eDreams ODIGEO

Transcription

eDreams ODIGEO

eDreams ODIGEO
A public limited liability company (société anonyme)
organized under the laws of the Grand Duchy of Luxembourg
(the “Company”)
104,878,049 ordinary shares
This prospectus (the “prospectus”) provides information in relation to the admission to trading on the Madrid,
Barcelona, Bilbao and Valencia stock exchanges (the “Spanish Stock Exchanges”), each of which constitutes a
regulated market for the purposes of Directive 2004/39/EC of the European Parliament and of the Council of
April 21, 2004 on markets in financial instruments (the “MiFID”) (the “Admission to Trading”), and for the
quotation on the Automated Quotation System (“AQS”) of the Spanish Stock Exchanges of 104,878,049 ordinary
shares with a nominal value of €0.10 each, representing the entire share capital of the Company and issued by the
Company under the laws of the Grand Duchy of Luxembourg (the “Shares”). Application has been made for the
Shares to be admitted to trading on the Spanish Stock Exchanges and quoted on the AQS.
Investing in the Shares involves certain risks. See “Risk Factors” beginning on page 21 of this prospectus.
To determine the tax implications of investing in the Shares in light of each investor’s circumstances,
particularly regarding dividends, capital gains and buy-backs, prospective investors are urged to consult with their
own tax advisors prior to making any investment decision.
This prospectus constitutes a prospectus for the purposes of article 5.3 of Directive 2003/71/EC of the European Parliament
and of the Council of November 4, 2003 on the prospectus to be published when securities are offered to the public or admitted to
trading and amending Directive 2001/34/EC, as amended (the “Prospectus Directive”), and the Luxembourg Law of July 10,
2005 on prospectuses for securities, as amended (loi du 10 juillet 2005 relative aux prospectus pour valeurs mobilières, telle que
modifiée) implementing the Prospectus Directive in Luxembourg (the “Prospectus Law”), and has been prepared in accordance
with the Prospectus Law and Commission Regulation (EC) 809/2004 of April 29, 2004, as amended. The Commission de
Surveillance du Secteur Financier (“CSSF”), the Luxembourg financial sector supervisory authority in its capacity as the
competent authority in Luxembourg under the Prospectus Law, has approved this prospectus for the purposes of giving
information with regard to the Company and the Admission to Trading.
The CSSF assumes no responsibility as to the economic and financial soundness of the transaction and the quality or
solvency of the Company in line with the provisions of article 7(7) of the Prospectus Law.
The Shares have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the
“Securities Act”) or with any securities regulatory authority of any state of the United States, and may not be offered or
sold within the United States unless the Shares are registered under the Securities Act or an exemption from the
registration requirements of the Securities Act is available.
In connection with the Admission to Trading, an offering not qualifying as an offer to the public for the purposes of
the Prospectus Directive (the “Offering”) of 36,707,313 Shares has been made by the Company and the Selling
Shareholders (as defined below). The Offering consisted of an offering not qualifying as an offer to the public for the
purposes of the Prospectus Directive (i) outside the United States in offshore transactions as defined in, and in compliance
with, Regulation S under the Securities Act and (ii) in the United States to persons reasonably believed to be qualified
institutional buyers (“QIBs”) as defined in, and in reliance on, Rule 144A under the Securities Act or pursuant to another
exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Purchasers of the
Shares pursuant to the Offering are hereby notified that the sellers of such Shares may have been relying on the
exemption from the registration provisions of Section 5 of the Securities Act provided by Rule 144A. The Shares sold
pursuant to the Offering will be delivered against payment of the purchase price to the accounts of purchasers thereof
(the “Settlement”), which is expected to occur on or about April 10, 2014.
For a description of these and other restrictions on transfers of the Shares, see “Transfer and Selling Restrictions”.
The Company assumes responsibility for the content of this prospectus and declares that, having taken all
reasonable care to ensure that such is the case, the information contained in this prospectus is, to the best of its
knowledge, in accordance with the facts and that it makes no omission likely to affect its import.
Neither the Admission to Trading, nor the approval of the document by the CSSF shall constitute a warranty or
representation by the CSSF or the Luxembourg Stock Exchange as to the competence of service providers or any
other party connected with the Company, the adequacy of the information contained in this prospectus, or the
suitability of the Company for investment purposes.
Date: April 4, 2014
TABLE OF CONTENTS
Page
Certain Definitions ................................................................................................................................................ iv
Market and Industry Data ....................................................................................................................................... x
Forward-Looking Statements ................................................................................................................................ xii
Summary of the Prospectus..................................................................................................................................... 1
Risk Factors ......................................................................................................................................................... 21
Presentation of Financial and Other Data .............................................................................................................. 52
Dividends and Dividend Policy............................................................................................................................. 57
Capitalization ....................................................................................................................................................... 59
Selected Financial Information and Other Data ..................................................................................................... 61
Other Unaudited Financial and Operating Data ..................................................................................................... 65
Management’s Discussion and Analysis of Our Financial Condition and Results of Operations ............................. 69
Industry Overview and Market Data ................................................................................................................... 117
Business ............................................................................................................................................................. 128
Regulation.......................................................................................................................................................... 159
Management and Board of Directors ................................................................................................................... 163
Principal Shareholders ........................................................................................................................................ 177
Certain Relationships and Related Party Transactions ......................................................................................... 180
Market Information ............................................................................................................................................ 181
General Information on the Company and the Group........................................................................................... 185
Description of the Share Capital of the Company and Applicable Regulations ..................................................... 191
Listing and Admission to Trading ....................................................................................................................... 206
Taxation ............................................................................................................................................................. 208
Plan of Distribution ............................................................................................................................................ 218
Transfer and Selling Restrictions ........................................................................................................................ 222
Enforcement of Civil Liabilities .......................................................................................................................... 225
Legal Matters ..................................................................................................................................................... 225
Independent Auditors ......................................................................................................................................... 226
Index to Financial Statements .............................................................................................................................. F-1
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THIS PROSPECTUS HAS BEEN PREPARED BY US SOLELY FOR THE PURPOSE OF THE ADMISSION
TO TRADING. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, ANY SHARES BY ANY PERSON IN ANY JURISDICTION. THE DELIVERY OF
THIS PROSPECTUS SHALL NOT UNDER ANY CIRCUMSTANCES IMPLY THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR ITS SUBSIDIARIES OR THAT THE INFORMATION
SET FORTH HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY, INCLUDING THE MERITS AND RISKS INVOLVED WITH RESPECT
TO AN INVESTMENT IN THE SHARES. NEITHER THE U.S. SECURITIES AND EXCHANGE
COMMISSION (“SEC”) NOR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY
HAS APPROVED OR DISAPPROVED OF THE SHARES. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR TRUTHFULNESS, OR DETERMINED THE
ADEQUACY, OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENCE IN THE UNITED STATES.
We are not making any representation to any offeree or purchaser of Shares regarding the legality of an
investment in the Shares by such offeree or purchaser under the laws applicable to such offeree or purchaser. Each
investor should consult with its own advisors as to the legal, tax, business, financial and related aspects of a
purchase of the Shares.
The information contained in this prospectus is accurate only as of the date of this prospectus.
The distribution of this prospectus is restricted by law in certain jurisdictions. No action has been or will be
taken in any jurisdiction by us or our shareholders that would permit an offer to the public of the Shares or
possession or distribution of a prospectus in any jurisdiction where action for that purpose would be required. This
prospectus may not be used for, or in connection with, and does not constitute an offer to, or solicitation by, anyone
in any jurisdiction in which it is unlawful to make such an offer or solicitation. Persons into whose possession this
prospectus may come are required by us to inform themselves about and to observe these restrictions. We do not
accept any responsibility for any violation by any person, whether or not such person is a prospective purchaser of
Shares, of any of these restrictions. For further information, see “Transfer and Selling Restrictions”.
This prospectus has been prepared on the basis that all offers of Shares will be made pursuant to an exemption
under the Prospectus Directive, as implemented in member states of the European Economic Area (“EEA”), from
the requirements to produce a prospectus for offers of securities. Accordingly, any person making or intending to
make an offer within the EEA of Shares which are the subject of this prospectus should only do so in circumstances
in which no obligation arises for us, our affiliates or our representatives to produce a prospectus for such offer. With
respect to the Admission to Trading, this prospectus complies with the requirements of the Prospectus Directive.
Copies of this prospectus are available for inspection at the registered office of the Company at 282, Route de
Longwy, L-1940 Luxembourg, Grand Duchy of Luxembourg. This prospectus will also be published on the
websites of the Company (www.edreamsodigeo.com) and of the Luxembourg Stock Exchange (www.bourse.lu),
and the Spanish translation of the summary of the prospectus will be available on the website of the Spanish
Comisión Nacional del Mercado de Valores (“CNMV”) (www.cnmv.es).
NOTICE TO U.S. INVESTORS
The Shares have not been, and will not be, registered under the Securities Act or with any securities regulatory
authority of any state of the United States, and may not be offered or sold within the United States unless the Shares
are registered under the Securities Act or an exemption from the registration requirements of the Securities Act is
available. The Offering consisted of an offering not qualifying as an offer to the public for the purposes of the
Prospectus Directive (i) outside the United States in offshore transactions as defined in, and in compliance with,
Regulation S under the Securities Act and (ii) in the United States to persons reasonably believed to be qualified
institutional buyers (“QIBs”) as defined in, and in reliance on, Rule 144A under the Securities Act or pursuant to
another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
Purchasers of the Shares pursuant to the Offering are hereby notified that the sellers of such Shares may have been
relying on the exemption from the registration provisions of Section 5 of the Securities Act provided by Rule 144A.
For a description of certain restrictions on resales relating to the Shares, see “Transfer and Selling Restrictions”.
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NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED
STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY
DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER
ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY
WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL
TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE
MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT, ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
NOTICE TO INVESTORS IN THE UNITED KINGDOM
In the United Kingdom, this prospectus is only being distributed to, and is only directed at, and any investment
or investment activity to which this prospectus relates is available only to, and will be engaged in only with, persons
(i) having professional experience in matters relating to investments who fall within the definition of “investment
professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005
(the “Order”); or (ii) who are high net worth entities falling within Article 49(2)(a) to (d) of the Order, or other
persons to whom it may otherwise be lawfully communicated (all such persons together being referred to as
“relevant persons”). Persons who are not relevant persons should not take any action on the basis of this prospectus
and should not act or rely on it.
This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom who are
“qualified investors” as defined in Section 86(7) of the Financial Services and Markets Act 2000, as amended (the
“FSMA”) or otherwise in circumstances which do not require the publication by the Company of a prospectus
pursuant to section 85(1) of the FSMA.
INFORMATION FOR INVESTORS IN CERTAIN COUNTRIES
For information for investors in certain countries, see “Transfer and Selling Restrictions”.
STABILIZATION
J.P. MORGAN SECURITIES PLC, AS STABILIZATION AGENT ACTING ON BEHALF OF ITSELF AND
THE OTHER UNDERWRITERS OF THE OFFERING OR ITS AGENT, MAY, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, AT ITS DISCRETION, ENGAGE IN TRANSACTIONS THAT STABILIZE,
SUPPORT, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SHARES INITIALLY SOLD FOR A
PERIOD OF 30 CALENDAR DAYS FROM THE DATE THE SHARES COMMENCE TRADING ON THE
SPANISH STOCK EXCHANGES. THE STABILIZATION PERIOD IS EXPECTED TO COMMENCE ON
APRIL 8, 2014 AND TO END ON MAY 8, 2014. SUCH TRANSACTIONS MAY BE EFFECTED ON THE
SPANISH STOCK EXCHANGES, THE OVER-THE-COUNTER MARKET OR OTHERWISE. EXCEPT AS
REQUIRED BY LAW, NONE OF J.P. MORGAN SECURITIES PLC, ANY OF ITS AGENTS OR ANY OF THE
UNDERWRITERS INTENDS TO DISCLOSE THE EXTENT OF ANY STABILIZATION AND/OR OVERALLOTMENT TRANSACTIONS IN CONNECTION WITH THE OFFERING.
THESE STABILIZATION ACTIVITIES MAY RAISE OR MAINTAIN THE MARKET PRICE OF THE
SHARES ABOVE INDEPENDENT MARKET LEVELS OR PREVENT OR RETARD A DECLINE IN THE
MARKET PRICE OF THE SHARES. NONE OF J.P. MORGAN SECURITIES PLC, ANY OF ITS AGENTS OR
ANY OF THE UNDERWRITERS IS REQUIRED TO ENGAGE IN THESE ACTIVITIES AND, IF
COMMENCED, THESE ACTIVITIES MAY BE DISCONTINUED AT ANY TIME. THERE CAN BE NO
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ASSURANCE THAT ANY SUCH ACTIVITIES WILL BE UNDERTAKEN. ACCORDINGLY, NO
ASSURANCE CAN BE GIVEN AS TO THE LIQUIDITY OF, OR TRADING MARKETS FOR, THE SHARES.
CERTAIN DEFINITIONS
In this prospectus, unless the context otherwise requires:
•
“1915 Law” refers to the Luxembourg law of August 10, 1915 on commercial companies, as amended;
•
“2001 Law” refers to the Luxembourg law of August 1, 2001 on the circulation of securities, as amended;
•
“2011 Law” refers to the Luxembourg law of May 24, 2011 on the exercise of certain rights of shareholders
in general meetings of listed companies, as amended;
•
“2013 Law” refers to the Luxembourg law of April 6, 2013 on dematerialized securities, as amended;
•
“2018 Notes” refers to the €325 million aggregate principal amount of GDF’s 7.500% Senior Notes due
2018 issued by GDF on January 31, 2013 under the 2018 Notes Indenture;
•
“2018 Notes Indenture” refers to the indenture governing the 2018 Notes dated January 31, 2013, as
amended and supplemented from time to time, by and among GDF, as issuer, Deutsche Trustee Company
Limited, as Trustee and the other parties named therein;
•
“2019 Notes” refers to the €175 million aggregate principal amount of GTF’s 10.375% Senior Notes due
2019 issued by GTF on April 21, 2011 under the 2019 Notes Indenture;
•
“2019 Notes Indenture” refers to the indenture governing the 2019 Notes dated April 21, 2011, as amended
and supplemented from time to time, by and among GTF, as issuer, Deutsche Trustee Company Limited, as
Trustee and the other parties named therein;
•
“Absorbed Companies” refers to the companies referred to in “Principal Shareholders— Shareholder
Reorganization—Shareholder Reorganization”;
•
“Admission to Trading” refers to the admission to trading of our Shares on the Spanish Stock Exchanges;
•
“Amadeus” refers to Amadeus IT Group, S.A.;
•
“ARC” refers to the Airlines Reporting Corporation, Arlington, Virginia;
•
“Ardian” refers to Ardian France S.A. (formerly known as AXA Investment Managers Private Equity
Europe);
•
“Ardian Funds” refers to funds advised or managed by Ardian;
•
“Ardian Vehicles” refers to AXA LBO Fund IV FCPR, AXA LBO Fund IV Supplementary FCPR and
AXA Co-Investment Fund III L.P.;
•
“Articles of Incorporation” refers to the articles of incorporation of the Company, as amended from time to
time;
•
“Axeurope” refers to Axeurope S.A., a public limited liability company (société anonyme) organized under
the laws of the Grand Duchy of Luxembourg, with its registered office at 21, boulevard Grande Duchesse
Charlotte, L-1331 Luxembourg, registered with the Luxembourg Register of Commerce and Companies
(Registre de commerce et des sociétés de Luxembourg) under number B 159.139;
•
“Board of Directors” refers to the board of directors (conseil d’administration) of the Company;
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•
“BSP” refers to a billing and settlement plan;
•
“CAGR” refers to compound annual growth rate;
•
“CET” refers to Central European Time;
•
“charter flights” refers to flights on chartered aircrafts offered on an ad hoc basis;
•
“CGU” refers to cash generating units;
•
“CNMV” refers to the Comisión Nacional del Mercado de Valores, the Spanish securities regulator;
•
“Combination” refers to the combination of the eDreams Group with the GoVoyages Group and the Opodo
Group to form eDreams ODIGEO, which was achieved through a contribution to the Company of the
eDreams Group by the Permira Funds and the GoVoyages Group by the Ardian Funds in exchange for
shares of the Company and the acquisition by a subsidiary of the Company of 100% of the share capital of
Opodo from Amadeus IT Group, S.A. (“Amadeus”) effective June 30, 2011 (the “Opodo Acquisition”);
•
“Company” refers to eDreams ODIGEO, a public limited liability company (société anonyme) organized
under the laws of the Grand Duchy of Luxembourg, having its registered office at 282, Route de Longwy,
L-1940 Luxembourg, Grand Duchy of Luxembourg, and registered with the Luxembourg Register of
Commerce and Companies (Registre de commerce et des sociétés de Luxembourg) under number B
159.036 (previously known as “LuxGEO Parent S.à r.l.”);
•
“Consolidated Annual Financial Statements” refers to the audited consolidated financial statements of the
Company and its subsidiaries as of and for the years ended March 31, 2013 and March 31, 2012, including
the notes thereto;
•
“Consolidated Financial Statements” refers to the Consolidated Annual Financial Statements and the
Consolidated Interim Financial Statements;
•
“Consolidated Interim Financial Statements” refers to the unaudited consolidated financial statements of
the Company and its subsidiaries as of December 31, 2013 and for the nine-month periods ended
December 31, 2013 and December 31, 2012, respectively, including the notes thereto;
•
“Convertible Subordinated Shareholder Bonds” refers to the convertible bonds issued by GTF on June 30,
2011 to Axeurope and Luxgoal in connection with the Opodo Acquisition and the simultaneous formation
of the eDreams ODIGEO Group;
•
“CSSF” refers to the Commission de Surveillance du Secteur Financier, the Luxembourg securities
regulator;
•
“Direct Connect” and “Direct Connects” refer to the proprietary technology we use to distribute certain
network and low-cost carrier flight products (and where the context requires, such flight products) by either
connecting customers directly to an airline’s proprietary inventory platform that we can access under a
formal agreement or by facilitating customers to book via an airline’s public access website, in each case,
without the intermediation of a GDS;
•
“Director” refers to a member of the Board of Directors;
•
“DTA” refers to deferred tax asset;
•
“Dynamic Packages” refers to dynamically priced packages consisting of a flight product and a hotel
booking that travelers customize based on their individual specifications by combining select products from
different travel suppliers through us;
•
“eDreams” and “eDreams Group” refer to eDreams Inc., a corporation organized under the laws of the
State of Delaware on January 28, 1999, and its subsidiaries, and where the context requires, the brands
associated with such entities;
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•
“eDreams ODIGEO”, “eDreams ODIGEO Group”, “we”, “us” and “our” refer to the Company and its
subsidiaries;
•
“EUR”, “euro” and “€” refer to the single currency introduced at the start of the third stage of the European
Economic Monetary Union pursuant to the Treaty on the Functioning of the European Union, as amended
from time to time;
•
“Eurozone” refers to the region composed of members states of the European Union that at the relevant
time have adopted the euro;
•
“Five Arrows Vehicles” refers to FA GOAL Co-Invest I, FCPR Five Arrows Principal Investments, FCPR
Five Arrows Principal Investments B and FCPR Five Arrows Co-Investments, which are investment
vehicles affiliated with Rothschild and have historically invested in the Company together with Ardian;
•
“flight business” refers to our operations relating to the sale of flight products;
•
“flight products” refers to flight bookings (network carrier, low-cost carrier and charter flights), as well as
related travel insurance;
•
“GBP”, “sterling”, “pounds sterling”, or “£” refer to the lawful currency of the United Kingdom;
•
“GDP” refers to gross domestic product;
•
“GDF” refers to Geo Debt Finance S.C.A., a partnership limited by shares (société en commandite par
actions) organized under the laws of the Grand Duchy of Luxembourg, having its registered office at 282,
route de Longwy, L-1940 Luxembourg and registered with the Luxembourg Register of Commerce and
Companies (Registre de commerce et des sociétés de Luxembourg) under number B 172.797;
•
“GDS” refers to a global distribution system, also referred to as a computer reservation service, which
provides a centralized, comprehensive repository of travel products, including availability and pricing of
seats on airline flights and hotel accommodations;
•
“Go Volo” refers to one of the brands associated with the GoVoyages Group;
•
“GoVoyages” and “GoVoyages Group” refer to, before the Combination, Lyparis and its subsidiaries and,
following the Combination, GoVoyages S.A.S. and GoVoyages Trade S.A.S., and where the context
requires, the brands associated with such entities;
•
“GTF” refers to Geo Travel Finance S.C.A., a partnership limited by shares (société en commandite par
actions) organized under the laws of the Grand Duchy of Luxembourg, having its registered office at 282,
•
“IATA” refers to the International Air Transport Association;
•
“Iberclear” refers to the Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de
Valores, S.A.;
•
“IFRS” refers to the International Financial Reporting Standards as adopted by the European Union;
•
“Indentures” collectively refers to the 2019 Notes Indenture and the 2018 Notes Indenture;
•
“Intercreditor Agreement” refers to the Intercreditor Agreement entered into on February 18, 2011, as
amended and restated from time to time, including as amended by the amendment and restatement
agreements dated April 15, 2011 and January 31, 2013, among, inter alia, GTF, the Trustee, certain lenders
and Société Générale as security agent;
•
“Joint Global Coordinators” refers to Deutsche Bank AG, London Branch and J.P. Morgan Securities plc
acting as joint global coordinators in connection with the Offering;
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•
“Liligo” refers to Findworks Technologies S.A., a public limited liability company (société anonyme)
organized under the laws of France, with its registered office at 4, allée verte, F-75011 Paris, France,
registered with the French Registre du Commerce et des Sociétés under number 483 314 134, and where the
context requires, the brands associated with such entity;
•
“Liligo Acquisition” refers to the acquisition by us of all shares in Findworks Technologies S.A. that was
consummated on October 2, 2013;
•
“Link Entity” refers to BNP Paribas Securities Services, Sucursal en España;
•
“LMV” refers to the Spanish law of July 28, 1988 on the securities market (Ley 24/1988, de 28 julio, del
Mercado de Valores), as amended, including by the Spanish law of October 4, 2011 (Ley 32/2011, de 4
octubre, por la que se modifica la Ley 24/1988, de 28 julio, del Mercado de Valores);
•
“low-cost carrier” refers to an airline with a lower operating cost structure than competitors that generally
offers lower ticket fares and limited services, often charging for extra services like food, priority boarding,
seat allocation and baggage;
•
“Luxembourg” refers to the Grand Duchy of Luxembourg;
•
“Luxembourg GAAP” refers to the accounting principles generally accepted in Luxembourg;
•
“LuxCSD Principal Agent” refers to BNP Paribas Securities Services, Luxembourg branch;
•
“LuxGEO” refers to LuxGEO S.à r.l., a private limited liability company (société à responsabilité limitée)
organized under the laws of the Grand Duchy of Luxembourg, with its registered office at 282, route de
Longwy, L-1940 Luxembourg and registered with the Luxembourg Register of Commerce and Companies
(Registre de commerce et des sociétés de Luxembourg) under number B 152.198. LuxGEO is an indirect
wholly owned subsidiary of the Company;
•
“Luxgoal” refers to Luxgoal S.à r.l., a private limited liability company (société à responsabilité limitée)
•
“Luxgoal 2” refers to Luxgoal S.à r.l., a private limited liability company (société à responsabilité limitée)
•
“Luxgoal 3” refers to Luxgoal 3 S.à r.l., a private limited liability company (société à responsabilité
limitée) organized under the laws of the Grand Duchy of Luxembourg, with its registered office at 282,
•
“Lyeurope” refers to Lyeurope S.A.S., a société par actions simplifiée organized under the laws of France,
with its registered office at 14 rue de Clery, 75002 Paris (France), registered with the French Registre du
Commerce et des Sociétés under number 522 727 700 RCS Paris, which was created for purposes of the
acquisition of the GoVoyages group by Ardian France S.A. in July 2010 and which is the holding company
of Lyparis;
•
“Lyparis” refers to Lyparis S.A.S., a société par actions simplifiée unipersonnelle organized under the laws
of France, with its registered office at 14 rue de Clery, 75002 Paris (France) and registered with the French
Registre du Commerce et des Sociétés under number 491 249 520 RCS Paris, a direct 100% owned
subsidiary of Lyeurope;
•
“Minority Shareholders” refers to certain current and former employees of the Company (including Javier
Pérez-Tenessa de Block, our founder, Chief Executive Officer and Chairman of our Board of Directors, and
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other members of our Senior Management) and “friends and family” shareholders of the Company who,
immediately following the completion of the Shareholder Reorganization, held in the aggregate
approximately 8.1% of the issued and outstanding Shares;
•
“Minority Selling Shareholders” refers to Minority Shareholders who are selling Shares in the Offering;
•
“multi-GDS flight products” refers to products whereby the components (e.g., the outbound flight and the
inbound flight) are sourced via different GDSs;
•
“net fare flight products” refers to flight products the fares of which are negotiated with airlines;
•
“network carrier” refers to an airline which typically has an international route network and actively
markets connecting flights via airline hub airports and provides the transfer services for passengers and
their baggage;
•
“NOLs” refers to net operating losses;
•
“non-flight business” refers to our operations relating to the sale of non-flight products, as well as other
non-travel activities such as advertising on our websites, incentives we receive from payment processors,
charges on toll calls and Liligo’s metasearch activity;
•
“non-flight products” principally refers to hotel bookings, Dynamic Packages, car rentals and vacation
packages, as well as related travel insurance;
•
“Nordics” refers to Denmark, Finland, Norway and Sweden;
•
“Notes” collectively refers to the 2019 Notes and the 2018 Notes;
•
“Opodo” and “Opodo Group” refer to Opodo Limited and its subsidiaries, and where the context requires,
the brands associated with such entities;
•
“Opodo Acquisition” refers to the acquisition of Opodo Limited by LuxGEO S.à r.l. from Amadeus IT
Group, S.A. that was consummated on June 30, 2011;
•
“Opodo Tours” refers to Opodo Tours GmbH, a limited liability company (Gesellschaft mit beschränkter
Haftung) organized under the laws of Germany, with its registered office at Mönckebergstraße 27, 20095
Hamburg (Germany), registered with the Commercial Register of the District Court of Hamburg
(Handelsregister des Amtsgerichtes Hamburg) under number HRB 115167, all shares in which have been
sold by Opodo to Seven Ventures GmbH, Unterföhring (Germany) and Mr. Frank Riecke, Hamburg
(Germany) pursuant to a share purchase agreement dated July 3, 2012, effective August 14, 2012, and
subsequently renamed TROPO GmbH;
•
“Orders” refers to delivered transactions, i.e., Bookings (see “Presentation of Financial and Other Data—
Non-GAAP Measures”), as well as transactions that are ultimately not processed, for example, due to credit
card issues;
•
“OTA” refers to online travel agencies;
•
“Other Ardian Co-investors” refers to entities affiliated with the CIC banking group, Massena and
Dentressangle that have historically invested in the Company together with Ardian;
•
“overcommissions” refers to commissions paid by certain travel suppliers based on the year-end
achievement of pre-defined targets;
•
“Paying Agent” refers to BNP Paribas Securities Services, Sucursal en España;
•
“Permira Funds” refers to one or more funds advised by Permira Asesores, S.L. or affiliated entities;
viii
•
“Principal Selling Shareholders” refers to Luxgoal 3, the Ardian Funds, Willinvest & GMPI, the Five
Arrows Vehicles, Luxgoal 2 and the other Ardian Co-investors who are selling Shares in the Offering;
•
“Principal Shareholders” refers to Luxgoal 3, the Ardian Funds, Willinvest & GMPI, the Five Arrows
Vehicles, Luxgoal 2 and the other Ardian Co-investors who, immediately following the completion of the
Shareholder Reorganization, held in the aggregate approximately 91.9% of the issued and outstanding
Shares;
•
“Principal Shareholder Group” refers to Luxgoal 3 together with its affiliates and/or the Ardian Funds
together with their affiliates;
•
“Prospectus Directive” refers to Directive 2003/71/EC of the European Parliament and of the Council of
November 4, 2003 on the prospectus to be published when securities are offered to the public or admitted
to trading and amending Directive 2001/34/EC, as amended;
•
“Prospectus Law” refers to the Luxembourg law of July 10, 2005 on prospectuses for securities, as
amended (loi du 10 juillet 2005 relative aux prospectus pour valeurs mobilières, telle que modifiée);
•
“ReallyLateBooking” refers to IIPIR Software Development S.L., a limited liability company (Sociedad
Limitada) organized under the laws of Spain, having its registered office at Santa Catalina street 11 3 B,
Majadahonda, 28220, Madrid, Spain, and registered with the Madrid Commercial Register (Registro
Mercantil de Madrid) under number B 862 333 68;
•
“regular flights” refers to flight products on a network or low-cost carrier;
•
“Revolving Credit Facility” refers to the revolving facilities and letters of credit and guarantee facilities
made available under the Revolving Credit Facility Agreement;
•
“Revolving Credit Facility Agreement” refers to a revolving credit facility agreement dated January 31,
2013 between, among others, GTF as the parent and obligor, certain of GTF’s subsidiaries, as borrowers
and guarantors, Credit Suisse International, Goldman Sachs International, Lloyds TSB Bank plc, Société
Générale and UBS Limited as mandated lead arrangers, and Société Générale as agent and security agent,
as amended and restated from time to time;
•
“sector” refers to a part of the travel market;
•
“segment” refers to our financial reporting segments of Core and Expansion (for a discussion, see
“Management’s Discussion and Analysis of Our Financial Condition and Results of Operations—
Overview”);
•
“Selling Shareholders” refers to the Principal Selling Shareholders and the Minority Selling Shareholders;
•
“Senior Credit Facilities Agreement” refers to the senior credit facilities agreement entered into between
LuxGEO Parent S.à r.l., the Senior Facilities Agent, the Security Agent, the Senior Lenders thereunder and
others dated February 18, 2011, as amended and restated from time to time, which was terminated as of
January 31, 2013;
•
“Senior Management” refers to the management group comprised as of the date of this prospectus of Javier
Pérez-Tenessa de Block, our Chairman and Chief Executive Officer, Dana Dunne, our Chief Operating
Officer, David Elízaga, our Chief Financial Officer, Mauricio Prieto, our Chief Marketing Officer, and
Philipe Vimard, our Chief Technology Officer;
•
“service fees” refers to the total difference between the price at which we source a product and sell that
product to a customer, which difference includes, among other components, any mark-up to the price at
which we source a product and fees that we charge customers in connection with a booking;
•
“service fees per flight Booking” refers to service fees earned in respect of flight products divided by the
number of flight Bookings;
ix
•
“Settlement” refers to the delivery of the Shares sold pursuant to the Offering through the book-entry
facilities of Iberclear against payment of the purchase price to the accounts of purchasers thereof;
•
“Shareholders” refers to the shareholders of the Company;
•
“Shareholders’ Agreement” refers to the shareholders’ agreement entered into on the date of pricing of the
Offering by and among Luxgoal 3, the Ardian Vehicles and Javier Pérez-Tenessa de Block in respect of the
Company;
•
“Shareholder Merger” refers to the merger of the Absorbed Companies into the Company, as described in
“Principal Shareholders—Shareholder Reorganization—Shareholder Reorganization”;
•
“Shareholder Reorganization” refers to the reorganization of our shareholder structure that took place
shortly after the pricing of the Offering but prior to the date of this prospectus, following which the
Shareholders held Shares directly in the Company as set out in “Principal Shareholders”;
•
“Shares” refers to our ordinary shares with a nominal value of €0.10 each issued by the Company under the
laws of the Grand Duchy of Luxembourg;
•
“Spanish GAAP” refers to the accounting principles generally accepted in Spain;
•
“Spanish Stock Exchanges” refers to the Madrid, Barcelona, Bilbao and Valencia stock exchanges;
•
“Travellink” refers to Travellink AB, a limited liability company in the form of a Swedish Aktiebolag
organized under the laws of Sweden having its registered office at Box 1108, 17222 Sundbyberg, Sweden,
and registered under number 556596-2650, and where the context requires, the brands associated with such
entity;
•
“U.K.” refers to the United Kingdom of Great Britain and Northern Ireland;
•
“Underwriters” refers to the underwriters of the Offering listed under “Plan of Distribution”;
•
“Unconsolidated 2011 Financial Statements” refers to the audited unconsolidated financial statements of
the Company as of March 31, 2011 and for the period from February 14, 2011 to and including March 31,
2011, including the notes thereto, the balance sheet and profit and loss account of which have been audited
in accordance with Luxembourg GAAP and the statements of cash flows and of changes in equity of which
have been audited in accordance with International Standard on Accounting 805;
•
“U.S.” and “U.S.A.” refer to the United States of America;
•
“USD”, “U.S. dollar” and “$” refer to the lawful currency of the United States of America;
•
“VAT” refers to value added tax;
•
“Willinvest & GMPI” refers to Willinvest and Gestion Mobilière, Patrimoniale et Immobilière (G.M.P.I.),
which are companies controlled indirectly by Groupe Arnault SAS and have historically invested in the
Company together with Ardian; and
•
“XML” refers to extensible mark-up language (“XML”).
MARKET AND INDUSTRY DATA
Certain information set forth in this prospectus has been derived from the following external sources:
•
“App Annie” rankings of apps for mobile devices;
•
The Economist Intelligence Unit (“EIU”) research data and reports;
x
•
“Eurostat” statistics database hosted on the internet site of the European Commission;
•
IHS Inc. (“IHS”), November 2013 publication;
•
International Air Transport Association (“IATA”), various statistics available on IATA’s internet site;
•
International Civil Aviation Organization (“ICAO”), Air Transport Monthly Monitor;
•
International Data Corporation (“IDC”), “Worldwide New Media Market Model”, 1H13, July 2013;
•
PhoCusWright, European Online Travel Overview, Fifth Edition—October 2009;
•
PhoCusWright, European Online Travel Overview, Sixth Edition—November 2010;
•
PhoCusWright, European Online Travel Overview, Seventh Edition—November 2011;
•
PhoCusWright, European Online Travel Overview, Eighth Edition—December 2012;
•
PhoCusWright, European Online Travel Overview, Ninth Edition—December 2013;
•
PhoCusWright, U.S. Online Travel Overview, Twelfth Edition—November 2012;
•
PhoCusWright, Asia Pacific Online Travel Overview, Sixth Edition—October 2013;
•
PhoCusWright, Latin American Online Travel Overview—April 2011;
•
PhoCusWright, Japan Online Travel Overview—March 2013;
•
PhoCusWright, “Online Travel Agency Flight Retailing” report prepared for and commissioned by the
Company dated February 3, 2014;
•
Travelport 2012 Annual Report (Travelport)
•
U.S. Travel Association (“U.S. Travel”), various forecasts available on U.S. Travel’s internet site;
•
The WM Company (“WMR”) financial research data; and
•
World Travel and Tourism Council (“WTTC”), Global Impact Report—2010.
The above PhoCusWright sources are collectively referred to as “PhoCusWright” in this prospectus. The above
external sources mainly include industry surveys and publications and macroeconomic data. Industry surveys and
publications generally state that the information contained therein has been obtained from sources believed to be
reliable, but some of this information may have been derived from estimates or subjective judgments or have been
subject to limited audit and validation. While we believe this market data to be accurate and correct, we have not
independently verified it. Market data presented in this section are based principally on PhoCusWright’s
aggregations or calculations of gross bookings, revenues (on a net basis) and operating margins from publicly
available sources, unless otherwise stated. Our estimates of our sector positions are based on gross bookings in
2012. We have accurately reproduced the sector share and industry data, and as far as we are aware and able to
ascertain from various market research publications, publicly available information and industry publications,
including reports published by the third-party sources identified above, no facts have been omitted which to our
knowledge would render the reproduced information inaccurate or misleading. However, you should note that the
measures aggregated or calculated by PhoCusWright are non-GAAP measures and as a result, may not be directly
comparable to similarly titled measures disclosed among companies operating in our industry, including us.
Unless otherwise stated, PhoCusWright data as presented herein are actual for the period 2007-2012 and
estimated for the period 2013-2015, with the exception of data stemming from PhoCusWright’s Latin American
Online Travel Overview referred to above, which are actual for the period 2006-2011 and estimated for the period
2012-2014.
xi
RESPONSIBILITY STATEMENT
The Company assumes responsibility for the content of this prospectus and declares that, having taken all
reasonable care to ensure that such is the case, the information contained in this prospectus is, to the best of its
knowledge, in accordance with the facts and that it makes no omission likely to affect its import.
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements within the meaning of the securities laws of certain
applicable jurisdictions. These forward-looking statements include, but are not limited to, the discussion of the
changing dynamics of the marketplace and the Company’s outlook for growth in the travel industry both within and
outside of France, Germany, Spain, Italy, the United Kingdom, and the Nordics. These forward-looking statements
can be identified by the use of forward-looking terminology, including the terms “aims”, “anticipates”, “believes”,
“continues”, “could”, “estimates”, “expects”, “forecasts”, “guidance”, “intends”, “may”, “plans”, “should” or “will”
or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements
include all matters that are not historical facts. They appear in a number of places throughout this prospectus and
include statements regarding our intentions, beliefs or current expectations concerning, among other things, our
results of operations, financial condition and performance, liquidity, prospects, growth, strategies and the industry in
which we operate.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements
are not guarantees of future performance and that our actual financial condition, results of operations and cash flows,
and the development of the industry in which we operate, may differ materially from those made in or suggested by
the forward-looking statements contained in this prospectus. In addition, even if our financial condition, results of
operations and cash flows, and the development of the industry in which we operate are consistent with the forwardlooking statements contained in this prospectus, those results or developments may not be indicative of our results or
developments in subsequent periods. Important factors that could cause these differences include, but are not limited
to:
•
the impact on our revenue, profits and cash flow resulting from general economic conditions, consumer
confidence, spending patterns and disruptions (including those related to natural disasters and health
pandemics) affecting the travel industry specifically;
•
changes, restrictions or disruptions affecting our technology platforms or the technology of our third-party
service providers;
•
the impact on our revenue, profits and cash flow resulting from our inability to successfully compete
against current and future competitors (including increasing competition from metasearch and online portal
companies);
•
the impact on our revenue, profits and cash flow resulting from adverse changes affecting our relationships
with travel product suppliers and suppliers’ intermediaries which could reduce our access to travel products
content and/or increase our costs;
•
the laws, rules and regulations to which we are subject and the potential for changes to those laws, rules
and regulations;
•
restrictions in the use of our brands;
•
the impact of seasonal fluctuations;
•
our exposure to risks associated with online commerce security and particularly payment fraud;
•
our ability to attract and retain highly skilled personnel and other qualified executives and employees;
•
our substantial leverage and ability to meet significant debt service obligations, including significant
repayment requirements in the coming years;
xii
•
restrictions in our debt instruments that could impair our activities;
•
our exposure to interest rate risk, hedging risk and currency fluctuations;
•
risks associated with our structure and ownership; and
•
other factors discussed or referred to in this prospectus.
The foregoing factors should not be construed as exhaustive. Due to such uncertainties and risks, readers are
cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof.
We urge you to read this prospectus, including the sections entitled “Risk Factors”, “Management’s Discussion and
Analysis of Our Financial Condition and Results of Operations”, “Industry Overview and Market Data” and
“Business”, for a more complete discussion of the factors that could affect our future performance and the industry
in which we operate.
We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any
forward-looking statement contained in this prospectus which may be made to reflect events or circumstances after
the date of this prospectus, including, without limitation, changes in our business or acquisition strategy or planned
capital expenditures, or to reflect the occurrence of unanticipated events except as required by law or by the rules
and regulations of the Spanish Stock Exchanges.
AVAILABILITY OF PROSPECTUS
This prospectus will be published on the Company’s website (www.edreamsodigeo.com). Note that nothing on
the Company’s website (www.edreamsodigeo.com) is intended to be, or should be construed as being part of, this
prospectus. Furthermore, the prospectus will be available free of charge as of April 4, 2014 during regular business
hours at the registered office of the Company at 282, Route de Longwy, L-1940 Luxembourg, Grand Duchy of
Luxembourg. This prospectus will also be published on the websites of the Company (www.edreamsodigeo.com)
and of the Luxembourg Stock Exchange (www.bourse.lu), and the Spanish translation of the summary of the
prospectus will be available on the website of the CNMV (www.cnmv.es).
INSPECTION OF DOCUMENTS AND AVAILABILITY OF FUTURE FINANCIAL INFORMATION
For a period of 12 months following the Admission to Trading, copies of the following documents will, when
published, be available for inspection free of charge during regular business hours on any weekday (Saturdays,
Sundays and Luxembourg public holidays excluded) at the registered office of the Company at 282, Route de
Longwy, L-1940 Luxembourg, Grand Duchy of Luxembourg.
•
the Articles of Incorporation;
•
the audited consolidated financial statements of the Company and its subsidiaries as of and for the years
ended March 31, 2013 and March 31, 2012, respectively, including the notes thereto (the “Consolidated
Annual Financial Statements”);
•
the unaudited consolidated financial statements of the Company and its subsidiaries as of December 31,
2013 and for the nine-month periods ended December 31, 2013 and December 31, 2012, respectively,
including the notes thereto (the “Consolidated Interim Financial Statements”); and
•
the audited unconsolidated financial statements of the Company as of March 31, 2011 and for the period
from February 14, 2011(the date of incorporation of the Company) to and including March 31, 2011,
including the notes thereto (the “Unconsolidated 2011 Financial Statements”), the balance sheet and profit
and loss account of which have been audited in accordance with Luxembourg GAAP and the statements of
cash flows and of changes in equity of which have been audited in accordance with International Standard
on Accounting 805.
The Company’s future annual and interim financial information, which the Company will be required to publish
pursuant to the Luxembourg law of January 11, 2008 relating to the transparency requirements in relation to
information about an issuer whose securities are admitted to trading on a regulated market, as amended, will be
available on the Company’s website (www.edreamsodigeo.com) and on the website of the Luxembourg Stock
xiii
Exchange (www.bourse.lu) and may be inspected at the registered office of the Company at 282, Route de Longwy,
L-1940 Luxembourg, Grand Duchy of Luxembourg.
Note that nothing on the Company’s website (www.edreamsodigeo.com) or on any other website to which
reference is made in this prospectus is intended to be, or should be construed as being part of, this prospectus.
AVAILABLE INFORMATION
For so long as any Shares are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities
Act, the Company will, during any period in which it is neither subject to Section 13 or 15(d) of the U.S. Securities
Exchange Act of 1934, as amended (the “Exchange Act”) nor exempt from reporting pursuant to Rule 12g3-2(b)
thereunder, provide to any holder or beneficial owner of such restricted securities or to any prospective purchaser of
such restricted securities designated by such holder or beneficial owner, upon the request of such holder, beneficial
owner or prospective purchaser, the information required to be provided by Rule 144A(d)(4) under the Securities
Act.
EXCHANGE RATE AND CURRENCY INFORMATION
Unless otherwise indicated, references in this prospectus to “sterling”, “pounds sterling”, “GBP” or “£” are to
the lawful currency of the United Kingdom; references to “euro” or “€” are to the single currency introduced at the
start of the third stage of the European Economic and Monetary Union pursuant to the Treaty on the functioning of
the European Community, as amended from time to time; and references to “U.S. dollars”, “dollars”, “U.S.$”,
“USD” or “$” are to the lawful currency of the United States of America.
The following table sets forth, for the periods set forth below, the high, low, average and period end Bloomberg
Composite Rate expressed as (i) U.S. dollars per €1.00 and per £1.00 and (ii) pounds sterling per €1.00. The
Bloomberg Composite Rate is a “best market” calculation, in which, at any point in time, the bid rate is equal to the
highest bid rate of all contributing bank indications and the ask rate is set to the lowest ask rate offered by these
banks. The Bloomberg Composite Rate is a midvalue rate between the applied highest bid rate and the lowest ask
rate. The rates may differ from the actual rates used in the preparation of the Consolidated Financial Statements, the
Unconsolidated 2011 Financial Statements and other financial information appearing in this prospectus. The
Company does not represent that the U.S. dollar or euro amounts referred to below could be or could have been
converted into pounds sterling at any particular rate indicated or any other rate.
The average rate for a year means the average of the Bloomberg Composite Rates on the last day of each month
during a year. The average rate for a month, or for any shorter period, means the average of the daily Bloomberg
Composite Rates during that month, or shorter period, as the case may be.
The Bloomberg Composite Rate of euro on March 31, 2014 was $1.3772 per €1.00, $1.6681 per £1.00 and
£0.8257 per €1.00.
Period end
Average rate
High
Low
USD per EUR
Year
2009......................................................................................
2010......................................................................................
2011......................................................................................
2012......................................................................................
2013......................................................................................
2014 (through March 31) .......................................................
1.4326
1.3387
1.2959
1.3192
1.3743
1.3772
Period end
1.3949
1.3266
1.3926
1.2860
1.3285
1.3687
Average rate
1.5134
1.4513
1.4830
1.3458
1.3804
1.3925
High
1.2531
1.1923
1.2907
1.2061
1.2780
1.3505
Low
USD per EUR
Month
October 2013.........................................................................
November 2013.....................................................................
December 2013 .....................................................................
January 2014 .........................................................................
xiv
1.3583
1.3591
1.3743
1.3488
1.3639
1.3497
1.3703
1.3623
1.3804
1.3606
1.3803
1.3763
1.3520
1.3367
1.3542
1.3488
February 2014 .......................................................................
March 2014 ...........................................................................
1.3802
1.3772
Period end
1.3670
1.3830
Average rate
1.3802
1.3925
High
1.3519
1.3733
Low
USD per GBP
Year
2009......................................................................................
2010......................................................................................
2011......................................................................................
2012......................................................................................
2013......................................................................................
2014 (through March 31) .......................................................
1.6173
1.5612
1.5549
1.6248
1.6556
1.6681
Period end
1.5670
1.5457
1.6041
1.5852
1.5649
1.6622
Average rate
1.6988
1.6362
1.6706
1.6279
1.6556
1.6762
High
1.3753
1.4334
1.5343
1.5317
1.4867
1.6311
Low
USD per GBP
Month
October 2013.........................................................................
November 2013.....................................................................
December 2013 .....................................................................
January 2014 .........................................................................
February 2014 .......................................................................
March 2014 ...........................................................................
1.6038
1.6368
1.6556
1.6441
1.6745
1.6681
Period end
1.6091
1.6114
1.6382
1.6473
1.6566
1.6625
Average rate
1.6236
1.6368
1.6556
1.6637
1.6747
1.6762
High
1.5951
1.5905
1.6264
1.6354
1.6305
1.6496
Low
GBP per EUR
Year
2009......................................................................................
2010......................................................................................
2011......................................................................................
2012......................................................................................
2013......................................................................................
2014 (through March 31) .......................................................
0.8865
0.8573
0.8333
0.8120
0.8306
0.8257
Period end
0.8992
0.8581
0.8680
0.8113
0.8491
0.8235
Average rate
0.9569
0.9121
0.9040
0.8493
0.8747
0.8396
High
0.8433
0.8091
0.8302
0.7779
0.8101
0.8209
Low
GBP per EUR
Month
October 2013.........................................................................
November 2013.....................................................................
December 2013 .....................................................................
January 2014 .........................................................................
February 2014 .......................................................................
March 2014 ...........................................................................
xv
0.8467
0.8303
0.8306
0.8206
0.8243
0.8257
0.8476
0.8377
0.8365
0.8270
0.8252
0.8319
0.8566
0.8467
0.8465
0.8344
0.8326
0.8396
0.8352
0.8303
0.8280
0.8174
0.8176
0.8209
SUMMARY OF THE PROSPECTUS
Summaries are made up of disclosure requirements, referred to as “Elements”. These Elements are numbered in
Sections A - E (A.1 - E.7). This summary contains all the Elements required to be included in a summary for this
type of securities and issuer. Since a number of points do not need to be addressed, there may be gaps in the
numbering sequence. Even though an Element may be required to be inserted in the summary because of the type of
securities and issuer, it is possible that no relevant information can be given regarding the Element. In this case a
brief description of the point with “not applicable” is included.
In this summary of the prospectus, “eDreams ODIGEO”, “eDreams ODIGEO Group”, “the Group”, “we”, “us”
and “our” refer to the Company (as defined in B.1. below) and its subsidiaries.
A. – Introduction and Warnings
A.1.
Warnings.
This summary should be understood as an introduction to the
prospectus. Any decision to invest in the securities should be based
on consideration of the prospectus as a whole by the investor.
Where a claim relating to the information contained in the prospectus
is brought before a court, the plaintiff investor might, under the
relevant national legislation of the individual member states of the
European Economic Area, have to bear the costs of translating the
prospectus before legal proceedings are initiated.
A.2.
Information
regarding the
subsequent use of
the prospectus.
Not applicable. Consent regarding the use of the prospectus for a
subsequent resale or placement of the securities has not been granted.
Legal and
commercial name of
the issuer.
The legal name of the company (the “Company”)
is “eDreams ODIGEO”.
B. – Issuer
B.1.
The Company trades under the commercial name
“eDreams ODIGEO”.
B.2.
B.3.
Domicile and legal
form of the issuer,
legislation under
which the issuer
operates and country
of incorporation.
The Company is domiciled in the Grand Duchy of Luxembourg and
has its registered office at 282, Route de Longwy, L-1940
Luxembourg, Grand Duchy of Luxembourg.
Description of, and
key factors relating
to, the nature of the
issuer’s current
operations and its
principal activities,
main products sold
Overview
The Company is a public limited liability company (société anonyme)
organized under the laws of the Grand Duchy of Luxembourg, the
Company’s country of incorporation.
We are a leading online travel company with a presence in 42
countries. We make flight and non-flight products directly available
to travelers principally through our online booking channels (desktop
websites, mobile websites and mobile apps) and via our call centers,
as well as indirectly through white label distribution partners and
1
and/or services
performed and
identification of the
principal markets in
which the issuer
competes.
other travel agencies. With more than 14 million customers served in
the year ended March 31, 2013, we are a worldwide leader in
delivering flight products, which is our principal business. We also
provide our customers with non-flight products, such as hotel
bookings, “Dynamic Packages” (which refers to dynamically priced
packages consisting of a flight product and a hotel booking that
travelers customize based on their individual specifications by
combining select products from different travel suppliers through us),
car rentals and vacation packages.
Substantially all of our operations are in the leisure travel business.
We derive the substantial majority of our revenue and profit from the
sale of flight products in Europe. Our principal operations, as
measured by Revenue Margin contribution, are in France, Germany,
Spain, Italy, the United Kingdom and the “Nordics” (which refers to
Denmark, Finland, Norway and Sweden). “Revenue Margin” means
our revenue less supplies (each pursuant to the International Financial
Reporting Standards as adopted by the European Union (“IFRS”)).
Outside of Europe, we are present in a number of large countries,
including, in order of Revenue Margin contribution, Australia, the
United States, Argentina, Brazil, Turkey and Mexico.
We also have operations in the corporate travel sector, mainly in the
Nordics, and are seeking to expand this business in certain of our
other geographies in Europe. In October 2013, we completed the
acquisition of Findworks Technologies S.A. (“Liligo”), a metasearch
company with websites in 11 countries, with a view to integrating
Liligo’s technology into our existing business and increasing our
advertising and meta click-out revenue.
We use innovative technology and our relationships with suppliers,
product know-how and marketing expertise to attract and allow
customers to research, plan and book a broad range of travel
products. We make our offers accessible to a broad range of
customers, including leisure and corporate travelers, offline travel
agents, and white label distribution partners.
We own and operate a strong portfolio of consumer brands composed
of “eDreams” (which refers to eDreams Inc. and its subsidiaries and
associated brands), “Opodo” (which refers to Opodo Limited and its
subsidiaries and associated brands), “GoVoyages” (which refers to,
before the combination of the eDreams group with the GoVoyages
group and the Opodo group (the “Combination”), Lyparis and its
subsidiaries, and after the Combination, GoVoyages S.A.S. and
GoVoyages Trade S.A.S., and associated brands), “Travellink”
(which refers to Travellink AB and associated brands), “Go Volo”
(which refers to one of the brands associated with the GoVoyages
group) and the recently acquired Liligo brand. Through our brands,
we have historically focused on the flight sector of the travel market.
2
Our Strengths
Our competitive strengths are the following:
•
We believe we are a global leader in the online leisure flight
sector and a category leader in European eCommerce, and this
scale is beneficial to our business.
•
Scalable state-of-the-art booking platform based on proprietary
technology.
•
Well positioned within a large, fragmented market with attractive
secular growth trends and additional expansion opportunities.
•
Proven growth track record with continued strong momentum.
•
Strong profitability, sustainable margins and cash flow
generation based on scale, revenue stream multiplication, breadth
of product offering and broad geographic footprint.
•
Sustainable competitive advantages and strong barriers to entry.
•
Innovative and proven management team.
Our Strategy
Our key strategic objectives are the following:
B.4a.
Most significant
recent trends
affecting the issuer
and the industries in
which it operates.
•
Continue investing in technological innovation as a driver of
lower prices, strong margins, and higher growth and customer
engagement.
•
Expanding our geographic footprint to provide for long-term
growth.
•
Capturing growth opportunities in non-flight travel, including
hotels, rental cars, Dynamic Packages, insurance, advertising
sales, metasearch and, in the future, potentially in-destination
services.
•
Continue expanding our presence across different customer
segments, booking channels and distribution channels.
•
Benefit from attractive M&A opportunities.
Our business has been, and may continue to be, affected by the following
factors, trends and changes in the global economy in general and the
travel industry in particular:
•
economic cycles influenced by macroeconomic conditions and
other factors outside our control, which cycles and factors affect
3
demand for travel products, including our own;
B.5.
Description of the
group and the
issuer’s position
within the group.
•
increased internet penetration and, accordingly, online travel
penetration;
•
our ability to compete with new and existing market participants
with the strength of our brands, technology and marketing track
record, together with our acquisition of Liligo;
•
trend towards travel bookings on mobile devices;
•
fragmentation of the European travel industry due to the high
number of countries, languages, currencies, tax and regulatory
environments leading to localized competition;
•
our continued ability to maintain our supplier relationships and to
continue to access a supplier with which we do not have a formal
relationship through our systems; and
•
increased regulation affecting our business, including the
European Economic Community Council Directive on Package
Travel, Package Holidays and Package Tours imposing various
obligations upon us.
The Company, with its registered office in Luxembourg, is the parent
holding company of eDreams ODIGEO. The following chart provides an
overview (in simplified form) of our subsidiaries as of the date of the
prospectus.
4
5
B.6.
B.7.
Persons who,
directly or
indirectly, have a
(notifiable) interest
in the issuer’s capital
or voting rights or
have control over the
issuer.
Selected historical
key financial
information.
As of the date of this prospectus, the following shareholders have a
(notifiable) interest in the Company’s capital or voting rights in that
they hold 5% or more of the Shares:
Shareholder
Number of
Shares owned
Luxgoal 3 S.à r.l.(1) ................................................................
48,472,569
AXA LBO Fund IV FCPR(2) ................................26,167,103
Percentage of
share capital(3)
46.2%
25.0%
(1)
A vehicle wholly owned by funds advised by Permira Asesores,
S.L. or affiliated entities (such funds, the “Permira Funds”).
Permira IV Continuing LP2 directly holds 68.42% of the share
capital Luxgoal 3 S.à r.l.
(2)
A fund managed by Ardian.
(3)
Total share capital reflects the issuance of 4,878,049 Shares by the
Company, which Shares are being sold in the Offering.
The summary financial information as of December 31, 2013 and for
the nine months ended December 31, 2013 and 2012, as of and for
the years ended March 31, 2013 and 2012 and as of March 31, 2011
and for the period from February 14, 2011 to and including March
31, 2011 presented below has been derived from:
•
the consolidated financial statements of the Company and its
subsidiaries as of December 31, 2013 and for the ninemonth periods ended December 31, 2013 and December 31,
2012, respectively (the “Consolidated Interim Financial
Statements”), which are unaudited;
•
the consolidated financial statements of the Company and its
subsidiaries as of and for the years ended March 31, 2013
and March 31, 2012, respectively (the “Consolidated Annual
Financial Statements”), which have been audited by Deloitte
Audit S.à r.l., our independent auditors; and
•
the unconsolidated financial statements of the Company as
of March 31, 2011 and for the period from February 14,
2011 to and including March 31, 2011 (the “Unconsolidated
2011 Financial Statements”), which have been audited by
Deloitte Audit S.à r.l., our independent auditors.
As the following summary financial information has been derived
from, and is not fully reflecting, the Consolidated Interim Financial
Statements, the Consolidated Annual Financial Statements and the
Unconsolidated 2011 Financial Statements, it is by its nature
incomplete.
6
Consolidated Income Statement Data
For the nine months ended
December 31,
2013
2012
For the year ended
March 31,
2013
(unaudited)
2012
(audited)
(in thousand €)
Revenue ........................................................................................
Operating profit/(loss) ...................................................................
Financial and similar income and expenses ....................................
Profit/(loss) before taxes ................................................................
Income tax ....................................................................................
Profit and loss attributable to the parent company ..........................
355,957
49,502
(46,953)
2,549
(11,677)
(9,128)
355,698
54,869
(45,515)
9,322
(7,212)
2,178
479,549
63,360
(83,141)
(19,781)
(3,617)
(23,330)
423,543
15,863
(72,356)
(56,493)
(7,763)
(64,256)
Consolidated Statement of Financial Position Data
As of
March 31,
As of
December 31,
2013
2013
(unaudited)
2012
(audited)
(in thousand €)
Assets:
Non-current assets ..........................................................
Current assets ................................................................................
Total Assets..................................................................................
1,206,347
167,046
1,373,393
1,219,494
281,478
1,500,972
1,236,940
270,913
1,507,853
Equity and liabilities:
Shareholder’s equity (parent company) ..........................................
Non-current liabilities ....................................................................
Current liabilities...........................................................................
Total Equity and Liabilities.........................................................
366,171
715,046
292,176
1,373,393
376,609
705,986
418,377
1,500,972
387,228
680,929
439,696
1,507,853
Consolidated Cash Flow Statement Data
December 31,
2013
2012
For the year ended
March 31,
2013
(unaudited)
2012
(audited)
(in thousand €)
Consolidated loss for the year ...................................................
Net cash from operating activities .............................................
Net cash flow from/(used) in investing activities .......................
Net cash flow from/(used) in financing activities.......................
(9,128)
(13,236)
(28,395)
(30,882)
2,178
16,128
(12,420)
(43,532)
(23,330)
107,484
(18,335)
(50,413)
(64,256)
95,929
(420,121)
370,738
Net increase/(decrease) in cash and cash equivalent ..............
Cash and cash equivalents at beginning of period ......................
Effect of foreign exchange rate changes ....................................
Cash and cash equivalents at end of period ...........................
(72,513)
159,157
(1,481)
85,163
(39,824)
119,346
526
80,048
38,736
119,345
1,074
159,155
46,546
72,022
778
119,346
Cash at the closing
Cash .........................................................................................
89,649
87,035
159,201
119,443
7
December 31,
2013
2012
For the year ended
March 31,
2013
(unaudited)
2012
(audited)
(in thousand €)
Bank facilities and overdrafts....................................................
(4,486)
85,163
(6,987)
80,848
(46)
159,155
(97)
119,346
Unconsolidated 2011 Profit and Loss Account Data
For the
period from
February 14,
2011 to and
including
March 31,
2011
(audited)
(in €)
Charges
Value adjustments in respect of
Formation expenses and tangible and intangible fixed assets(1) ............................................................
Other operating charges(2) ......................................................................................................................
Interest payable and other financial charges
Other interest and charges ..................................................................................................................
Other tax not shown under the above heading ........................................................................................
Total Charges ......................................................................................................................................
Income
Loss for the period.................................................................................................................................
Total Income ........................................................................................................................................
141
16,082
150
1,575
17,948
17,948
17,948
(1) Relates to amortization of formation expenses by 20% in the period from February 14, 2011 to and including March 31, 2011 by 20% from
€1,407 as of February 14, 2011 to €1,266 as of March 31, 2011.
(2) Other operating charges relates to the Company’s ordinary costs of conducting its business.
Unconsolidated 2011 Balance Sheet Data
As of
March 31,
2011
(audited)
(in €)
Assets
Formation expenses ...............................................................................................................................
Fixed assets
Financial assets
Shares in affiliated undertakings(1) .................................................................................................
Current assets
Cash at bank, cash in postal cheque accounts, cheques and cash in hand .............................................
Total Assets..........................................................................................................................................
8
1,266
31,000
1,443
33,709
As of
March 31,
2011
(audited)
(in €)
Liabilities
Capital and reserves
Subscribed capital(2) ...........................................................................................................................
Loss for the financial period ...............................................................................................................
Non-subordinated debt
Trade creditors
due in one year or less ...................................................................................................................
Total Liabilities ...................................................................................................................................
34,000
(17,948)
16,052
17,657
33,709
(1) Relates to the holding of 3,099,997 ordinary shares in, representing 99.99% of share capital of, Geo Travel Finance S.C.A.
(2) Relates to the Company’s share capital, which as of March 31, 2011 was €34,000, split into 3,400,000 shares with a par value of €0.01 each.
Unconsolidated 2011 Cash Flow Statement Data
For the period
from
February 14, 2011
to and including
March 31, 2011
(audited)
(in €)
Net Profit / (Loss) ............................................................................................................................
Value adjustment in respect of formations expenses, tangibles and intangible fixed assets ..................
Changes in working capital ................................................................................................................
Net cash from operating activities ...................................................................................................
Acquisitions of financial assets ..........................................................................................................
Net cash flow from / (used) in investing activities ...........................................................................
Proceeds of issue of shares (net of formation expenses) ......................................................................
Net cash flow from / (used) in financing activities ..........................................................................
Net increase / (decrease) in cash and cash equivalents ........................................................................
Cash and cash equivalents at beginning of period ...............................................................................
Cash and cash equivalents at end of period ....................................................................................
9
(17,948)
141
17,657
(150)
(31,000)
(31,000)
32,593
32,593
1,443
–
1,443
Significant changes
to the issuer’s
financial condition
and operating
results.
The following is a summary description of significant changes in the
Company’s financial condition and operating results, as measured by
“Bookings” (which refers to the number of transactions under the
agency model and the principal model as well as transactions made
via our white label distribution and sourcing partners; one booking
can encompass one or more products and one or more passengers),
Revenue Margin, “Recurring EBITDA” (which refers to profit/(loss)
before financial and similar income and expenses, income tax,
depreciation and amortization and profit/loss on disposals of noncurrent assets, certain share-based compensation, expenses related to
the Combination and other income and expense items which are
considered by management to not be reflective of our ongoing
operations), for the nine months ended December 31, 2013 and 2012
and the years ended March 31, 2013 and 2012. Bookings, Revenue
Margin and Recurring EBITDA are non-generally accepted
accounting principles measures, which are not accounting measures
as defined by IFRS. Each has limitations as an analytical tool, and
you should not consider them in isolation, or as a substitute for, or
superior to, an analysis of our results as reported under IFRS.
Our key operating metrics and results of operations for the year
ended March 31, 2012 include the results of the Opodo group for
nine months only.
Significant Changes since December 31, 2013
There has been no significant change in the financial or trading
position of the Company since December 31, 2013.
Comparison of the nine months ended December 31, 2013 and
2012
Bookings increased by 1.0 million, or 15.3%, to 7.3 million in the
nine months ended December 31, 2013, from 6.3 million in the nine
months ended December 31, 2012, principally due to the significant
increase in Bookings following the migration of the multiple former
separate operational platforms into one unified platform (the “One
Platform”).
Revenue Margin increased by €43.8 million, or 16.3%, to €311.9
million in the nine months ended December 31, 2013, from €268.1
million in the nine months ended December 31, 2012, principally due
to the significant increase in Bookings by 9.4%, as Revenue Margin
per Booking remained fairly stable over the period.
Recurring EBITDA increased by €8.7 million, or 10.8%, to €89.1
million in the nine months ended December 31, 2013 from €80.3
million in the nine months ended December 31, 2012, principally due
to the increase in Revenue Margin. This was partly offset by higher
marketing expenditures and merchant costs principally driven by
tactical marketing measures to increase our growth and further
increased expenditures in respect of our operating infrastructure, in
particular higher IT and personnel costs to support our growth
10
strategy.
Comparison of the years ended March 31, 2013 and 2012
Bookings increased by 1.0 million, or 12.9%, to 8.7 million in the
year ended March 31, 2013 from 7.7 million in the year ended March
31, 2012, principally due to the acquisition by a subsidiary of the
Company of 100% of the share capital of Opodo from Amadeus IT
Group, S.A. (the “Opodo Acquisition”) as well as increased sales of
“Direct Connect” (which refers to proprietary technology we use to
distribute certain network and low-cost carrier flight products without
the intermediation of a global distribution system or “GDS”) flight
products (reflecting the continued trend towards an increasing
proportion of Direct Connect flights in our product mix), “multi-GDS
flight products” (which refers to products whereby the components
(e.g., the outbound flight and the inbound flight) are sourced via
different GDSs) and “net fare flight products” (which refers to flight
products the fares of which are negotiated with airlines). Our
geographical expansion into new markets (39 countries as of March
31, 2013 compared to 29 countries as of March 31, 2012) and higher
volumes of travel products sold in certain regions, in particular in
France, the United Kingdom, the Nordics (albeit from a relatively
low base in the Nordics) and, to a lesser extent, in Italy. The increase
in Bookings in the year ended March 31, 2013 was partly offset by
lower sales in Spain and Germany, in particular in Spain, reflecting
lower consumer demand principally due to adverse economic
conditions in those countries.
Revenue Margin increased by €53.3 million, or 16.7%, to €373.0
million in the year ended March 31, 2013, from €319.7 million in the
year ended March 31, 2012, principally due to the Opodo
Acquisition, as well as the higher sales volumes as described above
under “—Bookings” and a higher average Revenue Margin per
Booking. Our higher average Revenue Margin per Booking was
principally a result of higher service fees and insurance revenue from
our customers despite an unfavorable change in product mix
reflecting an increased proportion of Direct Connect flights compared
to flights sourced via GDSs. In our flight business, Revenue Margin
per Booking increased by 4.6% from €36.7 in the year ended March
31, 2012 to €38.4 in the year ended March 31, 2013. Advertising and
other revenue remained broadly flat over the period.
Revenue Margin in the year ended March 31, 2013 was adversely
affected by lower airline commissions on flight products and a lower
proportion of sales of charter flights which carry a higher margin than
our “network carrier” (which refers to an airline which typically has
an international route network and actively markets connecting
flights via airline hub airports and provides the transfer services for
passengers and their baggage) or “low-cost carrier” (which refers to
an airline with a lower operating cost structure than competitors that
generally offers lower ticket fares and limited services, often
charging for extra services like food, priority boarding, seat
allocation and baggage) flight products. The increase in sales of
Direct Connect flight products (partly as a result of customers
11
looking for cheaper flight options as a result of the adverse economic
conditions in Europe) contributed to the growth of Bookings but did
not cause a proportional increase in our Revenue Margin because
Direct Connect flight products provide a lower average Revenue
Margin per Booking as a result of no supplier commissions being
paid and no GDS incentives being received, in most cases, on Direct
Connect flight products.
Recurring EBITDA increased by €13.0 million, or 13.6%, to €108.4
million in the year ended March 31, 2013 from €95.4 million in the
year ended March 31, 2012, principally due to the Opodo Acquisition
and to the higher Revenue Margin achieved in the year ended March
31, 2013. This increase was partly offset by higher marketing
expenditures and merchant costs principally driven by increased
tactical marketing measures to increase our growth and further
increased expenditures in respect of our operating infrastructure, in
particular on our common IT platform, call centers and higher
personnel costs to support our growth strategy.
B.8.
Selected key proforma financial
information.
Not applicable. The prospectus does not contain pro-forma financial
information.
B.9.
Profit forecasts or
estimates.
Not applicable. The prospectus does not contain profit forecasts or
estimates.
B.10.
Any qualifications in
the audit report on
the historical
financial
information.
Not applicable. There are no qualifications in the auditor’s report on
historical financial information.
B.11.
Explanation of
insufficiency of the
issuer's working
capital.
Not applicable.
The Company is of the opinion that it has sufficient working capital
in that it believes it has the ability to access cash and other available
liquid resources in order to meet its payment obligations falling due
within the 12-month period following the date of the prospectus.
C. – Securities
C.1.
C.2.
Type and class of the
securities being
offered and/or
admitted to trading,
including any
security
identification
number.
The securities being admitted to trading are ordinary shares of the
Company (the “Shares”).
Currency of the
Euro
All Shares carry the same rights.
The ISIN for the Shares is LU1048328220. The Common Code for
the Shares is 104832822.
12
securities issue.
C.3.
Number and par
value of the shares
issued and fully paid
in, and issued but
not fully paid in.
The Company has an issued share capital of €10,487,804.90,
consisting of a single class representing 104,878,049 Shares, each
such Share with a nominal value of €0.10 and fully paid.
C.4.
Description of the
rights attached to
the securities.
Each Share shall be entitled to one vote at all general meetings of the
shareholders. There are no restrictions on voting rights. All the
Shares carry full dividend rights.
C.5.
Restrictions on the
free transferability
of the securities.
Not applicable. Pursuant to the Company’s articles of incorporation,
there are no restrictions on the transferability of the Shares. (With
respect to any contractual restrictions on transferability, please see
“—Lock-up agreements” in item E.5. below.)
C.6.
Admission to trading
on a regulated
market.
We have applied for the admission to trading of the Shares on the
Spanish Stock Exchanges (the “Admission to Trading”) and for the
quotation of the Shares on the Automated Quotation System (“AQS”)
of the Madrid, Barcelona, Bilbao and Valencia stock exchanges
(the “Spanish Stock Exchanges”).
C.7.
Description of
dividend policy.
We do not currently intend to pay a dividend on our Shares in the
foreseeable future because based on the Company’s profile and
strategy we expect to reinvest our near-term future earnings and cash
generation in initiatives to grow the business or for purposes of
deleveraging.
Key risks that are
specific to the Issuer
or its industry.
The key risks that are specific to us, our business, the industry in
which we operate and the Shares are the following:
D. – Risks
D.1.
Risks Related to the Travel Industry
•
Demand for our products is dependent on the travel
industry, which may be materially affected by general
economic conditions and other factors outside our control.
Declines or disruptions in the travel industry could
adversely affect our business, financial condition and results
of operations.
•
Our business could be adversely affected by the occurrence
of events affecting travel safety, such as natural disasters
and political and social instability, which are outside our
control.
•
Our business, financial condition and results of operations
could be adversely affected if one or more of our major
suppliers, such as airlines, suffers a deterioration in its
13
financial condition or restructures its operations.
•
Our businesses are highly regulated and a failure to comply
with current laws, rules and regulations or changes to such
laws, rules and regulations and other legal uncertainties,
may adversely affect our business, financial condition and
results of operations.
•
Our business requires us to obtain certain licenses or
accreditations, and our accreditation with the International
Air Transport Association (“IATA”) is critical to our
business.
•
Our business experiences seasonal fluctuations and
comparisons of sequential quarters’ results may not be
meaningful.
•
Our business is influenced by the level of Internet
penetration and a slowing in the growth of Internet
penetration, or a fall, could adversely affect our growth
prospects and our business, financial condition and results of
operations.
Risks Related to Our Business
•
We operate in an increasingly competitive environment, and
we are subject to risks relating to competition that may
adversely affect our performance.
•
If we do not continue to innovate and provide tools that are
useful to travelers, we may not remain competitive, and our
revenues and operating results could suffer.
•
We rely on information technology to operate our business
and maintain our competitiveness, and any failure to adapt
to technological developments or industry trends could harm
our business.
•
If we are not able to keep up with rapid technological
changes or fail to address the challenges presented by recent
trends in consumer adoption and use of mobile devices, our
business could be adversely affected.
•
A substantial portion of our revenue is generated by our
flight activities. Changes in customer patterns with respect
to these products may adversely affect us.
•
A significant proportion of our business is in France and, to
a lesser extent, Spain and Italy and elsewhere in Europe.
Difficult macroeconomic circumstances in Europe, in
particular France, Italy or Spain, could cause a decline in the
demand for travel products and adversely affect our results
of operations.
14
•
Our business depends on the quantity of travel products
made available to us by, and our relationships with, our
suppliers and supplier intermediaries, particularly GDSs,
and a decrease in the products we can sell or an adverse
change in these relationships or our inability to enter into
new relationships could negatively affect our access to
travel offerings and have a material adverse effect on our
business, financial condition and results of operations.
•
We do not have relationship agreements with certain
suppliers, including ones whose products we sell, and
certain of such suppliers have sought to block our sale of
their products using legal and technical means or otherwise
influence or restrict how we distribute their products.
•
Our ability to charge service fees in the future may be
limited.
•
A substantial portion of our revenue is derived from
commissions, incentive payments and fees negotiated with
our travel suppliers and supplier intermediaries; any
reductions or eliminations of such commissions and
payments could adversely affect our business, financial
condition and results of operations.
•
Competition for advertising and metasearch revenue is
intense and may adversely affect our ability to operate
profitably.
•
Failure to effectively complete the integration of middleand back-office functions that support our eDreams group,
Opodo group and GoVoyages group operations could have a
material adverse effect on our financial condition and results
of operations.
•
We may not be successful in executing initiatives to adopt
new business models and practices or in otherwise
implementing our growth strategies, including implementing
any strategic transactions such as mergers, acquisitions and
joint ventures, and integrating any acquired businesses.
•
We rely on the value of our brands, and any failure to
maintain or enhance customer awareness of our brands
could have a material adverse effect on our business,
financial condition and results of operations. In addition, the
costs of maintaining and enhancing our brand awareness are
increasing and the strength of our brands is directly related
to our cost of customer acquisition.
•
Our business could be negatively affected by changes in
search engine algorithms and search engine relationships.
•
We are exposed to risks associated with payment fraud.
•
Our international operations involve additional risks and our
15
exposure to these risks will increase as we further expand
our international operations.
•
In certain of our business lines, such as in our charter flight
business, we bear inventory risk and/or bear the risk of
default by our supplier, which could adversely affect our
business.
•
We rely on third parties for certain services and systems,
and any disruption or adverse change in their businesses
could have a material adverse effect on our business.
•
System interruption and lack of redundancy may cause us to
lose customers or business opportunities.
•
We rely on the performance of highly skilled personnel and
our ability to attract and retain executives and other
qualified employees is crucial to our results of operations
and future growth. In addition, any significant disruption in
our workforce or the workforce of our suppliers or thirdparty service providers could adversely affect us.
•
We are, and may be in the future, involved in various legal
proceedings, the outcomes of which could adversely affect
our business, financial condition and results of operations.
•
We may not be able to protect our intellectual property
effectively from copying and use by others, including
current or potential competitors.
•
Claims by third parties that we infringe their intellectual
property rights could result in significant costs and
adversely affect our business and financial condition.
•
Our processing, storage, use and disclosure of personal data
could give rise to liabilities as a result of governmental
and/or industry regulation, conflicting law requirements and
differing views of personal privacy rights, and we are
exposed to risks associated with online commerce security.
•
Our business and financial performance could be negatively
impacted by adverse tax events.
Risks Related to Our Financial Profile
•
Our statement of financial position includes very significant
amounts of goodwill and other intangible assets. The
impairment of a significant portion of these assets would
negatively affect our reported results of operations and the
equity reflected on our statement of financial position, and
may affect our ability to pay dividends.
•
Our significant leverage could affect our financial position
and results and our ability to operate our business and raise
16
additional capital to fund our operations.
D.3.
Key risks that are
specific to the
securities.
•
We are subject to restrictive debt covenants that may limit
our ability to finance our future operations and capital needs
and to pursue business opportunities and activities.
•
We will require a significant amount of cash to meet our
debt obligations and to sustain our operations, which we
may not be able to generate or raise. Our ability to generate
cash and access capital markets depends upon many factors,
some of which are beyond our control.
•
We are exposed to risks associated with currency
fluctuations.
Risks Related to our Principal Shareholders and the Shares
•
The strategic interests of each of the Ardian Funds and the
Permira Funds, which will remain our principal
shareholders, may, from time to time, differ from, and
conflict with, our interests and the interests of our other
shareholders.
•
The market price of the Shares may be volatile and may
decline regardless of our actual operating performance.
•
The market price of the Shares and/or our ability to raise
capital through a future offering of Shares may be adversely
affected if our principal shareholders, or other shareholders,
sell substantial amounts of Shares or by the perception that
such sales could occur.
•
We may in the future seek to raise capital by conducting
equity offerings, which may dilute investors’ shareholdings.
•
Our ability to pay dividends to shareholders may be
constrained.
•
Shareholders in countries with currencies other than the euro
may face additional investment risk from exchange rate
fluctuations in connection with their holdings of the Shares.
•
There is no established trading market for the Shares, and
there can be no assurance that any active trading market will
develop.
•
You may be unable to effect service of process on us or
members of our board of directors or management in the
United States or to enforce judgments obtained in U.S.
courts for U.S. securities laws violations.
•
Shareholders may not be able to exercise their preferential
subscription rights to acquire further shares and other rights
attached thereto.
17
•
Possible withholding under the U.S. Internal Revenue Code
and Treasury regulations thereunder from 2017 may be
imposed.
•
There can be no assurance that the Company will not be a
passive foreign investment company (a “PFIC”) for any
taxable year, which could result in adverse U.S. federal
income tax consequences to U.S. investors in our Shares.
E. – Offer
E.1.
Total net proceeds
and estimated total
expenses of the offer.
Upon the delivery of the Shares sold pursuant to an offering not
qualifying as an offer to the public for the purposes of
Directive 2003/71/EC of 36,707,313 Shares by the Company and the
Selling Shareholders (as defined in the following paragraph below)
(the “Offering”) against payment of the purchase price to the
accounts of purchasers thereof (the “Settlement”), which is expected
to occur on or about April 10, 2014, we expect to obtain proceeds
from the sale of the new Shares in the Offering by us of
approximately €50 million.
We will not receive any of the proceeds from the sale of the Shares
by our shareholders that are selling Shares in the Offering (the
“Selling Shareholders”).
We estimate the total expenses of the Offering and the Admission to
Trading to be €12.6 million, including underwriting fees and
commissions relating to the Shares sold by us pursuant to the
Offering (assuming full payment of the Underwriters’ discretionary
fee), which we will pay with cash on hand. Accordingly, the effective
net proceeds of the Offering to us will be approximately €37.4
million.
E.2a
Reasons for the
offer, use of
proceeds, estimated
net amount of the
proceeds.
We intend to use the €50 million gross proceeds to us from the
Offering to redeem a portion of the €175 million aggregate principal
amount of senior notes issued by Geo Travel Finance S.C.A. on or
after May 1, 2014 to further reduce our indebtedness and interest
expense, and create additional flexibility in our capital structure. We
intend to use approximately €12.6 million of cash on hand to pay
total expenses of the Offering and the Admission to Trading,
including underwriting fees and commissions relating to the Shares
sold by us pursuant to the Offering (assuming full payment of the
Underwriters’ discretionary fee).
E.3.
Description of the
terms and conditions
of the offer.
Not applicable as no offer of the Shares to the public is being made.
Price Range.
Offer Period.
18
Amendments to the
term of the Offering.
Offer Price.
Delivery and
Settlement.
The Shares will be delivered against payment of the issue price
(which relates to the price of the Shares sold pursuant to the
Offering) on the date of the Settlement of the Offering, which is
anticipated to be on or about April 10, 2014, to the accounts of
purchasers through the book-entry facilities of Iberclear as per the
settlement instructions provided by the purchasers of the Offering.
Over-allotment /
Stabilization and
Greenshoe Option
Certain of the Selling Shareholders have granted an option toJ.P.
Morgan Securities plc (on behalf of the Underwriters of the
Offering), which is exercisable within 30 calendar days from the date
the Shares commence trading on the Spanish Stock Exchanges, to
purchase up to 5,506,097 additional Shares to cover over-allotments,
if any, in connection with the Offering. Any such additional Shares
will be sold by such shareholders selling pursuant to the Offering pro
rata to the number of Shares initially sold by them.
Admission to and
Commencement of
Trading.
Application has been made for the Shares to be admitted to trading
on the Spanish Stock Exchanges and quoted on the AQS. Trading of
the Shares on the Spanish Stock Exchanges is anticipated to
commence on or about April 8, 2014.
Underwriters.
Deutsche Bank AG, London Branch, J.P. Morgan Securities plc,
Jefferies International Limited, Banco Santander, S.A. and Société
Générale (taken together, the “Underwriters”).
Deutsche Bank AG, London Branch and J.P. Morgan Securities plc
are referred to as the “Joint Global Coordinators”.
E.4.
Description of any
interest that is
material to the
issue/offer including
conflicting interests.
The Company and each of the Selling Shareholders had an interest in
the Admission to Trading because they are expected to receive upon
Settlementnet proceeds from the Offering.
E.5.
Person or entity
offering to sell the
security.
Lock-up agreements.
We agreed that, without the prior written consent of the Joint
Global Coordinators, which consent shall not be unreasonably
withheld, we will not, during the period commencing on the date
on which the underwriting agreement was signed and ending 180
days following the listing of the Shares on the Spanish Stock
Exchanges, directly or indirectly issue, offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase,
lend or otherwise transfer or dispose of any of our Shares or any
securities convertible into or exercisable or exchangeable for our
Shares, file any registration statement with respect to any of the
19
foregoing or enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of our Shares, subject to
certain exceptions.
Certain of the Selling Shareholders (including Luxgoal 3 S.à r.l.
and AXA LBO Fund IV FCPR) agreed with the Underwriters to
similar restrictions from the date on which the underwriting
agreement was signed and ending 180 days following the listing of
the Shares on the Spanish Stock Exchanges, subject to certain
exceptions.
Each of our chief executive officer, our chief operating officer, our
chief financial officer, our chief technology officer and our chief
marketing officer (taken together, “Senior Management”) agreed
with the Underwriters to similar restrictions from the date on
which the underwriting agreement was signed and ending 360 days
following the listing of the Shares on the Spanish Stock
Exchanges, subject to certain exceptions.
In addition to the lock-up arrangements entered into for the benefit
of the Underwriters, approximately 100 employees of the
Company that are Selling Shareholders entered into with the
Company substantially the same restrictions and subject to
substantially the same exceptions as the lock-up arrangement
entered into by our Senior Management for a period of 360 days
following the listing of the Shares on the Spanish Stock
Exchanges.
The Company also entered into a substantially similar lock-up
arrangement with James Hare, one of our directors, for a period of
180 days following the listing of the Shares on the Spanish Stock
Exchanges.
E.6.
Amount and
percentage of
immediate dilution
resulting from the
offer. In case of a
subscription offer to
the existing holders,
the amount and
percentage of
immediate dilution if
they do not
subscribe to the new
offer.
The existing Shares immediately before completion of the Offering
will be diluted by the issue of Shares in the Offering corresponding to
a nominal value of €487,805. Following the completion of the
Offering, such newly issued Shares will represent 4.7%% of the
Company’s issued and outstanding share capital.
E.7.
Estimate of expenses
charged to the
investor by the
issuer or the offeror.
Not applicable as no offer of the Shares to the public is being
made.
20
RISK FACTORS
An investment in the Shares involves a high degree of financial risk. You should carefully consider all
information in this prospectus, including the risks described below, before you decide to buy any Shares. This
section addresses both general risks associated with the industry in which we operate and the specific risks
associated with our business. If any such risks were to materialize, our business, results of operations, cash flows
and financial condition could be materially and adversely affected, resulting in a decline in the value of the Shares.
Furthermore, this section describes certain risks relating to the investments in the Shares which could also
adversely impact the value of the Shares.
The risks and uncertainties discussed below are those that our management currently views as material, but
these risks and uncertainties are not the only ones that we face. Additional risks and uncertainties, including risks
that are not known to us at present or that our management currently deems immaterial, may also arise or become
material in the future, which could lead to a decline in the value of the Shares and a loss of part or all of your
investment.
This prospectus also contains forward-looking statements that involve risks and uncertainties. Our future
results may be materially impacted by the uncertainties inherent in such forward-looking statements as a result of
various factors, including the risks described below and elsewhere in this prospectus.
Risks Related to the Travel Industry
Demand for our products is dependent on the travel industry, which may be materially affected by general
economic conditions and other factors outside our control. Declines or disruptions in the travel industry could
adversely affect our business, financial condition and results of operations.
Our revenue is directly related to the overall level of travel activity, which is, in turn, largely dependent on
discretionary spending levels. Discretionary spending generally declines during recessions and other periods in
which disposable income is adversely affected. As a substantial portion of travel expenditure, for both leisure (our
principal market) and corporate travelers, is discretionary, such expenditure tends to decline or grow more slowly
during economic downturns. The economic downturn that began in 2008 increased unemployment and reduced the
financial capacity of both leisure and corporate travelers on a global basis, as well as in the markets in which we
operate. The global recession and the disruption of the financial markets relating in part to concerns over the
financial condition of certain Eurozone countries and their financial institutions, and the resulting uncertainty over
global macroeconomic conditions, particularly in certain of the core markets in which we operate, has affected and,
if it were to continue, could again affect demand for our products. Although we expect the European travel and
tourism market to grow over the long term, recent years showed a slowed growth in overall leisure and travel
spending in Europe as well as decreased demand in certain southern European markets. Further economic and
financial weakness and uncertainty may result in lower spending on our products by both leisure and corporate
travelers, in Europe or elsewhere, which may have a material adverse impact on our business, financial condition
and results of operations.
Our business could be adversely affected by the occurrence of events affecting travel safety, such as natural
disasters and political and social instability, which are outside our control.
The travel industry is sensitive to safety concerns. Our business could be adversely affected by the occurrence
of travel-related accidents, such as airplane crashes (whether caused by human or technical defaults or otherwise),
incidents of actual or threatened terrorism, political instability or conflict or other events whereby travelers become
concerned about safety issues, including as a result of unusual weather patterns or natural disasters (such as
hurricanes, tsunamis, earthquakes or volcanic ash clouds), potential outbreaks of epidemics or pandemics (such as
influenza, H1N1 virus, Avian Flu or Severe Acute Respiratory Syndrome outbreaks) or other human or natural
disasters (such as those that may result in exposure to radiation). For example, Hurricane Sandy disrupted travel in
the northeastern United States in late 2012, the major earthquake, tsunami and nuclear disaster that struck Japan in
early 2011 had a material adverse effect on the travel industry throughout Asia, and the volcanic ash cloud over
parts of Europe in 2010 had a very significant adverse impact on the European travel industry. In addition, political
and social instability in Africa and the Middle East, such as in Tunisia, Libya, Egypt and Syria since late 2010, and
in Senegal since 2012, and fears that such instability could deepen or spread, could have a material adverse effect on
21
our business, financial performance and results of operations. Such concerns, or concerns arising from similar events
in the future, are outside our control and could result in a significant decrease in demand for our travel products.
Any such decrease in demand, depending on its scope and duration, together with any other issues affecting travel
safety, could materially and adversely affect our business and financial performance over the short and long term.
The occurrence of such events could result in a decrease in our customers’ appetite to travel and adversely affect our
Moreover, due to the seasonal nature of our business, the occurrence of any of the events described above
during our peak summer or holiday travel seasons, or when customers are considering booking their summer
vacations, could exacerbate or disproportionately magnify the adverse effects of any such event and, as a result,
could materially and adversely affect our business or financial performance.
Our business, financial condition and results of operations could be adversely affected if one or more of our
major suppliers, such as airlines, suffers a deterioration in its financial condition or restructures its operations.
As we are an intermediary in the travel industry, a substantial portion of our revenue is affected by the fares and
tariffs charged by our suppliers, including airlines, GDSs, hotels and rental car suppliers, and the volume of products
offered by our suppliers. As a result, if one or more of our major suppliers, including airlines, hotel and rental car
suppliers, including in particular our two principal white label sourcing partners on which we are reliant for hotel
bookings and car rentals, suffer a deterioration in its financial condition or restructures its operations, it could
adversely affect our business, financial condition and results of operations. Accordingly, our business may be
negatively affected by adverse changes in the markets in which our suppliers operate.
In particular, as a substantial portion of our revenue depends on our sales of flight products, we could be
adversely affected by changes in the airline industry, including consolidation or bankruptcies and liquidations, and
in many cases, we will have no control over such changes. Events or weaknesses specific to the flight travel industry
that could negatively affect our business include air fare fluctuations, airport, airspace and landing fee increases, seat
capacity constraints, removal of destinations or flight routes, travel-related strikes or labor unrest, imposition of
taxes or surcharges by regulatory authorities and fuel price volatility. While decreases in prices for flights and other
travel products generally increase demand, such price decreases generally also have a negative effect on the
commissions we earn, particularly in our non-flight business, which is more dependent on commissions than our
flight business. The overall effect of a price increase or decrease is therefore uncertain.
In the past several years, several major airlines have filed for bankruptcy, recently exited bankruptcy, or
discussed publicly the risk of bankruptcy. In addition, some of these airlines have merged, or discussed merging,
with other airlines. If one of our major airline suppliers merges or consolidates with, or is acquired by, another
company that either does not participate in the GDS systems we use, or that participates in such systems but at
substantially lower levels, the surviving company may elect not to make supply available to us or may elect to do so
at lower levels than the previous supplier. Similarly, in the event that one of our major airline suppliers voluntarily
or involuntarily declares bankruptcy and is subsequently unable to successfully emerge from bankruptcy, and we are
unable to replace such supplier, our business would be adversely affected. For example, the consolidation in the
Italian airline sector that has occurred over the past several years, as well as recent bankruptcies of numerous small
airlines in other countries, such as the carrier Spanair in Spain, the state-owned airline Malev in Hungary, Cimber
Sterling in Denmark and Wind Jet in Italy, have resulted in capacity reductions and a decrease in the number of
airline tickets and routes available for booking on our websites. Further consolidation of one or more of the major
airlines, such as the announced merger of American Airlines and US Airways, could result in further capacity
reductions, a reduction in the number of airline tickets available for booking on our website and increased air fares,
which may have a negative impact on demand for travel products.
For a discussion of potential risks related to changes in GDS trends and credit strength, see “—Risks Related to
Our Business—A substantial portion of our revenue is derived from commissions, incentive payments and fees
negotiated with our travel suppliers and supplier intermediaries; any reductions or eliminations of such commissions
and payments could adversely affect our business, financial condition and results of operations”.
22
Our businesses are highly regulated and a failure to comply with current laws, rules and regulations or
changes to such laws, rules and regulations and other legal uncertainties, may adversely affect our business,
financial condition and results of operations.
We operate in a highly regulated industry. Our business and financial performance could be adversely affected
by unfavorable changes in, or interpretations of, existing laws, rules and regulations, or the promulgation of new
laws, rules and regulations applicable to us and our businesses. In particular, any future changes to IATA regulations
or further tightening of the European legislation relating to packaged travel could adversely affect our business. For
example, the amendment of the European Package Travel Directive 90/314/EEC on packaged travel, packaged
holidays and packaged tours proposed by the European Commission in July 2013, if adopted, would extend the
scope of the directive to more dynamic forms of packaged travel, which could increase the costs of conducting our
business and subject us to additional liabilities. See “Regulation”.
There is, and will likely continue to be, an increasing number of laws, regulations and court decisions pertaining
to the Internet and online commerce, which may relate to liability for information retrieved from or transmitted over
the Internet, display of certain taxes, discounts and fees, online editorial and user-generated content, user privacy,
behavioral targeting and online advertising, taxation, liability for third-party activities and the quality of products
and services. For example, in certain jurisdictions where we operate, local regulations impose restrictions on or
prohibit the credit/debit card operations that we can perform in order to protect the privacy and security of personal
information that is collected, processed and transmitted in or from the governing jurisdiction. The growth and
development of online commerce has also recently prompted calls for more stringent consumer protection laws and
more aggressive enforcement efforts by regulatory authorities, including on price transparency, that may impose
additional burdens on online businesses generally, such as increased costs associated with stronger data protection
systems, fines and a loss of competitive advantage as a result of any disclosure related to operations. Such trends are
likely to continue in the future. See also “Risks Related to Our Business—Our processing, storage, use and
disclosure of personal data could give rise to liabilities as a result of governmental and/or industry regulation,
conflicting law requirements and differing views of personal privacy rights, and we are exposed to risks associated
with online commerce security”. We are also currently, and expect in the future will be, subject to legal proceedings
brought by antitrust or competition authorities and other consumer protection organizations, the outcome of which
could have a material adverse effect on our business, financial condition and results of operations. See “Business—
Litigation”.
Our failure to comply with these laws and regulations may subject us to fines, penalties and potential criminal
sanctions, as well as publicity which may be harmful to our reputation. Furthermore, if such laws and regulations are
not enforced equally against our competitors in a particular market, our compliance with such laws and regulations
may put us at a competitive disadvantage vis-à-vis competitors who do not comply with such requirements.
Because of our international operations, the various regulatory regimes to which we are subject may conflict so
that compliance with the regulatory requirements in one jurisdiction may create regulatory issues in another, thereby
making compliance more difficult, increasing the costs of conducting our business. In addition, our business strategy
involves expansion into new geographies, which could have legal, regulatory, including license, or tax requirements
with which we are currently not familiar. Compliance with such requirements will place demands on our time and
resources, and we may nonetheless experience unforeseen and potentially adverse legal, regulatory or tax
consequences.
For further detail on laws and regulation to which we are subject, see “Regulation”.
Our business requires us to obtain certain licenses or accreditations, and our IATA accreditation is critical to
our business.
In some jurisdictions in which we operate, we are required to hold various travel agency and other licenses and
accreditations, and pay certain license fees.
Regulatory authorities have relatively broad discretion to grant, renew and revoke licenses and approvals and to
implement regulations. Accordingly, regulatory authorities could prevent or temporarily suspend us from carrying
on some or all of our activities or otherwise penalize us if our practices were found not to comply with the thencurrent regulatory or licensing requirements or any interpretation of such requirements by the regulatory authority.
For instance, in order to carry out flight booking operations, we are required to obtain IATA accreditation to sell
23
flight tickets of airlines which are IATA members. Our failure to comply with any of these requirements or
interpretations thereof could have a material adverse effect on our operations.
On an annual basis and upon the occurrence of certain events, IATA reviews our financial statements and
operations to determine whether we are in compliance with IATA rules, in particular with respect to our IATA
financial undertakings (including undertakings pertaining to capital resources, working capital and liquidity) and the
level of sales for which we act as full agent of record. If we do not comply with such rules and financial
undertakings, IATA may require us to provide guarantees and/or post performance bonds in order to minimize credit
risk on behalf of airlines. For example, IATA currently requires Group companies operating in certain jurisdictions
to issue guarantees and/or post bonds. Any changes to such guarantee and/or bond requirements could impose a
significant burden on us and in certain circumstances, we may be unable to comply with such obligations and
therefore lose our IATA accreditation. Financial undertakings applied by IATA vary from one jurisdiction to
another and in certain jurisdictions the lack of transparency as to applicable financial undertakings may result in
additional financial guarantees being required. In addition to guarantee requirements, IATA may impose penalties
for non-compliance or, under certain circumstances, take suspension action, or remove us or any or all of our
locations from the IATA agency list. Any such action by IATA could have a material adverse effect on our
operations. In particular, if IATA were to remove us from the IATA agency list, such removal would prevent us
from conducting a large portion of our current operations and could have a material adverse effect on our results of
operations.
For further detail on laws and regulation to which we are subject, see “Regulation”.
Our business experiences seasonal fluctuations and comparisons of sequential quarters’ results may not be
meaningful.
Our revenues and operating results have varied, and we expect will continue to vary, from quarter to quarter.
This is in large part attributable to the fact that our business experiences seasonal fluctuations, which are a function
of seasonal trends for travel products, in particular leisure travel. Because we generate the largest portion of our net
revenue from flight bookings, and this revenue is generally recognized at the time of booking, these trends cause our
revenue to be highest in the periods during which travelers book their vacations. Therefore, our revenues tend to be
lower in the quarter ending December 31 than in other quarters and typically highest in the quarter ending March 31,
corresponding to bookings for the busy spring and summer travel seasons. As a result, sequential quarter-on-quarter
comparisons of our revenue, cash flows and operating results may not be meaningful. In addition, depending on the
year, the Easter holiday season may fall in our first fiscal quarter or in our fourth fiscal quarter of any given financial
year ending March 31. The timing of Easter and other holidays can therefore affect the comparability of our
quarterly and yearly results.
Our business is influenced by the level of Internet penetration and a slowing in the growth of Internet
penetration, or a fall, could adversely affect our growth prospects and our business, financial condition and
We generate our revenue through the online sale of products and online advertising. As a result, our business is
affected by the level of Internet penetration in the countries in which we operate (i.e., the percentage of a country’s
population that are Internet users), and in particular by the online travel penetration in such countries (i.e., the
proportion of travel bookings made through the Internet).
In addition, we continue to seek to expand our international presence and a successful entrance into new
geographies will depend on the level of Internet penetration in such geographies. A slower adaptation of the Internet
as an advertising, broadcast and commerce medium in the countries we enter compared to the countries in which we
currently operate, could adversely affect our growth prospects and results of operations.
Linked to the level of Internet penetration is the level of online travel penetration, defined by PhoCusWright as
the percentage of total gross bookings made online. According to PhoCusWright, the online travel penetration in
Europe increased from 34% in 2010 to 40% in 2012 and is expected to increase to 45% in 2014, and the online
travel penetration in the United States increased from 39% in 2010 to 41% in 2012 and is expected to increase to
43% in 2014. However, there can be no guarantee that online travel penetration will continue to grow or remain at
current levels, and as the substantial majority of our operations are in Europe, a slowing of the growth in online
24
travel penetration in Europe, or a fall, could have an adverse effect on our growth prospects and our business,
Risks Related to Our Business
We operate in an increasingly competitive environment, and we are subject to risks relating to competition that
may adversely affect our performance.
Our businesses, which consist primarily of our travel websites, operate in the highly competitive travel industry.
Factors affecting the competitive success of our businesses include the prices we offer consumers, the availability of
travel supply, brand recognition, our ability to attract new customers at reasonable acquisition costs, customer
service, ease of use, fees charged to travelers, accessibility and reliability.
We compete with a variety of companies, including established and emerging online and traditional sellers of
travel-related services. Currently, these direct competitors include, among others:
•
other online travel agents;
•
travel suppliers, such as airlines, hotel companies and rental car companies, many of which have their own
branded websites, in addition to their physical boutiques;
•
metasearch companies, online portals and search engines; and
•
traditional travel agencies and tour operators.
The expansion of social media websites may also affect the competitive dynamics in our markets in the future.
Online travel agencies: We face competition from other OTAs, such as Expedia/Hotels.com, CTrip,
Orbitz/ebookers.com, Travelocity/lastminute.com, Priceline / Booking.com, Unister, Travix, Wotif, Bravofly and
MakeMyTrip, which in some cases may offer more attractive products for both travelers and suppliers, offer
products on more favorable terms, including lower prices (including as a result of accepting lower operating
margins), increased or exclusive product availability, all-in offers combining airline, hotel and/or car rental products,
absence of fees or unique access to proprietary loyalty programs, such as points and miles, or more favorable
connectivity and inventory. These more favorable terms could make the offerings of other OTAs more attractive to
consumers than ours, in particular if we are not able to match their all-in prices. In new markets into which we are
expanding, there may be incumbent OTAs that are already established in the relevant market.
Travel suppliers: Many airline operators, tour operators, hotel and rental car suppliers, including suppliers with
which we conduct business, have been steadily focusing on increasing online demand on their own websites in lieu
of third-party distributors such as our various websites. For example, various low-cost carriers, which have gained
segment share at the expense of network carriers (see “Industry Overview and Market Data”), seek to distribute their
online supply exclusively through their own websites and it is possible that network carriers will engage in similar
exclusivity initiatives through their own websites. In addition, some travel suppliers deliberately do not make
available a part of their products via GDSs, which generally makes distribution of such products by us more
challenging and expensive. Other travel suppliers seek to limit our access to their products in order to create,
distribute and promote on specific distribution channels custom-made offers based on their own products. In the
context of a relationship agreement with a travel supplier, sometimes we agree to such restrictions, and where there
is no relationship agreement, there can be no guarantee our Direct Connect technology will enable us to access such
products. See also “—We do not have relationship agreements with certain suppliers, including ones whose products
we sell, and certain of such suppliers have sought to block our sale of their products using legal and technical
means” and “Business—Litigation”.
In addition, suppliers who sell on their own websites may offer products and services on more favorable terms,
including lower prices, increased or exclusive product availability, all-in offers combining airline, hotel and/or car
rental products, absence of fees or unique access to proprietary loyalty programs, such as points and miles, which
could make their offerings more attractive to consumers than ours. For example, should airline operators decrease
the service fees charged to travelers for the services and products offered on their own branded websites, this would
increase downward pricing pressure for the products we offer and potentially redirect customers from our websites
to such airlines’ branded websites.
25
Metasearch companies, online portals and search engines: The activities of online travel metasearch sites, such
as Kayak/Swoodoo, Skyscanner, Jetcost, Trivago, Momondo and Qunar, which utilize their search technology to
aggregate travel search results across supplier, online travel and other websites as well as similar services offered by
large online portal and search companies, such as Google and Yahoo! affect the markets in which we operate.
Metasearch companies and search engines generally do not directly compete with us because typically no
bookings are made through their websites. However, metasearch companies and search engines may merge or
otherwise cooperate on preferential terms with OTAs, such as the Kayak/Priceline combination, resulting in a
diversion of bookings to such other OTAs or merged entities on a preferred booking path basis. We believe that the
trend of metasearch companies and OTAs converging has begun and may continue in the future as metasearch
companies seek to facilitate product bookings more directly to increase revenues. In October 2013, we acquired
Liligo, a metasearch company with websites present in 11 countries, with a view to integrating Liligo’s technology
into our existing business and increasing our advertising and meta click-out revenue. However, the acquisition may
not deliver the expected results. Several of our metasearch competitors have larger resources than we have and
different technology from ours and, accordingly, we may not be able to effectively compete to earn metasearch
revenue. See also “—We may not be successful in executing initiatives to adopt new business models and practices
or in otherwise implementing our growth strategies, including implementing any strategic transactions such as
mergers, acquisitions and joint ventures, and integrating any acquired businesses”. In addition, some of our existing
metasearch partners may view our Liligo Acquisition as a strategic concern or threat, which could induce them to be
less inclined to continue our relationship with them.
In addition, metasearch companies and search engines act as competition enhancers, thereby increasing
downward pricing pressure on the products that we offer, and may redirect our potential customers to our direct
competitors’ websites. We increasingly receive a large number of requests from such companies, which places a
significant strain on our information technology systems. In addition, in certain cases, these search engines charge us
each time a user accesses our website through their own, even if such users do not purchase any products from us. If
a substantial number of users visit our websites without making purchases, our expenses could increase considerably
compared to our Revenue Margin. Furthermore, metasearch companies apply certain technical criteria that could
result in such companies not displaying eDreams ODIGEO travel products in their search results, which would also
be the case if their payment structure made it unattractive for us to subscribe to their service. In most cases, we do
not have long-term contracts with metasearch companies and we may not be able to renew our contracts when they
expire on favorable terms or at all, which could adversely impact our ability to access the users of such metasearch
companies. In addition, with some metasearch companies, we do not have any contract at all, and our collaboration
is on a purely ad hoc basis. There can be no assurance that our relations with such metasearch companies will
continue in the future.
Furthermore, large established internet search engines with substantial resources, expertise and brand
recognition in developing online commerce and facilitating internet traffic are creating, and we believe intend to
continue to create, inroads into the online travel channel, as evidenced by recent technological innovations and
proposed and actual acquisitions by companies such as Google or Microsoft. For example, in 2011, following its
July 2010 acquisition of ITA Software, a U.S.-based flight information software company, Google launched
“Google Flights” in the United States, an enhanced metasearch flight tool offering access to a large inventory of
travel products, including from GDS operators, but excluding OTA search results, directly on its search engine.
Google Flights was partially launched in Europe in 2013 and, despite Google’s agreement in February 2014 to
comply with certain requirements against the background of antitrust proceedings against Google pending before the
European Commission, there can be no assurance that this service or similar services will not be rolled out in Europe
or in other markets in which we operate. These activities could result in more competition from supplier websites
and higher customer acquisition costs for third-party sites such as ours, which could have a material adverse effect
on our business, financial condition and results of operations.
Social media websites and mobile platform travel applications: In recent years, social media websites, such as
Facebook.com (“Facebook”), and mobile platforms, including smartphones and tablet devices, such as the iPhone
and iPad, have emerged and are growing rapidly. The emergence of mobile platforms has led to increasing use by
consumers of standalone mobile applications or “apps” to research and book travel. In addition, Facebook has
launched enhanced search functionality for data included within its website, which may in the future develop into
alternative research resources for travelers. See also “—If we are not able to keep up with rapid technological
changes or fail to address the challenges presented by recent trends in consumer adoption and use of mobile devices,
our business could be adversely affected”.
26
In addition, social media websites may also introduce new dynamics into the competitive landscape. For
example, with the emergence of social media, lack of customer satisfaction may more easily be shared with users of
social media websites and may ultimately be spread among a very large number of actual and potential readers,
without our having any means of controlling the dissemination of, or responding to, such unfavorable customer
reviews. Negative publicity may significantly harm our reputation in the markets in which we operate.
Some of our current and potential competitors, including large traditional travel service providers, have longer
operating histories, larger customer bases, greater brand recognition, greater access to travel inventories and/or
significantly greater financial, marketing, personnel, technical and other resources than we do. See also “—If we are
not able to keep up with rapid technological changes or fail to address the challenges presented by recent trends in
consumer adoption and use of mobile devices, our business could be adversely affected”.
If we do not continue to innovate and provide tools that are useful to travelers, we may not remain competitive,
and our revenues and operating results could suffer.
Our success depends on our continued innovation and our ability to provide features that make our websites and
mobile apps user-friendly for travelers. Our competitors are constantly developing innovations in online travelrelated products and features.
Our technology needs to keep up with changes in our suppliers’ inventory. For example, increasingly, travel
products are sold on an unbundled basis (where an airline charges for the component parts of a flight (seat type/seat
selection, tax, luggage and so forth) separately. This industry trend affects our Direct Connect products in particular
and requires our technology to keep pace with these new pricing features.
Moreover, the increased use of mobile devices could enable device companies that have substantial market
shares in the mobile devices industry and that control the operating systems of these devices, such as Apple and
Google’s Android, to compete directly with us. Apple and Google have more experience producing and developing
mobile apps and have access to greater resources than we have. To the extent Apple or Google use their mobile
operating systems or app distribution channels to favor their own travel service offerings, our business could be
adversely affected. To be competitive in the mobile business requires us to develop specific software and
applications under a variety of new platforms and operating systems, which are generally expected by our customers
to offer the same features and to be as easily and intuitively operated as desktop interfaces. If we are not competitive
on this front, we may lose market share as customers increasingly make their bookings on online devices. This poses
significant challenges and requires us to make significant efforts to achieve these goals. For example, we are in the
process of developing an app for Android-based mobile devices, which we currently do not have.
As a result of the above, we must continue to invest significant resources in research and development in order
to continually improve the speed, accuracy and comprehensiveness of our products. If we are unable to continue
offering innovative products, we may be unable to attract additional users or retain our current users, which could
adversely affect our business, results of operations and financial condition.
We rely on information technology to operate our business and maintain our competitiveness, and any failure
to adapt to technological developments or industry trends could harm our business.
We depend on the use of sophisticated information technologies and systems, including customized in-house
technology and systems used to attract customers to our websites, for website front-ends and mobile apps, product
building and pricing, reservations, customer service, internal and external communications, procurement, payments,
fraud detection, administration and reporting. As our operations grow in size, scope and complexity and we continue
to integrate our businesses, we must continuously improve and upgrade our systems and infrastructure to offer an
increasing number of travelers enhanced products, features and functionalities, while maintaining the reliability and
integrity of our systems and infrastructure.
Expanding our systems and infrastructure to meet any projected future increases in business volume may
require us to commit substantial financial, operational and technical resources before those increases materialize,
with no assurance that they actually will. Delays or difficulties in implementing new or enhanced systems may keep
us from achieving the desired results in a timely manner, to the extent anticipated, or at all, and we may also be
unable to devote adequate financial resources to develop or acquire new technologies and systems in the future.
27
If we are not able to keep up with rapid technological changes or fail to address the challenges presented by
recent trends in consumer adoption and use of mobile devices, our business could be adversely affected.
The markets in which we compete are characterized by rapidly changing technology, evolving industry standards,
consolidation, frequent new service announcements, introductions and enhancements and changing consumer
demands. We may not be able to keep up with these rapid changes and our future success also depends on our ability
to adapt our products and infrastructure to meet rapidly evolving consumer trends and demands while continuing to
improve the performance, features and reliability of our service in response to competitive service and product
offerings.
In addition, these market characteristics are heightened by the progress of technology adoption in various markets,
including the continuing adoption of the Internet and online commerce in certain geographies and the emergence
and growth of the use of smartphones and tablets for mobile e-commerce transactions, including through the
increasing use of mobile apps. For example, we believe travel transactions will continue to grow rapidly on mobile
platforms and may gain acceptance on social and flash-sale platforms. As a result, our future success will depend on
our ability to adapt to rapidly changing technologies, to adapt our products to evolving industry standards and to
continually improve the performance, features and reliability of our service in response to competitive service
offerings and the evolving demands of the marketplace. We incur, and expect to continue to incur, substantial
expenditures to modify or adapt our services or infrastructure to those new technologies.
In particular, as a result of the widespread adoption of mobile devices coupled with the improved web browsing
functionality and development of apps available on these devices, we have experienced a significant shift of
business to mobile platforms and our advertising partners are also seeing a rapid shift of traffic to mobile platforms.
Our major competitors and certain new market entrants are increasingly offering mobile apps for travel-related
products and other functionality. In response to these market trends, in 2010, we launched our first applications for
iPhone devices. We estimate that approximately 12% of our flight Orders were made through mobile devices in
December 2013 compared with approximately 6% in December 2012. We believe that mobile bookings present an
opportunity for growth and that it will be increasingly important for us to effectively offer our products through
mobile apps and mobile optimized websites on smartphones and other mobile devices.
The trends in consumer adoption and use of mobile devices also create new challenges for our business. For
example, revenue earned on a mobile transaction may be different to that earned in a typical desktop transaction due
to different consumer purchasing patterns. Furthermore, given the device sizes and technical limitations of mobile
devices, mobile consumers may not be willing to download multiple apps from multiple travel service providers and
instead prefer to use one or a limited number of apps for their mobile travel activity. As a result, the consumer
experience with mobile apps as well as brand recognition and loyalty are likely to become increasingly important.
As a result, we intend to continue to spend significant resources maintaining, developing and enhancing our
websites, including our mobile optimized websites, and our mobile apps and other technology. If we are unable to
continue to rapidly innovate and create new, user-friendly and differentiated mobile offerings and efficiently and
effectively advertise and distribute on these platforms, or if our mobile apps are not downloaded and used by travel
consumers, we could lose market share to existing competitors or new entrants and our future growth and results of
operations could be adversely affected.
Some of our current and potential competitors, including large traditional travel service providers, have longer
operating histories, larger customer bases, greater brand recognition, greater access to travel inventories and/or
significantly greater financial, marketing, personnel, technical and other resources than we do and may be better
placed to exploit rapid technological changes or to address the challenges presented by recent trends in consumer
adoption and use of mobile devices. Our current and potential competitors may develop technology similar to or
better than ours which could result in us losing our competitive advantage over time and negatively affect our
overall competitive position. Increased competition may result in reduced operating margins, as well as loss of
market share, brand recognition and competitiveness, which could have a material adverse effect on our business,
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A substantial portion of our revenue is generated by our flight activities. Changes in customer patterns with
respect to these products may adversely affect us.
A substantial portion of our revenue depends on our sales of flight products and, to a lesser degree, hotel nights
and Dynamic Packages (which are dynamically priced packages consisting of a flight product and a hotel booking
that travelers customize based on their individual specifications by combining select products from different travel
suppliers through us). Our flight business contributed 81% of our Revenue Margin in the nine months ended
December 31, 2013 and 82% of our Revenue Margin in the year ended March 31, 2013. Although we also sell
products such as train tickets, vacation packages, cruises, self-catering accommodation and bus tickets through
certain of our websites, these sales only account for a limited portion of our revenue. Changes in consumer patterns
leading to an increased preference for substitute products, such as train and bus tickets or non-regulated lodging
alternatives such as vacation rentals, could adversely affect us. In particular, high-speed train networks are rapidly
expanding in Europe and have taken segment share from short-haul flights, principally within domestic markets. If
these trends were to continue and we fail to scale our sales of such substitute products to reach sales volumes similar
to our flight and hotel sales volumes, this could have a material adverse effect on our business, financial condition
A significant proportion of our business is in France and, to a lesser extent, Spain and Italy and elsewhere in
Europe. Difficult macroeconomic circumstances in Europe, in particular France, Italy or Spain, could cause a
decline in the demand for travel products and adversely affect our results of operations.
Our operations are principally in Europe, and France is our most important market. In the year ended March 31,
2013 and the year ended March 31, 2012, France, including all Go Volo Bookings for the years ended March 31,
2013 and 2012, accounted for 39.7% and 39.7% of our Bookings, respectively (36.3% and 37.2% for the nine
months ended December 31, 2013 and 2012, respectively, where Go Volo Bookings have been allocated to countries
according to the country of booking and not entirely attributed to France) and 46.8% and 47.3% of our Revenue
Margin, respectively (41.0% and 43.9% for the nine months ended December 31, 2013 and 2012, respectively,
where Go Volo Bookings have been allocated to countries according to the country of booking and not entirely
attributed to France). Accordingly, changes in the demand for travel products in France, including as a result of the
factors discussed above and elsewhere in these risk factors, may have a significant impact on our overall results. In
addition, Italy and Spain are important markets for us and the European economic downturn continues to impact
both economies. In 2013, GDP decreased by 1.9% in Italy (2012: decrease of 2.4%) and is estimated by IHS to
decrease by 1.3 % in Spain (2012: decrease of 1.6%), in each case compared with the prior year, according to
information published by Eurostat (except the IHS estimate). The decrease in GDP and the corresponding
contraction in consumers’ discretionary spending on travel in these countries negatively affected our results of
operations in those markets in 2012 and 2013. Our results of operations may be adversely affected if the difficult
macroeconomic circumstances in these countries or other countries in which we operate cause a sustained or
significant fall in the demand for travel products.
Our business depends on the quantity of travel products made available to us by, and our relationships with,
our suppliers and supplier intermediaries, particularly GDSs, and a decrease in the products we can sell or an
adverse change in these relationships or our inability to enter into new relationships could negatively affect our
access to travel offerings and have a material adverse effect on our business, financial condition and results of
operations.
Our ability to conduct our business generally depends on the quantity of flight seats made available for purchase
by travel suppliers, such as airlines, and supplier intermediaries, and the price at which they offer such seats. Both
parameters are materially affected by factors outside our control, such as prices for jet fuel, government regulation,
taxes or timetable constraints, any of which could lead to reductions in seat supply. Reductions in overall seat supply
could adversely affect the quantity of products we are able to sell and, consequently, our business, financial
An important component of our business success depends on our ability to obtain, maintain and expand
relationships with travel suppliers and supplier intermediaries, which can be difficult. Maintaining and expanding
such relationships is important for our revenue generation, because a substantial portion of our Revenue Margin
(26.6% in the year ended March 31, 2013 and 29.2% in the year ended March 31, 2012) is derived from
commissions, incentive payments and fees negotiated with our travel suppliers, our GDS partners and hotel
aggregators with which we have entered into formal relationships. See also “—A substantial portion of our revenue
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is derived from commissions, incentive payments and fees negotiated with our travel suppliers and supplier
intermediaries; any reductions or eliminations of such commissions and payments could adversely affect our
business, financial condition and results of operations”.
Where we have formal relationships with travel product suppliers, the conditions under which we sell their
products through our websites may require ongoing negotiations to maintain these contracts, which may be timeconsuming, prove unsuccessful and lead to disputes. See “Business—Litigation”. There can be no assurance that
litigations will not prevent some or all of our websites from being able to sell certain travel products in the future. In
certain circumstances, and depending on the terms of any applicable court case or settlement, although we may be
able to access a suppliers’ public website directly, there can be no guarantee that such direct connection will be
legally or technically feasible. Any such access will be subject to the risks described in “—We do not have
relationship agreements with certain suppliers, including ones whose products we sell, and certain of such suppliers
have sought to block our sale of their products using legal and technical means”.
In addition, certain of our formal agreements with airlines limit our ability to access their products in certain
markets or combinations of certain products in certain markets in which they operate their business. For example,
GoVoyages is currently excluded from accessing certain Delta Airlines products.
Although we source our inventory from a variety of suppliers, it is critical for us to maintain our existing
relationships with our GDS partners in order to be able to access a larger inventory of travel products. We also
depend on existing arrangements between suppliers and supplier intermediaries, such as full content agreements
entered into between certain airlines and GDS providers. From time to time, we seek to renegotiate or change the
terms of such existing arrangements in a manner that is beneficial to us, but we may not be successful in obtaining
such beneficial terms and may be required to recognize costs or expenses or pay a penalty in connection with the
termination of existing arrangements. In addition, any amendment or termination of our relationships with GDS
partners or of full content agreements between suppliers and supplier intermediaries could significantly limit our
ability to offer certain flight products to our customers and have a material adverse effect on our business, financial
condition and results of operations. In addition, in certain cases, we rely on a limited number of suppliers for our
supply of certain travel products. A significant reduction on the part of any of our major suppliers of their
participation in our system for a sustained period of time or their complete withdrawal could have a material adverse
effect on our business, financial condition and results of operations.
We also rely on our two principal white label sourcing partners for hotel bookings and car rentals to make their
services available to our customers through our website. We source substantially all of our inventory of hotel rooms
or other accommodations and car rentals from these white label sourcing partners. In general, our arrangements with
our white label sourcing partners do not require them to make available on our website any specific quantity of hotel
room reservations or car rentals, or to make hotel room or accommodation reservations or car rentals available in
any geographic area or at any particular price. Any amendment or termination of our relationships with any of our
white label sourcing partners, as well as inability or unwillingness on the part of any of our white label sourcing
partners to perform its obligations, could significantly limit our ability to offer certain hotel rooms or other
accommodations and car rentals through our website, divert our customers’ demand for our white label sourcing
partners’ products to competitors’ websites and have a material adverse effect on an important revenue stream for
us.
We do not have relationship agreements with certain suppliers, including ones whose products we sell, and
certain of such suppliers have sought to block our sale of their products using legal and technical means or
otherwise influence or restrict how we distribute their products.
We have formal agreements with the three principal GDS providers (note that our agreement with Sabre expired
on December 31, 2013 and we are in the process of negotiating an extension of the agreement in accordance with its
terms) pursuant to which we request information and facilitate bookings by our customers of products distributed by
such GDS providers. In addition, we have formal relationship agreements with many of our airline suppliers
pursuant to which we sell their products by connecting our customers directly to their proprietary inventory systems
using our Direct Connect technology. However, we do not have formal agreements with certain of our suppliers,
including certain low-cost airlines, although we are currently able to use our Direct Connect technology to access
such suppliers’ products by connecting our customers directly to their public websites.
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In the past, some of these travel suppliers with whom we do not have a formal agreement have attempted to
prevent or restrict us from accessing their inventory through both technological and legal means. In particular,
certain airlines are striving for exclusivity of their online supply and have taken steps to prevent us from selling their
products, including legal action against OTAs, including us, to prevent the offering of their products on third-party
websites. See also “Business—Litigation”. Such suppliers have also employed technical means to seek to prevent
OTAs from selling their products through, among other means, changing the configurations of their websites or their
booking processes. For example, Ryanair had until recently installed a technology which prompted customers to
manually type a series of letters in order to make a booking, thereby restricting OTAs from accessing its website via
automated algorithms. Although Ryanair recently removed this technology, there is no guarantee that Ryanair or any
other airlines will not put in place a similar technology in the future, thereby restricting our access to its products. So
far, we have been able to limit the effect of such legal or technical measures, but we cannot guarantee that we will
be able to continue to do so in the future, failure of which could have a material adverse impact on our business,
The development and maintenance of Direct Connect software is technologically challenging. If the desire of
certain suppliers to distribute their products exclusively leads to more airlines developing systems and processes that
prevent third-party booking systems, including ours, from offering real-time availability, this could lead to loss of
connectivity and a consequential loss of bookings by our business.
In addition, IT connections to travel suppliers with whom we do not have a relationship agreement in general
are often less stable and more prone to failure than connections to suppliers with whom we have a relationship
agreement or to GDSs. In the past, our booking platforms have been unable to connect directly to the public
websites of certain suppliers due to technical issues related to connectivity, as a result of which we were unable to
sell that supplier’s travel products for a period of several days. Although we have been able to re-establish
connections in the past, there can be no assurance that we will be able to do so in the future or that any loss of
connectivity will not be for an extended period.
Any failure in such connection or changes in the legal or technical conditions that allow us to access such
supplier’s inventory could harm our reputation with customers and could have a material adverse effect on our
business. In addition, if litigation or technological advancement impedes our ability to offer our customers the
broadest selection of travel options possible, we could lose our competitive advantage in providing the best all-in
fares and a broad range of travel products and our business would be adversely affected.
Our ability to earn service fees in the future may be limited.
Although we have been able to increase service fees for our products, our ability to charge our customers
service fees in the future may be limited due to competition, consumer resistance to paying such service fees,
changes in consumer protection legislation and/or a potential structural market change similar to the one that the
U.S. market has undergone, among other factors. In the U.S. market, where the concentration of travel suppliers is
higher than in Europe and overall market complexity is lower than in Europe, OTA service fees were removed to
create a “level playing field” with respect to prices offered on supplier sites, which traditionally did not levy any
service fees for an online booking. This change adversely affected the overall margins that U.S. OTAs were able to
earn. We believe the inherent complexities of the European markets (multiple language, tax and regulations as well
as the less concentrated airline landscape) provides more scope for us to earn service fees if we are able to continue
to offer attractive all-in prices to our customers, which is and will continue to be critical to our ability to earn service
fees. Reductions in our ability to earn service fees would have an adverse effect on our business, financial condition
A substantial portion of our revenue is derived from commissions, incentive payments and fees negotiated with
our travel suppliers and supplier intermediaries; any reductions or eliminations of such commissions and
payments could adversely affect our business, financial condition and results of operations.
We derive a substantial portion of our Revenue Margin from our relationships with suppliers (26.6% and 28.7%
for the years ended March 31, 2013 and 2012, respectively and 24.7% and 25.8% for the nine months ended
December 31, 2013 and 2012, respectively), in particular, from commissions and incentive payments negotiated
with travel suppliers for bookings made through our websites. We also rely on fees paid to us by GDS partners, in
particular Amadeus, and hotel aggregators, which fees are determined based on various volume measures such as
flight segments (which corresponds to the number of seats sold on each individual flight, whether or not part of a
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multi-flight journey), Bookings or gross bookings. The substantial majority of the revenue we generate from GDSs
is from Amadeus.
Many of the formal agreements we have entered into with travel suppliers and supplier intermediaries are shortterm contracts, providing our counterparties with a right to terminate at short notice or without notice. While in
certain cases we have entered into long-term agreements (in particular in 2011, a 10-year non-exclusive agreement
with GDS service provider Amadeus, which was amended in 2013), no assurances can be given that certain GDS
partners or travel suppliers will not reduce or eliminate compensation or incentives paid to us, attempt to charge
travel agencies for content, credit or debit card fees or other services, or otherwise attempt to change the financial
terms of our agreements, any of which could reduce our revenue and margins, thereby adversely affecting our
Under certain of our agreements with travel suppliers or supplier intermediaries, no sales incentive will be due
to us unless we meet certain minimum sales thresholds or, if we fail to meet such thresholds, we will be liable for a
penalty due to the relevant supplier or supplier intermediary. For example, under our agreement with Amadeus, a
reduced incentive will be due to us by Amadeus if we fail to meet an annual volume target through the Amadeus
GDS and, in that event, we may also be liable for a penalty corresponding to a percentage of the unearned portion of
the signing bonus received from Amadeus upon completion of the Opodo Acquisition (based on the shortfall of
volumes of products sold when compared to the annual target), plus interest. See “Management’s Discussion and
Analysis of Our Financial Condition and Results of Operations—Key Factors Affecting Our Results of
Operations—Changes in revenue sources and product mix—Supplier revenue”. Any repayment in part or in full of
signing bonus may have a material adverse effect on our business, financial condition and results of operations.
To the extent any of our travel suppliers reduces or eliminates the commissions or incentive payments it pays to
us, our revenue may be reduced unless we are able to adequately mitigate such reduction by increasing the service
fees we charge to our customers in a sustainable manner. However, any increase in service fees may also result in a
loss of potential customers. Furthermore, our arrangement with travel suppliers may limit the amount of service fees
that we are able to charge our customers.
In addition, there has been a customer trend towards Direct Connect flight products and away from flight
products sourced from GDSs, which has had an adverse effect on our average Revenue Margin per Booking because
in the case of certain Direct Connects we do not receive commission from travel suppliers or incentives from GDSs,
which are another important revenue stream for us. Although we have been successful in responding to lower
incentives payments (particularly from airlines) by growing our other sources of revenue, there can be no assurance
we will be able to continue to maintain or increase our revenue from customers while remaining competitive.
Competition for advertising and metasearch revenue is intense and may adversely affect our ability to operate
profitably.
Our websites compete for advertising revenue with large Internet portal sites, such as TripAdvisor and social
media websites and mobile platforms that offer listing or other advertising opportunities for travel-related
companies. Several of these market participants have significantly greater financial, technical, marketing and other
resources and large client bases. In addition, we compete with other OTAs (such as Expedia or Priceline),
newspapers, magazines and other traditional media companies that provide offline and online advertising
opportunities. We expect to face additional competition as other established and emerging market participants enter
the online advertising market. Competition could result in reduced margins on our advertising revenue. If we are not
able to compete effectively with current or future competitors as a result of these and other factors, our business
could be materially adversely affected.
We compete for metasearch revenue with large metasearch websites, such as Kayak/Swoodoo, Skyscanner,
Jetcost, Trivago, Momondo and Qunar, as well as Google. We expect to face additional competition if other
established and emerging market participants enter the metasearch market. Competition could adversely affect the
Revenue Margin associated with this service. If we are unable to compete effectively with current or future
competitors as a result of these and other factors, our business could be materially adversely affected.
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Failure to effectively complete the integration of middle- and back-office functions that support our eDreams
Group, Opodo Group and GoVoyages Group operations could have a material adverse effect on our financial
Since the Opodo Acquisition, we have been actively focused on integrating the eDreams, Opodo and
GoVoyages businesses. While the migration of the multiple former separate operational platforms into one unified
platform (the “One Platform”) for the core elements of the flight booking engine was successfully accomplished
(with the exception of Travellink) during the summer of 2013, the implementation of common middle- and backoffice functions such as accounting, IT and operational systems, management information and financial control
systems, marketing and customer service is still ongoing. In addition, the integration of the Dynamic Package
booking engine, the vacation package product and the front-end interfaces are currently in progress. Although we
have made significant progress in these areas, we expect that the integration will continue to require significant time,
expenses and other resources and to pose significant management, administrative and financial challenges, including
regarding cost-effectiveness and additional capital expenditure requirements. Finalizing the integration process may
therefore cause operating difficulties and expenditures that are not currently foreseen. Failure to effectively and
efficiently complete the integration could have a material adverse effect on our financial condition and results of
operations.
We currently operate several middle- and back-office systems, which are connected to each other as well as to
other internal and external systems, through which large sums of money and other data are transferred on a daily
basis. Any interruption, programming or other error with respect to such systems could negatively affect our ability
to collect our receivables when they become due, pay our payables when they become due and/or accurately capture
information important to our management of our business.
We may not be successful in executing initiatives to adopt new business models and practices or in otherwise
implementing our growth strategies, including implementing any strategic transactions such as mergers,
acquisitions and joint ventures, and integrating any acquired businesses.
We continue to seek to adapt our business to remain competitive, including investing in expanding into new
geographies, new businesses such as metasearch, developing distribution channels such as mobile and offering
additional products and options to our customers. These endeavors may involve significant risks and uncertainties,
including distraction of management from current operations, expenses associated with the initiatives and
inadequate return on investments. These initiatives may require significant investments, including changes to our
processes, which could increase our costs. These new initiatives may not be successful.
In addition, we have acquired, or invested in, a number of businesses in the past. For example, in October 2013
we acquired Liligo, a metasearch company, with a view to integrating Liligo’s technology into our existing business
and increasing our advertising and meta click-out revenue. We expect to continue to evaluate potential strategic or
other acquisitions and transactions as part of our growth strategy. There can be no assurance that we will succeed in
implementing this strategy as it is subject to many factors which are beyond our control, including our ability to
identify, attract and successfully execute suitable acquisition opportunities and partnerships. Any transactions that
we enter into could be adverse to our financial condition and results of operations. In particular, acquisitions may
affect our EBITDA margins depending on the acquisition cost and EBITDA contribution of the acquired assets or
entity.
The process of integrating an acquired company, business or technology may create unforeseen operating
difficulties and expenditures. The areas where we face risks include, among others:
•
use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions may limit
other potential uses of our cash, including debt service;
•
amortization expenses related to acquired intangible assets and other adverse accounting consequences,
including changes in fair value of contingent consideration;
•
impairment of goodwill or other intangible assets such as trademarks or other intellectual property arising
from our acquisitions;
33
•
expected and unexpected costs incurred in pursuing acquisitions, including identifying and performing due
diligence on potential acquisition targets that may or may not be successful;
•
difficulties and expenses in assimilating the operations, products, technology, privacy protection systems,
information systems or personnel of the acquired company;
•
challenges relating to the structure of an investment, such as governance, accountability and
decision-making conflicts that may arise in the context of a joint venture or majority ownership investment;
•
impairment of relationships with employees, suppliers, customers and affiliates of our business and the
acquired business;
•
the assumption of known and unknown debt and liabilities of the acquired company;
•
costs associated with litigation or other claims arising in connection with the acquired company;
•
failure to generate adequate returns on our acquisitions and investments, or returns in excess of alternative
uses of capital;
•
failure to successfully implement, or generate benefits from, our venture farm strategy to partner and invest
in small innovative companies with large growth potential; and
•
entrance into markets in which we have no direct prior experience. See “—Our international operations
involve additional risks and our exposure to these risks will increase as we further expand our international
operations”.
We rely on the value of our brands, and any failure to maintain or enhance customer awareness of our brands
could have a material adverse effect on our business, financial condition and results of operations. In addition,
the costs of maintaining and enhancing our brand awareness are increasing and the strength of our brands is
directly related to our cost of customer acquisition.
Our brands, image and reputation constitute a significant part of our value proposition. Our success over the
years has largely depended on our ability to develop our brands and image as leading online travel company across
Europe. As we seek to continue to expand our operations into new geographies as part of our growth strategy,
increasing the awareness, perceived quality and perceived different attributes of our brands and image outside
European borders will be of significant importance to attract and expand the number of travelers that purchase our
products.
Travelers expect that we will provide them with a large selection of quality travel products at low prices, and
this reputation has strengthened our image and brands, fueling our expansion. Any event, such as the poor quality of
products provided by our travel suppliers (over which we have no direct control) and offered through our websites,
that may not meet our customers’ expectations, or the failure to reimburse for products not effectively provided,
could lead to customer complaints, damage our image, reputation or brands and have a material adverse effect on
our business, financial condition and results of operations. Our reputation could also be damaged if customer
complaints or negative reviews of us or our activities were to be exchanged on public social networks’ websites.
In addition, our main brands are key assets of our business and the strength of our brands is directly related to
our cost of customer acquisition. We believe that maintaining and expanding such brands are important aspects of
our efforts to attract and expand our user and advertiser base. Our expenditures to maintain our brands’ value have
been steadily increasing due to a variety of factors. These include increased spending from our competitors, the
increasing costs of supporting multiple brands, expansion into new geographies and products where our brands are
less well known, inflation in media pricing including search engine keywords and the relative traffic share growth of
search engines and metasearch engines. We have spent considerable financial and human resources to date on the
establishment and maintenance of our brands, and we will continue to invest in, and devote resources to, advertising
and marketing, as well as other brand-building efforts to preserve and enhance consumer awareness of our brands.
Some of our competitors use marketing channels we are not familiar with to maintain customer awareness of
their brands. For example, we have historically not used, and have little experience or track record in using,
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television as a means of promoting and marketing our products. Substantially all of our advertising is online. Failure
to use appropriate promotion and marketing channels could adversely affect our business, financial condition and
There is no assurance that we will be able to successfully maintain or enhance consumer awareness of our
brands. Even if we are successful in our branding efforts, such efforts may not be cost-effective. If we are unable to
maintain or enhance consumer awareness of our brands and generate demand in a cost-effective manner, it would
negatively impact our ability to compete in the travel industry and would have a material adverse effect on our
business. As new media, such as social media, and devices, such as smartphones and tablet devices, continue to
develop, we will need to expend additional funds to promote our brand awareness on such media and devices. If we
are unable to adapt to such new media forms and devices, we may lose online travel segment share, which would
have a material adverse effect on our business. See also “—We may not be able to protect our intellectual property
effectively from copying and use by others, including current or potential competitors”.
Our business could be negatively affected by changes in search engine algorithms and search engine
relationships.
We utilize to a significant and increasing extent Internet search engines, principally through the purchase of
travel-related keywords, in particular on Google, and inclusion in metasearch results, to generate traffic to our
websites. The purchase of travel-related keywords consists of anticipating what words and terms consumers will use
to search for travel on Internet search engines and then bidding on those words and terms in the applicable search
engine’s auction system. We bid against other advertisers for preferred placement on the applicable Internet search
engine’s results page. Search engines, including Google, frequently update and change the logic that determines the
placement and display of results of a consumer’s search, such that the purchased or algorithmic placement of links to
our websites can be negatively affected.
We also generate a significant proportion of our Bookings on our websites from “free traffic” resulting from
customers clicking a non-paid results link in a Google or other search engine. Our positioning on such search
engine’s search results depends on algorithms designed by the various search engine providers such as Google and
based on various criteria including, in particular, the historical level of traffic on our websites. As a result, if search
engine providers such as Google change their search algorithms in a manner that is competitively disadvantageous
to us, whether to support their own travel-related services or otherwise, our ability to generate traffic to our websites
would be harmed, which in turn could adversely affect our business, market share and financial performance. In
addition, if we fail to maintain our current strong levels of traffic and our search rankings fall as a consequence
thereof, our free traffic would fall and our margins, business and financial performance could be adversely affected.
Furthermore, a significant amount of traffic is directed to our websites through our participation in pay-per-click
and display advertising on Internet media properties and search engines whose pricing and operating dynamics can
experience rapid change, both technically and competitively. If one or more of such arrangements are terminated or
if competitive dynamics further impact market pricing in a negative manner, we may experience a decline in traffic
on our websites which in turn could adversely affect our margins, business, financial condition and results of
operations.
Moreover, changes in our relationships with certain search engines, metasearch or affiliate partners that feature
links to our sites could limit our access to customers at a reasonable cost, which in turn could adversely affect our
margins, business, financial condition and results of operations.
We are exposed to risks associated with payment fraud.
We have historically suffered, and expect to continue to suffer, from Internet-related fraud which has impacted
our results. For example, we experience periodic instances of significant attempted fraud, particularly in our
expansion markets. Although we have made significant investments with respect to fraud prevention and detection
(including for contracting external supplementary fraud detection services and the rollout of a unified fraud
detection system within the framework of the integration of the One Platform) and we have generally been able to
keep credit or debit card fraud levels at reasonable levels so far, we cannot guarantee that we will be able to do so in
the future. We are liable for accepting fraudulent credit or debit cards or checks and are subject to other payment
disputes with our customers for such sales. In instances in which we are unable to combat the use of fraudulent
credit or debit cards or checks, we are liable vis-à-vis suppliers for the entire airfare (even when we do not bear
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inventory risk) and our revenue from such sales could also be subject to automatic chargebacks related to fraudulent
transactions from credit or debit card processing companies or demands from the relevant banks. Our ability to
detect and combat increasingly sophisticated fraudulent schemes may be negatively impacted by the adoption of
new payment methods, the emergence of new technology platforms such as smartphones and tablet devices and our
expansion into emerging markets. Our fraud protection measures also result in our refusal of bookings to some
legitimate customers, which results in lost revenue and dissatisfied users, and also involve significant direct
compliance costs. If we are unable to effectively combat the use of fraudulent credit cards on our websites, our
results of operations and financial condition could be adversely affected.
Our international operations involve additional risks and our exposure to these risks will increase as we
further expand our international operations.
Our principal operations, as measured by Revenue Margin contribution, are in France, Germany, Spain, Italy,
the United Kingdom and the Nordics. However, we are seeking to expand our geographic footprint rapidly, and as of
December 31, 2013 we operated in 42 countries. We face complex, dynamic and varied risk landscapes in the
countries in which we operate. To achieve widespread acceptance as we enter countries and markets that are new to
us, we must continue to tailor our products and business model to the unique circumstances of such countries and
markets, including travel supplier relationships, traveler preferences and adding new languages to our website
interfaces. In each new market that we enter we will need to address the particular economic, currency, political and
regulatory risks associated with such new markets, which may include, among other things, finding new acquisition
partners, hiring and training new call center staff with local language skills and an understanding of the local market,
adapting to new payment methods frequently used in the market to be entered, implementing new fraud systems and
processing additional currencies.
Learning the customs and cultures of various countries, particularly with respect to travel patterns and practices,
and subsequently integrating our operations across different cultures and languages, can be difficult, costly and
divert management and personnel resources. In particular, establishing effective payment systems in the countries
and markets we enter can be time-consuming and challenging. To compete in certain international markets we have
in the past, and may in the future, adopt locally preferred payment methods, which may increase our cost and risk of
fraud. Our failure to adapt our practices, internal systems and processes and models effectively to traveler and
supplier preferences of each country into which we expand could slow our international growth.
In addition, when we enter new markets and/or seek to become a new distribution partner for airlines with
which we have no existing relationships, we are typically required to undergo a lengthy application process while
we seek to obtain respective IATA and/or ARC accreditation. In the majority of cases, there is no guarantee that we
will ultimately become a distribution partner and be granted access to all brand/market combinations of the
respective airline.
We expect to continue to face ongoing and additional risks in international operations from jurisdiction to
jurisdiction. These risks may include:
•
local economic or political instability;
•
threatened or actual acts of terrorism;
•
regulatory requirements, including data privacy requirements, consumer protection and retail regulations,
labor laws and anti-competition regulations, and our general ability to comply with local laws and
regulations and compliance costs associated therewith;
•
diminished ability to legally enforce our contractual rights;
•
longer payment cycles;
•
increased risk and limits on our ability to enforce intellectual property rights;
•
increased risk of Internet and particularly credit or debit card fraud;
•
possible preferences by local populations for local providers;
36
•
currency exchange restrictions and exchange rate fluctuations;
•
financial risk arising from transactions in multiple currencies, including our failure to adequately manage
those risks;
•
restrictions on our ability to repatriate cash and earnings as well as restrictions on our ability to invest in
our operations in certain countries;
•
slower adoption of the Internet as an advertising, broadcast and commerce medium in those markets as
compared to the jurisdictions in which we currently operate;
•
increasing labor costs due to high wage inflation in foreign locations, differences in general employment
conditions and the degree of employee unionization and activism; and
•
difficulties in managing staffing and operations due to distance, time zones, language and cultural
differences.
If we are not able to effectively mitigate or eliminate these risks, our results of operations could be materially
and adversely affected.
In certain of our business lines, such as in our charter flight business, we bear inventory risk and/or bear the
risk of default by our supplier, which could adversely affect our business.
We generally do not assume inventory risk in our different business lines. However, for a limited range of
products (principally charter flights), we purchase inventory in order to benefit from special negotiated rates and we
assume inventory risk on such products. If we are unable to sell these products at an appropriate price, or at all, our
revenue and business may be adversely affected. In cases where we bear inventory risk, we are particularly exposed
to competition as, for example, the introduction by a competitor of new or additional capacity on a particular route
or for a particular product has required us in the past, and may require us in the future, to significantly decrease our
prices and thereby suffer a loss on the sales of those products. Furthermore, in our charter flights business we also
bear the counterparty credit risk of default by our charter suppliers, particularly Air Méditerrannée, which is one of
our main suppliers. If any of our charter suppliers were to voluntarily or involuntarily undergo a bankruptcy
proceeding and is subsequently unable to successfully emerge from bankruptcy, or were to otherwise cease
operations, temporarily or permanently, or face any other business disruption, and we are unable to replace such
supplier, our business would be adversely affected. In addition, we could incur additional costs and constrained
liquidity if we are required to provide relief to tour operators and/or affected travelers by refunding the price or fees
associated with charter flight products and other related travel products and services.
We rely on third parties for certain services and systems, and any disruption or adverse change in their
businesses could have a material adverse effect on our business.
We rely on third-party service providers for certain customer care, fulfillment, processing, systems
development, technology and other services and we may in the future migrate additional services to outsourcing
providers. If these third parties experience difficulty meeting our requirements or standards, this could damage our
reputation or make it difficult for us to operate certain aspects of our business. In addition, if such third-party service
providers were to cease operations, temporarily or permanently, or face financial distress or other business
disruption, we could suffer increased costs and delays in our ability to provide similar services until an equivalent
service provider is found or we develop replacement technology or operations. If we fail to replace any such
defaulting service provider, this could result in our inability to access a particular source of revenue and, as a result,
our revenue could also be adversely impacted. If we are unsuccessful in choosing partners who meet our quality
standards or we ineffectively manage these partners, this could have an adverse impact on our business and financial
performance. In addition, any transition of services currently provided by us to an outsourcing provider could result
in labor-related costs or disruptions.
In addition to relying on the electronic central reservation systems and GDSs of the airline, hotel and car rental
industries as discussed elsewhere in this section, we currently rely on certain third-party computer systems, service
providers and software companies in order to:
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•
process credit or debit card payments, including fraud prevention and detection systems;
•
provide computer infrastructure critical to our business, including hosting, internet bandwidth and firewall
protection;
•
provide reporting data, including data analysis and benchmarking;
•
facilitate customer acquisition, including agreements with metasearch engines; and
•
perform call center and online customer support services.
Our success is dependent on our ability to maintain relationships with our technology partners. In the event our
arrangements with any of such third parties are impaired or terminated, we may not be able to find an alternative
source of systems support on a timely basis or on commercially reasonable terms, which could result in significant
additional cost or disruptions to our businesses. In addition, some of our agreements with third-party service
providers can be terminated by those parties on short notice and, in many cases, provide no recourse for service
interruptions. Such an event could have a material adverse effect on our business, financial condition and results of
operations.
We outsource certain of our call center operations for customer service to third-party providers. These thirdparty providers operate call centers located in New Delhi, India and Casablanca, Morocco. If our outsourcing service
providers experience difficulty in meeting, or fail to meet, our requirements for quality and customer services
standards or the requirements or standards of governmental authorities, our reputation could suffer and our business
and prospects could be adversely affected. Our operations and business could also be adversely affected if our
outsourcing service providers experience any system or other operational interruptions. For example, in 2013, one of
our external call center operators experienced an employee strike, which caused stoppages to GoVoyages’ and
Opodo’s customer services and required us to make alternative call center arrangements. See “Business—
Litigation—Commercial and intellectual property disputes—Call Expert litigation”. In addition, termination of any
contract with our outsourcing service providers could cause a decline in the quality of our services and disrupt and
adversely affect our business, results of operations and financial condition if we are unable to find alternative
outsourcing service providers on commercially reasonable terms or if the replacement outsourcing service providers
do not meet our quality requirements.
System interruption and lack of redundancy may cause us to lose customers or business opportunities.
We rely on our own and our suppliers’ computer systems to attract customers to our websites and apps and to
facilitate and process transactions. Our and our suppliers’ inability to maintain and improve our respective
information technology systems and infrastructure may result in system interruptions. Like many online businesses,
we and our suppliers have experienced and may in the future experience system interruptions. Any interruptions,
outages or delays in systems we utilize or deterioration in their performance could impair our ability to process user
traffic and transactions and decrease the quality of products that we can offer to travelers. The costs of enhancing
infrastructure to attain improved stability and redundancy may be time-consuming and expensive and may require
resources and expertise that are difficult to obtain.
We currently operate two data processing and hosting facilities, which are located in Barcelona, Spain and
Paris, France. While some of the functions performed by these facilities are duplicative and some of the databases of
these facilities are synchronized in predetermined intervals with databases of the respective other facility for backup
purposes, the two facilities are currently not designed to be entirely redundant. In particular, one database may not
be able to fully perform the full range of operations of the respective other database, i.e., our ability to carry out all
of our operations requires full functionality of both facilities. Accordingly, in case of failure of one of the data
processing and hosting facilities, we may lose customer data as well as the ability to record and process Bookings,
which could have a material adverse effect on our business, financial condition and results of operations.
Fire, flood, power loss, telecommunications failure, physical break-ins, earthquakes, acts of war or terrorism,
acts of God, computer viruses, electronic intrusion attempts from both external and internal sources and similar
events or disruptions may impact, damage or interrupt computer or communications systems or business processes
or data at any time. For example, in the past, we have experienced security intrusions and attacks on our systems for
fraud or service interruption (called “denial of service” attacks) that have made portions of our websites slow or
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unavailable for periods of several hours. Although we have taken measures to protect certain portions of our
facilities, assets and data, if we were to experience frequent or persistent system failures or security breaches, such
events could significantly curtail our ability to conduct our businesses and generate revenue, and our reputation and
brands could be harmed.
Security intrusions and attacks are likely to become more difficult to manage as we expand the number of
jurisdictions in which we operate and as the tools and techniques used in such attacks becomes more advanced. In
addition, companies that we may acquire in the future, may employ security and networking standards at levels we
find unsatisfactory. The process of enhancing infrastructure to improve security and network standards may be time
consuming and expensive and may require resources and expertise that are difficult to obtain. Acquisitions could
also increase the number of potential vulnerabilities and could cause delays in detection of an attack, or the timelines
of recovery from an attack.
While we have backup systems and contingency plans for critical aspects of our operations or business
processes, our disaster recovery or business continuity planning may not be sufficient. In addition, we may have
inadequate insurance coverage or insurance limits to compensate for losses from a major interruption, and
remediation may be costly and have a material adverse effect on our financial condition and results of operations.
We rely on the performance of highly skilled personnel and our ability to attract and retain executives and
other qualified employees is crucial to our results of operations and future growth. In addition, any significant
disruption in our workforce or the workforce of our suppliers or third-party service providers could adversely
affect us.
We depend substantially on the continued services and performance of our key executives, senior management
and skilled personnel, particularly our information technology and systems, marketing, pricing, retail, finance and
supplier relations professionals and country directors. Any of these individuals may choose to terminate their
employment with us at any time and we cannot ensure that we will be able to retain the services of any member of
our senior management or key employees, the loss of whom could seriously harm our business.
Competition for well-qualified employees in certain aspects of our business, including top management,
software engineers, developers, marketing and supplier relationship managers and other business, finance and
technology professionals, also remains intense. The specialized skills we require are difficult and time-consuming to
acquire and, as a result, such skills are in short supply. We expect that this shortage will continue. A lengthy period
of time is also required to hire and train replacement personnel and it takes time for newly recruited specialists to
learn our systems and business and become productive.
Our employees are subject to personal income tax. There has been a trend in the past of increased taxation for
some of our employees. Should personal income tax rates continue increasing, we may not be able to retain our
employees services without increasing our labor cost which may adversely impact our results of operations.
An inability to hire, train and retain a sufficient number of qualified employees could materially hinder our
business by, for example, delaying our ability to bring new products and services to market or impairing the success
of our operations. Even if we are able to maintain our employee base, the resources needed to attract and retain such
employees, as well as to update their skills as the technological demands of our industry change, may adversely
affect our profits, growth and operating margins.
We are, and may be in the future, involved in various legal proceedings, the outcomes of which could adversely
affect our business, financial condition and results of operations.
We are, and may be in the future, involved in various legal proceedings relating to allegations of our failure to
comply with consumer protection, antitrust or competition regulations that involve claims or sanctions for
substantial amounts of money or for other relief or that might necessitate changes to our business or operations. For
example, in France we are currently involved in commercial litigation with Air France arising from their claim that
in the past, eDreams engaged in unfair competition by failing to comply with certain French and EU regulations
concerning price transparency. See also “Business—Litigation—Commercial and intellectual property disputes—
Air France litigation”.
Such legal proceedings include disputes with certain authorities relating to regulatory matters. The defense of
any of these actions is, and may continue to be, both time-consuming and expensive. We cannot assure you that we
39
will prevail in these legal proceedings or in any future legal proceedings and if such disputes were to result in an
unfavorable outcome, it could result in reputational damage and have a material adverse effect on our business,
For a discussion of certain key legal proceedings relating to us, see “Business—Litigation”.
We may not be able to protect our intellectual property effectively from copying and use by others, including
current or potential competitors.
Our success and ability to compete depend, in part, upon our technology and other intellectual property,
including our brands. Our websites rely on content and technology intellectual property, much of which we regard as
proprietary. We protect our logo, brand name, websites’ domain names and our content and proprietary technology
by relying on domain names, trademarks, copyrights, trade secret laws, patents and confidentiality agreements.
However, not all of our intellectual property can be protected by registration. If someone else were to copy or
otherwise obtain and use our proprietary technology or content without our authorization or to develop similar
technology independently, our competitive advantage based on our technology could be reduced and may be
eliminated. In addition, effective trademark, copyright, patent and trade secret protection may not be available in
every jurisdiction in which our products are made available, and policing unauthorized use of our proprietary
information is difficult and expensive. As we expand to new jurisdictions, some of which have less robust
protections for intellectual property, the cost of protecting, and the risk of third-party infringement of, our
intellectual property increases.
We cannot be sure that the steps we have taken will in all instances preserve our ability to enforce our
intellectual property rights or prevent unprotected disclosure or misappropriation of our proprietary information.
Unauthorized use and misuse of our intellectual property or disclosure of our proprietary information could have a
material adverse effect on our business, financial condition and results of operations. In addition, although we seek
to protect our intellectual property through confidentiality or non-disclosure agreements and agreements not to
compete with us, these agreements typically have terms that end after several years. Furthermore, in the future we
may need to go to court or other tribunals to enforce our intellectual property rights, to protect our trade secrets or to
determine the validity and scope of the proprietary rights of others, and the legal remedies available to us may not
adequately compensate us for the damages caused by unauthorized use.
Claims by third parties that we infringe their intellectual property rights could result in significant costs and
adversely affect our business and financial condition.
From time to time, we face claims that we have infringed the patents, copyrights, trademarks or other
intellectual property rights of others. In addition, to the extent that our employees, contractors or other third parties
with which we do business use intellectual property owned by others in their work for us, disputes may arise as to
the rights in related or resulting know-how and inventions. We endeavor to defend our intellectual property rights
diligently, but intellectual property litigation is expensive and time-consuming and may divert managerial attention
and resources from our business objectives. Successful infringement claims against us could result in significant
monetary liability, including any indemnification due to travel suppliers for claims made against them. Such claims
could also delay or prohibit the use of existing, or the release of new, products, services or processes, and the
development of new intellectual property. We could be required to obtain licenses to use the intellectual property
that is the subject of the infringement claims, which may be expensive to obtain, and resolution of these matters may
not be available on acceptable terms within a reasonable time frame or at all. Intellectual property claims against us
could have a material adverse effect on our business, financial condition and results of operations, and such claims
may result in a loss of intellectual property protections that relate to certain parts of our business.
Our processing, storage, use and disclosure of personal data could give rise to liabilities as a result of
governmental and/or industry regulation, conflicting law requirements and differing views of personal privacy
rights, and we are exposed to risks associated with online commerce security.
In the processing of our traveler transactions, we receive and store a large volume of personally identifiable
information, including credit card information, and we rely on information collected online for purposes of
advertising to visitors to our websites. Substantial or ongoing security breaches, whether instigated internally or
externally on our systems or other Internet-based systems, could significantly harm our business, including our
40
relations with our suppliers. We incur, and expect to continue to incur, substantial expense to protect ourselves
against, and remedy, security breaches and their consequences. We rely on licensed encryption and authentication
technology to effect secure transmission of confidential customer information, including credit or debit card
numbers. However, advances in technology or other developments could result in a compromise or breach of the
technology that we use to protect customer and transaction data.
It is possible that computer circumvention capabilities, new discoveries or advances or other developments,
including our own acts or omissions, could result in a party (whether internal, external, an affiliate or unrelated third
party) compromising or circumventing our security systems and stealing customer transaction/personal data or our
proprietary information or cause significant interruptions in our operations. For example, in 2012, several major
companies, including Zappos, Apple, AOL, LinkedIn, Google, and Yahoo! experienced high-profile security
breaches that exposed their customers’ personal information. We cannot guarantee that our security measures will
prevent data breaches, or that third-party service providers will be successful in implementing security systems to
prevent data breaches. Failure to improve our standards or a substantial data breach in any of our businesses, or in
the systems of third parties upon which we rely, could expose us to a risk of loss or litigation and possible liability
and could significantly harm our business. Our insurance may not be adequate to reimburse us for losses caused by
security breaches.
Security breaches could also damage our reputation and cause customers and potential customers to lose
confidence in our security, which would have a negative effect on the value of our brands and the demand for our
products. Moreover, public perception concerning general security and privacy on the Internet could adversely affect
customers’ willingness to use our websites. A publicized breach of security, even if it only affects other companies
conducting business over the Internet, could inhibit the growth of consumers’ willingness to provide private
information or effect commercial transactions on the Internet and, therefore, demand for our products as a means of
conducting commercial transactions.
Customer information is increasingly subject to legislation, regulation and industry policies in numerous
jurisdictions around the world. As we expand the number of places where we operate, we face additional challenges
to comply with these requirements and restrictions, which are not, and may not in the future be, necessarily
consistently applied. Such regulations and policies are typically intended to protect the privacy and security of
personal information (including credit or debit card information) that is collected, processed and transmitted in or
from the governing jurisdiction. We could be adversely affected if legislation, regulations or other requirements are
expanded to require changes in our current business practices or if governing jurisdictions or industry groups
interpret or implement their requirements in ways that negatively affect our business, financial condition and results
of operations. For example, in January 2012 the European Union proposed a major reform of the EU legal
framework on the protection of personal data which, if adopted, would result in a greater compliance burden for
businesses with users in Europe, such as our businesses, and as a result would increase our costs of compliance.
Moreover, our failure to comply with any of these requirements or interpretations could have a material adverse
effect on our reputation and operations, and subject us to litigation.
As privacy and data protection have become more sensitive issues for regulators and consumers, we may also
become exposed to potential liabilities as a result of differing views on the protections that should apply to travel
and/or online data. These and other privacy and security developments are difficult to anticipate and could adversely
affect our business and financial performance. See also “—Our international operations involve additional risks and
our exposure to these risks will increase as we further expand our international operations” above.
Our business and financial performance could be negatively impacted by adverse tax events.
We are subject to corporate income tax, withholding tax, value added tax, payroll taxes and social security taxes
and, in certain countries, to local taxes on income or assets. The estimated net result of our business is based on tax
rates which are currently applicable as well as current legislation, jurisprudence, regulations and interpretations by
local tax authorities. A change in applicable corporate tax rates or in general of any tax rule or interpretation made
by local tax authorities will impact our net results of operations. While there has been a trend to reduce the corporate
tax rates over the last decade, the countries in which we operate could either increase the applicable income tax rates
and/or seek to enlarge the taxable basis to generate more tax revenue.
The application of tax laws, rules and regulations to our business is subject to interpretation by the competent
tax authorities. We rely on generally available interpretations of tax laws and regulations in the jurisdictions in
41
which we operate. There can be no assurance that tax authorities may not take the view that our interpretations are
not accurate or are not in agreement with our views. Similarly, we may, from time to time, effect certain changes in
the way we organize and conduct our business operations to enhance efficient management of our business, the tax
consequences of which may be viewed by the tax authorities of the relevant jurisdictions differently from us. This
could result in a reassessment by tax authorities, increasing our tax expense for past periods and may trigger
penalties and interest for the underpayment of taxes.
We have significant tax losses carried forward which can be offset against future taxable profits. There is a
trend that tax authorities implement rules with the aim to restrict the utilization of these tax losses, for example, by
permitting only a partial offset against taxable profits of a subsequent year or even restricting the period during
which tax losses can be utilized. The implementation of such restrictive rules regarding the utilization of tax losses
may result in more income tax than anticipated becoming due by us.
Further, tax authorities tend to implement so-called “anti-base erosion” provisions with the aim of restricting the
deduction of finance expenses in respect of tax payers’ financial debt. Although such measures have already been
implemented in certain countries, these countries may further restrict the deduction of finance expense and other
countries may implement similar measures. Since we are significantly leveraged, any restriction of the deduction of
our finance expense may adversely impact our future income tax expense.
Income tax is paid in the countries in which our operating companies are resident, irrespective generally of
where our customers are located or where the travel products are actually purchased or consumed by our customers.
The payment of income tax in the relevant countries in which we operate is based on the current internationally
accepted tax rules and transfer pricing framework. The current rules, based on which taxable profits are allocated,
may change or be interpreted differently in the future, which would result, for example in taxable profits being
(partly) allocated to countries where customers are located or where the travel product is actually consumed. This
may lead to a shift of taxable profits to other countries where less favorable tax rates and rules regarding the
determination of taxable income are applicable. The allocation of our taxable profits to a different country mix may
impact our future income tax expense.
In our present legal structure, we are able to distribute cash generated by the operating entities upstream,
triggering a minimal amount of withholding taxes. However, tax authorities may take measures that change either
withholding tax rates or the dividend exemption rules, or may interpret the current legislation, jurisprudence and
regulations in a manner that disables the application of reduced withholding tax rates or dividend exemption rules.
This could lead to an increase of our income tax expenses which will impact our net result of operation.
We operate in the travel industry which is subject to specific VAT rules. Since we primarily distribute products
to customers, this category of customers is not entitled to a deduction of input VAT. This means that VAT is
generally a cost of the transaction. The increase of applicable VAT rates could result in an increase in the total
aggregate prices of our products, which might cause a decrease in demand for our products and we may be forced to
decrease our margins in order to remain competitive. This may adversely impact our results of operations.
In our industry, tax authorities focus increasingly on the actual behavior of travel agents in addition to the
contractual relationship between the travel agent and its customers to determine whether or not the travel agent is a
disclosed agent for VAT purposes. This may have an impact on the determination of the country in which VAT is
due as well as the basis on which VAT is due. While we believe that we have taken a prudent position in this
respect, there can be no assurance that tax authorities will take the same view, which may impact the amount of
VAT which is due on the services which we render to our customers.
Tax authorities of a country may consider that VAT is due in their country, for example because the customer is
a resident of that country or because the travel service is deemed to be used and enjoyed in that country, whereas we
may take the view that VAT is not due in that country. If tax authorities successfully enforce their different view,
they may cause us to pay tax which we currently do not collect or pay. Passing on additional taxes to the customer
may decrease the demand for our services.
A significant part of our operating revenue comes from the fees we charge as an intermediary in the sale of
travel insurance. In many countries the sale of insurance is subject to insurance premium tax. This insurance
premium tax is normally due in the country where the insured risk is located. Tax authorities may take a view that is
different from our view in determining where the insured risk is actually located, considering that we operate on the
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internet. This may impact the amount of the insurance tax which is due by us. If additional insurance tax is levied
which is not fully passed-on to our customers, this may adversely impact our results of operations.
Although we believe our tax position is true and accurate and we have taken a prudent position for the purpose
of recognizing a provision for tax risks, the position taken by tax authorities based on tax audits could be different
from the position which we have taken. We do not believe that we have implemented aggressive tax planning in our
group structure and business operations that are likely to be challenged by tax authorities.
Risks Related to Our Financial Profile
Our statement of financial position includes very significant amounts of goodwill and other intangible assets.
The impairment of a significant portion of these assets would negatively affect our reported results of
operations and the equity reflected on our statement of financial position, and may affect our ability to pay
dividends.
The goodwill and other intangible assets recognized on our statement of financial position represented 72.9%
and 24.8%, respectively, of our total non-current assets as at December 31, 2013 (71.8% and 25.4%, respectively, as
at March 31, 2013). These assets consist primarily of goodwill and identified other intangible assets associated with
the Combination. Within other intangible assets, our principal assets are our brands (85.4% of total other intangible
assets as at December 31, 2013) and software (14.0% of total other intangible assets as at December 31, 2013). See
notes 14 and 15 to our Consolidated Annual Financial Statements and notes 11 and 12 to our Consolidated Interim
Financial Statements for further information regarding our goodwill and other intangible assets. Any further
acquisitions may result in our recognition of additional goodwill or other intangible assets.
Under IFRS, we are required to amortize certain intangibles over the useful life of the asset and subject our
goodwill and certain of our intangible assets to impairment testing rather than amortization. Accordingly, on at least
an annual basis, we assess whether there have been impairments in the carrying value of our goodwill and certain of
our intangible assets. If the carrying value of the asset is determined to be impaired, then it is written down to fair
value by an impairment loss in the income statement. See “Management’s Discussion and Analysis of Our Results
of Operations—Critical Accounting Policies—Impairment testing of the recoverable amounts of a CGU or group of
CGUs”.
We have recognized impairments in the past, including as a result of changes in our business performance and
strategy. We recognized impairments of €21.4 million on other intangible assets relating to brands at March 31,
2012. In addition, at March 31, 2013, we recognized impairments of €9.3 million mainly relating to our IT
technology (€6.7 million) and our customer relationships (€2.0 million), both initially recognized in relation to the
purchase price allocation following the past acquisitions. We recognized impairments of €0.5 million on tangible
assets, mainly relating to GoVoyages assets, at December 31, 2013. We also recognized impairments of intangible
assets, mainly relating to the GoVoyages brand and, to a lesser extent, to capitalized IT projects, of €11.7 million at
that date. Factors that have resulted in us recognizing impairments in the past include the relative focus on one brand
over another (for example, following the decrease in the sales of GoVoyages charter flights, which led to an
impairment of the GoVoyages brand) and the changes in technology (for example, the development of our One
Platform, which lowered the carrying value of certain of our predecessors’ technology).
An impairment of a significant portion of goodwill or other intangible assets could have a material adverse
effect on our reported results of operations and the equity reflected on our statement of financial position. Pursuant
to Luxembourg law, we are only able to pay dividends if, on the closing date of the last financial year, the net assets
as set out in the annual accounts are not, and would not as a consequence of such dividend payment become, less
than the amount of our subscribed capital plus any reserves which may not be distributed under law or by virtue of
our Articles of Incorporation. Luxembourg law further provides that the amount of a dividend distribution to the
Shareholders may not exceed the amount of the profits for the end of the most recent financial year plus any profits
carried forward and any amounts drawn from reserves which are available for that purpose, less any losses carried
forward and sums to be placed in reserve in accordance with the law or the Articles of Incorporation. As
impairments reduce our profit, impairments could reduce or eliminate our ability to pay dividends. See also “—Our
ability to pay dividends to Shareholders may be constrained”.
Additionally, pursuant to Luxembourg corporate law, if such impairment results in a loss of half a company’s
equity, the board of directors is required to convene a general meeting of the shareholders to be held within a period
43
not exceeding two months from the time at which the loss was or should have been ascertained by them and such
meeting shall resolve, in accordance with the Luxembourg corporate law, on the dissolution of such company. The
same rules apply where the loss equals at least three quarters of a company’s equity. In the latter case, the vote to
dissolve a company may be passed by a quorum of one fourth of the votes cast at the meeting.
Our significant leverage could affect our financial position and results and our ability to operate our business
and raise additional capital to fund our operations.
We have a substantial amount of outstanding indebtedness with significant debt service requirements. Our debt
generally bears interest at a fixed rate; however, debt under the Revolving Credit Facility Agreement bears interest
at a floating rate. See also “Management’s Discussion and Analysis of Our Financial Condition and Results of
Operations— Description of Debt Arrangements”. As of January 31, 2014, we had total gross debt of €488.1 million
(excluding Convertible Subordinated Shareholder Bonds). See “Management’s Discussion and Analysis of Our
Financial Condition and Results of Operations—Liquidity and Capital Resources”. These arrangements require us to
dedicate a portion of our cash flow to service interest and to make principal repayments. Our significant leverage
could have negative consequences, including:
•
making it more difficult for us to satisfy our obligations with respect to our indebtedness, including
restrictive covenants and borrowing conditions under our debt instruments, the breach of which could result
in an event of default under those instruments;
•
requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt,
thereby reducing the availability of our cash flow to fund internal growth through working capital and
capital expenditures and for other general corporate purposes;
•
increasing our vulnerability, and reducing our flexibility to respond, to general adverse economic and
industry conditions;
•
placing us at a competitive disadvantage compared to competitors that have less debt in relation to cash
flow;
•
limiting our flexibility in planning for, or reacting to, changes in our business and our industry;
•
restricting us from exploiting certain business opportunities or making acquisitions or investments; and
•
limiting, among other things, our ability to borrow additional funds or raise equity capital in the future, and
increasing the costs of such additional financings if interest rates increase,
any of which could have a material adverse effect on our business, financial condition and results of operations.
We are subject to restrictive debt covenants that may limit our ability to finance our future operations and
capital needs and to pursue business opportunities and activities.
The agreements governing our indebtedness contain various covenants, including those that restrict our ability
to, among other things:
•
incur or guarantee additional indebtedness and issue certain preferred stock;
•
pay dividends and make certain other restricted payments;
•
prepay or redeem subordinated debt or equity;
•
make certain investments;
•
create or permit to exist certain liens;
•
sell, lease or transfer certain assets;
•
engage in certain transactions with certain affiliates; and
44
•
consolidate, merge or transfer all or substantially all of its assets and the assets of our subsidiaries on a
consolidated basis.
All of these limitations are subject to significant exceptions and qualifications. The covenants to which we are
subject could limit our ability to finance our future operations and capital needs and our ability to pursue business
opportunities and activities that may be in our interest.
Certain of our debt instruments also require us to comply with certain affirmative covenants and certain
specified financial covenants and ratios. Our Revolving Credit Facility Agreement requires us to satisfy a specified
financial ratio at certain specified dates. See “Management’s Discussion and Analysis of Our Financial Condition
and Results of Operations—Description of Debt Arrangements”. Our ability to meet this financial ratio can be
affected by events beyond our control and we cannot assure you that we will meet them. A breach of any of those
covenants, ratios, tests or restrictions could result in an event of default under our Revolving Credit
Facility Agreement. See “Management’s Discussion and Analysis of Our Financial Condition and Results of
Operations—Description of Debt Arrangements”.
We will require a significant amount of cash to meet our debt obligations and to sustain our operations, which
we may not be able to generate or raise. Our ability to generate cash and access capital markets depends upon
many factors, some of which are beyond our control.
Our ability to meet our debt obligations and to fund our ongoing operations will depend on our future
performance and our ability to generate cash, which to a certain extent is subject to general economic, financial,
competitive, legislative, legal, regulatory and other factors, as well as other factors discussed in these “Risk
Factors”, many of which are beyond our control.
Historically, we have met our debt service and other cash requirements with cash flows from operations and
borrowing facilities. Although we believe that our expected cash flows from operating activities, together with cash
on hand and available borrowing facilities, will be adequate to meet our anticipated liquidity and debt service needs,
we cannot guarantee you that our business will generate sufficient cash flows from operating activities or that future
debt and equity financing will be available to us in an amount sufficient to meet our debt obligations or to fund our
other liquidity needs. See also “Management’s Discussion and Analysis of Our Financial Condition and Results of
Operations”. The availability of financing depends in significant part on capital markets and liquidity factors over
which we exert no control. In light of periodic uncertainty in the capital and credit markets, we can provide no
assurance that we can access the capital or other financing markets on attractive or acceptable terms.
If our future cash flows from operations and other capital resources are insufficient to meet our debt obligations
or to fund our liquidity needs, we may be forced to:
•
reduce or delay our business activities and capital expenditures;
•
sell assets;
•
obtain additional debt or equity capital; or
•
restructure or refinance all or a portion of our debt on or before maturity.
Any additional debt or equity capital financing that we may need may not be available on terms favorable to us
or at all.
We cannot assure you that we would be able to accomplish any of these alternatives on a timely basis or on
satisfactory terms, if at all. In addition, the terms of our existing debt will limit our ability to pursue any of these
alternatives. If we obtain additional debt financing, the related risks we now face will increase.
We are exposed to risks associated with currency fluctuations.
We report our results in euro, and the euro is also our functional currency. Our results of operations may be
affected by both the transaction effects and the translation effects of foreign currency exchange rate fluctuations. We
are exposed to transaction effects when one of our companies incurs costs or earns revenue in a currency different
from its functional currency. Our exposure to currencies is principally to U.S. dollars, British pounds and Swedish
45
kronor. As we expand into new markets which do not use the euro, our exposure to exchange rate fluctuations will
increase. We are also exposed to currency fluctuation when we convert currencies that we may receive for our
operations into currencies required to pay our debt, or into currencies in which we meet our fixed costs or pay for
services, which could result in a gain or loss depending on fluctuations in exchange rates.
Risks Related to our Principal Shareholders and the Shares
The strategic interests of each of the Ardian Funds and the Permira Funds, which are our principal
Shareholders following the Offering, may, from time to time, differ from, and conflict with, our interests and
the interests of our other Shareholders.
Following the Settlement, vehicles controlled by the Ardian Funds and the Permira Funds will become
Shareholders of, and will each continue to hold significant stakes in, the Company. So long as the Ardian Funds, the
Permira Funds or their respective successor entities continue to own and control, directly or indirectly, a substantial
portion of our voting share capital, even if their respective interests represent less than half of our total voting share
capital, such Shareholders will continue to be able to exert significant influence over decisions at both the
shareholder and board level of our group. For more information, see “Principal Shareholders” and “Management and
Board of Directors”.
The strategic interests of each of the Ardian Funds and the Permira Funds may differ from, and conflict with,
our interests and the interests of our other Shareholders in material respects. For example, each of the Ardian Funds
and the Permira Funds are in the business of making investments in companies and may, from time to time, acquire
interests in businesses that directly or indirectly compete with certain areas of our business or that are suppliers or
partners of the eDreams ODIGEO Group. In addition, each of the Ardian Funds and the Permira Funds may pursue
acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities
may not be available to us.
There can be no assurance that the actions of the Ardian Funds and the Permira Funds will not conflict with our
interests or the interests of our other Shareholders.
There can be no assurance that the issue price will correspond to the price at which trading in the Shares will
develop and continue after the Offering.
If you agreed to purchase any Shares in the Offering, you will pay a price that was not established in the public
trading markets. The issue price has been discussed and agreed by the Underwriters and us, and no independent
experts were consulted in determining the issue price. Among the factors considered in determining the issue price
were our future prospects and the prospects of our industry in general, our revenue and certain other financial and
operating information in recent periods, and the financial ratios, market prices of securities and certain financial and
operating information of companies engaged in activities similar to ours. There can be no assurance that the prices at
which the Shares will trade in the public market after the Offering will not be lower than the issue price or that an
active trading market in the Shares will develop and continue after the Offering.
The market price of the Shares may be volatile and may decline regardless of our actual operating
performance.
The market price of the Shares may be volatile and significantly affected by the following factors, among
others:
•
investor perception of the success and impact of the offering and the strategy described in this prospectus;
•
our actual or anticipated financial condition and results of operations;
•
new services or products offered by us or our competitors;
•
negative publicity;
•
the results of operations of our competitors;
•
changes in the market valuations of our competitors, customers or travel providers;
46
•
changes in securities analysts’ recommendations regarding us, the sector in which we operate, or the travel
and tourism industry generally;
•
announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures;
•
announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;
•
developments affecting the regulation of one or more of the various sectors of the travel and tourism
industry in the countries in which we operate or may in the future operate;
•
capital commitments;
•
changes among our key personnel;
•
sales of Shares, including sales of Shares by our principal Shareholders, directors and senior management;
•
short-selling or other similar trading activities in respect of Shares or securities or other instruments linked
to the Shares;
•
changes in travel preferences or habits;
•
our success in entering new markets; and
•
conditions in the financial and securities markets generally and other factors beyond our control.
During recent years, the securities markets in Spain and worldwide have experienced significant volatility in
prices and trading volumes. This volatility could have a material adverse effect on the market price of the Shares,
irrespective of our financial condition and results of operations and the other factors referred to above.
The market price of the Shares and/or our ability to raise capital through a future offering of Shares may be
adversely affected if our principal Shareholders, or other Shareholders, sell substantial amounts of Shares, or
by the perception that such sales could occur.
Sales of a substantial number of Shares in the public market following the Admission to Trading, or the
perception that such sales will or might occur, could adversely affect the market price of the Shares and/or our
ability to raise capital through a future offering of Shares.
We agreed with the Underwriters that, without the prior written consent of the Joint Global Coordinators, which
consent shall not be unreasonably withheld, we would not, during the period commencing on the date on which the
underwriting agreement was signed and ending 180 days following the listing of the Shares on the Spanish Stock
Exchanges, directly or indirectly issue, offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or
dispose of any of our Shares or any securities convertible into or exercisable or exchangeable for our Shares, file any
registration statement with respect to any of the foregoing or enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of our
Shares, subject to certain exceptions described in “Plan of Distribution” below.
The Principal Selling Shareholders agreed with the Underwriters to similar restrictions from the date on which
the underwriting agreement was signed and ending 180 days following the listing of the Shares on the Spanish Stock
Exchanges, subject to certain exceptions described in “Plan of Distribution” below.
Each member of our Senior Management agreed with the Underwriters to similar restrictions from the date on
which the underwriting agreement was signed and ending 360 days following the listing of the Shares on the
Spanish Stock Exchanges, subject to certain exceptions described in “Plan of Distribution” below.
In addition to the lock-up arrangements entered into for the benefit of the Underwriters, approximately 100
Minority Selling Shareholders who are current employees of the eDreams ODIGEO Group (excluding our Senior
Management) agreed with the Company to substantially the same lock-up arrangements for a period of 360 days
following the listing of the Shares on the Spanish Stock Exchanges as those entered into by our Senior Management
47
with the Underwriters. The Company also entered into a substantially similar lock-up arrangement with James Hare,
one of our Directors, for a period of 180 days following the listing of the Shares on the Spanish Stock Exchanges.
After the expiry of the specified lock-up periods, any of our Shareholders, including one or more of our
Principal Shareholders, could sell its holdings of Shares in whole or in part (subject to certain limitations for the
orderly sale of shares by certain of our principal Shareholders contained in the Shareholders’ Agreement) and we
could offer to sell new shares in public or private transactions. Any such future sales by us could dilute the
ownership interests of our then-existing Shareholders, and sales by our principal or management Shareholders or by
us could materially and adversely affect the trading price of the Shares.
We may in the future seek to raise capital by conducting equity offerings, which may dilute investors’
shareholdings.
The Board of Directors or delegate(s) duly appointed by the board may from time to time issue Shares within
the authorized share capital at such times and on such terms and conditions, including the issue price, as the board or
its delegate(s) may in its or their discretion resolve. See “Description of the Share Capital of the Company and
Applicable Regulations—Share Capital—Authorized Capital”.
We may in the future seek to raise capital through public or private debt or equity financings by issuing
additional Shares or other shares, debt or equity securities convertible into Shares or rights to acquire these securities
and, in certain circumstances, may seek to exclude the preferential subscription rights pertaining to the then
outstanding Shares. Any additional capital raised through the issue of additional Shares or other shares may dilute an
investor’s interest in the Company. Any additional offering of ordinary Shares by us, or the public perception that an
offering may occur, could also have a negative impact on the trading price of the Shares and could increase the
volatility in the trading price of the Shares.
Our ability to pay dividends to Shareholders may be constrained.
We do not currently intend to pay a dividend on our Shares in the foreseeable future. However, even if our
Board of Directors decided to pay a dividend, our ability to pay dividends to Shareholders may be constrained by
certain legal and financial restrictions in the debt instruments of our subsidiaries, including the 2018 Notes, the 2019
Notes and the Revolving Credit Facility Agreement. For more information, see “Dividends and Dividend Policy”.
The financing arrangements of our subsidiaries contain restrictions on their ability to pay dividends and lend
funds to us. We are a holding company and our ability to generate income and pay dividends is dependent on the
ability of our subsidiaries to declare and pay dividends or lend funds to us. The actual payment of future dividends
by us and the payment of dividends to us by our subsidiaries, if any, and the amounts thereof, will depend on a
number of factors, including (but not limited to) the amount of distributable profits and reserves and investment
plans, earnings, level of profitability, ratio of debt to equity, credit ratings, applicable restrictions on the payment of
dividends under applicable laws, compliance with covenants in our debt instruments, the level of dividends paid by
other comparable listed companies and such other factors as our Board of Directors may deem relevant from time to
time. As a result, our ability to pay dividends in the future may be limited and/or our dividend policy may change. If
dividends are not paid in the future, capital appreciation, if any, of the Shares would be investors’ sole source of
gains.
Shareholders in countries with currencies other than the euro may face additional investment risk from
exchange rate fluctuations in connection with their holdings of Shares.
Shareholders in countries with currencies other than the euro face additional investment risk from currency
exchange rate fluctuations in connection with their holdings of Shares. The Shares will be quoted only in euro, and
any future payments of dividends on the Shares will be denominated in euro. Accordingly, any dividends paid on the
Shares or received in connection with any sale of Shares could be adversely affected by the fluctuation of the euro
against the U.S. dollar or other currencies.
There is no established trading market for the Shares, and there can be no assurance that any active trading
market will develop.
The Offering constituted our initial offering of Shares, and, prior to it and the Admission to Trading, no public
market for the Shares existed. We have applied for Admission to Trading of the Shares on the Spanish Stock
48
Exchanges. Any delay in the commencement of trading of the Shares would impair the liquidity of the market for
the Shares and make it more difficult for holders to sell any Shares.
There can be no assurance that an active trading market for the Shares will develop or be sustained following
the Admission to Trading. Moreover, Shares sold in or into the United States have not been listed on a U.S.
exchange or registered under the Securities Act. Accordingly, there will not be a trading market for Shares in the
United States and resales of Shares in the United States will be restricted.
You may be unable to effect service of process on us or members of our Board of Directors or management in
the United States or to enforce judgments obtained in U.S. courts for U.S. securities laws violations.
The Company is organized under the laws of the Grand Duchy of Luxembourg and substantially all of our
assets are located outside the United States. It is anticipated that all or substantially all of the members of the
Company’s Board of Directors and senior management will be non-residents of the United States and that all or
substantially all of their assets will be located outside the United States. As a result, it may not be possible for
investors to effect service of process within the United States upon the Company or members of its Board of
Directors or management, or to enforce any judgments obtained in U.S. courts predicated upon civil liability
provisions of the U.S. securities laws. In addition, the Company cannot assure you that civil liabilities predicated
upon the federal securities laws of the United States will be enforceable in Luxembourg. For a further discussion,
see “Enforcement of Civil Liabilities”.
Shareholders may not be able to exercise their preferential subscription rights to acquire further Shares and
other rights attached thereto.
Under Luxembourg corporate law, holders of the Shares generally have the preferential right to subscribe and
pay for a sufficient number of ordinary shares to maintain their relative ownership percentages prior to the issuance
of any new Shares. However, as the share capital increase of a Luxembourg public limited liability company (société
anonyme) may take place by a decision of the Shareholders taken during an extraordinary general meeting and
fulfilling the quorum and majority conditions required for the amendment of the Articles of Incorporation,
Shareholders fulfilling such quorum and majority conditions have the possibility to restrict or waive the preferential
subscription rights or authorize the Board of Directors to do so. Pursuant to the Articles of Incorporation, the share
capital of the Company may also be increased by a decision of the Board of Directors within the framework of the
authorized capital clause. The Board of Directors of the Company is authorized, for a period of five years from the
date of publication of the Shareholders decision in this respect, to issue Shares within the limit of such authorized
share capital to such person and on such terms as it sees fit and to proceed to such an issue without reserving a
preferential subscription right for the existing Shareholders. This authorization is renewable (for a period not
exceeding five years) by the general meeting of the Shareholders.
We may determine it is in our best interests to restrict or waive the preferential subscription rights or authorize
the Board of Directors to do so. In addition, holders of the Shares in certain jurisdictions other than Luxembourg
may not be able to exercise preferential subscription rights unless applicable securities law requirements are
complied with or exemptions are available. Accordingly, the preferential subscription rights of any Shareholders
may lapse and their proportionate interests may be reduced. In particular, holders of the Shares resident in the
United States may not be able to exercise any future preferential subscription rights in respect of the Shares they
hold unless a registration statement under the Securities Act is effective or an exemption from the registration
requirements is available. No assurance can be given that we would file or have declared effective any such
registration statement or that any exemption from such registration requirements would be available to allow for the
exercise of the preferential rights of U.S. holders, or that we would utilize an exemption if one were available.
Moreover, as the Shares are not Spanish securities, in order to enable the holding and settlement of the Shares in
Iberclear (the clearing and settlement system of the Spanish Stock Exchanges), the Company has entered into a
foreign custody, link and paying agency agreement with BNP Paribas Securities Services, Sucursal en España (the
“Link Entity” and the “Paying Agent”) and BNP Paribas Securities Services, Luxembourg Branch (the “Foreign
Custodian”) that will enable investors willing to do so to hold and settle their Shares in book-entry form through
Iberclear or a participant thereto as opposed to through another intermediary securities account holder (such as
Euroclear or Clearstream) or LuxCSD. Holders of Shares held through Iberclear or a participant thereto will only be
able to exercise their rights attached to their Shares by instructing the Link Entity to exercise these rights on their
behalf, and, therefore, the process for exercising rights (including the right to vote at general meetings of
49
Shareholders and the preferential subscription right in respect of the issue of new Shares) may take longer for
holders of Shares held through Iberclear or a participant thereto than it will for holders of Shares held through
another intermediary securities account holder (such as Euroclear or Clearstream) or LuxCSD. Consequently, the
Link Entity may set a deadline for receiving instructions from holders of Shares held through Iberclear or a
participant thereto in respect of any corporate event of the Company which may be shorter than the deadline
otherwise applicable for holders of Shares of the Company through another intermediary securities account holder
(such as Euroclear or Clearstream) or LuxCSD. Furthermore, the Link Entity will not exercise any rights in respect
of Shares held through Iberclear or a participant thereto for which it has not received appropriate instructions from
the beneficial owner thereof within the established deadline. For further information on the provisions applicable to
the Shares held and settled through Iberclear, see “Description of the Share Capital of the Company and Applicable
Regulations” and “Market Information”.
In addition, under Luxembourg corporate law, the Board of Directors may determine the period of time during
which preferential subscription rights may be exercised, which may be as short as 30 days from the start of the
subscription period, with such subscription or exercise period being announced in the Luxembourg official gazette
(Mémorial C, Recueil des Sociétés et Associations) and in two Luxembourg newspapers. Shareholders in certain
jurisdictions other than Luxembourg may not become aware of such subscription period in a timely fashion to
participate in the issuance of any new shares.
Possible FATCA withholding from 2017 may be imposed.
Provisions of the U.S. Internal Revenue Code and Treasury regulations thereunder commonly known as
“FATCA” may impose 30% withholding on certain payments that are considered “foreign passthru payments” made
by non-U.S. financial institutions that have entered into agreements with the U.S. Internal Revenue Service to
perform certain diligence and reporting obligations with respect to the financial institutions’ U.S.-owned accounts
(each such non-U.S. financial institution, a “Participating Foreign Financial Institution”). The definition of
“financial institution” for FATCA purposes includes certain holding companies that are formed in connection with,
or availed of by, certain investment funds. It is not entirely clear whether a company such as our Company would
fall under the definition a holding company that is a financial institution for FATCA purposes. If the Company (or
any relevant intermediary) is a financial institution and becomes a Participating Foreign Financial Institution,
withholding under FATCA may be imposed on payments on Shares to any non-U.S. financial institution (including
an intermediary through which a holder may hold the Shares) that is not a Participating Foreign Financial Institution
and is not otherwise exempt from FATCA, and to other holders that do not provide sufficient identifying
information. Such withholding would apply to payments only to the extent that they are considered “foreign
passthru payments.” Under current guidance it is not clear whether or to what extent payments on the Company’s
Shares would be considered foreign passthru payments subject to FATCA withholding. Withholding on foreign
passthru payments would not be required with respect to payments made before January 1, 2017.
The United States has entered into intergovernmental agreements (“IGAs”) with certain jurisdictions that may
modify the FATCA withholding regime described above. Luxembourg indicated that it intends to enter into an IGA
with the United States. It is not yet clear how these IGAs will address “foreign passthru payments”, and whether
these agreements may relieve financial institutions (including intermediaries) that are subject to IGAs from any
obligation to withhold on foreign passthru payments.
U.S. Holders should consult their tax advisers regarding the possible implications of FATCA and any relevant
IGA or non-U.S. legislation implementing FATCA or an IGA on their investment in the Company’s Shares.
There can be no assurance that the Company will not be a passive foreign investment company, or a PFIC, for
any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. investors in our
Shares.
A non-U.S. corporation will be a PFIC for any taxable year if either (i) at least 75% of its gross income consists
of “passive income” or (ii) at least 50% of the average quarterly value of its assets consists of assets that produce, or
are held for the production of, passive income. Based on the nature of the Company’s business and the expected
price of the Shares in their initial public offering, the Company does not expect to be a PFIC for its current taxable
year or in the foreseeable future. However, because the determination of the Company’s PFIC status for any taxable
year will depend on the composition of its income and assets and the value of its assets from time to time (and the
value of the Company’s assets may be determined by reference to the market price of the Shares, which may
50
fluctuate after the Shares’ initial public offering), there can be no assurance that the Company will not be a PFIC for
any taxable year. If the Company were a PFIC for any taxable year during which a U.S. person owned Shares,
certain adverse U.S. federal income tax consequences could apply to such U.S. person. See “Taxation—Certain U.S.
Federal Income Tax Considerations—Passive Foreign Investment Company Rules.”
51
PRESENTATION OF FINANCIAL AND OTHER DATA
The Company reports consolidated financial information in accordance with IFRS, applying harmonized
accounting principles and policies across all of its constituent businesses. In addition to the Consolidated Financial
Statements, this prospectus includes Unconsolidated 2011 Financial Statements for the Company as of March 31,
2011 and for the period from February 14, 2011(the date of incorporation of the Company), to and including March
31, 2011, which were prepared in accordance with Luxembourg GAAP.
For purposes of our Consolidated Financial Statements, the consolidation perimeter of the Company comprises
the Company and all its direct and indirect subsidiaries, including GTF, LuxGEO and all significant entities
historically included in the GoVoyages Group, the eDreams Group and the Opodo Group. All entities are fully
consolidated with a percentage of interest of 100%, for the year ended March 31, 2012, except for
ReallyLateBooking, 25% of whose share capital is owned by Opodo and recorded in the Consolidated Financial
Statements using the equity method. Although Lyparis owned 97% of eDreams Inc. until September 30, 2011, we
considered eDreams Inc. as wholly owned by Lyparis for the purpose of the preparation of the Consolidated
Financial Statements. Lyparis acquired the remaining 3% of the share capital of eDreams Inc. on September 30,
2011.
Consolidated Financial Statements
The Consolidated Financial Statements included in this prospectus comprise the Consolidated Annual Financial
Statements and the Consolidated Interim Financial Statements.
The Consolidated Annual Financial Statements included in this prospectus comprise the audited consolidated
financial statements of the Company and its subsidiaries as of and for the years ended March 31, 2013 and
March 31, 2012, respectively, including the notes thereto.
The Consolidated Interim Financial Statements included in this prospectus comprise the unaudited consolidated
financial statements of the Company and its subsidiaries as of December 31, 2013 and for the nine-month periods
ended December 31, 2013 and December 31, 2012, respectively, including the notes thereto.
The Consolidated Annual Financial Statements and Consolidated Interim Financial Statements were prepared in
accordance with IFRS.
Unconsolidated 2011 Financial Statements
In addition to the Consolidated Financial Statements, this prospectus includes audited unconsolidated historical
financial information for the Company as of March 31, 2011 and for the period from February 14, 2011 (the date of
incorporation of the Company) to and including March 31, 2011. The Unconsolidated 2011 Financial Statements
were prepared for statutory purposes under Luxembourg law in accordance with Luxembourg GAAP and cover the
period in the year ended March 31, 2011 from the date of incorporation of the Company. The balance sheet and
profit and loss account of the Unconsolidated 2011 Financial Statements have been audited in accordance with
Luxembourg GAAP and the statements of cash flows and of changes in equity of the Unconsolidated 2011 Financial
Statements have been audited in accordance with International Standard on Accounting 805. The Company and its
direct and indirect subsidiaries at the time (GTF and LuxGEO) did not have any operations and only had de minimis
activities during such period and were incorporated in anticipation of the Combination, which was effective on
June 30, 2011 as described below. As a result and in accordance with article 313 of the 1915 Law, the Company did
not prepare consolidated financial statements for such period.
Limited Comparability of Consolidated Financial Statements and Unconsolidated 2011 Financial Statements
Combination Accounting
Through a contribution to the Company of the eDreams Group by the Permira Funds and the GoVoyages Group
by the Ardian Funds in exchange for shares of the Company and the acquisition by a subsidiary of the Company of
100% of the share capital of Opodo from Amadeus IT Group, S.A. (“Amadeus”) effective June 30, 2011 (the
52
“Opodo Acquisition”), the eDreams Group was combined with the GoVoyages Group and the Opodo Group to form
eDreams ODIGEO (the “Combination”). The eDreams Group, the GoVoyages Group and the Opodo Group were
consolidated in the Company’s Consolidated Financial Statements as of July 1, 2011.
As part of the Combination, the Ardian Funds and the Permira Funds jointly contributed the GoVoyages Group
and the eDreams Group to GTF in exchange for GTF’s shares (held indirectly). The contribution was outside of the
scope of IFRS 3 Business Combination. As a result, in accordance with International Accounting Standard 8.12 and
absent any guidance under IFRS, the Company considered pronouncements of other standard setting bodies and, in
particular, the guidance under US GAAP (ASC 323 Investments—Equity Method and Joint Ventures) and
determined that using the predecessor’s values of the constituent businesses was the appropriate basis of accounting.
Accordingly, under such accounting treatment, the financial information for the year ended March 31, 2012 reflects
the results of the eDreams Group and the GoVoyages Group for the period from April 1, 2011 through and including
June 30, 2011, even though such groups were not owned by the eDreams ODIGEO Group during such period
because the GoVoyages Group had been acquired by the Ardian Funds in July 2010 and the eDreams Group had
been acquired by the Permira Funds in August 2010.
As a result of the Opodo Acquisition completed on June 30, 2011, the financial information for the year ended
March 31, 2012 reflects the operations of the Opodo Group only for nine months. See “Management’s Discussion
and Analysis of Our Financial Condition and Results Of Operations—Factors Affecting the Comparability of Our
Results of Operations”.
Limitations on Comparability
Due to our financial history and the Combination, certain of our reported financial information included herein
(including in the Consolidated Annual Financial Statements) needs to be carefully considered, as it is not directly
comparable to the financial information reported for the corresponding prior or subsequent years because our
reported financial information for the year ended March 31, 2012 does not include for the full period the results of
each of the principal businesses which now form the eDreams ODIGEO Group, as reflected in the financial
information included herein for the year ended March 31, 2013 and each of the nine months ended December 31,
2013 and 2012. In particular, the financial information included herein for the year ended March 31, 2012 does not
reflect the results of the Opodo business for the period April 1, 2011 through June 30, 2011 (i.e., the first quarter of
the year ended March 31, 2012), as the Opodo business was acquired and consolidated effective June 30, 2011.
In addition, the Unconsolidated 2011 Financial Statements are not comparable with the consolidated financial
information included in this prospectus because the Unconsolidated 2011 Financial Statements were prepared on an
unconsolidated basis in accordance with Luxembourg GAAP for the period from February 14, 2011(the date of
incorporation of the Company) to and including March 31, 2011, during which time the Company had no operations
and only de minimis activities, while the Consolidated Annual Financial Statements reflects consolidated financial
information for the financial years and includes the results of the operating companies of the Group as described
above.
Non-GAAP Measures
The financial information included in this prospectus includes certain non-GAAP measures which are not
accounting measures as defined by IFRS. These measures have been included for the reasons described below.
However, these measures should not be used instead of, or considered as alternatives to, the eDreams ODIGEO
Group’s historical financial results based on IFRS. Further, these measures may not be comparable to similarly titled
measures disclosed by other companies. Certain of these measures are also presented on a “per Booking” basis,
which are also non-GAAP measures.
As used in this prospectus, the following terms have the following meanings:
“Bookings” means the number of transactions under the agency model and the principal model as well as
transactions made via our white label distribution and sourcing partners. One booking can encompass one or more
products and one or more passengers. For a description of the agency and principal models, see “Management’s
Discussion and Analysis of Our Financial Condition and Results of Operations—Principal Consolidated Income
Statement Line Items—Revenue—Agency and principal models”.
53
“Capital Expenditure” represents the cash outflows incurred during the period to acquire non-current assets such
as property, plant and equipment, certain intangible assets and capitalization of certain development IT costs, but,
where relevant, excluding effects of the consideration paid in connection with the Opodo Acquisition, the effects of
the disposal of Opodo Tours and the effects of the consideration paid in connection with the Liligo Acquisition, each
with respect to the eDreams ODIGEO Group consolidated financial data.
“EBITDA” means profit/(loss) before financial and similar income and expenses, income tax and depreciation
and amortization and profit/loss on disposals of non-current assets. See also “—Recurring EBITDA” below.
“Fixed Costs” includes IT expenses net of capitalization write-off, personnel expenses which are not Variable
Costs, external fees, building rentals and other expenses of fixed nature. Our management believes the presentation
of Fixed Costs may be useful to readers to help understand our cost structure and the magnitude of certain costs we
have the ability to reduce in response to changes affecting the number of transactions processed.
“Gross Bookings” means the total amount paid by our customers for travel products and services booked
through us (including the part that is passed on to, or transacted by, the travel supplier), including taxes, service fees
and other charges and excluding VAT. Gross Bookings include the gross value of transactions booked under both
agency and principal models as well as transactions made via our white label distribution and sourcing partners or
any transaction where we act as “pure” intermediary whereby we serve as a click-through and pass the reservations
made by the customer to the relevant travel supplier.
“Recurring EBITDA” means profit/(loss) attributable to the parent company before financial and similar
income and expenses, income tax, depreciation and amortization and profit/loss on disposals of non-current assets,
certain share-based compensation, expenses related to the Combination and other income and expense items which
are considered by management to not be reflective of our ongoing operations. Neither EBITDA nor Recurring
EBITDA is a measure of performance or liquidity under IFRS and should not be considered by investors in isolation
from, or as a substitute for, a measure of profit, or as an indicator of our operating performance or cash flows from
operating activities as determined in accordance with IFRS. For a reconciliation of EBITDA and Recurring
EBITDA to operating profit, see “Selected Financial Information and Other Data—Reconciliation of EBITDA and
Recurring EBITDA to Operating profit”.
“Recurring EBITDA Margin” is Recurring EBITDA divided by Revenue Margin. Our management uses
Recurring EBITDA Margin to measure Recurring EBITDA generated in proportion to Revenue Margin generated.
Recurring EBITDA Margin provides a comparable Recurring EBITDA measure for products, whether sold under
the agency or principal model. For a description of the agency and principal models, see “Management’s Discussion
and Analysis of Our Financial Condition and Results of Operations—Principal Consolidated Income Statement Line
Items—Revenue—Agency and principal models”.
“Revenue Margin” means our IFRS revenue less supplies. Our management uses Revenue Margin to provide a
measure of our revenue after reflecting the deduction of amounts we pay to our suppliers in connection with the
revenue recognition criteria used for products sold under the principal model (gross value basis). Accordingly,
Revenue Margin provides a comparable revenue measure for products, whether sold under the agency or principal
model. For a description of the agency and principal models, see “Management’s Discussion and Analysis of Our
Financial Condition and Results of Operations—Principal Consolidated Income Statement Line Items—Revenue—
Agency and principal models”. Revenue Margin reported in respect of the years ended March 31, 2012 and 2013 is
based on audited income statement line item figures; Revenue Margin reported in respect of the nine months ended
December 31, 2012 and 2013 is based on unaudited income statement line item figures.
“Variable Costs” includes all expenses which depend on the number of transactions processed. These include
acquisition costs, merchant costs and other costs of a variable nature, as well as personnel costs related to call
centers as well as corporate sales personnel. Our management believes the presentation of Variable Costs may be
useful to readers to help understand our cost structure and the magnitude of certain costs we have the ability to
reduce certain costs in response to changes affecting the number of transactions processed.
Bookings, Capital Expenditure, EBITDA, Fixed Costs, Recurring EBITDA, Recurring EBITDA Margin,
Revenue Margin, Variable Costs and similar measures are used by different companies for differing purposes and
are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in
comparing Bookings, Capital Expenditure, EBITDA, Fixed Costs, Recurring EBITDA, Recurring EBITDA Margin,
54
Revenue Margin, Variable Costs or any similar measures or data as reported by us to similar measures or data as
reported by other companies. EBITDA and Recurring EBITDA are not measures of performance under IFRS and
you should not consider EBITDA or Recurring EBITDA as an alternative to (a) operating profit or profit for the
period (as determined in accordance with IFRS) as a measure of our operating performance, (b) cash flows from
operating, investing and financing activities as a measure of our ability to meet our cash needs or (c) any other
measures of performance under generally accepted accounting principles. EBITDA and Recurring EBITDA, as well
as the other non-GAAP financial measures used in this prospectus, each has limitations as an analytical tool, and
you should not consider them in isolation, or as a substitute for, or superior to, an analysis of our results as reported
under IFRS. We have presented these supplemental non-GAAP measures because we believe that they are useful
indicators of our financial performance. We encourage you to evaluate the adjustments made to arrive at EBITDA
and Recurring EBITDA, and the limitations for purposes of analysis in excluding them.
The limitations that EBITDA and Recurring EBITDA have as an analytical tool include:
•
they do not reflect our cash expenditures or future requirements for capital expenditures or contractual
commitments;
•
they do not reflect changes in, or cash requirements for, our working capital needs;
•
they do not reflect the significant interest expense, or the cash requirements necessary, to service interest or
principal payments, on our debts;
•
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized
will often need to be replaced in the future and EBITDA and Recurring EBITDA do not reflect any cash
requirements that would be required for such replacements;
•
some of the exceptional items that we eliminate in calculating Recurring EBITDA reflect cash payments
that were made, or will in the future be made; and
•
the fact that other companies in our industry may calculate EBITDA and Recurring EBITDA differently
than we do, which limits its usefulness as a comparative measure.
Similarly, net debt (which we define as our total financial liabilities plus capitalized interests and overdraft less
financing costs and amortizations and cash and cash equivalents) is a measure presented to enhance the investor’s
understanding of indebtedness and our ability to fund our ongoing operations. However, it is a non-GAAP measure
not determined based on IFRS, or any other internationally accepted accounting principles, and you should not
consider it as an alternative to the historical financial position of the eDreams ODIGEO Group, included elsewhere
in this prospectus. Net debt, as defined by us, may not be comparable to similarly titled measures as presented by
other companies due to differences in the way our debt and liquidity non-GAAP measures are calculated.
Certain amounts and percentages included in this prospectus have been rounded. Accordingly, in certain
instances, the sum of the numbers in a column of a table may not exactly equal the total figure for that column.
The financial information included in this prospectus is not intended to comply with the applicable accounting
requirements of the Securities Act and the related rules and regulations of the SEC.
Pre-Combination Financial Information
This prospectus presents certain financial information for eDreams on a consolidated basis for periods prior to
which eDreams became part of the eDreams ODIGEO Group through the Combination for the sole purpose of
assisting potential investors to understand the scale of our business compared to eDreams and our extended
operating history (as eDreams was the most important entity involved in the Combination given our continuing chief
executive officer, company culture and technology). eDreams’ pre-Combination consolidated financial information
was prepared in accordance with Spanish GAAP, which differs in certain respects from IFRS.
The pre-Combination eDreams financial measures presented herein include revenues, Revenue Margin,
Recurring EBITDA and service fees per flight booking. Although eDreams used the same definitions to calculate
Revenue Margin, Recurring EBITDA (as described above in “—Non-GAAP Measures”) and service fees per flight
booking as we do, the financial information used to calculate eDreams’ financial measures, and eDreams’
55
consolidated revenues, is based on Spanish GAAP information. Although differences exist between Spanish GAAP
and IFRS, management has determined that there are no significant differences applicable to eDreams in relation to
the recognition and measurement principles applied under Spanish GAAP that are necessary in order to facilitate the
indicative comparison of the eDreams’ pre-Combination financial measures presented herein with those of the
Company.
56
DIVIDENDS AND DIVIDEND POLICY
Dividend Policy
We do not currently intend to pay a dividend on our Shares in the foreseeable future because based on the
Company’s profile and strategy we expect to reinvest our near-term future earnings and cash generation in initiatives
to grow the business or for purposes of deleveraging. If our Board of Directors decides to pay a dividend on our
Shares in the future, we expect the amount and timing of such future dividends will depend upon a number of
factors, including our strategy, future earnings, financial condition and level of indebtedness, cash flow, working
capital requirements, capital expenditures and applicable provisions of our Articles of Incorporation. In addition, our
ability to pay dividends is subject to certain limitations as set out below.
All of our Shares will have equal rights to the payment of dividends.
Any dividends paid in the future will be subject to tax under Luxembourg law. See “Taxation—Taxation in the
Grand Duchy of Luxembourg—Taxation of the Company—Withholding Tax on Dividends” below.
Limitations on Dividend Payments and Other Distributions
Principal Debt Arrangements
We are a holding company and our ability to generate income and pay dividends is dependent on the ability of
our subsidiaries to declare and pay dividends or lend funds to us. The 2018 Notes Indenture, the 2019 Notes
Indenture and the Revolving Credit Facility Agreement each contain certain customary provisions limiting the
ability of our direct subsidiary GTF, our indirect subsidiary LuxGEO or our indirect subsidiary GDF, as applicable,
to pay dividends and make other distributions, which restricts our ability to pay dividends and make other
distributions to our Shareholders.
2018 Notes Indenture
LuxGEO’s ability to pay dividends on its shares is limited under the terms of the 2018 Notes Indenture to an
amount equal to 50% of GTF’s consolidated net income (calculated in accordance with the 2018 Notes Indenture)
since April 1, 2011 to the end of the most recently ended fiscal quarter for which internal financial statements are
available preceding the dividend payment plus 100% of net cash proceeds or fair market value of marketable
securities received by LuxGEO from the issue or sale of certain of its equity or equity-linked securities since
January 31, 2013 plus certain other amounts set out in the 2018 Notes Indenture, subject to certain other conditions.
Such other conditions include the ability of LuxGEO and its restricted subsidiaries to incur debt under the fixed
charge coverage ratio (calculated in accordance with the 2018 Notes Indenture).
In addition, following the completion of an initial public offering of a parent entity (such as the Offering),
LuxGEO may pay dividends on its capital stock in an amount not to exceed the greater of (i) 6% of the net cash
proceeds received by LuxGEO from such offering and (ii) an amount equal to 6% of the IPO market capitalization
(as defined in the 2018 Notes Indenture), subject to certain conditions. Such conditions include the requirement that,
pro forma for such dividend payment, GTF’s consolidated leverage ratio (calculated in accordance with the 2018
Notes Indenture) is equal to or less than 3.00 to 1.00 and, directly or indirectly, the net proceeds of LuxGEO’s
dividend are used to fund a corresponding dividend on the capital stock of the Company.
2019 Notes Indenture
The 2019 Notes Indenture contains substantially similar limitations on GTF’s ability to pay dividends on its
shares as those contained in the 2018 Notes Indenture in respect of LuxGEO’s ability to pay dividends, provided that
the provision permitting dividends of GTF following the completion of an initial public offering of a parent entity
(such as the Offering) is for an amount not to exceed the greater of (i) 6% of the net cash proceeds received by GTF
from such offering and (ii) an amount equal to 5% of the parent entity’s IPO market capitalization (as defined in the
2019 Notes Indenture).
57
Revolving Credit Facility Agreement
The Revolving Credit Facility Agreement contains the same limitations on LuxGEO’s ability to pay dividends
on its shares as those contained in the 2018 Notes Indenture.
See “Management’s Discussion and Analysis of Our Financial Condition and Results of Operations—
Description of Debt Arrangements” for further details regarding the 2018 Notes Indenture, the 2019 Notes Indenture
and the Revolving Credit Facility Agreement.
Luxembourg Law
The conditions under which we may declare dividends based on Luxembourg law and our Articles of
Incorporation are described under “Description of the Share Capital of the Company and Applicable Regulations—
General Provisions Relating to Profit Allocation and Dividend Payments” below.
58
CAPITALIZATION
The following table sets forth our net cash and cash equivalents and capitalization on (i) an actual basis as of
January 31, 2014 and (ii) on an as-adjusted basis to reflect (A) the completion of the Shareholder Reorganization
(see “Principal Shareholders—Shareholder Reorganization”), (B) the sale by us of 4,878,049 newly-issued Shares in
the Offering, at an issue price of €10.25 per Share and (C) the use of the €50 million gross proceeds received by us
to redeem a portion of the 2019 Notes on or after May 1, 2014 and the use of €12.6 million of cash on hand to pay
underwriting fees and commissions and other offering expenses (assuming full payment of the Underwriters’
discretionary fee) (see “Plan of Distribution”).
This table should be read in conjunction with “Plan of Distribution”, “Selected Consolidated Financial
Information and Other Data”, “Management’s Discussion and Analysis of Our Financial Condition and Results of
Operations” and our Consolidated Financial Statements, included elsewhere in this prospectus.
As of January 31, 2014(1)
Actual
As adjusted
(unaudited)
(in thousand €)
Cash:
Cash and cash equivalents ...............................................................................................
Overdraft(2)......................................................................................................................
Net cash and cash equivalents .......................................................................................
Debt:
Revolving Credit Facility(3) ..............................................................................................
2018 Notes(3) ...................................................................................................................
2019 Notes(3) ...................................................................................................................
Convertible Subordinated Shareholder Bonds ..................................................................
Total obligations under finance leases(4) ...........................................................................
Other loans......................................................................................................................
Accrued interest(5) ...........................................................................................................
Total debt.......................................................................................................................
Capitalized financing costs ..............................................................................................
Other...............................................................................................................................
Total borrowings ...........................................................................................................
Equity:
Share capital....................................................................................................................
Share premium ................................................................................................................
Other reserves .................................................................................................................
Retained earnings ............................................................................................................
Net income/(loss) ............................................................................................................
Total equity....................................................................................................................
Total capitalization ........................................................................................................
141,754
(119)
141,635
129,190 (6)
(119)
129,071
–
325,000
175,000
150,498
155
257
4,540
655,450
(19,268)
(35,451)
600,730
–
325,000
128,610 (7)
– (8)
155
257
4,540
458,561
(16,917) (9)
– (10)
441,644
234,862
10,488 (11)
238,849 663,721 (10)
3,412
3,412
(100,519) (140,024) (13)
(12,810) (24,282) (14)
363,794
513,316
964,524
954,960
(1)
Since January 31, 2014, there has been no material change to our capitalization, other than as a result of the Offering and the
Shareholder Reorganization on an as-adjusted basis.
(2)
Represents amounts temporarily drawn under certain of our bank accounts in connection with our cash pooling in France.
(3)
Guaranteed and secured debt. See “Management’s Discussion and Analysis of Our Financial Condition and Results of Operations—
Description of Debt Arrangements”.
(4)
€0.2 million of total obligations under financial leases consisted of non-current financial leases.
(5)
Represents accrued interest on the 2018 Notes and the 2019 Notes in an amount equal to €4.5 million.
(6)
Reflects the use of €12.6 million of cash on hand to pay underwriting fees and commissions and other offering expenses (assuming full
payment of the Underwriters’ discretionary fee). See “Listing and Admission to Trading”.
59
(7)
Reflects a reduction of €46.4 million of outstanding principal amount of the 2019 Notes as a result of the use of the €50 million gross
proceeds received by us in the Offering to redeem a portion of the 2019 Notes on or after May 1, 2014. The remaining €3.6 million of the
gross proceeds received by us in the Offering will be used to pay the redemption applicable premium in respect of the redeemed portion of
the 2019 Notes. See “Listing and Admission to Trading”.
(8)
As described in “Principal Shareholders—Shareholder Reorganization”, as a result of the Shareholder Reorganization, the Company will
become the holder of 100% of the Convertible Subordinated Shareholder Bonds, which were issued by GTF in connection with the
Combination. Accordingly, our consolidated total debt will not reflect the Convertible Subordinated Shareholder Bonds as such debt will be
within our consolidation group.
(9)
Reflects a reduction of €2.4 million in capitalized financing costs corresponding to the portion of the 2019 Notes redeemed with the gross
proceeds received by us in the Offering.
(10) Other represents the portion of the Convertible Subordinated Shareholder Bonds classified as equity under IFRS for €35.5 million. As
described in “Principal and Selling Shareholders—Shareholder Reorganization”, as a result of the Shareholder Reorganization, the
Company will become the holder of 100% of the Convertible Subordinated Shareholder Bonds, which were issued by GTF in connection
with the Combination. Accordingly, there would not be a portion of the Convertible Subordinated Shareholder Bonds classified as equity
on an as adjusted basis.
(11) In connection with the Shareholder Reorganization, the share capital of the Company held by our Shareholders will be reduced to €10
million, representing 100,000,000 Shares with a nominal value of € 0.10 each. In addition, the share capital also reflects the issuance of
4,878,049 new Shares with a nominal value of €0.10 each offered by us in the Offering at an issue price of €10.25 per Share. See “Principal
Shareholders—Shareholder Reorganization”.
(12) Reflects an increase in our share premium in connection with the Shareholder Reorganization and the issuance of 100,000,000 Shares with
a nominal value of €0.10 as well as an increase in our share premium of €49.5 million corresponding to the issuance of 4,878,049 new
Shares offered by us in the Offering at an issue price of €10.25 per Share.
(13) Reflects €3.0 million of the €12.6 million of underwriting fees and commissions and other offering expenses (assuming full payment of the
Underwriters’ discretionary fee) that are directly attributable to the issuance of 4,878,049 new Shares offered by us in the Offering at an
issue price of €10.25 per Share and allocated as Retained earnings. Also reflects €36.5 million of the Convertible Subordinated Shareholder
Bonds classified as equity under IFRS.
(14) Reflects an increase in Net loss due to the following items:
•
in connection with the redemption of the portion of 2019 Notes, €2.4 million of capitalized financing costs will be reversed in the
income statement and €3.6 million of the redemption price of such 2019 Notes will be booked in the financing costs;
•
in connection with the Offering, €9.6 million of underwriting fees and other offering expenses will be expensed in the income
statement (of which €3.0 million had already been accrued as of January 31, 2014); and
•
financial income of €1.1 million related to the reversal of the effective interest rate expense recognized historically in connection with
the Convertible Subordinated Shareholder Bonds, which will no longer be considered as debt in our consolidated group following the
Shareholder Reorganization.
60
SELECTED FINANCIAL INFORMATION AND OTHER DATA
The selected financial information as of December 31, 2013 and for the nine months ended December 31, 2013
and 2012, as of and for the years ended March 31, 2013 and 2012 and as of March 31, 2011 and for the period from
February 14, 2011 to and including March 31, 2011 presented below has been derived from our Consolidated
Interim Financial Statements, our Consolidated Annual Financial Statements and our Unconsolidated 2011 Financial
Statements, respectively, and should be read in conjunction with, and is qualified by reference to, “Presentation of
Financial and Other Data”, “Management’s Discussion and Analysis of Our Financial Condition and Results of
Operations”, and our Consolidated Interim Financial Statements and Consolidated Annual Financial Statements,
including the notes thereto, included in this prospectus.
The Consolidated Interim Financial Statements have been prepared in accordance with IFRS and are unaudited.
The Consolidated Annual Financial Statements have been prepared in accordance with IFRS and audited by
Deloitte Audit S.à r.l., our independent auditors.
The Unconsolidated 2011 Financial Statements have been prepared in accordance with Luxembourg GAAP and
audited by Deloitte Audit S.à r.l., our independent auditors.
reported financial information for each of the years ended March 31, 2011 and March 31, 2012 does not include, or
does not include for the full period, the results of each of the principal businesses which now form the eDreams
ODIGEO Group, as reflected in the financial information included herein for the year ended March 31, 2013 and
each of the nine months ended December 31, 2013 and 2012. In particular, the financial information included herein
for the year ended March 31, 2012 does not reflect the results of the Opodo business for the period April 1, 2011
through June 30, 2011 (i.e., the first quarter of the year ended March 31, 2012), as the Opodo business was acquired
and consolidated effective June 30, 2011.
information included in this prospectus because the Unconsolidated 2011 Financial Statements were prepared on an
unconsolidated basis in accordance with Luxembourg GAAP for the period from February 14, 2011 to and including
March 31, 2011, during which time the Company had no operations and only de minimis activities, while the
Consolidated Annual Financial Statements reflects consolidated financial information for the financial years and
includes the results of the operating companies of the Group.
See “Management’s Discussion and Analysis of Our Financial Condition and Results of Operations—Factors
Affecting the Comparability of Our Results of Operations”.
Consolidated Income Statement Data
December 31,
2013
2012
For the year ended
March 31,
2013
(unaudited)
2012
(audited)
(in thousand €)
Revenue ........................................................................................
Operating profit/(loss) ...................................................................
Financial and similar income and expenses ....................................
Profit/(loss) before taxes ................................................................
Income tax ....................................................................................
Profit and loss attributable to the parent company ..........................
61
355,957
49,502
(46,953)
2,549
(11,677)
(9,128)
355,698
54,869
(45,515)
9,322
(7,212)
2,178
479,549
63,360
(83,141)
(19,781)
(3,617)
(23,330)
423,543
15,863
(72,356)
(56,493)
(7,763)
(64,256)
Consolidated Statement of Financial Position Data
As of
December 31,
As of
March 31,
2013
2013
(unaudited)
2012
(audited)
(in thousand €)
Assets:
Non-current assets ..........................................................
Current assets ................................................................................
Total Assets..................................................................................
1,206,347
167,046
1,373,393
1,219,494
281,478
1,500,972
1,236,940
270,913
1,507,853
Equity and liabilities:
Shareholder’s equity (parent company) ..........................................
Non-current liabilities ....................................................................
Current liabilities...........................................................................
Total Equity and Liabilities.........................................................
366,171
715,046
292,176
1,373,393
376,609
705,986
418,377
1,500,972
387,228
680,929
439,696
1,507,853
Consolidated Cash Flow Statement Data
December 31,
2013
2012
For the year ended
March 31,
2013
(unaudited)
2012
(audited)
(in thousand €)
Profit/(loss) ..............................................................................
Net cash from operating activities .............................................
Net cash flow from/(used) in investing activities .......................
Net cash flow from/(used) in financing activities.......................
(9,128)
(13,236)
(28,395)
(30,882)
2,178
16,128
(12,420)
(43,532)
(23,330)
107,484
(18,335)
(50,413)
(64,256)
95,929
(420,121)
370,738
Net increase/(decrease) in cash and cash equivalent ..............
Cash and cash equivalents at beginning of period ......................
Effect of foreign exchange rate changes ....................................
(72,513)
159,157
(1,481)
85,163
(39,824)
119,346
526
80,048
38,736
119,345
1,074
159,155
46,546
72,022
778
119,346
Cash at the closing
Cash .........................................................................................
Bank facilities and overdrafts....................................................
89,649
(4,486)
85,163
87,035
(6,987)
80,848
159,201
(46)
159,155
119,443
(97)
119,346
62
Unconsolidated 2011 Profit and Loss Account Data
For the
period from
February 14,
2011 to and
including
March 31,
2011
(audited)
(in €)
Charges
Value adjustments in respect of
Formation expenses and tangible and intangible fixed assets(1) ............................................................
Other operating charges(2) ......................................................................................................................
Interest payable and other financial charges
Other interest and charges ..................................................................................................................
Other tax not shown under the above heading ........................................................................................
Total Charges ......................................................................................................................................
Income
Loss for the period.................................................................................................................................
Total Income ........................................................................................................................................
141
16,082
150
1,575
17,948
17,948
17,948
(1) Relates to amortization of formation expenses by 20% in the period from February 14, 2011 to and including March 31, 2011 by 20% from
€1,407 as of February 14, 2011 to €1,266 as of March 31, 2011.
(2) Other operating charges relates to the Company’s ordinary costs of conducting its business.
Unconsolidated 2011 Balance Sheet Data
As of
March 31,
2011
(audited)
(in €)
Assets
Formation expenses ...............................................................................................................................
Fixed assets
Financial assets
Shares in affiliated undertakings(1) .................................................................................................
Current assets
Cash at bank, cash in postal cheque accounts, cheques and cash in hand .............................................
Total Assets..........................................................................................................................................
Liabilities
Capital and reserves
Subscribed capital(2) ...........................................................................................................................
Loss for the financial period ...............................................................................................................
Non-subordinated debt
Trade creditors
due in one year or less ...................................................................................................................
Total Liabilities ...................................................................................................................................
1,266
31,000
1,443
33,709
34,000
(17,948)
16,052
17,657
33,709
(1) Relates to the holding of 3,099,997 ordinary shares in, representing 99.99% of share capital of, Geo Travel Finance S.C.A.
(2) Relates to the Company’s share capital, which as of March 31, 2011 was €34,000, split into 3,400,000 shares with a par value of €0.01 each.
63
Unconsolidated 2011 Cash Flow Statement Data
For the period
from
February 14, 2011
to and including
March 31, 2011
(audited)
(in €)
Net Profit / (Loss) ............................................................................................................................
Value adjustment in respect of formations expenses, tangibles and intangible fixed assets ..................
Changes in working capital ................................................................................................................
Net cash from operating activities ...................................................................................................
Acquisitions of financial assets ..........................................................................................................
Net cash flow from / (used) in investing activities ...........................................................................
Proceeds of issue of shares (net of formation expenses) ......................................................................
Net cash flow from / (used) in financing activities ..........................................................................
Net increase / (decrease) in cash and cash equivalents ........................................................................
Cash and cash equivalents at beginning of period ...............................................................................
Cash and cash equivalents at end of period ....................................................................................
64
(17,948)
141
17,657
(150)
(31,000)
(31,000)
32,593
32,593
1,443
–
1,443
OTHER UNAUDITED FINANCIAL AND OPERATING DATA
The following financial information includes measures which are not accounting measures as defined by IFRS.
These measures should not be used instead of, or considered as alternatives to, the eDreams ODIGEO Group’s
historical financial results based on IFRS. These measures may not be comparable to similarly titled measures
disclosed by other companies.
The other unaudited financial and operating data as of December 31, 2013 and for the nine months ended
December 31, 2013 and 2012 and as of and for the years ended March 31, 2013 and 2012 presented below has been
derived from our Consolidated Interim Financial Statements, our Consolidated Annual Financial Statements and/or
internal Group accounts or information systems.
December 31,
2013
2012
For the year ended
March 31,
2013
2012
(unaudited, unless otherwise stated)
(in thousand €, unless otherwise stated)
Bookings(1) (in thousand)
Flight .............................................................................
Non-flight .......................................................................
Total Bookings ..................................................................
6,512
750
7,261
5,700
599
6,300
7,949
779
8,728
7,077
653
7,730
Bookings(1) (2) (in thousand)
Core ...............................................................................
Expansion ......................................................................
Total Bookings ..................................................................
4,402
2,859
7,261
4,025
2,275
6,300
5,640
3,088
8,728
5,376
2,354
7,730
Gross Bookings(3)...............................................................
3,261
3,119
4,281
3,586
Revenue Margin(4)
Flight .............................................................................
Non-flight .......................................................................
Total Revenue Margin........................................................
251,224
60,683
311,906
215,144
53,001
268,144
305,211
67,775
372,986
259,867
59,835
319,703
Revenue Margin(2) (4)
Core ...............................................................................
Expansion ......................................................................
194,547
117,359
311,906
176,216
91,928
268,144
250,038
122,948
372,986
231,400
88,303
319,703
Service fees per flight Booking(5) (in €) ..............................
25.30
23.10
23.10
22.30
Revenue Margin(4)
from customers ...............................................................
from suppliers ................................................................
from advertising and meta click-outs...............................
223,446
77,062
11,398
311,906
192,815
69,228
6,101
268,144
265,443
99,245
8,298
372,986
220,258
91,668
7,777
319,703
Variable Costs(6).................................................................
Fixed Costs(7) .....................................................................
178,800
44,286
148,214
39,548
210,197
54,358
172,166
52,103
Recurring EBITDA(8) .........................................................
88,820
80,382
108,431
95,434
Recurring EBITDA Margin(9)
(% of Revenue Margin) ..................................................
28.5%
30.0%
29.1%
29.9%
81,189
72,220
96,981
59,709
(8)
EBITDA .........................................................................
65
(1) Bookings, which is a non-GAAP measure, means the number of transactions under the agency model and the principal model as well as
transactions made via our white label distribution and sourcing partners. One booking can encompass one or more products and one or more
passengers. For a description of the agency and principal models, see “Management’s Discussion and Analysis of Our Financial Condition
and Results of Operations—Principal Consolidated Income Statement Line Items—Revenue—Agency and principal models”.
(2) For the years ended March 31, 2013 and 2012, the Core segment includes all Bookings and Revenue Margin attributable to Go Volo
irrespective of the location at which the booking was made. For the nine months ended December 31, 2013 and 2012, Bookings and
Revenue Margin attributable to Go Volo have been allocated between the Core and Expansion segments according to the country of
booking.
(3) Gross Bookings, which is a non-GAAP measure, means the total amount paid by our customers for travel products and services booked
through us (including the part that is passed on to, or transacted by, the travel supplier), including taxes, service fees and other charges and
excluding VAT. Gross Bookings include the gross value of transactions booked under both agency and principal models as well as
transactions made via our white label distribution and sourcing partners or any transaction where we act as “pure” intermediary whereby we
serve as a click-through and pass the reservations made by the customer to the relevant travel supplier.
(4) Revenue Margin, which is a non-GAAP measure, means our IFRS revenue less supplies. Our management uses Revenue Margin to provide
a measure of our revenue after reflecting the deduction of amounts we pay to our suppliers in connection with the revenue recognition
criteria used for products sold under the principal model (gross value basis). Accordingly, Revenue Margin provides a comparable revenue
measure for products, whether sold under the agency or principal model. For a description of the agency and principal models, see
“Management’s Discussion and Analysis of Our Financial Condition and Results of Operations—Principal Consolidated Income Statement
Line Items—Revenue—Agency and principal models”. Figures for the years ended March 31, 2013 and 2012 are based on audited income
statement line item figures.
(5) Service fees per flight Booking, which is a non-GAAP measure, means service fees (which is the total difference between the price at which
we source a product and sell that product to a customer, which difference includes, among other components, any mark-up to the price at
which we source a product and fees that we charge customers in connection with a booking) earned in respect of flight products divided by
the number of flight Bookings.
(6) Variable Costs, which is a non-GAAP measure, includes all expenses which depend on the number of transactions processed. These include
acquisition costs, merchant costs as well as personnel costs related to call centers as well as corporate sales personnel.
(7) Fixed Costs, which is a non-GAAP measure, includes IT expenses net of capitalization write-off, personnel expenses which are not Variable
Costs, external fees, building rentals and other expenses of fixed nature.
(8) We define EBITDA, which is a non-GAAP measure, as profit/(loss) before financial and similar income and expenses, income tax and
depreciation and amortization and profit/loss on disposals of non-current assets. We define Recurring EBITDA, which is a non-GAAP
measure, as profit/(loss) attributable to the parent company before financial and similar income and expenses, income tax, depreciation and
amortization and profit/loss on disposals of non-current assets, certain share-based compensation, expenses related to the Combination and
other income and expense items which are considered by management to not be reflective of our ongoing operations. Neither EBITDA nor
Recurring EBITDA is a measure of performance or liquidity under IFRS and should not be considered by investors in isolation from, or as a
substitute for, a measure of profit, or as an indicator of our operating performance or cash flows from operating activities as determined in
accordance with IFRS. We do not consider these non-GAAP financial measures to be a substitute for, or superior to, the information
provided by IFRS financial measures. We have presented this supplemental non-GAAP measure because we believe that it is a useful
indicator of our ability to incur and service our indebtedness and can assist analysts, investors and other parties to evaluate our business.
EBITDA, Recurring EBITDA and similar measures are used by different companies for differing purposes and are often calculated in ways
that reflect the circumstances of those companies. You should exercise caution in comparing EBITDA or Recurring EBITDA as reported by
us to similar measures of other companies. We encourage you to evaluate the adjustments made to arrive at EBITDA and Recurring
EBITDA, and the limitations for purposes of analysis in excluding them. For a reconciliation of EBITDA and Recurring EBITDA to
operating profit, see “—Reconciliation of EBITDA and Recurring EBITDA to Operating profit”.
(9) Recurring EBITDA Margin, which is a non-GAAP measure, is Recurring EBITDA divided by Revenue Margin. Our management uses
Recurring EBITDA Margin to measure Recurring EBITDA generated in proportion to Revenue Margin generated. Recurring EBITDA
Margin provides a comparable Recurring EBITDA measure for products, whether sold under the agency or principal model. For a
description of the agency and principal models, see “Management’s Discussion and Analysis of Our Financial Condition and Results of
Operations—Principal Consolidated Income Statement Line Items—Revenue—Agency and principal models”.
66
Reconciliation of EBITDA and Recurring EBITDA to Operating profit
December 31,
For the year ended
March 31,
2012
2013
2013
2012
(in thousand €)
Operating profit(1) ................................................................................................
49,502
54,869
Depreciation and amortization, impairment and profit/(loss)
(17,351)
on disposals of non-current assets (net) (2) ................................ (31,687)
81,189
72,220
EBITDA................................................................................................
63,360
15,863
(33,621)
96,981
(43,846)
59,709
Non-recurring personnel expenses ................................................................
(5,822)
(5,479)
Other non-recurring income/(expenses)................................................................
(1,809)
(2,615)
68
Non-controlling interest – Result ................................................................–
(3)
88,820
80,382
Recurring EBITDA ................................................................
(8,153)
(3,229)
68
108,431
(5,923)
(29,802)
–
95,434
(1) Operating profit for the years ended March 31, 2012 and 2013 is audited.
(2) Depreciation and amortization, impairment and profit/(loss) on disposals of non-current assets for the years ended March 31, 2012 and 2013
is audited.
(3) For the nine months ended December 31, 2013 and December 31, 2012, respectively, the difference between EBITDA and Recurring
EBITDA is explained by:
•
€1.8 million (2012: €2.6 million) of other non-recurring income and expenses;
•
€5.0 million (2012: €3.7 million) of non-cash expenses in relation to the long-term incentive plan dedicated to the eDreams ODIGEO
Group employees; and
•
€0.9 (2012: €1.8 million) of personnel costs notably related to employee termination agreements.
For the year ended March 31, 2013 and March 31, 2012, respectively, the difference between EBITDA and Recurring EBITDA is explained
by:
•
€3.2 million (2012: €29.8 million) of other non-recurring income and expenses;
•
€6.4 million (2012: €4.8 million) of non-cash expenses in relation to the long-term incentive plan dedicated to the eDreams ODIGEO
Group employees; and
•
€1.8 million (2012: €1.1 million) of personnel costs notably related to employee termination agreements.
Leverage Ratio
As of and for
the twelve
months ended
December 31,
2013
As of and
for the year
ended
March 31,
2013
As of and for As of and for
the twelve
the year
months ended
ended
December 31,
March 31,
(1)
2012
2012
(unaudited)
(in thousand €, unless otherwise stated)
Net debt (as per statement of financial position)(2) ................................
410,910
Recurring EBITDA(3) ........................................................
116,869(4)
Leverage ratio(7) (as a multiple of Recurring EBITDA)................................
3.5x
332,405
108,431
3.1x
385,215
108,254(5)
3.6x
355,287
107,334(6)
3.3x
(1) Refers to GTF and its consolidated subsidiaries, as the Company does not have historical quarterly information and accordingly cannot
present its consolidated financial information as of or for the twelve months ended December 31, 2012. GTF is a wholly owned subsidiary
of eDreams ODIGEO which directly or indirectly controls all of our operating companies. Our management regards the consolidated
information of GTF as indicative of the consolidated information of the Company as at and for the twelve months ended December 31,
2012.
(2) Net debt is a non-GAAP measure. For a discussion of net debt, see “Management’s Discussion and Analysis of Our Financial Condition and
Results Of Operations—Liquidity and Capital Resources”.
(3) We define Recurring EBITDA, which is a non-GAAP measure, as profit/(loss) attributable to the parent company before financial and
similar income and expenses, income tax, depreciation and amortization and profit/loss on disposals of non-current assets, certain sharebased compensation, expenses related to the Combination and other income and expense items which are considered by management to not
be reflective of our ongoing operations. Neither EBITDA nor Recurring EBITDA is a measure of performance or liquidity under IFRS and
should not be considered by investors in isolation from, or as a substitute for, a measure of profit, or as an indicator of our operating
67
performance or cash flows from operating activities as determined in accordance with IFRS. We do not consider these non-GAAP financial
measures to be a substitute for, or superior to, the information provided by IFRS financial measures. We have presented this supplemental
non-GAAP measure because we believe that it is a useful indicator of our ability to incur and service our indebtedness and can assist
analysts, investors and other parties to evaluate our business. EBITDA, Recurring EBITDA and similar measures are used by different
companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise
caution in comparing EBITDA or Recurring EBITDA as reported by us to similar measures of other companies. We encourage you to
evaluate the adjustments made to arrive at EBITDA and Recurring EBITDA, and the limitations for purposes of analysis in excluding them.
For a reconciliation of EBITDA and Recurring EBITDA to operating profit, see “Selected Financial Information and Other Data—
Reconciliation of EBITDA and Recurring EBITDA to Operating profit”.
(4) Shows Recurring EBITDA for the twelve months ended December 31, 2013.
(5) Shows Recurring EBITDA for the twelve months ended December 31, 2012.
(6) Includes the results of the Opodo Group for the period April 1, 2011 through June 30, 2011.
(7) Leverage ratio, which is a non-GAAP measure, means net debt (as per statement of financial position) divided by Recurring EBITDA.
68
MANAGEMENT’S DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of the financial condition and results of operations of
eDreams ODIGEO (the “Company”) on a consolidated basis (the “eDreams ODIGEO Group”) in conjunction with
the sections entitled “Selected Consolidated Financial Information and Other Data”, “Other Unaudited Financial
and Operating Data”, “Presentation of Financial and Other Data—Non-GAAP Measures” as well as the financial
statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking
statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk
Factors” section of this prospectus. Actual results could differ materially from those contained in any
forward-looking statements. See the “Forward-Looking Statements” section of this prospectus.
The following discussion and analysis of the financial condition and results of operations is based on the
Consolidated Annual Financial Statements and Consolidated Interim Financial Statements, which were each
prepared in accordance with IFRS, as well as on the Unconsolidated 2011 Financial Statements for the Company,
which were prepared in accordance with Luxembourg GAAP. The Consolidated Annual Financial Statements and
the Unconsolidated 2011 Financial Statements are audited. The Consolidated Interim Financial Statements are
unaudited.
reported financial information for each of the years ended March 31, 2011 and March 31, 2012 does not include, or
does not include for the full period, the results of each of the principal businesses which now form the eDreams
ODIGEO Group, as reflected in the financial information included herein for the year ended March 31, 2013 and
each of the nine months ended December 31, 2013 and 2012. In particular, the financial information included
herein for the year ended March 31, 2012 does not reflect the results of the Opodo business for the period April 1,
2011 through June 30, 2011 (i.e., the first quarter of the year ended March 31, 2012), as the Opodo business was
acquired and consolidated effective June 30, 2011.
information included in this prospectus because the Unconsolidated 2011 Financial Statements were prepared on
an unconsolidated basis in accordance with Luxembourg GAAP for the period from February 14, 2011 to and
including March 31, 2011, during which time the Company had no operations and only de minimis activities, while
the Consolidated Annual Financial Statements reflects consolidated financial information for the financial years
and includes the results of the operating companies of the Group.
The financial information included in this prospectus includes certain measures which are not accounting
measures as defined by IFRS. These measures have been included for the reasons described below. However, these
measures should not be used instead of, or considered as alternatives to, the eDreams ODIGEO Group’s historical
financial results based on IFRS. Further, these measures may not be comparable to similarly titled measures
disclosed by other companies. See “Presentation of Financial and Other Data—Non-GAAP Measures”.
Overview
We are a leading online travel company with a presence in 42 countries. We make flight and non-flight products
directly available to travelers principally through our online booking channels (desktop websites, mobile websites
and mobile apps) and via our call centers, as well as indirectly through white label distribution partners and other
travel agencies. With more than 14 million customers served in the year ended March 31, 2013, we are a worldwide
leader in delivering flight products, which is our principal business. We also provide our customers with non-flight
products, such as hotel bookings, Dynamic Packages (which are dynamically priced packages consisting of a flight
product and a hotel booking that travelers customize based on their individual specifications by combining select
products from different travel suppliers through us), car rentals and vacation packages.
Substantially all of our operations are in the leisure travel business. We derive the substantial majority of our
revenue and profit from the sale of flight products in Europe. Our principal operations, as measured by Revenue
Margin contribution, are in France, Germany, Spain, Italy, the United Kingdom and the Nordics. Outside of Europe,
69
we are present in a number of large countries, including, in order of Revenue Margin contribution, Australia, the
We organize our operations into two principal financial reporting segments: Core (our mature markets) and
Expansion (the markets in which we are less well established), which reflects the manner in which our management
evaluates the performance of our various businesses and, on the basis of such information, makes financial and
strategic decisions regarding our operations. Our Core segment consists of our operations in France, Spain and Italy.
Our Expansion segment consists of our operations in Germany, Austria, the United Kingdom and the other countries
in which we operate, including, among others, the Nordics and countries outside Europe. In each of our Core and
Expansion segments, we offer flight and non-flight products to travelers.
In the nine months ended December 31, 2013, our businesses generated 7.3 million Bookings, and generated
Revenue Margin of €311.9 million and Recurring EBITDA of €88.8 million, compared to 6.3 million Bookings,
€268.1 million of Revenue Margin and €80.4 million of Recurring EBITDA in the nine months ended December 31,
2012.
In the year ended March 31, 2013, our businesses generated 8.7 million Bookings, and generated Revenue
Margin of €373.0 million and Recurring EBITDA of €108.4 million, compared to 7.7 million Bookings,
€319.7 million of Revenue Margin and €95.4 million of Recurring EBITDA in the year ended March 31, 2012.
We generate our Revenue Margin principally from sales of flight products in our Core segment. The following
table sets forth the proportion of Revenue Margin generated by our Core and Expansion segments and by our sales
of flight and non-flight products as a percentage of our total Revenue Margin:(1)
For the nine months For the year ended
ended December 31,
March 31,
2013
2012
2013
2012
(unaudited unless otherwise stated)
(in % of total Revenue Margin)
Revenue Margin(1)
Core(2) ...............................................................................................
Expansion ..........................................................................................
Total Revenue Margin ............................................................................
Revenue Margin(1)
Flight.................................................................................................
Non-flight ..........................................................................................
Total Revenue Margin ............................................................................
62.4% 65.7% 67.0% 72.4%
37.6% 34.3% 33.0% 27.6%
100.0% 100.0% 100.0% 100.0%
80.5%
19.5%
80.2%
19.8%
81.8%
18.2%
81.3%
18.7%
100.0% 100.0% 100.0% 100.0%
(1)
Revenue Margin, which is a non-GAAP measure, means revenue less supplies. Our management uses Revenue Margin to provide a
measure of our revenue after reflecting the deduction of amounts we pay to our suppliers in connection with the revenue recognition criteria
used for products sold under the principal model (gross value basis).
(2)
For the years ended March 31, 2013 and 2012, the Core segment includes all Bookings and Revenue Margin attributable to Go Volo
booking.
We generate our revenue from the sale of (i) flight products, including flights on network carriers, low-cost
carriers and, to some extent, charter airlines, each of which we source through GDSs or our Direct Connect
technology, as well as insurance for flight products and (ii) non-flight products, including hotel bookings, Dynamic
Packages, which are dynamically priced packages consisting of a flight product and a hotel booking that travelers
customize based on their individual specifications by combining select products from different travel suppliers
through us (including revenue from the flight component thereof), car rentals, vacation packages and insurance for
non-flight products, as well as non-travel products, such as advertising, metasearch activities and phone revenue,
consisting mainly of charges on toll calls to our call centers.
The substantial majority of our revenue is generated from our customers. Customer revenue is earned through
service fees (which is the total difference between the price at which we source a product and sell that product to a
customer, which difference includes, among other components, any mark-up to the price at which we source a
product and fees that we charge customers in connection with a booking), insurance revenue and other fees. We also
70
generate revenue from our various suppliers linked to the volume of sales facilitated by us, such as commission and
overcommissions (which are commissions based on the year-end achievement of pre-defined targets), payments
from travel suppliers, incentives from our GDS service providers based on the volume of Bookings completed by us
through GDS systems, commissions we receive from partners under white label sourcing agreements, incentives we
receive from payment processors and charges on toll calls.
Our revenue also comprises revenue from certain other ancillary sources, such as advertising on our websites
and revenue from our metasearch activities. Our metasearch activities generate revenue through cost-per-search
arrangements, where we earn a fee for each user searching on one of our metasearch websites and “clicking out” to a
third party’s website by following a link displayed in one of our metasearch websites, and cost-per-action
arrangements, where we earn a fee for each user “clicking out” to a third party’s website by following a link
displayed in one of our metasearch websites who subsequently makes a booking on such third party’s website.
The proportion of Revenue Margin generated from our customers has increased over the periods presented
compared to the other sources from which we generate revenue. The following table sets forth the proportion of
Revenue Margin generated from customers, suppliers and advertising and meta click-outs as a percentage of our
total Revenue Margin:
For the nine months
ended December 31,
2013
2012
For the year ended
March 31,
2013
2012
(unaudited)
(in % of total
Revenue Margin)
Revenue Margin(1)
from customers ............................................................................................
71.6%
from suppliers ..............................................................................................
24.7%
from advertising and meta click-outs ............................................................
3.7%
Total Revenue Margin .....................................................................................
100.0%
(1)
71.9%
25.8%
2.3%
100.0%
71.2%
26.6%
2.2%
100.0%
68.9%
28.7%
2.4%
100.0%
Revenue Margin, which is a non-GAAP measure, means our IFRS revenue less supplies. Our management uses Revenue Margin to provide
criteria used for products sold under the principal model (gross value basis).
Substantially all of our revenue is earned by us acting as an agent although we also earn revenue acting as
principal for certain products. For a description of the agency and principal models, see “—Principal Consolidated
Income Statement Line Items—Revenue—Agency and principal models”.
Presentation of Financial Information
The Company reports consolidated financial information in accordance with IFRS, applying harmonized
accounting principles and policies across all of its constituent businesses. In addition to the Consolidated Financial
Statements, this prospectus includes Unconsolidated 2011 Financial Statements for the Company as of March 31,
2011 and for the period from February 14, 2011 (the date of incorporation of the Company) to and including March
31, 2011, which were prepared in accordance with Luxembourg GAAP.
For purposes of our Consolidated Financial Statements, the consolidation perimeter of the Company comprises
the Company and all its direct and indirect subsidiaries, including GTF, LuxGEO and all significant entities
historically included in the GoVoyages Group, the eDreams Group and the Opodo Group. All entities are fully
consolidated with a percentage of interest of 100%, for the year ended March 31, 2012, except for
ReallyLateBooking, 25% of whose share capital is owned by Opodo and recorded in the Consolidated Financial
Statements using the equity method. Although Lyparis owned 97% of eDreams Inc. until September 30, 2011, we
considered eDreams Inc. as wholly owned by Lyparis for the purpose of the preparation of the Consolidated
Financial Statements. Lyparis acquired the remaining 3% of the share capital of eDreams Inc. on September 30,
2011.
The Unconsolidated 2011 Financial Statements were prepared for statutory purposes under Luxembourg law in
accordance with Luxembourg GAAP and cover the period in the year ended March 31, 2011 from February 14,
2011, the date of incorporation of the Company. The Company and its direct and indirect subsidiaries at the time
(GTF and LuxGEO) did not have any operations and only had de minimis activities during such period and were
71
incorporated in anticipation of the Combination, which was effective on June 30, 2011 as described below. As a
result and in accordance with article 313 of the 1915 Law, the Company did not prepare consolidated financial
statements for such period.
Combination accounting
Through a contribution to the Company of the eDreams Group by the Permira Funds and the GoVoyages Group
by the Ardian Funds in exchange for shares of the Company and the acquisition by a subsidiary of the Company of
100% of the share capital of Opodo from Amadeus IT Group, S.A. (“Amadeus”) effective June 30, 2011 (the
“Opodo Acquisition”), the eDreams Group was combined with the GoVoyages Group and the Opodo Group to form
eDreams ODIGEO (the “Combination”). The eDreams Group, the GoVoyages Group and the Opodo Group were
consolidated in the Company’s Consolidated Financial Statements as of July 1, 2011.
As part of the Combination, the Ardian Funds and the Permira Funds jointly contributed the GoVoyages Group
and the eDreams Group to GTF in exchange for GTF’s shares (held indirectly). The contribution was outside of the
scope of IFRS 3 Business Combination. As a result, in accordance with International Accounting Standard 8.12 and
absent any guidance under IFRS, the Company considered pronouncements of other standard setting bodies and, in
particular, the guidance under US GAAP (ASC 323 Investments—Equity Method and Joint Ventures) and
determined that using the predecessor’s values of the constituent businesses was the appropriate basis of accounting.
Accordingly, under such accounting treatment, the financial information for the year ended March 31, 2012 reflects
the results of the eDreams Group and the GoVoyages Group for the period from April 1, 2011 through and including
June 30, 2011, even though such groups were not owned by the eDreams ODIGEO Group during such period
because the GoVoyages Group had been acquired by the Ardian Funds in July 2010 and the eDreams Group had
been acquired by the Permira Funds in August 2010.
As a result of the Opodo Acquisition completed on June 30, 2011, the financial information for the year ended
March 31, 2012 reflects the operations of the Opodo Group only for nine months. See “—Factors Affecting the
Comparability of Our Results of Operations”.
Recent transactions
On July 3, 2012, Opodo entered into a share purchase agreement to sell all of its shares in Opodo Tours to
SevenVentures GmbH and Frank Riecke. The sale was completed in August 2012. For purposes of reporting
EBITDA and Recurring EBITDA, Opodo Tours’ negative EBITDA for the months of April and May 2012 (when
the sale was agreed in principle) was included in our EBITDA but not in our Recurring EBITDA in our 2012
Interim Consolidated Financial Statements. The negative EBITDA for these two months amounted to €0.3 million.
On October 2, 2013, we acquired all the shares in Liligo. For purposes of financial reporting, Liligo’s results
since that date have been consolidated in our Consolidated Financial Statements.
Recent Trading
Based on our unaudited management accounts for January 2014, Revenue Margin in January 2014 was
approximately 13% higher than in January 2013. Recurring EBITDA in January 2014 was substantially in line with
Recurring EBITDA in January 2013. We believe the principal driver of the Revenue Margin performance in January
2014 is because in 2013, Easter fell at the end of March whereas in 2014 Easter falls in late April resulting in
customers making travel booking for Easter later in the year in 2014 than in 2013. In addition, we believe that the
lack of year-over-year Recurring EBITDA growth in January 2014 is related to Revenue Margin growth being lower
than Variable Cost growth principally due to the roll-out of certain middle-office functions across our three main
brands to extend full features and functionalities that were not previously applied across all three brands (for
example, in some countries we were not offering all methods of payment to customers) and the timing effect of
Liligo incurring a substantial portion of its annual marketing expense in the first calendar quarter of 2014 (including
in January), as in the past, whereas Liligo was not part of our consolidation perimeter in January 2013.
72
Factors Affecting the Comparability of Our Results of Operations
Consolidated Financial Statements
Following the completion of the Opodo Acquisition, the GoVoyages Group, the eDreams Group and the Opodo
Group were combined to form the eDreams ODIGEO Group and consolidated in the Company’s Consolidated
Financial Statements as of July 1, 2011. See “—Presentation of Financial Information—Combination Accounting”.
Consequently, the Consolidated Financial Statements of the Company reflect the operations of the Opodo Group, the
eDreams Group and GoVoyages Group for the periods of time set forth in the table below:
Financial statements as of
December 31, 2013 and for the
nine months ended
December 31,
2013(1)
2012
(unaudited)
eDreams Group ...........................................
GoVoyages Group .......................................
Opodo Group ..............................................
9 months
9 months
9 months
9 months
9 months
9 months
Financial statements as of and
for
the year ended March 31,
2013(2)
2012
(audited)
12 months
12 months
12 months
12 months
12 months
9 months
(1)
On October 2, 2013, we acquired all the shares in Liligo. For purposes of financial reporting, Liligo’s results since that date have been
consolidated in our Consolidated Financial Statements.
(2)
On July 3, 2012, Opodo entered into a share purchase agreement to sell all of its shares in Opodo Tours to SevenVentures GmbH and Frank
Riecke. The sale was completed in August 2012. For purposes of reporting EBITDA and Recurring EBITDA, Opodo Tours’ negative
EBITDA for the months of April and May 2012 (when the sale was agreed in principle) was included in our EBITDA but not in our
Recurring EBITDA in our 2012 Interim Consolidated Financial Statements. The negative EBITDA for these two months amounted to €0.3
million.
Accordingly, our financial results for the years ended March 31, 2013 and March 31, 2012 are not fully
comparable because of the financial information consolidated therein.
Unconsolidated 2011 Financial Statements
In addition to the Consolidated Financial Statements, this prospectus includes Unconsolidated 2011 Financial
Statements for the Company as of March 31, 2011 and for the period from February 14, 2011 to and including
March 31, 2011, which were prepared in accordance with Luxembourg GAAP. The Unconsolidated 2011 Financial
Statements are not comparable with the consolidated financial information included in this prospectus because the
Unconsolidated 2011 Financial Statements were prepared on an unconsolidated basis in accordance with
Luxembourg GAAP for the period from February 14, 2011 to and including March 31, 2011, during which time the
Company had no operations and only de minimis activities, while the Consolidated Annual Financial Statements
reflects consolidated financial information for the financial years and includes the results of the operating companies
of the Group as described above.
Key Factors Affecting Our Results of Operations
Our results of operations, financial position and liquidity have been, and may continue to be, affected by the
following factors and developments:
Trends and changes in the travel industry and global economy
Our financial results have been, and are expected to continue to be, affected by factors, trends and changes in
the global economy in general and the travel industry in particular. These factors, trends and changes include:
•
Global economic conditions and other factors outside of our control. The economic cycle affects demand
for travel products and consequently our business. Such cycles in general, and demand for travel in
particular, are generally influenced by macroeconomic conditions; global political events, such as terrorist
acts or episodes or labor or social unrest, war or other hostilities, or failing governments; market-specific
events, such as shifts in customer confidence; and customer spending and other events that are beyond our
control, such as pandemic and health-related risks. Demand for travel products is particularly influenced by
general economic conditions, as spending on travel is largely discretionary and tends to decline, or grow
73
more slowly, during economic downturns. The economic and financial crisis has had, and, if it were to
continue, could again have, a significant impact on customer demand in general, and on demand for travel
products in particular. However, during the economic downturn, an increasing number of cost-conscious
customers turned to online travel agencies in the search for cheaper flights and travel deals, which further
increased the extent of online travel penetration and partly offset the adverse impact of deteriorating
consumer confidence on overall travel expenditures. Demand for our products is also exposed to climate
change, accidents, natural disasters, such as the eruption in 2010 of Iceland’s Eyjafjallajökull volcano,
leading to the closure of airspace in various European countries and numerous flight cancellations,
outbreaks of diseases and epidemics. Given the worldwide reach of our travel offerings, similar events in
the past have affected, and could in the future directly affect, our customers’ propensity to travel and lead
to a reduction in travel expenditures. See also “Risk Factors—Risks Related to the Travel Industry—
Demand for our products is dependent on the travel industry, which may be materially affected by general
economic conditions and other factors outside our control. Declines or disruptions in the travel industry
could adversely affect our business, financial condition and results of operations”.
•
Internet penetration in our different markets. The level of our activity and the growth of our businesses are
also highly dependent on the level of online travel penetration (i.e., the proportion of travel bookings made
through the Internet) and the distribution of travel products generally. Increased usage and familiarity with
the Internet have driven rapid growth in online travel penetration of travel expenditures over the past few
years. According to PhoCusWright, the online travel penetration in Europe increased from 34% in 2010 to
41% in 2012. We believe that online travel penetration is lower in most of our expansion markets than in
Europe and that this represents a significant opportunity for OTAs in those countries.
•
Competition from new and existing market participants. The steady increase of penetration rates of online
travel over the past few years has attracted an increasing number of competitors to the online travel
industry and the level of competition is expected to remain high or intensify further in the foreseeable
future. We face strong competition mainly from both established and emerging online and traditional
sellers of travel-related services and products (including traditional travel agencies, tour operators, travel
suppliers and other OTAs). Many travel suppliers, in particular airlines, have been focusing on increasing
online demand for their own websites in lieu of third-party distributors such as our various websites.
Suppliers who sell through their own websites may offer products and services on more favorable terms,
including lower prices, increased or exclusive product availability, no fees or unique access to proprietary
loyalty programs, such as points and miles. In addition, large online portal and search companies, as well as
online travel metasearch sites, which utilize their search technology to aggregate travel search results, may
redirect possible customers to our direct competitors’ websites. On the other hand, we expect that our
strong brand awareness, marketing track record and advanced proprietary technologies give us a
competitive advantage, as new entrants would require significant time and investment to reach a
comparable level of brand awareness and to develop comparable IT systems. Furthermore, the recent
acquisition of our metasearch business, Liligo, allows us to generate revenue based on click-outs to thirdparty vendors, which provides us with additional opportunities to earn revenue.
•
Trend towards travel bookings on mobile devices. Over the past few years, mobile devices (including
smartphones and tablets) have become an increasingly important channel for customers to make travel
bookings and we expect this trend to continue. We believe that customers increasingly plan and book their
journeys when they happen to have free time slots, irrespective of their immediate whereabouts, and mobile
devices afford customers the convenience to make travel arrangements while on the go. We and our
competitors are actively engaged in the design, rollout and improvement of applications for mobile devices.
In 2010, we launched our first applications for iPhone devices. Since then, we have continuously developed
new applications (for both the Android and iPhone/iPad ) and launched updated and optimized versions of
our existing applications. We have experienced significant increases in the orders made via mobile devices
(including via our applications and mobile web browsers). We estimate that approximately 12% of our
flight Orders were made through mobile devices in December 2013 compared with approximately 6% in
December 2012. We do not believe the proportion of non-delivered transactions is materially different
between mobile and non-mobile customers. We believe our service fees per flight Booking made on a
mobile device is similar to that for bookings made on a desktop or laptop computer across our brands and
geographies based on service fees per flight Booking information for eDreams (for which we have data for
the relevant historical period).
74
•
Fragmentation of the European travel industry. The European market for the supply of travel products is
highly fragmented due to the presence of multiple countries with different languages, currencies, tax and
regulatory environments, leading to localized competition for most types of product or service offerings,
structural over-capacity and higher fares. This fragmentation represents an appealing growth opportunity
for OTAs with the ability to access and aggregate the existing extensive range of travel content from
different sources on a timely basis, compare it and make it easily understandable and usable for online
customers. In addition, the fragmentation of the European travel industry along national and language
borders, and among low-cost and flag-carrier airlines, uniquely positions OTAs to arbitrage geographical
differences and offer the best travel deals, establishing a broad-based brand awareness in Europe,
improving transaction volumes and increasing scale.
•
Access to supply of travel products. As we make our travel products available from a variety of large and
small commercial airlines, lodging companies, car rental companies, other destination service providers and
insurance providers, an important component of the success of our business depends on our ability to
maintain our existing relationships, as well as build new relationships, with travel suppliers and GDS
partners. Our ability to maintain our supplier relationships, or continue to access a supplier with which we
do not have a relationship through our systems utilizing its public website, is important to our ability to
source and supply products we sell. In 2011, we signed a 10-year non-exclusive global distribution system
contract with Amadeus, a leading transaction processor for the European travel and tourism industry, which
gives us access to products available on airlines’ branded websites and to other repositories of travel
content, including the highest value segments. In addition, we have established and seek to maintain longterm relationships with key network carriers. We believe that our ability to continue to offer comprehensive
travel content to our customers through our supplier relationships will be a key factor to further enhance
our position as a leading pan-European online travel company.
•
Regulation in our different markets. We must comply with laws and regulations relating to the travel
industry and the provision of travel products, including those relating to IATA accreditation, sales of
packages, data protection and e-commerce, and this compliance imposes a financial burden on us. As we
continue to expand the reach of our brands into the European and other international markets, we are
increasingly subject to laws and regulations applicable to travel agents in those markets, including, in some
countries, laws regulating the provision of travel packages and industry specific value-added tax regimes,
and this is likely to increase our compliance costs. For example, the European Economic Community
Council Directive on Package Travel, Package Holidays and Package Tours imposes various obligations
upon marketers of travel packages, such as disclosure obligations to consumers and liability to consumers
for improper performance of the package, including supplier failure. Pursuant to European and other
regulations, we are required to disclose service fees. The growth and development of online commerce may
prompt calls for more stringent consumer protection laws, which may impose additional financial burdens
on online businesses in general and our business areas and operations in particular.
The eDreams ODIGEO Group and integration of our constituent businesses
The Combination has had a significant effect on our business in terms of realizing certain revenue and cost
benefits, and the integration of our businesses and related costs.
We are a business of considerably larger scale as a result of the Combination. In the year ended March 31,
2013, we had 8.7 million Bookings compared to 7.7 million Bookings in the year ended March 31, 2012 (which
7.7 million Bookings excludes 763,000 Bookings at Opodo in the first quarter of that financial year (i.e., the three
months ended June 30, 2011), which are not reflected in the eDreams ODIGEO Group figures as the Opodo
business was acquired and consolidated effective June 30, 2011). Our Revenue Margin in the year ended March 31,
2013 was €373.0 million compared to Revenue Margin of €319.7 million in the year ended March 31, 2012.
Our scale provides us with a stronger negotiating position with suppliers, as evidenced by the ten-year
non-exclusive GDS contract that we entered into in 2011 with Amadeus, which was amended in 2013. We also
entered into a group-wide contract under which we sell travel-related insurance, which is on more favorable terms
than each of the predecessor businesses enjoyed on a stand-alone basis. We have also been able to leverage the
technology of our constituent businesses by, for example, expanding eDreams’ Direct Connect technology to our
GoVoyages and Opodo websites.
75
The Combination and the integration of our businesses have required significant management time and
significant expenditure relating to, for example, implementing group financial reporting and management systems,
strengthening our management team and developing common technology. In the summer of 2013, the individual
platforms of GoVoyages, Opodo and eDreams were successfully migrated onto the One Platform, which enables
each of our brands to offer a full range of inventory, including Direct Connect, multi-GDS access and net fares. The
integration process is still ongoing in respect of our middle and back-office functions, such as accounting, IT and
operational systems, management information and financial control systems, market and customer service, and
although we have made significant progress in these areas, we expect the integration will continue to require
significant time, expenditure and resources.
See “—Non-recurring items recognized in our historical financial statements and effects of our expected
deleveraging in connection with the Offering—Non-recurring items”.
Geographic concentration and expansion of operations
We believe that our strategic geographic expansion into new countries, together with the organic growth of our
business in countries in which we have already established a presence, has contributed to our growth to date and will
be an important factor in the development of our business.
In particular, the fragmentation of the travel markets in which we operate allows us to adopt different growth
and marketing strategies that are tailored specifically for each country in which we operate. For example, in
countries where we hold significant market positions, such as France, we have focused our resources on retaining
our market share and up-selling more products.
The following table sets forth the proportion of our Bookings and Revenue Margin attributable to our operations
in the countries of our Core segment (France, Spain and Italy) as well as attributable to our operations in France,
each as a percentage of our Bookings and Revenue Margin:
December 31,
2013
2012
For the year ended
March 31,
2013
2012
(in % of total)
Core segment (total)
Bookings(1) (2) ................................................................................................
61%
Revenue Margin(2) (3) ................................................................
62%
64%
66%
65%
67%
70%
72%
France
Bookings(1) (2) ................................................................................................
36%
Revenue Margin(2) (3) ................................................................
41%
37%
44%
40%
47%
40%
47%
(1)
Bookings, which is a non-GAAP measure, means the number of transactions under the agency model and the principal model as well as
passengers.
(2)
For the years ended March 31, 2013 and 2012, all Bookings and Revenue Margin attributable to Go Volo were allocated to France,
irrespective of the country in which the booking was made. For the nine months ended December 31, 2013 and 2012, Bookings and
Revenue Margin attributable to Go Volo have been allocated between the countries according to the country of booking, i.e., France only
includes Go Volo bookings that originated in France.
(3)
Accordingly, our operating results in France continue to have a significant impact on our overall results, despite
the fact that the relative weight of France in our Bookings has decreased as a consequence of our expansion strategy
relating to the scale and the geographic scope of our operations.
In the year ended March 31, 2013, we continued to expand the scale and geographic scope of our operations and
entered 10 new countries, including South Africa, Indonesia, New Zealand, Singapore and Thailand. In the nine
months ended December 31, 2013, we entered three new countries (Greece, Romania and Hungary). Although the
76
scalability of our online platform allows more rapid expansion into new geographic markets, our marketing and
administrative expenses increased as we hired additional personnel and incurred additional IT infrastructure costs in
connection with the geographic expansion.
Changes in revenue sources and product mix
Changes in the air travel industry have affected, and will continue to affect, the revenue earned by online travel
companies, including us.
Supplier revenue
We receive incentives from our GDS service providers based on the volume of Bookings completed by us
through GDS systems, and such incentives are payable based on a formula that requires a minimum level of sales.
Revenue under our contract with Amadeus represents a significant portion of our income and a large proportion of
our GDS income. The agreement with Amadeus also contemplated a signing bonus in the amount of €51.1 million,
payable by Amadeus to LuxGEO, which represents an advance payment of anticipated incentives relating to sales of
travel products through Amadeus’ GDS platform. The unearned portion of the signing bonus is subject to repayment
to Amadeus if we do not meet certain volume thresholds. We recognize the signing bonus as revenue in our
financial statements over the 10-year term of the contract, while the unearned portion is reflected as a liability on our
statement of financial position.
We also receive incentives and commissions directly from certain airline companies, based on the total volumes
of bookings we sell. Given the relatively weaker position of airlines outside of their local markets, many of our
airline suppliers pay incentive fees to travel companies such as ourselves, in order to improve their sales and build
their brand awareness outside their core markets. However, volatility in global economic conditions and jet fuel
prices over the past few years have caused our airline partners to accelerate their efforts to cut costs throughout their
operations, including managing and reducing their distribution costs. Measures taken by airlines to reduce
distribution costs in recent years have included reductions of commissions paid to travel companies.
Airlines could further reduce their distribution costs by reducing fees paid to GDSs, which in turn could reduce
incentives paid directly to OTAs, including us. In addition, when we use Direct Connect technology to access airline
inventory, we do not generate any GDS incentive fees and in many cases, we do not earn any airline commission on
Direct Connect bookings. As we expect our share of Direct Connect bookings to continue to increase, we expect the
revenue we are able to earn from suppliers to continue to generally decrease over time on a per booking basis.
Customer revenue
In our flight business, service fees per flight Booking increased by 3.6% from €22.30 in the year ended
March 31, 2012 to €23.10 in the year ended March 31, 2013 and by 9.5% from €23.10 in the nine months ended
December 31, 2012 to €25.30 in the nine months ended December 31, 2013. Despite this increase in service fees,
increasing competition from other OTAs and direct sales by suppliers may put pressure on our current levels of
service fees.
Flight product mix
Changes in our flight product mix have affected, and are expected to continue to affect, our operating results. In
particular, during 2011 we started selling Direct Connect flight products through the GoVoyages and Opodo
websites to complement our existing sales of Direct Connect flight products through the eDreams website. The
proportion of Direct Connect flights in our product mix compared to flights sourced via GDSs and charter flights has
increased, in particular in France, and is expected to continue to increase in the future. The completion of the
migration of the previous individual platforms of GoVoyages, Opodo and eDreams into the One Platform in the
summer of 2013, which enables each of our brands to offer a full range of flights, including Direct Connect, multiGDS and net fare flight products, has further accelerated this trend. We do not receive commissions from airlines or,
in most cases, incentive fees from GDSs for sales of Direct Connect flight products. Accordingly, increases in
Bookings due to increased Direct Connect flight product sales do not result in a proportional increase in Revenue
Margin. Therefore, the average Gross Bookings per Booking is lower for Direct Connect flight products (three
months ended December 31, 2013: €223) than for flight products sourced via GDSs (three months ended December
31, 2013; €536). However, the increasing volume of sales of Direct Connect flights has a positive impact on the
77
overall increase in our revenue due to the service fees that we charge our customers. We define Revenue Margin per
Booking as Revenue Margin per product divided by the number of Bookings for that product.
Flight vs. non-flight revenue
While we continue to be flight-focused, we aim to capitalize on our leadership position in the flight sector of the
travel market by entering into strategic partnerships with industry leaders in the non-flight sector. These strategic
partnerships enable us to provide our customers with non-flight products. We also seek to increase our sales of nonflight products by improving our technology, upgrading our user interface by allowing the customization and
combination of dynamically priced travel products from different suppliers, increasing marketing spend and
exploring additional cross-selling opportunities.
The following table sets forth the proportion of non-flight products in our product mix as a percentage of our
Bookings and Revenue Margin.
December 31,
2013
2012
For the year ended
March 31,
2013
2012
(in % of total)
Bookings(1) ............................................................................
Revenue Margin(2) .................................................................
10%
19%
10%
20%
9%
18%
8%
19%
(1)
passengers.
(2)
In 2013, we increased our advertising revenue principally as a result of our increased focus on advertising sales.
In addition, with the recent acquisition of Liligo we expect to generate click-out revenue and to further increase our
advertising revenue.
Seasonality
We experience seasonal fluctuations in the demand for travel products offered by us. Because we generate the
largest portion of our Revenue Margin from flight bookings, and this revenue is generally recognized at the time of
booking, these trends cause our revenue to be highest in the periods during which travelers book their vacations.
Therefore, our revenues tend to be lower in the quarter ending December 31 than in other quarters and typically
highest in the quarter ending March 31, corresponding to bookings for the busy spring and summer travel seasons.
Cash generated and profitability have historically been lower between September and December as the post-summer
period has historically been our lowest booking period. Consequently, comparisons of sequential quarters may not
be meaningful.
Brand awareness and marketing expenses
We believe that brand awareness is a crucial factor for customer acquisition and retention among online travel
companies. We have historically committed significant resources to supporting brand awareness. As a result, we
believe that our brands rank consistently among the most searched and highest rated online flight travel brands in
Europe and worldwide (based on search engine recognition metrics). Our advertising efforts are focused primarily
on online marketing. We believe that continued investment in our brands is critical to retaining and expanding our
traveler, supplier and advertiser bases and such investments have included costs relating to tactical marketing
measures taken to increase our growth.
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Non-recurring items recognized in our historical financial statements and effects of our expected deleveraging
in connection with the Offering
We consider that certain costs recognized in our income statement arose from specific events that are nonrecurring and that such costs should therefore be specifically considered when assessing our historical financial
performance. In addition, we expect our level of debt, and therefore interest expense, to decrease as a result of the
Offering and associated transactions.
Non-recurring items
The Combination and the financing transactions conducted in connection with the Combination, as well as a
partial refinancing thereof in January 2013, have had a significant effect on our reported results during the years
ended March 31, 2012 and 2013, which we do not consider reflective of our ongoing financial performance and
believe should be specifically considered when assessing our historical financial performance.
In particular, in respect of the nine months ended December 31, 2013, we recognized the following items in our
income statement:
•
€4.9 million of depreciation of the value of Opodo’s technology. As a result of the development of our
One Platform, the value of certain technology in Opodo, which we recognized as part of the purchase price
allocation in connection with the Combination and which we planned to amortize over a four-year period,
exceeded its fair value and, accordingly, we recognized an impairment of €4.9 million relating to the value
of such technology (€3.9 million on a post-tax basis).
•
€11.4 million of impairments of the value of the GoVoyages brand, which we recognized as part of the
purchase price allocation in connection with the Combination. As a result of changes in our business
strategy (which, following the Combination, has deemphasized the GoVoyages brand compared with our
expectation at the time of the allocation of goodwill) and, to a lesser extent, changes in the business
environment, particularly in our charters business, we recognized an impairment of €11.4 million (€7.5
million on a post-tax basis).
•
€1.9 million of release of deferred tax assets in relation to the long-term incentive plan of eDreams.
In particular, in respect of the nine months ended December 31, 2012, we recognized the following item in our
income statement:
•
€0.6 million of deferred tax income in relation to the long-term incentive plan of eDreams.
In respect of the year ended March 31, 2013, we recognized the following items in our income statement:
•
€17.6 million of finance fees relating to the reversal of capitalized financing fees associated with senior
debt we incurred under our Senior Credit Facility Agreement in connection with the Combination, which
we refinanced in January 2013 (€11.5 million on a post-tax basis). Under IFRS, the refinancing of this debt
required us to immediately recognize in our income statement the remaining capitalized portion of the
financing fees associated with such debt.
•
€6.7 million of finance costs relating to the cancellation of certain interest rate hedging contracts we
entered into to hedge the variable rate debt under our Senior Credit Facility Agreement (€4.4 million on a
post-tax basis).
•
€6.7 million of impairments to the value of Opodo’s technology. As a result of the development of our One
Platform, the value of certain technology in Opodo, which we recognized as part of the purchase price
allocation in connection with the Combination and we planned to amortize over a four-year period,
exceeded its fair value and, accordingly, we recognized an impairment of €6.5 million relating to the value
of such technology (€5.0 million on a post-tax basis).
•
€2.0 million of impairments of a relationship agreement between GoVoyages and a charter flight sourcing
company in recognition of the decreased importance of our sales of charter flights compared to our
79
valuation of this relationship as part of the purchase price allocation performed prior to the Combination
when GoVoyages was a stand-alone company (€1.3 million on a post-tax basis).
•
In respect of the year ended March 31, 2012, we recognized the following items in our income statement:
•
€13.6 million of finance fees relating to the reversal of capitalized financing fees associated with the debt
of Opodo and GoVoyages existing at the time of the Combination (€8.9 million on a post-tax basis). Under
IFRS, the financing fees incurred in connection with the issuance of debt are recognized on the statement of
financial position and then amortized over the term of the debt. However, the refinancing of Opodo and
GoVoyages’ pre-Combination debt in connection with the Combination required us to immediately
recognize in our income statement the remaining capitalized portion of the financing fees associated with
such debt, rather than amortizing such fees over the remaining term of such debt.
•
€21.4 million of impairment of our GoVoyages brand as a result of changes in our business strategy (which
deemphasized the GoVoyages brand compared with our expectation at the time of the allocation of
goodwill prior to the Combination) and, to a lesser extent, changes in the business environment,
particularly in our charters business (€14.0 million on a post-tax basis).
•
€21.3 million of transaction costs related to the Combination (€21.3 million on a post-tax basis).
•
€3.2 million of deferred tax assets recognized by GoVoyages in its standalone financial statements prior to
the Combination but then reversed in our financial statements as a result of the debt allocated to the
GoVoyages French tax group in connection with the Combination, which significantly reduced the
likelihood of it being able to utilize such deferred tax assets (€3.2 million on a post-tax basis).
•
Although we believe these items should be specifically considered when assessing our historical financial
results, we note we may engage in future acquisitions and/or financing or refinancing transactions, and may
recognize impairments of goodwill or other intangible assets in the future (see “Risk Factors—Risks Relating to Our
Business–Our statement of financial position includes very significant amounts of goodwill and other intangible
assets. The impairment of a significant portion of these assets would negatively affect our business, financial
condition and results of operations, and may affect our ability to pay dividends”).
Deleveraging
Our principal sources of debt prior to the Offering were our 2018 Notes, 2019 Notes and our Revolving Credit
Facility, as well as our Convertible Subordinated Shareholder Bonds.
As described in “Principal Shareholders—Shareholder Reorganization”, as a result of the Shareholder
Reorganization, the Company has become the holder of 100% of the Convertible Subordinated Shareholder Bonds,
which were issued by GTF in connection with the Combination. Accordingly, although we have recognized interest
expense associated with such Convertible Subordinated Shareholder Bonds in the past, following the Shareholder
Reorganization, such expense is no longer recognized in our consolidated results as such Convertible Subordinated
Shareholder Bonds are within our consolidation group.
In addition, as described in “Listing and Admission to Trading”, we intend to use the €50 million gross
proceeds to us from the Offering to redeem a portion of the 2019 Notes on or after May 1, 2014 to further reduce our
indebtedness and interest expense, and create additional flexibility in our capital structure.
The following table sets forth the components of our interest expense for the year ended March 31, 2013 and
nine month periods ended December 31, 2012 and 2013:
80
For the nine
For the year
months
ended
ended
March 31,
December
2013
31, 2013
(in thousand
€)
2019 Notes
Interest expense (10.375%) ..............................................................................................
Amortization of capitalized financing fees ........................................................................
2018 Notes
Interest expense (7.50%) ..................................................................................................
Convertible Subordinated Shareholder Bonds(1)
Interest expense (including effective interest rate).............................................................
Debt under our Senior Credit Facility Agreement(2)
Interest expense ...............................................................................................................
Amortization of capitalized financing fees(3) .....................................................................
Derivatives
Financial expense related to derivatives(4) .........................................................................
Revolving Credit Facility
Interest expense ...............................................................................................................
Commitment fees and other fees.......................................................................................
Foreign exchange gains and losses
Foreign exchange differences relating to financing arrangements ......................................
Other financial income and expenses
Other financial income and expenses ................................................................................
Finance result per income statement.................................................................................
(13,619)
(916)
(18,158)
(1,093)
(18,350)
(966)
(4,063)
(615)
(10,621)
(12,495)
–
–
(13,504)
(22,486)
–
(6,683)
(168)
(1,248)
(384)
(240)
(1,861)
(69)
(299)
(1,305)
(382)
(46,953)
(524)
(83,096)
(1)
As a result of the Shareholder Reorganization, the Convertible Subordinated Shareholder Bonds have become liabilities within our
consolidation group following the Offering (see “Certain Relationships and Related Parties Transactions—Shareholder Reorganization”).
(2)
Our indebtedness under our Senior Credit Facility Agreement was discharged in full as part of our refinancing in January 2013.
(3)
Of which €17.6 million related to the reversal of capitalized financing fees associated with the cancellation of the senior debt under our
Senior Credit Facility Agreement, which we refinanced in January 2013.
(4)
As a result of refinancing of the Senior Credit Facility Agreement in January 2013, we cancelled certain interest rate hedging contracts that
we entered into to hedge the variable rate debt under our Senior Credit Facility Agreement and this cancellation resulted in us recognizing a
financing cost.
Certain corporate tax consequences of deleveraging
Certain parts of the Group have net operating losses (“NOLs”) that can be utilized to offset potential future
earnings. For certain of these NOLs we have recognized a deferred tax asset (“DTA”) in our balance sheet as of
March 31, 2013, as set forth in the following table:
NOLs
Recognized DTAs
(in million €)
France ...................................................................................................................
U.K.(1) ...................................................................................................................
Sweden .................................................................................................................
Other countries(2) ...................................................................................................
Total .....................................................................................................................
(1)
(2)
58.4
152.5
23.9
11.3
246.1
0.0
35.1
0.6
0.0
35.7
U.K. relates to Opodo Limited only; NOLs of eDreams Limited are included in “other countries” below.
A substantial portion of NOLs in other countries are located in Luxembourg.
A majority of the Group’s debt has been allocated to entities which form part of the French tax group. As a
result, prior to the Offering, NOLs in France have had a low likelihood of being utilized, and therefore have not been
accounted for as a DTA in our balance sheet.
81
The deleveraging in connection with the Offering as described in “—Non-recurring items recognized in our
historical financial statements and effects of our expected deleveraging in connection with the Offering—
Deleveraging” above is expected to have an effect on the Group’s tax position. In particular, the deleveraging will
reduce the debt burden of the entities within our French tax group, thereby increasing the likelihood of the French
NOLs being utilized. This may result in us recognizing a DTA for all or a part of these NOLs. Note that the decision
on any such recognition of a DTA for French NOLs will only be made when we prepare our annual financial
statements for the period in which the deleveraging will have taken place. The recognition of a DTA for French
NOLs in the future would have a one-off positive effect on our income tax expense and hence on our Group
effective tax rate as set forth in our income statement and, consequently, on our reported net profit in the financial
year in which the above DTA would be recognized.
Our historic effective tax rate has been influenced by the fact that a DTA for certain NOLs has not been
recognized in the years in which these NOLs have actually been incurred and therefore is not a good reference for
the Group’s effective tax rate following the offering. Group companies operate in a number of tax jurisdictions
(including principally the United Kingdom, Sweden, France, Spain, Italy and the United States) and are subject to
statutory income tax rates ranging from 22% to 35%. We believe that our Group current (cash) tax rate will be at the
lower end of this tax rate range in the short- to medium-term until the NOLs of France, the U.K. and Sweden have
been fully offset against taxable profits.
Goodwill, other intangible assets and impairments
The goodwill and other intangible assets recognized on our statement of financial position represented 72.9%
and 24.8%, respectively, of our total non-current assets as at December 31, 2013 (71.8% and 25.4%, respectively, as
at March 31, 2013). These assets consist primarily of goodwill and identified other intangible assets associated with
the Combination. Within other intangible assets, our principal assets are our brands (85.4% of total other intangible
assets as at December 31, 2013) and software (14.0% of total other intangible assets as at December 31, 2013). See
notes 14 and 15 to our Consolidated Annual Financial Statements and notes 11 and 12 to our Consolidated Interim
Financial Statements for further information regarding our goodwill and other intangible assets. Any further
acquisitions may result in our recognition of additional goodwill or other intangible assets.
Under IFRS, we are required to amortize certain intangibles over the useful life of the asset and subject our
goodwill and certain of our intangible assets to impairment testing rather than amortization. Accordingly, on at least
an annual basis, we assess whether there have been impairments in the carrying value of our goodwill and certain of
our intangible assets. If the carrying value of the asset is determined to be impaired, then it is written down to fair
value by an impairment loss in the income statement. See “Management’s Discussion and Analysis of Our Results
of Operations—Critical Accounting Policies—Impairment testing of the recoverable amounts of a CGU or group of
CGUs”.
We have recognized impairments in the past, including as a result of changes in our business performance and
strategy, and some of these impairments have been significant. See “—Non-recurring items recognized in our
historical financial statements and effects of our expected deleveraging in connection with the Offering—Nonrecurring items”. See also “Risk Factors—Our statement of financial position includes very significant amounts of
goodwill and other intangible assets. The impairment of a significant portion of these assets would negatively affect
our reported results of operations and the equity reflected on our statement of financial position, and may affect our
ability to pay dividends”.
The recognition of impairments affects our income statement. Accordingly, if we recognize impairments in the
future, our reported results will be adversely affected, even though such impairments are non-cash items.
Acquisitions and Divestments
Effects of the Opodo Acquisition
The Opodo Acquisition, which gave rise to a change of control of Opodo for IFRS accounting purposes, was
accounted for using the purchase method of accounting. Under the revised IFRS 3 Business Combinations, the cost
of an acquisition is measured as the fair value of the assets transferred, liabilities incurred and the equity interests
issued by the acquirer, including the fair value of any asset or liability resulting from a contingent consideration
arrangement. Opodo Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities
82
and contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date. The excess of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the fair value of the acquirer’s share of the identifiable net assets acquired are recorded as goodwill.
In accordance with IFRS, we had 12 months from the date of the Opodo Acquisition (i.e., until June 30, 2012)
to finalize the allocation of the purchase price. In the year ended March 31, 2013, the final purchase price allocation
for the Opodo Acquisition taken into consideration for the purpose of the preparation of the Consolidated Financial
Statements for that period can be summarized as follows:
•
fair value of identifiable assets acquired and liabilities assumed at the acquisition date including:
•
•
•
•
trademarks (infinite-lived intangible assets):
developed technology (finite-lived intangible assets):
deferred tax liabilities arising from acquired intangibles:
goodwill as of March 31, 2013
€108.0 million
€20.0 million
€(33.3) million
€359.5 million
See “Note 29—Business Combination” to our Consolidated Annual Financial Statements.
Effects of the Opodo Tours Divestment
As the sale of Opodo Tours was agreed in principle in May 2012, its negative EBITDA for the months of April
and May 2012 was included in our EBITDA but not in our Recurring EBITDA in our 2012 Consolidated Annual
Financial Statements. See “—Presentation of Financial Information—Combination Accounting”. The negative
EBITDA for these two months amounted to €0.3 million.
Effects of the Liligo Acquisition
On October 2, 2013, we completed the acquisition of Liligo and have consolidated its results of operations from
this date.
Principal Consolidated Income Statement Line Items
The following section presents our main income statement line items derived from our Consolidated Financial
Statements.
Revenue
We generate our revenue from the sale of (i) flight products, including flights on network carriers, low-cost
carriers and, to some extent, charter airlines, each of which we source through GDSs or our Direct Connect
technology, as well as insurance for flight products and (ii) non-flight products, including hotel bookings, Dynamic
Packages, which are dynamically priced packages consisting of a flight product and a hotel booking that travelers
customize based on their individual specifications by combining select products from different travel suppliers
through us (including revenue from the flight component thereof), car rentals, vacation packages and insurance for
non-flight products, as well as non-travel products, such as advertising, metasearch activities and phone revenue,
consisting mainly of charges on toll calls to our call centers.
The substantial majority of our revenue is generated from our customers. Customer revenue is earned through
service fees (which is the total difference between the price at which we source a product and sell that product to a
customer, which difference includes, among other components, any mark-up to the price at which we source a
product and fees that we charge customers in connection with a booking), insurance revenue and other fees. We also
generate revenue from our various suppliers linked to the volume of sales facilitated by us, such as commission and
overcommissions (which are commissions based on the year-end achievement of predefined targets), payments from
travel suppliers, incentives from our GDS service providers based on the volume of Bookings completed by us
through GDS systems, commissions we receive from partners under white label sourcing agreements, incentives we
receive from payment processors and charges on toll calls.
Our revenue also comprises revenue from certain other ancillary sources, such as advertising on our websites
and revenue from our metasearch activities. Our metasearch activities generate revenue through cost-per-search
arrangements, where we earn a fee for each user searching on one of our websites and “clicking out” to a third
83
party’s website by following a link displayed in one of our websites, and cost-per-action arrangements, where we
earn a fee for each user “clicking out” to a third party’s website by following a link displayed in one of our websites
who subsequently makes a booking on such third party’s website.
We recognize revenue when (i) we have evidence of a contractual agreement in respect of products and services
to be provided, (ii) such products are delivered or such services have been rendered and (iii) the revenue is
determinable and collectability is reasonably assured. We have evidence of a contractual agreement when we enter
into a legally enforceable agreement with the customer with terms and conditions that describe the product to be
delivered or the service to be rendered and the related payment terms. We consider revenue to be determinable when
the product or service has been delivered or rendered in accordance with the applicable agreement. Revenue
recognition depends on product type, as described in “—Critical Accounting Policies—Revenue recognition”.
Agency and principal models
We make our flight and non-flight products available primarily through two business models: the agency model
and the principal model:
•
Under the agency model, we act as agent and not as primary obligor of the arrangement, neither
bearing any inventory nor any other financial risk. The agency model applies to the substantial
majority of our products and, therefore, of our Bookings. As agent, we enable travelers to book flight
and non-flight products we source from travel suppliers and in respect of such bookings, we are either
(a) the full agent of record, in which case we charge and receive payment for the full amount of the
booking from the customer and pay the net price of the travel product to our travel suppliers at a later
date, or (b) the agent of record only in respect of the service fees we charge to the customer, in which
case the remaining part of the booking value is transacted and charged to the customer directly by our
travel suppliers. Whether we act as full agent of record or agent of record only in respect of the service
fees we charge to the customer, we record our revenue on a “net” basis, representing the service fees
(which is the total difference between the price at which we source a product and sell that product to a
customer, which difference includes, among other components, any mark-up to the price at which we
source a product and fees that we charge customers in connection with a booking) we earn. We also act
as a “pure” intermediary whereby we serve as a click-through and pass reservations made by the
customer on to the relevant travel supplier (in particular with respect to standalone hotel and rental car
products offered by our white label sourcing partners as well as with respect to vacation packages
offered in Germany), or perform certain limited intermediary functions with respect to such
reservations. On such “pure” intermediary transactions, we are not the agent of record in respect of any
amounts paid by the customer and our revenue consists solely of commissions and incentives from
travel suppliers and/or GDS service providers. Depending on the specific agency role that we perform,
we provide varying degrees of support, if any, to the customer once the booking has been secured.
•
Under the principal model, we act as principal in respect of a transaction by purchasing inventory for
resale or otherwise acting as the primary obligor of the arrangement and incur inventory and other
financial risk in connection with our products. In each case, revenue represents the total amount paid
by our customers for such products and services and we recognize such revenue on a “gross” basis.
The cost of procuring the relevant products sold to our customers for which we act as principal is
accounted for as “supplies”. We act as principal in respect of certain charter flights, conferences and
events and, to a lesser extent, vacation packages.
For more information, see “—Critical Accounting Policies—Revenue recognition”.
Supplies
Supplies relates to the cost of procuring products sold to our customers under the principal model. For some of
these products, we purchase inventory in order to enjoy special negotiated rates or we bear certain financial risk on
the bookings (such as cancellation). The cost of procuring such products sold to our customers is reflected on our
income statement as “supplies”. To date, the products for which we bear inventory risk or other financial risks are
certain charter flights, conferences and events and, to a lesser extent, vacation packages.
84
Personnel expenses
Personnel expenses primarily consist of wages and salaries, employee welfare expenses, contributions to
mandatory retirement funds as well as other expenses related to the payment of retirement benefits, and other
employee benefits. In addition, personnel expenses include personnel costs relating to IT development projects to
the extent they are not capitalized.
Other operating expenses
Other operating expenses primarily consist of marketing expenses, credit card processing costs, chargebacks on
fraudulent transactions, IT costs relating to the development and maintenance of our technology, GDS search costs
and fees paid to our outsourcing service providers, such as outsourced call centers or IT services. Our marketing
expenses comprise customer acquisition costs (such as paid search costs, metasearch costs and other promotional
campaigns) and commissions due to agents and white label distribution partners. A large portion of our other
operating expenses are variable costs, either because they are directly related to the number of transactions
processed through us or because they result from discretionary decisions from our management.
Depreciation and amortization and profit/loss on disposals of non-current assets
Depreciation and amortization and profit/loss on disposals of non-current assets consists primarily of
depreciation expense recorded on property and equipment, such as computers and office furniture, fixtures and
equipment, leasehold improvements and IT hardware and capitalized IT costs and includes any impairment we
recognize. Amortization consists primarily of amortization recorded on intangible assets, such as software, licenses
and trademarks and domains. Impairment consists primarily of impairment recorded on intangible assets, such as
brands and customer relationships. See “—Key Factors Affecting Our Results of Operations—Goodwill, other
intangible assets and impairments”.
Financial result
Financial result is the income from financing activities less interest expense on our debt, other financing costs
and bank charges.
Comparison of Results of Operations
The following is a discussion of our key operating metrics and results of operations comparing the nine months
ended December 31, 2013 and December 31, 2012 and the years ended March 31, 2013 and March 31, 2012. We
have not included a comparison of our key operating metrics and results of operations with respect to the financial
information for the period from February 14, 2011 to and including March 31, 2011 derived from our
Unconsolidated 2011 Financial Statements as such information is not comparable with the consolidated financial
information derived from our Consolidated Financial Statements and reflects de minimis activities and expenses
incurred in connection with the formation of the Company and its subsidiaries, as well as the Company’s holding of
shares in such subsidiaries. See “Presentation of Financial and Other Data—Unconsolidated 2011 Financial
Statements”.
85
Comparison of the nine months ended December 31, 2013 and December 31, 2012
Key Operating Metrics
The following table sets forth certain of our key operating metrics for the nine months ended December 31,
2013 and December 31, 2012.
December 31,
2013
2012
(unaudited)
(in thousand €,
unless otherwise stated)
Bookings(1) (2) (in thousand)
Core ................................................................................................
4,402
Expansion ............................................................................................ 2,859
Total Bookings ......................................................................................... 7,261
Core ................................................................................................ 194,547
Expansion ............................................................................................117,359
Total Revenue Margin ..............................................................................311,906
Recurring EBITDA(4) ............................................................................... 88,820
EBITDA(4)................................................................................................ 81,189
Recurring EBITDA Margin(5) (% of Revenue Margin) .............................. 28.5%
Change
(%)
4,025
2,275
6,300
9.4%
25.7%
15.3%
176,216
91,928
268,144
80,382
72,220
30.0%
10.4%
27.7%
16.3%
10.5%
12.4%
(5.0)%
(1)
passengers.
(2)
For the nine months ended December 31, 2013 and 2012, Bookings and Revenue Margin attributable to Go Volo have been allocated
between the Core and Expansion segments according to the country of booking.
(3)
(4)
We define EBITDA, which is a non-GAAP measure, as profit/(loss) before financial and similar income and expenses, income tax and
other income and expense items which are considered by management to not be reflective of our ongoing operations. See “Presentation of
Financial and Other Data— Non-GAAP Measures”.
(5)
Recurring EBITDA Margin, which is a non-GAAP measure, is Recurring EBITDA divided by Revenue Margin.
Bookings
Bookings increased by 1.0 million, or 15.3%, to 7.3 million in the nine months ended December 31, 2013, from
6.3 million in the nine months ended December 31, 2012, principally due to the significant increase in Bookings
following the implementation of the One Platform, which increased our access to inventory.
Bookings of both flight and non-flight products increased in the period under review. Bookings of flight
products increased by 0.8 million, or 14.2%, to 6.5 million in the nine months ended December 31, 2013, from 5.7
million in the nine months ended December 31, 2012, principally due the implementation of the One Platform as
described above as well as our improved marketing strategy to sustain volume growth. Bookings of non-flight
products increased by 0.1 million, or 25.1%, to 0.7 million in the nine months ended December 31, 2013, from 0.6
million in the nine months ended December 31, 2012, principally due the implementation of our new arrangement
with our principal white label sourcing partners which increased our access to inventory of non-flight products such
as hotels and rental cars. Overall, the mix of flight and non-flight product Bookings remained approximately stable
between December 2013 and December 2012 at 90% for flight Bookings and 10% for non-flight Bookings.
86
Core segment. In the Core segment, Bookings increased by 0.4 million, or 9.4%, to 4.4 million in the nine
months ended December 31, 2013 from 4.0 million in the nine months ended December 31, 2012, principally due to
the positive impact on Bookings of the implementation of the One Platform, which has a particularly pronounced
effect in our French market as well as the general recovery of the Spanish market.
Expansion segment. In the Expansion segment, Bookings increased by 0.6 million, or 25.7%, to 2.9 million in
the nine months ended December 31, 2013 from 2.3 million in the nine months ended December 31, 2012,
principally due to the good trading performance in the United Kingdom notably due to the implementation of the
One Platform as well as the increase in Bookings in countries outside of our main European countries (for example,
Australia, Portugal and the United States).
Revenue Margin
Revenue Margin mainly consists of service fees (which is the total difference between the price at which we
source a product and sell that product to a customer, which difference includes, among other components, any markup to the price at which we source a product and fees that we charge customers in connection with a booking) and
revenue from insurance sales, as well as incentive payments and commissions received from suppliers and from our
GDS service providers, principally under the Amadeus contract. In addition, Revenue Margin in the nine months
ended December 31, 2013 also included €11.4 million of advertising and meta click-out revenue (nine months ended
December 31, 2012: €6.1 million), of which €2.8 million corresponds to the three months of metasearch click-out
revenue following the Liligo Acquisition, and €8.6 million of other sources of revenue compared (nine months
ended December 31, 2012: €6.1 million).
Revenue Margin increased by €43.8 million, or 16.3%, to €311.9 million in the nine months ended
December 31, 2013, from €268.1 million in the nine months ended December 31, 2012, principally due to the
significant increase in Bookings of 15.3%, as described above under “—Booking”, and a slight increase in Revenue
Margin per Booking over the period.
Core segment. In the Core segment, Revenue Margin increased by €18.3 million, or 10.4%, to €194.5 million
in the nine months ended December 31, 2013, from €176.2 million in the nine months ended December 31, 2012,
principally due to the increase in Bookings by 9.4%, as Revenue Margin per Booking remained approximately
stable over the period.
Expansion segment. In the Expansion segment, Revenue Margin increased by €25.4 million, or 27.7%, to
€117.4 million in the nine months ended December 31, 2013 from €91.9 million in the nine months ended
December 31, 2012, principally due to the increase in Bookings by 25.7%, as Revenue Margin per Booking
remained approximately stable over the period.
Revenue Margin by product type. The following table sets forth the Revenue Margin generated by our flight
and non-flight businesses for the nine months ended December 31, 2013 and December 31, 2012.
For the nine months ended December 31,
2013
2012
(unaudited)
Change
(%)
(in thousand € or % of total)
Revenue Margin(1)
Flight ................................................................................................
251,224 80.5% 215,144 80.2%
Non-flight ................................................................................................
60,683 19.5% 53,001 19.8%
Total Revenue Margin ..............................................................................
311,906 100.0% 268,144 100.0%
(1)
16.8%
14.5%
16.3%
Revenue Margin generated by our flight business increased by €36.1 million, or 16.8%, to €251.2 million in the
nine months ended December 31, 2013, from €215.1 million in the nine months ended December 31, 2012,
87
principally due to the positive impact of the One Platform implementation on our Bookings of flight products (which
increased by 14.2%), and an ability to increase flight volumes in our expansion geographies, as well as a 2.2%
increase in Revenue Margin per Booking principally as a result of higher services fees earned.
Revenue Margin generated by our non-flight business increased by €7.7 million, or 14.5%, to €60.7 million in
the nine months ended December 31, 2013, from €53.0 million in the nine months ended December 31, 2012,
principally due a 25.1% increase in our Bookings principally due to the positive effect on our non-flight product
Bookings of our new white label sourcing partnerships and an ability to increase non-flight volumes in our
expansion geographies, partly offset by a 8.5% decrease in our Revenue Margin per Booking for non-flight
products, principally as a result of change in product mix with a higher portion of lower margin hotels and cars as
opposed to vacation packages and Dynamic Packages. This has been partly offset by increased Revenue Margin
generated by Liligo, which does not generate Bookings, but whose Revenue Margin is included within Revenue
Margin per non-flight Booking.
Revenue Margin by source. We earn our Revenue Margin from our customers, suppliers and advertising and
meta click-outs. The following table sets forth our Revenue Margin by source for the nine months ended
December 31, 2013 and December 31, 2012.
2012(1)
2013
Change
(unaudited)
(%)
Revenue Margin(2)
from customers ................................................................ 223,446
from suppliers................................................................ 77,062
from advertising and meta click-outs................................ 11,398
Total Revenue Margin ...................................................... 311,906
71.6%
24.7%
3.7%
100.0%
192,815
69,228
6,101
268,144
71.9%
25.8%
2.3%
100.0%
15.9%
11.3%
86.8%
16.3%
(1)
Respective percentages for the three months ended December 31, 2013 are: Revenue Margin from customers: 70.0%, Revenue Margin from
suppliers: 24.0%, Revenue Margin from advertising and meta click-outs: 6.0%. These numbers refer to GTF and its consolidated
subsidiaries, as the Company does not have historical quarterly information and accordingly cannot present its consolidated financial
information as of the quarter-ends indicated. GTF is a wholly owned subsidiary of eDreams ODIGEO which directly or indirectly controls
all of our operating companies. Our management regards the consolidated information of GTF as of the quarter-end indicated as indicative
of the consolidated information of the Company as of the quarter-end indicated.
(2)
Revenue Margin from customers increased by €30.6 million, or 15.9%, to €223.4 million in the nine months
ended December 31, 2013, from €192.8 million in the nine months ended December 31, 2012, principally due to the
15.3% increase in Bookings, as Revenue Margin per Booking from customers remained approximately stable. This
reflects a product mix effect, as the increase in service fees, notably on flight bookings, was partly offset by lower
customer revenue on non-flight bookings. The implementation of our new white label sourcing arrangements
adversely affected our Revenue Margin per Booking from customers because under these arrangements we only
earn revenue from suppliers and accordingly Revenue Margin per Booking from customers in respect of non-flight
products decreased. Service fees per flight Booking increased by €2.2, or 9.5%, to €25.3 in the nine months ended
December 31, 2013, from €23.1 in the nine months ended December 31, 2012, principally due to our ability to
increase service fees while offering the best all-in price to customers.
Revenue Margin from suppliers increased by €7.8 million, or 11.3%, to €77.1 million in the nine months ended
December 31, 2013, from €69.2 million in the nine months ended December 31, 2012, principally due to the 15.3%
increase in Bookings, which was partly offset by a lower Revenue Margin per Booking from suppliers notably due
to the higher proportion of Direct Connect products over the period compared to the same period last year.
Revenue Margin from advertising and meta click-outs increased by €5.3 million, or 86.8%, to €11.4 million in
the nine months ended December 31, 2013, from €6.1 million in the nine months ended December 31, 2012,
88
principally due to higher advertising revenue combined with the impact of the Liligo Acquisition, which generated
€2.8 million revenue in the three months ended December 31, 2013.
Recurring EBITDA
Recurring EBITDA increased by €8.5 million, or 10.6%, to €88.8 million in the nine months ended
December 31, 2013 from €80.4 million in the nine months ended December 31, 2012, principally due to the increase
in Revenue Margin. This was partly offset by higher marketing expenditures and merchant costs principally driven
by strategic marketing measures to increase our growth and further increased expenditures in respect of our
operating infrastructure, in particular higher IT and personnel costs to support our growth strategy.
We analyze our costs in two categories, as set forth in the following table for the nine months ended
December 31, 2013 and December 31, 2012:
2013
2012
Change
(unaudited)
(%)
(in thousand €)
Variable Costs(1) .......................................................................................178,800
Fixed Costs(2) ........................................................................................... 44,286
148,214
39,548
20.6%
12.0%
(1)
Variable Costs, which is a non-GAAP measure, includes all expenses which depend on the number of transactions processed. These include
(2)
Fixed Costs, which is a non-GAAP measure, includes IT expenses net of capitalization write-off, personnel expenses which are not Variable
Variable Costs. Variable Costs increased by €30.6 million, or 20.6%, to €178.8 million in the nine months
ended December 31, 2013 from €148.2 million in the nine months ended December 31, 2012, principally as a result
of the increase in Bookings combined with higher variable costs per Booking. Variable Costs per Booking
increased by 4.7% from €23.5 in the nine months ended December 31, 2012 to €24.6 in the nine months ended
December 31, 2013, principally as a result of higher marketing expenditures per Booking combined with a higher
proportion of full agent of record Bookings which generated higher merchant costs.
Fixed Costs. Fixed Costs increased by €4.7 million, or 12.0%, to €44.3 million in the nine months ended
December 31, 2013 from €39.5 million in the nine months ended December 31, 2012, principally due to higher
personnel costs and IT costs to support our growth strategy. Fixed Costs per Booking decreased by 2.8% from €6.3
in the nine months ended December 31, 2012 to €6.1 in the nine months ended December 31, 2013 principally due
to scale effect.
EBITDA
EBITDA increased by €9.0 million, or 12.5%, to €81.2 million in the nine months ended December 31, 2013,
from €72.2 million in the nine months ended December 31, 2012, principally due to the factors discussed under “—
Recurring EBITDA” above and lower non-recurring costs, which decreased by €0.5 million.
Results of Operations
The following table sets forth our results of operations in the nine months ended December 31, 2013 and
December 31, 2012.
December 31
2013
2012
(unaudited)
Change
(%)
(in thousand €)
Revenue ................................................................................................ 355,957
Supplies ................................................................................................ (44,051)
Revenue Margin(1) ...........................................................................................
311,906
89
355,698
(87,554)
268,144
0.1%
(49.7)%
16.3%
December 31
2013
2012
(unaudited)
Change
(%)
(in thousand €)
Personnel expenses ...................................................................................(50,044)
Other operating expenses (including non-recurring)(2) ...............................(180,673)
Depreciation and amortization, impairment and profit/(loss) on
disposals of non-current assets (net) ......................................................(31,687)
Operating profit/(loss) ............................................................................ 49,502
Financial result(3) ......................................................................................(46,953)
Profit/(loss) before tax ............................................................................ 2,549
Income tax ...............................................................................................(11,677)
Income/(loss) of associates accounted for using equity method ..................
—
Non-controlling interest - result ................................................................
—
Profit/(loss) ............................................................................................. (9,128)
(45,784)
(150,140)
9.3%
20.3%
(17,351)
54,869
(45,547)
9,322
(7,212)
(32)
68
2,178
82.6%
(9.8)%
3.1%
(72.7)%
61.9%
(100.0)%
(100.0)%
n/a
(1)
(2)
Other operating expenses include: (i) other recurring operating expenses in the amount of €178.9 million and €147.5 million in the nine
months ended December 31, 2013 and 2012, respectively; and (ii) other non-recurring expenses in the amount of €1.8 million and €2.6
million in the nine months ended December 31, 2013 and 2012, respectively. See “Note 8—Other operating income/(expense)” and
“Note 9—Non-recurring income/(expense)” to our Consolidated Interim Financial Statements.
(3)
Financial result includes: (i) financial cost of €45.1 million and €41.2 million in the nine months ended December 31, 2013 and 2012,
respectively; (ii) financial income of €0.1 million and €0.3 million in the nine months ended December 31, 2013 and 2012, respectively; and
(iii) other financial income/(expenses) of €2.0 million and €4.6 million in the nine months ended December 31, 2013 and 2012,
respectively. See “Note 10—Financial Result” to our Consolidated Interim Financial Statements.
Revenue
Revenue includes the net value of products sold under the agency model as well as the gross value of products
sold under the principal model, for example, charter flights.
Revenue increased by €0.3 million, or 0.1%, to €356.0 million in the nine months ended December 31, 2013
from €355.7 million in the nine months ended December 31, 2012, principally due to higher Bookings resulting
from the positive impact of the implementation of the One Platform and the growth we experienced in our expansion
geographies. Also see “—Key Operating Metric—Revenue Margin” above. This has beenpartly offset by the change
in accounting of Dynamic Packages sold by Opodo, which are no longer accounted on gross basis as a result in
changes to the terms and conditions. Since June 1, 2013, Opodo has acted as agent and no longer as principal. The
impact of this change is that Opodo no longer recognizes revenue from the sale of Dynamic Packages (including
revenue from the flight component thereof) on a gross basis (namely, the full sales value of the Dynamic Packages
sold) but rather as an agent, which means that Opodo recognizes on a net basis. Accordingly, this has no impact on
our reported Revenue Margin (which is equal to our revenues less our supplies) but has reduced both our revenues
and our cost of suppliers by the same amounts. See “—Principal Consolidated Income Statement Line Items—
Revenue”. Please refer to note 4 of our Condensed Interim Consolidated Financial Statements.
Supplies
Supplies costs decreased by €43.5 million, or 49.7%, to €44.1 million in the nine months ended December 31,
2013 from €87.6 million in the nine months ended December 31, 2012, principally due to the change in accounting
treatment of Dynamic Packages offered by Opodo as from June 1, 2013 described above.
Personnel expenses
Personnel expenses increased by €4.3 million, or 9.3%, to €50.0 million in the nine months ended December 31,
2013 from €45.8 million in the nine months ended December 31, 2012, principally due to an increase in our
headcount, relating mainly to the strengthening of the IT teams, the creation of corporate sales team for the
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development of the corporate travel business, as well as higher non-recurring costs related to our existing long-term
incentive plan.
Other operating expenses, which consist of recurring other operating expenses and non-recurring other
operating expenses, increased by €30.6 million, or 20.3%, to €180.7 million in the nine months ended December 31,
2013 from €150.1 million in the nine months ended December 31, 2012.
Recurring other operating expenses principally consist of (i) variable costs, such as marketing expenses, call
center costs, credit card expenses and chargeback costs, and (ii) fixed costs, such as, among others, IT-related
expenditures, rent, external fees and media costs, partly offset by capitalization of IT project expenses. Recurring
other operating expenses increased by €31.3 million, or 21.2%, to €178.9 million in the nine months ended
December 31, 2013 from €147.5 million in the nine months ended December 31, 2012, principally due to the higher
level of marketing expenses to support growth, as well as higher merchant costs in relation with the increase in level
of Bookings as well as a higher proportion of full agent of record bookings.
Non-recurring other operating expenses decreased by €0.8 million, or 30.8%, to €1.8 million in the nine months
ended December 31, 2013 from €2.6 million in the nine months ended December 31, 2012, principally due to lower
integration costs as well as severance and termination costs. In the nine months ended December 31, 2013, nonrecurring other operating expenses primarily consisted of €1.3 million of integration-related fees. In the nine months
ended December 31, 2012, non-recurring other operating expenses primarily consisted of €1.7 million of
integration-related fees, €0.3 million of contract termination fees and €0.3 million of results generated by Opodo
Tours prior to its disposal.
Depreciation and amortization, impairment and profit/loss on disposals of non-current assets (net)
Depreciation and amortization, impairment and profit/loss on disposals of non-current assets (net) increased by
€14.3 million, or 82.6%, to €31.7 million in the nine months ended December 31, 2013 from €17.4 million in the
nine months ended December 31, 2012, principally due to the impairment of the GoVoyages brand of €11.4 million
and due to an increase in the level of IT capitalization driving higher depreciation and amortization, as well as PPA
related amortization notably relating to the former IT technology of Opodo.
Operating profit/(loss)
As a result of the foregoing factors, operating profit decreased by €5.4 million, or 9.8%, to €49.5 million in the
nine months ended December 31, 2013 from €54.9 million in the nine months ended December 31, 2012.
Financial result
Financial result decreased by €1.4 million, or 3.1%, to a loss of €47.0 million in the nine months ended
December 31, 2013 from a loss of €45.5 million in the nine months ended December 31, 2012, principally due to the
difference between the 2018 Notes interest expenses and the former Senior Credit Facility interest expense.
Profit/(loss) before tax
Profit before tax decreased by €6.7 million, or 72.7%, to a gain of €2.5 million in the nine months ended
December 31, 2013 from a gain of €9.3 million in the nine months ended December 31, 2012.
Income tax
Current tax expense increased by €4.2 million to €10.1 million in the nine months ended December 31, 2013
compared to a tax expense of €5.9 million in the nine months ended December 31, 2012, principally due to an
increase of the profits of the Spanish tax group as well as catch-up payment in respect of the US tax group.
Deferred tax expense increased by €0.3 million to €1.6 million in the nine months ended December 31, 2013
compared to a tax expense of €1.4 million in the nine months ended December 31, 2012. This difference is a mix of
increasing and decreasing items and principally concerns the use of Opodo’s tax losses as well as the effect of nondeductibility of part of the interest expense in Spain, mitigated by the impact of the change in tax rate related to the
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Opodo’s intangible assets recognized according to PPA as well as the reversal of the deferred tax liability related to
the impairment of the Go Voyages brand.
Profit/(loss)
As a result of the foregoing factors, our business generated a loss of €9.1 million in the nine months ended
December 31, 2013, compared to a gain of €2.2 million in the nine months ended December 31, 2012.
Comparison of the years ended March 31, 2013 and March 31, 2012
Key Operating Metrics
The following table sets forth certain of our key operating metrics for the years ended March 31, 2013 and
March 31, 2012.
For the year ended
March 31,
2013
2012
Change
(2013 vs.
2012)
(unaudited, unless otherwise
stated)
(in thousand €,
unless otherwise stated)
(%)
(1) (2)
Bookings
(in thousand)
Core .....................................................................................................
Expansion ............................................................................................
Total Bookings .........................................................................................
Revenue Margin(2) (3) (unaudited)
Core .....................................................................................................
Expansion ............................................................................................
Recurring EBITDA(4) ...............................................................................
EBITDA(4)................................................................................................
Recurring EBITDA Margin(5) (% of Revenue Margin) ..............................
5,640
3,088
8,728
5,376
2,354
7,730
4.9%
31.2%
12.9%
250,038
122,948
372,986
108,431
96,981
29.1%
231,400
88,303
319,703
95,434
59,709
29.9%
8.1%
39.2%
16.7%
13.6%
62.4%
(1)
passengers.
(2)
irrespective of the location at which the booking was made.
(3)
(4)
Financial and Other Data—Non-GAAP Measures”.
(5)
Recurring EBITDA Margin, which is a non-GAAP measure, is Recurring EBITDA divided by Revenue Margin.
Bookings
Bookings increased by 1.0 million, or 12.9%, to 8.7 million in the year ended March 31, 2013 from 7.7 million
in the year ended March 31, 2012, principally due to the Opodo Acquisition as well as increased sales of Direct
Connect flight products (reflecting the continued trend towards an increasing proportion of Direct Connect flights in
our product mix), multi-GDS flight products and net fare flight products. Our geographical expansion into new
markets (39 countries as of March 31, 2013 compared to 29 countries as of March 31, 2012) and higher volumes of
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travel products sold in certain regions, in particular in France, the United Kingdom, the Nordics (albeit from a
relatively low base in the Nordics) and, to a lesser extent, in Italy. The increase in Bookings in the year ended March
31, 2013 was partly offset by lower sales in Spain and Germany, in particular in Spain, reflecting lower consumer
demand principally due to adverse economic conditions in those countries.
Bookings of both flight and non-flight products increased in the period under review. Bookings of flight
products increased by 0.8 million, or 12.3%, to 7.9 million in the year ended March 31, 2013, from 7.1 million in the
year ended March 31, 2012, principally due to the Opodo Acquisition as well as the introduction of Direct Connect,
multi-GDS and net fare flight products through the eDreams, Opodo and GoVoyages websites. Bookings of nonflight products increased by 0.1 million, or 19.3%, to 0.8 million in the year ended March 31, 2013, from 0.7 million
in the year ended March 31, 2012, principally due to the Opodo acquisition.
Core segment. In the Core segment, Bookings increased by 0.3 million, or 4.9%, to 5.6 million in the year
ended March 31, 2013 from 5.4 million in the year ended March 31, 2012, principally due to the Opodo Acquisition
and higher volumes of travel products sold in France and to a lesser extent in Italy, which were partly offset by
lower sales of products in Spain as described above.
Expansion segment. In the Expansion segment, Bookings increased by 0.7 million, or 31.2%, to 3.1 million in
the year ended March 31, 2013 from 2.4 million in the year ended March 31, 2012, principally due to the Opodo
Acquisition and our geographical expansion into new markets (36 countries in the Expansion segment as of
March 31, 2013 compared to 26 countries as of March 31, 2012) and higher volumes of products sold in the United
Kingdom and Nordics, which was partly offset by lower sales of products in Germany.
Revenue Margin
Revenue Margin increased by €53.3 million, or 16.7%, to €373.0 million in the year ended March 31, 2013,
from €319.7 million in the year ended March 31, 2012, principally due to the Opodo Acquisition, as well as the
higher sales volumes as described above under “—Bookings” and a higher average Revenue Margin per Booking.
Our higher average Revenue Margin per Booking was principally a result of higher service fees and insurance
revenue from our customers despite an unfavorable change in product mix reflecting an increased proportion of
Direct Connect flights compared to flights sourced via GDSs as described below.
Core segment. In the Core segment, Revenue Margin increased by €18.6 million, or 8.1%, to €250.0 million in
the year ended March 31, 2013, from €231.4 million in the year ended March 31, 2012, principally due to the Opodo
Acquisition as well as the higher sales volumes as described above under “—Bookings” and a higher average
Revenue Margin per Booking, principally due to higher service fees and higher sales of insurance especially in
France. These increases were partly offset by a higher proportion of sales of Direct Connect flight products leading
to a lower average Revenue Margin per Booking, and a lower proportion of charter flights sold in France.
Expansion segment. In the Expansion segment, Revenue Margin increased by €34.6 million, or 39.2%, to
€122.9 million in the year ended March 31, 2013 from €88.3 million in the year ended March 31, 2012, principally
due to the Opodo Acquisition as well as higher sales volumes as described above under “—Bookings” as well as a
higher average Revenue Margin per Booking due to higher service fees and, to a lesser extent, higher sales of
insurance and non-travel products such as advertising. These increases were partly offset by a higher proportion of
Direct Connect flight products leading to a lower average Revenue Margin per Booking.
Revenue Margin by product type. The following table sets forth the Revenue Margin generated by our flight
and non-flight businesses for the years ended March 31, 2013 and March 31, 2012.
For the year ended March 31,
2013
2012
Change
(unaudited)
(%)
Revenue Margin(1)
Flight ................................................................................................
305,211
Non-flight ................................................................................................
67,775
93
81.8% 259,867
18.2% 59,835
81.3%
18.7%
17.4%
13.3%
2013
2012
Change
(unaudited)
(%)
372,986 100.0% 319,703 100.0%
(1)
16.7%
Revenue Margin generated by our flight business increased by €45.3 million, or 17.4%, to €305.2 million in the
year ended March 31, 2013, from €259.9 million in the year ended March 31, 2012, principally due to a 12.3%
increase in Bookings (notably following the Opodo Acquisition) combined with a 4.6% increase in the Revenue
Margin per Booking from €36.7 per Booking for the year ended March 31, 2012 to €38.4 per Booking for the year
ended March 31, 2013, principally as a result of higher service fees per flight bookings as well as higher insurance
revenue following the implementation of a group contract. This has been partly offset by lower airline commissions
on flight products and a lower proportion of sales of charter flights which carry a higher margin than our network or
low-cost carrier flight products. The increase in sales of Direct Connect flight products (partly as a result of
customers looking for cheaper flight options as a result of the adverse economic conditions in Europe) contributed to
the growth of Bookings but did not cause a proportional increase in our Revenue Margin because Direct Connect
flight products provide a lower average Revenue Margin per Booking as a result of no supplier commissions being
paid and no GDS incentives being received, in most cases, on Direct Connect flight products.
Revenue Margin generated by our non-flight business increased by €7.9 million, or 13.3%, to €67.8 million in
the year ended March 31, 2013, from €59.8 million in the year ended March 31, 2012, principally due to a 19.3%
increase in Bookings (notably following the Opodo Acquisition) and partly offset by a 5.1% decrease in the
Revenue Margin per Booking from €91.7 per Booking for the year ended March 31, 2012 to €87.0 per Booking for
the year ended March 31, 2013, principally as a result of a change in product mix.
Revenue Margin by source. We earn our Revenue Margin from our customers, suppliers and advertising and
meta click-outs. The following table sets forth our Revenue Margin by source for the years ended March 31, 2013
and March 31, 2012.
2013
2012
Change
(unaudited)
(%)
Revenue Margin(1)
from customers ................................................................ 265,443
from suppliers ................................................................ 99,245
from advertising and meta click-outs................................ 8,298
Total Revenue Margin ...................................................... 372,986
(1)
71.2%
26.6%
2.2%
100.0%
220,258
91,668
7,777
319,703
68.9%
28.7%
2.4%
100.0%
20.5%
8.3%
6.7%
16.7%
Revenue Margin from customers increased by €45.2 million, or 20.5%, to €265.4 million in the year ended
March 31, 2013, from €220.3 million in the year ended March 31, 2012, principally due to the impact of the Opodo
Acquisition as well as the increase in volumes. Revenue margin per Booking increased by 6.7% from €28.5 for the
year ended March 31, 2012 to €30.4 for the year ended March 31, 2013. The increase in Revenue Margin per
Booking was largely attributable to the €1.2 increase in insurance Revenue per Booking following the roll-out of our
new insurance supplier, as well as the 3.6% increase in service fees per flight Booking to €23.10 in the year ended
March 31, 2013 from €22.30 in the year ended March 31, 2012, which was driven by our ability to provide lower
all-in prices to customers.
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Revenue Margin from suppliers increased by €7.6 million, or 8.3%, to €99.2 million in the year ended
March 31, 2013, from €91.7 million in the year ended March 31, 2012, principally due to the impact of the Opodo
Acquisition.
Revenue Margin from advertising and meta click-outs increased by €0.5 million, or 6.7%, to €8.3 million in the
year ended March 31, 2013, from €7.8 million in the year ended March 31, 2012, principally due to the impact of
the Opodo Acquisition.
Recurring EBITDA
Recurring EBITDA increased by €13.0 million, or 13.6%, to €108.4 million in the year ended March 31, 2013
from €95.4 million in the year ended March 31, 2012, principally due to the Opodo Acquisition and to the higher
Revenue Margin achieved in the year ended March 31, 2013. This increase was partly offset by higher marketing
expenditures and merchant costs principally driven by tactical marketing measures to increase our growth and
further increased expenditures in respect of our operating infrastructure, in particular on our common IT platform,
call centers and higher personnel costs to support our growth strategy.
We analyze our costs in two categories, as set forth in the following table for the year ended March 31, 2013
and March 31, 2012:
2013
2012
(unaudited)
Change
(%)
(in thousand €)
Variable Costs(1) .......................................................................................210,197
Fixed Costs(2) ........................................................................................... 54,358
172,166
52,103
22.1%
4.3%
(1)
Variable Costs, which is a non-GAAP measure, includes all expenses which depend on the number of transactions processed. These include
(2)
Fixed Costs, which is a non-GAAP measure, includes IT expenses net of capitalization write-off, personnel expenses which are not Variable
Variable Costs.Variable Costs increased by €38.0 million, or 22.1%, to €210.2 million in the year ended March
31, 2013 from €172.2 million in the year ended March 31, 2012, principally due to the Opodo Acquisition as well as
higher acquisition costs to sustain the volume growth. Variable Costs per Booking increased by 8.1% from €22.3 in
the year ended March 31, 2012 to €24.1 in the year ended March 31, 2013, principally as a result of higher
marketing expenditures per Booking combined with a higher proportion of full agent of record bookings which
generate more merchant costs.
Fixed Costs. Fixed Costs increased by €2.3 million, or 4.3%, to €54.3 million in the year ended March 31, 2013
from €52.1 million in the year ended March 31, 2012, principally due to the Opodo Acquisition. Fixed Costs per
Booking decreased by 7.6% from €6.7 in the year ended March 31, 2012 to €6.2 in the year ended March 31, 2013,
principally as a result of scale effect.
EBITDA
EBITDA increased by €37.3 million, or 62.4%, to €97.0 million in the year ended March 31, 2013, from €59.7
million in the year ended March 31, 2012, principally due to the Opodo Acquisition and the factors discussed under
“—Recurring EBITDA” above and lower other non-recurring costs in the year ended March 31, 2013 compared
with the year ended March 31, 2012. These primarily comprised lower non-recurring costs related to the Opodo
Acquisition and its integration partly offset by higher non-recurring personnel costs in the year ended March 31,
2013 relating to our long-term incentive plan for our employees.
95
Results of Operations
The following table sets forth our results of operations in the year ended March 31, 2013 and March 31, 2012.
For the year ended
March 31
2012
2013
(audited)
Change
(2013 vs.
2012)
(%)
(in thousand )
Revenue................................................................................................ 479,549
Supplies ................................................................................................ (106,563)
Revenue Margin(1) ............................................................................................
372,986
Personnel expenses ............................................................................................
(61,171)
Other operating expenses (including non-recurring)(2) ................................
(214,834)
Depreciation and amortization, impairment and profit/(loss) on
(33,621)
disposals of non-current assets (net)................................................................
Operating profit/(loss)......................................................................................
63,360
Financial result(3) ...............................................................................................
(83,096)
Income/(loss) of associates accounted for using equity method ...........................
(45)
Profit/(loss) before tax......................................................................................
(19,781)
Income tax ................................................................................................ (3,617)
Non-controlling interest—result ................................................................
68
(23,330)
Profit/(loss) ................................................................................................
423,543
(103,840)
319,703
(55,953)
(204,041)
13.2%
2.6%
16.7%
9.3%
5.3%
(43,846)
15,863
(72,356)
(23.3%)
299.4%
14.8%
(56,493)
(7,763)
—
(64,256)
(65.0%)
(53.4%)
(63.7%)
(1)
(2)
Other operating expenses include: (i) other recurring operating expenses in the amount of €211.6 million and €174.2 million in the year
ended March 31, 2013 and 2012, respectively; and (ii) other non-recurring expenses in the amount of €3.2 million and €29.8 million in the
year ended March 31, 2013 and 2012, respectively. See “Note 10—Other operating income/(expense)” and “Note 11—Non-recurring
income/(expense)” to our Consolidated Annual Financial Statements.
(3)
Financial result includes: (i) financial cost of €72.8 million and €69.3 million in the years ended March 31, 2013 and 2012, respectively;
(ii) financial income of €0.05 million and €0 in the years ended March 31, 2013 and 2012, respectively; and (iii) other financial expenses of
€10.3 million and €3.0 million in the years ended March 31, 2013 and 2012, respectively. See “Note 12—Financial Result” to our
Consolidated Annual Financial Statements.
Revenue
Revenue increased by €56.0 million, or 13.2%, to €479.5 million in the year ended March 31, 2013 from €423.5
million in the year ended March 31, 2012, principally due to the Opodo Acquisition and (i) higher sales volumes
resulting from our geographical expansion into new markets (39 countries as of March 31, 2013 compared to 29
countries as of March 31, 2012) as well as higher sales volumes in countries where we have existing operations, in
particular in France, the United Kingdom and the Nordics, partly offset by lower sales volumes in Spain and
Germany, and Italy being flat, and (ii) additional revenue from service fees charged, and sales of insurance, to our
customers; and, to a lesser extent, (iii) higher non-travel revenue, such as advertising and phone revenue. These
impacts were partly offset by lower sales of charter flights.
Supplies
Supplies costs increased by €2.7 million, or 2.6%, to €106.6 million in the year ended March 31, 2013 from
€103.8 million in the year ended March 31, 2012, principally due to additional inventory bought following our
expansion after the Opodo Acquisition partly offset by lower sales of charter flights.
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Personnel expenses
Personnel expenses increased by €5.2 million, or 9.3%, to €61.2 million in the year ended March 31, 2013 from
€56.0 million in the year ended March 31, 2012, principally due to the higher average number of employees and
higher costs relating to our operations following our expansion after the Opodo Acquisition and higher staff costs
relating to (i) the strengthening of our in-house call center operations in line with the growth of our operations,
(ii) extended operating hours, (iii) the strengthening of the IT teams in charge of our One Platform project (the
development of a common IT platform for all our websites), (iv) expansion of our marketing teams to support our
growth strategy, and (v) higher non-recurring costs mostly related to the long-term incentive plan.
Other operating expenses, which consist of recurring other operating expenses and non-recurring other
operating expenses, increased by €10.8 million, or 5.3%, to €214.8 million in the year ended March 31, 2013 from
€204.0 million in the year ended March 31, 2012.
Recurring other operating expenses principally consist of (i) variable costs, such as marketing expenses, call
center costs, credit card expenses and chargeback costs, and (ii) fixed costs, such as, among others, IT-related
expenditures, rent, external fees and media costs, partly offset by capitalization of IT project expenses. Recurring
other operating expenses increased by €37.3 million, or 21.4%, to €211.6 million in the year ended March 31, 2013
from €174.2 million in the year ended March 31, 2012, principally due to the Opodo Acquisition.
Non-recurring other operating expenses decreased by €26.6 million to €3.2 million in the year ended March 31,
2013 from €29.8 million in the year ended March 31, 2012, principally as a result of most non-recurring expenses
relating to the Combination being paid in the year ended March 31, 2012. These included €22.1 million of
transaction expenses related to the Opodo Acquisition and the Combination, €2.5 million of consulting fees related
to the Combination and €0.3 million of contract termination fees paid mostly in connection with the Combination. In
the year ended March 31, 2013, non-recurring other operating expenses primarily consisted of €1.9 million of
consulting fees, €0.5 million of contract termination fees paid as well as €0.3 million related to the two months of
Opodo Tours losses.
Depreciation and amortization, impairment and profit/loss on disposals of non-current assets (net)
Depreciation and amortization, impairment and profit/loss on disposals of non-current assets (net) decreased by
€10.2 million, or 23.3%, to €33.6 million in the year ended March 31, 2013 from €43.8 million in the year ended
March 31, 2012, principally due to the Combination and amortization charges on intangible assets as well as lower
impairment charges on intangible assets accounted for the year ended March 31, 2013 (€9.3 million) as compared to
the year ended March 31, 2012 (€21.4 million), in each case, recognized in the course of purchase price allocations
related to the Opodo Acquisition and the Combination. Whereas in the year ended March 31, 2012, the impairment
charge was related to the GoVoyages brand impairment, in the year ended March 31, 2013, the impairment charge
primarily related to the former Opodo IT technology (€6.7 million) and a GoVoyages customer relationship (€2.0
million).
Operating profit/(loss)
As a result of the foregoing factors, operating profit increased by €47.5 million to €63.4 million in the year
ended March 31, 2013 from €15.9 million in the year ended March 31, 2012.
Financial result
Finance loss increased by €10.7 million to a loss of €83.1 million in the year ended March 31, 2013 from a loss
of €72.4 million in the year ended March 31, 2012, principally due to the one-off reversal of €17.6 million
capitalized interest expense relating to our senior debt that was repaid in the year ended March 31, 2013 as well as
the termination of certain derivatives related to such debt (€6.7 million), compared with the one-off reversal of €13.6
million of capitalized interest expense relating to indebtedness of eDreams and GoVoyages that was repaid in the
year ended March 31, 2012 following the Opodo Acquisition.
97
Profit/(loss) before tax
Loss before tax decreased by €36.7 million to a loss of €19.8 million in the year ended March 31, 2013 from a
loss of €56.5 million in the year ended March 31, 2012.
Income tax
Current tax expense decreased by €4.2 million to €3.6 million in the year ended March 31, 2013 compared to a
tax expense of €7.8 million in the year ended March 31, 2012, primarily due to income tax payments partly offset by
an income tax credit obtained by GoVoyages. Deferred tax income increased by €9.9 million to a gain of €5.2
million in the year ended March 31, 2013 compared to a tax expense of €4.7 million in the year ended March 31,
2012, principally due to the impact of the refinancing of the former Senior Debt which was refinanced in January
2013.
Profit/(loss)
As a result of the foregoing factors, loss decreased by €41.0 million to a loss of €23.3 million in the year ended
March 31, 3013 from a loss of €64.3 million in the year ended March 31, 2012.
Liquidity and Capital Resources
Overview
To date, our liquidity needs have been met principally from cash flow from operations, including the cash
generated by the effect of negative working capital, supplemented by borrowings under our revolving credit facility
under the Revolving Credit Facility Agreement as required and other bank borrowings. For the Opodo Acquisition
and costs associated with the Combination, a combination of equity and debt financing was used, including the
proceeds from the offering of the 2019 Notes and Convertible Subordinated Shareholder Bonds.
Our business model benefits from a structurally negative working capital because under both the principal and
the full agent of record model we generally receive cash from travelers at the time of booking and we pay travel
suppliers generally within a few weeks after completing the transaction. Therefore, under each model (and with the
exception of commissions received from our white label sourcing partners and fees paid by travel suppliers in
connection with our metasearch activities), we generally receive cash from the travelers prior to paying suppliers,
and this favorable operating cycle represents a working capital source of cash. However, the increased proportion of
sales of Direct Connect reduces the extent of our negative working capital as customers of Direct Connect products
typically pay the Direct Connect provider directly at the time of booking.
We have experienced a strong operating free cash flow conversion (defined as (Recurring EBITDA-Capital
Expenditures)/Recurring EBITDA) of 84.6% in the year ended March 31, 2013 (for this ratio, Capital Expenditures
excludes any financial investment (€1.6 million in the year ended March 31, 2013)). This solid result was achieved
in spite of the significant investments made during the same period, including the completion of the integration of
our core booking engines and systems for flights, hotels, rental cars and advertising sales; the ongoing integration of
our front, middle- and back-offices; and the ongoing introduction of Dynamic Packages, all of which weighed on
operating cash flow generation.
Within our working capital, trade and other receivables primarily comprise commissions, incentives or other
payments due to us by travel suppliers and by trade and corporate customers and security deposits. Trade and other
payables primarily comprise payables to our travel suppliers, metasearch companies that facilitate the distribution of
our products and operators of websites on which we advertise, as well as employee-related and tax liabilities. The
level of trade payables mainly relates to the payment terms of our travel suppliers, which are generally due several
weeks after completing the transaction with our customer.
Our cash requirements have mainly been for funding operating expenses as well as capital expenditures such as
IT infrastructure (in particular during the implementation of the One Platform), the growth of our business and the
service of the debt incurred in connection with the Opodo Acquisition and the making of amortization payments
thereon (in the year ended March 31, 2013, we paid €10.3 million in amortization payments, compared with €20.1
million in the year ended March 31, 2012). Following completion of the refinancing in January 2013, no further
amortization payments are required.
98
Our business has significant seasonality of cash generation, with March usually being the month in which we
generate the most cash and December usually being the time of the year in which our cash is lowest.
Our cash and cash equivalents were €89.6 million at December 31, 2013 compared to €159.2 million as of
March 31, 2013, and reflected the seasonality of our working capital. As of January 31, 2014, our cash and cash
equivalents were €141.8 million and our net debt as per statement of financial position was €346.4 million.
The following sets forth an overview of our net debt (excluding the Convertible Subordinated Shareholder
Bonds) as of the end of the quarters indicated below:
As of
December 31,
As of
September 30,(1)
As of
June
30,(1)
As of
March
31,
As of
December 31,(1)
As of
September 30,(1)
2013
As of
June
30,(1)
As of
March
31,
As of
December 31,(1)
As of
September 30,(1)
2012
As of
June
30,(1)
As of
April
1,(1)
2011
(in €million)
Term Loan
Facilities(2) ................................
—
—
2019 Notes ................................
(175.0) (175.0)
(325.0) (325.0)
2018 Notes ................................
Revolving
credit
facilities(3) ................................
—
—
Other debt and
finance
(2.4)
(1.8)
leases(5) ................................
Total
financial
(502.4) (501.8)
liabilities ................................
Capitalized
interests ................................
(13.2)
(11.6)
Financing
costs and
amortiza19.5
20.4
tions(6) ................................
Overdraft ................................
(4.5)
(0.1)
Cash and cash
equivalents ................................
89.6
127.4
Net debt (as
per
statement of
financial
(410.9) (365.8)
position) ................................
(1)
—
(175.0)
(325.0)
—
(175.0)
(325.0)
—
—
(314.7)
(175.0)
—
(314.7)
(175.0)
—
(324.8)
(175.0)
—
(324.8)
(175.0)
—
(340.0)
(175.0)
—
(340.0)
(175.0)
—
(340.0)
(175.0)
—
—
—
—
—
—
(43.3)(4)
—
(187.1)
—
—
—
(1.9)
(1.7)
(0.5)
(0.5)
(0.6)
(0.8)
(1.0)
(0.9)
(0.8)
(1.0)
(501.9)
(501.7)
(490.1)
(490.2)
(500.4)
(500.5)
(516.0)
(515.9)
(559.2)
(188.1)
(13.2)
(11.6)
(3.0)
(7.6)
(3.0)
(7.6)
(3.0)
(8.1)
(3.5)
(3.4)
21.1
(0.2)
21.8
(0.0)
28.2
(7.0)
29.7
(6.8)
31.8
(0.3)
33.5
(0.1)
33.5
(0.1)
35.4
(0.1)
38.8
(0.1)
13.1
(0.1)
139.4
159.2
86.8
(354.8)
(332.4)
(385.2)
106.8
121.4
119.4
62.1
85.1
149.5
(368.1)
(350.5)
(355.3)
(423.5)
(403.6)
(374.5)
72.1
(106.4)
Refers to GTF and its consolidated subsidiaries, as the Company does not have historical quarterly information and accordingly cannot
present its consolidated financial information as of the quarter-ends indicated. GTF is a wholly owned subsidiary of eDreams ODIGEO
which directly or indirectly controls all of our operating companies. Our management regards the consolidated information of GTF as of the
quarter-ends indicated as indicative of the consolidated information of the Company as of the quarter-ends indicated.
(2)
Refers to the term loan facilities under our Senior Credit Facilities Agreement, which was terminated in January 2013.
(3)
Refers to revolving credit facilities under our Revolving Credit Facility Agreement for the 2013 periods indicated and to the revolving
credit facilities under our Senior Credit Facilities Agreement for the 2012 and 2011 periods indicated. See “—Description of Debt
Arrangements”.
(4)
These drawdowns relate to certain amounts payable by us in connection with the Opodo Acquisition.
(5)
Includes tax refund liability.
(6)
Of the financing costs and amortizations, €3.0 million, €3.1 million, €3.3 million and €3.4 million related to financing costs associated with
undrawn revolving credit facilities under our Revolving Credit Facility Agreement as of December 31 2013, September 30, 2013, June 30,
2013 and March 31, 2013, respectively.
Working capital statement
The Company is of the opinion that it has sufficient working capital in that it believes it has the ability to access
cash and other available liquid resources in order to meet its payment obligations falling due within the 12-month
period following the date of the prospectus.
99
Cash Flows
The following is a discussion of our consolidated cash flows comparing the nine months ended December 31,
2013 and December 31, 2012 and the years ended March 31, 2013 and March 31, 2012. We have not included a
comparison of the Company’s cash flows with respect to the financial information for the period from February 14,
2011 to and including March 31, 2011 derived from our Unconsolidated 2011 Financial Statements as such
information is not comparable with the consolidated financial information derived from our Consolidated Financial
Statements and reflects de minimis activities and cash flows relating to the formation of the Company and its
subsidiaries, as well as the Company’s holding of shares in such subsidiaries. See “Presentation of Financial and
Other Data—Unconsolidated 2011 Financial Statements”.
Comparison of the nine months ended December 31, 2013 and December 31, 2012
The following table sets forth our consolidated cash flows in the nine months ended December 31, 2013 and
December 31, 2012.
For the nine months
ended December 31,
2013
2012
(unaudited)
Change
(%)
(in thousand €)
Consolidated profit/(loss) for the year ................................................................
(9,128)
Depreciation and amortization, impairment ................................
31,687
Other provisions ................................................................
1,670
Income tax ........................................................................
11,677
Gain or loss on disposal of assets .......................................
—
Finance income/(loss)........................................................
46,953
Income/(loss) of associates accounted for using equity
method ..........................................................................
—
Expenses related to share-based payments .........................
3,409
Other non-cash items .........................................................
1
Change in working capital .................................................
(90,861)
Income tax paid .................................................................
(8,644)
(13,236)
Net cash from operating activities.......................................
(28,395)
Net cash flow from/(used) in investing activities.................
(30,882)
Net cash flow from/(used) in financing activities ................
(72,513)
Net increase/(decrease) in cash and cash equivalent...........
Net cash and cash equivalents at beginning of period .........
159,157
Effect of foreign exchange rate changes .............................
(1,481)
85,163
Net cash and cash equivalents at end of period ..................
2,178
17,351
1,671
7,212
—
45,515
32
2,081
—
(52,559)
(7,353)
16,128
(12,420)
(43,532)
(39,824)
119,346
526
80,048
n/a
82.6%
0.0%
61.9%
n/a
3.2%
n/a
63.8%
n/a
72.9%
17.6%
n/a
128.6%
(29.1%)
82.1%
33.4%
n/a
6.4%
Operating activities
Cash from operating activities consists of the results from the income statement adjusted for non-cash items,
which include all items listed in the table above except for change in working capital and income tax paid.
Net cash from operating activities decreased by €29.4 million to a net cash outflow of €13.2 million in the nine
months ended December 31, 2013, compared to a net cash inflow of €16.1 million in the nine months ended
December 31, 2012, principally due to:
•
lower net profit including as a result of the impairment of GoVoyages brand in December 2013 (€11.4
million); and
•
the higher increase in working capital in December 2013 compared to December 2012 notably due to (i) the
abnormally high level of negative working capital in March 2013 due to delays in the payments of weekly
BSP in Germany and the Nordics, as well as a delay in payment of marketing expenses of approximately
100
€19 million, as March 31, 2013 fell on Easter Sunday, (ii) a delay in the payment of the weekly German
and Nordics BSP in December 2012 with an impact of €11.0 million and (iii) a one-time negative impact
on working capital of the implementation of the One Platform.
Investing activities
Net cash used in investing activities increased by €16.0 million to a net cash outflow of €28.4 million in the
nine months ended December 31, 2013 compared to a net cash outflow of €12.4 million in the nine months ended
December 31, 2012, principally due to the Liligo Acquisition.
Financing activities
Net cash used in financing activities decreased by €12.7 million to a net cash outflow of €30.9 million in the
nine months ended December 31, 2013 compared to a net cash outflow of €43.5 million in the nine months ended
December 31, 2012, principally due to the timing difference in the payment of interest on the 2018 Notes compared
to the payment of interest under our former Senior Credit Facility.
Comparison of the year ended March 31, 2013 and March 31, 2012
The following table sets forth our consolidated cash flows in the year ended March 31, 2013 and March 31,
2012.
For the years ended March 31,
2013
2012
Change
(audited)
(%)
(in thousand €)
Consolidated profit/(loss) for the year ................................................................
(23,330)
(64,256)
Depreciation and amortization, impairment ................................
33,622
43,846
Other provisions ................................................................................................
3,553
2,208
Income tax................................................................................................
3,615
7,763
Gain or loss on disposal of assets ................................................................ 0
97
Finance income/(loss) ................................................................
83,097
72,356
Income/(loss) of associates accounted for using equity method ................................
45
0
Expenses related to share-based payments................................................................
3,449
3,074
Other non-cash items ................................................................................................
0
(3)
Change in working capital ................................................................ 10,396
40,785
Income tax paid ................................................................................................
(6,963)
(9,941)
Net cash from operating activities ................................................................
107,484
95,929
Net cash flow from/(used) in investing activities ................................ (18,335)
(420,121)
Net cash flow from/(used) in financing activities ................................ (50,413)
370,738
Net increase/(decrease) in cash and cash equivalent ................................
38,736
46,546
Net cash and cash equivalents at beginning of period................................
119,345
72,022
Effect of foreign exchange rate changes ................................................................
1,074
778
Net cash and cash equivalents at end of period................................ 159,155
119,346
(63.7%)
(23.3%)
60.9
(53.4%)
n/a
14.8%
n/a
12.2%
n/a
(74.5%)
(30.0%)
12.0%
(95.6%)
n/a
(16.8%)
65.7%
38.0%
33.4%
Operating activities
Net cash from operating activities increased by €11.6 million, or 12.0%, to a net cash inflow of €107.5 million
in the year ended March 31, 2013, compared to a net cash inflow of €95.9 million in the year ended March 31, 2012,
principally due to a decrease in the net loss combined with financing expenses, partly offset by lower depreciation
and amortization as well as a less positive change in working capital.
While the net loss was lower in the year ended March 31, 2013 compared with a loss in the year ended
March 31, 2012, the increase in the net cash from operating activities was principally due to:
•
higher performance of our business in relation with the volumes growth described above;
101
•
higher operating expenses being capitalized in relation with IT projects and then considered as capital
expenditure;
•
positive change in working capital in the year ended March 31, 2013 benefiting from postponement of
March 2013 month-end payments as a consequence of the month-end day falling on a Sunday;
•
less favorable effects of the change in GDS/Direct Connect product mix on the change in working capital;
•
lower non-recurring expenses vis-à-vis the expenses incurred in the year ended March 31, 2012 in relation
with the integration of the newly created Group;
•
certain transaction fees paid in the year ended March 31, 2012 in relation with the Opodo Acquisition
partly financed by a signing bonus received from Amadeus pursuant to the new GDS agreement; and
•
a lower income tax payment of €7.0 million in the year ended March 31, 2013 as compared to €10.0
million in the year ended March 31, 2012.
Investing activities
Net cash used in investing activities decreased by €401.8 million to a net cash outflow of €18.3 million in the
year ended March 31, 2013 compared to a net cash outflow of €420.1 million in the year ended March 31, 2012,
principally due to a higher amount of expenses capitalized in the context of IT development projects, fully offset by
the Opodo Acquisition with a total investment of €409.7 million.
Financing activities
Net cash from financing activities decreased by €421.1 million to a net cash outflow of €50.4 million in the year
ended March 31, 2013 compared to a net cash inflow of €370.7 million in the year ended March 31, 2012,
principally due to:
•
lower positive debt payment/repayment effects in relation to the refinancing completed in January 2013
(net impact of €10.3 million) as compared to the financing of the Opodo Acquisition (€420.3 million) in the
year ended March 31, 2012;
•
a lower amount of financing fees paid in relation with the refinancing of January 2013 (€11.3 million) as
compared to financing fees associated with the Opodo Acquisition (€35.6 million);
•
higher derivative costs related to the termination of all hedging agreements following the refinancing
completed in January 2013 (€6.7 million);
•
debt amortization payments of €10.3 million (excluding transactional effects) in the year ended March 31,
2013 as compared to €15.2 million in the year ended March 31, 2012 due to the refinancing of the
amortized Senior Debt in January 2013 by non-amortizing 2018 Notes; and
•
increased cash interest payments in the year ended March 31, 2013 (€33.7 million) as compared to the year
ended March 31, 2012 (€33.3 million) due to higher accrued interests at year end.
Long-Term Financing Arrangements
On January 31, 2013, GDF, a wholly owned indirect subsidiary of the Company, issued €325 million aggregate
principal amount of 7.500% Senior Notes due 2018 (the “2018 Notes”). Proceeds of the offering of the 2018 Notes
were used in January 2013 to prepay in full certain term loan facilities of other group companies and pay certain
offering and refinancing expenses. At the same time as the issuance of the 2018 Notes, certain companies in the
eDreams ODIGEO Group entered into a Revolving Credit Facility.
As of December 31, 2013, our total financial liabilities excluding capitalized interests, financing costs
capitalized and overdrafts amounted to €502.4 million, excluding the Convertible Subordinated Shareholder Bonds,
compared to €501.7 million as of the year ended March 31, 2013.
102
As of December 31, 2013, the principal payments of our long-term financing arrangements were as follows:
Payment due
2015
Facilities
2019 Notes ..........................................
2018 Notes ..........................................
Convertible Subordinated
Shareholder Bonds(1) .....................
Obligations under finance
leases ..............................................
Total....................................................
(1)
between January 1 and December 31,
2016
2017
2018
2019
2020
(in € thousand)
—
—
—
13
13
—
—
—
—
— 175,000
— 325,000
—
—
—
—
—
—
—
—
beyond
December 31,
2020
Total
—
—
175,000
325,000
149,306
149,306
—
—
—
—
—
—
— 325,000 175,000
—
149,306
13
649,319
Convertible Subordinated Shareholder Bonds includes the capitalized interests
Under IFRS, our total long-term financial liabilities as of December 31, 2013 amounted to €597.3 million. The
difference with the principal payments of our long-term financing arrangements is the financing costs capitalized
amounting to €16.5 million and the split between debt and equity of the Convertible Subordinated Shareholder
Bonds amounting to €35.5 million. For a description of the material terms of our financing arrangements, including
the Revolving Credit Facility Agreement, see “—Description of Debt Arrangements”.
High-yield bonds
Our subsidiaries have issued two series of high-yield bonds. In 2011, GTF issued €175 million of 10.375%
senior subordinated secured bonds due 2019. In 2013, GDF issued €325 million of 7.500% senior secured bonds due
2018.
As described in “Listing and Admission to Trading”, we intend to use the €50 million gross proceeds to us from
the Offering to redeem a portion of the 2019 Notes on or after May 1, 2014 to further reduce our indebtedness and
interest expense, and create additional flexibility in our capital structure.
Drawings under revolving credit facilities
As of December 31, 2013, we had €28.1 million in committed facilities under our existing revolving credit
facility under the Revolving Credit Facility Agreement, of which €28.1 related to guarantees thereunder. As of
December 31, 2013, the amount of committed but undrawn facilities under the Revolving Credit Facility Agreement
available for operating activities as well as guarantees in the future was €97.8 million and €4.1 million was available
for guarantees only. In the past, funds under our existing revolving credit facility were drawn for a minimum period
of two weeks mainly to pay BSP suppliers during the month.
Convertible Subordinated Shareholder Bonds
In connection with the Opodo Acquisition, on June 30, 2011, GTF issued an aggregate amount of €117,751,315
of Convertible Subordinated Shareholder Bonds due June 30, 2060. Interest on the Convertible Subordinated
Shareholder Bonds accrues annually since June 30, 2011 but will not be paid until the maturity date. The estimated
effective interest rate for the period since June 30, 2011 through 2020 is 9.875% per annum.
The Convertible Subordinated Shareholder Bonds were initially issued to Lyeurope and subsequently
contributed by Luxgoal and Axeurope to GTF at the nominal value plus interest in exchange for an aggregate
amount of €117,751,315 Convertible Subordinated Shareholder Bonds issued to Luxgoal and Axeurope.
As at December 31, 2013, the outstanding principal of the Convertible Subordinated Shareholder Bonds
amounted to €82.3 million and the accrued interest amounts to €31.6 million, totaling €113.8 million. The
Convertible Subordinated Shareholder Bonds have been accounted in connection with IFRS requirements and
contain two components: one component is a financial liability, i.e., our contractual obligation to pay cash, and the
other component is an equity instrument, which has been valued at €26 million.
103
As described in “Principal Shareholders—Shareholder Reorganization”, as a result of the Shareholder
Reorganization, the Company has become the holder of 100% of the Convertible Subordinated Shareholder Bonds,
which were issued by GTF in connection with the Combination. Accordingly, although we have recognized interest
expense associated with such Convertible Subordinated Shareholder Bonds in the past (€11.4 million in the year
ended March 31, 2012 and €12.5 million in the year ended March 31, 2013), following the Shareholder
Reorganization, such expense will no longer be recognized in our consolidated results as such Convertible
Subordinated Shareholder Bonds are within our consolidation group.
Hedging
In the past, we entered into interest rate swaps to manage our exposure to interest rates. Following completion
of the refinancing in January 2013 and the repayment of the debt under the Senior Credit Facilities Agreement
(which was variable rate), each of the 2018 Notes and the 2019 Notes bear interest at fixed rates. Consequently, all
the hedging instruments were terminated in January 2013 at a total cost of €6.7 million, of which €5.3 million
related directly to the cancellation of hedging instruments. See “Capitalization”.
Description of Debt Arrangements
As of December 31, 2013, we had consolidated total debt of €502.4 million, including principal and accrued
and unpaid interest. The principal components of our total debt were:
•
the €325 million aggregate principal amount of 7.500% Senior Notes issued on January 31, 2013
by GDF, a wholly owned indirect subsidiary of the Company, due 2018 (the “2018 Notes”), the
proceeds of which were used mainly to refinance a senior facility that was entered into to finance the
Opodo Acquisition; and
•
the €175 million aggregate principal amount of 10.375% Senior Notes issued on April 21, 2011
by GTF, a wholly owned direct subsidiary of the Company, due 2019 (the “2019 Notes”), the proceeds
of which were used to finance the Opodo Acquisition.
In addition, on January 31, 2013, LuxGEO, a wholly-owned subsidiary of GTF, GTF and certain other
eDreams ODIGEO companies entered into a revolving credit facility agreement (the “Revolving Credit Facility
Agreement”) with certain lenders, replacing the revolving credit facility under our Senior Credit Facilities
Agreement. As of February 28, 2014, no cash drawings were outstanding under the Revolving Credit Facility
Agreement.
2018 Notes
The 2018 Notes are general senior obligations of GDF and are guaranteed on a senior subordinated basis by
GTF, LuxGEO, Opodo, Travellink and eDreams. The 2018 Notes and related Guarantees are secured by
(i) first-ranking security interests (but contractually with right of payment junior to the lenders under the Revolving
Credit Facility Agreement) over (a) certain receivables of GDF, (b) the capital stock in GDF held by LuxGEO,
(c) all of the issued capital stock in Geo Debt GP S.à r.l., (d) all of the issued Capital Stock in LuxGEO and Opodo,
(e) the bank accounts of LuxGEO and GTF located in Luxembourg, (f) the bank accounts of Travellink,
(g) substantially all of the assets of Opodo and all the assets (other than any shareholdings) of eDreams,
(h) intercompany receivables and trade receivables of Travellink, (i) material intellectual property rights and
trademarks of Travellink, and (j) all of the issued capital stock in Vacaciones eDreams S.L.; and (ii) second ranking
interests (but contractually with right of payment senior to the holders of the 2019 Notes (as defined below) and
junior to the lenders under the Revolving Credit Facility Agreement) over (a) certain receivables held by GTF,
(b) the financial securities accounts opened in the name of Opodo and on which are credited all financial securities
issued by Lyeurope and held by Opodo, and (c) the financial securities accounts opened in the name of GTF and on
which are credited all financial securities issued by Lyeurope and held by GTF (together, the “Collateral”). The
security interests held by the lenders under the Revolving Credit Facility Agreement and the 2018 Notes by virtue of
the Intercreditor Agreement are senior to certain security interests over the same assets relating to the 2019 Notes,
with the obligations under the Revolving Credit Facility Agreement being “super senior”. See “—Intercreditor
Agreement” below.
The terms of the 2018 Notes are governed by the 2018 Notes Indenture, which is governed by New York law.
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The 2018 Notes Indenture provides that GDF may redeem all or part of the 2018 Notes:
•
in whole or in part at any time prior to February 1, 2015, at a redemption price equal to 100% of the
principal and the applicable “make-whole” premium, plus accrued and unpaid interest and additional
amounts, if any, to the date of redemption;
•
in whole or in part at any time on or after February 1, 2015, at redemption prices (expressed as
percentages of their principal amount at maturity) beginning at 103.750% of the principal amount
thereof as of February 1, 2015 and declining to 100.00% on February 1, 2017 and thereafter, plus
accrued and unpaid interest and additional amounts, if any, to the date of redemption; and
•
at any time and from time to time prior to February 1, 2015, in an aggregate principal amount not to
exceed 35% of the aggregate principal amount of the 2018 Notes originally issued, with the proceeds
of one or more qualifying equity offerings, at a redemption price equal to 107.500% of the principal
amount redeemed plus accrued and unpaid interest, and additional amounts, if any, to the date of
redemption.
The 2018 Notes Indenture contains customary provisions relating to GTF’s obligation to make payments free of
withholding deduction and its ability to redeem the 2018 Notes in the event of certain changes in the taxation of the
2018 Notes.
If an event treated as a change of control, as defined in the 2018 Notes Indenture, occurs at any time, then each
holder of 2018 Notes may require GDF to repurchase all or any part of such holder’s 2018 Notes at a purchase price
equal to 101% of the aggregate principal amount of 2018 Notes repurchased, plus accrued and unpaid interest and
additional amounts, if any, to the date of repurchase. GDF is also required to offer to repurchase the 2018 Notes with
excess proceeds, if any, following certain asset sales.
The 2018 Notes Indenture contains customary covenants that limit, among other things, the ability of LuxGEO
and its restricted subsidiaries to:
•
incur or guarantee additional indebtedness and issue certain preferred stock;
•
make certain restricted payments, including dividends or other distributions with respect to shares of
LuxGEO or its restricted subsidiaries (see “Dividends and Dividend Policy”);
•
prepay or redeem subordinated debt or equity;
•
make certain investments;
•
create or permit to exist certain liens;
•
sell, lease or transfer certain assets;
•
enter into arrangements that impose encumbrances or restrictions on the ability of their subsidiaries to
pay dividends, make other payments or transfer assets to LuxGEO or any of its restricted subsidiaries;
•
change their center of main interests and establishments;
•
engage in certain transactions with affiliates;
•
consolidate, merge or transfer all or substantially all of their assets on a consolidated basis; and
•
impair the security interests for the benefit of the holders of the 2018 Notes,
in each case subject to important exceptions and qualifications.
The 2018 Notes Indenture contains customary events of default, including, among others, failure to pay
principal or interest on the 2018 Notes, failure to comply with certain covenants, certain failures to perform or
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observe other obligations under the 2018 Notes Indenture, the occurrence of certain defaults under other
indebtedness and certain events of bankruptcy or insolvency.
2019 Notes
The 2019 Notes are general senior obligations of GTF and are guaranteed on a senior subordinated basis by
GDF, LuxGEO, Opodo, Travellink and eDreams. The 2019 Notes and related Guarantees are secured by the capital
stock in GTF held by the Company, Axeurope and Luxgoal, all of the issued capital stock in LuxGEO GP S.à r.l.;
the bank accounts of the Company located in Luxembourg and intercompany loans and other receivables of the
Company, if any (together, the “2019 First Priority Collateral”) and second-ranking security interests over the same
assets that secure the 2018 Notes (see “—2018 Notes” above).
The terms of the 2019 Notes are governed by the 2019 Notes Indenture, which is governed by New York law.
The 2019 Notes Indenture provides that GTF may redeem all or part of the 2019 Notes:
•
in whole or in part at any time prior to May 1, 2014, at a redemption price equal to 100% of the
principal and the applicable “make-whole” premium, plus accrued and unpaid interest and additional
amounts, if any, to the date of redemption;
•
in whole or in part at any time on or after May 1, 2014, at redemption prices (expressed as percentages
of their principal amount at maturity) beginning at 107.781% of the principal amount thereof as of
May 1, 2014 and declining to 100.00% on May 1, 2017 and thereafter, plus accrued and unpaid interest
and additional amounts, if any, to the date of redemption; and
•
at any time and from time to time prior to May 1, 2014, in an aggregate principal amount not to exceed
35% of the aggregate principal amount of the 2019 Notes originally issued, with the proceeds of one or
more qualifying equity offerings, at a redemption price equal to 110.375% of the principal amount
redeemed plus accrued and unpaid interest, and additional amounts, if any, to the date of redemption.
The 2019 Notes Indenture contains customary provisions relating to GTF’s obligation to make payments free of
withholding deduction and its ability to redeem the 2019 Notes in the event of certain changes in the taxation of the
2019 Notes.
If an event treated as a change of control occurs at any time, then each holder of 2019 Notes may require GTF
to repurchase all or any part of such holder’s 2019 Notes at a purchase price equal to 101% of the aggregate
principal amount of 2019 Notes repurchased, plus accrued and unpaid interest and additional amounts, if any, to the
date of repurchase. GTF is also required to offer to repurchase the 2019 Notes with excess proceeds, if any,
following certain asset sales.
The 2019 Notes Indenture contains customary covenants in respect of GTF and its restricted subsidiaries that
are substantially similar to the covenants applicable to LuxGEO and its restricted subsidiaries under the 2018 Notes
Indenture described above.
The 2019 Notes Indenture contains customary events of default, including, among others, failure to pay
principal or interest on the 2019 Notes, failure to comply with certain covenants, certain failures to perform or
observe other obligations under the 2019 Notes Indenture, the occurrence of certain defaults under other
indebtedness and certain events of bankruptcy or insolvency.
Revolving Credit Facility Agreement
On January 31, 2013, LuxGEO, a wholly-owned subsidiary of GTF, GTF and certain other eDreams ODIGEO
companies (including in their capacity as guarantors) entered into the Revolving Credit Facility Agreement with
certain lenders (the “RCF Lenders”) for general corporate purposes, as well as for the purpose of providing working
capital. The Revolving Credit Facility Agreement provides for a €130 million facility with a final maturity date of
July 15, 2018, which may be utilized by way of cash drawings, overdraft, bank guarantees, letters of credit or
ancillary facilities.
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With the exception of certain schedules, which are governed by New York law, the Revolving Credit Facility
Agreement is governed by English Law.
Interest rate and fees
Utilizations under the Revolving Credit Facility Agreement bear interest at rates per annum equal to the
aggregate of:
(a)
EURIBOR; and
(b)
an initial applicable margin of 3.75% per annum, subject to downward adjustment in accordance
with a margin ratchet based on the ratio of Consolidated Total Net Debt at the end of an
accounting quarter to Consolidated EBITDA (as such terms are defined in the Revolving Credit
Facility Agreement) for the preceding four accounting quarters (as reported in the applicable
compliance certificate required under the Revolving Credit Facility Agreement at the end of each
quarter if any Utilization in cash or by overdraft facility was made during such period) on any date
on which a compliance certificate is required to be delivered.
LuxGEO is also required to pay a commitment fee on available but unused commitments under the Revolving
Credit Facility Agreement, quarterly and in arrears, at a rate of 40% per annum of the applicable margin.
LuxGEO is further required to pay fees related to the issuance of ancillary facilities, letters of credit and certain
fees to the facility agent and the security agent in connection with the Revolving Credit Facility Agreement.
Guarantees and Security
The obligations under the Revolving Credit Facility Agreement are secured by the Collateral (as defined in “—
2018 Notes” above). The Collateral also secures the 2018 Notes and the Guarantees in respect of the 2018 Notes.
The security interests held by the lenders under the Revolving Credit Facility Agreement and the 2018 Notes by
virtue of the Intercreditor Agreement are senior to certain security interests over the same assets relating to the 2019
Notes, with the obligations under the Revolving Credit Facility Agreement being “super senior”. See “—
Intercreditor Agreement” below.
The Revolving Credit Facility Agreement requires that (i) the aggregate of the unconsolidated revenues of the
guarantors thereunder exceeds 85% of each of the consolidated revenues of GTF and its subsidiaries and (ii) the
aggregate of the unconsolidated EBITDA of the guarantors thereunder exceeds 85% of Consolidated EBITDA (as
defined in the Revolving Credit Facility Agreement) as well as that certain material subsidiaries become guarantors.
Covenants
The Revolving Credit Facility Agreement contains customary covenants in respect of LuxGEO and GDF and its
restricted subsidiaries that are substantially similar to the covenants applicable to LuxGEO and its restricted
subsidiaries under the 2018 Notes Indenture described above.
In addition, the Revolving Credit Facility Agreement requires us to comply with a specified financial ratio of
Consolidated Total Net Debt to Consolidated EBITDA, or Total Debt Cover (each as defined in the Revolving
Credit Facility Agreement) which will be tested quarterly. The Total Debt Cover must not exceed 5.50 to 1.00.
Failure to maintain the Total Debt Cover covenant at any testing date shall constitute an event of default under the
Revolving Credit Facility Agreement.
Prepayment
The liabilities under the Revolving Credit Facility Agreement must be prepaid in full upon the occurrence of
certain events, including in the event of a change of control or the sale of all or substantially all of the assets of
LuxGEO and its subsidiaries. The borrower may prepay, in whole or in part upon giving at least five business days’
prior notice to the facility agent, amounts outstanding under the Revolving Credit Facility Agreement.
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Events of Default
The Revolving Credit Facility Agreement also contains certain customary events of default, including nonpayment of principal, interest or other payments; misrepresentations; breach of covenants; repudiation of the
financing or transaction documents; cross default to other indebtedness of a member of the eDreams ODIGEO
Group in excess of €3 million in the aggregate; an event of default under the 2018 Notes; invalidity of security or
guarantees under the Revolving Credit Facility Agreement; breach of the Intercreditor Agreement; certain
nationalization or expropriation; certain audit qualification; certain litigation; unlawfulness or invalidity; and
material adverse change.
In addition, certain events of default under the Revolving Credit Facility Agreement follow the terms of the
2018 Notes Indenture in respect of bankruptcy, insolvency or insolvency proceedings or other similar events. See
“—2018 Notes” above.
Axeurope and Luxgoal are the direct holders of the substantial majority of the share capital of the Company.
The Company owns the entire limited share capital of GTF (other than one ordinary share owned by each of
Axeurope and Luxgoal) as associé commanditaire of GTF, and LuxGEO GP S.à r.l. is the unlimited shareholder
(associé commandité) and the Manager (gérant) of GTF. In addition, Axeurope and Luxgoal hold convertible bonds
issued by GTF (the “Convertible Subordinated Shareholder Bonds”). As described in “Principal Shareholders—
Shareholder Reorganization”, as a result of the Shareholder Reorganization, the Company has become the holder of
100% of the Convertible Subordinated Shareholder Bonds, and the Convertible Subordinated Shareholder Bonds
have become liabilities within the Company’s consolidation group. See “Certain Relationships and Related Party
Transactions—Convertible Subordinated Shareholder Bonds”.
The Convertible Subordinated Shareholder Bonds have a 49-year maturity period and are subject to the terms of
the Intercreditor Agreement as Investor Liabilities (as defined therein). The total return on each of the Convertible
Subordinated Shareholder Bonds for any accrual period will be an amount equal to the product of (i) the interest rate
multiplied by (ii) the sum of (a) the par value of such Convertible Subordinated Shareholder Bond and (b) the
accrued but unpaid yield in respect of any previous accrual period. Such yield will only be paid after the date falling
one year after the final discharge date. Unpaid yield accumulates and is capitalized on an annual basis. No
compulsory early redemption applies in relation to the Convertible Subordinated Shareholder Bonds except for any
repayment at final maturity. In addition, no optional redemption may be made before the date falling one year after
the final discharge date of the 2019 Notes.
Intercreditor Agreement
On January 31, 2013, GDF, GTF, LuxGEO, certain creditors, trustees and agents entered into an amendment
agreement pursuant to which the Intercreditor Agreement was amended and restated in order to establish the relative
rights of certain creditors under our financing arrangements.
The Intercreditor Agreement is governed by English law. The Intercreditor Agreement sets out, amongst other
things: the relative ranking of certain of our indebtedness; the relative ranking of certain security granted by our
companies; when payments (including redemptions otherwise permitted by the terms of such debt) can be made in
respect of certain of our indebtedness; when enforcement action can be taken in respect of such indebtedness and the
Collateral (as defined in “—2018 Notes” above); the terms pursuant to which certain layers of our indebtedness are
subordinated upon the occurrence of certain insolvency events; any conditions applicable to a refinancing or
addition of certain of our indebtedness; turnover provisions; and when security and guarantees will be released to
permit a sale of the Collateral (as defined in “—2018 Notes” above).
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Financial and Other Long-Term Contractual Obligations
Our financial and other long-term contractual obligations under IFRS as of December 31, 2013 grouped
according to the period in which payments are due are set forth in the table below.
Contractual Obligations
Less than 1
year
Long-term and short-term debt obligations(1) ..................
Capital (finance) lease obligations ................................
Operating lease obligations ............................................
Other long-term liabilities ..............................................
Total .........................................................................
17,931
153
3,040
1,986
23,110
5 years and
more
(unaudited)
(in €thousands)
1-5 years
325,000
13
7,038
—
332,051
324,306
—
497
—
324,803
Total
667,237
166
10,575
1,986
679,964
(1) Short and long-term debt, excluding financing costs capitalized and the split between debt and equity of the Convertible Subordinated
Shareholder Bonds.
Capital Expenditures
Our capital expenditures for the year ending March 31, 2014 will comprise four principal components, IT
capitalization, acquisition of hardware and software, our acquisition of Liligo (€13.5 million) and middle and back
office integration, and we estimate our capital expenditures for the year ending March 31, 2014 will be
approximately €22 million (€35.5 million including the Liligo Acquisition).
In connection with the implementation of certain aspects of our strategy (see “Business—Our Strategy”) and
our ongoing business needs, we expect our capital expenditures to increase from the levels spent in the periods under
review. However, we have completed the majority of our IT integration, especially in our core booking engine.
Some elements of the middle and back office of the platform are still to be integrated and we are targeting
completion of this in the year ending March 31, 2015. Accordingly, the two key recurring components of capital
expenditure in the medium term are IT capitalization and the acquisition of hardware. Based on our ongoing
projects, we expect our base capital expenditure to be in the range of approximately €20 million to €25 million per
annum over the next few years, excluding any potential acquisitions. The completion of the middle and back office
integration is expected to require approximately an additional €6 million in the year ending March 31, 2015.
In the nine months ended December 31, 2013, we had capital expenditures of €28.4 million, including the
Liligo Acquisition (€13.5) million, software acquisition (€13.0) million (of which €11.8 million was related to IT
development projects) and acquisition of hardware and other capital investment (€1.9 million), compared to €12.3
million in the nine months ended December 31, 2012.
In the year ended March 31, 2013, we had capital expenditures of €18.2 million (including IT capitalization for
€13.6 million, acquisition of hardware and other capital investment for €3.4 million and the disposal of Opodo Tours
for €1.2 million) compared to €10.4 million in the year ended March 31, 2012 (€420.1 million including the effects
of the Opodo Acquisition).
In the year ended March 31, 2012, we financed our capital expenditure requirements with cash flows from
operations. We made capital expenditures of €10.4 million in the year ended March 31, 2012 (€420.1 million
including the effects of the Opodo Acquisition). Capital expenditures mainly related to the IT capitalization and the
acquisition of IT-related assets and software, as well as the acquisition of 25% of the share capital of
ReallyLateBooking.
Due to the nature of our capital expenditures described above and the online nature of our operations, the
substantial majority of our capital expenditures are made in Europe, but to the extent that such capital expenditures
are related to the development and maintenance of our IT capabilities, such capital expenditures are incurred for the
benefit of our operations across all of the geographies in which we are present and as a result, we are unable to
provide a specific geographical split of our capital expenditures.
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Off-Balance Sheet Arrangements
As of December 31, 2013, off-balance sheet arrangements consisted entirely of guarantees amounting to €61.8
million granted by eDreams ODIGEO companies and certain financial institutions to cover three main types of
contingencies:
•
guarantees issued in favor of IATA and local regulators to allow our companies to operate and sell flight
tickets in certain jurisdictions. The total amount outstanding as of December 31, 2013 was €59.9 million
and consisted of guarantees issued in favor of (i) IATA in the amount of €36.2 million, (ii) regulators in the
Nordics in the amount of €11.0 million, (iii) regulators in France in the amount of €11.2 million and
(iv) regulators in the United Kingdom, Italy and the United States in the amount of €1.4 million;
•
guarantees issued in favor of certain suppliers to allow our companies to offer their products; the total
amount outstanding as of December 31, 2013 was €1.8 million; and
•
other guarantees issued to cover other contingencies in the amount of €0.1 million.
Disclosures about Market Risks
The following is an overview of the principal market risks that we are subject to. These risks are also described
in the “Risk Factors” section of this prospectus. See, in particular, “Risk Factors— In certain of our business lines,
such as in our charter flight business, we bear inventory risk and/or bear the risk of default by our supplier, which
could adversely affect our business”, “Risk Factors—We will require a significant amount of cash to meet our debt
obligations and to sustain our operations, which we may not be able to generate or raise. Our ability to generate cash
and access capital markets depends upon many factors, some of which are beyond our control” and “Risk Factors—
We are exposed to risks associated with currency fluctuations”.
Credit risk
Our cash and cash equivalents are held with financial entities with strong credit ratings.
Certain transactions at the eDreams Group are channeled through Caixa Catalunya, which has a Moody’s long
term rating of Ba1. These transactions amount to an average of €1.8 million on a daily basis. We usually transfer
these amounts on a daily basis to other financial institutions in order to mitigate this risk.
Our credit risk is mainly attributable to business-to-business customer advertising receivables and, to a lesser
extent, customer receivables on corporate travel and business-to-business customers, and advertising receivables.
These amounts are recognized in the consolidated statement of financial position net of provisions for doubtful
receivables, which is estimated by our management on a case-by-case basis.
Interest rate risk
Most of our financial debt is exposed to fixed interest rates. Of our debt, only the Revolving Credit Facility
bears interest at a variable rate, although to date we have only drawn loans under the Revolving Credit Facility for
intra-month working capital purposes. Therefore, we have no material exposure to interest rate risk.
Liquidity risk
In order to meet our liquidity requirements, our principal sources of liquidity are: cash and cash equivalents
from the statement of financial position, cash flow generated from operations and the revolving credit facilities
under our Revolving Credit Facility Agreement to fund intra-month cash swings and supplier guarantees.
Subsequent to the Refinancing, our sources of our liquidity are the same except that the revolving credit facility
under our Senior Credit Facilities Agreement has been replaced by the Revolving Credit Facility Agreement.
Exchange rate risk
The exchange rate risk arising on our activities has basically two sources: the risk arising in respect of
commercial transactions carried out in currencies other than the functional currency of each company of the
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eDreams ODIGEO Group and the risk arising on the consolidation of subsidiaries that have a functional currency
other than the euro.
In relation to commercial transactions, we are principally exposed to exchange rate risk as it operates with the
pound sterling as well as the Swedish krona and other Nordic currencies (Norwegian Krone and Danish Krone). The
exchange rate risk arises on future commercial transactions and on assets and liabilities denominated in a foreign
currency.
However, the volume of our sales and purchases in foreign currency (other than the local currency of each of
the subsidiaries) is of little relevance compared to our total operations.
Critical Accounting Policies
Our Consolidated Financial Statements and related notes contain information that is pertinent to the discussion
and analysis of our results of operations and financial conditions set forth in this section. The preparation of our
Consolidated Financial Statements and related notes in conformity with IFRS requires us to make judgments,
estimates and assumptions that may affect the amounts reported. An accounting policy is considered to be critical if
it meets the following two criteria:
(i)
the policy requires an accounting estimate to be made based on assumptions about matters that are
highly uncertain at the time the estimate is made; and
(ii)
different estimates that reasonably could have been used or changes in the estimates that are
reasonably likely to occur from period to period would have a material impact on our
Consolidated Financial Statements.
We believe that the accounting methods and policies listed below are the most likely to be affected by these
estimates and assumptions. Although we believe these policies to be the most critical, other accounting policies also
have a significant effect on our Consolidated Financial Statements and certain of these policies may also require the
use of estimates and assumptions.
Revenue recognition
We recognize revenue when (i) we have evidence of a contractual agreement in respect of products and services
to be provided, (ii) such products are delivered or such services have been rendered and (iii) the revenue is
determinable and collectability is reasonably assured. We have evidence of a contractual agreement when we enter
into a legally enforceable agreement with the customer with terms and conditions that describe the product to be
delivered or the service to be rendered and the related payment terms. We consider revenue to be determinable when
the product or service has been delivered or rendered in accordance with the said agreement.
Revenue is measured at the fair value of the consideration received or receivable and represents amounts
receivable for products or services provided in the ordinary course of business net of VAT and similar taxes. We
provide customers the ability to book air travel, hotels, car rentals and other travel products and services through our
various websites. These travel products and services are made available to our customers for booking on a
stand-alone basis or as part of a vacation package.
When we act as principal and purchase inventory for resale or are the primary obligor in the arrangement,
revenue is recognized on a “gross” basis. The revenue comprises the gross value of the transaction billed to the
customer, net of VAT, with any related expenditure charged as cost of sales. Such revenue comprises sales in
respect of charter flights, conferences and events and, to a lesser extent, vacation packages. At time of booking,
revenue is recorded as deferred income. For travel products, revenue and supplies are recognized on the date of
departure. As regards Dynamic Packages (including revenue from the flight component thereof) offered by Opodo,
as from June 1, 2013, pursuant to the revised applicable terms and conditions for the sale of Dynamic Packages, the
Opodo Group is now acting as agent and no longer as principal, and revenue is therefore no longer recognized on a
“gross” basis.
In other transactions where we act as agent (i.e., bear no inventory risk and are not the primary obligor in the
arrangement), revenue is recognized on a “net” basis, with revenue representing the margin earned. Such revenue
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comprises sales in respect of scheduled airlines, hotels, car rentals and most of our packaged travel products. For
Direct Connects, we usually pass reservations booked by customers to the travel supplier and revenue represents the
service fee charged to the customer. In such transactions, we have limited, if any, ability to determine or change the
products or services provided and the customer is responsible for the selection of the service supplier. Booking is
then secured when no further obligation is supported by us. For air transactions, this is at the time of ticketing. For
hotel transactions, car transactions and packaged products, net revenue is recognized when the customer uses the
reservation (i.e., on the date of hotel check-out, car pick-up or departure for packages). The timing of revenue
recognition is different for air travel because the primary service to the customer is fulfilled at the time of booking.
Where we act as agent, additional income, such as over-commissions, may accrue based on the achievement of
certain gross sales values over a specified period. We therefore accrue for such income where it is considered
probable that the gross sales values will be met and the amount to be received is estimable. Where it is probable that
the gross sales value will be met, revenue is recognized based on the percentage of gross sales value achieved by the
reporting date.
The table below summarizes the revenue recognition basis for our principal income streams.
Income stream
Charter flight transactions
Scheduled flight transactions
Airline incentives
GDS incentives
Direct Connect
Hotel transactions
Car transactions
Dynamic Packages (including the flight portion thereof)
Vacation packages
Advertising revenue
Metasearch revenue
Insurance
Basis of revenue recognition
Date of departure
Date of booking
Accrued based on gross sales
Date of booking
Date of booking
Date of departure (check-out)
Date of departure (pick-up)
Date of departure
Date of departure
Date of display
Date of click or date of purchase
Date of booking
For flight products, revenue is generally recognized upon booking as we do not assume any further performance
obligation to our customers after the product has been ticketed (even though we support fraud risks). In these
instances, revenue is recognized on a net basis. Conversely, in cases where (i) we pre-purchase and assume
inventory risk or (ii) we bear any financial risk with respect to the booking, for instance, in the event of cancellation,
revenue is recognized at time of departure as we are considered to be the primary obligor to the traveler. In these
cases, revenue is recognized on a gross basis, comprising the gross value of the transaction billed to the customer
(net of VAT and cancellations), with any amounts paid to the supplier accounted for as “supplies”.
In the event of cancellation of a booking, flight revenue recognized in respect of commissions earned from
travel suppliers is reversed and is netted off from our revenue earned during the fiscal period at the time of
cancellation. For flight products or services carrying inventory or other financial risk, cancellations do not impact
revenue recognition since revenue is recognized upon the departure date, when the product is delivered or the
service is rendered.
For non-flight products, we consider that revenue is determinable upon the departure date for packages, checkout date for hotel rooms, pick-up date for car rentals, date of publication over the delivery period for advertising
revenue and, depending on the particular agreement, date of click or date of purchase for our metasearch activities.
In the event of cancellation, our revenue recognition is not impacted since revenue is recognized, in each case, when
the product is delivered or the service is rendered.
In both flight and non-flight, revenue on products or services for which we do not assume inventory or other
financial risk is accounted for on a “net” basis, representing the service fees (which is the total difference between
the price at which we source a product and sell that product to a customer, which difference includes, among other
components, any mark-up to the price at which we source a product and fees that we charge customers in connection
with a booking) we earn. When we incur an inventory and other financial risk in either of our two lines of business
(currently the case only for charter flights, conferences and events and, to a lesser extent, vacation packages)
revenue is accounted for on a “gross” basis, representing the total amount paid by our customers for these products
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and services. The cost of procuring the relevant products and services sold to our customers is accounted for as
“supplies”.
We generally do not take on credit risk with the customer; however, we are subject to charge-backs and fraud
risk which we monitor closely.
We use GDS services to source and book products. Under GDS service agreements, we earn revenue in the
form of an incentive payment for each segment that is processed through a GDS service provider. Revenue is
recognized for these incentive payments at the time the travel reservation is processed through the GDS service
provider, which is generally at the time of booking.
We recognize revenue for insurance sold to customers along with travel products at the time of booking, as the
cover starts from that date.
We generate other revenues, which primarily comprise revenue from advertising and metasearch activities.
Such revenue is derived primarily from the delivery of advertisements on the various websites we operate and is
recognized at the time of display or over the advertising delivery period, depending on the terms of the advertising
contract, as well as for searches, clicks and purchases generated by our metasearch activities.
Reporting revenue on a “gross” versus “net” basis is a matter of significant judgment that depends on a relevant
set of facts and circumstances. This analysis is performed using various criteria such as, but not limited to, whether
we are the primary obligor in the arrangement, have inventory risk, have latitude in establishing price, have
discretion in supplier selection or have credit risk.
However, if our judgments regarding revenue are inaccurate, actual revenue could differ from the amount we
recognize, directly impacting our reported revenue.
Measurement of property, plant and equipment and intangible assets other than goodwill
Total property, plant and equipment and total intangible assets (mainly trademarks, technologies and
customer-related intangibles) will represent a significant portion of our total consolidated statement of financial
position. Property, plant and equipment and intangible assets other than goodwill are recorded at their acquisition or
production cost. When such assets are acquired in a business combination, purchase accounting requires judgment in
determining the estimated fair value of the assets at the date of the acquisition. As direct observable fair values are
not always readily available, indirect valuation methods are often used with their inherent limitations. Examples of
indirect methods we commonly use for certain acquired intangibles include the relief of royalty method for
trademarks or the excess earnings approach for customers’ relationships. A change in any of the assumptions used in
any of the indirect valuation methods could change the amount to be allocated to the acquired intangibles.
Similarly, judgment is required in determining the useful lives of the assets both at and subsequent to the
acquisition date. Such judgment considers obsolescence, physical damage, significant changes to the manner in
which an asset is used, worse than expected economic performance, a drop in revenues and other external indicators.
Considering the type of assets and the nature of the activities, most of our assets do not generate independent
cash flows from those attached to the Cash-Generating Unit (“CGU”). Hence, the assessment of the need for an
impairment test is mostly determined at the CGU level (see hereunder) in accordance with IAS 36 Impairment of
Assets (“IAS 36”).
With respect to an internally generated intangible asset arising from the development of our website operating
platforms and related back-office systems, it will be recognized if, and only if, all of the following have been
demonstrated:
•
an asset is created that can be identified (such as software and new processes);
•
it is probable that the asset created will generate future economic benefits; and
•
the development cost of the asset can be measured reliably.
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Once capitalized, these development costs will be amortized over the estimated useful lives of the products
concerned (generally between three and five years; ten years in the case of the One Platform).
We must therefore evaluate the commercial and technical feasibility of those development projects and estimate
the useful lives of the products resulting from the projects. Should a product fail to substantiate those assumptions,
we may be required to impair or write off some of the capitalized development costs in the future.
Purchase price allocation and allocation of goodwill
The amount of goodwill determined in a business combination is dependent on the allocation of the purchase
price over the corresponding equity in the fair value of the underlying assets acquired and the liabilities assumed: a
process that requires a significant level of estimation and judgment.
Under IFRS, goodwill is not amortized but will be reviewed for impairment at least annually at the level of the
CGU or group of CGUs. Goodwill is to be allocated to each of the acquirer’s CGUs or groups of CGUs that is
expected to benefit from the synergies of the business combination. Such allocation represents the lowest level at
which the goodwill is monitored for internal management purposes and is not larger than an operating segment.
Therefore, changes in the way management monitors goodwill or in the segment reporting structure may require
a reallocation and trigger the need for an impairment test.
Impairment testing of the recoverable amount of a CGU or group of CGUs
The determination of impairment under IAS 36 will require the use of estimates which include but are not
limited to the cause, the timing and the amount of the impairment. As such, the determination of the recoverable
amount represents an area where significant assumptions and judgment are required.
The recoverable amount is the higher of the fair value less costs to sell and the value in use:
•
fair value less costs to sell is the best estimate of the amount obtainable from the sale of a CGU in an
arm’s-length transaction between knowledgeable, willing parties, less the costs of disposal. Because the fair
value of our CGUs is rarely expected to be directly observable, it will be determined on the basis of
available market information, such as revenue and EBITDA multiples for comparable companies or
transactions, or discounted cash flows including market participant assumptions on weighted average costs
of capital or long-term growth rates; and
•
value in use is determined by our management based on the discounted cash flows derived from the
applicable business plan.
When cash flow projections are used, they will be based on economic and regulatory assumptions and forecast
trading conditions, including:
•
the influence of competitors;
•
the evolution and utilization of new technologies;
•
the level of appeal of these new technologies and related products or services to the customers; and
•
the long-term growth rate and discount rate.
The values assigned to each of those parameters reflect past experience and anticipated changes over the period
of the business plans.
The methodology used and the related estimates have a material impact on the recoverable value and ultimately
the amount of any asset impairment. If the assumptions do not materialize as expected, this may result in decreased
revenue, EBITDA or cash flows and materially change the potential impairment.
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Accounting for income taxes
The eDreams ODIGEO Group applies a consolidated taxation framework. As at December 31, 2013, the
eDreams ODIGEO Group encompassed three distinct consolidated tax groups: Spain, France and the U.S. The
Spanish consolidated tax group is headed by eDreams Inc. and includes Vacaciones eDreams, S.L.U. and eDreams
International Network, S.L. The French consolidated tax group is headed by Lyeurope S.A.S. and includes Lyparis
S.A.S., GoVoyages S.A.S., GoVoyages Trade S.A.S. and Opodo S.A.S. For U.S. income tax purposes, all
subsidiaries (in)directly owned by eDreams Inc., except eDreams GmbH, are considered disregarded entities, which
effectively results in the existence of a U.S. tax group. Within the consolidated taxation framework, the entities
heading each tax group pay the income taxes for such group, and the remaining companies of each group settle their
income taxes with their respective head of the tax group. The companies within the eDreams ODIGEO Group that
are not a member of a consolidated tax group pay their income taxes on an individual basis directly to the tax
authority of the country of their residence.
The total income tax expense is the sum of the current tax and deferred tax.
Current tax: The current tax payable is based on taxable profit for the year. Taxable profit may differ from the
profit as reported in the consolidated income statement because of items of income or expense that are taxable or
deductible in other years (temporary differences) and items that are never taxable or deductible (permanent
differences). The eDreams ODIGEO Group’s liability for current tax is calculated using income tax rates that have
been either fully or substantively enacted by the end of the reporting period.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in
the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are
generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will
be available against which these deductible temporary differences can be utilized. Such deferred tax assets and
liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit
nor the accounting profit.
Significant judgment on the part of management is required in determining current and deferred income taxes,
as a result of the inherent necessity of interpreting tax laws or assessing the respective technical merits of the
company and tax administration positions following a tax audit as well as assessing the availability of future taxable
income that can be offset against tax loss carry forwards within the appropriate time frame, as estimated by
management.
The realization of deferred tax assets is also reviewed by management using each entity’s tax forecast based on
budgets and strategic business plans.
Upon the acquisition of Opodo, we had trade losses carried forward which could be offset against future trade
income without limitation. In addition, Opodo had capital allowances carried forward which could be utilized
against future taxable profits without limitation. The Opodo Acquisition has not triggered the U.K. rules regarding
the change in the nature or conduct of a business. Prior to the Opodo Acquisition, Opodo had recognized a deferred
tax asset of €55.9 million (based on a total amount of trade losses and capital allowances carried forward amounting
to €215.1 million). We analyzed the recoverability of the deferred tax asset according to IFRS at the Opodo level
and concluded that a revaluation of the tax asset was not necessary given that there was no change in the probability
of utilizing such tax losses. However, the recognized deferred tax asset was reduced by €5.6 million as a result of
changes in the U.K. tax rate and the overstatement of certain assets as at acquisition date. These amendments were
considered part of the accounting of the business combination as indicated in paragraph 67 of IAS 12 Income Taxes
(“IAS 12”). As at December 31, 2013, Opodo had deferred tax assets of €25.0 million relating to unused trade losses
and capital allowances carried forward.
Accounting for provisions and liabilities
In the ordinary course of business, we are involved in a number of litigations and claims. The costs that may
result from these litigations and claims are only accrued when it is probable that a liability will be incurred and the
amount of that liability can be quantified or estimated within a reasonable range. The amount of the provisions
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recorded is based on a case-by-case assessment of the risk level, and events arising during the course of legal
proceedings may require a reassessment of this risk.
We exercise significant judgment in measuring and recognizing provisions or determining exposure to
contingent liabilities that are related to pending litigation or other outstanding claims. These judgments and
estimates are subject to change as new information becomes available. Any change could lead to a different
conclusion regarding the amount of the provision or liability recognized and could have a significant effect on our
Consolidated Financial Statements.
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INDUSTRY OVERVIEW AND MARKET DATA
Certain information set forth in this section has been derived from external sources, including the
PhoCusWright reports identified in “Market and Industry Data”. Industry surveys and publications generally state
that the information contained therein has been obtained from sources believed to be reliable, but some of this
information may have been derived from estimates or subjective judgments or have been subject to limited audit and
validation. While we believe this market data to be accurate and correct, we have not independently verified it.
Market data presented in this section are based principally on PhoCusWright’s aggregations or calculations of
gross bookings, revenues (on a net basis) and operating margins from publicly available sources, unless otherwise
stated. Our estimates of our sector positions are based on gross bookings in 2012. We have accurately reproduced
the sector share and industry data, and as far as we are aware and able to ascertain from various market research
publications, publicly available information and industry publications, including reports published by the thirdparty sources identified in “Market and Industry Data”, no facts have been omitted which to our knowledge would
render the reproduced information inaccurate or misleading. However, you should note that the measures
aggregated or calculated by PhoCusWright are non-GAAP measures and as a result, may not be directly
comparable to similarly titled measures disclosed among companies operating in our industry, including us.
As presented herein, PhoCusWright data for the period 2007-2012 are actual and data for the period
2013-2015 are estimated.
The following is an overview of the online travel industry, including outlook and drivers of the industry. Within
this industry, we look at the more specific market of online travel agencies (“OTAs”) in the online flight sector,
including us, and discuss key trends within this market. We also discuss competition within the travel industry, as
well as the principal countries in which we operate.
Online Travel Industry
Overview
The online travel industry, particularly the online leisure flight sector in which we principally operate, is a large
and fast growing global market. The online travel industry includes leisure and corporate online bookings of flights,
other transportation and hospitality products, as well as ancillary products such as travel insurance. With worldwide
consumer spending of approximately $349 billion in the year ended December 31, 2012 and estimated spending of
$402 billion in the year ended December 31, 2013, the online leisure travel sector is the largest eCommerce category
in the world and at least twice the size of online apparel and at least three times the size of online software and apps,
which are the next two largest eCommerce categories after online leisure travel. The corresponding worldwide
consumer spending growth rate of 15.2% in the year ended December 31, 2013 compared to the prior year would
also suggest the online leisure travel sector is fast growing. (Source: IDC, Worldwide New Media Market Model,
1H13)
According to PhoCusWright, the proportion of online travel gross bookings as a percentage of total travel gross
bookings (“online travel penetration”) in Europe, our principal geographic region, reached 40% in 2012 from 34%
in 2010. Online travel penetration in other geographic regions in which we also operate has also been rising with
respect to the travel industry generally, which encompasses more than 400,000 companies. The following graph sets
out online travel penetration in each of the United States, Europe, APAC and LatAm in the years ended December
31, 2010 and 2012.
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Online travel penetration
39%
2010A
41%
2012A
1
40%
34%
24%
21%
20%
14%
US
1
W. Europe
APAC
LatAm
2012E for LatAm
Source: Estimates and projections from PhoCusWright U.S. Online Travel Overview 12th Edition (2012); PhoCusWright European Online
Travel Overview 9th Edition (2013); PhoCusWright Asia Pacific Online Travel Overview 6th Edition (2013); PhoCusWright Latin America
Online Travel Overview (2011).
Outlook and Drivers of Online Travel
The following table sets out gross bookings (according to PhoCus Wright) in the online travel market (OTAs
and supplier direct websites) for each of Western Europe, Asia-Pacific (“APAC”), the United States and Latin
America (“LatAm”).
Online travel market (Online travel gross bookings, US$ bn)
2010
W. Europe .............
% growth1 2 ...........
APAC ...................
% growth2 .............
U.S........................
% growth2 .............
LatAm...................
% growth2 .............
Total .....................
% growth2 .............
105.0
53.2
100.0
8.2
266.4
2011
121.3
15.5%
66.9
25.8%
114.0
14.0%
11.2
36.6%
313.4
17.6%
2012
137.2
13.2%
79.2
18.4%
126.0
10.5%
14.3
27.7%
356.7
13.8%
2013E
2014E
2015E
147.9
7.7%
93.4
17.9%
136.0
7.9%
17.2
20.3%
394.5
10.6%
161.5
9.2%
108.5
16.2%
145.0
6.6%
n/a
n/a
n/a
n/a
174.6
8.1%
126.6
16.7%
n/a
n/a
n/a
n/a
n/a
n/a
10-13E
CAGR
13-15E
CAGR
12.1%
8.7%
20.6%
16.4%
10.8%
n/a
28.0%
n/a
14.0%
n/a
(1)
We used the following euro to U.S. dollar exchange rate to convert euro amounts PhoCusWright European Online Travel Overview 9th Edition
(2013) to U.S. dollar amounts: €1 = US$ 1.3780 (Source: WMR; December 31, 2013).
(2)
Percentage growth compared to prior year.
Source: PhoCusWright U.S. Online Travel Overview 12th Edition (2012); PhoCusWright Asia Pacific Online Travel Overview 6th Edition
(2013); PhoCusWright European Online Travel Overview 9th Edition (2013); PhoCusWright Latin American Online Travel Overview (2011).
The following is a discussion of key drivers affecting the worldwide online travel industry. As discussed below,
we believe that our markets present attractive growth prospects, driven by compounding factors: the broader travel
market is expected to experience long-term growth above that of real GDP as it has done historically, the online
sales channel is expected to grow faster due to increasing online travel penetration, and within online the OTA
sector is expected to grow even faster given the attractive value proposition that OTA companies offer over
suppliers’ own individual online channels.
Improved Macroeconomic Environment
The discretionary nature of certain travel spending, mainly driven by leisure customers but also in certain areas
of the corporate sector, leads to a correlation between the macroeconomic environment and the strength of the
traditional and online travel industries. Beginning in 2008 and continuing throughout 2009, the global economy
experienced a prolonged recession that significantly impacted the travel industry, particularly the traditional travel
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sector as offline travel agents were less able to offer price-sensitive customers attractive prices for their travel
products. According to PhoCusWright, in 2009 compared to 2008, travel market gross bookings decreased by 10.4%
in Europe and by 15.3% in the United States. Since that time, the improved macroeconomic environment has driven
passenger traffic upwards, particularly in Europe.
Notwithstanding the uncertainty and challenges of the global economic situation in the recent past, we believe
that the long-term correlation and relationship observed historically between global GDP growth and the growth of
the travel industry is likely to persist. As set out in the graph below, between 1980 and 2013, the flight sector,
measured by air passenger traffic, has outgrown world GDP trends by a factor of 1.6x. As a result, we expect that
the travel market will continue benefitting from the economic recovery. In its November 2013 publication on
Eurozone Q3 GDP, IHS forecasts the Eurozone’s real GDP to grow at a CAGR of 0.2% between 2012 and 2014. In
comparison, PhoCusWright forecasts the European travel market to grow at a CAGR of 2.8% between 2012 and
2014.
Passenger traffic growth vs. world GDP growth
Last 10 years
average ratio of
1.6x
3
(1)
ICAO for passenger figures indexed to 1980.
(2)
EIU GDP in constant US$ (2005) indexed to 1980.
(3)
Calculated as passenger traffic growth index divided by World GDP growth index.
Source: EIU, ICAO, PhoCusWright European Online Travel Overview 9th Edition (2013), Eurostat.
Shift from Offline to Online Travel Bookings
Historically, the distribution of travel products and services has been dominated by traditional “brick & mortar”
travel agents. However, over a period of more than ten years the internet has disrupted the travel industry’s
traditional sales channels. An increasing proportion of consumers are opting to book their travel arrangements
online, benefiting from the convenience of 24/7 access, the option to research an exhaustive list of schedules and
availability and the ability to compare fares in real time. As a result of this online travel penetration has increased in
the United States, Europe, APAC and LatAm from 2010 to 2012 as exhibited in the table above.
Online travel penetration rates vary widely across geographies and countries. Access to the internet, broadband
penetration, general e-commerce adoption, the breadth of travel products offered online and the availability of
locally-relevant electronic payment methods are generally seen as the key drivers of online travel penetration in any
given territory. Structural trends are also driving the growth in the penetration of online travel bookings. These
include the aforementioned factors but also the shift in demographics towards generations of consumers who are less
likely to consider offline booking channels, the emergence of mobile distribution channels, the increasing ability of
online players to cater to complex and bespoke travel journeys and the increasing relevance of reviews and
recommendation engines powered by online social networks.
According to IDC, Worldwide New Media Market Model, 1H13 data, the worldwide percentage of population
using the internet was 30% in 2011 and is expected to grow to 41% in 2015. The worldwide percentage of
households with broadband access was 29% in 2011 and is expected to grow to 36% in 2015. Online penetration is
significantly higher in Western Europe: the percentage of population using the internet was 77% in 2011 and is
expected to grow to 83% in 2015 and the percentage of households with broadband access was 66% in 2011 and is
expected to grow to 73% in 2015.
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1
Increasing Market Share of OTAs in Online Travel
Two principal types of operators compete in the online travel industry: the supplier direct websites
(e.g., airlines, hotels, etc.) and OTAs. OTAs have become popular with consumers due to their extensive range of
products from multiple suppliers, sometimes exclusive inventory in the form of special fares, powerful aggregation
capacity and user-friendly interfaces to compare travel deals in real time. In particular, some OTAs have the ability
to segment itineraries with several “legs” using different airlines, which can produce costs savings that are valued by
customers. From the suppliers’ standpoint, OTAs offer an efficient distribution channel, especially in fragmented
and non-home markets where the suppliers’ brand awareness may be limited.
OTAs have progressively gained share over supplier direct websites (except in the United States) as shown in
the following graph, which sets out OTA gross bookings as a percentage of total online travel gross bookings in the
United States, Europe, APAC and LatAm:
OTA gross bookings as a % of total online gross bookings
2010A
39%
2012A1
2012A1
38%
35%
35%
30%
34%
33%
27%
US
1
W. Europe
APAC
LatAm
2012E for US and LatAm.
Source: Estimates & projections from PhoCusWright U.S. Online Travel Overview 12th Edition (2012); PhoCusWright European Online Travel
Overview 9th Edition (2013); PhoCusWright Asia Pacific Online Travel Overview 6th Edition (2013); PhoCusWright Latin America Online
Travel Overview (2011)
According to PhoCusWright, gross bookings of OTAs worldwide have increased 14.1% from gross bookings of
$111.7 billion in the year ended December 31, 2011 to $127.4 billion in the year ended December 31, 2012. In
Western Europe, the OTA sector is expected to grow at a CAGR of 16.0% in the period from 2010 to 2013 in terms
of gross bookings, reaching an estimated $57.9 billion of gross bookings in 2013. Over the same period in Europe,
gross bookings by supplier direct websites are expected to grow at a CAGR of 9.8%.
The following table sets out the evolution and expected evolution of OTA gross bookings for each of Western
Europe, APAC, the United States and LatAm.
Online travel market (OTA gross bookings, US$ bn)
2010
W. Europe ...............................
% growth(1) (2) ..........................
APAC .....................................
% growth(2)..............................
US ..........................................
% growth(2)..............................
LatAm.....................................
% growth(2)..............................
Total .......................................
% growth(2) .............................
37.1
16.1
39.5
2.2
94.9
2011
45.4
22.4%
21.5
33.5%
41.4
5.0%
3.4
54.5%
111.7
17.8%
2012
52.7
16.1%
25.9
20.5%
43.9
6.0%
4.9
44.1%
127.4
14.1%
120
2013E
2014E
2015E
57.9
9.9%
30.6
18.1%
46.4
5.7%
n/a
n/a
n/a
n/a
65.1
12.4%
35.6
16.3%
49.1
5.8%
n/a
n/a
n/a
n/a
71.9
10.5%
41.2
15.7%
n/a
n/a
n/a
n/a
n/a
n/a
10-13E
CAGR
13-15E
CAGR
16.0%
11.4%
23.9%
16.0%
5.6%
n/a
n/a
n/a
n/a
n/a
(1)
We used the following euro to U.S. dollar exchange rate to convert euro amounts PhoCusWright European Online Travel Overview 9th Edition
(2013) to U.S. dollar amounts: €1 = US$ 1.3780 (Source: WMR; December 31, 2013).
(2)
Percentage growth compared to prior year.
Source: PhoCusWright U.S. Online Travel Overview 12th Edition (2012); PhoCusWright Asia Pacific Online Travel Overview 6th Edition (2013);
PhoCusWright European Online Travel Overview 9th Edition (2013); PhoCusWright Latin American Online Travel Overview (2011).
eDreams ODIGEO is present and growing in 16 of top 18 online travel markets identified by PhoCusWright.
Online travel gross bookings growth in 2012(1)
1
Countries ordered by gross bookings in 2010 (from lowest to highest).
Source: PhoCusWright Global Online Trend Overview 2nd Edition (2011); PhoCusWright European Online Travel Overview 9th Edition (2013);
PhoCusWright U.S. Online Travel Overview 12th Edition (2012).
OTAs and the Online Flight Sector
Overview and Key Trends
According to PhoCusWright’s “Online Travel Agency Flight Retailing” report (February 2014) commissioned
by and prepared for the Company, which analyses the worldwide OTA flight sector based on a set of key OTAs
selected by PhoCusWright (the “PhoCusWright Commissioned Report”), online flight represents the largest sector
within OTAs by gross bookings although its significance varies by geographic region. Flight gross bookings in
Europe represented a significantly higher percentage of total OTA gross bookings (74% in the year ended December
31, 2012) compared to other major regions such as the United States (57% in the year ended December 31, 2012)
and APAC (65% in the year ended December 31, 2012).
The flight sector is complex. Over time airlines have developed very advanced yield management systems that
result in the same flight products being sold at an array of different prices. In the past, GDSs, which were systems
built by airlines, were the only tool that customers and travel agents had to compare such vast array of prices for
flight products and historically, travel agents were incentivized to sell flight products at high prices as their revenue
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was largely dependent on commissions paid by airlines in proportion to the price of the flight products they sold.
Over time, the flight sector landscape has changed significantly due to a number of key developments and trends.
The following is a discussion of key trends affecting the flight sector in Europe, which is our key geographical
region:
Recovering macroeconomic environment. Following the challenges of the economic crisis in 2009, flight travel
volumes in Northern Europe have returned to growth as the region’s economies have generally recovered. While
flight travel volumes in Southern Europe lagged due to the more challenging domestic economic conditions and
austerity measures that countries in this region experienced, the improved macroeconomic environment has driven,
and is expected to continue driving, passenger traffic upwards. One trend that has continued from the economic
crisis is that consumers continue to be price-sensitive and value OTA’s ability to discover or structure the cheapest
fares.
Online travel market share gains from offline travel. As discussed in “—Online Travel Industry—Outlook and
Drivers of Online Travel” and “—Online Travel Industry—Outlook and Drivers of Online Travel—Shift from
Offline to Online Travel Bookings”, online travel penetration has increased in the United States, Europe, APAC and
LatAm from 2010 to 2012. We believe this trend continued in 2013 and that the share gain will continue given the
factors discussed above.
Increasing market share of OTAs in online travel. As discussed in “—Online Travel Industry—Outlook and
Drivers of Online Travel—Increasing Market Share of OTAs in Online Travel”, OTAs have progressively gained
market share over supplier direct websites in terms of gross bookings in Europe, APAC and LatAm.
Broad selection of destinations and departure times. Short-haul travel within Europe has increased
significantly over the last ten years as immigration rules have been relaxed. In the long term, long-haul travel is
expected to be a key growth driver for the industry going forward as intercontinental travel becomes more affordable
and appeals to an increasingly broad base of consumers. In addition, leisure customers are expected to continue
traveling to a variety of destinations and so concentration on any particular destination is expected to be low. OTAs
provide an exhaustive list of alternative travel arrangements, across suppliers and routes compared to supplier direct,
which are often limited to a particular set of routes. Long-haul journeys, in particular those involving connecting
flights, can be more complex to book and create an opportunity for intermediaries, such as OTAs to add value for
customers.
Globalization. Suppliers, distributors and other competitors are increasingly focusing on how best to adapt and
benefit from globalization, which is a trend that benefits travel companies with large scale and the “know-how” to
operate internationally.
Increasing prominence of Direct Connect. Over the past several years, there has been an increasing trend of
OTAs, through their use of the internet and technological innovation, accessing inventory not only from GDSs but
also by connecting directly to supplier systems to minimize the “all-in price” for customers and create new
itineraries and product combinations that were not available elsewhere. Such developments have not only benefitted
customers who now have access to flight products at cheaper prices and to inventory that previously did not exist,
but also partner airlines who have increased sales due to the increased distribution of their flight products through
OTAs.
Low Cost Carriers (“LCCs”). Certain airlines have expanded the number of routes they offer throughout
Europe. Their proposition to offer a “no frills” yet efficient service along popular short- to mid-haul routes at very
competitive fares has won the endorsement of consumers and has in general impacted pricing by all airlines and
made travel more affordable.
Emerging markets carriers. The Persian Gulf’s strategic location between Europe and Asia, as well as the
growth experienced by its local economies in recent years, has led to the development of new travel hubs and strong
flagship airlines out of Dubai (Emirates), Abu Dhabi (Etihad) and Qatar (Qatar Airways). These carriers are
increasingly competing with European airlines for passengers flying on long-haul flights and seeking to increase
their presence outside of their home markets.
Airline consolidation. The economic crisis accelerated a consolidation trend among air carriers in Europe. For
example, Air France and KLM merged in 2004 and British Airways and Iberia combined in 2010. Moreover, a
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number of airlines have declared bankruptcy, including Spainair in Spain, Malev in Hungary, Cimber Sterling in
Denmark and Wind Jet in Italy. Continued consolidation, together with the airlines’ attempt at optimizing flight
occupancy rates, could result in further capacity reduction. However, we do not expect the same level of
consolidation in Europe compared to the United Sates in light of the heterogeneity and the complexity of the
European flight market compared to that of the United States. Also, new airlines such as Volotea and Norwegian
have recently been created or are reaching scalability, which helps counterbalance any of the potential
aforementioned capacity reduction.
Fare Deconstruction. In the wake of market share gains by LCCs, traditional airlines are increasingly offering
“à la carte” services on top of basic airfares in order to enhance the competitiveness of their offerings. Consumers
can pay extra fees to be served meals, check in excess luggage, choose their seats or board the aircraft early,
purchase exchangeable or reimbursable tickets, etc. The comparison engine of OTAs is particularly valuable in an
environment where prices and services are increasingly complex, including in respect of the trend of airlines to
unbundle their prices.
Reduction of Airline Commissions to Travel Agents. Airlines began reducing commissions paid to travel agents
in 2003, which required travel agents to find new sources of revenues and reduced dependency on airline
commissions, which currently represents a small fraction of OTA revenue in Europe.
OTA Flight Revenue and Margins
According to the PhoCusWright Commissioned Report, revenues (on a net basis) for OTAs relating to the sale
of flight products has increased steadily since 2009. In the year ended December 31, 2009, worldwide OTA
revenues (on a net basis) for flight products was $1.2 billion. OTA revenues for flight products increased at a CAGR
of 8% since that time to reach $1.5 billion in the year ended December 31, 2012. On a regional basis, the United
States is the largest geographical region in terms of OTA revenue for flight products at $659 million for the year
ended December 31, 2012. Europe is the second largest with OTA revenue for flight products of $489 million the
same year followed by APAC with $319 million.
OTA margins on flight products (as measured by flight revenue divided by flight gross bookings) has remained
reasonably stable worldwide in the last five years except in the United States. Margins on flight products vary
considerably from region to region. For the year ended December 31, 2013, margin on flight products in Europe is
estimated to be 5.7% compared to 2.3% in the United States. Margins in APAC and LatAm were also projected to
be significantly higher than the United States at 5.5% and 5.4%, respectively. This reflects the less favorable
competitive dynamics of the U.S. market, while OTAs in other geographical regions are able to monetize greater
amounts from each flight booking.
Flight revenue/flight gross bookings (%) — Margins outside the United
States are stable and approximately 3 times higher
*
Totals include full year projections for private OTAs and actuals for the nine months ended September 30, 2013 for public OTAs.
**
Excludes non-U.S. figures for U.S. OTAs.
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Source: PhoCusWright Commissioned Report based on a set of key OTAs selected by PhoCusWright.
Key Differences between the European and U.S. OTA Markets
The European travel market and the U.S. travel market (where we have a relatively small presence) are
structurally different. The fragmentation of the European market, across countries, routes, languages, consumer
preferences, currencies, payment methods, regulatory environments and tax regimes makes the aggregation of travel
supply and demand all the more valuable. Fragmentation is the cornerstone of the strong competitive position
achieved by OTAs in the European travel industry’s value chain. In contrast, the U.S. travel market is characterized
by a high degree of concentration. As a result, OTAs in the United States may be perceived as providing a
commoditized service and thus adding less value than they do in Europe.
In addition, the number of travel suppliers is significantly larger in Europe than it is in the United States. For
instance, according to IATA, most countries have their own airlines, including full-service airlines and LCCs,
leading to approximately 120 airlines in Europe, versus approximately 60 in North America as of 2010. Google
Trends data for the year ended December 31, 2012 suggests that the major “flag carrier” airlines, such as Air France,
Alitalia, Iberia and British Airways, tend to enjoy strong brand recognition principally in their respective home
markets. Outside their home markets, OTAs and in particular the eDreams ODIGEO brands tend to have higher
brand recognition. Consequently, OTAs play an important role in the European travel landscape, helping consumers
to find the optimal product or service at the best price and helping suppliers to fill capacity.
The following table highlights the key differences between the OTA markets in United States and Europe:
Europe
c. 120
Number of airlines1
Supply
US
40%
56%
Market share of top 4 airlines1
Airline brand recognition
Low
High
Domestic
20%
Customer habits
c. 60
Proportion of domestic vs.
International travel1
Int'l,
23%
Int'l,
80%
Domestic
77%
6%
24%
Fragmentation of flight routes1,2
Multi-legend segments
Many
Fewer
OTA market concentration3,4
Other Top 3
47% Players
57%
Service fee by airlines/OTAs
/
Number of countries
50
1
Languages
23
5
26
Currencies
137
1
Legal, Tax, Payment methods
Many
Fewer
Other
Distribution
Other
12%
(1)
Based on industry research.
(2)
Top 10 “from-to” city pairs, presented as a percentage of total passengers.
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Top 3
Players
88%
/
(3)
Top 3 players in Europe refers to eDreams ODIGEO, Priceline and Expedia based on gross bookings.
(4)
Top 3 players in the United States refers to Expedia, Orbitz and Travelocity based on gross bookings.
(5)
European Union designated by agreement with member states.
(6)
English and Spanish taken into account.
(7)
Includes Norway, Switzerland and 11 countries belonging to the European Union but not to the Eurozone.
Source: PhoCusWright Global Online Trend Overview 2nd Edition (2011); PhoCusWright European Online Travel Overview 9th Edition (2013);
PhoCusWright U.S. Online Travel Overview 12th Edition (2012).
Competition
The global OTA market includes a wide range of public and private companies, some of which have a clear
regional focus while others operate across regions and worldwide. According to the PhoCusWright Commissioned
Report, with gross bookings for flight products of $4.8 billion and revenue for flight products of $392 million, in
each case, in the year ended March 31, 2013, we are the leading online distributor of flight products in Europe.
The European travel market is competitive. Market participants vying for the same consumer travel spending
include other OTAs, traditional (offline) travel agencies and travel suppliers themselves, such as airlines, hotels and
tour operators, which need to balance the yield enhancement that intermediaries can induce with the associated
customer acquisition costs. Competitors in our market include:
OTAs. The OTA sector is itself highly fragmented with more than 600 OTAs worldwide and competition
varying by country, segment and products. While there are a number of global OTAs with brand presence across
multiple countries, each country has regional OTAs competing in their respective markets. Within the flight sector
specifically, our competitors are different in each country, reflecting the highly localized nature of the travel
industry.
Traditional Travel Agencies (“TTAs”). We estimate that there are over 400,000 travel companies worldwide.
In the principal European countries in which we operate, the majority of travel bookings are still made through
TTAs. TTAs are typically small in size compared to OTAs and lack the scale, brand recognition and technological
resources often associated with OTAs. TTAs typically have a small number of employees and rely significantly on
manual processes that are not as efficient as the automation used by many OTAs. Since their inception, OTAs have
gained market share from TTAs on a gross bookings basis is discussed above.
Airline and Hotel Direct Websites. Airlines and hotels are strong partners and suppliers of OTAs and have
benefitted from mutual cooperation since OTAs began operating. However, airlines and hotels as suppliers also try
to diversify their distribution channels and seek to acquire customers directly. As such, hotel and airline websites are
competitors of OTAs with respect to customer acquisition. Airline and hotel direct websites, like OTAs, have shown
strong growth in the past years, but recently, OTAs have been gaining share from supplier direct in all markets
except the United States, as discussed above.
Pure Metasearch Companies. Metasearch companies, such as Kayak and Skyscanner are distributors of OTAs.
They source customers and send them to OTAs and Suppliers sites to complete a booking. Although we do not
directly compete with metasearch companies, we seek to diversify our distribution channels and as such could be
seen to compete with metasearch companies with respect to customer acquisition. Metasearch companies have been
present in the European online travel market since the inception of eDreams ODIGEO but have not grown as
strongly as large OTAs. Two of our OTA competitors previously made acquisitions in the metasearch space, namely
Priceline with Kayak and Expedia with Trivago, and we added metasearch capabilities to our operations with the
acquisition of Liligo in October 2013.
Google. Google is an important source of customers for most online businesses. Google acquired ITA, a U.S.based flight information software company, in 2010 and has used its technology to launch Google Flights, a
metasearch service in the United States and Europe. OTAs and supplier direct websites have continued showing
strong growth after the ITA acquisition and after the launch of Google Flights.
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Our Geographical Markets
Our principal operations are in France, Germany, Italy, Spain, the United Kingdom and the Nordic region. The
information below has been sourced from the PhoCusWright European Online Travel Overview 9th Edition (2013)
and 8th Edition (2012) and is presented in euro unless otherwise stated.
France
According to PhoCusWright, the travel market in France is the third largest in Europe with gross bookings of
€43.8 billion in 2012, which are expected to reach €46.8 billion in 2014 (2012-2014 CAGR of 3.4%). The flight
sector accounted for €21.5 billion of gross bookings in 2012, the majority of which were generated by full-service
airlines. Historically, there have been fewer LCCs in France because of the lack of viable domestic air routes driven
in part by an efficient high-speed train network. LCC penetration is however expected to increase in the future.
According to PhoCusWright, online travel penetration in France has grown from 34% in 2010 to 42% in 2012
and is expected to reach 46% in 2014. The online travel industry grew from €13.3 billion in 2010 to €18.5 billion in
2012, and is expected to reach €21.7 billion in 2014 (2012-2014 CAGR of 8.3%). In 2012, supplier websites
accounted for 57% of online travel gross bookings while OTAs accounted for 43%.
In the French leisure sector, our main competitors are TTAs (including travel agency networks such as AS
Voyages, integrated networks such as Thomas Cook, and travel agencies created by supermarket distribution groups
such as E.Leclerc Voyages), other OTAs such as Expedia and Orbitz/eBookers, and regional and local players.
We believe we are the largest OTA in the flight sector in France based on total flight gross bookings in 2012.
Germany
According to PhoCusWright, Germany is the largest travel market in Europe with approximately €56.8 billion
of gross bookings in 2012, which are expected to reach €59.5 billion in 2014 (2012-2014 CAGR of 2.3%). The
flight sector comprised €29.5 billion of gross bookings, of which €4.7 billion was from LCCs in 2012.
Online travel penetration has grown from 32% in 2010 to 36% in 2012 and is expected to reach 41% in 2014.
The online travel industry grew from €15.4 billion in 2010 to €20.2 billion in 2012, and is expected to reach
€24.3 billion in 2014 (2012-2014 CAGR of 9.7%). In 2012, supplier websites accounted for 58% of online travel
gross bookings while OTAs accounted for 42%.
The German OTA sector is highly fragmented, with our main flight-focused OTA competitors consisting of
Expedia and Unister. Our competitors also include TTAs.
We believe we are the second largest OTA in the flight sector in Germany based on total flight gross bookings
in 2012.
Spain
According to PhoCusWright, Spain is the fourth largest travel market in Europe with gross bookings of
€20.0 billion in 2012, which are expected to reach €21.4 billion in 2014 (2012-2014 CAGR of 3.4%). The flight
sector accounted for €6.0 billion of gross bookings in 2012, the majority of which were derived from full-service
airlines. Spain has been particularly affected by the economic downturn and the recovery of the Spanish travel
industry is expected to be protracted.
The online travel market grew from €5.0 billion in 2010 to €5.7 billion in 2012, and is expected to reach €6.7 billion
in 2014 (2012-2014 CAGR of 8.4%). In 2012, supplier websites accounted for 47% of online travel sales while
OTAs accounted for 53%.
Our principal competitors in Spain include Rumbo and offline travel agents such as El Corte Inglés and Halcón
Viajes.
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We believe we are the second largest OTA in Spain in the flight sector based on total flight gross bookings in
2012.
Italy
According to PhoCusWright, the Italian travel market is the fifth largest in Europe, with gross bookings of
€20.5 billion in 2012, which are expected to remain flat in 2014. The flight sector comprised €5.0 billion of gross
bookings, of which €0.6 billion from LCCs in 2012.
€6.9 billion in 2014 (2012-2014 CAGR of 11%). In 2012, supplier websites accounted for 46% of online travel
In Italy, our main competitors are TTAs (numbering over 10,000), as well as OTAs such as Expedia, Bravofly
and Volagratis.it.
We believe we are the second largest OTA in the flight sector in Italy based on total flight gross bookings in
2012 and excluding non-flight focused OTAs.
United Kingdom
According to PhoCusWright, the U.K. travel market is the second largest travel market in Europe with gross
bookings of €48.5 billion in 2012, which are expected to reach €53.0 billion in 2014 (2012-2014 CAGR of 4.6%).
The flight sector comprised €24.6 billion of gross bookings, of which €5.6 billion was from LCCs in 2012.
In the United Kingdom, our main competitors are “high street” travel agents and OTAs such as Expedia and,
eBookers.
We believe we are the fourth largest OTA in the flight sector in the UK based on total flight gross bookings in
2012.
Nordics
According to PhoCusWright, the Scandinavian travel market including Denmark, Norway and Sweden reached
gross bookings of €14.4 billion in 2012, which are expected to reach €15.9 billion in 2014 (2012-2014 CAGR of
5.1%). The flight sector comprised €6.5 billion of gross bookings, of which €1.6 billion was from LCCs in 2012.
The online travel industry grew from € 6.2 billion in 2010 to €8.2 billion in 2012, and is expected to reach
Our principal competitors in the Nordics are offline travel agents and OTAs such as Expedia, Orbitz and ETI.
We believe we are the second largest OTA in the flight sector in the Nordics based on total flight gross
bookings in 2012.
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BUSINESS
Overview
We are a leading online travel company with a presence in 42 countries. We make flight and non-flight products
directly available to travelers principally through our online booking channels (desktop websites, mobile websites
and mobile apps) and via our call centers, as well as indirectly through white label distribution partners and other
travel agencies. With more than 14 million customers served in the year ended March 31, 2013, we are a worldwide
leader in delivering flight products, which is our principal business. We also provide our customers with non-flight
products, such as hotel bookings, Dynamic Packages (which are dynamically priced packages consisting of a flight
product and a hotel booking that travelers customize based on their individual specifications by combining select
products from different travel suppliers through us), car rentals and vacation packages.
Substantially all of our operations are in the leisure travel business. We derive the substantial majority of our
revenue and profit from the sale of flight products in Europe. Our principal operations, as measured by Revenue
Margin contribution, are in France, Germany, Spain, Italy, the United Kingdom and the Nordics. Outside of Europe,
we are present in a number of large countries, including, in order of Revenue Margin contribution, Australia, the
We also have operations in the corporate travel sector, mainly in the Nordics, and are seeking to expand this
business in certain of our other geographies in Europe. In October 2013, we completed the acquisition of Liligo, a
metasearch company with websites in 11 countries, with a view to integrating Liligo’s technology into our existing
business and increasing our advertising and meta click-out revenue.
We use innovative technology and our relationships with suppliers, product know-how and marketing expertise
to attract and allow customers to research, plan and book a broad range of travel products. We make our offers
accessible to a broad range of customers, including leisure and corporate travelers, offline travel agents and white
label distribution partners.
We own and operate a strong portfolio of consumer brands composed of eDreams, Opodo, GoVoyages,
Travellink, Go Volo and the recently acquired Liligo brand. Through our brands, we have historically focused on the
flight sector of the travel market.
In the nine months ended December 31, 2013, our businesses generated 7.3 million Bookings, and generated
Revenue Margin of €311.9 million and Recurring EBITDA of €88.8 million, compared to 6.3 million Bookings,
€268.1 million of Revenue Margin and €80.4 million of Recurring EBITDA in the nine months ended December 31,
2012.
In the year ended March 31, 2013, our businesses generated 8.7 million Bookings, and generated Revenue
Margin of €373.0 million and Recurring EBITDA of €108.4 million, compared to 7.7 million Bookings,
€319.7 million of Revenue Margin and €95.4 million of Recurring EBITDA in the year ended March 31, 2012.
Our Strengths
We believe we are a global leader in the online leisure flight sector and a category leader in European
eCommerce, and this scale is beneficial to our business
We are a global leader in the online distribution of airline passenger flights and we believe we are the world’s
largest online travel company in the flight sector measured by flight revenues. We have a global footprint with
operations in 42 countries with a particularly strong footprint in Europe, and we are present in 16 of the largest 18
Online Travel Markets in the world, as identified by PhoCusWright. We served more than 14 million customers in
the year ended March 31, 2013.
Online leisure travel is one of the largest worldwide eCommerce categories, as measured by spending according
to IDC, Worldwide New Media Market Model, 1H13. We believe our EBITDA is among the largest when
compared to publicly-traded European eCommerce companies and that our EBITDA Margins are also strong
compared to such companies.
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We believe online travel product distribution will increasingly be dominated by “pure play” category leaders
who focus their investment, know-how, resources and technology to build scale on a worldwide basis in a particular
category (e.g., flight products instead of flight and hotel products) and that such category leaders will be better
positioned to extract superior margins than online travel companies that spread their resources across different
product categories seeking to become leaders in multiple categories.
We believe that our scale and focus on flight products, together with our ability to direct business towards
different trading partners, allow us to negotiate more favorable economic terms with, and grant us access to better
inventory from, our travel suppliers (including airlines, GDSs, hotel and car rental aggregators, and travel insurance
providers), non-travel suppliers (including payment processors and hardware and software providers) and other
distribution channels (including metasearch companies and affiliate networks) than many of our competitors. In
particular, we believe we are the largest customer of several of our key suppliers, further increasing our negotiating
leverage and access. We also benefit from efficiencies of scale and resource utilization, as well as the expertise
gained through our 14-year history, to further optimize our product offerings, technology platform, operational
processes and cost structure. Scale also enables us to fund larger marketing and technology investments that are
beneficial to us as we seek to consolidate our leading position in the flight sector. An important milestone in
realizing economies of scale was the rollout of our “One Platform” in the summer of 2013, which allows us to
distribute our full range of inventory through our principal brands and in most of our markets (for a discussion of
our One Platform, see “—Scalable state-of-the-art booking platform based on proprietary technology”).
Our scale derives from, and reinforces, our strong brand recognition. On a combined basis, we believe our
brands (eDreams, Opodo, GoVoyages, Travellink, Go Volo and Liligo) enjoy the strongest online brand recognition
on Google worldwide for the flight sector, at approximately the same level as the Expedia group and significantly
above the level of Priceline (combined with Booking.com and Kayak), Orbitz (combined with eBookers) and
Travelocity (combined with lastminute.com). Our powerful brand recognition attracts a high volume of “free traffic”
to our websites, which delivers stronger margins for us as the customer acquisition costs are lower. In addition, our
multi-brand approach allows us to offer the same products through our different brands, which customers may not
realize are affiliated, providing us with the ability to offer multiple offerings on different brands for searches
conducted by customers on search engines or metasearch operators.
Scalable state-of-the-art booking platform based on proprietary technology
We believe that we have a state-of-the-art scalable technology platform with physical infrastructure and
processes that enable us to sustain our plans for future growth, and are capable of being adapted and extended
rapidly to address new business opportunities. In particular, our proprietary technology has supported, and we
expect will continue to support, our international expansion strategy.
We have invested extensively in flight technology for 14 years and now have a highly advanced and complex
platform that we have developed internally and is proprietary to us. Our sophisticated supply technology enables us
to offer a wide variety of products and includes (i) Direct Connect technology to source prices and special offers
directly from certain travel suppliers’ own reservation systems without the intermediation of GDS providers
(including network carriers and low-cost airlines such as Ryanair), (ii) other product customization elements (such
as dynamic GDS selection, net fare handling, multi-carrier and multi-stop itinerary building and charter flight
booking systems) that our competitors are unable to offer comprehensively and (iii) unique dynamic pricing
technology that incorporates computerized analytic processes to review an estimated average of approximately 7
billion pricing elements per hour to maximize our service fees at the time of booking. We have also built technology
to help us interact with distributors such as search engines, affiliate partners and metasearch companies, that
expands our reach and lowers our customer acquisition costs. New developments and additions to our technology
platform are also critical to the efficiency of our business because practically all of our interactions with suppliers,
customers and distributors are automated over the internet and our booking platform.
During the period immediately following the Combination through March 2013, we focused a significant
portion of our resources in creating one single company from three companies, integrating people, processes and
technology, and in particular developing a unified flight booking engine. We also unified our hotel and car
platforms. During this period, we substantially completed the development of our common booking and inventory
platform (the “One Platform”), drawing on the best aspects of the respective IT platforms operated by eDreams,
GoVoyages and Opodo. For example, we incorporated and improved eDreams’ leading Direct Connect technology,
GoVoyages’ multi-GDS capabilities and Opodo’s superior net fares technology, which the other brands did not
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have. The development of the One Platform is now substantially complete for our flight booking engine (with the
exception of our Travellink brand) and confers two principal benefits:
•
all of our customers in all of our markets and across our principal brands have access to the best
products that eDreams ODIGEO can offer. We believe this combined product offering is superior to
the offering of each individual brand prior to the development of the One Platform and resulted in an
immediate improvement in performance and revenue growth; and
•
we can now focus our development resources away from “infrastructure building” and back to
innovation. Our speed of innovation has also increased due to more efficient technological
improvements flowing from operating the highly configurable One Platform, as features we would like
to launch (for example, adding a new supplier, a new payment method, a new pricing element or a new
revenue source) do not need to be replicated across multiple platforms and can be implemented with
lead times as short as one day. Due to the One Platform, creating the features for all our brands and
most of our markets can be done in a centralized manner, allowing us to devote our resources to more
innovation. We anticipate that the One Platform is currently able to accommodate a doubling of search
volumes. We believe our enhanced speed of innovation and the scalability of our information
technology solutions will be key to further extending our competitive advantage.
Our technology allows us to achieve the following:
•
Offer products to our customers at low overall all-in prices, which we seek to achieve by optimizing the
combination of our inventory, including Direct Connect, multi-GDS, net fare and charter flight products,
through each of our brands in a flexible manner. We estimate that around two-thirds of our bookings sold
are “custom made” (which we regard as inventory not directly available from our default GDS providers
and where certain of our inventory and content are combined to create a proprietary offering for
customers). This creates additional scope for us to charge higher service fees than for individual products
because Gross Bookings on a per Booking basis are significantly lower for “custom made” products such
as products sourced via Direct Connect compared to products that we source through our GDS inventory.
We believe that most of our competitors do not have the breadth of products that we are able to offer as a
result of our technology, which allows us to conduct up to 40 million supplier searches per day and
includes proprietary applications that perform real-time “crawling” of a variety of databases.
•
Offer customers a variety of means of accessing and booking our products (website, mobile website,
mobile app and call center) through effective and easy-to-use user interfaces, in multiple languages, in
multiple currencies and through multiple payment systems, and that comply with multiple legal, regulatory
and tax systems.
•
Extract more revenue from our customers through higher service fees payable by our customers. Our
average service fees per flight Booking was €23.10 for the year ended March 31, 2013 compared to €20.70
at eDreams in 2007. Our technology allows us to test the offers available on our websites on an ongoing
basis, which tests involve a number of variables such as price, availability and inventory combinations from
different suppliers. We estimate that our technology is able to carry out approximately 3,600 tests
simultaneously on our websites to test a number of variables, including price. For a discussion on how
technology allows us to optimize our service fees, see “—Strong profitability, sustainable margins and cash
flow generation based on scale, revenue stream multiplication, breadth of product offering and broad
geographic footprint”.
•
We also use our technology to optimize for each transaction other revenue streams that are not service fee
related in areas such as supplier sorting and selection, GDS selection, collections and payments, and
inventory sourcing location, as well as to maximize cash generation. Our technology allows us to test the
offers available on our websites on an ongoing basis; these tests involve a number of variables such as
price, availability and inventory combinations from different suppliers. We believe we have advantages
in this technology compared to many of our competitors.
•
Improve our productivity and customer acquisition costs by managing our cost base in a flexible manner.
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•
The automated nature of substantially all of our Bookings is a key difference from traditional offline travel
agents and leads to lower personnel costs on a relative basis.
•
Our technology and the automated nature of our Bookings also allow us to have a variable and scalable cost
base, which makes us relatively resilient to volume fluctuations.
By leveraging our robust IT backbone, rolling out our sophisticated technology applications across all of our
businesses and geographies and continuing to innovate, we expect to remain well positioned to source the products
that best suit customers’ needs through a set of complex proprietary algorithms. We also expect to further enhance
the flexibility of our product offerings while providing a superior buying experience, which we believe in turn
increases brand loyalty and propensity to buy our products.
Well positioned within a large, fragmented market with attractive secular growth trends and additional
expansion opportunities
We believe we operate in a market with strong fundamentals and attractive characteristics. Online leisure travel
is the largest eCommerce category and was estimated to be more than twice the size of apparel and nine times the
size of electronics in 2013, based on spending according to IDC, Worldwide New Media Market Model, 1H13.
Furthermore, the online travel industry is expected to continue growing across geographies supported by:
•
general improvements in macro-economic conditions across Europe and worldwide, and increases in
air travel passenger numbers, which increased at an average rate of 1.6x global GDP (as measured by
the World Bank in constant U.S. dollars) growth over the last ten years;
•
increasing internet and broadband penetration and connectivity, as well as increasing mobile internet
access, particularly in developing countries;
•
migration of customers to online platforms that offer superior value and convenience of use (see “—
Proven growth track record with continued strong momentum”). According to IDC, Worldwide New
Media Market Model, 1H13, in absolute spending terms, online travel is expected to grow more than
any other eCommerce category in the 2013 as compared to the 2012 calendar year; and
•
stable or increasing use of intermediaries over supplier direct sales in online travel in all geographies,
except in the United States, according to PhoCusWright.
The highly fragmented nature of the travel market and the inherent significant complexity of flight travel,
particularly in markets outside the United States, create an attractive dynamic for online travel companies such as us.
We estimate that worldwide there are approximately 1 trillion price changes of airline seats each day based on
certain assumptions. Finding the best price from one point in the world to another is a very complex endeavor given
the large combinations of parameters that can define a flight journey (price, carrier, carrier combinations, departure
time, departure airport, number and/or location of stops, arrival airport and so forth). Other factors increasing market
complexity and fragmentation include the large number of destination choices and route combinations, differing
payment systems and currencies across countries, as well as different languages, legal and tax requirements and
customer preferences, as well as the propensity for flight bookings to be international and multi-segment journeys.
In addition, our core European flight market is characterized by a large number of airlines, and a large share of
international travel. Few airlines have sufficient network density and brand recognition across all European
countries, and so are more in need of distribution partners outside their home markets.
By helping consumers navigate this complexity, online travel distributors add value for airlines (by providing
greater access to consumers outside of their home markets), GDS and aggregators (by providing access to
consumers), and to consumers (by enabling more convenient access to broader attractively priced inventory than
would otherwise be available), and this allows us to earn, in most of our transactions, commissions or fees both from
the supplier and consumer of the flight products we distribute. We believe that having developed technology and a
business designed to manage the complexity and fragmentation of the European flight market provides us with a
strong base for expansion to other markets.
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We have significant advantages over our competition in offline and online travel distribution
Online travel penetration remains below 50% in the United States and Europe and is lower in Asia Pacific and
Latin America (source: PhoCusWright data referred to in “Market and Industry Data”). The present levels of online
travel penetration mean that, in the countries in which we operate, more than half of potential travelers use
traditional high-street, or offline, travel agents when making their purchase decisions. We believe we have
significant advantages over such offline travel agents in the leisure flight sector, including our scale, brand
awareness and technological innovation. We estimate that there are approximately 10,000 offline travel agents in
each of France, Spain and Italy and a large number of offline travel agents in the other countries in which we
operate, and that most offline travel agents are small operations with substantially limited resources compared to us,
for example, in terms of technology, brands, productivity (due to automation), team strength and international
presence. We also believe that we have significant advantages over even large network offline travel agents due to
our superior technology, productivity and international presence. As a result of our significant advantages, we have
been taking market share in terms of revenues from offline travel agents rapidly since our inception and believe we
will continue to do so in the future, especially as online travel penetration is expected to continue increasing in the
future.
In online flight distribution, we are partners but also competitors of flight product suppliers and distributors,
such as airlines, other online travel companies and metasearch companies, and we believe we are also well
positioned in respect of such competition in online travel product distribution. With the exception of the United
States, over the period from January 1, 2011 to December 31, 2012, online travel companies have been gaining
market share from airline direct sites according to PhoCusWright, as we believe we have been doing (source:
PhoCusWright data referred to in “Market and Industry Data”). We believe we have the tools to continue to
successfully compete against airline direct sales because of our extensive inventory that allows us to offer customers
customized itineraries for flights anywhere in the world on multiple airlines, routes and multi-leg journey options at
competitive prices, because of our broad international presence, which airlines are unable to do as successfully
through their direct sales model.
We have also shown superior growth and profitability compared to pure metasearch companies, such as
Skyscanner and Kayak, which are well-established companies in the online travel markets. On average, our
revenues and scale have grown at a faster rate than the revenues and scale of metasearch companies since their
inception, and such metasearch companies are presently small in scale in terms of revenue and EBITDA compared
to us and have had lower EBITDA margins. Although we compete in customer acquisition with metasearch
companies, because they are distribution partners for us, we also benefit from their growth. We believe metasearch
companies derive the overwhelming majority of their revenue from other online distributors such as us rather than
from airlines, and we believe the risk of disintermediation in the metasearch channel is low. Therefore, as long as we
are able to offer attractive all-in prices, we believe we are likely to continue to benefit from the growth of
metasearch companies while maintaining our strength in attracting customers directly.
We are well positioned to benefit from key trends in the online travel markets in which we operate
We believe that our scale and strategic advantages position us well to benefit from certain key trends in the
online travel markets in which we operate.
Metasearch. We believe that we are well positioned to remain competitive in light of competition from
metasearch companies. With the acquisition of Liligo in October 2013, we have added metasearch capabilities to our
existing OTA framework and platform. In addition, we believe that our technology goes deeper in the value chain
and is more sophisticated than pure metasearch technology, which we believe makes us a partner of choice to supply
technology and products to metasearch companies seeking strategic partnerships with OTAs to generate transactionbased revenue.
Mobile. We believe that our user-friendly interfaces and mobile apps will permit us to benefit from the
increasing penetration and connectivity of mobile devices. For example, we believe we are better suited to exploit
the mobile channel than pure metasearch companies, which have experienced difficulties in monetizing mobile
traffic as a result of needing to direct their users to other companies’ websites to make bookings. For a more detailed
discussion, see “—Our Strategy—Continue expanding our presence across different customer segments, booking
channels and distribution channels”.
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Price unbundling. We believe that our markets, including the U.S. market, will become increasingly more
attractive for companies such as us who thrive on complexity, massive data analysis, extensive system integration
and proven innovation capacity, as airlines continue to move away from offering all-inclusive prices (including
airfare, taxes, payment surcharges, seat selection, boarding card printing, luggage and so forth) towards unbundled
pricing where each of these services is priced separately. Many airlines have already begun to do this. Price
unbundling effectively creates new products and makes the selection and assessment of flight products more
complex, making it challenging for operators of smaller scale to compete, increasing the value we can add for our
customers and airline suppliers and our capacity to earn additional margins.
Proven growth track record with continued strong momentum
We have a strong track record of delivering organic growth throughout economic cycles underpinned by our
strong technology and continuous focus on innovation and delivering value to our customers, as well as our ability
to expand our market share. We have grown both revenues and EBITDA with no interruption since the year we were
founded in spite of adverse macro-economic conditions at certain times during our history. Our growth has always
been driven by technology-led innovation, and over time, our platform, team know-how and brands have become
our principal assets.
Over the 2005-2010 period, eDreams delivered consistent top-line growth, with revenues growing at 37%
CAGR and Recurring EBITDA growing at a 44% CAGR. Through the Combination, together with continued
organic growth, eDreams ODIGEO’s Revenue Margin was 3.2x and Recurring EBITDA was 3.95x, in each case,
for the year ended March 31, 2012 compared to eDreams’ Revenue Margin and Recurring EBITDA for the year
ended December 31, 2010. For the year ended March 31, 2013, eDreams ODIGEO’s Revenue Margin and
Recurring EBITDA grew 16.7% and 13.6%, respectively, compared to the year ended March 31, 2012. Recently, the
benefits of the integration of our businesses and development of our One Platform, together with our renewed focus
on international expansion, have contributed to our accelerated organic growth. In the nine months ended December
31, 2013, Revenue Margin grew by 16.3% compared to the same period in the prior year.
Our overall market share has also been growing strongly. In terms of eDreams’ market share, in 2009, eDreams’
share of worldwide segments sold by travel agencies in GDS was 0.37%. In 2010, eDreams’ market share grew 1.2x
to 0.43%. With the Combination, together with continued organic growth, our market share reached 1.72% in 2012
(source: Travelport data referred to in “Market and Industry Data”).
With growth rates of 14%, 15% and 14% over the three months ended June 30, 2013, September 30, 2013 and
December 31, 2013 respectively, we have recently experienced a strong growth in flight bookings. Based on a
comparison with most recently completed financial years, we believe we are outperforming our major peers in terms
of flight bookings growth within the online sector of the flight travel market.
Overall, we have also grown our share of total seats offered by airlines in the market, irrespective of whether
they are sold directly by the airlines or via distributors. Based on ICAO data, airline seat capacity in kilometers
expanded by 4.8% in the twelve months ended December 31, 2013 while our flight Bookings growth grew by 12.6%
during the same period.
Strong profitability, sustainable margins and cash flow generation based on scale, revenue stream
multiplication, breadth of product offering and broad geographic footprint
We believe globalization is unstoppable in our industry and we expect to see global-focused category leaders
take share from local and or generalist players. We operate with strong profitability relative to most online travel
companies and also compared to European-headquartered eCommerce companies, as measured by Recurring
EBITDA Margin, due in part to our scale and our size, as well as our deliberate focus on the online leisure flight
sector compared to companies who seek to be leaders in several travel sectors.
The following characteristics of our business also underpin our strong profitability and margins.
Revenue stream multiplication
We believe that our focus on revenue stream multiplication makes us competitive among online travel
companies. We focus on service fees (which is the total difference between the price at which we source a product
and sell that product to a customer, which difference includes, among other components, any mark-up to the price at
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which we source a product and fees that we charge customers in connection with a booking) as an important source
of revenue to maximize our margin expansion. In contrast to 2001 when the overwhelming majority of an online
travel company’s revenues derived from airline commissions and incentive fees, this revenue stream is now
considerably less significant (for example, for the year ended March 31, 2013, airline commissions and
overcommissions received on flight Bookings represented 8% of our Revenue Margin).
Over time, we have invested in technology to multiply our sources of revenue for each user and booking, which
are various and include:
•
customer revenues, including in the form of service fees on a range of flight products (including network,
low-cost carriers and charter) and non-flight products (such as Dynamic Packages), as well as insurance
related to these products;
•
supplier revenues, including in the form of GDS incentive payments, commissions and overcommissions
from airlines, white label sourcing partners, hotel operators, tour operators and other providers of travel
products, as well as payment processors and insurance companies; and
•
our advertising and metasearch revenues, which have increased to €11.4 million for the nine months ended
December 31, 2013, a growth rate of 86.8% compared to the corresponding prior nine-month period and
representing 3.7% of our revenues for the nine months ended December 31, 2013, notably as a result of the
Liligo acquisition in October 2013.
We are not dependent on supplier revenue, and approximately 71% of our Revenue Margin in the year ended
March 31, 2013 was generated from our customers. A typical flight transaction generates between six and eight
revenue streams for us (for a discussion, see “—Business Model and Revenue Sources”). We believe this is an
advantage because most of our competitors do not have the know-how or have not invested in the multiplication of
revenue sources in recent years.
Increased margins generated by our superior technology
Following the Combination, eDreams ODIGEO, has been able to increase service fees on products continuously
as a result of our technology, which allows us to dynamically set our service fees in a sophisticated and adaptable
manner, with an estimated average of 7 billion pricing elements reviewed per hour. By offering customers lower
prices compared to other available options, we are able to offer attractive all-in prices and to generate strong
margins. We use the inventory from our multiple inventory sources (e.g., GDSs, Direct Connect, etc.), combined
with our massive testing ability, to find low overall itinerary cost options, as well as the optimum service fees. This
helps us maximize our Revenue growth and EBITDA Margin mix.
In addition, our technology and our online acquisition channels provide us with instantaneous detailed data on
customer acquisition costs for each single booking, allowing us to maximize margins. For example, we manage 21
million keywords in our search engine partners to generate an average of 28 million daily impressions (which are the
number of online advertisements generated on the websites of search engines). We have invested in search engine
marketing since its inception and over time have developed strong know-how, a leading position and strong
technology to help us optimize the cost of the search channel. Search engine algorithms typically value an online
retailer’s historical track record for a specific set of keywords, and companies with a strong track record such as us
can generate higher traffic with lower costs compared to new entrants with no track record. Because of our strong
historical track record in the vast majority of possible keywords in the online flight distribution sector, we believe
that it is difficult for other competitors to generate similar margins from online search advertising and that this has
driven some competitors who cannot achieve those returns, particularly new entrants, into investing heavily in
offline advertising. We believe our ability to deliver good returns from online advertising is a strategic advantage
and a direct consequence of our extensive investment in technology over many years, which we plan to continue
maintaining.
We have similarly developed strong technology components geared at optimizing our margins for our products
distributed through metasearch companies and other online distribution partners.
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Overall, we have demonstrated in the past an ability to generate more Gross Bookings per unit of marketing
spend than most of our competitors, and more Revenue per unit of marketing spend than pure metasearch
companies.
Geographic footprint expansion
We are present in 42 countries and our broad geographical reach enhances our ability to diversify the risks of
single-market shocks and reduce the overall level of competitive pressure. We operate in 16 of the world’s 18 largest
online travel countries, according to PhoCusWright, and are particularly strong in Europe. We have continued to
enter new markets with 14 new markets entered since March 31, 2012 and, based on internal Company reports, we
have been successful in achieving profitability (measured as Revenue Margin earned less variable costs) in most of
our new markets within 12 months of entering such markets. France is our most important market in terms of
Revenue Margin contribution, followed by Germany, Spain, Italy, the United Kingdom and the Nordics, and we
believe we have the largest flight distribution platform in Europe (based on 2012 Gross Bookings). Outside of
Europe, we are present in a number of large countries, including Australia, the United States, Argentina, Brazil,
Turkey and Mexico.
Our Revenue Margin from our Expansion segment grew by 27.7% in the nine months ended December 31,
2013 and 39.2% in the year ended March 31, 2013, in each case compared to the corresponding prior period,
demonstrating our success in establishing market presence and gaining market share. Revenue Margin growth for
the year ended March 31, 2013 was positively impacted by the full year consolidation of Opodo. In the nine months
ended December 31, 2013 and the year ended March 31, 2013, our Expansion segment represented 38% and 33% of
our Revenue Margin, respectively, and we believe international expansion is a key opportunity for continued
growth.
Our rate of growth in the countries in which we are present other than France, Germany, Spain, Italy, the United
Kingdom, and the Nordics (the “Other Countries”) is also strong. In the nine months ended December 31, 2013,
Bookings in such Other Countries grew by 52% during such period. During the same period, bookings in the three
Other Countries with the highest individual growth in Bookings (which together accounted for 67% of all Other
Countries Bookings) grew by 36%, collectively, and growth in the remaining Other Countries (which together
accounted for 33% of all Other Countries Bookings) grew by 95%, collectively.
Breadth of flight product offering
We believe we offer a broad array of flight travel products. We source and make available to leisure travelers
tickets from full-service carriers, low-cost carriers and charter flights. We access inventory from carriers both via the
principal GDS providers and via Direct Connect technology to an airline’s booking systems or public website. In
respect of full-service carriers, we access published fares and, in certain cases, private fares. We further benefit from
time to time from an allocation of seats, which enables us to offer more competitive prices. In addition, we have
developed unique proprietary technology which allows us to dynamically price air tickets, combine competitively
priced products and combine fares, creating unique fare combinations and lowering ticket prices to customers in
order to attract more travelers.
Breadth of distribution
We work with hundreds of business partners (including most large social media sites), dozens of metasearch
companies, traditional travel agencies, tour operators, white label partners, corporate customers and several
generalist search engines to ensure our products are as widely accessible as possible. We believe that our diversified
relations with distributors contributes to optimizing our customer acquisition costs.
Superior cash generation
Our business is characterized by structurally negative working capital as customers typically pay us before we
pay our suppliers, and our state-of-the-art technology platform has been developed mostly in-house and requires
limited capital expenditure relative to our EBITDA, which contributes to robust free cash flow generation.
Accordingly, we have been able to deliver on a net debt basis since the Opodo Acquisition from 4.7x net
debt/Recurring EBITDA (as of December 31, 2010 pro forma for the Opodo Acquisition and adjusted for the
issuance of the 2019 Notes and application of the proceeds thereof) to 3.5x net debt/Recurring EBITDA (as of
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December 31, 2013), despite challenging macroeconomic conditions in Europe. Our strong profitability and cash
flow have allowed us to invest in growth initiatives, including in new technology.
Sustainable competitive advantages and strong barriers to entry
We operate in a highly complex and fragmented market that requires scalable, state-of-the-art technology to
become or remain a competitive player. The size and scale of certain online travel companies such as us also provide
such players with significant competitive advantages. As a result of these factors, all set out in greater detail above,
we believe that we operate in a market that has significant barriers to entry.
Innovative and proven management team
Our management team has a long history of operating in leading companies and the online travel industry, a
track record of long-term profitable business growth through several business cycles and exogenous shocks to the
travel industry and a shared vision for our combined group. Certain key members of our management team have
more than 13 years of online flight distribution experience, which provides us with deep know-how and a strong
basis to transform innovative ideas into technological products to be offered through our platform and a superior
visibility of market trends resulting from our category leadership and global scale.
Our Chief Executive Officer, Javier Pérez-Tenessa de Block, a trained aerospace engineer, has instilled a strong
analytical and quantitative approach, as well as a passion for innovation, in everything we do. Javier Pérez-Tenessa
de Block is a veteran of the Internet, having worked at Netscape Communications (which invented the web browser)
in Silicon Valley from 1996. He launched the first eDreams website in 2001 and has run the company from its
founding. Our Chief Financial Officer, David Elízaga, brings complementary functional knowledge and capital
markets experience with over €2 billion raised in several debt and equity market transactions including the initial
public offering of Codere, S.A. Our Group Chief Operating Officer, Dana Dunne, has vast experience in managing
large, complex multinational companies and teams, strong operational and analytical skills, and broad industry
experience gained through positions at McKinsey, as president of AOL Europe and as chief commercial officer at
EasyJet.
Our Strategy
Our principal objective is to grow our leading market position in the online flight distribution business on a
worldwide basis.
We believe success in online flight distribution depends strongly on the ability to excel in five key areas:
(i) superior breadth of seat inventory, (ii) lower overall available itinerary cost, (iii) higher margin generation,
(iv) superior booking growth and (v) customer engagement with strong brands. Building on our strengths discussed
above and by taking advantage of our team know-how, broad access to data and understanding of the global flight
market, we plan to continue focusing on innovation with the goal of optimizing our business along these five areas.
Our management intends to accomplish this by continuing to focus on the following strategies.
Continue investing in technological innovation as a driver of lower prices, strong margins, and higher growth
and customer engagement
We believe that our proprietary technology is critical to our success, as described in “—Our Strengths—
Scalable state-of-the-art booking platform based on proprietary technology”. Our principal technology objectives are
(i) ensuring our continued ability to offer our customers the most competitive pricing possible across an extensive
range of inventory, (ii) maximizing our operating results by increasing our margins and (iii) continuing to contribute
to our effective marketing strategy. We believe these objectives are key to support our growth strategy, improve our
margins and allow us to invest in innovation and better products compared to our competitors.
Innovation around superior inventory is critical to our strategy to offer the lowest possible overall itinerary cost
and at the same time preserve our ability to generate higher margins
We distribute flight products to our customers to which we add service fees over the price at which we source
the inventory from different airlines, as well as additional service or booking fees. We have invested heavily in our
technology in the past and intend to continue doing so in the future to ensure that we can provide attractively priced
offers to our customers for any flight product, for example, by connecting to several GDS providers, optimizing our
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“Direct Connect” technology, improving our handling of net fares, and integrating our systems to those of several
payment processors.
The all-in price is the key decision factor for travelers when making a travel booking, particularly a flight, and
through the continued enhancement of our sophisticated algorithm-driven platforms and data-mining software,
which are part of the One Platform, we intend to maintain our pricing advantage in offering low overall itinerary
costs to customers so that we can benefit from higher margin generation.
By lowering overall itinerary costs, our technology is critical to generating higher margins because generating
and offering the most attractive itinerary cost to our customers allows us to charge higher levels of service fees for
the products we offer while remaining competitive compared to the alternative offers of our competitors. We have
invested significant technological resources in the past to refine the service fees we can charge to customers in each
transaction, by measuring and adjusting our offer to each customer’s perceived price elasticity. We intend to
continue investing in such margin maximization technology to maintain our innovative edge.
Increasing our engagement and relationship with our customers is also important
We believe that in addition to our competitive all-in prices, our effective and simple customer interaction with
our sites, as well as our strong pre-booking and after-booking customer service are key to increasing our
engagement with our customers, which in turn increases the attractiveness of our brands, reduces our customer
acquisition costs and improves our overall profitability. We have invested significant technological resources in the
past to improve the reliability and user-friendliness of our sites and we have built large multi-lingual call centers
serving the markets in which we operate. We see call centers not only as a key tool to generate customer loyalty, but
also as a revenue generation unit, and we have lowered our call center cost-per-action significantly. We expect to
continue investing to improve customer interaction with our sites and the productivity of our call centers.
In addition, we plan to enhance our relationship with customers by continuing to focus on promoting our brands
through online channels, where we currently invest most of our marketing budget, as these channels have delivered
higher final margins for us in the past compared to traditional offline channels such as television advertising. We
will continue investing in online acquisition channels, including search engine marketing technology, which we
believe is an important strength as set out in “—Our Strengths—Strong profitability, sustainable margins and cash
flow generation based on scale, revenue stream multiplication, breadth of product offering and broad geographic
footprint—Increased margins generated by our superior technology”. We will also continue investing on our
technology components geared at optimizing our margins for our products distributed through metasearch
companies and other online distribution partners.
Expanding our geographic footprint to provide for long-term growth
We are focused on making our product offerings more broadly accessible. Although our principal revenues are
currently generated in Europe, we have been broadening our operations outside of Europe in a number of large
countries in which we have been growing rapidly, such as India, Australia, Brazil, Mexico, the United States and
Canada as well as other countries in South America, Africa and Asia, where we are generally experiencing strong
growth and market share gains. Since March 31, 2012, we have expanded our operations into 14 new jurisdictions,
and we continue to look for new attractive market opportunities.
Our operations in our Expansion segment (which we define as our markets other than France, Spain and Italy)
are already an important and growing part of our business. In the year ended March 31, 2013, our Expansion
segment represented 33% of our Revenue Margin, and Revenue Margin from our Expansion segment grew by
39.2% compared to the year ended March 31, 2012 partly as a result of the full year consolidation of Opodo. In the
nine months ended December 31, 2013, our Expansion segment represented 38% of our Revenue Margin, and
Revenue Margin from our Expansion segment grew by 27.7% compared to nine months ended December 31, 2012.
(Note that for the years ended March 31, 2013 and 2012, the Expansion segment does not include any Revenue
Margin attributable to Go Volo, as it has been attributed to the Core segment in its entirety irrespective of the
location at which the booking was made. For the nine months ended December 31, 2013 and 2012, Revenue Margin
attributable to Go Volo has been allocated between the Core and Expansion segments according to the country of
booking.) We intend to continue focusing on developing our businesses in our Expansion markets and believe that
this represents a promising opportunity for driving long-term growth. In particular, we believe that expanding and
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further customizing our products in less mature travel markets characterized by higher growth potential and lower
online travel penetration provides upside opportunities.
Prior to entry, we carefully analyze new market opportunities by considering factors such as market size,
penetration of online access, competitive landscape, economic growth potential, and the legal and regulatory
framework, among others. When we enter a new market, we seek to be profitable (measured as Revenue Margin
earned less variable costs) in that market within 12 months of operations.
Capturing growth opportunities in non-flight travel, including hotels, rental cars, Dynamic Packages,
insurance, advertising sales, metasearch and, in the future, potentially in-destination services
As described in “—Our Strengths—We believe we are a global category leader in eCommerce and the leader in
the online leisure flight sector”, our principal focus is on growing our flight leadership position. However, we intend
to continue increasing the revenues we generate from non-flight products by partnering with non-flight category
leaders to source non-flight products. We also believe that our strategy of leveraging our scale in the flight segment
to cross-sell non-flight products will allow us to acquire non-flight travel customers at significantly reduced costs.
Dynamic Packages. Dynamic Packages (which are dynamically priced packages consisting of a flight product
and a hotel booking that travelers customize based on their individual specifications by combining select products
from different travel suppliers based on our inventory) are an important product in our growth strategy because we
believe that our superior flight platform gives us a competitive advantage compared to other players with respect to
such packaged products because flights are typically the first product customers consider in travel planning,
enabling us to cross-sell hotels. As a result, we intend to continue developing this product in our primary business in
which we will manage all aspects of the transaction with proprietary technology. The unification of Dynamic
Packages into a single improved technology platform is a principal project over the next two years.
Hotels and car rentals—optimizing inventory sourcing. We recently signed nonexclusive “white label”
agreements with leading providers of hotel and car rental booking platforms, which allows us to offer our customers
hotel and car rental inventory offered by these sourcing partners directly through our own websites and with our
branding. By sourcing from such white label partners, we have improved attachment rates of non-flight products
such as hotels and car rentals and related insurance over the last two years.
Insurance. We sell travel insurance products through a partnership with a leading insurance provider on what
we believe are attractive terms. We intend to continue cross-selling insurance to our customers.
Advertising and metasearch. We are focused on expanding our non-transactional revenue sources and have
been successful at increasing our advertising revenues, which have grown by 86.8% year-on-year to €11.4 million
for the nine months ended December 31, 2013.
We believe that advertising and metasearch is an additional non-transactional revenue stream through which we
can grow our business. Metasearch revenue is not directly booking-related (and is based on revenue per search and
per click-out basis) and the monetization of non-booking traffic monetization complements the core revenue
generation streams of our largest brands. To capitalize on this opportunity, in October 2013, we acquired Liligo, a
metasearch company. Through this acquisition, we believe we can enhance growth by integrating Liligo’s
technology and revenue generation model into our core offering, to increase our advertising and meta click-out
revenue. Liligo currently operates in 11 countries and processes approximately 39 million metasearches per year and
we plan to expand its operations to certain other jurisdictions where our other brands operate, drawing on our
knowledge and experience in those jurisdictions.
We operate a venture farm to allow us to partner and invest in small innovative companies where we see large
growth potential. We look for companies with unique technology that could help to improve margins, prices or
cross-selling capacities based on our sale of flight products, which we believe can be leveraged across our customer
base, with a view to producing synergies. For example, our venture farm identified and led to our recent acquisition
of Liligo.
In-destination spending. We believe that in-destination products and services (such as restaurant reservations,
local transportation and local retailing) sold online and the push of contextual offers to travelers during their trip
may, in the future, be growth areas for us, although this would be a new area for OTAs, including us. Because the
first booking that customers typically make when making a multi-product booking is a flight product and we are the
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category leader in the online flight sector, we have good early visibility on when and where a customer will be
travelling, which is valuable proprietary information we can use to offer and cross-sell in-destination products and
services. As a result, we believe we would be well positioned to take advantage of growth from the shift of
in-destination spending towards online (and mobile) channels from the mostly offline channels currently used by
customers in the in-destination market. The total amount spent by customers in the in-destination market was
estimated to be US$2.1 trillion in 2010 (source: U.S. Travel, WTTC, and IATA data referred to in “Market and
Industry Data”).
Continue expanding our presence across different customer segments, booking channels and distribution
channels
We intend to invest in the expansion of our product offerings across different customer segments, booking and
distribution channels.
Mobile. We continue to invest in our mobile platforms to be competitive in this important booking channel
(implementing a common platform across our brands). We have dedicated teams to foster our presence in the mobile
travel space, which has grown significantly in the last year. In App Annie’s ranking of free travel apps (excluding
non-flight focused or non-travel apps), our apps were ranked second in Spain and Italy and third in France in terms
of frequency of downloads as of January 14, 2014. In December 2013, 12% of our flight Orders were made through
mobile devices compared with 6% of our flight Orders in December 2012. We believe that mobile will be the
channel that will ultimately allow online distributors to access the in-destination market in the future so it is an
important area of focus for any potential expansion into this market.
We believe that our ability to generate both transactional and non-transactional revenue from customer visits to
our websites gives us an advantage over pure metasearch companies, which have experienced, for example,
difficulties in monetizing the mobile channel.
Online corporate travel. Through Travellink, we operate an online corporate travel business in the Nordic
region. Utilizing Travellink’s experience and infrastructure, we intend to expand into offering online corporate
travel products in other parts of Europe under our eDreams and Opodo brands. Online corporate travel is an
attractive market for us because it is characterized by repeat business and relatively low online penetration.
According to PhoCusWright, the online corporate travel market is expected to grow in 2014 as measured by gross
bookings, and such growth is expected to be associated with a shift from offline to online. We expect the
development of our online corporate travel business to be a long-term process as customer acquisition is based on
relationship building through personalized sales contact, rather than creating and promoting websites, as in our
leisure business.
White label and XML distribution agreements. We also operate white label distributor services for
approximately 185 other companies in the travel industry, including Aer Lingus and Wizz Tours, where we operate
their respective flight and/or dynamic package booking engines. This demonstrates our preeminent technological
leadership position in flights, as customers find it more attractive and efficient to outsource their booking engines to
us. We intend to continue seeking to attract new customers to provide white label services in flight bookings.
In addition to our white label distribution partnership agreements, we have agreements in place with 11 XML
partners to which we provide XML feeds and webservice links so that such partners can display the products that we
distribute on their websites. Our XML partners include Ctrip, an online travel agent focused on China, with which
we recently signed an agreement to use our flight booking platform to display certain flights on Ctrip’s websites. In
contrast to a white label distribution partner, XML partners do enter into an agreement with the end customer and
collect the purchase price from the customer, which they pass on to us for the purpose of paying the supplier.
We will continue optimizing our online and offline channels, including search engines, metasearch, direct
traffic and CRM, as well as white label distribution arrangements and business-to-business for offline players.
Benefit from attractive M&A opportunities
As a group, we believe we have demonstrated the ability to deliver on ambitious and large M&A transactions,
such as the Combination and the Opodo Acquisition in 2011, and the ensuring integration process, which can be
particularly challenging when acquiring technology companies. These major transactions multiplied our Revenue by
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3x and our EBITDA by 3.5x (based on our results for the year ended March 31, 2012 compared with eDreams
results for the year ended December 31, 2010).
Our position as the world’s largest online distributor of flight products and one of Europe’s largest eCommerce
companies, as well as our proven ability to deliver on strategic transactions, put us in an advantageous position to
investigate, test and, if appropriate, execute any attractive strategic opportunities. Furthermore, our strong cash flow
generation and expected deleveraging in connection with the use of proceeds of the Offering will give us increased
flexibility, allowing us to act opportunistically in respect of any attractive targets.
Our History
Our history begins in 1999 with the founding of eDreams in Silicon Valley by Javier Pérez-Tenessa de Block
and the launch of the first eDreams website in 2001. Following ten years of strong growth and international
expansion, which included three financing rounds and two leveraged buyouts, two significant strategic transactions
in 2011 resulted in the creation of eDreams ODIGEO. Through a contribution to the Company of the eDreams
Group by the Permira Funds and the GoVoyages Group by the Ardian Funds in exchange for shares of the Company
and the acquisition by a subsidiary of the Company of 100% of the share capital of Opodo from Amadeus IT Group,
S.A. (“Amadeus”) effective June 30, 2011 (the “Opodo Acquisition”), the eDreams Group was combined with the
GoVoyages Group and the Opodo Group to form eDreams ODIGEO (the “Combination”).
Our growth has always been driven by technology-led innovation, as our platform, team know-how and brands
are our principal assets. From the Combination to March 2013, we were focused on creating a single company from
the combination of the GoVoyages Group, the eDreams Group and the Opodo Group, which required us to integrate
numerous teams, processes and technologies through various jurisdictions, in particular the integration of the flight
booking engines of the eDreams Group, the GoVoyages Group and the Opodo Group into our One Platform, which
draws on the best aspects of the respective IT platforms operated by the three groups. The integration required
management, organizational and legal resources and over time has led to a well-integrated and efficient company.
Prior to the Combination, the GoVoyages Group, the eDreams Group and the Opodo Group operated as
separate stand-alone online travel companies.
More than ten years after its founding in Silicon Valley in 1999, and following a period of strong growth and
international expansion which included three financing rounds and two leveraged buyouts, eDreams was acquired by
the Permira Funds in August 2010. At the time of the acquisition, eDreams was the leading online travel company in
Spain and had a significant position in Italy based on gross bookings, according to PhoCusWright reports, as well as
a presence in several other countries at the time of the Combination.
GoVoyages was created in 1997. In 2010, GoVoyages was acquired by the Ardian Funds. At the time of the
Combination, GoVoyages was the leading online travel company in France based on gross bookings according to
PhoCusWright reports.
Opodo was established in 2000 as a joint venture between nine airlines: Aer Lingus, Air France, Alitalia,
Austrian Airlines, British Airways, Finnair, Iberia, KLM and Lufthansa. Amadeus became a shareholder of Opodo
in 2004 and in 2010 Opodo became a wholly owned subsidiary of Amadeus. At the time of the Combination, the
Opodo Group was operated principally in the United Kingdom, France, Germany and the Nordics (through its
Travellink operations) and was one of the leading online travel companies based on gross bookings according to
PhoCusWright reports.
In October 2013, we acquired Liligo, a metasearch company with websites present in 11 countries, with a view
to integrating Liligo’s technology into our existing business and increasing our advertising and meta click-out
revenue.
Business Model and Revenue Sources
In our Core segment (comprising our operations in France, Spain and Italy) and Expansion segment (comprising
our operations in Germany, the United Kingdom, the Nordics and the other countries in which we operate), we offer
travel and non-travel products, directly and principally through our online booking channels (desktop websites,
mobile websites and mobile apps) or via our call centers, and indirectly through white label distribution partners and
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other distributors, both on a stand-alone and package basis, through two main lines of products: (i) flight and (ii)
non-flight. Flight comprises revenue generated from the sale of air tickets and flight insurance. Non-flight comprises
all other revenue, including revenue generated from the sale of hotel bookings, Dynamic Packages, car rentals and
vacation packages, as well as revenue from the sale of the related insurance, and other non-travel-related revenue
such as from advertising on our websites, incentives we receive from payment processors, charges on toll calls to
our call centers and revenue generated from our metasearch activity.
The following table sets forth our Bookings and Revenue Margin for our Core and Expansion segments and our
Recurring EBITDA and EBITDA for the periods indicated. Such data has been derived from our Consolidated
Interim Financial Statements, our Consolidated Annual Financial Statements and/or internal Group
accounts or information systems. See also “Other Unaudited Financial and Operating Data”.
2013
2012
2013
2012
(in thousand € or % of total, unless otherwise stated)
Bookings(1) (2) (in thousand or % of
total)
Core ............................................................
4,402
Expansion ....................................................
2,859
7,261
Total Bookings.............................................
Core ............................................................
194,547
Expansion ....................................................
117,359
311,906
Total Revenue Margin ................................
60.6%
39.4%
100.0%
4,025
2,275
6,300
63.9%
36.1%
100.0%
5,640
3,088
8,728
64.6%
35.4%
100.0%
5,376
2,354
7,730
69.6%
30.4%
100.0%
62.4%
37.6%
100.0%
176,216
91,928
268,144
65.7%
34.3%
100.0%
250,038
122,948
372,986
67.0%
33.0%
100.0%
231,400
88,303
319,703
72.4%
27.6%
100.0%
—
—
80,382
72,220
— 108,431
— 96,981
—
—
95,434
59,709
—
—
Recurring EBITDA(4) ................................ 88,820
EBITDA(4) ......................................................81,189
(1)
passengers.
(2)
booking.
(3)
(4)
measure, as profit/(loss) attributable to parent company before financial and similar income and expenses, income tax, depreciation and
Financial and Other Data—Non-GAAP Measures”.
The following table sets forth our Bookings and Revenue Margin for our flight and non-flight business for the
periods indicated. Such data has been derived from our Consolidated Interim Financial Statements, our
Consolidated Annual Financial Statements and/or internal Group accounts or information systems. See also
“Other Unaudited Financial and Operating Data”.
2013
2012
2013
2012
Bookings(1) (in thousand or % of total)
Flight............................................................... 6,512 89.7%
750 10.3%
Non-Flight(2) ....................................................
Total Bookings ................................................ 7,261 100.0%
Revenue Margin(3)
Flight...............................................................251,224 80.5%
141
5,700
599
6,300
90.5%
9.5%
100.0%
7,949
779
8,728
91.1%
8.9%
100.0%
7,077
653
7,730
91.6%
8.4%
100.0%
215,144
80.2%
305,211
81.8%
259,867
81.3%
2013
2012
2013
2012
(2)
Non-Flight .................................................... 60,683 19.5%
Total Revenue Margin......................................311,906 100.0%
53,001
268,144
19.8%
100.0%
67,775
372,986
18.2%
100.0%
59,835
319,703
18.7%
100.0%
(1)
passengers.
(2)
Non-flight revenue includes revenue from hotels, Dynamic Packages (which are dynamically priced packages consisting of a flight product
and a hotel booking that travelers customize based on their individual specifications by combining select products from different travel
suppliers through us) and from certain other ancillary sources, such as advertising on our websites, commissions we receive from sourcing
partners under white label agreements, incentives we receive from payment processors, charges on toll calls and revenue from metasearch
activity.
(3)
The following diagram illustrates our diversified revenue streams:
Supplier revenue and advertising
and metasearch
- revenue
Customer revenue
M
G
Airlines
GDS
C
A
C
A
O
A
eDreams
ODIGEO
M
Distribution
End
Customers
channels
Other travel suppliers
Other non-travel
A
Advertising and metasearch revenue
G
GDS incentives
C
Commissions and overcommissions
M
Customer revenue (service
- fees and insurance)
O
Other revenue
Our flight and non-flight businesses generate revenue from both our customers and suppliers. Our flight product
suppliers include our GDS partners and airlines, and our non-flight product suppliers include our white label
sourcing partners, as well as various content aggregators and platforms, such as hotel bed-banks and tour operators.
Our customer revenue consists of service fees (which is the total difference between the price at which we
source a product and sell that product to a customer, which difference includes, among other components, any markup to the price at which we source a product and fees that we charge customers in connection with a booking) and
insurance revenue. Revenue generated by our suppliers or by advertising and meta click-out includes (i) incentive
fees paid by our GDS partners based on the volume of Bookings completed by us through GDS systems,
(ii) commissions on a per gross booking basis and overcommissions paid directly by certain airlines and other travel
suppliers based on the total volumes of gross bookings we sell, (iii) fees generated by advertising a supplier’s or an
external party’s products or services on our websites as well as revenue generated from our metasearch activity
following the acquisition of Liligo in October 2013, and (iv) other non-travel-related revenue such as incentives
from payment processors or revenues from toll calls to our call centers. For a discussion of trends relating to our
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supplier and customer revenue, see “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Key Factors Affecting Our Results of Operations—Changes in revenue sources and product mix”.
Our Products
We offer a wide range of flight, as well as non-flight products, in each of our Core and Expansion segments.
Flight
We believe we are the largest online distributor of flights worldwide based on revenues. We facilitate bookings
by our customers of network carrier and low-cost carrier flight tickets as well as, to a lesser extent, charter flight
tickets that we source via GDSs or directly through our Direct Connect technology from an airline’s proprietary
booking platform or public access websites. As of December 31, 2013, we provided customers with the option to
book tickets for flights on more than 430 airlines worldwide.
Through our websites and our mobile apps, customers can search for flights based on their desired parameters,
review the pricing and availability of flights, evaluate and compare options and book and purchase flights. Desired
parameters that customers can define include city of departure and destination, number of travelers, dates of travel,
preferred time of travel, cabin class, preferred airlines and maximum number of stops. We also provide customers
with the option to purchase travel insurance from certain insurance companies with whom we have arrangements in
place. We generate revenues from the distribution of flight products through service fees charged on such products
to the customer or commissions and incentives received from suppliers.
For the nine months ended December 31, 2013, our flight activity generated 6.5 million Bookings (for the nine
months ended December 31, 2012: 5.7 million) and €251.2 million of Revenue Margin (for the nine months ended
December 31, 2012: €215.1 million), representing 81% of our Revenue Margin for that period (for the nine months
ended December 31, 2012: 80%).
For the year ended March 31, 2013, our flight product sales generated 7.9 million Bookings (for the year ended
March 31, 2012: 7.1 million) and €305.2 million of Revenue Margin (for the year ended March 31, 2012: €259.9
million), representing 82% of our Revenue Margin for that period (for the year ended March 31, 2012: 81%).
Network and low-cost carriers via GDSs and Direct Connect technology
The main activity of our flight business is to facilitate bookings by our customers of network carrier and lowcost carrier flight tickets as well as, to a lesser extent, charter flight tickets that we source via GDSs or directly
through our Direct Connect technology (flights that we distribute by connecting customers directly to either an
airline’s proprietary inventory platform that we can access under a formal agreement or facilitating access of
customers to book via an airline’s public access website, in each case, without the intermediation of a GDS, using
our “Direct Connect” technology) from an airline’s proprietary booking platform or public access websites. Either
via GDSs or our Direct Connect technology, we provide our customers with access to a wide selection of airline
tickets for substantially all major airline companies, including Air France-KLM, Iberia, British Airways, Lufthansa,
Ryanair, EasyJet, United Airlines, American Airlines and Emirates. Our flight products are sourced from airlines at
either private fares, which are discounted fares negotiated with an airline, or the fares available to the public.
We have experienced a significant rise in the sales of Direct Connect flights in recent years. We believe we are
one of the leading distributors of Direct Connect flights in terms of bookings.
Charter flights
In addition to facilitating bookings on network and low-cost carrier flights, we also facilitate bookings by our
customers of charter flight products through different channels. Our charter flight business consists of the sale of
flight products on a wholesale basis to tour operators, and on a retail basis to end consumers through our own
websites or through travel agencies or a white label distribution partner. Our charter flight business is significantly
smaller than our network and low-cost carrier flight business.
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Non-flight
Our non-flight products consist principally of hotel rooms, Dynamic Packages, car rentals and vacation
packages and, to a lesser extent, train tickets. For all these products, customer also have the option to purchase
travel insurance related to their booking. We also generate revenue from non-travel-related activities and we
generate revenue from advertising and from our metasearch activity, as well as other ancillary sources of revenue.
For the nine months ended December 31, 2013, our non-flight product sales generated €0.7 million Bookings
(for the nine months ended December 31, 2012: 0.6 million) and €60.7 million of Revenue Margin (for the nine
months ended December 31, 2012: €53.0 million), representing 19% of our Revenue Margin for that period (for the
nine months ended December 31, 2012: 20%).
For the year ended March 31, 2013, our non-flight product sales generated 0.8 million Bookings (for the year
ended March 31, 2012: 0.7 million) and €67.8 million of Revenue Margin (for the year ended March 31, 2012:
€59.8 million), representing 18% of our Revenue Margin for that period (for the year ended March 31, 2012: 19%).
Hotels
We have a series of non-exclusive agreements with leading hotel sourcing companies, one of which is our
principal hotel sourcing partner. This partnership allows us to offer our customers hotel inventory offered by this
hotel sourcing partner directly through our own websites and with our branding. Inventory for hotel rooms sold on a
stand-alone basis is sourced principally from our principal white label sourcing partner and offered through our
eDreams, Opodo, GoVoyages and Travellink brands. In return, we receive commissions based on gross booking
value from our principal white label sourcing partner.
Customers can search, compare and make reservations at a wide selection of hotels worldwide. Customers may
search for hotels based on their destination and/or preferred dates for check-in and check-out, and may easily filter
our search results by selecting star ratings, specific hotel chains and locations. Customers can also indicate amenity
preferences such as business services, Internet access, fitness centers, swimming pools and travel assistance.
In addition to hotel rooms sourced from our principal white label sourcing partner, we obtain hotel rooms
through hotel aggregators (or “bed-banks”), through international hotel chains, such as Accor, and by contracting
directly with hotels.
Dynamic Packages
We offer travelers the opportunity to select a particular real-time flight and hotel combination and book these in
a single transaction, although payment can happen at different times. This may result in lower prices and greater
convenience than if each product was booked separately at the time of booking because our hotel rooms are sourced
from exclusive inventory that is made available to us at discounted prices and special fares may apply when a hotel
room is combined with a flight. In addition, we may have access to special fares on a flight only when such flight is
sold in combination with a hotel or another travel product.
In addition, we offer Dynamic Packages through our white label distribution partnership agreements, including
with AerLingus and WizzAir, through their respective websites.
Car Rentals
We offer our customers the ability to make car rental reservations through our websites. We have a series of
non-exclusive white label agreements with a leading car rentals sourcing company, which is our principal car rental
sourcing partner. This partnership allows us to offer our customers car rental inventory offered by this car rental
sourcing partner directly through our own websites and with our specific design and branding. We are currently
offering this car rental inventory through our eDreams, Opodo, GoVoyages and Travellink brands. In return, we
earn commissions based on gross booking value from our principal white label sourcing partner.
In addition to car rental inventory sourced from our principal white label sourcing partner, we obtain our car
rental supply from several international car rental companies, as well as with aggregators that sell inventory for
various car rental companies.
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Vacation Packages
We offer vacation packages designed by third-party tour operators under contractual arrangements with various
travel suppliers, our GDS providers or white label sourcing partners where we principally act as a
reseller/distributor. In addition, to a lesser extent, we also design and offer our own pre-packaged vacations.
Advertising and Metasearch revenue
We generate revenue from third parties in connection with the advertising of their products and services on our
websites as well as revenue deriving from our metasearch activity. Such revenue may be earned based on sold
impressions (which are the number of online advertisements generated on our websites), clicks to external sites,
searches on our sites, bookings on external sites and fixed monthly or yearly rates for placement. In October 2013,
we completed the acquisition of Liligo, a metasearch company with offices in France and Hungary, with a view to
integrating Liligo’s technology into our existing business and increasing our advertising and meta click-out revenue.
The Liligo Acquisition was identified internally and analyzed by our venture farm (see “—Our Strengths”).
We intend to continue to display the other eDreams ODIGEO brands in the results of a Liligo search without
any bias or preference over third-party brands, which are currently our customers under the metasearch model.
Other non-flight products and ancillary non-flight revenue sources
In certain of our geographical markets, our customers may also book train, cruise and bus tickets, as well as
self-catering accommodation.
We also generate revenue from certain ancillary sources, such as incentives we receive from payment
processors and toll calls to our call centers.
Insurance for flight and non-flight products
Ancillary to both our flight and non-flight products, we provide our customers with the option to purchase travel
insurance from certain insurance companies with whom we have arrangements. We source most of the travel
insurance we offer under an agreement with a global insurance provider that we signed in August 2012 to supply
travel insurance policies and a broad range of related insurance products. We facilitate access to travel insurance
through our websites and other booking channels.
Our Geographical Markets
We are currently present in 42 countries and served more than 14 million passengers in the year ended March
31, 2013. Our principal operations in Europe, as measured by Revenue Margin contribution, are located in France,
Germany, Spain, Italy, the United Kingdom and the Nordics. Outside of Europe, we are present in a number of large
countries, including, in order of Revenue Margin contribution, Australia, the United States, Argentina, Brazil,
Turkey and Mexico.
The following chart shows an overview of our countries of operations and provides a split between the countries
where we believe we have a leading position based on gross bookings, according to PhoCusWright, and the
countries where we are seeking to expand our presence.
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Countries of operations1
1
2012 market share based on gross bookings from PhoCusWright European Online Travel Overview—Ninth Edition (December 2013)
excluding non-air focused players.
We believe we have strong market positions in Europe, as shown by the following chart which sets out our
estimated OTA rankings based on PhoCusWright market share analysis based on gross bookings.
Leading European market share1
Nordics
#1 in flights
in Europe
#2
#4
UK
Germany
#2
France
#1
Spain
Italy
#2
#2
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We currently organize the various countries in which we operate into two principal financial reporting
segments: Core and Expansion. Our Core segment comprises our operations in France, Spain and Italy. Our
Expansion segment comprises our operations in Germany, the United Kingdom, the Nordics and the other countries
in which we operate, most of which are outside of Europe.
For the nine months ended December 31, 2013, our Core and Expansion segments generated 61% and 39%,
respectively, of our Bookings, and 62% and 38%, respectively of our Revenue Margin.
For the year ended March 31, 2013, our Core and Expansion segments generated 65% and 35%, respectively, of
our Bookings, and 67.0% and 33.0% of our Revenue Margin.
Our operational headquarters are located in Barcelona, Paris and London and the majority of our workforce is
based in France, Spain, Germany, Italy, the United Kingdom and the Nordics.
Booking Channels
Our customers can book our products through various channels. The vast majority of our bookings are
processed online and can be completed either on a desktop or laptop computer through our websites, or on a mobile
device such as a smartphone or tablet through our websites or our mobile apps. In addition, a limited proportion of
our bookings are processed by our call center operations.
Desktop and laptop computer bookings
We operate 84 branded domains, including eDreams.es, eDreams.it and govoyages.fr). We acquired Liligo in
October 2013, which operates 22 branded domains. Our websites have been designed to provide a user-friendly
experience to our customers and are reviewed and upgraded on a regular basis. Although we are experiencing a
significant shift of business to our mobile booking channel, access via our websites through desktop and laptop
computers remains our most important booking channel.
Using our websites, customers can easily and quickly review the pricing and availability of substantially all our
services and products, evaluate and compare options and book and purchase such services and products online
within minutes and in a variety of languages, including English, French, Spanish, Italian, German, Portuguese,
Finnish and Swedish.
Typically, a transaction on our websites involves the following steps:
Search. A customer conducts a search for a particular product, or combination of products, by defining desired
parameters. For example, for flights, in addition to the city of departure and destination, number of travelers and
dates of travel, our customers can also input additional parameters such as preferred time of travel, cabin class,
preferred airlines and direct flights. Our websites’ search capabilities employ scalable search and routing logic that
we believe return comprehensive results without sacrificing search response times. Our web-based booking engines,
which have been designed to link directly to our suppliers’ systems or through GDSs, allow us to deliver real-time
information.
Select. At this stage, our websites display to the customer various possible selections that are available in a
user-friendly format listed in pricing order and that also prompt the customer with available special offers or provide
additional information about the product. Our websites allow customers to sort or refine search results by further
defining certain parameters such as price range, time range, preferred airlines, preferred hotel chains, star rating and
hotel amenities.
Review. After a customer has selected a particular option, our websites provide the customer with an
opportunity to review the details of the product being purchased and the terms and conditions of such purchase. At
this stage, our websites connect to the GDS or the websites of our travel suppliers to confirm the availability and
pricing of the product selected. Customers booking flight products or hotels will also be shown options to purchase
travel insurance and other related ancillary services.
Payment. We offer our customers a variety of payment methods, including debit cards, credit cards or PayPal,
in 30 currencies. Our payment gateways for sales on our websites are secured.
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Mobile bookings
As a result of the widespread adoption of mobile devices, including smartphones and tablets, we have
experienced significant growth in the mobile booking channel, with customers making bookings on such devices
through our websites (whether our general websites or mobile-specific websites) and our mobile apps. Over the past
few years, mobile devices have become an increasingly important channel for customers to search for travel
information and make travel bookings, and we expect this trend to continue. We believe customers increasingly plan
and book their journeys when they happen to have free time slots, irrespective of their immediate whereabouts, and
mobile devices afford customers that convenience to make travel arrangement while on the go. We and our
competitors are actively engaged in the design, rollout and improvement of applications for mobile devices. To be
competitive in the mobile business requires us to develop specific software and applications under a variety of new
platforms and operating systems, which are generally expected by our customers to offer the same features and to be
as easily and intuitively operated as desktop interfaces. This poses significant challenges and has required and will
continue to require us to make significant financial and operational investments to achieve these goals.
In 2010, we launched our first applications for iPhone devices. Since then, we have continuously developed
new applications (for both the Android and iPhone/iPad ) and launched updated and optimized versions of our
existing applications. We have experienced significant increases in the orders made via mobile devices (including
via our applications and mobile websites) and in App Annie’s ranking of free travel apps (excluding non-flight
focused or non-travel apps), our apps were ranked second in Spain and Italy and third in France in terms of
frequency of downloads as of January 14, 2014. We estimate that approximately 12% of our flight Orders were
made through mobile devices in December 2013 compared with approximately 6% in December 2012. We do not
believe the proportion of non-delivered transactions is materially different between mobile and non-mobile
customers. We believe our service fees per flight Booking made on a mobile device is similar to that for bookings
made on a desktop or laptop computer across our brands and geographies based on service fees per flight Booking
information for eDreams (for which we have data for the relevant historical period). We believe that our broadly
equivalent service fees across booking channels gives us a strategic advantage in terms of revenue generation over
certain metasearch companies whose revenues from mobile users are lower than revenues from desktop or laptop
users. We do not believe that the pure metasearch model is well suited to the mobile booking channel because this
model requires a click-out to a different site, making the mobile app experience cumbersome compared to a full
brand experience such as those provided by us.
Call centers
Although a vast majority of our bookings are completed automatically without any human intervention, our inhouse or outsourced call centers handle our sales and post-sales customer service support. Ten call centers located in
ten different countries are currently serving our customers in 42 countries. Our main in-house call centers are
located in Barcelona, Paris, Leicester, Berlin, Stockholm and Helsinki. We also have external call centers in
Casablanca (Morocco) and New Delhi (India). Most of our call centers operate seven days a week and cover various
time zones. Customers can call these centers to consult with our sales representatives, receive comprehensive, realtime product information, and make travel bookings. Sales representatives in our call centers are able to assist our
customers in 18 languages to cover our principal geographical needs, including English, French, Spanish, Italian,
German, Portuguese and Swedish.
All of our call centers are equipped with systems which allow us to monitor the performance of our sales
representatives and outsourced agents. We have software that allows us to log on to customer calls enabling us to
perform random checks on our call centers on a real-time basis. Our system also allows us to monitor the number of
waiting calls and limit customer aborted calls on our hotlines due to unacceptably long waiting times.
Marketing and Distribution Channels
We are focused on marketing and brand awareness because they are critical in maximizing customer acquisition
and retention among online travel companies, like us. Together with product sourcing, customization and pricing,
marketing and brand awareness are crucial in driving customers to us from our various distribution partners.
We benefit from a unique portfolio of brands with strong awareness. We have historically committed significant
resources to supporting brand awareness. As a result, we believe that our brands rank consistently among the most
searched and highest rated online flight travel brands in Europe and worldwide (based on search engine recognition
148
metrics). We believe that continued investment in our brands is critical to retaining and expanding our traveler,
supplier and advertiser bases and that our long-term success and profitability depend on our continued ability to
maintain and increase the overall number of traveler transactions in a cost-effective manner.
Our marketing programs are intended to build and maintain the value and awareness of our various brands,
drive traffic and conversion, and optimize ongoing traveler acquisition costs. Following the Combination, we
decided to maintain our main brands eDreams, Opodo, GoVoyages, Travellink and Go Volo as independent brands
for our customers. Following the acquisition of Liligo in October 2013, we added Liligo as a brand to our business
and will maintain it as an independent brand as well.
Our marketing programs and brands seek to drive customers to one of the following distribution channels:
Direct Free Traffic. Our powerful brand recognition attracts a high volume of “direct free traffic” to our
website, which we generate when customers type the company name or url directly into internet browsers. Direct
free traffic delivers stronger margins for us as the customer acquisition costs are lower (for example, as we do not
need to pay fees to any search engine or metasearch provider in respect of such visitors).
Search engines. We use to a significant and increasing extent Internet search engines, principally through the
purchase of travel-related keywords, in particular on Google, and inclusion in metasearch results, to generate traffic
to our websites. The purchase of travel-related keywords consists of anticipating what words and terms consumers
will use to search for travel on Internet search engines and then bidding on those words and terms in the applicable
search engine’s auction system. We bid against other advertisers for preferred placement on the applicable Internet
search engine’s results page. Search engine marketing is one of the major cost items for online travel companies,
including us, because Google and other search engines typically charge on a cost-per-search basis. However,
because the cost is variable, we can monitor the return on investment on a daily basis. Part of our marketing
expenses also relates to search engine optimization, which refers to the process of improving the visibility of a
website in search engines through modifications of design or content on the actual website pages.
Given the growing prevalence of search engines in consumers’ e-commerce behavior, we believe that we are
well positioned to continue to build our customer base and brand awareness through the search engine distribution
channel. We have made and will continue to make investments in both search engine marketing as well as search
engine optimization initiatives to further improve our brand awareness.
Metasearch. Metasearch companies, such as Kayak/Swoodoo, Skyscanner, Jetcost, Trivago, Momondo and
Qunar are search engines and comparison websites that aggregate travel search results across supplier and online
travel agency websites to display offerings to customers from external sources and redirect clients to their chosen
option. No bookings are made on the metasearch websites, as metasearch companies are focused exclusively on the
search stage and not the booking process. Online travel companies, including us, and supplier direct websites pay
metasearch commissions on a cost-per-search or cost-per-action basis. Historically, metasearch companies generally
have been smaller companies, with less technological development in the last decade than online travel companies
like us. For example, where we have built and delivered technology to access inventory from any source (GDSs,
airlines and other online travel companies) to compare offers from different suppliers, create products that are not
otherwise available in the market, add supplements, collect money and book tickets, metasearch companies typically
have been technologically limited to the first step of the process.
We work with approximately 60 third-party metasearch companies to distribute our products to customers and
we pay such companies commissions based on a cost-per-search or cost-per-action basis. We are not dependent on
any third-party metasearch company for the distribution of our products as the revenue generated by our products
through any one metasearch company is small.
In addition to the distribution of our products by third-party metasearch companies, we acquired Liligo, a
metasearch company specializing in travel, in October 2013 to enter directly into the travel metasearch market,
complement our online travel company capabilities and to broaden our revenue base. The Liligo Acquisition, which
we bought from Voyages-SNCF, an entity affiliated with the national French railways, was a result of our venture
farm activity.
Direct Marketing and Affiliates. We use direct and personalized traveler communications on our websites, as
well as direct e-mail communication with our travelers. Our marketing programs and initiatives include promotional
149
offers such as coupons, as well as seasonal or periodic offers from our travel suppliers based on our supplier
relationships. We are currently focused on improving our ability to target customers with specific offers that
correspond to their particular interests based on order history and other profile information.
We also make use of affiliate marketing and receive bookings from customers who have clicked through to our
respective websites via links posted on affiliate partners’ websites.
White Label Distribution Partners and XML Partners. We generate bookings and revenues from our white label
distribution partnership agreements. Under these agreements, online intermediaries offer third-party products on
their websites under fixed payments or revenue sharing arrangements. We have entered into approximately 185
white label distribution agreements, where a partner distributes our product on its website and the transaction is
entered into between ourselves and the customer and a commission is paid by us to the partner for distributing our
product. Our white label distribution partners include AerLingus and WizzAir. When a customer connects to their
websites for a flight product, the customer has access to our inventory.
In addition to our white label distribution partnership agreements, we have agreements in place with 11 XML
partners to which we provide XML feeds and webservice links so that such partners can display the products that we
distribute on their websites. Our XML partners include Ctrip, an online travel agent focused on China, with which
we recently signed an agreement to use our flight booking platform to display certain flights on Ctrip’s websites. In
contrast to a white label distribution partner, XML partners do enter into an agreement with the end customer and
collect the purchase price from the customer, which they pass on to us for the purpose of paying the supplier.
Other Distributors. We also have long-standing relationships with other companies, including offline travel
agents, that distribute our products to their customers. These distributors have access to our inventory and sell our
products to their customers, and we pay them a commission.
Supplier Relationships
We seek to build and maintain diversified and long-term strategic relationships with travel suppliers, GDS
partners and other travel product intermediaries. We have entered into long-term supply contracts with each major
GDS (Amadeus, Travelport and Sabre) (note that our agreement with Sabre expired on December 31, 2013 and we
are in the process of negotiating an extension of the agreement in accordance with its terms). In addition, we have
entered into a large number of agreements with travel suppliers and supplier intermediaries that are short-term
contracts and provide our counterparties with a right to terminate on short notice or without notice. Despite the
increasing proportion of flight bookings sourced and fulfilled outside of these GDSs (such as Direct Connects), we
access the majority of our flight offering through these contractual relationships. In addition to these contracts, we
enter into short-term (less than one year) incentive contracts for our flight products with airlines based on different
criteria such as volume targets, growth versus prior year and segment share achievements. We also enter into other
short-term contracts with airlines, where we benefit, from time to time, from special negotiated rates. We currently
have specially negotiated contracts with 108 airlines and our supply of flight products is not dependent on any
particular carrier or route. For our non-flight products, we have contractual relationships with content aggregators
and platforms, such as hotel bed banks and tour products distribution platforms and have entered into non-exclusive
white label agreements with leading non-flight sourcing partners on which we are reliant for hotel room and car
rental bookings.
Our relationship teams are focused on relationship management, supplier sponsored promotions and contract
negotiation covering our retail, corporate and packaging businesses. An important component of the success of our
business depends on our ability to maintain, expand and further diversify our relationships with such suppliers and
partners. See also “Risk Factors—Risks Related to Our Business—Our business depends on our relationships with
our suppliers and supplier intermediaries, and adverse changes in these relationships or our inability to enter into
new relationships could negatively affect our access to travel offerings and have a material adverse effect on our
business”.
GDS and other products aggregators
Global Distribution Systems, or GDSs, also referred to as computer reservation services, provide a centralized,
comprehensive repository of travel products, which includes availability and pricing of seats on various airlines, as
well as information relating to hotel accommodations and car rental companies. GDS providers act as intermediaries
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between travel suppliers and travel agencies, allowing companies like us to book flights, rooms and other available
travel products. Travel agencies can enter into exclusive or non-exclusive contracts with GDS operators, who in turn
pay incentives to the online travel companies on a per booking basis using a variety of payment methods. GDS
contracts are typically long-term and are structured using volume bands with incentives/penalties paid if targets are
exceeded/not met. We use Amadeus as our primary GDS provider, although we also sell travel products obtained via
other GDS providers.
We entered into a 10-year non-exclusive GDS contract with Amadeus, which became effective on June 30,
2011, and secures a wide range of flight and non-flight product inventory in Europe. This contract has provided us
with reliable access to travel products as Amadeus has signed full content agreements with the majority of the key
airlines in terms of passenger numbers, meaning that most supply available on an airline’s own website is available
to us through Amadeus’ GDS database.
Direct Connect
We have developed internally sophisticated supply technology that allows us to offer a wider range of network
and low-cost carrier flight product inventory and where pursuant to certain Direct Connect formal agreements with
an airline, at more attractive prices than what is available through GDSs, allowing us to charge higher service fees.
Our supply technology includes “Direct Connect” technology, which allows us to distribute flights by connecting
customers directly to either an airline’s proprietary inventory platform that we can access under a formal agreement
or facilitating access of customers to book via an airline’s public access website, in each case, without the
intermediation of a GDS. Such technology incorporates computerized analytic processes and reduces costs
associated with such intermediation. This is accomplished by sharing XML and webservice links of the supplier
application programming interfaces (“APIs”), or via accessing directly a supplier’s public website.
Certain travel suppliers, including certain low-cost airlines, are striving for exclusivity of their online supply
and have taken steps to prevent online travel companies, including us, from accessing their public website and
facilitating bookings of their products on our website. See “Risk Factors—Risks Related to Our Business—We do
not have relationship agreements with certain suppliers, including ones whose products we sell, and certain of such
suppliers have sought to block our sale of their products using legal and technical means” and “Business—
Litigation”.
White label sourcing partners
For sales of hotel and cars products on a stand-alone basis, we distribute the products of our white label
sourcing partners. White label sourcing partnerships allow us to target and service end customers directly through
our websites, thereby offering third-party products by distributing the partner’s product under our websites. In
return, the white label sourcing partner pays us a commission for distributing its product.
The majority of both our hotel offerings on a stand-alone basis and of our car rental offerings are sourced from
our respective principal white label sourcing partners. In addition, for some of our brands and in some of the
countries in which we are present, we have white label sourcing agreements for specific products, such as vacation
packages and cruises.
Information Technology
General
We have proprietary and sophisticated technologies which we believe have high levels of reliability, security
and scalability, and which have been designed to handle high transaction volumes across all our respective websites.
We also believe that these technologies will allow us to sustain high growth and to expand rapidly to address new
business opportunities.
Increasingly centralized technology platform
We operate an increasingly centralized technology platform with highly efficient processes, focused around the
integration of search engine interaction, inventory sourcing, product customization, dynamic pricing, inventory
management, booking, accounting/reporting, collection and payment. These advanced technology platforms allow
us to efficiently offer a wide variety of proprietary products, including through supplier connectivity (such as multi151
GDS access) and dedicated hosting solutions for other travel suppliers and white label distribution partners. In
addition, these platforms allow us to complete a high percentage of transactions with a low level of human
intervention and a high level of automation, thereby reducing the average cost per transaction. For certain travel
product suppliers our booking system accesses their public websites directly through our Direct Connect technology.
Before the Combination, the technology systems of our various brands were fragmented. For example, eDreams
had advanced Direct Connect technology, GoVoyages had multi-GDS capabilities and Opodo had advanced net
fares technology, but none of the other brands within the eDreams ODIGEO Group had such capabilities. Since the
Combination, we have been actively focused on integrating our businesses, including our ongoing initiative to
develop and deploy one IT platform for all our brands and geographies (as opposed to multiple systems deployed
prior to the Combination). We spent significant management time and incurred costs in connection with our
integration relating to, for example, implementing group financial reporting and management systems, strengthening
our management team and developing common technology. In the summer of 2013, the investment of such time and
costs led to the successful migration of the previous individual platforms of GoVoyages, Opodo and eDreams the
One Platform, which allows each of our brands to offer a full range of inventory, including Direct Connect, multiGDS access and net fares. We continue to focus on the optimization and enhancement of our One Platform and other
technology.
The completion of the rollout of the flight booking engine to eDreams, GoVoyages and Opodo has had two
principal benefits. It provided a one-time lift and improvement in product quality, as each of our websites now has
access to the entire eDreams ODIGEO inventory, offering customers a superior product choice. By making our
platform more efficient so that an engineer no longer has to implement a change across four to seven platforms, the
One Platform has also freed up our IT resources to focus on the development of new technological features and
innovations.
The implementation of a common organizational and reporting structure is at an advanced stage but is ongoing.
The integration process in respect of our middle- and back-office functions, such as accounting, IT and operational
systems, management information and financial control systems, marketing and customer service, is also still
ongoing, and although we have made significant progress in these areas, we currently expect the development of the
integration process to be finalized by the end of 2014 with the rollout of the integration to follow in 2015. In
addition, the integration of the Dynamic Package booking engine, the vacation package product and the front-end
interfaces are currently in progress. For a discussion of the expenses and resources allocated in connection with the
integration process, see “Management’s Discussion and Analysis of Our Financial Condition and Results of
Operations—Key Factors Affecting Our Results of Operations—The eDreams ODIGEO Group and integration of
our constituent businesses”.
Security
We are committed to protecting the security of our customers’ information. Our information security team is
responsible for implementing and maintaining controls to prevent unauthorized users to access our respective
systems or to protect us from denial of services and other cyber attacks. These controls include the implementation
of information security policies and procedures, security monitoring software, encryption policies, access policies,
password policies, physical access limitations and detection and monitoring of fraud from internal staff. We also
operate fraud detection systems which use transaction patterns and other data sources seeking to prevent fraudulent
transactions in real time. For a discussion of how European Union data protection laws affect us, see “Regulation—
European Union Regulations—Customer Privacy and Data Protection Regulations”.
See “—Risk Factors—Risks Related to Our Business—Our processing, storage, use and disclosure of personal
data could give rise to liabilities as a result of governmental and/or industry regulation, conflicting law requirements
and differing views of personal privacy rights, and we are exposed to risks associated with online commerce
security”.
Intellectual Property
Our intellectual property rights include trademarks and domain names associated with the names eDreams,
Opodo, GoVoyages, Travellink, Go Volo and Liligo, as well as other rights arising from agreements relating to our
website content and technology. We regard our intellectual property as a factor contributing to our success. We rely
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on trademark law, copyright law, trade secret protection, non-competition and confidentiality agreements with our
employees and some of our partners to protect our intellectual property rights.
We require our employees to enter into agreements to keep confidential all information relating to our
customers, methods, business and trade secrets during and after their employment with us. Our employees are
required to acknowledge and recognize that all inventions, trade secrets, works of authorship, developments and
other processes made by them during their employment are our property.
We have registered our different material domain names and have full legal rights over these domain names for
the period for which such domain names are registered.
Employees
As of December 31, 2013, we had 1,556 employees, compared to 1,307 employees as of December 31, 2012
and compared to 1,324 as of December 31, 2011. We also outsource some of our customer service and sales
functions as well as certain IT development functions.
A considerable number of our employees have been with us since 2000 and have a detailed and thorough
understanding of our businesses, with additional capacity recruited as the company achieved its various growth
milestones. With 80% of our employees aged 40 years or less, our team is young and dynamic. Also, the interests of
many of our employees are well-aligned with the interests of our Shareholders, as 13% of our employees are
Shareholders and substantially all of our employees have performance-based bonuses and targets. Many of our
employees are engineers or mathematicians.
The following table sets forth the number of our employees by country as of December 31, 2013:
As of December 31, 2013
Spain...............................................................................................................................
France .............................................................................................................................
U.K. ................................................................................................................................
Germany .........................................................................................................................
Italy ................................................................................................................................
Nordics ...........................................................................................................................
Other...............................................................................................................................
660
329
130
148
98
154
37
In addition, in certain cases, we contract with third parties for the provision of temporary employees from time
to time for various functions.
Facilities
Our facilities consist of our 15 corporate offices, which are located in:
•
Paris, France;
•
Barcelona, Spain;
•
Madrid, Spain;
•
London, U.K.;
•
Leicester, U.K.;
•
Milan, Italy;
•
Hamburg, Germany;
•
Berlin, Germany;
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•
Stockholm, Sweden;
•
Oslo, Norway;
•
Vantaa, Finland;
•
Copenhagen, Denmark;
•
Miami, U.S.A.;
•
Budapest, Hungary; and
•
Sydney, Australia.
All of our facilities are leased.
Litigation
From time to time, we may be subject to various legal proceedings and claims that are incidental to our ordinary
course of business. We are currently party to various legal proceedings, including consumer complaints, contract
disputes, disputes regarding alleged infringement of antitrust, consumer protection or other regulations or of thirdparty intellectual property rights, and other claims. This section identifies all litigation matters which we believe are
potentially material to our business, financial position or results of operations or which, in the event of an adverse
outcome, could materially harm our reputation. For the potential consequences of an adverse outcome in relation to
these proceedings and claims, see “Risk Factors—Risks Related to Our Business—We are, and may be in the future,
involved in various legal proceedings and may experience unfavorable outcomes, which could adversely affect our
business and financial condition”.
Consumer protection regulatory proceedings
Italian investigations
In November 2009, the Italian Data Protection Authority (Garante per la protezione dei dati personali, the
“GPDP”) fined eDreams S.r.l. following claims from two consumers and a subsequent investigation related to
compliance with the Italian Privacy Code. In April 2012, the GPDP imposed a sanction of €160,000 on eDreams
S.r.l., which eDreams S.r.l. challenged before the Court of Milan. In May 2013, the judge entered the judgment in
favor of eDreams S.r.l., whereby the fine was reduced to €140,000. In July 2013, eDreams S.r.l. filed an appeal to
the judgment requesting a further reduction of the fine.
In May 2010, the Italian Antitrust Office fined eDreams S.r.l. and Opodo Italia S.r.l. following an investigation
related to the display of information provided to consumers in the Italian travel market. The investigation focused on
several online travel companies and covered issues such as display in the booking and payment processes,
misleading promotions, pre check-out insurance selection and complaint management. In March 2011, the Italian
Authority for Competition and Market (the “AGCM”) imposed sanctions of €135,000 and €25,000 on eDreams S.r.l.
and Opodo Italia S.r.l., respectively. eDreams S.r.l. challenged the sanction; the proceedings are currently pending
before the regional administrative court (tribunale amministrativo regionale). In 2012, the AGCM ruled that each of
eDreams S.r.l. and Opodo Italia S.r.l. had failed to implement certain remedial measures and imposed additional
fines of €30,000 and €20,000, respectively.
In August 2013, the AGCM started new investigations against eDreams S.r.l. and Opodo Italia S.r.l. for noncompliance with regulations related to the display of information provided to consumers in the Italian market. These
proceedings are part of an ongoing dialogue between a number of online travel companies and the AGCM on the
correct interpretation of Italian regulations on the display of information. The proceedings against eDreams S.r.l.
were closed in December 2013 with AGCM’s imposing a €50,000 sanction. The proceedings against Opodo Italia
S.r.l. were closed in January 2014 with AGCM’s imposing a €150,000 sanction. In each of the cases, the AGCM
confirmed that the respective websites are now compliant with regulatory requirements.
Vacaciones eDreams, S.L. was involved in further proceedings initiated by the AGCM in May 2013 relating to
allegations of unfair commercial practices mainly against Webloyalty International S.à r.l and Webloyalty
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International S.r.l., two companies whose products and services are featured on our Italian websites. The AGCM
found that the Webloyalty companies unfairly encouraged consumers to subscribe to their service “Acquisti e
Risparmi”, which is also featured on our websites, without previously providing consumers with information on its
terms and conditions. As a consequence of the AGCM’s proceedings, we changed the layout and information
relating to “Acquisti e Risparmi” on our own websites, and following this change, we believe we are now compliant
with the AGCM’s requirements. In February 2014, the AGCM imposed a €220,000 administrative sanction on
Vacaciones eDreams, S.L. for improperly featuring “Acquisti e Risparmi” in the past. This sanction is subject to an
appeal to the regional administrative court (tribunale amministrativo regionale), which Vacaciones eDreams, S.L.
may elect to file by mid-April 2014.
French investigations
In April 2013, the French Departmental Directorate for Population Protection (Direction départementale de la
protection des populations, the “DDPP”) initiated an investigation against eDreams France for non-compliance with
consumer protection rules on display of prices and credit card fees. The scope of these investigations has been
extended to include Opodo and GoVoyages in July 2013. eDreams France, Opodo and GoVoyages are currently
negotiating with the DDPP and aims to reach a settlement. The outcome of these proceedings, which are ongoing,
could result in further changes to our website design and practices. See “—Commercial and intellectual property
disputes—Air France litigation”.
In July 2013, the DDPP extended its investigations related to surcharging practices to Opodo and GoVoyages.
Opodo and GoVoyages are currently negotiating with the DDPP. The outcome of these proceedings, which are
ongoing, could result in further changes to our website design and practices. We recently received a “pre-injoction”
notice to cease certain website practices in respect of GoVoyages’ website in France and are considering our
options.
In December 2012, the French General Directorate for Competition Policy, Consumer Affairs and Fraud
Control (Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes, the
“DGCCRF”) initiated proceedings against Opodo France relating to the display and selection of for insurance
products. In December 2012, the DGCCRF initiated proceedings against GoVoyages relating to alleged noncompliance (i.e., a change in price at the time of payment) with consumer protection rules, notably in connection
with the unavailability of holiday packages, display of prices for flights and booking fees. This proceeding relates to
commercial practices of GoVoyages that have already been subject to enquiries by the DGCCRF in the past and
have resulted in various changes in our website presentation and practices. Both proceedings are at a preliminary
stage and the companies have replied to the DGCCRF in March 2013.
U.K. investigations
In August 2013, the Civil Aviation Authority contacted both eDreams and Opodo citing several points of
concern. These concerns included the presentation of fares and ancillary fees, pre-ticked insurance and service
packages and certain points in the general terms and conditions. Conversations with the Civil Aviation Authority
have been positive thus far and eDreams and Opodo agreed to discontinue pre-ticked selling of products, to make
certain amendments to their terms and conditions and Opodo presented arguments to support the presentation of
fares. The outcome of these conversations could result in further changes to our website design and practices or
potentially, if no agreement is reached, in legal proceedings.
German litigation
The Unister Group is a German company that operates travel-related web portals. Opodo Ltd. (Germany)
initiated several legal proceedings against Unister because of non-compliance of Unister’s websites with the
applicable laws. Most of Opodo Ltd.’s requests for preliminary injunctions were granted by the courts. Unister did
not accept the preliminary proceedings’ outcome and appealed these rulings, requesting a full trial. These
proceedings (and/or appeals with respect thereto) are currently still pending.
Conversely, at the instigation of certain Unister Group companies, Opodo Ltd. was served cease and desist
letters and a number of preliminary injunctions relating to the selection of insurance and service packages, payment
fees, voucher advertising and as well as payment methods in 2012 and 2013. A number of injunctions were granted
in favor of Unister and subsequently confirmed by the competent courts of appeals. We believe that these
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injunctions will not materially affect Opodo Ltd.’s business, as the practices in question had already been
independently discontinued by us. However, depending on the outcome of certain proceedings that are still pending,
we may decide to further change the design of our website and practices.
At present, we have a standstill agreement with Unister in place, which states that no new legal action shall be
taken and the filing of administrative fines shall be ceased. Each party has the right to terminate the standstill
agreement with two weeks’ notice. We expect to resume negotiations with Unister with a view to reaching a final
settlement.
Commercial and intellectual property disputes
Ryanair litigation
Ryanair initiated legal proceedings for intellectual property infringement and unfair commercial practices
against eDreams and Opodo in Spain and France in 2008, respectively, primarily in connection with the screen
scraping method used by eDreams and Opodo to access Ryanair flight inventory and then offer customers Ryanair
flight tickets on their respective websites. Screen scraping consists of using internal online travel technology to scan
travel supplier websites in order to collect information about the travel products they offer. Neither eDreams nor
Opodo has entered into agreements with Ryanair, whose policy is to sell their tickets only through its own website.
See “Risk Factors—We operate in an increasingly competitive environment, and we are subject to risks relating to
competition that may adversely affect our performance”.
In Spain, Ryanair filed a civil action before the Barcelona Commercial Court in 2008 arguing that eDreams
(i) was in breach of the terms and conditions of use of Ryanair’s website, which stated that only the private use of
the website was allowed and expressly prohibited the screen scraping method used by eDreams Spain, (ii) violated
Ryanair’s rights as author and manufacturer of the database of flights contained on its website, (iii) infringed
intellectual property rights over software used on its website and (iv) carried out unfair commercial practices,
namely, imitation acts in exploitation of Ryanair’s reputation and infringement of the general good faith obligation
prohibited under the Spanish Unfair Competition Act. Ryanair’s action was dismissed both by the Barcelona
Commercial Court and the Provincial Court of Barcelona. Ryanair appealed to the High Court of Spain, which
entered a final judgment definitively rejecting Ryanair’s claims on October 30, 2012.
In 2008, eDreams initiated litigation against Ryanair for unfair competition, including a claim for damages of
€1.5 million, and requested the Barcelona Commercial Court to prevent Ryanair from cancelling or threatening to
cancel Ryanair flight tickets acquired through eDreams’ website, which request was granted. On May 21, 2012, the
Provincial Court of Barcelona concluded that Ryanair’s actions constituted unfair competition and ordered Ryanair
to pay eDreams damages of €40,000. Ryanair’s appeal against this decision was dismissed by the High Court of
Spain on October 29, 2013 and Ryanair paid the awarded sum in December 2013.
Ryanair has also initiated proceedings against Vivacances (now Opodo France) based on trademark
infringement, database infringement, breach of the terms of use of the website “Ryanair.com” and unfair
competition relating to the alleged screen scraping activities of Opodo France. On April 9, 2010, the Paris First
Instance Court dismissed Ryanair’s complaint and required Ryanair to pay €30,000 in compensation to Opodo
France for its disparaging remarks and an extra €7,500 compensation for legal fees. Upon Ryanair’s appeal, this
judgment was confirmed by the Paris Court of Appeals on March 23, 2012. Ryanair has complied with all of these
Court orders, but appealed the judgment before the French Supreme Court in August 2012. In view of the
complexity of the proceedings before the French Supreme Court, the decision is not expected to be rendered prior to
September 2014.
Air France litigation
Air France took legal action on April 21, 2011 before the Commercial Court of Paris against Vacaciones
eDreams S.L. and eDreams S.r.l. alleging unfair competition. Air France claimed that eDreams’ France website did
not comply with French and EU regulations concerning the display of prices, as service fees were not disclosed from
the beginning of the booking process. Air France filed a motion to order eDreams to stop infringing applicable
regulations within 10 days from notification of a judgment on such motion, which judgment Air France moved to
have provisionally executed. On May 15, 2011, the parties signed a settlement agreement in respect of Air France’s
suit, which was reported to the Court. However, in October 2012, Air France sent a letter to each of eDreams and
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GoVoyages alleging that they had breached the terms of the settlement agreement and threatened to reinitiate the
legal proceeding. In December 2012, eDreams and GoVoyages replied jointly to Air France setting forth the
eDreams ODIGEO Group’s position in respect of Air France’s letter that the terms of the settlement agreement had
not been breached.
On April 21, 2013, Air France delivered a writ of summons under short notice against Vacaciones eDreams S.L.
and eDreams S.r.l. before the Commercial Court of Paris. In its action, Air France requested that eDreams pay €13.1
million in remediation of the damages allegedly suffered as a consequence of eDreams’ alleged breach of their
settlement, as well as the violation of the French Consumer Code and EU Regulation No. 1008/2008 of
September 24, 2008 on common rules for the operation of air services in the European Community. On the hearing
of May 28, 2013, the defendants presented their pleadings in response. A further procedural hearing was held on
November 12, 2013 and on January 21, 2014, Air France filed a motion with the Commercial Court of Paris to
temporarily stay the case while a settlement out of court is under consideration. The Commercial Court of Paris is
expected to decide on this motion on the hearing scheduled for April 1, 2014. In light of the complexity of the case,
a decision on the merits is not expected to be rendered prior to September 2014. eDreams believes that the
allegations made by Air France are unfounded and that it was acting in full compliance with the provisions of
French and EU laws at any time. Nevertheless, the outcome of these proceedings could result in payment of
damages and further changes to our website design and practices.
Hospitality alliance litigation
Opodo Ltd. (Germany) received two preliminary injunctions in the first instance regarding trade mark
infringements made via www.opodo.de concerning certain hotel names (“Ramada” and “H2”) being used in search
engine advertising. We have appealed against these injunctions as we believe that an agent may use hotel names that
are being distributed via its website.
Delta Air Lines litigation
Delta Air Lines sent letters to eDreams and GoVoyages to terminate the appointments of all agencies in France,
Germany, Italy, Spain and Portugal to sell Delta products by the end of June 2012. In response, GoVoyages,
GoVoyages Trade and eDreams France launched an action in France to obtain an interim measure prohibiting Delta
from terminating the appointments, which were under a series of long-term agency appointment agreements the
terms of which require cause for unilateral terminations. On June 29, 2012, the President of the Commercial Court
of Paris ordered Delta to continue the commercial relationships with eDreams France until October 31, 2012 and
with GoVoyages and GoVoyages Trade until December 31, 2012. An action on the merits of the case was launched
in July 2012 to obtain a ruling on the discriminatory and illicit practice of Delta and wrongful termination of the
agency appointments. In July 2012, Delta Air Lines also appealed against the interim injunctions of the President of
the Commercial Court of Paris issued on June 29, 2012. The interim injunction against eDreams France expired on
October 31, 2012 and as a result, eDreams and GoVoyages no longer have access to Delta products. On appeal,
Delta won the case with respect to the interim injunctions in April 2013, as eDreams and GoVoyages were unable to
show any damages suffered. The case on the merits is currently pending. Delta Air Lines submitted its written
pleadings on November 15, 2013 and a judgment is not expected to be rendered prior to June 2014.
Call Expert litigation
GoVoyages and Opodo previously outsourced call center services to Call Expert. On June 5, 2013, Call Expert
ceased performing its services due to a strike of its employees in its call center in Ales (Frances). Since that time,
Call Expert ceased providing services from its call center, causing a disruption to GoVoyages’ and Opodo’s
customer services. GoVoyages, Opodo and Opodo Ltd. notified Call Expert of the termination of their agreements in
August 2013. On August 8, 2013, GoVoyages, Opodo and Opodo Ltd. delivered to Call Expert (and to HSBC
Factoring France in its capacity as Call Expert’s factor) a writ of summons before the Commercial Court of Paris,
requesting damages compensating for the losses caused by Call Expert’s failure to perform its contractual
obligations. A hearing was held on February 10, 2014 and the case is currently pending.
On September 17, 2013, Call Expert submitted a writ of summons to the President of the Commercial Court of
Paris, requesting an interim payment of invoices issued to GoVoyages and Opodo Limited in the amounts of
€88,758 and €219,034, respectively. Written pleadings have been submitted on behalf of GoVoyages, Opodo and
Opodo Limited, arguing that Call Expert has no legal interest in this proceeding as a result of the factoring
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agreement it had entered into with HSBC Factoring France and that these amounts, to the extent in fact owed to Call
Expert, are more than set off by damages suffered and claimed by GoVoyages, Opodo and Opodo Ltd. Call Expert
did not reply to GoVoyages’, Opodo’s and Opodo Ltd.’s written pleadings to that effect, and a hearing took place on
November 1, 2013. Because Call Expert had been placed under judicial receivership the day before the hearing took
place, the Commercial Court of Paris ordered that this procedure be suspended until further notice. This means that
the procedure could be re-initiated upon judicial request from any party within a period of two years following the
hearing.
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REGULATION
We operate in a highly regulated industry. Our operations are subject to various laws and regulations, including
those regarding IATA accreditation and consumer protection aspects such as price display, sales of packages, ecommerce and data protection. As we seek to continue to expand our operations into new geographies, we will
encounter legal, regulatory or tax requirements with which we are currently not familiar. Likewise, such regulations
can be amended or interpreted in a manner that is unfavorable to us and our business. Compliance with such
requirements, which could conflict between jurisdictions, would result in a greater regulatory compliance burden for
our businesses, and as a result could increase our costs of compliance, or could otherwise be detrimental to our
business.
To our knowledge, in addition to the discussion below and the risks included in the “Risk Factors” section of
this prospectus, there are currently no significant factors, including unusual or infrequent events or new
developments, relating to governmental, economic, fiscal, monetary or political policies or other factors that might
materially affect, or materially affects, directly or indirectly, the Company’s operations. See, in particular, “Risk
Factors—Risks Related to Our Business—Our businesses are highly regulated and a failure to comply with current
laws, rules and regulations or changes to such laws, rules and regulations and other legal uncertainties, may
adversely affect our business, financial condition and results of operations”, “Risk Factors—Risks Related to Our
Business—Our business and financial performance could be negatively impacted by adverse tax events” and “Risk
Factors—Risks Related to Our Business—Our processing, storage, use and disclosure of personal data could give
rise to liabilities as a result of governmental and/or industry regulation, conflicting law requirements and differing
views of personal privacy rights, and we are exposed to risks associated with online commerce security”.
IATA Regulation
The International Air Transport Association (“IATA”) is the global trade organization of the air transport
industry and it represents 240 airlines, covering 84% of total air traffic as of December 31, 2013. IATA regulations
are applicable to our flight booking business and apply at two levels:
•
in order to act as intermediaries and sell tickets for and on behalf of the IATA airline members, we need to
receive IATA accreditation; and
•
our flight booking operations are required to comply with the IATA Passenger Sales Agency Rules and the
terms of the Passenger Sales Agency Agreement which each of our IATA-accredited entities has entered
into with IATA.
IATA accreditation is obtained as a result of an application process and the examination by IATA of the
relevant applicant in order to determine whether it has the necessary qualifications (mainly, qualified staff) and
financial standing to become and maintain status as an “accredited” intermediary, among others.
Continued reporting obligations aim to assess the creditworthiness of the agent, its ability to regularly pay the
air sales completed on credit and the communication of annual audited financial statements. In the event of a change
of control, and for the purpose of assessing the solvency of the new owners, prior notification is required of the
changes affecting the IATA-accredited intermediary (including changes affecting the legal status, name or location
of the intermediary). Some changes, including the acquisition of an IATA-accredited intermediary by a person who
is not an IATA-accredited intermediary or certain changes in the legal nature of the IATA-accredited intermediary,
may require the entering into of a new Passenger Sales Agency Agreement. IATA-accredited intermediaries may
also be subject to reviews initiated by IATA administrators, namely if the IATA administrator in charge considers it
likely that the IATA-accredited intermediary no longer fulfills the requirements to qualify for accreditation or fails
to meet certain financial requirements.
In addition, when operating under the agent model, IATA may require us to post guarantees in order to
minimize credit risk on behalf of airlines. Parameters adopted by IATA to assess intermediaries’ creditworthiness
may vary from one jurisdiction to another and based on its annual review of the audited financial statements of our
operating companies, IATA may modify the guarantee requirements applicable to us, which they require of us in
certain jurisdictions. The requirements regarding the agent’s creditworthiness, the eligibility requirements for being
granted unlimited credit from IATA without posting any financial guarantee and the frequency of settlement
(remittance) are collectively known as the “Financial Criteria”. The applicable Financial Criteria vary from country
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to country and are negotiated among representatives of the airlines and of the travel agents in the respective national
Agency Programme Joint Council (the “APJC”), which meets on a yearly basis. While the Financial Criteria have
not changed for several years in certain countries, such as Germany and France, they have recently changed in
certain other countries, such as Portugal, Italy and Spain. IATA reviews the adherence to the Financial Criteria by
travel agents on a yearly or half-yearly basis, and to the extent the Financial Criteria are found not to be met, may
require an amendment of the guarantees posted or additional guarantees to be posted.
The following table sets forth the IATA guarantees provided by eDreams ODIGEO Group companies in effect
as of December 31, 2013.
Country
Guaranteed company
Germany ....................................................................................Opodo Ltd .................
Italy ...........................................................................................Opodo Italia Srl .........
Austria .......................................................................................Opodo Ltd .................
Poland........................................................................................Travellink ..................
Portugal .....................................................................................eDreams ....................
Germany ....................................................................................eDreams ....................
Italy ...........................................................................................eDreams ....................
United Kingdom .........................................................................eDreams ....................
Total IATA Guarantees
(in million €)
29.1
2.2
0.2
0.2
0.1
1.8
2.5
0.2
36.2
IATA also regulates the frequency on which settlement (remittance) is due by accredited intermediaries. IATA
regulations currently provide that frequency of payment may vary from one jurisdiction to another, but that payment
shall occur at least once a month. To amend the frequency of remittance in a given country, airlines and travel
agents in the respective national APJC are required to negotiate and agree on a new frequency and to submit such
agreement to the Passenger Agency Conference for approval.
European Union Regulations
Our operations are principally in Europe, where we have to comply with a number of European Union
regulations and national implementing legislation that is applicable to our business. Compliance with such
regulations, as implemented in the relevant jurisdictions, is critical to our business. Certain of these regulations that
we believe most directly apply to our business are set forth below. Other regulations, which may be similar to the
ones described below, or may differ, apply to our operations outside the European Union.
Package Travel Directive
Our package travel sales operations are specifically governed by the EU Package Travel Directive 90/314/EEC
on package travel, package holidays and package tours (the “Package Travel Directive”). The scope of the Package
Travel Directive is limited to the non-occasional sale of package tours by an “organizer” (person who organizes
packages and sells or offers them for sale, whether directly or through a retailer) or a “retailer” (person who sells or
offers for sale packages put together by an organizer) to a consumer, to the exclusion of individually organized tours
or to the delivery of single travel services, such as a scheduled flight or hotel accommodation.
For the purposes of the Package Travel Directive, “package” means a combination previously put together by
an organizer or a combination of elements tailored by the travel agent at the request of the consumer including not
fewer than two of the following elements: transportation, accommodation or other tourist services not ancillary to
transportation or accommodation but which account for a significant part of the package. Additionally, in order to be
covered under the “package” definition, such combinations are required to be sold or offered for sale at an inclusive
price and the services must cover a period of more than 24 hours or include overnight accommodation. The EU
member countries were allowed to implement a more extensive regime (which was for example done in Germany)
and, accordingly, the implementation of the Package Travel Directive may differ from one EU member country to
another.
Insofar as we act as organizers or retailers, our activities are impacted by the Package Travel Directive and
implementing national legislations, primarily with respect to (i) minimum standards concerning the information to
be provided to consumers, (ii) formal requirements for package travel contracts, including mandatory rules
concerning cancellation, modification and the civil liability of package tour organizers or retailers, and
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(iii) providing effective protection to consumers in the event of the package tour organizer’s insolvency, namely
repayment of the price and repatriation of consumers. Under the Package Travel Directive, member states were
allowed to choose between mandatory joint liability of the organizer and the retailer or to split liabilities in
consideration of organizers and retailer’s traditional roles and responsibilities; therefore, we may be subject to
different standards of liability depending on the jurisdictions in which we operate. For instance, in our core markets,
we are subject to mandatory joint liability in France and Spain, whereas liability is split between organizers and
retailers in the United Kingdom and Italy.
On July 9, 2013, the European Commission proposed a reform of the Package Travel Directive (the “Proposal”)
to bring it up to date with developments in the travel market, such as consumers’ increased preference for Dynamic
Packages, where they create their own customized travel arrangements with the assistance of different online or
offline operators instead of opting for pre-arranged products. The objective of the Proposal is, among others, to
extend the current protection for traditional pre-arranged packages to a new combination of travel services. If those
new combinations of travel services feature the characteristics associated with packages, the consumer is protected
under the new rules. Depending on what kind of package is purchased, the proposed changes to the Package Travel
Directive will offer (i) consumer improved protection rights, such as more predictable prices and increased
cancellation rights and (ii) protection to buyers of customized travel arrangements in the event of a packaged tour
organizer’s insolvency. The Proposal is currently under consideration by the European parliament. The full impact
of the current wording in the Proposal is not clear, as some concepts that have been introduced are insufficiently
defined. Implementation of the Proposal could lead to increased bonding obligations and increased commitments
towards our customers if suppliers of travel products default on their performance obligations.
E-Commerce Directive
The online nature of our business requires us to comply with European Union regulations and implementing
national legislation governing electronic commerce, primarily relating to (i) pre-contractual information to be
provided to consumers on our activities, (ii) the regulation of commercial communications we send to consumers,
(iii) formal rules for entering into electronic contracts such as post-contractual confirmation duties, (iv) the use of
cookies on websites and (v) the liability of intermediary service providers. Specifically, our business is subject to the
EU Directive 2000/31/EC on e-commerce (the “E-Commerce Directive”), which establishes rules on transparency
and information requirements for online service providers, commercial communications, electronic contracts and
limitations of liability of intermediary service providers.
Consumer Rights Directive
To the extent it addresses consumers of any European Union member state, our business is subject to European
Union regulations and implementing national legislation relating to consumer rights. In particular, our business is
subject to the EU Directive 2011/83/EU on consumer rights (the “Consumer Rights Directive”), notably to its
provisions relating to so-called distance and off-premises contracts. EU member countries are required to transpose
the Consumer Rights Directive into national law by December 13, 2013 and its rules will govern contracts entered
into after June 13, 2014. The Consumer Rights Directive, once implemented in the EU member countries by
June 13, 2014, will have an impact on the amount of credit card fees that can be levied. We have already been
anticipating the new legislation and have already revised the amount of credit card fees that we levy, to be in
accordance with the Consumer Rights Directive. Similar restrictions on credit card fees will likely be incorporated in
the new EU Directive on payment services 2013/0264 (COD) that is currently under revision.
EC Regulations Governing Airline Industry Services
Our business is affected by various EC regulations governing services in the airline industry. These regulations
include:
EC Regulation No. 261/2004
EC Regulation No. 261/2004 establishes common rules on compensation and assistance to passengers in the
event of denied boarding and of cancellation or long delay of flights (more than three hours may qualify). While this
regulation is primarily addressed to airline carriers, as intermediaries or agents we are required to comply with the
obligations set forth in the regulation on the airline carrier’s behalf. Failing to do so could result in the airline carrier
having a compensation claim against us. A proposal for a revised regulation was published on March 13, 2013 and
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has been submitted to the European Parliament. The implementation of such proposal could lead to the expansion of
the rights of passengers and, accordingly, this may affect our internal policies.
EC Regulation No. 1008/2008
EC Regulation No. 1008/2008 on common rules for the operation of air services governs certain price display
information. While primarily addressed to airline carriers, this regulation also requires us to comply with the rules
set forth therein. For European and certain non-European airline carriers, it codifies the pricing freedom principle
and sets forth certain information obligations vis-à-vis customers.
Customer Privacy and Data Protection Regulations
We, like other companies subject to European Union regulations, are subject to increasing regulation relating to
customer privacy and data protection. In general terms, applicable data protection regulations limit the uses of data
that we collect about customers, including purposes for which the data may be used and the circumstances in which
we may communicate with them or disclose their personal data to third parties. In addition, we are generally
obligated to adopt certain measures in accordance with applicable laws to protect customer data while it is in our
possession.
Insurance Mediation Directive
The current EU Directive 2002/92/EC on insurance mediation regulates the selling practices of all insurance
products, but travel insurance is exempted. A European Commission proposal for revision was published on July 3,
2012, and the draft proposal is now at the European Parliament level. The European Commission proposal would
extend the scope of the regulations to travel insurance, but the proposal has been heavily criticized. If the proposal
were to be implemented as currently proposed, it would increase our administrative burden.
Unfair Commercial Practices Directive
EU Directive 2005/29/EC on Unfair Commercial Practices (the “Unfair Commercial Practices Directive”) is a
horizontal Directive, which applies to all business-to-consumer transactions. This Directive aims at facilitating
cross-border trade by creating a single set of rules in the field of unfair commercial practices. Firstly, the European
Commission will seek to ensure full conformity of national laws with the Unfair Commercial Practices Directive by
closely monitoring the correct transposition and application of this Directive in all EU member countries. Secondly,
it will enhance enforcement and administrative cooperation between EU member countries. The European
Commission will focus its efforts on five key sectors, which include travel and transport, digital and on-line markets,
environmental claims, financial services and immovable properties. We will monitor these developments closely.
National-Level Regulation
The laws of certain jurisdictions set forth additional license or other requirements for the operation of our travel
agency business. These requirements vary from one jurisdiction to another and compliance costs associated
therewith can be significant. For instance, French law requires our travel agencies to be listed in a specific registry
and Italian law provides for local permit requirements. Furthermore, we are subject to French regulations requiring
all travel products and services retailers to take out a specific insurance policy covering any damages in connection
with the carrying out of our activities. We are also subject to the U.K. Civil Aviation (Air Travel Organizers’
Licensing (“ATOL”)) Regulations (the “ATOL Regulations”), administered by the U.K. Civil Aviation Authority
that have introduced a protection scheme for holiday packages. According to the ATOL Regulations, most United
Kingdom tour operators selling air travel are required to hold an ATOL license. Pursuant to an amendment to the
ATOL Regulations made in 2012, the scope of the ATOL Regulations has been extended to “flight-plus”
arrangements. This only applies to our sales by Opodo Limited.
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MANAGEMENT AND BOARD OF DIRECTORS
Board of Directors
General
Our Board of Directors (conseil d’administration) is responsible for the management, administration and
representation of the Company in all matters concerning the business of the Company, including but not limited to
the review, establishment and oversight of our strategic objectives, and supervises our operations, approves certain
major transactions and oversees our systems of internal controls and governance. Our Board of Directors is also
entrusted with convening Shareholders’ meetings and operates subject to the provisions of our Articles of
Incorporation, Rules of Procedure of the Board of Directors and the powers granted by Shareholders’ resolutions.
Board size and composition
Our Articles of Incorporation provide for a Board of Directors consisting of a minimum of five directors
(administrateurs) and a maximum of fifteen directors (each a “Director” and together the “Directors”). In
accordance with a resolution adopted by our general Shareholders’ meeting on March 18, 2014, our Board of
Directors currently comprises six Directors and will comprise nine Directors immediately following the earlier of
Admission to Trading and the Settlement when the appointments of our three independent Directors become
effective.
Any natural or legal person may serve on our Board of Directors, except for persons specifically prohibited by
applicable law. A legal entity may be a Director (a “Corporate Director”), in which case it must designate a
permanent representative to perform that role in its name and for its account. The revocation by a Corporate Director
of its representative is conditional upon the simultaneous appointment of a successor.
Pursuant to the Shareholders’ Agreement, which is expected to be signed at the time of pricing of the offering,
Luxgoal 3, the Ardian Funds and Javier Pérez-Tenessa de Block will agree to vote in favor of any Shareholder
resolutions required to ensure that the composition of the Board of Directors on the earlier of Admission to Trading
and Settlement will be as set out in “—Directors—Board of Directors immediately following the earlier of
Admission to Trading and Settlement”.
Immediately following the earlier of Admission to Trading and Settlement, our Articles of Incorporation
will provide that so long as Luxgoal 3 or the Ardian Funds, in each case, together with their respective affiliates
(each group, a “Principal Shareholder Group”), directly or indirectly hold 17.5% or more of the issued and
outstanding Shares of the Company, two Directors shall be elected by the Shareholders from among candidates put
forward by each such Principal Shareholder Group. If a Principal Shareholder Group’s direct or indirect percentage
ownership of the issued and outstanding Shares of the Company is less than 17.5% but equal to or greater than 7.5%,
one Director shall be elected by the Shareholders from among candidates put forward by such Principal Shareholder
Group. If a Principal Shareholder Group’s direct or indirect percentage ownership of the issued and outstanding
Shares is below 17.5%, such Principal Shareholder Group will ensure that one of the two Directors who were
nominated by such Principal Shareholder Group will resign with immediate effect, provided that such resignation
requirement in respect of the Ardian Funds will apply only following the Offering and as a result of the disposal of
any Shares other than in the Offering (including the over-allotment option Shares). If a Principal Shareholder
Group’s direct or indirect percentage ownership of the issued and outstanding ordinary shares is below 7.5%, such
Principal Shareholder Group will ensure that the remaining Director that was nominated by such Principal
Shareholder Group will resign with the resignation becoming effective upon the appointment by our Board of
Directors of the replacement independent Director in accordance with our Articles of Incorporation. The process for
the Board of Directors to appoint a new independent Director as set out below under “—Term, appointment and
removal of directors” will begin upon the crossing of such threshold and be completed as soon as possible thereafter.
Term, appointment and removal of Directors
Our Directors are elected by our Shareholders to serve for a term of three years and may be re-elected to serve
for an unlimited number of terms, except for independent Directors, who may only serve in such capacity for a
maximum aggregate period of twelve years. If a Director does not serve out his or her term, the Board of Directors
may fill the vacancy by appointing a replacement Director to serve until the next general Shareholders’ meeting. A
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Director may resign or be removed from office by the Shareholders at a general Shareholders’ meeting. A Director
may be removed from office ad nutum, with or without cause, by the Shareholders at a general Shareholders’
meeting by vote of a majority of the votes cast, irrespective of the number of Shares represented at the meeting.
Our Articles of Incorporation will provide that if there is a vacancy in the Board of Directors that requires
the appointment of an independent Director due to a resignation of a Director nominated by Luxgoal 3 or the Ardian
Funds or otherwise, the Chairman of our Board of Directors may propose candidates to fill such vacancy and such
proposal will be considered by the Remuneration and Nomination Committee, who may also independently search
for and propose other candidates in addition to those proposed by the Chairman of our Board of Directors. The
Remuneration and Nomination Committee will report to the Board of Directors on the candidates for independent
Director and based on such report, our Board of Directors will appoint such a replacement Director who is an
independent Director. Such Director will be subject to confirmation by the general Shareholders’ meeting at the next
scheduled Shareholders’ meeting for reappointment.
Chairman and Vice Chairman
In accordance with a resolution passed by our Board of Directors on March 18, 2014, Javier Pérez-Tenessa de
Block was elected the Chairman of our Board of Directors. Immediately following the earlier of Admission to
Trading and the Settlement, our Board of Directors (including the newly appointed independent Directors) will meet
to consider reconfirming the appointment of Javier Pérez-Tenessa de Block as Chairman and will consider the
election of Robert Gray, an independent Director, as Vice Chairman in accordance with our Articles of
Incorporation and Rules of Procedure of the Board of Directors. The Vice Chairman will be responsible for
coordinating and discussing the views of our non-executive Directors.
Our Articles of Incorporation and Rules of Procedure of the Board of Directors will provide that the Board will
elect a Secretary of the Board of Directors who need not be a Director as soon as practicable following the earlier of
Admission to Trading and the Settlement. The Secretary will be tasked with ensuring that the actions of the Board of
Directors comply with our Articles of Incorporation, the Rules of Procedure of the Board of Directors and the
Regulations for the general Shareholders’ meetings.
Board meetings
Pursuant to the Shareholders’ Agreement, Luxgoal 3, the Ardian Funds and Javier Pérez-Tenessa de Block
will agree to cause their respective Directors to reconfirm or appoint Javier Pérez-Tenessa de Block and Robert Gray
as Chairman and Vice Chairman of the Board of Directors, respectively.
Our Board of Directors will convene at least six times per year, with one of such meetings being held within six
months of the end of our financial year. Our Articles of Incorporation will provide that half of the members of the
Board of Directors (represented in person or by proxy by another member of the Board of Directors) constitutes a
quorum. Except as otherwise provided by law or specified in our Articles of Incorporation, resolutions of the Board
of Directors will be adopted by a simple majority of the Directors present or represented at a Board meeting.
Our Rules of Procedure of the Board of Directors will provide that the Chairman is responsible for calling a
meeting of the Board of Directors whenever he or she considers such a meeting necessary or suitable. The rules will
also provide that the Vice Chairman may call a meeting of the Board of Directors and include matters in the agenda
of any meeting. In addition, so long as the Ardian Funds or the Permira Funds directly or indirectly hold 7.5% or
more of the issued and outstanding Shares of the Company, the Directors nominated by the Ardian Funds or the
Permira Funds, as applicable, may call a meeting of the Board of Directors and include matters in the agenda of any
meeting.
Our Directors may participate by way of video conference or by way of telecommunication means permitting
their identification, except for any meeting of the Board of Directors relating to the convening of the General
Shareholders Meeting, the approval of the annual accounts or the approval of the annual budget, in which case our
Directors must attend the meeting in person.
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Delegation of powers of the Board of Directors
In accordance with Luxembourg law, the day-to-day management of the business of the Company and the
power to represent the Company with respect thereto may be delegated to one or more Directors, officers, managers
or other agents as an administrateur délégué (if such delegation is made to a Director) or as a délégué à la gestion
journalière (“daily manager”), acting alone or jointly. The appointment and removal, powers, duties and
remuneration of such delegates will be determined by our Board of Directors.
The principal delegate of the Board of Directors will be our Chief Executive Officer who will be our
administrateur délégué. In the Shareholders’ Agreement, the parties have agreed to vote in favor of delegating
certain powers of the Board of Directors relating, inter alia, to certain intra-group matters, certain acquisition,
disposal, partnership, joint venture, financing and other activities, and employment and renumeration matters to our
Chief Executive Officer, which powers will become effective upon the earlier of Admission to Trading and the
Settlement. The Board of Directors will have the right to rescind or amend the powers delegated to our Chief
Executive Officer.
Directors
Current Board of Directors
As of the date of this prospectus, our Board of Directors is comprised of six Directors who were appointed at
our general Shareholders’ meeting on March 18, 2014. The following table sets forth the name, date of first
appointment, age, title, date of expiration of appointment and affiliation of each member of our Board of Directors
as of the date of this prospectus:
Name
Date of first
appointment
Age
Title
Date of expiration
of appointment
Affiliation
Javier Pérez-Tenessa de Block
Mauricio Prieto ·························
Philippe Poletti··························
Lise Fauconnier ·························
Benoit Vauchy ··························
Carlos Mallo ····························
March 18, 2014
March 18, 2014
March 18, 2014
March 18, 2014
March 18, 2014
March 18, 2014
46
46
48
48
38
46
Chairman
Director
Director
Director
Director
Director
July 19, 2017
July 19, 2017
July 19, 2017
July 19, 2017
July 19, 2017
July 19, 2017
Executive
Executive
Ardian Funds
Ardian Funds
Permira Funds
Permira Funds
The official address of each of the Directors is the registered office of the Company.
Board of Directors immediately following the earlier of Admission to Trading and Settlement
Immediately following the earlier of Admission to Trading and the Settlement, the appointment of our three
independent Directors at our general Shareholders’ meeting on March 18, 2014 will become effective and our Board
of Directors will comprise nine Directors. The following table sets forth the name, date of first appointment, age,
title date of expiration of appointment and affiliation of each member of our Board of Directors at such time:
Name
Date of first
appointment
Age
Title
Date of expiration
of appointment
Affiliation
Javier Pérez-Tenessa de Block
Robert A. Gray··························
Mauricio Prieto ·························
Philippe Poletti··························
Lise Fauconnier ·························
Benoit Vauchy ··························
Carlos Mallo ····························
James Hare ······························
Philip C. Wolf···························
March 18, 2014
March 18, 2014
March 18, 2014
March 18, 2014
March 18, 2014
March 18, 2014
March 18, 2014
March 18, 2014
March 18, 2014
46
57
46
48
48
38
46
45
57
Chairman
Vice Chairman
Director
Director
Director
Director
Director
Director
Director
July 19, 2017
July 19, 2017
July 19, 2017
July 19, 2017
July 19, 2017
July 19, 2017
July 19, 2017
July 19, 2017
July 19, 2017
Executive
Independent
Executive
Ardian Funds
Ardian Funds
Permira Funds
Permira Funds
Independent
Independent
Our three independent Directors will qualify as independent directors pursuant to Spanish Order
ECC/461/2013, dated March 20, 2013. Our independent Directors, Robert A. Gray, James Hare and Philip C. Wolf,
are experienced professionals who are neither employees nor shareholders of the Company (other than James Hare
who owns approximately 0.25% of our share capital as of the date of this prospectus).
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The official address of each of the Directors will be the registered office of the Company.
Biographical Information
Biographical information for each of the current and future members of our Board of Directors is presented
below:
Javier Pérez-Tenessa de Block. Mr. Pérez-Tenessa de Block is the Chief Executive Officer of
eDreams ODIGEO and the Chairman of our Board of Directors. Prior to founding eDreams ODIGEO, Mr. PérezTenessa de Block held various positions in companies such as the European Aeronautic Defence and Space
Company N.V. (EADS), McKinsey & Company and Netscape Communications Corporation. Mr. Pérez-Tenessa de
Block has served as a member of the board of directors of the eDreams ODIGEO Group and Vueling Airlines S.A.
He currently also acts as a board member of ReallyLateBooking. Mr. Pérez-Tenessa de Block received his aerospace
engineering degree from Universidad Politécnica de Madrid. He also received his MBA from Stanford University.
Robert A. Gray. Mr. Gray has been the Chief Financial Officer and an Executive Director of UBM plc since
September 2009. He was previously Chief Financial Officer of Codere S.A. in Spain from February 2004. He began
his career at J.P. Morgan & Co., where he worked in a number of senior investment banking roles, including in the
former Soviet Union and in Latin America. From 1999 to 2004, he worked at Deutsche Bank as Managing Director,
Latin American Investment Banking. Mr. Gray has extensive experience in mergers and acquisitions, capital-raising
across a broad range of markets, industries and geographies, building businesses in international markets, notably in
emerging markets in Latin America and Asia, and in transforming corporate financial functions to support growth
and access to capital markets. An American citizen, Mr. Gray received a BA from Dartmouth College and an MBA
from Harvard Business School.
Mauricio Prieto. Mr. Prieto is the Chief Marketing Officer of eDreams ODIGEO and a member of our Board of
Directors. Prior to joining eDreams ODIGEO in 1999, Mr. Prieto occupied the positions of head of business
development at Charles Schwab and consultant at Booz Allen Hamilton. Mr. Prieto received his Bachelor’s degree
from Princeton University. He also received his MBA from the University of California at Berkeley.
Philippe Poletti. Mr. Poletti joined Ardian in 1999 and is currently the Senior Managing Director at Ardian in
charge of the Mid Market Enterprise Capital funds for France, Germany and Italy. He has worked as the leading
Managing Director on a number of projects, including Icare, Spotless, Photonis, Vulcanic, Titanite, Larivière,
Cornhill France, Novacap and Anios. Prior to joining Ardian, he was the Head of Mergers, Acquisitions and
Divestments at DMC, a textile group, between 1997 and 1999. Prior to his role at DMC, he was with the Desnoyers
Group (a copper tube manufacturer) in a number of roles and was a consultant at Solving International in Paris and
Milan.
Lise Fauconnier. Ms. Fauconnier joined Ardian in 1998. Before joining Ardian, Lise worked as an
Investment Manager at Euris. As a Managing Director at Ardian, she notably led investments in Newrest, Odigeo
and Camaieu. She is also a board member of Linedata, a company listed on Euronext. Ms. Fauconnier began her
career at Clinvest as a project manager in the mergers, acquisitions and restructuring department.
Benoit Vauchy. Mr. Vauchy joined the Group in 2011 as Non- Executive Director of Opodo Limited and
also previously served as the Chairman of the Group’s Audit Committee. He is currently a Partner and the Head of
the Paris Office at Permira. Whilst at Permira he served on the board and was the Chairman of the Audit Committee
at NDS Group Ltd., an investee company of the Permira Funds. Prior to joining Permira in 2006, he spent most of
his career in leveraged finance including at J.P. Morgan in London.
Carlos Mallo. Mr. Mallo joined the Group in 2011 as a non-executive Director of Opodo Limited. He is
currently a member of the Permira Board of Directors, serving on Permira’s Executive and Investment Committee
and is the Head of the Madrid Office. In addition to eDreams ODIGEO, he also holds serves on the boards of other
Permira investments, including Telepizza and Cortefiel. Prior to joining Permira in 2003, he worked for 3i Group in
the United Kingdom and Spain, where he was the head of the Barcelona Office in his latter role.
James Hare. Mr. Hare is an internet entrepreneur and angel investor, and is currently mentoring and managing
multiple start-ups in Europe and Asia. Mr. O’Hare was the co-founder and President of eDreams. He formerly held
management roles in international marketing and corporate development for Electronics For Imaging and Netscape.
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In addition, he has founded a software company in Kiev, produced software titles for Ubi Soft, and was a planner for
the Davos World Economic Forum.
Philip C. Wolf. Mr. Wolf is the retired chairman of PhoCusWright Inc., an independent travel, tourism and
hospitality research firm he founded in 1994. He served as president and chief executive officer until its acquisition
by Northstar Travel Media LLC in June 2011. Prior to founding PhoCusWright, Mr. Wolf was president and chief
executive officer of a venture-funded software developer and travel booking engine pioneer, which held two patents
for its pricing algorithms. Mr. Wolf was formerly an adjunct professor at NYU’s Preston Robert Tisch Center for
Hospitality, Tourism and Sports Management and a lecturer at the Cornell University School of Hotel
Administration. In addition to eDreams ODIGEO, Mr. Wolf also serves as board director for a number of other
companies including NASDAQ-listed MakeMyTrip, Hopper, QuickMobile, Booking Markets, TrustYou and
Travel.ru. Mr. Wolf has a Bachelor of Arts degree in public policy studies from Duke University in the United
States and an MBA degree from the Owen Graduate School of Management, Vanderbilt University in the United
States.
Board Committees
Immediately following the earlier of Admission to Trading and Settlement and in accordance with our Articles
of Incorporation, Spanish legal obligations and, to the extent we deem applicable, the recommendations of the
Spanish Unified Corporate Governance Code (Código Unificado de Buen Gobierno Corporativo), our Board of
Directors will establish an Audit Committee and Remuneration and Nomination Committee, and will delegate a
number of important responsibilities of the Board of Directors to such committees, subject to matters reserved for
the Board of Directors.
The following is an overview of the committees of our Board of Directors that will be formed immediately after
the earlier of Admission to Trading and the Settlement. Following their formation, the committees will conform with
both our Articles of Incorporation and our Rules of Procedure of the Board of Directors.
Audit Committee
The Audit Committee will consist of at least three Directors, including one independent Director and to the
extent possible the other members being non-executive Directors. The Chairman of the Audit Committee must be an
independent Director. The members of the Audit Committee, and in particular the Chairman, will be elected by our
Board of Directors taking into consideration their knowledge and experience in accounting, auditing and risk
management standards. The members of the Audit Committee will be elected for a term of three years, subject to
renewal.
Immediately following the earlier of Admission to Trading and the Settlement, the Audit Committee will
consist of Robert Gray (Chairman of the committee and independent Director), Philip Wolf (independent Director)
and Benoit Vauchy (Director nominated by the Permira Funds). Our Articles of Incorporation and Rules of
Procedure of the Board of Directors will provide that so long as the Ardian Funds or the Permira Funds directly or
indirectly hold 7.5% or more of the issued and outstanding Shares of the Company, a nominated Director of either
the Ardian Funds or the Permira Funds will be a member of the Audit Committee.
The Audit Committee’s role will include, among other things:
•
to manage and report the main risks identified as a consequence of the monitoring of the efficiency of the
Company’s internal control and internal auditor, if applicable;
•
to ensure the independence and efficacy of the internal audit function;
•
to propose the selection, appointment, reappointment, and removal of the head of the internal audit service;
•
to propose the internal audit budget and receive regular reports on its activities;
•
to verify that senior management takes into account the findings and recommendations of its reports;
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•
to establish and supervise a mechanism whereby staff can report, confidentially and, if appropriate,
anonymously, potentially significant irregularities within the Company that they detect, in particular
financial or accounting irregularities;
•
to receive regular information from the external auditor on the audit plan and the results of the
implementation thereof and to check that senior management takes its recommendations into account;
•
to monitor the independence of the external auditor, to which end (i) the Company must report a change of
auditor to the CNMV as a significant event, accompanied by a statement of any disagreements with the
outgoing auditor and the reasons for the same, (ii) the Audit Committee must ensure that the Company and
the auditor adhere to current regulations on the provision of non-audit services, the limits on the
concentration of the auditor’s business and, in general, all other regulations established to safeguard the
independence of the auditors and (iii) in the event of resignation of the external auditor, the Audit
Committee investigates the circumstances that may have given rise thereto; and
•
to report to the Board of Directors, prior to the adoption thereby of the relevant resolutions, on the
following matters: (i) the financial information that the Company must periodically make public due to its
status as a listed company; (ii) the creation or acquisition of interests in special-purpose entities or entities
registered in countries or territories regarded as tax havens, and any other transactions or operations of a
comparable nature whose complexity might impair the transparency of the eDreams ODIGEO Group; and
(iii) related-party transactions.
The Audit Committee will review periodic financial information to be furnished to the securities regulatory
authorities and the information to be approved by our Board of Directors and included in our annual report and any
other financial reports.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee will consist of at least three Directors, each of which must be a
non-executive Director and the majority of which must be independent Directors. The members of the Remuneration
and Nomination Committee will be elected by our Board of Directors and such elected members will elect one of the
independent Directors that is a member to serve as Chairman of the committee. The members of the Remuneration
and Nomination Committee will be elected for a term of three years, subject to renewal.
Immediately following the earlier of Admission to Trading and the Settlement, the Remuneration and
Nomination Committee will consist of Philip C. Wolf (Chairman and independent Director), James Hare
(independent Director) and Lise Fauconnier (Director nominated by the Ardian Funds). Our Articles of
Incorporation and Rules of Procedure of the Board of Directors will provide that so long as the Ardian Funds or the
Permira Funds directly or indirectly hold 7.5% or more of the issued and outstanding Shares of the Company, a
nominated Director of either the Ardian Funds or the Permira Funds will be a member of the Remuneration and
Nomination Committee.
The Remuneration and Nomination Committee’s role will include, among other things:
•
to assess the qualifications, background knowledge and experience necessary to sit on the Board of
Directors, defining, accordingly, the duties and qualifications required of the candidates to fill each
vacancy, and to decide the time and dedication necessary for them to properly perform their duties. The
Chairman may request the Remuneration and Nomination Committee to consider possible candidates to fill
vacancies for the position of Director, provided that the Remuneration and Nomination Committee may
independently search for and consider alternative candidates for such position in addition to those
candidates proposed by the Chairman;
•
to examine or organize, in the manner it deems appropriate, the succession of the Chairman and the Chief
Executive Officer and, if appropriate, to make proposals to the Board of Directors for such succession to
take place in an orderly and well-planned manner; and
168
•
to propose to the Board of Directors: (i) the remuneration policy for Directors and senior management,
(ii) the individual remuneration of the Chief Executive Officer and our Directors and other terms of their
contracts and (iii) the basic terms and conditions of the contracts with senior management on a group basis
The Chairman of the Remuneration and Nomination Committee will call a meeting of the committee whenever
the Board of Directors or its Chairman requests the preparation of a report or the adoption of a proposal or whenever
the Chairman of our Board of Directors or the committee chairman, or any two committee members request such a
meeting and, in any event, the committee shall meet as often as necessary for the proper discharge of its functions.
Senior Management
We are managed on a day-to-day basis by our senior management, which includes our Chief Executive
Officer, our President and Chief Operating Officer, our Chief Financial Officer, our Chief Marketing Officer and our
Chief Technology Officer (collectively, the “Senior Management”). We regard our Senior Management as
comprising those persons having the authority and responsibility for planning, directing and controlling the activities
of the eDreams ODIGEO Group companies, directly or indirectly.
The following table sets forth the name, age and title of each member of our Senior Management both as of the
date of this prospectus and immediately following the earlier of Admission to Trading and the Settlement:
Name
Age
Title
(1)
Javier Pérez-Tenessa de Block ................................
46
Chief Executive Officer
Dana Philip Dunne ................................
50
President and Chief Operating Officer
David Elízaga ................................................................
40
Chief Financial Officer
Mauricio Prieto(1)................................
46
Chief Marketing Officer
Philipe Vimard ................................................................
39
Chief Technology Officer
(1) Executive Director.
The official address of each of the members of our Senior Management is the registered office of the Company.
In addition, we are currently in the process of selecting and approving a Chief Legal Officer, which position is
currently vacant.
Biographical Information
Biographical information for each of the members of our Senior Management as of the date of this prospectus is
presented below:
Javier Pérez-Tenessa de Block is the Chief Executive Officer of eDreams ODIGEO. For his biographical
information, see “—Board of Directors—Directors—Biographical Information”.
Dana Philip Dunne is the President and Group Chief Operating Officer of eDreams ODIGEO. Prior to joining
eDreams ODIGEO, Mr. Dunne was Chief Commercial Officer of EasyJet plc, and before that he occupied various
positions at AOL, Town and City Holdings PLC, WebTV Europe PLC, Belgacom Group, US West, Inc, and
McKinsey & Company. Mr. Dunne received a Bachelor’s Degree in Economics from Wesleyan University and a
Master’s Degree in Business Administration from The Wharton School.
David Elízaga is the Chief Financial Officer of eDreams ODIGEO. Prior to joining eDreams ODIGEO,
Mr. Elízaga was Chief Financial Officer of Codere SA, and before that he occupied various positions at
Codere S.A., Monitor Group and Lehman Brothers. Mr. Elízaga holds degrees in Business and Law from
Universidad Pontificia de Comillas—ICADE.
Mauricio Prieto is the Chief Marketing Officer of eDreams ODIGEO. For his biographical information, see “—
Board of Directors—Directors—Biographical Information”.
Philipe Vimard is the Chief Technology Officer of eDreams ODIGEO. Prior to joining eDreams ODIGEO,
Mr. Vimard exercised engineering management positions at Expedia Group, including senior director of lodging and
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senior director of cars, cruises, destination services and trains. He was also previously the Chief Technology Officer
of Venere.com. Mr. Vimard holds a Bachelor’s degree in Engineering from CDI College University of Montreal.
Code of Internal Conduct
On March 18, 2014, our Board of Directors adopted the Internal Regulations for Conduct in the Securities
Markets (Reglamento Interno de Conducta en los Mercados de Valores) (the “Internal Code of Conduct”), which
will become effective upon earlier of the Admission to Trading and the Settlement. The Internal Code of Conduct
regulates, among other things, our Directors’ and management’s conduct with regard to the treatment, use and
disclosure of our material information. The Internal Code of Conduct applies to, among other persons, all of our
Directors, senior management and employees who have access to material non-public information, as well as to our
external advisors that have access to such material non-public information.
The Internal Code of Conduct, among other things:
•
establishes the restrictions on, and conditions for, the purchase or sale of our securities, including our
Shares, or our other financial instruments by persons subject to the Internal Code of Conduct and by
others who possess material non-public information;
•
provides that persons subject to the Internal Code of Conduct must not engage in market manipulation
with respect to our securities, including our Shares, or our other financial instruments;
•
provides that the Company must not engage in open market purchases with a view to manipulating the
market price of our securities, including our Shares, or our other financial instruments, or to favoring
any particular Shareholder(s); and
•
provides that persons with a conflict of interest must act in good faith and with loyalty toward the
Company and our shareholders and without regard to such person’s individual interests.
Corporate Governance
As a Luxembourg public limited liability company (société anonyme) whose Shares are to be admitted to
trading on a regulated market within the meaning of article 4 (1) point 14 of Directive 2004/39/EC in Spain, the
Company is not required to adhere to the Ten Principles of Corporate Governance of the Luxembourg Stock
Exchange, which is the Luxembourg corporate governance regime recommended for companies that are listed in
Luxembourg.
As a listed company on the Spanish Stock Exchanges, we will be subject to the recommendations of the Spanish
Unified Corporate Governance Code (Código Unificado de Buen Gobierno Corporativo), which we believe that we
will substantially comply with. Within the “comply or explain” regime of the Spanish Unified Corporate
Governance Code, our corporate internal regulations will vary from the recommendations set forth in the Spanish
code in the following respects, without prejudice to such recommendations that refer to practical matters and
compliance therewith that can be verified only by observing the Company’s practices once our Shares are listed on
the Spanish Stock Exchanges:
•
No Executive Committee will be appointed as a separate committee of the Board of Directors.
Consequently, recommendations regarding the Executive Committee are not applicable. However, the
Board of Directors will appoint the Chief Executive Officer as adminstrateur délégué and will delegate
to such officer the powers described in “—Board of Directors—Delegation of powers of the Board of
Directors”.
•
The appointment and termination of members of our senior management, as well as their severance
packages, are not matters reserved for approval by our Board of Directors as stipulated by
Recommendation 8(b) of the Unified Corporate Governance Code.
•
In relation to Recommendation 14 of the Unified Corporate Governance Code, as of the date of this
prospectus, five of our current Directors are male. However, at no time have we restricted or prevented
170
the appointment of a Director on the grounds of gender. In relation to future appointments, we will
ensure that there are no obstacles to the election of a female Director who satisfies the required profile.
•
We will not comply fully with recommendation 22 of the Unified Corporate Governance Code,
regarding Directors’ right to request additional information on matters within the Board’s purview, as
such right will be qualified by materiality. In general terms, any matter involving an amount equal to
less than €1 million (quantum subject to periodic review) will not be a matter for which Directors can
request additional information.
•
In relation to the limitations on variable remuneration, we do not comply with recommendation 36 of
the Unified Corporate Governance Code, as no limits on variable remuneration are contemplated.
•
The Audit Committee does not currently have a mechanism in place by which they may cause any
employee or officer to appear before it, as envisaged by recommendation 46 of the Unified Corporate
Governance Code.
•
The individual remuneration and other terms of executive directors are not matters in which the
Remuneration and Nomination Committee are to make a proposal as envisaged in recommendation 52
of the Unified Corporate Governance Code.
Conflicts of Interests within the Board of Directors and Senior Management
As mentioned above, Philippe Poletti and Lise Fauconnier are Senior Managing Director and Managing
Director, respectively, of Ardian, and Benoit Vauchy and Carlos Mallo are Partners and are respectively heads of
Permira’s Paris and Madrid offices. Following the Settlement of the Offering, Luxgoal 3 (which is wholly-owned by
certain funds managed or advised by Permira Asesores S.L.) and the Ardian Funds will hold Shares in the Company
in the amounts and proportions as set out in “Principal Shareholders”.
In addition, Javier Pérez-Tenessa de Block, our Chairman and Chief Executive Officer, acts as Opodo’s
nominated members on ReallyLateBooking’s board of directors. Opodo currently owns 25% of the share capital of
ReallyLateBooking.
Except as otherwise disclosed, we believe there are no other conflicts of interests, actual or potential, among the
members of our Board of Directors or Senior Management and none of the members of our Board of Directors or
Senior Management is engaged in any self-dealing or appropriating to themselves any business that could be
considered as part of our operations or otherwise has private interests or other duties that could result in a potential
conflict of interests with their prospective duties owed to the Company.
Corporate Conflicts of Interests Procedures
Article 57 of the 1915 Law provides that “Any director having an interest in a transaction submitted for
approval to the board of directors conflicting with that of the company, shall be obliged to advise the board thereof
and to cause a record of his statement to be included in the minutes of the meeting. He may not take part in these
deliberations.” This, however, does not apply when the decision of the Board of Directors relates to current
operations entered into under normal conditions.
Article 6 of our Rules of Procedure of the Board of Directors will require each of our Directors to avoid
situations that could give rise to a conflict of interests between the Company and such Director or persons related to
him or her. Each Director will be required to report to the Board of Directors any circumstances that may give rise to
a conflict of interests with the Company as soon as such Director becomes aware of such circumstances. Each
Director will be required to abstain from voting on matters in which such Director may have a personal interest,
whether direct or indirect. In addition, each Director will be required to abstain from engaging with the Company in
any relevant commercial or professional transactions without having first informed and received approval for such
transaction from the Board of Directors, which shall seek a report from the Audit Committee. However, Board
authorization will not be required for related-party transactions that satisfy certain conditions. In relation to
transactions in the ordinary course of business or transactions of a recurrent or habitual character, general
authorization from the Board of Directors will be sufficient.
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In accordance with our Internal Code of Conduct, conflicts of interests will be deemed to arise in respect of (i) a
significant client or provider of the Company or the eDreams ODIGEO Group or (ii) a company engaged in the
same type of business or which is a competitor of the Company or the eDreams ODIGEO Group, when a Director in
respect of such client, provider, company or competitor
•
is a director or senior officer thereof;
•
owns a significant stake therein (which, for companies traded on any official secondary Spanish or foreign
market, the companies referred to in Article 53 of the LMV and implementing legislation, and domestic or
foreign privately held companies, is understood to mean any direct or indirect share exceeding 20 percent
of the issued share capital);
•
is related to directors, owners of significant stakes in capital, or senior officers thereof; or
•
maintains significant direct or indirect contractual relationships.
Shareholdings of Directors and Members of Senior Management
Immediately following the Settlement, certain of our Directors and members of our Senior Management will
beneficially own an aggregate of 3,314,955 Shares in the Company, representing approximately 3.2% of our issued
and outstanding Shares of the Company.
The following table sets forth the names and shareholdings of our Directors and members of our Senior
Management as of the date of this prospectus and after the Settlement:
Shares
As of the date of this prospectus
Number of Shares
held
Name
After Settlement(4)
As a percentage of
total Shares
Number of Shares
held
As a percentage of
total Shares
3.0%
0.5%
0.2%
2,029,618
356,096
168,764
1.9%
0.3%
0.2%
0.3%
0.2%
0.5%
4.7%
234,652
207,451
318,374
3,314,955
0.2%
0.2%
0.3%
3.2%
Directors: (5)
Javier Pérez-Tenessa de Block(1) (3) ................................
2,988,700
Mauricio Prieto(1) (3) ...............................................................
524,367
James Hare(2)................................................................
248,512
Members of Senior Management:
Dana Philip Dunne(3) .............................................................
277,380
David Elízaga................................................................
207,451
468,819
Philipe Vimard(3) ................................................................
4,715,229
Total................................................................
(1)
Also a member of our Senior Management.
(2)
Independent Director.
(3)
Senior Management member who sold Shares in the Offering.
(4)
Assuming no exercise of the over-allotment option pursuant to the Offering.
(5)
Lise Fauconnier, Benoit Vauchy, Philippe Poletti and Carlos Mallo, our Directors affiliated with the Permira Funds and the Ardian
Funds, respectively, have indirect interests in the Company via having an interest in one or more of Permira Funds or Ardian Funds, or
their respective co-investment vehicles, as applicable.
The difference, if any, in shares owned as of the date of this prospectus and after Settlement as set forth in the
above table is explained by the Directors and members of our Senior Management identified above selling Shares in
the Offering.
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As of the date of this prospectus, none of our Directors or Senior Management members holds options in
respect of the Shares.
Remuneration of Directors and Members of Senior Management
Overview
The compensation of the members of our Board of Directors will be determined at a general Shareholders’
meeting and the compensation of the members of our Senior Management will generally be determined by our Chief
Executive Officer based on the general remuneration and compensation policy set out by our Remuneration and
Nomination Committee. For the year ended March 31, 2013 and the nine months ended December 31, 2013, our
former members of our Board of Directors, who were our Directors during the periods indicated, did not receive any
compensation for their mandate from the Company or its subsidiaries. For the year ended March 31, 2013 and the
nine months ended December 31, 2013, the aggregate compensation paid to the members of our Senior Management
by the Company and its subsidiaries was €1.3 million and €1.9 million, respectively, which consisted of cash
compensation for salary and bonuses. (including any amounts contributed to a pension scheme at the election of a
member of Senior Management). The Company and its subsidiaries make available a pension scheme to members of
our Senior Management, pursuant to which any member of our Senior Management may elect to allocate a portion
of the fixed base salary to such pension scheme. Other than in respect of such pension scheme, there are no pension
commitments or contributions made by the Company or its subsidiaries in respect of members of our Senior
Management.
Remuneration of the Members of our Board of Directors
Independent Directors on our Board of Directors will be compensated based on the number of Board
meetings they attend. An independent Director will receive approximately €6,700 for each meeting he or she
attends. Executive Directors and Directors appointed from among candidates put forward by a Principal Shareholder
Group will not be paid a fee for their service on the Board of Directors. In addition, each independent Director is
entitled to additional remuneration for his role as chairman of the Audit Committee or the Remuneration and
Nomination Committee or if he is a Vice Chairman.
Remuneration of the Members of our Senior Management
Following Admission to Trading and Settlement, the Remuneration and Nomination Committee will establish
the general policy on remuneration and compensation of our Senior Management, which will be implemented on an
individual basis by our Chief Executive Officer. However, our Chief Executive Officer’s compensation will be
determined by our Board of Directors.
The policy governing the remuneration of our Senior Management will be aimed at attracting, rewarding, and
retaining highly-qualified executives and at providing and motivating the members of our Senior Management with
a balanced and competitive remuneration that is focused on sustainable results and aligned with the long-term
strategy of the Company.
Pursuant to the remuneration policy, the remuneration of the members of our Senior Management consists of
the following fixed and variable components:
•
a fixed base salary;
•
a variable, annual bonus (short-term annual cash incentive); and
•
a long-term variable incentive plan.
These components are discussed in more detail below.
Fixed Base Salary
The base salary of the members of our Senior Management will be determined by our Chief Executive Officer
based on the general policy set out by our Remuneration and Nomination Committee.
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Variable Annual Cash Bonus
The variable compensation component is dependent on the Company’s operating results and the achievement of
individual targets determined on an individual basis by our Chief Executive Officer based on the general policy set
out by our Remuneration and Nomination Committee. The objective of this short-term annual cash incentive is to
ensure that our Senior Management is well-incentivized to achieve performance targets in the shorter term.
Performance conditions will be set by our Chief Executive Officer based on the general policy set out by our
Remuneration and Nomination Committee and may include criteria concerning the Company’s financial
performance, qualitative criteria representing Company performance and/or individual qualitative performance. In
general, the larger the compensation package of a member of Senior Management, the higher the percentage of
his/her variable cash bonus. For members of our Senior Management, approximately 25% of their remuneration is
made up by the variable component.
Management Long-Term Incentive Plan
Our Board of Directors expect to put in place a long-term incentive plan (“LTIP”) for the purpose of aligning
the longer term interests of members of our Senior Management and other employees of the eDreams ODIGEO
Group selected by our Chief Executive Officer (such members of our Senior Management and other employees,
including our Chief Executive Officer, taken together, “Eligible Employees”) with those of our Shareholders. The
LTIP is also designed to incentivize long-term focus and retention of management and staff.
Under the LTIP, the Company will grant performance stock rights (“PSRs”) to Eligible Employees proposed by
our Chief Executive Officer and approved by our Board of Directors. Each PSR will vest and entitle holders thereof
to acquire one Share if certain performance thresholds of the Company are met or where such performance
thresholds are not met in full, a number of Shares with a total market value (as of the relevant value date) equal to a
certain percentage (calculated on a gradient scale) of the market value that the Shares of the relevant Tranche (as
defined below) would have had, if the relevant performance threshold had been met in full (any such Shares, the
“Incentive Shares”). We currently expect that all PSRs will be settled by the delivery of newly issued Shares as
authorized by our Articles of Incorporation. The maximum number of Incentive Shares that would be issued or
delivered to Eligible Employees as a result of the settlement of the PSRs would represent 4.4% of the total issued
share capital of the Company on a fully diluted basis (including treasury shares, if any) as of the Admission to
Trading.
The LTIP will relate to a period of four years with two overlapping cycles of three years each, with half of the
PSRs tracking the performance of the Company over the first three-year period from the date of Admission to
Trading (the “First Cycle”) and the remaining half of the PSRs tracking the performance of the Company over the
three-year period from the first anniversary of the date of Admission to Trading (the “Second Cycle”).
The First Cycle will be divided into two overlapping tranches: (i) a first tranche, with 40% of the PSRs, tracking
the performance of the Company over the two-year period from the date of Admission to Trading; and (ii) a second
tranche, with 10% of the PSRs, tracking the performance of the Company over the three-year period from the date of
Admission to Trading (the “First Cycle Tranches”).
The Second Cycle will also be divided into two overlapping tranches: (i) a first tranche, with 30% of the PSRs,
tracking the performance of the Company over the two-year period from the first anniversary of the date of
Admission to Trading; and (ii) a second tranche, with 20% of the PSRs, tracking the performance of the Company
over the three-year period from the first anniversary of the date of Admission to Trading (the “Second Cycle
Tranches” and, together with the First Cycle Tranches, the “Tranches”).
The performance thresholds for the vesting of the PSRs and the acquisition of Incentive Shares by Eligible
Employees corresponding to each Tranche will be based on the growth rate of total Shareholder’s return on an
absolute basis (i.e., without comparison to any other company) which will be calculated based on the increase in the
market value of the Shares within the relevant Tranche, taken together with the value of any dividends or other
distributions made to Shareholders.
In connection with the LTIP, members of our Senior Management that are Eligible Employees will be subject to
certain lock-up arrangements that will require such Eligible Employees at the time of any proposed sale of Incentive
Shares, not to be left, as a result of the sale, with a number of Incentive Shares the market value of which is less than
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several times the gross annual fixed salary of such Eligible Employee on the date of the sale; or (in respect of our
Chief Executive Officer only) less than a certain percentage of his Incentive Shares, whichever is lower, until the
earlier of such Eligible Employee leaving the Company and the end of the four-year period relating to the LTIP.
Employment Agreements
Members of our Senior Management have entered into employment agreements with a member of the eDreams
ODIGEO Group, which sets out the terms and conditions of their employment. In general, our Senior Management
are subject to a three-month notice period for termination and a non-compete clause for a period ranging between six
months and two years. The length of the non-compete period depends on a Senior Management member’s role
within the Group, and senior members are generally subject to longer non-compete periods of between one and two
years.
Insurance for the Members of our Board of Directors and Senior Management
We will provide members of our Board of Directors and Senior Management with protection through a
Directors’ and officers’ insurance policy. Under this policy, any of our past, present or future directors or officers
will be indemnified against any claim made against any one of them for any alleged or actual wrongful act in their
respective capacities as Directors or officers. The policy will also cover the losses arising from any such indemnified
claim, but only when and to the extent we are legally required or permitted to indemnify the Directors or officers for
such loss.
Service Contracts Providing for Benefits upon Termination of Board Membership and/or Employment
We expect to enter into a new services contract with Javier Pérez-Tenessa de Block in respect of his role as
our Chief Executive Officer that will provide, as does his current contract, that if his employment is terminated
without cause, he shall be entitled to a payment equivalent to up to three years’ base salary and bonus. In addition,
the contract is expected to provide that if the scope of powers delegated to him as Chief Executive Officer as of the
earlier of Admission to Trading and Settlement is reduced, he will be entitled to be removed as Chief Executive
Officer and to be treated as having been removed without cause.
We also expect to enter into a new services contract with Dana Philip Dunne in respect of his role as our
President and Chief Operating Officer that will provide, as does his current contract, that if his employment is
terminated without cause, he shall be entitled to a payment equivalent to nine months of base salary including
severance payments required under applicable law.
Other than as described above, the directorship agreements and employment agreements between the
Company and its subsidiaries, on the one hand, and members of our Board of Directors and members of our Senior
Management, respectively, on the other hand, do not include any provisions for special severance payments in
addition to those required under applicable law.
Loans and Similar Undertakings
Following the completion of the Offering, there will be no loans or similar undertakings outstanding to any
members of our Board of Directors or any members of our Senior Management.
Arrangements between any Director or Member of Senior Management and Shareholders
There are no arrangements or understandings between any Director or member of Senior Management and any
principal Shareholder other than the Shareholders’ Agreement as described in “Principal Shareholders—
Shareholders’ Agreement”.
Family Relationships
There are no family ties among the members of our Board of Directors and/or our Senior Management.
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Statement on Past Records
During the past five years, none of the members of our Board of Directors or our Senior Management have been
(i) convicted of fraudulent offenses; (ii) directors, officers etc. of companies that have entered into bankruptcy,
receivership or liquidation except as set out immediately below; or (iii) subject to any public incrimination and/or
sanctions by statutory regulatory authorities (including designated professional bodies) and have not been
disqualified by a court from acting as a member of an issuer’s board of directors, executive board or supervisory
body or being in charge of an issuer’s management or other affairs.
Mr. Dana Dunne was a non-executive member of the board of directors of The Game Group plc when the
company entered aministration in March 2012. This company was subsequently purchased out of administration by
Baker Acquisitions, a private equity firm and subsidiary of OpCapita, and renamed Game Retail Limited. Mr. Dana
Dunne ceased being a member of the board of directors of The Game Group plc in March 2012.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to shareholders holding 5% or more of the Shares
as of the date of this prospectus and after the Settlement.
Shares owned as of the
date of this prospectus
Shareholders
Luxgoal 3 S.à r.l.
(1)
AXA LBO Fund IV FCPR(2)
Number
48,472,569
26,167,103
Number of
Shares
offered in the
Offering
% (3)
46.2%
25.0%
Shares owned after
Settlement
No exercise of the overallotment option
Number
%
15,554,982 32,917,587 31.4%
8,397,096 17,770,007 16.9%
Full exercise of the overallotment option
Number
30,104,534
16,251,428
%
28.7%
15.5%
(1)
A vehicle wholly-owned by the Permira Funds. Permira IV Continuing LP2 directly holds 68.42% of the share capital of Luxgoal 3
S.à r.l.
(2)
A fund managed by Ardian.
(3)
Total share capital reflects the issuance of 4,878,049 Shares by the Company, which Shares are being sold in the Offering.
The difference, if any, in shares owned as of the date of this prospectus and after Settlement as set forth in the
above table is explained by the Shareholders identified above selling Shares in the Offering.
There are no investors that control the Permira Funds and the Ardian Funds (including AXA LBO Fund IV
FCPR) within the meaning of article 9(e) of the Luxembourg law of January 11, 2008 on transparency requirements,
as amended. The Permira Funds are advised by Permira Asesores, S.L or affiliated entities. The Ardian Funds are
managed by Ardian France S.A.
Ardian
Ardian was established in 1996 with headquarters in Paris. Ardian manages and advises over $36 billion of
assets and currently has offices in Frankfurt, London, Milan, New York, Singapore, Vienna, Zurich, Luxembourg
and Beijing. Funds managed by Ardian invest in a complete range of buyout asset classes including buyout, venture
capital, co-investment, infrastructure, private debt, primary, early secondary and secondary funds of funds. Ardian
does not have a specific industry focus, but in the past five years its main investments have been in the oil & gas,
health, testing, chemical, industrial, consumer and technology, and media and telecommunications sectors. Recent
investments of the funds managed by Ardian include NHV in the oil & gas transportation sector, Anios in the health
sector, Trescal in the testing sector, Fives Group in the industrial sector, Riemser in the health sector and
Schustermann & Borenstein in the consumer sector. To date, funds managed by Ardian have closed over 50 buyout
transactions in France, Germany, Belgium and Italy.
Ardian holds its interests in the Company via the Ardian Vehicles, including AXA LBO Fund IV FCPR.
Permira Funds
Since 1985, the Permira Funds have made nearly 200 private equity investments, with a total committed
capital of approximately €22 billion. The Permira Funds’ investment activity focuses on six core sectors: Chemicals,
Consumer, Financial Services, Healthcare, Industrial Products and Services and Technology, Media and
Telecommunications, with the latter accounting for approximately 35% of total investments made.
The Permira Funds hold their interests in the Company via Luxgoal 3.
Shareholder Reorganization
Shortly after the pricing of the Offering but prior to the date of this prospectus, our Shareholder structure was
reorganized as set out below.
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Shareholdings prior to the Shareholder Reorganization
Our principal Shareholders prior to the pricing of the Offering were Axeurope S.A. (“Axeurope”), a
Luxembourg investment vehicle controlled by the Ardian Funds, and Luxgoal S.à r.l. (“Luxgoal”), a Luxembourg
investment vehicle controlled by the Permira Funds. Prior to the pricing of the Offering, Axeurope and Luxgoal held
approximately 44.09% and approximately 53.89% of our total share capital, respectively, in the form of ordinary
shares. In addition to Ardian’s controlling stake in Axeurope, certain co-investors in the GoVoyages Group,
members of the former GoVoyages Group management through a Luxembourg investment vehicle named Go
Partenaires 3 and the Permira Funds through a Luxembourg investment vehicle named Luxgoal 2 S.à r.l. each held a
minority stake in Axeurope. In addition to the Permira Funds’ controlling stake in Luxgoal, members of the former
eDreams Group management (including certain members of our senior management) held a minority stake in
Luxgoal.
Certain members of our management also held directly or indirectly a stake in the Company as follows:
•
Some of these management members held indirectly (and together with Axeurope, Luxgoal and certain
co-investors) through G-Co Investment I S.C.A., a Luxembourg investment vehicle managed by G CoInvestment GP S.à r.l., a Luxembourg investment vehicle which is held by Axeurope and Luxgoal,
ordinary shares of the Company (such shares representing approximately 0.47% of our total share
capital immediately prior to the pricing of the Offering) and class A preferred shares entitled to receive
a preferred cumulative dividend and to exercise voting rights (such shares representing approximately
0.24% of our total share capital immediately prior to the pricing of the Offering).
•
Some of these management members held indirectly through G-Co Investment II S.C.A. and G-Co
Investment III S.C.A., each of them a Luxembourg investment vehicle managed by G Co-Investment
GP S.à r.l., class B preferred shares (such shares representing approximately 0.52% of our total share
capital immediately prior to the pricing of the Offering) and class C preferred shares (such shares
representing approximately 0.64% of our total share capital immediately prior to the pricing of the
Offering) which were convertible into ordinary shares in connection with certain events, including the
Offering and entitle to exercise voting rights.
•
Some of these management members held, either directly or indirectly through G-Co Investment IV
S.C.A., a Luxembourg investment vehicle managed by G Co-Investment GP S.à r.l., class D shares
which were redeemable into ordinary shares in connection with certain events, including the Offering,
which redemption price is based on a pricing formula linked to the enterprise value of the eDreams
ODIGEO Group (such class D shares representing approximately 0.16% of our total share capital).
Shareholder Reorganization
On April 3, 2014, a reorganization of our Shareholder structure took place following our Shareholders hold
Shares directly in the Company as set out in the table provided at the beginning of this section (the “Shareholder
Reorganization”), rather than all such persons holding interests indirectly in the Company as was the case for some
Shareholders prior to the Shareholder Reorganization.
The Shareholder Reorganization consisted of the merger by absorption under Section XIV, sub-section 1 of
the 1915 Law of each of Axeurope, Luxgoal, G-Co Investment I S.C.A., G-Co Investment II S.C.A., G-Co
Investment III S.C.A., G-Co Investment IV S.C.A., G Co-Investment GP S.à r.l. and Go Partenaires 3 (together, the
“Absorbed Companies”) into the Company. As part of the merger process, the Company (i) received and cancelled
all its outstanding shares held by the Absorbed Companies, (ii) exchanged its class D shares which were directly
held by management members against new ordinary shares and (iii) issued new ordinary shares to the shareholders
of the Absorbed Companies (the “Shareholder Merger”). As a result of the Shareholder Merger, all the outstanding
shares of the Company were contributed to or exchanged with the Company and were cancelled, and new Shares
were issued by the Company.
On April 3, 2014, the Shareholder Merger became effective, as a result of which in addition to the
redemption and cancellation of all the outstanding share capital and the issuance of new Shares (including the Shares
sold by the Selling Shareholders pursuant to the Offering) by the Company, each of the absorbed entities ceased to
exist and the Company was the transferee of all the assets and liabilities of the absorbed entities, including the
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receivables and other rights under the Convertible Subordinated Shareholder Bonds issued by GTF to Axeurope and
Luxgoal and the rights under the loans granted to certain members of our senior management.
In connection with the Shareholder Merger, under the 1915 Law, creditors of the merging entities were
granted a period of two months from the date of publication of the minutes of the relevant general meeting of the
shareholders approving the Shareholder Merger in the Luxembourg official gazette (Mémorial C, Recueil des
Sociétés et Associations) during which creditors holding a claim that predates such publication may obtain from the
presiding judge of the commercial chamber of the competent Tribunal d’arrondissment that the Company as the
surviving entity grant security interests to secure the payment obligations owed to such creditors. However, because
the Absorbed Companies had no significant liabilities as of the date of the Shareholder Merger, we do not expect
any such creditor rights to be exercised or require us to grant security interests over any material assets of the
eDreams ODIGEO Group.
Following the Shareholder Merger, certain limited recourse loans granted by Opodo Limited or deferred
purchase prices granted by Axeurope and Luxgoal to certain existing or former members of our management were
fully repaid in consideration of (i) the sale on the market of some or all of the new Shares held by such members of
our management and the repayment of the proceeds resulting from such sale in cash by such members of our
management to the Company; and/or (ii) the set-off against any other sum owed by the Company or any company of
its Group to such members of our management.
After the Shareholder Merger, the share capital of the Company was reduced to €10 million by way of a
reduction of the nominal value of each Share from €1 to € 0.10 without cancellation of any Shares issued
immediately following the Shareholder Merger in issue nor repayment on any Share and by allocation of an amount
corresponding to the resulting reduction of the share capital of an amount of €90 million to a reserve of the
Company.
After the Settlement and Admission to Trading, certain of the Principal Selling Shareholders will transfer
some of their new Shares to members of the former GoVoyages Group management in partial satisfaction of the
contingent and deferred price owed by such Principal Selling Shareholders relating to the prior sale from such
members of the former GoVoyages Group management and purchase by such Principal Selling Shareholders of
Axeurope securities. See “Plan of Distribution—Lock-Up Periods”.
For a description of certain transactions between us and certain of our principal Shareholders, see “Certain
Relationships and Related Party Transactions” below.
Shareholders’ Agreement
On April 3, we understand that Luxgoal 3, the Ardian Funds and Javier Pérez-Tenessa de Block entered into a
Shareholders’ Agreement in respect of the Company. The Company is not a party to the Shareholders’ Agreement.
In addition to the matters relating to our Board of Directors and our Chief Executive Officer described in
“Management and Board of Directors”, the Shareholders’ Agreement contains provisions to support an orderly and
coordinated process in respect of future sales of Shares by Luxgoal 3 or the Ardian Funds following the expiration
of their lock-up arrangements described in “Plan of Distribution”.
The Shareholders’ Agreement will terminate at such time that each of Luxgoal 3 or the Ardian Funds, in each
case, together with their respective affiliates, cease to hold at least 7.5% of the issued and outstanding Shares.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Opodo Acquisition and the Combination
On June 30, 2011, the eDreams ODIGEO Group was formed through the combination of the eDreams Group
with the GoVoyages Group and the Opodo Group (the “Combination”) by way of (i) a contribution to the Company
of (a) the eDreams Group by the Permira Funds and (b) the GoVoyages Group by the Ardian Funds in exchange for
shares of the Company and (ii) the acquisition by LuxGEO (a wholly-owned subsidiary of the Company) of 100%
of the share capital of Opodo from Amadeus IT Group, S.A. (“Amadeus”) effective as of June 30, 2011 (the “Opodo
Acquisition”).
Agreements with Amadeus
On February 9, 2011, in connection with the Opodo Acquisition, the Company entered into a 10-year nonexclusive agreement with Amadeus, which controlled the Opodo Group at that time, for the supply of GDS services.
The cash consideration paid by the Company to Amadeus for the Opodo Acquisition was approximately
€409.7 million. In connection with the Opodo Acquisition, Amadeus agreed to pay the eDreams ODIGEO Group a
signing bonus in the amount of €51.1 million under the GDS agreement. Under certain circumstances, the eDreams
ODIGEO Group may be required to repay the GDS contract bonus, in whole or in part, to Amadeus, namely if the
eDreams ODIGEO Group fails to meet certain targets for volumes of products sold through the Amadeus GDS set
forth in the GDS agreement.
Transactions with Affiliates
An affiliate of the Permira Funds purchased 2019 Notes issued by GTF on April 21, 2011 and 2018 Notes
issued by GDF on January 31, 2013. Our affiliates may from time to time hold or transact in the 2019 Notes and the
2018 Notes.
Management Incentives
For a description of management incentives, see “Management and Board of Directors—Remuneration of
Directors and Members of Senior Management”.
Following the completion of the Opodo Acquisition and the Combination, Axeurope and Luxgoal held
subordinated convertible bonds issued by GTF, with a maturity period of 49 years and subject to the terms of the
Intercreditor Agreement as Investor Liabilities (as defined therein). As described in “Principal Shareholders—
Shareholder Reorganization”, as a result of the Shareholder Reorganization, the Company became the holder of
100% of the Convertible Subordinated Shareholder Bonds, which were issued by GTF in connection with the
Combination. Accordingly, following the Shareholder Reorganization, the Convertible Subordinated Shareholder
Bonds are within our consolidation group and therefore an intra-Group liability. See “Management’s Discussion and
Analysis of Our Financial Condition and Results of Operations—Description of Debt Arrangements”.
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MARKET INFORMATION
Prior to the date of this prospectus, there has been no public market for the Shares. We have applied to list the
Shares on the Spanish Stock Exchanges and to have the Shares quoted through the AQS of the Spanish Stock
Exchanges. The Spanish securities market for equity securities consists of the Spanish Stock Exchanges (located in
Madrid, Barcelona, Bilbao and Valencia) and the AQS, or Mercado Continuo.
SIBE
The AQS, or Mercado Continuo, also known as the SIBE (Sistema de Interconexión Bursátil Español), links the
four Spanish Stock Exchanges, providing those securities listed on it with a uniform continuous market that
eliminates certain of the differences between the local exchanges. The principal feature of the system is the
computerized matching of bid and offer orders at the time of entry of the relevant order. Each order is executed as
soon as a matching order is entered, but can be modified or canceled until it is executed. The activity of the market
can be continuously monitored by investors and brokers. The SIBE is operated and regulated by Sociedad de Bolsas,
S.A. (“Sociedad de Bolsas”). All trades on the SIBE must be placed through a brokerage firm, a dealer firm or a
credit entity that is a member of a Spanish Stock Exchange.
In a pre-opening session held from 8:30 a.m. to 9:00 a.m. CET each trading day, an opening price is established
for each security traded on the SIBE based on a real-time auction in which orders can be entered, modified or
canceled but not executed. During this pre-opening session, the system continuously displays the price at which
orders would be executed if trading were to begin at that moment. Market participants only receive information
relating to the auction price (if applicable) and trading volume permitted at the current bid and offer price. If an
auction price does not exist, the best bid and offer price and associated volumes are shown. The auction finishes
with a random period of 30 seconds in which share allocation takes place. Until the allocation process has finished,
orders cannot be entered, modified or canceled. In exceptional circumstances (including the inclusion of new
securities on the SIBE) and after giving notice to the CNMV, Sociedad de Bolsas may establish an opening price
without regard to the reference price (the previous trading day’s closing price), alter the price range for permitted
orders with respect to the reference price or modify the reference price.
The computerized trading hours are from 9:00 a.m. to 5:30 p.m. CET. During the trading session, the trading
price of a security is permitted to vary up to a maximum so-called ‘static’ range of the reference price, provided that
the trading price for each trade of such security is not permitted to vary in excess of a maximum so-called ‘dynamic’
range with respect to the trading price of the immediately preceding trade of the same security. If, during the trading
session, there are matching bid and offer orders for a security within the computerized system which exceed any of
the above ‘static’ and/or ‘dynamic’ ranges, trading on the security is automatically suspended and a new auction is
held where a new reference price is set, and the ‘static’ and ‘dynamic’ ranges will apply over such new reference
price. The ‘static’ and ‘dynamic’ ranges applicable to each particular security are set up and reviewed periodically
by Sociedad de Bolsas. In addition, during the trading session from 9:00 a.m. to 5:30 p.m. CET, trades may occur
outside of the general trading system (contratación general) without prior authorization of Sociedad de Bolsas in the
form of block trades (contratación de bloques) provided that certain requirements are met in terms of maximum
spread of the trade price to the spot price of the security on the general trading system and minimum volume of the
trade.
Between 5:30 p.m. and 8:00 p.m. CET, trades may occur outside the computerized matching system without
prior authorization of Sociedad de Bolsas (provided such trades are communicated to Sociedad de Bolsas), at a price
within the range of 5% above the higher of the average price and closing price for the day and 5% below the lower
of the average price and closing price for the day if (i) there are no outstanding bids or offers, respectively, on the
system matching or bettering the terms of the proposed off-system transaction, and (ii) if, among other things, the
trade involves more than €300,000 and more than 20% of the average daily trading volume of the stock during the
preceding three months. These trades must also relate to individual orders from the same person or entity and be
reported to Sociedad de Bolsas before 8:00 p.m. CET.
Trades may take place (with the prior authorization of Sociedad de Bolsas) between 5:30 p.m. and 8:00 p.m.
CET at any price if:
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•
the trade involves more than €1.5 million and more than 40% of the average daily trading volume of the
stock during the preceding three months;
•
the transaction derives from a merger or spin-off, or from the reorganization of a group of companies;
•
the transaction is executed for the purpose of settling litigation or completing a complex set of contracts; or
•
Sociedad de Bolsas finds another appropriate cause.
Information with respect to the computerized trades which take place between 9:00 a.m. and 5:30 p.m. CET is
made public immediately, and information with respect to trades which occur outside the computerized matching
system is reported to the Sociedad de Bolsas by the end of the trading day and is also published in the Stock
Exchange official gazette (Boletín de Cotización) and on the computer system by the beginning of the next trading
day.
Clearance and Settlement System
The Shares were issued in dematerialized form under the 2013 Law. Under Luxembourg law, listed securities
belonging to the same class must be registered at all times in one single issuance account (compte d’émission) held
by one single clearing institution. Such clearing institution is LuxCSD, further to the decision of the Company’s
Board of Directors. The issuance account (compte d’émission) shall mention the securities identification elements,
the issued amount as well as any subsequent amendment thereto. The dematerialized securities are represented only
by a book-entry in a securities account (compte-titres). Ownership of and transfer of title to the Shares is evidenced
by means of book-entries within LuxCSD. The clearing institution may however establish or have established by the
issuer certificates corresponding to the dematerialized securities for the purpose of the international circulation of
securities. For a discussion of the form and transfer of the Shares, see “Description of the Share Capital of the
Company and Applicable Regulations—Form and Transfer of Shares”.
Transactions carried out on the SIBE are cleared and settled through the Sociedad de Gestión de los Sistemas de
Registro, Compensación y Liquidación de Valores, S.A. (“Iberclear”). Iberclear has approved regulations introducing
the so-called “T+3 Settlement System” by which the settlement of any transactions must be made within three
business days following the date on which the transaction was carried out. Only those entities participating in
Iberclear are entitled to use its clearing and settlement facilities, and participation is restricted to authorized
members of the Spanish Stock Exchanges, the Bank of Spain and, with the approval of the CNMV, other brokers
who are not members of the Spanish Stock Exchanges, banks, savings banks and foreign settlement and clearing
systems. Iberclear is owned by Bolsas y Mercados Españoles, Sociedad Holding de Mercados y Sistemas
Financieros, S.A., a holding company which holds a 100% interest in each of the Spanish official secondary markets
and settlement systems, including the Spanish Stock Exchanges. The clearance and settlement system and its
participating entities are responsible for maintaining records of purchases and sales under the book entry system.
Iberclear, which manages the clearance and settlement system, maintains a registry reflecting the number of shares
held by each of its participating entities on its own behalf as well as the number of shares held on behalf of its
clients. Each participating entity, in turn, maintains a registry of the owners of such shares.
In order for the Shares to be admitted to trading on the Spanish Stock Exchanges they must be eligible for
holding and settlement in book-entry form through Iberclear or a participant thereto. In the case of shares issued by
foreign issuers or originally registered with a foreign clearing and settlement institution, such as the Shares,
eligibility for holding and settlement through Iberclear or its participant entities requires that the issuer enters into a
foreign custodian, link and paying agency agreement with a participant in the foreign clearing and settlement
institution (the Foreign Custodian) and a participant of Iberclear (the Link Entity, as defined below) in terms
satisfactory to Iberclear to enable holders of the securities to transfer those in and out of the book-entry system of
Iberclear and to ensure at all times that the book-entries in respect of such securities registered with Iberclear and its
participants are supported by the corresponding book-entries held by the Link Entity in the foreign custodian on
behalf and for the benefit of investors holding the securities through Iberclear or a participant thereto.
As Foreign Custodian and depositary entity of the dematerialized shares, BNP Paribas assumes the
following obligations:
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•
To guarantee the existence, consistency, immobilization and exclusive allocation of the Shares to the
book-entry system operated by Iberclear. In addition, the foreign custodian assumes the obligation to
keep reconciled at all times the balance between the Shares registered in Iberclear and its participant
entities and the Shares that the Link Entity has effectively included in such system.
•
Not to communicate to the Link Entity the inclusion of the Shares in the book-entry system operated
by Iberclear and its participating entities, except under certain circumstances set out in the agreement.
•
To maintain its status as participant entity of LuxCSD, as well as the legal authorization to carry
registries and keep deposits on behalf of third parties.
As Link Entity between us, the Spanish authorities and our investors, BNP Paribas assumes, among others,
the following obligations:
•
To act before Iberclear as our representative, communicate any information and take all necessary
steps to comply with Spanish current legislation.
•
To establish and maintain the necessary mechanism to facilitate, at any time, the exercise by our
Shareholders holding our Shares through Iberclear of the rights on their behalf.
•
To coordinate with the Foreign Custodian entity the necessary actions to include the Shares in
Iberclear, as well as to keep reconciled at all times the balance of Shares in Iberclear and the custodian
entity.
•
To maintain its status as participant entity of Iberclear.
As Paying Agent, BNP Paribas’ main obligations, among others, are to assume on our behalf the payment
of the economic rights that may derive from the Shares registered in Iberclear and its participant entities.
The agreement will be in force for the same time as the securities to which it relates, i.e., for an indefinite
period. Notwithstanding this, we could revoke the appointment of any of the parties by signing a new agreement
with another entity and obtaining clearance from Iberclear. Additionally, any of the parties may cancel the
agreement in the event of non-compliance by another party with any of the obligations assumed by virtue of the
agreement. This circumstance must be notified to Iberclear and to the investors.
In addition, obtaining beneficial ownership of the Shares held through Iberclear or a participant thereto requires
the participation of a Spanish official stockbroker, broker-dealer or other entity authorized under Spanish law to
record the transfer of Shares. In order to evidence such beneficial ownership of the Shares, the relevant participating
entity in Iberclear must, at the Shareholder’s request, issue a certificate of ownership. If the owner is a participating
entity of Iberclear, Iberclear is in charge of the issuance of the certificate with respect to the Shares held in the
participating entity’s name.
Holders of Shares held through Iberclear or a participant thereto will only be able to exercise their rights
attached to their Shares (including the right to vote at general meetings and the preferential subscription right in
respect of the issue of new Shares) by instructing the Link Entity to exercise these rights on their behalf, and,
therefore, the process for exercising rights may take longer for holders of Shares held through Iberclear or a
participant thereto than it will for holders of Shares held through another intermediary securities account holder
(such as Euroclear or Clearstream) or LuxCSD and the LuxCSD Principal Agent (as defined below). Consequently,
the Link Entity may set a deadline for receiving instructions from holders of Shares held through Iberclear or a
participant thereto in respect of any corporate event of the Company which may be shorter than the deadline
otherwise applicable for holders of Shares of the Company through another intermediary securities account holder
(such as Euroclear or Clearstream) or LuxCSD and the LuxCSD Principal Agent. Furthermore, the Link Entity will
not exercise any rights in respect of Shares held through Iberclear or a participant thereto for which it has not
received appropriate instructions from the beneficial owner thereof within the established deadline.
Law 32/2011, of October 4, which amended the LMV, features some changes yet to be implemented in the
Spanish clearing, settlement and registry procedures of securities transactions that will substantially modify the
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above-mentioned system and will allow the connection of the post–trading Spanish systems to the European system
Target-2 Securities, which is scheduled to be fully implemented in February 2017.
LuxCSD and the LuxCSD Principal Agent/Foreign Custodian
The Shares were issued in dematerialized form under the 2013 Law through their inclusion in book-entry form
in an issuance account (compte d’émission) held through LuxCSD (which is 50% held by Clearstream International
S.A. and 50% held by Banque centrale du Luxembourg), which has entered into an agreement with the Company in
this respect. LuxCSD also holds a securities account (compte-titres) in the name of BNP Paribas Securities Services,
Luxembourg branch (the “LuxCSD Principal Agent”) on behalf of the Company pursuant to an agreement entered
into between the Company and the LuxCSD Principal Agent. Such securities account evidences ownership of and
transfer of title to the Shares. In the event of the issuance of new Shares, the LuxCSD Principal Agent will inform
LuxCSD in order to make the appropriate entry in the relevant book. The LuxCSD Principal Agent also serves as an
intermediary and coordinates with the Link Entity in Spain in order to disseminate information received from the
Company with respect to the Shares, such as concerning general meetings of the Shareholders or dividends, to the
holders of the Shares through the facilities of Iberclear.
See “Description of the Share Capital of the Company and Applicable Regulations—Form and Transfer of
Shares” concerning transfers of the Shares and “Description of the Share Capital of the Company and Applicable
Regulations—Voting Rights and General Meeting of the Shareholders” concerning the ability of holders of the
Shares to participate in general Shareholders’ meetings.
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GENERAL INFORMATION ON THE COMPANY AND THE GROUP
Formation, Name, Registered Office, Fiscal Year and Duration of the Company
eDreams ODIGEO was incorporated under the laws of the Grand Duchy of Luxembourg by (i) Luxgoal S.à r.l.,
a Luxembourg private limited liability company (société à responsabilité limitée), having its registered office at 282,
Route de Longwy, L-1940 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg
Register of Commerce and Companies (Registre de commerce et des sociétés de Luxembourg) under number
B 152.268 and (ii) FCPR Axa LBO Fund IV, a fonds commun de placement à risques à procédure allégée, governed
by the laws of the Republic of France, acting through its manager, Axa Investment Managers Private Equity Europe,
a société anonyme incorporated under the laws of the Republic of France, registered with the Paris Register of
Commerce and Companies under number 403 201 882, whose registered office is at 20 place Vendôme, F-75001
Paris, on February 14, 2011 as a Luxembourg private limited liability company (société à responsabilité limitée)
under the name “LuxGEO Parent S.à r.l.”, having an initial share capital of €34,000 pursuant to a notarial deed
enacted by the Luxembourg notary Maître Martine Schaeffer for an unlimited duration. The Company is registered
with the Luxembourg Register of Commerce and Companies (Registre de commerce et des sociétés de Luxembourg)
under registration number B 159.036. On January 16, 2014, the legal name of the Company was changed to
“eDreams ODIGEO”. On January 27, 2014, the Company was transformed from a private limited liability company
(société à responsabilité limitée) into a public limited liability company (société anonyme) under the laws of the
Grand Duchy of Luxembourg and the Articles of Incorporation of the Company were fully restated. Shortly after the
pricing of the Offering but prior to the date of this prospectus, our share capital was reorganized as described in
“Principal Shareholders—Shareholder Reorganization”. The share capital of the Company is as of the date of this
prospectus set at €10,487,804.90, composed of 104,878,049 Shares having a nominal value of €0.10 each.
The Company’s financial year begins on April 1 of each year and ends on March 31 of the following year. The
first financial year of the Company exceptionally began on the Company’s date of incorporation (February 14, 2011)
and ended on March 31, 2011. The Company’s registered office is located at 282, Route de Longwy, L-1940
Luxembourg, Grand Duchy of Luxembourg. The Company’s telephone number is +352 26 86 81 30.
Historical changes to the Articles of Incorporation of the Company
Following the Company’s incorporation on February 14, 2011, the Articles of Incorporation of the Company
were first amended on June 30, 2011 pursuant to a notarial deed enacted by the Luxembourg notary Maître Carlo
Wersandt in order to increase the share capital of the Company from its original amount of €34,000 to
€31,037,974.05 through the issuance of 3,100,397,405 new shares having a nominal value of €0.01 with a share
premium of €31,003,974.05. Such capital increase took place by way of a contribution in kind consisting of a stake
in Lyeurope, Go Partenaires 2 and Lyparis.
On June 30, 2011, the Articles of Incorporation of the Company were further amended by a notarial deed
enacted by the Luxembourg notary Maître Carlo Wersandt whereby class A preferred shares and class B preferred
shares were created and whereby, through various contributions in cash and in kind of receivables, the share capital
of the Company was increased from its original amount of €31,037,974.05 to €116,488,075.72 through the issuance
of a total of 8,333,615,391 new ordinary shares, 56,394,776 new class A preferred shares and 155,000,000 new class
B preferred shares, each having a nominal value of €0.01, with a total share premium of €83,336,153.91 being paid
on the new ordinary shares issued. The Articles of Incorporation were also fully restated, including to spell out the
rights of the class A preferred shares and class B convertible preferred shares and to amend the Company’s
corporate object.
The Articles of Incorporation of the Company were additionally amended on June 30, 2011 by a notarial deed
enacted by the Luxembourg notary Maître Carlo Wersandt increasing the share capital of the Company from
€116,488,075.72 to €226,279,847.66 through the issuance of 10,979,177,194 new ordinary shares having a nominal
value of €0.01 each issued with a share premium in a total amount of €117,052,243.03. This capital increase was
made by way of a contribution in kind to the Company consisting of 13,081,722 shares in eDreams, Inc.
On September 27, 2011, the Company’s Articles of Incorporation were further amended by a notarial deed of
the Luxembourg notary Maître Carlo Wersandt whereby the Company’s share capital was decreased from
€226,279,847.66 to €225,959,988.59 through the cancellation of 31,985,907 class B preferred shares.
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On September 30, 2011, by a notarial deed enacted by the Luxembourg notary Maître Carlo Wersandt, the
Company’s share capital was increased, by a contribution in kind of receivables, from €225,959,988.59 to
€232,506,715.30 through the issuance of 654,672,671 new ordinary shares having a nominal value of €0.01 each
issued with €6,546,726.72 of share premium.
By a notarial deed of the Luxembourg notary Maître Carlo Wersandt, on February 26, 2013, the Company’s
Articles of Incorporation were amended in order to create a new class of shares in the share capital of the Company
(class C preferred shares) and in order to increase the Company’s share capital, by a contribution in cash, from
€232,506,715.30 to €234,006,715.30 through the issuance of 150,000,000 new class C preferred shares having a
nominal value of €0.01 each. The Articles of Incorporation were also fully restated, including to spell out the rights
of the class C convertible preferred shares.
On September 20, 2013, by a notarial deed enacted by the Luxembourg notary Maître Carlo Wersandt, the
Company’s share capital was increased, by contributions in kind of shares in G Co-Investment I S.C.A., from
€234,006,715.30 to €234,497,114.65 through the issuance of 49,039,935 new ordinary shares having a nominal
value of €0.01 each issued with a total of €909,600.65 of share premium.
On December 13, 2013, by a notarial deed enacted by the Luxembourg notary Maître Carlo Wersandt, (i) six
new classes of shares (class D1 shares, class D2 shares, class D3 shares, class D4 shares, class D5 shares and class
D6 shares) were created, (ii) the share capital of the Company was increased from €234,497,114.65 to
€234,862,114.65 through the issuance of 6,083,335 class D1 shares, 6,083,333 class D2 shares, 6,083,333 class D3
shares, 6,083,333 class D4 shares, 6,083,333 class D5 shares and 6,083,333 class D6 shares (all with a nominal
value of €0.01 each) in exchange for a contribution in cash and (iii) the Articles of Incorporation of the Company
were amended and fully restated in order to reflect the foregoing and the rights and obligations attached to the new
class D1 shares, class D2 shares, class D3 shares, class D4 shares, class D5 shares and class D6 shares.
Pursuant to a meeting of an extraordinary general meeting of the Shareholders held on January 16, 2014 before
the Luxembourg notary Maître Carlo Wersandt, the name of the Company was changed from “LuxGEO Parent
S.à r.l.” to “eDreams ODIGEO” and the Company’s Articles of Incorporation were amended to reflect this change.
On January 27, 2014, the Company’s Articles of Incorporation were further amended by a notarial deed enacted
by the Luxembourg notary Maître Wersandt, whereby the Company was converted from a private limited liability
company (société à responsabilité limitée) to a public limited liability company (société anonyme).
The Company’s Articles of Incorporation were entirely amended and restated on March 20, 2014 before the
Luxembourg notary Maître Carlo Wersandt. The entirely amended and restated Articles of Incorporation are to
come into effect as of the earlier of Admission to Trading or Settlement of the Offering, save for the authorized
capital clause which came into effect on the pricing of the Offering and the provisions in relation to the possible
dematerialization of shares in the Company which became effective as of the above-mentioned date of the general
Shareholders’ meeting before the notary.
The Company's Articles of Incorporation were amended during an extraordinary general meeting of the
shareholders of the Company held on April 1, 2014 before the Luxembourg notary Maître Carlo Wersandt in
relation to, inter alia, the Shareholder Reorganization, the cancellation of the Company's share capital prior to the
completion of the Shareholder Reorganization, the issuance of 100,000,000 Shares in dematerialized form and the
change of the nominal value of the Shares in the Company to €0.10. The issuance of the 100,000,000 Shares and the
change of the nominal value became effective upon completion of the Shareholder Reorganization.
The Articles of Incorporation of the Company were most recently amended in connection with the issuance of
4,878,049 new Shares issued within the framework of the Company's authorized capital with €49.5 million of share
premium by a decision of the board of directors of the Company taken during a meeting of the board of directors
held on April 2, 2014. The issuance of such 4,878,049 Shares became effective upon, inter alia, receipt by the
Company of the funding for such Shares on April 4, 2014.
Corporate Purpose
On March 20, 2014, the Articles of Incorporation were amended and fully restated. Such amended and restated
Articles of Incorporation contain certain provisions that will become effective on the earlier of Admission to
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Trading and Settlement. The description below is of the amended and restated Articles of Incorporation, as they will
be in force upon the effectiveness of such provisions.
According to article 3 of the Company’s Articles of Incorporation, the purpose of the Company is:
•
to act as an investment holding company and to co-ordinate the business of any corporate bodies in
which the Company is for the time being directly or indirectly interested, and to acquire (whether by
original subscription, tender, purchase, exchange or otherwise) the whole of or any part of the stock,
shares, debentures, debenture stocks, bonds and other securities issued or guaranteed by any person
and any other asset of any kind and to hold the same as investments, and to sell, exchange and dispose
of the same;
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•
to carry on any trade or business whatsoever and to acquire, undertake and carry on the whole or any
part of the business, property and/or liabilities of any person carrying on any business;
•
to invest and deal with the Company’s money and funds in any way the Company’s Board of Directors
thinks fit and to lend money and give credit in each case to any person with or without security;
•
to borrow, raise and secure the payment of money in any way the Company’s Board of Directors
thinks fit, including by way of public offer. It may issue by way of private or public placement (to the
extent permitted by Luxembourg law) securities or instruments, perpetual or otherwise, convertible or
not, whether or not charged on all or any of the Company’s property (present and future) or its
uncalled capital, and to purchase, redeem, convert and pay off those securities;
•
to borrow, raise and secure the payment of money in any way the Company’s Board of Directors
thinks fit, including by the issue (to the extent permitted by Luxembourg law) of debentures and other
securities or instruments, perpetual or otherwise, convertible or not, whether or not charged on all or
any of the Company’s property (present and future) or its uncalled capital, and to purchase, redeem,
convert and pay off those securities;
•
to acquire an interest in, amalgamate, merge, consolidate with and enter into partnership or any
arrangement for the sharing of profits, union of interests, co-operation, joint venture, reciprocal
concession or otherwise with any person, including any employees of the Company;
•
to enter into any guarantee or contract of indemnity or suretyship, and to provide security for the
performance of the obligations of and/or the payment of any money by any person (including any body
corporate in which the Company has a direct or indirect interest or any person (a “Holding Entity”)
which is for the time being a member of or otherwise has a direct or indirect interest in the Company or
any body corporate in which a Holding Entity has a direct or indirect interest and any person who is
associated with the Company in any business or venture), with or without the Company receiving any
consideration or advantage (whether direct or indirect), and whether by personal covenant or mortgage,
charge or lien over all or part of the Company’s undertaking, property, assets or uncalled capital
(present and future) or by other means; for the purposes of article 3 of the Company’s Articles of
Incorporation, “guarantee” includes any obligation, however described, to pay, satisfy, provide funds
for the payment or satisfaction of, indemnify and keep indemnified against the consequences of default
in the payment of, or otherwise be responsible for, any indebtedness or financial obligations of any
other person;
•
to purchase, take on lease, exchange, hire and otherwise acquire any real or personal property and any
right or privilege over or in respect of it;
•
to sell, lease, exchange, let on hire and dispose of any real or personal property and/or the whole or any
part of the undertaking of the Company, for such consideration as the Company’s Board of Directors
thinks fit, including for shares, debentures or other securities, whether fully or partly paid up, of any
person, whether or not having objects (altogether or in part) similar to those of the Company; to hold
any shares, debentures and other securities so acquired; to improve, manage, develop, sell, exchange,
lease, mortgage, dispose of, grant options over, turn to account and otherwise deal with all or any part
of the property and rights of the Company;
•
enter into agreements including, but not limited to any kind of credit derivative agreements,
partnership agreements, underwriting agreements, marketing agreements, distribution agreements,
management agreements, advisory agreements, administration agreements and other services contracts,
selling agreements, or other in relation to its purpose;
•
to do all or any of the things provided in any paragraph of article 3 of the Company’s Articles of
Incorporation (a) in any part of the world; (b) as principal, agent, contractor, trustee or otherwise; (c)
by or through trustees, agents, sub-contractors or otherwise; and (d) alone or with another person or
persons; or
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•
to do all things (including entering into, performing and delivering contracts, deeds, agreements and
arrangements with or in favour of any person) that are in the opinion of the Company’s Board of
Directors incidental or conducive to the attainment of all or any of the Company’s objects, or the
exercise of all or any of its powers;
provided always that the Company will not enter into any transaction which would constitute a regulated activity of
the financial sector or require a business license under Luxembourg law without due authorisation under
Luxembourg law.
Group Structure and Material Shareholdings
Overview
The Company, with its registered office in Luxembourg, is the parent holding company of the eDreams
ODIGEO Group. We are a leading online travel company with a presence in 42 countries. We make flight and nonflight products directly available to travelers principally through our online booking channels (desktop websites,
mobile websites and mobile apps) and via our call centers, as well as indirectly through white label distribution
partners and other travel agencies. The following chart provides an overview (in simplified form) of our subsidiaries
as of the date of this prospectus.
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Significant Subsidiaries
The following table provides an overview of our significant direct and indirect subsidiaries as of the date of the
prospectus.
Name of Subsidiary
Country of
Subsidiary
Ownership interest of
Company
Number of shares
Vacaciones eDreams S.L.U. ................................
Spain
1,203,680
Opodo Limited ................................................................
United Kingdom
2,751,131,546
GoVoyages S.A.S.................................
France
14,150,000
eDreams Inc. ................................................................
United States
11,472,463
% of
share
capital
99.99%
99.99%
99.99%
99.99%
Voting power of Company
Number of shares
1,203,680
2,751,131,546
14,150,000
11,472,463
% of voting
shares
99.99%
99.99%
99.99%
99.99%
Significant or Material Change
Save as disclosed in this prospectus there has been no significant change in the financial or trading position of
the Company since December 31, 2013 and there has been no material adverse change in the financial position or
prospects of the Company since December 31, 2013.
Paying Agent
BNP Paribas Securities Services, Luxembourg Branch will be the paying agent in respect of Luxembourg. The
address of the paying agent in respect of Luxembourg is 33, rue de Gasperich Howald-Hesperange, L-2085
Luxembourg, Grand Duchy of Luxembourg.
BNP Paribas Securities Services, Sucursal en España will be the paying agent in respect of Spain. The address
of the paying agent in respect of Spain is Calle de la Ribera del Loira, 28, 28042 Madrid, Spain.
Independent Auditors
The independent auditors of the Company are Deloitte Audit S.à r.l., 560, Rue de Neudorf, L2220 Luxembourg, Grand Duchy of Luxembourg. Deloitte Audit S.à r.l. are members of the Luxembourg Institute
of Registered Auditors (Institut des Réviseurs d’Entreprises), qualifying as cabinet de révision agréé. Deloitte Audit
S.à r.l. have audited the Consolidated Annual Financial Statements and the Unconsolidated 2011 Financial
Statements included elsewhere in this prospectus, as stated in their reports appearing elsewhere in this prospectus.
See “Presentation of Financial and Other Data”.
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DESCRIPTION OF THE SHARE CAPITAL OF THE COMPANY AND APPLICABLE REGULATIONS
The following overview provides information concerning our share capital and briefly describes certain
significant provisions of our Articles of Incorporation and Luxembourg corporate law. This summary does not
purport to be complete and is qualified in its entirety by reference to our Articles of Incorporation and Luxembourg
corporate law. Copies of our Articles of Incorporation are available at our registered office at 282, Route de
Longwy, L-1940 Luxembourg, Grand Duchy of Luxembourg.
Share Capital
General
As of the date of this prospectus, the share capital of the Company was set at €10,487,804.90, composed of
104,878,049 ordinary Shares having a nominal value of €0.10 each. All Shares in the Company’s issued share
capital were fully paid up and no Shares have been partially paid. With respect to the issued share capital of the
Company during the period covered by the historical financial information, more than 10% of such issued share
capital was paid for with assets other than cash. See “General Information on the Company and the Group—
Historical changes to the Articles of Incorporation of the Company”.
Under Luxembourg law, share premium may be paid in at the incorporation or during the existence of the
company. From a Luxembourg corporate law perspective, such share premium represents neither a profit, nor a
reserve but an additional contribution which is not part of the share capital and may be paid by new subscribers to
equalize the financial rights of the former and new shareholders. The payment of share premium is not mandatory
and implies that the subscription price for the shares is higher than their nominal value.
Evolution of Issued Share Capital
The Company was founded on February 14, 2011 as a private limited liability company (société à
responsabilité limitée) with a nominal capital of initially €34,000 divided into 3,400,000 shares, each such share
with a nominal value of €0.01. On June 30, 2011, the share capital of the Company was increased to €31,037,974.05
and further increased to €116,488,075.72 and €226,279,847.66. On September 27, 2011, the share capital of the
Company was reduced to €225,959,988.59 through the cancellation of certain class B preferred shares. The share
capital of the Company was further increased on September 30, 2011 to €232,506,715.30, on February 26, 2013 to
€234,006,715.30, on September 20, 2013 to €234,497,114.65 and on December 13, 2013 to €234,862,114.65. On
March 20, 2014, the Articles of Incorporation of the Company were amended such that the share capital of the
Company following the completion of the Shareholder Reorganization was composed of 100,000,000 Shares having
a nominal value of €0.10 each for a total issued share capital of €10,000,000. The amount of the share premium
following completion of the Shareholder Reorganization is €663.7 million. The Articles of Incorporation of the
Company were most recently amended in connection with the issuance of 4,878,049 new Shares issued within the
framework of the Company's authorized capital with €49.5 million of share premium by a decision of the board of
directors of the Company taken during a meeting of the board of directors held on April 2, 2014. The issuance of
such 4,878,049 Shares became effective upon, inter alia, receipt by the Company of the funding for such Shares on
April 4, 2014.
Authorized Capital
Pursuant to an amendment to the Articles of Incorporation approved by the Shareholders on March 20,
2014 and with effect as of April 3, 2014, the Company had an unissued but authorized share capital of a maximum
amount of €21,000,000 to be represented by 210,000,000 Shares with a nominal value of €0.10 per Share. Following
the above-mentioned issuance of Shares through the authorized and unissued share capital, the Company currently
has an authorized and unissued share capital of €20,512,195.10 to be represented by 205,121,951 Shares. The
authorized and unissued share capital shall be and the authorization to issue Shares thereunder will expire on the
earlier of (i) five (5) years from the effective date of such authorization (i.e., pricing of the Offering) or (ii) April 3,
2019 (unless amended or extended by the general meeting of the Shareholders).
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The Board of Directors or delegate(s) duly appointed by the Board of Directors may from time to time
issue such Shares within the authorized share capital at such times and on such terms and conditions, including the
issue price, as the Board of Directors or its delegate(s) may in its or their discretion resolve, within the limits
provided for in the Company’s Articles of Incorporation. These limits include that upon Admission to Trading,
unless as otherwise provide for in the Articles of Incorporation, issuances of Shares from the authorized share
capital may not in total exceed fifty percent (50%) of the Company’s total subscribed share capital immediately
following Admission to Trading. In relation to this limit, issuances of Shares by the Company may in total represent
up to fifty percent (50%) of the Company’s total subscribed share capital immediately following Admission to
Trading, if the Board of Directors does not limit or cancel the Shareholders’ preferential rights to subscribe for such
Shares. However, with respect to those issuances for which the Board of Directors limits or cancels the
Shareholders’ preferential subscription rights, such issuances may not in total exceed twenty percent (20%) of the
Company’s total subscribed share capital immediately following Admission to Trading.
Convertible bonds and/or warrants may be issued entitling their holders, upon their exercise of such
instruments, to subscribe for new Shares issued from the authorized capital. Within the framework of a long-term
incentive plan for the employees or management of the Company and/or any entity in which the Company has a
direct or indirect interest, performance stock units may also be issued which entitle their holders to, upon their
exercise thereof, subscribe for new Shares issued from the authorized capital in an amount corresponding to up to
4.44% of the total share capital of the Company on a fully diluted basis (including treasury Shares, if any) as at
Admission to Trading. The abovementioned fifty percent (50%) and twenty percent (20%) limits, however, do not
apply to issuances of Shares upon the exercise of such performance stock units.
Even though the general rule is that Shares to be subscribed for in cash shall be offered on a preferential
basis to Shareholders in proportion to the capital represented by their Shares, the Board of Directors is authorized
under the authorized capital clause to suppress, limit or waive any preferential subscription rights of Shareholders to
the extent it deems it advisable for any issues of Shares within the authorized capital and may issue the Shares it is
authorized to issue under the authorized capital clause to such persons and at such price with or without a premium
and paid up by contribution in kind for cash, offsetting of claims, capitalization of reserves or in any other way the
Board of Directors may determine.
In addition, the issued and/or authorized capital of the Company may be increased or reduced one or more
times by a resolution of the general meeting of the Shareholders that is adopted in compliance with the quorum and
majority rules set out by the Articles of Incorporation for any amendment to the Articles of Incorporation.
The Company may proceed with the repurchase or redemption of its own Shares within the limits set forth
by law.
Form and Transfer of Shares
The Company’s Shares are all in dematerialized form which is in accordance with the 2013 Law and
permitted by the Company’s Articles of Incorporation.
Pursuant to the Company’s Articles of Incorporation and the 2013 Law, the entire issuance of dematerialized
shares must be registered in a securities account (compte-titres) representing the dematerialized shares issued with
the same clearing institution, and this requirement must be complied with on an ongoing basis. Pursuant to the 2013
Law, the name (LuxCSD) and address of the clearing institution must be published in a national newspaper and on
the Company’s website (www.edreamsodigeo.com) prior to the issuance of the dematerialized shares. Issuers
registered with the Luxembourg Register of Commerce and Companies (Registre de commerce et des sociétés de
Luxembourg) additionally need to file an extract with the Luxembourg Register of Commerce and Companies
(Registre de commerce et des sociétés de Luxembourg) indicating the name and address of the clearing institution in
order for it to be published in the Mémorial C, Recueil des Sociétés et Associations, the Luxembourg official gazette.
The Shares of the Company are entered in an issuance account (compte d’émission) and securities account
(compte-titres) held by LuxCSD, with its registered office at 43 Avenue Monterey, L-2163 Luxembourg, Grand
Duchy of Luxembourg, the Luxembourg clearing institution (organisme de liquidation), and in securities account(s)
(compte(s)-titres) held in Spain by Iberclear, with its registered office at Plaza de la Lealtad, 1, 28014 Madrid,
Spain, who serve as intermediaries. See “Market Information—Clearance and Settlement System”.
192
Dematerialized shares are transferred by means of book-entry transfer between accounts. The provisions of the
2001 Law, as amended and restated by the 2013 Law, are applicable to dematerialized shares, except where an
exception is foreseen in the 2013 Law. Accordingly, if the accounts are held with the same account holder, the
transfer is completed by book-entry transfer between these accounts. Otherwise the transfer must take place without
compensation between the account holders, via the clearing institution. See “Market Information—Clearance and
Settlement Systems”.
Pursuant to the provisions governing dematerialized shares of the 1915 Law, holders of dematerialized shares
may only be granted access to the general meeting and exercise their shareholders’ rights if they hold such shares no
later than fourteen days prior to the general meeting. See “—Voting Rights and General Meeting of the
Shareholders”.
In accordance with Company’s Articles of Incorporation, the Company’s Shares are freely transferable.
For a discussion of the holding and settlement of the Shares in book-entry form through Iberclear or a
participant thereto, see “Market Information—Clearance and Settlement System”.
Voting Rights and General Meeting of the Shareholders
Each Share shall be entitled to one vote at all general meetings of the Shareholders. There are no restrictions on
voting rights and there are no different voting rights granted to any of the Company’s Shareholders, including for the
avoidance of doubt the Company’s principal Shareholders, including the Selling Shareholders. Every Shareholder
may take part in the deliberations and/or take the floor on any matter on the agenda.
Following the amendment to the Articles of Incorporation on March 20, 2014 and with effect as of the
earlier of Admission to Trading or Settlement, the annual general meeting will be held on the second to last
Wednesday of July of each year. If such day is a holiday, the general meeting will be held on the next following
business day.
The annual general meeting will resolve, upon the approval of the audited annual accounts, the discharge of the
directors and other items of the agenda (if any).
Fifteen days before the general meeting, Shareholders may inspect at the registered office:
•
the annual accounts and the list of directors, as well as a list of the statutory auditors or the approved
statutory auditors (réviseurs d’entreprises agréés);
•
the list of sovereign debt, shares, bonds and other company securities making up the Company’s
portfolio;
•
the list of Shareholders who have not paid up their shares, with an indication of the number of their
Shares and their domicile;
•
the report of the Board of Directors; and
•
the report of the statutory auditors or the approved statutory auditors (réviseurs d’entreprises agréés).
Every Shareholder shall be entitled to obtain free of charge, upon production of proof of his title, fifteen days
before the meeting, a copy of the documents referred to in the foregoing paragraph.
Unless otherwise provided by the 1915 Law or by the Articles of Incorporation, all decisions by the annual or
ordinary general meeting of the Shareholders shall be taken by simple majority of the votes cast, regardless of the
proportion of the share capital represented by Shareholders attending the meeting (with, at least one Shareholder
present in person or by proxy and entitled to vote).
A general meeting of the Shareholders convened to amend any provisions of the Articles of Incorporation,
including to alter the share capital of the Company or to change the rights of the Shareholders, shall not validly
deliberate unless at least one half of the share capital is represented and the agenda indicates the proposed
amendments to the Articles of Incorporation. If the first of these conditions is not satisfied, a second meeting may be
193
convened, provided that (i) the first general meeting of the Shareholders was properly convened; and (ii) the agenda
for the reconvened meeting does not include any new item. The second meeting shall validly deliberate regardless of
the proportion of the capital represented. At both meetings, resolutions, in order to be adopted, must be carried by at
least two-thirds of the votes cast.
The matters reserved to such general meeting are, amongst others, (i) the limitation or waiver of preferential
subscription rights or the granting of powers to the Board of Directors to limit or waive the preferential subscription
rights of the Shareholders; (ii) the increase or reduction of the Company’s share capital; (iii) any changes to the
Articles of Incorporation; and (iv) the voluntary dissolution of the Company.
Votes cast shall not include votes attaching to Shares in respect of which the Shareholder has not taken part in
the vote or has abstained or has returned a blank or invalid vote.
Shareholders can participate in the general meeting of the Shareholders by way of video conference or by way
of telecommunication means permitting their identification, and shall be deemed to be present for the calculation of
quorum and majority if participating in such manner. However, such means must satisfy technical characteristics to
ensure an effective participation in the meeting without interruption and the Articles of Incorporation provide that
participation by electronic means should allow any or all of the following forms of participation: real-time
transmission of the general meeting of the Shareholders, real-time two-way communication enabling Shareholders
to address the general meeting of the Shareholders from a remote location, a mechanism for casting votes, whether
before or during the general meeting of the Shareholders without the need to appoint a proxy holder who is
physically present at the meeting. The 2011 Law and the Articles further provide that the use of electronic means for
the purpose of enabling Shareholders to participate in the general meeting of the Shareholders may be made subject
only to such requirements and constraints as are necessary to ensure the identification of Shareholders and the
security of electronic communications, and only to the extent that they are proportionate to achieving those
objectives.
To the extent possible matters that are substantially independent shall be proposed and voted on separately.
The Board of Directors or the auditor(s) may convene a general meeting of the Shareholders in accordance with
Luxembourg law. They shall be obliged to convene it so that it is held within a period of one month if Shareholders
representing one tenth of the capital require so in writing with an indication of the agenda.
The right of a Shareholder to participate in the general meeting of the Shareholders or to vote in respect of its
Shares is determined with respect to the Shares held by it on the record date, which shall be the fourteenth day (at
midnight Luxembourg time) prior to the general meeting (the “Record Date”) in accordance with article 5 of the
2011 Law and article 71 of the 1915 Law. No later than on the Record Date, the Shareholder shall indicate to the
Company its intention to participate in the general meeting of the Shareholders and the Company determines in
which manner this declaration is to be made. As the Shares are in dematerialized form, a Shareholder intending to
participate at the general meeting of the Shareholders shall request a certificate from the financial institution or
depository agent holding the securities account (compte-titres) in which its Share(s) are entered stating that such
Shareholder is indeed the holder of the particular Shares in question on the Record Date. The certificate shall in
particular state the number of Shares held by the Shareholder, the name and address of the Shareholder and, if the
Shareholder is an entity, its registration number and register with which it is registered. The Shareholder shall
present this certificate to the Company which will record for each Shareholder wishing to participate in the general
meeting of the Shareholders, (i) the name and address of such Shareholder, (ii) the number of Shares held by such
Shareholder on the Record Date and (iii) the abovementioned certificate provided by the Shareholder to the
Company.
One or more Shareholders who together hold at least five percent (5%) of the capital may request that one or
more additional items be put on the agenda of any general meeting of the Shareholders and have a right to table draft
resolutions for items included or to be included on the general meeting’s agenda. The requests should include
justification for the proposed additional agenda points or the draft resolutions to be adopted. Such a request shall be
sent by post or electronically to the address indicated in the convening notice and must be received by the Company
no later than on the twenty-second day prior to the holding of the meeting. The request should include the postal or
electronic address where the Company can acknowledge receipt of the request and the Company should send such
acknowledgement within 48 hours of receipt.
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In accordance with the 2011 Law, convening notices for all general meetings of the Shareholders shall be
published at least 30 days prior to the holding of the general meeting of the Shareholders in Mémorial C, Recueil des
Sociétés et Associations and in such other media which may reasonably be relied upon for the effective
dissemination of the information to the public throughout the EEA, and which are rapidly accessible and on a nondiscriminatory basis. If a new convening notice is required as a result of the quorum requirements not being met
upon the first convocation and provided that the convening notice complied with the above requirements and no new
agenda items have been added, the above-mentioned period of 30 days is reduced to 17 days prior to the general
meeting of the Shareholders.
The convening notice shall contain at least the following details:
•
precise indication of the date and location of the general meeting of the Shareholders and the proposed
agenda;
•
a clear and precise description of the procedures that the Shareholders must comply with in order to be
able to participate in and cast their votes during the general meeting of the Shareholders. This
information shall include: (i) the rights available to the Shareholders to include points to the agenda
and table draft resolutions (as described above) and where applicable, the deadline by which those
rights may be exercised and the electronic address to which Shareholders should send their requests.
The convening notice may confine itself to stating only the deadlines by which those rights may be
exercised and the above-mentioned electronic address, provided it contains a statement that more
detailed information with respect to these rights are available on the Company’s internet site; (ii) the
procedure for voting by proxy, including the forms to be used and the means by which the Company is
prepared to accept electronic notifications of the appointment of proxyholders; and (iii) where
applicable, the procedures for participating from a remote location and voting by correspondence or
electronically.
•
where applicable, a statement of the record date, as defined in article 5 of the 2011 Law, and the
manner in which Shareholders have to register, and a statement that only those who are Shareholders
on that date shall have the right to participate and vote in the general meeting of the Shareholders;
•
indication of the postal and electronic addresses where, and how, it is possible to obtain the full text of
the documents and draft resolutions;
•
indication of the address of the internet site (i.e., the Company’s website (www.edreamsodigeo.com)
where for a continuous period starting the day of publication of the convening notice (and including
the day of the general meeting of the Shareholders) the following information (at a minimum) shall be
made available by the Company:
•
convening notice;
•
total number of Shares and voting rights at the date of the convening notice;
•
documents to be submitted to the general meeting of the Shareholders;
•
reports and draft resolutions, or where no resolution has been proposed for adoption, a comment
from the Board of Directors for each item of the proposed agenda; and
•
where applicable, forms for voting by proxy and voting by correspondence, unless they have been
sent directly to each Shareholder.
The 2011 Law also sets forth rules in relation to participating in general meeting of the Shareholders by
electronic means, the right to ask questions in relation to agenda points, proxy voting and formalities for
proxyholders, voting remotely and voting results.
The Board of Directors is entitled to adjourn a meeting, while in session, for four weeks. It must do so at
the request of Shareholders representing at least one-fifth of the capital of the Company. Any such adjournment,
which shall also apply to Shareholders’ meetings called for the purpose of amending the Articles of Incorporation,
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shall cancel any resolution passed. The second meeting shall be entitled to pass final resolutions provided that, in
cases of amendments to the Articles of Incorporation, the conditions as to quorum laid down in article 67-1 of the
1915 Law are fulfilled.
General Provisions Relating to Profit Allocation and Dividend Payments
Each year, at least one twentieth of the net profits of the Company shall be allocated to a legal reserve; this
allocation shall cease to be compulsory when the reserve has reached an amount equal to one tenth of the share
capital of the Company, but shall again be compulsory if the reserve falls below one tenth. The remaining balance of
the net profit is at the disposal of the general meeting of the Shareholders. Except for cases of reduction of
subscribed capital, no distributions to Shareholders may be made when on the closing date of the last financial year
the net assets as set out in the annual accounts are, or following such a distribution would become, lower than the
amount of the subscribed capital plus the reserves which may not be distributed under law or by virtue of the
Articles of Incorporation. The amount of the subscribed capital referred to in the previous paragraph shall be
reduced by the amount of subscribed capital remaining uncalled if the latter amount is not included as an asset in the
balance sheet. The amount of a distribution to Shareholders may not exceed the amount of the profits at the end of
the last financial year plus any profits carried forward and any amounts drawn from reserves which are available for
that purpose, less any losses carried forward and sums to be placed to reserve in accordance with the law or the
Articles of Incorporation. In practice, the amount of share premium in the Company would also be taken into
account in determining whether the Company has sufficient available funds to declare and distribute a dividend.
Interim dividends may be paid by the Company upon decision of the Board of Directors to the Shareholders in
proportion to the number of Shares held by them, in accordance with the provision of the Articles of Incorporation
and the 1915 Law.
Distributions are made to the Shareholders of the Company pro rata to the aggregate number of Shares held by
each Shareholder. The Luxembourg civil code (article 2277) sets the prescription period (statute of limitations) for
claims for payment at five (5) years. Although Luxembourg law does not specify the prescription period after which
time a shareholder’s entitlement to payment of dividends declared, but unpaid, lapses, Belgian case law and French
law – to which the Luxembourg courts often look as guidance – apply a five (5)-year prescription period and certain
Luxembourg legal scholars by extension consider this to be as well the applicable prescription period with respect to
a shareholder’s entitlement to declared, but unpaid, dividends. Thus it is considered that distributions that have not
been claimed within five years from the date that they first became available shall lapse and be given to the
Company. In accordance with article 16 of the 2013 Law, in the event of such distributions, the Company would
transfer the funds to the Luxembourg clearing institution (organisme de liquidation) which would then pay such
distributions on the securities accounts (comptes-titres) of the relevant account holders. The Company is discharged
of its responsibilities with respect to such distributions once it transfers the funds to the clearing institution
(organisme de liquidation) and similarly the clearing institution (organisme de liquidation) is discharged of its
responsibilities with respect to the distributions upon transfer of the funds to the securities accounts of the relevant
account holders.
The payment of dividends is subject to compliance with the 1915 Law and the Articles of Incorporation,
including, in particular, the availability of distributable net profits and reserves.
Under Luxembourg law, the share premium shall be fully paid up upon subscription of shares in the company.
The articles of association shall provide for rules relating to the distribution of share premium and the corporate
body in charge of taking decisions in this respect. Unless otherwise stated in the articles of association, the general
meeting of shareholders may, at the simple majority, decide how to allocate the share premium. The advantage of
the share premium is to allow the direct and immediate distribution of share premium to the shareholders. The
Articles of Incorporation provide that decisions with respect to the use of the Company’s share premium are to be
taken by the Shareholders or the Board of Directors subject to the 1915 Law and the Articles of Incorporation.
Issue of Shares and Preferential Subscription Rights
The Shares of the Company may be issued pursuant to a resolution of the general meeting of the
Shareholders. The general meeting of the Shareholders may also delegate the authority to issue Shares to the Board
of Directors for a renewable period of five years. The Board of Directors has been authorized to issue up to
€21,000,000 worth of additional ordinary Shares for a period of five years and will expire on the earlier of (i) five
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years from the authorization given by the Shareholders or (ii) April 3, 2019 (unless amended or extended by the
general meeting of the Shareholders).
Each holder of Shares shall have preferential subscription rights to subscribe for any issue of Shares pro rata to
the aggregate amount of such holder’s existing holding of the Shares. Each Shareholder shall, however, have no
preferential subscription right on Shares issued for a non-cash contribution.
Preferential subscription rights may be restricted or excluded by a resolution of the general meeting of the
Shareholders, or by the Board of Directors if the Shareholders so delegate. The general meeting of the Shareholders
has delegated to the Board of Directors the power to waive the preferential subscription rights of the Shareholders
when issuing Shares.
If the Company decides to issue new Shares in the future and does not exclude the preferential subscription
rights of existing Shareholders, the Company will publish the decision by placing an announcement in Mémorial C,
Recueil des Sociétés et Associations, in two newspapers published in Luxembourg, which are expected to be the
Luxemburger Wort or the Tageblatt, and on the websites of the Company and the CNMV. The announcement will
specify the period in which the preferential subscription rights may be exercised. Such period may not be shorter
than 30 days from the start of the subscription period. Luxembourg law does not provide for any procedure for
determining the preferential subscription right exercise date and such date is always defined in the relevant
resolution on the issue of Shares. The announcement will also specify the details regarding procedure for exercise of
the preferential subscription rights. The preferential subscription right is exercised by placing an order with the
Company and paying for the newly issued Shares. Under Luxembourg law preferential subscription rights are
transferable and tradable property rights. In the event of a rights issue a request would be made for the admission to
trading of the preferential subscription rights on the Spanish Stock Exchanges. The 1915 Law provides that the
unexercised preferential subscription rights shall, after the end of the subscription period, be sold publicly by the
Company on the Luxembourg Stock Exchange. The proceeds of the sale, after deduction of the expenses thereof,
shall be held at the disposal of the Shareholders who have not exercised their preferential subscription rights for a
period of five years. Any balance not claimed by the relevant Shareholder shall revert to the Company.
Repurchase of Own Shares
According to article 49-2 of the 1915 Law and without prejudice to the principle of equal treatment of all
shareholders and the Market Abuse Law (as defined below), the Company and its Luxembourg subsidiaries as
referred to in article 49-2 of the 1915 Law may acquire its own shares subject to the following conditions:
•
an authorization given by the general meeting of the Shareholders which shall determine the terms and
conditions of the proposed acquisition and in particular the maximum number of Shares to be acquired,
the duration of the period for which the authorization is given and which may not exceed five years
and, in case of acquisition for value, the maximum and the minimum requirements;
•
the acquisitions, including Shares previously acquired by the Company and held by it in its portfolio as
well as Shares acquired by a person acting in its own name or on behalf of the Company, must not
have the effect of reducing the net assets below the aggregate of the subscribed capital and the reserves
which may not be distributed under law or the Articles of Incorporation; and
•
only fully paid Shares may be included in the transaction.
At the time of the general meeting of the Shareholders of the Company deciding on the Shareholder
Reorganization, the Shareholders authorized the Company to be able to, for a period of five (5) years, acquire its
own Shares from the final purchasers or Joint Global Coordinators (on behalf of the Underwriters) in the event of
the termination of the underwriting agreement.
The Board of Directors shall ensure that, at the time of each authorized acquisition, the conditions referred to in
the second and third bullet are complied with.
In principle, the Company has no obligation to sell or cancel the Shares so acquired and held by the Company in
treasury. According to the 1915 Law, the Company may, under certain circumstances, acquire its own Shares
without the prior authorization by the Shareholders and the other conditions set out above. Such Shares shall be sold
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after three years as from the date of their acquisition unless the nominal value or, in the absence of nominal value,
the accounting par value of the Shares acquired, including shares which the Company may have acquired through a
person acting in its own name, but on behalf of the Company, does not exceed 10% of the subscribed capital. If such
transfer is not made within three years, such Shares shall be canceled.
Our Internal Regulations for Conduct in the Securities Markets will comply with the CNMV recommendations
relating to treasury stock, which comprise, among others, that (i) treasury stock shall be managed with complete
transparency in relations with the supervisors and the governing entities of the markets; (ii) the aggregate daily
trading volume of Shares in all markets or systems in which operational treasury stock is made, including purchases
and sales, shall not exceed 15% of the average daily purchases transacted in the 30 latest sessions of the orders
market of the official secondary market in which the stocks are admitted to trading; (iii) in any event, the Company
may not execute treasury stock transactions within fifteen days prior to the date scheduled for publication by the
Company of its results; and (iv) treasury stock held shall not exceed the limits established by applicable corporate
law.
Capital Reduction
The general meeting of the Shareholders may, subject to Luxembourg law and the Company’s Articles of
Incorporation, resolve to reduce the Company’s issued share capital. Article 69 of the 1915 Law provides that in the
event of a capital reduction involving a repayment to the Shareholders or a waiver of the Shareholders’ obligations
to pay up their Shares, creditors whose claims predate the publication in the Luxembourg official gazette (Mémorial
C, Recueil des Sociétés et Associations) of the minutes of the general meeting of the Shareholders deliberating on
the capital reduction may, within 30 days from the date of such publication, apply for the creation of security
interests in this respect to the judge presiding over the chamber of the Tribunal d’arrondissement dealing with
interim applications relating to commercial matters. The judge may only reject such an application if the creditor
already has adequate safeguards or if such security is unnecessary, having regard to the assets of the Company. No
payment may be made or waiver given to the Shareholders until the creditors have obtained satisfaction or until the
judge has ordered that their application should not be granted.
Annual Accounts
Annually, the Board of Directors is required to prepare and approve the stand-alone financial statements of the
Company, which must be accompanied by a management report and an auditor’s report. Such accounts are
submitted to the general meeting of the Shareholders for approval.
Upon the Admission to Trading, the Company shall prepare (and submit to the general meeting for approval)
annual financial reports, which shall comprise audited consolidated accounts according to IFRS, a management
report and statements by the persons responsible within the Company. In addition, the Company will disclose halfyearly financial reports, which shall comprise a condensed set of financial statements, an interim management report
and statements by the persons responsible within the Company. Furthermore, the Company shall publish interim
quarterly reports or alternatively interim management statements.
Liquidation Rights
In the event of the Company’s dissolution, the Company must be liquidated according to applicable
Luxembourg law. The balance of the Company’s equity remaining after the payment of debts (and the cost of
liquidation) shall be distributed to the Company’s Shareholders pro rata to the aggregate number of Shares held by
each Shareholder.
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Certain Disclosure and Reporting Duties
As a Luxembourg domiciled company that is to be listed on a regulated market in Spain, disclosure and
reporting duties of the shareholders and the Company will be subject to Luxembourg law as to duties imposed by the
Directive 2004/109/EC of the European Parliament and of the Council of December 15, 2004, as amended (the
“Transparency Directive”), as Luxembourg is the home Member State of the Company. Moreover, as an issuer of
shares listed on a Spanish regulated market, the Company will be subject to certain other disclosure obligations
falling out of the scope of the Transparency Directive, such as and among others, price-sensitive information and the
annual reports on corporate governance and remuneration.
Reporting and Notification Duties for Material Shareholdings
Disclosure and reporting duties with regard to material shareholdings in the Company are governed by the
Luxembourg law of January 11, 2008 relating to the transparency requirements in relation to information about an
issuer whose securities are admitted to trading on a regulated market, as amended (the “Transparency Law”).
Shareholders in the Company and/or holders of derivatives or other financial instruments linked to shares may be
subject to notification obligations pursuant to the Transparency Law. The following description summarizes those
obligations. Shareholders are advised to consult with their own legal advisers to determine whether the notification
obligations apply to them. The Transparency Law requires a shareholder who acquires or disposes of shares (or
certain rights to shares), including depositary receipts representing shares, of issuers whose shares, including
depositary receipts representing shares, are admitted to trading on a regulated market and for which Luxembourg is
the home Member State and to which voting rights are attached, to notify the issuer and the CSSF of the proportion
of voting rights of the issuer held by the shareholder as a result of the acquisition or disposal where that proportion
reaches, exceeds or falls below the threshold of 5%, 10%, 15%, 20%, 25%, 331/3%, 50% and 662/3%.
A person must also notify the Company of the proportion of his or her voting rights if that proportion reaches,
exceeds or falls below the above-mentioned thresholds as a result of events changing the breakdown of voting
rights.
For the purposes of calculating the percentage of a Shareholder’s voting rights in the Company, the following
will be taken into account:
•
voting rights held by a third party with whom that person or entity has concluded an agreement and
which obliges them to adopt, by concerted exercise of the voting rights they hold, a lasting common
policy towards the management of the Company;
•
voting rights held by a third party under an agreement concluded with that person or entity providing
for the temporary transfer for consideration of the voting rights in question;
•
voting rights attaching to Shares which are lodged as collateral with that person or entity, provided the
person or entity controls the voting rights and declares its intention to exercise them;
•
voting rights attaching to Shares in which a person or entity holds an interest for the duration of the life
of such person or entity;
•
voting rights which are held, or may be exercised within the meaning of the four foregoing points, by
an undertaking controlled by that person or entity;
•
voting rights attaching to Shares deposited with that person or entity which the person or entity can
exercise at its discretion in the absence of specific instructions from the Shareholders;
•
voting rights held by a third party in its own name on behalf of that person or entity; and
•
voting rights which that person or entity may exercise as a proxy where the person or entity can
exercise the voting rights in its sole discretion.
As long as the information required in accordance with the Transparency Law as mentioned above has not been
notified to the issuer in the manner prescribed in such law, the exercise of voting rights relating to the Shares
exceeding the fraction that should have been notified is suspended. Where such voting rights have been exercised
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notwithstanding their suspension under Luxembourg law, the District Court (Tribunal d’arrondissement) in the
district in which the Company’s registered office is located, sitting in commercial matters, may, on request of the
Company or of one of its Shareholders holding voting rights or any other person having justifiable interest,
pronounce the nullity of part or all of the decisions of the general meeting of the Shareholders if, without the voting
rights exercised unlawfully, the quorum or majority requirements for the decision in question had not been reached.
Ad hoc Notifications
In accordance with the Transparency Law, inside information which qualifies as regulated information within
the meaning of the Transparency Law will have to be published and stored with the officially appointed mechanism
(“OAM”), which is operated by the Luxembourg Stock Exchange and filed with the CSSF. In addition, the
Company will be required to file with the CNMV and publish, to the extent required, price sensitive information
notices (hechos relevantes).
Directors’ Dealings
The disclosure and reporting of directors’ dealings in the Company’s shares will be governed principally by the
Company’s Internal Regulations for Conduct in the Securities Markets and the Luxembourg law of May 9, 2006 on
market abuse, as amended (the “Market Abuse Law”).
Any dealings in or from Luxembourg in respect of the shares, and any other securities whose value is
determined by the value of the shares are also subject to the provisions of the Market Abuse Law in relation to the
prohibition of insider dealing and market manipulation.
Pursuant to the Market Abuse Law, persons discharging managerial responsibilities in respect of an issuer
which has its registered office in Luxembourg and, if applicable, persons closely associated with any such person
shall notify the CSSF and the issuer, within five business days of each individual transaction, all transactions
conducted on their own account relating to shares admitted to trading on a regulated market (or derivatives or other
financial instruments linked to them). Persons discharging managerial responsibilities include the members of the
board, the managers having a delegation of the day-to-day management and the statutory auditors, as well as other
high level responsible persons having regular access to inside information and being empowered to take
management decisions on future developments and strategy of the issuer.
In addition, persons closely associated with a person discharging managerial responsibilities have the same
obligation of declaration. This category concerns (i) the spouse or any partner considered by national law as
equivalent, (ii) dependent children, (iii) other relatives living in the same household for at least one year, (iv) any
legal entity, fiduciary estate or trust or association where managerial responsibilities are discharged by any of the
persons described under the two categories (persons discharging managerial responsibilities with the issuer or
closely associated persons) or where the organization is under control by or created in favor of such person or the
economic interests are substantially equivalent to such a person.
The declaration has to indicate (i) the name of the issuer, (ii) the name of the person discharging managerial
responsibilities, or as the case may be the name of the closely associated person, (iii) the reason for the notification
obligation, (iv) the description of the financial instrument, (v) the nature of the transaction (acquisition or disposal),
(vi) the date and place of the transaction and (vii) the price per instrument and the total amount of the transaction.
The issuer shall ensure that the information pertaining to the transactions in shares notified to it by persons
discharging managerial responsibilities or closely associated persons is easily accessible to the public as soon as
possible, at least in the French, German or English language.
Voting at the General Meeting of the Shareholders
According to the 1915 Law and the Articles of Incorporation, in principle, general meetings shall be held in the
place where the Company’s registered office is situated, or any other place within Luxembourg as may be specified
in the notices convening the general meeting of the Shareholders. The annual general meeting of the Shareholders
shall, in accordance with the Articles of Incorporation, as amended on March 20, 2014 and with effect as of the
earlier of Admission to Trading and Settlement, take place at the registered office of the Company at 282, Route de
Longwy, L-1940 Luxembourg on the second to last Wednesday of July of each year. If such day is a holiday, the
general meeting will be held on the next following business day.
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Provided that all the shareholders are present or represented and if they state that they have been informed of
the agenda of the meeting, they may waive all convening requirements and formalities.
Under the 2011 Law, the rights of a shareholder to participate in a general meeting of the shareholders and to
vote in respect of its shares is determined with respect to the shares held by that shareholder on the Record Date. See
“—Voting Rights and General Meeting of the Shareholders”.
The Articles of Incorporation provide that the Shareholders may also vote from a remote location in advance of
the general meeting of the Shareholders, by correspondence or by electronic means, using a form made available by
the Company and in accordance with the 2011 Law.
A Shareholder may be represented at a general meeting of the Shareholders of the Shareholders by appointing
in writing (or by fax or e-mail or any similar means) any other natural or legal person as a proxy or attorney to
attend and vote at the general meeting of the Shareholders in its name and such proxy or attorney does need not be a
Shareholder. A Shareholder may only appoint one person to act for it as a proxy holder in relation to any one general
meeting of the Shareholders. However, by way of derogation to the foregoing, (a) if the Shares of the Company are
held in more than one securities account, a Shareholder may appoint a separate proxy holder as regards Shares held
in each securities account in relation to any one general meeting of the Shareholders and (b) the person qualifying as
a shareholder but who act in the course of a business on behalf of another natural or legal person, may give proxy to
each of these other natural or legal persons or to a third person designated by them. A person may serve as a
proxyholder for more than one Shareholder without limitation as to the number of Shareholders so represented and
in such a case the proxy holder may cast votes for a certain Shareholder differently from votes cast by another
Shareholder.
The Company shall be notified of the appointment or revocation of a proxy holder in writing by postal services
or by electronic means to the address indicated in the convening notice. Beyond this requirement of a document in
writing, the appointment (or revocation) of a proxy holder, the notification of the appointment (or revocation) to the
Company and the issuance of voting instructions, if any, to the proxy holder may be made subject only to such
formal requirements as are necessary to ensure the identification of the Shareholder and of the proxy holder, or to
ensure the possibility of verifying the content of voting instructions, respectively, and only to the extent that they are
proportionate to achieving these objectives. The Shareholder may also abstain from voting in particular resolutions.
Abstentions will be excluded from the vote, but they will count for purposes of determining whether a quorum is
present. The proxy may be revoked at any time prior to its exercise in the above-mentioned manner. The proxy
holder should as well receive the revocation notice. A Shareholder may also revoke the voting instruction by voting
in person at the general meeting of the Shareholders. In the event that a shareholder has provided a proxy, it may
nevertheless still choose to attend the general meeting of the Shareholders and vote itself.
With regard to the results of the voting at a general meeting of the Shareholders, the Company shall
establish for each resolution at least the number of Shares for which votes were validly cast, the proportion of the
share capital represented by those votes, the total number of votes validly cast, as well as the number of votes cast in
favor of and against each resolution and the number of abstentions, if applicable. As provided for in the Articles of
Incorporation, the Company shall for each resolution publish on its website the results of the votes passed at general
Shareholders’ meetings, including the number of Shares for which votes have been validly cast and the proportion of
capital represented by such validly cast votes, the total number of votes validly cast, the number of votes cast for and
against each resolution and, where applicable, the number of abstentions.
Challenging Resolutions of General Meetings of the Shareholders
Under Luxembourg law and the conflict of law rules, a resolution of the general meeting of the Shareholders of
a Luxembourg company may only be challenged in a Luxembourg court in accordance with Luxembourg
commercial and civil proceedings law.
Pursuant to Luxembourg law, a resolution of the general meeting of the Shareholders may be challenged by
each Shareholder regardless of the number of Shares held by it if the resolution is, amongst others: (i) in conflict
with the statutory law, provisions of the Articles of Incorporation or the proceedings for taking resolutions; or (ii)
made to the sole benefit of the majority Shareholder and not in the Company’s best interest (abus de majorité).
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The claim should be filed with a district court having jurisdiction over the Company’s seat. The statute of
limitation to file a claim is ten years as at the day of passing of the resolution.
As regards the Company, the competent courts are the Courts of Luxembourg City, Grand Duchy of
Luxembourg. The plaintiff should show a legal interest in challenging the resolution. The claim may be made in the
French, Luxembourgish or German language and can be made by an attorney qualified to practice in the Grand
Duchy of Luxembourg. If the court finds in favor of the appealing shareholder, then the resolution will be nullified.
Actions Against Directors
Being a director of a Luxembourg public limited liability company (société anonyme) potentially entails certain
liabilities, both civil and criminal. A director has a potential statutory liability for failure to execute his mandate
properly or for any misconduct in the management of the company’s business. Liability under this head is to the
company which can only bring an action on the basis of an ordinary resolution of shareholders, but the individual
shareholders cannot sue the directors direct in respect of liability under this heading. A director also has a potential
statutory liability for breach of the 1915 Law or of the articles of incorporation of the company. The directors are
jointly and severally liable for a breach; however a director who is not a party to the breach will not be liable
provided he reports the breach to the next general meeting of the Shareholders held after he becomes aware of the
breach. Liability under this head is both towards the company and third parties (including individual shareholders to
the extent they have suffered a loss separate from that suffered by the company as a whole). Finally, the
Luxembourg Civil Code includes a provision to the effect that any person who causes damage to another person is
liable to compensate that other person for the damage resulting from that behaviour.
Potential criminal liabilities for a director under Luxembourg law can be mainly grouped in the following
categories: (i) offences relating to the normal running of the company; (ii) misuse of corporate assets or powers; (iii)
offences under general law and (iv)offences relating to the insolvency of the company.
Luxembourg companies may take out insurance in favour of their directors in respect of their liability as
directors provided the insurance does not cover criminal liability, tax or administrative penalties, wilful default or
gross negligence.
Public Takeover Bids
Supervisory authority and applicable law
Pursuant to Directive 2004/25/EC of the European Parliament and of the Council of April 21, 2004 (the
“Takeover Directive”), any voluntary or mandatory bid for the takeover of the Company will be subject to the
following dual regulation:
•
matters relating to the consideration of the bid (in particular, the price), the bid procedure, the contents of
the offer document and the disclosure of the bid, shall be dealt with in accordance with the implementing
regulations of the Takeover Directive in Spain, i.e., Spanish Law 24/1988, of July 28, on the securities
market and Spanish Royal Decree 1066/2007, of July 27, 2007, on takeovers (“Spanish Takeover
Regulations”), and the Spanish CNMV will be the competent authority for the purposes of authorizing and
supervising a takeover bid for the Company’s Shares; and
•
matters regarding, among others, information to be provided to employees of the Company or company
law, such as the percentage of voting rights which give control over the Company, the acquisition of which
gives rise to an obligation to launch a mandatory offer, any derogation from the obligation to launch a bid
or the conditions under which the Board of Directors of the Company may undertake any action which
might result in the frustration of the bid, will be governed by Luxembourg Act dated May 19, 2006 on
public takeovers (the “Luxembourg Public Takeover Law”), which has implemented the Takeover
Directive into Luxembourg law and the CSSF will be the supervisory authority in respect thereto.
Voluntary and Mandatory Public Takeover Bids
Pursuant to the Luxembourg Public Takeover Law, where a person as a result of such person’s acquisition or
the acquisition by persons acting in concert with such person, holds securities, which added to any existing holdings
of those securities of such person and the holdings of those securities of persons acting in concert with such person,
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directly or indirectly gives such person a specified percentage of voting rights in the company, giving control over
that company, that person is required to make a mandatory public offer to all the holders of those securities for all
their holdings at an equitable price within the meaning of article 5(1) of the Luxembourg Public Takeover Law.
For a company whose registered office is in Luxembourg, the percentage of voting rights which confers control
for the purposes of the Luxembourg Public Takeover Law is set at 33⅓% of the voting rights in that company
(excluding for the purposes of calculation the securities which only confer voting rights in particular circumstances).
Pursuant to article 4(5) of the Luxembourg Public Takeover Law the CSSF is allowed not to apply article 5(1)
of the Luxembourg Public Takeover Law provided that the general principles set out in article 3 of the Luxembourg
Takeover Law are respected. This means that a person having gained control over the target company by reaching
the threshold of 33⅓% of voting rights is allowed to submit a request to the CSSF asking to be granted an exemption
from the obligation to launch a mandatory takeover bid. However, a specially reasoned decision is required in this
case.
A voluntary takeover bid can be launched at any time irrespective of the existence of a mandatory takeover bid
pursuant to the principles set out in the Luxembourg Public Takeover Law. As regards such voluntary takeover bid
the same dual regulation regime as referred to above applies. Consequently, matters relating to the information to be
provided to the employees of the target company and matters relating to company law as well as the conditions
under which the board of the target company may undertake any action which might result in the frustration of the
bid are subject to the Luxembourg Public Takeover Law regarding such voluntary takeover bids. In this respect, the
rules applying to voluntary takeover bids are not different to the rules for mandatory takeover bids.
Consideration
Pursuant to Spanish Takeover Regulations, the price of the mandatory bid is deemed equitable when it is at least
equal to the highest price paid by the bidder or by any person acting in concert therewith for the same securities
during the 12 months prior to the announcement of the bid. When the mandatory bid must be made without the
bidder having previously acquired the shares over the above–mentioned 12-month period, the equitable price shall
not be less than the price calculated in accordance with other rules set forth in the regulations. In any case, the
CNMV may change the price so calculated in certain circumstances (extraordinary events affecting the price,
evidence of market manipulation, etc.).
Procedure and disclosure
Pursuant to Spanish Takeover Regulations, mandatory offers must be submitted for authorization by the CNMV
within one month from the acquisition of control of the target company.
The offer document, which must be prepared in Spanish, shall contain any other information that the offeror
deems it advisable to include in order for the addressees thereof to be able to make an informed assessment of the
bid. The CNMV may require the offeror to include in the offer document any additional information it deems
necessary and to submit any supplemental documents that it deems appropriate.
Once the CNMV authorizes the bid, the offeror shall disseminate the bid and make it generally known to the
public within a maximum period of five business days, by means of its publication in the Listing Bulletin (Boletín de
Cotización) of the Spanish Stock Exchanges where the securities subject matter of the bid are admitted to trading
and, at least, in a newspaper of national circulation.
The acceptance period of the bid shall be established by the offeror, provided, however, that it shall not be less
than fifteen nor greater than seventy calendar days from the trading day immediately following the date of
publication of the first of the above-referred announcements.
Within five business days after the expiration of the acceptance period, the Spanish Stock Exchange
management companies or, as applicable, the entities acting for the account of the offeror, shall inform the CNMV
of the total number of securities covered by the acceptances submitted by the shareholders.
Once the CNMV is aware of the total number of acceptances, it shall, within two business days, inform the
Spanish Stock Exchange management companies on which the securities are admitted to trading and, if applicable,
Sociedad de Bolsas, the offeror and the target company of the positive or negative result, depending upon whether or
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not the minimum number of securities specified in the bid has been reached and whether or not the conditions
established for the effectiveness thereof have been fulfilled. The Spanish Stock Exchange management companies
shall publish the result, specifying the details thereof, in the issue of the Listing Bulletin corresponding to the trading
session at which they receive such information.
Squeeze-out Rules
Pursuant to the Luxembourg Public Takeover Law, should an offeror hold Shares in the Company representing
not less than 95% of the capital carrying voting rights and not less than 95% of the voting rights in the Company as a
result of a takeover bid, such offeror would be entitled to squeeze out the minority shareholders. Where the
Company has issued more than one class of securities, the right of squeeze-out can be exercised only in the class in
which the applicable threshold has been reached. The right of squeeze-out must be exercised within three months of
the end of the time allowed for acceptance of the bid.
Sell-out Rules
The Luxembourg Public Takeover Law provides that following a bid made to all holders of the Company’s
Shares for all of their Shares, a holder of remaining shares is allowed to require the offeror to buy such holder’s
shares from him/her at a fair price where the offeror holds alone or together with persons acting in concert shares
representing not less than 90% of the voting rights in the Company. Where the Company has issued more than one
class of securities, the right of sell-out can be exercised only in the class in which the applicable threshold has been
reached. The right of sell-out must be exercised within three months of the end of the time allowed for acceptance of
the bid.
Luxembourg Squeeze-out/Sell-out Law
In scenarios in which no takeover bid pursuant to the Luxembourg Public Takeover Law has taken place, the
Luxembourg law of July 21, 2012 on squeeze-out and sell-out (the “Squeeze-out/Sell-out Law”) might be
applicable. Pursuant to article 4 of the Squeeze-out/Sell-out Law, any majority Shareholder of the Company is
entitled to squeeze out the minority shareholders (squeeze-out). In accordance with article 5 of the Squeeze-out/Sellout Law any minority shareholder of the Company is allowed to require the majority Shareholder to buy his/her
Shares (sell-out). A majority shareholder within the meaning of article 1 of the Squeeze-out/Sell-out Law is any
legal or natural person holding alone or together with persons acting in concert Shares in the Company representing
not less than 95% of the capital carrying voting rights and not less than 95% of the voting rights in the Company.
Delisting bids under Spanish law
When a company approves the delisting of its shares from Spanish official secondary markets, the Spanish
Takeover Regulations require that a takeover bid be made, unless certain exceptions apply, e.g., when, following a
takeover bid, the squeeze-out or sell-out provisions are enforced (and, in this latter case, the offeror becomes the
holder of 100% of the company’s share capital), when all of the shareholders waive the sale of their securities under
the rules applicable to takeover bids or when the shareholders acting at a general meeting of the Shareholders (and,
if applicable, the bondholders acting at a bondholders’ meeting) approve a procedure that in the opinion of the
CNMV is equivalent to a takeover bid because it ensures the protection of the legitimate interests of the holders of
the securities to be delisted.
A delisting offer may be made by the issuer of the securities to be delisted or by another person or entity
provided that such person or entity obtains the approval of the shareholders acting at a general meeting of the
Shareholders of the issuer.
The price of the bid, which must be fully paid in cash and approved by the shareholders acting at a general
meeting of the Shareholders of the issuer of the securities to be delisted, shall not be less than the higher of (i) the
equitable price (see “—Public Takeover Bids—Consideration” above) and (ii) the price resulting from taking into
account, collectively and based on a rationale for the respective relevance thereof, certain valuation methods
provided in the Spanish Takeover Regulations.
Moreover, the directors of the issuer of the securities to be delisted must prepare a report containing a rationale
for the proposed delisting and for the price offered on the basis of the aforementioned valuation methods. The report
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must be made available to the shareholders at the time of convening the general meeting of the Shareholders at
which a resolution is to be adopted regarding the delisting, the offer and the price.
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LISTING AND ADMISSION TO TRADING
Admission to Trading and Markets
General Information
Application has been made for the Shares to be admitted to trading on the Spanish Stock Exchanges. The Shares
will be accepted for clearance through the global system maintained by LuxCSD, with its registered office at
43 Avenue Monterey, L-2163 Luxembourg and Iberclear, with its registered office at Plaza de la Lealtad, 1,
28014 Madrid, Spain. The ISIN for the Shares is LU1048328220. The Common Code for the Shares is 104832822.
The prospectus will be published on the website of the Company (www.edreamsodigeo.com) on or about
April 4, 2014. Furthermore, this prospectus will also be published on the website of the Luxembourg Stock
Exchange (www.bourse.lu), and the Spanish translation of the summary of the prospectus will be available on the
website of the CNMV) (www.cnmv.es).
The expected Admission to Trading date will be on or about April 8, 2014.
The Company may decide to change the above dated if it deems so necessary for the successful completion of
the Admission to Trading. Information on any changes in the above dates will be announced on the website of the
Company (www.edreamsodigeo.com). Information on any change of the above dates will be published no later than
on the originally set date.
Markets
The Shares will be traded solely on the Spanish Stock Exchanges. At the date of this prospectus, the Company
does not intend to seek an admission to trading other than on the Spanish Stock Exchanges.
Each of the Spanish Stock Exchanges is a regulated market for the purpose of the MiFID.
For more information, please see “Description of the Share Capital of the Company and Applicable
Regulations”.
Issue date
The issue date of the new Shares sold pursuant to the Offering was April 4, 2014.
The new Shares sold pursuant to the Offering were issued pursuant to a resolution of the Company’s Board of
Directors adopted on the occasion of its meeting dated April 2, 2014, which also resolved to offer the new Shares in
the Offering.
Issue price
The issue price of the Shares sold in the Offering was €10.25 per Share.
Total net proceeds and estimate of the total expenses of the Offering
Upon Settlement, which is expected to occur on or about April 10, 2014, we expect to obtain gross proceeds
from the sale of the new Shares in the Offering of €50 million. We intend to use such gross proceeds to redeem a
portion of the 2019 Notes on or after May 1, 2014 to further reduce our indebtedness and interest expense, and
create additional flexibility in our capital structure.
We estimate the total expenses of the Offering and the Admission to Trading to be €12.6 million, including
underwriting fees and commissions relating to the Shares sold by the Company pursuant to the Offering (assuming
full payment of the Underwriters’ discretionary fee). We intend to pay such expenses with cash on hand.
Accordingly, the effective net proceeds of the Offering to us will be approximately €37.4 million.
Interests Material to the Issue; Conflicting Interests
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The Company and each of the Selling Shareholders had an interest in Admission to Trading because they are
expected to receive upon Settlement net proceeds from the Offering. Such Selling Shareholders are identified in
“Principal Shareholders”. See also “Plan of Distribution—The Offering”.
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TAXATION
Taxation in the Grand Duchy of Luxembourg
The following is a general description of certain Luxembourg tax considerations relating to the Shares. It does
not purport to be a complete analysis of all tax considerations relating to the Shares, whether in Luxembourg or
elsewhere. Prospective Shareholders should consult their own tax advisers as to which countries’ tax laws could be
relevant to acquiring, holding and disposing of the Shares and the consequences of such actions under the tax laws
of the Grand Duchy of Luxembourg. This summary is based upon the laws as in effect on the date of this prospectus.
Taxation of the Company
Income taxation
The Company is a fully taxable resident company for tax purposes in Luxembourg and liable as a matter of
principle to Luxembourg corporate income tax (“CIT”) and municipal business tax (“MBT”).
For 2013, the maximum CIT rate was 22.47% (including the 7% solidarity surcharge for the employment fund).
The MBT rate was 6.75% (for a company having its statutory seat in Luxembourg City). As a result, the current
aggregate rate was 29.22% for the fiscal year 2013 for a company established in Luxembourg City.
A minimum advance CIT (“ACIT”) of €3,000 (increased to €3,210 by the 7% solidarity surcharge for the
employment fund) is levied, as from January 1, 2013, on any company and whose financial assets, transferable
securities and cash deposits exceeds 90% of their total balance sheet and is creditable against any future CIT charge
due by the taxpayer. Any excess is however not refundable.
An ACIT is also levied for all other companies at a progressive minimum amount which ranges from €535 to
€21,400 depending on the closing balance sheet total. For the purpose of determining the minimum ACIT, (i) shares
and units held in tax transparent entities will be considered “financial assets” irrespective of the underlying assets
held by the entity as it is computed on the commercial balance sheet and (ii) the net value of assets which generate
(or may generate) income that Luxembourg is not allowed to tax according to a double tax treaty (e.g., income
deriving from foreign real estate) should be excluded when computing the balance sheet total.
Liability for such taxes extends to the Company’s worldwide profits including capital gains, subject to the
provisions of any relevant double taxation treaty or EU regulations (and the implementing laws). The taxable
income of the Company is computed by application of the Luxembourg income tax law of December 4, 1967, as
amended, as commented and currently applied by the Luxembourg tax authorities (“LITL”). As a fully taxable
Luxembourg resident company, the Company should, from a Luxembourg tax perspective, be able to benefit from
double taxation treaties and European directives in direct and indirect tax matters.
It should however be noted that specific exemptions are available under certain conditions in relation to
dividends and liquidation proceeds received as well as capital gains realized on qualifying shareholdings held by the
Company (participation exemption regime as provided for by article 166 of the LITL and the Grand-Ducal decree
dated December 21, 2001 (Règlement Grand-Ducal du 21 décembre 2001)).
Net Wealth Taxation
Unless benefiting from a special tax regime, a net wealth tax (“NWT”) is due annually by the Company on
January 1 of each year at the rate of 0.5% assessed on the net worth of the Company (unitary value – valeur
unitaire). The unitary value is the difference between (a) assets estimated at their fair market value (valeur estimée
de realisation or Gemeiner Wert) or at a specific value according to tax valuation rules, and (b) liabilities vis-à-vis
third parties. In this respect, specific assets such as shares in subsidiaries may benefit from an NWT exemption
(paragraph 60 Bewertungsgesetz) if the following conditions are met:
(a) the Company holds a participation of at least 10% or which acquisition price is at least €1.2 million at the
end of the financial year preceding January 1, and
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(b) the subsidiary is (a) a Luxembourg fully taxable capital company, (b) a non-Luxembourg capital company
is fully liable to a tax corresponding to the Luxembourg corporate income tax (i.e., a taxation of at least
10.5% and a taxable basis comparable to the corporate income tax basis), or (c) a European Union resident
company in the meaning of Article 2 of the EU Parent-Subsidiary Directive.
Debts in economic relation with an exempt shareholding are not deductible in calculating the net wealth.
For the purposes of application of the exemption, the holding of participation through an entity listed under
article 175 LITL in a company listed under paragraph (b) above is deemed to be a direct shareholding in proportion
with the part of net asset value held in such entity.
The NWT charge for a given year can be reduced if a specific reserve, equal to five times the NWT to save, is
created before the end of the subsequent tax year and maintained during the five following tax years. The maximum
NWT to be saved is limited to the corporate income tax amount due for the same tax year, including the employment
fund surcharge, but before imputation of available tax credits.
Capital Duty – Registration Duties
Subject to certain exceptions (such as the contribution of a Luxembourg real estate property) only a fixed
registration duty of €75 is due upon incorporation of a Luxembourg company by a contribution of cash made to its
share capital and on further amendments of its Articles of Incorporation.
No registration duties or other similar taxes are payable in Luxembourg on the issue of the Shares by the
Company.
Withholding Tax on Dividends
Dividends paid by the Company to its shareholders are normally subject to withholding tax in Luxembourg at
the domestic rate of 15% unless (i) the reduced withholding tax rates as provided for by relevant double taxation
treaties apply or, (ii) the conditions to benefit from the exemption of withholding tax set out under article 147 LITL
are met:
(a) at the date the distribution is made available to the shareholders, each of the relevant shareholders holds or
commits to hold directly or through a tax transparent vehicle (holding a participation through a tax
transparent entity is deemed to be a direct participation in the proportion of the net assets held in this
entity), during an uninterrupted period of at least 12 months, a participation representing (a) at least 10% of
the share capital of the Company or (b) an acquisition cost of at least €1.2 million;
(b) the beneficiary of the dividends is:
•
a company (“organisme à caractère collectif”) resident in Luxembourg fully liable to Luxembourg tax;
or
•
an EU resident company within the meaning of article 2 of the EU Council Directive 90/435/EC of
July 23, 1990, as replaced by EU Council Directive 2011/96/EU of November 30, 2011, concerning
the common fiscal regime applicable to parent and subsidiary companies of different member states (to
be read with the Circular L.I.R. N° 147/1 of March 6, 2012) or its Luxembourg permanent
establishment; or
•
a Swiss corporation which is liable to Swiss corporate tax without benefiting from an exemption; or
•
a company subject to an income taxation comparable to the Luxembourg corporate income tax, which
is resident in a country having concluded a double taxation treaty with Luxembourg or its Luxembourg
permanent establishment; or
•
a corporation or a cooperative company resident in a non-European Union country that is member of
the EEA that is fully subject to an income taxation corresponding to the Luxembourg corporate income
tax; or
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•
a permanent establishment of a corporation or a cooperative company resident in a non-European
Union country member of the EEA.
With respect to the application of the above-mentioned exemption, the investors should note that according to a
recent internal note of the Luxembourg tax authorities, withholding tax should be applied to any distributions made
to shareholders holding a direct participation of at least 10% (or acquisition cost of which is at least €1.2 million)
before the 12 months period has elapsed. Repayment of such withholding tax can however ultimately be requested
by the relevant shareholder. In addition, even though all the above conditions are met (including the 12 months
period), the Company should, in principle, apply the withholding tax to any distributions if it is not in a position to
determine whether the conditions are fulfilled by the shareholders. Repayment of such withholding tax can however
ultimately be requested by the relevant shareholder by filing a form 901bis with the Luxembourg Tax Authorities
within the legal deadline.
To the extent a withholding tax applies the Company is responsible for withholding amounts corresponding to
such taxation at source.
The U.S.-Luxembourg income tax treaty generally does not provide for a reduced tax rate on dividends.
Capital Decrease
The reimbursement of share capital by the Company is not treated as a dividend distribution for Luxembourg
withholding tax purposes and thus not subject to any withholding tax provided (i) there are no reserves or profits at
the level of the Company and (ii) the capital decrease is motivated by sound business reasons. In case the Company
does not have sound business reasons to proceed to a capital decrease, the entire amount paid will be subject to a
15% withholding tax, unless the conditions set out under “—Withholding Tax on Dividends” are met.
Taxation of the Company’s Shareholders
Preliminary Consideration on the Luxembourg Tax Residency of the Company’s Shareholders
A shareholder will not become a resident, nor be deemed to be a resident, in Luxembourg, by reason only of
the holding of the Shares, or the execution, performance, delivery and/or enforcement of the Shares.
Income Taxation of Luxembourg Resident Shareholders
Luxembourg Resident Individuals
50% of the dividends received by resident individuals, who act in the course of either their private wealth or
their professional/business activity, are subject to income tax at the progressive ordinary rate (with the 2013
maximum effective marginal tax rate being at 42.80% or 43.60% depending on the amount of taxable income); the
other 50% of the dividends received are tax exempt. The 15% withholding tax may be offset against the income tax
liability.
A gain realized upon the sale, disposal or redemption (note that if some but not all ordinary shares of a given
holder of ordinary shares are redeemed, the same tax treatment may apply as for dividends) of Shares by
Luxembourg resident individual shareholders, acting in the course of the management of their private wealth is not
subject to Luxembourg income tax, provided this sale, disposal or redemption took place more than six months after
the ordinary shares were acquired and provided the ordinary shares do not represent a substantial shareholding. A
shareholding is considered a substantial shareholding in limited cases, in particular if (i) the relevant shareholder has
held, either alone or together with its spouse or partner and/or its minor children, either directly or indirectly, at any
time within the five years preceding the realization of the gain, more than 10% of the share capital of the Company,
or (ii) the taxpayer acquired free of charge, within the five years preceding the transfer, a participation that
constituted a substantial participation in the hands of the alienator (or the alienators in case of successive transfers
free of charge within the same five-year period). Capital gains realized on a substantial participation more than six
months after the acquisition thereof are subject to income tax according to the half-global rate method (i.e. the
average rate applicable to the total income is calculated according to progressive income tax rates and half of the
average rate is applied to the capital gains realized on the substantial participation). A disposal may include a sale,
an exchange, a contribution or any other kind of alienation of the shareholding.
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Capital gains realized on the disposal of the Shares by resident individual holders, who act in the course of their
professional / business activity, are subject to income tax at ordinary rates. Taxable gains are determined as being
the difference between the price for which the ordinary shares have been disposed of and the lower of their cost or
book value.
Luxembourg Corporate Residents
Luxembourg resident corporate shareholders (organisme à caractère collectif) of the Company must include the
dividends received and any capital gains derived from the Shares, in their taxable profits for Luxembourg income
tax assessment purposes (CIT and MBT at the maximum aggregate rate of 29.22% in 2013 for corporate
shareholders having their statutory seat in Luxembourg City). The 15% withholding tax (if any) may be offset
against the corporate income tax liability. Taxable gains are determined as being the difference between the sale,
repurchase or redemption price and the lower of the cost or book value of the ordinary shares sold or redeemed.
However, dividends and liquidation proceeds received by Luxembourg resident corporate shareholders from the
Company will be exempt from CIT and MBT in case of a participation held directly, or indirectly through a tax
transparent vehicle (holding a participation through a tax transparent entity is deemed to be a direct participation in
the proportion of the net assets held in this entity), representing at least 10% of the share capital of the Company or
an acquisition price of at least €1.2 million, provided that at the time the income is made available, the recipient has
held or commits to hold the participation for an uninterrupted period of at least twelve months. If the above
mentioned conditions are not met, 50% of the dividends received from the Company are exempt from CIT and
MBT.
Capital gains realized upon disposal of ordinary shares by Luxembourg resident corporate shareholders will be
exempted in case of a participation held directly, or indirectly through a tax transparent vehicle (holding a
participation through a tax transparent entity is deemed to be a direct participation in the proportion of the net assets
held in this entity), representing at least 10% of the share capital of the Company or an acquisition price of at least
€6 million, provided that at the time of the disposal, the beneficiary has held or commits to hold the participation
during an uninterrupted period of at least twelve months. The capital gain would remain taxable up to the aggregate
amount of expenses and impairment incurred during the year of disposal and previous years which have been
deducted from the taxable base.
Luxembourg Residents Benefiting from a Special Tax Regime
Luxembourg resident shareholders of the Company that are entities benefiting from a special tax regime, such
as, (i) undertakings for collective investment subject to the amended law of December 17, 2010 (Loi du 17
décembre 2010 concernant les societies de placement), (ii) specialized investment funds subject to the amended law
of February 13, 2007 (Loi du 13 février 2007 relative aux fonds d’investissement spécialisés) or (iii) family wealth
management companies governed by the amended law of May 11, 2007 (Loi du 11 mai 2007 relative à la societie
d’une société de gestion de patrimoine familial (SPF)) are tax exempt entities in Luxembourg and are thus not
subject to any Luxembourg income tax.
Income Taxation of Luxembourg Non-resident Shareholders
Shareholders of the Company who are non-residents of Luxembourg and who have neither a permanent
establishment nor a permanent representative in Luxembourg to which or to whom the ordinary shares are
attributable, are generally not liable to any Luxembourg income tax (except for withholding taxes on dividends, as
described in “—Taxation of the Company—Withholding Tax on Dividends”).
As an exception, a non-resident shareholder may be liable to Luxembourg income tax on capital gains realized
on the ordinary shares if it has held, either alone or together with its spouse or partner and/or its minor children,
directly or indirectly, at any time within the five years preceding the disposal of the ordinary shares, more than 10%
of the ordinary shares of the Company and it has either (i) held the ordinary shares for less than six months or
(ii) been a Luxembourg resident taxpayer for more than 15 years and became a non-resident less than five years
before the realization of the capital gains on the ordinary shares. Depending on its residence State, such non-resident
shareholders might, however, claim tax treaty benefits in order to avoid Luxembourg tax on any such capital gains.
Non-resident corporate shareholders that have a permanent establishment or a permanent representative in
Luxembourg to which or whom the ordinary shares are attributable, must include any income received, as well as
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any gain realized on the sale, disposal or redemption of ordinary shares, in their taxable income for Luxembourg tax
assessment purposes. The same inclusion applies to individuals, acting in the course of the management of a
professional or business undertaking, who have a permanent establishment or a permanent representative in
Luxembourg to which or whom the ordinary shares are attributable. Taxable gains are determined as being the
difference between the sale, repurchase, or redemption price and the lower of the cost or book value of the ordinary
shares sold or redeemed.
Net Wealth Tax
Luxembourg resident shareholders and shareholders who have a permanent establishment or a permanent
representative in Luxembourg to which or whom the ordinary shares are attributable are subject to Luxembourg
NWT on such ordinary shares, except if such shareholder is (i) a resident or non-resident individual taxpayer, (ii) an
undertaking for collective investment subject to the amended law of December 17, 2010 (Loi du 17 décembre 2010
concernant les societies de placement collectif), (iii) a securitization company governed by the amended law of
March 22, 2004 on securitization (Loi du 22 mars 2004 relative à la titrisation), (iv) a company governed by the
amended law of June 15, 2004 on venture capital vehicles (Loi du 15 juin 2004 relative à la société d’investissement
en capital à risque (SICAR)), (v) a specialised investment fund governed by the amended law of February 13, 2007
(Loi du 13 février 2007 relative aux fonds d’investissement spécialisés), (vi) a Luxembourg pension pooling vehicle
governed by the amended law of July 13, 2005 (Loi du 13 Juillet 2005 relative aux institutions de retraite
professionnelle sous forme de société d’épargne-pension à capital variable (sepcav) et d’association d’épargnepension (assep)) or (vii) a family wealth management company governed by the amended law of May 11, 2007 (Loi
du 11 mai 2007 relative à la création d’une société de gestion de patrimoine familial (SPF)).
Other Taxes
No Luxembourg registration duties or similar taxes are levied on the transfer of Shares.
No estate or inheritance tax is levied on the transfer of Shares upon death of a shareholder of the Company in
cases where the deceased was not a resident of Luxembourg for inheritance tax purposes.
Luxembourg tax may be levied on a gift or donation of ordinary shares if embodied in a Luxembourg notarial
deed or otherwise registered in Luxembourg. Where a holder of Shares is a resident of Luxembourg for tax purposes
at the time of his death, the ordinary shares are included in its taxable estate for inheritance tax or estate tax
purposes.
Certain Spanish Tax Considerations
General
The following is a summary of certain Spanish tax implications of the acquisition, ownership and disposition of
Shares by investors that are resident in Spain for tax purposes (“Spanish Holders”), provided the Shares are listed on
the Spanish Stock Exchanges. This summary is not intended to be, nor should it be construed to be, legal or tax
advice. This summary is not a complete analysis or description of all the possible Spanish tax implications of such
transactions and does not address all tax considerations that may be relevant to all categories of potential investors,
some of whom may be subject to special rules (for instance, pension funds and collective investment institutions). In
particular, this tax section does not address the Spanish tax consequences applicable to partnerships or other entities
that are taxed as “look through” entities (such as estates) nor the Spanish tax treatment of transactions between
related parties. Similarly, this information does not take into account specific regulations established in Navarra or
in the historic territories of the Basque Country or the specialities in place in other autonomous communities of
Spain (including the cities of Ceuta and Melilla).
Accordingly, prospective investors in the Shares should consult their own tax advisers as to the applicable tax
consequences of their purchase, ownership and disposition of Shares, including the effect of tax laws of any other
jurisdiction, based on their particular circumstances.
The description of Spanish tax laws set forth below is based on law currently in effect in Spain as of the date of
this prospectus, and on administrative interpretations of Spanish law. As a result, this description is subject to any
changes in such laws or interpretations occurring after the date hereof, including changes having retrospective effect.
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As used in this particular section “Certain Spanish Tax Considerations”, the term “Spanish Holder” means a
beneficial owner of Shares:
(a) who is an individual resident for tax purposes in Spain, and who does not acquire the Shares by reason of
his/her employment, or a corporation resident in Spain for tax purposes; and
(b) who is not treated as owning, direct or indirectly, 5% or more of our Shares.
Taxation on Ownership and Transfer of Shares
Indirect taxation
The acquisition or subscription of Shares and any subsequent transfer thereof are exempt from Transfer Tax,
Stamp Duty and Value Added Tax.
Direct taxation
Individuals. Income Tax on Individuals
Taxation of dividends
According to the Spanish Income Tax on Individuals (Impuesto sobre la Renta del las Personas Físicas; “IIT”)
Law (Ley 35/2006, de 28 de noviembre, del Impuesto sobre la Renta de las Personas Físicas y de modificación
parcial de las leyes de los Impuestos sobre Sociedades, sobre la Renta de no Residentes y sobre el Patrimonio; “IIT
Law”), income received by a Spanish Holder in the form of dividends, shares in profits, consideration paid for
attendance at general meetings of the Shareholders, income from the creation or assignment of rights of use or
enjoyment of the Shares and any other income received in his or her capacity as shareholder are considered, inter
alia, gross capital income.
Administration and custody expenses are deductible for IIT, except those incurred in individualized portfolio
management. Capital income is allocated to the Spanish Holder’s savings IIT taxable base. Savings IIT taxable base
is taxed during 2014 at a flat rate of 21% for the first €6,000, 25% between €6,001 and €24,000, and 27% for any
amount in excess of €24,000. Please note that capital income is exempt from taxation up to an aggregate amount of
€1,500. This limit is applicable to all dividends and profit participations obtained by the taxpayer in its capacity as a
shareholder during a calendar year.
Such exemption is not applicable to dividends or distributed profits arising from securities acquired by the
shareholder during the two months prior to the dividend distribution date if, after that date, within the same term, the
shareholder sells securities of the same type.
The payment to Spanish Holders of dividends or any other distribution is generally subject to a withholding tax
on account of final IIT at the rate of 21% on its gross amount, thus without taking into consideration the €1,500
exemption described above. Such withholding tax is fully creditable from the net IIT due (cuota líquida); any
amount withheld in excess of the amount of the IIT payable is refundable by the Spanish tax authorities. Such
withholding taxes would be levied by the Spanish tax resident or established depositary of the Shares or by the
Spanish tax resident or established collecting agent of any income arising from the Shares.
Taxation of capital gains
Transfer of Shares may trigger capital gains or losses. The taxable amount equals the difference between the
Shares’ tax basis and their transfer value; Spanish IIT Law considers as transfer value the listed value of the Shares
as of the transfer date or, if higher, the agreed transfer price. Costs and expenses effectively borne on the acquisition
and disposal of the Shares are taken into account for the calculation.
Capital gains or losses arising from the transfer of Shares held for more than one year are included in the
individual’s savings IIT taxable base corresponding to the period when the transfer takes place. Savings IIT taxable
base is taxed, during tax year 2014, at a flat rate of 21% for the first €6,000, 25% between €6,001 and €24,000 and
27% for any amount in excess of €24,000.
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However, capital gains or losses deriving from the transfer of Shares held for less than one year by a Spanish
Holder (short-term gains or losses, as the case may be) are included in such Spanish Holder’s general IIT taxable
base, together with inter alia labour, professional or entrepreneurial income. General IIT taxable base is taxed at
marginal rates (up to 52% as per the IIT Law, although, this tax rate may vary depending on the Spanish
autonomous region of residence of the corresponding Spanish Holder). Short-term capital losses can only be offset
against (i) short-term capital gains; and (ii) the excess, up to 10% of the rest of the general IIT taxable base.
Capital gains deriving from the transfer of Shares are not subject to withholding tax on account of IIT.
Please note that losses deriving from the transfer of Shares admitted to trading on certain official stock
exchanges are disregarded if securities of the same kind (Shares) have been acquired during the period between two
months before and two months after the date of the transfer which originated the loss. In these cases, capital losses
will be included in the IIT taxable base when the transfer of the remaining Shares of the taxpayer takes place.
Subscription Rights
If a Spanish Holder sells any rights received, the sale proceeds reduce the tax basis of the Shares to which they
pertain. Any excess over the tax basis is treated as a capital gain for IIT purposes. The exercise of the rights
generally is not a taxable event under Spanish law.
Spanish Wealth Tax
Individual Spanish Holders are subject to Spanish Wealth Tax (Impuesto sobre el Patrimonio) on all their assets
(such as the Shares) during tax year 2014.
Spanish Wealth Tax Law (Ley 19/1991, de 6 de junio, del Impuesto sobre el Patrimonio) exempts from taxation
the first €700,000 of net wealth owned by an individual Spanish Holder some additional exemptions may apply
on specific assets; those exemptions do not generally apply to the Shares; the rest of the net wealth is taxed at
rates ranging between 0.2% to 2.5%. However, this taxation may vary depending on the Spanish autonomous region
of residence of the corresponding Spanish Holder.
Spanish Inheritance and Gift Tax
Individuals resident in Spain for tax purposes who acquire Shares by inheritance or gift is subject to Spanish
Inheritance and Gift Tax (“Impuesto sobre Sucesiones y Donaciones”; “IGT”) in accordance with the IGT Law (Ley
29/1987, de 18 de diciembre, del Impuesto sobre Sucesiones y Donaciones; “IGT Law”), without prejudice to the
specific legislation applicable in each autonomous community. The effective tax rate, after applying all relevant
factors, ranges from 7.65% to 81.6%. Some tax benefits may reduce the effective tax rate.
Corporations. Corporate Income Tax
Taxation of Dividends
According to the Corporate Income Tax (Impuesto sobre Sociedades; “CIT”) Law (Real Decreto Legislativo
4/2004, de 5 de marzo, por el que se aprueba el texto refundido de la Ley del Impuesto sobre Sociedades; “CIT
Law”) dividends deriving from the Shares received by corporate Spanish Holders reduced by any expenses inherent
to holding the Shares, are included in the CIT taxable base. The general CIT tax rate is currently 30%.
Also, Spanish Holders that are CIT taxpayers are generally subject to withholding on account of final CIT
liability at a rate of 21% on the gross amount of the distributed profits. Such withholding tax is fully creditable from
the CIT payable, and if the amount of tax withheld exceeds the final CIT payable, the taxpayer is entitled to a
refund. Such withholding taxes would be levied by the Spanish tax resident or established depositary of the Shares
or by the Spanish tax resident or established collecting agent of any income arising from the Shares.
Income deriving from transfers of Shares.
The gain or loss deriving from the transfer of Shares is included in the tax base of CIT taxpayers, being taxed
generally at a rate of 30%.
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The impairment of Shares is not deductible for CIT purposes. Gains deriving from the transfer of Shares are not
subject to withholding on account of CIT.
Other Spanish Taxes
Spanish Holders that are subject to CIT are not subject to Spanish Net Wealth Tax, nor to IGT. However,
Spanish Holders that are subject to CIT should include the fair market value of the Shares received by inheritance or
gift in their taxable CIT income.
Certain US Federal Income Tax Considerations
This disclosure is limited to the U.S. federal tax issues addressed herein. Additional issues may exist that
are not addressed in this disclosure and that could affect the U.S. federal tax treatment of the Company’s
Shares. This tax disclosure was written in connection with the promotion or marketing of the Shares by the
Company and it cannot be used by any person for the purpose of avoiding penalties that may be asserted
under the Internal Revenue Code of 1986, as amended (the “Code”). Prospective investors should seek advice
based on their particular circumstances from independent tax advisers.
The following is a description of certain U.S. federal income tax consequences to the U.S. Holders described
below of owning and disposing of the Company’s Shares, but it does not purport to be a comprehensive description
of all tax considerations that may be relevant to a particular person’s decision to acquire Shares. This discussion
applies only to a U.S. Holder that acquired Shares in the Offering and holds the Shares as capital assets for U.S.
federal income tax purposes. In addition, it does not describe all of the tax consequences that may be relevant in
light of a U.S. Holder’s particular circumstances, including alternative minimum tax consequences, any aspect of the
Medicare contribution tax on “net investment income” and tax consequences applicable to U.S. Holders subject to
other special rules, such as:
•
certain financial institutions;
•
dealers or traders in securities that use a mark-to-market method of tax accounting;
•
persons holding the Company’s Shares as part of straddle, wash sale, conversion transaction or
integrated transaction or persons entering into a constructive sale with respect to the Shares;
•
persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
•
entities classified as partnerships for U.S. federal income tax purposes;
•
tax-exempt entities, including “individual retirement accounts” or “Roth IRAs”;
•
persons that own or are deemed to own ten percent or more of the Company’s voting stock; or
•
persons holding Shares in connection with a trade or business conducted outside of the United States.
If an entity that is classified as a partnership for U.S. federal income tax purposes owns the Company’s Shares,
the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities
of the partnership. Partnerships owning Shares and partners in such partnerships should consult their tax advisers as
to the particular U.S. federal income tax consequences of owning and disposing of the Company’s Shares.
This discussion is based on the Code, administrative pronouncements, judicial decisions, final, temporary and
proposed Treasury regulations, and the income tax treaty between Luxembourg and the United States (the “Treaty”),
all as of the date hereof, any of which is subject to change, possibly with retroactive effect.
A “U.S. Holder” is a person that, for U.S. federal income tax purposes, is a beneficial owner of the Company’s
Shares, is eligible for the benefits of the Treaty and is:
•
an individual who is a citizen or resident of the United States;
215
•
a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the
United States, any state therein or the District of Columbia; or
•
an estate or trust the income of which is subject to U.S. federal income taxation regardless of its
source.
U.S. Holders should consult their tax advisers concerning the U.S. federal, state, local and foreign tax
consequences of owning and disposing of Shares in their particular circumstances.
Except as defined in “—Passive Foreign Investment Company Rules” below, this discussion assumes that the
Company is not, and will not become, a passive foreign investment company, as described below.
Taxation of Distributions. Distributions paid on the Company’s Shares, other than certain pro rata distributions
of ordinary shares, will be treated as dividends to the extent paid out of the Company’s current or accumulated
earnings and profits (as determined under U.S. federal income tax principles). Because the Company does not
maintain calculations of its earnings and profits under U.S. federal income tax principles, it is expected that any
distributions generally will be reported to U.S. Holders as dividends. Subject to applicable limitations, dividends
paid to certain non-corporate U.S. Holders may be subject to favorable tax rates if the Company is eligible for the
benefits of the Treaty. The Company will generally be eligible for Treaty benefits if at least fifty percent of its
shares are ultimately owned by certain U.S. or Luxembourg persons that are eligible for the benefits of the Treaty or
U.S. citizens, and the deductible items of the Company paid to persons that are not entitled to the benefits of the
Treaty do not exceed fifty percent of the Company’s gross income. Non-corporate U.S. Holders should consult their
tax advisers as to whether any dividends paid to them may qualify for favorable tax rates. Dividends will not be
eligible for the dividends-received deduction generally available to U.S. corporations under the Code. The amount
of a dividend will include any amounts withheld by the Company in respect of Luxembourg income taxes.
Dividends will generally be included in a U.S. Holder’s income on the date of the U.S. Holder’s receipt of the
dividend. The amount of any dividend paid in foreign currency will be the U.S. dollar amount calculated by
reference to the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted
into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder should not be
required to recognize foreign currency gain or loss in respect of the amount received. A U.S. Holder may have
foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt, and any such gain
or loss will be U.S.-source ordinary income or loss. U.S. Holders that are entitled to receive a refund of Luxembourg
taxes that were withheld from any distribution should consult their tax advisers regarding the possible recognition of
foreign currency gain or loss in respect of the amount received as a refund.
Dividends will generally be foreign-source income to U.S. Holders. Subject to applicable limitations which
vary depending upon the U.S. Holder’s circumstances, Luxembourg income taxes withheld from dividends at a rate
not exceeding the applicable Treaty rate will be creditable against the U.S. Holder’s U.S. federal income tax
liability. Luxembourg withholding taxes that are refundable, or that are withheld at a rate exceeding the applicable
Treaty rate will not be creditable. Foreign taxes eligible for credit are calculated separately with respect to specific
classes of foreign source income. The rules governing foreign tax credits are complex, and U.S. Holders should
consult their tax advisers regarding the creditability of foreign taxes in their particular circumstances. In lieu of
claiming a foreign tax credit, U.S. Holders may, at their election, deduct foreign taxes, including Luxembourg taxes,
in computing their taxable income, subject to generally applicable limitations. An election to deduct foreign taxes
instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year.
Sale or Other Taxable Disposition of Shares. For U.S. federal income tax purposes, gain or loss realized on the
sale or other taxable disposition of the Company’s Shares will be capital gain or loss, and will be long-term capital
gain or loss if the U.S. Holder owned the shares for more than one year. The amount of the gain or loss will equal
the difference between the U.S. Holder’s tax basis in the shares disposed of and the amount realized on the
disposition, in each case as determined in U.S. dollars. This gain or loss will generally be U.S.-source gain or loss
for foreign tax credit purposes. The deductibility of capital losses is subject to limitations.
Passive Foreign Investment Company Rules. Based on the nature of its business and the issue price of the
Shares, the Company does not expect to be a “passive foreign investment company” (a “PFIC”) for U.S. federal
income tax purposes for its current taxable year or in the foreseeable future. However, because the Company’s
PFIC status for any taxable year will depend on the composition of its income and assets and the market value of its
assets from time to time (which may be determined by reference to the market value of the Company’s Shares from
216
time to time, which may be volatile) there can be no assurance that the Company will not be a PFIC for any taxable
year.
In general, a non-U.S. corporation will be considered a PFIC for any taxable year in which (i) 75% or more of
its gross income consists of passive income or (ii) 50% or more of the average quarterly value of its assets consists
of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, a
non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is
treated as if it held its proportionate share of the assets of the other corporation and received directly its
proportionate share of the income of the other corporation. Passive income generally includes dividends, interest,
rents, royalties and certain gains.
Under attribution rules, if the Company were a PFIC, U.S. Holders would be deemed to own their proportionate
shares of any subsidiary or other entity that is a PFIC and in which the Company owns directly or indirectly equity
interests (a “Lower-tier PFIC”) and would be subject to U.S. federal income tax according to the rules described in
the following paragraph on (i) certain distributions by a Lower-tier PFIC and (ii) a disposition by the Company of
shares of a Lower-tier PFIC, in each case as if the U.S. Holder held such shares directly, even though the U.S.
Holders have not received the proceeds of those distributions or dispositions directly.
If the Company is a PFIC for any taxable year during which a U.S. Holder owned the Company’s Shares, gain
recognized by a U.S. Holder on a sale or other disposition, including certain pledges, of Shares (or on an indirect
disposition of shares of a Lower-tier PFIC) would be allocated rateably over the U.S. Holder’s holding period for the
shares. The amounts allocated to the taxable year of the sale or disposition and to any year before the Company
became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be
subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an
interest charge would be imposed on the resulting tax liability with respect to each taxable year. Further, to the
extent that any distribution received by a U.S. Holder on its Shares (or a distribution by a Lower-tier PFIC that is
deemed to be received by a U.S. Holder) exceeds 125% of the average of the annual distributions received or
deemed received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, that
distribution would be subject to taxation in the same manner as gain, as described immediately above.
If the Company is a PFIC for any year during which a U.S. Holder owns Shares, it generally will continue to be
treated as a PFIC with respect to the U.S. Holder for all succeeding years during which the U.S. Holder owns the
Shares, even if the Company ceases to meet the threshold requirements for PFIC status.
If the Company is a PFIC for any taxable year, certain elections may be available that would result in alternative
treatments (such as mark-to-market treatment of the Shares). U.S. Holders should consult their tax advisers to
determine whether any of these elections would be available and if so, what the consequences of the alternative
treatments would be in their particular circumstances.
If a U.S. Holder owns Shares during any year in which the Company is a PFIC, the U.S. Holder generally will
be required to file with the Internal Revenue Service annual returns containing such information as may be required
by the U.S. Treasury.
Information Reporting and Backup Withholding. Payments of dividends and sales proceeds that are made
within the United States or through certain U.S.-related financial intermediaries generally are subject to information
reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is an exempt recipient or (ii) in the
case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is
not subject to backup withholding. The amount of any backup withholding from a payment to a U.S. Holder will be
allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle it to a refund, provided
that the required information is timely furnished to the Internal Revenue Service.
Certain U.S. Holders who are individuals (and under proposed regulations, certain entities controlled by
individuals) may be required to report information relating to their ownership of the Company’s Shares unless the
Shares are held in accounts at financial institutions (in which case the accounts may be reportable if maintained by
non-U.S. financial institutions). U.S. Holders should consult their tax advisers regarding their reporting obligations
with respect to the Shares.
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PLAN OF DISTRIBUTION
The Offering
In the Offering, we offered newly-issued Shares and the Selling Shareholders offered existing Shares, in each
case, issued following the completion of the Shareholder Reorganization.
Underwriting Arrangements
We entered into an underwriting agreement with the Underwriters named below (the “underwriting agreement”)
with respect to the newly-issued Shares offered by us and the existing Shares offered by the Principal Selling
Shareholders and the Minority Selling Shareholders in the Offering. To facilitate the sale of the Shares by the
Minority Selling Shareholders pursuant to the Offering and the underwriting agreement, we entered into a
facilitation agreement with the Minority Selling Shareholders and act as their intermediary in respect of such sale of
Shares pursuant to the Offering and the underwriting agreement (noting that such Shares and the proceeds from the
sale thereof shall at all times remain the property of the relevant Minority Selling Shareholder). Deutsche Bank AG,
London Branch and J.P. Morgan Securities plc are acting as the Joint Global Coordinators of the Offering. Pursuant
to the terms of the underwriting agreement, each Underwriter severally and not jointly agreed to subscribe for and
purchase the number of Shares indicated in the table below.
Underwriters
Number of
Shares
offered by the
Company
Deutsche Bank AG, London Branch ........................................1,707,317
J.P. Morgan Securities plc .......................................................1,707,317
Jefferies International Limited .................................................975,611
Banco Santander, S.A. .............................................................243,902
Société Générale......................................................................243,902
Total .......................................................................................4,878,049
Number of
Shares
offered by the
Selling
Shareholders
Aggregate
number of
Shares
Percentage
11,140,242
11,140,242
6,365,854
1,591,463
1,591,463
31,829,264
12,847,559
12,847,559
7,341,465
1,835,365
1,835,365
36,707,313
35%
35%
20%
5%
5%
100%
In consideration of the agreement by the Underwriters to subscribe for or purchase the Shares offered in the
Offering, the Company and the Selling Shareholders agreed to pay to the Underwriters commissions totalling 1.5
percent of the aggregate of the issue price multiplied by the number of Shares issued or sold in the Offering
(including over-allotment Shares, if and to the extent the over-allotment option is exercised). In addition, the
Company and the Selling Shareholders agreed that they may, in their sole discretion, pay to the Underwriters
discretionary commissions of up to 1.5 percent of the aggregate of the issue price multiplied by the number of
Shares issued or sold in the Offering (including over-allotment Shares, if and to the extent the over-allotment option
is exercised) to be distributed among the Underwriters as determined by the Company and the Selling Shareholders.
The amount, if any, of such discretionary commission will be determined by the Company in respect of its Shares
and certain Principal Selling Shareholders in respect of Shares sold by the Selling Shareholders. The Company
agreed to reimburse the Underwriters for certain expenses incurred in connection with the Offering.
The Principal Selling Shareholders and Javier Pérez-Tenessa de Block have granted to J.P. Morgan Securities
plc, on behalf of the Underwriters, an option to purchase additional Shares representing up to 15% of the total
number of Shares sold by us and the Selling Shareholders in the Offering to cover over-allotments, if any, made in
connection with the Offering. Any such additional Shares will be sold by the Principal Selling Shareholders and
Javier Pérez-Tenessa de Block pro rata to the number of Shares sold by each of them in the Offering. J.P. Morgan
Securities plc may exercise the over-allotment option, in whole or in part, once during the 30 days following the date
of commencement to trading of the Shares on the Spanish Stock Exchanges. This period is expected to commence
on April 8, 2014 and to end on May 8, 2014. The actual date on which the Shares will commence to trade on the
Spanish Stock Exchanges will depend on certain regulatory approvals from the CNMV that are beyond our control
and may take longer than expected.
The underwriting agreement provides that the obligations of the Underwriters are subject to certain customary
conditions precedent. The underwriting agreement may be terminated by the Joint Global Coordinators upon the
occurrence of certain events. If this right is exercised, the Offering (and the arrangements associated with it) will
lapse and any moneys received in respect of the Offering by us or the Selling Shareholders will be returned to
218
applicants without interest. In addition, the Settlement will not occur if the admission of our Shares to trading on the
regulated markets of the Spanish Stock Exchanges and quotation on the AQS has not occurred before April 30,
2014. In the cases above, where Shares have already been delivered by us or the Selling Shareholders, as the case
may be, and the purchase price has been paid by the Underwriters or investors, the principal consequences of
revocation of the Settlement are: (i) we and the Selling Shareholders, as the case may be, would be obligated to buy
back the Shares at the issue price per Share from the holders of Shares; and (ii) holders of Shares will have the right
to sell to us or the Selling Shareholders, as the case may be, the Shares they purchased at the issue price per Share.
Except as set out above, none of the Company, the Selling Shareholders, or the Underwriters shall be liable to any
person as a result of the revocation of the Offering.
The Shares have not been registered under the Securities Act or with any securities regulatory authority of any
state of the United States, and may not be offered or sold within the United States unless the Shares are registered
under the Securities Act or an exemption from the registration requirements of the Securities Act is available. The
Underwriters have advised us that they propose to resell the Shares initially at the issue price set forth herein
(i) outside the United States in offshore transactions as defined in, and in compliance with, Regulation S under the
Securities Act and (ii) in the United States to persons reasonably believed to be qualified institutional buyers
(“QIBs”) as defined in, and in reliance on, Rule 144A under the Securities Act or pursuant to another exemption
from, or in a transaction not subject to, the registration requirements of the Securities Act. Any offer or sale of the
Shares in reliance on Rule 144A will be made by broker-dealers who are registered as such under the Exchange Act.
In addition, until the end of the 40th calendar day after commencement of the Offering, an offering or sale of Shares
within the United States by a dealer (whether or not participating in the Offering) may violate the registration
requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A under
the Securities Act.
We and the Principal Selling Shareholders have each given certain representations, warranties and undertakings
to the Underwriters and have agreed to indemnify the Underwriters against certain liabilities, including liabilities
under applicable securities laws that may arise in connection with the Offering.
Settlement and Admission to Trading
We expect that on or about April 4, 2014, purchasers will become unconditionally obligated to pay for, and
entitled to receive delivery of, Shares purchased in the Offering. In order to expedite the registration and listing of
the Shares, it is anticipated that one or more of the Joint Global Coordinators in their capacity as prefunding banks
acting in the name and on behalf of the Underwriters, and each Underwriter acting on behalf of the final purchasers,
will subscribe and pay for the new Shares on such date. Payment for such Shares is expected to be made to us in our
account at BNP Paribas, as agent bank. We expect that all of the Shares sold in the Offering, including those
subscribed by one or more of the Joint Global Coordinators on such date, will be delivered against payment on or
about April 10, 2014 to the ultimate purchasers through the facilities of Iberclear and that our Shares will commence
trading on the Spanish Stock Exchanges on or about April 8, 2014 under the symbol “EDR”. The date on which the
Shares will commence to trade on the Spanish Stock Exchanges will depend on certain regulatory approvals from
the CNMV that are beyond our control and may take longer than expected.
Lock-Up Periods
We agreed that, without the prior written consent of the Joint Global Coordinators, which consent shall not be
unreasonably withheld, we would not, during the period commencing on the date on which the underwriting
agreement was signed and ending 180 days following the listing of the Shares on the Spanish Stock Exchanges,
directly or indirectly issue, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any
of our Shares or any securities convertible into or exercisable or exchangeable for our Shares, file any registration
statement with respect to any of the foregoing or enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of our Shares; provided,
however, the foregoing restrictions shall not apply to the issue of Shares pursuant to the Offering or the Shareholder
Reorganization.
The Principal Selling Shareholders will agree with the Underwriters to similar restrictions from the date on
which the underwriting agreement is signed and ending 180 days following the listing of the Shares on the Spanish
Stock Exchanges, provided, however, that the restrictions shall not apply in the event of (a) the transfer of Shares in
219
connection with the offering (including as a result of the lending of Shares by the Principal Selling Shareholders to
the Joint Global Coordinators (on behalf of the Underwriters) in connection with the Offering and as a result of the
exercise of the over-allotment option); (b) transfers of Shares among affiliated companies (within the meaning of
Article 4 of the LMV), provided that the transferees of such Shares agree to be bound by restrictions similar to those
provided for in the underwriting agreement; (c) accepting a general offer made to all holders of issued and allotted
Shares for the time being (other than Shares held or contracted to be acquired by the offeror or its associates) on
terms which treat all such holders alike; (d) executing and delivering an irrevocable commitment or undertaking to
accept a general offer (without any further agreement to transfer or dispose of any Shares or any interest therein) as
is referred to in subparagraph (c) above; (e) selling or otherwise disposing of Shares pursuant to any offer by the
Company to purchase its own Shares which is made on identical terms to all holders of Shares; (f) transferring or
disposing of Shares pursuant to a compromise or arrangement between the Company and its creditors or any class of
them or between the Company and its members or any class of them which is agreed to by the creditors or members
and (where required) sanctioned by the court under applicable law; (g) taking up Shares or other rights and
disposing of any rights granted in respect of a rights issue or other pre-emptive share offering by the Company;
(h) entering into and performing transactions contemplated by, the Stock Lending Agreement (as such term is
defined in the underwriting agreement); (i) transfers of Shares by any of the Ardian Vehicles, Willinvest & GMPI,
the Five Arrows Vehicles and Luxgoal 2 to certain former managers of GoVoyages or their immediate family
members or affiliates in connection with the settlement of certain existing earn-out rights of such managers or
immediate family members or affiliates provided that such managers enter into a lock-up undertaking substantially
consistent with the lock-up undertaking, together with exceptions, described in this paragraph in respect of the
Shares received for the then remaining lock-up period applicable to the transferor, or (j) any transfer or disposal of
Shares in connection with the Shareholder Reorganization.
Each member of our Senior Management will agree with the Underwriters to similar restrictions from the
date on which the underwriting agreement is signed and ending 360 days following the listing of the Shares on the
Spanish Stock Exchanges, which restrictions shall not apply in the event of (a) the transfer of Shares in connection
with the Offering; (b) accepting a general offer made to all holders of issued and allotted Shares for the time being
(other than Shares held or contracted to be acquired by the offeror or its associates) on terms which treat all such
holders alike; (c) executing and delivering an irrevocable commitment or undertaking to accept a general offer
(without any further agreement to transfer or dispose of any Shares or any interest therein) as is referred to in subclause (b) above; (d) selling or otherwise disposing of Shares pursuant to any offer by the Company to purchase its
own Shares which is made on identical terms to all holders of Shares; (e) taking up Shares or other rights and
disposing of any rights granted in respect of a rights issue or other pre-emptive share offering by the Company;
(f) any transfer of Shares notified in writing in advance to the Joint Global Coordinators and the Company and to
which the Joint Global Coordinators give their prior consent in writing (such consent not to be unreasonably
withheld or delayed); (g) any transfer of Shares pursuant to an intervening court order; (h) any transfer of Shares by
way of gift to certain persons, including family members and persons acting in the capacity of trustee of a trust
created by such individual, provided that the transferee agrees to be bound by the lock-up obligations described in
this paragraph; (i) any transfer of Shares by personal representatives of an individual who dies during the lock-up
period or (j) any transfer or disposal of Shares in connection with the Shareholder Reorganization. In addition, with
respect to Javier Pérez-Tenessa de Block, the lock-up restrictions shall additionally not apply to the transfer of
Shares as a result of the lending of Shares to the Joint Global Coordinators (on behalf of the Underwriters) in
connection with (1) the Offering and as a result of the exercise of the over-allotment option; or (2) entering into, and
performing transactions contemplated by, the Stock Lending Agreement (as such term is defined in the underwriting
agreement).
In addition to the lock-up arrangements entered into for the benefit of the Underwriters, approximately 100
Minority Selling Shareholders who are current employees of the eDreams ODIGEO Group (excluding our Senior
Management) agreed with the Company to substantially the same lock-up arrangements for a period of 360 days
following the listing of the Shares on the Spanish Stock Exchanges as those entered into by our Senior Management
with the Underwriters. The Company also entered into a substantially similar lock-up arrangement with James Hare,
one of our Directors, for a period of 180 days following the listing of the Shares on the Spanish Stock Exchanges.
Stabilization
In connection with the Offering, J.P. Morgan Securities plc as stabilization agent acting on behalf of itself and
the other Underwriters of the Offering may, to the extent permitted by applicable law, at its discretion engage in
220
transactions that stabilize, support, maintain or otherwise affect the price of the Shares initially sold for a period of
30 calendar days from the date the Shares commence trading on the Spanish Stock Exchanges. The stabilization
period is expected to commence on or about April 8, 2014 and to end on or about May 8, 2014. Such transactions
may be effected on the Spanish Stock Exchanges, the over-the-counter market or otherwise. Except as required by
law, none of J.P. Morgan Securities plc, any of its agents or any of the Underwriters intends to disclose the extent of
any stabilization and/or over-allotment transactions in connection with the Offering.
These stabilization activities may raise or maintain the market price of the Shares initially sold above
independent market levels or prevent or retard a decline in the market price of the Shares. None of J.P. Morgan
Securities plc, any of its agents or any of the Underwriters is required to engage in these activities and, if
commenced, these activities may be discontinued at any time. There can be no assurance that any such activities will
be undertaken. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Shares.
Interests of Participating Parties in the Offering
Certain of the Underwriters and their affiliates may from time to time engage in transactions with, and
perform services for, us and the eDreams ODIGEO Group in the ordinary course of their business. In addition, the
Underwriters and their respective affiliates have performed, and may in the future perform, various financial
advisory, investment banking, commercial banking or other services for us and the eDreams ODIGEO Group, for
which they have received and are likely to continue to receive customary fees and expenses.
Dealings for Own Accounts
In connection with the Offering, the Underwriters and any of their respective affiliates acting as an investor for
its or their own account(s) may subscribe for or purchase Shares sold pursuant to the Offering and, in that capacity,
may retain, purchase, sell, offer to sell, or otherwise deal for its or their own account(s) in such securities, any other
securities of our company or other related investments in connection with the Offering or otherwise. The
Underwriters do not intend to disclose the extent of any such investment or transaction otherwise than in accordance
with any legal or regulatory obligation to do so.
Relationships Between the Company, the Selling Shareholders and the Underwriters
From time to time certain of the Underwriters and their respective affiliates may have provided us, the Selling
Shareholders and our and their respective affiliates with investment banking, commercial banking and other
advisory services. They may provide us, the Selling Shareholders and our and their respective affiliates with similar
or other services and engage in similar activities in the future. In connection with the Offering, each of the
Underwriters and any affiliate acting as an investor for its own account may take up Shares and in that capacity may
retain, purchase or sell Shares (or related investments), for its own account and may offer or sell Shares (or other
investments) otherwise than in connection with the Offering.
221
TRANSFER AND SELLING RESTRICTIONS
Transfer Restrictions
The Shares have not been, and will not be, registered under the Securities Act or with any securities regulatory
authority of any state of the United States, and may not be offered or sold within the United States unless the Shares
are registered under the Securities Act or an exemption from the registration requirements of the Securities Act is
available. In the United States, the Shares will be sold only to persons reasonably believed to be QIBs in reliance on
Rule 144A under the Securities Act or pursuant to another exemption from, or in a transaction not subject to, the
requirements of the Securities Act. All offers and sales of Shares outside the United States will be made in
compliance with Regulation S under the Securities Act.
In addition, until the end of the 40th calendar day after commencement of the Offering, an offering or sale of
Shares within the United States by a dealer (whether or not participating in the Offering) may violate the registration
requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A under
the Securities Act.
Notice to Rule 144A Investors
Each purchaser of Shares sold within the United States purchasing pursuant to Rule 144A under the Securities
Act or another exemption from, or in a transaction not subject to, the requirements of the Securities Act will be
deemed to have represented and agreed that it has received a copy of this prospectus and such other information as it
deems necessary to make an informed investment decision and that:
a)
such purchaser acknowledges that the Shares have not been, and will not be, registered under the
Securities Act or with any securities regulatory authority of any state of the United States and that the
Shares may not be offered, sold, pledged or otherwise transferred, directly or indirectly, other than in
accordance with paragraph D below;
b) such purchaser (i) is a QIB, and (ii) is aware that the sale to it is being made in reliance on Rule 144A
and (iii) is acquiring the Shares for its own account or for the account or benefit of one or more QIBs;
c)
the Shares are “restricted securities” within the meaning of Rule 144(a)(3) and no representation is
made as to the availability of the exemption provided by Rule 144 for resales of any Shares;
d) if, in the future, such purchaser decides to offer, resell, pledge or otherwise transfer such Shares, such
Shares may be offered, sold, pledged or otherwise transferred only (i) to a person who is reasonably
believed to be a QIB in a transaction meeting the requirements of Rule 144A, (ii) in an offshore
transaction in compliance with Regulation S, or (iii) in accordance with Rule 144 under the Securities
Act (if available), in each case in accordance with all applicable securities laws of the United States;
e)
such purchaser will not deposit or cause to be deposited such Shares into any depositary receipt facility
established or maintained by a depositary bank other than a Rule 144A restricted depositary receipt
facility, so long as such Shares are “restricted securities” within the meaning of Rule 144(a)(3); and
f)
the Company shall not recognize any offer, sale, pledge or other transfer of the Shares made other than
in compliance with the above-stated restrictions.
Notice to Regulation S Investors
Each purchaser of Shares pursuant to Regulation S will be deemed to have represented and agreed that it has
received a copy of the prospectus and such other information as it deems necessary to make an informed investment
decision and that:
a)
the Shares have not been, and will not be, registered under the Securities Act or with any securities
regulatory authority of any state of the United States;
222
b) such purchaser is purchasing the Shares in an “offshore transaction” (as defined in Regulation S);
c)
the purchaser is aware of the restrictions on the offer and sale of the Shares pursuant to Regulation S
described in this prospectus; and
d) the Company shall not recognize any offer, sale, pledge or other transfer of the Shares made other than
in compliance with the above-stated restrictions.
Selling Restrictions
European Economic Area
In relation to each member state of the European Economic Area that has implemented the Prospectus Directive
(each, a “Relevant Member State”), with effect from and including the date on which the Prospectus Directive was
implemented in that Relevant Member State (the “Relevant Implementation Date”), no Shares have been offered or
will be offered to the public in that Relevant Member State prior to the publication of a prospectus in relation to the
Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate,
approved in another Relevant Member State and notified to the competent authority in the Relevant Member State,
all in accordance with the Prospectus Directive, except that with effect from and including the Relevant
Implementation Date, offers of Shares may be made to the public in that Relevant Member State at any time under
the following exemptions under the Prospectus Directive, if they are implemented in that Relevant Member State:
a)
to any legal entity which is a qualified investor, as defined in the Prospectus Directive;
b) to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus
Directive) in such Relevant Member State subject to obtaining the prior consent of the Underwriters
for any such offer; or
c)
in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Shares shall result in a requirement for the publication by the Company or the
Underwriters of a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant
to Article 16 of the Prospectus Directive.
For this purpose, the expression “an offer of any shares to the public” in relation to any Shares sold in any
Relevant Member State means the communication in any form and by any means of sufficient information on the
terms of the offer and any Shares to be offered so as to enable an investor to decide to subscribe for any Shares, as
the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in
that Relevant Member State. The expression “Prospectus Directive” means Directive 2003/71/EC (and any
amendments thereto, including the 2010 PD Amending Directive) and includes any relevant implementing measure
in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
United Kingdom
This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom who are
“qualified investors” as defined in Section 86(7) of the Financial Services and Markets Act 2000, as amended (the
“FSMA”) or otherwise in circumstances which do not require the publication by the Company of a prospectus
pursuant to Section 85(1) of the FSMA.
In the United Kingdom, this prospectus is only being distributed to, and is only directed at, and any investment
or investment activity to which this prospectus relates is available only to, and will be engaged in only with, persons
(i) having professional experience in matters relating to investments who fall within the definition of “investment
professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005
(the “Order”); or (ii) who are high net worth entities falling within Article 49(2)(a) to (d) of the Order, or other
persons to whom it may otherwise be lawfully communicated (all such persons together being referred to as
“Relevant Persons”). Persons who are not Relevant Persons should not take any action on the basis of this
prospectus and should not act or rely on it.
223
Buyer’s Representation
Each person in a Relevant Member State who receives any communication in respect of, or who acquires any
Shares under, the offers contemplated in this prospectus will be deemed to have represented, warranted and agreed
to and with each Underwriter and the Company that:
a)
it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article
2(1)(e) of the Prospective Directive; and
b) in the case of any Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of
the Prospectus Directive, (i) the Shares sold pursuant to the Offering acquired by it in the offer have not
been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in
any Relevant Member State other than qualified investors, as that term is defined in the Prospectus
Directive, or in circumstances in which the prior consent of the Underwriters has been given to the offer or
resale; or (ii) where Shares sold pursuant to the Offering have been acquired by it on behalf of persons in
any Relevant Member State other than qualified investors, the offer of those Shares sold pursuant to the
Offering to it is not treated under the Prospectus Directive as having been made to such persons.
For the purposes of this representation, the expression “Prospectus Directive” means Directive 2003/71/EC (and
any amendments thereto, including the 2010 PD Amending Directive) and includes any relevant implementing
measure in each Relevant Member State and the expression “2010 PD Amending Directive” means
Directive 2010/73/EU.
224
ENFORCEMENT OF CIVIL LIABILITIES
The Company is a public limited liability company (société anonyme) organized under the laws of the Grand
Duchy of Luxembourg and its assets are located primarily outside the United States. In addition, the members of the
Company’s Board of Directors are non-residents of the United States whose assets are located primarily outside the
United States. As a result, it may not be possible for investors to effect service of process within the United States
upon the Company or such persons or to enforce against them or the Company judgments of courts of the United
States, whether predicated upon the civil liability provisions of the federal securities laws of the United States or
other laws of the United States or any state thereof.
Although there is no treaty between Luxembourg and the United States regarding the reciprocal enforcement of
judgments, a valid, final and conclusive judgment against the Company obtained from a state or federal court of the
United States, which judgment remains in full force and effect, may be enforced through a court of competent
jurisdiction in Luxembourg, subject to compliance with the enforcement procedures set forth in article 678 et seq. of
the Luxembourg New Code of Civil Procedure, as follows:
•
the foreign court must properly have had jurisdiction to hear and determine the matter, both according to its
own laws and to the Luxembourg international private law conflict of jurisdiction rules;
•
the foreign court must have applied the law which is designated by the Luxembourg conflict of laws rules
(although some first instance decisions rendered in Luxembourg, which have not been confirmed by the
Court of Appeal, no longer apply this condition) or, at least, the order must not contravene the principles
underlying those rules;
•
the decision of the foreign court must be enforceable (exécutoire) in the jurisdiction in which it was
rendered;
•
the decision of the foreign court must not have been obtained by fraud, but in compliance with the rights of
the defendant and in compliance with its own procedural laws; and
•
the decisions and the considerations of the foreign court must not be contrary to Luxembourg international
public policy rules or have been given in proceedings of a tax, penal or criminal nature (which would
include awards of damages made under civil liabilities provisions of the U.S. federal securities laws, or
other laws, to the extent that the same would be classified by Luxembourg courts as being of a penal or
punitive nature (for example, fines or punitive damages)). Ordinarily an award of monetary damages would
not be considered as a penalty, but if the monetary damages include punitive damages, such punitive
damages may be considered as a penalty.
If an original action is brought in Luxembourg, without prejudice to specific conflict of law rules, Luxembourg
courts may refuse to apply the designated law if the choice of such foreign law was not made bona fide or (i) if the
foreign law was not pleaded and proved or (ii) if pleaded and proved, such foreign law was contrary to mandatory
Luxembourg laws or incompatible with Luxembourg public policy rules. In an action brought in Luxembourg on the
basis of U.S. federal or state securities laws, Luxembourg courts may not have the requisite power to grant the
remedies sought.
LEGAL MATTERS
Certain matters governed by U.S. federal and English law will be passed on for us by Davis Polk & Wardwell
London LLP, our U.S. and English counsel, and for the Underwriters by Linklaters LLP, U.S. and English counsel
to the Underwriters.
The validity of the Shares and certain matters governed by Luxembourg law will be passed on for us by Clifford
Chance, our Luxembourg counsel.
The validity of certain matters governed by Spanish law will be passed on for us by Uría Menéndez Abogados,
S.L.P., our Spanish counsel.
225
INDEPENDENT AUDITORS
The Consolidated Annual Financial Statements and the Unconsolidated 2011 Financial Statements included
elsewhere in this prospectus have been audited by Deloitte Audit S.à r.l., independent auditors of the Company, as
stated in their reports appearing elsewhere in this prospectus. See “Presentation of Financial and Other Data”.
Deloitte Audit S.à r.l. is a current member of the Institut des Réviseurs d’Entreprises the national member body for
Luxembourg of the International Federation of Accountants. Deloitte Audit S.à r.l. is on the public register of
authorized audit firms held by the Commission de Surveillance due Secteur Financier.
226
INDEX TO FINANCIAL STATEMENTS
Consolidated Interim Financial Statements as of December 31, 2013 and for the nine-month
period ended December 31, 2013 (unaudited)
Report of the réviseur d’entreprises agréé ....................................................................................... F-2
Consolidated income statement........................................................................................................ F-6
Consolidated statement of other comprehensive income ................................................................... F-7
Consolidated statement of financial position .................................................................................... F-8
Statement of changes in equity ........................................................................................................ F-9
Consolidated cash flow statement .................................................................................................... F-10
Consolidated Annual Financial Statements as of and for the years ended March 31, 2013 and
2012 (audited)
Report of the réviseur d’entreprises agréé ....................................................................................... F-39
Consolidated income statement........................................................................................................ F-45
Consolidated statement of other comprehensive income ................................................................... F-46
Consolidated statement of financial position .................................................................................... F-47
Statement of changes in equity ........................................................................................................ F-48
Consolidated cash flow statement .................................................................................................... F-49
Unconsolidated 2011 Financial Statements (audited)
Annual accounts and report of the approved statutory auditors
Report of the approved statutory auditors.................................................................................... F-125
Balance sheet ............................................................................................................................. F-127
Profit and loss account ............................................................................................................... F-128
Statements of cash flows and of changes in equity and report of the approved statutory auditors
Report of the approved statutory auditors in accordance with International Standard of
F-136
Accounting 805..........................................................................................................................
Statement of cash flows .............................................................................................................. F-138
Statement of changes in equity....................................................................................................... F-139
Basis of accounting........................................................................................................................ F-140
F-1
Deloitte Audit
Société à responsabilité limitée
560, rue de Neudorf
L-2220 Luxembourg
BP 1173
L-1011 Luxembourg
Tel +352 451 451
Fax +352 451 452 992
www.deloitte.lu
15NOV201217532999
To the Board of Directors of
eDreams ODIGEO, S.A.
(formerly LuxGEO Parent S.a r.l.)
282, route de Longwy
L-1940 Luxembourg
REVIEW REPORT ON CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Introduction
We have reviewed the accompanying condensed interim consolidated statement of financial
position of eDreams ODIGEO, S.A. as of December 31 , 2013 and the related condensed interim
consolidated statements of income, other comprehensive income, changes in equity and cash flows
for the nine month period then ended and the other explanatory notes. The Board of Directors is
responsible for the preparation and fair presentation of the condensed interim consolidated financial
statements in accordance with International Accounting Standard 34, Interim Financial Reporting, as
adopted in the European Union. Our responsibility is to express a conclusion on condensed interim
consolidated financial statements based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor
as adopted by the Institut des Réviseurs d’Entreprises. A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial and accounting matters,
and applying analytical and other review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on Auditing and consequently does not
enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying condensed interim consolidated financial statements are not prepared, in all material
respects, in accordance with International Accounting Standard 34, Interim Financial Reporting, as
adopted in the European Union.
For Deloitte Audit, Cabinet de révision agréé
26SEP201313144225
Marco Crosetto, Réviseur d’entreprises agréé
Partner
March 14, 2014
Société à responsabilité limitée au capital de 35.000 €
RCS Luxembourg B 67.895
Autorisation d’établissement 10022179
27NOV201215543547
F-2
eDreams ODIGEO (formerly LuxGeo Parent S.à r.l.)
and Subsidiaries
Condensed Interim Consolidated Financial Statements
and Notes for the nine-month period ended December 31, 2013
Registered office:
282, route de Longwy
L-1940 Luxembourg
R.C.S. Luxembourg B N 159 036
Subscribed Capital: e 234,862,115
As of March 14, 2014 the Board of Directors formally prepared and signed these Condensed
Interim Consolidated Financial Statements for the nine-month period ended December 31, 2013.
7MAR201421084726
F-3
INDEX
INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-4
Condensed Interim Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-6
Condensed Interim Consolidated Statement of Other Comprehensive Income . . . . . . . . . . . .
F-7
Condensed Interim Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . .
F-8
Condensed Interim Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . .
F-9
Condensed Interim Consolidated Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-10
1.
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-11
2.
Significant Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.1
Significant events during the nine-month period ended December 31, 2013 . . . .
2.2
Significant events during the year ended March 31, 2013 . . . . . . . . . . . . . . . . .
F-11
F-11
F-11
3.
Basis
3.1
3.2
3.3
3.4
3.5
.
.
.
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.
.
F-12
F-12
F-12
F-13
F-13
F-14
4.
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-14
5.
Seasonality of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-16
6.
Segment Information . . . . . . . . . . . . . . . . . . .
6.1
Segment revenue and revenue margin .
6.2
Geographical information . . . . . . . . . .
6.3
Other financial disclosures . . . . . . . . .
.
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.
.
F-16
F-17
F-18
F-18
7.
Depreciation, Amortization and Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-19
8.
Other Operating Income/(Expenses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-19
9.
Non-Recurring Income/(Expenses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-20
10.
Financial and Similar Income and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-20
11.
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-21
12.
Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-21
13.
Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.1 Main assumptions used in the financial projections . . . . . . . . . . . . . . . . . . . . . .
13.2 Key assumptions used and sensitivity analysis . . . . . . . . . . . . . . . . . . . . . . . . .
F-22
F-22
F-23
14.
Cash and Cash Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-24
15.
Equity
15.1
15.2
15.3
15.4
15.5
16.
Borrowings and Debts . . . .
16.1 Debt by type . . . . . .
16.2 Credit lines . . . . . . .
16.3 Debt by maturity date
of Presentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Framework of preparation . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounting principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New and revised International Financial Reporting Standards .
Changes in consolidation perimeter . . . . . . . . . . . . . . . . . . .
Comparative information . . . . . . . . . . . . . . . . . . . . . . . . . . .
............................
Share capital . . . . . . . . . . . . . . . . . .
Share premium . . . . . . . . . . . . . . . .
Option premium in convertible bonds .
Equity-settled share-based payments .
Foreign currency translation reserve . .
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F-24
F-24
F-25
F-25
F-25
F-25
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F-26
F-26
F-27
F-28
7MAR201421084726
F-4
16.4
16.5
Fair value of borrowings and debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-29
F-30
17.
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-30
18.
Business Combination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18.1 Acquisition of ODIGEO Paris Meta S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-30
F-30
19.
Off-Balance Sheet Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19.1 Operating lease commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19.2 Other off-balance sheet commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-32
F-32
F-32
20.
Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20.1 Transactions and balances with related parties . . . . . . . . . . . . . . . . . . . . . . . . .
20.2 Directors and key management compensation . . . . . . . . . . . . . . . . . . . . . . . . .
F-33
F-33
F-35
21.
Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-36
22.
Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-36
23.
Consolidation Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-37
7MAR201421084726
F-5
eDreams ODIGEO and Subsidiaries
FINANCIAL STATEMENTS
(Thousands of Euros)
Condensed Interim Consolidated Income Statement
for the nine-month period ended December 31, 2013
Notes
December
2013
December
2012
4&6
355,957
355,698
(44,051)
(50,044)
(87,554)
(45,784)
(19,441)
(12,246)
(178,864)
(17,300)
(51)
(147,525)
51,311
57,484
Operating income
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization and loss on disposals of
non-current assets . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income / (expenses) . . . . . . . . . . . . . .
.....
.....
.....
.....
.....
7
7
8
Recurrent operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income / (expenses) non-recurrent . . . . . . . . . . . . . . . .
9
Operating profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,809)
(2,615)
49,502
54,869
(45,055)
72
(1,970)
(41,151)
265
(4,629)
Financial and similar income and expenses
Financial cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other financial income / (expenses) . . . . . . . . . . . . . . .
Income (loss) of associates accounted for using equity
method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.....
.....
.....
10
10
10
.....
10
Profit/(loss) before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(32)
2,549
9,322
Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11,677)
(7,212)
Profit/(loss) for the year from continuing operations . . . . . . .
(9,128)
2,110
Profit for the year from discontinued operations net of taxes
(net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated profit/(loss) for the year . . . . . . . . . . . . . . . . . .
Non controlling interest—Result . . . . . . . . . . . . . . . . . . . . . .
Profit and loss attributable to the parent company . . . . . . . . .
—
(9,128)
—
(9,128)
—
2,110
68
2,178
The notes on pages F-11 to F-38 are an integral part of these condensed interim consolidated
financial statements.
7MAR201421084726
F-6
Condensed Interim Consolidated Statement of Other Comprehensive Income
December 2013
Consolidated profit/(loss) for the year (from the income
statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 2012
(9,128)
2,178
—
(6,359)
—
—
(130)
2,552
—
39
(6,359)
2,461
Total recognized income and expenses . . . . . . . . . . . . . . .
(15,487)
4,639
a) Attributable to the parent company . . . . . . . . . . . . . . . . .
b) Attributable to minority interest . . . . . . . . . . . . . . . . . . . .
(15,487)
—
4,571
68
Income and expenses recorded directly in equity
For cash flow hedges . . . . . . . . . . . . . .
Exchange differences . . . . . . . . . . . . . .
For actuarial gains and losses (pensions)
Tax effect . . . . . . . . . . . . . . . . . . . . . . .
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7MAR201421084726
F-7
Condensed Interim Consolidated Statement of Financial Position
at December 31, 2013
ASSETS
Notes December 2013 March 2013 EQUITY AND LIABILITIES
Non-current assets
Goodwill . . . . . . . . . . . .
Other intangible assets . . .
Tangible assets . . . . . . . .
Non-current financial assets
Deferred tax assets . . . . .
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11
12
Other non-current assets . . . . . . . . . . . . . . .
879,927
299,467
5,632
4,783
4,719
876,116
310,261
5,087
4,996
10,750
11,819
12,284
1,206,347
1,219,494
Notes December 2013 March 2013
Shareholder’s Equity
Capital . . . . . . . . . . . . . .
Additional paid-in capital . .
Retained earnings . . . . . .
Net income / (loss) . . . . . .
Foreign currency translation
. . . . . .
. . . . . .
. . . . . .
. . . . . .
reserve
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F-8
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.
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . .
14
66,211
11,114
72
89,649
114,140
8,066
71
159,201
167,046
281,478
1,373,393
1,500,972
234,007
237,939
(80,797)
(23,330)
8,790
366,171
376,609
—
—
15
366,171
376,609
16
17
597,323
16,272
36,863
64,588
584,921
14,456
39,645
66,963
715,046
705,985
254,751
2,181
15,198
20,046
393,780
1,874
9,465
13,259
292,176
418,378
1,373,393
1,500,972
Non controlling interest . . . . . . . . . . . . . . . .
Non-current liabilities
Non-current financial liabilities
Non current provisions . . . . .
Deferred revenue . . . . . . . . .
Deferred tax liabilities . . . . . .
Current assets . . . . . . . . .
Trade and other receivables
Current tax assets . . . . . .
Financial assets . . . . . . . .
Cash and cash equivalent .
234,862
238,849
(100,843)
(9,128)
2,431
Current liabilities
Trade and other payables
Current provisions . . . . .
Current taxes payables . .
Current financial liabilities
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.
TOTAL EQUITY AND LIABILITIES . . . . . . . . . .
17
16
The notes on pages F-11 to F-38 are an integral part of these condensed interim consolidated financial statements.
7MAR201421084726
F-8
Condensed Interim Consolidated Statement of Changes in Equity
at December 31, 2013
Share
Other
Foreign
Premium & Profit & Loss
equity
currency
Non
Share
Other
for the
instruments translation controlling
Capital Reserves
period
(Note 15.3)
reserve
interest Total Equity
Closing balance at March 31,
2012 . . . . . . . . . . . . . . . . . 232,507
Total recognized income /
(expenses) . . . . . . . . . . . .
71
512
387,228
—
4,639
2,178
—
2,461
—
—
—
—
—
(512)
(512)
—
—
—
—
—
(512)
(512)
.
—
2,081
—
—
—
.
.
.
—
—
—
(64,143)
6
(62,056)
64,256
—
64,256
—
—
—
130,326
2,178
26,012
(expenses) . . . . . . . . . . . .
2,081
—
—
—
—
6
2,087
2,419
—
393,442
—
6,371
—
(19,137)
(113)
—
(113)
—
1,500
—
—
—
—
—
1,500
1,500
—
—
—
—
—
1,500
. .
—
42
—
—
—
—
42
. .
. .
. .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8,790
—
376,609
(6,359)
—
(15,487)
Closing balance at March 31,
2013 . . . . . . . . . . . . . . . . . 234,007
(expenses) . . . . . . . . . . . .
Capital Increases /
(Decreases) (Note 15) . . . .
Operations with members or
owners . . . . . . . . . . . . . . .
.
.
.
.
.
.
.
.
(25,508)
—
—
Capital Increases /
(Decreases) . . . . . . . . . . .
Other operations with
members or owners
owners . . . . . . . . . . . . . . .
Payments based on equity
instruments . . . . . . . . .
Allocation of result . . . . . .
Other changes . . . . . . . .
Other changes in equity .
26,012
—
Closing balance at
December 31, 2012 . . . . . . . 232,507
Preference dividends
(note 15) . . . . . . . . . . .
instruments . . . . . . . . .
Other changes . . . . . . . .
Other changes in equity . . .
(64,256)
—
Increases / (Decreases) on
business combinations . . .
Other operations with
members or owners
owners . . . . . . . . . . . . . . .
instruments . . . . . . . . . .
Allocation of result and other
transfers between equity
items . . . . . . . . . . . . . .
Other changes . . . . . . . . .
Other changes in equity . . . .
192,382
1,369
(607)
804
1,369
(607)
804
131,130
(23,330)
26,012
—
—
(9,128)
—
855
910
—
—
—
—
1,765
855
910
—
—
—
—
1,765
3,409
(23,330)
(125)
(20,046)
—
23,330
—
23,330
—
—
—
—
—
—
—
—
—
—
—
—
3,409
—
(125)
3,284
111,994
(9,128)
26,012
2,431
—
—
—
—
—
Closing balance at
December 31, 2013 . . . . . . . 234,862
366,171
7MAR201421084726
F-9
Condensed Interim Consolidated Cash Flow Statement
December 2013
Net Profit / (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . .
Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain or loss on disposal of assets . . . . . . . . . . . . . . . .
Finance (Income) / Loss . . . . . . . . . . . . . . . . . . . . . . .
method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses related to share based payments . . . . . . . . .
Other non cash items . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in working capital . . . . . . . . . . . . . . . . . . . . .
Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 2012
(9,128)
2,178
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
19,441
12,246
1,670
11,677
—
46,953
17,300
51
1,671
7,212
—
45,515
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
—
3,409
1
(90,861)
(8,644)
32
2,081
—
(52,559)
(7,353)
Net cash from operating activities . . . . . . . . . . . . . . . . . . .
(13,236)
16,128
.
.
.
.
.
.
.
(15,794)
1
(66)
854
(13,390)
—
—
(11,134)
11
(106)
7
(13)
(1,096)
(89)
Net cash flow from / (used) in investing activities . . . . . . .
(28,395)
(12,420)
.
.
.
.
.
.
.
.
1,765
—
(214)
—
(31,702)
183
(914)
—
—
—
(10,431)
—
(33,525)
424
—
—
Net cash flow from / (used) in financing activities . . . . . . .
(30,882)
(43,532)
Net increase / (decrease) in cash and cash equivalent . . .
(72,513)
(39,824)
Cash and cash equivalents at beginning of period . . . . . . .
Effect of foreign exchange rate changes . . . . . . . . . . . . . .
159,157
(1,481)
119,346
526
Cash and cash equivalents at end of period . . . . . . . . . . .
85,163
80,048
Cash at the closing
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank facilities and overdrafts . . . . . . . . . . . . . . . . . . . . . . .
89,649
(4,486)
87,035
(6,987)
Cash and cash equivalents at end of period . . . . . . . . . . .
85,163
80,048
Acquisitions of intangible and tangible assets . . . . . . . .
Proceeds on Disposal of tangible and intangible assets
Acquisitions of financial assets . . . . . . . . . . . . . . . . . .
Payments/ Proceeds from disposals of financial assets .
Acquisitions of subsidiaries net of cash acquired . . . . .
Disposal of subsidiaries net of cash disposed . . . . . . .
Cash effect of change in consolidation method . . . . . .
Proceeds of issues of shares . . . . . . . . . .
Borrowings drawdown . . . . . . . . . . . . . . .
Reimbursement of borrowings . . . . . . . . . .
Payment for derivatives . . . . . . . . . . . . . . .
Interests and other financial expenses paid
Interests received . . . . . . . . . . . . . . . . . . .
Fees paid on debt . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . .
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7MAR201421084726
F-10
Notes to the condensed interim consolidated financial statements
1.
General Information
eDreams ODIGEO (formerly LuxGEO Parent S.à r.l.) was set up as a limited liability company
(société à responsabilité limitée) formed under the laws of Luxembourg on commercial company on
February 14, 2011, for an unlimited period, with its registered office located at 282, route de
Longwy, L-1940 Luxembourg (the ‘‘Company’’ and, together with its subsidiaries, the ‘‘Group’’). Its
main holding companies are Axeurope S.A. (‘‘Axeurope’’) and Luxgoal S.à r.l. (‘‘Luxgoal’’). In
January 2014, the denomination of the Company was changed to eDreams ODIGEO and its
corporate form from an S.à r.l. to an S.A. (‘‘Société Anonyme’’).
eDreams ODIGEO and its direct and indirect subsidiaries (the ‘‘Group’’), headed by eDreams
ODIGEO (as detailed in note 23, Consolidation Scope), is a leading pan-European online travel
company that uses innovative technology and builds on relationships with suppliers, product
know-how and marketing expertise to attract and enable customers to research, plan and book a
broad range of travel products and services.
ARDIAN (formerly AXA Private Equity) and certain Permira Funds had indirect ownership of the
Company. ARDIAN (through Lyeurope and Lyparis) and Permira Funds (through eDreams Inc.),
indirectly owned Go Voyages Group and eDreams Group, respectively, prior to the creation of the
Company.
Following the creation of the Company, AXA Private Equity and Permira Funds, respectively,
jointly contributed Go Voyages and eDreams Groups in exchange for the Company’s shares
(indirectly held).
2.
Significant Events
2.1 Significant events during the nine-month period ended December 31, 2013
On August 12, 2013 Lyparis entered in a sale purchase agreement ‘‘SPA’’ to buy all the shares
of ODIGEO Paris Meta S.A. (formerly Findworks Technologies S.A.), the company that operates the
website Liligo, a travel search engine that searches flights, hotels and cars among several travel
sites on the web. The transaction was settled on October 2, 2013 with an enterprise value of
13.5 million of euros.
2.2 Significant events during the year ended March 31, 2013
Change in the Group debt structure
On January 31, 2013, the Group completed a change in the debt structure of its existing
Senior Credit Facilities by its subsidiary Geo Debt Finance S.C.A. issuing e325 million principal
aggregate amount of Senior Secured Notes (the ‘‘2018 Notes’’) due 2018 (see note 16.1). The
interest rate of the 2018 Notes is 7.5%. Interest is payable semi-annually in arrears each February 1
and August 1, beginning on August 1, 2013.
The proceeds of the 2018 Notes were used directly or indirectly through the use of
intercompany loans or distributions:
– To prepay e314.7 million of outstanding debt under the existing Long Term Facilities A
and B.
– To cover the related cost, administrative expenses and fees (legal, accounting or otherwise)
as well as the costs of cancelling certain interest rate hedges.
7MAR201421084726
F-11
Notes to the condensed interim consolidated financial statements (Continued)
2.
Significant Events (Continued)
In addition to the issuance of the 2018 Notes, the Group entered into a Revolving Credit
Facility Agreement with commitments of e130 million.
The sources and uses of the funds related to this transaction are shown in the table below:
Sources
Uses
(in millions of EUR)
Prepayment of existing Senior Credit
Cash . . . . . . . . . . . . . . . . . . . . . .
7.2 Facilities
2018 Notes . . . . . . . . . . . . . . . . . 325.0 Term Loan Facilities A . . . . . . . . . . 144.7
Term Loan Facilities B . . . . . . . . . . 170.0
Transaction fees and expenses . . .
12.2
Cancellation of interest rate . . . . . .
5.3
Total . . . . . . . . . . . . . . . . . . . . . .
3.
332.2
332.2
Basis of Presentation
3.1 Framework of preparation
These Condensed Interim Consolidated Financial Statements and Notes for the nine-month
period ended December 31, 2013 have been issued in the context of the admission to trading
process for the eDreams ODIGEO shares on the Madrid, Barcelona, Bilbao and Valencia stock
exchanges (the ‘‘Spanish Stock Exchanges’’) for the quotation on the Automated Quotation System
(‘‘AQS’’) of the Spanish Stock Exchanges and as per the requirement of the EU Prospectus
Directive 809/2004, Annex I, 20-6-2, solely for the purpose of complying with the EU Prospectus
Directive on historical and interim information that should be included in the Prospectus and for no
other purpose.
As a part of the abovementioned admission to trading process, eDreams ODIGEO is
considering the possibility to absorb its shareholders with simultaneously effect. However, these
mergers are still subject to the approval of the respective shareholders of the companies to be
merged and will only become effective immediately after the definitive setting of the price of the
shares of the absorbing company (eDreams ODIGEO) for the purpose of the admission to trading,
if such a price setting takes place.
3.2 Accounting principles
The condensed nine month-period consolidated financial statements of eDreams ODIGEO and
its subsidiaries (‘‘the Group’’) have been prepared in accordance with the international accounting
standard IAS 34—Interim Financial Reporting as adopted in the European Union. As condensed
financial statements, they do not include all the information required by IFRS for the preparation of
the annual financial statements and must therefore be read in conjunction with the Group
consolidated financial statements prepared in accordance with IFRS as adopted in the European
Union for the year ended at March 31, 2013.
The accounting policies used in the preparation of these condensed nine-month period
consolidated financial statements as of and for the period ended at December 31, 2013 are the
7MAR201421084726
F-12
3.
Basis of Presentation (Continued)
same as those applied in the Group’s consolidated annual accounts for the year ended at
March 31, 2013, except for the following:
– New IFRS or IFRIC issued, or amendments to existing ones that came into effect as of
April 1, 2013, the adoption of which did not had a significant impact on the Group’s financial
situation in the period of application;
– Income tax which, in accordance with IAS 34, is recorded in interim periods on a best
estimate basis.
The effective tax rates primarily derives from the fact that income tax expense is reported for
the periods ending December 2013, resp. December 2012 for which the Company reported a
relatively low profit before tax due the existing leverage structure. The income tax expense level for
both periods is influenced by expenses which are permanently non-deductible for income tax
purposes. The most relevant differences are the non-recognition of a tax asset relating to current
year tax losses in France and the UK, the effect of non-deductibility of part of the interest expense
in France and the effect of the partial participation exemption relating to dividends received in
France.
The Earnings per share have not been disclosed in these Condensed Interim Consolidated
Financial Statements and Notes for the nine-month period ended December 31, 2013.
As explained in paragraph 3.1,, eDreams ODIGEO is considering the possibility to be merged
with its shareholders. The number and types of shares issued by the Company after these mergers
will be significantly different than the number and type of shares of the Company currently
outstanding. On that basis, the disclosure of Earnings per Share based on the current number and
type of shareshas not been considered as relevant.
There is no accounting principle or policy which would have a significant effect and has not
been applied in drawing up these financial statements.
3.3 New and revised International Financial Reporting Standards
IFRS standards and IFRIC interpretations applicable from April 1, 2012
The new IFRS and interpretations published as of March 31, 2013 and effective from April 1,
2013 listed in the Note 3.2—New and revised International Financial Reporting on the Consolidated
Financial Statement for the year ended March 31, 2013, had no material impact on the Group
interim Condensed Interim Consolidated Financial Statements at December 31, 2013.
Early application of standards
The Group has not early adopted standards and interpretations that are not yet mandatorily
effective at April 1, 2013.
3.4 Changes in consolidation perimeter
During the nine-month period ended December 31, 2013, one change occurred in the
consolidation perimeter following the acquisition of ODIGEO Paris Meta S.A. (formerly Findworks
Technologies S.A.).
7MAR201421084726
F-13
3.
Basis of Presentation (Continued)
The subsidiary Lyparis made an offer and entered into a sale and purchase agreement on
August 12, 2013 to acquire all of the issued and outstanding capital stock of ODIGEO Paris
Meta S.A. (company that operates the website Liligo, a travel search engine that searches flights,
hotels and cars among several travel sites on the web). This company is the holding of two other
additional companies (Findworks Technologies Hungary Bt and Liligo Hungary Kft). The transaction
was settled on October 2, 2013.
3.5 Comparative information
The Directors present, for comparative purposes, together with the figures for the nine-month
period ended December 31, 2013, the previous periods’ figures for each of the items on the
condensed interim consolidated statement of financial position (March 31, 2013), condensed interim
consolidated income statement, condensed interim consolidated statement of other comprehensive
income, condensed interim consolidated statement of changes in equity, condensed interim
consolidated cash flow statement (December 31, 2012) and the quantitative information required to
be disclosed in the condensed interim consolidated financial statements.
4.
Revenue
The Group makes travel products and services available to travellers, either directly or through
a business customer, both on a stand-alone and package basis. We generate our revenue from the
sale of (i) flight products, including regular airline and LCC flight products and charter flight
products as well as insurance for flight products, (ii) non-flight products, including hotel bookings,
Dynamic Packages (including revenue from the flight component thereof), vacation packages, car
rentals and insurance for non-flight products, and (iii) non-travel services, such as advertising and
phone revenue, consisting mainly of charges on toll calls. Our revenue is earned through mark-ups,
booking fees, insurance commissions and other fees from our customers, as well as incentive
payments from suppliers linked to the number of sales facilitated by us. We also receive incentives
from our GDS service providers based on the volume of sales completed by us through the GDS
systems.
For a significant majority of our products and services, we act as agent, neither bearing any
inventory risk nor serving as the primary obligor of the arrangement. As agent, we enable travellers
to book flight and non-flight products and services we source from travel suppliers and in respect
of such bookings, we are either (a) the full agent of record, in which case we charge and receive
payment for the full amount of the booking from the customer and pay the net price of the travel
product or service to our travel suppliers at a later date, or (b) the agent of record only in respect
of the service fees we charge to the customer, in which case the remaining part of the booking
value is transacted and charged to the customer directly by our travel suppliers. Whether we act as
full agent of record or agent of record only in respect of the service fees we charge to the
customer, we record our revenue on a net basis. We also act as a ‘‘pure’’ intermediary whereby we
serve as a click through and pass reservations made by the customer on to the relevant travel
supplier (e.g., in respect of tour packages offered in Germany) or perform certain limited
intermediary functions with respect to such reservations. On such ‘‘pure’’ intermediary transactions,
we are not the agent of record in respect of any amounts paid by the customer and our revenue
consists solely of commissions and incentives from travel suppliers and/or GDS service providers.
Depending on the specific agency role that we perform, we provide varying degrees of support
services, if any, to the customer once the booking has been secured.
7MAR201421084726
F-14
4.
Revenue (Continued)
Under the principal model, we purchase inventory for resale (and accordingly bear the
inventory risk) or are the primary obligor of the arrangement and, in each case, recognize revenue
on a gross basis. We act as principal in respect of charter flights offered by Go Voyages in France,
conference and events offered by Travellink in the Nordics and, to a lesser extent, package tours
offered to the employees by eDreams in Italy. As regards to Dynamic Packages (including revenue
from the flight component thereof) offered by Opodo, as from June 1, 2013, pursuant to the revised
applicable terms and conditions for the sale of Dynamic Packages, the Opodo Group is now acting
as agent and no longer as principal, and revenue is therefore no longer recognized on a ‘‘gross’’
basis. The following is an analysis of the impact of the change in the recognition of the Dynamic
Packages of Opodo from a ‘‘gross’’ basis to a ‘‘net’’ basis’’:
December 2013
December 2012
Dynamic Packages of Opodo . . . . . . . . . . . . . . . .
Other Products . . . . . . . . . . . . . . . . . . . . . . . . . .
11,641
344,316
41,249
314,449
Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .
355,957
355,698
Other Products . . . . . . . . . . . . . . . . . . . . . . . . . .
(9,787)
(34,264)
(39,243)
(48,311)
Total Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . .
(44,051)
(87,554)
Other Products . . . . . . . . . . . . . . . . . . . . . . . . . .
1,854
310,052
2,006
266,138
Total Revenue Margin . . . . . . . . . . . . . . . . . . . . .
311,906
268,144
In addition to the revenue generated under the agency and principal models, we generate
other revenue from non-travel related products and services, such as fees for advertising on our
websites, incentives we receive from credit card companies and charges on toll calls.
The Group enables travellers to book flight and non-flight products and services sourced from
travel companies. Gross bookings is an operating and statistical metric that captures the total
amount paid by customers for travel products and services booked through us (including the part
that is passed on to, or transacted by, the travel supplier), including taxes, service fees and other
charges and excluding VAT. Gross Bookings include the gross value of transactions booked under
both agency and principal models as well as transactions made via our white label distribution and
7MAR201421084726
F-15
4.
Revenue (Continued)
sourcing partners or any transaction where we act as ‘‘pure’’ intermediary whereby we serve as a
click-through and pass the reservations made by the customer to the relevant travel supplier’’.
December 2013
December 2012
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Southem Europe (Spain + Italy) . . . . . . . . . . . . . .
1,413,784
554,483
1,425,978
521,768
Core . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,968,267
1,947,746
Germany + Austria . . . . . . . . . . . . . . . . . . . . . . .
UK + Nordics + Other . . . . . . . . . . . . . . . . . . . . .
480,275
812,464
476,339
695,250
Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,292,739
1,171,589
Total Gross bookings . . . . . . . . . . . . . . . . . . . . .
3,261,006
3,119,335
Total Number of bookings . . . . . . . . . . . . . . . . .
7,261,250
6,299,635
The following is an analysis of the Group’s revenue for the year:
5.
December 2013
December 2012
Ticketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . .
329,775
11,398
14,784
337,336
6,101
12,261
Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .
355,957
355,698
Seasonality of Business
We experience seasonal fluctuations in the demand for travel services and products offered by
us. Because we generate the largest portion of our revenue margin from flight bookings, and most
of that revenue for flight is recognized at the time of booking, we tend to experience higher
revenues in the periods during which travellers book their vacations, i.e., during the first and
second calendar quarters of the year, corresponding to bookings for the busy spring and summer
travel seasons. Consequently, comparisons between subsequent quarters may not be meaningful.
6.
Segment Information
The Group has four reportable geographical segments based on how the Chief Operating
Decision Maker (CODM) manages the business, makes operating decisions and evaluates
operating performance. Reportable segments offer different products and services and are
managed separately because the nature of products and methods used to distribute the services
are different. For each reportable segment, the Group’s Leadership team comprising of Chief
Executive Officer and Chief Financial Officer, reviews internal management reports. Accordingly, the
Leadership Team is construed to be the Chief Operating Decision Maker (CODM).
7MAR201421084726
F-16
6.
Segment Information (Continued)
6.1 Segment revenue and revenue margin
The following is an analysis of the Group’s revenue and revenue margin by reportable
segments:
TOTAL Revenue
December December
2013
2012
Revenue Margin
December December
2013
2012
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Southem Europe (Spain + Italy) . . . . . . . . . . .
160,760
66,660
171,483
58,871
127,876
66,671
117,794
58,422
Core . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
227,420
230,354
194,547
176,216
Germany + Austria . . . . . . . . . . . . . . . . . . . .
UK + Nordics + Other . . . . . . . . . . . . . . . . .
47,548
80,989
61,463
63,881
41,457
75,902
35,773
56,155
Expansion . . . . . . . . . . . . . . . . . . . . . . . . . .
128,537
125,344
117,359
91,928
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
355,957
355,698
311,906
268,144
Personnel expenses (excl. non recurring
personnel costs) . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . .
Impairment and results on disposal of
non-current assets (net) . . . . . . . . . . . . . .
Other operating expenses (incl. non recurring
costs) . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
.
(44,222)
(19,441)
(40,305)
(17,300)
.
(12,246)
(51)
.
(186,495)
(155,619)
Operating profit/(loss) . . . . . . . . . . . . . . . . .
49,502
54,869
Financial result . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) of associates accounted for
using equity method . . . . . . . . . . . . . . . . .
(46,953)
(45,515)
Profit before tax . . . . . . . . . . . . . . . . . . . . . .
2,549
—
(32)
9,322
7MAR201421084726
F-17
6.
Segment Information (Continued)
6.2 Geographical information
The Group operates in 4 principal areas:
Gross Bookings
Total Revenue
Revenue Margin
December December December December December December
2013
2012
2013
2012
2013
2012
France . . . . . . . . . . . . . . . 1,413,784
Southem Europe
(Spain + Italy) . . . . . . . .
554,483
1,425,978
160,760
171,483
127,876
117,794
521,768
66,660
58,871
66,671
58,422
Core . . . . . . . . . . . . . . . . . 1,968,267 1,947,746
227,420
230,354
194,547
176,216
476,339
695,250
47,548
80,989
61,463
63,881
41,457
75,902
35,773
56,155
Expansion . . . . . . . . . . . . 1,292,739 1,171,589
128,537
125,344
117,359
91,928
TOTAL . . . . . . . . . . . . . . . 3,261,006 3,119,335
355,957
355,698
311,906
268,144
Germany + Austria . . . . . .
UK + Nordics + Other . . . .
480,275
812,464
No single customer contributed 10% or more to the Group’s revenue at December 31, 2013
and December 31, 2012.
6.3 Other financial disclosures
December
2013
December
2012
Revenue Margin from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue Margin from suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue Margin from advertising and meta clicks-out . . . . . . . . . . . . . . . . .
223,446
77,062
11,398
192,815
69,228
6,101
Total Revenue Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
311,906
268,144
Variable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . .
Impairment and results on disposal of non-current assets (net) .
Non-recurring personnel expenses . . . . . . . . . . . . . . . . . . . . .
Other non-recurring expenses . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(178,800)
(44,286)
(19,441)
(12,246)
(5,822)
(1,809)
(148,214)
(39,548)
(17,300)
(51)
(5,479)
(2,615)
(68)
49,502
54,869
.
.
.
.
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.
.
.
.
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.
.
.
.
.
.
Total Operating Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7MAR201421084726
F-18
7.
Depreciation, Amortization and Impairment
This item breaks down as follows:
December 2013
December 2012
Depreciation on tangible assets . . . . . . . . . . . . . . . . . . . . . .
Amortization on intangible assets (see Note 12) . . . . . . . . . . .
1,820
17,621
1,910
15,390
Total Depreciation and amortization . . . . . . . . . . . . . . . . . .
19,441
17,300
Impairment on tangible assets . . . . . . . . . . . . . . . . . . . . . . .
Impairment on intangible assets (see Note 12) . . . . . . . . . . .
500
11,746
51
—
Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,246
51
Amortization of intangible assets primarily related to the capitalised IT projects as well as the
intangible assets identified through the purchase price allocation.
The impairment of other intangible assets recognized in December 2013 mainly corresponds
to the impairment of the Go Voyages brand (see note 13).
8.
Other Operating Income/(Expenses)
Advertising and other operating expenses .
Professional fees . . . . . . . . . . . . . . . . . . .
IT expenses . . . . . . . . . . . . . . . . . . . . . .
Rent charges . . . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gains/(losses) . . . . . . .
.
.
.
.
.
.
.
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.
.
.
.
.
.
.
.
.
.
Total other operating income and expenses . . . . . . . . . . . .
December 2013
December 2012
166,237
5,417
4,477
2,682
432
(379)
136,294
4,330
3,569
2,721
581
30
178,864
147,525
Other operating expenses primarily consist in marketing expenses, credit card processing
costs (incurred only under the merchant model), chargebacks on fraudulent transactions, IT costs
relating to the development and maintenance of our technology, GDS search costs and fees paid to
our outsourcing service providers, such as call centers or IT services.
The marketing expenses comprise customer’s acquisition costs (such as paid search costs,
metasearch costs and other promotional campaigns) and commissions due to agents and white
label partners.
A large portion of the other operating expenses are variable costs, either because they are
directly related to the number of transactions processed through us or because they result from
discretionary decisions from our management.
7MAR201421084726
F-19
9.
Non-Recurring Income/(Expenses)
December 2013
December 2012
Personnel costs
Long Term Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,950
872
3,720
1,759
Personnel costs Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,822
5,479
Others
Integration related fees . . .
Contract termination fees . .
Result generated by Opodo
Others . . . . . . . . . . . . . . .
.
.
.
.
1,278
—
—
531
1,743
265
287
320
Others Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,809
2,615
........
........
Tours until
........
............
............
transaction sale
............
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
The non-recurring expenses correspond to expenses which are considered by management
not to be reflective of its on-going operations.
10.
Financial and Similar Income and Expenses
Interest expenses on debt
Interest expenses on 2019 Notes . . . . . . . . . . . . . . .
Interest expenses on 2018 Notes . . . . . . . . . . . . . . .
Interest expenses on Convertible bonds (Note 20.1) .
Interest expenses on Senior Debt . . . . . . . . . . . . . .
Revolving Credit Facilities . . . . . . . . . . . . . . . . . . . .
Effective interest rate impact on debt . . . . . . . . . . . . .
Financial expenses on derivatives . . . . . . . . . . . . . . . .
Foreign exchange differences . . . . . . . . . . . . . . . . . . .
Other financial expenses . . . . . . . . . . . . . . . . . . . . . .
Other financial incomes . . . . . . . . . . . . . . . . . . . . . . .
method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
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.
.
.....
TOTAL Financial result . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 2013
December 2012
(13,619)
(18,350)
(10,267)
—
(168)
(2,621)
—
(299)
(1,988)
359
(13,619)
—
(9,343)
(12,244)
(104)
(5,595)
(2,093)
(708)
(2,038)
229
—
(46,953)
(32)
(45,547)
7MAR201421084726
F-20
11.
Goodwill
A detail of the goodwill movement for the nine-month period ended December 31, 2013 is set
out below:
December 2013
st
Balance at March 31 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in the scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange rate diferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
876,116
8,608
(4,798)
Balance at December 31st 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
879,927
As at December 31, 2013, the amount of the goodwill corresponding to the Nordic markets
has decreased by e4.7 million due to the evolution of the euro compared to the functional currency
of these countries, with a balancing entry under ‘‘Cumulative translation adjustment’’.
The ‘‘Changes in the scope’’ include the goodwill related to the ODIGEO Paris Meta S.A.
(Formerly Findworks Technologies, S.A.) (See note 18.1)
The goodwill allocation by markets at December 31, 2013 was as follows:
Net Value
France . . . . . . . . . . .
Spain . . . . . . . . . . . .
UK . . . . . . . . . . . . .
Italy . . . . . . . . . . . . .
Germany . . . . . . . . .
Nordics . . . . . . . . . .
Other . . . . . . . . . . . .
France (metasearch) .
.
.
.
.
.
.
.
.
397,634
49,073
53,545
75,225
166,057
75,074
54,710
8,608
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
879,927
12.
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.
Other Intangible Assets
The other intangible assets at December 31, 2013 break down as follows:
INTANGIBLE
ASSETS
Balance at March 31st 2013
Acquisitions . . . . . . . . . . . . .
Amortization . . . . . . . . . . . .
Impairment . . . . . . . . . . . . .
Disposals / Reversals . . . . . .
Changes in scope . . . . . . . .
Exchange rate Diferences . . .
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Balance at December 31st 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
310,261
12,975
(17,621)
(11,746)
—
6,292
(694)
299,467
7MAR201421084726
F-21
12.
Other Intangible Assets (Continued)
‘‘Acquisitions’’ mainly correspond to the capitalization of the technology internally developed
by the Group which, due to its functional benefits, contributes towards attracting new customers
and retaining the existing ones.
‘‘Changes in the scope’’ correspond to the temporary purchase price allocation of the price
paid in the acquisition of ODIGEO Paris Meta, S.A. (See note 18.1)
As detailed in the Note 13, the impairment of other intangible assets corresponds to the
impairment of the Go Voyage brand.
13.
Impairment of assets
13.1 Main assumptions used in the financial projections
For each country, the discount rate after taxes has been defined on the basis of the weighted
average cost of capital (WACC).
In calculating the discount rate, a specific risk premium has also been considered in certain
cases in line with the specific characteristics of each country and the inherent risk profile of the
projected flows of each of the countries.
In calculating the value of the assets in each different country, the following parameters have
been considered:
• In the first year, EBITDA was projected using the 2014/2015 budget assumptions approved
by the Directors.
• In the four following years, a scenario of profitability and needs for investment in intangible
assets and working capital that is consistent and sustainable in the long term for each
country.
• The perpetuity growth rate has been estimated at 2% for all countries.
The main assumptions used by the Group to measure present cash flows, which determine
the recoverable value of the assets in each country where impairment of assets has been
estimated, are as follows:
Growth/Value in %
December
2013
Revenue Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Perpetuity Growth rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,7%
13,8%
2,0%
March
2013
5,4%
6,9%
2,0%
7MAR201421084726
F-22
13.
Impairment of assets (Continued)
WACC by market %
December
2013
France . .
Germany
Spain . .
Italy . . . .
UK . . . .
Nordics .
Other . .
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10,5%
9,2%
13,0%
12,5%
11,3%
10,4%
11,1%
March
2013
9,5%
8,7%
13,7%
12,7%
9,9%
10,3%
12,6%
Main assumptions have been prepared based on both expected volume and revenue margin
per booking growths for the different market considering the historical.
Main changes in December 2013 assumptions as compared with March 2013 derive from the
significant over performance achieved over the 9 month ended December 2013 as compared with
last year. Current growths in revenue margin and recurring operating profit before depreciation and
impairment are respectively 16.3% and 10.9%.
13.2 Key assumptions used and sensitivity analysis
The key assumptions used in estimating the recoverable value are: the discount rate and the
revenue margin. The sensitivity of these key assumptions has been measured through a sensitivity
table with a variation of +/ 0.5% on discount rate and a variation of +/0.2% on the revenue
margin growth, this being an indicator as of which impairment may be considered to exist. The
table presented below shows the effects over the present value of the discounted cash flows of
every cash generating units which would not generate any impairment for any of the markets.
WACC
+ 0.5% 0.5%
France . .
Spain . .
Italy . . . .
UK . . . .
Germany
Nordics .
Others . .
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5%
4%
4%
5%
6%
6%
6%
6%
5%
5%
6%
7%
6%
6%
Perpetual
Growth
+ 0.2% 0.2%
2%
1%
1%
2%
2%
2%
2%
2%
1%
1%
2%
2%
2%
2%
However, in the case of the Italian market, an increase by 0.5% of the WACC, assuming
unchanged values for the other assumptions, would cause the recoverable amount of that market to
equal its carrying value. Any increase over 0.5% of the WACC would result in the recognition of an
impairment loss.
7MAR201421084726
F-23
14.
Cash and Cash Equivalent
Shown below is a breakdown of cash and cash equivalent:
December 2013
March 2013
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and other cash equivalent . . . . . . . . . . . . . . . . . . . . . . . . .
1,065
88,584
9,609
149,592
Cash and cash equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . . .
89,649
159,201
‘‘Marketable securities’’ include the investment held by the group in short term financial funds
used as part of the treasury management strategy. This investment has an excellent liquidity and no
exit charge.
The majority of the bank accounts and marketable securities have been pledged to secure the
obligations in respect of the Group financial indebtedness.
15.
Equity
A breakdown at December 31, 2013 and March 31, 2013 is as follows:
Share capital . . . . . . . . . . . . . . . . . .
Share premium . . . . . . . . . . . . . . . .
Treasury shares . . . . . . . . . . . . . . . .
Legal reserves . . . . . . . . . . . . . . . . .
Option premium in convertible bonds
Equity-settled share based payments
Retained earnings & others . . . . . . .
Profit & Loss atributable to the parent
Foreign currency translation reserve .
Non controlling interest . . . . . . . . . .
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company
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Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 2013
March 2013
234,862
238,849
—
—
26,012
10,196
(137,051)
(9,128)
2,431
—
234,007
237,939
—
—
26,012
6,787
(113,596)
(23,330)
8,790
—
366,171
376,609
15.1 Share capital
As at March 31, 2013, the share capital of the Company was set at e234,007 thousand
represented by 23,071,262,661 ordinary shares, 56,394,776 Class A preferred shares, 123,014,093
Class B preferred shares and 150,000,000 Class C preferred shares, all having a par value of e0.01
each. The share premium was set at e237,939 thousand.
As at September 20, 2013, the Shareholders resolved to increase the corporate capital of the
Company by an amount of e490 thousand. The Shareholders resolved to issue 49,039,935 new
ordinary shares with a nominal value of e0.01 per share, having the same rights and privileges as
the existing ordinary shares, together with a share premium of e910 thousand paid by a
contribution in kind of the shares of G Co-Investment I S.C.A.
As at December 13, 2013, the Shareholders resolved to increase the corporate capital of the
Company by an amount of e365 thousand. The Shareholders resolved to issue 6,083,335 new class
D1 shares, 6,083,333 new class D2 shares, 6,083,333 new class D3 shares, 6,083,333 new class
7MAR201421084726
F-24
15.
Equity (Continued)
D4 shares, 6,083,333 new class D5 shares and 6,083,333 new class D6 shares, all with a nominal
value of e0.01 paid by contribution in cash.
As at December 31, 2013, the share capital of the Company was set at e234,862 thousand
represented by 23,120,302,596 ordinary shares, 56,394,776 Class A preferred shares, 123,014,093
Class B preferred shares, 150,000,000 Class C preferred shares, 6,083,335 Class D1 shares,
6,083,333 Class D2 shares, 6,083,333 Class D3 shares, 6,083,333 Class D4 shares, 6,083,333
Class D5 shares and 6,083,333 Class D6 shares all having a par value of e0.01 each. The share
premium was set at e238,849 thousand.
15.2 Share premium
The share premium account may be used to provide for the payment of any shares, which the
Company may repurchase from its shareholders, to offset any net realised losses, to make
distributions to the shareholders in the form of a dividend or to allocate funds to the legal reserve.
The amount recognized under ‘‘Share Premium’’ in the consolidated balance sheet at
December 31, 2013 arose as a result of the various capital increases performed (see note 15.1).
15.3 Option premium in convertible bonds
The amount recognized under ‘‘Option premium in convertible bonds’’ in the consolidated
balance sheet at March 31, 2013 is related to the convertible bonds subscribed between Geo Travel
Finance S.C.A. and Axeurope S.A. and Luxgoal (see note 16.1). The amount has been registered
net of its tax effect that amounts e10,522 thousand.
15.4 Equity-settled share-based payments
The amount recognized under ‘‘Equity-settled share-based payments’’ in the consolidated
balance sheet at December 31, 2013 arose as a result of the Long Term Incentive Plan given to the
employees during the current year.
15.5 Foreign currency translation reserve
The foreign currency translation reserve correspond to the net amount of the exchange
differences arising from the translation of the financial statements of eDreams LLC, eDreams Ltd.,
and Travellink since they are expressed in currencies other than the euro.
7MAR201421084726
F-25
16.
Borrowings and Debts
16.1 Debt by type
The Group borrowings and debts at December 31, 2013 and March 31, 2013 are as follows:
December 2013
Current Non Current
Total
March 2013
Current Non Current
Total
Principal
2019 Notes . . . . . . . . . . . . . . .
2018 Notes . . . . . . . . . . . . . . .
Convertible bonds . . . . . . . . . .
—
—
—
166,027
317,447
82,258
166,027
317,447
82,258
—
—
—
165,111
316,481
81,904
165,111
316,481
81,904
Total Principal . . . . . . . . . . . .
—
565,732
565,732
—
563,496
563,496
Accrued interests—2019 Notes
Accrued interests—2018 Notes
Accrued interests—Convertible
bond . . . . . . . . . . . . . . . . . .
3,026
10,156
—
—
3,026
10,156
7,565
4,063
—
—
7,565
4,063
—
31,554
31,554
—
21,287
21,287
Total Interests . . . . . . . . . . . .
13,182
31,554
44,736
11,628
21,287
32,915
Total Borrowings . . . . . . . . . .
13,182
597,286
610,468
11,628
584,783
596,411
Other Financial Liabilies
Bank facilities and bank
overdrafts . . . . . . . . . . . . . .
Finance Lease Liabilities . . . . .
Other Financial Liabilies . . . . . .
4,486
129
2,249
—
37
—
4,486
166
2,249
44
141
1,446
—
138
—
44
279
1,446
Total other Financial liabilities
6,864
37
6,901
1,631
138
1,769
Total financial liabilities . . . . .
20,046
597,323
617,369
13,259
584,921
598,180
Senior notes—2018 Notes
As mentioned in note 2.2, Significant events during the year ended March 31, 2013, on
January 31, 2013 Geo Debt Finance S.C.A. issued e325 million aggregate principal amount of 7.5%
Senior Secured Notes (‘‘the 2018 Notes’’). Interest of the Notes are payable semi-annually in
arrears each February 1 and August 1.
Senior Subordinated notes—2019 Notes
On April 21, 2011 Geo Travel Finance S.C.A. issued e175 million Senior Notes at 10.375% with
a maturity date of May 5, 2019. Interest of the Notes are payable semi-annually in arrears each
February 1 and August 1.
Convertible bonds
On June 30, 2011, Geo Travel Finance S.C.A. issued 11,775,131,507 convertible subordinated
shareholder bonds due June 30, 2060 at Par (e0.01), resulting in total indebtedness of
e117.7 million.
7MAR201421084726
F-26
16. Borrowings and Debts (Continued)
From issuance through 2020, all interest payments (rate 9.875%) are not paid in cash but
accrued. At December 31, 2013, the amount of accrued interests is e31.55 million. Further
information is disclosed below.
Initially the convertible bonds were issued and held by Lyeurope for e107.1 million since
July 2, 2010. As part of the debt restructuring, the convertible bonds issued by Lyeurope were
contributed by Luxgoal and Axeurope to Geo Travel Finance S.C.A. at their nominal value plus
interest, i.e. e117.7 million in exchange for the issue of 11,775,131,507 convertible bonds by Geo
Travel Finance S.C.A. to Axeurope and Luxgoal.
The effective interest rate of the liability element on initial recognition is 9.875% per annum,
accrued from issuance until 2020.
The detail of the issued bonds and their contribution break down as follows:
Name
Number of Issued
Bonds subscribed
Subscription Price
(EUR)
Lyeurope Bonds
Contributed (EUR)
Luxgoal S.a.r.l. . . . . . . . . . . . . . .
AxaEurope S.A . . . . . . . . . . . . . .
6,476,322,329
5,298,809,178
64,763,223
52,988,092
58,905,000
48,195,000
Total . . . . . . . . . . . . . . . . . . . . .
11,775,131,507
117,751,315
107,100,000
The convertible bonds have been accounted in connection with IAS 32 requirements. The
convertible bonds contain two components. One is a financial liability, namely the issuer’s
contractual obligation to pay cash, and the other is an equity instrument, namely the holder’s option
to convert into common shares, which has been valued at e26 million (net of tax effect).
The split has been made at issuance and will not be revised for subsequent changes in
market interest rates, share prices, or other event that changes the likelihood that the conversion
option will be exercised.
16.2 Credit lines
At December 31, 2013, the Group had a e130 million 5 year Revolving Credit Facility to
provide for working capital requirements and IATA Guarantees divided into a e105 million tranche
that can be used to finance working capital or guarantees, and a e25 million tranche that can be
used only for guarantees. At the end of December 2013 and March 2013, the Group had not drawn
any credit line.
7MAR201421084726
F-27
16.3 Debt by maturity date
The maturity date of the debt at December 31, 2013 and March 31, 2013 is as follows:
December 31st, 2013
Principal
2019 Notes . . . . . . . . . . . .
2018 Notes . . . . . . . . . . . .
Convertible bonds . . . . . . .
Senior Finance Agreement .
< 1 year
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
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.
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.
.
.
.
.
.
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.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
1 to 5 years
> 5 years
Total
.
.
.
.
—
—
—
—
—
317,447
—
—
166,027
—
82,258
—
166,027
317,447
82,258
—
Total Principal . . . . . . . . . . . . . . . . . . . . . . . . .
—
317,447
248,285
565,732
Accrued interests—2019 Notes . . . . . . . . . . . . .
Accrued interests—Convertible bond . . . . . . . . .
3,026
10,156
—
—
—
—
—
—
31,554
3,026
10,156
31,554
Total Interests . . . . . . . . . . . . . . . . . . . . . . . . .
13,182
—
31,554
44,736
Other financial liabilities
Bank facilities and bank overdrafts . . . . . . . . . . .
Finance Lease Liabilities . . . . . . . . . . . . . . . . . .
Other financial liabilities . . . . . . . . . . . . . . . . . . .
4,486
153
2,249
—
13
—
—
—
—
4,486
166
2,249
Total Other Financial Liabilies . . . . . . . . . . . . .
6,888
13
—
6,901
Total financial liabilities . . . . . . . . . . . . . . . . . .
20,070
317,460
279,839
617,369
< 1 year
1 to 5 years
> 5 years
Total
March 31st, 2013
Principal
2019 Notes . . . . . . . . . . . .
2018 Notes . . . . . . . . . . . .
Convertible bonds . . . . . . .
Senior Finance Agreement .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
—
—
—
—
—
—
—
—
165,111
316,481
81,904
—
165,111
316,481
81,904
—
Total Principal . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
563,496
563,496
Accrued interests—Convertible bond . . . . . . . . .
7,565
4,063
—
—
—
—
—
—
21,287
7,565
4,063
21,287
Total Interests . . . . . . . . . . . . . . . . . . . . . . . . .
11,628
—
21,287
32,915
Other financial liabilities
Bank facilities and bank overdrafts . . . . . . . . . . .
Finance Lease Liabilities . . . . . . . . . . . . . . . . . .
Other financial liabilities . . . . . . . . . . . . . . . . . . .
44
141
1,446
—
138
—
—
—
—
44
279
1,446
Total Other Financial Liabilies . . . . . . . . . . . . .
1,631
138
—
1,769
Total financial liabilities . . . . . . . . . . . . . . . . . .
13,259
138
584,783
598,180
7MAR201421084726
F-28
16.4 Fair value of borrowings and debt
December 2013
Total net book
value of the Level 1 : Quoted
class
prices and cash
Level 2 : Internal Level 3 : Internal
model using
model using
observable
non-observable
factors
factors
Fair
value
Balance Sheet headings and classes
of instruments
Non-current financial assets . . . . . . . .
Non current loans and receivables . . . .
28
4,755
Total Non-current financial assets . . . .
Financial assets . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . .
4,783
72
89,649
Total current financial assets . . . . . . .
89,721
89,721
Total assets . . . . . . . . . . . . . . . . . .
94,504
94,504
High-Yield 1 . . . . . . . . . . . . . . . . . .
169,053
x
168,486
Principal and Interest . . . . . . . . . . . .
Financing costs capitalized on HY1 . . .
Amortization of Financing costs
capitalized on HY1 . . . . . . . . . . . .
178,026
11,909
x
x
177,458
11,909
2,936
x
2,936
High-Yield 2 . . . . . . . . . . . . . . . . . .
327,603
x
322,498
Principal and Interest . . . . . . . . . . . .
Financing costs capitalized on HY2 . . .
Amortization of Financing costs
capitalized on HY2 . . . . . . . . . . . .
335,157
8,722
x
x
330,052
8,722
1,168
x
1,168
Convertible shareholder’s bonds . . . .
113,812
x
116,824
Bank facilities and bank overdrafts . .
Finance Lease Liabilities . . . . . . . . .
Other financial liabilities . . . . . . . . .
4,486
166
2,249
x
x
4,486
166
2,249
Total liabilities . . . . . . . . . . . . . . . .
617,369
28
4,755
x
4,783
72
89,649
x
x
x
614,709
Valuation techniques and assumptions applied for the purposes of measuring fair value
The fair values of financial assets and financial liabilities are determined as follows:
• The fair values of financial assets and financial liabilities with standard terms and conditions
and traded on active liquid markets are determined with reference to quoted market prices
(includes listed redeemable notes, bills of exchange, debentures and perpetual notes).
• The fair values of other financial assets and financial liabilities (excluding those described
above) are determined in accordance with generally accepted pricing models based on
discounted cash flow analysis.
The market value of financial assets and liabilities measured at fair value in the statement of
financial position shown in the table above has been ranked based on the three hierarchy levels
defined by IFRS 13:
• level 1: quoted price in active markets;
• level 2: inputs observable directly or indirectly;
7MAR201421084726
F-29
• level 3: inputs not based on observable market data.
16.5 Covenants
Pursuant to the Senior Facility Agreement, Geo Travel Finance S.C.A. has to respect its
Consolidated Total Net Debt Cover ratio every quarter. The requested covenant is calculated as
follows:
Total Net Debt Cover ratio = Total Net Debt / Last Twelve Month EBITDA
At December 31, 2013 the abovementioned covenant is met.
17. Provisions
The amounts of provisions break down as follows:
December 2013
March 2013
Non-current provisions
Provisions for tax contingencies . . . . . . . . . . . . . . . . . . . .
Provision for pensions and other post employment benefits
Provision for other employee benefits (LTI’s) . . . . . . . . . . .
Provision for other risks . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Non-current provisions . . . . . . . . . . . . . . . . . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
8,616
1,076
6,165
415
16,272
8,546
978
4,625
308
14,457
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
408
92
1,681
2,181
523
97
1,254
1,874
Current provisions
Provisions for litigations . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for pensions and other post employment benefits
Provisions for other risks . . . . . . . . . . . . . . . . . . . . . . . . .
Total Current provisions . . . . . . . . . . . . . . . . . . . . . . . . .
18. Business Combination
18.1 Acquisition of ODIGEO Paris Meta S.A.
As explained in note 2.1, the subsidiary Lyparis made an offer and entered into a sale and
purchase agreement on August 12, 2013 to acquire all of the issued and outstanding capital stock
of ODIGEO Paris Meta S.A. (formerly Findworks Technologies S.A.), a company that operates the
website Liligo, a travel search engine that searches flights, hotels and cars among several travel
sites on the web. Nevertheless, the transaction was not settled until the October 2, 2013 with an
enterprise value of e13.5 million (equity value of e17.3 million).
The Transaction is accounted for in compliance with IFRS 3 ‘‘‘Business combinations’’, with a
temporary purchase price allocation that takes into consideration the fact that adjustments to
purchase accounting could be performed during the ‘‘measurement period’’ that cannot exceed
one year from the acquisition date.
7MAR201421084726
F-30
18. Business Combination (Continued)
The temporary purchase price allocation of ODIGEO Paris Meta S.A. taken into consideration
in the Condensed Interim Consolidated Financial Statements can be summarized as follows:
• Fair value of identifiable assets acquired and liabilities assumed at the acquisition date
including:
—
—
—
—
Brand (indefinite-lived intangible assets) . . . . . . . . . .
Developed technology (finite-lived intangible assets) .
Customer relationship (finite-lived intangible assets) .
Deferred tax liabilities arising of acquired intangibles .
.
.
.
.
.
.
.
.
.
.
.
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.
.
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.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
e 4
e 2
e 0.2
e(2.1)
million
million
million
million
The goodwill arising from the acquisition is e8.6 million
As explained above, the acquisition was finalised on October 2, 2013 and ODIGEO Paris
Meta S.A. and its subsidiaries were fully consolidated from this date. The main items of the
acquisition balance sheet of ODIGEO Paris Meta S.A. per the provisionally purchase price
allocations are as follows:
ODIGEO Paris
Meta and
subsidiaries
Assets
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,413
7,180
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,593
Equity
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,723
2,107
2,763
TOTAL EQUITY AND LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,593
Had this business combination been effected at April 1, 2013, the additional revenue of the
OdigeO Group and additional profit of the nine-month period ended December 31, 2013 would
have been e4.3 million and e1.0 million, respectively.
The accounting figures for revenue and profits for the period ended December 31, 2013 for
ODIGEO Paris Meta sub-group are as follows:
ODIGEO Paris Meta (9 months) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ODIGEO Paris Meta (3 months) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue
Profit
7,163
2,893
1,523
476
7MAR201421084726
F-31
19.
19.1
Off-Balance Sheet Commitments
Operating lease commitments
The Group leases mainly buildings under non-cancellable operating lease contracts. These
contracts have a long term, most of them being renewable upon expiry at market conditions. The
minimum total future payments in respect of non-cancellable operating leases are as follows:
< 1 year
1 to 5 years
> 5 years
TOTAL
3,040
7,038
497
10,575
< 1 year
1 to 5 years
> 5 years
TOTAL
2,457
6,591
952
10,001
Minimum lease payments at December 2013 . . .
Minimum lease payments at March 2013 . . . . . .
The condensed interim consolidated income statement for December 31, 2013 includes
operating lease expenses totalling e2.7 million.
19.2
Other off-balance sheet commitments
December 2013
March 2013
.
.
.
.
.
35,899
22,246
1,778
1,780
115
35,728
14,404
1,878
2,127
328
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61,817
54,465
Guarantees
Guarantees
Guarantees
Guarantees
Others . . .
To IATA . . . . . . . . . . . . .
To Package Travel . . . . .
Linked To Public Entities
linked to Private Entities .
...................
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.
Additionally, the Company is a party to an intercreditor agreement entered into between,
amongst others, the Company as Investor Creditor and several credit institutions, which provided
financing to the Company’s affiliated undertakings in the context of the refinancing of LuxGEO, Geo
Travel Finance S.C.A.’s subsidiary, which was completed on January 31, 2013.
All the shares held by the Company in Geo Travel Finance S.C.A. are pledged in favor of the
holders of certain of the Company’s bonds.
7MAR201421084726
F-32
20.
20.1
Related Parties
Transactions and balances with related parties
• Long Term Incentive Plans:
Opodo Limited has made the following loans to related parties, in relation with the Plan 4 of
Share Based compensation (as detailed in note 22.1 of the March 31, 2013 consolidated annual
accounts of eDreams ODIGEO):
Related party
December 2013
March 2013
LuxGoal S.à r.l. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AXEurope S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
185
150
1,165
185
150
1,165
Total loans to related parties (LTI) . . . . . . . . . . . . . . . . . . . . . .
1,500
1,500
In addition, executive management was involved in the long term incentive plans (Plan 1, 2
and 3) described in the note 22 of Consolidated Financial Statements and notes for the year ended
March 31, 2013. The value of the shares were financed by a loan amounted to e38.8 million
(including the accrued interest pending to be paid) granted from the period ended March 31, 2011
to 2013 by related parties not included in the consolidation perimeter.
• Convertible bonds issued to related parties:
As detailed in note 16.1, Debt by type, on June 30, 2011 Geo Travel Finance S.C.A. issued
11,775,131,507 convertible subordinated shareholder bonds due June 30, 2060. These convertible
bonds were acquired by AXEurope S.A. and LuxGoal S.à.r.l.
The convertible bonds have been accounted in connection with IAS 32 requirements. The
convertible bonds contain two components. One is a financial liability, namely the issuer’s
contractual obligation to pay cash, and the other is an equity instrument, namely the holder’s option
to convert into common shares. The nominal amount of the convertible bonds is the following:
Related party
March 2013
March 2012
LuxGoal S.à.r.l. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AXEurope S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64,763
52,988
64,763
52,988
Total Nominal Convertible bonds . . . . . . . . . . . . . . . . . . . . . . . . . .
117,751
117,751
7MAR201421084726
F-33
20.
Related Parties (Continued)
The amounts with related parties in relation to these convertible bonds, as explained in
note 16.1, are the following:
Related party
December 2013
March 2013
LuxGoal S.à r.l. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AXEurope S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45,242
37,016
45,047
36,857
Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82,258
81,904
LuxGoal S.à r.l. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AXEurope S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,355
14,199
11,708
9,579
Accrued interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,554
21,287
LuxGoal S.à r.l. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AXEurope S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,094
16,440
20,094
16,440
Other equity instruments (amount gross of tax impact) . . . . . .
36,534
36,534
Total Convertible bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
150,346
139,725
The reconciliation between the nominal amount and the figures is the following:
Related party
December 2013
March 2013
LuxGoal S.à r.l. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AXEurope S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64,763
52,988
64,763
52,988
Total Nominal Convertible bonds . . . . . . . . . . . . . . . . . . . . . . .
117,751
117,751
LuxGoal S.à r.l. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AXEurope S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,355
14,199
11,708
9,579
Accrued interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,554
21,287
LuxGoal S.à r.l. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AXEurope S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
572
469
378
309
Amortised cost impact on Convertible Bonds . . . . . . . . . . . . .
1,041
687
Total Convertible bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
150,346
139,725
7MAR201421084726
F-34
20.
The expense for interest accrued with related parties in relation to these convertible bonds
during the period is the following:
Related party
December 2013
December 2012
LuxGoal S.à r.l. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AXEurope S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,647
4,620
5,139
4,204
Interest expenses on debt (Note 10) . . . . . . . . . . . . . . . . . .
10,267
9,343
LuxGoal S.à r.l. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AXEurope S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
195
159
168
137
Effective interest rate impact on debt . . . . . . . . . . . . . . . . .
354
305
Total Interests for Convertible bonds . . . . . . . . . . . . . . . . .
10,621
9,648
• Other Loans with related parties
Related party
December 2013
March 2013
.
.
.
.
25
30
100
50
—
—
100
—
Total other loans to related parties . . . . . . . . . . . . . . . . . . . . . .
180
100
G
G
G
G
Co-Investment
Co-Investment
Co-Investment
Co-Investment
I S.C.A.
II S.C.A.
III S.C.A.
IV S.C.A.
....
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On September 26, 2013, the Company granted a loan to G Co-Investment I S.C.A. for an
amount of e25 thousands. This loan bears interest at 4% per annum. The maturity date of this loan
is December 31, 2017.
On September 26, 2013, the Company granted a loan to G Co-Investment II S.C.A. for an
On February 26, 2013, the Company granted a loan to G Co-Investment III S.C.A. for an
On December 17, 2013, the Company granted a loan to G Co-Investment IV S.C.A. for an
• Other
On November 8, 2012, the Company resolved to declare a Preferred Dividend of
e42 thousands to the holders of Class A preferred shares.
20.2
Directors and key management compensation
The members of the Board of Directors of eDreams ODIGEO have not received any
remuneration for their mandate.
7MAR201421084726
F-35
20.
The compensation received by the key management of the Group and during the nine-month
periods ended December 31, 2013 and December 31, 2012 amounted to e3.3 and e2.2 million,
respectively.
No other significant transactions have been carried out with any member of senior
management or as shareholder with a significant influence on the Group.
21.
Contingencies
On April 21, 2013, Air France delivered a writ of summons under short notice against
Vacaciones eDreams, S.L. and eDreams SARL (‘‘eDreams’’) before the Commercial Court of Paris.
In its action Air France requested that eDreams pays e13.1 million in concept of the prejudice
suffered because of eDreams’ alleged violation of the French Consumer Code and the

eDreams ODIGEO

Transcription

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