A Year of Growth for Club Med in 2012 despite a challenging environment in Europe

  A Year of Growth for Club Med in 2012 despite a challenging environment in
                                    Europe

2012 Annual Results

PR Newswire

MIAMI, Dec. 7, 2012

MIAMI, Dec. 7, 2012 /PRNewswire/ --

- Business volume up 3.7% to €1,515 million
- 4 and 5 Trident customers up 7% increase [+ 57,000 ]
- Operating Income Villages up 1% to €62 million
- Net income before tax and non-recurring items up 7.3% to €35 million
- Net result €2 million
- Gearing -10 points at 23%
- Free cash flow up 45% to €55 million

Xavier Mufraggi, CEO of Club Med North America, comments on the fiscal 2012
results as a reflection of Club Med's success in the U.S. saying:

"Club MedNorth Americais pleased to announce another profitable year in
2012, with our best results in more than 10 years despite a challenging
market, illustrating the success of a change in business model that aligns
with an upscale and family-focused strategy.

The success of the renovation of Sandpiper Bay in Florida is one of the key
elements in Club Med North America's impressive performance. The resort
surpassed expectations and illustrates the importance of having an
all-inclusive family resort in the U.S.Sandpiper Bay was not the only resort
responsible for our growth, and even despite challenges in the market, the
region has also garnered more sustainability through an increase in brand
loyalty, and an acceleration of new guest recruitment in resorts worldwide
(including ski destinations and additional group bookings.)

Club Med continues to keep a pulse on the industry in order to offer today's
travelers an unparalleled and dynamic vacation experience at more than 80
locations around the world.

For 2013, we will continue to invest in our portfolio by opening new resorts
in Pragelato Vialattea, Italy, Belek, Turkey and Guilin, China, while also
renovating current properties in Rio Das Pedras, Brazil and Cherating Beach,
Malaysia.Specifically in North America, we will continue to focus on our
points of differentiation vs. the competition. For example, we will reinforce
the positioning of our sports offering through a new concept surrounding
"Active Vacations" set to launch at our Sandpiper Bay property. To further
strengthen our positioning as the leader in unique children's offerings, this
spring Club Med will introduce the most competitive pricing for children in
the market by extending our kids under 2 stay free to kids under 4.

In response to the increased interest from American and Canadian customers in
our unique ski product, Club Med has prospective plans to open a new ski
resort in North America. Our brand already has 50 years of experience in ski
vacations and 23 ski properties worldwide with high occupancy rates and an
outstanding level of guest satisfaction.

We are confident in the North American market and look forward to upcoming
projects and new growth."

Commenting on the annual results, Henri Giscard d'Estaing, Chairman and Chief
Executive Officer, noted that:

"Club Mediterranee's reported an increase in revenue for fiscal 2012 despite
accelerating deterioration of the European tourist markets during the summer.
Thanks to its powerful positioning on the upscale market, the Group was able
to protect its margins and demonstrate the resilience of its business model.

Club Med is now in a position for a new step forward in the deployment of its
international expansion strategy, by leveraging its stronger financial
position, its upscale portfolio of villages and the ability to interface
one-to-one with customers through direct distribution network.

Club Med is positioned to capture growth in the market of all-inclusive
upscale vacation packages in order to get by the end of 2015 one in three
customers to come from fast-developing economies."

1. A year of growth in 2012 despite worsening market conditions in Europe

-- Key figures for fiscal 2012 (1 November 2011 - 31 October 2012)

  oVillage business volume (corresponding to total sales regardless of
    village operating structure) rose by 3.7% to €1,515 million from €1,461
    million in fiscal 2011.
  oVillage revenue totaled €1,447 million, up 2.2% with increases of 2.8% in
    the Europe-Africa region (of which +2.5% in France in a market declining
    by 2.6% according to CETO^1) and 4.5% in the Americas region. In Asia,
    revenues dipped 2.6% due to the sale of the Lindeman Island village in
    Australia. Excluding Lindeman Island, revenue from the region was up 2.8%,
    helped by a 24% rise in the number of Chinese customers during the fiscal
    year.
  oRevPAB (revenue per available bed) at constant exchange rates was 2.1%
    higher, at €99.3, versus €97.3 in fiscal 2011, reflecting a 1.8%
    improvement in the average price per hotel day to €139,3 and a one-point
    rise in the occupancy rate to just under 69%.

-- Profitability preserved attesting to the business model's robustness.

  oEBITDA Villages was stable at €126 million. EBITDA margin stood at 8.7%,
    close to the 9% target announced last June.
  oOperating Income Villages rose to €62 million from €61 million in fiscal
    2011, lifted by higher contributions from the Americas and Asia. These two
    regions now account for over two-thirds of total operating income
    villages, reflecting the effectiveness of the Group's global strategy.
  oOperating loss from the management of assets amounted to €26 million, with
    the €32 million cost of closing non-strategic villages partly offset by
    gains on disposal of the Meribel Aspen Park village and other assets.
  oOther operating income and expense represented a net expense of €14
    million, of which restructuring costs accounted for €10 million.
  oFinance cost - net represented €8 million versus €16 million in fiscal
    2011. The €47 million reduction in average net debt led to interest
    savings of €3 million, while profits on sales of shares and provision
    reversals had a positive impact of €4 million.
  oNet income before tax and non-recurring items rose slightly to €35 million
    after quadrupling in fiscal 2011. Attributable net profit was stable at €2
    million.
  oThe Board of Directors meeting held on 6 December approved the 2012
    financial statements. It also indicated that it would like for
    shareholders to benefit from the Company's improvements. This could be
    done through purchase of shares to be cancelled under the shareholder
    buyback program which will be submitted at the Annual Shareholder
    Meeting. Due to the lack of visibility on the fiscal 2013 earnings, in
    the currently worsening economic environment and declining European
    tourist market, the Board believes that this option is preferable to
    paying a cash dividend for fiscal 2012.

-- Club Med has three major strengths to help it withstand the challenging
environment in France and the rest of Europe

  oA strong financial position, with growing positive underlying free cash
    flow. In fiscal 2012, free cash flow stood at €55 million compared with
    €38 million the previous year, or €36 million versus €26 million excluding
    the impact of asset disposals and village exit costs. In addition, net
    debt is significantly lower at €118 million, reflecting a 10-point
    improvement in gearing to 22.6%, while the ratio of net debt to EBITDA
    villages has improved considerably and now stands at less than 1x. It was
    divided by two since 2010.
  oA fully refurbished, upscale village offer, with 4 and 5-Trident villages
    representing two third of total capacity at 31 October 2012, a 3.6-point
    increase over one year. Three villages were sold during the year (Meribel
    Aspen Park, Lindeman Island and Bora-Bora) and five non-strategic villages
    were closed (Smir, Coral Beach, Djerba Meridiana, Beldi and Nabeul).

  The Valmorel village in France that was opened last December has confirmed
  the validity of the Group's strategic positioning in the uscale and very
  upscale segments. With an occupancy rate of 81% in its first year, the new
  village attests the leading position of Club Med's mountain village offer,
  even in the summer.

  oTighter customer relations, with over 60% of sales carried out directly.
    Online bookings have continued to grow, accounting for 20.5% of sales in
    fiscal 2012.

2. Fiscal 2013 outlook

-- A slightly growing Winter 2013, led by demand in the Americas and Asia.

As of 1 December, winter 2013 bookings (business volume at constant exchange
rates) were up 1.1% on the prior-year season. In 2011, bookings at that date
represented two-thirds of the winter total.

Bookings in the Europe-Africa region were down 0.8%. In France, Club Med
Business bookings that reached records last year were down, while the
individuals were up +1.2% in business volume. This figure translate in number
of customers to a -3.1%, while the market is down 10.3% at the end of October,
according to France's tour operators organization CETO.

Bookings in the Americas and Asia were up by 7.2% and 5.0% respectively,
lifted by the more favorable economic environment in these regions and, in
particular, by the dynamism of Brazil, China and other fast-developing
markets.

Bookings for the past four weeks were down 0.6% with a drop of 5.1% for the
Europe-Africa region, partly offset by booking that are up in Americas and
Asia.

-- The uncertain environment calls for prudence in 2013

In light of the sluggish economic environment in Europe, particularly France,
the following measures have been taken:

  oWinter 2013 capacity has been adjusted by 3.7% compared with winter 2012.
    In Europe-Africa, closure of Meribel Aspen Park and Coral Beach along with
    temporary shutdowns of certain villages in North Africa have led to a 5.4%
    capacity reduction. For the summer 2013 season, Europe-Africa capacity has
    been shrunk by 6.2% in response to the uncertain economic environment.
  oCapital spending will be kept at the fiscal 2012 level of around €55
    million and will concern both ongoing projects to move the village offer
    upscale and necessary maintenance work. In addition, a further €10 million
    or so may be spent on acquiring equity interests to speed up the pace of
    growth in certain high potential markets such as Brazil and Russia.
  oCosts reported under "Operating loss from the management of assets" should
    be considerably lower than in fiscal 2012 now that the program to move the
    village offer upscale is nearing completion.

Based on the above outlook, the Group should report positive free cash flow in
fiscal 2013.

3. 2015: a new milestone in Club Med's global strategy to capture growth in
the all-inclusive upscale vacation package market

-- Step up the pace of growth in fast-developing markets

With growth set to remain strong in major high potential markets such as
China, Brazil and Russia, Club Med is aiming for one in three customers to
come from fast-developing markets by the end of 2015.

First among these will be China, which will become Club Med's second largest
market by 2015 with 200,000 customers, five villages (including Guilin, the
country's second 4-Trident village which will welcome its first guests in
spring 2013) and a new premium resort hotel brand – by Club Med – aligned with
local demand. The "by Club Med" large upscale resort-hotels will target
Chinese city-dwellers looking for long weekend breaks in the countryside at
relatively short distance from their home. They will also serve the meetings,
incentives, conferences and exhibitions (MICE) market.

--Continue to win market share in France and other mature markets by
strengthening premium distribution, upgrading pricing policies to include a
family deal with children under 6 staying free, and offering new products such
as new Club Med Discovery tours and new Club Med 2 cruises.

-- Promote Club Med brand's unique spirit

In early 2013, Club Med will be launching its new worldwide brand advertising
campaign to raise its notoriety, recruit new customers and promote repeat
bookings.

To speed up the pace of international expansion, new distribution channels are
being developed and the Group is targeting a fourfold increase in the number
of Club Med shop-in-shops and franchise outlets (from 50 to 200) by the end of
2015.

-- Optimize the business model

Club Med is taking its upscale strategy a step further, with three-quarters of
village capacity set to meet 4 or 5-Trident standards by 2015 including new
villages such as Pragelato Vialattea in Italy, Belek in Turkey and Guilin in
China that are due to open in 2013. These new destinations will increase the
number of year-round permanent villages (or bi-seasonal) with optimum
capacity.

In line with the asset-light strategy, most of the current development
projects are based on the management contract model, the aim being to improve
return on capital employed while also achieving a balance of models for the
village portfolio.

Additional information

The consolidated and parent company financial statements of Club Mediterranee
for the fiscal year ended 31 October 2012 were approved by the Board of
Directors on 6 December 2012.
These financial statements have been audited and the Auditors' reports are in
the process of being prepared.
The fiscal 2012 financial results presentation is available for download at
http://www.clubmed-corporate.com. 

^1CETO : Cercle d'Etudes des Tours Operateurs (French Tour-Operators
Association)

SOURCE Club Med

Website: http://www.clubmed-corporate.com
Contact: Media: Caroline Bruel, +33 (0)1 53 35 31 29,
caroline.bruel@clubmed.com, or Analysts: Pernette Rivain, +33 (0)1 53 35 30
75, pernette.rivain@clubmed.com
 
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