World Duty Free S.p.A. Annual Financial Report · PDF fileDirectors 2 Gilberto Benetton ......

World Duty Free S.p.A.

Annual Financial Report 2013

WDF S.p.A. – Financial Annual Report 2013

Boards and Officers

Board of Directors

Chairman Gianmario Tondato da Ruos 1

CEO José Maria Palencia Saucedo 2,3,E

Directors Gilberto Benetton 2

Alberto De Vecchi 2

Gianni Mion 1

Paolo Roverato 1,5,7

Carla Cico 2,5,8

Laura Cioli 2,4,7,9,L

Lynda Christine Tyler-Cagni 2,6,9

Secretary Marcello Marzo 12

Board of Statutory Auditors

Chairman Marco Giuseppe Maria Rigotti 10

Standing auditors Massimo Catullo 10

Patrizia Paleologo Oriundi 10

Alternate auditors Antonella Campus

Cinzia Cravagna

Independent auditors KPMG S.p.A. 11

1 Appointed upon the incorporation of the company on March 27, 2013 and remain in office until the shareholders’ meeting approving

the financial statements for the year ending December 31, 2015. 2 Appointed by shareholders’ meeting held on July 18, 2013 and assumed office starting September 16,2013 and until the

shareholders’ meeting approving the financial statements for the year ending December 31, 2015. 3

Appointed at the Board of Directors’ meeting of September 20, 2013 4

Independent non-executive director, chairman of the Internal Control Committee and Corporate Governance 5

Independent non-executive director, member of the Internal Control Committee and Corporate Governance 6

Independent non-executive director, chairman of the Human Resources Committee 7

Independent non-executive director, member of the Human Resources Committee 8

Independent non-executive director, chairman of the Related Parties Operations Committee 9

Independent non-executive director, member of the Related Parties Operations Committee 10

Certified auditor 11

Appointed by shareholders’ meeting held on July 18, 2013 for the financial years from 2013 to 2021 12

Appointed by Board of Directors held on February 13, 2014 until June 30, 2014 E

Executive Director L

Lead Independent Director

WDF S.p.A. – Financial Annual Report 2013

Contents

Part I – Director´s Report

1. Directors’ Report

1.1. The World Duty Free Group

1.2. Group performance

1.2.1. General business context

1.2.2. Highlights

1.2.3. Income statement results

1.2.4. Financial position

1.3. Business segments

1.4. Group Performance

1.5. Performance in the fourth quarter of 2013

1.6. Financial review World Duty Free S.p.A.

1.6.1. Income Statement Results

1.6.2. Reclassified statement of financial position

1.7. Outlook

1.8. Other information

1.8.1. Corporate Social Responsibility

1.8.2. Main risks and uncertainties faced by the World Duty Free Group

1.8.3. Corporate Governance

1.8.4. Management and coordination

1.8.5. Related party transactions

1.8.6. Statement pursuant to art. 2.6.2 of the Regulations for Markets organized and

managed by Borsa Italiana S.p.A.

1.8.7. Research and development

1.8.8. Treasury shares

1.8.9. Significant non-recurring events and transactions

1.8.10. Atypical or unusual transactions

1.8.11. Reconciliation between parent and consolidated equity

1.8.12. Shareholders’ Meeting

1.9. Proposal for approval

Part II – Consolidated Financial Statements

1. Consolidated Financial Statements

1.1. Statement of Financial Position

1.2. Income Statement

1.3. Statement of comprehensive income

1.4. Statement of change in equity

1.5. Statement of cash flow

2. Notes to the consolidated financial statements

Annexes

List of consolidated companies

Certification by the CEO and financial reporting officer

Independent Auditors´ Report

WDF S.p.A. – Annual Financial Report 2013

Part III – Separate Financial Statements

1. Separate Financial Statements

1.1. Statement of Financial Position

1.2. Income Statement

1.3. Statement of comprehensive income

1.4. Statement of change in equity

1.5. Statement of cash flow

2. Notes to the Separate financial statements

Annexes


Certification by the CEO and financial reporting officer

Independent Auditors´ Report

Report from the Board of Statutory Auditors

WDF S.p.A. – Part I -Director´s Report as of December 31, 2013

PART I – DIRECTOR´S REPORT

1. DIRECTOR´S REPORT

1.1 The World Duty Free Group

Operations

World Duty Free S.p.A. (WDF S.p.A.) was incorporated on March 27, 2013 and was listed on Milan

Stock Exchange on October 1, 2013 (see paragraph 1.2.2).

WDF S.p.A. is the parent company of World Duty Free Group (“WDFG” or the “Group”), one of the

leading operators worldwide in the airport travel retail sector. As of December 31, 2013, the Group

was present in 21 countries with a workforce of 8,500, it manages 519 stores. The Group operates

duty free and duty paid stores, mainly located in airports, through a partnership concession model.

Under the duty free regime, goods sold are exempt from import taxes, customs and other taxes

while under the duty paid regime, import taxes and other taxes are applied to the goods sold. As

regarding the operations in the European Union, in accordance with Directive 91/689/CEE of

December 16, 1991 the duty paid regime applies if the passenger’s final destination is domestic of

a European Union member state, while the duty free regime applies if the passenger’s final

destination is outside of the European Union.

The Group’s largest market is Europe, with a solid presence in the United Kingdom and Spain; in

December 2012, in this latter country, the Group was awarded a seven-year extension of its

existing presence in the Spanish Airports; the corresponding new contract was signed in February

2013. The Group is also active in the Americas, Asia and Middle East. Particularly, 480 stores are

located in 98 airport around the world and in some selected non-airport locations and 39 stores

located in cultural institutions. Among the stores the WDFG manages 6 stores in Saudi Arabia and

India that are run through local partners with whom WDFG subscribed, respectively, joint venture

and operating agreements.

The Group provides a large range of products, mainly comprised in the following categories:

“beauty”, “drinks”, “tobacco” and “food”. The wide variety of products are tailored according to the

store location, in line with the customers’ needs and expectations. Each store is designed on the

basis of the flight destinations served in the airport where the store is located and to the specific

profile of passengers in transit.

The main location by geographical area and the main countries where WDFG operates are set out

below:

Number of locations Travel Retail & Duty-Free

Channel United

Kingdom

Rest of

Europe Americas

Asia and

Middle EastTotal

Airports 21 28 38 11 98

Cultural institutions 2 33 4 0 39

Total 23 61 42 11 137


Countries

Brazil India Peru

Cape Verde Italy Saudi Arabia

Canada Jamaica Spain

Chile Jordan Sri Lanka

Curaçao Kuwait Turkey

Germany Mexico United Kingdom

Finland Panama USA

Our Airport Stores

WDFG understands Travel Retail as a partnership business where the three key actors, Airports, Brands and Retailer must work together to deliver the best possible commercial offer and extract the best value of it.

Under this strategy, with the passengers flow in mind, WDFG models stores in a standard or walk-through multi-category store, in a single category store or in a last minute store depending on the size of the airport, the space available in the relevant commercial or the passengers’ flow. Some of the Group’s airport stores are specially designed according to the airport’s location, giving the travellers a “sense of place”.

General travel retail stores

These are the Group’s general airport stores, some of them are easily identifiable from the fascia as stores of the Group and accompanied by the name of the relevant airport, where a wide range of traditional duty-free products are offered. The Group’s “General travel retail” stores are designed to optimise the space granted under the concession but are also adapted to the natural flow of travellers.

The Group is the pioneer of the “walkthrough store”, which are stores located in the passenger flow from security to the lounge areas, with the result that passengers must walk through the store to get to their departure gate. This concept has consistently delivered an uplift in sales wherever it has been implemented. Additionally, the Group’s “General travel retail” stores have clean spaces, trying to reduce barriers that might impede the travellers’ flow and access to the stores.

Each of the Group’s “General travel retail” stores are divided into different clearly identifiable product zones, by product and by brand, depending on the type of travellers and the purpose of their journey. In addition, in line with the Group’s brand partners strategy, some of the Group “General travel retail” stores have special reserved and personalised areas for some of the Group’s brand partners and some feature enhanced premium areas (such as “beauty rooms”).

Some Group’s airport stores feature fixtures and furniture reflecting the relevant region and are especially designed to recreate, in a modern and fashionable manner and by using innovative architectonic concepts, the environment of the airport’s location, so that travellers experience an extension of their destination (“sense of place”).

Specialist and Theme Stores

The Group has also established several “Specialist and Theme Stores” for specific categories of products or products within the different categories. These “Specialist and Theme Stores” are specially designed for the type of product offered and have highly trained staff who are specialists in the products offered.


Souvenir Stores

The Group’s souvenir stores offer a wide range of typical and original products: books, decorative items, food, reproductions of works of art, t-shirts, gifts, key rings, writing materials and accessories, and many more.

Luxury Boutiques & Stores

These stores are designed to create a glamour, sophistication and luxury environment and offer a carefully assortment of haute couture jewellery, watches, leather and clothing products. The availability of this kind of shops help reinforcing the commercial customer proposition and help delivering a strongest sense of luxury to the whole of the different product categories. The luxury segment is one of the fastest growing categories in travel retail, with strong appeal amongst some of key spending nationalities such us China, Russia and Brazil.

Convenience Stores

These are stores for essential reading and last-minute food and travel purchases. The Group operates from a range of news stores that cater for international, regional and local readerships. These stores are currently located only in the airports included in the US Retail Division.

Other sales channels

Group also provides some other additional types of services in channels different from airports, mainly:

(i) wholesale and logistic services to ship chandlers, embassies and diplomatic corps, ferry and cruise liner shops, on-board airline sales, other airport shops, sea-port shops, border shops and military bases. The Group provides its wholesale clients with similar products to those offered to travellers in any of the Group’s stores.

(ii) commercial and management services at cultural institutions and sites of historical heritage (such as cathedrals, museums or palaces) in Panama, Spain, Turkey (though a management agreement) and the United States of America. These services include ticket offices, information services, guided tours, provision of audio-guides and publishing coordination (of guides, art books, exhibition catalogues, etc.) and the products offered in these stores are mainly cultural merchandising.


Strategy

WDFG’s strategy aims to strengthen the Group’s position in the airport travel retail sector, thanks

to the improvement of performance of existing concessions, the extension and/or renewal of these

and entering into new concessions in same Countries and into new Countries characterized by

high rates of growth in passengers’ traffic.

To pursue its objectives the WDFG adapts the commercial offer to the passengers’ evolving needs

by constantly refining the range of products offered and their corresponding marketing, increases

accuracy in designing the sale spaces and the efficient management of the supply chain,

strengthen the commercial capacity through the increased use of top-performing retail models and

reinforces the collaboration with licensors and brand partners.

Although the global travel retail sector continues to be highly fragmented, WDFG deems that in the

next years, thanks to a series of agreements, acquisitions and integrations, global leaders of the

sector may be able to emerge in order to generate potential synergies in terms of costs and

investments and to have higher chances of being awarded new concessions owning both the

necessary competences in the sector and adequate financial capacity and to enlarge geographical

presence, mainly in Countries characterized by higher growth rates.

Within this scenario, the Group is ready to assess potential opportunities that may allow the WDFG

to strengthen its global presence always maintaining a well-balanced financial structure. Any

opportunities for growth which create shareholder value will be carefully assessed in terms of both

business strategy – whether they complement the areas and channels served – and financial

sustainability, and will be pursued in a way that keeps the financial structure consistent with the

operations performed and the needs of the WDFG and its stakeholders.


Simplified Group structure1

The main group companies in terms of revenue are reported below:

1 Where not otherwise specified, all companies are wholly owned. See the Annex to the notes to the consolidated and separate

financial statements for a complete list of equity investments.


Organizational structure

The Group is structured in business units, which manage operational levers according to objectives

and guidelines defined by the corporate executives of WDF S.p.A..


1.2 Group Performance

1.2.1 General business context

The travel retail market has been defined as the sale of goods or the provision of services mainly

to travelers in different sale channels connected to transport, including airports, sea ports, railway

stations, border areas, airplanes, ferries ad cruise boats.

WDFG main activities are concentrated in the airport channel that is a market with total revenues in

2013 amounting to USD 33 billion characterized by a constant growth (CAGR of 10.2% from 2009

to 20132) and that has shown increases in all the main geographical areas of the world irrespective

of the context of the corresponding domestic economies.

The airport travel retail sector is characterized by customers with limited time to be spent in the

airport. This, however, allows the airport travel retailer to gather a much higher knowledge than a

traditional retailer of the target customer’s features (destination, and therefore, indirectly nationality

and purchase preferences). For these customers shopping at the airport becomes part of the travel

experience and the airport travel retailer targets a cosmopolitan, non-regular clientele, with a high

socio-economic profile and with high propensity to buy.

In recent years, airport managers have increasingly focused on the commercial potential of their

facilities, showing a more sophisticated approach to the airport travel retail with results of new

commercial offer models, based mainly on the general increase of the commercial spaces

dedicated to travel retail.

More specifically, the European airport travel retail sector, where the Group is significantly present,

represents the second largest market in size, after Pacific Asia. In 2013, the European market of

travel retail amounted to USD 11.1 billion (around 32.3% of the total market), with a 2.4% increase

compared to 20122.

The airport traffic

The sales volumes of the air transport sector shows a strong correlation with the volume of

passengers’ traffic and, consequently, the travel retail market is highly sensitive to geopolitical and

economic developments as well as to long-term demographic changes.

Passenger traffic3,4 kept showing further growth of 3.9% in 2013, in line with the increase recorded

in 2012 and was driven especially by international traffic (+5.2%), with all the areas showing

positive rates (except Africa) and Asia Pacific and Middle East showed the higher ones.

Domestic traffic grew at a lower rate of 2.7%, led by Asia Pacific and Latin America & Caribbean;

North America recorded a faint growth, while Europe was close to remaining flat, recording a

slightly negative growth rate5.

Of the roughly 4.3 billion passengers worldwide, Europe and North America contribute about 30%

and 29%, respectively with Asia Pacific increasing its contribution up to 27% of passengers.

2 Source: Verdict Retail (part of Informa Business Information).

3 Sources: ACI, PaxFlash_FreightFlash, February 2014 Press release.

4 BAA, Airport of Manchester and Airport of Gatwick, January-December 2013.

5 Domestic traffic includes passengers travelling within the same country whilst international passengers includes passengers that flight

from one country to another one.


Passengers in North America increased by 1.3% to 1.2 billion, mostly corresponding to domestic

traffic, which accounts for roughly half of global domestic traffic.

Europe enjoyed a 2.6% increase in traffic thanks to solid international growth. The trend in the

main airports where the Group is present came to a contrasting +3.6% in the United Kingdom and -

3.5% in Spain6. Growth in the UK factors in the decrease experimented during the 2012 London

Olympic Games, which caused a reduction in traffic during the main travel months of the year, July

and August. The downward trend in Spain reflects the country’s economic crisis, mirrored in the

demand for domestic flights and the operations of major airlines, which reduced their capacity (e.g.

Iberia and Ryanair) or went out of business (Spainair).

Asia made a solid contribution, accounting for slightly over a third of the growth in global

international traffic. Specifically, in 2013 traffic in Asian countries was up by 7.2%; after slowing

down in the central months of the year, it began to accelerate again on the strength of renewed

confidence in the prospects of the Chinese economy.

Traffic in Latin America & Caribbean (350 million passengers in 2013) progressed by 4.8% thanks

to significant economic growth in the area and the expansion of trade with North America and Asia.

Growth was also significant in the Middle East (+10.1% to close to 170 million passengers),

stemming exclusively from international routes.

1.2.2 Highlights

Introduction

During 2013, Autogrill S.p.A., a subsidiary of Schematrentaquattro S.p.A., initiated and completed

a strategic project to split the Food & Beverage business from the Travel Retail & Duty Free

business. That split was realized through the partial proportional demerger (the “Demerger”),

effective from October 1, 2013, of the Travel Retail & Duty Free business from Autogrill S.p.A. in

favor of WDF S.p.A., specifically incorporated by Autogrill S.p.A. for the purpose of the Demerger.

In particular, with the Demerger, Autogrill S.p.A. transferred to WDF S.p.A. its investment in World

Duty Free Group SAU (“WDFG SAU”), a parent company of a group operating in the Travel Retail

& Duty Free sector.

As a result of the Demerger, the consolidated financial statements of WDF S.p.A. (as described in

the illustrative note 2 of the financial statements), were represented as follows:

i) in order to better understand the results of WDFG, the Directors’ Report presents the

consolidated economic and financial information for the twelve months period ended December

31, 2013, irrespectively of the effective date of the Demerger. The comparable data for the

financial year 2012 are referred to the consolidated economic and financial information for the

twelve months period ended December 31, 2012 of WDFG SAU (subject to the Demerger),

based on the historical data included in the Autogrill S.p,A. consolidated financial statements as

of December 31, 2012;

ii) as regarding the “Financial Highlights” figures, there were also represented the consolidated

economic and financial information of WDF S.p.A. for the period from March 27, 2013 (the date

of incorporation of WDF S.p.A.) to December 31, 2013 (closing date of the financial year).

6 AENA. January – December 2013.


Financial Highlights

in millions of Euro

Revenue 547.0

EBITDA 60.8

EBITDA margin 11.1%

Cash EBITDA 68.7

EBITDAR 230.0

EBITDAR margin 42.1%

EBIT 35.4

EBIT margin 6.5%

Profit for the year 19.8

% of revenue 3.6%

Net cash flows from operating activities 20.5

Net capital expenditure 38.6

% revenue 7.1%

Earning per share (Euro cents)

- basic 6.5

- diluted 6.5

For the period from March

27, 2013 to December 31, 2013

See footnote for specific definitions

7

in millions of Euro 2013 2012 change

change at

constant

exchange rates

Revenue 2,078.5 2,002.0 3.8% 7.1%

EBITDA 254.8 262.3 (2.9%) 0.6%

EBITDA margin 12.3% 13.1%

Cash EBITDA 274.4 262.3 4.6% 8.0%

EBITDAR 912.3 877.8 3.9% 7.3%

EBITDAR margin 43.9% 43.8%

EBIT 163.6 149.7 9.3% 13.6%

EBIT margin 7.9% 7.5%

Profit for the year 110.9 103.0 7.6% 12.7%

% of revenue 5.3% 5.1%

Net cash flows from operating activities (96.1) 189.5 (150.7%)

Net capital expenditure 63.4 28.4 123.2%

% revenue 3.1% 1.4%


7,8

7 The above indicators are not recognized as accounting measures under IFRSs and therefore they should not be considered as alternative measures to those ones included in the financial statements for evaluating the Group’s economic performance. Since such financial information are not determined in accordance with generally accepted accounting principles for the preparation of the consolidated financial statements, the criteria applied for their calculation may not be consistent with those ones used by other group companies and thus, these measures may not be comparable with any similar measures used by other group companies.

The above indicators are defined as follows:

Ebitda: profit for the year + income tax + impairment and revaluation of financial assets + net financial expense + depreciation and amortization + impairment losses on property, plant and equipment and intangible assets

Ebitda margin: Ebitda/revenues

Ebitdar: Ebitda + leases, rentals, concessions and royalties

Ebitdar margin: Ebitdar/revenues

Cash Ebitda: Ebitda + recovery of annual concession fees paid in advance to AENA

Ebit: operating profit

Ebit margin: Ebit/revenues

Net cash flows from operating activities: see detailed calculation reported in the table “Net cash generation”

Net capital expenditure: the item refers to the additions in capital expenditure, excluding investments in financial fixed assets and equity investments.

Some figures may have been rounded to the nearest million. Changes and ratios have been calculated using figures in thousands and not the figures rounded to the nearest million as shown.

8 Change at constant exchange rates: the variation that would have been reported had the comparative figures of consolidated

companies with functional currencies other than Euro been converted at the same exchange rates employed for the period under

review.



change at

constant

exchange rates

Net invested capital 1,445.8 1,147.2 26.0% 28.3%

Net financial position 1,026.7 549.0 87.0% 87.4%

For the detailed calculation of these indicators see table “Reclassified consolidated statement of financial position”

The acquisition of US Retail Division

On July 2013, World Duty Free Group US, Inc (a subsidiary of WDFG) and WDFG entered into a

purchase agreement with HMS Host Corporation and its subsidiary Host International Inc (both

subsidiaries of Autogrill S.p.A.) in relation to the sale of 248 convenience stores located in 29 US

airports (the “US Retail Division”).

On September 6, 2013 these retail business activities, for which the authorization was granted by

the landlord, were acquired by the Group. The purchase price agreed was USD 105 million, equal

to 87.8% of the maximum consideration (i.e. USD 120 million) initially agreed in the event of all the

retail concessions managed by HMS Host Corporation were transferred. Any subsequent closing

will be made once the necessary authorizations have been granted by the landlords.

The convenience stores, related to the US Retail Division, mainly offer souvenirs, gifts, books and

newspapers, beverages and ready-to-eat food. Certain categories of items offered by the

convenience stores overlap the categories offered by the other points of sale of Group. The offer of

the convenience stores of the US Retail Division is adequate to the characteristics of the travel

retail market in North America, where the flow of domestic passengers is dominant (in 2013

approximately 83% of passengers in North America were domestic passengers5).

The US Retail Division recorded a strong growth in the three-year period 2010-2012, with revenues

of USD 194.2 million in 2010, USD 212.8 million in 2011 and USD 227.8 million in 2012, and with a

compound annual growth rate of 8.3%.

The acquisition rational is to expand its presence in 29 US airports (including San Francisco,

Chicago, Washington D.C., Miami and Dallas) and to leverage on these activities strengthen the

presence of WDFG in North America.

1.2.3 Income statement results

2013 has been a transformational year for WDFG. During 2013 took place the listing of WDF

S.p.A. in the Milan stock exchange, the acquisition of new activities in the United States through

the US Retail Division and successful results in terms of award of important contracts also in new

countries. The refurbishment and enlargement of store portfolio operated in Spain, the international

expansion achieved with new operations in Germany, Saudi Arabia, Brazil and Jamaica, and the

starting of leverage new categories following the acquisition of the US travel retail operation left the

Group in a better position to face the economic recession and the drop in consumption registered

in some European countries and thus to continue to improve revenue and cash flow generation.


Condensed consolidated income statement

in millions of Euro 2013% of

revenue2012

% of

revenuechange

change at

constant

exchange

rates

Revenue 2,078.5 100.0% 2,002.0 100.0% 3.8% 7.1%

Other operating income 26.1 1.3% 26.6 1.3% (1.9%) 0.6%

Total revenue and other operating income 2,104.6 101.3% 2,028.6 101.3% 3.7% 7.0%

Cost of goods sold (847.7) (40.8%) (820.0) (41.0%) 3.4% 6.5%

Personnel expense (220.8) (10.6%) (205.9) (10.3%) 7.2% 10.1%

Leases, rentals, concessions and royalties (657.5) (31.6%) (615.5) (30.7%) 6.8% 10.2%

Other operating expense (123.8) (6.0%) (124.9) (6.2%) (0.9%) 3.1%

EBITDA 254.8 12.3% 262.3 13.1% (2.9%) 0.6%

Cash EBITDA 274.4 13.2% 262.3 13.1% 4.6% 8.0%

Depreciation, amortization and impairment losses (91.3) (4.4%) (112.7) (5.6%) (19.0%) (16.8%)

EBIT 163.6 7.9% 149.7 7.5% 9.3% 13.6%

Net financial income/expenses (34.3) (1.6%) (18.5) (0.9%) 85.5% 86.8%

Impairment and revaluation of financial assets 2.0 0.1% 1.8 0.1% 10.7% 10.7%

Pre-tax profit 131.3 6.3% 133.0 6.6% (1.3%) 3.4%

Income tax (20.5) (1.0%) (30.0) (1.5%) (31.8%) (28.3%)

Profit for the year attributable to: 110.9 5.3% 103.0 5.1% 7.6% 12.7%

- owners of the parent 105.8 5.1% 100.7 5.0% 5.1% 10.2%

- non-controlling interest 5.0 0.2% 2.3 0.1% 121.0% 122.0%


7,8


Revenue

The Group closed 2013 with consolidated revenue of Euro 2,078.5 million which at constant

exchange rates is 7.1% compared to the previous year. The exchange rate trends of the currencies

other than Euro in which WDFG operates, had a negative impact on revenue which at current

exchange rates increased by 3.8% compared to the previous year’s figures of Euro 2,002.0

million, in particular due to the revaluation of the Euro against the pound and US Dollar. The US

Retail Division, acquired in September 2013, had an impact on total revenues of USD 59.5 million,

equivalent to Euro 44.8 million. Group’s revenue growth at constant exchange rates and excluding

the contribution of the US Retail Division would have been +4.8%.

Change in revenues (in million of Euro)

2,002

2,034

2,078

6460

248

4

45

1,850

1,900

1,950

2,000

2,050

2,100

Revenues 12M

2012

Forex effect United

Kingdom

Rest of

Europe

Americas (ex

US Retail)

Asia & Middle

East

Revenues 12M

2013 (ex US

Retail)

US Retail Revenues 12M

2013

Revenues related to the airport channel amounts to Euro 2,032.8 million or 97.8% of the total

revenues generated in financial year 2013. Within this, the acquired US Retail division delivered

revenues of Euro 44.8 million from the date of acquisition, or 2.2% of total annual revenues.

The Group recorded non-airport revenues for an amount of 2.2% of the Group’s total revenues for

2013.

Excluding the addition to the perimeter of the US Retail, the product mix evolution showed the

growing focus of the business in Beauty category with sales at Euro 901.0 million improving its

share of airport sales to 45.3% of total sales against 44.3% in 2013. Liquor sales at 18.3% and

Food sales at 11.6% of total sales both also grew their share versus 2012. Tobacco sales were

impacted by ongoing regulations (such as the UK Tobacco Display Area requirements) and were in

2013 12.2% of sales, being -0.5% lower than 2012.

The Spanish airport tender impacted adversely on the sales of the Luxury and Souvenir categories.

Luxury at 4.9% of total airport sales were -1.3% lower than 2012, with Euro 96 million sales

dropping -20.7% against 2012. Souvenirs at 2.7% of total sales were -0.7% lower than 2012 with

sales being -12.8% lower.


EBITDA

In 2013 Ebitda amounted to Euro 254.8 million, up 0.6% at constant exchange rates (down -2.9%

at current exchange rates) from Euro 262.3 million in the same period of 2012.

EBITDA margin amounted to 12.3% of total revenue compared to 13.1% in 2012.

Change in EBITDA margin

The decrease in EBITDA margin was largely due to the increase in rental costs mainly as a

consequence of the contract extensions in Spanish airports. Perimeter change mixes also

adversely impacted the Ebitda margin, due to the effect from the start-up operations; mainly in

Düsseldorf (Germany), and the dilution stemming from the acquisition of the US Retail division,

which pushed Ebitda margins lower. The type of products offered by the US Retail Division, has a

natural Ebitda margin which is lower than the average margin of WDFG.

The gross margins (i.e. Revenue minus Cost of Goods Sold) were however improved through

internal efficiencies and external supplier deals.

Cash EBITDA, calculated as the sum of EBITDA and the recovery of annual concession fees paid

in advance to AENA, the Spanish licensor, amounted to Euro 274.4 million, representing 13.2% on

revenues.

Amortization, depreciation and impairment

In 2013 amortization, depreciation and impairment amounted to Euro 91.3 million, Euro 21.4 million

lower than in 2012 (Euro 18.9 million at constant exchange rates), mainly due to the effect of the

revision of the useful life of the Spanish concessions after their extension at the end of 2012 up to

2020, as well as to having the fixed assets connected with the former Spanish contract fully

amortized while the new developments relating to the extension awarded at the end of 2012 are in

progress.


Net Financial Expenses

In 2013 net financial expenses amounted to Euro 34.3 million, up from Euro 18.5 million recorded

in 2012: the increase was mainly due to a higher average cost of debt and to bank fees paid on the

loans extinguished as part of Travel Retail & Duty Free’s debt refinancing which had not been fully

amortized as of June 5, 2013. Financial expenses were partially offset by financial income relating

to the implicit interests recorded in connection with the advance payment to AENA.

The average cost of debt, net of the bank fees related to the new financing, was 3.9% compared to

3.2% in 2012.

Income tax

Income Tax decreased from Euro 30.0 million in 2012 to Euro 20.5 million in 2013. The average

tax rate was 15.6%, down from 22.6% in 2012. The improvement mainly reflects the revaluation of

deferred tax liabilities in UK in view of the recent lowering of tax rates to be applied in the next

fiscal years.

Net profit for the period

Net profit attributable to the controlling interest amounted to Euro 105.8 million compared to Euro

100.7 million recorded in 2012, due to the positive evolution of amortization and income tax being

partially offset by lower Ebitda and higher net financial expenses.

Net profit attributable to minority interests amounted to Euro 5.0 million, up from Euro 2.3 million of

previous year.


1.2.4 Financial position

Reclassified consolidated statement of financial position9

in millions of EuroDecember

31, 2013

December

31, 2012 *change

change at

constant

exchange

rates

Intangible assets 1,167.7 1,228.0 (60.3) (35.6)

Property, plant and equipment 137.7 87.3 50.4 53.5

Financial assets 41.0 13.1 27.9 28.2

A) Non-current assets 1,346.4 1,328.4 18.0 46.2

Inventories 156.6 142.5 14.1 19.0

Trade receivables 36.5 27.9 8.5 9.5

Other receivables 54.6 20.0 34.7 37.7

Trade payables (235.5) (203.8) (31.7) (36.8)

Other payables (119.2) (101.8) (17.4) (98.2)

B) Working capital (107.0) (115.3) 8.2 (68.8)

C) Invested capital, less current liabilities 1,239.3 1,213.1 26.2 (22.6)

D) Other non-current non-financial assets and liabilities 206.5 (65.9) 272.3 347.6

E) Assets held for sale - - - -

F) Net invested capital 1,445.8 1,147.2 298.6 325.0

Equity attributable to owners of the parent 411.0 595.5 (184.6) (160.4)

Equity attributable to non-controlling interests 8.2 2.7 5.5 5.6

G) Equity 419.1 598.2 (179.1) (154.8)

Non-current financial liabilities 984.3 515.7 468.6 470.3

Non-current financial assets - - - -

H) Non-current financial indebteness 984.3 515.7 468.6 470.3

Current financial liabilities 78.2 64.7 13.5 13.9

Cash and cash equivalent and other current financial assets (35.8) (31.4) (4.4) (4.3)

I) Current net financial indebteness 42.4 33.3 9.1 9.6

Net financial position (H+I) 1,026.7 549.0 477.7 479.9

* The figures were adjusted since their original plublication due to the application of IAS 19 revised as described in note 2.1. reported

in the illustrative notes of financial statements.

Net invested capital at December 31, 2013 amounted to Euro 1,445.8 million, increasing of Euro

298.6 million with respect to the previous year. The increase is mainly related to “Other non-current

non-financial assets and liabilities” that includes non-current portion of the payment made to

AENA. Particularly, based on the agreement signed in February 2013 with AENA for the extension

of the Spanish airport concessions to 2020, WDFG, in the first quarter of 2013, made an advance

payment of Euro 279 million to be offset against future rent payments (of this amount, Euro 17

million have been already offset during 2013). For further details please also refer to note 2.3

reported in the illustrative notes of the financial statements.

The Group’s financial position is mainly represented by the medium-long term loan of Euro 1,250

million, signed by WDFG SAU at the end of May 2013. For further details, please refer to note

2.4.20 reported in the illustrative notes of the financial statements.

Net financial position at December 31, 2013 was Euro 1,026.7 million (Net Debt), with an increase

of Euro 477.7 million compared with the previous year’s figures.

9 The figures in the reclassified consolidated statement of financial position are directly derived from the consolidated financial

statements and illustrative notes.


Change in net financial position (in million of Euro)

The effect produced by the translation of foreign currency items into Euro was positive by Euro 4.7

million due to the positive impact on the net financial position produced by pound/Euro translation.

The net cash flows from operating activities (excluding the advance payment and the cash deposit

paid to AENA) amounted to Euro 165.9 million, a decrease of Euro 23.6 million on the previous

year, with higher interest payments explaining a big portion of this decrease.

In addition, three very significant events with impact on the Net Financial Position took place during

2013: i) Euro 261.9 million related to the advance payment to AENA described above and Euro

27.3 million in connection with the cash deposit paid to AENA within the framework of the

agreement signed in February 2013; ii) Euro 220.0 million dividend distribution approved by

Shareholders’ meeting on April 30, 2013 which was paid on June 5, 2013 to Autogrill S.p.A.; and

iii) Euro 80.0 million (including 5% retained to serve as guarantee as set in the sale and purchase

agreement – see note 2.2 of the illustrative notes to the financial statements for further details) for

the acquisition on September 6, 2013 of US Retail Division from HMS Host (a company of

Autogrill Group).

The fair value on interest rate hedges at December 31, 2013 was negative for Euro 1.8 million. At

the end of 2013, 37.7% of consolidated net financial position was denominated in British pounds,

and the rest in Euros. 26.0% was originally fixed-rate or converted to fixed-rate by means of

interest rate swaps. Debt consists mainly of committed non-current credit lines from banks. At 31

December 2013, loans had an average remaining life of 3.4 years. The loan contracts require the

Group to uphold certain financial ratios. At December 31, 2013 all of these were satisfied. For more

detailed information, please refer to the note 2.4.20 in the illustrative notes of financial statements.


Net cash generation


EBITDA 254.8 262.3 (7.5)

Change in net working capital (7.1) (13.0) 5.9

AENA advance payment (Net) (261.9) - (261.9)

Other non-cash items 0.5 1.0 (0.5)

Cash flow from operating activities (13.7) 250.3 (263.9)

Tax paid (50.8) (42.5) (8.3)

Net interest paid (31.6) (18.3) (13.2)

Net cash flow from operating activities (96.1) 189.5 (285.5)

Net capital expenditure paid (49.5) (28.3) (21.2)

US Retail Division Acquisition (80.0) - (80.0)

Free operating cash flow (225.6) 161.2 (386.7)

See footnote for specific definitions7,10

WDFG registered a negative free operating cash flow of Euro 225.6 million compared with the

previous year’s positive amount of Euro 161.2 million. The decrease reflects the advance payment

of Euro 261.9 million to AENA and the US Retail acquisition. Excluding these effects, the free

operating cash flow would have been positive by Euro 116.3 million.

The 2013 change in working capital have a negative impact of Euro 5.9 million, mainly due to the

one-off effect connected with the change in the rent payment terms under the contract signed with

AENA.

The increase in net interest paid with respect to the 2012 was Euro 13.2 million up to Euro 31.6

million recorded in 2013.

Net capital expenditure outflow of Euro 49.5 million recorded an increase of Euro 21.2 million

compared with the previous year’s, mainly related to Rest of Europe area for the refurbishment and

enlargement of store portfolio operated in Spain and for the new openings in Dusseldorf Airport in

Germany.

Capital expenditure

Net capital expenditure was Euro 63.4 million, up from Euro 28.4 million in 2012 and rose from

1.4% to 3.1% of revenue. It mostly concerned the European airports totaling about Euro 53.4

million.

10

Definitions:

Change in net working capital: change into (inventories + trade receivables + tax assets + other current receivables + trade payables

+ tax liabilities + other current payables + current provisions for risks and charges).

Net cash flow from operating activities: EBIT + depreciation, amortization and impairment losses - proceeds from asset disposals +

change in working capital + change in non-current assets and liabilities - interests and taxes paid.

Free operating cash flow: net cash flow from operating activities - net capital expenditure paid + fixed asset disposal proceeds.


1.3 Business segments

in thousands of EuroUnited

Kingdom

Rest of

EuropeAmericas

Asia and

Middle East Unallocated Total

Revenue 975.6 620.7 322.2 160.0 - 2,078.5

Other operating income 3.9 11.8 6.2 4.2 - 26.1

Total revenue and other operating income 979.5 632.5 328.4 164.2 - 2,104.6

EBITDA 147.4 56.7 27.8 22.9 - 254.8

Depreciation, amortization and impairment losses on assets (36.7) (34.8) (11.0) (8.7) - (91.3)

Operating profit (loss) 110.7 21.9 16.8 14.2 - 163.6

Net financial income/expenses - - - - (34.3) (34.3)

Adjustement to the value of financial assets - - - - 2.0 2.0

Pre-tax profit (loss) 110.7 21.9 16.8 14.2 (32.2) 131.3

Income tax - - - - (20.5) (20.5)

Profit (loss) for the year 110.7 21.9 16.8 14.2 (52.7) 110.9

in thousands of EuroUnited

Kingdom

Rest of

EuropeAmericas

Asia and

Middle East Unallocated Total

Revenue 961.7 596.9 280.6 162.6 - 2,002.0

Other operating income 1.2 13.0 7.0 5.5 - 26.6

Total revenue and other operating income 962.9 609.9 287.6 168.1 - 2,028.6

EBITDA 126.2 76.7 32.0 27.4 - 262.3

Depreciation, amortization and impairment losses on assets (40.6) (53.7) (9.5) (8.9) - (112.7)

Operating profit (loss) 85.6 23.1 22.5 18.5 - 149.7

Net financial income/expenses - - - - (18.5) (18.5)

Adjustement to the value of financial assets - - - - 1.8 1.8

Pre-tax profit (loss) 85.6 23.1 22.5 18.5 (16.6) 133.0

Income tax - - - - (30.0) (30.0)

Profit (loss) for the year 85.6 23.1 22.5 18.5 (46.7) 103.0

For the year ended December 31, 2013

For the year ended December 31, 2012

Revenue

In 2013 revenues amounted to Euro 2,078.5 million, up +7.1% at constant exchange rates (+3.8%

at current exchange rates) against Euro 2,002.0 million in 2012. Revenues contributed by the

recently acquired US Retail Division were Euro 44.8 million; excluding this contribution, revenues

would have grown +4.8% at constant exchange rates (+1.6% at current exchange rates).

Revenues in the United Kingdom reached Euro 975.6 million, +6.2% at constant exchange rate

(+1.4% at current exchange rate) supported by the traffic growth of +3.6%11 alongside higher

average spending per passenger. Higher British sterling exchange rates and the staging of the

Olympic Games in 2012 implied travelling in the United Kingdom was more expensive in 2012. The

spend per passenger in 2013 is slightly up on 2012, despite the higher number of passengers

subsequently seen in 2013 travelling to European destinations, who tend to show lower spends.

Heathrow Airport recorded sales of Euro 455.6 million up +4.0% at constant exchange rates

compared to a traffic increase of +3.4%. The good performance is driven by a higher number of

passengers to European destinations along with business initiatives driving stronger spends on

those passengers travelling to non-EU destinations. These offset the adverse spends seen from

higher volumes on low spending EU passengers and the negative mix from passenger volumes

being switched to lower spend terminals, away from the Terminal 3 walk-through store.

11 Source: BAA, Airport of Manchester and Airport of Gatwick, January-December 2013.


Revenues at Gatwick Airport were up +7.5% at constant exchange rates to Euro 173.4 million

higher than the +3.6% increase in traffic thanks to contribution of the new walk-through stores in

the South Terminal from the second half 2012 driving an increase in spend per passenger

throughout first half 2013.

Manchester airport recorded an increase in revenues of +5.9% at constant exchange rates

compared to the prior year. The performance is mainly driven by increase of traffic (+5.1% )

considering that the spend per passenger remained flat as the passenger increases have been on

low spending destinations.

Sales in the Rest of Europe were Euro 620.7 million, up 4.0% compared to Euro 596.9 million in

2012. This increase is due to the contribution of the new operations in Dusseldorf, which more than

offsets the negative growth rate recorded in the Spanish airports (-4.1%), affected by the drop in

traffic (-3.5%13) and the impact of the closing of the Boutiques12. This negative performance was

due to the effect of lower number of Iberia flights and to the passenger mix, that was less

favourable with lower business passenger and higher tourist volumes. This impacted Madrid

heavily with its passenger numbers being reduced by -12.1%. Madrid sales of Euro 132.6 million, -

21.7% compared to 2012. Excluding the Euro -21 million impact of the Boutique exit, the sales

were in line with the passenger decline effect. Barcelona airport showed excellent spend

performance, with sales up +5.3% against flat traffic13,being sustained by both a higher spend per

passenger with destinations outside Europe and the opening of new commercial layouts in May

2013. Alicante airport performed well with revenues of Euro 40.8 million, with an increase of +9.7%

compared to Euro 37.2 million in 2012, mainly driven by increase in passenger traffic of +8.8%13.

Canary Islands airports recorded revenues of Euro 69.7 millions, in line with the prior year.

Regarding Dusseldorf Airport, the new stores recorded sale for Euro 47.3 million since the opening

at the beginning of January 2013.

In Americas revenues amounted to Euro 322.2 million, up +19.4% at constant exchange rates

(+14.8% at current exchange rates) compared to 2012. The US Retail business inclusion

contributed Euro 44.8 million. Excluding this contribution, Americas grew +2.8% at constant

exchange rates, despite of the negative impact of the exit from the duty free operations in Atlanta

and Orlando, thanks primarily to the outstanding performance recorded in other airports of the

geography. Canada recorded the best performance, showing an increase of +20.0%, mainly due to

the increase in spend per passenger thanks to marketing activities and to new development

finished in the first half of 2012; Mexico increased by 15.1% over the prior year thanks to new

store in Los Cabos airport opened at the end of 2012 and the bigger volume of higher spending

passengers (particularly from Russia); Peru recorded a positive growth rate of +7.0% over the prior

year, driven by an increase in passenger traffic, even if the main portion of it consists of low

spending passengers. Only Chile showed a slowdown of -2.7% reflecting a change in the

passenger profile mix, particularly, the lower number of passengers from Brazil and some

government restrictions for Argentinean passengers which have reduced the average spend per

passenger. Furthermore 2013 sales has been affected by currency depreciation and

refurbishments in shops and terminals disrupting sales.

In Asia and Middle East revenues amounted to Euro 160 million, up +2.6% at constant exchange

rates (-1.6% at current exchange rates) compared to 2012. Jordan at Euro 72.7 million sales

continued to record positive performance with growth rates of 13.0% thanks to new operations

12

Store discontinued after the new agreement signed with AENA on February 2013. 13

Source: AENA, January-December 2013.


opened during 2013. Kuwait, second biggest country of this area, recorded sales for Euro 52.9

million, up +6.2% compared to the previous year while Sri Lanka at Euro 30.8 million sales

declined -20.2% with direct competition at the airport impacting historic sales.

EBITDA

Ebitda amounted to Euro 254.8 million, with an increase of +0.6% at constant exchange rates (-

2.9% at current exchange rates) in respect to Euro 262.3 million reported in 2012. Ebitda Margin at

12.3% for 2013 decreased by -0.8% versus 13.1% in 2012, at both constant and current exchange

rates.

In the United Kingdom Ebitda was euro 147.4 million, with an increase of +22.4% at constant

exchange rates (+16.8% at current exchange rate) in respect to Euro 126.2 million reported in

2012. The Ebitda margin came to 15.1% compared to 13.1% in the prior year thanks to an

improvement in the operating and personnel costs.

In the Rest of Europe the Ebitda reached Euro 56.7 million, a drop of -26.1% with respect to

Euro 76.7 million reported in 2012, while the Ebitda margin came to 9.1%, versus the prior year at

12.9%, directly related to higher rent rates seen. The effect of new business at lower Ebitda

margins at the beginning of the operations is balanced by an improvement in gross margins.

In Americas Ebitda amounted to Euro 27.8 million, decreasing by -9.6% at constant exchange

rates (-13.2% at current exchange rates) in respect to Euro 32.0 million reported in 2012. Ebitda

margin decrease to 8.6% (11.4% in 2012) mainly for the inclusion of the new US Retail business

that generated Ebitda margin in 2013, start-up costs related to new openings and for fixed costs

related to the closing of Atlanta and Orlando operations.

In Asia and Middle East, Ebitda amounted to Euro 22.9 million, with a decrease of -13.4% at

constant exchange rates (-16.5% at current exchange rates) compared to Euro 27.4 million

reported in 2012. Ebitda margin decrease to 14.3% (16.9% in 2012) mainly due to the increase in

operating costs.

Amortization, depreciation and impairment

In 2013 amortization, depreciation and impairment was lower by Euro 18.9 million at constant

exchange rates, mostly driven by the Rest of Europe (Euro 18.8 million) mainly due to the effect of

the revision of the useful life of the Spanish concessions after their extension at the end of 2012 up

to 2020, as well as to having the fixed assets connected with the former Spanish contract fully

amortized while the new developments relating to the extension awarded at the end of 2012 are in

progress. The United Kingdom accounted for a reduction of Euro 2.1 million at constant exchange

rate, while the Americas increased Euro 1.9 million due to the incorporation of the US Retail. Asia

and Middle East remained flat versus prior year.


1.4 Performance in the fourth quarter 2013

Revenue

Group revenues at Euro 547.0 million for the fourth quarter 2013, was up +12.8% at current

exchange rates (+7.5% at constant exchange rates and excluding the contribution of the US Retail)

against the same quarter of 2012.

Revenues in the United Kingdom airports reached Euro 253.2 million, up +7.4% at constant

exchange rates (+3.1% at current exchange rates) compared to the fourth quarter 2012, driven by

traffic (up 3.5%14) alongside higher spend per passenger. Heathrow Airport recorded sales of Euro

123.9 million (up +3.8%) compared to a traffic increase of 2.7%. A Record breaking Christmas

sales period drove the spend gain, with these spends being flat through early fourth quarter.

Revenues at Gatwick Airport were up +3.7% to Euro 41.6 million, lower than the +4.4% increase in

traffic, with spends disrupted by airport closure issues at Christmas. Manchester Airport recorded

an increase in revenues of +6.6% compared to Euro 20.5 million in the fourth quarter of 2012. The

performance is mainly driven by increase of traffic of +4.7%.

Sales in the Rest of Europe were Euro 139.5 million, up +7.5% compared to the same period of

2012. At a constant perimeter, therefore excluding activities in Dusseldorf (Germany) and the effect

of the closing of boutiques in Spain (mainly in Madrid), there would be an increase of +2.9%.

Particularly, at a constant perimeter, Spain recorded an increase in revenues of +3.1% compared

to a traffic increase of +1.5%15. The Canaries airports achieved growth of +16.1% with Euro sales

of 21.2 million in quarter four 2013. Alicante, Malaga, and Palma De Mallorca all achieved growth

above the Spain average, with Barcelona’s growth of +3.6%, in line with the passenger growths

seen. Madrid sales at Euro 32.8 million declined -22.2%, but excluding the effect of the closing of

Boutiques (down Euro -6.2 million) the fourth quarter decline was of -8.6%, versus a Madrid

passenger decline of -5.7%. Regarding Dusseldorf Airport, the new stores recorded sales of Euro

12.3 million in the fourth quarter 2013.

In Americas revenues amounted to Euro 113.3 million, +77.5% at constant exchange rates

compared to the same period of 2012. This performance is affected by the change in the

perimeter, with the new US Retail acquisition accounting for Euro 44.8 million sales (excluding the

contribution of the US Retail, the growth at constant exchange rate would have been +8.6%).

Canada grew +20.8% benefitting from new developments. Mexico showed +14.3% supported by

the Los Cabos development. Peru growth of +15.3% was countered by Chile decreasing -6.3%

due to works in progress and passenger shifts.

In Asia and Middle East, revenues amounted to Euro 41.0 million up +6.3% at constant exchange

rates compared to the same period of 2012. Jordan continued to recording positive performance

with growth of +18.9%, while Sri Lanka remained flat from continued competition impacting.

EBITDA

Ebitda in the fourth quarter 2013 amounted to Euro 60.8 million, showing an increase +8.3% at

constant exchange rates (+4.4% at current exchange rates) versus the same period of 2012. The

Ebitda Margin of 11.1% in the fourth quarter of 2013 decreased by -0.9% compared to 12.0% in

the same period of 2012.

14 Source: BAA, Airport of Manchester and Airport of Gatwick, October-December 2013. 15 Source: AENA, October-December 2013.


The US business acquisition at negative Ebitda in the quarter reduced group Ebitda margins in the

fourth quarter. Excluding this, the Ebitda margin was +12.2% showing an improvement of 0.2%,

since efficiencies in operating costs were seen, more than offsetting the increase in rent rates.

Capital expenditure

In the fourth quarter of 2013 net capex was Euro 38.6 million (Euro 12.6 million in the

corresponding period of the previous year), amounting to 7.1% of sales. Capital expenditure in

quarter four of 2013 accounted for approximately 60% of the whole capital expenditure of the year,

with the developments in Spain being the main contributors.

Depreciation, amortization and impairment losses

In the fourth quarter of 2013 depreciation, amortization and impairment losses amounted to Euro

25.3 million, with a decrease of -8.2% compared to Euro 27.6 million recorded in the same period

of 2012 (-5.4% at current exchange rates).

Net financial expense

In the fourth quarter of 2013 net financial expense increased to Euro 10.6 million, compared to

Euro 4.1 million of the same period of 2012. The significant change is primarily due to the increase

in debt amount.

Income tax

In the fourth quarter of 2013 tax decreased to Euro 4.9 million compared with Euro 7.3 million in

the same period of 2012. The average tax rate was 19.1%, down from 27.2% compared to the

fourth quarter of 2012.

Profit

In the fourth quarter of 2013 the profit reached Euro 19.8 million compared to Euro 19.5 million in

the same period of 2012. The profit attributable to owners of the parent amounted to Euro 16.5

million compared to Euro 18.9 million compared to the fourth quarter of 2012.


1.5 Financial review World Duty Free S.p.A.

1.5.1 Income statement results

Condensed income statement

in millions of Euro 2013

Dividends and other income from investments -

Other operating income -

Total revenue and other operating income -

Personnel expense -

Other operating expense (0.9)

EBITDA (0.9)

Depreciation, amortization and impairment losses (0.0)

EBIT (0.9)

Net financial income/expenses (0.0)

Pre-tax profit (0.9)

Income tax -

Profit (loss) for the year (0.9)


7

Other operating expenses mainly correspond to costs for consulting services, remuneration to the

Board of Directors and fees to the Statutory Auditors.


1.5.2 Reclassified statement of financial position16

in millions of Euro December 31, 2013

Intangible assets -

Property, plant and equipment 0.0

Financial assets 428.9

A) Non-current assets 428.9

Inventories -

Trade receivables -

Other receivables 0.2

Trade payables (4.7)

Other payables (0.6)

B) Working capital (5.1)

C) Invested capital, less current liabilities 423.8

D) Other non-current non-financial assets and liabilities -

E) Assets held for sale -

F) Net invested capital 423.8

Equity attributable to owners of the parent 419.1

Equity attributable to non-controlling interests -

G) Equity 419.1

Non-current financial liabilities 6.3

Non-current financial assets -

H) Non-current financial indebteness 6.3

Current financial liabilities -

Cash and cash equivalent and other current financial assets (1.6)

I) Current net financial indebteness (1.6)

Net financial position (H+I) 4.7

Financial assets include the investment in WDFG SAU, which was transferred by Autogrill S.p.A. to

WDF S.p.A by the effect of the Demerger.

Non-current financial liabilities consist of the revolving facility loan granted in 2013 by the

subsidiary WDFG SAU, expiring in 2018 and for a maximum amount of Euro 10 million.

16

The figures in the reclassified statement of financial position are directly derived from the separate financial statements and

illustrative notes.


1.6 Outlook

The first eight weeks of 2014 delivered a growth rate at constant exchange rates of +4.2%

compared to the same period of the previous year (+5.3% excluding the effect of the Boutiques in

Spain mentioned previously), showing a positive evolution in all the regions. Despite financial

turmoil in Latin America, the recovery of a positive economic sentiment in Europe has been started

to be perceived both in terms of traffic and consumer confidence. In addition, the recently acquired

contribution of the US Retail activity is pushing up the revenue growth rate to +11.6%.

In the first eight weeks the highest contributing region to that growth in sales at constant exchange

rates is Asia and Middle East (+9.4%) while Rest of Europe and UK are performing close to the

average (+4.0% and +3.9%, respectively; Rest of Europe, excluding the effect of the Boutiques is

+8.7%, though); Americas (excluding US Retail) is delivering weaker growth due to the financial

situation the region is facing during this period. As is well known, the start of the year clearly is the

low season in most of the Group’s operations particularly in Europe which start to become more

relevant along summer season starts.

The Group will provide more detailed information on forecasts for the year in course when it

publishes results for the first half of 2014. Given the above, the guidelines for 2014 are to focus on

generating cash to reduce current net debt levels, implementing development programs currently

in progress along the Group and execute new openings such as Helsinki airport.

Events after the reporting date

Since December 31, 2013, no events have occurred that if known in advance would have entailed

an adjustment to the figures reported or required additional disclosures.

1.7 Other information

1.7.1 Corporate Social Responsibility

WDFG adopted a coherent and integrated framework of values, rules of conduct, systems and

structures to support the pursuit of its corporate strategy. These beliefs are embodied in the

system of corporate governance and provide the foundation for the development of the Group’s

Sustainability initiatives.

WDFG is an organization made of people that sells products and provides services for other

people, nourishing a circular and virtuous value-creating circle involving the organization itself and

its employees and customers. Improving employee relation and satisfaction, offering travelers

better service, sharing objectives with partners and landlords, carrying out periodic analyses to fully

comprehend the employees, landlords, consumers and the characteristics of the markets mean

being innovative, extending and re-inventing one’s own concepts.

Employees

To facilitate a long term satisfaction and engagement among its employees, WDFG is committed to

developing various initiatives of welfare and worklife balance. Attention to employees is not limited

to management of working hours, but instead takes into consideration all those elements that

contribute to improving the quality of people’s lives.

Particular attention is devoted to the creation of a “diverse workforce” (i.e. a team composed of

members who speak different languages, etc.) with the ultimate objective of increasing the value


provided to group customers. The Group defined a series of policies (such as Recruiting practice

policy, Remuneration policy, Employees Training and Development Program) targeting diversity

and equal opportunity: these plans were developed aimed at preventing any form of discrimination

(salary-based, career-oriented, etc.) and they have been designed in compliance with the currently

applicable laws and in agreement with worker representatives.

Employee training represents the key leverage for personnel development and the development of

WDFG. Training planning is strictly correlated to the outcomes derived from employee

performance and competency evaluation processes. Moreover, in the UK there are specific

professional profiles available to help complete training plans with employees in the stores.

Health and safety

WDFG is commitment to the health and safety of all employees and consumers translates into

prevention, technology, training, and day-to-day monitoring. The Group performs preventive

assessments of workplace hazards so it can take the most suitable measures, such as new

operating procedures or the purchase of individual protection devices that will eliminate or

minimize the risks. To make sure these measures are effective, the number and type of accidents

that occur are constantly monitored, along with the steps taken to mitigate the hazards.

Comparable data shows that there has been a reduction in accidents over the last three years.

Social certification

OHSAS 18001 certification, obtained in 2012 for all WDFG shops in Great Britain, promotes a safe

and healthy workplace by maintaining an infrastructure that allows the group to systematically

monitor health and safety risks, reduce hazards, foster regulatory compliance and improve overall

standards.

Environment

Environmental issues – climate change, access to clean water, waste disposal, etc. – concern

people, organizations and institutions all over the world. WDFG believes it is the personal

contribution of each individual that makes the difference. Simple, everyday habits can help reduce

emissions without sacrificing quality of life. The Group feels a responsibility to reduce the

consumption of energy, water and raw materials. WDFG is doing this by designing green facilities,

properly managing resources and processes, monitoring performance and, above all, enlisting the

help of its employees.

An innovative and flexible property management system was experimented while restyling stores,

which enabled the group not only to design more welcoming and greener stores, but also to enjoy

considerable cost reductions and the possibility of effectively comparing consumption in different

stores. Specifically, new stores should be equipped with highly efficient air conditioning systems

and LED technology lighting.

Also, WDFG opened a round table with its commercial partners with the aim of reducing

packaging, optimizing the consumption of paper/cardboard and the volume of packaging during

transportation and in the warehouse.

Environmental certification

World Duty Free Group UK Ltd. received the internationally recognized ISO 14001:2004

certification for all of its stores, attesting to the effectiveness of its environmental management

system.


Community support

World Duty Free Group engages with community and charitable partnerships in many of the

territories in which it operates, with a strong but not exclusive focus on children, young people and

their families and education. The Group uses a combination of corporate donations and employee

fundraising to benefit a number of charities and community projects.

WDFG partners Fundación Iberoamericana Down 21. Canal Down21 is a network of foundations,

associations, educational establishments, hospitals and other bodies who work in the study,

teaching, development and research of people with Downs’ Syndrome.

Canal Down21 enables these institutions to collaborate to promote better understanding of the

condition and to improve the care and social inclusion of people with Down’s Syndrome.

World Duty Free Group’s partnership has helped to make it possible for the organization to reach

beyond Spanish borders, and turn it into a benchmark for the understanding of Down’s Syndrome

in all Spanish-speaking countries. In 2013 WDFG donated Euro 45 thousand.

WDFG has been in partnership with The One Foundation since 2006, selling bottled water and

reuseable jute bags in its stores which fund life saving water and nutrition projects in Africa. In

2013, sales of these products helped to raise Euro 148 thousand to continue to assist people in

droubt-stricken areas of the world such as North West Kenya.

Fundación Padre Arrupe’s primary objective is to contribute towards the economic, human and

social development of El Salvador, a country which suffers the consequences of recent civil war

and the effects of the most devastating natural disasters, circumstances which combine to drive

down the standard of living in some of the poorest areas of Central America to unsustainable

levels.

The core aims of the Foundation are to develop education and training in these areas:

• assistance to build educational structures and to allow training as well as social, economic

and cultural promotion in under-developed countries.

• enhancement of social and educational work performed by other institutions.

• social integration of children and youngsters through training and education.

• strengthening of women’s training to increase their control of their own economic and social

environment.

WDFG has partnered Fundación Padre Arrupe since 2002 and in 2013 donated Euro 20 thousand.

Fundación Xaley’s mission is to ensure that Senegal’s most vulnerable children and young people

can develop their abilities in an environment which respects their rights and their culture.

Working closely with local NGOs, Xaley is able to help some of the most vulnerable people in

Senegal, including street children and youths who do not attend school.

Key focus areas for Fundación Xaley are in education and training, health and hygiene, personal

rights and financial support to enable young people to be given a stable future.

WDFG has supported Fundación Xaley since 2009, specifically Xaley Ca Kanam in St. Louis,

Senegal and in 2013 donated Euro 13 thousand.

In the UK, WDFG has partnered The Rainbow Trust, an organisation which provides emotional and

practical support to children with a life-threatening or terminal illness, and they current help around


12,000 families a year. In the 2013, WDFG raised and donated Euro 65 thousand through

employee-driven fundraising.

In the Middle East, WDFG has donated to three charities from its centre of operations in Jordan.

The Group has partnered SOS Children’s Village for 5 years; this is a project which cares for

orphaned and abandoned children in specially built villages, providing them with love care and

support in a family setting. In 2013, WDFG donated Euro 16 thousand.

Other projects include Injaz which helps to prepare young people for a productive future and to

which the Group donated Euro 7 thousand, and the King Hussein Cancer Foundation which

received a donation of Euro 8 thousand.

In Canada, WDFG has partnered Touchstone Family Association whose services are primarily

focused on preserving and enhancing family relationships and in the second year of our

partnership in 2013, the Group donated Euro 10 thousand.

Prizes and Awards

The Group has been granted with a number of industry awards over 2013. These are awards are

testament to the Groups´s continuous search for excellence and innovation.

Frontier Awards – Airport Retailer of the year and Best Partnership initiative of the year: The

2013 Frontier Awards – known as the Oscar of the industry - took place at Cannes on October 23

and WDFG won two of them: Award to the Best Airport Retailer of the year. Best partnership

initiative of the year with Luxottica.

The Frontier Awards, instituted in 1985, were instigated to raise the standards of retailing and the

quality of products in travel-retail. One of the factors that makes the Awards so special is the

unique judging process, whit a panel of top executives from the industry who collectively boast a

wealth of experience in the various product categories and geographical regions.

Best Airport Retailer: The ‘Airport Retailer of the Year’ award represents official recognition of the

Group’s expertise and achievements in this increasingly complex and dynamic global industry.

When judging the awards, it was WDFG’s innovation and their incorporation of the latest

technologies into their stores, which really stood out for the panel of judges. They praised the

creativity and foresight demonstrated by World Duty Free Group in its approach to travel retailing,

with its focus on creating the ultimate airport shopping environments for its customers. In

particular, its Contentainment™ digital marketing concept helps create dramatic and engaging ‘in

store’ theatre for its customers and really brings brands to life, whilst helping brand partners

themselves to showcase and sample their products to best effect.

Partnership initiative of the year: The award recognises the unique global partnership that has

been created, which has taken the concept of ‘partnership’ itself, to a new level of excellence. The

combination of Luxottica’s expertise and authority in sunglasses, and WDFG´s global resources

and understanding of travel retail, allowed WDFG to create a single team that is united in driving

the growth and development of sales of this product category.

World Airport Awards:: At the 2013 World Airport Awards held at Passenger Terminal EXPO in

Geneva in March, and for the third consecutive year, Heathrow Terminal 5, where WDFG operates

the duty free stores, was voted as Best Airport Shopping. Travellers from over 160 countries take

part in the world’s largest, annual airport passenger satisfaction survey, to decide award winners.

The World Airport Awards are a global benchmark of airport excellence and Quality ranking.


The World Airport Awards are managed by the air transport rating organisation, Skytrax Research

of London, UK. The Airport Survey has operated since 1999, and the 2013 Awards are based on

12.1 million airline passenger nominations, and include 395 airports worldwide. The survey

evaluates 39 airport service and product key performance indicators - from check-in, arrivals,

transfers, shopping, security and immigration through to departure at the gate.

European Business Awards - Ruban d´Honneur: WDFG has been named as one of the final

100 businesses and Ruban d’Honneur recipients in the 2013/2014 European Business Awards

sponsored by RSM international. Selected as one of ten finalists in the Infosys Business of the

Year (turnover above Euro 150 million) category, WDFG will now go on to compete in the third and

final round of judging resulting in 10 overall category winners to be announced in May. The 100

Ruban d’Honneur recipients were chosen from 375 National Champions by an esteemed panel of

judges made up of European business and political leaders, academics and entrepreneurs.

DFNI product awards: WDFG obtained best marketing campaign awards for both for WDFG´s

Wine Festival 2013 - aimed to showcase the extensive selection of value and fine wines from

France, Spain and the New World on offer in the WDFG’s stores – and the WDFG & Lancôme

campaign for Lancôme Wonderland 3D Exhibition at London Heathrow Terminal 5.

The Moodie Report Dreamstore 2013: WDFG’s operations in Heathrow were singled out for the

Beauty category honours, with specific reference to Terminal 5 for its promotions, offer and

service, and the luxury approach in Terminal 3.

The Moodie Report Social Media Awards 2013: In the Moodie Report’s inaugural airport social

media, digital and mobile awards ‘The Moodies’, WDFG came top in three categories. WDFG was

awarded Best Twitter Feed for an Airport Retailer, Best Use of Digital Media on the Concourse (for

WDFG´s innovative Contentainment programme) and top accolade, Best Use of Social Media

Overall for the Group´s activities across web, social media and in-store digital marketing.

1.7.2 Main risks and uncertainties faced by the World Duty Free Group

WDFG is exposed to external risks and uncertainties arising from general economic conditions or

those specific to the industries in which it works, from the financial markets and from frequent

changes in legislation, as well as to risks generated by strategic decisions and operating

procedures.

WDF Group has maintained the risk management processes in place across the Group before

demerging and the main risks identified are periodically brought to the attention of the control

bodies.

The main business risks are presented below.

With regard to the main financial risks, for further information see the section “Other information” in

the illustrative notes to the consolidated financial statements.

Risks associated with the concentration of WDFG’s activities in the United Kingdom and in Spain

Considering the fundamental contribution of the concessions in the United Kingdom and in Spain

to the WDFG’s revenue – during financial year 2013, about the 74.1% of the total revenue- the

http://www.worldairportawards.com/


loss or non-renewal of these concessions or any event which may negatively impact the volume of

passengers transitioning through the UK or Spanish airports in which the Group operates

(especially London Heathrow, Madrid Barajas and Barcelona El Prat), may adversely affect the

financial, economic situation and the assets of the WDFG.

Concessions in the United Kingdom and in Spain are expected to expire starting from 2020 and the

Group works proactively to mitigate this risk by diversifying activities through the acquisition of new

contracts, both within and outside UK and Spain, and the renewal of existing contracts.

To reach these targets WDFG manages relationship with its licensors to understand and anticipate

possible development opportunities in airports where already exist retail activities.

Risks associated with the acquisition, renewal and keeping of WDFG concessions

WDFG performs its core activity predominantly under concession agreements where it has the

right to operate in certain airport commercial areas. Concessions are the Group’s core asset and,

consequently, WDFG focuses its strategy on renewing its existing concessions and on acquiring

new ones. Due to the strong competition in this sector, in the case of new acquisitions and/or

renewals of concessions, the terms provided by the licensors may be less favorable than those

currently in place.

The Group works proactively to mitigate the risk of not acquiring any new contracts or not renewing

existing ones or not maintaining the profitability of the concessions.

In particular the Group works constantly, with the support of its current licensors, to analyze traffic

trends and customer needs in order to present the best offer and to manage Travel retail and Duty

Free shops on action. This means constantly reviewing products offer and services’ standards in

order to keep them competitive in terms of quality and price and suitable to consumers’ different

spending habits.

In some cases, the concession agreements in force may be terminated or cease to be in force for

several reasons beyond the WDFG’s control, including an order by the competent authorities or

courts nullifying them, or the licensors not granting their prior approval to transactions resulting in a

change in control of a member of the Group.

In general, the Group mitigates this risk by following an approach aimed at building and

maintaining a clear long-term partnership arrangement with the concession grantor, based in part

on the development of concepts and commercial solutions that maximize the overall gain.

Risks associated with events that may affect passenger traffic and their spending attitudes

WDFG’s activity largely relies on the sales to passengers in transit through the airports in which the

Group is present. The Group performance, therefore, is influenced by the evolution in the travelers’

spending attitudes and shows a significant correlation with the variation in the number of

passengers. The travelers’ spending attitudes and passenger traffic are both highly sensitive to the

general economic trends and, in particular, the trends in consumers’ confidence, the availability

and costs of consumer credit, inflation or deflation, interest and exchange rates and the

unemployment levels.

Particularly, impulse buying at an airport is strongly influenced by the exchange rate between the

country of origin and the destination. It is essential to monitor the price perceived by the customer


as a result of exchange rate fluctuations, in order to boost sales of products that are especially

good value in certain countries.

The Group’s widespread operations around the globe, and its constant attention to product supply

and demand in countries of origin and destination, help it identify the advantage customers will

perceive from favorable rates of exchange, mitigating in practice this risk.

Furthermore, passenger traffic is also sensitive to events beyond the WDFG’s control, including for

example: political instability, acts or threats of terrorism, hostilities or wars, increased security

control time, fuel price escalations, emerging alternatives to air travel (such as high speed rail),

strikes, disruption or suspension of services provided by airlines, amongst others.

Any event that may adversely impact air travelers’ spending attitudes, their dwelling time at the

airport and passenger traffic (such as those mentioned above) may negatively affect the WDFG’s

sales thus may adversely affect the WDFG’s financial-economic condition and assets.

Risks associated with the changes to the regulations governing the duty-free sale of products and the sector in which WDFG operates

The ability to operate under the duty-free regime is a competitive advantage for WDFG vis-a-vis

those operators who cannot take advantage of this regime. Nevertheless, the respective

governmental authorities of the countries where WDFG operates may amend or suppress the

implementation of the duty-free regime for some categories of products, or modify the taxation

regime applied to the products sold in traditional shops outside the airports, thus eliminating part of

WDFG’s competitive advantage. Furthermore, if the requirements for granting, maintaining or

renewing certifications, licenses and authorizations to operate duty-free shops in airports are

modified, and WDFG is not able to adapt to the new requirements, the Group may lose the

authorization to operate under the duty-free regime, in general, in one of the markets where it

operates or with respect to certain categories of products.

Particularly, sale of tobacco is heavily regulated and, as a general matter, the applicable

regulations of the countries where the Group operates, or its concession agreements, impose

some advertising and/or sale restrictions of tobacco products. Moreover, an increasing number of

national and local governments have prohibited, or are proposing to prohibit, smoking in public

places.

As the sale of tobacco represents an important share of the Group’s revenues, if the Group were

no longer able to sell tobacco products under the duty-free regime in general or in some of the

markets where it is present, or if the tightening of the ban on smoking caused a reduction in the

sales of these products, the WDFG’s financial-economic condition and assets may be adversely

affected.

To mitigate these risks, with the support of external specialists, WDFG stays constantly abreast of

legal developments so it can adapt its processes, procedures and controls to the new requirements

and bring personnel up to date. It also relies on constant monitoring and frequent audits of service

quality with respect to contractual and legal obligations.

Risks associated with the loss of reputation by the Group towards licensors, clients and customs and fiscal authorities

Reputation towards both clients and licensors has great importance for the WDFG. Reputation of

the Group towards the licensors and also the clients represents one of the key elements based on

which licensors grant or renew concession agreements. The reputation of WDFG towards clients


could be negatively affected by the reduction of the perceived quality of the services rendered, with

a consequent loss of appeal and clients; the reputation of WDFG towards licensors could be

negatively affected by the inability of the same to fulfill its contractual obligations. In addition the

reputation of the Group could also be affected by third parties’ conduct; for instance, in those

countries where it operates through management agreements with local partners, by such

partners’ conduct.

In relation to the above risks, during the years, WDFG obtained and maintained a good reputation

towards both the licensors and the clients. An implicit confirmation of the good reputation of the

Group is represented by its ability, during the years, to renew its expiring concession agreements

and to obtain new ones.

Furthermore, WDFG monitors constantly the quality of the services rendered to clients (in terms of

perceived satisfaction and product safety) and to licensors (in terms of compliance with the

quantitative and qualitative parameters set forth in the agreements).

Risks associated with the Group operation in emerging markets

WDFG is present in some emerging markets which in 2013, generated 13.9% of the consolidated

revenue. The Group´s strategy envisages expanding in further emerging markets, which typically

present higher risks as compared to the OECD area markets. Among the most significant risks of

operating in these countries are those arising from the interruption of operation due to political or

social instability, in addition to the establishment/enforcement of foreign exchange restrictions

which, if they were to occur, could effectively prevent the Group from repatriating the profits. If

these risks occur, they may adversely affect the implementation of the WDFG’s strategy in these

markets.

Risks associated with specific provisions contained in the concession agreements entered into by members of WDFG

The concession agreements to which the members of WDFG are party contain provisions limiting

the WDFG concessioner’s ability to perform its activities in the relevant airports, including but not

limited to, restrictions on the range of products to be offered for sale and to the applicable pricing

policy.

Furthermore, the concession agreements typically entitle the licensors, even when the licensee is

not in breach, to unilaterally modify certain terms of the concession (sometimes without any

corresponding indemnification right), for reasons of public interest or airport safety.

By virtue of these clauses, which do not relate to the determination of the concession charges, the

licensors may, among other things, modify the extension or the location of the WDFG stores, which

could reduce the flow of passengers through them.

Among other things, the need to comply with these conditions may prevent the Group from

appealing or capturing of its clients, thus adversely affecting the financial and economic situation

and the assets of the Group.

Even if these risks exist, in the last three financial years none of the concession agreements

entered into by WDFG has been unilaterally modified by the relevant licensor.

The concession agreements of the travel retail sector, and also many of those entered into by

WDFG are typically for initial fixed term periods and generally provide for the licensee obligation to

pay guaranteed minimum annual charges, not always in relation with the revenues actually


generated or the flow of passengers. If the revenue generated by a concession is lower than that

foreseen when the concession was acquired (even due to a reduction in the passengers spending

attitude or, in some instances, in the number of passengers itself), the profitability of the

concession may decrease or even become negative due to the obligation to pay the guaranteed

minimum annual charges, thus adversely affecting the Group’s financial-economic condition and

assets.

Risks associated with product procurement

The risks associated with product procurement can be ascribed to two main factors: the degree of

concentration WDFG shows with regard to some suppliers and the complexity of effectively

managing the supply chain so as to continuously ensure a complete, balanced and effective

assortment of products, meeting the consumer’s expectations.

It should be noted, however, that airport commercial areas are an appealing distribution channel

for the suppliers, which enhances WDFG bargaining power.

Furthermore, as regards the main suppliers that are also brand partners of the Group, the

collaborative approach the Group has adopted with these suppliers may further reduce their

interest in taking advantage of their potential bargaining power.

Risks associated with the defined benefit pension plan of WDFG UK Ltd

The Group has pension obligations through its subsidiary WDFG UK Ltd (the Company) who

sponsors a funded defined benefit pension plan (the Plan) for qualifying UK employees. The Plan

is administered by a separate board of Trustees which is legally separate from the Company. The

Trustees are composed of representatives of both the employer and employees. The Trustees are

required by law to act in the interest of all relevant beneficiaries and are responsible for the

investment policy with regard to the assets plus the day to day administration of the benefits.

Under the Plan, employees are entitled to annual pensions on retirement at age 65 of one-sixtieth

of final pensionable salary for each year of service. Pensionable salary is defined as basic salary

less the Basic State Pension. Benefits are also payable on death and following other events such

as withdrawing from active service. No other post-retirement benefits are provided to these

employees.

The last funding valuation of the Plan was carried out by a qualified actuary as at April 5, 2011.

The Company agreed to pay deficit contributions and the next funding valuation is due no later

than April 5, 2014 at which progress towards full-funding will be reviewed

The Plan exposes the Company to a number of non controllable risks, the most significant of which

are: i) asset volatility: the liabilities are calculated using a discount rate set with reference to

corporate bond yields; if assets underperform this yield, this will create a deficit; ii) changes in bond

yields: a decrease in corporate bond yields will increase the value placed on the Plan's liabilities for

accounting purposes, although this will be partially offset by an increase in the value of the Plan’s

bond holdings; iii) inflation risk: a significant proportion of the Plan’s benefit obligations are linked to

inflation, and higher inflation will lead to higher liabilities; and iv) life expectancy: the majority of the

Plan’s obligations are to provide benefits for the life of the member, so increases in life expectancy

will result in an increase in the liabilities.

The Company remains exposed to risks from the Plan, as part of the pension strategy the

Company and Trustees have agreed a long-term strategy to reduce pension risks over time, based

on criteria set by the Company achieved through a package of liability reduction and investment


measures. As part of this strategy, the Trustees of the Plan entered into a bulk annuity transaction

with Legal & General on March 28, 2013 such that Legal & General would pay to the Trustees the

future pension payments of all pensioners and dependants who retired on or before September

2012.

1.7.3 Corporate Governance

All information on corporate governance is included in the Corporate Governance Report (prepared

in accordance with art. 123-bis of the Consolidated Finance Act), part of this Annual Report. It is

also available online at www.worlddutyfreegroup.com.

1.7.4 Management and coordination

The Board of Directors held on December 13, 2013 considered that WDF S.p.A. is not subject to

management and coordination by the parent company, Edizione S.r.l., pursuant to art. 2497-bis of

the Italian Civil Code.

The Board of Directors, also taking into consideration the short period of the company’s activities,

considered the relations heretofore occurred with Edizione S.r.l. (through Schematrentaquattro

S.p.A.) do not provide evidences for management and coordination activity.

1.7.5 Related party transactions

With the execution of the deed of demerger on September 26, 2013, filed for registration with the

Novara Companies’ Register on September 27, 2013, Autogrill S.p.A., the assigning company,

transferred to WDF S.p.A. – the beneficiary company fully owned by Autogrill S.p.A. and

incorporated on March 27, 2013 specifically for the demerger’s implementation (“WDF” or

“Beneficiary Company”) – the Autogrill Group’s operations in the sector Travel Retail & Duty Free

and more specifically the entire interest held by Autogrill S.p.A. in the Spanish company World

Duty Free Group S.A.U. (“WDFG SAU”), the parent company of a group operating in this sector,

through which Autogrill S.p.A. operated the mentioned above activities (the “Demerger”). The

partial proportional demerger became effective on October 1, 2013.

For further information about the Demerger please refer to, also to this Directors’ Report and to the

illustrative notes to the consolidated financial statements and to the separate financial statements,

the information document related to the Demerger and prepared in accordance with Article. 57 (I)

of Consob Regulation 11971 of May 14, 1999 issued on September 27, 2013 on the WDF website

(www.worlddutyfreegroup.com) and on Borsa Italiana website (www.borsaitaliana.it), (the

“Information Document”).

Other transactions with the Group’s related parties do not qualify as atypical or unusual and fall

within the normal sphere of operations. They are conducted in the interests of WDF S.p.A. and the

WDFG on an arm’s length basis.

See the section “Other information” in the notes to the consolidated financial statements and to the

separate financial statements for further information on related party transactions, including the

disclosures required by Consob Resolution 17221 of 12 March 2010 (amended with Resolution

17389 of 23 June 2010).

http://www.worlddutyfreegroup.com/

http://www.borsaitaliana.it/


The “Procedure for related party transactions” is available online at www.worlddutyfreegroup.com.

1.7.6 Statement pursuant to art. 2.6.2 (10) of the Regulations for Markets Organized and Managed by Borsa Italiana S.p.A.

In respect of art. 36 of Consob Regulation no. 16191 of 29 October 2007 on conditions for the

listing of companies that control entities formed or governed under the laws of countries outside

the European Union that are of material significance to the consolidated financial statements, we

report that four companies fall under these provisions (Aldeasa Jordan Duty Free Shops Ltd, World

Duty Free Group US Inc, World Duty Free North America LLC, Aldeasa Mexico de CV), that

suitable procedures have been adopted to ensure full compliance with said rules, and that the

conditions stated in art. 36 have been satisfied.

1.7.7 Research and development

In relation to the nature of its activities, the Group invests in innovation and improvements to the

quality of services. It does not conduct technological research as such.

1.7.8 Treasury shares

At December 31, 2013, WDF S.p.A. does not held treasury shares.

Its subsidiaries do not own equity or other instruments representing the share capital of WDF

S.p.A., and did not at any time during the year, either directly or through trust companies or other

intermediaries.

WDF S.p.A. and its subsidiaries, as of December 31, 2013 do not own equity or other instruments

representing the share capital of the ultimate parents, and did not at any time during the year,

either directly or through trust companies or other intermediaries.

1.7.9 Significant non-recurring events and transactions

Except for the partial proportional demerger of Autogrill S.p.A. in favor of WDF S.p.A., during 2013

there were no significant non-recurring events or transactions as defined by Consob Resolution

15519 of 27 July 2006 and Consob Communication DEM/6064293 of 28 July 2006.

1.7.10 Atypical or unusual transactions

In 2013 there were no atypical and/or unusual transactions as defined by Consob Communications

DEM/6037577 of April 28, 2006 and DEM/6064293 of July 28, 2006, unless the partial proportional

demerger of Autogrill S.p.A. in favor of WDF S.p.A., as communicated to the market, in accordance

with Consob Regulation 11971 of May 11, 1999.


1.7.11 Reconciliation between parent and consolidated equity

in thousand of Euro

Equity as of

March 27,

2013

Changes in

equityDemerger

Profit (loss)

for 2013

Equity as of

December 31,

2013

WDF S.p.A. separate financial statements 130,0 (8.954,6) 428.878,0 (958,4) 419.094,9

Effect of the consolidation of subsidiaries' financial

statements and related deferred taxation- 359.883,9 (428.878,0) 106.784,7 37.790,6

Translation reserve - (44.903,2) - - (44.903,2)

Hedging reserve* - (999,1) - - (999,1)

Group consolidated financial statements 130,0 305.027,0 - 105.826,3 410.983,2

Equity attributable to non-controlling interests 3.102,5 - 5.049,0 8.151,5

Total consolidated equity 130,0 308.129,4 - 110.875,3 419.134,7

* Net of tax effects

1.7.12 Shareholders’ Meeting

The Board of Directors, in accordance with art. 2364(2) of the Italian Civil Code and art. 21 of the

by-laws, has decided to call the Annual General Meeting of shareholders within the extended

deadline of 180 days after the end of the business year, in consideration of needs and obligations

relating to the preparation of the consolidated financial statements and taking account of the

extraordinary transaction carried out during the year ended December 31, 2013.


1.8 Proposal for approval

Proposal for approval of the financial statements and allocation of the 2013 loss

Dear Shareholders,

The year ended December 31, 2013 closed with a loss of Euro 958,417.

Recommending, for all further details, consultation of the financial statements published and made

available according to the protocol set by law, the Board of Directors submits for your approval the

following

motion

“The Annual General Meeting of shareholders:

• having examined the financial statements at and for the year ended December 31, 2013, which

close with a loss of Euro 958,417;

• having acknowledged the reports of the Board of Statutory Auditors and of the independent

auditors, KPMG S.p.A.;

hereby resolves

a) to approve the financial statements of World Duty Free S.p.A. at and for the year ended 31

December 2013, showing a loss of Euro 958,417;

b) to carry forward the loss for the year, in the amount of Euro 958,417.”

March 10, 2014

The Board of Directors

World Duty Free S.p.A. – Part II - Consolidated financial statements as of December 31, 2013

PART II – CONSOLIDATED FINANCIAL STATEMENTS

1. Consolidated financial statements

1.1 STATEMENT OF FINANCIAL POSITION

In thousands of Euro

2013of which related

parties 2012*

of which related

parties

ASSETS

Current assets 283,450 2,031 221,757 437

Cash and cash equivalents 2.4.1 22,772 - 18,684 -

Other financial assets 2.4.2 12,994 - 12,720 -

Tax assets 2.4.3 13,019 - 7,798 -

Other receivables 2.4.4 41,595 2,013 12,164 399

Trade receivables 2.4.5 36,477 18 27,929 38

Inventories 2.4.6 156,593 - 142,462 -

Non-current assets 1,639,759 - 1,372,496 -

Property, plant and equipment 2.4.7 131,100 - 80,355 -

Investment property 2.4.8 6,556 - 6,932 -

Goodwill 2.4.9 617,234 - 605,117 -

Other intangible assets 2.4.10 550,478 - 622,874 -

Investments 2.4.11 8,822 - 9,136 -

Other financial assets 2.4.12 32,228 - 3,975 -

Deferred tax assets 2.4.13 29,100 - 30,091 -

Other receivables 2.4.4 264,241 - 14,016 -

TOTAL ASSETS 1,923,209 2,031 1,594,253 437

LIABILITIES AND EQUITY

LIABILITIES 1,504,074 21,671 996,055 71,526

Current liabilities 432,928 21,671 370,348 1,526

Trade payables 2.4.14 235,493 15,529 203,843 -

Tax liabilities 2.4.15 18,351 - 18,694 -

Other payables 2.4.16 88,948 2,287 70,693 1,447

Other financial liabilities 2.4.17 6,278 3,855 876 79

Due to banks 2.4.20 71,915 - 63,839 -

Provisions for risks and charges 2.4.22 11,943 - 12,403 -

Non-current liabilities 1,071,146 - 625,707 70,000

Other payables 2.4.18 2,752 - 2,000 -

Other financial liabilities 2.4.19 1,751 - 76,408 70,000

Loans, net of current portion 2.4.20 982,519 - 439,299 -

Deferred tax liabilities 2.4.13 63,939 - 90,924 -

Defined benefit plan 2.4.21 11,904 - 10,222 -

Provisions for risks and charges 2.4.22 8,281 - 6,854 -

EQUITY 419,135 (4,006) 598,198 (3,664)

- attributable to owners of the parent 2.4.23 410,983 (4,006) 595,541 (3,664)

- attributable to non-controlling interests 2.4.23 8,152 - 2,657 -

TOTAL LIABILITIES AND EQUITY 1,923,209 17,664 1,594,253 67,862

As of December 31,

Notes

* The combined comparative figures for the year ended December 31, 2012 have been prepared in accordance with paragraph "Basis of preparation of the financial information"


1.2 INCOME STATEMENT


2013*of which related

parties 2012*

of which related

parties

Revenue 2.5.1 547,017 - 2,078,477 24 2,001,973 -

Other operating income 2.5.2 6,819 - 26,016 319 26,607 1,191

Total revenue and other operating income 553,836 - 2,104,493 343 2,028,580 1,191

Supplies and goods 2.5.3 (222,958) - (847,711) - (819,989) -

Personnel expense 2.5.4 (67,189) - (220,810) 610 (205,891) -

Leases, rentals, concessions and royalties 2.5.5 (169,217) - (657,459) - (615,470) -

Other operating expense 2.5.6 (33,697) (1,521) (123,674) (4,267) (124,894) (2,599)

Depreciation and amortization 2.5.7 (24,776) - (90,708) - (112,379) -

Impairment losses on property, plant and equipment and intangible assets (566) - (569) - (287) -

Operating profit 35,433 (1,521) 163,562 (3,314) 149,670 (1,408)

Financial income 2.5.8 3,219 - 10,801 - 817 2

Financial expense 2.5.8 (13,808) - (45,060) (692) (19,290) (2,258)

Impairment and revaluation of financial assets 2.5.9 (119) - 2,041 - 1,844 -

Pre-tax profit 24,725 (1,521) 131,344 (4,006) 133,041 (3,664)

Income tax 2.5.10 (4,906) - (20,469) - (30,029) -

Profit for the year 19,819 (1,521) 110,875 (4,006) 103,012 (3,664)

Profit for the year attributable to:

- owners of the parent 16,480 (1,521) 105,826 (4,006) 100,727 (3,664)

- non-controlling interest 3,339 - 5,049 - 2,285 -

Earnings per share (in Euro cents) 2.5.11- basic 6.47 41.58 39.59- diluted 6.47 41.58 39.59

Notesof which related

parties

For the period

from March 27,

2013 to December

31, 2013

For the twelve months periods ended 31 December

* The combined economic figures for the twelve months periods ended 31 December 2013 and 2012 have been prepared in accordance with paragraph "Basis of preparation of the financial information"

1.3 STATEMENT OF COMPREHENSIVE INCOME


2013* 2012*

Profit for the year 19,819 110,875 103,012

Items that will not be subsequently reclassified to profit or loss

Remeasurement of the defined liability (asset) 2.4.21 (3,474) (11,980) (5,235)

Tax on items that will not be reclassified to profit or loss 2.4.21 634 2,253 1,204

Total items that will not be subsequently reclassified to profit

or loss(2,840) (9,727) (4,031)

Items that will be reclassified subsequently to profit or loss

Effective portion of fair value change in cash flow hedges 2.4.23 1,479 4,658 (2,463)

Foreign currency translation differences for foreign operations 2.4.23 (4,207) (23,308) 10,642

Gains (losses) on net investment hedge 2.4.23 (826) 6,208 (6,760)

Tax on items that will be reclassified subsequently to profit or loss 2.4.23 (196) (3,260) 2,767

Total items that will be reclassified subsequently to profit or

loss(3,750) (15,702) 4,186

Total comprehensive income for the year 13,229 85,446 103,167

- attributable to owners of the parent 9,737 80,268 100,818

- attributable to non-controlling interests 3,492 5,178 2,349

* The combined economic figures for the twelve months periods ended 31 December 2013 and 2012 have been prepared in accordance with paragraph "Basis

of preparation of the financial information"

For the period from

March 27, 2013 to

December 31, 2013

For the twelve months periods ended

December 31,Notes


1.4 STATEMENT OF CHANGES IN EQUITY (note 2.4.23)


Reserve Hedging reserve Translation reserveEquity attributable to

owners of the parent

Equity attributable to

non-controlling

interests

Equity

Balance as of January 1, 2012* 592,866 (2,534) (25,648) 564,684 1,635 566,319

Comprehensive income for the period

Profit for the year 100,727 100,727 2,285 103,012

Effective portion of fair value change in cash flow hedges, net of tax effect (1,724) (1,724) (1,724)

Translation differences on foreign investments 8,881 1,697 10,578 64 10,642

Gains (losses) on net investment hedge, net of tax effect (4,732) (4,732) (4,732)

Remeasurement of the defined liability (asset), net of tax effect (4,031) (4,031) (4,031)

Total comprehensive income for the period 105,577 (1,724) (3,035) 100,818 2,349 103,167

Contributions by and distributions to owners of the parent

Dividend distribution (70,000) (70,000) (1,327) (71,327)

Changes in consolidated Group and other movements (5) (5) (5)

Share-based payments 44 44 44

Total contributions by and distributions to owners of the parent (69,961) 0 0 (69,961) (1,327) (71,288)

Balance as of December 31, 2012* 628,482 (4,258) (28,683) 595,541 2,657 598,198

* The combined economic figures for the twelve months periods ended 31 December 2013 and 2012 have been prepared in accordance with paragraph "Basis of preparation of the financial information"


Share Capital Legal reserve Reserve Hedging reserveTransalation

reserve

Equity

attributable to

owners of the

parent

Equity

attributable to

non-controlling

interests

Equity

Balance as of January 1, 2013* - - 628,482 (4,258) (28,683) 595,541 2,657 598,198

Comprehensive income for the period

Profit for the year - - 105,826 - - 105,826 5,049 110,875

Effective portion of fair value change in cash flow hedges, net

of tax effect

- - - 3,259 - 3,259 - 3,259

Translation differences on foreign investments - - (2,870) - (20,567) (23,437) 129 (23,308)

Gains (losses) on net investment hedge, net of tax effect - - - - 4,347 4,347 - 4,347

Remeasurement of the defined liability (asset), net of tax

effect

- - (9,727) - - (9,727) - (9,727)

Total comprehensive income for the period - - 93,229 3,259 (16,220) 80,268 5,178 85,446

Contributions by and distributions to owners of the

parentIncorporation of WDF SpA (March 27 2013) 120 - 10 - - 130 - 130

Demerger effect 63,600 12,720 (76,320) - - - - -

Transaction costs for the issuance and the listing of the shares - - (8,956) - - (8,956) - (8,956)

Dividend distribution - - (220,000) - - (220,000) (1,080) (221,080)

Changes in consolidated Group and other movements - - (35,962) - - (35,962) 1,397 (34,565)

Share-based payments - - (38) - - (38) - (38)

Total contributions by and distributions to owners of the

parent63,720 12,720 (341,266) - - (264,825) 316 (264,509)

Balance as of December 31, 2013* 63,720 12,720 380,445 (999) (44,903) 410,983 8,152 419,135

* The combined financial figures for the twelve months periods ended 31 December 2013 and 2012 have been prepared in accordance with paragraph "Basis of preparation of the financial information"

In thousand of Euro

Share Capital Legal reserve Reserve Hedging reserveTransalation

reserve

Equity

attributable to

owners of the

parent

Equity

attributable to

non-controlling

interests

Equity

Balance as of March 27, 2013* - - - - - - - -

Incorporation of WDF SpA (March 27 2013) 120 - 10 - - 130 - 130

Demerger effect 63,600 12,720 377,644 (2,033) (42,885) 409,045 6,297 415,342

Transaction costs for the issuance and the listing of the shares - - (8,956) - - (8,956) - (8,956)

Comprehensive income for the period March 27, 2013 -

December 31, 2013

Profit for the period March 27, 2013 - December 31, 2013 - - 16,480 - - 16,480 3,339 19,819

Effective portion of fair value change in cash flow hedges, net of

tax effect for the period March 27, 2013 - December 31, 2013- - - 1,034 - 1,034 - 1,034

Transalation differences on foreign investments for the period

March 27, 2013 - December 31, 2013- - (2,919) - (1,441) (4,360) 153 (4,207)

Gain (losses) on net investment hedge, net of tax effect for the

period March 27, 2013 - December 31, 2013- - - - (577) (577) - (577)

Remeasurement of the defined liability (asset), net of tax effect for

the period March 27, 2013 - December 31, 2013- - (2,840) - - (2,840) - (2,840)

Total comprehensive income for the period March 27, 2013 -

December 31, 2013 - - 10,721 1,034 (2,018) 9,737 3,492 13,229

Contribution by and ditribution to owners of the parent

Dividends distribution - - - - - - (1,020) (1,020)

Change in Group Consolidated area - - 1,097 - - 1,097 (617) 480

Share-base payments costs for the period March 27, 2013 -

December 31, 2013- -

(71) - - (71) -(71)

Totale contribution by and ditribution to owners of the

parent - - 1,026 - - 1,026 (1,638) (611)

Balance as of December, 31 2013* 63,720 12,720 380,445 (999) (44,903) 410,983 8,152 419,135

* The combined financial figures for the twelve months periods ended 31 December 2013 and 2012 have been prepared in accordance with paragraph "Basis of preparation of the financial information"


1.5 STATEMENT OF CASH FLOWS


2013* 2012*

Opening cash and cash equivalents 2.4.1 - 18,684 45,358

Pre-tax profit and net financial expense for the period 35,314 165,603 151,514

Amortization, depreciation and impairment losses on non-current assets,

net of reversals 2.5.725,342 91,277 112,666

Adjustments and (gains)/losses on disposal of financial assets 2.5.7 119 (2,041) (1,844)

(Gains)/losses on disposal of non-current assets 27 488 969

Change in working capital (26,682) (20,159) (7,273)

AENA Advances (Net) 7,835 (261,925) -

Net change in non-current non-financial assets and liabilities 10,790 13,087 (5,722)

Cash flows from / (used in) operating activities 52,745 (13,670) 250,310

Taxes paid (19,960) (50,800) (42,470)

Interest paid (12,330) (31,582) (18,349)

Net cash flows from / (used in) operating activities 20,455 (96,052) 189,491

Acquisition of the US Retail Division (2,015) (76,124) -

Acquisition of property, plant and equipment and intangible assets 2.4.7-10 (30,218) (49,689) (28,407)

Proceeds from sale of non-current assets 79 152 117

Net change in non-current financial assets (158) (26,077) (1,589)

Net cash flows from / (used in) investing activities (32,312) (151,738) (29,879)

Opening of new non-current loans 2.4.19-20 114,198 1,124,922 -

Repayments of non-current loans 2.4.19-20 (93,800) (645,111) (122,235)

Repayments of current loans, net of new loans 2.4.19-20 (744) 5,973 6,277

Dividends paid 2.4.23 (80) (220,080) (71,327)

Tansaction costs for the issuance and the listing of the shares (5,681) (5,681)

Capital contribution 2.4.23 130 130 -

Other cash flows (7,647) (6,834) 730

Net cash flows from / (used in) financing activities 6,376 253,319 (186,555)

Net increase / (decrease) in cash and cash equivalents (5,481) 5,529 (26,943)

Demerger effect 29,694 - -

Effect of exchange rate fluctuation on net cash and cash equivalents (1,441) (1,441) 269

Closing cash and cash equivalents 2.4.1 22,772 22,772 18,684

* The combined financial figures for the twelve months period ended 31 December 2013 and 2012 have been prepared in accordance with

paragraph "Basis of preparation of the financial information"

For the period

from March 27,

2013 to December

31, 2013

For the twelve months

periods ended December 31,

Notes


2. Notes to the consolidated financial statements

Group operation

World Duty Free S.p.A. (hereafter also referred to as “WDF S.p.A.”) is a public limited company

organized in accordance with the laws of the Italian Republic. The WDF S.p.A.’s registered office is

located in Novara, Via Greppi 2. The secondary office is located in Milan, Corso di Porta Vittoria,

16.

WDF S.p.A. and its subsidiaries (the “WDF Group”) are engaged, almost exclusively at airport

venues, in the sale of fragrances and cosmetics, spirits, tobacco products and other items with

“duty free” and “duty paid” tax status (“Travel Retail & Duty Free” sector).

The WDF Group operates stores throughout the world in the following geographic regions: (i)

United Kingdom; (ii) rest of Europe (mainly Spain, but also Italy and Germany); (iii) Americas

(Brazil, Canada, Chile, Curaçao, Jamaica, Mexico, Peru and United States of America); and (iv)

Asia and Middle East (Jordan, Kuwait, India, Sri Lanka and Cape Verde).

The WDF Group runs its activities under the duty free and the duty paid regimes. In particular,

under the duty free regime, goods sold are exempt from import taxes, customs and other taxes

while under the duty paid regime, import taxes and other taxes are applied to the goods sold. As

regarding the stores managed in the European Union, in accordance with Directive 91/689/CEE of

December 16, 1991 the duty paid regime applies if the passenger’s final destination is domestic or

a European Union member state, while the duty free regime applies if the passenger’s final

destination is outside of the European Union.

The airport stores are typically operated pursuant to concession agreements entered into by the

airport authorities (as licensors) and the group (as licensee). The conditions, duration and fees

payable are established in each of the concession agreements, the most significant of which are

those signed with AENA and former BAA Airports Limited in the case of Spain and the United

Kingdom, respectively.

WDF S.p.A. was incorporated on March 27, 2013 and registered with the Novara Company

Register from April 3, 2013. The duration of the company is fixed at December 31, 2070 and may

be extended on one or more occasions. The consolidated financial statements of the WDF Group

for the year ended December 31, 2013 are the first consolidated financial statements of the

company.

Demerger of Autogrill S.p.A. in favor of WDF S.p.A.

On October 1, 2013 the partial proportional demerger of Autogrill S.p.A. in favor of WDF S.p.A. (the

“Demerger”) became effective, following the resolutions of the respective shareholders’ meetings

on June 6, 2013.

The project of the Demerger was prepared jointly by Autogrill S.p.A. and WDF S.p.A. boards of

directors pursuant to Sections 2506-bis and 2501-ter of the Civil Code and was approved by those

boards of directors on May 3, 2013. The project of the Demerger was made available on Autogrill’s


website on May 4, 2013. The deed of Demerger was executed on September 26, 2013 and it was

filed for registration with the Novara Companies’ Register on September 27, 2013.

The purpose of the Demerger was pre-eminently industrial and is aimed to separate the two

sectors, Food & Beverage and Travel Retail & Duty Free, in which Autogrill Group operated,

considering that these two sectors have substantially different features from each other, both in

terms of market and competitive context of reference, as well as in terms of dynamic management

and development strategies; the two sectors are also managed independently and no significant

synergies connect one to the other. These features are reflected in the different historical and

projected results of the two sectors and development strategies that they will enact in the coming

years.

The Demerger aimed to create two distinct groups, focused in their own businesses, and will allow

each of them to better pursue its strategies and improve its performance by leveraging their

respective strengths.

With the Demerger, Autogrill S.p.A. transferred to WDF S.p.A. its investment in World Duty Free

Group SAU (“WDFG SAU”), a parent company of a group operating in the Travel Retail & Duty

Free sector (“Group WDFG SAU”).

As a result of the Demerger, on October 1, 2013, the net assets of WDF S.p.A. increased by Euro

428,878 thousand and, at the same time, the net assets of Autogrill S.p.A. decreased by the same

amount. Therefore, the shareholders of Autogrill S.p.A. received, for no consideration, shares in

WDF S.p.A. in the same number and of the same class of those previously held in Autogrill S.p.A..

Since October 1, 2013 the shares of WDF S.p.A. and of Autogrill S.p.A. have been listed

separately on the MTA (Mercato Telematico Azionario) in Milan.

The two companies operate separately and independently and are related parties because they

are both subsidiaries of Schematrentaquattro S.p.A., which holds, as at December 31, 2013 50.1%

of the share capital of Autogrill S.p.A. and 50.1% of the share capital of WDF S.p.A..

Schematrentaquattro S.p.A. has changed its legal status from Schematrentaquattro S.r.l. during

2013. Schematrentraquattro S.p.A. is fully owned by Edizione S.r.l..

Basis of preparation of the financial information

As already reported in the previous paragraph, WDF S.p.A. has been established on March, 27

2013. Therefore, the company has prepared the first consolidated financial statements for the

period from the incorporation date and December 31, 2013, closing date of the financial year (the

“Consolidated Financial Statements”).

For the purpose of the Demerger, WDF S.p.A. has prepared and issued on September 26, 2013

the information document, pursuant to Article 57, paragraph 1, letter d) of the Issuers Regulation

(the “Information Document”) for the admission to trading on the MTA of all the shares of WDF, in

order to make available information deemed by Consob equivalent to the information contained in

a listing prospectus.

The Demerger, with the effective date October 1, 2013 is considered a "business combination

involving entities or businesses under common control". It is therefore excluded from the

application of IFRS 3 and IFRIC 17 and has been recognized applying the continuity of values

principle.


WDFG SAU has prepared the consolidated financial statements for the year ending at December

31, 2013 and 2012 in accordance with the International Financial Reporting Standards endorsed

by the European Union (EU-IFRSs).

Taking into consideration the interpretation and accounting literature regarding the business

combinations “under common control” and in order to better understand the financial information of

the WDF Group, the Consolidated Financial Statements also report the following information:

i. in the column “for the period from March 27, 2013 to December 31, 2013” included in the

income statement, statement of comprehensive income and cash flows statement, the

financial and economic information of WDF S.p.A. for the period from March 27, 2013 to

December 31, 2013 and of the Group WDFG SAU for the period from October 1, 2013, the

Demerger’s effective date, to December 31, 2013;

ii. in the column “for the twelve months period ended December 31, 2013” included in the

income statement, statement of comprehensive income and cash flow statement, the

combined financial and economic results of the WDF Group for the full 2013 year,

irrespectively of the Demerger’s effective date. This column represents, therefore, the

economic and financial results of WDF S.p.A. for the period from March 27, 2013 to

December 31, 2013 and the consolidated results of the Group WDFG SAU for the twelve

months period ended December 31, 2013;

iii. in the column “for the twelve months period ended December 31, 2012” included in the

income statement, statement of comprehensive income and cash flow statement the

combined economic and financial information of Group WDFG SAU subject to the

Demerger for the twelve months ended December 31, 2012, based on the combined

financial statements for the years ended December 31, 2012, 2011 and 2010 included in

the Information Document.

In order to better understand the economic and financial information included in the consolidated

financial statements, the table below is reported:

"For the period from March 27, 2013 to

December 31, 2013"

"For the twelve months period ended

31 december 2013"

"For the twelve months period ended

31 december 2012"

accounting data of WDF S.p.A. for the

year 2013 (from March 27, 2013 to

December 31, 2013)

+

consolidated data of WDFG SAU for the

period from October 1, 2013 (Demerger's

effective date) to December 31, 2013

accounting data of WDF S.p.A. for the

year 2013 (from March 27, 2013 to

December 31, 2013)

+

consolidated data of WDFG SAU for the

period from January 1, 2013 to December

31, 2013

consolidated financial data of WDFG

SAU as of December 31, 2012

Data presented in the 2013 Consolidated financial statements

Furthermore, in the column “as of December 31, 2012” included in the statement of financial

position, are represented the financial information of Group WDFG SAU subject to the Demerger

for the twelve months ended December 31, 2012, based on the historical data included in the

Autogrill S.p.A. consolidated financial statements as of December 31, 2012 and in the Information

Document, adjusted to take into consideration the impact of the IAS 19 revised.


The combined data as of December 31, 2012 contain some reclassifications compared with

combined data presented in the Information Document, as set out below:

i. the liabilities related to the defined contributions plan has been reclassified from “Employee

benefit plan” to “Other payables” current for Euro 874 thousand;

ii. the fair value of interest rate hedging derivatives has been reclassified from “Other financial

liabilities” current to “Other financial liabilities” non current for Euro 6,408 thousand; and

iii. the receivables from credit card companies has been reclassified from “Other receivables”

current to “Other financial assets” current for Euro 12,449 thousand. Cash flow statement

has been modified consequently.

Furthermore, the effect of the application of the IAS 19 revised is shown in the following table:

In thousands of Euro Combined data as of

December 31, 2012

included in the

Information Document

Effects of the application

of the IAS 19 revised

Combined data as of

December 31, 2012 -

revised

Deferred tax assets 27,877 2,214 30,091

Defined benefit plan assets 7,103 (7,103) -

Deferred tax liabilities 92,557 (1,633) 90,924

Defined benefit plan liabilities 595 9,627 10,222

Equity - attributable to owners of the parent 608,424 (12,883) 595,541

On September 6, 2013, the WDF Group acquired from companies under common control the

business “US Retail” as better specified in the following note 2.2. The economic and financial

effects of this acquisition have been represented in the income statement, statement of

comprehensive income and cash flow statement columns “for the period from March 27, 2013 to

December 31, 2013” and “for the twelve months period ended December 31, 2013” of the

Consolidated Financial Statements from its effective date. For further information, refer to note 2.2.

The items relating to transactions between companies remaining within the Autogrill S.p.A. Group

post Demerger and the companies within the WDF Group are presented in the Consolidated

Financial Statements as transactions with related parties.

Based on what reported above, the illustrative notes included in the Consolidate Financial

Statements report the balances as of December 31, 2013 and 2012 with regard the financial

information of the WDF Group and the economic data for the period from March 27 to December

31, 2013 and for the twelve months periods ended December 31, 2013 and 2012 with regard to the

income statement, total comprehensive income, cash flows statement and statement of changes in

equity information.

The 2013 tables representing movement of assets and liabilities included in the illustrative notes

include an interim balance as of September 30, 2013, in order to represent the effect of the

Demerger.

2.1 ACCOUNTING POLICIES AND BASIS OF CONSOLIDATION

The main valuation criteria and significant accounting policies adopted in the preparation of these

consolidated financial statements are described below. These accounting principles have been

consistently applied to all the years presented in this document, unless otherwise stated.


General standards

The Consolidated Financial Statements have been prepared in accordance with International

Financial Reporting Standards (International Accounting Standards – IAS and International

Financial Reporting Standards – IFRS) issued by the International Financial Reporting Standards

Board and endorsed by the European Union (EU-IFRSs), supplemented by the respective

interpretations (Standing Interpretations Committee – SIC and International Financial Reporting

Interpretations Committee – IFRIC) (all of the abovementioned standards and interpretations are

being hereinafter referred to as the “IFRSs”).

The abbreviation EU-IFRSs shall mean all International Financial Reporting Standards, all

“International Accounting Standards” (IAS), all interpretations of the International Reporting

Interpretations Committee (IFRIC), previously called ‘Standing Interpretations Committee’ (SIC),

that, on the date these consolidated financial statements were approved, had been endorsed by

the European Union in accordance with the procedure set forth in EC Regulation No. 1606/2002

endorsed by the European Parliament and the European Council on July 19, 2002. Moreover,

please note that the EU-IFRSs were applied consistently for all of the periods presented in this

document.

The Consolidated Financial Statements have been prepared in accordance with the resolutions

regarding the financial statement presentation format adopted by CONSOB in implementation of

Article 9 of Legislative Decree No. 38/2005 and other CONSOB regulations and resolutions

concerning financial statements.

The Consolidated Financial Statements have been prepared under the historical cost convention,

except for the items that, in accordance with IFRS, are measured at fair value, as specified in the

individual accounting policies below, and in accordance with the going concern assumption. They

have been prepared with clarity and to give a true and fair view of the financial position, results of

operations and cash flows of the WDF Group.

New standards and interpretations not yet applicable

The table below lists the IFRS, interpretations, amendments to existing standards and

interpretations or specific provisions contained in standards or interpretations approved by the

IASB, showing those that were endorsed and not endorsed by the European Union as of the date

of the preparation of the Consolidated Financial Statements.


Description

Endorsed by the

EU at the date of

the financial

statements

Effective date

IFRS 9 “Financial instruments” NO Annual periods beginning on or after January 1, 2018

Annual improvements to IFRSs 2011-2013 Cycle NO Annual periods beginning on or after January 1, 2014

Amendments to IFRS 10, IFRS 12 and IAS 27 on

consolidation for investment entitiesDecember 2013 Annual periods beginning on or after January 1, 2014

Amdendements to IAS 36 "Impairment of assets" on

recoverable amounts disclosuresDecember 2013 Annual periods beginning on or after January 1, 2014

Financial instruments: Recognition and Measurement -

Amdendements to IAS 39 "Novation of Derivatives"December 2013 Annual periods beginning on or after January 1, 2014

Amendments to IFRS 10, IFRS 11 and IIFRS 12: Consolidated

Financial Statements, Joint Arrangements and Disclosure of

Interest in Other Entities - Transition Giudance

April 2013 Annual periods beginning on or after January 1, 2014

Amendment to IAS 32 “Financial instruments Presentation”

Offsetting financial assets and financial liabilitiesDecember 2012 Annual periods beginning on or after January 1, 2014

IFRS 10 "Consolidated Financial Statements" December 2012 Annual periods beginning on or after January 1, 2014

IFRS 11 "Joint Arrangements" December 2012 Annual periods beginning on or after January 1, 2014

IFRS 12 "Disclosure of interests in Other Entities" December 2012 Annual periods beginning on or after January 1, 2014

IAS 27 "Separate Financial Statements" December 2012 Annual periods beginning on or after January 1, 2014

IAS 28 "Investments in Associates and Joint Ventures" December 2012 Annual periods beginning on or after January 1, 2014

The WDF Group is in the process of assessing the impact that the adoption of these standards

could have on its financial statements. However, based on a preliminary analysis, no significant

effects should arise from the application of the above mentioned accounting standards.

Structure, format and content of the consolidated financial statements

The WDF Group made the following choices regarding the presentation format and content of the

financial statements:

i. in the statement of financial position, current and non-current assets and liabilities are

shown separately;

ii. in the income statement, costs and revenue are classified by nature;

iii. the statement of comprehensive income is presented separately;

iv. the statement of cash flows is presented in accordance with the indirect method.

The presentation formats used, as described above, are those best suitable to present the results

of operations, financial position and cash flows of the WDF Group.

These consolidated financial statements are denominated in Euro, the presentation currency of the

WDF Group.

The amounts shown in the financial statement schedules and the detail included in the

accompanying notes are in thousands of Euro, unless otherwise stated.


Consolidation scope and criteria

Consolidation area

The companies included in the consolidation area of WDF Group are listed in the Annex “List of

consolidated companies”. The US Retail Division entered the scope of consolidation of Group

WDFG SAU during the course of 2013. See paragraph 2.2 for details about the US Retail

acquisition.

Subsidiaries

Subsidiaries are companies in which the WDF Group has the power directly or indirectly to govern

financial and operating policies and to receive the resulting benefits.

Control may be exercised through direct or indirect ownership of the majority of voting rights, or

through contractual or legal agreements, regardless of the type of investment. When assessing

whether control exists, the existence of potential exercisable voting rights at the statement of

financial position date is considered.

In general, control is assumed to exist when the WDF Group holds directly or indirectly more than

50% of the voting rights.

Subsidiaries are fully consolidated from the date on which the WDF Group obtains control over the

company up to the date on which control is transferred to a third party. The financial statements of

the companies included in the consolidated area of WDF Group have been adjusted, where

necessary, in order to ensure compliance with the accounting policies of the WDF Group.

Subsidiaries are fully consolidated on a line by line basis as follows:

i. the assets and liabilities, revenue and costs of the subsidiaries are consolidated line by line

and the proportionate share of equity and profit (loss) are allocated to non−controlling

interests where applicable; equity and profit (loss) attributable to non−controlling interests

are reported separately in equity, the income statement and the statement of

comprehensive income;

ii. the WDF Group applies the acquisition method to business combinations except for those

under common control. Under the acquisition method, the consideration transferred in a

business combination is measured at fair value, calculated as the sum of the fair value of

the assets transferred and of the liabilities assumed by the WDF Group on the date of

acquisition and the equity instruments issued in exchange for control of the company

acquired. Costs related to the acquisition are recorded in the statement of comprehensive

income as incurred. The identifiable assets acquired and the liabilities assumed are

recognized at fair value on the acquisition date, except for the following items which are

recognized in accordance with their relevant accounting policy:

deferred tax assets and liabilities;

employee benefit assets and liabilities;

liabilities or equity instruments relating to share-based payments of the company acquired or to payments based on the shares of the WDF Group, issued to replace contracts of the company acquired;

assets held for sale and discontinued operations.


For each business combination, any non-controlling interest in the acquiree is measured at

fair value or in proportion to the non-controlling interests in the acquiree's net identifiable

assets. Goodwill arising from the acquisition is recognized as an asset and is initially

measured as the excess between the consideration transferred, the amount of any non-

controlling interest in the acquire and the acquisition date fair value of any previously equity

interest in the acquire over the fair value of the identifiable assets acquired and the

identifiable liabilities assumed. In case of a business combination achieved in stages, the

interest previously held in the acquiree is remeasured at its acquisition-date fair value and

any resulting gain or loss is recognized in profit or loss.

iii. significant gains and losses, with the related tax effects, arising from transactions made

between fully consolidated companies, and not yet realized with third parties, are

eliminated, unless the transaction provides evidence of impairment of the asset transferred.

Intercompany payables and receivables, costs and revenues, and financial income and

expenses are also eliminated if significant.

World Duty Free Group North America, LLC and its subsidiaries close their fiscal year on the

Friday closest to December 31 and divide it into 13 four-week periods, which in turn are grouped

into 12- week quarters with the exception of the last which is a 16-week quarter. As a result, the

accounts included in the 2013 consolidated financial statements cover the period September 7,

2013 (acquisition date) to January 4, 2014.

Associates

An associate is a company over which the Group has a significant influence, but not control or joint

control, through participation in decisions regarding the associate’s financial and operational

policies.

The associate’s income, expenses, assets and liabilities are recognized in the consolidated

financial statements at equity, except where the investment is classified as held for sale.

Under this method investments in associates are initially recognized at cost, adjusted to reflect

subsequent changes in the associates’ net assets and any impairment losses on individual equity

investments.

The amount by which the acquisition cost exceeds the Group’s share of the fair value of the

associate’s assets, liabilities and contingent liabilities identifiable on acquisition is recognized as

goodwill.

Business combinations under common control

Business combinations in which all of the combining entities or businesses are ultimately controlled

by the same party or parties both before and after the business combination and such control is not

transitory, are considered business combinations involving entities “under common control”.

Business combinations under common control are excluded from the scope of IFRS 3 ‘‘Business

Combinations’’, which governs the accounting for business combinations, and from other IFRS. In

the absence of an applicable accounting standard, such transactions should be accounted for

considering the requirements of IAS 8, ensuring the reliable and faithful representation of the

transaction. The accounting principles chosen to account for business combinations under

common control should reflect the economic substance of the transaction, independent of the legal

form. The key driver when considering the accounting treatment is the economic effect of the


transaction, which should make reference to an increase in value which should be realized as a

significant variation in cash flows of the net assets transferred.

In relation to the accounting treatment of the transaction, the Group also follows the current guiding

principles and interpretations, in particular the guidance set out by OPI 1 (ASSIREVI preliminary

guidelines regarding IFRS) ‘‘Business combinations of entities under common control in separate

and consolidated financial statements’’.

The WDF Group recognises net assets transferred in a business combination under common

control based on the pre-acquisition net book value as presented in the consolidated financial

statements of the common parent company and recognizes the difference between the

consideration amount and the net asset value as an adjustment to the consolidated shareholders’

equity reserves attributable to the WDF Group.

Foreign currency transactions

Translation of the financial statements of foreign entities

The financial statements of each company in the scope of consolidation are prepared in the

currency of its primary location. For the purpose of the consolidated financial statements, the asset

and the liabilities of foreign subsidiaries with a functional currency other than the euro (including

goodwill and fair value adjustments generated by the acquisition of a foreign business) are

translated at the rates prevailing at year end. Income and expense are converted at average

exchange rates for the year. Exchange differences are recognized in the statement of

comprehensive income and shown under “translation reserve” in the statement of changes in

equity.

Below are the main exchange rates used to translate the financial statements of the main

subsidiaries with a functional currency other than the euro:

Rate on 31

December

Average rate for

the year

Rate on 30

September

Average rate for

first nine

months

Rate on 31

December

Average rate for

the year

US dollar 1.379 1.328 1.351 1.317 1.319 1.285

British pound 0.834 0.849 0.836 0.852 0.816 0.811

Canadian dollar 1.467 1.368 1.391 1.349 1.314 1.284

Mexican peso 18.045 16.965 17.846 16.706 17.185 16.906

2013 20122013

Translation of foreign currency denominated transactions and balances

Foreign currency transactions are translated into the functional currency using the transaction date

exchange rate. Monetary assets and liabilities denominated in foreign currencies are translated

into the functional currency based on the exchange rate at the reporting date. Exchange rate gains

and losses are recorded in the income statement.

Cash and cash equivalents

Cash and cash equivalents include cash and current accounts with banks and post offices, as well

as demand deposits and other highly liquid short-term financial investments (maturity of three

months or less on the acquisition date) that are immediately convertible to cash; they are stated at

face value as they are subject to no significant risk of impairment.


Trade and other current and non-current receivables

Trade receivables and other receivables are initially recognized at fair value, and subsequently at

amortized cost using the effective interest method. They are reduced by estimated impairment

losses.

In accordance with IAS 39, factored receivables are derecognized if the contract entails the full

transfer of the associated risks and rewards (contractual rights to receive cash flows from the

asset). The difference between the carrying amount of the asset transferred and the amount

received is recognized in the income statement.

Other financial assets

“Other financial assets” are recognized or derecognized on the transaction date and are initially

measured at fair value, including direct acquisition costs.

Subsequently, the financial assets that the Group has the intention and capacity to hold to maturity

(held to maturity investment) are measured at amortized cost net of impairment losses.

Financial assets other than those held to maturity are classified as held for trading or available for

sale and are measured at each reporting date at fair value. If the financial assets are held for

trading, gains and losses arising from changes in fair value are recognized in that year's income

statement. Fair value gains and losses on other financial assets available for sale are recognized

directly in comprehensive income and presented under equity until they are sold or impaired. In

this case total gains or losses previously recognized in equity are taken to the income statement.

Inventories

Inventories are recognized at the lower of purchase cost and market value. Purchase cost includes

directly attributable expenses, net of discounts, calculated using the average cost method. When

the carrying amount of inventories is higher than their net realizable value, they are written down

and an impairment loss is recognised in the income statement. The recoverability of inventories is

tested at the end of each year. If the reasons for the impairment loss cease to apply, they are

reversed to an amount not exceeding purchase cost.

Property, plant and equipment and investment property

Property, plant and equipment and investment property are recognized when it is probable that use

of the asset will generate future benefits and when the cost of the asset can be reliably determined.

They are stated at purchase price or production cost, including ancillary charges and direct or

indirect costs to the extent that can reasonably be attributed to the asset.

Property, plant and equipment and investment property are systematically depreciated on a

straight-line basis at rates deemed to reflect their estimated useful lives. The WDF Group reviews

the useful life of property, plant and equipment and investment property annually. Cost includes

reasonably estimated expenses (if compatible with IAS 37) that are likely to be incurred on expiry

of the relevant contract to restore the asset to the contractually agreed condition, assuming that

maintenance will continue to be carried out properly and with the usual frequency. Components of

significant value or with a different useful life (50% longer or shorter than that of the asset to which

the component belongs) are considered separately when determining depreciation.


The depreciation periods used are as follows:

Estimated useful life

Buildings and investment property 25-50 years

Plant and machinery 3-15 years

Other equipment 4 years

Furniture 4-10 years

Electronic machinery 4-10 years

Motorvehicles 6 years

Other 4-10 years

Land is not depreciated.

An asset's useful life is reviewed annually and is changed when maintenance work during the year

has involved enhancements or replacements that materially change its useful life.

Regardless of depreciation already recognized, if there are impairment losses (determined as

described under “Impairment losses on assets”), the asset is written down accordingly.

Costs incurred to enhance and maintain an asset that produce a material and tangible increase in

its productivity or safety or extend its useful life are capitalized and increase the carrying amount of

the asset. Routine maintenance costs are taken directly to the income statement.

Leasehold improvements are included in property, plant and equipment on the basis of the type of

cost incurred. They are depreciated over the asset's residual useful life or the term of the contract,

whichever is shorter.

The gain or loss from the sale of property, plant or equipment or investment property is the

difference between the net proceeds of the sale and the asset’s carrying amount, and is

recognized under “Other operating income” or “Other operating expense”.

Goodwill

Goodwill arising from the acquisition of subsidiaries is shown separately in the statement of

financial position.

Goodwill is not amortized, but is subject to impairment testing on a yearly basis or when specific

events or changed circumstances indicate the possibility of a loss in value. After its initial

recognition, goodwill is measured at cost net of any accumulated impairment losses. For more

details please refer to the following paragraph “Impairment losses on assets”.

Upon the sale of a company or part of a company whose previous acquisition gave rise to goodwill,

the residual value of the goodwill is taken into consideration in order to determine gain or loss from

the sale.

Other intangible assets

“Other intangible assets” are recognized at purchase price or production cost, including ancillary

charges, and amortized on a systematic basis over their useful life when it is likely that use of the

asset will generate future economic benefits.

The WDF Group reviews the estimated useful life and amortization method of these assets

annually and whenever there is evidence of possible impairment losses. If impairment losses arise


- determined in accordance with the section "Impairment losses on assets" - the asset is impaired

accordingly.

The following are the amortization periods used for the various kinds of intangible asset:


Concessions 7-20 years

Licenses and trademarks 5-20 years

Software 3 years

Other Term of the right

Leased assets

Lease contracts are classified as finance leases if the terms of the contract are such to transfer all

risks and benefits of ownership to the lessee. All other lease contracts are treated as operating

leases.

Assets acquired under finance leases are recognized at fair value as of the commencement date of

the contract less ancillary charges and any expenses for replacing another party in the lease, or, if

lower, at the present value of the minimum payments due under the contract. The corresponding

liability to the lessor is charged to “Other financial liabilities”. Lease payments are divided into

principal and interest, using a constant interest rate over the life of the contract. Financial expenses

are recognized in the income statement.

Operating lease payments are recognized over the term of the lease. Benefits received or to be

received, and those given or to be given, as incentives for taking out operating leases are

recognized on a straight-line basis over the term of the lease.

Impairment losses on assets

Annually, or when specific events or changed circumstances indicate the possibility of a loss in

value, the WDF Group evaluates whether there is internal or external evidence of impairment of its

property, plant and equipment or intangible assets with definite useful life. If so, the recoverable

amount of the assets is estimated to determine any impairment loss. Where it is not possible to

estimate the recoverable amount of an individual asset, the WDF Group estimates the recoverable

amount of the cash-generating unit to which the asset belongs; a cash-generating unit (CGU) is a

group of assets that generates cash flows largely independent from other assets or groups of

assets. With regard to property, plant and equipment used in the sales network, this minimum

aggregation unit is the sales outlet or sales outlets covered by a single concession agreement.

Goodwill and intangible assets are tested for impairment at each reporting date and any time there

is evidence of possible impairment. The cash-generating units to which goodwill has been

allocated are grouped so that the level of detection of impairment reflects the lowest level at which

goodwill is monitored for internal reporting purposes, though reflecting the maximum level of this

aggregation represented by the operating segment. Goodwill acquired in a business combination is

allocated to the cash-generating units expected to benefit from the synergies of the combination.

Group management performs impairment test as follows: i) the recoverable amount is calculated

for each cash-generating unit, although in the case of property, plant and equipment, whenever

possible, impairment is calculated for each individual item; ii) the recoverable amount is the higher

of fair value less costs to sell and value in use. In determining value in use, the estimated future


cash flows are discounted to their current value using a pre-tax rate that reflects current market

assessments of the time value of money and the risks specific to the asset.

Every year senior management prepares a five-year business plan, by market and activity, for

each CGU. The main components of this plan are profit and loss projections and investment and

working capital projections. Other factors which affect the calculation of recoverable amount are: i)

the discount rate to be applied, understood to be the weighted average cost of capital, which is

mainly influenced by the cost of liabilities and the specific risks of the assets; and ii) the cash flows

growth rate used to extrapolate the cash flow projections beyond the period covered by the

budgets and forecasts.

The projections are prepared on the basis of past experience and the best estimates available,

which are consistent with external sources of information.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its

carrying amount, it is reduced to the recoverable amount. Impairment losses are recognized in the

income statement.

Impairment losses on cash-generating units are first deducted from the carrying amount of any

goodwill attributed to the unit; any remainder is deducted from the other assets of the unit (or group

of units) in proportion to their carrying amount.

If the reason for the impairment no longer exists, the asset or cash-generating unit is written back

to the new estimate of recoverable amount (except in the case of goodwill), which may not exceed

the carrying amount net of depreciation/amortization that the asset would have had if the

impairment loss had not been recognised. The reversal of impairment is taken to the income

statement.

Based on the Group’s organizational structure and activities, the cash-generating units are

essentially the same as the geographical areas.

Trade payables

Trade payables are initially recognized at fair value (normally the same as face value) net of

discounts, returns or billing adjustments, and of all directly attributable ancillary costs, and

subsequently at amortized cost, if the financial effect of payment deferral is material.

Loans and borrowings

Interest-bearing loans, bank loans and current account overdrafts are initially recognized at fair

value taking account of the amounts received, net of transaction costs, and are subsequently

measured at amortized cost using the effective interest method, if the financial effect of payment

deferral is material.

Provisions for employee benefits

All employee benefits are recognized and disclosed on an accruals basis.

WDF Group companies provide defined benefit and defined contribution plans.

Post-employment benefit plans are formalized and non-formalized agreements whereby the WDF

Group provides post-employment benefits to one or more employees. The manner in which these

benefits are provided varies according to legal, fiscal and economic conditions in the countries in

which the WDF Group operates, and are normally based on compensation and years of service.


Defined-contribution plans are post-employment benefit plans under which the WDF Group pays

pre-determined contributions to a separate entity (a fund) and will have no legal or constructive

obligation to pay further contributions should the fund have insufficient assets to pay all benefits to

employees.

Defined benefit plans are post-employment benefit plans other than defined contribution plans.

Defined benefit plans may be unfunded or else entirely or partly funded by contributions paid by

the employer, and sometimes by the employee, to a company or fund which is legally separate

from the company that pays the benefits.

The amount accrued is projected forward to estimate the amount payable on termination of

employment and is then discounted using the projected unit credit method, to account for the time

that will elapse before actual payment occurs.

The liability is recognized in the accounts net of the fair value of any plan assets. If the calculation

generates a benefit for the WDF Group, the amount of the asset recognized is limited to the sum of

any unrecognized cost for previous employment and the present value of economic benefits

available in the form of refunds from the plan or reductions in future contributions to the plan. To

establish the present value of these economic benefits, the minimum funding requirements

applicable to any Group plan are considered. An economic benefit is available to the Group when it

can be realized throughout the duration of the plan or upon settlement of the plan liabilities.

Actuarial valuations are made by actuaries outside the WDF Group.

Remeasurements arising from experience adjustments and changes in actuarial assumptions are

charged or credited to equity in other comprehensive income in the period in which they arise.

Past-service costs are recognised immediately in income.

Provisions for risks and charges

Provisions are recognized when the WDF Group has a present obligation as a result of a past

event and will likely have to use resources in order to produce economic benefits that satisfy that

obligation, and when the amount of the obligation can be reliably determined.

Provisions are based on the best estimate of the cost of fulfilling the obligation as of the reporting

date, and when the effect is material, are discounted to their present value.

An onerous contracts provision is recognized when the unavoidable costs necessary to fulfill the

obligations of a contract are greater than the economic benefits the WDF Group can expect to

obtain thereon. The provision is measured at the present value of the lower of the cost of

terminating the contract and the net cost of continuing with the contract. Before a provision is

established, the WDF Group recognizes any impairment losses on the assets associated with the

contract.

A provision for restructuring is recognized when the Group has approved a detailed and formal

restructuring plan, and the restructuring has either commenced or been publicly announced. Future

operating losses are not provided for.


Equity

Share capital

The share capital is composed wholly of ordinary shares.

Costs for equity transactions

Transaction costs directly attributable to equity transactions are accounted for and deducted from

equity.

Recognition of revenue and costs

Purchases and sales of goods are recognized on transfer of ownership at fair value, i.e., the price

paid or received net of returns, rebates, sales discounts and year-end bonuses.

Revenue is recognized when the risks and the rewards connected to ownership of the goods are

transferred to the buyer, recovery of the consideration is probable, the associated costs or possible

return of the goods can be estimated reliably, there is no continuing management involvement with

the goods, and the amount of the revenue can be accurately measured. If it is probable that

discounts will be granted and the amount can be measured reliably, the discount is charged as a

reduction of revenue when the sale is recognized.

The transfer of the risks and rewards varies with the type of sale made. In the case of a retail sale,

the transfer generally takes place when the goods are delivered and the consumer has paid the

consideration asked. In the case of wholesale transactions, the transfer usually coincides with the

arrival of the products in the client’s warehouse.

Service revenue and costs are recognized according to the stage of completion at year end. Stage

of completion is determined according to measurements of the work performed.

When the services covered under a single contract are provided in different years, the

consideration will be broken down by service provided on the basis of the relative fair value.

Recoveries of costs borne on behalf of third parties are recognized as a deduction from the related

cost.

Recognition of financial income and expense

Financial income includes interest on invested liquidity (including available for sale financial

assets), dividends received, proceeds from the transfer of financial assets available for sale, fair

value changes in financial assets recognized in profit or loss, income arising from a business

combination due to the remeasurement at fair value of the interest already held, gains on hedging

instruments recognized in profit or loss, and the reclassification of net gains previously recognized

in other comprehensive income.

Interest income is recognized on an accruals basis using the effective interest method. Dividends

are recognized when the WDF Group's right to receive them is established.

Financial expense includes interest on loans, discounting on provisions and deferred income,

losses from the sale of available for sale financial assets, fair value changes in financial assets at

fair value through profit or loss and in contingent consideration, impairment losses on financial

assets (other than trade receivables), losses on hedging instruments recognized in profit or loss,

and the reclassification of net losses previously recognized in other comprehensive income.


Borrowing costs that are not directly attributable to the purchase, construction or production cost of

an asset that justifies capitalization are recognized in profit or loss for the year using the effective

interest method.

Net exchange rate gains or losses on financial assets/liabilities are shown under financial income

and expense on the basis of the net gain or loss produced by foreign currency transactions.

Income tax

The tax expense for the year is the sum of current and deferred taxes recognized in the profit or

loss for the year, with the exception of those relating to business combinations or items recognized

directly in equity or in other comprehensive income.

Current tax is calculated on taxable income for the year. The taxable profit differs from the result

reported in the income statement because it excludes costs and income that will be deducted or

taxed in other years, as well as items that will never be deducted or taxed and tax credit. Current

tax liabilities are determined using the enacted tax rates in effect (on an official or de facto basis)

on the reporting date in the countries where the WDF Group operates.

Deferred tax liabilities are generally recognized for all taxable temporary differences, while deferred

tax assets are recognized to the extent that future taxable profit is likely to be earned allowing use

of the deductible temporary differences. Specifically, the carrying amount of deferred tax assets is

reviewed at each reporting date based on the latest forecasts as to future taxable income.

Deferred tax assets and liabilities are not recognized if the temporary differences arise from the

initial recognition of goodwill or, for transactions other than business combinations, of other assets

or liabilities in transactions that have no influence either on accounting profit or on taxable profit.

Deferred tax liabilities are recognized on taxable temporary differences relating to equity

investments in subsidiaries, associates or joint ventures, unless the WDF Group is able to monitor

the reversal of the temporary differences and they are unlikely to be reversed in the foreseeable

future.

Deferred tax assets and liabilities are measured using the tax rate expected to apply at the time the

asset is realized or the liability is settled, taking account of the tax rates in force at the close of the

year or approved and not yet in force. Deferred tax assets are recognized when they are likely to

be used against taxable income.

Deferred tax assets and liabilities are offset when there is a legal right to offset current tax

balances, when they pertain to the same tax authorities, and when the WDF Group plans to settle

its current tax assets and liabilities on a net basis.

WDFG Italia S.r.l. (formerly Alpha Retail Italia S.r.l.) and WDF S.p.A. agreed to be included in the

national tax consolidation scheme of Edizione S.r.l., respectively for the three-year period from

2011 to 2013 and for the three-year period from 2013 to 2015, in accordance with provisions of the

consolidated Income Tax Act. The regulation signed by the parties provides for payment in full of

the amount corresponding to the transferred losses or profits times the IRES (corporate tax) rate,

as well as the transfer of any tax assets. In particular, any fiscal losses will be transferred whereby

Edizione S.r.l. would utilize them within the tax consolidation scheme.

The net current tax asset or liability for the year, in respect of IRES only, will be therefore

recognised as a receivable or payable due from/to Edizione S.r.l. and will be therefore not shown

under tax assets or liabilities but under “Other receivables” or “Other payables”.


Earnings per share

The Group presents basic and diluted earnings per share for its ordinary shares. Basic earnings

per share is calculated by dividing the profit or loss attributable to ordinary shareholders of WDF

S.p.A. by the weighted average number of ordinary shares outstanding during the period, adjusted

for treasury shares held. Diluted earnings per share is determined by adjusting the profit or loss

attributable to ordinary shareholders and the weighted average number of ordinary shares

outstanding, as defined above, for the effects of all dilutive potential ordinary shares.

Derivative financial instruments and hedge accounting

The WDF Group’ s liabilities are exposed primarily to financial risks due to changes in interest and

exchange rates. To manage these risks, the Group uses financial derivatives, mainly in the form of

interest rate swap, forward rate agreements, and combination of these. The use of derivatives is

governed by Group policies approved by the WDF S.p.A.’s Board of Directors, which establish

precise written procedures concerning the use of derivatives in accordance with the Group’s risk

management strategies. Derivative contracts have been entered into with counterparties deemed

to be financially solid, with the aim of reducing default risk to a minimum. Group companies do not

use derivatives for purely trading purposes, but rather to hedge identified risks. Please refer to note

4 “Financial risk management” for further explanation.

In accordance with IAS 39, derivative financial instruments qualify for hedge accounting only if: (i)

at the inception of the hedge there is formal designation and documentation of the hedging

relationship, and the hedge is assumed to be effective; (ii) effectiveness can be reliably measured

(the actual effectiveness is within a range of 80%-125%); (iii) the hedge is effective throughout the

financial reporting periods for which it was designated.

All derivative financial instruments are initially measured at fair value, with the related transaction

costs recognized in profit or loss when incurred. They are subsequently carried at fair value. More

specifically, the fair value of forward exchange contracts is based on the listed market price, where

available. If a listed market price is not available, then fair value is estimated by discounting the

difference between the contractual forward price and the current spot rate for the residual maturity

of the contract using a risk-free interest rate (based on government securities).

For interest rate swaps, fair value is determined using the cash flows estimated on the basis of the

conditions and remaining life of each contract, and according to the year-end market interest rates

of comparable instruments.

Fair value changes are measured as described below. When financial instruments qualify for

hedge accounting, the following rules apply:

(i) Fair value hedge: if a derivative financial instrument is designated as a hedge against changes

in the fair value of a recognized asset or liability attributable to a particular risk that may affect

profit or loss, the gain or loss arising from subsequent fair value measurement of the hedge is

recognized in the income statement. The gain or loss on the hedged item attributable to the

hedged risk adjusts its carrying amount and is recognized in profit or loss;

(ii) Cash flow hedge: if a financial instrument is designated as a hedge against exposure to

variations in the future cash flows of a recognized asset or liability or a forecast transaction

that is highly probable and could affect profit or loss, the effective portion of the gain or loss on

the financial instrument is recognized in comprehensive income and presented in the "hedging

reserve" under equity. The cumulative gain or loss is reclassified from comprehensive income


and recognized in profit or loss in the same year in which the hedged transaction is

recognized. Fair value gains and losses associated with a hedge (or part of a hedge) which

has become ineffective are recognized in the income statement immediately. If a hedge or a

hedging relationship is terminated, but the hedged transaction has not yet taken place, the

gains or losses accrued up to that time in the statement of comprehensive income are

reclassified to profit or loss as soon as the transaction occurs. If the transaction is no longer

expected to take place, the gains or losses not yet realized that have been included in

comprehensive income are reclassified immediately to profit or loss;

(iii) Hedge of net investment: if a derivative is designated as a hedge of a net investment in a

foreign operation, held directly or indirectly through an intermediary holding company, the

effective portion of the gain or loss on the hedge is recognized in comprehensive income and

presented in the "translation reserve" under equity, while the ineffective portion is taken to

profit or loss. On disposal of the foreign operation, the gain or loss on the effective portion of

the hedge that has been cumulatively recognized in the translation reserve is also taken to

profit or loss.

If hedge accounting does not apply, the gains or losses arising from measurement at fair value of

the financial derivative are immediately recognized in the income statement.

Share-based payments

The grant-date fair value of share-based payment awards granted to employees is recognized in

personnel expense, with a corresponding increase in equity, over the period in which the

employees become unconditionally entitled to the awards. The amount recognized as an expense

is adjusted to reflect the number of awards for which the related service and non-market

performance conditions are expected to be met, such that the amount ultimately recognized as an

expense is based on the number of awards that meet those conditions at the vesting date. For

share-based payments with non-vesting performance conditions, the grant date fair value of the

share-based payment is measured to reflect such conditions and there is no true-up for differences

between expected and actual conditions.

The fair value of the amount payable to employees in respect of share appreciation rights, which

are settled in cash, is recognized as an expense with a corresponding increase in liabilities over

the period that the employees become unconditionally entitled to payment. The liability is re-

measured at each reporting date and at settlement date based on the fair value of the share

appreciation rights. Any changes in the liability are recognized as employee benefit expenses in

the income statement.

Use of estimates

The preparation of the consolidated financial statements and notes requires Group management,

on the basis of the IFRS requirements, to make estimates and assumptions that affect the carrying

amounts of assets, liabilities, costs and income and the disclosure about contingent assets and

liabilities at the reporting dates. Actual results may differ. Estimates are used to determine the

effects of business combinations, asset impairment, the fair value of derivatives, allowances for

impairment and inventory write down, amortization and depreciation, employee benefits, tax and

other provisions. Estimates and assumptions are periodically reviewed and the effect of any

change is taken to the income statement of the current and future years.


2.2 BUSINESS COMBINATIONS

The acquisition of the US Retail Division

On July 2013, World Duty Free Group US Inc (a subsidiary of WDF S.p.A.) and WDFG SAU

entered into a purchase agreement with HMS Host Corporation and its subsidiary Host

International Inc (both subsidiaries of Autogrill S.p.A.) in relation to the sale of 248 convenience

stores located in 29 US airports (the “US Retail Division”).

On September 6, 2013 the retail business activities, for which the authorization was granted by the

landlords, were acquired by the WDF Group. The corresponding purchase price was USD 105

million, equal to 87.8% of the maximum consideration initially agreed in the event of all the retail

concessions managed by HMS Host Corporation were transferred. The 5% of the purchase price

was retained from the WDF Group as set out in the contract, as guarantee for a period of nine

months from the date of the closing. Any subsequent closing will be made once the necessary

authorization has been granted by the landlords. The initial consideration was increased in USD 18

million, as an adjustment based on the net working capital at acquisition date. The transaction was

fully funded using the new loan signed on May 30, 2013 described in note 2.4.20.

As part of the acquisition of the US Retail Division, an agreement was executed for the supply from

HMS Host Corporation to WDFG SAU and its subsidiaries, until 31 March 2015, of several services

(including accounting, IT, personnel management services and other administrative support

services) in order to allow WDF Group to effectively carry out the activities of the recently acquired

US Retail Division.

The acquisition of the US Retail Division is a business combination under common control and it

has been accounted for in accordance with the accounting principles reported in the section above.

Therefore, the assets and the liabilities of the acquired entity are reflected at their carrying amount

in the WDF Group consolidated financial statements. The difference between the consideration

paid and the net assets acquired has been recorded as a decrease in equity for an amount of Euro

35.9 million.

The table that follows summarizes the assets and liabilities of the US Retail Division at the acquisition date:

In thousands of USD September 7, 2013

Property and equipment, net 26,476

Goodwill and intangible assets 33,241

A) Non-current assets 59,717

Inventories 16,814

Other current assets 10,246

Trade and other current lilabilities (10,634)

B) Working capital 16,426

C) Other non-current non-financial assets and liabilities (1,689)

D) Net invested capital 74,454

Equity attributable to owners of the parent 73,270

Equity attributable to non-controlling interests 2,720

E) Equity 75,990

F) Net financial position (1,536)

G) Total, as in D) 74,454

Acquisition cost 123,279

Effect on consolidated equity 50,009


The acquisition has generated tax assets not recognized, amounting to about Euro 14.5 million.

The revenue and the operating profit included in the consolidated income statement since

September 6, 2013 contributed by the US Retail Division was, respectively Euro 44.8 million and

Euro -2.5 million. The US Retail Division also contributed net profit of Euro -1.1 million over the

same period.

2.3 OTHER SIGNIFICANT EVENTS

The AENA agreements

On 29 June 2012, AENA, in accordance with the principles foreseen in Law 31/2007 for the

procedure negotiated, issued a public call to tender for the “Travel Retail” activity under the “Duty

Free” and “Duty Paid” systems in premises allocated by AENA Aeropuertos, S.A. for this business

for the period 2013-2020. On 18 December 2012 the directors of AENA agreed to award the new

contracts for the three airport groups to the WDF Group.

On February 2013, following the award in December 2012 of tenders for the award of concessions

to operate until 2020 duty free and duty paid travel retail activities at 26 airports in Spain, the

companies World Duty Free Group España S.A. and Sociedad de Distribución Comercial

Aeroportuaria de Canarias S.L., subsidiaries of WDF, and AENA executed the corresponding

agreements (the “AENA Agreements”).

On February 2013, in execution of the above mentioned contracts, AENA received: (i) the sum of

Euro 278,933 thousand (plus VAT amounting to Euro 58,576 thousand) as advance payment of a

portion of the concession fees payable over the duration of the contracts; and (ii) Euro 27,318

thousand as a security deposit. The advance payment will be gradually recovered by means of

deductions from the concession fees payable over the duration of the AENA Agreements based on

a calendar agreed between the parties. The security deposit will be refunded at the end of the

concession agreements.

Pursuant to the terms of the AENA Agreements, a bank guarantee was provided to AENA on

behalf of the WDF Group. For additional details, please see the more comprehensive information

provided in note 8 “Guarantees provided, commitments and contingent liabilities.”

The contract establishes the payment of rents on sales, as well as an additional rent for the

support surfaces, as well as investment commitments of Euro 94 million throughout the life of the

contract.


2.4 NOTES TO THE STATEMENT OF FINANCIAL POSITION

Current assets

2.4.1 Cash and cash equivalents

The table that follows shows a breakdown of “Cash and cash equivalents”:


Cash and cash equivalents 2013 2012

Bank and cash deposits 20,098 17,077 3,022

Cash and equivalents on hand 2,674 1,607 1,067

Total 22,772 18,684 4,089

As of December 31,Change

“Bank and cash deposits” mainly consist of bank accounts.

“Cash and cash equivalents on hand” includes cash floats at the stores and the amounts in the

process of being credited to bank accounts. The amount may vary substantially, depending on the

frequency of cash receipt pickups at the stores, generally handled by specialized carriers.

2.4.2 Other financial assets

“Other financial assets” amounting to Euro 12,994 thousand (Euro 12.720 thousand as of

December 31, 2012) mainly include receivables for credit cards for Euro 12,886 thousand as of

December 31, 2013 (Euro 12,449 thousand as of December 31, 2012).

2.4.3 Tax assets

The item amounts to Euro 13,019 thousand (7,798 thousand as of December 31, 2012) and

reflects advance payments made to tax authorities and tax credits, mainly for corporate income

tax.

2.4.4 Other receivables

The table below shows a breakdown of “Other receivables”:


Other receivables 2013 2012

Lease and concession advance payments 27,050 5,482 21,568

Inland revenue and government agencies 8,378 3,427 4,951

Other 6,167 3,255 2,912

Total current 41,596 12,164 29,431

Lease and concession advance payments 263,304 12,662 250,642

Other 937 1,354 (417)

Total non-current 264,241 14,016 250,225


“Lease and concession advance payments” refers to lease installments paid in advance to the

airport authorities where the WDF Group operates. As of December 31, 2013, the balance mainly

includes the advance payments given to the Jordan and Kuwait airport authorities and to the


Spanish airport authority (AENA). The non-current portion related to AENA advances amounts to

Euro 252,881 thousand. Please refer to note 2.3 for further details.

“Inland revenue and government agencies” refers mainly to indirect tax refunds receivable.

“Other” includes prepayments of maintenance fees, insurance policies and amounts rebilled to

Autogrill companies for the provision of services, mainly involving technical support.

2.4.5 Trade receivables

A breakdown of “Trade receivables” is provided below:


Trade receivables 2013 2012

Trade receivables versus suppliers 28,207 22,344 5,863

Trade receivables versus customers 10,309 7,789 2,520

Allowance for impairment (2,039) (2,204) 165

Total 36,477 27,929 8,548


“Trade receivables versus suppliers” consist mainly of promotional contributions receivable and

bonuses on purchases.

“Trade receivables versus customers” reflects primarily receivables for the wholesales business

The following table shows the changes that occurred in the “Allowance for impairment:”

In thousands of Euro As of December 31,

Allowance for impairment 2013

Opening balance as of December 31, 2012 2,204

Increases, net of releases (94)

Utilizations (49)

Changes in Consolidation Scope 105

Exchange rate differences (84)

Balance as of September 30, 2013 2,082

Increases, net of releases 172

Utilizations (183)

Changes in Consolidation Scope -


Closing balance as of December 31, 2013 2,039

Refer to note 4 for further information about the risk profile of receivables.


2.4.6 Inventories

A breakdown of “Inventories” is provided below:


Inventories 2013 2012

Finished goods 158,364 141,871 16,493

Advances 2,182 3,976 (1,793)

Allowance for inventory write-down (3,953) (3,385) (568)

Total 156,593 142,462 14,132

As of December, 31Change

The WDF Group is the holder of several insurance policies aimed at covering risks for existing

inventories due to extraordinary events (earthquakes, floods, etc.). The WDF Group believes that

these policies are sufficient to cover the value of the inventories. At December 31, 2013, there

were no agreements entailing obligations to make large purchases from suppliers.

The following changes took place in the “Allowance for inventory write down”:

In thousands of Euro As of December 31,

Allowance for inventory write down 2013

Opening balance as of December 31, 2012 3,385

Increases, net of releases 3,137

Utilizations (3,185)

Changes in Consolidation scope 675


Balance as of September 30, 2013 3,948

Increases, net of releases 2,662

Utilizations (2,672)

Changes in Consolidation scope -

Exchange rate differences 15

Closing balance as of December 31, 2013 3,953

Please note that on the reference dates the inventories were not encumbered by any type of

guarantee provided to third parties.


Non-current assets

2.4.7 Property, plant and equipment

The tables that follow report the movement of “Property, plant and equipment”:


Property, plant and equipment

Cost

Buildings 12,741 - - - - - (113) 12,628

Plant and machinery 81,626 5,929 (11,191) 1,619 3 - 408 78,394

Other equipment 2,468 120 (17) (1) 496 - - 3,066

Furniture 154,940 8,319 (7,142) 5,639 120 - 2,663 164,539

Electronic machinery 30,507 640 (2,054) 784 37 - 436 30,350

Motor vehicles 1,361 240 (78) 36 - - 7 1,566

Other 1,601 237 (352) 1 - - (25) 1,462

Assets under construction 5,410 10,432 (131) (8,124) - - 87 7,674

Total cost 290,654 25,917 (20,965) (46) 656 - 3,463 299,679

Accumulated depreciation and impairment - - - - - - - -

Buildings 7,058 531 - - - 44 (75) 7,558

Plant and machinery 59,461 10,295 (10,540) 289 3 64 292 59,864

Other equipment 1,562 297 (17) - 455 - - 2,297

Furniture 103,887 21,764 (6,921) (1) 53 178 1,533 120,493

Electronic machinery 26,986 1,530 (1,996) - 37 1 376 26,934

Motor vehicles 1,162 99 (74) - - - 6 1,193

Other 1,189 168 (349) - - - (23) 985

Total accumulated depreciation and impairment 201,305 34,684 (19,897) 288 548 287 2,109 219,324

Net value 89,349 (8,767) (1,068) (334) 108 (287) 1,354 80,355

Exchange

rate

differences

As of

December 31,

2012

As of

December 31,

2011

Increases Decreases ReclassificationsChanges in

Consolidation scope

Impairment

losses



Cost

Buildings 12,628 55 (1,627) - - - (132) 10,924

Plant and machinery 78,394 11,406 (8,676) 2,006 - - (1,250) 81,880

Other equipment 3,066 - - - 10,912 - 228 14,206

Furniture 164,539 2,798 (7,013) 3,203 4,494 - (3,675) 164,346

Electronic machinery 30,350 774 (762) 505 - - (663) 30,204

Motor vehicles 1,566 45 (68) 57 184 - (37) 1,747

Other 1,462 303 (71) (28) - - (39) 1,627

Assets under construction 7,674 9,259 (38) (5,984) 3,756 - (92) 14,575

Total cost 299,679 24,640 (18,255) (241) 19,346 - (5,660) 319,509

Accumulated depreciation and impairment

Buildings 7,558 391 (1,627) - - - (88) 6,234

Plant and machinery 59,864 4,332 (8,581) 3 - 2 (818) 54,802

Other equipment 2,297 180 - - - - - 2,477

Furniture 120,493 12,493 (6,622) (5) - 1 (2,527) 123,833

Electronic machinery 26,934 933 (758) - - - (577) 26,532

Motor vehicles 1,193 84 (65) - 148 - (31) 1,329

Other 985 108 (68) - - - (30) 995

Total accumulated depreciation and impairment 219,324 18,521 (17,721) (2) 148 3 (4,071) 216,202

Net value 80,355 6,119 (534) (239) 19,198 (3) (1,589) 103,307

Exchange

rate

differences

As of

September 30,

2013

As of

December 31,

2012


Consolidation scope

Impairment

losses




Cost

Buildings 10,924 18 34 - - - (115) 10,861

Plant and machinery 81,880 18,255 (6,377) (108) - - (528) 93,122

Other equipment 14,206 561 (48) 745 (202) - (231) 15,031

Furniture 164,346 5,750 (3,000) 709 317 - (120) 168,002

Electronic machinery 30,204 372 (5) 230 - - (11) 30,790

Motor vehicles 1,747 57 (77) 38 - - (18) 1,747

Other 1,627 23 (55) 2 - - (13) 1,584

Assets under construction 14,575 13,050 (17) (1,393) - - (153) 26,062

Total cost 319,509 38,086 (9,545) 223 115 - (1,189) 347,199


Buildings 6,234 122 34 - - - (74) 6,316

Plant and machinery 54,802 2,233 (6,301) (1) - 350 (275) 50,808

Other equipment 2,477 1,270 (40) 79 - - (45) 3,741

Furniture 123,833 4,921 (2,993) 7 - 216 (18) 125,966

Electronic machinery 26,532 374 (6) - - - (9) 26,891

Motor vehicles 1,329 40 (79) 36 - - (14) 1,312

Other 995 27 (59) 112 - - (10) 1,065

Total accumulated depreciation and impairment 216,202 8,987 (9,444) 233 - 566 (445) 216,099

Net value 103,307 29,099 (101) (10) 115 (566) (744) 131,100

Exchange

rate

differences

As of

December 31,

2013

As of

September 30,

2013


Consolidation scope

Impairment

losses

In 2013 additions refer to development of new sales spaces in airports in relation with new or

extended concessions, mainly in Spain (Madrid, Barcelona, Palma de Mallorca and the Canary

Islands), Germany (Dusseldorf) and Santiago de Chile (Chile) and the change in consolidation

scope is all referred to the US Retail acquisition.

Disposals of furniture and technical installations mainly comprise those derived from the renewal of

sales spaces in Spanish airports due to new contracts with AENA, the closing of the old terminal of

Amman airport in Jordan and the cease of operations in Orlando (United States).

In 2013 there was no significant impairment.

As of December 31, 2013 no fixed assets were encumbered by any type of guarantee provided to

third parties and there were no non-current assets held under finance leases.

The cost of fully depreciated property, plant and equipment and investment property which are in

use as of December 31, 2013 and 2012 is as follows:


2013 2012

Building 2,750 3,671 (921)

Machinery and installations 28,828 37,140 (8,312)

Furniture and fixtures 77,263 46,004 31,259

Other 8,688 6,848 1,840

Total 117,529 93,663 23,866



2.4.8 Investment Property

The table below shows a breakdown of “Investment property”:


Investment property 2013 2012

Cost 11,765 11,765 -

Accumulated depreciation (5,209) (4,833) (376)

Total 6,556 6,932 (376)


Details of income and expenses from investment property are as follows:


2013 2012

Rental income 502 369 133

Depreciation charge of investment property (376) (375) (1)

Operating expenses (806) (967) 161

For the year ended 31 DecemberChange

Investment property includes a warehouse building in Madrid leased to third parties under leases

that expire in 2017 and 2018.

Future minimum payment receivables under non-cancellable operating leases are as follows:


2013 2012 Change

Less than one year 500 394 106

Between one and five years 1,529 900 629

Over 5 years - - -

Total 2,029 1,294 735

For the year ended 31 December

The WDF Group has contracted some insurance policies to cover the risks of damages to its

property, plant and equipment and investment property. The coverage of these policies is

considered sufficient to cover these risks.

2.4.9 Goodwill

Goodwill was generated by the acquisitions of World Duty Free Group España SA (formerly

Aldeasa S.A.), completed in two stages respectively in 2005 for 50% of its share capital and in

2008 for the residual balance, Autogrill Holdings UK Plc. (formerly Alpha Group Plc.) in 2007 and

World Duty Free UK Holdings (formerly World Duty Free Europe Ltd.) in 2008.

The Cash Generating Units (CGUs) are essentially the same as the geographical areas.

The carrying amounts attributed to the CGU group are as follows:



Goodwill 2013 2012

Geographical area:

United Kingdom 423,985 433,124 (9,141)

Rest of Europe 82,243 82,248 (5)

Americas 66,225 43,397 22,828

Asia and Middle East 44,781 46,348 (1,567)

Total 617,234 605,117 12,117

As of December,31Change

The changes in goodwill on the reference dates are attributable to negative foreign exchange rate

translation differences for Euro 13,146 thousand and to the goodwill of the US Retail Division

acquired for Euro 25,263 thousand.

The recoverability of the goodwill allocated to each CGU is tested by estimating their value in use,

defined as the present value of estimated future cash flows discounted at a rate reflecting the time

value of money (differentiated by currency area) and specific risks of the individual CGUs at the

measurement date.

The discount rate was determined using as a reference the Capital Assets Pricing Model, based as

much as possible on indicators and parameters observable in the market.

Future cash flows were estimated at December 31, 2013 based on the 2014 budget and forecasts

for the 2015-2018 Plan.

Cash flows beyond the period covered by the plan were estimated by extrapolating plan

information and applying nominal growth rates (“g rate”), which do not exceed the long-term growth

estimates for the sector and the country in which each CGU operates and by using the perpetuity

method to calculate the terminal value.

The table below shows the main underlying assumptions used for impairment testing purposes:

Post tax Pre tax Post tax Pre tax

United Kingdom 2.00% 6.61% 6.91% 5.49% 6.07%

Rest of Europe 2.00% 5.63% - 8.33% 6.20% - 9.14% 5.06% - 8.98% 5.77% - 10.07%

Americas 2.00% 6.07% - 13.61% 6.83% - 14.95% 5.15% - 12.66% 5.99% - 14.11%

Asia and Middle East 2.00% 7.41% - 14.49% 7.57% - 16.32% 6.28% - 10.47% 6.66% - 11.37%

Forecast nominal growth

rate "g"

Discount rate 2013 Discount rate 2012

The main assumptions used to estimate cash flows for impairment test purposes are reported

below:

United Kingdom: as mature market, small growth rates in terms of passengers and spends have been projected for the period 2014-2018; profitability in line with recent past years.

Rest of Europe: significant revenue growth rates have been projected for the period 2014-2018 given the contribution of new operations (Helsinki) and full contribution in Dusseldorf and Spain (Madrid, Barcelona, Palma de Mallorca and the Canary Islands). Slight dilution in terms of profitability is assumed affected by the first years of the new operations and by the higher rental costs related to the new contracts in Spain.

Americas: moderate growth rates have been assumed (on a like-for-like basis considering full year impact of the US Retail); profitability diluted compared to historical, due to the contribution of the US Retail, despite of a slight improvement at constant perimeter.


Asia and Middle East: although overall flat revenue growth rate is assumed for the period 2014-2018, rates differ by country. Profitability is assumed to be slightly below the historical.

Based on the assumptions above reported, the amount of goodwill attributed to each cash

generating unit was found to be fully recoverable for the year ended December 31, 2013.

The following table shows the levels at which, for the most significant assumptions used in the

impairment tests, there would no longer be a gap between the CGU’s value in use and its carrying

amount.

Discount rate, net of tax effect g

United Kingdom 20.65% (60.75%)

Rest of Europe 18.90% (34.44%)

Americas 18.43% (25.50%)

Asia and Middle East 17.90% (19.81%)

2013

2.4.10 Other intangible assets

The movement of “Other intangible assets” is reported below:



Cost

Concessions 856,168 - - - - - 4,672 860,840

Licences and trademarks 126,230 - (89) (40) 40 - 2,967 129,108

Software 36,439 289 (1,217) 372 25 - 580 36,488

Assets under development - 2,237 - - - - - 2,237

Other 2,856 - - (285) 285 - - 2,856

Total cost 1,021,693 2,526 (1,306) 47 350 - 8,219 1,031,529

Accumulated amortization

Concessions 272,516 69,530 - - - - (67) 341,979

Licences and trademarks 23,461 6,535 (89) (40) 40 - 508 30,415

Software 34,875 1,111 (1,198) 38 25 - 562 35,413

Other 703 144 - (285) 286 - - 848

Total accumulated amortization 331,555 77,320 (1,287) (287) 351 - 1,003 408,655

Net value 690,138 (74,794) (19) 334 (1) - 7,216 622,874

Exchange rate

differences

As of

December 31,

2012

As of

December 31,

2011


Consolidation scope

Impairment

losses



Cost

Concessions 860,840 - - - 1,899 - (11,090) 851,649

Licences and trademarks 129,108 - - - 96 - (3,086) 126,118

Software 36,488 141 (22) 239 - - (673) 36,173

Assets under development 2,237 - - - - - - 2,237

Other 2,856 - - - - - - 2,856

Total cost 1,031,529 141 (22) 239 1,995 - (14,849) 1,019,033


Concessions 341,979 41,932 - - 1,828 - (3,491) 382,248

Licences and trademarks 30,415 4,664 - - 92 - (636) 34,535

Software 35,413 424 (22) - - - (651) 35,164

Other 848 107 - - - - - 955

Total accumulated amortization 408,655 47,127 (22) - 1,920 - (4,778) 452,902

Net value 622,874 (46,986) - 239 75 - (10,071) 566,131

Exchange rate

differences

As of

September 30,

2013

As of

December 31,

2012


Consolidation scope

Impairment

losses




Cost

Concessions 851,649 - - - - - (2,326) 849,323

Licences and trademarks 126,118 - (79) - 7 - 361 126,407

Software 36,173 416 - 10 - - 61 36,660

Assets under development 2,237 168 - - - - - 2,405

Other 2,856 - - - - - - 2,856

Total cost 1,019,033 584 (79) 10 7 - (1,904) 1,017,651


Concessions 382,248 13,929 - - - - (1,526) 394,651

Licences and trademarks 34,535 1,577 (77) - 6 - 111 36,152

Software 35,164 154 - - - - 61 35,379

Other 955 36 - - - - - 991

Total accumulated amortization 452,902 15,696 (77) - 6 - (1,354) 467,173

Net value 566,131 (15,112) (2) 10 1 - (550) 550,478

Exchange rate

differences

As of

December 31,

2013

As of

September 30,

2013


Consolidation scope

Impairment

losses

“Concessions” represents carrying amount of the contract rights as part of the fair value

measurement (Purchase Price Allocation) of the acquired assets and liabilities of World Duty Free

Group UK Holding Ltd. (formerly World Duty Free Europe Ltd.) and World Duty Free Group

España SA (formerly Aldeasa S.A.).

“Licenses and trademarks” consist mainly of the value assigned to trademarks as part of the above

mentioned valuation process.

A breakdown of concessions by geographical area at December 31, 2013 and 2012 is provided

below:


Concessions by geographical area 2013 2012

United Kingdom 219,169 239,782 (20,613)

Rest of Europe 173,053 198,431 (25,378)

Americas 25,221 32,836 (7,615)

Asia and Middle East 37,229 47,812 (10,583)

Total 454,672 518,861 (64,189)


The cost of fully amortized intangible assets in use as of December 31, 2013 is as follows:


2013 2012

Computer software 18,450 17,756 694

Other 3 404 (401)

Total 18,453 18,160 293


2.4.11 Investments

This item includes investments in associates, measured using the equity method, and investments

in other companies. In 2013, the WDF Group received dividends for Euro 1,904 thousand from

Creuers del Port de Barcelona S.A. (Euro 698 thousand in 2012).


The tables that follow list the carrying amount of these investments as of December 31, 2013 and

2012 and show the results, the assets, the liabilities and revenues related to these companies: In thousands of local currency

RevenueProfit/(Loss)

for the year

Total

assets

Total

liabilities

InvestmentsRegistered

addressCountry % held Currency

Name

Creuers del Port de Barcelona, S.A. Barcelona Spain 23% Euro 20,449 11,177 53,850 12,142 8,822

Total 20,449 11,177 53,850 12,142 8,822

Carrying

amount of

December 31,

2013Data in local currency/000

In thousands of local currencyRevenue

Profit/(Loss)

for the year

Total

assets

Total

liabilities

InvestmentsRegistered

addressCountry % held Currency

Name

Souk al Mouhajir, S.A. Tangeri Morocco 36% Dhs 4,169 (406) 18,188 2,746 468

Creuers del Port de Barcelona, S.A. Barcelona Spain 23% Euro 18,020 1,789 54,454 12,900 8,668

Total 22,189 1,383 72,642 15,646 9,136

Carrying

amount of

December 31,

2012Data in local currency/000

In 2013, the associated company Souk al Mouhair, S.A. was liquidated.

2.4.12 Other financial assets, non current

“Other financial assets, non-current” equal to Euro 32,228 thousand as of December 31, 2013

(Euro 3,975 thousand as of December 2012) include:

- Non-interest bearing deposits for Euro 22,230 thousand referred to the amortized cost of AENA

deposits (see note 2.3). These deposits were registered at inception date at their present value

considering the implicit rate of interest. The difference of that value with the amount paid is

expensed during the life of the contract; and

- security deposits given by the WDF Group, measured at amortized cost for Euro 5,667 thousand.

2.4.13 Deferred tax assets and liabilities

“Deferred tax assets” and “deferred tax liabilities” includes those resulting from temporary

differences between the carrying amount of assets and liabilities and their tax base due to the

presence of factors that would make them deductible or taxable in the future.

A breakdown of these deferred taxes for the years ended December 31, 2013 and 2012 is

provided in the table below: In thousands of Euro

Deferred tax assets and liabilities

Temporary

differencesTax effect

Temporary

differencesTax effect

Property, plant and equipment 21,000 4,536 20,242 4,798

Other financial liabilities 1,425 428 6,082 1,825

Other payables 1,267 253 8,891 2,333

Defined benefit plan 11,905 2,381 9,626 2,214

Deferred tax assets arising from tax losses and tax credits - 19,939 - 18,160

Other temporary differences 4,657 1,563 2,583 761

Total deferred tax assets 40,254 29,100 47,424 30,091

Other intangible assets 279,345 52,945 348,722 80,957

Investments 17,419 5,226 15,658 4,406

Other temporary differences 24,180 5,768 22,273 5,561

Total deferred tax liabilities 320,944 63,939 386,653 90,924

Total net deferred taxes (34,839) (60,833)

As of December 31, 2013 As of December 31, 2012


Deferred taxes regarding other intangible assets refer mainly to the World Duty Free trademark

and concessions.

The WDF Group has tax credits and tax losses carried forward amounting to Euro 70.5 million as

of December 31, 2013 (of which Euro 19.9 million are recognized in the statement of financial

position) attributable mainly to some Spanish companies, to the acquired US Retail business and

to World Duty Free S.p.A..

The deferred tax assets used for tax losses carry forwards amount to Euro 5.3 million in 2013

(Euro 6.5 million in 2012).

Current liabilities

2.4.14 Trade payables

“Trade payables,” amounting to Euro 235,493 thousand as of December 31, 2013 refer mainly to

the purchase of goods for resale. The increase with respect to the prior fiscal year, is mainly

related to the higher volume in the business and to the US Retail transaction.

2.4.15 Tax liabilities

“Tax liabilities” reflect the amount payable due to corporate income tax, net of offsettable tax

credits.

2.4.16 Other payables

A breakdown of “Other payables” at December 31, 2013 and 2012 is provided below:


Other payables 2013 2012

Personnel liabilities 19,800 29,244 (9,445)

Indirect taxes 11,560 8,441 3,120

Withholding taxes 5,506 6,553 (1,047)

Social Security institutions and defined contribution plans 5,485 4,781 704

Due to suppliers for investments 19,305 3,566 15,739

Other 27,293 18,108 9,185

Total 88,948 70,693 18,255


“Personnel liabilities” includes, among others, the liability for benefit under employee incentive

plans payable the following years.

“Other taxes payables” refers to retentions to employees, excise duties and other concepts.

Liabilities to “Social Security institution and defined contribution plan”, amounting to Euro 5,505

thousand, refer to payables for social security contribution and to insurance contribution for

employee benefit plans. In particular, the WDF Group operates defined contribution plans mainly in

Spain an US.

“Other” includes accrued payable for insurance premiums, utilities and maintenance and payables

owed to Autogrill Group companies for services rendered.


2.4.17 Other financial liabilities

The balance at December 31, 2013 mainly includes: i) Euro 3,855 thousand that is the 5% of the

consideration for the acquisition of US Retail Division, retained by the WDF Group as guarantee for

a period of nine months from the date of the closing; and ii) Euro 1,615 thousand for accrued

expenses and deferred income for interest on loans.

Non-current liabilities


Other payables, amounting to Euro 2,751 thousand as of December 31, 2013 (Euro 2,000

thousand as of December 31, 2012) mainly include the non-current portion of the liability for long

term employee incentive plan for Euro 2,734 thousand. Please refer to note 9.2 for further

information about incentive plan.

2.4.19 Other financial liabilities

The balance as of December 31, 2013 includes the fair value of interest rate hedging derivatives

for an amount of Euro 1,751 thousand (Euro 6,408 thousand as of December 31, 2012).

The balance as of December 31, 2012 also included Euro 70 million that corresponded to the loan

granted by Autogrill S.p.A. to the WDF Group for a maximum amount of Euro 200 million which

was completely reimbursed and cancelled during 2013. Please refer to note 2.4.20 for further

details.

2.4.20 Due to banks and loans, net of current portion

The table below provides a breakdown both for “Due to banks” and “Loans, net of current portion”

at December 31, 2013 and 2012:


Due to banks and loans, net of current portion 2013 2012

Current account overdrafts 11,915 3,318 8,597

Unsecured bank loans current 10,000 4,000 6,000

Current portion of non-current debt 50,000 56,521 (6,521)

Total current 71,915 63,839 8,076

Unsecured bank loans non-current 995,094 444,235 550,859

Commissions on loans (12,575) (4,936) (7,639)

Total non current 982,519 439,299 543,220

Total 1,054,434 503,138 551,296


Unsecured bank loan (current portion), amounting to Euro 10,000 thousand as of December 31,

2013 (Euro 4,000 thousand as of December 31, 2012) consists of lines of credit that are renewable

annually at maturity and entail no specific covenants, guarantees or other restrictions.

The liability for bank loans (including both current and non-current portion) amounts to Euro

1,045,094 thousand at December 2013 (Euro 500,756 thousand at December 31, 2012). At

December 31, 2012, the liability for bank loans consisted of a facility provided to the WDF Group

by a bank syndicate in July 2011 (“the Multicurrency Revolving Facility”). This facility was totally

reimbursed and cancelled on June 5, 2013 upon the disbursement of a new loan, as described

below.


On May 30, 2013 WDFG SAU, WDFG España S.A., WDFG UK Holdings Ltd and WDFG UK Ltd.

(jointly, the “Borrowing Companies”) signed a loan agreement providing four different tranches of

credit for a total amount of Euro 1.25 billion (the “Loan”).

The Loan is comprised of the following tranches:

Tranches Currency TypeTotal available

(in million)

Draw down as of

December 31, 2013Duration

Tranche 1 Euro amortizing term loan 400 400 5 years

Tranche 2 GBP amortizing term loan 125 125 5 years

Tranche 3 Euro/GBP revolving credit facility 375 262 5 years

Tranche 4* Euro revolving credit facility 350 258 lasting 18 months

Total 1,250 1,045

* May be extended by 18 months if the company deems

The Loan provides for an interest rate linked to Euribor or Libor, depending on the currency used

for the Loan, in addition to a margin. The margin applied for all tranches is a market margin and

calculated with respect to tranches 1, 2 and 3 on a ratchet basis by reference to the Leverage

Ratio (as defined hereunder).

On June 5, 2013, the WDF Group used the Loan to:

reimburse and cancel the debt outstanding under the Multicurrency Revolving Facility;

reimburse in full and cancel a medium term credit facility (Bilateral Revolving Credit Facility)

draw down in 2013 for Euro 100 million;

reimburse and cancel the loan provided by Autogrill S.p.A. for a residual amount of Euro 67

million; and

pay a dividend to Autogrill S.p.A. for an amount of Euro 220 million, approved by the WDFG

SAU shareholder’s meeting on April 30, 2013.

The Loan includes the obligation to maintain certain financial ratios based on the consolidated

financial statements of Group WDFG SAU, breach of which might entail the prepayment of the

Loan. These ratios have to be tested by June 30 and December 31 every year during the life of the

Loan, being the first test to be conducted based on information as of December 31, 2013. The

financial ratios refer to: i) the “Leverage Ratio” which is calculated as the ratio between the “net

financial indebtedness” and the “cash EBITDA” and must not exceed a threshold decreasing from

4.35 to 3.50 during the tenor of the Loan and ii) the “Interest Cover Ratio” which is the ratio

between the “cash EBITDA” and the “net financial charges” which shall be no less than 4.00 in

each verification period until December 31, 2014 and not lower than 4.50 for each verification

period thereafter. For the calculation of these ratios, the net financial indebtedness, the “cash

EBITDA” and the net financial charges are measured in accordance with the contractual definition

and therefore could differ from the amounts valid for financial statements purposes. Thus, the final

ratios are not readily apparent from the financial statements. In particular, the EBITDA is adjusted

to include certain rental expenses and other non-cash rent adjustments; as of the date of the

preparation of these consolidated financial statements, they mainly relate to rental expenses due in

a period in which the related payment is offset by the advance payment made to AENA on

February 2013.

As of December 31, 2013, all of the above financial covenants were satisfied.


The loan agreement considers the possibility of an early prepayment and cancellation of all or part

of the Loan in case of “Change of Control” as defined in the loan agreement. The loan agreement

provides that the lenders shall negotiate for a period not exceeding 30 days to determine whether

the facilities under the loan agreement can continue and on what basis. At the end of the 30-day

period, any lender not agreeing to continue the facility may require the Borrowing Companies, by

serving 10 days’ prior notice in writing, to prepay and cancel that lender’s participation in the Loan.

The Loan also provides certain limits upon the disposal of assets, assumption of additional

financial indebtedness and issuance of guarantees or other securities, distribution of dividends and

carrying out extraordinary transactions. No compliance with these limitations would entitle the

Lenders to drawstop, cancel and/or accelerate the Loan.

As of December 31, 2013, the Loan, accounted for according to the amortized cost method, is

represented net of the fees amounting to Euro 12,575 thousand.

2.4.21 Employee benefit plan

The item amounted to Euro 11,904 thousand at the year end, increased of Euro 1,682 thousand

with respect to December 31, 2012.

The WDF Group operates defined benefit pension plans mainly in the UK under specific regulatory

frameworks. All of the plans are final salary pension plans, which provide benefits to members in

the form of a guaranteed level of pension payable. The level of benefits provided depends on

members’ length of service and their salary in the final years leading up to retirement. In the UK

plans, pensions in payment are generally updated in line with the retail price index. The majority of

benefit payments are from trustee administered funds; however, there are also a number of

unfunded plans where the company meets the benefit payment obligation as it falls due. Plan

assets held in trusts are governed by local regulations, as is the nature of the relationship between

the Group and the trustees (or equivalent) and their composition. Responsibility for governance of

the plans – including investment decisions and contribution schedules – lies jointly with the

company and the board of trustees. The board of trustees must be composed of representatives of

the company and plans participants in accordance with the plans’ regulations.

The liabilities for defined contribution plans has been classified in current other payables. Please

refer to note 2.4.16 for further comments.

The table below show detail of employee benefits recognized as defined benefit plans.


2013 2012

Defined benefits plan 11,904 10,222 1,682

Total 11,904 10,222 1,682


This item is shown net of the fair value of the defined benefit plan assets amounting to Euro

144,177 thousand.

The following is a reconciliation of the present value of the obligation and the fair value of assets

against the liability recognized at December 31, 2013:



2013 2012

Present value of funded plans (156,681) (151,009) (5,672)

Fair value of plan assets 144,777 140,787 3,990

(11,904) (10,222) (1,682)

Present value of unfunded obligations - - -

Total deficit of defined benefit pension plans (11,904) (10,222) (1,682)

Impact of minimum funding requirement/asset ceiling - - -

Defined pension benefits (11,904) (10,222) (1,682)


The actuarial assumptions used to calculate the defined benefit plans are summarized in the

following table:

Actuarial assumptions

2013 2012

Discount rate 4.450% 4.500%

Inflation rate (RPI) 3.650% 3.250%

Salary increase rate 4.650% 4.250%

Pension increase rate 2.200% 2.100%

As of December 31,

The 2013 discount rate were determined based on the yield of high grade corporate bonds at the

date of this document.

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions

is:


Change in assumption Increase in Liability

Discount rate Decrease by 0.25% 7,813

Pension growth rate Increase by 0.25% 5,648

Life expectancy Increase by 1 year 4,064

Impact on defined benefit obligation

Below the amount recognized in the income statement for defined benefit plans:


2013 2012

Current service costs 101 201 393

Interest expense 3,206 6,431 5,794

Interest income on plan assets (3,022) (6,064) (6,210)

Total 285 568 (23)

For the period from

March 27, 2013 to

December 31, 2013


December 31,

Interest expense is recognized under “Financial expense” net of the expected yield on plan assets,

while the post employment benefit cost is recognized under “Personnel expense”.


The movement in the defined benefit obligation is as follows:

In thousands of Euro Total

As of January 1, 2012 136,793Current service cost 188

Interest expense 6,683

Remeasurement - (Gain)/loss from change in demographic assumptions (6,521)

Remeasurement - (Gain)/loss from change in financial assumptions 13,218

Remeasurement - (Gain)/loss from experience 141

Employee's share of contributions 109

Net benefits paid out (3,370)

Exchange rate gains (losses) 3,173

Other 595As of December 31, 2012 151,009


As of December 31, 2012 151,009

Current service cost 201Interest expense 6,431Remeasurement - (Gain)/loss from change in demographic assumptions (101)Remeasurement - (Gain)/loss from change in financial assumptions 6,513Remeasurement - (Gain)/loss from experience 311Employee's share of contributions 105Net benefits paid out (4,737)Exchange rate gains (losses) (3,051)Other -

As of December 31, 2013 156,681

The weighted average duration of the defined benefit obligation is 20 years.

The movement in the plan assets is as follows:


As of January 1, 2012 125,457

Estimated yield on plan assets (interest income on plan assets) 6,210

Remeasurement - (Gain)/loss from change in demographic assumptions -

Remeasurement - (Gain)/loss from change in financial assumptions -

Remeasurement - (Gain)/loss return on plan assets 2,976

Initial actuarial gain/(loss) on annuity policy -


Group's share of contributions 6,493


Exchange rate gains (losses) 2,912

Other -

As of December 31, 2012 140,787



As of December 31, 2012 140,787

Estimated yield on plan assets 6,064

Remeasurement - (Gain)/loss from change in demographic assumptions -

Remeasurement - (Gain)/loss from change in financial assumptions -

Remeasurement - (Gain)/loss return on plan assets 8,903

Initial actuarial gain/(loss) on annuity policy (14,160)


Group's share of contributions 10,080


Exchange rate gains (losses) (2,859)

Other -

As of December 31, 2013 144,777

The main categories of plan assets are:


Quoted Unquoted Total % Quoted Unquoted Total %

Equity instruments 38,618 - 38,618 27% 70,501 - 70,501 50%

Bonds 17,437 - 17,437 12% 60,947 - 60,948 43%

Qualifying insurance policies* - 49,178 49,178 34% - - - 0%

Investment funds 37,708 - 37,708 26% - - - 0%

Cash and cash equivalents 1,836 - 1,836 1% 9,338 - 9,338 7%

Total 95,599 49,178 144,777 100% 140,787 - 140,787 100%

As of December 31, 2013 As of December 31, 2012

* The buy-in annuity policy is the only asset class that is not quoted in an active market

2.4.22 Provision for risks and charges

A breakdown of this item at December 31, 2013 and 2012 with the current and non-current

portions shown separately, is provided below:



Provision for taxes - 7,463 (30) (47) - 5,017 12,403

Other provisions - - - - - - -

Total current provisions for risks and charges - 7,463 (30) (47) - 5,017 12,403

Provision for taxes 3,097 - (3,097) - - - -

Provision for legal disputes - - - - 21 - 21

Provision for the refurbishment of third party assets 6,919 - (249) 163 - - 6,833


Total non-current provisions for risks and charges 10,016 - (3,346) 163 21 - 6,854

As of December

31, 2012Reclassifications

As of December

31, 2011

Provisions, net of

releasesUtilizations

Exchange rate

differences

Changes in

Consolidation



Provision for taxes 12,403 - - (904) - - 11,498


Total current provisions for risks and charges 12,403 - - (904) - - 11,498

Provision for taxes - - - - - - -

Provision for legal disputes 21 - - - - (21) -

Provision for the refurbishment of third party assets 6,833 - (6) (163) - - 6,663

Other provisions - - - - 31 165 196

Total non-current provisions for risks and charges 6,854 - (6) (163) 31 144 6,860

As of

September 30,

2013

As of December

31, 2012

Provisions, net of


Exchange rate

differencesReclassifications

Changes in

Consolidation

scope




Provision for taxes 11,498 551 - (54) - (58) 11,937

Other provisions - 364 (345) (13) - - 6

Total current provisions for risks and charges 11,498 916 (345) (67) - (58) 11,943

Provision for taxes - - - - - - -

Provision for legal disputes - - - - - - -

Provision for the refurbishment of third party assets 6,663 865 - 35 - - 7,563

Other provisions 196 - (6) (1) - 527 717

Total non-current provisions for risks and charges 6,860 865 (6) 35 - 527 8,281

As of

December 31,

2013

As of September

30, 2013

Provisions, net of


Exchange rate

differencesReclassifications

Changes in

Consolidation

scope

Provision for taxes, amounting to Euro 11,937 thousand as of December 31, 2013 represent the

amount expected to be paid as a result of lawsuits underway in India in relation to indirect taxes

and customs duty. In relation to this dispute, during the year 2012, it was recorded a provision (net

of releases) for Euro 7,463 thousand.

The provision for refurbishment of third party assets, amounting to Euro 7,563 thousand as of

December 31, 2013 includes future payments that the Group is expected to incur in the United

Kingdom concessions to return property, plant and equipment in its original condition to the lessor

at the end of the concession.

2.4.23 Equity

The changes in equity reserves are shown in the corresponding schedule of these financial

statements.

A description of the content of the main equity reserves is provided below, together with some

details about the main changes for the period.

Share capital

The share capital of WDF S.p.A., fully subscribed and paid in, amounts to Euro 63,720 thousand

and consists of n. 254,520,000 ordinary shares with no par value.

On the date of incorporation (March 27, 2013), the share capital amounted to Euro 120 thousand,

consisted of 120,000 shares with no par value. As a result of the Demerger, the share capital of

WDF S.p.A. increased by Euro 63,600 thousand, by issuing 254,400,000 new ordinary shares.

Legal reserve

The legal reserve amounts to Euro 12,720 thousand as effect of the Demerger. This item includes

includes the portion of income of WDF to an extend reaching the requirement minimum of 20% of

share capital, as stated by the art. 2423 of Civil Code.

Hedging reserve

The “Hedging reserve” amounting to Euro 998 thousand includes the effective component of the

fair value of derivatives designated as cash flow hedges.

Translation reserve

Translation differences arise from the translation into Euro of the financial statements of companies

consolidated line by line that are denominated in currencies other than the euro.


Other Reserves

This item includes the profit of subsidiaries not distributed as dividends, consolidation adjustments

and the amount set aside in connection with the recognized costs of the stock options plans.

The changes in these reserves, in addition to the recognition of the profit for the year, include: i)

Euro 220 million as a dividends distribution to Autogrill S.p.A., approved by the WDFG SAU

shareholder’s meeting on 30 April 2013; ii) Euro 35.9 million as movements related to changes in

consolidation perimeter due to the acquisition of the US Retail Division (please also refer to note

2.2 for further information); and iii) Euro 9.7 million as the effect of the remeasurement of defined

benefit plans.

Non controlling interest

Non controlling interests amount to Euro 8,153 thousand at December 31, 2013, compared with

Euro 2,657 thousand at December 31, 2012. The increase is mainly due to the acquisition of the

US Retail division and to the profit for the year achieved by the group companies where minorities

exist.

Other comprehensive income

The following table shows the components of comprehensive income and the relative tax effect:


Gross

amount

Tax

benefit/

(expense)

Net

amount

Gross

amount

Tax

benefit/

(expense)

Net

amount

Remeasurement of the defined liability (asset) (11,980) 2,253 (9,727) (5,235) 1,204 (4,031)

Effective portion of fair value change in cash flow hedges 4,658 (1,398) 3,260 (2,463) 739 (1,724)

Foreign currency translation differences for foreign operations (23,308) - (23,308) 10,642 - 10,642

Gains (losses) on net investment hedge 6,208 (1,862) 4,346 (6,760) 2,028 (4,732)

Total other comprehensive income (24,422) (1,007) (25,429) (3,816) 3,971 155

2013 2012

WDF S.p.A. operates as the holding company of the WDF Group and therefore its ability to

distribute dividends to its shareholders depends on the amount of dividends distributed by the

subsidiary WDFG SAU.

The loan agreement signed by the subsidiary on May 2013, provides for restrictions on its ability to

make any distribution (either through dividend payments or otherwise) in any financial year on a

sliding scale based on the leverage ratio of WDFG SAU and its subsidiaries as at each relevant

determination date as provided in the loan agreement. For the calculation of the leverage ratio, the

loan agreement provides for specific definitions of net financial indebtedness, EBITDA and net

financial charges, and therefore differ from the amounts valid for financial reporting purposes.

Thus, the final ratios are not readily apparent from the financial statements. More specifically, the

loan agreement provides as follows:

Percentage of profits whose distribution is allowed Leverage Ratio

100% < 3.25

50% >=3.25 and < 3.75

40% >=3.75 and < 4.00

0% >= 4.00

With reference to the year 2013, the loan agreement allows for distributions up to a maximum of

Euro 40 million, irrespective of the levels of the leverage ratio as of December 31, 2013.


2.5 NOTES TO THE INCOME STATEMENT

2.5.1 Revenue

The table below shows a breakdown of “Revenue” by geographic area for 2013 and 2012:


Revenue by geographic area 2013 2012

United Kingdom 253,197 975,573 961,744

Rest of Europe 139,540 620,678 596,946

Americas 113,320 322,223 280,648

Asia and Middle East 40,960 160,003 162,635

Total 547,017 2,078,477 2,001,973

For the period from

March 27, 2013 to

December 31, 2013


December 31,

2.5.2 Other operating income

The table below shows a breakdown of “Other operating income”:


Other operating income2013 2012

Advertising 5.117 18.019 15.178

Other income 1.702 7.997 11.429

Total 6.819 26.016 26.607


December 31,

For the period

from March 27,

2013 to December

31, 2013

2.5.3 Supplies and goods

The table below shows a breakdown of “Supplies and goods”:


Supplies and goods 2013 2012

Purchases 218,622 855,888 813,931

Change in inventories 4,336 (8,177) 6,059

Total 222,958 847,711 819,990

For the period from

March 27, 2013 to

December 31, 2013


December 31,

The variation in “Purchases”, mainly referred to the cost of goods for resale, is in line with the

increase of revenues.


2.5.4 Personnel expense

The table below shows a breakdown of “Personnel expense” for 2013 and 2012:


Personnel expense 2013 2012

Wages and salaries 50,786 176,382 166,915

Social security contributions 7,525 27,563 25,350

Other costs 8,878 16,865 13,626

Total 67,189 220,810 205,891

For the period from

March 27, 2013 to

December 31, 2013


December 31,

Other costs mainly refer to the cost of contracting temporary personnel to cover summer periods

when sales increase.

The average headcount, expressed in terms of equivalent full-time employees, was 8,376 for 2013

(6,942 for 2012).

2.5.5 Leases, rentals concessions and royalties

The table below shows a breakdown of “Leases, rentals, concessions and royalties” for 2013 and

2012:


Leases, rentals, concessions and royalties 2013 2012

Leases, rentals and concessions 168,971 656,817 614,896

Royalties 246 642 574

Total 169,217 657,459 615,470

For the period from

March 27, 2013 to

December 31, 2013


December 31,

The increase in “Leases, rentals and concessions” is mostly due to the growth in sales revenues

and to the higher rent cost incurred as a result of the new contracts of the Spanish concessions.


2.5.6 Other operating expense

A breakdown of “Other operating expense” for 2013 and 2012 is provided below:


Other operating expense2013 2012

Consulting services 4,596 18,559 20,612

Maintenance 4,787 14,336 13,339

Commission on credit card payments 4,143 13,701 12,586

Advertising and market research 4,379 10,634 9,281

Utilities 2,247 9,865 8,656

Travel expenses 3,270 10,477 8,392

Storage and transport 1,674 7,164 7,661

Surveillance 1,108 4,723 5,146

Insurance 273 1,973 3,328

Cleaning 612 2,681 2,928

Telephone and postal charges 981 3,031 2,463

Banking services 713 2,602 1,975

Other services 1,143 13,405 11,570

Costs for materials and services 29,927 113,151 107,937

Impairment losses on receivables 170 77 (201)

Provisions for risks, net of releases 916 916 7,463

Other operating costs 2,685 9,530 9,695

Total 33,697 123,674 124,894

For the twelve months periods

ended December 31,For the period from

March 27, 2013 to

December 31, 2013

As regarding the provision for risks see note 2.4.22 for further information.

2.5.7 Depreciation and amortization

A breakdown of “Depreciation and amortization” for 2013 and 2012 is as follows:


Depreciation and amortization 2013 2012

Other intangible assets 15,695 62,823 77,320

Property, plant and equipment 8,987 27,509 34,684

Investment property 94 376 375

Total 24,776 90,708 112,379

For the period from

March 27, 2013 to

December 31, 2013


ended December 31,

The decrease in the amortization of “Other intangible assets” is mainly referred to the decline in the

amortization of concessions as a result of the redetermination of their useful life linked to the

extension until 2020 of the duty free and duty paid concessions in the Spanish airports.


2.5.8 Financial income and expense

A breakdown of “Financial income” and “Financial expense” for 2013 and 2012 is provided below:


Financial income 2013 2012

Interest income 47 213 416

Other financial income 3,172 10,588 401

Total 3,219 10,801 817


Financial expense 2013 2012

Interest expense 9,882 33,492 15,062

Interest paid to Autogrill Group companies 38 692 2,258

Exchange rate losses 811 957 959

Other financial expense 3,077 9,919 1,011

Total 13,808 45,060 19,290

For the period from

March 27, 2013 to

December 31, 2013


December 31,

For the period from

March 27, 2013 to

December 31, 2013


December 31,

“Other financial income” includes mainly the effect of valuing at amortized cost the AENA advance

payment. (see note 2.3).

“Other financial expense” also includes the effects of the amortized cost on the Multicurrency

Revolving Facility reimbursed during the year, amounting to Euro 4.9 million and the upfront fees

paid for the medium term credit facility amounting to Euro 1.2 billion (see note 2.4.20 for further

information).

2.5.9 Impairment and revaluation of financial assets

The table below shows a breakdown of “Impairment and revaluation of financial assets” for 2013

and 2012:


Impairment and revaluation of financial assets 2013 2012

Income from investments accounted for using the equity method (123) 2,224 2,219

Loss / impairment of investments 4 (183) (375)

Total (119) 2,041 1,844

For the period from

March 27, 2013 to

December 31, 2013


ended December 31,


2.5.10 Income tax

A breakdown of “Income tax” for 2013 and 2012 is provided below:


Income tax 2013 2012

Current income tax 14,813 46,091 40,897

Deferred income tax (9,907) (25,622) (10,868)

Total 4,906 20,469 30,029

For the period from

March 27, 2013 to

December 31, 2013


ended December 31,

The table that follows provides a reconciliation of the income tax expense recognized in the

consolidated financial statements to the theoretical tax liability, which was determined by applying

the applicable theoretical rate to the pre-tax profit generated in each jurisdiction.


2013 2012

Pre-tax profit 24,725 131,344 103,012

Theoretical income tax 5,492 33,789 32,699

Non-deductible expenses 2,958 6,298 7,006

Exempt income (3,071) (5,473) (3,902)

Increase/utilization of deferred tax assets on losses carried forward (1,056) (5,996) 3,535

Effect of tax rate differences (373) (8,516) (6,823)

Other adjustments 957 367 (2,486)

Income tax 4,907 20,469 30,029

For the period from

March 27, 2013 to

December 31, 2013


December 31,

In 2013, the WDF Group’s theoretical tax rate was about 26%, in line with previous year. The

average effective tax rate passed from 22.6% in 2012 to 15.5% in 2013 mainly for the revaluation

of deferred tax liabilities in UK in view of the recent lowering of tax rates to be applied in the next

fiscal years.

2.5.11 Basic and diluted earnings per share

Basic earnings per share is determined based on the weighted average number of shares,

excluding the average of own shares.

Diluted earnings per share is calculated by adjusting the profit or loss attributable to ordinary

shareholders and the weighted average number of ordinary shares outstanding, as defined above,

for the effects of all diluitive potential ordinary shares. As of December 31, 2013 and 2012 the

WDF Group has no potentially dilutable ordinary shares.

The computation details are provided below:



2013 2012

Profit for the year attributable to owners of the parent (in thousands of

Euro)16,480 105,826 100,727

Number of shares (in units) 254,520,000 254,520,000 254,400,000

Basic and Diluted earnings per share (in Euro cents) 6.47 41.58 39.59

For the period

from March 27,

2013 to December

31, 2013


ended December 31,

3. Net financial position

In accordance with the requirements of the Consob Communication of July 28, 2006 and

consistent with the ESMA/2011/81 Recommendation, a breakdown of net financial position at

December 31, 2013 and 2012 is provided below:


Net Financial Position 2013 2012

A) Cash on hand 2.4.1 2,674 1,607 1,067

B) Cash equivalents 2.4.1 20,098 17,077 3,022

C) Securities held for trading - - -

D) Cash and cash equivalents (A+B+C) 22,772 18,684 4,089

E) Current financial assets 2.4.2 12,994 12,720 274

F) Due to banks, current 2.4.20 (71,915) (63,839) (8,076)

G) Bonds issued - - -

H) Other financial liabilities 2.4.17 (6,278) (876) (5,401)

I) Current financial indebtedness (F+G+H) (78,193) (64,715) (13,478)

J) Net current financial indebtedness (I+E+D) (42,427) (33,311) (9,115)

K) Due to banks, net of current portion 2.4.20 (982,519) (439,299) (543,220)

L) Bonds issued - - -

M) Due to others 2.4.19 (1,751) (76,408) 74,657

N) Non-current financial indebtedness (K+L+M) (984,270) (515,707) (468,563)

O) Net financial indebtedness (J+N)* (1,026,697) (549,018) (477,678)

P) Non-current financial assets 2.4.12 40 - 40

Net financial position (O+P) (1,026,657) (549,018) (477,638)

* As defined by CONSOB communicationin July 28, 2006 and ESMA/2011/81 Recommendations

NotesAs of December 31,

Change

4. Financial risk management

WDF Group is exposed to the following risks:

market risk;

credit risk;

liquidity risk.

The WDF Group adopted a financial risk management procedure that sets forth the organization,

the separation of responsibilities, a risk assessment system and the principles that govern the

implementation of the policies and criteria for the recording of transactions in the accounting

records.


Information about the exposure of the WDF Group to each of the abovementioned risks, the

objectives, policies and processes to manage those risks, and the methods used to assess them is

provided in this section of the notes.

Market risk

The market risk is the risk that the fair value or future cash flows from a financial instrument may

fluctuate due to changes in exchange rates, interest rates or equity instrument prices. The aim of

market risk management is to monitor, manage and control, within acceptable levels, the exposure

of the WDF Group to these risks and the resulting impact on the Group’s income statement,

financial position and cash flow.

The WDF Group’s financial policy places special emphasis on the control and management of

market risk, specifically with regard to interest rates and exchange rates, given the extent of the

borrowings of the WDF Group and its international footprint.

Interest rate risk

The aim of interest rate risk management is to mitigate and/or reduce financial expense volatility.

This entails predetermining a portion of financial expense over a time horizon consistent with the

structure of the indebtedness, which, in turn, must be in line with the capital structure and future

cash flows. When the desired risk profile cannot be obtained in the capital markets or through bank

facilities, it is achieved by using derivatives for amounts and maturities in line with those of the

liabilities that they hedge. The derivatives used are interest rate swaps (IRS).

At December 31, 2013 most of the indebtedness of the WDF Group paid a floating rate. At

December 31, 2013 the ratio of fixed rate debt to net debt is 26.0%.

The purpose of using derivatives is to make financial expense predictable for a portion of the debt,

having established sustainable fixed rates. Hedging instruments are allocated to companies with

significant exposure to interest rate risk where there are borrowing paying floating rate (thus

exposing the WDF Group to higher finance costs if interest rate rises) or a fixed rate (which means

that lower interest rate do not bring about a reduction in financial expenses).

The tables that follow show the main characteristics of the interest rate swaps, serving as cash

flow hedges, outstanding at December 31, 2013 and 2012:

2013 2012

GBP 20,000 09/08/2011 21/07/2016 1.3125% (159) (618)

GBP 20,000 09/08/2011 21/07/2016 1.3200% (164) (625)

GBP 20,000 09/08/2011 21/07/2016 1.3380% (175) (641)

GBP 20,000 09/08/2011 21/07/2016 1.3505% (183) (652)

GBP 20,000 09/08/2011 21/07/2016 1.3275% (168) (632)

GBP 20,000 09/08/2011 21/07/2016 1.3475% (181) (649)

GBP 20,000 09/08/2011 21/07/2016 1.3430% (178) (645)

GBP 20,000 09/08/2011 21/07/2016 1.3450% (180) (647)

GBP 20,000 09/08/2011 21/07/2016 1.3450% (180) (647)

GBP 20,000 09/08/2011 21/07/2016 1.3500% (183) (652)

200,000 (1,751) (6,408)

Fair value as of December 31,Currency

Notional amount

(in thousands of GBP)

Commencement

dateMaturity date Interest rate


The fair value of financial instruments is measured in accordance with valuation techniques that

use as reference parameters observable in the market, different from prices quoted on active

markets for the assets and liabilities that are being valued. Consequently, in the fair value

hierarchical ranking they are classifiable at level 2 of the ranking.

A hypothetical unfavorable change of 1% in the interest rates applicable to assets and liabilities

and to interest rate hedges outstanding at December 31, 2013 would increase net financial

expenses by Euro 6,707 thousand.

Currency risk

Because it operates in international markets and uses different presentation currencies, the WDF

Group is exposed to currency risk.

Fluctuations in exchange rates affect the economic results of the WDF Group in several ways. A

significant impact is represented by the translation effect, which emerges when the financial

statements of foreign subsidiaries are translated into Euro. In addition, because a portion of the

revenue and expenses of the WDF Group are denominated in currencies other from the euro,

increases or decreases in the value of the euro versus those currencies can have an impact on the

consolidated financial statements of the WDF Group.

However, because within each country revenue and expenses are usually denominated in the

same currency, the WDF Group benefits to a significant extent from a natural hedging effect.

The aim of currency risk management is to neutralize in part this risk on foreign currency payables

and receivables that are not denominated in Euro.

The table that follows shows for the main currencies the exposure of the equity and profit for the

year of the WDF Group to currency risk at December 31, 2013:

In thousands of Euro CAD GBP USD MXP

Equity 16,740 333,099 303,833 171,202

Profit for the year 9,179 77,180 21,519 72,755

A 5% increase or depreciation of the Euro versus the currencies listed below would have caused,

at December 31, 2013 the effects on equity and profit shown in the table below, stated in

thousands of Euro:


2013 + 5% - 5% + 5% - 5% + 5% - 5% + 5% - 5% + 5% - 5%

Equity 757 (837) (4,420) 4,886 (494) 546 405 (448) (3,752) 4,147

Profit for the year 288 (318) 4,125 (4,559) 496 (549) 130 (144) 5,039 (5,569)

TotalCAD GBP USD MXP

This analysis was performed assuming that all other variables, interest rates in particular, remained

constant.

The WDF Group uses derivatives to hedge currency risk primarily in connection with intercompany

transactions.

Hedging instruments are allocated to companies with significant exposure to currency risk in terms

of translation risk (i.e., the risk attending conversion into Euro in the parent’s or its subsidiaries’


financial statements of equity investments in foreign currency) or financial assets or liabilities in a

currency other than the reporting currency. These transactions are recognized at fair value under

financial assets or liabilities.

In the case of financial instruments that hedge financial receivables and payables in a currency

other than the reporting currency, any changes in fair value and the corresponding change in the

carrying value of the hedged assets and liabilities are recognized in profit or loss.

In the case of financial instruments that hedge the translation risk and, consequently, are

designated as hedges of net investments, the effective component of fair value is recognized in

comprehensive income and classified in equity in the “Translation reserve”. The fair value of these

hedges outstanding at December 31, 2013 is shown in the following table:

Underlying Currency

Notional amount

in currency

(in thousands)

Maturity dateSpot exchange

rate

Forward

exchange rateFair value

Intragroup loan GBP 35,000 21/01/2014 0.8348 0.8351 11

Intragroup loan GBP (10,000) 03/01/2014 0.8355 0.8354 24

Intragroup loan BRL 1,150 20/06/2014 3.1965 3.3585 3

Intragroup loan USD 300 20/06/2014 1.3670 1.3672 2

Intragroup loan USD 360 20/06/2014 1.3670 1.3672 2

Intragroup loan USD 1,608 23/01/2014 1.3670 1.3666 9

Intragroup loan CAD 265 23/01/2014 1.4650 1.4664 -

Intragroup loan CAD 2,000 02/01/2014 1.4670 1.4667 -

Intragroup loan USD 1,000 23/01/2014 1.3780 1.3777 -

Total financial assets 51

Intragroup loan GBP 40,294 21/01/2014 0.8351 0.8353 (88)

Intragroup loan GBP 53,000 09/01/2014 0.8355 0.8355 (132)

Intragroup loan USD 8,700 23/01/2014 1.3747 1.3746 (21)






Intragroup loan USD 900 23/01/2014 1.3670 1.3666 (16)



Intragroup loan KWD 2,470 29/01/2014 0.3875 0.3878 (29)

Intragroup loan KWD 650 29/01/2014 0.3875 0.3878 (8)





Total financial liabilities (474)

The fair value of instruments outstanding at December 31, 2012 is detailed in the table below:


Underlying Currency

Notional amount

in currency

(in thousands)

Maturity dateSpot exchange

rate

Forward

exchange rateFair value





Intragroup loan KWD 3,236 27/03/13 1.3732 1.3734 42

Intragroup loan KWD 964 14/01/13 1.3732 1.3732 13

Intragroup loan KWD 450 27/03/13 1.3719 1.3723 3

Total financial assets 272

Intragroup loan USD (1,102) 16/01/13 - 1.3289 (8)




Intragroup loan CAD (4,240) 15/01/13 - 1.3122 (1)

Intragroup loan PEN (5,407) 16/01/13 - 3.4217 (25)

Intragroup loan KWD (964) 21/01/13 - 3.3755 (28)

Intragroup loan GBP (10,162) 15/01/13 - 0.8165 (5)

Intragroup loan USD (1,600) 26/03/13 1.3295 1.3322 (11)

Intragroup loan USD (399) 14/01/13 - 1.3276 (2)


Intragroup loan USD 700 26/03/13 1.3190 1.3193 -


Intragroup loan PEN 29,403 26/03/13 3.3680 3.3700 (25)

Total financial liabilities (157) For the purposes of containing the net total exposure to the British pound, which is related to the

presence of the WDF Group in the United Kingdom a portion of the indebtedness denominated in

British pounds was designated as a hedge of net investment.

The fair value of financial instruments is measured in accordance with valuation techniques that

use as reference parameters observable in the market, different from prices quoted on active

markets for the assets and liabilities that are being valued. Consequently, in the fair value

hierarchical ranking they are classifiable at level 2 of the ranking.

Credit risk

The credit risk is the risk that a customer or a financial instrument counterparty may cause a

financial loss by defaulting on an obligation. It arises principally in relation to the trade receivables

and financial investments of the WDF Group.

At December 31, 2013 the carrying amount of the financial assets represents the maximum

exposure of the WDF Group to the credit risk, in addition to the face value of guarantees given for

the borrowings or commitments of third parties as shown below:


Exposure to credit risk 2013 2012

Bank and cash deposits 20,099 17,077

Other financial assets - current portion 12,994 12,720

Trade receivables 36,477 27,929

Other receivables - current portion 28,409 7,544

Other financial assets - non-current portion 32,228 3,975

Other receivables - non current portion 264,242 14,016

Total 394,449 83,262

As of December 31,


Trade receivables consist of promotional contributions and bonuses on purchases from suppliers

and receivables from customers for wholesale transactions. Because of the business model of the

WDF Group, centered on the relationship with the end consumer, the credit risk on trade

receivables is not high relative to the total financial assets, as the consideration due for sales is

generally settled in cash.

Other receivables consist mainly of amounts due by the tax authorities and the public

administration, prepaid rent and advances for services, commercial investments made on behalf of

concession grantors and receivables owed by credit card issuers, all of which entail a limited credit

risk. The amounts corresponding to guarantee deposits and advance payments are contractually

covered.

Financial assets are recognized net of impairment losses computed to reflect the risk of default by

counterparties. Impairment is determined in accordance with local procedures, which may require

both impairment of individual positions, if individually material, when there is evidence of an

objective condition of uncollectability or all of part of the amount due, and generic impairment

calculated on the basis of historical and statistical data.

The table that follows shows the age of trade receivables at December 31, 2013 and 2012:

1-3

months

3-6

months

6 months -

1 year

Over 1

year

Trade receivables as of December 31, 2013 10,294 21,824 1,687 2,432 240 36,477

percentage of total trade receivables 28% 60% 5% 7% 1% 100%

Trade receivables as of December 31, 2012 11,048 8,956 6,832 338 755 27,929

percentage of total trade receivables 40% 32% 24% 1% 3% 100%

In thousands of Euro and percentage of trade receivables

Expired not impairedNot

expiredTotal

There is no significant concentration of credit risk.

Liquidity risk

The liquidity risk arises when it proves difficult to meet the obligations relating to financial liabilities.

The element that make up the WDF Group’s liquidity are the resources generated or absorbed by

operating and investing activities, the characteristics of its debt, the liquidity of its financial

investments, and financial market conditions.

The tables that follow shows an analysis of the maturities of financial liabilities derivative and not at

December 31, 2013 and 2012:


AS OF DECEMBER 31, 2013


Carrying

amountTotal 1-3 months 3-6 months

6 months -

1 year1-2 years 2-5 years Over 5 years

Financial non derivative liabilities

Current account overdraft 11,915 11,915 - - 11,915 - - -

Unsecured bank loans 1,055,094 1,055,094 - - 60,000 104,987 890,107 -

Other financial liabilities 5,804 5,804 5,804 - - - - -

Trade payables 235,493 235,493 235,493 - - - - -

Due to suppliers for investments 19,305 19,305 19,305 - - - - -

Other payables 5,036 5,036 5,036 - - - - -

Total 1,332,647 1,332,647 265,638 - 71,915 104,987 890,107 -



Carrying


6 months -


Financial derivative liabilities

Forward foreign exchange derivatives 474 474 474 - - - - -

Interest rate swap 1,751 1,751 - - - - 1,751 -

Total 2,225 2,225 474 - - - 1,751 -

Maturity

Maturity



Carrying


6 months -


Financial non derivative liabilities

Current account overdraft 3,318 3,318 - - 3,318 - - -

Unsecured bank loans 504,756 504,756 - - 60,521 - 444,235 -

Long term loans from Autogrill 70,079 70,079 - - - - 70,079 -

Other financial liabilities 640 640 640 - - - - -

Trade payables 203,843 203,843 203,843 - - - - -

Due to suppliers for investments 3,566 3,566 3,566 - - - - -

Other payables 3,884 3,884 3,884 - - - - -

Total 790,086 790,086 211,933 - 63,839 - 514,314 -



Carrying


6 months -


Financial derivative liabilities

Forward foreign exchange derivatives 157 157 157 - - - - -

Interest rate swap 6,408 6,408 - - - - 6,408 -

Total 6,565 6,565 157 - - - 6,408 -

Maturity

Maturity

As of December 31, 2013 and 2012 there were no financial liabilities with a maturity longer than

five years.

The loan agreement identifies certain ‘events of default’, customary for an agreement of this

nature. If one of these events occurred and the lenders exercised their right, the Borrowing

companies would be obliged to promptly reimburse the drawn-down amounts of the Loan, and this

would be terminated. Said events of default include, among others, failure by the WDF Group to

comply with certain financial covenants (see note 2.4.20 for further information). The WDF Group

carefully assessed its ability to meet the financial covenants even in case of events adversely

affecting the Group’s economic results and cash generation. Although the sustainability

assessment has shown that there are adequate security margins, it cannot be ruled out, however,

that, if more serious adverse events occurred as compared to the ones already considered, the

financial covenants might not be complied with.


In addition to the failure to meet the financial covenants, the loan agreement provides for further

‘events of default’ or circumstances that may trigger the prepayment of the Loan (or part of it),

including, by way of example, a change of control on the WDF Group.

In February 2013, after winning the contract to operate travel retail shops for the period 2013-2020,

the WDF Group made an outlay in excess of Euro 278,933 thousand (plus VAT amounting to Euro

58,576 thousand) as advance payment in relation to AENA agreements and Euro 27,318 thousand

as a security deposit. This advance payment will allow the Group to obtain more operating cash

flows in the future.

The WDF Group naturally has a negative working capital (Euro 146.0 million as of December 31,

2013 and Euro 148.6 million as of December 31, 2012). This peculiarity mainly arises from the

following structural characteristics of business of the WDF Group: (i) a low value of trade

receivables compared to the volume of sales, since much of the sales turn quickly into cash, as

usual for the businesses of retail sale to the final consumer; and (ii) an amount of inventories

structurally reduced compared to the turnover. For these reasons, the amount of current liabilities,

and trade payables in particular, usually exceeds current assets.

The WDF Group has unused committed bank facilities for approximately Euro 205 million as of

December 31, 2013.

The objective of the WDF Group is to maintain sufficient liquid assets to cover the liquidity risk.

Moreover, the WDF Group believes to have sufficient flexibility in the time management of its

investments and in containing overheads to address any financial stress, while complying with the

parameters required by the loan agreements.


5. Fair value estimation

The tables that follow provide a breakdown by category of financial assets and liabilities at

December 31, 2013 and analyses financial instruments carried at fair value, by valuation method.

The different levels have been defined as follows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset

and liability, either directly (that is, as prices) or indirectly (that is, derived from prices);

Level 3 – inputs for asset and liability that are not based on observable market data (that is,

unobservable inputs).


Financial assets

and liabilities at

fair value through

profit and loss

Derivatives

used for

hedging

Held to

maturiy

Loans and

receivables

Available

for sale

financial

assets

Other

financial

liabilities

Total Level 1 Level 2 Level 3 Total

Cash and cash equivalents - - - 22,772 - - 22,772 - - - -

Forward foreign exchange derivatives - 51 - - - - 51 - 51 - 51

Other financial assets - - - 45,171 - - 45,171 - - - -

Trade receivables - - - 36,477 - - 36,477 - - - -

Other receivables current - - - 28,409 - - 28,409 - - - -

Other receivables non current - - - 264,242 - - 264,242 - 264,242 - 264,242

Total - 51 - 397,072 - - 397,122 - 264,293 - 264,293

Due to banks - - - - - 71,915 71,915 - 21,915 50,000 71,915

Loans - - - - - 995,094 995,094 - - 995,094 995,094


Interest rate swap - 1,751 - - - - 1,751 - 1,751 - 1,751

Other financial liabilities - - - - - 5,804 5,804 - 5,804 - 5,804

Trade payables - - - - - 235,493 235,493 - - - -

Due to suppliers for investments - - - - - 19,305 19,305 - - - -

Other payables - - - - - 5,036 5,036 - - - -

Total - 2,225 - - - 1,332,647 1,334,872 - 29,944 1,045,094 1,075,038

As of December 31, 2013

The tables that follow provide a breakdown by category of financial assets and liabilities at

December 31, 2012 and their fair value:


Financial assets

and liabilities at

fair value

through profit

and loss

Derivatives

used for

hedging

Held to

maturiy

Loans and

receivables

Available

for sale

financial

assets

Other

financial

liabilities




Other financial assets - - - 16,424 - - 16,424 - - - -

Trade receivables - - - 28,246 - - 28,246 - - - -

Other receivables current - - - 7,227 - - 7,227 - - - -

Other receivables non current - - - 14,016 - - 14,016 - 14,016 - 14,016

Total - 271 - 84,597 - - 84,868 - 14,287 - 14,287

Due to banks - - - - - 63,839 63,839 - 7,318 56,521 63,839

Loans - - - - - 444,235 444,235 - - 444,235 444,235


Interest rate swap - 6,408 - - - - 6,408 - 6,408 - 6,408

Other financial liabilities - - - - - 70,719 70,719 - 70,719 - 70,719

Trade payables - - - - - 203,843 203,843 - - - -

Due to suppliers for investments - - - - - 3,566 3,566 - - - -

Other payables - - - - - 3,884 3,884 - - - -

Total - 6,565 - - - 790,086 796,651 - 84,603 500,756 585,359


There was no transfer between the different levels of hierarchy during 2013.


(a) Financial instruments in level 1

The fair value of financial instruments traded in active markets is based on quoted market prices at

the balance sheet date. A market is regarded as active if quoted prices are readily and regularly

available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency,

and those prices represent actual and regularly occurring market transactions on an arm’s length

basis. The quoted market price used for financial assets held by the Group is the current bid price.

(b) Financial instruments in level 2

The fair value of financial instruments that are not traded in an active market (for example, over-

the-counter derivatives) is determined by using valuation techniques. These valuation techniques

maximize the use of observable market data where it is available and rely as little as possible on

entity specific estimates. If all significant inputs required to fair value an instrument are observable,

the instrument is included in level 2. If one or more of the significant inputs is not based on

observable market data, the instrument is included in level 3.

For level 2, specific valuation techniques used to value financial instruments include:

the fair value of interest rate swaps is calculated as the present value of the estimated future

cash flows based on observable market yield curves. The credit value adjustment is based on

directly observable market credit spreads for the respective counterparts. The debit value

adjustment is considered by estimating the Group own credit rating based on several

representative financial ratios as well as on benchmarking analyses. Adjustments for both

above mentioned risks can be considered as not significant as per December 31, 2013;

the fair value of the AENA upfront payment and guarantee deposits is calculated as the

present value of the estimated future cash flows based on the counterparty credit risk; and

the carrying amount of short term financial assets and liabilities, such us short term

receivables and payables is a reasonable approximation of their fair values.

(c) Financial instruments in level 3 The fair value of the syndicated loan has been estimated by discounting the future cash

flows with observable risk free market interest rates plus a spread for the Group´s own

credit risk. The own credit risk spread is obtained by estimating the Group´s own credit

rating based on several representative financial ratios as well as on benchmarking

analyses. Furthermore, the fair value as per December 31, 2013 should be close to the

amortized cost considering the following aspects:

the “risk free part” of the Loan´s interest rate is linked to Euribor/Libor;

the contractual credit spread is variable as well, that is, the credit spread is periodically

adjusted depending on the credit risk of the Group; and

the syndicated loan has been signed in May 2013. The Group´s own credit risk has not

changed significantly since the date of the signing.

6. Segment reporting

The table below, which was prepared in accordance with the disclosure requirements of IFRS 8,

provides segment information about the Group’s operations as of December 31, 2013 and 2012.

The WDF Group operates in four geographical areas: United Kingdom, Rest of Europe, Americas

and Asia and Middle East, designated as operating segments pursuant to IFRS 8. The criteria

applied to designate these geographical areas as operating segments were based, inter alia, on


the methods used at the highest level of operational decision making to periodically review the

results of the WDF Group and adopt decisions concerning the allocation of resources to the

various operating segments and assess their performance.

The tables below present the relevant information concerning the four geographical areas during

the periods presented in the Consolidated Financial Statements.

In the following table, the column “Unallocated” includes the year’s share of the financial charges

and income taxes, that were not specifically allocated to the operating segments.


United

Kingdom

Rest of

Europe Americas

Asia and

Middle

East

Unallocated Total

Revenue 253,197 139,540 113,320 40,960 - 547,017

Other operating income 3,493 1,001 1,444 881 - 6,819

Total revenue and other operating income 256,690 140,540 114,765 41,840 - 553,836

Depreciation, amortization and impairment losses on

property, plant, equipment and intangible assets(9,295) (9,748) (4,141) (2,158) - (25,342)

Operating profit (loss) 27,566 24 3,211 4,631 - 35,432

Net financial expense (10,588) (10,588)

Adjustment to the value of financial assets (119) (119)

Pre tax profit (loss) 27,566 24 3,211 4,631 (10,708) 24,725

Income tax (4,906) (4,906)

Profit (loss) for the year 27,566 24 3,211 4,631 (15,614) 19,818

For the period from March 27, 2013 to December 31, 2013


2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

Revenue 975,573 961,744 620,678 596,946 322,224 280,648 160,003 162,635 - - 2,078,477 2,001,973

Other operating income 3,885 1,193 11,706 12,976 6,225 6,972 4,201 5,466 - - 26,016 26,607

Total revenue and other operating income 979,458 962,937 632,384 609,922 328,449 287,621 164,203 168,101 - - 2,104,493 2,028,580

Depreciation, amortization and impairment

losses on property, plant, equipment and

intangible assets

(36,742) (40,571) (34,850) (53,665) (10,972) (9,513) (8,713) (8,917) - - (91,276) (112,666)

Operating profit/ (loss) 110,685 85,608 21,870 23,065 16,802 22,479 14,204 18,518 - - 163,561 149,670

Net financial expenses (34,259) (18,473) (34,259) (18,473)

Adjustment to the value of financial assets 2,041 1,844 2,041 1,844

Pre tax profit/(loss) 110,685 85,608 21,870 23,065 16,802 22,479 14,204 18,518 (32,218) (16,629) 131,343 133,041

Income tax (20,469) (30,029) (20,469) (30,029)

Profit for the year 110,685 85,608 21,870 23,065 16,802 22,479 14,204 18,518 (52,687) (46,658) 110,874 103,012

For the twelve months periods ended December 31, 2013 and 2012

United Kingdom Rest of Europe AmericasAsia and Middle

East Unallocated Total


United

Kingdom

Rest of

Europe Americas

Asia and

Middle

East

Not

allocated Total

United

Kingdom

Rest of

Europe Americas

Asia and

Middle

East

Not

allocated Total

Goodwill 423,985 82,243 66,225 44,781 - 617,234 433,124 82,248 43,397 46,348 - 605,117

Other intangible assets 309,943 178,053 25,238 37,244 - 550,478 339,143 203,027 32,864 47,841 - 622,874

Property, plant and equipment 37,908 56,157 32,525 4,510 - 131,100 42,879 19,109 13,771 4,596 - 80,355

Investment property - 6,556 - - - 6,556 - 6,932 - - - 6,932

Financial assets 1,517 37,735 157 1,601 - 41,010 2,177 10,631 232 71 - 13,111

Non-current assets 773,353 360,745 124,145 88,136 - 1,346,378 817,323 321,947 90,263 98,856 - 1,328,389

Net working capital (82,452) (37,521) 8,965 3,958 - (107,050) (83,159) (50,554) 10,931 7,496 - (115,286)

Other non current non financial assets and liabilities (19,799) 250,474 1,330 9,300 (34,839) 206,465 (15,092) (2,616) 2,402 10,260 (60,832) (65,878)

Net invested capital 671,102 573,697 134,440 101,393 (34,839) 1,445,793 719,072 268,777 103,595 116,612 (60,832) 1,147,224

As of December 31,

2013 2012


7. Seasonal pattern

The WDF Group’s volumes are closely related to the flow of travelers, which is highly seasonal in

some businesses. A breakdown of 2013 results by quarter is as follows:

In million of Euro First quarter First Half First nine months Full year

2013 2013 2013 2013

Revenue 397.8 922.9 1,531.5 2,033.7

% on full year 19.6% 45.4% 75.3% 100.0%

Operating profit (loss) 17.6 65.6 128.1 161.1

% on full year 10.9% 40.7% 79.5% 100.0%

Pre-tax profit (loss) 13.0 51.8 106.6 128.9

% on full year 10.1% 40.2% 82.7% 100.0%

Profit (loss) for the year attributable to the owners of the parent 11.7 41.4 89.3 104.5

% on full year 11.17% 39.66% 85.48% 100.00%

The above figures are merely indicative and they cannot be used to predict results. The figures

corresponding to the US Retail business for the fourth quarter have been excluded in the above

table.

8. Guarantees provided, commitments and contingent liabilities

Guarantees

The WDF Group provided guarantees totaling Euro 205,200 thousand as of December 31, 2013

and Euro 140,440 thousand at December 31, 2012, mainly for concession licences and tax

procedures.

The tax related guarantees amount to Euro 48,330 thousand as of December, 31 2013 out of

which Euro 42,300 thousand (including interests) refer to the guarantee deposited by the WDFG

España with the taxation authorities in relation to the income tax inspection of 2006, 2007 and

2008 as reported below.

The Company directors and tax advisors classify the inspection's interpretation as not complying

with the law and, therefore, consider that it is more likely than not that the arguments put forward

against this interpretation will be upheld by any of the possible bodies of appeal.

During 2013, pursuant to the AENA contracts, the bank issued three guarantees for a total amount

of about Euro 46.3 million on behalf of the WDF Group to AENA.

Contingent liabilities

WDFG España S.A. (a subsidiary of WDF) is currently undergoing tax assessments in Spain

related to the application of the Spanish Corporate Income Tax for financial years 2006, 2007 and

2008. The Spanish Tax Authorities are challenging:

the applicability of specific tax deductions to avoid double taxation on domestic dividends,

in the context of a dividend received by the company; and


the calculation of tax effectiveness percentage of the merger difference arisen in 2006 from

the merger between certain entities incorporated in Spain.

Tax liability and interest due according to the assessments (actas en disconformidad) issued by

the Spanish Tax Authorities amount to Euro 41.2 million.

The WDF Group believes, also on the basis of authoritative independent experts’ opinion, that the

two matters challenged by the Spanish Tax Authorities have been correctly and lawfully executed

and that, therefore, the referred audits will not result in obligations giving rise to an outflow of

resources from WDF Group. Consequently, the WDF Group has decided not to record a provision

regarding the above described tax proceedings in Spain.

Commitments

A breakdown by maturity of the future payments in relation to the concession installments at

December 31, 2013 is provided below:


Year

2014 574,836 3,455 571,381

2015 633,455 2,690 630,765

2016 651,489 971 650,518

2017 670,379 958 669,421

2018 660,935 875 660,060

After 2018 1,722,689 1,975 1,720,714

Total 4,913,784 10,925 4,902,859

Total future lease

payments

Sub-lease future

payments

Net future lease

payments

The figures in the table above has been prepared considering the different typology of contracts,

estimations in the flow of passengers and sales surface, among other variables.

The business plan of the Group includes committed investments for the period 2014-2016 in fixed

assets for an amount not exceeding Euro 119 million. This amount considers the investment

commitments related to the AENA contracts, for Euro 94 million throughout their duration.

The WDF Group has commitments to the company HMS Host International and its subsidiary Host

International Inc. in relation to the retail concessions of US Retail Division not transferred on the

acquisition date, for which the necessary authorization will be subsequently granted by the

landlords.


9. Other information

9.1 Related party transactions

The tables below provide an overview of transactions with related parties for the 2013 as reflected

in the balances of the statement of financial position and the income statement:

Transactions with Edizione S.r.l.


Statement of financial position 2013 2012

Other receivable -current 51 164 (113)

Trade receivables - - -

Trade payables (40) - (40)

Other payables - current - - -

Other financial liabilities current and non current - - -

As of December 31,

Edizione S.r.l.

Change


Income statement 2013 2012

Revenues and other - - -

Operating expenses* (57) (57) -

Net financial expenses - - -

Edizione S.r.l.

* "Operating expenses" includes "raw material, supplies and goods", "Personnel expenses", "Cost for leases, rental concessiiones

and trademark roaylties "and "Other operaring expenses"


ended December 31,

For the period

from March 27,

2013 to

December 31,

2013

Transactions with other related parties


Statement of financial position 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

Other receivable -current 1 235 - - 1,961 - - - - -

Trade receivables - - - 3 18 - - - - 35

Trade payables (2,291) - (161) - (13,037) - - - - -

Other payables - current (520) (1,384) - - (1,767) (54) - (5) - (4)

Other financial liabilities current and non current - (70,079) - - (3,855) - - - - -

As of December 31,

Aeroporti di Roma

S.p.A.ADR Tel. S.p.A.HMS Host

Autogrill catering UK

LtdAutogrill S.p.A.


Incom statement 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

Revenue and other - 343 1,191 - - - - - - - - - - - - - - -

Operating expenses* (57) (1,482) (1,335) - - (45) (1,407) (2,118) (44) - - (7) - - (1,159) - - (9)

Net financial expenses - (654) (2,256) - - - - (38) - - - - - - - - - -

* "Operating expenses" includes "raw material, supplies and goods", "Personnel expenses", "Cost for leases, rental concessiiones and trademark roaylties "and "Other operaring expenses"

Autogrill catering UK Ltd HMS Host ADR Tel. S.p.A. Aeroporti di Roma S.p.A. ADR Mobility Srl

For the period

from March 27,

2013 to

December 31,

2013

For the period

from March 27,

2013 to

December 31,

2013

For the period

from March 27,

2013 to

December 31,

2013

For the period

from March 27,

2013 to

December 31,

2013

For the period

from March 27,

2013 to

December 31,

2013


periods ended

December 31,


periods ended

December 31,


periods ended

December 31,


periods ended

December 31,


periods ended

December 31,


periods ended

December 31,

For the period

from March 27,

2013 to

December 31,

2013

Autogrill S.p.A.

The incidence of related parties’ transactions on the statement of financial position and income statement of

the WDF Group is reported below:



Statement of financial positionTotal related parties Total Group %

Other receivable -current 2,013 41,595 4.84%

Trade receivables 18 36,477 0.05%

Trade payables (15,529) (235,493) 6.59%

Other payables - current (2,287) (88,948) 2.57%

Other financial liabilities current and non current (3,855) (8,029) 48.01%


Income statement Total related parties Total Group %

Revenue and other 343 2,104,493 0.02%

Operating expenses* (3,657) (1,940,931) 0.19%

Net financial expenses (692) (34,259) 2.02%



Income statement Total related parties Total Group %

Revenue and other - 553,836 0.00%

Operating expenses* (1,521) (518,403) 0.29%

Net financial expenses - (10,588) 0.00%



For the twelve months periods ended December 31, 2013

For the period from March 27, 2013 to December 31, 2013

9.2 Remuneration of directors and executives with strategic responsibilities

The following remuneration was paid to members of the Board of Directors and to executive with

strategic responsibilities of WDF Group during the twelve months period ended December 31,

2013:

Gianmario Tondato Da Ruos Chairman 2013-2015 17,058 - - - - 17,058

Jose Maria Palencia SaucedoExecutive

Director from 16.09.2013 to 2015 441,338 153,047 1,192,561 21,525 - 1,808,471

Gianni Mion Director 2013-2015 16,458 - - - - 16,458

Paolo Roverato Director 2013-2015 17,058 - - - 11,794 28,852

Lynda Christine Tyler-Cagni Director from 16.09.2013 to 2015 16,458 - - - 4,997 21,455

Gilberto Benetton Director from 16.09.2013 to 2015 17,058 - - - - 17,058

Alberto De Vecchi Director from 16.09.2013 to 2015 16,458 - - - - 16,458

Laura Cioli Director from 16.09.2013 to 2015 17,058 - - - 11,794 28,852

Carla Cico Director from 16.09.2013 to 2015 17,058 - - - 6,797 23,855

Total Directors 576,002 153,047 1,192,561 21,525 35,382 1,978,517

2,098,834 665,217 280,343 365,381 - 3,409,775

Total 2,674,836 818,264 1,472,904 386,906 35,382 5,388,292

Other

(Euro)

Total

(Euro)

Key management with strategic responsabilities

Name Office Term of officeRemuneration

(Euro)

Bonus and

other incentives

(Euro)

Non monetary

benefits

(Euro)

Long-term

incentive plan

(Euro)

The CEO’s remuneration includes his salary, bonuses paid under the annual incentive plan and

bonuses accrued under the long-term incentive plan. “Remuneration” also includes compensation

related to the long term incentive plan paid in 2013.

The CEO’s contract states that if he resigns with just cause or is dismissed by WDFG SAU without

just cause, the company must pay him about Euro 2.2 million. In the event of discontinuation of

office, the CEO shall retain the right to variable compensation under the incentive plans, subject to

the achievement of the targets and satisfying any other conditions stated in the plans, during the

relevant period of time.


A significant portion of the variable compensation received by the CEO and by Executives with

strategic responsibilities is tied to the achievement of specific targets established in advance by the

Board, by virtue of their participation in management incentive plans. In particular, the CEO and

top managers participated during the year in an annual bonus system involving earnings and

financial targets and other strategic objectives for the Group and/or the relevant business unit, as

well as individual objectives. This was in addition to the three-year incentive plan for 2010-2012

paid out in April 2013.

Another Long Term Incentive Plan is in place relating to the years 2011 and 2012 and the

participants include those Executives with Strategic responsibilities. The LTIP system involves

financial targets for the Group, and the scheme objective was to retain key executives whilst

driving Group financial performance. The LTIP bonus is deferred for three years once it is earnt,

and therefore payable in April 2014 and April 2015 respectively.

Share options plan

120,000 share options have been granted to one director of the WDF Group. The stock option

plan, originally implemented by Autogrill S.p.A., was modified on June 6, 2013 by Autogrill S.p.A.

shareholder’s meeting. The plan conveys the right to acquire by each option one Autogrill, S.p.A.

common share and one World Duty Free S.p.A. common share at a specified exercise price.

The main characteristics of the stock option plan are reported below:

the exercise price of the granted option is equal to the average market price of share on the

month before grant date and was calculated separately for Autogrill share and WDF share

after the Demerger;

options are conditional on the employee completing a certain multi-year period service

ending April 20, 2014;

the options are exercisable subject to the WDF Group and Autogrill S.p.A. achieving market

price jointly calculated; and

options may be exercised during the period between April 20, 2014 and April 30, 2018.

An independent external advisor has been engaged to calculate the fair value of the stock options,

based on the value of shares on the grant date estimated dividend payments, the term of the plan

and the risk free rate of return. The calculation was performed using the binomial method. The

same advisor was engaged to update the evaluation after the above mentioned Demerger.

The cost recognized by WDF Group during 2013 amounts to Euro 337 thousand (Euro 45

thousand for 2012).

Share options outstanding at the end of 2013 have an exercise price of Euro 4.17 for Autogrill

share and Euro 5.17 for WDF share.

9.3 Fees to the statutory auditors

Statutory auditors’ fees for the twelve months period ended December 31, 2013 are as follows:

Marco Giuseppe Maria Rigotti Chairman 2013-2015 28,521 4,397 32,918

Patrizia Paleologo Oriundi Standing auditor 2013-2015 19,014 2,932 21,946

Massimo Catullo Standing auditor 2013-2015 19,014 2,932 21,946

Total

(Euro)Name Office Term of office

Fees

(Euro)

Other fees

(Euro)


9.4 Fees to the independent auditors

The table below provides an overview of the fees for the independent auditors and other

companies in their network for the auditing services and other services provided:

Type of service Service provider RecipientFees

(in thousand of Euro)

Auditing Principal auditor Parent 35

Auditor in principal auditor´s network Subsidiaries 671

Attestation Principal auditor Parent -


Other services Principal auditor Parent* 603


Total 1,552

* Fees for “Other services” are referred to auditing and attestation services related to the issuance of the new shares and their related

listing, accounted by WDF S.p.A. into a specific equity reserve.

10. Significant non-recurring events and transactions

Except for the partial proportional demerger of Autogrill S.p.A. in favor of WDF S.p.A., during 2013,

there were no significant non-recurring events or transactions as defined by Consob’s Resolution

15519 and Communication DEM/6064293.

11. Atypical or unusual transactions

No atypical or unusual transactions, as defined by Consob Communications DEM/6037577 of 28

April 2006 and DEM/6064293 of 28 July 2006, were performed in 2013, unless the partial

proportional demerger of Autogrill S.p.A. in favor of WDF S.p.A., as communicated to the market,

in accordance with Consob Regulation 11971 of May 11, 1999.


12. Events after the reporting period


an adjustment to the figures in the financial statements or required additional disclosures in these

notes.

13. Authorization for publication

The Board of Directors authorized the publication of these draft financial statements at its meeting

of March 10, 2014.


Annex


Company Registered office CurrencyShare/quota

capital

% held at

December 31,

2013

% held at

December 31,

2012

Shareholders/quota holders

PARENT

World Duty Free, S.p.A. Milan EUR 63,720,000 50.10% - Schematrentaquattro, S.p.A.

COMPANIES CONSOLIDATED LINE-BY-LINE

World Duty Free Group, S.A.U. Madrid EUR 1,800,000 100.00% 100.00% World Duty Free, S.p.A.

World Duty Free Group España, S.A. Madrid EUR 10,772,462 99.93% 99.93% World Duty Free Group, S.A.U.

Aldeasa Chile, Limitada Santiago de Chile USD 2,516,819 100.00% 100.00% World Duty Free Group España, S.A.

Aldeasa Servicios Aeroportuarios, Ltda Santiago de Chile USD 15,000 99.99% 99.99% World Duty Free Group España, S.A.

Sociedad de Distribución Comercial Aeroportuaria de Canarias, S.L. Telde (Gran Canaria) EUR 667,110 60.00% 60.00% World Duty Free Group España, S.A.

Aldeasa Colombia, Ltda. Cartagena de Indias (Colombia) COP 2,356,075,724 100.00% 100.00% World Duty Free Group España, S.A.

Aldeasa México, S.A. de C.V. Cancún PXM 60,962,541 99.99% 99.99% World Duty Free Group España, S.A.

0.01% 0.01% World Duty Free Group, S.A.U.

Prestadora de Servicios en Aeropuertos, S.A. de C.V. Cancún PXM 50,000 99.99% 99.99% World Duty Free Group España, S.A.


Aldeasa Cabo Verde, S.A. Ilha do Sal (Cabo Verde) CVE 6,000,000 99.99% 99.99% World Duty Free Group España, S.A.


Aldeasa Italia S.L.R. Naples EUR 10,000 100.00% 100.00% World Duty Free Group España, S.A.

Aldeasa Duty Free Comercio e Importación de Productos LTDA Sao Paulo BRL 1,560,000 99.79% 99.99% World Duty Free Group España, S.A.


Palacios y Museos, S.L.U. Madrid EUR 160,000 100.00% 100.00% World Duty Free Group España, S.A.

Audioguiarte Servicios Culturales, S.L.U. Madrid EUR 251,000 100.00% 100.00% Palacios y Museos, S.L.U.

Panalboa, S.A. Ciudad de Panamá PAB 150,000 80.00% 80.00% Palacios y Museos, S.L.U.

Aldeasa Jamaica Ltd St James (Jamaica) JMD 23,740,394 100.00% 100.00% World Duty Free Group España, S.A.

WDFG Germany GmbH Düsseldorf EUR 5,250,000 100.00% 100.00% World Duty Free Group España, S.A.

WDFG Italia, S.r.L. (ARI) in liquidation Rome EUR 10,000 100.00% 100.00% World Duty Free Group España, S.A.

Cancouver Uno S.L.U. Madrid EUR 3,010 100.00% 100.00% World Duty Free Group UK Holdings, Ltd.

WDFG Vancouver LP Vancouver CAD 9,500,000 99.99% 99.99% Cancouver Uno S.L.U.

0.01% 0.01% WDFG Canada INC

WDFG Canada INC Vancouver CAD 1,000 100.00% 100.00% Cancouver Uno S.L.U.

Aldeasa Jordan Airport Duty Free Shops Amman USD 705,218 100.00% 100.00% World Duty Free Group UK Holdings, Ltd.

WDFG US, Inc. Delaware USD 149,072,737 100.00% 100.00% World Duty Free Group UK Holdings, Ltd.

Alpha Keys Orlando Retail Associates LLP Orlando USD 100,000 85.00% 85.00% WDF US, Inc.

World Duty Free US, Inc. Orlando USD 1,400,000 100.00% 100.00% WDFG US, Inc.

Aldeasa Atlanta, LLC Atlanta USD 1,672,000 100.00% 100.00% WDFG US, Inc.

Aldeasa Atlanta JV Atlanta USD - 51.00% 51.00% Aldeasa Atlanta, LLC

25.00% 25.00% WDFG US, Inc.

Aldeasa Curaçao N.V. Curacao USD 500,000 100.00% 100.00% World Duty Free Group UK Holdings, Ltd.

Autogrill Lanka, Ltd Colombo (Sri Lanka) SLR 30,000,000 99.00% 99.00% World Duty Free Group UK Holdings, Ltd.

Alpha-Kreol (India) Pvt Ltd Mumbai INR 100,000 50.00% 50.00% World Duty Free Group UK Holdings, Ltd.

Airport Retail Pvt Limited (formerly called Alpha Future Airport Retail PvT Ltd) Mumbai INR 601,472,800 50.00% 50.00% Alpha Airports Retail Holdings Pvt Limited

50.00% 50.00% World Duty Free Group UK Holdings, Ltd.

WDFG Helsinki Oy Vantaa (Finland) EUR 2,500 100.00% - World Duty Free Group España, S.A.

World Duty Free Group UK Holdings, Ltd. London GBP 12,484,395 80.10% 80.10% World Duty Free Group, S.A.U.

19.90% 19.90% World Duty Free Group España, S.A.

Autogrill Holdings UK, Ltd. London GBP 1,000 100.00% 100.00% World Duty Free Group UK Holdings, Ltd.

WDFG UK Limited London GBP 360,000 100.00% 100.00% World Duty Free Group UK Holdings, Ltd.

WDFG International Limited London GBP 2 100.00% 100.00% World Duty Free Group UK Holdings, Ltd.

WDFG Holdings UK Pension Trustees Ltd London GBP 100 100.00% 100.00% WDFG UK Limited

Alpha Retail Ireland Ltd Dublin EUR 1 100.00% 100.00% WDFG UK Limited

WDFG Jersey Limited Jersey GBP 4,100 100.00% 100.00% WDFG UK Limited

Alpha Airports Group (Channel Islands) Ltd St Helier, Jersey GBP 21 100.00% 100.00% World Duty Free Group UK Holdings, Ltd.

Alpha Airports Retail Holdings Pvt Limited Mumbai INR - 100.00% - World Duty Free Group UK Holdings, Ltd.

WDFG North America, LLC Delaware USD 72,047,935 100.00% - WDFG US, Inc.

WDFG-Howell-Mickens, Terminal A Retail II, LLC Delaware USD - 65.00% - WDFG North America, LLC

WDFG-Love Field Partners III, LLC Delaware USD - 51.00% - WDFG North America, LLC

WDFG-SPI DEN Retail, LLC Delaware USD - 75.00% - WDFG North America, LLC

WDFG JV Holdings, LLC Delaware USD - 100.00% - WDFG North America, LLC

AIRSIDE E JV Delaware USD - 50.00% - WDFG JV Holdings, LLC

WDFG-Tinsley JV Delaware USD - 84.00% - WDFG JV Holdings, LLC

WDFG PROSE JV II Delaware USD - 70.00% - WDFG JV Holdings, LLC

WDFG-ELN MSP Terminal 2 Retail, LLC Delaware USD - 90.00% - WDFG JV Holdings, LLC

Houston 8-WDFG JV Delaware USD - 60.00% - WDFG JV Holdings, LLC

WDFG Bush Lubbock Airport JV Delaware USD - 90.00% - WDFG JV Holdings, LLC

WDFG Adevco JV Delaware USD - 70.00% - WDFG JV Holdings, LLC

WDFG-Howell-Mickens JV Delaware USD - 65.00% - WDFG JV Holdings, LLC

WDFG-Solai MDW Retail, LLC Delaware USD - 66.00% - WDFG JV Holdings, LLC

WDFG-Diversified JV Delaware USD - 90.00% - WDFG JV Holdings, LLC

WDFG-Java Star JV Delaware USD - 50.01% - WDFG JV Holdings, LLC

WDFG-Howell Mickens Terminal A Retail I JV Delaware USD - 65.00% - WDFG JV Holdings, LLC

Phoenix-WDFG JV Delaware USD - 70.00% - WDFG JV Holdings, LLC

WDFG-Houston 8 Terminal E, LLC Delaware USD - 60.00% - WDFG JV Holdings, LLC

WDFG-Chelsea JV 1 Delaware USD - 65.00% - WDFG JV Holdings, LLC

WDFG-Love Field Partners II, LLC Delaware USD - 51.00% - WDFG JV Holdings, LLC

WDFG-DFW AF, LLC Delaware USD - 50.01% - WDFG JV Holdings, LLC

WDFG-Houston 8 San Antonio JV Delaware USD - 63.00% - WDFG JV Holdings, LLC

Miami Airport Retail Partners JV Delaware USD - 70.00% - WDFG JV Holdings, LLC

WDFG-Howell Mickens JV III Delaware USD - 51.00% - WDFG JV Holdings, LLC

WDFG-DMV DTW Retail LLC Delaware USD - 79.00% - WDFG JV Holdings, LLC

COMPANIES CONSOLIDATED PROPORTIONALLY

Alpha ASD Ltd London GBP 20,000 50.00% 50.00% World Duty Free Group UK Holdings, Ltd.

COMPANIES CONSOLIDATED USING THE EQUITY METHOD

Souk Al Mohuajir DF Shops Tanger DIRHA 6,500,000 - 36.00% World Duty Free Group España, S.A.

Creuers del Port de Barcelona S.A. Barcelona EUR 3,005,061 23.00% 23.00% World Duty Free Group España, S.A.


Statement of the CEO and manager in charge of financial Reporting

STATEMENT

about the consolidated financial statements

pursuant to art. 81-ter of Consob Regulation 11971

of 14 May 1999 (as amended)

1. We, the undersigned, José María Palencia as Chief Executive Officer and David Jiménez-Blanco as manager in charge of Financial Reporting of World Duty Free S.p.A., hereby declare, including in accordance with art. 154-bis (3) and (4) of Legislative Decree no. 58 of 24 February 1998:

a) the adequacy of, in relation to the characteristics of the business; and

b) due compliance with the administrative and accounting procedures for the preparation of the consolidated financial statements during 2013.

2. No significant findings have come to light in this respect.

3. We also confirm that:

3.1 the consolidated financial statements:

a) have been prepared in accordance with the applicable International Financial Reporting Standards endorsed by the European Union pursuant to Regulation 1606/2002/EC of the European Parliament and the Council of 19 July 2002;

b) correspond to the ledgers and accounting entries;

c) provide a true and fair view of the financial position and results of operations of World Duty Free S.p.A. and of companies included in the consolidation.

3.2 The directors’ report includes a reliable description of the performance and financial position of the issuer and the entities in the scope of consolidation, along with the main risks and uncertainties to which they are exposed.

Milan, March 10, 2014

_____________________ _____________________

Mr José María Palencia Mr David Jiménez-Blanco

Chief Executive Officer Manager in charge

of Financial Reporting

World Duty Free S.p.A. – Part III - Separate financial statements as of December 31, 2013

PART III – SEPARATE FINANCIAL STATEMENTS

1. SEPARATE FINANCIAL STATEMENTS

1.1 STATEMENT OF FINANCIAL POSITION

Euro NotesAs of December 31,

2013

of which

related parties

ASSETS

Current assets

Cash and cash equivalents 2.3.1 1,629,208 -

Other receivables 2.3.2 157,568 -

Total current assets 1,786,776 -

Non-current assets

Property, plant and equipment 2.3.3 6,706 -

Investments 2.3.4 428,878,184 -

Other receivables 1,098 -

Total non-current assets 428,885,988 -

TOTAL ASSETS 430,672,764 -

LIABILITIES AND EQUITY

LIABILITIES

Current liabilities

Trade payables 2.3.5 4,699,781 2,314,959

Other payables 2.3.6 563,425 -

Due to others 2.3.7 14,431 14,431

Total current liabilities 5,277,637 2,329,390


Due to others 2.3.7 6,300,000 6,300,000

Total non-current liabilities 6,300,000 6,300,000

Equity 2.3.8 419,095,126 -

TOTAL LIABILITIES AND EQUITY 430,672,764 8,629,390


1.2 INCOME STATEMENT

Euro NotesFor the year ended

December 31, 2013

of which

related parties

Dividends and other income from investments - -

Other operating income - -

Personnel expenses 2.4.1 (35,410) (35,410)

Other operating expenses 2.4.2 (894,179) (208,778)

Depreciation, amortization and impairment (667) -

Operating profit (930,256) (244,188)

Financial income - -

Financial expense 2.4.3 (28,160) (26,404)

Pre-tax profit (loss) (958,417) (270,592)

Income tax 2.4.4 - -

Profit (loss) for the year (958,417) (270,592)

1.3 STATEMENT OF COMPREHENSIVE INCOME

Profit (loss) for the year - (958,417)

Items that will not be subsequently reclassified to profit or loss - -

Items that will be subsequently reclassified to profit or loss - -

Total comprehensive income (expense) for the year - (958,417)

For the year ended

December 31, 2013Euro Notes


1.4 STATEMENT OF CHANGE IN EQUITY (note 2.3.8)

EuroShare

Capital

Legal

Reserve

Other

reserves and

retained

earnigns

Profit

(loss) for

the year

Equity

Incorporation and contribution to share capital 120,000 - 10,000 - 130,000

Comprehensive income for the year

Profit (loss) for the year - - - (958,417) (958,417)

Total comprehensive income for the year - - - (958,417) (958,417)

Transaction with owners of the parent, recognized

directly in equity

Partial demerger of Autogrill S.p.A. 63,600,000 12,720,000 352,558,184 - 428,878,184

Transaction costs for the issuance and the listing of the shares - - (8,954,641) - (8,954,641)

Total transaction with owners of the parent, recognized

directly in equity 63,600,000 12,720,000 343,603,543 - 419,923,543

Balance as of December 31, 2013 63,720,000 12,720,000 343,613,543 (958,417) 419,095,126

1.5 STATEMENT OF CASH FLOWS


December 31, 2013

Opening net cash and cash equivalents 2.3.8 -

Pre-tax profit (loss) and net financial expense for the year (930,256)

Amortization, depreciation and impairment losses on non-current assets,

net of reversals667

Change in working capital in the year 1,829,476

Cash flows from operating activities 899,887

Net interests paid (11,972)

Taxes paid -

Net cash flows used in operating activities 887,914

Acquisition of tangible assets 2.3.3 (7,372)

Net cash flows from investing activities (7,372)

Opening of intercompany loans from subsidiaries 2.3.7 6,300,000

Transaction costs for the issuance and the listing of the shares 2.3.8 (5,681,334)

Incorporation of the company 2.3.8 130,000

Net cash flows used in financing activities 748,666

Cash flow for the year 1,629,208

Closing net cash and cash equivalents 2.3.1 1,629,208



December 31, 2013

Opening net cash and cash equivalents - balance as of March 27, 2013 2.3.8 -

Cash and cash equivalents -

Current account overdrafts -

Closing net cash and cash equivalents - balance as of December 31, 2013 2.3.1 1,629,208

Cash and cash equivalents 1,629,208

Current account overdrafts -

WDF S.p.A. – Part III - Separate financial statements as of December 31, 2013

2. NOTES TO THE SEPARATE FINANCIAL STATEMENTS

2.1 GENERAL INFORMATION

Company operations

World Duty Free S.p.A. (hereinafter also “WDF S.p.A.”) is a public limited company organized in

accordance with the laws of the Italian Republic. WDF S.p.A. is the parent company of WDF Group

which directly holds the entire interest in World Duty Free Group SAU (hereinafter also “WDFG

SAU”), a company under Spanish law with registered office in Madrid, operating in the Travel

Retail & Duty Free sector.

WDF S.p.A. was incorporated on March 27, 2013 and registered with the Novara Company

Register from April, 3 2013. The duration of the company is fixed at December 31, 2070 and may

be extended on one or more occasions. The separate financial statements for the year ended

December 31, 2013 are, therefore, the first financial statements of the company.

As parent company, WDF S.p.A. has also prepared the consolidated financial statements for WDF

Group for the year ended December 31, 2013.

The WDF’s registered office is located in Novara, via Greppi, 2.

The secondary office is in Milan, Corso di Porta Vittoria 16.

Demerger of Autogrill S.p.A. in favor of WDF S.p.A.

On October 1, 2013 the partial proportional demerger of Autogrill S.p.A. in favor of WDF S.p.A. (the

“Demerger”) became effective, following the resolutions of the respective shareholders’ meetings

on June 6, 2013.

The project of the Demerger was prepared jointly by Autogrill S.p.A. and WDF S.p.A. boards of

directors pursuant to Sections 2506-bis and 2501-ter of the Civil Code and was approved by those

boards of directors on May 3, 2013. The project of the Demerger was made available on Autogrill’s

website on May 4, 2013. The deed of Demerger was executed on September 26, 2013 and it was

filed for registration with the Novara Companies’ Register on September 27, 2013.

The scope of the Demerger was predominantly industrial and is aimed to separate the two sectors,

Food & Beverage and Travel Retail & Duty Free, in which Autogrill Group operated, considering

that these two sectors have substantially different features from each other, both in terms of market

and competitive context of reference, as well as in terms of dynamic management and

development strategies; the two sectors are also managed independently and no significant

synergies connect one to the other. These features are reflected in the different historical and

projected results of the two sectors and development strategies that they will enact in the coming

years.

The Demerger aimed to create two distinct groups, focused in their own businesses, and will allow

each of them to better pursue its strategies and improve its performance by leveraging their

respective strengths.


With the Demerger, Autogrill S.p.A. transferred to WDF S.p.A. its investment in WDFG SAU, a

parent company of a group operating in the Travel Retail & Duty Free sector.

As a result of the Demerger, on October 1, 2013, the net assets of WDF S.p.A. increased by Euro

428,878 thousand and, at the same time, the net assets of Autogrill S.p.A. decreased by the same

amount. Therefore, the shareholders of Autogrill S.p.A. received, for no consideration, shares in

WDF S.p.A. in the same number and of the same class of those previously held in Autogrill S.p.A..

Since October 1, 2013 the shares of WDF S.p.A. and of Autogrill S.p.A. have been listed

separately on the MTA (Mercato Telematico Azionario) in Milan.

The two companies operate separately and independently and are related parties because they

are subsidiaries of Schematrentaquattro S.p.A., which holds, as at December 31, 2013 50.1% of

the share capital of Autogrill S.p.A. and 50.1% of the share capital of WDF S.p.A..

Schematrentraquattro S.p.A. is fully owned by Edizione S.r.l..

2.2 ACCOUNTING POLICIES

General Standards

These financial statements were prepared in accordance with the International Financial Reporting

Standards (IFRS) published by the International Accounting Standards Board (IASB) and endorsed

by the European Union. IFRS (or “International Accounting Standards”) mean International

Financial Reporting Standards including International Accounting Standards (IAS), supplemented

by the interpretations issued by the International Financial Reporting Interpretations Committee

(IFRIC), previously called the Standing Interpretations Committee (SIC).

These financial statements are also compliant with the rules on reporting formats adopted by

CONSOB in accordance with art. 9 of Legislative Decree 38/2005 and with the other CONSOB

regulations on financial reporting.

The financial statements have been prepared in accordance with the historical cost principle,

except for items that, in accordance with IFRS, are measured at fair value and in accordance with

the going concern assumption.

These financial statements are denominated in Euro. The statement of financial position, income

statement, the statement of comprehensive income, the statement of change in equity and the

statement of cash flows are expressed in Euro. The amounts in the illustrative notes, are

expressed in thousands of Euro, unless otherwise stated.

Structure, format and content of the financial statements

WDF S.p.A. made the following choices regarding the structure, format and content of the financial

statements:

(i) in the statement of financial position, current and non-current assets and liabilities are

shown separately;

(ii) in the income statement, costs and revenue are classified by nature;

(iii) the statement of comprehensive income is presented separately; and

(iv) the statement of cash flows is presented in accordance with the indirect method.


The structure and the formats used, as described above, are those best suitable to present the

results of operations, financial position and cash flows of WDF S.p.A..

The financial statements were prepared with clarity and to give a true and fair view of the financial

position, results of operations and cash flows of WDF S.p.A..

Accounting Policies and valuation criteria

The main valuation criteria and significant accounting policies adopted in the preparation of the

financial statements are described below.


Property, plant and equipment are recognized when it is probable that use of the asset will

generate future benefits and when the cost of the asset can be reliably determined. They are

stated at purchase price or production cost, including ancillary charges and direct or indirect costs

to the extent that can reasonably be attributed to the assets. Property, plant and equipment are

systematically depreciated on a straight-line basis at rates deemed to reflect their estimated useful

lives. WDF S.p.A. systematically reviews the useful life of each asset annually. Cost includes

reasonably estimated expenses (if compatible with IAS 37) that are likely to be incurred on expiry

of the relevant contract to restore the asset to the contractually agreed condition, assuming that

maintenance will continue to be carried out properly and with the usual frequency. Components of

significant value or with a different useful life (50% longer or shorter than that of the asset to which

the component belongs) are considered separately when determining depreciation.

The depreciation periods used are as follows:


Furniture 10 years

Electronic machinery 3-5 years

An asset’s useful life is reviewed annually, and is changed when maintenance work during the year

has involved enhancements or replacements that materially alter its useful life.

Regardless of depreciation already recognized, if there are impairment losses, the asset is

impaired accordingly.

Costs incurred to enhance and maintain an asset that produce a material and tangible increase in

its productivity or safety or extend its useful life are capitalized and increase the carrying amount of

the asset. Routine maintenance costs are taken directly to the income statement.

The gain or loss from the sale of property, plant or equipment is the difference between the net

proceeds of the sale and the asset’s carrying amount, and is recognized under “Other operating

income” or “Other operating costs”.

Investments

Investments in subsidiaries and other companies are measured at cost adjusted for impairment

losses as described below. At each reporting date, the company tests whether there are internal or

external indicators of impairment of the investment. If so, the recoverable amount of the assets is

estimated to determine any impairment loss.


The recoverable amount is the higher of market value (fair value less costs to sell) and value in

use. In determining value in use, the estimated future cash flows are discounted at their present

value using a pre-tax rate that reflects current market assessment of the time value of money and

the risks specific to the asset. The fair value of investments in subsidiaries and associates is

determined based on the market value when available, or otherwise, their recoverable amount is

taken as their estimated value in use, calculated by discounting the cash flows associated with

their forecast results.

If the recoverable amount of the investment is estimated to be less than its carrying amount, it is

reduced to the recoverable amount. Impairment losses are recognized in the income statement.

If the reason for impairment loss no longer exists, the investment in subsidiaries is reversed to the

new estimate of recoverable amount, which may not exceed the carrying amount that the

investment would have had if the impairment loss had not been charged. The reversal of

impairment is taken to the income statement.

Other receivables

“Other receivables” are initially recognized at fair value, and subsequently at amortized cost, using

the effective interest method, if the financial effect of payment deferral is material. They are

impaired to reflect estimated impairment losses.

Cash and cash equivalents

Cash and cash equivalents include the cash and the current accounts with banks and post offices,

as well as the demand deposits and other highly liquid short-term financial investments, with

maturity of three months or less on the acquisition date, that are immediately convertible to cash;

they are stated at face value as they are subject to no significant risk of impairment.

Equity

Share capital

The share capital is composed wholly of ordinary shares.

Costs for equity transactions

Transaction costs directly attributable to equity transactions are accounted for and deducted from

equity.

Trade payables

“Trade payables” are initially recognized at fair value, normally the same as face value, net of

discounts, returns and billing adjustments, and subsequently at amortized cost, if the financial

effect of payment deferral is material.

Due to others

“Due to others” are initially recognized at fair value taking account of the amounts received, net of

transaction costs, and are subsequently measured at amortized cost using the effective interest

method, if the financial effect of payment deferral is material.


Recognition of revenue and costs

Dividends are recognized when the company is entitled to receive payment.

Purchases and sales of goods are recognized on transfer of title at fair value, i.e., the price paid or

received net of returns, rebates, sales discounts and year-end bonuses.

Service revenue and costs are recognized according to the stage of completion at year end. Stage

of completion is determined according to measurements of the work performed. When the

services covered under a single contract are provided in different years, the consideration will be

broken down by service provided on the basis of the relative fair value.

Recoveries of costs borne on behalf of others are recognized as a deduction from the related cost.

Financial income and expense

Financial income includes interests on invested liquidity (including financial assets available for

sale), which are recognized on an accrual basis using the effective interest method.

Financial expense includes interests on loan.

Net foreign exchange gain or losses on financial assets/liabilities are shown under financial income

and expense on the basis of the net gain or loss produced by foreign currency transactions.

Income tax

Tax for the year is the sum of current and deferred taxes recognized in profit or loss for the year,

with the exception of items recognized directly in equity or in other comprehensive income.

Current tax is calculated on taxable income for the year. Taxable income differs from the result

reported in the income statement because it excludes costs and income that will be deducted or

taxed in other years, as well as items that will never be deducted or taxed. Current tax liabilities are

determined using the tax rates in effect (on an official or de facto basis) on the reporting date.

Deferred tax liabilities are generally recognized for all taxable temporary differences, while

deferred tax assets are recognized to the extent that future taxable income is likely to be earned

allowing use of the deductible temporary differences. Specifically, the carrying amount of deferred

tax assets is reviewed at each reporting date based on the latest forecasts as to future taxable

income.

Deferred tax liabilities are recognized on taxable temporary differences relating to equity

investments in subsidiaries, associates or joint ventures, unless the company is able to monitor the

reversal of these temporary differences and they are unlikely to be reversed in the foreseeable

future.

Deferred tax assets and liabilities are measured using the tax rate expected to apply at the time

the asset is realized or the liability is settled, taking account of the tax rates in force at the close of

the year.

Deferred tax assets and liabilities are offset when there is a legal right to offset current tax

balances, when they pertain to the same tax authorities, and when the company plans to settle its

current tax assets and liabilities on a net basis.

WDF S.p.A. agreed to be included in the national tax consolidation scheme of Edizione S.r.l. for

the three-year period from 2013 to 2016, in accordance with provisions of the consolidated Income


Tax Act. The regulation signed by the parties provides for payment in full of the amount

corresponding to the transferred losses or profits times the IRES (corporate tax) rate, as well as

the transfer of any tax assets. In particular, any fiscal losses will be transferred whereby Edizione

S.r.l. would utilize them within the tax consolidation scheme.

The net current tax asset or liability for the year, in respect of IRES only, will be therefore

recognised as a receivable or payable due from/to Edizione S.r.l. and then shown under “Other

receivables” or “Other payables”.

Foreign currency transactions

Foreign currency transactions are translated into the functional currency using the transaction date

exchange rate. Monetary assets and liabilities denominated in foreign currencies are translated

into the functional currency based on the exchange rate at the reporting date. Exchange rate gain

and losses are recorded in the income statement.

Use of estimates

The preparation of the separate financial statements and illustrative notes requires management,

on the basis of the IFRS requirements, to make estimates and assumptions that affect the carrying

amounts of assets, liabilities, costs and income and the disclosure about contingent assets and

liabilities at year end. Actual results may differ. Estimates are used to determine the allowances for

impairment, the impairment losses on assets and taxes. Estimates and assumptions are

periodically reviewed and the effect of any change is immediately taken to the income statement of

the current and future years.

New standards and interpretations not yet applicable

The table below lists the IFRS, interpretations, amendments to existing standards and

interpretations or specific provisions contained in standards or interpretations approved by the

IASB, showing those that were endorsed and not endorsed by the European Union as of the date

of the preparation of these financial statements:

Description

Endorsed by the

EU at the date of

the financial

Effective date

IFRS 9: “Financial instruments” NO Annual periods beginning on or after January 1, 2015

Annual improvements to IFRSs 2011-2013

Cycle NO Annual periods beginning on or after January 1, 2014

Amendment to IAS 27 “Separate Financial

Statements”December 2012 Annual periods beginning on or after January 1, 2014

Amendment to IAS 32 “Financial

instruments Presentation” Offsetting financial

assets and financial liabilities

December 2012 Annual periods beginning on or after January 1, 2014

IAS 28 (revised 2011) “Investments in

associates andjoint ventures”December 2012 Annual periods beginning on or after January 1, 2014

Amdendements to IAS 36 "Recoverable

Amounts Disclosures for Non -Financial

Assets"


Amdendements to IAS 39 "Novation of

Derivatives and Continuation of Hedge

Accounting"



No significant effects should arise from the application of the above mentioned accounting

standards.

WDF S.p.A. did not opted for early adoption of standards or interpretations which have effective

date as annual period beginning after January 1, 2014.

2.3 NOTES TO THE STATEMENT OF FINANCIAL POSITION

Current assets

2.3.1 Cash and cash equivalents

The item amounted to Euro 1,629 thousand, reflects the cash available on current bank deposits

2.3.2 Other receivables

The item amounted to Euro 158 thousand refers to advance payments to suppliers for fiscal

consulting services.

2.3.3 Property, plant and equipment

The item refers to furniture and electronic machineries acquired during the year.

The movements for the year are reported in the table below:



Cost

Furniture - 2 - - - 2

Electronic machinery - 6 - - - 6

Total cost - 8 - - - 8


Furniture - 0 - - - 0

Electronic machinery - 1 - - - 1

Total accumulated depreciation and

impairment - 1 - - - 1

Net value - 7 - - - 7

As of

December 31,

2013

As of March

27, 2013 Increases Decreases Reclassifications

Impairment

losses

Non-current assets

2.3.4 Investments

This item includes the investment in WDFG SAU, which was transferred by Autogrill S.p.A. to WDF

S.p.A. for the effect of the Demerger. The main financial and economic information of WDFG SAU

are described below:

As of October 1, 2013

(Demerger effective

date)

As of December

31, 2013Revenues* Equity*

Result for

the year*

WDFG SAU* 428,878 428,878 Madrid,

Spain100% 2,078,477 428,919 111,833

* Data referred to the consolidated financial statements

In thousand of Euro

Carrying amount

Registered

office% held



The recoverable amount of the investment is tested by estimating the value in use, defined as the

present value of estimated future cash flows for the subsidiary and other group companies (based

on the 2014 budget and projections for 2015-2018) discounted at rates calculated using the Capital

Assets Pricing Model (from 5.3% to 14.5%). Cash flows beyond the period covered by projections

have been estimated by extrapolating information from those forecasts and applying nominal

growth rates (“g”), which do not exceed the long-term growth estimates of each WDFG SAU

Group’s sector and Countries of operation (equal to 2%).

Based on the result of the estimation process above described, the recoverable amount of the

investment in WDFG SAU is significantly higher than the correspondent carrying amount.

Therefore, no impairment losses has been accounted for.

For the full list of key data on investments held directly and indirectly in subsidiaries and associates

as of December 31, 2013 see the Annex.

Current liabilities

2.3.5 Trade payables

The item, amounting to Euro 4,700 thousand, is detailed as follows:

In thousand of Euro As of December 31, 2013

Due to suppliers 2,414

Due to related companies 2,286

Total 4,700 “Due to suppliers” is referred to consulting services mainly related to the transaction costs directly

related to the issuance of the shares and to the listing process.

For more details about “Due to related companies” see the note 7.1.


“Other payables” are detailed as follows:

In thousand of Euro As of December 31, 2013

Tax payables 360

Other 203

Total 563 “Tax Payables” includes Euro 248 thousand for withholding taxes and Euro 112 thousand for VAT.

“Other” includes Euro 187 thousand related to the remuneration payable to the members of the

Board of Directors.


2.3.7 Due to others

The item, amounting to Euro 6,314 thousand (including the current portion referred to interests

accrued), consists of the loan (credit revolving facility) provided by the subsidiary WDFG SAU

during August 2013, expiring on 2018 for a maximum amount of Euro 10 million.


2.3.8 Equity

Equity as of December 31, 2013 amounts to Euro 419,095 thousand. The change in the year is

shown in the corresponding schedule of these financial statements.

Share capital

On the date of incorporation (March 27, 2013), the share capital amounted to Euro 120 thousand,

consisted of 120,000 shares with no par value, wholly held by Autogrill S.p.A.. As a result of the

Demerger, the share capital of WDF S.p.A. increased by Euro 63,600 thousand, by issuing

254,400,000 new ordinary shares assigned to Autogrill S.p.A. shareholders on the basis of one

WDF S.p.A. share per each Autogrill S.p.A. share held.

As of December 31, 2013 the share capital is equal to Euro 63,720,000, fully subscribed and paid

in, represented by 254,520,000 ordinary shares with no par value.

Legal reserve

The item includes the portion of income to an extend reaching the required minimum of 20% of

share capital, as stated by the art. 2430 of Civil Code. As of December 31, 2013 this item amounts

to Euro 12,720 thousand as a result of the Demerger.

Other reserves/retained earnings

This item amounts to Euro 343,613 thousand and includes: i) Euro 352,558 thousand, as effect of

the Demerger; ii) Euro (8,955) thousand, as transaction costs directly related to transaction costs

directly related to the issuance of the new shares and the related listing, mainly referred to fiscal,

legal, financial and accounting consulting services; these costs are accounted in reduction of

equity; iii) Euro 10 thousand, as extraordinary reserve made on the date of incorporation of the

company. the following table details permissible uses of the main components of equity:

In thousand of Euro As of December

31, 2013Eligibility of use

Amount

available

Share capital 63,720 - -

Income-related reserves:

Legal reserve 12,720 B -

Other reserves and retained earnings 343,614 A, B, C 343,614

Key:

A: for share capital increases

B: for coverage of losses

C: for distribution to shareholders

WDF S.p.A. operates as the holding company of the WDF Group and therefore its ability to

distribute dividends to its shareholders depends on the amount of dividends distributed by the

subsidiary WDFG SAU.

The loan agreement signed by the subsidiary on May 2013, provides for restrictions on its ability to

make any distribution (either through dividend payments or otherwise) in any financial year on a

sliding scale based on the leverage ratio of WDFG SAU and its subsidiaries as at each relevant

determination date as provided in the loan agreement. For the calculation of the leverage ratio, the

loan agreement provides for specific definitions of net financial indebtedness, EBITDA and net

financial charges, and therefore differ from the amounts valid for financial reporting purposes.

Thus, the final ratios are not readily apparent from the financial statements.

More specifically, the loan agreement provides as follows:


Percentage of profits whose distribution is allowed Leverage Ratio

100% < 3.25

50% >=3.25 and < 3.75

40% >=3.75 and < 4.00

0% >= 4.00

With reference to the year 2013, the loan agreement allows for distributions up to a maximum of

Euro 40 million, irrespective of the levels of the leverage ratio as of December 31, 2013.

2.4 NOTES TO THE INCOME STATEMENT

2.4.1 Personnel expenses

As of December 31, 2013 the company does not have any employees. The cost represented for

the period ended on December 31, 2013, amounting to Euro 35 thousand, refers to employees

seconded of foreign subsidiaries, for administrative and managing activities made during

December 2013.

2.4.2 Other operating expenses

A breakdown of “Other operating expenses” is provided below:

In thousand of EuroFor the year ended

December 31, 2013

Consulting services 531

Remuneration to the Board of Directors 187

Fees to the Statutory Auditors 77

Other services 55

Rent 25

Other operating expenses 20

Total 894 Consulting services are referred to administrative, IT, legal and fiscal services.

Consulting services also include the cost related to the service agreement executed with Autogrill

S.p.A. for the supply of IT, administrative and legal support services, in order to assist the transition

period following the Demerger.

2.4.3 Financial income and expense

Financial income and expense, amounting to Euro 28 thousand, are detailed as follows:

In thousand of Euro Fot the year ended

December 31, 2013

Interest expense 27

Exchange rate losses 1

Totale 28 Interest expenses are referred to the loan provided by the subsidiary WDFG SAU.

2.4.4 Income tax

There is no taxable income for the year ended December 31, 2013 and therefore no current

income tax was recorded.


WDF S.p.A. did not recognize deferred tax assets for tax losses carried forward and amounting to

Euro 2,573 thousand.

2.5 NET FINANCIAL POSITION

In accordance with the requirements of the Consob Communication of July 28, 2006 and

consistent with the ESMA/2011/81 Recommendation, a breakdown of net financial position at

December 31, 2013 is provided below:

In thousand of Euro Notes As of December 31, 2013

A) Cash on hand 2.3.1 1,629

B) Cash equivalents -

C) Securities held for trading -

D) Cash and cash equivalents (A+B+C) 1,629

E) Current financial receivables -

F) Due to banks, current -

G) Due to others 2.3.7 (14)

H) Other financial liabilities -

I) Current financial indebtedness (F+G+H) (14)

J) Net current financial indebtedness (I+E+D) 1,615

K) Due to banks, net of current portion -

L) Bonds issued -

M) Due to others 2.3.7 (6,300)

N) Non-current financial indebtedness (K+L+M) (6,300)

O) Net indebtness (J+N)* (4,685)

P) Non-current financial assets -

Net financial position (O+P) (4,685)

* As defined by Consob Communication July 28, 2006 and ESMA/2011/81 Recommendations


3. Financial risk management

In connection with management risk, the main risks identified and managed by the company are as follows:

market risk, mainly deriving from fluctuations in interest rates and in exchange rates;

credit risk, deriving from the possibility that a counterparty may default;

liquidity risk, deriving from the lack of sufficient financial resources to meet financial

obligations.

Information about quantitative and qualitative aspects related to those risks are provided in this

section of the notes.

Market risk

Currency risk

As at December 31, 2013, there are no significant receivable, payable or financial derivatives that are exposed to currency risk.

Interest rate risk

A hypothetical 1% variance in the interest rates applied to assets and liabilities outstanding as of

December 31, 2013 would have no a material effect on result for the year and on equity.

Credit risk

The credit risk is the risk that a financial institution counterparty may cause a financial loss by

defaulting on an obligation. It mainly arises in relation to the financial investments of WDF S.p.A..

As of December 31, 2013 the carrying amount of the financial assets represents the maximum

exposure of WDF S.p.A. to the credit risk, as shown below:

As of December 31,

2013

Cash and cash equivalents 1,629

Other receivables 158

Total exposure to credit risk 1,787

In thousand of Euro

Other receivables consist of advances for services, which entail a limited credit risk.

Liquidity risk

The liquidity risk arises when the company proves difficult to meet the obligations relating to

financial liabilities.

The table that follows shows an analysis of the maturities of financial liabilities as of December 31,

2013:


Due to others 6,314 14 - - - 6,300 -

Trade payables 4,700 4,700 - - - - -

Other payables 203 203 - - - - -

Total 11,217 4,917 - - - 6,300 -

Over 5

yearsIn thousand of Euro

As of

December

31, 2013

1-3

months

3-6

months

6 months

- 1 year1-2 years 2-5 years

As of December 31, 2013 there were no financial liabilities with a maturity longer than five years.

With regard to exposure to trade payables, there is no significant concentration of suppliers.

The objective of the company is to maintain sufficient liquid assets to address and to cover any risk

of financial stress.

Future company’s financial needs will be satisfied, mainly, through dividends expected to be

received from the subsidiary or rather the financial resources that the subsidiary will distribute.

4. Fair value estimation

The table attached provides a breakdown by category of financial assets and liabilities at

December 31, 2013 and analyses financial instruments carried at fair value, by valuation method.

The different levels have been defined as follows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset

and liability, either directly (that is, as prices) or indirectly (that is, derived from prices);

Level 3 – inputs for asset and liability that are not based on observable market data (that is,

unobservable inputs).


Financial assets

and liabilities at

fair value through

profit and loss

Derivatives

used for

hedging

Held to

maturity

Loans and

receivables

Available

for sale

financial

assets

Other

financial

liabilities



Other receivables - - - 159 - - 159 - - - -

Total - - 1,788 - - 1,788 - - - -

Due to others - - - - - 6,314 6,314 - - - -

Trade payables - - - 4,700 - - 4,700 - - - -

Other payables - - - 563 - - 563 - - - -

Total - - 5,263 - 6,314 11,578 - - - -


The carrying amount of financial assets and financial liabilities is substantially the same as their fair value.


5. Guarantees provided, commitments and contingent liabilities

As of December 31, 2013 there were not any guarantees provided and did not exist any

commitment and contingent liability.

6. Other information

6.1 Related parties transactions

WDF S.p.A. is controlled by Schematrentaquattro S.p.A., which owns as at December 31, 2013

50.1% of its ordinary shares. Schematrentaquattro S.p.A. has changed its legal status from

Schematrentaquattro S.r.l. during 2013. Schematrentaquattro S.p.A. is a wholly-owned subsidiary

of Edizione S.r.l..

All related-party transactions are carried out in the interest of WDF S.p.A. and at arm’s length.

In 2013 WDF S.p.A. had no transactions with its direct parent, Schematrentaquattro S.p.A..

Transactions with Edizione S.r.l.

Income statement


For the year ended

December 31, 2013

Dividends and other income from investements -


Personnel expenses -


Financial income -

Financial expense -

Statement of financial position

(in thousand of Euro)As of December 31, 2013

Other receivables -

Trade payables 40

Other payables -

Due to others -

Other operating expenses are referred to insurance and utilities costs amounting to Euro 12

thousand and to rent and leasing costs amounting to Euro 16 thousand to the accrual at December

31, 2012 for fees due to a director of Autogrill S.p.A., to be paid over to Edizione S.r.l. where he

serves as executive manager.

Trade payables outstanding on December 31, 2013 are related to the above mentioned operating

costs.


Transactions with related companies

For the year ended

December 31, 2013

Autogrill S.p.A.

Dividends and other income from investements -


Personnel expenses -


Financial income -

Financial expense -

Income Statement



Autogrill S.p.A.

Other receivables -

Trade payables 1,789

Other payables -

Due to others -



Other operating expenses are related to the service agreement executed with Autogrill S.p.A. for

the supply of IT, administrative and legal support services, in order to assist the transition period

following the Demerger.

Trade payables outstanding on December 31, 2013 are related to the above mentioned operating

costs and to the payments due for expenses anticipated by Autogrill S.p.A. related to the issuance

of the new shares, to the Demerger and the related listing process, accounted by the company into

a specific equity reserve deducted from equity.

Transactions with subsidiaries

WDFG SAU World Duty Free

Group UK Ltd

Total

subsidiaries

Dividends and other income from investements - - -


Personnel expenses 23 12 35

Other operating expenses 95 - 95

Financial income - - -

Financial expense 26 - 26

For the year ended December 31, 2013Income Statement


WDFG SAU World Duty Free

Group UK Ltd Total subsidiaries

Other receivables - - -

Trade payables 474 13 487

Other payables - - -

Due to others 6,314 - 6,314





Personnel expenses consist of charges for employees seconded that made administrative support

activities during December 2013.

Other operating expenses refer to IT and managing consulting services accrued for the fourth

quarter 2013.

Financial expenses consist of interest expenses related to the loan provided by the subsidiary.

Trade payables are referred to the above mentioned costs and to the payments due for expenses

anticipated by the spanish subsidiary related to the issuance of the new shares, to the Demerger

and the related listing process, accounted by the company into a specific equity reserve deducted

from equity.

The incidence of the related party transactions of the financial and economic statement is

represented below:

Income statement


Edizione S.r.l.,

related parties and

subsidiaries

WDF S.p.A. %

Dividends and other income from investements - - -

Other operating income - - -

Personnel expenses 35 35 100%

Other operating expenses 209 894 23%

Financial income - - -

Financial expense 26 28 94%



Edizione S.r.l.,

related parties

and subsidiaries

WDF S.p.A. %

Other receivables - 158 -

Trade payables 2,315 4,700 49%

Other payables - 563 -

Due to others 6,314 6,314 100%

6.2 Remuneration of directors and executives with strategic responsibilities

The following remuneration was paid by the WDF Group to members of the Board of Directors and

to executive with strategic responsibilities during the year ended December, 31 2013:

Gianmario Tondato Da Ruos Chairman 2013-2015 17,058 - - - - 17,058

Jose Maria Palencia SaucedoExecutive

Director from 16.09.2013 to 2015 441,338 153,047 1,192,561 21,525 - 1,808,471

Gianni Mion Director 2013-2015 16,458 - - - - 16,458

Paolo Roverato Director 2013-2015 17,058 - - - 11,794 28,852

Lynda Christine Tyler-Cagni Director from 16.09.2013 to 2015 16,458 - - - 4,997 21,455

Gilberto Benetton Director from 16.09.2013 to 2015 17,058 - - - - 17,058

Alberto De Vecchi Director from 16.09.2013 to 2015 16,458 - - - - 16,458

Laura Cioli Director from 16.09.2013 to 2015 17,058 - - - 11,794 28,852

Carla Cico Director from 16.09.2013 to 2015 17,058 - - - 6,797 23,855

Total Directors 576,002 153,047 1,192,561 21,525 35,382 1,978,517

2,098,834 665,217 280,343 365,381 - 3,409,775

Total 2,674,836 818,264 1,472,904 386,906 35,382 5,388,292

Other

(Euro)

Total

(Euro)

Key management with strategic responsabilities

Name Office Term of officeRemuneration

(Euro)

Bonus and

other incentives

(Euro)

Non monetary

benefits

(Euro)

Long-term

incentive plan

(Euro)


Please note that the in the table above attached, the remuneration for the Board of Directors for

the period from the 1 January to December 31, 2013 related to WDF Group.

The CEO’s remuneration includes his salary, bonuses paid under the annual incentive plan and

bonuses accrued under the long-term incentive plan. “Remuneration” also includes compensation

related to the long term incentive plan paid in 2013.

The CEO’s contract states that if he resigns with just cause or is dismissed by WDFG SAU without

just cause, the company must pay him about Euro 2.2 million. In the event of discontinuation of

office, the CEO shall retain the right to variable compensation under the incentive plans, subject to

the achievement of the targets and satisfying any other conditions stated in the plans, during the

relevant period of time.

A significant portion of the variable compensation received by the CEO and by executives with

strategic responsibilities is tied to the achievement of specific targets established in advance by the

Board, by virtue of their participation in management incentive plans. In particular, the CEO and

top managers participated during the year in an annual bonus system involving earnings and

financial targets and other strategic objectives for the Group and/or the relevant business unit, as

well as individual objectives. This was in addition to the three-year incentive plan for 2010-2012

paid out in April 2013.

Another Long Term Incentive Plan is in place relating to the years 2011 and 2012 and the

participants include those Executives with Strategic responsibilities. The LTIP system involves

financial targets for the Group, and the scheme objective was to retain key executives whilst

driving group financial performance. The LTIP bonus is deferred for three years once it is earnt,

and therefore payable in April 2014 and April 2015 respectively.

6.3 Fees to the statutory Auditors

Statutory auditors’ fees for the year ended December 31, 2013 are as follows:

Marco Giuseppe Maria Rigotti Chairman 2013-2015 28,521 4,397 32,918

Patrizia Paleologo Oriundi Standing auditor 2013-2015 19,014 2,932 21,946

Massimo Catullo Standing auditor 2013-2015 19,014 2,932 21,946

Total

(in thousand

of Euro)

Name Office Term of office

Fees

(in thousand of

Euro)

Other fees

(in thousand

of Euro)

6.4 Fees of the independent auditors

The table below provides an overview of the fees of the independent auditors for the services

provided in 2013:


Type of service Service provider Recipient

Fees

(in thousand of

Euro)

Auditing KPMG S.p.A. WDF S.p.A. 35

Other services KPMG S.p.A. WDF S.p.A. 682

Total 717

Fees for “Other services” are referred to auditing and attestation services related to the issuance of

the new shares and to their listing, accounted by the company into a specific equity reserve.

7. Events after the reporting date


an adjustment to the figures in the financial statements or required additional disclosures in these

notes.

8. Significant non-recurring events and transactions

Except for the partial proportional demerger of Autogrill S.p.A. in favor of WDF S.p.A., during 2013,

there were no significant non-recurring events or transactions as defined by Consob’s Resolution

15519 and Communication DEM/6064293.

9. Atypical or unusual transactions

No atypical or unusual transactions, as defined by Consob Communications DEM/6037577 of 28

April 2006 and DEM/6064293 of 28 July 2006, were performed in 2013, unless the partial

proportional demerger of Autogrill S.p.A. in favor of WDF S.p.A., as communicated to the market,

in accordance with Consob Regulation 11971 of May 11, 1999.

10. Authorization for publication

The Board of Directors authorized the publication of these draft financial statements at its meeting

of March 10, 2014.

The Shareholders’ Meeting approving the separate financial statements has the power to request

amendments to the financial statements.


Annex

List of investments held directly and indirectly in subsidiaries and associates

Company Registered office CurrencyShare/quota

capital

% held at

December 31,

2013

Shareholders/quota holders

PARENT

World Duty Free, S.p.A. Milan EUR 63,720,000 50.10% Schematrentaquattro, S.p.A.

COMPANIES CONSOLIDATED LINE-BY-LINE

World Duty Free Group, S.A.U. Madrid EUR 1,800,000 100.00% World Duty Free, S.p.A.

World Duty Free Group España, S.A. Madrid EUR 10,772,462 99.93% World Duty Free Group, S.A.U.

Aldeasa Chile, Limitada Santiago de Chile USD 2,516,819 100.00% World Duty Free Group España, S.A.

Aldeasa Servicios Aeroportuarios, Ltda Santiago de Chile USD 15,000 99.99% World Duty Free Group España, S.A.

Sociedad de Distribución Comercial Aeroportuaria de Canarias, S.L. Telde (Gran Canaria) EUR 667,110 60.00% World Duty Free Group España, S.A.

Aldeasa Colombia, Ltda. Cartagena de Indias (Colombia) COP 2,356,075,724 100.00% World Duty Free Group España, S.A.

Aldeasa México, S.A. de C.V. Cancún PXM 60,962,541 99.99% World Duty Free Group España, S.A.

0.01% World Duty Free Group, S.A.U.

Prestadora de Servicios en Aeropuertos, S.A. de C.V. Cancún PXM 50,000 99.99% World Duty Free Group España, S.A.


Aldeasa Cabo Verde, S.A. Ilha do Sal (Cabo Verde) CVE 6,000,000 99.99% World Duty Free Group España, S.A.


Aldeasa Italia S.L.R. Naples EUR 10,000 100.00% World Duty Free Group España, S.A.

Aldeasa Duty Free Comercio e Importación de Productos LTDA Sao Paulo BRL 1,560,000 99.79% World Duty Free Group España, S.A.


Palacios y Museos, S.L.U. Madrid EUR 160,000 100.00% World Duty Free Group España, S.A.

Audioguiarte Servicios Culturales, S.L.U. Madrid EUR 251,000 100.00% Palacios y Museos, S.L.U.

Panalboa, S.A. Ciudad de Panamá PAB 150,000 80.00% Palacios y Museos, S.L.U.

Aldeasa Jamaica Ltd St James (Jamaica) JMD 23,740,394 100.00% World Duty Free Group España, S.A.

WDFG Germany GmbH Düsseldorf EUR 5,250,000 100.00% World Duty Free Group España, S.A.

WDFG Italia, S.r.L. (ARI) in liquidation Rome EUR 10,000 100.00% World Duty Free Group España, S.A.

Cancouver Uno S.L.U. Madrid EUR 3,010 100.00% World Duty Free Group UK Holdings, Ltd.

WDFG Vancouver LP Vancouver CAD 9,500,000 99.99% Cancouver Uno S.L.U.

0.01% WDFG Canada INC

WDFG Canada INC Vancouver CAD 1,000 100.00% Cancouver Uno S.L.U.

Aldeasa Jordan Airport Duty Free Shops Amman USD 705,218 100.00% World Duty Free Group UK Holdings, Ltd.

WDFG US, Inc. Delaware USD 149,072,737 100.00% World Duty Free Group UK Holdings, Ltd.

Alpha Keys Orlando Retail Associates LLP Orlando USD 100,000 85.00% WDF US, Inc.

World Duty Free US, Inc. Orlando USD 1,400,000 100.00% WDFG US, Inc.

Aldeasa Atlanta, LLC Atlanta USD 1,672,000 100.00% WDFG US, Inc.

Aldeasa Atlanta JV Atlanta USD - 51.00% Aldeasa Atlanta, LLC

25.00% WDFG US, Inc.

Aldeasa Curaçao N.V. Curacao USD 500,000 100.00% World Duty Free Group UK Holdings, Ltd.

Autogrill Lanka, Ltd Colombo (Sri Lanka) SLR 30,000,000 99.00% World Duty Free Group UK Holdings, Ltd.

Alpha-Kreol (India) Pvt Ltd Mumbai INR 100,000 50.00% World Duty Free Group UK Holdings, Ltd.

Airport Retail Pvt Limited (formerly called Alpha Future Airport Retail PvT Ltd) Mumbai INR 601,472,800 50.00% Alpha Airports Retail Holdings Pvt Limited

50.00% World Duty Free Group UK Holdings, Ltd.

WDFG Helsinki Oy Vantaa (Finland) EUR 2,500 100.00% World Duty Free Group España, S.A.

World Duty Free Group UK Holdings, Ltd. London GBP 12,484,395 80.10% World Duty Free Group, S.A.U.

19.90% World Duty Free Group España, S.A.

Autogrill Holdings UK, Ltd. London GBP 1,000 100.00% World Duty Free Group UK Holdings, Ltd.

WDFG UK Limited London GBP 360,000 100.00% World Duty Free Group UK Holdings, Ltd.

WDFG International Limited London GBP 2 100.00% World Duty Free Group UK Holdings, Ltd.

WDFG Holdings UK Pension Trustees Ltd London GBP 100 100.00% WDFG UK Limited

Alpha Retail Ireland Ltd Dublin EUR 1 100.00% WDFG UK Limited

WDFG Jersey Limited Jersey GBP 4,100 100.00% WDFG UK Limited

Alpha Airports Group (Channel Islands) Ltd St Helier, Jersey GBP 21 100.00% World Duty Free Group UK Holdings, Ltd.

Alpha Airports Retail Holdings Pvt Limited Mumbai INR - 100.00% World Duty Free Group UK Holdings, Ltd.

WDFG North America, LLC Delaware USD 72,047,935 100.00% WDFG US, Inc.

WDFG-Howell-Mickens, Terminal A Retail II, LLC Delaware USD - 65.00% WDFG North America, LLC

WDFG-Love Field Partners III, LLC Delaware USD - 51.00% WDFG North America, LLC

WDFG-SPI DEN Retail, LLC Delaware USD - 75.00% WDFG North America, LLC

WDFG JV Holdings, LLC Delaware USD - 100.00% WDFG North America, LLC

AIRSIDE E JV Delaware USD - 50.00% WDFG JV Holdings, LLC

WDFG-Tinsley JV Delaware USD - 84.00% WDFG JV Holdings, LLC

WDFG PROSE JV II Delaware USD - 70.00% WDFG JV Holdings, LLC

WDFG-ELN MSP Terminal 2 Retail, LLC Delaware USD - 90.00% WDFG JV Holdings, LLC

Houston 8-WDFG JV Delaware USD - 60.00% WDFG JV Holdings, LLC

WDFG Bush Lubbock Airport JV Delaware USD - 90.00% WDFG JV Holdings, LLC

WDFG Adevco JV Delaware USD - 70.00% WDFG JV Holdings, LLC

WDFG-Howell-Mickens JV Delaware USD - 65.00% WDFG JV Holdings, LLC

WDFG-Solai MDW Retail, LLC Delaware USD - 66.00% WDFG JV Holdings, LLC

WDFG-Diversified JV Delaware USD - 90.00% WDFG JV Holdings, LLC

WDFG-Java Star JV Delaware USD - 50.01% WDFG JV Holdings, LLC

WDFG-Howell Mickens Terminal A Retail I JV Delaware USD - 65.00% WDFG JV Holdings, LLC

Phoenix-WDFG JV Delaware USD - 70.00% WDFG JV Holdings, LLC

WDFG-Houston 8 Terminal E, LLC Delaware USD - 60.00% WDFG JV Holdings, LLC

WDFG-Chelsea JV 1 Delaware USD - 65.00% WDFG JV Holdings, LLC

WDFG-Love Field Partners II, LLC Delaware USD - 51.00% WDFG JV Holdings, LLC

WDFG-DFW AF, LLC Delaware USD - 50.01% WDFG JV Holdings, LLC

WDFG-Houston 8 San Antonio JV Delaware USD - 63.00% WDFG JV Holdings, LLC

Miami Airport Retail Partners JV Delaware USD - 70.00% WDFG JV Holdings, LLC

WDFG-Howell Mickens JV III Delaware USD - 51.00% WDFG JV Holdings, LLC

WDFG-DMV DTW Retail LLC Delaware USD - 79.00% WDFG JV Holdings, LLC

COMPANIES CONSOLIDATED PROPORTIONALLY

Alpha ASD Ltd London GBP 20,000 50.00% World Duty Free Group UK Holdings, Ltd.

COMPANIES CONSOLIDATED USING THE EQUITY METHOD

Souk Al Mohuajir DF Shops Tanger DIRHA 6,500,000 - World Duty Free Group España, S.A.

Creuers del Port de Barcelona S.A. Barcelona EUR 3,005,061 23.00% World Duty Free Group España, S.A.


Statement of the CEO and manager in charge of financial Reporting

STATEMENT

about the separate financial statements

pursuant to art. 81-ter of Consob Regulation 11971

of 14 May 1999 (as amended)

1. We, the undersigned, José María Palencia as Chief Executive Officer and David Jiménez-

Blanco as manager in charge of Financial Reporting of World Duty Free S.p.A., hereby declare,

including in accordance with art. 154-bis (3) and (4) of Legislative Decree no. 58 of 24 February

1998:

a) the adequacy of, in relation to the characteristics of the business; and

b) due compliance with the administrative and accounting procedures for the preparation of the

separate financial statements during 2013.

2. No significant findings have come to light in this respect.

3. We also confirm that:

3.1 the separate financial statements:

a) have been prepared in accordance with the applicable International Financial

Reporting Standards endorsed by the European Union pursuant to Regulation

1606/2002/EC of the European Parliament and the Council of 19 July 2002;

b) correspond to the ledgers and accounting entries;

c) provide a true and fair view of the issuer’s financial position and results of operations.

3.2 The directors’ report includes a reliable description of the performance and financial position

of the issuer, along with the main risks and uncertainties to which it is exposed.

Milan, March 10, 2014

_____________________ _____________________

Mr José María Palencia Mr David Jiménez-Blanco

Chief Executive Officer Manager in charge

of Financial Reporting


Report of the Statutory Auditors

Shareholders,

In this document, which has been drafted in accordance with Art. 153 of Italian Legislative Decree

58/1998 (“TUF”) and with the applicable Consob recommendations, the Board of Statutory Auditors

of World Duty Free S.p.A. (“WDF” or the “Company”) reports to you on its supervisory work and

results obtained.

It should be borne in mind that the Company was incorporated on 27 March 2013 by Autogrill SpA

(“Autogrill”) as part of a plan for the partial and proportional demerger of its travel retail and duty-

free businesses (hereafter, the “Demerger”) which it undertook at the time. This took effect on 1

October 2013, the day when the Company’s shares were admitted to trading on Borsa Italiana’s

MTA electronic trading market. The undersigned Board of Statutory Auditors was appointed when

the Company was incorporated.

. The financial data of the Company at 31 December 2013 cannot therefore be compared with data from the previous business year. However, in order to give a better understanding of the results obtained by the Group headed by the Company, the directors have decided also to report the consolidated income statement and financial information of the twelve months ending on 31 December 2013 (including those of World Duty Free SpA), regardless of the actual date of the Demerger. Comparative figures for 2012 refer to the income and consolidated financial statements for the 12 months ending on 31 December 2012 of World Duty Free Group SAU (“WDFG”, the sub-holding company of a group operating in the travel retail and duty-free sector, the entire shareholding of the Demerger), on the basis of historical data included in the consolidated financial statements of Autogrill SpA as at 31 December 2012.

The separate financial statements for 2013 closed with a loss of €958,000. At the consolidated

level, the profit attributable to the Group amounted to €105.8 million, considering a 12-month

period, compared with a profit of €100.7 million in the previous year (considering only the period in

which business was carried out, i.e. from 27 March 2013, with consolidation of the data from the

subsidiaries as from 1 October 2013, the profit attributable to the Group amounted to €16.5

million).

The report drafted by the independent auditors KPMG SpA on the financial statements of World

Duty Free SpA at 31 December 2013, which was published on 4 April 2014, is unqualified.

Similarly, the report by KPMG on the consolidated financial statements of World Duty Free SpA at

31 December 2013, which was issued on the same date, is also unqualified.


1. Supervisory activities and information received

The Board of Statutory Auditors was also in charge of the audit until the effective date of the

Demerger and the admission of shares to trading on Borsa Italiana’s MTA electronic trading

market. Until that date, since the Company had been incorporated for the sole purpose of

implementing the Demerger project, it did not perform activities other than those that served the

purposes of the Demerger itself. With regard to the audit carried out during the year (which did not

involve the drafting of the 2013 budget), the Board has no items to indicate in this Report, which

has taken into account the current status of the Company as a listed issuer of shares.

During the year ended 31 December 2013, the Board of Statutory Auditors performed the

monitoring activities required by law, also taking into account the recommendations of Consob

concerning corporate governance and, in particular, Communication no. 1025564 of 6 April 2001,

as well as the principles of conduct recommended by the Consiglio Nazionale dei Dottori

Commercialisti e degli Esperti Contabili.

For this purpose, during the year the Board:

- held 8 board meetings, which were attended by all incumbent members;

- took part, generally together, in 7 meetings held by the Board of Directors;

- took part, generally together, in 3 meetings held by the Audit and Risk and Corporate Governance Committee;

- took part, in the person of the Chairman, in the meeting held by the Human Resources Committee

- took part, in the person of the Chairman, in the meeting held by the Related Party Transactions Committee;

- took part jointly in the Ordinary Shareholders’ Meeting on 6 June 2013 for the approval of the listing of the Company’s shares on Borsa Italiana’s MTA electronic trading market, in the Extraordinary Shareholders’ Meeting on the same date as the approval of the Demerger project, and in the Ordinary Shareholders' Meeting on 18 July 2013 concerning integration of the administrative body and redetermination of the remuneration involved, assignment of the task of the statutory audit, in accordance with Article 13 of Legislative Decree 39/2010, approval of the General Meeting Regulations, integration of the remuneration of the Board of Statutory Auditors (this resolution was made necessary by the forthcoming listing on the Stock Exchange, with effect from the date of admission to listing);

- kept open a frequent information channel and held regular meetings with the auditing company to ensure prompt exchanges of data and information concerning the performance of their respective duties;

- kept open a frequent information channel and held regular meetings with the chief of the Internal Audit department.

During the meetings of the Board of Directors, the Board of Statutory Auditors was informed by the

directors of the activities of the Company and of the Group of which it is the parent company, as

well as of the most important economic, financial and equity-related operations carried out by the

Company and by the Group, as well as transactions in which they had an interest, on their own

behalf or on behalf of third parties.

Information was also collected through checks and through information provided by the CEO and

by the heads of the departments concerned, through participation in the meetings of the Audit and


Risks and Corporate Governance Committee and other board committees, although the meetings

of these committees were limited to those held in the last period of the year, due to the change of

governance linked to admission to listing.

No reprehensible facts concerning the directors emerged either during the meetings or through

contacts with the auditing company.

It should be noted that during the activities of the Board of Auditors in 2013:

no charges were received pursuant to Art. 2408 CC.

no complaints were received.

During the course of the year, the Board of Statutory Auditors did not express favourable opinions

on the Board of Directors, in accordance with the law.

On 18 July 2013, the Board of Statutory Auditors submitted its reasoned proposal to the Assembly,

pursuant to Legislative Decree no. 39/2010 for the appointment of the external auditing company.

The Company is at the head of a group of companies and drafts the consolidated financial

statements.

Even though it is legally controlled by Edizione Srl (through Schematrentaquattro SpA), the

Company is not subject to direction and coordination, as illustrated by the directors in the

corporate governance and ownership report. The Board of Auditors has verified that this

assessment emerged after in-depth analysis and that it does not appear to be affected by the

presence of some corporate representatives of Edizione Srl on the Board of Directors of World

Duty Free SpA.

The Board of Directors decided to avail itself of the extended term, as per Art. 2364 of the Civil

Code and Art. 21 of the Articles of Association, to convene the Shareholders’ Meeting to approve

the 2013 accounts, since the prerequisites were already in place. The accounts documentation

was nevertheless made available to the public well within the terms of Art.154-ter TUF (120 days

from year end). The decision was taken by the Board of Directors, as explained in the Annual

Report, taking into account the extraordinary operation (i.e. the aforementioned Demerger), which

was carried out during the year that ended on 31 December 2013.

2. Transactions & events of major economic, financial and asset importance. Transactions with related parties.

As mentioned, the partial and proportional Demerger of Autogrill SpA in favour of the Company,

which was an owned subsidiary at the time, became effective on 1 October 2013, as approved by

the respective shareholders’ meetings on 6 June 2013.

The Demerger plan was prepared jointly by the Boards of Directors of Autogrill SpA and World

Duty Free SpA pursuant to and for the purposes of Arts 2506-bis and 2501-ter of the Italian Civil

Code, and approved by said Boards of Directors on 3 May 2013. The Demerger plan was

published on the Autogrill website on 4 May 2013 and additional information was published on 22

May. The Demerger was entered into on 26 September 2013 and filed with the commercial register

of Novara on 27 September 2013. The relative documentation is available on the Company’s

website.


The administrators motivated the Demerger stating that its aim was “primarily industrial, to

separate the two areas of activity - food and beverage, and travel retail and duty free - in which the

Autogrill Group was operating, since their characteristics are significantly different from each other,

both in terms of market and competitive context, and in terms of management mechanisms and

development strategies.” These two sectors were also managed independently and there were no

significant synergies between them. This was reflected in the various historical and projected

results of the two sectors and in the development strategies that they will be putting in place in the

coming years.

The Demerger led to the creation of two distinct groups that concentrate on their respective fields

of business which, in the opinion of the directors, will allow each of them to better pursue their own

strategies and to improve their results by leveraging their respective strengths.

Through the Demerger, World Duty Free SpA received the entire stake in World Duty Free Group

SAU, a company under Spanish legislation at the head of a sub-group in the travel retail and duty-

free sector.

As a result of the Demerger on 1 October 2013, the net assets of World Duty Free SpA increased

by €428,878,000 (while the net assets of Autogrill SpA were reduced by the same amount).

Consequently, Autogrill SpA shareholders received shares of World Duty Free SpA without

payment of any consideration, equal in terms of number and class to those previously held in

Autogrill SpA

On 1 October 2013, World Duty Free SpA and Autogrill SpA were listed separately on Borsa

Italiana’s MTA electronic trading market in Milan.

The two companies, which operate separately and independently, are related parties since both

are controlled by Edizione Srl through Schematrentaquattro SpA, which, at 31 December 2013,

holds 50.1% of the share capital of Autogrill SpA and 50.1% of the share capital of World Duty

Free SpA.

In order to take over all the activities related to the travel-retail and duty-free sector previously

managed by Autogrill, in July 2013 World Duty Free Group U.S., Inc., a subsidiary of World Duty

Free Group, signed a purchase agreement with HMSHost Corporation and its subsidiary Host

International Inc., a wholly-owned subsidiary of Autogrill, concerning the so-called “U.S. Retail

Branch”, i.e. management activities for a franchise of convenience stores located almost

exclusively in North American airports, and operated by HMSHost Corporation and some of its

subsidiaries.

The price agreed upon by the parties for the first closing – which took place on 6 September 2013,

and thus before the effective date of the Demerger, for the activities for which the appropriate

authorisations for the concessionaires had been obtained – was $105 million dollars, equivalent to

87.8% of the total price of $120 million established for the transfer of 100% of the retail

concessions that until then had been managed by HMSHost Corporation.

At 31 December 2013 the WDF Group had commitments to HMSHost Corporation and to its

subsidiary Host International Inc. concerning concession contracts included in the U.S. Retail

Branch but not at the time transferred, for which the relative authorisations will be obtained in the

future from the concessionaires.


Related to the Demerger, but prior to its date of effect, is the payment of a special dividend by

World Duty Free Group SAU to the Autogrill Group. Except for the Demerger and its related

transactions, in 2013 there are no records of transactions of major economic and financial

importance made by the Company and Group during the year, outside of the ordinary course of

business and management, which therefore receive special emphasis in the Annual Report.

In particular, there were no significant events concerning the Company and the Group after 1

October 2013.

Findings of the Board of Statutory Auditors

The Board of Statutory Auditors believes there was general compliance with the law, with the

Articles of Association and with the principles of good administration.

The Board of Statutory Auditors has neither found nor received reports from the auditing company

or from the head of the Internal Audit concerning atypical and/or unusual transactions, as defined

by the Consob Communication of 6 April 2001 and by Consob Communication no. DEM/6064293

of 28 July 2006, effected with third parties, related parties or group companies. During the course

of 2013, no significant non-recurring events or transactions, as defined by Consob Resolution no.

15519 of 27 July 2006 and Consob Communication no. DEM/6064293 of 28 July 2006, were

verified, apart from the Demerger and transactions related to it.

Concerning transactions with related parties, the Board of Statutory Auditors monitored compliance

of the procedures adopted by the Company on 1 October 2013 with the principles set out by

Consob, also taking part in the meeting of the Committee appointed by the Board of Directors in

which it was discussed. This procedure, which is available on the Company’s website, provides for

exemption from the same – under certain conditions – of the resolutions concerning the

remuneration of directors and of other key management personnel.

In view of the specific nature of the Group’s business, particular importance is given to the

inclusion in “Ordinary Transactions with Related Parties” of transactions that “form part of the

ordinary course of business and related financial activities (identified on the basis of the criteria

contained in the Regulations and in Consob Communication no. 1007868 of 24 September 2010)

and that [...] are concluded under conditions similar to those usually applied to non-related parties

for transactions of a similar nature, extent and risk”, in those cases in which the conditions brought

about by the participation of the Company or the subsidiary in competitive bidding are considered

similar to those usually applied to non-related parties, provided that the offer has been prepared in

accordance with the pre-established corporate policies which are applicable to all cases of

participation in tenders, even when not held by related parties, which require minimum parameters

of profitability, and which are approved by the Company’s Board of Directors, pursuant to and for

the purposes of this Procedure.”

At present no application policies appear to have been approved for this provision.

In the Annual Report and in the explanatory Notes, the directors mention the routine transactions

and those of lesser importance carried out with related parties, indicating their nature and size.

Those indicated are appropriate in view of their size.

For its part, the Board of Statutory Auditors detected no violations of laws or of the Articles of

Association, or transactions entered into by the directors that are manifestly imprudent or risky in

nature, that constitute potential conflict of interest, that are in contrast with the resolutions adopted

by the Assembly or that might in any way compromise the integrity of corporate assets.


3. Performance during the year, economic and financial situation.

As has been mentioned, the profits attributable to the Group amounted to €16.5 million,

considering the consolidation of the results of World Duty Free Group SAU with effect from 1

October 2013. Considering a 12-month period, the profit attributable to the Group amounted to

€105.8 million, compared with profits of €100.7 million in the previous year.

Consolidated shareholders’ equity attributable to the owners of the parent company amounted to

€411 million at the end of 2013.

The explanatory Notes to the consolidated financial statements contain information about the

economic and financial situation and the assets and liabilities relating to the activities involved in

the Demerger.

The consolidated net financial position was negative, amounting to €1,026.7 million at the end of

2013, whereas the figure for World Duty Free Group SAU at the end of 2012 had amounted to

€549 million, an increase of €477.6 million. The variation is due in particular to the advance

payment made to AENA (the Spanish airports management company) in relation to future

payments for the licences at Spanish airports (amounting to €279 million, of which €17 million were

already recovered in 2013), operations relating to the Demerger (the acquisition of the U.S. Retail

Branch for €80 million – including 5% withheld as guarantee, as established by the sale contract,

payment of an extraordinary dividend of €220 million by World Duty Free Group SAU), in addition

to ordinary operations (net cash provided by operating activities and net investments paid).

The consolidated net financial position consists mainly (€1,045 million) of the portion used for the

bank loan in medium- to long-term instalments of €1,250 million subscribed by World Duty Free

Group SAU and by some of its subsidiaries on 30 May 2013.

The current consolidated net financial position was negative, amounting to €42.4 million at the end

of 2013 compared with a figure of €33.3 million at the end of 2012, an increase of €9.1 million.

Considering the data for 12 months, the consolidated net cash generated from operating activities

for the year (including investment activities) was negative, amounting to €225.6 million, compared

with a net positive cash flow amounting to €161.2 million for the 12 months of 2012. In particular,

the variation was influenced by the advance payment to AENA and the acquisition of the U.S.

Retail Branch, without which the 12-month cash flow would have been positive, at €116.3 million.

The Group’s loan agreements provide for the maintenance within pre-established values of certain

financial indicators calculated on the basis of World Duty Free Group SAU as a whole, as indicated

in the notes to the financial statements. In the Annual Report and Financial Report, the directors

explain that all the parameters at the end of 2013 were met.


4. Organizational structure, internal control and risk management system, administrative and accounting system.

The organisational structure of the Company is based on the fact that it is a pure holding company.

The Board of Statutory Auditors has thus been able to ascertain the existence of a suitable

organisational structure in relation to the size, structure and objectives of the company, and that it

is able to comply with the laws applicable to the Company.

As a result of the Demerger and the issue of shares on the electronic trading market, the Company

has started a process of adapting to the system of internal control and risk management, viewed

as a set of rules, procedures and organisational structures that, through a proper process of

identification, measurement, management and monitoring of the main risks, can ensure proper,

sound management consistent with its strategic objectives. This activity, which has continued in

2014, has on a number of occasions involved the Board of Directors as well as Group companies

of strategic importance.

In his capacity as the executive director, with effect from 1 October 2013, in charge of the system

of internal control and risk management, the Chief Executive Officer establishes the instruments

and procedures for implementing the risk management system, in accordance with the guidelines

of the Board of Directors, and ensures the circulation of guidelines and coordination for the Group’s

organisational units. The organisational units are responsible for the entire process of

systematically identifying, measuring, managing and monitoring risks, as well as establishing the

relevant countermeasures and ensuring the overall adequacy of this system, its practical

effectiveness, and its adaptation to variations in operating conditions and within the legislative and

regulatory framework.

These activities are monitored by the internal audit department of the Group, the director of which,

appointed on 20 September 2013, reports to the Chairman of the Board of Directors, to whom he

responds directly, to the executive director responsible for the internal control and risk

management system, to the internal control, risk management and corporate governance

Committee, and to the Board of Statutory Auditors.

Furthermore, an enterprise risk manager was appointed on 13 February 2014.

The internal control system is defined as the set of rules, procedures and organisational structures

which, through a suitable process of identification, measurement, management and monitoring of

the main risks, enables the company to be sound, correct and consistent with regard to its

objectives. It is organised on three different levels of control, the last of which is that of the Group’s

internal audit department.

The head of the Group’s Internal Audit department, who does not have executive functions,

frequently reports to the Audit and Risk and Corporate Governance Committee, presenting the

annual work programme and reporting regularly on activities carried out. The Board of Statutory

Auditors, also acting as the Internal Control Committee, set up pursuant to Art. 19 of Legislative

Decree 39/2010, maintains constant dialogue with the head of the department, verifying the

effectiveness of its work.

The activities carried out by this department did not reveal any significant critical aspects in the

establishment and effective application of the system of internal control and risk management that

might significantly compromise an acceptable overall risk profile.


Existing policies and procedures govern, among other things, a number of issues concerning

financial reporting and public disclosure of inside information, corporate governance, internal

dealing, the appointment of the external auditing company, the internal audit, and other issues

mentioned in this Report. The system is based on the Group’s Code of Ethics.

Concerning the continuous disclosure requirements of Art. 114, para. 2, of the TUF, the procedure

concerning disclosure of inside information establishes the responsibility of the chairmen and

CEOs responsible for significant subsidiaries (i.e. the direct subsidiaries of World Duty Free SpA

and its sub-holding companies) for correct application of said procedure in relation to confidential

information concerning the companies they represent and administer, as well as other subsidiaries,

communicating the inside information promptly to the Chairman and/or to the Chief Executive

Officer of WDF.

The significant subsidiaries, as well as adopting the procedure in question and seeing to and

implementing its updates, are called upon to appoint the person responsible for its application and

implementation in the same significant subsidiaries and in their respective subsidiaries.

With regard to risk management, the approach adopted by the Company is described in the

corporate governance and ownership report, and is based on systematic and structured

identification, analysis and measurement of risk areas that might affect the achievement of the

strategic objectives, to assist management and the Board of Directors in their decision-making

processes, in the assessment of the overall risk level of the company, in the policy for required

mitigation actions, helping to reduce the degree of volatility of the objectives and consequently

ensuring that the nature and level of risk taken is consistent with the Company's strategic

objectives. This model is designed to ensure progressive integration into decision-making and

business processes.

The Annual Report provides information on the risks to which the Company is exposed, also for the

purposes of the provisions of Art. 19 para. 1, letter b) of Legislative Decree 39/2010.

On 1 October 2013, the Company adopted the organisation and management model for the

prevention of the offences set out in Legislative Decree 231/2001, concerning the administrative

liability of companies for offences committed by their employees and associates. The functions of

the supervisory board were given by the Board of Directors to the Company’s Board of Statutory

Auditors, with the result that the members of the supervisory board retain their posts only so long

as the members of the Board of Statutory Auditors retain theirs.

The functions of the supervisory board were attributed to the Board of Statutory Auditors in

accordance with Art. 6, para. 4-bis of Legislative Decree no. 231/2001 (introduced by Law no. 183

of 12 November 2011). Both the remuneration and the organisational position of the supervisory

board do not appear to compromise the independence of the members of the Board of Statutory

Auditors.

In line with the Organisational Model pursuant to Legislative Decree 231/2001, the supervisory

board has the Internal Audit Department perform monitoring activities and, under its direct

supervision and responsibility, it may request the assistance of all functions in the Company, or

external consultants.

It has been ascertained that the Company has complied with its obligations concerning privacy, in

accordance with the provisions of Legislative Decree 196/2003 regarding the processing of

personal data, and has drawn up the Security Policy Document.

Particularly with regard to the area of administration, in the corporate governance and ownership

report, the Board of Directors provides a detailed description of the main features of the risk


management and internal control systems with regard to the financial reporting process, consistent

with the provisions of Art. 123-bis of the TUF.

The Company has been seen to comply with the provisions introduced by Law 262/2005 and, upon

the proposal submitted by the Audit and Risk and Corporate Governance Committee and with the

approval of the Board of Statutory Auditors, has appointed the director in charge of preparing the

corporate accounting documents (the “designated director”). On 18 December 2013 the Council

adopted a Regulation submitted by the designated director, which provides, among other things,

for:

- The assignment to the designated director of adequate powers and means, including the financial and personnel resources and the power to enter into, modify and terminate all contracts, including employment contracts (except those of directors), as he may deem necessary, useful and appropriate for the performance of the duties he has been assigned; adequate access by the designated director to information deemed relevant for the performance of his duties, both in World Duty Free SpA and in the companies of the Group; the power of the designated director to supervise existing company procedures and to authorise new ones when they have an impact on the financial statements, on the consolidated financial statements, and on documents subject to declaration; the power of the designated director to avail himself of the cooperation of all the organisational units and to impart all directives to the companies in the Group, within pre-established limits, and to adopt any action, procedure and conduct as may be deemed appropriate and sufficient to allow the designated director to perform the duties he has been assigned; the same powers of inspection and control as those attributed to the Board of Statutory Auditors and to the auditing company, with regard to both World Duty Free and to other companies in the Group, subject to the limits of the powers and functions assigned to him and, with regard to foreign companies in the Group, within the limits imposed by local laws.

- The duty of the designated director to inform the Board of Directors, at least once every six months, on the performance of his duties, indicating any problems that might have arisen during the period and the work carried out or put into place to solve them; the duty to inform the Chairman of the Board of Directors of facts which, due to their critical nature or severity, may require urgent decisions to be taken by the Board of Directors; the duty to ensure a proper flow of information concerning his activities to the Audit and Risk and Corporate Governance Committee, to the Board of Statutory Auditors, to the auditing company and the Supervisory Board, in accordance with Legislative Decree 231/01, to the director in charge of the internal control and risk management system, on a six monthly basis or whenever deemed necessary or required by any of the above;

- The duty of the administrative bodies of significant subsidiaries to ensure the adoption of an adequate and appropriate system of control to monitor those administrative and accounting processes that generate information submitted to World Duty Free SpA for the purposes of drafting the consolidated financial statements, and to constantly monitor its adequacy and effective implementation, as well as ensuring the drafting of adequate administrative and accounting procedures also in accordance with the guidelines set out by the designated director; with the support of internal departments (internal audit) or independent external bodies, the bodies delegated by these companies must, among other things, carry out verification procedures to obtain evidence of the effective application of administrative and accounting procedures and of the monitoring activities they contain, also at the request of the designated director, as well as certifying the adequacy and effective application of administrative and accounting procedures with regard to the parent company, World Duty Free.

The director in charge of drafting the corporate accounting documents carries out an assessment

of the internal administration and accounting control system. The annual report presented by the

designated director to the Board of Directors did not reveal any critical aspects concerning the

drafting and effective application of the system of internal control that might significantly invalidate

the reliability of the accounting and financial report. Any ordinary anomalies have already been the


subject of corrective action, so as to minimise any exposure to risks and to ensure that all phases

of the process are fully adequate.

In relation to Art. 36 of the Consob Regulations regarding markets (which includes obligations

relating to subsidiary companies incorporated and regulated under the laws of countries outside

the European Union and of significance to the consolidated financial statements), the four

companies of the Group to which these regulations are applicable (Aldeasa Jordan Duty Free

Shops Ltd, World Duty Free Group US Inc., World Duty Free North America LLC, and Aldeasa

Mexico de CV), have in place appropriate procedures for regularly reporting the income statement,

balance sheet and financial data required for the preparation of the consolidated financial

statements to the management of the Company and to the auditor of the parent company.

Auditing Company

All the companies in the Group are subject to full auditing (in some case only concerning the reporting package drafted for consolidation purposes) by the auditing company, which is part of the KPMG network, and which was appointed on 18 July 2013 and whose term will expire upon approval of the financial statements for the year 2021.

On 4 April 2014 the Board received from the auditing company the report referred to in the third paragraph of Art. 19 of Legislative Decree 39/2010, which reported no significant deficiencies in the internal control system regarding the financial reporting process.

In the notes to the financial statements and to the consolidated financial statements, the directors provide analytical information concerning the remuneration of the auditing firm and the bodies that are part of its network of independent auditors, as indicated in the following table:

Type of service Service provider Recipient of the service Remuneration (€x1000)

Statutory audit Head auditor

Head auditor’s network

Parent company

Subsidiaries

35

671

Certification services Head auditor


Parent company

Subsidiaries

-

79

Other services Head auditor


Parent company *

Subsidiaries

603

164

Total 1,552

* Remuneration for “Other services” refers to auditing and certification services for the process of issuing new shares

and their listing, recorded in a special equity reserve of WDF SpA

The Board of Statutory Auditors points out that no critical aspect emerged concerning the

independence of the auditing company and confirms that it has received from said company

confirmation of independence in accordance with Art. 17, para. 9, letter a) of Legislative Decree no.

39/2010.

On this matter, it should be noted that, in November 2013, the Company adopted the Group

procedure concerning the assignment given by World Duty Free and its subsidiaries to the

company entrusted with the statutory audit and to legal bodies in its network. Among other things,

this procedure establishes that the auditing company of the parent company is also responsible for


the statutory audits of its subsidiaries, and it governs the allocation of additional assignments to the

auditing company in order to ensure they are not assigned duties incompatible with the auditing

activities, in accordance with the laws in force, or that may otherwise compromise the

independence of the auditing company.

5. Corporate governance

Analytical information concerning the means of implementation of the principles of corporate

governance approved by Borsa Italiana (contained in its Code of Conduct, hereinafter the “Borsa

Italiana Code”) is provided by the directors in the annual corporate governance and ownership

Report as approved on 10 March 2014 and attached to the financial report.

This Report has been seen to be in line with the requirements of Art. 123-bis of the TUF. In its

reports, the auditing company has confirmed that the Annual Report and the information referred to

in para. 1, letters c), d), f), l), m) and para. 2, letter b) of Art. 123-bis of Legislative Decree 58/98

presented in the corporate governance and ownership report are consistent with the financial

statements and with the consolidated financial statements.

On 20 September 2013, the Board of Directors approved the adoption of its Code of Conduct,

which reflects the general principles of the Borsa Italiana Code in the particular circumstances of

the Company and which, in a single, systematically organised document, contains all the basic

rules of governance that the Company is committed to implementing. The full text of this document

is available in the “Governance” section on the Company’s website under “Rules and Procedures”.

In general reference to the report referred to above, the Board of Statutory Auditors points out the

following.

The chief executive officer is the main person responsible for management of the company as well

as the only director qualified as executive. Partly through the work of its committees, the Board of

Directors is however involved in decision-making processes in the various sectors involved in the

budgets and strategic, business and financial plans, among other things, in a number of areas of

corporate governance (including issues relating to remuneration), and to the control and risk

system.

During the course of the year, the Company verified the independence of directors qualified as

“independent” in accordance with the Code of Conduct. Similarly, the continuing independence of

the members of the Board of Statutory Auditors was verified, as required by the Code of Conduct.

The Board of Statutory Auditors monitored the actual implementation of the corporate governance

rules contained in the Borsa Italiana Code, with which, in its public disclosure, the company has

declared it complies.

The composition of the Board of Directors is consistent with the legal rules concerning gender

quotas.


6. Conclusions concerning supervisory activities and the budget.

Through direct checks and information provided by the auditing company and the director

delegated to draft the corporate accounting documents, the Board of Statutory Auditors

ascertained compliance with the provisions of law regarding the formation and the composition of

the consolidated financial statements of World Duty Free, of the financial statements of World Duty

Free SpA and of the relative Report of the Board of Directors. During the course of this monitoring,

no elements emerged that would require reporting to the supervisory organs or mention in this

report.

The accounting company, in its reports issued as per Arts 14 and 16 of Legislative Decree no. 39

of 27 January 2010, expressed an unqualified opinion on the financial statements and on the

consolidated financial statements for 2013. The financial statements and the consolidated financial

statements are accompanied by the statements of the delegated director and of the CEO as

required by Art.154-bis of the TUF.

On the basis of the activities performed during the year, the Board of Statutory Auditors raises no

objection to the approval of the financial statements at 31 December 2013 or to the related motions

put forward by the Board of Directors.

Milan, 10 April 2014

The Board of Statutory Auditors of World Duty

Free SpA

Marco Rigotti

Massimo Catullo

Patrizia Paleologo Oriundi

.

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