Julían Díaz - CEO Andreas Schneiter - CFO

Jon Cox - Kepler Cheuvreux SA Joern Iffert - UBS Jaafar Mestari - J.P. Morgan Thomas Baumann - Mirabaud Securities Limited Corinne Gretler - Bloomberg Felix Remmers - zCapital

Thank you very much for the introduction, Maria. And as Maria said, this is Julían Díaz speaking.

Also, Andreas Schneiter is participating in the call from Dufry. Welcome to Dufry's half year 2017 result presentation.

We are going, as always, to use the presentation published this morning in our Web site. Please go to page five of the presentation.

In page five, we have the highlights of what we consider another step for achieving our 2017 targets, and we confirm the acceleration of organic growth in Q2 2017, plus 8.9%, the important increase in gross profit margin, reaching 59.5% in half-year, EBITDA grew to CHF411.2 million during the first six months, free cash flow increased to CHF204 million in the quarter, and net debt was reduced by CHF210 million compared with March 2017. Let's move to page six.

Turnover reached CHF3.8 billion, plus 5.8% compared with last year, impacted by minus 1.7% due to the translation effect especially generated by the devaluation of British pound and euro. In constant currency, turnover increased by 7.5% during the first six months of 2017.

As already commented on, organic growth reached 8.9% in Q2 and as a consequence 8.1% in half-year 2017, the highest growth over the last five years. Most of the operations performed well, and we are still implemented our refurbishment plan 2017.

Up to June 30th, we have renovated 14,000 square meters of commercial space, and opened 14,500 of new gross commercial space. We have also signed close to 22,000 square meters of new contracts will be opened around 2017, 19,000 square meters, and 2018, 21,800 square meters.

Every time, and I want to remind that we renovate the shop, spend per passenger increases between 15% and 20%. Other initiatives, as the brand plan or the specific marketing campaigns were the base of this acceleration of organic growth, on top of the good performance of currencies for some of the most important of our own clients' nationalities as Brazilians and Russians.

EBITDA grew by 7.8% compared with last year, reaching CHF411.2 million, and EBITDA margin expanded to 10.8%. EBITDA was positively impacted in the quarter by the increase of gross profit margin, and negatively impacted by the increase in concession fees and general expenses.

In the case of concession fees, the 20 basic points increased in the quarter compared with last-year quarter was due to the increase of mark in the Spanish contracts, then the mix of some important concessions with accelerated growth this year compared with previous year, and the delay in renovating some other concessions where we started to pay a higher mark still operating with the old store spaces, this is the case of [indiscernible]. The concession fees rate we expect by year-end is similar to the one in half-year.

Most of the extensions and renovations mentioned before are already opened, and performing as expected. Regarding general expenses, the impact will be mitigated will be mitigated along the second quarter because partially the impact was due to a one-off accrual.

Our main target from now on is the implementation of our business operating model, where due to the [standardization] [ph] of our process and procedures we expect to drive more efficiencies at EBITDA level by December, 2018. The project is in a phase of implementation, as expected, and our expectation is to deliver 50 basis points at EBITDA level due to these efficiencies.

Cash EPS finally grew by 38.5%, reaching CHF2.34 per share from CHF1.69 in 2016. Free cash flow during half-year 2017 was CHF127.5 million.

We had a strong seasonal quarter, reaching CHF204.5 million, 68% higher than in 2016. The amount of one-off payments during half-year was close to CHF100 million especially due to new contracts and extensions.

Net debt reached CHF3.6 billion, CHF200.7 million below when we compare with March, 2017. A strong performance for a second quarter, but next Q3, the quarter we are already now, is typically the highest cash generator due to the seasonality of our business.

Let's now to page seven of the presentation, most of the information here has been already commented, let me talk about the performance and the trading update. The acceleration of organic growth in Q4 2016, plus 5.6%, Q1 2017, 7.2%, having confirmed in Q2 2017 with 8.9%, and as a consequence half-year 2017 we reached 8.1%.

The translational FX impact was minus 1.7%, and as I mentioned was due to the devaluation of the British pound and the euro versus the Swiss Francs. The change of scope impacted negatively 0.6% due to the wholesale business that we closed, acquired with Nuance acquisition.

And as a consequence, total turnover reached CHF3.8 billion, versus CHF3.6 billion in 2016. On top of the increase of number of international passengers in the locations Dufry operates, where we increased 5.4%, during the first six months of 2017, Dufry has delivered a significant increase in productivity of 2.7% due to the initiatives mentioned during the calls, and obviously the refurbishment plan marketing initiatives have been implemented.

Regarding the different divisions, in division one, South of Europe and Africa, turnover increased by 4.4% and reached 776.6 million versus last year where we increased 5.8% inorganic growth. Africa increased double digit growth performance including Morocco, Ivory Coast, and Egypt, and single digit growth in Ghana.

Anatolia and Turkey finally performed at high double digit growth, and increased single digit growth based in the significant increase of Russian traffic. All the other operations, including Spain, Italy, and Malta, single digit growth despite a significant increase of traffic in Spain, but the problem we had there was the weakness of the British pound and as you'll know the most important international traveler in Spain are the British passengers.

Division two, U.K., Central and Eastern Europe, turnover increased by 10.1% organically, reaching 961 million compared with a similar figure in 2016 in reporting basis. U.K.

continued very strong performance in local currency after the Brexit vote in June 2016 and the devaluation of the British pound. U.K.

Syria, Russia, Kazakhstan, Armenia, and Finland double digit growth. Switzerland performance was flat mainly due to the strength of the Swiss Franc, and Sweden, Germany and Bulgaria, single digit positive growth.

In division three, Asia, Middle east, and Australia, turnover reached 370.7 million with similar level than in 2016. Organic growth in the division was -1.5%; double digit positive growth in Macau, Indonesia, and Cambodia; single digit positive growth in China, Korea, Singapore, Jordan, Kuwait, and Sharjah.

The business in Hong Kong continues to underperform last year. Australia with single digit negative growth due a total renovation of the shops that has been completed during the first week of July transforming performance in a very positive one, also had an impact of the performance of the division.

What impacted the organic growth in the division has been the closing of Mumbai in India, and Sri Lanka; this last one subject to tender process decision. We believe the decision will be reached during Q3.

Excluding Mumbai and Sri Lanka closings, the division performed a single digit positive growth. In Division four, Latin America, turnover reached 119.6 million, increasing by 13.8% compared with pervious year.

Organic growth in the division reached 12.4% during the first six months of 2017; double digit growth in Uruguay, Chile, Peru, Puerto Rico, Dominican Republic, and Brazil; single digit growth in Argentina, Ecuador, Mexico, Aruba, and Trinidad. And negative single digit performance in the British Caribbean Island.

In division five, North America, turnover reached 849.5 million, 7.5% above last year, and organic growth positive reached 6.3% increase. Double digit positive growth in duty free in the U.S.

and Canada, and single digit in duty paid operations. During the first 15 days of July, we have confirmed the same trend in consolidated basis in half year with single digit positive performance even considering July is high season and therefore comparable with July 2016.

Division one, acceleration of double digit growth and single digit positive performance in divisions 2 and 5, continue a double digit positive performance in division 4 Latin America, and single digit performance in division 3, same regions in Asia, Middle east and Australia. Let's now go to page 8.

In page 8, what we have tried is to show one of the most important components of organic growth is the evolution of the square meters. We have opened on the top of this slide, close to 14.500 square meters of new commercial space -- gross new commercial space.

In division one, Spain, Nigeria, Morocco, Egypt, Middle East, Greece, and Kenya; division two, Manchester, Manchester Brighton, Gatwick, Russia, and Belgrade; division three in Macau, Bali, and continental China. In division four, Brazil, Trinidad, Chile, and -- sales from cruise line operations; and in division five, in the U.S.

and Canada, Detroit, Minneapolis and several other ones with smaller sizes. Regarding the number of square meters refurbished, I think we have here very clear chart with 13,500 square meters renovated with different operations where we were more active.

Then we moved to page 9 of the presentation. The 22,000 square meters of additional commercial space already signed, 19,000 will be opened in 2017, and around 2008 in 2018.

Extensions in the Greece, Liverpool, Brazil, and Nashville, Las Vegas, and Minneapolis, and especially I would like to remark the new caption tender that we own in Barajas Madrid; the new sales improvement to the new terminal in Astana and the new operations in Phoenix, New Orleans, LA, Oklahoma, and Chicago. Regarding the pipeline opportunities what we are showing in this bottom -- in the bottom of this slide is 35,000 square meters of commercial space that we are under negotiation for participating in tenders.

Important and relevant, the 12,000 square meters of North America, the 10,000 in U.K., Central Europe -- and Central and Eastern Europe, and in Latin America 6000, Asia 3500 and Southern Europe 2500. If we move now to page 10 is the second obviously information regarding the organic growth is number of passengers.

So far in 2017, the number of international passengers has increased by 8.7% in the different regions. The most obviously active Europe with 10.3%, Middle East with 8.1%, and the lowest growth generated in Africa with 5.1%.

In the location where Dufry is operating, the number of international passengers increased by 5.4%. Regarding the forecast; between 5% and 7% for year '17, '18, and '19 obviously very healthy, and I hope that the passenger growth will continue to be the most important component of this organic growth.

Page 11; in page 11 as always we repeat Dufry segmentation. Dufry by division, the most important number today generated in U.K., Central and Eastern Europe by 26%, and then, we have North America and Latin America with 22%, Southern Europe and Africa 20%.

It's important to really comment on that in Southern Europe and Africa, the seasonality issue is even more deeper than the rest of the locations. And in third quarter, we would see a significant increase in Southern Europe and Africa too.

Finally, Asia, Middle East, and Australia 10% is confirmed. Our intention to expand the business in Asia is probably the most important player from regional point of view.

Regarding Dufry by channel, we are still obviously a retail operator. A 92% of the total turnover has been generated in retail, but then we have developed also alternative channels in our strategy what we have as retail, sales from more cruise lines and shops are important driver for growth in the mid and long term.

Regarding Dufry per category, all the category is performing well, two significant comments; luxury goods increased by 21% compared with previous year in the same period of time. Perfumery -- perfumes and cosmetics, and wines and spirits very close to 10%, and then food and confectionary around 7.5%.

The offset of this is publications related with publications books, magazines, and newspapers were dropped by 5% compared with the same period of last year. Again, we confirm here that our strategy is personal care, perfume and cosmetics, food and confectionary, and luxury product.

Regarding regime, this company still has a significant part of turnover generated by duty free operations 62%, and duty based 38%. The intention as many times repeated is to rise the duty paid to a level where we will report 50/50 duty-free duty-paid.

Then if we go to page 12; in page 12, the priorities for 2017, I don't think that to comment on all these aspects in detail is needed, because we already commented. Number one is increase an accelerated organic growth.

This year already has been a significant increase compared with last year so far the second year and the acceleration of the second year will be based in a higher performance last year, especially in the countries I mentioned, Turkey, Brazil, and Russia. What we are going to do and is in process and we are obviously doing it is continue with refurbishment plan, accelerate the commercial initiatives, and two aspects are very relevant for the future.

One is the whole digitalization of the company and the new one is a new generation store. Regarding the digitalization of the company, the main target is to improve the efficiency and obviously create at the same time that we implement the business operating model efficiencies in all the areas especially in the implementation of process and proceeds.

And the new generation store is a part of the digitalization, but it's obviously the most relevant initiative that we have started regarding the digitalization. The new generation store has the intention to really connect with the customers when they are at home and when they are enabled.

The idea is to communicate all the important aspects of the high retail and travel retail in terms of promotions, pricing and obviously using the same language. Regarding the new concessions and risk management, we will comment on that in previously, the new business operating model, the EBITDA margin and the most important target for this year, cash generation and de-leverage.

The medium term leverage already commented many times is below three, net debt-to-EBITDA then if we move to Page 14 of the presentation as disclosure in the presentation and in the press release, Dufry's Board of Directors is considering an IPO of North American business, in case it happens then intention is to keep majority ownership in the business with full consolidation. The level of integration expected will sustain the global sceneries of the whole group.

And if we move to page 15, the intention of this is really follow the American market, the North American travel retail market differs from all the International market in several specific segments, one of this of then is the importance of food and beverage, 50% of the travel retail in the U.S. is food and beverage, where in the rest of the world it's around 30%, within the retail there is another significant difference, 77% is duty-paid and 23% or 25% is duty-free.

The opposite in the rest of the world, they're also districts due to the ownership and structure where you have countries in lines, cities, states and this is not just have been developed with different types of management, one of them is the matter concession operator, the other one is developers, there are many aspects and the results were an important factor is the DBE programs in the U.S. where the operations are normally done with associations with ACDBE firms of women and minorities.

These businesses are considering the tender or report proposal documentations, and it's responsible for others in all these programs. As a consequence of these different development of the travel retail in the U.S., what we have considered is that in terms of the strategy, the food and beverage business is main priority for expanding on top of the normal convenience and specialty stuffs that we are operating today where we were the leader, one of the pillars for the growth and the only one is to participate in this inter-median structures between the landlord and the retailers.

One of the examples is the contract that we have been awarded in Midway in Chicago. Mainly, if we go to Page 15 here we have the rational of Dufry Hudson Group and for Dufry North America and the consequence of that and to obviously to retain control in a possible IPO as I said we'll keep the implementation of our global synergies.

One of our strategic pillars worldwide and generate overall global efficiencies. The process of this IPO will allow Dufry to accelerate the reduction of leverage for reaching our leverage target ahead of time.

Also the company will deposition with better financial flexibility for expanding in the future M&A opportunities and accelerating our growth globally and especially in Asia. As I mentioned both in many of our the conference calls obviously the intention of the company to expand two divisions in Asia also the intention of the companies to continue with M&A opportunities which M&A opportunities all are opportunistic.

But in our case we have repeated many times middle size and the small size of opportunities that are available, and this M&A future opportunities obviously will be considered. It will also position Dufry for returning cash to our shareholders that is one of the obviously important focus of our more of the rest of during this year in order to compensate the shareholders in terms of productivity and profitability.

As a leader in the U.S. this IPO will facilitate our North American business to focus in his specific food and beverage.

Master concession operator mortgage and all the similar mortgage and will increase the financial flexibility to capture growth through our current retail scope. I think this is and for 10 years we we're all obviously focusing and analyzing properly and submitting to the world of the right business proposal and the right financial proposal and from Dufry's perspective and we believe this is one of the, of the best event in order to accelerate the delivery of the world to our shareholders.

We move to the presentation financials, I will pass through Andreas Schneiter to continue with the subject number three.

Thank you, Julían, and good morning and good afternoon everyone. So let's move the record to page number 18.

Julían already commenced in detail on organic growth of the groups so, I will focus on the, on the other growth aspect. Changes in scope includes discontinuation of a wholesale business that we terminated in May 2016, the respective effect was 0.5% for the quarter.

The second quarter now was also the last period where this business generated a scope change so, going forward there shouldn't be any further changes in scope based on today's business profile. Then on the organic growth by region in the second quarter it's remained probably consistent with the first quarter as already commented by Julían we had an acceleration in both European divisions and to U.S.

Asia division lacked for the reasons described already earlier and Latin America continued its strong double digit performance. If we then move to page number 19, there which are some of the key emerging market currencies and what information clearly illustrates is that the exchange rate movements against the U.S.

dollar have reduced substantially over the last twelve months. This trend also has continued in the first days of the third quarter.

So, for example, if we look at the Brazilian Real; the currency has been trading at very similar levels compared to one year ago so, as a result the volatility in emerging market currencies has substantially normalized and assuming that, this remains the case does it remains unchanged. It should not have any material impact on our top line growth any longer.

Then if we move to page number 20, there we have the main currency for Dufry in terms of translation effects. The translation effect for the quarter for the second quarter was minus 1.6%; the main driver being the devaluation of the British pound which started at the end of the second quarter of 2016 due to the Brexit vote.

I think this effect now has annualized impact of the British pound will be relatively small going forward. On the other hand, the U.S.

dollar traded lower against the Swiss Franc in recent months. In case, these current trading levels of the U.S.

dollar versus the Swiss Francs prevail, we do expect a negative translation effect also the remainder of the year because of that. Then if we go to page 21, here we have the income statement for the half year 2017.

Starting with gross margin 510 basis points in the first half mainly driven by the synergies of World Duty Free integration then concession fee measured as a percentage of turnover increased by 50 basis points compared to the first half of 2016. Having said this, if we compare concession fees only for the second quarter the increase is about 20 basis points.

Personal and general expenses combined the increased by 20 basis points compared to last year. In the second quarter we have some specific charges which are nonrecurring in nature and excluding the one off effect the percentage should turnover slightly improved year-on-year.

Then share of results of associates were negative due to a one-off charge in the quarter. There is one asset we have owned as part of the Nuance transaction has not developed in the way we expected.

And we have therefore decided to fully amortize it. EBITDA for the period was $411 million EBITDA margin for the period was 10.8%.

Depreciation and amortization were fully in line with previous quarters when measured as absolute amounts. So the quarterly charges were around $40 million and $90 million respectively.

Then linearization which is related to the non-cash elements of our Spanish contract was $46 for the half year. The expected charge for full year 2017 is just below $60 million, but as the line items is considered seasonality we will have a positive contribution in Q3 of about $10 million and then again in negative charge in Q4 of about $23 million.

Other operational result for the period was minus $14.7 million. The largest part is as usual due to start up of new projects as well as local restructuring and projects on the other hand.

Financial result was $90 million for the half year some $8 million lower compared to the same period last year. The increase in the second quarter compared to the first one was mainly driven by one off expenses as well as increasing interest rates in the U.S.

dollar on the very short end of the curve. Income tax was minus $0.6 million; as usual this is very much a result of seasonality, so we shouldn't read too much into that number.

It does look along the year. Net earnings as a result were minus $0.9 million an improvement of $57 million year-on-year.

Minorities for the period were $24 million the increase compared to the last year is mainly due to the good performance in the US on one hand and the strong growth in the emerging markets on the other hand. Cash earnings where we just had bank acquisition related amortization was $35 million higher at CHF 126 million.

Then if we move to page 22, we have as usual the cash EPS evolution. Cash EPS for the period stood at CHF 234 which represents an increase of 38% compared to last year.

Just as a reminder due to the seasonality of the business, the third quarter is by far the most important quarter for the business as you also see on the chart on the top left f the page. Then on page 23, we have the cash flow statement.

Free cash flow for the half year was CHS 125.6 million. This number also includes certain projects related cash outs which we already commented on in our last calls.

In total these cash outs amounted to about CHF 110 million of which CHF 33 million are reflected in CapEx and about CHF 75 million are included as a change in working capital. This means that if we look at somewhat non-life cash flow generation so excluding these project related cash outs we generate about CHF 230 million free cash flow for the half year and that is about 15% higher free cash flow compared to last year.

Then on page 24 we have our key matrics on cash flow as usual, so core net working capital which includes inventory, trade receivables and trade payables was 5.3% over turnover. And this is fully in line with our expectation and above 20 basis points better than the same period last year.

On the CapEx side, we currently run at around 4% over turnover including the CHF33 million extra CapEx and as I mentioned before and so if we look at the full year, we do confirm that we expect total CapEx to be in the range of 3% to 3.5% turnover. Moving then to page 25, we have illustrated here again the quarterly sequence of the free cash flow generation, so firstly what you'll see is that we do have a very seasonal cash flow pattern with the third quarter being by far the most important quarter in terms of cash generation.

Secondly, you also see that the negative free cash flow, the first quarter has been fully compensated and the second quarter reported free cash flow in the quarter being CHF205 million. As mentioned before, there were about CHF33 million of one-off cash out in the first quarter and about CHF75 million in the second quarter from projects related to Greece and Latin America.

If we adjust for these cash outs, then the normalized cash flow generation was 15% as I mentioned before. On Page 26, we have the balance sheet there, I think is nothing unusual all the time the normal amortization in intangible assets deleveraging as well as some translation effect there are no material shift in the balance sheet.

On page 27, then to conclude we have the overview on the financing and the covenants, so net debt as of June just above CHF3.6 billion, so CHF210 million lower than at the end of the first quarter, covenants was 368 and well below the threshold of 425, and the debt by currency as well as the debt maturity profile has been virtually unchanged compared to previous quarters. So this concludes the financial part of the presentation, and I hand back to Julian.

Thank you, Andreas. Few remarks in Page 29, we expect good market conditions during our Q3 transition and the rest of the year, also in terms of comparable we will have higher one as I mentioned before in Brazil, U.K.

and Spain last year where these operations performed weaker due to the reasons already explained. The third quarter is also the most important in terms of generation of cash which continues to be our main priority of 2017.

Eventually with organic growth with acceleration I mentioned during the last quarter that in a normalized ways including second half which should be above 5% this year, 5%, 6%. The implementation of the new business operating model will be impacting the P&L in 2018 but we're already implemented these in 17 countries.

The digitalization that is an important part of Dufry's strategy for the next five years is having four specific pillars, one is the current referred. We are increasing and improving the quality of over search regarding the customers.

We do quarterly analysis with significant of the investment in time and effort from the -- from the total organization. The intention is to be more accurate in terms of assortments, pricing policies and marketing tools especially promotion as you know more than 50% of the sales in our business are always based in promotions.

The employee digitalization is another way of improving the efficiency of the company, especially in process and procedures. Omnichannel strategy already commented in previews, in previews conference calls where we have the different approaches one is regarding the point of content with the customers.

From the moment they booked the trip to the movement they return home and in the process in the travel agencies, with aid carriers, in the airports, in the shops and finally in when they are right home again but, we have also the strategy to develop internal omnichannel tools. One of them is right is the loyalty application that has been successfully launched in more than 10 country so far, the pre-order format in order to facilitate the pick-up pickup in the purchase and in arrivals.

And finally, as I mentioned, the store digitalization, two examples of the store digitalization are today in Madrid Terminal 4, and Melbourne. In both cases I think there is a significant change in the way the retailing in our business is going to be operated.

This is the first time that we are able to contact with the customers when during the trip and at the moment they are in the airport. As I repeat many times, this is not new.

In travel retail only between 16% and 19% of the total passengers or potential customers buy something in an airport. With this type of technology we will be able to improve and increase the penetration rate, and the same thing with [indiscernible].

This is -- during the next five years this will be the most important strategic move in order to really confirm that this is the way to go. We are developing right now new shops in Heathrow Terminal 3, Zurich, and Cancun.

And finally, as I mentioned during the presentation many times, focus on cash generation and de-leveraging remains unchanged as the main conclusion of this presentation, I think, is a good one. In any case, we are from now on open to the Q&A part of the presentation or comments.

Everything is welcome. Thank you very much.

Yes, good afternoon, Julían, and Andreas. Jon Cox, Kepler Cheuvreux here.

A couple of questions for you, just on the organic growth for the year, Julían, did you say 5% to 6% for the year? That looks a little bit cautious give the fact you're saying that the trends you saw in Q2 are continuing into July, which obviously is close to 9%.

That's the first question. Second one just on the margin.

I couldn't quite workout what you were saying about the concession fee or rather selling expenses in H1 being similar for the year. Could you just give us a best guess for your assumptions for the EBITDA margin for this year?

Obviously what you've done in the first-half, top line fantastic, but margin progression has been somewhat more muted than probably many of us expected. You seem to be saying it will accelerate in the second-half of the year, but can you give us a best guess for the year margin.

And then the third question just on the strategic rationale about the IPO in North America. How should we think about that, is it really -- they have ideas in mind for acquisitions in the sort of food and beverage space.

Should we be looking at like a [Autogrill] [ph] or should we be looking at something like fast casual dining experience, chipotle, that sort of thing when you're talking about food, because obviously there's a big difference in multiples that you would apply depending on what sort of expansion you're looking at in that food and beverage business. Thanks very much.

Thank you, Jon, for all these comments and questions. Let me start, regarding organic growth.

I think it's our view that last year, during the third and fourth quarter we accelerated a lot the organic growth. The problem that we had in the past regarding organic growth ended during Q3, 2016.

That in fact is the highest quarter too, and accelerated means that positively accelerated in Q4 2016. To maintain the level of 5%-6% on top of what I am now commenting on, I think is a realistic target.

Regarding the concession fees, what I said, and I explained what happened during the first six months of this year, is that we expect concession fee rate by year-end of around 27.5%. 27.5% could be 27.2%, but around 27.5%.

Regarding the EBITDA margin, I didn't comment anything about general expenses because I didn't say anything. I didn't comment on -- I don't expect any significant improvements in general expenses.

The impact of this one-off accrual in Q3 is relevant because it's in the Q3, but in a full-year basis I don't think it will be a critical issue. Regarding EBITDA margin full-year, as I always comment on, I don't think that this is the time that I can comment on that, because it will depend on the third quarter, and obviously performance is very difficult.

I cannot say, because I prefer to wait until the performance in Q3 is confirmed. Everything looks right, but as you know, it could be different.

And the seasonality of this company now is very high. The strategic rationale for the food and beverage in the U.S., I tried to explain it, but I will try again is, in the U.S.

we are leaders. And we control a significant part second most important part of the convenience store business.

If we want to accelerate growth we have to look for alternative models. We all know that in the U.S.

the travel retail is a different model one. The reality is that 60% of the turnover in the travel retail U.S.

is food and beverage. And within the 40% as I said, an important part, around 70%, is convenience.

In convenience we have today a significant part of food and beverage, get up and go. And I think this is going to continue to be one of our main priorities.

But we have also analyzed the strategic rationale of expanding in food and beverage in the U.S. [indiscernible] transactions obviously, because what we need at the beginning is to really acquire know-how of this business, and obviously infrastructure.

But it will be a company that will be a retail company, not a food and beverage company. The food and beverage is grab-and-go, and fast casual.

Nothing that will be compared with the huge operators, and we don't visualize Dufry competing with these operators even in the U.S., the U.S. is going to be a convenience market for us with grab-and-go food and beverage within the convenience, plus food and beverage fast casual.

The acquisition mood in the rest of the world will continue like until today, it's more on middle-sized companies that can be generated through the generation of cash that this company is showing in the cash flow statement. And that's all, nothing is new as such in the U.S., and with the rationale that I just comment on.

Okay, one other -- just follow-up, so you're saying that in terms of organic sales growth you expect 5% to 6% growth in the second half of the year compared to the second half of last year?

No, sorry, but probably I didn't explain it properly, in the year.

In the year 5% to 6%, okay. And then the second thing, you are saying that concession fees for the year as a whole will be 27.5% after being a similar level last year basically?

Yes, this is a point.

Okay, so it's quite a dramatic improvement, because I think in H1 you were like 28.9% or -- actually I'm including the other bits that were included, but…

Q1 and Q4, especially Q1 are very low in terms of generation of sales and productivity. But I think it's going to be like that.

Okay, great. That's encouraging.

Thank you.

Yes, hello gentlemen; [indiscernible] congratulation on the organic growth. Three questions from my side, I would like to try it again with your fiscal year '17 full-year earnings expectations.

Do you feel comfortable with the EBITDA [in terms of] [ph] expectation of 1 spot of 50 for the full year was my first question. And the second question is also in regards to understanding on your outlook.

You said EBITDA margin improvement of 50 basis points [indiscernible] '18. So my question is to which basis you are referring here.

So the 50 basis points is in '18 versus '17 or in '18 versus '16, so perhaps somewhat there for clarification on that. And finally on your potential IPO process, any idea about the timeline of next steps what is to expect?

Thank you.

Yes, thank you very much. Regarding the first question, as I just answer, EBITDA expectations remains for us unchanged.

But I cannot confirm anything because I prefer that the high season is over. Again, we are very seasonal.

Now it's very difficult, we need to really perform and complete the year with this seasonality in order to understand where we are. But the trend is very good because what we have seen is the recovery -- gradually recover in Turkey, in Antalya gradually recover -- of significant recovery in Brazil, and significant recovery in Russia.

This is one of the components that I mentioned as in previous calls, that is relevant regarding to achieve, obviously, the target of EBITDA. The second one, as you know, was the famous efficiencies.

As you mentioned here, is compared with 2017 or '18, it's compared with 2016. The 50 basis points, and I told about that in the previous calls, the 50 basis points that will be delevered through efficiencies will be based in 2016 P&L.

The third one is obviously the third element for confirming expectation of the EBITDA is the delivery of an implementation of the synergies due to the acquisitions. What I can confirm is all were implemented in 2016, and we are in the process to reflect all in the P&L in 2017.

The IPO timelines, this is depending on many regards. But we believe that will be before the year end.

Year-end, okay. Thank you very much.

All the best. Thank you.

Thank you.

Hello, Julían. Hello, Andreas.

And thanks for taking my questions. And the first one would be please on the World Duty Free synergies.

And could you please quickly share with us what were the incremental synergy amount materializing in the first half 2017, what will be the incremental synergies and supporting the second-half 2017? And are there any other incremental synergies from World Duty Free coming into 2018?

Second question would be coming back to your comment on M&A that this is opportunistically. If something, for example, would show up in the second half is this something you would consider, and would you also include the consideration of an equity hike for it, or would you purely find this is in debt?

Third question, please, would be on the EBITDA margin, which you highlighted or the target is medium term above 13%. Shall we read into this that this is a more 2019-'20 or can this already happen in 2018?

And then just two housekeeping question please. Andreas, what is roughly your best expectations for the interest cost line for 2017?

And then in the other line you were talking about, I think, a couple of one-offs which are not recurring. And if you have some more details here would be appreciated.

Thank you very much.

Okay. Regarding the synergies, I don't have the exact figure, but it's around CHF50 million, around CHF38 million -- it's around CHF50 million-CHF55 million.

Sorry, because the exact figure I don't have it here, impact in the P&L. Then acquisitions are opportunistic.

I cannot comment on anything when you know the acquisition depends on the other part. But I can say two or three things that I always repeat, is this company has a pillar for growth acquisitions.

These acquisitions in the process we are should happen in Asia, because obviously it's the way though where we will complete our own strategy. But acquisitions are in this moment available worldwide.

The acquisitions that are more likely to happen, if happen, are small or middle-size. I don't visualize any large or big transaction in the short, middle plan.

Regarding EBITDA margin targets, for us it's 2018, and I think the implementation of these three aspects that I mentioned during the previous question are -- or at the time I was answering this question was based in 2018.

And then on the question on the interest cost, so my best guess as of today will be in the area of CHF180 million. So this would then include also a few of the one-offs that we now had in the second quarter.

And I think if you look at the lines above the EBIDA, obviously the share of associates that is clearly a one-off, so this is clearly identifiable. And then on the general and personal expenses together, the one-off there is kind of a mid-high single-digit amount of a million, so that's why if you want to take that as a recurring -- sorry, to move that forward you would need to strip out that amount.

Okay, thanks very much. And if I may follow up, on the M&A regarding financing, would it be in the smaller sized companies, is this is a size that you can finance with debt or is it potentially also requiring a capital increase?

Not at all, no capital increase and we don't have even in mind to even talk about capital increases.

Okay. Great.

Thanks very much.

Thank you.

Hi, good afternoon. I have two questions please, both on the North America IPO project.

Firstly, I think when you presented the strategic rationale you mentioned a contract you've been awarded in Chicago as an example of what could be the contract [indiscernible] so if you could maybe just go through this a little bit with us. It looks on the outside like the contracts are still very much being attributed to pure play food and pure play players.

But was that different for you in Chicago? Do you have any of those [Master Concessionaire] [ph] contracts already that you can use a case study?

And my second question is on shareholders. As part of this project of IPOing North America, are you aware of the intentions of Mr.

DiMaggio, and is your understanding that the historical shareholders of Hudson would want to remain shareholders of Dufry Group? Or given the opportunity now are there any signs that they could be more interested in being shareholders of Dufry North America directly, is that part of the plan?

Okay, regarding the first part, obviously this is a business that is a strategic move, but it has not been completed yet. What we have in midway is one of these contract, Master Concessionaire, where we collaborate with another food and beverage company and management company for participating in the tender.

But we have in this tender responsibilities to operate the duty free and the duty paid. As a consequence this is a new move for us, and I hope that will generate a lot of more value, because the realities with this type of strategic move will have better control of the operations, and also longer concessions.

That is, as you know, one of the most significant challenges always in travel retail. Regarding the intention of third parties I cannot comment on anything.

But as you know, the referential holders in Dufry AG are different names, starting with three, and with other companies already reported, [indiscernible] as you comment on, are not part of the IPO, and they are not going to be part -- I don't know exactly [indiscernible] in the market. They will not be part of the rationale of this IPO in any regard.

All right. Thank you very much.

Good afternoon, gentlemen. A couple of questions if I may, and just with regard to the concessions fees, should we -- I don't understand your company that well, it's new to me, but we should actually see a plateauing of this going forward.

And if that is the case can you talk about some of the dynamics around that, the inputs there. And the other one is with regard to the M&A, as you said, was opportunistic.

But then also, squaring that with regard to your faster de-leverage and returning cash to shareholders. How should we sort of see those ranked as such and how we balance those elements?

Thanks.

Thank you very much for the questions. Regarding the concession fee in this business, it's a combined -- blended, I would say, of different contracts.

In most of the contracts what we have is a percentage -- we pay a percentage on turnover. And sometimes we have a minimum guarantee in each contract based in many aspects, could be based in number of passengers, could be based in square meters, could be based in the range of [indiscernible].

The dynamics of these concession fee is depending on the operator. And I read in several reports from analysts, and they are here present, that this business is changing, and the most important part of the profitability will go to the airport authorities.

I totally disagree with that. Totally disagree.

We are talking about concessions where there are tendered processes. But the tendered process is one of the possibilities to get in a concession.

You can also negotiate. You can also create joint venture; you can do many things regarding this part.

I think the trend, when there is a concession auction process obviously the trend is the rent percentage, the rent rates are increasing. How long and how far?

If you think in Dufry, excluding the two consolidated companies, World Duty Free and Nuance, and after, I don't know how many years reported in the market. We are still below 25% in like-for-like basis.

This is the important thing, is how to manage the concession portfolio. And if you ask me what is the trend in the future, again, if there is an auction process or there are auction processes pure economical and financial, where Dufry, probably you know, is not very specialized and don't participate in many of them.

The trend is that rents will increase. But if we are able, as we have been in the past, to manage concessions in different ways with one-on-one negotiations or joint venture tenders, or even acquiring a small concession portfolio with long duration we will be able to maintain a significant level of concession fees like we have today.

Regarding M&A opportunities, the question is very straight. I have to answer the question very straight.

The priority number one today is to return cash to the shareholders. And if we have to put the balance depending on the size, depending on many things, but one of the priorities of the company today is return cash to the shareholders.

Okay, thanks for that. Just going back to the concession, if you look at your portfolio, the blend now, going back to your point about the ability of self-managing versus a sort of standard template, do you see that that has actually shifted more to your favor, and it goes back to my point about plateauing, and also there your point on a percentage of revenues you mentioned earlier for the second half as the first half.

Is that something that we should actually see that -- this may be an emotive phrase, but the balance of power has shifted more in your favor going forward?

Well, the balance of power is always on the side of the airport, because the airport is the landlord. This is always like that.

Then it's how to do it, or how to implement this power. And the power is not only the capacity to increase the rent; it's also the capacity to generate more sales because if we pay a percentage on sales we will pay higher rent.

The issue here is not how to raise the highest rent. The issue here is how to raise the highest rent with the highest income per passenger.

And I think there are many airport authorities in the world today, and I met several two weeks ago, where you have -- or they have, sorry. They have the intention to reach the maximum income per passenger.

And this is a combination and collaboration with the operators and the other ones. But the answer to your question is very simple; the power is always on the landlord's side.

Right, okay. Thank you very much for the answer.

Hello gentlemen. You mentioned in your outlook the strong comparable base from pervious years in some markets.

And then you said that you see an organic growth rate in the full year of 5% to 6% as realistic. So the assumption is correct that the growth rate of 8.1% in Q2 will slow down in the coming quarters.

Question one. And question two is, I didn't understand quite right the decision whether you will do the IPO for the North American business will be taken before the end of the year, did you say that?

And you may have any idea how much of cash you can generate out of this IPO to lower your debt? Thank you.

Okay. Regarding the first part on the organic growth, yes the path of growth will slow down because, for example, last year, I remember now that in Q4, we grew organically 5% -- 5.6% and [indiscernible] comparable is going to impact the business 5 - 6% as I mentioned.

Regarding the IPO, I cannot comment on the specifics. And as you know, obviously this is an important legal aspect where if you ask me a specific question on the IPO, first of all I don't know most of the answers because we don't know yet.

And secondly I cannot answer this question.

Great. Thank you.

Yes, hi. Thanks for taking my question.

Actually I only have one left. On Slide 12, Julían stating that the medium target of EBITDA margin would be above 13% by the Q1.

You still said 13 to 13.5 is the target. I am not sure whether you are guiding downhill, whether this is just semantics?

My -- I could say the same thing is for me above 13% is a significant good performance into our retail specially in a company with multi-contracts and multi-country operation like we are. It is 13 - 13.5, I would say above 13% in order to make sure that I meet both requirements.

So there is nothing we should read into that?

No, no, no. It's a way of explaining.

Thank you.

Good afternoon, gentlemen. Thank you very much.

I have an additional one to the strategy in the U.S. with regard to F&B.

I think I understand what you are trying to say. But when you say you have to acquire a know-how and also infrastructure in this specific part of food and beverage, does that -- how should we take that?

Is that acquisition by externally or how do you intend to acquire this know-how and the infrastructure? That would be first part of my question.

Okay. And second?

I answer that.

It depends on the answer.

Yes, yes. No, no, I can understand now.

Yes, the know-how and infrastructure obviously is something we don't have internally. Now -- and we need to acquire a small -- middle size company.

A company that will lead us to the process of understanding better the business. But I am talking about an acquisition -- external acquisition.

Yes, acquisitions. Okay.

Okay, well, that answers my second question. Thank you.

Thank you very much.

Hi, thank you. Sorry.

Yes, thank you for taking my question. You mentioned that the IPO in North America would help accelerate de-leveraging.

I was wondering if it is fair to assume you will considering taking out any of the bond issues you have outstanding?

Sorry, can you repeat the question again. I didn't understand it.

Yes, I was saying that you mentioned during your presentation that following the or the IPO of North America business would help accelerate de-leveraging and I was wondering whether it would be fair to assume that you will be taking some of the bond outstanding.

We haven't made a final decision on that, but that is a possibility that we are currently looking at.

Okay. And the IPO would be potentially will be before the end of the year?

As you said would be -- maybe towards 2018 potentially?

We haven't commented on detail on that one. So I think we will need to see on timing and the [indiscernible] importers.

Okay. Okay, thank you.

Hi, thanks. I just have one question, earlier when Mr.

[indiscernible] asked about the potential IPO process, the timeline, and the next steps and what to expect, your answer was before the year end. What exactly was that referring to there?

I mean was it the next update regarding this decision process or the actual -- I mean what exactly were you referring to there when you said before year end?

The actual IPO.

Okay. So if the IPO goes through -- the potential IPO could through before year end, do I understand that correctly?

That is the idea, yes.

Okay. Thank you.

But it depends on many things as you know that we don't control.

Yes, yes.

Okay.

Thank you very much.

Welcome.

Yes, I will, and thanks for taking my question. One from my side, on the U.S, I mean all the other regions actually shown improvement in the EBITDA margin except for North America.

So, I was wondering what was the reason here, especially in Q2. And then, secondly on the potential IPO, as I understand the businesses are quite interconnected also with this EBITDA coming from distribution center, how do you intend to untie that for the shareholders the in the new IPO or company?

Okay. Regarding the EBITDA in the U.S.

for six months, we had had many new operations and many start-ups impacted the profitability. There is not an issue there.

That is one thing. The second one is [indiscernible] that what you are asking the second question is it was an inter company decision to as we have done in other times profitability from operations to the distribution centers.

Regarding the second part of the question that is this is total [indiscernible] we control information obviously from the day one. And to transfer of the gross profit margin is fully secured and fully transparent; will be fully secured and fully transparent, there is not an issue with that either.

Okay. And I mean this new company would then we led by independent managers or how that…

No, the new company will be -- the company -- the new company the company obviously the minority are [indiscernible] will be managed and operated in the same way that is today from operational and business point of view. They will be part of the global cash pool in order to benefit from the synergies -- the global synergies that the company will generate in the future.

The company will be subject to the process and procedures that we are operating today. And all these things are only having an issue is how to be more efficient and how to implement the global efficiencies in the local model as you know the group we have been always repeating the same thing.

This is a global company. Not because we want to be in many countries, is because the global synergies and global efficiencies are shared and implemented on at local level.

And we hope and I think this is intention that due to that the IPO, the situation on this regard will remain unchanged.

Thank you.

Thank you.

Yes, thanks. Thanks for taking the follow-up.

Just a couple of add-ons; one is just on H&A, I wonder if you've had any communication with them. There is a lot of news on Chinese government putting pressure on various companies [indiscernible] Bank today saying they need to sell their foreign assets et cetera, et cetera.

Have you had any discussions with H&A on this just to -- just wondering where you are on that? And then the second question on the return in cash to shareholders.

I am just wondering what sort of dividend policy do you think you guys would have, and also what do you think about buybacks? Is there is a chance that with the IPO proceeds, you may even do a little buyback?

Or is that isn't on agenda at the moment? Thank you.

Okay, thank you. Regarding H&A, we don't know anything obviously because they are doing a private transaction with the [indiscernible] but we know one thing on the other side is we started with the process of collaboration in the different aspects of the business.

They have vertical integration with travel agencies with air carriers with airport with new [indiscernible] business in China too. And what we are doing is creating a plan from extracting the synergies and continue the synergies [indiscernible] to the business we have.

And the second part is how to really manage the Asian market and how to improve in the Asian market. And we have also within significant obviously -- because still we are talking about plans to really manage the 200 million Chinese that will travel in 2020 around the world.

In both cases, they are very collaborative. We have identified many opportunities, and we are -- regarding the [indiscernible] anything, and obviously I cannot comment on anything because it's our private transaction between them.

Regarding the returning cash to shareholders, nothing today is avoided. I think returning cash to shareholders in a very broader base is what it is.

I cannot say it's going to be cash, it's going to be shared buyback; it's not -- in my view, it's not decided yet, but the Board of Directors is focused in this specific requirement, because obviously we had altered the market, and we will be [indiscernible] especially in the first quarter of 2018.

Thank you.

Welcome.

Okay. In this case, let me say thank you to all the participants in the conference call.

I appreciate a lot of the interest in Dufry, and we remain available through the Investor Relations Department directly whatever is needed. Thank you very much.