Club Méditerranée: Third-Quarter 2009 Revenue

Regulatory News:

Club Méditerranée (Paris:CU):

Business holds firm, with a limited decline in revenue for the first nine months of fiscal 2009, in line with the industry average

- Nine-month revenue down 6.8% to €1,034m, from €1,109m in the prior-year period; RevPAB* up 0.4%

- Third-quarter revenue down 12.5% to €315m, from €360m in third-quarter 2008; RevPAB* down 4.3%

Increase in last-minute bookings thanks to the scheduled postponement in marketing initiatives

- Summer bookings at 5 September down 13.8% (vs. a decline of 18.3% at 6 June)

- Summer bookings up 6.4% since 27 June

- Capacity reduced by 8.7%

Ongoing deployment of the €56m productivity program, which combined with the reduction in RevPAB, offset the impact of the decline in revenue on Villages Operating income – Leisure in the third quarter

Successful villa sales (22 signed or in the signing process) and reopening of Caravelle in Guadeloupe scheduled for 24 October

*Total like-for-like revenue net of tax and transportation costs per available bed.

• Revenue

Club Méditerranée’s revenue for the first nine months of fiscal 2009 (1 November 2008 – 31 July 2009) declined by 6.8% to €1,034 million from €1,109 million in the prior-year period. Like-for-like (i.e. excluding the currency effect and revenue generated by sale of villas beginning in second-quarter 2009), revenue for the period declined by 7.2%.

For the third quarter of fiscal 2009 alone (1 May-31 July), revenue was down 6.8% to €315 million from €360 million in the previous-year period. This represented a decline of 12.5% as reported and 14% like-for-like.

Beginning in late June, however, third-quarter revenue was boosted by the increase in last-minute sales, owing to the positive impact of the decision to postpone advertising and marketing initiatives and concentrate them mainly in July.

• Reduction in capacity

The decline in business in the third semester reflects a 9.7% reduction in capacity in line with the decision to adjust the offer to the recession, which especially hit companies in the hotel and tourism sectors during the summer.

In Europe, capacity was cut by 9.2% following the decision to shorten opening periods for entry-level seasonal villages and the work carried out at Djerba La Douce Calypso.

In the Americas, capacity was reduced by a very sharp 13% because of the impact of closings resulting from the influenza A epidemic (Cancun in May and Ixtapa, which was reserved for Mexican customers) and the closing of Caravelle (scheduled to reopen on 24 October) following the events in Guadeloupe.

In Asia, capacity was reduced by 7.5%, mainly due to the permanent closing of Bora Bora as well as to the shorting opening period for Sahoro in Japan.

• Solid resilience in revenue per available bed (RevPAB)

A key performance indicator, RevPAB rose by 0.4% for the first nine months of fiscal 2009. The decline in third-quarter RevPAB was limited to 4.3%, in particular because capacity was reduced and the price mix was maintained.

2. Third-quarter highlights

• Ongoing deployment of the productivity program

As previously announced, Club Méditerranée pursued initiatives to carry out its €56-million productivity program. Combined with the reduction in capacity, the program helped to offset the impact of the decline in revenue on Villages Operating income – Leisure in the third quarter.

• Successful share and bond issue

The €102-million share and bond issue in May was oversubscribed by 50%, helping to strengthen the Group’s financial position and increase its cash and cash equivalents. A total of 6,459,301 new ordinary shares were purchased at a price of €7.90 and 5,962,432 ORANE mandatorily convertible bonds were purchased at a price of €8.55. The transaction saw Crédit Agricole SA acquire an initial stake in the Group, while Edizione (Benetton) acquired ORANE 708,000 bonds.

The issue’s success demonstrates shareholder support for the strategic repositioning of Club Méditerranée.

Including the conversion of 2,165,197 ORANEs since the 8 June 2009 settlement date, the Group’s share capital is made up of 28,002,403 shares and 28,401,641 voting rights.

On 8 June 2012, when all ORANE bonds will be mandatorily converted into shares, Club Méditerranée’s share capital will be made up of 31,799,638 shares.

Following the sale by Accor of most of its stake, the percentage interest held by the shareholder pact formed on 9 June 2006 (comprising Accor, Fipar International-Caisse de Dépôt et de Gestion du Maroc Group and Air France Finance) was reduced to less than 15%, thereby resulting in the pact’s termination.

• Asset disposals

As part of its asset disposal plan, Club Méditerranée sold Arcs Altitude for €11 million. The two-trident village no longer met customer expectations with regard to comfort levels or the Group’s profitability criteria.

• Changes in the Board of Directors

Following the share and bond issue, two new directors were co-opted – Anass Houir Alami, Chief Executive Officer of Morocco’s Caisse de Dépôt et de Gestion and Jacques Lenormand, Chief Operating Officer of Crédit Agricole – and two non-voting directors were appointed: Amine Benhalima, Chief Executive Officer of Fipar Holding, and Gérard Pluvinet, Founder and Chairman of the Management Board of 21 Centrale Partners.

• Closure of Club Med World on 31 October 2009 and planned reorganization of the European call center (CMCAE)

In addition to the €56-million productivity program, the Group is pursuing other initiatives to improve profitability.

Club Med World Paris, whose lease expires on 30 June 2010, will close on 31 October 2009. Despite efforts in recent years to reposition it for a corporate clientele, Club Med World has total losses of approximately €40 million since its opening.

The closing will result in the elimination of 101 jobs, and a number of measures have been introduced to help employees concerned.

In response to changes in distribution, with the increase in online bookings and new technological developments, a plan to reorganize the Club Med European Call Center (CMCAE) was presented on 26 June 2009.

The call center transformation project would involve the elimination of 68 jobs and changes in a number of work contracts. A range of measures would be introduced to reduce the impact on the employees concerned and to support outplacement initiatives.

These projects will lead to additional non-recurring restructuring costs and are in line with the Group’s strategy of optimizing costs. Introduced in 2007, the strategy has helped to reduce distribution costs as a percentage of consolidated revenue by 2.6 points in three years and will be pursued.

• Success of recently renovated villages

During the third quarter, three villages were successfully reopened following renovation: Bodrum in Turkey, Da Balaïa in Portugal and Djerba La Calypso in Tunisia.

• Inauguration of the first villa at La Plantation d’Albion

The first Club Med villa was inaugurated on 18 July 2009 at Plantation d’Albion in Mauritius. Exemplifying the move upmarket and attached to a 5-Trident village, these villas create additional very upmarket capacity that is pre-financed and involves variable costs. To date, 22 villas have been sold (with 11 signed and 11 in the signing process) compared with 17 in July.

3. Outlook

Year-to-date bookings as a percentage of like-for-like revenue were down 13.8% at 5 September. By comparison, they were down 18.3% at 6 June. The approximately 8.7%-reduction in capacity for the summer mainly concerned entry-level seasonal villages.

As expected, the decision to postpone marketing initiatives led to an increase in late bookings in July and August. From 27 June to 5 September, summer bookings rose by 6.4% compared with the prior year period.

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