Extract from the 2015 Jungfraubahn Holding AG Business Report

Important note:
This extract from the official business report was specially prepared for presentation on Internet. It is a considerably shortened version. Please note that the proposals by the Executive Board and Annual General Meeting for approval / resolution refer to the unabridged printed version in the German language. Only the full version is binding. The full version of the report (in German) may be downloaded using the link below.
The report is in some places associated with a view to medium and long-term prospects. All statements relating to the future hold uncertainties. They are projections that reflect the current views of the decision makers. Actual future events and decisions may turn out differently, particularly in relation to changes in environmental conditions. All declarations referring to the future are based on facts current at the time the report was prepared in March 2016.

Dear Shareholders,
Ladies and Gentlemen

Fulfilment of a vision

The fascination of the Jungfraujoch – Top of Europe and its positioning as one of Switzerland's leading sightseeing attractions provided the basis for last year's extremely pleasing business performance. With CHF 36.2 million for 2015, we can once again present a record profit. The success is also reflected in a steady increase in the number of visitors. We were able to report: “Jungfraujoch sold out” on no fewer than 42 days.

The Jungfraujoch is sold out because our capacity and the dimensions of the facilities were certainly not designed to cover peak demand during the July and August high season. We only carry out any expansion of our facilities, which lie partly within protected areas of national importance, with caution and the utmost consideration for the environment. Our strategic growth perspective lies on the one hand in improving the quality and visitor experience, enabling an attractive price positioning within our branch of business. On the other hand it involves optimizing our capacity throughout the year and during the course of each day through active marketing.

The approach to reaching our capacity objective is illustrated by the slogan "10 months peak season for 1 million visitors in 2022". The number of one-million annual visitors was already achieved for the first time on 30 December 2015. The marked increase of 140,000 guests compared to last year was unexpected and so we were all the more pleased. Owing to the early achievement of our target, our slogan has lost at least a part of its visionary character. The "million visitors" has changed from a vision to an ambitious benchmark for the coming years. The experience with the huge stream of visitors in 2015, has led us to develop a new vision: "A reserved seat for every Jungfraujoch visitor!" The new formula that will eliminate standing on trains and queuing for the Jungfrau Railway will add substance to the concept of quality and require a uniform use of the capacity of our facilities throughout the day. In addition, our wish to turn mid-season to high season remains a challenge and an objective.

V-Cableway

The planned "Eiger Express" tri-cable aerial cableway in Grindelwald, which will lead directly to the portal of the Jungfrau Railway tunnel at the foot of the Eiger, together with new rolling stock for the Jungfrau Railway to be delivered in 2016, are important elements of improvements to our services. These investments will provide visitors to the Jungfraujoch with faster and easier transfer connections. The first visitors will arrive earlier at 3454 metres above sea level and the last will leave the Jungfraujoch later. Visitor numbers will be spread more evenly throughout the day. With a slight increase of 15% in the number of places, everyone will be able to travel sitting in comfort. The facilities on the mountain will also be relieved from visitor numbers peaking during the day. We are extremely grateful to the Wärgistal mountain cooperative for granting us the transit rights for the new aerial cableway on October 21, 2015 and thus giving us the green light for this project for future generations.

The Eiger Express tri-cable aerial cableway is one element of the V-Cableway project. The Eiger Express, together with a new Männlichen Gondola Cableway, form the V that gives the name to the entire project. The two ultra-modern aerial cableways have their starting point in a joint terminal in Grindelwald, with a parking garage and a connection to the network of the Bernese Oberland Railway. This 400-million-franc project (Jungfrau Railways Group investment: CHF 250 million) also includes significant replacements in terms of railway rolling stock. According to external reports, the entire project will have a proven positive economic effect and impact on traffic, of transregional dimensions. Internally, it will generate valuable synergies for the group, as in addition to the benefits to the Jungfraujoch it will also hold solutions to strategic problems posed regarding the winter sports segment. Not only will Jungfraujoch customers reach their goal more quickly, but the annoying waiting times for winter-sport fans will also be eliminated. Arrival will be faster and more comfortable. Skiers and snowboarders will be able to complete the attractive, long downhill runs several times a day. More appeal is the only possible long-term response to competitive disadvantages in the winter-sports market as a result of the high Swiss price structures and strong franc. The competition here has recently become even fiercer.

Strong brands and constantly new attractions

By promoting brand strength – for example by welcoming world stars from the fields of music and sports to events on the Jungfraujoch or engaging them for the legendary SnowpenAir concert on Kleine Scheidegg – we ensure brand awareness. Jungfrau Railways and the Jungfrau Region are to remain a "must" on a visit to Switzerland and be among the world's top entries on holiday wish lists. We surprise guests with constantly new attractions. Last year we built the adventurous "First Cliff Walk". Immediate plans include expansion of the restaurant on Harder Kulm above Interlaken and a new fun ride with mountain carts in the Grindelwald-First area, aimed at closing a gap in adventure attractions. On this note, dear shareholders, we wish you many good and entertaining prospects with your Jungfraubahn Holding AG.

Prospects

In terms of their forecasts for the Swiss economy in 2016, economic researchers are predicting an economic downturn in the aftermath of the “franc shock”. Some measure of recovery and consolidation is expected by the end of 2016. Jungfrau Railways have detected a corresponding impact, especially in the smaller business sectors of winter sports and experience mountains. In international business, the effects of repeated terrorist attacks in Paris and Brussels were far more significant than the changes in exchange rates. Demand slumped markedly in the short term, however it was the frequency-weak winter months that were affected. The intercontinental tourism business seems to be recovering relatively rapidly from the initial shock. International demand will remain high. Jungfrau Railways are strengthened in this assessment by the UNWTO (World Tourism Organization). In 2015, it determined a worldwide growth in tourist arrivals. The increase in Europe was above average at 5.3%.

Thanks

In 2015, our employees have once again pleased and impressed us with their performance. The entire staff of Jungfrau Railways has earned a special thank you for the commitment shown by each and every one! We have emphasized recognition of the credit due for achieving the one-million mark with a CHF 1000 bonus. In addition to thanking our employees, we wish to particularly convey our heartfelt gratitude to our customers, the federal and cantonal authorities, municipalities, mountain cooperatives, tourism organizations, neighbouring rail & cableways, distributors, suppliers, the International Foundation High Altitude Research Station and all other partners with whom we are able to maintain such fruitful relationships. Finally we wish to express our sincere thanks to you, our valued shareholders, for your trust in our group and the loyalty shown to Jungfraubahn Holding AG.

Business Report 2015 in German