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2004 Financial Report

12004 Club Méditerranée Financial Report

• 03 Group Overview and Fiscal 2004 Business Review• 04 Overview of the Club Méditerranée Group• 04 • Consolidated Financial Highlights• 05 • Company History• 05 • Human Resources Policies• 08 Review of Operations• 15 Executive Board Report• 25 Transition to IFRS • 27 Supervisory Board Report• 27 2005 Financial Communication Calendar• 28 Corporate Social Responsibility Report

• 33 Consolidated Financial Statements• 34 Consolidated Balance Sheets• 35 Consolidated Statements of Operations• 36 Consolidated Statements of Cash Flows• 37 Notes to the Consolidated Financial Statements• 37 • 01 / Summary of Accounting Policies• 41 • 02 / Significant Events of the Year• 42 • 03 / Notes to the Consolidated Balance Sheets• 53 • 04 / Notes to the Consolidated Statements of Operations• 57 • 05 / Notes to the Consolidated Statements of Cash Flows• 59 • 06 / Commitments and Contingencies• 60 • 07 / Employees and Executive Compensation• 61 • 08 / Fees Paid to the Auditors• 61 • 09 / Financial Instruments• 62 • 10 / Claims and Litigation• 62 • 11 / Recent Developments and Outlook• 63 • 12 / Companies Consolidated at October 31, 2004• 68 Auditors’ Report on the Consolidated Financial Statements• 69 Simplified Organization Chart at October 31, 2004

• 73 Club Méditerranée SA Financial Statements• 74 Balance Sheets• 75 Statements of Operations• 76 Statements of Cash Flows• 77 Five-Year Financial Summary• 78 Auditors’ Report on the Company Financial Statements

• 79 General Information• 80 General Information About Club Méditerranée• 83 General Information About the Company’s Capital• 87 The Market for Club Méditerranée Shares• 89 Dividends• 89 Corporate Governance

• 99 Additional Information• 100 Draft resolutions• 114 Appendix Articles of Incorporation (“Statuts”)

2004 ANNUAL REPORTof the Club Méditerranée Group for the year ended October 31,2004


GROUP OVERVIEW AND FISCAL 2004 BUSINESS REVIEW

• 4 Overview of the Club Méditerranée Group• 4 • Consolidated Financial Highlights• 5 • Company History• 5 • Human Resources Policies

• 8 Review of Operations

• 15 Executive Board Report

• 25 Transition to IFRS

• 27 Supervisory Board Report

• 27 2005 Financial Communication Calendar

• 28 Corporate Social Responsibility Report

2000 2001 2002 2003 2004

59

-70-62

-94

-44

20022000 2001

423

884

396

20042003

754

421

631

389488

390444

2000 2001 2002 2003 2004

103

50

17

-3 -62000

1,889

2001 2002

1,985

1,744

2003

1,609

2004

1,600


OVERVIEW OF THE CLUB MÉDITERRANÉE GROUP

Net indebtednessShareholders’ equity includingminority interests

millions of euros

Reported revenues

millions of euros

Operating income (loss)

millions of euros

Group net income (loss)

millions of euros

Net indebtedness and shareholders’ equity including minority interests

Number of employees

At the peak of the summer season

2000 2001 2002 2003 2004

Club Med Villages 899 903 895 880 883Other Club Med 2,639 2,630 2,298 2,117 2,135Total Club Med 3,538 3,533 3,193 2,997 3,018Jet tours 357 342 299 329 354Club Med Gym 756 880 842 685Club Med World 479 346 155 144Forum Voyages 105 85 80 0 0Total full-time employees 4,000 5,195 4,798 4,323 4,201

Village GOs 7,300 7,146 6,576 6,133 5,481Village GEs (service staff) 12,400 12,809 11,144 9,877 9,012Total seasonal employees 19,700 19,955 17,720 16,010 14,493Total employees 23,700 25,150 22,518 20,333 18,694

CONSOLIDATED FINANCIAL HIGHLIGHTSFiscal years ended October 31


COMPANY HISTORYClub Méditerranée was created in 1950 by Gérard Blitz as a not-for-profit association. The first village, named Alcudia, was opened the sameyear in the Balearic Islands. In 1957, the association was transformed intoa joint-stock corporation (société anonyme). Gilbert Trigano becameChairman and Chief Executive Officer in 1963, as the Companycontinued to expand, primarily in Europe. The Company’s shares werefirst listed on the Paris Bourse in 1966.

To serve the American market,an initial village was opened in 1968 in theFrench West Indies, at Fort Royal in Guadeloupe. In 1973, a sales officewas set up in Japan and villages were opened in New Caledonia andMalaysia to expand the Asian base of operations. In 1979, ClubMéditerranée set up operations in South America. In 1984, the Americanand Asian operations were spun off into a subsidiary, Club Med Inc.,which was listed on the New York Stock Exchange through a publicoffering of 27% of its capital.

Club Méditerranée then embarked on a program of investment anddiversification, involving:• Opening of the Faru village in the Maldives and the Phuket village inThailand (1985).• Opening of the Opio village in the backcountry north of Nice, France(1989).• Launch of Club Med 1, the world’s largest sailing ship (1990).• Acquisition of Club Aquarius (1991).• Launch of the Club Med 2 cruise ship (1992).• Opening of the Columbus Isle village in the Bahamas (1992).

In 1993, business was severely affected by the global recession after theGulf War, and the Company ended the year with a 346 million loss.Lingering political unrest and unfavorable economic conditions in theensuing years prompted management to implement a restructuring planin fiscal 1997.On April 23, 1997, shareholders approved a new corporategovernance structure,with an Executive Board and a Supervisory Board,and Philippe Bourguignon was appointed Chairman of the ExecutiveBoard. In January 1998,an in-depth restructuring plan was initiated acrossthe organization, with an impact on marketing, operations, humanresources, finance and other aspects of the business.

In order to extend its global reach, become a leading provider of leisureservices and grow its core business, the Group sought,on a country-by-country basis, opportunities for partnerships and acquisitions capableof consolidating its strategic positions and driving expansion. The June1999 purchase of Jet tours, France’s fourth largest tour operator, rep-resented the first step in this strategy. In May 2001, the acquisition ofGymnase Club - renamed Club Med Gym - supported the strategiccommitment to broadening the business base to all segments of theleisure services industry.

In the aftermath of September 11, Club Méditerranée took action tolimit the impact of the changed market conditions on its operationsand refocus on its core business. Around twenty villages were closedfor the 2002 winter season and a reorganization plan was prepared fordeployment.

In fiscal 2003, global tourism was hit by a succession of internationalevents. Club Méditerranée succeeded in riding the storm by scalingback capacity. At the same time, two new villages were opened - thethird Brazilian village, a 4-Trident unit, and the 3-Trident Palmyre-Atlantique unit on France’s Atlantic coast.

Fiscal 2004 saw a return to operating profit, although demand fortourism products still varied from one market to another. The yearwas also a watershed for the Group, which assertively implementedits new upmarket strategic positioning and gained the support of anew core industry shareholder following Accor’s acquisition of a28.9% stake.

HUMAN RESOURCES POLICIESOur human resources policies support the implementation of the“Setting Course for the Incomparable” project and are in phase withthe strategy of positioning Club Méditerranée as a “friendly, multi-cultural, upmarket” vacation experience. They are shaped by suchpowerful values as a multi-cultural spirit, a pioneering spirit, kindness,freedom and accountability.

These values informed our approach to 2004, a watershed year thatsaw the launch of our new strategy and Accor’s investment in our com-pany as a core industry shareholder. While our entire organization iscustomer-driven, our human resources challenges and our Villageproduct are clearly centered on our GOs and GEs. They represent acritical, differentiating advantage for enhancing GM satisfaction andimproving our business performance.

The mission of the human resources team is to develop our humancapital by pursuing a number of strategic objectives defined for the period2005-2007. The related programs involve developing our skills andorganization so that we can offer clients an upmarket product, fosteringinternal mobility, proactively planning human resources needs and identifyingfuture village managers, continuing constructive discussions with employeerepresentatives, adapting compensation practices and pooling humanresources processes, skills and practices from around the world. Throughout,the goal is to maintain a balance between the development of each GOand his or her effective contribution to our Village business.

Overview of the Club Méditerranée Group


Employees are known as GOs,because they’re nice(gentils) and they work as organizers (organisateurs)

Human resources policies focus on consolidating a managerial cultureshaped by the values of foresight, accountability, perseverance andefficiency. From recruitment to training and appraisals, humanresources teams are dedicated to finding the right balance betweenthe interests of Club Méditerranée and those of the GOs and GEs.They also strive to achieve a similar balance between organizationalskills (the “O” in GO) and human qualities (the “G”), in line with ourstrategic priorities.

• A streamlined, efficient, decentralized organizationOur decentralized organization is sharply focused on customers andtheir satisfaction. It reflects our commitment to placing the villages at theheart of the decision-making process, cutting costs and improving ourbusiness processes. More generally, it is the fruit of our endeavor to con-stantly optimize organizations and find ever-better ways of working.

The organizational transformation has made us more flexible, moreresponsive and more empowered. It has led us to optimize and stream-line our organizational structures, making them leaner and tighter. Today,the focus is on two major challenges, one involving operations and theother sales.

As part of the new organization,Regional Chief Executive positions werecreated two years ago. These positions are now well established andfunctioning effectively thanks to cooperation between OperationsDirectors, Regional Chief Executives and Village Managers. Deployed inEurope, the Americas and Asia, the Regional Chief Executives areresponsible for managing three or four villages, with a clear focus onaddressing GMs’ concerns and ensuring the quality and profitability ofoperations.

In the area of sales, marketing functions have been strengthened instrategic country markets. This sales dynamic is also supported by theintroduction of Key Account Managers, assigned to nurture ongoing,close, effective relationships between Club Méditerranée and ourdistribution networks with the goal of reaching each customer on aone-to-one basis.

• Attracting talentTo attract the best people, we are constantly improving our pro-activerecruitment methods. The Recruitment Village in Lyon supports ourrecruitment goals through a global strategy that has been rolled downto local job markets. To promote our image as a recruiter of talent,we’ve broadened and deepened our relations with schools and formedpartnerships with training organizations. Our European recruitmentwebsite (www.clubmed-jobs.com) informs and attracts new GOs,while Club Méditerranée representatives regularly par ticipate inrecruitment forums and job fairs. The candidate pre-selection process

has been enhanced and the growing number of job applications is beingprocessed more quickly. Recruitment is interactive, combining profes-sionalism with a sense of fun. It reflects our commitment to conti-nuously developing a multi-cultural approach to recruitment, withmore than 7,000 GOs representing 80 nationalities hired each year.

• Developing skills and potentialClub Méditerranée uses Helios, an advanced human resources ERPsystem, to manage careers and capabilities for Village GOs across arange of 90 core job skills.Helios allows us to assign the right GO to theright place at the right time. The system supports the development ofoptimized, consistent policies for actively managing high potentials,through performance appraisals and competence-building programs,with the goal of effectively meeting the needs of customers andguaranteeing a high level of professionalism. By analyzing the results ofindividual appraisals, Helios ensures that the specific needs of eachvillage are met as closely as possible. The system has also been deployedat corporate headquarters and in country head offices.

The Club Med University’s “Key GO” program identifies and prepares apersonal growth plan for GOs who have the potential to act as a drivingforce, both now and in the future, to help Club Méditerranée fulfill itsambitions. The program, which is managed internally, has already beenimplemented at headquarters, among management-grade GOs, and isbeing gradually rolled out to all positions and to the villages.

Suppor ting procedures include salary grids, annual performancereviews based on individual goals, Management by Objectives (MBO)techniques and the extension of performance-related pay systems toall department managers.

Human resources policies are also helping to support the decentrali-zation process. In particular, to provide technical training to village GOsand GEs, Club Med Schools are being set up and expanded in theAmericas, Asia and Europe, each with a dedicated budget. At thecorporate level, Club Med University is creating training modules for theactivities that make Club Méditerranée unique, as well as managementtraining modules for all Group managers working at headquarters, in thevillages and in the business units.

Our training policy is both ambitious and innovative.We have introducedformal on-the-job-training for village GOs, allowing managers to pass ontheir expertise directly to their teams. Interactive training is providedthrough a comprehensive, fun, customer-focused CD-Rom designed tohelp team leaders to hone the technical, interpersonal and marketingskills of their teams.

This commitment and spirit of innovation helped to increase the numberof GO/GEs who received training in 2004 by 40%,with no correspondingincrease in budgets.


Lastly, human resources policies are also designed to promote an entre-preneurial spirit in the business units and to strengthen the CorporateHuman Resources Department, while empowering regional humanresources teams. The aim is to continue developing the process, inorder 1) to maintain an overview of our human resources issues and thecapabilities needed to deal with them, and 2) to promote the adoptionof similar practices throughout the organization, taking into account localdifferences where appropriate.

• Moving training closer to the front lineIn addition to the courses offered by the Club Med Schools and ClubMed University, the Teamworks organization is being broadenedand deepened in the villages and head offices. Combining theory andpractice, Teamworks teaches teams to work together to set commongoals, develop a shared vision and prepare operational action plans.It helps teams to embrace organizational change, develop sharedprojects and share learning experiences.

Human resources policies are designed to develop and enhance thevalue of the human capital represented by the teams of GOs and GEs,in order to actively support the implementation of our new strategy.These teams are widely recognized as one of our greatest assets, andtheir commitment, particularly during challenging times and periods ofuncertainty due to international events, is helping us to prepare for thefuture—a future built on our core values. Human resources teams areactively supporting GO involvement in the deployment of the new“Setting Course for the Incomparable” strategy. This corporate programis built around five priority projects—Management Principles,Sales/Marketing/Transportation, Services, Village Organization andGO/GE—with the goal of involving all of our managers and their teams.In 40 days, meetings were held with some 3,000 GOs from around theworld, including all of the managers. These meetings provided feedbackfrom the frontline and generated a wealth of ideas,which were reviewedby the Management Committee when discussing ways to develop our“friendly, multicultural, upmarket” offering.

Our GOs and GEs and their contribution to operations in our Villagesand offices—and to corporate life in general—are providing the ener-gy and enthusiasm that is enabling Club Méditerranée to resolutely “SetCourse for the Incomparable.”

Overview of the Club Méditerranée Group


REPORTED REVENUES BY ISSUING ZONE AND BY BUSINESS

ALL-INCLUSIVE VILLAGE VACATIONSClub Méditerranée designs and markets all-inclusive vacation packagesin nearly 40 countries. The Club Med concept is unique in three respects.

• The village

One of the keys to the concept’s success has been the vacationvillage, situated in prime locations offering a wide range of natural sightsand activities. Each village is laid out like a small town, with streets,squares, shops and residential areas. In addition to accommodation, theyare equipped with a large number of attractions such as swimmingpools, bars, restaurants and discotheques, and offer vacationers(known as Gentils Membres or GMs) the opportunity to practice avariety of winter, water and other sports.

• A specialized team of organizers

The villages are run by specialized teams of people known as GentilsOrganisateurs, or GOs. However, in the same way as GMs are morethan just customers, GOs are more than simple employees. That’sbecause they play a multi-faceted role, combining a commitment toservice, technical capabilities and specialized expertise in a given area,such as sports, entertainment or administration. Most importantly, theydemonstrate the exceptional people skills that make a vacation withClub Méditerranée truly incomparable.

• An all-inclusive package

Club Méditerranée vacations are marketed at a single, all-inclusiveprice, covering airfare, accommodation, meals and beverages, enter-tainment and most activities. A Total All-Inclusive Package, whichincludes an open bar and free snacks, has been sold since the sum-mer of 2003 to American GMs staying at North American villages andsince November 2003 to all GMs who select a North American des-tination. In summer 2005, the concept will be offered as an option inthe European villages.

Definitions and characteristics of the village businessHotel days sold. A hotel day represents the sale of the right for a GMto occupy a bed for one night and to use all the related facilities.Because it equals the sum of the number of GMs multiplied by theduration of their stay, “hotel days sold” provides the best measure ofbusiness volume.

Occupancy rate and capacity. The occupancy rate corresponds to thenumber of hotel days sold expressed as a percentage of total capacity,which in turn equals the number of hotel days available for sale in a givenseason or year. Occupancy rate, in terms of number of beds, indicateshow well capacity is being managed for optimum return.

Issuing and Receiving Zones. Analysis of contribution by region is basedon a distinction between issuing zones and receiving zones. Issuing zonescorrespond to regions where revenues are generated and sellingexpenses are incurred (e.g. the United Kingdom, Belgium and Canada),while receiving zones correspond to regions where local revenues areearned (e.g. Morocco, Polynesia, Mexico) and the main operating costsare incurred. Club Méditerranée’s business involves the creation of cus-tomer flows from one zone to the other, and especially from Europeto Asia and North America.

REVIEW OF OPERATIONS

France: 565

Rest of Europe: 352

Americas: 203

Asia: 145

Jet tours: 277

Other businesses: 58

3.6%

35.3%

22%

12.7%

9.1%

17.3%millions of euros

Review of Operations


Volume. The volume effect is the impact on revenues or operatingincome of an increase or decrease in the number of hotel days sold.It reflects the sensitivity of revenues and operating income to changesin village activity levels.

Price-mix. The price-mix effect corresponds to the combined effectof three phenomena:• Changes in the price of a vacation in a given village during a given

period and of the corresponding transport.• The ratio of adults to children among GMs, which has an impact on

average spend.• The breakdown of sales between villages that charge different prices

based, for example, on the quality of accommodation or the timingof sales (peak season/shoulder season).

2000

1,710

2001 2002

1,782

1,534

2003

1,429

2004

1,421

2000

11,782

2001 2002

12,184

10,309

2003

9,590

2004

9,251

2000

73.7

2001 2002

72.069.0

2003

67.0

2004

68.9

2000 2001 2002 2003 2004

1,577

1,041

304

232

1,663

223

317

1,396

1,000

176

220

1,282

202

949

1,265

145

203

917

131

1,123

thousands

Number of GMs

thousands

% millions of euros

Number of Hotel Days Sold

Occupancy Rate Total Village Revenues

Europe Americas Asia

Flows of GMs

90% of Europeans visited destinations in Europe96% of North Americans visited destinations in North America96% of South Americans visited destinations in South America99% of Asians visited destinations in Asia.

Although only 7% of Europeans visited destinations in North America,they accounted for 27% of the clientele in the region. Similarly, the3% of Europeans who visited destinations in Asia accounted for nearly12% of the clientele in that region. The other inter-regional flows werenot significant.


90%173,000

North Americans

95,000South Americans

949,000 Europeans

203,000 Asians

96%

99%

Major GM Flows in 2004

Growth in Total Hotel Capacity

thousands of hotel days

2002 % 2003 % 2004 %

Europe 9,622 64 8,746 62 8,441 63Americas 3,400 23 3,526 25 3,152 23Asia 1,919 13 1,902 13 1,838 14

Total 14,941 100 14,174 100 13,431 100

Hotel Capacity by Category

% of total capacity

2002 2003 2004

Hut villages and 2-Tridents 24% 19% 13%

3 and 4-Tridents 76% 81% 87%

3%

7%

96%



List of villages at October 31,2004(villages open or temporarily closed, all types of operation)

Region Country Villages Beds

Europe France 25 14,859Italy 8 8,811Turkey 6 5,688Tunisia 5 5,353Morocco 5 4,270Greece 4 3,544Switzerland 4 2,110Spain 2 1,605Croatia 1 1,110Senegal 2 940Portugal 1 720Mauritius 1 585Egypt 1 480Ivory Coast 1 408

Total 66 50,483

Club Med 2 1 394

Total Europe 67 50,877

The Americas Brazil 3 2,110Mexico 2 1,700Dominican Republic 1 1,430United States 2 1,371French West Indies 2 1,270Bahamas 1 516Turks and Caicos 1 511

Total Americas 12 8,908

Region Country Villages Beds

Asia Indonesia 2 1,475Japan 2 1,125Malaysia 1 800Maldives 2 724Thailand 1 645Australia 1 475French Polynesia 1 300

Total Asia 10 5,544

Villas Mexico 5 444Egypt 2 376New Caledonia 1 153Turkey 1 126

Total Villas 9 1,099

TOTAL CLUB MED 98 66,428

Breakdown of Villages by Type of Operation at October 31,2004no. of beds

Exclusively owned Jointly-owned Leased Managed Total

Europe 14,918 6,243 27,615 2,603 51,379Asia 1,615 1,445 1,849 787 5,697Americas 4,310 1,520 2,932 590 9,352

Total 20,843 9,208 32,397 3,980 66,428

% of total 31.4% 13.9% 48.8% 6.0% 100.0%

2003 34.2% 12.5% 49.1% 4.2% 100.0%

no. of villages

Exclusively owned Jointly-owned Leased Managed Total

Europe 24 8 34 4 70Asia 3 2 4 2 11Americas 10 2 4 1 17

Total 37 12 42 7 98

% of total 37.8% 12.2% 42.9% 7.1% 100.0%

2003 39.8% 10.7% 44.7% 4.9% 100.0%


Number of GMs by Country of Origin

thousands

2000 2001 2002 2003 2004

France 694 758 656 613 581Belgium 113 122 108 104 101Italy 104 93 87 86 79Switzerland 50 48 41 35 34Germany 54 51 40 34 28Netherlands 40 40 36 33 32United Kingdom 37 35 32 29 27Israel 33 43 24 17 17Turkey 18 14 14 14 13Austria 12 14 8 3 3Spain 11 10 7 2 2Russia 8 8 7 6 6South Africa 5 6 6 6 6Greece 5 6 5 7 7Other 10 11 20 14 14

Total Europe 1,194 1,258 1,090 1,003 950United States/Canada 176 180 142 138 150Brazil 59 62 66 81 79Mexico 26 24 14 13 23Other 19 18 11 12 16

Total Americas 280 284 233 244 268Japan 95 96 99 95 102Australia 34 33 26 21 22Malaysia 20 22 20 17 12Singapore 17 18 18 16 22Other 70 70 49 33 45

Total Asia 236 240 212 182 203

TOTAL CLUB MED 1,710 1,782 1,534 1,429 1,421



2000

311

2001 2002

271 277

2003

267

2004

282

2000

281

2001 2002

263 269

2003*

269

2004

277

JET TOURS CONFIRMS MOVE UPMARKETAND RETURN TO PROFITJet tours reported a 2.1% increase in revenues to 3277 million in fiscal2004, with the number of customers gaining 5.6% to 282,000.Operating income amounted to 32.8 million, compared with 31 millionthe year before.

This second straight year of operating profit in a persistently difficultmarket demonstrates the soundness of the company’s business fun-damentals and the validity of its product portfolio and positioning.

Success drivers1.A market positioning focused on the top end and customer service:75% of the hotels included in Jet tours’ travel packages are now ratedfour stars or higher. Presented in seven brochures, the portfolio of out-standing hotels, tours and weekend getaways has been enhanced withhotels from the Four Seasons, Banyan Tree and Alain Ducasse chains.

The move upmarket was dramatically expressed in the new brochures,whose layout was completely revamped in summer 2004 to makethem more elegant and attractive, with a larger number of pictures.Advertising followed a similar trend and now reflects the brand’s morepremium identity. Fiscal 2004 also saw the launch of a luxury travelbusiness called Secrets de Jet tours. The latest development in thedeployment of the brand’s upmarket strategy, the catalogue features88 luxury hotels, selected for outstanding architecture and interiordecoration. The new offering has confirmed Jet tours’ credibility in theupscale segment.

During the year, Jet tours worked on demonstrating its customer-service positioning, expressing its message through eleven “Guaranteesfor a Successful Vacation” featured in both advertising and travel agencymaterials. Surveyed in May by the IPOS polling agency, customers gavethese services high ratings, especially home visa delivery, the possibilityof changing one’s mind up to two weeks before departure and thepresence of qualified Jet tours staff on call 24/7 in all of the company’sdestinations.

2. Improved margins, driven by:• Refocusing the portfolio on products that contribute the most to

earnings.• Optimizing synergies with Club Méditerranée in the purchase of

airline and incoming passenger services.• Optimizing hotel purchases.

3. Solid partnerships with travel agency networks:• Recognition and awards from agencies as the market’s best tour

operator.• An extensive marketing presence through window displays, famil-

iarization tours, trade shows and other initiatives.• Steady expansion over the past four years of Jet tours-branded

agencies.

4. Product offerings aligned with market expectations• The Tours business has proven highly successful, with 31,000 customers

in a high-margin segment that enhances the Jet tours image.• The number of spa and seawater therapy customers surged 47%

to 20,000 in 2004, lifted by powerful market trends.

thousandsmillions of euros

* Includes 36 million in intercompany revenues corresponding to planetickets resold to Club Med, which are eliminated from the consolidatedrevenues of the Club Méditerranée Group.

Jet tours customersJet tours revenues

Jet tours also enhanced and expanded its product offer in fiscal2004 with:• A new Eldorador Hotel-Club opened in Cyprus, the first managed on

the island by a French company.• A large number of new Tours destinations, including Chile, Jordan, Syria

and Mongolia.• Specialized seawater therapy packages, both in France, with nine new

Accor centers, and abroad, in such new destinations as Essaouira, Cyprus,Malta and Morocco.

• The inclusion of South Africa and Mexico in the A la Carte catalogues.

OTHER BUSINESSES• Club Med World

Club Med World Paris opened in June 2000. In 2004, more than 300,000customers were served in its various restaurants, bars and conferencerooms or purchased tickets to its shows and discothèque. The venuealso attracted new customers with its targeted soirées and themeevents, as well as its corporate services, which include conference rooms,convention facilities and special-event evenings.

Club Med World is a totally new leisure and entertainment complex inthe heart of the city where customers can relax and get away from life’spressures for an hour, an evening or a night. In a more formal but justas friendly atmosphere, Club Med World also offers customized corpo-rate products, making it a unique venue for gala evening events,product launches, earnings announcements and fashion shows.

Located just 10 minutes from the center of Paris, Club Med World offersits GMs and Parisian customers a broad array of leisure and entertain-ment facilities, including a shop, two restaurants serving French andSpanish cuisine, and three bars. Activities for children include workshopsand trapeze lessons. For a special night out, clients can see a show orconcert, and end the evening at the discothèque, which caters tovarious musical tastes.

• Club Med Gym:encouraging results

In 2004, Club Med Gym successfully completed the crucial step ofstrengthening its presence in Paris, as announced a year ago. Clubs inother parts of France were sold and initiatives were implemented torevitalize business in the Parisian facilities. Club Med Gym is nowfocusing on its 22 clubs in the French capital (17 Club Med Gym and5 Club Med Gym Waou units), as well its Brussels facility. The initialresults have been encouraging.

Staff skills were also enhanced during the year, with nearly all 700employees taking part in at least one training course conducted mainlyby Club Med University and other Group training teams. Coursesfocused on customer service, sales and management practices.

Club Med Gym also undertook an ambitious capital program designedto meet customer expectations, with investments primarily dedicatedto air-conditioning and cardio-training equipment. Deployment willcontinue in 2005.

After conducting surveys and forging new partnerships, Club Med Gymhas redefined its marketing and advertising strategy to focus more onoperations and customer relationship management. The goal is toimprove customer intelligence to more effectively attract and, above all,retain customers through direct marketing and other targeted initiatives.

In September 2004, Club Med Gym celebrated its 25th anniversarywith its “25 Years of Passion for Fitness” campaign. The festivities willcontinue in 2005 through monthly events in all 23 facilities.

To cap this year of recovery and progress, Club Med Gym was namedEuropean Operator of the Year by the International Health, Racquet andSport Association. The award was presented at a ceremony in Berlin onOctober 22, 2004.



GROUP RESULTSConsolidated revenues for the year ended October 31, 2004 amountedto 31,600 million, an increase of 1.2% based on a comparable scopeof consolidation and at constant exchange rates. Operating incometotalled 317 million, compared with an operating loss of 36 millionthe year before. The Villages business reported operating income of315 million, versus breakeven in fiscal 2003, while the other businessesswung to operating income of 32 million from a 36 million operatingloss last year. The net loss for the year came to 344 million versus a394 million loss in fiscal 2003.

BUSINESS VOLUMESClub Méditerranée welcomed 1.7 million customers in fiscal 2004,up a slight 0.4% from the previous year. They included Jet tourscustomers, whose number increased by 5.6% during the fiscal year.

Hotel daysThe number of hotel days sold in fiscal 2004 contracted by 3.5% to9,251,000. The decline varied by village category, however, with thenumber of days falling nearly 29.4% in hut villages and 2-Trident units, butrising 2.4% in 3 and 4-Trident villages. The improvement in the 3 and4-Trident segment indicates that customers are responding positivelyto our strategy of moving the offering upmarket.

Issuing zones (thousands of hotel days*)

2003 2004 Change

Europe 7,467 6,923 -7.3%Americas 1,446 1,573 8.8%Asia 677 755 11.5%

Total 9,590 9,251 -3.5%

Receiving zones (thousands of hotel days*)

2003 2004 Change

Europe 6,519 6,169 -5.4%Americas 2,173 2,094 -3.6%Asia 898 988 10.0%

Total 9,590 9,251 -3.5%

* Including hotel days sold locally in the villages.

Capacity and occupancy ratethousands of hotel days* and %

2003 2004 Change vs.03Occupancy Occupancy Occupancy

Capacity rate Capacity rate rate

Europe 8,746 74.5 % 8,441 73.1 % -1.4 pt

Americas 3,526 61.6 % 3,152 66.9 % +5.3 ptsAsia 1,902 47.2 % 1,838 53.8 % +6.6 pts

Total 14,174 67.7 % 13,431 68.9 % +1.2 pt

* Including hotel days sold locally in the villages.

Capacity was reduced by an aggregate 5.2% in fiscal 2004, reflecting thenet impact of:• The closure of 2-Trident villages in Europe (Donoratico, Corfu, Le

Lavandou, Cadaquès, Valbella).• The closure of Les Boucaniers for reopening as a 3-Trident in 2006.• The closure of Varadero in May 2003.

Two villages were opened during the year, Marrakech as a 4-Trident andEl Gouna as a 3-Trident.

Based on these figures, the overall occupancy rate rose by 1.2 pointsto 68.9% in fiscal 2004.

FINANCIAL REVIEWStatement of Operations

Consolidated revenues

• Change in revenues, fiscal 2003 and 2004millions of euros

Consolidated revenues for the year ended October 31, 2004 totaled31,600 million, an increase of 1.2% like-for-like (based on a comparablescope of consolidation and at constant exchange rates). This overallgrowth reflected a 2.4% increase in the winter season and a 0.1% gainin the summer.

EXECUTIVE BOARD REPORT

1,609

-22 -6

+46

-27

1,600

2004VolumePrice-mixScope of

consolidationCurrency

effect

2003


Change in revenues, fiscal 2003 and 2004

Reported Like-for-like

Winter -0.2% +2.4%Summer -1.0% +0.1%Full year -0.6% +1.2%

The year-on-year change can be explained as follows:• The main cause was the decline in volumes, which reduced revenues

by 327 million. However, this impact was amply offset by a positiveprice mix effect of 346 million, reflecting the steady upgrading of thevillage base. This improvement in product and service quality drove anincrease of 5.1% in like-for-like revenues per hotel day across all regionsduring the year.

• The currency effect was a negative 322 million due to the euro’sappreciation against other currencies.

• Changes in the scope of consolidation, corresponding to the divest-ment of Club Med Gym fitness centers outside Paris and the closureof Club Med World Montréal, had a negative impact of 36 million.

• Like-for-like growth in village revenues by issuing zonemillions of euros % change from prior-year period

2003 2004 Winter Summer Full-year

Europe 948 917 0.0 -6.0 -3.3Americas 186 203 9.3 8.8 9.1Asia 127 145 4.6 23.1 14.2

Total village revenues 1,261 1,265 2.3 -1.6 0.3Jet tours 263 277 3.3 6.7 5.3Other businesses 56 58 0.9 6.1 3.3

Group total 1,580 1,600 2.4 0.1 1.2

Jet tours’ revenues were up by 5.3% over the full year. Revenues fromother businesses came to 358 million, representing 4% of the consoli-dated total.

Seasonal variations in demand

The breakdown of business between the winter season (November 1to April 30) and the summer season (May 1 to October 31) wasvirtually the same as the year before. Winter revenues accounted for49% of the total, or 3784 million, while summer revenues represented51%, or 3816 million. This compares with 48.8% (3785 million) and51.2% (3824 million) in fiscal 2003.

Operating income

• Operating income by receiving area and by businessmillions of euros

Winter Summer 2003 Winter Summer 2004

Europe 14 12 26 19 (4) 15Asia 0 (5) (5) 3 3 6Americas 2 (23) (21) 10 (16) (6)

Total, villages 16 (16) 0 32 (17) 15Jet tours 0 1 1 1 2 3Other businesses (4) (3) (7) (1) 0 (1)

Group total 12 (18) (6) 32 (15) 17

Operating income came to 317 million, turning the page on three yearsof losses. The total included 315 million from the Villages business and32 million from Jet tours and the other businesses.

• Analysis of Villages business performancemillions of euros

2003 2004

Revenues 1,282 1,265Margin on variable costs 778 770As a % of revenues 60.7% 60.9%Fixed selling expenses (180) (175)Fixed operating costs (560) (546)Overheads (38) (34)

Operating income 0 15

Margin on variable costs widened slightly to 60.9% of revenues from60.7%. The 317 million decline in Village revenues reduced margin onvariable costs by only 38 million, thanks to the combined impact ofmeasures to move the offering upmarket, deployment of the Total AllInclusive (TAI) formula in the Americas region and room upgrades.The resulting 335 million improvement in the price-mix fully offset the319 million negative volume effect. In addition, fixed costs declined by323 million, feeding through to operating income of 315 million.


Operating income - Europe

millions of euros

2003 2004

Revenues 952 924Margin on variable costs 536 519As a % of revenues 56.3% 56.2%Fixed selling expenses (117) (114)Fixed operating costs (370) (369)Overheads (22) (21)

Operating income 26 15As a % of revenues 2.7% 1.6%

millions of euros

Analysis of operating income - Europe Full year Summer

Fiscal 2003 operating income 26 12

Currency effect 3 3Volume effect (23) (16)Price-mix effect 12 3Other (3) (6)


The price-mix effect improved again, by 312 million, reflecting anaverage price increase of 34.70 per hotel day across the region as morecustomers chose to stay at 3 and 4-Trident villages. However, the yearwas also shaped by a negative volume effect of 323 million, most of itin the summer season. Due to the Olympic Games, Greek destinations,for example, were particularly hard hit. Lastly the number of Europeancustomers to the Caribbean fell sharply in the summer, impacting resultsin both Europe and the Americas.

Operating income - Americas

millions of euros

2003 2004


Operating loss (21) (6)As a % of revenues –7.9 % –2.3 %

millions of euros

Analysis of operating income Full year Summer

Fiscal 2003 operating loss (21) (23)

Currency effect 0 1Volume effect (4) (6)

- Am -> Am 7 3- Eur -> Am (11) (9)

Price-mix effect 19 9Fixed costs 0 3


The Americas narrowed its operating loss to 36 million in fiscal 2004from 321 million the year before. The 9% increase in issuing revenueshad a 37 million positive impact. A further improvement in the price-mix reduced the loss by 319 million. This includes the transportationbusiness, which returned to profit during the year.

On the downside, the traditional flow of customers from Europe inthe summer season contracted sharply in fiscal 2004, leading to an311 million unfavorable impact. If European business had remained atthe same level as in 2003, the Americas would have broken even.

Operating income - Asia

millions of euros

2003 2004


Operating (loss)/income (5) 6As a % of revenues -3.2% 3.5%

Executive Board Report


millions of euros

Analysis of operating income - Asia Full year Summer


Currency effect 1 0Volume effect 6 6

- Asia -> Asia 5 4- Eur -> Asia 1 2

Price-mix effect 5 2Fixed costs (1) 0


Business began to rebound in Asia after a 2003 impacted by theterrorist attack in Bali and the SARS epidemic. Issuing revenues rose 23%,adding 35 million to the region’s operating income. These higher volumes,combined with a new improvement in the price-mix stemming fromongoing measures to upgrade the offering and enhance the village expe-rience, drove an 311 million favorable swing in total regional operatingresults. Of this, 38 million came from the summer season alone.

Operating income - Jet tours and other businesses

In fiscal 2004, Jet tours and the other businesses (Club Med Gym andClub Med World) generated aggregate operating income of 32 millionversus an operating loss of 36 million in 2003. This is the first time thatthe non-village businesses have made a positive contribution to con-solidated operating income.

Jet tours

millions of euros

2003 2004

Revenues 269 277Semi-net margin 28 32As a % of revenues 10.5% 11.5%Other costs (27) (29)

Operating income 1 3

With the number of customers up 5.6% to 282,000 from 267,000 infiscal 2003, operating income totaled 33 million, a particularly satis-factory increase in a year of mixed trends. This performance showsthat Jet tours has made the right strategic choices with its new planimplemented in 2002.

Other businesses

The closure of the fitness centers outside Paris restored Club Med Gym’sprofitability, with operating income of 32 million versus an operatingloss of 32 million in fiscal 2003. In a persistently difficult environment,Club Med World Paris continued to refocus on corporate seminars, post-ing an operating loss of 33 million.

Net financial expense

Net financial expense totaled 338 million compared with 345 millionthe previous year. Excluding the currency effect, net financial expenseheld steady at 335 million despite the increase in actual borrowing costs,stemming from the recognition of renegotiation fees, which was offsetby a 325 million decrease in average debt over the fiscal year.

Exchange losses, in an amount of 33 million, primarily reflected the dif-ference between the dollar-to-euro exchange rate used for accountingpurposes and the hedging rate.

Exceptional items

Net exceptional expense declined to 318 million from 356 million infiscal 2003. The main components were as follows:- Net gains on disposal of the assets of the Alpe d’Huez, Tignes les

Brévières, Le Lavandou, Eleuthera, Ouarzazate, St. Martin and Paradisevillages (311 million).

- Costs related to the closure of leased villages (314 million).- Restructuring costs (38 million).- Costs related to the closure of certain Club Med Gym fitness centers

outside Paris and exceptional depreciation charges at Club Med World(a total of 37 million).

Income tax

The current tax charge of 36 million was offset by a deferred taxbenefit of 310 million.


Net loss

The Group ended the year with a net loss of 344 million, versus394 million in fiscal 2003.

millions of euros

2003 2004

Revenues 1,609 1,600Operating loss (6) 17Net financial expense (45) (38)Net income from equity companies 0 0Net exceptional expense (56) (18)Income tax 21 4Amortization of goodwill (8) (8)Minority interests 0 (1)

Net loss (94) (44)

Balance sheetmillions of euros

Assets Oct. 31, 2003 Oct. 31, 2004

Tangible assets 805 761Intangible assets 194 183Financial assets 97 89Sub-total 1,096 1,033Net deferred tax assets 40 49

Total assets 1,136 1,082

Liabilities Oct. 31, 2003 Oct. 31, 2004

Shareholders’ equity and minority interests 488 444Provisions 78 68Working capital 181 180Net indebtedness 389 390

Total liabilities and shareholders’ equity 1,136 1,082

Gearing* 79.7% 87.8%

* Gearing: net indebtedness/shareholders’ equity.

Shareholders’ equity stood at 3444 million at October 31, 2004. The344 million decrease compared with the year-earlier figure was dueprimarily to the recognition of the fiscal 2004 loss.

Despite capital expenditure of 3100 million, net fixed assets contractedby 363 million due to net disposals in the amount of 359 million, depre-ciation and amortization for the year of 379 million, and a 321 millionnegative translation adjustment.

Provisions declined by 310 million to 368 million following the use ofa provision on Club Med World Montréal.

Working capital, which represents a net source of funds at ClubMéditerranée, was stable at 3180 million excluding deferred tax assets. Asin fiscal 2003, working capital corresponded to 11% of revenues.

Net indebtedness

At 3390 million, net indebtedness was unchanged from the year-earlierfigure. Gearing stood at 87.8%.

Financing

At October 31, 2004, Club Méditerranée had a 3220 million syndi-cated loan due June 2005. This loan was paid back early, inNovember 2004, through:• The issuance, on October 26, 2004, of 3150 million worth of bonds

convertible/exchangeable for shares (OCEANEs) due November 1,2010 and paying annual interest of 4.375%.

• The arrangement, on October 25, 2004, of a new five-year syndi-cated loan in an amount of 370 million, of which 30% must be paidback at the end of the third year. The covenants to be fulfilled areas follows:

Total off-balance sheet commitments capped at 3200 million.Net debt-to-equity ratio capped at 1.Net debt/Ebitda capped at the following ratios:

Ratio April 30 Oct. 31

2004 - 5.00

2005 4.50 4.00

2006 3.75 3.75

2007 3.50 3.50

2008 3.25 3.25

2009 3.00 -

Without increasing total debt, these two sources of financing havesignificantly lengthened debt maturity, from 47 months to 73 months,at an attractive cost. In addition, the balance sheet will be strengthenedif the bonds are converted into new shares. Moreover, the asset-backedfinancing policy will be pursued in the future.



Club Méditerranée has also issued 3140 million worth of 6.5-year con-vertible/exchangeable bonds (OCEANEs) due November 1, 2008 andpaying annual interest of 3%. Any bonds not converted or exchangedfor shares will be redeemed at maturity at a premium to their facevalue. Including this premium, the yield to maturity stands at 5.25%.Bondholders have a put option exercisable on April 30, 2006 at par,plus an 11.19% premium.

Change in cash and cash equivalents

millions of euros

2003 2004

Cash flow (17) 20Change in working capital 8 1Change in provisions 9 1

Net cash provided by operating activities 0 22Capital expenditure (74) (100)Proceeds from asset disposals 116 59

Free Cash Flow* 42 (19)Effect of exchange rate changes and other (7) 18

Change in cash and cash equivalents 32 (1)

* Free cash flow = Net cash provided by operating activities - capitalexpenditure + proceeds from asset disposals

Cash flow improved significantly during the year, swinging to apositive 320 million from a negative 317 million in fiscal 2003. Netcash provided by operating activities rose to 322 million. Capitalexpenditure exceeded proceeds from asset disposals by 341 million,whereas net proceeds totaled 342 million in fiscal 2003.

Free cash flow was a negative 319 million, reflecting a number ofnon-recurring items such as the 38 million adverse impact from thedisposal of Club Med World Montréal.

The capital expenditure budget for fiscal 2005 has been set at3120-130 million, in particular for the opening of the Peisey Vallandryvillage and re-opening of Les Boucaniers. Asset disposals are expectedto total between 340 million and 350 million.

SIGNIFICANT EVENTS OF FISCAL 2004• Business varied by region

- In the Americas, Club Méditerranée outperformed the US touristmarket thanks to measures to enhance the product and respond tolocal customer expectations (e.g. “Total All Inclusive” packages). Therecovering economy helped to lift comparable revenues by 9.1%, nar-rowing the regional loss to 36 million from 321 million in fiscal 2003.

- Business in Asia began to rebound, as the region’s sharp upturn indemand drove comparable revenue growth of 14.2% for the year.Operating income totaled 36 million.

- In Europe, demand was flat across the tourist industry, due to the com-bination of a lack of economic growth throughout the year, especiallyin the summer, and the unfavorable impact of the Olympic Games ontourism in Greece.

• Hurricanes in the CaribbeanThe hurricanes that swept the Caribbean in September 2004 damagedthree villages that were temporarily closed: Punta Cana and Sandpiper,which re-opened on November 1, and Columbus, which re-opened onDecember 18. All of the related damage and operating losses werecovered by insurance.

• Main changes in scope of consolidation in fiscal 2004- Sale of 11 Club Med Gym fitness centers outside Paris.- Opening of the La Palmeraie village in Marrakech in June 2004.- Opening of the El Gouna managed village in Egypt.- Sale of the Corfu Ipsos village in Greece, Lavandou in France and

Ouarzazate in Morocco.- Shutdown of operations at the Paradise Island village in the Bahamas

in August 2004.- Shutdown of operations at the Donoratico village in Italy and Cadaquès

in Spain.

• Update on the INCA projectLaunched at the end of fiscal 2003 to optimize purchasing, theINCA project generated savings of at least 37 million in fiscal 2004,in line with the goal of saving an aggregate 330 million by the endof fiscal 2006.

• Changes in the ownership base:- Accor becomes core industry shareholder

On June 11, 2004, Club Méditerranée’s two historical shareholders– the Agnelli Group (21.2% through its Exor and Ifil subsidiaries) andCaisse des Dépôts et Consignations (7.7%) – sold their interests toAccor for 3252 million.

After approval by the European Commission, Accor became ClubMéditerranée’s core shareholder on October 22, 2004, with a 28.9%interest. The arrival of Accor, a world leader in hotels and services,represents a key strength in our upmarket growth strategy. As part ofthis strategy, Club Méditerranée and Accor are identifying mutuallybeneficial ways to leverage synergy and pool resources. The partnershipputs both companies in the best possible position to benefit fromfuture growth in the world tourism market.


FISCAL 2005 OUTLOOK AND STRATEGY

OutlookForecast capacity for the 2005 winter season is currently expected tobe down 3.4% on winter 2004 overall, but with differences by region.

In Europe, capacity is up 3.5% overall, but with differences between thesun and ski villages. Sun village capacity has risen by 20% with theopening of the Coral Beach and El Gouna managed villages in Israel andEgypt and the impact of the new Marrakech village inaugurated in June2004. Ski village capacity, on the other hand, has contracted by 10%due to the sale of three 2 Trident villages last spring.

In Asia, the change in capacity reflects the closure of Cherating in win-ter 2004 for upgrading to 4 Trident standards. Capacity in the Americashas been reduced by the sale of Paradise Island and the temporaryclosure of Les Boucaniers for reconstruction. Les Boucaniers will re-openas a 3 Trident unit in winter 2006.

As of December 4, 2004, winter bookings were up 3.6% compared witha year earlier. In the four weeks to December 11, bookings were 1.3%higher than in the same period of 2003.

These figures do not reflect the temporary closing of the villages in Phuket(Thailand) and in Kani and Faru (Maldives) following the December 2004tsunami.

• Winter 2005 bookings vs. winter 2004in like-for-like revenues

Cumulative Over the at Dec. 4, 2004 4 weeks

to Dec. 11, 2004

Europe 4.3% 0%Americas 1.5% 7.5%Asia 0.9% 1.4%

Total, Club Med 3.6% 1.3%

Jet tours -2.0% 2.3%

Strategy• Sustained deployment of the new friendly, multicultural, upmarket

strategic positioning

Launched in spring 2004, operational implementation of the strategy toreposition the Club as upmarket, friendly and multicultural represents anambitious corporate project aligning all our teams in meeting a sharedobjective: responding to the special expectations of Club Med customers.Implementation will be stepped up in 2005 with five major innovationsin two critical areas:

Marketing/sales

Objectives have been clear ly identified to re-recruit lapsedcustomers, to increase the frequency of repeat stays by occasionalcustomers and to attract new customers. Resources allocated tomeeting these goals in 2005 include:- An ambitious advertising campaign scheduled for launch in March 2005.- A top-to-bottom revamping of the Trident catalogue, our primary

image driver and recruiting tool.

Products

- A Total All Inclusive option will be introduced in Europe.- Bar vouchers will be replaced by the Club Med Pass.- Investments in the villages will continue, with the renovation of

Val d’Isère, the opening of Riad in Marrakech, completed renovationof Turquoise in the Bahamas, construction of a 4-Trident snow villagein Peisey-Vallandry and reconstruction of the Les Boucaniers villagein Martinique.

“2004 was truly a watershed year for Club Méditerranée. For the firsttime in three years , we reported operating income, in a marketenvironment that is still relatively unfavorable. During the year, we alsolaunched an exciting project across the enterprise to invent and deployour new strategic positioning, which is to offer upmarket, fr iendly,multicultural products that create a whole new way for people to ‘betogether.’ Lastly, based on this new strategy and our new value-drivenbusiness model, last October Accor became our core industr y share-holder, in a commitment to supporting our turnaround and speedingour strategic repositioning.

“All this means that we can confirm our objective of returningto our highest operating margins, with operating income of aroundr100 million in 2006.”

Henri Giscard d’Estaing



DIVIDENDNo dividend will be paid for the year ended October 31, 2004(See General Information, page 89).

OTHER INFORMATIONExecutive compensation

(See General Information, pages 89 and 90).

Ownership structure

As of October 31, 2004, Richelieu Finance held over 10% of theCompany’s capital and Accor held over 20%. This information is basedon disclosures received in application of Articles L. 233-7 and L.233-11of the French Commercial Code and is provided in compliance withArticle L. 233-12 of the Code.

As of October 31, 2004, the Group held 257,000 Club MéditerranéeSA shares in treasury, representing 1.33% of the capital (see GeneralInformation, pages 83 to 86).

Acquisitions of controlling and other interestsin French companies

No controlling or other interests in French companies were acquired infiscal 2004.

Dependence on certain patents or supply contracts

The continued operation of the Group’s business is not dependent onany patents or supply contracts.

Exceptional events, claims and litigation

To the best of the Company’s knowledge, no claims, litigation or excep-tional events are in progress or pending that could have a serious adverseeffect on the business, results, assets and liabilities or financial positionof the Group or the Company.The nature of the Group’s business and the fact that its operations areconducted in a large number of countries with differing and sometimescontradictory regulations is a source of operating difficulties and can leadto disputes with suppliers, owners or local authorities. In the UnitedStates, for example, suit has been filed against Club Méditerranée in aUS District Court in Florida by persons claiming to be the owners ofland in Cuba on which the Varadero village was built by the Gaviotacompany. Club Méditerranée operated the village from 1997 to May2003 under a management contract. For the moment, the plaintiffs havenot yet announced the amount of their claim.

As of October 31, 2004, all identified risks have been provided for, takinginto account this specific context, as soon as the amounts involved canbe reasonably estimated.

Disputes can arise with the owners of certain village properties con-cerning the return of these properties at the end of the lease term.This is currently the case for the Don Miguel hotel, in Spain, where thematter has been put to arbitration.

Subsequent events

• Estimate of initial synergies with AccorIn a joint presentation to the financial community on December 14,2004, Club Méditerranée and Accor provided an estimate of thesynergies that will gradually contribute to both partners’ earnings.

Total gains from synergies, estimated as of December 14, 2004millions of euros

Year Accor Club Méditerranée Total

2005 6 11 172006 12 21 332007 16 30 46

An analysis of mutually beneficial synergies identified some one hundredmeasures in four main areas:- Increasing revenues.- Optimizing purchasing.- Sharing skills and expertise.- Human resources.

• RefinancingAt October 31, 2004, Club Méditerranée had a 3220 million syndi-cated loan due June 2005. This loan was paid back early, inNovember 2004, through:- The issuance of 3150 million worth of bonds convertible/exchan-

geable for shares (OCEANEs) due November 1, 2010 and payingannual interest of 4.375%.

- A new five-year syndicated loan in an amount of 370 million, of which30% must be paid back at the end of the third year. The covenantsto be fulfilled are as follows:



Ratio April 30 Oct. 31

2005 4.5 4.00

2006 3.75 3.75

2007 3.50 3.50

2008 3.25 3.25

2009 3.00 -

Without increasing total debt, these two sources of financing havesignificantly lengthened debt maturity at an attractive cost. In addition,the balance sheet will be strengthened if the bonds are converted intonew shares.

• The tsunami in AsiaOn December 26, 2004 a tsunami devastated the Bay of Bengal regionin Asia. Three Club Méditerranée villages were damaged and temporarilyclosed: Phuket (southern Thailand) and Kani and Faru (Maldives). Phuketre-opened on February 5 at 60% capacity, with full capacity to berestored by summer 2005. Kani is now being reconstructed, so that thevillage can re-open in fall 2005. Discussions are underway with localauthorities to determine the future of the Faru village, whose lease isset to expire. The tsunami-related property, casualty and business inter-ruption losses were covered by insurance.

Main competitors

In as much as Club Méditerranée is neither a pure tour operator nora pure hotel group, as is the case with many companies in thetravel and tourism industry, the Club Med product does not have anyserious competitors in the global marketplace. The only companiesoffering anything close to a competing product are local in scope.

RISK FACTORS

Insurance risk• Insurance coverClub Méditerranée manages risks and insurance coverage at the cor-porate level. Global risk management systems and insurance programshave been established in partnership with pools of leading insurancecompanies. This global cover is backed by local insurance policies andcover for specific activities, where the need arises.

On May 1, 2004, Club Méditerranée renewed, for a period of 18 months,its global one-year insurance programs that had expired, with a focuson maintaining the best possible tradeoff between premiums anddeductibles. As a result, total premiums for these programs werereduced to around 39.5 million, representing around 0.6% of consoli-dated revenues.

The main global insurance programs are as follows:• A Global Public Liability Program covering claims from customers and

third parties. The aggregate insured value of 3110 million was deter-mined based on the Club’s business and an overall assessment of therisks, taking into account the countries in which the Club operates andapplicable case law. The program covers the entire world.

• A Property & Casualty/Business Interruption Program, covering damagecaused by fire, natural disasters, etc. The ceiling of 392 million per claimwas set based on insurance values of the various Club properties.

The Property & Casualty/Business Interruption Program covered thecosts related to the hurricanes that hit three Caribbean villages inSeptember 2004.

Since the fiscal year-end, claims for property, casualty and business inter-ruption losses caused by the December 26 tsunami in Asia have beenmanaged as part of the related global insurance program, and the eventdid not affect self-insured risks. Following the hurricanes in the Americasregion in September and the tsunami in Asia in December, the pro-gram’s premiums and deductibles were revised. Despite the sustainedcommitment to maintaining the most effective tradeoff between pre-miums and deductibles, global insurance program premiums will riseto 311.5 million in 2005.

The bulk of the Group’s insurance programs have been set up throughthe Siaci-Jardine global insurance brokerage network. The insurance poolfor the global programs is headed by Axa and includes XL, Generali, AGF,SCOR and GAN.

Geopolitical riskClub Méditerranée has operations in more than 40 countries and geopo-litical risks throughout the world can therefore have an adverse effecton the Group’s accounts. These risks are by definition unpredictable andit is very difficult to assess their possible impact on the Group’s assetsand liabilities and results of operations.


Currency risksPositions at October 31, 2004 for the 2005 fiscal year

currency units in millions

USD GBP AUD JPY CAD MXN MAD TND TRL KRW

Net position before hedging (35) 11 11 1 200 25,5 (145) (180) (28) (16,600,000) 10,600

Net off balance-sheet position (hedges) 35 (2.8) (6.8) (790) (21.2) 40.9 0 0 0 (5,700)

Net position after hedging 0 8 4 410 4 (104) (180) (28) (16,600,000) 4,900

Net position after hedging in 3m 0 12 2 3 3 (7) (16) (18) (9) 3

Book exchange rate 1.274 0.696 1.7088 135.13 1.5546 14.6889 11.072 1.5666 1,877,600 1,425.78

Note: the above table shows exposure to certain currencies at October 31, 2004, related to the 2005 fiscal year, which were hedged afterthe fiscal year-end.USD: United States, GBP: United Kingdom, AUD: Australia, JPY: Japan, CAD: Canada, MXN: Mexico, MAD: Morocco, TND: Tunisia, TRL: Turkey,KRW: South Korea.


Interest rate and liquidity risk• Interest rate riskAverage variable rate net debt should amount to around 3110 millionin fiscal 2005. Interest rate hedges (swaps/collars where Club Méditerranéepays the fixed rate) have been put in place for fiscal 2005 on a notionalamount of 360 million. Exposure to the risk of an increase in borrow-ing costs concerns the unhedged portion of the variable rate debt, in theamount of 350 million. A 1-point increase or decrease in short-terminterest rates would have a 3500,000 impact on Group interest expense.

• Risks associated with the acceleration clauses containedin the Group’s loan covenants

If the Group fails to comply with any of the bank covenants described inthe section “Subsequent events” on page 22, it could be required to repay

the related loans immediately. In this case, Club Méditerranée would beobliged to initiate discussions with its bankers or obtain new financing.

• Currency riskBased on forecasts for the coming fiscal year, Club Méditerranée usesoptions, futures and non-deliverable forward contracts to hedge its expo-sure to fluctuations in the main billing currencies (British pound, Japaneseyen, Canadian dollar, Australian dollar, South Korean won, etc.). Exposureto the US dollar, which is both a billing and an operating currency,is hedged using options and futures. Exposure to the other operatingcurrencies (Moroccan dirham, Turkish lira, Tunisian dinar, Indonesian rupi-ah, Thai baht, etc.) is not systematically hedged.

• Liquidity risk (debt maturity) at October 31, 2004

Type of debt Interest rate Amount Maturity Commentsmillions of euros

OCEANE bonds Fixed rate 144 2008 Put option exercisableon April 30, 2006

LEASE FINANCING Fixed rate 70 2008/2018LONG-TERM LOANS Fixed rate 19 2005/2017- in US dollars Fixed rate 9 2007- in yen Fixed rate 1 2005- in Swiss francs Fixed rate 6 2007- in CFA francs Fixed rate 1 2005- in euros Fixed rate 2 2005/2017

Total fixed rate debt 232SYNDICATED LINE OF CREDIT Variable rate 220 June 2005 See p. 22LEASE FINANCING Variable rate 19 2005/2009LONG-TERM LOANS Variable rate 52 2008/2014SHORT-TERM BANK LOANS AND OVERDRAFTS 27

Total variable rate debt 318

Net debt at variable rates 318



Other risksThe nature of the Group’s business and the fact that its operations areconducted in a large number of countries with differing and sometimescontradictory regulations is a source of operating difficulties and can leadto disputes with suppliers, owners, employees or local authorities. All iden-tified risks have been provided for, taking into account this specific con-text, as soon as the amounts involved can be reasonably estimated.

CLUB MÉDITERRANÉE SAClub Méditerranée SA leads the Group in terms of sales revenue. Italso acts as the Group holding company and operates several villagesunder the Club Med brand in France and abroad. Consequently, itsfinancial results and their year-on-year change only partially reflect theGroup’s performance and do not track the same trends as the con-solidated results.

Club Méditerranée SA ended fiscal 2004 with a net loss of 378 millionversus a net loss of 3133 million the previous year. The improvementwas attributable to a decline in net financial expense, to 386 million from3134 million in fiscal 2003.

Results for the last five years are presented on page 77.

TRANSITION TO IFRSIn compliance with Regulation (EC) No. 1606/2002 of July 19, 2002 onthe application of international accounting standards, the consolidatedfinancial statements of the Club Méditerranée Group for the fiscal yearended October 31, 2006 will be prepared according to IAS/IFRS stan-dards applicable as of October 31, 2006 as adopted by the EuropeanUnion. The first financial statements prepared according to IAS/IFRS willbe the statements for the 2006 fiscal year, presented with comparativefiscal 2005 financial statements prepared using the same standards.The only exception concerns IAS 32/IAS 39, which will be applied fromNovember 1, 2005.An opening IFRS balance sheet has been prepared at November 1,2004 with the effects of the various changes of method recorded inequity.The impact of the switch on consolidated shareholders’ equity atNovember 1, 2004 and on net loss for the year ended October 31, 2004has been calculated on the basis of current estimates. At this pointin time, however, the impact of the new standards on the balancesheet, statement of operations and statement of cash flows has notbeen determined.

In addition, certain options and accounting methods applied in thefiscal 2004 financial statements may be modified when the final versionof the initial IFRS financial statements is published.The principal measures taken are as follows:• The villages and land have been valued by independent experts.• Tangible and intangible assets have been tested for impairment.• All lease contracts have been reviewed based on IAS 17 and 18.• All employee benefits granted by subsidiaries have been fully identified.• All stock option plans have been valued.• Due diligence performed by the Statutory Auditors.

Principal methods and options applied:The IAS/IFRS standards adopted by the European Union and the inter-pretations of the IFRIC as of the date of publication of this report havebeen applied.• Certain tangible fixed assets have been remeasured at fair value; the

revaluations concern either the entire village or just the land, basedon the opinion of independent experts, as allowed under IFRS 1.

• Fair value assets are valued using the cost model (IAS 16). TheGroup has decided not to apply the revaluation model, as allowedunder IFRS.

• The estimated useful life of fixed assets has been determined separatelyfor each component of the asset for depreciation purposes (IAS 16).

• Impairment tests have been performed, with each village consideredas representing a cash generating unit. Under French GAAP, the cashgenerating unit was the geographic region (IAS 36)

• Property leases on five villages have been classified as finance leases(IAS 17 and 18).

• The Group has decided not to apply IAS 32 and IAS 39 (under anexemption in IFRS 1).

• IFRS 3 has not been applied to business combinations prior toNovember 1, 2004.


Main impacts on the French GAAP balance sheetmillions of euros

Assets Reported at Impact of IFRS After impact at Oct. 31, 2004 Oct. 31, 2004

Tangible assets 761 325 1 086- Land 89 248 337- Buildings 672 77 749

Intangible and financial assets 272 (22) 250

Sub-total 1,033 303 1,336

Total assets 1,033 303 1,336

Liabilities Reported at Impact of IFRS After impact atOct. 31, 2004 Oct. 31, 2004

Shareholders’ equity and minority interests 444 97 541Provisions 68 6 74Net deferred taxes (49) 91 42Working capital 180 20 200Net debt 390 89 479

Total liabilities 1,033 303 1,336

Main impacts on shareholders’ equitymillions of euros

Shareholders’ equity - French GAAP 444

Fair value adjustments (IFRS 1) - depreciation by component (IAS 16) 280Finance leases and sale/leasebacks (IAS 17 and 18) -31Impairment tests (IAS 36) -50Post-employment benefits (IAS 19) -7Other -3

Total IAS/IFRS adjustments before tax 188

Tax impact of IAS/IFRS adjustments -91

Shareholders’ equity - IAS/IFRS 541

The main balance sheet impact concerns the valuation of certaintangible assets at their fair value. Club Méditerranée has a tradition ofdiscovering new tourist destinations, with the result that certain assetscarried at historical cost in the French GAAP balance sheet – particularlyland – are significantly undervalued.

• The classification of property leases for five villages as finance leaseswill increase net debt by 389 million and fixed assets by 376 million.

• Revaluations will have a total positive impact of 3303 million on fixedassets.

• Accounting for the impact of deferred taxes, these adjustments willincrease shareholders’ equity by 397 million.

• The changeover to IFRS will have no impact on gearing.

SUPERVISORY BOARD REPORTThe Executive Board has presented the Company’s financial statements,business review and management’s discussion and analysis for the yearended October 31, 2004. The Supervisory Board has received regularreports covering the performance and development of the business andthe Audit Committee, Strategy Committee and RemunerationsCommittee have been given all the necessary information on which tobase their opinions and recommendations.

The Supervisory Board has no matters to draw to shareholders’ atten-tion concerning the Executive Board’s report and the financial resultsfor the year ended October 31, 2004. Shareholders are thereforeinvited to approve the financial statements for the year and theresolutions proposed by the Executive Board.The Supervisory Board is assisted by three committees describedon pages 97 and 98.



2005 FINANCIAL COMMUNICATION CALENDARMarch 16: Annual Shareholders’ Meeting and first-quarter fiscal 2005 revenues announced.June 10: Fiscal 2005 interim results announcedSeptember: Third-quarter fiscal 2005 revenues announcedDecember 13: Fiscal 2005 annual results announced

Main impacts on the French GAAP statement of operationsmillions of euros

Reported at Impact of IFRS After impact at Oct. 31, 2004 Oct. 31, 2004

Operating income 17 5 22

Net loss (44) 5 (39)

The impact of the various IFRS adjustments on the statement ofoperations will be slightly positive, adding around 35 million to loss bythe same amount operating income and reducing net.


SOCIAL INDICATORSUnless otherwise indicated, the social and societal indicators publishedin this document relate to Club Méditerranée SA in France (includ-ing GOs assigned outside France) for the period from January 1 toDecember 31, 2004. This reporting basis represents 25% of the world-wide workforce in peak season but more than 50% of the full-timeworkforce. Additional information is available in the 2004 Review ofOperations.

Changes in Employee Numbersand Economic Impact on JobsIn a challenging international environment, the average number of ClubMéditerranée SA employees (GO/GE France and assigned outside France)was unchanged in 2004, while the number of headquarters and villageemployees declined by around 5%.

Indicator (Jan. 1 - Dec. 31) 2003 2004

Average number of employees, CMSA and GOs assigned outside France 4,006 3,799

Breakdown by type of job:- Headquarters employees 463 444- Headquarters managers 498 498- Full time village employees 573 542- Seasonal employees (GOs) 1,666 1,545- Service personnel (GEs) 686 652- Village managers 120 118

Number of permanent contract hires: 32 51- Managers 19 30- Employees 13 21

Number of fixed-term contract hires: 10,585 10,103- Managers 5 3- Employees 7,752 7,638- Service personnel 2,828 2,462

Indicator (Jan. 1 - Dec. 31) 2003 2004

Layoff plans: 57 9- Managers 23 4- Employees 34 5- Service personnel 0 0

Other terminations: 307 216- Managers 39 23- Employees 154 129- Service personnel 114 64

HR outsourcing:- IT service providers 40 40- Average temporary employees per month 37 39

Part-Time EmployeesApproximately 50 GOs in France, most of them women, work part time,mainly in the Club Med agencies.

Lay-Off Plan2003 saw the completion of the Rebound Plan involving 168 people,of whom 48 were laid off in 2004. Lay-off plans were also introducedto support the merger of Club Med Affaires and Club Med Collectivitésin late 2002 and the new Logistics organization in 2003.

To limit the number of outright dismissals, the 2002 and 2003 plansfocused on internal reassignments, with support provided by an in-housereassignment unit or an outplacement consultancy. Each employee con-cerned received at least two valid job offers. As for the reorganizationof the Logistics business, which was transferred from Morangis to theLyon suburbs, 13 of the 23 GOs concerned did not accept thereassignment offers and were laid off, while eight continued to receivesupport from the outplacement consultancy through the end ofAugust 2004. At that time, two were still looking for work, while theothers had found jobs, with either fixed-term or permanent contracts.

Lay-off plans

2003 CMA1/CMS2 Newmerger Logistics

organization

No. of people concerned 46 23

Internal reassignments 39 4

Lyon Transfers(internal reassignments) / 6

Layoffs 7 13

1 Club Med Affaires2 Club Med Collectivités

CORPORATE SOCIAL RESPONSIBILITY REPORT


Corporate Social Responsibility

Working Hours

Average workweek 2004

- Paris and Lyon headquarters 35 hrs.- Travel agencies 35 hrs.- Villages in France 39 hrs.

The Paris and Lyon headquarters and the travel agencies have applieda 35-hour workweek agreement since 1999. Staff at the Paris and Lyonheadquarters work 37.5 hours per week and are entitled to 12 days’leave and two long weekends per year. GOs and GEs working in villagesin France are entitled to recover the extra hours worked over 35 hoursand under 39 hours.

Type of absence Illness Work-related Maternity Paternity Sick children Totalaccident leave leave

Managers 2,728 42 1,799 64 22 4,655Employees 11,134 4,795 2,778 22 77 18,805Service personnel 3,432 1,364 0 44 0 4,840

TOTAL 17,294 6,201 4,577 130 98 28,300

The number of days absent remained almost unchanged in 2004,totaling 28,300 versus 29,617 in 2003. This mainly reflected a 14% declinein illness-related absences and an increase in lost time due to work-related accidents, as a result of a small number of village GOs being onlong-term industrial accident leave. The number of days absent formaternity, however, rose by 22.7%.

Compensation

Indicator Unit 2003 2004

Salaries and fringe benefits 3m 143 133

The decline in total payroll costs reflected a decrease in compensa-tion for managers at the Paris headquarters and a slight decline amongvillage GOs. Compensation for service personnel (GEs) was virtuallyunchanged from 2003.

Gender Equality

In most employee categories, women’s salaries are on average less thanthose for men, although the difference narrowed somewhat in 2004.

Average gross monthly 2003 2004salary (3) Men Women Men Women

Managers, headquarters and other offices 3,661 2,953 3,847 3,105Employees, headquarters and other offices 1,741 1,640 1,812 1,691Managers, villages 2,478 2,212 2,533 2,336Full-time employees, villages 1,423 1,293 1,449 1,326Seasonal employees, villages 1,204 1,188 1,296 1,278Service personnel 1,168 1,159 1,237 1,223

Employees are entitled to recover extra hours worked, which representaround three days’ leave per season. In July 2002, a separate agreementwas signed concerning night work. In headquarters and villages, additionaltime-off is used as compensation for overtime. Employees in the Parisand Lyon headquarters worked virtually no overtime. In the 18 winterand eight summer villages in France, non-recovered overtime in excessof an average 39-hour week amounted to only around 3,000 hoursincluding extra time. This mainly concerned kitchen and restaurant staff.

Labor RelationsIn February 2004, the Company signed an agreement with the CFDT,CFTC, CGC CGT-FO and UNSA trade unions covering GOs at the Parisand Lyon headquarters and the travel agencies, providing for a 2.2%across-the-board pay rise. In March, an agreement was signed with theCFDT, CFTC, CGC, CGT, CGT-FO and UNSA trade unions definingstand-by duties for technical and maintenance managers and nurses forvillages in France and for similar roaming GOs in other countries.

A contract rider signed in September with the Works Councilenabled GOs taking part in the Employee Stock Ownership Plan towithdraw up to 310,000 without penalty before the end of the year.

An agreement signed in November with the CFDT, CFTC, CGC, CGT,CGT-FO and UNSA trade unions defined the terms for individualtraining accounts and, as part of the restructuring of the training plan,terms for skills upgrading and enhancement programs.

Community Support and Works Council ActivitiesThe Club Méditerranée Corporate Foundation encourages employeesto take part in volunteer programs such as visiting sick children,working with the emergency assistance service for the homeless inParis, and tutoring disadvantaged children. Some employees make alonger-term humanitarian commitment through the Planète Urgenceassociation. The Foundation also suppor ts AIDES, a French HIV-prevention association.

In all, 0.53% of payroll is allocated to the social and cultural activitiesmanaged by the Club Méditerranée Works Council.

Training (worldwide)

Indicator At Nov. 30, 2003 At Nov. 30, 2004

Number of internsClub Med University 2,240 2,300Club Med SchoolsEurope: villages and sales 1,672 3,198Asia 725 1,350Americas 2,000 2,500

Average number of training hours per employee per year 16.8 32.3

As part of the process of decentralizing training, Club Med Schools havebeen set up in each region, to extend and enhance the trainingprovided at the Club Med University in Paris. 2004 saw an increasein the number of training programs, in particular those offered bydecentralized Club Med Schools.

Employment and Integration of Disabled Workers

Indicator 2003 2004

Number of disabled workers 11 20Amount contributed to AGEFIPH1

(3 thousands) 368 418

1 French fund to integrate the disabled into the workforce

Despite an increase in the number of disabled employees in theCompany, the amount contributed to AGEFIPH rose because of anincrease in the number of employees taken into account in the cal-culation. The Serre Chevalier village was also included for the firsttime, following a three-year exemption. The 5.84% increase inFrance’s minimum wage also had a significant impact on the high-er contribution to AGEFIPH.

Health and Safety

2003 2004

Number of work-related lost-time accidents at CMSA villages 340 341Employees (GOs) 193 204Service personnel (GEs) 147 137

Work-related accidents mainly concerned kitchen, catering and sports staff,and to a lesser extent, entertainment staff. The number of accidentsamong headquarters staff remained very low.



Corporate Social Responsibility

Subcontractors and Suppliers

2003 2004Outsourced operations Sales (3m) Sales (3m) Sites

Accommodation 4 4 6 villages in France

Laundry 3 3 All villages in France

Security 2 2 All villages in France

Ski school 10 10 All winter villages

IT services 4 4 Paris and Lyon headquarters

Storage 1 1 Paris and Lyon headquarters

- Ensuring equal remuneration for male and female workers for workof equal value.

Environmental indicatorsThe environmental indicators published in this document concern vil-lages in France, excluding the overseas departments and territories.Additional information is available in the 2004 Review of Operations.

Water, Raw Materials and Energy Consumption

Indicators 2003 2004

Water consumption (cu.m.) 774,651 700,269Electricity consumption (MWh) 53,694 52,846

Water economizers, pressure and flow rate limiters, daily consumptionmonitoring systems and water table monitoring equipment are installedat Club Méditerranée villages. Watering protocols have been revisedto reduce water consumption. Energy costs and consumption arecontinuously monitored, based on annual conservation and reductionobjectives, and initiatives are deployed to enhance the efficiency ofequipment and installations. The Club is also pursuing its program tointroduce automated energy management systems.

Most subcontracting costs were unchanged. The joint declaration on out-sourcing signed with the European Committee for Social Dialogue on June19, 2001 states that Club Méditerranée makes sure that subcontractorson its sites comply with applicable collective agreements, labor legislationand workers’ fundamental rights as expressed in the ILO Declaration onFundamental Principles and Rights at Work published on June 18, 1998.

Compliance with International ConventionsClub Méditerranée ensures that fundamental human rights are respectedat its operations in all host countries. An agreement covering the respectof fundamental rights at work and promoting international mobility ofservice personnel was signed in April 2004 with the InternationalUnion of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco andAllied Workers’ Associations (IUF) and the European Federation of Food,Agriculture and Tourism Trade Unions (EFFAT) for sites in Europe andAfrica. This agreement is based on the principles set out in theInternational Labour Organization (ILO) conventions and stipulates thatClub Méditerranée is committed to:- Respecting the rights of employees to establish and/or join a union of

their own choosing, in line with applicable legislation in each country.- Not interfering with the right to be a union member.- Ensuring that elected or appointed union representatives are not dis-

criminated against because of their union membership or activities.- Allowing union representatives to contact Club Méditerranée

employees in the framework of national or local legislation, collec-tive agreements and practices.

- Not tolerating any form of forced or compulsory labor as a means ofcoercion or as a punishment for expressing a political view.

- Eliminating child labor.- Respecting the principle of equality of opportunity and treatment in

respect of employment and occupation.

Protecting EcosystemsLocated in areas of outstanding natural beauty, Club Méditerranéevillages are designed to seamlessly blend into their environment andprotect and enhance their natural surroundings. Environmental impactassessments are systematically conducted before a new village isdeveloped. Villages are built in strict compliance with environmentalregulations, in particular to protect ecosystems and maintain biodiversity.

The Club protects biodiversity around its sites by selecting local plantvarieties and preserving the rarest species. Any trees chopped down aresystematically replaced.

Managing Emissions, Disamenities and WasteIn host countries that lack adequate drainage systems, villages are equippedwith their own wastewater treatment plants. The Club also strives toexpand selective sorting of waste in countries with appropriate process-ing industries.

The use of fertilizers and soil amendments for golf courses is strin-gently controlled through soil analyses and fertilization plans.

The Club’s activities do not generate significant emissions. The use ofgas-fired heating systems, which generate less pollution than systemsusing home heating oil, helps to preserve air quality. Energy consumptionis also optimized to limit greenhouse gas emissions.

Environmental ManagementRoutine environmental management is the responsibility of the EngineeringDepartment, which defines and deploys procedures for monitoringinstallations and performs regular environmental audits of the villages.A Green Space Europe Manager reports to the Department.An Environment and Sustainable Development Committee was set upin late 2003, comprising line managers (Engineering, Health and Safety,Construction) and managers from the relevant corporate departments(in particular Human Resources). The Committee meets regularly toexamine topical cross-functional issues and monitor the Club’s approachto dealing with them.

Environmental Risk Prevention and ManagementClub Méditerranée’s activities do not generate any specific environmentalrisks. Risks related to the technical installations traditionally present in avacation village are regularly monitored.

In the absence of significant risks, Club Med did not record any envi-ronment-related provisions or contingencies in 2004.

Regulatory complianceIn 2004, CMSA was not required to pay any compensation in appli-cation of any court ruling on environmental liability claims.

Objectives for subsidiaries outside FranceClub Méditerranée SA requires that its subsidiaries outside Franceapply the general policy and promote feedback and the sharing of besteconomic, environmental and social practices. Club Méditerranée SAalso ensures that its subsidiaries comply with local regulations.



CONSOLIDATED FINANCIAL STATEMENTS

• 34 Consolidated Balance Sheets

• 35 Consolidated Statements of Operations

• 36 Consolidated Statements of Cash Flows

• 37 Notes to the Consolidated Financial Statements• 37 • 01 / Summary of Accounting Policies• 41 • 02 / Significant Events of the Year• 42 • 03 / Notes to the Consolidated Balance Sheets• 53 • 04 / Notes to the Consolidated Statements of Operations• 57 • 05 / Notes to the Consolidated Statements of Cash Flows• 59 • 06 / Commitments and Contingencies• 60 • 07 / Employees and Executive Compensation• 61 • 08 / Fees Paid to the Auditors• 61 • 09 / Financial Instruments• 62 • 10 / Claims and Litigation• 62 • 11 / Recent Developments and Outlook• 63 • 12 / Companies Consolidated at October 31, 2004

• 68 Auditors’ Report on the Consolidated Financial Statements

• 69 Simplified Organization Chart at October 31, 2004


CONSOLIDATED BALANCE SHEETS AT OCTOBER 31

millions of euros

Assets Note Oct. 31, 2002 Oct. 31, 2003 Oct. 31, 2004

Goodwill 3.1 98 86 79Intangible assets 3.1 124 108 104Tangible assets 3.2 958 805 761Financial assets 3.3 105 97 89

Total fixed assets 1,285 1,096 1,033Inventories 26 23 19Trade receivables 78 67 61Other receivables 3.7 192 201 209Cash and cash equivalents 3.9 81 175 160

Total current assets 377 466 449

Total assets 1,662 1,562 1,482

millions of euros

Liabilities and shareholders’ equity Note Oct. 31, 2002 Oct. 31, 2003 Oct. 31, 2004

Common stock 77 77 77Additional paid-in capital 562 562 562Reserves 42 (71) (175)Group net loss (62) (94) (44)

Shareholders’ equity 3.10 619 474 420Minority interests 3.11 12 14 24

Provisions for contingencies and charges 3.12 113 114 93Borrowings 3.13 502 564 550Trade payables 143 151 159Other liabilities 3.14 273 245 236

Total liabilities 918 960 945

Total liabilities and shareholders’ equity 1,662 1,562 1,482


Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF OPERATIONS,YEARS ENDED OCTOBER 31millions of euros

Note 2002 2003 2004

Revenues 4.1 1,744 1,609 1,600

Other operating income 4.2 42 36 26

Total revenues 1,786 1,645 1,626

Purchases (795) (716) (714)External services (496) (455) (457)Payroll expenses (369) (356) (327)Other operating expenses (45) (40) (39)Depreciation and amortization (92) (83) (75)Provisions (net) 8 (1) 3

Operating expense 4.3 (1,789) (1,651) (1,609)Operating income (loss) 4.4 (3) (6) 17

Net financial expense 4.5 (32) (45) (38)Loss from continuing operations of fully-consolidated companies, before tax (35) (51) (21)

Net exceptional expense 4.6 (8) (56) (18)Income tax 4.7 (6) 21 4

Net loss of fully-consolidated companies (49) (86) (35)Amortization of goodwill 4.8 (10) (8) (8)

Net loss before minority interests (59) (94) (43)Minority interests 4.9 (3) 0 (1)

Group net loss (62) (94) (44)

in euros

Loss per share - primary 4.10 (3.21) (4.88) (2.28)

Loss per share - diluted 4.10 (3.21) (4.88) (2.28)


CONSOLIDATED STATEMENTS OF CASH FLOWS,YEARS ENDED OCTOBER 31millions of euros

Note 2002 2003 2004

Cash flows from operationsNet loss before minority interests (59) (94) (43)Depreciation, amortization and provisions for impairment in value 5.1 104 104 83Other movements 5.2 (11) (27) (20)

Cash flow 34 (17) 20Change in working capital 5.3 34 17 2

Net cash provided by operating activities 68 0 22Capital expenditure and acquisitions of financial assets 5.4 (151) (74) (100)Proceeds from disposals of fixed assets 5.5 71 116 59

Net cash (used) provided by investing activities (80) 42 (41)Net cash (used) provided, before financing activities (12) 42 (19)

Cash flows from financing activitiesCapital increases 0 0 10Dividends paid (4) (3) 9

Net cash (used) provided by financing activities 5.6 (4) (3) 19Impact of changes in exchange rates and other 5.7 (9) (7) (1)

Decrease (increase) in net indebtedness (25) 32 (1)Net indebtedness at beginning of year 5.8 (396) (421) (389)

Net indebtedness at end of year 5.8 (421) (389) (390)


1 - SUMMARY OF ACCOUNTINGPOLICIES1-1 ACCOUNTING PRINCIPLESThe consolidated financial statements have been prepared in accordancewith French generally accepted accounting principles, including standardCRC 99-02, which has been applied by the Club Méditerranée Groupas from November 1, 2000.

Club Méditerranée Group has applied the recommended methods setout in standard CRC 99-02, with regard to:• The treatment of translation adjustments to monetary assets and

liabilities (note 1-2-4).• The accounting treatment of pension and other post-retirement

benefit obligations (note 1-11).• The accounting treatment of capital leases.• The deferral of debt issuance costs and redemption premiums

(note 1-9).

1-2 BASIS OF CONSOLIDATION

1-2-1 Scope of consolidationAll significant companies that are controlled exclusively by ClubMéditerranée, directly or indirectly, are fully consolidated. Companiesthat are up to 50%-owned and over which the Group exercisessignificant influence, directly or indirectly, are accounted for by theequity method. Companies acquired during the year that are intendedto be sold are not consolidated.

Holiday Villages of Thailand, which is 49.21%-owned, is fully consolidatedbecause Club Méditerranée exercises de facto control.

1-2-2 Fiscal year-endThe majority of subsidiaries have an October 31 year-end. In countrieswhere local legislation requires the use of a different year-end, thesubsidiaries concerned are consolidated based on financial statementscovering the period from November 1 to October 31.

1-2-3 GoodwillGoodwill, representing the difference between the cost of shares in aconsolidated company and the fair value of the net assets acquired, at thedate of acquisition, is amortized over a maximum of 20 years. Goodwillrepresenting non-material amounts is written off in the year of acquisi-tion of the shares. Fair value adjustments to intangible and tangible assetsare recorded for their total amount and amortized over the residualuseful life of the related assets, with a corresponding adjustmentrecorded under “minority interests” where appropriate.

Exceptional amor tization is recorded in cases where the under-lying profitability of the companies concerned is lower than wasforecast at the time of acquisition.

1-2-4 Foreign currency translationThe financial statements of trading subsidiaries that are independentof Club Méditerranée SA are translated into euros using the year-endrate method. Under this method, balance sheet items are translatedat the year-end rate and income statement items are translated at theaverage rate for the year. Differences arising from translation are dealtwith in reserves.

The financial statements of operating and real estate companies thatare dependent on Club Méditerranée SA are translated into eurosusing the historical rate method. Under this method, fixed assets andthe corresponding charges to depreciation and amortization are trans-lated at historical exchange rates, monetary assets and liabilities aretranslated at the year-end rate, and income statement items (other thandepreciation and amortization charges) are translated at the averagerate for the year. Differences arising from translation are dealt with inthe income statement.

Differences arising from translation of monetary assets representing anintegral part of the Group’s net investment in foreign subsidiaries areincluded in shareholders’ equity up to the time of sale of the investment.

Long-term assets and liabilities in foreign currencies corresponding toamounts receivable from or payable to foreign subsidiaries, the settle-ment of which is not planned or expected to occur in the foreseeablefuture, are considered as representing part of the Group’s net invest-ment in the subsidiaries concerned and are treated in the same way.


NOTES TO THE CONSOLIDATED FINANCIALSTATEMENTS


1-2-5 Deferred taxesProvision is made for deferred taxes arising from temporary differencesbetween the book value of assets and liabilities in the consolidated finan-cial statements and their tax basis, using the liability method. This methodconsists of adjusting prior year provisions to take account of knownchanges in tax rates by debiting or crediting the income statement.

Deferred tax assets and liabilities are not discounted.

Deferred tax assets corresponding to tax loss carryforwards arerecognized only where the tax entity is likely to generate sufficienttaxable profits to enable the corresponding tax benefit to be realizedwithin a reasonable timeframe. The period in which deferred tax assetsare expected to reverse is determined based on estimated taxableincome for the years in question.

Deferred tax assets arise primarily from the tax losses of the ClubMéditerranée SA tax group. They are reported in the consolidatedbalance sheet under “Other receivables”.

The main sources of deferred tax liabilities are fair value adjustments tothe net assets of newly-acquired companies, the use of the historical ratemethod to translate the financial statements of certain subsidiaries, thecapitalization in the consolidated balance sheet of assets acquired undercapital leases and differences between depreciation periods applied inthe accounts of individual subsidiaries and in the consolidated financialstatements. Deferred tax liabilities are reported in the consolidated finan-cial statements under “Provisions for contingencies and charges”.

1-3 FIXED ASSETSFixed assets are stated at cost. Cost includes interest capitalized duringthe construction period, where the amounts involved are material.Depreciation is charged by the straight-line method over the esti-mated useful life of the asset.

An impairment test is performed at each year-end, by region, usingthe higher of market value or discounted cash flows. Discountedcash flows were valued on the basis of the following assumptions:• Discount rate equal to the weighted average cost of capital, or 7.5%.• Discount period 10 years.• Residual value equal to the lesser of 9 times Ebitda or market value.

1-3-1 Intangible assets (other than goodwill)Amortization is charged by the straight-line method over the followingestimated useful lives:- Travel management module 3 years- Financial information system 3 to 10 years- Other purchased software 3 to 8 years- Marketing system 3 to 14 years- Pre-opening expenses 5 years- Internet development costs 3 years- Other intangible assets 3 to 10 years

Brands and purchased goodwill are not amortized but provisions aremade for any impairment in value.Purchased goodwill recognized on acquisition of Club Med Gym correspondsto the value attributed to market share, determined on the basis ofthe customer portfolio represented by memberships in force at the dateof acquisition. The carrying value is reviewed at each year-end, based onchanges in the number of members and the membership fee.

1-3-2 Tangible assetsThe average useful lives of tangible assets are as follows:- Buildings 10 to 50 years- Fixtures and fittings 3 to 10 years- Other 5 to 15 yearsVillages that are intended to be sold or closed are written down toprobable realizable value.

1-3-3 Capital leasesAssets acquired under capital leases representing significant amounts arecapitalized at their original cost at the inception of the lease and depre-ciated by the straight-line method. An obligation in the same amount isrecorded as a liability. The finance charge, representing the differencebetween the total minimum lease payments over the lease term andthe initial liability, is allocated to periods during the lease term so as toproduce a constant periodic rate of interest on the remaining balanceof the liability in each period.

1-3-4 Financial assetsShares in non-consolidated companies are stated at the lower of cost andfair value, determined on the basis of the restated net assets of the com-panies concerned, their future earnings potential and the listed share pricewhere applicable.

The main exchange rates applied for translation into euros are shownin the table below.

in euros, against the main currencies

Currency Year-end rate Average rate

Oct. 31, Oct. 31, Fiscal Fiscal 2003 2004 2003 2004

US dollar USD 1.162 1.274 1.100 1.223Yen JPY 127.000 135.130 130.000 133.166Australian dollar AUD 1.650 1.709 1.760 1.678Brazilian real BRL 3.330 3.639 3.490 3.612Moroccan dirham MAD 10.900 11.072 10.800 10.986Tunisian dinar TND 1.470 1.567 1.430 1.530


1-4 INVENTORIESInventories are stated at the lower of cost and probable realizable value.Cost is determined by the weighted average cost method.

1-5 RECEIVABLESReceivables are stated at their nominal value. Provisions are made tocover any risks of non-recovery.

1-6 MARKETABLE SECURITIESMarketable securities are stated at the lower of cost and market value.Unrealized capital gains are not recognized.

1-7 OWN SHARESDuring the year, Club Méditerranée shares were bought back solelyfor the purpose of granting them to employees. As a result, they havebeen included in cash and cash equivalents. In previous years, ClubMéditerranée shares held by the Group could have been used forother purposes and were therefore recorded as a deduction fromshareholders’ equity.

1-8 SHAREHOLDERS’ EQUITY

1-8-1 Own sharesIn previous years, Club Méditerranée shares held by the Group wererecorded as a deduction from shareholders’ equity. They are now includedin cash and cash equivalents (see 1.7).

1-8-2 Stock optionsThe Group has set up stock option plans for certain employees andcorporate officers. The shares issued on exercise of the options areincluded in capital stock when the exercise price is paid. The latest stockoption plan (plan I) was set up on January 15, 2004.

1-9 BONDS, BANK LOANS AND DEBTS

1-9-1 Confirmed lines of credit and other borrowings

At October 31, 2004, this item included:• A 3220 million syndicated loan due June 2005. This loan was paid

back early, in November 2004 (see Note 11 - Recent developmentsand outlook).

• Two loans secured by mortgages on the Da Balaïa village and the ClubMed 2 cruise ship, representing a total 346 million at October 31,

2004. The covenants governing these loans at the end of the fiscalyear were as follows:

Covenant Situation(before renegotiation) at Oct. 31, 2004

Off-balance sheet commitments <= 3200 million 378.1mGearing <= 1.0 87.9%Net debt/Ebitda ratio =< 5.0 4.42

These conditions were met at October 31, 2004.

1-9-2 Bonds convertible/exchangeablefor shares (OCEANEs)

At October 31, 2004, 3139,474,514 wor th of OCEANE bondsconvertible into new Club Méditerranée shares or exchangeable forexisting shares were outstanding. Issued on April 23, 2002, the bondsare due on November 1, 2008 but may be redeemed early onApril 30, 2006. The bonds pay interest at 3% per year. Any bonds thatare not converted or exchanged for shares will be redeemed atmaturity at a premium to their face value. Including this premium,the yield to maturity stands at 5.25%.

The portion of interest between 3% and 5.25%, corresponding to theredemption premium, is accrued annually over the life of the bonds.

1-9-3 Financial instrumentsThe Company uses financial instruments to reduce its borrowing costsand hedge net cash flows in foreign currencies. All financial instrumentsused for these purposes have maturities not exceeding one year.Unrealized gains and losses arising from the year-end mark-to-market offinancial instruments used as hedges on transactions scheduled to takeplace in the next fiscal year are not recognized in the income statement.

1-10 Provisions for contingencies and chargesProvisions are recorded only for contingencies that are certain as to theirexistence but uncertain as to their amount and/or timing, which fulfillthe criteria defined in the new accounting standard on liabilitiesapplicable as from the first fiscal year commencing on or afterJanuary 1, 2002 (standard CRC 2002-06, CNC opinion no. 00-01). Theyconcern contingencies giving rise to an obligation of the Companytowards a third party which is probable or certain of giving rise to anoutflow of economic resources to that third party without any benefitof at least equivalent value being expected.

1-11 Retirement benefits and related commitmentsThe pension liabilities of foreign companies are provided for in theconsolidated balance sheet in accordance with the legislation of thecountry concerned.



Club Méditerranée’s liability for statutory retirement bonuses payable topermanent employees on retirement is also provided for in the balancesheet. The amount of the liability is determined by the projected unitcredit method, taking into account years of service, end-of-career salaries,mortality rates, a projected staff turnover rate of 6.4%, a projected 1.5%rate of increase in salary levels excluding cost-of-living adjustments, aninflation rate of 2.0% and a discount rate of 4.5%.

1-12 RevenuesLand package revenues are recognized over the period of serviceprovision. Transpor t revenues are recognized on the travel date.Other operating revenues are recognized in the period in which thetransaction takes place.

1-13 Earnings per shareEarnings per share data include both primary and diluted earnings pershare. The number of shares used to calculate diluted earnings per sharecomprises only those shares that would be created by the conversionof dilutive instruments outstanding at year-end whose exercise price islower than the closing share price at the year-end.

1-14 Statement of cash flowsThe statement of cash flows analyzes changes in net indebtedness. It isbroken down between cash flows from operating, investing and financingactivities. Net indebtedness corresponds to cash and cash equivalents lessshort-term bank loans, bond debt and other bank loans and debt.Movements in short-term provisions are treated as accrued charges andare therefore taken into account in determining changes in workingcapital. Only movements in long-term provisions are taken into accountin the calculation of cash flow.Acquisitions of consolidated companies are stated net of the cashacquired, while the proceeds from disposals of consolidated companiesare stated net of the cash disposed of.



Changes in the scope of consolidation did not have a material impacton the consolidated financial statements.

At October 31, 2004, 136 companies were consolidated compared with144 at the previous year end. Of these, 127 were fully consolidated(133 in 2003) and nine were accounted for by the equity method(11 in 2003). Four new companies were consolidated during the year,while 12 were de-consolidated as a result of divestments, liquidationsor mergers. The full list of companies consolidated at October 31, 2004,as well as details of changes in the scope of consolidation, are provid-ed in Note 12.

Four companies were fully consolidated for the first time during thefiscal year :• FST (65% interest acquired on November 1, 2003).• Jet Eldo Maroc (created on April 12, 2004).• CM Odmaralista (created on June 30, 2004).• CM Albion Resorts Ltd (created on July 6, 2004).

Three companies were sold:• CM Gym Suisse (January 1, 2004)• SLSL (June 30, 2004)• Société d’Equipement Sportif de Zinal (October 26, 2004), which was

previously accounted for by the equity method.

Two companies merged:• CM UK Transport, merged into CM UK (March 19, 2004)• CULIP, merged into SACM (April 28, 2004)

Seven companies were liquidated:• Byron Bay Beach Resort• Holiday Village (Byron Bay)• CM Development BV (November 1, 2003)• CM New Zealand (March 24, 2004)• SIAM Export & Management Service (May 17, 2004)• Méditerranéenne de Voyages (August 25, 2004)• Sophiclub (September 20, 2004)

CM Management Australia and Vacances Singapore Ltd., which werepreviously accounted for by the equity method due to low businessvolumes, were fully consolidated in fiscal 2004 following significant financialtransactions. Jet Stim is now accounted for by the equity method as theGroup reduced its shareholding from 70% to 49% on January 23, 2004.

2.5 NEW SHAREHOLDEROn October 22, 2004, Accor acquired 28.9% of Club Méditerranée’sshare capital from the two historical shareholders, the Agnelli Group(through its Exor and Ifil subsidiaries) and Caisse des Depôts etConsignations.

2 - SIGNIFICANTEVENTS OF THE YEAR2-1 BUSINESS ENVIRONMENTFiscal 2004 was shaped by mixed trends in the global tourism market.Business remains flat across the industry in the European market but haspicked up in Asia and North America. In the Bahamas, the DominicanRepublic and Florida, the Columbus Isle, Punta Cana and Sandpipervillages were closed temporarily due to the series of hurricanes thatswept the region in September.

2-2 NEW VILLAGESDuring the year, the Group opened La Palmeraie in Morocco.

2-3 VILLAGE CLOSURESThe following villages and facilities were sold during the year:• Alpe d’Huez les Bergers (France)• Tignes les Brévières (France)• Valmeinier (France)• Eleuthera (Bahamas)• Le Lavandou (France)• Ouarzazate (Morocco)• Al Hoceima (Morocco)• St. Martin (West Indies)In addition, Club Méditerranée closed the Corfu village in Greece, theFoca village in Turkey, the Cadaquès village in Spain and the Donoraticovillage in Italy. The Les Boucaniers village in Martinique was temporarilyclosed for reconstruction.

2-4 CHANGES IN SCOPE OF CONSOLIDATION

Number of consolidated Full Equity Totalcompanies consolidation method

Scope of consolidationat Oct. 31, 2003 133 11 144

Start-ups/acquisitions 4 4Divestments (2) (1) (3)Liquidations (7) (7)Mergers (2) (2)Change of consolidation method 1 (1) 0

Scope ofconsolidationat Oct. 31, 2004 127 9 136


3 - NOTES TO THE CONSOLIDATED BALANCE SHEETS3-1 GOODWILL AND OTHER INTANGIBLE ASSETSmillions of euros

Oct. 31, 2003 Oct. 31, 2004Net Cost Amortization Net

and provisions

Goodwill 86 143 (64) 79Other intangible assets 108 186 (82) 104

Total 194 329 (146) 183

Intangible assets by region and by business

millions of euros

Oct. 31, 2003 Oct. 31, 2004Cost Amortization Net Cost Amortization Net

and provisions and provisions

Europe 159 (91) 68 165 (102) 63Americas 32 (14) 18 32 (17) 15Asia 11 (6) 5 11 (7) 4

Sub-total villages 202 (111) 91 208 (126) 82Jet Tours 69 (11) 58 70 (14) 56Club Med Gym 54 (9) 45 51 (6) 45

Total 325 (131) 194 329 (146) 183

Software used by all the regions has been allocated on the following basis: 80% to Europe, 10% to the Americas and 10% to Asia.

3-1-1 Goodwillmillions of euros


and provisions

Jet tours Group 35 47 (14) 33Aquarius (1) 22 58 (39) 19Club Med Gym Group 16 16 (1) 15Club Med Inc. 10 16 (7) 9South America 2 3 (1) 2Other 1 3 (2) 1

Total 86 143 (64) 79

(1) Formerly Méditerranéenne de Voyage


3-1-1-1 Movements for the yearThe main movements in goodwill can be summarized as follows:

millions of euros

Cost at Changes in scope Reclassifications Cost at Oct. 31, 2003 of consolidation and other Oct. 31, 2004

Aquarius (1) 59 (1) 58Jet tours Group 47 47Club Med Gym Group 17 (1) 16Club Med Inc. 16 16South America 3 3Other 1 1 1 3

Total 143 1 (1) 143


3-1-1-2 Amortization and provisions for impairmentThe main movements in amortization and provisions for impairment were as follows:

millions of euros

Amortization Charge for Reclassifications Amortization and provisions the year and other and provisions

at Oct. 31, 2003 at Oct. 31, 2004

Aquarius (1) (37) (3) 1 (39)Jet tours Group (12) (2) (14)Club Med Gym Group (1) (1) 1 (1)Club Med Inc. (6) (1) (7)South America (1) (1)Other (1) (1) (2)

Total (57) (8) 1 (64)


3-1-2 Other intangible assetsmillions of euros


and provisions

Start-up costs - 1 (1) -Jet tours trademark 23 23 23Club Med Gym purchased goodwill 29 33 (4) 29Other trademarks, licenses 3 5 (3) 2Booking system 16 44 (28) 16Other software 23 59 (40) 19Leasehold rights and purchased goodwill 7 9 (2) 7Other intangible assets 3 9 (4) 5Intangible assets in progress 4 3 - 3

Total 108 186 (82) 104



3-1-2-1 Movements for the yearThe main movements in intangible assets can be summarized as follows:

millions of euros

Cost at Additions Disposals Changes in scope Reclassifications Cost atOct. 31, 2003 of consolidation and other Oct. 31, 2004

Start-up costs 1 1Jet tours trademark 23 23Club Med Gym purchased goodwill 33 33Other trademarks, licenses 5 5Booking system 41 3 44Other software 56 3 (1) 1 59Leasehold rights and purchased goodwill 11 (2) 9Other intangible assets 8 1 9Intangible assets in progress 4 4 (5) 3

Total 182 8 (1) (2) (1) 186

3-1-2-2 Amortization and provisions for impairmentThe main movements in amortization and provisions for impairment were as follows:

millions of euros

Amortization Increases Decreases Changes in Reclassifications Amortization and provisions scope of and other and provisions

at Oct. 31, 2003 consolidation at Oct. 31, 2004

Start-up costs (1) (1)Club Med Gym purchased goodwill (4) (4)Other trademarks, licenses (2) (1) (3)Booking system (25) (3) (28)Other software (33) (7) (40)Leasehold rights and purchased goodwill (4) 2 (2)Other intangible assets (5) (1) 1 1 (4)

Total (74) (12) 1 2 1 (82)


3-2 TANGIBLE ASSETSmillions of euros

Oct. 31, 2003 Oct. 31, 2004Net Cost Depreciation Net

and provisions

Land 92 90 (1) 89Buildings and leasehold improvements 575 993 (470) 523Machinery and equipment 59 169 (115) 54Other tangible assets 68 139 (85) 54Tangible assets in progress 11 41 41

Total 805 1,432 (671) 761

The cost of assets acquired under capital leases totaled 3164 million at October 31, 2004, including 36 million for land, 3145 million for buildingsand 313 million for other tangible assets. The corresponding depreciation amounted to 371 million, including 359 million for buildings and 312 millionfor other tangible assets.

3-2-1 Movements for the yearThe main movements in tangible assets can be summarized as follows:

millions of euros

Cost at Additions(1) Disposals(2) Changes Translation Reclassifications Cost at Oct. 31, 2003 in scope(3) adjustment(4) and other Oct. 31, 2004

Land 97 1 (6) (2) 90Buildings and leasehold improvements 1,039 24 (50) (3) (19) 2 993Machinery 179 11 (16) (1) (4) 169and equipmentOther tangible assets 150 3 (10) (4) 139Tangible assets in progress 11 48 (15) (3) 41

Total 1,476 87 (97) (4) (29) (1) 1,432

(1) Additions mainly concern the Peisey Vallandry, Chamonix, Val d’Isère, Turquoise, Cherating and Les Boucaniers villages and the acquisition ofthe Club Med World Canada building before it was sold.

(2) Disposals primarily concern assets written off on disposal of the Eleuthera, Tignes Les Brévières, Alpe d’Huez les Bergers, Les Boucaniers,Valmeinier and Ouarzazate villages, the St. Martin site and CM World Montreal.

(3) Changes in scope correspond to the divestment of Club Med Gym fitness centers outside the Paris region.(4) Translation adjustments primarily concern the US dollar (Columbus Isle, Crested Butte and Sandpiper villages), the Mexican peso (Cancun

village), the Thai baht (Phuket village), the Indonesian rupiah (Bali village) and the Brazilian real (Rio Das Pedras and Trancoso villages).



3-2-2 Depreciation and provisionsThe main movements in depreciation and provisions for impairment were as follows:

millions of euros

Depreciation and Increases Decreases(1) Changes in Translation Reclassifications Depreciation and provisions at scope(2) adjustment(3) and other provisions at Oct. 31, 2003 Oct. 31, 2004

Land (5) 4 (1)Buildings and leasehold improvements (464) (43) 28 1 7 1 (470)Machinery and equipment (120) (13) 15 3 (115)Other tangible assets (82) (12) 9 2 (2) (85)

Total (671) (68) 56 1 12 (1) (671)

(1) The main decreases concern depreciation written off on disposal of the Eleuthera, Tignes Les Brévières, Alpe d’Huez les Bergers, Les Boucaniersand Valmeinier villages and CM World Montreal.

(2) Divestment of Club Med Gym fitness centers outside the Paris region.(3) Translation adjustments primarily concern the US dollar (Columbus Isle village), the Thai baht (Phuket village) and the Brazilian real (Rio Das

Pedras village).

3-2-3 Tangible assets by region and by businessmillions of euros

Oct. 31, 2003 Oct. 31, 2004 Cost Depreciation Net Cost Depreciation Net

and provisions and provisions

Europe 931 (441) 490 933 (453) 480Americas 281 (96) 185 249 (81) 168Asia 177 (98) 79 174 (100) 74

Sub-total villages 1,389 (635) 754 1,356 (634) 722Jet Tours 13 (5) 8 13 (5) 8Club Med Gym 57 (26) 31 50 (25) 25Club Med World 17 (5) 12 13 (7) 6

Total 1,476 (671) 805 1,432 (671) 761

3-3 FINANCIAL ASSETSmillions of euros

Oct. 31, 2003 Oct. 31, 2004Note Net Cost Provisions Net

Investments accounted for by the equity method 3.4 7 4 4Other investments, loans and advances 3.5 17 26 (10) 16Deposits 3.6 65 58 58Other (loans) 3.6 8 11 11

Total 97 99 (10) 89



3-3-1 Movements for the yearThe main movements in the cost of financial assets can be summarized as follows:

millions of euros

Cost at Additions Disposals Changes Translation Reclassifications Cost at Oct. 31, 2003 in scope adjustment and other Oct. 31, 2004

Investments accounted for by the equity method 7 (1) (2) 4Other investments,loans and advances 27 1 (2) 26Deposits 65 5 (8) (3) (1) 58Other (loans) 8 1 (1) 3 11

Total 107 7 (9) (1) (3) (2) 99

3-3-2 Movements in provisions for impairmentTotal provisions for impairment on financial assets were unchanged from fiscal 2003:

3-4 INVESTMENTS IN COMPANIES ACCOUNTED FOR BY THE EQUITY METHODThis item corresponds to Club Méditerranée’s equity in the net assets of companies accounted for by the equity method, as follows:

millions of euros

Oct. 31, 2003 Fiscal 2004 Translation Changes Oct. 31, 2004income (loss) adjustment in scope

and other

Sviluppo Turistico per Metaponto (Italy) 3 3Sté de Promotion et de Financement Touristique - Carthago (Tunisia) (1) 2 (2) -Other (2) 2 (1) 1

Total 7 - - (3) 4

(1) Reclassified as a non-consolidated company (12.42% interest).(2) Club Med Management Australia and Vacances Singapore Ltd., previously accounted for by the equity method due to their low business vol-

umes, were fully consolidated in 2004 following significant financial transactions.


3-5 OTHER INVESTMENTS, LOANS AND ADVANCESThis item includes shares in non-consolidated companies and loans to these companies, as follows:

millions of euros

Oct. 31, 2003 Oct. 31, 2004Currency Net Cost Provisions Net

Marrakech Villaginvest (Morocco) MAD 1 2 - 2Ria Bintan USD 2 2 - 2Sté de Promotion et de Financement Touristique - Carthago (Tunisia)(1) TND - 2 - 2SEPT Hammamet (Tunisia) TND 1 2 (1) 1Torre d’Otrante SpA EUR 1 1 - 1Air Liberté EUR - 5 (5) -Bekalta (Tunisia) TND - 1 (1) -Other 1 3 (3) -

Total 6 18 (10) 8

Loans and advances (2) 11 8 8

Total 17 26 (10) 16

(1) Previously accounted for by the equity method (12.42% interest - see note 3.4).(2) Loans to Ria Bintan for 37 million. The 33 million loan to Marrakech Villaginvest has been reclassified under other loans.

3-6 DEPOSITS AND OTHER LOANSmillions of euros

Oct. 31, 2003 Oct. 31, 2004Net Cost Provisions Net

Deposits (1) 65 58 58Loans to building companies 5 5 5Other loans (2) 3 6 6

Total 73 69 - 69

(1) The decrease primarily corresponds to repayment of Kabira and Crested Butte deposits.(2) At October 31, 2004, other loans mainly concern the Marrakech village (33 million), the Athénia village (31 million) and the Bintan village

(31 million).


3-7 OTHER RECEIVABLESmillions of euros

Oct. 31, 2003 Oct. 31, 2004Net Cost Provisions Net

Tax credits 25 24 - 24Accrued income 4 3 - 3Prepayments to suppliers 13 9 - 9Current account advances to companies accounted for by the equity method 2 3 (1) 2Employee advances and prepaid payroll expenses 1 1 - 1Other receivables (1) 11 23 (3) 20Deferred tax assets 76 74 - 74Prepaid expenses 66 71 - 71Deferred charges 3 5 - 5

Total 201 213 (4) 209

(1) Of which 310 million in insurance payments related to hurricane damage.

Substantially all receivables are due within one year, with the exception of deferred tax assets.

3-8 DEFERRED TAXESmillions of euros

Oct. 31, 2003 Oct. 31, 2004

Deferred tax assets 76 74Deferred tax liabilities (36) (25)

Deferred taxes, net 40 49

Deferred tax assets and liabilities break down as follows:

millions of euros

Oct. 31, 2003 Movement Oct. 31, 2004 Deferred tax Deferred taxfor the year assets liabilities

Capital leases (15) 15 - 7 (7)Historical rate method (12) 2 (10) - (10)Depreciation periods/revaluations (1) 1 - - -Fair value adjustments (2) (2) (4) 4 (8)Ordinary tax losses (1) 31 (9) 22 22 -Evergreen tax losses(Club Méditerranée SA tax group) 36 - 36 36 -Non-deductible provisions 3 1 4 4 -Other timing differences 1 1 1 -

Total 40 9 49 74 (25)

(1) Deferred tax assets corresponding to ordinary tax losses of the Club Méditerranée SA tax group amount to 321 million.



Based on the forecast future earnings of the companies in the Club Méditerranée SA tax group, utilization of the tax losses for which deferred taxassets are carried in the consolidated balance sheet is considered as reasonably probable. According to medium-term business plan projections, 70%of the tax group’s ordinary and evergreen tax loss carryforwards will be set off against income for the next four fiscal years. Under France’s 2004Finance Act, tax losses may now be carried forward indefinitely.

Deferred tax assets corresponding to ordinary and evergreen tax loss carryforwards break down as follows:millions of euros

Unrecognized Recognized

Europe 64 57Americas 36 1Asia 9 -Sub-total villages 109 58Jet tours 6 -Club Med Gym 4 -Club Med World 4 -Total 123 58

3-9 CASH AND CASH EQUIVALENTSmillions of euros

Oct. 31, 2003 Oct. 31, 2004

Marketable securities 2 67Bank and cash 173 93Total cash and cash equivalents 175 160

Marketable securities consist of money market investments with a market value close to their book value.

3-10 CONSOLIDATED SHAREHOLDERS’ EQUITYmillions of euros

Number Common Additional Reserves Shareholders’of shares stock paid-in and net equity

capital income (loss)

At October 31, 2001 19,358,005 77 562 101 740Net loss for the year (62) (62)Treasury stock (9) (9)Translation adjustment (50) (50)At October 31, 2002 19,358,005 77 562 (20) 619Net loss for the year (94) (94)Treasury stock (2) (2)Translation adjustment (49) (49)At October 31, 2003 19,358,005 77 562 (165) 474Net loss for the year (44) (44)Own shares (1) 10 10Translation adjustment (20) (20)At October 31, 2004 19,358,005 77 562 (219) 420

(1) At October 31, 2004, the Company held 257,000 Club Méditerranée shares. Since these shares are being held for grant to employees, theyare no longer deducted from shareholders’ equity. Exercise of all employee stock options outstanding as of October 31, 2004 would result inthe issuance of 794,497 common shares.


3-11 MINORITY INTERESTSmillions of euros

At Oct. 31, Net Dividends Translation Changes in At Oct. 31,2003 income for adjustment scope of 2004

the year consolidation

Itaparica 6 1 (1) (1) 5Belladona Company for H&T (Egypt) 3 3Holiday Hotels (Switzerland) 2 2Taipe Trancoso 2 2Société Villages Hôtels de Caraïbes (1) - 11 11Other 1 1

Total 14 1 (1) (1) 11 24

(1) Share issuance underwritten by Caisse des Dépôts et Consignations.

3-12 PROVISIONS FOR CONTINGENCIES AND CHARGESProvisions for contingencies and charges are calculated based on an estimate of the risks existing at the end of each period.

3-12-1 Movements in provisions for contingencies and chargesmillions of euros

Note At Oct. 31, Increases Utilizations Reversals Translation Reclassifications At Oct. 31,2003 adjustment and other 2004

Provisions for retirement benefits 18 2 (1) - - (1) 18Provisions for losses not covered by insurance/third-party liability 13 4 (2) (4) - - 11Provisions for restructuring costs(1) 20 5 (13) (1) (1) - 10Provisions for claims and litigation 10 5 (2) (2) (1) - 10Provisions for redemption premium on OCEANE convertible/exchangeable bonds 5 4 - - - - 9Provisions for taxes 6 - (3) - - - 3Other provisions 6 5 (3) (1) - - 7

Total provisions for contingencies and charges 78 25 (24) (8) (2) (1) 68

Deferred taxes 3.8 36 1 (12) 25

Total 114 26 (36) (8) (2) (1) 93

(1) Provisions for restructuring costs mainly concern closure costs, for such facilities as Les Boucaniers (34 million), Al Hoceima (31 million),Moorea (31 million), Foca (31 million) and CM Gym headquarters (31 million).

3-12-2 Reversals of provisions for contingencies and chargesmillions of euros

Reversals credited to Operating income Financial income Exceptional income Total

Provisions for losses not covered by insurance (4) - - (4)Provisions for restructuring costs - - (1) (1)Provisions for claims and litigation (1) - (1) (2)Other provisions - - (1) (1)

Total (5) 0 (3) (8)



3-13 BONDS, BANK LOANS AND OTHER DEBTmillions of euros

Oct. 31, 2003 Oct. 31, 2004

OCEANE convertible/exchangeable bonds 144 144

Total bonds 144 144

Short-term bank loans and overdrafts 20 27Current maturities of long-term debt 22 250Long-term debt 378 129

Total bank loans and debts 420 406

Total 564 550

3-13-1 Analysis of debt by categorymillions of euros

Oct. 31, 2003 Oct. 31, 2004

Bonds 144 144Obligations under capital leases 47 89Bank borrowings 352 282Other borrowings, deposits received and accrued interest 1 8Bank overdrafts 20 27

Total 564 550

3-13-2 Analysis of debt by maturitymillions of euros

Oct. 31, 2003 Oct. 31, 2004

Less than one year (including bank overdrafts) 42 277

Beyond one year2004-2005 338 -2005-2006 5 162006-2007 22 292007-2008 146 165Beyond 11 63

Total due beyond one year 522 273

Total 564 550

3-13-3 Analysis of debt by repayment currencymillions of euros

Oct. 31, 2003 Oct. 31, 2004

Euro 534 500US dollars 11 9Other 19 41

Total 564 550


3-13-4 Analysis of debt by interest ratemillions of euros

Oct. 31, 2003 Oct. 31, 2004

Fixed rate debt 177 232Variable rate debt 387 318

Total 564 550

3-14 OTHER LIABILITIES

millions of euros

Oct. 31, 2003 Oct. 31, 2004

Amounts received for future vacations 93 77Accrued charges 18 13Accrued payroll expenses 45 41Accrued taxes 13 16Due to suppliers of fixed assets (1) 7 18Deferred income (2) 64 58Other (3) 5 13

Total 245 236

(1) Primarily concerns fixed assets at the Peisey Vallandry village (36 million), the Chamonix village (34 million) and the Val d’Isère village (33 million).(2) Deferred income corresponds to services that have not yet been provided.(3) Includes a 37 million down payment on the sale of the Corfu village.

4 - NOTES TO THE CONSOLIDATED STATEMENTS OF OPERATIONS4-1 REVENUES BY ISSUING ZONE AND BY BUSINESSRevenues can be analyzed as follows:

millions of euros

2003 2004

Europe 949 917Americas 202 203Asia 131 145

Sub-total villages 1,282 1,265Jet tours 263 277Club Med World 11 9Club Med Gym 53 49

Total 1,609 1,600



4-2 OTHER OPERATING INCOMEmillions of euros

2003 2004

Capitalized production 7 6Other income(1) 29 20

Total 36 26

(1) Other income for fiscal 2004 includes 37 million in employee-related costs transferred to the balance sheet.

4-3 OPERATING EXPENSESOutside services include rental expenses of 3118 million. Other operating expenses include taxes other than on income of 331 million (330 millionin fiscal 2003). Future rental commitments are presented in note 6-2.

4-4 OPERATING INCOME (LOSS)Operating income (loss) breaks down as follows by region and by business:

millions of euros

2003 2004

Europe 26 15Americas (21) (6)Asia (5) 6

Sub-total villages 0 15Jet tours 1 3Club Med World (5) (3)Club Med Gym (2) 2

Total (6) 17

4-5 NET FINANCIAL EXPENSEmillions of euros

2003 2004

Credit card transaction fees (8) (8)Interest expense (25) (24)Realized and unrealized exchange gains and losses (10) (3)Other (1) (2) (3)

Total (45) (38)

(1) Other financial expense includes costs related to the medium-term line of credit and OCEANE convertible/exchangeable bonds, as well asguarantee expenses.


4-6 EXCEPTIONAL ITEMS

millions of euros

2003 2004

Net exceptional expense (56) (18)

The main components of net exceptional expense are as follows:- Net gains on disposal of the assets of the Alpe d’Huez, Tignes Les Brévières, Le Lavandou, Eleuthera, Ouarzazate, St. Martin and Paradise villages (311million).- Costs related to the closure of leased villages (314 million).- Restructuring costs (38 million).- Costs related to the closure of Club Med Gym fitness centers outside Paris and exceptional depreciation charges at Club Med World (a total

of 37 million).

4-7 INCOME TAXmillions of euros

2003 2004

Current taxes (5) (6)Deferred taxes 26 10

Total 21 4

Club Méditerranée SA and 25 French subsidiaries file a consolidated tax return. At October 31, 2004, the tax group had ordinary tax loss carryforwardsof 360 million and evergreen tax loss carryforwards of 3103 million.

Income tax can be analyzed as follows:

millions of euros

2003 2004

Net loss before minority interests (94) (43)Amortization of goodwill 8 8Income tax (21) (4)

Loss taxable at standard rate (107) (39)Standard tax rate in France 35.43% 35.43%Theoretical tax at standard rate 38 14

Effect of:- Tax losses (38) (22)(1)

- Differences in foreign tax rates 27 12- Other (6) -

Total (17) (10)

Income tax paid by the Group 21 4

(1) The effect of tax losses corresponds to unrecognized deferred tax assets (328 million negative effect) and the use of tax losses recognizedin prior years (36 million positive effect).



4-8 AMORTIZATION OF GOODWILLmillions of euros

2003 2004

Jet tours Group (2) (2)Aquarius (1) (3) (3)Club Med Inc. (1) (1)Club Med Gym (1) (1)Other (1) (1)

Total (8) (8)


4-9 MINORITY INTERESTSmillions of euros

2003 2004

Itaparica - (1)

Total - (1)

4-10 EARNINGS PER SHAREDiluted earnings per share are calculated by adjusting Group net income and the weighted average number of shares for the effects of dilutivepotential shares. The number of shares used to calculate basic and diluted earnings per share is as follows:

2002 2003 2004

Number of shares- Weighted number of shares outstanding 19,358,005 19,358,005 19,358,005- Weighted number of shares and dilutive potential shares 19,358,005 19,358,005 19,358,005

Earnings (loss) per share (in euros)- Primary (3.21) (4.88) (2.28)- Diluted (3.21) (4.88) (2.28)


5 - NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS

5-1 DEPRECIATION, AMORTIZATION AND PROVISIONSmillions of euros

2003 2004

Amortization of goodwill 8 8Amortization and provisions, intangible assets 18 11Depreciation and provisions, tangible assets 78 64

Depreciation, amortization and provisions 104 83

5-2 OTHER MOVEMENTSmillions of euros

2003 2004

(Gains)/losses on disposals of assets (1) (4) (12)Deferred taxes (26) (10)Other (2) 3 2

Total (27) (20)

(1) Gains on disposals of assets primarily concern the sale of the Paradise Island village (33 million), the Alpe d’Huez les Bergers village (33 million),the Tignes Les Brévières village (32 million) and the Ouarzazate village (31 million). They also include net insurance payments for hurricanedamage (36 million). Disposal losses relate to the sale of the Lavandou village (31 million) and a dilution loss at Société Villages Hôtels desCaraïbes (31 million).

(2) Other movements include changes in provisions for pension liabilities (32 million) and the impact on exchange gains and losses of translat-ing the financial statements of certain foreign subsidiaries using the historical rate method (31 million).

5-3 CHANGE IN WORKING CAPITAL This item includes net additions to short-term provisions for contingencies and charges, which are included in accrued expenses.

5-4 CAPITAL EXPENDITURES AND ACQUISITIONS OF FINANCIAL ASSETSmillions of euros

Note 2003 2004

Acquisitions of intangible assets (9) (8)Acquisitions of tangible assets 5.4.1 (52) (87)Acquisitions of financial assets (13) (5)

Total (74) (100)



5-4-1 Acquisitions of tangible assetsCapital expenditures by region and by business are as follows:

millions of euros

2003 2004

Europe 28 50Americas 12 15Asia 4 7

Sub-total villages 44 72Jet tours 2 - Club Med World 2 12Club Med Gym 4 3

Total 52 87

5-5 DISPOSALS OF FIXED ASSETSIn fiscal 2004, proceeds from disposals of fixed assets (350 million) primarily concerned the sale of the Alpe d’Huez les Bergers village, the TignesLes Brévières village, Club Med World Canada and the Eleuthera village, as well as insurance payments for hurricane damage. The 39 million decreasein other financial assets corresponds to the repayment of deposits and loans.

5-6 NET CASH PROVIDED (USED) BY FINANCING ACTIVITIESmillions of euros

2003 2004

(Purchase)/sale of own shares (1) (2) 10SVHC share issue 10Return of capital to minority shareholders of subsidiaries - -Dividends paid to minority shareholders of subsidiaries (1) (1)

Total (3) 19

(1) In fiscal 2004, 308,269 shares were sold for 310 million (see Note 1.7.1).

5-7 IMPACT OF CHANGES IN EXCHANGE RATES AND OTHERmillions of euros

2003 2004

Impact of changes in exchange rates (2) (1)Impact of reclassifications and changes in scope of consolidation (5) -

Total (7) (1)


5-8 NET INDEBTEDNESSmillions of euros

Oct. 31, 2003 Oct. 31, 2004

Cash equivalents 2 67Cash 173 93

Total cash and cash equivalents 175 160

Borrowings (564) (550)

Net indebtedness (389) (390)

6 - COMMITMENTS AND CONTINGENCIES6-1 OFF-BALANCE SHEET COMMITMENTS AND CONTINGENCIES AT OCTOBER 31, 2004millions of euros

2003 2004Total < 1 year 1-5 years > 5 years Total

Commitments givenGuarantees given (1)

Europe 64 15 20 20 55Americas 19 8 6 3 17Asia 3 4 - 2 6

Total guarantees given 86 27 26 25 78

Other commitments given 6 - 1 1

Total commitments given 92 27 26 26 79

Commitments received (2) 19 7 4 2 13

Total commitments received 19 7 4 2 13

Reciprocal commitmentsUndrawn confirmed lines of credit - -Interest rate hedging instruments 90 60 60Forward purchases and sales of foreign currencies (3) 34 69 69Purchase commitments (in the case of expropriation) 39 39 39Rent guarantees 4 7 7

Total reciprocal commitments 167 129 46 175

All material off-balance sheet commitments or contingencies, as defined in current accounting standards, have been included in the above table.Two assets were pledged as collateral as of October 31, 2004:- The Da Balaïa village, until October 31, 2008 for the line of credit granted by Banco Espirito Santo.- The Club Med 2 cruise ship, until December 31, 2010 for the line of credit granted by DVB bank.

(1) Including 325 million in guarantees given in connection with travel agency and passenger transport licenses, 33 million in customs and taxbonds and 35 million in rent guarantees.

(2) Commitments received by the Group in respect of travel agencies amount to 311 million.(3) Consisting mainly of forward purchases of dollars (USD 49 million) and Mexican pesos (MXN 41 million) and forward sales of British pounds

(GBP 3 million), Canadian dollars (CAD 21 million), Australian dollars (AUD 7 million), Japanese yen (JPY 790 million) and Korean won(KRW 5.7 billion).

In addition, the unrecognized portion of the redemption premium on the OCEANE convertible bonds (see note 1.9.2) amounted to 315 million.



6-2 RENTAL COMMITMENTSmillions of euros

Total 2005 2006 2007 2008 2009 2010 2015 2025rent to to and

payable 2014 2024 beyond

Europe 1,082 65 62 63 63 64 281 411 73Americas 279 18 18 19 19 20 98 87Asia 171 11 11 11 10 10 53 65

Sub-total villages 1,532 94 91 93 92 94 432 563 73Jet tours 9 2 2 1 1 1 2Club Med World 6 1 1 1 1 1 1Club Med Gym 26 5 4 3 3 2 8 1

Total rental commitments 1,573 102 98 98 97 98 443 564 73

7 - EMPLOYEES AND EXECUTIVE COMPENSATION7-1 EMPLOYEESThe number of employees at the peak of the summer season was as follows:

Peak of the summer season Full-time equivalent

2000 2001 2002 2003 2004 2004

Club Med Villages 899 903 895 880 883 874Other Club Med 2,639 2,630 2,298 2,117 2,135 2,126Total Club Med 3,538 3,533 3,193 2,997 3,018 3,000Jet tours 357 342 299 329 354 341Club Med Gym 756 880 842 685 505Club Med World 479 346 155 144 152Forum Voyages 105 85 80 0 0 0

Total full-time employees 4,000 5,195 4,798 4,323 4,201 3,998

Village GOs 7,300 7,146 6,576 6,133 5,481 4,104Village GEs (service staff) 12,400 12,809 11,144 9,877 9,012 7,174

Total seasonal employees 19,700 19,955 17,720 16,010 14,493 11,278

Total employees 23,700 25,150 22,518 20,333 18,694 15,276

7-2 COMPENSATION PAID TO DIRECTORS AND OFFICERS OF CLUB MÉDITERRANÉE SA

thousands of euros

2003 2004

Total fees paid to members of the Supervisory Board 663 650Aggregate gross compensation paid to directors and officers during the year 3,564 3,364


8 - FEES PAID TO THE AUDITORSthousands of euros, all countries combined

2003 2004Ernst & Young Deloitte Total Ernst & Young Deloitte Total

& Associés & Associés

Audit services 834 79% 510 100% 1,344 86% 804 89% 604 96% 1,408 92%Statutory and contractual audits 774 495 1,269 748 589 1,337Other audit services 60 15 75 56 15 71

Other services 218 21% 0 0% 218 14% 99 11% 20 4% 119 8%Legal, tax and employee benefits advice 179 179 87 20 107Other 39 39 12 12

Total 1,052 100% 510 100% 1,562 100% 903 100% 624 100% 1,527 100%

9 - FINANCIAL INSTRUMENTSThe Club Méditerranée Group uses financial instruments to hedge exposure to currency risks arising from its operations and interest raterisks arising on its variable rate debt. Hedging transactions are carried out with a broad range of first-rate counterparties and are managedon a centralized basis.

Currency risks

The Group’s hedging policy, based on forecast transactions for the following year, is as follows:- Currency risks on the main billing currencies (British pound, Japanese yen, Canadian dollar, Australian dollar, Korean won, etc.) are hedged using

options, forward sales and non-deliverable forward contracts.- Currency risks on the US dollar, which is both a billing and an operating currency, are hedged using options and forward purchases.- Currency risks on other operating currencies (Moroccan dirham, Turkish lira, Tunisian dinar, Indonesian rupiah, Thai baht, etc.) are not systematically

hedged.

Positions at October 31, 2004 for the 2005 fiscal year

currency units in millions

USD GBP AUD JPY CAD MXN MAD TND TRL KRW

Net position before hedging (35) 11 11 1,200 25.5 (145) (180) (28) (16,600,000) 10,600

Net off balance-sheet position(hedges) 35 (3) (7) (790) (21) 41 0 0 0 (5,700)

Net position after hedging 0 8 4 410 5 (104) (180) (28) (16,600,000) 4,900

Net position after hedgingin 3m 0 11 2 3 3 (7) (16) (18) (9) 3

Book exchange rate 1.2737 0.6957 1.7088 135.13 1.5546 14.6889 11.072 1.5666 1,877,600 1,425.78

Note: the above table shows exposure to certain currencies at October 31, 2004, related to the 2005 fiscal year, which were hedged after thefiscal year-end.

USD: United States, GBP: United Kingdom, AUD: Australia, JPY: Japan, CAD: Canada, MXN: Mexico, MAD: Morocco, TND: Tunisia, TRL: Turkey,KRW: South Korea.



Interest rate risk

Average net variable rate debt should amount to around 3110 million in fiscal 2005. Interest rate hedges (swaps/collars where Club Méditerranéepays the fixed rate) have been put in place for fiscal 2005 on a notional amount of 360 million. Exposure to the risk of an increase in borrowingcosts concerns the unhedged portion of variable rate debt, in the amount of 350 million. A 1-point increase or decrease in short-term interest rateswould have a 3500,000 impact on Group interest expense.

10 - CLAIMS AND LITIGATIONThe nature of the Group’s business and the fact that its operations are conducted in a large number of countries with differing and sometimes con-tradictory regulations is a source of operating difficulties and can lead to disputes with suppliers, owners, employees or local authorities. In the UnitedStates, for example, suit has been filed against Club Méditerranée in a US District Court in Florida by persons claiming to be the owners of land inCuba on which the Varadero village was built by the Gaviota company. Club Méditerranée operated the village from 1997 to May 2003 under amanagement contract. For the moment, the plaintiffs have not yet announced the amount of their claim.

Taking into account any special conditions, such as the nature of the business and its international location, identified risks are provided for assoon as the amounts involved can be reasonably estimated. In this regard, disputes can arise with the owners of certain village properties con-cerning the return of these properties at the end of the lease term. This is currently the case for the Don Miguel hotel, in Spain, where the mat-ter has been put to arbitration. To the best of the Group’s knowledge, no significant dispute has arisen between the fiscal year-end and the datethis document was filed.

11 - RECENT DEVELOPMENTS AND OUTLOOKAt October 31, 2004, Club Méditerranée had a 3220 million syndicated loan due June 2005. This loan was paid back early, in November 2004, through:

• The issuance, on October 26, 2004, of 3150 million worth of bonds convertible/exchangeable for shares (OCEANEs) due November 1, 2010 andpaying annual interest of 4.375%.

• The arrangement, on October 25, 2004, of a new five-year syndicated loan in an amount of 370 million, of which 30% must be paid back atthe end of the third year. The covenants to be fulfilled are as follows:


April 05 Oct. 05 April 06 Oct. 06 April 07 Oct. 07 April 08 Oct. 08 April 09

Ratio 4.5 4.0 3.75 3.75 3.5 3.5 3.25 3.25 3.0

On December 26, 2004 a tsunami devastated the Bay of Bengal region in Asia. Three Club Méditerranée villages were damaged and temporarilyclosed: Phuket (southern Thailand) and Kani and Faru (Maldives). Phuket re-opened on February 5 at 60% capacity, with full capacity to be restoredby summer 2005. The tsunami-related property, casualty and business interruption losses were covered by insurance.



12 - COMPANIES CONSOLIDATED AT OCTOBER 31, 2004

GROUP Tax group member

Club Méditerranée SA Parent company •

% voting rights % interest Consolidation method

EuropeFranceClub Aquarius (formerly. SECAG) 100.00% 100.00% Full •Club Med Centre d’Appel Européen 100.00% 100.00% Full •CM Croisières & Tourisme 100.00% 100.00% Full •Club Med Événements 100.00% 100.00% Full •CM Marine 100.00% 100.00% Full •Grand Hôtel Parisien 100.00% 100.00% Full •Hoteltour 100.00% 100.00% Full •Loin 100.00% 100.00% Full •Domaine de Dieulefit 100.00% 100.00% Full •SCI de la Tour d’Opio 100.00% 100.00% FullSCI Edomic 100.00% 100.00% FullSCI de la Cabane des Bergers 100.00% 100.00% FullSociété de Gestion Hôtelière et de Tourisme - SGHT 100.00% 100.00% Full •Société des Villages de Vacances - SVV 100.00% 100.00% Full •Société Touristique de Vittel - STV 100.00% 100.00% Full •Sté Immobilière des Résidences Touristiques - S.I.R.T. 100.00% 100.00% Equity •

South Africa Vacances (Pty) Ltd 100.00% 100.00% Full

GermanyClub Méditerranée Deutschland 100.00% 100.00% Full

BelgiumClub Méditerranée 100.00% 100.00% Full

Ivory CoastClub Méditerranée Côte d’Ivoire 100.00% 100.00% Full

CroatiaClub Méditerranée Odmaralista 100.00% 100.00% Full

French overseas departments and territoriesSecag Caraïbes 100.00% 100.00% Full •Société Hôtelière d’Oyster Pond 86.87% 86.87% Full

EgyptBelladona Hotels & Tourisme 50.00% 50.00% Full

SpainClub Méditerranée 100.00% 100.00% FullHoteles y Campamentos - HOCASA 100.00% 100.00% FullSecag Iberica 100.00% 100.00% FullServicios Auxiliares del Club Mediterraneo - SACM 100.00% 100.00% Full

United KingdomClub Méditerranée UK Ltd 100.00% 100.00% FullClub Méditerranée Services Europe Ltd 100.00% 100.00% Full

% voting rights % interest Consolidation Tax groupmethod member

GreeceClub Méditerranée Hellas 100.00% 100.00% FullEntreprises Touristiques Hôtelières InternationalesClub Epe 100.00% 100.00% FullFunhotel Ltd (Ermioni) 100.00% 100.00% FullGregolimano E.T.A.B.E. 100.00% 100.00% FullEntreprises Touristiques KOS AE - T.E.K. 100.00% 100.00% Full

MauritiusHoliday Villages Management Services Ltd 100.00% 100.00% FullCompagnie des Villages de Vacances de l’Isle de France - COVIFRA 84.43% 84.43% FullClub Méditerranée Albion Resorts Ltd 100.00% 100.00% Full

IsraelClub Méditerranée Israël Ltd 100.00% 100.00% Full

ItalyCentrovacanze Kamarina Sole e sabbia di Sicilia SpA 100.00% 100.00% FullSta Alberghiera Porto d’Ora - S.A.P.O. SpA 40.52% 40.52% EquitySviluppo Turistico per Metaponto 38.00% 38.00% Equity

MoroccoSociété Immobilière de la Mer - S.I.M. 100.00% 100.00% FullSociété Civile Immobilière des Villages de Vacances - CIVAC 47.47% 47.47% EquitySociété Marocaine des Villages de Vacances - SOMAVIVAC 40.00% 40.00% EquitySociété de développement des Villages de vacances 100.00% 100.00% Full

NetherlandsClub Med Resorts BV 100.00% 100.00% FullClub Méditerranée Holland BV 100.00% 100.00% FullCM Middle East BV 60.00% 60.00% Equity

PortugalSociedade Hoteleira Da Balaïa SA 100.00% 100.00% FullClub Med Viagens lda 60.00% 60.00% Full

SenegalVacances Cap Skirring - VACAP 99.99% 99.99% Full

SwitzerlandClub Méditerranée Suisse 100.00% 100.00% FullHoliday Hotels AG 50.00% 50.00% FullNouvelle Société Victoria 100.00% 100.00% Full

TunisiaClub Méditerranée Voyages 49.00% 49.00% EquityClub Med Bazic Tunisie 100.00% 100.00% Full

TurkeyAkdeniz Turistik Tesisler A.S. 100.00% 100.00% Full

South AmericaFranceClub Med Amérique du Sud 100.00% 100.00% Full •Vacation Resorts 100.00% 100.00% Full •

ArgentinaClub Med Argentina SRL 100.00% 100.00% Full





BrazilClub Med Brasil SA 100.00% 100.00% FullClub Méditerranée do Brasil Turismo ltda 100.00% 100.00% FullItaparica SA Empreendimentos Turisticos 50.10% 50.10% FullTaipe Trancoso Empreendimentos SA 50.00% 72.22% FullClub Med Brasil Boutiques ltda 100.00% 100.00% Full

North AmericaFranceClub Med Amérique du Nord 100.00% 100.00% Full •

Grand CaymanClub Med Inc. 100.00% 100.00% Full

French West IndiesSociété Villages Hôtels des Caraïbes - SVHC 100.00% 100.00% FullSociété des Villages-Hôtels de Vacancesen Guadeloupe - SVHVG 100.00% 100.00% Full •Société Hôtelière du Chablais 100.00% 100.00% Full •Société Martiniquaise des Villages de Vacances 100.00% 100.00% Full

BahamasClub Méditerranée (Bahamas) Ltd 100.00% 100.00% FullColumbus Isle Casino 100.00% 100.00% EquityHoliday Village (Columbus Island) 100.00% 100.00% FullHoliday Village (Eleuthera) 100.00% 100.00% FullHoliday Village (Paradise Island) Ltd 100.00% 100.00% FullShipping Cruise Services Ltd 100.00% 100.00% Full

CanadaClub Med Sales Canada Inc. 100.00% 100.00% Full

United StatesClub Med Crested Butte, llc 100.00% 100.00% FullClub Med Management Services Inc. 100.00% 100.00% FullClub Med Sales Inc. 100.00% 100.00% FullHoliday Village of Sandpiper 100.00% 100.00% FullSandpiper Resort Properties Inc/srp 100.00% 100.00% FullGlobal Ticket Corporation 100.00% 100.00% FullVacation Wholesaler Inc 100.00% 100.00% Full

HaitiClub Méditerranée Haïti SA 100.00% 100.00% Full

MexicoCondominios Mediterranee de San Carlos SA de cv 100.00% 100.00% FullOperadora de Aldeas Vacacionales SA de cv 100.00% 100.00% FullProfotur SA de cv 100.00% 100.00% FullVacation Properties de Mexico SA de cv 100.00% 100.00% FullVilla Playa Blanca SA 100.00% 100.00% Full

Dominican RepublicHoliday Village of Punta Cana 100.00% 100.00% Full

Saint LuciaHoliday Village Ste Lucia Ltd 100.00% 100.00% Full

Turks and CaicosHoliday Villages Providenciales Turks & Caicos Ltd 100.00% 100.00% Full


Asia-PacificLuxembourgClub Med Asie 100.00% 100.00% Full

AustraliaClub Med Management (Australia) Pty Ltd 100.00% 100.00% FullClub Med Australia Pty Ltd 100.00% 100.00% FullHoliday Village (Australia) Pty Ltd 100.00% 100.00% Full

South KoreaClub Med Vacances (Korea) Ltd 100.00% 100.00% Full

Hong KongClub Méditerranée Hong Kong Ltd 100.00% 100.00% FullClub Méditerranée Management Asia Ltd 100.00% 100.00% FullMaldivian Holiday Villages Ltd 100.00% 100.00% Full

IndonesiaPT Bali Holiday Village 100.00% 100.00% Full

JapanClub Méditerranée KK 100.00% 100.00% FullSCM leisure development Co Ltd 100.00% 100.00% Full

MalaysiaHoliday Villages of Malaysia Sdn. Bhd. 100.00% 100.00% FullRecreational Villages Sdn. Bhd. 100.00% 100.00% FullVacances (Malaysia) Sdn. Bhd. 100.00% 100.00% Full

SingaporeClub Med Services Singapore Pte Ltd 100.00% 100.00% FullVacances (Singapore) Pte Ltd 100.00% 100.00% Full

TaiwanClub Med Vacances (Taiwan) Ltd 100.00% 100.00% Full

ThailandHoliday Villages Thaïland Ltd 49.21% 49.21% FullVacances Siam Club Med Ltd 100.00% 100.00% Full

Polynesia and New CaledoniaSociété Polynésienne des Villages de Vacances 98.45% 98.45% Full

Tour operatingFranceJet tours 99.85% 99.85% Full •Jet Eldo 100.00% 99.85% Full •Société de Gestion d’Hôtel et de loisirs 100.00% 99.85% Full •Jet Loisirs 100.00% 99.85% Full •Jet Marques 100.00% 99.98% FullJet Stim 49.00% 49.00% Equity

SpainClub Del Mar 99.91% 99.76% Full

TunisiaJet Eldo Tunisie 100.00 % 99.85% FullJet Hotel Tunisie 100.00 % 99.85% Full

MoroccoFST 65.00% 65.00% FullJet Eldo Maroc 100.00% 99.85% Full




Club Med WorldFranceClub Med World Holding 100.00% 100.00% Full •Club Med World France 100.00% 100.00% Full •CanadaCM World Montréal Inc 100.00% 100.00% FullCM World Montréal Holding Inc 100.00% 100.00% Full

Club Med GymFranceClub Med Gym SA 100.00% 100.00% FullIMF 100.00% 100.00% FullEdifit 100.00% 100.00% FullClub Med Gym Corporate 100.00% 100.00% FullBelgiumClub Med Gym Europe 100.00% 100.00% Full

Full: fully consolidated Equity: accounted for by the equity method

The following companies were consolidated for the first time during the fiscal year ended October 31, 2004:- FST (65% interest acquired on November 1, 2003)- Jet Eldo Maroc (set up on April 12, 2004)- CM Odmaralista (set up on June 30, 2004)- CM Albion Resorts Ltd (set up on July 6, 2004)

The following companies were excluded from the scope of consolidation, following their divestment or liquidation:- CM Development BV (liquidated on November 1, 2003)- CM Gym Suisse (sold with retroactive effect to January 1, 2004)- Byron Bay Beach Resort (liquidated on January 16, 2001)- Holiday Village (Byron Bay) (liquidated on October 1, 2003)- Club Méditerranée NZ (liquidated on March 24, 2004)- Club Med UK Transport (wound up without prior liquidation on March 19, 2004)- CULIP (merged into SACM on April 28, 2004)- Siam Export & Management Service, Thailand (liquidated on May 17, 2004)- SLSL (sold on June 30, 2004)- Méditerranéenne de Voyages (liquidated on August 25, 2004)- Sophiclub (liquidated on September 20, 2004)- Société d’équipement Sportif de Zinal (sold on October 26, 2004)

Club Med Management Australia and Vacances Singapore Ltd., which were previously accounted for by the equity method due to their low busi-ness volumes, were fully consolidated in 2004 following significant financial transactions. In addition, the interest in Jet Stim was reduced from 70% to49% on January 23, 2004. As a result, the company is now accounted for by the equity method rather than being fully consolidated.



for the year ended October 31, 2004

In accordance with the terms of our appointment by the AnnualShareholders’ Meeting, we have performed our examination of theconsolidated financial statements of Club Méditerranée SA for the yearended October 31, 2004, as attached to this report.These financial statements have been prepared by the Executive Board.Our responsibility is to express an opinion on these financial statementsbased on our audits.

I.Opinion on the consolidated financial statements

We conducted our audit in accordance with professional standardsapplicable in France. These standards require that we plan andperform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and dis-closures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation.We believe that our audit provides a reasonable basis forour opinion.In our opinion, the financial statements have been properly preparedin accordance with French generally accepted accounting principles andgive a true and fair view of the assets and liabilities, financial positionand results of operations of the consolidated companies.

II. Justification of Our Assessments

In accordance with the requirements of Article L. 225-235 of theFrench Commercial Code (Code de Commerce) relating to thejustification of our assessments, we draw to your attention the followingmatters:- In assessing the accounting rules and principles applied by your

Company, we verified the appropriateness of presenting the financialstatements on a going concern basis, as mentioned in Note 1 to theconsolidated financial statements, and of the disclosures in the notesconcerning the Company’s situation, in particular in note 11, whichmentions the new sources of financing arranged in November 2004.

- Notes 1.3 and 1.2.5 to the consolidated financial statements describethe accounting rules and methods applied to determine the fairvalue of fixed assets and assess the recoverability of deferred taxassets.We assessed the appropriateness of these accounting methodsand of the disclosures in the notes to the consolidated financialstatements. We also examined the consistency of the data, theassumptions used and the documents provided, which we used toassess the reasonableness of the related estimates.

The assessments were made in the context of our audit of theconsolidated financial statements, taken as a whole, and thereforecontributed to the formation of the unqualified opinion expressed in thefirst part of this report

III. Specific procedures and information

In addition, we have verified the information given in the reportentitled “Management’s Discussion and Analysis”. We are satisfied thatthe information is fairly stated and agrees with the consolidatedfinancial statements.

AUDITORS’ REPORT ON THE CONSOLIDATEDFINANCIAL STATEMENTS

Paris and Neuilly-sur-Seine, February 14, 2005The Statutory Auditors

Ernst & Young Audit Deloitte & AssociésPascal Macioce Alain Pons Hervé Pouliquen



Marketing Service Real estate Service and Othercompanies companies companies real estate companies

companies

EUROPEFrance CM centre d’appel Grand Hôtel Parisien CMSA

européen Domaine Club AquariusCM Croisières de Dieulefit Hoteltour

et tourisme SCI Cabane des Bergers LoinCM Événements SIRT

CM Marine Sté civile EdomicSGHT Sté civile Tour d’Opio

STVSVV

South Africa Vacances PtyGermany CM DeutschlandBelgium CM BelgiqueIvory Coast CM Côte d’IvoireCroatia CM OdmaralistaFrench Overseas Secag CaraïbesDepartments and Territories SHOPEgypt Belladona Hotels

& tourismeSpain CM Espagne Secag Iberica SACM

HocasaUnited Kingdom CM UK CM ServicesGreece Gregolimano Etabe CM Hellas Club Epe

TEK FunhotelMauritius HV Management Covifra CM Albion Resorts

ServicesIsrael CM IsraëlItaly Centrovacanze

KamarinaSte Alberghiera

Porto d’OraSviluppo Turistico

per MetapontoMorocco CIVAC SDVV

SOMAVIVACSte immobilière

de la MerNetherlands CM Holland CM Middle East

CM ResortsPortugal CM Viagens Sociedade Hoteleira

de BalaiaSenegal Vacances

Cap SkirringSwitzerland CM Suisse Holiday Hotels

Nouvelle Société VictoriaTunisia Club Med Voyages

CM Bazic TunisieTurkey Akdeniz Turistik

Tesisler

SIMPLIFIED ORGANIZATION CHART AT OCTOBER 31,2004


companies

SOUTH AMERICAFrance Vacation Resorts CM Amérique du SudArgentina CM ArgentinaBrazil CM do Brasil Turismo Itaparica CM Brasil

CM Brasil Boutiques Taipe TrancosoEmpredimentos

NORTH AMERICAFrance CM Amérique du NordFrench West Indies Sté martiniquaise SVHC Sté Hôtelière

des villages SVHGV du Chablaisde vacances

Bahamas Holiday village CM Bahamas(Columbus Island Columbus Isle Casino

Holiday village Shipping(Eleuthera) Cruise Services

Holiday village(Paradise)

Canada CM Sales Canada Inc.United States CM Sales CM Management Sandpiper Resort CM Crested Butte

Global Ticket services Properties Holiday villagecorporation Vacation of Sandpiper

Wholesaler IncGrand Cayman CM Inc.Haiti CM HaïtiMexico Operadora de Villa Playa Blanca Vacation Properties

Aldeas vacacionales Condominios de Mexicode San Carlos

ProfoturDominican Republic HV of

Punta CanaSaint Lucia HV Ste LucieTurks & Caicos HV Providenciales

ASIALuxembourg CM AsieAustralia CM Australie CM Management Holiday village Holiday village

Australia AustraliaBeach Club

South Korea CM Vacances KoreaPolynesiaand New Caledonia SPVVHong Kong CM Hong Kong Maldivian HV

CM ManagementAsia

Indonesia PT Bali HVJapan CM KK SCM Leisure

dévelopment Co





companies

Malaysia Vacances (Malaysia) HV Malaysia Recreational villagesSingapore CM Services (Singapore) Vacances (Singapore)Taiwan CM Vacances (Taiwan)Thailand Vacances Siam CM HV (Thaïland)

TOUR OPERATINGFrance Jet tours SA

Jet EldoSté de gestion

d’Hôtel et de LoisirsJet Loisirs

Jet MarquesJet Stim

Spain Club del MarMorocco Four Season Travel Jet Eldo MarocTunisia Jet Hotel Tunisie Jet Eldo Tunisie

CLUB MED WORLDFrance CM World France CM World HoldingCanada CM World Montréal CM World Montréal

Holding

CLUB MED GYMFrance Club Med Gym SA

IMFEdifit

CM Gym EntrepriseBelgium CM Gym Europe


CLUB MÉDITERRANÉE SA FINANCIAL STATEMENTS

• 74 Balance Sheets

• 75 Statements of Operations

• 76 Statements of Cash Flows

• 77 Five-Year Financial Summary

• 78 Auditors’ Report on the Company Financial Statements


BALANCE SHEETSmillions of euros

Assets Net at Net at Cost at Depreciation, Net at Oct. 31, Oct. 31, Oct. 31, amortization Oct. 31,

2002 2003 2004 and provisions 2004

Intangible assets 51 46 109 63 46Organization expense - - 1 - 1Research and development expense - - 1 - 1Patents, licenses and other rights 35 37 93 61 32 Goodwill 6 6 7 - 7 Other intangible assets 10 3 7 2 5

Tangible assets 164 151 325 158 167Land 4 4 4 4Buildings and equipment 142 133 266 135 131 Other tangible assets 18 14 55 23 32

Financial assets 721 710 966 352 614Shares in subsidiaries and affiliates 537 486 744 314 430 Loans to subsidiaries and affiliates 134 171 186 38 148Other investments 50 53 36 - 36

Total fixed assets 936 907 1,400 573 827Inventories 9 7 5 - 5Trade receivables 44 40 33 3 30Other receivables 273 27 348 27 321Marketable securities - - 73 - 73 Bank and cash 15 266 16 - 16

Total current assets 341 340 475 30 445Prepaid expenses 31 34 39 - 39Deferred charges 4 3 2 - 2

Total assets 1,312 1,284 1,916 603 1,313

millions of euros

Liabilities and shareholders’ equity Oct. 31, Oct. 31, Oct. 31,2002 2003 2004

Capital stock 77 77 77 Additional paid-in capital 562 562 562 Legal reserve 7 7 7 Other reserves 33 - -Deficit - (114) (247)Net income (loss) for the year (146) (133) (78)

Shareholders’ equity 533 399 321Provisions for contingencies and charges 47 62 46Bank loans and other debt 419 588 550 Customer prepayments 46 48 35 Trade payables 65 74 92 Accrued taxes and payroll costs 28 26 26Due to suppliers of fixed assets 9 4 12 Other liabilities 134 52 195

Total liabilities 701 792 910Deferred income 29 31 28Conversion gains 2 - 8

Total liabilities and shareholders’ equity 1,312 1,284 1,313


millions of euros

2002 2003 2004

Revenues 1,002 968 934Other income 34 22 25Reversals of provisions and expense transfers 24 23 14

Total revenues from operations 1,060 1,013 973Operating expensePurchases (486) (465) (459)External services (304) (280) (280)Taxes other than on income (15) (14) (12)Payroll expenses (182) (182) (162)Depreciation and amortization (29) (29) (27)Provisions (5) (14) (6)Other expenses (7) (7) (7)

Total operating expense (1,028) (991) (953)

Operating income 32 22 20

Net financial expense (154) (134) (86)

Loss from ordinary activities, before tax (122) (112) (66)

Net exceptional expense (22) (20) (10)

Income tax (2) (1) (2)

Net loss (146) (133) (78)

Financial Statements

STATEMENTS OF OPERATIONS


millions of euros

2002 2003 2004

Cash flow from operationsNet income (loss) (146) (133) (78)Depreciation, amortization and provisions for impairment in value of fixed assets, net (1) 62 79 143Other movements (2) 77 76 (1)

Cash flow (7) 22 64Change in working capital (7) 68 (4)

Net cash (used) provided by operating activities (14) 90 60Capital expendituresAcquisition of intangible assets (14) (11) (7)Acquisition of tangible assets (3) (51) (7) (35)Acquisition of financial assets (4) (14) (33) (8)

Total investments (79) (51) (50)

Cash flows from asset disposalsProceeds from disposals of fixed assets 18 20 1Proceeds from disposals of financial assets 20 23 22

Total asset disposals 38 43 23Net cash used by investing activities (41) (8) (27)

Net cash (used) provided, before financing activities (55) 82 33Other changes in indebtedness (5) (18) (173)

Net change in net indebtedness (73) 82 (140)Net indebtedness at beginning of year (331) (404) (322)Net indebtedness at end of year (404) (322) (462)

(1) The change corresponds to an increase in provisions for impairment of financial assets, as follows:• Club Med North America (349 million) and Club Med Asia (313 million), due to losses by their subsidiaries during the year.• Club Med World Holding (340 million), following the increase in its capital by capitalizing the current account. The provisions were partially

offset by the reversal of provisions for risks and on the current account.• Club Med Gym (312 million).

(2) Including, in fiscal 2003, debt waivers granted to Club Med North America (356 million), Club Med Marine (33 million) and Club Med Gym(33 million), and the negative impact of the mergers of Club Med Bazic (35 million) and Groupe Tekker (310 million).

(3) Including, in fiscal 2004, capitalized construction costs for the Peisey Vallandry village (313 million) and the Chamonix village (36 million),upgrading of the Kamarina village (33 million), and acquisition of the Flaine site (32 million).

(4) Including, in fiscal 2004, loans granted to STCO (39 million) and Opiobail (39 million), and repayment of deposits related to the Serre Chevalier,Tignes and Alpe d’Huez villages (32 million).

(5) In fiscal 2003, the portion of the current account used to finance subsidiary operating expenses (3173 million) was recognized under cash rather thanunder receivables. It was not reclassified in 2004.

STATEMENTS OF CASH FLOWS


Financial Statements

millions of euros

2000 2001 2002 2003 2004

I - CAPITAL AT YEAR-END

Capital stock 68 77 77 77 77 Number of shares outstanding 17,865,907 19,358,005 19,358,005 19,358,005 19,358,005Number of shares with dividend rights (weighted) 17,811,652 19,358,005 19,358,005 19,358,005 19,358,005

II - RESULTS OF OPERATIONSNet revenues 1,000 1,113 1,002 968 934 Income (loss) before tax, employee profit-sharing,depreciation, amortization and provisions - 185 (101) - - Income tax (1) (2) (2) (1) (2)Net income (loss) 44 21 (146) (133) (78)

III - PER SHARE DATA (in euros)Income (loss) after tax and employee profit sharing,before depreciation, amortization and provisions (1.30) 9.47 (5.32) 4.29 1.24Net income (loss) 2.45 1.11 (7.54) (6.87) (4.03)Dividend per share (full dividend rights) 1.50 - - - -Of which French tax credit 0.50 - - - -

IV - EMPLOYEE DATANumber of employees 8,574 9,737 9,387 8,848 8,791Total payroll and benefits 183 188 182 182 162

FIVE-YEAR FINANCIAL SUMMARY


for the year ended October 31, 2004

In accordance with the terms of our appointment at the AnnualShareholders’ Meeting, we hereby submit our report for the year endedOctober 31, 2004, on:- Our examination of the financial statements of Club Méditerranée SA,

as attached to this report.- The justification of our assessments.- The specific procedures and information required by law.

These financial statements have been prepared by your Executive Board.Our responsibility is to express an opinion on these financial statementsbased on our audits.

I.Opinion on the financial statements

We conducted our audit in accordance with professional standardsapplicable in France. These standards require that we plan and performthe audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluatingthe overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.In our opinion, the financial statements have been properly prepared, inaccordance with French generally accepted accounting principles, and givea true and fair view of the results of operations for the year endedOctober 31, 2004, and the assets and liabilities and financial position ofthe Company at that date.

II. Justification of Our Assessments

In accordance with the requirements of Article L. 225-235 of the FrenchCommercial Code (Code de Commerce) relating to the justificationof our assessments, we draw to your attention the following matters:- The Company has tested shares in non-consolidated companies for

impairment, as described in note 1.4 to the financial statements. Weassessed the appropriateness of the method used and, where neces-sary, reviewed the valuation documentation; we also assessed the con-sistency of the related data and reviewed the Company’s calculations.We used these procedures as a basis for assessing the reasonablenessof the estimates.

- In assessing the accounting rules and principles applied by yourCompany, we verified the appropriateness of presenting the financialstatements on a going concern basis, as mentioned in Note 1 to thefinancial statements, and of the disclosures in the notes concerningthe Company’s situation, in particular in note 4.5, which mentions thenew sources of financing arranged in November 2004.

The assessments were made in the context of our audit of the financialstatements, taken as a whole, and therefore contributed to the formationof the unqualified opinion expressed in the first part of this report

III. Specific procedures and information

We have also performed the specific procedures required by law, inaccordance with generally accepted auditing standards.

We are satisfied that the information given in the report of the ExecutiveBoard and the documents sent to shareholders on the financial positionand financial statements is fairly stated and agrees with those financialstatements.

In accordance with the Law, we have verified that information aboutacquisitions of shareholdings and the identity of shareholders and votingrights is disclosed in the report of the Executive Board.

AUDITORS’ REPORT ON THE COMPANY FINANCIAL STATEMENTS

Paris and Neuilly-sur-Seine, February 14, 2005The Statutory Auditors

Ernst & Young Audit Deloitte & AssociésPascal Macioce Alain Pons Hervé Pouliquen


GENERAL INFORMATION

• 80 General Information About Club Méditerranée

• 83 General Information About the Company’s Capital

• 87 The Market for Club Méditerranée Shares

• 89 Dividends

• 89 Corporate Governance


COMPANY NAMEClub Méditerranée.

REGISTERED OFFICE AND HEAD OFFICE11 rue de Cambrai, Paris 75957 cedex 19, France.

LEGAL FORM AND GOVERNING LAWClub Méditerranée (the Company) is a French société anonyme(Public ltd company) with an Executive Board and a SupervisoryBoard, governed by the laws of France, including Articles L. 225-57 toL. 225-93 of the Commercial Code.

TERMThe Company will be dissolved on October 31, 2095 unless it is woundup in advance or its term is extended by decision of an ExtraordinaryShareholders’ Meeting.

CORPORATE PURPOSE (ARTICLE 2 OF THE BY-LAWS)Club Méditerranée was established to develop and manage hotels orholiday centers and/or leisure facilities and/or entertainment facilities andany and all activities relating thereto, whether directly or indirectly, inFrance or abroad, including the prospecting, purchase and/or sale andleasing, on any basis, of land, movable property and real estate; the cre-ation and operation of design offices; the construction, fitting out, man-agement and maintenance of hotels, restaurants and holiday centersand/or leisure facilities and/or entertainment facilities; the promotion,organization or delivery of land packages; the provision of accommo-dation, food and transport for participants; the organization of tours andexcursions; the organization and execution of sporting, educational,tourist, cultural or artistic activities; the organization or events and shows,the performance thereof and the provision of any related consulting serv-ices; the creation or acquisition and development of any and all equip-ment, organizations and facilities for sporting, educational, tourism,cultural or artistic purposes; the drafting and signature of any and all con-tracts for the same purposes; the creation or acquisition and operationof any and all businesses or facilities conducting the same activities; par-ticipation by any method and in any form in any and all existing or futureventures or companies; the design, creation, production and marketing-directly or indirectly through a licensee or other partner-of any and allproducts and services that can be distributed under the brands, logosor emblems owned by the Company, or under any new brand, logo oremblem owned or registered by the Company in the future.

The Company may assist its subsidiaries by any method, including byextending loans, advances and credits, subject to compliance with appli-cable laws and regulations.

More generally, the Company may conduct all industrial, commercial orfinancial operations, involving both stocks and shares and property, includ-ing the acquisition, holding and management of interests in any indus-trial or commercial venture, directly or indirectly related to the aims ofthe Company as described above and any other similar or related aims.

INCORPORATION DETAILS572 185 684 RCS Paris - APE Code 552E.

CONSULTATION OF CORPORATE DOCUMENTSThe by-laws, minutes of Shareholders’ Meetings, financial statements andauditors’ reports are available for consultation at the Company’s headoffice.

FISCAL YEARThe Company’s fiscal year begins on November 1 and ends on October 31.

APPROPRIATION OF INCOMEArticle 39 of the by-laws states that at least five percent of net incomefor the year, less any prior year losses, is appropriated to the legalreserve. This appropriation ceases to be compulsory once the legalreserve represents one-tenth of the share capital. However, if for anyreason, the legal reserve falls to below one-tenth of the share capital,it must be restored to the required level by the same method.The income remaining, less any prior year losses and any other amountsto be credited to reserves pursuant to the law or the Company’sbylaws, plus any unappropriated retained earnings brought forward fromprior years, is then appropriated as follows:- To any extraordinary reserves or to revenue reserves, by decision

of the Annual Shareholders’ Meeting.- To the payment of a dividend provided that, except in the case of

a capital reduction, no distributions may be made to shareholdersif shareholders’ equity represents—or would represent if thedistribution were to be made—less than the sum of the sharecapital and non-distributable reserves.

The Annual Meeting may also decide to pay all or part of the dividendout of revenue reserves or to effect an exceptional distribution of rev-enue reserves. In this case, the reserves against which the dividend is

GENERAL INFORMATION ABOUTCLUB MÉDITERRANÉE


to be charged must be designated in the related resolution. However,no distributions of reserves may be decided if distributable earnings forthe year have not been fully distributed.

Any losses recorded in the financial statements approved by the AnnualMeeting are recorded in a special reserve account and set off againstincome earned in subsequent years until they have been absorbed in full.

The Annual Meeting may offer shareholders the option to reinvest allor part of the interim or final dividend in new shares. The method ofpayment of cash dividends is decided by the Annual Meeting or, failingthat, by the Executive Board. In all cases, dividends must be paid withinnine months of the year-end, unless the court grants an extension.

If the audited annual or interim financial statements show a profit forthe period, after deducting depreciation, amortization and provisionexpense, the balance remaining after deducting any prior year losses andany amounts to be appropriated to reserves pursuant to the law or theby-laws, as increased by any unappropriated retained earnings, may bedistributed in the form of an interim dividend prior to the approval ofthe financial statements for the year. Under no circumstances may inter-im dividends exceed the net income available for distribution as definedin the previous sentence.

ATTENDANCE AND REPRESENTATIONAT SHAREHOLDERS’ MEETINGSArticle 29 of the by-laws concerning Shareholders’ Meetings states that:

1 - All shareholders have the right to attend Shareholders’ Meetings andtake part in the vote, in person or by proxy, whatever the number ofshares held, upon presentation of evidence of their identity, provided thatthey have settled all capital calls within thirty days of receiving notifica-tion of the amount called and their shares are recorded in an accountopened in their name at least five days prior to the date of the meet-ing.

2 - All shareholders may vote by mail, using the postal voting form issuedby the Company. Details of how to obtain postal voting forms are pro-vided in the notice of meeting.

3 - Shareholders may give proxy only to their spouse or another share-holder.

4 - In order to be entitled to participate in Shareholders’ Meetings orto vote by mail, holders of registered shares are required to have theirshareholdings recorded in the share register kept by the Company orthe registrar at least five days prior to the date of the Shareholders’Meeting. Holders of bearer shares wishing to attend the Shareholders’Meeting are required to lodge at the Company’s head office or at anyother address specified in the notice of meeting, at least five days priorto the date of the meeting, a certificate issued by their stockbroker, bank

or other intermediary attesting to the holder’s ownership of the sharesand certifying that they are being held in a blocked account until afterthe date of the Shareholders’ Meeting.

5 - Holders of registered shares will be admitted to the meeting on pres-entation of evidence of their identity. Holders of bearer shares will beadmitted on presentation of the certificate referred to above.

The Executive Board may decide to issue admission cards to share-holders, indicating their name. Only the named shareholder or proxy mayuse these cards.

DOUBLE VOTING RIGHTSArticle 8 of the by-laws stipulates that all fully paid shares registered inthe name of the same holder for at least two years carry double vot-ing rights. Evidence of eligibility for double voting rights must be providedat least five days prior to the date of the Shareholders’ Meeting. In theevent such shares are transferred or converted to bearer form, they arestripped of their double voting rights. However, double voting rights arenot lost and the two-year qualifying period continues to run if the sharesare transferred in the estate of a deceased shareholder, or in connectionwith the settlement of the marital estate, or a donation inter vivos to aspouse or relative in the direct line of succession.

DISCLOSURE THRESHOLDSArticle 7 of the by-laws stipulates that any natural person or legal enti-ty acting alone or in concert with others, that acquires (i) 1% or theCompany’s capital or any multiple thereof, or (ii) 2.5% of theCompany’s capital, is required to disclose to the Company the totalnumber of shares and voting rights held. Disclosure must be made byregistered letter with return receipt requested, within 15 days of thedate on which the disclosure threshold is crossed. For the purpose ofdetermining whether a disclosure threshold has been crossed, accountis taken of any securities that are convertible, exchangeable, redeemableor otherwise exercisable for shares of the Company. These disclosurethresholds are in addition to the 5%, 10%, 20%, 33.33% and 50%thresholds provided for in Article L. 233-7 of the Commercial Code.The same disclosure rules apply if a shareholder’s interest is reduced tobelow any of the above thresholds.

For the purpose of applying this rule, the terms “shares” and “votingrights” have the same meaning as in Articles L. 233-3, L. 233-9 andL. 233-10 of the Commercial Code.

In the case of failure to comply with this requirement, duly noted in theminutes of the Shareholders’ Meeting, the shares in excess of the rele-vant threshold will be stripped of voting rights at all Shareholders’ Meetingsfor the period provided for by law at the request of one or several share-holders together holding at least 5% of the capital and voting rights.

General Information


Managers of funds and securities portfolios have a legal obligation tocarry out the disclosure procedures prescribed by law and theCompany’s bylaws, for all Club Méditerranée shares or other securitiesfor which they are registered as the holders, notwithstanding the obli-gations of the beneficial owners of the securities.

IDENTIFIABLE BEARER SECURITIESThe by-laws authorize the Company to apply at any time to the Frenchsecurities clearing agency for details of the identity of holders of votingshares and any securities convertible, exchangeable, redeemable, or oth-erwise exercisable for voting shares, and of the number of securities heldby each such holder, pursuant to Article L. 228-2 of the CommercialCode. The Company avails itself of this provision each year.

SERVICES PROVIDED BY THE COMPANYTO SUBSIDIARIESServices provided by Club Méditerranée SA in its capacity as parent com-pany to its subsidiaries include the usual senior management and sup-port services, including administrative, financial, legal, communication, mar-keting, human resources, training, IT and sales services. These servicesare billed at cost.

CORPORATE REPORT AND IMPLEMENTATION OF THE 35-HOURWORKWEEK

Corporate reportA corporate report (bilan social) is prepared each year, as required bylaw, and submitted to the Works Council for comment prior to trans-mission to the labor authorities. The report covers all ClubMéditerranée SA employees who contribute to the French social secu-rity system (including expatriates). According to the 2004 corporatereport, as of December 31, 2004, Club Méditerranée had 3,799 employ-ees meeting the above criteria, including 616 executive staff (cadres),2,531 non-executives (employés) and 652 service staff (personnel deservice).

Implementation of the 35-hour workweekEmployees at the Company’s headquarters, the Lyon office and the trav-el agencies in France work a 35-hour week. GOs and GEs at the vil-lages in France work a 39-hour week and are entitled to time off cor-responding to the four-hour difference per week. These working hoursand time-off arrangements were agreed with trade union representa-tives. The first agreement, signed in 1999, covers employees of theCompany’s headquarters, Lyon office and the travel agencies. The sec-ond agreement, signed in 2000, concerns village employees. A furtheragreement was signed in July 2002, dealing with night work.


General Information

GENERAL INFORMATION ABOUT THE COMPANY’S CAPITALCAPITAL STOCKAt October 31, 2004, the Company’s capital stock amounted to377,432,020, divided into 19,358,005 common shares with a par valueof 34.00, all fully paid-up. These figures were unchanged from October31, 2003. Shares registered in the name of the same holder for at leasttwo years (305,383 as of October 31, 2004) carry double voting rights.

POTENTIAL CAPITALThe exercise of all outstanding equity warrants and stock options wouldresult in the capital being increased to 390,228,940 consisting of22,557,235 shares of common stock, or a potential dilution of 16.5%. Thesefigures take into account all the securities outstanding at October 31, 2004that are convertible, redeemable, exchangeable or otherwise exercisablefor common shares at a future date.

19,358,005 shares outstanding at October 31, 2004+ 2,404,733 convertible bonds (OCEANEs) due October 31, 2008+ 794,497 stock options outstanding at October 31, 2004= 22,557,235 potential shares at October 31, 2004

AUTHORIZED, UNISSUED CAPITALThe Extraordinary Shareholders’ Meeting of March 17, 2003 approvedseveral resolutions authorizing the Executive Board to increase theCompany’s capital. The Executive Board may delegate the right to usethese authorizations to the Chairman, pursuant to Article L. 225-129-IIIof the Commercial Code. The purpose of these authorizations is toenable the Executive Board to raise financing by various methodsdepending on the circumstances.

FINANCIAL AUTHORIZATIONS AT OCTOBER 31, 2004

Authorization Maximum Duration Expiration date Used in fiscal Total used amount 2004

Shares and share equivalents with pre-emptive subscription rights 26 months May 16, 2005 Not used

Shares and share equivalents Debt: 3500 million 26 months May 16, 2005 Debt securities: Debt securities(2):without pre-emptive Equity: 350 million 3149.99 million 3149.99 millionsubscription rights Potential capital: Potential capital:

312.37 million 312.37 million

Shares and share equivalents 26 months May 16, 2005 Not usedin connection with a Public Exchange Offer

Bonus share issue or 3400 million 26 months May 16, 2005 Not usedincrease in par value of existing shares

Employee share issue 33.5 million 26 months May 16, 2005 Not used

Stock options for corporateofficers and employees (1) 26 months May 16, 2005 272,000 options 272,000 options

(1) The number of outstanding options may not exceed one-third of the Company’s common stock (Article L. 225-182 of the Commercial Code and Article D174-17 of

the Decree of March 23, 1967).

(2) The Executive Board report is available at Company headquarters.


CHANGES IN CAPITAL SINCE OCTOBER 31, 1999

Date Capital stock Additional Number of shares Type of transaction paid-in capital

7 ‘000s 7 ‘000sAt Oct. 31, 1999 58,663 - 15,392,068

1,409 19,946 369,598 Exercise of options6,946 140,003 1,822,585 Conversion of bonds1,073 19,322 281,656 Exercise of warrants

At Oct. 31, 2000 68,091 - 17,865,907

3,622 75,508 - Conversion of capital677 9,540 169,213 Employee share issue

5,042 90,753 1,322,885 Exercise of warrantsAt Oct. 31, 2001 77,432 - 19,358,005

- Conversion of capital- Employee share issue

Exercise of warrantsAt Oct. 31, 2002 77,432 - 19,358,005






ANALYSIS OF OWNERSHIP STRUCTURE OVER THE LAST THREE YEARS

Number of shares Voting rightsJan. 3, 2005 % Jan. 3, 2005 %

Accor 5,600,000 28.9 5,600,000 28.9Rolaco 909,577 4.7 909,577 4.7Nippon Life 769,731 4.0 769,731 4,0

Total Supervisory Board 7,279,308 37.6 7,279,308 37.5

Treasury stock 257,165 1.3 - -Employees 121,230 0.6 242,460 1.2Richelieu mutual fund 3,296,857 17.0 3,296,857 17.0French institutions 2,533,435 13.1 2,631,392 13.6Foreign institutions 2,750,756 14.2 2,753,780 14.2Public and other 3,119,254 16.1 3,202,426 16.5

Total 19,358,005 100.0 19,406,223 100.0

General Information

Single voting rights 19,358,005+ Double voting rights 305,383- Treasury stock 257,165Total voting rights 19,406,223

Number of shares Voting rightsJan. 2, 2003 % Jan. 3, 2004 % Jan. 2, 2003 % Jan. 3, 2004 %

Exor/Ifil 4,609,241 23.8 4,629,741 23.9 7,436,048 32.5 7,470,000 33.3CDC 1,589,085 8.2 1,586,732 8.2 1,732,547 7.6 1,730,194 7.7Rolaco 909,577 4.7 909,577 4.7 909,577 4.0 909,577 4.1Nippon Life 769,680 4.0 769,731 4.0 769,680 3.4 769,731 3.4

Total Supervisory Board 7,877,583 40.7 7,895,781 40.8 10,847,852 47.5 10,879,502 48.5

Treasury stock 238,678 1.2 300,669 1.6 - - - -Employees 191,140 1.0 174,620 0.9 220,690 1.0 349,240 1.6French institutions 4,413,171 22.8 3,819,762 19.7 4,583,711 20.0 3,761,730 16.8Foreign institutions 2,551,365 13.2 2,488,693 12.9 2,736,385 12.0 2,498,713 11.1Public and other 4,086,068 21.1 4,678,480 24.2 4,463,228 19.5 4,928,160 22.0

Total 19,358,005 100.0 19,358,005 100.0 22,851,866 100.0 22,417,345 100.0


CHANGES IN OWNERSHIP STRUCTUREOVER THE LAST THREE YEARSChanges in ownership structure over the last three years have been asfollows:

• 2002: The Agnelli Group’s interest, held through its Exor and IFIL sub-sidiaries, increased from 21.2% to 23.81% of the capital and from30.3% to 32.86% of the voting rights.

Following the merger of CDC Participations into CDC Ixis, Caissedes Dépôts et Consignations forfeited its double voting rights, there-by reducing its interest in the Company’s voting rights to below the10% disclosure threshold, with 7.56% of the voting rights repre-senting 8.30% of capital.

On January 17, 2002, FRM Corp. and FIL (Fidelity) raised their inter-ests to above the 5% disclosure threshold, with 5.73% of the capital.On October 10, these two companies reduced their interests to belowthe 5% disclosure threshold, with 4.85% of the capital.

• 2003: there were no significant changes in the ownership structure dur-ing the year.

• 2004: On October 22, 2004, Accor acquired a 28.9% interest in theCompany by purchasing the shares held by our two historic share-holders, the Agnelli Group (through its Exor and IFIL subsidiaries) andCaisse des Dépôts et Consignations.

On October 19, 2004 Richelieu Finance disclosed to the Autorité desMarchés Financiers that the number of Club Méditerranée shares heldin its managed funds and portfolios had exceeded the 10% threshold,at 10.22% of the capital. On January 25, 2005, Richelieu Finance informedthe Company that it held 3,668,857 shares of Club Méditerranée commonstock, representing 18.95% of the capital. On February 9, 2005, RichelieuFinance disclosed to the Autorité des Marchés Financiers that its holdingshad exceeded the 20% threshold, at 20.13% of the capital.

AUTHORIZATION TO TRADE IN THE COMPANY’S SHARESThe authorization given to the Executive Board to trade in theCompany’s shares on the stock market, as provided under ArticlesL. 225-209 et seq. of the Commercial Code, was renewed at the AnnualShareholders’ Meeting of March 11, 2004 (9th resolution) for a furtherperiod of eighteen months. Under the terms of this authorization, thenumber of shares purchased may not exceed 10% of the capital stock.

The authorization may be used, in the following order:• To purchase and sell shares to stabilize the stock price by trading

against the market.• To purchase shares for allocation on exercise of stock options granted

by the Company or other Group entities.• To purchase and sell shares based on market conditions.• To purchase shares for allocation in settlement of amounts due under

employee profit-sharing plans or for allocation to employee share own-ership plans.

• To purchase shares to be exchanged for stock in other companiesor in connection with the issue of share equivalents.

• To purchase shares in connection with the management of theCompany’s assets and liabilities and financial position.

• To purchase shares to be held or, if appropriate, sold or transferredby any appropriate method in connection with the active managementof the Company’s equity funds, taking into account its financing needs.

As of January 3, 2005, the Company had used the March 11, 2004 author-ization to purchase 264,765 shares and sell 291,269 shares. The totalamount of these transactions, including taxes and other transaction costs,was 317,590.

As of October 31, 2004, a total of 257,000 shares were held in treas-ury. At the Annual Meeting on March 16, 2005, shareholders will be askedto approve a new authorization, based on an information memorandumto be filed with the Autorité des Marchés Financiers.

SHAREHOLDERS’ PACTSTo the best of the Company’s knowledge, no shareholders’ pacts existto act in concert.


Club Méditerranée shares have been traded on the first market of theEuronext Paris market since 1966. Club Méditerranée is one of the 120stocks included in the SBF 120 index. As of February 9, 2005, its indexweighting was 0.07%. Transactions in Club Méditerranée shares can besettled under the Paris market’s SRD deferred settlement system.Common shares are traded under ISIN code FR 0000 121568. Betweenthe beginning of each fiscal year and the ex-dividend date, new sharesissued ex-dividend are traded on the cash settlement market. For sev-eral years, Club Méditerranée shares have been selected as a supportfor covered warrants issued by various banks.

To inform shareholders, financial analysts, brokers, portfolio managers andprivate investors of developments affecting the Group, press releases aredistributed to the main press agencies and published in a number ofnewspapers, as well as on the Company’s website.

Prices and trading volumes for Club Méditerranée common stock andOCEANE convertible/exchangeable bonds are presented below.

General Information

THE MARKET FOR CLUB MÉDITERRANÉE SHARES

TRADING PERFORMANCE OF CLUB MÉDITERRANÉE SA SECURITIES

Common stock (ISIN: FR 0000 121568) Monthly share price Monthly average(euros) daily trading volume

(number of sharestraded and

thousands of euros)

High Low Average (1) No. of shares Capital

July 2003 32.06 26.90 29.80 78,692 2,327

August 2003 35.00 30.52 33.59 77,721 2,615

September 2003 33.66 28.98 30.90 81,320 2,522

October 2003 33.63 29.75 31.53 43,170 1,364

November 2003 33.60 30.61 32.72 39,809 1,286

December 2003 33.75 29.65 31.94 38,121 1,221

January 2004 37.33 29.20 33.05 51,411 1,723

February 2004 35.35 32.60 33.87 43,579 1,476

March 2004 39.45 32.10 34.40 57,253 2,019

April 2004 37.00 33.53 35.17 25,688 908

May 2004 35.37 30.67 33.11 28,525 940

June 2004 40.00 33.17 36.59 113,944 4,302

July 2004 38.65 36.22 37.49 33,534 1,260

August 2004 37.50 34.50 36.02 21,093 761

September 2004 39.00 36.70 37.77 47,292 1,793

October 2004 38.98 35.30 37.42 337,386 14,607

November 2004 36.45 34.00 35.19 49,094 1,731

December 2004 35.70 33.45 34.87 80,405 2,828

Source: Fininfo

(1) Average daily closing price


3% OCEANE convertible/exchangeable bonds Monthly price Monthly average(face value 58 euros) (euros) daily trading volume(ISIN: FR 0000 180184) (number of bonds

traded and thousands of euros)

High Low Average (1) No. of bonds Capital

July 2003 61.40 55.55 60.14 1,995 120

August 2003 61.00 59.80 60.28 621 37

September 2003 62.55 60.00 61.09 1,018 62

October 2003 62.00 60.70 61.34 662 41

November 2003 61.19 59.00 60.56 1,394 84

December 2003 61.00 59.00 60.44 4,065 247

January 2004 61.51 60.00 60.79 720 44

February 2004 61.00 59.15 60.37 1,800 109

March 2004 62.55 60.50 61.67 220 14

April 2004 65.00 62.00 62.79 188 12

May 2004 64.70 63.25 63.90 1,227 78

June 2004 64.70 62.50 63.87 413 27

July 2004 65.00 63.00 64.34 127 8

August 2004 64.75 64.00 64.39 700 45

September 2004 66.00 64.55 65.06 161 10

October 2004 65.60 64.65 65.09 375 27

November 2004 64.00 63.10 63.62 752 48

December 2004 64.00 63.30 63.70 1,027 65

Source: Fininfo


4.375% OCEANE convertible/exchangeable bonds Monthly price Monthly average(face value 48.50 euros) (euros) daily trading volume(ISIN: FR 0010 130732) (number of bonds

traded and thousands of euros)

High Low Average (1) No. of bonds Capital

November 2004 48.90 47.30 48.35 2,652 128

December 2004 49.40 48.20 48.81 1,578 77

Source: Fininfo



Years Number Dividend for the year Share price Yield incl.ended Oct. 31 of shares tax credit based on

Oct. 31 share price

Net Tax credit Total High Low Oct. 312002 19,358,005 - - - 56.57 17.32 24.302003 19,358,005 - - - 35.00 15.90 32.562004 19,358,005 - - - 40.00 29.20 35.30

Dividends not claimed within five years are forfeited.

General Information

DIVIDENDS

CORPORATE GOVERNANCEDIRECTORS’ INTERESTS• Management compensation

The total gross compensation paid to the members of the ExecutiveBoard, including benefits in kind and expatriation allowances, for the yearended October 31, 2004 was as follows:

In euros

Fixed Variablecompensation compensation

Henri Giscard d’Estaing 586,937 197,150François Salamon 319,986 56,300Michel Wolfovski 288,009 68,150

The variable portion of management compensation is based on part onthe Company’s earnings performance and in part on the attainment ofindividual objectives. Members of the Executive Board were granted stockoptions in fiscal 2004. No loans or guarantees have been granted tomembers of the Executive Board.

Outstanding stock options granted in prior years

Plan F Plan F2 Plan G Plan G3 Plan G5 Plan H Plan I

Exercise dates 50% as of 50% as of Feb. 7, Feb. 6, Feb. 5, March 1, Jan. 15,Aug. 18, 2002 March 24, 2003 2005 2005 2006 2006 2007+ balance as + balance as

of Aug. 18, 2003 of March 24, 2004

Exercise price (euros) 68.8 70.81 111.11 92.78 44.74 35.00 31.03

Henri Giscard d’Estaing 51,099 25,000 130,000 33,000

François Salamon 10,000 25,000 15,000

Michel Wolfovski 10,000 5,000 5,000 30,000 10,000

Options granted to Henri Giscard d’Estaing under Plan F5 were cancelled after conditions for their exercise were not fulfilled.


The total gross compensation paid to the nine members of theExecutive Committee, including Executive Board members, in fiscal2004 amounted to 33,364,688 (33,564,373 in fiscal 2003).

• Supervisory Board compensation

Total compensation and benefits paid to the members of theSupervisory Board in fiscal 2004 was as follows:

In euros

Members of the Supervisory Board

A.Al Sulaiman (resigned Dec. 12, 2003)

S.Al Sulaiman (appointed Dec. 12, 2003)

L.Arnaudo (term ended March 17, 2003) 10,457

E. Bertier (appointed June 12, 2003) 5,083

T.R Brandolini d’Adda 47,851

D. Dautresme 23,180

M. Dupont (resigned June 12, 2003) 30,683

R. Espirito Santo Silva Salgado (elected March 17, 2003) 3,812

G.Gabetti 4,880

P. Jeanbart 26,672

P. Lagayette (resigned May 12, 2003) 8,133

P. Lebard 382,577

P. Martinet 33,327

A.C.Taittinger (appointed June 12, 2003) 7,523

K. Ujihara 3,050

W. Stricker 62,546

D.Winteler (elected March 17, 2003)

Directors’ fees are allocated among the Supervisory Board membersbased on recommendations of the Remunerations Committee and themembers’ attendance rates at meetings of the Supervisory Board andits committees. In fiscal 2003, out of the total fees of 3305,000 votedby the Annual Shareholders’ Meeting of March 17, 2003, 3244,000were allocated based on attendance of Supervisory Board meetings and361,000 based on attendance at meetings of Board Committees.

No loans or guarantees have been granted to members of theSupervisory Board.

• Agreements involving directors (Article L.225-86 of the Commercial Code)

(See Special Auditors’ Report on these agreements in the sectionAdditional Information.)

Certain agreements between Club Méditerranée and other companieswith common directors – most of which are wholly-owned by ClubMéditerranée SA – are considered as having been entered into in thenormal course of business, at arm’s length terms. The agreements inquestion deal with internal matters such as loans and guarantees,transfers of equity interests, the provision of services, the allocation ofoverheads and the payment of management fees, which do not involveany transactions between the Company and any other group of inter-ests. The list of arm’s length agreements entered into during the year isavailable for consultation at the Company’s headquarters.

EMPLOYEE PROFIT-SHARING AND INCENTIVE PLANS

Employee incentive plan

The last incentive bonus plan governed by section I of Government orderno. 86-1134 dated October 22, 1986 was set up on June 26, 1990 andcovered the period from November 1, 1989 to October 31, 1992.

Employee profit-sharing plan

The last employee profit-sharing plan for employees of three Frenchcompanies in the Group, Club Méditerranée SA, Société Martiniquaisede Villages de Vacances and Société Hôtelière du Chablais, expired onOctober 31, 1992. The plan has not been renewed because since thatdate the companies concerned have not generated sufficient earningsto permit an allocation to the profit-sharing reserve.

Employee share ownership

An Employee Share Ownership Plan was set up in March 2001 and arelated employee share issue was carried out during the summer.


No employee share issue has been carried out since. Through mutualfunds set up in connection with this plan and the earlier plans estab-lished between 1986 and 1991, a total of 121,230 shares were held byGroup employees as of January 2, 2005, representing 0.6% of theCompany’s capital stock.

Stock options have been granted to certain employees and officers ofthe Company (see below).

Employee stock options

Set up in fiscal 2004, option plan I provides for the grant of 272,000options, as follows:

Plan 1

Number of potential new shares to be issued 272,000

Exercise price 331.03

Exercise period expires January 14, 2014

General Information

Details of the stock option plans in place as of October 31, 2004 for corporate officers and full-time GOs are presented below.

1997 1998 1999 2000 2001 2002 2003 2004Plan F Plan F2 Plan F3 Plan F4 Plan F5 Plan G Plan G2 Plan G3 Plan G4 Plan G5 Plan H Plan I

Date of Shareholders’ Meeting 04/23/97 04/23/97 04/23/97 04/23/97 04/23/97 04/23/97 04/23/97 04/23/97 04/23/97 04/23/97 03/29/02 03/17/03

Date of Executive Board Meeting 08/18/97 03/24/98 08/24/98 02/17/99 07/29/99 02/07/00 07/26/00 02/06/01 07/24/01 02/05/02 02/28/03 01/15/04

Number of new or existing shares to be purchased 663,370 73,500 9,000 21,000 46,000 258,400 21,815 212,530 37,400 127,000 283,000 272,000

o/w number of new or existing shares to be purchased by members of the Executive Committee as of 10/31/04 61,319 10,000 1,000 - 33,000 4,000 27,600 2,000 23,000 244,000 109,000

Number of executives concerned 2 1 - 1 - 4 1 5 1 3 9 10

Starting date of exercise period 50% as of 50% as of 50% as of 50% as of 50% as of 02/07/05 07/26/04 02/06/05 07/24/05 02/05/06 03/01/06 01/15/07

08/18/02 03/24/03 08/24/03 02/17/04 07/23/04 + ban on + ban on + balance + balance + balance + balance + balance resale resale 08/18/03 03/24/04 08/24/04 02/17/05 07/23/05 before before

02/28/07 01/14/08

Expiry date 08/17/07 03/23/08 08/23/08 02/16/09 07/22/09 02/06/10 07/25/10 02/05/11 07/23/11 02/04/12 02/27/13 02/14/14

Exercise price(euros) 68.80 70.81 79.12 81.13 92.79 111.11 136.13 92.78 63.99 44.74 35 31.03

Options outstanding at October 31, 2004 122,640 14,500 4,000 11,000 4,000 104,842 11,200 131,365 15,900 109,800 262,000 265,250

* Plan I grants options to purchase new shares of common stock, which have already been issued and are currently held in treasury. Their exercise would therefore not have the

effect of increasing the Company’s capital.

All of the options granted under Plan F5 were cancelled after conditions for their exercise were not fulfilled.

The difference between the total number of new or existing shares to be purchased and the number of options outstanding at October 31, 2004 corresponds to options

granted to employees who subsequently left the company without exercising them. These options have been canceled. No options were exercised during the year.


Details of options granted to the ten employees, other than corporate officers, who received the largest number of options during the year were as follows:

Plan I

Exercise price (euros) 31.03

Starting date of exercise period January 15, 2007

Number of options granted during the year to the ten employees,other than corporate officers, who received the largest number of options 58,500

There are no other clauses granting preferential terms for the purchase or sale of shares representing at least 0.5% of outstanding shares or votingrights of the Company.

CORPORATE GOVERNANCE AND CONTROLClub Méditerranée adopted a two-tier management structure, with aSupervisory Board and an Executive Board, following the AnnualShareholders’ Meeting of April 23, 1997.

1. Executive BoardThe Executive Board, which is responsible for managing the business, hasat least two and no more than four members. They are appointed bythe Supervisory Board, which also decides on their number. The cur-rent Executive Board has three members. Henri Giscard d’Estaing wasappointed Chairman of the Executive Board on December 17, 2002. TheExecutive Board met twelve times during fiscal 2004.

2. Supervisory BoardThe Supervisory Board has at least three and no more than eighteenmembers, all elected by shareholders in Annual Meeting. There are cur-rently eleven members, none of which qualify as an employee-electedmember. The bylaws stipulate that each Supervisory Board member musthold at least 50 Club Méditerranée shares.

David Dautresme was appointed Chairman of the Supervisory Boardon October 22, 2004.

The Supervisory Board met four times during fiscal 2004. The attendancerates at these meetings were 10/13 (December 12, 2003), 9/13 (March11, 2004), 7/13 (June 10, 2004) and 7/11 (October 22, 2004).

The activities of the Supervisory Board are primarily governed by the Board’soperating procedures. These procedures deal with the activities of the Boardcommittees and require all members to preserve the confidentiality of anyinformation made available to them in their capacity as members of theSupervisory Board. The operating procedures also establish the rules of con-duct to be followed concerning issues brought before the Supervisory Board,where a member is an “insider” within the meaning of Article 10-1 of gov-ernment order 67-833 dated September 28, 1967, or where the member,

or any company represented by the member, or any company that he orshe manages or in which he or she has a direct or indirect interest, has aconflict of interests with the Company or any of its subsidiaries.Where mem-bers are in either of these situations, they are required either to abstain fromvoting or to immediately resign from the Supervisory Board or notify theSupervisory Board or its Chairman without delay.

INDEPENDENT DIRECTORS (AS DEFINED IN THE BOUTON REPORT)At its meeting on October 22, 2004, the Supervisory Board reviewedthe assessment of the level of independence of the various Board mem-bers, based on the criteria used in the Bouton report on corporate gov-ernance. According to this report, directors in the following situationsare not independent: directors who represent a shareholder that ownsmore than 10% of the Company’s common stock, directors with fami-ly ties, directors with an employment contract, directors with a seat onthe Board of another company of which the Company is also a direc-tor, directors whose term of office exceeds a certain period, directorswho were employed by the Company’s auditors and worked on theaudit of the Company’s accounts in any of the five preceding years anddirectors who have material business interests with the Company.

Based on the assessment, the Supervisory Board concluded that sevenof its eleven current members are independent. This represents morethan the 50% minimum recommended in the Bouton report. Thedetailed information below concerning each Supervisory Board mem-ber indicates whether he or she is an independent director.

CHANGES SINCE THE ANNUALSHAREHOLDERS’ MEETING OF MARCH 11, 2004Supervisory Board

Tiberto Ruy Brandolini d’Adda resigned from the Supervisory Board onOctober 21, 2004. He was replaced by Jean-Marc Espalioux, who wasappointed on October 22, 2004.


Anne-Claire Taittinger resigned from the Supervisory Board on October20, 2004. She was replaced by Véronique Morali, who was appointedon October 22, 2004.

Etienne Bertier resigned from the Supervisory Board on July 6, 2004. Hewas replaced by Serge Ragozin, who was appointed on October 22, 2004.

Pierre Martinet resigned from the Supervisory Board on October 21,2004. He was replaced by Jacques Stern, who was appointed onOctober 22, 2004.

Gianluigi Gabetti resigned from the Supervisory Board on October21, 2004. He was replaced by Pierre Todorov, who was appointedon October 22, 2004.

Willy Stricker and Daniel J.Winteler also resigned from the SupervisoryBoard on October 21, 2004.

To reflect the new ownership structure, on October 22, 2004, theSupervisory Board deemed it more appropriate for the Company tobe governed by a single-tier system, with a Board of Directors. Therequired change in the by-laws has been submitted to shareholderapproval at the combined Annual and Extraordinary Shareholders’Meeting on March 16, 2005.

At the same Meeting, shareholders will be asked to elect the new mem-bers of the Board of Directors, as presented on page 132.

Henri Giscard d’Estaing, who is currently Chairman of the ExecutiveBoard, will chair the new Board of Directors and serve as theCompany’s Chairman and Chief Executive Officer. The other twoExecutive Board members, François Salamon and Michel Wolfovski, willbe appointed Chief Operating Officers.

EXECUTIVE BOARDMembers of the Executive Board and their other directorships are asfollows.

Henri Giscard d’Estaing

ChairmanBorn October 17, 1956FrenchOfficer of the Company since July 17, 1997Re-appointed March 29, 2002Term expires at the 2007 Annual Shareholders’ Meeting

Other functions within the Group

Chairman of:Club Med World Holding (Paris)Jet tours SA (Ivry)

Chairman and Founding Director of:Fondation d’entreprise Club Méditerranée

Senior Executive of:Club Med Management Asia Ltd. (Hong Kong)

Permanent representative of:Hoteltour, on the Board of CM Middle East BV (Netherlands)Loin SARL, on the Board of SECAG Caraïbes (Paris)

Chairman of the Board of:Club Med Services Singapore Pte Ltd (Singapore)

Director of:Holiday Hôtels AG (Switzerland)Carthago (Tunisia)

Other directorships:

Director of:Casino, Guichard-Perrachon

François Salamon

Born July 23, 1953FrenchOfficer of the Company since December 16, 2002Term expires at the 2007 Annual Shareholders’ Meeting


Senior Executive of:Club Méditerranée Israel Ltd (Israel)Vacances (Proprietary) Ltd (South Africa)

General Information


Legal Manager of:Club Med Viagens Lda (Portugal)

Director of:Sociedade Hoteleira Da Balaia (Portugal)HOCASA (Spain)SACM (Spain)TEK AE (Greece)Carthago (Tunisia)

Founding Director of:Fondation d’Entreprise Club Méditerranée

Other directorships: none

Michel Wolfovski

Born April 3, 1957FrenchOfficer of the Company since December 16, 2002Term expires at the 2007 Annual Shareholders’ Meeting


Permanent representative of:Club Méditerranée S.A. on the Board of Club Med World Holding (Paris)

Director of:Jet tours SA (Ivry)

Other directorships: none

SUPERVISORY BOARDMembers of the Supervisory Board and their other directorships areas follows:

David Dautresme

Chairman of the Supervisory BoardBorn January 5, 1934FrenchFirst elected April 23, 1997Re-elected March 17, 2003Term expires at the 2006 Annual Shareholders’ MeetingNumber of shares held: 1,591Independent: yes

Main function outside the Group:Senior Advisor, Lazard et Frères

Other directorships (outside the Group)

Member of the Supervisory Board of:Casino (France)AXA (France)

Sole legal manager of:DD Finance (France)

Director of:Fimalac (France)

Non-voting director of:Groupe GO Sport (France)Lazard Frères Banque (France)Eurazeo (France)

Saud Al Sulaiman

Born December 8, 1961Saudi ArabianFirst elected December 12, 2003Term expires at the 2006 Annual Shareholders’ MeetingNumber of shares held: 50Independent: yes

Main function outside the Group: Partner and Managing Director ofRolaco Trading & Contracting and all its subsidiaries (Jeddah, Saudi Arabia)


Chairman of the Board of Directors of:Arabian Cement Company (Saudi Arabia)Rolaco Holding SA (Luxembourg)Hadhan Holding SA (Luxembourg)Oryx Finance Ltd (Grand Cayman)Semiramis Hotels Co. S.A.E. (Egypt)

Jean-Marc Espalioux

Born March 18, 1952FrenchFirst elected October 22, 2004Term expires at the 2006 Annual Shareholders’ MeetingNumber of shares held: 100Independent: no

Main function outside the Group:Chairman of the Management Board - Accor



Director of:Air France Veolia Environnement (France)

Non-voting director on:Supervisory Board of Caisse Nationale des Caisses d’Epargne (France)

Director of:Accor UK (United Kingdom)

Ricardo Espirito Santo SalgadoBorn June 25, 1944PortugueseFirst elected March 17, 2003Term expires at the 2006 Annual Shareholders’ MeetingNumber of shares held: 50Independent: yes

Main function outside the Group: Chairman and Chief Executive Officerof Banco Espirito Santo (Portugal)


Chairman of the Board of Directors of:Espirito Santo Financial Group SA (Luxembourg) Partran - Sociedad Gestora de Participaçoes Sociais (Portugal)

Vice Chairman of:Espirito Santo Bank of Florida (United States)

Member of the Executive Board of:Espirito Santo Group (Portugal)

Director of:Banque Espirito Santo et de la Vénétie (France)Compagnie Bancaire Espirito Santo SA (Switzerland)E-S International Holding SA (Luxembourg)

Member of the Supervisory Board of:Euronext NV

Paul JeanbartBorn August 23, 1939CanadianFirst elected April 23, 1997Re-elected March 17, 2003Term expires at the 2006 Annual Shareholders’ MeetingNumber of shares held: 50Independent: yes

Main function outside the Group: Managing Director of Rolaco HoldingS.A. Luxembourg


Chairman and Chief Executive Officer of:Oryx Finance Limited, Grand CaymanHôtels Intercontinental Genève SA

Managing Director of:Rolaco Holding S.A. Luxembourg and all of its subsidiariesLuxury Brand Development SADirector of:Sodexho Alliance SASemiramis Hôtel Co, EgyptDelta Bank Intenational, EgyptNasco Insurance Group, BermudaXL Capital Limited, Bermuda

Pascal Lebard

Born May 15, 1962FrenchFirst elected April 23, 1997Re-elected March 17, 2003Term expires at the 2006 Annual Shareholders’ MeetingNumber of shares held: 54Independent: no

Main function outside the Group:Managing Director of WORMS & Cie (France)


Chairman and Chief Executive Officer of:Domaines Codem (France)

Director of:Soficol (France)Exint. (France)

Véronique Morali

Born September 12, 1958FrenchFirst elected October 22, 2004Term expires at the 2006 Annual Shareholders’ MeetingIndependent: yes

Main function outside the Group: Chief Operating Officer - Fimalac

General Information



Director of:Eiffage (France)Valeo (France)Cassina SpA (Italy)

Sole director of:FCBS GIE

Director of:Fimalac, Inc. (United States)Fitch, Inc. (United States)Fitch Risk Management, Inc. (United States)Tesco Plc (United Kingdom)

Serge Ragozin

Born September 27, 1954FrenchFirst elected October 22, 2004Term expires at the 2006 Annual Shareholders’ MeetingNumber of shares held: 50Independent: no

Main function outside the Group: Senior Vice President, Global Servicesfor Hotels - Accor


Chairman and Chief Executive Officer of:DEVIMCO (France)

Director of:Go Voyages (France)Accor Asia Belgium

Member of the Supervisory Board of:Accor Hôtellerie Deutschland GMBH (Germany)

Permanent representative of:- Accor, on the Board of Société d’Exploitation d’Hôtels Suites - SEHS

(France)- Accor, on the Board of Société de Construction d’Hôtels Suites - SCHS

(France)

Jacques Stern

Born September 19, 1964FrenchFirst elected October 22, 2004Term expires at the 2006 Annual Shareholders’ MeetingNumber of shares held: 50Independent: no

Main function outside the Group: Chief Financial Officer - Accor


Director of:Société des Hôtels et Casino de Deauville - SHCD (France)Société du Casino de Trouville - SACT (France)Société d’Exploitation des Eaux et Thermes d’Enghein-les-Bains - SEETE(France)Accor Asia (Belgium)Accor Hotels Belgium (Belgium)

Managing Director of:Accordination

Member of the Supervisory Board of:Accor Casinos (France)Financière Courte-Paille (France)Accor Austria (Austria)Dorint AG (Germany)Groupe Lucien Barrière (France)

Permanent representative of:IBL, on the Board of SPIM

Director of:Accor Lodging North America (United States)

Director and President of Officers of:IBL Ltd LLC (United States)

Pierre Todorov

Born May 19, 1958FrenchFirst elected October 22, 2004Term expires at the 2006 Annual Shareholders’ MeetingNumber of shares held: 50Independent: no

Main function outside the Group: General Secretary - Accor



Member of the Supervisory Board of:Accor Casinos (France)Accor Services Participations (France)

Director of:Société des Hôtels et Casino de Deauville - SHCD (France)COBEFIN (Belgium)

Legal manager of:Société de détention d’Actions de Accor Casinos - SDAAC (SNC)(France)

Permanent representative of:- Accor, on the Board of Société de Gestion et de Participations -SOGEPAR (France)- SODETIS, on the Board of Société d’Exploitation d’Hôtels Suites - SEHS(France)- SODETIS, on the Board of Société de Construction d’Hôtels Suites -SCHS (France)

Director of:Accor Lodging North America (United States)DEVIMCO (Netherlands)

Kiyoshi Ujihara

Born November 28, 1948JapaneseFirst elected June 25, 2001Re-elected March 17, 2003Term expires at the 2006 Annual Shareholders’ MeetingNumber of shares held: 50Independent: yes

Main function outside the Group: Director, Chief Investment Officer,Senior General Manager for International Operations of Nippon LifeInsurance Company

Other directorships (outside the Group):

Director of:NLI International Inc.Nippon Life Insurance Company of AmericaPanAgora Asset Management, Inc.NLI International PLCNissay Deutsche Asset Management Europe LimitedNippon Life Insurance Company of the Phillipines, Inc.Nissay Asset Management CorporationNissay Capital Co. Ltd.New Town Center Development Corp.Bangkok Life Assurance Limited

SUPERVISORY BOARD COMMITTEESThe Supervisory Board is assisted by three Committees made up ofSupervisory Board members. The mission of each Committee is deter-mined by the Supervisory Board. The Committees act solely in a con-sultative capacity and report to the Supervisory Board.

Strategy Committee

Members: Jean-Marc Espalioux (Chairman), Serge Ragozin, Pascal Lebard,Kiyoshi Ujihara and Saud Al Sulaiman. The role of the StrategyCommittee is to assess and update Club Méditerranée’s strategy. It reviewsthe Company’s critical avenues to growth, not only in terms of geographicand product markets but also with regard to financial performance. TheCommittee met once in fiscal 2004, during which it discussed the followingmain issues:• A review of the strategic plan, with strategic orientations and budgets.• A report on financing.• Updates on projects such as the upmarket strategy.

Three of the five members of the Strategy Committee are independentdirectors, based on the criteria defined in the Bouton report.

Audit Committee

Members: David Dautresme (Chairman), Jacques Stern, Pascal Lebardand Véronique Morali. The Audit Committee is responsible forreviewing the appropriateness of the Company’s accounting policiesand ensuring that internal financial reporting and control proceduresprovide adequate assurance concerning the reliability of financial infor-mation. The Committee met twice in fiscal 2004, prior to the pres-entation of the interim and annual financial statements. Both meet-ings were attended by the external Auditors. The following mainissues were discussed:• Detailed review of the interim and annual financial statements.• Comments by the auditors.• A report on tax audits underway.• Changes in the Group’s organization.• An update on hedging commitments.• Internal audit projects.• A report on Group insurance strategy.• An update on village asset valuations.

Three of the four members of the Audit Committee are independ-ent directors, based on the criteria defined in the Bouton report.

General Information


Remunerations Committee

Members: Paul Jeanbart (Chairman), Pierre Todorov and Ricardo EspiritoSanto Salgado. The Remunerations Committee is responsible for makingrecommendations to the Supervisory Board concerning the compen-sation to be paid to corporate officers. The Committee met once 2004,during which it discussed the following main issues:

• Appraisal of executive performance and recommendations concerningtheir variable compensation.

• Analysis of the Towers Perrin report regarding the comparative posi-tion of Club Méditerranée’s executive compensation.

• Proposed changes in executive compensation.

Two of the three members of the Remunerations Committee are inde-pendent directors, based on the criteria defined in the Bouton report.

Candidates for election to the Board of Directorsat the March 16,2005 Annual Meeting (1)

In line with the new ownership structure and the Supervisory Boarddecision on October 22, 2004, shareholders at the Combined GeneralMeeting on March 16, 2005 will be asked to approve a change in theCompany’s governance to a single tier system composed of a Board ofDirectors (27th and 30th resolutions). They will also be asked to electtwelve directors to three-year terms ending at the Annual Meeting calledto approve the financial statements for the year ended October 31, 2007(11th to 22nd resolutions):

Saud Al Sulaiman (information, p. 101)

David Dautresme (information, p. 101)

Jean-Marc Espalioux (information, p. 102)

Henri Giscard d’Estaing (information, p. 102)

Paul Jeanbart (information, p. 102)

Pascal Lebard (information, p. 102)

Véronique Morali (information, p. 102)

Serge Ragozin (information, p. 103)

Jacques Stern (information, p. 103)

Pierre Todorov (information, p. 103)

Kiyoshi Ujihara (information, p. 103)

As well as:

Thierry Delaunoy de la Tour d’Artaise

Born October 27, 1954French

Main function outside the Group: Chairman and Chief Executive Officer -SEB


Chairman of:Seb International (France)Groupe Seb Moulinex (France)

Member of the Supervisory Board of:Rowenta Invest BV (Netherlands)

Legal Manager of:Rowenta Deustchland GmbH (Germany)Krups GmbH (Germany)

Director of:Tefal UK (United Kingdom)Groupe Seb Japan (Japan)Groupe Seb Mexicana (Mexico)Siparex Associés (France)

Permanent representative of:Sofinaction, on the Board of Lyonnaise de Banque (France).

(1) Assuming shareholder approval of the change in the Company’sgovernance system.


ADDITIONAL INFORMATION

• 100 Draft resolutions

• 114 Appendix Articles of Incorporation (“Statuts”)


A. ORDINARY RESOLUTIONS

First resolution - Review and approval oftransactions and of corporate financial statementsof the year closed as at october 31,2004

The Shareholders, deciding with the quorum and majority required forOrdinary General Meetings, having reviewed reports by the ExecutiveBoard, the Chairman of the Supervisory Board and the StatutoryAuditors, comments by the Supervisory Board and the corporatefinancial statements as submitted by the Executive Board,approve the financial statements of the year closed as at October 31,2004, as submitted by the Executive Board, which show a net loss aftertax of 77,741,277 euros and the transactions reflected in said financialstatements and summarized in said reports.

In consequence, the Shareholders discharge the members of the ExecutiveBoard and of the Supervisory Board for said fiscal year.

Second resolution - Review and approval of transactions and of consolidated financial statementsof the year closed as at october 31,2004

The Shareholders, deciding with the quorum and majority required forOrdinary General Meetings, having reviewed reports by the ExecutiveBoard, the Chairman of the Supervisory Board and the StatutoryAuditors, comments by the Supervisory Board and the consolidatedfinancial statements as submitted by the Executive Board,approve the consolidated financial statements of the year closed as atOctober 31, 2004, as submitted by the Executive Board, which show agroup’s share of net loss of 44,162 million euros and the transactionsreflected in said financial statements and summarized in said reports.

Third resolution - Appropriation of the results

The Shareholders, deciding with the quorum and majority required forOrdinary General Meetings, after taking into account the reinstatementof the earlier carried forward and on a proposal by the ExecutiveBoard, decide to allocate the loss of the year closed as at October31, 2004 of 77,741,277 euros to the carried forward account, whichnow stands at (325,092,531) euros.

In accordance with the law, the Shareholders specify the dividends paidout over the last three financial years:

2000/01 2001/02 2002/03

Number of shares remunerated 19,358,005 19,358,005 19,358,005Net dividend paid out - - -Tax Credit - - -

Fourth resolution - Approval of the agreementsreferred to under Article L.225-86 and ff. of the Commercial Code

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, having reviewed the special report bythe Statutory Auditors on the agreements referred to under ArticlesL. 225-86 and ff. of the Commercial Code, approve the transactions andthe agreements signed or performed during the financial year closed asat October 31, 2004.

Fifth resolution - Setting of the annual amountof directors’ fees

The Shareholders, deciding with the quorum and majority required forOrdinary General Meetings, having reviewed the report by theExecutive Board, decide to set the total annual amount of directors’fees for the fiscal year beginning on November 1, 2004 and ending onOctober 31, 2005 at the amount of 305,000 euros.

Provided that the twenty seventh and thirtieth resolutions are passed,said amount shall be allocated according to the prorata temporis rule,on a daily basis, to the members of the Supervisory Board up to thedate of this Meeting and, to directors, as from the date of this Meetinguntil the end of the fiscal year.

Sixth resolution - Approval of the co-optation of Mr. Jean-Marc Espalioux as member of the Supervisory Board

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, approve the appointment, as memberof the Company’s Supervisory Board, of Mr. Jean-Marc Espalioux whowas co-opted by the Supervisory Board at its meeting on October 22,2004 to replace Mr. Tiberto Ruy Brandolini d’Adda, for the term toexpire of the latter’s term of office, i.e. until the General Meeting calledto decide on the financial statements of the year closed as at October31, 2005.

DRAFT RESOLUTIONS


Additional Information

Seventh resolution - Approval of the co-optation of Mrs. Véronique Morali as memberof the Supervisory Board

The Shareholders, deciding with the quorum and majority required forOrdinary General Meetings, approve the appointment, as member ofthe Company’s Supervisory Board, of Mrs. Véronique Morali who wasco-opted by the Supervisory Board at its meeting on October 22, 2004to replace Mrs. Anne-Claire Taittinger, for the term to expire of thelatter’s term of office, i.e. until the General Meeting called to decideon the financial statements of the year closed as at October 31, 2005.

Eighth resolution - Approval of the co-optationof Mr.Serge Ragozin as member of the SupervisoryBoard

The Shareholders, deciding with the quorum and majority required forOrdinary General Meetings, approve the appointment, as member ofthe Company’s Supervisory Board, of Mr. Serge Ragozin who wasco-opted by the Supervisory Board at its meeting on October 22, 2004to replace Mr. Etienne Bertier, for the term to expire of the latter’sterm of office, i.e. until the General Meeting called to decide on thefinancial statements of the year closed as at October 31, 2005.

Ninth resolution - Approval of the co-optationof Mr. Jacques Stern as member of the SupervisoryBoard

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, approve the appointment, as memberof the Company’s Supervisory Board, of Mr. Jacques Stern who wasco-opted by the Supervisory Board at its meeting on October 22,2004 to replace Mr. Pierre Martinet, for the term to expire of thelatter’s term of office, i.e. until the General Meeting called to decideon the financial statements of the year closed as at October 31, 2005.

Tenth resolution - Approval of theco-optation of Mr.Pierre Todorov as memberof the Supervisory Board

The Shareholders, deciding with the quorum and majority required forOrdinary General Meetings, approve the appointment, as member ofthe Company’s Supervisory Board, of Mr. Pierre Todorov who wasco-opted by the Supervisory Board at its meeting on October 22, 2004to replace Mr. Gianluigi Gabetti, for the term to expire of the latter’sterm of office, i.e. until the General Meeting called to decide on thefinancial statements of the year closed as at October 31, 2005.

Eleventh resolution - Appointment ofMr.SaudAl Sulaiman as Director

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, having reviewed the report by theExecutive Board and on proposal by the Executive Board, providedthe twenty seventh and thirtieth resolutions are passed,

decide to appoint, as from today’s date

- Mr. Saud Al Sulaiman, c/o Rolaco Trading & Contracting, Medina Road,Al Sulaiman Building - 21411 Jeddah (Saudi Arabia),

as director for a term of 3 years, i.e. until the Meeting called to decideon the financial statements closed as at October 31, 2007.

Mr. Al Sulaiman represents, provided the twenty seventh and thirtiethresolutions are passed, that he accepts said duties and satisfies allconditions required to discharge same.

Twelfth resolution - Appointmentof Mr.David Dautresme as Director

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, having reviewed the report by theExecutive Board and on proposal by the Executive Board, providedthe twenty seventh and thir tieth resolutions are passed,


- Mr. David Dautresme, residing at 67 rue de Miromesnil, Paris75008,


Mr. Dautresme represents, provided that the twenty seventh andthir tieth resolutions are passed, that he accepts said duties andsatisfies all conditions required to discharge same.


Thirteenth resolution - Appointment of Mr.ThierryDelaunoy de la Tour d’Artaise as Director

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, having reviewed the report by theExecutive Board and on proposal by the Executive Board, providedthe twenty seventh and thirtieth resolutions are passed,


- Mr. Thierry Delaunoy de la Tour d’Artaise, residing at 40 bld des Belges,Lyon 69006,


Mr. Delaunoy de la Tour d’Artaise represents, provided the twentyseventh and thir tieth resolutions are passed, that he accepts saidduties and satisfies all conditions required to discharge same.

Fourteenth resolution - Appointmentof Mr. Jean-Marc Espalioux as Director

The Shareholders, deciding with the quorum and majority required forOrdinary General Meetings, having reviewed the report by theExecutive Board and on proposal by the Executive Board, provided thetwenty seventh and thirtieth resolutions are passed,


- Mr. Jean-Marc Espalioux, residing at Tour Maine Montparnasse,33 avenue du Maine, Paris 75015,


Mr. Espalioux represents, provided the twenty seventh and thirtiethresolutions are passed, that he accepts said duties and satisfies allconditions required to discharge same.

Fifteenth resolution - Appointment ofMr.Henri Giscard d’Estaing as Director


decide to appoint, as from today’s date:

- Mr. Henri Giscard d’Estaing, c/o Club Méditerranée SA, 11 rue deCambrai, Paris 75019,


Mr. Giscard d’Estaing represents, provided the twenty seventh andthir tieth resolutions are passed, that he accepts said duties andsatisfies all conditions required to discharge same.

Sixteenth resolution - Appointmentof Mr.Paul Jeanbart as Director

The Shareholders, deciding with the quorum and majority required forOrdinary General Meetings, having reviewed the report by theExecutive Board and on proposal by the Executive Board, provided thetwenty seventh and thirtieth resolutions are passed,


- Mr. Paul Jeanbart, residing at 19 rue de la Capite, 1223 Cologny, Geneva(Switzerland),


Mr. Jeanbart represents, provided the twenty seventh and thir tiethresolutions are passed, that he accepts said duties and satisfies allconditions required to discharge same.

Seventeenth resolution - Appointmentof Mr.Pascal Lebard as Director

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, having reviewed the report by theExecutive Board and on proposal by the Executive Board, provided thetwenty seventh and thirtieth resolutions are passed,


- Mr. Pascal Lebard, residing at 6 rue Meissonnier, Paris 75017,


Mr. Lebard represents, provided the twenty seventh and thir tiethresolutions are passed, that he accepts said duties and satisfies allconditions required to discharge same.

Eighteenth resolution - Appointmentof Mrs. Véronique Morali as Director



- Mrs. Véronique Morali, residing at 7 rue de la Chaise, Paris 75007,




Mrs. Morali represents, provided the twenty seventh and thir tiethresolutions are passed, that she accepts said duties and satisfies allconditions required to discharge same.

Nineteenth resolution - Appointmentof Mr.Serge Ragozin as Director

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, having reviewed the report by theExecutive Board and on proposal by the Executive Board, provided thetwenty seventh and thirtieth resolutions are passed,


- Mr. Serge Ragozin, residing at Tour Maine Montparnasse, 33 avenue duMaine, Paris 75015,


Mr. Ragozin represents, provided the twenty seventh and thir tiethresolutions are passed, that he accepts said duties and satisfies allconditions required to discharge same.

Twentieth resolution - Appointmentof Mr. Jacques Stern as Director



- Mr. Jacques Stern, residing at Tour Maine Montparnasse, 33 avenuedu Maine, Paris 75015,


Mr. Stern represents, provided the twenty seventh and thirtieth reso-lutions are passed, that he accepts said duties and satisfies all conditionsrequired to discharge same.

Twenty first resolution - Appointmentof Mr.Pierre Todorov as Director



- Mr. Pierre Todorov, residing at Tour Maine Montparnasse, 33 avenuedu Maine, Paris 75015,

as director for a term of 3 years, i.e. until the Meeting called to decide onthe financial statements closed as at October 31, 2007.

Mr. Todorov represents, provided the twenty seventh and thir tiethresolutions are passed, that he accepts said duties and satisfies allconditions required to discharge same.

Twenty second resolution - Appointmentof Mr.Kiyoshi Ujihara as Director

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, having reviewed the report by theExecutive Board and on proposal by the Executive Board, providedthe twenty seventh and thir tieth resolutions are passed


- Mr. Kiyoshi Ujihara, residing at 2-36-13, Utsukushigaokanishi Aoba-ku,Yokohama Kanagawa-Ken 225-0001 (Japon),


Mr. Ujihara represents, provided the twenty seventh and thir tiethresolutions are passed, that he accepts said duties and satisfies allconditions required to discharge same.

Twenty third resolution - Change of corporatename of one of the Company’s Statutory Auditors

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, having reviewed the report by theExecutive Board

take official note of the change of corporate name of the company“Deloitte Touche Tohmatsu - Audit”, the Company’s statutory audi-tors, whose corporate name is now “Deloitte & Associés”.

In consequence, the Shareholders grant the Company’s legal represen-tative all powers to carry out necessary formalities relating to publicdisclosure, registration, filing and other formalities.


Twenty fourth resolution - Authorization to be granted in view of a new program by the Companyto buy out its own shares

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, having reviewed the report by theExecutive Board and the prospectus stamped by the Autorité desMarchés Financiers1 and in accordance with the provisions of ArticlesL. 225-209 and ff. of the Commercial Code and CommissionRegulation (EC) No. 2273/2003 of December 22, 2003, authorize theExecutive Board or, in the event the twenty seventh and thir tiethresolutions are passed, the Board of Directors, with the right tosub-delegate in accordance with the conditions provided for by lawand by the Company’s Articles of Incorporation, to cause the Companyto buy its own shares representing up to 10% of the number of sharesmaking up the share capital of 19,358,005 shares on the date on whichthis Meeting is convened.

The Shareholders decide that the Executive Board or, in the event thetwenty seventh and thirtieth resolution are passed, the Board ofDirectors, with the right to sub-delegate in accordance with the condi-tions provided for by law, may:

buy or cause to be bought :

- through the intermediary of an investment service provider interveningin the name and on behalf of the Company in all independence andwithout being influenced by the Company under a liquidity agreementin compliance with a code of conduct recognized by the Autorité desMarchés Financiers or any other applicable measure,

- as part of the employee profit-sharing scheme or in view of theallocation of shares to the employees and/or corporate officers of theCompany and/or its group, in particular, for the share option serviceor under group savings schemes,

- for the remittance of shares or exchange, in particular, upon the issueof securities that immediately or subsequently grant access to thecapital or under merger and acquisitions and/or

- to cancel the shares thus acquired and, where applicable, those acquiredunder earlier authorizations to buy out shares; this solution entailedauthorization granted by the Special General Meeting.

and, for said purposes, keep the shares bought out, assign or transferthem by all means, as described below, in compliance with current reg-ulations and, in particular, by sale on the stock exchange or by privateagreement, by public offer of sale or exchange, by the use of optionalmechanisms or derivatives and/or cancel the shares thus acquired andthose acquired under earlier authorizations to buy-out shares, subjectto authorization granted by the Special General Meeting.

The maximum unit purchase price is set at 70 euros and the minimumunit sale price is set at 30 euros. Note that said prices shall not applyto the buy-out of shares used to satisfy option exercises (or the freeallocation of shares to employees), the sale price and the exchange valueof the shares shall then be set in accordance with the specific provisionsapplicable.

The maximum amount of the funds that the Company may devoteto the transaction is 135,506,035 euros.

The Shareholders decide that shares may be bought, assigned or transferredand paid by all means, including by use of optional mechanisms or deriv-atives or warrants and in particular the purchase of share options inaccordance with the conditions provided for by the market authoritiesand that the maximum share of the capital that may be transferred inshare blocks may take up the entire share buy-out program.

The Shareholders decide that the Company may implement this resolutionand continue with the implementation of its buy-out program even inthe event of public offers relating to the shares or securities issued bythe Company or initiated by the Company.

The Shareholders grant all powers to the Executive Board or in the eventthe twenty seventh and thirtieth resolutions are passed, the Board ofDirectors, with right to sub-delegate in accordance with the conditionsprovided for by law and by the Company’s Articles of Incorporation, tocarry out all actions, enter into all agreements, carry out all formalities andin general do whatsoever is necessary to implement this resolution.

This authorization shall be granted for a term of eighteen (18) months.It shall terminate and replace the previous authorization granted underthe ninth resolution of the General Meeting of the Company onMarch 11, 2004.

Twenty fifth resolution - Presentation of the financialstatements of the year closed as at October 31,2005

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, having reviewed the report by theExecutive Board,

take official note, provided that the twenty seventh and thirtieth resolutionsare passed, that the Board of Directors shall draw up the Company’sfinancial statements and submit repor ts on transactions and thecorporate and consolidated financial statements of the year closed asat October 31, 2005, including for the part of the financial year prior toits appointment, to the next Annual General Meeting of the Company’sshareholders.

decide that the Annual General Meeting of the Company’s shareholdersshall decide on the discharge to be given to the Executive Board and tothe Supervisory Board and to the Board of Directors for this financial year.1 Financial Markets Authority



Twenty sixth resolution - Powers

The Shareholders, deciding with the quorum and majority requiredfor Ordinary General Meetings, having reviewed the report by theExecutive Board, give all powers to the holder of copies or extracts ofminutes of these decisions to make all declarations and to carry outall formalities relating to registration, filing, public disclosure and otherformalities.

B - EXTRAORDINARY RESOLUTIONS

Twenty seventh resolution - Change in the systemofAdministration and Management of the Company- elimination of the Executive Board and Supervisoryboard system and adoption of the Board of Directorssystem

The Shareholders, deciding with the quorum and majority required forExtraordinary General Meetings, having reviewed the report by theExecutive Board, decide to change the system of administration andmanagement of the Company by eliminating the system provided forin Articles L. 225-57 to L. 225-93 of the Commercial Code and byadopting the system provided for in Articles L. 225-17 to L. 225-56of the Commercial Code, such that, as from today’s date, the Companyshall be administered and managed by a Board of Directors.

In consequence, the Shareholders take official note, provided that thisresolution and the thirtieth resolutions are passed, of the termination ofthe duties of members of the Supervisory Board and the Executive Board.

Twenty eighth resolution - Harmonization of the Articles of Incorporation with ordinance No.2004-604 of June 24,2004 which reforms the regulations applicable to securities issued by business corporations as approved and amended by the simplification of Law Act

The Shareholders, deciding with the quorum and majority requiredfor Extraordinary General Meetings, having reviewed the report bythe Executive Board, decide to harmonize its Articles of Incorporationwith ordinance No. 2004-604 of June 24, 2004, which reforms theregulations applicable to securities issued by business corporations asapproved and amended by the Simplification of Law Act.

In particular, the Shareholders decide:- to replace in the current drafting of Articles 7 (Share form and share

ownership) and 31 (Admission to Meetings - Powers) the referenceto Article L. 228-1 (3) of the Commercial Code by Article L. 228-1(7) of the Commercial Code,

- to replace in the current drafting of Article 7-3 of the Articles ofIncorporation (share form and share ownership) “institution respon-sible for clearing securities”, which is mentioned in point 3 of Article7 of the Articles of Incorporation by “the central custodian that man-ages its securities issue account”

- to add the following sentence:“It may delegate these powers to theBoard of Directors in accordance with the conditions laid downunder current law and regulations” at the end of the first paragraphin the current drafting of Article 11 of the Articles of Incorporation(increase of the share capital).

Twenty ninth resolution - Amendment of Article 7-4of the Company’s Articles of Incorporation on reaching percentage thresholds and of Article 28-4of the Company’s Articles of Incorporation on formalities to be carried out prior to meetings

The Shareholders, deciding with the quorum and majority requiredfor Extraordinary General Meetings, having reviewed the report by theExecutive Board,

1) decide to amend the first paragraph of Article 7-4 of the Company’sArticles of Incorporation as follows:“In addition to the legal obligation to inform the Company of the owner-ship of certain factions of the capital or voting rights, any natural person orlegal entity, acting alone or with others, that happens to directly or indirectlyown a percentage of the capital, voting rights or securities equal or in excessof 0.5% or a multiple of said percentage that subsequently grant accessto the Company’s capital, must inform the Company by registered letterwith recorded delivery requested, mentioning the number of voting rightsand securities immediately or subsequently granting access to the capitalthat it owns and the voting rights attached thereto, within five trading daysas from reaching each of said threshold percentages”.

The rest of Article 7-4 of the Company’s Articles of Incorporation isunchanged.

2) decide to amend Ar ticle 28-4 of the Company’s Ar ticles ofIncorporation as follows:

“The right to attend Meetings or vote by mail is subject, either to the reg-istration of the shareholder that holds registered shares in accounts keptby the Company or to the filing at the place specified in the notice of meet-ing of certificates issued by the authorized intermediaries recording the lock-up of bearer shares registered in account with authorized intermediariesup to the date of the Meeting. Said formalities must be carried out no laterthan forty eight hours prior to the Meeting being held.”

The rest of Article 28 of the Company’s Articles of Incorporation isunchanged.


Thirtieth resolution - Adoption of new Articles of Incorporation

The Shareholders, deciding with the quorum and majority requiredfor Extraordinary General Meetings, having reviewed the report bythe Executive Board and the text of the Articles of Incorporation,

decide, in consequence of the twenty seventh and twenty eighth reso-lutions above being passed, to adopt Article by Article and as a wholethe text of the new Articles of Incorporation that shall now govern theCompany and a copy of which is attached to these resolutions.

The Shareholders take official note of Article 23 of the Articles ofIncorporation as amended relating to non voting directors (“censeurs”),which provides, inter alia, that the non voting directors that will be respon-sible for assisting the Board of Directors without being able, in any case,to replace it shall be appointed, on proposal by its Chairman, by the Boardof Directors whereas heretofore the non voting directors that assistedthe Supervisory Board were appointed by the Ordinary General Meeting.

Thirty first resolution - Delegation of powersto decide on the issue of shares or sundry securitieswhile maintaining shareholders’ preferential subscription right

The Shareholders, deciding with the quorum and majority required forExtraordinary General Meetings, having reviewed the report by theExecutive Board and the special report by the Statutory Auditors underArticle L. 225-127, L. 225-129, L. 225-129-2 and L. 228-92 and ff. of theCommercial Code,

1) terminate with immediate effect the delegation granted by theCombined General Meeting of March 17, 2003 in its 26th resolution,

2) delegate to the Board of Directors or, if the twenty seventh andthirtieth resolutions are not passed, the Executive Board, for a termof twenty six (26) months as from this Meeting, its powers to decide,on its sole authority, on one or several occasions, in proportions andwhen it decides, in France and abroad, in euros or in foreign currencyor account unit fixed by reference to several currencies, the issue,while maintaining the shareholders’ preferential subscription right,of shares, capital securities or securities, including stand-alone sub-scription warrants issued free of charge or for valuable considerationor purchase warrants, granting access or that may grant access to thecapital or granting a right to the allocation of debt securities, whichmay be subscribed for in cash or by set-off of receivables. Note thatone or more issues may be made under this delegation pursuant toArticle L. 228-93 of the Commercial Code.

Note that the issue of preferred shares and the issue of all securitiesgranting access to preferred shares is excluded.

3) decide that the nominal amount of the immediate or subsequentcapital increase resulting from all issues made under the delegationgranted to the Board of Directors or, in the event the twenty seventhand thirtieth resolutions are not passed, the Executive Board, underthis resolution may not exceed twenty (20) million euros or itsexchange value in any other authorized currency. Note that (i) saidamount is set without taking account of the consequences on theamount of the capital of adjustments that may be made, in accordancewith the law and regulations following the issue of securities subse-quently granting access to the capital and that (ii) said amount shallbe charged against the total maximum amount of 270 million eurosset in the 40th resolution.

4) decide that the Board of Directors or if the twenty seventh andthirtieth resolutions are not passed, the Executive Board, may establishin favor of shareholders a subscription right on a pro rata basis toshares or securities that shall be exercised in proportion to their rightsand within the limit of their application. If the subscriptions on a rightsbasis and, where applicable, on a pro rata basis do not take up theentire issue, the Board of Directors or, if the twenty seventh andthirtieth resolutions are not passed, the Executive Board, may in theorder that it shall determine, use one or other of the possibilitiesbelow (or several of them):- either limit, in accordance with and in the conditions provided

for by law, the amount of the transaction to the amount of thesubscriptions received, on the condition that it reaches at least threequarters of the issue decided,

- or freely allocate all or part of the unsubscribed securities,- or offer them in whole or in part to the public.

5) acknowledge that the issue of securities granting access to thecapital entails waiver by the shareholders of their preferential sub-scription right to capital securities to which said securities maygrant entitlement.

6) decide that the amount owed or which should be owed to theCompany for each of the shares issued or to be issued under theaforementioned delegation, after taking account, in the event of the issueof strand-alone share subscription or allocation warrants, of the issueprice of said warrants, shall be at least equal to the minimum priceprovided for under the law and/or regulations applicable on the dateof the issue and whether the securities to be issued immediately orsubsequently are or are not fungible with the capital securities alreadyissued.

The securities thus issued may consist in debt securities and in par-ticular bonds or like or associated securities or else allow the issuethereof as intermediary securities. In particular, they may take the formof subordinated securities for a closed or open term and be issuedeither in euros or in foreign currencies or in any other currency units



established by reference to several currencies. The term of the loansmay not exceed twenty (20) years. The maximum nominal amount ofsaid debt securities may not exceed three hundred (300) million eurosor its exchange value on the date of the decision to issue. Note thatsaid amount corresponds to all debt securities of which the issue isdelegated to the Board of Directors or, in the event the twenty sev-enth and thirtieth resolutions are not passed, the Executive Board, inaccordance herewith.

They may be associated with a fixed and/or variable rate interest or elsebe capitalized and be repaid with or without a premium or a redemption.In addition, the securities may be bought on the stock market or be offeredin exchange by the Company.

In the event of an issue of debt securities, the Board of Directors or, inthe event the twenty seventh and thirtieth resolutions are not passed,the Executive Board, shall have all powers with the right to sub-delegatein accordance with the conditions provided for law and by the Company’sArticles of Incorporation, in particular, to decide if such securities shall besubordinated in form or not, set their interest rate, their term, the fixedor variable repayment price, with or without premium, the methods ofredemption and the conditions under which said securities shall grant enti-tlement to the Company’s shares.

The Board of Directors, in the event the twenty seventh and thirtiethresolutions are not passed, the Executive Board, shall have all powers, withthe right to sub-delegate in accordance with the conditions provided forby law and by the Company’s Articles of Incorporation, to implementthis delegation to make issues, set the conditions thereof, record thecompletion of the resulting increases and make the correspondingamendments of the Articles of Incorporation and, in particular, to set thedates, conditions and methods of any issue and the form and features ofsecurities to be issued, enter into all agreements and in general take allmeasures to achieve the due completion of the issues planned, thelisting and financial service of the instruments issued. In particular, it shallset the amounts to be issued, the issue and subscription prices of theshares or securities, with or without premium, the date from whichinterest or dividends is/are generated, which may be retroactive, themethod of full payment as well as, where applicable, the term andexercise price of the warrants or the methods of exchange, conversion,repayment or allocation in any other way of capital securities or ofsecurities granting access to the capital.

The Shareholders specify that the Board of Directors or, if the twentyseventh and thirtieth resolutions are not passed, the Executive Board,with right to sub-delegate in accordance with the conditions providedfor by law and by the Company’s Articles of Incorporation:• shall determine, in accordance with the law, the methods of adjusting

the conditions in which securities, including warrants, shall subsequentlygrant access to the capital,

• may, in the event of free allocation, in particular, of subscriptionwarrants, decide freely on the treatment of fractional shares,

• may provide for any special provision in the issue contract,• may provide for the possibility of suspending, if need be, the exercise

of rights attached to said securities for a time limit that may not exceedthe maximum time limit provided for under current law and regulations,

• may set the conditions applicable to the free allocation of stand-alonesubscription warrants and determine the methods of purchase on thestock market or exchange of securities and/or subscription or allocationwarrants and the repayment of said securities,

• may determine the methods of purchase on the stock market or ofexchange of the securities issued or to be issued at any time or atset periods,

• may make all charging against premiums and in particular charge costsincurred to make the issues,

• have all powers to preserve the rights of holders of securities thatsubsequently grant access to the Company’s capital in compliance withlaws and regulations.

Thirty second resolution - Delegation of powersto decide on the issue of shares or sundrysecurities while cancelling shareholders’ preferentialsubscription right

The Shareholders, deciding with the quorum and majority required forExtraordinary General Meetings, having reviewed the report by theExecutive Board and the special report by the Statutory Auditors underArticles L. 225-127, L.225-129, L. 225-129-2, L. 225-135, L. 225-136,L. 228-92 and ff. of the Commercial Code.

1) terminate with immediate effect the delegation granted by theCombined Regular and Special Meeting of March 17, 2003 by the voteof its 27th resolution,

2) delegate to the Board of Directors or, if the twenty seventh andthirtieth resolutions are not passed, the Executive Board, for a termof twenty six (26) months as from this Meeting, its powers to decide,on its sole authority, on one or several occasions, in proportions andwhen it decides, in France and abroad, in euros or in foreign currencyor account unit fixed by reference to several currencies, the issue ofshares, capital securities or investment securities, including stand-alonesubscription warrants issued for valuable consideration or purchasewarrants, granting access or that may grant access to the capital orgranting a right to the allocation of debt securities, which may besubscribed for in cash or by set-off of receivables. Note that one ormore issues may be made under this delegation pursuant to ArticleL. 228-93 of the Commercial Code.

3) decide to cancel the shareholders’ preferential subscription right tosaid shares, capital securities or sundry securities.


Note that the issue of preferred shares and the issue of all securitiesgranting access to preferred shares is excluded.

4) decide that the nominal amount of the immediate or subsequent cap-ital increase resulting from all issues made under the delegation grant-ed under this resolution may not exceed twenty (20) million eurosor its exchange value in any other authorized currency. Note that (i)said amount is the same for the thirty fifth resolution (ii) that it isset without taking account of the consequences on the amount ofthe capital of adjustments that may be made, in accordance with thelaw and regulations following the issue of securities subsequently grant-ing access to the capital and that (ii) said amount shall be chargedagainst the total maximum amount of 270 million euros set in the40th resolution.

5) In accordance with the law, delegate to the Board of Directors or, ifthe twenty seventh and thirtieth resolutions are not passed, theExecutive Board, the right to assess if there is need to provide for apro rata basis and/or a rights basis preferential subscription period infavor of shareholders of which the minimum term is set by decreeand to set this time limit and its methods and conditions of exercisein accordance with the provisions of Article L. 225-135 of theCommercial Code.

If the subscriptions have not taken up the entire issue, the Board ofDirectors or, if the twenty seventh and thirtieth resolutions are notpassed, the Executive Board may, in the order that it shall decide, useone or other of the possibilities below (or several of them):

- either limit, in accordance with and in the conditions provided for bylaw, the amount of the transaction to the amount of subscriptionsreceived, provided that it at least reaches three quarters of the issuedecided,

- or freely allocate all or part of the unsubscribed securities- or offer them in whole or in part to the public.

6) acknowledge that the issue of securities granting access to the capitalentails waiver by the shareholders of their preferential subscriptionright to capital securities to which said securities may grantentitlement.

7) decide that the amount owed or which should be owed to theCompany for each of the shares issued or to be issued under theaforementioned delegation, after taking account, in the event ofthe issue of strand-alone share subscription or allocation warrants,of the issue price of said warrants, shall be at least equal to theminimum price provided for under the law and/or regulationsapplicable on the date of the issue and whether the securities tobe issued immediately or subsequently are or are not fungible withthe capital securities already issued.

The securities thus issued may consist in debt securities and in particularbonds or be associated with the issue of such securities or else allow theissue thereof as intermediary securities. In particular, they may takethe form of subordinated securities for a closed or open term, and beissued either in euros or in foreign currencies or in any other currencyunits established by reference to several currencies. The term of the loansmay not exceed twenty (20) years. The maximum nominal amount ofsaid debt securities may not exceed three hundred (300) million eurosor its exchange value on the date of the decision to issue. Note that saidamount corresponds to all debt securities of which the issue is delegatedto the Board of Directors or, if the twenty seventh and thir tiethresolutions are not passed, the Executive Board, in accordance herewith.

In the event of an issue of debt securities, the Board of Directors or,if the twenty seventh and thirtieth resolutions are not passed, theExecutive Board, shall have all powers, with the right to sub-delegate inaccordance with the conditions provided for law and by the Company’sArticles of Incorporation, in particular, to decide if such securities shallbe subordinated in form or not, set their interest rate, their term, thefixed or variable repayment price, with or without premium, the methodsof redemption and the conditions under which said securities shall grantentitlement to the Company’s shares.

The Board of Directors or, if the twenty seventh and thirtieth reso-lutions are not passed, the Executive Board, shall have all powers, withthe right to sub-delegate in accordance with the conditions providedfor by law and by the Company’s Articles of Incorporation, to imple-ment this delegation to make issues, set the conditions thereof, recordthe completion of the resulting increases and make the correspondingamendments of the Articles of Incorporation and, in particular, to setthe dates, terms and conditions of any issue and the form and featuresof securities to be issued, enter into all agreements and in general takeall measures to achieve the due completion of the issues planned andthe listing to financial service of the instruments issued. In particular,it shall set the amounts to be issued, the issue and subscription pricesof the shares or securities, with or without premium, the date from whichinterest or dividends is/are generated, which may be retroactive,the method of full payment as well as, where applicable, the term andexercise price of the warrants or the methods of exchange, conversion,repayment or allocation in any other way of capital securities orsecurities granting access to the capital.

The Shareholders specify that the Board of Directors or, if the twentyseventh and thirtieth resolutions are not passed, the Executive Board,with right to sub-delegate in accordance with the conditions providedfor by law and by the Company’s Articles of Incorporation:• shall determine, in accordance with the law, the methods of adjusting

conditions under which securities, including warrants, shall subsequentlygrant access to the capital,



• may provide for any special provision in the issue contracts,• may provide for the possibility of suspending, if need be, the exercise

of rights attached to said securities for a time limit that may notexceed the maximum time limit provided for under current law andregulations,

• may determine the methods of purchase on the stock market or ofexchange of the securities issued or to be issued at any time or atset periods,

• may make all charging against premiums and in particular charge costsincurred to make the issues,

• have all powers to preserve the rights of holders of securities thatsubsequently grant to the Company’s capital in compliance withlaws and regulations.

Thirty third resolution - Authorizationto issue shares or sundry securities and to freelyset the issue price thereof

The Shareholders, deciding with the quorum and majority required forExtraordinary General Meetings, having reviewed the report by theExecutive Board and the special report by the Statutory Auditors underArticle L. 225-136 1° of the Commercial Code and within the limit of10% of the share capital per year, authorize, for a term of twenty six(26) months, the Board of Directors or, if the twenty seventh andthirtieth resolutions are not passed, the Executive Board, to issue allshares, capital securities or sundry securities, granting or that may grantaccess to the Company’s capital or grant entitlement to the allocationof debt securities by setting the issue price thereof in the event of apublic issue, without preferential subscription right, in relation to marketopportunities within the sole limit that the amounts to be received foreach share is at least equal to the nominal value. In this case, the Boardof Directors or, if the twenty seventh and thirtieth resolutions arenot passed, the Executive Board, shall draw up an additional report,which shall be certified by the statutory auditors, describing the finalconditions of the transaction and giving information to assess the actualimpact on the shareholder’s situation.

Thirty fourth resolution - Delegation of powersto decide on a capital increase by the capitalizationof reserves,profits or premiums

The Shareholders, having reviewed the report by the Executive Board,deciding under Articles L. 225-129, L. 225-129-2 and L. 225-130 of theCommercial Code, with the quorum and majority required for OrdinaryGeneral Meetings


2) delegate to the Board of Directors or, if the twenty seventh andthirtieth resolutions are not passed, the Executive Board, for a termof twenty six (26) months as from this Meeting, its powers to decideto increase the share capital, on its sole authority, on one or severaloccasions, when it shall decide, by capitalization of reserves, profitsor premiums, followed by the issue and free allocation of capitalsecurities or the increase of the nominal value of the existingcapital securities or the combination of these two methods.

3) decide that the rights forming fractional shares shall not be marketableor assignable and that the securities shall be sold. The amountgenerated by the sale shall be allocated to the holders of rights withinthe time limit set by Decree in Council of State.

4) decide that the amount of the capital increase resulting from all ofthe issues made under this resolution may not exceed the nominalamount of 226.5 million euro or its exchange value in any otherauthorized currency. Note that nominal amount of the capital increasemade under this delegation shall be charged against the total maxi-mum amount of 270 million eurosset in the 40th resolution.

5) grant the Board of Directors or, if the twenty seventh and thirtiethresolutions are not passed, the Executive Board, with right to sub-delegate in accordance with the conditions provided for by law andby the Company’s Articles of Association, all powers, in accordance withthe law and with the Company’s Articles of Association to implementthis resolution and to ensure the due completion thereof.

Thirty fifty resolution - Delegation of powers todecide on the issue of shares or sundry securities inthe event of a public offer initiated by the Company

The Shareholders, deciding with the quorum and majority required forExtraordinary General Meetings, having reviewed the report by theExecutive Board under Articles L. 225-148, L. 225-129 to L. 225-129-6of the Commercial Code,


2) delegate to the Board of Directors or, if the twenty seventh andthirtieth resolutions are not passed, the Executive Board, for a termof twenty six (26) months as from this Meeting, its powers to decide,on its sole authority, on the issue of shares, capital securities or sundrysecurities, including stand-alone subscription warrants, granting accessor that may grant access to the capital or granting a right to theallocation of debt securities in remuneration for the securities contributedto any public offer entailing an exchange initiated by the Companyon the securities of another company listed in one of the regulatedmarkets provided for under Article L. 225-148 of the Commercial


Code and decide, as required, to cancel the shareholders’ preferentialsubscription right to said shares or securities in favor of the holdersof such securities.

3) acknowledge that the issue of securities granting access to thecapital entails waiver by the shareholders of their preferentialsubscription right to capital securities to which said securities maygrant entitlement.

4) decide that the nominal amount of the immediate or subsequentcapital increase resulting from all issues of shares or sundry securitiesmade under the delegation granted to the Board of Directors or,if the twenty seventh and thirtieth resolutions are not passed, theExecutive Board, under this resolution may not exceed twenty (20)million euros or its exchange value in any other authorized currency.Note that (i) said amount is set without taking account of theconsequences on the amount of the capital of adjustments that maybe made, in accordance with the law and regulations following theissue of securities subsequently granting access to the capital and that(ii) said amount corresponds to the maximum amount of twenty (20)million euro provided for in the thirty second resolution and (iii) shallbe charged against the total maximum amount of 270 million eurosset in the 40th resolution.

5) decide that the amount owed or which should be owed to theCompany for each of the shares issued or to be issued under theaforementioned delegation, after taking account, in the event of theissue of strand-alone share subscription or allocation warrants, of theissue price of said warrants, shall be at least equal to the minimumprice provided for under the law and/or regulations applicable on thedate of the issue and whether the securities to be issued immediatelyor subsequently are or are not fungible with the capital securitiesalready issued.

The Shareholders decide to grant the Board of Directors or, if thetwenty seventh and thirtieth resolutions are not passed, the ExecutiveBoard, with right to sub-delegate in accordance with the conditionsprovided for by law and by the Company’s Articles of Association, allpowers needed to make the aforementioned public offers and to issueshares or securities to remunerate the shares or securities contributed.Note that the Board of Directors or, if the twenty seventh and thirtiethresolutions are not passed, the Executive Board shall be responsiblefor setting the exchange parities and recording the number of secu-rities contributed for the exchange.

Thirty sixth resolution - Delegation for the purposeof issuing shares or sundry securities in orderto remunerate contributions in kind made to theCompany

The Shareholders, deciding with the quorum and majority required forExtraordinary General Meetings, having reviewed the report by theExecutive Board under Article L. 255-147 (6),

delegate, for a term of 26 months as from this General Meeting, to Boardof Directors or, if the twenty seventh and thirtieth resolutions arenot passed, the Executive Board, the powers needed to issue shares,capital securities or sundry securities, in particular, granting or that maygrant access to the Company’s capital within the limit of 10% of theshare capital, at the time of the issue, to remunerate contributions inkind made to the Company and comprised of capital securities orsecurities granting access to the capital when the provisions of ArticleL. 225-148 of the Commercial Code are not applicable. TheShareholders specify, in accordance with the law, that the Board ofDirectors or the Executive Board shall decide on the reports of the inde-pendent appraiser(s) mentioned in Article L. 225-147 of said Code.

The Shareholders decide that the amount owed or which should beowed to the Company for each of the shares issued or to be issuedunder the aforementioned delegation, after taking account, in the eventof the issue of strand-alone share subscription or allocation warrants, ofthe issue price of said warrants, shall be at least equal to the minimumprice provided for under the law and/or regulations applicable on thedate of the issue and whether the securities to be issued immediatelyor subsequently are or are not fungible with the capital securities alreadyissued.

The Shareholders decide that the Board of Directors or, if the twentyseventh and thirtieth resolutions are not passed, the Executive Board, shallhave all powers, in particular, to approve the assessment of contributionsand, regarding said contributions, to record the completion thereof, tocharge all costs, expenses and duties against the premiums, the balancemay be allocated as decided by the Board of Directors or, if the twentyseventh and thirtieth resolutions are not passed, the Executive Board orby the Ordinary General Meeting, increase the share capital and make thecorresponding amendments of the Articles of Incorporation.

Thirty seventh resolution - Authorization to grantshare subscription and/or purchase options to members of the personnel and/or corporate officers of the companies of the Group

The Shareholders, deciding with the quorum and majority required forExtraordinary General Meetings, having reviewed the report by theExecutive Board and the special report by the Statutory Auditors



authorize the Board of Directors or, if the twenty seventh and thirtiethresolutions are not passed, the Executive Board under ArticlesL. 225-177 and ff. of the Commercial Code for a term of twenty six (26)months as from this General Meeting, to grant, on one or severaloccasions, salaried members of the personnel and corporate officersof the Company or some of them and of companies or economicinterest groups affiliated thereto in accordance with the conditionsprovided for in Article L. 225-180 of the Commercial Code and withinthe scope of the law in force,

• options granting entitlement to the subscription of new shares of theCompany to be issued for a capital increase and/or,

• options granting entitlement to the purchase of shares acquired by theCompany in accordance with the law,

the total number of open options thus allocated and still not exercisedthat may not grant entitlement to subscribe a number of shares in excessof the legal limits and the total maximum amount provided for in thefortieth resolution of this General Meeting.

It entails waiver of the shareholders’ preferential subscription right to theshares that shall be issued as and when options are exercised in favorof beneficiaries of the subscription options.

The Board of Directors or, if the twenty seventh and thirtieth resolutionsare not passed, the Executive Board shall set the subscription or purchaseprice of the shares on the date on which options are granted, withinthe limits and according to the methods provided for by law.

The beneficiaries may exercise the options within ten (10) years as fromthe date on which they are granted.

Shares resulting from the exercise of options shall generate interest ordividends on the first day of the exercise of the option.

The Shareholders decide to grant the Board of Directors or, if the twentyseventh and thirtieth resolutions are not passed, the Executive Board,within the limits set above and the limits set in the Articles ofIncorporation, with right to sub-delegate, within the conditions providedfor by law and the Company’s Articles of Incorporation, the powersneeded to implement this resolution and in particular for:• set the dates on which options shall be granted,• determine the dates of each allocation, set the conditions under which

the options shall be granted (these conditions may, in particular, totalor partial lock-up clauses), draw up the list of beneficiaries of optionsand decide on the number of shares that each beneficiary may subscribeor acquire,

• set the conditions for exercise of options and in particular the optionexercise periods. Note that the Board of Directors or, if the twentyseventh and thirtieth resolutions are not passed, the Executive Boardmay provide the possibility of temporarily suspending the exercise ofoptions in accordance with the law and regulations,

• decide on the conditions under which the price the number of sharesto be subscribed or acquired shall be adjusted in the cases providedfor law,

• determine the time limit during which the beneficiaries may exercisetheir options and the option exercise periods, which may not, however,exceed ten (10) years,

• carry out all acts and formalities to make the capital increases that maybe made under the authorization granted under this resolution final,

• in consequence, amend the Articles of Incorporation and in generaldo whatsoever is necessary.

The Board of Directors or, if the twenty seventh and thirtieth resolu-tions are not passed, the Executive Board shall inform each OrdinaryGeneral Meeting of transactions carried out under this authorization.

This delegation replaces and terminates the delegation of power grantedby the Combined General Meeting of March 17, 2003 in its 30th resolution.

Thirty eighth resolution - Increase of the numberof shares or securities to be issued in the eventof a capital increase,with or without the shareholders’preferential subscription right

The Shareholders, deciding with the quorum and majority required forExtraordinary General Meetings, in accordance with the provisions ofArticle L. 225-135-1 of the Commercial Code, having reviewed thereport by the Executive Board,

authorize the Board of Directors or, if the twenty seventh and thirtiethresolutions are not passed, the Executive Board, for a term of twentysix (26) months as from this Meeting to increase, on its sole authority,within the limit of the total maximum amount set in the fortiethresolution, the number of shares or securities to be issued in the eventof the increase of the Company’s share capital with or without theshareholders’ preferential subscription right within a period of 30 daysfollowing the closing of the subscriptions, to the extent of 15% of theinitial issue and at the same price as that determined for the initial issue,according to the provisions of Article 155-4 of Decree n°67-236 ofMarch 23, 1967 or any other applicable provision.

The Shareholders record that the limit provided for in 1° of I ofArticle L. 225-134 of the Commercial Code shall be increased in thesame proportions.


Thirty ninth resolution - Delegation ofpowers to decide on a capital increase in favorof the employees of the Group

The Shareholders, deciding with the quorum and majority requiredfor Extraordinary General Meetings, having reviewed the report bythe Executive Board and the special report by the Statutory Auditorsand deciding under the provisions of Article L. 443-1 and ff. ofthe French Employment Code and Ar ticle L. 225-138-1 of theCommercial Code and in accordance with the provisions of ArticlesL. 225-129-2 and L. 225-129-6 of the Commercial Code,

1) terminate with immediate effect the delegation granted by theCombined General Meeting of March 17, 2003 in its 31st resolutionand,

2) delegate to the Board of Directors or, if the twenty seventh andthirtieth resolutions are not passed, the Executive Board, for a termof twenty six (26) months as from this Meeting, its powers to decide,on one or several occasions, (i) the issue of new shares or othersecurities reserved for the employees of the Company and/orcompanies affiliated to the Company within the meaning of theprovisions of Article L. 225-180 of the Commercial Code who, whereapplicable, are members of a company savings scheme or a voluntaryemployee savings scheme on a partnership basis and/or all mutualfunds via which they subscribe for the new shares thus issued (ii)the free allocation to said employees of shares or other securitiesgranting access to the Company’s capital within the limits providedfor in Article L. 443-5 of the Employment Code.

3) decide that the nominal amount of the immediate or subsequentcapital increase resulting from all issues of shares, capital securities orsundry securities made under the delegation granted to the Boardof Directors or, if the twenty seventh and thirtieth resolutionsare not passed, the Executive Board, under this resolution, shall be3.5 million (3.5) million euros or its exchange value in any otherauthorized currency. Note that (i) said amount is set without takingaccount of the consequences on the amount of the capital ofadjustments that may be made, in accordance with the law andregulations following the issue or securities subsequently grantingaccess to the capital and that (ii) the nominal amount of the capitalincrease made under this delegation shall be charged against the totalmaximum amount of 270 million euros set in the 40th resolution.

4) decide that the subscription price of shares issued under thisdelegation of powers shall be determined in accordance with theconditions provided for under the provisions of Article L. 443-5 ofthe Employment Code.

5) decide to cancel the shareholders’ preferential subscription right toshares to be issued under this resolution in favor of said employeesor former employees members of a company savings scheme orvoluntary employee savings scheme on a partnership basis of theCompany or companies or groups affiliated to it within the meaningof Article L. 225-180 of the Commercial Code and Article L. 444-3of the Employment Code.

The Shareholders decide to grant the Board of Directors or, if thetwenty seventh and thirtieth resolutions are not passed, the ExecutiveBoard, with right to sub-delegate, within the conditions provided for bylaw and the Company’s Articles of Incorporation, the powers neededto implement this delegation of powers on one or several occasions,in accordance with the conditions that have been drawn up and inparticular all powers to determine the conditions or the issue(s) madeunder this delegation of powers and in particular to :• determine that the issues may be directly in favor of the beneficiaries

or via unit trusts,• determine the conditions and methods of issue that shall be made

under this authorization and in particular the date from which interestor dividends shall be generated, the methods of paying up the sharesin full,

• set the subscription price of shares in accordance with the law;• set the opening and closing dates of subscriptions,• set the time limit for the full payment of shares which cannot exceed

the maximum time limit provided for under the applicable law andregulations and, where applicable, the length of service required foremployees to take part in the transaction and the additional amountpaid by the Company,

• make the necessary amendments to the Articles of Incorporation andin general do whatsoever is necessary and that if it deems it to beappropriate to charge the amount of the capital increase againstthe amount of premiums related to said increases and deduct fromsaid amount the amounts needed to bring the statutory reserve toone tenth of the new capital after each increase.

Fortieth resolution - Total maximum amount of the capital increase

The Shareholders, deciding with the quorum and majority required forExtraordinary General Meetings, having reviewed the report by theExecutive Board, set, in accordance with Article L. 225-129-2 of theCommercial Code, the total maximum amount of the immediate orsubsequent capital increase that may result from all issues of shares, cap-ital securities or sundry securities made under the delegation grantedto the Board of Directors or, if the twenty seventh and thirtieth res-olutions are not passed, the Executive Board, under delegations of pow-ers provided for under the thirty first, thirty second, thirty third, thir-



ty fourth, thirty fifth, thirty sixth, thirty seventh, thirty eighth, thirty ninthresolutions to a total maximum amount of 270 million euro, withouttaking account of the consequences on the amount of the capital ofadjustments that may be made, in accordance with the law and regu-lations following the issue of securities subsequently granting access tothe capital. Note that within the limit of said maximum amount.

a) issues, with maintenance of the preferential subscription right, underthe thirty first resolution, after taking into account the increase ofthe number of shares or securities issued under the 38th resolutionmay not result in increasing the capital by an amount in excess of20 million euros,

b) issues, with cancellation of the preferential subscription right, underthe thirty second, thirty third and thirty fifth resolutions, after takinginto account the increase of the number of shares or securities issuedunder the 38th resolution may not result in increasing the capital byan amount in excess of 20 million euros,

c) capital increases by the capitalization of reserves, profits or premiumsunder the thirty fourth resolution may not result in increasing the cap-ital by an amount in excess of 226.5 million euros,

d) issues in favor of employees under the 39th resolution may not resultin increasing the capital by an amount in excess of 3.5 millions euros,

e) issues of shares to serve the share subscription options under the37th resolution may not result in increasing the capital above the legallimits set independently of b),

All of said amounts have been set without taking account of theconsequences on the amount of the capital of adjustments that may bemade, in accordance with the law and regulations following the issue ofsecurities subsequently granting access to the capital.

Forty first resolution - What happens to delegationsin the event of a takeover of the Company’s securities

The Shareholders, deciding with the quorum and majority required forExtraordinary General Meetings, having reviewed the report by theExecutive Board, take official note as required that, under Article L. 225-129-3 of the Commercial Code, all delegations granted to the Boardof Directors, if the twenty seventh and thirtieth resolutions are notpassed, the Executive Board shall be suspended during the periodof a public offer of purchase or exchange relating to the Company’ssecurities, unless it is part of the Company’s normal activity and itsimplementation is not liable to jeopardize the public offer.

Forty second resolution - Powers

The Shareholders, deciding with the quorum and majority required forExtraordinary General Meetings, having reviewed the report by theExecutive Board, grant all powers to the holder of copies or extractsof minutes of these decisions to make all declarations and carry outall formalities relating to registration, filing and other formalities.


I - LEGAL FORM - CORPORATE NAME -PURPOSE - HEAD OFFICE - TERM

Article 1 - Legal form

Club Méditerranée is a French public limited company in the form ofa société anonyme, which is governed by current law and regulationsand by these Articles of Incorporation.

Article 2 - Purpose

The company’s purpose in France and in all countries is the creationand operation, directly or indirectly, of hotels or holiday and/or leisureand/or entertainment centers and all activities relating directly or indirectlythereto, which shall include but not be limited to the following:• the search for, purchase and/or sale and rental, in any way whatsoever,

of all land, all personal property and real property,• the creation and upkeep of consulting firms,• the construction, fitting out, management and upkeep of hotels, restaurants

and holiday and/or leisure and/or entertainment centers;• the promotion, organization or realization of journeys,• the accommodation, catering for and transport of participants,• the organization of all circuits, tours, excursions,• the organization and implementation of all sports, educational, tourist,

cultural or artistic activities; the organization of events, shows, enter-tainment and any advice relating thereto,

• the creation or purchase and operation of all facilities, all organizationsand sports, educational, tourist, cultural or artistic oriented organizationsand facilities,

• the preparation and execution of all contracts related to the same aims,• the creation or purchase and operation of all businesses or estab-

lishments with the same activities,• the Company’s involvement by all means and in any form whatsoever

in all undertakings and in all companies established or to be established,• the design, creation, manufacturing, marketing, directly or indirectly

through the intermediary, in particular, any licensee of any products andservices that may be distributed under trademarks, logos or emblemsthat it owns or under any new trademark, logo or emblem that theCompany may hold or register.

The Company may be assist the subsidiaries of its group by all means,in particular, by granting them loans, advances and credits in compliancewith current laws and regulations.

In general, the Company may carry out all industrial, commercial orfinancial, personal property or real property transactions, in particular,any acquisition, possession or management of interests in all companies

or legal entities of any kind whatsoever, whether civil, industrial orcommercial, which is related directly or indirectly to the above purposeor to any like or related purposes.

Article 3 - Corporate name

Its corporate name is: Club Méditerranée.

In all legal instruments and documents issued by the Company for thirdparties, the corporate name must be immediately preceded or followedby the words “Société Anonyme1” and the statement of the amount ofthe share capital.

Article 4 - Head office - Branches

The Company’s head office is located at 11 rue de Cambrai, Paris 75957cedex 19, France.

It may be moved to any location in the same département2 or in aneighboring département by ordinary decision of the Board ofDirectors, provided that said decision is approved by the next RegularGeneral Meeting of shareholders. The Board of Directors shall then beauthorized to amend the Articles of Incorporation accordingly. The headoffice may also, subject to current law, be moved to any other locationpursuant to a decision by the Special General Meeting of shareholders.

The Board of Directors may open offices, agencies or branches whereverit wishes.

Article 5 - Term

The Company has been incorporated for a term that expires on October31, 2095 except in the event of the extension of the Company’s termor its early dissolution decided, in particular, by the General Meeting withthe majority provided for amendments of the Articles of Incorporation.

II - CAPITAL - SHARES

Article 6 - Share capital

The share capital has been set at the amount of SEVENTY SEVEN MILLIONFOUR HUNDRED AND THIRTY TWO THOUSAND AND TWENTYEUROS (377,432,020). It has been divided into NINETEEN MILLION THREEHUNDRED AND FIFTY EIGHT THOUSAND AND FIVE (19,358,005)shares.

APPENDIX ARTICLES OF INCORPORATION (“STATUTS”)

1 Public limited company

2 Administrative area of France (county)



A - Provisions relating to the Company’s shares

Article 7 - Share form and ownership

1. Shares or securities issued by the Company shall be in bearer orregistered form. Registered shares may be converted into bearershares, unless otherwise provided for by law. Said shares or securities,regardless of their form, must be registered in an account inaccordance with the conditions provided for under current law andregulations. Rights to shares shall be evidenced by registration inaccount in the conditions and according to the methods providedfor under current law and regulations.

2. Subject to the reservations and in accordance with the conditionsprovided for under the law and regulations, any intermediary may beregistered on behalf of the owners of securities of the Company pro-vided for under Article L. 228-1 (7) of the Commercial Code (Codede commerce) (owners not having a place of residence in France,within the meaning of Article 102 of the French Civil Code (Codecivil) provided, in particular, that the intermediary has declared uponopening its account with the Company or the financial intermediarythat manages the account, in accordance with the law and regulations,its capacity as a third party holding securities on behalf of another.

Said registration may be made in the form of a collective account orin several individual accounts, each for an owner.

3. The Company may at any time, in accordance with current law andregulations, request the central custodian that manages the issueaccount of its securities for information on the holders of securitiesissued by the Company that immediately or subsequently grant aright to vote and to securities. In view of the list provided by thecentral custodian that manages the issue account of its securities,the Company may, in particular, in accordance with the law andregulations request persons on said list and which it considers maybe registered on behalf of third parties for information on theowners of securities.

4. In addition to the legal obligation to inform the Company of theownership of certain fractions of the capital or voting rights, anynatural person or legal entity that, acting alone or with others, happensto directly or indirectly own a percentage of the capital, voting rightsor securities, subsequently granting access to the Company’s capital,equal to or in excess of 0.5 % or a multiple of said percentage, mustinform the Company by registered letter with recorded deliveryrequested specifying the number of voting rights and securitiesimmediately or subsequently granting access to the capital that it ownsas well as the voting rights which are attached thereto within fivetrading days as from reaching each of said percentage thresholds.

To determine the ownership thresholds provided for in the previousparagraph, account shall be taken of shares or voting rights held as saidterms are defined under the provisions of Articles L. 233-3, L. 233-9and L. 233-10 of the Commercial Code.

In each declaration provided for above, the par ty declaring thepercentage thresholds shall certify that the declaration made includesall securities held or owned within the meaning of the aboveparagraphs. The party declaring the percentage thresholds shall alsospecify the date(s) of purchase.

If the declaration has not been made as stated in the previous paragraphs,the shares that exceed the fraction that should have been declared shallbe deprived of the right to vote at shareholders’ meeting in accordancewith the conditions provided for by law if, at the time of a meeting,the non declaration has been recorded in minutes and if severalshareholders together holding at least 5% of the capital or voting rightsof the Company make a request to this effect during said meeting.

All natural persons or legal entities must also inform the Company inaccordance with the procedures and within the time limits providedfor above when his/its direct, indirect interest or his/its interestcombined with other interests falls below each of the thresholdsmentioned above.

In accordance with and in the conditions set by law and regulations,the Company may request legal entities that own its shares andhaving more than 2.5% of the capital or voting rights to inform it ofthe identity of natural persons or legal entities that directly or indirectlyown more than one third of the capital of said legal entity or ofvoting rights exercised at General Meetings.

Article 8 - Rights and obligations attachedto the shares

1. Each share shall grant entitlement in the sharing of profits and in theownership of company assets to a share proportional to the fractionof capital that it represents.

2. Each share shall grant entitlement to a vote and representation atGeneral Meetings, without limitation, in accordance with the legalconditions defined by law and the Articles of Incorporation.

However, a double voting right to that granted to other shares, hav-ing regard to the fraction of the capital that it represents, shall be allo-cated to all shares that have been paid up in full for which evidenceis provided five days prior to the date of the Meeting of registrationby name with the issuer or agent bank for at least two years in thename of the same shareholder.


In the case of a capital increase by the capitalization of reserves,profits or premiums, the double voting right may be granted as fromissue to registered shares allocated free of charge to a shareholder forold shares for which it/he enjoys said right.

The merger or split of the Company shall have no impact on thedouble voting right which may be exercised within the beneficiaryCompany if its Articles of Incorporation have provided for such.

The double voting right shall cease by right for any share that has beenconverted to bearer shares or the ownership of which has beentransferred. Nevertheless, any transfer following an inheritance, dividingup of commonly owned property between spouses or donation intervivos in favor of a spouse or a parent in line of inheritance shall notinterrupt the above time limit or the vested right shall be kept.

3. All shareholders shall be entitled to be informed of the Company’ssituation and to obtain certain company documents at times and inaccordance with the conditions provided for by law and regulations.

4. Shareholders shall bear losses only within the limit of their contributions.

Subject to the legal provisions, no majority may increase theirundertakings.

Rights and obligations attached to the share shall be transferred withthe share, regardless of who the shareholder is.

Ownership of one share shall by right entail acceptance of the decisionsof the General Meeting and of these Articles of Incorporation.

Heirs, creditors, assigns or other representatives of a shareholder maynot, under any pretext whatsoever, require that seals be placed on thecompany assets and documents, request the sharing or public auction(licitation) of said assets or interfere with the management of theCompany. To exercise their rights, they must rely on statements of theCompany’s assets and liabilities and decisions of the General Meeting.

5. Whenever it is necessary to own a certain number of shares toexercise a particular right, in the event of exchange, pooling orallocation of securities or at the time of a capital increase or reduction,a merger or any other transaction, the shareholders that own a numberof shares less than that required may exercise said rights only oncondition that they personally attend to obtaining the requirednumber of shares.

Article 9 - Indivisible nature of the shares

Shares shall be indivisible with regard to the Company. The co-ownersof joint shares shall be represented at General Meetings by one of themor by a joint representative of their choice. In the event of disagreement,the representative shall be appointed in court upon application by thefirst co-owner to act.

The beneficial owner shall hold the voting right at Regular GeneralMeetings and the legal owner shall hold such right at Special GeneralMeetings.

The legal owner shall exercise the preferential right in the event of acapital increase and if it fails to do so, the beneficial owner shallexercise such right.

The shareholder’s right to obtain company documents or to consultthem may also be exercised by each of the co-owners of joint shares,by the beneficial owner and by the legal owner of the shares.

Article 10 - Assignment and transfer of shares

Shares shall be freely marketable, unless otherwise provided for by lawor regulations.

Shares, regardless of the form thereof, whether registered shares or bearershares, shall be transferred from account to account in accordance withthe conditions and methods provided for by law.

However, shares on which due payments have not been paid up in fullmay not be transferred from account to account.

B - Changes in the share capital

Article 11 - Increase of the share capital

The share capital may be increased, either by the issue of securities thatimmediately or subsequently grant access to a fraction of the Company’scapital or by increasing the nominal amount of existing shares. Capitalincreases shall be made, in accordance with the law, by means ofcontributions in cash or in kind. They may be made by set-off with dueand payable receivables on the Company or by the capitalization ofprofits, reserves or issue premiums or by any other means authorizedby law. The Special General Meeting shall be solely empowered to decideon a capital increase on the basis of a report by the Board of Directors.It may delegate these powers to the Board of Directors in accordancewith the conditions laid down under current law and regulations.

The shareholders, in proportion to the amount of their shares, apreferential subscription right to shares paid in cash issued to make acapital increase. The shareholders may individually waive their preferentialright. They shall also have a subscription right on a pro rata basis if theGeneral Meeting expressly decides so.

The legal owner, subject to the beneficial owner’s rights, shall be entitledto the new shares allocated to shareholders following the capitalizationof reserves, profits or issue premiums.



Article 12 - Full payment of shares

In the event of a capital increase, at least one quarter of the nominalvalue of shares subscribed for in cash and, where applicable, the entireissue premium must be .paid upon subscription.

The remainder must be paid up in full on one or several occasionsby decision of the Board of Directors within five years as from thedate on which the capital increase became final.

Subscribers and shareholders shall be informed of calls for funds atleast fifteen days prior to the date set for each payment by noticepublished in a law gazette at the place of the head office or by individualregistered letter. Payments shall be made either at the head office orat any other location specified for this purpose.

Any delay in the payment of amounts owed on the unpaid amount ofthe shares shall entail by right and without there being a need forany formality to the payment of interest at the legal rate increased by3 points as from the due date, without prejudice to the personal actionthat the Company may bring against the defaulting shareholders and thecompulsory enforcement measures provided for by law.

Article 13 - Reduction - redemption of the share capital

The Special General Meeting shall authorize or decide on the capitalreduction. It may delegate all powers to the Board of Directors tocarry out same. Under no circumstances may the capital reductioninterfere with the equality of treatment to be afforded shareholders.

The capital may be redeemed in accordance with the law.

III - MANAGEMENT AND SUPERVISIONOF THE COMPANY

Article 14 - Board of Directors - Directors

1. In accordance with the law, the Company shall be managed by a Boardof Directors comprised of three to eighteen members, save for anexemption provided for by law in the event of a merger. The directorsshall be appointed in accordance with the law. The number of directorsand permanent representatives of directors that are legal entities thathave reached the age of seventy years may not exceed one third(rounded to the directly lower whole number) of directors in office.In the event this proportion is exceeded, the eldest director or thepermanent representative is deemed to have automatically resignedfrom office at the close of the Annual Regular General Meetingdeciding on the financial statements of the year during which theproportion is exceeded.

2. Directors shall be appointed or their term of office shall be renewedfor a 3 year term. The term of office of each director shall always berenewable. It shall actually end upon the close of the Regular GeneralMeeting of shareholders deciding on the financial statements of thepast year and held in the fiscal year during which said director’s termof office normally expires.

The General Meeting of shareholders may remove directors fromoffice at any time.

3. The Board may, in accordance with the law, replace directors whoseposition has become vacant during the term of office. Appointmentsthus made shall be subject to approval by the very next RegularMeeting.

The director appointed to replace another director whose term ofoffice has not expired shall remain in office only during the unexpiredperiod of his predecessor’s term of office.

4. Subject to the exemptions provided for by law, all members ofthe Board must own at least 50 shares within the time limits providedfor by law.

5. Any appointment made in breach of the regulations or Articles ofIncorporation shall be null and void and unless otherwise providedfor by law, this nullity shall not entail the nullity of decisions in whichthe director appointed in breach of the regulations or Articles ofIncorporation was involved.

Likewise, in the event of appointments made provisionally by the Board,in accordance with paragraph 3 above and failing approval by theshareholders’ meeting, the earlier decisions made and acts carried outby the Board shall be valid.

Article 15 - Chairman of the Board of Directors -Board committee

1. The Board shall appoint a natural person to act as Chairman fromamongst its members. He/she may be appointed for his/her entireterm of office as director and he/she may be re-appointed.

The Chairman’s age limit is 65 years.When the Chairman reaches theage limit, he/she shall be deemed to have automatically resigned.

The Board may appoint one or more Vice-Chairman fromamongst its members.

Lastly, the Board shall appoint a secretary who may be chosenoutside of the Company’s shareholders.


2. The Chairman shall chair Company meetings, organize and conductits proceedings and report thereon to the General Meeting. He/sheshall see to the proper operating of the Company’s bodies andensure, in particular, that the directors are able to carry out theirassignments. The Chairman shall chair General Meetings and drawup the reports provided for by law. He/she may also assume thegeneral management of the Company as Chief Executive Officerif the Board of Directors has chosen to combine these two officesupon his/her appointment or at any other date.

Article 16 - Decisions of the Board of Directors -Minutes

1. The Board of Directors shall meet as often as required in theCompany’s best interests, further to notice of meeting issued by itsChairman by all means, even by word of mouth. The meeting shallbe held at the head office or at any other location specified in thenotice of meeting sent by the Chairman.

In the event the Chairman is unavailable, the notice of meeting maybe sent by the director provisionally delegated to act as chairman or,where applicable, by a Vice-Chairman.

The Chairman may be requested to convene the Board further to aspecific agenda determined at the initiative of either one third of itsmembers or at least three of them.

Where applicable, the Chief Executive Officer may request theChairman to call a Board of Directors’ meeting for a specific agenda.

2. The Board of Directors shall deliberate validly only if at least half ofits members are present.

Subject to the exceptions provided for by law, for calculation of thequorum and majority, the directors who attend the Board meetingby videoconferencing means in the conditions determined accordingto current regulations shall be deemed to be present.

A director may grant another director a power in writing torepresent him/her. Each director may hold one power only during asame meeting.

An attendance register shall be kept. It shall be signed by the directorsattending the meeting and mention, where applicable, the directorsparticipating by videoconference. Proof of the number of directorsin office, their presence, including, where applicable, by videocon-ference or their representation is sufficiently evidenced with regardto third parties by statements of the minutes of each meeting.

3. The Chairman of the Board of Directors or, in his/her absence,the director that may be provisionally delegated to said office, aVice-Chairman or else any other director appointed by his/hercolleagues shall chair meetings.

Decisions shall be made with the majority of votes by members presentor possibly deemed to be such or represented. In the event of a tiein voting, the Chairman shall have a casting vote.

4. The Board may decide to set up committees or commissionsresponsible for studying issues that it or its Chairman submits to theirreview for an opinion. Said committees or commissions shall exercisetheir powers under its responsibility.

5. The Chairman of the meeting and a director or, in the event theChairman of the meeting is unable to act, at least two directors shallsign the minutes recording the decisions of the Board.

The Chairman of the Board of Directors, the Chief Executive Officer,the Deputy Chief Executive Officers, the director temporarilydelegated to act as chairman, the secretary to the Board ofDirectors or a representative authorized for this purpose shall validlycertify copies or extracts of minutes of the decisions.

6. Directors, and any individual requested to attend Board meetings,shall be bound by a duty of discretion with regard to the confidentialinformation notified as such by the Chairman of the meeting.

Article 17 - Assignments and powers of the Board

1. The Board of Directors shall determine the orientations of the Company’sactivity and see to the implementation thereof.

Subject to the powers expressly granted to the shareholders’ meetingsand within the scope of the Company’s purpose, it shall deal with anyissue concerning the smooth operation of the Company and throughits decisions settle the Company’s business.

The Board of Directors shall carry out the audits and checks that itconsiders to be appropriate.

The Chairman or Chief Executive Officer of the Company must provideeach director with all documents and information that he/she needsto carry out its assignment.

2. To exercise its powers, the Board shall grant, with or without the rightof substitution, if need be, all delegations to its Chairman or to any otherrepresentatives that it appoints, subject to the limitations providedfor by law regarding endorsements, guarantees and securities.



Article 18 - General management

In accordance with the law, the Chairman of the Board of Directorsor a natural person appointed by the Board of Directors, bearingthe title of Chief Executive Officer, shall be responsible for thegeneral management.

The decision of the Board of Directors on the choice between thetwo methods of general management shall be taken with a majorityof votes by the members present or possibly deemed to be such orrepresented.

Unless the Board of Directors decides otherwise, the option chosen andany following option shall be valid until the expiry of the term of officeof the Chairman who assumes responsibility for the general managementor of the term of office of the Chief Executive Officer in the event theoffices are separated or, where applicable, up to the date on which theChairman of the Board of Directors decides to no longer assume thetwin offices of Chairman of the Board of Directors and of ChiefExecutive Officer.

Article 19 - Chief Executive Officer - Appointment -Removal from Office - Powers

1. Depending on the choice made by the Board of Directors in accor-dance with the terms of Article 18, the Chairman of the Board ofDirectors or a natural person appointed by the Board of Directors,bearing the title of Chief Executive Officer, shall be responsible forgeneral management.

When the Board of Directors decides to separate the office ofChairman and of Chief Executive Officer, it shall appoint a ChiefExecutive Officer amongst the directors or outside of them, set his/herterm of office, set his/her compensation and, where applicable, the lim-itations of his/her powers.

Regardless of the Chief Executive Officer’s term of office, it shallend by right at the end of the year in which he/she reaches his/hersixty fifth years.

The Board of Directors may remove the Chief Executive Officerfrom office at any time.

2. The Chief Executive Officer shall be vested with the broadest pow-ers to act in the Company’s name in all circumstances. He/she shallexercise said powers within the scope of the Company’s purpose andsubject to the powers expressly allocated by law to the sharehold-ers’ meetings and to the Board of Directors.

The Chief Executive Officer shall represent the Company in its relationswith third parties. The Company shall be committed, event by actsof the Chief Executive Officer outside the scope of the Company’spurpose, unless it can prove that the third party knew that the actwas ultra vires or that it could not be unaware thereof given thecircumstances. Note that the sole publication of the Articles ofIncorporation shall not suffice to constitute this proof.When the ChiefExecutive Officer is responsible for the general management, he/she mayrequest the Chairman of the Board of Directors to call a Board ofDirectors’ meeting with a specific agenda.

3. The Chief Executive Officer and the Deputy Chief Executive Officersmay appoint all special representatives to act on their behalf.

Article 20 - Deputy Chief Executive Officers -Appointment - Removal from Office - Powers

1. On a proposal by the Chief Executive Officer, whether the Chairmanof the Board of Directors or any other individual holds said office,the Board of Directors may appoint one or more natural persons toassist the Chief Executive Officer, with the title of Deputy ChiefExecutive Officer.

The maximum number of Deputy Chief Executive Officers is set at five.

Regardless of the Deputy Chief Executive Officer’s term of office,his/her office shall end by right at the end of the year during whichhe/she reaches his/her sixty fifth year.

In the event of Chief Executive Officer terminates his/her office or isunable to act, the Deputy Chief Executive Officer(s) shall retain theiroffice and powers until the new Chief Executive Officer is appointed,unless the Board of Directors decides otherwise.

The Board of Directors may remove Deputy Chief ExecutiveOfficer(s) from office at any time.

2. In agreement with the Chief Executive Officer, the Board of Directorsshall determine the scope and term of the powers granted to theDeputy Chief Executive Officers.

Deputy Chief Executive Officer(s) have the same powers as the ChiefExecutive Officer with regard to third parties.

Article 21 - Compensation of Directors,the Chairman, the Chief Executive officer,Deputy Chief Executive Officers and representatives of the Board of Directors

1. The General Meeting shall set the maximum annual amount to be allo-cated to directors in compensation for their activities, as directors’ fees.

The Board of Directors shall allocate said compensation betweenits members as it wishes.


2. The compensation of the Chairman of the Board of Directors, ofthe Chief Executive Officer and of Deputy Chief Executive Officersshall be set by the Board. It may be set and/or variable.

3. The Board of Directors may allocate exceptional compensation todirectors responsible for assignments or specific mandates.

Article 22 - Regulated agreements

In accordance with the law, the Board shall authorize the agreementsreferred to under Article L. 225-38 of the Commercial Code, apart fromagreements relating to day-to day transactions entered into undernormal conditions which shall be notified in accordance with the law.

IV - NON VOTING DIRECTORS

Article 23 - Non voting directors

On proposal by its Chairman, the Board of Directors may appoint oneor more non voting directors, natural persons, chosen among theshareholders or outside of them, the number of which shall be limitedto a maximum of 6.

They shall be appointed for a term of three years and the Board ofDirectors may always renew their office and terminate it at any timeand for any reason whatsoever.

The non voting directors shall act as advisors and shall be responsiblefor assisting the Board of Directors without being able to replace it underany circumstances. They shall be called to Board of Directors’ meetingsand participate in decisions in an advisory capacity and their absencecannot impair the value of decisions.

Non voting directors may receive compensation for the discharge oftheir office. The Board of Directors shall set said compensation.

V - STATUTORY AUDITORS

Article 24 - Statutory Auditors

In accordance with the law, the General Meeting shall appoint twoprincipal statutory auditors and two deputy Statutory Auditors thatsatisfy the conditions laid down by law and regulations.

The Statutory Auditors shall be appointed for six years. The outgoingAuditors may be re-appointed in accordance with the law.

The Statutory Auditors’ assignment is defined by law. Their compensationshall be set in accordance with current regulatory requirements.

VI - SHAREHOLDERS’ MEETINGS

Article 25 - Type of Meetings

Shareholders’ decisions shall be made at General Meetings.

Regular General Meetings are those called to make all decisions that donot amend the Articles of Incorporation and any authorization grantedto the shareholders to opt for the payment of the dividend in shares.

Except for the case of the payment of the dividend in shares, SpecialGeneral Meetings are meetings called to decide or to authorizeamendments of the Articles of Incorporation.

The decisions of General Meetings shall bind all shareholders, event thoseabsent, dissenting or incapable.

Article 26 - Notice of Meeting and Holdingof General Meetings

The Board of Directors or any individual legally authorized for thispurpose shall call General Meetings.

The procedures and time limits for the calling of General Meetings arelaid down by law. The notice of meeting must, in particular, specify theagenda and the venue for the meeting, which may be the head officeor any other location.

When the Meeting has not been able to validly deliberate, failing therequired quorum, the second Meeting and, where applicable, the secondMeeting postponed, shall be called in accordance with the same procedureas the first meeting and the notice of meeting shall specify the date of thefirst meeting and its agenda.

Article 27 - Agenda

1. The individual that issues the notice of meeting shall draw up theagenda.

2. One or more shareholders, representing at least the required fractionof the share capital and acting in the conditions and within the timelimits provided for by law, shall be entitled to require, by registeredletter with recorded delivery requested, that draft resolutions beentered on the Meeting’s agenda.

3. The Meeting may not deliberate on an issue that has not been enteredon the agenda, which may not be changed in the second notice ofmeeting. It may, however, in all circumstances, remove one or moremembers of the Board of Directors from office and replace them.



Article 28 - Attendance at Meetings - Powers

1. All shareholders may attend General Meetings and take part in deci-sions personally or by representative, regardless of the number of its/hisshares, upon simple proof of its/his identity, insofar as payment due onsecurities have been paid up in full 30 days after the formal notice topay in full the amount not paid and have been registered in an accountin its/his name at least five days prior to the date of the meeting.

2. Shareholders may vote by mail in accordance with the methodsdefined by law. The Board of Directors shall be authorized to reducethe time limit for the receipt of vote forms.

The shareholders may, in the conditions defined by law and regulations,send their proxy form or vote by mail form for all General Meetingseither as hard copy or, following a decision of the Board of Directorspublished in the advertisement of meeting and/or notice of meeting,by remote transmission.

3. A shareholder may be represented only by his/her spouse or by anothershareholder holding a proxy.

The owners of shares mentioned in the seventh paragraph of ArticleL. 228-1 of the Commercial Code may be represented, in accordancewith the conditions provided for by law and regulations, by a registeredintermediary.

4. The right to attend Meetings or vote by mail is subject, either tothe registration of the shareholder that holds registered shares inaccounts kept by the Company or to the filing at the place specifiedin the notice of meeting of certificates issued by the authorized inter-mediaries recording the lock-up of bearer shares registered in accountwith authorized intermediaries up to the date of the Meeting. Saidformalities must be carried out no later than forty eight hours priorto the Meeting being held

5. The holders of registered shares may attend Meetings upon simpleproof of their identity. The holders of bearer shares may attend Meetingupon proof of the filing provided for above.

Access to the Meeting is open to members on simple proof of theircapacity. The Board of Directors may, however, if it deems so appropri-ate, issue personal admission cards in their names to the shareholders.

6. The Company shall be entitled to request the intermediary registeredon behalf of the shareholders mentioned in Article L. 228-1 ofthe Commercial Code to provide the list of shareholders that itrepresents, whose voting rights shall be exercised at the meeting.

The vote and the power issued by an intermediary which has notdeclared itself as such in accordance with the law and regulations orthese Articles of Incorporation or which has not stated the identityof the holders of the securities may not be taken into account.

Article 29 - Holding of the Meeting - Committee -Minutes

1. The shareholders present and the representatives shall sign the atten-dance sheet, to which the powers granted to each representative and,where applicable, the vote by mail form shall be attached. The com-mittee of the Meeting shall certify it to be true.

2. The Chairman of the Board of Directors or one of the Vice-Chairmenor a director specially appointed by the Board shall chair the Meetings.

If the Meeting is called by any other individual authorized in accordancewith the law, the individual who issued the notice shall chair the Meeting.

The two shareholders, present and accepting, representing bythemselves and as representatives the greatest number of votes,shall act as tellers.

The committee thus formed shall appoint a secretary who may bechosen from outside of the shareholders.

3. The duties of the committee relate exclusively to the holding of theMeeting and to its regular operating.

4. The decisions of Meetings shall be recorded in minutes drawn up ina special register in accordance with the law, which the members ofthe committee shall sign. Copies and extracts of said minutes shall bevalidly certified in accordance with the law.

Article 30 - Calculation of the quorum

The quorum shall be calculated on all shares making up the sharecapital, less shares without voting rights pursuant to the law.

In the event of a vote by mail, to calculate the quorum, account shallbe taken only of forms duly completed and received by the Companyat least three days prior to the date of the Meeting.

Article 31 - Regular General Meeting

The Regular General Meeting is the meeting called to make all decisionsthat do not amend the Articles of Incorporation.

The Regular General Meeting shall meet at least once a year, withinsix months of the closing of the fiscal year, to decide on the financialstatements of said year, unless said time limit is extended by courtdecision.

It shall deliberate validly fur ther to the first notice of meeting onlyif the shareholders present or represented or voting by mail holdat least one quarter of the shares with voting rights.

No quorum shall be required further to the second notice of meeting.It shall decide with the majority of votes held by the shareholders pres-ent or represented or voting by mail.


Article 32 - Special General Meetings

The Special General Meeting may amend all articles of the Articles ofIncorporation. However, it may not increase shareholders’ undertakings,subject to transactions resulting from shares pooled in accordance withthe law.

The Special General Meeting may deliberate validly only if the share-holders present or represented or voting by mail own at least, furtherto the first notice of meeting, one third and, further to the second noticeof meeting, one quarter of the shares with voting rights. Failing thelatter quorum, the second Meeting may be postponed two months atmost as from the date on which it had been called.

It shall decide with the majority of two thirds of the votes hold byshareholders present or represented or voting by mail.

In the event of a capital increase by the capitalization of reserves,profits or issue premiums, the Meeting shall decide with the quorumand majority of Regular General Meetings.

At Special General Meetings called to decide on the approval of acontribution in kind or the granting of a special benefit, except in thecases of merger, split or contribution placed under the regulationsapplicable to splits, the contributor or the beneficiary shall not havea vote in person or as representative.

Article 33 - Shareholders’ right of disclosure

All shareholders shall be entitled to obtain, in the conditions and at thetimes set by law, disclosure of documents needed to enable them todecide with full knowledge of the facts and to judge the managementand supervision of the Company.

VII - FISCAL YEAR - CORPORATE FINANCIAL STATEMENTS - APPROPRIATIONAND ALLOCATION OF PROFITS

Article 34 - Fiscal year

The fiscal year shall begin on November 1st and end on October 31st.

Article 35 - Statement of Assets and Liabilities -Financial Statements - Balance Sheet

Regular accounts of company transactions shall be kept in accordancewith the law.

At the closing of each fiscal year, the Board of Directors shall draw upa statement of assets and liabilities. It shall also draw up the financialstatements in accordance with the law.

It shall attach a statements of surety bonds, endorsements and securitiesgranted by the Company and a statement of security interests grantedto the balance sheet.

It shall draw up a management report that contains the information pro-vided for by law.

The management report shall include, where applicable, the report onthe management of the Group when the Company must draw up andpublish consolidated financial statements in accordance with the law.

Where applicable, the Board of Directors shall draw up the estimatedaccounting documents in accordance with the conditions provided forby law and regulations.

All said documents shall be made available to the Statutory Auditorsand shareholders in accordance with the law and regulations.

Article 36 - Appropriation and allocation of profits

First of all, amounts to be posted to reserve accounts in accordance withthe law shall be drawn from the profits of each fiscal year decreased,where applicable, by earlier losses.

Thus, five per cent shall be drawn from the profits to form the statutoryreserve fund. Said deduction shall cease to be mandatory when said fundreaches one tenth of the share capital. It shall resume its course when,for any reason whatsoever, the statutory reserve falls below said fraction.

The distributable profit is formed by the profit of the year, less earlier lossesand amounts posted to reserve accounts pursuant to the law or Articlesof Incorporation and increased by the profits carried forward.

From said profit, the General Meeting shall then draw the amounts thatit considers appropriate to allocate to all optional, regular or specialreserve funds or to carry forward.

The balance, if any, shall be allocated between all shares.

Apart from the case of capital reduction, no distribution may be madeto shareholders when the equity capital becomes or following whichbecomes less than the amount of the capital increased by reserves whichcannot be distributed pursuant to the law or Articles of Incorporation.

The General Meeting may decide to distribute amounts drawn fromoptional reserves either to provide or complete a dividend or as anexceptional distribution. In this case, the decision shall expressly spec-ify the reserve items from which the deductions were made. However,dividends shall be paid out first and foremost from the distributableprofit of the year.

Losses, if any, after the General Meeting’s approval of the financialstatements shall be entered in a special account to be charged againstthe profits of subsequent years until they have been discharged.



Article 37 - Payment of dividends

The General Meeting, deciding on the financial statements of the year,may grant each shareholder for all or part of the dividend paid out, anoption between the payment of the dividend in cash or in shares. Thesame option may be available in the event of the payment of interimdividends.

The General Meeting or, failing it, the Board of Directors, shall decideon the methods of paying dividends in cash.

However, dividends must be paid within a maximum time limit of ninemonths following the closing of the year, unless this time limit is extendedby court decision.

When a balance sheet drawn up during or at the end of the year andcertified by the Statutory Auditors shows that the Company, since theclosing of the previous year, after booking of the necessary depreciationexpenses and allowances, less any earlier losses, and amounts to be postedto reserve accounts pursuant to the law or Articles of Incorporationand considering the profits carried forward, made a profit, interim dividendsmay be paid out prior to the approval of the financial statements of theyear. The amount of said interim dividends may not exceed the amountof the profit thus defined.

VIII - EQUITY CAPITAL LESS THANHALF THE SHARE CAPITAL - DISSOLUTION -LIQUIDATION

Article 38 - Equity capital less than half the share capital

If, on account of losses posted in the accounting documents, the equi-ty capital of the Company falls to less than half the share capital, theBoard of Directors must, within four months following the approvalof the financial statements that show said losses, call a Special GeneralMeeting to decide if the Company should be dissolved early.

If dissolution is not decided, the capital must, subject to the law relatingto the minimum capital and within the time limit set by law, be reducedby an amount equal to that of the losses which could not be chargedagainst the reserves, if within said time limit the equity capital has notbeen rebuilt up to an amount at least equal to half the share capital.

In any event, the General Meeting’s decision must be published as requiredin accordance with current regulations.

In the event of violation of said regulations, any concerned party may bringa legal action to dissolve the Company. The same shall apply if the share-holders have not been able to validly deliberate.

In any event the court may grant the Company a maximum time limit ofsix months to rectify the situation. It may not decide on the dissolutionif on the day it rules on the merits, the situation has been rectified.

Article 39 - Dissolution - Liquidation

Apart from the cases of court-ordered dissolution provided for by lawand unless the Company’s term is extended in accordance with the law,the Company shall be dissolved upon the expiration of the term set inthe Articles of Incorporation or following a decision of the SpecialGeneral Meeting of shareholders.

Said Special General Meeting shall then appoint one or more liquidatorswith the quorum and majority provided for Regular General Meetings.

The liquidator shall represent the Company. The liquidator, who shall bevested with the broadest powers, shall sell all company assets and payoff the liabilities.

He shall then allocate the balance.

The General Meeting of shareholders may authorize him to continuethe business in progress or to undertake new business for the require-ments of the liquidation.

The net assets subsisting after the nominal value of shares has beenrepaid shall be shared equally between all shares.

Article 40 - Disputes

Any disputes that are liable to arise during the term of the Companyor after its dissolution during the course of liquidation transactions eitherbetween shareholders, management or supervisory bodies and theCompany or between shareholders themselves relating to companybusiness or the implementation of the Articles of Incorporation shallbe judged in accordance with the law and referred to the courts withjurisdiction.

Statutory Auditors• Ernst & Young Audit (SA), Faubourg de l’Arche Paris La Défense 92037Cedex, represented by Pascal Macioce.Appointment renewed at the March 13, 2001 Annual Shareholders’ Meeting,for a six-year period expiring at the close of the Annual Shareholders’Meeting called to approve the financial statements for the year endingOctober 31, 2006. First appointed at the Annual Shareholders’ Meeting ofApril 30, 1981.• Deloitte Touche Tohmatsu - Audit (SA), 185 avenue Charles de Gaulle,Neuilly-sur-Seine 92524 cedex, represented by Alain Pons and HervéPouliquen.Appointed at the Annual Shareholders’ Meeting of March 17, 2003, to replacethe previous joint auditor, for the remainder of the latter’s term expiring at theclose of the Annual Shareholders’ Meeting called to approve the financial state-ments for the year ending October 31, 2006.

Substitute Auditors• François Carrega, 13 boulevard des Invalides, Paris 75007.Appointed at the Annual Shareholders’ Meeting of March 13, 2001, for a six-yearperiod expiring at the close of the Annual Shareholders’ Meeting called toapprove the financial statements for the year ending October 31, 2006.• Beas, 185 avenue Charles de Gaulle, Neuilly-sur-Seine 92524 cedex.Appointed at the Annual Shareholders’ Meeting of March 17, 2003, to replacethe previous joint substitute auditor, for the remainder of the latter’s termexpiring at the close of the Annual Shareholders’ Meeting called to approvethe financial statements for the year ending October 31, 2006.

Information Officer

• Michel WolfovskiSenior Vice President and Chief Financial Officer, member of the ExecutiveBoard11 rue de Cambrai, Paris 75957 cedex 19, France.Tel.: +33 (0) 1 53 35 34 00

Head of Investor Relations and Financial Communications

• Caroline Bruel11 rue de Cambrai, Paris 75957 cedex 19, France.Tel.: +33 (0) 1 53 35 32 09Fax: +33 (0) 1 53 35 32 73e-mail: [email protected]


Consultancy, design and production 33 1 56 21 20 13

A French corporation governed by an Executive Board and a Supervisory Board with fully paid-up capital of EUR 77,432,020

Head office: 11 rue de Cambrai, Paris 75957 cedex 19, France - Phone: +33 1 53 35 35 53572 185 684 RCS Paris - Licence: LI 075 95 0333

APS - 6 rue Villaret de Joyeuse, Paris 75017

AXA CORPORATE SOLUTIONS - 4 rue Jules Lefèvre, Paris 75426 cedex 09 - Police n° 41.300.764.320

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