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Dear Shareholders,

In the Jungfrau Region, the desire to experience nature up close can be fulfilled in a multifaceted and geographically small area like nowhere else. This opens up attractive market potential to our mountain railway and leisure companies. We were able to take advantage of this: at the end of 2017, we achieved new visitor frequency and turnover records on the Jungfrau Railway, the Harder Railway, the Mürren Railway and in summer on the First Railway, and for the second time more than one million guests visited Jungfraujoch – Top of Europe. The majority of these visitors came from Asia, where traditional business with the tour operators is significant. The number of individual travellers from this area is also growing. In addition, we are increasingly seeing extended families and small groups organising their tours and stays independently and in some cases at very short notice. Travelling outside of a guided group is supported by a variety of electronic help devices to make it more comfortable, which are constantly growing in importance. Digitisation is thus increasingly becoming the driver of our business models. This is a development that our department heads and IT technicians are happy to take on.
The challenges involved are in line with the latest trends and leave no room for monotony or dull routine. Together with our innovative teams, we are convinced that the Jungfrau Railway Group is well prepared for the digital future, thanks to its roots in the region and its international brand appeal, as well as its increasingly digitally integrated offer. We can substantiate this for the past year with a new record of CHF 42 million in Group profit.

Through our role as the engine of regional tourism, and as a major employer and investor, we create value for our immediate environment.

Prof. Dr. Thomas Bieger, Chairman of the Management Board and Urs Kessler, Chief Executive Officer

Through our role as the engine of regional tourism, and as a major employer and investor, we create value for our immediate environment. This in turn strengthens our regional roots, our Swissness and our international appeal. In our online annual report, we want to bring you closer to the value creation for the region. You can learn how regional anchoring and international aura strengthen each other. This year we are focusing on people and their encounters as tourists. We report from where we make "the front" of our business, under the motto: "On the move 25 hours a day for our guests, partners and at our company!"

Last year we welcomed 1,041,500 guests to the Jungfraujoch – Top of Europe. This resulted in yet another transport income of over CHF 100 million for Jungfrau Railways. The experience of 2015 taught us that a million visitors could not always be transported through the Jungfrau Railway smoothly and without any loss of quality with conventional crowd control. In 2016, we therefore developed and implemented an electronic seat reservation system within months. This has now proven itself with a new visitor record. The system forms the basis for further developments that meet the individual behaviour of our customers, in particular the spontaneous adaptation of travel planning. We put our innovative strength to the test and are preparing for the best possible guidance of guests on the new "V-Cableway".

The "V-Cableway" has been the focus of our corporate development since December 2012: the "Eiger-Express" tricable gondola lift is the most prominent element of this strategic project. Together with the new Männlichen Railway, the main facility of Gondelbahn Grindelwald-Männlichen AG, the tricable gondola lift is the "V" which has given the entire project its name. The two powerful cableways have their starting point in the same terminal in Grindelwald with car park and direct connection to the railway network of our alliance partner, Berner Oberland-Bahnen AG. Amicable solutions could be found with the few remaining opponents and environmental associations. We are thus close to obtaining planning permission for the cable cars and the terminal, and so we are nearly at the start of a three-year construction phase.

The V-Cableway project also includes major renovations in the rolling stock of the railways, which have already been implemented. In its entirety, the V-Cableway has a positive economic and transport-related impact of national dimensions, as shown in external reports. The Eiger Express will allow travellers to reach the Jungfraujoch faster and with simpler transfer connections. Thus, the first visitors will arrive at 3,454 metres above sea level earlier and the last ones can leave later. The visitors will be better distributed throughout the day and the infrastructure on the mountain will be unburdened by peak times. Within the Group, the new railway creates valuable synergies by providing answers to strategic problems in the winter sports segment, in addition to the advantages for the Jungfraujoch. It is not only Jungfraujoch customers who will reach their destination more quickly. For winter sports enthusiasts, long waiting times will be a thing of the past. Journeys will be faster and more convenient. Skiers and snowboarders can enjoy the attractive descents into the valley every day. Increased attractiveness and excellent service with the best terminal in the Alps is the only permanent answer to the challenges in the highly competitive winter sports market.

The great progress with the V-Cableway will lead to the strategic horizon of the company extending beyond the opening of the V-Cableway. The Management Board, as suggested by the Executive Board, believes the challenge of the future lies in the strengthening of added value in the existing context. Its answer to this is the further development of the Group into an integrated leisure and service company. Initial steps have already been taken. Since the beginning of the current winter season, we have been operating the catering on Kleine Scheidegg ourselves. Further operations at Jungfraujoch and the new V-Cableway terminal in Grindelwald are to follow. In Interlaken we are testing an integrated model of a travel information office, ticket office and leisure shop.

The feedback from the markets and the reservation levels also make us confident about the short-term prospects. However, our experience has also shown that the worldwide sale of a tourist offer can sometimes encounter unexpected obstacles. Terror attacks, political turmoil or economic turbulence affect the behaviour of international customers. Within the industry, price wars – primarily in China – are becoming more relentless. The Jungfrau Railways Group uses its unique features and the quality
of its offers to defend its position on the market and its price level. With a long-term strategy based on Swiss and nature-related values, we are protecting ourselves against short-term fluctuations and whims in tourist demand.

We would like to take this opportunity to thank our employees for the outstanding performance and their daily, genuine hospitality towards our customers. We also thank our customers, the federal and cantonal authorities, the municipalities, the mountain communities, the tourism organisations, the neighbouring railways, the resellers, the suppliers, the International Hochalpine Research Station Foundation and all the other partners such as the hotel industry, with whom we should cultivate a fruitful collaboration. Finally, we would like to thank you, dear shareholders, for the trust in our Group and the loyalty you have shown to Jungfraubahn Holding AG.



Prof. Dr. Thomas Bieger
Chairman of the Management Board

Urs Kessler
Chief Executive Officer