Dow Jones received a payment from EQS/DGAP to publish this press
release.
TUI AG (TUI)
TUI AG: Half year financial report 2018
09-May-2018 / 07:00 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
H1 2018
TUI Group - financial highlights
EUR million Q2 Q2 2017 Var. H1 H1 2017 Var. Var. %
2018 restated % 2018 restated % at
constant
currency
Turnover 3,264 3,071.8 + 6.3 6,813. 6,353.8 + 7.2 + 8.5
.1 5
Underlying
EBITA1
Hotels & 84.8 73.6 + 179.2 122.8 + + 48.2
Resorts 15.2 45.9
Cruises 54.9 46.9 + 92.4 75.0 + + 24.0
17.1 23.2
Destination - 9.1 - 2.5 - - 9.3 0.3 n. a. -
Experiences 264.0
Holiday 130.6 118.0 + 262.3 198.1 + + 35.0
Experiences 10.7 32.4
Northern - - 108.7 + - - 138.0 + + 11.8
Region 89.4 17.8 120.5 12.7
Central - - 91.3 + 2.1 - - 143.7 - 1.5 - 1.6
Region 89.4 145.8
Western - - 54.5 - 9.5 - - 102.2 - 3.3 - 3.3
Region 59.7 105.6
Sales & - - 254.5 + 6.3 - - 383.9 + 3.1 + 2.8
Marketing 238.5 371.9
All other - - 17.5 - - 49.0 - 28.5 - - 56.6
segments 25.8 47.4 71.9
TUI Group - - 154.0 + - - 214.3 + + 29.8
133.7 13.2 158.6 26.0
Discontinued - - 3.1 n. a. - - 15.3 n. a. -
operations
Total - - 157.1 + - - 229.6 + + 34.5
133.7 14.9 158.6 30.9
- - 182.4 + - - 251.9 +
EBITA 2, 3 147.2 19.3 192.3 23.7
- - 59.9 + 37.8 - 27.3 n. a.
Underlying 31.5 47.4
EBITDA 3
- - 82.1 + 15.3 - 52.3 n. a.
EBITDA 3 40.2 51.0
- - 163.9 + - - 245.5 +
Net loss for 141.5 13.7 200.2 18.5
the period
Earnings per - - 0.32 + 9.4 - 0.46 - 0.51 + 9.8
share 3 EUR 0.29
Net capex 66.5 365.8 - 207.3 695.1 -
and 81.8 70.2
investments
Equity ratio 21.3 20.0 + 1.3
(31 March) 4
%
Net debt 576.0 1,404.1 -
position (31 59.0
March) 3
Employees 55,773 58,698 - 5.0
(31 March)
Differences may occur due to rounding.
This Half Year Financial Report of the TUI Group was
prepared for the reporting period H1 2018 from 1 October
2017 to 31 March 2018. The terms for previous periods
were renamed accordingly.
1 In order to explain and evaluate the operating
performance by the segments, EBITA adjusted for one-off
effects (underlying EBITA) is presented. Underlying EBITA
has been adjusted for gains on disposal of financial
investments, restructuring measures according to IAS 37,
all effects of purchase price allocations, ancillary
acquisition costs and conditional purchase price payments
and other expenses for and income from one-off items.
Please also refer to page 14 for further details.
2 We define EBITA as earnings before interest, income
taxes and goodwill impairment. EBITA includes
amortisation of other intangible assets. EBITA does not
include measurement effects from interest hedges and in
the prior year also earnings effects from container
shipping.
3 Continuing operations.
4 Equity divided by balance sheet total in %, variance is
given in percentage points.
INTERIM MANAGEMENT REPORT
On track to deliver our growth targets
· We have delivered a good H1 performance, with a further improvement in
the seasonal result. Turnover increased by 7.2 % to EUR 6,813.5 m and
underlying EBITA improved by 26.0 % to EUR - 158.6 m. Growth in earnings
was delivered as a result of continued strong demand for our Holiday
Experiences - including additional hotel and cruise ship capacity as we
continue to deploy the proceeds of disposals into higher returning assets -
and a good portfolio performance by Sales & Marketing.
· The key drivers of the year on year improvement in underlying EBITA are
shown in the table below.
H1 results at a glance
EUR million H1 2018
Underlying EBITA H1 FY2017 - 214
Holiday Experiences + 28
Sales & Marketing + 11
All other segments - 16
Riu hotel disposals (Q1) + 38
Impact Niki bankruptcy (Q1) - 20
Easter timing impact + 22
Foreign exchange translation - 8
Underlying EBITA H1 FY2018 - 159
Please see pages 7 to 11 for further commentary on segmental performance.
During H1 we announced the following strategic developments:
· We will become the world's leading provider of destination experiences,
with the acquisition of Destination Management from Hotelbeds Group. The
acquisition is expected to complete in H2 FY2018, funded from the remaining
proceeds of business disposals.
· Due to the continued strong demand for TUI Cruises, Mein Schiff Herz
(previously Mein Schiff 2) will remain within the TUI Cruises fleet.
Marella Cruises will instead acquire SkySea Golden Era from Royal
Caribbean. The ship will be renamed Marella Explorer 2, launching Summer
2019.
· In addition, approval has been given for a third new build expedition
cruise ship for Hapag-Lloyd Cruises. Planning and negotiation will shortly
launch for a scheduled delivery of the further Hanseatic class ship in
2021.
Current trading
Holiday Experiences
Our portfolio of over 380 hotels continue to perform very well, thanks to the
strength of our portfolio of destinations, new hotel openings and integrated
model. Following a very strong performance in the past few years in Spain and
more subdued demand for Turkey and North Africa, we are seeing a continued
rebalancing towards the latter destinations, as well as strong demand for
Greece (where we have over 40 Group and own concept hotels). Other
destinations such as the Caribbean and Cape Verde also continue to see good
demand. Our hotel and club brands will continue to expand their offering with
five openings in Summer 2018 plus further openings in FY2019. We also
continue to streamline the existing portfolio, having disposed of three Riu
hotels in Q1 and with repositionings under the TUI Blue and TUI Magic Life
brands in FY2018. The renovation of the Robinson Jandia Playa in
Fuerteventura is also underway, with the closure of this popular club for
most of FY2018.
In Cruises new launches are scheduled for TUI Cruises, Marella Cruises and
Hapag-Lloyd Cruises in 2018, 2019, 2021 and 2023. Demand for our cruises
remains strong, with higher yields year on year for the periods currently on
sale in all three brands. In Marella, Majesty exited the fleet in November
2017 and Spirit will exit in November 2018, and from Summer 2019 the entire
fleet will be fully all-inclusive.
Volumes in Destination Experiences (formerly Destination Services) are
expected to develop in line with our Sales & Marketing business. The
acquisition of the Destination Management business of Hotelbeds Group is
expected to complete in H2 FY2018, adding a further 25 countries to our
global destination presence.
Sales & Marketing
As expected, Winter 2017 / 18 closed out well, with revenues up 5 % on prior
year and bookings up 3 %. Growth was driven by North Africa, Cape Verde,
Thailand and Turkey, with stable demand for Spain.
Summer 2018 is also progressing well, with 59 % of the programme sold, in
line with prior year. Following a couple of very strong years, Spain remains
the number one destination by customer volume for Sales & Marketing, but with
year on year growth driven by destinations such as Turkey, North Africa and
Greece. We also see good growth in bookings for other smaller destinations
such as Bulgaria, Cyprus and Croatia.
Sales & Marketing - Current trading Summer 2018?*
YoY variation Total Total Total ASP Programme sold
% revenue customers (%)
Northern +4 +2 +2 60
Region
Central Region +11 +8 +3 60
Western Region +4 +3 +1 58
Total +7 +5 +2 59
* These statistics are up to 29 April 2018, shown on a constant currency
basis and relate to all customers whether risk or non-risk
In Northern Region, Nordics continue to deliver a strong, earlier booking
performance (+ 8 % currently, although the prior year comparatives will
strengthen in the coming months). Margins are ahead of prior year, reflecting
an increase in demand for Turkey and Greece, the introduction of our
proprietary Cyrus yield management system and actions taken by management to
improve the efficiency of the business. UK demand is resilient, with bookings
up 1 % on prior year, and margin performance continues to normalise in line
with our expectations, reflecting the impact on the cost base of the weaker
Pound Sterling. As expected, the UK is seeing a growth in demand for non-Euro
destinations such as Turkey, North Africa, Bulgaria and Croatia, as well as a
shortening of the average duration of holidays.
Within Central Region, bookings from Germany are up 4 %. This reflects a
significant increase in bookings to Turkey, North Africa and Greece, as well
as the continued popularity of Spain. Strong mainstream holiday bookings are
partly offset by lower bookings at this stage for some of our specialist
brands, however, we expect this to improve as we trade through the Summer.
Despite an increase in capacity (following the bankruptcy of Air Berlin /
Niki and subsequent changes to the TUI airline fleet), load factor is ahead
of prior year, helping to limit exposure to the lates market. The Central
Region bookings and revenue performance also reflects our strategy to grow
market share significantly in Poland.
In Western Region, bookings in Belgium and Netherlands are ahead of prior
year (+ 6 % overall), with growth destinations in general similar to the
other source markets. This is partly offset by trading in France, where
bookings are currently down on prior year, mainly due to lower sales of
tours. These were previously traded under the Transat brand and have now
switched to TUI, with some disruption to sales by third party distributors.
We remain focussed on the continued integration of the Transat business and
delivering an improved result in France this year.
Outlook
· We reiterate our guidance of our Annual Report 2017.
· We are continuing to deliver our growth strategy as set out in December
2017, based on market demand, digitalisation and investments, including the
announcements in H1 of further actions to enhance our destination
experiences business and accelerate growth in cruise.
· Based on a good H1 performance and strong current trading we are on track
to deliver at least 10 % underlying EBITA growth in FY2018.
· We are delivering our ambition - strong strategic positioning, strong
earnings growth and strong cash generation, with underlying EBITA doubling
between FY2014 and FY2020.
Expected development of Group turnover, underlying EBITA and
adjustments1
Expected development vs. PY
EUR million 2017 2018
Turnover 2 18,535 around 3 % growth
Underlying EBITA 1,102 at least 10 % growth
Adjustments 76 approx. EUR 80 m cost
1 Variance year-on-year assuming constant foreign-exchange
rates are applied to the result in the current and prior
period and based on the current group structure; guidance
relates to continuing operations and excludes the acquisition
of the Destination Management business from Hotelbeds Group.
2 Excluding cost inflation relating to currency movements.
Structure and strategy of TUI Group
Reporting structure
The present Half Year Financial Report 2018 is essentially based on TUI
Group's reporting structure set out in the Annual Report for 2017.
From Q1 FY2018 on, our segment reporting to reflect the growing strategic
importance of the services delivered in our destinations. Since the beginning
of financial year 2018, Destination Experiences (formerly Destination
Services), a crucial element of our customers' holiday experience, has been
reported as a separate segment alongside Hotels & Resorts and Cruises within
Holiday Experiences. The key figures of the new segment were carried under
Other Tourism in the completed financial year 2017. The other companies
previously reported as part of the Other Tourism segment are now carried
under All other segments; the Group totals have remained unchanged. The prior
year comparatives have been restated.
See Annual Report 2017 from page 24
Group targets and strategy
TUI Group's strategy set out in the Annual Report 2017 remains unchanged.
Details see Annual Report 2017 from page 20
Consolidated earnings
Turnover
EUR million Q2 2018 Q2 2017 Var. % H1 2017 Var. %
restated H1 2018 restated
Hotels & 143.1 158.8 - 9.9 287.9 300.0 - 4.0
Resorts
Cruises 203.3 194.0 + 4.8 395.6 345.9 + 14.4
Destination 21.4 23.4 - 8.5 59.8 54.6 + 9.5
Experiences
Holiday 367.8 376.2 - 2.2 743.3 700.5 + 6.1
Experiences
Northern 1,145.2 1,096.3 + 4.5 2,324.1 2,204.3 + 5.4
Region
Central 1,040.0 887.1 + 17.2 2,305.9 2,028.0 + 13.7
Region
Western 548.6 564.6 - 2.8 1,132.3 1,114.0 + 1.6
Region
Sales & 2,733.8 2,548.0 + 7.3 5,762.3 5,346.3 + 7.8
Marketing
All other 162.5 147.6 + 10.1 307.9 307.0 + 0.3
segments
TUI Group 3,264.1 3,071.8 + 6.3 6,813.5 6,353.8 + 7.2
TUI Group at 3,312.6 3,071.8 + 7.8 6,894.0 6,353.8 + 8.5
constant
currency
Discontinued - 293.9 n. a. - 546.3 n. a.
operations
Total 3,264.1 3,365.7 - 3.0 6,813.5 6,900.1 - 1.3
Underlying EBITA
EUR million Q2 2018 Q2 2017 Var. % H1 2017 Var. %
restated H1 2018 restated
Hotels & 84.8 73.6 + 15.2 179.2 122.8 + 45.9
Resorts
Cruises 54.9 46.9 + 17.1 92.4 75.0 + 23.2
Destination - 9.1 - 2.5 - 264.0 - 9.3 0.3 n. a.
Experiences
Holiday 130.6 118.0 + 10.7 262.3 198.1 + 32.4
Experiences
Northern - 89.4 - 108.7 + 17.8 - 120.5 - 138.0 + 12.7
Region
Central - 89.4 - 91.3 + 2.1 - 145.8 - 143.7 - 1.5
Region
Western - 59.7 - 54.5 - 9.5 - 105.6 - 102.2 - 3.3
Region
Sales & - 238.5 - 254.5 + 6.3 - 371.9 - 383.9 + 3.1
Marketing
All other - 25.8 - 17.5 - 47.4 - 49.0 - 28.5 - 71.9
segments
TUI Group - 133.7 - 154.0 + 13.2 - 158.6 - 214.3 + 26.0
TUI Group at - 125.1 - 154.0 + 18.8 - 150.5 - 214.3 + 29.8
constant
currency
Discontinued - - 3.1 n. a. - - 15.3 n. a.
operations
Total - 133.7 - 157.1 + 14.9 - 158.6 - 229.6 + 30.9
EBITA
EUR million Q2 2018 Q2 2017 Var. % H1 2017 Var. %
restated H1 2018 restated
Hotels & 84.7 72.4 + 17.0 179.1 120.0 + 49.3
Resorts
Cruises 54.9 46.9 + 17.1 92.4 75.0 + 23.2
Destination - 9.3 - 3.1 - 200.0 - 9.9 - 0.8 n. a.
Experiences
Holiday 130.3 116.2 + 12.1 261.6 194.2 + 34.7
Experiences
Northern - 93.8 - 114.5 + 18.1 - 129.2 - 148.1 + 12.8
Region
Central - 91.8 - 86.4 - 6.2 - 151.5 - 140.2 - 8.1
Region
Western - 62.9 - 80.1 + 21.5 - 118.7 - 128.8 + 7.8
Region
Sales & - 248.5 - 281.0 + 11.6 - 399.4 - 417.1 + 4.2
Marketing
All other - 29.0 - 17.6 - 64.8 - 54.5 - 29.0 - 87.9
segments
TUI Group - 147.2 - 182.4 + 19.3 - 192.3 - 251.9 + 23.7
Discontinued - - 6.6 n. a. - - 22.2 n. a.
operations
Total - 147.2 - 189.0 + 22.1 - 192.3 - 274.1 + 29.8
Segmental performance
Holiday Experiences
Hotels & Resorts
Q2 2018 Q2 2017 Var. % H1 2018 H1 2017 Var. %
Total 267.9 281.4 - 4.8 563.3 564.6 - 0.2
turnover
in EUR
million
Turnover 143.1 158.8 - 9.9 287.9 300.0 - 4.0
in EUR
million
Underlying 84.8 73.6 + 15.2 179.2 122.8 + 45.9
EBITA
in EUR
million
Underlying 91.7 73.6 + 24.6 182.0 122.8 + 48.2
EBITA at
constant
currency
rates
in EUR
million
Capacity 7,322.1 7,173.5 + 2.1 16,192.0 15,542.1 + 4.2
hotels
total 1, 4
in '000
Riu 4,038.1 4,180.8 - 3.4 8,433.1 8,382.9 + 0.6
Robinson 555.8 512.8 + 8.4 1,246.9 1,167.0 + 6.9
Blue 957.8 677.0 + 41.4 1,767.4 1,254.4 + 40.9
Diamond
79.6 78.4 + 1.1 77.1 75.3 + 1.8
Occupancy
rate
hotels
total 2
in %,
variance
in %
points
Riu 88.5 90.5 - 2.0 86.5 88.2 - 1.7
Robinson 62.2 60.1 + 2.1 63.0 62.4 + 0.6
Blue 80.0 80.2 - 0.3 78.8 81.1 - 2.3
Diamond
Average 79 78 + 2.1 71 70 + 2.3
revenue
per bed
hotels
total3
in EUR
Riu 72 75 - 3.5 68 69 - 1.6
Robinson 105 101 + 3.7 97 93 + 4.1
Blue 154 144 + 6.7 138 125 + 9.8
Diamond
Turnover measures include fully consolidated companies,
all other KPIs incl. companies measured at equity.
1 Group owned or leased hotel beds multiplied by opening
days per quarter
2 Occupied beds divided by capacity
3 Arrangement revenue divided by occupied beds
4 Previous year's total capacity now includes Blue Diamond
· Hotels & Resorts delivered a strong result in H1, with higher overall
occupancy and average rate. Further hotels were opened in H1, bringing the
total number of openings since merger to 38.
· We also continued to streamline our existing portfolio. As previously
announced, three hotels were sold by Riu in Q1, realising a gain of EUR 38
m. In addition, hotels have been repositioned to TUI Blue and TUI Magic
Life.
· Riu continues to deliver a strong operational performance, with high
occupancy rates reflecting its year-round destination portfolio. Average
revenue per bed performance reflects the impact of foreign exchange
translation, in particular on our Mexican hotels - excluding this, revenue
per bed was up 7 % year on year. The strong operational performance and
year on year benefit of hotel openings were partly offset by the impact of
hurricanes in the Caribbean (resulting in the closure of a hotel in St.
Martin) and loss of earnings from the three hotels which were sold in Q1.
· Robinson's H1 performance was in line with prior year, with new clubs in
the Maldives and Thailand in ramp up phase, and the closure of a club in
Fuerteventura for renovation.
· Blue Diamond delivered further growth in earnings, despite hurricane
disruption, reflecting growth in the hotel portfolio.
· The result also reflects an improved performance in our hotels in Turkey,
as demand continues to strengthen.
· The Hotels & Resorts result includes EUR 3 m impact from the earlier
timing of Easter.
Cruises
Q2 2018 Q2 2017 Var. % H1 2018 H1 2017 Var. %
Turnover 1 203.3 194.0 + 4.8 395.6 345.9 + 14.4
in EUR
million
Underlying 54.9 46.9 + 17.1 92.4 75.0 + 23.2
EBITA
in EUR
million
Underlying 55.2 46.9 + 17.7 93.0 75.0 + 24.0
EBITA at
constant
currency
rates
in EUR
million
Occupancy
in %,
variance in
% points
TUI Cruises 99.6 100.0 - 0.4 98.9 99.7 - 0.8
Marella 98.4 98.1 + 0.3 99.6 99.6 0.0
Cruises 2
Hapag-Lloyd 77.2 76.0 + 1.2 76.4 73.8 + 2.6
Cruises
Passenger
days
in '000
TUI Cruises 1,247.6 1,024.2 + 21.8 2,514.0 2,031.7 + 23.7
Marella 558.8 562.3 - 0.6 1,250.6 1,090.0 + 14.7
Cruises 2
Hapag-Lloyd 92.9 89.3 + 4.0 167.8 163.7 + 2.5
Cruises
Average
daily rates
3
in EUR
TUI Cruises 147 150 - 2.0 148 147 + 0.7
Marella 143 131 + 9.2 136 127 + 7.1
Cruises 2,
4
in GBP
Hapag-Lloyd 653 633 + 3.2 600 595 + 0.8
Cruises
1 No turnover is carried for TUI Cruises as the joint
venture is consolidated at equity
2 Rebranded from Thomson Cruises in October 2017
3 Per day and passenger
4 Inclusive of transfers, flights and hotels due to the
integrated nature of Marella Cruises
· Cruises result increased in H1, with additional capacity in TUI Cruises
and Marella Cruises, and a strong yield performance across all three
brands.
· TUI Cruises earnings increased due to the addition of Mein Schiff 6 in
May 2017, with a continued strong performance across the rest of the fleet.
· Marella Cruises earnings increased primarily due to the addition of
Marella Discovery in May 2017. Majesty exited the fleet in November 2017.
· Hapag-Lloyd Cruises earnings were in line with prior year, with a good
underlying performance offsetting year on year dry dock effects.
Destination Experiences
EUR Q2 2018 Q2 2017 Var. % H1 2017 Var. %
million restated H1 2018 restated
Total 56.2 53.5 + 5.0 138.6 127.0 + 9.1
turnover
Turnover 21.4 23.4 - 8.5 59.8 54.6 + 9.5
Underlying - 9.1 - 2.5 - 264.0 - 9.3 0.3 n. a.
EBITA
Underlying - 8.7 - 2.5 - 248.0 - 7.6 0.3 n. a.
EBITA at
constant
currency
rates
· Destination Experiences' H1 underlying EBITA result reflects a change
made since prior year to the way in which Sales & Marketing are recharged.
This results in a phasing of earnings into H2.
· Excluding the impact of this change, Destination Experiences delivered a
good operational performance. H1 arrival guests grew by 5 %, with increased
earnings in Spain, Portugal and Greece as well as improved trading in
Turkey and Tunisia.
Sales & Marketing
Sales & Marketing
Q2 2018 Q2 2017 Var. % H1 2017 Var. %
restated H1 2018 restated
Turnover 2,733.8 2,548.0 + 7.3 5,762.3 5,346.3 + 7.8
in EUR
million
Underlying - 238.5 - 254.5 + 6.3 - 371.9 - 383.9 + 3.1
EBITA
in EUR
million
Underlying - 240.3 - 254.5 + 5.6 - 373.3 - 383.9 + 2.8
EBITA at
constant
currency
rates
in EUR
million
Direct 75 75 - 74 73 + 1.0
distributi
on mix 1
in %,
variance
in %
points
Online mix 50 49 + 1.0 49 47 + 2.0
2
in %,
variance
in %
points
Customers 3,077 2,883 + 6.7 6,692 6,344 + 5.5
in '000
1 Share of sales via own channels (retail and online)
2 Share of online sales
· Sales & Marketing delivered a good portfolio performance in H1. Turnover
grew by 8 %, reflecting 5 % increase in customer volumes and higher selling
prices in the UK (primarily as a result of currency cost inflation) as well
as the earlier timing of Easter.
· Direct and online distribution mix also continued to increase, to 74 %
and 49 % respectively.
· The H1 underlying EBITA result includes EUR 19 m benefit from the earlier
timing of Easter.
Northern Region
Q2 2018 Q2 2017 Var. % H1 2017 Var. %
restated H1 2018 restated
Turnover 1,145.2 1,096.3 + 4.5 2,324.1 2,204.3 + 5.4
in EUR
million
Underlying - 89.4 - 108.7 + 17.8 - 120.5 - 138.0 + 12.7
EBITA
in EUR
million
Underlying - 90.8 - 108.7 + 16.5 - 121.7 - 138.0 + 11.8
EBITA at
constant
currency
rates
in EUR
million
Direct 91 90 + 1.0 92 90 + 2.0
distributi
on mix1
in %,
variance
in %
points
Online 66 63 + 3.0 65 63 + 2.0
mix2
in %,
variance
in %
points
Customers 1,114 1,117 - 0.3 2,363 2,363 0.0
in '000
1 Share of sales via own channels (retail and online)
2 Share of online sales
· Nordics delivered significant growth in earnings in H1, with a very
strong trading performance. We are particularly pleased with the
improvement in margin, reflecting the benefit of the TUI rebrand,
implementation of Cyrus yield management and One CRM, and realisation of
operational efficiencies.
· In the UK, demand remains resilient, with customer volumes in line with
prior year. Trading margins have continued to normalise as expected, as a
result of the weaker Pound Sterling. The TUI rebrand was completed
successfully with an additional cost of EUR 20 m in H1.
· Our Canadian joint venture delivered a good performance in H1, with
further growth in earnings.
· The Northern Region result includes EUR 15 m benefit from the earlier
timing of Easter.
Central Region
Q2 2018 Q2 2017 Var. % H1 2018 H1 2017 Var. %
Turnover 1,040.0 887.1 + 17.2 2,305.9 2,028.0 + 13.7
in EUR
million
Underlying - 89.4 - 91.3 + 2.1 - 145.8 - 143.7 - 1.5
EBITA
in EUR
million
Underlying - 89.7 - 91.3 + 1.8 - 146.0 - 143.7 - 1.6
EBITA at
constant
currency
rates
in EUR
million
Direct 50 49 + 1.0 49 47 + 2.0
distributi
on mix1
in %,
variance
in %
points
Online 23 19 + 4.0 21 17 + 4.0
mix2
in %,
variance
in %
points
Customers 1,054 885 + 19.0 2,418 2,146 + 12.7
in '000
1 Share of sales via own channels (retail and online)
2 Share of online sales
· Germany continues to see strong demand for holidays, with volumes up 10 %
in H1. Direct and online distribution mix improved further, to 48 % and 21
% respectively.
· The Central Region result reflects the non-repeat (EUR 24 m) of last
year's sickness event in TUI fly.
· This was offset by the write off of EUR 20 m wet lease receivable as a
result of the Niki insolvency. Following the insolvencies of Air Berlin and
Niki, TUI fly has taken back some aircraft and crew, with the remainder
being wet leased out under a new agreement. As outlined at Q1, there has
been some impact on the airline cost base which was not fully recovered
through trading and efficiency, however, we expect this to improve over
time.
· The Central Region result includes EUR 2 m benefit from the earlier
timing of Easter.
Western Region
Q2 2018 Q2 2017 Var. % H1 2018 H1 2017 Var. %
Turnover 548.6 564.6 - 2.8 1,132.3 1,114.0 + 1.6
in EUR
million
Underlying - 59.7 - 54.5 - 9.5 - 105.6 - 102.2 - 3.3
EBITA
in EUR
million
Underlying - 59.8 - 54.5 - 9.7 - 105.6 - 102.2 - 3.3
EBITA at
constant
currency
rates
in EUR
million
Direct 75 73 + 2.0 75 72 + 3.0
distributi
on mix1
in %,
variance
in %
points
Online mix 58 57 + 1.0 58 56 + 2.0
2
in %,
variance
in %
points
Customers 910 881 + 3.3 1,911 1,835 + 4.1
in '000
1 Share of sales via own channels (retail and online)
2 Share of online sales
· Benelux performed well in H1, benefitting from good trading, as well as
the non-repeat of rebrand costs in Belgium and Schiphol night flying
restrictions last year.
· France remains challenging. Whilst the integration of the Transat
business is going well, volumes have been impacted by the transition from
the Transat to TUI brand, therefore the result includes additional
marketing costs to support the rebrand. In addition, the result reflects
the inclusion of Transat's trading losses at the start of the year (the
business was acquired end of October 2016). We remain focussed on improving
the French result in the full year.
· The Western Region result includes EUR 2 m benefit from the earlier
timing of Easter.
All other segments
EUR Q2 2018 Q2 2017 Var. % H1 2017 Var. %
million restated H1 2018 restated
Turnover 162.5 147.6 + 10.1 307.9 307.0 + 0.3
Underlying - 25.8 - 17.5 - 47.4 - 49.0 - 28.5 - 71.9
EBITA
Underlying - 23.0 - 17.5 - 31.4 - 44.6 - 28.5 - 56.6
EBITA at
constant
currency
rates
· As previously stated, the H1 result includes the impact of a significant
planned aircraft maintenance event (D check) in Corsair.
· In addition the variance to prior year reflects the revaluation of share
based payments (in relation to senior management long term incentive
schemes), based on the increase in TUI share price.
Financial position and net assets
Cash Flow / Net capex and investments / Net debt
The cash outflow from operating activities increased by EUR 165.0 m to EUR
443.5 m. This was due in particular to higher advance payments to hotels,
payments for the integration of Transat in France and the deconsolidation of
the Travelopia Group.
From this interim report, we have adjusted the definition of our net debt.
While net debt has so far been calculated as the balance between current and
non-current financial debt and cash and cash equivalents, we will also
consider future short-term interest-bearing investments as a deduction item.
The majority of these investments becomes due between three and six months.
In accordance with IFRS regulations, these investments are not shown as cash
and cash equivalents in the consolidated balance sheet but within current
trade receivables and other assets. This adjustment had no effect on the
previous year.
Net debt
EUR million H1 2018 H1 2017 Var. %
Financial debt 1,977.8 2,027.4 - 2.4
Cash and cash equivalents 1,338.1 623.3 + 114.7
Short-term interest-bearing 63.7 - n. a.
investments
Net debt 576.0 1,404.1 - 59.0
The net debt position of the continuing operations improved by EUR 828.1 m to
EUR 576.0 m. The year-on-year improvement was attributable mainly to the
receipt of disposal proceeds not yet fully reinvested.
Net capex and investments
EUR million Q2 2018 Q2 2017 Var. % H1 2017 Var. %
restated H1 2018 restated
Cash gross
capex
Hotels & 53.0 71.8 - 26.2 115.1 130.6 - 11.9
Resorts
Cruises 2.7 223.8 - 98.8 38.1 247.2 - 84.6
Destination 1.3 0.4 + 225.0 2.1 2.6 - 19.2
Experiences
Holiday 57.0 296.0 - 80.7 155.3 380.4 - 59.2
Experiences
Northern 15.9 13.5 + 17.8 24.2 25.9 - 6.6
Region
Central 3.3 4.1 - 19.5 10.2 7.3 + 39.7
Region
Western 6.9 6.4 + 7.8 13.0 13.7 - 5.1
Region
Sales & 26.1 24.0 + 8.8 47.4 46.9 + 1.1
Marketing
All other 37.6 23.4 + 60.7 92.9 48.3 + 92.3
segments
TUI Group 120.7 343.4 - 64.9 295.6 475.5 - 37.8
Discontinued - 4.5 n. a. - 10.6 n. a.
operations
Total 120.7 347.9 - 65.3 295.6 486.1 - 39.2
Net pre - 60.7 33.7 n. a. - 20.2 117.5 n. a.
delivery
payments on
aircraft
Financial 13.6 1.0 n. a. 24.2 103.1 - 76.5
investments
Divestments - 7.1 - 16.8 + 57.7 - 92.3 - 11.6 - 695.7
Net capex 66.5 365.8 - 81.8 207.3 695.1 - 70.2
and
investments
The decline in net capex and investments was mainly driven by the
acquisition of a cruise ship for Marella Cruises and of Transat last year as
well as the sale of three Riu hotels in Q1 2018.
Assets and liabilities
Assets and liabilities
EUR million 31 Mar 2018 30 Sep 2017 Var. %
Non-current assets 10,088.8 9,867.6 + 2.2
Current assets 3,944.3 4,317.9 - 8.7
Assets 14,033.1 14,185.5 - 1.1
Equity 2,993.2 3,533.7 - 15.3
Provisions 2,098.4 2,278.7 - 7.9
Financial liabilities 1,977.8 1,933.1 + 2.3
Other liabilities 6,963.7 6,440.0 + 8.1
Liabilities 14,033.1 14,185.5 - 1.1
As at 31 March 2018, TUI Group's balance sheet total amounted to EUR 14.0 bn,
a decrease of 1.1 % compared to financial year end 30 September 2017. The
equity ratio stood at 21.3 %, falling below its level of 24.9 % as at 30
September 2017.
Details see Notes from page 30
Fuel / Foreign exchange
Our strategy of hedging the majority of our jet fuel and currency
requirements for future seasons, as detailed below, remains unchanged. This
gives us certainty of costs when planning capacity and pricing. The following
table shows the percentage of our forecast requirement that is currently
hedged for Euros, US Dollars and jet fuel for our Sales & Marketing, which
account for over 90 % of our Group currency and fuel exposure.
Foreign Exchange / Fuel
% Summer 2018 Winter 2018 / 19
Euro 93 67
US Dollar 96 77
Jet Fuel 91 79
As at 3 May 2018
Comments on the consolidated income statement
The consolidated income statement reflects the seasonality of the tourism
business, with negative results generated in the period from October to March
due to the seasonal nature of the business.
In the first half of 2018, turnover totalled EUR 6.8 bn, up 7.2 %
year-on-year. At constant currency rates, turnover grew by 8.5 % year-on-year
in H1 2018. Apart from the 5.5 % increase in customer volumes in Sales &
Marketing, the year-on-year turnover growth was driven by additional capacity
in the Cruises segment, higher average selling prices in the Hotels & Resorts
segment and higher pricing in the UK.
The year-on-year improvement in the result from continuing operations was
attributable to the operating performance as well as the proceeds of
disposals of two hotel companies, a hotel and an aircraft.
Income statement of the TUI Group for the period from 1
Oct 2017 to 31 Mar 2018
EUR million Q2 2018 Q2 2017 Var. % H1 2018 H1 2017 Var. %
Turnover 3,264.1 3,071.8 + 6.3 6,813.5 6,353.8 + 7.2
Cost of sales 3,177.0 3,029.2 + 4.9 6,558.7 6,127.9 + 7.0
Gross profit 87.1 42.6 + 104.5 254.8 225.9 + 12.8
Administrative 313.6 313.8 - 0.1 621.4 601.1 + 3.4
expenses
Other income 2.9 2.9 0.0 48.6 5.1 + 852.9
Other expenses - 0.9 n. a. 0.3 2.2 - 86.4
Financial 3.5 30.8 - 88.6 17.7 37.0 - 52.2
income
Financial 31.0 39.4 - 21.3 68.1 81.1 - 16.0
expenses
Share of 76.4 70.3 + 8.7 121.5 105.6 + 15.1
result of
joint ventures
and associates
Earnings - 174.7 - 207.5 + 15.8 - 247.2 - 310.8 + 20.5
before income
taxes from
continuing
operations
Income taxes - 33.2 - 43.6 + 23.9 - 47.0 - 65.3 + 28.0
Result from - 141.5 - 163.9 + 13.7 - 200.2 - 245.5 + 18.5
continuing
operations
Result from - - 54.6 n. a. - - 63.1 n. a.
discontinued
operations
Group loss - 141.5 - 218.5 + 35.2 - 200.2 - 308.6 + 35.1
Group loss - 170.9 - 245.4 + 30.4 - 270.5 - 362.9 + 25.5
attributable
to
shareholders
of TUI AG
Group loss 29.4 26.9 + 9.3 70.3 54.3 + 29.5
attributable
to
non-controllin
g interest
Alternative performance measures
Key indicators used to manage the TUI Group are EBITA and underlying EBITA.
We define EBITA as earnings before interest, income taxes and goodwill
impairment. EBITA includes amortisation of other intangible assets. EBITA
does not include measurement effects from interest hedges and in the prior
year also earnings effects from container shipping.
We consider underlying EBITA to be the most suitable performance indicator
for explaining the development of the TUI Group's operating performance.
Underlying EBITA has been adjusted for gains on disposal of financial
investments, expenses in connection with restructuring measures according to
IAS 37, all effects of purchase price allocations, ancillary acquisition cost
and conditional purchase price payments and other expenses for and income
from one-off items.
The table below shows a reconciliation of earnings before taxes from
continuing operations to underlying earnings. In H1 FY2018, adjustments
(including one-off items and purchase price allocations for continuing
operations) amounted to EUR 33.7 m, a decline of EUR 3.9 m year-on-year.
Reconciliation to underlying earnings
EUR million Q2 2018 Q2 2017 Var. % H1 2018 H1 2017 Var. %
Earnings - 174.7 - 207.5 + 15.8 - 247.2 - 310.8 + 20.5
before
income taxes
Income from - - 2.3 n. a. - - 2.3 n. a.
the sale of
the shares
in
Container
Shipping
Net interest 27.5 27.4 + 0.4 54.9 61.2 - 10.3
expense and
expense from
the
measurement
of interest
hedges
EBITA - 147.2 - 182.4 + 19.3 - 192.3 - 251.9 + 23.7
Adjustments:
plus: Losses - - - 0.7
on disposals
plus: 4.3 16.9 13.4 17.1
Restructurin
g expense
plus: 7.4 7.5 15.0 15.2
Expense from
purchase
price
allocation
plus: 1.8 4.0 5.3 4.6
Expense /
less: Income
from other
one-off
items
Underlying - 133.7 - 154.0 + 13.2 - 158.6 - 214.3 + 26.0
EBITA
The improvement in the interest result in H1 FY2018 was mainly driven by the
improvement in net debt position and lower interest rates.
Adjustments include one-off income and expense items impacting or distorting
the assessment of the operating profitability of the segments and the Group
due to their level and frequency. These items primarily include major
restructuring and integration expenses not meeting the criteria of IAS 37,
material expenses for litigation, gains and losses from the sale of aircraft
and other material business transactions of a one-off nature.
In H1 FY2018 TUI Group's operating loss adjusted for one-off effects improved
by EUR 55.7 m to EUR 158.6 m.
In H1 FY2018, adjustments included expenses for purchase price allocations of
EUR 15.0 m and in particular for the integration of Transat in France and the
restructuring of our German flight sector.
Key figures of income statement (continuing operations)
EUR million Q2 2018 Q2 2017 Var. % H1 2018 H1 2017 Var. %
Earnings 119.8 102.8 + 16.5 346.0 315.0 + 9.8
before
interest,
income
taxes,
depreciation
, impairment
and rent
(EBITDAR)
Operating 160.0 184.9 - 13.5 330.7 367.3 - 10.0
rental
expenses
Earnings - 40.2 - 82.1 + 51.0 15.3 - 52.3 n. a.
before
interest,
income
taxes,
depreciation
and
impairment
(EBITDA)
Depreciation 107.0 100.3 + 6.7 207.6 199.6 + 4.0
/
amortisation
less
reversals
of
depreciation
/
amortisation
*
Earnings - 147.2 - 182.4 + 19.3 - 192.3 - 251.9 + 23.7
before
interest,
income taxes
and
impairment
of goodwill
(EBITA)
Earnings - 147.2 - 182.4 + 19.3 - 192.3 - 251.9 + 23.7
before
interest and
income taxes
(EBIT)
Net interest 27.5 27.4 - 0.4 54.9 61.2 + 10.3
expense and
expense from
the
measurement
of interest
hedges
Income from - 2.3 n. a. - 2.3 n. a.
the sale of
the shares
in
Container
Shipping
Earnings - 174.7 - 207.5 + 15.8 - 247.2 - 310.8 + 20.5
before
income taxes
(EBT)
* On property, plant and equipment, intangible asssets,
financial and other assets
Other segment indicators
Underlying EBITDA
EUR million Q2 2018 Q2 2017 Var. % H1 2017 Var. %
restated H1 2018 restated
Hotels & 111.5 97.6 + 14.2 228.4 167.9 + 36.0
Resorts
Cruises 68.4 60.1 + 13.8 125.8 101.6 + 23.8
Destination - 6.9 - 0.6 n. a. - 5.0 4.2 n. a.
Experiences
Holiday 173.0 157.1 + 10.1 349.2 273.7 + 27.6
Experiences
Northern - 74.6 - 94.6 + 21.1 - 97.4 - 110.8 + 12.1
Region
Central - 84.4 - 86.6 + 2.5 - 136.0 - 134.0 - 1.5
Region
Western - 55.7 - 50.0 - 11.4 - 97.5 - 93.7 - 4.1
Region
Sales & - 214.7 - 231.2 + 7.1 - 330.9 - 338.5 + 2.2
Marketing
All other 10.2 14.2 - 28.2 19.5 37.5 - 48.0
segments
TUI Group - 31.5 - 59.9 + 47.4 37.8 - 27.3 n. a.
Discontinued - - 3.1 n. a. - - 15.3 n. a.
operations
Total - 31.5 - 63.0 + 50.0 37.8 - 42.6 n. a.
EBITDA
EUR million Q2 2018 Q2 2017 Var. % H1 2017 Var. %
restated H1 2018 restated
Hotels & 111.4 97.5 + 14.3 228.4 167.3 + 36.5
Resorts
Cruises 68.4 60.1 + 13.8 125.8 101.6 + 23.8
Destination - 7.2 - 1.2 - 500.0 - 5.7 3.1 n. a.
Experiences
Holiday 172.6 156.4 + 10.4 348.5 272.0 + 28.1
Experiences
Northern - 76.0 - 97.4 + 22.0 - 100.1 - 114.8 + 12.8
Region
Central - 86.9 - 81.2 - 7.0 - 140.6 - 129.6
Region
Western - 57.7 - 74.9 + 23.0 - 108.3 - 118.7 + 8.8
Region
Sales & - 220.6 - 253.5 + 13.0 - 349.0 - 363.1 + 3.9
Marketing
All other 7.8 15.0 - 48.0 15.8 38.8 - 59.3
segments
TUI Group - 40.2 - 82.1 + 51.0 15.3 - 52.3 n. a.
Discontinued - - 6.6 n. a. - - 22.2 n. a.
operations
Total - 40.2 - 88.7 + 54.7 15.3 - 74.5 n. a.
Employees
31 March 2017 Var. %
31 March 2018 restated
Hotels & Resorts 19,068 18,447 + 3.4
Cruises 313 313 0.0
Destination 3,333 2,648 + 25.9
Experiences
Holiday Experiences 22,714 21,408 + 6.1
Northern Region 13,268 14,016 - 5.3
Central Region 10,235 10,123 + 1.1
Western Region 6,058 6,037 + 0.3
Sales & Marketing 29,561 30,176 - 2.0
All other segments 3,498 3,558 - 1.7
TUI Group 55,773 55,142 + 1.1
Discontinued - 3,556 n. a.
operations
Total 55,773 58,698 - 5.0
Corporate Governance
Composition of the Boards
In H1 2018 the composition of the Executive Board and the Supervisory Board
of TUI AG changed as follows:
The Annual General Meeting on 13 February 2018 elected Dr. Dieter Zetsche,
CEO of Daimler AG, as a member of the Supervisory Board. At the same time,
Deputy Chairman of the Supervisory Board Sir Michael Hodgkinson, stepped down
at the close of the Annual General Meeting. Mr. Peter Long succeeded him in
this role.
Mr. Horst Baier, Chief Financial Officer, has decided not to extend his
contract as Member of the Board that expires in November 2018. The TUI AG
Group Supervisory Board has appointed Ms. Birgit Conix as member of the
Executive Board as of 15 July 2018. On Horst Baier's departure in Autumn
2018, Birgit Conix will take over responsibilities as Chief Financial
Officer.
The current, complete composition of the Executive Board and Supervisory
Board is listed on our website, where it has been made permanently available
to the public.
www.tuigroup.com/en-en/investors/corporate-governance
Risk and Opportunity Report
Successful management of existing and emerging risks and opportunities is
critical to the long-term success of our business and to the achievement of
our strategic objectives. Full details of our risk governance framework and
principal risks and opportunities can be found in the Annual Report 2017.
With the brand change programme successfully being implemented in all source
markets, the related risk is no longer considered principal to the Group. All
other principal risks and uncertainties outlined in that report continue to
face the Group and are set out below:
Inherent risks to the sector
Destination disruption; macroeconomic risks; competition & consumer
preferences; input cost volatility; seasonal cashflow profile; legal &
regulatory compliance; health & safety; supply chain risk; joint venture
partnerships
Actively managed principal risks
IT development & strategy; growth strategy; integration & restructuring
opportunities; sustainable development; information security; Brexit
Our main concern related to Brexit continues to be whether or not all of our
airlines will continue to have access to EU airspace as now. We will continue
to address the importance of there being a special deal for aviation to
protect consumer choice with the relevant UK and EU ministers and officials,
and are assessing options to ensure the Group is not adversely affected to
any material extent in this area. Our Brexit Steering Committee continues to
monitor external developments and coordinates our mitigation strategy.
With the EU GDPR regulation being enforced imminently, whereby any breaches
may result in a significant financial penalty, the gross impact to the
Information Security principal risk has increased. Our mitigation strategy
including making information security part of everyone's job continues to
focus on managing the likelihood of this risk materialising.
Details see Risk Report in our Annual Report 2017, from page 30
INTERIM FINANCIAL STATEMENTS
Income statement of the TUI Group for the period
from 1 Oct 2017 to 31 Mar 2018
EUR million Notes H1 2018 H1 2017
Turnover (1) 6,813.5 6,353.8
Cost of sales (2) 6,558.7 6,127.9
Gross profit 254.8 225.9
Administrative expenses (2) 621.4 601.1
Other income (3) 48.6 5.1
Other expenses 0.3 2.2
Financial income 17.7 37.0
Financial expenses 68.1 81.1
Share of result of joint (4) 121.5 105.6
ventures and associates
Earnings before income - 247.2 - 310.8
taxes from continuing
operations
Income taxes (5) - 47.0 - 65.3
Result from continuing - 200.2 - 245.5
operations
Result from discontinued - - 63.1
operations
Group loss - 200.2 - 308.6
Group loss attributable - 270.5 - 362.9
to shareholders of TUI AG
Group loss attributable (6) 70.3 54.3
to non-controlling
interest
Earnings per share
EUR H1 2018 H1 2017
Basic and diluted earnings per share - 0.46 - 0.62
from continuing operations - 0.46 - 0.51
from discontinued operations - - 0.11
Condensed statement of comprehensive income of the TUI Group
for the period from 1 Oct 2017 to 31 Mar 2018
EUR million H1 2018 H1 2017
Group loss - 200.2 - 308.6
Remeasurements of pension 79.1 223.2
obligations and related fund assets
Income tax related to items that - 13.4 - 53.4
will not be reclassified
Items that will not be reclassified 65.7 169.8
to profit or loss
Foreign exchange differences - 67.7 28.8
Financial instruments available for - 131.9
sale
Cash flow hedges 21.3 - 50.3
Changes in the measurement of 25.7 15.6
companies measured at equity
Income tax related to items that may - 4.5 - 0.2
be reclassified
Items that may be reclassified to - 25.2 125.8
profit or loss
Other comprehensive income 40.5 295.6
Total comprehensive income - 159.7 - 13.0
attributable to shareholders of TUI - 225.3 - 84.8
AG
attributable to non-controlling 65.6 71.8
interest
Allocation of share of shareholders
of TUI AG of total comprehensive
income
Continuing operations - 225.3 - 22.3
Discontinued operations - - 62.5
Financial position of the TUI Group as at 31 Mar 2018
EUR million Notes 31 Mar 2018 30 Sep 2017
Assets
Goodwill 2,877.5 2,889.5
Other intangible 555.5 548.1
assets
Property, plant and (7) 4,401.1 4,253.7
equipment
Investments in 1,379.2 1,306.2
joint ventures and
associates
Financial assets (12) 53.2 69.5
available for sale
Trade receivables (12) 222.2 211.8
and other assets
Touristic payments 170.4 185.2
on account
Derivative (12) 77.7 79.9
financial
instruments
Deferred tax assets 352.0 323.7
Non-current assets 10,088.8 9,867.6
Inventories 118.9 110.2
Financial assets (12) 5.0 -
available for sale
Trade receivables (12) 949.3 794.5
and other assets
Touristic payments 1,036.8 573.4
on account
Derivative (12) 326.2 215.4
financial
instruments
Income tax assets 142.3 98.7
Cash and cash (12), (15) 1,338.1 2,516.1
equivalents
Assets held for (8) 27.7 9.6
sale
Current assets 3,944.3 4,317.9
Total assets 14,033.1 14,185.5
Financial position of the TUI Group as at 31 Mar 2018
EUR million Notes 31 Mar 2018 30 Sep 2017
Equity and liabilities
Subscribed capital 1,501.6 1,501.6
Capital reserves 4,195.0 4,195.0
Revenue reserves - 3,363.0 - 2,756.9
Equity before 2,333.6 2,939.7
non-controlling
interest
Non-controlling 659.6 594.0
interest
Equity (11) 2,993.2 3,533.7
Pension provisions and (9) 987.7 1,094.7
similar obligations
Other provisions 766.1 801.4
Non-current provisions 1,753.8 1,896.1
Financial liabilities (10), (12) 1,801.5 1,761.2
Derivative financial (12) 58.0 50.4
instruments
Income tax liabilities 147.9 150.2
Deferred tax 58.7 109.0
liabilities
Other liabilities (12) 140.2 150.2
Non-current 2,206.3 2,221.0
liabilities
Non-current provisions 3,960.1 4,117.1
and liabilities
Pension provisions and (9) 34.2 32.7
similar obligations
Other provisions 310.4 349.9
Current provisions 344.6 382.6
Financial liabilities (10), (12) 176.3 171.9
Trade payables (12) 1,839.0 2,653.3
Touristic advance 3,803.8 2,446.4
payments received
Derivative financial (12) 300.7 217.2
instruments
Income tax liabilities 61.9 65.3
Other liabilities (12) 552.4 598.0
Current liabilities 6,734.1 6,152.1
Liabilities related to 1.1 -
assets held for sale
Current provisions and 7,079.8 6,534.7
liabilities
Total provisions and 14,033.1 14,185.5
liabilities
Condensed statement of changes in Group equity
for the period from 1 Oct 2017 to 31 Mar 2018
Subscribed Capital Revenue Equity Non-controlling Total
capital reserve reserves before interest
s non-co
EUR million ntroll
ing
intere
st
Balance as at 1,501.6 4,195.0 - 2,939. 594.0 3,533
1 Oct 2017 2,756.9 7 .7
Dividends - - - 381.8 - - -
381.8 381.8
Share-based - - 1.0 1.0 - 1.0
payment
schemes
Group loss - - - 270.5 - 70.3 -
270.5 200.2
Foreign - - - 63.0 - 63.0 - 4.7 -
exchange 67.7
differences
Cash Flow - - 21.3 21.3 - 21.3
Hedges
Remeasurements - - 79.1 79.1 - 79.1
of pension
obligations
and related
fund assets
Changes in the - - 25.7 25.7 - 25.7
measurement of
companies
measured
at equity
Taxes - - - 17.9 - 17.9 - -
attributable 17.9
to other
comprehensive
income
Other - - 45.2 45.2 - 4.7 40.5
comprehensive
income
Total - - - 225.3 - 65.6 -
comprehensive 225.3 159.7
income
Balance as at 1,501.6 4,195.0 - 2,333. 659.6 2,993
31 Mar 2018 3,363.0 6 .2
Condensed statement of changes in Group equity
for the period from 1 Oct 2016 to 31 Mar 2017
Subscribed Capital Revenue Equity Non-controlling Total
capital reserve reserves before interest
s non-co
EUR million ntroll
ing
intere
st
Balance as at 1,500.7 4,192.2 - 2,675. 573.1 3,248
1 Oct 2016 3,017.8 1 .2
Dividends - - - 368.6 - - 0.3 -
368.6 368.9
Share-based - - 0.5 0.5 - 0.5
payment
schemes
Acquisition of - - - 21.8 - 21.8 - -
own shares 21.8
Group loss - - - 362.9 - 54.3 -
362.9 308.6
Foreign - - 11.4 11.4 17.4 28.8
exchange
differences
Financial - - 131.9 131.9 - 131.9
instruments
available for
sale
Cash Flow - - - 50.4 - 50.4 0.1 -
Hedges 50.3
Remeasurements - - 223.2 223.2 - 223.2
of pension
obligations
and related
fund assets
Changes in the - - 15.6 15.6 - 15.6
measurement of
companies
measured at
equity
Taxes - - - 53.6 - 53.6 - -
attributable 53.6
to other
comprehensive
income
Other - - 278.1 278.1 17.5 295.6
comprehensive
income
Total - - - 84.8 - 84.8 71.8 -
comprehensive 13.0
income
Balance as at 1,500.7 4,192.2 - 2,200. 644.6 2,845
31 Mar 2017 3,492.5 4 .0
Condensed cash flow statement of the TUI Group
EUR million Notes H1 2018 H1 2017
Cash outflow from (15) - 443.5 - 278.5
operating activities
Cash outflow from (15) - 261.2 - 695.1
investing activities
Cash outflow from (15) - 470.6 - 478.3
financing activities
Net change in cash and - 1,175.3 - 1,451.9
cash equivalents
Change in cash and - 2.4 - 14.3
cash equivalents due
to exchange rate
fluctuation
Cash and cash 2,516.1 2,403.6
equivalents at
beginning of period
Cash and cash 1,338.4 937.4
equivalents at end of
period
of which included in 0.3 314.1
the balance sheet as
assets held for sale
NOTES
General
The TUI Group, with its major subsidiaries and other shareholdings, operates
in the tourism business. TUI AG based in Hanover and Berlin, Germany, is TUI
Group's parent company and a listed corporation under German law. The shares
in the Company are traded on the London Stock Exchange and the Hanover and
Frankfurt Stock Exchanges.
The condensed interim consolidated financial statements of TUI AG and its
subsidiaries cover the period from 1
October 2017 to 31 March 2018. The interim consolidated financial statements
are prepared in euros. Unless stated otherwise, all amounts are stated in
million euros (EURm).
The interim consolidated financial statements were released for publication
by the Executive Board of TUI AG on 7 May 2018.
Accounting principles
Declaration of compliance
The interim consolidated financial statements for the period ended 31 March
2018 comprise condensed interim consolidated financial statements and an
interim Group management report in accordance with § 115 of the German
Securities Trading Act (WpHG).
The interim consolidated financial statements were prepared in conformity
with the International Financial Reporting Standards (IFRS) and the relevant
Interpretations of the International Accounting Standards Board (IASB) for
interim financial reporting applicable in the European Union.
In accordance with IAS 34, the Group's interim financial statements are
published in a condensed form compared with the consolidated annual financial
statements and should therefore be read in combination with TUI AG's
consolidated financial statements for financial year 2017. The interim
financial statements were reviewed by the Group's auditors.
Going concern report according to the UK Corporate Governance Code
TUI Group meets its day-to-day working capital requirements through cash in
hand, bank balances and loans from financial institutions. As at 31 March
2018, TUI Group's net debt position (financial liabilities less short-term
interest-bearing bank balances) totals EUR 576.0 m (as at 30 September 2017
net financial assets of EUR 583.0 m). The increase in net debt versus
year-end is driven by typical seasonal cash outflows, mainly within the tour
operator.
The Group's main financial liabilities and credit lines as at 31 March 2018
are:
· An external revolving credit facility worth EUR 1,535.0 m maturing in
July 2022 to manage the seasonality of the Group's cash flows and
liquidity,
· a bond 2016 / 21 with a nominal value of EUR 300.0 m issued by TUI AG,
maturing in October 2021,
· finance lease obligations worth EUR 1,294.5 m, and
· liabilities to banks of EUR 358.8 m, primarily due to loan obligations
from the acquisition of property, plant and equipment.
The granting of the credit line requires compliance with certain financial
covenants, which were fully complied with at the balance sheet date.
Due to the current economic factors and the political situation in some
destinations, there is some uncertainty over customer demand. TUI's Executive
Board assumes that TUI's business model is sufficiently flexible to offset
the challenges currently identifiable. The forecasts have shown that TUI
Group will continue to have sufficient funds available from borrowings and
operating cash flows in order to meet its payment obligations for the
foreseeable future and guarantee its ability to continue as a going concern.
In conformity with Rule C1.3 of the UK Corporate Governance Code, the
Executive Board confirms that it is appropriate to adopt the going concern
basis of accounting in preparing the consolidated financial statements.
Accounting and measurement methods
The preparation of the interim financial statements requires management to
make estimates and judgements that affect the reported amounts of assets,
liabilities and contingent liabilities as at the balance sheet date and the
reported amounts of turnover and expenses during the reporting period. Actual
results may deviate from the estimates.
The accounting and measurement methods adopted in the preparation of the
interim financial statements as at
31 March 2018 are materially consistent with those followed in preparing the
previous consolidated financial statements for the financial year ended 30
September 2017. The income taxes were recorded based on the best estimate of
the weighted average tax rate that is expected for the whole financial year.
Newly applied standards
Since the beginning of the financial year 2018 the following standards
amended or newly issued by the IASB have been applied by TUI for the first
time either mandatorily or voluntarily early:
New applied standards in financial year 2018
Applicable Amendments Impact on
Standard from financial
statements
IAS 7 1 Jan 2017 The No impact
Angabeninitiative amendments on interim
will enable reporting,
users of at year-end
financial additional
statements to disclosures
better
evaluate
changes in
liabilities
arising from
financing
activities.
An entity is
required to
disclose
additional
information
about
cashflows and
non-cash
changes in
liabilities,
for which
cashflows are
classified as
financing
activities in
the statement
of cashflows.
IAS 12 1 Jan 2017 The amendment No material
Recognition of clarifies the impact
Deferred Tax Assets accounting
for Unrealised Losses for deferred
tax assets
for
unrealised
losses from
available for
sale
financial
assets.
Various 1 Jan 2017/ The various No impact
Annual Improvements to 1 Jan 2018 amendments
IFRS (early from the
(2014 - 2016) adoption) annual
improvement
project
2014 - 2016
affect minor
changes to
IFRS 12, IAS
28 and IFRS
1.
Regarding the
amendments to
IAS 28 and
IFRS 1, TUI
has elected
to early
adopt the
changes
voluntarily.
Group of consolidated companies
The consolidated financial statements include all material subsidiaries over
which TUI AG has control. Control requires TUI AG to have decision-making
power over the relevant activities, be exposed to variable returns and have
entitlements regarding the returns, or have the ability to affect the level
of those variable returns through its decision-making power.
The interim financial statements as at 31 March 2018 comprised a total of 254
subsidiaries of TUI AG.
Development of the group of consolidated companies *
and the Group companies measured at equity
Consolidated Associates Joint
subsidiaries ventures
Balance at 30 Sep 259 13 28
2017
Additions 5 - 1
Incorporation 2 - -
Acquisition 3 - 1
Disposals 10 - -
Liquidation 8 - -
Sale 2 - -
Balance at 31 Mar 254 13 29
2018
* excl. TUI AG
Acquisitions - Divestments
Acquisitions
In H1 2018, three travel agencies were acquired in the form of asset deals.
Moreover, 100 % of the shares in Cruisetour AG, Zurich, Switzerland, as well
as Croisimonde AG, Zug, Switzerland, were acquired on 21 December 2017. The
aim of the acquisition is to increase market presence in the Cruises segment
in the Swiss market. The considerations transferred for all acquisitions by
TUI Group exclusively consist of purchase price payments, totalling EUR 6.9
m.
The difference arising between the considerations and the remeasured acquired
net assets as at the acquisition date of EUR 5.6 m was carried as provisional
goodwill. This goodwill essentially constitutes part of the future earnings
potential.
Statement of financial position of Cruisetour AG and
Croisimonde AG
as at the date of first-time consolidation
Fair value at date of first-time
consolidation
EUR million
Other intangible assets 0.1
Trade and other receivables 2.9
Cash and cash equivalents 2.5
Other provisions 0.1
Trade and other liabilities 4.7
Equity 0.7
Based on the information available, it was not possible to finalise
measurement of several components of the acquired assets and liabilities of
the acquisitions, in particular in connection with the acquisition of
Cruisetour AG and Croisimonde AG. Use was made of the 12-month period
permitted under IFRS 3 for the completion of the purchase price allocation,
which allows for a provisional purchase price allocation to the individual
assets and liabilities until the end of that period.
In the period from January 2018 to March 2018, Cruisetour AG and Croisimonde
AG generated a turnover of in total EUR 4.0 m and an immaterial profit
contribution. If the acquisition had occurred on 1 October 2017, consolidated
pro-forma revenue of the TUI Group would have been EUR 6.0 m higher and
profit after tax would have been EUR 0.3 m higher.
No material acquisitions were made after the balance sheet date.
In the reporting period, the purchase price allocations of Transat France
S.A. acquired in financial year 2017 were finalised within the 12-month
period stipulated by IFRS 3. Apart from an adjustment that decreased goodwill
by EUR 13.7 m, the figures in the consolidated statement of financial
position as at 31 March 2017 were retroactively adjusted as follows:
Impact of changes in purchase price allocations and
adjustments
on the consolidated statement of financial position
EUR million Fair value at Adjustment Fair values at
date of date of
acquisition first-time
(31 Mar 2017) consolidation
Other intangible 1.2 18.0 19.2
assets
Property, plant and 5.7 2.3 8.0
equipment
Investments - - -
Fixed assets 6.9 20.3 27.2
Trade receivables 6.1 12.6 18.7
Other assets 16.0 - 1.8 14.2
Cash and cash 11.2 6.5 17.7
equivalents
Deferred tax - 6.7 6.7
provisions
Other provisions 6.0 - 0.2 5.8
Other liabilities 56.8 16.7 73.5
Equity - 22.6 14.4 - 8.2
The adjustments made do not have an impact on the prior year's income
statement.
In addition, shares in German Tur Turizm Ticaret A.S. were acquired for a
purchase price of EUR 8.0 m.
Divestments
In the first half of 2018, two Riu Group hotel companies were divested. The
sale of Dominicanotel S.A., Puerto Plata, Dominican Republic, and Puerto
Plata Caribe Beach S.A., Puerto Plata, Dominican Republic, generated a profit
on disposal of EUR 24.3 m. This profit includes a partial disposal of Riu
Group's goodwill of EUR 5.2 m.
Notes to the consolidated income statement
TUI Group's results reflect the significant seasonal swing in tourism between
the winter and summer travel months. The Group seeks to counteract the
seasonal swing through a broad range of holiday offerings in the summer and
winter season and its presence in different travel markets worldwide with
varying annual cycles. The consolidated income statement reflects the
seasonality of the tourism business, with the consequence that the result
generated in the period from October to March is negative. Due to the
seasonality of the business, a comparison of the first half year's results
with the full-year results is not meaningful.
(1) Turnover
Turnover grew by 7.2 % year-on-year. Alongside an increase in customer
volumes in Sales & Marketing, the turnover growth versus H1 2017 was driven
by the additional capacity in the Cruises segment, higher average selling
prices in Hotels & Resorts and higher prices in the UK.
(2) Cost of sales and administrative expenses
Cost of sales represent the expenses incurred to deliver tourism services. In
addition to the expenses for staff costs, depreciation, amortisation, rent
and leasing, they include all costs incurred by the Group in connection with
the procurement and delivery of airline services, hotel accommodation and
cruises as well as distribution costs.
Administrative expenses comprise all expenses incurred in connection with the
performance of administrative functions and break down as follows:
Administrative expenes
EUR million H1 2018 H1 2017
Staff cost 362.0 355.1
Rental and leasing expenses 27.0 30.9
Depreciation, amortisation and impairment 37.9 35.1
Others 194.5 180.0
Total 621.4 601.1
The cost of sales and administrative expenses include the following expenses
for staff, depreciation / amortisation, rent and leasing:
Staff cost
EUR million H1 2018 H1 2017
Wages and salaries 941.1 900.1
Social security contributions, pension costs 217.5 214.2
and benefits
Total 1,158.6 1,114.3
Depreciation / amortisation / impairment
EUR million H1 2018 H1 2017
Depreciation and amortisation of 203.2 198.2
other intangible assets and
property, plant and equipment
Impairment of other intangible 4.8 -
assets and property, plant and
equipment
Total 208.0 198.2
Rental and leasing expenses
EUR million H1 2018 H1 2017
Rental and leasing expenses 349.5 383.3
Aircraft leasing expenses declined year-on-year, primarily due to foreign
exchange effects. Leasing expenses for cruise ships also declined versus the
prior year, in particular due to the expiry of a lease agreement at Marella
Cruises.
(3) Other income
In H1 2018, other income mainly resulted from the sale of two hotel companies
and one hotel. Additional income was generated from the sale of an aircraft.
(4) Share of result of joint ventures and associates
Share of result of joint ventures and associates
H1 2018 H1 2017
EUR million restated
Hotels & Resorts 44.5 42.8
Cruises 53.3 38.3
Destination Experiences 4.2 6.8
Holiday experiences 102.0 87.9
Northern Region 18.5 16.4
Central Region 0.7 1.2
Western Region 0.2 0.1
Sales and Marketing 19.4 17.7
All other segments 0.1 -
Total 121.5 105.6
The increase in income from joint ventures and associates in the Cruises
segment mainly results from the launch of Mein Schiff 6.
(5) Income taxes
The tax income arising in the reporting period is mainly driven by the
seasonality of the tourism business.
(6) Group loss attributable to non-controlling interest
The Group result attributable to non-controlling interest represents a
profit, which primarily relates to the RIUSA II Group with an amount of EUR
70.7 m (previous year EUR 54.3 m).
Notes to the financial position of the TUI Group
(7) Property, plant and equipment
Property, plant and equipment rose by EUR 147.4 m year-on-year to EUR 4,401.1
m. The increase is primarily attributable to the acquisition of aircraft
assets worth EUR 286.8 m, thereof two finance leased aircraft worth EUR 149.1
m, and investments in hotels of EUR 117.6 m, with an opposite effect
resulting from depreciation / amortisation for the first half of the year as
well as foreign currency translation.
(8) Assets held for sale
As at 31 March 2018, a hotel company was classified as a disposal group.
Moreover, an administrative building is held for sale.
(9) Pension provisions and similar obligations
Pension provisions declined by EUR 105.5 m to EUR 1,021.9 m versus the end of
the completed financial year. The decline is primarily driven by a decreasing
shortfall in coverage of the funded pension plans in the UK. Assets of these
funds rose as a result of contributions paid by the employer as well as a
good performance of the plan assets.
Pension plans with an excess of plan assets over funded obligations, carried
under trade receivables and other assets, are almost flat versus 30 September
2017 at EUR 56.0 m.
(10) Financial liabilities
Non-current financial liabilities rose by EUR 40.3 m to EUR 1,801.5 m as
against 30 September 2017. This was mainly driven by the increase in
liabilities from finance leases by EUR 64.6 m. An opposite trend was caused
by a reduction in liabilities to banks by EUR 24.9 m.
(11) Changes in equity
Equity decreased by EUR 540.5 m to EUR 2,993.2 overall versus 30 September
2017.
In H1 2018, TUI AG paid a dividend of EUR 0.65 per no-par value share, EUR
381.8 m in total (previous year EUR 368.6 m), to its shareholders.
The Group loss in the first half of the year is attributable to the
seasonality of the tourism business.
Gains and losses from effective cash flow hedges worth EUR 21.3 m (pre-tax)
are carried under other comprehensive income in equity outside profit and
loss (previous year EUR - 50.3 m).
The revaluation of pension obligations is also carried under other
comprehensive income in equity outside profit and loss.
(12) Financial instruments
Carrying amounts and fair values according to classes
and measurement categories as at 31 Mar 2018
Category under IAS
39
Carrying At At Fair Fair Values Carrying Fair value
amount amort cost value valu according amount of of
ised with e to IAS 17 financial financial
EUR million cost no thro (leases) instruments instruments
effec ugh
t on prof
profi it
t and and
loss loss
Assets
Financial 58.2 - 32.1 26.1 - - 58.2 58.2
assets
Available
for sale
Trade 1,171.5 867.6 - - - - 867.6 867.6
receivables
and other
assets
Derivative
financial
instruments
Hedging 355.8 - - 355.8 - - 355.8 355.8
transaction
s
Other 48.1 - - - 48.1 - 48.1 48.1
derivative
financial
instrument
s
Cash and 1,338.1 1,338 - - - - 1,338.1 1,338.1
cash .1
equivalents
Liabilities
Financial 1,977.8 683.3 - - - 1,294.5 683.3 696.3
liabilities
Trade 1,839.0 1,837 - - - - 1,837.4 1,837.4
payables .4
Derivative
financial
instruments
Hedging 304.4 - - 304.4 - - 304.4 304.4
transaction
s
Other 54.3 - - - 54.3 - 54.3 54.3
derivative
financial
instrument
s
Other 692.6 72.2 - - - - 72.2 72.2
liabilities
Carrying amounts and fair values according to classes
and measurement categories as at 30 Sep 2017
Category under IAS
39
Carrying At At Fair Fair Values Carrying Fair value
amount amort cost value valu according amount of of
ised with e to IAS 17 financial financial
EUR million cost no thro (leases) instruments instruments
effec ugh
t on prof
profi it
t and and
loss loss
Assets
Financial 69.5 - 43.5 26.0 - - 69.5 69.5
assets
Available
for sale
Trade 1,006.3 745.1 - - - - 745.1 745.1
receivables
and other
assets
Derivative
financial
instruments
Hedging 259.8 - - 259.8 - - 259.8 259.8
transaction
s
Other 35.5 - - - 35.5 - 35.5 35.5
derivative
financial
instrument
s
Cash and 2,516.1 2,516 - - - - 2,516.1 2,516.1
cash .1
equivalents
Liabilities
Financial 1,933.1 706.6 - - - 1,226.5 706.6 714.0
liabilities
Trade 2,653.3 2,652 - - - - 2,652.4 2,652.4
payables .4
Derivative
financial
instruments
Hedging 229.2 - - 229.2 - - 229.2 229.2
transaction
s
Other 38.4 - - - 38.4 - 38.4 38.4
derivative
financial
instrument
s
Other 748.2 95.2 - - - - 95.2 95.2
liabilities
Due to the short remaining terms of cash and cash equivalents, current trade
receivables and other assets, current trade payables and other liabilities,
the carrying amounts are taken as realistic estimates of the fair values.
The fair values of non-current trade receivables and other assets correspond
to the present values of the cash flows associated with the assets, using
current interest parameters which reflect market- and counterparty-related
changes in terms and expectations. There are no financial investments held to
maturity.
Financial instruments classified as financial assets available for sale
include an amount of EUR 32.1 m (previous year EUR 43.5 m) for interests in
partnerships and corporations for which no active market exists. The fair
values of these non-listed interests cannot be calculated by means of a
measurement model since their future cash flows cannot be reliably
determined. The investments are carried at cost. In the reporting period, and
also as at 30 September 2017, there were no material disposals of interests
in partnerships or corporations measured at cost. TUI does not intend to sell
or derecognise any significant interest in these partnerships or corporations
in the near future.
Aggregation according to measurement categories under IAS
39 as at 31 Mar 2018
At At cost Fair value Carrying Fair
amortise amount of value
d cost financial
instrume
nts
EUR with no through Total
million effect profit
on and loss
profit
and loss
Loans and 2,205.7 - - - 2,205.7 2,205.7
receivabl
es
Financial
assets
available - 32.1 26.1 - 58.2 58.2
for sale
held for - - - 48.1 48.1 48.1
trading
Financial
liabiliti
es
at 2,592.9 - - - 2,592.9 2,605.9
amortised
cost
held for - - - 54.3 54.3 54.3
trading
Aggregation according to measurement categories under IAS
39 as at 30 Sep 2017
At At cost Fair value Carrying Fair
amortise amount of value
d cost financial
instrume
nts
EUR with no through Total
million effect profit
on and loss
profit
and loss
Loans and 3,261.2 - - - 3,261.2 3,261.2
receivabl
es
Financial
assets
available - 43.5 26.0 - 69.5 69.5
for sale
held for - - - 35.5 35.5 35.5
trading
Financial
liabiliti
es
at 3,454.2 - - - 3,454.2 3,461.6
amortised
cost
held for - - - 38.4 38.4 38.4
trading
Fair value measurement
The following table presents the fair values of the recurring, non-recurring
and other financial instruments recognised at fair value in accordance with
the underlying measurement levels. The individual levels have been defined as
follows in line with the input factors:
· Level 1: quoted (unadjusted) prices in active markets for identical
assets or liabilities.
· Level 2: input factors for the measurement are quoted market price other
than those mentioned in Level 1, directly (as market price quotation) or
indirectly (derivable from market price quotation) observable in the market
for the asset or liability.
· Level 3: input factors for the measurement of the asset or liability are
based on non-observable market data.
Hierarchy of financial instruments measured at fair value as
at 31 Mar 2018
Fair value hierarchy
EUR million Total Level 1 Level 2 Level 3
Assets
Financial assets 26.1 - - 26.1
Available for sale
Derivative financial
instruments
Hedging transactions 355.8 - 355.8 -
Other derivative 48.1 - 48.1 -
financial instruments
Liabilities
Derivative financial
instruments
Hedging transactions 304.4 - 304.4 -
Other derivative 54.3 - 54.3 -
financial instruments
Hierarchy of financial instruments measured at fair value as
at 30 Sep 2017
Fair value hierarchy
EUR million Total Level 1 Level 2 Level 3
Assets
Financial assets 26.0 - 20.1 5.9
Available for sale
Derivative financial
instruments
Hedging transactions 259.8 - 259.8 -
Other derivative 35.5 - 35.5 -
financial instruments
Liabilities
Derivative financial
instruments
Hedging transactions 229.2 - 229.2 -
Other derivative 38.4 - 38.4 -
financial instruments
At the end of every reporting period, TUI Group checks whether there are any
reasons for reclassification to or from one of the measurement levels.
Financial assets and financial liabilities are generally transferred out of
Level 1 into Level 2 if the liquidity and trading activity no longer indicate
an active market. The opposite situation applies to potential transfers out
of Level 2 into Level 1. In the reporting period, there were no transfers
between Level 1 and Level 2.
Reclassifications from Level 3 to Level 2 or Level 1 are made if observable
market price quo-tations become available for the asset or liability
concerned. Checks of the measurement pa-rameters showed that the stake in
peakwork AG did not classify as Level 2 any longer as no observable valuation
parameter were available anymore. There were no other transfers from or to
Level 3. TUI records transfers from or to Level 3 at the date of the
obligating event or occasion triggering the transfer.
Level 1 financial instruments
The fair value of financial instruments for which an active market is
available is based on the market price quotation at the balance sheet date.
An active market exists if price quotations are easily and regularly
available from a stock exchange, traders, brokers, price service providers or
regulatory authorities, and if these prices represent actual and regular
market transactions between independent business partners. These financial
instruments are categorised within Level 1. The fair values correspond to the
nominal values multiplied by the price quotations at the balance sheet date.
Level 1 financial instruments primarily comprise shares in listed companies
classified as available for sale and bonds issued in the category "Financial
liabilities measured at amortised cost".
Level 2 financial instruments
The fair values of financial instruments not traded in an active market, e.g.
over the counter derivatives (OTC), are determined by means of valuation
techniques. These valuation techniques maximise the use of observable market
data and minimise the use of Group-specific assumptions. If all essential
input factors for the determination of the fair value of an instrument are
observable, the instrument is categorised within Level 2.
If one or several of the essential input factors are not based on observable
market data, the instrument is categorised within Level 3.
The specific valuation techniques used for the measurement of financial
instruments are:
· For over the counter bonds, liabilities to banks, promissory notes and
other non-current financial liabilities, the fair value is determined as
the present value of future cash flows, taking account of observable yield
curves and the respective credit spread, which depends on the credit
rating.
· For over the counter derivatives, the fair value is determined by means
of appropriate calculation methods, e.g. by discounting the expected future
cash flows. The forward prices of forward transactions are based on the
spot or cash prices, taking account of forward premiums and discounts. The
calculation of the fair values of foreign exchange options and interest
derivatives is based on the Black & Scholes model and the Turnbull &
Wakeman model for fuel hedge options. The fair values determined on the
basis of the Group's own systems are regularly compared with fair value
confirmations of the external counterparties.
· Other valuation techniques, e.g. discounting future cash flows, are used
for the measurement of the fair values of other financial instruments.
Level 3 financial instruments
The following table shows the development of the values of the financial
instruments measured at fair value on a recurring basis categorised within
Level 3 of the measurement hierarchy.
Financial assets measured at fair value in level 3
Financial assets available for
EUR million sale
Balance as at 1 Oct 2016 6.0
Total gains or losses for the - 0.1
period
recognised in other - 0.1
comprehensive income
Balance as at 30 Sep 2017 5.9
Balance as at 1 Oct 2017 5.9
Additions 20.1
conversion / rebooking 20.1
Total gains or losses for the 0.1
period
recognised in other 0.1
comprehensive income
Balance as at 31 Mar 2018 26.1
The additions to Level 3 of the valuation hierarchy relate to the stake in
peakwork AG.
(13) Contingent liabilities
As at 31 March 2018, contingent liabilities totalled EUR 133.9 m (previous
year EUR 156.1 m). Contingent liabilities are reported at an amount
representing the best estimate of the potential expenditure that would be
required to meet the potential obligation as at the balance sheet date.
As at 31 March 2018, contingent liabilities mainly relate to the provision of
guarantees for the benefit of cruise or hotel activities. The decline of EUR
22.2 m versus 30 September 2017 is mainly driven by the return of guarantees
for the Travelopia companies which had to be carried as off-balance sheet
contingent liabilities following the sale of Specialist Group, and by
scheduled repayments made by TUI Cruises GmbH.
(14) Other financial commitments
Nominal values of other financial commitments
EUR million 31 Mar 2018 30 Sep 2017
Commitments from operating 2,832.0 2,777.4
lease, rental and charter
contracts
Order commitments in respect 3,984.6 4,164.5
of capital expenditure
Other financial commitments 64.3 95.9
Total 6,880.9 7,037.8
Capital commitments decreased by EUR 179.9 m as at 31 March 2018 in
comparison to 30 September 2017. This is largely driven by the delivery of
new aircraft and foreign exchange effects for commitments denominated in
non-functional currencies. Off-setting the reduction are higher levels of
hotel construction commitments due to new projects.
(15) Notes to the Group's cash flow statement
Based on the after-tax Group result, the cash flow from operating activities
is determined using the indirect method. In the reporting period, cash and
cash equivalents declined by EUR 1,177.7 m to EUR 1,338.4 m, including an
amount of EUR 0.3 m carried as assets held for sale.
In the reporting period, the outflow of cash from operating activities
amounted to EUR 443.5 m (previous year EUR 278.5 m).
The outflow of cash from investing activities totals EUR 261.2 m (previous
year EUR 695.1 m). It comprises a cash outflow for investments in property,
plant and equipment and intangible assets of EUR 364.0 m. The Group also
recorded an inflow of EUR 127.8 m from the sale of property, plant and
equipment and intangible assets as well as EUR 53.4 m from the sale of two
consolidated companies. The cash flow from investing activities also includes
an outflow of EUR 24.2 m in connection with the acquisition of consolidated
companies and the acquisition of a joint venture. A cash outflow of EUR 54.2
m relates to short-term interest-bearing investments.
The outflow of cash from financing activities totalled EUR 470.6 m (previous
year EUR 478.3 m). TUI Group companies took out financial liabilities of EUR
4.5 m. Outflows included an amount of EUR 80.5 m for the redemption of
financial liabilities, including EUR 51.7 m for finance lease obligations. At
the reporting date, the external revolving credit line to manage the
seasonality of cash flows and the Group's liquidity was not used. An outflow
of cash of EUR 45.5 m relates to interest payments, while an outflow of cash
of EUR 381.8 m resulted from dividends paid to TUI AG shareholders. In
October 2017, an inflow of cash of EUR 32.7 m was generated by the sale of
the shares in TUI AG held by the Employee Benefit Trust of TUI Travel Ltd.,
effected in the previous financial year.
Cash and cash equivalents also decreased by EUR 2.4 m due to changes in
exchange rates (in the previous year decline by EUR 14.3 m).
At 31 March 2018, cash and cash equivalents of EUR 262.7 m were subject to
restrictions (previous year EUR 261.0 m).
On 30 September 2016, TUI AG entered into an agreement to close the gap
between the obligations and the fund assets of defined benefit pension plans
in the UK in the long run. At the reporting date an amount of EUR 144.2 m is
deposited as security on a bank account. Until their disposal in financial
year 2017, the shares in Hapag-Lloyd AG held by TUI AG were assigned as
collateral. TUI Group can only use that cash and cash equivalents if it
presents alternative collateral.
Further, an amount of EUR 116.5 m (previous year EUR 116.5 m) was deposited
with a Belgian subsidiary without acknowledgement of debt by the Belgian tax
authorities in financial year 2013 respect of long-standing litigation over
VAT refunds for the years 2001 to 2011. The purpose was to suspend the
accrual of interest for both parties. In order to collateralise a potential
repayment, the Belgian government was granted a bank guarantee. Due to the
bank guarantee, TUI's ability to dispose of the cash and cash equivalents has
been restricted. The other restrictions relate to cash and cash equivalents
to be deposited due to legal or regulatory requirements.
(16) Segment indicators
Since the first quarter of 2018, the companies providing services in the
destinations have been separately reported as the Destination Experiences
segment. The other companies previously included in Other Tourism, such as
the French scheduled carrier Corsair and central tourism functions such as
information technology, are now included in All Other Segments. The prior
year's figures were restated accordingly to reflect the changes in
segmentation.
Turnover by segment for the period from 1 Oct 2017 to 31 Mar
2018
EUR million External H1 2018
Group Total
Hotels & Resorts 287.9 275.4 563.3
Cruises 395.6 - 395.6
Destination Experiences 59.8 78.8 138.6
Consolidation - - 1.4 - 1.4
Holiday experiences 743.3 352.8 1,096.1
Northern Region 2,324.1 1.1 2,325.2
Central Region 2,305.9 7.6 2,313.5
Western Region 1,132.3 20.7 1,153.0
Consolidation - - 25.5 - 25.5
Sales and Marketing 5,762.3 3.9 5,766.2
All other segments 307.9 47.2 355.1
Consolidation - - 403.9 - 403.9
Total 6,813.5 - 6,813.5
Turnover by segment for the period from 1 Oct 2016 to 31 Mar
2017
EUR million External H1 2017
restated Group Total
restated restated
Hotels & Resorts 300.0 264.6 564.6
Cruises 345.9 0.3 346.2
Destination Experiences 54.6 72.4 127.0
Consolidation - - 1.5 - 1.5
Holiday experiences 700.5 335.8 1,036.3
Northern Region 2,204.3 19.3 2,223.6
Central Region 2,028.0 8.8 2,036.8
Western Region 1,114.0 21.3 1,135.3
Consolidation - - 23.0 - 23.0
Sales and Marketing 5,346.3 26.4 5,372.7
All other segments 307.0 50.7 357.7
Consolidation - - 412.9 - 412.9
Continuing operations 6,353.8 - 6,353.8
Discontinued operations 546.3 - 546.3
Total 6,900.1 - 6,900.1
The following tables show the Group performance indicators EBITA and
underlying EBITA. The TUI Group defines EBITA as earnings before interest,
income taxes and goodwill impairment. EBITA includes amortisation of other
intangible assets. EBITA does not include measurement effects from interest
hedges and in the prior year also earnings effects from container shipping,
as the stake in Hapag-Lloyd AG is a financial investment and not an operating
investment from TUI AG's perspective.
EBITA by segment
EUR million H1 2017
H1 2018 restated
Hotels & Resorts 179.1 120.0
Cruises 92.4 75.0
Destination Experiences - 9.9 - 0.8
Holiday experiences 261.6 194.2
Northern Region - 129.2 - 148.1
Central Region - 151.5 - 140.2
Western Region - 118.7 - 128.8
Sales and Marketing - 399.4 - 417.1
All other segments - 54.5 - 29.0
Continuing operations - 192.3 - 251.9
Discontinued operations - - 22.2
Total - 192.3 - 274.1
In the first half year 2018, EBITA includes results of EUR 121.5 m (previous
year EUR 105.6 m) from joint ventures and associates, primarily generated in
Holiday experiences.
The underlying EBITA has been adjusted for results on disposal of financial
investments, expenses in connection with restructuring measures according to
IAS 37, all effects of purchase price allocations, ancillary acquisition
costs and conditional purchase price payments and other expenses for and
income from one-off items. The one-off items carried as adjustments are
income and expense items impacting or distorting the assessment of the
operating profitability of the segments and the Group due to their size or
frequency.
Underlying EBITA by segment
EUR million H1 2017
H1 2018 restated
Hotels & Resorts 179.2 122.8
Cruises 92.4 75.0
Destination Experiences - 9.3 0.3
Holiday experiences 262.3 198.1
Northern Region - 120.5 - 138.0
Central Region - 145.8 - 143.7
Western Region - 105.6 - 102.2
Sales and Marketing - 371.9 - 383.9
All other segments - 49.0 - 28.5
Continuing operations - 158.6 - 214.3
Discontinued operations - - 15.3
Total - 158.6 - 229.6
Reconciliation to earnings before income taxes of the
continuing operations of the TUI Group
EUR million H1 2018 H1 2017
Underlying EBITA of - 158.6 - 214.3
continuing operations
Result on disposal * - - 0.7
Restructuring expense * - 13.4 - 17.1
Expense from purchase - 15.0 - 15.2
price allocation *
Expense from other - 5.3 - 4.6
one-off items *
EBITA of continuing - 192.3 - 251.9
operations
Result from the sale of - 2.3
the shares in Container
Shipping
Net interest expense and - 54.9 - 61.2
expense from measurement
of interest hedges
Earnings before income - 247.2 - 310.8
taxes of continuing
operations
* For a description of the adjustments see the management
report.
(17) Related parties
Apart from the subsidiaries included in the consolidated financial
statements, TUI AG, in carrying out its ordinary business activities,
maintains direct and indirect relationships with related parties. All
transactions with related parties were executed on an arm's length basis,
based on international comparable price methods in accordance with IAS 24, as
before.
The equity stake held by Riu Hotels S.A., listed in the Notes on the
consolidated financial statements as at 30 September 2017, remained unchanged
at the reporting date for the interim financial statements. In the first half
year 2018, the Russian entrepreneur Alexey Mordashov acquired further shares.
At the reporting date, 31 March 2018, he held a 23.5 % stake in TUI. More
detailed information on related parties is provided under Other notes in the
Notes on the consolidated financial statements for 2017.
Togebi Holdings Limited (TUI Russia) is a joint venture between Oscrivia
Limited (Oscrivia), a subsidiary of Unifirm Limited, and TUI Group. Unifirm
Limited is the subsidiary of OOO Severgroup, owned by a large shareholder and
Supervisory Board member of TUI AG. In the reporting period, TUI Russia was
granted shareholder loans worth USD7.8 m by TUI Group.
(18) Significant transactions after the balance sheet date
On 13 April 2018, TUI UK Ltd. acquired the cruise ship Mein Schiff 1 from TUI
Cruises GmbH for a purchase price of EUR 202.2 m. After successful
rebuilding, Mein Schiff 1 will be operated as Marella Explorer and expand the
fleet of Marella Cruises.
(19) International Financial Reporting Standards (IFRS) not yet applied
We refer to our annual report for the 2017 financial year regarding the
effects of the new standards relating to revenue recognition (IFRS 15),
financial instruments (IFRS 9) and leases (IFRS 16). In comparison to those
explanations, the following additional insights have been gained:
IFRS 15
The group-wide examination of the effects of IFRS 15 has not yet been
completed.
TUI intends to first apply IFRS 15 retrospectively and present the
comparative period in accordance with IFRS 15.
We intend to make use of the relief not to reevaluate contracts fulfilled
before 1 October 2017 based on IFRS 15.
Revenue recognition at the tour operator: Individual revenue streams, which
to date have been primarily recognised at the start date of the journey, will
in future be required to be recognised over time under the new requirements.
This hereby results in a subsequent realisation of revenue and cost of sales
corresponding to the progression of the journey.
As our financial year ends each year at the end of an off-peak season, the
effects from the recognition of additional revenues and touristic expenses at
the beginning of a financial year, and lower revenues and touristic expenses
at the end of a financial year will almost entirely offset each other. In the
preliminary opening balance sheet as at 1 October 2017, equity would probably
decrease by a small two-digit million amount in comparison to the reported
amount.
We are currently in the process of completing the data analysis and
verification of results, as well as implementing accounting systems, such
that we are unable to reliably quantify further transition effects at this
point in time.
IFRS 9
The analysis of the effects of applying IFRS 9 has not yet been completed, so
that we cannot reliably quantify the expected financial effects on transition
at this point in time.
· We will make a decision shortly about the individual classification of
the equity instruments held by the Group as financial assets 'at fair value
through other comprehensive income' or as financial assets 'at fair value
through profit and loss'.
· In the second half of the financial year, we will conduct an analysis of
historical default rates to derive provision matrixes for those financial
assets, for which the simplified approach to determine the impairment
charges is applicable. For all other financial assets measured at amortised
cost (e.g. touristic loans), we will determine the impairment under the
expected credit loss model in accordance with the general approach. In
comparison to the current bad debt allowances we do not anticipate material
effects at this point in time.
· As the adaption of our treasury management systems regarding the hedge
accounting requirements has not been completed yet, we have not yet decided
whether we will make use of the accounting choice on transition to IFRS 9
to continue to apply the hedge accounting requirements of IAS 39.
At this stage TUI anticipates no material effect on the consolidated
financial statement upon transition to IFRS 9.
IFRS 16
TUI has tentatively decided to make use of the recognition exemptions for
short-term leases and leases of low-value assets. We intend to continue in
the future - consistent with the internal management approach - to present
intra-group leases in the segment reporting according to IFRS 8 as if they
were operating leases under IAS 17.
TUI will apply IFRS 16 effective 1 October 2019 in accordance with the
modified retrospective transition method. The Group has not yet taken
decisions about the various accounting choices and practical expedients
available on transition in view of the commenced group-wide recording and
evaluation of all external lease arrangements.
Responsibility statement
To the best of our knowledge, and in accordance with the applicable reporting
principles for Interim financial reporting and in the accordance with
(German) principles of proper accounting, the interim consolidated financial
statements give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Group, and the interim Group management
report includes a fair review of the development and performance of the
business and the position of the Group, together with a description of the
principal opportunities and risks associated with the expected development of
the Group for the remaining months of the financial year.
Hanover, 7 May 2018
The Executive Board
Friedrich Joussen
Horst Baier
David Burling
Sebastian Ebel
Dr. Elke Eller
Frank Rosenberger
Review Report
To TUI AG, Berlin / Germany and Hannover / Germany
We have reviewed the condensed interim consolidated financial statements -
comprising the statement of financial position, the income statement, the
condensed statement of compre-hensive income, the condensed statement of cash
flows, the condensed statement of changes in equity as well as selected
explanatory notes to the financial statements - and the interim Group
management report for the period from 1 October 2017 until 31 March 2018 of
TUI AG, which are components of the half-year financial report pursuant to §
115 WpHG (Wertpapierhandelsgesetz: German Securities Trading Act).The
preparation of the condensed interim consolidated financial statements in
accordance with the IFRSapplicable to interim financial reporting as adopted
by the EU, and of the interim group management report which has been prepared
in accordance with the requirements of the WpHG applicable to interim Group
ma-nagement reports is the responsibility of the entity's Management Board.
Our responsibility is to express a report on the condensed interim
consolidated financial statements and on the interim Group management report
based on our review.
We conducted our review of the condensed interim consolidated financial
statements and the interim Group management report in accordance with the
German generally accepted stan-dards for the review of financial statements
promulgated by the Institut der Wirtschaftsprüfer (IDW) as well as in
supplementary compliance with the International Standard on Review
En-gagements "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" (ISRE 2410). Those standards require that
we plan and perform the review in com-pliance with professional standards
such that we can preclude through critical evaluation, with limited
assurance, that the condensed interim consolidated financial statements have
not been prepared, in all material respects, in accordance with the IFRS
applicable to interim financial reporting as adopted by the EU or that the
interim Group management report has not been prepared, in all material
respects, in accordance with the requirements of the WpHG applicable to
interim Group management reports. A review is limited primarily to inquiries
of personnel of the entity and analytical procedures and therefore does not
provide the as-surance attainable in a financial statement audit. Since, in
accordance with our engagement, we have not performed a financial statement
audit, we cannot issue an auditor's report.
Based on our review, no matters have come to our attention that cause us to
presume that the condensed interim consolidated financial statements have not
been prepared, in material respects, in accordance with the IFRS applicable
to interim financial reporting as adopted by the EU, or that the interim
Group management report has not been prepared, in material respects, in
accordance with the requirements of the WpHG applicable to interim group
management reports.
Hanover / Germany, 7 May 2018
Deloitte GmbH
Wirtschaftsprüfungsgesellschaft
Christoph B. Schenk Dr. Hendrik Nardmann
German Public Auditor German Public Auditor
Cautionary statement regarding forward-looking statements
The present half year financial report contains various statements relating
to TUI's future development. These statements are based on assumptions and
estimates. Although we are convinced that these forward-looking statements
are realistic, they are not guarantees of future performance since our
assumptions involve risks and uncertainties that could cause actual results
to differ materially from those anticipated. Such factors include market
fluctuations, the development of world market prices for commodities and
exchange rates or fundamental changes in the economic environment. TUI does
not intend to and does not undertake any obligation to update any
forward-looking statements in order to reflect events of developments after
the date of this Report.
Analyst and investor enquiries
Peter Krüger
Director of Investor Relations and M&A
Tel.: + 49 (0)511 566 1440
Contacts for Analysts and Investors in UK,
Ireland and Americas
Sarah Coomes
Head of Investor Relations
Tel.: + 44 (0)1293 645 827
Hazel Chung
Investor Relations Manager
Tel.: + 44 (0)1293 645 823
Contacts for Analysts and Investors in
Continental Europe, Middle East and Asia
Nicola Gehrt
Head of Investor Relations
Tel.: + 49 (0)511 566 1435
Ina Klose
Investor Relations Manager
Tel.: + 49 (0)511 566 1318
Jessica Blinne
Junior Investor Relations Manager
Tel.: + 49 (0)511 566 1425
The presentation slides and the video webcast
for H1 2018 are available at the following link:
www.tuigroup.com/en-en/investors
Financial Calendar
9 May 2018
Half Year Financial Report 2018
Capital Markets Day
9 August 2018
Quarterly Statement Q3 2018
27 September 2018
Pre-Close Trading Update
13 DecembeR 2018
Annual Report 2018
12 February 2019
Annual General Meeting 2019
Contact and publishing details
Published by
TUI AG
Karl-Wiechert-Allee 4
30625 Hanover, Germany
Tel: + 49 (0)511 566-00
Fax: + 49 (0)511 566-1901
www.tuigroup.com
Concept and Design
3st kommunikation, Mainz
Photography
Title: TUI Cruises
The English and a German version of this
Half year financial report are available on the web:
www.tuigroup.com/en-en/investors
Published on 9 May 2018
ISIN: DE000TUAG000, DE000TUAG299
Category Code: IR
TIDM: TUI
LEI Code: 529900SL2WSPV293B552
OAM Categories: 1.2. Half yearly financial reports and audit reports/limited
reviews
Sequence No.: 5516
EQS News ID: 683923
End of Announcement EQS News Service
(END) Dow Jones Newswires
May 09, 2018 01:01 ET (05:01 GMT)
Tui (LSE:TUI)
Historical Stock Chart
From Apr 2024 to May 2024
Tui (LSE:TUI)
Historical Stock Chart
From May 2023 to May 2024
