RNS Number:3148Q
TUI Travel PLC
18 March 2008
18 March 2008
TUI TRAVEL PLC
QUARTERLY RESULTS FOR THE THREE MONTHS ENDED 31 DECEMBER 2007
Highlights
* The Group made a strong start to the year, with a �73m improvement in
underlying operating loss (Q1 08 loss of �41m; Q1 07 loss of �114m):
- Mainstream sector: underlying operating loss significantly improved
by �49m to �59m (Q1 07: loss of �108m) primarily as a result of a
significant turnaround in France and strong performances in the UK
and Nordics.
- Specialist sectors: delivered underlying operating profits up �5m to
�2m (Q1 07: loss of �3m) driven by a combination of strong organic
and acquisition growth.
- The Q1 08 underlying operating loss includes a gain on financial
derivatives of �22m that does not arise as a result of core operating
activities.
* Underlying loss before tax reduced by 51% to �60m (Q1 07: loss of �121m).
* The integration of our leading tour operating franchises, Thomson and
First Choice, is progressing very well; we are on track to achieve the
upgraded synergy target of �150m.
* Acquisition of four niche specialist businesses with a maximum
consideration of �21m were made during the quarter, with the acquisition
pipeline remaining strong.
* Current trading remains strong for both Winter 2007/08 and Summer 2008
across the group. UK Mainstream sales are up 4% for Winter 2007/08. Sales
are up 9% for Summer 2008 with 20% less product left to sell versus prior
year, with particularly strong performances in medium and long haul.
* The Board remains confident that it will meet its expectations for the
year ended 30 September 2008.
Peter Long, Chief Executive Officer of TUI Travel PLC, commented
''We are very pleased with our performance during Q1, our first as a fully
merged business. We have made excellent progress on our initiatives to enhance
margins throughout the group and have continued to grow our portfolio of niche
specialist businesses. The integration of our UK Mainstream brands, Thomson and
First Choice, and our plans to deliver �150 million of synergies by 2010 are
well on track. Current trading remains strong across the group for both Winter
2007/08 and Summer 2008 and combined with careful management of capacity, means
we have significantly fewer holidays to sell than at this point last year in our
key source markets. Based on the current outlook, I remain confident that the
group will meet the Board's expectations for the year and that the merger will
prove to be highly successful, delivering significant value for shareholders and
enabling us to perform robustly in an increasingly volatile economic
environment.''
Conference Call
A conference call for analysts will take place today at 10.00am (GMT). The
dial-in arrangements for the call are as follows:
Telephone: +44 (0) 1452 555 566
Participant Code: 38968655
A presentation to accompany the conference call will be made available via our
corporate website at 8.00 am (GMT). Please use the link below to access the
slides:
http://www.tuitravelplc.com/tuitravel/investors/presentations/
Please contact Kerry Gleeson (TUI Travel PLC Corporate Communications) on +44
(0)1293 645773 if you have any difficulty accessing either the conference call
or supporting presentation.
A recording of the conference call will be available until 1 April on:
Telephone: +44 (0) 1452 550 000
Participant Code: 38968655#
Enquiries:
TUI Travel PLC
Paul Bowtell, Chief Financial Officer Tel: 01293 645 713
Andy Jones, Director of Finance & Investor Relations Tel: 01293 645 795
David Paterson, Head of Strategy & Investor Relations Tel: 01293 645 795
Lesley Allan, Corporate Communications Director Tel: 01293 645 773
Hudson Sandler
Jessica Rouleau / Amy Faulconbridge Tel: 020 7796 4133
Overview
We made excellent progress in Q1, our first as a fully merged business. The Q1
08 underlying operating loss excluding the gain on financial derivatives is
�63m, an improvement of �51m on the prior year (Q1 07: loss of �114m). This has
primarily been achieved as a result of a significant turnaround in France and
strong performances in the UK and Nordics within the Mainstream sector. Strong
organic and acquisition led growth in the Specialist sectors also contributed to
the results. During the quarter we spent a significant amount of time reviewing
and analysing our plans for integration of our UK Mainstream businesses, Thomson
and First Choice. As a result, we were pleased to announce, at the end of
January, an increased synergy target of �150m. In line with our strategy to
continue growing our portfolio of niche, specialist businesses, we acquired four
businesses for a maximum total consideration of �21m.
Underlying Q11 results Q1 results
�m Q1 08 Q1 07 Change Q1 08 Q1 07
Revenue 2,528 2,405 +5% 2,528 2,405
Operating loss before financial (63) (114) +44% (118) (191)
derivatives gain
Financial derivatives gain 22 - - - -
Operating loss (41) (114) +64% (118) (191)
Loss before tax (60) (121) +51% (137) (198)
1 The Group believes that underlying operating loss and underlying loss before
tax provide additional guidance to the statutory measures on the underlying
performance of the business during the financial year. Underlying loss before
tax and underlying operating loss exclude separately disclosed items,
amortisation of IFRS 3 intangibles and taxation of results of the Group's joint
ventures and associates.
The financial derivative gain relates to changes in the fair value of certain
forward currency contracts which are required to be recognised immediately as
they arise in the income statement under the Group's IAS accounting policies. It
arises from hedges taken out against the Group's forward aircraft order book.
The gain reflects movements in the interest rates of the currencies in the
forward contracts rather than the results of core operating activities. The gain
is therefore excluded from analysis of underlying source market and sector
performance.
A reconciliation of underlying loss before tax to loss before tax is as follows:
Quarter ended 31 December 2007 2006
�m �m
Underlying loss before tax (59.8) (120.9)
Separately disclosed items (46.7) (74.0)
Amortisation of IFRS 3 intangibles (30.4) (3.5)
Taxation on losses of joint ventures and associates 0.3 0.2
Loss before tax (136.6) (198.2)
Separately disclosed items are further detailed in Note 3 of the financial
information. Amortisation of IFRS 3 intangibles arising on the merger of 3
September 2007 amounted to �29.4m and is included within the Q1 08 total charge
of �30.4m.
Current Trading
Since the last trading update on 29 January 2008 the Winter 2007/08 season has
continued to perform well and in line with our expectations, while trading
during the key booking period for the Summer 2008 programme has also been
strong.
Winter 2007/08
Trading for the Winter programme has continued to perform in line with our
expectations, with sales ahead of the prior year in our key source markets.
Current Trading 1
Winter 2007/08
y-o-y variation% Sales Customers Capacity
MAINSTREAM
Northern Europe
Short-haul -10 -24 -29
Medium-haul +16 +5 -1
Long-haul +3 -6 -7
UK Mainstream - Total +4 -7 -11
Nordic +13 +10 +11
Northern Europe - Total +7 -3 -7
Germany +3 +2
Austria -11 -8
Switzerland +16 +15
Central Europe - Total +4 +3 +1
France -3 -10
Belgium +15 +15
Netherlands +8 +2
Western Europe +4 flat +3
SPECIALIST +1 -3
ACTIVITY +11 n/a
ODS +42 +31
1 These statistics are up to 9 March 2008
UK Mainstream trading has remained strong with sales up 4%. Volumes are down
only 7% despite capacity being reduced by 11%, with the result that the total UK
programme is three percentage points further sold than last year and load
factors are ahead of last year in all departure months for the season. Margins
continue to track ahead of the prior year.
The Nordics winter programme has performed very well with the programme now 97%
sold. Sales are 13% ahead of last year on 10% higher volumes which has been
driven by the continued successful expansion of our long haul programme to
Thailand, where volumes are significantly higher than last year. In addition,
there has been strong growth in the medium haul destinations of Canaries and
Egypt. Margins continue to track ahead of last year.
In both Western and Central Europe trading overall remains strong with sales up
4% on prior year.
Specialist Sector sales have been tracking ahead in the UK and Europe, but the
Canadian business is 4% behind last year as a result of a highly competitive
market place.
Summer 2008
We remain encouraged by summer trading across the Group, and in particular the
strong rate of sale since the last trading update on 29 January 2008. We are now
47% booked in the UK and between 30% and 45% booked in our continental
businesses for the Summer 2008 programme, and we are continuing to experience
cost pressures, particularly the price of jet fuel oil.
Current Trading 1
Summer 2008
y-o-y variation% Sales Customers Capacity
MAINSTREAM
Northern Europe
Short-haul flat -12 -24
Medium-haul +23 +14 -4
Long-haul +7 +8 +2
UK Mainstream - Total +9 flat -13
Nordic +5 +3 flat
Northern Europe - Total +9 +1 -11
Germany +7 +6
Austria -22 -20
Switzerland +21 +22
Central Europe - Total +6 +5 -14
France -4 -8
Belgium +6 +4
Netherlands +8 +4
TUI Western Europe +4 +1 +5
SPECIALIST +6 +3
ACTIVITY +4 n/a
ODS +33 +23
1 These statistics are up to 9 March 2008
Summer 2008 trading in the UK has remained strong since our last trading update,
with sales up 9% on flat volumes. Sales for medium haul and long haul
destinations are now up 23% and 7% on the prior year, on higher volumes of +14%
and +8% respectively.
Capacity in the UK is 13% lower than last year, primarily as a result of cutting
back loss making scheduled flying capacity within the short haul programme. Load
factors continue to track ahead of last year for all departure months in the
season, and the total UK summer programme is six percentage points further sold.
As a result, we have 20% less product left to sell compared to this point last
year. Summer 2008 margins continue to track ahead despite input cost pressures,
particularly in relation to fuel.
Trading also remains strong in the Nordics region, with sales 5% ahead of prior
year on higher volumes of +3%.
Central Europe continues to benefit from strong customer demand, with sales up
6% on higher volumes of +5%. Capacity is down 14% as we have reduced the summer
2008 fleet by eight aircraft, and load factors and margins are tracking ahead of
prior year. Within Western Europe trading continues to be positive with sales up
4% on prior year on 1% higher volumes. Within France, while volumes are lower
within the package business, both prices and margins are tracking ahead of last
year and we remain confident that the business will break even in the current
financial year.
In the specialist sectors trading remains positive. Total sales are up 6% and 4%
for Specialist Holidays and Activity Holidays respectively, while total
transaction values are 33% ahead in ODS.
Outlook
We are very pleased with our Q1 08 performance and the continued strong trading
across the portfolio for both Winter 2007/08 and Summer 2008. The Board remains
confident that it will meet its expectations for the current TUI Travel PLC
financial year ending 30 September 2008.
BUSINESS AND FINANCIAL REVIEW
Segmental Performance
Within the Q1 segmental review, we have excluded the financial derivatives gain
of �22.5m in Q1 08 from the analysis of underlying source market and sector
performance as it has not arisen as a result of core operating activities.
All Q1 07 information is presented on a pro forma basis as set out in note 1 to
the financial information.
Mainstream Holidays Sector
Mainstream Holidays Sector reported an underlying operating loss of �58.8m in Q1
08, an improvement of �48.7m over the prior year (Q1 07: loss of �107.5m).
Mainstream Holidays Q1 08 Q1 07 Change %
Customers ('000)
Northern Europe 1,685 1,725 -2%
Central Europe 2,256 2,061 +9%
Western Europe 861 822 +5%
Total 4,802 4,608 +4%
y-o-y variation
Revenue per customer Total
Northern Europe +3%
Central Europe -4%
Western Europe flat
Total -1%
Underlying operating loss (�m)
Northern Europe (21.7) (47.7) +55%
Central Europe (23.7) (21.1) -12%
Western Europe (13.4) (38.7) +65%
Total (58.8) (107.5) +45%
Underlying operating margin %
Northern Europe (2.5%) (5.6%) +310bps
Central Europe (2.7%) (2.5%) -20bps
Western Europe (3.6%) (10.9%) +730bps
Total (2.8%) (5.2%) +240bps
Controlled distribution %
Northern Europe 74% 71% +3ppts
Central Europe 42% 41% +1ppts
Western Europe 53% 53% flat
Total 55% 54% +1ppts
Northern Europe
The Northern Europe division achieved a 55% improvement in underlying operating
loss to �21.7m (Q1 07: loss of �47.7m). Operating margin also improved
significantly to -2.5% in Q1 08 (Q1 07: -5.6%).
The underlying operating loss in the UK improved to �35.6m (Q1 07: loss of
�46.8m). Customer demand was strong during the period, in particular for medium
and long haul destinations. In addition, significant capacity was cut on the
loss making scheduled flying city routes, with a 50% reduction in capacity in
November and December 2007 versus the prior year. As a result, load factors and
margins were ahead of the prior year, and the operating margin improved by 150
basis points in the quarter. The Thomson UK business also benefited in Q1 08
from cost savings achieved through the implementation of pre-merger plans to
rationalise the retail estate and call centres and to generate efficiencies in
back office operations.
The Nordic region delivered a profit of �13.9m in the quarter, significantly
ahead of the prior year loss of �0.9m. This was due to further expansion of the
high margin long haul programme through the redeployment of an additional 767
aircraft from the UK . As a result, long haul volumes were up 34% in Q1 08
compared to last year. The hotels and holiday villages under the differentiated
Blue concept also performed very well, with particularly strong volume growth in
the long haul destinations and the Canary Islands. Controlled distribution was
up six percentage points in the quarter due to growth in the online channel, and
margins have benefited as a result.
Northern Europe Q1 08 Q1 07 Change %
Customers ('000)
UK 1,409 1,485 -5%
Nordic 276 240 +15%
Total 1,685 1,725 -2%
y-o-y variation
Revenue per customer Total
UK +3%
Nordic +1%
Total +3%
Revenue growth
UK -2%
Nordic +16%
Total +1%
Underlying operating (loss)/profit (�m)
UK (35.6) (46.8) +23%
Nordic 13.9 (0.9) +1,644%
Total (21.7) (47.7) +55%
Underlying operating margin %
UK (5.1%) (6.6%) +150bps
Nordic 8.1% (0.6%) +870bps
Total (2.5%) (5.6%) +310bps
Controlled distribution %
UK 74% 71% +3ppts
Nordic 76% 70% +6ppts
Total 74% 71% +3ppts
Central Europe
The Central Europe division reported an underlying operating loss of �23.7m (Q1
07: loss of �21.1m), primarily as a result of weaker customer demand in the
Austrian source market. Within Germany, the business performed satisfactorily
despite margin pressures in a competitive marketplace. As previously announced,
we have already cut airline capacity by eight aircraft for the Summer 2008
programme and continue to explore a potential merger of Germanwings and TUIfly
under the Memorandum of Understanding signed with Lufthansa in January 2008.
Switzerland performed well in the quarter, with margins benefiting from
increased sales through its direct-selling brand Vogele and cost efficiencies
arising from the turnaround programme implemented in the previous financial
year.
Central Europe Q1 08 Q1 07 Change %
Customers ('000) 2,256 2,061 +9%
Revenue per customer growth -4%
Revenue growth % +5%
Underlying operating (loss)/profit (�m)
(23.7) (21.1) -12%
Underlying operating margin % (2.7%) (2.5%) -20bps
Controlled distribution % 42% 41% +1ppt
Western Europe
Western Europe achieved significant improvement in the underlying operating loss
to �13.4m (Q1 07: loss of �38.7m), primarily driven by the performance of our
French business.
The underlying operating loss in France has been improved to �12.6m (Q1 07: loss
of �33.9m). Margins benefited from the rationalisation of the tour operator
product offering and improvements in yield management. Additionally, whilst the
fleet was reduced by one aircraft, capacity and volumes were maintained year on
year through rationalisation of the flight programme to focus on the French West
Indies and Indian Ocean destinations. Results also benefited from the continuing
recovery of La Reunion (one of Corsair's key destinations) which was heavily
impacted in Q1 07 by the outbreak of the Chikungunya disease.
The Netherlands improved its performance in the quarter with an underlying
profit of �1.4m (Q1 07: loss of �1.6m). The tour operator performed strongly
with volumes up 4%, particularly due to growth in the medium and long haul
destinations of Egypt and the Caribbean.
Belgium reported an underlying operating loss for Q1 08 of �2.2m compared to a
loss of �3.2m in Q1 07. Belgium continued to benefit from the remixing of
capacity from short to medium and long haul, with volumes up 11% in Q1 08 and
particularly strong demand for destinations such as Egypt and Morocco.
Western Europe Q1 08 Q1 07 Change %
Passengers ('000)
France 305 306 flat
Netherlands 251 241 +4%
Belgium 305 275 +11%
Total 861 822 +5%
y-o-y variation
Revenue per passenger Total
France +2%
Netherlands flat
Belgium +1%
Total flat
Revenue growth
France +2%
Netherlands +4%
Belgium +12%
Total +5%
Underlying operating (loss)/profit
(�m)
France (12.6) (33.9) +63%
Netherlands 1.4 (1.6) +188%
Belgium (2.2) (3.2) +31%
Total (13.4) (38.7) +65%
Underlying operating margin %
France (7.0%) (19.3%) +1,230bps
Netherlands 1.4% (1.6%) +300bps
Belgium (2.4%) (4.0%) +160bps
Total (3.6%) (10.9%) +730bps
Controlled distribution %
France 60% 63% -3ppts
Netherlands 53% 52% +1ppt
Belgium 46% 42% +4ppts
Total 53% 53% flat
Specialist Holidays Sector
The Sector reported underlying operating losses for the quarter of �1.6m (Q1 07:
profit of �2.4m). This was as a result of Canada's performance being adversely
impacted by the competitive market environment where significant overcapacity
led to reduced prices and an erosion of margins due to high levels of
discounting. We have already implemented several initiatives to further develop
our competitive positioning in this market. These include increasing our
differentiated product offering (such as the new Holiday Village opening in
Mexico in 2008), improving the comfort and customer offering of our air product
and driving growth in direct sales, which will benefit margins.
The European businesses operating within the Destination segment performed well,
driven by strong demand for Eastern Mediterranean and North African
destinations. Margins benefited from the scale back of previously poor
performing winter programmes in Nazar Germany and Nazar Switzerland.
Within the Premium segment, our long haul portfolio experienced encouraging
growth during the quarter. The Premium short haul businesses did not perform as
well as in 2007. This performance was in line with expectations given the
ongoing repositioning of the brands in this segment. In the Lifestages segment
the Q1 08 result is impacted by the inclusion of losses on acquisitions made
during 2007 in the Student Travel segment. The key trading periods for these
Lifestages businesses are in Q2 and Q3.
Specialist Holidays Q1 08 Q1 07 Change %
Passengers ('000)
Destination 330 312 +6%
Premium 27 25 +5%
Lifestages 44 37 +18%
Total 401 374 +7%
y-o-y variation
Revenue per passenger Total
Destination +6%
Premium +12%
Lifestages -20%
Total +3%
Revenue growth Total
Destination +12%
Premium +17%
Lifestages -5%
Total +10%
Underlying operating profit/(loss) (�m)
Destination 0.1 2.2 -95%
Premium 0.3 0.7 -57%
Lifestages (2.0) (0.5) -300%
Total (1.6) 2.4 -167%
Underlying operating margin %
Total (0.8%) 1.3% -210bps
Activity Holidays Sector
The Sector delivered a significant improvement in performance in Q1 08 achieving
revenue growth of 32% and reducing the underlying operating loss to �1.0m (Q1
07: loss of �6.5m). The Sector benefited from a combination of strong organic
and acquisition growth across the portfolio.
The Marine division performed well, with particularly strong demand for the
Moorings products and improved yacht occupancy levels. The Adventure division
achieved underlying profits of �1.8m, up 260% (Q1 07: �0.5m). The acquisition of
Quark Expeditions in April 2007 and the integration of this business with our
existing polar cruising business has been very successful, with margins
benefiting from our market leading position in this segment.
In North America, the Experiential division reported underlying profits of
�2.6m, an improvement of �3.1m on the prior year loss of �0.5m. This result was
achieved through a combination of strong organic growth and the acquisition of
Starquest Expeditions in September 2007. TCS Expeditions, our other business in
the luxury private jet segment, also delivered strong organic growth in the
quarter. Revenue increased by 94% year on year and TCS' Winter programme was
fully sold before the start of the season.
Activity Holidays Q1 08 Q1 07 Change %
y-o-y variation
Total revenue growth Total
Marine +2%
Adventure +42%
Experiential +51%
Total +32%
Underlying operating (loss)/profit (�m)
Marine (5.4) (6.5) +17%
Adventure 1.8 0.5 +260%
Experiential 2.6 (0.5) +620%
Total (1.0) (6.5) +85%
Underlying operating margin %
Total (0.9%) (7.8%) +690bps
Online Destination Services
ODS reported underlying profits of �4.2m in Q1 08, significantly ahead of the
prior year (Q1 07: �0.9m). Bednights were up 42% and total transactional value
("TTV'') per bednight was up 37%. This performance was achieved through a
combination of organic and acquisition led growth.
Organic growth was strong in both our online and offline businesses. All of our
online routes to market continued to deliver double digit volume growth in core
source markets such as the UK and through expansion into new source markets such
as Germany and Brazil. The integration of the Pacific World group of companies,
based in the Asia Pacific market, has led to strong online expansion within
Hotelbeds in Thailand and Malaysia and high growth in its core offline business
in Singapore and China.
LateRooms.com, which we acquired in December 2006, made a significant
contribution to Q1 08 profit growth for the sector. Bednights were up 26% year
on year and TTV per bednight was up 3%.
Online Destination Services Q1 08 Q1 07 Change %
Bednights ('000)
Hotelbeds 2,128 1,665 +28%
Bedsonline 1,093 847 +29%
Hotelopia 651 573 +14%
LateRooms 501 - -
Total 4,373 3,085 +42%
y-o-y variation
TTV per bednight Total
Hotelbeds +14%
Bedsonline +13%
Hotelopia +13%
Total +37%
Underlying operating profit (�m)
Total 4.2 0.9 +367%
Underlying operating margin %
Total 4.7% 1.1% +360bps
Acquisitions
In the quarter ended 31 December 2007, the Group acquired four businesses within
high growth niche segments for a maximum total consideration of �20.8m (�17.5m
cash paid during the quarter). In the Activity Holidays Sector we acquired an
escorted adventure operator, Australian Pinnacle Tours, and we further bolstered
our UK school focused businesses through the acquisition of CHS Tour Services,
the leading operator of UK school ski holidays to Austria. In the Specialist
Holidays Sector we acquired National Events, which provides travel services for
high school performing art groups in the US. Within Online Destination Services
we acquired Cruiselink II Ltd, a shore side cruise handling business based on
the east coast of the USA. See note 4 of the financial information for further
details on these acquisitions.
In January 2008 we acquired two further businesses. In the Online Destination
Services sector we acquired Destination Florida to further expand our presence
in the North American cruise handling market. This business is based in Miami
and provides shore side services to the large cruise companies in the ports of
Florida, Canada and New England. Within Activity Holidays we acquired Planet
Perth, an escorted adventure operator in Australia.
The acquisition pipeline remains strong as we continue to target travel
companies, notably within the Asia Pacific region, online, activity and North
American student travel segments that exhibit excellent growth characteristics
and the ability to generate premium margins, high earnings growth and strong
cash flow.
Cash and Liquidity
The net debt position (cash and cash equivalents less loans, overdrafts and
finance leases) at the quarter-end was �893.1m (30 September 2007: �532.3m).
This consisted of �1,270.5m of cash and �1,558.2m of current interest-bearing
loans and liabilities and �605.4m of non-current interest-bearing loans and
liabilities.
Balance Sheet at 30 September 2007
The balance sheet as at 30 September 2007 has been updated from the balance
sheet of the same date presented in the TUI Travel PLC Pro forma financial
information published on 13 December 2007.
The amendments primarily relate to applying acquisition accounting for the
acquisition of First Choice Holidays PLC, thereby recognising goodwill, business
combination intangible assets, other fair value adjustments and the related
deferred tax impacts. There have also been some minor reclassifications of
assets and liabilities within the balance sheet to ensure consistent
presentation between the two merged groups. Further details can be found in note
5 to the financial information.
The acquisition accounting applied in this quarterly financial information is
provisional and will not be final until 12 months after the date of the
acquisition of First Choice Holidays PLC.
TUI AG Reporting
TUI AG, our majority shareholder, is today issuing its year end report and
accounts to the German market in line with German regulatory requirements. This
report contains financial information relating to TUI Travel PLC. However, this
information is not directly comparable due to different presentation and
treatment of certain items.
Group income statement (unaudited)
for the 3 month period ended 31 December
Notes
Pro forma
2007 2006
�m �m
Revenue 2 2,527.5 2,405.2
Cost of sales (2,384.9) (2,381.2)
Gross profit 142.6 24.0
(259.7) (215.9)
Administrative expenses
Share of profits of joint ventures and associates (0.5) 1.1
Operating loss 2 (117.6) (190.8)
Analysed as:
Underlying operating loss 2 (40.8) (113.5)
Separately disclosed items 3 (46.7) (74.0)
Amortisation of IFRS 3 intangibles (30.4) (3.5)
Taxation on losses/profits of joint ventures and associates 0.3 0.2
(117.6) (190.8)
Financial income 65.1 38.1
Financial expenses (84.1) (45.5)
Net financial expenses (19.0) (7.4)
Loss before tax (136.6) (198.2)
Taxation 38.6 33.9
Loss for the period (98.0) (164.3)
Attributable to:
Ordinary shareholders (100.4) (159.7)
Minority interests 2.4 (4.6)
Loss for the period (98.0) (164.3)
Group balance sheet (unaudited)
at 31 December 2007 and 30 September 2007
31 December 30 September
2007 2007
Notes
�m �m
Non-current assets
Intangible assets 4,192.8 4,138.2
Property, plant and equipment 1,391.5 1,373.9
Investments in joint ventures and associates 115.1 102.7
Other investments available for sale 63.6 53.0
Trade and other receivables 223.9 252.6
Derivative financial instruments 29.9 4.4
Deferred tax assets 154.2 197.3
6,171.0 6,122.1
Current assets
Inventories 41.3 39.7
Other investments available for sale 9.1 12.4
Trade and other receivables 1,531.4 1,499.0
Derivative financial instruments 153.3 39.5
Cash and cash equivalents 1,270.5 1,958.7
Assets classified as held for sale 5.4 88.0
3,011.0 3,637.3
Total assets 9,182.0 9,759.4
Current liabilities
Interest-bearing loans and borrowings (1,558.2) (1,819.0)
Employee benefits (1.2) (2.9)
Derivative financial instruments (86.3) (142.7)
Trade and other payables (3,187.4) (3,316.6)
Provisions (171.2) (138.6)
Income tax payable (39.6) (38.1)
Liabilities classified as held for sale - (18.8)
(5,043.9) (5,476.7)
Non-current liabilities
Interest-bearing loans and borrowings (605.4) (672.0)
Employee benefits (324.5) (310.8)
Trade and other payables (91.5) (110.3)
Derivative financial instruments (64.6) (19.9)
Provisions (206.1) (151.8)
Deferred tax liabilities (201.0) (330.8)
(1,493.1) (1,595.6)
Total liabilities (6,537.0) (7,072.3)
Net assets 5 2,645.0 2,687.1
Total equity 2,645.0 2,687.1
Notes to the financial information (unaudited)
1. Basis of preparation
The financial information in this report relating to the 3 month periods ended
31 December 2007 and 31 December 2006, and the balance sheets at 31 December
2007 and 30 September 2007, is unaudited. This unaudited financial information
does not constitute the statutory accounts of TUI Travel PLC within the meaning
of section 240 of the Companies Act 1985. The first set of consolidated
statutory accounts of TUI Travel PLC will be prepared in compliance with
International Financial Reporting Standards as adopted by the European Union ('
Adopted IFRSs') for the year ending 30 September 2008. Nor does this unaudited
financial information comprise the interim management statement which would be
required under the Disclosure and Transparency Rules of the Financial Services
Authority.
On 3 September 2007, the TUI Travel PLC group was formed through a business
combination of the tourism businesses of TUI AG ('TUI Tourism') with First
Choice Holidays PLC ('First Choice'). The business combination was effected on
3 September 2007 through the acquisition of First Choice and TUI Tourism by TUI
Travel PLC ('the Company').
The unaudited financial information relating to the income statement for the 3
month period ended 31 December 2007, and the balance sheets as at 31 December
2007 and 30 September 2007, has been prepared on the basis of the Company's
Adopted IFRSs accounting policies, which are disclosed in Part VII of the TUI
Travel PLC Prospectus dated 29 June 2007.
The unaudited pro forma financial information for the 3 month period ended 31
December 2006 has been prepared by the Directors of the Company on a pro forma
basis to illustrate the effect of the business combination as if it had taken
place prior to 1 October 2006 (the first day of the comparative accounting
period presented). This is to provide information which the Directors consider
is relevant to an understanding of the combined group, but may not be entirely
comparable to the result for the 3 month period ended 31 December 2007 because
it does not fully reflect the acquisition accounting following the acquisition
of First Choice PLC. The unaudited pro forma financial information has been
prepared for illustrative purposes only, through the aggregation of financial
information of TUI Tourism, First Choice and the holding company, TUI Travel
PLC. It has not been designed to and does not give a presentation of the profit
and loss and financial position of the Company that would have been reported in
accordance with Adopted IFRSs had the business combination actually occurred
before 1 October 2006. In particular, in order to do so, this would have
required the assets of the First Choice group to be fair valued as at that date.
2 Segmental information (unaudited)
The Sector analysis is based on the Group's management and reporting structure.
3 months ended 31 December 2007
Mainstream Holidays
�m Central Northern Western Mainstream Specialist Activity Online Corporate** Joint Total
Europe Europe Europe Holidays Holidays Holidays Destination ventures Group
Services and
associates
External 887.5 866.4 372.2 2,126.1 202.5 109.4 89.5 - - 2,527.5
revenue
Operating (24.4) (4.9) (2.9) 1.5 11.9 (0.4) (117.6)
(loss)/profit (85.1) (13.3) (122.8)
Separately 0.7 39.8 (0.1) 40.4 - 1.0 0.1 5.2 - 46.7
disclosed
items
Amortisation* - 23.6 - 23.6 3.3 0.9 2.6 - - 30.4
Tax on losses - - - - - - - - (0.3) (0.3)
of joint
ventures
Underlying (23.7) (21.7) (13.4) (58.8) (1.6) (1.0) 4.2 17.1 (0.7) (40.8)
operating
(loss)/profit
* of IFRS 3 intangibles
** Corporate includes the financial derivative gain of �22.5m
3 months ended 31 December 2006 (Pro forma)
Mainstream Holidays
�m Central Northern Western Mainstream Specialist Activity Online Corporate Joint Total
Europe Europe Europe Holidays Holidays Holidays Destination ventures Group
Services and
associates
External 841.4 858.5 355.0 2,054.9 183.3 82.9 84.1 - - 2,405.2
revenue
Operating (35.4) (89.5) (54.5) (179.4) 1.3 (9.1) (1.0) (3.8) 1.2 (190.8)
(loss)/profit
Separately 14.3 41.8 15.8 71.9 0.6 1.5 - - - 74.0
disclosed
items
Amortisation* - - - - 0.5 1.1 1.9 - - 3.5
Tax on - - - - - - - - (0.2) (0.2)
profits of
joint
ventures
Underlying (21.1) (47.7) (38.7) (107.5) 2.4 (6.5) 0.9 (3.8) 1.0 (113.5)
operating
(loss)/profit
*of IFRS 3 intangibles
3. Separately disclosed items (unaudited)
Pro forma
2007 2006
�m �m
Restructuring expenses 6.0 71.0
Merger related integration costs 37.1 -
Other items 3.6 3.0
46.7 74.0
Restructuring expenses
These costs relate primarily to restructuring programmes that were already
underway pre merger (2006: TUI AG restructuring programme).
4. Acquisitions (unaudited)
Acquisitions in the three months ended 31 December 2007 were:
Sector and entity Country of operation Date of acquisition Consideration
recognised
�m
Specialist Holidays
National Events USA November 2007 0.8
Activity Holidays
CHS Tour Services UK December 2007 12.1
Australian Pinnacle Tours Australia December 2007 3.5
ODS
Cruiselink II Ltd USA November 2007 4.4
Total investment cost 20.8
5. Balance sheet at 30 September 2007 (unaudited)
The balance sheet at 30 September 2007 has been updated from the balance sheet
of the same date presented in the TUI Travel PLC Pro forma financial information
published on 13 December 2007, to reflect the application of acquisition
accounting in accordance with IFRS 3 Business Combinations.
The table below shows the resulting movements in net assets:
30 September
2007
�m
Pro forma net assets reported 1,926.4
Goodwill arising on acquisition of First Choice 1,590.9
First Choice fair value and acquisition adjustments, and working capital/debt settlement relating to
TUI Tourism (775.3)
Other adjustments - from pro forma to statutory basis (54.9)
Consolidated net assets 2,687.1
This information is provided by RNS
The company news service from the London Stock Exchange
END
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