TIDMTT.
RNS Number : 2394X
TUI Travel PLC
02 December 2010
TUI Travel PLC
Preliminary results for the year ended 30 September 2010
Key Financials
+----------------------+---------+----------+---------+---------+----------+
| | Underlying results1 | Statutory results |
+----------------------+------------------------------+--------------------+
| GBPm | 2010 | 2009 | Change% | 2010 | 2009 |
| | pro | restated | | | restated |
| | forma2 | | | | |
+----------------------+---------+----------+---------+---------+----------+
| Revenue | 13,525 | 13,851 | -2% | 13,400 | 13,851 |
+----------------------+---------+----------+---------+---------+----------+
| Operating profit / | 447 | 401 | +11% | 81 | (5) |
| (loss) | | | | | |
+----------------------+---------+----------+---------+---------+----------+
| Profit / (loss) | 337 | 324 | +4% | (36) | (94) |
| before tax | | | | | |
+----------------------+---------+----------+---------+---------+----------+
| Basic eps (pence) | 22.0 | 20.0 | +10% | (7.8) | (4.8) |
+----------------------+---------+----------+---------+---------+----------+
| Dividend per share | 11.0 | 10.7 | +3% | 11.0 | 10.7 |
| (pence) | | | | | |
+----------------------+---------+----------+---------+---------+----------+
1Underlying operating profit and underlying profit before tax are from
continuing operations and exclude separately disclosed items, amortisation of
acquisition related expenses, goodwill impairment and joint ventures and
associates. Underlying profit before tax also excludes separately disclosed
financial expenses. Underlying earnings per share excludes the same items, net
of related taxation.
2Pro forma, unaudited results for the period, reported before the estimated
financial impact of the closures of European airspace as a result of volcanic
ash. See note 1 for basis of preparation.
+--+---------------------------------------------------------------------+
| · | Pro forma underlying operating profit of GBP447m (2009 restated: |
| | GBP401m). |
| | |
+--+---------------------------------------------------------------------+
| · | Good turnaround progress in the year, particularly in Canada, |
| | Germany scheduled flying and Nouvelles Frontières. |
| | |
+--+---------------------------------------------------------------------+
| · | Social plan signed with employee representatives allows the |
| | implementation of the Corsair turnaround plan. |
| | |
+--+---------------------------------------------------------------------+
| · | Differentiated products performed well in Summer 2010. |
| | |
+--+---------------------------------------------------------------------+
| · | Sustained improvement in demand since July and trading for Winter |
| | 2010/11 and Summer 2011 remains positive. |
| | |
+--+---------------------------------------------------------------------+
| · | Working capital improvements during the year resulted in a stronger |
| | than expected cash flow performance, with net debt lower at GBP249m |
| | (2009: GBP338m). |
| | |
+--+---------------------------------------------------------------------+
| · | Final dividend of 7.8p per share, resulting in a full year dividend |
| | of 11.0p per share (2009: 10.7p). |
+--+---------------------------------------------------------------------+
Peter Long, Chief Executive of TUI Travel PLC, commented:
"In a difficult trading environment we have continued to achieve incremental
synergy benefits and made good progress in delivering the turnaround opportunity
during the year. The 2010 result was, however, affected by a weaker trading
performance in the UK, primarily due to increased winter losses resulting from
capacity-led volume reductions in anticipation of lower demand. The early summer
period was disrupted by a number of factors that increased customer uncertainty,
including the volcanic ash related airspace closures. We then experienced an
improvement in demand later in the Summer period and trading closed out well in
all source markets, including the UK.
In the three years since the merger we have achieved a number of key successes,
including the successful delivery of the synergy programme, the exit from
scheduled flying operations in the UK and Germany, and the strong position we
have established in the difficult Canadian source market.
Our journey is not complete, however, and we have a number of remaining
initiatives to drive further profit improvements. Of these, the turnaround of
Corsair, our French airline, is a significant opportunity and the agreement with
employee representatives we are announcing today is an important milestone
towards making the airline viable.
We have seen sustained improvement in demand since July and recent trading for
future seasons remains positive in most source markets. Whilst current booking
activity is good, driven by demand for our differentiated products, we remain
cautious about 2011 given the continued economic uncertainty and the relatively
early stage of the booking cycle".
A presentation for analysts and investors will be held today at 9.45am (GMT) at
RBS, 250 Bishopsgate, London EC2M 4AA. The presentation will also be webcast.
For details of the webcast please visit www.tuitravelplc.com.
Enquiries:
+-----------------------------------------------+--------------------------+
| Analysts and Investors | |
+-----------------------------------------------+--------------------------+
| Paul Rushton, Director of Investor Relations | Tel: 01293 645 795 |
+-----------------------------------------------+--------------------------+
| | |
+-----------------------------------------------+--------------------------+
| Press: | |
+-----------------------------------------------+--------------------------+
| Lesley Allan, Corporate Communications | Tel: 01293 645 774 |
| Director | |
+-----------------------------------------------+--------------------------+
| Michelle Jeffery, Corporate Communications | Tel: 01293 645 776 |
| Manager | |
+-----------------------------------------------+--------------------------+
| Michael Sandler / Kate Hough (Hudson Sandler) | Tel: 020 7796 4133 |
+-----------------------------------------------+--------------------------+
CURRENT TRADING AND OUTLOOK
Current Trading
Winter 2010/11
We have continued to see positive recent trading trends across most source
markets. In line with our product strategy, we have expanded our portfolio of
differentiated product and unique holiday experiences and this is driving
booking activity.
+-------------+------------+-----------+------------+
| YoY | Cumulative | Bookings | Cumulative |
| customer | bookings | since | bookings |
| booking | at 17 Oct | previous | at 21 Nov |
| variation | | trading | |
| % | | statement | |
+-------------+------------+-----------+------------+
| | | | |
+-------------+------------+-----------+------------+
| UK | +6 | +2 | +5 |
+-------------+------------+-----------+------------+
| Nordic | +32 | +27 | +31 |
| Region | | | |
+-------------+------------+-----------+------------+
| Germany | +10 | +9 | +9 |
+-------------+------------+-----------+------------+
| France | +13 | -6 | +8 |
+-------------+------------+-----------+------------+
| Belgium | +15 | +7 | +12 |
+-------------+------------+-----------+------------+
| Netherlands | +12 | +18 | +14 |
+-------------+------------+-----------+------------+
+-------------+--------+--------+------------+--------+-----------+--------+
| Current | Winter 2010/11 | | | |
| Trading1 | | | | |
+-------------+------------------------------+--------+-----------+--------+
| | | | |
+-------------+------------------------------+--------+--------------------+
| y-o-y | Total | Total | Total | | Risk Only |
| variation% | ASP2 | Sales2 | Customers2 | | |
+ + + + + +--------------------+
| | | | | | Capacity3 | Left |
| | | | | | | to |
| | | | | | | sell3 |
+-------------+--------+--------+------------+--------+-----------+--------+
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| MAINSTREAM | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| UK | +11 | +16 | +5 | | +5 | +3 |
+-------------+--------+--------+------------+--------+-----------+--------+
| Nordic | Flat | +31 | +31 | | +18 | -18 |
+-------------+--------+--------+------------+--------+-----------+--------+
| Northern | +7 | +21 | +14 | | | |
| Region | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Germany | +2 | +11 | +9 | | +6 | Flat |
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Austria | +7 | +6 | Flat | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Switzerland | -2 | -4 | -1 | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Poland | -12 | -2 | +11 | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Central | +1 | +10 | +8 | | | |
| Europe | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| France | +3 | +11 | +8 | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Belgium | -2 | +11 | +12 | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Netherlands | +6 | +20 | +14 | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Western | +2 | +13 | +11 | | | |
| Europe | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| SPECIALIST | NA | +4 | NA | | | |
| & ACTIVITY | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| A&D4 | +7 | +33 | +25 | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
1These statistics are up to 21 November 2010
2These statistics relate to all
customers whether risk or non-risk
3These statistics include all risk capacity
programmes
4These statistics refer to B2B Online businesses only and sales refer to total
transaction value (TTV)
In the UK, as previously reported, capacity for the season is 5% higher due to a
change in the fleet mix in Canada from B757s to smaller B737s which results in a
higher number of B757s in the UK. Trading remains positive, with booking
increases in line with the capacity change and higher average selling prices.
Load factor is currently 47%. In November and December, two of Thomson Cruises'
five ships are in extended dry dock for routine maintenance and the resulting
reduction in contribution will partially offset improved trading in the tour
operator in that period.
In the Nordic region, cumulative bookings are now up 31% versus the prior year
and the load factor is 81%, up eight percentage points. Demand for our market
leading portfolio of differentiated products, coupled with the successful use of
an additional long-haul aircraft from our airline in France, is driving these
strong booking volumes. Our product offering has been enhanced for Winter
2010/11 and Summer 2011 through co-operation with the UK business to bring the
Splash, Holiday Village and Sensatori concepts to the Nordic region.
In Germany, booking volumes remain ahead of capacity with volumes up 9% versus
the prior year. Due to the late timing of Easter and in response to demand we
are commencing certain summer destinations earlier than usual and as these
departure dates are reported as part of the winter season, reported 'winter'
capacity is up 6%. Adjusting for this effect, underlying winter capacity is
flat. Our load factor in Germany is currently 57%.
In the Western Europe source markets, the strong booking activity experienced
towards the latter part of the summer season has continued into winter. In
France, demand for our differentiated Nouvelles Frontières Hotel Clubs and Club
Marmara products is a key driver of volume growth.
In the Specialist & Activity Sector, all divisions have experienced higher sales
to date versus the prior year. Our private jet tours businesses, TCS and
Starquest, have seen a strong rebound in booking activity as the number of tours
has increased following the reduction in 2009/10. There has also been good
growth in our market leading ski brand, Crystal.
In A&D, the strong booking volumes for online accommodation experienced in 2010
has continued with booking volumes, transaction values and margins all higher
than the prior year.
Summer 2011
Trading for Summer 2011 remains good in those source markets currently on sale.
In the UK, total booking volumes are up 7% versus the prior year, driven by
demand for our differentiated product and increased duration flexibility.
Bookings for differentiated products are currently up 26% and we expect these
products to represent half of all holidays sold over the full season. We have
increased the flexibility in holiday durations significantly and have
experienced strong demand for nine to twelve night durations.
Average selling prices in the UK are currently up 4% versus the prior year and
given that Summer 2011 is expected to have minimal cost inflation (based on
achieved hedged rates and current forward rates), margins are currently ahead of
the prior year.
In the Nordic region, booking volumes are up 13%, again driven by our portfolio
of differentiated products.
+------------+--------+--------+------------+--------+-----------+--------+
| Current | Summer 2011 | | | |
| Trading | | | | |
| 1 | | | | |
+------------+------------------------------+--------+-----------+--------+
| | | | |
+------------+------------------------------+--------+--------------------+
| y-o-y | Total | Total | Total | | Risk Only |
| variation% | ASP2 | Sales2 | Customers2 | | |
+ + + + + +--------------------+
| | | | | | Capacity3 | Left |
| | | | | | | to |
| | | | | | | sell3 |
+------------+--------+--------+------------+--------+-----------+--------+
| | | | | | | |
+------------+--------+--------+------------+--------+-----------+--------+
| UK | +4 | +11 | +7 | | +1 | Flat |
+------------+--------+--------+------------+--------+-----------+--------+
| Nordic | +1 | +14 | +13 | | +5 | +4 |
+------------+--------+--------+------------+--------+-----------+--------+
| Northern | +4 | +11 | +7 | | | |
| Region | | | | | | |
+------------+--------+--------+------------+--------+-----------+--------+
| | | | | | | |
+------------+--------+--------+------------+--------+-----------+--------+
1These statistics are up to 21 November 2010
2These statistics relate to all
customers whether risk or non-risk
3These statistics include all risk capacity programmes
Fuel/Foreign Exchange
We have hedged a significant proportion of our expected fuel and foreign
exchange exposure for 2011:
+----------+--------+---------+--------+
| | | Winter |Summer |
| | |2010/11 | 2011 |
+----------+--------+---------+--------+
| Euro | | 87% | 83% |
+----------+--------+---------+--------+
| USD | | 92% | 85% |
+----------+--------+---------+--------+
| Jet | | 87% | 86% |
| Fuel | | | |
+----------+--------+---------+--------+
| As at | | | |
| 25 | | | |
| November | | | |
| 2010 | | | |
+----------+--------+---------+--------+
Corsair
After constructive and positive discussions, negotiations with employees and
union representatives have been finalised, enabling Corsair to implement its
turnaround plan. Employees have demonstrated strong support for the airline and
a great willingness to deliver a successful turnaround. Social plans have been
signed with the required employee representatives.
Under the turnaround project, we plan to change the fleet to replace three of
our B747 aircraft with two A330 aircraft which will optimise capacity and route
planning. Customers will enjoy a significantly improved onboard experience as we
also reconfigure and update the cabins in the existing fleet.
We have agreed a number of significant productivity improvements with employee
representatives, including a reduction in the number of employees by c.25%, a
freeze on salaries for a period of three years, a reduced cabin crew composition
and rationalisation of allowances.
We expect this restructuring programme to enable the airline to achieve at least
a breakeven result. Material benefits from the programme are expected to start
to come through in 2012 with the full benefits delivered in 2013.
Integration and cost efficiencies
The merger integration is now largely complete and we have delivered GBP195m of
synergy benefit to date, with the remaining GBP5m expected to be delivered in
2011. As part of the integration process, we have identified and removed areas
of duplicated cost. We are, however, continuing to review areas of our cost base
to maintain competitiveness, especially in commodity segments. These include
cost reductions and productivity improvements in Group airlines, replacement of
core reservation systems in the UK and Germany, and an overhead reduction
programme throughout the business.
Outlook
Since July, we have experienced a sustained improvement in trading which
resulted in Summer 2010 closing out well in all source markets and positive
trends for the Winter 2010/11 and Summer 2011 seasons. Trading for our unique,
differentiated product continues to outperform commodity segments and we are
introducing new concepts in 2011 leaving us well placed to capitalise on this
trend. Whilst encouraged by current trading, we remain cautious about 2011 given
the continued economic uncertainty and the relatively early stage of the booking
cycle.
BUSINESS AND FINANCIAL REVIEW
Restatement of prior year results
As previously announced, a number of irrecoverable receivable balances totalling
GBP117m have arisen as a result of failures to reconcile balances adequately in
legacy systems in the retail and tour operator businesses in TUI UK. These
balances are required to be written off and, as a result, we have restated the
results for the year ended 30 September 2009. The adjustments to the results are
non-cash in nature and have no impact on the company's cash and net debt
position.
The completion of a detailed balance sheet audit and controls review by internal
and external auditors leaves us confident there are no further accounting
issues. In the remainder of this Business and Financial Review, we use the
restated results as the 2009 comparator.
Group Performance
Year ended 30 September
+----------------------+---------+----------+---------+---------+----------+
| | Underlying results1 | Statutory results |
+----------------------+------------------------------+--------------------+
| GBPm | 2010 | 2009 | Change% | 2010 | 2009 |
| | pro | restated | | | restated |
| | forma2 | | | | |
+----------------------+---------+----------+---------+---------+----------+
| Revenue | 13,525 | 13,851 | -2% | 13,400 | 13,851 |
+----------------------+---------+----------+---------+---------+----------+
| Operating profit / | 447 | 401 | +11% | 81 | (5) |
| (loss) | | | | | |
+----------------------+---------+----------+---------+---------+----------+
| Profit / (loss) | 337 | 324 | +4% | (36) | (94) |
| before tax | | | | | |
+----------------------+---------+----------+---------+---------+----------+
| Basic eps (pence) | 22.0 | 20.0 | +10% | (7.8) | (4.8) |
+----------------------+---------+----------+---------+---------+----------+
| Dividend per share | 11.0 | 10.7 | +3% | 11.0 | 10.7 |
| (pence) | | | | | |
+----------------------+---------+----------+---------+---------+----------+
1Underlying operating profit and underlying profit before tax are from
continuing operations and exclude separately disclosed items, amortisation of
acquisition related expenses, goodwill impairment and taxation of results of the
Group's joint ventures and associates. Underlying profit before tax also
excludes separately disclosed financial expenses. Underlying earnings per share
excludes the same items, net of related taxation.
2Pro forma, unaudited results for the period, reported before the estimated
financial impact of the closures of European airspace as a result of volcanic
ash. See note 1 for basis of preparation.
Group revenue was 2% lower than the prior year at GBP13,525m (2009 restated:
GBP13,851m) driven by the impact of the strategic transactions in Canada and
Germany scheduled flying which reduced revenue by 3%. Revenue from acquisitions
increased revenue by 1% over the prior year whilst organic revenue was flat and
the impact of foreign currency translation was neutral.
The Group achieved a GBP46m improvement in underlying operating profit to
GBP447m in 2010 (2009 restated: GBP401m). This improvement has primarily been
achieved through the delivery of integration synergies, the recovery of
scheduled flying losses in Germany and the strategic venture in Canada,
partially offset by weaker trading. The trading performance was driven by
increased winter losses, especially in the UK source market following
capacity-led volume reductions. Improved summer trading, including strong
performances in Belgium and the Nordic region was not enough to offset the
increased winter losses.
The main drivers of the year on year improvement in underlying operating profit
are:
+-----------------+--------+
| GBPm | |
+-----------------+--------+
| 2009 | 401 |
| underlying | |
| operating | |
| profit | |
+-----------------+--------+
| Incremental | +75 |
| synergies | |
+-----------------+--------+
| Turnaround | +53 |
| of | |
| underperforming | |
| businesses | |
+-----------------+--------+
| Trading | -76 |
+-----------------+--------+
| Acquisitions | +4 |
| (including | |
| Emerging | |
| Markets JV) | |
+-----------------+--------+
| Foreign | -10 |
| exchange | |
| translation | |
+-----------------+--------+
| 2010 | 447 |
| underlying | |
| operating | |
| profit | |
+-----------------+--------+
| | |
+-----------------+--------+
A reconciliation of underlying operating profit to statutory operating profit /
(loss) is as follows:
+-----------------------------------------------+------------+------------+
| Year ended 30 September | 2010 | 2009 |
| | GBPm | GBPm |
+-----------------------------------------------+------------+------------+
| Underlying operating profit | 447 | 401 |
+-----------------------------------------------+------------+------------+
| Separately disclosed items - operating (Note | (181) | (340) |
| 3) | | |
+-----------------------------------------------+------------+------------+
| Volcanic ash impact | (104) | - |
+-----------------------------------------------+------------+------------+
| Impairment of goodwill | (12) | (7) |
+-----------------------------------------------+------------+------------+
| Acquisition related expenses | (63) | (56) |
+-----------------------------------------------+------------+------------+
| Taxation on profits of joint ventures and | (6) | (3) |
| associates | | |
+-----------------------------------------------+------------+------------+
| Statutory operating profit / (loss) | 81 | (5) |
+-----------------------------------------------+------------+------------+
| | | |
+-----------------------------------------------+------------+------------+
Segmental Performance
As previously announced and consistent with the adoption of IFRS 8, which
requires that an entity's operating segments are reported on the same basis as
internally reported information, the results of joint ventures and associates
are now reported within each relevant sector's result.
Northern Region
The Northern region achieved a 10% improvement in underlying operating profit to
GBP182m in 2010 (2009: GBP166m). The improvement was largely driven by
incremental merger synergies of GBP62m and an improved result in Canada
following the strategic venture with Sunwing, partially offset by trading in the
UK.
+--------------+---------+--------------------+--------+--------------------+
| Underlying | UK & | Nordics | Canada | Northern |
| operating | Ireland | | | Region |
| profit | | | | |
| bridge | | | | |
| GBPm | | | | |
+--------------+---------+--------------------+--------+--------------------+
| 2009 | 142 | 46 | (24) | 164 |
| (excl. | | | | |
| JV's & | | | | |
| Associates) | | | | |
+--------------+---------+--------------------+--------+--------------------+
| 2009 | - | 2 | - | 2 |
| JV's & | | | | |
| Associates | | | | |
+--------------+---------+--------------------+--------+--------------------+
| 2009 | 142 | 48 | (24) | 166 |
| (incl. | | | | |
| JV's & | | | | |
| Associates) | | | | |
+--------------+---------+--------------------+--------+--------------------+
| Synergies | +62 | - | - | +62 |
+--------------+---------+--------------------+--------+--------------------+
| Turnaround | +2 | - | +19 | +21 |
+--------------+---------+--------------------+--------+--------------------+
| Trading | -79 | +7 | | -72 |
| | | | - | |
+--------------+---------+--------------------+--------+--------------------+
| Acquisitions | - | +2 | | +2 |
| | | | - | |
+--------------+---------+--------------------+--------+--------------------+
| FX | - | +3 | - | +3 |
| translation | | | | |
+--------------+---------+--------------------+--------+--------------------+
| 2010 | 127 | 60 | (5) | 182 |
| (incl. | | | | |
| JV's & | | | | |
| Associates) | | | | |
+--------------+---------+--------------------+--------+--------------------+
| | | | | |
+--------------+---------+--------------------+--------+--------------------+
+---------+--------+--------+--------+--------+--------+--------+
| Northern Region | 2010 | | 2009 | | Change |
| | | | | | % |
+------------------+--------+--------+--------+--------+--------+
| | | | | | |
+------------------+--------+--------+--------+--------+--------+
| Customers | | | | | |
| ('000)1 | | | | | |
+------------------+--------+--------+--------+--------+--------+
| UK and | | 5,399 | | 5,687 | | -5% |
| Ireland | | | | | | |
+---------+--------+--------+--------+--------+--------+--------+
| Nordic | | 1,224 | | 1,177 | | +4% |
+---------+--------+--------+--------+--------+--------+--------+
| Total | | 6,623 | | 6,864 | | -4% |
+---------+--------+--------+--------+--------+--------+--------+
| | | | | | |
+------------------+--------+--------+--------+--------+--------+
| Revenue (GBP'm) | | | | | |
+------------------+--------+--------+--------+--------+--------+
| UK and Ireland | 3,392 | | 3,245 | | +5% |
+------------------+--------+--------+--------+--------+--------+
| Nordic | 904 | | 797 | | +13% |
+------------------+--------+--------+--------+--------+--------+
| Canada1 | 52 | | 168 | | -69% |
+------------------+--------+--------+--------+--------+--------+
| Total | 4,348 | | 4,210 | | +3% |
+------------------+--------+--------+--------+--------+--------+
| | | | | | |
+------------------+--------+--------+--------+--------+--------+
| Underlying | | | | | |
| operating | | | | | |
| profit/(loss) | | | | | |
| (GBPm) | | | | | |
+------------------+--------+--------+--------+--------+--------+
| UK and | | 127 | | 142 | | -11% |
| Ireland | | | | | | |
+---------+--------+--------+--------+--------+--------+--------+
| Nordic | | 60 | | 48 | | +25% |
+---------+--------+--------+--------+--------+--------+--------+
| Canada | | (5) | | (24) | | +79% |
+---------+--------+--------+--------+--------+--------+--------+
| Total | | 182 | | 166 | | +10% |
+---------+--------+--------+--------+--------+--------+--------+
| | | | | | |
+------------------+--------+--------+--------+--------+--------+
| Underlying | | | | | |
| operating | | | | | |
| margin % | | | | | |
+------------------+--------+--------+--------+--------+--------+
| UK and Ireland | 3.7% | | 4.4% | | -70bps |
+------------------+--------+--------+--------+--------+--------+
| Nordic | 6.6% | | 6.0% | | +60bps |
+------------------+--------+--------+--------+--------+--------+
| Canada | n/a | | n/a | | n/a |
+------------------+--------+--------+--------+--------+--------+
| Total | 4.2% | | 3.9% | | +30bps |
+------------------+--------+--------+--------+--------+--------+
| | | | | | |
+---------+--------+--------+--------+--------+--------+--------+
1From 14 January 2010, our Canadian operations have been accounted for under the
equity method and Canadian customer numbers have been excluded
UK & Ireland
The UK & Ireland businesses delivered an underlying operating profit of GBP127m
(2009 restated: GBP142m).
Summer trading was not strong enough to offset increased losses in the winter
season. Winter losses increased largely due to planned capacity reductions
which, whilst ensuring that supply and demand were in balance, removed holidays
from the programme that had previously made a positive contribution.
The summer trading performance was affected by a slowdown in bookings following
a downturn in consumer confidence in the early summer. Consumer booking trends
were affected by the recurrence of airspace closures caused by the volcanic ash,
the emergency budget and subsequent austerity measures, and the better than
average UK weather, combined with the expected quiet trading period during the
World Cup. The slowdown resulted in more stock left to sell in the lates period
than expected and although this period traded well, margins were inevitably
affected by this shift to later booking patterns.
The expansion of unique products continued in 2010, helping to mitigate margin
pressure in commodity products, with the differentiated product mix increasing
by three percentage points to 42%. This included the opening of Sensatori
Tenerife in May and the expansion of the First Choice Holiday Village portfolio
with new units in Lanzarote and Rhodes.
Controlled distribution increased by three percentage points to 81% in 2010,
driven by the online channel. This was supported by improvements in
functionality to the Thomson and the First Choice websites and the success of
personalised portals such as 'MyThomson', which allows customers to manage their
bookings online.
Our business in Ireland delivered GBP2m of turnaround progress. A
rationalisation in capacity resulted in an improved trading performance, helped
by the high profile failure of a competitor. Furthermore, cost savings were
achieved through back-office restructuring and optimisation of the distribution
network, which included the introduction of a virtual call centre and a
reduction in the number of retail shops.
Nordic Region
The Nordic region, consisting of our operations in Sweden, Norway, Denmark and
Finland,achieved an improved underlying operating profit of GBP60m (2009:
GBP48m).
The profit improvement was largely driven by a sharp improvement in customer
demand coupled with successful capacity planning. The business is highly
flexible as in-house flying accounts for only c.60% of all packages sold,
allowing capacity to be adjusted to meet market demand. After reducing capacity
in Summer 2009 and Winter 2009/10 in response to lower demand, the business was
able to add capacity when demand improved for Summer 2010.
Demand for TUI Nordics holidays outstripped that for competitors' products as a
result of multi-year investment in product and service differentiation which has
contributed to strong improvements in customer satisfaction scores and repeat
bookings. The range of unique products was further increased in 2010 with the
opening of a Blue Village Exotic Aquamarine in Hurghada, the eco-friendly Blue
Village Atlantica Caldera Creta Paradise and Blue Village Bellavista in
Bulgaria.
As a part of the Nordic business' focus on sustainability, TUIfly Nordic became
the first charter airline globally to achieve ISO14001 certification.
Furthermore, during 2010 all Mediterranean Blue Villages achieved this
certification.
The business has also invested in multimedia content to improve online product
presentation and this has further promoted the web as the main distribution
channel. Web-sales increased to 57% (2009: 52%). From Summer 2011, traditional
holiday brochures will no longer be produced, emphasising the online culture
within the business. Total controlled distribution was flat at 85% as we reduced
the number of owned stores.
Canada
Canada reported an underlying operating loss of GBP5m (2009: loss of GBP24m).
This represents a significant turnaround in our participation in Canada, and
results from the completion of the strategic venture with Sunwing in January
2010. The transaction has strengthened our position in the Canadian market,
providing the Group with a 49% stake in the second largest tourism business. On
an annualised basis, assuming the strategic venture was effective for the full
financial year, Canada would have delivered a profit of GBP2m in 2010.
We have identified opportunities to realise significant synergies in the
venture, primarily though network planning benefits and actions to remove
duplicated resources, such as migration to a single reservation system,
integration of certain back office functions and consolidation of office
premises. We estimate that our share of the synergy benefits is worth at least
GBP8m per annum, resulting in a target of GBP10m for our share of the venture's
profits.
Central Europe
The Central Europe division reported an underlying operating profit of GBP92m in
2010, an improvement of GBP21m over the prior year (2009: GBP71m). This
improvement is principally due to the elimination of scheduled flying losses
(GBP20m).
+------------------+---------+----------+---------+----------+-------------+----------+--------+----------+---------+
| Underlying | Germany | | Austria | | Switzerland | | Poland | | Central |
| operating | | | | | | | | | Europe |
| profit/(loss) | | | | | | | | | |
| bridge, GBPm | | | | | | | | | |
+------------------+---------+----------+---------+----------+-------------+----------+--------+----------+---------+
| 2009 (excl. JV's | 65 | | 8 | | - | | (7) | | 66 |
| & Ass.) | | | | | | | | | |
+------------------+---------+----------+---------+----------+-------------+----------+--------+----------+---------+
| 2009 JV's & Ass. | 5 | | - | | - | | - | | 5 |
+------------------+---------+----------+---------+----------+-------------+----------+--------+----------+---------+
| 2009 (incl. JV's | 70 | | 8 | | - | | (7) | | 71 |
| & Ass.) | | | | | | | | | |
+------------------+---------+----------+---------+----------+-------------+----------+--------+----------+---------+
| Turnaround | +20 | | - | | - | | +5 | | +25 |
+------------------+---------+----------+---------+----------+-------------+----------+--------+----------+---------+
| Trading | -6 | | +1 | | +4 | | - | | -1 |
+------------------+---------+----------+---------+----------+-------------+----------+--------+----------+---------+
| Synergies | - | | +1 | | - | | - | | +1 |
+------------------+---------+----------+---------+----------+-------------+----------+--------+----------+---------+
| FX Translation | -3 | | -1 | | - | | - | | -4 |
+------------------+---------+----------+---------+----------+-------------+----------+--------+----------+---------+
| 2010 (incl. JV's | 81 | | 9 | | 4 | | (2) | | 92 |
| & Ass.) | | | | | | | | | |
+------------------+---------+----------+---------+----------+-------------+----------+--------+----------+---------+
| | | | | | | | | | |
+------------------+---------+----------+---------+----------+-------------+----------+--------+----------+---------+
+---------------+--------+--------+---------+--------+---------+--------+
| Central | 2010 | | 2009 | | Change | |
| Europe | | | | | % | |
+---------------+--------+--------+---------+--------+---------+--------+
| | | | | | | |
+---------------+--------+--------+---------+--------+---------+--------+
| Customers | | | | | | |
| ('000) | | | | | | |
+---------------+--------+--------+---------+--------+---------+--------+
| Germany | 6,938 | | 8,775 | | -21% | |
+---------------+--------+--------+---------+--------+---------+--------+
| Austria | 558 | | 565 | | -1% | |
+---------------+--------+--------+---------+--------+---------+--------+
| Switzerland | 286 | | 286 | | flat | |
+---------------+--------+--------+---------+--------+---------+--------+
| Poland | 116 | | 104 | | +12% | |
+---------------+--------+--------+---------+--------+---------+--------+
| Total | 7,898 | | 9,730 | | -19% | |
+---------------+--------+--------+---------+--------+---------+--------+
| | | | | | | |
+---------------+--------+--------+---------+--------+---------+--------+
| Revenue | | | | | | |
| (GBPm) | | | | | | |
+---------------+--------+--------+---------+--------+---------+--------+
| Germany | 3,800 | | 4,144 | | -8% | |
+---------------+--------+--------+---------+--------+---------+--------+
| Austria | 324 | | 405 | | -20% | |
+---------------+--------+--------+---------+--------+---------+--------+
| Switzerland | 183 | | 185 | | -1% | |
+---------------+--------+--------+---------+--------+---------+--------+
| Poland | 68 | | 62 | | +10% | |
+---------------+--------+--------+---------+--------+---------+--------+
| Total | 4,375 | | 4,796 | | -9% | |
+---------------+--------+--------+---------+--------+---------+--------+
| | | | | | | |
+---------------+--------+--------+---------+--------+---------+--------+
| Underlying | | | | | | |
| operating | | | | | | |
| profit/(loss) | | | | | | |
| (GBPm) | | | | | | |
+---------------+--------+--------+---------+--------+---------+--------+
| Germany | 81 | | 70 | | +16% | |
+---------------+--------+--------+---------+--------+---------+--------+
| Austria | 9 | | 8 | | +13% | |
+---------------+--------+--------+---------+--------+---------+--------+
| Switzerland | 4 | | - | | n/a | |
+---------------+--------+--------+---------+--------+---------+--------+
| Poland | (2) | | (7) | | +71% | |
+---------------+--------+--------+---------+--------+---------+--------+
| Total | 92 | | 71 | | +30% | |
+---------------+--------+--------+---------+--------+---------+--------+
| | | | | | | |
+---------------+--------+--------+---------+--------+---------+--------+
| Underlying | | | | | | |
| operating | | | | | | |
| margin % | | | | | | |
+---------------+--------+--------+---------+--------+---------+--------+
| Germany | 2.1% | | 1.7% | | +40bps | |
+---------------+--------+--------+---------+--------+---------+--------+
| Austria | 2.8% | | 2.0% | | +80bps | |
+---------------+--------+--------+---------+--------+---------+--------+
| Switzerland | 2.2% | | - | | +220bps | |
+---------------+--------+--------+---------+--------+---------+--------+
| Poland | (2.9%) | | (11.3%) | | +840bps | |
+---------------+--------+--------+---------+--------+---------+--------+
| Total | 2.1% | | 1.5% | | +60bps | |
+---------------+--------+--------+---------+--------+---------+--------+
| | | | | | | |
+---------------+--------+--------+---------+--------+---------+--------+
Germany
Underlying operating profit was GBP81m, an improvement of GBP11m (2009: GBP70m).
Underlying operating margins also improved by 40bps to 2.1% (2009: 1.7%). This
improvement was driven by the GBP20m benefit of exiting from scheduled flying
operations. This transaction was also the primary driver behind the 21%
reduction in customers in the year.
Trading in the tour operator deteriorated by GBP6m versus the prior year. This
was largely as a result of weak trading in Q3 10, with lower load factors in
June, lost sales following the volcanic ash disruption, price pressure on
commodity product and by a shift in mix towards lower margin holidays (such as
overland tours). Summer 2010 bookings improved significantly in the last quarter
of 2010 with volumes up 14% in Q4 10 over the prior year, however the increased
lates mix also led to a reduction in profitability. The result was also affected
by foreign exchange translation losses of GBP3m.
Germany improved its controlled distribution by two percentage points to 51%.
During 2010 the online brand 1-2-FLY.com was launched, offering dynamically
packaged flight and hotel content.
Austria
Austria reported underlying operating profits of GBP9m (2009: GBP8m) and an
improvement of 80bps in underlying operating margin to 2.8% (2009: 2.0%).
Underlying margins improved by GBP1m over the prior year, due to growth in
demand for differentiated hotel content, such as Magic Life, Pegasos and the
Blue Collection, and an increase in online volumes. Controlled distribution
increased by 10 percentage points to 31%.
Switzerland
Switzerland reported underlying operating profits of GBP4m and an underlying
operating margin of 2.2%, a significant improvement over 2009's breakeven
result. This was primarily as a result of margin improvement, driven by fewer
holidays sold in the lates market versus prior year.
Poland
Poland reported an underlying operating loss of GBP2m in 2010 (2009: loss of
GBP7m). Customer demand for the Summer 2010 programme was strong, with volumes
up 24% over prior year in H2 10.
Western Europe
Western Europe reported underlying operating profits of GBP51m in 2010, an
improvement of GBP18m over the prior year (2009: GBP33m). The improvement was
largely driven by strong trading in Belgium and turnaround in Nouvelles
Frontières.
+-------------+--------+--------+-------------+--------+---------+--------+---------+
| Underlying | France | | Netherlands | | Belgium | | Western |
| operating | | | | | | | Europe |
| profit / | | | | | | | |
| (loss) | | | | | | | |
| bridge, | | | | | | | |
| GBPm | | | | | | | |
+-------------+--------+--------+-------------+--------+---------+--------+---------+
| 2009 | (19) | | 7 | | 45 | | 33 |
+-------------+--------+--------+-------------+--------+---------+--------+---------+
| Trading | +2 | | - | | +13 | | +15 |
+-------------+--------+--------+-------------+--------+---------+--------+---------+
| Turnaround | +6 | | +1 | | - | | +7 |
+-------------+--------+--------+-------------+--------+---------+--------+---------+
| Synergies | +3 | | - | | - | | +3 |
+-------------+--------+--------+-------------+--------+---------+--------+---------+
| FX | -4 | | -1 | | -2 | | -7 |
| Translation | | | | | | | |
+-------------+--------+--------+-------------+--------+---------+--------+---------+
| 2010 | (12) | | 7 | | 56 | | 51 |
+-------------+--------+--------+-------------+--------+---------+--------+---------+
| | | | | | | | |
+-------------+--------+--------+-------------+--------+---------+--------+---------+
+-------------+--------+--------+--------+--------+---------+
| Western | 2010 | | 2009 | | Change |
| Europe | | | | | % |
+-------------+--------+--------+--------+--------+---------+
| | | | | | |
+-------------+--------+--------+--------+--------+---------+
| Customers | | | | | |
| ('000) | | | | | |
+-------------+--------+--------+--------+--------+---------+
| France | 2,031 | | 1,959 | | +4% |
+-------------+--------+--------+--------+--------+---------+
| Netherlands | 1,211 | | 1,274 | | -5% |
+-------------+--------+--------+--------+--------+---------+
| Belgium | 1,861 | | 1,790 | | +4% |
+-------------+--------+--------+--------+--------+---------+
| Total | 5,103 | | 5,023 | | +2% |
+-------------+--------+--------+--------+--------+---------+
| | | | | | |
+-------------+--------+--------+--------+--------+---------+
| Revenue | | | | | |
| (GBPm) | | | | | |
+-------------+--------+--------+--------+--------+---------+
| France | 1,244 | | 1,228 | | +1% |
+-------------+--------+--------+--------+--------+---------+
| Netherlands | 668 | | 700 | | -5% |
+-------------+--------+--------+--------+--------+---------+
| Belgium | 754 | | 724 | | +4% |
+-------------+--------+--------+--------+--------+---------+
| Total | 2,666 | | 2,652 | | +1% |
+-------------+--------+--------+--------+--------+---------+
| | | | | | |
+-------------+--------+--------+--------+--------+---------+
| Underlying | | | | | |
| operating | | | | | |
| profit / | | | | | |
| (loss) | | | | | |
| (GBPm) | | | | | |
+-------------+--------+--------+--------+--------+---------+
| France | (12) | | (19) | | +37% |
+-------------+--------+--------+--------+--------+---------+
| Netherlands | 7 | | 7 | | flat |
+-------------+--------+--------+--------+--------+---------+
| Belgium | 56 | | 45 | | +24% |
+-------------+--------+--------+--------+--------+---------+
| Total | 51 | | 33 | | +55% |
+-------------+--------+--------+--------+--------+---------+
| | | | | | |
+-------------+--------+--------+--------+--------+---------+
| Underlying | | | | | |
| operating | | | | | |
| margin % | | | | | |
+-------------+--------+--------+--------+--------+---------+
| France | (1.0%) | | (1.5%) | | +50bps |
+-------------+--------+--------+--------+--------+---------+
| Netherlands | 1.0% | | 1.0% | | Flat |
+-------------+--------+--------+--------+--------+---------+
| Belgium | 7.4% | | 6.2% | | +120bps |
+-------------+--------+--------+--------+--------+---------+
| Total | 1.9% | | 1.2% | | +70bps |
+-------------+--------+--------+--------+--------+---------+
| | | | | | |
+-------------+--------+--------+--------+--------+---------+
France
+-------------+------------+--------+---------+--------+---------+--------+--------+
| Underlying | Nouvelles | | Corsair | | Marmara | | France |
| operating | Frontières | | | | | | |
| profit | | | | | | | |
| bridge, | | | | | | | |
| GBPm | | | | | | | |
+-------------+------------+--------+---------+--------+---------+--------+--------+
| 2009 | (13) | | (24) | | 18 | | (19) |
+-------------+------------+--------+---------+--------+---------+--------+--------+
| Turnaround | +6 | | - | | - | | +6 |
+-------------+------------+--------+---------+--------+---------+--------+--------+
| Trading | - | | +1 | | +1 | | +2 |
+-------------+------------+--------+---------+--------+---------+--------+--------+
| Synergies | +2 | | - | | +1 | | +3 |
+-------------+------------+--------+---------+--------+---------+--------+--------+
| FX | -2 | | -1 | | -1 | | -4 |
| Translation | | | | | | | |
+-------------+------------+--------+---------+--------+---------+--------+--------+
| 2010 | (7) | | (24) | | 19 | | (12) |
+-------------+------------+--------+---------+--------+---------+--------+--------+
| | | | | | | | |
+-------------+------------+--------+---------+--------+---------+--------+--------+
France reported an underlying operating loss of GBP12m in 2010 (2009: loss of
GBP19m). The GBP7m improvement was mainly due to continued turnaround in
Nouvelles Frontières.
Nouvelles Frontières benefited from reduced costs following the restructuring
implemented last year and from the successful introduction of the new Nouvelles
Frontières Hotel Clubs concept and the extended flight programme out of regional
airports in France. Online sales also increased by five percentage points to 17%
of total bookings.
Marmara increased its market share across all of its destinations in the year
and also successfully added new medium and long-haul destinations. Controlled
distribution increased by three percentage points to 41%.
Collaboration between the two tour operators in France delivered incremental
synergies of GBP3m in the year.
Corsair reported a flat underlying operating result. The scheduled flying market
in France continues to be highly competitive and management is executing plans
to make Corsair a viable airline in the future.
Netherlands
Netherlands reported an underlying operating profit of GBP7m (2009: GBP7m).
Underlying operating margins improved in 2010 by GBP1m, driven by a three
percentage increase in controlled distribution to 60% (2009: 57%). This was
mainly due to strong online growth due to improved websites for Arke.nl and
ArkeFly.nl. However, foreign exchange translation adversely affected the result
by GBP1m.
Belgium
Belgium achieved a strong improvement in underlying operating profits to GBP56m
(2009: GBP45m). Customer volumes increased by 4% over the prior year, driven by
the launch of new destinations and growth in the offering from regional
airports. Margins also improved as a result of a five percentage point increase
in controlled distribution to 55%, driven by the online channel.
Specialist & Emerging Markets Sector
The Specialist & Emerging Markets Sector reported underlying operating profits
of GBP19m in 2010 (2009: GBP31m). The decrease was driven by start up losses of
GBP6m in Emerging Markets, and capacity cuts in our private jet tours business
in the US, partly offset by better trading in the UK division.
+------------------------------------+--------+-----------+--------+----------+--------+------------+
| Specialist & Emerging Markets | 2010 | | 2009 | | Change % |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| | | | | | |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| Customers ('000) | | | | | |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| Europe | 536 | | 530 | | +1% |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| US | 267 | | 290 | | -8% |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| Total | 803 | | 820 | | -2% |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| | | | | | |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| Revenue (GBP'm) | | | | | |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| Europe | 547 | | 584 | | -6% |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| US | 170 | | 241 | | -29% |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| Total | 717 | | 825 | | -13% |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| | | | | | |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| Underlying operating profit/ (loss) (GBPm) | | | | |
+---------------------------------------------------------+--------+----------+--------+------------+
| Europe | 17 | | 16 | | +6% |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| US | 8 | | 15 | | -47% |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| Emerging Markets | (6) | | 1 | | n/a |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| Total | | 19 | | 32 | | -41% |
+------------------------------------+--------+-----------+--------+----------+--------+------------+
| | | | | | |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| Underlying operating margin % | | | | |
+---------------------------------------------------------+--------+----------+--------+------------+
| Total | 2.6% | | 3.9% | | -130bps |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| | | | | | |
+---------------------------------------------+-----------+--------+----------+--------+------------+
| | | | | | | |
+------------------------------------+--------+-----------+--------+----------+--------+------------+
Europe
Underlying operating profit was GBP17m (2009: GBP16m). This was mainly as a
result of margin improvement in some of the UK businesses, such as Hayes &
Jarvis, Sovereign and Citalia, who were able to change the mix of holidays sold
to a higher proportion of premium holidays in 2010.
US
The US division reported underlying operating profits of GBP8m (2009: GBP15m).
The reduction in profits was due to the c.70% reduction in the number of tours
operated by our US private jet tours business in Winter 2009/10, as the key
booking period for this season was during the peak of the recession in the
fourth quarter of 2008. Following a strong recovery in demand, we have increased
the number of tours for the Winter 2010/11 season and the business is performing
well.
Emerging Markets
This division reported underlying operating losses of GBP6m (2009 profit:
GBP1m), due to our continued investment in market and product development in the
businesses we acquired in Russia and the CIS. In 2010 the TUI brand was
introduced into these markets, with the rebranding of the retail network, the
launch of a TUI website and the co-branding of brochures. The division now has
480,000 customers, and a retail estate of over 150 travel agencies. The Russian
& Ukrainian markets remain attractive, with the annual package market estimated
to be between 8.5m to 10m customers.
Strong macroeconomic conditions, positive consumer behaviour and a growing
appetite for travel make the markets of Brazil, India and China particularly
interesting. The Group already has a presence in these markets however we are
currently evaluating our participation strategy across all three markets.
Activity Sector
The Activity Sector delivered underlying operating profits of GBP61m in 2010
(2009: GBP59m), driven by GBP7m of profits from acquisitions and GBP2m of
incremental synergies, offset by GBP6m due to weaker trading and a GBP1m loss
from foreign exchange translation.
+------------+--------+--------+--------+--------+--------+--------+
| Activity | | 2010 | | 2009 | | Change |
| | | | | | | % |
+------------+--------+--------+--------+--------+--------+--------+
| | | | | | | |
+------------+--------+--------+--------+--------+--------+--------+
| Revenue | | | | | | |
| (GBPm) | | | | | | |
+------------+--------+--------+--------+--------+--------+--------+
| Marine | | 134 | | 131 | | +2% |
+------------+--------+--------+--------+--------+--------+--------+
| Adventure | | 286 | | 240 | | +19% |
+------------+--------+--------+--------+--------+--------+--------+
| Ski, | | 448 | | 445 | | +1% |
| Student | | | | | | |
| and | | | | | | |
| Sport | | | | | | |
+------------+--------+--------+--------+--------+--------+--------+
| Total | | 868 | | 816 | | +6% |
+------------+--------+--------+--------+--------+--------+--------+
| | | | | | | |
+------------+--------+--------+--------+--------+--------+--------+
| Underlying operating | | | | |
| profit (GBPm) | | | | |
+------------------------------+--------+--------+--------+--------+
| Marine | | 16 | | 19 | | -16% |
+------------+--------+--------+--------+--------+--------+--------+
| Adventure | | 9 | | 13 | | -31% |
+------------+--------+--------+--------+--------+--------+--------+
| Ski, | | 36 | | 27 | | +33% |
| Student | | | | | | |
| and | | | | | | |
| Sport | | | | | | |
+------------+--------+--------+--------+--------+--------+--------+
| Total | | 61 | | 59 | | +3% |
+------------+--------+--------+--------+--------+--------+--------+
| | | | | | | |
+------------+--------+--------+--------+--------+--------+--------+
| Underlying | | | | | | |
| operating | | | | | | |
| margin % | | | | | | |
+------------+--------+--------+--------+--------+--------+--------+
| Total | | 7.0% | | 7.2% | | -20bps |
+------------+--------+--------+--------+--------+--------+--------+
| | | | | | | |
+------------+--------+--------+--------+--------+--------+--------+
The Marine division reported underlying profits of GBP16m, a decrease of GBP3m
versus the prior year (2009: GBP19m), primarily due to weak demand for the
Winter 2009/10 programme.
The Adventure businesses reported underlying operating profits of GBP9m (2009:
GBP13m). The annualisation of acquisitions made in the prior year contributed
GBP3m of profit in 2010. However, underlying trading worsened by GBP7m, despite
higher earnings at small group adventure operator Exodus, mainly due to weak
demand in Australian Adventure and Polar Cruising. Our Australian businesses had
a challenging time: Peregrine Adventures saw lower demand for higher priced
long-haul travel; Adventure Tours Australia felt the effect of the strong
Australian dollar which rendered outback experiences less affordable to their
backpacker clients, although good progress has been made in extracting cost
synergies following the combination of a number of similar businesses acquired
in the last three years. Polar expedition specialist Quark had a difficult year,
with clients reluctant to commit to their higher priced, iconic cruises in the
uncertain economic climate.
The Ski, Student and Sports divisions increased underlying operating profits by
GBP9m to GBP36m (2009: GBP27m). The divisions delivered strong trading growth of
GBP3m, driven by growth in the Student businesses and a good year for the Sports
division due to the Football World Cup, Vancouver Olympics and England's cricket
tour to South Africa. Businesses acquired during the year, plus the
annualisation of acquisitions made in the prior year, contributed GBP4m of
incremental profit. In the Student division, the integration of new acquisitions
(Hampstead School of English and the Manchester Academy of English) with our
existing business, EAC Language Centres, has created a strong brand presence in
the English language teaching industry. In the Ski division, Crystal, the UK's
largest ski operator, experienced strong customer demand for its new Crystal
Ski+ product which includes ski hire and lift pass in the package at highly
competitive rates. The business also delivered incremental synergies of GBP2m,
through the integration of the former TUI and First Choice ski businesses.
Accommodation & Destinations (A&D) Sector
The A&D Sector reported underlying operating profits of GBP71m in 2010 (2009:
GBP67m). The underlying trading result was unchanged, with the increase driven
by incremental merger synergies of GBP4m and a GBP1m contribution from the
annualisation of prior year acquisitions, partially offset by foreign exchange
translation losses of GBP1m.
+---------------+--------+--------+--------+--------+--------+
| Accommodation | | | | | change |
| & | | | | | % |
| Destinations | | | | | |
+---------------+--------+--------+--------+--------+--------+
| | | | | | |
+---------------+--------+--------+--------+--------+--------+
| Customers | | | | | |
| | | | | | |
+---------------+--------+--------+--------+--------+--------+
| B2B | | | | | +23% |
| roomnights | | | | | |
+---------------+--------+--------+--------+--------+--------+
| B2C | | | | | +17% |
| roomnights | | | | | |
+---------------+--------+--------+--------+--------+--------+
| Incoming | | | | | -4% |
| passenger | | | | | |
| volumes | | | | | |
+---------------+--------+--------+--------+--------+--------+
| | | | | | |
+---------------+--------+--------+--------+--------+--------+
| | 2010 | | 2009 | | change |
| | | | | | % |
+---------------+--------+--------+--------+--------+--------+
| | | | | | |
+---------------+--------+--------+--------+--------+--------+
| Revenue | 551 | | 552 | | Flat |
| (GBPm) | | | | | |
+---------------+--------+--------+--------+--------+--------+
| | | | | | |
+---------------+--------+--------+--------+--------+--------+
| Underlying | 71 | | 67 | | +6% |
| operating | | | | | |
| profit | | | | | |
| (GBPm) | | | | | |
+---------------+--------+--------+--------+--------+--------+
| | | | | | |
+---------------+--------+--------+--------+--------+--------+
| Underlying | 12.9% | | 12.1% | | +80bps |
| operating | | | | | |
| margin % | | | | | |
+---------------+--------+--------+--------+--------+--------+
| | | | | | |
+---------------+--------+--------+--------+--------+--------+
Within the flat underlying trading result, the B2B and B2C online businesses
have benefited from strong volume growth and improved conversion rates.
Profitability was offset, however, by start-up investment in new markets within
the online businesses and the impact of reduced tour operator volumes in the
incoming business and reduced activity in our Asian Meetings, Incentives,
Conferences and Entertainment business which suffered from reduced corporate
spending in the early part of the year.
Segmental structure
In June we announced a new segmental structure to be effective from 1 October
2010. The main change was the merger of the Specialist and Activity sectors. As
part of this restructure, the Emerging Markets Sector operates as a standalone
entity reporting directly to the Chief Executive and some of the European
specialist businesses transferred to the Mainstream and A&D sectors. Two new
divisions are now reported: Southern Europe includes continental European
businesses in Spain and Italy transferred from Specialist & Emerging Markets;
Hotels includes hotel management companies and joint ventures in hotel assets
previously reported in the Nordics region. In this Business and Financial Review
we report the segmental results under the existing structure, but future
reporting will be on the new structure.
The segmental revenue and underlying operating profits under the new structure
are shown in the table below:
+----------------------------+------------------+--------------------------+
| GBPm | Revenue | Underlying operating |
| | | profit |
+----------------------------+------------------+--------------------------+
| | | |
+----------------------------+------------------+--------------------------+
| Germany | 3,800 | 81 |
+----------------------------+------------------+--------------------------+
| Switzerland | 183 | 4 |
+----------------------------+------------------+--------------------------+
| Austria | 324 | 9 |
+----------------------------+------------------+--------------------------+
| Poland | 68 | (2) |
+----------------------------+------------------+--------------------------+
| Central Europe | 4,375 | 92 |
+----------------------------+------------------+--------------------------+
| | | |
+----------------------------+------------------+--------------------------+
| UK & Ireland | 3,392 | 127 |
+----------------------------+------------------+--------------------------+
| Nordic | 864 | 56 |
+----------------------------+------------------+--------------------------+
| Canada | 52 | (5) |
+----------------------------+------------------+--------------------------+
| Hotels | 40 | 5 |
+----------------------------+------------------+--------------------------+
| Northern Region | 4,348 | 183 |
+----------------------------+------------------+--------------------------+
| | | |
+----------------------------+------------------+--------------------------+
| France Airline | 343 | (24) |
+----------------------------+------------------+--------------------------+
| France Tour Operator | 967 | 14 |
+----------------------------+------------------+--------------------------+
| Netherlands | 668 | 7 |
+----------------------------+------------------+--------------------------+
| Belgium | 754 | 56 |
+----------------------------+------------------+--------------------------+
| Southern Europe | 131 | 4 |
+----------------------------+------------------+--------------------------+
| Western Europe | 2,863 | 57 |
+----------------------------+------------------+--------------------------+
| | | |
+----------------------------+------------------+--------------------------+
| Total Mainstream | 11,586 | 332 |
+----------------------------+------------------+--------------------------+
| | | |
+----------------------------+------------------+--------------------------+
| Emerging Markets | - | (7) |
+----------------------------+------------------+--------------------------+
| Specialist & Activity | 1,352 | 78 |
+----------------------------+------------------+--------------------------+
| A&D | 587 | 73 |
+----------------------------+------------------+--------------------------+
| Group | - | (29) |
+----------------------------+------------------+--------------------------+
| | | |
+----------------------------+------------------+--------------------------+
| TOTAL | 13,525 | 447 |
+----------------------------+------------------+--------------------------+
Acquisitions
In Canada, we entered into a strategic venture with Sunwing, a leading Canadian
tour operator. Under the terms of the deal, TUI Travel contributed its Canadian
operations plus a net C$102m and Sunwing contributed its operations to the
strategic venture. TUI Travel received a 49% interest in the strategic venture,
with Sunwing's owners receiving 51%.
TUI Nordic acquired 51% of WonderCruises which is the fastest growing cruise
tour operator in the Nordic region. This acquisition makes TUI Nordic well
placed to participate in the rapidly expanding Nordic cruise market.
Also in the Mainstream Sector, we have invested in a hotel management company in
Turkey and a number of small travel agencies in Germany.
In the specialist sectors, we made six bolt-on acquisitions, including:
+----------+---------------------------------------------------------------------+
| · | Consolidation of our leading position in the student sports tours |
| | market with the acquisition of SET Sports Tours, which organises |
| | sports tours and festivals for schools, clubs, and universities. |
| | |
+----------+---------------------------------------------------------------------+
| · | Expansion of our presence in the English language teaching market |
| | with the acquisition of the Hampstead School of English and |
| | Manchester Academy. |
| | |
+----------+---------------------------------------------------------------------+
| · | Acquisition of Select Tours, Australia's premier cruise handling |
| | operator, strengthening our leading position in the global cruise |
| | handling market. |
| | |
+----------+---------------------------------------------------------------------+
Taxation
Underlying profit before tax excluding joint ventures and associates for the
year was GBP348m. The effective tax rate on these profits is 27.5%. Based on the
current structure of the business and existing local taxation rates and
legislation, it is expected that the underlying tax rate will be maintained at
this level.
The cash tax rate is expected to be lower than the underlying income statement
tax rate as we utilise our deferred tax assets generated from restructuring
expenditure and trading losses. In the coming year, we envisage a cash tax rate
of approximately 20% of underlying profit before tax.
Earnings per share
Underlying basic earnings per share was 22.0p (2009 restated: 20.0p). Basic loss
per share from continuing operations was 7.8p (2009 restated: 4.8p).
Dividends
The Board is recommending a final dividend of 7.8p per share (2009: 7.7p). On 11
May 2010, the Board recommended an interim dividend of 3.2p per share (2009:
3.0p), making a full year dividend of 11.0p per share (2009: 10.7p). This
represents a payout ratio of 50% of underlying basic earnings per share. The
final dividend will be paid on 1 March 2011 to holders of relevant shares on the
register at 2 February 2011.
The Group's policy is to maintain underlying dividend cover at around two times.
We intend to continue to operate a dividend re-investment plan as an alternative
to receiving a cash dividend.
Cash and liquidity
The net debt position (loans, bonds, overdrafts and finance leases less cash and
cash equivalents) at the year end was GBP249m (2009: GBP338m). This consisted of
GBP1,304m of cash and GBP1,553m of interest-bearing loans and liabilities.
The reduction in net debt was primarily driven by an improved working capital
performance as a result of:
+--------+--------------------------------------------------------------------+
| · | Increased customer payments received in advance following strong |
| | booking activity for future seasons; and |
| | |
+--------+--------------------------------------------------------------------+
| · | Ongoing implementation of cash management initiatives, including: |
| | increased deposit levels and early payment of final customer |
| | balances; renegotiations with suppliers, particularly on hotel |
| | prepayments; and management focus on cash. |
+--------+--------------------------------------------------------------------+
We undertook a number of financing actions in the year, including:
+--------+-------------+
| · | An |
| | issue |
| | of |
| | GBP350m |
| | of |
| | convertible |
| | bonds due |
| | in October |
| | 2014; |
| | |
+--------+-------------+
| · | An |
| | issue |
| | of |
| | GBP400m |
| | of |
| | convertible |
| | bonds due |
| | in April |
| | 2017; and |
| | |
+--------+-------------+
| · | Additional |
| | revolving |
| | credit |
| | facilities |
| | of |
| | GBP150m, |
| | maturing |
| | in June |
| | 2012. |
| | |
+--------+-------------+
Following the repayment of EUR509m on 1 December 2010, we have now repaid most of
the shareholder loan with the final repayment of EUR160m scheduled for 30 April
2011.
In addition to the above, we have existing credit facilities of GBP910m which
mature in June 2012. Given the Group's current facilities and current cash flow
forecasts, the Board remains satisfied with the Group's funding and liquidity
position. Fixed charges cover and the ratio of net debt to EBITDA, which we
believe to be the most useful measures of cash generation and gearing, were 2.0x
and 0.4x respectively at the year end (2009 restated: 1.9x and 0.6x
respectively). Fixed charges cover is defined as EBITDA before operating lease
rentals charge divided by net interest plus operating lease rentals. EBITDA is
defined as earnings before interest, tax, depreciation and amortisation and is
calculated on an underlying basis.
Pension deficit
The net accounting pension deficit at the year end was GBP493m (2009: GBP500m).
The cash contribution to fund the pension deficit was GBP64m in 2010. We are in
discussions with Trustees which may reduce the annual cash contribution by
transferring certain assets into the schemes.
Consolidated income statement
for the year ended 30 September 2010
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | | | | Restated |
| | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | Year | Year | Year | Year |
| | | ended | ended | ended | ended |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | 30 | 30 | 30 | 30 |
| | | September | September | September | September |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | 2010 | 2010 | 2010 | 2009 |
| | | | | | (A) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | Unaudited | Unaudited | | |
| | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | pro | pro | | |
| | | forma | forma | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | before | impact | | |
| | | impact | of | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | of | Volcanic | Statutory | Statutory |
| | | Volcanic | ash (A) | | |
| | | ash | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| |Note | GBPm | GBPm | GBPm | GBPm |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Continuing operations | | 13,525 | (125) | 13,400 | 13,851 |
| Revenue | 2 | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Cost of sales | | (12,238) | 21 | (12,217) | (12,735) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Gross profit / (loss) | | 1,287 | (104) | 1,183 | 1,116 |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Administrative expenses | | (1,099) | - | (1,099) | (1,130) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Share of (losses) / profits of | | (3) | - | (3) | 9 |
| joint ventures and associates | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Operating profit / (loss) | | 185 | (104) | 81 | (5) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Analysed as: | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Underlying operating profit / |1, 2 | 447 | (35) | 412 | 401 |
| (loss) | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Separately disclosed items | 3 | (181) | (69) | (250) | (340) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Acquisition related expenses | | (63) | - | (63) | (56) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Impairment of goodwill | | (12) | - | (12) | (7) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Taxation on profits and | | (6) | - | (6) | (3) |
| interest of joint ventures and | | | | | |
| associates | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | 185 | (104) | 81 | (5) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Financial income | 4 | | | 69 | 72 |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Financial expenses | 4 | | | (186) | (161) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Net financial expenses | | | | (117) | (89) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Loss before tax | | | | (36) | (94) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Taxation (charge) / credit | 6 | | | (50) | 42 |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Loss for the year from | | | | (86) | (52) |
| continuing operations | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Discontinued operation | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Loss from discontinued | | | | (18) | (14) |
| operation | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Loss for the year | | | | (104) | (66) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Attributable to: | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Equity holders of the parent | | | | (104) | (67) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Non-controlling interests | | | | - | 1 |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Loss for the year | | | | (104) | (66) |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| | | | | Pence | Pence |
| | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| Basic and diluted loss per | | | | | |
| share (pence) for loss | | | | | |
| attributable to the equity | | | | | |
| holders of the Company during | | | | | |
| the year | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| - basic and diluted: from | 9 | | | (7.8) | (4.8) |
| continuing operations | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
| - basic and diluted: from | 9 | | | (1.6) | (1.3) |
| discontinued operation | | | | | |
+---------------------------------+------+-----------+-----------+------------------+-----------+
(A) Refer to 'Basis of Preparation' within note 1 of the financial statements
for details
Non-GAAP measures
Reconciliation of underlying operating profit to underlying profit before tax
+---------------------------------+---+--------+--------+-----------+-----------+
| | | | | | Restated |
| | | | | Year | Year |
| | | | | ended | ended |
| | | | | 30 | 30 |
| | | | | September | September |
| | | | | 2010 | 2009 |
+---------------------------------+---+--------+--------+-----------+-----------+
| | | | | GBPm | GBPm |
+---------------------------------+---+--------+--------+-----------+-----------+
| Underlying operating profit |1 | | | 447 | 401 |
| |/ | | | | |
| |2 | | | | |
+---------------------------------+---+--------+--------+-----------+-----------+
| Net underlying financial |4 | | | (110) | (77) |
| expenses | | | | | |
+---------------------------------+---+--------+--------+-----------+-----------+
| Underlying profit before tax | | | | 337 | 324 |
+---------------------------------+---+--------+--------+-----------+-----------+
Consolidated statement of comprehensive income
for the year ended 30 September 2010
+----------------------------------------------+--------+---+-----------+-----------+
| | | | | Restated |
| | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| | | | Year | Year |
| | | | ended | ended |
| | | | 30 | 30 |
| | | | September | September |
| | | | 2010 | 2009 |
+----------------------------------------------+--------+---+-----------+-----------+
| | Note | | GBPm | GBPm |
+----------------------------------------------+--------+---+-----------+-----------+
| Loss for the year | | | (104) | (66) |
+----------------------------------------------+--------+---+-----------+-----------+
| Other comprehensive (expense) / income | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| Foreign exchange translation | | | (88) | 129 |
+----------------------------------------------+--------+---+-----------+-----------+
| Actuarial losses arising in respect of | | | (42) | (271) |
| defined benefit pension schemes | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| Cash flow hedges: | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| - movement in fair value | | | 33 | (60) |
+----------------------------------------------+--------+---+-----------+-----------+
| - amounts recycled to the consolidated | | | 41 | (81) |
| income statement | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| Foreign exchange gains recycled through the | | | (6) | - |
| consolidated income statement | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| Share of other movements in reserves of | | | 2 | - |
| associates and joint ventures | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| Changes in the fair value of available for | | | (4) | (1) |
| sale financial assets | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| Deferred tax on items taken directly to |6(iii) | | (9) | 105 |
| equity | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| Other comprehensive expense for the year net | | | (73) | (179) |
| of income tax | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| Total comprehensive expense for the year | | | (177) | (245) |
+----------------------------------------------+--------+---+-----------+-----------+
| | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| Total comprehensive expense for the year | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| Attributable to: | | | | |
+----------------------------------------------+--------+---+-----------+-----------+
| Equity holders of the parent | | | (177) | (247) |
+----------------------------------------------+--------+---+-----------+-----------+
| Non-controlling interests | | | - | 2 |
+----------------------------------------------+--------+---+-----------+-----------+
| Total | | | (177) | (245) |
+----------------------------------------------+--------+---+-----------+-----------+
Consolidated balance sheet
at 30 September 2010
+-----------------------------------+----+---------------+-----------+----------+
| | | | Restated | Restated |
| | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| | | 30 | 30 | 1 |
| | | September | September | October |
+-----------------------------------+----+---------------+-----------+----------+
| | | 2010 | 2009 | 2008 |
+-----------------------------------+----+---------------+-----------+----------+
| | | GBPm | GBPm | GBPm |
+-----------------------------------+----+---------------+-----------+----------+
| Non-current assets | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Intangible assets | | 4,659 | 4,737 | 4,429 |
+-----------------------------------+----+---------------+-----------+----------+
| Property, plant and equipment | | 1,012 | 964 | 926 |
+-----------------------------------+----+---------------+-----------+----------+
| Investments in joint ventures and | | 211 | 112 | 114 |
| associates | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Other investments | | 79 | 77 | 56 |
+-----------------------------------+----+---------------+-----------+----------+
| Trade and other receivables | | 156 | 194 | 210 |
+-----------------------------------+----+---------------+-----------+----------+
| Retirement benefit asset | | 1 | 1 | 17 |
+-----------------------------------+----+---------------+-----------+----------+
| Derivative financial instruments | | 21 | 13 | 48 |
+-----------------------------------+----+---------------+-----------+----------+
| Deferred tax assets | | 114 | 211 | 205 |
+-----------------------------------+----+---------------+-----------+----------+
| | | 6,253 | 6,309 | 6,005 |
+-----------------------------------+----+---------------+-----------+----------+
| Current assets | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Inventories | | 49 | 51 | 51 |
+-----------------------------------+----+---------------+-----------+----------+
| Other investments | | - | 36 | 29 |
+-----------------------------------+----+---------------+-----------+----------+
| Trade and other receivables | | 1,404 | 1,482 | 1,599 |
+-----------------------------------+----+---------------+-----------+----------+
| Income tax recoverable | | 34 | 30 | 29 |
+-----------------------------------+----+---------------+-----------+----------+
| Derivative financial instruments | | 144 | 271 | 273 |
+-----------------------------------+----+---------------+-----------+----------+
| Cash and cash equivalents | | 1,304 | 790 | 1,130 |
+-----------------------------------+----+---------------+-----------+----------+
| Assets classified as held for | | 57 | 126 | 157 |
| sale | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| | | 2,992 | 2,786 | 3,268 |
+-----------------------------------+----+---------------+-----------+----------+
| | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Total assets | | 9,245 | 9,095 | 9,273 |
+-----------------------------------+----+---------------+-----------+----------+
| | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Current liabilities | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Interest-bearing loans and | | (757) | (327) | (99) |
| borrowings | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Retirement benefits | | (5) | (3) | (2) |
+-----------------------------------+----+---------------+-----------+----------+
| Derivative financial instruments | | (122) | (284) | (178) |
+-----------------------------------+----+---------------+-----------+----------+
| Trade and other payables | | (4,301) | (4,220) | (4,073) |
+-----------------------------------+----+---------------+-----------+----------+
| Provisions | | (236) | (189) | (235) |
+-----------------------------------+----+---------------+-----------+----------+
| Income tax payable | | (84) | (67) | (89) |
+-----------------------------------+----+---------------+-----------+----------+
| Liabilities classified as held | | (31) | (59) | (22) |
| for sale | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| | | (5,536) | (5,149) | (4,698) |
+-----------------------------------+----+---------------+-----------+----------+
| Non-current liabilities | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Interest-bearing loans and | | (796) | (801) | (1,167) |
| borrowings | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Retirement benefits | | (489) | (498) | (268) |
+-----------------------------------+----+---------------+-----------+----------+
| Derivative financial instruments | | (23) | (18) | (50) |
+-----------------------------------+----+---------------+-----------+----------+
| Trade and other payables | | (93) | (108) | (149) |
+-----------------------------------+----+---------------+-----------+----------+
| Provisions | | (307) | (250) | (180) |
+-----------------------------------+----+---------------+-----------+----------+
| Deferred tax liabilities | | (28) | (97) | (235) |
+-----------------------------------+----+---------------+-----------+----------+
| | | (1,736) | (1,772) | (2,049) |
+-----------------------------------+----+---------------+-----------+----------+
| | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Total liabilities | | (7,272) | (6,921) | (6,747) |
+-----------------------------------+----+---------------+-----------+----------+
| | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Net assets | | 1,973 | 2,174 | 2,526 |
+-----------------------------------+----+---------------+-----------+----------+
| | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Equity | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Share capital | | 112 | 112 | 112 |
+-----------------------------------+----+---------------+-----------+----------+
| Convertible bond reserve | | 83 | - | - |
+-----------------------------------+----+---------------+-----------+----------+
| Other reserves | | 2,772 | 2,775 | 2,749 |
+-----------------------------------+----+---------------+-----------+----------+
| Retained deficit | | (995) | (716) | (340) |
+-----------------------------------+----+---------------+-----------+----------+
| Total equity attributable to | | 1,972 | 2,171 | 2,521 |
| equity holders of the parent | | | | |
+-----------------------------------+----+---------------+-----------+----------+
| Non-controlling interests | | 1 | 3 | 5 |
+-----------------------------------+----+---------------+-----------+----------+
| Total equity | | 1,973 | 2,174 | 2,526 |
+-----------------------------------+----+---------------+-----------+----------+
The financial statements were approved by a duly authorised Committee of the
Board of Directors on 1 December 2010 and signed on its behalf by:
Paul Bowtell
Chief Financial Officer
Consolidated statement of changes in equity
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| | Share | Convertible | Merger | Translation | Hedging | Retained | Equity | Non | |
| | | bond | | | | | holders | -controlling | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| | capital | reserve | reserve | reserve | reserve | deficit | of | interests | Total |
| | | | | | | | parent | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
| | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| At 1 October | 112 | - | 2,490 | 232 | 27 | (270) | 2,591 | 5 | 2,596 |
| 2008 (as | | | | | | | | | |
| previously | | | | | | | | | |
| reported) | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| Restatement | - | - | - | - | - | (70) | (70) | - | (70) |
| (Note 1(C)) | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| Restated balance | 112 | - | 2,490 | 232 | 27 | (340) | 2,521 | 5 | 2,526 |
| at | | | | | | | | | |
| 1 October 2008 | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| (Loss) / profit | | - | | - | | | | | |
| for the year (as | | | | | | | | | |
| previously | - | | - | | - | (25) | (25) | 1 | (24) |
| reported) | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| Restatement | - | - | - | - | - | (42) | (42) | - | (42) |
| (Note 1(C)) | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| Restated (loss) | - | - | - | - | - | (67) | (67) | 1 | (66) |
| / profit for the | | | | | | | | | |
| year | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| Other | | | | | | | | | |
| comprehensive | | | | | | | | | |
| income / | | | | | | | | | |
| (expense) for | | | | | | | | | |
| the year | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| Other | - | - | - | 128 | (102) | (206) | (180) | 1 | (179) |
| comprehensive | | | | | | | | | |
| income / | | | | | | | | | |
| (expense) | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| Restated total | - | - | - | 128 | (102) | (273) | (247) | 2 | (245) |
| comprehensive | | | | | | | | | |
| income / | | | | | | | | | |
| (expense) for | | | | | | | | | |
| the year | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| Transactions | | | | | | | | | |
| with owners | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| Share-based | - | - | - | - | - | 16 | 16 | - | 16 |
| payment (net of | | | | | | | | | |
| deferred tax) | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| Dividends | - | - | - | - | - | (107) | (107) | (3) | (110) |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| Acquisition of | | - | | | | | | | |
| non-controlling | - | | - | - | - | (12) | (12) | (1) | (13) |
| interests | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
| Restated balance | 112 | - | 2,490 | 360 | (75) | (716) | 2,171 | 3 | 2,174 |
| at | | | | | | | | | |
| 30 September | | | | | | | | | |
| 2009 | | | | | | | | | |
+------------------+---------+-------------+---------+-------------+---------+----------+---------+--------------+--------+
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| | Share | Convertible | Merger | Translation | Hedging | Retained | Equity | Non-controlling | |
| | | bond | | | | | holders | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| | capital | reserve | reserve | reserve | reserve | deficit | of | interests | Total |
| | | | | | | | parent | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
| | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| At 1 October 2009 | 112 | - | 2,490 | 360 | (75) | (604) | 2,283 | 3 | 2,286 |
| (as previously | | | | | | | | | |
| reported) | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| Restatement (Note | - | - | - | - | - | (112) | (112) | - | (112) |
| 1(C)) | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| Restated balance | 112 | - | 2,490 | 360 | (75) | (716) | 2,171 | 3 | 2,174 |
| at 1 October 2009 | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| Loss for the year | - | - | - | - | - | (104) | (104) | - | (104) |
| | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| Other | | | | | | | | | |
| comprehensive | | | | | | | | | |
| (expense) / income | | | | | | | | | |
| for the year | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| Other | - | - | - | (59) | 56 | (70) | (73) | - | (73) |
| comprehensive | | | | | | | | | |
| (expense) / income | | | | | | | | | |
| for the year | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| Total | - | - | - | (59) | 56 | (174) | (177) | - | (177) |
| comprehensive | | | | | | | | | |
| (expense) / income | | | | | | | | | |
| for the year | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| Transactions with | | | | | | | | | |
| owners | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| Share-based | - | - | - | - | - | 20 | 20 | - | 20 |
| payment (net of | | | | | | | | | |
| deferred tax) | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| Acquisition of own | - | - | - | - | - | (7) | (7) | - | (7) |
| shares | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| Dividends | - | - | - | - | - | (118) | (118) | (2) | (120) |
| | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| Issue of | - | 83 | - | - | - | - | 83 | - | 83 |
| convertible bonds | | | | | | | | | |
| (net of deferred | - | | | | | | | | |
| tax) | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
| At 30 September | 112 | 83 | 2,490 | 301 | (19) | (995) | 1,972 | 1 | 1,973 |
| 2010 | | | | | | | | | |
+--------------------+---------+-------------+---------+-------------+---------+----------+---------+-----------------+--------+
Consolidated statement of cash flows
for the year ended 30 September 2010
+----------------------------------------------+------+-----------+-----------+
| | | | Restated |
| | | Year | |
| | | ended | Year |
| | | | ended |
+----------------------------------------------+------+-----------+-----------+
| | | 30 | 30 |
| | | September | September |
+----------------------------------------------+------+-----------+-----------+
| | | 2010 | 2009 |
+----------------------------------------------+------+-----------+-----------+
| |Note | GBPm | GBPm |
+----------------------------------------------+------+-----------+-----------+
| Loss for the year | | (104) | (66) |
+----------------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------------+------+-----------+-----------+
| Adjustment for: | | | |
+----------------------------------------------+------+-----------+-----------+
| Depreciation and amortisation | | 261 | 287 |
+----------------------------------------------+------+-----------+-----------+
| Impairment of intangible assets and | | 27 | 132 |
| property, plant and equipment | | | |
+----------------------------------------------+------+-----------+-----------+
| Equity-settled share-based payment expenses | | 14 | 16 |
+----------------------------------------------+------+-----------+-----------+
| Loss / (profit) on sale of property, plant | 5 | 1 | (12) |
| and equipment | | | |
+----------------------------------------------+------+-----------+-----------+
| Share of loss / (profit) of joint ventures | | 3 | (9) |
| and associates | | | |
+----------------------------------------------+------+-----------+-----------+
| Loss / (gain) on foreign exchange | 5 | 14 | (23) |
+----------------------------------------------+------+-----------+-----------+
| Change in value of trade investment | | (30) | - |
+----------------------------------------------+------+-----------+-----------+
| Dividends received from joint ventures and | | 9 | 10 |
| associates | | | |
+----------------------------------------------+------+-----------+-----------+
| Financial income | 4 | (69) | (72) |
+----------------------------------------------+------+-----------+-----------+
| Financial expenses | 4 | 186 | 161 |
+----------------------------------------------+------+-----------+-----------+
| Loss from discontinued operation | | 18 | 14 |
+----------------------------------------------+------+-----------+-----------+
| Taxation | | 50 | (42) |
+----------------------------------------------+------+-----------+-----------+
| Operating profit before changes in working | | 380 | 396 |
| capital and provisions | | | |
+----------------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------------+------+-----------+-----------+
| Decrease / (increase) in inventories | | 1 | (2) |
+----------------------------------------------+------+-----------+-----------+
| Decrease in trade and other receivables | | 34 | 93 |
+----------------------------------------------+------+-----------+-----------+
| Increase / (decrease) in trade and other | | 100 | (141) |
| payables | | | |
+----------------------------------------------+------+-----------+-----------+
| Increase / (decrease) in provisions and | | 93 | (23) |
| employee benefits | | | |
+----------------------------------------------+------+-----------+-----------+
| Cash flows from operations | | 608 | 323 |
+----------------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------------+------+-----------+-----------+
| Interest paid | | (59) | (68) |
+----------------------------------------------+------+-----------+-----------+
| Interest received | | 2 | 6 |
+----------------------------------------------+------+-----------+-----------+
| Income taxes paid | | (34) | (43) |
+----------------------------------------------+------+-----------+-----------+
| Cash flows from operating activities | | 517 | 218 |
+----------------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------------+------+-----------+-----------+
| Investing activities | | | |
+----------------------------------------------+------+-----------+-----------+
| Proceeds from sale of property, plant and | | 26 | 161 |
| equipment | | | |
+----------------------------------------------+------+-----------+-----------+
| Proceeds from disposal of associated | | 1 | - |
| undertakings net of cash disposed of | | | |
+----------------------------------------------+------+-----------+-----------+
| Acquisition of subsidiaries net of cash | | (51) | (48) |
| acquired | | | |
+----------------------------------------------+------+-----------+-----------+
| Acquisition of non-controlling interests | | - | (3) |
+----------------------------------------------+------+-----------+-----------+
| Proceeds from other investments | | 9 | - |
+----------------------------------------------+------+-----------+-----------+
| Investment in joint ventures, associates and | | (90) | (51) |
| other investments | | | |
+----------------------------------------------+------+-----------+-----------+
| Acquisition of property, plant and equipment | | (204) | (234) |
| and software | | | |
+----------------------------------------------+------+-----------+-----------+
| Cash flows from investing activities | | (309) | (175) |
+----------------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------------+------+-----------+-----------+
| Financing activities | | | |
+----------------------------------------------+------+-----------+-----------+
| Proceeds from new loans and deposits taken | | 768 | 17 |
+----------------------------------------------+------+-----------+-----------+
| Repayment of borrowings | | (257) | (280) |
+----------------------------------------------+------+-----------+-----------+
| Repayment of finance lease liabilities | | (31) | (22) |
+----------------------------------------------+------+-----------+-----------+
| Ordinary and minority interest dividends | | (120) | (110) |
| paid | | | |
+----------------------------------------------+------+-----------+-----------+
| Acquisition of shares for share-based | | (7) | - |
| payments | | | |
+----------------------------------------------+------+-----------+-----------+
| Cash flows from financing activities | | 353 | (395) |
+----------------------------------------------+------+-----------+-----------+
| | | | |
+----------------------------------------------+------+-----------+-----------+
| Net increase / (decrease) in cash and cash | | 561 | (352) |
| equivalents | | | |
+----------------------------------------------+------+-----------+-----------+
| Cash and cash equivalents at start of the | | 790 | 1,130 |
| year | | | |
+----------------------------------------------+------+-----------+-----------+
| Reclassification of cash to assets | | - | (4) |
| classified as held for sale | | | |
+----------------------------------------------+------+-----------+-----------+
| Effect of foreign exchange on cash held | | (47) | 16 |
+----------------------------------------------+------+-----------+-----------+
| Cash and cash equivalents at end of the year | | 1,304 | 790 |
+----------------------------------------------+------+-----------+-----------+
Movements in cash and net debt are presented in Note 8.
Notes to the consolidated financial statements
1. Basis of preparation
(A) Statutory accounts
The financial information set out above does not constitute the Group's
statutory accounts for the year ended 30 September 2010. Financial Statements
for the year ended 30 September 2010 will be delivered to the registrar of
companies in due course. KPMG Audit Plc has reported on these accounts; their
report was (i) unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498(2) or (3) of the
Companies Act 2006.
(B) Statement of compliance
The accounting policies applied by the Group in its consolidated financial
statements for the year ended 30 September 2010 are in accordance with
International Financial Reporting Standards as adopted by the European Union
(Adopted IFRSs). The accounting policies have been applied consistently to all
periods presented in the consolidated financial statements.
(C) Restatement
On 10 August 2010, as part of its unaudited results for the third quarter (nine
months ended 30 June 2010), TUI Travel PLC reported that following completion of
the integration of IT systems in its UK mainstream business, it had written off
a number of legacy receivable balances that had built up over an extended period
of time, amounting in total to GBP29m. This balance was reported as a separately
disclosed item.
The audit for the full year ended September 2010 highlighted a further GBP88m of
irrecoverable balances that needed to be written off, giving a total of GBP117m.
These have arisen as a result of failures to reconcile balances adequately in
legacy systems in the retail and tour operator businesses in TUI UK. As a
result, TUI Travel PLC has restated its results for the year ended 30 September
2009.
The adjustments to the results are non-cash in nature and have no impact on the
Group's cash and net debt position. As a result of process improvements during
the year, the impact in 2010 has been limited to GBP5m.
The components of the restatement, including the 2010 impact, are summarised in
the table below:
+-------------------------+--------+--------+-------+-------+
| GBPm | 2010 | 2009 | Pre |Total |
| | | | 2009 | |
+-------------------------+--------+--------+-------+-------+
| Revenue overstatement | 5 | 12 | 70 | 87 |
+-------------------------+--------+--------+-------+-------+
| Release of unmatched | - | 30 | - | 30 |
| credits | | | | |
+-------------------------+--------+--------+-------+-------+
| Total | 5 | 42 | 70 | 117 |
+-------------------------+--------+--------+-------+-------+
Revenue overstatement
In 2004, the UK tour operator, Thomson, implemented a new Retail booking system
into its distribution network of shops, call centres and website. As part of
that implementation, some controls were put in place to ensure that the new
Retail booking system was recording the same data as the existing Tour Operating
system. In the main, these controls operated well for the first few years of
the new system and any differences found as part of the recent investigation
were minimal.
Subsequently, as part of a drive for further cost savings and efficiencies,
processes around the two systems were streamlined, roles were consolidated and
parts of the process were transferred to an outsource provider in India. As a
result, it is now understood that control weaknesses arose and the level of
differences between the two systems grew. These differences arose because
transaction data was not accurately reflected in the Retail shops. Discounts
given on the price of holidays, cancellation fees and administration fees for
changes to holiday bookings were inaccurately recorded by travel agents as a
price change as opposed to being allocated to the relevant category within the
Retail booking system. This led to an overstatement in revenue in the Tour
Operator and a mismatch with the cash actually received from the customer that
was booked in the Retail booking system.
When the tourism business of TUI AG merged with First Choice Holidays PLC on 3
September 2007, a key part of the business plan was the integration of the two
UK tour operator businesses, Thomson and First Choice. As part of that business
merger it was decided to co-locate the businesses in Luton (the Thomson
headquarters) and integrate the First Choice business on to the Thomson systems.
The systems changeover occurred in 2008 and as a result the volumes going
through the systems increased. Furthermore, the strategic initiative to
increase controlled distribution in the business also meant that the volumes
going through internal channels were growing steadily. These changes caused the
level of overstated revenue to increase, reaching a peak in 2008. Subsequently,
in 2009 as a result of the introduction of a new front-end selling system in the
in-house retail stores, tighter controls were placed on the retail agent whereby
discounts, cancellation fees and administration fees had to be booked to the
appropriate category in the system and accordingly these operational changes
meant that the level of overstated revenue started to fall. Further actions
taken in 2010 further improved the situation.
Over a period of seven years the level of overstated revenue amounted to GBP87m
with GBP5m arising in 2010, GBP12m in 2009 and the balance of GBP70m prior to
the year ending 30 September 2009. The result of this revenue overstatement has
been to reduce the 2009 profit by GBP12m and reduce the opening reserves as at 1
October 2008 by GBP70m.
Release of unmatched credits
As a consequence of the systemic deficiencies in the revenue recognition process
that resulted in the overstatement referred to above, unmatched credits built up
in the books of the retailer. These unmatched credits were deemed by UK
management to be surplus to requirements in 2009 and were accordingly released
to cost of sales in the profit and loss account in that year. Had the systemic
errors in the revenue recognition process been identified and addressed at the
time, these unmatched credits would not have existed as they would have been
appropriately matched off. It is now evident that the analysis carried out, the
judgements made and the processes undertaken at the time to book the release of
these unmatched credits in the records of the entity concerned were
inappropriate and that the information provided to both Group management and to
the external auditors was inaccurate. Accordingly, the release of unmatched
credits has now been reversed in the restated income statement for the year
ended 30 September 2009.
Tax
The associated tax benefits have not been recognised as the legal entities
impacted already had unrecognised tax losses. The effect of the restatement is
therefore to increase the unrecognised tax losses.
The tables below show the impact of the restatement on the relevant Consolidated
income statement and balance sheet lines.
Prior year comparatives have been restated for the following items.
Consolidated income statement
+------------+---------+-----------+-----------+------------+--------+------------+
| Year | | | | | | |
| ended | | | Operating | Underlying | | Loss |
| 30 | | | profit / | operating | | from |
| September | Revenue | Cost | (loss) | profit | Loss | the |
| 2009 | | of | | | before | year |
| | | sales | | | tax | from |
| | | | | | | continuing |
| | | | | | | operations |
+------------+---------+-----------+-----------+------------+--------+------------+
| | | | | | | |
+------------+---------+-----------+-----------+------------+--------+------------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+------------+---------+-----------+-----------+------------+--------+------------+
| Originally | 13,863 | (12,705) | 37 | 443 | (52) | (10) |
| reported | | | | | | |
+------------+---------+-----------+-----------+------------+--------+------------+
| Correction | (12) | (30) | (42) | (42) | (42) | (42) |
+------------+---------+-----------+-----------+------------+--------+------------+
| Restated | 13,851 | (12,735) | (5) | 401 | (94) | (52) |
+------------+---------+-----------+-----------+------------+--------+------------+
Earnings / (loss) per share
+------------+-------+---------+-------+---------+
| Year | Earnings | Underlying |
| ended | per share | Earnings per |
| 30 | - | Share |
| September | Continuing | |
| 2009 | Operations | |
+------------+-----------------+-----------------+
| | Basic | Diluted | Basic | Diluted |
+------------+-------+---------+-------+---------+
| | Pence | Pence | Pence | Pence |
+------------+-------+---------+-------+---------+
| Originally | (1.0) | (1.0) | 23.8 | 23.5 |
| reported | | | | |
+------------+-------+---------+-------+---------+
| Correction | (3.8) | (3.8) | (3.8) | (3.7) |
+------------+-------+---------+-------+---------+
| Restated | (4.8) | (4.8) | 20.0 | 19.8 |
+------------+-------+---------+-------+---------+
Consolidated balance sheet
+------------+-------------+----------+--------+-------------+----------+--------+
| | 30 September 2009 | 30 September 2008 |
+ +---------------------------------+---------------------------------+
| | | | Equity | | | Equity |
| | Current | Current | | Current | Current | |
| | trade | trade | | trade | trade | |
| | and | and | | and | and | |
| | other | other | | other | other | |
| |receivables |payables | |receivables |payables | |
+------------+-------------+----------+--------+-------------+----------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+------------+-------------+----------+--------+-------------+----------+--------+
| Originally | 1,536 | (4,162) | 2,286 | 1,653 | (4,057) | 2,596 |
| reported | | | | | | |
+------------+-------------+----------+--------+-------------+----------+--------+
| Correction | (54) | (58) | (112) | (54) | (16) | (70) |
+------------+-------------+----------+--------+-------------+----------+--------+
| Restated | 1,482 | (4,220) | 2,174 | 1,599 | (4,073) | 2,526 |
+------------+-------------+----------+--------+-------------+----------+--------+
(D) Pro forma financial information
An unaudited pro forma income statement for the year ended 30 September 2010 has
been prepared by the Directors, on the pro forma basis described below. This is
to illustrate the estimated financial effect on the Consolidated income
statement in the current year of the unprecedented closure of UK and European
airspace, following the eruption of the Eyjafjallajokull volcano in Iceland in
April 2010. During this period of closure and the period to resumption of a
full flying schedule, from 15 April to circa 23 April 2010, the Group's ability
to earn revenue from package holidays and flights was severely impacted and the
Group incurred costs associated with disruption caused to holidays in progress
and stranded passengers.
The unaudited pro forma information is presented alongside the Consolidated
income statement. This is to provide information which the Directors consider
helps to provide a better understanding of the underlying performance of the
business. The differences between the unaudited pro forma income statement
information and the consolidated statutory income statement for the year are
summarised as follows:
+---------+------------------------------------------------------------------------+
| · | The pro forma income statement excludes the estimated incremental |
| | direct costs incurred by the Group in respect of welfare costs to |
| | accommodate and repatriate the customers who were affected by the |
| | closure of European airspace. These costs principally include hotel |
| | costs for stranded inbound and outbound customers and the cost of |
| | repatriation of inbound customers. These costs amount to GBP69m. |
+---------+------------------------------------------------------------------------+
| · | The pro forma income statement includes the estimated revenue (GBP93m) |
| | and estimated attributable cost of sales and administrative expenses |
| | (GBP68m) from holidays and flights which were both booked and paid for |
| | prior to the closure of the airspace but which were cancelled or |
| | unable to depart during the affected period (a foregone gross profit |
| | contribution of GBP25m). |
+---------+------------------------------------------------------------------------+
| · | The pro forma income statement also includes an estimated reduction in |
| | holiday and flight sales of GBP32m and cost of sales of GBP22m in the |
| | immediate period after 23 April 2010, as a result of the uncertainty |
| | from both the original closure of airspace and further additional |
| | closures and disruption in May, particularly in the UK. This impact, |
| | in terms of foregone gross profit contribution, is estimated at |
| | GBP10m. |
+---------+------------------------------------------------------------------------+
| · | Certain customers whose holidays and / or flights were cancelled will |
| | have subsequently re-booked their holiday once full holiday and flying |
| | operations commenced again after 23 April 2010. It is not possible to |
| | reliably track such re-bookings. It is also not possible to |
| | demonstrate that the re-booked holiday capacity would not otherwise |
| | have been sold and made a positive contribution, given the ability of |
| | the Group to sell and distribute holidays up until the date of |
| | departure. Consequently no adjustment has been to reflect an estimate |
| | of such possible re-bookings in the pro forma information. |
+---------+------------------------------------------------------------------------+
| · | The pro forma income statement does not include the estimated benefit |
| | of lost revenue and positive contribution which would have arisen from |
| | sale of further holidays during the airspace closure period from 15-23 |
| | April 2010 in the 'lates' market which would otherwise have departed |
| | during this period. |
+---------+------------------------------------------------------------------------+
A detailed analysis of the impact on the pro forma income statement due to the
volcanic ash disruption is shown in the table below:
+-----------------------+---------------+-----------+-------------+----------+
| | Cancellations | Estimated | Incremental | |
| | | impact | | |
+-----------------------+---------------+-----------+-------------+----------+
| | 15-23 | post 23 | costs | Total |
| | April | April | | |
+-----------------------+---------------+-----------+-------------+----------+
| | GBPm | GBPm | GBPm | GBPm |
+-----------------------+---------------+-----------+-------------+----------+
| Revenue | (93) | (32) | - | (125) |
+-----------------------+---------------+-----------+-------------+----------+
| Cost of sales | 68 | 22 | (69) | 21 |
+-----------------------+---------------+-----------+-------------+----------+
| Gross profit | (25) | (10) | (69) | (104) |
+-----------------------+---------------+-----------+-------------+----------+
| | | | | |
+-----------------------+---------------+-----------+-------------+----------+
| Separately disclosed | - | - | (69) | (69) |
| items ('SDI') | | | | |
+-----------------------+---------------+-----------+-------------+----------+
| Non SDI | (25) | (10) | - | (35) |
+-----------------------+---------------+-----------+-------------+----------+
| | (25) | (10) | (69) | (104) |
+-----------------------+---------------+-----------+-------------+----------+
+---------+------------------------------------------------------------------------+
| · | The closure of UK and European airspace had no effect on the |
| | comparative year to 30 September 2009 and therefore no pro forma |
| | income statement is presented for this period. |
+---------+------------------------------------------------------------------------+
(E) Underlying measures of profits and losses
The Group believes that underlying operating profit, underlying profit before
tax and underlying earnings per share provide additional guidance to statutory
measures to help understand the underlying performance of the business during
the financial year. The term underlying is not defined under IFRS. It is a
measure that is used by management to assess the underlying performance of the
business internally and is not intended to be a substitute measure for adopted
IFRSs' GAAP measures. The Group defines these underlying measures as follows:
Underlying operating profit is operating profit or loss from continuing
operations stated before separately disclosed items (Note 3), acquisition
related items, impairment of goodwill, interest and taxation on the Group's
share of the results of joint ventures and associates.
Underlying profit before tax is profit or loss from continuing operations before
taxation (Group and share of joint ventures and associates), acquisition related
items, impairment of goodwill, the interest expense of joint ventures and
associates and separately disclosed items included within both the operating
result (Note 3) and net financial expenses (Note 4).
Underlying earnings used in the calculation of underlying earnings per share is
profit after tax from continuing operations excluding acquisition related items,
impairment of goodwill and separately disclosed items included within both the
operating result (Note 3) and net financial expenses (Note 4) (net of related
taxation).
It should be noted that the definitions of underlying items being used in these
consolidated financial statements are those used by the Group and may not be
comparable with the term 'underlying' as defined by other companies within both
the same sector or elsewhere.
(F) Funding and Liquidity
The Board remains satisfied with the Group's funding and liquidity position.
The main sources of debt funding are:
+--+------------------------------------------------------------------------+
|1. | the shareholder loan from TUI AG, which is EUR669m and is being repaid |
| | as follows; 1 December 2010: EUR509m and 30 April 2011: EUR160m; |
+--+------------------------------------------------------------------------+
| | |
+--+------------------------------------------------------------------------+
|2. | a total of GBP1,060m syndicated bank revolving credit facilities which |
| | mature in June 2012; |
+--+------------------------------------------------------------------------+
| | |
+--+------------------------------------------------------------------------+
|3. | GBP40m of bonding and letter of credit facilities which mature in |
| | September 2011 and a further GBP50m which mature in June 2012; |
+--+------------------------------------------------------------------------+
| | |
+--+------------------------------------------------------------------------+
|4. | a GBP350m convertible bond (due 2014) issued on 1 October 2009 and |
| | settled on 5 October 2009; and |
+--+------------------------------------------------------------------------+
| | |
+--+------------------------------------------------------------------------+
|5. | a GBP400m convertible bond (due 2017) issued on 22 April 2010 and |
| | settled on 27 April 2010. |
+--+------------------------------------------------------------------------+
In addition to the above facilities a further GBP30m bonding and letter of
credit facility which matures in
June 2012 was signed on 15 October 2010.
The ratio of Earnings Before Interest, Taxation, Depreciation, Amortisation and
operating lease Rentals (EBITDAR) to fixed charges (being the aggregate amount
of interest and any other finance charges in respect of borrowings and including
all payments under operating leases) and the ratio of net debt to Earnings
Before Interest, Taxation, Depreciation and Amortisation (EBITDA), which the
Board believes to be the most useful measures of cash generation and gearing, as
well as being the main basis for the Group's credit facility covenants, are
currently well within the covenant limits. Forecasts reviewed by the Board,
including forecasts adjusted for significantly worse economic conditions, show
continued compliance with these covenants. For both covenants, earnings are
calculated on an underlying basis as described in Note 1(E).
On the basis of its forecasts, both base case and adjusted as described above,
and available facilities, the Board has concluded that the going concern basis
of preparation continues to be appropriate. In particular the Board believe
that the funding already in place is sufficient to repay the Shareholder loan
which will become payable as described above.
2. Segmental information
The Group has adopted IFRS 8 'Operating Segments' for the first time in the
year. IFRS 8 requires segment information to be presented on the same basis as
that used for internal management reporting. Segmental information is reported
by the Group's business sectors to the GMB. The GMB consists of tour operating
and functional experts drawn from across the Group that executes TUI Travel
PLC's day-to-day operations and allocates resources to, and assesses the
performance, of the operating segments. Consequently, the GMB is considered to
be the chief operating decision maker.
The Group presents segment information in respect of its business segments. On
the adoption of IFRS 8, the Group has determined new segments in line with the
requirements of this standard. The Group's operating segments were previously
defined as Mainstream (split between Central Europe, Northern Region and Western
Europe), Specialist and Emerging Markets, Activity and Accommodation &
Destinations Sectors. Under IFRS 8, the results of Germany, the UK & Ireland and
Canada are shown separately from Central Europe and Northern Region respectively
as these meet the threshold of being individual reportable segments. The French
airline, Corsair, has been separately disclosed from the rest of Western Europe
as it is the only scheduled airline consolidated within the Group and therefore
has a different business model to the rest of the Group's integrated tour
operators. A more detailed explanation of each segment is included in the
Business performance section of the Annual Report & Accounts. Comparative
information has also been restated to reflect these new segments.
Certain Group operating segments have been aggregated into reportable segments
where their activities are considered to be sufficiently similar in nature under
the aggregation criteria of IFRS 8. The results of Nordics form the rest of
Northern Region; Switzerland, Austria and Poland form the rest of Central
Europe; and Belgium, the Netherlands and the French tour operating businesses
form the rest of Western Europe.
Central costs are in respect of central costs including finance, human
resources, legal, facility costs and some information technology costs that do
not relate to each business segment (and hence they are not allocated) are
classified within all other segments.
Information regarding the results of each reportable segment is provided below.
Segmental performance is evaluated based on underlying operating profit and is
measured consistently with underlying operating profit or loss in the
consolidated financial statements and as defined in Note 1(E). The GMB reviews
revenues and underlying operating profit before the impact of the volcano.
Consequently, the segmental results are shown on a pre-volcano as defined in
Note 1(D) basis and reconciled back to the statutory result.
Inter-segment sales and transfers reflect arms-length prices as if sold or
transferred to third parties. Financial income and expenses are not allocated to
the reportable segments as this activity is managed by the Group's treasury
function which manages the overall net debt position of the Group.
No one customer exceeds 10% of entity revenues in any segment. Impairment losses
arising in the period relate to Specialist segments. All impairment losses have
been recognised in the profit and loss account.
Segment assets comprise capital expenditure (as this is the only measure of
assets reported to the GMB) and represent the amounts purchased in the year.
Capital expenditure is measured within the Group as non-business combination-
related additions of intangibles and property plant and equipment.
Note that with effect from 1 October 2010, the Group has reorganised its
business sectors. The Mainstream Sector remains unchanged in terms of operating
segments. The Specialist Sectors have been refined and renamed to reflect the
strategic priorities of TUI Travel as it develops. The three Specialist Sectors
are now called Accommodation & Destinations, Specialist & Activity and Emerging
Markets. Segmental information will be presented using this new structure
throughout the forthcoming financial year ending 30 September 2011.
Year ended 30 September 2010
+----------------+----------+-----------------+----------+------------+------------+------------+
| Sector | Total | Inter-segmental | Total | Underlying | Group's | Underlying |
| | revenue | revenue | external | operating | share | operating |
| | before | | revenue | profit / | of | profit / |
| | impact | | | (loss) | underlying | (loss) |
| | of | | | before | operating | before |
| | volcanic | | | joint | profit of | impact of |
| | ash | | | ventures | joint | volcanic |
| | | | | and | ventures | ash |
| | | | | associates | and | |
| | | | | and | associates | |
| | | | | volcanic | | |
| | | | | ash | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------+----------+-----------------+----------+------------+------------+------------+
| UK | 3,453 | (61) | 3,392 | 127 | - | 127 |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Canada | 52 | - | 52 | (5) | - | (5) |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Rest of | 967 | (63) | 904 | 58 | 2 | 60 |
| Northern | | | | | | |
| Region | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Total | 4,472 | (124) | 4,348 | 180 | 2 | 182 |
| Northern | | | | | | |
| Region | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Germany | 3,829 | (29) | 3,800 | 76 | 5 | 81 |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Rest of | 627 | (52) | 575 | 11 | - | 11 |
| Central | | | | | | |
| Europe | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Total | 4,456 | (81) | 4,375 | 87 | 5 | 92 |
| Central Europe | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| French | 399 | (56) | 343 | (24) | - | (24) |
| Airline | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Rest of | 2,336 | (13) | 2,323 | 75 | - | 75 |
| Western | | | | | | |
| Europe | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Total | 2,735 | (69) | 2,666 | 51 | - | 51 |
| Western | | | | | | |
| Europe | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Total | 11,663 | (274) | 11,389 | 318 | 7 | 325 |
| Mainstream | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Specialist | 717 | - | 717 | 25 | (6) | 19 |
| & Emerging | | | | | | |
| Markets | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Activity | 868 | - | 868 | 61 | - | 61 |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Accommodation | 760 | (209) | 551 | 61 | 10 | 71 |
| & | | | | | | |
| Destinations | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| All other | - | - | - | (29) | - | (29) |
| segments | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
| Total | 14,008 | (483) | 13,525 | 436 | 11 | 447 |
| Group | | | | | | |
+----------------+----------+-----------------+----------+------------+------------+------------+
Year ended 30 September 2009
+---------------+---------+-----------------+----------+------------+------------+------------+
| Sector | Total | Inter-segmental | Total | Underlying | Group's | Underlying |
| | Revenue | revenue | external | operating | share | operating |
| | | | revenue | profit / | of | profit / |
| | | | | (loss) | underlying | (loss) |
| | | | | before | profit of | |
| | | | | joint | joint | |
| | | | | ventures | ventures | |
| | | | | and | and | |
| | | | | associates | associates | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------------+---------+-----------------+----------+------------+------------+------------+
| UK | 3,332 | (87) | 3,245 | 142 | - | 142 |
| (restated*) | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Canada | 168 | - | 168 | (24) | - | (24) |
| | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Rest of | 878 | (81) | 797 | 46 | 2 | 48 |
| Northern | | | | | | |
| Region | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Total | 4,378 | (168) | 4,210 | 164 | 2 | 166 |
| Northern | | | | | | |
| Region | | | | | | |
| (restated*) | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Germany | 4,183 | (39) | 4,144 | 65 | 5 | 70 |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Rest of | 654 | (2) | 652 | 1 | - | 1 |
| Central | | | | | | |
| Europe | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Total | 4,837 | (41) | 4,796 | 66 | 5 | 71 |
| Central | | | | | | |
| Europe | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| French | 432 | (75) | 357 | (24) | - | (24) |
| airline | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Rest of | 2,310 | (15) | 2,295 | 57 | - | 57 |
| Western | | | | | | |
| Europe | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Total | 2,742 | (90) | 2,652 | 33 | - | 33 |
| Western | | | | | | |
| Europe | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Total | 11,957 | (299) | 11,658 | 263 | 7 | 270 |
| Mainstream | | | | | | |
| (restated*) | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Specialist | 825 | - | 825 | 31 | 1 | 32 |
| & Emerging | | | | | | |
| Markets | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Activity | 816 | - | 816 | 59 | - | 59 |
| | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Accommodation | 719 | (167) | 552 | 60 | 7 | 67 |
| & | | | | | | |
| Destinations | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| All other | - | - | - | (27) | - | (27) |
| segments | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
| Total | 14,317 | (466) | 13,851 | 386 | 15 | 401 |
| Group | | | | | | |
| (restated*) | | | | | | |
+---------------+---------+-----------------+----------+------------+------------+------------+
*Please refer to Basis of Preparation within Note 1 for details
Reconciliation of segmental analysis of revenue to statutory revenue
+--------------------------------+------+-------------+--------------+
| | | | Restated |
+--------------------------------+------+-------------+--------------+
| | | Year ended | Year ended |
| | | | 30 September |
| | | 30 | |
| | | September | 2009 |
| | | 2010 | |
+--------------------------------+------+-------------+--------------+
| |Note | GBPm | GBPm |
+--------------------------------+------+-------------+--------------+
| Total external revenue in | | 13,525 | 13,851 |
| segmental analysis | | | |
+--------------------------------+------+-------------+--------------+
| Pro forma impact of volcanic | 1 | (125) | - |
| ash | | | |
+--------------------------------+------+-------------+--------------+
| Statutory revenue | | 13,400 | 13,851 |
+--------------------------------+------+-------------+--------------+
Reconciliation of underlying operating profit to loss before tax
+--------------------------------+------+-------------+--------------+
| | | | Restated |
+--------------------------------+------+-------------+--------------+
| | | Year ended | Year ended |
| | | | 30 September |
| | | 30 | |
| | | September | 2009 |
| | | 2010 | |
+--------------------------------+------+-------------+--------------+
| |Note | GBPm | GBPm |
+--------------------------------+------+-------------+--------------+
| Group underlying operating | | 447 | 401 |
| profit disclosed above | | | |
+--------------------------------+------+-------------+--------------+
| Impact of volcanic ash | 1 | (35) | - |
+--------------------------------+------+-------------+--------------+
| | | 412 | 401 |
+--------------------------------+------+-------------+--------------+
| Separately disclosed items | 3 | (250) | (340) |
+--------------------------------+------+-------------+--------------+
| Acquisition related expenses | | (63) | (56) |
+--------------------------------+------+-------------+--------------+
| Impairment of goodwill | | (12) | (7) |
+--------------------------------+------+-------------+--------------+
| Taxationon profits and | | (6) | (3) |
| interest on joint ventures and | | | |
| associates | | | |
+--------------------------------+------+-------------+--------------+
| Operating profit / (loss) | | 81 | (5) |
+--------------------------------+------+-------------+--------------+
| Net financial expenses | 4 | (117) | (89) |
+--------------------------------+------+-------------+--------------+
| Loss before tax | | (36) | (94) |
+--------------------------------+------+-------------+--------------+
Other segmental information
+----------------+-------------+----------------+----------+------------+------------+
| | Capital expenditure | | Total depreciation of |
| | | | property, plant and |
| | | | equipment and |
| | | | amortisation of |
| | | | intangible assets |
+----------------+------------------------------+----------+-------------------------+
| | 30 | 30 September | | 30 | 30 |
| | September | | | September | September |
+----------------+-------------+----------------+----------+------------+------------+
| | 2010 | 2009 | | 2010 | 2009 |
+----------------+-------------+----------------+----------+------------+------------+
| | GBPm | GBPm | | GBPm | GBPm |
+----------------+-------------+----------------+----------+------------+------------+
| UK | 188 | 63 | | 84 | 91 |
+----------------+-------------+----------------+----------+------------+------------+
| Canada | - | 1 | | - | 3 |
+----------------+-------------+----------------+----------+------------+------------+
| Rest of | 15 | 19 | | 9 | 7 |
| Northern | | | | | |
| Region | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| Total | 203 | 83 | | 93 | 101 |
| Northern | | | | | |
| Region | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| Germany | 24 | 28 | | 35 | 35 |
+----------------+-------------+----------------+----------+------------+------------+
| Rest of | 2 | 4 | | 4 | 4 |
| Central | | | | | |
| Europe | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| Total | 26 | 32 | | 39 | 39 |
| Central Europe | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| French | 22 | 26 | | 22 | 25 |
| airline | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| Rest of | 22 | 33 | | 37 | 49 |
| Western | | | | | |
| Europe | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| Total Western | 44 | 59 | | 59 | 74 |
| Europe | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| Total | 273 | 174 | | 191 | 214 |
| Mainstream | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| Specialist & | 4 | 5 | | 11 | 12 |
| Emerging | | | | | |
| Markets | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| Activity | 29 | 35 | | 27 | 34 |
+----------------+-------------+----------------+----------+------------+------------+
| Accommodation | 17 | 16 | | 32 | 27 |
| & | | | | | |
| Destinations | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| All other | 1 | 4 | | - | - |
| segments | | | | | |
+----------------+-------------+----------------+----------+------------+------------+
| Total Group | 324 | 234 | | 261 | 287 |
+----------------+-------------+----------------+----------+------------+------------+
Total depreciation of property, plant and depreciation and amortisation of
intangible assets of GBP261m (2009: GBP287m) comprises GBP94m (2009: GBP103m) of
amortisation of intangible assets and GBP167m (2009: GBP184m) of depreciation.
Reconciliation of capital expenditure to amounts included in the financial
statements
+--------------------------------------+----------+-------------+-----------+
| | | Year ended | Year |
| | | | ended |
+--------------------------------------+----------+-------------+-----------+
| | | 30 | 30 |
| | | September | September |
+--------------------------------------+----------+-------------+-----------+
| | | 2010 | 2009 |
+--------------------------------------+----------+-------------+-----------+
| | | GBPm | GBPm |
+--------------------------------------+----------+-------------+-----------+
| Total Group capital expenditure as | | 324 | 234 |
| shown above | | | |
+--------------------------------------+----------+-------------+-----------+
| Analysed as: | | | |
+--------------------------------------+----------+-------------+-----------+
| Additions to intangible assets | | 43 | 82 |
+--------------------------------------+----------+-------------+-----------+
| Additions to property plant and | | 281 | 152 |
| equipment | | | |
+--------------------------------------+----------+-------------+-----------+
| | | 324 | 234 |
+--------------------------------------+----------+-------------+-----------+
| Reconciliation to the notes to the | | | |
| financial statements | | | |
+--------------------------------------+----------+-------------+-----------+
| Additions to intangible assets in | | 43 | 82 |
| segmental analysis | | | |
+--------------------------------------+----------+-------------+-----------+
| Additions to goodwill | | 1 | 3 |
+--------------------------------------+----------+-------------+-----------+
| Intangible assets: total additions | | 44 | 85 |
+--------------------------------------+----------+-------------+-----------+
| | | | |
+--------------------------------------+----------+-------------+-----------+
| Additions to property plant and | | 281 | 152 |
| equipment in segmental analysis | | | |
+--------------------------------------+----------+-------------+-----------+
| Property plant and equipment: total | | 281 | 152 |
| additions | | | |
+--------------------------------------+----------+-------------+-----------+
Group wide disclosures
The UK is the Group's parent company's country of domicile. Revenues from
external customers and non-current assets are split geographically as follows:
+-------------+-------+----------+-------+-------+-------+-------+-------+-------+-------+-------+--------+----------+
| | | | | | Rest of | |
| | UK | Germany | France | Other | the | Total |
| | | | | Europe | World | |
+-------------+------------------+---------------+---------------+---------------+---------------+-------------------+
| | | Restated | | | | | | | | | | Restated |
+-------------+-------+----------+-------+-------+-------+-------+-------+-------+-------+-------+--------+----------+
| | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
+-------------+-------+----------+-------+-------+-------+-------+-------+-------+-------+-------+--------+----------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
| | | | | | | | | | | | | |
+-------------+-------+----------+-------+-------+-------+-------+-------+-------+-------+-------+--------+----------+
| Revenue | 4,134 | 4,150 | 3,704 | 3,753 | 1,313 | 1,337 | 3,524 | 3,831 | 725 | 780 | 13,400 | 13,851 |
| from | | | | | | | | | | | | |
| external | | | | | | | | | | | | |
| customers | | | | | | | | | | | | |
+-------------+-------+----------+-------+-------+-------+-------+-------+-------+-------+-------+--------+----------+
| Non-current | 2,685 | 2,598 | 639 | 643 | 735 | 779 | 856 | 955 | 756 | 726 | 5,671 | 5,701 |
| assets | | | | | | | | | | | | |
+-------------+-------+----------+-------+-------+-------+-------+-------+-------+-------+-------+--------+----------+
United Kingdom revenue arises where the source of the supply is the United
Kingdom. In addition to the United Kingdom, revenue relating to an individual
country is separately disclosed when it represents 10% or more of total revenue.
'Other Europe' is defined as Continental Europe and Eire excluding UK, Germany
and France. Non-current assets for the table above includes intangible assets
and property, plant and equipment and excludes all financial instruments,
deferred tax assets and post-employment benefit assets in accordance with IFRS
8.
3. Separately disclosed items
+---------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
+---------------+-----------+-----------+
| | 30 | 30 |
| | September | September |
| | 2010 | 2009 |
+---------------+-----------+-----------+
| | GBPm | GBPm |
+---------------+-----------+-----------+
| Merger | 116 | 144 |
| related | | |
| integration | | |
| costs | | |
+---------------+-----------+-----------+
| Aircraft | 7 | 124 |
| and | | |
| other | | |
| assets | | |
+---------------+-----------+-----------+
| Restructuring | 58 | 72 |
| and other | | |
| separately | | |
| disclosed | | |
| items | | |
+---------------+-----------+-----------+
| Total | 181 | 340 |
| pre | | |
| volcanic | | |
| ash | | |
+---------------+-----------+-----------+
| Incremental | 69 | - |
| costs | | |
| caused by | | |
| volcanic | | |
| ash | | |
| disruption | | |
+---------------+-----------+-----------+
| Total | 250 | 340 |
+---------------+-----------+-----------+
+------------+--------+--------+
| Separately | 7 | 12 |
| disclosed | | |
| financial | | |
| expenses | | |
+------------+--------+--------+
The 2009 comparative numbers have been reallocated to ensure that they are in
alignment with the revised criteria used to differentiate between the different
types of separately disclosed items.
Separately disclosed items within the operating profit / (loss) are included
within the Consolidated income statement as follows:
+----------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
| | | |
+----------------+-----------+-----------+
| | 30 | 30 |
| | September | September |
| | 2010 | 2009 |
+----------------+-----------+-----------+
| | GBPm | GBPm |
+----------------+-----------+-----------+
| Cost | 133 | 209 |
| of | | |
| sales | | |
+----------------+-----------+-----------+
| Administrative | 117 | 131 |
| expenses | | |
+----------------+-----------+-----------+
| Total | 250 | 340 |
+----------------+-----------+-----------+
Merger related integration costs
These relate primarily to the costs of integration of the UK businesses. The
majority of costs arise from the integration of First Choice and Thomson in the
UK, and, in particular, from the formation of one airline and an integrated
retail estate. A combined Mainstream UK head office has been established in
Luton.
The UK business has also now completed the creation of a single management
information (MI) suite. The improved MI and forecast capability which it has
given the business has now led to the closing out of certain foreign currency
positions based on the improved visibility of past and future requirements,
resulting in a GBP20m charge in the current year.
Costs also arose from the ongoing merger of former TUI businesses based in
Continental Europe with their First Choice counterparts (GBP4m). In the
Accommodation & Destinations Sector separate First Choice and TUI Tourism
incoming agencies have been combined in a number of key destinations, notably
Spain, the Dominican Republic, Greece and Turkey (total GBP16m).
Costs include amounts paid or provided for redundancy and integration
remuneration costs (including the cost of the Value Creation Share Plan and
rolled over First Choice share awards, property closures and onerous lease
obligations, as well as professional fees relating to the integration project.
Aircraft and other assets
Included in the year ended 30 September 2010 is a GBP47m credit which relates to
a combination of aircraft order cancellation credits and compensation for delays
to the delivery of aircraft. Principal charges include GBP15m for the
impairment of the cruise ship, the 'Island Escape'; GBP12m to provide for costs
relating to the Corsair fleet renewal as part of the restructuring of that
business; and GBP7m to record an onerous lease provision on an unused property.
In the year ended 30 September 2009 there was a GBP124m impairment charge
principally in respect of asset write downs of Boeing 747s operated by Corsair.
Restructuring and other separately disclosed items
Costs incurred in the year ended 30 September 2010 include restructuring
programmes which are not related to the business combination of First Choice and
the Tourism businesses of TUI AG. The principal items are GBP43m to
significantly restructure Corsair, the scheduled French airline; GBP22m for the
restructuring of hotel operations in Turkey and GBP13m to restructure the tour
operator, retail network and hotel operations of Nouvelles Frontières in France.
Also included is a GBP30m credit arising from the revaluation of the investment
in The Airline Group and a GBP13m gain recognised on the disposal of the
Canadian Mainstream operation which was contributed when creating the strategic
venture (Note 18). This gain was more than offset by our share of post-deal
restructuring costs and related Skyservice write-offs.
The main costs incurred in the year ended 30 September 2009 were GBP40m in
relation to transaction costs and associated restructuring in the German source
market, due to the transaction to sell TUIfly's city charter business to Air
Berlin PLC, GBP16m due to the closure of the Sunsail Clubs in Turkey and the
Caribbean, and GBP13m for restructuring in the French tour operator, Nouvelles
Frontières.
Volcano impact
Included in separately disclosed items are the incremental direct costs incurred
by the Group in respect of welfare costs to look after the customers who were
affected by the closure of European airspace. These costs principally include
hotel costs for stranded inbound and outbound customers, and the cost of
repatriation of inbound customers. These costs amount to GBP69m and are shown
in the 'Pro forma impact of volcanic ash disruption' column on the face of the
Consolidated income statement.
Separately disclosed financial expenses
The separately disclosed financial expenses in the year ended 30 September 2010
relate to non debt items, principally a GBP3m interest charge on a tax penalty
imposed by the Turkish authorities relating to financial years up to and
including 2008.
The separately disclosed financial expenses for the year ended 30 September 2009
relate to non debt items including the revaluation of a put option written by
the Group in respect of a non-controlling interest shareholder of L'TUR
Akiengesellschaft Tourismus AG.
4. Net financial expenses
+-------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
+-------------+-----------+-----------+
| | 30 | 30 |
| | September | September |
| | 2010 | 2009 |
+-------------+-----------+-----------+
| Financial | GBPm | GBPm |
| income | | |
+-------------+-----------+-----------+
| Bank | 3 | 6 |
| interest | | |
| receivable | | |
+-------------+-----------+-----------+
| Interest | 66 | 64 |
| on | | |
| pension | | |
| scheme | | |
| assets | | |
+-------------+-----------+-----------+
| Other | - | 2 |
| financial | | |
| income | | |
+-------------+-----------+-----------+
| Total | 69 | 72 |
+-------------+-----------+-----------+
| | | |
+-------------+-----------+-----------+
| Financial | | |
| expenses | | |
+-------------+-----------+-----------+
| Bank | (10) | (11) |
| interest | | |
| payable | | |
| on loans | | |
| and | | |
| overdrafts | | |
+-------------+-----------+-----------+
| Finance | (44) | - |
| charges | | |
| on | | |
| convertible | | |
| bond | | |
+-------------+-----------+-----------+
| Interest | (84) | (81) |
| on | | |
| pension | | |
| scheme | | |
| liabilities | | |
+-------------+-----------+-----------+
| Interest | (15) | (42) |
| payable | | |
| in | | |
| respect | | |
| of loans | | |
| from | | |
| parent | | |
+-------------+-----------+-----------+
| Finance | (11) | (10) |
| lease | | |
| charges | | |
+-------------+-----------+-----------+
| Unwinding | (11) | (5) |
| of | | |
| discount | | |
| on | | |
| provisions | | |
+-------------+-----------+-----------+
| Other | (11) | (12) |
| financial | | |
| expenses | | |
+-------------+-----------+-----------+
| Total | (186) | (161) |
+-------------+-----------+-----------+
| Net | (117) | (89) |
| financial | | |
| expenses | | |
+-------------+-----------+-----------+
+------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
+------------+-----------+-----------+
| | 30 | 30 |
| | September | September |
| | 2010 | 2009 |
+------------+-----------+-----------+
| | GBPm | GBPm |
+------------+-----------+-----------+
| Net | (117) | (89) |
| financial | | |
| expenses | | |
| (as | | |
| above) | | |
+------------+-----------+-----------+
| Less | 7 | 12 |
| separately | | |
| disclosed | | |
| financial | | |
| expenses | | |
| (Note 3) | | |
+------------+-----------+-----------+
| Net | (110) | (77) |
| underlying | | |
| financial | | |
| expenses | | |
+------------+-----------+-----------+
5. Income, expenses and auditors' remuneration
+---------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
+---------------+-----------+-----------+
| | 30 | 30 |
| | September | September |
| | 2010 | 2009 |
+---------------+-----------+-----------+
| | GBPm | GBPm |
+---------------+-----------+-----------+
| Included | | |
| within | | |
| operating | | |
| profit in | | |
| the | | |
| consolidated | | |
| income | | |
| statement | | |
| for the year | | |
| are the | | |
| following | | |
| (credits) / | | |
| charges | | |
+---------------+-----------+-----------+
| Operating | (54) | (18) |
| lease | | |
| income: | | |
| aircraft | | |
+---------------+-----------+-----------+
| Operating | 162 | 163 |
| lease | | |
| rentals: | | |
| land and | | |
| buildings | | |
+---------------+-----------+-----------+
| Operating | 417 | 408 |
| lease | | |
| rentals: | | |
| aircraft | | |
| and other | | |
| equipment | | |
+---------------+-----------+-----------+
| Depreciation | 167 | 184 |
| of property, | | |
| plant and | | |
| equipment | | |
+---------------+-----------+-----------+
| Amortisation | 94 | 103 |
| of | | |
| intangible | | |
| assets | | |
+---------------+-----------+-----------+
| Charge | 15 | 17 |
| for | | |
| share-based | | |
| payments | | |
+---------------+-----------+-----------+
| Loss / | 1 | (12) |
| (profit) | | |
| on sale | | |
| of | | |
| property, | | |
| plant and | | |
| equipment | | |
+---------------+-----------+-----------+
| Loss / | 14 | (23) |
| (gain) | | |
| on | | |
| foreign | | |
| currency | | |
| retranslation | | |
+---------------+-----------+-----------+
| Impairment | 12 | 7 |
| of | | |
| goodwill | | |
| and other | | |
| intangibles | | |
+---------------+-----------+-----------+
| Impairment | 15 | 125 |
| of | | |
| property, | | |
| plant and | | |
| equipment | | |
+---------------+-----------+-----------+
Operating lease rentals, land and buildings, includes GBP15m (2009: GBP8m) of
costs included in separately disclosed items (Note 3) as provisions for onerous
leases, primarily related to vacated properties in the UK and Ireland. In
addition to the operating lease rentals disclosed above, charges of GBP149m
(2009: GBP71m) were incurred in respect of hotel accommodation rentals which are
disclosed as operating leases under IFRIC 4: Determining whether an arrangement
contains a lease.
+--------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
+--------------+-----------+-----------+
| | 30 | 30 |
| | September | September |
| | 2010 | 2009 |
+--------------+-----------+-----------+
| | GBPm | GBPm |
+--------------+-----------+-----------+
| Auditors' | | |
| remuneration | | |
+--------------+-----------+-----------+
| Auditors' | | |
| remuneration | | |
| for these | | |
| financial | | |
| statements | | |
| and other | | |
| Group | | |
+--------------+-----------+-----------+
| subsidiary | 3 | 2 |
| financial | | |
| statements | | |
| pursuant | | |
| to | | |
| legislation | | |
+--------------+-----------+-----------+
| Other | 1 | 1 |
| services | | |
| pursuant | | |
| to | | |
| legislation | | |
| (including | | |
| regulatory | | |
| reporting) | | |
+--------------+-----------+-----------+
| Other | 3 | 1 |
| services | | |
+--------------+-----------+-----------+
Auditors' remuneration refers to fees paid to the Group's auditors, KPMG Audit
Plc, and its associates and does not include fees paid to other auditors who
audit subsidiaries of the Group. Other services are principally in respect of
work relating to the restatement described in Note 1(C), defined benefit pension
scheme advice and tax compliance work in respect of certain overseas
subsidiaries.
6. Taxation
The tax charge / (credit) can be summarised as follows:
+--------------+-----------+-----------+
| | | Restated |
+--------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
+--------------+-----------+-----------+
| | 30 | 30 |
| | September | September |
| | 2010 | 2009 |
+--------------+-----------+-----------+
| | GBPm | GBPm |
+--------------+-----------+-----------+
| (i) | | |
| Analysis | | |
| of | | |
| charge / | | |
| (credit) | | |
| in the | | |
| year | | |
+--------------+-----------+-----------+
| | | |
+--------------+-----------+-----------+
| Current | | |
| tax | | |
| charge: | | |
+--------------+-----------+-----------+
| UK | - | (21) |
| corporation | | |
| tax on loss | | |
| for the | | |
| year | | |
+--------------+-----------+-----------+
| Non-UK | 61 | 41 |
| tax on | | |
| loss | | |
| for | | |
| the | | |
| year | | |
+--------------+-----------+-----------+
| Adjustments | (15) | (3) |
| in respect | | |
| of previous | | |
| years | | |
+--------------+-----------+-----------+
| | 46 | 17 |
+--------------+-----------+-----------+
| | | |
+--------------+-----------+-----------+
| Deferred | | |
| tax | | |
| charge / | | |
| (credit): | | |
+--------------+-----------+-----------+
| Origination | | |
| and | | |
| reversal of | | |
| timing | | |
| differences: | | |
+--------------+-----------+-----------+
| Current | (6) | (5) |
| year UK | | |
+--------------+-----------+-----------+
| Current | (2) | (43) |
| year | | |
| non-UK | | |
+--------------+-----------+-----------+
| Changes | (1) | - |
| in tax | | |
| rates | | |
+--------------+-----------+-----------+
| Adjustments | 13 | (11) |
| in respect | | |
| of previous | | |
| years | | |
+--------------+-----------+-----------+
| | 4 | (59) |
+--------------+-----------+-----------+
| | | |
+--------------+-----------+-----------+
| Total | 50 | (42) |
| income | | |
| tax | | |
| charge | | |
| / | | |
| (credit) | | |
| in | | |
| consolidated | | |
| income | | |
| statement | | |
+--------------+-----------+-----------+
(ii) Reconciliation of effective tax rate
The total tax charge (2009: credit) for the year is higher (2009: higher) than
the standard rate of corporation tax in the UK of 28% (2009: 28%). The
differences are explained below:
+-----------------+--------+--------+--------+--------+
| | | Restated |
+-----------------+-----------------+-----------------+
| | Year ended 30 | Year ended |
| | September 2010 | 30 September |
| | | 2009 |
+-----------------+-----------------+-----------------+
| | GBPm | % | GBPm | % |
+-----------------+--------+--------+--------+--------+
| Loss | (36) | | (94) | |
| before | | | | |
| tax | | | | |
| reported | | | | |
| in the | | | | |
| consolidated | | | | |
| income | | | | |
| statement | | | | |
| (2009: | | | | |
| restated) | | | | |
+-----------------+--------+--------+--------+--------+
| Less | 3 | | (9) | |
| share | | | | |
| of | | | | |
| loss / | | | | |
| (profit) | | | | |
| in joint | | | | |
| ventures | | | | |
| and | | | | |
| associates | | | | |
+-----------------+--------+--------+--------+--------+
| | (33) | | (103) | |
+-----------------+--------+--------+--------+--------+
| | | | | |
+-----------------+--------+--------+--------+--------+
| Income | | | | |
| tax on | | | | |
| loss | | | | |
| before | | | | |
| tax | | | | |
| excluding | | | | |
| share | | | | |
+-----------------+--------+--------+--------+--------+
| of | | | | |
| profit | | | | |
| of | | | | |
| joint | | | | |
| ventures | | | | |
| and | | | | |
| associates | | | | |
| at the | | | | |
| standard | | | | |
| rate | | | | |
+-----------------+--------+--------+--------+--------+
| of UK | (9) | 28 | (29) | 28 |
| tax of | | | | |
| 28% | | | | |
| (2009: | | | | |
| 28%) | | | | |
+-----------------+--------+--------+--------+--------+
| | | | | |
+-----------------+--------+--------+--------+--------+
| Expenses | 3 | (9) | 3 | (3) |
| not | | | | |
| deductible | | | | |
| for tax | | | | |
| purposes | | | | |
+-----------------+--------+--------+--------+--------+
| Income | (2) | 6 | (4) | 4 |
| not | | | | |
| taxable | | | | |
+-----------------+--------+--------+--------+--------+
| Non-utilisation | 67 | (203) | 11 | (11) |
| of tax losses | | | | |
+-----------------+--------+--------+--------+--------+
| Higher | (3) | 9 | (8) | 8 |
| tax | | | | |
| rates | | | | |
| on | | | | |
| overseas | | | | |
| earnings | | | | |
| / losses | | | | |
+-----------------+--------+--------+--------+--------+
| Lower | (3) | 9 | (1) | 1 |
| tax | | | | |
| rates | | | | |
| on | | | | |
| overseas | | | | |
| earnings | | | | |
| / losses | | | | |
+-----------------+--------+--------+--------+--------+
| Changes | (1) | 3 | - | - |
| in tax | | | | |
| rates | | | | |
+-----------------+--------+--------+--------+--------+
| Adjustments | (2) | 6 | (14) | 14 |
| to taxation | | | | |
| in respect | | | | |
| of previous | | | | |
| periods | | | | |
+-----------------+--------+--------+--------+--------+
| Total | 50 | (151) | (42) | 41 |
| income | | | | |
| tax | | | | |
| charge | | | | |
| / | | | | |
| (credit) | | | | |
| in | | | | |
| income | | | | |
| statement | | | | |
+-----------------+--------+--------+--------+--------+
The underlying effective rate of taxation for the year ended 30 September 2010
is calculated based on the underlying profit before tax (excluding separately
disclosed items, amortisation of IFRS 3 business combination intangibles and
goodwill impairment charges) and is calculated at 27%. The actual tax rate of
151% differs from the underlying effective tax rate due to the tax effect of
separately disclosed items (principally the non-recognition of tax losses
arising from such items), amortisation of IFRS 3 business combination
intangibles and goodwill impairment charges..
(iii) Deferred tax recognised directly in equity
The following taxation charge / (credit) has been recognised directly in equity
within the Consolidated statement ofcomprehensive income:
+---------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
+---------------+-----------+-----------+
| | 30 | 30 |
| | September | September |
+---------------+-----------+-----------+
| | 2010 | 2009 |
+---------------+-----------+-----------+
| | GBPm | GBPm |
+---------------+-----------+-----------+
| Tax | | |
| relating | | |
| to | | |
| components | | |
| of other | | |
| comprehensive | | |
| income | | |
+---------------+-----------+-----------+
| Cash | 9 | (39) |
| flow | | |
| hedges | | |
+---------------+-----------+-----------+
| Defined | (9) | (65) |
| benefit | | |
| pension | | |
| plans | | |
+---------------+-----------+-----------+
| Other | 9 | (1) |
+---------------+-----------+-----------+
| Total | 9 | (105) |
| tax | | |
| debited | | |
| / | | |
| (credited) | | |
| to other | | |
| comprehensive | | |
| income | | |
+---------------+-----------+-----------+
| | | |
+---------------+-----------+-----------+
| Tax | | |
| (credited) | | |
| / debited | | |
| directly | | |
| to equity | | |
+---------------+-----------+-----------+
| Equity | (4) | - |
| settled | | |
| transactions | | |
| (share-based | | |
| payments) | | |
+---------------+-----------+-----------+
| Convertible | 31 | - |
| bonds | | |
+---------------+-----------+-----------+
| Total | 27 | - |
| tax | | |
| debited | | |
| / | | |
| (credited) | | |
| to equity | | |
+---------------+-----------+-----------+
| | | |
+---------------+-----------+-----------+
| Total | 36 | (105) |
+---------------+-----------+-----------+
(iv) Factors affecting future tax charge
A) The Emergency Budget on 22 June 2010 announced that the UK corporation tax
rate will reduce from 28% to 24% over a period of 4 years from 2011. The first
reduction in the UK corporation tax rate from 28% to 27% was substantively
enacted on 20 July 2010 and will be effective from 1 April 2011. This may reduce
the Group's future current tax charge accordingly. It has not yet been possible
to quantify the full anticipated effect of the announced further 3% rate
reduction, although this should further reduce the Group's future current tax
charge and reduce the Group's deferred tax liabilities / assets accordingly.
B) The Spanish tax authorities are auditing parts of the Group's Spanish
operations for the years 2002 through 2006. During 2010, the Spanish tax
authorities formally notified the Group that they disagree with the Spanish
corporate income tax treatment of two separate transactions that were undertaken
during the period under audit. The Group has had extensive discussions with the
Spanish tax authorities to explain the nature of the transactions and seek to
agree the Spanish tax treatment of these.
The original tax deduction arising from the transactions being challenged by the
Spanish tax authorities was approximately EUR28 million. In prior years, the
Directors recorded a tax creditor for their best estimate of the tax that they
believe may become payable in the event that the Spanish tax authorities are
successful in their challenge. This creditor continues to be held at 30
September 2010, within income taxes payable. In continuing to challenge these
transactions, the tax authorities may seek to pursue a judicial process with the
possibility of interest and penalties, the outcome of which at this stage is not
certain. On the basis of independent legal advice taken, the group firmly
believes that in the event of any such case, it could be defended robustly. It
is likely that the resolution of this matter will take a number of years to
reach a final conclusion.
C) Other factors which may affect the future tax charge include the mix of
jurisdictions with different tax rates in which profits and losses arise,
changes in tax rates and the potential future recognition of tax losses for
which a deferred tax asset has not been recognised at the year-end.
7. Dividends
The following dividends which relate to ordinary shares have been deducted from
equity in the year:
+-----------+--------+-----------+-----------+
| | | Year | Year |
| | | ended | ended |
+-----------+--------+-----------+-----------+
| | | 30 | 30 |
| | | September | September |
| | | 2010 | 2009 |
+-----------+--------+-----------+-----------+
| | Pence | GBPm | GBPm |
| | per | | |
| | share | | |
+-----------+--------+-----------+-----------+
| Dividends | | | |
| relating | | | |
| to the | | | |
| year | | | |
| ended 30 | | | |
| September | | | |
| 2008 | | | |
+-----------+--------+-----------+-----------+
| | | | |
+-----------+--------+-----------+-----------+
| Interim | 2.8 | - | 31 |
| dividend | | | |
| (paid | | | |
| October | | | |
| 2008) | | | |
+-----------+--------+-----------+-----------+
| Final | 6.9 | - | 76 |
| dividend | | | |
| (paid | | | |
| April | | | |
| 2009) | | | |
+-----------+--------+-----------+-----------+
| | 9.7 | - | 107 |
+-----------+--------+-----------+-----------+
| | | | |
+-----------+--------+-----------+-----------+
| Dividends | | | |
| relating | | | |
| to the | | | |
| year | | | |
| ended 30 | | | |
| September | | | |
| 2009 | | | |
+-----------+--------+-----------+-----------+
| | | | |
+-----------+--------+-----------+-----------+
| Interim | 3.0 | 33 | - |
| dividend | | | |
| (paid | | | |
| October | | | |
| 2009) | | | |
+-----------+--------+-----------+-----------+
| Final | 7.7 | 85 | - |
| dividend | | | |
| (paid | | | |
| April | | | |
| 2010) | | | |
+-----------+--------+-----------+-----------+
| | 10.7 | 118 | - |
+-----------+--------+-----------+-----------+
The interim dividend in respect of the year ended 30 September 2010 of 3.2p per
share was paid on 1 October 2010 and this dividend of GBP36m will be recognised
as a deduction from equity in the year ending 30 September 2011.
Subsequent to the balance sheet date, the Directors have proposed a final
dividend of 7.8p per share (2009: final dividend of 7.7p per share) payable on 1
March 2011 to the holders of relevant shares on the register at 2 February 2011.
The final proposed dividend amounts to GBP122m and will, after approval by
shareholders, be recognised in the consolidated financial statements for the
year ending 30 September 2011. The final ordinary dividend of 7.8p per share,
together with the interim dividend of 3.2p per share, makes a total dividend of
11.0p per share relating to the year ended 30 September 2010.
A dividend reinvestment plan is in operation. Those shareholders who have not
elected to participate in this plan, and who would like to participate with
respect to the 2010 final dividend, may do so by contacting Equiniti directly on
0871 384 2030. The last day for election for the final proposed dividend is 15
February 2011 and any requests should be made in good time ahead of that date.
8. Movements in cash and net debt
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| | | Convertible | | | | | | |
| | | bonds | Amounts | | | | | |
| | Cash | | due to | | | | Other | |
| | and | | related | Bank | Loan | Finance | financial | |
| | cash | | parties | loans | notes | Leases | liabilities | Total |
| | equivalents | | | | | | | |
| | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| At 1 | 1,130 | - | (840) | (185) | (9) | (187) | (45) | (136) |
| October | | | | | | | | |
| 2008 | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| Cash | (352) | - | 91 | 143 | 6 | 22 | 23 | (67) |
| movement | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| Non-cash | (4) | - | 29 | - | (2) | - | (12) | 11 |
| movement | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| Foreign | 16 | - | (120) | (8) | (1) | (26) | (5) | (144) |
| exchange | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| Arising | - | - | - | (1) | - | (1) | - | (2) |
| on | | | | | | | | |
| acquisition | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| At 30 | 790 | - | (840) | (51) | (6) | (192) | (39) | (338) |
| September | | | | | | | | |
| 2009 | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| Cash | 561 | (750) | 222 | 13 | 4 | 31 | - | 81 |
| movement | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| Non-cash | - | 117 | - | - | - | (121) | - | (4) |
| movement | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| Foreign | (47) | -- | 43 | 2 | - | 13 | 1 | 12 |
| exchange | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
| At 30 | 1,304 | (633) | (575) | (36) | (2) | (269) | (38) | (249) |
| September | | | | | | | | |
| 2010 | | | | | | | | |
+-------------+-------------+-------------+---------+--------+--------+---------+-------------+--------+
Non-cash movements relate to the equity portion of the convertible bond issues
and the inception of new finance leases arising on capital expenditure. (2009:
financial liabilities arising from the issue of a put option in respect of
minority interest shares)
9. (Loss) / earnings per share
The basic loss per share is calculated by dividing the result attributable to
ordinary shareholders by the applicable weighted average number of shares in
issue during the year, excluding those held in the employee share ownership
trusts. The diluted loss per share is calculated on the result attributable to
ordinary shareholders divided by the adjusted potential weighted average number
of ordinary shares, which takes account of the outstanding share awards and the
impact of the conversion of the convertible bonds, where their conversion is
dilutive. The additional underlying earnings per share measures have been
presented to provide the reader of the accounts with a better understanding of
the results.
Basic and diluted loss per share from continuing operations is as follows
+-------------+----------+----------+----------+----------+----------+----------+
| | | Weighted | (Loss) | | Weighted | (Loss) |
| | (Loss) | average | / | (Loss) | average | / |
| | / | no. of | earnings | / | no. of | earnings |
| | earnings | shares | per | earnings | shares | per |
| | | | share | | | share |
+-------------+----------+----------+----------+----------+----------+----------+
| | | | | Restated | Restated | Restated |
| | | | | | | |
+-------------+----------+----------+----------+----------+----------+----------+
| | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 |
+-------------+----------+----------+----------+----------+----------+----------+
| | GBPm | Millions | Pence | GBPm | Millions | Pence |
| | | | | | | |
+-------------+----------+----------+----------+----------+----------+----------+
| Basic | (86) | | (7.8) | | | |
| and | | 1,107 | | (53) | 1,107 | (4.8) |
| diluted | | | | | | |
| loss | | | | | | |
| per | | | | | | |
| share | | | | | | |
+-------------+----------+----------+----------+----------+----------+----------+
| Acquisition | 127 | - | 11.5 | 47 | - | 4.2 |
| and related | | | | | | |
| expenses | | | | | | |
| and | | | | | | |
| impairment | | | | | | |
| of goodwill | | | | | | |
| (net of | | | | | | |
| tax) | | | | | | |
+-------------+----------+----------+----------+----------+----------+----------+
| Separately | 203 | - | 18.3 | 227 | - | 20.6 |
| disclosed | | | | | | |
| items (net | | | | | | |
| of tax) | | | | | | |
+-------------+----------+----------+----------+----------+----------+----------+
| Basic | 244 | 1,107 | 22.0 | 221 | 1,107 | 20.0 |
| underlying | | | | | | |
| earnings | | | | | | |
| per share | | | | | | |
+-------------+----------+----------+----------+----------+----------+----------+
| Effect | - | 11 | (0.2) | - | 11 | (0.2) |
| of | | | | | | |
| dilutive | | | | | | |
| options | | | | | | |
+-------------+----------+----------+----------+----------+----------+----------+
| Effect | 32 | 144 | 0.1 | - | - | - |
| of | | | | | | |
| convertible | | | | | | |
| bond (net | | | | | | |
| of tax) | | | | | | |
+-------------+----------+----------+----------+----------+----------+----------+
| Diluted | 276 | 1,262 | 21.9 | 221 | 1,118 | 19.8 |
| underlying | | | | | | |
| earnings | | | | | | |
| per share | | | | | | |
+-------------+----------+----------+----------+----------+----------+----------+
Basic and diluted loss per share from the discontinued operation is as follows
+---------+--------+----------+--------+--------+----------+----------+
| | | Weighted | Loss | | Weighted | Earnings |
| | Loss | average | | Loss | average | |
| | | no. of | per | | no. of | per |
| | | shares | share | | shares | share |
+---------+--------+----------+--------+--------+----------+----------+
| | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 |
+---------+--------+----------+--------+--------+----------+----------+
| | GBPm | Millions | Pence | GBPm | Millions | Pence |
| | | | | | | |
+---------+--------+----------+--------+--------+----------+----------+
| Basic | (18) | 1,107 | (1.6) | (14) | 1,107 | (1.3) |
| and | | | | | | |
| diluted | | | | | | |
| loss | | | | | | |
| per | | | | | | |
| share | | | | | | |
+---------+--------+----------+--------+--------+----------+----------+
For statutory measures of loss per share, in both the current and prior year the
effect of options is anti-dilutive. The anti-dilutive effect is not taken into
account and basic loss per share and diluted loss per share are both disclosed
as 7.8 pence (2009: (loss of 4.8) pence) for continuing operations and 1.6
pence (2009: loss of 1.3 pence) for the discontinued operation. The fully
diluted weighted average number of shares on a statutory basis is 1,323 million
(2009: 1,118 million). The diluting effect of options in both years and the
convertible bond (in 2010 only) is included solely to calculate diluted
underlying earnings per share.
2009 loss per share, (basic and diluted) underlying earnings per share (basic
and diluted) have been restated as a result of the restatement in Note 1(C).
The impact of the restatement on basic (and diluted) loss per share is to
increase the loss by 3.8 pence per share from 1.0 pence per share to 4.8 pence
per share. Basic underlying earnings per share decreases by 3.8 pence per share
from 23.8 pence per share to 20.0 pence per share. Diluted underlying earnings
per share decreases by 3.8 pence from 23.5 pence per share to 19.8 pence per
share.
Reconciliation of loss for the year from continuing operations attributable to
ordinary shareholders from continuing operations
+----------------------------------------------+----+----+----+------+-------+
| | | | | GBPm | GBPm |
| | | | | | |
+----------------------------------------------+----+----+----+------+-------+
| Loss attributable to ordinary shareholders | | | | (86) | (53) |
| from continuing operations | | | | | |
+----------------------------------------------+----+----+----+------+-------+
| Result attributable to non-controlling | | | | - | 1 |
| interests from continuing operations | | | | | |
+----------------------------------------------+----+----+----+------+-------+
| Loss for the year from continuing operations | | | | (86) | (52) |
+----------------------------------------------+----+----+----+------+-------+
2009 numbers have been restated as described in Note 1(C). None of the
discontinued loss for the year is attributable to non-controlling interests
(2009: none).
Non-GAAP measure
Reconciliation of underlying operating profit to underlying earnings
+--------------------------------+-------+-------+-------+-----------+-----------+
| | | | | | |
+--------------------------------+-------+-------+-------+-----------+-----------+
| | | | | | Restated |
+--------------------------------+-------+-------+-------+-----------+-----------+
| | | | | 30 | 30 |
| | | | | September | September |
+--------------------------------+-------+-------+-------+-----------+-----------+
| | | | | 2010 | 2009 |
+--------------------------------+-------+-------+-------+-----------+-----------+
| | | | | GBPm | GBPm |
+--------------------------------+-------+-------+-------+-----------+-----------+
| Underlying operating profit |1 / 2 | | | 447 | 401 |
+--------------------------------+-------+-------+-------+-----------+-----------+
| Net underlying financial | 4 | | | (110) | (77) |
| expenses | | | | | |
+--------------------------------+-------+-------+-------+-----------+-----------+
| Underlying profit before tax | | | | 337 | 324 |
+--------------------------------+-------+-------+-------+-----------+-----------+
| Underlying tax charge at 27% | | | | (93) | (102) |
| (2009: 28%) | | | | | |
+--------------------------------+-------+-------+-------+-----------+-----------+
| Underlying earnings | | | | 244 | 222 |
+--------------------------------+-------+-------+-------+-----------+-----------+
| Attributable to ordinary | | | | 244 | 221 |
| shareholders | | | | | |
+--------------------------------+-------+-------+-------+-----------+-----------+
| Attributable to | | | | - | 1 |
| non-controlling interests | | | | | |
+--------------------------------+-------+-------+-------+-----------+-----------+
| Underlying earnings | | | | 244 | 222 |
+--------------------------------+-------+-------+-------+-----------+-----------+
2009 reconciliation has been restated as described in Note 1(C). The underlying
numbers shown are as described in Note 1(E) and exclude the impact of the
Eyjafjallajokull volcano as described in Note 1(D).
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LIFVRFFLFIII
Grafico Azioni TUI Travel (LSE:TT.)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni TUI Travel (LSE:TT.)
Storico
Da Lug 2023 a Lug 2024
