TIDMTT.
RNS Number : 2505G
TUI Travel PLC
10 May 2011
10 May 2011
TUI Travel PLC
("TUI Travel")
Interim results for the six months ended 31 March 2011
Key Financials
Underlying results(1) Statutory results
GBPm H1 11 H1 10(2) Change H1 11 H1 10(2)
Revenue 5,205 4,969 +5% 5,205 4,969
Operating loss (307) (322) +5% (282) (377)
Loss before tax (364) (375) +3% (345) (432)
----------------- ------ --------- ------- -------- ----------
(1) Underlying operating loss and underlying loss before tax
above exclude separately disclosed items, amortisation of business
combination intangibles, acquisition related expenses and taxation
of results of the Group's joint ventures and associates
(2) Prior year figures have been re-presented to include Jet4You
which was previously reported as a discontinued operation
Highlights
-- First half underlying operating loss improved by GBP15m, driven by:
- Excellent turnaround progress, especially in Canada; and
- Stronger underlying trading, particularly in the Nordics
and Corsair.
-- Improved operating result achieved despite the impact from North
Africa and the later timing of Easter.
-- Trading for Summer 2011 remains satisfactory:
- Differentiated product continues to outperform;
- Overall booking volumes remain ahead of prior year; and
- Margins are in line with expectations.
-- Net debt reduced by GBP171m following continued focus on cash flow
initiatives.
-- Agreed measures to reduce future pension liabilities.
-- The Board proposes an interim dividend of 3.3p per share, an
increase of 3%.
Peter Long, Chief Executive of TUI Travel PLC, commented
"I am pleased to report an improved first half operating result,
particularly given the significant headwinds from political events
in Egypt and Tunisia, the weak UK economic environment and the
shift of the Easter peak period from Q2 to Q3 this year.
This result demonstrates our continued success in turning around
underperforming businesses and shows the strength of our
differentiated products which have allowed us to outperform the
market.
Furthermore, our continued focus on cash flow has resulted in a
good cash performance in the period. The flexibility of our
business model has allowed us to react quickly to mitigate the
impact of the events in North Africa in the upcoming summer season.
We have re-shaped our programmes across all source markets to
satisfy the shift in demand to alternative destinations, including
Spain, Greece and Turkey.
The first half performance and our current booking position for
the summer season leave us well placed to deliver the Board's
expectations for the year. At this stage of the booking cycle,
however, we remain cautious given the uncertain economic and
geopolitical outlook".
A presentation for analysts and investors will be held today at
9.30am (BST) at Deutsche Bank, 1 Great Winchester Street, London
EC2N 2DB. For details of the webcast please visit
www.tuitravelplc.com.
Enquiries:
Analysts and Investors
Will Waggott, Chief Financial Officer Tel: +44 (0)1582 645
334
Paul Rushton, Director of Investor Relations Tel: +44 (0)1293 645
795
Press
Lesley Allan, Corporate Communications Tel: +44 (0)1293 645
Director 774
Michelle Jeffery, Corporate Communications Tel: +44 (0)1293 645
Manager 776
Michael Sandler / Kate Hough (Hudson Tel: +44 (0)20 7796
Sandler) 4133
CURRENT TRADING & OUTLOOK
Current Trading
Winter 2010/11
The winter season finished in line with expectations, with
planned load factors achieved in all destinations apart from Egypt
and Tunisia.
Current Trading
(1) Winter 2010/11
Total Total
YoY variation% Total ASP(2) Sales(2) Customers(2) RiskCapacity(3)
MAINSTREAM
UK +8 +13 +4 +5
Nordic region Flat +25 +25 +25
Northern Region +6 +16 +9
Germany +4 +9 +5 +6
Austria +9 -2 -10
Switzerland -4 -12 -8
Poland -8 +2 +10
Central Europe +3 +8 +5
France - tour
operators -1 +1 +1
Belgium Flat +11 +11
Netherlands +6 +17 +10
Western Europe Flat +7 +7
SPECIALIST &
ACTIVITY N/A +4 N/A
A&D(4) +4 +23 +18
(1 ) These statistics are up to 1 May 2011 and are shown on a
constant currency basis (2) These statistics relate to all
customers whether risk or non-risk (3) These statistics include all
risk capacity programmes
(4) These statistics refer to online accommodation businesses
only; sales refer to total transaction value (TTV) and customers
refers to roomnights
Summer 2011
Trading for summer remains satisfactory, with differentiated
products continuing to outperform. Since our last trading update,
total Mainstream bookings are up 1% against the prior year.
YoY customer Cumulative Net bookings Cumulative
booking variation bookings at 27 since previous bookings at 1
% March statement(1) May
UK +2 -3 Flat
Nordic region +9 +16 +10
Germany +11 +1 +9
France - tour
operators -6 Flat -6
Belgium -1 +20 +2
Netherlands +14 +14 +14
------------------- ------------------ ----------------- ------------------
(1 ) UK adjusted for impact of volcanic ash re-bookings and
Egypt & Tunisia cancellations; including these factors bookings
were 10% down
Current
Trading (1) Summer 2011
YoY Total Total Total
variation% ASP(2) Sales(2) Customers(2) Risk Only
Left to
Capacity(3) sell(3)
MAINSTREAM
UK +4 +3 Flat +1 +2
Nordic
region Flat +10 +10 +5 -2
Northern
Region +3 +4 +1
Germany +3 +12 +9 +6 +2
Austria +3 Flat -3
Switzerland -9 -18 -10
Poland -4 +48 +55
Central
Europe +2 +10 +8
France -
tour
operators +3 -3 -6
Belgium -2 +1 +2
Netherlands +4 +19 +14
Western
Europe +2 +5 +3
SPECIALIST &
ACTIVITY N/A +6 N/A
A&D(4) +5 +30 +23
(1 ) These statistics are up to 1 May 2011 and are shown on a
constant currency basis (2) These statistics relate to all
customers whether risk or non-risk (3) These statistics include all
risk capacity programmes
(4) These statistics refer to online accommodation businesses
only; sales refer to total transaction value (TTV) and customers
refers to roomnights
In the UK, booking volumes have slowed since our last update,
with net bookings in the period 3% lower than the prior year
(adjusted for the effect of re-bookings of cancelled winter
holidays for summer following the closure of airspace as a result
of the volcanic ash cloud and cancellations for Egypt and Tunisia
this year). Since 17 April (date of the volcanic ash cloud in
2010), however, there has been a positive booking trend.
Total bookings to date are now flat against the prior year.
Within this, our differentiated products continue to outperform,
with booking volumes up 16%. Our customers also continue to
appreciate the excellent value all inclusive holidays offer, which
enable them to accurately budget the full holiday cost at the time
of purchase. These products account for 46% of bookings to date, up
from 43% last year. In the context of the difficult economic
environment some customers are reducing their holiday durations
with bookings for seven and 10/11 night durations increasing by 6%
and 24% respectively, against a 7% reduction in 14 night
holidays.
The Nordic region continues to trade well, with bookings driven
by differentiated products, particularly the Blue Village family
concept. Differentiated product volumes are currently 49% ahead of
the prior year.
In Germany, the solid economic backdrop has helped holiday
demand to remain strong. There is particularly high demand for
Western Mediterranean destinations, especially the Balearics, which
complements our strength in these locations. In addition, booking
volumes for Greece have bounced back after civil unrest in the
country affected demand in the prior year. Despite the 6% increase
in capacity, load factor is currently higher than the prior
year.
Trading remains challenging for the French tour operators, which
are particularly reliant on North African destinations, and this
will significantly impact profitability in the source market. The
unrest has also affected bookings for holidays to Morocco and the
recent terrorist incident in Marrakech has further weakened demand.
In Corsair, which is not included in the above table, some of the
first half trading improvement is expected to reverse in the second
half as an aircraft will be taken out of service for maintenance
checks and a cabin refit.
In the Netherlands trading remains strong with volumes tracking
well ahead of capacity. After a slow start, and against a difficult
market environment, our Belgian tour operator has seen a sustained
improvement in booking activity in recent months. Morocco is a
relatively important destination for this source market, however,
and this may impact bookings in the short term.
Sales in the Specialist & Activity sector are up 6%, with
good booking volumes in the Education division and the Specialist
Holiday Group, which includes Sovereign, Hayes & Jarvis and
Citalia.
Accommodation & Destinations (A&D) has continued to see
strong growth in its wholesale and Online Travel Agency (OTA)
accommodation businesses, with transaction values currently up 30%.
In both segments, bednights and margins are ahead of the prior
year.
Fuel/Foreign Exchange
We have hedged the majority of our fuel and currency
requirements for the seasons currently on sale. The following table
shows the percentage of our forecast requirement that is currently
hedged for Euros, US Dollars and jet fuel. As previously indicated,
at current rates, we estimate that fuel costs will increase by
circa 30% in 2012.
Summer 2011 Winter 2011/12
Euro 92% 68%
US Dollars 97% 76%
Jet Fuel 94% 62%
As at 6 May 2011
------------------ ------------ ---------------
Foreign exchange translation improved the underlying operating
result by GBP8m in the first half, primarily due to the recovery of
Sterling against the Euro. If exchange rates remain at current
levels we anticipate that the impact on the full year will be
positive.
Outlook
The second half of the year has started well, with April
benefitting from the later timing of Easter. Whilst the economic
environment is difficult in certain source markets, including the
UK, the Group benefits from its geographical diversity (with 27
source markets and approximately two-thirds of profits generated
outside of the UK).
The flexibility inherent in our business model means that we
were able to react quickly to the situation in Egypt and Tunisia by
re-shaping our summer programmes and mitigating the potential
impact to the Group. In addition, our turnaround of underperforming
businesses is progressing well.
All of the above coupled with our good first half performance,
leaves us well placed to deliver the Board's expectations for 2011.
At this stage of the booking cycle, however, we remain cautious
given the uncertain economic and geopolitical outlook.
BUSINESS AND FINANCIAL REVIEW
Group Performance
Group revenue increased by 5% to GBP5,205m (H1 10:
GBP4,969m).Organic revenue growth was 8%, driven by higher volumes
and average selling prices in many source markets. This was
partially offset by foreign exchange translation (-2%) and the
strategic transaction in Canada, where we now account for the
business as an associate (-1%).
The Group's underlying operating loss in the period was GBP307m
(H1 10: loss of GBP322m), with the improvement primarily driven by
delivery of the turnaround plan. This, combined with the final
merger synergies, foreign exchange translation benefits and better
underlying trading, offset the negative impact of the North Africa
situation and the later timing of Easter.
The main drivers of the year on year change in underlying
operating loss are summarised as:
GBPm
Underlying operating loss H1 10 (322)
Turnaround +34
Incremental synergies/cost efficiencies +10
Egypt/Tunisia -29
Easter -17
Trading +9
FX translation +8
Underlying operating loss H1 11 (307)
----------------------------------------- ------
A reconciliation of underlying loss before tax to loss before
tax is as follows:
31 March 31 March
2011 2010
Six months ended GBPm GBPm
Underlying loss before tax (364) (375)
Separately disclosed items - operating expenses 58 (24)
Separately disclosed items - financial expenses (6) (2)
Acquisition related expenses (32) (29)
Taxation on losses of joint ventures and associates (1) (2)
Loss before tax (345) (432)
----------------------------------------------------- --------- ---------
Separately disclosed items and acquisition related expenses are
further detailed in Notes 5 and 6 respectively.
Re-presentation of Jet4You
Jet4You is a low cost airline operating out of the Moroccan
source market. Previously, we reported Jet4You's results as a
discontinued operation as we expected to dispose of the business in
the near term. A sale agreement has not yet been reached, however,
so we now consider it appropriate to reclassify the business as a
continuing operation. As such, the prior year figures have been
re-presented to include Jet4You's results. The effect on the
results for the six months ended 31 March 2010 and the year ended
30 September 2010 is summarised below:
6-month period
ended 31 March 2010 Previously
GBPm Presented Jet4You Adjustment Re-presented
Underlying
operating loss (314) (8) (322)
Statutory operating
loss (364) (13) (377)
Underlying loss per
share (pence) (24.3) (0.7) (25.0)
Year ended 30
September 2010 Previously
GBPm Presented Jet4You Adjustment Re-presented
Underlying
operating profit 447 (13) 434
Statutory operating
profit 81 (18) 63
Underlying earnings
per share (pence) 22.0 (1.1) 20.9
Segmental Performance
Segmental performance is based on underlying financial
information (which excludes certain items, including separately
disclosed items and acquisition related expenses).
As previously announced, with effect from 1 October 2010, the
Group reorganised its business sectors, with the main change being
the merger of the Specialist and Activity sectors. The segmental
results for both the current and prior periods are presented under
this new structure.
Mainstream Sector
The Mainstream sector reported an underlying operating loss of
GBP295m (H1 10: GBP310m).
Mainstream H1 11 H1 10 Change %
( )
Customers ('000)(1)
Northern Region 2,151 2,026 +6%
Central Europe 2,622 2,693 -3%
Western Europe 2,140 2,000 +7%
------ ------ ---------
Total 6,913 6,719 +3%
====== ====== =========
Revenue (GBPm)
Northern Region 1,585 1,439 +10%
Central Europe 1,652 1,654 Flat
Western Europe 1,093 1,023 +7%
------ ------ ---------
Total 4,330 4,116 +5%
====== ====== =========
Underlying operating loss (GBPm)
Northern Region (137) (147) +7%
Central Europe (82) (73) -12%
Western Europe (76) (90) +16%
------ ------ ---------
Total (295) (310) +5%
====== ====== =========
1 Following the strategic venture with Sunwing, customer numbers
excludes Canada in both periods.
Northern Region
The Northern Region reported an underlying operating loss of
GBP137m (H1 10: GBP147m). The improved result was driven by the
turnaround delivered in Canada following the strategic venture with
Sunwing and improved trading in the Nordic Region, offset by the
impact from North Africa in the second quarter and the later timing
of Easter.
The main drivers of the year on year change in underlying
operating loss are summarised in the following table:
Nordic Northern
GBPm UK Region Canada Hotels Region
H1 10 (161) 29 (5) (10) (147)
Incremental synergies/cost
efficiencies +8 - - - +8
Turnaround - - +23 - +23
Egypt/Tunisia -5 -3 - - -8
Easter -7 -2 - - -9
Trading -8 +9 - -7 -6
FX translation - - +1 +1 +2
H1 11 (173) 33 19 (16) (137)
====== ======== ======= ======= =========
Northern Region H1 11 H1 10 Change %
( )
Customers ('000)(1)
UK & Ireland 1,566 1,558 +1%
Nordic Region 585 468 +25%
------ ------ ---------
Total 2,151 2,026 +6%
------ ------ ---------
Revenue (GBPm)
UK & Ireland 1,065 976 +9%
Nordic region 510 401 +27%
Canada(1) - 52 -100%
Hotels 10 10 Flat
------ ------ ---------
Total 1,585 1,439 +10%
====== ====== =========
Underlying operating profit /
(loss) (GBPm)
UK & Ireland (173) (161) -7%
Nordic Region 33 29 +14%
Canada 19 (5) n/a
Hotels (16) (10) -60%
------ ------ ---------
Total (137) (147) +7%
====== ====== =========
1 From 14 January 2010, our Canadian operations have been
accounted for under the equity method. Canadian customer numbers
have been excluded in both periods
UK & Ireland
The UK & Ireland businesses delivered an underlying
operating loss of GBP173m (H1 10: GBP161m). The trading result was
affected by two cruise ships being in extended dry dock during the
first quarter. In addition, the second quarter result includes the
impact of the later timing of Easter and events in Egypt and
Tunisia. This was partly offset by the delivery of the final GBP5m
of incremental synergies and GBP3m of further cost efficiencies in
the first quarter.
Nordic Region
The Nordic Region achieved an improved underlying operating
profit of GBP33m (H1 10: GBP29m), with stronger trading more than
offsetting the impact of Egypt and the later timing of Easter.
Volumes improved by 25% as a result of increased market share,
driven by its portfolio of differentiated product and additional
capacity to Thailand through the use of an aircraft transferred
from the French source market.
Canada
Canada improved significantly in the first half, reporting an
underlying operating profit of GBP19m (H1 10: loss of GBP5m). As
anticipated, the strategic venture with Sunwing, which completed in
January 2010, delivered a significant improvement in profitability
during the winter months. In addition, the venture is realising its
synergy plan (primarily network planning benefits and actions to
remove duplicated resources) more quickly than initially
anticipated. In the second half, Sunwing has initiated a new
transatlantic summer programme, including flights to London, Paris
and Rome.
Hotels
The Hotels division, which was previously reported within the
Nordic Region due to its historic geographical focus, is reported
separately as its operations now serve a number of source markets.
The division comprises hotel management companies and joint
ventures in hotel assets. The increased loss compared with the
comparative period is due to the inclusion of winter losses for the
hotel management businesses established in Turkey in 2010.
Central Europe
Central Europe reported a GBP9m increase in underlying operating
loss to GBP82m (H1 10: GBP73m). The main drivers of the year on
year change in underlying operating loss are summarised in the
following table:
Central
GBPm Germany Austria Switzer'd Poland Europe
H1 10 (58) (7) (4) (4) (73)
Turnaround - - - +1 +1
Egypt/Tunisia -6 -1 - - -7
Easter -4 - - - -4
Trading -2 -1 +1 - -2
FX translation +3 - - - +3
-------- -------- ---------- ------- --------
H1 11 (67) (9) (3) (3) (82)
======== ======== ========== ======= ========
Central Europe H1 11 H1 10 Change %
( )
Customers ('000)
Germany 2,375 2,453 -3%
Austria 81 86 -6%
Switzerland 129 124 +4%
Poland 37 30 +23%
------ ------ ---------
Total 2,622 2,693 -3%
====== ====== =========
Revenue (GBPm)
Germany 1,493 1,489 Flat
Austria 67 77 -13%
Switzerland 74 70 +6%
Poland 18 18 Flat
------ ------ ---------
Total 1,652 1,654 Flat
====== ====== =========
Underlying operating loss (GBPm)
Germany (67) (58) -16%
Austria (9) (7) -29%
Switzerland (3) (4) +25%
Poland (3) (4) +25%
------ ------ ---------
Total (82) (73) -12%
====== ====== =========
Germany
Germany reported an underlying operating loss of GBP67m (H1 10:
GBP58m), with the increase driven by the impact of North Africa,
the later Easter timing and the exit from city-pairs scheduled
flying in October 2009, as these operations contributed profits in
H1 2010.
Underlying profitability, after adjusting for these items,
improved as a result of a stronger trading performance. Excluding
the city-pairs flying customers in the prior year, volumes
increased by 4% in the period. There was also a GBP3m foreign
exchange translation gain in the period.
Other Central European businesses
The other Central European businesses of Austria, Switzerland
and Poland performed largely in line with the prior year. Poland
continued its turnaround progress following strong volume growth as
the business took share in an improving market.
Western Europe
Western Europe reported an underlying operating loss of GBP76m
(H1 10: GBP90m). The main drivers of the year on year change in
underlying operating loss are summarised in the following
table:
Southern Western
GBPm France Neth. Belgium Europe Jet4You Europe
H1 10 (51) (16) (15) - (8) (90)
Turnaround +5 +5 - - - +10
Egypt/Tunisia -8 - -2 -1 - -11
Easter -1 - -1 - - -2
Trading +15 +1 +4 -3 -2 +15
FX translation +1 - +1 - - +2
--------- --------
H1 11 (39) (10) (13) (4) (10) (76)
======= ====== ======== ========= ======== ========
Western Europe H1 11 H1 10 Change %
Customers ('000)
France 752 729 +3%
Netherlands 433 396 +9%
Belgium 646 577 +12%
Southern Europe 51 60 -15%
Jet4You 258 238 +8%
------ ------ ---------
Total 2,140 2,000 +7%
====== ====== =========
Revenue (GBPm)
France 530 491 +8%
Netherlands 244 223 +9%
Belgium 243 224 +8%
Southern Europe 40 49 -18%
Jet4You 36 36 Flat
------ ------ ---------
Total 1,093 1,023 +7%
====== ====== =========
Underlying operating loss
(GBPm)
France (39) (51) +24%
Netherlands (10) (16) +38%
Belgium (13) (15) +13%
Southern Europe (4) - n/a
Jet4You (10) (8) -25%
(76) (90) +16%
France H1 11 H1 10 Change %
Underlying operating loss
(GBPm)
Tour Operator (36) (28) -29%
Airline (3) (23) +87%
------ ------ ---------
(39) (51) +24%
France
France reported an underlying operating loss reduced by GBP12m
to GBP39m (H1 10: GBP51m). The improvement was driven by Corsair,
which benefited from network planning improvements and an improved
trading performance. The French tour operators have been heavily
affected by events in North Africa, which is a key destination for
this source market.
Netherlands
Netherlands reported an underlying operating loss of GBP10m, an
improvement of GBP6m against the prior year (H1 10: GBP16m). This
result was driven by cost reductions, airline operating
efficiencies and better market conditions.
Belgium
Belgium reported an underlying operating loss of GBP13m (H1 10:
GBP15m), benefiting from better airline utilisation and higher
volumes.
Southern Europe
North Africa is a significant destination for our Southern
European businesses, particularly for Turchese, which specialises
in Egypt. This, combined with the difficult economic environment in
these source markets, resulted in an operating loss of GBP4m (H1
10: GBPnil).
Jet4You
The underlying performance of the business was in line with
prior year as the 2011 result includes GBP1m relating to 2010
depreciation following the reclassification from a discontinued to
continuing operation.
Emerging Markets
The result reflects our continued investment to grow our brand
presence and distribution platform in the Russian source market.
The market remains highly competitive but continues to exhibit good
growth characteristics and we are developing our market position to
leave us well placed to take advantage of this growth.
Emerging Markets (share of JV) H1 11 H1 10 Change %
( )
Underlying operating loss (GBPm) (6) (4) -50%
Specialist & Activity
The sector reported a loss of GBP1m (H1 10: profit of GBP3m). In
the first half, the timing of Easter had an adverse impact of
GBP2m, principally affecting the Ski and Education businesses, and
events in North Africa had a GBP1m adverse impact, predominately in
the Adventure division. North American Specialist performed well
following the reintroduction of tours in the private jets business
following the programme reduction last year. This was offset,
however, by softer demand for gap-year travel within the Education
division.
Specialist & Activity H1 11 H1 10 Change %
Customers ('000) 699 717 -2%
Revenue (GBPm)
Adventure 73 86 -15%
North American Specialist 81 71 +14%
Education 82 90 -9%
Sport 30 25 +20%
Marine 44 42 +5%
Specialist Holiday Group 319 318 Flat
------- ------ ---------
Total 629 632 Flat
======= ====== =========
Underlying operating (loss) / profit (GBPm)
Adventure (1) 1 n/a
North American Specialist 6 1 n/a
Education (3) - n/a
Sport 1 1 Flat
Marine (11) (9) -22%
Specialist Holiday Group 7 9 -22%
Total (1) 3 n/a
======= ====== =========
Accommodation & Destinations
A&D increased profits to GBP7m (H1 10: GBP3m) following
continued strong volume growth in both its wholesale and OTA online
accommodation business.
The accommodation wholesaler experienced a 19% increase in
bednights as a result of strong trading in Latin America,
particularly Brazil, and Asia. The accommodation OTA delivered a
17% increase in roomnights, driven by continued growth in the
LateRooms.com business in the UK as well as encouraging progress in
AsiaRooms. In destination management, our cruise handling business,
Intercruises, delivered a good performance in the US and
Canada.
Accommodation & Destinations H1 11 H1 10 Change %
( )
Customers ('000)
B2B roomnights (Online) 4,956 4,148 +19%
B2C roomnights (Online) 2,673 2,281 +17%
Incoming passenger volumes 3,794 3,668 +3%
Revenue (GBPm) 246 221 +11%
Underlying operating profit (GBPm) 7 3 +133%
Acquisitions and Investments
In the six months ended 31 March 2011, the Group invested GBP12m
on acquisitions. In A&D, we acquired Lima Tours, a destination
management business which specialises in creating and operating
innovative and high value-added travel experiences in Peru,
supporting the sector's strategic plan to expand in high growth
emerging destinations. In Central Europe, we acquired 27 travel
agencies to support our strategy of increasing the controlled
distribution mix.
Strategic venture with Intrepid Travel
In April, we entered into a strategic venture with Intrepid
Travel. Intrepid, based in Melbourne, handles over 100,000
customers per annum, drawn from all the key adventure source
markets in the world. The transaction combines our Adventure
businesses with Intrepid to create the clear global leader in
adventure travel.
The transaction was based on an injection of businesses into the
venture by both parties and has no cash component. The Group has
60% ownership of the combined business and will fully consolidate
its results. Intrepid Travel's private shareholders own the
remaining 40%. The transaction is expected to drive cost synergies,
primarily arising from increased economies of scale, of at least
GBP10m per annum within the first three years.
Magic Life transaction
Magic Life is an all-inclusive club concept in the German and
Austrian source markets and is an important part of the
differentiated product offerings of our tour operators in these
markets. It has 13 high quality clubs in prime locations in Turkey
(6), Tunisia (3), Egypt (2), Greece (1) and Spain (1). We intend to
acquire the operating companies that lease and manage the Magic
Life clubs for a de minimis consideration of EUR6, which reflects
the current loss making nature of the business.
The key strategic rationale of the transaction is to secure
exclusive access to these differentiated products. Differentiated
products typically enjoy higher margins as a result of an earlier
booking profile, higher customer satisfaction, more repeat bookings
and an increased share of customers' total holiday spend due to the
all-inclusive nature of the product. Increasing our mix of
differentiated product is a key strategic imperative across all our
source markets.
As well as securing access for our German and Austrian tour
operators, we also intend to use these attractive products in our
other source markets to help drive our strategy of differentiation.
This will be under both the Magic Life brand and under local
concepts. For example, we intend to operate two of the Turkish
clubs as a Holiday Village (the family concept from the UK source
market) and a Blue Village (the family concept from the Nordic
source market) rather than under the Magic Life brand. We believe
that this will increase the yield and occupancy ratio of the clubs
and maximise the end-to-end profitability.
Magic Life is currently owned by TUI AG. The business has
recently generated operating losses (financial year 2010 underlying
operating loss: GBP9m) and has previously been highlighted by TUI
AG as a non-core asset which may be subject to disposal. We believe
that, as a result of restructuring undertaken by TUI AG prior to
disposal and operating changes we plan to implement, the business
will achieve a minimum break-even result by 2012. Given the related
party nature of the transaction, we will seek prior approval from
our minority shareholders through an Extraordinary General Meeting,
in line with UKLA rules.
Pensions update
We have agreed future service benefit reductions with the
members of the UK defined benefit pension schemes, the most
material of which is to cap the rate of future growth of
pensionable pay to a maximum of 2.5% per annum. This reduces the
forecast future liability by GBP63m and reduces the ongoing service
cost by GBP10m per annum.
We are also in advanced discussions with the Trustees of our six
UK defined benefit pension schemes on a package of measures to
address the ongoing funding and management of the pension schemes.
These include a merger of four of the smaller schemes, and the
funding of up to GBP275m of the aggregate deficits of the schemes
utilising a partnership arrangement backed by the Thomson and First
Choice brands. These measures would potentially reduce the cash
funding requirement by GBP25m per annum.
Dividends
The Board recommends an interim dividend per ordinary share of
3.3p (H1 10: 3.2p), payable to holders of relevant shares on the
register at 2 September 2011. This will be paid on 3 October
2011.
We intend to continue to operate a dividend re-investment plan
as an alternative to the cash dividend.
Separately disclosed items
Separately disclosed items net to a GBP58m credit in the period
(H1 10 expense: GBP24m). This primarily represents the GBP63m
reduction in the UK pension scheme liability following agreement
with pension scheme members to cap the rate of future growth of
pensionable pay, as described above. This benefit is partially
offset by restructuring costs relating primarily to our turnaround
actions in the French source market, plus certain other smaller
items. Further information is included in Note 5.
Cash and liquidity
The net debt position (cash and cash equivalents less loans,
overdrafts and finance leases) at 31 March 2011 was GBP1,182m (31
March 2010: GBP1,353m). This consisted of GBP378m of cash and
GBP313m of current interest-bearing loans and liabilities and
GBP1,247m of non-current interest-bearing loans and liabilities.
The reduction is primarily due to a better working capital
performance resulting from cash management initiatives and positive
forward bookings.
Consolidated income statement
for the 6-month period ended 31 March 2011
6-month
6-month period ended Year ended 30
period ended 31 March 2010 September 2010
31 March 2011 (re-presented) (re-presented)
----------------- ----- --------------- ---------------- -----------------
Note GBPm GBPm GBPm
----------------- ----- --------------- ---------------- -----------------
Revenue 4 5,205 4,969 13,491
Cost of sales (5,011) (4,841) (12,309)
----------------- ----- --------------- ---------------- -----------------
Gross profit 194 128 1,182
Administrative
expenses (491) (500) (1,116)
Share of profit
/ (loss) of
joint ventures
and associates 15 (5) (3)
----------------- ----- --------------- ---------------- -----------------
Operating (loss)
/ profit 4 (282) (377) 63
----------------- ----- --------------- ---------------- -----------------
Analysed as:
Underlying
operating
(loss) /
profit 4 (307) (322) 399
Separately
disclosed
items 5 58 (24) (255)
Acquisition
related
expenses 6 (32) (29) (63)
Impairment of
goodwill 7 - - (12)
Taxation on
results of
joint ventures
and associates (1) (2) (6)
----------------- ----- --------------- ---------------- -----------------
(282) (377) 63
----------------- ----- --------------- ---------------- -----------------
Financial income 48 41 69
Financial
expenses (111) (96) (186)
----------------- ----- --------------- ---------------- -----------------
Net financial
expenses (63) (55) (117)
----------------- ----- --------------- ---------------- -----------------
Loss before tax (345) (432) (54)
Taxation 8 91 113 (50)
----------------- ----- --------------- ---------------- -----------------
Loss for the
period / year (254) (319) (104)
----------------- ----- --------------- ---------------- -----------------
Attributable to
Equity holders
of the parent (255) (320) (104)
Non-controlling
interests 1 1 -
----------------- ----- --------------- ---------------- -----------------
Loss for the
period / year (254) (319) (104)
----------------- ----- --------------- ---------------- -----------------
Pence Pence Pence
----------------- ----- --------------- ---------------- -----------------
Basic and
diluted loss per
share (pence)
for loss
attributable to
the equity
holders of the
company during
the period /
year
- basic and
diluted 10 (23.0) (28.9) (9.4)
----------------- ----- --------------- ---------------- -----------------
Consolidated statement of comprehensive income
for the 6-month period ended 31 March 2011
6-month 6-month
period ended period ended Year ended
31 March 2011 31 March 2010 30 September 2010
----------------------- --------------- --------------- -------------------
GBPm GBPm GBPm
----------------------- --------------- --------------- -------------------
Loss for the period /
year (254) (319) (104)
Other comprehensive
income / (expense)
Foreign exchange
translation 81 50 (88)
Actuarial gains /
(losses) arising in
respect of defined
benefit pension
schemes 73 (27) (42)
Cash flow hedges:
- movement in fair
value 210 147 33
- amounts recycled
through the
consolidated income
statement (11) 4 41
Foreign exchange gains
recycled through the
consolidated income
statement - (6) (6)
Share of other
movements in reserves
of joint ventures and
associates - - 2
Changes in the fair
value of available
for sale financial
assets 1 - (4)
Deferred tax on other
comprehensive income
/ (expense) (78) (34) (9)
----------------------- --------------- --------------- -------------------
Other comprehensive
income / (expense)
for the period / year
net of tax 276 134 (73)
----------------------- --------------- --------------- -------------------
Total comprehensive
income / (expense)
for the period /
year 22 (185) (177)
----------------------- --------------- --------------- -------------------
Total comprehensive
income / (expense) for
the period / year
Attributable to:
Equity holders of the
parent 21 (186) (177)
Non-controlling
interests 1 1 -
----------------------- --------------- --------------- -------------------
Total 22 (185) (177)
----------------------- --------------- --------------- -------------------
Consolidated balance sheet
at 31 March 2011
31 March 2010
31 March 2011 (restated) 30 September 2010
Note GBPm GBPm GBPm
------------------- ----- -------------- -------------- ------------------
Non-current assets
Intangible assets 4,680 4,758 4,659
Property, plant
and equipment 1,004 960 1,012
Investments in
joint ventures
and associates 239 209 211
Other investments 80 69 79
Trade and other
receivables 288 266 156
Retirement benefit
asset 14 1 1
Derivative
financial
instruments 43 39 21
Deferred tax
assets 181 277 114
------------------- ----- -------------- -------------- ------------------
6,529 6,579 6,253
Current assets
Inventories 70 46 49
Other investments -- 1 -
Trade and other
receivables 1,739 1,667 1,404
Income tax
recoverable 68 65 34
Derivative
financial
instruments 360 210 144
Cash and cash
equivalents 378 402 1,304
Assets classified
as held for sale 9 54 57
------------------- ----- -------------- -------------- ------------------
2,624 2,445 2,992
Total assets 9,153 9,024 9,245
------------------- ----- -------------- -------------- ------------------
Current
liabilities
Interest-bearing
loans and
borrowings (313) (796) (757)
Retirement
benefits (2) (2) (5)
Derivative
financial
instruments (122) (147) (122)
Trade and other
payables 13 (4,386) (4,026) (4,301)
Provisions (257) (148) (236)
Income tax payable (78) (63) (84)
Liabilities
classified as
held for sale -- (34) (31)
------------------- ----- -------------- -------------- ------------------
(5,158) (5,216) (5,536)
Non-current
liabilities
Interest-bearing
loans and
borrowings (1,247) (959) (796)
Retirement
benefits (365) (498) (489)
Derivative
financial
instruments (10) (7) (23)
Trade and other
payables (71) (83) (93)
Provisions (317) (261) (307)
Deferred tax
liabilities (110) (96) (28)
------------------- ----- -------------- -------------- ------------------
(2,120) (1,904) (1,736)
Total liabilities (7,278) (7,120) (7,272)
------------------- ----- -------------- -------------- ------------------
Net assets 1,875 1,904 1,973
------------------- ----- -------------- -------------- ------------------
Equity
Share capital 112 112 112
Convertible bond
reserve 83 36 83
Merger and other
reserves 2,998 2,935 2,772
Retained deficit (1,320) (1,181) (995)
------------------- ----- -------------- -------------- ------------------
Total equity
attributable to
equity holders of
the parent 1,873 1,902 1,972
Non-controlling
interests 2 2 1
Total equity 1,875 1,904 1,973
------------------- ----- -------------- -------------- ------------------
Consolidated statement of cash flows
for the 6-month period ended 31 March 2011
6-month 6-month Year
period ended period ended ended
31 March 2011 31 March 2010 30 September 2010
----------------------- --------------- --------------- -------------------
GBPm GBPm GBPm
----------------------- --------------- --------------- -------------------
Loss for the period /
year (254) (319) (104)
Adjustment for:
Depreciation and
amortisation 113 124 261
Impairment of
intangible assets and
property, plant and
equipment 4 - 27
Equity-settled
share-based payment
expenses 9 8 14
(Profit) / loss on
sale of property,
plant and equipment (7) (2) 1
Share of (profit) /
loss of joint
ventures and
associates (15) 5 3
(Gain) / loss on
foreign exchange (16) (13) 14
Change in value of
trade investment - - (30)
Dividends received
from joint ventures 9
and associates 5 - 10
Pension curtailment (63) - -
Financial income (48) (41) (69)
Financial expenses 111 96 186
Loss from discontinued
operation - 13 18
Taxation (91) (113) 50
Operating (loss) /
profit before changes
in working capital
and provisions (252) (242) 380
(Increase) / decrease
in inventories (20) 5 1
(Increase) / decrease
in trade and other
receivables (351) (159) 34
(Decrease) / increase
in trade and other
payables (58) (371) 100
Increase / (decrease)
in provisions and 93
employee benefits 29 (35) ()
----------------------- --------------- --------------- -------------------
Cash flows from
operations (652) (802) 608
Net interest paid (36) (34) (57)
Income taxes paid (40) (22) (34)
----------------------- --------------- --------------- -------------------
Cash flows from
operating activities (728) (858) 517
----------------------- --------------- --------------- -------------------
Investing activities
Proceeds from sale of
property, plant and
equipment 59 16 26
Proceeds from disposal
of investments 2 7 1
Acquisition of
subsidiaries, net of
cash acquired (16) (22) (51)
Proceeds from other
investments - - 9
Investment in joint
ventures and
associates (9) (87) (90)
Acquisition of
property, plant and
equipment and
intangible assets (129) (113) (204)
----------------------- --------------- --------------- -------------------
Cash flows from
investing activities (93) (199) (309)
----------------------- --------------- --------------- -------------------
Financing activities
Proceeds from new
loans and deposits
taken 471 733 768
Repayment of
borrowings (448) (11) (257)
Payment of finance
lease liabilities (39) (12) (31)
Ordinary and
non-controlling
interest dividends
paid (122) (35) (120)
Acquisition of shares
for share-based
payments - - (7)
Cash flows from
financing activities (138) 675 353
----------------------- --------------- --------------- -------------------
Net (decrease) /
increase in cash and
cash equivalents (959) (382) 561
Cash and cash
equivalents at start
of period / year 1,304 790 790
Reclassification to
cash from assets
classified as held for
sale 10 - -
Effect of foreign
exchange on cash
held 23 (6) (47)
----------------------- --------------- --------------- -------------------
Cash and cash
equivalents at end of
period / year 378 402 1,304
----------------------- --------------- --------------- -------------------
Consolidated statement of changes in equity for the 6-month
period ended 31 March 2011
Equity Non
Share Merger Convertible Other Retained holders controlling
of
capital reserve bond reserves deficit parent interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- -------- -------- ------------ --------- --------- -------- ------------ ------
At 1 October
2010 112 2,490 83 282 (995) 1,972 1 1,973
Total
comprehensive
income /
(expense) for
the period
(Loss) /
profit - - - - (255) (255) 1 (254)
Other
comprehensive
income
Foreign
exchange
translation - - - 81 - 81 - 81
Actuarial
gains arising
in respect of
defined
benefit
pension
schemes - - - - 49 49 - 49
Cash flow
hedges - - - 145 - 145 - 145
Changes in the
fair value of
available for
sale
financial
assets - - - - 1 1 - 1
Total other
comprehensive
income - - - 226 50 276 - 276
--------------- -------- -------- ------------ --------- --------- -------- ------------ ------
Total
comprehensive
income /
(expense) for
the period - - - 226 (205) 21 1 22
--------------- -------- -------- ------------ --------- --------- -------- ------------ ------
Transactions
with owners
recorded
directly in
equity
Share-based
payment - - - - 11 11 - 11
Own share
transactions - - - - (9) (9) - (9)
Dividends - - - - (122) (122) - (122)
Total
transactions
with owners - - - - (120) (120) - (120)
--------------- -------- -------- ------------ --------- --------- -------- ------------ ------
At 31 March
2011 112 2,490 83 508 (1,320) 1,873 2 1,875
--------------- -------- -------- ------------ --------- --------- -------- ------------ ------
Consolidated statement of changes in equity for the 6-month
period ended 31 March 2010
Equity Non
Share Merger Convertible Other Retained holders controlling
of
capital reserve bond reserves deficit parent interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- -------- -------- ------------ --------- --------- -------- ------------ ------
At 1 October
2009 (as
previously
reported) 112 2,490 - 285 (604) 2,283 3 2,286
Restatement
(Note 1) - - - - (112) (112) - (112)
Restated
balance at 1
October 2009 112 2,490 - 285 (716) 2,171 3 2,174
Total
comprehensive
income /
(expense) for
the period
(Loss) / profit - - - - (320) (320) 1 (319)
Other
comprehensive
income /
(expense)
Foreign
exchange
translation - - - 50 - 50 - 50
Actuarial
losses arising
in respect of
defined
benefit
pension
schemes - - - - (20) (20) - (20)
Cash flow
hedges - - - 110 - 110 - 110
Foreign
exchange gains
recycled
through
consolidated
income
statement - - - - (6) (6) - (6)
Total other
comprehensive
income /
(expense) - - - 160 (26) 134 - 134
---------------- -------- -------- ------------ --------- --------- -------- ------------ ------
Total
comprehensive
income /
(expense) for
the period - - - 160 (346) (186) 1 (185)
---------------- -------- -------- ------------ --------- --------- -------- ------------ ------
Transactions
with owners
recorded
directly in
equity
Share-based
payment - - - - 13 13 - 13
Own share
transactions - - - - (14) (14) - (14)
Dividends - - - - (118) (118) (2) (120)
Issue of
convertible
bond - - 36 - -- 36 -- 36
---------------- -------- -------- ------------ --------- --------- -------- ------------ ------
Total
transactions
with owners - - 36 - (119) (83) (2) (85)
---------------- -------- -------- ------------ --------- --------- -------- ------------ ------
At 31 March
2010 112 2,490 36 445 (1,181) 1,902 2 1,904
---------------- -------- -------- ------------ --------- --------- -------- ------------ ------
Notes to the consolidated interim financial statements
1. Basis of preparation
Statement of compliance
These consolidated interim financial statements for the 6-month
period ended 31 March 2011 have been prepared in accordance with
the Disclosure and Transparency Rules of the Financial Services
Authority and with International Accounting Standard (IAS) 34
'Interim financial reporting' as adopted by the EU. The
consolidated interim financial statements should be read in
conjunction with the Company's published consolidated financial
statements for the year ended 30 September 2010, which were
prepared in accordance with IFRS as adopted by the European
Union.
The consolidated interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year ended 30
September 2010 were approved by the Board of Directors on 1
December 2010 and delivered to the Registrar of Companies. The
report of KPMG Audit plc, the auditors for that financial year end,
was (i) unqualified, (ii) did not include a reference to any
matters to which they drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498 of the Companies Act 2006.
These consolidated interim financial statements were approved by
the Board of Directors on 9 May 2011.
Accounting policies
As required by the Disclosure and Transparency Rules of the
Financial Services Authority, this interim financial information
has been prepared applying the accounting policies and presentation
that were applied in the preparation of the Company's published
consolidated financial statements for the year ended 30 September
2010, except as noted below:
Taxes in the interim period are accrued using the tax rate that
would be applicable to expected total annual earnings.
a) New and amended standards adopted by the Group
The following accounting standards and interpretations issued by
the International Accounting Standards Board (IASB) or IFRS
Interpretations Committee (IFRIC) have been adopted by the Group
from 1 October 2010 with no significant impact on the consolidated
results or financial position:
-- IFRIC 17 - Distributions of Non-cash assets to owners
-- IFRIC 18 - Transfers of assets from customers
-- IFRIC 19 - Extinguishing Financial Liabilities with Equity
Instruments
-- Amendment to IAS 32 - Financial instruments: Presentation
on classification or rights
-- Amendment to IFRS 2 - Group Cash-settled Share-based Payment
Transactions
-- Various IFRSs - Annual improvements (2009)
These adoptions have not had a significant impact on the current
or prior period's / year's results or balance sheet positions, and
therefore no restatement of the prior period's / year equity or
profit / (loss) has been presented.
b) New and amended standards which are not relevant to the
Group
-- Amendment to IFRS 1 - First time adoption on Financial instrument
disclosures
-- Amendment to IFRS 1 - First time adoption on additional
exemptions
-- IFRIC 15 - Agreements for the Construction of Real Estate
c) New interpretations and amendments to standards and
interpretations that have been issued but are not yet effective
The following further new accounting standards, amendments to
existing standards and interpretations are not yet effective and
have not been early adopted:
-- Amendment to IFRS 1 - First time adoption on hyperinflation
and fixed dates
-- Amendment to IFRS 7 - De-recognition disclosures
-- Amendment to IAS 12 - Income taxes on deferred tax
-- Amendment to IFRIC 14 - Prepayments of a Minimum Funding
Requirement
-- IFRS 9 - Financial instruments, on Classification and measurement
of financial assets
-- IAS 24 (revised) - Related Party Disclosures
-- Various IFRSs - Annual improvements (2010)
The Group does not currently believe the adoption of the above
standard, interpretations and amendments will have a material
impact on the consolidated results or financial position of the
Group.
Restatement of prior period balance sheet
As disclosed on pages 70-71 of the 2010 Annual Report and
Accounts, the Group restated its cumulative results for the periods
ended 30 September 2009 by GBP112m. The net impact of this
restatement on the 30 September 2009 balance sheet was to reduce
current trade and other receivables by GBP54m and increase current
trade and other payables by GBP58m.
The balance sheet at 30 September 2010 contained in the 2010
Annual Report and Accounts reflected this change and accordingly no
restatement of that balance sheet is necessary. However, the
consolidated balance sheet at 31 March 2010 has not been published
since this restatement was announced. As such, the consolidated
balance sheet as at 31 March 2010 is now restated for this change.
The net impact of this restatement on the balance sheet is to
reduce current trade and other receivables by GBP54m and increase
current trade and other payables by GBP58m as at 31 March 2010.
Re-presentation of prior periods' results
The results of the Group's business of Societe d'Investissement
Aerien S.A. (Jet4You) were previously separately classified as a
discontinued operation for the period ended 31 March 2010 and year
ended 30 September 2010. As a result of the cessation of current
negotiations for the sale of this business, this business ceases to
qualify as held-for-sale.
In accordance with IFRS 5, the results of Jet4You are presented
in the consolidated income statement as continuing in both the
current and comparative periods and this has resulted in the
re-presentation of the comparative periods as follows:
6-month period
ended 31 March 6-month period
2010 as Impact of the re- ended 31 March
previously presentation of 2010 as
reported Jet4You re-presented
GBPm GBPm GBPm
------------------ ------------------ ------------------ ------------------
Revenue 4,933 36 4,969
Cost of sales (4,802) (39) (4,841)
------------------ ------------------ ------------------ ------------------
Gross
profit/(loss) 131 (3) 128
Administrative
expenses (490) (10) (500)
------------------ ------------------ ------------------ ------------------
Operating loss (364) (13) (377)
------------------ ------------------ ------------------ ------------------
Analysed as:
Underlying
operating loss (314) (8) (322)
Separately
disclosed items (19) (5) (24)
Acquisition
related
expenses (29) - (29)
Taxation on
results of joint
ventures and
associates (2) - (2)
------------------ ------------------ ------------------ ------------------
Loss before tax
from continuing
operations (419) (13) (432)
------------------ ------------------ ------------------ ------------------
Loss after tax
from continuing
operations (306) (13) (319)
------------------ ------------------ ------------------ ------------------
Year ended 30
September 2010 as Impact of the re- Year ended 30
previously presentation of September 2010 as
reported Jet4You re-presented
GBPm GBPm GBPm
------------------ ------------------ ------------------ ------------------
Revenue 13,400 91 13,491
Cost of sales (12,217) (92) (12,309)
------------------ ------------------ ------------------ ------------------
Gross
profit/(loss) 1,183 (1) 1,182
Administrative
expenses (1,099) (17) (1,116)
------------------ ------------------ ------------------ ------------------
Operating
profit/(loss) 81 (18) 63
------------------ ------------------ ------------------ ------------------
Analysed as:
Underlying
operating (loss)
/ profit 412 (13) 399
Separately
disclosed items (250) (5) (255)
Acquisition
related
expenses (63) - (63)
Impairment of
goodwill (12) - (12)
Taxation on
results of joint
ventures and
associates (6) - (6)
------------------ ------------------ ------------------ ------------------
Loss before tax
from continuing
operations (36) (18) (54)
------------------ ------------------ ------------------ ------------------
Loss after tax
from continuing
operations (86) (18) (104)
------------------ ------------------ ------------------ ------------------
* Refer to 'Basis of Preparation' within Note 1 of the
consolidated financial statements within the 2010 Annual Report
& Accounts for details
For the purposes of segmental reporting, the results of Jet4You
are included within the Rest of Western Europe segment.
In accordance with IFRS 5, the current period balance sheet has
been re-measured to the carrying amounts prior to the disposal
group being classified as held-for-sale, adjusted for additional
GBP1m depreciation that would have been recognised if the disposal
group had not been classified as held-for-sale.
The balance sheet for both comparative periods have not been
re-presented or re-measured, as dictated by IFRS 5. Accordingly,
the comparative consolidated statement of cashflows has not been
re-presented.
Estimates and judgements
The preparation of interim financial statements requires
management to make estimates, judgements and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
Underlying measures of profit / loss
The Group believes that underlying operating profit / loss,
underlying profit / loss before tax and underlying earnings / loss
per share provide additional guidance to statutory measures to help
understand the underlying performance of the business during the
financial period / year. The term underlying is not defined under
International Financial Reporting Standards. 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 / loss is operating profit or loss
from continuing operations stated before separately disclosed items
(Note 5), the pro-forma impact of volcanic ash, acquisition related
items, impairment of goodwill and taxation on the Group's share of
the results of joint ventures and associates.
Underlying profit / loss before tax is profit or loss from
continuing operations before taxation (Group and share of joint
ventures and associates), the pro-forma impact of volcanic ash,
acquisition related items, impairment of goodwill and separately
disclosed items included within both the operating result and net
financial expenses.
Underlying earnings / loss used in the calculation of underlying
earnings / loss per share is profit / loss after tax from
continuing operations excluding the pro-forma impact of volcanic
ash, acquisition related items, impairment of goodwill and
separately disclosed items included within both the operating
result and net financial expenses (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.
Further details of the impact of the volcano, which occurred in
the second half of the 2010 financial year can be found on page 72
of the Group's Annual Report and Accounts. A reconciliation of
underlying operating profit to underlying profit before tax, taking
into account the impact of the volcano and the re-presentation of
Jet4You, is as follows:
6-month 6-month
period ended period ended Year ended
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
------------------------------ -------------- -------------- --------------
Underlying operating (loss) /
profit as previously
presented (314) 447
Impact of the re-presentation
of Jet4You (8) (13)
Underlying operating (loss) /
profit in segmental analysis
(as re-presented) (322) 434
Pro-forma impact of volcanic
ash - (35)
-------------- --------------
Underlying operating (loss) /
profit (307) (322) 399
Net underlying financial
expenses (57) (53) (110)
------------------------------ -------------- -------------- --------------
Underlying (loss) / profit
before tax (364) (375) 289
------------------------------ -------------- -------------- --------------
Separately disclosed items
Separately disclosed items are those significant items which in
management's judgement are highlighted by virtue of their size or
incidence to enable a full understanding of the Group's financial
performance. Such items are included within the income statement
caption to which they relate (Note 5).
Acquisition related expenses
Acquisition related items comprise amortisation of business
combination intangibles, other acquisition related expenses and
remuneration for post-combination services.
Funding, liquidity and going concern
The Directors have considered the funding and liquidity position
of the Group.
The Board remains satisfied with the Group's funding and
liquidity position. The main sources of debt funding as at 31 March
2011 are:
1. the shareholder loan from TUI AG of EUR160 million which is fully
drawn. This was fully repaid on 30 April 2011;
2. the external bank GBP1,060 million revolving syndicated credit
facilities which mature in June 2012;
3. a GBP350 million convertible bond (due 2014) issued on 1 October
2009 and received on 5 October 2009;
4. a GBP400 million convertible bond (due 2017) issued on 22 April
2010 and received on 27 April 2010; and
5. Bonding and letter of credit facilities of GBP120 million, maturing
in June 2012 except GBP40m which matures in September 2011.
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 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. EBITDA is Earnings Before Interest, Taxation,
Depreciation and Amortisation. For both covenants earnings are
calculated on an underlying basis as described previously.
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.
2. Seasonality
The Group's travel leisure business is subject to significant
seasonal fluctuations between the Winter and Summer seasons,
resulting in losses being expected in the first half and profits
being expected in the second half of the year. The Group mitigates
this seasonal impact through operating a broad range of holiday
products in both the Winter and Summer seasons and in different
global holiday markets which have different annual cycles. There
are appropriate sources of debt funding to match the seasonality of
the Group's cash flows, as described in Note 1.
3. Principal risks and uncertainties
The Group considers strategic, operational and financial risks
and identifies actions to mitigate those risks. The principal risks
and uncertainties faced by the Group for the remainder of the
financial year and which are unchanged from the prior year, are
listed below:
-- Global financial factors, such as exchange rates, fuel prices
and tax laws and the global economic environment
-- Political volatility, natural catastrophes and outbreaks
-- Regulatory environment, particularly in relation to aviation
taxes and environmental and consumer protection
-- Changing consumer preferences
-- Reliance on IT systems
-- Investment into niche businesses and emerging markets
-- Supply chain, such as dependency on the provision of services
by hotel operators and airline services
Further details of the Group's risk profile analysis can be
found on pages 20 to 23 of the Group's Annual Report and Accounts
for the year ended 30 September 2010, available from the Group
website: www.tuitravelplc.com.
4. Segmental information
The Group adopted IFRS 8: Operating Segments for the first time
in the year ended 30 September 2010. Information regarding the
identification of the chief operating decision-maker and operating
segments together with the basis of measurement for the year ended
30 September 2010 is disclosed on page 82 of the Group's Annual
Report and Accounts.
With effect from 1 October 2010, the Group reorganised its
business Sectors. The main change was the merger of the Specialist
and Activity sectors and simultaneously some of the European
specialist businesses transferred to the Mainstream and A&D
sectors. As part of the restructure, the Emerging Markets Sector
now operates as a standalone entity.
Segmental information for both the current and prior periods
have been presented using this new structure, with the prior period
information being re-presented for both this and for Jet4You
classified as a continuing operation (Note 1).
6-month period ended 31 March 2011
Underlying
Total operating
Inter-segmental external (loss)
Sector Total revenue revenue revenue / profit
GBPm GBPm GBPm GBPm
--------------- -------------- ---------------- -------------- -----------
UK 1,102 (37) 1,065 (173)
Canada - - - 19
Rest of
Northern
Region 542 (22) 520 17
--------------- -------------- ---------------- -------------- -----------
Total Northern
Region 1,644 (59) 1,585 (137)
Germany 1,503 (10) 1,493 (67)
Rest of
Central
Europe 178 (19) 159 (15)
--------------- -------------- ---------------- -------------- -----------
Total Central
Europe 1,681 (29) 1,652 (82)
French Airline 213 (48) 165 (3)
Rest of
Western
Europe 934 (6) 928 (73)
--------------- -------------- ---------------- -------------- -----------
Total Western
Europe 1,147 (54) 1,093 (76)
Total
Mainstream 4,472 (142) 4,330 (295)
--------------- -------------- ---------------- -------------- -----------
Specialist &
Activity 630 (1) 629 (1)
Emerging
Markets - - - (6)
Accommodation
and
Destinations 319 (73) 246 7
All other
segments and
unallocated
items - - - (12)
Total Group 5,421 (216) 5,205 (307)
--------------- -------------- ---------------- -------------- -----------
6-month period ended 31 March 2010
Underlying
operating
Total external (loss) /
Total revenue Inter-segmental revenue profit
Sector (re-presented) revenue (re-presented) (re-presented)
GBPm GBPm GBPm GBPm
--------------- --------------- ---------------- --------------- ---------------
UK 1,014 (38) 976 (161)
Canada 52 - 52 (5)
Rest of
Northern
Region 432 (21) 411 19
--------------- --------------- ---------------- --------------- ---------------
Total Northern
Region 1,498 (59) 1,439 (147)
Germany 1,495 (6) 1,489 (58)
Rest of
Central
Europe 181 (16) 165 (15)
--------------- --------------- ---------------- --------------- ---------------
Total Central
Europe 1,676 (22) 1,654 (73)
French Airline 183 (35) 148 (23)
Rest of
Western
Europe 877 (2) 875 (67)
--------------- --------------- ---------------- --------------- ---------------
Total Western
Europe 1,060 (37) 1,023 (90)
Total
Mainstream 4,234 (118) 4,116 (310)
--------------- --------------- ---------------- --------------- ---------------
Specialist &
Activity 633 (1) 632 3
Emerging
Markets - - - (4)
Accommodation
and
Destinations 280 (59) 221 3
All other
segments and
unallocated
items - - - (14)
Total Group 5,147 (178) 4,969 (322)
--------------- --------------- ---------------- --------------- ---------------
Year ended 30 September 2010
Underlying
operating
Total external profit /
Total revenue Inter-segmental revenue (loss)
Sector (re-presented) revenue (re-presented) (re-presented)
GBPm GBPm GBPm GBPm
--------------- --------------- ---------------- --------------- ---------------
UK 3,453 (61) 3,392 127
Canada 52 - 52 (5)
Rest of
Northern
Region 967 (63) 904 61
--------------- --------------- ---------------- --------------- ---------------
Total Northern
Region 4,472 (124) 4,348 183
Germany 3,829 (29) 3,800 81
Rest of
Central
Europe 627 (52) 575 11
--------------- --------------- ---------------- --------------- ---------------
Total Central
Europe 4,456 (81) 4,375 92
French Airline 399 (56) 343 (24)
Rest of
Western
Europe 2,625 (13) 2,612 68
--------------- --------------- ---------------- --------------- ---------------
Total Western
Europe 3,024 (69) 2,955 44
Total
Mainstream 11,952 (274) 11,678 319
--------------- --------------- ---------------- --------------- ---------------
Specialist &
Activity 1,351 - 1,351 78
Emerging
Markets - - - (7)
Accommodation
and
Destinations 796 (209) 587 73
All other
segments and
unallocated
items - - - (29)
Total Group 14,099 (483) 13,616 434
--------------- --------------- ---------------- --------------- ---------------
Reconciliation of segmental revenues to statutory revenues
6-month
6-month period ended Year ended
period ended 31 March 30 September
31 March 2011 2010 2010
GBPm GBPm GBPm
----------------------------- --------------- -------------- --------------
Total external revenue in
segmental analysis
(re-presented) 5,205 4,969 13,616
Pro-forma impact of volcanic
ash - - (125)
----------------------------- --------------- -------------- --------------
Statutory revenue
(re-presented) 5,205 4,969 13,491
Re-presentation of Jet4You
revenue - (36) (91)
----------------------------- --------------- -------------- --------------
Statutory revenue (as
previously stated) 5,205 4,933 13,400
----------------------------- --------------- -------------- --------------
Reconciliation of underlying operating (loss) / profit in
segmental analysis to operating (loss) / profit
6-month
6-month period ended Year ended
period ended 31 March 30 September
31 March 2011 2010 2010
GBPm GBPm GBPm
----------------------------- --------------- -------------- --------------
Underlying operating (loss)
/ profit in segmental
analysis (re-presented) (307) (322) 434
Pro-forma impact of volcanic
ash - - (35)
----------------------------- --------------- -------------- --------------
Underlying operating (loss)
/ profit (re-presented) (307) (322) 399
Separately disclosed items 58 (24) (255)
Acquisition related items (32) (29) (63)
Impairment of goodwill - - (12)
Taxation on joint ventures
and associates (1) (2) (6)
----------------------------- --------------- -------------- --------------
Operating (loss) / profit (282) (377) 63
----------------------------- --------------- -------------- --------------
5. Separately disclosed items
6-month
6-month period ended Year ended
period ended 31 March 2010 30 September 2010
31 March 2011 (re-presented) (re-presented)
GBPm GBPm GBPm
---------------------- --------------- ---------------- -------------------
Separately disclosed
items in operating
(loss) / profit
Merger related
integration costs - 34 116
Restructuring and
other separately
disclosed items (53) 34 63
Aircraft and other
assets (1) (44) 7
---------------------- --------------- ---------------- -------------------
Total pre volcanic
ash (54) 24 186
Incremental costs
caused by volcanic
ash disruption (4) - 69
---------------------- --------------- ---------------- -------------------
Total (58) 24 255
---------------------- --------------- ---------------- -------------------
Separately disclosed
financial expenses 6 2 7
---------------------- --------------- ---------------- -------------------
Merger related integration costs
The merger related integration programme has now been completed
and no further costs are expected to arise in this category.
Costs incurred in the comparative periods relate primarily to
the costs of integration of the UK businesses and, in the
Accommodation & Destinations Sector, separate First Choice and
TUI Tourism incoming agencies were combined in a number of key
destinations, notably Spain.
Restructuring and other separately disclosed items
During the 6-month period ended 31 March 2011, the Company
engaged in a consultation process with the members of its defined
benefit pension schemes to seek ways to limit future liabilities
for the Company in order to help make the schemes affordable,
sustainable and competitive for the future. One of the changes
which has been agreed with the members is a restriction to salary
increases used under the rules of the pension schemes to calculate
benefits to a maximum of 2.5% in any one year. This change has
resulted in a reduction in accrued pension liabilities measured
under IAS 19 of GBP63m. Under IAS 19, introducing a restriction to
the extent that future salary increases are linked to the benefits
payable for past service is a curtailment which is recognised fully
in the Income Statement in the period in which it occurs. Therefore
in this period a GBP63m credit is included in the Income Statement
in relation to this curtailment and it is included as a separately
disclosed item.
The introduction of the salary cap has also led to a change in
withdrawal assumptions where it is now less beneficial for members
to remain in certain schemes. The change in this assumption has the
impact of increasing the liabilities of the scheme by GBP15m. Under
IAS19 a change in assumption is recognised within actuarial gains
and losses in the statement of changes in equity and is not in the
income statement.
Also included in the 6-month period ended 31 March 2011 are
Mainstream restructuring costs of GBP10m which principally relate
to the ongoing restructure of Corsair, the scheduled French
airline, and the retail network of Nouvelles Frontieres in France.
In addition there has been GBP1m of restructuring costs in the
Specialist and Activity sector and GBP7m of restructuring costs
incurred in Group head office companies, offset by a GBP9m credit
on the change in value of unhedged foreign currency derivative
instruments.
Costs incurred in the 6-month period ended 31 March 2010 relate
principally to GBP22m for the restructuring of hotel operations in
Turkey and GBP4m for restructuring of the Canadian business as a
consequence of the strategic venture transaction with Sunwing
Travel Group Inc.
Aircraft and other assets
During the 6-month period ended 31 March 2011, the principal
charge is GBP4m in relation to a further impairment of the cruise
ship, the 'Island Escape', after its dry-dock costs were more
expensive than previously anticipated. This charge is offset by
GBP5m profit on the sale and leaseback of aircraft and the disposal
of aircraft engines previously held for sale.
The GBP44m credit in the 6-month period ended 31 March 2010
relates to a combination of aircraft order cancellation credits and
compensation for delays to the delivery of aircraft.
Impact of volcanic ash
There has been a release of GBP4m of accruals in the 6-month
period ended 31 March 2011 as costs in relation to the disruption
in 2010 are in the process of being finalised with third party
suppliers.
Separately disclosed financial expenses
The separately disclosed financial expenses in the 6 months
ended 31 March 2011, relate to interest charges on the late
settlement of tax liabilities in Spain. (6 months ended 31 March
2010: GBP2m revaluation of a put option written by the Group in
respect of a minority shareholder of L'TUR Tourismus AG).
6. Analysis of acquisition related expenses
6-month 6-month
period ended period ended Year ended
31 March 2011 31 March 2010 30 September 2010
GBPm GBPm GBPm
----------------------- --------------- --------------- -------------------
Acquisition related
expenses in operating
(loss) / profit
Amortisation of
business combination
intangibles 28 24 54
Other acquisition
related expenses 3 4 7
Remuneration for
post-combination
services 1 1 2
----------------------- --------------- --------------- -------------------
Total 32 29 63
----------------------- --------------- --------------- -------------------
7. Goodwill impairment charge
The goodwill impairment charge in the year ended 30 September
2010 of GBP12m related to the Italian (GBP7m) and Spanish (GBP5m)
Specialist cash generating units (both now part of the Rest of
Western Europe segment) as a result of a deterioration in forecast
trading results compared to the prior year.
8. Taxation
The Group's effective tax rate, being tax for the 6-month period
ended 31 March 2011, and the Group's underlying effective tax rate,
being tax on underlying loss before tax for the same period are
both 27%.
6-month 6-month
period ended period ended Year ended
31 March 2011 31 March 2010 30 September 2010
GBPm GBPm GBPm
----------------------- --------------- --------------- -------------------
Loss before tax
reported in the
consolidated income
statement (345) (432) (54)
Adjustment for share
of (profit) / loss of
joint ventures and
associates (15) 5 3
(360) (427) (51)
----------------------- --------------- --------------- -------------------
Total income tax
credit / (charge) in
income statement 91 113 (50)
Actual tax rate 25.3% 26.4% 98.0%
----------------------- --------------- --------------- -------------------
The actual tax rates shown above differ from the underlying
effective tax rate of 27% due to the tax effect of separately
disclosed items.
9. Dividends
The following dividends relating to ordinary shares have been
deducted from equity in the period:
6-month
6-month period ended
period ended 31 March Year ended
31 March 2011 2010 30 September 2010
GBPm GBPm GBPm
------------------------ --------------- -------------- -------------------
Interim dividend paid
for 2010 36 - -
Final dividend paid for
2010 86 - -
Interim dividend paid
for 2009 - 33 33
Final dividend paid for
2009 - 85 85
Total dividends 122 118 118
------------------------ --------------- -------------- -------------------
The interim dividend in respect of the year ended 30 September
2010 of 3.2p per ordinary share, totalling GBP36m was paid on 1
October 2010 and deducted from equity in the period.
At the Company's AGM on 3 February 2011, the shareholders
approved the final recommended dividend for 2010 of 7.8p per
ordinary share. The dividend was paid on 1 March 2011 and therefore
its value of GBP86m has been recognised as a deduction from equity
in the period.
Subsequent to the balance sheet date, the Directors have
proposed an interim dividend for the 6-month period ended 31 March
2011 of 3.3p per ordinary share, totalling GBP37m, payable on 3
October 2011.
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 2011 interim dividend, may
do so by contacting Equiniti on 0871 384 2030. The last day for
election for the proposed interim dividend is 19 September 2011 and
any requests should be made in good time ahead of that date.
10. Loss per share
The basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the applicable weighted
average number of shares in issue during the period, excluding
those held in the employee share ownership trusts.
The diluted loss per share is calculated by:
-- taking losses attributable to ordinary shareholders adjusted where
the effect would be dilutive by the interest expense of the Group's
convertible bond net of tax; and
-- dividing by the adjusted weighted average number of ordinary shares
and where the effect would be dilutive, outstanding share awards
and the conversion to ordinary shares of the Group's convertible
bond.
In the accordance with IAS 33: Earnings per share, the
calculations of basic and underlying diluted loss per share has not
included anti-dilutive potential ordinary shares. Therefore there
is no difference between the calculation of basic and diluted loss
per share in the 6-month periods ended 31 March 2011 and 31 March
2010.
Following the reclassification of Jet4You (see Note 1) the loss
per share for the period ended 31 March 2010 and the year ended 30
September 2010 have been re-presented. The basic and diluted loss
per share increased by 1.2p for the period ended 31 March 2010 and
1.6p for the year ended 30 September 2010.
The additional underlying earnings per share measures have been
given to provide the reader of the interim financial statements
with a better understanding of the results.
Basic and diluted loss per share for the 6-month period ended 31
March 2011
Weighted
average Loss
number per
Loss of share Weighted
6-month shares 6-month average number
period 6-month period of shares Loss per share
ended period ended Loss 6-month 6-month period 6-month period
31 ended 31 31 period ended ended 31 March ended 31 March
March March March 31 March 2010 2010 2010
2011 2011 2011 (re-presented) (re-presented) (re-presented)
GBPm Millions Pence GBPm Millions Pence
Basic and
diluted loss
per share (255) 1,107 (23.0) (320) 1,108 (28.9)
Acquisition
related
items (net
of tax) 23 - 2.1 22 - 2.0
Separately
disclosed
items (net
of tax) (30) - (2.7) 21 - 1.9
-------------- -------- --------- -------- --------------- --------------- ---------------
Basic and
diluted
underlying
loss per
share (262) 1,107 (23.6) (277) 1,108 (25.0)
-------------- -------- --------- -------- --------------- --------------- ---------------
Basic and diluted loss per share for the year ended 30 September
2010 is as follows:
(Loss) / earnings
(Loss) / earnings Weighted average per share Year
Year ended 30 no. of shares ended 30
September 2010 Year ended 30 September 2010
(re-presented) September 2010 (re-presented)
GBPm Millions Pence
------------------ ------------------ ------------------ ------------------
Basic and diluted
loss per share (104) 1,107 (9.4)
------------------ ------------------
Acquisition
related items
(net of tax) 127 - 11.5
Separately
disclosed items
(net of tax) 208 - 18.8
------------------ ------------------ ------------------ ------------------
Basic underlying
earnings per
share 231 1,107 20.9
Effect of
dilutive
options - 11 (0.2)
Effect of
convertible
bonds 32 144 0.1
------------------ ------------------ ------------------ ------------------
Diluted
underlying
earnings per
share 263 1,262 20.8
------------------ ------------------ ------------------ ------------------
11. Acquisitions and investments
(a) Acquisitions in the 6-month period ended 31 March 2011
In January 2011, the Accommodation and Destinations Sector of
the Group purchased 100% of the voting equity instruments of Lima
Tours S.A.C., a Peruvian based tour operator.
The fair values of the net assets acquired are set out
below:
GBPm
----------------------------- -----
Intangible fixed assets 3
Trade and other receivables 2
Cash and cash equivalents 1
Trade and other payables (4)
----------------------------- -----
Total 2
----------------------------- -----
Provisional goodwill arising on acquisitions in the period is
calculated as follows:
Calculation of goodwill arising GBPm
--------------------------------- -----
Consideration payable 5
Net assets acquired 2
--------------------------------- -----
Provisional goodwill arising 3
--------------------------------- -----
Contingent consideration for Lima Tours S.A.C. is also payable
dependent on the future results of the acquired business and on the
service of the vendors up to a maximum of GBP5m. In accordance with
IFRS 3 (2008), this cost will be expensed as remuneration for
post-combination services in the income statement over the earn-out
period, which ends in December 2013.
In addition to the above, in line with our distribution strategy
in Central Europe, the Group acquired 27 individually immaterial
Central European travel agencies in separate transactions and one
cruise handling business for a total of GBP6m cash consideration,
resulting in goodwill and intangibles of GBP6m. All acquisitions
have been accounted for using the purchase method.
For current period acquisitions certain fair value adjustments
and the value of contingent consideration have necessarily been
prepared on a provisional basis due to the recent timing of certain
acquisitions and the periods over which contingent consideration
may become payable. Experience may result in revisions to fair
values in the subsequent accounting period.
Provisional goodwill arising in respect of current year
acquisitions represents principally:
-- Increased market knowledge and share of particular geographic
areas;
-- The employee workforce of the acquired businesses; and
-- The ability to sell acquired product through existing channels and
existing product through acquired channels.
The total cash outflow in the period from acquisition of
subsidiaries and travel agencies (net of cash acquired) was GBP16
million, which comprised GBP7 million relating to current period
acquisitions and GBP9 million relating to prior period
acquisitions.
(b) Income statement
The acquired businesses and travel agents contributed revenues
of GBP6m during the 6-month period ended 31 March 2011 with no
material impact on profit after tax.
If the businesses and travel agencies that were acquired at
various times during the period ended 31 March 2011 had been part
of the Group since 1 October 2010, Group revenue would have
increased further by GBP5m with no material impact on profit after
tax.
(c) Acquisitions after the balance sheet date
On 4 April 2011, the Group entered into a strategic venture in
which it acquired 60% of the equity share capital of the company
headed by Intrepid Travel Group Limited ("Intrepid"), based in
Melbourne, Australia. The consideration paid for Intrepid was 40%
of the share capital of the Group's existing Adventure businesses.
The result of the transaction is that the Group owns 60% of the
newly formed group, called "PEAK", combining its adventure
businesses with Intrepid to form a leading position in the
adventure and experiential travel market. The Group will
consolidate PEAK from the date that control passed on 4 April 2011,
with 40% held by non-controlling interest shareholders.
The acquisition of the 60% of the Intrepid businesses will be
treated as a business combination in accordance with IFRS 3
(revised), and the disposal of 40% of the TUI Adventure businesses
will be treated in accordance with IAS 27 (revised), with any
difference between the fair value and book value of the assets
disposed being presented as a change in equity.
A review of the assets and liabilities acquired, including the
identification and valuation of intangible assets such as brands,
is still ongoing and therefore no fair value table has been
presented in this Interim Report. Consequently the resulting
goodwill arising from the transaction has not yet been
determined.
If Intrepid had been part of the Group from 1 October 2010 then
the turnover of the Group would have been GBP30m higher than that
reported. Until the acquisition accounting has been completed, it
is not possible to assess the impact on the Group's loss had
Intrepid been part of the Group from 1 October 2010.
12. Acquisitions of property, plant and equipment and intangible
assets
Payments made for additions of property, plant and equipment and
intangible assets totalled GBP129m in the six month period to 31
March 2011. This comprised GBP10m for land and buildings, GBP33m
for yachts, motor boats and cruise ships, GBP21m for aircraft and
related equipment, GBP28m for computer hardware and software and
GBP37m of other equipment.
13. Trade and other payables
6-month 6-month
period ended period ended Year ended
31 March 2011 31 March 2010 30 September 2010
GBPm GBPm GBPm
----------------------- --------------- --------------- -------------------
Customer deposits 2,388 1,972 1,513
Other 1,998 2,054 2,788
Trade and other
payables 4,386 4,026 4,301
----------------------- --------------- --------------- -------------------
14. Movements in cash and net debt
Amounts
Cash and due to Other
cash Convertible related Bank Loan Finance financial
equivalents bonds parties loans notes Leases liabilities Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------- ------------ ------------ -------- ------ ------ -------- ------------ --------
At 1
October
2010 1,304 (633) (575) (36) (2) (269) (38) (249)
Cash
movement (959) - 438 (461) - 39 - (943)
Non-cash
movement 10 (12) - - 1 (4) - (5)
Foreign
exchange 23 - (4) (1) (1) (1) (1) 15
At 31
March
2011 378 (645) (141) (498) (2) (235) (39) (1,182)
---------- ------------ ------------ -------- ------ ------ -------- ------------ --------
Amounts
Cash and due to Other
cash Convertible related Bank Loan Finance financial
equivalents bonds parties loans notes Leases liabilities Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------- ------------ ------------ -------- ------ ------ -------- ------------ --------
At 1 October
2009 790 - (840) (51) (6) (192) (39) (338)
Cash
movement (382) (350) - (372) - 12 - (1,092)
Non-cash
movement - 55 - - - (1) - 54
Foreign
exchange (6) - 22 9 - (2) 1 24
Arising on
acquisition - - - (1) - - - (1)
------------- ------------ ------------ -------- ------ ------ -------- ------------ --------
At 31 March
2010 402 (295) (818) (415) (6) (183) (38) (1,353)
------------- ------------ ------------ -------- ------ ------ -------- ------------ --------
15. Capital commitments
The following amounts have been contracted but not provided for
at the balance sheet date:
31 March 31 March 30 September
2011 2010 2010
GBPm GBPm GBPm
--------------------- --------- --------- -------------
Capital commitments 4 8 9
--------------------- --------- --------- -------------
In addition to the above items, the Group has contracted to
purchase forty-three aircraft and related spares. The Group intends
to refinance these aircraft and related spares in advance of their
delivery dates and therefore does not expect to use its own cash
resources for their purchase.
16. Contingent liabilities
The Group is at any time defending a number of actions against
it arising in the normal course of business. Provision is made for
these actions where this is deemed appropriate, which includes a
provision of EUR28m in relation to Spanish tax affairs where we are
still in discussion with the Spanish tax authorities as detailed on
page 97 of the Group's Annual Report and Accounts for the year
ended 30 September 2010. No actions which are outstanding at 31
March 2011 are expected to have a material effect on these
accounts. The Directors consider that adequate provision has been
made for all known liabilities.
17. Related party transactions
(a) Ultimate controlling party
The Group's ultimate controlling party is TUI AG, a company
registered in Berlin and Hanover (Federal Republic of Germany).
(b) Related party transactions
On 29 June 2007 the Company entered into the Shareholder Loan
Agreement with TUI AG under the terms of which TUI AG will lend a
maximum amount of EUR2 billion (GBP1.9 billion) to the Company for
general corporate purposes. At the beginning of the period, the net
balance owed to TUI AG under the Agreement was EUR0.7 billion
(GBP0.6 billion). The facility has remained in place throughout the
6-month period and the net balance at 31 March 2011 was EUR0.2
billion (GBP0.1 billion) including accrued interest of GBP4
million, following repayment of EUR0.5 billion of the loan in
December 2010.
The Group also held receivables of GBP19 million and payables of
GBP52 million with TUI AG and its subsidiaries, which arose through
the normal course of business, including under the Hotel Framework
Agreement and Trademark Licence Agreement, details of which are set
out in Note 30 of the Group's 2010 consolidated financial
statements. During the current and prior financial periods the
Group transacted with its joint ventures and associates in the
normal course of business. These transactions did not have a
significant impact on the result for the periods.
18. Post balance sheet events
(a) Shareholder loan
On 30 April 2011, the final EUR160m of the shareholder loan
principal amount was repaid to TUI AG in line with the agreed
repayment schedule.
(b) Acquisitions
Details of acquisitions since 31 March 2011 are disclosed in
Note 11(c).
Responsibility statement of the Directors in respect of the half
yearly financial statements
The Directors confirm that to the best of their knowledge:
-- the consolidated interim financial statements have been prepared
in accordance with IAS 34 'Interim Financial Reporting' as adopted
by the EU;
-- the interim management report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the
first six months of the financial year and their impact on
the consolidated set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first
six months of the current financial year and that have
materially affected the financial position or performance of
the Group during that period; and any changes in the related
party transactions described in the last annual report that
could do so.
The Directors of TUI Travel PLC are listed on page 48 of the TUI
Travel PLC Annual Report for the year ended 30 September 2011, with
the exception of the following changes in the period: Paul Bowtell
resigned on 31 December 2010; Jeremy Hicks resigned on 31 January
2011; Giles Thorley resigned on 31 January 2011 and Minnow Powell
was appointed on 4 April 2011.
On behalf of the Board of Directors
Will Waggott
Chief Financial Officer
9 May 2011
Independent review report to TUI Travel PLC
Introduction
We have been engaged by the Company to review the consolidated
set of interim financial statements in the half-yearly financial
report for the six months ended 31 March 2011, which comprises the
consolidated income statement, the consolidated statement of
comprehensive income, the consolidated balance sheet, the
consolidated statement of cash flows, the consolidated statement of
changes in equity and related notes. We have read the other
information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the consolidated
set of interim financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in Note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The consolidated set of interim financial
statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European
Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the consolidated set of interim financial statements in the
half-yearly financial report based on our review. This report,
including the conclusion, has been prepared for and only for the
Company for the purpose of the Disclosure and Transparency Rules of
the Financial Services Authority and for no other purpose. We do
not, in producing this report, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the consolidated set of interim financial
statements in the half-yearly financial report for the six months
ended 31 March 2011 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
Uxbridge
9 May 2011
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR ALMMTMBTMTFB
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
