TIDMTT.
RNS Number : 9126G
TUI Travel PLC
13 May 2014
13 May 2014
TUI Travel PLC
("TUI Travel")
Interim Results for the six months ended 31 March 2014
STRONG H1 PERFORMANCE
-- Continued momentum in unique holidays, booked increasingly online
-- Flexible, resilient business model ensures that we continue to deliver
profitable growth
-- Pleased with Summer 2014 trading overall
-- Remain confident of delivering full year underlying operating profit
growth of between 7% to 10% on a constant currency basis(1,2)
Peter Long, Chief Executive of TUI Travel PLC, commented:
"We have delivered a strong performance in the first half,
driven by our flexible and resilient business model. Demand
continues to grow for our unique holidays and we have seen strong
growth in online bookings, a key element of our digital
transformation. The UK is delivering excellent performance due to
market leadership and uniqueness of offering. We are particularly
pleased with the result in Germany, where we are making significant
headway in improving operating margin and are on a similar journey
to that of the UK. In France the turnaround plan to break even is
making good progress. Our global leadership position in
Accommodation Wholesaler is also delivering strong growth. Overall,
we are pleased with Summer 2014 trading, against strong
comparatives, and we remain confident of delivering 7% to 10%
growth in underlying operating profit during the year on a constant
currency basis(1,2) ."
Key Financials
Underlying results(2) Statutory results
GBPm H1 14 H1 13(3) Change% H1 14 H1 13(3)
Revenue 5,190 5,397 -4% 5,190 5,397
Operating loss (298) (289) -3% (315) (347)
Operating loss excluding
Easter timing impact at
constant currency(1) (277) (289) +4% n/a n/a
Loss before tax (369) (352) -5% (386) (410)
-------------------------- ------ --------- -------- -------- ----------
(1) Constant currency basis assumes that constant foreign
exchange translation rates are applied to the underlying operating
result in the current and prior year
(2) Underlying operating profit/loss and loss before tax exclude
separately disclosed items, acquisition related expenses,
impairment of goodwill and interest and taxation of results of the
Group's joint ventures and associates
(3) Prior period finance charges and tax have been restated to
reflect revision to IAS 19 'Employee benefits'
Highlights
-- H1 Results
* GBP12m improvement in underlying H1 operating loss
versus prior year (at constant currency rates(1) ,
excluding GBP23m timing impact of later Easter).
* Statutory operating loss improved by GBP32m to
GBP315m (H1 2013: GBP347m).
* Interim dividend increase of 8% to 4.05p (H1 2013:
3.75p).
-- One Mainstream strategy continues to deliver
* Pleased with UK performance - underlying operating
loss in line with prior year excluding the timing
impact of Easter, despite strong comparatives and
lower demand for Egypt.
* Excellent performance in Germany with a GBP16m
reduction in underlying operating loss(1) ,
excluding the timing impact of Easter.
* GBP11m reduction in French tour operator underlying
operating loss(1) as a result of restructuring and
tight capacity management.
* Significant growth in online bookings, accounting for
38% of sales in H1 2014 (H1 2013: 34%).
* Unique holidays continue to grow, accounting for 70%
of sales in H1 2014 (H1 2013: 67%).
* Rigorous business efficiency and destination mix
management offsetting impact of Egypt.
-- Strong Accommodation Wholesaler growth
* Continuing to leverage our scale and global market
leading position, with significant growth in H1
underlying operating profit.
-- Pleased with Summer 2014 trading overall, growth roadmap on track
* 60% sold to date, with higher average selling prices
across Mainstream offsetting a slight decrease in
overall volumes against strong comparatives.
* Accommodation Wholesaler performing very well, with
TTV up 24%.
-- Growth roadmap
* Remain confident of delivering full year underlying
operating profit growth of between 7% to 10% on a
constant currency basis(1) .
Investor and Analyst briefing and webcast
A presentation for analysts and investors will be held today at
9.30am (GMT) at the London Stock Exchange, 10 Paternoster Square,
London, EC4M 7LS. There will be a live audio webcast of the
presentation. Please visit www.tuitravelplc.com for more
details.
Interim Management Statement & Q3 Results
TUI Travel will issue its interim management statement and third
quarter results on Friday 8 August 2014.
Enquiries:
Analysts & Investors
Andy Long, Director of Strategy & Investor Tel: +44 (0)1293 645 795
Relations
Tej Randhawa, Investor Relations Manager Tel: +44 (0)1293 645 829
Sarah Coomes, Investor Relations Manager Tel: +44 (0)1293 645 827
Press
Lesley Allan, Corporate Communications Director Tel: +44 (0)1293 645 790
Mike Ward, External Communications Manager Tel: +44 (0)1293 645 776
Michael Sandler / Katie Matthews (Hudson Sandler) Tel: +44 (0)20 7796 4133
OUR GROWTH LEVERS : CREATING SHAREHOLDER VALUE
Our clearly defined strategic growth levers help drive improved
profitability and free cash flow and, therefore, superior returns
on investment. This improvement will allow us to invest further in
the future of our business which will benefit our customers,
colleagues and shareholders.
1. Delivering Mainstream Growth
1.1 Unique holidays only available from TUI Travel
Unique holidays
Our unique holidays, which are exclusive to us and command a
margin premium over commodity products, continue to see strong
growth. Sales of higher margin unique holidays during the first
half increased by three percentage points to 70% of Mainstream
holidays, driven by growth in demand in all key source markets.
This growth is set to continue with further expansion of our best
performing unique brands, such as Sensatori, which has recently
opened a new resort in Jamaica and will be opening a further two
resorts in Ibiza and Turkey for Summer 2015. Our customers continue
to be delighted with the holiday experiences we have designed for
them.
One mobility platform
Our unique holiday offering gives us control over the end-to-end
customer experience and an opportunity to interact with our
customers throughout their journey. We have a clear digital
strategy to enhance and deepen the relationship with our
customers.
Our digital assistant app is a key driver in maintaining the
ongoing customer relationship and will be used to link our people
more effectively with our customers any time, anywhere, any way,
with continuous additions to functionality. To date, we have rolled
out the app to five source markets, just twelve months after the
initial UK launch. The apps have received over 490,000 downloads to
date with good levels of usage and engagement. We have a clear
roadmap in place to make the transition 'from assistant to
concierge' over the next 18 months, with additional features that
will lead to an increased number of downloads.
To connect our people with our customers we have digitally
enabled our UK in-resort teams with tablets from Summer 2014 to
connect effectively our physical presence with the digital world.
We will now be rolling this out to other source markets.
Flight experience
A key part of our unique holiday offering is also the flight
experience. We continue to reshape the composition of our airline
fleet to drive customer satisfaction through a more modern
offering, and simplify the fleet to one short-haul and one
long-haul aircraft type. We took delivery of another Boeing 787-8
in the first half of the year and expect a further three to be
delivered in the second half. These aircraft are commanding
excellent customer satisfaction scores. We are also continuing to
modernise the short-haul fleet, with the delivery of four Boeing
737-800s in the first half of the year and a further one to come in
the second half.
1.2 Distributed directly to the customer - growth from
online
Direct distribution
Our direct distribution mix improved by three percentage points
in the first half to 68% of Mainstream sales, with improvements in
all key source markets. The improvement in direct distribution was
driven by the online channel which also increased by four
percentage points to 38% of Mainstream sales. Our customers are
increasingly seeing the benefits of our digital transformation
strategy, which in turn is driving conversion improvements from our
new web platforms.
One online platform
As an online-driven business, we have a focus on the online
customer experience. We are moving to one core online platform
across Mainstream. This has already been implemented in the UK and
Nordics source markets, and is being rolled out to others in 2014.
We continue to see significant benefits in conversion rates as a
result of the implementation of the new platform. The optimisation
of websites in our core source markets for mobile and tablet use is
also driving improved conversion - in the UK, smartphone and tablet
bookings improved by 81% in the first half of the year.
Holiday Open Day
As customers increasingly engage with us online, we are
enriching our digital content to showcase our unique brands, with a
focus on fast, fluid and user-led content. We have launched a new
immersive tool, 'Holiday Open Day', to help customers in the UK and
Germany visualise and find their perfect holiday. Using the tool,
customers are able to create a video of their dream holiday and
share their videos with family and friends via social media.
Next generation retail stores
We continue to modernise our retail offering. We launched the
first of our UK next generation stores during 2013, with two
openings since then in Bristol and Liverpool and a further three
planned openings in prime locations by the end of the year. These
stores allow us to combine personal advice and service with a rich
digital experience that enables customers to build their perfect
holiday.
1.3 Leveraging our scale
As Europe's largest tour operator we leverage our scale across
all source markets to consolidate our market leading position and
grow the number of customers travelling with us. Our One Mainstream
structure is in place and yielding tangible benefits across
multiple areas, including purchasing, holiday concept development,
distribution and online, digital transformation, airline and
in-resort services. We recently announced the implementation of a
common leadership structure across all group airlines, creating
'one virtual airline'.
2. Organic Specialist & Activity growth
Our specialist businesses are making good progress in delivering
organic growth. This includes consolidation of finance and
reservation systems to leverage scale across multiple brands, as
well as continuing on the journey of standardisation while
balancing the varied requirements of the different holiday
experiences they offer. We are confident of exceeding our growth
roadmap of underlying profit growth of 8-10% at constant currency
in the year ahead.
3. Leveraging our global leadership position in Accommodation
Wholesaler through growth in existing markets
Accommodation Wholesaler continues to consolidate its global
leadership position delivering TTV growth of 21% to GBP690m during
the first half of the year, with a strong performance from Asia and
Latin America. Roomnights grew by 21% to 8.3 million during the
first half, with hotel inventory also increasing by 19% to 64,000
hotels. Accommodation Wholesaler delivered a significant
improvement in operating result in the first half and is on track
to meet the roadmap of underlying profit growth of 15-20% at
constant currency in the year ahead.
4. Investing in Accommodation OTA
In Accommodation OTA (online travel agent) our focus is to build
on our strong brand positioning of LateRooms.com in the UK and
expand in the emerging markets across Asia through AsiaRooms.com
and in Brazil with MalaPronta, Brazil's fourth largest
accommodation-only OTA. We are continually improving our digital
offering for our OTA brands, including fully mobile optimised sites
and apps recently updated to improve the search and book
experience.
5. Focus on free cash flow generation, ROIC and operational efficiency
One of our key strategic objectives is to continue to improve
the Group's profitability and free cash flow and therefore deliver
superior returns on investment. This improvement will allow us to
invest further in the future of our business which will benefit our
customers, colleagues and shareholders.
Net debt reduced from GBP707m at 31 March 2013 to GBP586m at 31
March 2014 (excluding restricted cash and asset backed financing).
We have increased our interim dividend by 8% to 4.05p, reflecting
our improved profitability and cash flow.
Our business improvement programme delivered GBP8m of efficiency
savings in the first half, in line with expectations. This is just
one element of our focus on operational efficiency and we continue
to drive efficiency improvements across our businesses.
CURRENT TRADING & OUTLOOK
Winter 2013/14
Winter 2013/14 has closed out as expected, with strong pricing
across the Mainstream Sector overall, despite the challenging
trading environment in the Nordics. Mainstream bookings were down
by 2% excluding Egypt with average selling prices up 3%. Including
Egypt, bookings were down 6%, with average selling prices up 2%. In
Accommodation Wholesaler, TTV continued to grow significantly, up
20%. Trading in Specialist & Activity was in line with
expectations. Further commentary on the first half result is
included in the Business and Financial Review.
Summer 2014
Overall we are pleased with Summer 2014 trading, with 60% of the
programme sold. Overall Mainstream bookings are down slightly
against strong comparatives, with average selling prices up 2%. We
continue to see strong demand for our unique holidays, which
account for 71% of Mainstream bookings, up three percentage points.
Mainstream online bookings are up 6%.
Current Trading(1) Summer 2014
YoY variation% Total Total Total Programme sold (%)
ASP(2) Sales(2) Customers(2)
MAINSTREAM
UK +5 +2 -3 60%
Nordics Flat -7 -7 61%
Germany Flat Flat Flat 60%
France tour operators +3 -12 -14 55%
Other(3) +1 Flat -1 60%
Total Mainstream +2 Flat -2 60%
Accommodation Wholesaler(4) Flat +24 +23 N/A
(1) These statistics are up to 4 May 2014 and are shown on a
constant currency basis
(2) These statistics relate to all customers whether risk or non
risk
(3) Other includes Austria, Belgium, Netherlands, Poland and
Switzerland
(4) These statistics refer to online accommodation businesses
only; Sales refer to total transaction value (TTV) and customers
refers to roomnights
In the UK, bookings are down 3% compared with the prior year,
where we saw a very strong start to early trading. We have made
selected capacity increases in unique product in destinations such
as Greece, Ibiza and Lanzarote, in line with demand. Average
selling prices are up by 5%, reflecting the continued increase in
unique holiday mix and recovery of input cost increases. Sales of
unique holidays account for 85% of holidays sold to date, up by
three percentage points. This Summer we have further expanded our
highly successful Sensatori offering with the launch of a new
resort in Jamaica. Sales of our other unique concepts, such as
Couples, Holiday Village and Splashworld, are significantly higher
than prior year. Online sales account for 47% of Summer holidays
booked, up four percentage points on the prior year. To date, 60%
of the programme has been sold.
In the Nordics, reflecting the competitive trading environment,
bookings are down 7% with flat average selling prices. We have
reduced Summer capacity by 3%, whilst protecting core volumes in
the peak months, and we expect this to mitigate the impact of this
challenging environment. Unique holidays account for 95% of sales,
in line with prior year, and online sales account for 71% of
bookings, up three percentage points on prior year. To date, 61% of
the programme has been sold.
In Germany, bookings are flat compared with prior year, in line
with modest capacity increases. This reflects growth in core
package sales, in particular to medium-haul destinations such as
Turkey and Greece, as well as a recovery in sales of overland
products, offset by a strategic reduction in seat-only sales.
Average selling prices for packages are up 1% but remain flat
overall as a result of product mix changes, with an increase in
lower priced overland sales. Unique holidays continue to grow,
accounting for 55% of bookings, up two percentage points on prior
year. This Summer sees the second year of sales of our popular TUI
Reisewelten unique holiday brands (Beach, Classic, Lifestyle,
Nature, Premium and Scene). Online sales continue to expand in
Germany, up 17% compared with prior year. To date 60% of the
programme has been sold.
In France, bookings are down by 14%, in line with capacity cuts.
Whilst the trading environment remains challenging, we continue to
reshape our programme towards more profitable destinations, and we
are pleased with the 3% increase in average selling prices. To date
55% of the programme has been sold.
In Accommodation Wholesaler, TTV is up 24%, with strong trading
to all destinations, in particular Latin America and Asia, and from
all source markets, especially the UK and Asia.
In Specialist & Activity, sales are in line with
expectations, with a good performance by the North American
specialists, Marine and Adventure businesses.
Fuel/Foreign exchange
Our strategy of hedging the majority of our fuel and currency
requirements for future seasons, as detailed below, remains
unchanged. This gives us certainty of costs when planning capacity
and pricing. The following table shows the percentage of our
forecast requirement that is currently hedged for Euros, US Dollars
and jet fuel.
Summer 2014 Winter 2014/15
Euro 90% 60%
US Dollars 92% 73%
Jet Fuel 89% 64%
As at 9 May 2014
------------------ ------------ ---------------
Outlook
Overall, we are pleased with trading for the Summer, despite
strong comparatives. We are making clear progress against our
growth roadmap, in particular in Germany, where continued margin
improvement is evident, and in France, where we have further
reduced underlying operating losses. The UK continues to be the
clear market leader, with further growth in profitability expected
this year. Our Accommodation Wholesaler business continues to
deliver strong growth and the Specialist & Activity Sector is
on track to deliver against its growth roadmap.
Our strategy, focused on growing unique product and direct
distribution, continues to deliver sustainable growth, supported by
a flexible and resilient business model. We remain confident of
achieving our growth target this year of 7% to 10% underlying
operating profit growth on a constant currency basis.
BUSINESS AND FINANCIAL REVIEW
Group Performance
Six months ended 31 March 2014
Underlying results(1) Statutory results
GBPm H1 14 H1 13(2) Change% H1 14 H1 13(2)
Revenue 5,190 5,397 -4% 5,190 5,397
Operating loss (298) (289) -3% (315) (347)
Operating loss excluding
Easter timing impact at
constant currency(3) (277) (289) +4% n/a n/a
Loss before tax (369) (352) -5% (386) (410)
-------------------------- ------ --------- -------- -------- ----------
(1) Underlying operating loss and loss before tax exclude
separately disclosed items, acquisition related expenses,
impairment of goodwill and interest and taxation of results of the
Group's joint ventures and associates
(2) Prior period finance charges and tax have been restated to
reflect revision to IAS 19 'Employee benefits'
(3) Constant currency basis assumes that constant foreign
exchange translation rates are applied to the underlying operating
result in the current and prior year
Group revenue decreased by 4% to GBP5,190m (H1 2013: GBP5,397m).
This result was driven by the later timing of Easter and capacity
reductions in France.
The Group's underlying operating loss increased to GBP298m (H1
2013: loss of GBP289m). However, this included a GBP23m impact from
the later timing of Easter, which is expected to reverse fully
during Q3. On an underlying basis, excluding the timing impact of
Easter and foreign exchange translation, underlying operating loss
reduced by GBP12m.
Our business improvement programme is progressing to plan with
GBP8m of cost savings delivered in the period.
The main drivers of the year-on-year improvement in underlying
operating loss were:
GBPm
H1 13 underlying operating loss (289)
Trading 4
Business improvement 8
-----------
H1 14 underlying operating loss at constant currency, excluding Easter timing (277)
Easter (23)
FX translation 2
-----------
H1 14 underlying operating loss (298)
A reconciliation of underlying operating loss to statutory
operating loss is as follows:
H1 14 H1 13
GBPm GBPm
Underlying operating loss (298) (289)
Separately disclosed items 23 (8)
Acquisition related expenses (28) (31)
Impairment of goodwill - (10)
Taxation on profits and interest of joint ventures
and associates (12) (9)
------ ------
Statutory operating loss (315) (347)
------ ------
Segmental Performance
Segmental performance is based on underlying financial
information (which excludes certain items, including separately
disclosed items and acquisition related expenses).
Mainstream Sector
Underlying Mainstream operating loss in H1 was GBP254m (H1 2013:
loss of GBP250m). At constant currency and excluding the timing
impact of Easter, the loss reduced by GBP12m.
Mainstream H1 14 H1 13 Change %
Customers ('000)
UK 1,436 1,472 -2%
Nordics 641 649 -1%
Germany 1,882 2,163 -13%
France 490 600 -18%
Other 1,592 1,664 -4%
------ ------ ---------
Total 6,041 6,548 -8%
====== ====== =========
Revenue (GBPm)
UK 1,085 1,101 -1%
Nordics 560 589 -5%
Germany 1,446 1,525 -5%
France 356 411 -13%
Other 763 784 -3%
------ ------ ---------
Total 4,210 4,410 -5%
====== ====== =========
Underlying operating (loss) /
profit (GBPm)
UK (125) (113) -11%
Nordics 14 38 -63%
Germany (50) (63) +21%
France (45) (51) +12%
Other (48) (61) +21%
------ ------ ---------
Total (254) (250) -2%
====== ====== =========
Mainstream Key Performance Indicators
(%)
Unique mix 70 67 +3pp
Direct distribution mix 68 65 +3pp
Online mix 38 34 +4pp
The main drivers of the year on year change in underlying
operating loss are summarised in the following table:
GBPm UK Nordics Germany France Other Mainstream
H1 13 (113) 38 (63) (51) (61) (250)
Trading (3) (21) 16 3 11 6
Business improvement 2 - - 4 - 6
H1 14 at constant
currency, excluding
Easter (114) 17 (47) (44) (50) (238)
Easter (11) (3) (4) - - (18)
FX translation - - 1 (1) 2 2
------ -------- -------- ------- ------ -----------
H1 14 (125) 14 (50) (45) (48) (254)
====== ======== ======== ======= ====== ===========
UK
Key Performance Indicators (%) H1 14 H1 13 Change %pts
Unique mix 84 81 +3
Direct distribution mix 90 87 +3
Online mix 51 45 +6
The underlying UK operating loss in H1 was GBP125m (H1 2013:
loss of GBP113m). Excluding the timing impact of Easter, the loss
was broadly flat, against strong comparatives and despite the
decline in demand for Egypt. A remix of the programme and cost
saving measures have been implemented to mitigate this, in
particular in the airline, with reduced engineering and handling
costs. The continued rationalisation of the retail estate has also
driven cost base savings in the first half of the year. In
addition, the UK business delivered GBP2m of efficiency savings
towards the business improvement programme in the period.
Demand for our unique holidays continued to grow, accounting for
84% of departures in H1, up three percentage points on the prior
year. Online bookings accounted for 51% of departures during the
first half, up six percentage points year on year. We have seen a
continued trend towards booking holidays via tablet and smartphone
- bookings via these devices increased by 81% in the first half
compared with prior year.
Nordics
Key Performance Indicators (%) H1 14 H1 13 Change %pts
Unique mix 92 90 +2
Direct distribution mix 88 87 +1
Online mix 67 64 +3
Nordics' underlying operating profit in H1 was GBP14m (H1 2013:
profit of GBP38m). Excluding the timing impact of Easter, profit
reduced by GBP21m, reflecting the challenging trading environment.
We have experienced weaker pricing in H1 due to a significant
reduction in the Egypt programme, political unrest in Thailand and
a more competitive environment overall, particularly in the
Canaries which is a key destination for Winter profitability.
Unique holidays accounted for 92% of departures in the first
half, up two percentage points on prior year. Online distribution
continues to grow, to 67% of departures in H1, up three percentage
points over the prior year.
Germany
Key Performance Indicators (%) H1 14 H1 13 Change %pts
Unique mix(1) 45 42 +3
Direct distribution mix 38 36 +2
Online mix 10 7 +3
(1) Unique mix now includes 1-2-Fly
In Germany the H1 underlying operating loss was GBP50m (H1 2013:
loss of GBP63m). Excluding the timing impact of Easter and impact
of currency translation, losses reduced by GBP16m, reflecting
significant progress in our journey to improve operating margin in
this source market.
Since mid-2012, our new Managing Director in Germany has driven
significant cultural change across the business. Excellent progress
has been made in the simplification of back office functions, with
headcount reduced by 15% since the start of our business
improvement programme, and material savings in accommodation and
airline costs have been delivered in the first half as a result of
contract renegotiations. Overall, we expect to deliver an operating
margin of at least 3% in Germany this year.
Last year we launched our popular TUI Reisewelten labels which,
along with continued focus on our highly differentiated holiday
concepts, has increased the mix of unique holidays to 45%, up three
percentage points.
We have continued to focus on increasing direct distribution,
with the implementation of consistent TUI branding across all of
our own shops. Germany sold 38% of holidays in H1 directly to the
customer, an increase of two percentage points on prior year. This
was also partly driven by an increase in online sales, up 15% in
H1. Our digital presence has been strengthened through the updated
TUI.com website and launch of the Meine TUI digital assistant.
France
Key Performance Indicators (%) H1 14 H1 13 Change %pts
Unique mix 79 73 +6
Direct distribution mix 56 56 Flat
Online mix 19 19 Flat
In France underlying operating loss in H1 was GBP45m (H1 2013:
loss of GBP51m). Excluding the impact of currency translation,
losses reduced by GBP7m, reflecting the continued delivery of
efficiency savings and alignment of tour operator capacity in line
with demand.
The tour operator trading environment continues to be
challenging, in particular for North African destinations such as
Tunisia, Egypt and Morocco. We have therefore continued to remodel
our programme, developing alternative destinations such as Greece,
Sardinia, Lanzarote and Cape Verde for forthcoming seasons, and
further reducing our commitments in North Africa. We are continuing
to rationalise our distribution network, with the closure of
unprofitable shops and a focus on growing direct distribution
through online sales. The tour operator delivered GBP3m of
efficiency savings towards the business improvement programme in
the first half. The result includes GBP1m adverse impact from
foreign exchange translation.
The Airline result is down year-on-year, in line with our
expectations. We are now operating a more modern fleet, which
delivers improvements in customer service (and hence profitability)
across the year as a whole, but is more expensive in the Winter
months. This was partly offset by the delivery of the final GBP1m
of business improvement efficiencies.
France H1 14 H1 13 Change %
Underlying operating loss (GBPm)
Tour Operator (32) (42) +24%
Airline (13) (9) -44%
------ ------ ---------
(45) (51) +12%
Other
Other source markets delivered a reduced underlying operating
loss of GBP48m (H1 2013: loss of GBP61m). This includes GBP2m
benefit from foreign exchange translation. The reduction in loss
was driven by a strong performance in the Netherlands and
Canada.
Emerging Markets Sector
In the Emerging Markets Sector, our tour operator businesses in
Russia and Ukraine continued to be impacted by the decline in
demand for Egypt and by local political instability, leading to an
operating loss of GBP14m (H1 2013: loss of GBP7m). The trading
environment continues to be challenging due to geopolitical
issues.
Accommodation & Destinations (A&D) Sector
The A&D underlying operating profit in H1 was GBP3m (H1
2013: loss of GBP1m). Excluding the timing impact of Easter and
impact of currency translation, profit improved by GBP7m. This was
driven by a significant improvement in the Accommodation Wholesaler
result.
TTV for the Sector increased by 10% to GBP1,271m (H1 2013:
GBP1,160m). This was primarily driven by growth in the
Accommodation Wholesaler business.
Accommodation & Destinations Sector H1 14 H1 13 Change %
Revenue (GBPm) 338 282 +20%
Underlying operating profit /
(loss) (GBPm)
Online Accommodation 7 1 +600%
Inbound Services (4) (2) n/a
------ ------ ---------
Total 3 (1) n/a
====== ====== =========
The main drivers of the year on year improvement in underlying
operating result are summarised in the table below:
GBPm Online Accommodation Inbound Accommodation
Services & Destinations
H1 13 1 (2) (1)
Trading 9 (2) 7
Easter (2) - (2)
FX translation (1) - (1)
--------------------- ---------- ----------------
H1 14 7 (4) 3
===================== ========== ================
Online Accommodation
The Online Accommodation business delivered underlying operating
profit of GBP7m (H1 2013: profit of GBP1m), reflecting a strong
performance by Accommodation Wholesaler. TTV for Accommodation
Wholesaler grew by 21% to GBP690m and roomnights increased by 21%
to 8.3 million. The key area of focus remains on international
expansion, particularly in the Americas and Asia, and we are also
developing a greater presence in Africa. As a result we are
confident this year that we will again achieve our target to grow
underlying operating profit by 15% to 20% per annum, on a constant
currency basis.
In Accommodation OTA we remain focused on building on our strong
brand positioning of LateRooms.com in the UK, and expanding in the
emerging markets through AsiaRooms.com across Asia and in Brazil
with MalaPronta, Brazil's fourth largest accommodation only OTA. We
are continually improving our digital offering for our OTA brands,
including fully mobile optimised sites and apps recently updated to
improve the search and book experience.
Inbound Services
The Inbound Services business delivered an underlying operating
loss of GBP4m (H1 2013: loss of GBP2m), reflecting the impact of
fewer customers travelling to Egypt. Incoming passenger volumes
decreased by 8% as a result of this.
Specialist & Activity Sector
Specialist & Activity underlying operating loss in H1 was
GBP12m (H1 2013: loss of GBP12m). Excluding the timing impact of
Easter, losses reduced by GBP3m. North American Specialist reported
a strong performance, particularly in our polar cruising and
private jet tours businesses, although some of the upside seen at
Q1 has reversed in Q2 due to the timing of trips. In addition, the
Sector delivered GBP2m of efficiency savings towards the business
improvement programme in the period. This was partly offset by lost
ski volumes due to the late timing of Easter.
Sales for Summer 2014 are in line with expectations and this,
together with the continued delivery of efficiency savings, gives
us confidence that we will this year exceed our growth roadmap of
8% to 10% annualised growth in underlying operating profit, on a
constant currency basis.
Specialist & Activity H1 14 H1 13 Change %
Customers ('000) 591 668 -12%
Revenue (GBPm) 640 705 -9%
Underlying operating loss (GBPm) (12) (12) Flat
---------------------------------- ------ ------ ---------
Acquisitions & Investments
Total cash outflow in respect of acquisitions was GBP17m during
the period, net of cash acquired. The Group acquired two
businesses, including a further 41% of Le Passage to India ('LPTI')
that the Group did not already own. The Group previously owned 50%
of LPTI and accounted for this as a joint venture. The Group also
acquired five travel agents in Germany. Further information is
included in Note 11.
Taxation
The underlying effective tax rate on H1 2014 underlying loss
before tax is 29% (H1 2013: 27%). This underlying effective tax
rate is based on the current structure of the business and existing
local taxation rates and legislation. The increase in the
underlying effective tax rate is due to the effect of the
geographical mix of profits where these arise in countries with
statutory tax rates higher than 27% and higher than the UK
statutory rate of 22%.
The effective tax rate for the six months ended 31 March 2013
was 34%. This differs to the underlying tax rate due to the tax
effect of acquisition related expenses and separately disclosed
items.
The cash tax rate is expected to be lower than the underlying
income tax rate as we utilise our deferred tax assets generated
from restructuring expenditure and trading losses. In the coming
year, we envisage
an underlying cash tax rate of approximately 20% of underlying
profit before tax.
Dividends
The Board has approved an interim dividend of 4.05p per ordinary
share (H1 2013: 3.75p), an increase of 8%, payable to holders of
relevant shares on the register at 5 September 2014. This will be
paid on 3 October 2014.
We intend to continue to operate a dividend reinvestment plan as
an alternative to the cash dividend.
Separately disclosed items
Separately disclosed items net to GBP23m income in the period
(H1 2013: GBP8m expense). This included a restructuring charge of
GBP18m, primarily relating to previously announced restructuring in
France, Germany and Specialist & Activity. We also recorded
pension scheme related credits of GBP39m in relation to two pension
transactions completing in the UK and Norway. Further information
is included in Note 5.
Cash and liquidity
Net debt excluding restricted cash (cash and cash equivalents
less loans, overdrafts and finance leases) at 31 March 2014 was
GBP977m (31 March 2013: GBP1,076m). This excludes restricted cash
of GBP131m (31 March 2013: GBP27m). The increase in restricted cash
is primarily due to receipt of GBP98m from the Belgian government
in the second half of 2013, in relation to disputed VAT in a
long-running court case. The outcome of the case remains uncertain.
Further information is included in Note 13.
The net debt position consisted of GBP1,244m of cash and cash
equivalents, which includes restricted cash of GBP131m, GBP942m of
current interest bearing loans and liabilities and GBP1,148m of non
current interest bearing loans and liabilities.
We remain confident in our funding and liquidity position. We
recently signed a new GBP1.4bn new bank credit facility, including
letters of credit, maturing June 2018. This will be used to manage
the seasonality of the Group's cash flows and liquidity. The new
facility underpins TUI Travel's debt maturity profile and provides
valuable flexibility in respect of other debt facilities and
upcoming maturities. As a result of this, we have reduced our
GBP300m medium-term syndicated bank credit facility by GBP150m as
the Directors no longer considered this portion to be required
following the refinancing of the main revolving credit facility.
Our covenants remain unchanged.
In addition to the revolving credit facility we have three other
main sources of finance - a GBP350m convertible bond (due October
2014), a GBP400m convertible bond (due April 2017) and GBP323m of
drawn finance lease obligations.
Consolidated income statement
for the 6-month period ended 31 March 2014
6-month
6-month period ended Year ended
period ended 31 March 30 September
31 March 2013 2013
2014 (restated) (restated)
------------------------------------------------------------- ----- --------------- --------------- --------------
Note GBPm GBPm GBPm
------------------------------------------------------------- ----- --------------- --------------- --------------
Revenue 4 5,190 5,397 15,051
Cost of sales (4,930) (5,173) (13,395)
------------------------------------------------------------- ----- --------------- --------------- --------------
Gross profit 260 224 1,656
Administrative expenses (576) (581) (1,376)
Share of profits of joint ventures and associates 1 10 17
------------------------------------------------------------- ----- --------------- --------------- --------------
Operating (loss) / profit 4 (315) (347) 297
------------------------------------------------------------- ----- --------------- --------------- --------------
Analysed as:
Underlying operating (loss) / profit 4 (298) (289) 589
Separately disclosed items 5 23 (8) (24)
Acquisition related expenses 6 (28) (31) (65)
Impairment of goodwill 7 - (10) (188)
Taxation on profits and interest of joint ventures and
associates (12) (9) (15)
------------------------------------------------------------- ----- --------------- --------------- --------------
(315) (347) 297
------------------------------------------------------------- ----- --------------- --------------- --------------
Financial income 1 8 6 19
Financial expenses 1 (79) (69) (147)
------------------------------------------------------------- ----- --------------- --------------- --------------
Net financial expenses 1 (71) (63) (128)
------------------------------------------------------------- ----- --------------- --------------- --------------
(Loss) / profit before tax (386) (410) 169
Taxation 8 109 144 (115)
------------------------------------------------------------- ----- --------------- --------------- --------------
(Loss) / profit for the period / year (277) (266) 54
------------------------------------------------------------- ----- --------------- --------------- --------------
Attributable to:
Equity holders of the parent (273) (266) 51
Non-controlling interests (4) - 3
------------------------------------------------------------- ----- --------------- --------------- --------------
(Loss) / profit for the period / year (277) (266) 54
------------------------------------------------------------- ----- --------------- --------------- --------------
6-month
6-month period ended Year ended
period ended 31 March 30 September
31 March 2013 2013
2014 (restated) (restated)
------------------------------------------------------------- ----- --------------- --------------- --------------
Note Pence Pence Pence
------------------------------------------------------------- ----- --------------- --------------- --------------
Basic and diluted (loss) / earnings per share for (loss) /
profit attributable to the equity
holders of the Company during the period / year
Basic (loss) / earnings per share 10 (24.6) (24.0) 4.6
Diluted (loss) / earnings per share 10 (24.6) (24.0) 4.6
------------------------------------------------------------- ----- --------------- --------------- --------------
Comparative figures for the year ended 30 September 2013 and the
6-month period ended 31 March 2013 have been restated to reflect
the adoption of revised IAS 19 'Employee benefits'. Further details
are provided in Note 1.
Consolidated statement of comprehensive income
for the 6-month period ended 31 March 2014
6-month
6-month period ended
period ended 31 March Year ended
31 March 2013 30 September 2013
2014 (restated) (restated)
--------------------------------------------------------------- --------------- --------------- -------------------
GBPm GBPm GBPm
--------------------------------------------------------------- --------------- --------------- -------------------
(Loss) / profit for the period / year (277) (266) 54
Other comprehensive (loss) / income
Items that will not be reclassified to profit and loss:
Remeasurements of defined benefit pension schemes (6) (28) (11)
Tax on remeasurements of defined benefit pension schemes 2 7 (14)
--------------------------------------------------------------- --------------- --------------- -------------------
Items that will not be reclassified to profit and loss (4) (21) (25)
Items that may be subsequently reclassified to profit and
loss:
Foreign exchange translation (54) 132 44
Foreign exchange gains recycled through the consolidated
income statement - (2) (1)
Cash flow hedges:
- movement in fair value (29) 118 (76)
- amounts recycled through the consolidated income statement 8 (6) (5)
Tax on cash flow hedges 4 (22) 22
Available for sale financial assets:
- movement in fair value 1 4 1
Items that may be subsequently reclassified to profit and loss (70) 224 (15)
--------------------------------------------------------------- --------------- --------------- -------------------
Other comprehensive (loss) / income for the period / year net
of tax (74) 203 (40)
--------------------------------------------------------------- --------------- --------------- -------------------
Total comprehensive (loss) / income for the period / year (351) (63) 14
--------------------------------------------------------------- --------------- --------------- -------------------
Total comprehensive (loss) / income for the period / year
Attributable to:
Equity holders of the parent (347) (63) 15
Non-controlling interests (4) - (1)
--------------------------------------------------------------- --------------- --------------- -------------------
Total (351) (63) 14
--------------------------------------------------------------- --------------- --------------- -------------------
Comparative figures for the year ended 30 September 2013 and the
6-month period ended 31 March 2013 have been restated to reflect
the adoption of revised IAS 19 'Employee benefits'. Further details
are provided in Note 1.
Consolidated balance sheet
at 31 March 2014
31 March 31 March 30 September
2014 2013 2013
Note GBPm GBPm GBPm
----------------------------------------------------------- ------ --------- --------- -------------
Non-current assets
Intangible assets 12 4,388 4,619 4,384
Property, plant and equipment 12 1,236 1,269 1,238
Investments in joint ventures and associates 246 273 243
Other investments 37 71 36
Trade and other receivables 212 275 205
Derivative financial instruments 17 4 30 3
Deferred tax assets 289 332 168
----------------------------------------------------------- ------ --------- --------- -------------
6,412 6,869 6,277
----------------------------------------------------------- ------ --------- --------- -------------
Current assets
Inventories 60 65 57
Other investments 13 17 36
Trade and other receivables 1,570 1,633 1,331
Income tax recoverable 58 41 24
Derivative financial instruments 17 31 177 41
Cash and cash equivalents 13,16 1,244 502 1,753
Assets classified as held for sale 9 17 10
----------------------------------------------------------- ------ --------- --------- -------------
2,985 2,452 3,252
Total assets 9,397 9,321 9,529
----------------------------------------------------------- ------ --------- --------- -------------
Current liabilities
Interest-bearing loans and borrowings 14 (942) (123) (594)
Retirement benefits (3) (3) (3)
Derivative financial instruments 17 (149) (100) (147)
Trade and other payables 15 (4,828) (4,777) (4,773)
Provisions for liabilities (262) (308) (277)
Income tax payable (47) (22) (76)
(6,231) (5,333) (5,870)
----------------------------------------------------------- ------ --------- --------- -------------
Non-current liabilities
Interest-bearing loans and borrowings 14 (1,148) (1,428) (1,012)
Retirement benefits (564) (679) (658)
Derivative financial instruments 17 (17) (13) (26)
Trade and other payables (88) (66) (79)
Provisions for liabilities (354) (322) (362)
Deferred tax liabilities (11) (67) (31)
----------------------------------------------------------- ------ --------- --------- -------------
(2,182) (2,575) (2,168)
Total liabilities (8,413) (7,908) (8,038)
----------------------------------------------------------- ------ --------- --------- -------------
Net assets 984 1,413 1,491
----------------------------------------------------------- ------ --------- --------- -------------
Equity
Called up share capital 112 112 112
Convertible bond reserve 114 88 91
Other reserves 2,554 2,863 2,625
Accumulated losses (1,832) (1,694) (1,378)
----------------------------------------------------------- ------ --------- --------- -------------
Total equity attributable to equity holders of the parent 948 1,369 1,450
Non-controlling interests 36 44 41
Total equity 984 1,413 1,491
----------------------------------------------------------- ------ --------- --------- -------------
Consolidated statement of cash flows
for the 6-month period ended 31 March 2014
6-month
6-month period ended Year ended
period ended 31 March 30 September
31 March 2013 2013
Note 2014 (restated) (restated)
-------------------------------------------------------- ----- --------------- ----------------- -----------------
GBPm GBPm GBPm
-------------------------------------------------------- ----- --------------- ----------------- -----------------
(Loss) / profit for the period / year (277) (266) 54
Adjustment for:
Depreciation and amortisation 120 118 248
Impairment of intangible assets and property, plant and
equipment - 7 14
Impairment of goodwill - 10 188
Equity-settled share-based payment expense 10 8 15
Profit on sale of property, plant and equipment (5) - (10)
Share of profit of joint ventures and associates (1) (10) (17)
Loss / (profit) on foreign exchange 3 17 (19)
Change in value of assets held at fair value through
profit and loss - - (5)
Gain on disposal of other investment (1) - -
Dividends received from joint ventures and associates 2 28 43
Pension past service gains arising from curtailment 5 (39) (14) (25)
Financial income (8) (6) (19)
Financial expenses 79 69 147
Taxation 8 (109) (144) 115
Operating cash flow before changes in working capital
and provisions (226) (183) 729
(Increase) / decrease in inventories (3) (3) 3
(Increase) / decrease in trade and other receivables (275) (317) 63
(Decrease) / increase in trade and other payables (89) (15) 59
Belgian VAT receipt - - 98
(Decrease) / increase in provisions and retirement
benefits (65) (20) 11
-------------------------------------------------------- ----- --------------- ----------------- -----------------
Cash flows generated from operations (658) (538) 963
Interest paid (45) (44) (90)
Interest received 8 6 19
Income taxes paid (71) (71) (110)
-------------------------------------------------------- ----- --------------- ----------------- -----------------
Cash flows generated from operating activities (766) (647) 782
-------------------------------------------------------- ----- --------------- ----------------- -----------------
Investing activities
Proceeds from sale of property, plant and equipment 86 58 192
Acquisition of subsidiaries net of cash acquired 11 (17) (9) (10)
Proceeds from disposal of other investments 31 - -
Investment in joint ventures, associates and other
investments (22) (40) (41)
Acquisition of property, plant and equipment (100) (119) (311)
Acquisition of intangible assets (53) (38) (102)
-------------------------------------------------------- ----- --------------- ----------------- -----------------
Cash flows used in investing activities (75) (148) (272)
-------------------------------------------------------- ----- --------------- ----------------- -----------------
Financing activities
Proceeds from new loans and deposits taken 437 482 82
Repayment of borrowings (32) (25) (44)
Repayment of finance lease liabilities (12) (12) (26)
Dividends paid to ordinary and non-controlling
interests (43) (38) (132)
Cash flows generated from / (used in) financing
activities 350 407 (120)
-------------------------------------------------------- ----- --------------- ----------------- -----------------
Net (decrease) / increase in cash and cash equivalents 16 (491) (388) 390
Cash and cash equivalents at start of period / year 1,753 830 830
Increase in bank balances presented gross 16 18 - 491
Effect of foreign exchange on cash held (36) 60 42
-------------------------------------------------------- ----- --------------- ----------------- -----------------
Cash and cash equivalents at end of period / year 13 1,244 502 1,753
-------------------------------------------------------- ----- --------------- ----------------- -----------------
Comparative figures for the year ended 30 September 2013 and the
6-month period ended 31 March 2013 have been restated to reflect
the adoption of revised IAS 19 'Employee benefits'. Further details
are provided in Note 1.
Movements in cash and net debt are presented in Note 1.
Consolidated statement of changes in equity for the 6-month
period ended 31 March 2014
Called
up Convertible Equity
share bond Merger Other Accumulated holders Non-controlling
capital reserve reserve reserves losses of parent interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- --------- ------------ --------- ---------- ------------ ----------- ---------------- ------
At 1 October
2013 112 91 2,523 102 (1,378) 1,450 41 1,491
----------------- --------- ------------ --------- ---------- ------------ ----------- ---------------- ------
Loss for the
period - - - - (273) (273) (4) (277)
Other
comprehensive
loss for the
period - - - (71) (3) (74) - (74)
Total
comprehensive
loss for the
period - - - (71) (276) (347) (4) (351)
----------------- --------- ------------ --------- ---------- ------------ ----------- ---------------- ------
Transactions
with
owners
Share-based
payment
- charge for
the
period - - - - 8 8 - 8
Repurchase of
own
shares - - - - (32) (32) - (32)
Acquisition of
non-controlling
interests - - - - (4) (4) - (4)
Dividends - - - - (150) (150) (1) (151)
Adjustments in
respect of
prior
periods -
deferred
tax - 23 - - - 23 - 23
Total
transactions
with owners - 23 - - (178) (155) (1) (156)
----------------- --------- ------------ --------- ---------- ------------ ----------- ---------------- ------
At 31 March 2014 112 114 2,523 31 (1,832) 948 36 984
----------------- --------- ------------ --------- ---------- ------------ ----------- ---------------- ------
Consolidated statement of changes in equity for the 6-month
period ended 31 March 2013
Called
up Convertible Equity
share bond Merger Other Accumulated holders Non-controlling
capital reserve reserve reserves losses of parent interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- --------- ------------ --------- ---------- ------------ ----------- ---------------- ------
At 1 October
2012 112 88 2,523 104 (1,262) 1,565 44 1,609
----------------- --------- ------------ --------- ---------- ------------ ----------- ---------------- ------
Loss for the
period
(restated) - - - - (266) (266) - (266)
Other
comprehensive
income / (loss)
for
the period
(restated) - - - 236 (33) 203 - 203
Total
comprehensive
income / (loss)
for
the period - - - 236 (299) (63) - (63)
----------------- --------- ------------ --------- ---------- ------------ ----------- ---------------- ------
Transactions
with
owners
Share-based
payment
- charge for
the period - - - - 5 5 - 5
Repurchase of
own
shares - - - - (8) (8) - (8)
Acquisition of
non-controlling
interests - - - - - - 1 1
Dividends - - - - (130) (130) (1) (131)
Total
transactions
with owners - - - - (133) (133) - (133)
----------------- --------- ------------ --------- ---------- ------------ ----------- ---------------- ------
At 31 March 2013 112 88 2,523 340 (1,694) 1,369 44 1,413
----------------- --------- ------------ --------- ---------- ------------ ----------- ---------------- ------
Comparative figures for the year ended 30 September 2013 and the
6-month period ended 31 March 2013 have been restated to reflect
the adoption of revised IAS 19 'Employee benefits'. Further details
are provided in Note
1. Basis of preparation
Statement of compliance
This condensed consolidated interim financial information for
the 6-month period ended 31 March 2014 has been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and with International Accounting
Standard (IAS) 34 'Interim financial reporting' as adopted by the
European Union. The condensed consolidated interim financial
information should be read in conjunction with the Company's
published consolidated financial statements for the year ended 30
September 2013, which were prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
The condensed consolidated interim financial information is not
audited and does not comprise statutory accounts within the meaning
of section 434 of the Companies Act 2006. The summary results for
the year ended 30 September 2013 is an extract from the published
Annual Report & Accounts, with the exception of the restatement
for the adoption of IAS19 'Employee benefits' (revised) as
described below, which were approved by the Board of Directors on 9
December 2013 and delivered to the Registrar of Companies. The
report of the auditors on those Annual Report & Accounts was
unqualified, did not include a reference to any matters to which
they drew attention by way of emphasis without qualifying their
report and did not contain a statement under section 498 of the
Companies Act 2006.
This condensed consolidated interim financial information was
approved by the Board of Directors on 12 May 2014.
Accounting policies
As required by the Disclosure and Transparency Rules of the
Financial Conduct Authority, this condensed consolidated 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 2013, except as noted below in respect of
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) are considered applicable and
have been adopted by the Group with effect from 1 October 2013:
-- IAS 19 (revised) 'Employee benefits'
-- IFRS 13 'Fair value measurement', including the disclosures required by IAS 34 para 16A(j)
-- Annual improvements project (2011)
-- Amendments to IFRS 7 'Financial instruments: Disclosures' on offsetting.
The Group has also early adopted the following amendments to
current IFRSs:
-- Amendment to IAS 36 'Impairment of assets' in respect of fair value disclosures
-- Amendment to IAS 39 'Financial instruments: Recognition and
measurement' in respect of novation of derivatives and continuation
of hedge accounting.
The revision to IAS 19 'Employee benefits' makes significant
changes to the recognition and measurement of defined benefit
pension expense and termination benefits and enhances the
disclosures for all employee benefits. The most significant impact
for the Group is that interest expense is now calculated on the net
defined benefit liability by applying the discount rate to the net
defined benefit liability. This replaces the interest cost on the
defined benefit obligation and the expected return on plan
assets.
The revised standard has retrospective application and
consequently the relevant charges or income in the consolidated
income statement and the consolidated statement of comprehensive
income for the financial year ended 30 September 2013 and the
6-month period ended 31 March 2013 have been restated. The impact
on opening retained earnings or net assets has not been dealt with
as a prior year adjustment on the grounds of materiality.
The impact before tax on the results for the 6-month period to
31 March 2013 and year ending 30 September 2013 was as follows:
6-month
period ended Year ended
31 March 2013 6-month 30 September Year ended
as Impact of period ended 2013 Impact of 30 September
previously IAS 19 31 March 2013 as previously IAS 19 2013
reported (revised) as restated reported (revised) as restated
GBPm GBPm GBPm GBPm GBPm GBPm
Financial income 39 (33) 6 86 (67) 19
Financial expenses (96) 27 (69) (202) 55 (147)
---------------------- --------------- ------------ --------------- --------------- ------------- --------------
Net financial
expenses (57) (6) (63) (116) (12) (128)
---------------------- --------------- ------------ --------------- --------------- ------------- --------------
(Loss)/profit before
tax (404) (6) (410) 181 (12) 169
Taxation
(credit)/charge 143 1 144 (118) 3 (115)
---------------------- --------------- ------------ --------------- --------------- ------------- --------------
(Loss)/profit for the
period / year (261) (5) (266) 63 (9) 54
---------------------- --------------- ------------ --------------- --------------- ------------- --------------
Other comprehensive
income/ (loss) 198 5 203 (49) 9 (40)
Pence Pence Pence Pence Pence Pence
---------------------- --------------- ------------ --------------- --------------- ------------- --------------
Basic (loss)/earnings
per share (23.6) (0.4) (24.0) 5.4 (0.8) 4.6
Diluted
(loss)/earnings per
share (23.6) (0.4) (24.0) 5.4 (0.8) 4.6
Underlying
(loss)/earnings per
share (22.8) (0.4) (23.2) 30.8 (0.7) 30.1
Diluted underlying
(loss)/earnings per
share (22.8) (0.4) (23.2) 29.6 (0.7) 28.9
---------------------- --------------- ------------ --------------- --------------- ------------- --------------
The Group has adopted IFRS 13 'Fair value measurement' which has
affected disclosures only. In accordance with the transitional
provisions of IFRS 13, the Group has applied the new fair value
measurement guidance prospectively and has not provided any
comparative information for new disclosures.
The remaining adoptions have not had a material impact on the
current or prior period's / year's results or net assets and
therefore no restatement of the prior period's / year's equity or
(loss) / profit has been presented for these new standards and
amendments.
Estimates and judgements
The preparation of interim financial information requires
management to make estimates, judgements and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
The critical accounting estimates and judgements made by the
Directors in applying the Group's accounting policies are
consistent with those detailed on pages 122 to 123 of the Group's
2013 Annual Report & Accounts.
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 by 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 International Financial Reporting Standards.
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), acquisition related expenses, impairment of goodwill and
interest 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, acquisition related
expenses, impairment of goodwill, interest and taxation of joint
ventures and associates and separately disclosed items included
within the operating result.
Underlying earnings / (loss) used in the calculation of
underlying earnings / (loss) per share is profit / (loss) after tax
from continuing operations excluding acquisition related expenses,
impairment of goodwill and separately disclosed items included
within the operating result. For the purpose of this calculation,
an underlying tax charge of 30% (2013: 27%) is used which excludes
the tax effects of separately disclosed items, acquisition related
expenses, goodwill impairment charges and separately disclosed tax
items.
It should be noted that the definitions of underlying items
being used in this condensed consolidated interim financial
information 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.
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.
Acquisition related expenses
Acquisition related expenses comprise amortisation of business
combination intangibles, other acquisition related expenses and
remuneration for post-combination services.
Funding, liquidity and going concern
The Board have considered and remains satisfied with the Group's
funding and liquidity position. At 31 March 2014, the main sources
of debt funding included:
-- a total of GBP1,120m bank revolving credit facilities maturing in June 2015;
-- GBP185m of bonding and letter of credit facility maturing in June 2015;
-- GBP350m convertible bond due October 2014;
-- GBP400m convertible bond due April 2017;
-- GBP300m bank syndicated facility which matures in April 2016
and which is only available in the event of a requirement to redeem
the Group's convertible bonds; and
-- GBP323m of drawn finance lease obligations with repayments up to March 2023;
On 28 March 2014 the Group completed the renegotiations and
signed a new revolving credit facility with the conditions
precedent being met on 2 April 2014. The new facility comprise the
following sources of finance:
-- Syndicated bank revolving credit facility of GBP1,225m, maturing in June 2018; and
-- GBP175m of bonding and letter of credit facility which matures in June 2018.
The covenants in the new revolving credit facility are unchanged
from the covenants included in the GBP1,120m bank revolving credit
facilities.
At 31 March 2014 the drawn amount under the old revolving credit
facilities totalled GBP430m. This was repaid on 2 April 2014 using
GBP50m of cash and GBP380m drawn under the new facility. On the
same date the old facilities were cancelled and replaced by the new
facility.
On 22 April 2014 the Group reduced the GBP300m bank syndicated
facility by GBP150m as the Directors no longer considered this
portion to be required following the refinancing of the revolving
credit facilities.
The ratio of earnings before interest, taxation, depreciation,
amortisation and operating lease rentals (EBITDAR) to fixed charges
(being the aggregate amount of interest and any other finance
charges in respect of borrowings and including all payments under
operating leases) and the ratio of net debt to earnings before
interest, taxation, depreciation and amortisation (EBITDA), which
the Board believes to be the most useful measures of cash
generation and gearing, as well as being the main basis for the
Group's credit facility covenants, are well within the covenant
limits at the date of the balance sheet. Forecasts reviewed by the
Board, including forecasts adjusted for significantly worse
economic conditions, show continued compliance with these
covenants. For both covenants, earnings are calculated on an
underlying basis as described above.
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, as described in Note 1, to
match the seasonality of the Group's cash flows.
3. Principal risks and uncertainties
The Group considers strategic, operational and compliance 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:
-- Changing consumer preferences and desires, including price
sensitivity and digital solutions
-- Heavy reliance on legacy systems, processes and structures
-- Acquisitions and investment into new and emerging markets
-- Global financial factors, such as fluctuations in exchange
rates and aircraft fuel prices, complex tax laws and geo-political
events
-- Consumer demand caused by uncertainty in the economic outlook
-- Ability to retain key management and have good relations with our colleagues
-- Political volatility, natural catastrophes and outbreaks
-- Regulatory environment, particularly in relation to consumer
protection, aviation and the environment.
Further details of the Group's risk profile analysis can be
found on pages 42 to 51 inclusive of the Group's Annual Report
& Accounts for the year ended 30 September 2013, available from
the Group website: www.tuitravelplc.com.
4. Segmental information
Information regarding the identification of the chief operating
decision-maker and the basis of measurement for the results of the
current and prior periods and for the year ended 30 September 2013
is disclosed on page 123 of the Group's 2013 Annual Report &
Accounts.
Group structure
The Group presents segmental information in respect of its
Sectors. The businesses within our Mainstream Sector are reported
via each key source market. Emerging Markets remains outside of the
Mainstream Sector for internal monthly management reporting
purposes and is reported separately.
The Mainstream Sector consists of the following source markets:
UK & Ireland, Germany, France, Corsair, the Nordic Countries,
Canada, Belgium & Morocco, the Netherlands, Austria,
Switzerland, Poland, Southern Europe and the Hotels division
(comprising hotel management companies and joint ventures in hotel
assets). Each source market represents an individual operating
segment, prior to applying aggregation criteria, for the purposes
of segmental information.
The Specialist & Activity Sector operates and reports under
six divisions, namely Adventure, Education, Marine, North American
Specialist, Sport and Specialist Holidays Group, but is considered
to be one operating segment, consistent with internal management
reporting.
The Accommodation & Destinations Sector (A&D) provides a
range of services in destinations to tour operators, travel agents,
corporate clients and direct to the consumer worldwide. A&D
consists of Online Accommodation (comprising Accommodation
Wholesaler and Accommodation OTA) and Inbound Services. A&D is
considered as one operating segment, consistent with internal
management reporting.
Reportable and reported segments
The results of the UK & Ireland, Germany, Nordics and the
French tour operator are reported separately due to the size and
importance of these source markets and they meet the threshold for
being individual reportable segments. The results for the French
scheduled airline, Corsair, are shown separately to that of the
French tour operator as it has a different business model to the
rest of the Group's integrated tour operators. All of the other
Mainstream Sectors, except for the Hotels division, meet the
aggregation criteria set out in IFRS 8 and are reported as one
segment, the Rest of Mainstream. All of the aggregated businesses
are considered to be similar in nature and economically similar
over the long term. The Hotels division is reported separately as
this does not meet the aggregation criteria of IFRS 8.
Emerging Markets, the Specialist & Activity and A&D
Sectors are all reported as separate Sector totals as this is
consistent with internal management reporting.
6-month period ended 31 March 2014
Underlying
operating
Inter-segmental Total external (loss) /
Total revenue revenue revenue profit
Sector GBPm GBPm GBPm GBPm
------------------------ ---------------- ------------------ ----------------- -----------
UK & Ireland 1,159 (74) 1,085 (125)
Germany 1,458 (12) 1,446 (50)
Nordics 563 (3) 560 14
French tour operator 170 - 170 (32)
French airline 194 (8) 186 (13)
Hotels 59 (49) 10 (32)
Rest of Mainstream 778 (25) 753 (16)
------------------------ ---------------- ------------------ ----------------- -----------
Total Mainstream 4,381 (171) 4,210 (254)
------------------------ ---------------- ------------------ ----------------- -----------
Specialist & Activity 641 (1) 640 (12)
A&D 396 (58) 338 3
Emerging Markets 2 - 2 (14)
All other segments and
unallocated items - - - (21)
Total Group 5,420 (230) 5,190 (298)
------------------------ ---------------- ------------------ ----------------- -----------
6-month period ended 31 March 2013
Underlying
operating
Inter-segmental Total external (loss) /
Total revenue revenue revenue profit
Sector GBPm GBPm GBPm GBPm
------------------------ ---------------- ------------------ ----------------- -----------
UK & Ireland 1,202 (101) 1,101 (113)
Germany 1,545 (20) 1,525 (63)
Nordics 589 - 589 38
French tour operator 242 - 242 (42)
French airline 196 (27) 169 (9)
Hotels 53 (44) 9 (33)
Rest of Mainstream 788 (13) 775 (28)
------------------------ ---------------- ------------------ ----------------- -----------
Total Mainstream 4,615 (205) 4,410 (250)
------------------------ ---------------- ------------------ ----------------- -----------
Specialist & Activity 706 (1) 705 (12)
A&D 341 (59) 282 (1)
Emerging Markets - - - (7)
All other segments and
unallocated items - - - (19)
Total Group 5,662 (265) 5,397 (289)
------------------------ ---------------- ------------------ ----------------- -----------
Year ended 30 September 2013
Underlying
operating
Inter-segmental Total external profit /
Total revenue revenue revenue (loss)
Sector GBPm GBPm GBPm GBPm
------------------------ ---------------- ------------------ ----------------- -----------
UK & Ireland 4,007 (128) 3,879 251
Germany 4,187 (26) 4,161 113
Nordics 1,223 - 1,223 79
French tour operator 706 - 706 (59)
French airline 408 (37) 371 (1)
Hotels 214 (160) 54 6
Rest of Mainstream 2,564 (90) 2,474 125
------------------------ ---------------- ------------------ ----------------- -----------
Total Mainstream 13,309 (441) 12,868 514
------------------------ ---------------- ------------------ ----------------- -----------
Specialist & Activity 1,437 (4) 1,433 41
A&D 960 (210) 750 78
Emerging Markets - - - (12)
All other segments and
unallocated items - - - (32)
Total Group 15,706 (655) 15,051 589
------------------------ ---------------- ------------------ ----------------- -----------
Reconciliation of underlying operating (loss) / profit in
segmental analysis to (loss) / profit before tax
6-month Year ended
6-month period ended 30 September
31 March
period ended 2013 2013
31 March
2014 (restated) (restated)
GBPm GBPm GBPm
-------------------------------------- --------------- -------------- --------------
Underlying operating (loss) / profit (298) (289) 589
Separately disclosed items 23 (8) (24)
Acquisition related expenses (28) (31) (65)
Impairment of goodwill - (10) (188)
Taxation on profits and interest of
joint ventures and associates (12) (9) (15)
-------------------------------------- --------------- -------------- --------------
Operating (loss) / profit (315) (347) 297
Net financial expenses (71) (63) (128)
-------------------------------------- --------------- -------------- --------------
(Loss) / profit before tax (386) (410) 169
-------------------------------------- --------------- -------------- --------------
Comparative figures for the year ended 30 September 2013 and the
6-month period ended 31 March 2013 have been restated to reflect
the adoption of revised IAS 19 'Employee benefits'. Further details
are provided in Note 1.
5. Separately disclosed items
6-month 6-month Year ended
period ended period ended 30 September
31 March 2014 31 March 2013 2013
GBPm GBPm GBPm
--------------------------------------------------------- --------------- --------------- --------------
Separately disclosed items in operating (loss) / profit
Restructuring and other separately disclosed items 19 9 59
Aircraft and other assets (4) - (23)
Pension related credit (39) (14) (25)
Litigation provisions 1 13 13
Total (credit) / charge (23) 8 24
--------------------------------------------------------- --------------- --------------- --------------
Restructuring and other separately disclosed items
The overall charge of GBP19m includes GBP18m of restructuring
costs. These primarily relate to GBP8m in France from the ongoing
restructure of both the tour operator and the airline, GBP5m across
other Mainstream businesses, GBP3m in Marine and GBP2m in the
Accommodation & Destinations Sector. There has then been an
additional GBP1m charge arising mainly from the change in value of
unhedged foreign currency derivative instruments relating to future
seasons.
During the 6-month period ended 31 March 2013, the overall
charge of GBP9m included GBP17m of restructuring costs. These
restructuring costs primarily related to GBP9m in the Specialist
& Activity Sector due to the removal of the Sector management
team and the closure of a business in the Education division, and
GBP5m in France from the ongoing restructure of both the tour
operator and the airline. These restructuring costs were offset by
an GBP8m credit on the change in value of unhedged foreign currency
derivative instruments relating to future seasons.
Aircraft and other assets
During the 6-month period ended 31 March 2014, there was an
overall credit of GBP4m. GBP3m of this arose from sale and lease
back transactions through taking delivery from Boeing of five
aircraft in the period, net of entry into service costs being
incurred in the UK and Belgium as additional Boeing 787 Dreamliners
are brought into service. There was also a credit of GBP1m
recognised in the period on finalising the disposal of the majority
of our interests in The Airline Group Limited; the transaction
completing in March 2014.
Pension related credit
The GBP39m credit recognised in the 6-month period ended 31
March 2014 arose mainly from two pension transactions which
completed in the UK and Norway. In the UK, current pensioner
members of the three UK defined benefit pension schemes were given
the option to exchange non-statutory future increases in their
pension for a higher pension now with only limited (statutory)
increases to be applied in future years. The level of acceptances
reduced the present value of future pension liabilities and the
credit is taken to the income statement under IAS 19 (revised) as
it represents a change in plan benefits. Net of advisor costs, the
credit to the income statement arising from this transaction was
GBP33m.
In Norway, the Management Board agreed with the employees to
close the defined benefit pension scheme and move the members into
a defined contribution scheme. This change is classified as a past
service gain on scheme closure under IAS 19 (revised) and the
resultant reduction in accrued pension liabilities of GBP4m has
been recognised in the income statement in the period in which it
occurred.
During the comparative 6-month period ended 31 March 2013, the
management and works council of TUI Nederland NV agreed to close
their defined benefit pension scheme and replace it with a defined
contribution scheme. This change was also classified as a past
service gain under IAS 19 (revised) and the resultant reduction in
accrued pension liabilities of GBP14m was recognised in the income
statement in the period in which it occurred.
6. Acquisition related expenses
6-month 6-month
period ended period ended
31 March 31 March Year ended
2014 2013 30 September 2013
GBPm GBPm GBPm
----------------------------------------------------------- -------------- -------------- -------------------
Acquisition related expenses in operating (loss) / profit
Amortisation of business combination intangibles 25 28 57
Other acquisition related expenses - 1 2
Remuneration for post-combination services 3 2 6
----------------------------------------------------------- -------------- -------------- -------------------
Total 28 31 65
----------------------------------------------------------- -------------- -------------- -------------------
7. Goodwill impairment charge
Details of the goodwill impairment charge for the year ended 30
September 2013 of GBP188m are provided on pages 141 to 143 of the
Group's 2013 Annual Report & Accounts.
During the 6-month period ended 31 March 2013, a goodwill
impairment charge of GBP10m was recognised in respect of two small
businesses that were identified as non-core to the Group and which
were subsequently closed.
8. Taxation
The Group's effective rate of taxation, being the rate of
taxation forecast for the full year (excluding adjustments in
respect of prior years), applied to the 6-month period ended 31
March 2014, is 34%.
6-month 6-month
period ended period ended Year ended
31 March 31 March 2013 30 September 2013
2014 (restated) (restated)
GBPm GBPm GBPm
-------------------------------------------------------------- --------------- ---------------- -------------------
(Loss) / profit before tax reported in the consolidated
income statement (386) (410) 169
Less share of profit in joint ventures and associates (1) (10) (17)
(387) (420) 152
-------------------------------------------------------------- --------------- ---------------- -------------------
Effective tax rate 34% 34% 76%
-------------------------------------------------------------- --------------- ---------------- -------------------
Effective tax rate applied to (loss) / profit before tax,
excluding share of profit in joint
ventures and associates 130 144 (115)
Adjustment in respect of prior periods (21) - -
Total income tax credit / (charge) in the consolidated
income statement 109 144 (115)
-------------------------------------------------------------- --------------- ---------------- -------------------
Comparative figures for the year ended 30 September 2013 and the
6-month period ended 31 March 2013 have been restated to reflect
the adoption of revised IAS 19 'Employee benefits'. Further details
are provided in Note 1.
Following a review of the Group's deferred tax balances in the
period, the Directors have written off certain deferred tax assets
(GBP21m) where there is no longer sufficient certainty of the
timing of any benefits that might arise in the future and written
back certain deferred tax liabilities to reserves (principally in
respect of the convertible bonds).
Spanish tax case
The Spanish tax case came to a conclusion in the period with the
final hearing in the Spanish courts occurring on 31 March 2014. In
line with the settlement agreement reached on 11 October 2013, the
interest and penalties levied of EUR20m were paid prior to that
final hearing and the matter is now closed.
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 31 March Year ended
2014 2013 30 September 2013
GBPm GBPm GBPm
---------------------------------- -------------- -------------- -------------------
Interim dividend paid for 2013 42 - -
Final dividend proposed for 2013 108 - -
Interim dividend paid for 2012 - 38 36
Final dividend paid for 2012 - 92 89
Total dividends 150 130 125
---------------------------------- -------------- -------------- -------------------
The interim dividend in respect of the year ended 30 September
2013 of 3.75p per ordinary share, totalling GBP42m was paid on 4
October 2013 and deducted from equity in the current period.
At the Company's Annual General Meeting on 6 February 2014, the
shareholders approved the final recommended dividend for 2013 of
9.75p per ordinary share. The value of this dividend, GBP108m, has
therefore been recognised as a deduction from equity in the period
and as a liability at 31 March 2014. The dividend was paid on 9
April 2014.
Subsequent to the balance sheet date, the Directors have
approved an interim dividend for the 6-month period ended 31 March
2014 of 4.05p per ordinary share, totalling GBP45m, payable on 3
October 2014.
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 2014 interim dividend, may do so
by contacting Equiniti on 0871 384 2030. The last day for election
for the proposed interim dividend is 12 September 2014 and any
requests should be made in good time ahead of that date.
10. (Loss) / earnings per share
The basic (loss) / earnings per share is calculated by dividing
the result attributable to ordinary shareholders by the applicable
weighted average number of shares in issue during the period,
excluding those held in the Employee Benefit Trust.
The diluted (loss) / earnings per share is calculated by:
-- taking losses / earnings 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
bonds.
In accordance with IAS 33: Earnings per share, the calculation
of basic and underlying diluted loss per share has not included
items that are anti-dilutive. Therefore there is no difference
between the calculation of basic and diluted loss per share in the
6-month periods ended 31 March 2014 and 31 March 2014.
Comparative figures for the year ended 30 September 2013 and the
6-month period ended 31 March 2013 have been restated to reflect
the adoption of revised IAS 19 'Employee benefits'. Further details
are provided in Note 1.
The additional underlying earnings per share measures have been
given to provide the reader of the interim financial information
with a better understanding of the results. For the purpose of this
calculation, an underlying tax charge of 29% (2013: 27%) is used
which excludes the tax effects of separately disclosed items,
acquisition related expenses, goodwill impairment charges and
separately disclosed tax items.
Basic and diluted loss per share for the 6-month period ended 31
March 2014 were as follows:
Weighted Weighted
average Loss average
Loss number per number Loss per
for of share Loss for of share
the 6- shares for the the shares for the
month for the 6-month 6-month for the 6-month
period 6-month period period 6-month period
ended period ended ended period ended
31 ended 31 31 March ended 31 March
March 31 March March 2013 31 March 2013
2014 2014 2014 (restated) 2013 (restated)
GBPm Millions Pence GBPm Millions Pence
Basic and diluted loss per share (273) 1,110 (24.6) (266) 1,108 (24.0)
-------- -----------
Separately disclosed items (23) - 8 -
Acquisition related expenses and impairments 28 - 41 -
Interest on joint ventures and associates 3 - - -
Tax:
* Tax base difference (14) - (40) -
* Adjustment in respect of prior periods 21 - - -
Basic and diluted underlying loss per share (258) 1,110 (23.2) (257) 1,108 (23.2)
------------------------------------------------ -------- ---------- -------- ------------ --------- -----------
Basic and diluted earnings per share for the year ended 30
September 2013 were as follows:
Earnings Weighted Earnings
Year ended average number per share
30 September of shares 30 September
2013 30 September 2013
GBPm 2013 Pence
(restated) Millions (restated)
---------------------------- --------------- ----------------- ---------------
Basic earnings per share 51 1,110 4.6
---------------
Effect of dilutive options - 8
---------------
Diluted earnings per share 51 1,118 4.6
---------------------------- --------------- ----------------- ---------------
Basic and diluted underlying earnings per share for the year
ended 30 September 2013 were as follows:
Earnings Weighted Earnings
Year ended average number per share
30 September of shares 30 September
2013 30 September 2013
GBPm 2013 Pence
(restated) Millions (restated)
---------------------------------------------- --------------- ----------------- ---------------
Basic earnings per share 51 1,110 4.6
---------------
Acquisition related expenses and impairments 253 -
Separately disclosed items 24 -
Tax base difference 6 -
---------------------------------------------- --------------- ----------------- ---------------
Basic underlying earnings per share 334 1,110 30.1
Effect of dilutive options - 8
Effect of convertible bonds 49 205
---------------------------------------------- --------------- ----------------- ---------------
Diluted underlying earnings per share 383 1,323 28.9
---------------------------------------------- --------------- ----------------- ---------------
Non-GAAP measure
A reconciliation of underlying operating loss to underlying loss
for the 6-month period ended 31 March 2014 is as follows:
6-month
6-month period ended
period ended 31 March
31 March 2013
2014 (restated)
GBPm GBPm
------------------------------------------- --------------- --------------
Underlying operating loss (298) (289)
Net underlying financial expenses (71) (63)
------------------------------------------- --------------- --------------
Underlying loss before tax (369) (352)
Underlying tax credit at 29% (2013: 27%) 107 95
------------------------------------------- --------------- --------------
Underlying loss for the period (262) (257)
------------------------------------------- --------------- --------------
Attributable to ordinary shareholders (258) (257)
Attributable to non-controlling interests (4) -
Underlying loss for the period (262) (257)
------------------------------------------- --------------- --------------
11. Acquisitions
Acquisitions in the 6-month period ended 31 March 2014
During the 6-month period ended 31 March 2014, the Group
acquired two businesses, including a further 41% of Le Passage to
India Tours and Travels Private Limited ('LPTI'), a tour operator
and destination management company, on 20 December 2013. The Group
previously owned 50% of LPTI and accounted for this as a joint
venture. The Group also acquired five travel agents in Germany. The
total fair value of the consideration for these acquisitions was
GBP25m, comprising GBP13m initial cash consideration, GBP2m
deferred consideration and GBP10m non-cash consideration for the
Group's share of the LPTI joint venture. The provisional fair value
of assets acquired was GBP9m and the provisional goodwill arising
for these acquisitions was GBP16m. This goodwill predominantly
relates to the acquisition of LPTI and represents the ability to
control fully that business with a view to driving economies of
scale and participating fully in the Indian market. No goodwill is
expected to be deductible for tax purposes.
The provisional fair values of the net assets acquired are set
out below:
GBPm
----------------------------- -----
Intangible fixed assets 12
Tangible fixed assets 2
Cash and cash equivalents 2
Trade and other receivables 11
Trade and other payables (15)
Deferred tax liabilities (3)
----------------------------- -----
Total 9
----------------------------- -----
The acquisitions added GBP20m to the Group's revenue. The impact
on the Group's loss before tax for the 6-month period was less than
GBP1m as the Group previously included its share of LPTI's result
as a joint venture.
The total cash outflow in the period from acquisition of
subsidiaries and travel agencies (net of cash acquired) was GBP17
million, which comprised GBP11 million relating to current period
acquisitions and GBP6 million of deferred and contingent
consideration relating to prior period acquisitions.
12. Additions to property, plant and equipment and intangible
assets
Additions to property, plant and equipment and intangible assets
totalled GBP220m (2013: GBP293m) in the 6-month period to 31 March
2014. This comprises GBP6m (2013: GBP5m) for land and buildings;
GBP11m (2013: GBP18m) for yachts, motor boats and cruise ships;
GBP138m (2013: GBP187m) for aircraft and related equipment
including advance payments for future delivery of aircraft; GBP54m
(2013: GBP41m) for computer hardware and software; and GBP11m
(2013: GBP42m) of other equipment and intangibles.
In the 6-month period to 31 March 2014, net book value of
property, plant and equipment and intangible assets disposed
totalled GBP82m (2013: GBP58m), primarily relating to advance
payments on the delivery and subsequent sale and leaseback of five
aircraft (2013: three aircraft) with a value of GBP73m (2013:
GBP39m).
13. Cash and cash equivalents
31 March 31 March 30 September
2014 2013 2013
GBPm GBPm GBPm
--------------------------- --------- --------- -------------
Cash in hand 13 58 6
Cash at bank 911 287 920
Deposits 320 157 827
Cash and cash equivalents 1,244 502 1,753
--------------------------- --------- --------- -------------
For the period ended 31 March 2014, cash and cash equivalents
have been shown gross of specific overdraft balances within the
Group's pooling facilities where the Group does not currently have
the intention to exercise its right to settle these particular
balances simultaneously. The amount of cash balances presented
gross of the related overdraft position is GBP509m. In the period
ended 31 March 2013, the Group had both the contractual right as
well as the intention to settle these balances on a net basis and
therefore the related overdraft and cash balances were presented on
a net basis.
At 31 March 2014, cash and cash equivalents includes GBP33m
(2013: GBP27m) that is not available for immediate use by the
Group. This is made up of monies held to meet regulatory
requirements, together with cash balances on short term deposits,
held on a restricted basis by the Group's captive insurance funds
as part of their ongoing operations.
In addition to the above restricted cash balances, the Group has
been involved in a long-running VAT legal case with the Belgian
government. During the year ended 30 September 2013, GBP98m was
received from the Belgian government in relation to the disputed
VAT for the years up to and including 30 September 2011. The
Belgian government made this payment to the Group to prevent the
further accumulation of an interest charge in the event that the
government lost the ongoing VAT legal case. On 13 March 2014 the
European Court of Justice ruled in favour of the Belgian
government. Whilst this matter cannot be pursued any further in the
European courts, the Group is assessing various options for
mounting challenges within the Belgian courts. Therefore the
outcome of the case remains uncertain and it is not expected to be
resolved in the near future.
Given the uncertainty, the Group continues to accrue VAT payable
on the existing basis, although it is hoped that the law in Belgium
will be changed shortly. If the Group were to win the legal case,
the amount recovered would be subject to corporation tax in
Belgium. This money is currently held on a bank deposit account in
order that a collateralised bank guarantee can be provided to the
Belgian government for the duration of the legal proceedings to
give them assurance that they will be paid the money back should
they win the case. This receipt is shown in the consolidated
statement of cash flows as the item fulfils the IAS 7 criteria for
cash and cash equivalents and therefore the balance is included in
cash and cash equivalents. In view of the guarantee provided to the
Belgian Government, the Group's ability to use this cash is
restricted.
14. Interest-bearing loans and borrowings
31 March 31 March 30 September
2014 2013 2013
Current liabilities GBPm GBPm GBPm
-------------------------------------------- --------- --------- -------------
Bank loans and overdrafts 524 48 528
Convertible bond 344 - -
Finance leases and hire purchase contracts 28 29 22
Other financial liabilities 46 46 44
Total 942 123 594
-------------------------------------------- --------- --------- -------------
For the period ended 31 March 2014, bank overdrafts have been
shown gross of specific cash balances within the Group's pooling
facilities where the Group does not currently have the intention to
exercise its right to settle these particular balances
simultaneously. The amount of bank overdrafts presented gross of
the related cash position is GBP509m. In the period ended 31 March
2013, the Group had both the contractual right as well as the
intention to settle these balances on a net basis and therefore the
related overdraft and cash balances were presented on a net
basis.
Other financial liabilities mainly comprise the fair value of
two put options written by the Group to the sole remaining
non-controlling interest shareholder in L'TUR Tourismus AG which
may require the Group to purchase the non-controlling interest
shareholding, totalling 30%. The first put option over 20% of the
shares may be exercised at any time until 2015. A second put option
written by the Group to the same non-controlling interest
shareholder for the remaining 10% shareholding has no time
limit.
31 March 31 March 30 September
2014 2013 2013
Non-current liabilities GBPm GBPm GBPm
-------------------------------------------- --------- --------- -------------
Amounts owed to related parties - 10 -
Bank loans and loan notes 488 462 62
Finance leases and hire purchase contracts 295 270 253
Convertible bonds 365 686 697
Total 1,148 1,428 1,012
-------------------------------------------- --------- --------- -------------
31 March 31 March 30 September
2014 2013 2013
Convertible bonds GBPm GBPm GBPm
-------------------------------------------------- --------- --------- -------------
GBP350m convertible bond 6.0% - due October 2014 344 332 336
GBP400m convertible bond 4.9% - due April 2017 365 354 361
Total 709 686 697
-------------------------------------------------- --------- --------- -------------
The Group has two convertible bonds in issue, details of which
are as follows:
-- A GBP350m fixed rate 6% bond was issued in October 2009,
raising GBP341m net of issue costs. The bond is convertible at the
option of the holder, before or upon maturity in October 2014 and
is presented within current liabilities. Conversion into ordinary
shares will occur at a premium of 33% to the Group's share price on
the date of issuance.
-- A GBP400m fixed rate 4.9% bond was issued in April 2010,
raising GBP391m net of issue costs. The bond is convertible at the
option of the holder, before or upon maturity in April 2017 and is
presented within non-current liabilities. Conversion into ordinary
shares will occur at a premium of 33% to the Group's share price on
the date of issuance.
15. Current trade and other payables
31 March 31 March 30 September
2014 2013 2013
GBPm GBPm GBPm
---------------------------------- ---------- --------- -------------
Customer deposits 2,759 2,585 1,768
Other 2,069 2,192 3,005
Current trade and other payables 4,828 4,777 4,773
---------------------------------- ---------- --------- -------------
16. Movements in cash and net debt
Cash Other Available
and cash Convertible Bank Loan Finance financial Restricted net
equivalents bonds loans notes leases liabilities Total cash cash/(debt)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------- ------------ ------------ -------- ------- --------- ------------- ------- ----------- ------------
At 1
October
2013 1,753 (697) (589) (1) (275) (44) 147 (145) 2
Cash
movement (491) - (406) - 12 1 (884) 14 (870)
Increase
in bank
balances
presented
gross 18 - (18) - - - - - -
Non-cash
movement - (12) - - (67) (3) (82) - (82)
Foreign
exchange (36) - 2 - 7 - (27) - (27)
At 31
March
2014 1,244 (709) (1,011) (1) (323) (46) (846) (131) (977)
----------- ------------ ------------ -------- ------- --------- ------------- ------- ----------- ------------
Amounts
Cash due to Other Available
and cash Convertible related Bank Loan Finance financial Restricted net
equivalents bonds parties loans notes leases liabilities Total cash (debt)/cash
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------- ------------ ------------ -------- ------- ------- --------- ------------- -------- ----------- ------------
At 1
October
2012 830 (675) (10) (23) (1) (186) (43) (108) (34) (142)
Cash
movement (388) - - (457) - 12 - (833) 7 (826)
Non-cash
movement - (11) - (24) - (111) (1) (147) - (147)
Foreign
exchange 60 - - (5) - (14) (2) 39 - 39
At 31
March
2013 502 (686) (10) (509) (1) (299) (46) (1,049) (27) (1,076)
---------- ------------ ------------ -------- ------- ------- --------- ------------- -------- ----------- ------------
As set out in Note 13, cash and cash equivalents included
GBP131m (2013: GBP27m) of restricted cash.
The 2014 non-cash movement of GBP12m (2013: GBP11m) in
convertible bonds primarily relates to the accretion of convertible
bonds.
The 2014 movement of GBP18m between cash and cash equivalents
and bank loans and overdrafts reflects the impact of specific
overdraft balances being presented on a gross basis. Other non-cash
movements in 2013 within bank loans and overdrafts and finance
leases predominantly relate to advances in respect of additions to
property, plant and equipment.
17. Fair values
(a) Fair value measurements
IFRS 7 requires enhanced disclosures about fair value
measurements of financial instruments through the use of a three
level fair value hierarchy that prioritises the valuation
techniques used in fair value calculations.
The levels can be broadly described as follows:
-- Level 1 - use of unadjusted quoted prices in active markets
for identical assets or liabilities
-- Level 2 - use of observable inputs other than quoted prices
included within level 1, such as quoted prices for similar assets
or liabilities in active markets
-- Level 3 - use of inputs not based on observable market data
but reflecting management's own assumptions about pricing the asset
or liability.
The Group maintains policies and procedures to value instruments
using the most relevant data available. If there are multiple
inputs available that fall into different levels of the hierarchy,
the instrument is categorised on the basis of the lowest level
input.
The Group's financial assets and liabilities, excluding finance
lease liabilities, measured at fair value at 31 March 2014 are
categorised as follows:
Total
Level 1 Level 2 Level 3 fair value
31 March 2014 GBPm GBPm GBPm GBPm
------------------------------------- -------- -------- -------- ------------
Assets
Trade and listed investments 14 - 11 25
Derivative financial instruments - 35 - 35
Total assets 14 35 11 60
------------------------------------- -------- -------- -------- ------------
Liabilities
Derivative financial instruments - (166) - (166)
Other financial liabilities held at
fair value - - (50) (50)
Total liabilities - (166) (50) (216)
------------------------------------- -------- -------- -------- ------------
Total 14 (131) (39) (156)
------------------------------------- -------- -------- -------- ------------
Total
Level 1 Level 2 Level 3 fair value
31 March 2013 GBPm GBPm GBPm GBPm
------------------------------------- -------- -------- -------- ------------
Assets
Trade and listed investments 14 - 37 51
Derivative financial instruments - 207 - 207
Total assets 14 207 37 258
------------------------------------- -------- -------- -------- ------------
Liabilities
Derivative financial instruments - (113) - (113)
Other financial liabilities held at
fair value - - (41) (41)
Total liabilities - (113) (41) (154)
------------------------------------- -------- -------- -------- ------------
Total 14 94 (4) (104)
------------------------------------- -------- -------- -------- ------------
The movements in level 3 instruments, measured on a recurring
basis, for the period ended 31 March 2014 are as follows:
Other
financial
liabilities
Trade held at Total level
and other fair 3
investments value instruments
GBPm GBPm GBPm
---------------------------------------------- ------------- ------------- -------------
At 1 October 2012 36 (41) (5)
Cash settlement of contingent consideration - 2 2
Adjustment of deferred consideration through
goodwill - (2) (2)
Purchase of trade investments 1 - 1
---------------------------------------------- ------------- ------------- -------------
At 31 March 2013 37 (41) (4)
At 1 October 2013 42 (48) (6)
Cash settlement of contingent consideration - 4 4
Disposal of trade investments (31) - (31)
Adjustment of deferred consideration through
goodwill - (3) (3)
Charged to income statement - (3) (3)
At 31 March 2014 11 (50) (39)
---------------------------------------------- ------------- ------------- -------------
The following methods and assumptions were used to measure the
fair value of financial instruments carried at fair value on the
balance sheet:
Trade and listed investments
The level 1 trade investment totalling GBP14m mainly consists of
the Group's holding in Air Berlin PLC represented by 4.4% (2013:
4.4%) shareholding. The fair value of GBP12m (2013: GBP14m) is
determined by reference to its equity share price at the balance
sheet date. The Group also has an investment in mutual funds via
LPTI, the fair value of GBP2m being based on the net asset value as
obtained from fund managers.
As at 31 March 2014, GBP11m (2013: GBP37m) of trade and other
investments were categorised as level 3 instruments. These consist
of the Group's remaining GBP4m (2013: GBP30m) investment in The
Airline Group Limited and other trade investments in the equity of
unlisted companies of GBP7m (2013: GBP7m).
During March 2014 the Group sold 87.4% of its shareholding and
loan note interests in The Airline Group Limited. The Group's
remaining investment in this company has been valued using the
sales price received for the portion disposed.
Derivatives financial instruments
Derivatives are valued in the market using discounted cash flow
techniques. These techniques incorporate inputs at level 2, such as
interest rates, commodity prices and foreign currency exchange
rates. These market inputs are used in the discounted cash flow
calculation incorporating the instrument's term, notional amount,
volatility, discount rate and taking credit risk into account. As
significant inputs to the valuation are observable in external
markets, these instruments are categorised as level 2 in the
hierarchy.
Other financial liabilities held at fair value
The principal element of the put options of GBP41m to acquire
the remaining equity stake in L'TUR Tourismus AG (2013: GBP37m) are
classified as an other financial liability with changes in fair
value included in operating profit. They have been valued using the
minimum price stipulated in the contracts plus adjustments based on
estimated operating results in the three years preceding any
exercise of the options. Contingent consideration of GBP6m (2013:
GBP4m) is also measured at fair value based on the relevant
contracts.
There are no reasonably possible changes in assumptions which
would materially alter the value of these level 3 financial
instruments. The Group transfers financial instruments between
different levels in the fair value hierarchy when, as a result of
an event or change in circumstances, the valuation methodology
applied in determining their fair values alters in such a way that
it meets the definition of a different level. There were no
transfers between the level 1, level 2 and level 3 fair value
measurement categories in the period.
There are no material differences between the carrying value of
the Group's financial assets and liabilities and their estimated
fair values, with the exception of convertible bonds and finance
lease liabilities, for which the carrying amounts and fair values
are set out in the table below at 31 March 2014 and at 31 March
2013.
31 March 2014 31 March 2013
--------------------- ---------------------
Carrying Fair Carrying Fair
amount value amount value
GBPm GBPm GBPm GBPm
--------------------------- ----------- -------- ----------- --------
Borrowings
Convertible bonds (709) (948) (686) (834)
Finance lease liabilities (323) (316) (299) (304)
Total (1,032) (1,264) (985) (1,138)
--------------------------- ----------- -------- ----------- --------
The following methods and assumptions are used to estimate the
fair values of financial assets and liabilities which are not
measured at fair value on the balance sheet:
-- Cash and cash equivalents - approximates to the carrying amount
-- Convertible bonds - based on quoted market prices as traded on Bloomberg
-- Bank loans and overdrafts including Loan notes - approximates
to the carrying amount because of the short term maturity of these
instruments
-- Finance lease liability - this is valued by discounting
cashflows using the market related finance lease rates
-- Other financial assets and liabilities including amounts
owned to related parties - approximates to the carrying amount.
(b) Derivative financial instruments
At the balance sheet date the fair value of the Group's
derivative financial assets and liabilities was as follows:
31 March 2014 31 March 2013
----------------------------------------- -------------------------------------------------
Assets Liabilities Total Assets Liabilities Total
fair value fair value fair value fair value fair value fair value
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ------------- ------------ --------------------- ------------ ------------
Cash flow hedges
Foreign exchange
forwards 25 (148) (123) 191 (73) 118
Commodity options - - - 2 - 2
Commodity swaps 7 (10) (3) 14 (25) (11)
------------------------ ------------- ------------ ------------ --------------------- ------------ ------------
32 (158) (126) 207 (98) 109
Derivatives not hedge
accounted
Interest rate swap - (1) (1) - - -
Foreign exchange
forwards 3 (7) (4) - (15) (15)
Total 35 (166) (131) 207 (113) 94
------------------------ ------------- ------------ ------------ --------------------- ------------ ------------
Analysed as:
Current 31 (149) (118) 177 (100) 77
Non-current 4 (17) (13) 30 (13) 17
------------------------ ------------- ------------ ------------ --------------------- ------------ ------------
Total 35 (166) (131) 207 (113) 94
------------------------ ------------- ------------ ------------ --------------------- ------------ ------------
18. Capital commitments
The following amounts have been contracted but not provided for
at the balance sheet date:
31 March 31 March 30 September
2014 2013 2013
GBPm GBPm GBPm
--------------------- --------- --------- -------------
Capital commitments 4 16 3
--------------------- --------- --------- -------------
In addition to the above items, at 31 March 2014 the Group had
contracted to purchase 76 (2013: 25) aircraft with initial
deliveries commencing in the third quarter of the financial year
2014. At list price, the total order value is US$9,715m (2013:
US$3,264m) before discounts.
The Group intends to refinance these aircraft in advance of
their delivery dates and therefore does not expect to use its own
cash resources for their purchase.
The Group's share of its joint ventures and associates capital
commitments was GBP14m at 31 March 2014 (2013: GBP7m).
19. 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. Information
regarding contingent liabilities and provisions in respect of tax
are disclosed on page 139 of the Group's 2013 Annual Report &
Accounts. No other actions which are outstanding at 31 March 2014
are expected to have a material effect on the condensed
consolidated interim financial information. The Directors consider
that adequate provision has been made for all known
liabilities.
20. 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
The Group held receivables of GBP134m (2013: GBP118m) and
payables of GBP133m (2013: GBP113m) with its own joint ventures and
associates and with TUI AG and its subsidiaries, joint ventures and
associates, 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 31 of the Group's
2013 Annual Report & Accounts. 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.
The Group has an agreement with S-Group Capital Management
Limited (SGCM), regarding Togebi Holdings Limited, a jointly-owned
investment company, owned 51% by SGCM and 49% by the Group. The
joint venture owns four subsidiary tour operators and travel agency
groups in Russia and Ukraine. These businesses form the majority of
our Emerging Markets Sector. SGCM is owned by a significant
shareholder of TUI AG and is therefore considered to be a related
party. Togebi Holdings Limited (Togebi) and its subsidiary
undertakings are also considered to be related parties.
During the 6-month period ended 31 March 2014, TUI Travel
Holdings Limited, a direct subsidiary of the Company, injected a
further GBP5m of capital into Togebi and provided a one year
interest-bearing loan of GBP4m for the purpose of providing short
term liquidity. On 16 April 2014, TUI Travel Holdings Limited
injected a further GBP3m of capital into Togebi as part of the
Group's continuing financial support of this venture.
During the period, the Group, through one of the Company's
indirect subsidiaries, has provided capital injections totalling
GBP17m into Bartu Turizm Yatirimlari Anonim Sirketi (Bartu), a 50%
joint venture of the Group.
21. Post balance sheet events
No other material events have occurred subsequent to the end of
the interim period that have not already been disclosed elsewhere
in this report.
Responsibility statement of the Directors in respect of the
condensed consolidated interim financial information
The Directors confirm that to the best of their knowledge:
-- the condensed consolidated interim financial information has been
prepared in accordance with IAS 34 'Interim Financial Reporting'
as adopted by the European Union;
-- 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
condensed consolidated interim financial information; 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 maintenance and integrity of the TUI Travel PLC website is
the responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
The Directors of TUI Travel PLC are listed on page 66 & 67
of the TUI Travel PLC Annual Report & Accounts for the year
ended 30 September 2013, except for the following changes that have
taken since the date of signing the Annual Report & Accounts on
9 December 2013:
- On 16 December 2013 Tony Campbell resigned as a Non-Executive
Director and Volker Bottcher resigned as an Executive Director;
- On 7 February 2014, Valerie Gooding was appointed as an
Independent Non-Executive Director and Vladimir Yakushev was
appointed as a Non-Executive Director; and
- On 24 March 2014 Vladimir Yakushev resigned as a Non-Executive Director.
On behalf of the Board of Directors
Will Waggott
Chief Financial Officer
12 May 2014
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed the condensed consolidated interim financial
statements, defined below, in the 'half-yearly financial report' of
TUI Travel PLC for the six months ended 31 March 2014. Based on our
review, nothing has come to our attention that causes us to believe
that the condensed consolidated interim financial statements are
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 Conduct Authority.
This conclusion is to be read in the context of what we say in
the remainder of this report.
What we have reviewed
The condensed consolidated interim financial statements, which
are prepared by TUI Travel PLC, comprise:
-- the consolidated income statement and consolidated statement
of comprehensive income for the period then ended;
-- the consolidated balance sheet as at 31 March 2014;
-- the consolidated statement of cash flows for the period then ended;
-- the consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the condensed consolidated interim financial statements.
As disclosed in note 1, the financial reporting framework that
has been applied in the preparation of the full annual financial
statements of the group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
The condensed consolidated interim financial statements included
in the half-yearly financial report have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
What a review of condensed consolidated financial statements
involves
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.
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 condensed consolidated interim financial statements.
Responsibilities for the condensed consolidated interim
financial statements and the review
Our responsibilities and those of the directors
The half-yearly financial report, including the condensed
consolidated interim financial statements, 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 Conduct Authority.
Our responsibility is to express to the company a conclusion on
the condensed consolidated 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 complying with the Disclosure and
Transparency Rules of the Financial Conduct Authority and for no
other purpose. We do not, in giving this conclusion, 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.
PricewaterhouseCoopers LLP
Chartered Accountants
12 May 2014
London
This information is provided by RNS
The company news service from the London Stock Exchange
END
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