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of the aircraft fleet. The £44m credit in the 6-month period ended
31 March 2010 relates to a combination of aircraft order cancellation credits and compensation for delays to the
delivery
of aircraft.
In the comparative 6-month period ended 31 March 2009, sale and leaseback profits of £6m were offset by £25m of costs
relating to foreign exchange on aircraft order book hedging, aircraft fleet advisory fees, the foreign exchange
revaluation
of aircraft held for sale and remaining flight replacement costs following the collapse of Futura.
In the year ended 30 September 2009 there was a £124m impairment charge principally in respect of asset write downs of
Boeing 747s operated by Corsair. Costs of £32m were incurred relating to the transaction to sell TUIfly's city charter
business to Air Berlin PLC.
Separately disclosed financial expenses
The separately disclosed financial expenses in the 6 months ended 31 March 2010 relate to the valuation of a put option
written by the Group in respect of a minority shareholder of L'TUR Tourismus AG. The option is exercisable until 31
December 2015.
5. Analysis of acquisition related items
6-month period ended 31 March 2010 6-month period ended
31 March 2009 Year ended 30 September 2009
£m £m
£m
Acquisition related items in operating (loss) / profit
Amortisation of business combination intangibles 24 29
56
Acquisition related expenses 4 -
-
Amortisation of contingent consideration 1 -
-
Total 29 29
56
6. Goodwill impairment charge
The goodwill impairment charge in the year ended 30 September 2009 of £7m related to the closure of the majority of the
Sunsail Clubs' operations.
7. Taxation
The Group's effective tax rate, being tax for the 6-month period ended 31 March 2010 and the Group's underlying
effective
tax rate, being tax on underlying profit before tax for the same period are both 27%.
8. Discontinued operation
The business of Société d'Investissement Aérien S.A. (Jet4You) has been presented as a discontinued operation as it was
acquired on 30 June 2008 with a view to its subsequent resale. This disposal is ongoing.
6-month period ended 31 March 2010 6-month period ended
31 March 2009 Year ended 30 September 2009
£m £m
£m
Revenue 35 32
80
Expenses (48) (38)
(86)
Loss before tax of discontinued operation (13) (6)
(6)
Tax - -
-
Loss after tax of discontinued operation (13) (6)
(6)
Provision for loss on disposal - -
(8)
Loss for the period / year from discontinued operation (13) (6)
(14)
(14)
9. Dividends
The following dividends relating to ordinary shares have been deducted from equity in the period / year:
6-month period ended 31 March 2010 6-month period ended 31 March 2009 Year
ended 30 September 2009
£m £m £m
Interim dividend paid for 2009 33 - -
Final dividend proposed for 2009 86 - -
Interim dividend paid for 2008 - 31 31
Final dividend paid for 2008 - 76 76
Total dividends 119 107 107
The interim dividend in respect of the year ended 30 September 2009 of 3.0p per ordinary share, totalling £33m was paid
on
1 October 2009 and deducted from equity in the period.
At the Company's AGM on 9 February 2010, the shareholders approved the final recommended dividend for 2009 of 7.7p per
ordinary share. The value of this dividend, of £86m, has therefore been recognised as a deduction from equity in the
period and as a liability at 31 March 2010. The dividend was paid on 1 April 2010.
Subsequent to the balance sheet date, the Directors have proposed an interim dividend for the 6-month period ended 31
March
2010 of 3.2p per ordinary share, totalling £35m, payable on 1 October 2010.
A dividend reinvestment plan is in operation. Those shareholders who have not elected to participate in this plan, and
who
would like to participate with respect to the 2010 interim dividend, may do so by contacting Equiniti on 0871 384 2030.
The last day for election for the proposed interim dividend is 17 September 2010 and any requests should be made in good
time ahead of that date.
10. Loss per share
The basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the applicable
weighted average number of shares in issue during the period, excluding those held in the employee share ownership
trusts.
The diluted loss per share is calculated by:
- taking losses attributable to ordinary shareholders adjusted where the effect would be dilutive by the interest
expense of the Group's convertible bond net of tax; and
- dividing by the adjusted weighted average number of ordinary shares and where the effect would be dilutive,
outstanding share awards and the conversion to ordinary shares of the Group's convertible bond.
In the accordance with IAS 33: Earnings Per Share, the calculation of diluted loss per share from continuing operations,
diluted underlying loss per share from continuing operations, and diluted loss per share from discontinued operation has
not included anti-dilutive potential ordinary shares. Therefore there is no difference between the calculation of basic
and diluted measures in the 6-month periods ended 31 March 2010 and 31 March 2009.
The additional underlying loss per share measures have been given to provide the reader of the interim financial
information with a better understanding of the results.
Basic and diluted loss per share from continuing operations
Loss
Weighted average number of shares Loss per share Loss Weighted average number of
shares Loss per share
6-month
6-month 6-month 6-month 6-month
6-month
period ended 31
March period ended 31 March period ended 31 March period ended 31 March period ended 31 March
period ended 31 March
2010
2010 2010 2009 2009
2009
£m
Millions Pence £m Millions
Pence
Basic and diluted loss per share (307)
1,108 (27.7) (328) 1,107
(29.6)
Acquisition related items (net of tax) 22
- 2.0 20 -
1.8
Basic and diluted loss per share before amortisation of business combination intangibles (net of tax) (285)
1,108 (25.7) (308) 1,107
(27.8)
Separately disclosed items (net of tax) 16
- 1.4 68 -
6.2
Basic and diluted underlying loss per share (269)
1,108 (24.3) (240) 1,107
(21.6)
Basic and diluted loss per share from discontinued operation
Basic and diluted loss per share (13) 1,108 (1.2) (6) 1,107 (0.5)
Basic and diluted loss per share from continuing and discontinued operations for the year ended 30 September 2009 is as
follows:
(Loss) / earnings
Weighted averageno. of shares (Loss) / earningsper share
Year ended30 September Year
ended30 September Year ended30 September
2009 2009
2009
£m
Millions Pence
Basic and diluted loss per share (11)
1,107 (1.0)
Amortisation of business combinationintangibles, and impairment of goodwill (net of tax) 47 -
4.3
Separately disclosed items (net of tax) 227 -
20.5
Basic underlying earnings per share 263
1,107 23.8
Effect of dilutive options - 11
(0.3)
Diluted underlying earnings per share 263
1,118 23.5
Basic and diluted loss per share from discontinued operation
Basic and diluted loss per share (14)
1,107 (1.3)
11. Acquisitions and investments
(a) Acquisitions in the 6-month period ended 31 March 2010
The businesses acquired during the period and their acquisition dates were:
Business Description Date Country
Accommodation & Destinations Sector
Select World Pty Limited (trading as Select Tours Australia) Cruise Services October 2009 Australia
Activity Sector
Sport Executive Travel Limited Tour operator December 2009 United Kingdom
Hampstead School of English Language teaching February 2010 United Kingdom
Mainstream
TTOHL Otel Izmetleri Turizm Ve Ticaret Anonim Sirketi Hotel operations March 2010 Turkey
The Group acquired 100% of the voting equity instruments in respect of Select World Pty Limited and Sport Executive
Travel
Limited whilst the Hampstead School of English acquisition related to 100% of the business and assets. TTOHL is a new
entity created to manage the operation of eleven hotels in Turkey.
The total net assets / (liabilities) acquired are set out below:
Fair value of
Book value net assets /
prior to Fair value (liabilities)
acquisition adjustments acquired
Net assets / (liabilities) acquired £m £m £m
Intangible fixed assets - 37 37
Trade and other receivables 1 - 1
Cash and cash equivalents 4 - 4
Trade and other payables (31) - (31)
Provisions (1) - (1)
Deferred tax liabilities - (3) (3)
Total (27) 34 7
Provisional goodwill arising on acquisitions in the period is calculated as follows:
Calculation of goodwill arising £m
Consideration payable - cash paid 13
Net assets acquired 7
Provisional goodwill arising 6
All acquisitions have been accounted for using the purchase method.
In addition to the above, 15 travel agencies were purchased for £5m cash consideration in Germany resulting in goodwill
and
intangibles of £5m.
Revised IFRS 3 (2008) has been adopted for the first time in the period. The Group has adopted the transitional
arrangements of the revised standard which is therefore applicable prospectively for all acquisitions after 1 October
2009.
Revised IFRS 3 requires consideration that is contingent on future service by the vendor to always be expensed over the
service period and acquisition costs to be expensed as incurred. Previously these costs would have been included as part
of
the cost of acquisition and calculation of goodwill. As a result of these changes £5m has been expensed in the period
and
included in the acquisition related items on the condensed consolidated income statement.
Contingent consideration, up to a maximum of £4m in total for Select World Pty Limited, Sports Executive Travel Limited
and
for Hampstead School of English is payable contingent on the future service of the vendors. There is currently no reason
to
believe that the maximum amount will not become payable and will therefore be expensed over the related service period.
For current period acquisitions certain fair value adjustments and the value of contingent consideration have
necessarily
been prepared on a provisional basis due to the recent timing of certain acquisitions and the periods over which
contingent
consideration may become payable. Experience may result in revisions to fair values in the subsequent accounting
period.
The total cash outflow in the period from acquisition of subsidiaries and travel agencies (net of cash acquired) was £26
million, which comprises £18 million relating to current period acquisitions and £8 million relating to prior period
acquisitions.
(b) Income statement
The acquired businesses and travel agents contributed revenues of £7m and a profit after tax (including amortisation of
business combination intangibles) of £1m during the 6-month period ended 31 March 2010.
If the businesses and travel agencies that were acquired at various times during the period ended 31 March 2010 had been
part of the Group since 1 October 2009, Group revenue would have increased further by £2m with no impact on profit after
tax.
(c) Joint venture and associated company transactions
Togebi Holdings Limited
On 15 April 2009, the Group signed an agreement with S-Group Capital Management Limited (SGCM) for the formation of a
jointly owned investment holding company, to be owned 51% by SGCM and 49% by TUI Travel PLC. The joint venture agreed
to
acquire majority stakes in the businesses of two tour operators and travel agency groups in Russia and Ukraine, VKO
Group
and Voyage Kiev, and signed a letter of intent to acquire a 75% controlling stake in Mostravel, an entity in which TUI
Travel PLC already owned 34%.
All regulatory and competition authority approvals have now been granted and the joint venture was officially launched
on 2
March 2010.
All major decisions have to be agreed by both shareholders and under IAS 31 - Interests inJoint Ventures, the entity
will
be accounted for as a joint venture.
Sunwing strategic venture
The Canadian Mainstream business was classified as a disposal group as at 30 September 2009 and disclosed as held for
sale
on the basis of the announced strategic venture transaction with Sunwing Travel Group Inc.
Subsequent to the year end, the respective parties received all the necessary regulatory approvals on 14 January 2010
and
subsequently finalised the transaction.
TUI Travel Group transferred the above mentioned Canadian business as well as a cash injection of £87m. Pre-completion
working capital adjustments net of future consideration payments mean that the expected net cash contribution of TUI
Travel
Group to the strategic venture will amount to £56m as previously announced.
6-month period
ended 31 March 2010 6-month Period ended 31 March 2009 Year ended 30 September 2009
£m
£m £m
Disposal of Group company held for sale as at 30 September 2009 - Canadian Mainstream business - 100%
Revenue 52
150 167
Expenses (58)
(161) (192)
Loss before tax of disposed operation (6)
(11) (25)
Tax -
- -
Loss for the period / year from disposed operation (6)
(11) (25)
Associated company share of results of the Sunwing strategic Venture - 49%
Share of underlying profits before tax for the year 3
- -
Share of tax charge -
- -
Share of net profits 3
- -
(d) Acquisitions after the balance sheet date
Subsequent to 31 March 2010, the Group acquired one further business and four travel agencies for a total consideration
of
£10 million. The accounting under IFRS 3 for these acquisitions including the book and fair value of assets and
liabilities has not yet been finalised due to the recent timing of these transactions.
12. Capital commitments
The following amounts have been contracted but not provided for at the balance sheet date:
31 March 2010 31 March 2009 30 September 2009
£m £m £m
Capital commitments 8 17 22
In addition to the above items, the Group has contracted to purchase forty aircraft and related spares. The Group
intends
to refinance these aircraft and related spares in advance of their delivery dates and therefore does not expect to use
its
own cash resources for their purchase.
13. Related party transactions
(a) Ultimate controlling party
The Group's ultimate controlling party is TUI AG, a company registered in Berlin and Hanover (Federal Republic of
Germany).
(b) Related party transactions
On 29 June 2007 the Company entered into the Shareholder Loan Agreement with TUI AG under the terms of which TUI AG will
lend a maximum amount of E2 billion (£1.9 billion) to the Company for general corporate purposes. At the beginning of
the
period, the net balance owed to TUI AG under the Agreement was E0.9 billion (£0.8 billion). The facility has remained
in
place throughout the 6-month period and the net balance at 31 March 2010 was E0.9 billion (£0.8 billion) including
accrued
interest of £7 million.
The Group also held receivables of £24 million and payables of £90 million with TUI AG and its subsidiaries, which arose
through the normal course of business, including under the Hotel Framework Agreement and Trademark Licence Agreement,
details of which are set out in Note 30 of the Group's 2009 consolidated financial statements. During the current
period
and during the prior financial period the Group transacted with its joint ventures and associates in the normal course
of
business. These did not have a significant impact on the result for the periods.
14. 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. No actions which are outstanding at 31 March 2010 are expected
to
have a material effect on these accounts. The Directors consider that adequate provision has been made for all known
liabilities.
15. Post balance sheet events
(a) Funding and Liquidity
Details of the Group's new convertible bond and financing facilities, issued and agreed subsequent to the period end,
are
given in Note 1.
(b) Acquisitions
Details of acquisitions since 31 March 2010 are disclosed in Note 11(d).
(c) Disruption caused by the eruption of Eyjafjallajokull volcano, Iceland
On Wednesday, 14 April 2010, the Eyjafjallajokull volcano in Iceland entered a new explosive phase of its eruption. In
doing so it created a volcanic ash cloud in the atmosphere which then spread south and east, resulting in the closure on
safety grounds of much of Northern Europe airspace for a period of 6 days from 15 to 20 April 2010.
Although for the Group this was a period of relatively low holiday activity, the disruption to its programmes has still
had
a significant financial impact. The Group had to cancel over 175,000 holidays due to the closure of airspace, and at
the
same time provide welfare to and repatriate over 180,000 customers who were stranded abroad.
(d) Shareholder loan
Subsequent to the period end on 2 April 2010, E250m of the shareholder loan principal amount was repaid to TUI AG in
line
with the agreed repayment schedule. The remaining instalments fall due on 1 December 2010 (E509m) and 20 April 2011
(E160m).
Responsibility statement of the Directors in respect of the half yearly financial statements
We confirm that to the best of our knowledge:
· the condensed consolidated set of financial statements has been prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU;
· the interim management report includes a fair review of the information required by:(a) DTR 4.2.7R of the
Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six
months of the financial year and
their impact on the condensed consolidated set of financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and(b) DTR 4.2.8R of the Disclosure and Transparency Rules,
being related party
transactions that have taken place in the first six months of the current financial year and that have materially
affected the financial position or performance of the entity during that period; and any changes in the related party
transactions described
in the last annual report that could do so.
The Directors of TUI Travel PLC are listed in the TUI Travel PLC Annual Report for the year ended 30 September 2009.
On behalf of the Board of Directors
Paul Bowtell
Chief Financial Officer
10 May 2010
INDEPENDENT REVIEW REPORT TO TUI Travel PLC
Introduction
We have been engaged by the Company to review the condensed consolidated set of financial statements in the half-yearly
financial report for the 6-month period ended 31 March 2010 which comprises the condensed consolidated income statement,
condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position,
condensed
consolidated statement of cash flows, condensed consolidated statement of changes in equity and the related explanatory
notes. We have read the other information contained in the half-yearly financial report and considered whether it
contains
any apparent misstatements or material inconsistencies with the condensed information in the set of financial
statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in
meeting
the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK
FSA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to
it
in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility
to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are
responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.
The annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed
consolidated set of financial statements included in this half-yearly financial report has been prepared in accordance
with
IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed consolidated set of financial statements
in
the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board
for
use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review is substantially
less
in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and
consequently
does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in
an
audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated set of
financial statements in the half-yearly financial report for the 6-month period ended 31 March 2010 is not prepared, in
all
material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.
Oliver Tant
For and behalf of KPMG Audit Plc
Chartered Accountants
8 Salisbury Square, London, EC4Y 8BB
10 May 2010
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