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(320) (334) (25)
Non-controlling interests
1 - 1
Loss for the period / year
(319) (334) (24)
Pence Pence Pence
Basic and diluted loss per share (pence) for loss attributable to the equity holdersof the company during the period /
year
- basic and diluted: from continuing operations
10 (27.7) (29.6) (1.0)
- basic and diluted: from discontinued operation
10 (1.2) (0.5) (1.3)
£m £m £m
Underlying operating (loss) / profit
(314) (289) 443
Net underlying financial expenses
(53) (44) (77)
Underlying (loss) / profit before tax
(367) (333) 366
Pence Pence Pence
Underlying (loss) / profit per share for result attributable to the equity holders of the company during the period /
year
- basic
10 (24.3) (21.6) 23.8
- diluted
10 (24.3) (21.6) 23.5
Condensed consolidated statement of comprehensive income
for the 6-month period ended 31 March 2010
6-month period ended 31 March 2010
6-month period ended 31 March 2009 Year ended 30 September 2009
£m £m
£m
Loss for the period / year (319) (334)
(24)
Other comprehensive income
Foreign exchange translation 50 218
130
Actuarial losses arising in respect of defined benefit pension schemes (20) (86)
(206)
Cash flow hedges 110 (99)
(102)
Foreign exchange gains recycled through income statement (6) -
-
Changes in the fair value of available for sale asset - -
(1)
Other comprehensive income for the period / year net of income tax 134 33
(179)
Total comprehensive income for the period / year (185) (301)
(203)
Total comprehensive income for the period / year
Attributable to:
Equity holders of the parent (186) (301)
(205)
Non-controlling interests 1 -
2
Total (185) (301)
(203)
Condensed consolidated statement of financial position
at 31 March 2010
31 March 2010 31 March 2009 30 September 2009
£m £m £m
Non-current assets
Intangible assets 4,758 4,791 4,737
Property, plant and equipment 960 1,030 964
Investments in joint ventures and associates 209 91 112
Other investments 69 51 77
Trade and other receivables 266 282 194
Retirement benefit asset 1 1 1
Derivative financial instruments 39 70 13
Deferred tax assets 277 427 211
6,579 6,743 6,309
Current assets
Inventories 46 71 51
Other investments 1 3 36
Trade and other receivables 1,721 1,982 1,536
Income tax recoverable 65 65 30
Derivative financial instruments 210 623 271
Cash and cash equivalents 402 583 790
Assets classified as held for sale 54 112 126
2,499 3,439 2,840
Total assets 9,078 10,182 9,149
Current liabilities
Interest-bearing loans and borrowings (796) (71) (327)
Retirement benefits (2) (3) (3)
Derivative financial instruments (147) (626) (284)
Trade and other payables (3,968) (4,282) (4,162)
Provisions (148) (267) (189)
Income tax payable (63) (83) (67)
Liabilities classified as held for sale (34) (27) (59)
(5,158) (5,359) (5,091)
Non-current liabilities
Interest-bearing loans and borrowings (959) (1,609) (801)
Retirement benefits (498) (356) (498)
Derivative financial instruments (7) (73) (18)
Trade and other payables (83) (125) (108)
Provisions (261) (183) (250)
Deferred tax liabilities (96) (286) (97)
(1,904) (2,632) (1,772)
Total liabilities (7,062) (7,991) (6,863)
Net assets 2,016 2,191 2,286
Equity
Share capital 112 112 112
Other reserves 2,971 2,868 2,775
Retained deficit (1,069) (791) (604)
Total equity attributable to equity holders of the parent 2,014 2,189 2,283
Non-controlling interests 2 2 3
Total equity 2,016 2,191 2,286
Condensed consolidated statement of cash flows
for the 6-month period ended 31 March 2010
6-month period ended 31 March 2010
6-month period ended 31 March 2009 Year ended 30 September 2009
£m
£m £m
Loss for the period / year (319)
(334) (24)
Adjustment for:
Depreciation and amortisation 124
133 287
Impairment of intangible assets and property, plant and equipment - -
132
Equity-settled share-based payment expenses 8 8
16
Profit on sale of property, plant and equipment (2)
(1) (12)
Share of (profit) / loss of joint ventures and associates 5
(1) (9)
(Gain) / loss on foreign exchange (13) -
(23)
Dividends received from joint ventures and associates - 2
10 10
Financial income (41)
(36) (72)
Financial expenses 96
80 161
Loss from discontinued operation 13 6
14
Taxation (113)
(128) (42)
Operating (loss) / profit before changes in working capital and provisions (242)
(271) 438
Decrease / (increase) in inventories 5
(26) (2)
(Increase) / decrease in trade and other receivables (159)
(139) 93
Decrease in trade and other payables (371)
(105) (183)
Decrease in provisions and employee benefits (35)
(90)(90) (23)(23)
Cash flows from operations (802)
(631) 323
Net interest paid (34)
(37) (62)
Income taxes paid (22)
(9) (43)
Cash flows from operating activities (858)
(677) 218
Investing activities
Proceeds from sale of property, plant and equipment 16
215 161
Proceeds from disposal of investments 7 -
-
Acquisition of subsidiaries, net of cash acquired (22)
(35) (48)
Acquisition of non-controlling shareholdings - -
(3)
Investment in joint ventures and associates (87)
(13) (51)
Acquisition of property, plant and equipment and software (113)
(232) (234)
Cash flows from investing activities (199)
(65) (175)
Financing activities
Proceeds from new loans and deposits taken 733
506 17
Repayment of borrowings (11)
(308) (280)
Payment of finance lease liabilities (12)
(26) (22)
Ordinary and non-controlling interest dividends paid (35)
(34) (110)
Acquisition of shares for share-based payments -
(3) -
Cash flows from financing activities 675
135 (395)
Net decrease in cash and cash equivalents (382)
(607) (352)
Cash and cash equivalents at start of period / year 790
1,130 1,130
Reclassification of cash to assets classified as held for sale - -
(4)
Effect of foreign exchange on cash held (6)
60 16
Cash and cash equivalents at end of period / year 402
583 790
Condensed consolidated statement of changes in equity for the 6-month period ended 31 March 2010
Equity Non
Share Merger Convertible Other
Retained holders controlling
capital reserve bond reserves
deficit of parent interests Total
£m £m £m £m £m
£m £m £m
At 1 October 2009 112 2,490 - 285 (604)
2,283 3 2,286
Total comprehensive (cost) / income for the period
(Loss) / profit - - - - (320)
(320) 1 (319)
Other comprehensive income / (cost)
Foreign exchange translation - - - 50 -
50 - 50
Actuarial losses arising in respect of defined benefit pension schemes - - - - (20)
(20) - (20)
Cash flow hedges - - - 110 -
110 - 110
Foreign exchange gains recycled through income statement - - - - (6)
(6) - (6)
Total other comprehensive income / (cost) - - - 160 (26)
134 - 134
Total comprehensive income / (cost) for the period - - - 160 (346)
(186) 1 (185)
Transactions with owners recorded directly in equity
Share-based payment - - - - 13
13 - 13
Own share transactions - - - - (13)
(13) - (13)
Dividends - - - - (119)
(119) (2) (121)
Issue of convertible bond - - 36 - -
36 - 36
Total transactions with owners - - 36 - (119)
(83) (2) (85)
At 31 March 2010 112 2,490 36 445
(1,069) 2,014 2 2,016
Condensed consolidated statement of changes in equity for the 6-month period ended 31 March 2009
Equity
Non
Share Merger Other Retained holders
controlling
capital reserve reserves deficit of parent
interests Total
£m £m £m £m £m
£m £m
At 1 October 2008 112 2,490 259 (270) 2,591
5 2,596
Total comprehensive (cost) / income for the period
Loss - - - (334) (334)
- (334)
Other comprehensive income / (cost)
Foreign exchange translation - - 218 - 218
218
Actuarial losses arising in respect of defined benefit pension schemes - - - (86) (86)
- (86)
Cash flow hedges - - (99) - (99)
- (99)
Total other comprehensive income / (cost) - - 119 (86) 33
- 33
Total comprehensive income / (cost) for the period - - 119 (420) (301)
- (301)
Transactions with owners recorded directly in equity
Share-based payment - - - 8 8
- 8
Own share transactions - - - (3) (3)
- (3)
Dividends - - - (107) (107)
(3) (110)
First time consolidation - - - 1 1
- 1
Total transactions with owners - - - (101) (101)
(3) (104)
At 31 March 2009 112 2,490 378 (791) 2,189
2 2,191
Notes to the condensed consolidated financial statements
1. Basis of preparation
Statement of compliance
These condensed consolidated interim financial statements for the 6-month period ended 31 March 2010 have been prepared
in
accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with International
Accounting
Standard (IAS) 34 Interim Financial Reporting as adopted by the EU. The condensed consolidated interim financial
statements should be read in conjunction with the annual financial statements for the year ended 30 September 2009,
which
were prepared in accordance with IFRS as adopted by the EU.
These condensed consolidated interim financial statements were approved by the Board of Directors on 10 May 2010.
Accounting policies
As required by the Disclosure and Transparency Rules of the Financial Services Authority, this interim financial
information has been prepared applying the accounting policies and presentation that were applied in the preparation of
the
Company's published consolidated financial statements for the year ended 30 September 2009, except as noted below:
Adoption of IAS 1(revised) - Presentation of Financial Statements
The Group has presented for the first time a condensed consolidated Statement of Comprehensive Income and a condensed
consolidated Statement of Changes in Equity. The condensed consolidated Statement of Comprehensive Income replaces the
condensed consolidated Statement of Recognised Income and Expense (SORIE). This represents a change from the
requirement
to present only one financial statement: a SORIE or a statement of all changes in equity. Comparative information has
been
re-presented so that it is in conformity with the revised standard. Since the change in accounting policy only impacts
presentation aspects there is no impact on loss per share.
Adoption of IFRS 8 - Operating Segments
IFRS 8 requires that an entity's operating segments are reported on the same basis as the internally reported
information
that is provided to the chief operating decision maker. The chief operating decision maker has been identified as the
Group
Management Board (GMB). Following the adoption of IFRS 8, the Group has revised its reported operating segments and
provided further information in respect of these segments as well as additional disclosures. Details are provided in
Note
3.
Adoption of IFRS 3 (2008) - Business Combinations
IFRS 3 (2008) changes the treatment of incidental acquisition expenses and deferred consideration payments which are
contingent on continued employment, the measurement of consideration payable, and the treatment of changes to the amount
of
consideration payable. This has resulted in items being expensed in the income statement which would previously have
been
included as part of the cost of investment in an acquired business. The financial impact of this revised standard has
been
included in the Acquisition related items line on the condensed consolidated income statement. The Group has adopted
the
transitional arrangements of the revised standard which is therefore applicable prospectively, only for acquisitions
after
1 October 2009.
The following accounting standards and interpretations issued by the International Accounting Standards Board (IASB) or
International Financial Reporting Interpretations Committee (IFRIC) have been adopted by the Group from 1 October 2009
with
no significant impact on its consolidated results or financial position:
· IAS 32 (2008) - Financial Instruments: Presentation
· IAS 39 (2008) & IFRIC 9 - Financial Instruments: Recognition and Measurement
· IFRIC 17 - Distributions of Non-cash assets to owners
· IFRIC 18 - Transfers of assets from customers
· Amendment to IFRS 2 - Group Cash-settled Share-based Payment Transactions
These above changes in policy have not had a significant impact on the current or prior periods' / year's results or
balance sheet positions, and therefore no restatement of the prior period / year equity or profit / (loss) has been
presented.
The following further new accounting standards, amendments to existing standards and interpretations are in issue but
are
not yet endorsed for use in the European Union:
· Amendment to IFRIC 14 - Prepayments of a Minimum Funding Requirement
· IFRIC 19 - Extinguishing Financial Liabilities with Equity Instruments
· Amendment to IFRS 1 - Additional exemptions for First-time Adopters
· Revised IAS 24 - Related Party Disclosures
· Amendment to IFRS 1 -- Limited Exemptions from Comparative IFRS 7 Disclosures for First-time Adopters
The Group does not currently believe the adoption of the above standards or interpretations will have a material impact
on
the consolidated results or financial position of the Group.
Comparative financial information
The comparative figures for the financial year ended 30 September 2009 are not the Company's statutory accounts for that
financial year. Those accounts have been reported on by the Company's auditors and delivered to the registrar of
companies.
The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors
drew
attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2)
or
(3) of the Companies Act 2006.
Estimates and Judgements
The preparation of interim financial statements requires management to make estimates, judgements and assumptions that
affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
Underlying measures of profit / loss
The Group believes that underlying operating profit / loss, underlying profit / loss before tax and underlying earnings
/
loss per share provide additional guidance to statutory measures to help understand the underlying performance of the
business during the financial period / year. The term underlying is not defined under International Financial Reporting
Standards. It is a measure that is used by management to assess the underlying performance of the business internally
and
is not intended to be a substitute measure for Adopted IFRSs' GAAP measures. The Group defines these underlying
measures
as follows:
Underlying operating profit / loss is operating profit or loss from continuing operations stated before separately
disclosed items (Note 4), acquisition related items, impairment of goodwill and taxation on the Group's share of the
results of joint ventures and associates.
Underlying profit / loss before tax is profit or loss from continuing operations before taxation (Group and share of
joint
ventures and associates), acquisition related items, impairment of goodwill and separately disclosed items included
within
both the operating result and net financial expenses.
Underlying earnings / loss used in the calculation of underlying earnings / loss per share is profit / loss after tax
from
continuing operations excluding acquisition related items, impairment of goodwill and separately disclosed items
included
within both the operating result and net financial expenses (net of related taxation).
It should be noted that the definitions of underlying items being used in these consolidated financial statements are
those
used by the Group and may not be comparable with the term "underlying" as defined by other companies within both the
same
sector or elsewhere.
Separately disclosed items
Separately disclosed items are those significant items which in management's judgement are highlighted by virtue of
their
size or incidence to enable a full understanding of the Group's financial performance. Such items are included within
the
income statement caption to which they relate (Note 4).
Acquisition related items
Acquisition related items comprise amortisation of business combination intangibles, acquisition related expenses and
amortisation of contingent consideration.
Funding and liquidity
The Directors have considered the funding and liquidity position of the Company.
The Board remains satisfied with the Group's funding and liquidity position. The main sources of debt funding as at 31
March 2010 are:
1. the shareholder loan from TUI AG of E919m which is fully drawn and repayable on;
1 April 2010: E250m, 1 December 2010: E509m and 30 April 2011: E160m;
2. the external bank £910 million revolving syndicated credit facilities which mature in June 2012;
3. a £350m convertible bond (due 2014) issued on 1 October 2009 and received on
5 October 2009;
4. a bonding letter of credit facility of £40m which matures in September 2010.
In addition, subsequent to the period end on 22 April 2010, the Group issued a £400m convertible bond (received on 27
April
2010 and due 2017). £150m of new bank revolving credit facilities were also agreed, maturing in 2012.
The ratio of Earnings Before Interest, Taxation, Depreciation, Amortisation and operating lease Rentals (EBITDAR) to
fixed
charges (being the aggregate amount of interest and any other finance charges in respect of borrowings and including all
payments under operating leases) and the ratio of net debt to EBITDA, which the Board believes to be the most useful
measures of cash generation and gearing, as well as being the main basis for the Group's credit facility covenants, are
currently well within the covenant limits. Forecasts reviewed by the Board, including forecasts adjusted for
significantly
worse economic conditions, show continued compliance with these covenants. EBITDA is Earnings Before Interest,
Taxation,
Depreciation and Amortisation. For both covenants earnings are calculated on an underlying basis as described 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.
The Group mitigates this seasonal impact through operating a broad range of holiday products in both the Winter and
Summer
seasons and in different global holiday markets which have different annual cycles. There are appropriate sources of
debt
funding to match the seasonality of the Group's cash flows, as described in Note 1.
3. Segmental Information
The Group has adopted IFRS 8: Operating Segments for the first time in the period.
Under IFRS 8 segmental information is presented by the Group's business sectors and is based on the Group's management
and
reporting structure which is reported to the Group Management Board (GMB). Segment results include items directly
attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items include
corporate costs and net financial expenses.
Management has determined the reportable segments based on the reports reviewed by the GMB. The GMB consists of tour
operating and functional experts drawn from across the Group and executes TUI Travel's day-to-day operations.
All of the segments reported meet the quantitative thresholds required by IFRS 8 with the exception of the French
Airline
(Corsair).
Corsair has been disclosed separately as it is the only scheduled Airline consolidated within the group and therefore
has a
different business model to the rest of the Group's integrated tour operators.
6 Month period ended 31 March 2010
Sector Total external revenue Underlying operating (loss) / profit before joint ventures and
associates Joint ventures and associates Underlying operating (loss) / profit
£m £m
£m £m
UK 976 (161)
- (161)
Rest of Northern Region 457 14
- 14
Total Northern Region 1,433 (147)
- (147)
Germany 1,489 (60)
2 (58)
Rest of Central Europe 172 (15)
- (15)
Total CentralEurope 1,661 (75)
2 (73)
French Airline 148 (23)
- (23)
Rest of Western Europe 753 (60)
- (60)
Total Western Europe 901 (83)
- (83)
Total Mainstream 3,995 (305)
2 (303)
Specialist 303 (1)
(4) (5)
Activity 430 6
- 6
Accommodation and Destinations 205 (3)
5 2
Central - (14)
- (14)
Total Group 4,933 (317)
3 (314)
6 Month period ended 31 March 2009
Sector Total external revenue Underlying operating (loss) / profit before joint ventures and
associates Joint ventures and associates Underlying operating (loss) / profit
£m £m
£m £m
UK 1,092 (123)
- (123)
Rest of Northern Region 563 10
(3) 7
Total Northern Region 1,655 (113)
(3) (116)
Germany 1,596 (97)
3 (94)
Rest of Central Europe 180 (23)
- (23)
Total CentralEurope 1,776 (120)
3 (117)
French Airline 174 (1)
- (1)
Rest of Western Europe 779 (63)
- (63)
Total Western Europe 953 (64)
- (64)
Total Mainstream 4,384 (297)
- (297)
Specialist 404 12
- 12
Activity 404 6
- 6
Accommodation and Destinations 187 (3)
5 2
Central - (12)
- (12)
Total Group 5,379 (294)
5 (289)
12 Month period ended 30 September 2009
Sector Total external revenue Underlying operating profit / (loss) before joint ventures and
associates Joint ventures and associates Underlying operating profit / (loss)
£m £m
£m £m
UK 3,257 184
- 184
Rest of Northern Region 965 22
2 24
Total Northern Region 4,222 206
2 208
Germany 4,144 65
5 70
Rest of Central Europe 652 1
- 1
Total CentralEurope 4,796 66
5 71
French Airline 357 (24)
- (24)
Rest of Western Europe 2,295 57
- 57
Total Western Europe 2,652 33
- 33
Total Mainstream 11,670 305
7 312
Specialist 825 31
1 32
Activity 816 59
- 59
Accommodation and Destinations 552 60
7 67
Central - (27)
- (27)
Total Group 13,863 428
15 443
Reconciliation of underlying operating (loss) / profit in segmental analysis to operating (loss) / profit
6-month period ended 31 March 2010 6-month period ended 31
March 2009 Year ended 30 September 2009
£m £m
£m
Underlying operating (loss) / profit disclosed above (314) (289)
443
Separately disclosed items (19) (93)
(340)
Acquisition related items (29) (29)
(56)
Impairment of goodwill - -
(7)
Taxation on joint ventures and associates (2) (1)
(3)
Operating (loss) / profit (364) (412)
37
There is no material change in segment assets from the information disclosed in the 2009 Annual Report.
4. Separately disclosed items
6-month period ended 31 March 2010 6-month period ended
31 March 2009 Year ended 30 September 2009
£m £m
£m
Separately disclosed items in operating (loss) / profit
Merger related integration costs 34 49
143
Restructuring expenses 29 25
40
Aircraft (44) 19
157
Total 19 93
340
Separately disclosed financial expenses 2 -
12
Merger related integration costs
These relate primarily to the costs of integration of the UK businesses. The majority of costs arise from the
integration
of First Choice and Thomson in the UK, and in particular from the formation of one airline and an integrated retail
estate.
A combined Mainstream UK head office has been established in Luton. Costs in the comparative periods also arise from
bringing together former Thomson Specialist businesses with the former First Choice Activity and Specialist Sectors,
notably Ski and UK specialist brands. In the Accommodation & Destinations Sector separate First Choice and TUI
Tourism
incoming agencies have been combined in a number of key destinations, notably Spain.
Restructuring expenses
Costs incurred in the 6-month period ended 31 March 2010 relate to restructuring programmes which are not related to the
business combination of First Choice and the TUI Tourism businesses. The principal items are £22m for the restructuring
of
our hotel operations in Turkey and £4m for restructuring of the Canadian business as a consequence of the strategic
venture
transaction with Sunwing Travel Group Inc.
The main cost incurred in the comparative 6-month period ended 31 March 2009 was £16m due to the closure of the Sunsail
Clubs in Turkey and the Caribbean.
In the full year ended 30 September 2009 restructuring costs also included £13m for the ongoing restructuring of the
French
tour operator, Nouvelles Frontières, and £8m for restructuring the German source market as a consequence of the sale of
TUIfly's city charter operation to Air Berlin PLC.
Aircraft
Aircraft items relate to the continuing restructuring
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