Earnings

Consolidated profit and loss statement

In the short financial year 2009, the item Result from Discontinued Operations includes earnings by Container Shipping for the first quarter of 2009. In addition, the Magic Life Group was classified as a Discontinued Operation in accordance with IFRS 5 in the period under review. The previous year’s figures were restated accordingly in accordance with IFRS 5.

TUI AG’s 43.33% stake in Albert Ballin Joint Venture GmbH & Co. KG, taken in the framework of the sale, was measured at equity in TUI’s consolidated financial statements. In line with the character of the investment, the proportionate at equity result of the Container Shipping stake to be included in consolidated earnings as of the second quarter of 2009 was no longer included in the TUI Group’s operating performance indicator EBITA.

In order to enhance comparability, group figures for the short financial year 2009 were presented alongside the figures for the comparative 9-month period in 2008 (1 January to 30 September 2008). The figures for the short financial year are not directly comparable with those for the full financial year 2008.

Turnover and cost of sales   
Turnover comprised the turnover by the Continuing Operations, i.e. Tourism and Central Operations, which cover the Group’s holding companies and real estate companies. At €13.1bn, Group turnover declined by 14% against the comparative period in 2008. The decrease was above all attributable to the decline in the business volume of TUI Travel driven by the capacity cuts and the year-on-year weakening of the exchange rate of sterling. Turnover is presented alongside the cost of sales, which accounted for €11.8bn, down 15% year-on-year. A detailed breakdown of turnover showing how it has developed is presented in the section Group Turnover and Earnings.

Gross profit   
Gross profit, i.e. the difference between turnover and cost of sales, totalled €1.3bn in the completed short financial year 2009, down 4% year-on-year.

Administrative expenses   
Administrative expenses comprised expenses not directly attributable to turnover transactions, in particular expenses for general management functions. In the short financial year 2009, they accounted for €1.1bn, matching the level recorded in the first nine months in 2008.

Other income/other expenses
Other income and other expenses primarily comprised profits or losses from the sale of fixed assets. At €18m, the balance of income and expenses improved by €102m against the value reported for the comparative period in 2008, which was lower due to expenses for sale-and-lease-back transactions.

Impairments of goodwill    
Goodwill impairment totalled €9m. It related to the impairment of goodwill for the Moroccon airline Jet4You which has been classified as held for sale in the Tourism Division.

Financial result and net income    
The financial result included the interest result and the net income from marketable securities. In the short financial year 2009, financial income of €162m and financial expenses of €669m arose. The net financial result was €-507m. The financial expenses in the short financial year included charges for valuation effects totalling €354m from the loans granted to Container Shipping.

Adjusted for this expense, the financial result improved by €86m in the short financial year 2009 against the comparative period in 2008. This positive trend was attributable to lower interest rate levels and in particular the improvement in the financial position of the Continuing Operations.

Result from companies measured at equity
The result from companies measured at equity comprised the proportionate net profit for the year of the associated companies and joint ventures and impairments of goodwill for these companies. The significant decline in the result from companies measured at equity in the short financial year 2009 was driven by the first-time measurement of the 43.33% stake retained by the TUI Group, following the sale of the majority stake in Container Shipping in March 2009, as an asso­ciated company in the consolidated financial statements. The proportionate negative earnings by Container Shipping in the short financial year 2009 were €-214m.

Underlying earnings (EBITA)   
In the short financial year 2009, underlying earnings by Continuing Operations totalled around €657m, slightly down year-on-year. Underlying EBITA was adjusted for gains on disposal of investments, expenses in the framework of restructuring measures, amortisations on intangible assets of purchase price allocations and other one-off items. The adjustments are outlined in detail in the chapters Group Turnover and Earnings and Business Development in the Divisions.

Income taxes   
Income taxes included taxes on the profits from ordinary business activities by the Continuing Operations. They totalled €-46m and comprised effective income taxes of €10m and deferred income taxes of €36m. The significant year-on-year decrease in income taxes was mainly attributable to a revaluation of tax risks and the use of tax losses carried forward by TUI Travel.

Result from Discontinued Operations
Earnings from Discontinued Operations comprised operating income and expenses by Container Shipping until the disposal date and the gain on disposal. The gain on disposal of Container Shipping, determined on the basis of early application of IAS 27, amounted to €1,135m, taking account of subsequent purchase price adjustments. Against the framework of current negotiations about the sale of the hotel company Magic Life comprising four hotels in Turkey, the group has also been reclassified as Discontinued Operation. Besides current operation losses of €26m in short financial year 2009, a writedown of assets of €44m had to be booked in connection with the reclassification of Magic Life as Discontinued Operation. A detailed breakdown is provided in the notes under Result from Discontinued Operations.

Group profit   
Group profit improved by €356m to €401m on the first three quarters in 2008. The increase reflected in particular the book profit from the disposal of Container Shipping, carried in the year under review.

Minority interests    
Minority interests in Group profit for the year totalled €67m and almost exclusively related to companies in the Tourism Division.

Earnings per share   
The interest in Group profit for the year attributable to TUI AG shareholders (after deduction of minority interests and the dividend on the hybrid capital) totalled €333m. In relation to the weighted average number of shares of 251,444,305 units, basic earnings per share amounted to €1.25 (previous year: €0.07). In the short financial year, no dilution effect occured so that diluted earnings per share also stood at €1.25.

Earnings position of TUI AG

The annual financial statements of TUI AG were prepared in accordance with the provisions of the German Commercial Code and audited by the auditors PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Hanover. They were published in the electronic federal gazette. The annual financial statements have been made permanently available on the internet at www.tui-group.com and may be requested in print from TUI AG.

In the present annual report, the management report of TUI AG has been combined with the management report of the TUI Group.

Profit and loss statement of TUI AG

The earnings situation of TUI AG, the Group’s parent company, was mainly determined by the development of earnings by its Group companies, either directly associated with TUI AG via profit and loss transfer agreements or distributing their profits to TUI AG based on corresponding resolutions. The development of earnings by TUI AG was also materially affected by the completion of the sale of Container Shipping in the first quarter of 2009. The profit and loss statement for the short financial year 2009 was prepared using the type of expenditure format.

The Annual General Meeting of 13 May 2009 decided to change TUI AG’s financial year to a financial year beginning on 1 October of any one year and ending on 30 September of the subsequent year. Accordingly, a short financial year was introduced for the period from 1 January to 30 September 2009. Since the period under review only comprised nine months, comparability with the 12-month period in 2008 is limited.

Turnover and other operating income
In the short financial year 2009, turnover almost completely resulted from renting out leased aircraft to Group-owned airlines. In 2008, turnover had also included rental income from Container Shipping assets until the sale of these assets.

Other operating income mainly comprised income from the reversal of provisions for anticipated losses for derivative financial instruments as well as gains on exchange. In line with commercial-law accounting, this item also included the income carried for the loss takeover, included in the purchase price for Hapag-Lloyd AG, for the company’s short financial year ended on 28 February 2009 as income. Write-backs to investments taken through profit and loss were also carried in this item.

Expenses    
The cost of materials mainly included expenses for aircraft rental agreements with third parties. The decline in personnel costs was due in particular a significant year-on-year decline in pension expenses. The measurement of pension provisions using a 7-year average interest result of 4.5%, applied for the first time in 2008, was retained unamended. The decline in depreciation mainly resulted from the sale of Shipping assets in 2008 so that depreciation was no longer effected. Other operating expenses included in particular expenses for exchange losses, expenses for anticipated losses from receivables from Group companies, fees, borrowing costs, financial and monetary transaction costs as well as charges and other administrative costs.

Investments    
In the financial year under review, net income from investments mainly comprised dividend payments from TUI Travel PLC and companies in the TUI Hotels & Resorts Sector. Expenses for loss transfers mainly resulted from the negative commercial-law earnings of Hapag-Lloyd for its short financial year ended on 28 February 2009, introduced prior to the transfer of ownership to Albert Ballin Holding GmbH & Co. KG. Since these losses were offset in the purchase price, corresponding gains on disposal for Hapag-Lloyd AG were carried under Other operating income, in line with commercial-law presentation.

Write-downs of financial investments
Write-downs of investments included an amount of €296m for the shares in Group companies. Other write-downs carried under this item almost exclusively included the loans granted and the hybrid instruments to be provided to the new container shipping group.

Interest result   
The interest result, only covering a period of nine months in the short financial year under review, was significantly characterised by the considerably lower interest rate level in the completed financial year, reflected in particular in lower interest expenses. Interest expenses declined further due to the reduction in debt.

Net loss for the year   
The net loss for the year totalled €98m. An amount of €98m was withdrawn from the capital reserves to balance the net loss for the year.