Accounting Principles

Accounting principles

In accordance with IAS 34 ‘Interim Financial Reporting’, the Group’s interim financial statements as at 31 March 2009 were published in a condensed form compared with the consolidated annual financial statements. They were based on the historical cost principle, the only exception being the accounting method applied in measuring financial instruments.

As a matter of principle the interim financial statements as at 31 March 2009 were prepared in accordance with the same accounting and measurement principles as those applied in the preceding consolidated financial statements as at 31 December 2008.

In addition, the following standards and interpretations revised or newly adopted by the IASB were mandatory as of the beginning of financial year 2009:

• IFRS 8: ‘Operating Segments’
• Amendments to IAS 1: ‘Presentation of Financial Statements’
• Amendments to IAS 23: ’Borrowing Costs’ concerning removal of the option of capitalising borrowing costs
• IFRIC 13: ’Customer Loyalty Programmes’
• Amendments to IFRS 2: ’Share-based Payment’ concerning the definition of vesting conditions and cancellations
• Amendments to IAS 32: ’Financial Instruments: Presentation’ and follow-up amendment to IAS 1: ’Presentation of Financial Statements’ concerning puttable financial instruments and obligations arising on liquidation
• Amendments to IFRS 1: ’First-time Adoption of International Financial Reporting Standards’ and IAS 27: ’Consolidated and Separate Financial Statements’ concerning the determination of the cost of an investment in a subsidiary, a jointly controlled entity or an associate
• Annual improvements project

IFRS 8 replaces the previous provisions of IAS 14 on segment reporting. The main amendment is that the structure of segment reporting follows the reporting structure internally used by the chief operating decision makers (management approach). In addition, disclosures on geographical regions and major customers are exclusively required for the preparation of annual financial statements.

The present interim financial statements also reflect the amendments to IAS 1 concerning the presentation of the financial position and financial performance for IFRS-based financial statements. Accordingly, a consolidated statement of comprehensive income for the period is now presented, and the statement of changes in equity is shown as a separate element of the financial statements. The statement of comprehensive income for the period comprises the consolidated profit and loss and the other comprehensive income, which corresponds to income and expenses directly recognised in equity. On top of the previous pre­sentation, the statement of financial position shows an additional column listing the values as at the beginning of the comparative period in the event of retrospective restatements.

The amendments to IAS 23 now requiring capitalisation of borrowing costs do not impact the financial position and financial performance since the TUI Group already exercised the previous option of capitalising borrowing costs.

Accounting for customer loyalty programmes (e.g. air miles) was adjusted to the requirements of IFRIC 13. The amount of proceeds allocated to the award credits is therefore now measured at their fair value and the fair value is deferred from turnover until the credits are redeemed. Application of this interpretation does not have a material effect on the TUI Group’s earnings. The effects on the consolidated statement of financial position items are presented below:

Effects of IFRIC 13 on the consolidated statement of financial position

The mandatory application of all other amendments to or improvements of standards and interpretations listed above did not give rise to any major effects on the TUI Group’s financial position and financial performance.

Basis of consolidation

The consolidated financial statements included all major subsidiaries in which TUI AG was able to directly or indirectly govern the financial or operating policies such that the Group obtained benefits from the activities of these companies.

The interim financial statements as at 31 March 2009 included a total of 43 domestic and 672 foreign subsidiaries, besides TUI AG.

Since 1 January 2009, one newly established tourism company has been included in consolidation while two tourism companies have been deconsolidated due to a merger or reduction in business activities. A total of 47 companies were removed from consolidation as against the end of 2008 due to the completion of the sale of container shipping in the first quarter of 2009.

Acquisitions – divestments
In the present financial statements, the purchase price allocations of the Active Safary Group, the Destination Florida Group, the Gullivers Group and Your Sporting Challenge Ltd., acquired in the first quarter of 2008, were finalised within the period of twelve months from the acquisition date allowed under IFRS 3. These final purchase price allocations did not give rise to any major effects on goodwill.

On 23 March 2009, TUI AG sold its entire container shipping operations. All shares in Hapag-Lloyd AG were sold to ‘Albert Ballin’ Holding GmbH & Co. KG, an indirect subsidiary of the ‘Albert Ballin’ GmbH & Co. KG consortium. By the end of March of the current financial year, container shipping generated turnover of €1,118.9m and earnings after tax of €-197.9m. The 47 subsidiaries were sold at an enterprise value (without real estate) of €4.3bn. After deduction of the cost to sell, the sale resulted in overall positive earnings after tax of €989.5m in the first quarter of 2009.

Deconsolidation balance sheet of container shipping

The assets and liabilities of container shipping carried as at 31 December 2008 were shown in separate balance sheet items in the balance sheet for 2008.

TUI AG indirectly acquired an entrepreneurial stake of 43.33% in ’Albert Ballin’ Joint Venture GmbH & Co. KG, the sole shareholder of ‘Albert Ballin’ Holding GmbH & Co. KG.