Financial Statements Profit and Loss Statement
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Since container shipping was classified as a discontinued operation according to IFRS 5 since March 2008, earnings by this sector have now been shown under the item ‘Result from discontinued operation’ instead of the items of the ‘Continued operations’. In accordance with IFRS 5, the previous year’s figures were restated accordingly.
The year-on-year development of the consolidated profit and loss statement of the continued operations was essentially characterised by the consolidation of the First Choice Holidays Group acquired in September 2007.
At turnover of € 922.0 million, the First Choice Holidays Group generated seasonally negative underlying EBITA of € - 83.0 million in the first quarter of 2008.
Overall, the earnings situation of the continued operations was also characterised by the seasonal swing of the tourism business, as a result of which positive earnings are primarily generated in the second and third quarters of any one year.
Turnover by the TUI Travel sector rose substantially overall, with the First Choice Holidays Group, acquired in the late summer of 2007, in particular contributing to turnover in the first quarter of the 2008 financial year at € 922.0 million. Besides this growth caused by the change in the group of consolidated companies, turnover also rose due to the increases in customer volumes and in prices, in particular in source markets Northern, Central and Western Europe. In addition, TUI Hotels & Resorts and cruises generated turnover growth of € 9.7 million and € 8.1 million, respectively.
(1) Turnover and administrative expenses
Adjusted for the contribution by the First Choice Holidays Group in the current financial year, turnover declined year-on-year. Besides an increase in aircraft fuel prices and the opposite effects of cost reduction measures, this trend was in particular also due to the weak British pound sterling exchange rate.
Administrative expenses grew by € 216.1 million due to the consolidation of the First Choice Holidays Group and the restructuring and integration costs for TUI Travel, carried under this item.
Turnover and administrative expenses comprised the following items:
Rental and lease expenses
| € million | Q1 2008 | Q1 2007 |
|---|---|---|
| Rental and lease expenses | 174.9 | 149.2 |
The increase in rental and lease expenses was attributable to the consolidation of the First Choice Holidays Group. It was partly offset by a decline in such expenses due to the restructuring measures in source market TUI UK.
Personnel costs
| € million | Q1 2008 | Q1 2007 |
|---|---|---|
| Personnel costs | 549.7 | 442.4 |
The restructuring measures implemented in previous years, above all in source market Northern Europe and TUI AG, led to a reduction in personnel costs, which partly limited the rise caused by the inclusion of the First Choice Holidays Group in consolidation.
Depreciation/amortisation/impairments
| € million | Q1 2008 | Q1 2007 |
|---|---|---|
| Depreciation and amortisation | 136.8 | 91.4 |
| Impairments of property, plant and equipment | 0.8 | – |
| Total | 137.6 | 91.4 |
The increase in depreciation due to the integration of the First Choice Holidays Group was partly offset by a decline in depreciation due to restructuring activities in source market Northern Europe.
(2) Other income/Other expenses
Other income/Other expenses
| € million | Q1 2008 | Q1 2007 |
|---|---|---|
| Other income | 21.1 | 14.8 |
| Other expenses | 3.5 | 3.3 |
| Total | 17.6 | 11.5 |
Other income in the current financial year primarily resulted from book profits in connection with sale-and-lease-back agreements in the flight operations sector
(€ 9.1 million) and gains on disposal in the real estate sector (€ 3.4 million). The income shown in the previous year’s reference period mainly resulted from the divestment of a hotel complex and of various plots of land.
The change in the financial result is due to an increase in interest expenses caused by changes in the group of consolidated companies to account for the financial liabilities of the First Choice Holidays Group on the one hand and a bank loan (€ 450.0 million) taken up on the basis of an exchangeable bond by TUI AG as well as the slight year-on-year increase in interest rate levels on the other hand.
The tax income resulting from the seasonal swing in tourism in the first quarter
of 2008 rose substantially year-on-year due to the inclusion of the First Choice Holidays Group.
(3) Other one-off items according to divisions
In addition to the disclosures required according to IFRS, a reconciliation to underlying earnings is provided in the consolidated profit and loss statement. The adjustments show deconsolidation income as gains on disposals, events according to
IAS 37 as restructuring measures and all effects resulting from purchase price
allocations on EBITA under purchase price allocations. This reconciliation also includes the following individual one-off effects.
Other one-off items according to divisions
| € million | Q1 2008 | Q1 2007 |
|---|---|---|
| Tourism | 15.7 | 8.3 |
| TUI Travel | 15.7 | 8.3 |
| of which First Choice Holidays | 7.5 | – |
| TUI Hotels & Resorts | – | – |
| Cruises | – | – |
| Central operations | – | – |
| Total | 15.7 | 8.3 |
Special one-off expenses incurred in the tourism division in the first quarter of 2008 mainly resulted from the integration cost of TUI Travel from the merger of the British activities of € 8.9 million.
One-off expenses shown for the 2007 reference period above all related to the
rebranding of the new TUIfly.com brand and the costs for changes in the air
passenger duty in the UK which could not be passed on to passengers.
Profit and loss statement of the TUI Group for the period from 1 January to 31 March
| € million | Notes | Q1 2008 | Q1 20072) |
|---|---|---|---|
| Turnover | 3,636.5 | 2,670.4 | |
| Cost of sales | (1) | 3,572.3 | 2,747.5 |
| Gross profit/loss | 64.2 | - 77.1 | |
| Administrative expenses | (1) | 377.2 | 161.1 |
| Other income/other expenses | (2) | + 17.6 | 11.5 |
| Impairment of goodwill | – | – | |
| Financial income | 8.5 | 16.0 | |
| Financial expenses | 101.6 | 67.9 | |
| Share of results of joint ventures and associates | 7.6 | 5.2 | |
| Earnings before taxes on income | - 380.9 | - 273.4 | |
| Reconciliation to underlying earnings: | |||
| Earnings before taxes on income | - 380.9 | - 273.4 | |
| Interest result and earnings from the valuation of interest hedges | 82.9 | 51.7 | |
| Impairment of goodwill | – | – | |
| EBITA from continuing operations1) | - 298.0 | - 221.7 | |
| Adjustments: | |||
| Gains on disposals | – | – | |
| Restructuring | 27.1 | 1.6 | |
| Purchase price allocation | 41.5 | – | |
| Other one-off items | (3) | 15.7 | 8.3 |
| Underlying EBITA from continuing operations | - 213.7 | - 211.8 | |
| Earnings before taxes on income | - 380.9 | - 273.4 | |
| Taxes on income | - 114.3 | - 66.0 | |
| Result from continuing operations | - 266.6 | - 207.4 | |
| Result from discontinued operation | - 11.5 | 102.4 | |
| Group profit/loss | - 278.1 | - 105.0 | |
| - Group profit attributable to shareholders of TUI AG | - 166.8 | - 116.5 | |
| - Group profit attributable to minority interests | - 111.3 | 11.5 | |
| Group profit/loss | - 278.1 | - 105.0 | |
| € | Q1 2008 | Q1 20072) |
|---|---|---|
| Basic earnings per share3) | - 0.69 | - 0.47 |
| from continuing operations | - 0.64 | - 0.88 |
| from discontinued operation | - 0.05 | + 0.41 |
| Diluted earnings per share3) | - 0.69 | - 0.47 |
| from continuing operations | - 0.64 | - 0.88 |
| from discontinued operation | - 0.05 | + 0.41 |
1) EBITA is equivalent to earnings before interest, taxes on income and impairment of goodwill.
2) Since the alternative treatment allowed under IAS 23 to capitalise borrowing costs was exercised in the 2007 financial year, interest expenses declined by € 1.7 million in the previous year’s reference period. At the same time, the cost of sales rose by € 0.1 million, while Other income decreased by € 1.2 million. Taking account of the tax effect, earnings by continuing operations thus grew by € 0.2 million. Earnings by discontinued operations rose overall by € 0.6 million.
3) In calculating earnings per share in accordance with the rules of IAS 33.12, the after-tax amount of the dividend on the hybrid capital was deducted from Group profit attributable to shareholders of TUI AG since the hybrid capital represents equity but does not represent equity attributable to shareholders of TUI AG.