Consolidated Earnings
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Consolidated profit and loss statement
| € million | Q2 2008 | Q2 2007 | Var. % | H1 2008 | H1 2007 | Var. % | |
|---|---|---|---|---|---|---|---|
| Turnover | 4,740.2 | 3,724.3 | + 27.3 | 8,376.7 | 6,394.7 | + 31.0 | |
| Cost of sales | 4,447.5 | 3,517.3 | + 26.4 | 8,019.8 | 6,264.8 | + 28.0 | |
| Gross profit/loss | 292.7 | 207.0 | + 41.4 | 356.9 | 129.9 | + 174.7 | |
| Administrative expenses | 322.6 | 236.9 | + 36.2 | 699.8 | 398.0 | + 75.8 | |
| Other income/other expenses | - 99.7 | + 8.4 | n/a | - 82.1 | 19.9 | n/a | |
| Impairment of goodwill | 76.1 | – | – | 76.1 | – | – | |
| Financial result | - 100.5 | - 53.6 | - 87.5 | - 193.6 | - 105.5 | - 83.5 | |
| - Financial income | 63.9 | 64.0 | - 0.2 | 72.4 | 80.0 | - 9.5 | |
| - Financial expenses | 164.4 | 117.6 | + 39.8 | 266.0 | 185.5 | + 43.4 | |
| Share of results of joint ventures and associates | + 5.3 | + 10.2 | - 48.0 | + 12.9 | + 15.4 | - 16.2 | |
| Earnings before taxes on income | - 300.9 | - 64.9 | - 363.6 | - 681.8 | - 338.3 | - 101.5 | |
| Reconciliation to underlying earnings: | |||||||
| Earnings before taxes on income | - 300.9 | - 64.9 | - 363.6 | - 681.8 | - 338.3 | - 101.5 | |
| Interest result and earnings from the valuation of interest hedges | 93.7 | 54.8 | + 71.0 | 176.6 | 106.5 | + 65.8 | |
| Impairment of goodwill | + 76.1 | – | – | + 76.1 | – | – | |
| EBITA from continuing operations*) | - 131.1 | - 10.1 | n/a | - 429.1 | - 231.8 | - 85.1 | |
| Adjustments | |||||||
| Gains on disposals | – | – | – | – | |||
| Restructuring | 190.6 | 8.7 | 217.7 | 10.3 | |||
| Purchase price allocation | 11.7 | – | 53.2 | – | |||
| Other one-off items | 29.9 | 31.0 | 45.6 | 39.3 | |||
| Underlying EBITA from continuing operations | 101.1 | 29.6 | + 241.6 | - 112.6 | - 182.2 | + 38.2 | |
| Earnings before taxes on income | - 300.9 | - 64.9 | - 363.6 | - 681.8 | - 338.3 | - 101.5 | |
| Taxes on income | - 23.9 | - 139.9 | + 82.9 | - 138.2 | - 205.9 | + 32.9 | |
| Result from continuing operations | - 277.0 | 75.0 | n/a | - 543.6 | - 132.4 | - 310.6 | |
| Result from discontinued operation | 151.7 | - 4.5 | n/a | 140.2 | 97.9 | + 43.2 | |
| Group profit/loss for the year | - 125.3 | 70.5 | n/a | - 403.4 | - 34.5 | n/a | |
| - attributable to shareholders of TUI AG of Group profit | - 55.6 | 58.9 | n/a | - 222.4 | - 57.6 | - 286.1 | |
| - attributable to minority interests of Group profit | - 69.7 | 11.6 | n/a | - 181.0 | 23.1 | n/a | |
| Group profit/loss | - 125.3 | 70.5 | n/a | - 403.4 | - 34.5 | n/a | |
| Basic earnings per share | in € | - 0.24 | + 0.19 | n/a | - 0.93 | - 0.28 | - 232.1 |
| Diluted earnings per share | in € | - 0.24 | + 0.20 | n/a | - 0.93 | - 0.28 | - 232.1 |
*) EBITA is equivalent to earnings before interest, taxes on income and impaiment of goodwill.
As container shipping has been classified a discontinued operation according to IFRS 5 since March 2008, earnings by this sector are now shown under the item ‘Result from discontinued operation’; they are no longer carried under continuing operations. The previous year’s figures were restated accordingly in compliance with IFRS 5.
The year-on-year development of the consolidated profit and loss statement for the continuing operations was primarily characterised by the inclusion of the First Choice Holidays Group, acquired in September 2007.
Overall, current earnings by continuing operations reflect the seasonality of the tourism business, with positive earnings primarily generated in the third quarter of any one year.
Turnover and cost of sales
Turnover comprised the turnover of the continuing operations, i.e. tourism and central operations. Turnover grew by 27.3% year-on-year to € 4.7 billion in the second quarter of 2008 and by 31.0% to € 8.4 billion for the first half of 2008. This increase was mainly caused by the first-time consolidation of the First Choice Holidays Group. Turnover was shown on a cost of sales basis, which also rose due to the changes in consolidation. A detailed breakdown of turnover and the development of turnover is presented in the section ’Consolidated turnover and earnings’.
Gross profit
Gross profit as the balance from turnover and cost of sales rose to € 293 million (previous year: € 207 million) in the second quarter. It grew by 174.7% to € 357 million in the first half of the year. This growth mainly reflected the inclusion of the First Choice Holidays Group in the group of consolidated companies.
Administrative expenses
Administrative expenses comprised expenses not directly allocable to the turnover transactions, such as expenses for general management. At € 323 million, there were up 36.2% year-on-year in the second quarter and 75.8% for the first half of the year. The considerable year-on-year increase in administrative costs resulted from the consolidation of the First Choice Holidays Group and the restructuring and integration costs included in the quarter.
Other income/Other expenses
Other income and other expenses primarily comprised profits or losses from the sale of fixed asset items. The year-on-year increase in other expenses of € 108 million in the second quarter and € 102 million in the first half of the year resulted from expenses related to the strategic realignment of TUI Travel’s flight operations.
Impairment of goodwill
In the second quarter of 2008, goodwill was impaired by € 76 million in connection with the classification of ’TUIfly’ and Tarajal Properties S.L. as held for sale according to IFRS 5. No impairment of goodwill had been required in the first quarter and the corresponding reference periods in 2007.
Financial result
The financial result comprised the interest result and the net result from marketable securities. At € -101 million, the financial result declined year-on-year in the second quarter of 2008 and comprised financial income of € 64 million, matching the 2007 reference figure, and financial expenses of € 164 million (previous year: € 118 million), which rose year-on-year primarily due to changes in consolidation. The accumulated financial result for the first half of the year also declined year-on-year to € - 194 million (previous year: € - 106 million).
Share of results of joint ventures and associates
The share of results of joint ventures and associates comprised the share in net profit for the year of the associated companies and joint ventures and as well as impairments of the goodwill of these companies. At € 5 million, it dropped by 48.0% in the second quarter of 2008, decreasing by 16.2% for the first half of the year. The decline followed from less year-on-year earnings by the joint ventures and associates in TUI Travel and TUI Hotels & Resorts.
Underlying EBITA of continuing operations
Underlying earnings of the continuing operations totalled € 101 million in the second quarter of 2008, a considerable increase year-on-year. EBITA was adjusted for gains on disposal, restructuring expenses, purchase price allocations and one-off items. The adjustments are outlined in detail in the sections on ’Consolidated turnover and earnings’ and ’Development of the divisions’.
Taxes on income
Taxes on income comprised taxes on profits from business activities of the continuing operations. The tax income to be carried in the second quarter due to the seasonality of the tourism business totalled € 24 million (previous year: € 140 million). The decline in tax income resulted from the effects of the corporate re-structuring of the German companies transferred to TUI Travel and the issue of a convertible bond comprised in 2007 figures.
Result from discontinued operation
The result from the discontinued operation comprised the reclassified container shipping operations and totalled € 152 million in the second quarter of 2008 and € 140 million in the first half of the year. Year-on-year the item totalled € - 4 million and € 98 million, respectively. In accordance with IFRS 5, since 31 March 2008 scheduled depreciation of fixed assets was discontinued. Thus, the result of the current quarter increased € 66 million. Likewise, equity measurement of participations of container shipping had to be suspended leading to a € 7 million decline in the second quarter result. Thereby limiting a year-on-year comparison. A detailed breakdown is provided in the notes in section ‘Result from discontinued operation’.
Group profit
In the second quarter, Group profit totalled € - 125 million (previous year: € 71 million), a decrease of € 196 million. For the first half of the year, Group profit stood at € - 403 million, down by € 369 million year-on-year. This development was mainly driven by expenses related to the strategic realignment of TUI Travel’s flight operations.
Minority interests
Minority interests in Group profit totalled € - 70 million for the second quarter of 2008 and € - 181 million for the first half of 2008. They related to the outside shareholders of TUI Travel PLC and companies in the sector TUI Hotels & Resorts.
Earnings per share
After deduction of minority interests, TUI AG shareholders accounted for € - 56 million (previous year: € 59 million) of Group profit in the second quarter of 2008. As a result, basic earnings per share amounted to € - 0.24 (previous year: € 0.19) in the second quarter. In the first half of the year, TUI AG shareholders accounted for € - 222 million of Group profit after deduction of minority interests. Basic earnings per share thus totalled € - 0.93 (previous year: € - 0.28) in the first half of the year.
Performance indicators
Key figures of the profit and loss statement of the continuing operations
| € million | Q2 2008 | Q2 2007 | Var. % | H1 2008 | H1 2007 | Var. % |
|---|---|---|---|---|---|---|
| Earnings before interest, taxes on income, depreciation, impairment and rent (EBITDAR) | 182.8 | 238.5 | - 23.4 | 198.0 | 255.4 | - 22.5 |
| Operating rental expenses | 190.7 | 152.8 | + 24.8 | 365.6 | 302.0 | + 21.1 |
| Earnings before interest, taxes on income, depreciation and impairment (EBITDA) | - 7.9 | 85.7 | n/a | - 167.6 | - 46.6 | - 259.7 |
| Depreciation/amortisation less reversals of depreciation1) | 123.2 | 95.8 | + 28.6 | 261.5 | 185.2 | + 41.2 |
| Earnings before interest, taxes on income and impairment of goodwill (EBITA) | - 131.1 | - 10.1 | n/a | - 429.1 | - 231.8 | - 85.1 |
| Impairment of goodwill | 76.1 | 0.0 | n/a | 76.1 | 0.0 | n/a |
| Earnings before interest and taxes on income (EBIT) | - 207.2 | - 10.1 | n/a | - 505.2 | - 231.8 | - 117.9 |
| Interest result | - 93.7 | - 54.8 | - 71.0 | - 176.6 | - 106.5 | - 65.8 |
| Earnings before taxes on income (EBT) | - 300.9 | - 64.9 | - 363.6 | - 681.8 | - 338.3 | - 101.5 |
1) on property, plant and equipment, intangible assets, financial and other assets
Operating rental expenses
Operating rental expenses of the continuing operations amounted to € 191 million (previous year: € 153 million) in the second quarter and € 366 million (previous year: € 302 million) in the first half of the year. The increase in rental expenses was attributable to the consolidation of the First Choice Holidays Group.
Interest result
The interest result of the continuing operations totalled € - 94 million (previous year: € - 55 million) in the second quarter of 2008, with an accumulated interest result of € - 177 million (previous year: € - 107 million) for the first half of the year.