TUI AG (FRA:DE000TUA) TUI AG: Half-yearly Results

Half-Year Financial Report 1 Oct. 2019 - 31 March 2020

 

• COVID-19 is the greatest crisis the tourism industry and TUI has ever faced.
• Group Underlying EBIT for the five months to February delivered a strong result, up €62m1 versus prior year excluding one-offs, driven by Markets & Airlines
• H1 Group Underlying EBIT down €512m1on prior year as a result of loss of contribution and costs arising from COVID-19 shutdown as well as costs from Boeing 737 Max grounding
• €1.8bn German State Aid bridge loan confirmed on 27 March to increase the existing credit agreement due to the pandemic
• FY20 guidance withdrawn on 15 March 2020 based on the current unpredictable situation
• Global transformation to be accelerated
• TUI is a resilient business and will be stronger, much leaner and more flexible post COVID-19

1 at constant currency rates

 

TUI Group - financial highlights
		Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %	Var. % at constant currency
Turnover		2,787.9	3,101.6	- 10.1	6,638.7	6,676.4	- 0.6	- 1.3
Underlying EBIT (IAS 17)1
Hotels & Resorts		- 1.2	65.3	n. a.	42.1	134.5	- 68.7	- 56.1
Cruises		- 22.4	59.4	n. a.	26.5	106.4	- 75.1	- 77.1
Destination Experiences		- 20.3	- 5.6	- 262.5	- 29.4	- 10.4	- 183.8	- 187.0
Holiday Experiences		- 44.0	119.1	n. a.	39.1	230.5	- 83.0	- 76.8
Northern Region		- 313.5	- 121.1	- 158.9	- 424.8	- 183.9	- 131.0	- 130.0
Central Region		- 152.1	- 86.9	- 75.1	- 183.5	- 119.6	- 53.5	- 53.6
Western Region		- 131.0	- 92.1	- 42.1	- 194.6	- 152.6	- 27.5	- 27.8
Markets & Airlines		- 596.5	- 300.1	- 98.7	- 802.9	- 456.1	- 76.0	- 75.8
All other segments		- 40.4	- 37.4	- 7.9	- 64.9	- 76.0	+ 14.6	+ 14.1
TUI Group1		- 680.9	- 218.5	- 211.7	- 828.7	- 301.6	- 174.8	- 169.7
Underlying EBITDA (IAS 17)2		- 539.5	- 105.7	- 410.4	- 559.4	-78.5	- 612.4
Underlying EBIT (IFRS 16)		- 680.1	- 218.5	- 211.3	- 826.8	-301.6	- 174.2
EBIT (IFRS 16)1		- 700.2	- 242.1	- 189.2	- 778.0	-348.1	- 123.5
Underlying EBITDA (IFRS 16)		- 409.6	- 105.7	- 287.5	- 298.1	-78.5	- 279.6
EBITDA (IFRS 16)2		- 418.7	- 120.0	- 248.8	- 228.9	- 107.7	- 112.6
Group loss		- 740.5	- 176.9	- 318.5	- 845.8	- 289.1	- 192.6
Earnings per share	€	- 1.30	- 0.35	- 271.4	- 1.51	- 0.58	- 160.3
Net capex and investment		- 226.5	- 356.6	+ 36.5	- 287.2	- 651.4	+ 55.9
Equity ratio (31 March)3	%				15.6	21.2	- 5.6
Net financial position (31 March)					- 4,902.5	- 1,964.1	- 149.6
Employees (31 March)					53,525	60,135	- 11.0

 

 

Differences may occur due to rounding.

This Half-Year Financial Report of the TUI Group was prepared for the reporting period H1 FY20 from 1 October 2019 to 31 March 2020.

TUI Group applied IFRS 16 from 1 October 2019. Prior year figures were not adjusted.

In the current financial year, underlying EBIT is also adjusted for the earnings effect of IFRS 16 ('underlying EBIT (IAS 17)') as part of internal reporting in order to facilitate year-on-year comparability. Accordingly, adjusted EBIT (IAS 17) represents the Group performance measure within the meaning of IFRS 8.

Since the beginning of this financial year, the items of the profit and loss statement of the aircraft leasing companies holding the TUI Group's aircraft and subletting them within the Group have been fully allocated to the airlines using the respective aircraft (Northern Region, Central Region and Western Region). In the first half of the previous year, the aircraft leasing companies were fully included in All other segments, while in the 2019 Annual Report, the result from intra-Group subleasing was already allocated to the respective airlines (Northern Region, Central Region and Western Region). The prior-year figures have been adjusted accordingly.

1 We define the EBIT in underlying EBIT as earnings before interest, income taxes and result of the measurement of the Group's interest hedges. For further details please see page 15.

2 EBITDA is defined as earnings before interest, income taxes, goodwill impairment and amortisation and write-downs of other intangible assets, depreciation and write-downs of property, plant and equipment, investments and current assets.

3 Equity divided by balance sheet total in %, variance is given in percentage points.

 

Interim Management Report

 

H1 FY20 Summary

• The first half of the 2020 financial year has been marked by two developments - the first five months saw an exceptional start to our Summer 2020 programme, with January 2020 being the best ever bookings month in the company's history. The final month of the second quarter saw an unprecedented global travel suspension as COVID-19 escalated into a pandemic.
• The impact on our programme and operations has been undeniably acute. For the first time ever in the company's history, our full programme was suspended and alongside many other corporates across the sector State Aid was applied for. As a result of our swift action, TUI was the first business in Germany to receive state support in these exceptional times.
• First five months (5M) underlying EBIT loss of €343m1 was up €62m versus prior year excluding digital platforms operational investment, Boeing 737 Max and effect of a one-off hedging gain, reflecting the strong operational result and start to the year.
• H1 Group underlying EBIT loss of €813m1 was down €512m1 on prior year as a result of lost contribution in March and costs arising from COVID-19 shutdown, most notably from ineffective hedges, and additionally replacement lease costs relating to the Boeing 737 Max. Total costs in March incurred relating to both COVID-19 measures and Max amounted to €470m.
• The tourism industry has weathered a number of macroeconomic shocks throughout the most recent decades, however the COVID-19 pandemic is unquestionably the greatest crisis the industry and TUI has ever faced.

 

H1 results at a glance (pro-forma IAS17 basis)
	€ million
Underlying EBIT 5M FY19	- 302
5M YTD
Holiday Experiences	- 20
Markets & Airlines	+ 69
All other segments	+ 13
Underlying EBIT 5M YTD FY20 at constant currency excluding special items	- 240
Special items:
Current year: Digital platform opex	- 8
Markets & Airlines Prior year: Hedging gain (Northern Region)	- 29
Markets & Airlines Current year: Boeing 737 Max grounding	- 66
Underlying EBIT 5M YTD FY20 at constant currency	- 343
March 2020:
Special items:
Loss of contribution	- 242
Net hedging ineffectiveness	- 146
Repatriation costs	- 29
Compensation costs	- 14
Marella Celebration impairment	- 19
Net Boeing 737 Max costs	- 6
Other (COVID-19 related)	- 14
Underlying EBIT H1 FY20 at constant currency	- 813
Foreign exchange translation	- 16
Underlying EBIT H1 YTD FY20 at actual rates	- 829
IFRS 16 impact	+ 2
Underlying EBIT H1 FY20 at actual rates (IFRS 16 basis)	- 827

 

 

COVID-19 development

• At our Q1 update on 11 February 2020, there was neither a worldwide travel ban on the horizon nor any indication that the world, and particularly the tourism industry, would come to a standstill. The outbreak in China at the end of December and during the course of January had little to no impact on our key markets. Looking back on previous epidemics, any consumer impact had been very much contained in and limited to the source region of the outbreak.
• The outbreak in Italy on 21 February was however followed by an incidence of COVID-19 at one of our partnership hotels in Tenerife. By the beginning of March, we were experiencing lower travel demand, however our year to date bookings remained well above prior year. The further spread of COVID-19 in the following days led to the decision to trigger Force Majeure notices to all third party hotelier partners, enabling either a cancellation or reduction of committed capacity contracts for the remainder of the season.
• By the middle of March a number of governments across our key destinations, such as Spain, Mexico and Greece were advising that they would be closing borders as part of their efforts to mitigate the spread of COVID-19. As a result, on 15 March, we announced the suspension of the vast majority of our travel programme until further notice. All financial guidance for FY20 was withdrawn at this point.

 

Financial and operational measures as a result of travel suspension

Application for and granting of German State Aid

• In light of the suspension of operations, it was clear the company would require additional liquidity headroom to help bridge the effects of the pandemic until Summer 2020. TUI applied for State Aid from the German Federal Government on 17 March. Ten days later, on 27 March TUI received a commitment from the German Federal Government for a KfW bridge loan for the amount of €1.8 billion. The €1.8 billion support came in the form of an extension to the pre-existing €1.75bn Revolving Credit Facility (RCF) and was ratified by the existing RCF banking consortium on 8 April.
• Under the terms of the loan, the annual dividend will be suspended during the course of the credit line. Both covenants, net leverage and net fixed charge cover, relating to the existing and increased RCF will be suspended for the next 18 months. Covenant testing will resume in September 2021.

 

The largest ever repatriation campaign by TUI

• From mid-March, customer service, aviation planning and crisis management teams, alongside in-destination colleagues and flight crew, worked tirelessly round the clock to coordinate the return of customers and colleagues. Over 200,000 customers plus ~4,000 colleagues were returned to home countries in the weeks that followed. Additionally, at the request of various foreign ministries, the teams worked hard to also repatriate many non-TUI passengers on rescue flights, who would have otherwise been stranded.

 

Significant fixed cost base actions

• Whilst our programme is suspended, significant crisis measures have been taken across the business to reduce cash costs and expenditure to an absolute minimum. From capex, to marketing, to rental and leases, all expenditure has been cut or paused. Strict cost discipline, required during these exceptional circumstances, has been a top priority for the business as a whole.
• The largest cost base for the Group is accommodation and having invoked the Force Majeure clause on all hotel contracts, our overall monthly cash cost base has been substantially reduced by more than 70%. Incremental aircraft leases are being renegotiated with our lessors, as have our rental lease agreements with landlords in our Hotels & Resorts business. Cruise ships have been laid up, saving around ~50% of monthly costs.
• The business took the difficult but necessary decision to reduce staff costs worldwide from April onwards. Short-time work, pay-cuts, furlough, unpaid leave or other staff costs saving measures were applied across the Group, whilst our business is paused. We have participated in government job retention schemes where available, such as in Germany and the UK. These substantial measures across the business have helped to deliver a ~50% cost saving in May, with ~90% of our employees participating in the above measures.
• Due the nature of our advance contracting to secure committed capacity, accommodation and services for the seasons ahead, TUI would typically see a high level of operational leverage. In a normal year c. 63% of our cash costs across the business are deemed to fixed. This equates to a cash outflow range of between ~€700m to ~€1,400m per month, the latter during our peak season.
• As detailed above, the exceptional shutdown imposed has enabled significant cost reductions during this incomparable crisis period. Having reduced cash costs by more than 70% to an absolute crisis minimum, we expect for the remainder of the financial year a fixed cost cash outflow range of between ~€250m to ~€300m per month.

 

Bookings and refund mechanisms

• Since the beginning of the measures to mitigate COVID-19, we have seen a material decline in bookings for Summer 2020 as a result of the travel suspension currently in place. We see bookings for Summer 2020 down 36%1, with ASP up 11% and 35%1 of the programme sold to date, down from 59% sold at the same point last year reflecting our cancelled programme from mid-March.
• The Markets and Airlines programme across the three regions are on average suspended until middle of June with our Cruise brands on average suspended similarly. Under the European Travel Directive, cash refunds should be provided for holidays cancelled. Many of our source market governments are however considering voucher refund mechanisms or state backed fund solutions as alternatives to cash refunds and subsequently we expect a low to mid-single digit hundred millions per month cash outflow to cover customer refunds relating to cancelled holidays. We see typically, a higher proportion of customers requesting refunds for immediate departures and customers with outer dates, choosing a voucher refund credit or rebooking to a later departure date. Customers who do not wish to take advantage of our vouchers/refund credits with a discount for future booking, remain entitled to a cash refund should their holiday be cancelled.
• Holidays remain a high priority for our customers and we see our customers committing early for future seasons. Winter 2020/21 is still very early in the booking cycle however UK bookings are up 8%1 with ASP in line with prior year. Summer 21 bookings are looking positive on small volumes.

1 These statistics are up to 3 May 2020, shown on a constant currency basis and relate to all customers whether risk or non-risk 
 

Liquidity position and measures

With cash and available facilities as well as a number of liquidity enhancing measures, TUI has sufficient funds to cover the coming months. As at 10 May, TUI AG's total cash and available facilities amounted to €2.1bn.

 

TUI continues to evaluate a variety of options with the aim to best position TUI's balance sheet and liquidity through an extended period of disruption and post crisis.

 

Our liquidity enhancing measures:

• Cash cost base reduced to crisis minimum range of between ~€250m to ~€300m per month
• Capex reduction/postponement from range of between ~€750m to ~€900 for FY20 to ~€440m2
• Adoption of voucher/refund credit mechanism
• Tax relief
• Closing of Hapag-Lloyd Cruises transaction
• Sale and leaseback of assets
• Immediate working capital normalisation on recovery of bookings/restart of business

 

The Group is strongly focused on rebuilding its solid balance sheet profile post crisis.

 

H2 Outlook

TUI has a resilient business model and has shown strong operational performance in recent years. Before the COVID-19 crisis, the business was on track to deliver a strong FY20, despite further costs related to the grounding of the Boeing 737 Max.

 

The travel industry has proven to be resilient many times, weathering many macroeconomic shocks throughout the recent decades and has been quick to adapt to macro challenges.

 

We expect travel will be different for the remainder of this year, however we strongly believe our customers will still want to holiday. Online enquiries to our website indicate to us that customers are still actively researching holidays and destinations; customers want to travel as soon as tourism can take off responsibly and safely.

 

We consider ourselves very well positioned to benefit from a recovery post the COVID-19 crisis. Our vertically integrated model enables a fully coordinated restart of the value chain. TUI's trusted brand, direct customer engagement across the full holiday journey and differentiated products are clear USPs for customer post crisis. TUI's market leading position combined with long-standing relationships with suppliers, retail agents and tour operators, means TUI plays an important and critical role in the restart of the industry.

 

The foreign tourism ministries from destinations such as Greece, Cyprus, Portugal, the Balearic Islands, Austria, and Bulgaria are preparing intensively for the return of tourists. The health and wellbeing of both customers and colleagues remain paramount and we are assessing how we can responsibly adapt to measures so that leisure travel can resume. We are preparing new procedures for the airport process, on board our aircraft, in hotels and on our ships, so that any social distancing recommendations or guidelines can be implemented, without compromising customer enjoyment and travel experience. TUI, alongside our many destination partners, stands ready for a responsible restart and resumption of our travel programme.

 

Acceleration of our strategy post COVID-19

It is clear as a result of the COVID-19 crisis, the travel industry will evolve even faster and perhaps more profoundly than many had expected. The world will be different and TUI will be different also.

 

This evolution will see the launch of our global realignment programme. We are reviewing our activities, every business unit and group companies worldwide to identify synergies and where we can be leaner, faster and more efficient. What is crucial now more than ever is to adapt our structures, and review our investments and presence in both markets and destinations.

 

To address costs, we will leverage synergies in areas such as hotel purchasing and exploit further potential within our global IT structures. We are targeting to permanently reduce our overhead cost base by 30% across the entire Group. This will have an impact on potentially 8,000 roles globally that will either not be recruited or reduced.

 

We will be less capital intensive, and we will continue our asset-right strategy in our Hotels & Cruise business which we launched in 2019. We will right-size our airlines and order book, alongside restructuring. We will divest and address non-profitable activities within our business.

 

Driving digitalisation - we will accelerate our Group transformation into a digital platform business. We will expand accommodation only and seat only products as well as increase dynamic packaging options. For our digital platform within Destination Experiences, we will enhance and prioritise the planned transformation.

 

TUI is well positioned to adapt to these opportunities. In order to return to the successful development of the past years after the crisis, we will now implement the realignment quickly.

 

Future TUI will be leaner, less capital intensive and more digital, creating an even stronger and more agile business.

 

Report on changes in expected development

 

On 15 March 2020, the Executive Board of TUI AG withdrew its guidance for financial year 2020 in view of the considerable uncertainties in the assessment of future developments.

 

The effects of the COVID-19 pandemic will have a considerable impact on the development of Group earnings. Cost savings will only partly compensate for the negative effects. We therefore expect Group turnover and underlying EBIT (IAS 17, at constant currency) to decline significantly compared with the previous year. 

 

Structure and strategy of TUI Group

 

Reporting structure

The present Half Year Financial Report 2020 is essentially based on TUI Group's reporting structure set out in the Annual Report for 2019.

 

Since the beginning of this financial year, the items of the profit and loss statement of the aircraft leasing companies holding the TUI Group's aircraft and subletting them within the Group have been fully allocated to the airlines using the respective aircraft (Northern Region, Central Region and Western Region). In the previous year's report data, the aircraft leasing companies were fully included in All other segments, while in the 2019 Annual Report, the result from intra-Group subleasing was already allocated to the respective airlines (Northern Region, Central Region and Western Region). The prior-year figures have been adjusted accordingly.

 

Group targets and strategy

TUI Group's strategy set out in the Annual Report 2019 should be continued after the effects of COVID-19 have subsided.

 

 

Consolidated earnings

 

Turnover
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Hotels & Resorts	133.9	131.7	+ 1.7	300.2	271.0	+ 10.8
Cruises	243.2	234.2	+ 3.8	481.6	424.6	+ 13.4
Destination Experiences	83.7	144.5	- 42.1	300.4	302.8	- 0.8
Holiday Experiences	460.8	510.4	- 9.7	1,082.2	998.4	+ 8.4
Northern Region	966.6	1,023.5	- 5.6	2,187.0	2,123.8	+ 3.0
Central Region	855.3	934.6	- 8.5	2,209.9	2,224.9	- 0.7
Western Region	480.2	514.3	- 6.6	1,075.1	1,057.4	+ 1.7
Markets & Airlines	2,302.2	2,472.4	- 6.9	5,471.9	5,406.2	+ 1.2
All other segments	24.9	118.8	- 79.0	84.5	271.8	- 68.9
TUI Group	2,787.9	3,101.6	- 10.1	6,638.7	6,676.4	- 0.6
TUI Group (IAS 17, at constant currency)	2,792.3	3,101.6	- 10.0	6,593.0	6,676.4	- 1.2

 

 

 

TUI Group applied IFRS 16 from 1 October 2019. Prior year figures were not adjusted. In order to enhance year-on-year comparability, our internal reporting for the current financial year uses underlying EBIT and underlying EBITDA in line with the rules of IAS 17. Accordingly, the amounts presented for the prior year and the current year do not include the effect of the initial application of IFRS 16.

 

 

Underlying EBIT (IAS 17)
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Hotels & Resorts	- 1.2	65.3	n. a.	42.1	134.5	- 68.7
Cruises	- 22.4	59.4	n. a.	26.5	106.4	- 75.1
Destination Experiences	- 20.3	- 10.2	- 99.0	- 29.4	- 10.4	- 182.7
Holiday Experiences	- 44.0	114.4	n. a.	39.1	230.5	- 83.0
Northern Region	- 313.5	- 125.8	- 149.2	- 424.8	- 183.9	- 131.0
Central Region	- 152.1	- 88.0	- 72.8	- 183.5	- 119.6	- 53.4
Western Region	- 131.0	- 95.9	- 36.6	- 194.6	- 152.6	- 27.5
Markets & Airlines	- 596.5	- 309.7	- 92.6	- 802.9	- 456.1	- 76.0
All other segments	- 40.4	- 46.8	+ 13.7	- 64.9	- 76.0	+ 14.6
TUI Group	- 680.9	- 242.1	- 181.2	- 828.7	- 301.6	- 174.8

 

 

 

Underlying EBITDA (IAS 17)
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Hotels & Resorts	28.6	90.4	- 68.4	101.9	185.1	- 44.9
Cruises	21.7	79.9	- 72.8	100.4	146.5	- 31.5
Destination Experiences	- 14.5	- 1.7	- 752.9	- 18.9	- 2.6	- 626.9
Holiday Experiences	35.8	168.6	- 78.8	183.5	329.0	- 44.2
Northern Region	- 279.1	- 95.7	- 191.6	- 362.6	- 134.5	- 169.6
Central Region	- 134.7	- 74.9	- 79.8	- 153.6	- 96.8	- 58.7
Western Region	- 116.3	- 80.6	- 44.3	- 167.3	- 130.1	- 28.6
Markets & Airlines	- 530.0	- 251.3	- 110.9	- 683.4	- 361.4	- 89.1
All other segments	- 45.2	- 23.0	- 96.5	- 59.5	- 46.2	- 28.8
TUI Group	- 539.5	- 105.7	- 410.4	- 559.4	- 78.5	- 612.6

 

 

Segmental performance1

 

Holiday Experiences

 

Holiday Experiences
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Turnover	460.8	510.4	- 9.7	1,082.2	998.4	+ 8.4
Underlying EBIT (IAS 17)	- 44.0	119.1	n. a.	39.1	230.5	- 83.0
Underlying EBIT (IAS 17, at constant currency)	- 26.6	119.1	n. a.	53.6	230.5	- 76.7

 

 

Hotels & Resorts
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Total turnover	253.8	277.8	- 8.6	582.4	591.3	- 1.5
Turnover	133.9	131.7	+ 1.7	300.2	271.0	+ 10.8
Underlying EBIT (IAS 17)	- 1.2	65.3	n. a.	42.1	134.5	- 68.7
Underlying EBIT (IAS 17, at constant currency)	18.2	65.3	- 72.1	59.0	134.5	- 56.1
Capacity hotels total1 ('000)	7,108	7,632	- 6.9	16,634	16,767	- 2.7
Riu	3,809	4,187	- 9.0	8,199	8,601	- 2.3
Robinson	595	607	- 1.9	1,337	1,284	- 1.2
Blue Diamond	1,148	1,072	+ 7.1	2,298	2,021	- 5.0
Occupancy rate hotels total2 (in %, variance in % points)	74	79	- 5	75	77	- 2
Riu	81	86	- 5	82	84	- 2
Robinson	62	64	- 2	67	68	- 1
Blue Diamond	73	83	- 10	75	78	- 3
Average revenue per bed hotels total3 (in €)	81	80	+ 1.8	73	72	+ 1.9
Riu	73	72	+ 1.5	70	69	+ 1.5
Robinson	104	105	- 1.7	97	96	+ 1.6
Blue Diamond	135	139	- 2.7	123	127	- 3.2
Turnover measures include fully consolidated companies, all other KPIs incl. companies measured at equity.
1 Group owned or leased hotel beds multiplied by opening days per quarter
2 Occupied beds divided by capacity
3 Arrangement revenue divided by occupied beds

 

 

• At the close of the first half, the majority of our hotels was closed as a result of global COVID-19 measures. A very small number of hotels remained open to host customers awaiting repatriation. From mid-April, all hotels across the portfolio were closed in line with government advice.
• Hotels & Resorts delivered both increased occupancies and rate versus prior year on a 5M basis. On a H1 basis, occupancy levels were clearly impacted as a result of shutdown measures in March, resulting in occupancy rate of 75%, down 2%pts year on year. Average rate per bed increased by 2% to €73 on a half year basis.
• Hotels & Resorts H1 earnings of €59m were down €75m versus prior year reflecting lost contribution in March as a result of forced closures from COVID-19.

 

Cruises
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Turnover1	243.2	234.2	+ 3.8	481.6	424.6	+ 13.4
Underlying EBIT (IAS 17)	- 22.4	59.4	n. a.	26.5	106.4	- 75.1
Underlying EBIT (IAS 17, at constant currency)	- 24.3	59.4	n. a.	24.4	106.4	- 77.1
Occupancy (in %, variance in % points)
TUI Cruises	78	98	- 20	88	99	- 11
Marella Cruises	92	99	- 7	96	100	- 4
Hapag-Lloyd Cruises	79	79	-	77	77	-
Passenger days ('000)
TUI Cruises	1,243	1,446	- 14.1	2,841	2,818	+ 0.8
Marella Cruises	585	738	- 20.7	1,366	1,442	- 5.3
Hapag-Lloyd Cruises	112	79	+ 41.6	200	150	+ 33.0
Average daily rates2 (in €)
TUI Cruises	138	146	- 5.7	142	148	- 4.1
Marella Cruises3 (in £)	151	154	- 1.6	146	145	+ 1.0
Hapag-Lloyd Cruises	654	680	- 3.9	613	639	- 4.1
1 No turnover is carried for TUI Cruises as the joint venture is consolidated at equity
2 Per day and passenger
3 Inclusive of transfers, flights and hotels due to the integrated nature of Marella Cruises, in £

 

 

• As the first half came to a close, many of our cruise fleet had curtailed their itineraries and docked as a result of global COVID-19 measures. A small handful of our ships continued with their planned sailings returning all passengers to home countries by early April.
• Cruise H1 earnings of €24m were down €82m versus prior year, with TUI Cruises and Marella more notably impacted by lost contribution, compensation costs from cancelled itineraries and rerouting costs throughout March.
• Hapag-Lloyd saw less operational disruption due to itinerary type and saw earnings break even in the first half.

 

Destination Experiences
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Total turnover	118.2	191.5	- 38.3	423.7	417.8	+ 1.4
Turnover	83.7	144.5	- 42.1	300.4	302.8	- 0.8
Underlying EBIT (IAS 17)	- 20.3	- 5.6	- 262.5	- 29.4	- 10.4	- 182.7
Underlying EBIT (IAS 17, at constant currency)	- 20.5	- 5.6	- 266.1	- 29.8	- 10.4	- 186.5

 

 

• Destination Experiences earnings for the first half declined by €19m versus prior year reflecting lost revenue throughout March, planned investment in building market share and acceleration of its digital platform.

 

Markets & Airlines
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Turnover	2,302.2	2,472.4	- 6.9	5,471.9	5,406.2	+ 1.2
Underlying EBIT (IAS 17)	- 596.5	- 300.1	- 98.8	- 802.9	- 456.1	- 76.0
Underlying EBIT (IAS 17, at constant currency)	- 597.8	- 300.1	- 99.2	- 801.7	- 456.1	- 75.8
Direct distribution mix1,3 (in %, variance in % points)	75	74	+ 1	73	74	- 1
Online mix2,3 (in %, variance in % points)	53	53	-	51	52	- 1
Customers ('000)3	2,489	2,879	- 13.5	6,265	6,546	- 4.3
1 Share of sales via own channels (retail and online)
2 Share of online sales

 

 

• Total H1 loss for Markets & Airlines of €802m increased by €346m as a result of lost contribution and costs arising from COVID-19 measures, particularly from the crystallisation of ineffective hedges amounting to ~€146m, repatriation and compensation costs and separately, aircraft replacement costs relating to the 737 Max. In addition, the prior year benefitted from a € 29m hedging gain.
• Customer numbers for the H1 period decreased by 4%. Excluding March, customer numbers had increased by 4% versus prior year, reflecting the strong demand across our markets prior to travel restrictions.

 

Northern Region
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Turnover	966.6	1,023.5	- 5.6	2,187.0	2,123.8	+ 3.0
Underlying EBIT (IAS 17)	- 313.5	- 121.1	- 158.9	- 424.8	- 183.9	- 131.0
Underlying EBIT (IAS 17, at constant currency)	- 314.4	- 121.1	- 159.6	- 422.9	- 183.9	- 130.0
Direct distribution mix1 (in %, variance in % points)	91	92	- 1	91	92	- 1
Online mix2 (in %, variance in % points)	66	67	- 1	65	67	- 2
Customers ('000)	969	1,009	- 4.0	2,239	2,246	- 0.3
1 Share of sales via own channels (retail and online)
2 Share of online sales

 

 

• Northern Region H1 underlying EBIT loss increased by €239m versus prior year, predominantly as a result of lost contribution, net ineffective hedges and Boeing 737 Max grounding which incurred a total cost of €194m for the region. The prior year's figure included a €29m hedge gain. Excluding 737 Max and prior year hedging gain, underlying EBIT for the 5M period had improved by 10% versus prior year.

 

Central Region
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Turnover	855.3	934.6	- 8.5	2,209.9	2,224.9	- 0.7
Underlying EBIT (IAS 17)	- 152.1	- 86.9	- 75.0	- 183.5	- 119.6	- 53.4
Underlying EBIT (IAS 17, at constant currency)	- 152.1	- 86.9	- 75.0	- 183.6	- 119.6	- 53.5
Direct distribution mix1,3 (in %, variance in % points)	47	48	- 1	46	49	- 3
Online mix2,3 (in %, variance in % points)	23	20	+ 3	20	20	-
Customers3 ('000)	774	976	- 20.7	2,196	2,380	- 7.7
1 Share of sales via own channels (retail and online)
2 Share of online sales

 

 

• Central Region H1 underlying EBIT loss increased by €64m versus prior year, predominantly as a result of lost contribution, net ineffective hedges and Boeing 737 Max grounding which incurred a total cost of €96m for the region. Excluding 737 Max, underlying EBIT for the 5M period had improved by 12% versus prior year.

 

Western Region
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Turnover	480.2	514.3	- 6.6	1,075.1	1,057.4	+ 1.7
Underlying EBIT (IAS 17)	- 131.0	- 92.1	- 42.2	- 194.6	- 152.6	- 27.5
Underlying EBIT (IAS 17, at constant currency)	- 131.3	- 92.1	- 42.6	- 195.1	- 152.6	- 27.9
Direct distribution mix1 (in %, variance in % points)	79	77	+ 2	78	77	+ 1
Online mix2 (in %, variance in % points)	62	60	+ 2	61	60	+ 1
Customers ('000)	746	894	- 16.5	1,830	1,920	- 4.7
1 Share of sales via own channels (retail and online)
2 Share of online sales

 

 

• Western Region H1 underlying EBIT declined by €42m versus prior year, predominately as a result of lost contribution, net ineffectiveness hedges and Boeing 737 Max grounding which incurred a total cost of €99m for the region. Excluding 737 Max, underlying EBIT for the 5M period had improved by 30% versus prior year.

 

All other segments
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Turnover	24.9	118.8	- 79.0	84.5	271.8	- 68.9
Underlying EBIT (IAS 17)	- 40.4	- 37.4	- 8.0	- 64.9	- 76.0	+ 14.6
Underlying EBIT (IAS 17, at constant currency)	- 40.6	- 37.4	- 8.6	- 65.3	- 76.0	+ 14.1

 

 

• The result for All other segments improved primarily due to non-inclusion of Corsair winter losses.

 

Financial position and net assets

 

Cash Flow / Net capex and investments / Net debt

The TUI Group's operating cash flow was also impacted by the travel restrictions imposed by COVID-19 in March. At the same time, due to the first-time application of IFRS 16, the cash outflow from operating activities no longer included payments for operating leases in the period under review, while the unadjusted previous year's figure still included them. At €728.4m, the reported cash outflow from operating activities therefore matched the previous year's level.

 

In the wake of the first-time application of IFRS 16, the definition of the TUI Group's net financial position for FY20 was adjusted. The liabilities from finance leases pursuant to IAS 17 previously included in financial liabilities will be carried as lease liabilities in accordance with IFRS 16 together with the obligations from leases classified as operating leases under IAS 17 as of FY20. The previous year was not adjusted. Taking this change of presentation into account, the net debt of continuing operations as of 31 March 2020 increased by €2,938.4m to €4,902.5m.

 

Net debt
	31.3.2020	31.3.2019 adjusted	Var. %
Financial debt	2,014.4	3,101.3	- 35.0
thereof finance leases (IAS 17)	-	1,526.9
Finance lease liabilities (IFRS 16)	3,922.8	-
Cash and cash equivalents	1,022.7	1,091.6	- 6.3
Short-term interest-bearing investments	12.0	45.7	- 73.7
Net debt	-4,902.5	-1,964.1	- 149.6

 

 

 

Net capex and investments
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Cash gross capex
Hotels & Resorts	98.0	107.5	- 8.8	170.7	186.6	- 8.5
Cruises	4.3	53.8	- 92.0	43.5	200.0	- 78.3
Destination Experiences	3.7	7.6	- 51.3	7.2	9.6	- 25.0
Holiday Experiences	106.0	169.0	- 37.3	221.4	396.3	- 44.1
Northern Region	15.3	19.8	- 22.7	30.9	30.5	+ 1.3
Central Region	2.6	8.7	- 70.1	9.0	14.6	- 38.4
Western Region	3.8	9.7	- 60.8	11.9	21.0	- 43.3
Markets & Airlines*	29.2	77.7	- 62.4	60.7	111.4	- 45.5
All other segments	21.7	19.9	+ 9.0	39.4	35.9	+ 9.7
TUI Group	156.9	266.6	- 41.1	321.5	543.6	- 40.9
Net pre delivery payments on aircraft	17.6	- 22.4	n. a.	- 42.4	- 54.4	+ 22.1
Financial investments	46.9	85.2	- 45.0	56.9	146.7	- 61.2
Divestments	5.0	27.2	- 81.6	- 48.8	15.6	n. a.
Net capex and investments	226.5	356.6	- 36.5	- 287.2	651.4	n. a.

 

 

* Including €7.5m for Q2 and €8.9m for H1 FY20 (Q2 2019: €39.5m, H1 FY19: €45.3m) cash gross capex of the aircraft leasing companies, which - in contrast to the items of the income statement - are allocated to Markets & Airlines as a whole, but not to the individual segments Northern Region, Central Region and Western Region.

 

The decline in net capex and investments in H1 FY20 was mainly driven by the acquisition of the Marella Explorer 2 and the online platform Musement, which was included in previous year's figure. The increase in divestments compared to last year was due to the sale of two German specialist tour operators in Q1 FY20.

 

 

Assets and liabilities

 

Assets and liabilities
	31 Mar 2020	30 Sep 2019  adjusted	Var. %
Non-current assets	13,944.2	11,951.1	+ 16.7
Current assets	4,389.2	4,313.5	+ 1.8
Assets	18,333.4	16,264.6	+ 12.7
Equity	2,792.3	4,165.6	- 33.0
Provisions	1,847.2	2,204.9	- 16.2
Financial liabilities	2,014.4	2,682.2	- 24.9
Other liabilities	11,679.5	7,211.9	+ 61.9
Liabilities	18,333.4	16,264.6	+ 12.7

 

 

 

As at 31 March 2019, TUI Group's balance sheet total amounted to € 18.3 bn, up 12.7 % against the level of financial year end 30 September 2019. The equity ratio stood at 15.2%, falling below its level of 25.6% as at 30 September 2019.

 

 

Comments on the consolidated income statement

 

TUI Group's results reflect the significant seasonal swing in tourism between the winter and summer travel months. The Group seeks to counteract the seasonal swing through a broad range of holiday offerings in the summer and winter season and its presence in different travel markets worldwide with varying annual cycles.

 

The consolidated income statement reflects the seasonality of the tourism business, with negative results generated in the period from October to March. Following a very strong start to financial year 2020, the development of TUI Group's turnover and earnings in the first half was materially impacted by the global travel restrictions launched in order to contain the spread of COVID-19. From mid-March the vast majority of our tour operation, aviation, hotel and cruise operations were abruptly stopped.

 

Income statement of the TUI Group for the period from 1 Oct 2019 to 31 Mar 2020
€ million	Q2 2020	Q2 2019    adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Turnover	2,787.9	3,101.6	- 10.1	6,638.7	6,676.4	- 0.6
Cost of sales	3,199.9	3,142.8	+1.8	6,970.9	6,626.9	+5.2
Gross profit	- 412.0	- 41.2	- 900.0	- 332.3	49.5	n. a.
Administrative expenses	245.9	264.3	- 7.0	528.4	531.7	- 0.6
Other income	- 0.4	7.4	n. a.	93.1	12.9	+621.7
Other expenses	- 1.6	12.6	n. a.	3.7	13.9	- 73.4
Impairment of financial assets	19.1	1.1	n. a.	23.5	- 2.8	n. a.
Financial income	2.5	22.0	- 88.6	22.4	69.9	- 68.0
Financial expenses	80.8	29.5	+173.9	150.6	79.1	+90.4
Share of result of joint ventures and associates	3.2	71.4	- 95.5	41.9	106.3	- 60.6
Earnings before income taxes from continuing operations	- 751.0	- 247.9	- 202.9	- 881.1	- 383.3	- 129.9
Income taxes	- 10.5	- 70.9	+85.2	- 35.2	- 94.2	+62.6
Group loss	- 740.5	- 176.9	- 318.6	- 845.8	- 289.1	- 192.6
Group loss attributable to shareholders of TUI AG	- 763.6	- 203.8	- 274.7	- 892.2	- 343.1	- 160.0
Group loss attributable to non-controlling interest	23.2	26.9	- 13.8	46.4	54.1	- 14.2
* Prior-year figures adjusted due to restrospective application of IFRS 15

 

 

After Group turnover in the first five months was still around 6% above the prior-year figure, consolidated turnover in H1 delined by 0.6 % year-on-year to €6.6bn. On a constant currency basis, turnover fell by 1.2 % year-on-year in H1 2020. This decline reflects the disposal of Corsair, which was divested in the previous year (H1 2019 revenues: €187.1m) and the travel restrictions from mid-March onwards due to COVID-19.

 

The year-on-year decline in the result from continuing operations was partly driven by lower margins and additional costs for the repatriation of customers following the suspension of business operations in March 2020. In addition, the Group recorded one-off costs totalling €77m related to the grounding of the Boeing 737 Max as well as expenses worth €146m for the measurement of ineffective fuel hedges in H1 2020, while the prior year's figures had not included any similar items. On the other hand, a positive effect was attributable to the gain on disposal from the divestment of the German specialist tour operators generated in the first quarter of 2020.

 

Alternative performance measures

 

From FY20, we use 'Underlying EBIT', which is more common in the international sphere, for our management system. Underlying EBITA is therefore no longer be used as a KPI. We define the EBIT in underlying EBIT as earnings before interest, taxes and result of the measurement of the Group's interest hedges. Unlike the previous KPI EBITA, EBIT by definition includes impairments of goodwill.

 

One-off items carried here include adjustments for income and expense items that reflect amounts and frequencies of occurrence rendering an evaluation of the operating profitability of the segments and the Group more difficult or causing distortions. These items include gains on disposal of financial investments, significant gains and losses from the sale of assets as well as significant restructuring and integration expenses. Any effects from purchase price allocations, ancillary acquisition costs and conditional purchase price payments are adjusted. Also, any goodwill impairments would be adjusted in the reconciliation to underlying EBIT.

 

TUI Group applied IFRS 16 from 1 October 2019. Prior year figures were not adjusted. In order to enhance year-on-year comparability, our internal reporting for the current financial year uses underlying EBIT in line with the rules of IAS 17. Accordingly, the amounts presented for the prior year and the current year do not include the effect of the initial application of IFRS 16. A reconciliation to underlying EBIT according to IFRS 16 is shown below:

 

Reconciliation to underlying earnings

 

Reconciliation to underlying EBIT
	Q2 2020	Q2 2019	Var. %	H1 2020	H1 2019	Var. %
€ million		adjusted			adjusted
Earnings before income taxes	- 751.0	- 247.9	- 202.9	- 881.1	- 383.3	- 129.9
plus: Net interest expense	52.7	5.3	894.3	104.7	32.7	220.2
less / plus: Expense from the measurement of interest hedges	- 1.8	0.5	n. a.	- 1.6	2.4	n. a.
EBIT from continuing operations	- 700.2	- 242.1	- 189.2	- 778.0	- 348.1	- 123.5
less / plus: Separately disclosed items	8.3	13.5	- 38.5	- 71.1	27.3	n. a.
plus: Expense from purchase price allocation	11.8	10.1	16.8	22.3	19.3	15.5
Underlying EBIT from continuing operations (IFRS 16)	- 680.1	- 218.5	- 211.3	- 826.8	- 301.6	- 174.1
Adjustments IAS 17 / IFRS 16 (IFRS 16 impact)	- 0.8	-	n. a.	- 1.9	-	n. a.
Underlying EBIT from underlying operations (IAS 17)	- 680.9	- 218.5	- 211.6	- 828.7	- 301.6	- 174.8

 

 

In H1 FY20, separately disclosed items included a gain of disposal of €90.4m of the German specialist tour operators partly offset by restructuring costs in Destination Experiences, Central Region and Western Region.

 

In H1 FY19, one-off payments in connection with the conversion of the pension plan in the United Kingdom to a defined contribution plan and the loss on the Corsair disposal were adjusted.

 

The TUI Group's operating loss adjusted for special items increased by €525.2m to €826.8m in H1 FY20.

 

 

Key figures of income statement
	Q2 2020	Q2 2019 restated	Var. %	H1 2020	H1 2019 restated	Var. %
EBITDAR	- 404.6	47.9	n. a.	- 194.0	236.7	n. a.
Operating rental expenses	- 14.1	- 167.9	+ 91.6	- 34.9	- 344.4	+ 89.9
EBITDA	- 418.7	- 120.0	- 248.9	- 228.9	- 107.7	- 112.5
Depreciation/amortisation less reversals of depreciation*	- 281.5	- 122.1	- 130.5	- 549.1	- 240.4	- 128.4
EBIT	- 700.2	- 242.1	- 189.2	- 778.0	- 348.1	- 123.5
Expense from the meaurement of interest hedges	- 1.8	0.5	n. a.	- 1.6	2.4	n. a.
Net interest expense	52.7	5.3	+ 894.3	104.7	32.7	+ 220.2
EBT	- 751.0	- 247.9	- 202.9	- 881.1	- 383.3	- 129.9
* on property, plant and equipment, intangible asssets, financial and other assets

 

 

Other segment indicators

 

Underlying EBIT (IFRS 16)
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Hotels & Resorts	- 11.3	65.3	n. a.	24.0	134.5	- 82.2
Cruises	- 21.8	59.4	n. a.	26.9	106.4	- 74.7
Destination Experiences	- 20.0	- 5.6	- 257.1	- 28.9	- 10.4	- 177.9
Holiday Experiences	- 53.2	119.1	n. a.	22.1	230.5	- 90.4
Northern Region	- 309.5	- 121.1	- 155.6	- 415.2	- 183.9	- 125.8
Central Region	- 150.6	- 86.9	- 73.3	- 179.5	- 119.6	- 50.1
Western Region	- 126.4	- 92.1	- 37.2	- 189.6	- 152.6	- 24.2
Markets & Airlines	- 586.3	- 300.1	- 95.4	- 784.3	- 456.1	- 72.0
All other segments	- 40.6	- 37.4	- 8.6	- 64.6	- 76.0	+ 15.0
TUI Group	- 680.1	- 218.5	- 211.3	- 826.8	- 301.6	- 174.1

 

 

EBIT (IFRS 16)
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Hotels & Resorts	- 11.3	65.3	n. a.	23.9	134.4	- 82.2
Cruises	- 21.8	59.4	n. a.	26.9	106.4	- 74.7
Destination Experiences	- 25.5	- 10.2	- 150.0	- 39.1	- 19.8	- 97.5
Holiday Experiences	- 58.7	114.4	n. a.	11.8	221.0	- 94.7
Northern Region	- 313.6	- 125.8	- 149.3	- 423.4	- 203.5	- 108.1
Central Region	- 154.9	- 88.0	- 76.0	- 100.5	- 121.8	+ 17.5
Western Region	- 132.6	- 95.9	- 38.3	- 199.0	- 157.1	- 26.7
Markets & Airlines	- 601.0	- 309.7	- 94.1	- 722.8	- 482.5	- 49.8
All other segments	- 40.5	- 46.8	+ 13.5	- 67.0	- 86.7	+ 22.7
TUI Group	- 700.2	- 242.1	- 189.2	- 778.0	- 348.1	- 123.5

 

 

Underlying EBITDA (IFRS 16)
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Hotels & Resorts	40.5	90.4	- 55.2	124.3	185.1	- 32.8
Cruises	22.0	79.9	- 72.5	101.0	146.5	- 31.1
Destination Experiences	- 12.6	- 1.7	- 641.2	- 15.3	- 2.6	- 488.5
Holiday Experiences	49.9	168.6	- 70.4	210.0	329.0	- 36.2
Northern Region	- 222.2	- 95.7	- 132.2	- 247.8	- 134.5	- 84.2
Central Region	- 110.2	- 74.9	- 47.1	- 103.5	- 96.8	- 6.9
Western Region	- 82.0	- 80.6	- 1.7	- 99.5	- 130.1	+ 23.5
Markets & Airlines	- 414.3	- 251.3	- 64.9	- 450.7	- 361.4	- 24.7
All other segments	- 45.2	- 23.0	- 96.5	- 57.4	- 46.2	- 24.2
TUI Group	- 409.6	- 105.7	- 287.5	- 298.1	- 78.5	- 279.7

 

 

EBITDA (IFRS 16)
€ million	Q2 2020	Q2 2019 adjusted	Var. %	H1 2020	H1 2019 adjusted	Var. %
Hotels & Resorts	40.5	90.4	- 55.2	124.2	185.0	- 32.9
Cruises	22.0	79.9	- 72.5	101.0	146.5	- 31.1
Destination Experiences	- 15.3	- 3.5	- 337.1	- 19.8	- 6.5	- 204.6
Holiday Experiences	47.2	166.8	- 71.7	205.4	325.1	- 36.8
Northern Region	- 223.0	- 97.1	- 129.7	- 249.5	- 147.6	- 69.0
Central Region	- 112.2	- 75.3	- 49.0	- 21.4	- 97.5	+ 78.1
Western Region	- 85.7	- 83.1	- 3.1	- 103.8	- 132.0	+ 21.4
Markets & Airlines	- 420.8	- 255.5	- 64.7	- 374.6	- 377.1	+ 0.7
All other segments	- 45.1	- 31.2	- 44.6	- 59.8	- 55.6	- 7.6
TUI Group	- 418.7	- 120.0	- 248.9	- 228.9	- 107.7	- 112.5

 

 

 

 

 

 

Employees
	31 March 2020	31 March 2019 adjusted	Var. %
Hotels & Resorts	16,655	20,217	- 17.6
Cruises*	347	348	- 0.3
Destination Experiences	6,983	6,527	+ 7.0
Holiday Experiences	23,985	27,092	- 11.5
Northern Region	11,458	12,636	- 9.3
Central Region	9,701	10,751	- 9.8
Western Region	5,954	6,129	- 2.9
Markets & Airlines	27,113	29,516	- 8.1
All other segments	2,427	3,527	- 31.2
Total	53,525	60,135	- 11.0

 

 

Corporate Governance

 

 

Composition of the Boards

In H1 2020 the composition of the Supervisory Board of TUI AG changed as follows:

 

The term of office of the following four members of the Supervisory Board ended at the end of the Annual General Meeting on 11 February 2020: Valerie Gooding, Janis Kong, Vladimir Lukin and Coline McConville.

 

The re-elected Supervisory Board members were Vladimir Lukin and Coline McConville. María Garaña Corces (Managing Director, Google Professional Services EMEA, Google Global Sales & Operations), and Ingrid-Helen Arnold (President, SAP Data Network, SAP) were newly elected to the Supervisory Board.

 

There were no changes in the composition of TUI AG's Executive Board in H1 FY20.

 

The current, complete composition of the Executive Board and Supervisory Board is listed on our website, where it has been made permanently available to the public.

 

 

 

 

Risk and Opportunity Report

 

Successful management of existing and emerging risks is critical to the long-term success of our business and to the achievement of our strategic objectives. Full details of our risk governance framework and principal risks can be found in the Annual Report 2019.

 

Actively Managed: IT Development & Strategy, Growth Strategy, Integration & Restructuring, Corporate & Social Responsibility, Information Security, Brexit

 

Monitored: Destination Disruption, Customer Demand, Input Cost Volatility, Seasonal Cash flow, Legal & Regulatory Compliance, Health & Safety, Supplier Reliance, Talent & Leadership Development, Joint Venture Partnerships

 

Several principal risks materialised simultaneously as a result of the COVID-19 pandemic, which has led to travel restrictions across the world, both within the Markets as well as in destination countries.

 

During this period of travel suspension, the Executive Board continues to monitor the key risks, particularly those whose probability of occurrence has increased due to the COVID-19 pandemic such as customer demand and those that impact the financial profile (i.e. cost volatility and cash flow) of the Group. 

 

There is a material uncertainty as to when the TUI Group's travel activities can be fully re-sumed. The in our view highly unlikely event that tourism operations cannot be resumed in the very long term, this might jeopardise the continuation of the Group's business operations, since the companies of the TUI Group might then not be able to realise their assets and repay their liabilities in the ordinary course of business. The measures described above, such as the utilisa-tion of government aid and the significant reduction of fixed costs, serve to bridge the impact of the COVID-19 pandemic on the Group's liquidity.

 

Additionally TUI Group is continuously reviewing how to restart operations to align to the "new normal" guidelines to be introduced by markets and destination countries once restrictions begin to lift. This is to ensure resumption of activities at the earliest and in the safest manner.

 

 

Interim Financial Statements

 

 

 

Income statement of the TUI Group for the period from 1 Oct 2019 to 31 Mar 2020
€ million	Notes	H1 2020	H1 2019 adjusted
Turnover	(1)	6,638.7	6,676.4
Cost of sales	(2)	6,970.9	6,626.9
Gross profit		- 332.3	49.5
Administrative expenses	(2)	528.4	531.7
Other income	(3)	93.1	12.9
Other expenses	(4)	3.7	13.9
Impairment of financial assets		23.5	- 2.8
Financial income	(5)	22.4	69.9
Financial expenses	(5)	150.6	79.1
Share of result of joint ventures and associates	(6)	41.9	106.3
Earnings before income taxes from continuing operations		- 881.1	- 383.3
Income taxes	(7)	- 35.2	- 94.2
Group loss		- 845.8	- 289.1
Group loss attributable to shareholders of TUI AG		- 892.2	- 343.1
Group loss attributable to non-controlling interest	(8)	46.4	54.1

 

 

 

 

 

Earnings per share
	H1 2020	H1 2019
€
Basic and diluted earnings per share	- 1.51	- 0.58

 

 

 

 

 

Condensed statement of comprehensive income of the TUI Group for the period from 1 Oct 2019 to 31 Mar 2020
€ million	H1 2020	H1 2019    adjusted
Group loss	- 845.8	- 289.1
Remeasurements of defined benefit obligations and related fund assets	458.1	- 53.1
Other comprehensive income of companies measured at equity that will not be reclassified	- 44.8	- 51.9
Fair value gain/loss on investments in equity instruments designated as at FVTOCI	- 8.3	- 0.7
Income tax related to items that will not be reclassified	- 103.1	19.4
Items that will not be reclassified to profit or loss	301.9	- 86.3
Foreign exchange differences	- 160.2	67.4
Cash flow hedges	- 444.4	- 342.8
Other comprehensive income of companies measured at equity that may be reclassified	- 5.0	2.6
Income tax related to items that may be reclassified	106.6	67.7
Items that may be reclassified to profit or loss	- 503.0	- 205.1
Other comprehensive income	- 201.1	- 291.4
Total comprehensive income	- 1,046.9	- 580.5
attributable to shareholders of TUI AG	- 1,053.6	- 646.6
attributable to non-controlling interest	6.7	66.1

 

Financial position of the TUI Group as at 31 Mar 2020
€ million	Notes	31 Mar 2020	30 Sep 2019 adjusted
Assets
Goodwill	(9)	2,992.7	3,009.2
Other intangible assets		687.8	710.7
Property, plant and equipment	(10)	3,753.6	5,810.7
Right-of-use assets	(11)	3,867.3	-
Investments in joint ventures and associates		1,472.5	1,507.6
Trade and other receivables	(19)	96.7	60.9
Derivative financial instruments	(19)	45.4	43.9
Other financial assets	(19)	30.6	43.0
Touristic payments on account		153.1	183.7
Other non-financial assets		631.1	369.9
Income tax assets		9.6	9.6
Deferred tax assets		203.7	202.0
Non-current assets		13,944.2	11,951.1
Inventories		108.5	114.7
Trade and other receivables	(19)	631.6	876.4
Derivative financial instruments	(19)	326.7	303.8
Other financial assets	(19)	12.0	31.1
Touristic payments on account		1,164.2	908.7
Other non-financial assets		137.9	131.5
Income tax assets		177.0	155.7
Cash and cash equivalents	(19)	1,022.7	1,741.5
Assets held for sale	(12)	808.5	50.0
Current assets		4,389.2	4,313.5
Total assets		18,333.4	16,264.6
€ million	Notes	31 Mar 2020	30 Sep 2019 adjusted
Equity and liabilities
Subscribed capital		1,505.8	1,505.8
Capital reserves		4,207.5	4,207.5
Revenue reserves		- 3,637.6	- 2,259.2
Equity before non-controlling interest		2,075.7	3,454.2
Non-controlling interest		716.6	711.4
Equity	(18)	2,792.3	4,165.6
Pension provisions and similar obligations	(13)	783.2	1,035.6
Other provisions		747.1	775.0
Non-current provisions		1,530.3	1,810.6
Financial liabilities	(14), (19)	1,655.9	2,457.6
Lease liabilities	(15)	3,113.5	-
Derivative financial instruments	(19)	151.0	59.1
Other financial liabilities	(19)	19.5	18.8
Other non-financial liabilities		117.2	100.1
Income tax liabilities		74.7	70.9
Deferred tax liabilities		192.4	226.9
Non-current liabilities		5,324.3	2,933.5
Non-current provisions and liabilities		6,854.7	4,744.2
Pension provisions and similar obligations	(13)	31.1	32.4
Other provisions		285.8	361.9
Current provisions		316.9	394.3
Financial liabilities	(14), (19)	358.5	224.6
Lease liabilities	(15)	809.3	-
Trade payables	(19)	1,840.0	2,873.8
Derivative financial instruments	(19)	630.0	157.1
Other financial liabilities	(16), (19)	1,457.9	89.6
Touristic advance payments received	(16)	2,181.0	2,911.2
Other non-financial liabilities		438.5	519.3
Income tax liabilities		62.5	81.9
Current liabilities		7,777.8	6,857.4
Liabilities related to assets held for sale	(17)	591.8	103.1
Current provisions and liabilities		8,686.4	7,354.9
Total provisions and liabilities		18,333.4	16,264.6

 

 

 

 

 

 

 

 

 

 

Condensed statement of changes in Group equity for the period from 1 Oct 2019 to 31 Mar 2020
€ million	Subscribed capital	Capital reserves	Revenue reserves	Equity before non-controlling interest	Non-controlling interest	Total
Balance as at 30 Sep 2019 (adjusted)	1,505.8	4,207.5	- 2,259.2	3,454.2	711.4	4,165.6
Adoption of IFRS 16	-	-	- 8.0	- 8.0	-	- 8.0
Balance as at 1 Oct 2019	1,505.8	4,207.5	- 2,267.2	3,446.2	711.4	4,157.6
Dividends	-	-	- 318.1	- 318.1	- 0.2	- 318.3
Share-based payment schemes	-	-	1.6	1.6	-	1.6
Effects on the acquisition of non-controlling interest	-	-	- 0.3	- 0.3	- 1.3	- 1.6
Group loss	-	-	- 892.2	- 892.2	46.4	- 845.8
Foreign exchange differences	-	-	- 120.5	- 120.5	- 39.7	- 160.2
Financial assets at FVOCI	-	-	- 8.3	- 8.3	-	- 8.3
Cash Flow Hedges	-	-	- 444.4	- 444.4	-	- 444.4
Remeasurements of defined benefit obligations and related fund assets	-	-	458.1	458.1	-	458.1
Other comprehensive income of companies measured at equity	-	-	- 49.8	- 49.8	-	- 49.8
Taxes attributable to other comprehensive income	-	-	3.5	3.5	-	3.5
Other comprehensive income	-	-	- 161.4	- 161.4	- 39.7	- 201.1
Total comprehensive income	-	-	- 1,053.6	- 1,053.6	6.7	- 1,046.9
Balance as at 31 Mar 2020	1,505.8	4,207.5	- 3,637.6	2,075.7	716.6	2,792.3

 

 

Condensed statement of changes in Group equity for the period from 1 Oct 2018 to 31 Mar 2019 (adjusted)
€ million	Subscribed capital	Capital reserves	Revenue reserves	Equity before non-controlling interest	Non-controlling interest	Total
Balance as at 30 Sep 2018	1,502.9	4,200.5	- 2,062.6	3,640.8	634.8	4,275.6
Adoption of IFRS 9	-	-	5.8	5.8	-	5.8
Balance as at 1 Oct 2018	1,502.9	4,200.5	- 2,056.8	3,646.6	634.8	4,281.4
Dividends	-	-	- 423.3	- 423.3	-	- 423.3
Share-based payment schemes	-	-	3.0	3.0	-	3.0
Effects on the acquisition of non-controlling interest	-	-	-	-	3.5	3.5
Group loss	-	-	- 343.2	- 343.2	54.1	- 289.1
Foreign exchange differences	-	-	55.6	55.6	11.8	67.4
Financial assets at FVOCI	-	-	- 0.7	- 0.7	-	- 0.7
Cash Flow Hedges	-	-	- 343.0	- 343.0	0.2	- 342.8
Remeasurements of defined benefit obligations and related fund assets	-	-	- 53.1	- 53.1	-	- 53.1
Other comprehensive income of companies measured at equity	-	-	- 49.3	- 49.3	-	- 49.3
Taxes attributable to other comprehensive income	-	-	87.1	87.1	-	87.1
Other comprehensive income	-	-	- 303.4	- 303.4	12.0	- 291.4
Total comprehensive income	-	-	- 646.6	- 646.6	66.1	- 580.5
Balance as at 31 Mar 2019	1,502.9	4,200.5	- 3,123.7	2,579.7	704.4	3,284.1

 

 

 

Condensed cash flow statement of the TUI Group
€ million	Notes	H1 2020	H1 2019
Cash outflow from operating activities	(22)	- 728.4	- 717.5
Cash outflow from investing activities	(22)	- 263.7	- 679.1
Cash inflow / cash outflow from financing activities	(22)	258.5	- 72.5
Net change in cash and cash equivalents		- 733.6	- 1,469.2
Change in cash and cash equivalents due to exchange rate fluctuation		29.8	12.8
Cash and cash equivalents at beginning of period		1,747.6	2,548.0
Cash and cash equivalents at end of period		1,043.9	1,091.6
of which included in the balance sheet as assets held for sale		21.1	-

 

 

 

notes

 

 

General

 

The TUI Group and its major subsidiaries and shareholdings operates in tourism. TUI AG, based in Hanover and Berlin, Germany, is TUI Group's parent company and a listed corporation under German law. The shares in the Company are traded on the London Stock Exchange and the Hanover and Frankfurt Stock Exchanges.

 

The condensed interim consolidated financial statements of TUI AG and its subsidiaries cover the period from 1 October 2019 to 31 March 2020. The interim consolidated financial statements are prepared in euros. Unless stated otherwise, all amounts are stated in million euros (€m).

 

The interim consolidated financial statements were released for publication by the Executive Board of TUI AG on 11 May 2020.

 

 

Accounting principles

 

Declaration of compliance

The interim consolidated financial statements for the period ended 31 March 2020 comprise the condensed interim consolidated financial statements and the interim Group management report in accordance with section 115 of the German Securities Trading Act (WpHG).

 

The interim consolidated financial statements were prepared in conformity with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB) and the relevant Interpretations of the IFRS Interpretation Committee (IFRS IC) for interim financial reporting applicable in the European Union.