DJ TUI AG: TUI GROUP HALF-YEAR FINANCIAL REPORT 1 OCTOBER 2020 - 31 MARCH 2021
TUI AG (TUI) TUI AG: TUI GROUP HALF-YEAR FINANCIAL REPORT 1 OCTOBER 2020 - 31 MARCH 2021 12-May-2021 / 08:00 CET/CEST Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. =---------------------------------------------------------------------------------------------------------------------- TUI GROUP Half-Year Financial Report 1 October 2020 - 31 March 2021 Contents Interim Management Report H1 2021 Summary Report on changes in expected development Structure and strategy of TUI Group Consolidated earnings Segmental performance Financial position and net assets Comments on the consolidated income statement Alternative performance measures Other segment indicators Corporate Governance Risk and Opportunity Report Unaudited condensed Consolidated Interim Financial Statements Notes General Accounting principles Group of consolidated companies Acquisitions - Divestments Notes to the unaudited condensed consolidated income statement of TUI Group Notes to the unaudited condensed consolidated statement of financial position of TUI Group Responsibility statement Review Report Cautionary statement regarding forward-looking statements Financial calendar Contacts Interim Management Report TUI Group - financial highlights EUR million H1 2021 H1 2020 adjusted Var. % Var. % at constant currency Revenue 716.3 6,638.7 - 89.2 - 89.0 Underlying EBIT1 Hotels & Resorts - 198.3 56.1 n. a. n. a. Cruises - 153.3 26.9 n. a. n. a. TUI Musement - 62.0 - 28.9 - 114.5 - 117.6 Holiday Experiences - 413.6 54.2 n. a. n. a. Northern Region - 418.3 - 415.2 - 0.7 - 2.4 Central Region - 272.0 - 179.5 - 51.5 - 51.5 Western Region - 159.8 - 189.6 + 15.7 + 16.6 Markets & Airlines - 850.1 - 784.3 - 8.4 - 9.1 All other segments - 45.1 - 64.6 + 30.2 + 29.9 Underlying EBIT - 1,308.8 -794.8 - 64.7 - 66.5 EBIT1 - 1,298.5 -746.0 - 74.1 Underlying EBITDA - 856.1 -266.0 - 221.9 EBITDA2 - 831.5 - 196.9 - 322.4 Group loss - 1,498.1 - 815.0 - 83.8 Earnings per share EUR - 1.83 - 1.46 - 25.3 Net capex and investment - 108.4 287.2 n. a. Equity ratio (31 March)3 % 1.3 15.6 - 14.3 Net financial position (31 March) - 6,813.1 - 4,902.5 - 39.0 Employees (31 March) 36,029 53,525 - 32.7
Differences may occur due to rounding.
This Quarterly Statement of the TUI Group was prepared for the reporting period H1 FY2021 from 1 October 2020 to 31 March 2021.
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 14.
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.
H1 2021 Summary - Group revenue of EUR716m, down 89% as a result of extended travel restrictions imposed across our key European
markets for the majority of the first half. - Within Hotels & Resorts, 122 hotels were open at end of the quarter reflecting both the usual winter seasonality
and limited operations from travel restrictions. - TUI Cruises and Hapag-Lloyd Cruises operated five ships during the first half, offering itineraries to the Baltic
and North Sea, and Greek Islands in the first quarter and to the Canary Islands in the second. - Markets & Airlines, took away 684k customers on holiday during the period, demonstrating the continued desire to
travel when restrictions allow. - Group underlying EBIT loss of EUR1,309m reflecting our continued cost discipline, contribution from operational
opportunities, helping to reduce average monthly underlying EBIT loss to EUR218m per month. - During the second quarter, we concluded all elements of our third support package of EUR1.8bn, including >EUR500m fully
subscribed rights issue. - Additionally, we successfully placed EUR400m convertible bonds post balance sheet date. - Our available liquidity1 as at 7 May 2021 amounts to EUR1.7bn. - Global Realignment Programme on track to achieve our cost savings target of EUR400m p.a by FY2023. Reflecting our
accelerated plans to transform into a more agile and leaner business, we expect to deliver 50% of our targeted
savings by end of FY2021. - Pipeline of 2.6m customers booked for Summer 2021 season. Planned capacity of 75% (of Summer 2019) for our upcoming
peak Summer months (Q4), with our re-opening portfolio focused on destinations such as Greece, Balearics and
Canaries with anticipated good vaccinations rates and low infection rates. - The continued vaccination progress across our key customer markets and destinations, combined with more testing,
and comprehensive hygiene measures throughout our eco-system, should enable the safe return to holidays this
Summer. - Insight survey2 results tell us our customers value a strong brand, flexibility, comprehensive health and safety
protocols with a good customer experience during these unprecedented times. TUI, with its integrated model, strong
brand, and in-destination service and online 24/7 support, is the model of choice for many holiday makers.
1 Available liquidity defined as unrestricted cash plus committed lines including third support package (contains KFW credit facility provided by KfW of EUR200m as of end of May) and convertible bonds
2 TUI Consumer Travel Behaviour Survey, August 2020
Completion of Third Support Package
Our third support package as announced on 2 December 2020 amounting to EUR1.8bn, agreed with our shareholders, a syndicate of underwriting banks, KfW and the German government (WSF) was successfully concluded in the period, comprising the following components: - a capital increase with subscription rights of >EUR500m - a silent participation, convertible into shares by the WSF of EUR420m (IFRS equity accounted) - a non-convertible silent participation by the WSF of EUR671m (IFRS equity accounted) - an additional credit facility provided by KfW of EUR200m
EUR400m placement of convertible bonds
Post balance sheet date on 16 April 2021, we successfully completed the placement of senior unsecured convertible bonds for EUR400m. These bonds have been offered at a coupon rate of 5% and were 2 times oversubscribed. They utilise 68% of authorised capital resolved at our recent AGM, representing around 75m underlying shares.
Unless previously converted, redeemed or repurchased and cancelled, the convertible bonds will be redeemed at their principal amount on 16 April 2028. Investors also have the possibility to convert the bonds into new and/or existing no-par value ordinary registered shares of TUI. The initial conversion price was set at 5.3631 EUR, representing a conversion premium of 25% above the reference share price of 4.2905 EUR.
With the successful offering, we plan to start the refinancing of loans from the COVID-19 support packages, in addition to strengthening our liquidity in the short-term.
Liquidity Position/Cash Outflow
Available liquidity1 as at 7 May 2021 amounts to EUR1.7bn. Bearing in mind the typical seasonal swings, and combined with clear signs of pent-up demand as evidenced by the immediate spike in bookings when a destination is re-opened, we are fully confident that the typical seasonal inflow usually seen in Q2, will materialise as we head towards the peak Summer season.
Our assumption for Q3 FY2021, is for departure volumes being muted in the light of travel restrictions. We however anticipate significant working capital inflow once reopening of markets are confirmed and destinations are announced, in line with our planned capacity for Q4.
Our assumption for Q4 FY2021, is for significant positive contributions from strong volumes and normalised level of operations.
1 Available liquidity defined as unrestricted cash plus committed lines including third support package (contains KFW credit facility provided by KfW of EUR200m as of end of May) and convertible bonds
Net debt
Net financial position improved to EUR6,813m versus our net debt position of EUR7,177 as at 31 December 2020 (Q1). The EUR364m decrease in net debt in the second quarter predominantly reflects net cash proceeds from our capital raise and the silent participations of the WSF.
The WSF measures comprise a silent participation convertible into shares in TUI of EUR420m (Silent Participation I) and a second silent participation of EUR671m. At 31 March 2021, Silent Participation I was fully paid in and Silent Participation II in the amount of EUR500m. In the IFRS consolidated financial statements, the silent participations are shown as equity due to their nature and are therefore not included in the Group's net debt.
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With the successful placement of EUR400m convertible bonds post balance sheet date, we have taken the first step towards refinancing our government facilities. As international leisure travel resumes and global markets begin to recover, it is our priority to rebuild a robust financial profile and return to a gross leverage ratio target of less than 3x. The Group continues to explore measures to accelerate de-leveraging and ensure the appropriate capitalisation to support growth over the longer term.
Trading Update - Summer 2021 bookings1 including amendments and voucher re-bookings, down 69% versus Summer 2019 (undistorted by
COVID-19). - 2.6m customers booked for our Summer 2021 programme, which is a small reduction since our Q1 update, reflecting
customers choosing to defer their booking to future seasons due to the lack of clarity provided by governments on
lifting of travel restrictions. - Our capacity plans of 75% (for Q4 peak summer, compared to 2019 programmes) remains in line with our AGM update on
25 March 2021. We will be focussed on a reopening portfolio of destinations with expected well vaccination and low
incidence rates. Destinations will include the Greek islands, the Balearics, the Canaries and Portugal. More than
60% of our planned capacity for Summer 2021 are to destinations with anticipated low incidence rates. - Summer 2021 ASP1 is up 22%, and continues to be driven by both pricing and mix, with higher level of packaged
holidays booked versus prior year. - We anticipate TUI Cruises to operate a phased restart with summer itineraries from May, with its full Mein Schiff
fleet of seven ships to be in operation by Q4. Hapag-Lloyd Cruises is currently sailing with Europa 2, with Europa
to resume in Q4. Expedition Class Hanseatic nature and Hanseatic inspiration to resume end of May with short
cruises, with their newest ship Hanseatic spirit scheduled to join from August. - Marella is offering UK cruise itineraries with Explorer and Explorer 2 from end of June. From August, Discovery and
Discovery 2 are scheduled to operate cruises to the Mediterranean. - Continued customer appetite and intention to travel for future seasons: - Winter 2021/22 - UK bookings1 up 17%, - Summer 2022 bookings - UK bookings1 up 293%
1 Bookings up to 2 May 2021 compared to respective bookings for 2019 programmes (undistorted by COVID-19) and relate to all customers whether risk or non-risk
Global Realignment Programme
As one of our self-help measures, we announced our Global Realignment Programme to deliver targeted savings across the group of EUR400m per annum by FY2023. Projects are well underway across core functions, Markets & Airlines and TUI Musement (formerly Destination Experiences) and we are on track to achieve almost 50% of our targeted savings by end of the current financial year. Of the 8k roles potentially impacted as part of the programme, we have to date a reduction of 6k FTEs already agreed.
Report on changes in expected development
It remains difficult to forecast the further course of the pandemic and its impact on customer behavior. In view of these considerable uncertainties, the Management Board continues to believe that it is not in a position to issue a specific forecast for the financial year2021.
The expectations for the financial year 2021made in the Annual Report 2020 have been adjusted in the following points.
Due to the travel restrictions in the first half of the year and the current expectations for the summer season 2021, we now expect TUI Group revenue (IFRS 16) in financial year 2021 to be down year-on-year at constant currency rates.
Based on expected gross capital expenditure, divestments and recoveries from advance payments made for aircraft orders, we expect cash inflow from net investments in property, plant and equipment and financial investments to be at least at the prior-year level in financial year 2021. - See also TUI Group Annual Report 2020 page 50
Structure and strategy of TUI Group
Reporting structure
The present Half-Year Financial Report 2021 is based on TUI Group's reporting structure set out in the Annual Report 2020. - See TUI Group Annual Report 2020 from page 26
Group strategy
TUI Group's strategy set out in the Annual Report 2020 should be continued after the effects of COVID-19 have subsided. - See TUI Group Annual Report 2020 from page 23
Consolidated earnings
Revenue
EUR million H1 2021 H1 2020 Var. %
Hotels & Resorts 83.9 300.2 - 72.0
Cruises 1.5 481.6 - 99.7
TUI Musement 18.6 300.4 - 93.8
Holiday Experiences 104.0 1,082.2 - 90.4
Northern Region 159.1 2,187.0 - 92.7
Central Region 337.4 2,209.9 - 84.7
Western Region 102.1 1,075.1 - 90.5
Markets & Airlines 598.6 5,471.9 - 89.1
All other segments 13.6 84.5 - 83.9
TUI Group 716.3 6,638.7 - 89.2
TUI Group (at constant currency) 732.4 6,638.7 - 89.0
Underlying EBIT
EUR million H1 2021 H1 2020 Var. %
adjusted
Hotels & Resorts - 198.3 56.1 n. a.
Cruises - 153.3 26.9 n. a.
TUI Musement - 62.0 - 28.9 - 114.5
Holiday Experiences - 413.6 54.2 n. a.
Northern Region - 418.3 - 415.2 - 0.7
Central Region - 272.0 - 179.5 - 51.5
Western Region - 159.8 - 189.6 + 15.7
Markets & Airlines - 850.1 - 784.3 - 8.4
All other segments - 45.1 - 64.6 + 30.2
TUI Group - 1,308.8 - 794.8 - 64.7
EBIT
EUR million H1 2021 H1 2020 Var. %
adjusted
Hotels & Resorts - 198.4 56.0 n. a.
Cruises - 153.4 26.9 n. a.
TUI Musement - 67.1 - 39.1 - 71.6
Holiday Experiences - 418.9 43.9 n. a.
Northern Region - 441.0 - 423.4 - 4.2
Central Region - 224.1 - 100.5 - 123.0
Western Region - 166.5 - 199.0 + 16.3
Markets & Airlines - 831.7 - 722.8 - 15.1
All other segments - 48.0 - 67.0 + 28.4
TUI Group - 1,298.5 - 746.0 - 74.1
Segmental performance
Holiday Experiences
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 104.0 1,082.2 - 90.4
Underlying EBIT - 413.6 54.2 n. a.
Underlying EBIT at constant currency - 422.7 54.2 n. a.
Hotels & Resorts
EUR million H1 2021 H1 2020 Var. %
adjusted
Total revenue 146.8 582.4 - 74.8
Revenue 83.9 300.2 - 72.1
Underlying EBIT - 198.3 56.1 n. a.
Underlying EBIT at constant currency - 204.6 56.1 n. a.
Capacity hotels total1 ('000) 9,418 16,634 - 43.4
Riu 4,782 8,199 - 41.7
Robinson 601 1,337 - 55.1
Blue Diamond 2,032 2,298 - 11.6
Occupancy rate hotels total2 40 75 - 35
(in %, variance in % points)
Riu 41 82 - 41
Robinson 48 67 - 19
Blue Diamond 39 75 - 36
Average revenue per bed hotels total3 64 73 - 13.3
(in EUR)
Riu 55 70 - 20.5
Robinson 92 97 - 5.5
Blue Diamond 93 123 - 24.2
Revenue includes 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
122 hotels were open as at the end of the period (34% of Group hotel portfolio), reflecting both the winter seasonality and travel restrictions currently in place.
Overall H1 occupancy rate declined 35%pts to 40% across our operating portfolio, reflecting the impact of travel restrictions across our key European markets throughout most of H1. Average daily rate declined by 13% to EUR63.5.
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Underlying EBIT loss of EUR198m, down EUR254m versus prior year reflects the factors as outlined above.
Cruises
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue1 1.5 481.6 - 99.7
Underlying EBIT - 153.3 26.9 n. a.
Underlying EBIT at constant currency - 155.2 26.9 n. a.
Occupancy (in %, variance in % points)
TUI Cruises 35 97 - 62
Marella Cruises - 96 n. a.
Hapag-Lloyd Cruises2 33 77 - 44
Passenger days ('000)
TUI Cruises 354 2,854 - 87.6
Marella Cruises - 1,366 n. a.
Hapag-Lloyd Cruises 21 191 - 88.8
Average daily rates3 (in EUR)
TUI Cruises 104 141 - 26.4
Marella Cruises4 (in GBP) - 146 n. a.
Hapag-Lloyd Cruises2 411 611 - 32.7
1 No revenue is carried for TUI Cruises and Hapag-Lloyd Cruises as the joint venture is consolidated at equity
2 Hapag-Lloyd Cruises prior year KPIs restated to align to TUI Cruises methodology
3 Per day and passenger
4 Inclusive of transfers, flights and hotels due to the integrated nature of Marella Cruises, in GBP
In the first quarter, TUI Cruises operated three ships (Mein Schiff 1, 2 and 6), offering short "Blue Cruises" around the Baltic Sea, Greek and Canary Islands. In the second quarter, Mein Schiff 1 and 2 operated with itineraries to the Canaries. H1 average daily rate of the operated fleet was EUR104, down 26% versus prior year (H1 FY2020: EUR141) reflecting the shorter average duration and more local routes of "Blue Cruises". H1 occupancy of the operated fleet was 35%, reflecting the overall more subdued environment for departures as a result of travel restrictions as well as adherence to COVID-19 government safety advice capping the numbers of passengers on board.
Hapag-Lloyd Cruises operated two ships during the first quarter, the Europa 2 and Hanseatic inspiration, which offered sailings to the Baltic Sea and the Canaries. The Europa 2 continued to sail in the second quarter, offering itineraries to the Canary Islands. H1 average daily rate for the operated fleet was EUR411, down 33% versus prior year (H1 FY2020: EUR611), reflecting the pricing of shorter and more local itineraries. H1 occupancy of the operated fleet was 33% (H1 FY2020: 77%).
Marella Cruises (our UK cruise brand) remained suspended throughout the period, in line with UK government travel advice, with our teams in preparation mode for restart towards the end of Q3.
Underlying EBIT loss of EUR153m, down EUR180m versus prior year, reflects the limited capacity operated over the period as a result of travel restrictions. Prior year includes 100% result of Hapag-Lloyd Cruises (H1 FY2020: Underlying EBIT of EUR22m) which is now consolidated at equity within the TUI Cruises Joint Venture.
TUI Musement (formerly Destination Experiences)
EUR million H1 2021 H1 2020 Var. %
adjusted
Total revenue 25.4 423.7 - 94.0
Revenue 18.6 300.4 - 93.8
Underlying EBIT - 62.0 - 28.9 - 114.5
Underlying EBIT at constant currency - 62.9 - 28.9 - 117.6
141K excursions and activities sold, down 90% versus prior year, reflecting the limited operations throughout the period, resulting in an underlying EBIT loss of EUR62m, a decline of EUR33m on prior year.
Online distribution was 50% increasing from 21% in H1 2020, driven by the successful integration of Musement inventory across our TUI source markets App.
Markets & Airlines
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 598.6 5,471.9 - 89.1
Underlying EBIT - 850.1 - 784.3 - 8.4
Underlying EBIT at constant currency - 855.5 - 784.3 - 9.1
Direct distribution mix1,3 76 73 + 3
(in %, variance in % points)
Online mix2,3 56 49 + 7
(in %, variance in % points)
Customers ('000)3 684 6,265 - 89.1
1 Share of sales via own channels (retail and online)
2 Share of online sales
3 Like-for-like basis excluding disposed entities Berge & Meer and Boomerang
As covered above, due to the extended lockdown measures across many of our key source markets, operations have been highly limited for the majority of the first half. A total of 684k customers departed in the first half, down 89% versus prior year, with around half departing in the month of October, prior to more recent restrictions.
Underlying loss of EUR850m reflects the limited capacity operated over the period.
Northern Region
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 159.1 2,187.0 - 92.7
Underlying EBIT - 418.3 - 415.2 - 0.7
Underlying EBIT at constant currency - 425.3 - 415.2 - 2.4
Direct distribution mix1 93 91 + 2
(in %, variance in % points)
Online mix2 76 65 + 11
(in %, variance in % points)
Customers ('000) 119 2,239 - 94.7
1 Share of sales via own channels (retail and online)
2 Share of online sales
Underlying loss of EUR418m, down EUR3m versus prior year. 119K customers departed in the first six months, down 95% versus prior year.
Direct distribution increased by 2%pts to 93% (H1 FY2020: 91%) with online distribution increasing by 11%pts to 76% (H1 FY2020: 65%).
Central Region
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 337.4 2,209.9 - 84.7
Underlying EBIT - 272.0 - 179.5 - 51.5
Underlying EBIT at constant currency - 272.0 - 179.5 - 51.5
Direct distribution mix1,3 63 51 + 12
(in %, variance in % points)
Online mix2,3 37 22 + 15
(in %, variance in % points)
Customers3 ('000) 333 2,196 - 84.9
1 Share of sales via own channels (retail and online)
2 Share of online sales
3 Like-for-like basis excluding disposed entities Berge & Meer and Boomerang
Underlying loss of EUR272m, down EUR93m versus prior year. 333K customers departed in the first six months, down 85% versus prior year.
Direct distribution increased by 12%pts to 63% (H1 FY2020: 51%) with online distribution increasing by 15%pts to 37% (H1 FY2020: 22%).
Western Region
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 102.1 1,075.1 - 90.5
Underlying EBIT - 159.8 - 189.6 + 15.7
Underlying EBIT at constant currency - 158.2 - 189.6 + 16.6
Direct distribution mix1 86 78 + 8
(in %, variance in % points)
Online mix2 72 61 + 11
(in %, variance in % points)
Customers ('000) 232 1,830 - 87.3
1 Share of sales via own channels (retail and online)
2 Share of online sales
Underlying loss of EUR160m, up EUR30m versus prior year. 232K customers departed in the first six months, down 87% versus prior year.
Direct distribution increased by 8%pts to 86% (H1 FY2020: 78%) with online distribution increasing by 11%pts to 72% (H1 FY2020: 61%).
All other segments
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 13.6 84.5 - 83.9
Underlying EBIT - 45.1 - 64.6 + 30.2
Underlying EBIT at constant currency) - 45.3 - 64.6 + 29.9
Underlying EBIT loss was EUR45m, up EUR20m versus prior year.
Financial position and net assets
Cash Flow / Net capex and investments / Net debt
In the period under review the TUI Group's operating cash flow continued to be impacted by the travel restrictions imposed by COVID-19 in March 2020.
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At EUR1,476.0m, the cash outflow from operating activities increased by EUR747.6m year-on-year.
The net debt as of 31 March 2021 increased by EUR1,910.6m to EUR6,813.1m.
Net debt
31 Mar 2021 31 Mar 2020 Var. %
Financial debt 4,847.9 2,014.4 + 140.7
Lease liabilities 3,377.8 3,922.8 - 13.9
Cash and cash equivalents 1,399.7 1,022.7 + 36.9
Short-term interest-bearing investments 12.9 12.0 + 7.5
Net debt 6,813.1 4,902.5 + 39.0
Net capex and investments
EUR million H1 2021 H1 2020 Var. %
Cash gross capex
Hotels & Resorts 69.9 170.7 - 59.1
Cruises 15.1 43.5 - 65.3
TUI Musement 5.8 7.2 - 19.4
Holiday Experiences 90.8 221.4 - 59.0
Northern Region 5.4 30.9 - 82.5
Central Region 2.5 9.0 - 72.2
Western Region 1.7 11.9 - 85.7
Markets & Airlines* 15.0 60.7 - 75.3
All other segments 32.9 39.4 - 16.5
TUI Group 138.7 321.5 - 56.9
Net pre delivery payments on aircraft - 31.6 - 42.4 + 25.5
Financial investments 21.7 56.9 - 61.9
Divestments - 237.2 - 48.8 - 386.1
Net capex and investments - 108.4 287.2 n. a.
* Including EUR5.4m for H1 2021 (previous year EUR8.9m) cash gross capex of the aircraft leasing companies, which are allocated to Markets & Airlines as a whole, but not to the individual segments Northern Region, Central Region and Western Region.
Cash gross capex in H1 FY 2021 was 56.9 % lower year-on-year, reflecting our disciplined capex management. Net capex and investments declined by EUR395.6m.
The divestments related mainly to the sale of Hapag-Lloyd Kreuzfahrten to our joint venture TUI Cruises and the sale and lease back of spares and aircraft. Previous year's divestments included the sale of two German specialist tour operators.
Assets and liabilities
Assets and liabilities
31 Mar 2021 30 Sep 2020 Var. %
Non-current assets 12,205.0 12,647.8 - 3.5
Current assets 2,621.4 2,693.4 - 2.7
Assets 14,826.4 15,341.1 - 3.4
Equity 192.7 218.1 - 11.6
Provisions 2,221.1 2,317.3 - 4.2
Financial liabilities 4,847.9 4,269.0 + 13.6
Other liabilities 7,564.7 8,536.7 - 11.4
Liabilities 14,826.4 15,341.1 - 3.4
Comments on the consolidated income statement
Unaudited condensed consolidated income statement of TUI Group for the period from
1 Oct 2020 to 31 Mar 2021
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 716.3 6,638.7 - 89.2
Cost of sales 1,518.2 6,959.7 - 78.2
Gross loss - 801.9 - 321.0 - 149.8
Administrative expenses 387.7 528.4 - 26.6
Other income 10.8 93.1 - 88.4
Other expenses 8.2 3.7 +121.6
Impairment (+) / Reversals of impairment (-) of financial assets - 29.1 23.5 n. a.
Financial income 26.9 22.4 +20.1
Financial expenses 256.0 129.7 +97.4
Share of result of joint ventures and associates - 157.2 41.9 n. a.
Impairment (+) / Reversals of impairment (-) of net investments in joint ventures and
associates
Earnings before income taxes - - 849.0 - 81.8
1,543.7
Income taxes (expense (+), income (-)) - 45.6 - 34.0 - 34.1
Group loss - - 815.0 - 83.8
1,498.1
Group loss attributable to shareholders of TUI AG - - 861.4 - 71.2
1,474.8
Group loss / profit attributable to non-controlling interest - 23.3 46.4 n. a.
The development of TUI Group's revenue and earnings in H1 FY 2021 was still materially impacted by the suspension of the vast majority of our tour operation, aviation, hotel and cruise operations as a result of the global travel restrictions in order to contain the spread of COVID-19. TUI Group's results generally also reflect the significant seasonal swing in tourism between the winter and summer travel months, however this period the impact is less evident due to the COVID-19 pandemic.
Consolidated turnover in H1 FY 2021 declined by 89.2 % year-on-year to EUR0.7bn. On a constant currency basis, turnover fell by 89.0 % year-on-year. This decline reflects the worldwide travel restrictions imposed to stem the spread of COVID-19.
Alternative performance measures
We use underlying EBIT for our management system. We define the EBIT in underlying EBIT as earnings before interest, taxes and result of the measurement of the Group's interest hedges.
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.
Reconciliation to underlying EBIT
EUR million H1 2021 H1 2020 Var. %
adjusted
Earnings before income taxes - 1,543.7 - 849.0 - 81.8
plus: Net interest expense (excluding expense / income from measurement of interest 239.6 104.7 +128.8
hedges)
plus / less: Expense (income) from measurement of interest hedges 5.6 - 1.7 n. a.
EBIT - 1,298.5 - 746.0 - 74.1
Adjustments:
less: Separately disclosed items - 26.4 - 71.1
plus: Expense from purchase price allocation 16.2 22.3
Underlying EBIT - 1,308.8 - 794.8 - 64.7
The TUI Group's operating loss adjusted for special items increased by EUR514.0m to EUR1,308.8m in H1 FY 2021. - For further details on the separately disclosed items see page 4USD in the Notes of this Report.
Key figures of income statement
H1 2021 H1 2020 Var. %
adjusted
EBITDAR - 824.0 - 161.9 - 409.0
Operating rental expenses - 7.5 - 35.0 + 78.6
EBITDA - 831.5 - 196.9 - 322.3
Depreciation/amortisation less reversals of depreciation* - 467.0 - 549.1 + 15.0
EBIT - 1,298.5 - 746.0 - 74.1
Income/Expense from the meaurement of interest hedges 5.6 - 1.7 n. a.
Net interest expense 239.6 104.7 + 128.8
EBT - 1,543.7 - 849.0 - 81.8
* on property, plant and equipment, intangible assets, financial and other assets
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Other segment indicators
Underlying EBITDA
EUR million H1 2021 H1 2020 Var. %
adjusted
Hotels & Resorts - 87.1 156.4 n. a.
Cruises - 122.3 101.0 n. a.
TUI Musement - 49.5 - 15.3 - 223.5
Holiday Experiences - 258.9 242.1 n. a.
Northern Region - 255.5 - 247.8 - 3.1
Central Region - 209.9 - 103.5 - 102.8
Western Region - 90.7 - 99.5 + 8.8
Markets & Airlines - 556.1 - 450.7 - 23.4
All other segments - 41.1 - 57.4 + 28.4
TUI Group - 856.1 - 266.0 - 221.8
EBITDA
EUR million H1 2021 H1 2020 Var. %
adjusted
Hotels & Resorts - 87.2 156.3 n. a.
Cruises - 122.3 101.0 n. a.
TUI Musement - 50.9 - 19.8 - 157.1
Holiday Experiences - 260.4 237.5 n. a.
Northern Region - 272.1 - 249.5 - 9.1
Central Region - 161.3 - 21.4 - 653.7
Western Region - 93.8 - 103.8 + 9.6
Markets & Airlines - 527.2 - 374.6 - 40.7
All other segments - 44.0 - 59.8 + 26.4
TUI Group - 831.5 - 196.9 - 322.3
Employees
31 March 2021 31 March 2020 Var. %
Hotels & Resorts 9,068 16,655 - 45.6
Cruises* 59 347 - 83.0
TUI Musement 3,856 6,983 - 44.8
Holiday Experiences 12,983 23,985 - 45.9
Northern Region 8,710 11,458 - 24.0
Central Region 7,860 9,701 - 19.0
Western Region 4,163 5,954 - 30.1
Markets & Airlines 20,733 27,113 - 23.5
All other segments 2,313 2,427 - 4.7
Total 36,029 53,525 - 32.7
* Excludes TUI Cruises (JV) employees. Cruises employees are primarily hired by external crew management agencies.
Corporate Governance
Composition of the Boards
In H1 2021 the composition of Boards of TUI AG changed as follows:
The terms of office of all ten employee representatives on the Supervisory Board and four of the ten Supervisory Board members to be elected by the Annual General Meeting ended at the close of the Annual General Meeting on 25 March 2021.
The following members were elected or re-elected to the Supervisory Board by this year's the ordinary General Meeting:
Dr. Jutta Dönges, Managing Director of Finanzagentur GmbH; Prof. Dr. Edgar Ernst, President of the German Financial Reporting Enforcement Panel (FREP); Janina Kugel, Supervisory Board member & Senior Advisor and Alexey Mordashov, Chairman of the Board of Directors of PAO Severstal. Peter Long and Angelika Gifford resigned from the Supervisory Board at the end of their regular term of office.
The ten Supervisory Board members representing the employees were already elected on 8 October 2020. Mark Muratovic and Tanja Viehl were elected to the Supervisory Board as new employee representatives. Dr Dierk Hirschel and Michael Pönipp stepped down at the end of their regular term of office.
The composition of TUI AG's Executive Board changed as follows in H1 2021:
Birgit Conix, who had been responsible for Finance on TUI AG's Executive Board since July 2018, left in December 2020. She was succeeded by Executive Board member Sebastian Ebel.
In January 2021, Peter Krueger took over a newly tailored Executive Board department as Chief Strategy Officer, combining the TUI Airlines, hotel and cruise shareholdings as well as his previous areas of responsibility TUI Strategy and M&A.
The current, complete composition of the Executive Board and Supervisory Board is published on our website, where it is permanently accessible to the public.
- www.tuigroup.com/en-en/investors/corporate-governance
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 2020.
- Details see Risk Report in our Annual Report 2020, from page 33
Actively Managed: IT Development & Strategy, Integration & Restructuring, Corporate & Social Responsibility, Information Security, Brexit
Monitored: Destination Disruption, Customer Demand, Input Cost Volatility, 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.
There is material uncertainty as to when the TUI Group's travel activities can be fully resumed. Taking into account the financing lines still available and the low operating cash inflows in the last six months due to the pandemic, there is a risk that, in the absence of an increase in new travel bookings in the coming months and related customer prepayments from summer 2021 onwards, the TUI Group will no longer have sufficient financial resources to continue its business operations without further support measures or the short-term sale of non-current assets. Overall, there is a risk that the TUI Group will not be able to continue its business operations without further external support measures and realise its assets and service its liabilities in the normal course of business.
TUI's solvency could also be jeopardized if a further suspension of covenant compliance is not achieved for the test period ending on 30 September 2021 and beyond. Furthermore, the loans from KfW (both tranches) and the initial revolving credit facility totaling EUR4.6bn will have to be refinanced in FY 2022. Due to the uncertainty regarding future business development, there is a risk that refinancing on the banking and capital markets will not be successful and that an extension of the existing financing or further government support measures will therefore be necessary.
During this period of travel suspension, the Executive Board continues to monitor the key risks, particularly heightened risks such as customer demand and those that impact the financial profile (i.e. cost volatility and cashflow) of the Group.
Additionally, TUI Group is preparing to restart operations to align to the requirements to be introduced by source markets and destinations once restrictions begin to lift. This is to ensure resumption of activities at the earliest and in the safest manner.
Unaudited condensed Consolidated Interim Financial Statements
Unaudited condensed consolidated income statement of TUI Group for the period from
1 Oct 2020 to 31 Mar 2021
EUR million Notes H1 2021 H1 2020
adjusted*
Revenue (1) 716.3 6,638.7
Cost of sales (2) 1,518.2 6,959.7
Gross loss - 801.9 - 321.0
Administrative expenses (2) 387.7 528.4
Other income (3) 10.8 93.1
Other expenses (4) 8.2 3.7
Impairment (+) / Reversals of impairment (-) of financial assets (20) - 29.1 23.5
Financial income (5) 26.9 22.4
Financial expenses (5) 256.0 129.7
Share of result of joint ventures and associates (6) - 157.2 41.9
Impairment (+) / Reversals of impairment (-) of net investments in joint ventures and (6) - 0.5 -
associates
Earnings before income taxes - - 849.0
1,543.7
Income taxes (expense (+), income (-)) (7) - 45.6 - 34.0
Group loss - - 815.0
1,498.1
Group loss attributable to shareholders of TUI AG - - 861.4
1,474.8
Group loss / profit attributable to non-controlling interest (8) - 23.3 46.4
* For further information, please refer to the section 'Correction of comparative periods'
Earnings per share
EUR H1 2021 H1 2020
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adjusted*
Basic and diluted loss / earnings per share - 1.83 - 1.46
* For further information, please refer to the section 'Correction of comparative periods'
Unaudited condensed consolidated statement of comprehensive income of TUI Group for the period from
1 Oct 2020 to 31 Mar 2021
EUR million H1 2021 H1 2020
adjusted*
Group loss - 1,498.1 - 815.0
Remeasurements of defined benefit obligations and related fund assets - 144.3 458.1
Other comprehensive income of companies measured at equity that will not be reclassified 29.9 - 44.8
Fair value gain/loss on investments in equity instruments designated as at FVTOCI - 0.5 - 8.3
Income tax related to items that will not be reclassified (expense (-), income (+)) 32.9 - 103.1
Items that will not be reclassified to profit or loss - 82.0 301.9
Foreign exchange differences 63.1 - 121.4
Cash flow hedges 53.9 - 444.4
Other comprehensive income of companies measured at equity that may be reclassified - 23.3 - 5.0
Income tax related to items that may be reclassified (expense (-), income (+)) - 22.1 106.6
Items that may be reclassified to profit or loss 71.6 - 464.2
Other comprehensive income - 10.4 - 162.3
Total comprehensive income - 1,508.5 - 977.3
attributable to shareholders of TUI AG - 1,498.1 - 984.0
attributable to non-controlling interest - 10.4 6.7
* For further information, please refer to the section 'Correction of comparative periods'
Unaudited condensed consolidated statement of financial position of TUI Group as at 31 Mar 2021
EUR million Notes 31 Mar 2021 30 Sep 2020
Assets
Goodwill (9) 3,007.9 2,914.5
Other intangible assets 552.1 553.5
Property, plant and equipment (10) 3,396.3 3,462.5
Right-of-use assets (11) 3,183.3 3,227.9
Investments in joint ventures and associates 1,092.8 1,186.7
Trade and other receivables (12) (20) 199.9 402.4
Derivative financial instruments (20) 4.5 7.4
Other financial assets (20) 10.1 10.6
Touristic payments on account 128.0 149.9
Other non-financial assets 381.8 423.2
Income tax assets 9.6 9.6
Deferred tax assets 238.7 299.6
Non-current assets 12,205.0 12,647.8
Inventories 71.5 73.2
Trade and other receivables (12) (20) 386.9 486.3
Derivative financial instruments (20) 29.4 88.9
Other financial assets (20) 12.9 14.9
Touristic payments on account 512.1 555.5
Other non-financial assets 132.5 113.4
Income tax assets 71.8 70.9
Cash and cash equivalents (20) 1,399.7 1,233.1
Assets held for sale (13) 4.7 57.2
Current assets 2,621.4 2,693.4
Total assets 14,826.4 15,341.1
Unaudited condensed consolidated statement of financial position of TUI Group as at 31 Mar 2021
EUR million Notes 31 Mar 2021 30 Sep 2020
Equity and liabilities
Subscribed capital 1,099.4 1,509.4
Capital reserves 5,190.4 4,211.0
Revenue reserves - 7,673.2 - 6,168.8
Silent participation 920.0 -
Equity before non-controlling interest - 463.4 - 448.4
Non-controlling interest 656.0 666.5
Equity (19) 192.7 218.1
Pension provisions and similar obligations (14) 1,027.5 983.6
Other provisions 696.4 912.1
Non-current provisions 1,724.0 1,895.7
Financial liabilities (15), (20) 4,578.9 3,691.7
Lease liabilities (16) 2,663.8 2,712.6
Derivative financial instruments (20) 19.0 44.0
Other financial liabilities (17), (20) 5.7 7.2
Other non-financial liabilities 200.3 198.4
Income tax liabilities 80.5 61.3
Deferred tax liabilities 67.2 192.7
Non-current liabilities 7,615.6 6,908.1
Non-current provisions and liabilities 9,339.6 8,803.7
Pension provisions and similar obligations (14) 30.4 31.4
Other provisions 466.8 390.3
Current provisions 497.1 421.6
Financial liabilities (15), (20) 268.9 577.3
Lease liabilities (16) 714.1 687.3
Trade payables (20) 1,190.4 1,611.5
Derivative financial instruments (20) 72.9 274.8
Other financial liabilities (17), (20) 396.0 422.0
Touristic advance payments received (18) 1,664.4 1,770.1
Other non-financial liabilities 430.0 447.8
Income tax liabilities 60.3 82.4
Current liabilities 4,797.0 5,873.2
Liabilities related to assets held for sale - 24.5
Current provisions and liabilities 5,294.1 6,319.3
Total equity, liabilities and provisions 14,826.4 15,341.1
Unaudited condensed consolidated statement of changes in Group equity of TUI Group for the period from
1 Oct 2020 to 31 Mar 2021
Subscribed Capital Revenue Silent Equity before Non-controlling
EUR million capital reserves reserves participation non-controlling interest Total
interest
Balance as at 30 Sep 1,509.4 4,211.0 - - - 448.4 666.5 218.1
2020 6,168.8
Dividends - - - - - - 0.1 - 0.1
Share-based payment - - 0.5 - 0.5 - 0.5
schemes
Conversion of - 34.5 - - 34.5 - 34.5
convertible bonds
Capital increase 509.0 25.9 - 920.0 1,454.9 - 1,454.9
Capital reduction - 919.0 919.0 - - - - -
Other - - - 6.9 - - 6.9 - - 6.9
Group loss - - - - - 1,474.8 - 23.3 -
1,474.8 1,498.1
Foreign exchange - - 50.2 - 50.2 12.9 63.1
differences
Financial assets at - - - 0.5 - - 0.5 - - 0.5
FVTOCI
Cash Flow Hedges - - 53.9 - 53.9 - 53.9
Remeasurements of
defined benefit - - - 144.3 - - 144.3 - - 144.3
obligations and
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related fund assets
Other comprehensive
income of joint - - 6.7 - 6.7 - 6.7
ventures and
associates
Taxes attributable to
other comprehensive - - 10.8 - 10.8 - 10.8
income
Other comprehensive - - - 23.2 - - 23.2 12.9 - 10.3
income
Total comprehensive - - - - - 1,498.0 - 10.4 -
income 1,498.0 1,508.4
Balance as at 31 Mar 1,099.4 5,190.4 - 920.0 - 463.4 656.0 192.7
2021 7,673.2
Unaudited condensed consolidated statement of changes in Group equity of TUI Group for the period from
1 Oct 2019 to 31 Mar 2020
Subscribed Capital Revenue Silent Equity before Non-controlling
EUR million capital reserves reserves participation non-controlling interest Total
interest
Balance as at 30 Sep 1,505.8 4,207.5 - - 3,454.2 711.4 4,165.6
2019 (adjusted) 2,259.2
Adoption of IFRS 16 - - - 8.0 - - 8.0 - - 8.0
Balance as at 1 Oct 1,505.8 4,207.5 - - 3,446.2 711.4 4,157.6
2019 2,267.2
Dividends - - - 318.1 - - 318.1 - 0.2 - 318.3
Share-based payment - - 1.6 - 1.6 - 1.6
schemes
Effects on the
acquisition of - - - 0.3 - - 0.3 - 1.3 - 1.6
non-controlling
interest
Group loss (adjusted*) - - - 861.4 - - 861.4 46.4 - 815.0
Foreign exchange
differences - - - 81.7 - - 81.7 - 39.7 - 121.4
(adjusted*)
Financial assets at - - - 8.3 - - 8.3 - - 8.3
FVTOCI
Cash Flow Hedges - - - 444.4 - - 444.4 - - 444.4
Remeasurements of
defined benefit - - 458.1 - 458.1 - 458.1
obligations and
related fund assets
Other comprehensive
income of joint - - - 49.8 - - 49.8 - - 49.8
ventures and
associates
Taxes attributable to
other comprehensive - - 3.5 - 3.5 - 3.5
income
Other comprehensive - - - 122.6 - - 122.6 - 39.7 - 162.3
income (adjusted*)
Total comprehensive - - - 984.0 - - 984.0 6.7 - 977.3
income (adjusted*)
Balance as at 31 Mar 1,505.8 4,207.5 - - 2,145.3 716.6 2,861.9
2020 3,568.0
* For further information, please refer to the section 'Correction of comparative periods'
Unaudited condensed consolidated cash flow statement of TUI Group for the period from
1 Oct 2020 to 31 Mar 2021*
EUR million Notes H1 2021 H1 2020*
Group loss - 1,498.1 - 815.0
Depreciation, amortisation and impairment (+) / write-backs (-) 467.3 549.7
Other non-cash expenses (+) / income (-) 127.8 - 52.3
Interest expenses 251.4 121.3
Dividends from joint ventures and associates 10.0 6.5
Profit (-) / loss (+) from disposals of non-current assets - 3.1 - 88.7
Increase (-) / decrease (+) in inventories 4.4 - 2.4
Increase (-) / decrease (+) in receivables and other assets 540.2 409.0
Increase (+) / decrease (-) in provisions - 235.7 - 132.7
Increase (+) / decrease (-) in liabilities (excl. financial liabilities) - 1,140.1 - 723.8
Cash outflow from operating activities (23) - 1,476.0 - 728.4
Payments received from disposals of property, plant and equipment and intangible assets 228.1 101.0
Payments received from disposals of consolidated companies 31.3 41.4
(less disposals of cash and cash equivalents due to divestments)
Payments received from the disposals of other non-current assets 23.5 20.8
Payments made for investments in property, plant and equipment and intangible assets - 150.0 - 372.7
Payments made for investments in consolidated companies - 0.7 - 41.2
(less cash and cash equivalents received due to acquisitions)
Payments made for investments in other non-current assets - 22.2 - 13.0
Cash inflow / cash outflow from investing activities (23) 110.0 - 263.7
Payments received from capital increases 1,488.9 - 1.0
Payments made for interest increase in consolidated companies - - 1.6
Dividend payments
TUI AG - - 318.1
subsidiaries to non-controlling interest - - 0.6
Payments received from the raising of financial liabilities 844.2 1,085.1
Payments made for redemption of loans and financial liabilities - 314.1 - 70.4
Payments made for principal of lease liabilities - 290.6 - 330.4
Interest paid - 217.2 - 104.4
Cash inflow from financing activities (23) 1,511.2 258.6
Net change in cash and cash equivalents 145.3 - 733.6
Development of cash and cash equivalents (23)
Cash and cash equivalents at beginning of period 1,233.1 1,747.6
Change in cash and cash equivalents due to exchange rate fluctuations 21.4 29.8
Net change in cash and cash equivalents 145.3 - 733.6
Cash and cash equivalents at end of period 1,399.7 1,043.9
of which included in the balance sheet as assets held for sale - 21.1
* The presentation was changed to present more detailed information on cashflows in line with the presentation in the
annual report.
Notes
General
The TUI Group and its major subsidiaries and shareholdings operate 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 TUI AG are traded on the London Stock Exchange and the Hanover and Frankfurt Stock Exchanges. In this document, the term "TUI Group" represents the consolidated group of TUI AG and its direct and indirect investments. Additionally, the unaudited condensed consolidated interim financial statements of TUI Group are referred to as "Interim Financial Statements", the unaudited condensed consolidated income statement of TUI Group is referred to as "income statement", the unaudited condensed consolidated statement of financial position of TUI Group is referred to as "statement of financial position", the unaudited condensed consolidated statement of comprehensive income of TUI Group is referred to as "statement of comprehensive income" and the unaudited condensed consolidated statement of changes in TUI Group equity is referred to as "statement of changes in equity".
The Interim Financial Statements cover the period from 1 October 2020 to 31 March 2021. The Interim Financial Statements are prepared in euros. Unless stated otherwise, all amounts are stated in million euros (EURm).
The Interim Financial Statements were released for publication by the Executive Board of TUI AG on 10 May 2021.
Accounting principles
Declaration of compliance
The consolidated half-year financial report for the period ended 31 March 2021 comprise the Interim Financial Statements and the Interim Management Report in accordance with section 115 of the German Securities Trading Act (WpHG).
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The Interim 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.
In accordance with IAS 34, the Interim Financial Statements are published in a condensed form compared with the consolidated annual financial statements and should therefore be read in combination with TUI Group's consolidated financial statements for financial year 2020. The Interim Financial Statements were reviewed by the Group's auditors.
Going concern reporting in accordance with the UK Corporate Governance Code The TUI Group covers its day-to-day working capital requirements through cash on hand, balances and borrowings from banks. The TUI Group's net debt (financial debt plus lease liabilities less cash and cash equivalents and less short-term interest-bearing cash investments) as of March 31, 2021 was EUR6.8bn.
Net debt EUR million 31 Mar 2021 30 Sep 2020 Var. % Financial debt 4.847,9 4.269,0 + 13,6 Lease liabilities 3.377,8 3.399,9 - 0,7 Cash and cash equivalents 1.399,7 1.233,1 + 13,5 Short-term interest-bearing investments 12,9 14,9 - 13,4 Net debt 6.813,1 6.420,9 + 6,1
The global travel restrictions to contain COVID-19 had a strong negative impact on the Group's earnings and liquidity development from the end of March 2020. To cover the resulting liquidity requirements, the Group also received financing measures from the Federal Republic of Germany in fiscal 2020, in particular in the form of a credit line from KfW totalling EUR2.85bn and an option bond from the Economic Stabilization Fund (WSF) in the amount of EUR150m with option rights to around 58.7m shares. The option bond was issued to the Economic Stabilization Fund on 1st October 2020. In the second quarter of fiscal 2021, TUI secured further funds from a further financing package of EUR1.8bn agreed with Unifirm Ltd, a banking consortium and KfW as well as the Economic Stabilization Fund (WSF).
The preconditions for all components of the third financing package were created at the Extraordinary General Meeting of TUI AG on January 5, 2021. This included in particular the resolution to reduce the capital stock from EUR2.56 per share to EUR1.00 per share and the subsequent capital increase of around EUR509m.
The WSF and TUI AG subsequently signed the agreement on two silent participations totalling EUR1.091bn. The WSF measures comprise a silent participation convertible into shares in TUI of EUR420m (Silent Participation I) and a second silent participation of EUR671m. At March 31, 2021, silent Participation I was fully paid in and silent participation II in the amount of EUR500m. In the IFRS consolidated financial statements, the silent participations are shown as equity due to their nature and are therefore not included in the Group's net debt. As part of the third financing package, KfW also participated in an additional loan facility together with private banks in the amount of EUR200m.
TUI AG successfully completed its capital increase on January 28, 2021. The gross issue proceeds amounted to around EUR568m. The Group's share capital increased nominally by just under EUR509m to around EUR1.099bn.
TUI used the funds from the capital increase to repay the outstanding senior bond (October 2016 - October 2021) of EUR300m ahead of schedule on February 23, 2021, in accordance with the terms and conditions of the bond. In accordance with the agreement on the loans granted by KfW under the three financing packages, the early redemption of the senior bond extended their maturities. KfW's loans under the stabilization packages totalling EUR3.05bn will therefore now mature in July 2022.
The revolving credit facility (RCF) and the KfW credit line of TUI AG are subject to compliance with certain financial targets (covenants) for debt coverage and interest coverage. The review of these covenants is currently suspended and will resume in September 2021. Testing will be based on the four most recent reported quarters prior to September 2021. In light of the ongoing pressures from the COVID 19 pandemic, we are seeking a covenant suspension (referred to as a covenant holiday) for the testing period ending September 30, 2021 and beyond under the RCF.
On April 16, 2021, TUI AG successfully completed the issuance of a convertible bond. The unsubordinated and unsecured convertible bond matures in 2028 and has a total nominal amount of EUR400m. Unless the convertible bonds are converted, redeemed or repurchased and retired prior to maturity, they will be redeemed at their nominal value on April 16, 2028. Investors have the option to convert the convertible bonds into registered shares of TUI.
The successfully placed convertible bond is intended in particular to initiate the refinancing of loans from the Corona stabilization packages and also to strengthen the liquidity available in the short term. Additional funds were generated in H1 2021 from the sale and leaseback of aircraft and spare parts. We also expect cash inflows from hotel projects in the second half of the year.
Currently, the TUI Group continues to be affected by the negative financial impact of the COVID 19 pandemic. At the time of preparing this report (May 10, 2021), it is not foreseeable when the international travel restrictions will be lifted again and when we will be able to fully resume our travel program. In particular, it is not possible at this time to reliably predict how quickly vaccination against the COVID-19 virus can be completed in each country, whether new variants of the virus will emerge, and when medications will be available to treat COVID-19 disease. Also, a change in booking behavior cannot be ruled out at this time.
Taking into account the financing lines still available and the low operating cash inflows in the last six months due to the pandemic, there is a risk that, in the absence of an increase in new travel bookings in the coming months and related customer prepayments from summer 2021, the TUI Group will no longer have sufficient financial resources to continue its business operations without further support measures or the short-term sale of non-current assets. Overall, there is a risk that the TUI Group will not be able to continue its business operations without further external support measures and to realize its assets and service its liabilities in the normal course of business.
TUI's solvency could also be jeopardized if a further suspension of covenant compliance is not achieved for the test period ending on September 30, 2021 and beyond. Furthermore, the loans from KfW (both tranches) and the initial revolving credit facility totalling EUR4.6bn will have to be refinanced in fiscal 2022. Due to the uncertainty surrounding future business development, there is a risk that refinancing on the banking and capital markets may not be successful and an extension of the existing financing or further government support measures will be necessary.
The Executive Board assumes that the successful implementation of the measures described is possible. Due to the dependence of the TUI Group's solvency on the further development of travel bookings, risks with regard to the refinancing of the external loans and the necessary further suspension of compliance with the covenants as well as the uncertainty with regard to the future development due to the COVID 19 pandemic, there are significant doubts about the TUI Group's ability to continue its business operations. In this respect, there is a material uncertainty with regard to the Group's ability to continue as a going concern.
Based on the assumptions described above, we expect that, despite the existing risks, the TUI Group currently has and will continue to have sufficient funds, both from borrowings and from operating cash flows, to meet its payment obligations for the foreseeable future and to continue as a going concern.
In accordance with Regulation 30 of the UK Corporate Governance Code, the Board of Directors confirms that, in its opinion, it is appropriate to prepare the Interim Financial Statements on a going concern basis.
Accounting and measurement methods
The preparation of the Interim Financial Statements requires management to make estimates and judgements that affect the reported values of assets, liabilities and contingent liabilities as at the balance sheet date and the reported values of revenues and expenses during the reporting period.
At the end of the financial year 2020 TUI assumed that the travel activities could be resumed in the first half of the financial year 2021. Due to the later resumption of the travel business in comparison to the assumptions made at the financial year end 2020, there are indications that certain assets of TUI Group companies may be impaired. Accordingly, the assets of TUI Group, in particular the business entities carrying goodwill, as well as property, plant and equipment and shareholdings were tested for impairment as at 31 March 2021.
The impairment test required estimates and judgement regarding the underlying assumptions, in particular the weighted average cost of capital (WACC) used as a discounting basis, the growth rate in perpetuity and the forecasts for future cash flows including the underlying budget assumptions based on corporate planning. Changes in these assumptions may have a substantial impact on the recoverable amount and the level of a potential impairment.
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The basic assumption of our medium-term corporate planning is still that the travel activity can be resumed in the summer of the financial year 2021. After a further recovery in financial year 2022 it is our unchanged expectation, that the Group's business will reach at the latest in the financial year 2023 the level of the years before the outbreak of the COVID-19-pandemic. In comparison to the assumptions at financial year end 2020 it is now expected that the resumption of the business will happen later in the financial year 2021 and the level of travel activity will be lower especially as there was nearly no business from 1 October 2020 to 31 March 2021.
For information on the calculation of the cost of capital and growth rate, please refer to the section "Goodwill".
The accounting and measurement methods adopted in the preparation of the Interim Financial Statements as at 31 March 2021 are materially consistent with those followed in preparing the annual consolidated financial statements for the financial year ended 30 September 2020, with the exception of the initial application of new or amended standards, as outlined below.
The income taxes were recorded based on the best estimate of the weighted average tax rate that is expected for the whole financial year.
Newly applied standards
Since the beginning of financial year 2021, TUI Group has initially applied the following standards and interpretations, amended or newly issued by the IASB and endorsed by the EU, on a mandatory basis:
New applied standards in financial year 2021
Standard Applicable Amendments Impact on financial statements
from
Materiality is a key concept in preparing
financial statements according to IFRS. The
Amendments to IAS 1 amendments refine the definition of
& IAS 8 1 Jan 2020 'material' and clarify how to apply No impact.
Definition of materiality. The amendments also align the
Material definition of 'material' and ensure
consistency in the application of that
concept across all IFRS Standards.
The revised Conceptual Framework includes
Framework revised definitions of an asset and a
Amendments to liability, and new guidance on measurement
References to the 1 Jan 2020 and derecognition, presentation and No impact.
Conceptual disclosure. References to the Conceptual
Framework in IFRS Framework in existing Standards are updated.
Standards The revised Conceptual Framework is not
subject to the Endorsement Process.
The assessment process used to
Amendments to The amendments to IFRS 3 clarify the determine whether an acquisition of
definition of a business and make it easier a subsidiary falls into the scope of
IFRS 3 1 Jan 2020 for entities to determine whether an IFRS 3 was revised in the period
Definition of a acquisition transaction results in under review. As a result,
business recognition of a group of assets or a accounting for acquisitions of hotel
business. companies, in particular, will now
be assessed on this revised basis.
The amendments relate to the provision of
relief from potential consequences arising
Amendments to IFRS from the reform of interbank offered rates
9, IAS 39 and IFRS (IBORs) such as LIBOR on companies' financial
7 reporting. They are intended to secure the
Interest Rate 1 Jan 2020 continuation of hedging relationships despite Not material.
Benchmark Reform the replacement of current interest rates
(Phase 1) with alternative rates. Entities also have to
disclose the extent to which their hedges are
affected by the interest rate benchmark
reform.
The amendments published by the IASB on 28
May 2020 provide lessees with an exemption
Amendments to from assessing whether a COVID-19-related
IFRS 16 rent concession is a lease modification. No impact. TUI does not apply the
COVID-19-Related 1 Jun 2020 Lessees applying the exemption have to new practical expedient.
Rent Concessions account for the rent concessions as if they
were not lease modifications. The amendments
are available for rent concessions reducing
lease payments due on or before 30 June 2021.
Correction of comparative periods
In the financial year 2020 the functional currency of companies in Turkey changed. Beginning with 1 October 2019 the Euro was determined as functional currency as opposed to the Turkish Lira before.
In the consolidated financial statements for the financial year ending 30 September 2020 the financial figures of the affected companies were reported for the first time based on Euro. In the Interim Financial Statements per 31 March 2020 they reported erroneously based on the functional currency Turkish Lira. As the exchange rate of the Turkish Lira in comparison to the Euro changed considerably during the financial year 2020 the comparatives to the income statement, to the earnings per share, to the statement of comprehensive income and to the statement of changes in equity for the period from 1 October 2019 to 31 March 2020 have been corrected accordingly. The restated amounts are presented below.
Restated items of the unaudited condensed consolidated income statement of TUI Group for the period from 1 Oct 2019 to
31 Mar 2020
EUR million before Change in functional adjusted
adjustment currency
Cost of sales 6,970.9 - 11.2 6,959.7
Gross loss - 332.2 11.2 - 321.0
Financial expenses 150.6 - 20.9 129.7
Earnings before income taxes - 881.0 32.1 - 849.0
Income taxes - 35.3 1.3 - 34.0
Group loss - 845.7 30.8 - 815.0
Group loss for the year attributable to shareholders of TUI - 892.2 30.8 - 861.4
AG
Reconciliation to the adjusted earnings per share of the TUI Group for the period from
1 Oct 2019 to 31 Mar 2020
EUR before adjustment change in functional currency adjusted
Basic and diluted earnings per share - 1.51 0.05 - 1.46
Restated items of the unaudited condensed consolidated statement of comprehensive income of TUI Group for the period
from 1 Oct 2019 to 31 Mar 2020
EUR million before adjustment Change in functional currency adjusted
Group loss - 845.8 30.8 - 815.0
Foreign exchange differences - 160.2 38.8 - 121.4
Items that may be reclassified to profit or loss - 503.0 38.8 - 464.2
Other comprehensive income - 201.1 38.8 - 162.3
Total comprehensive income - 1,046.9 69.6 - 977.3
attributable to shareholders of TUI AG - 1,053.6 69.6 - 984.0
Corresponding to the corrections of amounts in the statement of comprehensive income in the statement of changes equity the revenue reserves increased by EUR69.6m from EUR-3,637.6m to EUR-3,568.0m, the equity before non-controlling interest increased from EUR2,075.7m to EUR2,145.3m and the total equity increased from EUR2,792.3m to EUR2,861.9m.
Group of consolidated companies
The Interim Financial Statements include all material subsidiaries over which TUI AG has control. Control requires TUI AG to have decision-making power over the relevant activities, be exposed to variable returns and have entitlements regarding the returns, or have the ability to affect the level of those variable returns through its decision-making power.
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