DJ TUI AG: INTERIM REPORT Q1 2023 1 OCTOBER 2022 - 31 DECEMBER 2022
TUI AG (TUI) TUI AG: INTERIM REPORT Q1 2023 1 OCTOBER 2022 - 31 DECEMBER 2022 14-Feb-2023 / 07:00 CET/CEST Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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TUI GROUP
Interim report Q1 2023
1 October 2022 - 31 DECEMBER 2022
Content
Interim Management Report
Summary
Report on changes in expected development
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
Notes to the unaudited condensed consolidated Statement of Financial Position
Responsibility Statement
Review Report
Cautionary statement regarding forward-looking statements
Financial calendar
Contacts
This Interim Financial Report of the TUI Group was prepared for the reporting period from 1 October 2022 to 31 December 2022.
Interim Management Report
Summary
Q1 2023 underlying EBIT of EUR-153.0m delivering a strong improvement year-on-year (Q1 2022: EUR-273.6m) with an encouraging booking momentum across both Winter and Summer seasons.
-- 3.3m customers departed in the quarter, an increase of 1.0m customers versus the prior year and 93% of Q12019 customer levels on a like for like basis1. As a result, average load factor for the quarter was 85% (Q1 2022:Load factor 79%).
-- Group revenue of EUR3.8bn, was up EUR1.4bn on the prior year (Q1 2022: EUR2.4bn), reflecting the strength ofdemand and a return to a restriction free travel environment achieving levels above pre-pandemic levels (Q1 2019:EUR3.7bn).
-- Q1 Group underlying EBIT at EUR-153.0m, up by EUR120.6m and thereby close to half the prior year loss (Q1 2022: EUR-273.6m loss), with almost all segments contributing to the strong improvement.? Hotels & Resorts reported a third consecutive quarter above 2019 levels and was up year-on-year,supported by good operational performances across the hotels businesses. - The recovery in Cruises continues with the segment achieving a third positive quarter since the startof the pandemic. As a result, the business recorded a strong improvement against last year driven by highervolumes as well as improved occupancies with a full fleet back in operation. - In Markets & Airlines results were well ahead of last year supported by higher prices and volumeswith Central and Western Regions above 2019 levels.
-- Net debt of EUR-5.3bn as of 31 December 2022 was broadly in line with prior year (31 December 2021:EUR-5.1bn).
-- We re-confirm our expectations to increase underlying EBIT significantly for financial year 20232supported by an encouraging booking momentum.
-- 8.7m bookings3 have been taken across both the Winter and Summer seasons whereby Summer is, as usual, atan early booking stage.
-- The start into the new year has seen significant booking momentum with record booking days online in boththe UK and Germany. Volumes overall in the last four weeks are now above pre-pandemic levels at +5% for Winter 2022/23 and +10% for Summer 2023, with higher prices, underlining the popularity of our product offering and atestament to the importance of travel for our customers.
-- Our commitment is to be industry-leading in achieving net-zero emissions and we aim to achieve thistarget across our operations and supply chain by 2050 at the latest. Our 2030 Science based targets have beenvalidated by the SBTi for our Airline, Cruise and Hotel operations and are detailed below.
1 Excluding businesses sold and discontinued since 2019
^2 Based on constant currency. In view of the effects from the war in Ukraine, the assumption for underlying EBIT is subject to considerable
uncertainty. Amongst others, the greatest area of uncertainty will be the impact on consumer confidence, should there be further cost inflation
volatility and/or an escalation of the war in Ukraine.
3 Bookings up to 5 February 2023 relate to all customers whether risk or non-risk and includes amendments and voucher re-bookings.
Sustainability as opportunity
-- For TUI Group, sustainability covering all three areas of economic, environmental and socialsustainability is a fundamental management principle and a cornerstone of our strategy for continually enhancingthe value of our company. We firmly believe that sustainable development is critical to long-term economic success.Together with our many partners around the world, we are actively committed to shaping a more sustainable futurefor tourism.
-- We already operate some of the most efficient aircraft and cruise ships. Our commitment is to beindustry-leading in achieving net-zero emissions and we aim to achieve this target across our operations and supplychain by 2050 at the latest.
-- TUI has committed to the Science Based Targets initiative (SBTi) to reduce emissions in line with thelatest climate science by 2030 for airlines, cruises and hotels. The independent organisation has now checked andvalidated our reduction targets. It confirmed that they are in line with the latest climate science. Our targetsare: - Reduction of airline CO2e per revenue passenger kilometer by 24% by 20301. - Reduction of absolute CO2e from our own cruise operations by 27.5% by 20301. - Reduction of absolute CO2e from TUI Hotels & Resorts own operations by 46.2% by 20302.
1 Baseline 2019. Level of ambition well below 2Oc. CO2e = CO2 equivalents. Apart from carbon dioxide (CO2), they include the other five greenhouse gases impacting the climate as listed in the Kyoto Protocol: methane (CH4), nitrous oxide (N2O), hydro-fluorocarbons (HFCs), perfluorocarbons (PFCs) and Sulphur hexafluoride (SF6).
2 Baseline 2019. Level of ambition 1.5Oc
TUI Group - financial highlights EUR million Q1 2023 Q1 2022 Var. % Var. % at constant currency Revenue 3,750.5 2,369.2 + 58.3 + 59.2 Underlying EBIT1 Hotels & Resorts 71.9 61.1 + 17.7 + 20.9 Cruises 0.2 - 31.7 n. a. + 100.0 TUI Musement - 13.0 - 12.7 - 1.9 + 3.9 Holiday Experiences 59.2 16.7 + 254.9 + 269.8 Northern Region - 122.0 - 171.7 + 29.0 + 24.7 Central Region - 28.3 - 55.0 + 48.6 + 46.0 Western Region - 43.7 - 32.4 - 35.0 - 40.2 Markets & Airlines - 193.9 - 259.0 + 25.1 + 21.1 All other segments - 18.3 - 31.3 + 41.6 + 41.5 TUI Group - 153.0 - 273.6 + 44.1 + 41.2 EBIT1 - 158.7 - 271.4 + 41.5 Underlying EBITDA 58.3 - 65.4 n. a. EBITDA2 58.0 - 55.5 n. a. Group loss - 231.8 - 386.5 + 40.0 Earnings per share EUR - 0.14 - 0.27 + 48.1 Net capex and investment 149.0 53.4 + 179.0 Equity ratio (31 Dec)3 % 0,7 2,5 - 1.8 Net debt (31 Dec) - 5,259.9 - 5,069.6 + 3.8 Employees (31 Dec) 49,979 43,162 + 15.8
Differences may occur due to rounding.
^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 17.
2 EBITDA is defined as earnings before interest, income taxes, goodwill impairment and amortisation and write-ups of other intangible assets, depreciation and write-ups of property, plant and equipment, investments and current assets.
3 Equity divided by balance sheet total in %, variance is given in percentage points.
All change figures refer to the same period of the previous year, unless otherwise stated.
The present Interim Report for Q1 2023 is based on TUI Group's reporting structure set out in the Consolidated Financial Statements of TUI AG as at 30 September 2022. See TUI Group Annual Report 2022 from page 27.
Trading update - Encouraging booking momentum across both Winter 2022/23 and Summer 2023
Markets & Airlines
-- 8.7m bookings1 have been taken across Winter 2022/23 and Summer 2023 with an encouraging developmentacross both seasons.
-- The start into the new year has seen significant booking momentum with record booking days online in boththe UK and Germany. Volumes overall in the last four weeks are now above pre-pandemic at higher prices, underliningthe popularity of our product offering and a testament to the importance of travel for our customers. Based on thecurrent trend, capacity is expected to be close to pre-pandemic levels.
Winter 2022/23
-- To date 4.0m bookings have been taken at this stage of the Winter season with 85% of the programme soldwhich is broadly in line with Winter 2018/19 levels.
-- Winter 2022/23 bookings stand at 87% of Winter 2018/19 levels up against the 84% we published as part ofour FY22 full-year announcement on 14 December 2022, highlighting the positive booking development in recent weeksand the trend towards a higher share of short-term bookings with volumes ahead of Winter 2018/19 in the last fourweeks at +5%. Against Winter 2021/22, bookings are up strongly at +44%, supported by an improved tradingenvironment compared to last year.
-- Winter ASP is +29% higher against Winter 2018/19 slightly ahead of the +28% reported in December.Compared to prior year ASP is up +8% which will help to soften the impact from FX volatility and the current higherinflationary environment.
-- In UK bookings are trading in line with capacity assumptions with ASP at +25% versus Winter 2018/19.
-- The Canaries, Egypt, Mainland Spain, Cape Verde and Mexico form a key part of our offering for the Winterseason.
Summer 2023
-- Current indications for the Summer season are positive. Summer 2023 bookings of 4.7m are at an earlystage at 30% of the overall programme sold with the shorter-term booking trend continuing into Summer.
-- Bookings are up +20% year-on-year and at 89% of pre-pandemic levels.
-- Against Summer 2022, ASP for the Summer season is at +2% and excluding Summer 2022 re-bookingsrolled-forward from previous seasons which included booking incentives, at +6%, highlighting customers continuedwillingness to prioritise spend on travel and experiences. Against pre-pandemic levels ASP is up +24%.
-- Momentum has continued to build in the last four weeks with volumes up +50% versus Summer 2022 and abovepre-pandemic levels at +10%, supported by stronger prices at +12% year-on-year and +27% versus Summer 2019.
-- Spain, Greece and Turkey continue to be popular Summer destinations for our customers.
Holiday Experiences
-- Hotels & Resorts - Number of available bed nights for H12 is slightly ahead of prior year at +1%, with H2at +4% versus 2022. Booked occupancy is up year-on-year at +15%pts for H1 and +7%pts for H2 driven by Riu andRobinson hotels. Average daily rates are well ahead year-on-year for H1 and encouraging for H2, with Riu drivingthe strong performance. Key destinations in H1 are the Caribbean, the Canaries and Cape Verde with the Canaries,the Balearics, Greece and Turkey important destinations in H2.
-- Cruises - Our three brands are currently operating a full fleet of in total sixteen ships. As a result,available passenger cruise days are significantly up +37%3 year-on-year for H1 supported by the return to arestriction free travel environment, whilst H2 available passenger cruise days are slightly behind at -1% due tothe delivery of Mein Schiff Herz from TUI Cruises to Marella and subsequent refurbishment. Occupancy rates are up+40%pts. for H1 and +14%pts. for H2, developing, for many Cruises, close to the peaks last seen in 2019. 2023booked ticket rates for many cruises are above pre-pandemic levels.
-- TUI Musement - Our tours and activity business continues its expansion benefitting from our integratedmodel with a global product offering in cities as well as sun and beach locations, and growth of third-party salesthrough the TUI Musement platform. The transfer business, providing support to our guests in their destination, isexpected to develop in line with our Markets & Airlines volumes in 2023. Sales to date for our Experiencesbusiness, providing excursions, activities and tickets, are up 70%3 year-on-year for H1 and up mid-double digitpercent for H2. The growth in Experiences is driven by the restriction free travel environment, enlarged productoffering and our diversified distribution via TUI, B2C and B2B.
1 Bookings up to 5 February 2023 relate to all customers whether risk or non-risk and includes amendments and voucher re-bookings.
2 2023 trading data as of 5 February 2023 excluding Blue Diamond
3 2023 trading data as of 5 February 2023
Net debt
31 December 2022 net debt position of EUR-5.3bn was broadly in line with prior year (31 December 2021: EUR-5.1bn).
Strategic priorities
The TUI Group's strategy outlined in the Annual Report 20221 will be continued in the current financial year.
TUI's strategy aims to deliver growth in both Holiday Experiences and Markets & Airlines, embedded in one central customer ecosystem, underpinned by our sustainability agenda and our people. Our Holiday Experiences business strategy focuses on asset-right growth in differentiated content and expanding the customer base with multi-channel distribution. Having accelerated our strategic transformation of Markets & Airlines during the pandemic, and fully implemented our Global Realignment Programme, our business strategy is now focused on profitable growth. This will be achieved by offering more product choice, growing our customer ecosystem into untapped segments, and increasing customer value. This includes increasing the volume and proportion of dynamically sourced packages, as well as significantly increasing our component offer in accommodation only and flight only.
We also aim to further improve our cash position focusing on optimising working capital and cash from operations and maintaining disciplined capital expenditure supported by asset right growth. Besides this, we will continue reducing our debt and German government exposure with the aim to return to a solid and healthy balance sheet and improve our credit rating. On 13 December 2022, TUI has concluded an agreement with the German Economic Stabilization Fund ("WSF") on the repayment of stabilisation measures2.
FY23 Assumptions3 - Based on the encouraging booking momentum across both seasons with Summer at an early stage, we confirm our expectations for FY23 that underlying EBIT will increase significantly.
Mid-term ambitions - We have a clear strategy to accelerate profitable market growth. Our mid-term 2025/26 ambitions are for underlying EBIT to significantly build on EUR1.2bn4 and also have a target to return to a gross leverage ratio5 of well below 3.0x.
1 Details on our strategy see TUI Group Annual Report 2022 from page 23.
2 Details on our repayment agreement see page in this Report.
3 Based on constant currency. In view of the effects from the war in Ukraine, the assumption for underlying EBIT is subject to considerable
uncertainty. Amongst others, the greatest area of uncertainty will be the impact on consumer confidence, should there be further cost inflation
volatility and/or an escalation of the war in Ukraine.
4 FY19 underlying EBIT of EUR893m including EUR293m Boeing Max cost impact.
5 Defined as as gross debt (Financial liabilities incl. lease liabilities and net pension obligation) divided by Reported EBITDA; pre impact of
potential capital increase.
Report on changes in expected development
We re-confirm our expectation set out in the Annual Report 2022 for a significant improvement in TUI Group's underlying EBIT in financial year 20231 compared with 2022.
We continue to consider the remaining assumptions for the financial year 2023 made in the Annual Report 2022 also to be valid2. See also TUI Group Annual Report 2022 from page 52 onwards.
1 Based on constant currency
2 Pre impact of a potential capital increase
Consolidated earnings
Revenue EUR million Q1 2023 Q1 2022 Var. % Hotels & Resorts 210.9 198.3 + 6.3 Cruises 115.2 34.2 + 237.3 TUI Musement 141.4 66.3 + 113.3 Holiday Experiences 467.5 298.8 + 56.5 Northern Region 1,343.1 652.2 + 105.9 Central Region 1,351.1 985.1 + 37.1 Western Region 534.9 416.1 + 28.6 Markets & Airlines 3,229.1 2,053.4 + 57.3 All other segments 53.8 17.0 + 217.1 TUI Group 3,750.5 2,369.2 + 58.3 TUI Group (at constant currency) 3,772.1 2,369.2 + 59.2 Underlying EBIT EUR million Q1 2023 Q1 2022 Var. % Hotels & Resorts 71.9 61.1 + 17.7 Cruises 0.2 - 31.7 n. a. TUI Musement - 13.0 - 12.7 - 1.9 Holiday Experiences 59.2 16.7 + 254.9 Northern Region - 122.0 - 171.7 + 29.0 Central Region - 28.3 - 55.0 + 48.6 Western Region - 43.7 - 32.4 - 35.0 Markets & Airlines - 193.9 - 259.0 + 25.1 All other segments - 18.3 - 31.3 + 41.6 TUI Group - 153.0 - 273.6 + 44.1 EBIT EUR million Q1 2023 Q1 2022 Var. % Hotels & Resorts 71.3 82.4 - 13.5 Cruises 0.2 - 31.7 n. a. TUI Musement - 13.4 - 14.6 + 8.3 Holiday Experiences 58.1 36.1 + 61.0 Northern Region - 125.7 - 175.6 + 28.4 Central Region - 28.2 - 64.0 + 56.0 Western Region - 42.6 - 33.2 - 28.4 Markets & Airlines - 196.5 - 272.8 + 28.0 All other segments - 20.2 - 34.7 + 41.7 TUI Group - 158.7 - 271.4 + 41.5
Segmental performance
Holiday Experiences
EUR million Q1 2023 Q1 2022 Var. %
Revenue 467.5 298.8 + 56.5
Underlying EBIT 59.2 16.7 + 254.9
Underlying EBIT at constant currency 61.7 16.7 + 269.8
Hotels & Resorts
EUR million Q1 2023 Q1 2022 Var. %
Total revenue1 384.7 282.8 + 36.0
Revenue 210.9 198.3 + 6.3
Underlying EBIT 71.9 61.1 + 17.7
Underlying EBIT at constant currency 73.9 61.1 + 20.9
Available bed nights2 ('000) 8,548 8,595 - 0.5
Riu 3,224 3,431 - 6.0
Robinson 825 729 + 13.1
Blue Diamond 1,363 1,323 + 3.0
Occupancy3 (%, variance in % points) 75 64 + 11
Riu 86 69 + 17
Robinson 69 63 + 6
Blue Diamond 84 74 + 10
Average daily rate4 (EUR) 86 72 + 19.8
Riu 77 66 + 17.6
Robinson 101 101 -
Blue Diamond 151 119 + 27.3
Revenue includes fully consolidated companies, all other KPIs incl. companies measured at equity
1 Total revenue includes intra-Group revenue
2 Number of hotel days open multiplied by beds available (Group owned and leased hotels)
3 Occupied beds divided by available beds (Group owned and leased hotels)
4 Board and lodging revenue divided by occupied bed nights (Group owned and leased hotels)
Q1 2023 total revenue grew to EUR384.7m, an improvement of EUR101.9m year-on-year (Q1 2022: EUR282.8m) reflecting the restriction free travel environment across our multiple destinations, versus the prior year. The segment reported a Q1 underlying EBIT profit of EUR71.9m as a result, improving by EUR10.8m year-on-year (Q1 2022: EUR61.1m). Results were supported by good operational performances across the hotels businesses with higher occupancies and rates in a stronger trading environment leading to higher results especially in the Caribbean, Cape Verde and Turkey.
Our hotel portfolio is well-diversified in terms of product offer, destination mix and ownership models, and has benefits from multi-channel and multi-source market distribution via Markets & Airlines, direct to the customer, and third parties such as Online Travel Agents (OTAs).
We operated 8.5m available bednights (capacity) in the quarter, slightly down on 1% in Q1 2022 due to a number of hotel renovations.
The overall occupancy rate for the segment increased 11%pts year-on-year to 75%, driven in particular by the Caribbean and Spanish destinations. Our hotels across the Caribbean delivered average occupancy rates of 87%, with Mexico being our most popular destination achieving 94% average occupancy in the first quarter. Our hotels in the Canaries also saw high demand during this winter period, achieving average occupancy of 82%. Other popular destinations in the quarter were Turkey, Egypt and Cape Verde.
Q1 2023 average daily rate in Hotels & Resorts increased overall by 20% year-on-year to EUR86 with rates in particular in the Caribbean higher. Riu's average daily rate increased 18% to EUR77 (Q1 2022: EUR66) and Blue Diamond average daily rate increased 27% to EUR151 (Q1 2022: EUR119). Robinson achieved an average rate of EUR101, in line with prior year (Q1 2022: EUR101).
Cruises
EUR million Q1 2023 Q1 2022 Var. %
Revenue1 115.2 34.2 + 237.3
Underlying EBIT 0.2 - 31.7 n. a.
Underlying EBIT at constant currency - 0.0 - 31.7 + 100.0
Available passenger cruise days2 ('000)
Mein Schiff 1,623 1,300 + 24.8
Hapag-Lloyd Cruises 148 148 -
Marella Cruises 607 378 + 60.7
Occupancy3 (%, variance in % points)
Mein Schiff 88 53 + 35
Hapag-Lloyd Cruises 65 50 + 15
Marella Cruises 91 48 + 43
Average daily rate (EUR)
Mein Schiff4 139 155 - 10.4
Hapag-Lloyd Cruises4 669 624 + 7.1
Marella Cruises5 (in GBP) 157 142 + 10.7
1 No revenue is carried for Mein Schiff and Hapag-Lloyd Cruises as the joint venture TUI Cruises is consolidated at
equity
2 Number of operating days multiplied by berths available on the operated ships. This key figure has changed compared
to previous periods.
3 Achieved passenger cruise days divided by available passenger cruise days
4 Ticket revenue divided by achieved passenger cruise days
5 Revenue (stay on ship inclusive of transfers, flights and hotels due to the integrated nature of Marella Cruises)
divided by achieved passenger cruise days
The Cruises segment comprises the joint venture TUI Cruises in Germany, which operates cruise ships under the brands Mein Schiff and Hapag-Lloyd Cruises, and Marella Cruises in UK. The segment operated a full fleet of 16 ships in the first quarter (Q1 2022: 14 ships operated due to a more restrictive travel environment).
Q1 2023 Cruises revenue, reflecting Marella Cruises solely (TUI Cruises is accounted for using the equity method) grew to EUR115.2m, an improvement of EUR81.1m year-on-year (Q1 2022: EUR34.2m). As a result, Q1 2023 underlying EBIT for the segment (including the equity result of TUI Cruises) was EUR0.2m, an improvement of EUR31.9m (Q1 2022: EUR-31.7m loss) with both TUI Cruises and Marella contributing to the positive development and highlight the continued improvement across all brands supported by higher volumes as well as improved occupancies. This is the third consecutive positive quarter for our Cruises business with TUI Cruises achieving Q1 2023 EAT (earnings after tax) at EUR8m.
Mein Schiff - Mein Schiff operated their full fleet of seven ships against six ships in the previous year, offering itineraries to the Canaries, the Caribbean and around the world with Asian itineraries resuming in the quarter for the first time since the pandemic. Occupancy of the operated fleet in Q1 2023 was 88% as a result (Q1 2022: 53%) demonstrating the strong demand for our German language, premium all-inclusive product. At EUR139, the average daily rate was close to pre-pandemic levels (Q1 2019: 149EUR) but -10% lower versus prior year (Q1 2022: EUR155) due to a higher mix of premium cabins with overall lower occupancies and capacity in the prior year.
Hapag-Lloyd Cruises - Hapag-Lloyd Cruises, our luxury and expeditions brand, operated itineraries around the world as well as voyages to Antarctica with, as in Q1 2022, their full fleet of five ships in Q1 2023. Q1 average daily rate was EUR669, well above pre-pandemic levels (Q1 2019: EUR591), an increase of 7% on prior year (Q1 2022: EUR624). Q1 occupancy of the fleet was 65% (Q1 2022: 50%), underlining the increased demand for these cruises.
Marella Cruises - With all four ships in operation against three in Q1 2022, our UK cruise brand, offered itineraries to the Caribbean and the Canaries. The business achieved an average daily rate of GBP157 up 10.7 % (Q1 2022: GBP142) and above the pre-pandemic level of GBP137 with occupancy at 91%, versus a previous Q1 of 48% supported by an improved trading environment.
TUI Musement EUR million Q1 2023 Q1 2022 Var. % Total revenue1 206.0 100.2 + 105.7 Revenue 141.4 66.3 + 113.3 Underlying EBIT - 13.0 - 12.7 - 1.9 Underlying EBIT at constant currency - 12.2 - 12.7 + 3.9 1 Total revenue includes intra-Group revenue
In TUI Musement, our tours and activity business, Q1 2023 revenue of EUR141.4m, was up EUR75.1m year-on-year (Q1 2022: EUR66.3m) highlighting the growth in this area, with an underlying EBIT loss of EUR-13.0m in line with prior year (Q1 2022: EUR-12.7m loss), due to investment in particular in the B2C distribution channel. We continued to accelerate and enhance our digital transformation at TUI Musement to drive the customer experience throughout all channels, providing support and expertise in resort both in person and through our dedicated TUI App.
TUI Musement provided 5.0m transfers to guests in their destinations against 3.3m in the same quarter last year in line with the recovery to a more normalised trading environment across our global destinations. In addition, 1.7m experiences were sold, up 0.7m year-on-year (Q1 2022: 1.1m).
Markets & Airlines
EUR million Q1 2023 Q1 2022 Var. %
Revenue 3,229.1 2,053.4 + 57.3
Underlying EBIT - 193.9 - 259.0 + 25.1
Underlying EBIT at constant currency - 204.3 - 259.0 + 21.1
Direct distribution mix1 75 75 -
(in %, variance in % points)
Online mix2 52 52 -
(in %, variance in % points)
Customers ('000) 3,293 2,255 + 46.0
1 Share of sales via own channels (retail and online)
2 Share of online sales
Q1 2023 revenue of EUR3,229.1m, was up EUR1,175.7m year-on-year (Q1 2022: EUR2,053.4m). Q1 underlying EBIT was the usual seasonal loss for the sector of EUR-193.9m which however was an improvement of EUR65.1m year-on-year (Q1 2022: EUR-259.0m loss). The results were supported by higher prices and also reflect a restriction free trading environment year-on-year with good demand for our wide and varied product offering. The overall market continued to be influenced by uncertainties resulting in inflationary pressures especially on energy as well as exchange rate volatility. As a consequence, short-term bookings continued to make up a higher proportion of overall bookings. Traditional short- and medium haul destinations such as the Canaries and Egypt were again popular destinations for our customers, with long-haul destinations such as Mexico and the Dominican Republic also in demand.
A total of 3,293k customers departed in Q1 2023, an increase of 1,038k customers versus Q1 2022. Capacity operated was 86% of Q1 2019 levels, with an average load factor achieved of 85% for Q1 2023 (Q1 2019: 83%).
Northern Region
EUR million Q1 2023 Q1 2022 Var. %
Revenue 1,343.1 652.2 + 105.9
Underlying EBIT - 122.0 - 171.7 + 29.0
Underlying EBIT at constant currency - 129.3 - 171.7 + 24.7
Direct distribution mix1 93 94 - 1
(in %, variance in % points)
Online mix2 68 73 - 5
(in %, variance in % points)
Customers ('000) 1,208 665 + 81.8
1 Share of sales via own channels (retail and online)
2 Share of online sales
Northern Region reported Q1 2023 revenue of EUR1,343.1m, which was up EUR690.9m year-on-year (Q1 2022: EUR652.2m). Q1 underlying EBIT loss for the region of EUR-122.0m decreased by EUR49.7m year-on-year (Q1 2022:
EUR-171.7m loss) with both the UK and Nordic results higher supported by a return to a more normalised operating environment. This was offset to an extent by disruption costs due to winter storm Elliot in North America impacting the key winter business in Canada.
Q1 2023 customer volumes increase to 1,208k versus 665k customers in Q1 2022 underlining the market recovery. Online distribution continues to be strong at 68%, which was down 5%pts against prior year (Q1 2022: 73%) but slightly ahead of pre-pandemic levels (Q1 2019: 67%). The comparison against last year is however limited due to lower volumes and longer retail shop closures due to the COVID-19 restrictions last year. Direct distribution was at 93% broadly in line with prior year (Q1 2022: 94%) and at pre-pandemic levels (Q1 2019: 93%).
Central Region
EUR million Q1 2023 Q1 2022 Var. %
Revenue 1,351.1 985.1 + 37.1
Underlying EBIT - 28.3 - 55.0 + 48.6
Underlying EBIT at constant currency - 29.7 - 55.0 + 46.0
Direct distribution mix1 54 56 - 2
(in %, variance in % points)
Online mix2 28 30 - 2
(in %, variance in % points)
Customers ('000) 1,222 917 + 33.2
1 Share of sales via own channels (retail and online)
2 Share of online sales
Q1 revenue of EUR1,351.1m, was up EUR365.9m year-on-year (Q1 2022: EUR985.1m) with a significant improvement in the underlying EBIT loss for the region of EUR-28.3m, almost halving the prior year losses (Q1 2022: EUR-55.0m loss) and returning to above pre-pandemic levels (Q1 2019: EUR-37,1m). The significant improvement was driven in particular by a strong operational performance in the key source market and a return to a more normalised trading environment.
Customer volume increased by 33.2% to 1,222k versus prior year (previous year 917k) in line with the easing of travel restrictions due to COVID-19. Online distribution for Central Region reached 28%, down 2%pts against prior year whereby comparison is limited due to lower volumes and longer retail shop closures due to the COVID-19 restrictions last year. Against pre-pandemic levels, online distribution was up by 7%pts (Q1 2019: 21%) emphasising the significant development of our online offering in this region in line with consumer demand for this channel. Direct distribution was down 2%pts to 54% against Q1 2022 of 56% but slightly ahead versus pre-pandemic levels (Q1 2019: 49%).
Western Region
EUR million Q1 2023 Q1 2022 Var. %
Revenue 534.9 416.1 + 28.6
Underlying EBIT - 43.7 - 32.4 - 35.0
Underlying EBIT at constant currency - 45.4 - 32.4 - 40.2
Direct distribution mix1 79 82 - 3
(in %, variance in % points)
Online mix2 62 63 - 1
(in %, variance in % points)
Customers ('000) 863 673 + 28.2
1 Share of sales via own channels (retail and online)
2 Share of online sales
In Western Region Q1 2023 revenue of EUR534.9m, was up EUR118.9m year-on-year (Q1 2022: EUR416.1m). Q1 underlying EBIT loss of EUR-43.7m, decreased by EUR-11.3m year-on-year (Q1 2022: EUR-32.4m loss). Despite improving volumes in the region year-on-year, results in the Netherlands were impacted by a softer trading environment post summer flight disruptions in Schiphol.
Customer volumes increased by 28.2% to 863k guests year-on-year (Q1 2022: 673k). Online distribution for region stood at 62%, 1%pt below prior year but up 3%pts versus pre-pandemic levels (Q1 2019: 59%). Direct distribution was down 3%pts to 79% versus last year (Q1 2022: 82%) but up 3%pts against pre-pandemic levels (Q1 2019: 76%).
All other segments EUR million Q1 2023 Q1 2022 Var. % Revenue 53.8 17.0 + 217.1 Underlying EBIT - 18.3 - 31.3 + 41.6 Underlying EBIT at constant currency) - 18.3 - 31.3 + 41.5
Q1 2023 underlying EBIT loss of EUR-18.3m, improved EUR13.0m year-on-year (Q1 2022: EUR-31.3m loss) supported by cost savings across the segment.
Financial position and net assets
Cash Flow / Net capex and investments / Net debt
In the first three months of financial year 2023, TUI Group's business volume was significantly higher than in Q1 2022 which was still impacted by measures 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. In addition to seasonality, the winter season of the previous year was also negatively affected by the impact of the COVID 19 pandemic.
TUI Group's operating cash outflow in Q1 2023 of EUR1,670.9m increased by EUR706.3m compared to previous year, due to an increase in supplier payments as a result of higher business volumes in the previous Summer, in addition to slightly lower December bookings received in Q1 2023.
Net debt position as at 31 December 2022 of EUR-5.3bn was close to previous year level (31 December 2021: EUR-5.1bn).
Net debt EUR million 31 Dec 2022 31 Dec 2021 Var. % Financial debt 3,951.8 3,576.6 + 10.5 Lease liabilities 2,935.8 3,260.2 - 10.0 Cash and cash equivalents 1,542.7 1,649.3 - 6.5 Short-term interest-bearing investments 85.0 117.8 - 27.8 Net debt -5,259.9 -5,069.6 + 3.8 Net capex and investments EUR million Q1 2023 Q1 2022 Var. % Cash gross capex Hotels & Resorts 71.4 22.0 + 224.5 Cruises 28.0 21.5 + 30.2 TUI Musement 4.0 3.5 + 14.3 Holiday Experiences 103.4 47.0 + 120.0 Northern Region 5.7 4.9 + 16.3 Central Region 1.8 0.5 + 260.0 Western Region 4.2 1.2 + 250.0 Markets & Airlines* 33.1 10.3 + 221.4 All other segments 33.0 25.6 + 28.9 TUI Group 169.5 82.9 + 104.5 Net pre delivery payments on aircraft 59.0 - 46.4 n. a. Financial investments 0.3 - n. a. Divestments - 79.8 16.9 n. a. Net capex and investments 149.0 53.4 + 179.0
* Including EUR21.4m for Q1 2023 (Q1 2023: EUR3.7m) 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 Q1 2023 was 104.5% higher year-on-year. This increase was mainly due to higher investments in Hotels & Resorts and the airline sector. Net capex and investments of EUR149.0m increased by EUR95.6m year-on-year. The divestments include an inflow of EUR71m from the sale of the stakes in RIU Hotels S.A. in financial year 2021.
Assets and liabilities EUR million 31 Dec 2022 30 Sep 2022 Var. % Non-current assets 11,091.9 11,351.7 - 2.3 Current assets 3,481.8 3,903.8 - 10.8 Total assets 14,573.7 15,255.5 - 4.5 Equity 101.6 645.7 - 84.3 Provisions 1,870.2 1,897.4 - 1.4 Financial liabilities 3,951.8 2,051.3 + 92.6 Other liabilities 8,650.1 10,661.0 - 18.9 Total equity, liabilities and provisions 14,573.7 15,255.5 - 4.5
Comments on the consolidated income statement
In the first three months of financial year 2023, TUI Group's business volume was significantly higher than in Q1 2022 which was still impacted by measures 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. In addition to seasonality, the winter season of the previous year was also negatively affected by the impact of the COVID 19 pandemic.
In Q1 2023, consolidated revenue increased by EUR1.4bn year-on-year to EUR3.8bn.
Unaudited condensed consolidated Income Statement of TUI AG for the period from1 Oct 2022 to 31 Dec 2022 EUR million Q1 2023 Q1 2022 Var. % Revenue 3,750.5 2,369.2 +58.3 Cost of sales 3,661.4 2,472.4 +48.1 Gross profit / loss 89.2 - 103.2 n. a. Administrative expenses 242.6 201.7 +20.3 Other income 6.0 26.2 - 77.1 Other expenses 5.8 0.9 +544.4 Impairment (+) / Reversal of impairment (-) of financial assets 0.8 - 4.3 n. a. Financial income 18.4 20.8 - 11.5 Financial expense 132.5 147.8 - 10.4 Share of result of investments accounted for using the equity method - 4.4 - 2.3 - 91.3 Earnings before income taxes - 272.6 - 404.5 +32.6 Income taxes (expense (+), income (-)) - 40.8 - 17.9 - 127.9 Group loss - 231.8 - 386.5 +40.0 Group loss attributable to shareholders of TUI AG - 256.1 - 384.3 +33.4 Group profit / loss attributable to non-controlling interest 24.3 - 2.3 n. a.
Alternative performance measures
The Group's main financial KPI is underlying EBIT. We define the EBIT in underlying EBIT as earnings before interest, income taxes and expenses for the measurement of the Group's interest hedges. EBIT by definition includes goodwill impairments.
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 are adjusted in the reconciliation to underlying EBIT.
Reconciliation to underlying EBIT EUR million Q1 2023 Q1 2022 Var. % Earnings before income taxes - 272.6 - 404.5 +32.6 plus: Net interest expenses (excluding expense / income from measurement of interest 110.5 131.6 - 16.0 hedges) plus: (Income) expense from measurement of interest hedges 3.4 1.5 +126.7 EBIT - 158.7 - 271.4 +41.5 Adjustments: less: Separately disclosed items - 0.7 - 9.3 plus: Expense from purchase price allocation 6.4 7.1 Underlying EBIT - 153.0 - 273.6 +44.1
The TUI Group's operating loss adjusted for special items decreased by EUR120.6m to EUR-153.0m in Q1 2023.
-- For further details on the separately disclosed items see page 44 in the Notes of this Interim Report.
Key figures of income statement EUR million Q1 2023 Q1 2022 Var. % EBITDAR 57.8 - 51.5 n. a. Operating rental expenses 0.2 - 4.0 n. a. EBITDA 58.0 - 55.5 n. a. Depreciation/amortisation less reversals of depreciation* - 216.7 - 215.9 - 0.4 EBIT - 158.7 - 271.4 + 41.5 Income/Expense from the measurement of interest hedges 3.4 1.5 + 126.7 Net interest expense (excluding expense/income from measurement of interest hedges) 110.5 131.6 - 16.0 EBT - 272.6 - 404.5 + 32.6 * on property, plant and equipment, intangible assets, right of use assets and other assets
Other segment indicators
Underlying EBITDA
EUR million Q1 2023 Q1 2022 Var. %
Hotels & Resorts 122.0 107.0 + 14.0
Cruises 17.9 - 15.0 n. a.
TUI Musement - 7.0 - 6.8 - 2.8
Holiday Experiences 132.9 85.1 + 56.1
Northern Region - 43.2 - 96.5 + 55.2
Central Region - 3.0 - 27.1 + 88.8
Western Region - 7.2 3.0 n. a.
Markets & Airlines - 53.4 - 120.6 + 55.7
All other segments - 21.3 - 30.0 + 29.0
TUI Group 58.3 - 65.4 n. a.
EBITDA
EUR million Q1 2023 Q1 2022 Var. %
Hotels & Resorts 121.4 128.3 - 5.4
Cruises 17.9 - 15.0 n. a.
TUI Musement - 5.7 - 7.0 + 18.6
Holiday Experiences 133.6 106.3 + 25.7
Northern Region - 44.1 - 97.1 + 54.6
Central Region - 2.9 - 34.6 + 91.7
Western Region - 5.4 3.0 n. a.
Markets & Airlines - 52.4 - 128.6 + 59.3
All other segments - 23.3 - 33.2 + 29.9
TUI Group 58.0 - 55.5 n. a.
Employees
31 Dec 2022 31 Dec 2021 Var. %
Hotels & Resorts 19,179 15,456 + 24.1
Cruises* 75 56 + 33.9
TUI Musement 6,718 4,687 + 43.3
Holiday Experiences 25,972 20,199 + 28.6
Northern Region 9,444 8,668 + 9.0
Central Region 7,033 7,344 - 4.2
Western Region 5,004 4,609 + 8.6
Markets & Airlines 21,481 20,621 + 4.2
All other segments 2,526 2,342 + 7.9
Total 49,979 43,162 + 15.8
* Excludes TUI Cruises (JV) employees. Cruises employees are primarily hired by external crew management agencies.
Corporate Governance
Composition of the Boards
In Q1 2023 the composition of the Boards of TUI AG changed as follows:
Executive Board
As of 30 September 2022 Friedrich Joussen has resigned as Chief Executive Officer of TUI AG. Sebastian Ebel, previously Chief Financial Officer, took over as CEO as of 1 October 2022. Also effective 1 October 2022 the Supervisory Board appointed Mathias Kiep, previously Group Director Controlling, Corporate Finance and Investor Relations as the new CFO. Both new appointments have a contract term of three years.
Frank Rosenberger, Member of the Board of Management responsible for IT and Future Markets, left TUI Group on 31 October 2022.
Supervisory Board
There were no changes in the composition of the Supervisory Board in Q1 2023.
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.
We aggregate the risks into principal risks, were senior management is deciding its risk appetite upon. Full details of our risk governance framework and principal risks can be found in the Annual Report 2022.
- Details see Risk Report in our Annual Report 2022, from page 34
External events, namely the COVID 19-pandemic, the impact on input cost due the Ukraine war, and supply chain disruptions impact the principal risks. The impact is higher if a combination of principal risks is affected.
Although the impact of the COVID-19 pandemic on economic activity has diminished, the global geopolitical and economic environment remains challenging.
The booking dynamics in our most important markets have so far remained largely unaffected by Russia's war of aggression on Ukraine. However, the intensified general price increase , especially due to rising energy costs, may lead to a reduction in the private budget available for travel services, thus lowering purchasing power and resulting in declining customer demand. In addition, the war is affecting our input cost volatility risk: Fuel and other services we source in US-Dollars and the jet-fuel or bunker price itself have a significant impact on our cost structure. Whereas we seek to minimize these effects through hedging, the lines with bank for doing so, continue to be tight, hence any unhedged position may create unwanted impacts on our earnings. This particularly affects the results of the Northern Region, Central Region, Western Region and Cruises segments.
Our operation is dependent on a complex chain of supply of goods and services. In some areas, suppliers cannot easily be interchanged, leading to a reliance on these key suppliers. The strong industry recovery immediately after the COVID-19 pandemic, compounded by a tight labour market, has led to significant operational issues particularly in the European airline operations. Although TUI as well as the service suppliers have placed numerous measures to increase the resilience, there remains the risk that the peak summer operation may still be impacted by disruptions causing additional cost or an adverse impact on our bookings.
From the Executive Board's perspective, despite the existing risks, TUI Group currently has and will continue to have sufficient funds, resulting from both borrowings and operating cash flows, to meet its payment obligations and to ensure the going concern of the company accordingly in the foreseeable future. In this context, the Executive Board assumes that the credit lines expiring in summer 2024 will be refinanced. Therefore, as at 31 December 2022, the Executive Board does not identify any material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern.
In its assessment, the Executive Board assumes that booking behaviour in the financial year 2023 will largely correspond to the pre-pandemic level. The Executive Board assumes that travel behaviour will not be affected by further long-term closures and lockdowns or by the impact of Russia's war of aggression against Ukraine.
The Executive Board does not consider the remaining risk with regard to a further pandemic / war-related change in booking behaviour to be a threat to the company's existence. Nevertheless, the TUI Group's performance might be impaired by the following factors. The intensified general price increase of recent months could continue, in particular due to rising energy costs, and lead to a significant reduction in the private budget available for travel services, thus lowering purchasing power and resulting in declining customer demand. In addition, a permanent increase in fuel costs as well as other services, especially those we purchase in US dollars, could lead to an increase in our input costs. Further burdens could result from continued or increased flight disruptions. If these risks were to materialise, compliance with the financial covenants as at 31 March 2023 and 30 September 2023 could be jeopardised. The Executive Board considers the simultaneous occurrence of these risks to be very unlikely and therefore assumes that the financial targets (covenants) will be met.
Unaudited condensed consolidated Interim Financial Statements
Unaudited condensed consolidated Income Statement of TUI AG for the period from1 Oct 2022 to 31 Dec 2022
EUR million Notes Q1 2023 Q1 2022
Revenue (1) 3,750.5 2,369.2
Cost of sales (2) 3,661.4 2,472.4
Gross profit / loss 89.2 - 103.2
Administrative expenses (2) 242.6 201.7
Other income (3) 6.0 26.2
Other expenses (4) 5.8 0.9
Impairment (+) / Reversal of impairment (-) of financial assets (19) 0.8 - 4.3
Financial income (5) 18.4 20.8
Financial expense (5) 132.5 147.8
Share of result of investments accounted for using the equity method (6) - 4.4 - 2.3
Earnings before income taxes - 272.6 - 404.5
Income taxes (expense (+), income (-)) (7) - 40.8 - 17.9
Group loss - 231.8 - 386.5
Group loss attributable to shareholders of TUI AG - 256.1 - 384.3
Group profit / loss attributable to non-controlling interest (8) 24.3 - 2.3
Earnings per share
EUR Q1 2023 Q1 2022
Basic and diluted loss / earnings per share - 0.14 - 0.27
Unaudited condensed consolidated Statement of Comprehensive Income of TUI AG for the period from1 Oct 2022 to 31 Dec
2022
EUR million Q1 2023 Q1 2022
Group loss - 231.8 - 386.5
Remeasurements of defined benefit obligations and related fund assets - 123.7 72.6
Fair value profit / loss on investments in equity instruments designated as at FVTOCI 1.1 - 0.3
Income tax related to items that will not be reclassified (expense (-), income (+)) 30.9 - 18.1
Items that will not be reclassified to profit or loss - 91.7 54.2
Foreign exchange differences - 101.3 3.7
Foreign exchange differences outside profit or loss - 101.3 3.7
Cash flow hedges - 136.3 - 3.9
Changes in the fair value - 116.3 - 2.5
Reclassification - 20.0 - 1.4
Other comprehensive income of investments accounted for using the equity method that may be - 1.0 2.8
reclassified
Changes in the measurement outside profit or loss - 1.0 2.8
Income tax related to items that may be reclassified (expense (-), income (+)) 34.7 0.6
Items that may be reclassified to profit or loss - 203.8 3.2
Other comprehensive income - 295.6 57.4
Total comprehensive income - 527.3 - 329.1
attributable to shareholders of TUI AG - 530.8 - 331.9
attributable to non-controlling interest 3.5 2.8
Unaudited condensed consolidated Statement of Financial Position of TUI AG as at 31 Dec 2022
EUR million Notes 31 Dec 2022 30 Sep 2022
Assets
Goodwill (9) 2,952.0 2,970.6
Other intangible assets 515.9 507.6
Property, plant and equipment (10) 3,414.7 3,400.9
Right-of-use assets (11) 2,741.2 2,971.5
Investments in joint ventures and associates 745.2 785.4
Trade and other receivables (12), (19) 156.0 131.6
Derivative financial instruments (19) 3.3 26.6
Other financial assets (19) 11.5 10.6
Touristic payments on account 133.0 138.0
Other non-financial assets 124.8 169.7
Income tax assets 17.2 17.2
Deferred tax assets 277.0 222.0
Non-current assets 11,091.9 11,351.7
Inventories 56.6 56.1
Trade and other receivables (12), (19) 897.4 1,011.8
Derivative financial instruments (19) 90.7 232.5
Other financial assets (19) 85.0 85.8
Touristic payments on account 616.3 619.6
Other non-financial assets 134.5 135.4
Income tax assets 27.5 23.1
Cash and cash equivalents (19) 1,542.7 1,736.9
Assets held for sale (13) 31.0 2.7
Current assets 3,481.8 3,903.8
Total assets 14,573.7 15,255.5
Unaudited condensed consolidated Statement of Financial Position of TUI AG as at 31 Dec 2022
EUR million Notes 31 Dec 2022 30 Sep 2022
Equity and liabilities
Subscribed capital 1,785.2 1,785.2
Capital reserves 6,085.9 6,085.9
Revenue reserves - 8,980.3 - 8,432.7
Silent participation 420.0 420.0
Equity before non-controlling interest - 689.2 - 141.6
Non-controlling interest 790.8 787.3
Equity (18) 101.6 645.7
Pension provisions and similar obligations (14) 622.9 568.2
Other provisions 801.8 755.0
Non-current provisions 1,424.6 1,323.2
Financial liabilities (15), (19) 3,660.2 1,731.4
Lease liabilities (16) 2,270.5 2,508.7
Derivative financial instruments (19) 0.2 3.2
Other financial liabilities (17), (19) 2.6 2.8
Other non-financial liabilities 256.8 165.2
Income tax liabilities 10.6 11.1
Deferred tax liabilities 52.2 121.2
Non-current liabilities 6,253.1 4,543.8
Non-current provisions and liabilities 7,677.7 5,867.0
Pension provisions and similar obligations (14) 32.5 33.1
Other provisions 413.0 541.0
Current provisions 445.5 574.2
Financial liabilities (15), (19) 291.6 319.9
Lease liabilities (16) 665.4 698.8
Trade payables (19) 2,003.3 3,316.5
Derivative financial instruments (19) 110.8 57.5
Other financial liabilities (17), (19) 122.9 174.6
Touristic advance payments received 2,627.3 2,998.9
Other non-financial liabilities 460.2 519.9
Income tax liabilities 67.3 82.3
Current liabilities 6,348.8 8,168.6
Current provisions and liabilities 6,794.4 8,742.7
Total equity, liabilities and provisions 14,573.7 15,255.5
Unaudited condensed consolidated Statement of Changes in Equity of TUI AG for the period from1 Oct 2022 to 31 Dec 2022
Subscribed Capital Revenue Silent Equity before Non-controlling
EUR million capital reserves reserves participation non-controlling interest Total
interest
Balance as at 1 Oct 1,099.4 5,249.6 - 1,091.0 - 1,085.8 667.3 - 418.4
2021 8,525.7
Share-based payment - - 0.2 - 0.2 - 0.2
schemes
Capital increase 523.5 583.0 - - 1,106.5 - 1,106.5
Group loss for the - - - 384.3 - - 384.3 - 2.3 - 386.6
year
Foreign exchange - - - 1.2 - - 1.2 5.0 3.8
differences
Financial assets at - - - 0.3 - - 0.3 - - 0.3
FVTOCI
Cash flow hedges - - - 3.9 - - 3.9 - - 3.9
Remeasurements of
defined benefit - - 72.6 - 72.6 - 72.6
obligations and
related fund assets
Other comprehensive
income of investments - - 2.8 - 2.8 - 2.8
accounted for using
the equity method
Taxes attributable to
other comprehensive - - - 17.5 - - 17.5 - - 17.5
income
Other comprehensive - - 52.5 - 52.5 5.0 57.5
income
Total comprehensive - - - 331.8 - - 331.8 2.7 - 329.1
income
Balance as at 31 Dec 1,622.9 5,832.5 - 1,091.0 - 310.8 669.9 359.1
2021 8,857.3
Balance as at 1 Oct 1,785.2 6,085.9 - 420.0 - 141.6 787.3 645.7
2022 8,432.7
Coupon on silent - - - 16.8 - - 16.8 - - 16.8
participation
Group profit/loss for - - - 256.1 - - 256.1 24.3 - 231.8
the year
Foreign exchange - - - 80.4 - - 80.4 - 20.9 - 101.3
differences
Financial assets at - - 1.1 - 1.1 - 1.1
FVTOCI
Cash flow hedges - - - 136.3 - - 136.3 - - 136.3
Remeasurements of
defined benefit - - - 123.7 - - 123.7 - - 123.7
obligations and
related fund assets
Other comprehensive
income of investments - - - 1.0 - - 1.0 - - 1.0
accounted for using
the equity method
Taxes attributable to
other comprehensive - - 65.6 - 65.6 - 65.6
income
Other comprehensive - - - 274.7 - - 274.7 - 20.9 - 295.6
income
Total comprehensive - - - 530.8 - - 530.8 3.4 - 527.4
income
Balance as at 31 Dec 1,785.2 6,085.9 - 420.0 - 689.2 790.7 101.6
2022 8,980.3
Unaudited condensed consolidated Cash Flow Statement of TUI AG for the period from1 Oct 2022 to 31 Dec 2022
EUR million Notes Q1 2023 Q1 2022
Group loss - 231.8 - 386.5
Depreciation, amortisation and impairment (+) / write-backs (-) 216.7 216.0
Other non-cash expenses (+) / income (-) 12.7 9.8
Interest expenses 129.5 138.8
Dividends from joint ventures and associates 2.2 0.1
Profit (-) / loss (+) from disposals of non-current assets - 4.0 - 24.5
Increase (-) / decrease (+) in inventories - 1.1 0.2
Increase (-) / decrease (+) in receivables and other assets 310.2 - 87.7
Increase (+) / decrease (-) in provisions - 120.6 - 53.2
Increase (+) / decrease (-) in liabilities (excl. financial liabilities) - 1,984.6 - 777.3
Cash inflow / cash outflow from operating activities (22) - 1,670.9 - 964.6
Payments received from disposals of property, plant and equipment and intangible assets 9.9 58.5
Payments received/made from disposals of consolidated companies - 0.7 - 2.2
(less disposals of cash and cash equivalents due to divestments)
Payments received/made from disposals of other non-current assets 72.8 - 23.6
Payments made for investments in property, plant and equipment and intangible assets - 228.6 - 85.8
Payments made for investments in other non-current assets - 0.9 -
Cash inflow / cash outflow from investing activities (22) - 147.6 - 53.2
Payments received from capital increase by issuing new shares - 1,106.5
Coupon on silent participation (dividends) - 16.8 -
Payments received from the raising of financial liabilities 1,984.3 284.8
Payments made for redemption of loans and financial liabilities - 47.7 - 77.9
Payments made for principal of lease liabilities - 162.8 - 141.8
Interest paid - 122.3 - 94.4
Cash inflow / cash outflow from financing activities (22) 1,634.7 1,077.2
Net change in cash and cash equivalents - 183.7 59.4
Development of cash and cash equivalents (22)
Cash and cash equivalents at beginning of period 1,736.9 1,586.1
Change in cash and cash equivalents due to exchange rate fluctuations - 10.6 3.8
Net change in cash and cash equivalents - 183.7 59.4
Cash and cash equivalents at end of period 1,542.7 1,649.3
Notes
General
The TUI Group and its major subsidiaries and shareholdings operate in tourism. TUI AG, based in Karl-Wiechert-Allee 4, 30625 Hanover, Germany, is the TUI Group's parent company and a listed corporation under German law. The Company is registered in the commercial registers of the district courts of Berlin-Charlottenburg (HRB 321) and Hanover (HRB 6580), Germany. 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 AG are referred to as "Interim Financial Statements", the unaudited condensed consolidated income statement of TUI AG is referred to as "income statement", the unaudited condensed consolidated statement of financial position of TUI AG is referred to as "statement of financial position", the unaudited condensed consolidated statement of comprehensive income of TUI AG is referred to as "statement of comprehensive income" and the unaudited condensed consolidated statement of changes in equity of TUI AG is referred to as "statement of changes in equity".
The Interim Financial Statements cover the period from 1 October 2022 to 31 December 2022. The Interim Financial Statements are prepared in euros. Unless stated otherwise, all amounts are stated in million euros (EURm). TUI Group's results generally also reflect the significant seasonal swing in tourism between the winter and summer travel months.
The Interim Financial Statements were approved for publication by the Executive Board of TUI AG on 13 February 2023.
Accounting principles
Declaration of compliance
The consolidated interim financial report for the period ended 31 December 2022 comprise the Interim Financial Statements and the Interim Management Report in accordance with section 115 of the German Securities Trading Act (WpHG).
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 2022. The Interim Financial Statements were reviewed by the Group's auditor.
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 with and borrowings from banks. 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 31 December 2022 was EUR5.3bn (as at 30 September 2022 EUR3.4bn).
Net debt EUR million 31 Dec 2022 30 Sept 2022 Var. % Financial debt 3,951.8 2,051.3 + 92.6 Lease liabilities 2,935.8 3,207.5 - 8.5 Cash and cash equivalents 1,542.7 1,736.9 - 11.2 Short-term interest-bearing investments 85.0 85.8 - 0.9 Net debt -5,259.9 -3,436.2 + 53.1
The global travel restrictions to contain COVID-19 have had a continuous negative impact on the Group's earnings and liquidity development since the end of March 2020. To cover the resulting liquidity needs, the Group has carried out various financing measures in the financial years 2020 to 2022, which, in addition to three capital increases, the use of the banking and capital markets and cash inflows from the sale of assets, also include financing measures from the Federal Republic of Germany in the form of a KfW credit line initially totalling EUR2.85bn, an option bond from the Economic Stabilisation Fund (WSF) totalling EUR150m and two silent participations from the WSF initially totalling EUR1.091bn.
In financial year 2022, TUI reduced KfW's credit line to EUR2.1bn in various steps. In addition, 913 of the 1,500 bonds with warrants issued to WSF were redeemed and the silent participation II of the WSF of EUR671.0m was repaid in full ahead of schedule. Including the coupons to be shown as dividends, TUI repaid EUR725.4m to WSF. Following full repayment and termination of the KfW credit line, TUI has to pay remuneration to the German state for the coupons saved by the early repayment of Silent Participation II.
In the IFRS consolidated financial statements, the silent participations are reported as equity due to their nature and are therefore not included in the Group's net debt. The financing measures are described in detail in the annual reports for the past three financial years.
As at 31 December 2022, TUI Group's revolving credit facilities totalled EUR3.74bn. They have a term until summer 2024 and comprised the following
-- EUR1.64bn credit line from 20 private banks (incl. EUR190m guarantee line)
-- EUR2.1bn KfW credit line.
With regard to the KfW credit lines, it was agreed that TUI AG would use 50% of individual cash inflows exceeding EUR50m, for example from capital measures or disposals of assets or companies, to reduce the financing granted to TUI AG to bridge the effects of COVID-19; there is no maximum limit.
TUI AG's EUR1.64bn credit line from private banks and KfW credit line are subject to compliance with certain financial target values (covenants) for debt coverage and interest coverage, the review of which is carried out on the basis of the last four reported quarters at the end of the financial year or the half-year of a financial year. Against the backdrop of the ongoing pressures from the COVID-19 pandemic, the review has only been resumed in September 2022 and TUI was in full compliance. In addition, higher limits are to be applied on the first two cut-off dates before normalised limits have to be complied with from September 2023.
On 13 December 2022, TUI has concluded a new agreement with the WSF on the repayment of stabilization measures ("Repayment Agreement"). This agreement regulates the intended complete termination of the stabilization measures granted by the WSF by means of a right of the Company (i) to repayment of the contribution made by the WSF as a silent partner in January 2021 in the nominal amount of currently EUR420m ("Silent Participation I") and (ii) to repurchase the warrant-linked bond 2020/2026 ("Warrant Bond") issued by the Company to WSF in the remaining amount of EUR58.7m as well as the 58,674,899 option rights ("Warrants") originally attached to the warrant bond. In addition, the Repayment Agreement regulates the implementation of capital measures for the purpose of refinancing the aforementioned measures.
Under the Repayment Agreement, the Company is obliged, to the extent permitted by law, to propose to the General Meeting a reduction in the Company's share capital from currently approx. EUR1.785bn to then approx. EUR179m by consolidating shares at a ratio of ten to one in accordance with the provisions of the German Economic Stabilization Acceleration Act (Wirtschaftsstabilisierungsbeschleunigungsgesetz - "WStBG"). The amount of the reduction of approx. EUR1.606bn will be allocated to the Company's capital reserves and will not be distributed to shareholders. The capital reduction shall pave the way for the termination of the stabilization measures and is thus related to the recapitalization of the Company implemented in January 2021. The invitation to the Annual General Meeting, including the full agenda and the corresponding resolution proposals from Company management, has been published in the German Federal Gazette (Bundesanzeiger) and on the Company's website at the beginning of January 2023.
Pursuant to the recapitalization measures adopted in January 2021, WSF has the right to convert Silent Participation I at a conversion price of EUR1.00 per share into currently up to EUR420m shares in the Company. In addition, under the Warrants, the WSF has the right to subscribe for currently up to 58,674,899 shares in the Company at an option price of 1.00 EUR per share, whereby the option price can also be paid by contributing the Warrant Bond.
The repayment agreement provides for a right of the Company to terminate the Silent Participation I in full and to repurchase the remaining Warrant Bond together with all Warrants until 31 December 2023 at a repayment price of EUR730,113,240.00 plus interest accruing until repayment under the stabilization measures. In economic terms, this price accounts for the existing conversion and option rights of the WSF. If the weighted average stock exchange price of the shares of the Company during the last fifteen calendar days prior to the date of the public announcement of the Refinancing Capital Increase referred to below, as adjusted for the price increase effect of the share consolidation, ("Adjusted Average Price"), is higher than 1.6816EUR, the repayment price shall be increased in accordance with the repayment agreement as follows: The Adjusted Average Price less a discount of 9.3% shall be multiplied by the total nominal amount of the stabilization measures in the amount of EUR478.7m, capped at a maximum amount of EUR957.4m.
WSF undertakes not to exercise its conversion and option rights under Silent Participation I and the Warrants until 31 December 2023. The Company is obliged to exercise its repayment and repurchase right under the Repayment Agreement in the event of successful completion of the Refinancing Capital Increase referred to below. If the stabilization measures are not fully terminated by 31 December 2023, the Company will pay WSF an at market standstill premium.
To finance the repayment of the WSF and thus the termination of the stabilization measures, the Company is obligated under the Repayment Agreement, to the extent permitted by law, to use its best efforts to implement a rights issue capital increase from the Authorized Capital 2022/I existing pursuant to Art. 4 par. 5 of the Articles of Association in the amount of approx. EUR162m and from Authorized Capital 2022/II existing pursuant to Art. 4 par. 7 of the Articles of Association in the amount of approx. EUR627m ("Refinancing Capital Increase"). This obligation applies for a period starting from the effective date of the capital reduction referred to above until 31 December 2023 - subject to the positive assessment of the then prevailing capital market conditions by the Board of Management and Supervisory Board. The proceeds from this Refinancing Capital Increase shall be used primarily for a full repayment of Silent Participation I and a repurchase of the Warrant Bond and the Warrants.
The Company intends to use (i) the proceeds from the exercise of the Authorized Capital 2022/I exclusively for the priority of the full repayment of the WSF and (ii) the proceeds from the exercise of Authorized Capital 2022/II predominantly for a substantial redemption of KfW's credit lines, it being understood that both capital increases shall be carried out simultaneously in one subscription offer.
The effectiveness of the repayment agreement is still subject to confirmation by the European Commission that it does not raise any objections under state aid law. Additionally the General Meeting needs to approve the reduction in the Company's share capital and a rights issue capital increase must have been implemented before the repayment agreement can be closed.
Currently, TUI Group is only marginally effected by the negative financial impact of the COVID-19 pandemic.
Contact restriction measures and travel restrictions were gradually eased in most countries in the first months of the calendar year 2022 and business was fully resumed in all segments. As of April 2022, the entire fleet of the Cruises Segment was in operation, and as of summer 2022, the Hotels & Resorts Segment was able to offer the entire product portfolio. Demand recovered very robustly, albeit later than assumed in the previous year's planning due to the travel restrictions in place at the beginning of the financial year 2022. In the Cruises segment, the recovery in demand started later than in the other segments. A more short-term booking behaviour continues to be observed.
From the Executive Board's perspective, despite the existing risks, TUI Group currently has and will continue to have sufficient funds, resulting from both borrowings and operating cash flows, to meet its payment obligations and to ensure the going concern of the company accordingly in the foreseeable future. In this context, the Executive Board assumes that the credit lines expiring in summer 2024 will be refinanced. Therefore, as at 31 December 2022, the Executive Board does not identify any material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern.
In its assessment, the Executive Board assumes that booking behaviour in the 2023 financial year will largely correspond to the pre-pandemic level. The Executive Board assumes that travel behaviour will not be affected by further long-term closures and lockdowns or by the impact of Russia's war of aggression against Ukraine.
The Executive Board does not consider the remaining risk with regard to a further pandemic / war-related change in booking behaviour to be a threat to the company's existence. Nevertheless, the TUI Group's performance might be impaired by the following factors. The intensified general price increase of recent months could continue, in particular due to rising energy costs, and lead to a significant reduction in the private budget available for travel services, thus lowering purchasing power and resulting in declining customer demand. In addition, a permanent increase in fuel costs as well as other services, especially those we purchase in US dollars, could lead to an increase in our input costs. Further burdens could result from continued or increased flight disruptions. If these risks were to materialise, compliance with the financial covenants as at 31 March 2023 and 30 September 2023 could be jeopardised. The Executive Board considers the simultaneous occurrence of these risks to be very unlikely and therefore assumes that the financial targets (covenants) will be met.
In accordance with Regulation 30 of the UK Corporate Governance Code, the Executive Board confirms that,
in its opinion, it is appropriate to prepare the consolidated 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 at the balance sheet date and the reported values of revenues and expenses during the reporting period.
Both the recent development of the pandemic and current trading for the summer programme have confirmed the business performance guidance provided by TUI at the end of financial year 2022. Additionally a risk assessment was performed for the Group's assets to identify any indications of impairment as at 31 December 2022. On the basis of that assessment, TUI does not see any indication that the Group's assets may generally be impaired.
The accounting and measurement methods adopted in the preparation of the Interim Financial Statements as at 31 December 2022 are materially consistent with those followed in preparing the annual consolidated financial statements for the financial year ended 30 September 2022, except for 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.
The repayment agreement with the WSF has not been recognized as per 31. December 2022 as the conditions for its effectiveness and closing have not yet been met and as it is not sufficiently certain at this time that they will be met. For further details on the repayment agreement please see 'Going concern reporting in accordance with the UK Corporate Governance Code'.
Newly applied standards
Since the beginning of financial year 2023, TUI Group has initially applied the following standards, amended by the IASB and endorsed by the EU, on a mandatory basis:
Newly applied standards in financial year 2023
Standard Applicable Amendments Impact on financial
from statements
The amendments specify which costs to include in assessing No impacts to the Q1
Amendments to whether a contract is onerous. The amendments clarify that the interim reporting. For
IAS 37 1 Jan 2022 cost of fulfilling a contract consists of the direct cost of the current financial
Onerous the contract representing either the incremental costs of year no material impacts
Contracts fulfilling the contract or an allocation of other costs that are expected.
relate directly to fulfilling the contract.
The amendments prohibit deducting from the cost of an item of
Amendments to property, plant and equipment any proceeds from selling items
IAS 16 produced while bringing that asset to the location and
Proceeds 1 Jan 2022 condition necessary for it to be capable of operating in the No impacts.
before manner intended by management. Instead, an entity has to
Intended Use recognise the proceeds from selling such items, and the cost
of producing those items, in profit or loss.
Amendments to
IFRS 3 The amendments update a reference to the Conceptual Framework
Reference to 1 Jan 2022 in IFRS 3 without changing the accounting requirements for No impacts.
the business combinations.
Conceptual
Framework
Various The amendments resulting from the Annual Improvements
amendments to 1 Jan 2022 2018-2020 Cycle include small amendments to IFRS 1, IFRS 9, No major impacts.
IFRS IAS 41, and the Illustrative Examples accompanying IFRS 16.
(2018-2020)
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 or have entitlements regarding the returns, and can affect the level of those variable returns through its decision-making power.
The Interim Financial Statements as of 31 December 2022 comprised a total of 270 subsidiaries of TUI AG.
Development of the group of consolidated companies*and the Group companies measured at equity
Consolidated subsidiaries Associates Joint ventures
Number at 30 Sep 2022 268 17 27
Additions 2 - -
Incorporation 1 - -
Demerger 1 - -
Disposals - - -
Number at 31 Dec 2022 270 17 27
* excl. TUI AG
Acquisitions - Divestments
Acquisitions in the period under review
In 3M 2023, no companies were acquired.
No acquisitions were made after the reporting date.
Acquisitions of the prior financial year
In financial year 2022, no companies were acquired under IFRS 3.
Divestments
In 3M 2023, no companies were sold.
No divestments took place after the reporting date.
Notes to the unaudited condensed consolidated Income Statement
In the first three months of financial year 2023, TUI Group's business volume was significantly higher than in Q1 2022 which was still impacted by measures 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. In addition to seasonality, the winter season of the previous year was also negatively affected by the impact of the COVID 19 pandemic. 1. Revenue
In the first three months of the financial year 2023, consolidated revenue increased by EUR1.4bn year-on-year to EUR3.8bn.
External revenue allocated by destinations for the period from 1 Oct 2022 to 31 Dec 2022
Rest of Q1 2023
Spain Other Caribbean, North Africa, Revenues
EUR million (incl. European Mexico, Africa Ind. Other from Other Q1 2023
Canary destinations USA & & Ocean, countries contracts Total
Islands) Canada Turkey Asia with
customers
Hotels & 89.3 10.8 53.4 13.1 44.3 - 210.9 - 210.9
Resorts
Cruises 46.7 18.3 50.2 - - - 115.2 - 115.2
TUI Musement 30.9 36.6 33.6 7.7 19.1 13.5 141.4 - 141.4
Holiday 166.9 65.7 137.2 20.8 63.4 13.5 467.5 - 467.5
experiences
Northern 427.0 243.6 334.4 160.3 168.6 7.8 1,341.7 1.4 1,343.1
Region
Central 388.1 278.1 106.0 332.4 244.6 1.6 1,350.8 0.3 1,351.1
Region
Western 167.9 76.7 129.9 89.3 66.0 3.7 533.5 1.4 534.9
Region
Markets & 983.0 598.4 570.3 582.0 479.2 13.1 3,226.0 3.1 3,229.1
Airlines
All other 0.5 5.0 2.0 2.4 41.0 3.0 53.9 - 53.8
segments
Total 1,150.4 669.1 709.5 605.2 583.6 29.6 3,747.4 3.1 3,750.5
External revenue allocated by destinations for the period from 1 Oct 2021 to 31 Dec 2021
Rest of Q1 2022
Spain Other Caribbean, North Africa, Revenues
EUR million (incl. European Mexico, Africa Ind. Other from Other Q1 2022
Canary destinations USA & & Ocean, countries contracts Total
Islands) Canada Turkey Asia with
customers
Hotels & 91.7 11.7 50.5 10.9 33.5 - 198.3 - 198.3
Resorts
Cruises 18.6 3.1 12.3 - - 0.2 34.2 - 34.2
TUI Musement 16.4 22.4 16.9 3.3 5.4 1.9 66.3 - 66.3
Holiday 126.7 37.2 79.7 14.2 38.9 2.1 298.8 - 298.8
experiences
Northern 245.3 148.6 143.6 47.3 63.9 2.7 651.4 0.8 652.2
Region
Central 325.6 335.4 51.0 192.9 79.7 0.3 984.9 0.2 985.1
Region
Western 194.1 75.3 97.0 21.9 26.9 0.4 415.6 0.4 416.1
Region
Markets & 765.0 559.3 291.6 262.1 170.5 3.4 2,051.9 1.4 2,053.4
Airlines
All other 0.9 4.5 0.9 0.9 7.9 2.0 17.1 - 17.0
segments
Total 892.6 601.0 372.2 277.2 217.3 7.5 2,367.8 1.4 2,369.2 2. Cost of sales and administrative expenses
Cost of sales relates to the expenses incurred in the provision of tourism services. In addition to the expenses for staff costs, depreciation, amortisation, rental and leasing, it includes all costs incurred by TUI Group in connection with the procurement and delivery of airline services, hotel accommodation and cruises and distribution costs.
Due to the increased business volume, the cost of sales increased by 48.1% to EUR3.7bn in 3M 2023.
Government Grants EUR million Q1 2023 Q1 2022 Cost of Sales - 11.5 Administrative expenses 0.2 13.5 Total 0.2 25.0
In the prior year, government grants were awarded due to the measures in place to contain the COVID-19 pan-demic. When these measures ended in financial year 2022, the various aid programmes were also terminated. The government grants reported under cost of sales and administrative expenses include in particular grants for wages and salaries as well as social security contributions directly reimbursed to the relevant company. In addition, a number of Group companies have received government grants, e. g. in the form of grants for fixed costs.
Administrative expenses comprise all expenses incurred in connection with the performance of administrative functions and break down as follows:
Administrative expenses EUR million Q1 2023 Q1 2022 Staff costs 141.9 135.8 Rental and leasing expenses 3.8 3.5 Depreciation, amortisation and impairment 17.2 21.0 Others 79.8 41.4 Total 242.6 201.7
The cost of sales and administrative expenses include the following expenses for staff and depreciation/ amortisation:
Staff costs
EUR million Q1 2023 Q1 2022
Wages and salaries 448.7 394.3
Social security contributions, pension costs and benefits 94.3 83.4
Total 543.0 477.7
Depreciation/amortisation/impairment
EUR million Q1 Q1
2023 2022
Depreciation and amortisation of other intangible assets, property, plant and equipment and 212.6 218.6
right-of-use assets
Impairment of other intangible assets, property, plant and equipment and right-of-use assets 4.2 2.2
Total 216.8 220.8
The impairments of EUR4.2m were presented within cost of sales (Q1 2022 EUR2.2m). In 3M 2023, no reversals of impairment losses were recognized. In the first quarter of the prior year reversals of impairments of EUR4.9m were recognized, all recorded in cost of sales. 3. Other income
In the first three months of the financial year 2023 other income mainly includes EUR4.7m from the disposal of the Jet Set House (Crawley). In the prior year, this item had primarily included income from the disposal of TUI Group companies. 4. Other expenses
In 3M 2023 other expenses mainly results from the disposal of aircraft assets. In the previous year, other expenses also included losses from the disposal of aircraft assets. 5. Financial income and financial expenses
The improvement in the net financial result from EUR-127.0 m in the first three months of the previous year to EUR-114.1m in the current financial year is mainly the result of less interest expenses. 6. Share of result of investments accounted for using the equity method
Share of result of investments accounted for using the equity method EUR million Q1 2023 Q1 2022 Hotels & Resorts 15.8 7.0 Cruises 7.6 - 2.6 TUI Musement 2.9 1.0 Holiday Experiences 26.3 5.4 Northern Region - 31.0 - 7.1 Central Region - 0.2 - 0.6 Western Region 0.3 - Markets & Airlines - 30.9 - 7.7 All other segments 0.2 - Total - 4.4 - 2.3 7. Income taxes
The tax income arising in the first three months of 2023 is mainly driven by the seasonality of the tourism business. 8. Group profit / loss attributable to non-controlling interest
TUI Group's result attributable to non-controlling interests is substantially a gain, primarily relating to RIUSA II Group at an amount of EUR24.0m (Q1 2022 EUR2.2m loss).
Notes to the unaudited condensed consolidated Statement of Financial Position 9. Goodwill
Goodwill decreased by EUR18.6mEUR to EUR2,952.0m due to foreign exchange translation. The following table presents a breakdown of goodwill by cash generating unit (CGU) at carrying amounts.
Goodwill per cash generating unit EUR million 31 Dec 2022 30 Sep 2022 Northern Region 1,190.7 1,204.7 Central Region 502.3 502.5 Western Region 412.3 412.3 Riu 343.1 343.1 Marella Cruises 288.3 288.8 TUI Musement 168.4 171.4 Other 46.9 47.8 Total 2,952.0 2,970.6
As at 31 December 2022, a risk assessment of the capitalised goodwill was carried out based on updated information for the current financial year. As part of this assessment, there were no indications that led to a requirement to perform impairment testing of the capitalised goodwill. In this context, please refer to the section 'Accounting and measurement methods'. 10. Property, plant and equipment
Compared to 30 September 2022 property, plant and equipment increased by EUR13.8m to EUR3,414.7m. Additions of EUR187.8m included EUR66.1m of acquisitions in the Hotels & Resorts segment. The construction of a new hotel in Mexico and the renovation of hotels in Cape Verde and Mauritius led to additions in the Riu Group totalling EUR60.5m. In addition, advance payments of EUR59.1m were made for the future delivery of additional aircraft. Furthermore, additions of EUR27.5m were attributable to payments on account to carry out maintenance work on cruise ships. Further additions related to the purchase of aircraft engines at EUR17.0m and of aircraft spare parts at EUR6.0m. The reclassification of an aircraft from right-of-use assets was the result of the exercise of an existing purchase option and led to an increase in property, plant and equipment of EUR18.3m.
On the other hand, property, plant and equipment decreased by EUR96.6m due to foreign exchange translation. Depreciation and amortisation of EUR61.5m led to a further decrease in property, plant and equipment. The planned sale of two aircraft engines led to a reclassification of EUR31.3m to assets held for sale. In this context, please refer to the section 'Assets held for sale'. 11. Right-of-use assets
Compared to 30 September 2022 right-of-use assets decreased by EUR230.3m to EUR2,741.2m. The foreign exchange translation led to a decrease in right-of-use assets of EUR137.1m. Furthermore, depreciation charged of EUR124.1m led to a decrease in right-of-use assets. The reclassification of an aircraft into property, plant and equipment led to a further reduction of right-of-use assets by EUR18.3m (in this context, we refer to the section 'Property, plant and equipment'). Disposals also reduced the right-of-use assets by EUR6.7m.
On the other hand, modifications and reassessments of existing lease contracts increased the right-of-use assets by EUR57.5m. The increase is mainly due to contract extensions related to leased aircraft (EUR35.9m) and hotel leases (EUR13.2).
The corresponding liabilities are explained in the section 'Lease Liabilities'. 12. Trade and other receivables
The decrease in current trade and other receivables results from reduced security deposits issued to secure advance payment from customers. 13. Assets held for sale
As at 31 December 2022, two aircraft engines with a total value of EUR31.0m were classified as held for sale. The sale of the aircraft engines is planned for the beginning of February 2023. During the period under review, there were no reclassifications to assets held for sale.
As at the end of the prior financial year, the building at Jet Set House (Crawley) of TUI Airways Limited was classified as held for sale (EUR2.7m). The disposal transaction was completed on 3 October 2022. The purchase price payment of GBP6.5m was made on 3 October 2022. 14. Pension provisions and similar obligations
The pension provisions for unfunded plans and underfunded plans increased by EUR54.1m to EUR655.4m compared to the end of the previous financial year.
The overfunding of funded pension plans reported in other non-financial assets decreased by EUR44.3m from EUR163.4m as at 30 September 2022 to EUR119.1m as at 31 December 2022.
This development is attributable in particular to remeasurement effects due to increased discount rates in the UK compared to 30 September 2022. 15. Financial liabilities
Non-current financial liabilities increased by EUR1,928.8m to EUR3,660.2m compared to 30 September 2022. This increase was primarily attributable to an increase in liabilities to banks related to credit lines with maturity in July 2024 of EUR1,944.5m.
The main financing instrument is a syndicated revolving credit facility (RCF) between TUI AG and the existing bank-ing syndicate which from 2020, included the KfW. The volume of this revolving credit facility totals EUR3.555bn at 31 December 2022.
At 31 December 2022, the amounts drawn under the revolving credit facilities totalled EUR2,449.8m (30 September 2022 EUR562.0m).
Current financial liabilities decreased by EUR28.3m to EUR291.6m at 31 December 2022 compared to EUR319.9m at 30 September 2022.
For more details on the terms, conditions and the reductions of the credit lines as well as the redemption of the bond with warrants, please refer to the section 'Going Concern Reporting under the UK Corporate Governance Code'. 16. Lease liabilities
Compared to 30 September 2022, the lease liabilities decreased by EUR271.6m to EUR2,935.9m. Payments of EUR202.4m led to a decline in lease liabilities. Furthermore, lease liabilities decreased by EUR165.0m due to foreign exchange translation. On the other hand, changes and remeasurements of existing leases resulted in an increase in lease liabilities of EUR51.3m. In addition, the lease liabilities increased by EUR42.5m due to interest charges. 17. Other financial liabilities
The other financial liabilities include touristic advance payments received for tours cancelled because of COVID-19 restrictions of EUR15.5m (as at 30 September 2022 EUR16.7m), for which immediate cash refund options exist and which have to be repaid shortly if the customer opts for payment. Further obligations from COVID-19 related cancelled holidays do not exist. 18. Changes in equity
Overall, equity decreased by EUR544.1m when compared to 30 September 2022, from EUR645.7m to EUR101.6m.
For the Silent Participation I, a coupon for financial year 2022 in the amount of EUR16.8m was paid to the Economic Stabilisation Fund in December 2022 and reported in line Coupon on silent participation.
In the first three months of the financial year 2023, TUI AG paid no dividend (previous year: no dividend).
The Group loss in the first three months of the financial year 2023 is mainly caused by the seasonality of the tourism business.
The proportion of gains and losses from hedging instruments for effective hedging of future cash flows includes an amount of EUR-136.3m (pre-tax) carried under other comprehensive income in equity outside profit and loss (previous year EUR-3.9m).
The revaluation of pension obligations is also recognised under other comprehensive income directly in equity without effect on profit and loss. 19. Financial instruments
Carrying amounts and fair values according to classes and measurement categories according to IFRS 9 as at 31 Dec 2022
Category according to IFRS 9
At Fair value with no Fair value with no Fair value Fair value
EUR million Carrying amortised effect on profit and effect on profit and through of financial
amount cost loss without recycling loss with recycling profit and instruments
loss
Assets
Trade receivables
and other
receivables
thereof
instruments 1,045.6 1,009.6 - - 36.0 1,039.8
within the scope
of IFRS 9
thereof
instruments 7.8 - - - - 8.1
within the scope
of IFRS 16
Derivative
financial
instruments
Hedging 29.9 - - 29.9 - 29.9
transactions
Other derivative
financial 64.1 - - - 64.1 64.1
instruments
Other financial 96.5 85.0 10.6 - 0.9 93.3
assets
Cash and cash 1,542.7 1,542.7 - - - 1,542.7
equivalents
Liabilities
Financial 3,951.8 3,951.8 - - - 3,619.0
liabilities
Trade payables 2,003.3 2,003.3 - - - 2,003.3
Derivative
financial
instruments
Hedging 76.6 - - 76.6 - 76.6
transactions
Other derivative
financial 34.4 - - - 34.4 34.4
instruments
Other financial 125.5 125.5 - - - 125.5
liabilities
Carrying amounts and fair values according to classes and measurement categories according to IFRS 9 as at 30 Sep 2022
Category according to IFRS 9
At Fair value with no Fair value with no Fair value Fair value
EUR million Carrying amortised effect on profit and effect on profit and through of financial
amount cost loss without recycling loss with recycling profit and instruments
loss
Assets
Trade receivables
and other
receivables
thereof
instruments 1,133.8 1,027.3 - - 106.5 1,124.5
within the scope
of IFRS 9
thereof
instruments 9.6 - - - - 9.9
within the scope
of IFRS 16
Derivative
financial
instruments
Hedging 124.4 - - 124.4 - 124.4
transactions
Other derivative
financial 134.7 - - - 134.7 134.7
instruments
Other financial 96.4 85.9 9.6 - 0.9 90.5
assets
Cash and cash 1,736.9 1,736.9 - - - 1,736.9
equivalents
Liabilities
Financial 2,051.3 2,051.3 - - - 1,656.7
liabilities
Trade payables 3,316.5 3,316.5 - - - 3,316.5
Derivative
financial
instruments
Hedging 27.0 - - 27.0 - 27.0
transactions
Other derivative
financial 33.7 - - - 33.7 33.7
instruments
Other financial 177.4 177.4 - - - 177.4
liabilities
The amounts shown in the column 'carrying amount' (as shown in the balance sheet) in the tables above can differ from those in the other columns of a particular row since the latter include all financial instruments. That is the latter columns include financial instruments which are part of disposal groups according to IFRS 5. In the balance sheet, financial instruments, which are part of a disposal group, are shown as separate items. If such financial instruments are included, further details on these financial instruments are explained in the section 'Assets held for sale'.
The instruments measured at fair value through other comprehensive income (OCI) within the other financial assets class are investments in companies based on medium to long-term strategic objectives. Recording all short-term fluctuations in the fair value in the income statement would not be in line with TUI Group's strategy; these equity instruments were, therefore, designated as at fair value through OCI.
In the period under review the fair values of current other receivables, current other financial assets and current liabilities to banks were generally determined. This approach is in line with the previous financial year, taking into account yield curves and the respective credit risk premium (credit spread) based on credit rating. As a result, the assumption that the carrying amount approximately corresponds to the fair value due to the short remaining term has been adjusted to the current market conditions due to the COVID-19 pandemic.
The fair values of non-current trade receivables and other receivables correspond to the present values of the cash flows associated with the assets, taking account of current interest parameters which reflect market and counterparty-related changes in terms and expectations. In the case of cash and cash equivalents, current trade receivables, current trade payables and other financial liabilities the carrying amount approximates the fair value due to the short remaining term.
The COVID-19 pandemic significantly impacted TUI's business operations, causing a strong increase in TUI's credit risk premiums. The significant increase in TUI's credit risk has a direct impact on the effectiveness of hedging relationships according to IAS 39 and explicitly on the retrospective hedge effectiveness test, because when calculating retrospective effectiveness, the credit risk is included in the derivative instrument entered into with the counterparty, but not in the hypothetical derivative. As a result, fuel price, interest rate and currency hedges had to be de-designated as they no longer met the effectiveness requirements of IAS 39. All future changes in the value of these de-designated hedges are also taken to the cost of sales respectively in the financial result in the case of interest rate hedges in the income statement through profit and loss and recognised as other derivative financial instruments from the date of the termination of the cash flow hedge accounting. As at 31 December 2022, the fair value of these reclassified fuel price hedges totalled EUR+16.9m at a nominal volume of EUR239.5m, while the fair value of the interest rate hedges amounted to EUR+5.5m at a nominal volume of EUR300.8m and the fair value of foreign currency hedges totalled EUR+4.1m at a nominal volume of EUR46.9m.
Aggregation according to measurement categories under IFRS 9 as at 31 Dec 2022
EUR million Carrying amount of financial instruments Fair Value
Total
Financial assets
at amortised cost 2,637.3 2,628.3
at fair value - recognised directly in equity without recycling 10.6 10.6
at fair value - through profit and loss 101.0 101.0
Financial liabilities
at amortised cost 6,080.6 5,747.8
at fair value - through profit and loss 34.4 34.4
Aggregation according to measurement categories under IFRS 9 as at 30 Sep 2022
EUR million Carrying amount of financial instruments Fair Value
Total
Financial assets
at amortised cost 2,850.1 2,834.9
at fair value - recognised directly in equity without recycling 9.6 9.6
at fair value - through profit and loss 242.1 242.1
Financial liabilities
at amortised cost 5,545.2 5,150.6
at fair value - through profit and loss 33.7 33.7
Fair value measurement
The table below presents the fair values of recurring, non-recurring and other financial instruments measured at fair value in line with the underlying measurement level. The individual measurement levels have been defined as follows in line with the inputs:
-- Level 1: (unadjusted) quoted prices in active markets for identical assets or liabilities.
-- Level 2: inputs for the measurement other than quoted market prices included within Level 1 that areobservable in the market for the asset or liability, either directly (as quoted prices) or indirectly (derivablefrom quoted prices).
-- Level 3: inputs for the measurement of the asset or liability not based on observable market data.
Hierarchy of financial instruments measured at fair value as at 31 Dec 2022
Fair value hierarchy
EUR million Total Level 1 Level 2 Level 3
Assets
Other receivables 36.0 - - 36.0
Other financial assets 11.5 - - 11.5
Derivative financial instruments
Hedging transactions 29.9 - 29.9 -
Other derivative financial instruments 64.1 - 64.1 -
Liabilities
Derivative financial instruments
Hedging transactions 76.6 - 76.6 -
Other derivative financial instruments 34.4 - 34.4 -
Hierarchy of financial instruments measured at fair value as of 30 Sep 2022
Fair value hierarchy
EUR million Total Level 1 Level 2 Level 3
Assets
Other receivables 106.5 - - 106.5
Other financial assets 10.5 - - 10.5
Derivative financial instruments
Hedging transactions 124.4 - 124.4 -
Other derivative financial instruments 134.7 - 134.7 -
Liabilities
Derivative financial instruments
Hedging transactions 27.0 - 27.0 -
Other derivative financial instruments 33.7 - 33.7 -
At the end of every reporting period, TUI Group checks whether there are any reasons for reclassification to or from one of the measurement levels. Financial assets and financial liabilities are generally transferred out of Level 1 into Level 2 if the liquidity and trading activity no longer indicate an active market. The opposite situation applies to potential transfers out of Level 2 into Level 1. In the reporting period, there were no transfers between Level 1 and Level 2.
Reclassifications from Level 3 to Level 2 or Level 1 are made if observable market price quotations become available for the asset or liability concerned. In the reporting period there were no other transfers from or to Level 3. TUI Group records transfers from or to Level 3 at the date of the obligating event or occasion triggering the transfer.
Level 1 financial instruments
The fair value of financial instruments for which an active market exists is based on quoted prices at the reporting date. An active market exists if quoted prices are readily and regularly available from an exchange, dealer, broker, pricing service or regulatory agency and these prices represent actual and regularly occurring market transactions on an arm's length basis. These financial instruments are classified as Level 1. The fair values correspond to the nominal amounts multiplied by the quoted prices at the reporting date. Level 1 financial instruments primarily comprise shares in listed companies classified as at fair value through OCI and bonds issued classified as financial liabilities at amortised cost.
Level 2 financial instruments
The fair values of financial instruments not traded in an active market, e.g., over-the-counter (OTC) derivatives, are determined by means of valuation techniques. These valuation techniques make maximum use of observable market data and minimise the use of Group-specific assumptions. If all essential inputs for the determination of the fair value of an instrument are observable, the instrument is classified as Level 2.
If one or several key inputs are not based on observable market data, the instrument is classified as Level 3.
The following specific valuation techniques are used to measure financial instruments:
-- For OTC bonds, debt components of warrants and convertible bonds, liabilities to banks, promissory notesand other non-current financial liabilities as well as for current other receivables, current financial liabilitiesand non-current trade and other receivables, the fair value is determined as the present value of future cashflows, taking account of observable yield curves and the respective credit spread, which depends on the creditrating.
-- The fair value of over-the-counter derivatives is determined by means of appropriate calculation methods,e.g. by discounting the expected future cash flows. The forward prices of forward transactions are based on thespot or cash prices, taking account of forward premiums and discounts. The fair values of optional hedges arecalculated based on option pricing models. The fair values determined on the basis of the Group's own systems areperiodically compared with fair value confirmations of the external counterparties.
-- Other valuation techniques, e.g., discounting future cash flows, are used to determine the fair values ofother financial instruments.
Level 3 financial instruments
The table below presents the fair values of the financial instruments measured at fair value on a recurring basis, classified as Level 3:
Financial assets measured at fair value in Level 3 EUR million Other receivables IFRS9 Other financial assets IFRS 9 Balance as at 1 Oct 2021 108.1 12.3 Disposals - 15.0 - Total gains or losses for the period 13.4 - 1.4 recognised through profit and loss 13.4 - 0.1 recognised in other comprehensive income - - 1.3 Foreign currency effects - - 0.4 Balance as at 30 Sep 2022 106.5 10.5 Balance as at 1 Oct 2022 106.5 10.5 Disposals - 70.7 - payment - 70.7 - Total gains or losses for the period 0.2 1.1 recognised through profit and loss 0.2 - recognised in other comprehensive income - 1.1 Foreign currency effects - - 0.1 Balance as at 31 Dec 2022 36.0 11.5
Evaluation process
The fair value of financial instruments in level 3 has been determined by TUI Group's financial department using the discounted cash flow method. This involves the market data and parameters required for measurement being compiled or validated. Non-observable input parameters are reviewed based on internally available information and updated if necessary.
In principle, the unobservable input parameters relate to the following parameters: the (estimated) EBITDA margin is in a range between 8.3 % and 24.0 % (30 September 2022: 8.3 % and 24.0 %). The constant growth rate is 1 % (30 September 2022: 1 %). The weighted average cost of capital (WACC) is in a range between 9.62%-10.17 % (30 September 2022: 9.5 %-11.3 %). Due to materiality, no detailed figures have been provided. With the exception of the WACC, there is a positive correlation between the input factors and the fair value.
The increase of the fair values of the Other financial assets in Level 3 mainly results from a valuation effect in the amount of EUR1.1m and foreign exchange rate effects in the amount of EUR-0.1m.
The Other receivables according to IFRS 9 in Level 3 at a carrying amount of EUR36.0 as at 31 December 2022 (as at 30 September 2022 EUR106.5m) relate to a variable purchase price receivable from the sale of RIU Hotels S.A., carried as a financial instrument in the measurement category at fair value through profit and loss. The fair value is determined using a probability calculation for the future gross operating profit, taking account of contractual entitlements to an additional purchase price demand and an appropriate risk-adjusted discount rate (3.49 %, 30 September 2022: 1.99 to 2.87 %). Gross operating profit is defined as total revenue minus operating expenses. The cash flows from the contractual claims set out in the underlying Memorandum of Understanding depend solely on a number of contractually determined Riu hotels delivering the gross operating profit for calendar year 2023.
The variable purchase price payment varies as a function of delivering the contractually fixed gross operating profit. The maximum amount is limited. At least 90 % of the target gross operating profit contractually agreed for 2023 has to be achieved in order to generate a variable purchase price payment. If the 90 % target is not met, no further purchase price payment will be made. The maximum purchase price payment totals EUR39.7m. Due to different expectations regarding target achievement, potential purchase price payments vary between EUR0 and EUR39.7m.
TUI expects the hotels concerned to deliver around 100 % to 105 % of cumulative gross operating profit in calendar year 2023. The current planning for the relevant hotels (input parameters) is regularly reviewed by the responsible accounting staff.
Sensitivity analysis shows that an increase in the hotels' gross operating profit of 10 % would result in a change in the present value of the additional purchase price receivable of EUR2.0m (as at 30 September 2022 EUR2.0m), while a reduction in gross operating profit of 10 % would result in a change in the present value of EUR-24.4m (as at 30 September 2022 EUR-24.4m). An interest rate shift of +/-100 basis points would alter the present value of the purchase price receivable by EUR0.4m (as at 30 September 2022 EUR0.5m).
Effects on results
The effects of remeasuring financial assets carried at fair value through OCI as well as the effective portions of changes in fair values of derivatives designated as cash flow hedges are listed in the statement of changes in equity. 20. Contingent liabilities
As at 31 December 2022, contingent liabilities amounted to EUR89.6m (as at 30 September 2022 EUR93.5m). They are mainly attributable to the granting of guarantees for the benefit of hotel and cruises activities and the granting of guarantees for contingent liabilities from aircraft leasing agreements. The contingent liabilities are reported at an amount representing the best estimate of the expenditure required to meet the potential obligation at the balance sheet date. 21. Other financial commitments
Nominal values of other financial commitments EUR million 31 Dec 2022 30 Sep 2022 Order commitments in respect of capital expenditure 2,218.7 2,291.4 Other financial commitments 98.3 129.2 Total 2,317.0 2,420.6
As at 31 December 2022 order commitments in respect of capital expenditure decreased by EUR72.7m as against
30 September 2022.
The decrease in order commitments is largely attributed to a decline in aircraft obligations. Scheduled payments and the effects of foreign exchange for order commitments denominated in non-functional currencies is to a greater extent partially offset by new aircraft orders undertaken in the period. The commitments for maintenance and repairs which are reported within other financial commitments decreased particularly in the segment Hotels & Resorts due to a reduction of refurbishment projects undertaken. 22. Note to the unaudited condensed consolidated Cash Flow Statement
The cash flow statement shows the flow of cash and cash equivalents on the basis of a separate presentation of cash inflows and outflows from operating, investing and financing activities. The effects of changes in the group of consolidated companies and of foreign currency translation are eliminated.
In the period under review, cash and cash equivalents decreased by EUR194.2m to EUR1,542.7m.
In 3M 2023, the cash outflow from operating activities totalled EUR1,670.9m (Q1 2022 cash outflow of EUR964.6m),
including an inflow of EUR6.4m (Q1 2022 EUR1.3m) from interest payments and EUR2.2m (Q1 2022 EUR0.1m) from dividends received from companies measured at equity. Income tax payments resulted in a cash outflow of EUR28.9m (Q1 2022 EUR6.1m).
The total cash outflow from investing activities totalled EUR147.6m (Q1 2022 cash outflow of EUR53.2m). This amount included a cash outflow for capital expenditure on property, plant and equipment and intangibles of EUR228.6m. The Group recorded a cash inflow of EUR9.9m from the divestment of property, plant and equipment and intangible assets. TUI recorded a cash inflow of EUR70.7m from the earn-out payment in connection with sale of the stakes in Riu Hotels S.A., effected in financial year 2021. A cash inflow of EUR2.1m resulted from the sale of money market funds.
The cash inflow from financing activities totalled EUR1,634.7m (Q1 2022 cash inflow of EUR1,077.2m).
In the financial year under review, TUI AG increased its syndicated credit facility by EUR1,884.6m. Other TUI Group companies took out loans worth EUR99.8m. A cash outflow of EUR210.5m resulted from the redemption of financial liabilities, including an amount of EUR162.8m for lease liabilities. Interest payments resulted in a cash outflow of EUR122.3m. TUI AG paid an amount of EUR16.8m as coupon on Silent Participation I of the German Economic Stabilisation Fund, carried as a dividend.
In addition, cash and cash equivalents decreased by EUR10.6m (Q1 2022 increase by EUR3.8m) due to changes in exchange rates.
As at 31 December 2022, cash and cash equivalents worth EUR637.1m were subject to restrictions (as at 30 September 2022 EUR526.1m).
On 30 September 2016, TUI AG entered into a long-term agreement to close the gap between the obligations and the fund assets of defined benefit pension plans in the UK. At the balance sheet date, an amount of EUR66.6m was deposited as security within a bank account (as at 30 September 2022 EUR66.1m). TUI Group can only use this amount of cash and cash equivalents if it provides alternative collateral.
Furthermore, an amount of EUR116.1m (as at 30 September 2022 EUR116.1m) related to cash collateral received, which was deposited with a Belgian subsidiary without acknowledgement of debt by the Belgian tax authorities in financial year 2013 in respect of long-standing litigation over VAT refunds for the period from 2001 to 2011. The purpose was to suspend the accrual of interest for both parties. In order to collateralise a potential repayment, the Belgian government was granted a bank guarantee. Due to the bank guarantee, TUI's ability to dispose of the cash and cash equivalents is restricted.
The remaining EUR454.5m (as at 30 September 2022 EUR343.9m) relate to cash and cash equivalents to be deposited due to statutory or regulatory requirements, mainly in order to secure customer deposits and credit card payables. 23. Reporting segments
Revenue by segment for the period from 1 Oct 2022 to 31 Dec 2022 EUR million External Group Q1 2023 Total Hotels & Resorts 210.9 173.8 384.7 Cruises 115.2 - 115.2 TUI Musement 141.4 64.6 206.0 Consolidation - - 0.1 - 0.1 Holiday Experiences 467.5 238.3 705.8 Northern Region 1,343.1 86.6 1,429.7 Central Region 1,351.1 21.2 1,372.3 Western Region 534.9 37.6 572.5 Consolidation - - 138.8 - 138.8 Markets & Airlines 3,229.1 6.6 3,235.7 All other segments 53.8 1.5 55.3 Consolidation - - 246.3 - 246.3 Total 3,750.5 - 3,750.5 Revenue by segment for the period from 1 Oct 2021 to 31 Dec 2021 EUR million External Group Q1 2022 Total Hotels & Resorts 198.3 84.5 282.8 Cruises 34.2 - 34.2 TUI Musement 66.3 33.9 100.2 Consolidation - - 1.2 - 1.2 Holiday Experiences 298.8 117.2 416.0 Northern Region 652.2 76.3 728.5 Central Region 985.1 18.8 1,003.9 Western Region 416.1 35.1 451.2 Consolidation - - 128.4 - 128.4 Markets & Airlines 2,053.4 1.8 2,055.2 All other segments 17.0 0.8 17.8 Consolidation - - 119.8 - 119.8 Total 2,369.2 - 2,369.2
The segment data shown are based on regular internal reporting to the Executive Board. Since the 2020 fiscal year, the internationally more commonly used earnings measure "underlying EBIT" is used for value-based management.
Accordingly, this represents the segment performance indicator within the meaning of IFRS 8.
We define the EBIT in underlying EBIT as earnings before interest, income taxes and expenses from the measurement of the Group's interest rate hedging instruments. Impairment losses on goodwill are by definition included in EBIT.
Underlying EBIT has been adjusted to exclude certain items which, due to their size and frequency of occurrence, make it difficult or distort the assessment of the operating performance of the business areas and the Group. These items include gains and losses on the disposal of financial assets, significant gains and losses on the disposal of assets and significant restructuring and integration expenses. In addition, all effects from purchase price allocations, incidental acquisition costs and contingent purchase price payments are adjusted. Impairment losses on goodwill have also been eliminated in the reconciliation to underlying EBIT.
In 3M 2023, underlying EBIT includes results of investments accounted for using the equity method of EUR-4.4m (Q1 2022 EUR-2.3m). For a split up by segments, please refer to Note 6 'Share of result of investments accounted for using the equity method'.
Underlying EBIT by segment EUR million Q1 2023 Q1 2022 Hotels & Resorts 71.9 61.1 Cruises 0.2 - 31.7 TUI Musement - 13.0 - 12.7 Holiday Experiences 59.2 16.7 Northern Region - 122.0 - 171.7 Central Region - 28.3 - 55.0 Western Region - 43.7 - 32.4 Markets & Airlines - 193.9 - 259.0 All other segments - 18.3 - 31.3 Total - 153.0 - 273.6 Impairment on other intangible assets, property, plant and equipment and right of use assets EUR million Q1 2023 Q1 2022 Hotels & Resorts 3.3 - Holiday Experiences 3.3 - Northern Region 0.9 0.5 Central Region - 1.2 Western Region - 0.3 Markets & Airlines 0.9 2.0 All other segments - 0.2 Total 4.2 2.2 Reconciliation to underlying EBIT of TUI Group EUR million Q1 2023 Q1 2022 Earnings before income taxes - 272.6 - 404.5 plus: Net interest expenses (excluding expense / income from measurement of interest hedges) 110.5 131.6 plus: (Income) expense from measurement of interest hedges 3.4 1.5 EBIT - 158.7 - 271.4 Adjustments: less: Separately disclosed items - 0.7 - 9.3 plus: Expense from purchase price allocation 6.4 7.1 Underlying EBIT - 153.0 - 273.6
Net income for separately disclosed items of EUR0.7m included EUR2m income from the release of restructuring provisions no longer needed in Western Region and EUR1m release of restructuring provisions no longer needed in TUI Musement for the termination of the Tantur / TUI Russia business in the previous financial year, partly offset by EUR2m restructuring expenses in All Other Segments.
Net income for the separately disclosed items of EUR9.3m in Q1 2022 include income of EUR21m from the sale of the
shares in Nordotel S.A, fully consolidated in the Hotels & Resorts segment, to Grupotel S.A., a joint venture of the
TUI Group. In addition, restructuring expenses in the Central Region (EUR9m) and All Other Segments (EUR3m) segments were adjusted.
Expenses for purchase price allocations of EUR6.4m (previous year EUR7.1m) relate in particular to the scheduled amortisation of intangible assets from acquisitions made in previous years. 24. Related parties
Apart from the subsidiaries included in the Interim Financial Statements, TUI AG, in carrying out its business activities, maintains direct and indirect relationships with related parties. All transactions with related parties were executed on an arm's length basis.
Detailed information on related parties is provided under section 50 in the Notes to the consolidated financial statements 2022.
Responsibility Statement
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting and in the accordance with (German) principles of proper accounting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim Group management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.
The Executive Board
Hanover, 13 February 2023
Sebastian Ebel
David Burling
Mathias Kiep
Peter Krueger
Sybille Reiss
Review Report
To TUI AG, Berlin/Germany and Hanover/Germany
We have reviewed the condensed interim consolidated financial statements - comprising the condensed income statement, the condensed statement of comprehensive income, the condensed statement of financial position, the condensed statement of changes in equity, the condensed statement of cash flows as well as selected explanatory notes to the consolidated financial statements - and the interim Group management report for the period from 1 October 2022 until 31 December 2022 of TUI AG, Berlin and Hanover, which are part of the financial report under § 115 WpHG section 7 (Wertpapierhandelsgesetz: German Securities Trading Act). The preparation of the condensed interim consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) applicable to interim financial reporting as adopted by the EU, and of the interim group management in accordance with the requirements of the WpHG applicable to interim Group management reports is the responsibility of the entity's executive board. Our responsibility is to issue a review report on the condensed interim consolidated financial statements and on the interim Group management report based on our review.
We conducted our review of the condensed interim consolidated financial statements and of the interim Group management report in compliance with the German Generally Accepted Standards for the Review of Financial Statements promulgated by the Institut der Wirtschaftsprüfer (IDW) and in supplementary compliance with the International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". Those standards require that we plan and perform the review to obtain a limited level of assurance to preclude through critical evaluation that the condensed interim consolidated financial statements have not been prepared, in material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU or that the interim Group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim Group management reports. A review is limited primarily to inquiries of personnel of the entity and to analytical procedures applied to financial data and thus provides less assurance than an audit. Since, in accordance with our engagement, we have not performed an audit, we do not express audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the condensed interim consolidated financial statements of TUI AG, Berlin and Hanover, have not been prepared, in material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU, or that the interim Group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports.
Hanover/Germany, 13 February 2023
Deloitte GmbH
Wirtschaftsprüfungsgesellschaft
Annika Deutsch Elmar Meier
German Public Auditor German Public Auditor
Cautionary statement regarding forward-looking statements
The present Interim Financial Report contains various statements relating to TUI Group's and TUI AG's future development. These statements are based on assumptions and estimates. Although we are convinced that these forward-looking statements are realistic, they are not guarantees of future performance since our assumptions involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Such factors include market fluctuations, the development of world market prices for commodities and exchange rates or fundamental changes in the economic environment. TUI does not intend to and does not undertake any obligation to update any forward-looking statements in order to reflect events or developments after the date of this Report.
Financial calendar
Date Annual General Meeting of TUI AG 2023 14 February 2023 Half-Year Financial Report H1 2023 10 Mai 2023 Interim Financial Report Q3 2023 14 August 2023
Contacts
Nicola Gehrt
Group Director Investor Relations
Tel: + 49 (0)511 566-1435
Adrian Bell
Senior Manager Investor Relations
Tel: + 49 (0)511-2332
James Trimble
Investor Relations Manager
Tel: +44 (0)1582 315 293
Stefan Keese
Investor Relations Manager
Tel: + 49 (0)511 566-1387
Anika Heske
Junior Investor Relations Manager
Tel: + 49 (0)511 566-1425
TUI AG
Karl-Wiechert-Allee 4
30625 Hannover
Tel: + 49 (0)511 566-00
www.tuigroup.com
This Interim Financial Report, the presentation slides and the video webcast for Q1 2023 (published on 14 February 2023) are available at the following link: www.tuigroup.com/en-en/investors
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ISIN: DE000TUAG000 Category Code: QRF TIDM: TUI LEI Code: 529900SL2WSPV293B552 OAM Categories: 3.1. Additional regulated information required to be disclosed under the laws of a Member State Sequence No.: 222814 EQS News ID: 1558525 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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(END) Dow Jones Newswires
February 14, 2023 01:00 ET (06:00 GMT)
