remuneration of the members of the Executive Board contained in the table depicts the amounts actually received in the respective
financial year. For current members of the Executive Board for financial year 2020, these values correspond to values presented in the
table 'Awarded and owed remuneration pursuant to section 162 (1) sentence 1 AktG' (page 133 - 134 of the Annual Report). Where members of
the Executive Board only received pro rata remuneration in the individual financial years, e. g. due to starting during the year, the
remuneration for this financial year shall be projected for the full year in order to ensure comparability.
1 See page 128 of the Annual Report for details on past members.
2 Further, in FY 2020 Mr Baier received pension payments totalling &euro 910.3 k. Thereafter the relative share of the LTIP will total
approx. 4.9 % of the remuneration granted to him in FY 2020.
3 The following section is a mandatory disclosure in accordance with section 162 (1) sentence 2 no. 2 AktG in connection with section
26j (2) sentence 2 EGAktG and is in accordance with section 162 (3) sentence 2 AktG not subject to the financial report audit.
The earnings performance is generally depicted using the performance of the annual result of TUI AG pursuant to section 275 (2) no. 17
HGB. [Because the remuneration of the members of the Executive Board is also substantially dependent on the performance of Group
indicators, the performance of the underlying EBITA reported in the consolidated accounts of the TUI Group is also specified.]
The comparison of the development of the average remuneration of the employees is based on the average remuneration of the staff of TUI
AG. As the employee and remuneration structures are varied within the subsidiaries, in particular in terms of overseas employees, it is
expedient to rely solely on the staff of TUI AG for the comparison of the development of the average remuneration. This comparison group
was also used for the review of the appropriateness of the remuneration of the members of the Executive Board. This took into account the
remuneration of all employees, including managerial employees within the meaning of section 5 (3) German Works Constitution Act (BetrVG).
Any additional remuneration received by employees as members of the Supervisory Board of TUI AG was disregarded. To ensure comparability,
the remuneration of part-time employees was rounded up to FTE.
Comparison of annual change to Executive Board remuneration
according to section 162 (1) no. 2 AktG
Annual change (in %) 2020 vs. 2019
Executive Board remuneration 1
Friedrich Joussen - 5 %
David Burling - 15 %
Birgit Conix - 5 %
Sebastian Ebel - 5 %
Dr Elke Eller - 5 %
Frank Rosenberger - 5 %
Horst Baier (CFO until 30 September 2018) 2 10 %
Michael Frenzel (CEO until 31 March 2014) 3 1 %
Earnings performance
Annual result (TUI AG) 4
EBITA (Group) 5
Average employee remuneration on FTE basis
Company employees - 2 %
1 "Remuneration awarded and owed" within the meaning of section 162 (1) sentence 1 AktG (fixed remuneration, JEV, LTIP,
fringe benefits and fixed annual pension payment for Ms Conix and Mr Burling; "received values")
2 In FY 2019 Mr Baier received a payment from his pension plan, in FY 2020 he received a payment from his pension plan and from
the LTIP tranche 2017- 2020.
3 In FY 2019 and 2020 Mr Frenzel received payments from his pension plan.
4 Annual result within the meaning of section 275 (2) no. 17 HGB
5 Underlying EBITA of the TUI Group
REVIEW OF APPROPRIATENESS OF THE REMUNERATION AND PENSIONS OF MEMBERS
OF THE EXECUTIVE BOARD
Following the end of financial year 2020, the Supervisory Board carried out the annual review of the remuneration and pensions of Members
of the Executive Board for financial year 2020. It concluded that the level of the Executive Board remuneration and pensions are
appropriate from a legal point of view within the meaning of section 87 (1) German Stock Corporation Act.
The Supervisory Board also regularly makes use of external advisors when assessing the appropriateness of the remuneration and pensions
of Members of the Executive Board. This involves assessing the level and structure of the remuneration of Members of the Executive Board
in relation to the remuneration of senior management and the workforce as a whole (vertical comparison) from an outside perspective. In
addition to a status quo review, the vertical comparison also takes into account how this relationship changes over time. Secondly, the
remuneration level and structure are assessed based on the position of TUI AG in a peer market (horizontal comparison). The peer market
consists of a combination of DAX and MDAX companies that are within the scope of the German Stock Corporation Act (AktG), that are
companies of similar sectors or that have similar core attributes and that are similar in terms of size (horizontal comparison). In
addition to the fixed remuneration, the horizontal comparison also covers the short- and long-term remuneration components as well as the
amount of company pension.
Companies for the assessment of the appropriateness of
Executive Board remuneration *
Company Stock market Company Stock market
segment segment
Adidas AG Dax Hugo Boss AG MDax
alstria office Mdax Infineon Dax
REIT-AG Technologies AG
Aurubis AG Mdax innogy SE MDax
BASF SE Dax K+S AG MDax
Bayer AG Dax KION GROUP AG MDax
Bechtle AG MDax LANXESS AG MDax
Beiersdorf AG Dax LEG Immobilien AG MDax
Brenntag AG Dax Merck KGaA Dax
Carl Zeiss Meditec MDax METRO AG MDax
AG
Continental AG Dax MorphoSys AG MDax
Covestro AG Dax MTU Aero Engines MDax
AG
Daimler AG Dax Nemetschek SE MDax
Delivery Hero AG Dax NORMA Group SE MDax
Deutsche Euroshop MDax OSRAM Licht AG MDax
AG
Deutsche Lufthansa Dax ProSiebenSat.1 MDax
AG Media SE
Deutsche Post AG Dax Rheinmetall AG MDax
Deutsche Telekom AG MDax RWE AG Dax
Deutsche Wohnen AG MDax SAP SE Dax
Drillisch AG MDax Sartorius AG MDax
Dürr AG MDax Scout24 AG MDax
E.ON SE Dax Siemens AG Dax
Evonik Industries MDax Siltronic AG MDax
AG
Evotec AG MDax Software AG MDax
Fielmann AG MDax Symrise AG MDax
Fraport AG MDax TAG Immobilien AG MDax
freenet AG MDax Telefónica MDax
Deutschland
Holding AG
Fresenius Medical Dax ThyssenKrupp AG Dax
Care AG & Co KGaA
Fresenius SE & Co Dax Uniper SE MDax
KGaA
Fuchs Petrolub SE MDax United Internet MDax
AG
GEA Group AG MDax Volkswagen AG Dax
Gerresheimer AG MDax Vonovia SE Dax
HeidelbergCement AG Dax Wacker Chemie AG MDax
Henkel AG & Co KGaA Dax Wirecard AG Dax
HOCHTIEF AG MDax Zalando SE MDax
* This date-related table is a disclosure in accordance with section G.3 of the GCGC in the version dated 16 December 2019 and is not
subject to the financial report audit.
Against the background of the voluntary waiver of parts of the fixed remuneration as well as all variable remuneration components, no
corresponding expert opinion was commissioned on the appropriateness of the level of remuneration for members of the Executive Board for
financial year 2020. As in financial year 2019 the remuneration was significantly below that of financial year 2018, the appropriateness
of which was in turn also examined and confirmed. The amount of the remuneration received, which for financial year 2020 consists of
fixed remuneration, fringe benefits and pension contributions only, was largely known after the Annual General Meeting, which voted on
the remuneration system in financial year 2020.
Remuneration of the Supervisory Board
The provisions and remuneration of members of the Supervisory Board are derived from section 18 of TUI AG's Articles of Association,
which have been made permanently accessible to the public on the internet. The remuneration of the Supervisory Board is reviewed at
appropriate intervals. In this regard the expected time required for the relevant duties and experience in companies of a similar size,
industry and complexity are taken into account.
Objective and reference to the corporate strategy
Highly-qualified Supervisory Board members are to be acquired and retained. This will foster the efficiency of the work of the
Supervisory Board and the long-term performance of TUI AG.
Procedure
Besides reimbursement of their expenses, which include the revenue tax due on their emoluments, the members of the Supervisory Board
receive a fixed remuneration of &euro 90.0 k per financial year, payable upon completion of the financial year. The chairman shall
receive three times, and his deputies twice, the fixed remuneration of a Supervisory Board member.
An additional fixed remuneration of &euro 42.0 k is paid for membership of committees (e. g. the presiding committee, the audit committee
and the strategy committee, but not the nomination committee). As a result of the successful completion of the integration of TUI AG and
the former TUI Travel PLC, the integration committee was dissolved as planned in December 2016, which has already been described in the
Annual Report 2017. The chairman of the audit committee shall receive three times, and the chairman of the strategy committee twice, this
remuneration. This remuneration is also paid out at the end of the respective financial year.
The members of the Supervisory Board receive no further remuneration components and no fringe benefits. In all cases the remuneration
relates to a full financial year. For parts of a financial year and for short financial years the remuneration shall be paid on a
pro-rata basis.
The members of the Supervisory Board and the committees receive an attendance fee of &euro 1.0 k per meeting, regardless of the form the
meeting takes.
Moreover, the members of the Supervisory Board are included in a financial liability insurance policy (D&O insurance) taken out in an
appropriate amount by the company in its own interests. The relevant insurance premiums are paid by the company. There is a deductible
for which the Supervisory Board members can take out their own private insurance.
Cap
There is no need to set a cap for the remuneration of the Supervisory Board because the remuneration for the Supervisory Board members
does not consist of variable but solely of fixed components. This also applies under the new stipulations of the AktG in the version
incorporating ARUG II. These new stipulations provide for the determination of a maximum remuneration expressly only for the Members of
the Executive Board, but not the members of the Supervisory Board.
1. REMUNERATION OF THE SUPERVISORY BOARD AS A WHOLE
Against the background of the impact of the COVID-19-pandemic and the economic implications on the business of the company, the members
of the Supervisory Board voluntarily waived 30 % of their fixed remuneration pursuant to section 18 para 1 of the Articles of Association
in the version of 11 February 2020 for the months April to September.
Remuneration of the Supervisory Board as a whole
&euro'000 2020 2019
Fixed remuneration 1,853.4 2,158.1
Long-term variable 0.0 252.9
remuneration
Remuneration for committee 1,064.0 1,084.4
memberships
Attendance fees 418.0 354.0
Remuneration for TUI AG 3,335.4 3,849.4
Supervisory Board mandate
Remuneration for Supervisory 37.3 40.6
Board mandates in the Group
Total 3,372.7 3,890.0
In addition, travel and other expenses totalling &euro 182.8 k (previous year: &euro 188.4 k) were reimbursed. Total remuneration of the
Supervisory Board members, including reimbursement of travel and other expenses, thus amounted to &euro 3,555.5 k (previous year: &euro
4,078.4 k).
2. REMUNERATION AWARDED AND OWED IN financial year 2020
Individual remuneration of Supervisory Board in FY 2020
Fixed in % Remuneration in % Attendance in % Remuneration in % Total
remun for fee for
erati committee &euro '000 Supervisory
on 1 &euro '000 Board
&euro mandates in
'000 the Group
&euro '000
Dr Dieter 229.5 58.9 126.0 32.3 34.0 8.7 389.5
Zetsche 2
(Chairman)
Frank Jakobi 166.5 57.6 93.8 3 32.4 29.0 10.0 289.3
(Deputy
Chairman)
Peter Long 153.0 50.0 126.0 41.2 27.0 8.8 306.0
(Deputy 2
Chairman)
Ingrid-Helen 44.0 81.5 10.0 18.5 54.0
Arnold 4
Andreas 76.5 47.4 42.0 26.0 21.0 13.0 21.8 13.5 161.3
Barczewski
Peter Bremme 76.5 54.8 42.0 30.1 21.0 15.1 139.5
Prof. Dr 76.5 28.4 168.0 62.3 25.0 9.3 269.5
Edgar Ernst
Wolfgang 76.5 84.5 14.0 15.5 90.5
Flintermann
María Garaña 44.0 83.0 9.0 17.0 53.0
Corces 4
Angelika 76.5 41.0 84.0 45.0 26.0 13.9 186.5
Gifford
Valerie 32.8 59.5 15.3 27.8 7.0 12.7 55.1
Gooding 5
Stefan 12.3 86.0 2.0 14.0 14.3
Heinemann 7
Dr Dierk 76.5 54.8 42.0 30.1 21.0 15.1 139.5
Hirschel
Janis Kong 5 32.8 59.5 15.3 27.8 7.0 12.7 55.1
Vladimir 76.5 63.1 26.8 6 22.1 18.0 14.8 121.3
Lukin
Coline 76.5 55.2 42.0 30.3 20.0 14.4 138.5
McConville
Alexey 76.5 42.6 84.0 46.8 19.0 10.6 179.5
Mordashov
Michael 76.5 45.6 51.8 3 30.9 24.0 14.3 15.5 9.2 167.8
Pönipp
Carola 76.5 84.5 14.0 15.5 90.5
Schwirn
Anette 76.5 54.4 42.0 29.9 22.0 15.7 140.5
Strempel
Ortwin 67.5 44.9 63.0 41.9 20.0 13.3 150.5
Strubelt 8
Joan Trían 76.5 84.5 14.0 15.5 90.5
Riu
Stefan 76.5 84.5 14.0 15.5 90.5
Weinhofer
Total 1,853 1,064.0 418.0 37.3 3,372.
.4 7
1 Taking account of a voluntary waiver of 30 % of the fixed remuneration for the months April to September 2020
2 Taking account of an additional voluntary waiver of 30 % of the remuneration as Chairman / deputy Chairman for the months April to
September 2020
3 Pro rated view of the committee remuneration from 7 July 2020
4 Pro rated view of all remuneration components from 11 February 2020
5 Pro rated view of all remuneration components up to 11 February 2020
6 Pro rated view of the committee remuneration from 11 February 2020
7 Pro rated view of all committee remuneration from 21 July 2020
8 Pro rated view of all remuneration components up to 30 June 2020
3. COMPARATIVE VIEW OF THE ANNUAL CHANGES TO THE REMUNERATION OF THE MEMBERS OF THE
SUPERVISORY BOARD WITH EARNINGS PERFORMANCE AND THE AVERAGE REMUNERATION OF TUI AG EMPLOYEES 1
The following table shows a comparison of the percentage change of the remuneration of the members of the Supervisory Board with the
earnings performance of TUI AG and the average remuneration of the employees on FTE basis over the last five financial years. The
remuneration of the members of the Supervisory Board contained in the table depicts the amounts actually received in the respective
financial year. For current members of the Supervisory Board for financial year 2020, these values correspond to values presented in the
table 'Awarded and owed remuneration pursuant to section 162 (1) sentence 1 AktG' (page 135 of the Management Report). Where members of
the Supervisory Board only received pro rata remuneration in the individual financial years, e. g. due to starting during the year, the
remuneration for this financial year shall be projected for the full year in order to ensure comparability. If any members of the
Supervisory Board previously belonged to the Executive Board of TUI AG and received remuneration as a result, this is not taken into
account in the comparative view.
1 The following section is a mandatory disclosure in accordance with section 162 (1) sentence 2 no. 2 AktG and is in accordance with
section 162 (3) sentence 2 AktG not subject to the financial report audit.
The earnings performance is generally depicted using the performance of the annual result of TUI AG pursuant to section 275 (2) no. 17
HGB. Because the remuneration of the members of the Supervisory Board is also substantially dependent on the performance of Group
indicators, the performance of the underlying EBITA reported in the consolidated accounts of the TUI Group is also specified.
The comparison of the development of the average remuneration of the employees is based on the average remuneration of the staff of TUI
AG. As the employee and remuneration structures are varied within the subsidiaries, in particular in terms of overseas employees, it is
expedient to rely solely on the staff of TUI AG for the comparison of the development of the average remuneration. This comparison group
was also used for the review of the appropriateness of the remuneration of the members of the Executive Board. This took into account the
remuneration of all employees, including managerial employees within the meaning of section 5 (3) German Works Constitution Act (BetrVG).
Any additional remuneration received by employees as members of the Supervisory Board of TUI AG was disregarded. To ensure comparability,
the remuneration of part-time employees was rounded up to FTE.
Comparison of annual change to Supervisory Board remuneration
according to
section 162 (1) no. 2 AktG
Annual change (in %) 2020 vs. 2019
Supervisory Board remuneration2
Dr Dieter Zetsche 3 + 71 %
Frank Jakobi + 0 %
Peter Long - 8 %
Ingrid Arnold 4 n. a.
Andreas Barzcewski - 15 %
Peter Bremme - 5 %
Prof. Dr Edgar Ernst - 6 %
Wolfgang Flintermann - 10 %
María Garaña Corces 4 n. a.
Angelika Gifford 5 12 %
Valerie Gooding 6 - 8 %
Stefan Heinemann 4 n. a.
Dr Dierk Hirschel - 15 %
Janis Kong 6 - 6 %
Vladimir Lukin 7 21 %
Coline McConville - 16 %
Alexey Mordashov - 8 %
Michael Pönipp - 7 %
Carola Schwirn - 21 %
Anette Strempel - 14 %
Ortwin Strubelt 6 - 11 %
Joan Trían Riu 8 - 10 %
Stefan Weinhofer - 10 %
Earnings performance
Annual result (TUI AG) 9 - 1,994 %
EBITA (Group) 10 - 440 %
Average employee remuneration on FTE basis
Company employees - 2 %
2 "Remuneration awarded and owed" within the meaning of section 162 (1) sentence 1 AktG (fixed remuneration and variable
remuneration in FY 2019 where applicable; "received values")
3 Only Chairman of the Supervisory Board from 23 May 2019 in FY 2019, therefor increased remuneration only as of 23 May 2019.
4 No entry as appointed as a new member of the Supervisory Board in FY 2020
5 Only a member of the Presiding Committee since 23 May 2019 in FY 2019, thus increased remuneration as of 23 May 2019.
6 Rounded up to full-year values for FY 2020 due to departure during the year
7 Rounded up to full-year values for FY 2019 due to appointment during the year, since 12 Feb. 2020 member of the
Audit Committee and thus higher remuneration as of 12 Feb. 2020
8 Rounded up to full-year values for FY 2019 due to appointment during the year
9 Annual result within the meaning of section 275 (2) no. 17 HGB 2019: &euro 120 k; 2020: &euro - 2,272.6 k
10 Underlying EBITA of the TUI Group 2019: &euro 893.3 k; 2020: &euro - 3,032.8 k
Apart from the work performed by the employees' representatives pursuant to their contracts, none of the members of the Supervisory Board
provided any personal services such as consultation or agency services for TUI AG or its subsidiaries in financial year 2020 and thus did
not receive any additional remuneration arising out of this.
CONSOLIDATED FINANCIAL STATEMENTS
Income Statement of TUI Group
for the period from 1 Oct 2019 to 30 Sep 2020
&euro million Notes 2020 2019
adjusted *
Revenue (1) 7,943.7 18,928.1
Cost of sales (2) 9,926.1 17,489.4
Gross loss / profit - 1,982.4 1,438.7
Administrative expenses (2) 1,017.3 987.1
Other income (3) 574.4 21.3
Other expenses (3) 15.2 22.5
Impairment of goodwill (12) 68.1 -
Impairment of financial assets (40) 180.6 4.5
Financial income (4) 35.3 119.7
Financial expenses (5) 321.7 171.4
Share of result of joint ventures (6) - 193.3 297.5
and associates
Impairment of net investments in (6) 34.5 -
joint ventures and associates
Earnings before income taxes - 3,203.3 691.6
Income taxes (expense [+], income (7) - 64.2 159.6
[-])
Group loss / profit - 3,139.1 532.1
Group loss / profit attributable (8) - 3,148.4 416.4
to shareholders of TUI AG
Group profit attributable to (9) 9.4 115.7
non-controlling interest
* For further information, please refer to the section 'Restatement of comparative periods'.
Earnings per share
&euro Notes 2020 2019
Basic and diluted loss / earnings per (10) - 5.34 0.71
share
Statement of Comprehensive Income of TUI Group
for the period from 1 Oct 2019 to 30 Sep 2020
&euro million Notes 2020 2019
adjusted *
Group loss / profit - 3,139.1 532.1
Remeasurements of defined 25.5 - 19.9
benefit obligations and
related fund assets
Other comprehensive income - 51.6 - 36.2
of companies measured at
equity that will not be
reclassified
Fair value loss / gain on - 27.7 2.2
investments in equity
instruments designated
as at FVTOCI
Income tax related to items (11) - 15.2 26.3
that will not be
reclassified
Items that will not be - 69.0 - 27.6
reclassified to profit or
loss
Foreign exchange differences - 185.9 96.7
Foreign exchange differences - 187.0 96.7
outside profit or loss
Reclassification 1.1 -
Cash flow hedges - 316.1 - 340.0
Changes in the fair value - 65.0 6.6
Reclassification - 251.1 - 346.6
Other comprehensive income 13.0 0.8
of companies measured
at equity that may be
reclassified
Changes in the measurement 13.0 0.8
outside profit or loss
Income tax related to items (11) 73.3 79.5
that may be reclassified
Items that may be - 415.7 - 163.0
reclassified to profit or
loss
Other comprehensive income - 484.7 - 190.6
Total comprehensive income - 3,623.8 341.5
attributable to shareholders - 3,580.4 215.9
of TUI AG
attributable to - 43.4 125.6
non-controlling interest
* For further information, please refer to the section 'Restatement of comparative periods'.
Statement of financial Position of TUI Group as at 30 Sep
2020
&euro million Notes 30 Sep 2020 30 Sep 2019
adjusted *
Assets
Goodwill (12) 2,914.5 3,009.2
Other intangible (13) 553.5 710.7
assets
Property, plant and (14) 3,462.5 5,810.7
equipment
Right-of-use assets (15) 3,227.9 -
Investments in joint (16) 1,186.7 1,507.6
ventures and
associates
Trade and other (17), (40) 402.4 60.9
receivables
Derivative financial (40) 7.4 43.9
instruments
Other financial assets (40) 10.6 43.0
Touristic payments on (18) 149.9 180.4
account
Other non-financial (19) 423.2 369.9
assets
Income tax assets 9.6 9.6
Deferred tax assets (20) 299.6 202.0
Non-current assets 12,647.8 11,947.9
Inventories (21) 73.2 114.7
Trade and other (17), (40) 486.3 876.4
receivables
Derivative financial (40) 88.9 303.8
instruments
Other financial assets (40) 14.9 31.1
Touristic payments on (18) 555.5 865.4
account
Other non-financial (19) 113.4 131.5
assets
Income tax assets 70.9 155.7
Cash and cash (22), (40) 1,233.1 1,741.5
equivalents
Assets held for sale (23) 57.2 50.0
Current assets 2,693.4 4,270.2
Total assets 15,341.1 16,218.1
* For further information, please refer to the section 'Restatement of comparative periods'.
Statement of financial Position of TUI Group as at 30 Sep
2020
&euro million Notes 30 Sep 2020 30 Sep 2019
adjusted *
Equity and liabilities
Subscribed capital (24) 1,509.4 1,505.8
Capital reserves (25) 4,211.0 4,207.5
Revenue reserves (26) - 6,168.8 - 2,259.2
Equity before - 448.4 3,454.2
non-controlling interest
Non-controlling interest (28) 666.5 711.4
Equity 218.1 4,165.6
983.6
Pension provisions and (29) 1,035.6
similar obligations
Other provisions (30) 912.1 775.0
Non-current provisions 1,895.7 1,810.6
Financial liabilities (31), 3,691.7 2,457.6
(40)
Lease liabilities (31), 2,712.6 -
(40)
Derivative financial (40) 44.0 59.1
instruments
Other financial (32), 7.2 15.6
liabilities (40)
Other non-financial (34) 198.4 100.1
liabilities
Income tax liabilities 61.3 70.9
Deferred tax liabilities (20) 192.7 226.9
Non-current liabilities 6,908.1 2,930.3
Non-current provisions 8,803.7 4,740.9
and liabilities
Pension provisions and (29) 31.4 32.4
similar obligations
Other provisions (30) 390.3 361.9
Current provisions 421.6 394.3
Financial liabilities (31), 577.3 224.6
(40)
Lease liabilities (31), 687.3 -
(40)
Trade payables (40) 1,611.5 2,830.5
Derivative financial (40) 274.8 157.1
instruments
Other financial (32), 422.0 89.6
liabilities (40)
Touristic advance (33) 1,770.1 2,911.2
payments received
Other non-financial (34) 447.8 519.3
liabilities
Income tax liabilities 82.4 81.9
Current liabilities 5,873.2 6,814.1
Liabilities related to (35) 24.5 103.1
assets held for sale
Current provisions and 6,319.3 7,311.6
liabilities
Total equity, 15,341.1 16,218.1
liabilities and
provisions
* For further information, please refer to the section 'Restatement of comparative periods'.
Statement of Changes in Group Equity of the TUI Group for the period from 1 Oct 2019 to 30 Sep 2020
&euro million Subscribed Capital Other Foreign Financial Financial Cash Revaluation Revenue Equity Non-controlling Total
capital reserves revenue exchange assets instrume flow reserve reserv before interest
(24) (25) reserves differences at FVTOCI nts hedge es non-co (28)
available s (26) ntroll
for sale ing
intere
st
Balance as at 1,502.9 4,200.5 - - 1,273.6 - 0.5 353.9 12.9 - 3,640. 634.8 4,275.6
30 Sep 2018 1,156.3 2,062.6 8
Adoption of - - 6.3 - - - 0.5 - - 5.8 5.8 - 5.8
IFRS 9
Balance as at 1,502.9 4,200.5 - - 1,273.6 - - 353.9 12.9 - 3,646. 634.8 4,281.4
1 Oct 2018 1,150.0 2,056.8 6
Dividends - - - 423.3 - - - - - - 423.3 - - 52.5 - 475.8
423.3
Share-based - - 5.0 - - - - - 5.0 5.0 - 5.0
payment
schemes
Issue of 2.9 7.0 - - - - - - - 9.9 - 9.9
employee
shares
First-time - - - - - - - - - - 3.5 3.5
consolidation
Group profit - - 416.4 - - - - - 416.4 416.4 115.7 532.1
for the year
(adjusted)
Foreign - - 9.2 83.6 1.5 - - 8.3 0.6 86.6 86.6 10.1 96.7
exchange
differences
Financial - - - - 2.2 - - - 2.2 2.2 - 2.2
assets at
FVTOCI
Cash flow - - - - - - - - - 340.0 - - - 340.0
hedges 340.0 340.0
Remeasurements - - - 19.9 - - - - - - 19.9 - 19.9 - - 19.9
of defined
benefit
obligations
and related
fund assets
Other - - - 35.2 - - - - - - 35.2 - 35.2 - 0.2 - 35.4
comprehensive
income of
joint
ventures and
associates
Taxes - - 26.3 - - - 79.5 - 105.8 105.8 - 105.8
attributable
to other
comprehensive
income
Other - - - 19.6 83.6 3.7 - - 0.6 - 200.5 - 9.9 - 190.6
comprehensive 268.8 200.5
income
Total - - 396.8 83.6 3.7 - - 0.6 215.9 215.9 125.6 341.5
comprehensive 268.8
income
(adjusted)
Balance as at 1,505.8 4,207.5 - - 1,190.0 3.7 - 85.1 13.5 - 3,454. 711.4 4.165.5
30 Sep 2019 1,171.5 2,259.2 1
First-time - - - 13.7 - - - - - - 13.7 - 13.7 - - 13.7
adoption of
IFRS 16
Balance as at 1,505.8 4,207.5 - - 1,190.0 3.7 - 85.1 13.5 - 3,440. 711.4 4,151.8
1 Oct 2019 1,185.2 2,272.9 4
Dividends - - - 318.1 - - - - - - 318.1 - - 0.2 - 318.3
318.1
Share-based - - 2.9 - - - - - 2.9 2.9 - 2.9
payment
schemes
Issue of 3.6 3.5 - - - - - - - 7.1 - 7.1
employee
shares
Effects from - - - 0.3 - - - - - - 0.3 - 0.3 - 1.3 - 1.6
acquisitions
on
non-controllin
g interests
Group profit / - - - - - - - - - - 9.4 -
loss for the 3,148.5 3,148.5 3,148. 3,139.1
year 5
Foreign - - - 6.1 - 136.0 0.1 - 9.4 - 0.7 - 133.3 - - 52.6 - 185.9
exchange 133.3
differences
Financial - - - - - 27.7 - - - - 27.7 - 27.7 - - 27.7
assets at
FVTOCI
Cash flow - - - - - - - - - 316.2 - 0.1 - 316.1
hedges 316.2 316.2
Remeasurements - - 25.5 - - - - - 25.5 25.5 - 25.5
of defined
benefit
obligations
and related
fund assets
Other - - - 38.3 - - - - - - 38.3 - 38.3 - 0.3 - 38.6
comprehensive
income of
joint ventures
and associates
Taxes - - - 15.2 - - - 73.3 - 58.1 58.1 - 58.1
attributable
to other
comprehensive
income
Other - - - 34.1 - 136.0 - 27.6 - - - 0.7 - 431.9 - - 52.8 - 484.7
comprehensive 233.5 431.9
income
Total - - - - 136.0 - 27.6 - - - 0.7 - - - 43.4 -
comprehensive 3,182.6 233.5 3,580.4 3,580. 3,623.8
income 4
Balance as at 1,509.4 4,211.0 - - 1,326.0 - 23.9 - - 12.8 - - 666.5 218.1
30 Sep 2020 4,683.3 148.4 6,168.8 448.4
Cash flow Statement of TUI Group for the period from 1 Oct
2019 to 30 Sep 2020
&euro million Notes 2020 2019 Variance
adjusted*
Group loss / profit - 3,139.1 532.1 - 3,671.2
Depreciation, 1,573.5 509.4 1,064.2
amortisation and
impairment (+) /
write-backs (-)
Other non-cash expenses 313.4 - 256.1 569.5
(+) / income (-)
Interest expenses 305.6 167.7 137.9
Dividends from joint 7.1 244.6 - 237.5
ventures and associates
Profit (-) / loss (+) - 564.3 - 5.3 - 559.0
from disposals of
non-current assets
Increase (-) / decrease 33.1 - 3.1 36.2
(+) in inventories
Increase (-) / decrease 627.9 - 207.9 835.8
(+) in receivables and
other assets
Increase (+) / decrease 74.1 - 58.3 132.4
(-) in provisions
Increase (+) / decrease - 2,003.2 191.8 - 2,195.0
(-) in liabilities
Cash outflow / cash (42) - 2,771.9 1,114.9 - 3,886.8
inflow from operating
activities
Payments received from 109.9 182.0 - 72.1
disposals of property,
plant and equipment and
intangible assets
Payments received / made 689.3 - 52.4 741.7
from disposals of
consolidated companies
(less disposals of cash
and cash equivalents due
to divestments)
Payments received from 79.1 7.7 71.4
the disposals of other
non-current assets
Payments made for - 587.0 - 987.0 400.0
investments in property,
plant and equipment and
intangible assets
Payments made for - 40.8 - 242.3 201.5
investments in
consolidated companies
(less cash and cash
equivalents received due
to acquisitions)
Payments made for - 88.6 - 49.4 - 39.2
investments in other
non-current assets
Cash inflow / cash (43) 161.8 - 1,141.4 1,303.2
outflow from investing
activities
Payments made for - 1.0 - 0.4 - 0.7
acquisition of own shares
Payments received from 7.1 9.9 - 2.8
the issuance of employee
shares
Payments made for - 1.6 - - 1.6
interest increase in
consolidated companies
Dividend payments
TUI AG - 318.1 - 423.3 105.2
subsidiaries to - 0.6 - 52.2 51.6
non-controlling interest
Payments received from 3,372.4 52.5 3,319.9
the raising of financial
liabilities
Payments made for - 81.4 - 110.1 28.7
redemption of loans and
financial liabilities
Payments made for - 612.4 - 122.3 - 490.1
principal of lease
liabilities
Interest paid - 251.9 - 117.9 - 134.0
Cash inflow / cash (44) 2,112.5 - 763.8 2,876.3
outflow from financing
activities
Net change in cash and - 497.6 - 790.3 292.7
cash equivalents
Development of cash and (45)
cash equivalents
Cash and cash equivalents 1,747.6 2,548.0 - 800.3
at beginning of period
Change in cash and cash - 17.0 - 10.1 - 6.9
equivalents due to
exchange rate
fluctuations
Net change in cash and - 497.6 - 790.3 292.7
cash equivalents
Cash and cash equivalents 1,233.1 1,747.6 - 514.5
at end of period
of which included in the - 6.1 - 6.1
balance sheet as assets
held for sale
* For further information, please refer to the section 'Restatement of comparative periods'.
Notes
Principles and Methods underlying the Consolidated Financial Statements
General
The TUI Group and its major subsidiaries and shareholdings operate in tourism.
TUI AG, based in Karl-Wiechert-Allee 4, Hanover 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). The shares
in the company are traded on the London Stock Exchange and the Hanover and Frankfurt Stock Exchanges.
These consolidated financial statements of TUI AG were prepared for the financial year 2020 comprising the period from 1 October 2019 to
30 September 2020. Where any of TUI's subsidiaries have different financial years, financial statements were prepared as at 30 September
in order to include these subsidiaries in TUI AG's consolidated financial statements.
The Executive Board and the Supervisory Board have submitted a Declaration of Compliance with the German Corporate Governance Code
required pursuant to section 161 of the German Stock Corporation Act (AktG) and made it permanently available to the general public on
the Company's website (www.tuigroup.com).
The consolidated financial statements are prepared in euros. Unless stated otherwise, all amounts are indicated in million euros
(&eurom). Due to the utilisation of rounded amounts there may be minor rounding differences in total and percentages.
The consolidated financial statements were approved for publication by TUI AG's Executive Board on 9 December 2020.
Accounting principles
Declaration of compliance
Pursuant to Regulation EEC No. 1606 / 2002 of the European Parliament and Council, TUI AG's consolidated financial statements as at 30
September 2020 were prepared in accordance with the International Financial Reporting Standards (IFRS) as applicable in the European
Union. Moreover, the commercial-law provisions listed in section 315e (1) of the German Commercial Code (HGB) were also observed in
preparing the consolidated financial statements.
The accounting and measurement methods and the explanatory information and Notes to these annual financial statements for financial year
2020 are generally consistent with those followed in preparing the previous consolidated financial statements for financial year 2019,
with the exception of the initial application of new or amended standards, as outlined below.
Newly applied standards
Since the beginning of financial year 2020, TUI has adopted the following mandatory standards and interpretations amended or newly issued
by the IASB and endorsed by the EU.
New applied standards in FY 2020
Standard Applicable Amendments Impact on
from financial
statements
IFRS 16 1 Jan 2019 IFRS 16 The new
Leases replaces the standard has
current IAS 17 significant
and its effects on TUI
interpretations Group's
. For lessees, financial
there is no statements.
longer the The effects
requirement to are explained
classify into below.
finance and
operating
leases. Instead
all leases are
accounted for
according to
the so-called
'Rights of Use'
approach. In
the statement
of financial
position a
lessee is to
recognise an
asset for the
right to use
the leased item
and a liability
for the future
lease payments.
There are
optional
exemptions for
short-term
leases (< 12
months) and
so-called
small-ticket
leases. For
lessors, the
accounting
stays largely
unchanged.
Lessors will
continue to
classify leases
in accordance
with the
criteria
transferred
from IAS 17. In
addition, IFRS
16 includes
several other
new
requirements,
in particular a
new definition
of a lease, on
sale and
leaseback
transactions
and the
accounting for
subleases.
IFRIC 23 1 Jan 2019 The Not material.
Uncertainty over interpretation
Income Tax complements the
Treatments rules of IAS 12
on the
accounting for
actual and
deferred taxes
to clarify the
accounting for
uncertainties
over income tax
treatments and
transactions by
taxation
authorities or
fiscal courts.
Amendments to IAS 1 Jan 2019 The amendments Not material.
28 clarify that
Long-term the impairment
Interests in rules of IFRS 9
Associates and apply to
Joint Ventures long-term
interests in
associates and
joint ventures
that, in
substance, form
part of the net
investment in
the associate
or joint
venture to
which the
equity method
is applied.
Nevertheless,
(as a second
step) these
long-term
interests will
have to be
taken into
account when
the IAS 28 loss
allocations are
ad-justed to
the value of
the long-term
interests.
Various 1 Jan 2019 The various Not material.
Improvements to amendments from
IFRS (2015 - 17) the annual
improvement
project 2015 -
2017 cycle
affect minor
changes to IFRS
3, IFRS 11, IAS
12 and IAS 23.
Amendments to IAS 1 Jan 2019 Where an Not material.
19 amendment,
Plan Amendment, curtailment or
Curtailment or settlement of a
Settlement defined benefit
plan occurs,
the amendments
require a
company to use
updated
actuarial
assumptions to
determine its
current service
cost and net
interest for
the period. The
effect of the
asset ceiling
is disregarded
when
calculating
the gain or
loss on any
settlement of
the plan and is
dealt with
separately in
other
comprehensive
income (OCI).
IFRS 16
The changes in lessee accounting for leases resulting from the adoption of IFRS 16 have a significant impact on all parts of the Interim
Financial Statements and the presentation of TUI Group's statement of financial position, net assets and earnings position.
For further general information on the accounting for leases since 1 October 2019, please refer to the section 'Accounting and
measurement methods'.
As a lessor, TUI Group's transition to IFRS 16 has not resulted in any changes in the accounting for existing leases, with the following
exception. Due to the reclassification of existing subleases based on the right-of-use assets in the sublease in relation to the head
lease, three contracts have been reclassified as finance leases and receivables of &euro 47.3 m have been capitalised.
Regarding the options and practical expedients available to lessees, TUI Group has decided:
· to present the right-of-use assets and lease liabilities separately in the statement of financial position.
· to use the recognition and measurement exceptions for short-term leases (with terms of 12 months or less) and for leases of low value
assets. The lease payments associated with those leases are recognised as an expense in functional costs either on a straight-line
basis over the lease term or another systematic basis.
· For some asset classes, in particular for vehicle and IT leases as well as for leases of hotel capacity, to not separate lease
components from non-lease components when accounting for contracts that contain lease components and non-lease components.
TUI has also elected to use the option for lessees and lessors not to apply the new standard to leases of intangible assets.
TUI Group initially applies IFRS 16 as at 1 October 2019 using the modified retrospective approach and in accordance with the transition
guidance. Using that method, the prior year's comparative period is not restated. The effect of the transition is reported directly in
equity as at 1 October 2019.
Regarding the new definition of a lease, the option to grandfather existing leases is not used in transitioning to IFRS 16. The new rules
are thus applied to all contracts existing as at 1 October 2019 falling within the scope of IFRS 16, regardless of whether TUI Group
contractually operates as the lessee or lessor. In the context of the purchasing of mixed touristic accommodation services the
contracting over the majority of a hotel's room capacity is identified as a lease component if TUI Group contractually commits to the
supplier to the guaranteed fixed purchase of more than 90 % of a hotel's total capacity for a period of more than twelve months and no
contract-exempt return of allotments for self-distribution by the hotelier is agreed and hence an irrevocable payment obligation exists.
In transitioning to the new standard, TUI Group applies the following practical expedients for lessees:
· For leases already classified as operating leases under IAS 17, the lease liability is carried at the amount of the present value of
the future lease payments, determined using the incremental borrowing rate, as at 1 October 2019. The weighted average incremental
borrowing rate was 4.99 %. The right-of-use asset is initially measured at the amount of the lease liability and adjusted for the
amount of existing lease prepayments and accrued rent.
· For leases with a remaining term of less than one year at the date of initial application, TUI Group does not recognise any
right-of-use assets and lease liabilities, in line with exercising the exception for short-term leases with lease terms of twelve
months or less.
· Initial direct costs are not included in the initial measurement of the right-of-use asset as at the date of initial adoption.
· Hindsight is used in determining the lease term of contracts containing options to extend or terminate the lease.
· At the date of initial adoption, the right-of-use assets are not tested for impairment. Instead, the right-of-use assets are adjusted
by the amount of any provisions for onerous leases existing as at 30 September 2019 recognised in the statement of financial position.
In transitioning to IFRS 16, right-of-use assets of &euro 2,390.3 m and lease liabilities of &euro 2,368.6 m were recognised for the
first time on the balance sheet as at 1 October 2019. The table below shows a reconciliation of other financial commitments from rental
and lease agreements as at 30 September 2019 to the opening balance of the lease liabilities as at 1 October 2019:
Reconciliation of IFRS 16 lease liabilities
&euro million
Financial obligations from operating 2,744.7 1
leases as at 30 September 2019
Recognition exception for short-term - 34.6
leases
Recognition exception for leases of - 5.9
low value items
Changes due to new definition of a 81.8
lease
Changes due to assessment of renewal 178.6
or termination options
Payments for non-lease components and - 73.2
intangible assets
Total payment obligations from 2,891.4
operating leases
Discounting 522.8
Present value of new IFRS 16 lease 2,368.6 2
liabilities as at 1 October 2019
Finance lease liabilities as at 30 1,495.2
September 2019
Other financial liabilities from 4.7
finance leases as at 30 September 2019
Carrying amount of IFRS 16 lease 3,868.5 2
liabilities as at 1 October 2019
1 Prior year adjusted by &euro 83.6 m.
2 Thereof &euro 7.0 m carried in liabilities related to assets held for sale under IFRS 5.
In transitioning to IFRS 16, the carrying amounts of the assets and liabilities from finance leases existing as at 30 September 2019 are
reclassified to right-of-use assets and lease liabilities as at 1 October 2019.
In total, the initial application of IFRS 16 results in the following adjustments to the statement of financial position as at 1 October
2019:
Effects of the first-time adoption of IFRS 16 on the
financial position of TUI Group as at 1 Oct 2019
&euro million Carrying Adoption of Carrying amount
amount IAS 17 IFRS 16 IFRS 16
30 Sep 2019 1 Oct 2019
Assets
Other intangible 710.7 - 13.7 697.0
assets
Property, plant 5,810.7 - 1,451.6 4,359.1
and equipment
Right-of-use - 3,831.6 3,831.6
assets
Trade and other 60.9 36.7 97.6
receivables
Touristic payments 180.4 - 8.4 172.0
on account
Non-current assets 11,947.9 2,394.6 14,342.5
Trade and other 876.4 10.6 887.0
receivables
Touristic payments 865.4 - 86.5 778.9
on account
Assets held for 50.0 7.0 57.0
sale
Current assets 4,270.2 - 68.9 4,201.2
Total assets 16,218.1 2,325.7 18,543.7
Effects of the first-time adoption of IFRS 16 on the
financial position of TUI Group as at 1 Oct 2019
&euro million Carrying Adoption of Carrying amount
amount IAS 17 IFRS 16 IFRS 16
30 Sep 2019 1 Oct 2019
Equity and
liabilities
Revenue reserves - 2,259.2 - 13.7 - 2,272.9
Equity before 3,454.2 - 13.7 3,440.4
non-controlling
interest
Equity 4,165.6 - 13.7 4,151.8
Other provisions 775.0 2.1 777.1
Non-current 1,810.6 2.1 1,812.7
provisions
Financial 2,457.6 - 1,364.7 1,092.9
liabilities
Lease liabilities - 3,061.2 3,061.2
Other financial 15.6 - 4.7 10.9
liabilities
Deferred tax 226.9 - 0.4 226.5
liabilities
Non-current 2,930.3 1,691.4 4,621.7
liabilities
Non-current 4,740.9 1,693.5 6,434.4
provisions and
liabilities
Other provisions 361.9 - 3.5 358.4
Current provisions 394.3 - 3.5 390.8
Financial 224.6 - 130.5 94.1
liabilities
Lease liabilities - 800.3 800.3
Trade payables 2,830.5 - 24.7 2,805.8
Other 519.3 - 2.7 516.6
non-financial
liabilities
Current 6,814.1 642.4 7,456.6
liabilities
Liabilities 103.1 7.0 110.1
related to assets
held for sale
Current provisions 7,311.6 645.9 7,957.5
and liabilities
Total equity and 16,218.1 2,325.7 18,543.7
liabilities
Going concern reporting according to the UK Corporate Governance Code
TUI Group covers its daily working capital requirements through cash, bank balances and bank loans. As at 30 September 2020, TUI Group's
net debt (financial debt plus lease liabilities less cash and cash equivalents and less short-term interest-bearing investments) totalled
&euro 6,420.9 m (as at 30 September 2019 &euro 909.7 m).
Net debt in particular rose due to the increase in lease liabilities recognised in the statement of financial position due to the initial
application of IFRS 16. In the wake of transitioning to IFRS 16, the definition of TUI Group's net debt was adjusted. From financial year
2020, the liabilities from finance leases under IAS 17, previously included in financial liabilities, are carried as lease liabilities
according to IFRS 16 alongside the liabilities from leases classified as operating leases under IAS 17. The prior year's numbers were not
restated.
Net debt
&euro million 30 Sep 2020 30 Sep 2019 Var. in %
Financial debt 4,269.0 2,682.2 + 59.2
thereof finance leases (IAS - 1,495.2 n. a.
17)
Lease liabilities (IFRS 16) 3,399.9 - n. a.
Cash and cash equivalents 1,233.1 1,741.5 - 29.2
Short-term interest-bearing 14.9 31.1 - 52.1
investments
Net debt - 6,420.9 - 909.7 - 605.8
The increase in net debt is also a consequence of the worldwide travel restrictions to contain COVID-19, which had a strong negative
impact on the Group's earnings and liquidity development from the end of the second quarter onwards.
The TUI Group was initially forced to discontinue its entire travel program due to the travel restrictions associated with the
COVID-19-pandemic. Despite a certain resumption of business from May 2020, the travel business was subject to permanent restrictions, in
particular due to different and changing travel restrictions in source markets and destinations. Due to increasing COVID-19 infection
figures, these travel restrictions were again extended to almost all destinations relevant for the TUI Group in autumn 2020.
Due to the reasons described above, the TUI Group had a liquidity requirement in financial year 2020 that was significantly higher than
the cash inflows resulting from current operations and the existing unused credit lines, despite the initiated savings measures. In order
to close these liquidity gaps, additional credit lines totaling &euro 2.85 billion were granted in addition to the cost-cutting and
payment deferral measures initiated within the Group and regional support measures in various countries. The additional credit line was
made available via KfW Bank (KfW) using the existing revolving credit lines of &euro 1.8 billion and &euro 1.05 billion as part of two
stabilization packages with the support of the German government. In addition, the Economic Stabilization Fund (WSF) subscribed to a
warrant bond in the amount of &euro 150 million in October 2020. The financing commitments of &euro 1.8 billion available as of September
30, 2020 were fully utilized as of the balance sheet date.
On 27 March 2020 TUI AG received the approval of the German government for a bridging loan of &euro 1.8 bn from KfW in the framework of
the state COVID 19 programmes. The loan was intended to cushion the effects of the COVID-19-pandemic until normal business operations can
be resumed. The KfW loan was used to increase TUI AG's existing revolving credit facility with its banks. The contract was signed by the
banking consortium of the existing RCF facility on 8 April 2020.
The KfW loan of &euro 1.8 bn has various tranches with different maturities and is subject to the fulfillment of certain conditions. In
addition to compliance with the general rules of the KfW programme, one of the conditions of the KfW loan is that TUI AG does not make a
resolution on a dividend payment during the term of the bridging loan. In a first step, the credit line will be reduced to &euro 1.3 bn
on 1 April 2021. If TUI refinances its 2016 / 21 bond before 31 July 2021 or transfers the remaining &euro 1.3 bn credit liability to
non-government lenders by that date, the remaining &euro 1.3 bn credit facility will be available until 20 July 2022. Otherwise, its term
will end on October 15, 2021.
The RCF and the new KfW credit facility are also subject to compliance with certain financial covenants for debt coverage and interest
coverage. The review of these covenants is currently suspended. Tests of the covenants will be resumed in September 2021. The tests will
be based on the last four reported quarters prior to September 2021. We expect our results for these reporting quarters to continue to be
impacted by the COVID-19-pandemic. As a result, we may not meet our financial targets. We are therefore seeking a suspension of the
covenants (so-called 'covenant holiday') for the testing period ending September 30, 2021 and beyond under the RCF.
On 12 August 2020 TUI AG and KfW concluded an agreement to increase the KfW tranche of the existing Revolving Credit Facility (RCF)
committed in April 2020 by &euro 1,050.0 m to &euro 2,850.0 m. The remaining RCF counterparties have agreed to this amendment. Their
interest in RCF is not affected by the amendment and remains at &euro 1,750.0 m, of which &euro 215.0 m relates to a revolving credit
facility. Utilization of the additional credit facility was initially dependent on TUI AG issuing a &euro 150.0 m equity linked bond to
the Economic Stabilization Fund (WSF) and on the creditors of the bond maturing in October 2021 agreeing to a change in the terms and
conditions of the bond so that TUI AG no longer has to maintain a certain interest coverage ratio. Both conditions for raising additional
funds from the RCF increase were met in October 2020.
The warrant bond was issued to the Economic Stabilization Fund on October 1, 2020. The warrant bond has a term of six years and bears
interest of 9.5 % per annum. After repayment and termination of the above-mentioned top-up amount of &euro 1,050.0 m, TUI AG has an
ordinary termination right. Separable warrants were issued with the bond. The option price per share was set at the minimum amount of
&euro 2.56 (rounded). The options have a term of 10 years and can be converted into TUI AG shares at any time.
In addition to the restrictions under the existing KfW loan, such as a waiver of dividend payments and a restriction of share buy-backs,
the stabilization measure of the WSF is subject to further restrictions, among others with regard to investments in other companies as
long as the WSF remains invested. Also, the remuneration of Executive Board members is subject to restrictions.
Effective October 16, 2020, the changes in the terms and conditions of the &euro 300.0 m bond due in October 2021 became effective. This
means that TUI AG's obligation to maintain a certain interest coverage ratio until the maturity date is suspended. To this end, interest
rates were increased to 9.5 % p. a. as of 1 October 2020. From April 1, 2021, an additional quarterly interest payment of 2.0 % of the
outstanding nominal amount of the bond is due. Finally, TUI AG undertakes to redeem the Bonds prematurely in full or in part using
certain additional funds raised by TUI AG, provided that these funds total at least &euro 150.0 m. The raising of funds in the framework
of state subsidies or support measures, leasing agreements and sale and leaseback agreements are excluded from this provision.
The TUI Group is currently still affected by the negative financial impact of the COVID-19-pandemic. At the time of publication of this
report (10 December 2020) it is not foreseeable when the travel restrictions will be lifted again and when we will be able to resume our
travel program in full. In particular, it is not possible at this point in time to reliably predict how quickly a nationwide vaccination
against the coronavirus can be carried out and when drugs will be available for the treatment of COVID-19 disease. Also a change in
booking behavior cannot be excluded at this time.
Taking into account the financing lines still available and the low expected cash inflows in the winter season 2020 / 21 due to the
pandemic, there is a risk that the TUI Group would probably no longer have sufficient financial resources to continue its business
operations without further support measures or the sale of non-current assets in the short term if there is no increase in new travel
bookings and the associated customer advance payments in the first calendar quarter of 2021. Overall, there is a risk that the TUI Group
will not be able to continue its business operations without further external support measures and to realize its assets and service its
liabilities in the normal course of business.
In order to continue to have sufficient financial resources even in the absence of an increase in new travel bookings and the associated
advance payments, TUI AG has agreed with Unifirm Ltd., a syndicate of underwriting banks, KfW and the Economic Support Fund
(Wirtschaftsstabilisierungsfonds - WSF) on a further financing package of &euro 1.8 bn for TUI. A corresponding term sheet was signed on
December 2, 2020. The corresponding contracts for the individual components of the term sheet had not yet been signed at the time of
publication of this report. The continuation of the Company's business operations thus depends in particular on TUI's ability to
successfully implement the measures introduced in the financing package.
The package includes
· a capital increase with subscription rights of approx. &euro 509 m;
· a silent participation convertible into shares of TUI by the WSF of &euro 420 m;
· a non-convertible silent participation by the WSF of &euro 280 m;
· a state guarantee of &euro 400 m, or, alternatively, a respective increase of the non-convertible silent participation by the WSF;
and
· an additional credit facility by KfW of &euro 500 m, and a prolongation of an existing credit facility by KfW until July 2022.
The financing package strengthens TUI's position and provides it with liquidity reserves in this volatile market environment. It also
balances out the presumed travel restrictions until the beginning of the 2021 summer season. The package became necessary due to the
increasing travel re-strictions caused by the rising number of infections and the associated more short-term booking behaviour of some
customers.
This further financing package supplements the existing financing measures of the Federal Republic of Germany in the form of a KfW credit
line at a total of &euro 2.85 bn and a WSF warrant bond of &euro 150 m with option rights for approx. 58.7 m shares.
The financing package includes a WSF financing measure in the form of a silent participation without a participation in losses generated
by TUI, which can be converted into shares of TUI, in the amount of &euro 420 m (Silent Participation I), and a further silent
participation with a participation in losses generated by TUI of &euro 280 m (Silent Participation II).
The conversion price for the WSF in respect of the Silent Participation I is &euro 1.00 per share. In case of a conversion of the Silent
Participation I the WSF will obtain a participation in TUI of not more than 25 % plus one share.
The agreement on the silent participations is, inter alia, subject to the approval of the European Commission under state aid rules, the
granting of the necessary merger control approvals (where there is a prohibition on implementation) and the implementation of the other
components of the financing package.
In addition, KfW has undertaken - subject to market standard conditions - to participate in a further secured credit line of &euro 200 m
and to grant a prolongation of a portion of the existing KfW credit line. The prolongation relates to a part of the existing KfW credit
line of &euro 500 m, which would have otherwise ceased to be available on 1 April 2021 and which will after the prolongation have the
same maturity as the rest of the existing KfW credit line. The agreement on the participation by KFW is, inter alia, subject to the
implementation of the other components of the financing package.
The financing package also provides for a reduction of TUI's share capital from &euro 2.56 per share to &euro 1.00 per share (without
merging shares), followed by a capital increase by means of a rights issue of approx. 509 m shares. The reduction of the share capital,
the capital increase and the conversion rights of the WSF under the Silent Participation I are to be resolved at an extraordinary general
meeting of TUI in January 2021. The subscription price shall be &euro 1.07 per share, implying net proceeds after fees and expenses of
approx. &euro 509 m. As TUI's largest single shareholder, holding approx. 24.89 % of the shares, Unifirm Ltd. has irrevocably committed
to exercise its subscription rights in this capital increase (the Confirmed Acquisition Declaration).
The remainder of the capital increase will be safeguarded through underwriting commitments, subject to certain terms and conditions. In
this respect, Unifirm Ltd. has undertaken, in addition to its Confirmed Acquisition Declaration, and if the current shareholders do not
subscribe to their new share entitlements, that it will (i) subscribe for further newly issued shares up to a total stake of 36 %, where
this is possible without making a mandatory offer to the other shareholders of TUI based on an exemption from BaFin under the German
Securities and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz, WpÜG) (the Conditional Commitment), and (ii) otherwise
subscribe for further newly issued shares up to a total stake of 29.9 % (the Unconditional Underwriting Commitment). The remaining part
of the capital increase will be secured through a market standard underwriting by a banking syndicate, subject to terms and conditions in
line with market practice for similar transactions, also as far as the aforementioned exemption for Unifirm Ltd. should not be granted by
BaFin.
The proceeds of the capital increase will be used to repay &euro 300 m senior notes of TUI (due in October 2021) and so will provide a
significant contribution to the extension of TUI's maturity profile. The remaining amount of the capital increase, and more generally the
financing package, is intended to strengthen TUI's liquidity or to be used for general corporate purposes.
The financing measure shall also include a guarantee credit facility in the amount of &euro 400 m. The guarantee credit facility will be
supported by a state guarantee, potentially including the federal states. It is intended to enable access to funds currently deposited
for socalled cash collaterals by replacing the cash collaterals with guarantees. As an alternative, the Silent Participation II of the
WSF will be increased.
In addition to the restrictions under the existing KfW loan, such as TUI's waiver of dividend payments and a restriction on share
buy-backs, the silent participations by the WSF come with further restrictions, including relating to investments in other companies as
long as the WSF remains invested. In addition, to the extent permitted by law, the Executive Board and the Supervisory Board shall ensure
that two persons nominated by the WSF become members of the Supervisory Board of TUI.
Depending on the imminent availability of vaccines against COVID-19, TUI expects a significant reduction in current travel restrictions,
and thus a significant further improvement in its working capital and liquidity situation. We continue to work on different demand
scenarios for the coming seasons.
These initiated measures to strengthen liquidity depend in particular on the approval of the Extraordinary General Meeting on January 5,
2021, for the rights issue described above as well as the approval of these measures by the EU. The Executive Board of TUI AG assumes
that all necessary consents and approvals will be granted and that the planned financing measures can be implemented in time.
We also assume that we will not be able to meet the financial targets as of September 30, 2021 from the existing and increased RCF. TUI's
solvency is therefore at risk if a further suspension of compliance with the covenants for the test period ending on September 30, 2021
and beyond is not achieved. In addition, the KfW loans (both tranches) and the initial Revolving Credit Facility in the total amount of
&euro 4.6 bn must be refinanced in the 2022 financial year. Due to the uncertainty regarding future business development, there is a risk
that refinancing on the banking and capital markets is probably not possible and that further government support measures may be
necessary.
The Executive Board believes that the successful implementation of the measures described above is likely. Due to the dependence of the
TUI Group's solvency on the additional financing measures, the fact that certain conditions still have to be met for the successful
implementation of the financing measures, risks with regard to the refinancing of the external loans as well as the uncertainty regarding
the future development due to the COVID 19 pandemic, there are significant doubts about the TUI Group's ability to continue its business
operations. Insofar, this is a material uncertainty regarding the continuation of the Group's business activities.
On the basis of the assumptions described above, we expect that, despite the existing risks, the TUI Group currently has and will
continue to have sufficient funds, resulting from both borrowing and operating cash flows, to meet its payment obligations for the
foreseeable future and to ensure the going concern principle accordingly.
In accordance with provision 30 of the UK Corporate Governance Code, the Executive Board confirms that, in its opinion, it is appropriate
to prepare the consolidated financial statements on a going concern basis.
Restatement of comparative periods
Due to the increasing digitalisation of the tour operator business, the IT costs incurred by Markets & Airlines will no longer be fully
shown as administrative expenses from this financial year onwards, but also as cost of sales on a pro rata basis for the functional
areas. This will improve the presentation of the impact of the digital transformation of our business model in the income statement.
In addition, the definition of cost of sales was changed so that costs incurred for the management of the hotel in the destinations were
also shown as cost of sales. In contrast, the costs of the hotel holdings are now shown in full as administrative expenses. This
presentation takes greater account of the operational character of the hotels in the destinations.
As a result, the cost of sales for the financial year increases, while the gross profit and administrative expenses decrease accordingly.
The previous year's figures for the above-mentioned items were adjusted by &euro 232.0 m in each case to enhance comparability of the
periods.
In previous years, touristic payments on account, for which TUI has acted as an agent, amounted to &euro 46.5 m, the same amount has been
accounted for trade liabilities and other financial liabilities. As these amounts should be presented net instead of gross, the previous
year's figures were adjusted by &euro 46.5 m.
Further immaterial prior year adjustments to the income statement as well as the adjustments of the prior-year figures in the statement
of the financial position are based on adjustments to purchase price allocations finalised partly at 30 September 2019 and 30 September
2020.
Principles and methods of consolidation
Principles
The consolidated financial statements include all significant subsidiaries directly or indirectly controlled by TUI AG. Control exists
where TUI AG has power over the relevant activities, is exposed to variable returns or has rights to the returns, and has the ability to
affect those variable returns through its power over the investee.
Generally, the control is exercised by means of a direct or indirect majority of voting rights. If the TUI Group holds less than the
majority of voting rights in a shareholding, it may exercise control due to contractual or similar agreements, as in the case of the
participation in the RIUSA II Group. Due to the contractual agreements between the shareholders and the framework agreements with TUI
Group as well as the considerable importance of tour operation for the economic success of RIUSA II Group, TUI Group is able to exercise
a controlling influence on decisions about the most relevant activities and consequently the amount of returns. TUI Group is subject to
variable returns from RIUSA II Group, in particular due to dividend payments and fluctuations in the value of the stake itself. RIUSA II
Group is therefore consolidated although TUI Group only holds a 50 % equity stake.
In assessing control, the existence and effect of potential voting rights that are currently exercisable or convertible are taken into
account. Consolidation of subsidiaries starts from the date TUI gains control. When TUI ceases to control the corresponding companies,
they are removed from the group of consolidated companies.
The consolidated financial statements are prepared from the separate or single-entity financial statements of TUI AG and its
subsidiaries, drawn up on the basis of uniform accounting, measurement and consolidation methods and usually audited or reviewed by
auditors.
Associates for which the TUI Group is able to exert significant influence over the financial and operating policy decisions within these
companies are accounted for using the equity method. Generally, significant influence is assumed if TUI AG directly or indirectly holds
voting rights of 20 to less than 50 per cent.
Stakes in joint ventures are also measured using the equity method. A joint venture is a company managed jointly by the TUI Group with
one or several partners based on a contractual agreement, in which the parties that jointly exercise control have rights to the company's
net assets. Joint ventures also include companies in which the TUI Group holds a majority or minority of voting rights but in which
decisions about the relevant activities may only be taken on an unanimous basis due to contractual agreements.
The dates on which associates and joint ventures are included in or removed from the group of companies measured at equity are determined
in a manner consistent with that applied to subsidiaries. At equity measurement in each case is based on the last annual financial
statements available or the interim financial statements as at 30 September if the balance sheet dates differ from TUI AG's balance sheet
date. This affects 37 companies with a financial year from 1 January to 31 December, four companies with a financial year from 1 November
to 31 October and two companies with a financial year from 1 April to 31 March of the following year.
Group of consolidated companies
In financial year 2020, the consolidated financial statements included a total of 277 subsidiaries. The table below presents changes in
the number of companies since 1 October 2019.
Development of the group of consolidated companies *
and the Group companies measured at equity
&euro million Consolidated Associates Joint
subsidiaries ventures
Balance at 30 Sep 288 21 30
2019
Additions 5 - 1
Incorporation 2 - -
Acquisition 1 - 1
Expansion of 2 - -
business operations
Change in ownership 1 - - 1
stake
Disposals 17 2 -
Liquidation 2 - -
Sale 7 2 -
Merger 8 - -
Balance at 30 Sep 277 19 30
2020
* Excl. TUI AG
TUI AG's direct and indirect subsidiaries, associates and joint ventures are listed under Other Notes -
TUI Group Shareholdings.
39 subsidiaries were not included in the consolidated financial statements. Even when taken together, these companies are of minor
significance to the presentation of a true and fair view of the financial position and performance of the Group.
Acquisitions - Divestments
Acquisitions of the current financial year
In financial year 2020, companies were acquired for a total consideration of &euro 42.6 m, comprised of deferred purchase price payments
worth &euro 1.2 m and cash consideration worth &euro 41.4 m.
Summary presentation of acquisitions
Name Business Acquirer Date of Acquired Consideration
and activity acquisition share % transferred
headqu in &euro
arters million
of the
acquir
ed
compan
y
Kybele Accommodation TT 16.1.2020 100 % 39.9
Turizm Service Hotels
Yatiri Turkey
m San. Otel
Ve Hizmetle
Tic. ri
A. S., Turizm
Istanb ve
ul, ticaret
Turkey A. S.
Emder Travel Agent TUI 24.3.2020 50 % 0.1
Hapag- Deutschl
Lloyd and GmbH
Reiseb
üro
GmbH &
Co.
KG,
Emden
Six Travel Agent TUI 1.11.2019 - n. a. 2.4
Travel Deutschl 2.1.2020
Agenci and GmbH
es
in
German
y
One Travel Agent TUI 1.10.2019 n. a. 0.2
Travel Belgium
Agency Retail
in N. V.
Belgiu
m
Total 42.6
The acquisitions of travel agencies in Germany and Belgium in financial year 2020 were carried out as asset deals - i. e. no shares were
acquired - and qualified as business combinations under IFRS 3. The goal of these acquisitions is to increase the footprint in the German
and Belgian markets.
Due to the acquisition of the interests in Emder Hapag-Lloyd Reisebüro GmbH & Co. KG, Emden, the 50 % stake previously held by TUI Group
was increased to 100 %. The goal of the transaction is to increase TUI Group's earnings potential. The investment, previously classified
as a joint venture measured at equity, was measured at fair value through profit and loss. In the framework of the remeasurement of the
stake at the date of acquisition, a loss of &euro 1.8 m was carried in the share of result of joint ventures and associates. Below, these
acquisitions are jointly presented as 'travel agencies'.
In line with TUI Group's growth strategy, the goal of the acquisition of Kybele Turizm Yatirim San. Ve Tic. A. S., Istanbul, Turkey, is
to secure accommodation capacity in the holiday destination of Turkey and increase TUI Group's earnings potential.
Reconciliation to goodwill as at the date of first-time
consolidation
&euro million Kybele Turizm Yatirim Travel Agencies
San. Ve Tic. A. S.
Consideration 39.9 2.7
transferred
Net Assets at fair value 5.2 0.8
Goodwill 34.7 1.9
The purchase price allocation for the acquisitions in financial year 2020 are finalised and no other intangibles were identified. The
difference between consideration transferred and the acquired net asset at fair value have been capitalised as goodwill. Goodwill
primarily constitutes a part of the future earnings potential. The goodwill related to Kybele Turizm Yatirim San. Ve Tic. A. S.,
Istanbul, Turkey, has been allocated the segment Hotels & Resorts. Goodwill capitalised in the reporting period includes an amount of
&euro 2.1 m expected to be tax-deductible.
Statement of financial position as at the date of first-time
consolidation
&euro million Kybele Turizm Yatirim Travel
San. Ve Tic. A. S. Agencies
Assets
Other intangible assets 0.8 0.7
Property, plant and 46.3 -
equipment
Non-current assets 47.1 0.7
Inventories 0.1 -
Trade and other 18.2 -
receivables
Other assets 0.5 0.1
Cash and cash 0.1 0.5
equivalents
Equity and liabilities
Deferred tax liabilities 8.0 -
Other provisions 1.8 0.2
Financial liabilities 35.4 -
Other liabilities 15.6 0.3
Equity 5.2 0.8
attributable to 5.2 0.8
shareholders of TUI AG
There were no impairment charges with regard to trade and other receivables.
Revenue and profit contribution of newly acquired entities
&euro million Kybele Turizm Yatirim San. Ve
Tic. A. S.
Revenue from first-time -
consolidation
Loss from first-time - 1.1
consolidation
Pro-Forma revenue from 1 Oct 3.8
2019 until 30 Sep 2020
Pro-Forma loss from 1 Oct 2019 - 14.9
until 30 Sep 2020
The other acquired companies would only have delivered immaterial revenue and profit contributions even if they had already been included
in consolidation as at 1 October 2019.
No acquisitions were made after the reporting date.
Acquisitions of the prior financial year
As at 31 March 2020, the purchase price allocation for Papirüs Otelcilik Yatirim Turizm Seyahat Insaat Ticaret A. S., Antalya, Turkey,
already acquired in financial year 2019, was finalised as follows:
Impact of changes in purchase price allocations and
adjustments of financial position of Papirüs Otelcilik
Yatirim Turizm Seyahat Insaat Ticaret A. S. on TUI Group's
statement of financial position
&euro million Fair value at date Adjustment Fair value at
of date of
acquisition first-time
(31 May 2019) consolidation
Assets
Goodwill - 21.5 21.5
Property, plant 104.5 - 27.6 76.9
and equipment
Fixed assets 104.5 - 6.1 98.4
Other assets 1.6 - 1.6
Equity and
liabilities
Deferred tax 16.2 - 6.1 10.1
liabilities
Other provisions 0.4 - 0.4
Financial 18.5 - 18.5
liabilities
Other 14.4 - 14.4
liabilities
Equity 56.6 - 56.6
In addition, the adjustments made also resulted in a reduction in the cost of sales of &euro 0.3 m and an increase in income taxes of
&euro 0.1 m in the prior year.
As of 30 September 2020, the purchase price allocation for Renco (Zanzibar) Limited, Unguja, Tanzania, - meanwhile renamed into Gemma
Limited - acquired in the second half of financial year 2019, was finalised without having any impact on the statement of financial
position.
Divestments
On 1 October 2019, the two specialist tour operators Berge & Meer and Boomerang in the Central Region segment, presented as held for
sale, were sold to GENUI Zwölfte Beteiligungsgesellschaft mbH for &euro 128.3 m. The divestment of the companies generated a gain of
&euro 90.2 m, carried in Other income. This gain comprises income from the reclassification of amounts previously carried in Other
comprehensive income outside profit and loss. The disposal was realised for the most part tax-free.
Condensed balance sheet of 'Berge & Meer' and 'Boomerang
Reisen' as at 1 Oct 2019*
&euro million 1 Oct 2019
Assets
Goodwill 24.0
Property, plant and equipment and 4.2
intangible assets
Other non-current assets 0.9
Trade receivables 72.1
Other current assets 36.8
Cash and cash equivalents 6.1
144.1
Provisions and liabilities
Non-current liabilities 5.3
Current provisions 0.3
Trade payables 29.4
Touristic advance payments received 53.5
Other current liabilities 20.4
108.9
* On a stand-alone basis
In addition, Wolters Reisen GmbH in the Central Region segment was sold on 20 December 2019 to E-Domizil GmbH for &euro 6.3 m. The
transaction includes the disposal of &euro 1.7 m allocated goodwill. The disposal was realised for the most part tax-free.
At the beginning of July 2020, Hapag-Lloyd Kreuzfahrten GmbH was sold to the joint venture TUI Cruises GmbH for &euro 837.4 m. The
purchase price consists &euro 706.2 m already paid in the financial year and &euro 71.1 m financial receivables from TUI Cruises. In
addition, the amount includes the assignment of financial liabilities owed to Hapag-Lloyd Kreuzfahrten GmbH by TUI AG to TUI Cruises GmbH
in the amount of &euro60.2m. Hapag-Lloyd Kreuzfahrten had been part of the Cruises segment and the leading provider of luxury and
expedition cruises in German-speaking markets. The divestment of the company generated a gain of &euro 475.6 m, carried under Other
income. In accordance with the accounting option exercised, the gain on disposal arising from the divestment was determined in accordance
with IFRS 10, by which the gain was not reduced by the proportion which TUI Group holds in the joint venture. This gain includes income
from the reclassification of amounts previously carried in Other comprehensive income outside profit and loss. The disposal was realised
tax-free to a large extent, or was able to be offset against TUI AG tax losses carried forward.
Condensed balance sheet of 'Hapag-Lloyd Kreuzfahrten' as at 1
July 2020
&euro million 1 July 2020
Assets
Other intangible assets and property, plant 687.8
and equipment
Trade and other receivables 7.9
Derivative financial instruments 10.2
Right-of-use assets 7.2
Income tax assets 12.6
Inventories 9.1
Touristic payments on account 17.8
Other non-financial assets 8.2
Cash and cash equivalents 55.4
Other assets 0.1
816.3
Provisions and liabilities
Financial liabilities 344.8
Trade payables 8.0
Derivative financial instruments 15.6
Touristic advance payments received 79.5
Deferred tax liabilities 10.0
Pension provisions and similar obligations 19.8
Other financial liabilities 16.8
Other non-financial liabilities 11.6
Lease liabilities 7.2
Other provisions and liabilities 7.6
520.9
Foreign exchange translation
Transactions in foreign currencies are translated into the functional currency at the foreign exchange rates at the date of the
transaction. Any gains and losses resulting from the execution of such transactions and the translation of monetary assets and
liabilities denominated in foreign currencies at the foreign exchange rate at the date of the transaction are shown in the income
statement, with the exception of gains and losses to be recognised in equity as qualifying cash flow hedges.
The annual financial statements of companies are prepared in the respective functional currency. The functional currency of a company is
the currency of the primary economic environment in which the company operates.
Where subsidiaries prepare their financial statements in functional currencies other than the Euro, being the Group's reporting currency,
the assets and liabilities are translated at the rate of exchange applicable at the balance sheet date (closing rate). Goodwill allocated
to these companies and adjustments of the fair value arising on the acquisition of a foreign company are treated as assets and
liabilities of the foreign company and also translated at the rate of exchange applicable at the balance sheet date. The items of the
income statement and hence the result for the year shown in the income statement are translated at the average rate of the month in which
the respective transaction takes place.
Differences arising on the translation of the annual financial statements of foreign subsidiaries are reported outside profit and loss
and separately shown as foreign exchange differences in the consolidated statement of changes in equity. When a foreign company or
operation is sold, any foreign exchange differences previously included in equity outside profit and loss are recognised as a gain or
loss from disposal in the income statement through profit and loss.
Translation differences relating to non-monetary items with changes in their fair values eliminated through profit and loss (e. g. equity
instruments measured at their fair value through profit and loss) are included in the income statement. In contrast, translation
differences for non-monetary items with changes in their fair values taken to equity (e. g. financial assets at FVTOCI) are included in
revenue reserves.
The TUI Group did not hold any subsidiaries operating in hyperinflationary economies in the completed financial year, nor in the previous
year.
The translation of the financial statements of foreign companies measured at equity follows the same principles for adjusting carrying
amounts and translating goodwill as those used for consolidated subsidiaries.
Net investment in a foreign operation
Monetary items receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the
foreseeable future, essentially constitute part of a net investment in this foreign operation. Foreign exchange differences from the
translation of these monetary items are recognised in other comprehensive income. TUI Group has granted loans of this type in particular
to hotel companies in North Africa and Turkey.
Exchange rates of currencies of relevance to the TUI Group
Closing rate Annual average rate
1 &euro 30 Sep 2020 30 Sep 2020 2019
equivalent 2019
Sterling 0.91 0.89 0.88 0.88
US dollar 1.17 1.09 1.12 1.13
Swiss franc 1.08 1.08 1.07 1.12
Swedish krona 10.53 10.71 10.58 10.50
Consolidation methods
The recognition of the net assets of acquired businesses is based on the acquisition method. Accordingly all identifiable assets and all
liabilities assumed are measured at fair value as of the acquisition date. Subsequently, the consideration for the stake is measured at
fair value and eliminated against the acquiree's revalued equity attributable to the acquired share. As in the prior year, the option to
measure the non-controlling interests at their fair value (full goodwill method) was not used.
Any excess of acquisition costs over net assets acquired is capitalised as goodwill and recognised as an asset in accordance with the
provisions of IFRS 3. Any negative goodwill is recognised immediately in profit and loss and presented as other income.
When additional shares are purchased after obtaining control, the difference between the purchase price and the carrying amount of the
stakes acquired is recognised directly in equity. The effects from sales of stakes not entailing a loss of control are also recognised
directly in equity. By contrast, when control is obtained or lost, gains or losses are recognised in profit and loss. In the case of
business combination achieved in stages (where the acquirer held an equity interest before he obtained control), the equity stake
previously held in the acquired company is revalued at the fair value applicable at the acquisition date and the resulting gain or loss
is recognised in profit or loss. For transactions involving a loss of control, the profit or loss does not only comprise the difference
between the carrying amounts of the disposed stakes and the consideration received but also the result from the revaluation of the
remaining shares.
On loss of control of a subsidiary the gain or loss on derecognition will be calculated as the difference of the fair value of the
consideration plus the fair value of any investment retained in the former subsidiary less the share of the book value of the net assets
of the subsidiary. Any gains or losses previously recognised in other comprehensive income from currency translations or the valuation of
financial assets and liabilities will be reclassified to the income statement. When a subsidiary is sold, any goodwill allocated to the
respective subsidiary is taken into account in the calculation of the profit or loss of disposal.
The Group's associates and joint ventures are measured at equity and included at the cost to purchase as at the acquisition date. The
Group's stake in associates and joint ventures includes the goodwill arising from the respective acquisition.
The Group's share in profits and losses of associates and joint ventures is carried in the income statement from the date of acquisition
(Share of result from joint ventures and associates), while the Group's share in the total other comprehensive income is shown in its
revenue reserves. The accumulated changes arising after the acquisition are shown in the carrying amount of the shareholding. When the
share in the loss of an associated company or joint venture equals or exceeds the Group's original stake in this company, including other
unsecured receivables, no further losses are recognised. Any losses exceeding that stake are only recognised to the extent that
obligations have been assumed or payments have been made for the associated company or joint venture.
Where the accounting and measurement methods applied by associates and joint ventures differ from the uniform accounting rules applied in
the Group, the differences are adjusted.
Intercompany receivables and payables or provisions are eliminated, as are intercompany revenue, other income and the corresponding
expenses. Intercompany results from intercompany deliveries and services are reversed through profit and loss, taking account of deferred
taxes. However, intercompany losses are an indicator that an asset may be impaired. Intercompany profits from transactions with companies
measured at equity are eliminated in relation to the Group's stake in the companies. Intercompany transactions are provided on an arm's
length basis.
Accounting and measurement methods
The consolidated financial statements were prepared according to the historical cost principle, with the exception of certain financial
instruments such as financial assets and derivatives as well as plan assets from externally funded pensions benefit obligations held at
fair value at the balance sheet date.
The financial statements of the consolidated subsidiaries are prepared in accordance with uniform accounting and measurement principles.
The amounts recognised in the consolidated financial statements are not determined by tax regulations but solely by the commercial
presentation of the financial position and performance as set out in the rules of the IASB.
Revenue recognition
TUI recognises revenue upon transfer of control over distinct goods or services to the customer. In Markets and Airlines, TUI
predominantly generates revenue from the sale of package holidays. The flights, hotel accommodation and other services included in a
package holiday are transformed into one product for the customer through a significant integration service provided by TUI as tour
operator within the meaning of IFRS 15, so that the package holiday constitutes one performance obligation for TUI. This revenue is
recognised when TUI delivers the service for its customer, i. e. on a linear basis over the duration of the holiday tour, as customers
consume their holiday on a pro rata basis. TUI generates further revenue from the sale of other tourist services, e. g. seat-only,
accommodation-only, cruises, etc. Revenue is recognised when or as TUI has satisfied its performance obligation, either over time in
relation to the duration of the journey if the services relate to a period of time, e. g. in the case of multi-day hotel stays, or at a
point in time on the day of the performance of the performance obligation, e. g. for flight services on the day of the flight. Revenue
from long-term contracts is recognised over the duration of the individual contract in accordance with IFRS 15.
Amendment fees do not constitute an independent performance obligation. Revenue is therefore recognised along with the delivery of the
main performance obligation.
If TUI has control over the asset before it is delivered to the customer, TUI acts as the principal in relation to that service.
Otherwise, TUI acts as an agent. As a principal, TUI carries the recognised revenue and costs in the income statement on a gross basis,
e. g. for revenue from its own tour operator activities, for hotel revenue in own hotels, and for aviation revenue. When acting as an
agent, TUI carries the relevant revenue on a net basis at the amount of the commission received, e. g. for car rental and hotel revenue
for third-party hotels in which TUI does not have control over the hotel rooms. Passenger-related aviation taxes and fees charged by TUI
on behalf of third parties and passed on to these third parties are carried in the income statement on a net basis.
TUI uses the practical expedient offered under IFRS 15.121(a). For open performance obligations as at the balance sheet date, TUI
discloses all performance obligations for contracts with an original term of more than twelve months.
TUI has to pay compensation to customers for flight delays or cancellations (so-called denied boarding compensation). These payments
stand in direct connection with the obligation of the flight service. Therefore these payments represent variable considerations under
IFRS 15. In conclusion denied boarding compensations are shown net in revenue.
Goodwill and other intangible assets
Acquired intangible assets are carried at cost. Internally generated intangible assets are capitalised at cost where an inflow of future
economic benefits for the Group is probable and can be reliably measured. The cost to produce comprises direct costs and directly
allocable overheads. Intangible assets with a finite service life are amortised over the expected useful life.
Intangible assets acquired as a result of business combinations are included at their fair value as at the date of acquisition and are
amortised on a straight-line basis.
Useful lives of intangible assets
Useful lives
Brands, licences and other rights 5 to 20 years
Transport and leasing contracts 12 to 20 years
Computer Software 3 to 10 years
Customer base as at acquisiton date 7 to 15 years
Due to the decision to accelerate the digital transformation of TUI Group the useful life of single software solutions were estimated
with 1 respective 2 years. Please refer for further information to the section 'Other intangible assets'.
If there are any events or indications suggesting potential impairment, the amortised carrying amount of the intangible asset is compared
with the recoverable amount. Any losses in value going beyond wear-and-tear depreciation are taken into account through the recognition
of impairment charges.
Depending on the functional area of the intangible asset, amortisation and impairment charges are included under cost of sales or
administrative expenses.
Intangible assets with indefinite useful lives are not amortised but are tested for impairment at least annually. In addition, impairment
tests are conducted if there are any events or indications suggesting potential impairment. The TUI Group's intangible assets with an
indefinite useful life consist exclusively of goodwill.
Impairment tests for goodwill are conducted on the basis of cash generating units (CGU) or group of cash generating units.
Impairment charges are recognised where the carrying amount of the tested units plus the allocated goodwill exceeds the recoverable
amount. The recoverable amount is the higher of fair value less costs of disposal and the present value of future cash flows based on
continued use (value in use). The fair value less costs of disposal corresponds to the amount that could be generated between
knowledgeable, willing, independent business partners after deduction of the costs of disposal.
Impairment of goodwill is shown separately in the consolidated income statement.
Property, plant and equipment
Property, plant and equipment are measured at amortised cost. The costs to purchase include costs to bring the asset to a working
condition. The costs to produce are determined on the basis of direct costs and directly attributable indirect costs and depreciation.
Borrowing costs directly associated with the acquisition, construction or production of qualifying assets are included in the costs to
acquire or produce these assets until the assets are ready for their intended use.
To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the underlying capitalisation rate is
determined on the basis of the specific borrowing cost; in all other cases the weighted average of the borrowing costs applicable to the
borrowings outstanding is applied.
Depreciation of property, plant and equipment is based on the straight-line method, based on the customary useful lives. The useful
economic lives are as follows:
Useful lives of property, plant and equipment
Useful lives
Hotel buildings 30 to 40 years
Other buildings 25 to 50 years
Cruise ships 30 to 35 years
Aircraft
Fuselages and engines 22 to 25 years
Engine overhaul depending on intervals,
up to 12 years
Major overhaul depending on intervals,
up to 12 years
Spare parts up to 12 years
Operating and business equipment 3 to 10 years
Moreover, the level of depreciation is determined by the residual values at the end of the useful life of an asset. The residual value
assumed in first-time recognition for cruise ships and hotel complexes is between 15 % and 35 % of the acquisition costs. The
determination of the depreciation of aircraft fuselages and aircraft engines in first-time recognition is based on a residual value of a
maximum of 5 % of the cost of acquisition. The payments made under a power by the hour arrangement relating to maintenance overhauls are
capitalised as PPE under construction up to a maintenance event at which point the cost is transferred to the appropriate PPE category.
Both the useful lives and residual values are reviewed on an annual basis when preparing the Group financial statements. The review of
the residual values is based on comparable assets at the end of their useful lives as at the current point in time. Any adjustments
required are recognised as a correction of depreciation over the remaining useful life of the asset. The adjustment of depreciation is
recognised retrospectively for the entire financial year in which the review has taken place. Where the review results in an increase in
the residual value so that it exceeds the remaining net carrying amount of the asset, depreciation is suspended. In this case, the
amounts are not written back.
Any losses in value going beyond wear-and-tear depreciation are taken into account through the recognition of impairment losses. If there
are any events or indications suggesting impairment, the required impairment test is performed to compare the carrying amount of an asset
with the recoverable amount.
Leases
Leases
Leases are all agreements transferring the right to use an identified asset for a given period of time in return for a payment. As a
lessee, TUI leases moveable assets such as aircraft, vehicles and cruise ships, as well as, in particular, immoveable property such as
hotel buildings and land, office buildings and travel agencies. As a lessor, TUI subleases some aircraft and hotel and office space.
TUI as lessee
Until 30 September 2019, the criteria of IAS 17 were applied to assign a leased asset to its economic owner. Leased property, plant and
equipment for which substantially all the risks and rewards incidental to ownership were transferred to TUI as a lessee (finance leases)
were capitalised. The leases were capitalised at the lower of the fair value of the asset and the present value of the minimum lease
payments. The asset was depreciated over the shorter of the lease term or the useful life of the asset on the basis of the depreciation
method applicable to comparable purchased or produced assets. Every lease payment was broken down into an interest portion and a
redemption portion so as to produce a constant periodic rate of interest on the remaining balance of the liability. The interest portion
was carried in the income statement through profit or loss.
Where economic ownership of the leased asset was attributed to the lessor in accordance with IAS 17 (operating lease), the lease payments
were recognised as an expense in the income statement on a straight-line basis.
Since 1 October 2019, TUI has carried right-of-use assets and lease liabilities for all leases in the statement of financial position. At
the inception of an agreement, TUI evaluates whether it is, or contains, a lease. Apart from traditional lease, tenancy or leasing
contracts, service or capacity agreements may also fall within the scope of IFRS 16. In connection with the purchase of mixed tourism
services, the rental or purchase of the largest portion of a hotel's room capacity is identified as a lease component if TUI commits to
its contract partner to purchase a fixed allotment of more than 90 % of the hotel's capacity for a period of more than 12 months, if the
agreement does not include an exemption to return committed capacity for self-marketing by the hotelier, and if therefore an irrevocable
payment obligation exists. For agreements that contain one or several lease components alongside non-lease components, TUI uses the
option not to separate these non-lease components, in particular for vehicle or IT leases and for hotel capacity contracts.
At the commencement date, i. e. the date from which the lessee is entitled to exercise the right to use the underlying asset, a lease
liability amounting to the present value of the lease payments not yet made as at that date is recognised. The lease payments include all
fixed and in substance-fixed payments less any future lease incentives to be provided by the lessor. The lease payments also include
variable payments linked to an index or an (interest) rate as well as expected payments from residual value guarantees. Lease payments
for the exercise of extension, purchase and termination options are included if the exercise of these options is assessed as reasonably
certain. As a rule, the lease payments are discounted at the lessor's interest rate implicit in the lease. If that rate is not known to
TUI, the present value is determined using the incremental borrowing rate. After initial measurement, the carrying amount is increased to
reflect interest on the lease liability and reduced to reflect the lease payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e. g., changes to
future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an
option to purchase the underlying asset. The interest expense from the subsequent measurement of the lease liability is presented in the
interest result. Variable lease payments not linked to an index nor to an (interest) rate are recognised through profit or loss in the
period in which the event or condition that triggers the payment occurs.
In addition, a right-of-use asset is recognised at the commencement date. Right-of-use assets for the leased items are measured at
amortised cost less cumulative depreciation / amortisation and cumulative impairment and adjusted for revaluations of the lease
liability. The costs of a right-of-use asset comprise the present value of the future lease payments plus initial direct costs and the
lease payments made prior to commencement less any lease incentives received and the estimated costs to be incurred to restore the leased
asset to the condition required by the terms and conditions of the lease. Capitalised right-of-use assets are depreciated on a
straight-line basis over the shorter of the lease term and the expected useful life of the right-of-use asset. If the lease transfers
ownership of the leased asset to TUI by the end of the lease term, or if the lease payments reflect the future exercise of a purchase
option, the right-of-use asset is depreciated over the useful life of the leased asset. Depreciation of capitalised right-of-use assets
is carried in the cost of sales or in administrative expenses.
TUI applies the recognition and measurement exemptions for all short-term leases and low-value asset leases. A short-term lease is a
lease that has a lease term of 12 months or less and does not contain a purchase option. The lease payments for those leases are
recognised as an expense in the cost of sales or in administrative expenses on a straight-line basis over the lease term or on another
systematic basis.
Sale-and-leaseback
For sale-and-leaseback transactions, TUI initially determines in accordance with IFRS 15 whether the transfer of the asset has to be
accounted for as a sale. If the transfer is accounted for as a sale, TUI recognises the right-of-use asset associated with the
sale-and-leaseback transaction, as seller and as lessee, at the proportion of the previous carrying amount that relates to the right of
use retained. The gain or loss from the sale transaction is carried in profit or loss on a pro rata basis at the amount of the rights
transferred to the buyer and lessor. If the transfer is not accounted for as a sale, TUI continues to recognise the legally transferred
asset as before and carries a financial liability for the proceeds received.
TUI as lessor
As a lessor, TUI classifies each lease as an operating lease or a finance lease. If TUI as a lessor has substantially all the risks and
rewards incidental to ownership of the underlying asset, the lease is classified as an operating lease. If the lease transfers
substantially all the risks and rewards incidental to ownership of the underlying asset to the lessee, the lease is classified as a
finance lease.
For subleases, since 1 October 2019 the lease classification is made by reference to the right-of-use asset arising from the head lease
in accordance with IFRS 16. Until 30 September 2019 a sublease was classified by reference to the asset underlying the lease in
accordance with IAS 17.
The lease payments from operating leases are recognised in revenue on a straight-line basis over the lease term. Any initial direct costs
incurred in obtaining the lease are added to the carrying amount of the underlying leased item and depreciated over the lease term on a
straight-line basis.
For finance leases, TUI recognises a lease receivable at an amount equal to the net investment in the lease and derecognises the
underlying leased asset or the right-of-use asset from the head lease. The lease payments made by the lessees are broken down into an
interest portion and a redemption portion using the effective interest rate method so as to produce a constant periodic rate of interest
on the balance of the net investment. The redemption portions received are deducted from the lease receivable. The interest portion of
the payments received is carried in the interest result.
Financial instruments
Financial instruments are contractual rights or obligations that will lead to an inflow or outflow of financial assets or the issue of
equity rights. They also comprise derivative rights or obligations derived in particular from primary assets.
Primary financial assets and financial liabilities
The classification and measurement of financial assets are determined on the basis of the business model used to manage financial assets
and the related contractual cash flows. At initial recognition of financial assets, the classification comprises the categories
'Financial assets at amortised cost (AC)', 'Financial assets at fair value through other comprehensive income (FVTOCI)' and 'Financial
assets at fair value through profit and loss (FVPL)'.
Primary financial assets are recognised at the value as at the trading date on which TUI Group under-takes to buy the asset. When
recognised for the first time, they are either classified as at amortised costs or at fair value, depending on their objective. Primary
financial assets are classified as financial assets at amortised cost when the objective of the entity's business model is to hold the
financial assets to collect contractual cash flows, and when the contractual terms and conditions of the assets exclusively constitute
interest and principal payments on the nominal amount outstanding.
For the financial assets held at amortised cost, a loss allowance for expected credit losses is recognised in accordance with IFRS 9.
Loss allowances for financial assets are based on either full lifetime expected credit losses or 12-month expected credit losses. A loss
allowance for lifetime expected credit losses is required for a financial instrument if the credit risk of that financial asset has
increased significantly since initial recognition. For all other financial instruments, expected credit losses are measured at an amount
equal to the 12-month expected credit losses.
IFRS 9 allows entities to apply a simplified approach inter alia for trade receivables. Lifetime expected credit losses on all these
assets can already be recognised at initial recognition.
Impairments and reversals of impairments are recognised under 'impairment of financial asset' in the income statement.
The equity instruments held in the balance sheet item 'Other financial assets' were irrevocably designated as 'Financial assets at fair
value through OCI' as they are held for medium- to long-term strategic objectives. These instruments are stakes in associated
non-consolidated subsidiaries, equity investments and other investments. Recognising all short-term fluctuations in the fair value in the
income statement would not be in line with the Group's strategy. They are allocated to non-current assets unless the entity intends to
sell them within twelve months after the balance sheet date. Dividends from these equity instruments are recognised in the income
statement unless the dividends are clearly a partial repayment of the cost to purchase the equity instrument.
The cumulative gain or loss from the measurement of the equity instruments recognised in other comprehensive income will continue to be
recognised in equity even after it has been derecognised and has to be reclassified to revenue reserves.
All other financial assets not recognised at amortised cost or at fair value through OCI must be measured at fair value through profit or
loss.
Primary financial liabilities are recognised in the consolidated statement of financial position if an obligation exists to transfer cash
and cash equivalents or other financial assets to another party. Initial recognition of a primary liability is effected at its fair
value. For loans taken out, the nominal amount is reduced by discounts retained and transaction costs paid. The subsequent measurement of
primary financial liabilities is effected at amortised cost using the effective interest method. TUI does not use the fair value option.
All foreign exchange differences resulting from the translation of trade accounts payable are reported as a correction of the cost of
sales. Foreign exchange differences from the translation of liabilities not resulting from normal operating processes are reported under
other income / other expenses, financial expenses /
income or administrative expenses, depending on the nature of the underlying receivables or payables.
Assets are derecognised as at the date on which the rights for payments from the assets expire or are transferred and therefore as at the
date on which essentially all risks and rewards of ownership are transferred. The rights to an asset expire when the rights to receive
the cash flows from the asset have expired. For transfers of financial assets, it is assessed whether they have to be derecognised in
accordance with derecognition requirements of IFRS 9.
Derivative financial instruments and hedging
At initial measurement, derivative financial instruments are measured at the fair value attributable to them on the date the contract is
entered into. Subsequent remeasurement is also recognised at the fair value applicable at the respective balance sheet date. Where
derivative financial instruments are not part of a hedge in connection with hedge accounting, they are classified as 'at fair value
through profit and loss'. The method used to recognise gains and losses depends on whether the derivative financial instrument has been
fully or possibly only partly designated as a hedging instrument, and on the nature of the hedged item. Changes in the fair value are
immediately recognised through profit and loss. If, by contrast, an effective hedging relationship exists, the transaction is recognised
as a hedge.
TUI Group uses the accounting policy choice provided by IFRS 9, enabling entities to continue to apply the hedge accounting requirements
of IAS 39. Hedge accounting is exclusively used to hedge the exposure to variability in cash flows from future transactions highly likely
to occur (cash flow hedges). Hedges of balance sheet items (Fair Value Hedges), i. e. hedges of the fair value of an asset or a
liability, are currently not included in hedge accounting.
Upon entering into a transaction, TUI Group documents the hedge relationship between the hedge and the underlying transaction, the risk
management goal and the underlying strategy. In addition, a record is kept of the assessment, both at the beginning of the hedge
relationship and on a continual basis, as to whether the derivatives used for the hedge are highly effective in compensating for the
changes in the fair values or cash flows of the underlying transactions.
The effective portion of changes in the fair value of derivatives forming cash flow hedges is recognised in equity. Any ineffective
portion of such changes in the fair value, by contrast, is recognised immediately in the income statement through profit and loss.
Amounts taken to equity are reclassified to the income statement and carried as income or expenses in the period in which the hedged item
has an effect on results.
If a hedge expires, is sold or no longer meets the criteria of IAS 39 for hedge accounting, the cumulative gain or loss remains in equity
and is only recognised in the income statement through profit and loss when the originally hedged future forecasted transaction occurs.
If the future transaction is no longer expected to take place, the cumulative gains or losses recognised directly in equity are
immediately recognised through profit and loss.
More detailed information on the Group's risk management activities is provided in Note 40 and as well as in the 'Risk report' section of
the management report.
Contractual assets and trade receivables
If TUI has fulfilled their contractual obligations, contractual assets or trade receivables are carried. Trade receivables are carried if
the claim for the acquisition of the consideration is no longer subject to a condition. As a rule, this is the case when the Group is
contractually entitled to issue an invoice to the customer that has not yet been paid in advance through a customer deposit. Due to the
tourism business model under which customers pay for their travel services in advance, TUI does not have any contractual assets.
Contractual costs
The direct costs immediately resulting from obtaining a contract, e. g. sales commissions to travel agencies for sales of travel
services, are capitalised as contractual costs in the statement of financial position upon payment of the commission. As a rule, the
resulting expenses are recognised over the duration of the travel service in line with the associated revenue.
Inventories
The measurement method applied to similar inventory items is the weighted average cost formula.
Cash and cash equivalents
Cash and cash equivalents comprise cash, call deposits, other current highly liquid financial assets with an original term of a maximum
of three months and current accounts. Overdrawn current accounts are shown as liabilities to banks under current financial liabilities.
Equity
Ordinary shares are classified as equity. Costs directly allocable to the issue of new shares or conversion options are taken to equity
on a net after-tax basis as a deduction from the issuance proceeds.
Own shares
The group's holdings in its own equity instruments are shown as deductions from shareholders' equity at cost, including directly
attributable transaction costs. No gain or loss is recognised in the income statement on the purchase or sale of shares. Any difference
between the proceeds from sale and the original cost are taken to reserves.
Pension Provisions
The pension provision recognised for defined benefit plans corresponds to the net present value of the defined benefit obligations (DBOs)
as at the balance sheet date less the fair value of the plan assets. If the value of the plan assets exceeds the value of the DBO, the
excess amount is shown within other assets. The DBOs are calculated annually by independent actuaries using the projected unit credit
method.
For defined contribution plans, the Group pays contributions to public or private pension insurance plans on the basis of a statutory or
contractual obligation or on a voluntary basis. The Group does not have any further payment obligations on top of the payment of the
contributions. The contributions are recognised under staff costs when they fall due.
Other Provisions
Other provisions are formed when the Group has a current legal or constructive obligation as a result of a past event, where in addition
it is probable that assets will be impacted by the settlement of the obligation and the level of the provision can be reliably
determined.
Where a large number of similar obligations exist, the probability of a charge over assets is determined on the basis of this group of
obligations. A provision is also recognised if the probability of a charge over assets is low in relation to an individual obligation
contained in this group.
Provisions are measured at the present value of the expected expenses, taking account of a pre-tax interest rate, reflecting current
market assessments of the time value of money and the risks specific to the liability. Risks already taken into account in estimating
future cash flows do not affect the discount rate. Increases in provisions due to accretion of interest are recognised as interest
expenses through profit or loss.
Government Grants
Government grants are recorded if there is reasonable assurance that TUI will comply with all attached conditions for receiving the grant
and the grant will be awarded. Investment grants received are deducted from the carrying amounts of assets in property, plant or
equipment where these grants are directly allocable to individual assets. If a direct allocation of grants to individual items of
property, plant or equipment is not possible, or if the grants are from other government programmes, the grants and subsidies received
are recognised as deferred income and shown within Other liabilities. Grants related to income are deducted from related expenses in the
period in which the corresponding expenses are incurred.
Touristic advance payments received (contract liabilities)
A contract liability is an obligation of the Group to deliver goods or services for a customer for which the customer has already
delivered a performance, e. g. in the form of payment of a deposit. In the tourism business model, customers pay deposits on most travel
services prior to departure. The deposits received therefore constitute contract liabilities within the meaning of IFRS 15.
Deferred taxes and income taxes
Expected tax savings from the use of tax losses carried forward assessed as recoverable in the future are recognised as deferred tax
assets. Regardless of the unlimited ability to carry German tax losses forward which continues to exist, the annual utilisation is
limited by the minimum taxation. Foreign tax losses carried forward frequently have to be used within a given country-specific time limit
and are subject to restrictions concerning the use of these losses carried forward for profits on ordinary activities, which are taken
into account accordingly in the measurement.
Income tax is directly charged or credited to equity if the tax relates to items directly credited or charged to equity in the same
period or some other period.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the
temporary difference or an unused tax loss can be utilised.
Deferred taxes are measured at the tax rates and tax provisions applicable at the balance sheet date or adopted by law and expected to be
applicable at the date of recognition of the deferred tax asset or the payment of the deferred tax liability.
Deferred and current income tax liabilities are offset against the corresponding tax assets if they exist in the same fiscal territory
and have the same nature and maturity.
Share-based payments
Share-based payment schemes in the Group comprise both cash-settled and equity-settled schemes.
For cash-settled transactions, the resulting liability for the Group is charged to expenses at its fair value as at the date of the
performance of the service by the beneficiary. Until settlement of the liability, the fair value of the liability is re-measured at every
closing date and all changes in the fair value are recognised through profit and loss.
For equity-settled transactions the fair value of the awards granted is recognised under staff costs with a corresponding direct increase
in equity. The fair value is determined at the point when the awards are granted and spread over the vesting period during which the
employees become entitled to the awards. The method for the calculation of the granted awards is described in Note 40.
Summary of selected accounting and measurement methods
The table below lists the key accounting and measurement methods used by the TUI Group.
Summary of selected measurement bases
Item in the statement of Measurement base
financial position
Assets
Goodwill At cost (subsequent
measurement: impairment test)
Other intangible assets with At amortised cost
definite useful lives
Property, plant & equipment At amortised cost
Right-of-use assets At amortised cost
Investments in Joint ventures and At the Group's share of the
Associates net assets of the
joint ventures and associates
Financial assets
Equity Instruments At fair value through other
comprehensive income
(without subsequent
reclassifcation in profit or
loss)
Trade and other receivables At amortised cost (depending
on the underlying business
model and the contractual
cashflows)
Derivative financial instruments At fair value through profit
or loss
Cash and cash equivalents At amortised cost
Inventory Lower of cost and net
realisable value
Touristic prepayments At cost (or lower recoverable
amount)
Assets held for sale Lower of cost and fair value
less cost of disposal
Liabilities and Provisions
Financial liabilities At amortised cost
Provision for pensions Projected unit credit method
Other provisions Present value of the
settlement amount
Lease liabilities At amortised cost
Touristic advance payments At amortised cost
received
Financial liabilities
Non-derivative financial At amortised cost
liabilities
Derivative financial liabilities At fair value through profit
or loss
Payables, trade and other At amortised cost
liabilities
Key judgements, assumptions and estimates
The presentation of the assets, liabilities, provisions and contingent liabilities shown in the consolidated financial statements is
based on judgements, estimates and assumptions. Any uncertainties are appropriately taken into account in determining the values.
All estimates and assumptions are based on the conditions and assessments as at the balance sheet date. In evaluating the future
development of business, reasonable assumptions are made regarding the expected future economic environment in the business areas and
regions in which the Group operates.
Despite careful preparation of the estimates, actual results may differ from the estimate. In such cases, the assumptions and the
carrying amounts of the assets and liabilities concerned, if necessary, are adjusted accordingly. As a matter of principle, changes in
estimates are taken into account in the financial year in which the changes have occurred and in future periods.
Judgements
The judgements made by management in applying accounting policies that may have a significant impact on TUI Group's assets and
liabilities mainly relate to the following topics:
· Assessment when the Group has de facto control over an investee and therefore consolidates this investment
· Definition whether a Group company acts as an agent or as a principal in a transaction
· Determination whether an agreement is to be classified as a lease or contains a lease
· Determination of the term of the lease as a lessee in the event of agreements with extension or termination options
Determination of the term of the lease as a lessee
TUI determines the term of the lease as the non-cancellable period for which the lessee has the right to use the asset, together with any
periods covered by extension options, if exercise of that option by TUI is reasonably certain, as well as periods covered by termination
options if TUI is reasonably certain that it will not exercise that option. Many of TUI's individually negotiated aircraft and real
estate leases contain extension or termination options.
TUI applies judgement in evaluating whether it is reasonably certain that an option to renew will be exercised or that an option to
terminate the lease will not be exercised. In this context, TUI considers all relevant facts and circumstances that create an economic
incentive for TUI to exercise, or not to exercise, the extension or termination option, respectively. From the commencement date, TUI
remeasures the lease term if there is either a significant event or a significant change in the circumstances within our control alters
any of our assessments about what is reasonably certain. The lease term, for instance, is adjusted if an extension option is exercised or
if a termination option is not exercised and if this had been considered differently in the original assessment.
For aircraft leases, we determine the end of the lease term on the basis of the contractually agreed return date. For medium- to
long-term property agreements, e. g. office buildings, hotels or travel agency leases, options to renew the lease are included in the
lease term to the extent to which TUI presumes that the future exercise of the option is reasonably certain in the individual case.
For information on potential future lease payments relating to periods after the exercise date for extension or termination options,
please refer to Note 15.
Assumptions and estimates
Assumptions and estimates that may have a material impact on the amounts reported as assets and liabilities in the TUI Group are mainly
related to the following balance sheet-related facts and circumstances:
· Future development of the travel business after the COVID-19-pandemic and impact on valuation of assets
· Establishment of assumptions for impairment tests, in particular for goodwill and property, plant and equipment
· Determination of the fair values for acquisitions of companies and determination of the useful lives of acquired intangible assets
· Determination of useful lives and residual carrying amounts of property, plant and equipment
· Determination of actuarial assumptions to measure pension obligations
· Recognition and measurement of other provisions
· Determination of the incremental borrowing rate used to measure lease liabilities
· Recoverability of future tax savings from tax losses carried forward and tax-deductible temporary differences
· Measurement of tax risks
· Recoverable amounts of touristic prepayments
· Determination that the package holiday represents a performance obligation due to the significant integration service
· Determination of period-related revenue recognition on a straight-line basis over the duration of the trip
· Determination of the ECL of financial instruments
Future development of the travel business after the COVID-19-Pandemic and impact
on the valuation of assets
Due to the development of the COVID-19-pandemic, there were indications that Group assets may be impaired. Accordingly, the Group's
assets, in particular the business units carrying goodwill, property, plant and equipment, other intangible assets, rights of use and
companies accounted for using the equity method were tested for impairment as at 30 September 2020. The impairment tests are performed on
the basis of future discounted cash inflows derived from medium-term corporate planning. Both the derivation of future cash inflows and
the determination of the interest rate are subject to a high degree of assumptions and estimates and are associated with uncertainties.
The sporadic openings of destinations in summer 2020 showed that strong demand for travel can be expected once the pandemic ends. A
fundamental assumption of our medium-term corporate planning is therefore that our various Group divisions will be able to gradually
resume their programmes in the course of the 2021 financial year. While business activity is expected to be severely restricted in the
first and second quarters, a recovery in travel activity is anticipated for the summer of the 2021 financial year, without reaching the
pre-crisis level of the 2019 financial year. In particular, the timing of the resumption of travel activity in the 2021 financial year is
difficult to predict. After a transitional phase in the 2022 financial year with a further increase in bookings due to the reopening of
all destinations and the return of consumer confidence, it is expected that the Group's business performance will return to normal levels
of demand and profitable growth in the 2023 financial year at the latest, and reach the level of the years before the outbreak of the
COVID-19-pandemic.
Other key factors are the weighted average cost of capital after income taxes (WACC) on which discounting is based, the growth rate and
the perpetuity. Changes in these assumptions may have a significant impact on the recoverable amount and the amount of any impairment
loss.
In the following, we describe the most important assumptions used in medium-term corporate planning and in determining the weighted
average cost of capital for the segments mentioned. In order to estimate the uncertainties underlying the assumptions, we have performed
sensitivity analyses, which are presented in the section entitled ,Goodwill'.
For Markets & Airlines travel activity is expected to resume in the second half of the 2021 financial year. In the 2022 financial year,
all destinations will be open for travel and passenger numbers will continue to rise. Based on a prudent business plan it is expected
that the number of guests in the Markets & Airlines segment will return to the level of the 2019 financial year in the 2023 financial
year. The reissue of the flight permit for Boeing 737 Max aircraft and the associated cost savings compared to the 2019 business year are
expected for the 2021 business year. The cost-cutting measures and restructuring measures already initiated, the increased use of online
sales and investments in digitalisation will also be taken into account. These planning assumptions are subject to increased uncertainty.
The weighted average cost of capital after income taxes (WACC) of Märkte & Airlines on which the discounting is based was derived from
the analysis of comparable companies using external capital market information. Due to the increased uncertainties regarding medium and
long-term market expectations in the Markets & Airlines Division, a risk premium of 1.1 % was also recognised. In addition, a further
premium of 2.25 % on the cost of capital was added, taking into account value-enhancing facts relating to the later commencement of
travel activities in the first and second quarters of the 2021 business year, so that a total cost of capital rate of 11.75 % is applied.
In the planning of the Hotels & Resorts segment, a recovery in volume and earnings to the level of the 2019 financial year is planned for
the 2022 financial year. By precisely steering demand into own hotel brands, these will recover comparatively faster. In the medium term,
a further increase in revenue is planned less through capacity expansion and more through an increase in demand and a slight rise in
average prices.
The weighted average cost of capital after income taxes (WACC) in the Hotels & Resorts segment is adjusted for country risks and includes
an adjustment of 0.11 % to reflect the later commencement of travel activities in the 2021 financial year.
In the Cruises segment, Marella Cruises is expected to resume operations in the 2021 financial year. In the financial year 2022, the
fleet, which will then be reduced, will be deployed again at the customary level, but with a slightly lower load factor than in the 2019
financial year. The load factor of the financial year 2019 will be reached in the 2023 financial year at the latest. TUI Cruises expects
a return to a normal level in financial year 2022, also with a reduced fleet. Please refer to the section 'Goodwill' for information on
the calculation of the cost of capital.
The development of TUI Musement depends on the development of customer numbers in the Markets & Airlines sector. However, TUI Musement
will generate further growth, in particular in financial years 2021 and 2022, through the online distribution of its products, so that in
financial year 2023 the revenue volume of financial year 2019 will be exceeded. For information on the calculation of the cost of
capital, please refer to the section ,Goodwill'.
Business acquisitions and intangible assets
In accounting for business combinations, the identifiable assets, liabilities and contingent liabilities acquired have to be measured at
their fair values. In this context, cash flow-based methods are regularly used, which may lead to different results depending on the
underlying assumptions. In particular, some judgement is required in estimating the economic useful lives of intangible assets and
determining the fair values of contingent liabilities.
Detailed information on business acquisitions and useful lives of intangible assets is provided in the section 'Acquisitions -
divestments' in the section on 'Principles and methods of consolidation' and in the section on 'Goodwill and other intangible assets' of
the section 'Accounting and measurement methods'.
Property, plant and equipment
The measurement of wear-and-tear to property, plant and equipment items entails estimates. The carrying amount of property, plant and
equipment as at 30 September 2020 totals &euro 3,462.5 m (previous year &euro 5,810.7 m). In order to review the amounts carried, an
evaluation is carried out on a regular basis to assess whether there are any indications of a potential impairment. These indications
relate to a number of areas and factors, e. g. the market-related or technical environment but also physical condition. If any such
indication exists, management must estimate the recoverable amount on the basis of expected cash flows and appropriate interest rates.
The covid-19-pandemic was an indicator to test property, plant and equipment for impairment as per 30 September 2020. Further, essential
estimates and judgements include the definition of economic useful lives and the residual values of items of property, plant and
equipment which may be recovered.
More detailed information on the useful lives and residual values of property, plant and equipment items is provided in the section
'Property, plant and equipment' in the section 'Accounting and measurement methods'.
Pension provisions
As at 30 September 2020, the carrying amount of provisions for pensions and similar obligations totals &euro 1,015.0 m (previous year
&euro 1,068.0 m). For those pension plans where the plan assets exceed the obligation, other non-financial assets amounting to &euro
363.3 m are shown as at 30 September 2020 (prior year &euro 310.0 m).
In order to determine the obligations under defined benefit pension schemes, actuarial calculations are used which rely on underlying
assumptions concerning life expectancy and the discount rate.
At the balance sheet date, the fair value of the plan assets totals &euro 3,373.7 m (previous year &euro 3,397.9 m). As assets classified
as plan assets are never available for short-term sale, the fair values of these plan assets may change significantly up to the
realisation date.
Detailed information on actuarial assumptions is provided under Note 29.
Other provisions
As at 30 September 2020, other provisions of &euro 1,302.4 m (previous year &euro 1,136.9 m) are reported. When recognising and measuring
provisions, assumptions are required about probability of occurrence, maturity and level of risk.
Determining whether a current obligation exists is usually based on review by internal or external experts. The amount of provision is
based on expected expenses, and is either calculated by assessing the specific case in the light of empirical values, outcomes from
comparable circumstances, or else estimated by experts. Due to the uncertainties associated with assessment, actual expenses may deviate
from estimates so that unexpected charges may result.
More detailed information on other provisions is provided in the notes to the statement of financial position in Note 30.
Lease liabilities
As at 30 September 2020, lease liabilities worth &euro 3,399.9 m (previous year: finance leases of &euro 1,495.2 m) were carried,
reflecting the present value of the future lease payments not yet made as at that date. The interest rate implicit in the lease can only
be easily determined in exceptional cases. In all other cases TUI therefore uses its own incremental borrowing rate to measure the lease
liability. The incremental borrowing rate is the interest rate TUI would have to pay to borrow over a similar term, and with a similar
security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.
Determining the incremental borrowing rate therefore regularly involves estimates regarding the interest rate the Group would have to
pay. In this context, estimates are required, for instance, to determine the interest the Group companies would have to pay if no
observable interest rates are available, or if adjustments are required regarding the contractually individually agreed terms and
conditions such as the transaction currency or contract term. TUI determines the incremental borrowing rate using observable inputs (e.
g. market interest rates, bond yields and CDS quotations) and makes specific adjustments for individual companies (e. g. country risk
premiums).
Deferred tax assets
As at 30 September 2020, deferred tax assets totalling &euro 299.6 m (previous year &euro 202.0 m) were recognised. Prior to offsetting
against deferred tax liabilities, deferred tax assets total &euro 707.2 m, included an amount of &euro 124.2 m (previous year &euro 116.4
m) for recognised losses carried forward. The assessment of the recoverability of deferred tax assets is based on the ability of the
respective Group company to generate sufficient taxable income. TUI therefore assesses at every balance sheet date whether the
recoverability of expected future tax savings is sufficiently probable in order to recognise deferred tax assets. The assessment is based
on various factors including internal forecasts regarding the future earnings situation of the Group company. TUI uses a five-year
planning horizon to derive the usability of tax loss carryforwards and deductible differences. If the assessment of the recoverability of
future deferred tax assets changes, impairment charges may be recognised, if necessary, on the deferred tax assets.
More detailed information on deferred tax assets is available in the Notes to the statement of financial position in Note 20.
Income taxes
The Group is liable to pay income taxes in various countries. Key estimates are required when determining income tax liabilities,
including the probability, the timing and the size of any amounts that may become payable. For certain transactions and calculations the
final tax charge cannot be determined during the ordinary course of business. After taking appropriate external advice, the Group makes
provisions or discloses contingencies for uncertain tax positions based on the probable or possible level of additional taxes that might
be incurred. The level of obligations for expected tax audits is based on an estimation of whether and to what extent additional income
taxes will be due. Judgements are corrected, if necessary, in the period in which the final tax charge is determined.
Recoverable Amounts of touristic prepayments
At 30 September 2020, the carrying amount of touristic prepayments totals &euro 705.4 m (previous year &euro 1,045.8 m). The assessment
of the recoverable amounts of touristic prepayments made to hoteliers requires judgement about the volume of future trading with
hoteliers and the credit worthiness of those hoteliers. To assess the recoverability of touristic prepayments, TUI considers the
financial strength of those hoteliers, the quality of the hotels as well as the demand for each hotel and the relevant destination during
the past and in coming seasons.
Financial instruments
When measuring ECL of financial instruments under IFRS 9 TUI uses, besides historical information, reasonable and supportable forward
looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will
effect each other. It exists the uncertainty that this information will not be in line with expected Information notably with regard to
the impact of the COVID-19-pandemic and the restart of the tourism activity.
Segment Reporting
Notes on the segments
The identification of operating segments is based on the internal organisational and reporting structure primarily built around the
different products and services as well as a geographical structure within the TUI Group. Allocation of individual organisational
entities to operating segments is exclusively based on economic criteria, irrespective of the participation structure under company law.
The segments are independently managed by those in charge, who regularly receive separate financial information for each segment. They
regularly report to the Group Executive Committee, which consists of six Executive Board members and six other executives. The legally
binding decision regarding the use of resources is taken by the Executive Board. The TUI Group Executive Board has therefore been
identified as the Chief Operating Decision Maker (CODM) in accordance with IFRS 8.
The Hotels & Resorts segment comprises all Group-owned hotels and hotel shareholdings of TUI Group.
The Cruises segment consists of the joint venture TUI Cruises, its subsidiary Hapag-Lloyd Cruises as well as the British cruise business
Marella Cruises.
The TUI Musement (previously Destination Experiences) segment comprises the companies providing services in the destinations.
As of this financial year, the income statement items of the aircraft leasing companies holding the TUI Group's aircraft and subletting
them within the Group have been fully allocated to the airlines using the respective aircraft (Northern Region, Central Region and
Western Region segments). In the prior-year period, the aircraft leasing companies were fully included in All Other Segments, whereas in
the 2019 Annual Report, the result from intra-Group subleasing was already allocated to the respective airlines (Northern Region, Central
Region and Western Region segments). The figures for the previous year have been adjusted accordingly.
The Northern Region segment comprises the tour operators and airlines in the UK, Ireland and the Nordic countries and the stake in the
tour operation business of the Canadian company Sunwing as well as the associate TUI Russia. This segment also includes the tour operator
TUI Lakes & Mountains, which plays a major role in securing the load factor for our aircraft fleet in the UK in winter.
The Central Region segment comprises the tour operators and airlines in Germany and tour operators in Austria, Poland and Switzerland.
The Western Region segment comprises the tour operators and airlines in Belgium and the Netherlands and tour operators in France.
Apart from the above segments, the recognised items also include All other segments. This comprises the business operations for new
markets and in particular the central corporate functions and interim holdings of TUI Group and the Group's real estate companies, as
well as central tourism functions such as information technology.
Notes to the segment data
The selection of segment data presented is based on the regular internal reporting to the Executive Board. From financial year 2020, the
Group is using 'underlying EBIT', which is more common in the international sphere, for value-oriented management. In the current
financial year, the earnings effect of IFRS 16 ('underlying EBIT (IAS 17)') is removed from underlying EBIT as part of internal reporting
in order to enhance year-on-year comparability. Accordingly, underlying EBIT (IAS 17) represents the Group's performance measure in
accordance with IFRS 8.
We define the EBIT in underlying EBIT as earnings before interest, income taxes and result of the measurement of the Group's interest
hedges. Unlike the previous KPI EBITA, EBIT by definition includes goodwill impairments.
Underlying EBIT is adjusted for by income and expense items impacting or distorting the assessment of the operating profitability of the
segments and the Group due to their level and frequency. These separately disclosed items include gains on disposal from investments,
major gains and losses from the sale of assets and major restructuring and integration expenses. In addition, adjustments are carried for
all effects from purchase price allocations, ancillary acquisition costs and conditional purchase price payments. Adjustments made in the
reconciliation to underlying EBIT also include goodwill impairments.
In the 2020 financial year, net income totalling &euro 119.1 m was adjusted as separately disclosed items.
Of the gains on disposal adjusted in the 2020 financial year, &euro 90 m resulted from the divestment of the German specialist tour
operators realized at the beginning of the financial year and &euro 476 m from the sale of Hapag-Lloyd Kreuzfahrten to TUI Cruises.
The goodwill impairments of &euro 68 m adjusted in the year under review exclusively related to the Hotels & Resorts segment.
In TUI Musement, restructuring expenses of &euro 14 m were adjusted. A further &euro 46 m was attributable to the closure of travel
agencies and restructuring in the tour operator and airline sectors in the Northern Region. In the Central Region, the adjusted expenses
of &euro 191 m resulted from the planned capacity reduction at TUIfly Deutschland, an expansion of the existing restructuring program at
TUI Deutschland and the restructuring of the Group's own over-the-counter distribution. The &euro 68 m adjusted expenses in the Western
Region related in particular to the restructuring in France and further projects in Belgium and the Netherlands. A further &euro 7 m is
attributable to one-off expenses in All Other Segments.
In addition, &euro 53 m were attributable to impairments on IT projects resulting from the Group's accelerated digital transformation
that were hence classified as restructuring costs.
In the 2019 financial year, net costs totaling &euro 86.1 m were adjusted as separately disclosed items.
In the 2019 financial year, income of &euro 25 m from the reduction of pension obligations in the United Kingdom and &euro 7 m from sale
and leaseback transactions were adjusted. This was offset by &euro 12 m in adjusted expenses from the sale of the French airline Corsair
and expenses for restructuring and reorganization in Hotels & Resorts (&euro 9 m), TUI Musement (&euro 8 m), Northern Region (&euro 34
m), Central Region (&euro 39 m), Western Region (&euro 12 m) and All Other Segments (&euro 4 m).
The adjusted expenses of &euro 49.5 m (previous year &euro 38.8 m) from purchase price allocations mainly include scheduled amortization
of intangible assets from acquisitions made in previous years.
Intra-group leases continue to be carried as operating lease, rental and leasing agreements following the transition to IFRS 16.
Apart from this indicator, internal and external revenue, depreciation and amortisation, impairments of other intangible assets
(excluding goodwill), property, plant and equipment, right-of-use assets and investments as well as the share of result of joint ventures
and associates are likewise shown for each segment, as these amounts are included when measuring underlying EBIT. As in the calculation
of the earnings figure, these are adjusted for the IFRS 16 effect in this financial year. As a rule, inter-segment business transactions
are based on the arm's length principle, as applied in transactions with third parties. No single external customer accounts for 10 % or
more of revenue.
Assets and liabilities by segment are not included in the reporting to the Executive Board and are therefore not shown in segment
reporting.
Depreciation / amortisation and write-backs relate to non-current assets by region and do not include goodwill impairments.
Non-current assets by region contain other intangible assets, property, plant and equipment, right-of-use assets and specific other
non-current assets that do not meet the definition of financial instruments.
Segment indicators
Revenue by segment
2020 2019
&euro million External Group Total External Group Total
adjusted adjusted adjusted
Hotels & 402.4 349.0 751.4 660.0 851.8 1,511.8
Resorts
Cruises 472.6 - 0.0 472.6 965.8 - 0.0 965.8
TUI Musement 306.3 155.0 461.3 856.2 375.2 1,231.4
Consolidation - 0.0 - 3.7 - 3.7 - 0.1 - 5.7 - 5.8
Holiday 1,181.3 500.3 1,681 2,482.0 1,221.2 3,703.2
experiences .6
Northern 2,466.6 272.3 2,738 6,355.2 292.2 6,647.4
Region .9
Central 2,861.5 125.7 2,987 6,416.9 129.7 6,546.6
Region .2
Western 1,348.5 155.6 1,504 3,237.2 167.1 3,404.3
Region .1
Consolidation - 0.0 - - - 0.0 - 565.1 - 565.1
541.6 541.6
Markets & 6,676.6 12.0 6,688 16,009.3 23.9 16,033.2
Airlines .6
All other 94.9 5.9 100.8 436.7 25.9 462.6
segments
Consolidation - - - - - -
518.1 518.1 1,270.9 1,270.9
Total (IAS 7,952.9 - 7,952 18,928.1 - 18,928.1
17) .9
IFRS 16 - 9.2 - 9.2 - -
Effect
Total (IFRS 7,943.7 - 7,943 18,928.1 - 18,928.1
16) .7
Underlying EBIT (IAS 17) by segment
&euro million 2020 2019
adjusted
Hotels & Resorts - 399.6 451.8
Cruises - 322.8 366.0
TUI Musement - 114.6 55.7
Holiday experiences - 837.0 873.5
Northern Region - 975.1 58.5
Central Region - 619.8 101.9
Western Region - 440.8 - 28.6
Markets & Airlines - 2,035.7 131.8
All other segments - 160.2 - 111.8
Total - 3,032.8 893.5
Reconciliation to underlying EBIT (IAS 17) of TUI Group
&euro million 2020 2019
adjusted
Earnings before income taxes - 3,203.3 691.6
plus: Net interest expense (excluding 281.7 74.1
expense / income from measurement
of interest hedges)
less / plus: Expense (income) from - 5.9 2.9
measurement of interest hedges
EBIT (IFRS 16, previous year IAS 17) - 2,927.4 768.7
Adjustments:
less / plus: Separately disclosed items - 119.1 86.1
plus: Expense from purchase price 49.5 38.8
allocation
Underlying EBIT (IFRS 16) - 2,997.0 893.5
Adjustments IAS 17 / IFRS 16 (IFRS 16 - 35.8 -
impact)
Underlying EBIT (IAS 17) - 3,032.8 893.5
Other segmental information
Amortisation Thereof Thereof Share of
(+), impairment of amortisation/ result of
depreciation intangible depreciation joint
(+), assets and of intangible ventures
impairment (+) property, assets and and
and plant, property, associates
write-backs equipment and plant,
(-) of other right-of-use equipment
intangible assets and
assets, right-of-use
property, assets
plant and
equipment,
right-of-use
assets
and
investments
&euro 2020 2019 2020 2019 2020 2019 2020 2019
million adjusted adjusted adjusted adjusted
Hotels & 204.5 111.5 77.8 2.4 126.8 109.8 - 97.3
Resorts 78.9
Cruises 239.9 91.6 150.4 - 89.5 91.6 - 202.6
74.2
TUI 36.2 27.5 5.2 0.8 31.0 26.8 - 9.7
Musement 2.7
Holiday 480.7 230.6 233.5 3.2 247.2 228.1 - 309.6
Experien 155.
ces 8
Northern 173.3 126.0 41.6 7.8 131.7 118.2 - - 15.7
Region 35.0
Central 79.8 48.0 15.3 0.1 64.6 47.1 - 3.1
Region 2.3
Western 115.4 52.5 49.9 - 65.5 52.5 - 0.4
Region 0.2
Markets 368.6 226.5 106.8 7.9 261.9 217.8 - - 12.1
& 37.5
Airlines
All 44.9 51.7 27.0 1.1 17.9 50.5 - -
other
segments
Total 894.2 508.8 367.3 12.2 526.9 496.4 - 297.5
(IAS 17) 193.
3
IFRS 16 610.3 - 88.1 - 522.1 - - -
Effect
Total 1,504. 508.8 455.4 12.2 1,049. 496.4 - 297.5
(IFRS 5 0 193.
16) 3
Key figures by region
External revenue Non-current assets
by customer location
&euro 2020 2019 2020 2019
million adjusted *
Germany 2,504.4 5,326.6 434.5 915.7
United 2,282.8 6,024.6 3,933.3 3,157.3
Kingdom
Spain 75.8 181.1 738.7 609.9
Other 2,817.2 6,774.4 597.2 511.4
Europe
North and 140.1 305.2 510.3 539.7
South
America
Rest of 123.4 316.2 1,258.9 1,037.3
the world
Total 7,943.7 18,928.1 7,472.9 6,771.3
* Prior year corrected and adjusted due to changed purchase price adjustments
Notes to the Consolidated Income Statement
The development of TUI Group's revenue and earnings in the financial year 2020 was materially impacted by the suspension of the vast
majority of our tour operation, aviation, hotel and cruise operations as a result of the global travel restrictions launched from
mid-March 2020 in order to contain the spread of COVID-19. TUI Group's results generally also reflect the significant seasonal swing in
tourism between the winter and summer travel months, however this period the impact is less evident due to the COVID-19-pandemic.
(1) Revenue
Group revenue is mainly generated from tourism services. The other revenues present income from sub-lease. In the financial year 2020,
consolidated revenue decreased by 58.0 % year-on-year to &euro 8.0 bn.
External revenue allocated by destinations for the period from 1 Oct 2019
to 30 Sep 2020
&euro Spain Other Caribbean North Rest Other 2020 Other 2020
million (incl. European , Mexico, Afric of countries Revenues Total
Canary destinations USA & a & Afric from
Island Canada Turke a, contract
s) y Ind. s with
Ocean customer
, s
Asia
Hotels & 190.6 56.7 27.3 32.8 81.1 13.9 402.4 - 402.4
Resorts
Cruises 93.3 63.1 141.7 0.2 77.0 97.3 472.6 - 472.6
TUI 40.0 85.2 54.4 15.2 77.5 34.0 306.3 - 306.3
Musement
Holiday 323.9 205.0 223.4 48.2 235.6 145.2 1,181.3 - 1,181
experien .3
ces
Northern 830.9 464.5 486.9 250.8 372.7 45.8 2,451.6 10.4 2,462
Region .0
Central 728.9 1,021.9 197.7 416.4 479.1 10.2 2,854.2 5.5 2,859
Region .6
Western 332.2 290.8 294.2 180.7 206.4 24.3 1,328.6 17.3 1,345
Region .9
Markets 1,892. 1,777.2 978.8 847.9 1,058 80.3 6,634.4 33.2 6,667
& 0 .2 .5
Airlines
All 4.1 37.8 5.0 2.2 32.6 13.2 94.9 - 94.9
other
segments
Total 2,220. 2,020.0 1,207.2 898.3 1,326 238.7 7,910.6 33.2 7,943
0 .4 .7
External revenue allocated by destinations for the period from 1 Oct 2018
to 30 Sep 2019
&euro Spain Other Caribbean North Rest Other 2019 Other 2019
million (incl. European , Mexico, Afric of countries Revenues Total
Canary destinations USA & a & Afric from
Island Canada Turke a, contract
s) y Ind. s with
Ocean customer
, s
Asia
Hotels & 275.9 74.3 120.9 110.5 78.1 0.3 660.0 - 660.0
Resorts
Cruises 207.8 367.4 172.6 - 189.3 28.7 965.8 - 0.0 965.8
TUI 16.5 497.0 139.4 16.2 142.5 44.6 856.2 - 856.2
Musement
Holiday 500.2 938.7 432.9 126.7 409.9 73.6 2,482.0 - 0.0 2,482
experien .0
ces
Northern 2,138. 1,948.2 1,056.0 618.6 532.0 44.4 6,337.4 7.8 6,345
Region 2 .2
Central 1,818. 2,151.1 408.1 1,145 850.6 21.1 6,395.3 17.7 6,413
Region 6 .8 .0
Western 718.9 1,011.5 545.8 563.8 337.3 31.1 3,208.4 23.5 3,231
Region .9
Markets 4,675. 5,110.8 2,009.9 2,328 1,719 96.6 15,941.1 49.0 15,99
& 7 .2 .9 0.1
Airlines
All 7.1 103.4 96.0 6.8 209.5 23.8 446.6 9.4 456.0
other
segments
Total 5,183. 6,152.9 2,538.8 2,461 2,339 194.0 18,869.7 58.4 18,92
0 .7 .3 8.1
Future revenue from performance obligations not yet delivered as at 30 September 2020 total &euro 1,993.7 m (previous year &euro 1,163.9
m), including an amount of &euro 1,854.8 m (previous year &euro 918.1 m) to be recognised within the next twelve months. The remaining
revenue will mostly be recognised in the following twelve months. TUI uses the practical expedient offered under IFRS 15.121(a) and only
discloses long-term performance obligations from contracts with a term of more than twelve months, i. e. at least twelve months lie
between the start of the contract (in principle the booking date) and the end of the contract (in principle the end of the service).
The touristic advance payments received (contract liabilities) are presented in Note 32.
(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 personnel,
depreciation, amortisation, rental and leasing, it includes all costs incurred by the Group in connection with the procurement and
delivery of airline services, hotel accommodation, cruises and distribution costs.
Due to the suspension of business operations as a result of COVID-19 from mid-March 2020, the cost of sales declined by 43.2 % to &euro
9.9 bn in financial year 2020.
During the period under review, income from the compensation agreed with Boeing to offset the effects of the 737 Max flight ban, which
represents pure damages, was recognised in cost of sales. The receivable for the respective compensation is included in other
receivables.
The cost of sales in financial year 2020 include effects from the termination of hedging relationships that were previously designated in
hedge accounting. Please refer to the section on Financial instruments in these notes.
Government Grants
&euro million 2020 2019
Cost of Sales 95.1 4.9
Administrative expenses 47.1 0.6
Total 142.2 5.5
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.
Administrative expenses comprise all expenses incurred in connection with activities by the administrative functions and break down as
follows:
Administrative expenses
&euro million 2020 2019
adjusted
Staff cost 649.0 683.0
Rental and leasing expenses 23.6 66.3
Depreciation, amortisation and impairment 126.7 71.9
Others 218.1 165.8
Total 1,017.3 987.1
The cost of sales and administrative expenses include the following expenses for personnel, depreciation /
amortisation, rent and leasing:
Staff costs
&euro million 2020 2019
Wages and salaries 1,871.6 2,019.0
Social security contributions 247.1 291.6
Pension costs 142.3 139.2
Total 2,261.0 2,449.8
Pension costs include service cost for defined benefit obligations and contributions to defined contribution pension schemes.
The decrease in personnel expenses in financial year 2020 compared to the previous year results in particular from the decrease in the
number of employees in the Group due to the COVID-19-crisis. In addition, significant savings were generated by, among other things, the
use of short-time work and other government programs for job retention, salary cuts waivers and unpaid vacation. This is offset by higher
costs for various restructuring projects within the Group.
The average annual headcount (excluding trainees) evolved as follows:
Average annual headcount in the financial
year (excl. trainees)
2020 2019
Hotels & Resorts 15,471 24,566
Cruises 271 341
TUI Musement 5,558 8,011
Holiday Experiences 21,300 32,918
Northern Region 11,172 12,397
Central Region 9,021 10,178
Western Region 5,819 6,401
Markets & Airlines 26,012 28,976
All other segments 2,293 2,881
Total 49,605 64,775
Depreciation / amortisation / impairment
&euro million 2020 2019
adjusted
Depreciation and amortisation of 1,049.1 496.4
other intangible assets, property,
plant
and equipment and right-of-use
assets
Impairment of other intangible 455.4 12.2
assets, property, plant and
equipment and
right-of-use assets
Total 1,504.5 508.6
The increase in depreciation and amortisation is primarily attributable to the initial application of IFRS 16.
Impairment on other intangible assets,
property, plant and equipment and
right-of-use assets
&euro million 2020 2019
Hotels & Resorts 135.8 2.4
Cruises 150.4 -
TUI Musement 5.2 0.8
Holiday Experiences 291.4 3.2
Northern Region 61.8 7.8
Central Region 17.7 0.1
Western Region 57.5 -
Markets & Airlines 137.0 7.9
All other segments 27.0 1.1
Total 455.4 12.2
Of the impairments losses &euro 280.0 m relate to property, plant and equipment.: Additionally &euro 97.4 m correspond to right-of-use
assets and &euro 78.0 m to other intangible assets. Of the impairment losses &euro 422.5 m (previous year &euro 4.1 m) are presented
within cost of sales and &euro 32.9 m (previous year &euro 8.1 m) in administrative expenses.
For details of the impairments effected in financial year 2020, please refer to the respective sections of the notes on the consolidated
statement of financial position.
The year-on-year decline in rental and leasing expenses is primarily attributable to the initial application of IFRS 16.
(3) Other income and other expenses
Other income in financial year 2020 mainly results from the disposal of subsidiaries. For more information, please refer to the section
'Divestments'. In the prior year, this item had primarily included gains from the disposal of aircraft assets and buildings.
In financial year 2020, Other expenses include losses from the sale of aircraft assets and expenses incurred in connection with the
disposal of Group companies. In the prior year, this item had included a loss of &euro 12.0 m from the sale of Corsair S. A.
(4) Financial income
Financial income
&euro million 2020 2019
Bank interest income 9.4 32.2
Other interest and similar income 10.4 48.4
Income from the measurement of hedges 9.9 10.0
Interest income 29.7 90.6
Income from investments 0.6 1.1
Foreign exchange gains on financial 5.0 28.0
instruments
Total 35.3 119.7
The decrease in financial income of &euro 84.4 m in financial year 2020 mainly results from lower interest income. Moreover, this item
had included income from the reversal of hedges no longer required in the prior year.
(5) Financial expenses
Financial expenses
&euro million 2020 2019
Bank interest payable on loans and overdrafts 14.8 27.2
Interest expenses on lease liabilities 148.1 50.9
Net interest expenses from defined benefit 2.5 13.4
pension plans
Unwinding of discount on provisions 7.5 6.0
Other interest and similar expenses 128.7 57.2
Expenses relating to the measurement of hedges 4.0 12.9
Interest expenses 305.6 167.6
Expenses relating to the measurement of other 0.3 0.8
financial instruments
Foreign exchange losses on financial 15.8 3.0
instruments
Total 321.7 171.4
In the period under review, financial expenses rose by &euro 150.3 m. This increase was mainly attributable to higher interest expenses
resulting from the use of credit lines, the increase in interest expenses as a result of the change in accounting for lease liabilities
in accordance with IFRS 16, and expenses due to foreign exchange differences arising for lease liabilities.
(6) Share of result of joint ventures and associates
The share of result of joint ventures and associates of &euro - 193.3 m (previous year &euro 297.5 m) comprises the net loss / profit for
the year attributable to the associated companies and joint ventures.
The year-on-year decline is attributable to cancelled holidays, customer repatriation costs and hotel closures due to the
COVID-19-pandemic. Moreover, the joint ventures and associates were tested for impairment as at 30 September 2020 due to the development
of the pandemic, resulting in an impairment loss of &euro 34.5 m. The impairments required for the joint ventures and associates include
&euro 33.2 m relating to the Hotels & Resorts segment and &euro 1.3 m relating to the Central Region segment.
For the development of the results of the material joint ventures and associates we refer to Note 16 'Investments in joint ventures and
associates'.
(7) Income taxes
As in the previous year, TUI Group's German companies have to pay trade tax of 15.7 % and corporation tax of 15.0 % plus a 5.5 %
solidarity surcharge on corporation tax.
Foreign income taxes are calculated on the basis of the laws and provisions applicable in the individual countries. The income tax rates
applied to foreign companies vary from 0 % to 35.0 %.
Breakdown of income taxes
&euro million 2020 2019
Current tax expense
in Germany 6.0 - 69.8
abroad 15.5 100.8
Deferred tax expense / income - 85.7 128.5
Total - 64.2 159.5
In the prior year, the actual tax income in Germany included income attributable to prior periods. Due to the required reassessment of
tax risks, income tax liabilities of &euro 74.2 m were reversed in the prior year. In financial year 2020, the tax liabilities from
actual taxes attributable to prior periods total &euro 0.2 m (previous year tax income of &euro 67.0 m).
In the financial year under review, deferred tax liabilities include a reassessment of tax loss carryforwards in Germany of &euro 43.8 m
(previous year &euro 100.8).
In financial year 2020, income taxes totalling &euro 64.2 m (previous year expense &euro 159.5 m) and are derived as follows from an
'expected' income tax expense that would have arisen if the statutory income tax rate of parent company TUI AG (aggregate income tax
rate) had been applied to earnings before taxes.
Reconciliation of expected to actual income taxes
&euro million 2020 2019
Earnings before income taxes - 3,203.4 691.4
Expected income tax (current year 31.5 %, - 1,009.1 217.8
previous year 31.5 %)
Effect from the difference of the actual tax 259.0 - 23.0
rates to the expected tax rates
Changes in tax rates and tax law 40.0 4.3
Income not taxable - 204.6 - 168.0
Expenses not deductible 226.4 64.5
Effects from loss carryforwards 590.5 125.1
Temporary differences for which no deferred 35.3 6.9
taxes were recognised
Deferred and current income tax relating to - 2.3 - 68.7
other periods (net)
Other differences 0.6 0.6
Income taxes - 64.2 159.5
(8) Group loss attributable to shareholders of TUI AG
In financial year 2020, the share in Group loss attributable to TUI AG shareholders decreased from &euro 416.4 m in the prior year to
&euro - 3,148.4 m due to the suspension of the vast majority of our tour operation, aviation, hotel and cruise operations as a result of
the global travel restrictions launched from mid-March 2020 in order to reduce the spread of COVID-19.
(9) Group profit attributable to non-controlling interest
In the Hotels & Resorts segment, the Group profit attributable to non-controlling interest primarily relates to the RIUSA II Group with
&euro 14.2 m (previous year &euro 112.8 m).
(10) Earnings per share
In accordance with IAS 33, basic earnings per share are calculated by dividing the Group result for the year attributable to TUI AG
shareholders by the weighted average number of registered shares outstanding during the financial year. The average number of shares is
derived from the total number of shares at the beginning of the financial year (589,020,588 shares) and the employee shares issued on a
pro rata basis (84,053 new shares).
Earnings per share
2020 2019
Group loss / profit for the year - 3,148.4 416.4
attributable to shareholders of TUI
AG&euro million
Weighted average number of shares 589,104,641 587,956,653
Basic earnings per share&euro - 5.34 0.71
Diluted Earnings per share
2020 2019
Group loss / profit for the year - 3,148.4 416.4
attributable to shareholders of TUI
AG&euro million
Weighted average number of shares 589,104,641 587,956,653
Diluting effect from assumed exercise of - 86,023
share awards
Weighted average number of shares 589,104,641 588,042,676
(diluted)
Diluted earnings per share&euro - 5.34 0.71
As a rule, a dilution of earnings per share occurs when the average number of shares increases due to the addition of the issue of
potential shares from conversion options. In the completed year existing share awards were converted into TUI AG shares.
On 1 October 2020 TUI AG issued a warrant bond to the Economic Stabilisation Fund (WSF) of &euro 150.0 m. The warrant bond has a term of
ten years and can be converted into TUI AG shares at any time. As the conversion price per share was set at an amount of &euro 2.56, the
potential shares amount to 58.7 m. More detailed information is provided in Note 46 'Significant events after balance sheet date'.
(11) Taxes attributable to other comprehensive income
Tax effects relating to other comprehensive income
2020 2019
&euro million Gross Tax Net Gross Tax Net
effect effect
Foreign - - - 96.7 - 96.7
exchange 185.9 185.9
differences
Cash flow - 73.3 - - 79.5 -
hedges 316.1 242.8 340.0 260.5
Remeasurements 25.5 - 15.2 10.3 - 19.9 26.3 6.4
of
benefit
obligations
and
related fund
assets
Changes in the - - - 38.6 - 35.4 - - 35.4
measurement of 38.6
companies
measured at
equity outside
profit or loss
Fair value - - - 27.7 2.2 - 2.2
gain / loss on 27.7
investments in
equity
instruments
designated
as at FVTOCI
Other - 58.1 - - 105.8 -
comprehensive 542.8 484.7 296.4 190.6
income
Corporate income taxes worth &euro - 1.9 m (previous year &euro - 1.5 m) were generated in the reporting period and recognised directly
in equity. As in the previous year, deferred income taxes recognised directly in equity were not generated.
Notes on the consolidated statement of financial position
(12) Goodwill
Goodwill
&euro million 2020 2019
adjusted
Historical cost
Balance as at 1 Oct 3,438.3 3,341.8
Exchange differences - 48.0 -
Additions 40.1 96.5
Disposals 25.7 -
Balance as at 30 Sep 3,404.7 3,438.3
Impairment
Balance as at 1 Oct - 429.1 - 428.7
Exchange differences 7.0 - 0.4
Impairments for the current year - 68.1 -
Balance as at 30 Sep - 490.2 - 429.1
Carrying amounts as at 30 Sep 2,914.5 3,009.2
Goodwill increased by &euro 36.6 m due to acquisitions and by &euro 3.5 m due to the first time consolidation of a formerly immaterial
and thus not consolidated subsidiary. Disposals from the group of consolidated companies resulted in a reduction of goodwill of &euro
25.7 m. Goodwill also declined by an additional impairment of &euro 68.1 m. Detailed information on acquisitions and divestments is
presented under 'Acquisitions - Divestments'.
In accordance with the provisions of IAS 21, goodwill allocated to the individual segments and sectors was recognised in the functional
currency of the subsidiaries and subsequently translated when preparing the consolidated financial statements. Similar to the treatment
of other differences from the translation of annual financial statements of foreign subsidiaries, differences due to exchange rate
fluctuations between the exchange rate at the date of acquisition of the subsidiary and the exchange rate at the balance sheet date are
taken directly to equity outside profit and loss and disclosed as a separate item. In financial year 2020, a decrease in the carrying
amount of goodwill of &euro 41.0 m (previous year &euro 0.4 m) resulted from foreign exchange differences.
The following table presents a breakdown of goodwill by cash generating unit (CGU) at carrying amounts. The position Other consists
exclusively the two cash-generating units Robinson and Blue Diamond, which belong to the Hotels & Resorts segment.
Goodwill per cash generating unit
&euro million 30 Sep 2020 30 Sep 2019 adjusted
Northern Region 1,162.2 1,191.3
Central Region 501.7 522.2
Western Region 412.3 412.1
Riu 343.1 343.1
Marella Cruises 279.3 286.5
TUI Musement 170.1 171.0
Northern Hotels - 23.6
TUI Blue - 10.2
Other 45.8 49.2
Total 2,914.5 3,009.2
By the middle of March, a number of governments across our key destinations announced the closure of their borders as part of their
efforts to mitigate the spread of COVID-19. As a result, the entire travel programme of TUI Group was suspended for the first time in the
company's history. From mid-June, the tour operator programme was partially restarted, but with significantly lower volumes than usual
summer levels. The ongoing travel restrictions and the associated acute effect of the COVID-19-pandemic on all business areas constitute
a potential impairment triggering event. Goodwill was therefore tested for impairment at the level of cash generating units (CGUs) as at
30 June 2020. Due to the ongoing restrictions imposed by the COVID-19-pandemic an impairment test was performed as at 30 September 2020.
The goodwill impairment test was conducted as at 30 June 2020 as a result of the COVID-19-pandemic and the associated suspension of the
travel programme for the first time in the history of TUI Group. The impairment test resulted in the recognition of an impairment loss
totalling to &euro 68.1 m for capitalised goodwill in the Hotels & Resort segment. The existing goodwill of the CGU Northern Hotels
amounting to &euro 58.5 m and the CGU TUI Blue in the amount of &euro 9.6 m were fully impaired. In addition to the aforementioned
impairment of capitalised goodwill, further impairment requirements were allocated proportionately to the right of use assets of hotels
and to capitalised hotels in property, plant and equipment area. The impairment losses on right of use assets of hotels related to the
following touristic destinations.
Impairment on right-of-use assets of hotels as at 30 June
2020
Tourist destination Number of Impairment Recoverable
hotels in &euro amount
million in &euro million
Turkey 3 20.0 60.2
Spain 2 13.8 41.3
Italy 1 8.0 24.0
Portugal 1 2.9 8.6
North Africa 2 1.1 3.2
Total 45.8 137.3
Impairment losses on hotels carried in property plant and equipment totalling to &euro 33.5 m were attributable with &euro 14.5 m to the
CGU Northern Hotels and with &euro 19.0 m to the CGU TUI Blue. The impairment test as at 30 June 2020 was based on discount rates of 8.05
% and a growth rate of 1.0 % for the period after the detailed planning. The forecast of the future expected cash flows was based on an
updated planning scenario for a forecast period of 3.25 years. The recoverable amount was determined based on the fair value less cost to
sell (level 3). For the impaired cash-generating units Northern Hotels and TUI Blue, the sensitivity analysis carried out as of 30 June
2020 had identified an additional need of asset impairments. An increase in the WACC by 100 basis points would have resulted in a further
asset impairment requirement of &euro 43.9 m for Northern Hotels and of &euro 23.4 m for TUI Blue. Assets would have to be impaired by an
additional amount of &euro 53.2 m for Northern Hotels and of &euro 25.2 m for TUI Blue in the event of a 15 % decrease in the discounted
cash flow, while a 50 basis point decrease in the growth rate would have resulted in an impairment for Northern Hotels of &euro 20.1 m
and for TUI Blue of &euro 10.9 m.
As at 30 September 2020, an updated impairment test of capitalised goodwill was performed at the level of cash-generating units based on
an updated planning scenario. No further impairment requirements of capitalised goodwill were determined.
For all CGUs, the recoverable amount, being the higher value compared to the value in use, was determined on the basis of fair value less
costs of disposal. The fair value was calculated by discounting the expected cashflows. This was based on the medium-term plan for the
respective entity as at 30 September 2020, following deductions of income tax payments. Budgeted revenues and EBIT margins are based on
expectations with regard to the future business performance, assuming gradual business normalisation by 2023 at the latest. We refer to
the section 'Assumptions and estimates'.
The discount rates are calculated as the weighted average cost of capital, taking account of country-specific risks of the CGU and based
on external capital market information. The higher weighted average cost of capital compared to prior year reflects the current market
situation and the increased amount of debt capital due to the COVID-19-pandemic.
The table below provides an overview of the parameters adjusted versus the end of the previous financial year, underlying the
determination of the fair values per CGU. Given the impact of the COVID-19-pandemic and the expected regeneration in the upcoming
planning periods with a gradual recovery by 2023, the growth rate for revenues and the EBIT margin are not comparative in a meaningful
way. The forecast period was adjusted as a result of the impairment test performed as of 30 September 2020 due to the uncertainties in
the planning process in the current financial year. The table lists the CGUs to which goodwill has been allocated:
Assumptions for calculation of the recoverable amount at 30 September
2020
Planning Growth EBIT- Sustainable WACC Level Carrying Recoverable
period rate Margin Growth rate in % amount amount in
in years revenues in % 2 in &euro &euro
in % p. p. a. in % million million
a.
Northern 3.00 44.1 1.0 0.5 11.75 3 1,973.2 2,516.8
Region
Central 3.00 28.3 - 0.5 11.75 3 167.7 808.7
Region
Western 3.00 34.8 2.1 0.5 11.75 3 321.5 872.6
Region
Riu 1 3.00 27.9 26.9 1.0 7.74 3 2,010.3 2,778.4
Marella 3.00 32.5 1.0 1.0 9.74 3 573.6 696.4
Cruises
1
TUI 3.00 40.3 - 1.8 1.0 8.39 3 352.5 453.9
Musement
Other 3.00 40.3 to 11.3 1.0 7.74 3 568.9 to 662.8 to
42.3 to to 666.5 778.1
12.4 8.80
1 Those are groups of CGUs.
2 Growth rate of expected net cash inflows
Assumptions for calculation of the recoverable amount at 30 June 2019
Planning Growth EBIT- Sustainable WACC Level Carrying Recoverable
period rate Margin Growth rate in % amount amount in
in years revenues in % 2 in &euro &euro
in % p. p. a. in % million million
a.
Northern 3.25 8.6 1.5 1.0 5.56 3 911.0 2,660.9
Region
Central 3.25 3.7 0.9 1.0 5.56 3 - 14.1 539.6
Region
Western 3.25 8.0 0.8 1.0 5.56 3 11.3 822.6
Region
Riu 1 3.25 5.6 30.6 1.0 6.09 3 1,952.8 3,712.5
Marella 3.25 8.4 12.7 1.0 6.29 3 816.3 1,685.6
Cruises
1
TUI 3.25 11.6 1.2 1.0 5.56 3 351.8 527.9
Musement
Other 3.25 15.9 to 6.1 to 1.0 6.09 3 107 to 216 to
57.0 16.6 to 615 881
7.35
1 Those are groups of CGUs.
2 Growth rate of expected net cash inflows
In view of the existing uncertainties regarding future business development, an extended analysis of sensitivities for the main planning
parameters was carried out. To reflect the uncertainties in the cost of capital, potential risk discounts and risk premiums were
considered in the Markets & Airlines sector. The following table shows the effects of potential deviations in fair value in the financial
year 2020:
Sensivities presenting potential changes of the recoverable amount
Sensivity WACC WACC Sustainable Sustainable Discounted Discounted Normalisation Normalisation
analysis + 125 - 225 growth rate growth rate Cash Flow Cash Flow of of
Markets & BPS BPS 2 2 + 15 % - 15 % business 2022 business 2024
Airlines &euro &euro + 50 BPS - 50 BPS &euro &euro &euro million &euro million
milli milli &euro &euro million million
on on million million
Northern - + + 46.4 - 42.4 + 377.5 - 377.5 + 38.9 - 14.3
Region 151.9 362.4
Central - + + 34.7 - 31.8 + 126.5 - 126.5 + 54.2 - 59.2
Region 90.5 227.4
Western - + + 29.5 - 27.0 + 135.2 - 135.2 + 10.5 - 3.1
Region 82.2 203.2
Sensivity WACC WACC Sustainable Sustainable Discounted Discounted Normalisation Normalisation
analysis + 100 - 100 growth rate growth rate Cash Flow Cash Flow of of
Cruises BPS BPS 2 2 + 10 % - 10 % business 2022 business 2024
&euro &euro + 50 BPS - 50 BPS &euro &euro &euro million &euro million
milli milli &euro &euro million million
on on million million
Marella - + + 39.9 - 35.6 + 71.5 - 71.5 + 33.0 - 39.4
Cruises 1 78.8 99.3
Sensitivity WACC WACC Sustainable Sustainable Discounted Discounted Normalisation Normalisation
analysis + 100 - 100 growth rate growth rate Cash Flow Cash Flow of of
Hotels & BPS BPS 2 2 + 10 % - 10 % business 2022 business 2024
Resorts and &euro &euro + 50 BPS - 50 BPS &euro &euro &euro million &euro million
TUI milli milli &euro &euro million million
Musement on on million million
Riu 1 - + + 211.5 - 182.3 + 300.8 - 300.8 + 10.7 - 25.0
387.2 522.4
TUI - + + 36.4 31.8 + 58.7 - 56.1 + 33.9 - 35.7
Musement 67.5 91.8
Other - + + 38.2 to + - 33.6 to - + 66.3 to - 66.3 to - 1.5 to + - 2.4 to -
74.2 95.8 55.9 48.1 + 83.5 - 83.5 3.0 18.8
to - to +
102.4 138.1
1 Those are groups of CGUs.
2 Sustainable growth rate of expected net cash inflows
The fair values of the cash-generating units determined as part of the sensitivity analysis did not indicate any need for additional
impairment losses. Only for the cash-generating units Robinson and Blue Diamond, which are reported under Other in the Hotels & Resorts
segment, the recoverable amount approached the carrying amount. A change in the discount rate of + 1.1 % in the CGU Robinson and + 1.3 %
in CGU Blue Diamond would lead to an estimated recoverable amount to be equal to the carrying amount.
(13) Other intangible assets
The development of the line items of other intangible assets in financial year 2020 is shown in the following table.
Other intangible assets
Brands Computer software Transport Customer Intangible Total
, and base assets in
licens leasing the
es and contracts course of
other constructi
rights on and
Payments
on account
&euro million internally acquired
generated
Historical cost
Balance as at 1 422.0 415.5 295.1 91.1 91.4 112.2 1,427
Oct 2018 .3
Exchange 0.2 - 3.9 - 1.8 - 0.2 2.8 0.6 - 2.3
differences
Additions due to 30.7 3.0 11.0 - 2.2 - 46.9
changes in the
group of
consolidated
companies
Additions 3.6 22.3 19.4 - - 126.2 171.5
Disposals - - 56.3 - 58.3 - - 1.9 - 3.1 -
119.1 238.7
Reclassification - 0.7 - - 7.2 - - 0.1 - 0.8 - 8.8
as assets held
for sale
Transfer 0.6 77.8 22.8 - - - 100.8 0.4
Balance as at 30 337.3 458.4 281.0 90.9 94.4 134.3 1,396
Sep 2019 .3
(adjusted)
First-time - - - - 24.9 - - -
adoption of IFRS 24.9
16
Balance as at 1 337.3 458.4 281.0 66.0 94.4 134.3 1,371
Oct 2019 .4
(restated)
Exchange - 9.6 - 10.5 - 3.1 - 6.9 - 0.9 - 2.3 -
differences 33.3
Additions due to 1.1 - - - 0.3 - 1.4
changes in the
group of
consolidated
companies
Additions 4.5 16.7 26.7 - - 64.0 111.9
Disposals - 5.0 - 11.6 - 61.2 - - 15.0 - 14.6 -
107.4
Reclassification - - - 4.4 - - - 0.7 - 5.1
as assets held
for sale
Transfer 0.4 64.2 30.8 - - - 96.6 - 1.2
Balance as at 30 328.7 517.2 269.8 59.1 78.8 84.1 1,337
Sep 2020 .7
Amortisation and
impairment
Balance as at 1 - - 218.3 - 212.4 - 51.0 - 40.0 - -
Oct 2018 262.4 784.1
Exchange 0.9 1.7 1.5 0.2 - 2.4 - 1.9
differences
Amortisation for - 21.0 - 59.4 - 37.1 - 4.5 - 8.0 - -
the current year 130.0
Impairment for - 1.1 - 6.6 - 0.8 - - - 0.6 - 9.1
the current year
Disposals 116.3 56.3 54.2 - 1.9 0.6 229.3
Reclassification 0.7 - 5.7 - - - 6.4
as assets held
for sale
Transfer 0.2 - - 0.1 - - 0.1 - -
Balance as at 30 - - 226.3 - 189.0 - 55.3 - 48.6 - -
Sep 2019 166.4 685.6
(adjusted)
First-time - - - 11.3 - - 11.3
adoption of IFRS
16
Balance as at 1 - - 226.3 - 189.0 - 44.0 - 48.6 - -
Oct 2019 166.4 674.3
(restated)
Exchange 1.5 5.4 2.3 1.6 0.8 - 11.6
differences
Amortisation for - 22.6 - 75.1 - 40.1 - 2.4 - 9.8 - -
the current year 150.0
Impairment for - 7.0 - 28.6 - 25.3 - - 1.8 - 15.3 -
the current year 78.0
Disposals 3.6 11.6 58.2 - 15.0 14.4 102.8
Reclassification - - 3.8 - - - 3.8
as assets held
for sale
Transfer 2.0 - 0.3 - 1.7 - - 0.1 - - 0.1
Balance as at 30 - - 313.3 - 191.8 - 44.8 - 44.5 - 0.9 -
Sep 2020 188.9 784.2
Carrying amounts 170.9 232.1 92.0 35.6 45.8 134.3 710.7
as at 30 Sep
2019 (adjusted)
Carrying amounts 139.8 203.9 78.0 14.3 34.3 83.2 553.5
as at 30 Sep
2020
Internally generated computer software consists of computer programs for tourism applications exclusively used internally by the Group.
Transport contracts relate to landing rights at airports in the UK purchased and measured during the acquisition of First Choice Holidays
Plc in 2007.
In the previous year, the leasing contracts exclusively related to advantageous supply contracts for aircraft, which were capitalized as
part of the purchase price allocation following the acquisition of First Choice Holidays Plc in 2007. Due to the application of IFRS 16
as of 1 October 2020, the advantageous contracts were reclassified as right-of-use assets, as they are related to the rights of use
assets of aircraft.
Payments on account made totalled &euro 0.3 m as at 30 September 2020 (previous year &euro 6.9 m). The intangible assets in course of
constructions amounted to &euro 82.9 m as at 30 September 2020 (previous year &euro 127.4 m).
Additions to consolidation mainly relate to the acquisition of Kybele Turizm Yatirim San. Ve Tic. A.S as well as acquisitions of travel
agencies. For details, please refer to the section 'Acquisitions'.
The impairments recognised for the financial year under review totalled &euro 78.0 m (previous year &euro 9.1 m). The Covid-19 pandemic
gave reason to focus and accelerate the digital transformation of TUI. Accordingly local software systems which will be replaced by group
wide software were impaired to a remaining value of zero. This includes with &euro 28.6 m internally and with &euro 25.3 m acquired
computer software. In addition software projects presented as intangible assets in the course of construction have been impaired by &euro
15.3 m. Likewise it was decided that smaller brands and licences with a total book value of &euro 7.0 m and a customer list with a book
value of &euro 1.8 m will no longer be used. Accordingly these assets were impaired.
The useful life of individual software systems have been revised based on the acceleration of the digital transformation. Due to this
revision the useful life of the affected software systems were shortened which increased the amortization by &euro 9.5 m in the financial
year. For the financial year 2021 we expect an an increase of amortization compared with the amount that would have been charged before
the change in useful life by &euro 7.7 m in comparison to the amount before the change of the useful life, for the financial year 2022 by
&euro 5.4 m.
In February 2020, TUI AG concluded an agreement with its joint venture partner Royal Caribbean Cruises on the sale of Hapag-Lloyd
Kreuzfahrten to the joint venture TUI Cruises GmbH. Accordingly, the associated assets were reclassified to the balance sheet item
'Assets held for sale' before the divestment was closed in early July 2020. For further details on the disposal, we refer to the relevant
section on 'Divestments'.
(14) Property, plant and equipment
The table below presents the development of the individual items of property, plant and equipment in financial year 2020.
Property, plant and equipment
&euro Hotels Other Aircraft Cruise Other Assets under Payments Total
million incl. build ships plant construction on
Land ings , account
and opera
land ting
and
offic
e
equip
ment
Historical
cost
Balance as 1,754. 268.9 2,185.2 1,331. 1,259 144.6 479.3 7,423
at 1 Oct 4 5 .6 .5
2018
Exchange 28.8 2.5 99.3 - 8.2 8.7 6.8 18.3 156.2
differences
Acquisitions 201.5 0.4 - 0.2 8.2 - - 210.3
through
business
combinations
Additions 196.4 43.0 257.0 128.8 81.5 328.8 168.5 1,204
.0
Disposals - 20.9 - - 409.6 - 37.5 - - 8.6 - 118.0 -
21.5 93.3 709.4
Transfer to - - 0.9 0.5 - - 3.9 - - - 4.3
assets held
for sale
Transfer 55.2 - 5.8 45.3 230.1 40.7 - 298.7 - 66.8 - 0.0
Balance as 2,215. 286.6 2,177.7 1,644. 1,301 172.9 481.3 8,280
at 30 Sep 4 9 .5 .3
2019
(adjusted)
Adoption of - 0.4 - 7.2 - - - - 0.1 - -
IFRS 16 1,629.9 246.2 51.1 1,934
.9
Balance as 2,215. 279.4 547.8 1,398. 1,250 172.8 481.3 6,345
at 1 Oct 0 7 .4 .4
2019
(restated)
Exchange - - - 7.0 - 20.5 - - 10.1 - 21.5 -
differences 107.6 27.4 29.6 223.7
Acquisitions 37.7 - - - 8.7 - - 46.4
through
business
combinations
Additions 65.7 1.2 17.5 125.4 68.8 181.3 117.6 577.5
Disposals - 12.9 - 3.6 - 71.7 - 6.0 - - 0.1 - 98.9 -
51.1 244.3
Transfer to - - 0.4 - 93.4 - - 5.3 - - 24.4 -
assets held 1,013. 1,136
for sale 4 .9
Transfer 82.5 1.5 - 0.9 163.0 63.3 - 123.5 - 82.1 103.8
Balance as 2,280. 250.7 392.3 647.2 1,305 220.4 372.0 5,468
at 30 Sep 4 .2 .2
2020
Depreciation
and
impairment
Balance as - - - 770.0 - - 0.2 - -
at 1 Oct 514.3 74.9 336.3 851.9 2,547
2018 .2
Exchange - 3.4 - - 18.6 1.1 - 6.1 - - -
differences 27.0
Depreciation - 51.1 - 3.3 - 122.2 - 88.9 - - - -
for the 101.0 366.5
current year
Impairment - 1.7 - - - - 1.4 - - - 3.1
for the
current year
Disposals 10.5 13.5 325.7 37.5 83.7 - - 470.9
Transfer to - 0.7 - - 2.3 - - 3.0
assets held
for sale
Transfer - 8.8 2.4 - - 6.7 - - 0.3
Balance as - - - 585.1 - - 0.2 - -
at 30 Sep 568.8 61.6 386.6 867.7 2,469
2019 .6
(adjusted)
Adoption of 0.5 1.9 372.4 83.1 25.4 - - 483.3
IFRS 16
Balance as - - - 212.7 - - 0.2 - -
at 1 Oct 568.3 59.7 303.5 842.3 1,986
2019 .3
(restated)
Exchange 19.5 - 0.4 0.9 7.9 10.5 - - 38.4
differences
Depreciation - 60.4 - 2.7 - 32.2 - 73.5 - - - 0.6 -
for the 99.2 268.6
current year
Impairment - 70.7 - 5.0 - 46.5 - - - - 4.1 -
for the 138.3 15.4 280.0
current year
Disposals 12.7 2.2 67.6 6.0 45.1 - 4.1 137.7
Transfer to - 0.1 68.9 350.4 4.3 - - 423.7
assets held
for sale
Transfer 0.6 - 0.1 1.1 - 57.9 - - - -
14.3 70.6
Balance as - - - 152.9 - - 0.2 - 0.6 -
at 30 Sep 666.6 65.6 208.9 911.3 2,005
2020 .7
Carrying 1,646. 225.0 1,592.6 1,258. 433.8 173.1 481.3 5,810
amounts as 6 3 .7
at 30 Sep
2019
(adjusted)
Carrying 1,613. 185.1 239.4 438.3 393.9 220.6 371.4 3,462
amounts as 8 .5
at 30 Sep
2020
The initial application of IFRS 16 in the period under review resulted in a reclassification of leased assets worth &euro 1,451.6 m,
which had been classified as finance leases under IAS 17, to right-of-use assets.
Acquisitions through business combinations mainly relate to acquisitions of hotel companies. For details, please refer to the section
'Acquisitions'.
Hapag-Lloyd Kreuzfahrten GmbH invested an amount of &euro 117.1 m in the acquisition of the cruise ship HANSEATIC inspiration. Other
additions include investments of &euro 121.5 m in Hotels & Resorts (previous year &euro 259.1 m).
In the financial year under review, advance payments of &euro 38.9 m (previous year &euro 34.7 m) were made for the acquisition of cruise
ships, while &euro 52.1 m (previous year &euro 116.9 m) were invested to acquire aircraft.
Further additions to assets under construction include an amount of &euro 158.3 m (previous year &euro 98.7 m) for investments in hotels
in Hotels & Resorts. The amount carried for assets under construction in the prior year had additionally included &euro 170.7 m for the
cruise ship Marella Explorer 2.
Due to the development of the COVID-19-pandemic and its impact on the business property, plant and equipment have been tested for
impairment.
One aircraft which is owned by the aircraft leasing companies of the group was impaired. This aircraft is currently leased to the
associated company Corsair S. A. and is planned to be sold to them. The aircraft has been impaired by &euro 46.5 m to its fair value less
cost to sell (level 2) and transferred to the line item 'Assets held for sale'. Please refer to this section for further information. The
remaining aircrafts have been tested on the level of the segments Region Northern, Region Western or Region Central. No further
impairments were identified.
Of the cruise ships, all of which are attributable to Marella Cruises in the Cruises segment, Marella Dream was impaired by &euro 52.1 m
to the planned selling price less cost to sell of &euro 1.4 m due to the sale to be completed in October 2021. The Marella Dream is
therefore reclassified as assets held for sale. The Marella Celebration was decommissioned due to the COVID-19-pandemic and was impaired
by &euro 17.1 m. Furthermore, the planned renovation measures were cancelled in order to avoid further investments and the &euro 4.1 m
already paid for them were fully impaired. For the remaining cruise ships the impairment test was carried out by discounting future cash
inflows derived from the business plan with a discount rate of 9.74 %. Please refer to the section 'Goodwill' and the explanations on the
group of cash generating units 'Marella Cruises' for further information especially on the determination of the discount rate. An
inflation-related growth of 0.5 % per season after a normalized level of business is reached was assumed. Each individual cruise ship
represents a cash generated unit. The recoverable amount was calculated based on the value in use. The impairment losses are allocated to
the cash-generating units as follows:
Impairment on cruise ships
Cruise ship Impairment Recoverable amount
in &euro million in &euro million
Marella Discovery 0.8 10.3
Marella Discovery 2 49.6 130.9
Marella Explorer 4.0 160.1
Marella Explorer 2 14.7 129.5
Total 69.1 430.8
Furthermore the hotels including land of the segment Hotels & Resorts were tested for impairment. Each Hotel represents a separate cash
generating unit. In principle the same methods were applied as for the impairment tests of the cruise ship. However other discount rates
were applied depending on the individual risk of the respective hotel and a growth rate of 1 %. For further information we refer again to
the section 'Goodwill'. With the exception of the impairment below the recovery amount was the value in use. Impairment losses on hotels
relate to the following destination and are mainly attributable to an impairment of two hotel in the Maldives and three hotels in Turkey.
Impairment on hotels incl. land by tourist destinations
Tourist Discount rate Impairment Recoverable
destination in % in &euro amount
million in &euro million
Maldives 8.48 35.5 28.6
Turkey 8.48 22.3 101.3
East Africa 8.80 6.2 38.6
Total 64.0 168.5
In addition, a hotel in Italy amounting was impaired by &euro 6.7 m to the fair value less cost to sell.
The impairments of 'Other buildings and land' and 'Other plant, operating and office equipment' are related to a multiplicity of smaller
assets. The impairments are mainly caused by the decommissioning and restrictions on the use of assets due to the COVID-19-pandemic.
In February 2020, TUI AG concluded an agreement with its joint venture partner Royal Caribbean Cruises to sell Hapag-Lloyd Kreuzfahrten
GmbH to the joint venture TUI Cruises GmbH. Accordingly, the associated assets were reclassified to the balance sheet item 'Assets held
for sale' before the sale was completed in early July 2020. For further information on the disposal, please refer to the relevant section
on 'Divestments'.
The additions to property, plant and equipment by reclassifications relate amongst other to carrying amounts of previously leased assets
carried as right-of-use assets for which purchase options were exercised.
In the financial year 2020, borrowing costs of &euro 2.5 m (previous year &euro 4.0 m) were capitalised as part of acquisition and
production costs. The capitalisation rate of capitalised borrowing costs is 3.0 % p. a. for financial year 2020 and 2.9 % p. a. for the
prior year.
The carrying amount of property, plant and equipment subject to ownership restrictions or pledged as security totals &euro 333.6 m as at
the balance sheet date (previous year &euro 629.0 m). The decline is attributable to the disposal of Hapag-Lloyd Kreuzfahrten.
(15) Leasing
In financial year 2020, TUI introduced the amended standard on lease accounting (IFRS 16). As a lessee, TUI recognises right-of-use
assets and lease liabilities according to IFRS 16.
For more detailed information on this new application and the use of practical expedients, please refer to the section 'Newly applied
standards' in Principles and Methods Underlying the Consolidated Financial Statements.
TUI as a lessee
As a lessee, TUI leases moveable assets such as aircraft, vehicles and cruise ships, as well as property such as hotel buildings, land,
office buildings and travel agencies. The terms and conditions of the lease agreements are individually negotiated. Some of TUI's
aircraft leases comprise purchase or extension options. Many of TUI's property leases, in particular for travel agencies and office
buildings, contain extension options and price adjustment clauses. No residual value guarantees were provided for the leased items.
Due to the introduction of IFRS 16, right-of-use assets totalling &euro 3,831.6 m were carried as at 1 October 2019. This amount includes
&euro 1,451.6 m for assets previously capitalised as finance leases, reclassified from property, plant and equipment to right-of-use
assets.
The development of the right-of-use assets in financial year 2020 is presented in the table below:
Right-of-use assets
&euro million Aircraft Hotels Travel Buildings Cruise Other Total
and Agenci ships
engines es
Historical cost
Balance as at 1 2,834.7 751.6 206.2 212.3 247.0 74.0 4,325
Oct 2019 .8
Exchanges - 157.8 - 3.6 - 0.7 - 2.3 - 5.2 - 0.6 -
differences 170.2
Additions 294.8 49.0 17.6 11.6 78.6 14.5 466.1
Revaluations and 60.6 - 7.3 - 24.7 - 20.3 - 0.3 -
modifications 178.8 156.2
Disposals - 2.0 - 6.3 - 0.7 - 11.7 - - 0.8 -
21.5
Reclassifications - 36.5 - - - - - -
as assets held 36.5
for sale
Transfer 5.1 0.1 - 0.5 - 1.1 - 88.4 - -
20.7 105.5
Balance as at 30 2,998.9 612.0 229.2 184.1 211.7 66.1 4,302
Sep 2020 .0
Depreciation and
impairment
Balance as at 1 - 383.6 - - - 1.9 - 83.2 - -
Oct 2019 25.5 494.2
Exchange 42.5 2.3 0.8 0.3 1.6 0.2 47.7
differences
Depreciation for - 409.3 - - 54.9 - 24.7 - 18.0 - -
the current year 107.9 15.5 630.3
Impairment for - 6.2 - 54.8 - 24.6 - 1.1 - 7.9 - 2.8 -
the current year 97.4
Disposals 2.0 6.1 0.3 3.9 - 0.1 12.4
Reclassifications 18.7 - - - - - 18.7
as assets held
for sale
Transfer - 1.1 - 1.2 - - 58.0 13.3 69.0
Balance as at 30 - 737.0 - - 78.4 - 23.5 - 49.5 - -
Sep 2020 155.5 30.2 1,074
.1
Carrying amounts 2,451.1 751.6 206.2 210.4 163.8 48.5 3,831
as at 1 Oct 2019 .6
Carrying amounts 2,261.9 456.5 150.8 160.6 162.2 35.9 3,227
as at 30 Sep 2020 .9
Since the date of the initial application of IFRS 16, right-of-use assets have declined by &euro 603.7 m. While cumulative depreciation
amounted to &euro 630.3 m, additions included in particular an amount of &euro 294.8 m for aircraft and engines as well as &euro 78.6 m
for cruise ships and &euro 49.0 m for hotels. Right-of-use assets decreased by a further &euro 122.5 m due to foreign exchange
translation.
In addition, remeasurements and contractual changes to leases resulted in a reduction in right-of-use assets of &euro 156.2 m. Most
remeasurements and changes in leases are based on contractual amendments driven by the COVID-19-pandemic.
Information on the associated lease liabilities is provided in Note 31, 'Financial liabilities and lease liabilities'. Details regarding
the maturities of the lease payments not yet made at the balance sheet date are shown in the section 'Liquidity risk' in Note 40
'Financial instruments'.
The table below presents the expenses and income carried in the consolidated statement of financial position in financial year 2020 in
connection with leases in which TUI is the lessee:
Expenses and income from leases with TUI as the lessee
&euro million 2020
Expenses from short-term leases - 56.0
Expenses from low-value leases - 12.8
Variable leasing income and expenses 36.4
Depreciation of right-of-use assets - 630.3
Impairment of right-of-use assets - 97.4
Interest expenses from lease liabilities - 148.1
Gains or losses arising from sale and leaseback 0.7
transactions
The impairment test for carrying amounts performed in connection with the pandemic resulted in impairments of &euro 97.4 m to
right-of-use assets in the completed financial year. The impairment losses mainly relate to right-of-use assets on hotels totalling &euro
54.8 m.
Information on impairments of hotels are provided in Note 12 'Goodwill'. In addition to the values mentioned there, an impairment loss of
&euro 9.1 m was recognised as at 30 September 2020 on the right of use asset for a hotel in Egypt. Furthermore, impairment losses of
&euro 24.6 m relate to a large number of right-of-use assets for travel agencies. Further impairment were attributable to right-of-use
assets on cruise ships with &euro 7.9 m and to right-of-use assets on aircraft and engines with &euro 6.3 m.
The cash outflows for leases totalled &euro 816.5 m in financial year 2020.
At the balance sheet date, unrecognised financial commitments for short-term leases amounted to &euro 6.6 m. In addition, potential
future lease payments from extension and termination options of &euro 265.8 m were not included in the measurement of the right-of-use
assets and lease liabilities as it was not reasonably certain that the lease contracts were going to be extended or not to be terminated.
TUI as lessor
As a lessor, TUI leases or subleases aircraft and, less significantly, space in hotels and office buildings. In financial year 2020,
proceeds from operating leases worth &euro 35.2 m were carried in revenue. This amount included &euro 25.4 m for the sublease of
right-of-use assets.
In addition, income from finance leases of &euro 2.1 m was carried in the interest result.
At the balance sheet date, there were receivables from three subleases classified as finance leases upon transition to IFRS 16. The
following table shows the reconciliation from the undiscounted lease payments to the net investment:
Net investments - finance leases
&euro million 30 Sep 2020 1 Oct 2019
Undiscounted lease payments (lease 44.7 54.0
components)
Unguaranteed residual values - -
Gross investment 44.7 54.0
Unearned finance income 4.1 6.5
Impairment 27.1 -
Net investment 13.5 47.4
The table below comprises a maturity analysis of the undiscounted annual payments from leases in which TUI is the lessor:
Expected minimum lease payments
30 Sep 2020
Remaining term
&euro up to 1- 2 2- 3 3- 4 4- 5 more Total
million 1 year years years years years than 5
years
Operating 22.7 23.2 21.3 16.2 2.6 0.1 86.1
lease
contracts
Finance 13.8 9.7 9.7 9.0 2.5 - 44.7
lease
contracts
1 Oct 2019
Remaining term
&euro up to 1- 2 2- 3 3- 4 4- 5 more Total
million 1 year years years years years than 5
years
Operating 62.7 27.4 17.7 17.7 16.9 2.8 145.2
lease
contracts
Finance 10.5 10.4 10.4 10.4 9.6 2.7 54.0
lease
contracts
(16) Investments in joint ventures and associates
The table below presents all joint arrangements and associates of relevance to TUI Group. All joint arrangements and associates are
listed as TUI Group Shareholdings in Note 52. All joint arrangements are joint ventures. There are no joint operations within the meaning
of IFRS 11.
Significant associates and joint ventures
Capital share in % Voting rights share
in %
Name and Nature 30 Sep 30 Sep 30 Sep 30 Sep 2019
headquarter of 2020 2019 2020
of company business
Associates
Sunwing Tour 49.0 49.0 25.0 25.0
Travel operator
Group Inc., &
Toronto, Hotel
Canada operator
Togebi Tour 10.0 10.0 10.0 10.0
Holdings operator
Limited,
Nicosia,
Cyprus
Joint
ventures
Riu Hotels Hotel 49.0 49.0 49.0 49.0
S. A., operator
Palma de
Mallorca,
Spain
TUI Cruises Cruise 50.0 50.0 50.0 50.0
GmbH, ship
Hamburg, operator
Germany
All companies presented above are measured at equity.
The financial year of Sunwing Travel Group Inc., Toronto / Canada (Sunwing) corresponds to TUI Group's financial year. The financial
years of the joint ventures listed above and of Togebi Holdings Limited, Nicosia, Cyprus deviate from TUI Group's financial year, ending
on 31 December of any one year. In order to update the at equity measurement as at TUI Group's balance sheet date, interim financial
statements for the period ending 30 September are prepared for these companies.
Significant associates
In 2009, TUI Group entered into a partnership with Sunwing. Sunwing is a vertically integrated travel company comprising tour operation,
an airline and retail shops. Since the transfer of the hotel operation and development company Blue Diamond Hotels & Resorts Inc., St
Michael / Barbados, to Sunwing in September 2016, Sunwing has also included the hotel operation business with a chain of luxury beach
resorts and hotels in the Caribbean and Mexico. Sunwing's hotel operation business is carried in the Hotels & Resorts segment, while the
tour operation business is carried in the Northern Region segment. The company has different classes of shares. TUI Group holds 25 % of
the voting shares.
Togebi Holdings Limited (TUI Russia) was established in 2009 as a joint venture. The business purpose of this associate is to develop the
tour operation business, in particular in Russia and Ukraine. The company owns tour operation subsidiaries and retail chains in these
countries. In the beginning of October 2018 TUI Group's share in TUI Russia decreased from 25 % to 10 % due to a capital increase in
which TUI Group did not participate. Since then Togebi Holdings Limited is classified as an associate.
Significant joint ventures
Riu Hotels S. A. is a hotel company owning and operating hotels in the 4- to 5-star segments. The hotels of the company established in
1976 are mainly located in Spain and Central America.
TUI Cruises GmbH is a joint venture with the US shipping line Royal Caribbean Cruises Ltd established in 2008. The Hamburg-based company
offers German-speaking cruises for the premium market. TUI Cruises GmbH currently operates eleven cruise ships.
Financial information on associates and joint ventures
The tables below present summarised financial information for the significant associates and joint ventures of the TUI Group. The amounts
shown reflect the full amounts presented in the consolidated financial statements of the relevant associates and joint ventures (100 %);
they do not represent TUI Group's share of those amounts.
Summarised financial information of material associates
Sunwing Travel Togebi Holdings Limited,
Group Inc., Nicosia, Cyprus
Toronto, Canada
&euro million 30 Sep 30 Sep 2019 30 Sep 2020 30 Sep 2019 /
2020 / / 2019 / 2020 2019
2020
Non-current 1,525.6 1,393.8 15.7 6.7
assets
Current assets 601.0 575.1 225.2 143.6
Non-current 811.7 935.5 65.2 185.8
provisions and
liabilities
Current 1,021.0 567.6 313.7 116.1
provisions and
liabilities
Revenue 1,349.9 2,193.1 456.6 863.2
Profit / loss* - 143.9 - 13.0 - 97.4 - 6.2
Other - 28.0 26.5 16.6 - 8.9
comprehensive
income
Total - 171.9 13.5 - 80.8 - 15.1
comprehensive
income
* Solely from continuing operations
Summarised financial information of material joint ventures
Riu Hotels S. A., TUI Cruises GmbH,
Palma de Mallorca, Hamburg, Germany
Spain
&euro million 30 Sep 2020 30 Sep 30 Sep 2020 30 Sep 2019
/ 2020 2019 / / 2020 / 2019
2019
Non-current 813.6 890.3 4,180.6 3,200.3
assets
Current assets 70.2 118.4 373.6 218.0
thereof cash and 14.3 54.6 96.0 104.3
cash equivalents
Non-current 123.0 67.9 2,902.6 1,910.3
provisions and
liabilities
thereof 106.3 51.2 2,893.0 1,910.3
financial
liabilities
Current 47.0 71.5 868.4 755.5
provisions and
liabilities
thereof 11.8 11.5 332.1 244.9
financial
liabilities
Revenue 225.8 319.0 646.3 1,416.6
Depreciation / 25.3 29.2 115.4 100.5
amortisation of
intangible
assets
and property,
plant and
equipment
Interest income 0.2 1.7 - 0.1
Interest 0.2 - 59.6 60.0
expenses
Income taxes 17.4 27.6 0.3 -
Profit /loss* 10.2 88.5 - 148.4 405.2
Other - 165.6 - 59.7 29.1 0.8
comprehensive
income
Total - 155.4 28.8 - 119.3 406.0
comprehensive
income
* Solely from continuing operations
In the financial year 2020, TUI Group received dividends of 4.9 m (previous year &euro 237.8 m) from all joint ventures. In addition in
financial year 2020, dividends of &euro 0.8 m (previous year &euro 6.7 m) were received from its associates.
In addition to TUI Group's significant associates and joint ventures, TUI AG has interests in other associates and joint ventures
measured at equity, which individually are not considered to be of material significance. The tables below provide information on TUI
Group's share of the earnings figures shown for the major associates and joint ventures as well as the aggregated amount of the share of
profit / loss, other comprehensive income and total comprehensive income for the immaterial associates and joint ventures.
Share of financial information of material and other
associates
Sunwing Togebi Other Associates
Travel Holdings immaterial Total
Group Inc., Limited, associates
Toronto, Nicosia,
Canada Cyprus
&euro 2020 2019 2020 2019 2020 2019 2020 2019
millio
n
TUI's
share
of
Profit - 70.5 - 6.4 - - - 0.2 6.3 - 70.7 - 0.1
/ loss
*
Other - 17.8 15.4 - - - 10.6 2.3 - 28.4 17.7
compre
hensiv
e
income
Total - 88.3 9.0 - - - 10.8 8.6 - 99.1 17.6
compre
hensiv
e
income
* Solely from continuing operations
Share of financial information of material and other
joint ventures
Riu Hotels TUI Cruises Other Joint
S. A., GmbH, immaterial ventures
Palma de Hamburg, joint Total
Mallorca, Germany ventures
Spain
&euro 2020 2019 2020 2019 2020 2019 2020 2019
millio
n
TUI's
share
of
Profit 5.0 43.4 - 74.2 202.6 - 53.4 51.6 - 297.6
/ loss 122.6
*
Other - 81.1 - 29.3 14.6 0.4 - 11.1 16.4 - 77.6 - 12.5
compre
hensiv
e
income
Total - 76.1 14.1 - 59.6 203.0 - 64.5 68.0 - 285.1
compre 200.2
hensiv
e
income
* Solely from continuing operations
Net assets of the material associates
&euro million Sunwing Travel Togebi Holdings
Group Inc., Limited, Nicosia,
Toronto, Canada Cyprus
Net assets as at 1 Oct 2018 458.8 -
Reclassification - - 136.5
Other comprehensive income - 0.7 -
Dividends - 6.5 -
Foreign exchange effects 27.2 - 8.9
Profit / loss - 13.0 - 6.2
Net assets as at 30 Sep 2019 465.8 - 151.6
Foreign exchange effects - 28.0 16.6
Capital increase - 94.4
Profit / loss - 143.9 - 97.4
Net assets as at 30 Sep 2020 293.9 - 138.0
Reconciliation to the carrying amount of the associates in
the Group balance sheet
&euro million Sunwing Togebi Other Associates
Travel Holdings immaterial total
Group Inc., Limited, associates
Toronto, Nicosia,
Canada Cyprus
Share of TUI in 49.0 10.0 - -
%
as at 30 Sep
2019
TUI's share of 228.2 - 15.2 82.5 295.5
the net
assets as at 30
Sep 2019
Unrecognised - 6.3 6.4 12.7
share of losses
Goodwill as at 52.5 8.9 7.2 68.6
30 Sep 2019
Carrying value 280.7 0.0 96.1 376.8
as at 30 Sep
2019
Share of TUI in 49.0 10.0 - -
%
as at 30 Sep
2020
TUI's share of 144.0 - 13.8 2.0 132.2
the net
assets as at 30
Sep 2020
Impairment of - - - 0.1 - 0.1
carrying
amounts
Unrecognised - 5.5 31.8 37.3
share of losses
Goodwill as at 48.5 8.3 7.0 63.8
30 Sep 2020
Carrying value 192.5 - 40.7 233.2
as at 30 Sep
2020
Net assets of the material joint ventures
&euro million Riu Hotels S. A., TUI Cruises GmbH,
Palma de Mallorca, Hamburg,
Spain Germany
Net assets as at 1 910.4 686.5
Oct 2018
Profit / loss 88.5 405.2
Other comprehensive - 73.8 0.8
income
Dividends - 70.0 - 340.0
Foreign exchange 14.2 -
effects
Net assets as at 30 869.3 752.5
Sep 2019
Profit / loss 10.2 - 148.4
Other comprehensive - 105.1 29.1
income
Capital increase - 150.0
Foreign exchange - 60.2 -
effects
Net assets as at 30 714.2 783.2
Sep 2020
Reconciliation to the carrying amount of the joint ventures
in the Group balance sheet
&euro million Riu Hotels TUI Other Joint
S. A., Cruises immaterial ventures
Palma de GmbH, joint total
Mallorca, Hamburg, ventures
Spain Germany
TUI AG's share 426.0 376.3 305.7 1,108.0
of the net
assets
as at 30 Sep
2019
Goodwill as at 1.7 - 21.0 22.7
30 Sep 2019
Carrying value 427.7 376.3 326.7 1,130.7
as at 30 Sep
2019
TUI AG's share 350.0 391.6 221.0 962.6
of the net
assets
as at 30 Sep
2020
Goodwill as at 1.7 - 20.7 22.4
30 Sep 2020
Impairment of - - - 34.4 - 34.4
carrying
amounts
Unrecognised - - 2.9 2.9
share of losses
Carrying value 351.7 391.6 210.2 953.5
as at 30 Sep
2020
Impairment of the carrying value of associates and joint ventures
Due to the impact of the Covid-19-pandemic there are indications that the carrying values of the joint ventures and associates might be
impaired. Accordingly the carrying values have been tested for impairment. All impairment tests used the business plan of the respective
joint venture or associate. Based on this business plans the recoverable amount was calculated by discounting future net cash flows. In
all cases the fair value less cost to sell was higher than the value in use. level 3 inputs were used in the calculations. In the
financial year impairments of &euro 34.5 m were recognised under Impairment of net investment in JV and Associates.
In the segment Hotels & Resorts the impairments totalled &euro 33.2 m and mainly related to joint ventures in Vietnam (&euro 13.9 m) and
in Croatia (&euro 17.9 m). Country-specific discount rates of 8.15 % for Croatia and 8.48 % for Vietnam were used. Apart from that, the
same parameters were applied as for the goodwill impairment test in the Hotels & Resorts segment (see Note 12).
Unrecognised losses by associates and joint ventures
Unrecognised accumulated losses amounted &euro 40.2 m (previous year &euro 12.7 m). By financial year 2014 the recognition of TUI group's
share of losses exceeded the amount of the equity share of Togebi Holdings Limited. Recognition of further losses would have reduced the
carrying amount to below zero. After the consideration of the capital increase and the result of the financial year the losses amounted
&euro 5.5 m. In addition unrecognised losses of &euro 34.7 m relate to the share of TUI of the result of the Corsair SA and the Bartu
Turizm Yatirimlari AS whose equity share carrying value is written down to &euro nil.
Risks associated with the stakes in associates and joint ventures
Contingent liabilities of &euro 20.0 m (previous year &euro 49.8 m) existed in respect of associates as at 30 September 2020. Contingent
liabilities in respect of joint ventures totalled &euro 89.4 m (previous year &euro 12.1 m).
(17) Trade and other receivables
Trade and other receivables
30 Sep 2020 30 Sep 2019
&euro million Remaining Total Remaining Total
term more term more
than 1 year than 1 year
Trade receivables - 151.2 - 584.5
Advances and loans 198.7 288.7 41.2 97.5
Lease receivables 9.6 13.5 - -
Other receivables 194.1 435.3 19.8 255.3
and assets
Total 402.4 888.7 60.9 937.3
As at 30 September 2020, TUI had capitalised sales commissions to travel agencies and other distribution channels worth &euro 38.4 m
(previous year &euro 78.7 m) in respect of costs of obtaining a contract. In the financial year under review, sales commission worth
&euro 340.7 m (previous year &euro 744.8 m) were recognised in profit and loss.
TUI Group and Boeing have agreed on a comprehensive package of measures to offset the consequences of the grounding of the 737 Max. It
provides compensation which covers a significant portion of the financial impact, as well as credits for future aircraft orders. The cash
payments will be realised over the next two years, while the income is already partly realized within Cost of Sales in the reporting
period and will be partly spread over the useful life of those 737 Max delivered in the future. The compensation receivable is included
in other receivables.
(18) Touristic payments on account
Touristic payments on account mainly relate to customary advance payments in respect of future tourism services, in particular advance
payments made by tour operators for future hotel services.
The impairments charged for advance payments made by tour operators for future hotel services for the financial year under review
totalled &euro 53.4 m (previous year &euro 1.4 m).
(19) Other non-financial assets
The other non-financial assets with an amount of &euro 536.6 m (prior year &euro 501.4 m) resulted mainly from the overfunded pension
plans with an amount of &euro 363.3 m (prior year &euro 310.0 m) and assets from other taxes with an amount of &euro 81.3 m (prior year
&euro 111.4 m).
(20) Deferred tax assets
Individual items of deferred tax assets and liabilities
recognised in the financial position
30 Sep 2020 30 Sep 2019
adjusted
&euro million Asset Liability Asset Liability
Lease - 46.4 - 131.4 2.1 -
transactions
Recognition and 78.2 274.4 48.7 283.5
measurement
differences for
property,
plant and
equipment and
other
non-current
assets
Recognition 120.2 52.3 18.9 33.5
differences for
receivables and
other assets
Measurement of 76.5 20.5 9.1 58.5
financial
instruments
Measurement of 156.6 69.9 194.1 50.3
pension
provisions
Recognition and 53.0 5.8 61.7 8.4
measurement
differences for
other
provisions
Other 52.1 46.0 41.3 83.0
transactions
Capitalised tax 124.2 - 116.4 -
savings from
recoverable
losses
carried forward
Netting of - 407.6 - 407.6 - 290.3 - 290.3
deferred tax
assets and
liabilities
Balance sheet 299.6 192.7 202.0 226.9
amount
Deferred tax assets include an amount of &euro 147.5 m (previous year &euro 196.0 m) expected to be realised after more than twelve
months. Deferred tax liabilities include an amount of &euro 183.6 m (previous year &euro 202.4 m) expected to be realised after more than
twelve months.
No deferred tax assets are recognised for deductible temporary differences of &euro 436.5 m (previous year &euro 178.9 m).
No deferred tax liabilities are carried for temporary differences of &euro 76.3 m (previous year &euro 72.4 m) between the net assets of
subsidiaries and the respective taxable carrying amounts of subsidiaries since these temporary differences are not expected to be
reversed in the near future.
Recognised losses carried forward and time limits for
non-recognised losses carried forward
&euro million 30 Sep 2020 30 Sep 2019
Recognised losses carried forward 617.5 517.1
Non-recognised losses carried 9,260.5 6,318.3
forward
of which losses carried forward 9.9 10.6
forfeitable within one year
of which losses carried forward 144.8 34.3
forfeitable within 2 to 5 years
of which losses carried forward 38.5 -
forfeitable within more than 5 years
(excluding non-forfeitable loss
carryforwards)
of which non-forfeitable losses 9,067.3 6,273.4
carried forward
Total unused losses carried forward 9,878.0 6,835.4
Losses carried forward for German companies comprise the cumulative amount of trade tax and corporation tax as well as interest carried
forward in relation to the German interest barrier rule. Potential tax savings totalling &euro 1,740.1 m (previous year &euro 1,141.9 m)
were not recognised as the underlying losses carried forward were not expected to be utilised in the planning horizon.
In financial year 2020, tax savings of &euro 0.0 m (previous year &euro 2.3 m) resulted from the use of tax losses carriedforward
previously not assessed as recoverable for which, therefore, no deferred tax assets had been carried as at 30 September 2020 for the
potential tax savings resulting from these assets. Tax losses carried back resulted in tax savings of &euro 0.3 m (previous year &euro
2.6 m).
Development of deferred tax assets from losses carried forward
&euro million 2020 2019
Capitalised tax savings at the beginning 116.4 198.3
of the year
Use of losses carried forward - 0.6 - 9.3
Capitalisation of tax savings from tax 78.3 28.0
losses carried forward
Impairment of capitalised tax savings - 69.9 - 100.8
from tax losses carried forward
Exchange adjustments and other items - 0.2
Capitalised tax savings at financial 124.2 116.4
year-end
Capitalised deferred tax assets from temporary differences and losses carried forward that are assessed as recoverable of &euro 213.0 m
(previous year &euro 16.1 m) are covered by expected future taxable income even for companies that generated losses in the reporting
period or the prior year. This is based on the future business development planned by TUI management. The key points of this planning are
presented in the section Assumptions and estimates. TUI uses a five-year planning horizon to derive the recoverability of tax loss
carryforwards and deductible differences.
(21) Inventories
Inventories
&euro million 30 Sep 2020 30 Sep 2019
(END) Dow Jones Newswires
December 10, 2020 01:04 ET (06:04 GMT)
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