Airline spares and operating equipment 29.2 38.6
Real estate for sale 14.6 33.1
Consumables used in hotels 16.4 20.6
Other inventories 13.0 22.5
Total 73.2 114.7
In financial year 2020, inventories of &euro 411.7 m (previous year &euro 619.1 m) were recognised as expense. A write-down of real
estate for sale to net realizable value resulted in expenses of &euro 17.2 m in the financial year.
(22) Cash and cash equivalents
Cash and cash equivalents
&euro million 30 Sep 2020 30 Sep 2019
Bank deposits 1,225.0 1,712.7
Cash in hand and cheques 8.1 28.8
Total 1,233.1 1,741.5
At 30 September 2020, cash and cash equivalents of &euro 324.0 m were subject to restrictions (previous year &euro 203.1 m).
On 30 September 2016, TUI AG entered into a long term agreement to close the gap between the obligations and the fund assets of defined
benefit pension plans in the UK. At the balance sheet date an amount of &euro 52.0 m is deposited as security within a bank account. TUI
Group can only use that cash and cash equivalents if it provides alternative collateral.
Further, an amount of &euro 116.5 m (previous year &euro 116.5 m) was deposited with a Belgian subsidiary without acknowledgement of debt
by the Belgian tax authorities in financial year 2013 in respect of long-standing litigation over VAT refunds for the years 2001 to 2011.
The purpose was to suspend the accrual of interest for both parties. In order to collateralise a potential repayment, the Belgian
government was granted a bank guarantee. Due to the bank guarantee, TUI's ability to dispose of the cash and cash equivalents has been
restricted. The remaining restrictions relate to funds that must be held in reserve due to legal or regulatory requirements, including
those to secure travel funds received from customers.
(23) Assets held for sale
Assets held for sale
&euro million 30 Sep 2020
Aircraft 42.4
Investments in joint ventures and associates 13.1
Other assets 1.7
Total 57.2
In March 2019 TUI Group sold Corsair S. A. to Diamondale Ltd. At the same time, TUI Group acquired a 27 % stake in Diamondale Ltd for 1
euro. Since then the investment in Diamondale Ltd is presented as an associated company with a book value of 1 euro. At the moment TUI
Group is negotiating to dispose its investment in Diamondale Ltd. As part of this transaction an aircraft together with related financial
liabilities should be transferred to Corsair S. A. The negotiations are advanced. TUI Group expects to close this transaction in the
financial year 2021.
Therefore these assets and liabilities presented within Markets & Airlines are classified as held for sale. On classification the
aircraft was measured at fair value less cost to sell. An impairment loss of &euro 46.5 m was recognized in cost of sales and the book
value of the aircraft of &euro 24.5 m as an asset held for sale.
Due to the expected sale, an additional aircraft of the sector Markets & Airlines with a book value of &euro 17.9 m was reclassified to
assets held for sale as at 30 September 2020.
On 29 September 2020, an agreement was concluded on the sale of the joint venture Karisma Hotels Caribbean S. A. The closing of the
transaction is subject to the usual terms and conditions, in particular approval by the relevant competition authorities. Accordingly,
the carrying amount of the shareholding which is presented in the segment Hotels & Resorts of &euro 13.1 m was classified as held for
sale. With this transaction the hotel portfolio in the caribbean will be focused. We do not expect a material result out of this
transaction.
Included in other assets is a cruise ship of Marella Cruises of the segment cruises with a book value of &euro 1.4 m. The cruise ship was
valued at fair value less cost to sell. The resulting impairment of &euro 52.1 m was recognized in cost of sale. The cruise ship was
decommissioned due to the renewal of the cruise ship fleet of Marella Cruise and will be sold in October 2020.
In the financial year under review, Hapag-Lloyd Kreuzfahrten GmbH was reclassified to assets held for sale. The disposal was completed at
the beginning of July 2020. In the prior year, the two specialist tour operators Berge & Meer and Boomerang in Central Region had been
carried in this item with &euro 50.0 m. These tour operators were sold as at 1 October 2019. For further details, please refer to the
section 'Divestments'.
Disposal group 'Berge & Meer' and 'Boomerang'
&euro million 30 Sep 2019
Other intangible assets and property, 4.2
plant and equipment
Trade and other receivables 2.3
Derivative financial instruments 2.9
Income tax assets 1.1
Touristic payments on account 25.7
Other non-financial assets 7.1
Cash and cash equivalents 6.1
Other assets 0.6
Total 50.0
(24) Subscribed capital
The fully paid subscribed capital of TUI AG consists of no-par value shares, each representing an identical share in the capital stock.
The proportionate share in the capital stock per no-par value share is around &euro 2.56. As the capital stock consists of registered
shares, the owners are listed by name in the share register.
The subscribed capital of TUI AG has been registered in the commercial registers of the district courts of Berlin-Charlottenburg and
Hanover. In the financial year, it rose by a total of 1,394,512 employee shares. It thus comprised 590,415,100 shares (previous year
589,020,588 shares) as at the end of the financial year. It rose by &euro 3.6 m to &euro 1,509.4 m.
The Annual General Meeting on 11 February 2020 authorised the Executive Board of TUI AG to acquire own shares of up to 5 % of the capital
stock. The authorisation will expire on 10 August 2021. The authorisation to acquire own shares has not been used to date.
In August 2020, TUI AG acquired 102,293 own shares to issue to employees as part of the employee share programme in accordance with § 71
Para. 1 No. 2 AktG. This corresponds to a purchase volume of &euro 1.0 m.
Conditional capital
The Annual General Meeting on 9 February 2016 had created conditional capital of &euro 150.0 m and authorised the Company to issue bonds.
The conditional capital authorisation to acquire bonds with conversion or option rights and profit participation (with or without a mixed
maturity) is limited to a nominal amount of &euro 2.0 bn and expires on 8 February 2021. This authorisation was fully used with the
issuance of a bond with warrants with a volume of &euro 150 m to the Economic Stabilisation Fund in October 2020.
Overall, TUI AG's total conditional capital remained flat year-on-year at &euro 150.0 m as at 30 September 2020.
Authorised capital
The Annual General Meeting on 13 February 2018 resolved to create additional authorised capital of &euro 30.0 m for the issue of employee
shares. The Executive Board of TUI AG has been authorised to use this authorised capital in one or several transactions to issue employee
shares against cash contribution by 12 February 2023. 1,394,512 (previous year 1,119,284) new employee shares were issued in the
completed financial year so that authorised capital totals around &euro 22.3 m (previous year &euro 25.8 m) at the balance sheet date.
The Annual General Meeting on 9 February 2016 resolved an authorisation to issue new registered shares against cash contribution for up
to a maximum of &euro 150.0 m. This authorisation will expire on 8 February 2021.
The Annual General Meeting on 9 February 2016 also resolved to create authorised capital for the issue of new shares against cash or
non-cash contribution for up to &euro 570.0 m. The issue of new shares against non-cash contribution is limited to a maximum of &euro
300.0 m. The authorisation for this authorised capital will expire on 8 February 2021.
At the balance sheet date, the accumulated authorised capital that had not yet been taken up amounted to &euro 742.3 m (previous year
&euro 745.8 m).
(25) Capital reserves
The capital reserves comprise transfers of premiums. They also comprise amounts entitling the holders to acquire shares in TUI AG in the
framework of bonds issued for conversion options and warrants. Premiums from the issue of shares due to the exercise of conversion
options and warrants were also transferred to the capital reserve.
Capital reserves rose by &euro 3.5 m (previous year &euro 7.0 m) due to the issue of employee shares in the completed financial year.
(26) Revenue reserves
In the completed financial year, TUI AG paid a dividend of &euro 0.54 per no-par value share to its shareholders; the total amount paid
was &euro 318.1 m (previous year &euro 423.3 m). The share of non-controlling interests declined by &euro 0.2 m (previous year &euro 52.5
m) in financial year 2020 due to the issue of dividends.
The ongoing recording of existing equity-settled stock option plans resulted in an increase in equity of &euro 2.9 m in the reporting
period. Disclosures on these long-term incentive programmes are outlined in the section on Share-based payments in accordance with IFRS
2.
In financial year 2019, the movement in the first-time consolidation of non-controlling interests was essentially attributable to the
non-controlling interests of the acquired companies in Destination Management worth &euro 3.5 m.
Foreign exchange differences comprise differences from the translation of the financial statements of foreign subsidiaries as well as
differences from the translation of goodwill denominated in foreign currencies.
The proportion of gains and losses from hedges used as effective hedges of future cash flows is carried directly in equity at &euro -
316.1 m (previous year &euro 340.0 m) (pre-tax). A reversal of this provision through profit and loss takes place in the same period in
which the hedged item has an effect on profit and loss or is no longer assessed as probable. The decrease in financial year 2020 is,
besides changes in exchange rates and fuel prices, attributable to the premature termination of hedging instruments, which have not
fulfilled the IAS 39 criteria of high likelihood of occurence of the underlying transaction any longer due to the COVID-19-pandemic.
The revaluation of pension obligations (in particular actuarial gains and losses) is also carried directly in equity.
The revaluation reserve formed in accordance with IAS 27 (old version) in the framework of step acquisitions of companies is retained
until the date of deconsolidation of the company concerned.
(27) Use of Group profit available for distribution
In accordance with the German Stock Corporation Act, the Annual General Meeting resolves the use of the profit available for distribution
carried in TUI AG's commercial-law annual financial statements. TUI AG's loss for the year amounts to &euro 2,272.6 m (previous year
&euro 120.0 m profit). Taking account of profit carried forward of &euro 1,176.0 m (previous year &euro 1,374.1 m) and a reduction of
revenue reserves of &euro 1,287.5 m, TUI AG's profit available for distribution totals &euro 190.9 m (previous year &euro 1,494.1 m). A
proposal will be submitted to the Annual General Meeting to use the profit available for distribution for the financial year under review
to carry the amount forward on account.
(28) Non-controlling interest
Non-controlling interests mainly relate to RIUSA II S. A. based in Palma de Mallorca, Spain. TUI's capital share in this hotel operator
stands at 50.0 %, as in the prior year.
The financial year of RIUSA II S. A. ends on 31 December and thus deviates from TUI Group's financial year. This reporting date was fixed
when the company was founded. In order to include the RIUSA II Group in TUI Group's consolidated financial statements as at 30 September,
the RIUSA II Group prepares sub-group financial statements as at 30 September, the balance sheet date.
RIUSA II Group, allocated to Hotels & Resorts, operates owned and leased hotels and hotels operated under management contracts in tourism
destinations of TUI Group.
The table below provides summarised financial information on RIUSA II S. A., Palma de Mallorca, Spain - the subsidiary for which material
non-controlling interests exist. It presents the consolidated financial statements of the sub-group.
Summarised financial information on RIUSA II S. A., Palma de
Mallorca, Spain *
&euro million 30 Sep 2020 / 30 Sep 2019 /
2020 2019
Current assets 153.6 215.6
Non-current assets 1,755.5 1,729.8
Current liabilities 115.8 116.8
Non-current liabilities 127.1 86.2
Revenues 449.3 850.0
Profit / loss 28.4 225.6
Other comprehensive income - 104.6 20.1
Cash inflow / outflow from operating 149.4 256.5
activities
Cash inflow / outflow from investing - 143.5 - 205.3
activities
Cash inflow / outflow from financing - 6.6 - 111.5
activities
Accumulated non-controlling interest 661.5 699.6
Profit / loss attributable to 14.2 112.8
non-controlling interest
Dividends attributable to - 51.4
non-controlling interest
* Consolidated Subgroup
(29) Pension provisions and similar obligations
A number of defined contribution and defined benefit pension plans are operated for Group employees. Pension obligations vary, reflecting
the different legal, fiscal and economic conditions in each country of operation, and usually depend on employees' length of service and
pay levels.
All defined contribution plans are funded by the payment of contributions to external insurance companies or funds. German employees
enjoy benefits from a statutory defined contribution plan paying pensions as a function of employees' income and the contributions paid
in. Several additional industry pension organisations exist for TUI Group companies. Once the contributions to the state-run pension
plans and private pension insurance organisations have been paid, the Company has no further payment obligations. Apart from Germany,
major defined contribution plans are also operated the Netherlands and in the UK. Contributions paid are expensed for the respective
period. In the reporting period, the expenses for all defined contribution plans totalled &euro 86.7 m (previous year &euro 93.4 m).
Apart from these defined contribution pension plans, the TUI Group operates defined benefit plans, which usually entail the formation of
provisions within the Company or investments in funds outside the Company.
Within this group, MER-Pensionskasse VVaG, a private pension fund in which German companies of the tourism industry are organised,
represents a multi-employer plan classified as a defined benefit plan. In accordance with the statues of the plan, the plan participants
and the employers pay salary-based contributions into the plan. There are no further obligations pursuant to the statutes of the plan; an
additional funding obligation of the participating companies is explicitly excluded. The paid-in contributions are invested in accordance
with the policies of the pension plan unless they are used in the short term for benefit payments. As the investments are pooled and are
not kept separately for each participating employer, an allocation of plan assets to individual participating employers is not possible.
The investment risk and the mortality risk are jointly shared by all plan participants. Moreover, the pension fund does not provide any
information to participating companies that would allow the allocation of any over- or underfunding or TUI's participation in the plan.
For this reason, accounting for the plan as defined benefit plan is not possible, and the plan is therefore in accordance with the
requirements of IAS 19 shown like a defined contribution plan. In the reporting period, contributions to MER-Pensionskasse VVaG totalled
&euro 6.1 m (previous year &euro 5.9 m). For the next financial year, contributions are expected to remain at that level.
TUI Group's major pension plans recognised as defined benefit plans exist in Germany and the UK. By far the largest pension plans are
operated by the Group's tour operators in the UK. They accounted for 70.6 % (previous year 70.9 %) of TUI Group's total obligations at
the balance sheet date. German plans account for a further 24.8 % (previous year 24.4 %).
Material defined benefit
plans in Great Britain
Scheme name Status
BAL Scheme closed
TUI UK Scheme closed
TAPS Scheme closed
Almost all defined benefit plans in the UK are funded externally. Under UK law, the employer is obliged to ensure sufficient funding so
that plan assets cover the pension payments to be made and the administrative costs of the funds. The pension funds are managed by
independent trustees. The trustees comprise independent members, beneficiaries of the plan and employer representatives. The trustees are
responsible for the investment of fund assets, taking account of the interests of plan members, but they also negotiate the level of the
contributions to the fund to be paid by the employers, which constitute minimum contributions to the funds. To that end, actuarial
valuations are made every three years by actuaries commissioned by the trustees. The annual contributions to be paid to the funds in
order to cover any shortfalls were last defined on the basis of the measurement as at 30 September 2016. The actuarial measurement as at
30 September 2019 had not yet been finalised at the reporting date.
Since 31 October 2018, the main sections of TUI Group's UK Pension Trust have been closed to future accrual of benefits, which has led to
a significant decrease in the current service cost for services delivered by the employees. As a result, current service cost no longer
arises for services delivered by the employees. Since 1 November 2018, increases in accrued pension benefits from the plan have been
therefore calculated in line with the rules for retired pension rights holders. With the closure of the Pension Trust for future accrual,
all existing staff in the defined benefit scheme were offered the opportunity to join the existing defined contribution plan to accrue
pension from 1 November 2018 onwards.
By contrast, defined benefit plans in Germany are mainly unfunded and the obligations from these plans are recognised as provisions. The
company assumes the obligation for payments of company pensions when the beneficiaries reach the legal retirement age. The amount of the
pension paid usually depends either on the remuneration received by the employee at the retirement date or the amount of the average
remuneration over the employee's service period. Pension obligations usually include surviving dependants' benefits and invalidity
benefits. Pension payments are partly limited by third party compensations, e. g. from insurances and MER-Pensionskasse.
Material defined benefit plans in Germany
Scheme name Status
Versorgungsordnung TUI AG open
Versorgungsordnung TUIfly GmbH open
Versorgungsordnung TUI Deutschland GmbH closed
Versorgungsordnung TUI Beteiligungs GmbH closed
Versorgungsordnungen TUI Immobilien closed
Services GmbH
In the period under review, defined benefit pension obligations created total expenses of &euro 48.0 m for TUI Group, essentially
comprising current service cost. The expenses carried in the previous financial year additionally included a negative past service cost
arising from a plan change in the TUI Group UK Pension Trust.
The net interest expense from pensions declined substantially year-on-year, as many of the pension plans in the UK have a surplus and
therefore generate an interest surplus, which nearly fully offsets the interest expense for the Group's unfunded or underfunded pension
plans.
Pension costs for defined benefit obligations
&euro million 2020 2019
Current service cost for 49.5 39.9
employee service in the period
Curtailment gains 4.0 0.7
Net interest on the net 2.5 13.4
defined benefit liability
Past service cost - - 24.0
Total 48.0 28.6
Provisions for pension obligations are established for benefits payable in the form of retirement, invalidity and surviving dependants'
benefits. Provisions are exclusively formed for defined benefit schemes under which the Company guarantees employees a specific pension
level, including arrangements for early retirement and temporary assistance benefits.
Defined benefit obligation recognised on the balance sheet
&euro million 30 Sep 2020 30 Sep 2019
Total Total
Present value of funded obligations 3,071.3 3,176.5
Fair value of external plan assets 3,373.7 3,397.9
Surplus (-) / Deficit (+) of funded - 302.4 - 221.4
plans
Present value of unfunded pension 954.1 979.4
obligations
Defined benefit obligation recognised on 651.7 758.0
the balance sheet
of which
Overfunded plans in other non-financial 363.3 310.0
assets
Provisions for pensions and similar 1,015.0 1,068.0
obligations
of which current 31.4 32.4
of which non-current 983.6 1,035.6
For funded pension plans, the provision carried only covers the shortfall in coverage between plan assets and the present value of
benefit obligations.
Where plan assets exceed funded pension obligations, taking account of a difference due to past service cost, and where at the same time
there is an entitlement to reimbursement or reduction of future contributions to the fund, the excess is recognised in conformity with
the cap defined by IAS 19. As at 30 September 2020, other non-financial assets include excesses of &euro 363.3 m (previous year &euro
310.0 m).
Development of defined benefit obligations
&euro million Present value Fair value of Total
of obligation plan assets
Balance as at 1 Oct 4,155.9 - 3,397.9 758.0
2019
Current service cost 49.5 - 49.5
Past service cost - - -
Curtailments and - 4.5 0.5 - 4.0
settlements
Interest expense (+) 58.3 - 55.8 2.5
/ interest income (-)
Pensions paid - 179.8 148.6 - 31.2
Contributions paid by - - 81.5 - 81.5
employer
Contributions paid by 1.6 - 1.6 -
employees
Remeasurements 28.2 - 53.7 - 25.5
due to changes in 8.2 - 8.2
financial assumptions
due to changes in 59.8 - 59.8
demographic
assumptions
due to experience - 39.8 - - 39.8
adjustments
due to return on plan - - 53.7 - 53.7
assets not included
in
group profit for the
year
Exchange differences - 62.8 67.7 4.9
Other changes - 21.0 - - 21.0
Balance as at 30 Sep 4,025.4 - 3,373.7 651.7
2020
Development of defined benefit obligations
&euro million Present value Fair value of Total
of obligation plan assets
Balance as at 1 Oct 3,570.8 - 2,701.1 869.7
2018
Current service cost 39.9 - 39.9
Past service cost - 24.0 - - 24.0
Curtailments and - 0.7 - - 0.7
settlements
Interest expense (+) 85.4 - 72.0 13.4
/ interest income (-)
Pensions paid - 166.2 134.6 - 31.6
Contributions paid by - - 111.5 - 111.5
employer
Contributions paid by 1.8 - 1.8 -
employees
Remeasurements 670.4 - 650.5 19.9
due to changes in 734.1 - 734.1
financial assumptions
due to changes in - 65.4 - - 65.4
demographic
assumptions
due to experience 1.7 - 1.7
adjustments
due to return on plan - - 650.5 - 650.5
assets not included
in
group profit for the
year
Exchange differences - 8.6 4.4 - 4.2
Other changes - 12.9 - - 12.9
Balance as at 30 Sep 4,155.9 - 3,397.9 758.0
2019
In the financial year under review, both pension obligations and the value of the plan assets fluctuated, at times strongly, in
particular following the outbreak of the COVID-19-crisis in March. However, at the end of the financial year under review, the Group
posted only slight year-on-year variations. The net obligation declined by &euro 106.3 m to &euro 651.7 m, primarily due to pension
payments and contributions to the pension funds.
At the balance sheet date, TUI Group's fund assets break down as shown in the table below.
Composition of fund assets at the balance sheet date
30 Sep 2020 30 Sep 2019
Quoted market price Quoted market price
in an active market in an active market
&euro yes no yes no
million
Fair value 2,902.5 471.2 2,213.5 1,184.4
of fund
assets at
end of
period
of which 36.3 - 39.3 -
equity
instruments
of which 36.2 - 33.5 -
government
bonds
of which 929.1 - 496.6 -
corporate
bonds
of which 1,449.4 - 1,181.6 -
liability
driven
investments
of absolute 184.9 - 182.8 -
return
bonds
of which 262.7 - 276.0 -
property
of which - 111.2 - 100.1
insurance
policies
of which - 130.9 - 130.3
insurance
linked
securities
of which - 204.0 - 195.9
loans
of which - 25.1 - 751.5
cash
of which 3.9 - 3.7 6.6
other
At the balance sheet date, as in the prior year, fund assets did not comprise any direct investments in financial instruments issued by
TUI AG or its consolidated subsidiaries or any property owned by the Group. For funded plans, investments in passive index tracker funds
may entail a proportionate investment in Group-owned financial instruments.
Pension obligations are measured on the basis of actuarial calculations based on country-specific parameters and assumptions. The
obligations under defined benefit plans are calculated on the basis of the internationally accepted projected unit credit method, taking
account of expected future increases in salaries and pensions. For the pension plans in the UK, expected increases in salaries are not
taken into account as they are no longer relevant for the measurement due to the plan amendment outlined above.
Actuarial assumptions
30 Sep 2020
Percentage Germany Great Other
p. a. Britain countries
Discount 0.7 1.6 0.7
rate
Projected 2.5 0.0 0.9
future
salary
increases
Projected 1.8 2.8 1.3
future
pension
increases
30 Sep 2019
Percentage Germany Great Other
p. a. Britain countries
Discount 0.7 1.7 0.2
rate
Projected 2.5 - 1.2
future
salary
increases
Projected 1.8 3.1 0.9
future
pension
increases
The interest rate applicable in discounting the provision for pensions is based on an index for corporate bonds adjusted for securities
already downgraded and under observation by rating agencies as well as subordinate bonds in order to meet the criterion for high quality
bonds (rated AA or higher) required under IAS 19. The resulting yield structure is extrapolated on the basis of the yield curves for
almost risk-free bonds, taking account of an appropriate risk mark-up reflecting the term of the obligation. In order to cover a
correspondingly broad market, an index partly based on shorter-term bonds is used (for instance for Eurozone bonds from the iBoxx &euro
Corporates AA 10+ and iBoxx &euro Corporates AA 7-10).
Apart from the parameters described above, a further key assumption relates to life expectancy. In Germany, the Heubeck reference tables
2018 G are used to determine life expectancy. In the UK, the S3NxA base tables are used, adjusted to future expected increases on the
basis of the Continuous Mortality Investigation (CMI) 2019. The pension in payment escalation formulae depend primarily on the pension
plan concerned. Apart from fixed rates of increase, there are also a number of inflation-linked pension adjustment mechanisms in
different countries.
Changes in the key actuarial assumptions mentioned above would lead to the changes in defined benefit obligations presented below. The
methodology used to determine sensitivity corresponds to the method used to calculate the defined benefit obligation. The assumptions
were amended in isolation each time; actual interdependencies between the assumptions were not taken into account. The effect of the
increase in life expectancy by one year is calculated by means of a reduction in mortality due to the use of the Heubeck tables 2018 G
for pension plans in Germany. In the UK, an extra year is added to the life expectancy determined on the basis of the mortality tables.
Sensitivity of the defined benefit obligation due to
changed actuarial assumptions
30 Sep 2020 30 Sep 2019
&euro + 50 - 50 Basis + 50 Basis - 50 Basis
million Basis points points points
points
Discount - 342.5 + 393.5 - 388.7 + 450.8
rate
Salary + 17.1 - 16.0 + 18.9 - 18.7
increase
Pension + 119.1 - 119.7 + 142.2 - 139.6
increase
+ 1 year + 1 year
Life + 177.2 - + 182.8 -
expectancy
The weighted average duration of the defined benefit obligations totalled 19.6 years (previous year 19.6 years) for the overall Group. In
the UK, the weighted duration was 19.9 years (previous year 19.9 years), while it stood at 19.6 years (previous year 19.6 years) in
Germany.
Fund assets are determined on the basis of the fair values of the funds invested as at 30 September 2020. The interest rate used to
determine the interest income from the assets of external funds is identical with the discount rate used for the defined benefit
obligation.
For the forthcoming financial year, the companies of TUI Group are expected to contribute around &euro 112.7 m (previous year &euro 94.1
m) to pension funds and pay pensions worth &euro 31.4 m (previous year &euro 32.4 m) for unfunded plans. The expected employer
contribution to the pension funds mainly includes the annual payment agreed with the trustees in the UK to reduce the existing coverage
shortfall. For funded plans, the payments to the recipients are fully made from fund assets and therefore do not result in a cash outflow
for TUI Group.
TUI Group's defined benefit plans entail various risks; some of which may have a substantial effect on the Company.
Investment risk
The investment risk plays a major role, in particular for the large funded plans in the UK. Although shares usually outperform bonds in
terms of producing higher returns, they also entail stronger volatility of balance sheet items and the risk of short-term shortfalls in
coverage. In order to limit this risk, the trustees have built a balanced investment portfolio to limit the concentration of risks.
Interest rate risk
The interest rate influences in particular unfunded schemes in Germany as a decline in interest rates leads to an increase in the defined
benefit obligations. Accordingly, an increase in the interest rate leads to a reduction in the defined benefit obligations. Funded plans
are less strongly affected by this development as the performance of the interest-bearing assets included in plan assets regularly
dampens the effects. For the funded plans in the UK, the trustees have invested a part of the plan assets in liability-driven investment
portfolios, holding credit and hedging instruments in order to largely offset the impact of changes in interest rates.
Inflation risk
An increase in the inflation rate normally increases the obligation in pension schemes linked to the final salary of beneficiaries as
inflation causes an increase in the projected salary increases. At the same time, inflation-based pension increases included in the plan
also rise. The inflation risk is reduced through the use of caps and collars. Moreover, the large pension funds in the UK hold
inflation-linked assets, which also partly reduce the risk from a significant rise in inflation. By investing, in particular, plan assets
in liability-driven investment portfolios, which hold credit and hedging instruments, they aim to largely offset the impact of the
inflation rate.
Longevity risk
An increasing life expectancy increases the expected benefit duration of the pension obligation. This risk is countered by using
regularly updated mortality data in calculating the present values of the obligation.
Currency risk
For the TUI Group, the pension schemes entail a currency risk as most pension schemes are operated in the UK and therefore denominated in
sterling. The risk is limited as the currency effects on the obligation and the assets partly offset each other. The currency risk only
relates to any excess of pension obligations over plan assets or vice versa.
(30) Other provisions
Development of provisions in the FY 2020
&euro million Balance First-time Balance Changes Usage Reversal Additions Balance
as at adoption as at with no as at
30 Sep of 1 Oct effect 30 Sep
2019 IFRS 16 2019 on 2020
restated profit
and
loss *
Maintenance 768.9 5.5 774.4 - 3.6 176.2 7.8 148.1 734.9
provisions
Restructuring 38.5 - 38.5 0.5 20.1 0.6 256.4 274.7
provisions
Provisions 49.8 - 49.8 - 1.0 - 3.6 52.4
for
environmental
protection
Provisions 35.2 - 35.2 5.6 - - 5.6 46.4
for other
taxes
Provisions 44.6 - 44.6 - 0.5 2.6 9.4 3.9 36.0
for other
personnel
costs
Provisions 22.5 - 22.5 4.5 12.8 0.2 4.8 18.8
for
Litigation
Risks from 30.9 - 6.7 24.2 - 12.4 4.1 4.2 10.1 13.6
onerous
contracts
Miscellaneous 146.5 - 0.2 146.3 - 20.3 51.1 32.2 82.9 125.6
provisions
Other 1,136.9 - 1.4 1,135.5 - 26.2 267.9 54.4 515.4 1,302.4
provisions
* reclassifications, transfers, exchange differences and changes in the group of consolidated companies
Provisions for maintenance primarily relate to contractual maintenance, overhaul and repair requirements for aircraft, engines and other
specific components arising from aircraft lease contracts. Measurement of these provisions is based on the expected cost of the next
maintenance event, estimated on the basis of current prices, expected price increases and manufacturers' data sheets. In line with the
terms of the individual contracts and the aircraft model concerned, additions are recognised on a prorated basis in relation to flight
hours, the number of flights or the length of the complete maintenance cycle.
Restructuring provisions comprise severance payments to employees as well as payments for the early termination of leases. They primarily
relate to restructuring projects as part of our Global Realignment Program for which detailed, formal restructuring plans were drawn up
and communicated to the parties concerned. At the balance sheet date, restructuring provisions totalled &euro 274.7 m (previous year
&euro 38.5 m), for the most part relating to benefits for employees in connection with the termination of employment contracts.
Provisions for environmental protection primarily relate to statutory obligations to remediate sites contaminated with legacy waste from
former mining and metallurgical activities.
Provisions for personnel costs comprise provisions for jubilee benefits and provisions for cash-settled share-based payment schemes in
accordance with IFRS 2. For information on these long-term incentive programmes, please refer to Note 39 'Share-based payments in
accordance with IFRS 2'.
Provisions for litigation are formed for existing lawsuits. For further details on lawsuits, please refer to Note 37.
Miscellaneous provisions include various provisions that, taken individually, do not have a significant influence on TUI Group's economic
position. This item includes provisions for dismantling obligations and compensation claims from customers.
Changes in other provisions outside profit and loss primarily relate to changes in the group of consolidated companies, foreign exchange
differences and reclassifications within other provisions.
Where the difference between the present value and the settlement value of a provision is material for the measurement of a non-current
provision as at the balance sheet date, the provision is recognised at its present value in accordance with IAS 37. The discount rate to
be applied should take account of the specific risks of the liability and of future price increases. This criterion applies to some items
contained in TUI Group's other provisions. Additions to other provisions comprise an interest portion of &euro 7.5 m (previous year &euro
6.0 m), recognised as an interest expense.
Terms to maturity of other provisions
30 Sep 2020 30 Sep 2019
&euro million Remaining Total Remaining Total
term more term more
than 1 year than 1 year
Maintenance 615.3 734.9 616.8 768.9
provisions
Restructuring 146.6 274.7 - 38.5
provisions
Provisions for 49.1 52.4 46.7 49.8
environmental
protection
Provisions for 26.4 46.4 23.5 35.2
other taxes
Provisions for 28.4 36.0 35.2 44.6
other personnel
costs
Provisions for 5.4 18.8 3.9 22.5
litigation
Risks from 2.1 13.6 6.5 30.9
onerous
contracts
Miscellaneous 38.8 125.6 42.4 146.5
provisions
Other provisions 912.1 1,302.4 775.0 1,136.9
(31) Financial and lease liabilities
Financial and lease liabilities
30 Sep 2020 30 Sep 2019
Remaining term Remaining term
&euro up to 1- 5 more Total up to 1- 5 more Total
million 1 years than 1 year years than 5
year 5 years
years
Bonds - 298.9 - 298.9 - 297.8 - 297.8
Liabilities 560.9 3,298 94.2 3,953. 74.9 391.0 404.1 870.0
to banks .6 7
Liabilities - - - - 130.5 658.4 706.3 1,495.
from 2
finance
leases *
Other 16.4 - - 16.4 19.2 - - 19.2
financial
liabilitie
s
Financial 577.3 3,597 94.2 4,269. 224.6 1,347. 1,110. 2,682.
liabilities .5 0 2 4 2
Lease 687.3 1,693 1,019 3,399. - - - -
liabilities .5 .1 9
* Financial liabilities include liabilities from finance leases for the last time as of 30 Sep 2019.
Having transitioned to IFRS 16 as at 1 October 2019, TUI Group no longer has to differentiate between finance leases and operating leases
as a lessee. In this context, lease liabilities are presented and explained separately in the statement of financial position and are
therefore no longer carried in financial liabilities.
Non-current financial liabilities, less any lease liabilities included in the previous year, rose by &euro 2,598.8 m to &euro 3,691.7 m
as against 30 September 2019. The increase was almost entirely driven by an increase in liabilities to banks of &euro 2,597.7 m.
The core financing instrument is a syndicated revolving credit facility (RCF) between TUI AG and the former banking syndicate or KfW,
respectively, which recently joined the banking syndicate.
Due to the impact of the COVID-19-pandemic on business operations, TUI Group's liquidity requirements rose significantly. TUI AG
additionally faced the risk of non-compliance with its covenants so that the existing terms and conditions of the RCF had to be
renegotiated.
TUI AG subsequently secured a separate credit facility of &euro 1.8 bn from KfW, granted in the framework of the German government's
state aid scheme. The credit facility increased TUI AG's existing credit agreement with its banks for &euro 1.75 bn to a total RCF volume
of &euro 3.55 bn. The agreement was signed by the existing RCF banking syndicate on 8 April 2020. According to the agreement, the RCF
comprises a credit facility of the former banking syndicate and a separate facility issued by KfW under its own terms and conditions.
As at 30 September 2020, the amounts drawn under the revolving credit facility totalled &euro 3.3 bn.
The covenant tests with respect to the existing and the increased RCF has been suspended (so-called 'covenant holiday'). It is currently
agreed to resume the covenant test in September 2021.
Current financial liabilities, less the lease liabilities included in the previous year, rose by &euro 483.2 m from &euro 94.1 m to &euro
577.3 m as against 30 September 2019. The increase includes an amount of &euro 500.0 m for the credit facility from KfW, due within one
year. For more details on the terms and conditions of the credit facility granted by KfW, please refer to the section 'Going-concern
reporting according to the UK Corporate Governance Code'.
Movements financial and lease liabilities
&euro million Bonds Short-term Long-term Other Total Lease
liabilitie liabilities financial financial liabilities
s to banks liabilities liabilities
to banks
Balance as at 297.8 74.9 795.0 19.3 1,187.0 3,861.5
1 Oct 2019
Payment in - 480.5 2,812.8 - 2.3 3,291.0 - 612.4
the period
Changes in - - 34.6 - 277.1 - - 311.7 - 7.2
scope of
consolidation
Foreign - - 0.3 11.0 - 10.7 - 145.4
exchange
movements
Other 1.0 40.4 51.2 - 0.6 92.0 303.4
non-cash
movement
Balance as at 298.8 560.9 3,392.9 16.4 4,269.0 3,399.9
30 Sep 2020
Movements financial liabilities
&euro Bonds Short-term Long-term Finance Other Total
million liabilitie liabilities Leasing financial financial
s to banks * liabilities liabilities
to banks
Balance as 296.8 64.1 716.4 1,342.6 23.0 2,442.9
at 1 Oct
2018
Payment in - - 34.2 - 25.6 - 122.3 2.2 - 179.9
the period
Acquisitions - 4.8 22.9 - - 1.1 26.6
Foreign - 1.3 1.1 53.6 - 56.0
exchange
movements
Other 1.0 38.9 80.2 221.3 - 4.8 336.6
non-cash
movement
Balance as 297.8 74.9 795.0 1,495.2 19.3 2,682.2
at 30 Sep
2019
* Financial liabilities include liabilities from finance leases for the last time as of 30 Sep 2019.
Fair values and carrying amounts of the bonds at 30 Sep 2020
30 Sep 2020 30 Sep 2019
&euro Issuer Nominal Nominal Interest Stock Carrying Stock Carrying
milli value value rate marke amount marke amount
on initial outstan % p. a. t t
ding value value
2016 TUI AG 300.0 300.0 2,125 269.5 298.9 309.6 297.8
/ 21
bond
Total 269.5 298.9 309.6 297.8
For details regarding the fixed-interest bonds with a nominal value of &euro 300.0 m issued in October 2016, please refer to Note 46
'Significant events after the balance sheet date'.
(32) Other financial liabilities
The other financial liabilities include touristic advance payments received for tours canceled because of COVID-19 restrictions of &euro
351.0 m, for which immediate cash refund options exist and which have to be repaid shortly if the customer opts for payment. Please see
the following section for more details.
(33) Touristic advance payments received
Touristic advance payments received
&euro million
Touristic advance payments received as at 1 2,824.8
Oct 2018
Revenue recognised that was included in the - 2,370.9
balance at the beginning of the period
Increases due to cash received, excluding 2,636.4
amounts recognised as revenue during the
period
Changes in the consolidation status and - 166.0
changes caused by IFRS 5
Other - 13.1
Touristic advance payments received as at 30 2,911.2
Sep 2019
Revenue recognised that was included in the - 1,811.0
balance at the beginning of the period
Increases due to cash received, excluding 3,023.3
amounts recognised as revenue during the
period
Reclassification to other financial - 351.0
liabilities
Customer refund repayments - 1,897.7
Changes in the consolidation status - 76.4
Other - 28.3
Touristic advance payments received as at 30 1,770.1
Sep 2020
Apart from the immediate cash refund option in certain jurisdictions, TUI Group offers its customers voucher /
refund credits for trips canceled because of the COVID-19-crisis. If these voucher / refund credits are not used for future bookings
within a specified period, the customer is entitled to a refund of the voucher value. Due to the high level of uncertainty regarding the
further development of the COVID-19-crisis and customer behaviour, it is not possible for TUI Group to reliably estimate the extent of
utilization of the voucher / refund credits for future bookings. Accordingly, the touristic advance payments received include &euro 184.8
m of advance payments for cancelled trips for which customers have received voucher / refund credits with no immediate cash refund
option.
(34) Other non-financial liabilities
Other non-financial liabilities
30 Sep 2020 30 Sep 2019
Remaining term Remaining term
&euro up to 1 - 5 Total up to 1 - 5 Total
million 1 year years 1 year years
Other 184.9 24.3 209.2 210.1 25.4 235.5
liabiliti
es
relating
to
employees
Other 44.3 - 44.3 45.3 - 45.3
liabiliti
es
relating
to social
security
Other 19.7 - 19.7 37.1 - 37.1
liabiliti
es
relating
to other
taxes
Other 149.2 5.6 154.8 140.9 6.0 146.9
miscellan
eous
liabiliti
es
Deferred 49.7 168.5 218.2 85.9 68.7 154.6
income
Other 447.8 198.4 646.2 519.3 100.1 619.4
non-finan
cial
liabiliti
es
(35) Liabilities related to assets held for sale
As at 30 September 2020 liabilities related to assets held for sale of &euro 24.5 m were reported. These liabilities relate to the
expected transfer of an aircraft to an associated company of TUI Group. We refer to the section 'Assets held for sale'.
As at 30 September 2019, liabilities related to assets held for sale totalled &euro 103.1 m. These liabilities exclusively related to the
'Berge & Meer' and 'Boomerang' disposal group, divested at the beginning of the financial year under review. For further details, please
refer to the section 'Divestments'.
Disposal group 'Berge & Meer' and 'Boomerang'
&euro million 30 Sep 2019
Deferred tax liabilities 4.1
Trade payables 34.1
Touristic advance payments received 58.1
Other non-financial liabilities 4.7
Other provisions and liabilities 2.1
Total 103.1
(36) Contingent liabilities
As at 30 September 2020, contingent liabilities amounted to &euro 165.6 m (previous year &euro 143.5 m). They are mainly attributable to
the granting of guarantees for the benefit of hotel and cruises activities and are reported at an amount representing the best estimate
of the expenditure required to meet the potential obligation at the balance sheet date.
(37) Litigation
TUI AG and its subsidiaries are involved in several pending or foreseeable court or arbitration proceedings, which do not have a
significant impact on their economic position as at 30 September 2020 or future periods. This also applies to actions claiming warranty,
repayment or any other compensation in connection with the divestment of subsidiaries and business units over the past few years. As in
previous years, the Group recognised adequate provisions, partly covered by expected insurance benefits, to cover all probable financial
charges from court or arbitration proceedings.
(38) Other financial commitments
Other financial commitments
30 Sep 2020 30 Sep 2019
Remaining term Remaining term
&euro up to 1- 5 more Total up to 1 - 5 more Total
million 1 years than 1 year years than
year 5 5
years years
Order 465.9 54.2 2,549. 1,427. 1,691. 87.4 3,206.
commitmen 2,028. 0 8 1 3
ts in 9
respect
of
capital
expenditu
re
Financial - - - - 717.1 1,446. 581.5 2,744.
commitmen 1 7
ts from
operatin
g lease
and
rental
contracts
*
Other 99.0 110.8 2.9 212.7 111.4 25.0 3.0 139.4
financial
commitmen
ts
Total 564.9 2,139. 57.1 2,761. 2,256. 3,162. 671.9 6,090.
7 7 3 2 4
* Prior year adjusted.
Order commitments in respect of capital expenditure relate almost exclusively to tourism and decreased by &euro 657.3 m year-on-year as
at 30 September 2020. The reduction in commitments is caused by delivery of aircraft, scheduled payments and general decrease in new
commitments undertaken. Further declines were generated with the disposal of Hapag-Lloyd Kreuzfahrten GmbH and from foreign exchange
effects for commitments denominated in non-functional currencies.
The commitments from lease, rental and charter agreements at 30 September 2019 exclusively related to leases that did not transfer all
risks and rewards of ownership of the assets to the TUI Group companies under IAS 17 (operating leases).
(39) Share-based payments in accordance with IFRS 2
As at 30 September 2020, all existing awards except the employee share program 'oneShare' are recognized as cash-settled share-based
payment schemes.
The following share-based payment schemes are in effect within TUI Group as at 30 September 2020.
1. PHANTOM SHARES IN THE FRAMEWORK OF THE Long Term Incentive Plan (LTIP)
1.1 LTIP WITH SHARE AWARDING FOR THE FINANCIAL YEAR 2020 (LTIP EPS20)
Since the 2020 financial year, the Long Term Incentive Plan (LTIP) consists of a program based on phantom shares and is measured over a
period of four years (performance reference period). The phantom shares are granted in annual tranches.
All Executive Board members have their individual target amounts defined in their service contracts. At the beginning of each financial
year, this target amount is translated into a preliminary number of phantom shares based on the target amount. It constitutes the basis
for the determination of the performance-related pay after the end of the performance reference period. In order to determine that
number, the target amount is divided by the average Xetra share price of TUI AG shares during the 20 trading days prior to the beginning
of the performance reference period (1 October of any one year). The entitlement under the long-term incentive programme arises upon
completion of the four-year performance reference period and is subject to attainment of the relevant target.
The performance target for determining the amount of the final payout after the end of the performance reference period is the average
development over four years of the earning per share based on a pro-forma adjusted EPS from continuing operations (Earnings per Share -
EPS) as reported in the annual report of the company. The average development of EPS per annum (in percent) is derived from the four
equally weighted yearly EPS development values (in percent). Each yearly EPS development value is calculated as the quotient of the EPS
of the current financial year and the EPS of the previous financial year. The initial EPS value used to determine the target achievement
is calculated at the beginning of the performance period from the first EPS in the performance period and the last EPS before the
performance period.
Target achievement for the average development of EPS per annum based on the annual amounts is determined as follows:
· An average absolute EPS of less than 50 % of the absolute EPS value determined at the beginning of the performance period corresponds
to target achievement of 0 %.
· An average absolute EPS of 50 % of the absolute EPS value determined at the beginning of the performance period corresponds to target
achievement of 25 %.
· An average absolute EPS of 50 % or more of the absolute EPS value determined at the beginning of the performance period up to an
average increase of 5 % corresponds to target achievement of 25 % to 100 %.
· An average increase of 5 % p. a. corresponds to target achievement of 100 %.
· An average increase of 5 % to 10 % p. a. corresponds to target achievement of 100 % to 175 %.
· An average increase of 10 % or more p. a. corresponds to target achievement of 175 %.
For an average absolute EPS of 50 % or more of the absolute EPS value determined at the beginning of the performance period up to an
average increase of 5 %, corresponding to a target achievement of 25 % to 100 %, and an average increase of 5 % to 10 % p. a.,
corresponding to a target achievement of 100 % to 175 %, linear interpolation is used to determine the degree of target achievement. The
degree of target achievement is rounded to two decimal places, as is customary in commercial practice.
If the prior-year EPS amounts to less than &euro 0.50, the Supervisory Board defines new absolute targets for EPS as well as minimum and
maximum amounts for determining the percentage target achievement for each subsequent financial year in the performance reference period.
In order to determine the final number of phantom shares, the degree of target achievement is multiplied by the preliminary number of
phantom shares on the final day of the performance reference period. The payout amount is determined by multiplying the final number of
phantom shares by the average Xetra share price of TUI AG shares over the 20 trading days prior to the end of the performance reference
period (30 September of any one year). The payout amount determined in this way is paid out in the month of the approval and audit of TUI
Group's annual financial statements for the relevant financial year. If the service contract begins or ends in the course of the
financial year relevant for the granting of the LTIP, the entitlement to payment of the LTIP is determined on a pro rata basis.
In case of a capital increase from company funds, the number of preliminary phantom shares would increase at the same ration as the
nominal value of the share capital. In case of a capital decrease without return of capital, the number of preliminary phantom shares
would decrease at the same ration as the nominal value of the share capital. In case of a capital increase against contributions, a
capital decrease with return of capital or any other capital or structural measures that have an effect on the share capital and cause a
material change in the value of the TUI AG share, the number of preliminary phantom shares would also be adjusted. The Supervisory Board
is entitled, at reasonable discretion, to make adjustments to neutralize any negative or positive effects from such capital or structural
measures. The same rule applies in case of a change in share price due to the payment of an usually high superdividend.
The maximum LTIP payout is capped at 240 % of the individual target amount for each performance reference period. This means that there
is an annual LTIP cap which is determined individually for each Executive Board member. The Supervisory Board is furthermore, according
to section 87 para. 1 cl. 3 German stock corporation law, authorized to cap the LTIP payout in case of extraordinary circumstances (e. g.
company mergers, segment disposals, recognition of hidden reserves or external influences).
1.2 LTIP WITH SHARE AWARDING FOR THE FINANCIAL YEARS 2018 and 2019 (LTIP EPS18 - 19)
For the financial years 2018 and 2019, the LTIP has consisted of a phantom share-based programme and has been measured over a duration of
four years (performance reference period) upon achievement of a total shareholder return (TSR) target and an earnings per share (EPS)
target. The phantom shares are granted in annual tranches.
All Executive Board members have their individual target amounts defined in their service contracts. At the beginning of each financial
year, this target amount is translated into a preliminary number of phantom shares based on the target amount. It constitutes the basis
for the determination of the performance-related pay after the end of the performance reference period. In order to determine that
number, the target amount is divided by the average Xetra share price of TUI AG shares during the 20 trading days prior to the beginning
of the performance reference period (1 October of any one year). The entitlement under the long-term incentive programme arises upon
completion of the four-year performance reference period and is subject to attainment of the relevant target.
The performance target for determining the amount of the final payout after the end of the performance reference period is the
development of TSR of TUI AG relative to the development of the TSR of the STOXX Europe 600 Travel & Leisure (Index). The relative TSR is
included in the determination of target achievement with a weighting of 50 %. The degree of target achievement is determined as a
function of TUI AG's TSR rank in comparison with the TSR ranks of the index companies over the performance reference period. In order to
determine TUI AG's relative TSR, the TSR ranks established for TUI's peer companies are sorted in descending order. TUI AG's relative TSR
is expressed as a percentile (percentile rank).
The TSR is the aggregate of all share price increases plus the gross dividends paid over the performance reference period. Data from
recognised data providers (e. g. Bloomberg, Thomson Reuters) is used to establish the TSR ranks for TUI AG and the index companies. The
reference used to determine the ranks is the composition of the index on the last day of the performance reference period. The values for
companies that were not listed over the entire performance reference period are factored in on a pro rata basis. The degree of target
achievement (in percent) is established as follows for TUI AG's relative TSR based on the percentile:
· A percentile below the median of the index corresponds to target achievement of 0 %.
· A percentile equal to the median corresponds to target achievement of 100 %.
· A percentile constituting the maximum value corresponds to target achievement of 175 %.
For a percentile between the median and the maximum value, linear interpolation is used to determine the degree of target achievement at
between 100 % and 175 %. The degree of target achievement is rounded to two decimal places, as is customary in commercial practice.
Moreover the average development of EPS per annum is included in the LTIP as an additional Group indicator with a weighting of 50 %. The
averages determined for the four-year performance reference period are based on pro forma underlying earnings per share from continuing
operations, as already reported in the Annual Report.
Target achievement for the average development of EPS per annum based on the annual amounts is determined as follows:
· An average increase of less than 3 % p. a. corresponds to target achievement of 0 %.
· An average increase of 3 % p. a. corresponds to target achievement of 25 %.
· An average increase of 5 % p. a. corresponds to target achievement of 100 %.
· An average increase of 10 % or more p. a. corresponds to target achievement of 175 %.
For an average increase of 3 % to 5 % p. a., linear interpolation is used to determine the degree of target achievement at between 25 %
and 100 %. Linear interpolation is used for an average increase of between 5 % and 10 % or more p. a. to determine target achievement at
between 100 % and 175 %. Here, too, the degree of target achievement is rounded to two decimal places, as is customary in commercial
practice.
If the prior-year EPS amounts to less than &euro 0.50, the Supervisory Board defines new absolute targets for EPS as well as minimum and
maximum amounts for determining the percentage target achievement for each subsequent financial year in the performance reference period.
The degree of target achievement (in percent) is calculated from the average target achievement for the performance targets 'relative TSR
of TUI AG' and 'EPS'. In order to determine the final number of phantom shares, the degree of target achievement is multiplied by the
preliminary number of phantom shares on the final day of the performance reference period. The payout amount is determined by multiplying
the final number of phantom shares by the average Xetra share price of TUI AG shares over the 20 trading days prior to the end of the
performance reference period (30 September of any one year). The payout amount determined in this way is paid out in the month of the
approval and audit of TUI Group's annual financial statements for the relevant financial year. If the service contract begins or ends in
the course of the financial year relevant for the granting of the LTIP, the entitlement to payment of the LTIP is determined on a pro
rata basis.
The maximum LTIP payout is capped at 240 % of the individual target amount for each performance reference period. This means that there
is an annual LTIP cap which is determined individually for each Executive Board member.
1.3 LTIP WITH SHARE AWARDING UP TO AND INCLUDING FINANCIAL YEAR 2017 (LTIP)
For those members of the Executive Board whose service contracts already existed prior to financial year 2018, the replaced remuneration
system will continue to apply in parallel for LTIP for the time being. This relates only to the LTIP tranches granted before financial
year 2018 but not yet paid out due to the four-year performance reference period, which are therefore included in the future awards.
The LTIP is a share plan based on phantom shares, assessed over a period of four years (performance reference period). Phantom shares are
granted in annual tranches.
For Executive Board members, an individual target amount (Target Amount) is determined in their service contract. At the beginning of
each financial year, a preliminary number of phantom shares is determined in relation to the target amount. This number constitutes the
basis for determining the final performance-based payment after the end of the respective performance reference period. In order to
determine that number, the target amount is divided by the average Xetra share price of TUI AG shares over the 20 trading days prior to
the beginning of the performance reference period (1 October of any one year). The claim to a payment only arises upon expiry of the
performance reference period, subject to attainment of the respective performance target.
The performance target for determining the amount of the final payout after the end of the performance reference period is the
development of the total shareholder return (TSR) of TUI AG relative to the development of the TSR of the STOXX Europe 600 Travel &
Leisure (Index). To that end, the rank of the TSR of TUI AG in relation to the index companies is monitored over the entire performance
reference period. The TSR is the aggregate of all share price increases plus the gross dividends paid over the performance reference
period. Data from a recognised data provider (e. g. Bloomberg, Thomson Reuters) is used to establish the TSR values for TUI AG and the
index. The reference for determining the ranks is the composition of the index on the last day of the performance reference period. The
values for companies that were not listed over the entire performance reference period are factored in on a pro rata basis. The degree of
target achievement is established as follows depending on the TSR rank of TUI AG relative to the TSR values of the index companies over
the performance reference period:
· A TSR value of TUI AG equivalent to the bottom or second to bottom rank of the index corresponds to target achievement of 0 %.
· A TSR value of TUI AG equivalent to the third to bottom rank of the index corresponds to target achievement of 25 %.
· A TSR value of TUI AG equivalent to the median of the index corresponds to target achievement of 100 %.
· A TSR value of TUI AG equivalent to the third to top, second to top or top rank of the index corresponds to target achievement of 175
%.
For performance between the third to bottom and the third to top rank, linear interpolation is used to determine the degree of target
achievement at between 25 % and 175 %. The degree of target achievement is rounded to two decimal places, as is customary in commercial
practice.
In order to determine the final number of phantom shares, the degree of target achievement is multiplied by the preliminary number of
phantom shares on the final day of the performance reference period. The payout amount is determined by multiplying the final number of
phantom shares by the average Xetra share price of TUI AG shares over the 20 trading days prior to the end of the performance reference
period (30 September of any one year). The payout amount determined in this way is paid out in cash in the month of the adoption of the
annual financial statements of TUI AG for the fourth financial year of the performance reference period. If the service contract begins
or ends in the course of the financial year relevant for the granting of the LTIP, the claim for payment of the LTIP is determined on a
pro rata basis as a matter of principle.
There is an annual LTIP cap individually defined for each Executive Board member.
Performance Share Plan (PSP)
The PSP details the share-based payments for entitled Group executives who are not part of the Board. The scheme conditions are
harmonized with the LTIP without the earnings-per-share performance measure of the Board members with the notable exceptions of a three
year performance period instead of four years. Target amounts and grant frequency are subject to individual contractual agreements.
Since LTIP without the earnings-per-share performance measure and PSP follow common scheme principles, the following development of
awarded phantom shares under the programs are shown on an aggregated basis. The development of phantom shares awarded that are subject to
the EPS performance measure are shown separately.
Development of phantom shares awarded (LTIP EPS20, LTIP
EPS18 - 19, LTIP & PSP)
LTIP EPS20 LTIP EPS18 - 19 LTIP & PSP
Number Present Number Present Number Present
of value of value of value
shares &euro shares &euro shares &euro
million million million
Balance as - - 360,808 6.0 1,363,95 22.6
at 30 Sep 5
2018
Phantom - - 402,652 6.2 442,312 6.8
shares
awarded
Phantom - - - - - - 1.3
shares 134,355
exercised
Phantom - - - - - - 6.2
shares 452,860
forfeited
Measurement - - - - 4.1 - - 8.9
results
Balance as - - 763,460 8.1 1,219,05 13.0
at 30 Sep 2
2019
Phantom 630,699 6.2 - - 928,679 9.2
shares
awarded
Phantom - - - - - - 1.3
shares 141,508
exercised
Phantom - - - - - - 5.2
shares 722,824
forfeited
Measurement - - 4.0 - - 5.5 - - 11.3
results
Balance as 630,699 2.2 763,460 2.6 1,283,39 4.4
at 30 Sep 9
2020
Employee share program 'oneShare'
Eligible employees can acquire TUI AG shares under preferential conditions when participating in the oneShare program. The preferential
conditions include a discount on 'investment' shares bought during a twelve month investment period plus one 'matching' share per three
held investment shares, after a lock up period of two years. Investment shares are created via capital increase, while matching shares
are bought on the open market. Eligible employees decide once a year about their participation in oneShare.
As the investment and matching shares as well as the Golden shares are equity instruments of TUI AG, oneShare is accounted for as an
equity-settled share-based payment scheme in line with IFRS 2. Once all eligible employees have decided upon their yearly participation,
the fair value of the equity instrument granted is calculated once and fixed for each tranche on the basis of the proportional shares
price at grant date taking into consideration the discounted estimated dividends.
In 2020, no new tranche of oneShare was launched. The matching date occurred for Tranche 1 on 30 September and the matching shares of
Tranche 1 were subsequently transferred to participants who still held their investment shares at the beginning of the financial year.
The development of acquired investment and estimated matching shares, as well as the parameters used for the calculation of the fair
value are as follows:
Overview oneShare tranches
Tranche 1 Tranche 2 Tranche 3 Tranche 4
(2017 / 3) (2017 / 7) (2018 / 7) (2019 / 7)
Investment 1.4.2017 - 1.8.2017 - 1.8.2018 - 1.8.2019 -
period 31.7.2017 31.7.2018 31.7.2019 31.7.2020
Matching date 30.9.2019 30.9.2020 30.9.2021 30.9.2022
Acquired 349,941 524,619 1,152,598 1,394,512
investment
shares
thereof 1,228 10,216 32,859 31,724
forfeited
investment
shares
Distributed / 116,647 174,873 384,199 464,837
Estimated
matching
shares
thereof 15,256 23,953 45,928 14,035
forfeited
matching
shares
Share price at 12.99 13.27 18.30 8.99
grant datein
&euro
Fair value: 2.60 2.02 2.94 1.26
Discount per
investment
share in &euro
recognised - 0.63 0.72 0.54
estimated
dividendin
&euro
Fair value: 11.65 11.15 15.93 7.17
matching
sharein &euro
recognised 1.34 2.11 2.37 1.82
discounted
estimated
dividend in
&euro
Closed share-based payment schemes
The following share-based payment schemes are closed, resulting in no new awards being granted. Awards made in the past remain valid and
will vest according to the respective plan conditions.
TUI AG Stock option plan
The stock option plan for qualifying Group executives below Board level was closed during financial year 2016. The last tranche was
granted in February 2016 and vested in February 2018.
Bonuses were granted to eligible Group executives; the bonuses were translated into phantom shares in TUI AG on the basis of an average
share price. The phantom shares were calculated on the basis of Group earnings before interest, taxes and amortisation of goodwill
(EBITA). The translation into phantom shares was based on the average share price of the TUI share on the 20 trading days following the
Supervisory Board meeting at which the annual financial statements were approved. The number of phantom shares granted in a financial
year was, therefore, only determined in the subsequent year. Following a lock-up period of two years, the individual beneficiaries are
free to exercise their right to cash payment from this bonus within three years. Following significant corporate news, the entitlements
have to be exercised within defined timeframes. The lock-up period is not applicable if a beneficiary leaves the Company; in that case,
the entitlements have to be exercised in the next time window. The level of the cash payment depends on the average share price of the
TUI share over a period of 20 trading days after the exercise date. There are no absolute or relative return or share price targets. A
cap has been agreed for exceptional, unforeseen developments. Since the strike price is &euro 0.00 and the incentive programme does not
entail a vesting period, the fair value corresponds to the intrinsic value and hence the market price at the balance sheet date.
Accordingly, the fair value of the obligation is determined by multiplying the number of phantom shares with the share price at the
respective reporting date.
As at 30 September 2020, 30,915 share options valued at &euro 0.1 m are vested and outstanding. Since the plan is closed, no new grants
were made, 10 options were exercised (total value of &euro 0.0 m) and no options were forfeited.
Accounting for share-based payment schemes
As at 30 September 2020, all existing awards except oneShare are recognized as cash-settled share-based payment schemes and are granted
with an exercise price of &euro 0.00. The personnel expense is recognized upon actual delivery of service according to IFRS 2 and is,
therefore, spread over a period of time. According to IFRS 2, all contractually granted entitlements have to be accounted for,
irrespective of whether and when they are actually awarded. Accordingly, phantom shares granted in the past are charged on a pro rata
basis upon actual delivery of service.
In the financial year 2020, a profit of &euro 6.5 m was realized due to the release of provisions for cash-settled share-based payment
schemes (previous year: profit of &euro 12.7 m).
In the financial year 2020, personnel expenses due to equity-settled share-based payment schemes of &euro 5.1 m (previous year &euro 7.0
m) were recognised through profit and loss.
As at 30 September 2020, provisions relating to entitlements under these long-term incentive programmes totaled &euro 9.7 m (previous
year provisions of &euro 14.3 m and &euro 1.2 m liabilities).
(40) Financial instruments
Risks and risk management
Risk management principles
Due to the nature of its business operations, the TUI Group is exposed to various financial risks, including market risks (consisting of
currency risks, interest rate risks and market price risks), credit risks and liquidity risks.
In accordance with TUI Group's financial goals, financial risks have to be mitigated. In order to achieve this, policies and procedures
have been developed to manage risk associated with financial transactions undertaken.
The rules, responsibilities and processes as well as limits for transactions and risk positions have been defined in policies. The
trading, processing and control have been segregated in functional and organisational terms. Compliance with the policies and limits is
continually monitored. All hedges by the TUI Group are consistently based on recognised or forecasted underlying transactions. Standard
software is used for assessing, monitoring, reporting, documenting and reviewing the effectiveness of the hedging relationships for the
hedges entered into. In this context, the fair values of all derivative financial instruments determined on the basis of the Group's own
systems are regularly compared with the fair value confirmations from the external counterparties. The processes, the methods applied and
the organisation of risk management are reviewed for compliance with the relevant regulations on at least an annual basis by the internal
audit department and external auditors.
Within the TUI Group, financial risks primarily arise from cash flows in foreign currencies, fuel requirements (jet fuel and bunker oil)
and financing via the money and capital markets. In order to limit the risks from changes in exchange rates, market prices and interest
rates for underlying transactions, the TUI Group uses over-the-counter derivative financial instruments. These are primarily fixed-price
transactions. In addition, the TUI Group also uses options and structured products. Use of derivative financial instruments is confined
to internally fixed limits and other policies. The transactions are concluded on an arm's length basis with counterparties operating in
the financial sector, whose counterparty risk is regularly monitored. Foreign exchange translation risks from the consolidation of Group
companies not preparing their accounts in euros are not hedged.
Market risk
Market risks result in fluctuations in earnings, equity and cash flows. Risks arising from input cost volatility are more fully detailed
in the risk report section of the management report. In order to limit or eliminate these risks, the TUI Group has developed various
hedging strategies, including the use of derivative financial instruments.
IFRS 7 requires the presentation of a sensitivity analysis showing the effects of hypothetical changes in relevant market risk variables
on profit or loss and equity. The effects for the period are determined by relating the hypothetical changes in risk variables to the
portfolio of primary and derivative financial instruments as at the balance sheet date. It is assured that the portfolio of financial
instruments as at the balance sheet date is representative for the entire financial year.
The analyses of the TUI Group's risk reduction activities outlined below and the amounts determined using sensitivity analyses represent
hypothetical and thus uncertain risks. Due to unforeseeable developments in the global financial markets, actual results may deviate
substantially from the disclosures provided. The risk analysis methods used must not be considered a projection of future events or
losses, since the TUI Group is also exposed to risks of a non-financial or non-quantifiable nature. These risks primarily include
sovereign, business and legal risks not covered by the following presentation of risks.
Currency risk
The business operations of the TUI Group's companies generate payments or receipts denominated in foreign currencies, which are not
always matched by payments or receipts with equivalent terms in the same currency. Using potential netting effects (netting of payments
made and received in the same currency with identical or similar terms), the TUI Group enters into appropriate hedges with external
counterparties in order to protect its profit margin from exchange rate-related fluctuations.
Within the TUI Group, risks from exchange rate fluctuations are hedged, with the largest hedging volumes relating to US dollars, euros
and pound sterling. The Eurozone limits the currency risk from transactions in the key tourist destinations to Group companies whose
functional currency is not the euro. The tourism business operations are mainly affected by changes in the value of the US dollar and the
euro, the latter predominantly affecting the TUI tour operators in the UK and the Nordic countries. In tourism operations, payments in US
dollars primarily relate to the procurement of services in non-European destinations, purchases of jet and ship fuel and aircraft and
cruise ship purchases or charter.
The tourism companies use financial derivatives to hedge their planned foreign exchange requirements. They aim to cover 80 % to 100 % of
the planned currency requirements at the beginning of the tourism season. In this regard, account is taken of the different risk profiles
of the TUI Group companies. The hedged currency volumes are adjusted in line with changes in planned requirements based on reporting by
business units.
Currency risks within the meaning of IFRS 7 arise from primary and derivative monetary financial instruments issued in a currency other
than the functional currency of a company. Exchange rate-related differences from the translation of financial statements into the
Group's presentation currency are not taken into account. Taking account of the different functional currencies within the TUI Group, the
sensitivity analyses of the currencies identified as relevant risk variables are presented below. A 10 % strengthening or weakening of
the respective functional currencies, primarily euro and pound sterling, against the other currencies would cause the following effects
on the revaluation reserve and earnings after income tax:
Sensitivity analysis - currency risk
&euro million 30 Sep 2020 30 Sep 2019
Variable: + 10 % - 10 % + 10 % - 10 %
Foreign exchange
rate
Exchange rates
of key
currencies
&euro / US
dollar
Revaluation - 27.6 + 25.5 - 142.0 + 133.5
reserve
Earnings after - 62.0 + 75.2 - 8.3 + 19.6
income taxes
Pound sterling /
&euro
Revaluation - 13.4 + 14.9 + 156.0 - 156.0
reserve
Earnings after - 54.2 + 63.1 - 9.6 + 12.4
income taxes
Pound sterling /
US dollar
Revaluation - 26.1 + 26.3 - 114.4 + 114.4
reserve
Earnings after + 287.4 - 355.8 - 13.0 - 15.2
income taxes
&euro / Swedish
krona
Revaluation + 4.0 - 5.4 + 26.3 - 26.3
reserve
Earnings after + 6.3 - 8.4 - -
income taxes
Interest rate risk
The TUI Group is exposed to interest rate risks from floating-rate primary and derivative financial instruments. Where interest-driven
cash flows of floating-rate primary financial instruments are converted into fixed cash flows using derivative hedges and the critical
terms of the hedging transaction are the same as those of the hedged items they are not exposed to an interest rate risk. No interest
rate risk exists for fixed-interest financial instruments carried at amortised cost.
Changes in market interest rates mainly impact floating-rate primary financial instruments and derivative financial instruments entered
into in order to reduce interest-induced cash flow fluctuations.
The following table presents the equity and earnings after income taxes effects of an assumed increase or decrease in the market interest
rate of 50 basis points as at the balance sheet date.
Sensitivity analysis - interest rate risk
&euro 30 Sep 2020 30 Sep 2019
million
Variable: + 50 - 50 + 50 basis - 50 basis
Interest basis basis points points
rate level points points
for floating
interest-be
aring debt
Revaluation - + 0.9 + 11.9 - 10.0
reserve
Earnings - 305.5 - 287.6 - 0.5 - 1.2
after income
taxes
Fuel price risk
Due to the nature of its business operations, the TUI Group is exposed to market price risks from the purchase of fuel for the aircraft
fleet and the cruise ships.
The tourism companies use financial derivatives to hedge their exposure to market price risks for the planned consumption of fuel. At the
beginning of the touristic season the target hedging ratio is at least 80 %. The different risk profiles of the Group companies operating
in different source markets are taken into account, including the possibility of levying fuel surcharges. The hedging volumes are
adjusted for changes in planned consumption as identified by the Group companies.
If the commodity prices, which underlie the fuel price hedges, increase by 15 % or decrease by 10 % (previous year + / - 10 %), on the
balance sheet date, the impact on equity and on earnings after income taxes would be as shown in the table below . The adjustment in the
market price sensitivity from plus 10 % to plus 15 % is based on the assumption that an above-average increase in fuel prices is to be
expected following a recovery in demand for flight capacity.
Sensitivity analysis - fuel price risk
&euro million 30 Sep 2020 30 Sep 2019
Variable: Fuel + 15 % - 10 % + 10 % - 10 %
prices for
aircraft and
ships
Revaluation + 5.5 - 5.2 + 73.6 - 76.6
reserve
Earnings after + 56.9 - 35.9 + 0.5 - 0.2
income taxes
Other price risks
Apart from the financial risks that may result from changes in exchange rates, commodity prices and interest rates, the TUI Group is not
exposed to significant price risks at the balance sheet date.
Credit risk
The credit risk in non-derivative financial instruments results from the risk of counterparties defaulting on their contractual payment
obligations.
Maximum credit risk exposure corresponds to the total of the recognised carrying amounts of the financial assets (including derivative
financial instruments with positive market values). Furthermore, there are no material financial guarantees for the discharge of
liabilities. Where legally enforceable, financial assets and liabilities are netted. Credit risks are reviewed closely on conclusion of
the contract and continually monitored thereafter in order to swiftly respond to potential impairment in a counterparty's solvency.
Responsibility for handling the credit risk is generally held by the Group company holding the receivable.
Since the TUI Group operates in many different business areas and regions, significant credit risk concentrations of receivables from and
loans to specific debtors or groups of debtors are not to be expected. A significant concentration of credit risks related to specific
countries is not to be expected either. As in the previous year, at the balance sheet date, there is no material collateral held, or
other credit enhancements that reduce the maximum credit risk. Collateral held in the prior period relates exclusively to financial
assets of the category trade receivables and other receivables. The collateral mainly comprises collateral for financial receivables
granted and maturing in more than one year and / or with a volume of more than &euro 1.0 m. Real property rights, directly enforceable
guarantees, bank guarantees and comfort letters are used as collateral.
Credit management also covers the TUI Group's derivative financial instruments. The maximum credit risk for derivative financial
instruments entered into is limited to the total of all positive market values of these instruments since in the event of counterparty
default asset losses would only be incurred up to that amount. Since derivative financial instruments are concluded with different
debtors, credit risk exposure is reduced. The specific credit risks of individual counterparties are taken into account in determining
the fair values of derivative financial instruments. In addition, the counterparty risk is continually monitored and controlled using
internal bank limits.
IFRS 9 requires entities to recognise expected losses for all financial assets held at amortised cost and for financial assets
constituting debt instruments and measured at FVTOCI (Fair Value Through Other Comprehensive Income). In TUI Group, the items affected
are financial instruments recognised at amortised cost in the following categories: trade receivables and other receivables with the
sub-classes trade receivables, advances and loans, other receivables and assets as well as lease receivables. Additional classes are
other financial assets and funding. In determining expected losses, IFRS 9 distinguishes between the general and the simplified approach
to impairment.
Under the general approach to impairment, financial assets are classified into three stages. Stage 1 is where financial assets are
recognised for the first time or where credit risk has not increased significantly since initial recognition. At this stage, the expected
bad debt losses that may arise from possible default events within the next 12 months after the respective balance sheet date are
reported. For financial assets in stage 1, entities are required to recognise 12-month Expected Credit Losses (ECL). Stage 2 is where
credit risk has increased significantly since initial recognition. Stage 3 includes financial assets that additionally have objective
evidence of impairment alongside the criteria of stage 2. Stages 2 and 3 show Lifetime-ECL.
Under the simplified approach to impairment, a loss allowance is carried at an amount equal to life-time ECL at initial recognition for
trade receivables and lease receivables, regardless of the credit quality of the accounts receivable and the lease receivables. TUI uses
a provision matrix to determine the expected loss for trade receivables and lease receivables. Average historical observed default rates
are determined for the following maturity bands. Not overdue, less than 30 days past due, 30 - 90 days, 91 - 180 days and more than 180
days past due. The loss rates determined are adjusted by credit default swap (CDS) rates in order to take account of forward-looking
information. The adjusted loss rates are based on average rates for the past few years. The economic environment of the relevant
geographical regions is taken into account through a weighting of CDS rates. All model parameters mentioned above are regularly reviewed
and updated.
Under the simplified approach to impairment, trade receivable and lease receivables are transferred to stage 3 when there is any
objective evidence of impairment. TUI Group classifies whether a trade receivable is to be transferred to stage 3 on an individual basis,
depending on the region, after 180 days at the earliest. Within TUI Group, an assessment of the recoverability of a receivable is
performed after 180 days at the earliest, as determined by the individual regions. In the framework of TUI Group's business model,
customers book a trip, for instance, six months ahead of departure and immediately pay a deposit; under that business model, some
receivables have a longer term than 90 days; accordingly, an actual default of a receivable is only assumed when receivables are more
than 180 days past due and an impairment loss is recognized, and in general a complete write-down has to be made. Objective evidence of
impairment of lease receivables includes, for example, significant financial difficulties on the part of the debtor, breach of contract
(default or delay in interest and repayment) or concessions made for economic or contractual reasons in connection with the debtor's
financial difficulties.
For all other financial assets carried at amortised cost impairments are determined in accordance with the general approach.
For cash and cash equivalents, the low credit risk exemption of IFRS 9 is applied, according to which financial instruments with a low
default risk at the time of acquisition can be classified in - stage 1 of the impairment model. Cash and cash equivalents include, for
instance, cash in hand or bank balances that are exclusively due to counterparties with a high credit rating. In accordance with stage 1
of the impairment hierarchy, a risk provision corresponding to the 12-month credit loss is recorded in cash and cash equivalents upon
initial recognition. At each balance sheet date, a verification is made as to whether the counterparties continue to have a rating of
investment grade quality. As the corresponding financial assets have a maximum term of 3 months, the impairment requirement is very low.
A transfer from - stage 1 to stage 2 or 3 has no practical relevance, as the business relationship would be terminated immediately in the
case of a corresponding event.
For material advances and loans and other receivables and assets, the expected credit losses are determined by multiplying the
probability of default with the loss given default and the exposure of default. TUI Group determines the probabilities of default on the
basis of an internal rating model. As part of the TUI Group's business model, the ratings of debtors for material receivables are
evaluated on the basis of this internal rating. Category 1 of the rating model contains the debtors with the highest credit rating,
whereas the debtors with the lowest credit rating are classified in the category 7. If the credit risk has not significantly deteriorated
since initial recognition, 12-month credit losses are determined (stage 1). In the event of a significant increase in the credit risk,
the lifetime expected credit loss is determined (stage 2). A significant increase in the default risk is assumed on the basis of the
internal rating and other relevant information such as changes in the economic, regulatory or technological environment.
If there is any objective evidence of impairment, a transfer is made to stage 3.
The gross carrying amount of a financial asset of any class of financial instruments recognized at amortised cost is written off when
there is no longer the expectation of full or partial recovery a financial asset following an appropriate assessment. For individual
customers the gross carrying amount is usually written off based on historical experience of recoveries in the country specific business
environment when the financial asset is more than 45 up to 360 days past due. For corporate customers, the Group's businesses conduct an
individual assessment about the timing and the amount of write off based on whether there is a reasonable expectation of recovery. The
Group expects no significant recovery from the amount written off. Financial assets that have been written off however could still be
subject to enforcement activities for recovery of amounts overdue.
For other advances and loans, other receivables and assets as well as other financial assets, the expected credit losses are determined
on a portfolio basis. This portfolio approach deviates from insignificant individual cases, as the relevant information for determining
the expected loss is available at the stage of the individual instrument. Here, TUI Group solely combines financial assets with similar
credit risk properties, e. g. type of product and geographical region. TUI Group initially carries the credit loss based on a loss rate
expected for the next twelve months. This loss rate is adjusted at regular intervals depending on the macroeconomic market environment.
If the credit risk increases significantly, the lifetime expected credit loss is determined (stage 2). The assessment of a significant
increase in the credit risk is for instance effected individually by region, changes in market data relating to default risk or changes
in contractual conditions. A default within based on the past due status of the instruments. The past due status is assumed within a
range of more than 30 days past due to more than 90 days past due, depending on the portfolio. If there is objective evidence of
impairment, the instrument is transferred to stage 3.
In principle, the general approach assumes that the default risk of financial assets has increased significantly since initial
recognition if contractual payments are more than 30 days overdue. However, this can be refuted by the Group's available appropriate and
comprehensible information. The assessment of the objective evidence of impairment for all instruments falling within the scope of the
general model is based on the following indicators: e. g. severe financial difficulties of the debtor, breach of contract (default or
delinquency in interest or principal payment) or concessions made for economic or contractual reasons in connection with financial
difficulties of the debtor. As a result, such instruments are usually written off in full.
As this is forward-looking information, the general impairment model also uses CDS rates.
The Group recognises an impairment gain or loss for all financial assets with a corresponding adjustment of the carrying amount through a
loan loss provision.
As of 30 September 2020, trade receivables were impaired in the amount of &euro 86.2 m (prior year &euro 55.5 m). The following overview
shows a maturity analysis of the impairments.
Ageing structure of impairment of financial instruments
classified
as trade receivables
30 Sep 2020
&euro Gross Impairment Net Impairment
million value value ratio
Trade
receiva
bles
Not 101.5 26.0 75.5 5 - 25 %
overdue
Overdue 32.3 5.8 26.5 10 - 30 %
less
than 30
days
Overdue 32.6 14.4 18.2 15 - 35 %
30 - 90
days
Overdue 15.7 3.7 12.0 20 - 45 %
91 -
180
days
Overdue 55.3 36.3 19.0 50 - 75 %
more
than
180
days
Total 237.4 86.2 151.2
Ageing structure of impairment of financial instruments
classified
as trade receivables
30 Sep 2019
&euro million Gross value Impairment Net value Impairment
ratio
Trade receivables
Not overdue 343.7 12.0 331.7 1 - 3 %
Overdue less than 30 136.7 4.1 132.6 3 %
days
Overdue 30 - 90 days 74.7 4.7 70.0 6 %
Overdue 91 - 180 38.2 2.7 35.5 7 - 10 %
days
Overdue more than 46.6 32.0 14.6 20 - 68 %
180 days
Total 639.9 55.5 584.4
Impairments of lease receivables have developed as follows.
Ageing structure of impairment of financial instruments
classified
as lease receivables
30 Sep 2020
&euro Gross Impairment Net Impairment
million value value ratio
Lease
receiva
bles
Not 37.6 24.1 13.5 5 - 25 %
overdue
Overdue 1.5 1.5 - 10 - 30 %
less
than 30
days
Overdue 1.5 1.5 - 15 - 35 %
30 - 90
days
Overdue - - - 20 - 45 %
91 -
180
days
Overdue - - - 50 - 75 %
more
than
180
days
Total 40.6 27.1 13.5
Ageing structure of impairment of financial instruments
classified
as lease receivables
30 Sep 2019
&euro million Gross value Impairment Net value Impairment
ratio
Lease receivables
Not overdue - - - 1 - 3 %
Overdue less than 30 - - - 3 %
days
Overdue 30 - 90 days - - - 6 %
Overdue 91 - 180 - - - 7 - 10 %
days
Overdue more than - - - 20 - 68 %
180 days
Total - - -
The following table shows the development of impairment losses on financial instruments in the category other receivables and assets.
Ageing structure of impairment of financial instruments
classified
as other receivables and assets
30 Sep 2020
&euro Gross Impairment Net Impairment
million value value ratio
Other
receiva
bles
and
assets
Not 221.9 4.2 217.7 5 - 25 %
overdue
Overdue 0.9 - 0.9 10 - 30 %
less
than 30
days
Overdue 1.7 - 1.7 15 - 35 %
30 - 90
days
Overdue 0.8 - 0.8 20 - 45 %
91 -
180
days
Overdue 3.0 1.2 1.8 50 - 75 %
more
than
180
days
Total 228.3 5.4 222.9
Ageing structure of impairment of financial instruments
classified
as other receivables and assets
30 Sep 2019
&euro million Gross value Impairment Net value Impairment
ratio
Other receivables
and assets
Not overdue 149.6 0.3 149.3 1 - 3 %
Overdue less than 30 - - - 3 %
days
Overdue 30 - 90 days - - - 6 %
Overdue 91 - 180 - - - 7 - 10 %
days
Overdue more than - - - 20 - 68 %
180 days
Total 149.6 0.3 149.3
Impairments of advances and loans have developed as follows:
Ageing structure of impairment of financial instruments
classified
as advances and loans
30 Sep 2020
&euro Gross value Impairment Net value
million
Advances
and loans
Not 132.4 57.1 75.3
overdue
Overdue - - -
less than
30 days
Overdue 30 - - -
- 90 days
Overdue 91 - - -
- 180 days
Overdue 1.9 1.2 0.7
more than
180 days
Total 134.3 58.3 76.0
Ageing structure of impairment of financial instruments
classified
as advances and loans
30 Sep 2019
&euro million Gross value Impairment Net value
Advances and loans
Not overdue 29.5 0.3 29.2
Overdue less than 30 days - - -
Overdue 30 - 90 days - - -
Overdue 91 - 180 days - - -
Overdue more than 180 days 16.6 16.6 -
Total 46.1 16.9 29.2
For the material single items in the following table, the default risk on financial instruments classified as advances and loans and as
other receivables is shown on the basis of an internal rating. There was a transfer of &euro 6.2 m from - stage 1 to stage 2 in the
category loans and advances to other companies in the course of the year, as the risk of default increased significantly during the past
financial year following initial recognition due to the COVID-19-pandemic.
Default risk on financial instruments classified as advances and
loans and as other receivables
30 Sep 2020 30 Sep 2019
&euro Impairment Internal Gross Impairment Net Gross Impairment Net
million stage rating value value value valu
class e
Loans to
related
parties
Advances 1 1 - - - 40.6 - 0.1 40.5
and
loans
Advances 1 2 12.0 - 0.1 11.9 - - -
and
loans
Advances 2 2 28.1 - 28.1 - - -
and
loans
Other 1 2 65.3 - 2.4 62.9 - - -
receivab
les
Loans to
hotels
Advances 2 5 29.1 - 1.8 27.3 29.7 - 1.9 27.8
and
loans
Loans to
other
compani
es
Advances 1 2 145.7 - 0.3 145.4 - - -
and
loans
Loans to
other
compani
es
Other 1 3 151.6 - 2.2 149.4 - - -
receivab
les
Other financial assets carried at amortised cost at an amount of &euro 14.9 m (prior year &euro 31.1 m) relate to short-term deposits
with banks. The full amount of these investments with a gross amount of &euro 15.4 m (prior year &euro 31.6 m) is not overdue.
Impairments of &euro 0.5 m (prior year &euro 0.5 m) were carried in the framework of risk provisioning.
During financial year 2020, as in the prior year, there were no material payment inflows from impaired interest-bearing trade receivables
and other financial assets.
The tables below show a reconciliation of the loan loss provisions for financial assets, measured at amortised cost, for which loan loss
provisions are determined using the general approach or the simplified approach.
Change in risk provisions for financial assets measured at
amortised cost in the following classes advances and loans,
other receivables and assets and other financial assets
&euro million Stage 1 Stage 2 Total
12-month-ECL Lifetime-ECL
(not impaired)
Risk provisioning as at 1 19.1 5.6 24.7
Oct 2018
Addition of impairment on 1.3 - 1.3
newly issued / acquired
financial assets
Unused Impairments on 0.9 3.8 4.7
financial assets
derecognised during the
period
Risk provisioning as at 30 19.5 1.8 21.3
Sep 2019
Risk provisioning as at 1 19.5 1.8 21.3
Oct 2019
Changes in the group of 0.7 - 0.7
consolidated companies
Addition of impairment on 50.5 - 50.5
newly issued / acquired
financial assets
Transfer to - - -
Stage 2 Lifetime-ECL (not - 3.1 3.1 -
impaired)
Unused Impairments on 1.4 0.1 1.5
financial assets
derecognised during the
period
Risk provisioning as at 30 66.2 4.8 71.0
Sep 2020
As at 30 September 2020, risk provisioning totals &euro 10.0 m (prior year &euro 2.0 m) for the other receivables and assets class and
&euro 0.5 m (prior year &euro 0.5 m) for the other financial assets class as well as &euro 60.4 m (prior year &euro 18.8 m) for the
advances and loans class.
As at 30 September 2020, no stage 3 instruments were recognised. There were no significant exchange differences. Changes in the group of
consolidated companies in the amount of &euro 0.7 m (prior year no change) and transfers in the class advances and loans from stage 1 to
stage 2 in the amount of &euro 3.1 m (prior year no transfers between stages 1 - 3, nor any other changes within given stages) took
place.
No significant impairment losses have been recognised and the models have been adjusted to reflect the macroeconomic market environment
in terms of the risk parameters used in terms of the loss rate. This resulted in additional risk provisions of &euro 14.3 m.
Change in risk provisions for financial assets measured at
amortised cost classified as trade receivables
&euro million Lifetime-ECL simplified
approach
Risk provisioning as at 1 Oct 94.2
2018
Changes in the group of - 1.3
consolidated companies
Addition of impairment on newly 19.7
issued / acquired financial
assets
Unrequired impairments on 57.1
financial assets derecognised
during the period
Risk provisioning as at 30 Sep 55.5
2019
Risk provisioning as at 1 Oct 55.5
2019
Exchange differences - 0.1
Changes in the group of 0.7
consolidated companies
Addition of impairment on newly 51.7
issued / acquired financial
assets
Unrequired impairments on 21.6
financial assets derecognised
during the period
Risk provisioning as at 30 Sep 86.2
2020
Change in risk provisions for financial assets measured at
amortised cost classified as lease receivables
&euro million Stage 3
Lifetime-ECL
(impaired)
Risk provisioning as at 1 Oct 2019 -
Addition of impairment on newly issued / 27.1
acquired financial assets
Risk provisioning as at 30 Sep 2020 27.1
The table of change in risk provisions for financial assets measured at amortised cost classified as lease relates primarily to lease
receivables from an investment. For this receivable, which ist not overdue, there is objective evidence of impairment, against this
background this receivable, which is not overdue, is reported in stage 3.
The tables below show a reconciliation of gross carrying amounts for financial assets measured at amortised cost:
Change in gross carrying amounts classified as advances and
loans
&euro million Stage 1 Stage 2 Total
12-month-ECL Lifetime-ECL
(not impaired)
Gross carrying amounts as 59.1 60.9 120.0
at 1 Oct 2018
Changes from receivables 28.2 - 31.8 - 3.6
recognised or derecognised
in the reporting period
Gross carrying amounts as 87.3 29.1 116.4
at 30 Sep 2019
Gross carrying amounts as 87.3 29.1 116.4
at 1 Oct 2019
Changes due to newly formed 39.2 3.1 42.3
impairments on receivables
Changes due to reversed 1.4 0.1 1.5
impairments on receivables
Changes in the group of - 0.6 - - 0.6
consolidated companies
Transfer to Lifetime-ECL - 6.2 6.2 -
(Stage 2)
Changes from receivables 229.5 43.5 273.0
recognised or derecognised
in the reporting period
Gross carrying amounts as 285.8 63.4 349.2
at 30 Sep 2020
As of 30 September 2020, no instruments in the class advances and loans have been reported in stage 3. There were no changes or
modifications. There have been transfers from stage 1 to stage 2 in the amount of &euro 6.2 million (previous year no transfers between
stages 1 - 3).
Change in gross carrying amounts classified as other
receivables
and assets and other financial assets
&euro million Stage 1 Stage 2 Total
12-month-ECL Lifetime-ECL
(not impaired)
Gross carrying amounts as 287.3 - 287.3
at 1 Oct 2018
Changes from receivables 2.2 - 2.2
recognised or derecognised
in the reporting period
Gross carrying amounts as 289.5 - 289.5
at 30 Sep 2019
Gross carrying amounts as 289.5 - 289.5
at 1 Oct 2019
Changes due to newly formed 8.0 - 8.0
impairments on receivables
Changes from receivables 179.1 - 179.1
recognised or derecognised
in the reporting period
Gross carrying amounts as 460.6 - 460.6
at 30 Sep 2020
As of 30 September 2020, no instruments in the classes other receivables and assets and other financial assets have been reported in
stage 3. There were no changes or modifications. There have been no transfers between stages 1 to 3 and no changes within stages
(previous year: no transfers between stages 1 - 3). At the time of initial recognition no newly issued or purchased instruments had been
credit-impaired.
Change in gross carrying amounts of assets classified as trade
receivables
&euro million Lifetime-ECL simplified
approach
Gross carrying amounts as at 1 Oct 2018 640.0
Changes in the group of consolidated - 1.1
companies
Changes in receivables recognised or 1.1
derecognised in the reporting period
Gross carrying amounts as at 30 Sep 2019 640.0
Gross carrying amounts as at 1 Oct 2019 640.0
Reclassification to impaired receivables 51.7
Reclassification from impaired 21.3
receivables
Changes in receivables recognised or - 372.2
derecognised in the reporting period
Gross carrying amounts as at 30 Sep 2020 237.4
Change in gross carrying amounts of assets classified as lease
receivables
&euro million Stage 3
Lifetime-ECL (impaired)
Gross carrying amounts as at 1 Oct 2019 -
Reclassification to impaired receivables 27.0
Changes in receivables recognised or 67.5
derecognised in the reporting period
Gross carrying amounts as at 30 Sep 2020 40.5
Liquidity risk
Liquidity risks arise from the TUI Group being unable to meet its short term financial obligations and the resulting increases in funding
costs. The TUI Group has established an internal liquidity management system to secure TUI Group's liquidity at all times and
consistently comply with contractual payment obligations. To that end, TUI Group's liquidity management system uses the opportunities of
physical and virtual cash pooling for more efficient liquidity pooling. It also uses credit lines to compensate for the seasonal
fluctuations in liquidity resulting from the tourism business. The core credit facility is a syndicated revolving credit facility with
banks.
Due to the COVID-19-pandemic and the associated impacts on the tourism business, TUI Group's liquidity requirements have considerably
increased. The previous revolving credit facility agreed with banks in the sum of &euro 1,750.0 m was initially increased by &euro 1,800
m to a total of &euro 3,550.0 m through a separate credit facility granted by KfW. In the framework of a second stabilisation package
agreed with the German government prior to the balance sheet date, KfW's existing credit facility is increased by &euro 1.05 bn. It was
further agreed that the Economic Stabilisation Fund (WSF) will subscribe to the Group's bond with warrants totalling &euro 150 m. In
addition, a further stabilisation package was agreed at the beginning of December in order to increase existing liquidity reserves.
Details on the increase to the credit facility and ,the bond with warrants and the further stabilisation package are presented in
connection with the going-concern reporting in accordance with the UK Corporate Governance Code and the section Events after the balance
sheet date.
As in the previous year, no material assets were deposited as collateral for liabilities. Moreover, the Group companies participating in
the cash pool are jointly and severally liable for financial liabilities from cash pooling agreements.
The tables provided below list the contractually agreed (undiscounted) cash flows of all primary financial liabilities as at the balance
sheet date. Planned payments for future new liabilities were not taken into account. Where financial liabilities have a floating interest
rate, the forward interest rates fixed at the balance sheet date were used to determine future interest payments. Financial liabilities
cancellable at any time are allocated to the earliest maturity band.
The analysis of cash flows from derivative financial instruments shows the contractually agreed (undiscounted) cash flows of foreign
exchange hedges of all liabilities and receivables that existed at the balance sheet date. Derivative financial instruments used to hedge
other price risks are included in the analysis with their agreed cash flows from all financial receivables and liabilities at the balance
sheet date.
Cash flow of financial instruments - financial and lease liabilities (30 Sep
2020)
Cash outflow until 30 Sep
up to 1 year 1 - 2 years 2 - 5 years more than 5 years
&euro repayment interest repayment interest repayment interest repayment interest
million
Financial
liabilities
Bonds - - 7.9 - 300.0 - 28.5 - - - -
Liabilities - 560.9 - 118.4 - 2,833.4 - 44.4 - 465.3 - 25.1 - 94.2 - 9.3
to banks
Other - 16.3 - - - - - - -
financial
debt
Trade - 1,611.5 - - - - - - -
payables
Other - 422.1 - - 0.6 - - 4.0 - - -
financial
liabilities
Lease - 687.3 - 88.4 - 652.8 - 91.0 - 1,040.7 - 111.5 - 1,019.1 - 134.2
liabilities
Cash flow of financial instruments - financial liabilities (30 Sep 2019)
Cash outflow until 30 Sep
up to 1 year 1 - 2 years 2 - 5 years more than 5 years
&euro repayment interest repay- interest repayment interest repayment interest
million (adjusted) (adjusted) ment
Financial
liabilities
Bonds - - 6.4 - - 6.4 - 300.0 - 6.4 - -
Liabilities - 74.9 - 7.2 - 68.4 - 7.5 - 322.5 - 16.7 - 404.2 - 6.3
to banks
Liabilities - 130.5 - 44.7 - - 39.6 - 505.7 - 85.7 - 706.4 - 46.9
from 152.6
finance
leases *
Other - 19.2 - - - - - - -
financial
debt
Trade - 2,873.8 - - - - - - -
payables
Other - 63.4 - - 7.3 - - 1.5 - - 4.3 -
financial
liabilities
* Financial liabilities include liabilities from finance leases for the last time as of 30 Sep 2019.
Cash flow of derivative financial instruments (30 Sep 2020)
Cash in- / outflow until 30 Sep
&euro million up to 1 year 1 - 2 years 2 - 5 years more than
5 years
Derivative
financial
instruments
Hedging + 627.0 + 59.8 - -
transactions -
inflows
Hedging - 691.1 - 60.7 - -
transactions -
outflows
Other + 2,152.8 + 175.7 + 83.6 -
derivative
financial
instruments -
inflows
Other - 2,390.7 - 210.7 - 100.8 - 0.8
derivative
financial
instruments -
outflows
Cash flow of derivative financial instruments (30 Sep 2019)
Cash in- / outflow until 30 Sep
&euro million up to 1 year 1 - 2 years 2 - 5 years more than
5 years
Derivative
financial
instruments
Hedging + 8,601.0 + 983.4 + 14.8 -
transactions -
inflows
Hedging - 8,415.0 - 959.6 - 38.9 - 28.9
transactions -
outflows
Other + 1,808.6 - - -
derivative
financial
instruments -
inflows
Other - 1,831.3 - - -
derivative
financial
instruments -
outflows
The derivative financial instruments carried as Other derivative financial instruments are derivatives not designated as hedging
instruments according to IAS 39.
For further information for hedging strategies and risk management see also the remarks in the Risk Report section of the Management
Report.
Derivative financial instruments and hedges
Strategy and goals
In accordance with the TUI Group's policy, derivatives are allowed to be used if they are based on underlying recognised assets or
liabilities, firm commitments or forecast transactions. Hedge accounting based on the rules of IAS 39 is applied to forecasted
transactions. In the completed financial year, hedges consisted of cash flow hedges.
Derivative financial instruments in the form of fixed-price transactions and options as well as structured products are used to limit
currency, interest rate and fuel risks.
The COVID-19-pandemic significantly impacted business operations and the existing hedging strategy for currency risks and fuel price
risks. It led to a temporary suspension of all travel operations and flight bans. As a result, the occurrence of numerous hedged
underlying transactions can no longer be assessed as highly likely, causing a rapid decline in fuel price and currency hedge requirements
and therefore requiring the prospective termination of these hedges.
For the hedges affected, occurrence of the underlying transactions can no longer be expected for a future point in time, either, so that
all accrued amounts from the change in the value of the hedging instruments were reclassified from cash flow hedge reserve (OCI) to the
cost of sales in the income statement. Accordingly, reclassifications of &euro - 330.7 m (thereof &euro - 211.9 m from hedges that were
already recognised as hedging instruments in the previous year) from fuel price hedges and &euro 97.9 m (thereof &euro 19.6 m from hedges
that were already recognised as hedging instruments in the previous year) from currency hedges that were affected during the financial
year under review.
All future changes in the value of these de-designated hedges are taken to the cost of sales in the income statement through profit and
loss and recognised as other derivative financial instruments from the date of the termination of the cash flow hedge accounting. As at
30 September 2020, the fair value of these reclassified fuel price hedges totalled &euro - 93.3 m at a nominal volume of &euro 230.6 m,
while the fair value of the reclassified currency hedges totalled &euro 11.8 m at a nominal volume of &euro 1,625.1 m.
Furthermore, the strong increase in TUI's credit risk had a direct impact on the retrospective hedge effectiveness test. As a result,
additional fuel price, interest rate and currency hedges had to be terminated as they no longer met the effectiveness requirements of IAS
39 and were outside the admissible 80 - 125 % effectiveness bandwidth as at 30 September 2020.
All future changes in the value of these de-designated hedges are also taken to the cost of sales respectively in the financial result in
the case of interest rate hedges in the income statement through profit and loss and recognised as other derivative financial instruments
from the date of the termination of the cash flow hedge accounting. As at 30 September 2020, the fair value of these reclassified fuel
price hedges totalled &euro - 97.1 m at a nominal value of &euro 398.1 m, while the fair value of the interest rate hedges amounted to
&euro - 18.0 m at a nominal volume of &euro 494.7 m and the fair value of currency hedges totalled &euro - 3.1 m at a nominal volume of
&euro 221.2 m.
Cash Flow Hedges
At 30 September 2020, hedges existed to manage cash flows in foreign currencies with maturities of up to three years (previous year up to
four years). The fuel price hedges had terms of up to one year (previous year up to four years). Hedges to protect variable interest
payment obligations have terms of up to one year (previous year up to fourteen years). The impact on profit or loss for the period is at
the time the expected cash inflow / outflow occurs.
Nominal amounts of derivative financial instruments used
30 Sep 2020
Remaining term
&euro up to more than Total Average Average
million 1 year 1 year hedged hedging
rate / interest
price rate
Interest
rate hedges
Caps / - - - -
Floors
Swaps 7.8 - 7.8
Payer EUR - - - -
Payer USD 7.8 - 7.8 2.96
Currency -
hedges
Forwards 1,381.2 75.3 1,456.5
Forwards EUR 251.8 - 251.8 1.1395
/ GBP
Forwards EUR 436.8 71.3 508.1 0.8589
/ USD
Forwards GBP 456.6 - 456.6 0.7692
/ USD
Forwards EUR 92.8 - 92.8 0.0939
/ SEK
Other 143.2 4.0 147.2
currencies
Commodity -
hedges
Swaps 114.1 - 114.1
Jet fuel 103.7 - 103.7 517.64
Marine fuel 10.3 - 10.3 481.90
Other fuels - - - -
Other 4,816.2 956.4 5,772.6
derivative
financial
instruments
Nominal amounts of derivative financial instruments used
30 Sep 2019
Remaining term
&euro up to more than Total Average Average
million 1 year 1 year hedged hedging
rate / interest
price rate
Interest
rate hedges
Caps / - 175.5 175.5 -
Floors
Swaps 9.5 898.5 908.0
Payer EUR - 654.3 654.3 0.73
Payer USD 9.5 244.2 253.7 2.96
Currency -
hedges
Forwards 8,430.9 1,113.3 9,544.2
Forwards EUR 2,618.4 152.4 2,770.8 1.1151
/ GBP
Forwards EUR 1,878.9 511.6 2,390.5 0.8468
/ USD
Forwards GBP 2,192.3 275.9 2,468.2 0.7732
/ USD
Forwards EUR 320.9 66.8 387.7 0.0952
/ SEK
Other 1,313.6 84.0 1,397.6
currencies
Commodity -
hedges
Swaps 1,036.2 219.4 1,255.6
Jet fuel 907.6 165.3 1,072.9 593.08
Marine fuel 90.5 54.1 144.6 484.96
Other fuels 38.2 - 38.2 409.33
Other 2,217.1 201.2 2,418.3
derivative
financial
instruments
Other derivative hedging instruments comprise the nominal values of hedges not designated for hedge accounting. TUI Group exclusively
enters into derivative financial instruments for hedging purposes. Depending on the type of the hedged underlying transaction, TUI
exercises the option to apply hedge accounting according to IAS 39. Due to the COVID-19-pandemic, a large number of hedges according to
IAS 39 had to be terminated. Accordingly, the derivative financial instruments underlying these hedges are shown under Other derivative
financial instruments.
The nominal values correspond to the total of all purchase and sale amounts underlying the transactions or the respective contract values
of the transactions.
In order to hedge the risks of fluctuations in future cash flows from currency, interest rate and fuel price risks, TUI regularly enters
into hedges. The planned transactions, i. e. the underlying transactions, are used to determine the ineffective portions of hedges
designated as cash flow hedges. In designating cash flow hedges, only the spot rate component is included in hedge accounting as a hedge
for some forward exchange transactions, while the interest component of these financial instruments is shown separately in all relevant
tables under Other derivative financial instruments, in line with derivatives not designated as hedging instruments according to IAS 39.
Disclosures on underlying transactions of cash flow hedges
30 Sep 2020
&euro Fair Value Balance of Hedging
million changes to hedging reserve
determine reserve of completed
inefficie active cash flow
nt cash flow hedges
portions hedges
Interest 0.2 - 0.1 - 33.5
rate risk
hedges
Currency - 2.8 4.6 5.9
risk hedges
Fuel price 46.5 - 43.5 - 129.7
risk hedges
Hedging 43.9 - 39.0 - 157.3
Other - - -
derivative
financial
instruments
Total 43.9 - 39.0 - 157.3
Disclosures on underlying transactions of cash flow hedges
30 Sep 2019
&euro million Fair Value Balance of Hedging
changes to hedging reserve
determine reserve of completed cash
inefficient active cash flow hedges
portions flow hedges
Interest rate 42.5 - 42.3 4.1
risk hedges
Currency risk - 229.4 228.3 1.3
hedges
Fuel price risk 79.6 - 77.3 -
hedges
Hedging - 107.3 108.7 5.4
Other - - -
derivative
financial
instruments
Total - 107.3 108.7 5.4
In the case of fair value changes to determine inefficient portions, the signs of the amounts in the previous year's figures have been
adjusted.
In accounting for cash flow hedges, the effective portions of the hedging relationships have to be recognised in OCI outside profit and
loss. Any additional changes in the fair value of the designated components are recognised as ineffective portions in other operating
income through profit and loss. The table below presents the development of OCI in financial year 2020.
Development of OCI
30 Sep 2020
&euro million Interest Currency Fuel Total
rate risk price
risk risk
Gain or loss - 33.6 10.5 - - 196.3
from fair value 173.2
changes of
hedges within
hedge accounting
recognised in - 33.6 10.5 - - 196.3
equity 173.2
recognised in - - - -
the income
statement
Reclassification - 7.5 130.2 - - 251.1
from cash flow 373.8
hedge reserve
to income
statement
Due to early - 4.0 38.2 - - 200.2
termination of 234.4
the hedge
Due to - 3.5 92.0 - - 50.9
recognition of 139.4
the underlying
transaction
Development of OCI
30 Sep 2019
&euro million Interest Currency risk Fuel price Total
rate risk risk
Gain or loss from - 42.3 228.3 - 77.3 108.7
fair value changes
of hedges within
hedge accounting
recognised in - 42.3 228.3 - 77.3 108.7
equity
recognised in the - - - -
income statement
Reclassification 6.7 - 263.7 - 89.6 - 346.6
from cash flow
hedge reserve to
income statement
Due to early 0.3 - 20.4 - - 20.1
termination of the
hedge
Due to recognition 6.4 - 243.3 - 89.6 - 326.5
of the underlying
transaction
In the reporting period, expense of &euro 47.4 m (previous year: expense of &euro 340.2 m) from currency hedges and derivative financial
instruments used to hedge the impact of exposure to fuel price risks was recognised in the cost of sales. Interest rate hedges result in
expenses of &euro 3.5 m (previous year: income of &euro 6.4 m), carried in net interest income. Income of &euro 0.6 m (previous year:
income of &euro 1.4 m) was recognised for the ineffective portion of cash flow hedges.
Fair values of derivative financial instruments
The fair values of derivative financial instruments generally correspond to the market value. The market price determined for all
derivative financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. A description of the determination of the fair values of derivative
financial instruments is provided with the classification of financial instruments measured at fair value.
Positive and negative fair values of derivative
financial instruments
shown as receivables or liabilities
30 Sep 2020
&euro Receivables Liabilities FV Nominal
million change volume
s
to
determ
ine
ineff
ective
portio
ns
Cash
flow
hedges
for
currency 22.3 17.7 4.6 1,456.5
risks
fuel - 43.5 - 43.5 114.1
price
risks
interest - 0.1 - 0.1 7.8
rate
risks
Hedging 22.3 61.3 - 39.0 1,578.4
Other 74.0 257.5 - 5,772.5
derivati
ve
financia
l
instrume
nts
Total 96.3 318.8 - 39.0 7,350.9
Positive and negative fair values of derivative financial
instruments
shown as receivables or liabilities
30 Sep 2019
&euro Receivables Liabilities FV changes Nominal
million to volume
determine
ineffecti
ve
portions
Cash flow
hedges for
currency 278.2 49.9 228.3 9,544.2
risks
fuel price 6.2 83.5 - 77.3 1,255.6
risks
interest 1.9 44.2 - 42.3 908.0
rate risks
Hedging 286.3 177.6 108.7 11,707.8
Other 61.4 38.6 - 2,418.3
derivative
financial
instruments
Total 347.7 216.2 108.7 14,126.1
Financial instruments which are entered into in order to hedge a risk position according to operational criteria but do not meet the
criteria of IAS 39 to qualify for hedge accounting are shown as other derivative financial instruments. They include foreign currency
transactions entered into in order to hedge against foreign exchange-exposure to changes in the value of balance sheet items and foreign
exchange fluctuations from future expenses in tourism.
Financial instruments - Additional disclosures
Carrying amounts and fair values
Where financial instruments are listed in an active market, e. g. shares held and bonds issued, the fair value or market value is the
respective quotation in this market at the balance sheet date. For over-the-counter bonds, liabilities to banks, promissory notes and
other non-current financial liabilities, the fair value is determined as the present value of future cash flows, taking account of yield
curves and the respective credit spread, which depends on the credit rating.
In financial year 2020, the fair values of other current receivables, current liabilities to banks and other financial liabilities were
determined in contrast to the past financial year, taking into account yield curves and the respective credit risk premium (credit
spread) based on credit rating. As a result, the assumption that the carrying amount approximately corresponds to the fair value due to
the short remaining term which has been adjusted to the current market conditions due to the COVID-19-pandemic.
The fair values of non-current trade receivables and for parts of current other receivables and current other financial assets as well as
cash and cash equivalents, current other financial liabilities and trade payables correspond to the present values of the cash flows
associated with the assets, taking account of current interest parameters which reflect market and counterparty-related changes in terms
and expectations. In the case of cash and cash equivalents, current trade receivables, other financial assets and current trade payables,
the carrying amount approximates the fair value due to the short remaining term.
The table below shows the reconciliation of the balance sheet items to the financial instrument categories by carrying amount and fair
value of the financial instruments.
Carrying amounts and fair values according to classes and
measurement categories according to IFRS 9 as at 30 Sep
2020
Category according to IFRS 9
&euro Carrying At Fair Fair Fair Fair
million amount amortis value value value value of
ed cost with no with no through financial
instrume
effect effect profit nts
on on and loss
profit profit
and and
loss loss
without with
recyclin recycl
g ing
Assets
Trade
receivables
and other
receivables
thereof 875.2 875.2 - - - 847.1
instruments
within the
scope of
IFRS 9
thereof 13.5 - - - - 39.2
instruments
within the
scope of
IFRS 16
Derivative
financial
instrument
s
Hedging 22.3 - - 22.3 - 22.3
transaction
s
Other 74.0 - - - 74.0 74.0
derivative
financial
instruments
Other 25.5 14.9 8.5 - 2.1 25.5
financial
assets
Cash and 1,233.1 1,233.1 - - - 1,233.1
cash
equivalents
Liabilities
Financial 4,269.0 4,291.4 - - - 4,022.8
liabilities
Trade 1,611.5 1,611.5 - - - 1,611.5
payables
Derivative
financial
instrument
s
Hedging 61.3 - - 61.3 - 61.3
transaction
s
Other 257.5 - - - 257.5 257.5
derivative
financial
instruments
Other 429.2 431.3 - - - 430.8
financial
liabilities
Carrying amounts and fair values according to classes and
measurement categories according to IFRS 9 as at 30 Sep 2019
Category according to
IFRS 9
&euro Carrying At Fair Fair Fair Values Carrying Fair
million amount amor value value value accor amount of value of
tised with no with throug ding financial
cost effect no h to IAS instrumen financial
on effect profit 17 ts instrumen
profit on and (lease ts
and profit loss s)
loss and
withou loss
t with
recycli recycl
ng ing
Assets
Trade 937.4 939.7 - - - - 939.7 1 937.3 1
receivables 1
and other
receivables
Derivative
financial
instrument
s
Hedging 286.3 - - 286.3 - - 286.3 286.3
transactio
ns
Other 61.4 - - - 64.3 2 - 64.3 2 64.3 2
derivative
financial
instrument
s
Other 74.1 31.2 42.0 - 0.9 - 74.1 74.1
financial
assets
Cash and 1,741.5 1,747 - - - - 1,747.6 3 1,747.6 3
cash .6 3
equivalent
s
Liabilities
Financial 2,682.2 1,187 - - - 1,495. 1,187.0 1,202.6
liabilities .0 2
Trade 2,873.9 2,908 - - - - 2,908.0 4 2,908.0 4
payables .0 4
Derivative
financial
instrument
s
Hedging 177.6 - - 177.6 - - 177.6 177.6
transaction
s
Other 38.6 - - - 38.6 - 38.6 38.6
derivative
financial
instruments
Other 108.4 108.4 - - - - 108.4 108.4
financial
liabilitie
s
1 Changed by &euro 2.3 m compared to the published TUI Group's consolidated financial statements for financial year 2019.
2 Changed by &euro 2.9 m compared to the published TUI Group's consolidated financial statements for financial year 2019.
3 Changed by &euro 6.1 m compared to the published TUI Group's consolidated financial statements for financial year 2019.
4 Changed by &euro 34.1 m compared to the published TUI Group's consolidated financial statements for financial year 2019.
The amounts shown in the column 'carrying amount' (as shown in the balance sheet) in the tables above can differ from those in the other
columns of a particular row since the latter include all financial instruments. That is the latter columns include financial instruments
which are part of disposal groups according to IFRS 5. In the balance sheet, financial instruments, which a part of a disposal group, are
shown in separate items. Please refer to the sections 'Assets held for sale' and 'Liabilities related to assets held for sale' for more
details concerning these financial instruments.
Moreover, the amounts listed in this section as at 30 September 2019 as a footnote in the table above: carrying amounts and fair values
according to classes and measurement categories according to IFRS 9 as at 30 September 2019 had to be adjusted by the amounts in the
footnotes, as financial instruments which were part of disposal groups in accordance with IFRS 5 have not been included in the
disclosures. For all instruments carried at amortised cost the fair value corresponds to the carrying amount.
The instruments measured at fair value through other comprehensive income within the other financial assets class are investments in
companies based on medium to long-term strategic objectives. Recording all short-term fluctuations in the fair value in the income
statement would not be in line with TUI Group's strategy; these equity instruments were therefore designated as at fair value through
OCI.
The financial instruments classified as other financial assets include stakes in partnerships and corporations. In total, the fair value
of these financial investments as of 30 September 2020 amounts to &euro 8.5 m (previous year &euro 42.0 m). There were disposals of
stakes in partnerships or corporations amounting to &euro 3.5 m (previous year &euro 35.4 m) which were measured at fair value, as part
of their first consolidation. Any reclassifications of the cumulative gains and losses of these assets amounting to &euro 0.4 m (previous
year &euro 1.6 m) result from the change of the group of consolidated companies. None of these strategic financial investments were sold
in the completed financial year. The dividends received from these financial investments amount to &euro 0.6 m (previous year &euro 1.1
m).
Aggregation according to measurement categories under IFRS 9
as at 30 Sep 2020
&euro million Carrying amount of Fair Value
financial instruments
Total
Financial assets
at amortised cost 2,123.2 2,095.0
at fair value - 8.5 8.5
recognised directly in
equity without recycling
at fair value - through 76.1 76.1
profit and loss
Financial liabilities
at amortised cost 6,334.1 6,065.0
at fair value - through 257.5 257.5
profit and loss
Aggregation according to measurement categories under IFRS 9
as at 30 Sep 2019
&euro million Carrying amount of Fair Value
financial
instruments
Total
Financial assets
at amortised cost 2,718.5 1 2,716.1 1
at fair value - 42.0 42.0
recognised directly in
equity without recycling
at fair value - through 65.2 2 65.2 2
profit and loss
Financial liabilities
at amortised cost 4,203.4 3 4,219.0 3
at fair value - through 38.6 38.6
profit and loss
1 Changed by &euro 8.4 m compared to the published TUI Group's consolidated financial statements for financial year 2019.
2 Changed by &euro 2.9 m compared to the published TUI Group's consolidated financial statements for financial year 2019.
3 Changed by &euro 34.1 m compared to the published TUI Group's consolidated financial statements for financial year 2019.
Fair value measurement
The table below presents the fair values of recurring, non-recurring and other financial instruments measured at fair value in line with
the underlying measurement level. The individual measurement levels have been defined as follows in line with the inputs:
· Level 1: (unadjusted) quoted prices in active markets for identical assets or liabilities.
· Level 2: inputs for the measurement other than quoted market prices included within level 1 that are observable in the market for the
asset or liability, either directly (as quoted prices) or indirectly (derivable from quoted prices).
· Level 3: inputs for the measurement of the asset or liability not based on observable market data.
Hierarchy of financial instruments measured at fair value as
at 30 Sep 2020
Fair value hierarchy
&euro million Total Level 1 Level 2 Level 3
Assets
Other financial assets 10.6 - - 10.6
Derivative financial
instruments
Hedging transactions 22.3 - 22.3 -
Other derivative 74.0 - 74.0 -
financial instruments
Liabilities
Derivative financial
instruments
Hedging transactions 61.3 - 61.3 -
Other derivative 257.5 - 257.5 -
financial instruments
Hierarchy of financial instruments measured at fair value as
of 30 Sep 2019
Fair value hierarchy
&euro million Total Level 1 Level 2 Level 3
Assets
Other financial assets 42.9 - - 42.9
Derivative financial
instruments
Hedging transactions 286.3 - 286.3 -
Other derivative 64.3* - 64.3* -
financial instruments
Liabilities
Derivative financial
instruments
Hedging transactions 177.6 - 177.6 -
Other derivative 38.6 - 38.6 -
financial instruments
* Changed by &euro 2.9 m compared to the published TUI Group's consolidated financial statements for financial year 2019.
At the end of every reporting period, TUI Group checks whether there are any reasons for reclassification to or from one of the
measurement levels. Financial assets and financial liabilities are generally transferred out of level 1 into level 2 if the liquidity and
trading activity no longer indicate an active market. The opposite situation applies to potential transfers out of level 2 into level 1.
In the reporting period, there were no transfers between level 1 and level 2.
Reclassifications from level 3 to level 2 or level 1 are made if observable market price quotations become available for the asset or
liability concerned. In financial 2019 there were no other transfers from or to level 3. The TUI Group records transfers from or to level
3 at the date of the obligating event or occasion triggering the transfer.
Level 1 Financial instruments
The fair value of financial instruments for which an active market exists is based on quoted prices at the reporting date. An active
market exists if quoted prices are readily and regularly available from an exchange, dealer, broker, pricing service or regulatory agency
and these prices represent actual and regularly occurring market transactions on an arm's length basis. These financial instruments are
classified as level 1. The fair values correspond to the nominal amounts multiplied by the quoted prices at the reporting date. Level 1
financial instruments primarily comprise shares in listed companies classified as at fair value through OCI and bonds issued classified
as financial liabilities at amortised cost.
Level 2 Financial instruments
The fair values of financial instruments not traded in an active market, e. g. over-the-counter (OTC) derivatives, are determined by
means of valuation techniques. These valuation techniques make maximum use of observable market data and minimise the use of
Group-specific assumptions. If all essential inputs for the determination of the fair value of an instrument are observable, the
instrument is classified as level 2.
If one or several key inputs are not based on observable market data, the instrument is classified as level 3.
The following specific valuation techniques are used to measure financial instruments:
· For over-the-counter bonds, liabilities to banks, promissory notes and other financial liabilities, the fair value is determined as
the present value of future cash flows, taking account of yield curves and the respective credit spread, which depends on the credit
rating.
· The fair value of over-the-counter derivatives is determined by means of appropriate calculation methods, e. g. by discounting the
expected future cash flows. The forward prices of forward transactions are based on the spot or cash prices, taking account of forward
premiums and discounts. The fair values of optional hedges are calculated on the basis of option pricing models. The fair values
determined on the basis of the Group's own systems are periodically compared with fair value confirmations of the external
counterparties.
· Other valuation techniques, e. g. discounting future cash flows, are used to determine the fair values of other financial
instruments.
Level 3 Financial instruments
The table below presents the fair values of the financial instruments measured at fair value on a recurring basis, classified as level 3:
Financial assets measured at fair value in level 3
&euro million Other financial assets IFRS 9
Balance as at 30 Sep 2018 26.7
First-time adoption IFRS 9 50.4
Balance as at 1 Oct 2018 77.1
Disposals - 35.7
sale - 0.3
consolidation - 35.4
Total gains or losses for the 1.5
period
recognised through profit and - 0.7
loss
recognised in other comprehensive 2.2
income
Balance as at 30 Sep 2019 42.9
Balance as at 1 Oct 2019 42.9
Disposals - 3.5
consolidation - 3.5
Total gains or losses for the - 28.8
period
recognised through profit and - 1.1
loss
recognised in other comprehensive - 27.7
income
Balance as at 30 Sep 2020 10.6
Evaluation process
The fair value of financial instruments in level 3 has been determined by TUI Group's financial department using the discounted cash flow
method. This involves the market data and parameters required for measurement being compiled or validated. Non-observable input
parameters are reviewed on the basis of internally available information and updated if necessary.
In principle, the unobservable input parameters relate to the following parameters; the (estimated) EBITDA margin is in a range between -
13 % and 22 %. The constant growth rate is 1 %. The weighted average cost of capital (WACC) is in a range between 8.6 % - 9.9 %. Due to
materiality, no detailed prior-year figures have been provided. With the exception of the WACC, there is a positive correlation between
the input factors and the fair value.
The reduction in the fair values of financial instruments in level 3 mainly resulted from a &euro 21.1 m decrease in the fair value of
the shares of Peakwork AG. This reduction is due to a new assessment of Peakwork AG which is below previous forecasts as a result of the
COVID-19-pandemic.
Effects on results
The effects of remeasuring of financial assets carried at fair value through OCI as well as the effective portions of changes in fair
values of derivatives designated as cash flow hedges are listed in the statement of changes in equity.
The net results of the financial instruments by measurement category according to IFRS 9 are as follows:
Net results of financial instruments
2020
&euro from interest other net result
million net results
Financial 24.7 - 193.4 - 168.7
assets
at 15.0 - 193.2 - 178.2
amortised
cost
at fair 9.7 - 0.2 9.5
value
through
profit or
loss
Financial - 17.4 - 402.6 - 420.0
liabiliti
es
at - 17.4 - 24.2 - 41.6
amortised
cost
at fair - - 378.4 - 378.4
value
through
profit or
loss
Total 7.3 - 596.0 - 588.7
Net results of financial instruments
2019
&euro million from interest other net result
net results
Financial assets 19.4 62.1 81.5
at amortised cost 9.5 56.3 65.8
at fair value through - 5.8 5.8
profit or loss
Financial liabilities - 41.2 76.5 35.3
at amortised cost - 41.2 - 5.4 - 46.6
at fair value through - 81.9 81.9
profit or loss
Total - 21.8 138.6 116.8
Netting
The following financial assets and liabilities are subject to contractual netting arrangements:
Offsetting of financial assets
Financial assets and
liabilities not set off
in the balance sheet
&euro Gross Gross Net Financial Collateral Net
million amoun amoun amount liabilities received amount
ts of ts of s of
finan finan finan
cial cial cial
asse liab assets
ts iliti set
es off,
set presen
off ted in
the
balan
ce
sheet
Financial
assets
as at 30
Sep 2020
Derivative 96.3 - 96.3 13.7 - 82.6
financial
assets
Cash and 1,571 338.4 1,233. - - 1,233.
cash .5 1 1
equivalent
s
Financial
assets
as at 30
Sep 2019
Derivative 347.7 - 347.7 212.1 - 135.6
financial
assets
Cash and 4,594 2,852 1,741. - - 1,741.
cash .1 .6 5 5
equivalent
s
Offsetting of financial liabilities
Financial assets and
liabilities not set off
in the balance sheet
&euro Gross Gross Net Financial Collateral Net
million amoun amoun amount assets granted amount
ts of ts of s of
finan finan finan
cial cial cial
liab asse liabil
iliti ts ities
es set set
off off,
presen
ted in
the
balanc
e
sheet
Financial
liabilitie
s as at 30
Sep 2020
Derivative 318.8 - 318.8 13.7 - 305.1
financial
liabilitie
s
Financial 4,607 338.4 4,269. - - 4,269.
liabilitie .4 0 0
s
Financial
liabilitie
s as at 30
Sep 2019
Derivative 216.2 - 216.2 212.1 - 4.1
financial
liabilitie
s
Financial 5,534 2,852 2,682. - - 2,682.
liabilitie .8 .6 2 2
s
Financial assets and financial liabilities are only netted in the balance sheet if a legally enforceable right to netting exists and the
Company concerned intends to settle on a net basis.
The contracts for financial instruments are based on standardised master agreements for financial derivatives (including ISDA Master
Agreement, German master agreement for financial derivatives), creating a conditional right to netting contingent on defined future
events. Under the contractual agreements all derivatives contracted with the corresponding counterparty with positive or negative fair
values are netted in that case, resulting in a net receivable or payable in the amount of the balance. As this conditional right to
netting is not enforceable in the course of ordinary business transactions and thus the criteria for netting is not met, the derivative
financial assets and liabilities are carried at their gross amounts in the balance sheet at the reporting date.
Financial assets and liabilities in the framework of the cash pooling scheme are shown on a net basis if there is a right to netting in
ordinary business transactions and the Group intends to settle on a net basis.
(41) Capital management
TUI Group's capital management ensures that our goals and strategies can be achieved in the interest of our share- / bond- and
credit-holders as well as other stakeholders. The primary objectives of the Group are as follows:
· Ensuring sufficient liquidity for the Group
· Profitable growth and a sustainable increase in TUI Group's value
· Strengthening our cash generation allowing to invest, pay dividends and strengthen the balance sheet
· Maintaining sufficient debt capacity and an at least unchanged credit rating
In financial year 2020, the travel restrictions triggered by the COVID-19-pandemic had a strong negative impact on the Group's earnings
and liquidity development from the end of the second quarter onwards. 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 bn were granted in addition to the cost-cutting and payment deferral measures initiated within the Group and regional support
measures in various countries.
The support and stabilization package is described in detail in the section on going concern reporting in accordance with the UK
Corporate Governance Code, page 152.
Management variables used in capital management to measure and control the above objectives are Return On Invested Capital (ROIC) and the
leverage ratio, presented in the table below.
The TUI Group applies IFRS 16 as of 1 October 2019. The figures for the comparative prior-year period have not been adjusted. Starting in
the 2020 financial year, we therefore calculate the leverage ratio in a slightly modified form as the ratio of gross financial debt (+
&euro 4,269.0 m) + lease liabilities (+ &euro 3,399.9 m) + recognized obligations from defined benefit pension plans (+ &euro 651.7 m) to
reported EBITDA (IFRS 16) (- &euro 1,355.0 m). In the financial year, EBITDAR (IAS 17) amounted to - &euro 1,436.0 m.
In the previous year, it was calculated as follows: The leverage ratio was calculated as the ratio of gross financial debt (+ &euro
2,682.2 m) + discounted financial obligations from operating rental, lease and charter agreements (+ &euro 2,579.6 m) + recognized
obligation from defined benefit pension plans (+ &euro 758.0 m) calculated on the basis of the reported EBITDAR (IAS 17) (&euro 1,990.4
m).
Due to the negative EBITDA, the negative leverage ratio calculated for financial year 2020 is not a meaningful indicator. Our medium-term
objective is to return to a leverage ratio of below 3.0x.
TUI Group's financial and liquidity management for all Group subsidiaries is centrally operated by TUI AG, which acts as the Group's
internal bank. Financing and refinancing requirements, derived from the multi-year finance budget, are satisfied by the timely conclusion
of appropriate financing instruments. The short-term liquidity reserve is safeguarded by syndicated credit facilities, bilateral bank
loans and liquid funds. Moreover, through intra-Group cash pooling the cash surpluses of individual Group companies are used to finance
the cash requirements of other Group companies.
Key figures of capital risk management
&euro million 2020 2019
adjusted
? Invested Capital 7,134.8 5,777.6
Underlying EBIT (IAS 17) - 3,032.8 893.5
ROIC (IAS 17) - 42.5 % 15.5 %
Leverage Ratio (IFRS 16) (Previous - 6.1 3.0
year IAS 17)
Reconciliation to EBITDAR (IAS 17)
&euro million 2020 2019
adjusted
EBIT (IFRS 16, previous year IAS 17) * - 2,927.4 768.7
Amortisation (+) / write-backs (-) of 1,504.4 -
other intangible assets and
depreciation (+) / write-backs (-) of
property, plant and equipment (IFRS
16)
Impairment of goodwill (IFRS 16) 68.1 -
Amortisation (+) / write-backs (-) of - 508.8
other intangible assets and
depreciation (+) / write-backs (-) of
property, plant and equipment (IAS 17)
EBITDA (IFRS 16) - 1,355.0 -
Adjustments IAS 17 / IFRS 16 (IFRS 16 - 645.5 -
impact)
EBITDA (IAS 17) - 2,000.5 1,277.5
Long-term rental, leasing and leasing 564.5 712.9
expenses (IAS 17)
EBITDAR (IAS 17) - 1,436.0 1,990.4
* The reconciliation from EBIT (IFRS 16) to earnings before income taxes is shown in the segment reporting.
Notes on the Cash Flow Statement
The cash flow statement shows the flow of cash and cash equivalents on the basis of a separate presentation of cash inflows and outflows
from operating, investing and financing activities. The effects of changes in the group of consolidated companies and of foreign currency
translation are eliminated. Having transitioned to IFRS 16, all leases are carried as right-of-use assets and lease liabilities in the
statement of financial position. As a result, most payments for leases are no longer carried in the cash outflow from operating
activities, but in the cash outflow from financing activities as interest payments and repayments of lease liabilities.
In the period under review, cash and cash equivalents declined by &euro 514.5 m to &euro 1,233.1 m. The balance sheet item 'Assets held
for sale' does not include any cash and cash equivalents (previous year &euro 6.1 m).
(42) Cash outflow / cash inflow from operating activities
Based on the Group result after tax, the cash flow from operating activities is derived using the indirect method. In the completed
financial year, the cash outflow from operating activities totalled &euro - 2,771.9 m (previous year &euro+ 1,114.9 m). The cash outflow
includes interest payments of &euro 25.1 m (previous year &euro 37.8 m) and dividends of &euro 7.7 m (previous year &euro 245.8 m).
Income tax payments resulted in a cash inflow of &euro 56.1 m (previous year &euro - 117.5 m).
(43) Cash inflow / cash outflow from investing activities
In financial year 2020, the cash inflow from investing activities totalled &euro 161.8 m (previous year &euro - 1,141.4 m). This amount
includes a cash outflow for capital expenditure related to property, plant and equipment and intangible assets of &euro 587.0 m (previous
year &euro 987.0 m), including &euro 2.5 m for interest capitalised as borrowing costs (previous year &euro 4.0 m). The Group also
recorded a cash inflow of &euro 109.9 m (previous year &euro 182.0 m) from the sale of property, plant and equipment and intangible
assets. In addition, investing activities include a cash inflow of &euro 689.3 m in connection with the sale of interests in consolidated
companies, including &euro 646.0 m for the divestment of Hapag-Lloyd Kreuzfahrten. A cash inflow of &euro 62.5 m was recorded from the
sale of interests in two associated companies. Further cash outflows relate to the acquisition of a hotel company and several travel
agencies (&euro 40.8 m), the acquisition of interests in a joint venture (&euro 0.5 m) and capital increases by joint ventures and
associates (&euro 88.1 m). A cash inflow of &euro 16.6 m related to the termination of short-term interest-bearing investments.
(44) Cash inflow / cash outflow from financing activities
The cash inflow from financing activities totalled &euro 2,112.5 m (previous year outflow of &euro 763.8 m). In the period under review,
TUI AG recorded a cash inflow of &euro 3,302.4 m from its syndicated credit facility after deduction of capital procurement costs. Other
TUI Group companies took out loans worth &euro 70.0 m. A cash outflow of &euro 693.8 m was used to repay financial liabilities, including
&euro 612.4 m for lease liabilities. In the reporting period, a cash outflow of &euro 251.9 m related to interest payments (previous year
&euro 117.9 m). A cash outflow of &euro 318.1 m related to dividend payments to TUI AG shareholders and a further outflow of &euro 0.6 m
related to dividend payments to minority share-holders. A cash inflow of &euro 7.1 m resulted from the issue of employee shares. An
amount of &euro 1.0 m was used to purchase shares transferred to TUI Group employees under the oneShare employee share programme. A
further cash outflow of &euro 1.6 m related to increasing the stake in a consolidated company.
(45) Development of cash and cash equivalents
Cash and cash equivalents comprise all liquid funds, i. e. cash in hand, bank balances and cheques.
Cash and cash equivalents declined by &euro 17.0 m (previous year &euro 10.1 m) due to foreign exchange effects.
Other Notes
(46) Significant events after balance sheet date
On 12 August 2020, TUI AG and the KfW reached an agreement to increase the tranche of KfW of the existing RCF by &euro 1,050.0 m to &euro
2,850.0 m. The lenders of the other tranches of the existing RCF agreed as well. Their tranches remain unchanged. The drawing of the
additional &euro 1,050.0 m is subject to the issuance of a convertible bond to the Economic Stabilisation Fund (WSF) in the amount of
&euro 150.0 m and a waiver of a financial covenant (interest coverage ratio) by the bondholders of the Senior Notes due in October 2021.
On 1 October 2020 TUI AG issued a warrant bond to the WSF. The warrant bond has an initial term of six years and is split up into 1,500
bonds. The bond would bear interest at a rate of 9.5 % p. a. TUI AG has a termination right once the &euro 1,050.0 m KfW tranche is
redeemed and terminated. The bond was used to issue separable warrants. The conversion price per share was set at the minimum amount of
&euro 2.56. The options have a term of 10 years and can be converted into TUI AG shares at any time.
Until the WSF has sold all warrant bonds to a third party or TUI has satisfied all payment obligations in respect of the warrant bonds
(or a combination of these two options has occurred), the terms of the documentation related to the warrant bonds restrict or forbid
certain activities of TUI Group;
· dividend payments of TUI AG;
· buy back of shares or capital decreases if not intended for a financial restructuring;
· the way we may remunerate board members of TUI AG;
· restrict our ability to purchase or make investments in other companies or expand our business;
The amendments to the terms and conditions of the Senior Notes worth &euro 300.0 m maturing in October 2021 took effect from 16 October
2020. As a result, TUI AG's obligation to comply with a certain interest cover has been suspended until the maturity date. In return, the
coupon was increased to 9.5 % p. a. from 1 October 2020. An additional interest payment of 2.0 % of the outstanding nominal amount of the
Senior Notes per quarter is due from 1 April 2021. TUI AG has also committed to an early redemption of the Senior Notes, in full or in
part, from certain additional funds raised by TUI AG provided that such funds raised by TUI AG amount to at least &euro 150.0 m. This
agreement does not affect funding taken out under government aid or support measures, from leases or from sale-and-leaseback agreements.
Accordingly in October 2020 both conditions are met so that TUI can raise further liquidity from the increase of the KfW tranche.
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 billion for TUI. A corresponding termsheet was signed
on December 2, 2020. The corresponding contracts for the individual components of the termsheet had not yet been signed at the time of
publication of this report. The package includes both the provision of financial liability and of equity. For further information we
refer to the section 'Going concern reporting according to the UK Corporate Governance Code'.
(47) Services of the auditors of the consolidated financial statements
TUI AG's consolidated financial statements have been audited by Deloitte GmbH Wirtschaftsprüfungsgesellschaft. Since financial year 2017,
Dr Hendrik Nardmann has been the auditor in charge. Total expenses for the services provided by the auditors of the consolidated
financial statements in financial year 2020 break down as follows:
Services of the auditors of the consolidated financial
statements
&euro million 2020 2019
Audit fees for TUI AG and subsidiaries 3.3 3.2
in Germany
Audit fees 3.3 3.2
Review of interim financial statements 0.8 1.6
Other certification services (mainly in 0.5 0.1
connection with comfort letters)
Other certification services 1.3 1.7
Total 4.6 4.9
(48) Remuneration of Executive and Supervisory Board members acc. to § 314 HGB
In the completed financial year, the remuneration paid to Supervisory Board members totalled &euro 3,372.7 k (previous year &euro 3,890.0
k).
Pension payments for former Executive Board members or their surviving dependants totalled &euro 6,055.3 k (previous year &euro 6,016.0
k) in the completed financial year. Pension obligations for former Executive Board members and their surviving dependants amounted to
&euro 73,483.7 k (previous year &euro 79,767.9 k) at the balance sheet date.
Additional information of the relevant amounts for individual Board members and further details on the remuneration system are provided
in the Remuneration Report included in the Management Report.
(49) Use of exemption provision
The following German subsidiaries fully included in consolidation made use of the exemption provision in accordance with section 264 (3)
of the German Commercial Code (HGB):
Use of exemption provisions
DEFAG Beteiligungsverwaltungs GmbH I, TUI Aviation Holding
Hanover GmbH, Hanover
DEFAG Beteiligungsverwaltungs GmbH III, TUI Beteiligungs GmbH,
Hanover Hanover
FIRST Travel GmbH, Hanover TUI Business Services
GmbH, Hanover
Flyloco GmbH, Rastatt TUI Customer
Operations GmbH,
Hanover
Last-Minute-Restplatzreisen GmbH, TUI Deutschland GmbH,
Rastatt Hanover
Leibniz-Service GmbH, Hanover TUI Group Services
GmbH, Hanover
l'tur GmbH, Rastatt TUI-Hapag Beteiligungs
GmbH, Hanover
MEDICO Flugreisen GmbH, Rastatt TUI Hotel
Betriebsgesellschaft
mbH, Hanover
MSN 1359 GmbH, Hanover TUI Immobilien
Services GmbH, Hanover
Preussag Beteiligungsverwaltungs GmbH TUI InfoTec GmbH,
IX, Hanover Hanover
Robinson Club GmbH, Hanover TUI Insurance Services
GmbH, Hanover
TICS GmbH Touristische Internet und Call TUI Leisure Travel
Center Services, Rastatt Service GmbH, Neuss
TLT Urlaubsreisen GmbH, Hanover TUI Magic Life GmbH,
Hanover
TUI 4 U GmbH, Bremen TUIfly GmbH,
Langenhagen
TUI aqtiv GmbH, Hanover TUIfly Vermarktungs
GmbH, Hanover
TUI Aviation GmbH, Hanover
(50) Related parties
Apart from the subsidiaries included in the consolidated financial statements, TUI AG, in carrying out its ordinary business activities,
maintains indirect or direct relationships with related parties. Related parties controlled by the TUI Group or over which the TUI Group
is able to exercise a significant influence are shown in the list of shareholdings published in the Federal Gazette
(www.bundesanzeiger.de). Apart from pure equity investments, related parties also include companies that supply goods or provide services
for TUI Group companies.
Financial obligations from order commitments vis-à-vis related parties primarily relate to the purchasing of hotel services.
Transactions with related parties
&euro million 2020 2019
Services provided by the Group
Management and consultancy services 76.5 132.9
Sales of tourism services 58.3 134.4
Other services 3.7 0.5
Total 138.5 267.8
Services received by the Group
Rental and leasing agreements 16.8 39.1
Purchase of hotel services 197.5 427.8
Distribution services 6.3 4.2
Other services 6.1 17.0
Total 226.7 488.1
Transactions with related parties
&euro million 2020 2019
Services provided by the Group to
non-consolidated Group companies 0.4 0.5
joint ventures 49.0 110.6
associates 48.2 86.7
other related parties 40.9 70.0
Total 138.5 267.8
Services received by the Group from
non-consolidated Group companies 0.3 1.0
joint ventures 169.2 363.4
associates 49.8 105.9
other related parties 7.4 17.8
Total 226.7 488.1
Transactions with joint ventures and associates are primarily effected in the Tourism segment. They relate in particular to the tourism
services of the hotel companies used by the Group's tour operators.
In accordance with IAS 24, all transactions with related parties were executed on an arm's length basis as would be customary with third
parties outside the Group.
In April 2020, RIUSA II S. A. sold Nakheel Riu Deira Islands Hotel FZCO for &euro 63.0 m to the joint venture Riu Hotels S. A. In July
2020, TUI Group transferred its subsidiary Hapag-Lloyd Kreuzfahrten and the cruise ships operated by the cruise line to the joint venture
TUI Cruises. For details of the transaction, we refer to the section 'Divestments'.
Receivables against related parties
&euro million 30 Sep 2020 30 Sep 2019
Trade receivables from
non-consolidated Group companies - 0.1
joint ventures 6.2 15.6
associates 5.6 78.0
other related parties 3.2 0.8
Total 15.0 94.5
Advances and loans to
non-consolidated Group companies 0.1 -
joint ventures 39.6 56.2
associates 60.0 5.9
Total 99.7 62.1
Payments on account to
joint ventures 28.6 30.1
Total 28.6 30.1
Other receivables from
non-consolidated Group companies 1.7 1.3
joint ventures 87.9 12.1
associates 1.7 3.1
other related parties 34.3 34.3
Total 125.6 50.8
Payables due to related parties
&euro million 30 Sep 2020 30 Sep 2019
Trade payables due to
non-consolidated Group companies 0.1 0.2
joint ventures 23.2 29.0
associates 7.5 21.7 1
other related parties - 0.2
Total 30.8 51.1
Financial liabilities due to
non-consolidated Group companies 0.5 0.3
joint ventures 134.6 137.1
Total 135.1 137.4
Other liabilities due to
non-consolidated Group companies 5.3 5.7
joint ventures 6.9 17.8
associates 3.8 4.9 1
key management personnel 3.2 3.4
Total 19.2 31.8
1 Prior year adjusted
Financial liabilities to joint ventures included liabilities from leases of &euro 134.6 m (previous year &euro 137.1 m).
The share of result of associates and joint ventures is shown separately by segment in segment reporting.
Unifirm Limited, Cyprus, held 24.9 % of the shares in TUI AG as at 30 September 2020. Unifirm Limited is con-trolled by the family of
Russian entrepreneur Alexei Mordashov, a member of TUI's Supervisory Board.
DH Deutsche Holdings Limited, a Cyprus-based company controlled by the joint venture partner Hamed El Chiaty, increased its equity stake
to 5.1 %.
At the balance sheet date, the joint venture Riu Hotels S. A. held 3.5 % of the shares in TUI AG. Members of the Riu family hold a 51 %
stake in Riu Hotels S. A. Joan Trían Riu is a member of TUI's Supervisory Board. The amount of compensation claimed by TUI from the other
Riu Group shareholders at the balance sheet date was &euro 34.3 m. This amount results from payments made by TUI and attributable to the
other shareholders of Riu Group.
The Executive Board and the Supervisory Board are key management personnel. They are therefore related parties in the meaning of IAS 24
whose compensation must be disclosed separately.
Remuneration of Executive and Supervisory Board
&euro million 2020 2019
Short-term benefits 7.7 8.5
Post-employment benefits 2.9 5.1 1
Share-based payment - 3.8 - 4.9
Other long-term benefits - -
Termination benefits - -
Total 6.8 8.7
1 Prior year adjusted
Post-employment benefits are transfers to or reversals of pension provisions for Executive Board members active in the reporting period.
The expenses mentioned do not meet the definition of remuneration for Executive and Supervisory Board members under German accounting
rules. The share-based payments are an offset amount of expenses due to the addition to the provision and income resulted from the
reversal of the provision due to the valuation.
Pension provisions for active Executive Board members total &euro 16.6 m (previous year &euro 16.2 m) as at the balance sheet date. In
addition, provisions of &euro 2.1 m (previous year &euro 5.9 m) are recognised relating to the long-term incentive programme.
(51) International Financial Reporting Standards (IFRS) not yet applied
New standards endorsed by the EU, but applicable after 30 Sep
2020
Standard Applicable from Amendments Expected
impact on
financial
position and
performance
Amendments to 1 Jan 2020 Materiality is No major
IAS 1 & IAS 8 a key concept impacts
Definition of in preparing
Material financial
statements
according to
IFRS. The
amendments
refine the
definition of
'material' and
clarify
how to apply
materiality.
The amendments
also align the
definition of
'material' and
ensure
consistency in
the
application of
that concept
across
all IFRS
Standards.
Framework 1 Jan 2020 The revised No impacts
Amendments to Conceptual
References to the Framework
Conceptual Framework includes
in IFRS Standards revised
definitions of
an asset and a
liability, and
new guidance
on measurement
and
derecognition,
presentation
and
disclosure.
References to
the Conceptual
Framework in
existing
Standards are
updated. The
revised
Conceptual
Framework is
not subject to
the
Endorsement
Process.
Amendments to IFRS 3 1 Jan 2020 The amendments No major
Definition of a to IFRS 3 impacts
Business clarify the
definition of
a business and
make it easier
for entities
to determine
whether an
acquisition
transaction
results in
recognition of
a group of
assets or a
business.
Amendments to IFRS 1 Jan 2020 The amendments No major
9, IAS 39 relate to the impacts
and IFRS 7 provision of
Interest Rate relief from
Benchmark Reform potential
(Phase 1) consequences
arising from
the reform of
interbank
offered rates
(IBORs) such
as
LIBOR on
companies'
financial
reporting.
They are
intended to
secure the
continuation
of hedging
relationships
despite the
replacement of
current
interest rates
with
alternative
rates.
Entities also
have to
disclose the
extent to
which their
hedges are
affected by
the interest
rate benchmark
reform.
Amendments to IFRS 1 Jun 2020 The amendments No impacts.
16 published by TUI expects
COVID-19-Related the IASB on 28 it
Rent Concessions May 2020 will not
provide elect to
lessees with apply this
an exemption new
from assessing practical
whether a expedient.
COVID-19-relat
ed rent
concession is
a lease
modification.
Lessees
applying the
exemption have
to account for
the rent
concessions as
if they were
not lease
modifications.
The amendments
are available
for rent
concessions
reducing lease
payments due
on or before
30 June 2021.
The following amendments and new standards have not yet been endorsed by the European Union.
New standards and interpretations not yet endorsed by the EU
and applicable after 30 Sep 2020
Standard Applicable Amendments Expected
from impact on
financial
position and
performance
Amendments to IFRS 1 Jan 2021 The amendments No major
9, IAS 39, IFRS 7, address issues impacts
IFRS 4 and IFRS 16 that affect
Interest Rate financial
Benchmark Reform reporting when
(Phase 2) an existing
interest rate
benchmark is
actually
replaced by an
alternative
interest rate
benchmark as a
result of the
interest rate
benchmark
reform.
Amendments to IAS 1 Jan 2022 The amendments TUI will
37 specify which review the
Onerous Contracts costs to include impacts of
in assessing these
whether a amendments in
contract is due course.
onerous. The We
amendments currently do
clarify that the not expect to
cost of see any
fulfilling a major
contract impacts.
consists of the
direct cost of
the contract
representing
either the
incremental
costs of
fulfilling the
contract or an
allocation of
other costs that
relate directly
to fulfilling
the contract.
Amendments to IAS 1 Jan 2022 The amendments No major
16 prohibit impacts
Proceeds before deducting from
Intended Use the cost of an
item of
property, plant
and equipment
any proceeds
from selling
items produced
while bringing
that asset to
the location and
condition
necessary for it
to be capable of
operating in the
manner intended
by management.
Instead, an
entity has to
recognise the
proceeds from
selling such
items, and the
cost of
producing those
items, in profit
or loss.
Various amendments 1 Jan 2022 The amendments No major
to resulting from impacts
IFRS (2018 - 2020 the Annual
Cycle) Improvements
2018- 2020 Cycle
include small
amendments to
IFRS 1, IFRS 9,
IAS 41,
and the
Illustrative
Examples
accompanying
IFRS 16.
Amendments to IFRS 1 Jan 2022 The amendments No impacts
3 update a
Reference to the reference to the
Conceptual Conceptual
Framework Framework in
IFRS 3 without
changing the
accounting
requirements for
business
combinations.
Amendments to IAS 1 Jan 2023 The amendments TUI will
1 to IAS 1 are review the
Classification of intended to impacts of
Liabilities as clarify the this
Current criteria used to amendment in
or Non-Current classify a due course.
liability as We currently
current or do not expect
non-current. In to see any
future, the major
classification impacts.
of liabilities
as current or
non-current will
exclusively be
based on
'rights' that
are in existence
at the end of
the reporting
period. The
amendments
additionally
include guidance
on the
interpretation
of the criterion
'right to defer
settlement by at
least twelve
months' and
clarify
what
'settlement'
refers to. On 15
July 2020, the
IASB issued an
amendment
resulting in the
deferral of the
effective date
to 1 January
2023.
IFRS 17 1 Jan 2023 IFRS 17 Not relevant
Insurance establishes the
Contracts principles for
the accounting
for insurance
contracts and
replaces IFRS 4.
On 25 June 2020,
the IASB
published
Amendments to
IFRS 17 and
deferred the
effective date
of the Standard
to 1 January
2023. Amendments
were also issued
to address
challenges
arising from the
implementation
of IFRS 17 that
were identified
after it was
published.
(52) TUI Group Shareholdings
Company Country Capital
share in %
Consolidated companies
Tourism
Absolut Holding Limited, Qormi Malta 99.9
Acampora Travel S. r. l., Italy 100
Sorrent
Adehy Limited, Dublin Ireland 100
Advent Insurance PCC Limited Malta 100
(Absolut Cell), Qormi
Africa Focus Tours Namibia Namibia 100
(Proprietary) Limited, Windhuk
Antwun S. A., Clémency Luxembourg 100
ATC African Travel Concept South Africa 50.1
Proprietary Limitied, Kapstadt
ATC-Meetings and Conferences South Africa 100
Proprietary Limitied, Kapstadt
B. D.S Destination Services Egypt 100
Tours, Kairo
B2B d. o. o., Dubrovnik Croatia 100
BU RIUSA II EOOD, Sofia Bulgaria 100
Cabotel-Hoteleria e Turismo Cape Verde 100
Lda., Santiago
Cassata Travel s. r. l., Cefalù Italy 66
(Palermo)
Cel Obert SL, Sant Joan de Andorra 100
Caselles
Chaves Hotel & Investimentos S. Cape Verde 100
A., Sal-Rei, Boa Vista Island
Citirama Ltd., Quatre Bornes Mauritius 100
Club Hotel CV SA, Santa Maria Cape Verde 100
Club Hôtel Management Tunisia Tunisia 100
SARL, Djerba
Cruisetour AG, Zürich Switzerland 100
Crystal Holidays, Inc, United States 100
Wilmington (Delaware)
Daidalos Hotel- und Greece 89.8
Touristikunternehmen A. E.,
Athen
Darecko S. A., Clémency Luxembourg 100
Destination Services Morocco SA, Morocco 100
Agadir
Destination Services Singapore Singapore 100
Pte Limited, Singapur
Egyptian Germany Co. for Hotels Egypt 66.6
Limited, Kairo
Elena SL, Palma de Mallorca Spain 100
Entreprises Hotelières et Greece 100
Touristiques PALADIEN Lena Mary
A. E., Argolis
ETA Turizm Yatirim ve Turkey 100
Isletmeleri A. S., Ankara
Evre Grup Turizm Yatirim A. S., Turkey 100
Ankara
Explorers Travel Club Limited, United Kingdom 100
Luton
Faberest S. r. l., Verona Italy 100
First Choice (Turkey) Limited, United Kingdom 100
Luton
First Choice Holiday United Kingdom 100
Hypermarkets Limited, Luton
First Choice Holidays & Flights United Kingdom 100
Limited, Luton
First Choice Land (Ireland) Ireland 100
Limited, Dublin
First Choice Travel Shops United Kingdom 100
Limited, Luton
FIRST Reisebüro Güttler GmbH & Germany 75.1
Co. KG, Dormagen
FIRST Travel GmbH, Hanover Germany 100
flyloco GmbH, Rastatt Germany 100
Follow Coordinate Hotels Portugal 100
Portugal Unipessoal Lda,
Albufeira
Fritidsresor Tours & Travels India 100
India Pvt Ltd, Bardez, Goa
GBH Turizm Sanayi Isletmecilik Turkey 100
ve Ticaret A. S., Istanbul
GEAFOND Número Dos Fuerteventura Spain 100
S. A., Las Palmas, Gran Canaria
GEAFOND Número Uno Lanzarote S. Spain 100
A., Las Palmas, Gran Canaria
Gemma Limited, Unguja Tansania 100
German Tur Turizm Ticaret A. S., Turkey 100
Izmir
Groupement Touristique France 100
International SAS, Lille
Gulliver Travel d. o. o., Croatia 100
Dubrovnik
Hannibal Tourisme et Culture SA, Tunisia 100
Tunis
Hapag-Lloyd Reisebüro Hagen GmbH Germany 70
& Co. KG, Hanover
Hellenic EFS Hotel Management E. Greece 100
P. E., Athen
Holiday Center S. A., Cala Spain 100
Serena / Cala d'Or
Holidays Services S. A., Agadir Morocco 100
Iberotel International A. S., Turkey 100
Antalya
Iberotel Otelcilik A. S., Turkey 100
Istanbul
Imperial Cruising Company SARL, Egypt 90
Heliopolis-Kairo
Incorun SAS, Saint Denis Reunion Island 51
Inter Hotel SARL, Tunis Tunisia 100
Intercruises Shoreside & Port Canada 100
Services Canada, Inc., Quebec
Intercruises Shoreside & Port Australia 100
Services Pty Limited, Sydney
Intercruises Shoreside & Port Monaco 100
Services Sam, Monaco
Intercruises Shoreside & Port France 100
Services SARL, Paris
Intercruises Shoreside & Port United States 100
Services, Inc., State of
Delaware
Itaria Limited, Nikosia Cyprus 100
Jandia Playa S. A., Morro Jable Spain 100
/ Fuerteventura
Kurt Safari Proprietary South Africa 51
Limitied, White River -
Mpumalanga
Kybele Turizm Yatirim San. Ve Turkey 100
Tic. A. S., Istanbul
Label Tour EURL, Levallois France 100
Perret
Last-Minute-Restplatzreisen Germany 100
GmbH, Rastatt
Le Passage to India Tours and India 91
Travels Pvt Ltd, New Delhi
Lima Tours S. A. C., Lima Peru 100
Lodges & Mountain Hotels SARL, France 100
Notre Dame de Bellecombe, Savoie
l'tur GmbH, Rastatt Germany 100
L'TUR Suisse AG, Dübendorf / ZH Switzerland 99.5
Lunn Poly Limited, Luton United Kingdom 100
Luso Ds - Agência de Viagens Portugal 100
Unipessoal Lda, Faro
Magic Hotels SA, Tunis Tunisia 100
MAGIC LIFE Assets GmbH, Wien Austria 100
Magic Life Egypt for Hotels LLC, Egypt 100
Sharm el Sheikh
Magic Tourism International S. Tunisia 100
A., Tunis
Manahe Ltd., Quatre Bornes Mauritius 51
Marella Cruises Limited, Luton United Kingdom 100
Medico Flugreisen GmbH, Rastatt Germany 100
Meetings & Events International United Kingdom 100
Limited, Luton
Meetings & Events Spain S. L. Spain 100
U., Palma de Mallorca
Meetings & Events UK Limited, United Kingdom 100
Luton
Morvik EURL, Bourg Saint Maurice France 100
Musement S. p. A., Mailand Italy 100
MX RIUSA II S. A. de C. V., Cabo Mexico 100
San Lucas
Nazar Nordic AB, Malmö Sweden 100
Nordotel S. A., San Bartolomé de Spain 100
Tirajana
Nouvelles Frontières Senegal S. Senegal 100
R. L., Dakar
Nungwi Limited, Sansibar Tanzania 100
Ocean College LLC, Sharm el Egypt 100
Sheikh
Ocean Ventures for Hotels and Egypt 98
Tourism Services SAE,
Sharm el Sheikh
Pacific World (Beijing) Travel China 100
Agency Co., Ltd., Peking
Pacific World (Shanghai) Travel China 100
Agency Co. Limited, Shanghai
Pacific World Destination East Malaysia 65
Sdn. Bhd., Penang
Pacific World Meetings & Events Thailand 49
(Thailand) Limited, Bangkok*
* entrepreneurial management
Pacific World Meetings & Events Greece 100
Hellas Travel Limited, Athen
Pacific World Meetings & Events Hong Kong SAR 100
Hong Kong, Limited, Hongkong
Pacific World Meetings & Events Monaco 100
SAM, Monaco
Pacific World Meetings & Events Singapore 100
Singapore Pte. Ltd, Singapur
Pacific World Meetings and France 100
Events France SARL, Nizza
Pacific World Travel Services Vietnam 90
Company Limited, Ho Chi Minh
City
Papirüs Otelcilik Yatirim Turizm Turkey 100
Seyahat Insaat Ticaret A. S.,
Antalya
Paradise Hotel Management Egypt 100
Company LLC, Kairo
PATS N. V., Oostende Belgium 100
Professor Kohts Vei 108 AS, Norway 100
Stabekk
Promociones y Edificaciones Spain 100
Chiclana S. A., Palma de
Mallorca
PT. Pacific World Nusantara, Indonesia 100
Bali
RC Clubhotel Cyprus Limited, Cyprus 100
Limassol
RCHM S. A. S., Agadir Morocco 100
Rideway Investments Limited, United Kingdom 100
London
Riu Jamaicotel Ltd., Negril Jamaica 100
Riu Le Morne Ltd, Port Louis Mauritius 100
RIUSA II S. A., Palma de Spain 50
Mallorca*
* entrepreneurial management
RIUSA NED B. V., Amsterdam Netherlands 100
Robinson Austria Clubhotel GmbH, Austria 100
Villach-Landskron
Robinson Club GmbH, Hanover Germany 100
Robinson Club Italia S. p. A., Italy 100
Marina di Ugento
Robinson Club Maldives Private Maldives 100
Limited, Malé
Robinson Clubhotel Turizm Ltd. Turkey 100
Sti., Istanbul
Robinson Hoteles España S. A., Spain 100
Cala d'Or
Robinson Hotels Portugal S. A., Portugal 67
Vila Nova de Cacela
Robinson Otelcilik A. S., Turkey 100
Istanbul
Santa Maria Hotels SA, Santa Cape Verde 100
Maria
SERAC Travel GmbH, Zermatt Switzerland 100
Silversun Monitor Proprietary South Africa 85
Limited, Kapstadt
Skymead Leasing Limited, Luton United Kingdom 100
Société d'Exploitation du Morocco 100
Paladien Marrakech SA,
Marrakesch
Société d'Investissement Aérien Morocco 100
S. A., Casablanca
Société d'Investissement et France 100
d'Exploration du Paladien de
Calcatoggio (SIEPAC), Montreuil
Société d'investissement Morocco 100
hotelier Almoravides S. A.,
Marrakesch
Société Marocaine pour le Morocco 100
Developpement des Transports
Touristiques S. A., Agadir
Sons of South Sinai for Tourism Egypt 84.1
Services and Supplies SAE, Sharm
el Sheikh
Specialist Holidays, Inc., Canada 100
Mississauga, Ontario
Stella Polaris Creta A. E., Greece 100
Heraklion
STIVA RII Ltd., Dublin Ireland 100
Summer Times International Ltd., Mauritius 100
Quatre Bornes
Summer Times Ltd., Quatre Bornes Mauritius 100
Sunshine Cruises Limited, Luton United Kingdom 100
Tantur Turizm Seyahat A. S., Turkey 100
Istanbul
TdC Agricoltura Società agricola Italy 100
a r. l., Florenz
Tec4Jets NV, Zaventem Belgium 100
Tenuta di Castelfalfi S. p. A., Italy 100
Florenz
Thomson Reisen GmbH, St. Johann Austria 100
Thomson Travel Group (Holdings) United Kingdom 100
Limited, Luton
TICS GmbH Touristische Internet Germany 100
und Call Center Services,
Rastatt
TLT Reisebüro GmbH, Hannover Germany 100
TLT Urlaubsreisen GmbH, Hannover Germany 100
Transfar - Agencia de Viagens e Portugal 100
Turismo Lda., Faro
Travel Choice Limited, Luton United Kingdom 100
Travel Guide With Offline Maps Netherlands 100
B. V., Amsterdam
TT Hotels Italia S. R. L., Rom Italy 100
TT Hotels Turkey Otel Hizmetleri Turkey 100
Turizm ve ticaret A. S., Antalya
TUI (Suisse) AG, Zürich Switzerland 100
TUI 4 U GmbH, Bremen Germany 100
TUI Airlines Belgium N. V., Belgium 100
Oostende
TUI Airlines Nederland B. V., Netherlands 100
Rijswijk
TUI Airways Limited, Luton United Kingdom 100
TUI aqtiv GmbH, Hannover Germany 100
TUI Austria Holding GmbH, Wien Austria 100
TUI Belgium NV, Oostende Belgium 100
TUI Belgium Real Estate N. V., Belgium 100
Brüssel
TUI Belgium Retail N. V., Belgium 100
Zaventem
TUI Blue AT GmbH, Schladming Austria 100
TUI Bulgaria EOOD, Varna Bulgaria 100
TUI Curaçao N. V., Curaçao Country of 100
Curaçao
TUI Customer Operations GmbH, Germany 100
Hannover
TUI Cyprus Limited, Nikosia Cyprus 100
TUI Danmark A / S, Kopenhagen Denmark 100
TUI Destination Experiences Costa Rica 100
Costa Rica SA, San José
TUI Destination Services Cyprus, Cyprus 100
Nikosia
TUI Deutschland GmbH, Hannover Germany 100
TUI Dominicana SAS, Higuey Dominican 100
Republic
TUI DS USA, Inc, Wilmington United States 100
(Delaware)
TUI España Turismo SL, Palma de Spain 100
Mallorca
TUI Finland Oy Ab, Helsinki Finland 100
TUI France SA, Nanterre France 100
TUI Hellas Travel Tourism and Greece 100
Airlines A. E., Athen
TUI Holding Spain S. L., Palma Spain 100
de Mallorca
TUI Hotel Betriebsgesellschaft Germany 100
mbH, Hannover
TUI Ireland Limited, Luton United Kingdom 100
TUI Italia S. r. l., Fidenza Italy 100
TUI Jamaica Limited, Montego Bay Jamaica 100
TUI Magic Life GmbH, Hannover Germany 100
TUI Malta Limited, Pieta Malta 100
TUI Mexicana SA de CV, Mexico Mexico 100
TUI Nederland Holding N. V., Netherlands 100
Rijswijk
TUI Nederland N. V., Rijswijk Netherlands 100
TUI Nordic Holding AB, Stockholm Sweden 100
TUI Norge AS, Stabekk Norway 100
TUI Northern Europe Limited, United Kingdom 100
Luton
TUI Norway Holding AS, Stabekk Norway 100
TUI Österreich GmbH, Wien Austria 100
TUI Pension Scheme (UK) Limited, United Kingdom 100
Luton
TUI Poland Dystrybucja Sp. z o. Poland 100
o., Warschau
TUI Poland Sp. z o. o., Warschau Poland 100
TUI PORTUGAL - Agencia de Portugal 100
Viagens e Turismo S. A., Faro
TUI Reisecenter Austria Business Austria 74.9
Travel GmbH, Wien
TUI Service AG, Altendorf Switzerland 100
TUI Suisse Retail AG, Zürich Switzerland 100
TUI Sverige AB, Stockholm Sweden 100
TUI Technology NV, Zaventem Belgium 100
TUI Travel Distribution N. V., Belgium 100
Oostende
TUI UK Italia Srl, Turin Italy 100
TUI UK Limited, Luton United Kingdom 100
TUI UK Retail Limited, Luton United Kingdom 100
TUI UK Transport Limited, Luton United Kingdom 100
TUIfly GmbH, Langenhagen Germany 100
TUIfly Nordic AB, Stockholm Sweden 100
TUIfly Vermarktungs GmbH, Germany 100
Hanover
Tunisie Investment Services Tunisia 100
Holding S. A., Tunis
Tunisie Voyages S. A., Tunis Tunisia 100
Tunisotel S. A. R. L., Tunis Tunisia 100
Turcotel Turizm A. S., Istanbul Turkey 100
Turkuaz Insaat Turizm A. S., Turkey 100
Ankara
Ultramar Express Transport S. Spain 100
A., Palma de Mallorca
WOT Hotels Adriatic Management Croatia 51
d. o. o., Zagreb
Zanzibar Beach Village Limited, Tanzania 100
Sansibar
All other segments
Absolut Insurance Limited, St. Guernsey 100
Peter Port
Canadian Pacific (UK) Limited, United Kingdom 100
Luton
Cast Agencies Europe Limited, United Kingdom 100
Luton
CP Ships (Bermuda) Ltd., Bermuda 100
Hamilton
CP Ships (UK) Limited, Luton United Kingdom 100
CP Ships Ltd., Saint John Canada 100
DEFAG Beteiligungsverwaltungs Germany 100
GmbH I, Hannover
DEFAG Beteiligungsverwaltungs Germany 100
GmbH III, Hannover
Europa 2 Ltd, Valletta Malta 100
First Choice Holidays Finance United Kingdom 100
Limited, Luton
First Choice Holidays Limited, United Kingdom 100
Luton
First Choice Olympic Limited, United Kingdom 100
Luton
Hapag-Lloyd (Bahamas) Limited, Bahamas 100
Nassau
Jetset Group Holding (Brazil) United Kingdom 100
Limited, Luton
Jetset Group Holding Limited, United Kingdom 100
Luton
Leibniz-Service GmbH, Hannover Germany 100
Mala Pronta Viagens e Turismo Brazil 100
Ltda., Curitiba
Manufacturer's Serialnumber 852 Ireland 100
Limited, Dublin
MSN 1359 GmbH, Hannover Germany 100
PM Peiner Maschinen GmbH, Germany 100
Hannover
Preussag Beteiligungsverwaltungs Germany 100
GmbH IX, Hannover
Sovereign Tour Operations United Kingdom 100
Limited, Luton
Thomson Airways Trustee Limited, United Kingdom 100
Luton
travel-Ba.Sys GmbH & Co KG, Germany 83.5
Mülheim an der Ruhr
TUI Ambassador Tours Unipessoal Portugal 100
Lda, Lissabon
TUI Aviation GmbH, Hannover Germany 100
TUI Aviation Holding GmbH, Germany 100
Hannover
TUI Aviation Services Limited, United Kingdom 100
Luton
TUI Beteiligungs GmbH, Hannover Germany 100
TUI Brasil Operadora e Agencia Brazil 100
de Viagens LTDA, Curitiba
TUI Business Services GmbH, Germany 100
Hannover
TUI Canada Holdings, Inc, Canada 100
Toronto
TUI Chile Operador y Agencia de Chile 100
Viajes SpA, Santiago
TUI China Travel CO. Ltd., China 75
Peking
TUI Colombia Operadora y Agencia Colombia 100
de Viajes SAS, Bogota
TUI Group Fleet Finance Limited, United Kingdom 100
Luton
TUI Group Services GmbH, Germany 100
Hannover
TUI Group UK Healthcare Limited, United Kingdom 100
Luton
TUI Group UK Trustee Limited, United Kingdom 100
Luton
TUI Immobilien Services GmbH, Germany 100
Hannover
TUI India Private Limited, New India 100
Delhi
TUI InfoTec GmbH, Hanover Germany 100
TUI Insurance Services GmbH, Germany 100
Hannover
TUI International Holiday Malaysia 100
(Malaysia) Sdn. Bhd., Kuala
Lumpur
TUI Leisure Travel Service GmbH, Germany 100
Neuss
TUI LTE Viajes S.A de C.V, Mexico 100
Mexico City
TUI Spain, SLU, Madrid Spain 100
TUI Travel Amber E&W LLP, Luton United Kingdom 100
TUI Travel Aviation Finance United Kingdom 100
Limited, Luton
TUI Travel Common Investment United Kingdom 100
Fund Trustee Limited, Luton
TUI Travel Group Management United Kingdom 100
Services Limited, Luton
TUI Travel Group Solutions United Kingdom 100
Limited, Luton
TUI Travel Holdings Limited, United Kingdom 100
Luton
TUI Travel Limited, Luton United Kingdom 100
TUI Travel Overseas Holdings United Kingdom 100
Limited, Luton
TUI-Hapag Beteiligungs GmbH, Germany 100
Hanover
Non-consolidated Group companies
Tourism
"Schwerin Plus" Germany 80
Touristik-Service GmbH, Schwerin
Airline Consultancy Services S. Morocco 100
A. R. L., Casablanca
Ambassador Tours S. A., Spain 100
Barcelona
Centro de Servicios Destination Mexico 100
Management SA de CV, Cancun
FIRST Reisebüro Güttler Germany 75
Verwaltungs GmbH, Hanover
Gebeco Verwaltungsgesellschaft Germany 50.2
mbH, Kiel
Hapag-Lloyd Reisebüro Hagen Germany 70
Verwaltungs GmbH, Hanover
Hotel Club du Carbet SA, France 100
Levallois Perret
HV Finance SAS, Levallois Perret France 100
Ikaros Travel A. E.(i. L.), Greece 100
Heraklion
L'TUR Polska Sp.z o. o., Stettin Poland 100
L'TUR SARL, Schiltigheim France 100
Lunn Poly (Jersey) Limited, St. Jersey 100
Helier
N. S. E. Travel and Tourism A. Greece 100
E. (i. L.), Athen
NEA Synora Hotels Limited Greece 100
(Hinitsa Beach), Porto Heli
Argolide
New Eden S. A., Marrakesch Morocco 100
Nouvelles Frontières Burkina Burkina Faso 100
Faso EURL, Ouagadougou
Nouvelles Frontières Tereso Ivory Coast 100
EURL, Grand Bassam
Nouvelles Frontières Togo S. R. Togo 99
L.(i.L), Lome
PCO Asia Pacific SDN BHD, George Malaysia 100
Town (Penang)
Résidence Hôtelière Les Pins France 100
SARL (i. L.), Levallois Perret
Società Consortile a r. l. Italy 100
Tutela dei Viaggiatori TUI
Italia, Fidenza (Pr)
Société de Gestion du resort Al Morocco 100
Baraka, Marrakesch
T-Développement SAS, Levallois France 100
Perret
Trendturc Turizm Otelcilik ve Turkey 100
Ticaret A. S., Istanbul
Triposo GmbH i. L., Berlin Germany 100
Triposo Travel B. V., Amsterdam Netherlands 100
TUI 4 U Poland sp.zo. o., Poland 100
Warschau
TUI Blue DE GmbH, Hannover Germany 100
TUI d. o. o., Maribor Slovenia 100
TUI Magyarország Utazasi Iroda Hungary 100
Kft., Budapest
TUI Reisecenter GmbH, Salzburg Austria 100
TUI ReiseCenter Slovensko s. r. Slovakia (Slovak 100
o., Bratislava Republic)
TUI Travel Cyprus Limited, Cyprus 100
Nikosia
TUIFly Academy Brussels, Belgium 100
Zaventem
VPM Antilles S. R. L., Levallois France 100
Perret
VPM SA, Levallois Perret France 100
All other segments
Bergbau Goslar GmbH, Goslar Germany 100
travel-Ba.Sys Beteiligungs GmbH, Germany 83.5
Mülheim an der Ruhr
Joint ventures and associates
Tourism
Abou Soma for Hotels S. A. E., Egypt 16.7
Giza
Ahungalla Resorts Limited, Sri Lanka 40
Colombo
Aitken Spence Travels (Private) Sri Lanka 50
Limited, Colombo
Alpha Tourism and Marketing Mauritius 25
Services Ltd., Port Louis
ARP Africa Travel Limited, United Kingdom 25
Harrow
Atlantica Hellas A. E., Rhodos Greece 50
Atlantica Hotels and Resorts Cyprus 49.9
Limited, Lemesos
Bartu Turizm Yatirimlari Anonim Turkey 50
Sirketi, Istanbul
Clubhotel Kleinarl GmbH & Co KG, Austria 24
Flachau
Corsair SA, Rungis France 25
Daktari Travel & Tours Ltd., Cyprus 33.3
Limassol
DER Reisecenter TUI GmbH, Germany 50
Dresden
Diamondale Limited, Dublin Ireland 27
ENC for touristic Projects Egypt 50
Company S. A. E., Sharm el
Sheikh
Etapex, S. A., Agadir Morocco 35
Fanara Residence for Hotels S. Egypt 50
A. E., Sharm el Sheikh
Gebeco Gesellschaft für Germany 50.1
internationale Begegnung und
Cooperation mbH & Co. KG, Kiel
GRUPOTEL DOS S. A., Can Picafort Spain 50
Ha Minh Ngan Company Limited, Vietnam 50
Hanoi
Holiday Travel (Israel) Limited, Israel 50
Airport City
Hydrant Refuelling System NV, Belgium 25
Brüssel
InteRes Gesellschaft für Germany 25.2
Informationstechnologie mbH,
Darmstadt
Interyachting Limited, Limassol Cyprus 45
Jaz Hospitality Services DMCC, United Arab 50
Dubai Emirates
Jaz Hotels & Resorts S. A. E., Egypt 51
Kairo
Kamarayat Nabq Company for Egypt 50
Hotels S. A. E., Sharm el Sheikh
Karisma Hotels Adriatic d. o. Croatia 33.3
o., Zagreb
Karisma Hotels Caribbean S. A., Panama 50
Panama
Pollman's Tours and Safaris Kenya 25
Limited, Mombasa
Raiffeisen-Tours RT-Reisen GmbH, Germany 25.1
Burghausen
Ranger Safaris Ltd., Arusha Tanzania 25
Riu Hotels S. A., Palma de Spain 49
Mallorca
Sharm El Maya Touristic Hotels Egypt 50
Co. S. A. E., Kairo
Südwest Presse + Hapag-Lloyd Germany 50
Reisebüro GmbH & Co.KG, Ulm
Sun Oasis for Hotels Company S. Egypt 50
A. E., Hurghada
Sunwing Travel Group, Inc, Canada 49
Toronto
Teckcenter Reisebüro GmbH, Germany 50
Kirchheim unter Teck
Tikida Bay S. A., Agadir Morocco 34
TIKIDA DUNES S. A., Agadir Morocco 30
Tikida Palmeraie S. A., Morocco 33.3
Marrakesch
Togebi Holdings Limited, Nikosia Cyprus 10
Travco Group Holding S. A. E., Egypt 50
Kairo
TRAVELStar GmbH, Hanover Germany 50
TRAVELStar Touristik GmbH & Co. Austria 50
OHG, Wien
TUI Cruises GmbH, Hamburg Germany 50
UK Hotel Holdings FZC L. L. C., United Arab 50
Fujairah Emirates
Vitya Holding Co. Ltd., Takua, Thailand 47.5
Phang Nga Province
WOT Hotels Adriatic Asset Croatia 50
Company d. o. o., Tucepi
All other segments
.BOSYS SOFTWARE GMBH, Hamburg Germany 25.2
Responsibility Statement
by Management
To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a
true and fair view of the net assets, financial position and results of operations of the Group, and the group management report includes
a fair review of the development and performance of the business and the position of the Group, together with a description of the
principal opportunities and risks associated with the expected development of the Group.
Hanover, 9 December 2020
The Executive Board
Friedrich Joussen David Burling Birgit Conix
Sebastian Ebel Dr Elke Eller Frank Rosenberger
INDEPENT AUDITOR'S REPORT
To TUI AG, Berlin and Hanover / Germany
Report on the audit of the consolidated financial statements and of the combined management report
Audit Opinions
We have audited the consolidated financial statements of TUI AG, Berlin and Hanover / Germany, and its subsidiaries (the Group), which
comprise the consolidated statement of financial position as at 30 September 2020, and the consolidated statement of profit or loss and
other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the
financial year from 1 October 2019 to 30 September 2020, and the notes to the consolidated financial statements, including a summary of
significant accounting policies. In addition, we have audited the combined management report for the parent and the group of TUI AG,
Berlin and Hanover / Germany, for the financial year from 1 October 2019 to 30 September 2020. In accordance with the German legal
requirements, we have not audited the content of those parts of the combined management report set out in the appendix to the auditor's
report.
In our opinion, on the basis of the knowledge obtained in the audit,
· the accompanying consolidated financial statements comply, in all material respects, with the IFRS as adopted by the EU and the
additional requirements of German commercial law pursuant to Section 315e (1) German Commercial Code (HGB) and, in compliance with
these requirements, give a true and fair view of the assets, liabilities and financial position of the Group as at 30 September 2020
and of its financial performance for the financial year from 1 October 2019 to 30 September 2020, and
· the accompanying combined management report as a whole provides an appropriate view of the Group's position. In all material
respects, this combined management report is consistent with the consolidated financial statements, complies with German legal
requirements and appropriately presents the opportunities and risks of future development. Our audit opinion on the combined management
report does not cover the content of those parts of the combined management report set out in the appendix to the auditor's report.
Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of
the consolidated financial statements and of the combined management report.
Basis for the Audit Opinions
We conducted our audit of the consolidated financial statements and of the combined management report in accordance with Section 317 HGB
and the EU Audit Regulation (No 537 / 2014; referred to subsequently as "EU Audit Regulation") and in compliance with German Generally
Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW). We performed the audit of the
consolidated financial statements in supplementary compliance with the International Standards on Auditing (ISA). Our responsibilities
under those requirements, principles and standards are further described in the "Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the Combined Management Report" section of our auditor's report. We are independent of the group
entities in accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other
German professional responsibilities in accordance with these requirements. In addition, in accordance with Article 10 (2) point (f) of
the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU Audit
Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions
on the consolidated financial statements and on the combined management report.
Material Uncertainty Related to Going Concern
We refer to the "Viability Statement" section of the combined management report and to the chapter "Going concern reporting according to
the UK Corporate Governance Code" in the notes to the consolidated financial statements, in which the management board describes that as
a result of the new travel restrictions in force since autumn 2020, and since it is possible that an increase in new travel bookings and
associated payments on account might fail to materialise, there are not enough financial resources available to settle TUI AG's payment
obligations. In order to maintain the solvency of TUI Group, the management board thus, in principle, agreed on a third financial package
with the Economic Stabilisation Fund, KfW, the dominant shareholder of TUI AG, and further financial partners. If this financial package
fails to be successfully implemented, there is a risk that TUI AG might encounter insolvency in the first quarter of fiscal year 2021. As
is described in the "Viability Statement" section in the combined management report and in the chapter "Going concern reporting according
to the UK Corporate Governance Code" in the notes to the consolidated financial statements, the successful implementation of the third
financial package is subject to certain conditions yet to be met. Because of the future development in terms of the travel restrictions
and the related impacts on the assets, liabilities, financial situation and financial performance, the financial covenants agreed with
the creditors as a prerequisite for granting the loans can probably not be met as at 30 September 2021 and beyond. Moreover, risks
regarding TUI Group's solvency arise from the uncertainty in view of the future development. If, in particular, the travel restrictions
remain in force in the financial year 2020 / 21 and beyond, and / or a permanent reluctance to travel materialises, there is a
possibility that the liquidity of TUI AG continues to be at risk. In the light of the situation described above, uncertainty moreover
prevails as to whether the external loans can be refinanced. Therefore, the Group's existence as a going concern is endangered. As is
presented in the above sections of the combined management report and the notes to the consolidated financial statements, these events
and conditions indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going
concern, and constitute a risk endangering the existence of the Group as a going concern within the meaning of Section 322 (2) sentence 3
HGB.
During our audit, we considered whether the preparation of the consolidated financial statements using the going concern basis of
accounting and the presentations of the matters that may cast significant doubt on the Group's ability to continue as a going concern set
out in the notes to the consolidated financial statements and the combined management report are appropriate. To this end, we reviewed,
in particular, the liquidity forecasts and plans for future measures of the management board underlying its forecasts and estimates,
assessing whether the liquidity forecasts are plausible, and whether the management board's plans are feasible in the circumstances of
the situation.
During our audit, we initially critically reviewed the draft of the Independent Business Review prepared by an external expert. We
verified the plausibility of the multi-year planning on which this report is based and the assumptions it contains by comparing them with
general and industry-specific market expectations and historical data.
In this process, we were supported by internal valuation and restructuring specialists. During the entire audit process, we regularly
discussed the individual measures with representatives of TUI Group. Together with our specialists, we moreover critically discussed the
results the draft of the Independent Business Review with the experts who had prepared the reports and the representatives of TUI.
As of the liquidity and financing measures already carried out during the preparation period, we inspected the relevant documents,
contracts and agreements, critically reviewed them and - where they had not yet been implemented - assessed their feasibility.
In particular, we critically reviewed the current short-term liquidity forecast prepared by the Company until the completion of the
audit. We also examined the underlying updated assumptions, particularly with regard to revenue expectations, based on supporting
evidence, and assessed their traceability and plausibility. Involving internal specialists, we assessed the plausibility of the
expectations regarding the further development of the COVID-19-pandemic underlying the short-term development.
We critically assessed the prospects for the successful implementation of the third financing package in terms of plausibility. In
addition, we satisfied ourselves of the appropriateness of the disclosures made in the consolidated financial statements and in the
combined management report.
Our audit opinions were not modified in respect of this matter.
Key Audit Matters in the Audit of the Consolidated Financial Statements
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements for the financial year from 1 October 2019 to 30 September 2020. These matters were addressed in the context of our
audit of the consolidated financial statements as a whole and in forming our audit opinion thereon; we do not provide a separate audit
opinion on these matters.
In addition to the matter described in section "Material Uncertainty Related to Going Concern", we have identified the matters described
in the following as key audit matters:
recoverability of goodwill,
recoverability of touristic prepayments for hotel services,
recoverability of deferred tax assets,
specific provisions, and
lease accounting under IFRS 16.
Our presentation of these key audit matters has been structured as follows:
description (including reference to corresponding information in the consolidated financial statements), and
auditor's response.
Recoverability of Goodwill
In TUI AG's consolidated financial statements as at 30 September 2020, goodwill totalling mEUR 2,914.5 is reported under the item
"Goodwill" reported in the statement of financial position. Goodwill is subject to an impairment test at least once a year. Valuation is
made by means of a valuation model based on the discounted cash flow method. Since the outcome of this valuation strongly depends on the
estimate of future cash inflows by the management board and on the discount rate used, in the light of the uncertainty of further impacts
of the COVID-19-pandemic, there is an increased degree of forecasting uncertainty. Thus, the valuation is subject to significant
uncertainty. Against this background, we believe that this is a key audit matter.
The Company's disclosures on goodwill are provided in Note (12) of the notes to the consolidated financial statements.
We evaluated the process for performing the impairment test on goodwill, and carried out an assessment of the accounting-relevant
controls contained therein. Specifically, we satisfied ourselves of the appropriateness of the future cash inflows used in the
calculation. To do so, among other things, we compared these figures with the current budgets contained in the three-year plan adopted by
the management board and approved by the supervisory board, and reconciled it with general and industry-specific market expectations.
Since even relatively small changes in the discount rate can have a material effect on the amount of the business value determined in
this way, we also focused on examining the parameters used to determine the discount rate used, including the weighted average cost of
capital, and analysed the calculation algorithm. Owing to the material significance of goodwill and the fact that the valuation also
depends on macroeconomic conditions which are beyond the control of the Company, we also assessed the sensitivity analyses prepared by
the Company for the cash-generating units with low excess cover (carrying amount compared to the present value).
Recoverability of Touristic Prepayments for Hotel Services
Payments on account for hotel services amounting to mEUR 359.9 are recognised under the item "touristic prepayments" reported in the
statement of financial position in TUI AG's consolidated financial statements as at 30 September 2020.
In our view, this is a key audit matter, as the valuation of this significant item is based to a large extent on estimates and
assumptions made by the management board.
The Company's disclosures on "touristic prepayments" are provided in Note (18) of the notes to the consolidated financial statements.
We evaluated the valuation process for touristic prepayments, and carried out an assessment of the accounting-relevant controls contained
therein. In the knowledge that there is an increased risk of misstatement in financial reporting when using estimated values, and that
the valuation decisions of the management board have a direct and significant effect on the consolidated profit, we have assessed the
appropriateness of the values recognised by comparing them against historical values and by means of the contractual bases presented to
us. We have assessed the recoverability of touristic prepayments particularly in the light of the travel restrictions in force since
March 2020 in connection with the COVID-19-pandemic and the resulting underutilisation of hotel capacities in a wide number of touristic
destination areas. We did so taking into account, among other things, the repayment schedules agreed with the hoteliers concerned, the
options for offsetting against future overnight accommodation, framework agreements concluded, and potential risks of insolvency
affecting individual hotels.
Recoverability of Deferred Tax Assets
TUI AG's consolidated financial statements as at 30 September 2020 report deferred tax assets totalling mEUR 299.6 under the statement of
financial position item "Deferred tax assets". Recoverability of the capitalised deferred taxes is measured by means of forecasts about
the future earnings situation.
In our view, this is a key audit matter because it strongly depends on estimates and assumptions made by the management board and is
subject to uncertainties.
The Company's disclosures on deferred tax assets are provided in the notes to the consolidated financial statements in the chapter
"Accounting and measurement methods" and under Note (20).
We involved our own tax experts in our audit of tax issues. With their support, we assessed the internal processes and controls
established for recognising tax issues. We assessed the recoverability of deferred tax assets on the basis of internal forecasts on the
future taxable income situation of TUI AG and its major subsidiaries. In this context, we referred to the planning prepared by the
management board, and assessed the appropriateness of the planning basis used. Among other things, these were examined in the light of
general and industry-specific market expectations.
Specific Provisions
TUI AG's consolidated financial statements as at 30 September 2020 report provisions for maintenances of mEUR 734.9 under the statement
of financial position item "Other provisions". Furthermore, provisions for pensions and similar obligations of mEUR 1,015.0 were
recognised as of 30 September 2020. In our view, these facts are key audit matters, as the recognition and measurement of these
significant items are based to a large extent on estimates and assumptions made by the management board.
The Company's disclosures on provisions are provided under the Notes (29) and (30) as well as under the disclosures on recognition and
measurement methods set out in the notes to the consolidated financial statements.
We evaluated the process of recognition and measurement applicable to specific provisions, and carried out an assessment of the
accounting-relevant controls contained therein. In the knowledge that there is an increased risk of misstatements in financial reporting
with estimated values, and that the valuation decisions of the management board have a direct and significant effect on the consolidated
profit, we assessed the appropriateness of the values recognised by comparing them against historical values and by means of the
contractual bases presented to us.
Among other things, we
· assessed the computation of the expected maintenance costs for aircrafts. This was done on the basis of group-wide maintenance
contracts, price increases expected on the basis of external market forecasts and the discount rates applied, supported by our own
analyses;
· assessed the appropriateness of the valuation parameters used to calculate the pension provisions. Among other things, we did so by
comparing them against market data and taking into account the expertise of our internal pension valuation experts.
Lease Accounting under IFRS 16
Assets under leases of mEUR 3,227.9 are recognised under the item "Right-of-use assets" and "Lease liabilities" amounting to mEUR 3,399.9
are recognised under the item "rights of use" reported in the statement of financial position of TUI AG's consolidated financial
statements as at 30 September 2020. They account for 26 % of the non-current assets and 21 % of the Group's total assets. The principles
applicable to lease accounting under IFRS 16 were applied for the first time in the financial year 2019 / 20. They were applied as of 1
October 2019 using the modified retrospective approach. For the complete and accurate recognition, categorisation and classification of
the different lease contracts, a software that is deployed throughout the Group is predominantly used.
In our view, the first-time application of IFRS 16 is a key audit matter since the large number of contracts and the present
opportunities to exercise discretion - in particular in view of valuation - entail a risk that the impacts of the changes in lease
accounting are materially misstated. This particularly relates to the estimate regarding exercising extension and termination options
defined in the lease contracts, which affects the term of the lease, regarding, where relevant, the amount of the interest rate, the
amount of the lease liability and the related effects on the consolidated statement of financial position, the consolidated statement of
comprehensive income and the consolidated statement of cash flows. Therefore, the assessment of the accounting treatment of leases is a
key audit matter within the scope of our audit.
The Company's disclosures on lease accounting under IFRS 16 are provided in Notes (15), (31) and (40) of the notes to the consolidated
financial statements.
We have evaluated the implementation process concerning the principles conferred by the new IFRS 16. With regard to the implementation of
IFRS 16, we focused on the assessment of the management board's interpretation of the criteria used for the categorisation and
classification of the different contract types, and reproduced the valuation of the right-of-use and assets and of lease liabilities.
Among other things, we
· assessed the data entered in the used leasing software on a sample basis. In this context, we reconciled the accuracy of the data
entry of the data transferred against the original contracts;
· assessed the determination of values by the leasing software used, and the transfer of these values to the consolidated financial
statements; and
· the accuracy and completeness of the disclosures required to be made in the notes to the consolidated financial statements under IFRS
16.
Other Information
The management board and the supervisory board are responsible for the other information. The other information comprises:
· the unaudited content of those parts of the combined management report specified in the appendix to the auditor's report,
· the executive directors' confirmation regarding the consolidated financial statements and the combined management report pursuant to
Section 297 (2) sentence 4 and Section 315 (1) sentence 5 HGB, respectively, and
· all the remaining parts of the annual report, with the exception of the audited consolidated financial statements and the combined
management report and our auditor's report.
The supervisory board is responsible for the report of the supervisory board and for the report of the audit committee. The management
board and the supervisory board are responsible for the statement pursuant to Section 161 German Stock Corporation Law (AktG) on the
German Corporate Governance Code, which forms part of the statement on corporate governance included in the section "Corporate Governance
Report" set out in the combined management report. Otherwise, the management board is responsible for the other information.
Our audit opinions on the consolidated financial statements and on the combined management report do not cover the other information, and
consequently we do not express an audit opinion or any other form of assurance conclusion thereon.
In connection with our group audit, our responsibility is to read the other information and, in so doing, to consider whether the other
information
· is materially inconsistent with the consolidated financial statements, with the combined management report or our knowledge obtained
in the audit, or
· otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Responsibilities of the Management Board and the Supervisory Board for the
Consolidated Financial Statements and the Combined Management Report
The management board is responsible for the preparation of the consolidated financial statements that comply, in all material respects,
with IFRS as adopted by the EU and the additional requirements of German commercial law pursuant to Section 315e (1) HGB, and that the
consolidated financial statements, in compliance with these requirements, give a true and fair view of the assets, liabilities, financial
position and financial performance of the Group. In addition, the management board is responsible for such internal control as it has
determined necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements, the management board is responsible for assessing the Group's ability to continue as
a going concern. It also has the responsibility for disclosing, as applicable, matters related to going concern. In addition, it is
responsible for financial reporting based on the going concern basis of accounting unless there is an intention to liquidate the Group or
to cease operations, or there is no realistic alternative but to do so.
Furthermore, the management board is responsible for the preparation of the combined management report that as a whole provides an
appropriate view of the Group's position and is, in all material respects, consistent with the consolidated financial statements,
complies with German legal requirements, and appropriately presents the opportunities and risks of future development. In addition, the
management board is responsible for such arrangements and measures (systems) as it has considered necessary to enable the preparation of
a combined management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient
appropriate evidence for the assertions in the combined management report.
The supervisory board is responsible for overseeing the Group's financial reporting process for the preparation of the consolidated
financial statements and of the combined management report.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements and of the Combined Management Report
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and whether the combined management report as a whole provides an appropriate view of the
Group's position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in
the audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as
well as to issue an auditor's report that includes our audit opinions on the consolidated financial statements and on the combined
management report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Section 317 HGB and
the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the
Institut der Wirtschaftsprüfer (IDW) and in supplementary compliance with the ISA will always detect a material misstatement.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial statements and this combined
management report.
We exercise professional judgement and maintain professional scepticism throughout the audit. We also
· identify and assess the risks of material misstatement of the consolidated financial statements and of the combined management
report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our audit opinions. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal controls.
· obtain an understanding of internal control relevant to the audit of the consolidated financial statements and of arrangements and
measures relevant to the audit of the combined management report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an audit opinion on the effectiveness of these systems.
· evaluate the appropriateness of accounting policies used by the management board and the reasonableness of estimates made by the
management board and related disclosures.
· conclude on the appropriateness of the management board's use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the
auditor's report to the related disclosures in the consolidated financial statements and in the combined management report or, if such
disclosures are inadequate, to modify our respective audit opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor's report. However, future events or conditions may cause the Group to cease to be able to continue as a going
concern.
· evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and
whether the consolidated financial statements present the underlying transactions and events in a manner that the consolidated
financial statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Group in
compliance with IFRS as adopted by the EU and with the additional requirements of German commercial law pursuant to Section 315e (1)
HGB.
· obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express audit opinions on the consolidated financial statements and on the combined management report. We are responsible for
the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinions.
· evaluate the consistency of the combined management report with the consolidated financial statements, its conformity with German
law, and the view of the Group's position it provides.
· perform audit procedures on the prospective information presented by the management board in the combined management report. On the
basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by the management board as
a basis for the prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We
do not express a separate audit opinion on the prospective information and on the assumptions used as a basis. There is a substantial
unavoidable risk that future events will differ materially from the prospective information.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with the relevant independence requirements, and
communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, the related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit
of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor's report unless law or regulation precludes public disclosure about the matter.
Other legal and regulatory Requirements
Further Information Pursuant to Article 10 of the EU Audit Regulation
We were elected as group auditor by the general meeting on 11 February 2020. We were engaged by the supervisory board on 8 / 15 June
2020. We have been the group auditor of TUI AG, Berlin and Hanover /
Germany, without interruption since the financial year 2016 / 17.
We declare that the audit opinions expressed in this auditor's report are consistent with the additional report to the audit committee
pursuant to Article 11 of the EU Audit Regulation (long-form audit report).
Review of the Management Board's Declaration of Compliance with the UK Corporate Governance Code
Pursuant to item 9.8.10 R (1 and 2) of the Listing Rules in the UK, we were engaged to review the management board's statement pursuant
to item 9.8.6 R (6) of the Listing Rules in the UK relating to compliance with provisions 6 and 24 to 29 of the UK Corporate Governance
Code included in the report on the UK Corporate Governance Code, and the management board's statement pursuant to item 9.8.6 R (3) of the
Listing Rules in the UK included in the "Viability Statement" section of the combined management report and in chapter "Going concern
reporting according to the UK Corporate Governance Code" of the notes to the consolidated financial statements in the financial year 2019
/ 20. We have nothing to report in this regard.
German Public Auditor responsible for the engagement
The German Public Auditor responsible for the engagement is Dr Hendrik Nardmann.
Hanover / Germany, 9 December 2020
Deloitte GmbH
Wirtschaftsprüfungsgesellschaft
Signed: Christoph B. Schenk Signed: Dr Hendrik Nardmann
Wirtschaftsprüfer Wirtschaftsprüfer
(German Public Auditor) (German Public Auditor)
(END) Dow Jones Newswires
December 10, 2020 01:04 ET (06:04 GMT)
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