TUI AG (TUI) TUI AG: Annual Financial Report - Part 2
08-Dec-2021 / 08:00 CET/CEST Dissemination of a Regulatory
Announcement, transmitted by EQS Group. The issuer is solely
responsible for the content of this announcement.
-----------------------------------------------------------------------------------------------------------------------
Financial Highlights
TUI Group - financial highlights
2020 Var. %
EUR million 2021 adjusted Var. % at constant
currency
Revenue 4,731.6 7,943.7 - 40.4 - 40.5
Underlying EBIT 1
Hotels & Resorts - 152.7 - 395.2 + 61.4 + 58.8
Cruises - 277.5 - 322.3 + 13.9 + 14.2
TUI Musement - 105.3 - 114.0 + 7.6 + 6.6
Holiday Experiences - 535.4 - 831.5 + 35.6 + 34.4
Northern Region - 965.8 - 960.9 - 0.5 + 1.4
Central Region - 328.6 - 612.5 + 46.4 + 46.5
Western Region - 176.6 - 433.7 + 59.3 + 59.9
Markets & Airlines - 1,470.9 - 2,007.1 + 26.7 + 27.8
All other segments - 69.1 - 158.4 + 56.4 + 56.8
TUI Group - 2,075.5 - 2,997.0 + 30.7 + 31.2
EBIT 1 - 2,012.8 - 2,927.4 + 31.2
Underlying EBITDA - 1,145.2 - 1,615.0 + 29.1
EBITDA 2 - 1,000.4 - 1,355.0 + 26.2
Group loss - 2,480.9 - 3,139.1 + 21.0
Earnings per shareEUR - 2.58 - 5.34 + 51.7
Net capex and investment - 699.1 - 149.3 - 368.3
Equity ratio (30 Sept) 3 % - 3.0 1.4 - 4.4
Net financial position (30 Sept) - 4,954.2 - 6,420.9 + 22.8
Employees (30 Sept) 50,584 48,330 + 4.7 Due to rounding, some of the figures may not add up precisely to the stated totals, and percentages may not precisely reflect the absolute figures.
This Annual Report 2021 of the TUI Group was prepared for the
reporting period from 1 October 2020 to 30 September 2021.
1 We define the EBIT in underlying EBIT as earnings before
interest, income taxes and result of the measurement of the Group's
interest hedges. For further details please see page 58
2 EBITDA is defined as earnings before interest, income taxes,
goodwill impairment and amortisation and write-downs of other
intangible assets, depreciation and write-downs of property, plant
and equipment, investments and current assets.
3 Equity divided by balance sheet total in %, variance is given
in percentage points.
Interview with Friedrich Joussen
»We want to, we can and we will find our way back to economic
strength.«
Last year was marked by transition: after a period of
standstill, airlines, hotels and tourism companies made a
successful new start. What has changed for TUI as a result of the
pandemic? CEO Friedrich Joussen explains what is new, what remains
- and why there are good reasons for optimism.
How does TUI rate the 2021 season in tourism?
The reboot after Easter and the summer season were successful
for TUI. This shows also in the results. Of course, 2021 was a
transition year. The late restart, some European source markets
lifting restrictions in our fourth financial quarter only, not
all destinations being permanently open - this required a lot of
flexibility. Like no one else, TUI delivers this flexibility,
because we have all steps of the value chain inhouse and can take
fast and coordinated decisions. When we open hotels in a
destination, we set up the flightplan, we have the aircraft to
operate the destination and the teams on site to look after our
guests. Everything meshes together. This is important for the guest
and our service, and it is economically efficient. The good news
for 2021 is: the market is intact, the COVID-19 pandemic has not
changed that. Holidays are extremely important for people. Bookings
in the fourth quarter were, as expected, around 50 % of a normal
booking year. Despite the challenging environment, Hotels &
Resorts and the Central and West regions were able to achieve
positive results for the first time since the beginning of the
pandemic. This once again demonstrates the benefits of our
integrated business model. Our hotel partners and all the companies
operating in tourism have enabled people to enjoy a safe, relaxing
holiday. We want to say thank you - to our guests for their
loyalty, to our colleagues for their great commitment and to our
hoteliers and local partners for being so professional and
hospitable.
What are TUI's expectations for the 2022 season?
Looking ahead to the 2022 summer season, we are positive. The
indicators and trends are intact, summer 2022 is well booked and
currently in line with capacity expectations. Presently, at the end
of 2021, we are seeing the fourth wave, among others in our home
market Germany. At the same time, many countries in southern Europe
are very stable, with low incidences and high vaccination rates.
These are destinations that were also well booked and very safe
last winter. However, it is crucial to look ahead to spring and
summer 2022. It is still too early to make a real forecast for the
2022 summer season. But we are optimistic that tourism will be able
to recover to 2019 levels next summer. At the same time, we also
know from 2021 that bookings will be made much later and at shorter
notice. Bookings for summer 2022 from all TUI markets are already
very encouraging.
What new trends in travel behaviour have you been seeing since
the pandemic?
One major, lasting trend is customer demand for higher-value
travel and more add-on services. Holidaymakers are willing to spend
more money on, for example, room upgrades, a higher quality hotel
or individual, authentic experiences. There has also been a slight
increase in the average length of stay. At the moment we are seeing
a strong shift towards the Mediterranean countries. We expect
recovery in the long-haul business to follow a little later. But
the long-haul destinations are on the way back, including North
Africa and the Cape Verde Islands.
What hasn't changed, in your view?
Tourism is and will remain a strong growth market. It benefits
from overarching social trends that are already very evident today
and will intensify in the long term: People are getting older, they
are healthier and live more consciously. Many have the financial
means and make a conscious decision to travel. For many people,
experiences and encounters are more important than property and
possessions. You could say that experiences are the new luxury.
People want to experience special moments. That is the holiday, the
hotel or the cruise segment. Travel benefits from this. The
pandemic has merely hit a pause button, but the trends are unbroken
and continue.
What plans does TUI Group have for investment? Has the pandemic
changed those plans in any way?
We will press ahead with our asset-right strategy, which we
launched back in 2019 before the pandemic crisis began. That means
more hotels to be operated by us, fewer hotels under our ownership.
We are a hotel company, not a real estate company. The growth of
the Group and its hotels will no longer be linked to investment. We
are separating hotel management and the holiday experience from the
ownership of real estate. The merits of the business case have been
demonstrated globally by city hotels. With over 400 hotels, TUI is
the global leader in the holiday hotel sector. For the customer
experience, it's the brand and the quality of hotel that matter,
not whether the property belongs to us. We will carry on creating a
personalised hotel experience for our guests, and that can be done
just as well through management contracts. We are on the look-out
above all, for long-term strategic partnerships and we also give
consideration to working with institutional investors. Basically,
our growth plans include holiday hotels in Europe, East Asia,
Africa and the Caribbean.
But you are also looking to transformation and digitalisation.
Where does TUI stand there?
We began early to transform TUI from a vertically integrated
tourism group into a digital platform company. That was already
important before the crisis and was pushed forward massively. An
extremely important building block is our business segment
Activities and Experiences. We see great potential for the future
there. As I said before, experience is the new luxury. We are
active in more than 100 countries around the world, we connect the
experiences of the world and the demands of the customers. For our
own businesses and as a partner for third parties. Through the
acquisition and integration of Musement, we have developed a
strategic business area. The integration of Musement is complete
and is delivering excellent results. The experiences platform is
now so scalable and robust that other major travel portals are also
using it for their customers.
Lots of destinations are looking to sustainability and quality,
but that puts the price up. Does that fit in with your plans or
does it reduce the number of people taking holidays?
Sustainability and quality are an important component in our
strategy. We have invested in new aircraft, commissioned new cruise
liners, and over 80 per cent of our hotels have been certified as
sustainable. In 2019 we already cut out more than 250 million
plastic items across all operations. The important thing is to
protect the environment at the destination while enabling local
people and local businesses to derive economic and social benefits
from that. The way I see it, social and environmental
sustainability belong together. I liked the motto they chose for
the G20 summit: 'People, Planet, Prosperity'. Our sustainability
agenda is called 'People, Planet, Progress'. Progress stands for
moving forwards and the measurable advances that we want to achieve
year by year. I look at greater sustainability and further
transformation as entrepreneurial opportunities, not as a
consequence of political regulation. We at TUI aren't starting out
from scratch, but building on our programmes and successes of the
last few years. TUI has always attached great importance to
sustainability. Not only the company, but in particular our
employees. At the same time, it is important to me that we do not
outdo ourselves with promises, but set measurable targets, make
conscious decisions and then make real progress. The decisions of
recent years to invest in a modern, CO2-efficient aircraft fleet
have been made in this way, and the reduction of plastic parts has
followed the same logic.
How are you organising the disposal of interests to the Riu
Group? What impact will it have on customers?
None at all. TUI still holds a 50 % stake in Riu. The core is
and remains the successful 50:50 joint venture held by the Riu
family and TUI, the hotel company. The operation and marketing of
all Riu hotels, 100 of them around the world, all take place under
that roof. Nothing changes for our guests, and Riu - just like in
the past - makes a substantial contribution to earnings in the TUI
hotel segment. The changes have affected a second branch,
essentially a company engaged purely in owning real estate, which
managed 21 properties. TUI held a 49 % minority stake in that real
estate company. The Riu family have now taken those properties over
completely. The sale has already been concluded several months ago
and it has no impact on operations. Those 21 properties are still
being operated and marketed by our joint hotel venture. For a hotel
operator, owning the property is not the decisive factor. In fact,
it tends to be the exception with big hotel brands. What counts is
the management, the marketing, the design of the hotel and holiday
experiences, and the hotel brands. Nothing has changed there at Riu
and TUI.
No doubt, 2020 and 2021 are bound to enter history as pandemic
years. What about 2022?
Following the transformation and restructuring of our business
segments, and the reboot in tourism over the last few months, our
focus is now on refinancing and reducing the drawdown of public
loans. We want to, we can and we will find our way back to economic
strength. We are working on this relentlessly. The new TUI will be
leaner, more digital and more efficient. But it will continue to
set standards in tourism in terms of quality, innovation, and
sustainability. What makes us unique is our enthusiasm for what we
do: creating holiday experiences for our customers. The desire for
this will be greater than ever after two years of pandemic. This
also makes all of us at TUI optimistic for 2022.
Thank you for your time.
Report of the Supervisory Board
Dear Ladies and Gentlemen,
The past financial year was marked by the effects of the
COVID-19 pandemic. This brought many challenges. There were also
bright spots, among other things. After the decline in the number
of infections and initial relaxations, which also made travel to
selected destinations possible again, had made us cautiously
optimistic at the beginning of the financial year, the pandemic had
us firmly in its grip again by November at the latest. The
lockdown, which has been in effect since mid-December 2020, has
significantly restricted public life and also brought travel to and
from our key source markets and destinations to a virtual
standstill once again. Large parts of Europe were declared risk
areas again in autumn 2020, so that passenger traffic was severely
restricted and strict testing and quarantine rules were
implemented. The emergence of new virus variants as well as the
bottleneck in the procurement of vaccines and the resulting delay
in the start of the Europe-wide vaccination campaign has
significantly dampened our expectations and hopes for the financial
year at the beginning of 2021.
Even in this environment, our customers' desire to travel
remained unbroken. As soon as destinations were able to reopen,
bookings increased by leaps and bounds, despite testing obligations
and strict hygiene measures. The best example of this was Mallorca
over the Easter holidays. Our safety and hygiene concepts on the
road and in the local hotels are effective and are regularly
reviewed and revised. We have also revised and expanded our
products and services to meet new customer needs: Flexible
cancellation and rebooking options are now much more important than
Last-Minute bargain prices. New offers such as workation and
alternative accommodation are proving very popular. The TUI brand
continues to stand for unforgettable holiday experiences, quality
and safety and thus enjoys the trust of our customers. With the
summer season, we were fortunately able to devote our full
attention to the reopening of our hotels and the provision of
flight capacity in most destinations and our ships were ready to
set sail again.
However, the crisis is not over, the pandemic is not yet over
and so we will closely monitor further developments in order to be
able to react as flexibly as possible.
However, not only COVID-19, but also political events have
shaped the past business year. Brexit went almost unnoticed by the
public. The concrete challenges that this will bring for the
operating business and our customers in our largest source market,
the United Kingdom, will presumably only become fully apparent when
the market environment returns to normal.
You, dear shareholders, have repeatedly demonstrated your
confidence in our inherently intact and competitive business model
in the past financial year. At the Extraordinary General Meeting in
January 2021, you approved a substantial capital increase, thereby
signalling to us that you believe in TUI's continued existence,
recovery and competitiveness in a post-COVID-19 market environment
and have confidence in the management. On behalf of the entire
Supervisory Board, I would like to take this opportunity to express
my sincere thanks to you!
The 2021 business year, however, presented not only challenges
but also opportunities. We have used the pandemic-related
operational standstill to drive forward the transformation into a
digital platform company. The first functions are already available
and the roll-out to the various source markets is progressing
rapidly. For more than a year, most employees have been working
almost entirely from home without any loss of efficiency or major
technical difficulties. We all miss the personal exchange, of
course, and that should return as soon as the situation allows.
However, our working world has changed permanently and we want to
take the positive effects and experiences with us into the time
after the pandemic. In future, employees will be free to choose
where they want to work from, TUI will merge office buildings and
set up flexible workplaces through so-called desk sharing. This
will make us more attractive to our employees, more flexible, more
efficient and, last but not least, save us considerable costs.
We as the Supervisory Board have also adapted and got used to
the new circumstances. All meetings were held digitally. Of course,
we also hope that it will be possible to meet in person again. But
we are now more flexible and know that the Supervisory Board has
also successfully taken the path into the digital world.
Cooperation between the Supervisory Board and the Executive
Board
The Executive Board and the Supervisory Board are closely guided
by the principles of responsible and good corporate governance and
work together in a spirit of trust in accordance with the
principles set out in the Corporate Governance Report (page 109).
In doing so, the Supervisory Board has primarily monitored the
legality and regularity, expediency and efficiency of the actions
of the management and the Executive Board, naturally with a
significant focus on managing the impacts of the COVID-19 pandemic.
Further details can be found in the report below.
The Executive Board kept us regularly, promptly and
comprehensively informed through written and verbal reports at and
outside meetings. These reports contained all relevant information
on the development and implementation of strategic goals, liquidity
development, planning, business development during the year and the
situation of the Group, the risk situation and risk management,
compliance, but also reports from the capital markets (e. g. from
analysts) and the press. In financial year 2021, the focus was
primarily on overcoming the challenges in connection with the
COVID-19 pandemic and thus both the structural and financial
consequences of the operational standstill and the resumption of
business operations. The impact of Brexit, which took place at the
beginning of 2021, and the corresponding consequences, especially
for the UK source market, were also the subject of discussion. The
Supervisory Board was involved in all decisions of fundamental
importance for the company in good time. We passed the resolutions
required by law, the Articles of Association or the Rules of
Procedure after thorough consultation. For this purpose, we
regularly prepared ourselves on the basis of documents that the
Executive Board made available to the Supervisory Board and the
committees in advance. The Executive Board also informed the
Supervisory Board immediately about urgent issues in writing and
at extraordinary meetings convened at short notice. As Chairman of
the Supervisory Board, I was also regularly informed by the
Executive Board about the current business situation and important
business transactions in the company outside of the Supervisory
Board meetings.
Deliberations in the Supervisory Board and its Committees
Prior to the Supervisory Board meetings, the shareholder and
employee representatives met in separate preparatory meetings.
Members of the Executive Board also regularly participated in these
meetings. Discussions of Executive Board and Supervisory Board
matters take place without the members of the Executive Board,
unless otherwise requested by the members of the Supervisory Board.
All members of the Supervisory Board may also submit to the
Chairman of the Supervisory Board the need to discuss an item on
the agenda without the presence of the Executive Board. In
addition, the agenda of each meeting of the Supervisory Board
provides for a separate agenda item, irrespective of the topic, for
which the members of the Executive Board are not present. Members
of the Supervisory Board may raise all topics to be discussed
without the Executive Board within the scope of this agenda
item.
In addition to the plenum, a total of four committees were
established in the past financial year: the Presiding Committee,
the Audit Committee, the Strategy Committee and the Nomination
Committee. The Mediation Committee, to be formed in accordance with
section 27, paragraph 3 of the German Co-determination Act, did not
have to meet. The chairpersons of the committees report regularly
and in detail on the work of the committees at the regular meetings
of the Supervisory Board. In connection with the application for
further stabilisation measures and the use of financing
instruments, Transaction Committees set up by the Supervisory Board
and consisting of Dr Zetsche, Mr Jakobi and Prof. Dr Ernst met.
This made it possible to pass resolutions at very short notice
within the framework granted by the Supervisory Board, insofar as
this was necessary. All documents and the minutes of the
Transaction Committees were always accessible to all members of the
Supervisory Board. In addition, the meetings were reported on at
the respective subsequent Supervisory Board meeting. No additional
remuneration or attendance fees were paid for the meetings of the
Transaction Committees.
Despite the high number of meetings, we were able to record a
consistently high attendance rate at our consultations in financial
year 2021, as in previous years. Attendance at the plenary meetings
averaged 95.0 % (previous year 97.1 %) and at the committees 98.6 %
(previous year 98.8 %). The vast majority of the members of the
Supervisory Board participated in all meetings of the Supervisory
Board and in its committees in accordance with their respective
membership in financial year 2021. Members who were unable to
attend the meetings generally participated in the resolutions by
sending written votes. The timely distribution of documents by the
Executive Board in advance of the meetings and the almost universal
avoidance of table papers made the preparation of the meetings much
easier for the members of the Supervisory Board. All Supervisory
Board and committee meetings in the reporting period were held as
video conferences against the background of the COVID-19
pandemic.
Attendance at meetings of Supervisory Board financial year
2021
Attendance at meetings of Supervisory Board financial year 2021
Supervisory Transaction Presiding Audit Nomination Strategy
Name Board committees committee committee committee Committee
meetings
Dr Dieter Zetsche (Chairman) 15 (15) 4 (4) 5 (5)1 8 (8) 3 (3) 6 (6)1
Frank Jakobi (Deputy Chairman) 15 (15) 4 (4) 5 (5) 8 (8) 6 (6)
Peter Long (Deputy Chairman) 7 (7) 3 (3) 3 (3) 4 (4)1
(until 25 March 2021)
Ingrid-Helen Arnold 13 (15)
Andreas Barczewski 15 (15) 4 (4)
Peter Bremme 15 (15) 5 (5)
Prof. Dr Edgar Ernst 15 (15) 4 (4) 2 (2) 8 (8)1 0 (0) 6 (6)
Wolfgang Flintermann 15 (15)
María Garaña Corces 14 (15)
Dr Jutta Dönges 5 (8) 3 (4) 2 (2)
(since 25 March 2021)
Angelika Gifford (until 25 7 (7) 3 (3) 4 (4)
March 2021)
Stefan Heinemann 15 (15) 4 (4)
(since 21 July 2020)
Dr Dierk Hirschel 7 (7) 4 (4)
(until 25 March 2021)
Janina Kugel (since 25 March 7 (8)
2021)
Vladimir Lukin 15 (15) 8 (8) 2 (2)
Coline Lucille McConville 15 (15) 4 (4) 2 (2)
Alexey Mordashov 7 (15) 3 (5) 3 (3) 6 (6)
Mark Muratovic 8 (8) 4 (4)
(since 25 March 2021)
Michael Pönipp 7 (7) 3 (3) 4 (4)
(until 28 February 2021)
Carola Schwirn 15 (15)
Anette Strempel 15 (15) 5 (5)
Joan Trían Riu 15 (15)
Tanja Viehl (since 25 March 8 (8)
2021)
Stefan Weinhofer 15 (15) 4 (4)
Attendance at meetings in % 95.0 100.0 94.4 98.4 100.0 100.0
Attendance at Committee 98.6
meetings in %
(In brackets: number of meetings held) 1 Chairperson of
Committee.
Main topics of the Supervisory Board's work
There were 15 meetings of the Supervisory Board. In addition,
four resolutions were passed by circular decision. Furthermore, the
respective Transaction Committees of the Supervisory Board met four
times and another resolution was passed by circular resolution. The
following focal points were the subject of the individual
meetings:
1. At its meeting on 6 October 2020, the Supervisory Board first
reviewed the past financial year and approved the budget for
financial year 2021. Furthermore, the Supervisory Board dealt with
the prerequisites of a possible capital increase with subscription
rights, taking into account the existing regulations in the United
Kingdom, and gave its approval to the establishment of a
corresponding Transaction Committee to ensure a short-term
resolution. Furthermore, a report was given on the current state of
negotiations between the EU and the United Kingdom regarding the
upcoming Brexit and possible consequences for free air traffic. The
Supervisory Board also explored the possibility of holding the 2021
Annual General Meeting in virtual form. Among the Executive Board
matters, the Supervisory Board decided to terminate the appointment
of Ms Conix by mutual agreement at the end of the year and to give
Mr Ebel responsibility for the finance department. In addition, Mr
Krueger was appointed as a new member of the Executive Board for
the business area 'Group Strategy, M&A, Airline and JV's' with
effect from the beginning of 2021. In addition to approving the
organizational chart of the Executive Board, the Supervisory Board
decided, among other things, to waive the determination of the
individual performance factor for the Executive Board's annual
performance-related remuneration (STI) in view of the current
circumstances and determined the appropriateness of the Executive
Board's pension remuneration for the past financial year.
2. The extraordinary meeting on 19 October 2020 included an
update on securing the Group's liquidity. The Executive Board
reported on concrete considerations to forego the capital increase
for the time being in view of the current market environment and to
apply for further state aid instead.
3. At an extraordinary meeting on 20 November 2020, the
Executive Board provided information on the impact of government
measures to contain the COVID-19 pandemic, the current status of
the application process at the WSF for further government aid and
presented the updated liquidity forecast. In addition, the
immunologist and scientific advisor to the Society, Prof. Dr
Kaufmann, reported on the development and effectiveness of vaccines
and current developments.
4. In its meeting on 2 December 2020, the Supervisory Board
approved, after intensive discussion, the term sheet agreed with
the WSF for a further stabilisation package, as well as the
establishment of a corresponding committee consisting of Dr
Zetsche, Mr Jakobi and Prof. Dr Ernst to enable a decision to be
taken at short notice. The Executive Board also gave an overview of
the current liquidity situation and forecasts based on it and
discussed the draft of the non-financial statement. In addition,
the impact of the pandemic on the workforce, such as through
short-time working and the long-term changes in work design and
culture, as well as internal restructuring and cost-saving
programmes, were outlined.
5. At the meeting on 9 December 2020, the Executive Board
informed the Supervisory Board about the current status of the
process for the further granting of stabilisation measures and the
associated antitrust and state aid review by the EU: The financial
statements of the Group and TUI AG, each of which had been issued
with an unqualified audit opinion by the auditors, and the combined
management report for the Group were then discussed. The auditors
were also present. A discussion was also held with the auditors in
the absence of the Executive Board members. We then approved the
financial statements prepared by the Executive Board and the
combined management report for TUI AG and the Group. The annual
financial statements for financial year 2020 were thus adopted. The
Supervisory Board also approved the Report of the Supervisory
Board, the Corporate Governance Report and the Remuneration Report.
In addition, the declarations of compliance with the German and UK
Corporate Governance Codes and the proposal to the General Assembly
to engage Deloitte GmbH Wirtschaftprüfungsgesellschaft for the 2021
half-year and annual financial statements were adopted.
Furthermore, the Supervisory Board decided to hold the
extraordinary general meeting on 5 January 2021 virtually and
agreed to disclose the voting results and voting intentions of the
members of the Supervisory Board.
6. At its meeting on 28 December 2020, the Transaction Committee
approved the measures required for the implementation of the third
package of stabilisation measures.
7. On 3 January 2021, the Transaction Committee approved the
amendment to the revolving credit facilities in connection with
stabilisation measures.
8. On 7 January 2021, the Transaction Committee lifted the
closed period resulting from internal requirements by means of a
circular decsision in order to allow the exercise of subscription
rights for TUI employees against the background of the upcoming
capital increase. These employees had, for example, participated in
the Company's employee share programme in previous years and were
thus shareholders of the Company.
9. The meeting of 8 February 2021 included explanations on the
quarterly report and quarterly financial report. The Executive
Board then presented the updated liquidity planning based on
different recovery scenarios regarding the summer business. In
addition to planning for the Annual General Meeting, the
Supervisory Board dealt with the changes to the remuneration
restrictions applicable to the members of the Executive Board from
the second framework agreement with WSF and approved the conclusion
of corresponding addenda to the service agreements.
10. In preparation for the Annual General Meeting 2021, the
Supervisory Board formally adopted the remuneration systems for the
Executive Board and the Supervisory Board in its extraordinary
meeting on 26 February 2021. Furthermore, a resolution was passed
on the election proposals concerning Dr Doenges, Ms Kugel, Prof. Dr
Ernst and Mr Mordashov. In addition to an update on the new
composition of the committees, the agenda and the holding of the
Annual General Meeting as a virtual event were resolved and the
Executive Board reported on the current liquidity situation of the
company.
11. At its constituent meeting on 25 March 2021, the Supervisory
Board re-elected Mr Jakobi as Deputy Chairman of the Supervisory
Board. In addition, it was decided that in future the Presiding
Committee would only consist of three shareholder and three
employee representatives. In addition, the Supervisory Board passed
resolutions on the composition of the Presiding Committee, the
Audit Committee, the Strategy Committee and the Mediation Committee
as well as the respective chairmanship of the Audit Committee and
the Presiding Committee. In addition, the composition of the
Nomination Committee was discussed. In addition, the Executive
Board gave an update on liquidity development, corresponding
forecasts and possible measures.
12. In a circular desiscion on 1 April 2021, the Supervisory
Board unanimously approved the divestment of all shares held by TUI
in Entreprises Hotelieres et Touristiques Paladien Lena Mary AE
('Lena Mary').
13. The extraordinary meeting on 6 April 2021 dealt with the
marketing of a convertible bond. The Supervisory Board approved the
issue in principle and set up a Transaction Committee to enable a
resolution to be passed at short notice if necessary.
14. In its first meeting on 9 April 2021, the Transaction
Committee gave its approval to the marketing of a convertible bond
in the early morning.
15. In its second meeting on 9 April 2021, the Transaction
Committee gave its approval in the afternoon to determine the final
terms of a convertible bond.
16. Following a cancellation at short notice of the transaction
approved by the Supervisory Board on 1 April 2021, the Supervisory
Board approved the sale of all TUI shares in Lena Mary to an
alternative prospective buyer in a circular decision on 28 April
2021.
17. At the meeting on 11 May 2021, the Executive Board first
reported on the liquidity development and financial recovery before
presenting the report on the current financial year, the quarterly
financial statements and the first half of 2021. The implications
of the ownership structure in connection with the EU Ownership and
Control Regulation and possible next steps in this regard were then
discussed, and the measures for risk identification, safety
concepts and implementation of testing and vaccination campaigns
were presented. In the context of Executive Board matters, we
appointed, on the recommendation of our Presiding Committee, Ms
Sybille Reiss as successor to Dr Eller as member of the Executive
Board and Labour Director with effect from 1 July 2021 and
accordingly approved the termination of Dr Eller's appointment and
the expiry of her service agreement at the contractual end. After
addressing the results and derived measures of the self-assessment
conducted in September 2020, we received an update on the
preparations for the 2022 Annual General Meeting. In addition, the
Executive Board informed us about the possibility of selling the
Castelfalfi complex.
18. With the circular decision of 21 May 2021, the Supervisory
Board approved the already announced sale of 100 % of the shares in
Tenuta di Castelfalfi.
19. On 27 May 2021, we gave our consent to the divestment of the
shares TUI has held in Riu Hotels S. A. We assured ourselves that
the partnership cooperation in Riu II will not be affected by this
transaction. In addition, we were provided with updated documents
on the 3-year plan as well as on trading and liquidity.
20. In a so-called learning session on 2 June 2021, the
Supervisory Board was informed in detail about the requirements of
the UK Securities and Exchange Commission as well as the rights and
obligations of Directors in connection with a possible capital
increase, in particular with regard to the prospectus required for
BaFin and FCA. Both our external legal advisors and representatives
of the bank acting as sponsor participated in this meeting.
21. The extraordinary meeting on 25 June 2021 initially dealt
with an update from the Executive Board regarding the resumption of
business, the current liquidity situation and the corresponding
planning. In addition, the Supervisory Board gave its approval in
principle to the increase of the 2021 convertible bond and the
establishment of a Transaction Committee in the usual composition
in case it had to be set up. However, the Transaction Committee was
not needed.
22. By circular resolution dated 26 July 2021, the Supervisory
Board approved the maturity extension of the revolving credit
facilities (RCF) until summer 2024.
23. At the strategy meeting on 8 September 2020, the Supervisory
Board dealt with strategic issues relating to progress in the
development of platform technologies and the strategic positioning
of the Group's own airlines. In addition, the budget for the coming
financial year and the three-year plan were discussed, which also
included strategic topics due to the necessary balance sheet
restructuring.
On the second day of the meeting, the Supervisory Board received
an update on the liquidity as well as the financial profile of the
Group during its ordinary meeting on 9 September 2021. In addition,
resolutions were passed on the determination of the target total
remuneration of the Executive Board members, on the determination
of the target values for the annual performance-related
remuneration as well as on the determination of the performance
criteria for the individual performance for the following financial
year 2022. These resolutions were subject to the validity of the
remuneration restrictions from the Framework Agreement II.
Furthermore, the Supervisory Board dealt with the review of the
appropriateness of the Executive Board remuneration and pensions as
well as the review of the appropriateness of the Supervisory Board
remuneration. With the resolution on the Financial Market Integrity
Strengthening Act (Finanzmarktintegritätsstärkungsgesetz - FISG),
the Supervisory Board fulfilled its obligations arising from the
statutory new provisions of the Act. In addition, the Supervisory
Board approved the termination of the profit and loss transfer
agreements between TUI AG and DEFAG I GmbH and between TUI AG and
DEFAG III GmbH, along with other transactions requiring its
consent.
24. In its extraordinary meeting on 24 September 2021, the
Executive Board reported to the Supervisory Board on the process,
timetable and potential volume of a capital increase. The
Supervisory Board approved the capital increase in principle and
established a Transaction Committee.
Presiding Committee
The Presiding Committee is responsible for Executive Board
matters (including succession planning, appointments, terms of
service agreements, remuneration, proposals for the remuneration
system). In addition, the Presiding Committee prepares the meetings
of the Supervisory Board. Five meetings were held during the
reporting period.
The Presiding Committee, which is equally represented, consists
of:
-- Dr Dieter Zetsche (Chairman) -- Peter Long (until 25 March 2021)
-- Peter Bremme
-- Prof. Dr Edgar Ernst (since 25 March -- -- Alexey Mordashov
2021) -- Michael Pönipp (until 28 February
-- Angelika Gifford (until 25 March 2021)
2021) -- Anette Strempel
-- Frank Jakobi
1. At the meeting on 6 October 2020, the Presiding Committee
primarily dealt with Executive Board matters. The proposal to
comply with the wish of Ms Conix and to terminate her appointment
at the end of the year, to transfer the responsibility for the
finance department to Mr Ebel and to appoint Mr Krueger to the
Executive Board with effect from 1 January 2021 was developed. In
this context, a change in the organizational chart of the Executive
Board was also discussed. In addition, the Presiding Committee made
the recommendation to refrain from setting the individual
performance factor for financial year 2020 in view of the voluntary
waiver of the members of the Executive Board.
2. On 8 February 2021, the Presiding Committee dealt with the
liquidity situation, the Q1 report and the preparation of the
Annual General Meeting.
3. TUI AG's Annual General Meeting was the subject of the
extraordinary meeting on 26 February 2021. Apart from
recommendations on proposed resolutions to the AGM concerning the
remuneration systems for the Executive Board and Supervisory Board,
the Presiding Committee dealt with possible election proposals, the
future composition of the committees as well as the agenda and
virtual format of the AGM.
4. At its meeting on 10 May 2021, the Presiding Committee
prepared a recommendation for the appointment of Ms Sybille Reiss
as a member of the Executive Board and as Labour Director as well
as the early termination of the appointment of Dr Eller. In
addition, the long-term succession planning for the Supervisory
Board and especially for the Executive Board and the associated
challenges against the background of the remuneration restrictions
were discussed. The Presiding Committee also recommended approval
of the change to the organizationl chart of the Executive Board,
gave its consent to Mr Ebel taking on two further external
Supervisory Board mandates. Finally, the results as well as derived
measures from the self-assessment of the Supervisory Board
conducted in September 2020 were discussed.
5. On 7 September 2021, the Presiding Committee dealt with the
general process of succession planning in the Executive Board. In
addition, the determination of the target total remuneration of the
members of the Executive Board as well as the target values of the
annual performance remuneration for the financial year 2022 were
discussed. The performance criteria for the individual performance
of the Executive Board, which is always also based on ESG criteria,
was also discussed in preparation for a resolution by the
Supervisory Board. In addition, the appropriateness of the
remuneration of the Executive Board and the remuneration of the
Supervisory Board was discussed. Furthermore, the preparation of
the resolution of the Supervisory Board on the innovations from the
Financial Market Integrity Strengthening Act
(Finanzmarktintegritätsstärkungsgesetz - FISG) was on the agenda of
the Presiding Committee.
Audit Committee
The audit committee held six ordinary and two extraordinary
meetings in financial year 2021. For the detailed report of the
Audit Committee and for information on its composition, tasks,
deliberations and resolutions, please see page 20.
Nomination Committee
The Nomination Committee proposes suitable shareholder
candidates to the Supervisory Board for its election proposals to
the Annual General Meeting or for appointment by the local
court.
The members of the Nomination Committee, which met three times,
were:
-- Dr Dieter Zetsche (Chairman)
-- Prof. Dr Edgar Ernst (since 25 March 2021) --
-- Peter Long (until 25 March 2021)
-- Alexey Mordashov
1. At the meeting on 1 December 2020, the Nomination Committee
dealt with the future composition of the Supervisory Board, in
particular against the background of the requirement associated
with the granting of stabilisation measures that two persons
nominated by the WSF be appointed as members of the company's
Supervisory Board.
2. In another meeting on 19 January 2021, the Nomination
Committee discussed possible proposals for the future composition
of the Supervisory Board and its committees.
3. At its meeting on 16 February 2021, the Nomination Committee
recommended that the Supervisory Board propose the re-election of
Prof. Dr Ernst and Mr Mordashov at the 2021 Annual General Meeting.
Furthermore, the Nomination Committee recommended to propose the
election of Dr Doenges and Ms Kugel as WSF nominees at the 2021
Annual General Meeting.
Strategy Committee
The task of the Strategy Committee is to advise the Executive
Board on the development and implementation of the corporate
strategy. The committee held a total of six meetings during the
financial year.
The members of the Strategy Committee were:
-- Dr Dieter Zetsche (Chairman since 25
March 2021) -- Frank Jakobi
-- Peter Long (until 25 March 2021, until -- Vladimir Lukin (since 25 March
then Chairman) -- 2021)
-- Dr Jutta Doenges (since 25 March 2021) -- Coline McConville (since 25
March 2021)
-- Angelika Gifford (until 25 March 2021) -- Alexey Mordashov
-- Prof. Dr Edgar Ernst
1. In its meeting on 5 October 2020, the Strategy Committee
discussed the current liquidity situation, but also the financial
profile and corresponding recovery scenarios. In addition,
important key figures were discussed.
2. On 1 December 2020, the Strategy Committee discussed
different approaches for cost-saving programmes that were developed
together with an external consulting firm.
3. The Strategy Committee discussed a further update on cost
savings on 12 January 2021. It also discussed which additional
measures would be beneficial to the company's recovery in the
longer term.
4. On 8 February 2021, the committee dealt with the concrete
implementation of the cost-saving programmes. The progress of the
individual projects, which are monitored in a separate project
office, was presented and discussed.
5. In its meeting on 6 April 2021, the progress of the
cost-saving programmes was reported again. In addition, feedback
from customers was discussed, who had made their first experiences
with holidays under hygiene protection measures in the slowly
restarting business. The Strategy Committee also received an update
on the restructuring of TUIfly and the current liquidity situation.
The update also included a discussion on how to reduce the
company's debt.
6. At its meeting on 10 May 2021, the Strategy Committee
received a further update on the cost-saving programmes and
liquidity. Different scenarios of a returning business with the
respective effects on the company's earning power were also
discussed. In addition, the Strategy Committee received an update
on current IT projects and discussed the product strategy.
Corporate Governance
The TUI AG share has its initial listing on the London Stock
Exchange in the United Kingdom. In this context, TUI AG's
constitution as a stock corporation under German law naturally
requires the Supervisory Board to deal regularly and in great
detail with the recommendations of both German and UK corporate
governance. Apart from mandatory compliance with the provisions of
the German Stock Corporation Act (Aktiengesetz - AktG), the
Co-Determination Act (Mitbestimmungsgesetz - MitbestG), the Listing
Rules and the Disclosure and Transparency Rules, TUI AG had
declared in 2014 in the framework of the merger with TUI Travel PLC
that it would comply with both the German Corporate Governance Code
(DCGK) and - to a practicable extent - the UK Corporate Governance
Code (UK CGC).
For the DCGK, which is based on the German Stock Corporation Act
(Aktiengesetz - AktG) in its basic conception, we were able to
submit the Declaration of Conformity 2021 with the Executive Board
in accordance with section 161 AktG. The DCGK is complied with,
with the exception of some recommendations in section G. I.3. The
deviations from the UK CGC are largely due to the conceptual
difference between the monistic management system of a public
listed company in the United Kingdom (so-called one-tier board) and
the dualistic management system consisting of Executive Board and
Supervisory Board in a public limited company (so-called two-tier
board) under German law.
In conducting the audit of the financial statements, the auditor
did not identify any facts that would indicate that the declaration
on the DCGK issued by the Executive Board and the Supervisory Board
was incorrect.
Further information on Corporate Governance, the Declaration of
Conformity 2021 pursuant to section 161 of the German Stock
Corporation Act (AktG) and the declaration on the UK CGC can be
found in the Corporate Governance Report jointly prepared by the
Executive Board and the Supervisory Board in this Annual Report on
page 109 and on TUI AG's website.
Conflicts of interest that have arisen
The Supervisory Board has continuously monitored whether
conflicts of interest could arise in the current financial year. It
has determined that no conflict of interest arose in the 2021
financial year.
Audit of the annual financial statements and consolidated
financial statements of TUI AG and the TUI Group
The Supervisory Board examined whether the annual financial
statements and the consolidated financial statements as well as the
other financial reporting complied with the applicable
requirements. The annual financial statements of TUI AG prepared by
the Executive Board in accordance with the rules of the German
Commercial Code (Handelsgesetzbuch - HGB), the combined management
report of TUI AG and the TUI Group and the consolidated financial
statements for financial year 2021 prepared on the basis of the
International Financial Reporting Standards (IFRS) were audited by
Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Hanover, and issued
with an unqualified audit opinion in each case. The aforementioned
documents, the Executive Board's proposal for the appropriation of
the balance sheet profit and the auditor's reports were submitted
to all members of the Supervisory Board in good time. We discussed
them in detail at the audit committee meeting on 6 December 2021
and at our balance sheet meeting on 7 December 2021, at which the
Executive Board explained the financial statements in detail. At
these meetings, the chairman of the audit committee and the auditor
reported on the results of their audits, the focus of which had
previously been determined with the audit committee for the
reporting year. Neither the auditor nor the audit committee
identified any weaknesses in the early risk detection and internal
control system. On the basis of our own review of the annual
financial statements, the consolidated financial statements and the
combined management report, we had no cause for objections and
therefore concurred with the Executive Board's assessment of the
situation of TUI AG and the TUI Group.
On the recommendation of the Audit Committee, we approved the
financial statements for financial year 2021; the annual financial
statements of TUI AG are thus adopted.
Composition of the Executive Board and Supervisory Board
The composition of the Executive Board and the Supervisory Board
as at 30 September 2021 is shown in the overviews on pages 105 and
106 for the Supervisory Board and on page 107 for the Executive
Board.
Supervisory Board
In the following I will give you an overview of the personnel
changes in the Supervisory Board. It should be mentioned in advance
that it was agreed with the Economic Stabilisation Fund
(Wirtschaftsstabilisierungsfonds - WSF) within the framework of the
agreed stabilisation measures to work towards appointing two
persons nominated by WSF as members of the Supervisory Board.
Ms Angelika Gifford and Mr Peter Long retired from the
Supervisory Board of TUI AG as shareholder representatives at the
end of the 2021 Annual General Meeting. Ms Gifford had been a
member of our Board since February 2016 and had noticeably enriched
us with her expertise in digital technologies and social media. She
has always closely followed and scrutinised the management's
digitalization strategy and has made constructive contributions to
highlight potential challenges as well as solutions. Due to her
other professional commitments, Ms Gifford unfortunately did not
stand for re-election to the Supervisory Board at this year's
Annual General Meeting. We wish her every success in her future
endeavours.
Mr Long has also decided not to stand for re-election to the
Supervisory Board for the benefit of the Company with regard to the
WSF's right of nomination and therefore left the Supervisory Board
at the end of the 2021 AGM. Mr Long was extremely closely
associated with TUI for many years: He had been CEO of the former
TUI Travel PLC since 2007 and, following the successful merger,
co-chaired the Executive Board of TUI AG together with Mr Joussen.
Since 2016, he has been a member of the Supervisory Board and also
Chairman of the Strategy Committee. The company and also the
Supervisory Board have benefited greatly from his many years of
experience and expertise in the tourism sector. Both operationally
and strategically, Mr Long has played a key role in shaping and
accompanying important developments at TUI. As Chairman of the
Strategy Committee, he accompanied the transformation into a
digital platform company with a well-founded critical eye. We thank
him for his extraordinary commitment and wish him all the best for
the future.
In place of Ms Gifford and Mr Long and at the proposal of the
WSF and the Supervisory Board, Dr Jutta Doenges and Ms Janina Kugel
were elected to the Supervisory Board of TUI AG by the shareholders
at the 2021 Annual General Meeting. For more than three years, Dr
Doenges has been Managing Director of state owned Finanzagentur
GmbH, which, among other things, manages WSF's involvement with TUI
AG. In this capacity, Dr Doenges has been proposed by WSF for
membership of our Supervisory Board. As an economist engineer with
a doctorate, she looks back on an impressive career as, among other
things, Executive Director of the Investment Banking Division at
Goldman Sachs and Chair of the Steering Committee of the Federal
Agency for Financial Market Stabilisation. Particularly in view of
the challenges still ahead, we are very pleased to have gained a
true expert on investment and financing topics in her.
Janina Kugel, who studied economics, has many years of
experience in human resources management in various companies and
sectors. She is known to the public at the latest through her
Executive Board mandate at Siements AG. With her, we welcome an
extremely experienced manager on board our Supervisory Board,
especially with regard to transformation and restructuring, as well
as the associated changes in working methods and culture, also on
the international stage.
In view of the current challenges, which concern not only the
purely operative business, but also our position on the financial
market and our internal repositioning, both bring valuable
experience and expertise and are an optimal addition to our
Supervisory Board.
Upon retirement, Mr Poenipp resigned from the Supervisory Board
of TUI AG as an employee representative on 28 February 2021. Mr
Poenipp had been a member of the Supervisory Board since April 2013
and was a member of both the Presiding Committee and the Audit
Committee. Due to his experience and in-depth understanding of the
operative business, he was a highly valued contact for all of us.
Moreover, TUI's employees have had a committed and extremely
competent representative of their interests on the Supervisory
Board in him, who most recently served as Chairman of the Works
Council of the Tour Operator of TUI Deutschland GmbH and Deputy
Chairman of the General Works Council of TUI Deutschland GmbH. We
wish Mr Poenipp all the best in his well-deserved retirement and,
above all, continued good health.
Dr Dierk Hirschel also resigned from the Supervisory Board of
TUI AG as an employee representative at the end of the 2021 Annual
General Meeting. Dr Hirschel, Head of Economic Policy at the Ver.di
trade union, had been a member of our Supervisory Board and also of
the Audit Committee for six years. With his outside view of the
Company, he always had the macroeconomic context in mind and always
encouraged the members of the Supervisory Board but also the
management to discuss and pursue new approaches and ideas. We thank
him for his commitment and wish him all the best for the
future.
We were pleased to welcome Ms Tanja Viehl and Mr Mark Muratovic
to the Supervisory Board as new employee representatives at the end
of the 2021 Annual General Meeting. Ms Viehl has now been working
for the Vereinigung Cockpit e. V. for four years as a lawyer
specialising in collective bargaining policy. With her experience
in labour law issues in the aviation industry, she is an competent
addition to our board.
Mr Muratovic has worked for TUI Deutschland GmbH since 1999 in
various sales-related positions and currently holds the position of
Deputy Chairman of the General Works Council of TUI Deutschland
GmbH in addition to his role as Chairman of the Works Council of
the Tours Operator of TUI Deutschland GmbH. With his in-depth
knowledge of the operating business, he is a valuable partner for
us on the Supervisory Board of TUI AG.
Presiding Committee
Mr Michael Poenipp retired from the Presiding Committee on 28
February 2021. Due to the upcoming Annual General Meeting, there
was no immediate replacement for his vacant mandate. With their
resignation from the Supervisory Board, Ms Angelika Gifford and Mr
Peter Long also resigned from the Presiding Committee after the
Annual General Meeting on 25 March 2021.
As the size of the Presiding Committee was reduced from eight
seats to six seats, there was no replacement of Mr Michael Poenipp
on the side of the employee representatives. On the side of the
shareholder representatives, Prof. Dr Ernst was elected as a member
of the Presiding Committee.
Audit Committee
Until the 2021 Annual General Meeting, the equally represented
Audit Committee consisted of: Prof. Dr Edgar Ernst as Chairman, Mr
Andreas Barczewski, Dr Dierk Hirschel, Mr Frank Jakobi, Mr Vladimir
Lukin, Ms Coline McConville and Dr Dieter Zetsche. Mr Michael
Poenipp retired from the Supervisory Board of TUI AG and thus also
from its Audit Committee at the end of 28 February 2021.
The current Audit Committee was elected from the members of the
Supervisory Board immediately after the Annual General Meeting in
March 2021. The election of the committee members is valid for the
respective duration of their Supervisory Board mandate. The audit
committee, with equal representation, currently consists of Prof.
Dr Edgar Ernst as chairman, Dr Jutta Doenges, Mr Stefan Heinemann,
Mr Frank Jakobi, Mr Vladimir Lukin, Mr Mark Muratovic, Mr Stefan
Weinhofer and Dr Dieter Zetsche.
Nomination Committee
Following the resignation of Mr Peter Long from the Supervisory
Board and thus also from TUI AG's Nomination Committee, the vacant
seat was filled by Prof. Dr Edgar Ernst.
Strategy Committee
Both Mr Peter Long as Chairman and Ms Angelika Gifford resigned
from the TUI AG Supervisory Board Strategy Committee on 25 March
2021. The Committee is now chaired by Dr Dieter Zetsche. The vacant
seats have been occupied by Dr Jutta Doenges and Ms Coline
McConville since 25 March 2021.
Executive Board
In financial year 2020, Ms Conix announced that she would not be
renewing her service agreement, which was goin to expire on 14 July
2021. After intensive discussion, the Supervisory Board decided to
appoint Mr Sebastian Ebel as CFO with effect from 1 January 2021
and Mr Peter Krueger as a new member of the Executive Board with
responsibility for Strategy, M&A, Airlines and Joint Ventures.
In accordance with the wishes of Dr Elke Eller, her service
agreement was also not extended. Dr Elke Eller's appointment as a
member of the Executive Board was terminated at the end of 30 June
2021. She was succeeded as CHRO and Labour Director by Ms Sybille
Reiss with effect from 1 July 2021.
Thanks!
The Supervisory Board would like to thank all employees of the
TUI Group for their great commitment, which has carried TUI through
a financial year with unprecedented challenges, as in the previous
year. Against the backdrop of the still great uncertainties in
2021, your commitment is a remarkable achievement!
Hanover, 6 December 2021
For the Supervisory Board,
Dr Dieter Zetsche Chairman of the Supervisory Board
Audit Committee Report
Dear Shareholders,
As the Audit Committee, we are tasked with supporting the
Supervisory Board in the performance of its monitoring function. In
this context, we deal with the audit of accounting, the monitoring
of the accounting process, the effectiveness of the internal
control system, the risk management system and the internal audit
system, as well as the audit of the financial statements and
compliance. The accounting process includes, in particular, the
consolidated financial statements and the Group management report,
including CSR reporting, financial information during the year and
the separate financial statements in accordance with the German
Commercial Code (HGB). In the financial year under review, we dealt
in particular with issues relating to the TUI Group's accounting
and financial reporting, as required by law, the German Corporate
Governance Code (DCGK), the UK Corporate Governance Code (UK CGC)
and the rules of procedure of the Supervisory Board.
In addition, the Audit Committee is responsible for the
selection of the external auditor, whereby it also reviews the
qualification as well as the independence of the auditor. The
selected auditor is then proposed by the Supervisory Board to the
Annual General Meeting for appointment. After the appointment by
the Annual General Meeting, the Supervisory Board formally
commissions the external auditor to audit the annual financial
statements and the consolidated financial statements. The auditor
is also commissioned to review the half-yearly financial report and
any additional interim financial information that meets the
requirements for the half-yearly financial report. The Audit
Committee has agreed with the auditor that the latter will inform
the Audit Committee without delay of all findings and events of
significance for its tasks that come to its attention during the
performance of the audit. Furthermore, the Audit Committee has
agreed with the auditor that the auditor will inform the Committee
and make a note in the audit report if, during the performance of
the audit, the auditor ascertains facts that show a misstatement in
the declaration on the DCGK issued by the Executive Board and the
Supervisory Board. In addition, the Audit Committee regularly
assesses the quality of the audit.
Until the 2021 ordinary Annual General Meeting, the Audit
Committee consisted of as set out in the report of the Supervisory
Board, an equal number of members of both shareholder
representatives and employee representatives: Prof. Dr Edgar Ernst
(Chairman), Andreas Barczewski, Dr Dierk Hirschel, Frank Jakobi,
Vladimir Lukin, Coline McConville and Dr Dieter Zetsche. Michael
Pönipp retired from TUI AG's Supervisory Board and thus also from
its Audit Committee at the end of 28 February 2021.
The current Audit Committee was elected from the members of the
Supervisory Board immediately after the Annual General Meeting in
March 2021. The election of the committee members is valid for the
respective term of their Supervisory Board mandate. The Audit
Committee with equal representation currently consists of the
following eight members of the Supervisory Board:
-- Prof. Dr Edgar Ernst (Chairman) -- Vladimir Lukin
-- Dr Jutta Dönges -- -- Mark Muratovic
-- Stefan Heinemann -- Stefan Weinhofer
-- Frank Jakobi -- Dr Dieter Zetsche
The Chairman of the Audit Committee has special knowledge and
experience in the application of accounting principles and internal
control procedures and is familiar with the auditing of financial
statements. In the opinion of the Supervisory Board, he is
independent of the Company and the Executive Board (for information
on the independence of the other members of the Audit Committee,
see page 110). At least one other member of the Audit Committee has
expertise in the field of auditing. The members of the Audit
Committee all have competencies relevant to the sector in which the
Company operates.
The Audit Committee meets regularly six times a year. The
meeting dates and agendas are based in particular on the Group's
reporting cycle and the Supervisory Board's agendas. Additional
meetings may be held on specific topics. These topic-related
meetings generally also include a meeting at which the Executive
Board explains to the Audit Committee the main content of the
Pre-Close Trading Update, which is published shortly before the
reporting date for the annual financial statements. Due to the
market environment and the very short-term bookings, particularly
at the end of financial year 2021, a Post-Close Trading Update was
considered more suitable, which then already fell into the
financial year following the reporting period. Moreover, the Audit
Committee held two extraordinary meetings in the reporting
period.
In addition to the members of the Audit Committee, the meetings
were also attended by the Chairman of the Executive Board and the
Chief Financial Officer, as well as the heads of Group Financial
Accounting & Reporting, Group Audit, Group Legal, Compliance
& Board Office, Group Treasury, Group Controlling and Group
Investor Relations & Corporate Finance.
The auditors were invited to attend the meetings to discuss
relevant issues. Other members of TUI Group's senior management and
managers with operational responsibility or external consultants
were invited as required.
In addition to the meetings of the Audit Committee, the Chairman
of the Audit Committee also held individual discussions with the
Executive Board, divisional managers or the responsible partners of
the auditor if this appeared necessary to go into more detail on
individual topics and issues. The Chairman of the Audit Committee
reported on the main results of these discussions at the following
meeting of the Audit Committee.
The Chairman of the Audit Committee reports on the work and
proposals of the Audit Committee and on the content of individual
discussions at the subsequent Supervisory Board meeting.
The members attended the meetings of the Audit Committee as
shown in the table on page 13.
Informational value of financial reporting and monitoring of the
accounting process
The preparation of the annual financial statements and annual
report of a German stock corporation is the sole responsibility of
the Executive Board. Pursuant to Section 243 (2) of the German
Commercial Code (HGB), the annual financial statements must be
clear and concise and provide a realistic overview of the company's
economic situation. This is in line with the requirements of the UK
Corporate Governance Code (UK CGC), according to which the annual
financial statements and annual report must be accurate, balanced
and comprehensible. Against this background, the Executive Board is
satisfied - although the assessment was not delegated to the Audit
Committee - that the submitted Annual Report meets the requirements
of both legal systems.
In order to satisfy ourselves as well of the informative value
of the annual financial statements and the interim reporting, we
were informed in detail by the Executive Board about the business
development and the financial situation of the Group at the four
Audit Committee meetings held immediately prior to the publication
of the respective financial statements. The relevant reports were
discussed. At these meetings, the auditors also reported in detail
on material aspects of the financial statements and on the results
of the audit or the auditors' review. In principle, discussions can
always take place in the absence of the Executive Board.
In order to monitor accounting, we intensively dealt with
individual aspects. As in the previous year, TUI's economic
development due to the COVID-19 crisis was naturally a central
topic in our meetings. We received detailed reports from TUI AG's
Executive Board on the measures taken to secure liquidity, in
particular with regard to state-backed financing, and planned
capital measures.
In addition, we examined the accounting treatment of significant
balance sheet items, in particular goodwill, tangible fixed assets,
touristic payments on account for hotel services and other
provisions. In consultation with the auditors, we satisfied
ourselves that the assumptions and estimates underlying the
accounting treatment were appropriate. Furthermore, material
aspects arising from operations, in particular the impairment
testing of the Group's assets in the light of the COVID-19 crisis,
were assessed by the Audit Committee.
In the period under review, we dealt in particular with the
following individual aspects:
Even before the outbreak of the COVID-19 crisis, TUI AG's
Executive Board initiated optimisation processes with regard to the
structure of working capital and the associated cash flows. These
measures also included the creation of a Corporate Finance
structure. We were regularly informed about these projects at our
meetings. Due to the outbreak of the COVID-19 crisis, these
processes were greatly expanded and accompanied by measures for
strict cost control. As in the previous year, we received detailed
reports on the corresponding measures.
For each quarterly report and for the annual financial
statements, the consistency of the reconciliation to the key figure
'adjusted earnings' and the material items eliminated here
(adjustments) were also discussed.
Furthermore, an assessment of the quality of the audit was
carried out in order to obtain an ex ante picture of the
effectiveness of the audit as well as to deal with the
effectiveness of audits already carried out. Objectively assessable
indicators were evaluated. As a result, for example, the intensive
exchange with the sub-area auditors before, during and after the
audit was assessed as positive.
We were also informed about the corporate transactions of the
financial year. This related in particular to the sale of the
shares in Riu Hotels S. A. The Audit Committee already previously
had the internal procedure for the control of transactions with
related parties being explained to it, whereby a control of the
transactions within the financial year was carried out by the
Chairman of the Audit Committee in preparation, as provided for in
the internal procedure.
In addition, the agenda also included reporting on the
monitoring of processes for compliance with the obligations
resulting from the second framework agreement concluded with WSF.
In addition, the Audit Committee dealt with the legal innovations
resulting from the Financial Market Integrity Strengthening Act
(FISG).
In addition to these topics, the going concern report prepared
by the Company was discussed in particular against the backdrop of
the COVID-19 crisis in order to verify the relevant going concern
statements in the half-year report and the annual financial
statements. The viability statement to be issued in the annual
financial statements under the UK CGC regulations was also the
subject of discussion.
Since the introduction of mandatory reporting on corporate
social responsibility (CSR) in the management report, the
Supervisory Board has been responsible for reviewing the content of
these disclosures. The Supervisory Board has decided to seek the
support of TUI's Group Audit division in reviewing the disclosures.
Accordingly, we were informed of the results of the review by Group
Audit in the financial year under review and are of the opinion
that the disclosures published in the CSR Report are appropriate
and reasonable.
Our assessment of all aspects of accounting and financial
reporting discussed is consistent with that of management and the
auditor.
Effectiveness of the control and risk management system
The Audit Committee is guided in its statutory obligation to
deal with the effectiveness of the internal control and risk
management system by the conviction that a stable and effective
internal control system is indispensable to ensure business success
in the long term. In order to fulfil its monitoring task, the Audit
Committee regularly obtains information on the maturity of the
implemented controls and also on the further development of the
internal control system.
The Group has continuously developed its internal control system
based on the COSO concept. The routine review of key financial
controls is performed by local management and monitored by the
Executive Board. In the largest source markets, the UK and Germany,
additional internal controls are also reviewed.
The compliance function in the Group is further divided into the
areas of finance, legal and IT. This division plays a key role in
identifying further control requirements and permanently improving
the existing controls. In addition, the auditor also reports on any
weaknesses in the Group's accounting-related control system that it
identifies, and management follows up on their prompt
elimination.
The Audit Committee receives regular reports on the
effectiveness of the risk management system, as described in the
Risk Report starting on page 35. The Risk Oversight Committee that
has been set up plays a key role within the Group. We are convinced
that an appropriate risk management system is in place.
The internal audit department ensures the independent monitoring
of the implemented processes and systems as well as the material
projects and reports directly to the Audit Committee at each
regular meeting. In the reporting period, the Audit Committee was
not informed of any audit findings that indicated material
weaknesses in the internal control system or the risk management
system. In addition, regular meetings are held between the Chairman
of the Audit Committee and the Group Director of Internal Audit for
closer coordination. The annual audit planning process is agile.
The Audit Committee has received a detailed report on the
methodology and has noted and approved it, together with the audits
for the coming financial year that have already been defined in
this context. The Audit Committee believes that regular
coordination ensures the effectiveness of internal auditing.
At our meetings during the fiscal year, we were informed about
the status of implementation of the provisions of the EU General
Data Protection Regulation in the individual business units. Based
on this report, we are convinced that both in the previous
financial years and in the current reporting period the projects
and measures initiated throughout the Group for this purpose are
suitable for meeting the requirements of the EU GDPR.
Whistleblowing systems for employees in the event of compliance
violations
A standardised whistleblowing system has been set up in the TUI
Group, enabling employees to draw attention to potential breaches
of compliance guidelines.
As part of the reporting on the legal compliance system, we were
presented with the key findings from the whistleblower system for
the current fiscal year.
Review of the independence and objectivity of the auditor
For financial year 2021, the Audit Committee recommended to the
Supervisory Board that Deloitte GmbH
Wirtschaftsprüfungsgesellschaft (Deloitte) be proposed to the
Annual General Meeting as auditor. Following the appointment of
Deloitte as auditors by the Annual General Meeting in March 2021,
the Supervisory Board commissioned Deloitte with the audit of the
2021 annual financial statements.
The Audit Committee had Deloitte explain to it in advance the
audit plan for the annual financial statements as of 30 September
2021. This plan includes the key audit areas and the group of
companies to be audited from the Group's perspective. The Audit
Committee is convinced that this plan ensures that the audit
adequately takes into account the identifiable risks. It also
considers the independence and objectivity of the auditor to be
given.
On the basis of regular reporting by the auditor, we have
satisfied ourselves of the effectiveness of the external audit and
have decided to recommend to the Supervisory Board that Deloitte be
proposed to the Annual General Meeting as auditor again for FY22.
Deloitte was selected by us as auditor in a public tender process
in the 2016 financial year and has been appointed as auditor
without interruption since the first election by the Annual General
Meeting in 2017.
In order to ensure the independence of the auditor, all
engagements for the provision of non-audit services by the auditor
must be submitted to the Audit Committee for approval before the
engagement is awarded. The Audit Committee makes use of the
possibility to delegate the approval to the company depending on
its size. The Chairman of the Audit Committee is only involved in
the decision if a specified cost limit is exceeded. Where the
auditors provided services to the Group outside the scope of the
audit, the nature and amount of these services were explained to
the Audit Committee. This approach is in line with the Company's
existing policy on the approval of non-audit services, which takes
into account the requirements of the provisions of the German Audit
Reform Act (Abschlussprüfungsreformgesetz - AReG) on prohibited
non-audit services and on limitations on the amount of non-audit
services. In financial year 2021, these regulations were complied
with as in previous years. Globally, non-audit services accounted
for around 35 % of Deloitte's audit fee in financial year 2021,
which amounted to EUR 7.1 million.
I would like to thank the members of the Audit Committee, the
auditors and the management for their trusting and committed
cooperation in the past financial year.
Hanover, 6 December 2021
Prof. Dr Edgar Ernst Chairman of the Audit Committee
TUI Group Strategy
Growing travel market driven by strong fundamental trends
Before the COVID-19 pandemic, the global travel market was
growing above global GDP levels1. The crisis has had an
unprecedented impact on the world of travel over the past two
years. However, following the COVID-19 pandemic, the global travel
market is expected to recover strongly, returning to pre-crisis
levels and growth by 2022 to 2024. Furthermore, leisure travel is
expected to recover more quickly than business travel.
In particular three megatrends will continue to drive the growth
of tourism in the future. Firstly, we are seeing a shift in
demographics with people living healthier, longer and with more
money to spend which has a positive effect on travel and tourism.
Secondly, middle classes continue to grow, particularly in South
East Asia and Latin America. Thirdly, people are choosing
experiences over the ownership of goods with increasing frequency.
Therefore, tourism will continue to be an attractive growth market
in the mid-term. Short-term, tourism markets have rebounded
strongly from the COVID-19 crisis. The underlying desire of people
to travel has been evident throughout the COVID-19 crisis, as we
have seen immediate strong booking surges for our destinations on
easings of governments' travel restrictions. Following the roll-out
of successful vaccination programmes and further easing of more
government travel restrictions this positive market momentum is
expected to continue, in particular also for long-haul
destinations2.
TUI'S INTEGRATED BUSINESS MODEL YIELDS SYNERGIES
TUI is an integrated tourism group organised in two business
divisions, Holiday Experiences and Markets & Airlines, offering
synergies and scale. TUI serves millions of customers and operates
137 aircraft, 414 hotels3, 16 cruise ships4 and a digital platform
for tours and activities with a strong portfolio of over 215 k
offers4. While our Holiday Experience division benefits from our
Markets & Airlines distribution capabilities, it supports our
distribution division by offering own and differentiated
products.
1 As per Statista data for global tourism receipts (review
period 2015 - 2019)
2
https://www.reuters.com/world/us/exclusive-us-partly-lift-international-travel-curbs-nov-8-official-2021-10-15/
3 As at 30 Sept. 2021, including third party hotels
4 As at 30 Sept. 2021
Holiday Experiences: Sizeable and differentiated leisure hotel,
cruise and tours and activities product portfolio
Hotels & Resorts - Differentiated brands, investments and
asset-right growth
TUI features a portfolio of own and differentiated leisure
brands such as Robinson, TUI Magic Life, TUI Blue and TUI Suneo.
This brand portfolio is complemented by JV hotel brands such as
Riu, Atlantica, Blue Diamond and Grupotel. Our hotel portfolio is
well-diversified in terms of destination mix and ownership models
including ownership, lease, management and franchise. The earnings
development of our Hotels & Resorts business unit is driven by
our vertical integration with the majority of our revenue being
generated by our Markets & Airlines division. We will continue
the asset-right strategy that we commenced in 2019 before the
crisis. The growth of the hotel portfolio will be decoupled from
investments, separating hotel management and the holiday experience
from property ownership. The customer experience is driven by the
brand and the quality of the hotel and we will continue to create
tailor-made hotel experiences for our guests. We are committed to
growing our global brand and hotel portfolio with a stronger focus
on management and franchise in the future as well as long-term,
strategic partnerships with hoteliers and institutional
investors.
Cruises - Differentiated brands, asset-light investments and
growth
TUI's cruise business consists of three brands covering the full
cruise sector spectrum from premium all-inclusive to luxury to
expeditions. Our JV brands TUI Cruises and Hapag-Lloyd Cruises are
specifically designed for the German-speaking all-inclusive (Mein
Schiff fleet of TUI Cruises), luxury (Europa and Europa 2 vessels
at Hapag-Lloyd Cruises) and expedition (HANSEATIC class of
Hapag-Lloyd Cruises) markets. Our Marella Cruises brand represents
a bespoke UK cruise product with a focus on all-inclusive
fly-cruising.
Our TUI Cruises JV will continue to grow by investing into
new-build ships for all market segments. Marella Cruises will
continue to pursue a fleet upgrading strategy by replacing older
ships with newer and larger vessels, enabling it to increase
product pricing.
TUI Markets & Airlines will continue to distribute our own
and differentiated cruise product offerings, driving the
performance of our cruise business unit.
TUI Musement - Growth and upstream consolidation
TUI Musement, one of the largest digital providers in the online
intermediary market for tours, activities and experiences5,
connects our own and third party tours and activities product
portfolio in the destinations with our own Markets & Airlines
customers as well as third party customers through strategic
partnerships such as with Booking.com or Trivago.
TUI Musement will focus on strongly growing its own and third
party curated product offering and will therefore strategically
focus on upstream market consolidation. Its product offering covers
tours and activities globally, both in leisure and city
destinations. TUI Musement will retain a strong focus on the
curation and fulfilment of its experiences product offerings such
as excursions & day trips, attractions & guided tours,
multi-day tours, cruise shore excursions, transfers, tickets &
events and other activities.
Markets & Airlines - Continued focus on customers,
digitalisation and mass-individualisation
TUI is, according to consumer surveys for unaided brand
awareness and consideration, a leading tourism brand6. More than a
dozen source markets7 deliver a strong and diversified customer
base for our differentiated product offerings. Customers appreciate
TUI's flexible, safe, differentiated and highly service-oriented
holiday experience offerings, specifically designed for their
needs8. Covering the whole customer journey, TUI holds multiple
digital and physical touchpoints with its customers and therefore
delivers a strong blend of digital and human interaction. TUI
follows a customer centric approach, aiming to create long-term
relationships with its customers. Personalized experiences and new
product development is a strategic priority, intended to improve
the value for money for our customers while driving demand for our
products at the same time.
TUI continues with the development and implementation of its own
IT platform TRIPS, a comprehensive software stack covering the
whole value chain from inventory management, creation of products
offerings and pricing to customer relationship management. This
comprehensive IT platform will replace various local legacy systems
and therefore drive synergies and cost reductions as TUI will use
one common system across all markets in the future. At the same
time this platform will form the basis for our digital
mass-individualisation product initiative and will therefore
support to drive revenues. One central development allows for high
agility and strong development and running cost control.
To further protect its strong market positions, TUI has
established a global realignment programme, with the target of
delivering EUR 400 m of cost savings p. a. by FY23, with a large
proportion of such savings targets being allocated to our Markets
& Airlines business. By the end of financial year 2021 more
than 60 % of this target have been delivered already.
5 According to Bernstein analysis, TUI Musement ranked 2nd for
market share in the tours, activities and experiences market
6 As measured by brand consideration in TUI brand performance
tracking, completed by Metrixlab
7 Germany, UK, Belgium, Netherlands, Sweden, Denmark, Norway,
Finland, France, Austria, Switzerland, Poland, Canada and
Russia
8 Based on TUI research [e. g. brand/customer surveys]
Tui is strongly committed to sustainability
Our responsibility as a world-renowned tourism company has never
been greater. The travel and tourism industry needs to respond to
global challenges such as climate change. With the next phase of
our Sustainability Agenda, we will enter a decade of sustainable
transformation. Our ambition is to lead the industry and to
actively shape a more sustainable future for tourism. This ambition
is anchored by the sigificant progress we've made to date.
Our airlines are already among the most environmentally
efficient in the world, ranking first and fourth among the world's
200 largest airlines in terms of CO2 efficiency9. In financial year
2021, our airline's relative carbon emissions rose by 15 % to 78g
CO2 / pkm (previous year: 67.8g CO2 / pkm). This is attributable to
the grounding of our fleet due to the COVID crisis, which led to a
considerable decrease in flight operations and occupancy rates of
all TUI airlines. The increased freight component of various TUI
airlines caused the weight of the aircrafts to increase, which in
turn elevated fuel consumption.
Between 2015 and 2019, TUI's cruises business has achieved a
13.6 % reduction in relative CO2 emissions and a 60 % reduction in
fresh water consumption on our cruise ships. In addition, by 2019
83.8 % of TUI Hotels & Resorts had their sustainability
certification10. In total, we had removed 257 million pieces of
single-use plastic11 from our operations, between 2018 and 2019, a
significant achievement on our journey to create sustainable
holidays for our guests.
Our next steps will be anchored in several core deliverables:
Empowering communities in destinations, driving transformation by
increasing and sharing knowledge through our educational
initiatives12, reducing our environmental footprint13 and working
with partners across the tourism industry and outside to accelerate
the transformation beyond TUI.
9 According to latest atmosfair Airline Index from 2018
10 Tangible environmental improvements (10 % less CO2, 24 % less
waste volume and 23 % more green energy in certified hotels vs.
non-certified)
11 27 m pieces from the airline, 31 m pieces from cruises and
197 m pieces from our hotels
12 https://www.tuigroup.com/en-en/media/press-releases/2021/
2021-06-02-tcf-and-enpact-launch-tourism-recovery-programme
13 Working with science-based emissions targets, water, energy
& waste
TUI will emerge stronger and leaner from the crisis
TUI has accelerated its strategic transformation during the
COVID-19 crisis. It is emerging as a more digital, leaner and
stronger company, which we believe posititons us well to capture
further market growth potential. TUI will continue to grow its
differentiated Holiday Experience product offerings whilst in our
pursuit to deliver high-quality and more individualised service and
products to its customer base, based on a blend of digital and
human interactions.
Our employees
In 2021, the COVID-19 pandemic again posed significant
challenges for TUI Group, our HR Departments and our employees. It
required us to build systematically on the measures already
launched in 2020 to reduce staff costs. As we press ahead with our
ongoing transformation and restructuring projects, TUI is moving
towards its goal of future-proofing the Company and successfully
counteracting the long-term effects of the COVID-19 pandemic.
In financial year 2021, key drivers were our digitalisation
strategy and the transformation to a digital platform company, and
these are also reflected our HR activities. In August 2021, we
launched the 'TUI Way of Working', seeking to reach global
agreement on a new way of working and develop a shared vision for
the future of work at TUI. We have already implemented a number of
initiatives and programmes, in particular in the leadership,
workplace and technology modules.
In the next few months, we will focus on formulating a new
People Strategy with our new Chief HR Officer and Labour Director.
The strategy will create an HR view of the portfolio and also
address the HR function as such. Its goal is to update the HR
function and enhance its efficiency while aligning our HR
activities to the changing requirements that define the world of
work in our future digital platform company.
Details see page 84 onwards
Corporate Profile
Group Structure
TUI AG parent company
TUI AG is TUI Group's parent company headquartered in Hanover
and Berlin. It holds direct or, via its affiliates, indirect
interests in the principal Group companies conducting the Group's
operating business in individual countries. Overall, TUI AG's group
of consolidated companies comprised 272 direct and indirect
subsidiaries at the balance sheet date. A further 18 affiliated
companies and 27 joint ventures were included in TUI AG's
consolidated financial statements on the basis of at equity
measurement.
For details on principles and methods underlying the
consolidated financial statements and TUI Group shareholders, see
page 156 and 243.
Organisation and management
TUI AG is a stock corporation under German law, whose basic
principle is two-tiered management by two boards, the Executive
Board and the Supervisory Board. The Executive and Supervisory
Boards cooperate closely in governing and monitoring the Company.
The Executive Board is responsible for the overall management of
the Company.
The appointment and removal of Board members are based on
Sections 84 et seq. of the German Stock Corporation Act in
combination with Section 31 of the German Co-Determination Act.
Amendments to the Articles of Association are effected on the basis
of the provisions of Sections 179 et seq. of the German Stock
Corporation Act in combination with Section 24 of TUI AG's Articles
of Association if appplicable.
Executive Board and Group Executive Committee (GEC)
As at the balance sheet date, the Executive Board of TUI AG
consisted of the CEO and five other Board members.
For details on Executive Board members, see page 107
The Executive Board is the Company's central decision-making
body. In addition, there is the Group Executive Committee (GEC),
which as of 30 September 2021 consisted of eleven members,
including six Executive Board members, and is chaired by Friedrich
Joussen, Chairman of the Executive Board. As a rule, the Group
Executive Committee participates in all Board meetings, with the
exception of items dealing with personnel matters relating to the
composition of the Senior Leadership Team. The GEC was set up to
enhance informed, effective decision-making and to create a flat
hierarchy and strong execution environment. It reflects a culture
of openness and information sharing.
For details, see:
www.tuigroup.com/en-en/investors/corporate-governance
TUI Group reporting structure
TUI Group is a global integrated tourism group. Its core
businesses, Holiday Experiences and Markets & Airlines, are
clustered into the segments Hotels & Resorts, Cruises and TUI
Musement as well as three regions: Northern, Central and Western
Regions. TUI Group also comprises All other segments. The Group's
reporting structure thus remained largely unchanged year-on-year in
the reporting period.
Holiday Experiences
Holiday Experiences comprises our hotel, cruise and destination
activities.
Hotels & Resorts
The Hotels & Resorts segment comprises TUI Group's
diversified portfolio of Group hotel brands and hotel companies.
The segment includes hotels majority-owned by TUI, joint ventures
with local partners, stakes in companies giving TUI significant
influence, and hotels operated under management contracts.
In financial year 2021, Hotels & Resorts comprised a total
of 359 hotels with 275,773 beds. 333 hotels, i. e. the majority,
are in the four- or five-star categories. 53 % were operated under
management contracts, 38 % were owned by one of the hotel
companies, 8 % were leased and 1 % of the hotels were managed under
franchise agreements
Hotels & Resorts portfolio
Hotel brand 3 stars 4 stars 5 stars Total Beds Main sites
hotels
Riu 3 50 48 101 105,435 Spain, Mexico, Caribbean, Cape Verde, Portugal, Morocco
Robinson 1 17 8 26 16,015 Spain, Greece,
Turkey, Austria
Blue Diamond 3 12 19 34 32,270 Cuba, Dom. Rep., Jamaica, Mexico, Saint Lucia
Other hotel 19 108 71 198 122,053 Spain, Greece,
companies Turkey, Egypt
Total 26 187 146 359 275,773
As at 30 September 2021
Riu is the largest hotel company in the portfolio of Hotels
& Resorts in terms of the number of hotels. The Mallorca-based
enterprise primarily operates four- and five-star hotels in Spain,
Mexico and the Caribbean. Its three product lines Riu Clubhotels,
Riu Plaza (city hotels) and Riu Palace (premium segment) target
different customer groups.
In the framework of our asset-right strategy, which entails a
decoupling of hotel growth and property investments, we sold our 49
% stake in the joint venture Riu Hotels S.A to a Riu Group company
owned by Carmen and Luis Riu with effect from 31 July 2021. The
transaction did not affect our subsidiary RIUSA II S. A., which
continues to be in charge of management and distribution for all
Riu hotels and resorts around the globe. The number of beds in our
Group-owned hotel portfolio was not affected by this transaction as
the 21 Riu hotels sold will continue to be operated under
management contracts by RIUSA II S. A.
Robinson operates mainly four- and five-star club hotels and is
a leading German provider of club holidays. Most of its clubs are
located in Spain, Greece, Turkey, the Maldives and Austria.
Blue Diamond is a hotel chain in the Caribbean. The Hotels &
Resorts segment comprises 34 resorts in the Caribbean and
Mexico.
Other hotel companies include in particular the flagship brand
TUI Blue and TUI Magic Life. TUI Blue is TUI Group's youngest hotel
brand, targeting an international audience. Its portfolio is being
expanded by combining TUI Blue's existing offerings with those of
the concept brands TUI Sensimar and TUI Family Life. Including
those rebranded as TUI Blue hotels, the brand has hotels in 19
countries. TUI Magic Life is an all-inclusive brand, targeting an
international audience seeking club holidays with different
profiles in beachfront locations.
Our hotels operated by third-party hoteliers include a total of
55 hotels belonging to our international concept brands. This
brings the total number of TUI Group hotels to 414.
Cruises
The Cruises segment consists of the joint venture TUI Cruises,
which also operates Hapag-Lloyd Cruises since the prior year, and
Marella Cruises. With their combined fleet of 16 vessels as at the
reporting date, the three cruise lines offer different service
concepts to serve different target groups.
Cruise fleet by ownership structure
Owned Leases Total
TUI Cruises (Joint Venture) 12 0 12
of which Hapag-Lloyd Cruises 5 0 5
Marella Cruises 3 1 4
Total 15 1 16
As at 30 September 2021
TUI Cruises is a joint venture in which TUI AG and the US
shipping company Royal Caribbean Cruises Ltd. each hold a 50 %
stake. With its seven 'Mein Schiff' vessels, TUI Cruises is
top-ranked in the German-speaking market for cruises. The Berlitz
Cruise Guide 2020, the most important international reference guide
for cruise ship ratings, ranked four ships operated by TUI Cruises
among the Top 5 liners in the 'Large ships' category.
The traditional Hapag-Lloyd Cruises brand, which is also part of
TUI Cruises, is a leading provider of luxury and expedition cruises
in German-speaking markets. At the reporting date, the fleet
comprised two luxury liners and three expedition cruise ships. As
in the past, the flagships Europa and Europa 2 were the only ships
to feature in the highest category of the Berlitz Cruise Guide, the
5-star-plus category.
With a fleet of four ships, Marella Cruises offers voyages in
different segments, including family and city cruises, in the
British market.
TUI Musement
The TUI Musement segment delivers local services at our holiday
destinations around the world. TUI Musement's business model is
based on an open online platform available to suppliers and
customers alike. It gives our customers the option to book tours,
activities and excursions in the destinations directly and enables
our partners and third-party providers to sell products and
services. TUI also employs its own staff in numerous holiday
destinations. In order to tap further growth potential, we entered
into additional strategic B2B partnerships in the period under
review.
Markets & Airlines
With our three regions - Northern, Central and Western - we have
well-positioned sales and marketing structures offering our
customers attractive holiday experiences. Our sales activities are
based on online and offline channels. The travel agencies include
Group-owned agencies as well as joint ventures and agencies
operated by third parties. In order to offer our customers a wide
choice of hotels, our source market organisations have access to a
large portfolio of TUI hotels. They also have access to third-party
hotel bed capacity, some of which has been contractually
committed.
Our own flying capacity continues to play a key role in our
business model. Thanks to a combination of Group-owned and
third-party capacity, we offer tailored travel programmes for each
individual source market region and can respond flexibly to changes
in customer preferences. Balanced management of flight and hotel
capacity enables us to develop destinations and optimise the
margins of both service providers.
Northern Region
The Northern Region segment comprises tour operator activities
and airlines in the UK, Ireland and the Nordics. This segment also
includes the Canadian strategic venture Sunwing and the TUI Russia
associate. The stake in TUI Russia was sold in the period under
review.
Central Region
The Central Region segment comprises the tour operators and
airlines in Germany and the tour operator activities in Austria,
Poland, and Switzerland. The tour operator in Italy was closed in
the prior year.
Western Region
The Western Region segment comprises the tour operators and
airlines in Belgium and the Netherlands and the tour operator
activities in France.
All other segments
'All other segments' includes our business activities for the
new markets, the corporate centre functions of TUI AG and the
interim holdings, the Group's real estate companies and the Group's
key tourism functions.
Research and development
As a tourism service provider, the TUI Group does not engage in
research and development activities comparable with manufacturing
companies. This sub-report is therefore not prepared.
Value-oriented Group Management
Management system and Key Performance Indicators
A standardised management system has been created to implement
value-driven management across the Group as a whole and in its
individual business segments. The value-oriented management system
is an integral part of consistent Group-wide controlling and
planning processes.
Our key financial performance indicators for tracking our
earnings position are revenue and underlying EBIT. Accordingly,
underlying EBIT represents the segment indicator as defined by IFRS
8.
We define the EBIT in underlying EBIT as earnings before
interest, taxes and expenses for the measurement of the Group's
interest hedges. EBIT by definition includes amortisation of
goodwill.
Underlying EBIT has been adjusted for income and expense items
which, due to their level and frequency, impact or distort the
assessment of operating profitability in the segments and the
Group. These one-off items include gains on disposal of
investments, major gains and losses from the disposal of assets,
and major restructuring and integration expenses. The indicator is
additionally adjusted for all effects from purchase price
allocations, ancillary acquisition costs and conditional purchase
price payments. The reconciliation to underlying EBIT also adjusts
for goodwill impairments.
To track the Group's financial position in financial year 2021,
we identified net capital expenditure and financial investments as
well as TUI Group's net financial position as key performance
indicators. In addition, we monitor the Group's leverage ratio as a
further indicator of financial stability.
Key management variables used for regular value analysis are
Return On Invested Capital (ROIC) and Economic Value Added. ROIC is
compared with the weighted average cost of capital (WACC).
We regard specific carbon emissions (in g CO2 / pkm) from our
aircraft fleet as a key non-financial performance indicator.
To track business performance in our segments in the course of
the year, we also monitor other non-financial performance
indicators, such as the customer numbers in tour operation,
capacity or passenger days, occupancy and average prices in Hotels
& Resorts and Cruises.
Information on operating performance indicators is provided in
the sections on Segmental performance (page 61) and Environmental
matters (page 77) and in the Report on Expected Developments (page
50).
Cost of capital
The cost of capital is calculated as the weighted average cost
of equity and debt capital (WACC). While the cost of equity
reflects the return expected by investors from TUI shares, the cost
of debt capital is based on the average borrowing costs for TUI
Group. The cost of capital always shows pre-tax costs, i. e. costs
before corporate and investor taxes. The expected return determined
in this way corresponds to the same tax level as the underlying
EBIT included in ROIC. For fiscal year 2021, we apply a cost of
capital of 7.77 % for the Hotel & Resorts segment, 9.18 % for
Marella Cruises, 8.36 % for TUI Musement and 11.75 % for the
Markets & Airlines division.
ROIC and Economic Value Added
ROIC is calculated as the ratio of underlying earnings before
interest and taxes (underlying EBIT) to average invested
interest-bearing capital (invested capital).
Given its definition, this performance indicator is not
influenced by any tax or financial factors and has been adjusted
for one-off effects. From a Group perspective, invested capital is
derived from liabilities, comprising equity (including
non-controlling interests) and the balance of interest-bearing
liabilities and interest-bearing assets with an adjustment for the
seasonality of the Group's net financial position. The cumulative
amortisations of purchase price allocations are then added to the
invested capital.
Apart from ROIC as a relative performance indicator, Economic
Value Added is used as an absolute value-oriented performance
indicator. Economic Value Added is calculated as the product of
ROIC less associated pre-tax capital costs (WACC) multiplied by
interest-bearing invested capital.
As a result of the business disruptions caused by COVID-19 and
the associated negative underlying EBIT, the TUI Group's overall
ROIC is negative at - 30.02 %. With a group weighted cost of
capital of 10.27 %, this yielded negative Economic Value Addded of
EUR 2.8 bn (previous year negative EVA of EUR 3.7 bn).
Invested Capital
EUR million Notes 2021 2020
Equity - 418.4 218.1
Subscribed capital (24) 1,099.4 1,509.4
Capital reserves (25) 5,249.6 4,211.0
Revenue reserves (26) - 8,525.7 - 6,168.8
Non-controlling interest (29) 667.3 666.5
Silent Participations 1,091.0 0.0
plus interest bearing financial liability items 7,509.0 9,002.7
Pension provisions and similar obligations (30) 935.1 1,015.0
Non-current financial liabilities (32), (36) 3,036.1 3,691.7
Current financial liabilities (32), (36) 284.6 577.3
Derivative financial instruments (32), (36) 23.7 318.8
Lease liabilities (IFRS 16) (32) 3,229.4 3,399.9
less financial assets 1,383.7 1,157.6
Derivative financial instruments (36) 62.3 96.4
Cash and cash equivalents (22), (36) 1,583.9 1,233.1
Other financial assets 237.6 328.2
Seasonal adjustment1 - 500.0 - 500.0
less overfunded pension plans 137.1 363.3
Invested Capital before addition of effects from 5,569.7 7,699.9
purchase price allocation
Invested Capital excluding purchase price allocation prior year 7,699.9 6,059.2
Ø Invested capital before addition of effects from 6,634.8 6,879.6
purchase price allocation2
Invested Capital before addition of effects from 5,569.7 7,699.9
purchase price allocation
plus effects from purchase price allocation 296.9 259.8
Invested Capital 5,866.6 7,959.7
Invested Capital prior year 7,959.7 6,310.0
Ø Invested Capital2 6,913.1 7,134.8
1 Adjustment to net debt to reflect a seasonal average cash
balance
2 Average value based at beginning and year-end
ROIC
EUR million 2021 2020
adjusted
Underlying EBIT - 2,075.5 - 2,997.0
Ø Invested Capital* 6,913.1 7,134.8
ROIC % - 30.02 - 42.01
Weighted average cost of capital (WACC)% 10.27 10.32
Value added - 2,785.6 - 3,733.4
* Average value based on balance at beginning and year-end
Group performance indicators used in the Executive Board
remuneration system
From the 2020 financial year onwards, the internationally more
common earnings measure 'adjusted EBIT' is used for value-oriented
corporate management. In the 2020 financial year, the adjusted EBIT
was also adjusted for the earnings effect of IFRS16 ('adjusted EBIT
[IAS17]') as part of internal reporting to facilitate comparability
with the previous year. From the 2021 financial year onwards,
adjusted EBIT (IFRS 16) is the segment performance indicator within
the meaning of IFRS 8, and the previous year's figures were
adjusted accordingly.
JEV-relevant EBT at constant currency
Group earnings before interest and taxes (EBIT) on a constant
currency basis, weighted at 75 %, are used to determine annual
variable remuneration (JEV) for the Executive Board. EBIT is
quantified on a constant currency basis in order to avoid any
distortion caused by currency-driven translation effects when
measuring actual management performance.
Group earnings before interest and taxes on a constant currency
basis developed as follows in the financial year under review:
Reconciliation EBIT
EUR million 2021
EBIT - 2,012.8
FX effects from translation to budget rates 10.6
EBIT at budget rates - 2,002.2
JEV-relevant cash flow before dividend
The second Group performance indicator reflected in JEV is the
cash flow indicator cash flow before dividend, included in the
calculation with a weighting of 25 %. For this purpose, cash flow
before dividend is determined using a simplified approach, based on
the management cash flow calculation. TUI Group EBIT, the indicator
serving as the initial basis for calculations, is also shown on a
constant currency basis for this purpose.
Cash flow before dividend for JEV purposes developed as follows
in the financial year under review:
Cash Flow before dividend
EUR million 2021
EBIT - 2,012.8
FX effects from translation to budget rates 10.6
EBIT at budget rates - 2,002.2
plus amortisation / minus write-backs of other intangible assets and plus depreciation / 1,012.4
minus write-backs of property, plant and equipment
plus Delta Working Capital 822.9
plus other non-cash result items - 107.9
minus share of result of joint ventures and associates 232.7
plus dividends received by TUI AG from joint ventures and associates 14.2
minus paid net interest - 398.4
minus paid income taxes - 9.0
minus pension contributions - 110.2
minus net capex and investments 699.1
Cash Flow before dividend 153.7
Reconciliation cash flow before dividend to Cash Flow Statement
EUR million 2021
Cash inflow from operating activities - 151.3
plus cash inflow from investing activities 704.7
less interest paid - 404.8
less payments made for acquisition of minority interest 0.0
plus payments received for the issuance of employee shares 0.0
less payments made for the purchase of own shares - 1.7
less payments received from the sale of money markets fund shares - 3.7
Cash Flow before dividend at actual rates 143.2
Effect from translation to budget rates 10.6
Cash Flow before dividend 153.8
Pro-forma underlying earnings per share
The measurement of the long term incentive plan (LTIP) for the
Executive Board is exclusively based on the average development of
pro forma underlying earnings per share from continuing operations
(LTIP-relevant EPS).
The table below shows TUI Group's pro forma underlying earnings
per share. The normalized Group tax rate for the year under review
was reduced in the prior year to 0 % against the background of the
considerable decline in earnings caused by COVID-19; this rate was
also applied for the year under review. The calculation is based on
the subscribed capital as at the balance sheet date.
Pro forma underlying earnings per share from continuing
operations (LTIP-relevant EPS) developed as follows in the
financial year under review:
Pro forma underlying earnings per shares TUI Group
EUR million 2021 2020
adjusted
Underlying EBIT - 2,075.5 - 2,997.0
less net interest expense - 448.9 - 275.9
Underlying profit before tax - 2,524.4 - 3,272.9
Income taxes (0 % assumed tax rate) 0 0
Underlying Group profit - 2,524.4 - 3,272.9
Minority interest - 13.8 9.4
Underlying Group profit attributable to TUI shareholders of TUI AG - 2,510.6 - 3,282.3
Numbers of shares at FY end (in million) 1,099.4 590.4
Underlying earnings per share (EUR) - 2.28 - 5.56
Risk Report
Successful management of existing and emerging risks is critical
to the long-term success of our business and to the achievement of
our strategic objectives. In order to seize market opportunities
and leverage the potential for success, risk must be accepted to a
reasonable degree. Risk management is therefore an integral
component of the Group's Corporate Governance.
Risk Governance
Executive Board - Direct & Assure
With oversight by the Supervisory Board, the Executive Board
determines the strategic direction of the Group and agrees the
nature and extent of the risks it is willing to take to achieve its
strategic objectives.
Ultimately, accountability for the Group's risk management rests
with the Executive Board and therefore it has established and
maintains a risk management system to identify, assess, manage and
monitor risks which could threaten the existence of the company or
have a significant impact on the achievement of its strategic
objectives: these are referred to as the principal risks of the
Group. This risk management system includes an internally-published
risk management policy which helps to reinforce the tone set from
the top on risk, by instilling an appropriate risk culture in the
organization whereby employees are expected to be risk aware,
control minded and 'do the right thing'. The policy provides a
formal structure for risk management to embed it in the fabric of
the business. Each principal risk has assigned to it a member of
the Executive Committee as overall risk sponsor to ensure that
there is clarity of responsibility and to ensure that each of the
principal risks are understood fully and managed effectively.
The Executive Board reports to the Audit Committee of the
Supervisory Board on the adherence to both the UK and German
listing requirements, the overall risk position of the Group, on
the individual principal risks and their management, and on the
performance and effectiveness of the risk management system as a
whole.
Risk Oversight Committee - Review & Communicate
On behalf of the Executive Board, the Risk Oversight Committee
(the 'ROC'), ensures that business risks are identified, assessed,
managed and monitored across the businesses and functions of the
Group. Meeting on a quarterly basis, the ROC's responsibilities
include considering the principal risks to the Group's strategy and
the risk appetite for each of those risks, assessing the
operational effectiveness of the mitigation in place to manage
those risks and any action plans to further mitigate them, as well
as reviewing the bottom-up risk reporting from the businesses
themselves to assess whether there are any heightened areas of
concern.
Senior executives from the Group's major businesses are required
to attend the ROC on a rotational basis and present on the risk and
control framework in their business, so that the members of the ROC
can ask questions on the processes in place, the risks present in
each business and any new or evolving risks which may be on their
horizon, and also to seek confirmation that an appropriate risk
culture continues to be in place in each of the major
businesses.
Chaired by the Chief Financial Officer, senior operational and
finance management as well as all of management's second line
functions are represented on the committee.
The ROC reports bi-annually to the Executive Board to ensure
that it is kept abreast of changes in the risk landscape and
developments in the management of principal risks, and to
facilitate regular quality discussions on risk management at the
Executive Board meetings.
Group Risk Department - Support & report
The Executive Board has also established a Group Risk department
to ensure that the risk management system functions effectively and
that the risk management policy is implemented appropriately across
the Group. The department supports the risk management process by
providing guidance, support and challenge to management whilst
acting as the central point for coordinating, monitoring and
reporting on risk across the Group. It also supports the ROC in
fulfilling it's duties and the reporting to both the Executive and
Supervisory Boards. Additionally, Group Risk is responsible for the
operation of the risk and control software that underpins the
Group's risk reporting and risk management process.
Businesses & functions - Identify & assess
Every business and function in the Group is required to adopt
the Group Risk Management policy. In order to do this, each either
has their own risk committee or includes risk as a regular agenda
item at their Board meetings to ensure that it receives the
appropriate senior management attention within their business. In
addition, the businesses each appoint a Risk Champion, who promotes
the risk management policy within their business and ensures its
effective application. The Risk Champions are in close contact with
Group Risk and are critical both in ensuring that the risk
management system functions effectively, and in implementing a
culture of continuous awareness and improvement in risk management
and reporting.
Risk Appetite
The Executive Board and Audit Committee, in conjunction with the
Risk Oversight Committee has reviewed the Group's risk appetite.
The results of the review indicate the board's risk appetite across
three risk types:
Operational - moderate level to all operational risks where the
board seeks to manage them responsibly to create unique holidays
for our customers but recognizes as a matter of course we operate
in a market environment characterized by external events.
Compliance - a low risk appetite to exposure of compliance
related risks including adhering to regulatory requirements,
protecting information in all forms as well as avoiding harm to
customers, employees and all other stakeholders.
Financial - low risk appetite with exposure to financial risks.
The Group seeks to achieve financial stability and certainty in
particular during the pandemic as the scrutiny of costs and cash
management has been heightened.
Our principal risks are aligned to these risk types.
Risk Reporting
The Group Risk department applies a consistent risk reporting
methodology across the Group. This is underpinned by risk and
control software which reinforces clarity of language, visibility
of risks, mitigation and actions and accountability of ownership.
Although the process of risk identification, assessment and
response is continuous and embedded within the day-to-day
operations of the businesses and functions, it is consolidated,
reported and reviewed at varying levels throughout the Group on at
least a quarterly basis.
Risk Identification: Management closest to the risks identify
those that are relevant to the pursuit of the strategy within their
business area.
A risk owner is assigned to each risk, who has the
accountability and authority for ensuring that the risk is
appropriately managed.
Risk Assessment: The methodology used is to initially assess the
gross (or inherent) risk. This is essentially the downside, being
the product of the impact together with the likelihood of the risk
materializing if there is no mitigation in place to manage or
monitor the risk. The key benefit of assessing the gross risk is
that it highlights the potential risk exposure if mitigation were
to fail completely or not be in place at all. Both impact and
likelihood are scored using the criteria shown below:
Impact Assessment
minor moderate SIGNIFICANT major SERIOUS
Impact on Impact on Impact on Impact on Impact on
Financials (Sales and Financials (Sales and Financials (Sales and Financials (Sales and Financials (Sales and
/ or Costs) / or Costs) / or Costs) / or Costs) / or Costs)
Reputation Reputation Reputation Reputation Reputation
Technology Technology Technology Technology Technology
reliability reliability reliability reliability reliability
Compliance Compliance Compliance Compliance Compliance
Health & Safety Health & Safety Health & Safety Health & Safety Health & Safety
standards standards standards standards standards
Programme Delivery Programme Delivery Programme Delivery Programme Delivery Programme Delivery
Likelihood Assessment
rare unlikely possible likely almost certain
< 10 % Chance 10 - < 30 % Chance 30 - < 60 % Chance 60 - < 80 % Chance >= 80 %
The next step in the risk reporting process is to assess and
document the mitigation currently in place to reduce the likelihood
of the risk materializing and / or its impact if it does.
Consideration of these then enables the current (or residual) risk
score to be assessed, which is essentially the reasonably
foreseeable scenario. This measures the impact and likelihood of
the risk with the mitigation in place and effective. The key
benefit of assessing the current risk score is that it provides an
understanding of the current level of risk faced today and the
reliance on the mitigation in place.
Risk Response: If management are comfortable that the current
risk position is within the Group's appetite, the risk is accepted
and no further action is required to further reduce it. The
mitigation continues to be operated and management monitor the
risk, the mitigation and the risk landscape to ensure that it
remains at an acceptable level. If management assesses that the
current risk score is too high, an action plan will be drawn up
with the objective of introducing new or stronger mitigation that
will further reduce the impact and / or likelihood of the risk to
an acceptable level. This is known as the target risk score and is
the parameter by which management can ensure the risk is being
managed in line with their overall risk appetite. The risk owner
will normally be the individual tasked with ensuring that this
action plan is implemented within an agreed timetable.
Each business and function will continue to review their risk
register on an ongoing basis through the mechanism appropriate for
their business e. g. local Risk Committee.
This bottom-up risk reporting is considered by the ROC alongside
the Group's principal risks. New risks are added to the Group's
principal risk register if deemed to be of a significant nature so
that the ongoing status and the progression of key action plans can
be managed in line with the Group's targets and expectations.
Ad hoc risk reporting
Whilst there is a formal process in place for reporting on risks
on a quarterly basis, the process of risk identification,
assessment and response is continuous and therefore if required,
risks can be reported to the Executive Board outside of the
quarterly process, should events dictate that this is necessary and
appropriate. Ideally such ad hoc reporting is performed by the
business or function which is closest to the risk, but it can be
performed by the Group Risk department if necessary.
Effectiveness of the Risk Management System
The Executive Board regularly reports to the Audit Committee of
the Supervisory Board on the performance, effectiveness and
adherence to listing requirements of the risk management system,
supported by the ROC and the Group Risk department. Additionally,
the Audit Committee receives assurance from Group Audit through its
audit plan over a selection of principal risks, processes and
business transformation initiatives most critical to the Group's
continued success.
The pandemic has continued to affect TUI's business operations
during the financial year causing a significant reduction to the
companies' operations, and therefore resulting in a reduction in
operational risks. Therefore financial risks in terms of liquidity
management were the primary focus during the reduced operations.
Unchanged to the beginning of the pandemic the Executive Board has
monitored and managed the associated principal risk to ensure that
the low level of appetite is being exercised. The requirements for
risk reporting that is coordinated by the Group Risk department and
reported to the ROC could therefore be paused. Despite this,
business areas and functions continued to ensure all risks are
managed effectively.
The conclusion from all of the above assurance work is that the
risk management system has functioned effectively throughout the
year and there have been no significant failings or weaknesses
identified. Of course there is always room for improvement, and the
Risk Champions and the Group Risk department continue to work
together to enhance the risk management and reporting processes,
particularly in the next financial year where the formal
requirements for risk reporting will be re-introduced in line with
business as usual.
Finally, in accordance with Section 317 (4) HGB (German
Commercial Code), the auditor of TUI AG has reviewed the Group's
early detection system for risks in place as required by Section 91
(2) AktG (German Stock Corporation Act) to conclude, if the system
can fulfill its duties.
Principal Risks
The principal risks to the Group are either considered to be
'Above' or 'Within' risk appetite.
Risks above the appetite are those that either require further
mitigation in order to reduce them to an acceptable position or are
heightened by external events beyond our control such as the COVID
pandemic. We have action plans in place to increase or strengthen
mitigation around each of these risks and reduce the current risk
score to the target level indicated in the heat map diagram.
Risks within the appetite are those that considered to be at an
acceptable level. For these, we have controls, processes and
procedures in place as a matter of course that serve to mitigate
each risk to either minimize the likelihood of the event occurring
and / or minimize the impact if it does occur. These risks remain
on our risk radar where we regularly monitor the risk, the
mitigation and the risk landscape to ensure that the risk score
stays stable and within our risk appetite in each case.
In the heat map diagram, the assessment criteria used are shown
on page 37.
Financial year 2021 Principal Risks
Similarly to other external factors that have previously
impacted our Group (e. g. the volcanic ash-cloud or grounding of
the B737 Max fleet), we regard the COVID-19 pandemic as an event
which has led to travel restrictions across the world, both within
the Markets as well as in destination countries. This has led to
several of our principal risks to materialise simultaneously,
including: customer demand, input cost volatility, cashflow,
destination disruption and security, health & safety. All of
these principal risks continue to remain heightened throughout the
pandemic.
Measures taken in order to react to this crisis have also
heightened the principal risk profile. Therefore the lack of
integration risk has increased, due to the volume and speed of
transformation required within the Group in order to react to the
impact; and the ability to attract and retain talent, due to the
cost saving measures related to our employees.
The Executive Board believes that, despite the existing risks,
the TUI Group currently has sufficient funds, and will continue to
have sufficient funds in the future, resulting both from borrowing
and from expected operating cash flows, to meet its payment
obligations for the foreseeable future and to continue as a going
concern. The Executive Board anticipates that, a material
uncertainty that may cast significant doubt about the Group's
ability to continue as a going concern no longer exists. The
Executive Board no longer considers the remaining risk with regard
to a further pandemic-related change in booking behaviour to be a
threat to the Group's continued existence. In its assessment, the
Executive Board assumes that the booking figures will gradually
recover in the 2022 financial year and that the booking behaviour
in the 2023 financial year will largely correspond to the
pre-pandemic level. The Executive Board assumes that there will be
no further long-term closures and lockdowns that could affect
travel behaviour. Nevertheless, customer bookings may deteriorate
due to new travel restrictions, insufficient vaccination coverage
against the COVID-19 virus in individual countries, and virus
variants for which there is insufficient vaccination protection,
thereby affecting the Company's performance.
For further information please refer to the Viability Statement
on page 47
See chapter Going Concern Reporting in accordance with UK
Corporate Governance Code, page 155
If the risk detail in the subsequent tables does not suggest
otherwise, the risks shown below relate to all segments of the
Group. The risks listed are the principal risks to which we are
exposed but are not exhaustive and will evolve over time due to the
dynamic nature of our business.
Principal Risks above risk appetite
Nature of Risk
1. Lack of integration and flexibility within operations and IT
systems
Our focus is on enhancing our operations and customer experience
by providing engaging, intuitive, seamless and continuous customer
service through delivery of digital solutions, core platform
capabilities, underlying technical infrastructure and IT services
required to support the Group's overall strategy for driving
profitable topline growth.
Although the Group's strategy has ensured that we are more
vertically integrated, which has reduced impact of disruption by
pure digital players, a lack of integration and flexibility within
our systems and operations, particularly in the Markets &
Airline businesses could impact on our cost base. This would
therefore impact on our competitiveness, our ability to provide a
superior customer experience as well as on quality and operational
efficiency.
The COVID-19 pandemic has heightened this risk due to the
shorter timescales required to deliver the integration of our
businesses and flexibility of the IT systems and therefore there
are a number of transformation projects currently in place to
mitigate this risk.
Mitigating Factors
-- Progressing with the implementation of TRIPS, our new common
IT platform, which will be introduced to allof our Markets
businesses.
-- Integration and development of Musement IT platform as
technology driver for Customer Experience.
-- An established Global Transformation Office to monitor all
initiatives to ensure they are on track aswell as regularly provide
status updates to the Executive Committee.
-- An established Asset Transformation Board, chaired by the
Chief Strategy Officer that reviews the currentasset portfolio
within our airline, hotels and cruise businesses.
-- Strong project management structures exist for all of the
major restructuring, acquisition and disposalprograms, which are
underway to ensure that they are managed effectively.
-- Project reporting tool ensures enhanced visibility of the
progress of major projects as a matter ofroutine.
-- Centralised management structures to oversee the Markets and
Airline businesses.
Nature of Risk
2. Reduction in customer demand
Spending on travel and tourism is discretionary and price
sensitive as well as competitive. The economic outlook remains
uncertain with different markets at different points in the
economic cycle. Furthermore, in recent years there has been an
emergence of successful substitute business models such as
web-based travel and hotel portals which allow end users to combine
the individual elements of a holiday trip on their own and book
them separately.
There is the risk that these external factors within our
industry will impact on the spending power as well as the desire to
travel of our customers. This could impact our short-term growth
rates and lead to margin erosion.
This risk has heightened due to customer demand being
significantly impacted by the COVID-19 pandemic.
Mitigating Factors
-- Our market position as a globally operating tourism group,
our brand and our integrated business modelenables us to respond
robustly to competitive threats.
-- The Group is characterised by the continuous development of
new holiday experiences, developing newconcepts and services which
match the needs and preferences of our customers. Our strong and
lasting relationshipswith our key hotel partners further reinforces
our ability to develop new concepts exclusive to the Group.
-- Many customers prioritize their spending on holidays above
other discretionary items.
-- Leveraging our scale to keep costs down and prices
competitive.
-- Having a range of markets so that we are not over exposed to
one particular economic cycle.
-- Promoting the benefits of travelling with a globally
operating tour operator to increase customerconfidence and peace of
mind. This is particularly prominent during rhe pandemic where
customers are seeking ahigher level of security from reputable
companies.
Nature of Risk
3. Inability to attract and retain talent
Our success depends on the ability to attract, retain, and
develop our talent to ensure that we equip our employees to deliver
our strategy as well as to also become our future leaders.
There is a risk that we are unable to attract and retain key
talent, build future leadership capability and maintain the
commitment and trust of our employees.
Challenges in managing and maintaining our talent pipeline in
order to deliver against our strategy, drive competitiveness and
maximize on our operating performance, may impact on our ability to
future proof the Group and the associated potential for negative
impact on shareholder confidence.
This risk has increased as a result of the cost saving measures
related to our employees as well due to the tourism industry
becoming a less attractive sector during the pandemic.
Mitigating Factors
-- Driving high performance and engagement through our
performance review, development plans and careerplanning
process.
-- Promoting a working from anywhere culture, allows us to
attract and retain a wider pool of talent thatdoes not require to
be located close to our base offices.
-- Establishing and maintaining online professional academies to
provide our employees with learningofferings in specific functional
areas.
-- A strategically aligned leadership programme for high
performing management at all levels.
Nature of Risk
4. Insufficient cash flow
Tourism is an inherently seasonal business with the majority of
profits earned in the European summer months. Cash flows are
similarly seasonal with the cash high occurring in the summer as
advance payments and final balances are received from customers,
with the cash low occurring in the winter as liabilities have to be
settled with many suppliers after the end of the summer season.
There is the risk that if we do not adequately manage cash
balances through the winter low period this could impact on the
Group's liquidity and ability to settle liabilities as they fall
due whilst ensuring that financial covenants are maintained.
As a result of the COVID-19 pandemic the Group has experienced
increasing challenges to the cashflow profile. This is due to
operational activity being significantly reduced during the summer
months, which is the time when the majority of cash balances are
received from customers. We are also experiencing a significantly
shorter booking profile whereby customers are booking very close to
departure and therefore cash deposits are received later than
previous booking patterns and the cash balances are subject to
higher short tem movements.
Mitigating Factors
-- The Executive Board has continued to place significant focus
on the review of the Group's cash flowposition during this crisis
period.
-- The partial resumption of holidays, particularly in mainland
Europe source markets in the summer seasonhas contributed towards
stabilising the cash positon.
-- With the customer deposits received for the coming seasons,
the funds from the financing measuresimplemented in the year under
review (capital increase in January 2021 and the convertible bond
placed in April),the cash inflow from the sale of Riu Hotels S. A.,
the extension of the revolving credit facilities including
thefurther suspension of the review of the financial covenants as
well as the further capital increase in October 2021, which took
place after the balance sheet date, the Executive Board believes
that, despite the existing risks,the TUI Group currently has and
will continue to have sufficient funds resulting both from the
borrowing and fromoperating cash flows to meet its payment
obligations and to continue as a going concern. The Executive Board
nolonger considers the remaining risk with regard to a further
pandemic-related change in booking behaviour as athreat to the
company as a going concern. In its assessment, the Executive Board
assumes that the booking figureswill gradually recover in the
financial year 2022 and that the booking behaviour in the financial
year 2023 willlargely correspond to the pre-pandemic level. The
Executive Board assumes that there will be no further
long-termclosures and lockdowns that could affect travel behaviour.
Nevertheless, customer bookings may deteriorate due tonew travel
restrictions, insufficient vaccination coverage against the
COVID-19 virus in individual countries, andvirus variants for which
there is insufficient vaccination protection, thereby affecting the
Company's performance.
-- Our focus on holiday experiences is helping to reduce the
seasonality risk, as hotels, cruises anddestination experiences
have a more evenly distributed profit and cash profile across the
year.
-- As our business is spread across a number of markets, there
are some counter-cyclical features e. g.winter is a more important
season for the Nordic and Canadian markets. Some brands, such as
the UK ski brandCrystal Ski, have a different seasonality profile
which helps to counter-balance the overall profile.
-- The business regularly produces both short term and long term
cash forecasts during the year - on a dailybasis when needed - ,
which the Treasury department use to manage cash resources
effectively. We continue tomaintain high-quality relationships with
the Group's key financiers. TUI AG's RCF and KfW credit line are
subjectto compliance with certain financial target values
(covenants) for debt coverage and interest coverage, the reviewof
which is carried out based on the last four reported quarters at
the end of the financial year or the half-yearof a financial year.
Against the backdrop of the ongoing pressures from the COVID-19
pandemic, the review iscurrently suspended. On 9 June 2021 and
again when the credit lines were extended, TUI AG's creditor banks
agreedto a further suspension of the review of these covenants
until the end of March 2022, so that the review will nowonly be
resumed in September 2022. In addition, higher limits will be
applied at the first two cut-off dates beforenormalised limits have
to be complied with from September 2023.
-- Regularly reviewing ways how we can raise additional finance
from the capital markets, should it berequired, and how we can
continue to improve our Free Cash Flow position. Please refer to
the Viability Statementon page 47 for further details on the
measures taken this year.
Nature of Risk
5. Volatility of input costs
A significant proportion of operating expenses are in non-local
currency and / or relate to aircraft and cruise fuel which
therefore exposes the business to fluctuations in both exchange
rates and fuel prices.
There is the risk that if we do not manage adequately the
volatility of exchange rates, fuel prices and other input costs,
then this could result in increased costs and lead to margin
erosion, impacting on our ability to achieve profit targets. As a
result of the pandemic there is also a risk that there will be no
lines available to put in place hedges to manage the volatility of
future seasons.
There is also the risk that if our hedging policy is too rigid.
E. g. when the majority of the competitors in a source market do
not hedge (a certain destination) we may find ourselves unable to
respond to competitive pricing pressures during the season without
it having a direct detrimental impact on our market position and /
or profitability.
Furthermore, changes in macroeconomic conditions, such as those
currently being experienced as a result of the pandemic can have an
impact on exchange rates which, particularly for the GBP / EUR rate
has a direct impact on the translation of non-euro market results
into euros, the reporting currency of our Group.
Mitigating Factors
-- An established Hedging Committee that monitors the Group's
hedging position.
-- Ensuring that the appropriate derivative financial
instruments are used to provide hedging cover for theunderlying
transactions involving fuel and foreign currency.
-- Maintaining an appropriate hedging policy to ensure that this
hedging cover is taken out ahead of themarkets' customer booking
profiles. This provides a degree of certainty over input costs when
planning pricing andcapacity, whilst also allowing some flexibility
in prices so as to be able to respond to competitive pressures
ifnecessary.
-- Tracking the foreign exchange and fuel markets to ensure the
most up-to-date market intelligence and theongoing appropriateness
of our hedging policies.
-- Expressing our key profit growth target in constant currency
terms so that short term performance can beassessed without the
distortion caused by exchange rate fluctuations. We are currently
unable to exercise all controls as our banking lines do not
sufficiently cover the hedging needs. We regard this as a temporary
topic and acceptable in the current business environment.
Further information on currency and fuel hedges can be found in
the Notes to the consolidated financial statements in the Financial
instruments section.
Nature of Risk
6. Impact of Brexit
Our main concern is whether or not all of our airlines will
continue to have access to EU airspace as now. If we were unable to
continue to fly intra-EU routes, such as from Germany to Spain,
this would have a significant operational and financial impact on
the Group.
Other areas of uncertainty include the status of our UK
employees working in the EU and vice versa and the potential for
customer visa requirements for holidays from the UK to the EU.
Mitigating Factors
-- Established Brexit workstreams to coordinate suitable
mitigation strategies where the UK exit from theEuropean Union has
an impact on our operations, particularly the airlines.
-- In addition we continue to lobby relevant UK and EU decision
makers to stress the continued importance ofa liberalised and
deregulated aviation market across Europe to protect consumer
choice in both regions.
Nature of Risk
7. Disruption to IT systems (Cyber Attacks)
Our responsibility is to protect the confidentiality, integrity
and availability of the data we process for our customers,
employees, and businesses.
This is an evolving risk due to increasing global cyber-crime
activity and regulation (e. g. EU GDPR). At the same time our
consolidation under the TUI brand and increasing dependence on
online sales and customer care increases our exposure and
susceptibility to cyber-attacks.
If we do not ensure we have the appropriate level of security
controls in place across the Group, this could have a significant
negative impact on our key stakeholders, associated reputational
damage and potential for financial implications.
Mitigating Factors
-- Continued commitment from the Executive Board in support of
key initiatives to ensure existing and futureIT systems are secure
by design, that exposure to vulnerability is managed, user access
is monitored, and colleagues are made aware of information security
risks through appropriate training - Security first in everythingwe
do.
-- Implementation of a Security Operations Centre and monitoring
tools to anticipate, detect and respond tocriminal attacks and
resolve information security incidents.
-- Launch of a Security Engineering initiative to ensure
controls are embedded in the applicationdevelopment pipeline as
TUI's information technology is transformed.
-- Continuous improvement through lessons learned from real or
simulated cyber incidents.
Nature of Risk
8. Lack of sustainability improvements
For the Group, economic, environmental and social sustainability
is a fundamental management principle and a cornerstone of our
strategy for continually enhancing the value of our Company. This
is the way we create the conditions for long-term economic success
and assume responsibility for sustainable transformation in the
tourism sector.
Our focus is to reduce the environmental impact of our
operations and promote responsible social policies and outcomes
both directly through our own business and indirectly via our
influence over our supply chain partners, thereby creating positive
change.
There is a risk that we are not successful in driving social and
environmental improvements across our operations, that our
suppliers do not uphold our corporate and social responsibility
standards and we fail to influence destinations to manage tourism
more sustainably.
If we do not maximize our positive impact on destinations and
minimize the negative impact to the extent that our stakeholders
expect, this could result in a decline in stakeholder confidence,
reputational damage and reduction in demand for our products and
services.
Mitigating Factors
-- Implemented the 'Better Holidays, Better World' initiatives
which included specific targets for keysustainability indicators.
Furthermore, work is underway to rollout the newly developed TUI
Sustainability Agenda.
-- A dedicated sustainability department to work closely with
the business and external stakeholders.
-- Operating one of the most carbon efficient airlines in Europe
with continued investment in new, moreefficient aircraft and cruise
ships.
-- Implemented an environmental management system with all TUI
airlines having achieved ISO 14001certification.
-- Increased measures to influence accommodation suppliers to
achieve third-party sustainabilitycertification recognised by the
Global Sustainable Tourism Council (GSTC).
-- TUI Care Foundation expanded to focus for charitable
donations and sustainability projects, withparticular emphasis on
maximizing the economic benefits of tourism in destinations.
Principal Risks within appetite
Nature of Risk
A. Disruption within our destinations
Providers of holiday and travel services are exposed to the
inherent risk of external events affecting destinations. This can
include natural catastrophes such as hurricanes or tsunamis;
outbreaks of disease such as the ongoing COVID-19 pandemic;
political volatility as has been seen in Egypt, Turkey and Greece
in recent years; the implications of war in countries close to our
markets and destinations; and terrorist events such as the tragic
incident in Tunisia in 2015.
There is the risk that if such an event occurs, impacting one or
more of our destinations that we could potentially suffer
significant operational disruption and costs. We may be required to
repatriate our customers and / or the event could lead to a
significant decline in demand for holidays to the affected
destinations over an extended period of time.
This risk has heightened due to COVID-19 whereby the Group is
experiencing more destination disruption due to constant changes in
travel advice and corridors.
Mitigating Factors
-- Whilst we are unable to prevent such events from occurring,
we have well defined crisis managementprocedures and emergency
response plans, which are implemented when an event of this nature
occurs, with the focusbeing on the welfare of our customers.
-- Where the appropriate course of action is to bring customers
home immediately, our significant fleet ofaircraft allows us to do
this smoothly and efficiently, as demonstrated in March 2020 when
all customers had to berepatriated due to COVID-19.
-- Our policy is to follow foreign office advice in each of our
markets with regards to non-essentialtravel. This serves to
minimize the exposure of our customers to turbulent regions.
-- Due to our presence in all key holiday regions, when a
specific destination has been impacted by anexternal event, we are
able to offer alternative destinations to our customers and to
remix our destinationportfolio away from the affected area in
future seasons if necessary.
Nature of Risk
B. Security Health & Safety breach
For all providers of holiday and travel services, ensuring the
security, health and safety of customers is of paramount
importance.
There is the risk of accidents or incidents occurring causing
illness, injury or death to customers or colleagues whilst on a TUI
holiday. This could result in reputational damage to the business
and / or financial liabilities through legal action being taken by
the affected parties. This is particularly important during the
pandemic where health & safety is under more scrutiny and
requirements from are continuously changing.
Mitigating Factors
-- An established Security Health & Safety function across
the Group in order to ensure there is appropriatefocus on health
and safety processes as part of the normal course of business.
-- The function ensures standardization as well as compliance
with best practice standards.
-- Appropriate insurance policies are in place for when
incidents do occur.
Nature of Risk
C. Reliance on key suppliers
Providers of holiday and travel services are exposed to the
inherent risk of failure in their key suppliers, particularly for
hotels, aircraft and cruise ships. This is heightened by the
industry convention of paying hoteliers in advance ('prepayments')
to secure a level of room allocation for the season as well as in
areas where a single supplier is used to provide a product or
service.
There is the risk that we are unable to continue with our core
operations in the event of a major service failure from our key
suppliers.
Mitigating Factors
-- Using reputable and financially stable suppliers,
particularly in areas where a single supplier is usedto provide a
service.
-- Regular monitoring of supplier performance against agreed
terms and conditions.
-- Strong working relationships with all key suppliers.
-- Owned and joint venture partner hotels form a substantial
part of our program which reduces our inherentrisk in this
area.
-- A robust prepayment authorization process is established and
embedded to both limit the level ofprepayments made and ensure that
they are only paid to trusted, credit-worthy counterparties.
-- Prepayments are monitored on a timely and sufficiently
granular basis to manage our financial exposure tojustifiable
levels.
Nature of Risk
D. Breach of regulatory requirements
Most providers of holiday and travel services operate across a
number of economies and jurisdictions, which therefore exposes them
to a range of legal, tax and other regulatory laws which must be
complied with.
As we are operating from multiple source markets and providing
holidays in more than many destinations, we are exposed to a range
of laws and regulations with which we must comply or else risk
incurring fines or other sanctions from regulatory bodies.
Mitigating Factors
-- Communication and strong tone from the top concerning
compliance with laws and regulations.
-- Regular reporting in different bodies (Group Executive
Committee, Audit Committee, Group Works Council)in order to
guarantee appropriate monitoring, supervision and implementation of
action plans and to strengthen theIntegrity & Compliance
culture across the Group.
-- Embedded legal and tax expertise in all major businesses
responsible for maintaining high qualityrelationships with the
relevant regulators and authorities.
-- Ongoing implementation and review of Compliance Management
System conducted by the Group Integrity &Compliance department
to monitor compliance with regulations and provide expert advice to
local teams on specificcompliance areas.
Nature of Risk
E. Management of joint venture partnerships
It is common for tourism groups to use joint venture
partnerships in some of their operations in order to reduce the
risk of new ventures, to gain access to their expertise of the
local market as well as to strengthen the balance sheet position in
line with our less capital intensive 'asset-right' strategy (e. g.
the transaction completed with Riu this financial year). There are
three significant joint ventures within the Group - Riu, TUI
Cruises and Sunwing.
For details on our strategy refer to page 25
There is the risk that if we do not maintain good relations with
our key partners that the ventures' objectives may not remain
consistent with that of the Group which could lead to operational
difficulties and jeopardize the achievement of financial
targets.
Mitigating Factors
-- Good working relationships exist with all of our main joint
venture partners and they are fully alignedwith and committed to
the growth strategy of the Group.
Viability Statement
In accordance with Rule 31 of the UK Corporate Governance Code,
the Executive Board assesses the Company's future prospects for a
period exceeding the twelve months required by the going concern
premise. The Executive Board reviews the business development
annually and on a rolling basis based on a three-year strategic
plan. The current three-year plan was adopted in September 2021and
covers the period until 30 September 2024. A three-year horizon is
considered appropriate for a fast moving competitive environment
such as tourism.
The global travel restrictions to contain COVID-19 had a strong
negative impact on the Group's earnings and liquidity development
from the end of March 2020 and also throughout financial year 2021.
Due to the reasons described above, the TUI Group had a liquidity
requirement in financial years 2020 and 2021 that was significantly
higher than the cash inflows resulting from ongoing business
operations and the existing credit lines not yet utilised, despite
the cost-cutting measures initiated. In order to close these
liquidity gaps, silent participations of EUR 1.1 bn and credit
lines totalling EUR 4.8 bn were granted in addition to the
cost-cutting and payment deferral measures initiated in the Group
as well as regional support measures in various countries. As of 30
September 2021, silent participation I and II were fully paid
in.The financing commitments available until 30 September 2021 were
utilised in the amount of EUR 2.6 bn as at the balance sheet date.
In addition, the Group carried out various financing measures in
the reporting year, in particular a capital increase and the
placement of a convertible bond. Further funds accrued to the Group
from the sale of Riu Hotels S. A.. On 27 July 2021, TUI agreed with
the bank consortium and KfW on an extension of TUI AG's revolving
credit facility (RCF) and KfW
credit line (both tranches) totalling EUR 4.7 bn to summer 2024.
In this context, TUI AG's creditor banks agreed to a further
suspension of the review of these covenants until the end of March
2022, so that the review will now only be resumed in September
2022. In addition, higher limits will be applied at the first two
reporting dates before normalised limits have to be complied with
as of September 2023.
Upon entry of the new shares in the commercial register on 28
October 2021 and final settlement with the banks involved on 2
November 2021, TUI AG successfully completed another capital
increase. The gross issue proceeds amount to around EUR 1.1 bn.
The support and stabilisation package as well as the further
financing measures are described in detail in the chapter 'Going
concern reporting according to the UK Corporate Governance Code' in
the notes.
See chapter Going Concern Reporting in accordance with the UK
Corporate Governance Code, page 155
Currently, the TUI Group continues to be affected by the
negative financial impact of the COVID-19 pandemic.
After a significant decrease in the number of COVID-19 cases in
the summer of 2021, many countries are currently recording a
significant increase in infections again. As a result, contact
restriction measures have been tightened again in the affected
countries. At the time of preparation of this report (6 December
2021) due to ongoing changes in travel restrictions, it remains
impossible to predict when we will be able to fully resume our
travel programme. In particular, it is not possible at this time to
reliably predict how quickly vaccination against the COVID-19 virus
can be completed in each country, whether new variants of the virus
will emerge, and when medications will be available to treat
COVID-19 disease. However, it is now foreseeable that sufficient
vaccines will be available in our key source markets and
destinations to ensure a further recovery in travel in the
financial year 2022.
With the customer deposits received for the coming seasons, the
funds from the financing measures implemented in the year under
review (capital increase in January 2021 and the convertible bond
placed in April), the cash inflow from the sale of Riu Hotels S.
A., the extension of the revolving credit facilities including the
further suspension of the review of the financial covenants as well
as the further capital increase in October 2021, which took place
after the balance sheet date, the Executive Board believes that,
despite the existing risks, the TUI Group currently has and will
continue to have sufficient funds resulting both from the borrowing
and from expected operating cash flows to meet its payment
obligations and to continue in the foreseeable future as a going
concern. In this context, the Executive Board assumes that the
credit lines expiring in summer 2024 will be refinanced. Therefore,
as at 30 September 2021, the Executive Board no longer identifies a
material uncertainty that may cast significant doubt about the
Group's ability to continue as a going concern.
The Executive Board has conducted a sound assessment of the
company's main risks, including future events that would jeopardise
the business model, future results, solvency or liquidity. A
sensitivity analysis is used to determine the potential impact of
the main risks, whereby they may occur individually or together.
The going concern scenario used for the assessment assumes that
booking figures will gradually recover in the 2022 financial year
and that booking behaviour in the 2023 financial year will largely
correspond to the pre-pandemic level. The Executive Board assumes
that the booking figures will gradually recover in the financial
year 2022 and volumes in the summer of 2022 will settle at
approximately the normalised level of the summer of 2019. For the
2023 financial year, it is expected that the booking behaviour in
the financial year 2023 will largely correspond to the pre-pandemic
level. The Executive Board assumes that there will be no further
long-term closures and lockdowns that could affect travel
behaviour. Nevertheless, customer bookings may deteriorate due to
new travel restrictions, insufficient vaccination coverage against
the COVID-19 virus in individual countries, and virus variants such
as the new Omicron virus variant, for which there may not be
sufficient vaccination protection, thereby affecting TUI Group's
performance.
Taking into account the current situation of the Group, the main
risks and the above-mentioned sensitivity analysis, the Executive
Board has a reasonable expectation that the Group will be able to
continue operations and meet the obligations arising within the
three-year period under review.
Key features of the internal control and risk management system
in relation to the (Group) accounting process (sections 289 (4) and
315 (4) of the German Commercial Code HGB)
1. Definition and elements of the internal control and risk
management system in the TUI Group
The TUI Group's internal control system comprises all the
principles, processes and measures that are applied to secure
effective, efficient and accurate accounting which is compliant
with the necessary legal requirements.
The internationally recognised framework of COSO (Committee of
Sponsoring Organizations of the Treadway Commission) forms the
conceptual basis for TUI Group's internal control system,
consisting of internal controls and the internal monitoring system.
The Executive Board of TUI AG, in exercising its function of
managing business operations, has entrusted responsibility for the
internal control system in the TUI Group to specific Group
functions.
The elements of the internal monitoring system in the TUI Group
comprise both measures integrated into processes and measures
performed independently. Besides manual process controls, e. g. the
'four-eyes principle', another key element of the process-related
measures are automated IT process controls. Process-related
monitoring is also secured by bodies such as the Risk Oversight
Committee of TUI AG and by specific Group functions.
The Supervisory Board of TUI AG, in particular its Audit
Committee, as well as the Group Auditing department at TUI AG are
incorporated into the TUI Group's internal monitoring system
through their audit activities performed independently from
business processes. On the basis of section 107 (3) of the German
Stock Corporation Act, the Audit Committee of TUI AG deals
primarily with the auditing of the annual financial statements,
monitoring the accounting process and the effectiveness of the
internal control and risk management system. In the Audit Committee
Report the reliability of the financial reporting and the
monitoring of the financial accounting process as well as the
effectiveness of the internal control and risk management system
are described.
Audit Committee Report see from page 20
The Group's auditors have oversight of the TUI Group's control
environment. The audit of the consolidated financial statements by
the Group auditor and the audit of the individual financial
statements of Group companies included in the consolidated
financial statements, in particular, constitute a key
non-process-related monitoring measure with regard to Group
accounting.
In relation to Group accounting, the risk management system,
introduced as an Enterprise Risk Management System (ERM System) as
a component of the internal control system, also addresses the risk
of misstatements in Group bookkeeping and external reporting. Apart
from operational risk management, which includes the transfer of
risks to insurance companies by creating cover for damage and
liability risks and also hedging transactions to limit foreign
currency and fuel price risks, the TUI Group's risk management
system embraces the systematic early detection, management and
monitoring of risks across the Group. A more detailed explanation
of the risk management system is provided in the section on the
Risk Governance Framework in the Risk Report.
2. Use of IT systems
Bookkeeping transactions are captured in the individual
financial statements of TUI AG and of the subsidiaries of TUI AG,
through local accounting systems such as SAP or Oracle. As part of
the process of preparing their individual financial statements,
subsidiaries complete standardized reporting packages in the
Group's Oracle Hyperion Financial Management 11.1.2.4 (HFM)
reporting system. HFM is used as the uniform reporting and
consolidation system throughout the Group so that no additional
interfaces exist for the preparation of the consolidated financial
statements.
Nearly all consolidation processes used to prepare the
consolidated financial statements of TUI AG, e. g. capital
consolidation, assets and liabilities consolidation and expenses
and income elimination including at equity measurement, are
generated and fully documented in HFM. Virtually all elements of
TUI AG's consolidated financial statements, including the
disclosures in the Notes, are developed from and validated by the
HFM consolidation system. HFM also provides various modules for
evaluation purposes in order to prepare complementary information
to explain TUI AG's consolidated financial statements.
The HFM reporting and consolidation system has an in-built
workflow process whereby when businesses promote their data within
the system, to signal that their reporting package is complete,
they are then locked out from making any further changes to that
data. This ensures data integrity within the system and also
facilitates a strong audit trail enabling changes to a reporting
package to be identified. This feature of the HFM system has been
checked and validated by the TUI AG Group Audit department on
several occasions since the system was introduced.
At their own discretion, TUI AG's Group auditors select certain
individual financial statements from the financial statements
entered in the HFM reporting and consolidation system by the Group
companies, which are then reviewed for the purposes of auditing the
consolidated financial statements.
3. Specific risks related to (Group) Accounting
Specific risks related to (Group) accounting may arise, for
example, from unusual or complex business transactions, in
particular at critical times towards the end of the financial year.
Business transactions not routinely processed also entail special
risks. The discretion necessarily granted to employees for the
recognition and measurement of assets and liabilities may result in
further (Group) accounting-related risks. The outsourcing and
transfer of accounting-specific tasks to service companies may also
give rise to specific risks. Accounting-related risks from
derivative financial instruments are outlined in the Notes to the
consolidated financial statements.
4. Key regulation and control activities to ensure proper and
reliable (Group) Accounting
The internal control measures aimed at securing proper and
reliable (Group) accounting ensure that business transactions are
fully recorded in a timely manner in accordance with legal
requirements and the Articles of Association. This also ensures
that assets and liabilities are properly recognised, measured and
presented in the financial statements and the consolidated
financial statements. The control operations also ensure that
bookkeeping records provide reliable and comprehensive
information.
Controls implemented to secure proper and reliable accounting
include, for instance, analysis of facts and developments on the
basis of specific indicators. Separation of administrative,
execution, settlement and authorisation functions and the
implementation of these functions by different persons reduces the
potential for fraudulent operations. Organisational measures also
aim to capture any corporate or Groupwide restructuring or changes
in sector business operations rapidly and appropriately in (Group)
accounting. They also ensure, for instance, that bookkeeping
transactions are correctly recognised in the period in which they
occur in the event of changes in the IT systems used by the
accounting departments of Group companies. The internal control
system likewise ensures that changes in the TUI Group's economic or
legal environment are mapped and that new or amended accounting
standards are correctly applied.
The TUI Group's accounting policies together with the
International Financial Reporting Standards (IFRS) in compliance
with EU legislation, govern the uniform accounting and measurement
principles for the German and foreign companies included in TUI's
consolidated financial statements. They include general accounting
principles and methods, policies concerning the statement of
financial position, income statement, notes, management report and
cash flow statement.
The TUI Group's accounting policies also govern specific formal
requirements for the consolidated financial statements. Besides
defining the group of consolidated companies, they include detailed
guidance on the reporting of financial information by those
companies via the group reporting system HFM on a monthly,
quarterly and year end basis. TUI's accounting policies also
include, for instance, specific instructions on the initiating,
reconciling, accounting for and settlement of transactions between
group companies or determination of the fair value of certain
assets, especially goodwill. At Group level, specific controls to
ensure proper and reliable (Group) accounting include the analysis
and, where necessary, correction of the individual financial
statements submitted by the Group companies, taking account of the
reports prepared by the auditors and meetings to discuss the
financial statements which involve both the auditors and local
management. Any further content that requires adjusting can be
isolated and processed downstream. The control mechanisms already
established in the HFM consolidation system minimize the risk of
processing erroneous financial statements. Certain parameters are
determined at Group level and have to be applied by Group
companies. This includes parameters applicable to the measurement
of pension provisions or other provisions and the interest rates to
be applied when cash flow models are used to calculate the fair
value of certain assets. The central implementation of impairment
tests for goodwill recognised in the financial statements secures
the application of uniform and standardized evaluation
criteria.
5. Disclaimer
With the organisational, control and monitoring structures
established by the TUI Group, the internal control and risk
management system enables company-specific facts to be captured,
processed and recognised in full and properly presented in the
Group's accounts.
However, it lies in the very nature of the matter that
discretionary decision-making, faulty checks, criminal acts and
other circumstances, in particular, cannot be ruled out and will
restrict the efficiency and reliability of the internal control and
risk management systems, so that even Group-wide application of the
systems cannot guarantee with absolute certainty the accurate,
complete and timely recording of facts in the Group's accounts.
Any statements made relate exclusively to TUI AG and to
subsidiaries according to IFRS 10 included in TUI AG's consolidated
financial statements.
Overall Assessment by the Executive Board and Report on expected
Developments
Actual business performance 2021 compared with our guidance
Due to travel restrictions in the first half of the year and in
the course of Summer 2021, TUI Group's revenue at constant currency
declined by 40.5 % year-on-year. After we had initially expected to
deliver revenue growth, we updated our guidance to an expected
year-on-year decline in revenue with the publication of our
Half-Year Financial Report 2021.
As expected, TUI Group's underlying EBIT in financial year 2021
improved by EUR 921.5 m to an operating loss of EUR 2,075.5 m.
Including a gain on disposal from the sale of our 49 % stake in
Riu Hotels S. A., not included in our original guidance, net
adjustments for the financial year under review amounted to +EUR
95.9 m. After our guidance had originally expected a net negative
effect from adjustments, we modified our statement in this regard
when we published our 9M results.
ROIC (IFRS 16) and Economic Value Added (IFRS 16) improved as
expected in financial year 2021.
Due to lower gross capex and the sale of hotels, sales of
aircraft and spare engines and in particular the 49 % stake in Riu
Hotels S. A., the Group generated cash inflow from net capex and
financial investments of EUR 699.1 m (previous year EUR 149.3 m).
After our guidance had initially foreseen an increase in net capex
and financial investments, we updated the relevant statement in our
Half-Year Financial Report 2021, indicating that cash inflow from
net investments in property, plant and equipment and financial
investments would at least be flat year-on-year.
At EUR 5.0 bn, TUI Group's net debt carried at the end of
financial year 2021 declined versus the prior year's figure of EUR
6.4 bn.
For financial year 2021, we had expected specific CO2 emissions
to decrease year-on-year. Due to lower average load factors for our
aircraft, this expectation was not met.
Projected development of global situation
Projected development of World Output
Var. % 2022 2021
World + 4.9 + 5.9
Eurozone + 4.3 + 5.0
Germany + 4.6 + 3.1
France + 3.9 + 6.3
UK + 5.0 + 6.8
US + 5.2 + 6.0
Russia + 2.9 + 4.7
Japan + 3.2 + 2.4
China + 5.6 + 8.0
India + 8.5 + 9.5
Source: Projections of International Monetary Fund (IMF), World
Economic Outlook, October 2021
Macroeconomic situation and market development in tourism
The International Monetary Fund (IMF) expects the global economy
to continue recovering from the effects of the COVID-19 pandemic
with growth of 4.9 % in calendar year 2022 (IMF, World Economic
Outlook, October 2021). Global travel is also slowly recovering
from a very low level, albeit with regional variations. In a number
of destinations, in particular those with large domestic markets,
recovery in the tourism sector is being driven by demand for
domestic travel. We expect that package tours in the low-cost
land-based and short-haul segment will be the first businesses to
pick up again once the effects of COVID-19 fade away and global
travel restrictions are lifted. Restoring consumer confidence and
resuming travel continue to depend on the progress of vaccinations,
coordinated national responses to travel restrictions, harmonised
safety protocols and clear communication (UNWTO, September
2021).
Effects on TUI Group
As a global tourism provider, TUI Group depends on the political
and legal framework and on consumer demand in the big source
markets in which we operate with our hotel, cruise and tour
operator brands. Our budget is based on the IMF's assumptions about
the future development of the global economy and takes its cue from
UNWTO's long-term forecast.
In the completed financial year 2021, the TUI Group's business
performance again was significantly impacted by the travel
restrictions triggered by the COVID-19 pandemic. At present, it can
be observed that the TUI Group will continue to be affected by the
negative impact of the COVID-19 pandemic. In view of the uncertain
environment, the Executive board believes it would not be
appropriate to issue a specific forecast for the new financial year
2022 at this time.
Expected development of Group earnings
TUI Group
The translation of the income statements of foreign subsidiaries
in our consolidated financial statements is based on average
monthly exchange rates. TUI Group generates a considerable
proportion of consolidated revenue and substantial earnings and
cash flow contributions in non-euro currencies, in particular the
pound sterling and US dollar. Taking account of the seasonality in
tourism, the value of these currencies against the euro in the
course of the year therefore exerts a major impact on the financial
indicators displayed in TUI AG's consolidated financial
statements.
Our key financial performance indicators for our earnings
position in financial year 2022 are revenue and underlying
EBIT.
Definition of underlying EBIT in Value-oriented Group management
on page 31.
Key performance indicators used for regular value analysis are
Return On Invested Capital (ROIC) and Economic Value Added. ROIC
for a given segment is shown against the segment-specific cost of
capital.
Below, we present TUI Group's expected development in financial
year 2022 based on the constant currency rates for financial year
2021.
Revenue
For financial year 2022, we expect TUI Group's revenue to grow
significantly year-on-year.
Underlying EBIT
For financial year 2022, we expect TUI Group's underlying EBIT
to improve significantly year-on-year.
Adjustments
Due to the non-repeat of the positive gain on disposal included
in the results for financial year 2021, we expect a net negative
effect from adjustments for financial year 2022, in contrast to the
net positive adjustments carried in financial year 2021.
For details on objectives and strategies, see page 25 onwards;
for details on risks, see Risk Report from page 35 onwards.
ROIC and Economic Value Added
Due to the expected improvement in our operating result, ROIC
and Economic Value Added are also expected to improve significantly
year-on-year, depending on how capital costs for TUI Group
develop.
Expected development of financial position
To forecast the Group's financial position in financial year
2022, we have defined the Group's net capital expenditure and
investments and its net financial position as key performance
indicators.
Net capex and investments
Due to TUI Group's large divestments in financial year 2021, we
expect a significant year-on-year increase in net capex and
investments for financial year 2022.
Net financial position
For financial year 2022, we expect a significant decrease in the
Group's net debt.
Sustainable development
Climate protection and emissions
We have identified specific carbon emissions (in g CO2 / pkm)
from our aircraft fleet as the key non-financial performance
indicator. In financial year 2021, the lower load factors for our
aircraft due to the sustained travel restrictions caused by
COVID-19 resulted in an increase in specific CO2 emissions. For
financial year 2022, we therefore expect specific CO2 emissions to
significantly fall in comparison with financial year 2021.
Overall Executive Board assessment of TUI Group's current
situation and expected development
At the date of preparation of the Management Report (6 December
2021), TUI Group was still feeling the negative financial effects
of the COVID-19 pandemic. In the light of the ongoing changes to
travel restrictions, the Group still cannot foresee when we will be
able to resume our travel programme in full. Despite continued
uncertainty about COVID-19 vaccination rates in various countries,
potential new virus variants and the arrival of drugs to treat
COVID-19, we assume that suitable vaccines will be sufficiently
available in our main source markets and destinations to ensure the
further recovery of travel activities in financial year 2022. For
financial year 2022, we therefore expect TUI Group's underlying
EBIT to improve significantly year-on-year on a constant currency
basis.
Outlook for TUI AG
The future business performance of TUI AG is essentially subject
to the same factors as those impacting TUI Group. Due to the
business ties between TUI AG and its Group companies, the outlook,
opportunities and risks presented for TUI Group are largely
mirrored by expectations for TUI AG. The comments made for TUI
Group therefore also apply to TUI AG.
Opportunity Report
TUI Group's opportunity management follows the Group strategy
for Tourism as our core business. Responsibility for systematically
identifying and taking up opportunities rests with the operational
management of the Hotels & Resorts, Cruises and TUI Musement
segments as well as our source markets. Market scenarios and
critical success factors for the individual sectors are analysed
and assessed in the framework of the Group-wide planning and
control process. The core task of the Group's Executive Board is to
secure profitable growth for TUI Group again by optimising the
shareholding portfolio and developing the Group structure over the
long term.
Opportunities and risks arising from macro trends
The comprehensive lifting of current travel restrictions, in
particular, would facilitate a significant and swift recovery of
our business. Faster or stronger than expected recovery in demand
in the travel market would have a positive effect on TUI Group and
its segments. Moreover, changes in the competitive environment
could create opportunities for TUI Group in individual markets.
Corporate strategy opportunities
Opportunities arise from the implementation of our Global
Realignment Programme. We are reviewing our activities, each
business unit and each Group company worldwide in order to identify
synergies and be leaner, faster and more efficient. We see
opportunities in the further adjustment of our structure and our
presence in the markets and destinations.
Further opportunities arise from accelerating the Group's
transformation into a digital platform business. We will expand
hotel-only and flight-only products and broaden our dynamic
packaging opportunities. We will prioritise the planned
transformation of our digital platform in the Destination
Experiences segment.
Operational opportunities
We intend to operate as an asset-light organisation and see
opportunities in the implementation of our asset-right strategy in
our Hotels & Resorts and Cruises businesses. We are reviewing
unprofitable activities and will divest them as appropriate.
Business Review
Macroeconomic, Industry and Market Framework
Macroeconomic development
Development of World Output
Var. % 2021 * 2020
World + 5.9 - 3.1
Eurozone + 5.0 - 6.3
Germany + 3.1 - 4.6
France + 6.3 - 8.0
UK + 6.8 - 9.8
US + 6.0 - 3.4
Russia + 4.7 - 3.0
Japan + 2.4 - 4.6
China + 8.0 + 2.3
India + 9.5 - 7.3
* Projection
Source: International Monetary Fund (IMF), World Economic
Outlook, October 2021
Following the historic slump in the global economy due to the
global COVID-19 pandemic in the previous year, the International
Monetary Fund projects global economic output to recover
considerably with global GDP growth of 5.9 % in calendar year 2021.
Recovery from the effects of the pandemic varied greatly from one
region to another. Access to vaccines and early political support
remain the crucial factors for overcoming the repercussions (IMF,
World Economic Outlook, October 2021).
Key exchange rates and commodity prices
TUI Group companies operate on a worldwide scale. This presents
financial risks for TUI Group arising from changes in exchange
rates and commodity prices. The essential financial transaction
risks from operations concern euros and US dollars. They mainly
result from foreign exchange items in the individual Group
companies, for instance jet fuel and bunker oil or ship handling,
or from sourcing transactions by hotels. The parity of sterling
against the euro affects the translation of results generated in
the UK market in TUI's consolidated financial statements. Following
the UK's exit from the European Union, the currency fluctuations
continued, impacting the translation of results from our UK
business. Changes in commodity prices above all affect TUI Group
when procuring fuels such as aircraft fuel and bunker oil. In
Tourism, risks relating to changes in exchange rates and price
risks from fuel sourcing are partly hedged by derivatives.
Information on hedging strategies and risk management as well as
financial transactions and the scope of such transactions at the
balance sheet date is provided in the sections Financial position
and Risk report in the Management Report and the section Financial
instruments in the Notes to the consolidated financial
statements.
Financial position on page 68, Risk report on page 35 and
Financial instruments in the Notes on page 214.
Industry overview
TUI Group is a global tourism provider. The development of the
international tourism market has an impact on all business areas of
the Group.
The key indicators to measure the size of the tourism sector
include the number of international tourist arrivals. According to
the United Nations World Tourism Organization (UNWTO), the number
of international tourist arrivals grew by around 5 % year-on-year
from 2009 to 2019 (UNWTO, World Tourism Barometer, January
2020).
This growth was driven by a number of factors: the relatively
stable global economy, a growing middle class in the emerging
economies, technological progress, low travel costs and an easing
of visa requirements.
The COVID-19 pandemic has had a particularly serious impact on
the travel and tourism sector. Travel restrictions were imposed in
numerous markets across the globe; aircraft were grounded and
hotels closed. For the first seven months of calendar year 2021,
UNWTO reports a decline in international tourist arrivals of 40 %
year-on-year and 80 % versus the 2019 reference period which was
not impacted by COVID-19. Following a weak start to the year,
international tourism saw a slight increase in tourist arrivals in
the period from June to July 2021. This was attributable to the
reopening of numerous destinations for global travel, above all in
Europe and America. The lifting of restrictions on travel for
vaccinated travellers and the progress delivered by COVID-19
vaccinations helped to boost consumer confidence and gradually
restore safe mobility in Europe and other parts of the world
(UNWTO, World Tourism Barometer, September 2021).
Change of international tourist arrivals vs. prior years
Var. % 2021* 2021*
vs. 2020 vs. 2019
World - 40.3 - 80.5
Europe - 31.1 - 76.9
Asia and the Pacific - 81.0 - 95.3
Americas - 19.1 - 68.0
Afrika - 44.9 - 77.3
Middle East - 50.5 - 82.5
Source: UNWTO World Tourism Barometer, September 2021 * Period
January till July
Travel intermediary market
A travel intermediary operates between a provider of tourism
services, such as an airline or a hotel, and final customers,
typically delivering distribution or related services.
Travel intermediaries include tour operators and online travel
agencies (OTAs), whose business models vary substantially.
Traditional tour operators offer their customers a package product
(comprising e. g. flight, hotel and transfers), usually through a
combination of offline (i. e. travel agencies) and online channels.
In order to secure flight and hotel capacity in advance, a tour
operator usually commits to a certain share of required capacity.
Tour operators thus take the risk to fill the committed capacity;
in return, they can expect the supplier to offer them a favourable
rate and the opportunity to secure accommodation on an exclusive
basis. OTAs, by contrast, typically do not commit to taking
contingents. Their offering to suppliers is a digital distribution
platform with broad customer reach. Both bigger OTAs and dynamic
packaging* are gaining relevance.
* dynamic packaging of travel services such as flight, transfer,
hotel and catering to a package tour
Airline market
The airline industry was hit particularly hard by the COVID-19
crisis, as airlines around the world had to ground their aircraft
and cancel flights due to global travel bans. Recovery scenarios
vary; however, the first positive signs are emerging. When key
European destinations reopened for visitors in Summer 2020, flight
capacity was ramped up. A similar development was observed in
Summer 2021, when travel restrictions were lifted once again. The
holiday trip segment is expected to recover first and grow faster
than the business travel market in the next few years (skift.com,
2021).
The European airline market is characterised by fierce
competition and overcapacity, resulting in pressure on yields.
Despite a number of insolvencies, the market has not seen a
significant reduction in flight capacity. Instead, capacity has
typically been absorbed by existing players.
Hotel market
The COVID-19 pandemic had significant impacts on the hotel
sector as travel and hotel restrictions imposed by governments in
many countries resulted in the temporary closing of hotels and a
significant decline in the number of bed nights. The recovery of
the hotel market was initiated with the resumption of domestic
travel. Following the lifting of governmental restrictions,
international travel contributed to an increase in bed nights.
The hotel market comprises business and leisure hotels. Leisure
hotels feature a number of characteristics distinguishing them from
business hotels, including longer average lengths of stay and
differences in location, room features and service offerings. From
a demand perspective, the leisure hotel market in Europe comprises
several smaller sub-markets catering to customers' individual needs
and preferences. The sub-markets comprise premium, comfort and
budget hotels as well as family / apartment hotels and club or
resort hotels. Hotel companies may offer a variety of hotels for
different market segments, often defined by price segment, star
rating, exclusivity or available facilities.
In Europe, in particular, there are many small, often family-run
hotels, which are less upscale and have fewer financial resources.
Most family-owned hotels are not branded.
Given the large number of ownership and operating models for
leisure hotels and the fragmented competitive landscape which, at
least in Europe, is not dominated by large hotel chains, the
competitive environment differs greatly between locations. Despite
this strong fragmentation, a structural change can be observed in
the European hotel industry, as in nearly all regions in the world.
The share held by hotel chains is increasing.
Cruise market
From 1990 to 2019, the global ocean cruise sector recorded
annual passenger growth of 6.6 %. An estimated 29.7 m passengers
undertook an ocean cruise in calendar year 2019. At around 15.4 m
passengers, North America remains the largest cruise market in the
world, followed by Europe with around 7.7 m passengers. In terms of
passenger numbers, the most frequently visited destinations are the
Caribbean, Asia and Africa as well as the central and western
Mediterranean (CLIA, 2021 State of the Cruise Industry
Outlook).
Restrictions imposed by governments due to COVID-19 temporarily
brought the cruise sector to a standstill. Due to the pandemic,
numerous ships were also decommissioned earlier than planned with a
view to modernising fleets and improving their environmental
performance. (Cruise Market Watch)
Destination Experiences market
The market for tours and activities is a rapidly growing tourism
segment. The market is highly fragmented on the supplier side and
is predominantly operated offline. However, due to growing
consolidation and digitalisation, the market is undergoing
change.
Pre-COVID-19, the forecast market growth on a five-year outlook
varied between 3 % and 7 % (Company estimate based on Phocuswright
& Euromonitor), depending how the market was defined.
Our TUI Brand
Our brand with the red 'smile' - the smiling logo formed by the
three letters of our brand name TUI - stands for TUI's ambition to
provide a consistent customer experience, digital presence and
competitive strength above and beyond the actual holiday
experience. In recent years, to further leverage the appeal and
strength of our core brand and tap the associated growth potential,
we have created global branding and a consistent brand
experience.
TUI Group is an integrated tourism group operating on a global
scale. TUI is one of the best-known travel brands in our core
markets in Europe. Seeking to emerge stronger from the COVID-19
crisis, we launched a freshly designed marketing campaign in
October 2021. Its goal is to underpin the existing brand essence
with our values reliability, credibility and quality, while also
strengthening the links between TUI's brand identity and the
leisure experience following the expansion of TUI Group's portfolio
over the past few years to include TUI Musement. Our new brand
strategy 'TUI creates the moments that make life richer' will
visualise our goal of offering our guests sustainable, personally
significant holidays and experiences.
Group Earnings
Comments on the consolidated income statement
In financial year 2021, the development of TUI Group's revenue
and earnings was significantly impacted by the continued suspension
of most of TUI's tour operator, aviation, hotel and cruise
businesses caused by the persistent global travel restrictions to
curb the spread of COVID-19. In the period under review, TUI
Group's operating loss ( underlying EBIT) declined by EUR 921.5 m
to a loss of EUR 2,075.5 m, an improvement of EUR 933.8 m
year-on-year on a constant currency basis.
Consolidated Income Statement of TUI AG for the period from 1 Oct 2020 to 30 Sep 2021
EUR million 2021 2020 Var. %
Revenue 4,731.6 7,943.7 - 40.4
Cost of sales 5,955.4 9,926.1 - 40.0
Gross loss - 1,223.8 - 1,982.4 + 38.3
Administrative expenses 840.5 1,017.3 - 17.4
Other income 250.6 574.4 - 56.4
Other expenses 11.5 15.2 - 24.3
Impairment of goodwill - 68.1 n. a.
Impairment (+) / Reversals of impairment (-) of financial assets - 38.0 180.6 n. a.
Financial income 27.3 35.3 - 22.8
Financial expenses 464.1 321.7 + 44.3
Share of result of investments accounted for using the equity method - 232.7 - 193.3 - 20.4
Impairment (+) / Reversals of impairment (-) of net investments in joint ventures and 5.0 34.5 - 85.5
associates
Earnings before income taxes - 2,461.7 - 3,203.3 + 23.2
Income taxes (expense [+], income [-]) 19.2 - 64.2 n. a.
Group loss - 2,480.9 - 3,139.1 + 21.0
Group loss attributable to shareholders of TUI AG - 2,467.2 - 3,148.4 + 21.6
Group loss / profit attributable to non-controlling interest - 13.8 9.4 n. a.
Revenue and cost of sales
Revenue
EUR million 2021 2020 Var. %
Hotels & Resorts 440.5 402.4 + 9.5
Cruises 27.0 472.6 - 94.3
TUI Musement 116.7 306.3 - 61.9
Holiday Experiences 584.1 1,181.3 - 50.6
Northern Region 807.7 2,462.0 - 67.2
Central Region 2,322.9 2,859.6 - 18.8
Western Region 976.1 1,345.9 - 27.5
Markets & Airlines 4,106.7 6,667.5 - 38.4
All other segments 40.8 94.9 - 57.1
TUI Group 4,731.6 7,943.7 - 40.4
TUI Group (at constant currency) 4,724.6 7,943.7 - 40.5
In financial year 2021, TUI Group's revenue declined by 40.4 %
to EUR 4,731.6 m due to the COVID-19 pandemic. On a constant
currency basis, revenue decreased by 40.5 %. Customer numbers were
33.5 % down year-on- year. Reve-nue is presented alongside the cost
of sales in the income statement, which declined by 40.0 % in the
period under review.
Gross loss
The difference between revenue and the cost of sales declined by
EUR 758.6 m year-on-year to a gross loss of EUR 1,223.8 m.
Administrative expenses
Administrative expenses decreased by EUR 176.8 m year-on-year to
EUR 840.5 m.
Other income and other expenses
In financial year 2021, other income mainly resulted from the
sale of our 49 % stake in the Riu Hotels S. A. joint venture (real
estate portfolio) to a Riu Group company. In the prior year, other
income had mainly included income from the divestment of the German
specialist tour operators and of Hapag-Lloyd Kreuzfahrten.
As in the prior year, other expenses in financial year 2021
mainly included expenses incurred in connection with the disposal
of Group companies and losses from the sale of aircraft assets.
Financial result
The financial result declined by EUR 150.4 m to EUR - 436.8 m,
primarily due to higher interest expenses driven by the use of
credit facilities to cover the payments due, expenses incurred in
connection with the early redemption of TUI's senior bond on 23
February 2021, and lower income from bank balances. Financial
income mainly resulted from changes in exchange rates for lease
liabilities in accordance with IFRS 16.
Share of result of joint ventures and associates
The share of result from joint ventures and associates of EUR -
232.7 m comprises the proportionate net profit for the year of
these companies. The decline in the share of result is driven by
adverse operational impacts caused by the COVID-19 pandemic. In the
prior year, the result in Cruises had included a profit
contribution from the Winter 2019 / 20 season.
Earnings before income taxes
In the period under review, earnings before income taxes
totalled EUR - 2,461.7 m. The loss therefore declined by EUR 741.6
m year-on-year.
Group loss
The Group loss for financial year 2021 declined by EUR 658.2 m
to EUR 2,480.9 m.
Share in Group loss attributable to TUI AG shareholders
The share in Group loss attributable to TUI AG shareholders
amounted to EUR - 2,467.2 m in financial year 2021.
Non-controlling interests
In the completed financial year, non-controlling interests in
the Group result totalled EUR - 13.8 m. They mainly related to
RIUSA II Group.
Earnings per share
The interest in the Group result attributable to TUI AG
shareholders resulted in basic earnings per share of EUR - 2.58
(previous year EUR - 5.34) in financial year 2021. The underlying
average number of shares results from the number of shares at the
beginning of the financial year and the prorated effect of the
capital increase implemented in financial year 2021.
Alternative Performance indicators
The Group's main financial KPI is 'underlying EBIT'. We define
the EBIT in underlying EBIT as earnings before interest, income
taxes and expenses for the measurement of the Group's interest
hedges. EBIT by definition includes goodwill impairments.
Underlying EBIT is adjusted by income and expense items
impacting or distorting the assessment of the operating
profitability of the segments and the Group due to their level and
frequency. These items include gains on disposal from investments,
major gains and losses from the sale of assets and major
restructuring and integration expenses. In addition, adjustments
are carried for all effects from purchase price allocations,
ancillary acquisition costs and conditional purchase price
payments. Adjustments made in the reconciliation to underlying EBIT
include goodwill impairments.
The table below provides a reconciliation to underlying
EBIT:
Reconciliation to underlying EBIT of TUI Group
EUR million 2021 2020 Var. %
Earnings before income taxes - 2,461.7 - 3,203.3 + 23.2
plus: Net interest expense (excluding expense / income from measurement of interest hedges) 439.1 281.7 + 55.9
less / plus: Expense (income) from measurement of interest hedges 9.8 - 5.9 n. a.
EBIT - 2,012.8 - 2,927.4 + 31.2
Adjustments:
less / plus: Separately disclosed items - 95.9 - 119.1
plus: Expense from purchase price allocation 33.2 49.5
Underlying EBIT - 2,075.5 - 2,997.0 + 30.7
TUI Group's EBIT declined by EUR 914.6 m to EUR - 2,012.8 m in
financial year 2021.
EBIT
EUR million 2021 2020 Var. %
Hotels & Resorts 39.4 - 463.7 n. a.
Cruises - 277.5 153.3 n. a.
TUI Musement - 127.3 - 146.1 + 12.9
Holiday Experiences - 365.4 - 456.4 + 19.9
Northern Region - 995.1 - 1,036.1 + 4.0
Central Region - 297.3 - 720.8 + 58.8
Western Region - 236.6 - 533.9 + 55.7
Markets & Airlines - 1,528.9 - 2,290.7 + 33.3
All other segments - 118.5 - 180.3 + 34.3
TUI Group - 2,012.8 - 2,927.4 + 31.2 TUI Group's operating loss adjusted for one-off effects (underlying EBIT) declined by EUR 921.5 m to EUR 2,075.5 m in financial year 2021.
Underlying EBIT
EUR million 2021 2020 Var. %
adjusted
Hotels & Resorts - 152.7 - 395.2 + 61.4
Cruises - 277.5 - 322.3 + 13.9
TUI Musement - 105.3 - 114.0 + 7.6
Holiday Experiences - 535.4 - 831.5 + 35.6
Northern Region - 965.8 - 960.9 - 0.5
Central Region - 328.6 - 612.5 + 46.4
Western Region - 176.6 - 433.7 + 59.3
Markets & Airlines - 1,470.9 - 2,007.1 + 26.7
All other segments - 69.1 - 158.4 + 56.4
TUI Group - 2,075.5 - 2,997.0 + 30.7
Since financial year 2020, the Group has used the indicator
'underlying EBIT', which is more common in the international
sphere, for the purposes of value-oriented management. In financial
year 2020, underlying EBIT was also adjusted for the IFRS 16
earnings effect in the framework of internal reporting ('underlying
EBIT [IAS 17]') in order to enhance comparability with the prior
year. From financial year 2021, underlying EBIT (IFRS 16) is the
segment KPI within the meaning of IFRS 8. The prior year's numbers
have been restated accordingly.
In financial year 2021, net income was adjusted by EUR 95.9 m
for one-off effects.
For details, please refer to the Notes to the segment data.
For one-off effects, please see page 171. Other segment
indicators
Reconciliation to EBITDA
EUR million 2021 2020 Var. %
adjusted
EBIT - 2,012.8 - 2,927.4 + 31.2
Amortisation (+) / write-backs (-) of other intangible assets and depreciation (+) / 1,012.4 1,504.4 - 32.7
write-backs (-) of property, plant and equipment
Impairment of goodwill - 68.1 n. a.
EBITDA - 1,000.4 - 1,355.0 + 26.2
EBITDA
EUR million 2021 2020 Var. %
adjusted
Hotels & Resorts 257.2 - 58.3 n. a.
Cruises - 214.1 393.3 n. a.
TUI Musement - 94.3 - 103.9 + 9.2
Holiday Experiences - 51.2 231.0 n. a.
Northern Region - 631.5 - 631.1 - 0.1
Central Region - 163.9 - 535.8 + 69.4
Western Region - 77.7 - 287.6 + 73.0
Markets & Airlines - 873.1 - 1,454.5 + 40.0
All other segments - 76.1 - 131.5 + 42.1
TUI Group - 1,000.4 - 1,355.0 + 26.2
Underlying EBITDA
EUR million 2021 2020 Var. %
adjusted
Hotels & Resorts 63.1 - 58.0 n. a.
Cruises - 214.1 - 82.3 - 160.1
TUI Musement - 79.9 - 87.4 + 8.6
Holiday Experiences - 230.9 - 227.7 - 1.4
Northern Region - 618.1 - 593.6 - 4.1
Central Region - 202.1 - 435.9 + 53.6
Western Region - 38.1 - 237.2 + 83.9
Markets & Airlines - 858.4 - 1,266.7 + 32.2
All other segments - 55.9 - 120.6 + 53.6
TUI Group - 1,145.2 - 1,615.0 + 29.1
Segmental Performance
Cautionary note on COVID-19
The COVID-19 crisis, which broke out in our key source markets
and destinations in Europe at the end of the second quarter of
financial year 2020, had severe impacts on the tourism sector and
TUI Group in the financial years 2020 and 2021. As our business
operations were significantly restricted, the key performance
indicators of financial year 2021 shown in the sections below are
of limited, if any, comparability and do not allow any conclusions
to be drawn about the sustained development.
Holiday Experiences
Holiday Experiences
EUR million 2021 2020 Var. %
adjusted
Revenue 584.1 1,181.3 - 50.6
Underlying EBIT - 535.4 - 831.5 + 35.6
Underlying EBIT (at constant currency) - 545.6 - 831.5 + 34.4
Hotels & Resorts
EUR million 2021 2020 Var. %
adjusted
Total revenue 666.7 751.4 - 11.3
Revenue 440.5 402.4 + 9.5
Underlying EBIT - 152.7 - 395.2 + 61.4
Underlying EBIT (at constant currency) - 162.7 - 395.2 + 58.8
Capacity hotels total1 ('000) 27,070 24,013 + 12.7
Riu 10,604 11,144 - 4.8
Robinson 2,289 2,083 + 9.9
Blue Diamond 4,671 2,543 + 83.7
Occupancy rate hotels total2 (in %, variance in % points) 53 66 - 13
Riu 55 72 - 17
Robinson 58 62 - 4
Blue Diamond 51 70 - 19
Average revenue per bed - hotels total3 (in EUR) 70 71 - 1.7
Riu 59 67 - 12.8
Robinson 103 100 + 3.0
Blue Diamond 104 122 - 14.8
Turnover measures include fully consolidated companies, all
other KPIs incl. companies measured at equity.
1 Group owned or leased hotel beds multiplied by opening
days
2 Occupied beds divided by capacity
3 Arrangement revenue divided by occupied beds
-- Our Hotels & Resorts segment made an underlying EBIT loss
of EUR 152.7 m, a EUR 242.5 m improvement on the prior year
(previous year: EUR 395.2 m loss). This improvement reflects in
part the improved operational result fromeasing of travel
restrictions, particularly in the second half of the financial
year, as well as a non-repeatbenefit from impairment charges in the
prior year of EUR 78 m.
-- The segment not only beneffited from our portfolio ownership
of hotel and club brands across multipledestinations, but also the
distribution power of our integrated model. Our multi-destination
portfolio of hotelsenabled us to reopen as soon as destination
specific travel restrictions were progressively lifted around
theworld, whilst our high level of direct distribution allowed us
to optimise customer volumes into our own assets, aswell as flexing
our distribution to third party channels.
-- As at 30 September 2021, 331 hotels were in operation (92 %
of 359 Group hotel portfolio) increasingfrom the 142 hotels at
previous year end (previous year: 40 % of 355 Group hotels),
reflecting the wider liftingof travel restrictions and progress of
vaccination programmes across both markets and destinations.
Importantdestinations in summer 2021 were Spain, Greece, Turkey and
Mexico, with Mexico benefiting from US travellers andlocal domestic
market holiday customers.
-- Available bed nights increased by 13 % year-on-year
reflecting the drivers above. The average occupancyrate (based on
open hotels) was 53 % with the prior year benefitting from five
months of normal operationspre-pandemic (previous year: 66 %).
Average rate per bed was broadly in line at EUR 70 versus prior
year. (previousyear: EUR 71).
-- Riu occupancy declined by 17 % pts to 55 % versus prior year
(previous year: 72 %) and average ratedeclined 13 % to EUR 59
(previous year: EUR 67), with the prior year benefitting from five
months of normal operationspre-pandemic.
-- Robinson occupancy declined 4 % pts to 58 % versus prior year
(previous year: 62 %) and average rateincreased 3 % to EUR 103
(previous year: EUR 100), reflecting the strength of our Robinson
brand which remains highlypopular for our German customer base.
-- Blue Diamond occupancy reduced by 19 % pts to 51 % versus
prior year (previous year: 70 %) and averagerate declined 15 %
including FX to EUR 104 (previous year: EUR 122), with the prior
year benefitting from five monthsof normal operations
pre-pandemic.
-- Our Other hotel brands with hotels in Turkey, Balearics and
Canaries benefitting from higher demand, asthese destination
reopened more widely to receive leisure customer versus the prior
year.
Cruises
EUR million 2021 2020 Var. %
adjusted
Revenue1 27.0 472.6 - 94.3
Underlying EBIT - 277.5 - 322.3 + 13.9
Underlying EBIT (at constant currency) - 276.4 - 322.3 + 14.2
Occupancy (in %, variance in % points)
TUI Cruises 41 87 - 46
Hapag-Lloyd Cruises2 45 67 - 22
Marella Cruises 39 96 - 57
Passenger days ('000)
TUI Cruises 1,227 2,965 - 58.6
Hapag-Lloyd Cruises2 114 207 - 45.0
Marella Cruises 153 1,366 - 88.8
Average daily rates3 (in EUR)
TUI Cruises 132 142 - 7.0
Hapag-Lloyd Cruises2 514 567 - 9.4
Marella Cruises3 (in GBP) 124 146 - 15.1
1 No revenue is carried for TUI Cruises and Hapag-Lloyd Cruises
as the joint venture is consolidated at equity
2 Per day and passenger
3 Inclusive of transfers, flights and hotels due to the
integrated nature of Marella Cruises, in GBP
-- TUI Cruises and Hapag-Lloyd Cruises, our two cruise brands in
Germany, have been operating a partialfleet since July 2020, which
was made possible by Germany's decision to permit cross-border
travel in EU states andSchengen Area since Summer 2020. The UK in
contrast only permitted Cruise liners to resume almost a year
later,from May 2021.
-- The Cruise segment reported an underlying EBIT loss of EUR
277.5 m (previous year: EUR 322.3 m loss,including impairments of
EUR 150 m). The operational loss, taking into account previous
year's impairments, reflectsa full year of partial operations by
TUI Cruises and Hapag-Lloyd Cruises and Marella only in operation
for thefinal quarter of the financial year versus a prior year
which benefitted from five months of normal operationspre-pandemic.
Occupancy rates ranged between 39 % and 45 % across our Cruise
brands, with an element of cappedoccupancy requirements still in
place by some destinations during the course of the year. 14 ships
out of 16 totalfleet (including the new expedition class Hanseatic
spirit) were in operation as at 30 September 2021.
-- TUI Cruises' average daily rate of EUR 132 declined 7 %
versus prior year (previous year: EUR 142). Occupancyrate was 41 %,
46 % pts lower versus prior year (previous year: 87 %) with a
short-term booking trend very evidentand the prior year benefitting
from five months of normal operations pre-pandemic. Six out of the
seven-ship fleetwere in operations.
-- Hapag-Lloyd Cruises' average daily rate of EUR 514 declined 9
% versus prior year (previous year: EUR 567).Occupancy of 45 %
declined by 22 % pts versus prior year (previous year: 67 %)
reflecting the same factors as TUI Cruises. Four ships were in
operation with the fifth (brand new) expedition class Hanseatic
spirit joining thefleet on 26 August 2021.
-- Marella Cruises (our UK cruise brand) remained fully
suspended for first nine months of the financialyear with Marella
Explorer the first ship to return sailing at the end of June 2021.
As at end of the financialyear, three out of the four ship fleet
were back in operation, offering itineraries around the British
Isles and tothe Mediterranean. The average daily rate was GBP 124,
down 15 % on prior year, reflecting international fly-cruisingin
the prior year pre-pandemic (previous year: GBP 146). Occupancy was
39 %, down 57 % pts versus prior year(previous year: 96 %), with
shorter lead time to market itineraries limiting the opportunity in
the final quarter,and the prior year benefitting from five months
of normal operations pre-pandemic.
TUI Musement
EUR million 2021 2020 Var. %
adjusted
Total revenue 178.3 461.3 - 61.3
Revenue 116.7 306.3 - 61.9
Underlying EBIT - 105.3 - 114.0 + 7.6
Underlying EBIT (at constant currency) - 106.5 - 114.0 + 6.6
-- TUI Musement made an underlying EBIT loss of EUR 105.3 m, a
EUR 8.7 m improvement on prior year (previousyear: EUR 114.0 m),
benefitting from savings delivered through our Global Realignment
Programme, reflecting 3K FTE reductions realised to date.
-- In addition, a higher number of customers were able to travel
this Summer 2021 versus Summer 2020 astravel restrictions eased,
with much of the volume driven by our Markets & Airlines
business. 1.5 m excursions andactivities were sold in the year.
-- We continue to accelerate and enhance our digitilisation
transformation at TUI Musement, adapting our'Digital First' service
model to ensure we remain guest centric throughout all channels,
providing support andexpertise in resort both in person and through
our dedicated TUI App 24- 7 when needed.
Markets & Airlines
Markets & Airlines
EUR million 2021 2020 Var. %
adjusted
Revenue 4,106.7 6,667.5 - 38.4
Underlying EBIT - 1,470.9 - 2,007.1 + 26.7
Underlying EBIT (at constant currency) - 1,449.2 - 2,007.1 + 27.8
Direct distribution mix1 (in %, variance in % points) 73 73 -
Online mix2 (in %, variance in % points) 50 49 + 1
Customers ('000) 5,361 8,057 - 33.5
1 Share of sales via own channels (retail and online)
2 Share of online sales
-- Our Markets & Airlines business made an underlying EBIT
loss of EUR 1,470.9 m, a EUR 536.2 m improvement on prior year
(previous year: EUR 2,007.1 m loss), with EUR 200 m of this
improvement delivered through our GlobalRealignment Programme.
-- A total of 5.4 m customers departed for their holidays during
the period under review, reflecting thelimitation on leisure travel
across our markets, particularly in the first half of the year
which saw many of ourkey source market governments imposing strict
lockdowns over the winter period. Overall volume was down 34
%year-on-year (previous year: 8.1 m) with the prior year
benefitting from five months of normal operationspre-pandemic.
-- The second half of the financial year, saw vaccination
programmes launched across our source markets andkey destinations,
breaking the correlation between incidence rate and
hospitalisation. The high vaccination take-uprate paved the way for
the EU to ease travel restrictions.
-- This earlier easing of travel restrictions by the EU compared
to UK, enabled our Central and Westernregions to restart business
operations for the summer season. In the UK, despite a high
vaccination take-up rateand a clear impact in lowering
hospitalisation rates, a highly restrictive travel traffic light
system remained inplace until 17 September 2021, limiting the
opportunity for our UK customers to depart in the summer saison
2021 compared to our Continental European customers.
-- Short-haul destinations such as the Balearics, Canaries,
Greece, Cyprus and Turkey remained important forour guests, with
regular long-haul destinations such as Mexico and Domincan Republic
largely restricted for ourEuropean markets. As a result, we
operated a capacity of 50 % of the volume in financial year 2019
for our peakSummer period July to October.
Northern Region
EUR million 2021 2020 Var. %
adjusted
Revenue 807.7 2,462.0 - 67.2
Underlying EBIT - 965.8 - 960.9 - 0.5
Underlying EBIT (at constant currency) - 947.4 - 960.9 + 1.4
Direct distribution mix1 (in %, variance in % points) 94 91 + 3
Online mix2 (in %, variance in % points) 74 67 + 7
Customers ('000) 826 2,438 - 66.1
1 Share of sales via own channels (retail and online)
2 Share of online sales
Northern Region comprises UK, Nordics and joint ventures in
Canada and Russia.
-- Northern Region delivered a similar underlying EBIT loss of
EUR 965.8 to the prior year (previous year: EUR 960.9 m loss)
reflecting the extent of travel restrictions which remained largely
in place in the UK throughout thecourse of the financial year,
heavily limiting the opportunity for our UK and Nordic customers to
depart thissummer. Savings were delivered by our Global Realignment
Programme, with the reduction of our UK & Ireland retailestate
to 315 stores (previous year: 355) one of our many initiatives.
-- Customer volume declined 66 % to 826 k versus prior year
(previous year: 2.4 m) reflecting the factorscovered, with the
prior year benefiting from five months of normal operations
pre-pandemic.
Central Region
EUR million 2021 2020 Var. %
adjusted
Revenue 2,322.9 2,859.6 - 18.8
Underlying EBIT - 328.6 - 612.5 + 46.4
Underlying EBIT (at constant currency) - 327.7 - 612.5 + 46.5
Direct distribution mix1 (in %, variance in % points) 61 54 + 7
Online mix2 (in %, variance in % points) 34 26 + 8
Customers ('000) 2,673 3,230 - 17.2
1 Share of sales via own channels (retail and online)
2 Share of online sales
Central Region comprises Germany and Austria (operated as one
market), Switzerland and Poland.
-- Central Region underlying EBIT loss of EUR 328.6 m, is an
improvement of EUR 283.9 m versus prior year(previous year: EUR
612.5 m loss) firstly reflecting the operational development as
well as benefits deliveredthrough our Global Realignment Programme,
largely driven by the significant down-sizing of TUI fly airline
fleetand reduction of our Germain retail estate to 402 stores
(previous year: 445). Operationally, the more open
travelenvironment permitted by the EU, enabled many of our
customers from Germany in particular, to resume theirinternational
holidays this summer.
-- Customer volume declined 17 % to 2.7 m versus prior year
(previous year: 3.2 m) with the prior yearbenefiting from five
months of normal operations pre-pandemic.
Western Region
EUR million 2021 2020 Var. %
adjusted
Revenue 976.1 1,345.9 - 27.5
Underlying EBIT - 176.6 - 433.7 + 59.3
Underlying EBIT (at constant currency) - 174.1 - 433.7 + 59.9
Direct distribution mix1 (in %, variance in % points) 81 79 + 2
Online mix2 (in %, variance in % points) 63 60 + 3
Customers ('000) 1,862 2,388 - 22.1
1 Share of sales via own channels (retail and online)
2 Share of online sales
Western Region comprises Belgium, Netherlands and France.
-- Western Region underlying EBIT loss of EUR 176.6 m, is an
improvement of EUR 257.1 m versus prior year(previous year: EUR
433.7 m loss). Similar to the Central Region, as well as benefits
delivered by our GlobalRealignment Programme, the more open travel
environment permitted by the EU, enabled many of our customers
fromBelgium and the Netherlands in particular, to resume their
international holidays this summer.
-- Customer volume declined 22 % to 1.9 m year-on-year (previous
year: 2.4 m) with the prior year benefitingfrom five months of
normal operations pre-pandemic.
All other segments
EUR million 2021 2020 Var. %
adjusted
Revenue 40.8 94.9 - 57.0
Underlying EBIT - 69.1 - 158.4 + 56.4
Underlying EBIT (at constant currency) - 68.4 - 158.4 + 56.8
-- The result for All other segments improved by EUR 89.3 m
versus prior year, (previous year: EUR 158.4 mloss), reflecting the
non-repeat of negative valuation effects in prior year as well as
the benefit of our ongoing cost savings measures across head office
and other entities, as part of our Global Realignment
Programme.
Net Assets
Development of the Group's asset structure
EUR million 30 Sep 2021 30 Sep 2020 Var. %
Fixed assets 10,300.8 11,345.1 - 9.2
Non-current receivables 921.6 1,302.7 - 29.3
Non-current assets 11,222.3 12,647.8 - 11.3
Inventories 42.8 73.2 - 41.5
Current receivables 1,210.2 1,329.9 - 9.0
Cash and cash equivalents 1,583.9 1,233.1 + 28.4
Assets held for sale 96.5 57.2 + 68.7
Current assets 2,933.3 2,693.4 + 8.9
Assets 14,155.7 15,341.1 - 7.7
Equity - 418.4 218.1 n. a.
Liabilities 14,574.1 15,123.0 - 3.6
Equity and liabilities 14,155.7 15,341.1 - 7.7
The Group's balance sheet total decreased by 7.7 % year-on-year
to EUR 14.2 m.
Vertical structural indicators
Non-current financial assets accounted for 79.3 % of total
assets, compared with 82.4 % in the previous year. The
capitalisation ratio (ratio of fixed assets to total assets)
decreased from 74.0 % to 72.8 % .
Current assets accounted for 20.7 % of total assets, compared
with 17.6 % in the previous year. The Group's cash and cash
equivalents increased by EUR 350.8 m to EUR 1,583.9 m. They thus
accounted for 11.2 % of total assets, as against 8.0 % in the
previous year.
Horizontal structural indicators
Due to the suspension of our business operations driven by
COVID-19 and the resulting losses, Group equity was negative at the
balance sheet date. In the prior year, the ratio of equity to
non-current assets had been 1.7 %. The ratio of equity plus
non-current financial liabilities to fixed assets was 25.4 %,
compared with 34.5 % in the previous year.
Development of the Group's non-current assets
Structure of the Group's non-current assets
EUR million 30 Sep 2021 30 Sep 2020 Var. %
Goodwill 2,993.1 2,914.5 + 2.7
Other intangible assets 498.6 553.5 - 9.9
Property, plant and equipment 3,159.3 3,462.5 - 8.8
Right of use assets 3,009.2 3,227.9 - 6.8
Investments in joint ventures and associates 640.5 1,186.7 - 46.0
Fixed assets 10,300.8 11,345.1 - 9.2
Receivables and assets 630.5 1,003.1 - 37.1
Deferred tax claims 291.1 299.6 - 2.8
Non-current receivables 921.6 1,302.7 - 29.3
Non-current assets 11,222.3 12,647.8 - 11.3
Goodwill
Due to foreign exchange translation effects, Goodwill rose by
2.7 % to EUR 2,993.1 m EUR.
For details, please refer to the section Goodwill in the Notes
from page 181.
Property, plant and equipment
Property, plant and equipment totalled EUR 3,159.3 m at the
balance sheet date, down by EUR 303.2 m year-on-year. This decline
was driven by various factors including disposals of property,
plant and equipment from the sale of spare engines. Major additions
to property, plant and equipment related to the acquisition of
shares in a hotel company in Croatia and investments by Riu Group
in the construction and renovation of hotels. In addition, tests of
the carrying amounts performed due to the travel restrictions
caused by COVID-19 resulted in impairment losses, above all for
hotels and aircraft.
Development of property, plant and equipment
EUR million 30 Sep 2021 30 Sep 2020 Var. %
Real estate with hotels 1,675.8 1,613.8 + 3.8
Other land 165.5 185.1 - 10.6
Aircraft 127.1 239.4 - 46.9
Ships 446.3 438.3 + 1.8
Machinery and fixtures 351.7 393.9 - 10.7
Assets under construction 134.6 220.6 - 39.0
Payments on accounts 258.3 371.4 - 30.5
Total 3,159.3 3,462.5 - 8.8
Right-of-use assets
As a lessee, TUI recognises right-of-use assets and lease
liabilities in the statement of financial position in accord-ance
with IFRS 16. The right-of-use assets relate to moveable assets
such as aircraft, vehicles and cruise ships, as well as property
such as hotel buildings and land, office buildings and travel
agencies.
Companies measured at equity
Eightteen associated companies and 27 joint ventures were
measured at equity. At EUR 640.5 m, their value decreased by 46.0 %
year-on-year as at the balance sheet date.
Development of the Group's current assets
Structure of the Group's current assets
EUR million 30 Sep 2021 30 Sep 2020 Var. %
Inventories 42.8 73.2 - 41.5
Trade accounts receivable and other financial assets1 537.1 590.2 - 9.0
Other non-financial assets2 615.3 668.8 - 8.0
Current tax assets 57.7 70.9 - 18.6
Cash and cash equivalents 1,583.9 1,233.1 + 28.4
Assets held for sale 96.5 57.2 + 68.7
Current assets 2,933.3 2,693.4 + 8.9
1 Incl. receivables from derivative financial instruments
2 Incl. touristic prepayments
Financial Position of the Group
Principles and goals of financial management
Principles
TUI Group's financial management is centrally operated by TUI
AG, which acts as the Group's internal bank. Financial management
covers all Group companies in which TUI AG directly or indirectly
holds an interest of more than 50 %. It is based on policies
covering all cash flow-oriented aspects of the Group's business
activities. In the course of establishing a cross-border
organisation, TUI AG has outsourced some of its treasury activities
to First Choice Holidays Finance Ltd, a British Group company.
However, the treasury activities are carried out on a coordinated
and centralised basis.
Goals
TUI's financial management goals include ensuring sufficient
liquidity for TUI AG and its subsidiaries and limiting financial
risks from fluctuations in currencies, commodity prices and
interest rates as well as default risks associated with treasury
activities.
Liquidity safeguards
The Group's liquidity safeguards consist of two components:
-- In the course of the annual Group planning process, TUI draws
up a multi-annual financial budget, from which long-term financing
and refinancing requirements are derived. This information and
financial marketobservation to identify refinancing opportunities
create a basis for decision-making, enabling appropriatefinancing
instruments for long-term corporate funding to be adopted at an
early stage.
-- TUI uses syndicated credit facilities and bilateral bank
lines as well as its liquid funds to securesufficient short-term
cash reserves. Through intra-Group cash pooling, excess cash of
individual Group companies isused to finance the cash requirements
of other Group companies. A monthly rolling liquidity planning
system is thebasis for arrangements with banks. The reporting
frequency was increased to weekly reporting in the wake of the
COVID-19 situation.
Limiting financial risks
The Group companies operate on a worldwide scale. This gives
rise to financial risks for TUI Group, mainly from changes in
exchange rates, commodity prices and interest rates.
The key operating financial transaction risks relate to the
euro, US dollar, pound sterling and Swedish krona and to changing
fuel prices. They mainly result from cost items in foreign
currencies held by individual Group companies, e. g. hotel
procurement, aircraft fuel and bunker oil invoices or ship handling
costs.
The Group has entered into derivative hedges in various foreign
currencies in order to limit its exposure to risks from changes in
exchange rates. Changes in commodity prices affect TUI Group, in
particular, in procuring fuels such as aircraft fuel and bunker
oil. Some of these price risks related to fuel procurement are
hedged by derivative instruments. Where price increases can be
passed on to customers due to contractual agreements, this is also
reflected in our hedging behaviour.
In the wake of the COVID-19 pandemic, currency and fuel hedging
activities were heavily restricted. Predictability of the required
hedging was limited by constantly changing travel restrictions.
Moreover, the banks considerably reduced their derivative trading
lines with TUI. As a result, there were frequent deviations from
targeted hedge ratios for the underlying transactions.
In order to control risks related to changes in interest rates
arising on funding in international money and capital markets and
investments of liquid funds, derivative interest hedges are used on
a case-by-case basis as part of the Group's interest management
system.
In order to limit default risks from settlement payments for
derivatives as well as money market investments with banks, TUI AG
and First Choice Holidays Finance Ltd have defined credit rating
criteria for the selection of their counterparties. Trading and
transaction limits are allocated to these counterparties on the
basis of the credit ratings issued by the major rating agencies.
The credit ratings and the corresponding limits are regularly
reviewed. In the event of changes in the fair value of derivatives
or rating changes, new business with these counterparties may
temporarily be suspended until the limits can be applied
appropriately again.
The use of derivative hedges is based on underlying
transactions; the derivatives are not used for speculation
purposes.
More detailed information on hedging strategies and risk
management as well as financial transactions and the scope of such
transactions at the balance sheet date is provided in the Risk
Report and the section Financial instruments in the Notes to the
consolidated financial statements.
See from page 35 ff. or 214 ff.
Capital structure
Capital structure of the Group
EUR million 30 Sep 2021 30 Sep 2020 Var. %
Non-current assets 11,222.3 12,647.8 - 11.3
Current assets 2,933.3 2,693.4 + 8.9
Assets 14,155.7 15,341.1 - 7.7
Subscribed capital 1,099.4 1,509.4 - 27.2
Capital reserves 5,249.6 4,211.0 + 24.7
Revenue reserves - 8,525.7 - 6,168.8 - 38.2
Silent participation 1,091.0 - n. a.
Non-controlling interest 667.3 666.5 + 0.1
Equity - 418.4 218.1 n. a.
Non-current provisions 1,665.5 1,895.7 - 12.1
Current provisions 572.7 421.6 + 35.8
Provisions 2,238.2 2,317.3 - 3.4
Non-current financial liabilities 3,036.1 3,691.7 - 17.8
Current financial liabilities 284.6 577.3 - 50.7
Financial liabilities 3,320.8 4,269.0 - 22.2
Non-current lease liabilities 2,606.1 2,712.6 - 3.9
Current lease liabilities 623.3 687.3 - 9.3
Lease liabilities 3,229.4 3,399.9 - 5.0
Other non-current liabilities 402.8 503.7 - 20.0
Other current liabilities 5,332.3 4,608.6 + 15.7
Other liabilities 5,735.1 5,112.3 + 12.2
Debt related to assets held for sale 50.6 24.5 + 106.5
Liabilities 14,155.7 15,341.1 - 7.7
Capital ratios
EUR million 30 Sep 2021 30 Sep 2020 Var. %
Non-current capital 7,292.1 9,021.8 - 19.2
Non-current capital in relation to balance sheet total% 51.5 58.8 - 7.3*
Equity ratio% - 3.0 1.4 n. a.*
Equity and non-current financial liabilities 2,617.7 3,909.8 - 33.0
Equity and non-current financial liabilities in relation to 18.5 25.5 - 7.0*
balance sheet total%
* percentage points
Overall, non-current capital decreased by 19.2 % to EUR 7,292.1
m. It accounted for 51.5 % (previous year 58.8 %) of the balance
sheet total.
The equity ratio was - 3.0 % (previous year 1.4 %). Equity and
non-current financial liabilities accounted for 18.5 % (previous
year 25.5 %) of the balance sheet total.
Equity
The capital stock was reduced in the framework of an ordinary
capital decrease for the purpose of transferring a part of the
capital stock into the capital reserves and subsequently increased
in the form of a cash contribution by issuing new registered no-par
value shares. At the end of the financial year under review, the
subscribed capital therefore consisted of 1,099,393,634 shares with
a proportionate share in the capital stock of EUR 1.00 per share.
Revenue reserves declined by EUR 2.4 bn to EUR - 8.5 bn in the
period under review. Non-controlling interests accounted for EUR
667.3 m of equity.
Silent ESF participations
In financial year 2021, two silent participations were issued to
the ESF. They are both carried in equity in accordance with IAS 32.
The first silent participation was fully paid in at EUR 420.0 m. It
is convertible at any time in whole or in part into shares in TUI
AG at a conversion price of EUR 1.00 per share as long as the ESF
does not obtain a participation in TUI's equity capital of more
than 25 % plus one share. The second silent participation is not
convertible into shares. It amounts to EUR 671.0 m and has been
fully paid in.
Provisions
Provisions mainly comprise provisions for pension obligations,
tax provisions and provisions for typical operating risks
classified as current or non-current, depending on expected
occurrence. At the balance sheet date, they accounted for a total
of EUR 2,238.2 m, down by EUR 79.1 m year-on-year.
Financial and lease liabilities
Composition of financial liabilities and lease liabilities
EUR million 30 Sep 2021 30 Sep 2020 Var. %
adjusted
Bonds 641.5 298.9 + 114.6
Liabilites to banks 2,612.6 3,953.7 - 33.9
Other financial liabilities 66.6 16.4 + 306.1
Financial liabilities 3,320.7 4,269.0 - 22.2
Lease liabilities 3,229.4 3,399.9 - 5.0
Non-current financial liabilities decreased by EUR 655.6 m as
against 30 September 2020 to EUR 3,036.1 m. The decline primarily
results from the reduction in liabilities to banks of EUR 1,027.9 m
and the early redemption of senior bonds issued by TUI on 26
October 2016 with a nominal volume of EUR 300.0 m on 23 February
2021. This decrease is offset by an increase in liabilities from
the issuance of a convertible bond in April 2021 of EUR 400.0 m,
which was upsized by EUR 189.6 m in July 2021.
For more detailed information, please refer to the Notes to the
consolidated financial statements.
See chapter Financial and lease liabilities, page 207
Overview of TUI's listed bonds
The table below lists the maturities, nominal volumes and annual
interest coupon of the listed bond issued in 2021 with a nominal
value of EUR 589.6 m and a seven-year term.
Listed bonds
Amount Amount Interest rate
Capital measures Issuance Maturity initial outstanding % p. a.
EUR million EUR million
Convertible Bond 2021 April / July 2021 April 2028 589.6 589.6 5.000
Convertible bonds 2021
In April 2021, TUI AG issued senior unsecured convertible bonds
maturing in 2028 with a total nominal amount of EUR 400.0 m. The
convertible bonds have a denomination of EUR 100,000 per bond and a
coupon of 5.0 % p. a., payable semi-annually in arrears. The
initial conversion price was set at EUR 5.3631 per share. In July
2021, the convertible bond was upsized through a further issue with
a nominal amount of EUR 189.6 m at a price of 104.75 %. With the
exception of the issue price, the new convertible bonds were issued
on the same terms and conditions as those of the convertible bonds
issued in April and have been consolidated with the existing
convertible bonds to form a single series. In October 2021, the
conversion price was reduced to EUR 4.5827 per share in the wake of
the capital increase.
See Other information from page 238
ESF warrant bond
On 1 October 2020, an unlisted bond with warrants totalling EUR
150.0 m was issued to the Economic Stabilisation Fund (ESF). The
bond has a term of six years and carries an interest coupon of 9.5
% p. a. The attached warrants have a term of ten years and
authorise the holders to subscribe to around 58.7 m shares in TUI
AG at an initial price of EUR 2.56 per share. Due to the capital
reduction in January 2021, the subscription price for the same
number of shares was reduced to EUR 1.00 per share.
Syndicated credit facility of TUI AG
In January 2021, the extension of a part of the existing KfW
credit facility of EUR 500.0 m that would have been due for
redemption in April 2021 was agreed on the basis of the financing
package adopted in December 2020. Moreover, an additional
collateralised syndicated credit facility of EUR 200.0 m was agreed
with KfW and six private banks. The term of the extension and the
new credit line was adjusted to July 2022 to match the existing
syndicated credit line.
In July 2021, an agreement was reached with the banks to extend
TUI AG's syndicated credit facilities totalling EUR 4.8 bn
(including a tranche of EUR 215.0 m for bank guarantees) ahead of
schedule to July 2024. For regulatory reasons driven by Brexit, the
contribution to the syndicated credit line of EUR 4.6 bn made by a
British bank (around EUR 80 m cash and EUR 25.0 m guarantee line)
cannot be extended beyond July 2022. In September 2021, the credit
line was reduced by EUR 30.0 m from EUR 200.0 m to EUR 170.0 m
through a partial termination by TUI AG.
The interest rate for cash drawdowns is variable and depends on
the short-term interest level (EURIBOR or LIBOR) plus a margin
determined by TUI's credit rating. The differentiated term of this
syndicated credit facility is explained in the chapter Going
concern reporting according to UK Corporate Governance Code in the
annual financial statements.
See chapter Going concern reporting according to UK Corporate
Governance Code, page 155
As of the balance sheet date, the cash utilisation of syndicated
credit facilities was around EUR 1.9 billion.
Bank credits and lease liabilities
Liabilities to banks largely relate to the drawdowns from TUI
AG's syndicated credit facilities and TUI AG's Schuldschein worth
EUR 425.0 m.
Lease liabilities essentially relate to aircraft and hotel
leases. For more detailed information, in particular on the
remaining terms, please refer to the section Financial and lease
liabilities in the Notes to the consolidated financial
statements.
See section Financial and lease liabilities, page 207
Other liabilities
The combined figure for other liabilities mainly includes trade
payables and touristic advance payments received. At EUR 5,735.1 m,
it was EUR 622.8 m up year-on-year.
Key credit facilities
Syndicated credit facilities of TUI AG
TUI AG's syndicated credit facilities of EUR 4.8 bn includes a
tranche of EUR 215.0 m for bank guarantees. At the balance sheet
date, cash drawdowns from this credit facility amounted to around
EUR 1.9 bn. In addition, an amount of EUR 149.4 m was drawn from
this credit facility through the use of bank guarantees.
Bilateral guarantee facilities of TUI AG with banks
TUI AG has concluded bilateral guarantee facilities with a total
volume of EUR 22.1 m with banks to provide bank guarantees in the
framework of ordinary business operations. Some of the guarantees
have a term of several years. The guarantees granted give rise to a
commission in the form of a fixed percentage of the maximum
guaranteed amount. At the balance sheet date, an amount of EUR 9.4
m from these facilities had been used.
In October 2021, TUI AG concluded a guarantee facility of EUR
152.0 m with a multi-year term with a bank in order to meet a
regulatory requirement. This guarantee facility was fully used.
Obligations from financing agreements
TUI AG's Schuldschein worth EUR 425.0 m issued in 2018, the bond
with warrants worth EUR 150.0 m issued in October 2020, the
convertible bond worth EUR 589.6 m issued in 2021 and the credit
and guarantee facilities contain a number of obligations.
Under its syndicated credit facilities worth EUR 4.8 bn, TUI AG
has a duty to comply with certain financial covenants (as defined
in the contract). These require (a) compliance with an
EBITDAR-to-net interest expense ratio measuring TUI Group's
relative charge from the interest result and its lease and rental
expenses; and (b) compliance with a net debt-to-EBITDA ratio,
calculating TUI Group's relative charge from financial liabilities.
The EBITDAR-to-net interest expense ratio must have a coverage
multiple of at least 1.5; net debt must not exceed 3.0 times
EBITDA. The financial covenants are determined every six months,
but the banks have agreed to a waiver for this financial covenant
obligation up until and including 31 March 2022, with higher ratio
limits set for testing during the period up until and including 31
March 2023. Until 31 March 2022, compliance with the suspended
financial covenants will be replaced by compliance with a liquidity
reserve (as defined in the contracts) of at least EUR 400.0 m. In
addition, TUI's scope for pledging or selling assets, acquiring
other companies or shareholdings, or effecting mergers has been
restricted.
TUI AG's Schuldschein worth EUR 425.0 m, the bond with warrants
worth EUR 150.0 m, the convertible bond worth EUR 589.6 m and the
credit and guarantee facilities also contain additional clauses
typical of financing instruments of this type. Non-compliance with
these obligations awards the lenders the right to call in the
facilities or terminate the financing schemes for immediate
repayment.
Ratings by Standard & Poor's and Moody's
TUI AG ratings
2017 2018 2019 2020 2021 Outlook
Standard & Poor's BB BB BB CCC+ CCC+ stable
Moody's Ba2 Ba2 Ba2 Caa1 Caa1 stable
In particular due to the COVID-19 pandemic with the associated
impacts on cash flow generation and the increase in debt, Standard
& Poor's successively downgraded the TUI rating to 'CCC+
(negative outlook)'. Moody's likewise successively lowered TUI's
rating to 'Caa1 (negative outlook)'. In January 2021, Moody's
upgraded TUI's rating outlook to 'stable', with Standard &
Poor's following suit in February 2021.
Due to a significant improvement in the business environment and
the strengthening of the balance sheet structure, both rating
agencies upgraded the rating to 'B- (stable outlook)' (Standard
& Poor's) and 'B3 (stable outlook)' (Moody's) in October
2021.
Standard & Poor's also upgraded the rating for amounts
totalling around EUR 1.5 bn granted by private banks within TUI
AG's syndicated credit facility from 'CCC+' to 'B-' in October
2021.
Financial stability targets
TUI considers a constant credit rating to be a prerequisite for
the future development of the business. In response to the
structural improvements resulting from the merger between TUI AG
and TUI Travel, the operating performance observed over the past
few years, and the strengthening of the business model despite a
challenging environment, both Standard & Poor's and Moody's
upgraded their ratings for TUI to the BB or Ba ranges in 2014. In
particular due to effects of the COVID-19 pandemic, these ratings
were then lowered to CCC+ and Caa1, respectively. We consider the
return to the B range to be essential, not only in order to benefit
from financing terms, but also to retain access to the debt capital
markets even in difficult macroeconomic situations. As an indicator
of financial stability, we have defined a leverage ratio along the
following basic lines:
Leverage ratio = (gross financial liabilities + lease
liabilities + obligations from defined-benefit pension plans) /
reported EBITDA. This basic definition is subject to specific
amendments in order to reflect current circumstances. Following a
leverage ratio of 3.0x for financial year 2019*, the impact of
COVID-19 in financial years 2020 and 2021 resulted in a leverage
ratio that lacked meaning. We expect our operating result to
recover and our balance sheet structures to stabilise after the
COVID-19 pandemic ends and therefore aim to deliver a leverage
ratio of less than 3.0x again in the medium term.
* The calculation of the leverage ratio for financial year 2019
was based on a slight modification, as IFRS 16 had not yet been
applied.
See section Capital management, page 236.
Interest and financing environment
In the period under review, short-term interest rates remained
at an extremely low level compared with historical rates. In some
currency areas, the interest rate remained negative throughout the
year. Moreover, the ECB again increased its pandemic emergency
purchase programme for private and public sector securities in
order to stimulate the economy, with corresponding impacts on
yields for money market investments but also on reference interest
rates for floating-rate debt.
In the financial year under review, quoted credit margins (based
on CDS levels) for corporates in the sub-investment grade area
returned to a level more or less corresponding to the long-standing
average. In Q1 2021, credit margins for TUI AG initially rose
strongly as the pandemic spread and subsequently remained high on a
long-standing comparison. In April 2021, for the first time since
the outbreak of the pandemic, TUI secured non-public refinancing by
issuing convertible bonds in an improved capital market
environment.
Liquidity analysis
At the balance sheet date, TUI AG, the parent company of TUI
Group, held cash and cash equivalents worth EUR 592.5 m.
Restrictions on the transfer of liquid funds
At the balance sheet date, there were restrictions worth around
EUR 0.5 bn (previous year: EUR 0.3 bn) on the transfer of liquid
funds within the Group that might significantly impact the Group's
liquidity, such as restrictions on capital movements and
restrictions due to credit agreements concluded.
Change of control
Significant agreements taking effect in the event of a change of
control due to a takeover bid are outlined in the chapter on
Information required under takeover law.
See chapter Information required under takeover law, page 97
Cash flow statement
Summary cash flow statement
EUR million 2021 2020
Net cash outflow from operating activities - 151.3 - 2,771.9
Net cash inflow from investing activities + 704.7 - 161.8
Net cash out- / inflow from financing activities - 233.5 - 2,112.5
Change in cash and cash equivalents with cash effects + 319.9 - 497.6 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. TUI Group's cash flow statement is presented with the Nordotel S. A. disposal group included. The prior year's cash flow statement had included the cash flow statement of the Hapag-Lloyd Kreuzfahrten disposal group until its disposal.
In the period under review, cash and cash equivalents increased
by EUR 353.0 m to EUR 1,586.1 m.
Cash inflow / outflow from operating activities
In the period under review, the cash outflow from operating
activities totalled EUR 151.3 m (previous year EUR - 2,771.9 m),
including interest payments received of EUR 6.4 m (previous year
EUR 25.1 m) and dividends of EUR 14.2 m (previous year EUR 7.7 m).
Income tax payments resulted in a cash outflow of EUR 9.0 m
(previous year inflow of EUR 56.1 m).
Cash inflow / outflow from investing activities
In financial year 2021, the total cash inflow from investing
activities amounted to EUR 704.7 m (previous year EUR+ 161.8 m).
This includes a cash outflow for capital expenditure on property,
plant and equipment and intangibles of EUR 299.7 m (previous year
EUR 587.0 m). The Group recorded a cash inflow of EUR 357.9 m
(previous year EUR 109.9 m) from the divestment of property, plant
and equipment and intangible assets. A Group cash inflow of EUR
105.5 m was posted in connection with the sale of consolidated
companies, including EUR 32.9 m for the divestment of Hapag-Lloyd
Kreuzfahrten, effected in the prior year, and EUR 50.0 m for the
divestment of Nordotel S. A., completed after the financial year
under review ended. TUI Group also recorded a cash inflow of EUR
543.8 m from the sale of its stakes in Riu Hotels S. A. and Karisma
Hotels Caribbean S. A., and EUR 19.6 m from repaid loans in
connection with the sale of its interests in Togebi Holdings
Limited (TUI Russia). A cash outflow of EUR 21.0 m resulted from a
capital increase in TUI Cruises GmbH.
Cash inflow / outflow from financing activities
The cash outflow from financing activities fell by EUR 233.5 m
(previous year inflow of EUR+ 2,112.5 m). TUI AG recorded a cash
inflow of EUR 1,743.8 m from a number of equity measures after
deduction of borrowing costs. TUI AG took out loans and bonds
resulting in an inflow of EUR 598.6 m after deduction of borrowing
costs. Other TUI Group companies took out loans worth EUR 257.0 m.
In the financial year under review, TUI AG reduced its syndicated
credit facility by EUR 1,445.1 m and paid EUR 300.0 m for the early
redemption of a senior bond. Other Group companies recorded a cash
outflow of EUR 94.1 m for the redemption of financial liabilities.
A further outflow of EUR 587.2 m related to the redemption of lease
liabilities, while interest payments accounted for an outflow of
EUR 404.8 m.
Change in cash and cash equivalents
EUR million 2021 2020
Cash and cash equivalents at the beginning of period + 1,233.1 + 1,747.6
Changes due to changes in exchange rates + 33.2 - 17.0
Cash changes + 319.8 - 497.6
Cash and cash equivalents at the end of period + 1,586.1 + 1,233.1
Cash and cash equivalents comprise all liquid assets, i. e. cash
in hand, bank balances and cheques.
The detailed cash flow statement and additional explanations are
provided in the consolidated financial statements and in the
section Notes to the cash flow statement in the Notes to the
consolidated financial statements.
See page 152 and 237
Analysis of investments
The development of fixed assets, including property, plant and
equipment, intangible assets as well as shareholdings and other
financial investments is presented in the section on Net assets in
the Management Report. Additional explanatory information is
provided in the Notes to the consolidated financial statements.
Net capex and investments
EUR million 2021 2020 Var. %
adjusted
Cash gross capex
Hotels & Resorts 113.9 327.2 - 65.2
Cruises 22.5 48.8 - 53.9
TUI Musement 13.8 12.8 + 7.8
Holiday Experiences 150.2 388.8 - 61.4
Northern Region 10.2 35.7 - 71.4
Central Region 5.1 14.6 - 65.1
Western Region 8.2 15.6 - 47.4
Markets & Airlines* 52.4 85.1 - 38.4
All other segments 82.1 61.4 + 33.7
TUI Group 284.8 535.2 - 46.8
Net pre delivery payments on aircraft - 86.0 - 41.5 - 107.1
Financial investments 28.0 132.1 - 78.8
Divestments - 925.9 - 775.1 - 19.4
Net capex and investments - 699.1 - 149.3 - 368.3
* Including EUR 28.9 m cash gross capex for financial year 2020
for the aircraft leasing companies (previous year: EUR 19.2 m),
which - in contrast to the items of the income statement - are
allocated to Markets & Airlines as a whole, but not the
individual segments Northern Region, Central Region and Western
Region.
In the financial year under review, TUI Group's cash gross capex
totalled EUR 284.8 m. The decline of 46.8 % reflects the continued
strict management of investment projects.
Divestments related in particular to the sale of our 49 % stake
in the Riu Hotels S. A. joint venture to a Riu Group company and
the sale-and-leaseback of spare engines and aircraft. In the prior
year, divestments had included in particular the divestment of
Hapag-Lloyd Kreuzfahrten to our joint venture TUI Cruises and the
sale of two German specialist tour operators.
In the period under review, net capex and investments declined
by EUR 549.8 m year-on-year to EUR - 699.1 m.
The table below shows a reconciliation of capital expenditure to
additions to TUI Group's other intangible assets and property,
plant and equipment.
Reconciliation of capital expenditure
EUR million 2021 2020
Cash gross capex 284.8 535.2
Additions right of use assets 27.4 - 11.3
Advance payments 15.0 52.1
Ship debt financing - 115.6
Other non-cash changes 15.2 - 2.1
Additions to other intangible assets and property, plant and equipment 342.3 689.4
Investment obligations
Order commitments
Due to agreements concluded in financial year 2021 or in prior
years, order commitments for investments totalled EUR 2,386.1 m as
at the balance sheet date; this total includes an amount of EUR
456.5 m for scheduled investments in financial year 2022.
More detailed information is provided in the section Other
financial liabilities in the Notes to the consolidated financial
statements.
Net debt
The net debt of continuing operations as of 30 September 2021
declined by EUR 1,467 m year-on-year to EUR 4,954 m.
Net debt
EUR million 30 Sep 2021 30 Sep 2020 Var. %
Financial debt 3,320.8 4,269.0 - 22.2
Lease liabilities (IFRS 16) 3,229.4 3,399.9 - 5.0
Cash and cash equivalents 1,583.9 1,233.1 + 28.4
Short-term interest-bearing investments 12.1 14.9 - 18.8
Net debt - 4,954.2 - 6,420.9 + 22.8
Combined non-financial Declaration
pursuant to the CSR Directive Implementation Act
For TUI Group, economic, environmental and social sustainability
is a fundamental management principle and a cornerstone of our
strategy for continually enhancing the value of our company. We
firmly believe that sustainable development is critical to
long-term economic success. Together with our many partners around
the world, we are actively committed to promoting sustainable
development in the tourism sector.
In the following section, in line with CSR reporting
legislation, we report on sustainability issues that promote a
better understanding of our business operations, context and future
development. In compliance with section 315b, paragraph 1, sentence
3 of the German Commercial Code (HGB) we also refer, in a number of
respects, to non-financial disclosures found in other parts of the
Group Management Report.
Our materiality analysis generated insights into the risks and
opportunities relating to sustainability. We describe our risk
management system and principal risks associated with our business
activities, business relations and services in our Risk Report from
page 35 onwards, where the principal risks relating to
sustainability are listed and explained.
This combined non-financial declaration has been reviewed by our
Group Audit function on behalf of the Supervisory Board.
Review report from Group Audit regarding the combined
non-financial declaration (page 92)
Our reporting covers the United Nations Global Compact
principles, which TUI signed up to in 2014. Furthermore, we
reviewed our sustainability activities against the United Nations
Sustainable Development Goals (SDGs). These goals provide a useful
framework with which to view the material impact of our business
operations and a bench-mark to assess the relevance of our
initiatives. The tourism value chain is closely linked to many
different sectors. This enables us to influence progress on many
SDGs.
Business model
TUI Group's business model is outlined on pages 25 ff and 28 ff
in accordance with section 315c paragraph 1 in conjunction with
section 289c, paragraph 1 HGB.
Sustainability strategy and implementation
In 2020 TUI Group closed out its sustainability strategy 'Better
Holidays, Better World'. These sustainability actions and
objectives adopted in 2015 addressed the environmental and social
challenges facing the tourism sector which had been the subject of
public debate. Due to the continued major restrictions on business
operations caused by the COVID-19 crisis, the key figures as of 30
September 2021 presented in the following sections are of limited
or no communicative value, not least by comparison with the
previous year.
Our reporting for financial year 2021 is again based on the
fields of action defined in our previous strategy. In the period
under review, under the continuing impact of the COVID-19 pandemic,
we built on existing core objectives and activities, delivering
further progress through our commitment to sustainability.
In the financial year under review, TUI Group's international
sustainability team focussed on developing TUI's Sustainability
Agenda. New priorities and strategic directions for TUI's future
sustainability activities were drawn up in consultation with
internal and external stakeholders, taking account of current
challenges, global scenarios and mechanisms such as the EU Green
Deal. Alongside the work invested in finalising the Sustainability
Agenda, a number of specific initiatives were launched, in
particular with a view to reducing our carbon footprint (adoption
of an Emission Roadmap) and promoting a circular economy (training
programmes and cooperation with suppliers).
With the next phase of our Sustainability Agenda, we will enter
a decade of sustainable transformation. Our ambition is to continue
to lead the industry and to actively shape a more sustainable
future for tourism.
Our next steps will be anchored in core deliverables, building
on the significant progress made - with a focus on:
-- Empowering communities in destinations
-- Driving transformation by increasing and sharing knowledge
through educational initiatives open for many
-- Reducing our environmental footprint (energy, waste, water)
and working with science-based emissionstargets
-- Working with partners across the tourism industry and outside
to accelerate the transformation beyond TUI
-- Introducing industry-leading initiatives (e. g., on the topic
of circularity or sustainable destinationmanagement)
In active pursuit of this sustainable transformation, TUI also
launched its Sustainability Academy in the period under review.
This online learning platform enables TUI Group employees to
undergo further training around sustainability, and in particular
around TUI's strategic priorities. The first stage of the online
platform with appropriate learning content has now gone live and
additional content and functions will be added successively.
Materiality
TUI Group carried out a formal materiality assessment involving
a variety of key stakeholder groups. Applying recognised
qualitative and quantitative methods, a global stakeholder survey
and an impact analysis identified the leading material aspects and
set priorities. A repeat of the global stakeholder survey scheduled
for 2021 had to be postponed due to the ongoing COVID-19 pandemic.
Thanks to direct contact with our stakeholders and sector
initiatives, we also benefited from important input, which was
subsequently incorporated into our sustainability activities.
Sustainability management
Across TUI Group, a team of experienced sustainability
professionals are working in close collaboration with senior
management at Group and at divisional level to ensure that TUI's
business and sustainability strategies are well aligned. The role
of our sustainability team is to drive implementation of more
sustainable business practices across TUI Group and along its
supply chain. The TUI Group Executive Committee is regularly
updated on our performance in delivering the sustainability
strategy and tackling other key sustainability issues. These are
also regularly included on the agenda for meetings of divisional
and platform management boards (e. g. in hotels and aviation) and
the Risk Oversight Committee (ROC).
As part of TUI's sustainability management approach, corporate
headquarters were successfully audited against the environmental
standard ISO 14001:2015.
Sustainability indices
TUI AG is represented on the sustainability index FTSE4Good. In
2021, TUI participated in the CDP Climate Change programme and in
the S&P Dow Jones Sustainability Index Assessment and engaged
in dialogue with other researchers.
Environmental matters
Respecting the environment in our products, services and
processes is an essential feature of our quality standards. We have
prioritised improving our carbon and resource efficiencies, with a
particular focus on waste and water consumption. Conserving natural
resources and mitigating negative environmental impacts are both in
the interests of our business as well as the future success of
travel and tourism.
We aim to reduce the environmental impact of our operations and
are setting clear stretch targets to deliver these improvements
across aviation, cruise, hotels, offices, retail shops and ground
transport. We have liaised with the Science Based Targets
Initiative to develop carbon roadmaps. TUI continues to run carbon
reduction initiatives across the business - from airline and cruise
efficiency programmes, to retail energy savings and the reduction
of printed brochures.
In financial year 2021, TUI Group's total emissions decreased by
43 % year-on-year in absolute terms as a consequence of the impact
of the COVID-19 pandemic across our businesses.
Carbon dioxide emissions (CO2)
tons 2021 2020 Var. %
Airlines & Aviation 1,317,865 2,725,937 - 51.7
Cruises 391,475 602,794 - 35.1
Hotels 362,474 328,282 + 10.4
Major premises / shops 15,949 18,189 - 12.3
Ground transport 5,440 5,235 + 3.9
Scope 3 (indirect emissions from TUI's value chain) 27,911 41,073 - 32.0
Total 2,121,114 3,721,510 - 43.0
As part of TUI's environmental reporting the breakdown of energy
usage by business area shows that Airlines and Aviation represented
more than 67 % of the total energy used.
Energy usage by business area
MWh 2021 2020 Var. %
Airlines & Aviation 5,371,454 11,110,512 - 51.7
Cruises 1,518,886 2,328,410 - 34.8
Hotels 1,021,997 947,324 + 7.9
Major premises / shops 60,766 64,931 - 6.4
Ground transport 23,314 20,986 + 11.1
Total 7,996,417 14,472,163 - 44.7
Climate protection and resource efficiencies by TUI's
airlines
We already operate one of Europe's most carbon-efficient
airlines and we aim to continuously improve in this space. TUI's
airlines have numerous measures in place to further enhance carbon
efficiency. We have implemented the following measures to support
our efficiency goals:
-- Process optimisation, e. g. single-engine taxing in and out,
acceleration altitude reduction and winduplinks
-- Weight reduction, e. g. introduction of carbon brakes and
water uplift optimisation
-- Flight planning optimisation, e. g. alternate distance and
minimum fuel programme
-- Implementation of fuel management systems to improve fuel
analysis, identify further opportunities andtrack savings
We did not achieve the target set as part of our Better
Holidays, Better World strategy to reduce our carbon intensity from
aviation operations by 10 % by 2020. We had hoped to deliver
against this target through the deployment of efficiency measures
as well as through fleet renewal. Unfortunately, the grounding of
the Boeing 737 Max and delays to deliveries of further aircrafts
significantly impacted our ability to deliver against this target.
The ongoing COVID-19 crisis made it impossible to deliver further
relative carbon emissions improvements as they are based on load
factors and fuel burn.
TUI's airlines play a pioneering role in maintaining
environmental management systems based on the internationally
recognised ISO 14001 standard. In the period under review, each of
our airlines held an ISO 14001:2015 certification.
TUI Airlines - Fuel consumption and CO2 emissions
2021 2020 Var. %
Specific fuel consumption l / 100 rpk* 3.10 2.69 + 4.0
Carbon dioxide (CO2) - total t 1,300,942 2,357,195 - 44.8
Carbon dioxide (CO2) - specific kg / 100 rpk* 7.80 6.78 + 15.0
* rpk=revenue passenger kilometer
TUI Airlines - Carbon intensity
g CO2 / rpk* 2021 2020 Var. % g CO2e / rpk*
TUI Airline fleet 78.0 67.8 + 15.0 78.8
TUI Airways 83.3 65.5 + 27.2 84.1
TUI fly Belgium 82.8 75.1 + 10.3 83.6
TUI fly Germany 75.8 69.4 + 9.2 76.6
TUI fly Netherlands 70.3 66.4 + 5.9 71.0
TUI fly Nordic 69.7 66.1 + 5.4 70.4
* rpk=revenue passenger kilometer
We commissioned Verifavia to provide assurance on the carbon
intensity metrics for 2021 as displayed in the table 'TUI Airlines
- Carbon Intensity' above. To read our airline carbon data
methodology document and the assurance report in full, please visit
www.tuigroup.com/en-en/sustainability/reporting-downloads
Relative carbon emissions across our airlines increased by 15 %
in the financial year 2021. This has been caused by the grounding
of our fleet due to the COVID-19 crisis with significantly reduced
operations and load factors across all airlines. Additional cargo
sectors across some TUI airlines have led to greater aircraft
weight resulting in increased fuel burn.
Specific emissions are also shown in the form of CO2 equivalents
(CO2e). Apart from carbon dioxide (CO2), they include the other
five greenhouse gases impacting the climate as listed in the Kyoto
Protocol: methane (CH4), nitrous oxide (N2O), hydro-fluorocarbons
(HFCs), perfluorocarbons (PFCs) and Sulphur hexafluoride (SF6).
Climate protection and resource management in Cruises
TUI Cruises continues to operate a modern and technologically
advanced fleet. The newbuild ships in the fleet include the latest
technologies to minimise fuel burn. A smart energy management
system, efficient air conditioning, innovative lighting controls
and the use of exhaust heat from the engines all contribute to a
significantly reduced carbon footprint compared to other vessels
not equipped with these technologies.
TUI Cruises Environment Report:
www.tuicruises.com/nachhaltigkeit/umweltbericht/
Sulphur emissions from the new ships in the fleet are reduced by
up to 99 % thanks to new systems that treat the exhaust fumes
before releasing them.
The ships are fitted with advanced emission purification
systems, which operate around the clock - not only in the
designated special emission control areas of the North and Baltic
Seas, the English Channel and North America but also in the other
areas that TUI Cruises travels to, such as the Mediterranean,
Orient, Caribbean and Central America.
Hapag-Lloyd Cruises ships exclusively use 0.1 % low-sulphur
marine gas oil. This reduces the sulphur emissions of Hapag-Lloyd
Cruises' fleet by up to 80 % and reduces particulates by up to 30
%. All Hapag-Lloyd Cruises ships have the Tributyltin-free
underwater coatings, seawater desalination systems for water
treatment purposes as well as a biological sewage treatment system
for wastewater. Waste is separated on board in an environmentally
friendly manner prior to disposal on land by specialized companies
in accordance with international regulations (MARPOL).
Hapag-Lloyd Cruises' Hanseatic Nature, Inspiration and Spirit
are also equipped with modern environmental technologies. The
optimisation of the hull and the use of a rudder with special
propeller contribute to a reduction in fuel consumption. The ships
are equipped with SCR catalysts, which reduce nitrogen oxide
emissions by almost 95 %, and have the option of using shore
power.
In the financial year 2021 Marella Cruises have introduced an
environmental data management dashboard to track and drive
environmental performance.
Cruises - carbon intensity, fresh water and waste
2021 2020 Var. %
Carbon dioxide (CO2) - relative kg / Cruise passenger night 240 130 + 83.8
Fresh water - relative l / Cruise passenger night 89 107 - 16.4
Waste - relative l / Cruise passenger night 23.7 13.6 + 73.9
In financial year 2021, relative carbon emissions in Cruises
increased by 83.8 % due to the significant reduction in load
factors caused by COVID-19. Per cruise passenger night 23.7 litres
of waste were measured - a 73.9 % increase - and 89 litres of fresh
water consumed, a decrease of 16.4 % due to less bunkering of fresh
water.
Climate protection and resource management by hotels
Together with our hotel partners we constantly work on improving
our sustainability performance. TUI research shows that our hotels
with sustainability certifications deliver on average better
environmental performance and higher customer satisfaction.
We have included a sustainability clause in contracts with our
accommodation suppliers outlining minimum expectations and the
requirement to work towards credible sustainability certification
recognised by the Global Sustainable Tourism Council (GSTC). TUI is
supporting its hotel partners by providing guidance and consultancy
to enable our hotel partners to prepare for certification. In
addition TUI has set up a dedicated online platform to inform hotel
partners about relevant sustainability issues and to offer support
in finding sustainable solutions for hotel operations.
Hotels - carbon intensity, water* and waste
2021 2020 Var. %
Carbon dioxide (CO2) - relative kg CO2 / guest night 13.25 12.49 + 6.1
Water - relative l / guest night 843 773 + 9.1
Waste - relative kg / guest night 2.22 2.20 + 1.0
* Includes water for domestic, pool and irrigation purposes
Effective waste management aims to conserve resources and reduce
its environmental impact and costs through recycling practices. Our
owned and partner hotels implement various measures to reduce
waste, for example through a stronger focus on local procurement
and reducing packaging via buying in bulk. Per guest night 2.22 kg
of waste was measured in financial year 2021, and remained stable.
The increases of carbon emissions, water and waste per guest night
is due to impact of the COVID-19 crisis resulting in the temporary
closure of hotels and overall lower occupancy rates.
Moving towards Circularity
The new TUI Sustainability Agenda focuses on the circular
economy and the promotion of a closed-loop system in which raw
materials, components and products lose as little value as possible
through the use of renewable energy sources. TUI Group has set
itself the goal of operating an increasingly circular business
model, the details of which are set out in TUI's Circular Economy
Commitments. To inform about the necessity of the topic, numerous
information and workshop events were held, in which more than 300
employees and interested persons participated in the financial year
2021.
As part of the membership to the Sustainable Transformation
Group on Circular Economy, coordinated by the Antwerp Management
School, cross-industry approaches to promoting the circular economy
are presented and discussed. The TUI Group participates in order to
be informed about current developments for the promotion of a
circular economy.
An important aspect of the Circular Economy is the reduction of
unnecessary and problematic single-use plastic items. To this end,
the TUI Group joined the Global Tourism Plastic Initiative in July
2021 and signed up to its commitments. UNWTO and UNEP are leading
the implementation of the initiative in cooperation with the Ellen
MacArthur Foundation and with the support of an advisory group, of
which TUI Group is a member. As part of this, TUI's airlines have
replaced certain single-use plastic items on board with more
sustainable alternatives.
To further determine the acceptance of certain single-use
plastic alternatives TUI Group has launched a project in summer
2021 in cooperation with the sustainability initiative Futouris.
The initiative aims to use more sustainable alternatives in certain
guest rooms in two TUI Clubs on the Balearic Islands. The
effectiveness will be measured by using guest surveys, successful
measures will be transferred to other hotels.
Social matters and destination collaboration
Through our sustainability agenda we aim to make a difference.
We believe tourism is a powerful force for good - boosting
economies, creating jobs, protecting human rights and enhancing
cultural understanding and tolerance.
Sustainable holidays
Hotels play a key role in raising the bar for sustainability
performance at our destinations. By carefully managing their
impacts on local people, economies and habitats, each hotel is
uniquely positioned to make a positive difference.
Our own hotels and hotel partners are expected to achieve
independent sustainability certifications that meet the standards
of the Global Sustainable Tourism Council (GSTC) and demonstrate
social and environmental good practice To support hotel partners
achieve our sustainability targets and pursue certification we
support them on their journey via dedicated resource and materials,
face-to-face meetings and conferences, an online collaboration and
training for purchasing managers.
TUIPartners.com / sustainability
This year we have added a sustainability section to our B2B
platform TUIPartners.com accessed by our accommodations and tours,
activities, excursions and transport providers. Its purpose is to
serve as an online platform for sharing knowledge and experiences
on the various sustainability topics therefore, keeping TUI's
partners fully updated with the latest trends, requirements,
technologies and opportunities.
Sustainable holidays
2021 2020 Var. %
Number of customer (millions) staying at certified hotels1 2.8 3.8 - 25.6
Number of contracted hotels with certifications2 630 1,069 - 41.1
% of TUI hotels with certifications (variance in % points) 54 79 - 253
1 Hotels that are certified to a GSTC-recognised
certification
2 Hotels that are certified to a GSTC-recognised certification
and welcomed a minimum of 100 TUI customers in financial year
2021
3 Variance is given in percentage points
By financial year 2019 we were able to increase the number of
customers staying in a hotel certified to a GSTC-recognised
standard to 10.3 million (exceeding our 2020 target), however, in
the last two financial years, the severe disruption to operations
caused by the COVID-19 pandemic has meant that we have not been
able to report any further growth.
The number of certified hotels has decreased year-on-year by
41.1 % to 630 hotels. Travel restrictions and auditor availability
at our main certification partner, Travelife, resulted in the many
audits necessary to renew the certification not taking place until
the final three months of the TUI financial year. This meant there
was insufficient time for the hotels to regain their certification
to be included in this year's report.
We expect to see a significant increase in certifications next
year, as our hotel partners remain committed to sustainability and
are actively engaged in this process. However, the combined impact
of the COVID-19 pandemic and the timing of our financial reporting
year has meant the numbers are particularly depressed this
year.
Sustainability reporting methodology document:
www.tuigroup.com/en-en/responsibility/reporting-downloads
Communicating with customers
Embedding sustainability into our brand and raising customer
awareness are key priorities. We want to stimulate demand for more
sustainable holidays by showing customers how these contribute to a
better holiday experience and highlighting the role they can play
in driving a positive change. An example of an initiative is the
online responsible souvenir guide launched in cooperation with the
Global Nature Fund (GNF). The guide offers guests tips on how to
preserve biodiversity at the destination, contribute to the local
economy by purchasing regional products, and avoid any unpleasant
surprises when passing through customs. TUI enhanced the content of
this online platform in financial year 2021.
Initially launched in the Netherlands, we enable customers to
more easily choose sustainable accommodations and automatically
contribute to an additional two ways of sustainable development.
Customers who book the fair travel concept contribute to social and
economic development in tourist destinations through an integrated
donation made to the TUI Care Foundation and contribute to
investments in the development of sustainable transportation
through projects such as upscaling sustainable aviation fuels.
Animal welfare
TUI audits its suppliers against established animal welfare
guidelines. TUI excursions featuring animals must comply with ABTA
guidelines (Global Animal Welfare Guidance for Animals in tourism).
Since 2016 more than 237 independent audits of animal attractions
featured by TUI were conducted. Wherever possible we prefer to work
with suppliers to deliver improvement plans, however a number of
venues were taken out of the programme for not meeting the required
standards.
Destination collaboration
The TUI Care Foundation is the main channel utilised to
coordinate our approach for developing tourism in a sustainable
manner, together with the destinations and the industry.
We measure the effects of enhancing the positive impact of
tourism by the amount invested in charities, projects, and
initiatives as well as memberships that support good causes.
Investments into projects and good causes
EUR million 2021 2020 Var. %
Amount raised for research / good causes 2.3 3.8 - 41.1
Our businesses, colleagues and customers raised EUR 2.3 m in
financial year 2021, a decrease of 41 % due to the ongoing impact
of the COVID-19 pandemic.
TUI Care Foundation
The TUI Care Foundation was adopted as our Group's corporate
foundation in 2016. It is an independent charitable foundation,
with a majority of non-TUI trustees. The TUI Care Foundation builds
on the potential of tourism as a force for good by supporting and
initiating partnerships and projects that create new opportunities
for the younger generations.
In 2021 enpact and the TUI Care Foundation launched the joint
Tourism Recovery Programme which supported young founders in the
travel and tourism industry. Participants were micro, small, and
medium-sized tourism enterprises in Egypt, Mexico, South Africa and
Kenya.
The Tourism Recovery Programme was designed to support
innovative tourism businesses on their path to economic recovery.
The future of tourism depends on resilient touristic businesses
offering sustainable products and services, particularly in
developing and emerging economies. With the United Nations
Sustainable Development Goals at its core, the Tourism Recovery
Programme builds capacity around leadership, resilience,
sustainability, innovation, and digital transformation.
Additionally, the aim of the continuing programme is to create a
flourishing international network of tourism businesses.
Under the six-month programme, participating businesses have the
opportunity to gain access to dedicated mentoring, business
development training and financial support The support package drew
on the experience of the previous COVID-19 Relief Programme for
Tourism, where already 352 participants from 150 tourism businesses
from Mexico, Kenya, Indonesia and Jordan benefited from the same
opportunity.
More on TUI Care Foundation: www.tuicarefoundation.com
Group Security, Health & Safety (SHS)
TUI operates holistic safety and security standards for
customers and employees, the company's reputation and its assets,
setting the tourism industry standard in security, health and
safety. In financial year 2021 the business made a significant push
in its efforts to centralise security and safety activities.
Through extensive continuous dialogues with stakeholders including
all subsidiaries we aligned their needs with the professional
security, health and safety management delivered. Additionally, the
department steered all measures related to health, safety, crisis
response and business continuity and supported the markets coming
back to business as usual adjusting to the dynamic, pandemic
environment.
The travel experience is about relaxing and winding down, or
discovering and exploring something new. However, the travel
experience can also entail a wide range of risks. As far as
possible, our activities aim to minimise these risks for customers
and employees. The business takes a risk based approach to prevent
intentional risks to the well-being of our customers, such as crime
or terror (Security) and offer all customers a travel experience
with the most security and safety, even in relation to
unintentional risks (Health & Safety), for all services booked
in the framework of their trips (e. g. flight, transfer to the
hotel, hotel stay and excursions). TUI continually monitors and
analyses safety-critical developments in destinations and discusses
response measures with the markets.
Safety
In financial year 2021 TUI saw the creation of a new Safety and
Risk team to support the Markets Transformation strategic
initiative and to create a centre of excellence within the Group
for safety management. This new team was created by combining the
Markets' Health & Safety teams and the TUI Musement Safety
Management Team in to one global function with a single management
structure - accountable via the newly introduced Group Security,
Health & Safety Governance Committee represented by senior
stakeholders from across the Group's business units and
functions.
This Safety and Risk team retains the policy and oversight remit
across the Group but also now has an operational focus on
accommodation, transfers, excursions, activities, tours and all
other in-destination activities.
The consolidation of our in-destination operational safety
management is driving increased operational efficiency and enabling
us to lead the way with a risk-based safety management approach,
maximising the use of data from across TUI and from key industry
partners.
TUI has implemented a group-wide incident reporting system
(Riskonnect), more effectively enabling us to view consolidated
data and safety related trend analysis. 5,746 health and safety
incidents were reported this year including 1,638 for COVID-19.
Operationally we have worked to adapt to the evolving COVID-19
environment reviewing and updating protocols to support the
operational restart and increasing customer volumes. We have
reviewed the requirements from our Source Markets and our
destinations and led work to procure COVID-19 testing solutions for
colleagues and guests. For example for the UK market where the
government required PCR testing on return to the UK, we established
a contract with Chronomics to provide cost effective testing
solutions for all TUI UK customers and travelling collegues.
Working on a safe return to operations has been a continued
focus throughout financial year 2021 supporting the business with
measures required in response to COVID-19 whilst maintaining a
focus on the other safety related risks. In partnership with
specialist assessment industry partners, TUI has conducted 4,347
safety assessments across our portfolio using a multi-layered
assessment approach. TUI has also implemented a data driven,
digital process which enables the sharing of safety related data
from our RIU hotels. TUI Hotels and Resorts COVID protocols have
been regularly updated to meet the changes in requirements relating
to the prevention of the virus, Group Security, Health and Safety
(SHS) continue to support TUI Hotels and Resorts with technical
guidance. The management of COVID-19 within our owned and managed
hotels remains a key focus, however is now business as usual
activity within these hotels and will remain so for the foreseeable
future. Strong hygiene concepts are the key to reducing the risk of
spread COVID-19 as well as many other infectious diseases and we
will continue to promote this activity.
Our airlines and cruise lines have continued to ensure
appropriate health and safety protocols are in place for our
passengers, colleagues and contracted suppliers meeting industry
and international standards.
Group SHS is supporting the strategic direction of the business
and ensuring that TUI remains a brand that can be trusted by our
customers, clients, colleagues, and industry partners.
Security
In October 2020, TUI unified operations for Security, Health
& Safety, Crisis, Business Continuity Management and
Occupational Health. As such, security expertise in the markets was
centralised to align destination and corporate security. Both
security functions have large crossovers in scope and expertise
with responsibility to support TUI business units across the globe
when actioning security-related risk management.
Group SHS develops and aligns Group-wide security standards in
close corporation with the business units and supports the local
implementation, such as the development and implementation of a
guideline for protest and demonstration hand-ling in retail stores
across our key markets. TUI has established an internal Group
Security Forum, which brings together all markets and business
units to strengthen security corporation, share best practices and
work closely together to set aligned security standards. As a
result of the COVID-19 pandemic security risk assessments in third
party hotel units had to be postponed to financial year 2022.
Occupational Health and Safety
TUI is determined to ensure all employees are given appropriate
support to ensure their physical and mental health and occupational
safety. The business ensures compliance with all applicable
occupational health and safety standards and offers a varied
'TUI-fit' package of services with professional support.
At the Hanover site, for sports courses, we offer health-related
talks and measures (TUI Wellbeing Days), various forms of health
coaching and nutrition counselling to (preventive) medical
check-ups and chiropractic therapy. In Luton TUI offers a package
of wellbeing services such as guided meditation and mindfulness
sessions. Especially in times of crisis TUI attaches great
importance to support our employee's mental health. Various
internal and external counselling offers are implemented across the
Group. That includes training managers to identify and prevent
psychosocial risks, offering access to an Employee Assistance
Programme 24 / 7 or offering information and webchats on mental
health via internal channels.
In addition, intensive dialogue within TUI serves to analyse TUI
Group's structure in the pursuit of common processes and shared
standards. Some of the 'TUI-fit' offers have had to be paused
because of the COVID-19 pandemic and to ensure our compliance with
local government regulations. Where possible, digital versions were
offered instead.
Crisis Management and Business Continuity
TUI operates Group wide crisis and business continuity protocols
and governance modules. They were successfully applied, in
particular, during the COVID-19 pandemic.
Apart from aggregating data and analysing the local situation,
our event management frameworks ascertain how guests and employees
are affected and what support they need. This will be enhanced by
the introduction of a Group wide crisis management system software
for monitoring, escalation and managing of day-to-day incidents and
crisis by the end of 2021. With the ability to work individually
within each business and to come together as a group when needed
with oversight and direction at a group level, 24 / 7 control
centers in different source markets form the basis for fast and
pertinent responses to critical events, with the additional support
of our destination teams.
Experienced crisis managers work within a team to cover areas
such as customer, commercial, communications and insurance
management. These experts across the Group facilitate a fast,
flexible response to levels of crisis. Appropriate reporting and
coordination within TUI ensures that management is updated on all
key incidents and developments and can immediately take decisions
if necessary.
In 2021 we embarked on three key areas of alignment across the
Group, which includes the Group crisis system software, which will
be implemented in all markets, at the airlines, the cruise, Hotels
& Resorts, and TUI Musement. In addition, both the Group Crisis
Manual and the Group Business Continuity Manual have been reviewed,
amended, and cascaded to all areas of the business. All projects
have included representation from all business areas and have been
successful in re-writing our roles and responsibilities but also
with an enhanced governance process supported by Group SHS.
COVID-19 pandemic
We moved the COVID-19 crisis back into business as usual in
October 2020 while still continuing to support as required. The
reporting and manageing of COVID-19 cases became part of the
regular Health & Safety illness processes including the
required protocols to mitgate risk. In addition Group SHS continue
to update all business areas with the latest destination
information as approved by government affairs. Understanding and
communicating the country information has been challenging and we
have supported projects including an on-line travel restrictions
system as a solution for customers and colleagues.
Group SHS continued working in collaboration with occupational
health teams across the Group. Implemented measures like hygiene
and distance rules were reassessed and adjusted in the light of the
current situation and the applicable legal requirements on a
regular basis. It is important to work as globally as possible but
as locally as needed, to ensure each countries strict rules and
regulations are implemented, whilst embedding best practice across
the Group for the benefit of our colleagues. In Germany for example
an interdisciplinary team implemented measures required by
regulations like e. g. SARS-CoV- 2 occupational health and safety
regulation at the campus Hanover, which were shared with other
German business units as best practice. In addition to mandatory
COVID-19 trainings continuous communication on COVID-19 information
was ensured via internal channels.
We coordinated step-by-step re-opening of operations and
established safe working conditions to reduce the risk of
infection. This work continues and will do so for many months to
come.
Respecting human rights
TUI Group respects all internationally proclaimed human rights
as specified in the International Bill of Human Rights and expects
the same of our suppliers and business partners. Modern slavery and
its components of forced labour and human trafficking are of
particular concern given their egregious nature and increasing
prevalence.
Modern Slavery Act Statement on
www.tuigroup.com/en-en/sustainability/msa
In accordance with applicable law, conventions and regulation,
TUI is committed to respecting human rights throughout its
worldwide operations. We have a number of policies and initiatives
in place to monitor, identify, mitigate and prevent human rights
impacts in line with the UN Guiding Principles on Business and
Human Rights, and will take remedial action where necessary.
In September 2014, TUI signed up to the UN Global Compact,
committing the Group to 10 universally accepted principles in the
areas of human rights, labour, environment and anticorruption. In
2012, TUI signed the UN World Tourism Organisation's (UNWTO) Global
Code of Ethics - further underlining our commitment to respecting
human rights.
We have a working group on human rights, drawing on senior
management from major departments across our business to help with
the continuous process of analysing potential human rights risks.
We also sit on the Boards of the Global Sustainable Tourism Council
(GSTC) and Travelife, both of which are addressing these issues
through sustainability certification standards.
TUI Group has a number of policies and procurement processes in
place focused on the prevention of human rights violations and
modern slavery.
-- The Global Employment Statement applies both to our own
employees and to our contractual partners. Itsfocus is the fair and
respectful treatment of employees at all levels and compliance with
applicable law andindustry standards.
-- The Employee Code of Conduct, the 'Integrity Passport',
commits us to respect and observe human rights. TUI Group employees
are also encouraged to report any wrongdoing to the 'Speak Up'
Line.
-- The Supplier Code of Conduct sets out the minimum standards
we expect from suppliers. The code includesguidance on human rights
and labour laws, bribery and corruption, environmental impacts and
support for localcommunities.
-- We have incorporated environmental and social requirements
into contracts for our accommodation suppliersas well as other
areas of procurement.
We require our hotel suppliers to implement credible
sustainability 3rd party certifications recognised or approved by
the Global Sustainable Tourism Council (GSTC). Schemes approved and
/ or recognized by GSTC mandate the highest standards of human
rights, child protection and social welfare in the tourism
industry.
A key focus is raising awareness of human rights across our
business. The e-learning sessions have been integrated into TUI
People, a global internal HR and learning platform, which is a more
efficient and better tool to track completion. Airline crews in the
UK, Nordics and Germany receive Vulnerable Children &
Trafficking Training during their inductions, where they learn
about how to spot trafficking and what to do.
TUI Group supports a number of projects and partnerships to
protect human rights in our destinations. We raise awareness of
modern slavery at TUI hotel partner conferences and support
Travelife with road shows. TUI Group is a founding member of the
World Travel and Tourism Council's Human Trafficking Task Force to
work closer with the whole tourism sector in preventing human
trafficking.
Our internal Child Protection Guidelines now also include
information for our colleagues on 'voluntourism' and visits to
orphanages and schools, what activities are currently being offered
on the market, the issues surrounding it and what TUI is doing to
this respect, including prohibiting any type of visits to
orphanages during TUI activities and no interaction between local
children and TUI guests during any activities.
TUI JUNIOR ACADEMY
The TUI Care Foundation and Mentor International continued to
work together on a mentoring programme to empower more than 800
young people from vulnerable communities in Jordan and Sweden. The
programme focused on schools in socially vulnerable areas,
targeting students (13- 17 years old) who are refugees or
struggling to integrate. Workshops designed to strengthen
self-esteem, social inclusion and parental involvement aimed to
support the young people's development, reduce isolation, improve
school results, strengthen school-to-work transition and motivate
and support the young people to thrive. Due to the restrictions of
COVID-19, workshops continued either online or on a rescheduled
timetable. The programme also involved the recruitment of
volunteers by Mentor and TUI Care Foundation from local
communities, including employees from across TUI Group, to lead and
take part in inspirational and motivational workshops.
Employee matters
The COVID-19 pandemic again posed significant challenges for the
tourism sector and hence also TUI Group, our HR Departments and our
employees in financial year 2021. The lifting of some restrictions
in Summer and Autumn 2020 was followed by renewed massive travel
and contact restrictions in Winter 2020 / 21 and Spring 2021. This
required us to continue systematically on the measures already
launched in 2020 to reduce staff costs. As we press ahead with our
ongoing transformation and restructuring projects, TUI is moving
towards its goal of future-proofing the Company and successfully
counteracting the long-term effects of the COVID-19 pandemic. The
ongoing transformation and restructuring projects were continued
and consistently driven ahead. In financial year 2021, key drivers
were our digitalisation strategy and the transformation to a
digital platform company. With the launch of the 'TUI Way of
Working', we are seeking to reach global agreement on a new way of
working and develop a shared vision for the future of work at TUI.
In addition, a number of strategic HR projects were completed or
continued in the period under review. In the next few months, we
will focus on developing a new People Strategy with our new Chief
HR Officer and Labour Director. The strategy will create an HR view
of the portfolio and also address the HR function as such. Its goal
is to make the HR function even more modern and enhance its
efficiency while aligning our HR activities to the changing
requirements that define the world of work in our future digital
platform company.
COVID-19
Due to the persistent COVID-19 pandemic and the uncertain market
environment, staff costs had to be kept at a low level. The
measures already adopted in the previous financial year such as
salary cuts, unpaid leave, vacancy freezes and other measures to
reduce staff costs were therefore continued in financial year 2021
for the duration of restricted business operations. Since April
2020, short-time work benefit programmes have been agreed for all
German Group companies, and they have been extended for financial
year 2021 and beyond. In financial year 2021, Group companies also
benefited from state-supported programmes and measures available in
other countries. Some of these programmes have already been
terminated or will successively end in the wake of the gradual
lifting of restrictions to contain the COVID-19 pandemic.
In Spring and Summer of financial year 2021, booking numbers
rose again as travel and contact restrictions were increasingly
lifted, so that business operations were gradually resumed. Hotels
and destinations were allowed to reopen in many places.
Consequently, many employees returned to work, with some of them
having spent several months on short-time work arrangements or
other state-sponsored programmes. New projects were launched and
some projects that had been suspended were resumed. In order to
support the return of people to their teams and workplaces, a
'reboarding toolbox' was provided in the TUI Learning Lounge. This
toolbox comprises, for instance, tips for the optimal use of
Microsoft 365 and a refresher on TUI's values as well as
information on health and well-being offerings.
Global Realignment Programme
Apart from the operational measures to cut staff costs, TUI's
transformation was driven further ahead in financial year 2021. The
consistent implementation of our Global Realignment Programme will
serve to bundle our strengths and secure and expand our market
position. The Global Realignment Programme comprises various
projects in the core functions, Markets & Airlines as well as
TUI Musement. The focus of the transformation is on platforms and
cost-efficient structures, increasing digitalisation and process
automation. The programme goes hand in hand with job cuts, which
for the most part were implemented or agreed by the end of
financial year 2021.
The implementation of the transformation projects is actively
supported by our global and local HR Business Partners. This
includes the measures taken in cooperation with the local
co-determination bodies as well as support and advice for our
executives in the transformation process as new global
organisational structures have been defined. These were also
implemented in the global HR IT Platform TUI People in order to
reflect the current structure of the organisation.
Regular reports about the Global Realignment Programme are
presented to the Group Executive Committee and the Supervisory
Board. The employees and executives, too, are continually updated
about the current situation, the transformation plans and changes
within TUI Group via e-mail and through the intranet.
'TUI Way of Working'
Before the pandemic, TUI Group was well on its way towards
becoming a Digital Platform Business. This evolution has
accelerated even faster due to COVID-19. This resulted in new
requirements for the daily local and global cooperation of our
employees. In March 2020, a large part of the work was switched to
mobile working, which was also continued in the financial year
2021. Mobile working using web-based applications has become the
norm for many employees and will also shape future collaboration.
Reflecting these unique circumstances, we have created the TUI Way
of Working to provide a holistic framework for all the challenges
and the world of working of tomorrow.
The TUI Way of Working is our common vision of what work at TUI
looks like and how it is organised on a global level, which can be
adapted locally. We will use it to create a culture of trust that
enables a sense of belonging for colleagues, wherever they choose
to work, giving them flexibility whilst keeping performance and
efficiency high. The key message for this vision is that 'work is
something we do, not somewhere we go'.
The TUI Way of Working contains four building blocks that focus
on Leadership, Workplace, Technology and Organisation, with our
Culture and Mindset providing a firm foundation for the whole
concept. Naturally, our Culture and our Mindset are shaped by the
central TUI values of 'Trusted, Unique, Inspiring'.
-- Culture & Mindset: We create a sense of belonging, with
the TUI Values as our shared foundation, andstrive to find new
learning opportunities and help each other grow.
-- Leadership: Our leaders embrace change, empower our teams,
and create an environment based on trust andopenness.
-- Workplace: We choose hybrid formats and encourage use of our
office spaces for creativity, networking,and collaboration.
-- Organisation: Our global teams and agility are the framework
for our organisation, enabling anenvironment that fosters
innovative ideas.
-- Technology: We will provide and use technology to optimise
our hybrid working and collaborationopportunities.
The TUI Way of Working was launched globally in August 2021.
Initial initiatives and programmes were implemented in financial
year 2021, in particular in the areas of Leadership, Workplace and
Technology. Further development is planned for financial year
2022.
Leadership
The second half of financial year 2021 saw the launch of 'Global
VIBE' (Vision, Inspire, Build Teams, Execute), the Group-wide
development programme for executives, in the framework of the TUI
Way of Working. This programme enables our executives to expand
their knowledge and build their skills, helping them in particular
to bring the new global teams together and lead them. The learning
content is provided in a virtual environment in the format of
60-minute master classes on the top themes, complemented by the
Global VIBE Toolkit for in-depth learning. Executives also have the
opportunity to engage and exchange with the Peer-to-Peer Learning
Community and learn from one another. In financial year 2021, a
total of 246 executives took part in three master classes. The
Global VIBE Toolkits were retrieved 1,779 times, and 123 executives
joined the MS Teams Learning Community.
'How2' is another leadership programme seeking to develop
knowledge and skills for all new executives and ensure that they
are able to fully exercise their roles. The programme consists of
six modules, offering different online formats such as e-learning
modules, teamcasts and facilitated meetings. 223 employees had been
admitted by the end of the financial year under review. The
programme will kick off at the start of financial year 2022.
Workplace
The new Group-wide TUI Workwide programme was rolled out in
August 2021 and enables employees to work abroad for up to 30
workdays per year if their role allows this. This makes TUI
Workwide a key module in the TUI Way of Working. Trust is one of
TUI's key values. That is why the programme was designed with a
maximum of flexibility in mind. Our employees can freely choose
where to work, the focus is on outcomes. By the end of September,
as many as 69 employees had applied for or participated in TUI
Workwide. The most popular countries for our employees to spend
their TUI Workwide assignments are Spain, Greece and Portugal. Ten
employees requested to be given the opportunity to stay the full 30
workdays abroad. On an average, employees apply for eight workdays
of work abroad in the framework of TUI Workwide. More than one
third of all applications were from Germany, followed by the UK and
Spain.
Another project related to the Workplace module is the TUI
Campus project in Hanover. It aims at combining three locations
into one central site in Hanover. In this context, TUI focuses,
among other things, on a shared-desk concept in order to create a
modern and contemporary work environment for eight companies under
one roof.
Technology
The TUI Way of Working requires a high-performance IT landscape.
With Microsoft 365, we have already responded to that need in order
to facilitate e. g. hybrid work. An efficient HR system is also
required. That is why TUI continued to drive the expansion of its
global HR IT platform TUI People further ahead in the period under
review, focusing on various aspects including the alignment and
digitalisation of processes. In Switzerland and the Nordics, the
new core HR system Employee Central was initiated with success. It
will be rolled out in other countries in future. TUI People was
also expanded to include a digital desktop assistant in September
2020, which was further rolled out in the period under review. The
assistant offers practical step-by-step instructions to facilitate
the use of TUI People. In addition, the 360° feedback tool for TUI
Musement went live. Moreover, Language Mentoring was launched as a
pilot project, enabling our employees to improve their foreign
language skills as mentees or teach language skills as mentors.
Another milestone was reached with the further consolidation of ten
recruiting processes into two global processes aligned with the
global process strategy.
The TUI Way of Working will only be successful if TUI also
strengthens the sense of belonging in a hybrid-working
environment. We need to ensure that colleagues who work elsewhere
are also part of the team, feeling like they belong and can live
the TUI values. For this, TUI will arrange activities - both
globally and, especially, locally - which encourage use of our
offices as places of exchange, engagement, creativity and
learning.
Other HR projects
Employee Listening
The COVID-19 pandemic has caused a volatile work situation at
TUI, which led to the decision to pause the TUIgether employee
survey in 2020, as it would have delivered an incomplete snapshot
without generating a profound data base for future decisions. As
part of the crisis response, local business surveys were carried
out to provide support to their employees during those challenging
times and to gain insights to support the design of a future hybrid
work model. In autumn 2020 the businesses in Germany, UK&I as
well as Belgium and the Netherlands conducted specialised surveys
about their employees' experience with working from home. Within
the UK&I 769 out of 1,661 participants are planning to come
back to the office on one or two days a week. In Belgium and the
Netherlands the majority of participants stated that they are
either generally satisfied (54 %) or very satisfied (36 %) with
home / telecommuting. Other parts of TUI Group recently went
through a major transformation, e. g. TUI Musement and Group IT
Domain, and therefore focused their local surveys on transformation
topics and agility. Even once the pandemic's impacts are reduced,
TUI will still be faced with a
fast-paced and digitalised work environment. The chosen path for
the future is therefore to evolve into a more holistic Listening
approach with a focus on Employee Experience. This concept will
focus on three main types of surveys, that each will be tailored to
the specific needs of different participant groups. Lifecycle
Surveys will focus on key moments in the Employee Journey to
capture feedback that significantly impacts employee experience (e.
g. Onboarding, Change of roles, returning from parental leave).
Business Insight Surveys will be triggered by insight needs on
topics for a specific target group of employees (e. g.
transformation). The Global People Surveys are short (pulse)
survey(s) for all TUI Group employees with focus on Engagement and
other topics with a strategic impact.
It is the mid- / long-term ambition to create a holistic view of
needs during the different stages of the lifecycle, and for
different employee segments, enabling better data driven decisions
about to best evolve our processes, culture, and ways of
working.
TUI Learning
The strategic Learning@TUI approach supports employees and
executives around the world with a great variety of learning
content in the framework of leadership and management programmes.
The goal is to enable our employees to assume responsibility for
their own growth and career in a world characterised by constant
change. In financial year 2021, TUI People offered more than 1,253
online programmes and 489 in-person schemes. More than 200,000
trainings were completed in TUI People in the period under review.
The number of trainings offered in Summer 2021 reflects the
increasing resumption of our business operations. In June 2021
alone, the number of training sessions successfully completed rose
from around 14,000 in the prior year to 40,000. During the COVID-19
pandemic, our employees also had access to other attractive
development opportunities such as the TUI Learning Lounge, the TUI
Academy and the master classes. In Germany, the TUI@University and
TUI@Expertise programmes were resumed in September 2021.
TUI@University supports our employees wishing to enrol at
university alongside their jobs, while TUI@Expertise offers further
training and continuing professional development, e. g. for
business administrators or economists.
In IT, the new learning tool 'for:ward' was successfully rolled
out. for:ward is a programme offering employees the opportunity to
learn new skills and acquire new knowledge. Due to the changes in
our business, we need to adjust our IT roles and create a learning
organisation culture. for:ward offers a basis to support the
development of the IT Domain Organisation. The programme is open
for all employees in the IT Domain Organisation. To this end,
for:ward offers participants two options: learning on demand or
learning with the support of an external partner. Employees can
apply for a licence that includes access to the highest-ranking
business and technology programmes. The second option, also
supported by the external partner, relates to role transition.
Learning paths have been established for certain roles that either
develop employees into a new role or deepen their expertise in
their current role. Employees can spend 30 % to 50 % of their
working hours on this programme for five to six months and complete
the learning path at their own pace.
Performance & Talent Management
In the light of the special conditions driven by the COVID-19
pandemic, it was important to offer our employees clarity and
guidance. In order to offer our employees a simple tool to engage
in dialogue, we continued to provide a 'light' version of our
global Performance & Talent Management format Great Place to
Grow. In doing so, we not only encourage all executives and their
teams to provide feedback, but can also check their progress and
show appreciation for their performance and engagement.
In the TUI Musement segment, Great Place to Grow was accompanied
by the launch of the Objectives Key Results (OKR) concept. OKR is a
collaborative tool for defining objectives, used by teams and
organisations to set challenging, ambitious short-term goals with
measurable results. The 'objectives' describe the goals employees
are seeking to achieve. The 'key results' stand for the levers
employees will use to reach their goals. The approach is supported
by the overarching key values Transparency and Cooperation. The
introduction of the OKR concept supports our employees in
understanding the corporate strategy and aligning their day-to-day
work to this strategy. The concept also enables teams to work
together effectively and to deliver shared priorities in a
fast-paced environment while continuing to improve and
innovate.
Recruiting & Talent Acquisition
In Recruiting und Talent Acquisition, the focus in the completed
financial year was on Talent Acquisition Transformation, aiming to
digitise processes in this area. The first phase of the digital
Talent Acquisition Transformation was completed with the
harmonisation of the recruitment processes and tools in most of our
customer-facing units and in Early Careers. and we are now ready to
launch the campaign in October 2021. TUI works with a software
providing a fully digital measurement and selection process, which
improves the candidate experience in a cost-efficient, consistent
manner. In financial year 2022, the recruiting processes and tools
will be aligned and adjusted across markets and platforms. The goal
of the campaign is to strengthen the TUI employer brand across all
recruiting channels and tap new recruiting markets to win the best
talents for TUI.
Early Talents
The COVID-19 pandemic continued to affect our training
activities in the period under review. Most selection processes,
trainings and meetings were carried out in a virtual format.
Learning materials such as e-learnings, presentations and
specialist articles were, for instance, provided in the Trainee
Learning Lounge. In the last few months of the financial year, many
trainees returned to their workplace in travel agencies or the tour
operator. In Hanover, an information week was held with an
in-person format, taking account of the relevant hygiene measures,
to enable the new trainees and sandwich course students to visit
locally and get to know their employer TUI. In Summer 2021, our
junior company 'TUI Youngsters' also resumed operation, attracting
attention with a range of marketing activities. Students enrolled
in a practice-oriented dual study programme completed their first
project by progressing the portfolio of activities and overall
framework for 'TUI Youngsters'. They also partnered with the youth
and trainee representatives to generate new ideas and update
existing concepts. It was important to ensure the quality of
training in the mobile work space and to offer a contact person who
will be available to the trainees and dual study programme
participants at all times.
At the end of September, TUI employed 250 trainees in Germany,
with women accounting for around 72 % of these. The trainee ratio
was 3.3 %. In financial year 2021, 147 trainees successfully
completed their training and around 37 % of them were given a
further contract.
In the UK, 83 % of all trainees were furloughed during the
COVID-19 pandemic. In spite of these circumstances, 22 apprentices
successfully completed their training. Thanks to positive ratings
by our trainees, we won the myApprenticeship Award, ranking us
among the Top 100 apprenticeship employers in 2020 / 21. In the
course of Summer 2021, we resumed the recruitment of early talents
in the UK. With our campaign we were able to recruit new graduates,
e. g. in data science and analytics. In October 2021, further
campaigns will follow to fill internal and external apprenticeships
and internships for university graduates.
Diversity & Inclusion
In financial year 2021, we continued our efforts to promote
diversity, inclusion and equal opportunities. To enhance the
measurability of the progress delivered, the diversity reporting
launched in 2019 was repeated and further expanded in the financial
year under review.
With the TUI Global Employment Statement and as a signatory to
the UN Global Compact, we have made a clear commitment: We do not
accept any discrimination based on national origin or ethnicity,
sex, gender identity, sexual orientation, marital status, religion,
world view, disability, age or social origin. Decisions about
hiring, salary, benefits, training opportunities, work assignments,
advancement, discipline and termination must be based solely on
objective grounds.
As in previous years, various indicators relating to the
proportion of women in managerial functions and in the overall
headcount were reported this year as part of our diversity
activities. The proportion of women in the overall headcount
declined to 54.6 %. While TUI delivered increases in the proportion
of women in managerial functions in the period from 2017 to 2019,
the numbers remained flat or declined in the prior year and in the
period under review. However, the proportion of women on the Senior
Leadership Team rose slightly year-on-year.
For Germany (TUI AG, TUI Deutschland, TUI fly), voluntary
targets were defined in 2020 for the period until 2023, in
accordance with the statutory requirements of the German Stock
Corporation Act and the Act on Limited Liability Companies. The
first of these targets for 2023 were achieved in the period under
review.
Proportion of women in managerial positions
in % 30 Sep 2021 30 Sep 2020 Target 2023
TUI AG
Supervisory Board 40 30 30
Executive Board 1 woman 2 women at least
1 women
First management level below Executive Board 24 25 25
Second management level below Executive Board 24 22 30
TUI Deutschland
Supervisory Board 33 44 30
Executive Board 25 40 25
First management level below Executive Board 22 27 30
Second management level below Executive Board 44 52 40
TUI fly
Supervisory Board 25 33 30
Executive Board 0 0 20
First management level below Executive Board 20 13 30
Second management level below Executive Board 47 45 40
See declaration in the Corporate Governance Report on page
116
Pension schemes
Many TUI Group companies offer their employees pension schemes
in the form of direct benefits or through an occupational
providence fund, or else by paying in additional employer
contributions to pension insurance. In Germany, collective
contracts have been concluded with an insurance undertaking in
order to meet the legal entitlement to deferred compensation.
Employee representatives
TUI and the employee representation bodies intend to maintain
their active response to the requirements of digital transformation
and the ever-changing world of work and are seeking to shape the
future together. TUI Group has various co-determination bodies at
national and international, company and supra-company level. The
Group Works Council represents the interests of employees in German
companies at the highest level in accordance with legislation on
industrial relations.
In financial year 2021, both the Group Works Council and the
local works councils in Germany as well as the co-determination
bodies in other countries engaged in permanent constructive
dialogue and concluded company agreements, e. g. on the
introduction of short-time work benefit schemes and similar state
support programmes, delivering a key contribution to coping with
the COVID-19 pandemic. In addition, the required agreements, e. g.
for the TUI Campus project and the for:ward learning programme,
were concluded.
At a European level, the TUI Europe Forum (TEF) offers an
information and consultation process for cross-border measures
affecting the interests of employees in Europe. TUI's Europe Forum
represents the interests of employees in companies outside Germany,
thereby playing an important support and integration role. In
financial year 2021, 40 employee representatives from 13 countries
were delegated to the Forum. The Forum continues to address all
transformation projects in the Global Transformation Programme and
the shift to a domain structure. Further topics addressed by the
TEF in the period under review include the European changes
associated with the cross-border holding structure for all TUI
Group airlines and a range of strategic projects in other European
countries. In April 2021, the TUI Europe Forum adopted the Common
Social Understanding as a shared Memorandum. It creates uniform
minimum standards for talks about terminating employment, support
for professional reorientation and options for potential
rehiring.
Employee indicators
In financial year 2021, staff numbers increased by 4.7 % to
50,584. While an increase in the headcount was driven by the
reopening of hotels and destinations in Hotels & Resorts and
TUI Musement, an opposite effect was attributable to the
implementation of the Global Realignment Programme. Of the 8,000
roles potentially impacted as part of the programme, we have a
reduction of more than 7,000 already completed or agreed by the end
of financial year 2021. Staff numbers also fell due to further
measures to cut costs, e. g. by leaving vacancies open.
Personnel by segment 1
30 Sep 2021 30 Sep 2020 Var. %
Hotels & Resorts 21,508 16,041 + 34.1
Cruises2 57 64 - 10.9
TUI Musement 5,381 4,708 + 14.3
Holiday Experiences 26,946 20,813 + 29.5
Northern Region 9,011 10,746 - 16.1
Central Region 7,492 8,940 - 16.2
Western Region 4,833 5,602 - 13.7
Markets & Airlines 21,336 25,288 - 15.6
All other segments 2,302 2,229 + 3.3
TUI Group 50,584 48,330 + 4.7
1 Includes all employees of TUI companies with active employment
contracts, i. e. also employees who were on short-time working or
similar government programmes at the balance sheet date.
2 Excludes TUI Cruises (JV) employees. Cruises employees are
primarily hired by external crew management agencies.
Hotels & Resorts
In Hotels & Resorts, the headcount grew by 34.1 % to 21,508.
Riu recorded an increase in staff numbers of 36.3 % to 8,349, above
all due to the reopening of hotels in Spain, Jamaica and Cape
Verde. Robinson reported an increase in its headcount of 83.5 %
from 2,596 to 4,763. This growth resulted primarily from the
reopening of clubs in Turkey, North Africa and the Maldives. TUI
Blue and the Northern hotels also recorded headcount increases.
Cruises
The headcount in the Cruises segment declined by 10.9 %
year-on-year to 57.
TUI Musement
In financial year 2021, the headcount in TUI Musement rose by
14.3 % to 5,381. The increase was driven by the gradual reopening
of destinations, in particular in Spain and Greece.
Northern Region
Northern Region recorded a year-on-year headcount decline of
16.1 % to 9,011. In the UK, staff numbers decreased by 16.2 % from
9,966 in the prior year to 8,353. This is attributable to retail
shop closures and reductions in the Tour Operator and Airline
sectors. In the Nordics, staff numbers in the Tour Operator and
Airline sectors declined by a total of 15.6 % to 658.
Central Region
The headcount in Central Region declined by 16.2 % year-on-year
to 7,492. In Germany, staff numbers fell by 17.3 % from 7,326 to
6,061, in particular due to restructuring measures in the Airline,
Tour Operator and Retail segments. Staff numbers in Austria
decreased by 17.7 % to 431 following travel agency closures. In
Switzerland, the headcount declined by 21.0 % to 357 due to
restructuring measures. In Poland, the headcount remained nearly
flat year-on-year.
Western Region
The headcount in Western Region declined by 13.7 % year-on-year
to 4,833. This was driven by declines in the Retail, Tour Operator
and Airline sectors in Belgium and the Netherlands. In France,
staff numbers declined by 43.7 % to 535 due to restructuring
measures.
All other segments
Overall, the headcount rose by 3.3 % year-on-year to 2,302. The
number of employees working for Head Office functions in Germany
fell by 8.0 % to 658, including 277 employees working for TUI AG.
The number of employees working for Head Office functions in the UK
remained nearly flat year-on-year. The headcount in IT rose by 19.6
% year-on-year to 879. The Future Markets segment recorded a
decline in its headcount of 4.8 % to 357.
Employee indicators
Employment structure
TUI Group Germany
in % 30 Sep 2021 30 Sep 2020 30 Sep 2021 30 Sep 2020
Number of employees 50,584 48,330 7,592 8,841
Employees, female 54.6 57.8 66.1 66.2
Females in management positions 28.2 28.5 31.0 31.4
Employees in part-time, total 16.3 20.1 40.3 40.4
Employees in part-time, female 25.9 30.3 52.1 52.2
Employees, fixed-term employment contract 22.5 18.2 5.1 8.8
Personnel costs
EUR million 2021 2020 Var. %
Wages and salaries 1,393.1 1,871.6 - 25.6
Social security contributions 193.7 247.1 - 21.6
Pension costs 119.3 142.3 - 16.2
Total 1,706.1 2,261.0 - 24.5
The pay package offered by TUI Group consists of various
components, reflecting the framework conditions in different
countries and companies and the appropriateness of compensation and
customary market rates. Depending on the function concerned, a
fixed salary may go hand in hand with variable components,
honouring individual performance and promoting employees to
sustainably participate in the Company's targets. In addition, the
Senior Leadership Team can participate in a long-term share-based
compensation programme based on the allocation of virtual
shares.
In the period under review, TUI Group's personnel costs
decreased from EUR 2.3 bn in previous year to 1.7 bn. The
year-on-year decrease in expenses for wages and salaries and social
security contributions in financial year 2021 mainly results from
the decline in average staff numbers across the Group due to the
COVID-19 crisis as well as initial reorganisation effects,
including from the Global Realignment Programme. In addition,
substantial savings were generated through a range of measures
including short-time work benefit schemes and other
government-sponsored programmes, e. g. the job Retention Scheme in
Great Britain, to save jobs. In the course of the gradual
relaxations in the context of the COVID-19 crisis, these have
already been partly terminated or are gradually being phased out.
Moreover, restructuring costs were lower year-on-year in financial
year 2021.
Anti-corruption and anti-bribery
Details of TUI Group's anti-corruption and anti-bribery measures
are presented in the Corporate Governance section on Compliance
from page 118 in this Report.
Limited Assurance Report regarding the Combined Non-Financial
Declaration
The Group Audit department of TUI Group performed a limited
assurance review of the combined non-financial declaration for
financial year 2021. The work was conducted in accordance with the
International Standard on Assurance Engagements (ISAE) 3000
(revised).
The audit work comprised in particular the assessment of the
materiality analysis used and the concepts specified on the basis
of interviews and the collection and review of relevant records and
evidence to evaluate data collection, validation and reporting
processes and the reliability of reported data. In addition,
inquiries of employees and directors responsible for determining
the above matters at Group level were conducted, and the overall
presentation of the declaration was assessed.
In financial year 2021 we focused specifically on the effects of
the COVID-19 pandemic and climate - related matters.
Based on the procedures performed and evidence obtained, nothing
has come to the attention of Group Audit that leads Group Audit to
believe that the combined non-financial declaration for financial
year 2021, in all material aspects, is not accurate, appropriate,
or in line with legal requirements.
Annual financial Statements of TUI AG
The annual financial statements of TUI AG were prepared in
accordance with the provisions of the German Commercial Code (HGB),
taking account of the complementary provisions of the German Stock
Corporation Act (AktG), and audited by Deloitte GmbH
Wirtschaftsprüfungsgesellschaft, Hanover. They are published in the
Federal Gazette. The annual financial statements have been made
permanently available on the Internet at www.tuigroup.com.
In the present Annual Report, the Management Report of TUI AG
has been combined with the Management Report of TUI Group.
Earnings position of TUI AG
Income statement of TUI AG
EUR million 2021 2020 Var. %
Revenue 33.9 39.0 - 13.1
Other operating income 1,750.3 750.3 + 133.3
Cost of materials 11.3 13.8 - 18.1
Personnel costs 39.6 45.3 - 12.6
Depreciation 4.5 3.1 + 45.2
Other operating expenses 471.8 455.7 + 3.5
Net income from investments - 381.1 - 984.8 + 61.3
Write-downs of investments 1,180.3 1,556.8 - 24.2
Net interest - 191.1 1.3 n. a.
Taxes on income and profit - 2.8 1.8 n. a.
Profit after taxes - 492.7 - 2,270.6 + 78.3
Other taxes - 1.3 2.1 n. a.
Net profit for the year - 491.5 - 2,272.7 + 78.4
The earnings position of TUI AG, the Group's parent company, is
primarily determined by the appropriation of profits by its Group
companies, either directly associated with TUI AG via profit and
loss transfer agreements or distributing their profits to TUI AG
based on relevant resolutions.
Revenue and other operating income
The decrease in revenue in the financial year under review
mainly resulted from lower management revenue. The increase in
Other operating income was primarily attributable to the divestment
of shareholdings. In September 2021, the stake in TUI Cruises GmbH
was sold to Preussag Beteiligungsverwaltungs GmbH IX with a gain on
disposal of EUR 1.5 bn. Exchange gains declined year-on-year. These
gains were offset by expenses incurred for exchange losses, carried
in Other operating expenses. Other operating income also included
income from intercompany service recharges, compared with expenses
passed on to TUI AG from other Group companies, shown in Other
operating expenses, as well as income from the reversal of an
allowance on a loan settled in the financial year under review and
income from the reversal of provisions no longer required. The
prior year's Other operating income had mainly reflected the
disposal of the stake in Hapag-Lloyd Kreuzfahrten to TUI
Cruises.
Expenses
Personnel costs declined versus financial year 2020. The decline
in wages and salaries results in particular from the initiation of
short-time work benefit schemes due to the COVID-19 pandemic. The
expenses for pension plans declined primarily due to lower
additions to pension provisions.
Other operating expenses mainly comprised the expenses for
exchange losses, cost of financial and monetary transactions,
charges, fees, services, impairment charges, other administrative
costs as well as expenses for the intercompany recharges of
services. While capital procurement costs incurred in connection
with the financing measures and expenses for intercompany services
rose, write-downs of receivables and exchange losses declined
year-on-year, resulting in an overall increase in Other operating
expenses.
Net income from investments
The year-on-year increase in the net income from investments is
mainly driven by the increase in income from profit and loss
transfer agreements and the reduction in expenses for loss
transfers. The income from profit and loss transfer agreements
generated in financial year 2021 mainly results from the disposal
of the stake in Riu Hotels S. A. by a subsidiary.
Write-downs of investments
In the period under review, the write-downs of shares in Group
companies mainly related to subsidiaries in the tour operator
business.
Interest result
The development of the interest result mainly reflected higher
interest expenses for drawdowns from the syndicated credit
facilities upsized in April and August of the prior year and from
interest expenses from the additional finance agreements concluded
in financial year 2021, i. e. the ESF warrant bond, the convertible
bonds and the ESF's silent participations.
Taxes
Income tax expenses mainly resulted from reassessments of tax
provisions effected in the period under review. They did not
include any deferred taxes.
Net loss for the year
For financial year 2021, TUI AG posted a net loss of EUR 491.5
m.
Net assets and financial position of TUI AG
TUI AG's net assets and financial position as well as its
balance sheet structure reflect its function as TUI Group's parent
company. In financial year 2021, the balance sheet total increased
year-on-year to EUR 10,036.0 m.
Abbreviated balance sheet of TUI AG (financial statement according to German Commercial Code)
EUR million 30 Sep 2021 30 Sep 2020 Var. %
Intangible assets /property, plant and equipment 6.2 44.5 - 86.1
Investments 8,022.8 8,044.1 - 0.3
Fixed assets 8,029.0 8,088.6 - 0.7
Receivables 1,385.4 694.9 + 99.4
Cash and cash equivalents 592.5 343.3 + 72.6
Current assets 1,977.8 1,038.2 + 90.5
Prepaid expenses 29.1 0.4 n. a.
Assets 10,036.0 9,127.2 + 10.0
Equity 3,034.8 2,924.4 + 3.8
Special non-taxed items 0.1 0.1 -
Provisions 327.5 297.1 + 10.2
Bonds 739.6 300.0 + 146.5
Other liabilities 5,934.0 5,605.6 + 5.9
Liabilities 6,673.6 5,905.6 + 13.0
Liabilities 10,036.0 9,127.2 + 10.0
Fixed assets
At the balance sheet date, fixed assets almost exclusively
consisted of investments. The development of financial assets was
affected by capital increases, in particular at TUI Group Services
GmbH and other subsidiaries. These capital increases were exceeded
by write-downs on shares in group companies as well as the sale of
a shareholding and the repayment of loans. This resulted in an
overall decrease in financial assets. The decline in intangible
assets and property, plant and equipment mainly resulted from the
sale of the office building at Karl-Wiechert-Allee 23 as of 30
September 2021 in the framework of a sale-and-leaseback
agreement.
Current assets
The increase in current assets of 90.5 % to EUR 1,977.8 m was
mainly driven by the increase in receivables, which went hand in
hand with an increase in cash and cash equivalents. The increase in
receivables was primarily attributable to results transferred in
the financial year under review under profit and loss transfer
agreements and the provision of liquidity to Group companies. The
increase in cash and cash equivalents resulted from the cash inflow
from the finance agreements concluded in financial year 2021.
TUI AG's capital structure
Equity
TUI AG's equity increased by 3.8 % to EUR 3,034.8 m. This
increase was primarily driven by the capital increase in January
2021. In the financial year under review, the capital stock was
reduced by EUR 918,957,135.83 to EUR 590,415,100.00 in accordance
with the requirements on ordinary capital decreases for the purpose
of transferring a part of the capital stock into the Company's
capital reserves. The capital decrease was effected through a
corresponding reduction in the equity capital, as a result of which
the proportionate share in the company stock per share was reduced
from previously EUR 2.56 to EUR 1.00 per existing non-par value
share. In accordance with section 7 of the German Economic
Stabilisation Acceleration Act (WstBG), the reduced capital stock
was subsequently increased by EUR 508,978,534.00 in the form of a
cash contribution to EUR 1,099,393,634.00 by issuing 508,978,534
new registered no-par value shares with a proportionate share in
the capital stock of EUR 1.00 per share. At the end of the
financial year under review, subscribed capital comprised
1,099,393,634 shares, corresponding to EUR 1,099,393,634.00. In
accordance with section 71(1) no. 2 of the German Stock Corporation
Act, TUI acquired 317,171 new shares to be issued to employees in
the framework of the employee stock option plan. The 317,171 shares
were purchased on the stock exchange at EUR 3.8513 and transferred
free of charge to the employees participating in the plan on 30
September 2021. The shares represent a share capital of EUR
317,171, i. e. <0.03 % of the share capital, and an acquisition
volume of EUR 1.2 m. Please refer to the notes on subscribed
capital in the notes to the financial statements of TUI AG. As of
30 September 2021, TUI AG did not hold any own shares.
The capital reserve increased by EUR 967.3 m in financial year
2021 due to the capital reduction in January and the premium
associated with the capital increase. A further increase in the
capital reserves of EUR 44.5 m resulted from premiums and interest
benefits in connection with the issue of the bond warrant in
October 2020 and the convertible bond in April and July 2021,
transferred to the capital reserve. In total, the capital reserve
grew by EUR 1,011.8 m to EUR 2,236.0 m in financial year 2021 as of
the cut-off date.
The loss for the year totals EUR 491.5 m. Considering the profit
carried forward of EUR 190.9 m, net loss totals EUR 300.6 m. The
equity ratio declined to 30.2 % in financial year 2021 (previous
year 32.0 %).
Provisions
Provisions increased by EUR 30.4 m to EUR 327.5 m. They
consisted of pension provisions worth EUR 153.7 m (previous year
EUR 151.6 m), tax provisions worth EUR 32.3 m (previous year EUR
35.6 m) and other provisions worth EUR 141.5 m (previous year EUR
109.9 m).
Pension provisions remained nearly flat in the financial year
under review. The increase in other provisions mainly resulted from
the formation of provisions for onerous losses of EUR 47.5 m for
the rent and continued expenses for using the building at
Karl-Wiechert-Allee 4. From financial year 2023, administration
will be pooled at the Hanover site in TUI Campus at
Karl-Wiechert-Allee 23. The office space at Karl-Wiechert-Allee 4
will no longer be used after that. On the other hand, a decline in
provisions was attributable to lower provisions for onerous losses
from the measurement of forward exchange transactions.
Liabilities
TUI AG's liabilities totalled EUR 6,673.6 m, up by EUR 768.0 m
or 13.0 %.
In order to cover the liquidity requirements resulting from the
global travel restrictions to curb COVID-19, TUI AG initiated a
number of financing measures in financial year 2021.
In April and August 2020, the previous syndicated credit
facility of EUR 1.75 bn (including a tranche of EUR 215.0 m for
bank guarantees) was increased by two tranches from KfW totalling
EUR 2.85 bn to a total of EUR 4.6 bn. On 1 October 2020, TUI AG
issued a warrant bond of EUR 150.0 m with warrants for around 58.7
m shares to the Economic Stabilisation Fund (ESF), meeting one of
the prerequisites for the use of the second KfW tranche. In January
2021, another syndicated credit facility of EUR 200.0 m was agreed
with KfW and a syndicate of private banks. This was reduced to EUR
170 m on 30 September 2021 and cannot be used as at the reporting
date, as it is still subject to the condition precedent of the
registration of the trademark rights to Robinson Club GmbH as
collateral. In July 2021, the term of the syndicated credit
facilities totalling EUR 4.8 bn was extended ahead of schedule by
two years to July 2024. For regulatory reasons due to Brexit, the
share of a British bank in the EUR 4.6 bn syndicated credit line
(around EUR 80 m cash and EUR 25 m guarantee line) cannot be
extended beyond July 2022. This amount is therefore carried as a
current liability with a term of up to one year.
Cash totalling EUR 1,852.9 m as at 30 September 2021 has been
drawn from this credit facility, carried as a liability to
banks.
The interest rate for cash drawdowns is variable and depends on
the short-term interest level (EURIBOR or LIBOR, for drawings in
British Pound replaced by SONIA since 29 July) and TUI's credit
rating plus a margin.
The funds from the capital increase effected on 28 January 2021
were used for the early redemption on 23 February 2021, in line
with the terms and conditions, of the senior bond totalling EUR
300.0 m issued in October 2016 with an original term until October
2021.
On 16 April 2021, TUI AG issued a convertible bond with a total
nominal value of EUR 400.0 m, which was upsized through a further
issue with a nominal amount of EUR 189.6 m at a price of 104.75 %.
TUI therefore recorded an inflow of nearly EUR 600 m from the total
issue of the convertible bond. If the convertible bond is not
converted, terminated or bought back ahead of schedule, it will be
redeemed at the nominal amount of EUR 589.6 m on 16 April 2028.
Investors also have the opportunity to convert the convertible bond
into registered shares in TUI. The proceeds from the total issuance
of convertible bonds will be used to reduce drawdowns and later to
repay the KfW facilities.
As in the prior year, liabilities to banks include unsecured
Schuldschein liabilities to banks of EUR 425.0 m issued in July
2018. The proceeds from this Schuldschein serve general corporate
financing purposes. The Schuldschein has different tenors between
originally five and ten years and partly carries floating interest
rates (depending on EURIBOR) and partly fixed interest rates.
In the framework of the third financing package, the Economic
Stabilisation Fund (ESF) and TUI AG agreed silent participations
totalling EUR 1,091 bn. The ESF measures comprise Silent
Participation I of EUR 420 m, convertible into shares in TUI at a
conversion price of EUR 1.00 per share, and Silent Participation II
totalling EUR 671 m. As at 30 September 2021, both silent
participations were fully paid in. In the financial statements
under the German Commercial Code, the silent participations are
carried as other liabilities with a term of more than five
years.
The net financial position (cash and cash equivalents less
liabilities to banks, bonds and promissory notes) totalled EUR -
2,430.1, (previous year EUR - 3,703.0 m) in the financial year
under review.
Capital authorisation resolutions
Information on new and existing resolutions concerning capital
authorisation, adopted by Annual General Meetings, is provided in
the next chapter on Information required under takeover law.
Information required under Takeover Law
Pursuant to sections 289a and 315a of the German Commercial Code
(HGB) and explanatory report
Subscribed capital
The subscribed capital of TUI AG consists of no-par value
shares, each representing an equal share of the capital stock. As a
proportion of the capital stock, the value of each share is around
EUR 1.00.
The subscribed capital of TUI AG, registered in the commercial
registers of the district courts of Berlin- Charlottenburg and
Hanover, consisted of 1,099,393,634 shares at the end of financial
year 2021 (previous year 590,415,100 shares) and totalled EUR
1,099,393,634. Each share confers one vote at the Annual General
Meeting.
Restrictions on voting rights or share transfers
The Executive Board of TUI AG is not aware of any restrictions
on voting rights or the transfer of shares.
Equity interests exceeding 10 % of the voting shares
The Executive Board of TUI AG has been notified of the following
direct or indirect equity interests reaching or exceeding 10 % of
the voting rights:
As at 30 September 2021, Unifirm Limited, Cyprus, held 32.0 % of
the voting shares in TUI AG. Kirill A. Mordashov, Moscow, and
Nikita A. Mordashov, Moscow, each hold 50 % of the voting shares in
KN-Holding Limited Liability Company, Cherepovets, Russian
Federation, which, in turn, holds 65 % of the voting shares in
Unifirm Limited, and Alexey A. Mordashov, Cherepovets, indirectly
holds 35 % of the voting shares in Unifirm Limited.
Alexey A. Mordashov, Kirill A. Mordashov and Nikita A. Mordashov
have notified us that their share of voting rights in TUI AG
exceeded the threshold of 30 % on 26 January 2021 and amounted to
30.10 % at that date (330,917,480 voting rights).
At the end of financial year 2021, around 64 % of TUI shares
were in free float. Around 38 % of all TUI shares were held by
private shareholders, around 26 % by institutional investors and
financial institutes, and around 36 % by strategic investors.
The current shareholder structure and voting rights
notifications according to section 33 of the Securities Trading Act
(WpHG) are available online at:
www.tuigroup.com/en-en/investors/share/shareholder-structure and
www.tuigroup.com/en-en/investors/news
Shares with special rights conferring powers of control
No shares with special rights conferring powers of control have
been issued.
System of voting right control of any employee share scheme
where the control rights are not exercised directly by the
employees
Where TUI AG grants shares to employees under its employee share
programme, the shares are directly transferred to the employees
(sometimes with a lock-up period). Beneficiaries are free to
directly exercise the control rights to which employee shares
entitle them, in just the same way as other shareholders, in line
with legal requirements and the provisions of the Articles of
Association.
Appointment and removal of Executive Board members and
amendments to the Articles of Association
The appointment and removal of Executive Board members is based
on Sections 84 et seq. of the German Stock Corporation Act in
combination with Section 31 of the German Co-Determination Act.
Amendments to the Articles of Association are based on the
provisions of Sections 179 et seq. of the German Stock Corporation
Act in combination with Section 24 of the Articles of Association
of TUI AG if applicable.
Powers of the Executive Board to issue shares
The Annual General Meeting on 9 February 2016 adopted a
resolution to create conditional capital of EUR 150.0 m for the
issue of bonds. The authorisation to issue bonds with conversion
options or warrants as well as profit-sharing rights and income
bonds (with or without fixed terms) of up to a nominal amount of
EUR 2.0 bn expired on 8 February 2021. With the issuance of a bond
with warrants worth EUR 150 m to the German Economic Stabilisation
Fund in October 2020, this authorisation was fully used.
The Annual General Meeting on 13 February 2018 adopted a
resolution to create authorised capital for the issue of employee
shares worth EUR 30.0 m. The Executive Board of TUI AG is empowered
to use this authorised capital by 12 February 2023 in one or
several transactions by issuing employee shares against cash
contributions. In the completed financial year, no new employee
shares were issued, so that the authorised capital continued to
total around EUR 22.3 m at the balance sheet date.
The Extraordinary General Meeting on 5 January 2021 resolved to
create conditional capital of EUR 420.0 m in order to grant the ESF
the right to convert ESF's asset contribution in the form of a
silent participation of EUR 420.0 m ('Silent Participation I') at
any time (in a single or several transactions) in full or in part
into up to 420 m new registered no-par value shares, each
representing a proportionate share in the capital stock of EUR 1.00
per no-par value share. The new shares will be issued at the
minimum issue price of EUR 1.00. The conversion right outlined
above is limited in that the ESF may only ever convert Silent
Participation I into new no-par value shares to such an extent that
the ESF's total participation (including all other shares held by
the ESF) does not at any time exceed 25 % plus one share in the
Company's increased capital stock after the conversion has been
carried out.
The ordinary Annual General Meeting on 25 March 2021 resolved to
create an authorisation to issue new registered shares against cash
contribution for up to a maximum of EUR 109.9 m (Authorised Capital
2021 / I). This authorisation will expire on 24 March 2026.
The Annual General Meeting on 25 March 2021 also resolved to
create authorised capital for the issuance of new shares against
cash or non-cash contribution of EUR 417.0 m (Authorised Capital
2021 / II). The issuance of new shares against non-cash
contribution is limited to EUR 109.9 m. This authorisation will
expire on 24 March 2026.
The latter two capital authorisations resolved in 2021 were
used. Authorised Capital 2021 / I was fully used, while Authorised
Capital 2021 / II was used almost completely (except for around EUR
3.4 m) for a rights issue in October 2021.
The Annual General Meeting on 25 March 2021 resolved to create
conditional capital for the issuance of bonds totalling EUR 109.9
m. The authorisation to issue bonds with conversion or option
rights and profit participation (with or without a fixed maturity)
is limited to a nominal amount of EUR 2.0 bn and expires on 24
March 2026. This authorisation was nearly fully used with the
issuance of a convertible bond worth EUR 589.6 m in April and July
2021.
See the section on Subscribed capital in the Notes to the
consolidated financial statements on page 198 and the section on
Subscribed capital in the annual financial statements of TUI AG
(disclosure pursuant to Section 160 (1) no. 2 of the German Stock
Corporation Act).
Significant agreements taking effect in the event of a change of
control of the Company following a takeover bid, and the resulting
effects
Some of TUI AG's outstanding financing instruments contain
change of control clauses. A change of control occurs in particular
if a third partly directly or indirectly acquires control over at
least 50 % or the majority of the voting shares in TUI AG.
In the event of a change of control, the holders of the
Schuldschein worth EUR 425.0 m, the warrant bond worth EUR 150 m
and the convertible bond worth EUR 589.6 m must be offered a
buyback. For the syndicated credit facilities worth EUR 4.8 bn
(including bank guarantees), of which EUR 1.9 bn (via cash) and EUR
149.4 m (via bank guarantees) had been used as at the balance sheet
date, a right of termination by the lenders has been agreed in the
event of a change of control.
Beyond this, there are no agreements in guarantee, leasing,
option or other financing contracts that might cause material early
redemption obligations that would be of significant relevance for
the Group's liquidity.
Apart from the financing instruments mentioned above, a
framework agreement between the Riu family and TUI AG includes a
change of control clause. A change of control occurs if a
shareholder group represents a predefined majority of attendees of
General Meetings or if one third of the shareholder representatives
on the Supervisory Board are attributable to a shareholder group.
In the event of a change of control, the Riu family is entitled to
acquire at least 20 % and at most all shares held by TUI in RIUSA
II S. A. at the share value determined by an internationally
recognised auditing company. Since TUI AG's Annual General Meeting
of 25 March 2021, the conditions for Unifirm representing a
majority of AGM attendees have been met so that the entitlement has
arisen for the Riu family to acquire shares within certain time
windows in 2021, 2022 and 2023. The Riu family dispensed with
exercising its purchase right in 2021.
A similar agreement concerning a change of control at TUI AG has
been concluded with El Chiaty Group. Here, too, a change of control
occurs if a shareholder group represents a predefined majority of
AGM attendees or if one third of the shareholder representatives on
the Supervisory Board are attributable to a shareholder group. In
that case, El Chiaty Group is entitled to acquire at least 15 % and
at most all shares held by TUI in each of the joint hotel companies
in Egypt and the United Arab Emirates at a share value determined
by an internationally recognised auditing company. Due to an
increase in the stake in TUI AG held by Unifirm following the
capital increase of 2 November 2021, here, too, a change of control
was triggered by a majority of AGM attendees.
A change of control agreement has also been concluded for the
joint venture TUI Cruises between Royal Caribbean Cruises Ltd and
TUI AG in the event of a change of control in TUI AG. The agreement
gives the partner the right to demand termination of the joint
venture and to purchase the stake held by TUI AG at a price which
is lower than the selling price of their own stake under certain
circumstances.
Compensation agreements have not been concluded between the
Company and Executive Board members or employees in the event of a
takeover bid.
TUI Share1
COVID-19 pandemic weighs heavily on TUI share price in financial
year 2021
Our share price started off the financial year at a price of EUR
1.73 2 and experienced high volatility during the course of the
year. Overall, the share price rose by around 85 %, closing at EUR
3.19 2 on 30 September 2021. The significant fluctuation in share
price was largely attributable to the environment created as a
result of the COVID-19 pandemic and the subsequent economic impact
on companies within the tourism sector.
As Winter 2020 approached, the number of COVID-19 infections
again rose rapidly across our source markets and destinations. In
November 2020, drastic measures to curb the pandemic were launched
with the introduction of a second partial lockdown, for instance in
Germany. These measures were extended and significantly tightened
towards the end of the month. Our share price responded with
corresponding volatility and came under strong pressure from the
end of November.
At the beginning of December, TUI agreed with private investors,
banks and the German government on a further EUR 1.8 bn support
package, including a rights issue of around EUR 500 m. The main aim
of the package was to secure refinancing options and liquidity and
strengthen the balance sheet structure. In addition to the issuance
of new shares, the package included convertible and non-convertible
silent participation provided by the Economic Stabilisation Fund
(WSF) and a further credit line provided by KfW Bank.
The approval of the first vaccines in Europe at the end of
December 2020 triggered hopes for an end to the pandemic, prompting
positive share price reactions. However, the persistently high
infection figures and debate about further restrictions caused
renewed uncertainty in the market so that the share again came
under pressure. From mid-February 2021, positive sentiment from the
approvals of further COVID-19 vaccines, the global launch of
vaccination campaigns and increased availability and adoption of
rapid tests helped to improve our share price. Our share price
reached a high on 1 March 2021 at EUR 4.45 2 as a result During the
course of March however, doubts about AstraZeneca's vaccine and the
general shortage of vaccines slowed down the vaccination campaign,
leading to a strong fall in our share price again.
1 The contents presented in this chapter are unaudited and
voluntary.
2 Historical prices adjusted for the effect of the rights issue
capital increases. Source: Reuters
In April 2021, TUI successfully issued convertible bonds with a
total nominal amount of around EUR 400 m, followed by an
announcement in June 2021 on the upsizing of the bonds through a
EUR 190 m tap issue. Despite these positive steps, our share price
remained weak, in line with the overall performance of the tourism
sector. During that period, TUI delivered progress in its
asset-right strategy by selling its stake in the real-estate
portfolio consisting of 21 properties previously held jointly with
Riu to the Riu family. At the same time, the Group negotiated a
two-year extension of credit lines worth EUR 4.7 bn to July 2024.
In addition, during the run-up to this extension, the covenant
tests due as at 30 September 2021 and 31 March 2022 were agreed to
be waivered. All of which are key steps towards returning to a
solid and healthy balance sheet structure and a target gross debt
leverage of less than 3x.
TUI share data
30 September 2021
WKN TUAG00
ISIN DE000TUAG000
Stock exchange centres London, Xetra, Hanover
Reuters / Bloomberg TUIGn.DE / TUI1.GR (Frankfurt / Main); TUIT.L / TUI:LN (London)
Stock category Registered ordinary shares
Capital stockEUR 1,099,393,634.00
Number of shares 1,099,393,634
Market capitalisationbn EUR 3.5
Market capitalisationbn GBP 3.0
Long-term development of the TUI share (Xetra) 1
EUR 2017 2018 2019 2020 20212
High 14.90 20.66 16.56 12.67 4.45
Low 11.46 14.34 7.87 2.89 1.60
Year-end share price 14.38 16.56 10.67 3.24 3.19
1 Source: Reuters
2 Historical prices adjusted for the effect of the rights issue
capital increases.
Quotations, indices, and trading
TUI has its primary listing in the Premium segment of the Main
Market of the London Stock Exchange and is included in FTSE's UK
Index Series. It also has a secondary listing in the electronic
trading system Xetra and at the Hanover Stock Exchange.
As TUI shares are traded in a regulated market in Germany in
addition to their London Stock Exchange listing, TUI falls within
the scope of the German Securities Acquisition and Takeover Act and
is monitored by the Federal Financial Supervisory Authority and the
Financial Conduct Authority in this respect.
TUI is also listed in the sustainability index FTSE4Good. In
financial year 2021, the average daily trading volume at the London
Stock Exchange was around 5.0 million shares, while about 8.2
million shares were traded on Xetra. Across all trading platforms,
the daily trading volume in the UK amounted to around 9.1 million
shares, with around 15.7 million shares traded in the euro line.
Both the sterling and the euro lines thus delivered strong
liquidity for trading by institutional and retail investors.
Analyst recommendations
Analyses and recommendations by financial analysts are a key
decision-making factor for institutional and private investors. In
the financial year under review, around 20 analysts regularly
published studies on TUI Group. In September 2021, 5 % of analysts
issued a recommendation to 'buy' the TUI share, with 15 %
recommending 'hold' and 80 % of analysts recommending to 'sell' the
share.
Shareholder structure
At the end of financial year 2021, around 64 % of TUI shares
were in free float. Around 38 % of all TUI shares were held by
private shareholders, around 26 % by institutional investors and
financial institutes, and around 36 % by strategic investors. The
current shareholder structure and the voting right notifications
pursuant to Section 33 of the German Securities Trading Act are
available online at:
www.tuigroup.com/en-en/investors/share/shareholder-structure and
www.tuigroup.com/en-en/investors/news
Dividend policy
Development of dividends and earnings of the TUI share
EUR 2017 2018 2019 2020 2021
Earnings per share + 1.10 + 1.25 + 0.71 - 5.34 - 2.58
Dividend 0.65 0.72 0.54 - -
In connection with the COVID-19 crisis, TUI agreed three
stabilisation packages with the German federal government.
Conditions attached to the support include a de facto dividend
holiday, which will remain in force over the term of the loans and
the duration of the investment provided by both Kfw and the
Economic Stabilisation Fund (WSF).
Investor Relations
Open, continuous dialogue and transparent communication with our
private shareholders, institutional investors, equity and credit
analysts and lenders form the basis for our Investor Relations
engagement. Many discussions were held, centring on the Group
strategy, business performance in the individual segments, the
financing structure and the implications of the COVID-19 crisis,
enabling stakeholders to make a realistic assessment of the future
performance of the TUI share.
In financial year 2021, dialogue with investors primarily
focused on the following topics:
-- The effects of vaccination campaigns and further progress in
tackling the pandemic on booking numbers andcustomers' booking
behaviour
-- Refinancing: Further agreements on financing packages with
the federal government, banks and privateinvestors to immediately
secure liquidity and return to a solid and healthy financing
structure
-- Progress delivered in the asset-right strategy: sale of the
real-estate portfolio of the Riu Hotels S. A.Joint Venture to the
Riu family, sales proceeds of EUR 541 m (excl. earn-out)
-- Progress delivered in the Global Realignment Programme - 60 %
of the planned annual savings of EUR 400 mwere delivered by the end
of the financial year under review
-- Accelerated implementation of the digitalisation strategy -
strong increase in the use of the app bypackage tour customers in
financial year 2021
As usual, TUI's management team sought dialogue with investors
through roadshows and conferences. Against the background of the
COVID-19 pandemic, many of these events were held in a virtual
format. The management met investors from numerous European
financial hubs, and from North America and Asia.
TUI's Investor Relations team also makes every effort to engage
in direct contact with private investors. Due to the COVID-19
situation, however, large in-person events were cancelled in the
financial year under review, and intensive dialogue took place on
the basis of numerous one-on-one discussions. TUI also offers a
broad range of information for analysts, investors and private
shareholders on its website. All financial results conference calls
were transmitted live.
Supervisory Board and Executive Board
TUI AG Supervisory Board
Number of
Name Function / Occupation Location Initial Appointed Other Board Memberships 2 TUI AG shares
Appointments until AGM (direct and
indirect)2
Dr Dieter Chairman of the Supervisory Stuttgart 13.2.2018 2023 b) Veta Health LLC 195,500
Zetsche Board of TUI AG
Deputy Chairman of the
Frank Jakobi1 Supervisory Board of TUI AG Hamburg 15.8.2007 2026 2,401
Travel Agent
Peter Long Deputy Chairman of the Kent 9.2.2016 25.3.2021 8,625
Supervisory Board of TUI AG
Ingrid-Helen Member of the Executive Walldorf 11.2.2020 2024 b) Heineken N. V. 0
Arnold Board, Südzucker AG
Andreas Grethem
Barczewski1 Aircraft Captain 10.5.2016 2026 a) TUIfly GmbH4 0
(OT Buechten)
Regional Head of the
Special Service Division
Peter Bremme1 Hamburg 2.7.2014 2026 a) TÜV Nord AG 0
of ver.di - Vereinte
Dienstleistungsgewerkschaft
Member of the Executive
Dr Jutta A. Board, Frankfurt am b) FMS
Dönges Main 25.3.2021 2025 a) Commerzbank AG Wertmanagement AöR 0
Bundesrepublik Deutschland
- Finanzagentur GmbH
President of Deutsche
Prof. Dr Prüfstelle für a) Metro AG
Edgar Ernst Rechnungslegung Bonn 9.2.2011 2025 0
Vonovia SE4
DPR e. V.
a) Deutscher Reisepreis-
Wolfgang Group Director Financial
Flintermann1 Accounting & Reporting, TUI Großburgwedel 13.6.2016 2026 Sicherungsverein 4,472
AG
VVaG
Vice President Professional b) Alantra
María Garaña Services, Europe, Partners, S. A.
Corces Madrid 11.2.2020 2024 0
Middle East and Africa, Liberbank, S. A.
Adobe Inc.
Angelika Vice President Central 26.3.2012
Gifford Europe, Facebook Inc. Kranzberg 25.3.2021 a) thyssenkrupp AG b) Facebook Inc. 4,100
9.2.2016*
Senior Product Owner
Disposition & Maintenance,
Stefan Airline Nordstemmen 21.7.2020 2026 10,641
Heinemann1
Platform Services, Airline
IT, TUI InfoTec GmbH
Business unit manager of
Dr Dierk the trade union ver.di -
Hirschel1 Berlin 16.1.2015 25.3.2021 a) DZ Bank AG 0
Vereinte
Dienstleistungsgewerkschaft
a) b) Konecranes Plc.
Pensions-Sicherungs-Verein
Janina Kugel Supervisory Board Member & Munich 25.3.2021 2025 Kyndryl Inc. 0
Senior Advisor Versicherungsverein auf
thinkproject
Gegenseitigkeit Deutschland GmbH
Vladimir Special Advisor to CEO OOO 12.2.2014
Lukin Severgroup Moscow 2024 0
5.6.2019*
TUI AG Supervisory Board
Initial Appointed Number of TUI AG
Name Function / Occupation Location Appointments until AGM Other Board Memberships 2 shares (direct
and indirect)2
b) 3i Group PLC
Coline Member of supervisory Fevertree
McConville bodies in different London 12.12.2014 2024 Drinks PLC 0
companies
Travis Perkins
PLC
b) JSC
'Severstal
Management' 3
Alexey Chairman Board of Directors Moscow 9.2.2016 2025 JSC 'Power 0
Mordashov of PAO Severstal Machines' 3
Nord Gold PLC
Lenta IPJSC 3
a) TUI Deutschland
GmbH
Mark Travel agent Hanover 25.3.2021 2026 3,742
Muratovic1 MER -
Pensionskasse V.
V. a. G.
Michael Hotel Manager Hanover 17.4.2013 28.2.2021 1,729
Pönipp1
Department Coordinator in a) Eurogate
Carola the Transportation Division Geschäftsführungs-
Schwirn1 Berlin 1.8.2014 2026 0
of ver.di - Vereinte GmbH & Co. KGaA
Dienstleistungsgewerkschaft
Anette Travel Agent Hemmingen 2.1.2009 2026 8,684
Strempel1
b) Ahungalla
Resorts Ltd.
Joan Trían Executive Board Member of Palma de
Riu Riu Hotels & Resorts Mallorca 12.2.2019 2024 RIUSA II S. A. 0
Riu Hotels S.
A.
Lawyer (in-house lawyer),
Tanja Viehl1 Woelfersheim 25.3.2021 2026 0
Vereinigung Cockpit e. V.
Stefan International Employee b) TUI Austria
Weinhofer1 Relations Coordinator at Vienna 9.2.2016 2026 Holding GmbH 0
TUI AG
1 Representative of the employees
2 Information refers to 30 September 2021 or date of resignation
from the Supervisory Board of TUI AG in financial year 2021.
3 Chairman
4 Deputy Chairman
* New Appointment
a) Membership in supervisory boards within the meaning of
section 125 of the German Stock Corporation Act (AktG)
b) Membership in comparable German and non-German bodies of
companies within the meaning of section 125 of the German Stock
Corporation Act (AktG)
TUI AG Executive Board
Number of TUI AG
Name Department Other Board Memberships shares
(direct and
indirect)1
Friedrich Joussen
(Age: 58)
Member of the Executive Board
since October 2012, a) TUI Deutschland
GmbH²
CEO since February 2013, Chairman b) RIUSA II S. A.2 855,788
TUIfly GmbH²
Joint-CEO since December 2014,
CEO since February 2016,
Current appointment until
September 2025
Birgit Conix
(Age: 56)
CFO 0
Member of the Executive Board
since July 2018
Appointment until December 2020
b) First Choice Holidays
Ltd.
First Choice Holidays &
Flights Ltd.
First Choice Olympic Ltd.
David Burling Sunwing Travel Group Inc.
(Age: 53) TUI Canada Holdings Inc.
a) TUI Deutschland GmbH
Member of the Executive Board CEO Markets TUI Northern Europe Ltd. 30,351
since June 2015 TUIfly GmbH
TUI Nordic Holdings Sweden
Current appointment until May AB
2024
TUI Travel Group Management
Services Ltd.
TUI Travel Holdings Ltd.
TUI Travel Ltd.
TUI Travel Overseas Holdings
Ltd.
a) BRW Beteiligungs AG
Sebastian Ebel
Eves Information
(Age: 58) Technology AG2
b) RIUSA II S. A.
Member of the Executive Board CFO TCT TechnikCentrumThale 23,725
since December 2014 GmbH TUI China
Current appointment until AeroSys AG
December 2023
Compass Group
Deutschland GmbH
Dr Elke Eller
(Age: 59)
CHRO / Labour a) K+S AG 41,980
Member of the Executive Board Director
since October 2015
Appointment until June 2021
Peter Krueger
b) Director at Sunwing
(Age: 45) Travel
Member of the Executive Board CSO Group Inc. 81,404
since January 2021
Old Court Management Limited
Current appointment until
December 2023
Sybille Reiss
(Age: 45)
CHRO / Labour a) TUI Deutschland GmbH
Member of the Executive Board Director 745
since July 2021 TUIfly GmbH
Current appointment until June
2024
Frank Rosenberger
(Age: 53)
Member of the Executive Board CIO a) Peakwork AG 9,310
since January 2017
Current appointment until
December 2023
1 Information refers to 30 Sep 2021 or date of resignation from
the Excecutive Board in financial year 2021.
2 Chairman a) Membership in Supervisory Boards required by law
within the meaning of section 125 of the German Stock Corporation
Act (AktG) b) Membership in comparable Boards of domestic and
foreign companies within the meaning of section 125 of the German
Stock Corporation Act (AktG)
Corporate Governance Report
Statement on Corporate Governance (as part of the Management
Report)
The actions of TUI AG's management and oversight bodies are
determined by the principles of good and responsible corporate
governance.
The Executive Board and the Supervisory Board discussed
Corporate Governance issues in financial year 2021. In this
chapter, the Executive Board provides - also for the Supervisory
Board - the report on Corporate Governance in the Company pursuant
to Principle 22 of the German Corporate Governance Code in the
version dated 16 December 2019 (DCGK) and section 289a of the
German Commercial Code (HGB) as well as Disclosure and Transparency
Rule (DTR) 7.2 and Listing Rule (LR) 9.8.7R.
Declaration of Compliance pursuant to section 161 of the German
Stock Corporation Act (AktG)
As a stock corporation company under German law, TUI AG's
Executive Board and Supervisory Board are obliged to submit a
declaration of compliance with the DCGK pursuant to section 161 of
the German Stock Corporation Act.
www.dcgk.de/en/code.html
Wording of the Declaration of Compliance for 2021
'In accordance with section 161 of the German Stock Corporation
Act, the Executive Board and Supervisory Board hereby declare:
Since the last declaration of compliance was submitted in
September 2021, the recommendations of the German Corporate
Governance Code in it applicable version have been and will be with
the exception of several Recommendations in Section G. I.3.
observed.
Recommendations for determining the variable remuneration
components (Section G. I.3.)
In the framework of the stabilisation measures agreed with the
Economic Stabilisation Fund, restrictions were agreed for TUI AG
regarding the remuneration of Executive Board members. These
restrictions lead to the situation that the members of the
Executive Board will not be granted and thus will not be
constituted variable or comparable remuneration during the
stabilisation measures. In this respect, Recommendations G.6 (Share
of variable remuneration resulting from long-term and short-term
targets), G.7 (Determination of performance criteria for all
variable remuneration components), G.9 sentence 1 (Determination of
the amount of variable remuneration to be granted) and G.11
sentence 1 (Consideration of extraordinary developments for
variable remuneration) are void and as a precautionary measure, a
deviation from these recommendations is declared.'
Place of publication:
www.tuigroup.com/en-en/investors/corporate-governance
Declaration of Compliance pursuant to DTR 7.2 and LR 9.8.7R
As an overseas company with a premium listing on the London
Stock Exchange, TUI AG's Executive Board and Supervisory Board are
obliged pursuant to No. 7.2 DTR and LR 9.8.7R to make a statement
on the application of the UK Corporate Governance Code (UK CGC).
Since the German Corporate Governance Code also applies to TUI AG
as a stock corporation under German law, TUI AG had announced at
the time of its merger with TUI Travel PLC that it would also
comply with the UK CGC to the extent practicable.
https://www.frc.org.uk/getattachment/88bd8c45-50ea-4841-95b0-d2f4f48069a2/
2018-UK-Corporate-Governance-Code-FINAL.PDF
In many respects, the requirements of the DCGK and the UK Code
are similar. However, there are certain aspects that are not
compatible, which are explained below. Therefore some deviations
from Code requirements and best practice in the UK have been
necessary.
Under the German Stock Corporation Act, the legislation
applicable to TUI AG, a two-tier board system is mandatory (see
below section 'Functioning of the Executive and Supervisory Board'
on page 113). The two-tier board structure is different to the UK
unitary board structure on which the UK Code is based. Some of the
principles of composition and operation of the boards of a German
stock corporation also differ from those of a UK company (for
example, there is no Company Secretary). For this reason, the
Executive Board and the Supervisory Board have set out below in
which areas the UK Code is not complied with and explained the
reasons for the deviations. In addition, the Executive Board and
the Supervisory Board have also explained those instances where
they consider TUI AG not to be compliant with the UK Code in the
literal sense but where it lives up to the spirit and meaning of
the respective regulation.
Sub-headings refer to sections of the UK Code for ease of
reference for investors.
Wording of the UK Corporate Governance Statement 2021
'Executive Board and Supervisory Board declare pursuant to DTR
7.2 and LR 9.8.7R:
Throughout the reporting period, TUI AG has complied with the
provisions of the UK Code in the version of July 2018, including
its main principles, except as set out and explained below.'
Place of publication:
www.tuigroup.com/en-en/investors/corporate-governance
Dialogue with shareholders (Provision 3)
It is still not widespread practice in German companies for
committee chairs to make themselves available for meetings with
shareholders. The German Corporate Governance Code stipulates in
the Suggestion A.3 that the Chairman of the Supervisory Board
should be available - within reasonable limits - to discuss
Supervisory Board-related issues with investors.
The table below provides an overview of all appointments of the
Executive Board with shareholders, in some of which also employees
of Investor Relations participated.
Dialogue with shareholders
Date Meeting Participants
Financial year 2020 Results Presentation FJ, BC, SE
December 2020
virtual Roadshow UK FJ, BC, SE
EGM (virtual) FJ, SE
January 2021 virtual Deal Roadshows FJ, SE
virtual Commerzbank German Investment Seminar SE
virtual UniCredit / Kepler Cheuvreux 20th German Corporate Conference SE
February 2021 FY21 Q1 Results Presentation (virtual) FJ, SE
AGM (virtual) FJ, SE
March 2021 FY21 H1 Results Presentation FJ, SE
May 2021 virtual Roadshow London FJ, SE
virtual Roadshow Frankfurt / Zurich FJ, SE
virtual Roadshow Paris SE
June 2021 virtual dbAccess Berlin Conference SE
August 2021 FY21 Q3 Results Presentation FJ, SE
Stifel 5th Transportation Conference SE
September 2021 Commerzbank virtual Sector Conference SE
Berenberg & Goldman Sachs virtual German Corporate Conference SE
Bernstein virtual Strategic Decision Conference FJ, SE
Key: Friedrich Joussen (FJ), Birgit Conix (BC), Sebastian Ebel
(SE)
The Supervisory Board receives feedback from the Chairman and
Executive Board members following meetings with major shareholders
or investors. Additionally, a monthly Investor Relations Report and
event-driven assessments of brokers are forwarded to the Executive
Board and the Supervisory Board. They contain updates on the share
price development, analyses of the shareholder structure as well as
purchases and sales of shares and feedback and assessments from
investors. The Executive Board and the Supervisory Board consider
that TUI AG lives up to the spirit and meaning of the UK Code.
Independence of Supervisory Board members (Provision 10)
Under the UK Code, the Board must identify in the annual report
each non-executive director it considers to be 'independent' for
the purposes of the UK Code. Based on the responsibilities assigned
to the Supervisory Board by the German Stock Corporation Act, the
members of the Supervisory Board are considered to be non-executive
directors for the purposes of the UK Code. Under the UK Code,
persons are 'independent' if they are independent in character and
judgement and if there are no relationships or circumstances which
are likely to affect, or could appear to affect, their judgement.
TUI AG does not, however, extend its independence disclosures to
its 10 employee representatives on the Supervisory Board (for a
detailed explanation of shareholder and employee representatives
and the underlying considerations, please see below).
The Supervisory Board has determined that five of its nine
shareholder representatives (the Chairman is not taken into account
according to the UK Code) are independent for the purposes of the
UK Code. The shareholder representatives considered to be
independent are: Ms Ingrid-Helen Arnold, Prof. Dr Edgar Ernst, Ms
María Garaña Corces, Ms Janina Kugel and Ms Coline McConville.
Additionally, the Chairman, Dr Dieter Zetsche, was independent on
election in 2019 and is still considered independent (Dr Dieter
Zetsche also was independent when he was elected to the Supervisory
Board in February 2018).
Prof. Dr Ernst has been a member of the Supervisory Board of TUI
AG since 9 February 2011. According to the UK Code, it is an
indication of a lack of independence if a member has been on the
supervisory board for more than nine years; according to the DCGK,
it is an indication of a lack of independence from the management
board and the company if a member has been on the supervisory board
for more than twelve years. In view of this, the shareholder
representatives on the Supervisory Board have taken a close look at
how they assess Prof. Dr Ernst's independence. In particular in
view of Prof. Dr Ernst's professional career, the shareholder
representatives have come to the conclusion that Prof. Dr Ernst -
also taking into account his membership on the Supervisory Board of
TUI AG of over ten years - provides the necessary critical distance
from the Executive Board and the Company and therefore consider him
to be independent. Prof. Dr Ernst has exhibited his critical
distance from the Executive Board and the Company in the past,
especially in his position as Chairman of the Audit Committee.
The members of the Supervisory Board not considered to be
independent for the purposes of the UK Code are Dr Jutta Dönges, Mr
Vladimir Lukin, Mr Alexey Mordashov, and Mr Joan Trían Riu.
In reaching its determination, the Supervisory Board has
considered, in particular, the factors set out below.
Shareholder and employee representatives
The Supervisory Board of TUI AG consists of ten members who are
elected by shareholders at AGM (the 'Shareholder Representatives')
and ten members who represent the employees of TUI AG (the
'Employee Representatives'). This differs from UK practice where
only those board members representing major shareholders are
typically referred to as 'Shareholder Representatives' and are not
considered independent under the UK Code because of their link to a
significant shareholder.
At TUI AG, the shareholder representative Mr Joan Trían Riu (Riu
Hotels, approx. 3.55 % of the voting rights) is linked to a major
shareholder. Mr Alexey Mordashov notified us on 21 June 2019 that
his share in the total voting rights in TUI AG had fallen to zero.
At the same time, the company was informed that the corresponding
approx. 32 % of the voting rights are held via Unifirm Ltd.
controlled by KN-Holding LLC and that Mr Mordashov indirectly holds
35 % of the shares in Unifirm Ltd. Unifirm Ltd. is considered a
controlling shareholder under the UK Listing Rules Appendix 1 (see
also the following section). There is also a joint venture between
TUI AG and Riu Hotels S. A. Dr Jutta Dönges is Managing Director of
the Finance Agency GmbH of the Federal Republic of Germany. On 4
January 2021, TUI AG entered into Framework Agreement with the
Economic Stabilisation Fund (WSF) represented by Finance Agency
GmbH regarding the WSF's entry into the silent participations and
the further measures under the stabilisation package. Dr Dönges was
nominated by the WSF for membership of the Supervisory Board of TUI
AG. Mr Vladimir Lukin is a Special Advisor to the CEO of OOO
Severgroup and is therefore associated with Mr Mordashov.
Therefore, neither Dr Dönges, Mr Mordashov, Mr Lukin nor Mr Trían
Riu are considered independent for the purposes of the UK Code.
On 15 December 2020, TUI AG and Unifirm Ltd. entered into a
Relationship Agreement which has been in effect since Unifirm Ltd.
holds 30 % or more of the shares in the company and is therefore
deemed to be a controlling shareholder within the meaning of LR
Appendix 1. The main purpose of the Relationship Agreement is to
ensure that the company and its subsidiaries are able to conduct
their business independently. In this context, pursuant to LR 9.8.4
(14), the Executive Board and the Supervisory Board declare that
TUI AG complies with the requirements of the Listing Rules with
regard to the controlling shareholder and that, as far as TUI AG is
aware, Unifirm Ltd. both complies with these requirements itself
and ensures that its affiliates comply with them.
Seven of the ten employee representatives of the Supervisory
Board are elected by the employees of TUI Group entitled to vote.
Three employee representatives are nominated by a German trade
union.
Under the UK Code, directors who are or have been employees of
the Group in the last five years or who participate in the Group's
pension arrangements would generally not be considered independent.
In the UK, directors with an employment relationship are normally
current or former executives. By contrast, under German law,
employee representatives of the Supervisory Board must be employees
of the Group, and must be elected by the employees without any
involvement of the Executive or Supervisory Boards. Furthermore,
the employment contract of employee representatives may only be
terminated in exceptional cases.
The employee representatives may also participate in Group
pension schemes as is normal for employees and in their capacity as
employees.
Trade union representatives are nominated, and employed by the
trade union but are still classified as employee representatives.
They can only be removed from the Supervisory Board by their
respective union and neither the Executive nor the Supervisory
Board has any role in their appointment or removal.
Half the Board should be independent Non-executive Directors
(Provision 11)
As mentioned above, TUI AG's Supervisory Board consists of ten
employee and ten shareholder representatives. As the employee
representatives are not considered independent under the UK Code,
TUI AG's Supervisory Board comprises five (excluding the Chairman
of the Supervisory Board) independent shareholder
representatives.
Identification of Senior Independent Director (Provision 12)
Under German law and the DCGK, there is no concept of a 'Senior
Independent Director'. Instead, shareholders may raise any issues
at the Annual General Meeting (AGM). In this forum, the Executive
Board and the Chairman of the Supervisory Board are available to
address any issues and are legally obliged to provide adequate
responses.
Outside the AGM, shareholders may approach the Executive Board,
in particular the CEO or the CFO, or, for topics relating to
Supervisory Board matters, the Chairman of the Supervisory Board or
his Deputy. Mr Frank Jakobi, as employee representative, is Deputy
Chairman in accordance with the German Co-Determination Act.
Division of responsibilities - Chairman & Chief Executive
(Provision 14)
The separation of the roles of the Chairman of the Supervisory
Board (Dr Dieter Zetsche) and the CEO (Mr Friedrich Joussen) is
clearly defined under German law as part of the two-tier board
structure. Therefore, no further division of their responsibilities
as well as responsibilities of the Executive Board and the
Supervisory Board is required or even possible. In addition, the
division of responsibilities within the Executive Board and the
Supervisory Board as well as its committees also results directly
from legislation and the respective terms of reference. Therefore,
the Executive Board and the Supervisory Board consider that TUI AG
lives up to the spirit and meaning of the UK Code.
Advice and service of the Company Secretary (Provision 16)
There is no specific role of Company Secretary in German
companies. However, Executive and Supervisory Board members have
access to the Board Office of TUI AG if they need any advice on all
governance matters or other services. The Board Office acts as an
interface in corporate matters for the Executive and Supervisory
Board members and is responsible for ensuring that the requisite
processes and procedures are in place governing all Executive and
Supervisory Board meetings (i. e. preparation of agendas, minuting
of meetings and ensuring compliance with German and UK law, as
appropriate, and with recommendations for corporate governance).
The Board Office also supports the Chairman of the Supervisory
Board, the CEO, the CFO and the Chairmen of the Audit and the
Strategy Committees. Executive and Supervisory Board members also
have access to legal advice via the Group Director Legal,
Compliance & Board Office and via the Board Office. The
Supervisory Board can also approach the Executive Board directly
for specific advice on any matters. Accordingly, the Executive
Board and the Supervisory Board consider that TUI AG lives up to
the spirit and meaning of the UK Code.
Nomination Committee - Composition and responsibilities
(Provision 17)
The role of the Nomination Committee in a typical UK company is
fulfilled in TUI AG by two Committees of the Supervisory Board:
Under the Terms of Reference for the Supervisory Board and its
Committees (which are equivalent to the Terms of Reference of a
British corporation) the Nomination Committee considers and
proposes suitable candidates as shareholder representatives to the
Supervisory Board for its election proposals to the AGM. The
Presiding Committee determines the requirements and remuneration
for any new appointments to the Executive Board and recommends
suitable candidates to the Supervisory Board. On that basis, the
Supervisory Board appoints Executive Board members. This approach
is different from the UK where all director appointments are
approved by shareholders at the AGM. Succession planning for
management levels below Executive Board is carried out by the
Executive Board.
However, as is common practice in Germany, at each AGM
shareholders are asked to decide whether they approve the actions
of the Executive Board and Supervisory Board members during the
past financial year. Since the AGM 2015, in the light of UK
practice, TUI AG has changed its procedure to allow a separate vote
on each individual Executive Board and Supervisory Board member, as
it is customary in the UK.
TUI AG intends to continue this practice. Accordingly, the
Supervisory Board considers that TUI AG lives up to the spirit and
meaning of the UK Code to the extent practicable.
Annual re-election by shareholders at the AGM (Provision 18)
None of the Executive or Supervisory Board members is re-elected
annually. However, as noted above, in light of the UK Code and UK
best practice, TUI AG voluntarily puts individual resolutions
approving the actions of each Executive and Supervisory Board
member to the AGM resolving on the annual financial statements for
the previous year. TUI AG intends to continue this practice.
The end of appointment periods for Supervisory Board members are
disclosed in the table from page 105.
Current curricula vitae of all Executive and Supervisory Board
members are published at www.tuigroup.com/en-en/
investors/corporate-governance.
Board performance evaluation (Principle L and Provision 21)
The performance of each individual Executive Board member is
evaluated annually by the Supervisory Board for the annual
performance-based remuneration. In this context, the Supervisory
Board also reviews the individual member's overall performance as
part of the Executive Board. However, no external performance
evaluation is done for the Executive Board.
It is not customary to conduct annual reviews of the Supervisory
Board's efficiency. Each Supervisory Board member can give feedback
to the Chairman, the Deputy Chairman or the Supervisory Board as a
whole as and when appropriate or required.
External evaluation, which includes the work of the Chairman of
the Supervisory Board, is performed by means of individual
interviews and anonymous reviews. Executive Board members are
invited to contribute to the process. Consolidated results are
shared with the entire Supervisory Board and appropriate actions
are suggested and discussed as appropriate. The last external
review of the Supervisory Board was undertaken in 2015 by Board
Consultants International. Board Consultants International has no
other connection with TUI AG. Due to the forthcoming change in the
chairmanship of the Supervisory Board, an internal efficiency audit
was conducted at the end of 2018, which was accompanied by a notary
of GÖHMANN Rechtsanwälte und Notare to ensure anonymity. At its
last meeting on 12 September 2019, the Supervisory Board, now
chaired by Dr Dieter Zetsche, dealt with the measures derived from
the results of the efficiency audit. Due to the change in the
chairmanship of the Supervisory Board, no efficiency review was
planned for 2019. Rather, the Supervisory Board concentrated on
implementing the measures derived from the efficiency review. The
Supervisory Board discussed this issue and decided to return to the
subject of external efficiency audits in 2020, after an appropriate
number of meetings had been held under the chairmanship of Dr
Dieter Zetsche. Due to the COVID-19 pandemic, the efficiency audit
(currently under the DCGK self-assessment) was conducted internally
at the end of September 2020. The Presiding Committee and the
Supervisory Board have subsequently dealt with the results and
derived measures from them. These primarily concern the work of the
Supervisory Board, the organisation of the meetings and the main
topics the Supervisory Board would like to deal with in more
detail.
Nomination Committee - Section in the Annual Report (Provision
23)
For the activities of the Nomination Committee, see page 16
which is part of the Chairman's letter to shareholders. The
succession planning approach is outlined on page 112. The policy on
diversity and inclusion can be found on page 116. For evaluation of
the performance of the board, see above.
Composition of the Audit Committee (Provision 24)
Neither German law nor the German Corporate Governance Code
stipulates that the Chairman of the Supervisory Board should not be
a member of the audit committee and that the audit committee may
only consist of independent members. The audit committee consists
of Dr Zetsche as Chairman of the Supervisory Board, Dr Dönges and
Mr Lukin, who are not considered to be independent. TUI AG
therefore does not fully meet the requirements of the UK CGC, but
is of the opinion that the current composition of the audit
committee ensures reliable work based on experience.
Fair, balanced and understandable Annual Report & Accounts
(Provision 27)
In a German stock corporation the Executive Board is responsible
for drafting the Annual Report & Accounts (ARA). According to
section 243 (2) of the German Commercial Act (HGB) the ARA must be
clearly arranged and should present a realistic picture of the
Company's economic situation. This is equivalent to the UK Code
requirement for the ARA to be fair, balanced and understandable.
Although this assessment has not been delegated to the Audit
Committee, the Executive Board is convinced that this ARA satisfies
both requirements.
Established and operation of Remuneration Committee (Provision
32, 34 and 41)
In the German governance structure there is no separate
Remuneration Committee. The remuneration of the Executive Board is
under involvement of the employee representatives monitored and
agreed by the Supervisory Board based on recommendations from the
Presiding Committee, which is governed by the Supervisory Board
Terms of Reference.
The remuneration of the members of the Supervisory Board and the
members of the Supervisory Board Committees is governed by the
Articles of Association as resolved on by the shareholders at the
AGM.
See the Directors' Remuneration Report from page 121 for full
details on Executive and Supervisory Board member's remuneration
and our website.
www.tuigroup.com/en-en/investors/corporate-governance
Policy for post-employment shareholding requirements (Provision
36)
Neither German law nor the German Corporate Governance Code
requires the company to implement a policy for post-employment
shareholding requirements. According to the remuneration system
approved by the Annual General Meeting in 2021, no policy is
provided for post-employment shareholding requirements.
Notice periods for Executive Directors (Provision 39)
In accordance with the customary practice in Germany members of
the Executive Board are generally appointed for a term of three to
five years. The appointments of respective members of the Executive
Board was extended by three years in financial year 2020. This is
not yet fully in line with the UK CGC recommendation that notice
periods or contract terms should be set at one year or less.
However, the contracts include maximum limits on the amounts
payable on termination.
See Remuneration Report from page 128.
Further information on Corporate Governance
Functioning of the Executive and Supervisory Boards
TUI AG is a company under German law. One of the fundamental
principles of German stock corporation law is the dual management
system involving two bodies, the Executive Board in charge of
managing the company and the Supervisory Board in charge of
monitoring the company. TUI AG's Executive Board and Supervisory
Board cooperate closely and in a spirit of trust in managing and
overseeing the Company, with strict separation between the two
bodies in terms of their membership and competences. Both bodies
are obliged to ensure the continued existence of the Company and
sustainable creation of added value in harmony with the principles
of the social market economy.
TUI AG's Executive Board comprised six members as at the closing
date 30 September 2021. The Executive Board is responsible for
managing the Company's business operations in the interests of the
Company. The Executive Board works on the basis of terms of
reference issued by the Supervisory Board. The allocation of
functions and responsibilities to individual Board members is
presented in a separate section.
For functions, see tables 'Supervisory Board and Executive
Board' on page 105.
In accordance with the law and the Articles of Association, the
Supervisory Board had 20 members at the balance sheet date, i. e.
30 September 2021. As the oversight body, the Supervisory Board
provided on-going advice and supervision for the Executive Board in
managing the Company in financial year 2021, as required by the
law, the Articles of Association and its own Terms of Reference.
The Supervisory Board is involved in strategic and planning
decisions and all decisions of fundamental importance to the
Company. When the Executive Board takes decisions on major
transactions, such as the annual budget, major acquisitions or
divestments, it is required by its terms of reference to seek the
approval of the Supervisory Board. The Chairman of the Supervisory
Board coordinates the work in the Supervisory Board, chairs its
meetings and represents the concerns of the body externally. The
Supervisory Board and the Audit Committee have adopted terms of
reference for their own work. The Terms of Reference of the
Supervisory Board are available on the company's website.
For further details, please refer to the Report of the
Supervisory Board on page 11.
TUI AG has taken out a D&O insurance policy for all members
of the Executive Board and Supervisory Board, providing for a
deductible for Executive Board members in accordance with the
statutory requirements of the German Stock Corporation Act. The
deductible amounts to 10 % of the loss up to the amount of one and
a half times the fixed annual compensation.
Composition of the Supervisory Board
TUI AG falls within the scope of the German Industrial
Co-Determination Act (MitbestG). The Supervisory Board is therefore
composed of an equal number of shareholder representatives and
employee representative. Employee representatives within the
meaning of the Act include a senior manager (section 5 (3) of the
German Works Constitution Act) and three trade union
representatives.
The composition of the Supervisory Board in financial year 2021
ensured that its members as a group had the knowledge, ability and
expert experience required to properly complete their tasks. The
goals set by the Supervisory Board itself for its composition
include in particular comprehensive industry knowledge, at least
five independent shareholder representatives, at least five members
with international experience, and diversity (see also the
diversity concepts for the Supervisory Board and the Executive
Board from page 116 of this report).
Twelve members of the Supervisory Board had considerable
international experience. Due to the different professional
experiences of its members, the composition of the Supervisory
Board overall reflects a great diversity of relevant experience,
ability and industry knowhow. Six shareholder representatives are
independent (including the Chairman of the Supervisory Board, who
can be included in the count according to the German Corporate
Governance Code). The six independent members from the Company and
its Executive Board were Ms Ingrid-Helen Arnold, Prof. Dr Edgar
Ernst, Ms María Garaña Corces, Ms Janina Kugel, Ms Coline
McConville and Dr Dieter Zetsche. Furthermore, TUI AG has no
controlling shareholder within the meaning of the German Corporate
Governance Code.
The members of the Supervisory Board take responsibility for
undertaking any training or professional development measures
necessary to fulfil their duties and they receive support in this
respect from the company. The company regularly informs its members
about current changes in the legislation as well as about relevant
topics relating to the company and corporate governance. As part of
the preparation for the capital increase, all members of the
Supervisory Board received a training on the rights and obligations
in connection with their membership on the Supervisory Board of a
public limited company. The training was conducted by an external
renowned law firm. Furthermore, at the meeting in September 2021,
the members were informed about the legal changes introduced with
the entry into force of the Financial Market Integrity
Strengthening Act (FISG). New members of the Supervisory Board are
given the opportunity to be introduced in detail to key issues of
the Supervisory Board as part of the onboarding programme. In
addition, they have meetings with members of the Executive Board in
order to receive further information on their respective areas of
responsibility.
Conflicts of interest
Executive and Supervisory Board members are bound to observe the
TUI AG's best interests. In addition, Executive Board members are
subject to comprehensive non-compete clauses throughout the
duration of their appointment. In the completed financial year
2021, there were no conflicts of interest requiring disclosure to
the Chairmen of the Supervisory Board or the Executive Board. None
of the Executive Board or Supervisory Board members has a board
role or a consultancy contract with one of TUI's competitors.
In accordance with the Framework Agreement that the Company
entered into with the WSF dated 4 January 2021, the WSF was
involved in the selection of the candidates Dr Jutta Dönges and Ms
Janina Kugel for the Supervisory Board as the Framework Agreement
provides for the obligation of the Executive Board and the
Supervisory Board, to the extent legally permissible, to endeavour
to procure that two persons nominated by the WSF will become
members of the Supervisory Board. Other than that, no current
member of the Executive Board has been appointed, and no member of
the Supervisory Board has been elected, pursuant to any arrangement
or understanding with major shareholders, customers, suppliers or
others. There are no family relationships between any current
members of the Executive Board or Supervisory Board.
Specifications pursuant to sections 76 (4), 111 (5) of the
German Stock Corporation Act
At least 30 % of the Supervisory Board members were women and at
least 30 % were men at the balance sheet date. The Supervisory
Board was therefore compliant with section 96 (2) sentence 1 of the
German Stock Corporation Act. Neither the shareholder nor the
employee representatives of the Supervisory Board have objected
with regard to overall compliance in accordance with section 96 (2)
sentence 2 of the German Stock Corporation Act.
In a resolution dated 15 September 2020, the Supervisory Board
extended the target of one woman in the Executive Board until 30
September 2023 in accordance with section 111 (5) of the German
Stock Corporation Act. This target was achieved in the reporting
period with the membership of Dr Elke Eller and her subsequent
replacement by Ms Sybille Reiss from 1 July 2021.
In turn, the Executive Board resolved, in keeping with section
76 (4) of the German Stock Corporation Act, that women should
account for 25 % of executives at the level immediately below the
Executive Board and 30 % at the level below this. Both targets
should be reached by 30 September 2023. For this reason, TUI AG has
implemented various measures over the past years aimed at
increasing the proportion of women on a long-term and sustainable
basis. This includes, among other things, the promotion of women in
talent programmes and specifically addressing them in the
recruitment process. In addition, at least one woman should always
be on the shortlist in the recruitment process for positions in the
Senior Leadership Team. Despite all the measures taken, the
suitability and qualification of candidates for filling vacant
positions are still of primary importance. With the proportion of
women of 24 % at the first management level below the Executive
Board, we have almost reached the target of 25 %. At the second
management level below the Executive Board, the proportion of women
was increased from 22 % to 24 %, so we are gradually moving towards
the target of 30 %.
Shareholders and Annual General Meeting
TUI AG shareholders exercise their co-determination and
monitoring rights at the Annual General Meeting, which takes place
at least once a year. The AGM takes decisions on all statutory
matters, and these are binding on all shareholders and the Company.
For voting on resolutions, each share confers one vote.
All shareholders registering in due time are entitled to
participate in the Annual General Meeting. Shareholders who are not
able to attend the AGM in person are entitled to have their voting
rights exercised by a bank, a shareholder association, one of the
representatives provided by TUI AG and acting on the shareholders'
behalf in accordance with their instructions, or some other proxy
of their own choosing. Shareholders also have the opportunity of
authorising the representative provided by TUI AG via the web in
the run-up to the AGM. Shareholders can, moreover, register for
electronic dispatch of the AGM documents.
The invitation to the AGM and the reports and information
required for voting are published in accordance with the provisions
of the German Stock Corporation Act and provided in German and
English on TUI AG's website. During the AGM, the presentations by
the chairman of the Supervisory Board and the Executive Board
members can be followed live over the Internet.
Statement pursuant to Provision 4 UK CGC
At the Annual General Meeting of TUI AG on 25 March 2021 the
resolution approving the re-election of Mr Alexey Mordashov to the
Supervisory Board of the Company (Resolution 8.4) received 75.61 %
votes in favour and 24.39 % votes against (with 0.67 % of votes
withheld and so not counted). As more than 20 % of the votes cast
were against the resolution the Company has sought to understand
the reasons for this, as required by the UK CGC.
Based on consultations with both shareholders and proxy
advisors, the Company believes the main reason for the level of
votes cast against the resolution was shareholders following their
own proxy guidelines and / or the recommendation of certain proxy
advisors to vote against the resolution. The Company believes this
recommendation was based on the number of non-independent members
of the Supervisory Board. Mr Mordashov is considered
non-independent under the UK CGC as a result of his connection to
Unifirm Ltd., which is the Company's largest shareholder currently
holding approximately 32 % of the Company's total issued share
capital.
The Company believes that Mr Mordashov has been an effective
member of the Supervisory Board and will continue to be so for the
remainder of his term in office. In this respect, the Company also
notes that at the 2021 AGM a resolution to approve the actions of
Mr Mordashov as a member of the Supervisory Board for the financial
year ended 30 September 2020 (Resolution 3.17) received 99.65 %
votes in favour and 0.35 % votes against (with 19.09 % of votes
withheld and so not counted). The Company further notes that
Unifirm Ltd. has been a supportive shareholder for the Company
during the COVID-19 pandemic, including making a material
additional investment in the Company.
As a consequence of the Company's view of why more than 20 % of
the votes were cast against the resolution approving the
re-election of Mr Mordashov to the Supervisory Board, the Company
does not believe it is necessary or appropriate to take any
additional action.
Risk management
Good corporate governance entails the responsible handling of
commercial risks. The Executive Board of TUI AG and the management
of the TUI Group have comprehensive general and company-specific
reporting and monitoring systems available to identify, assess and
manage these risks. These systems are continually developed,
adjusted to match changes in overall conditions and reviewed by the
auditors. The Executive Board regularly informs the Supervisory
Board about existing risks and changes to these risks. The Audit
Committee deals in particular with monitoring the accounting
process, including reporting, the effectiveness of the internal
control and risk management systems and the internal auditing
system, compliance and audit of the annual financial
statements.
More detailed information about risk management in the TUI Group
is presented in the Risk Report. It also contains the report on the
accounting-related internal control and risk management system
required in accordance with the German Commercial Code (sections
289 (5), 315 (2) no. 5 HGB).
Risk Report see page 35.
Transparency
TUI provides immediate, regular and up-to-date information about
the Group's economic situation and new developments to capital
market participants and the interested public. The Annual Report
and the Interim Reports are published within the applicable
timeframes. The Company publishes press releases and ad hoc
announcements, if required, on topical events and any new
developments. Moreover, the company website at www.tuigroup.com
provides comprehensive information on TUI Group and the TUI
share.
The scheduled dates for the principal regular events and
publications - such as the AGM, Annual Report and Interim Reports -
are set out in a financial calendar. The calendar is published well
in advance and made permanently accessible to the public on TUI
AG's website.
Directors' dealings
The Company was informed by Mr David Burling, Mr Sebastian Ebel,
Dr Elke Eller, Mr Stefan Heinemann, Mr Friedrich Joussen, Mr Peter
Krueger, Mr Peter Long, Mr Alexey Mordashov (via Unifirm Limited),
and Dr Dieter Zetsche of notifiable purchase and sale transactions
of TUI AG shares or related financial instruments by directors
(directors' dealings or managers' transactions) concerning
financial year 2021. Details are provided on the Company's
website.
Purchase and sales transactions by members of the boards are
governed by the Group Manual Share Dealings by Restricted Persons,
approved by the Executive Board and the Supervisory Board,
alongside corresponding statutory provisions. The Group Manual
Share Dealings by Restricted Persons stipulates above all an
obligation to receive a clearance to deal for transactions with TUI
AG's financial instruments.
Accounting and auditing
TUI AG prepares its consolidated financial statements and
consolidated interim financial statements in accordance with the
provisions of the International Financial Reporting Standards
(IFRS) as applicable in the European Union. The statutory annual
financial statements of TUI AG, which form the basis for the
dividend payment, are prepared in accordance with the German
Commercial Code (HGB). The consolidated financial statements are
prepared by the Executive Board, audited by the auditors and
approved by the Supervisory Board. The interim report is discussed
between the Audit Committee and the Executive Board prior to
publication. The consolidated financial statements and the
financial statements of TUI AG were audited by Deloitte GmbH
Wirtschaftsprüfungsgesellschaft, Hanover, the auditors elected by
the 2021 Annual General Meeting. The audit was based on German
auditing rules, taking account of the generally accepted auditing
standards issued by the German Auditors' Institute as well as the
International Standards on Auditing. It also covered the risk
detection system. A review pursuant to Listing Rule 9.8.10 R (1)
and (2) was carried out.
See audit opinion by the auditors on page 249.
The condensed consolidated interim financial statement and
management report as of 31 March 2021 was reviewed by the auditors.
In addition, a contractual agreement was concluded with the
auditors to the effect that the auditors will immediately inform
the Supervisory Board or the audit committee about all findings and
issues of importance for its tasks which come to the knowledge of
the auditors during the performance of the audit. Furthermore, it
was agreed with the auditors that they inform the Supervisory Board
or the audit committee and note in the audit report if during the
performance of the audit, any facts were identified that indicate
an inaccuracy in the Declaration of Compliance regarding the
recommendations of the DCGK issued by the Executive Board and
Supervisory Board. There were no grounds to provide such
information in the framework of the audit of financial year
2021.
Engagement with our stakeholders
Under the UK CGC, TUI AG is required to provide information on
how it complies with the requirements of section 172 of the
Companies Act 2006, including how it takes into account the
interests of key stakeholders in discussions and decisions.
The Company considers key stakeholders to be customers,
employees, shareholders and other financial stakeholders, suppliers
and Non-governmental organisations.
Further details on how the company engages with particular
stakeholders can be found on the following pages of this Annual
Report:
-- Customers - see page 26
-- Employees - see page 84
-- Shareholders and other financial stakeholders - see pages 100
and 155 ff.
-- Suppliers - see page 119
-- Non-governmental organisations - see page 80
Diversity concepts for the composition of the Executive Board
and Supervisory Boards
Diversity concept for the composition of the Executive Board
The diversity concept for the composition of the Executive Board
takes into account the following diversity aspects:
(a) Age:
As a rule, the employment contracts of members of the Executive
Board end once the standard retirement age for statutory retirement
insurance has been reached (currently 67).
(b) Gender:
The Executive Board should include one woman.
(c) Educational / professional background
The necessity for a variety of educational and professional
backgrounds already arises from the obligation to manage the
company in accordance with the law, the company's articles of
association and its terms of reference. In addition, the Executive
Board as a whole, through its individual members, should possess
the following essential background qualities:
-- management experience, some of which ideally has been
acquired abroad, and intercultural competence forsuccessful
management and motivation of global teams;
-- in-depth practical experience in stakeholder dialogue (i. e.
with managers and employees, including theirrepresentative bodies,
with shareholders and the public);
-- experience in IT management and an understanding of
digitalisation of vertically integrated value chains;
-- profound experience in value-driven, KPI-based strategy
development and implementation and corporategovernance;
-- profound knowledge of the intricacies and requirements of the
capital market (shareholder management);
-- knowledge of accounting and financial management
(controlling, financing);
-- in-depth understanding of and experience with change
management.
Goals of the diversity concept for the composition of the
Executive Board
The standard retirement age on the one hand enables incumbent
members of the Executive Board to contribute their professional and
life experience for the good of the company for as long a time as
possible. On the other hand, adherence to the standard retirement
age is intended to promote regular rejuvenation of the board.
Inclusion of both genders in Executive Board work is on the one
hand an expression of the conviction of the Supervisory Board that
mixed-gender teams lead to the same or better outcomes as teams
with representation from only one gender. But it is also the
logical continuation of the gender diversity measures implemented
by the Executive Board within the wider company, which aim to
increase the proportion of women in leadership roles. These
measures are only to be applied and implemented in a credible
manner if the Executive Board does not consist solely of male
members ('proof of concept').
A variety of professional and educational backgrounds is
necessary on the one hand to properly address the tasks and
obligations of the law, the company's articles of association and
its terms of reference. In addition, it is the view of the
Supervisory Board that they are a guarantee of ensuring diverse
perspectives on the challenges and associated approaches to
overcoming them that are faced in the day-to-day work of the
company. International management experience is of particular
importance. Without such skill and experience with integrating,
leading and motivating global teams, it is impossible to take into
consideration the different cultural backgrounds of managerial
staff and the workforce as a whole.
Method of implementation of the diversity concept for the
composition of the Executive Board
A key aspect of applying the diversity concept to the
composition of the Executive Board is inclusion of the Supervisory
Board within the corporate organisation, as is prescribed by law,
the company's articles of association and its terms of reference.
This ensures the Supervisory Board is familiar with the strategic,
economic and actual situation of the company.
In its role as overseer of the management of the Executive
Board, the Supervisory Board of TUI AG makes decisions on the
allocation of business responsibilities within the Executive Board,
appointments to the Executive Board and thus also workforce and
succession planning within the Executive Board. As part of that
workforce and succession planning, the Presiding Committee or the
Supervisory Board itself regularly meets with the Executive Board
or its members to discuss suitable internal succession candidates
for Executive Board positions (emergency, medium-term and long-term
scenarios). As part of these Supervisory Board and Committee
meetings, or in preparation for them, members of the Supervisory
Board have the opportunity to meet up with so-called high
potentials within the Group in a professional and personal setting.
The Presiding Committee and Supervisory Board make their own
deliberations about these matters and also discuss them in the
absence of the Executive Board. This includes evaluation and
possible inclusion of external candidates for Executive Board
positions in the selection process. In all of these deliberations,
the above-mentioned diversity aspects of Executive Board
appointments play a part in the decision-making of the Supervisory
Board. The Supervisory Board also asks the Executive Board to
report on current progress and implementation of family-friendly
concepts and concrete measures for promotion of women (e. g. at
least one woman on the final shortlist for any new or replacement
appointments to roles within the senior leadership team).
Results achieved in financial year 2021
With effect from 1 July 2021, Ms Sybille Reiss as successor to
Dr Elke Eller was appointed member of the Executive Board. The
target set by the Supervisory Board that at least one woman should
be a member of the Executive Board has thus been achieved in the
reporting period. In connection with the leaving of Ms Birgit Conix
from the Executive Board with effect from 31 December 2020, Mr
Sebastian Ebel took over the Finance Department from 1 January
2021. In addition, the Supervisory Board appointed Mr Peter Krueger
as a member of the Executive Board with effect from 1 January 2021
(see overview of the Executive Board on page 107). It is the view
of the Supervisory Board that Ms Reiss, Mr Ebel and Mr Krueger
among other things through their professional careers, their
wide-ranging international experience and by virtue of their
diverse professional histories and individual backgrounds, will
contribute to the diversity of the Executive Board. For anyone
interested in further information, the CVs of these and all other
members of the Executive Board are available on the company
website, as well as further details communicated about the
appointment decisions of the Supervisory Board.
Diversity concept for the composition of the Supervisory
Board
The diversity concept for the composition of the Supervisory
Board takes into account the following diversity aspects: The terms
of reference of the Supervisory Board of TUI AG stipulate a
standard age limit of 68 for elections to the Supervisory Board. As
well as the statutory gender quota (section 96(2)(1) of the German
Stock Corporation Act, (AktG) the Supervisory Board has set itself
further goals in relation to its composition. These include e. g.
the kind of international character and sector experience that
diverse educational and professional backgrounds provide as well as
a number of independent shareholder representatives. Application of
the law about the codetermination rights of employees also
contributes greatly to ensuring diverse educational and
professional backgrounds within the Supervisory Board of TUI
AG.
Goals of the diversity concept for the composition of the
Supervisory Board
The Supervisory Board is convinced that the diversity of its own
composition sends an important signal both inside and outside the
company. The age limit and standard membership term have the goal
on the one hand of finding and retaining suitable candidates.
Members of the board must possess sufficient professional
experience and personal suitability for the position and have the
necessary time available to perform the role. After familiarisation
with the business model and the peculiarities of a vertically
integrated company, the Supervisory Board considers the stability
of board composition in the sense of continuity of corporate
development to be equally important. On the other hand, the
Supervisory Board should be looking at new approaches and new ideas
on a regular basis, in order to further the continual development
of the company and the business model. The Supervisory Board
considers the age limit and standard membership term to be
worthwhile instruments for achieving both goals.
Other goals in relation to composition (including international
character and sector experience) reflect the demands placed on the
advisory and oversight body and its role within a globally active
Group of companies operating in a challenging competitive
environment. Multicultural and international experience of
corporate integration is equally as important for this as knowledge
of the value drivers and success levers of the sector. In all of
this, the effect and cultural features of the so-called stakeholder
approach of a social market economy must be taken into account,
which is also ensured on the Supervisory Board by the
codetermination of employee representatives.
Method of implementation of the diversity concept for the
Supervisory Board
Implementation of the goals pursued by the diversity concept is
assured by the anchoring of its key components in law and in the
company's terms of reference as well as the requirement for a
Declaration of Compliance in accordance with section 161 of the
German Stock Corporation Act (AktG) on Corporate Governance within
the company. As far as the shareholder side of the Supervisory
Board is concerned, the Nomination Committee ensures that the
binding and voluntary targets for the composition of the
Supervisory Board are met. As part of regularly conducted
efficiency audits, the Supervisory Board also undertakes a
self-evaluation process, which includes aspects of its
composition.
Results achieved in financial year 2021
In financial year 2021, no changes have been made to the
diversity concept or the composition of the Supervisory Board. In
accordance with the recommendation in point 5.4.1 (2) of the
previous German Corporate Governance Code (version dated 7 February
2017) the Supervisory Board in its resolution of 14 September 2017
issued a competency profile for the composition of the board as a
whole.
In place of Ms Gifford and Mr Long and at the proposal of the
WSF and the Supervisory Board of TUI AG, Dr Jutta Dönges and Ms
Janina Kugel were elected to the Supervisory Board at the 2021
AGM.
Particularly in view of the challenges still ahead, the
Supervisory Board in Dr Dönges has gained an expert on investment
and financing issues. Ms Kugel brings a lot of expertise as an
experienced manager in human resources, especially with regard to
transformation and restructuring, as well as the associated changes
in working methods and culture. Additionally, Ms Tanja Viehl and Mr
Mark Muratovic have been appointed to the Supervisory Board as new
employee representatives with effect from the end of the 2021 AGM.
Both Ms Viehl, with her experience in personnel law issues in the
aviation industry, and Mr Muratovic, with his knowledge of the
operational business, are valuable additions to the board. On the
shareholder side, five out of ten members of the Supervisory Board
are women, and the proportion of women on the board as a whole is
40 %, which is in line with the statutory quota. With six different
nationalities represented on the Supervisory Board, its composition
can be described as international. The diversity of professional
and educational backgrounds of the individual members of the board
is also evident from the yearly updated CVs of Supervisory Board
members published on the corporate website.
Integrity & Compliance
Anti-corruption and bribery
In implementing our business activities, we have to comply with
many national and international laws and rules as well as internal
policies. However, our understanding of Compliance goes beyond
respecting laws and regulations, as we shift our Company's culture
away from a purely rule-based approach towards a living culture of
integrity. Behaviour violating integrity principles may not only
have legal consequences, but can also result in lasting damage to
the reputation of our Company. Our Compliance Management System
aims to promote integrity and prevent potential misconduct, making
liability risks manageable for the Company, its legal
representatives, executives and employees and thereby protecting
the Company's reputation. It is a fundamental component in our
commitment to corporate, environmental and social responsibility in
our actions.
Due to the reduced business operations in the period under
review and the continuing short-time work benefit schemes, which
also affected Integrity & Compliance, we have focused on
activities in our core areas. To reduce the workload for our
employees, training programmes were carried out on a selective
basis. While everyone had to complete the Integrity Passport
training, the Fair Competition training was only provided for
selected employees. The development of our Compliance Management
System centred on the digitalisation of existing processes to
achieve a more data-driven approach to Compliance. The aim of this
development process is to establish an up-to-date Compliance
Management System that draws on a broad data basis to ensure that
the risk management system is transparent and clear. In
implementing the risk analysis, we dispensed with the customary
dispatch of questionnaires so as to relieve the pressure on
business units. Instead, the Compliance Officers in charge used the
information available and existing data to analyse and assess the
risk landscape. This process served as a test run for establishing
a risk score system. This process aims to operate a single IT
system where all the data required is stored and retrieved,
permitting real-time analysis. Using a risk score to evaluate this
data enables us to design and implement measures and processes for
minimising risk in an even more targeted manner.
Compliance Management System
TUI Group's Compliance Management System is based on a risk
management approach. It is built around three pillars: prevent,
detect and react, which, in turn, comprise a variety of measures
and processes.
The Integrity & Compliance team is in charge of the core
areas anti-corruption, fair competition and trade sanctions. Our
Compliance Management System defines the set-up and standard
operations as well as the documentation of roles, responsibilities
and processes in these areas.
The Compliance Management System applies to TUI AG and all
companies majority-owned, directly or indirectly, by TUI AG,
whether domestic or foreign, and of any other shareholdings, where
management control directly or indirectly lies with TUI AG
('Managed Group Companies'). Implementation of the Compliance
Management System is recommended for companies where management
control does not lie with TUI AG ('Non-Managed Group
Companies').
Integrity & Compliance structure
The Chief Compliance Officer is responsible for drawing up,
maintaining and developing our Compliance Management System. She is
supported by the Integrity & Compliance department, forming
part of Legal. In the financial year under review, the activities
of this department were centralised. Rather than many part-time
local Compliance Officers, responsibility now rests with a
centrally managed team of full-time Compliance Officers. This
structure ensures greater consistency of processes and measures as
well as more efficiency. Some Compliance Officers continue to be
based in the companies or the regions they cater for. All
Compliance Officers are in close contact with local management, who
remains generally responsible for Compliance rules, and together
they are responsible for the implementation of our Compliance
requirements and Integrity values, above all:
-- Raising awareness of Integrity & Compliance and the
associated core issues through communicationcampaigns (e. g. the
Integrity & Compliance Advent calendar)
-- Implementing a selective risk analysis relating to the core
Compliance issues for selected segments (e.g. Hotels & Resorts,
Markets & Airlines, TUI Musement)
-- Implementing measures to ensure that we comply with our
commitment to integrity in our action in line with the Integrity
Passport
-- Providing training on the Integrity Passport and Fair
Competition
-- Advising managers and employees, primarily with regard to
trade sanctions, anti-corruption & anti-briberyand fair
competition
-- Securing the necessary exchange of information between local
management and the Integrity & Complianceteam
-- Monitoring new national and international legislation (e. g.
implementation of the EU Directive on theProtection of Persons who
Report Breaches of Union Law or the requirements of the German Act
on Corporate DueDiligence in Supply Chains)
-- Providing regular reports to the Group Executive Committee
and annual reports to the Audit Committee ofthe Supervisory
Board
Integrity & Compliance Culture
The Integrity & Compliance culture influences people's
behaviour and their views about complying with the applicable
rules. It therefore forms the basis for an effective Compliance
Management System. Our culture reflects our corporate values and
the fundamental attitude and conduct of management all the way to
the Executive Board and Supervisory Board of TUI AG, thus the 'tone
from the top'. It is expressed, in particular, in our corporate
value 'Trusted', appealing to our employees' personal
responsibility and their honesty and sincerity in handling guests,
stakeholders and fellow employees.
Integrity Passport - TUI's Code of Conduct
Our Integrity Passport is binding for all employees, from
Executive Board members to trainees, and for all managed Group
companies. The name 'Integrity Passport' signals a shift in the
Company's Compliance culture: away from a purely rule-based
understanding of Compliance towards a culture of integrity values.
The Integrity Passport serves as the guiding principle for our
Executive Board, managements, executives and employees alike. It
provides orientation in key areas of people's day-to-day work and
in conflict situations: fair competition, anti-bribery and
anti-corruption, appropriate gifts and hospitalities, protection of
our business secrets, data privacy, handling conflicts of interest,
prevention of insider trading, maintaining proper accounts and
financial records, anti-money laundering, trade restrictions,
respectful dealings with each other, sustainability, and public
communications about TUI and how to raise a concern.
Suppliers' Code of Conduct
The Integrity Passport is complemented by the Suppliers' Code of
Conduct, which details TUI's ethical, social and legal expectations
of its business partners.
Moreover, all business partners are required by contract to
observe all national and international anti-corruption laws
applicable to the supplier relationship. This places our business
relationship with our partners on a solid basis.
Integrity & Compliance - Policy Management
The principles anchored in the Integrity Passport are
communicated to and implemented in TUI Group through our policies,
statements and manuals. Our Group-wide policy management develops
the standards for Group-wide policies and coordinates the
involvement of relevant internal stakeholder groups, e. g. other
departments and the works council. This approach is designed to
provide employees with a set of policies which are as
comprehensible as possible. TUI Group's Compliance policies offer
guidance on a range of issues, including on appropriate conduct
regarding gifts and hospitality, fair competition and compliance
with trade sanctions.
Integrity & Compliance - Risk Assessment
Conducting a risk analysis is a key element of our Compliance
Management System. With digitalisation advancing at such a fast
pace, it is now vital to further develop the risk analysis process
and align it to the technical possibilities available. Development
is focusing on the IT and data base used to assess risks. Under the
previous approach, most of the information on fair competition,
anti-corruption and handling trade sanctions that was required for
risk analysis was compiled from a questionnaire to be completed by
local management. The Compliance Department analysed that
information to assess risks using likelihood of occurrence and
potential damage (including reputational risks) as criteria. The
assessments served to identify principal risks and to derive
corresponding measures to minimise those risks. In the completed
financial year, a deliberate decision was taken to dispense with
sending out a questionnaire. Instead, the Compliance Officers in
charge compared the existing information from past surveys with
information from current data sources and from individual
communications with the business owners and then scored it. This
data was used, on the basis of the criteria mentioned above, to
update the risk analysis. Moreover, Risk Committee meetings were
held at local and Group level to identify and discuss
business-specific challenges. Information and findings generated at
these levels were likewise fed into the risk analysis. Reported
infringements of Compliance requirements were also reflected. Where
infringements had been investigated, the Compliance Officers
factored in the findings and reassessed the risk in the relevant
area in the light of the potential need for risk minimisation.
The annual survey among legal representatives, executives and
selected employees of TUI Group to identify potential conflicts of
interest is also part of the risk assessment and precautionary
measure. A conflict of interests exists if the professional
business judgment of an employee conflicts with his or her own
interests.
In the period under review, the survey was carried out within
TUI Group. In the framework of the digitalisation strategy and with
a view to improving the existing process, an interface was created
between the personnel management system TUI People and the
Compliance Platform. As a result, the data exchanged between the
systems can now be processed faster and more efficiently.
The survey was completed by 99 % of those surveyed. The
evaluation showed that potential conflicts of interest requiring
further investigations existed for 11 % of the respondents. These
conflicts of interest were subsequently eliminated, approved or
monitored, ensuring the required transparency.
Integrity & Compliance training
Training is a key element of TUI's Compliance Management System,
with its focus on preventing misconduct, and a crucial component of
TUI Group's Integrity & Compliance culture. It is carried out
according to a graded concept: managers and staff at TUI have all
benefited from face-to-face teaching and online programmes. The
online training programme on the Integrity Passport, which explains
integrity and the underlying corporate values, is mandatory for all
employees and executives. The online training on 'Fair competition'
was rolled out in individual companies and segments within TUI, and
training schemes with their own specific focus were offered, e. g.
on anti-corruption, competition law or the appropriate handling of
gifts and hospitalities, to raise awareness of the risk-related
challenges employees might face.
Whistleblower system: SpeakUp Line
TUI offers its managers and employees a Group-wide whistleblower
system to enable serious infringements of laws or the policies
anchored in TUI's Integrity Passport to be reported anonymously and
without reprisals. This whistleblowing system is currently
available to staff in 53 countries. All reports are consistently
followed up in the interests of all stakeholders and the Company.
Our top priority is to ensure confidentiality and handle
information discreetly. Any incidents resulting from the use of the
whistleblower system are reviewed and followed up by the Integrity
& Compliance team, in some cases in conjunction with Group
Audit Fraud.
In 2021, a total of 29 reports (in 2020 50 reports) were
received through the SpeakUp Line. Apart from the SpeakUp Line,
employees also used the opportunity to directly report
infringements to their line managers, the Compliance contact in
charge or the Compliance Mailbox, also available externally. A
further 21 reports (in 2020 19 reports) were received through these
channels. They were followed up whenever there were any indications
suggesting potential infringements of internal policies or the law.
Out of the 50 reports (in 2020 69 reports) submitted in total, 16
cases (in 2020 nine cases) initially presented prima facie
indications of a Compliance infringement, leading to further
investigations, which in one case (in 2020 5 cases) resulted in
disciplinary measures.
Business partner screening (due diligence process)
There is a risk of active and passive corruption because we
operate in countries with a high corruption index. Moreover, the
risk of TUI business partners being subject to trade sanctions or
be included in sanctions lists cannot be ruled out.
As part of the transformation process, a new provider for the
screening of business partners was selected in the financial year
under review. The selection criteria include the usability of the
platform, the price structure, and the quality and scope of
retrievable data. The Internet data base set up by the provider
serves to check the names of business partners against
international sanctions, terrorist and wanted persons lists. In the
event of a match, we launch a range of measures, in the severest
cases terminating the business relationship.
In addition, the existing process of risk-based business partner
screening was reviewed. If a contract is to be concluded with a
business partner, a guided information request has to be carried
out in the Compliance Platform in order to establish whether an
extended business partner screening must be implemented. The
criteria used to determine the outcome include, for instance, the
registered office of the business partner, the term of the contract
and the value of the contract. If these process criteria identify a
potential risk associated with the business partner, the next step
must include checking the business partner against international
sanctions, terrorist and wanted persons lists via the Internet data
base provider. If the business partner gives grounds for concern,
further measures must be launched, the severest being termination
of the business relationship. These measures are another key
component of the data-driven Compliance approach.
Data protection
Data protection remains important for the TUI Group. We evaluate
the compliance with data protection law permanently and report
indicators to the Group Executive Committee. Furthermore, Risk
Oversight Committee will be informed about risk connected with data
protection. In addition, we have reported few data breaches in
accordance with Art. 33 GDPR. However, no fines are imposed so far.
Indicators measure observance of the legal time limit to respond to
data access requests (2021: 99.8 %.; 2020: 99.9 %).
Remuneration Report
The remuneration report mainly explains the remuneration of the
members of TUI AG's Executive Board and the remuneration of the
members of the Supervisory Board in accordance with the Articles of
Association. The underlying remuneration systems are based in
particular on the recommendations of the German Corporate
Governance Code (DCGK), the requirements of the German Commercial
Code (Handelsgesetzbuch - HGB) and the German Stock Corporation Act
(Aktiengesetz
- AktG) and, where possible, the recommendations of the UK
Corporate Governance Code (UK CGC). In addition, the remuneration
report includes the disclosures required by section 162 of the
German Stock Corporation Act as amended by the Act Implementing the
Second Shareholders' Rights Directive (ARUG II). TUI AG thus also
implements the requirements on the remuneration report resulting
from the second framework agreement on the granting of
stabilisation measures, which it concluded with the Economic
Stabilisation Fund on 4 January 2021 (Framework Agreement II).
As a German stock corporation, TUI AG is also listed on the
London Stock Exchange (LSE). Where mandatory rules on the
governance structure and legal requirements of a German stock
corporation are affected, these are presented accordingly in this
report and, where appropriate, placed in the context of the UK
CGC.
Executive Board and Executive Board Remuneration
CONFIRMATION OF THE REMUNERATION SYSTEM BY THE SHAREHOLDERS
Following preparatory work in financial year 2019, the
Supervisory Board of TUI AG adopted a revised remuneration system
for the members of the Executive Board in December 2019 with
retroactive effect from the beginning of financial year 2020, i. e.
1 October 2019. The remuneration system in its revised form was
approved by TUI AG shareholders at the Annual General Meeting on 11
February 2020, also with retrospective effect from the beginning of
financial year 2020. In addition to the statutory requirements, the
revision of the remuneration system took into account the
recommendations of the DCGK as amended on 7 February 2017 and the
draft of the new version of the DCGK as of 16 December 2019. In
addition, the recommendations of the UK CGC and a different market
practice in the United Kingdom were also taken into account in the
revision. Against the background of changes in market practice and
further developments in the structure of Executive Board
remuneration since the last fundamental revision of the
remuneration system, the remuneration system for TUI AG's Executive
Board was revised to include and take account of the aforementioned
perspectives and approved by TUI AG's shareholders: The defined
performance indicators are designed to take account of the
interests of all stakeholders and create value for our equity and
debt providers. In revising the Executive Board remuneration
system, the Supervisory Board was supported by renowned,
independent external remuneration consultants
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft
(PwC).
The revision of the remuneration system included, among other
things, different performance targets for the short-term incentive
plan (STI). In addition, the Total Shareholder Return (TSR)
performance target is no longer used in the calculation of the long
term incentive plan (LTIP). In addition, the revised remuneration
system now also includes malus and clawback rules, thus taking into
account the requirements of UK-based stakeholders and the amended
recommendations of the DCGK in particular.
According to the German Stock Corporation Act (AktG) in the
version of SRD II, the Supervisory Board must in future submit the
remuneration system for approval whenever there is a significant
change, but at least every four years. The Supervisory Board had to
make such a submission for the first time at the first ordinary
Annual General Meeting following 31 December 2020. TUI AG's
previous voluntary procedure in line with the UK CGC already
largely complied with these new requirements. In its resolution of
25 March 2021, the AGM approved the remuneration system for
Executive Board members by 95.8 % and thus adopted it.
Composition of the Board of Directors
In financial year 2021, the Executive Board consisted of a total
of six members. The service agreements of two Executive Board
members were not renewed at their own request and they therefore no
longer belong to TUI AG's active Executive Board. They were
replaced by new members.
-- Friedrich Joussen: CEO
-- David Burling: CEO Markets
-- Sebastian Ebel: CEO Hotels & Resorts, Cruises,
Destination Experiences until 31 December 2020, CFO since 1 January
2021
-- Peter Krueger: CSO, Member of the Executive Board since 1
January 2021
-- Sybille Reiss: CHRO / Labour Director, Member of the Board
since 1 July 2021
-- Frank Rosenberger: CIO
-- Birgit Conix: CFO, Member of the Executive Board until 31
December 2020
-- Dr Elke Eller: CHRO / Labour Director, Member of the
Executive Board until 30 June 2021
GENERAL PRINCIPLES
Upon recommendation of the Presiding Committee, the Supervisory
Board determines the remuneration of the individual members of the
Executive Board in accordance with section 87 (1) sentence 1 AktG.
In addition, the Supervisory Board regularly reviews the
remuneration system for the Executive Board.
In particular, the following principles are taken into
account:
-- Comprehensibility and transparency
-- Economic situation, success and sustainable development of
the company
-- Linking the shareholder interest in value enhancement and
profit distribution with correspondingperformance incentives for
the members of the Executive Board
-- Competitiveness in the market for highly qualified
managers
-- Appropriateness and orientation towards tasks, responsibility
and success of each individual member ofthe Executive Board, also
in a relevant environment of comparable international companies,
taking into account thetypical practice in other large German
companies
-- Linking a significant part of the total remuneration to the
achievement of demanding long-termperformance targets
-- Appropriate relationship between the amount of the fixed
remuneration and the performance-relatedremuneration
-- Adequacy in horizontal and vertical comparison (see page
138)
The remuneration system and the service agreements of the
members of the Executive Board stipulate in particular,
-- how the target total remuneration is determined for the
individual members of the Executive Board andwhat amount the total
remuneration may not exceed (maximum remuneration),
-- the relative share of fixed remuneration on the one hand and
short-term variable and long-term variableremuneration components
on the other hand in the target total remuneration,
-- which financial and non-financial performance criteria are
decisive for variable remuneration components,
-- what the relationship is between the achievement of the
previously agreed performance criteria and thevariable
remuneration,
-- in what form and when the member of the Executive Board can
dispose of the variable remuneration amounts.
The remuneration system adopted by the Supervisory Board at the
end of 2019 and approved by the 2021 Annual General Meeting also
contains a malus and clawback provision. Accordingly, in the event
of a serious breach by the beneficiary of the principles contained
in the company's Code of Conduct or of due diligence in the
management of the company during the assessment period of the
corresponding variable remuneration components, the company may
reduce or cancel the payment amounts in full or demand their return
in full or in part after payment. The Supervisory Board shall
decide on this in each individual case at its due discretion and
shall take into account in its decision in particular the severity
of the violation as well as the amount of the financial or
reputational damage caused thereby.
I. REMUNERATION OF THE EXECUTIVE BOARD IN THE FINANCIAL YEAR
2021
In financial year 2021, the remuneration of the Executive Board
members consisted of: (1) a fixed remuneration, (2) a
performance-related annual bonus as short-term incentive (STI), (3)
virtual shares in TUI AG under the long term incentive plan (LTIP),
(4) fringe benefits and (5) pension benefits. The following table
provides an overview of the individual components of the
remuneration system for Executive Board members in force and
approved by the Annual General Meeting as well as the structure of
the individual remuneration components. All information in the
table is subject to the remuneration restrictions set out under
'Remuneration Restrictions based on the Framework Agreement with
the Economic Stabilisation Fund' on page 130.
Target total remuneration
Target
The target total remuneration of the members of the Executive
Board was determined subject to the application of the remuneration
restrictions arising from Framework Agreement II.
(1) Fixed remuneration
Target
Fixed remuneration paid in twelve equal monthly instalments in
arrears at the end of the month, taking into account the applicable
tax and social security regulations. Together with the other
remuneration components, the fixed remuneration forms the basis for
attracting and retaining the highly qualified members required for
the development and implementation of the corporate strategy for
the Executive Board.
Intra-Group mandates
No separate remuneration / credit against fixed remuneration
Extra-Group mandates
No offsetting against fixed remuneration, subject to approval by
the Supervisory Board
(2) STI
Target
STI is designed to motivate members of the Executive Board to
achieve demanding and challenging financial, operational and
strategic goals during a financial year. The targets reflect the
corporate strategy and are aimed at increasing the value of the
company. In particular, through the link to EBIT, the one-year
variable remuneration is linked to the achievement of a key Group
performance indicator in the respective financial year.
Target amount
Contractually agreed, individual target amount
Overall target achievement
-- Total target achievement of the financial ratios
-- Interpolation: 0 % to 180 %
-- Individual power: 0.8 to 1.2
-- Adjustment element pursuant to section G.11 DCGK
-- Compliance Claw-back
Group key figure 1
Group key figure
EBIT (Reported)
Target achievement
Actual vs. target value at constant currency
Target achievement corridor
75 % to 115 %
Weighting
75 %
Group key figure 2
Group key figure
Cash flow before dividends
target achievement
Target value against + / - 15 % of EBIT to budget rates
target achievement corridor
85 % to 115 %
Weighting
25 %
Individual performance
Target
For each financial year, the Supervisory Board sets performance
criteria for the individual performance of the beneficiary, the
performance of the entire Executive Board and the achievement of
stakeholder goals and their weighting in relation to each other.
ESG goals are always taken into account here.
Target achievement corridor
0.8 to 1.2
(3) LTIP
Target
The company's value and the value for the shareholders
(so-called shareholder value) are to be increased in the long term
by setting ambitious goals that are closely linked to the company's
earnings, the share price development and the dividend. By linking
earnings per share and the development of the share price, a
congruence is established between the interests and expectations of
the shareholders and the remuneration of the Executive Board. The
performance period of four years helps to ensure that the actions
of the Executive Board in the current financial year are also
aligned with the long-term development of the company.
Target amount
Contractually agreed, individual target amount
Overall target achievement
-- Interpolation: 0 % to 175 %
-- Adjustment: EPS < 0.50 EUR
-- Claw-back
Group key figure
Group key figure
EPS
Target achievement
EPS p. a. based on four weighted annual amounts
Target achievement corridor
Ø 50 % Start EPS to Ø 10 % p. a.
Shares
-- Allocation of a provisional number of virtual shares
calculated from the quotient of the agreedindividual target amount
and the average XETRA share price of TUI AG
-- The final number of virtual shares is calculated from the
product of the preliminary number of virtualshares and the degree
of target achievement of the key figures
Payment
Multiplication of the final number of virtual shares by the
average XETRA share price of TUI AG over the 20 trading days
preceding the last day of the performance period.
(4) Fringe benefits
Target
The fringe benefits should be competitive in the market for
highly qualified members of the Executive Board in order to attract
and retain suitable candidates for the company in the long term.
Furthermore, an attractive working environment shall be created for
the members of the Executive Board.
-- For business trips, reimbursement of travel expenses
-- Reimbursement twice in the financial year (incl. discount for
family members).Applies only to service agreement relationships
established before September 2020
-- Discount of 75 % on flights with a TUI airline. Applies only
to service agreement relationshipsestablished before September
2020
-- Accident insurance
-- Subsidy for health and long-term care insurance
-- Criminal law protection and D&O insurance
-- Company car / car allowance
(5) Maximum remuneration
Target
-- CEO: EUR 7,500 k
-- Other Executive Board: EUR 3,500 k
-- Contractually defined upper limit for total remuneration
(incl. fixed remuneration, STI, LTIP, companypension scheme and
fringe benefits. If the contractually defined upper limit of the
total remunerationis exceeded, the LTIP is reduced proportionately
in the inflow. The contractually defined upper limit ofthe total
remuneration corresponds to the respective maximum total
remuneration for the membersof the Executive Board determined by
the Supervisory Board.
(6) Severance payment cap in the event of early termination of
contract
Target
-- CEO: Severance payment limited to the value of two years'
remuneration
-- Other Executive Board members: Severance payment limited to
the value of one year's remuneration
-- No change-of-control clauses agreed
Maximum Remuneration
EUR '000 Fixed remuneration 1 JEV LTIP Maximum total
remuneration
Friedrich Joussen 1,100.0 2,743.2 4,392.0 7,500.0
David Burling 680.0 1,080.0 2,208.0 3,500.0
Birgit Conix 680.0 1,188.0 2,208.0 3,500.0
Sebastian Ebel 680.0 1,080.0 2,208.0 3,500.0
Dr Elke Eller 680.0 1,177.2 2,208.0 3,500.0
Peter Krueger 600.0 1,004.4 1,836.0 3,500.0
Sybille Reiss 600.0 1,004.4 1,836.0 3,500.0
Frank Rosenberger 600.0 1,004.4 1,836.0 3,500.0
1 Fixed amount, no cap applied
(7) Pension benefits
Target
The aim is to attract and retain the highly qualified members of
the Executive Board necessary for the development and
implementation of the corporate strategy. The pension benefits or
the pension subsidy should be competitive in the market for highly
qualified members of the Executive Board and offer them an
appropriate level of benefits in retirement.
Contributions to the company pension scheme
-- Mr Joussen: EUR 454.5 k per year. In the case of Mr Joussen,
the resulting pension can be paid out when hereaches the age of
62.
-- Mr Ebel: EUR 207.0 k per year. In the case of Mr Ebel, the
resulting pension can be paid out when hereaches the age of 62.
-- Dr Eller: EUR 230.0 k per year. In the case of Dr Eller, the
resulting pension can be paid out when shereaches the age of
63.
-- Mr Rosenberger: EUR 230.0 k per year. In the case of Mr
Rosenberger, the resulting pension can be paidout when he reaches
the age of 63.
Fixed annual payout amounts for the purpose of retirement
benefits
-- Mr Burling: EUR 225.0 k per year
-- Ms Conix: EUR 230.0 k per year
-- Mr Krueger: EUR 230.0 k per year
-- Ms Reiss: EUR 230.0 k per year
I.1 PENSION PROVISIONS FOR THE CURRENT MEMBERS OF THE EXECUTIVE
BOARD UNDER TUI AG'S PENSION SCHEME
Pension obligations for active members of the Executive Board in
accordance with IAS 19 totalled EUR 15,984.5 k as at 30 September
2021 (previous year: EUR 16,649.6 k). Of this amount, EUR 5,762.4 k
(previous year: EUR 5,721.7 k) related to entitlements earned by Mr
Ebel in the framework of his work for the TUI Group until 31 August
2006. The remaining entitlements were distributed as follows:
Pensions and the amounts spent or accrued for this purpose by the current members
of the Executive Board under TUI AG's pension plan
Addition to / reversal Net present value
from pension provisions
EUR '000 2021 2020 30 Sep 2021 30 Sep 2020
Friedrich Joussen 497.2 215.9 5,445.8 4,948.6
Sebastian Ebel 235.4 118.6 2,419.2 2,183.8
Dr Elke Eller 466.8 249.3 2,248.0 1,781.2
Frank Rosenberger 342.8 203.8 2,357.0 2,014.2
Total 1,542.2 787.6 12,470.0 10,927.8
As regards the pension commitments of Mr Ebel, Dr Eller and Mr
Rosenberger, corresponding assets were transferred in each case to
a trustee on a fiduciary basis in line with the contractual
agreement in order to finance the pension rights and to secure in
case of a security event.
No changes to these commitments were made in financial year
2021.
I.2 BENEFITS IN THE EVENT OF PREMATURE TERMINATION OF BOARD
MEMBERSHIP
The payments to be made to a member of the Executive Board in
the event of premature termination of his service agreement without
good cause are in principle limited in Mr Joussen's service
agreement to the value of two years' remuneration. In the service
agreements of Ms Conix and Mr Rosenberger, it is agreed that
payments in the event of premature termination of Executive Board
activities without good cause - in the case of premature
termination during the first year after the service agreement comes
into force - may not exceed the value of two years' remuneration
and - in the case of premature termination after the end of the
first year after this service agreement comes into force - may not
exceed the value of one year's remuneration (severance payment
cap).
In the service agreements of Mr Burling, Mr Ebel, Dr Eller, Mr
Krueger and Ms Reiss, it is agreed that payments in the event of
premature termination of their Executive Board activities without
good cause may not exceed the value of one year's remuneration
(severance payment cap).
For all members of the Executive Board, no more than the
remaining term of the service agreement is compensated. For the
calculation of the severance payment cap, the target direct
remuneration (fixed remuneration, target amount of the STI and
target amount of the LTIP) of the past financial year and, if
applicable, also the expected target direct remuneration for the
current financial year are taken into account. If the service
agreement is terminated for cause, members of the Executive Board
do not receive any benefits.
If the appointment of a member of the Executive Board is
revoked, the respective service agreement shall also end. If the
revocation is not based on a reason, which at the same time
constitutes an important reason for termination of the service
agreement without notice, the service agreement shall end upon
expiry of a period of expiry. This expiry period is generally
twelve months. An expiry period of 24 months has been agreed with
Mr Joussen.
In the event of premature termination of the service agreement,
the STI and the payments from the LTIP are regulated as
follows:
-- STI:? If the service agreement is terminated by the Company
before the end of the one-year performance period for good cause
for which the member of the Executive Board is responsible, or if
the member of theExecutive Board resigns without good cause, the
entitlement to an annual bonus for the performance period
inquestion shall lapse without replacement or compensation. ? In
all other cases of early termination of the service contract before
the end of the one-yearperformance period, the STI shall be paid
pro rata temporis.
-- LTIP:? Claims under the LTIP shall lapse without replacement
or compensation for all tranches not yetdisbursed if the service
agreement is terminated by TUI AG before the end of the performance
period for causefor which the Executive Board member is responsible
or by the Executive Board member without cause. ? If the service
agreement ends before the end of the performance period for other
reasons, theentitlements under the LTIP for tranches not yet paid
out are retained. The tranche for the current financialyear is
reduced pro rata temporis. The amount to be paid out is determined
in the same way as in the case of acontinuation of the service
agreement.
It has been agreed with Mr Joussen and Mr Burling that they may
unilaterally resign from their positions as members of the
Executive Board as of 1 June 2022 with a notice period of three
months to 30 September 2022, in which case STI and LTIP will be
paid out in accordance with the service agreement and will not
expire. Should Mr Joussen or Mr Burling exercise this right of
resignation, the respective service agreement will end after an
expiry period of 24 and 9 months respectively.
TUI AG shall be entitled to release the members of the Executive
Board in connection with a termination of the service agreement, in
particular following a termination of this service agreement,
irrespective of the party by which such termination is declared, or
following the conclusion of a termination agreement, in whole or in
part from the obligation to perform work with continued payment of
remuneration. The release shall initially be irrevocable for the
duration of any outstanding holiday entitlements, which are thereby
settled. Subsequently, the release shall be maintained until the
termination of the service agreement. It is revocable if there are
questions in connection with the settlement of the employment
relationship or if a temporary activity becomes necessary for
operational reasons.
The rest of the service agreement is not affected by this. The
service agreement of the members of the Executive Board do not
contain any change-of-control clauses.
I.3 BENEFITS AND BENEFIT COMMITMENTS TO MEMBERS OF THE EXECUTIVE
BOARD WHO HAVE LEFT THE EXECUTIVE BOARD IN FINANCIAL YEAR 2021
Ms Birgit Conix resigned from the Executive Board of TUI AG in
financial year 2021. Ms Conix was originally appointed as a member
of TUI AG's Executive Board until the end of 14 July 2021. TUI AG
and Ms Conix terminated the Executive Board mandate prematurely by
mutual agreement as at the end of 31 December 2020. On the occasion
of the termination, TUI AG concluded a termination agreement with
Ms Conix. The subject matter of the termination agreement included
the continuation of the service agreement until the end of the
regular termination date, i. e. until the end of 14 July 2021. TUI
AG promised Ms Conix to process her remuneration in accordance with
the service agreement until the termination date of the service
agreement. Until this date, TUI AG has committed to a fixed annual
payout amount for the purpose of retirement benefits. Ms Conix also
had her company car at her disposal until the end of 31 December
2020 and was entitled to the agreed fringe benefits until that
date.
In addition, Dr Elke Eller resigned from TUI AG's Executive
Board in financial year 2021. Dr Eller was originally appointed as
a member of TUI AG's Executive Board until the end of 14 October
2021 and was appointed Labour Director. TUI AG and Dr Eller
terminated the Executive Board mandate and the office of Labour
Director prematurely by mutual agreement as per the end of 30 June
2021. On the occasion of the termination, TUI AG concluded a
termination agreement with Dr Eller. The subject matter of the
termination agreement included the continuation of the service
agreement until the end of the regular termination date, i. e.
until 14 October 2021. TUI AG promised Dr Eller that it would
process her remuneration in accordance with the service agreement
until the termination date of the service agreement. TUI AG also
continued to make contributions to the company pension scheme until
this date. Dr Eller also had her company car at her disposal until
the end of 30 June 2021 and was entitled to the agreed fringe
benefits until that date.
II REMUNERATION RESTRICTIONS BASED ON THE FRAMEWORK AGREEMENT
WITH THE ECONOMIC STABILISATION FUND (WSF)
Principle
On 4 January 2021, TUI AG concluded a framework agreement with
the Economic Stabilisation Fund (Wirtschaftsstabilisierungsfonds -
WSF) on the granting of stabilisation measures, which sets out
various requirements for the remuneration of Executive Board
members during the utilisation of stabilisation measures (Framework
Agreement II). According to this agreement, any member of the
Executive Board already appointed on 31 December 2019 may not
receive any remuneration in excess of the basic remuneration of
this member of the Executive Board as at 31 December 2019
(including any Group remuneration in the event of dual employment
at another Group company) as long as at least 75 % of the
stabilisation measure has not been repaid. The framework agreement
also stipulates that, as long as TUI AG makes use of the
stabilisation measure, it will not grant and thus not constitute
any bonuses, other variable or comparable remuneration components
or special payments in the form of share packages, bonuses or other
separate remuneration in addition to the fixed salary, other
remuneration components and benefits at the discretion of the
company or severance payments not required by law to members of the
Executive Board 'including any Group remuneration'.
For members of the Executive Board who are appointed as a member
of the Executive Board at the time the stabilisation measure is
granted or thereafter, the upper limit shall be the basic
remuneration of members of the Executive Board with the same level
of responsibility as at 31 December 2019.
Procedure
TUI AG has agreed corresponding amendments to the service
agreements with all Executive Board members, adjusting the benefits
generally promised under the remuneration system to the
remuneration restrictions agreed with the Economic Stabilisation
Fund.
Due to the corresponding amendment of the service agreements and
the waivers of the Executive Board members, TUI AG deviates from
the remuneration system in place in financial year 2021 with regard
to the Short Term Incentive (STI) and the Long Term Incentive Plan
(LTIP). The deviation is in the interest of TUI AG and is a
prerequisite for TUI AG to be able to take advantage of
stabilisation measures in accordance with the Economic
Stabilisation Fund Act, if required. Apart from that, there were no
deviations from the current remuneration system in financial year
2021.
III OVERVIEW: INDIVIDUAL REMUNERATION OF THE MEMBERS OF THE
EXECUTIVE BOARD
III.1 ACHIEVEMENT OF OBJECTIVES
The following describes how the performance criteria were
applied and the targets for the variable remuneration components
were achieved in financial year 2021.
III.1.1 STI
The multiplication of the target amounts with the weighted
target achievement levels for EBIT and cash flow and the individual
performance factor results in the amount taken into account for the
payment of the STI per member of the Executive Board.
III.1.1.1 Remuneration paid and owed in financial year 2021 from
STI
With regard to STI's individual performance factor for financial
year 2020, the Supervisory Board decided before the start of
financial year 2020 to defer the individual targets in favour of
the overall Executive Board targets against the backdrop of the
company-wide transformation process. Thus, the further
implementation of the transformation by reducing complexity in the
system landscape but also operationally and the expansion of the
digital platform across all source markets were an essential part
of the objective. Closely linked to this, the Supervisory Board has
defined engagement goals that include, in particular, the retention
and participation of employees and managers as well as a
comprehensive change management process.
In addition, the members of the Executive Board have been given
ambitious ESG targets. These include reducing the environmental
impact of holidaymakers and strengthening the positive impact of
tourism in the respective destinations. Due to the voluntarily
declared waiver by the members of the Executive Board, the
Supervisory Board has waived a determination of target achievement
for EBIT and cash flow. The effects of the COVID-19 pandemic, which
led to a temporary cessation of business operations and a
considerable liquidity bottleneck, meant that neither of the two
performance targets could have been achieved in financial year
2020, despite a strong start to the financial year in terms of
bookings and massive cost-saving measures. As a result, there is no
remuneration paid and owed in financial year 2021 within the
meaning of section 162 para. 1 sentence 1, sentence 2 no. 1 AktG
from the STI for financial year 2020.
Accordingly, the Supervisory Board waived the determination of
the individual performance factor. Despite the immense amount of
work demanded of the members of the Executive Board by the
extraordinary challenges of financial year 2020, they showed
above-average commitment and dedication, while remaining focused on
the agreed targets. After intensive discussion and despite the
voluntary waiver by the members of the Executive Board, the
Supervisory Board has come to the conclusion that the targets have
been met extremely satisfactorily and in part ahead of schedule,
within the bounds of what is technically and operationally possible
and taking into account the special challenges.
III.1.1.2 Outlook for the remuneration paid and owed in
financial year 2022 from STI
The EBIT and cash flow targets set by the Supervisory Board are
based on the operational annual planning and are in line with the
financial communication. The Supervisory Board has made use of the
adjustment element of section G.11 of the DCGK implemented in the
remuneration system and has set the target achievement corridor for
EBIT and cash flow in accordance with the remuneration system. The
reason for this is that the target corridors of the existing
remuneration system lead to very narrow absolute corridors due to
the low planning level with a negative EBIT. The availability of a
vaccine or even further travel restrictions, all of which would
have the potential for both maximum and minimum values to be
reached very quickly, were identified as uncertainties here.
Applying the adjustment element, the Supervisory Board decided to
set the EBIT target value equal to the budget value in accordance
with the usual procedure. A 50 % target achievement is reached at
an EBIT of EUR - 831 million, a 180 % target achievement as a
maximum at EUR 169 million. For the cash flow, these values are EUR
- 312 million and EUR 688 million, whereby the target value also
corresponds to the budget value.
With regard to the individual performance factor, the
Supervisory Board decided before the start of financial year 2021
to defer the individual targets in favour of the overall Executive
Board targets against the backdrop of the company-wide
transformation process. Thus, the further implementation of the
transformation by reducing the complexity in the system landscape
but also operationally and the expansion of the digital platform
across all source markets was an essential part of the target
setting. In addition, the members of the Executive Board have been
given ambitious sustainability targets. These include starting to
develop a roadmap to become net carbon free by 2050, amplifying the
positive impact of tourism in destinations and raising awareness of
sustainable tourism.
The effects of the COVID-19 pandemic, which have led to
considerable restrictions on business operations and a significant
liquidity bottleneck, have meant that none of the performance
targets could be achieved in financial year 2021, despite
increasing bookings and massive cost-saving measures. As a result,
there will be no remuneration paid and owed in financial year 2022
within the meaning of Section 162 (1) sentence 1, sentence 2 no. 1
AktG from the STI of financial year 2021. Furthermore, due to the
conditions of the Framework Agreement II, bonuses and other
variable or comparable remuneration components, among others, may
not be granted and thus may not be constituted.
The Supervisory Board therefore decided not to set the
individual performance factor. However, the Supervisory Board
agreed in its discussions that the entire Executive Board did an
excellent job in financial year 2021, even under extremely
difficult boundary conditions. Through very stringent cash
management and massive cost reductions to the point of tapping
extensive sources of financing, the effects of the crisis that
threatened the existence of the company were brought under control.
Work was done early on to stabilise the balance sheet again. The
Supervisory Board expressly acknowledges this extraordinary
performance, which was achieved with tireless dedication.
III.1.2 LTIP
III.1.2.1 Remuneration paid and owed in financial year 2021
under the LTIP
The payment of the 2017 / 2020 LTIP tranche is governed by the
provisions of the remuneration system that was replaced on 1
October 2017.
An average stock exchange price of the TUI share of EUR 12.36 is
to be used as a basis. At the end of the performance period on 30
September 2020, the average stock exchange price of the TUI share
was EUR 3.44. Based on the target achievement level of TUI AG's TSR
rank compared with the TSR values of the companies in the STOXX
Europe 600 Travel & Leisure over the performance period, the
LTIP results in a target achievement of 25 %. However, due to the
voluntarily declared waiver, no payment was made for the LTIP
tranche 2017 / 2020 for the active members of the Executive Board
in financial year 2021. As a result, no remuneration paid and owed
within the meaning of section 162(1) sentence 1, sentence 2 no. 1
AktG exists for the LTIP tranche 2017 / 2020 in financial year
2021.
III.1.2.2 Outlook for the remuneration paid and owed in
financial year 2022 from the LTIP
The payment of the LTIP tranche 2018 / 2021 is governed by the
provisions of the remuneration system, which came into force
retroactively as of 1 October 2017.
The LTIP tranche was based on an average TUI AG share price of
EUR 14.60 at the time of allocation. At the end of the performance
period, TUI AG's average share price was EUR 3.62. The average
share price of TUI AG at the end of the performance period was EUR
3.62. The average share price of TUI AG was EUR 3.62. Due to the
degree of target achievement of TUI AG's TSR rank compared with the
TSR values of the companies in the STOXX Europe 600 Travel &
Leisure over the performance period, the target achievement for
LTIP was 0 %. EPS also failed to reach a level of target
achievement that would generally lead to a pay-out. Although the
EPS for both financial year 2020 and 2021 were below the EUR 0.50
mark at which the Supervisory Board is to set new absolute target
values for the EPS as well as minimum and maximum values for
determining the percentage target achievement in accordance with
the relevant remuneration system. As a result, however, the
remuneration restrictions of the Framework Agreement II would not
allow a pay-out. The Supervisory Board has therefore decided not to
set any new absolute target values for EPS and minimum and maximum
values for determining the percentage target achievement for the
2018 / 2021 LTIP tranche. For the LTIP tranche 2018 / 2021, there
is no remuneration paid and owed in December 2021 within the
meaning of section 162 para. 1 sentence 1, sentence 2 no. 1
AktG.
III.2 LOANS OR ADVANCES
As in the previous year, no loans or advances were granted to
the members of the Executive Board in financial year 2021.
III.3 APPLICATIONS
III.3.1 'Remuneration paid and owed' within the meaning of
section 162 para. 1 sentence 1 AktG in financial year 2021
Pursuant to section 162 para. 1 sentence 1, sentence 2 no. 1
AktG, all fixed and variable remuneration components 'paid and
owed' to the individual members of the Executive Board in financial
year 2021 must also be disclosed. The values stated for both the
STI and the LTIP for financial year 2021 refer to the remuneration
components 'paid and owed' in the respective financial year
pursuant to section 162 (1) sentence 1 AktG. They thus include all
benefits actually received in the respective financial year,
regardless of the financial year for which they were received by
the members of the Executive Board. The value of the STI therefore
corresponds to the amount for the STI from financial year 2020,
which would not have been paid out until financial year 2021 in
accordance with the service agreements. The value of the 2017 /
2020 LTIP tranche therefore corresponds in value to the amount for
the LTIP whose four-year term ended on 30 September 2020, but which
would not have been paid out until financial year 2021 in
accordance with the service agreements.
Remuneration 'paid and owed remuneration' pursuant to section 162 (1) sentence 1 AktG
Friedrich Joussen David Burling Birgit Conix
CEO, Member of the Executive Member of the Executive
since 14 February 2013 1 Board, Board,
since 1 June 2015 since 15 July 2018 5
EUR '000 in % EUR '000 in % EUR '000 in % EUR in % EUR '000 EUR '000
2020 2 4 2021 4 2020 2, 3 4 '000 4 2020 2 in % 4 2021 in % 4
2021
Fixed remuneration 1,045.0 61.1 1,100.0 63.0 611.9 70.9 680.0 73.4 646.0 72.2 418.6 69.0
Fringe benefits 6 36.3 2.1 52.1 3.0 26.1 3.0 21.1 2.3 18.2 2.0 4.5 0.7
Total 1,081.3 63.2 1,152.1 63.1 638.0 73.9 701.1 75.7 664.2 74.3 423.1 69.8
STI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
LTIP
LTIP Tranche (2016 - 2019) 0.0 0.0 0.0 0.0 0.0 0.0
LTIP Tranche (2017 - 2020) 0.0 0.0 0.0 0.0 0.0 0.0
Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Claw Back according to § 162
para. 1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
sen. 2 no. 4 AktG7
Total 1,081.3 63.2 1,152.1 66.0 638.0 73.9 701.1 75.7 664.2 74.3 423.1 69.8
Pension / service costs 8 628.3 36.8 592.7 34.0 225.0 26.1 225.0 24.3 230.0 25.7 183.4 30.2
Total remuneration 1,709.6 100.0 1,744.8 100.0 863.0 100.0 926.1 100.0 894.2 100.0 606.5 100.0
1 Member of the Executive Board since 15 October 2012;
Co-Chairman of the Executive Board from 9 December 2014 to 9
February 2016.
2 Taking into account the voluntary waiver of 30 % of fixed
remuneration for the months April and May 2020.
3 Taking into account an additional voluntary waiver of 30 % of
the fixed remuneration for the months June to September 2020 due to
national measures in the UK.
4 The relative shares stated here refer to the remuneration
components 'paid and owed' in the respective financial year in
accordance with section 162 para. 1 sentence 1 AktG. They thus all
benefits actually received in the respective financial year,
irrespective of the financial year for which they were paid to the
Executive Board members. The relative are therefore not comparable
with the relative shares in the description of the remuneration
system pursuant to section 87a para. 1 no. 3 AktG, which will be
submitted to the Annual General Meeting together with this
remuneration report. The shares stated in the remuneration system
refer to the respective target values.
5 Pro rata temporis until 14 July 2021.
6 Without insurance from group contracts.
7 The service agreements of the members of the Executive Board
include - in accordance with the remuneration system adopted by the
Supervisory Board in December 2019 - a malus and clawback
provision. In financial year 2021 TUI AG has not made use of this
provision.
8 For Mr Joussen, Mr Ebel, Dr Eller and Mr Rosenbeger service
costs acc. to IAS 19 and therefor not 'awarded and owed'
remuneration' within the meaning of section 162 (1) sentence 1
AktG. For Mr Burling and Mrs Conix payments for pension
contribution and therefor part of 'awarded and owed' remuneration
in the meaning of section 162 (1) sentence 1 AktG .
9 Pro rata temporis from 1 January 2021.
10 Pro rata temporis from 1 July 2021.
Remuneration 'paid and owed remuneration' pursuant to section 162 (1) sentence 1 AktG
Sebastian Ebel Dr Elke Eller Peter Krueger 9
Member of the Executive Member of the Executive Board / Labour Member of the Executive
Board, Director, Board,
since 12 December 2014 since 15 October 2015 since 1 January 2021
EUR '000 in % EUR in % EUR '000 EUR '000 EUR in % EUR in %
2020 2 4 '000 4 2020 2 in % 2 2021 in % 4 '000 2 '000 4
2021 2020 2021
Fixed remuneration 646.0 68.0 680.0 70.2 646.0 62.3 680.0 65.2 450.0 70.8
Fringe benefits 6 18.0 1.9 18.0 1.9 34.4 3.3 18.0 1.7 13.5 2.1
Total 664.0 69.9 698.0 72.0 680.4 65.6 698.0 67.0 463.5 72.9
STI 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
LTIP
LTIP Tranche (2016 - 2019) 0.0 0.0 0.0 0.0
LTIP Tranche (2017 - 2020) 0.0 0.0 0.0 0.0
Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Claw Back according to § 162
para. 1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
sen. 2 no. 4 AktG 7
Total 664.0 69.9 698.0 72.0 680.4 65.6 698.0 67.0 463.5 72.9
Pension / service costs 8 285.9 30.1 271.1 28.0 356.7 34.4 344.2 33.0 172.5 27.1
Total remuneration 949.9 100.0 969.1 100.0 1,037.1 100.0 1,042.2 100.0 636.0 100.0
1 Member of the Executive Board since 15 October 2012;
Co-Chairman of the Executive Board from 9 December 2014 to 9
February 2016.
2 Taking into account the voluntary waiver of 30 % of fixed
remuneration for the months April and May 2020.
3 Taking into account an additional voluntary waiver of 30 % of
the fixed remuneration for the months June to September 2020 due to
national measures in the UK.
4 The relative shares stated here refer to the remuneration
components 'paid and owed' in the respective financial year in
accordance with section 162 para. 1 sentence 1 AktG. They thus all
benefits actually received in the respective financial year,
irrespective of the financial year for which they were paid to the
Executive Board members. The relative are therefore not comparable
with the relative shares in the description of the remuneration
system pursuant to section 87a para. 1 no. 3 AktG, which will be
submitted to the Annual General Meeting together with this
remuneration report. The shares stated in the remuneration system
refer to the respective target values.
5 Pro rata temporis until 14 July 2021.
6 Without insurance from group contracts.
7 The service agreements of the members of the Executive Board
include - in accordance with the remuneration system adopted by the
Supervisory Board in December 2019 - a malus and clawback
provision. In financial year 2021 TUI AG has not made use of this
provision.
8 For Mr Joussen, Mr Ebel, Dr Eller and Mr Rosenbeger service
costs acc. to IAS 19 and therefor not 'awarded and owed'
remuneration' within the meaning of section 162 (1) sentence 1
AktG. For Mr Burling and Mrs Conix payments for pension
contribution and therefor part of 'awarded and owed' remuneration
in the meaning of section 162 (1) sentence 1 AktG .
9 Pro rata temporis from 1 January 2021.
10 Pro rata temporis from 1 July 2021.
Remuneration 'paid and owed remuneration' pursuant to section 162 (1) sentence 1 AktG
Sybille Reiss 10 Frank Rosenberger
Member of the Executive Board / Labour Member of the Executive
Director Board
since 1 July 2021 since 1 January 2017
EUR '000 in % 4 EUR '000 in % 4 EUR '000 in % EUR '000 in %
2020 2021 2020 2 4 2021 4
Fixed remuneration 150.0 70.8 570.0 57.2 600.0 59.2
Fringe benefits6 4.5 2.1 18.0 1.8 30.5 3.0
Total 154.5 15.9 588.0 59.0 630.5 62.3
STI 0.0 0.0 0.0 0.0 0.0 0.0
LTIP
LTIP Tranche (2016 - 2019) 0.0 0.0
LTIP Tranche (2017 - 2020) 0.0 0.0
Others 0.0 0.0 0.0 0.0 0.0 0.0
Claw Back according to § 162 para. 1 sen. 2 no. 4 0.0 0.0 0.0 0.0 0.0 0.0
AktG7
Total 154.5 15.9 588.0 59.0 630.5 62.3
Pension / service costs8 57.5 27.1 408.8 41.0 382.2 37.7
Total remuneration 212.0 100 996.8 100.0 1,012.7 100
1 Member of the Executive Board since 15 October 2012;
Co-Chairman of the Executive Board from 9 December 2014 to 9
February 2016.
2 Taking into account the voluntary waiver of 30 % of fixed
remuneration for the months April and May 2020.
3 Taking into account an additional voluntary waiver of 30 % of
the fixed remuneration for the months June to September 2020 due to
national measures in the UK.
4 The relative shares stated here refer to the remuneration
components 'paid and owed' in the respective financial year in
accordance with section 162 para. 1 sentence 1 AktG. They thus all
benefits actually received in the respective financial year,
irrespective of the financial year for which they were paid to the
Executive Board members. The relative are therefore not comparable
with the relative shares in the description of the remuneration
system pursuant to section 87a para. 1 no. 3 AktG, which will be
submitted to the Annual General Meeting together with this
remuneration report. The shares stated in the remuneration system
refer to the respective target values.
5 Pro rata temporis until 14 July 2021.
6 Without insurance from group contracts.
7 The service agreements of the members of the Executive Board
include - in accordance with the remuneration system adopted by the
Supervisory Board in December 2019 - a malus and clawback
provision. In financial year 2021 TUI AG has not made use of this
provision.
8 For Mr Joussen, Mr Ebel, Dr Eller and Mr Rosenbeger service
costs acc. to IAS 19 and therefor not 'awarded and owed'
remuneration' within the meaning of section 162 (1) sentence 1
AktG. For Mr Burling and Mrs Conix payments for pension
contribution and therefor part of 'awarded and owed' remuneration
in the meaning of section 162 (1) sentence 1 AktG .
9 Pro rata temporis from 1 January 2021.
10 Pro rata temporis from 1 July 2021.
III.3.2 COMPARISON OF THE ANNUAL CHANGE IN THE REMUNERATION OF
THE MEMBERS OF THE EXECUTIVE BOARD WITH THE DEVELOPMENT OF EARNINGS
AND THE AVERAGE REMUNERATION OF EMPLOYEES OF TUI AG
The following table shows a comparison of the percentage change
in the remuneration of the Executive Board members with the
development of TUI AG's earnings and with the average remuneration
of employees on a full-time equivalent basis compared with the
previous financial year.* The remuneration of the Executive Board
members included in the table reflects the amounts actually
received in the respective financial year. For active members of
the Executive Board, these values for financial year 2021
correspond to the values stated in the table 'Remuneration paid and
owed pursuant to section 162 para. 1 sentence 1 AktG' (page 134
ff.).
As a matter of principle, the development of earnings is
presented on the basis of the development of TUI AG's net profit
for the year in accordance with section 275 sub-section 2 no 17 of
the German Commercial Code (HGB). Since the remuneration of the
Executive Board members also depends to a significant extent on the
development of Group key figures, the TUI Group's earnings trend
also includes the development of the TUI Group's underlying EBIT
shown in the consolidated financial statements for financial years
2020 and 2021 and the TUI Group's underlying EBITA shown in the
consolidated financial statements for financial years 2016 to
2019.
The comparison with the development of average employee
remuneration is based on the average remuneration of TUI AG's
workforce. Since the employee and remuneration structures in the
subsidiaries are diverse, in particular in the case of employees
abroad, it is appropriate to base the comparison of the development
of average remuneration only on TUI AG's workforce. This
comparative group was also used to review the appropriateness of
the remuneration of the Executive Board members. The remuneration
of all employees, including executive employees within the meaning
of section 5 sub-section 3 German Works Council Constitution Act
(Betriebsverfassungsgesetz - BetrVG), was taken into account. Where
employees also received remuneration as members of TUI AG's
Supervisory Board, this remuneration was not taken into account. In
order to ensure comparability, the remuneration of part-time
employees was extrapolated to full-time equivalents. * Pursuant to
section 26j, paragraph 2, sentence 2 of the Introductory Act to the
Stock Corporation Act (EGAktG), a comparison of the average
remuneration of employees on a full-time equivalent basis over the
last five financial years pursuant to section 162, paragraph 1,
sentence 2, no. 2 of the German Stock Corporation Act (AktG) is not
yet to be included in the remuneration report.
Comparison of annual change to Executive Board remuneration according to section 162 para. 1 no. 2
AktG
Annual change (in %) 2021 vs. 2020 2020 vs. 2019 2019 vs. 2018 2018 vs. 2017 2017 vs. 2016
Executive Board remuneration 1
Friedrich Joussen 5 % - 1 % - 74 % 31 % 5 %
David Burling 7 % - 8 % - 55 % 14 % 7 %
Birgit Conix - 32 % - 4 % 144 %
Sebastian Ebel 4 % - 2 % - 58 % 30 % 3 %
Dr Elke Eller - 1 % 0 % - 48 % 9 % 6 %
Peter Krueger
Sybille Reiss
Frank Rosenberger 5 % - 1 % - 45 % 36 %
Horst Baier 5 % 10 % - 73 % 8 % - 13 %
(CFO until 30 September 2018) 2
Michael Frenzel 1 % 1 % 2 % 2 % 0 %
(CEO until 31 March 2014) 3
Earnings performance
TUI AG 4 30 % - 1,994 % - 88 % 33 % 430 %
TUI Group 5 69 % - 435 % - 22 % 4 % 1 %
Average employee remuneration
on FTE basis
Company employees 6 % - 2 %
1 Remuneration paid and owed within the meaning of section 162
para. 1 sentence 1 AktG (fixed remuneration, STI, LTIP, fringe
benefits and fixed annual pension payment for Mr Burling, Ms Conix,
Mr Krueger and Ms Reiss.
2 Mr Baier received a payout from his pension plan in financial
years 2019 to 2021. In financial year 2021, he received a payout
from the remuneration paid and owed from the 2017 / 2020 LTIP
tranche.
3 Mr Frenzel received payouts from his pension plan in financial
years 2016 to 2021.
4 Annual result within the meaning of section 275 para 2 no. 17
HGB.
5 Adjusted EBIT of the TUI Group for financial years 2021 and
2020. For financial years 2016 to 2019, adjusted EBITA of the TUI
Group.
REVIEW OF THE APPROPRIATENESS OF EXECUTIVE BOARD REMUNERATION
AND PENSIONS
The Supervisory Board conducted the annual review of the
Executive Board remuneration and pensions for financial year 2021.
It came to the conclusion that the amount of the Executive Board
remuneration and the pensions are appropriate from a legal point of
view within the meaning of section 87 para 1 of the German Stock
Corporation Act (AktG).
For the assessment of the appropriateness of the Executive Board
remuneration and the pension, the Supervisory Board also regularly
takes external advice. This involves assessing the relationship
between the amount and structure of Executive Board remuneration
and the remuneration of senior management and the workforce as a
whole from an external perspective (vertical comparison). In
addition to a status quo analysis, the vertical comparison also
takes into account the development of remuneration ratios over
time. Secondly, the remuneration level and structure are assessed
on the basis of TUI AG's positioning in a comparative market
(horizontal comparison). The comparative market consists of a
combination of DAX and MDAX companies falling within the scope of
the German Stock Corporation Act (AktG), belonging to related
sectors or having comparable core characteristics and with which
there is a similarity in terms of company size. In addition to the
fixed remuneration, the horizontal comparison also includes the
short- and long-term remuneration components as well as the amount
of the company pension plan.
Companies for the assessment of the appropriateness of Executive Board remuneration
Company Stock market segment Company Stock market segment
Adidas AG DAX Hugo Boss AG MDAX
alstria office REIT-AG MDAX Infineon Technologies AG DAX
Aurubis AG MDAX innogy SE MDAX
BASF SE DAX K+S AG MDAX
Bayer AG DAX KION GROUP AG MDAX
Bechtle AG MDAX LANXESS AG MDAX
Beiersdorf AG DAX LEG Immobilien AG MDAX
Brenntag AG DAX Merck KGaA DAX
Carl Zeiss Meditec AG MDAX METRO AG MDAX
Continental AG DAX MorphoSys AG MDAX
Covestro AG DAX MTU Aero Engines AG MDAX
Daimler AG DAX Nemetschek SE MDAX
Delivery Hero AG DAX NORMA Group SE MDAX
Deutsche Euroshop AG MDAX OSRAM Licht AG MDAX
Deutsche Lufthansa AG DAX ProSiebenSat.1 Media SE MDAX
Deutsche Post AG DAX Rheinmetall AG MDAX
Deutsche Telekom AG MDAX RWE AG DAX
Deutsche Wohnen AG MDAX SAP SE DAX
Drillisch AG MDAX Sartorius AG MDAX
Dürr AG MDAX Scout24 AG MDAX
E.ON SE DAX Siemens AG DAX
Evonik Industries AG MDAX Siltronic AG MDAX
Evotec AG MDAX Software AG MDAX
Fielmann AG MDAX Symrise AG MDAX
Fraport AG MDAX TAG Immobilien AG MDAX
freenet AG MDAX Telefónica Deutschland Holding AG MDAX
Fresenius Medical Care AG & Co KGaA DAX ThyssenKrupp AG DAX
Fresenius SE & Co KGaA DAX Uniper SE MDAX
Fuchs Petrolub SE MDAX United Internet AG MDAX
GEA Group AG MDAX Volkswagen AG DAX
Gerresheimer AG MDAX Vonovia SE DAX
HeidelbergCement AG DAX Wacker Chemie AG MDAX
Henkel AG & Co KGaA DAX Zalando SE MDAX
HOCHTIEF AG MDAX
Against the backdrop of the remuneration restrictions and the
resulting elimination of the payment of variable remuneration
components, the Supervisory Board did not commission a
corresponding expert opinion on the appropriateness of the
remuneration level for members of the Executive Board for financial
year 2021. As in financial years 2019 and 2020, the remuneration
was significantly below that of financial year 2018, the
appropriateness of which was again assessed and confirmed. The
amount of the remuneration paid and owed, which for financial year
2021 consists only of fringe benefits and pension contributions in
addition to the fixed remuneration, was largely known to the Annual
General Meeting, which approved the remuneration system in
financial year 2021.
III.3.3 BENEFITS TO FORMER MEMBERS OF THE EXECUTIVE BOARD
For former members of the Executive Board and their surviving
dependents, total pension payments in financial year 2021 amounted
to EUR 6,074.2 k (previous year EUR 6,055.3 k). Of this amount, EUR
884.9 thousand was attributable to Michael Frenzel, who left the
Executive Board on 31 March 2014, and EUR 955.8 thousand to Horst
Baier, who left the Executive Board on 30 September 2018, in
financial year 2021. The remaining payments related to former
members of the Executive Board who left TUI AG's Executive Board
more than ten years ago.
At the balance sheet date, pension provisions for former members
of the Executive Board and their surviving dependants totalled EUR
71,766.5 k (previous year: EUR 73,483.7 k) measured in accordance
with IAS 19 - excluding Mr Ebel's entitlements of EUR 5,762.4 k
(previous year: EUR 5,721.7 k) earned in the framework of his
service for the TUI Group before 31 August 2006.
Mr Baier, who resigned from the Executive Board of TUI AG as at
30 September 2018, has an entitlement to payment from the 2017 /
2020 LTIP tranche of EUR 47.0 k, which expired on 30 September
2020. This entitlement was paid out in December 2020 in accordance
with the service agreement and is therefore to be regarded as paid
and owed in financial year 2021 within the meaning of section 162
para. 1 sentence 1, sentence 2 no. 1 AktG. The allocation of the
LTIP tranche 2017 / 2020 was based on an average stock market price
of the TUI AG share of EUR 12.36. The performance period ended on
31 December 2020. At the end of the performance period, the average
stock market price of the TUI AG share was EUR 3.44. Due to the
degree of target achievement of TUI AG's TSR rank compared with the
TSR values of the companies in the STOXX Europe 600 Travel &
Leisure over the performance period, the LTIP achieved a target of
25 %. As Mr Baier was no longer an active member of the Executive
Board at the time the Framework Agreement II was concluded, the
remuneration restrictions do not apply to him.
Based on the above information, the relative share of Mr Baier's
pension payment is approximately 95.3 % of the remuneration paid
and owed to him in financial year 2021 within the meaning of
section 162 para. 1 sentence 1, sentence 2 no. 1 of the AktG. The
relative share of the payment amount from the 2017 / 2020 LTIP
tranche is accordingly approx. 4.7 % of the remuneration paid and
owed to him in financial year 2021 within the meaning of section
162 para. 1 sentence 1, sentence 2 no. 1 of the AktG.
Mr Baier also has a claim to payment from the LTIP tranche 2018
/ 2021, which expired on 30 September 2021. This claim of EUR 51.1
k will be paid out in December 2021 in accordance with the service
agreement and is therefore not to be regarded as paid and owed
within the meaning of section 162 para. 1 sentence 1, sentence 2
no. 1 AktG until financial year 2022. The allocation of the LTIP
tranche 2018 / 2021 was based on an average stock exchange price of
the TUI AG share of EUR 14.60. At the end of the performance
period, the average stock market price of the TUI AG share was EUR
3.62. Due to the degree of target achievement of TUI AG's TSR rank
compared with the TSR values of the companies in the STOXX Europe
600 Travel & Leisure over the performance period, the LTIP
achieved a target of 25 %. As Mr Baier was no longer an active
member of the Executive Board at the time the Framework Agreement
II was concluded, the remuneration restrictions do not apply to
him.
Supervisory Board and Supervisory Board Remuneration
CONFIRMATION OF THE REMUNERATION SYSTEM BY THE SHAREHOLDERS
According to the German Stock Corporation Act (AktG) in the
version of the SRD II, the Annual General Meeting of a listed
company must resolve on the remuneration of the members of the
Supervisory Board at least every four years. A resolution
confirming the existing remuneration is also permissible. The
resolution must comply with new formal requirements. Such a
resolution was passed by the Annual General Meeting on 25 March
2021. The remuneration system for the members of the Supervisory
Board was approved by 99.7 % and thus adopted.
Composition of the Supervisory Board
In accordance with the Articles of Association, the Supervisory
Board of TUI AG comprises a total of 20 members. At the Annual
General Meeting on 25 March 2021, four shareholder representatives
had to be newly elected or re-elected. The elections and
re-elections of employee representatives were held in the run-up to
the Annual General Meeting.
Composition of the Supervisory Board
Dr Dieter Zetsche Member since 13 February 2018
Chairman
Frank Jakobi * Member since 15 August 2007
Vice-Chairman
Peter Long Member from 9 February 2016 to 25 March 2021
Vice-Chairman
Ingrid-Helen Arnold Member since 11 February 2020
Andreas Barczweski * Member since 10 May 2006
Peter Bremme * Member since 2 July 2014
Dr Jutta Dönges Member since 25 March 2021
Prof. Dr Edgar Ernst Member since 9 February 2011
Wolfgang Flintermann * Member since 13 June 2016
María Garaña Corces Member since 11 February 2020
Angelika Gifford Member from 26 March 2012 to 28 October 2014 and
from 9 February 2016 until 25 March 2021
Stefan Heinemann * Member since 21 July 2020
Dr Dierk Hirschel * Member from 16 January 2015 to 25 March 2021
Janina Kugel Member since 25 March 2021
Mark Muratovic * Member since 25 March 2021
Vladimir Lukin Member from 12 February 2014 to 28 October 2014 and
since 5 June 2019
Coline McConville Member since 12 December 2014
Alexey Mordashov Member since 9 February 2016
Michael Pönipp * Member from 17 April 2013 to 28 February 2021
Carola Schwirn * Member since 1 August 2014
Anette Strempel * Member since 2 January 2009
Joan Trían Riu Member since 12 February 2019
Tanja Viehl * Member since 25 March 2021
Stefan Weinhofer * Member since 9 February 2016
* Workers' representatives
I REMUNERATION OF THE SUPERVISORY BOARD IN FINANCIAL YEAR
2021
The rules and remuneration of the members of the Supervisory
Board are set out in section 18 of TUI AG's Articles of
Association, which are permanently accessible to the public on the
internet. Supervisory Board remuneration is reviewed at appropriate
intervals. This takes account of the time expected to be spent on
the exercise of the office and the practice in companies of
comparable size, industry and complexity.
(1) Fixed remuneration Supervisory Board
Target
The aim is to attract and retain highly qualified members of the
Supervisory Board. This will promote the efficiency of the
Supervisory Board's work and the long-term development of TUI
AG.
-- Chairman: EUR 270.0 k
-- Vice-Chairman: EUR 180.0 k
-- Member: EUR 90.0 k
-- In each case plus the value-added tax on the emoluments
In accordance with the provisions of TUI AG's Articles of
Association, retired members of the Supervisory Board shall receive
(pro rata temporis) fixed remuneration from TUI AG for the last
time immediately after the end of the financial year in which they
resigned for the duration of their membership of TUI AG's
Supervisory Board. After the final payment of the (pro rata
temporis) fixed remuneration, retired members of the Supervisory
Board shall no longer receive any remuneration from TUI AG for
their former Supervisory Board activities.
(2) Fixed remuneration Committees
Presidium
-- Chairman: EUR 42.0 k
-- Member: EUR 42.0 k
Audit Committee
-- Chairman: EUR 126.0 k
-- Member: EUR 42.0 k
Strategy Committee
-- Chairman: EUR 84.0 k
-- Member: EUR 42.0 k
Nominating Committee
-- none
Transaction committees
-- none
(3) Attendance fees
-- Supervisory Board: EUR 1.0 k per meeting
-- Presidium: EUR 1.0 k per meeting
-- Audit Committee: EUR 1.0 k per meeting
-- Strategy Committee: EUR 1.0 k per meeting
-- Nomination Committee: EUR 1.0 k per meeting
-- Transaction Committees: none
(4) Maximum remuneration
Since the remuneration of the members of the Supervisory Board
does not consist of variable but exclusively of fixed components,
there is no need to determine a maximum total remuneration for the
members of the Supervisory Board. The provisions of the German
Stock Corporation Act (AktG) in the version of the SRD II expressly
provide for the determination of a maximum remuneration only for
the members of the Executive Board, but not for the members of the
Supervisory Board.
(5) D&O
Target
In addition, the members of the Supervisory Board are included
in a pecuniary damage liability insurance policy (so-called D&O
insurance) maintained by the company in the interest of the company
at an appropriate amount. The premiums for this are paid by the
company. There is no deductible.
I.1 TOTAL REMUNERATION OF THE SUPERVISORY BOARD
I.1.1 'REMUNERATION PAID AND OWED' WITHIN THE MEANING OF SECTION
162 PARA. 1 SENTENCE 1 AKTG IN THE FINANCIAL YEAR 2021
Pursuant to section 162 para. 1 sentence 1, sentence 2 no. 1 of
the German Stock Corporation Act (AktG), all fixed and variable
remuneration components 'paid and owed' to the individual members
of the Supervisory Board in financial year 2021 must also be
disclosed. The values stated refer to the remuneration components
'paid and owed' in the respective financial year pursuant to
section 162 (1) sentence 1 AktG. They thus include all benefits
actually received in the respective financial year, regardless of
the financial year for which they were received by the members of
the Supervisory Board. In terms of value, the amounts for financial
year 2020 are taken into account, which will not be paid out until
financial year 2021 in accordance with the Articles of
Association.
Total remuneration paid and owed to the Supervisory Board
EUR '000 Outlook: 2022 2021 2020
Fixed remuneration 2,115.2 1,853.4 2,158.1
Longterm variable remuneration n. a. n. a. 252.9
Remuneration for committee memberships 1,029.2 1,064.0 1,084.4
Attendance fees 429.0 418.0 354.0
Remuneration for TUI AG Supervisory Board mandate 3,573.4 3,335.4 3,849.4
Remuneration for Supervisory Board mandates in the Group 38.7 37.3 40.6
Total 3,612.1 3,372.7 3,890.0
In addition, travel costs and expenses amounting to EUR 0 k
(previous year EUR 187.6 k) were reimbursed. The remuneration of
the Supervisory Board in financial year 2021, together with the
reimbursement of travel costs and expenses, amounted to EUR 3,372.7
k (previous year EUR 4,077.6 k).
I.2.1 'REMUNERATION PAID AND OWED' WITHIN THE MEANING OF SECTION
162 PARA. 1 SENTENCE 1 OF THE GERMAN STOCK CORPORATION ACT (AKTG)
IN THE FINANCIAL YEAR 2021. 1 SENTENCE 1 AKTG IN THE FINANCIAL YEAR
2021
Pursuant to section 162 para. 1 sentence 1, sentence 2 no. 1 of
the German Stock Corporation Act (AktG), all fixed and variable
remuneration components 'paid and owed' to the individual members
of the Supervisory Board in financial year 2021 must also be
disclosed. The values stated refer to the remuneration components
'paid and owed' in the respective financial year pursuant to
section 162 (1) sentence 1 AktG. They thus include all benefits
actually received in the respective financial year, regardless of
the financial year for which they were received by the members of
the Supervisory Board. In terms of value, the amounts for financial
year 2020 are taken into account, which, in accordance with the
Articles of Association, will only be paid out in financial year
2021.
Paid and owed remuneration of the Supervisory Board (individual) in financial year 2021
Fixed in % Remuneration in % Attendance in % Remuneration for in % Total
remuneration 1 for fee Supervisory Board mandates
EUR '000 committee EUR '000 in the Group
EUR '000 EUR '000
Dr Dieter Zetsche 229.5 58.9 126.0 32.3 34.0 8.7 389.5
(Chairman) 2
Frank Jakobi (Deputy 166.5 57.6 93.8 32.4 29.0 10.0 289.3
Chairman) 3
Peter Long (Deputy 153.0 50.0 126.0 41.2 27.0 8.8 306.0
Chairman) 2
Ingrid-Helen Arnold 4 44.0 81.5 10.0 18.5 54.0
Andreas Barczewski 76.5 47.4 42.0 26.0 21.0 13.0 21.8 13.5 161.3
Peter Bremme 76.5 54.8 42.0 30.1 21.0 15.1 139.5
Prof. Dr Edgar Ernst 76.5 28.4 168.0 62.3 25.0 9.3 269.5
Wolfgang Flintermann 76.5 84.5 14.0 15.5 90.5
María Garaña Corces 4 44.0 83.0 9.0 17.0 53.0
Angelika Gifford 76.5 41.0 84.0 45.0 26.0 13.9 186.5
Valerie Gooding 5 32.8 59.5 15.3 27.8 7.0 12.7 55.1
Stefan Heinemann 6 12.3 86.0 2.0 14.0 14.3
Dr Dierk Hirschel 76.5 54.8 42.0 30.1 21.0 15.1 139.5
Janis Kong 5 32.8 59.5 15.3 27.8 7.0 12.7 55.1
Vladimir Lukin 7 76.5 63.1 26.8 22.1 18.0 14.8 121.3
Coline McConville 76.5 55.2 42.0 30.3 20.0 14.4 138.5
Alexey Mordashov 76.5 42.6 84.0 46.8 19.0 10.6 179.5
Michael Pönipp 3 76.5 45.6 51.8 30.9 24.0 14.3 15.5 9.2 167.8
Carola Schwirn 76.5 84.5 14.0 15.5 90.5
Anette Strempel 76.5 54.4 42.0 29.9 22.0 15.7 140.5
Ortwin Strubelt 8 67.5 44.9 63.0 41.9 20.0 13.3 150.5
Joan Trían Riu 76.5 84.5 14.0 15.5 90.5
Stefan Weinhofer 76.5 84.5 14.0 15.5 90.5
Total 1,853.4 1,064.0 418.0 37.3 3,372.7
1 Taking into account a voluntary waiver of 30 % of the fixed
remuneration for the months April to September 2020.
2 Taking into account an additional voluntary waiver of 30 % of
the remuneration as Chairman / Deputy Chairman for the months April
to September 2020.
3 Pro rata temporis view of committee remuneration from 7 July
2020.
4 Pro rata temporis view of all remuneration components as of 11
February 2020.
5 Pro rata temporis view of all remuneration components until 11
February 2020.
6 Pro rata temporis view of all remuneration components as of 21
July 2020.
7 Pro rata temporis view of committee remuneration as of 11
February 2020.
8 Pro rata temporis view of all remuneration components until 30
June 2020.
I.2.2 OUTLOOK ON 'REMUNERATION PAID AND OWED' WITHIN THE MEANING
OF SECTION 162 (1) SENTENCE 1 AKTG. 1 SENTENCE 1 AKTG IN THE
FINANCIAL YEAR 2022
In terms of value, the outlook takes into account the amounts
for financial year 2021, which, in accordance with the Articles of
Association, will not be paid out until financial year 2022.
Outlook: Paid and owed remuneration of the Supervisory Board (individual) in financial year 2022
Fixed in % Remuneration in % Attendance in % Remuneration for in % Total
remuneration for fee Supervisory Board mandates in
EUR '000 committee EUR '000 the Group
EUR '000 EUR '000
Dr Dieter Zetsche 270.0 59.4 147.6 32.5 37.0 8.1 454.6
(Chairman) 1
Frank Jakobi (Deputy 180.0 52.9 126.0 37.1 34.0 10.0 340.0
Chairman)
Peter Long (Deputy 87.8 52.9 61.3 36.9 17.0 10.2 166.1
Chairman) 2
Ingrid-Helen Arnold 90.0 87.4 13.0 12.6 103.0
Andreas Barczewski 3 90.0 59.3 20.4 13.4 19.0 12.5 22.4 14.8 151.8
Peter Bremme 90.0 59.2 42.0 27.6 20.0 13.2 152.0
Dr Jutta Dönges 4 46.5 46.5 43.4 43.4 10.0 10.0 99.9
Prof. Dr Edgar Ernst 1 90.0 29.0 189.7 61.1 31.0 10.0 310.7
Wolfgang Flintermann 90.0 85.7 15.0 14.3 105.0
María Garaña Corces 90.0 86.5 14.0 13.5 104.0
Angelika Gifford 2 43.8 44.4 40.8 41.4 14.0 14.2 98.6
Stefan Heinemann 1 90.0 68.9 21.7 16.6 19.0 14.5 130.7
Dr Dierk Hirschel 2 43.8 58.2 20.4 27.1 11.0 14.6 75.2
Janina Kugel 4 46.5 86.9 7.0 13.1 53.5
Vladimir Lukin 1 90.0 50.4 63.7 35.6 25.0 14.0 178.7
Coline McConville 90.0 58.8 42.0 27.5 21.0 13.7 153.0
Alexey Mordashov 90.0 46.6 84.0 43.5 19.0 9.8 193.0
Mark Muratovic 4 46.5 55.2 21.7 25.7 12.0 14.2 4.1 4.9 84.3
Michael Pönipp 5 43.8 39.5 40.8 36.8 14.0 12.6 12.3 11.1 110.9
Carola Schwirn 90.0 85.7 15.0 14.3 105.0
Anette Strempel 90.0 59.2 42.0 27.6 20.0 13.2 152.0
Joan Trían Riu 90.0 85.7 15.0 14.3 105.0
Tanja Viehl 4 46.5 85.3 8.0 14.7 54.5
Stefan Weinhofer 1 90.0 68.9 21.7 16.6 19.0 14.5 130.7
Total 2,115.2 58.6 1,029.2 28.5 429.0 11.9 38.8 1.1 3,612.2
1 Pro rata temporis view of individual committee remuneration as
of 25 March 2021.
2 Pro rata temporis view of all remuneration components until 25
March 2021.
3 Pro rata temporis view of individual committee remuneration
until 25 March 2021.
4 Pro rata temporis view of all remuneration components from 25
March 2021.
5 Pro rata temporis view of all remuneration components until 28
February 2021.
I.3 COMPARISON OF THE ANNUAL CHANGE IN THE REMUNERATION OF THE
MEMBERS OF THE SUPERVISORY BOARD WITH THE DEVELOPMENT OF EARNINGS
AND THE AVERAGE REMUNERATION OF TUI AG EMPLOYEES
The following table shows a comparison of the percentage change
in the remuneration of the members of the Supervisory Board with
the development of TUI AG's earnings and with the average
remuneration of employees on a full-time equivalent basis compared
with the previous financial year*. The remuneration of the members
of the Supervisory Board included in the table reflects the amounts
actually received in the respective financial year. For financial
year 2021, these values correspond to the values stated in the
table 'Remuneration paid and owed within the meaning of section 162
para. 1 sentence 1 AktG' (page 134 ff.). Where members of the
Supervisory Board had previously belonged to the Executive Board of
TUI AG and received remuneration for this, this would not be
included in the comparative presentation. However, this does not
apply to any member of the Supervisory Board.
The development of earnings is generally presented based on the
development of TUI AG's profit for the year in accordance with
section 275 sub-section 2 no 17 of the German Commercial Code
(HGB).
The comparison with the development of average employee
remuneration is based on the average remuneration of TUI AG's
workforce. Since the employee and remuneration structures in the
subsidiaries are diverse, in particular in the case of employees
abroad, it is appropriate to base the comparison of the development
of average remuneration only on the workforce of TUI AG. The
remuneration of all employees, including executive staff as defined
in section 5 sub-section 3 of the German Works Council Constitution
Act (BetrVG), was taken into account. Employee remuneration did not
include remuneration received by employees as members of TUI AG's
Supervisory Board. In order to ensure comparability, the
remuneration of part-time employees was extrapolated to full-time
equivalents.
* Pursuant to section 26j, para. 2, sentence 2 of the
Introductory Act to the Stock Corporation Act (EGAktG), a
comparison of the average remuneration of employees on a full-time
equivalent basis over the last five financial years pursuant to
section 162, paragraph 1, sentence 2, no. 2 of the Stock
Corporation Act (AktG) is not yet to be included in the
remuneration report.
Comparison of annual change to Executive Board remuneration according to section 162 para 1 no. 2 AktG
Annual change (in %) 2021 vs. 2020 2020 vs. 2019 2019 vs. 2018 2018 vs. 2017 2017 vs. 2016
Supervisory Board remuneration 1
Dr Dieter Zetsche 17 % 71 % 268 %
Frank Jakobi 18 % 0 % - 6 % - 3 % - 6 %
Peter Long - 46 % - 8 % 21 % 47 % 59 %
Ingrid-Helen Arnold 91 %
Andreas Barczewski - 6 % - 13 % 5 % - 5 % - 22 %
Peter Bremme 9 % - 14 % 1 % 2 % - 12 %
Dr Jutta Dönges
Prof. Dr Edgar Ernst 15 % - 6 % 17 % - 5 % - 26 %
Wolfgang Flintermann 16 % - 10 % 1 % 1 % 240 %
María Garaña Corces 96 %
Angelika Gifford - 47 % 12 % 14 % 0 % 61 %
Stefan Heinemann 914 %
Dr Dierk Hirschel - 46 % - 15 % 3 % 9 % - 7 %
Janina Kugel
Vladimir Lukin 47 % 279 %
Coline McConville 10 % - 16 % 3 % 3 % - 18 %
Alexey Mordashov 8 % - 8 % 5 % - 4 % 62 %
Mark Muratovic
Michael Pönipp - 34 % - 8 % 2 % - 2 % - 20 %
Carola Schwirn 16 % - 21 % 3 % 2 % - 27 %
Anette Strempel 8 % - 14 % 0 % 0 % - 24 %
Joan Trían Riu 16 % 41 %
Tanja Viehl
Stefan Weinhofer 44 % - 10 % 1 % 2 % 54 %
Earnings performance
Annual result (TUI AG) 2 30 % - 1,994 % - 88 % 33 % 430 %
Average employee remuneration
on FTE basis
Company employees 6 % - 2 %
1 Changes result in particular from the time of entry into the
Supervisory Board, membership of the committees and the respective
date of resignation
2 Annual result within the meaning of section 275 para. 2 no. 17
German Commercial Code (HGB)
Apart from the work performed by the employee representatives in
the framework of their employment contracts, the members of the
Supervisory Board did not provide any personal services, such as
consultancy or agency services, for TUI AG or its subsidiaries in
financial year 2021 and therefore did not receive any additional
remuneration based on such services.
Consolidated Financial Statements
Consolidated Income Statement of TUI AG
for the period from 1 Oct 2020 to 30 Sep 2021
EUR million Notes 2021 2020
Revenue (1) 4,731.6 7,943.7
Cost of sales (2) 5,955.4 9,926.1
Gross loss - 1,223.8 - 1,982.4
Administrative expenses (2) 840.5 1,017.3
Other income (3) 250.6 574.4
Other expenses (3) 11.5 15.2
Impairment of goodwill (12) - 68.1
Impairment (+) / Reversals of impairment (-) of financial assets (41) - 38.0 180.6
Financial income (4) 27.3 35.3
Financial expenses (5) 464.1 321.7
Share of result of investments accounted for using the equity method (6) - 232.7 - 193.3
Impairment (+) / Reversals of impairment (-) of net investments in joint ventures and (6) 5.0 34.5
associates
Earnings before income taxes - 2,461.7 - 3,203.3
Income taxes (expense [+], income [-]) (7) 19.2 - 64.2
Group loss - 2,480.9 - 3,139.1
Group loss attributable to shareholders of TUI AG (8) - 2,467.2 - 3,148.4
Group loss / profit attributable to non-controlling interest (9) - 13.8 9.4
Earnings per share
EUR Notes 2021 2020
Basic and diluted loss / earnings per share (10) - 2.58 - 5.34
Consolidated Statement of Comprehensive Income of TUI AG
for the period from 1 Oct 2020 to 30 Sep 2021
EUR million Notes 2021 2020
Group loss - 2,480.9 - 3,139.1
Remeasurements of defined benefit obligations and related fund assets - 257.5 25.5
Other comprehensive income of investments accounted 40.3 - 51.6
for using the equity method that will not be reclassified
Fair value loss on investments in equity instruments - 0.1 - 27.7
designated as at FVTOCI
Income tax related to items that will not be reclassified (11) 139.3 - 15.2
(expense [-], income [+])
Items that will not be reclassified to profit or loss - 78.0 - 69.0
Foreign exchange differences 119.9 - 185.9
Foreign exchange differences outside profit or loss 71.7 - 187.0
Reclassification 48.2 1.1
Cash flow hedges 144.0 - 316.1
Changes in the fair value 309.1 - 65.0
Reclassification - 165.1 - 251.1
Other comprehensive income of investments accounted - 22.4 13.0
for using the equity method that may be reclassified
Changes in the measurement outside profit or loss - 22.4 13.0
Income tax related to items that may be reclassified (11) - 32.1 73.3
(expense [-], income [+])
Items that may be reclassified to profit or loss 209.4 - 415.7
Other comprehensive income 131.5 - 484.7
Total comprehensive income - 2,349.4 - 3,623.8
attributable to shareholders of TUI AG - 2,350.3 - 3,580.4
attributable to non-controlling interest 0.9 - 43.4
Consolidated Statement of Financial Position of TUI AG as at 30 Sep 2021
EUR million Notes 30 Sep 2021 30 Sep 2020
Assets
Goodwill (12) 2,993.1 2,914.5
Other intangible assets (13) 498.6 553.5
Property, plant and equipment (14) 3,159.3 3,462.5
Right-of-use assets (15) 3,009.2 3,227.9
Investments in joint ventures and associates (16) 640.5 1,186.7
Trade and other receivables (17), (41) 308.7 402.4
Derivative financial instruments (41) 8.9 7.4
Other financial assets (41) 12.3 10.6
Touristic payments on account (18) 107.6 149.9
Other non-financial assets (19) 183.4 423.2
Income tax assets 9.6 9.6
Deferred tax assets (20) 291.1 299.6
Non-current assets 11,222.3 12,647.8
Inventories (21) 42.8 73.2
Trade and other receivables (17), (41) 471.6 486.3
Derivative financial instruments (41) 53.4 88.9
Other financial assets (41) 12.1 14.9
Touristic payments on account (18) 508.6 555.5
Other non-financial assets (19) 106.7 113.4
Income tax assets 57.7 70.9
Cash and cash equivalents (22), (41) 1,583.9 1,233.1
Assets held for sale (23) 96.5 57.2
Current assets 2,933.3 2,693.4
Total assets 14,155.7 15,341.1
Consolidated Statement of Financial Position of TUI AG as at 30 Sep 2021
EUR million Notes 30 Sep 2021 30 Sep 2020
Equity and liabilities
Subscribed capital (24) 1,099.4 1,509.4
Capital reserves (25) 5,249.6 4,211.0
Revenue reserves (26) - 8,525.7 - 6,168.8
Silent participation (27) 1,091.0 -
Equity before non-controlling interest - 1,085.8 - 448.4
Non-controlling interest (29) 667.3 666.5
Equity - 418.4 218.1
901.9
Pension provisions and similar obligations (30) 983.6
Other provisions (31) 763.6 912.1
Non-current provisions 1,665.5 1,895.7
Financial liabilities (32), (41) 3,036.1 3,691.7
Lease liabilities (32), (41) 2,606.1 2,712.6
Derivative financial instruments (41) 10.9 44.0
Other financial liabilities (33), (41) 5.9 7.2
Other non-financial liabilities (35) 206.3 198.4
Income tax liabilities 56.4 61.3
Deferred tax liabilities (20) 123.3 192.7
Non-current liabilities 6,045.1 6,908.1
Non-current provisions and liabilities 7,710.5 8,803.7
Pension provisions and similar obligations (30) 33.2 31.4
Other provisions (31) 539.5 390.3
Current provisions 572.7 421.6
Financial liabilities (32), (41) 284.6 577.3
Lease liabilities (32), (41) 623.3 687.3
Trade payables (41) 2,052.4 1,611.5
Derivative financial instruments (41) 12.9 274.8
Other financial liabilities (33), (41) 313.0 422.0
Touristic advance payments received (34) 2,379.4 1,770.1
Other non-financial liabilities (35) 518.0 447.8
Income tax liabilities 56.7 82.4
Current liabilities 6,240.3 5,873.2
Liabilities related to assets held for sale (36) 50.6 24.5
Current provisions and liabilities 6,863.6 6,319.3
Total equity, liabilities and provisions 14,155.7 15,341.1
Consolidated Statement of Changes in Equity of TUI AG for the period from 1 Oct 2020 to 30 Sep 2021
Subscribed Capital Other Foreign Financial Cash Revaluation Revenue Silent Equity before Non-controlling
EUR million capital reserves revenue exchange assets flow reserve reserves Participation non-controlling interest Total
reserves differences at FVTOCI hedges interest
Notes (24) (25) (26) (27) (29)
Balance as at 1,505.8 4,207.5 - 1,171.5 - 1,190.0 3.7 85.1 13.5 - 2,259.2 - 3,454.1 711.4 4,165.5
30 Sep 2019
First-time
adoption of - - - 13.7 - - - - - 13.7 - - 13.7 - - 13.7
IFRS 16
Balance as at 1 1,505.8 4,207.5 - 1,185.2 - 1,190.0 3.7 85.1 13.5 - 2,272.9 - 3,440.4 711.4 4,151.8
Oct 2019
Dividends - - - 318.1 - - - - - 318.1 - - 318.1 - 0.2 - 318.3
Share-based - - 2.9 - - - - 2.9 - 2.9 - 2.9
payment schemes
Issue of 3.6 3.5 - - - - - - - 7.1 - 7.1
employee shares
Effects on the
acquisition
of - - - 0.3 - - - - - 0.3 - - 0.3 - 1.3 - 1.6
non-controlling
interests
Group loss for - - - 3,148.5 - - - - - 3,148.5 - - 3,148.5 9.4 - 3,139.1
the year
Foreign
exchange - - - 6.1 - 136.0 0.1 9.4 - 0.7 - 133.3 - - 133.3 - 52.6 - 185.9
differences
Financial
assets at - - - - - 27.7 - - - 27.7 - - 27.7 - - 27.7
FVTOCI
Cash flow - - - - - - 316.2 - - 316.2 - - 316.2 0.1 - 316.1
hedges
Remeasurements
of defined
benefit - - 25.5 - - - - 25.5 - 25.5 - 25.5
obligations and
related fund
assets
Other
comprehensive
income of
investments - - - 38.3 - - - - - 38.3 - - 38.3 - 0.3 - 38.6
accounted for
using the
equity method
Taxes
attributable to
other - - - 15.2 - - 73.3 - 58.1 - 58.1 - 58.1
comprehensive
income
Other
comprehensive - - - 34.1 - 136.0 - 27.6 - 233.5 - 0.7 - 431.9 - - 431.9 - 52.8 - 484.7
income
Total
comprehensive - - - 3,182.6 - 136.0 - 27.6 - 233.5 - 0.7 - 3,580.4 - - 3,580.4 - 43.4 - 3,623.8
income
Balance as at 1,509.4 4,211.0 - 4,683.3 - 1,326.0 - 23.9 - 148.4 12.8 - 6,168.8 - - 448.4 666.5 218.1
30 Sep 2020
Dividends - - - - - - - - - - - 0.1 - 0.1
Share-based - - 0.3 - - - - 0.3 - 0.3 - 0.3
payment schemes
Issuance of
bonds with
warrant - 93.9 - - - - - - - 93.9 - 93.9
and convertible
bonds
Capital 509.0 26.9 - - - - - - 1,091.0 1,626.9 - 1,626.9
increase
Capital - 919.0 917.8 - - - - - - - - 1.2 - - 1.2
reduction
Other - - - 6.9 - - - - - 6.9 - - 6.9 - - 6.9
Group profit /
loss for the - - - 2,467.2 - - - - - 2,467.2 - - 2,467.2 - 13.7 - 2,480.9
year
Foreign
exchange - - - 45.2 153.8 - - 3.9 - 104.7 - 104.7 15.2 119.9
differences
Financial
assets at - - - - - 0.1 - - - 0.1 - - 0.1 - - 0.1
FVTOCI
Cash flow - - - - - 144.0 - 144.0 - 144.0 - 144.0
hedges
Remeasurements
of defined
benefit - - - 257.5 - - - - - 257.5 - - 257.5 - - 257.5
obligations and
related fund
assets
Other
comprehensive
income of
investments - - 18.5 - - - - 18.5 - 18.5 - 0.6 17.9
accounted for
using the
equity method
Taxes
attributable to
other - - 139.4 - - - 32.1 - 107.3 - 107.3 - 107.3
comprehensive
income
Other
comprehensive - - - 144.8 153.8 - 0.1 108.0 - 116.9 - 116.9 14.6 131.5
income
Total
comprehensive - - - 2,612.0 153.8 - 0.1 108.0 - - 2,350.3 - - 2,350.3 0.9 - 2,349.4
income
Balance as at 1,099.4 5,249.6 - 7,301.9 - 1,172.2 - 24.0 - 40.4 12.8 - 8,525.7 1,091.0 - 1,085.8 667.3 - 418.4
30 Sep 2021
Consolidated Cash Flow Statement of TUI AG for the period from 1 Oct 2020 to 30 Sep 2021
EUR million Notes 2021 2020
Group loss - 2,480.9 - 3,139.1
Depreciation, amortisation and impairment (+) / write-backs (-) 1,012.4 1,573.5
Other non-cash expenses (+) / income (-) 163.0 313.4
Interest expenses 461.6 305.6
Dividends from joint ventures and associates 14.2 7.1
Profit (-) / loss (+) from disposals of non-current assets - 204.4 - 564.3
Increase (-) / decrease (+) in inventories 16.2 33.1
Increase (-) / decrease (+) in receivables and other assets 390.8 627.9
Increase (+) / decrease (-) in provisions - 137.4 74.1
Increase (+) / decrease (-) in liabilities (excl. financial liabilities) 613.2 - 2,003.2
Cash inflow / cash outflow from operating activities (43) - 151.3 - 2,771.9
Payments received from disposals of property, plant and equipment and intangible assets 357.9 109.9
Payments received from disposals of consolidated companies (less disposals of cash and cash 105.5 689.3
equivalents due to divestments)
Payments received from disposals of other non-current assets 567.2 79.1
Payments made for investments in property, plant and equipment and intangible assets - 299.7 - 587.0
Payments made for investments in consolidated companies (less cash and cash equivalents - 5.3 - 40.8
received due to acquisitions)
Payments made for investments in other non-current assets - 21.0 - 88.6
Cash inflow / cash outflow from investing activities (44) 704.7 161.8
Payments received from capital increase by issuing new shares 542.5 7.1
Payments received from capital increase through issuance of silent participations 1,084.4 -
Payments received from capital increase through equity components of the convertible bond and 116.9 -
bond with warrants issued
Payments made for acquisition of own shares - 1.7 - 1.0
Payments made for interest increase in consolidated companies - - 1.6
Dividend payments
TUI AG - - 318.1
subsidiaries to non-controlling interest - - 0.6
Payments received from the raising of financial liabilities 855.5 3,372.4
Payments made for redemption of loans and financial liabilities - 1,839.2 - 81.4
Payments made for principal of lease liabilities - 587.2 - 612.4
Interest paid - 404.8 - 251.9
Cash inflow / cash outflow from financing activities (45) - 233.5 2,112.5
Net change in cash and cash equivalents 319.8 - 497.6
Development of cash and cash equivalents (46)
Cash and cash equivalents at beginning of period 1,233.1 1,747.6
Change in cash and cash equivalents due to exchange rate fluctuations 33.2 - 17.0
Net change in cash and cash equivalents 319.8 - 497.6
Cash and cash equivalents at end of period 1,586.1 1,233.1
of which included in the balance sheet as assets held for sale 2.2 -
Consolidated Statement of Changes in Equity
Notes
Principles and Methods underlying the Consolidated Financial
Statements
General
The TUI Group and its major subsidiaries and shareholdings
operate in tourism.
TUI AG, based in Karl-Wiechert-Allee 4, 30163 Hanover, Germany,
is the TUI Group's parent company and a listed corporation under
German law. The Company is registered in the commercial registers
of the district courts of Berlin-Charlottenburg (HRB 321) and
Hanover (HRB 6580). The shares in the company are traded on the
London Stock Exchange and the Hanover and Frankfurt Stock
Exchanges.
These consolidated financial statements of TUI AG were prepared
for the financial year 2021 comprising the period from 1 October
2020 to 30 September 2021. Where any of TUI's subsidiaries have
different financial years, financial statements were prepared as at
30 September in order to include these subsidiaries in TUI AG's
consolidated financial statements.
The Executive Board and the Supervisory Board have submitted a
Declaration of Compliance with the German Corporate Governance Code
required pursuant to section 161 of the German Stock Corporation
Act (AktG) and made it permanently available to the general public
on the Company's website (www.tuigroup.com).
The consolidated financial statements are prepared in euros.
Unless stated otherwise, all amounts are indicated in million euros
(EURm). Due to the utilisation of rounded amounts there may be
minor rounding differences in total and percentages.
The consolidated financial statements were approved for
publication by TUI AG's Executive Board on 6 December 2021.
Accounting principles
Declaration of compliance
Pursuant to Regulation EEC No. 1606 / 2002 of the European
Parliament and Council, TUI AG's consolidated financial statements
as at 30 September 2021 were prepared in accordance with the
International Financial Reporting Standards ( IFRS) as applicable
in the European Union. Moreover, the commercial-law provisions
listed in section 315e (1) of the German Commercial Code (HGB) were
also observed in preparing the consolidated financial
statements.
The accounting and measurement methods and the explanatory
information and Notes to these annual financial statements for
financial year 2021 are generally consistent with those followed in
preparing the previous consolidated financial statements for
financial year 2020, with the exception of the initial application
of new or amended standards, as outlined below.
Newly applied standards
Since the beginning of financial year 2021, TUI Group has
initially applied the following standards and interpretations,
amended or newly issued by the IASB and endorsed by the EU, on a
mandatory or voluntary basis:
Newly applied standards in financial year 2021
Standard Applicable Amendments Impact on financial statements
from
Materiality is a key concept in preparing
financial statements according to IFRS. The
Amendments to IAS 1 amendments refine the definition of 'material'
& IAS 8 and clarify
Definition of 1 Jan 2020 how to apply materiality. The amendments also No impact.
Materiality align the definition of 'material' and ensure
consistency in the application of that concept
across
all IFRS Standards.
The revised Conceptual Framework includes
Framework revised definitions of an asset and a
Amendments to liability, and new guidance on measurement and
References to the 1 Jan 2020 derecognition, presentation and disclosure. No impact.
Conceptual References to the Conceptual Framework in
Framework in IFRS existing Standards are updated. The revised
Standards Conceptual Framework is
not subject to the Endorsement Process.
Amendments to IFRS The amendments to IFRS 3 clarify the definition
3 1 Jan 2020 of a business and make it easier for entities The assessment process used
Definition of a to determine whether an acquisition to determine whether an acquisition of a
Business transaction results in recognition of a group subsidiary falls into the scope of IFRS
of assets or a business. 3 was revised in the reporting period.
As a result, accounting for acquisitions
of hotel companies, in particular, will
now be assessed on this
revised basis.
The amendments relate to the provision of
relief from potential consequences arising from
Amendments to IFRS the reform of interbank offered rates (IBORs)
9, IAS 39 such as
and IFRS 7 LIBOR on companies' financial reporting. They
Interest Rate 1 Jan 2020 are intended to secure the continuation of Not material.
Benchmark Reform hedging relationships despite the replacement
(Phase 1) of current interest rates with alternative
rates. Entities also must disclose the extent
to which their hedges are affected by the
interest rate benchmark reform.
The amendments published by the IASB on 28 May
2020 provide lessees with an exemption from
Amendments to IFRS assessing whether a COVID-19-related rent
16 concession is a lease modification. Lessees No impact. TUI does not apply the new
COVID-19-Related 1 Jun 2020 applying the exemption must account for the practical expedient.
Rent Concessions 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.
Amendments to IFRS The amendments published by the IASB on 31
16 March 2020 extend the period of application of No impact. TUI does not apply the
COVID-19-Related 1 Apr 2021 the aforementioned amendments to IFRS 16 practical expedient.
Rent Concessions issued on 28 May 2020 for another year.
beyond 30 June 2021
Going concern reporting according to the UK Corporate Governance
Code
TUI Group covers its daily working capital requirements through
cash, bank balances and bank loans. As at 30 September 2021, TUI
Group's net debt (financial debt plus lease liabilities less cash
and cash equivalents and less short-term interest-bearing
investments) totalled EUR 4,954.2 m (as at 30 September 2020 EUR
6,420.9 m).
Net debt
EUR million 30 Sep 2021 30 Sep 2020 Var. %
Financial debt 3,320.8 4,269.0 - 22.2
Lease liabilities (IFRS 16) 3,229.4 3,399.9 - 5.0
Cash and cash equivalents 1,583.9 1,233.1 + 28.4
Short-term interest-bearing investments 12.1 14.9 - 18.8
Net debt - 4,954.2 - 6,420.9 + 22.8
The global travel restrictions to contain COVID-19 had a strong
negative impact on the Group's earnings and liquidity development
from the end of March 2020 and also throughout the 2021 financial
year. To cover the resulting liquidity requirements, the Group also
received financing measures in two steps from the Federal Republic
of Germany in financial year 2020, in particular in the form of a
credit line from KfW totalling EUR 2.85 bn and an option bond from
the Economic Stabilization Fund (ESF) in the amount of EUR 150 m
with initial option rights to around 58.7 m shares. The option bond
was issued to the Economic Stabilization Fund on 1 October 2020. In
the second quarter of financial year 2021, TUI secured further
funds from a further financing package of EUR 1.8 bn agreed with
Unifirm Ltd, a banking consortium and KfW as well as the ESF.
The preconditions for all components of the third financing
package were created at the Extraordinary General Meeting of TUI AG
on 5 January 2021. This included in particular the resolution to
reduce the capital stock from EUR 2.56 per share to EUR 1.00 per
share and the subsequent capital increase of around EUR 509 m.
The ESF and TUI AG subsequently signed the agreement on two
silent participations totalling EUR 1.091 bn. The ESF measures
comprise a silent participation convertible into shares in TUI of
EUR 420 m (Silent Participation I) and a second silent
participation (Silent Participation II) of EUR 671 m. As of 30
September 2021, silent participation I and II were fully paid in.
In the IFRS consolidated financial statements, the silent
participations are shown as equity due to their nature and are
therefore not included in the Group's net debt. As part of the
third financing package, KfW also participated in an additional
loan facility together with private banks in the amount of EUR 200
m.
TUI AG successfully completed its capital increase on 28 January
2021. The gross issue proceeds amounted to around EUR 568 m. The
Group's share capital increased nominally by just under EUR 509 m
to around EUR 1.099 bn. The premium from the capital increase
boosted the capital reserves by a further EUR 58.8 m.
With the funds from the capital increase, TUI repaid the
outstanding senior bond (October 2016 - October 2021) of EUR 300 m
early on 23 February 2021 in accordance with the terms and
conditions of the bond. In accordance with the agreement on the
loans granted by KfW under the three financing packages, the early
redemption of the senior bond extended their maturities until July
2022.
On 16 April 2021, TUI AG issued a convertible bond with a total
nominal amount of EUR 400 m, which was increased by a total nominal
amount of almost EUR 190 m in July 2021. TUI received a total of
more than EUR 600 m from the overall issue of the convertible bond.
Provided the convertible bond has not been converted, redeemed or
repurchased and retired ahead of schedule, it will be redeemed at
its nominal amount on 16 April 2028. Investors have the option to
convert the convertible bond into registered shares of TUI. TUI has
used the proceeds from the overall issuance of the convertible
bonds to refinance and to reduce drawings on the KfW
facilities.
On 27 May 2021, TUI AG agreed to sell its 49 % stake in Riu
Hotels S. A. to a company of the Riu Group owned by Carmen and Luis
Riu. The transaction was completed on 31 July 2021 and resulted in
a net cash inflow of EUR 541.4 m, which was used to reduce the
Group's debt. Further purchase price payments will be made in
financial year 2023 and 2024 if Riu Hotels S. A. achieves agreed
earnings targets.
Already in H1 2021, cash inflows were also generated from the
sale and leaseback of aircraft and spare parts.
On 27 July 2021, TUI agreed with the bank consortium and KfW on
an extension of TUI AG's revolving credit facility ('RCF') and KfW
credit line (both tranches) to summer 2024. TUI Group's revolving
credit facilities currently amount to EUR 4.8 bn. For regulatory
reasons due to Brexit, the credit line of a British bank (around
EUR 80 m cash and EUR 25 m guarantee line) cannot be extended
beyond summer 2022, so that thereafter the credit lines will total
EUR 4.7 bn until 2024. At the same time, the term of the loan
facility of EUR 200 m was also agreed to the summer of 2024.
With the extension of the KfW credit lines, it was also agreed
that TUI AG would use 50 % of individual cash inflows exceeding EUR
50 m by 20 July 2022, but a maximum amount of EUR 700 m, e. g. from
capital measures or the sale of assets or companies, to first
reduce the volume of the loan facility of EUR 200 m and
subsequently the KfW credit line and repay it if utilised. The
reduction is to be made for the first time on 1 April 2022. The
cash inflows from the sale of Riu Hotels S. A. are excluded from
this provision. After 20 July 2022 in general 50 % of certain cash
flows exceeding EUR 50 m are to be used. There is no maximum amount
defined.
As at 30 September 2021, the loan facility was reduced by EUR 30
m from EUR 200 m to EUR 170 m. The facility was not utilised at any
time in the financial year 2021. Therefore, not all requirements
for the use of the facility have been met yet, but this would be
possible in the short term.
The TUI Group's current credit facilities comprise the
following
-- EUR 1.75 bn credit line from 20 private banks (incl. EUR 215
m guarantee line)
-- EUR 1.8 bn KfW from 1st financing package
-- EUR 1.05 bn KfW from 2nd financing package
-- EUR 0.17 bn KfW and private banks from 3rd financing package
(currently not available as described above).
TUI AG's RCF and KfW credit line are subject to compliance with
certain financial target values (covenants) for debt coverage and
interest coverage, the review of which is carried out based on the
last four reported quarters at the end of the financial year or the
half-year of a financial year. Against the backdrop of the ongoing
pressures from the COVID-19 pandemic, the review is currently
suspended. On 9 June 2021 and again when the credit lines were
extended, TUI AG's creditor banks agreed to a further suspension of
the review of these covenants until the end of March 2022, so that
the review will now only be resumed in September 2022. In addition,
higher limits will be applied at the first two cut-off dates before
normalised limits have to be complied with from September 2023.
Upon entry of the new shares in the commercial register on 28
October 2021 and final settlement with the banks involved on 2
November 2021, TUI AG successfully completed another capital
increase. The gross issue proceeds amount to around EUR 1.1 bn. The
Group's share capital will nominally increase by EUR 523.5 m to EUR
1.623 bn. The proceeds from the capital increase will be used to
decrease the drawdown on the KfW credit line and the banks' cash
facility (RCF). On 1 April 2022 the EUR 0.17 bn credit facility
will then be cancelled in total, the EUR 1.05 bn credit facility
will be cancelled by EUR 505 m in particular in relation to the net
proceeds of the capital increase.
Currently, the TUI Group continues to be affected by the
negative financial impact of the COVID-19 pandemic.
After a significant decrease in the number of COVID-19 cases in
the summer of 2021, many countries are currently recording a
significant increase in infections again. As a result, contact
restriction measures have been tightened again in the affected
countries. Due to ongoing changes in travel restrictions, it
remains impossible to predict when TUI will be able to fully resume
its travel programme. In particular, it is not possible at this
time to reliably predict how quickly vaccination against the
COVID-19 virus can be completed in each country, whether new
variants of the virus will emerge, and when medications will be
available to treat COVID-19 disease. However, it is now foreseeable
that sufficient vaccines will be available in our key source
markets and destinations to ensure a further recovery in travel in
the financial year 2022.
With the customer deposits received for the coming seasons, the
funds from the financing measures implemented in the year under
review (capital increase in January 2021 and the convertible bond
placed in April), the cash inflow from the sale of Riu Hotels S.
A., the extension of the revolving credit facilities including the
further suspension of the review of the financial covenants as well
as the further capital increase in October 2021, which took place
after the balance sheet date, the Executive Board believes that,
despite the existing risks, the TUI Group currently has and will
continue to have sufficient funds resulting both from the borrowing
and from expected operating cash flows to meet its payment
obligations and to continue in the foreseeable future as a going
concern. Therefore, as at 30 September 2021, the Board no longer
identifies any material uncertainty that may cast significant doubt
on the Group's ability to continue as a going concern. In this
context, the Executive Board assumes that the credit lines expiring
in summer 2024 will be refinanced. The Executive Board as at
September 2021 no longer considers the remaining risk with regard
to a further pandemic-related change in booking behaviour as a
threat to the company as a going concern. In its assessment, the
Executive Board assumes that the booking figures will gradually
recover in the financial year 2022 and volumes in the summer of
2022 will settle at approximately the normalised level of the
summer of 2019. For the 2023 financial year, it is expected that
the booking behaviour in the financial year 2023 will largely
correspond to the pre-pandemic level. The Executive Board assumes
that there will be no further long-term closures and lockdowns that
could affect travel behaviour. Nevertheless, customer bookings may
deteriorate due to new travel restrictions, insufficient
vaccination coverage against the COVID-19 virus in individual
countries, and virus variants such as the new Omicron virus
variant, for which there may not be sufficient vaccination
protection, thereby affecting
TUI Group's performance.
In accordance with Regulation 30 of the UK Corporate Governance
Code, the Executive Board confirms that, in its opinion, it is
appropriate to prepare the Group's Financial Statements on a going
concern basis.
Principles and methods of consolidation
Principles
The consolidated financial statements include all significant
subsidiaries directly or indirectly controlled by TUI AG. Control
exists where TUI AG has power over the relevant activities, is
exposed to variable returns or has rights to the returns, and has
the ability to affect those variable returns through its power over
the investee.
Generally, the control is exercised by means of a direct or
indirect majority of voting rights. If the TUI Group holds less
than the majority of voting rights in a shareholding, it may
exercise control due to contractual or similar agreements, as in
the case of the participation in the RIUSA II Group. Due to the
contractual agreements between the shareholders and the framework
agreements with TUI Group as well as the considerable importance of
tour operation for the economic success of RIUSA II Group, TUI
Group is able to exercise a controlling influence on decisions
about the most relevant activities and consequently the amount of
returns. TUI Group is subject to variable returns from RIUSA II
Group, in particular due to dividend payments and fluctuations in
the value of the stake itself. RIUSA II Group is therefore
consolidated although TUI Group only holds a 50 % equity stake.
In assessing control, the existence and effect of potential
voting rights are taken into account that are currently exercisable
when decisions about the direction of relevant activities are made.
Consolidation of subsidiaries starts from the date TUI gains
control. When TUI ceases to control the corresponding companies,
they are removed from the group of consolidated companies.
The consolidated financial statements are prepared from the
separate or single-entity financial statements of TUI AG and its
subsidiaries, drawn up on the basis of uniform accounting,
measurement and consolidation methods and usually audited or
reviewed by auditors.
Associates for which the TUI Group is able to exert significant
influence over the financial and operating policy decisions within
these companies are accounted for using the equity method.
Generally, significant influence is assumed if TUI AG directly or
indirectly holds voting rights of between 20 to 50 per cent.
Stakes in joint ventures are also measured using the equity
method. A joint venture is a company managed jointly by the TUI
Group with one or several partners based on a contractual
agreement, in which the parties that jointly exercise control have
rights to the company's net assets. Joint ventures also include
companies in which the TUI Group holds a majority or minority of
voting rights but in which decisions about the relevant activities
may only be taken on an unanimous basis due to contractual
agreements.
The dates on which associates and joint ventures are included in
or removed from the group of companies measured at equity are
determined in a manner consistent with that applied to
subsidiaries. At equity measurement in each case is based on the
last annual financial statements available or the interim financial
statements as at 30 September if the balance sheet dates differ
from TUI AG's balance sheet date. This affects 33 companies with a
financial year from 1 January to 31 December, four companies with a
financial year from 1 November to 31 October and two companies with
a financial year from 1 April to 31 March.
Group of consolidated companies
In financial year 2021, the consolidated financial statements
included a total of 272 subsidiaries. The table below presents
changes in the number of companies since 1 October 2020.
Development of the group of consolidated companies1
and the Group companies measured at equity
EUR million Consolidated subsidiaries Associates Joint ventures
Number at 30 Sep 2020 277 19 30
Additions 11 - -
Incorporation 5 - -
Expansion of business operations 1 - -
Added to group of consolidated companies due to further 5 - -
acquisition of shares
Disposals 16 2 2
Liquidation 4 - -
Sale 4 2 2
Merger 8 - -
Change in ownership stake - 2 1 - 1
Number at 30 Sep 2021 272 18 27
1 excl. TUI AG
2 Addition 1 / disposal - 1
TUI AG's direct and indirect subsidiaries, associates and joint
ventures are listed under Other Notes - TUI Group
Shareholdings.
34 subsidiaries were not included in the consolidated financial
statements. Even when taken together, these companies are of minor
significance to the presentation of a true and fair view of the
financial position and performance of the Group.
Acquisitions - Divestments
Acquisitions of the current financial year
The acquisition of the interests in Karisma Hotels Adriatic d.
o. o.za trgovinu i usluge, Zagreb, Croatia, resulted in an increase
of the 33 % stake previously held by TUI Group to 100 %. This
acquisition is not in the scope of IFRS 3. Accordingly, the
purchase price is allocated to the individual acquired assets and
liabilities, based on their fair value at the acquisition date. The
consideration received comprises of settled purchase price payments
of EUR 4.9 m and cash consideration of EUR 5.1 m.
Summary presentation of acquisitions
Name and headquarters Business Date of Acquired Consideration
of the acquired company activity Acquirer acquisition share transferred
in EUR million
Karisma Hotels Adriatic d. o. o.za Accommodation TUI Travel Overseas
trgovinu i usluge, Service Holding Limited 23.2.2021 67 % 10.0
Zagreb, Croatia (subgroup)
Total 10.0
Acquisitions of the prior financial year
The purchase price allocation for the companies acquired in
financial year 2020 had already been finalised in the prior
year.
Divestments
In March 2019, TUI Group sold its stake in the Corsair S. A.
airline to Diamondale Ltd. and acquired a 27 % stake in Diamondale
Ltd. for EUR 1. Since then, the investment has been carried as a
TUI Group associate with a carrying amount of EUR 1. On 30 December
2020, TUI Group sold the indirect investment in Corsair S. A. As
part of that transaction, on 29 December 2020, a 75.0 % stake in
the aircraft asset company MSN 1359 GmbH was sold to Corsair S. A.
for EUR 1. Following the divestment of the stake in MSN 1359 GmbH,
previously recognised as a fully consolidated subsidiary, TUI
Aviation GmbH has retained a 25.0 % stake, recognised as an
associate accounted for using the equity method. The divestment of
the stake generated a loss of EUR 3.3 m, carried in Other
expenses.
On 10 May 2021, the stake in the fully consolidated hotel
company Enterprises Hotelières et Touristiques Paladien Lena Mary
S. A. in the Western Region segment was sold for a purchase price
of EUR 6.1 m. The divestment generated a gain of EUR 2.3 m, carried
in Other income.
In May 2021, the disposal group Tenuta di Castelfalfi S. p. A.
in the Hotels & Resorts segment was reclassified to assets held
for sale due to the Group's intention to sell the entity. On
occasion of the reclassification, the disposal group was impaired
by EUR 4.0 m to its selling price less costs to sell. The
impairment is shown in the cost of sales. On 30 June 2021, the
transaction was completed at a preliminary purchase price less
costs to sell of EUR 18.5 m, generating a preliminary loss on
disposal of EUR 0.2 m, carried in Other expenses.
An agreement on the disposal of the stake in the Riu Hotels S.
A. joint venture was concluded on 27 May 2021. The stake was
classified as held for sale at a carrying amount of EUR 379.3 m,
carried in the Hotels & Resorts segment. The transaction was
completed on 31 July 2021. The purchase price paid in the reporting
period less the associated costs to sell was initially EUR 540.8 m.
In October 2021, subsequent purchase price adjustments resulted in
a reduction in the purchase price by EUR 23.9 m. Due to an earn-out
clause applicable to Riu Hotels S. A. delivering its operating
budgets for financial years 2022 and 2023, an amount of EUR 108.1 m
was carried as a contingent purchase price payment which is
reported in the balance sheet item trade receivables and other
receivables. For further explanations with regard to the
evaluation, please refer to note 41 'Financial instruments'. The
goal of the transaction, which contributes to delivering the
asset-right strategy, is to decouple growth in hotels from real
estate investments. Adjusted for the accumulated foreign exchange
differences of EUR - 49.0 m recognised in Other comprehensive
income and reclassified to profit and loss with an equal and
opposite entry in Other comprehensive income, the sale generated a
profit of EUR 196.8 m, shown in Other income. The proceeds of the
transaction will be used to reduce TUI Group's debt.
On 27 September 2021, the 66.0 % stake in the fully consolidated
travel agency company Cassata Travel s. r. l., Cefalù (Palermo),
Italy, in the TUI Musement segment was sold for a purchase price of
EUR 1. The transaction generated a loss of EUR 0.1 m, carried in
Other expenses.
Condensed balance sheet of divestments
EUR million MSN 1359 GmbH Tenuta di Castelfalfi S. p. A. (subgroup)
29 Dec 2020 30 Jun 2021
Assets
Property, plant and equipment and intangible assets 24.5 13.3
Other non-current assets - 0.1
Trade receivables 1.7 0.9
Other current assets - 16.7
Cash and cash equivalents 2.0 0.7
28.2 31.7
Provisions and liabilities
Non-current liabilities 19.3 0.3
Current provisions - 1.0
Trade payables - 3.6
Other current liabilities 5.6 8.1
24.9 13.0
Foreign exchange translation
Transactions in foreign currencies are translated into the
functional currency at the foreign exchange rates at the date of
the transaction. Any gains and losses resulting from the execution
of such transactions and the translation of monetary assets and
liabilities denominated in foreign currencies at the foreign
exchange rate at the date of the transaction are shown in the
income statement, with the exception of gains and losses to be
recognised in equity as qualifying cash flow hedges.
The annual financial statements of companies are prepared in the
respective functional currency. The functional currency of a
company is the currency of the primary economic environment in
which the company operates.
Where subsidiaries prepare their financial statements in
functional currencies other than the Euro, being the Group's
reporting currency, the assets and liabilities are translated at
the rate of exchange applicable at the balance sheet date (closing
rate). Goodwill allocated to these companies and adjustments of the
fair value arising on the acquisition of a foreign company are
treated as assets and liabilities of the foreign company and also
translated at the rate of exchange applicable at the balance sheet
date. The items of the income statement and hence the result for
the year shown in the income statement are translated at the
average rate of the month in which the respective transaction takes
place.
Differences arising on the translation of the annual financial
statements of foreign subsidiaries are reported outside profit and
loss and separately shown as foreign exchange differences in the
consolidated statement of changes in equity. When a foreign company
or operation is sold, any foreign exchange differences previously
included in equity outside profit and loss are recognised as a gain
or loss from disposal in the income statement through profit and
loss.
Translation differences relating to non-monetary items with
changes in their fair values eliminated through profit and loss (e.
g. equity instruments measured at their fair value through profit
and loss) are included in the income statement. In contrast,
translation differences for non-monetary items with changes in
their fair values taken to equity (e. g. financial assets at
FVTOCI) are included in revenue reserves.
The TUI Group did not hold any subsidiaries operating in
hyperinflationary economies in the completed financial year, nor in
the previous year.
The translation of the financial statements of foreign companies
measured at equity follows the same principles for adjusting
carrying amounts and translating goodwill as those used for
consolidated subsidiaries.
Net investment in a foreign operation
Monetary items receivable from or payable to a foreign
operation, the settlement of which is neither planned nor likely in
the foreseeable future, essentially constitute part of a net
investment in this foreign operation. Foreign exchange differences
from the translation of these monetary items are recognised in
other comprehensive income. As at 30 September 2021 TUI Group had
granted loans of this type in particular to hotel companies in
North Africa.
Exchange rates of currencies of relevance to the TUI Group
Closing rate Annual average rate
1 EUR equivalent 30 Sep 2021 30 Sep 2020 2021 2020
Sterling 0.86 0.91 0.87 0.88
US dollar 1.16 1.17 1.20 1.12
Swiss franc 1.08 1.08 1.09 1.07
Swedish krona 10.22 10.53 10.18 10.58
Consolidation methods
The recognition of the assets and liabilities of acquired
businesses is based on the acquisition method. Accordingly all
identifiable assets, all liabilities and certain contingent
liabilities assumed are measured at fair value as of the
acquisition date. Subsequently, the consideration for the stake is
measured at fair value and eliminated against the acquiree's
revalued equity attributable to the acquired share. As a matter of
principle, the option to measure the non-controlling interests at
their fair value (full goodwill method) was not used.
Any excess of acquisition costs over net assets acquired is
capitalised as goodwill and recognised as an asset in accordance
with the provisions of IFRS 3. Any negative goodwill is recognised
immediately in profit and loss and presented as other income.
When additional shares are purchased after obtaining control,
the difference between the purchase price and the carrying amount
of the stakes acquired is recognised directly in equity. The
effects from sales of stakes not entailing a loss of control are
also recognised directly in equity. By contrast, when control is
obtained or lost, gains or losses are recognised in profit and
loss. In the case of business combinations achieved in stages
(where the acquirer held an equity interest before he obtained
control), the equity stake previously held in the acquired company
is revalued at the fair value applicable at the acquisition date
and the resulting gain or loss is recognised in profit or loss. For
transactions involving a loss of control, the profit or loss does
not only comprise the difference between the carrying amounts of
the disposed stakes and the consideration received but also the
result from the revaluation of the remaining shares.
On loss of control of a subsidiary the gain or loss on
derecognition will be calculated as the total of the fair value of
the consideration plus the fair value of any investment retained in
the former subsidiary less the share of the book value of the net
assets of the subsidiary. Any gains or losses previously recognised
in other comprehensive income from currency translations or the
valuation of financial assets and liabilities will be reclassified
to the income statement. When a subsidiary is sold, any goodwill
allocated to the respective subsidiary is taken into account in the
calculation of the profit or loss of disposal.
The Group's associates and joint ventures are measured at equity
and included at the cost to purchase as at the acquisition date.
The Group's stake in associates and joint ventures includes the
goodwill arising from the respective acquisition.
The Group's share in profits and losses of associates and joint
ventures is carried in the income statement from the date of
acquisition (Share of result from joint ventures and associates),
while the Group's share in the total other comprehensive income is
shown in its revenue reserves. The accumulated changes arising
after the acquisition are shown in the carrying amount of the
shareholding. When the share in the loss of an associated company
or joint venture equals or exceeds the Group's original stake in
this company, including other unsecured receivables, no further
losses are recognised. Any losses exceeding that stake are only
recognised to the extent that obligations have been assumed or
payments have been made for the associated company or joint
venture.
Where the accounting and measurement methods applied by
associates and joint ventures differ from the uniform accounting
rules applied in the Group, the differences are adjusted.
Intercompany receivables and payables or provisions are
eliminated, as are intercompany revenue, other income and the
corresponding expenses. Intercompany results from intercompany
deliveries and services are reversed through profit and loss,
taking account of deferred taxes. However, intercompany losses are
an indicator that an asset may be impaired. Intercompany profits
from transactions with companies measured at equity are eliminated
in relation to the Group's stake in the companies. Intercompany
transactions are entered into on an arm's length basis.
Accounting and measurement methods
The consolidated financial statements were prepared according to
the historical cost principle, with the exception of certain
financial instruments such as financial assets and derivatives as
well as plan assets from externally funded pensions benefit
obligations held at fair value at the balance sheet date.
The financial statements of the consolidated subsidiaries are
prepared in accordance with uniform accounting and measurement
principles. The amounts recognised in the consolidated financial
statements are not determined by tax regulations but solely by the
commercial presentation of the financial position and performance
as set out in the rules of the IASB.
Revenue recognition
TUI recognises revenue upon transfer of control over distinct
goods or services to the customer. In Markets and Airlines, TUI
predominantly generates revenue from the sale of package holidays.
The flights, hotel accommodation and other services included in a
package holiday are transformed into one product for the customer
through a significant integration service provided by TUI as tour
operator within the meaning of IFRS 15, so that the package holiday
constitutes one performance obligation for TUI. This revenue is
recognised when TUI delivers the service for its customer, i. e. on
a linear basis over the duration of the holiday tour, as customers
consume their holiday on a pro rata basis. TUI generates further
revenue from the sale of other tourist services, e. g. seat-only,
accommodation-only, cruises, etc. Revenue is recognised when or as
TUI has satisfied its performance obligation, either over time in
relation to the duration of the journey if the services relate to a
period of time, e. g. in the case of multi-day hotel stays, or at a
point in time on the day of the performance of the performance
obligation, e. g. for flight services on the day of the flight.
Revenue from long-term contracts is recognised over the duration of
the individual contract in accordance with IFRS 15.
Amendment fees do not constitute an independent performance
obligation. Revenue is therefore recognised along with the delivery
of the main performance obligation.
If TUI has control over the asset before it is delivered to the
customer, TUI acts as the principal in relation to that service.
Otherwise, TUI acts as an agent. As a principal, TUI carries the
recognised revenue and costs in the income statement on a gross
basis, e. g. for revenue from its own tour operator activities, for
hotel revenue in own hotels, and for aviation revenue. When acting
as an agent, TUI carries the relevant revenue on a net basis at the
amount of the commission received, e. g. for car rental and hotel
revenue for third-party hotels in which TUI does not have control
over the hotel rooms. Passenger-related aviation taxes and fees
charged by TUI on behalf of third parties and passed on to these
third parties are carried in the income statement on a net
basis.
TUI uses the practical expedient offered under IFRS 15.121(a).
For open performance obligations as at the balance sheet date, TUI
discloses all performance obligations for contracts with an
original term of more than twelve months.
TUI has to pay compensation to customers for flight delays or
cancellations (so-called denied boarding compensation). These
payments stand in direct connection with the obligation of the
flight service. Therefore these payments represent variable
considerations under IFRS 15. In conclusion denied boarding
compensations are shown net in revenue.
Goodwill and other intangible assets
Acquired intangible assets are carried at cost. Internally
generated intangible assets are capitalised at cost where an inflow
of future economic benefits for the Group is probable and can be
reliably measured. The cost to produce comprises direct costs and
directly allocable overheads. Intangible assets with a finite
service life are amortised over the expected useful life.
Intangible assets acquired as a result of business combinations
are included at their fair value as at the date of acquisition and
are amortised on a straight-line basis.
Useful lives of intangible assets
Useful lives
Brands, licences and other rights 5 to 20 years
Transport and leasing contracts 12 to 20 years
Computer Software 3 to 10 years
Customer base as at acquisiton date 7 to 15 years
Due to the decision to accelerate the digital transformation of
TUI Group the useful life of certain software solutions were
estimated to be 1 or 2 years. Please refer for further information
to the section 'Other intangible assets'.
If there are any events or indications suggesting potential
impairment, the amortised carrying amount of the intangible asset
is compared with the recoverable amount. Any losses in value going
beyond wear-and-tear depreciation are taken into account through
the recognition of impairment charges.
Depending on the functional area of the intangible asset,
amortisation and impairment charges are included under cost of
sales or administrative expenses.
Intangible assets with indefinite useful lives are not amortised
but are tested for impairment at least annually. In addition,
impairment tests are conducted if there are any events or
indications suggesting potential impairment. The TUI Group's
intangible assets with an indefinite useful life consist
exclusively of goodwill.
Impairment tests for goodwill are conducted on the basis of cash
generating units (CGU) or groups of cash generating units.
Impairment charges are recognised where the carrying amount of
the tested units plus the allocated goodwill exceeds the
recoverable amount. The recoverable amount is the higher of fair
value less costs of disposal and the present value of future cash
flows based on continued use (value in use). The fair value less
costs of disposal corresponds to the amount that could be generated
between knowledgeable, willing, independent business partners after
deduction of the costs of disposal.
Impairment of goodwill is shown separately in the consolidated
income statement.
Property, plant and equipment
Property, plant and equipment are measured at amortised cost.
The costs to purchase include costs to bring the asset to a working
condition. The costs to produce are determined on the basis of
direct costs and directly attributable indirect costs and
depreciation.
Borrowing costs directly associated with the acquisition,
construction or production of qualifying assets are included in the
costs to acquire or produce these assets until the assets are ready
for their intended use.
To the extent that funds are borrowed specifically for the
purpose of obtaining a qualifying asset, the underlying
capitalisation rate is determined on the basis of the specific
borrowing cost; in all other cases the weighted average of the
borrowing costs applicable to the borrowings outstanding is
applied.
Depreciation of property, plant and equipment is based on the
straight-line method, based on the customary useful lives. The
useful economic lives are as follows:
Useful lives of property, plant and equipment
Useful lives
Hotel buildings 30 to 40 years
Other buildings 25 to 50 years
Cruise ships 30 to 38 years
Aircraft
Fuselages and engines 22 to 25 years
Engine overhaul depending on intervals, up to 12 years
Major overhaul depending on intervals, up to 12 years
Spare parts up to 10 years
Operating and business equipment 3 to 10 years
Moreover, the level of depreciation is determined by the
residual values at the end of the useful life of an asset. The
residual value assumed in first-time recognition for cruise ships
and hotel complexes is between 15 % and 35 % of the acquisition
costs. The determination of the depreciation of aircraft fuselages
and aircraft engines in first-time recognition is based on a
residual value of a maximum of 5 % of the cost of acquisition. In
addition, a residual value of 20 % is used to determine the
scheduled depreciation of spare parts. The payments made under a
power by the hour arrangement relating to maintenance overhauls are
capitalised as PPE under construction up to a maintenance event at
which point the cost is transferred to the appropriate PPE
category.
Both the useful lives and residual values are reviewed on an
annual basis when preparing the Group financial statements. The
review of the residual values is based on comparable assets at the
end of their useful lives as at the current point in time. Any
adjustments required are recognised as a correction of depreciation
over the remaining useful life of the asset. The adjustment of
depreciation is recognised retrospectively for the entire financial
year in which the review has taken place. Where the review results
in an increase in the residual value so that it exceeds the
remaining net carrying amount of the asset, depreciation is
suspended. In this case, the amounts are not written back.
Any losses in value going beyond wear-and-tear depreciation are
taken into account through the recognition of impairment losses. If
there are any events or indications suggesting impairment, the
required impairment test is performed to compare the carrying
amount of an asset with the recoverable amount.
Leases
Leases are agreements transferring the right to use an
identified asset for a given period of time in return for a
payment. As a lessee, TUI leases moveable assets such as aircraft,
vehicles and cruise ships, as well as, in particular, immoveable
property such as hotel buildings and land, office buildings and
travel agencies. As a lessor, TUI subleases some aircraft and hotel
and office space.
TUI as lessee
Since 1 October 2019, TUI has carried right-of-use assets and
lease liabilities for all leases in the statement of financial
position. At the inception of an agreement, TUI evaluates whether
it is, or contains, a lease. Apart from traditional lease, tenancy
or leasing contracts, service or capacity agreements may also fall
within the scope of IFRS 16. In connection with the purchase of
mixed tourism services, the rental or purchase of the largest
portion of a hotel's room capacity is identified as a lease
component if TUI commits to its contract partner to purchase a
fixed allotment of more than 90 % of the hotel's capacity for a
period of more than 12 months, provided the agreement does not
include an exemption to return committed capacity for
self-marketing by the hotelier, and if therefore an irrevocable
payment obligation exists. For agreements that contain one or
several lease components alongside non-lease components, TUI uses
the option not to separate these non-lease components, in
particular for vehicle or IT leases and for hotel capacity
contracts.
At the commencement date, i. e. the date from which the lessee
is entitled to exercise the right to use the underlying asset, a
lease liability amounting to the present value of the lease
payments not yet made as at that date is recognised. The lease
payments include all fixed and in substance-fixed payments less any
future lease incentives to be provided by the lessor. The lease
payments also include variable payments linked to an index or an
interest rate as well as expected payments from residual value
guarantees. Lease payments for the exercise of extension, purchase
and termination options are included if the exercise of these
options is assessed as reasonably certain. As a rule, the lease
payments are discounted at the lessor's interest rate implicit in
the lease. If that rate is not known to TUI, the present value is
determined using the incremental borrowing rate. After initial
measurement, the carrying amount is increased to reflect interest
on the lease liability and reduced to reflect the lease payments
made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease term,
a change in the lease payments (e. g., changes to future payments
resulting from a change in an index or rate used to determine such
lease payments) or a change in the assessment of an option to
purchase the underlying asset. The interest expense from the
subsequent measurement of the lease liability is presented in the
interest result. Variable lease payments not linked to an index nor
to an interest rate are recognised through profit or loss in the
period in which the event or condition that triggers the payment
occurs.
In addition, a right-of-use asset is recognised at the
commencement date. Right-of-use assets for the leased items are
measured at amortised cost less cumulative depreciation /
amortisation and cumulative impairment and adjusted for
revaluations of the lease liability. The costs of a right-of-use
asset comprise the present value of the future lease payments plus
initial direct costs and the lease payments made prior to
commencement less any lease incentives received and the estimated
costs to be incurred to restore the leased asset to the condition
required by the terms and conditions of the lease. Capitalised
right-of-use assets are depreciated on a straight-line basis over
the shorter of the lease term and the expected useful life of the
right-of-use asset. If the lease transfers ownership of the leased
asset to TUI by the end of the lease term, or if the lease payments
reflect the future exercise of a purchase option, the right-of-use
asset is depreciated over the useful life of the leased asset.
Depreciation of capitalised right-of-use assets is carried in the
cost of sales or in administrative expenses.
TUI applies the recognition and measurement exemptions for all
short-term leases and low-value asset leases. A short-term lease is
a lease that has a lease term of 12 months or less and does not
contain a purchase option. The lease payments for those leases are
recognised as an expense in the cost of sales or in administrative
expenses on a straight-line basis over the lease term or on another
systematic basis.
Sale-and-leaseback
For sale-and-leaseback transactions, TUI initially determines in
accordance with IFRS 15 whether the transfer of the asset has to be
accounted for as a sale. If the transfer is accounted for as a
sale, TUI recognises the right-of-use asset associated with the
sale-and-leaseback transaction, as seller and as lessee, at the
proportion of the previous carrying amount that relates to the
right-of-use asset retained. The gain or loss from the sale
transaction is carried in profit or loss on a pro rata basis at the
amount of the rights transferred to the buyer and lessor. If the
transfer is not accounted for as a sale, TUI continues to recognise
the legally transferred asset as before and carries a financial
liability for the proceeds received.
TUI as lessor
As a lessor, TUI classifies each lease as an operating lease or
a finance lease. If TUI as a lessor has substantially all the risks
and rewards incidental to ownership of the underlying asset, the
lease is classified as an operating lease. If the lease transfers
substantially all the risks and rewards incidental to ownership of
the underlying asset to the lessee, the lease is classified as a
finance lease.
For subleases, the lease classification has been made by
reference to the right-of-use asset arising from the head lease in
accordance with IFRS 16 since 1 October 2019. Until 30 September
2019 a sublease was classified by reference to the asset underlying
the lease in accordance with IAS 17.
The lease payments from operating leases are recognised in
revenue on a straight-line basis over the lease term. Any initial
direct costs incurred in obtaining the lease are added to the
carrying amount of the underlying leased item and depreciated over
the lease term on a straight-line basis.
For finance leases, TUI recognises a lease receivable at an
amount equal to the net investment in the lease and derecognises
the underlying leased asset or the right-of-use asset from the head
lease. The lease payments made by the lessees are broken down into
an interest portion and a redemption portion using the effective
interest rate method so as to produce a constant periodic rate of
interest on the balance of the net investment. The redemption
portions received are deducted from the lease receivable. The
interest portion of the payments received is carried in the
interest result.
Financial instruments
Financial instruments are contractual rights or obligations that
will lead to an inflow or outflow of financial assets or the issue
of equity rights. They also comprise derivative rights or
obligations derived in particular from primary assets.
Primary financial assets and financial liabilities
The classification and measurement of financial assets are
determined on the basis of the business model used to manage
financial assets and the related contractual cash flows. At initial
recognition of financial assets, the classification comprises the
categories 'Financial assets at amortised cost (AC)', 'Financial
assets at fair value through other comprehensive income (FVTOCI)'
and 'Financial assets at fair value through profit and loss
(FVPL)'.
Primary financial assets are recognised at the value as at the
trading date on which TUI Group under-takes to buy the asset. When
recognised for the first time, they are either classified as at
amortised costs or at fair value, depending on their objective.
Primary financial assets are classified as financial assets at
amortised cost when the objective of the entity's business model is
to hold the financial assets to collect contractual cash flows, and
when the contractual terms and conditions of the assets exclusively
constitute interest and principal payments on the nominal amount
outstanding.
For the financial assets held at amortised cost, a loss
allowance for expected credit losses is recognised in accordance
with IFRS 9. Loss allowances for financial assets are based on
either full lifetime expected credit losses or 12-month expected
credit losses. A loss allowance for lifetime expected credit losses
is required for a financial instrument if the credit risk of that
financial asset has increased significantly since initial
recognition. For all other financial instruments, expected credit
losses are measured at an amount equal to the 12-month expected
credit losses.
IFRS 9 allows entities to apply a simplified approach inter alia
for trade receivables. Lifetime expected credit losses on all these
assets can already be recognised at initial recognition. TUI
applies the simplified approach for all trade receivables.
Impairments and reversals of impairments are recognised under
'impairment / reversals of impairment of financial assets' in the
income statement.
The equity instruments held in the balance sheet item 'Other
financial assets' were irrevocably designated as 'Financial assets
at fair value through OCI' as they are held for medium- to
long-term strategic objectives. These instruments are stakes in
associated non-consolidated subsidiaries, equity investments and
other investments. Recognising all short-term fluctuations in the
fair value in the income statement would not be in line with the
Group's strategy. They are allocated to non-current assets unless
the entity intends to sell them within twelve months after the
balance sheet date. Dividends from these equity instruments are
recognised in the income statement unless the dividends are clearly
a partial repayment of the cost to purchase the equity
instrument.
The cumulative gain or loss from the measurement of the equity
instruments recognised in other comprehensive income will continue
to be recognised in equity even after it has been derecognised and
has to be reclassified to revenue reserves.
All other financial assets not recognised at amortised cost or
at fair value through OCI must be measured at fair value through
profit or loss.
Primary financial liabilities are recognised in the consolidated
statement of financial position if an obligation exists to transfer
cash and cash equivalents or other financial assets to another
party. Initial recognition of a primary liability is effected at
its fair value. For loans taken out, the nominal amount is reduced
by discounts retained and transaction costs paid. The subsequent
measurement of primary financial liabilities is effected at
amortised cost using the effective interest method. TUI does not
use the fair value option.
All foreign exchange differences resulting from the translation
of trade accounts payable are reported as a correction of the cost
of sales. Foreign exchange differences from the translation of
liabilities not resulting from normal operating processes are
reported under Other income / other expenses, Financial expenses /
income or Administrative expenses, depending on the nature of the
underlying receivables or payables.
Assets are derecognised as at the date on which the rights for
payments from the assets expire or are transferred and therefore as
at the date on which essentially all risks and rewards of ownership
are transferred. The rights to an asset expire when the rights to
receive the cash flows from the asset have expired. For transfers
of financial assets, it is assessed whether they have to be
derecognised in accordance with derecognition requirements of IFRS
9.
The bond with warrants and the convertible bond on shares in TUI
AG have to be accounted for as compound financial instruments.
Compound financial instruments are divided into an equity and a
debt component in accordance with IAS 32. The debt component shown
under financial liabilities is valued less the pro rata transaction
costs and added to the repayment amount using the effective
interest method. The equity component is valued at the residual
value that results after deducting the amount determined for the
debt component from the fair value of the entire instrument. The
pro rata transaction costs of the equity component are deducted
from this component. No gain or loss will result from the exercise
or expiry of the relevant conversion option.
Derivative financial instruments and hedging
At initial measurement, derivative financial instruments are
measured at the fair value attributable to them on the date the
contract is entered into. Subsequent remeasurement is also
recognised at the fair value applicable at the respective balance
sheet date. Where derivative financial instruments are not part of
a hedge in connection with hedge accounting, they are classified as
'at fair value through profit and loss'. The method used to
recognise gains and losses depends on whether the derivative
financial instrument has been fully or possibly only partly
designated as a hedging instrument, and on the nature of the hedged
item. Changes in the fair value of a derivative financial
instrument not designated as a hedging instrument or the component
of a derivative financial instrument not designated as a hedging
instrument are immediately recognised through profit and loss. If,
by contrast, an effective hedging relationship exists, the
transaction is recognised as a hedge.
TUI Group uses the accounting policy choice provided by IFRS 9,
enabling entities to continue applying the hedge accounting
requirements of IAS 39. Hedge accounting is exclusively used to
hedge the exposure to variability in cash flows from future
transactions highly likely to occur (cash flow hedges). Hedges of
balance sheet items (fair value hedges), i. e. hedges of the fair
value of an asset or a liability, are currently not included in
hedge accounting.
Upon entering into a transaction, TUI Group documents the hedge
relationship between the hedge and the underlying transaction, the
risk management goal and the underlying strategy. In addition, a
record is kept of the assessment, both at the beginning of the
hedge relationship and on a continual basis, as to whether the
derivatives used for the hedge are highly effective in compensating
for the changes in the fair values or cash flows of the underlying
transactions.
The effective portion of changes in the fair value of
derivatives forming cash flow hedges is recognised in equity. Any
ineffective portion of such changes in the fair value, by contrast,
is recognised immediately in the income statement through profit
and loss. Amounts taken to equity are reclassified to the income
statement and carried as income or expenses in the period in which
the hedged item has an effect on results.
If a hedge expires, is sold or no longer meets the criteria of
IAS 39 for hedge accounting, the cumulative gain or loss remains in
equity and is only recognised in the income statement through
profit and loss when the originally hedged future forecasted
transaction occurs. If the future transaction is no longer expected
to take place, the cumulative gains or losses recognised directly
in equity are immediately recognised through profit and loss.
More detailed information on the Group's risk management
activities is provided in Note 41 and as well as in the 'Risk
report' section of the Management Report.
Contractual assets and trade receivables
If TUI has fulfilled their contractual obligations, contractual
assets or trade receivables are carried. Trade receivables are
carried if the claim for the acquisition of the consideration is no
longer subject to a condition. As a rule, this is the case when the
Group is contractually entitled to issue an invoice to the customer
that has not yet been paid in advance through a customer deposit.
Due to the tourism business model under which customers pay for
their travel services in advance, TUI generally does not have any
contractual assets.
Contractual costs
The direct costs immediately resulting from obtaining a
contract, e. g. sales commissions to travel agencies for sales of
travel services, are capitalised as contractual costs in the
statement of financial position upon payment of the commission. As
a rule, the resulting expenses are recognised over the duration of
the travel service in line with the associated revenue.
Inventories
The measurement method applied to similar inventory items is the
weighted average cost formula.
Cash and cash equivalents
Cash and cash equivalents comprise cash, call deposits, other
current highly liquid financial assets with an original term of a
maximum of three months and current accounts. Overdrawn current
accounts are shown as liabilities to banks under current financial
liabilities.
Equity
Ordinary shares are classified as equity. Costs directly
allocable to the issue of new shares or conversion options are
taken to equity on a net after-tax basis as a deduction from the
issuance proceeds.
Own shares
The group's holdings in its own equity instruments are shown as
deductions from shareholders' equity at cost, including directly
attributable transaction costs. No gain or loss is recognised in
the income statement on the purchase or sale of shares. Any
difference between the proceeds from sale and the original cost are
taken to reserves.
Pension provisions
The pension provision recognised for defined benefit plans
corresponds to the net present value of the defined benefit
obligations (DBOs) as at the balance sheet date less the fair value
of the plan assets. If the value of the plan assets exceeds the
value of the DBO, the excess amount is shown within other
non-financial assets. The DBOs are calculated annually by
independent actuaries using the projected unit credit method.
For defined contribution plans, the Group pays contributions to
public or private pension insurance plans on the basis of a
statutory or contractual obligation or on a voluntary basis. The
Group does not have any further payment obligations on top of the
payment of the contributions. The contributions are recognised
under staff costs when they fall due.
Other provisions
Other provisions are formed when the Group has a current legal
or constructive obligation as a result of a past event, where in
addition it is probable that assets will be impacted by the
settlement of the obligation and the level of the provision can be
reliably determined.
Where a large number of similar obligations exist, the
probability of a charge over assets is determined on the basis of
this group of obligations. A provision is also recognised if the
probability of a charge over assets is low in relation to an
individual obligation contained in this group.
Provisions are measured at the present value of the expected
expenses, taking account of a pre-tax interest rate, reflecting
current market assessments of the time value of money and the risks
specific to the liability. Risks already taken into account in
estimating future cash flows do not affect the discount rate.
Increases in provisions due to accretion of interest are recognised
as interest expenses through profit or loss.
Government grants
Government grants are recorded if there is reasonable assurance
that TUI will comply with all attached conditions for receiving the
grant and the grant will be awarded. Investment grants received are
deducted from the carrying amounts of assets in property, plant or
equipment where these grants are directly allocable to individual
assets. If a direct allocation of grants to individual items of
property, plant or equipment is not possible, or if the grants are
from other government programmes, the grants and subsidies received
are recognised as deferred income and shown within Other
liabilities. Grants related to income are deducted from related
expenses in the period in which the corresponding expenses are
incurred. Government grants include, for example, income subsidies
or social security contributions for short-time allowances. If
short-time allowance is a personal benefit for the employee, the
respective payments are not recognised as income in the statement
of profit or loss.
Touristic advance payments received (contract liabilities)
A contract liability is an obligation of the Group to deliver
goods or services for a customer for which the customer has already
delivered a performance, e. g. in the form of payment of a deposit.
In the tourism business model, customers pay deposits on most
travel services prior to departure. The deposits received therefore
constitute contract liabilities within the meaning of IFRS 15.
Deferred taxes and income taxes
Expected tax savings from the use of tax losses carried forward
assessed as recoverable in the future are recognised as deferred
tax assets. Regardless of the unlimited ability to carry German tax
losses forward which continues to exist, the annual utilisation is
limited by the minimum taxation. Foreign tax losses carried forward
frequently have to be used within a given country-specific time
limit and are subject to restrictions concerning the use of these
losses carried forward for profits on ordinary activities, which
are taken into account accordingly in the measurement.
Income tax is directly charged or credited to equity if the tax
relates to items directly credited or charged to equity in the same
period or some other period.
Deferred tax assets are recognised to the extent that it is
probable that future taxable profits will be available against
which the temporary difference or an unused tax loss can be
utilised.
Deferred taxes are measured at the tax rates and tax provisions
applicable at the balance sheet date or adopted by law and expected
to be applicable at the date of recognition of the deferred tax
asset or the payment of the deferred tax liability.
Deferred and current income tax liabilities are offset against
the corresponding tax assets if they exist in the same fiscal
territory and have the same nature and maturity.
Share-based payments
Share-based payment schemes in the Group comprise both
cash-settled and equity-settled schemes.
For cash-settled transactions, the resulting liability for the
Group is charged to expenses at its fair value as at the date of
the performance of the service by the beneficiary. Until settlement
of the liability, the fair value of the liability is re-measured at
every closing date and all changes in the fair value are recognised
through profit and loss.
For equity-settled transactions the fair value of the awards
granted is recognised under staff costs with a corresponding direct
increase in equity. The fair value is determined at the point when
the awards are granted and spread over the vesting period during
which the employees become entitled to the awards. The method for
the calculation of the granted awards is described in Note 40
'Share-based payments in accordance with IFRS 2'.
Summary of selected accounting and measurement methods
The table below lists the key accounting and measurement methods
used by the TUI Group.
Summary of selected measurement bases
Item in the statement of Measurement base
financial position
Assets
Goodwill At cost (subsequent measurement: impairment test)
Other intangible assets with At amortised cost
definite useful lives
Property, plant & equipment At amortised cost
Right-of-use assets At amortised cost
Investments in Joint ventures and At the Group's share of the net assets of the joint ventures
Associates and associates
Financial assets
Equity Instruments At fair value through other comprehensive income
(without subsequent reclassification to profit or loss)
Trade and other receivables At amortised cost or at fair value through profit or loss (depending on the
underlying business model and the contractual cashflows)
Derivative financial instruments At fair value through profit or loss
Cash and cash equivalents At amortised cost
Inventories Lower of cost and net realisable value
Touristic prepayments At cost (or lower recoverable amount)
Assets held for sale Lower of cost and fair value less cost of disposal
Liabilities and Provisions
Financial liabilities At amortised cost
Provision for pensions Projected unit credit method
Other provisions Present value of the settlement amount
Lease liabilities At amortised cost
Touristic advance payments At amortised cost
received
Other financial liabilities
Non-derivative financial At amortised cost
liabilities
Derivative financial liabilities At fair value through profit or loss
Payables, trade and other At amortised cost
liabilities
Key judgements, assumptions and estimates
The presentation of the assets, liabilities and provisions as
well as contingent assets and liabilities shown in the consolidated
financial statements is based on judgements, estimates and
assumptions. Any uncertainties are appropriately taken into account
in determining the values.
All estimates and assumptions are based on the conditions and
assessments as at the balance sheet date. In evaluating the future
development of business, reasonable assumptions are made regarding
the expected future economic environment in the business areas and
regions in which the Group operates.
Despite careful preparation of the estimates, actual results may
differ from the estimate. In such cases, the assumptions and the
carrying amounts of the assets and liabilities concerned, if
necessary, are adjusted accordingly. As a matter of principle,
changes in estimates are taken into account in the financial year
in which the changes have occurred and in future periods.
Judgements
The judgements made by management in applying accounting
policies that may have a significant impact on TUI Group's assets
and liabilities mainly relate to the following topics:
-- Assessment when the Group has de facto control over an
investee and therefore consolidates thisinvestment
-- Definition of whether a Group company acts as an agent or as
a principal in a transaction
-- Determination whether an agreement is to be classified as a
lease or contains a lease
-- Determination of the term of the lease as a lessee in the
event of agreements with extension ortermination options
Determination of the term of the lease as a lessee
TUI determines the term of the lease based on the
non-cancellable period for which the lessee has the right to use
the asset, together with any periods covered by extension options,
if exercise of that option by TUI is reasonably certain, as well as
periods covered by termination options if TUI is reasonably certain
that it will not exercise that option. Many of TUI's individually
negotiated aircraft and real estate leases contain extension or
termination options.
TUI applies judgement in evaluating whether it is reasonably
certain that an option to renew will be exercised or that an option
to terminate the lease will not be exercised. In this context, TUI
considers all relevant facts and circumstances that create an
economic incentive for TUI to exercise, or not to exercise, the
extension or termination option, respectively. From the
commencement date, TUI remeasures the lease term if there is either
a significant event or a significant change in the circumstances
within our control that alters any of our assessments about what is
reasonably certain. The lease term, for instance, is adjusted if an
extension option is exercised or if a termination option is not
exercised and if this had been considered differently in the
original assessment.
For aircraft leases, we determine the end of the lease term on
the basis of the contractually agreed return date. For medium- to
long-term property agreements, e. g. office buildings, hotels or
travel agency leases, options to renew the lease are included in
the lease term to the extent to which TUI presumes that the future
exercise of the option is reasonably certain in the individual
case.
For information on potential future lease payments relating to
periods after the exercise date for extension or termination
options, please refer to Note 15.
Assumptions and estimates
Assumptions and estimates that may have a material impact on the
amounts reported as assets and liabilities in the TUI Group are
mainly related to the following balance sheet-related facts and
circumstances:
-- Future development of the travel business after the COVID-19
pandemic and impact on valuation of assets
-- Effect of climate-related risks on the measurement of
assets
-- Establishment of assumptions for impairment tests, in
particular for goodwill and property, plant andequipment
-- Determination of the fair values for acquisitions of
companies and determination of the useful lives ofacquired
intangible assets
-- Determination of useful lives and residual carrying amounts
of property, plant and equipment
-- Determination of actuarial assumptions to measure pension
obligations
-- Recognition and measurement of other provisions
-- Determination of the incremental borrowing rate used to
measure lease liabilities
-- Recoverability of future tax savings from tax losses carried
forward and tax-deductible temporarydifferences,
-- Measurement of tax risks
-- Recoverable amounts of touristic prepayments
-- Determination that the package holiday represents a
performance obligation due to the significantintegration
service
-- Determination of period-related revenue recognition on a
straight-line basis over the duration of thetrip
-- Determination of the ECL of financial instruments
Future development of the travel business after the COVID-19
pandemic and impact on the valuation of assets
Due to the development of the COVID-19 pandemic uncertainties
remain with regard to the recovery of the travel business.
Accordingly a risk assessment was carried out for the Group's
assets if there is evidence for impairment as at 30 September 2021.
Higher risks for impairments were identified for the assets of the
cash-generating units Robinson, TUI Blue and Northern Hotels of the
segment Hotels & Resorts. Accordingly the assets of these
cash-generating units, namely hotels and right of use assets for
hotels, were tested for impairment. Furthermore tests were carried
out in the case of additional indications for an impairment such as
closing, disposals and restructurings. Finally all assets which
have been impaired before were tested for further impairments or
reversal of impairments.
The impairment tests are performed on the basis of future
discounted cash inflows derived from medium-term corporate
planning. Both the derivation of future cash inflows and the
determination of the interest rate are subject to a high degree of
assumptions and estimates and are associated with
uncertainties.
Due to the development of effective vaccines and the progress in
vaccination in our key source markets and destinations, the
affordable testing capacities and established hygiene measures the
strict travel restrictions were gradually lifted in our source
markets in summer 2021. Only in the United Kingdom were the travel
restrictions lifted later and thus the demand recovered later.
Overall the recovery fell short of the prior year expectations,
especially due to the more comprehensive travel restrictions as
expected and their revocation later than anticipated in summer
2021. Accordingly the revenues for the financial year 2021 were
below forecast and lower than the revenues of the financial year
2020. However, the resumption of the travel activity in summer 2021
showed that strong demand for travel can be assumed once the
pandemic ends. Nonetheless it is expected that the first half of
the financial year 2022, other than anticipated in the prior year,
will still be affected by uncertainties in relation to the
development of the pandemic and the pandemic related customer
behaviour to book only shortly before the departure. For summer and
the second half of the financial year 2022 it is expected that it
will be possible to travel to most of our destinations including
certain long haul destinations and that consequently the volume
will nearly reach the level of the financial year 2019. Already in
the financial year 2020 initiatives have been started to reduce
costs and digitalize our business and to develop existing or new
business segments. In the financial years 2023 and 2024 we expect
that these initiatives will become fully effective, more than
anticipitaed in the prior year plan. Accordingly the volume will
exceed the level of the financial year 2019. The market
consolidation that has already occurred will foster this.
Other key factors are the weighted average cost of capital after
income taxes (WACC) on which discounting is based, and the growth
in perpetuity. Changes in these assumptions may have a significant
impact on the recoverable amount and the amount of any impairment
loss.
In the following, we describe the most important assumptions
used in medium-term corporate planning and in determining the
weighted average cost of capital for the segments mentioned. In
order to estimate the uncertainties underlying the assumptions, we
have performed sensitivity analyses, which are presented in the
section entitled 'Goodwill'.
In the planning of the Hotels & Resorts segment, the
unchanged plan is for a a gradual recovery in volume and earnings
for the 2022 financial year. It is expected that the recovery of
the occupancy of the hotels in the Caribbean and in Europe will be
faster than for the hotels in other destinations. However, a
complete recovery is expected for the 2023 financial year. In the
medium term, a further increase in revenue is planned partly
through capacity expansion but more significantly through an
increase in demand and a slight rise in average prices. Please
refer to the section 'Goodwill' for information on the calculation
of the cost of capital. Particularly in the valuation of individual
hotels, additional country-related risk premiums are applied, which
ultimately also reflect climate-related risks.
In the Cruise segment, Marella Cruises it is still expected to
suffer lower occupancy rates in the 2022 financial year than in the
2019 financial year. However, all ships will be deployed from with
summer 2022. In the financial year 2023 the occupancy will then
reach the levels of the financial year 2019. In summer 2023 a new
ship will increase the fleet. TUI Cruises expects a return to a
normal level in financial year 2023. Please refer to the section
'Goodwill' for information on the calculation of the cost of
capital.
The development of TUI Musement depends partially on the
development of customer numbers in the Markets & Airlines
sector. However, TUI Musement will generate further growth, in
particular in financial years 2023 and 2024, through the online
distribution of its products to TUI and third party customers, so
that in financial year 2023 the revenue volume of financial year
2019 will be exceeded. For information on the calculation of the
cost of capital, please refer to the section 'Goodwill'.
For Markets & Airlines it is expected that other than
anticipated in the prior year the first half of the 2022 financial
year will see a reduced volume due to the pandemic.In the second
half of the 2022 financial year the volumes will reach the levels
of the financial year 2019. The reissue of the flight permit for
Boeing 737 Max aircraft will lead to cost savings and a reduction
in CO2 emissions compared to the 2019 business year. It is expected
that the cost-cutting measures and restructuring measures already
initiated and the increased use of online sales and investments in
digitalisation will become fully effective in the 2023 and 2024
financial years. The market consolidation that has already occured
will further support this. These planning assumptions are subject
to increased uncertainty.
The weighted average cost of capital after income taxes (WACC)
on which the discounting is based was derived from the analysis of
external capital market information of comparable companies. The
cost of capital of Markets & Airlines was additionally
increased by an additional risk premium of 3.4 %. This risk premium
is based on the analysis of internal and external market
expectations and represents risks resulting from the progress of
the COVID-19 pandemic and uncertainties regarding the middle and
long term market development.
Effect of climate-related risks on the measurement of assets
Climate-related risks may have an impact on the recoverability
of the Group's assets in various ways. These risks include the
increasing occurrence of natural disasters and the resulting
damage, e. g. to hotels, or the disruption to travel activity,
rising future expenses due to regulatory measures or scarcer
procurement goods, and declining demand due to the adverse impact
on the reputation of travel driven by the climate effect.
TUI addresses risks from natural disasters, e. g. hurricanes, by
taking out insurance policies. With a well-trained crisis
management team, TUI is well positioned to secure the repatriation
of tourists in an emergency situation. This gives TUI a lasting
advantage over other travel providers not maintaining such a
management team. TUI addresses higher future expenses by investing
in lower-emission aircraft and cruise ships. Through a range of
programmes, TUI seeks to minimise the negative impacts of travel
activities operated by TUI.
Overall, TUI therefore does not consider climate-related risks
as a triggering event to test assets for impairment. Should
impairment tests be carried out for other reasons on the basis of
discounted future cash flows, the cash flows contain in particular
the payments incurred in connection with the measures mentioned
above. The risks, e. g. those resulting from natural disasters, are
implicitly included in the tests of individual assets, in
particular hotels, through a country risk premium. Should several
assets be tested, e. g. for groups of cash-generating units, it is
assumed that these risks offset each other.
Business acquisitions and intangible assets
In accounting for business combinations, the identifiable
assets, liabilities and contingent liabilities acquired have to be
measured at their fair values. In this context, cash flow-based
methods are regularly used, which may lead to different results
depending on the underlying assumptions. In particular, some
judgement is required in estimating the economic useful lives of
intangible assets and determining the fair values of contingent
liabilities.
Detailed information on business acquisitions and useful lives
of intangible assets is provided in the section 'Acquisitions -
divestments' in the section on 'Principles and methods of
consolidation' and in the section on 'Goodwill and other intangible
assets' of the section 'Accounting and measurement methods'.
Property, plant and equipment
The measurement of wear-and-tear to property, plant and
equipment items entails estimates. In addition material assumptions
are the determination of useful lives and residual carrying amounts
of property, plant and equipment. Climate-related risks are taken
into account when assessing the useful life of hotel buildings. The
carrying amount of property, plant and equipment as at 30 September
2021 totals EUR 3,159.3 m (previous year EUR 3,462.5 m). In order
to review the amounts carried, an evaluation is carried out on a
regular basis to assess whether there are any indications of a
potential impairment. These indications relate to a number of areas
and factors, e. g. the market-related or technical environment but
also physical condition. If any such indication exists, management
must estimate the recoverable amount on the basis of expected cash
flows and appropriate interest rates.
More detailed information on the useful lives and residual
values of property, plant and equipment items is provided in the
section 'Property, plant and equipment' in the section 'Accounting
and measurement methods'.
Pension provisions
As at 30 September 2021, the carrying amount of provisions for
pensions and similar obligations totals EUR 935.1 m (previous year
EUR 1,015.0 m). For those pension plans where the plan assets
exceed the obligation, other non-financial assets amounting to EUR
137.1 m are shown as at 30 September 2021 (previous year EUR 363.3
m).
In order to determine the obligations under defined benefit
pension schemes, actuarial calculations are used which rely on
underlying assumptions concerning life expectancy and the discount
rate.
At the balance sheet date, the fair value of the plan assets
totals EUR 3,172.1 m (previous year EUR 3,373.7 m). As assets
classified as plan assets are never available for short-term sale,
the fair values of these plan assets may change significantly up to
the realisation date.
Detailed information on actuarial assumptions is provided under
Note 30.
Other provisions
As at 30 September 2021, other provisions amount to EUR 1,303.1
m (previous year EUR 1,302.4 m). When recognising and measuring
provisions, assumptions regarding the probability of occurrence,
maturity and level of risk are required.
Determining whether a current obligation exists is usually based
on review by internal or external experts. The amount of provision
is based on expected expenses, and is either calculated by
assessing the specific case in the light of empirical values,
outcomes from comparable circumstances or ranges of possible
claims, or else estimated by experts. Due to the uncertainties
associated with assessment, actual expenses may deviate from
estimates so that unexpected charges may result.
More detailed information on Other provisions is provided in the
Notes to the statement of financial position in Note 31.
Lease liabilities
As at 30 September 2021, lease liabilities worth EUR 3,229.4 m
(previous year EUR 3,399.9 m) were carried, reflecting the present
value of the future lease payments as at that date. The interest
rate implicit in the lease can only be easily determined in
exceptional cases. In all other cases TUI therefore uses its own
incremental borrowing rate to measure the lease liability. The
incremental borrowing rate is the interest rate TUI would have to
pay to borrow over a similar term, and with a similar security, the
funds necessary to obtain an asset of a similar value to the
right-of-use asset in a similar economic environment. Determining
the incremental borrowing rate therefore regularly involves
estimates regarding the interest rate the Group would have to pay.
In this context, estimates are required, for instance, to determine
the interest the Group companies would have to pay if no observable
interest rates are available, or if adjustments are required
regarding the specific agreed terms and conditions such as the
transaction currency or contract term. TUI determines the
incremental borrowing rate using observable inputs (bond yields and
CDS quotations) and makes specific adjustments for individual
companies (e. g. country risk premiums).
Deferred tax assets
As at 30 September 2021, deferred tax assets totalling EUR 291.1
m (previous year EUR 299.6 m) were recognised. Prior to offsetting
against deferred tax liabilities, deferred tax assets total EUR
636.3 m, included an amount of EUR 147.3 m (previous year EUR 124.2
m) for recognised losses carried forward. The assessment of the
recoverability of deferred tax assets is based on the ability of
the respective Group company to generate sufficient taxable income.
TUI therefore assesses at every balance sheet date whether the
recoverability of expected future tax savings is sufficiently
probable in order to recognise deferred tax assets. The assessment
is based on various factors including internal forecasts regarding
the future earnings situation of the Group company. TUI uses a
five-year planning horizon to derive the recoverability of tax loss
carryforwards and deductible differences. If the assessment of the
recoverability of future deferred tax assets changes, impairment
charges may be recognised, if necessary, on the deferred tax
assets.
More detailed information on deferred tax assets is available in
the notes to the statement of financial position in Note 20.
Income taxes
The Group is liable to pay income taxes in various countries.
Key estimates are required when determining income tax liabilities,
including the probability, the timing and the size of any amounts
that may become payable. For certain transactions and calculations
the final tax charge cannot be determined during the ordinary
course of business. After taking appropriate external advice, the
Group makes provisions or discloses contingencies for uncertain tax
positions based on the probable or possible level of additional
taxes that might be incurred. The level of obligations for expected
tax audits is based on an estimation of whether and to what extent
additional income taxes will be due. Judgements are corrected, if
necessary, in the period in which the final tax charge is
determined.
Recoverable amounts of touristic prepayments
At 30 September 2021, the carrying amount of touristic
prepayments totals EUR 616.2 m (previous year EUR 705.4 m). The
assessment of the recoverable amounts of touristic prepayments made
to hoteliers requires judgement about the volume of future trading
with hoteliers and the credit worthiness of those hoteliers. To
assess the recoverability of touristic prepayments, TUI considers
the financial strength of those hoteliers, the quality of the
hotels as well as the demand for each hotel and the relevant
destination during the past and in forthcoming seasons.
Financial instruments
When measuring ECL of financial instruments under IFRS 9 TUI
uses, besides historical information, reasonable and supportable
forward looking information, which is based on assumptions for the
future movement of different economic drivers. The uncertainty
remains that this future ECL will not be in line with actual
default rates due to market development notably with regard to the
impact of the COVID-19 pandemic.
The measurement of the range of potential outcomes relating to
the variable purchase price receivable from the sale of Riu Hotels
S. A. meets the definition of a key estimate. More detailed
information on the variable purchase price receivable is available
in the Notes to the financial instruments in Note 41.
Segment Reporting
Notes on the segments
The identification of operating segments is based on the
internal organisational and reporting structure primarily built
around the different products and services as well as a
geographical structure within the TUI Group. Allocation of
individual organisational entities to operating segments is
exclusively based on economic criteria, irrespective of the
participation structure under company law. The segments are
independently managed by those in charge, who regularly receive
separate financial information for each segment. They regularly
report to the Group Executive Committee, which consists of six
Executive Board members and five other executives. The legally
binding decision regarding the use of resources is taken by the
Executive Board. TUI Group's Executive Board has therefore been
identified as the Chief Operating Decision Maker (CODM) in
accordance with IFRS 8.
The Hotels & Resorts segment comprises all Group-owned
hotels and hotel shareholdings of TUI Group.
The Cruises segment consists of the joint venture TUI Cruises,
its subsidiary Hapag-Lloyd Cruises as well as the British cruise
business Marella Cruises.
The TUI Musement segment comprises the companies providing
services in the destinations.
The income statement items of the aircraft leasing companies
holding the TUI Group's aircraft and subletting them within the
Group have been fully allocated to the airlines using the
respective aircraft (Northern Region, Central Region and Western
Region segments).
The Northern Region segment comprises the tour operators and
airlines in the UK, Ireland and the Nordic countries and the stake
in the tour operation business of the Canadian company Sunwing as
well as until its disposal end of March 2021 the associate TUI
Russia. This segment also includes the tour operator TUI Lakes
& Mountains, which plays a major role in securing the load
factor for our UK aircraft fleet in winter.
The Central Region segment comprises the tour operators and
airlines in Germany and tour operators in Austria, Poland and
Switzerland.
The Western Region segment comprises the tour operators and
airlines in Belgium and the Netherlands and tour operators in
France.
Apart from the above segments, the recognised items also include
All other segments. This comprises the business operations for new
markets and in particular the central corporate functions and
interim holdings of TUI Group and the Group's real estate
companies, as well as central tourism functions such as information
technology.
Notes to the segment data
The selection of segment data presented is based on the regular
internal reporting to the Executive Board. From the 2020 financial
year onwards, the internationally more common earnings measure
'adjusted EBIT' is used for value-oriented corporate management. In
the 2020 financial year, the adjusted EBIT was also adjusted for
the earnings effect of IFRS16 ('adjusted EBIT [IAS17]') as part of
internal reporting to facilitate comparability with the previous
year. From the 2021 financial year onwards, adjusted EBIT is
determined on the basis of IFRS 16 and is the segment performance
indicator within the meaning of IFRS 8, and the previous year's
figures were adjusted accordingly.
We define the EBIT in underlying EBIT as earnings before
interest, income taxes and result of the measurement of the Group's
interest hedges. EBIT by definition includes goodwill
impairments.
Underlying EBIT is adjusted for by income and expense items
impacting or distorting the assessment of the operating
profitability of the segments and the Group due to their level and
frequency. These separately disclosed items include gains on
disposal from investments, major gains and losses from the sale of
assets and major restructuring and integration expenses. In
addition, adjustments are carried for all effects from purchase
price allocations, ancillary acquisition costs and conditional
purchase price payments. Adjustments made in the reconciliation to
underlying EBIT also include goodwill impairments.
In the 2021 financial year, net income totaling EUR 95.9 m was
adjusted as separately disclosed items.
Separately disclosed items of financial year 2021 include income
of EUR 54 m from the reversal of provisions as well as other
obligations in connection with restructuring measures no longer
required in the Central Region due to the lower than expected
reduction in fleet size at TUIfly and EUR 2 m in the Western
Region. In addition, restructuring expenses of EUR 149 m related to
the segments TUI Musement (EUR 12 m), Northern Region (EUR 11 m),
Central Region (EUR 21 m), Western Region (EUR 55 m) and All other
segments (EUR 50 m). Furthermore, gains or losses on disposal from
the sale of our 49 % stake in the joint venture Riu Hotels S. A. to
a company of the Riu Group (EUR 197 m), the closure of TUI
Musement's Mauritius business (EUR - 2 m) and the sale of a stake
in an aircraft asset company in the Northern (EUR - 2 m) and
Western (EUR - 1 m) Regions, the sale of two hotel companies in
Hotels & Resorts (EUR - 4 m) and in the Western Region (EUR 2
m) were adjusted.
In the 2020 financial year, net income totaling EUR 119.1 m were
adjusted as separately disclosed items.
Of the gains on disposal adjusted in the 2020 financial year,
EUR 90 m resulted from the divestment of the German specialist tour
operators realized at the beginning of the financial year and EUR
476 m from the sale of Hapag-Lloyd Kreuzfahrten to TUI Cruises.
The goodwill impairments of EUR 68 m adjusted in the prior year
exclusively related to the Hotels & Resorts segment.
In financial year 2020, in TUI Musement restructuring expenses
of EUR 14 m were adjusted. A further EUR 46 m was attributable to
the closure of travel agencies and restructuring in the tour
operator and airline sectors in the Northern Region. In the Central
Region, the adjusted expenses of EUR 191 m resulted from the
planned capacity reduction at TUIfly Deutschland, an expansion of
the existing restructuring programme at TUI Deutschland and the
restructuring of the Group's own over-the-counter distribution. The
EUR 68 m adjusted expenses in the Western Region related in
particular to the restructuring in France and further projects in
Belgium and the Netherlands. A further EUR 7 m is attributable to
one-off expenses in All other segments.
In addition, EUR 53 m were attributable to impairments on IT
projects resulting from the Group's accelerated digital
transformation that were hence classified as restructuring
costs.
The adjusted expenses of EUR 33.2 m (previous year EUR 49.5 m)
from purchase price allocations mainly include scheduled
amortization of intangible assets from acquisitions made in
previous years.
In accordance with IFRS 8 TUI presents intercompany leases - in
line with the internal steering logic - as if they were IAS 17
Operating leases in segment reporting.
Apart from this indicator, internal and external revenue,
depreciation and amortisation, impairments of other intangible
assets (excluding goodwill), property, plant and equipment,
right-of-use assets and investments as well as the share of result
of joint ventures and associates are likewise shown for each
segment, as these amounts are included when measuring underlying
EBIT. As a rule, inter-segment business transactions are based on
the arm's length principle, as applied in transactions with third
parties. No single external customer accounts for 10 % or more of
revenue.
Assets and liabilities by segment are not included in the
reporting to the Executive Board and are therefore not shown in
segment reporting.
Depreciation / amortisation and write-backs relate to
non-current assets by region and do not include goodwill
impairments.
Non-current assets by region contain other intangible assets,
property, plant and equipment, right-of-use assets and specific
other non-current assets that do not meet the definition of
financial instruments.
Segment indicators
Revenue by segment
2021 2020
EUR million External Group Total External Group Total
adjusted adjusted adjusted
Hotels & Resorts 440.5 226.2 666.7 402.4 349.0 751.4
Cruises 27.0 0.0 27.0 472.6 - 0.0 472.6
TUI Musement 116.7 61.6 178.3 306.3 155.0 461.3
Consolidation - - 4.1 - 4.1 - - 3.7 - 3.7
Holiday Experiences 584.1 283.8 867.9 1,181.3 500.3 1,681.6
Northern Region 807.7 273.8 1,081.5 2,462.0 272.2 2,734.2
Central Region 2,322.9 84.0 2,406.9 2,859.6 125.7 2,985.3
Western Region 976.1 130.7 1,106.8 1,345.9 155.6 1,501.5
Consolidation - - 484.9 - 484.9 - - 541.6 - 541.6
Markets & Airlines 4,106.7 3.6 4,110.3 6,667.5 11.9 6,679.4
All other segments 40.8 4.4 45.2 94.9 5.9 100.8
Consolidation - - 291.8 - 291.8 - - 518.1 - 518.1
Total 4,731.6 - 4,731.6 7,943.7 - 7,943.7
Underlying EBIT by segment
EUR million 2021 2020
adjusted
Hotels & Resorts - 152.7 - 395.2
Cruises - 277.5 - 322.3
TUI Musement - 105.3 - 114.0
Holiday Experiences - 535.4 - 831.5
Northern Region - 965.8 - 960.9
Central Region - 328.6 - 612.5
Western Region - 176.6 - 433.7
Markets & Airlines - 1,470.9 - 2,007.1
All other segments - 69.1 - 158.4
Total - 2,075.5 - 2,997.0
Reconciliation to underlying EBIT of TUI Group
EUR million 2021 2020
Earnings before income taxes - 2,461.7 - 3,203.3
plus: Net interest expense (excluding expense / income from measurement 439.1 281.7
of interest hedges)
less / plus: Expense (income) from measurement of interest hedges 9.8 - 5.9
EBIT - 2,012.8 - 2,927.4
Adjustments:
less / plus: Separately disclosed items - 95.9 - 119.1
plus: Expense from purchase price allocation 33.2 49.5
Underlying EBIT - 2,075.5 - 2,997.0
Other segmental information
Thereof Thereof
impairment of amortisation / Share of result
Amortisation (+), depreciation (+), impairment (+) intangible assets depreciation of of
and write-backs (-) of other intangible assets, and intangible assets joint ventures
property, plant and equipment, right-of-use assets property, plant, and and associates
and investments equipment and property, plant,
right-of-use equipment and
assets right-of-use assets
EUR million 2021 2020 2021 2020 2021 2020 2021 2020
adjusted adjusted adjusted
Hotels & 217.8 337.3 56.6 135.8 192.3 201.6 - 44.6 - 78.9
Resorts
Cruises 63.4 240.0 - 150.4 63.4 89.5 - 146.7 - 74.2
TUI Musement 32.9 42.1 0.2 5.2 32.9 36.9 - 5.6 - 2.7
Holiday 314.1 619.4 56.7 291.4 288.5 328.0 - 196.9 - 155.8
Experiences
Northern 363.6 405.0 37.6 61.8 328.5 343.2 - 38.2 - 35.0
Region
Central 133.4 184.9 6.4 17.7 127.2 167.3 2.3 - 2.3
Region
Western 158.9 246.3 18.4 57.5 143.9 188.8 - - 0.2
Region
Markets & 655.9 836.2 62.4 137.0 599.6 699.3 - 35.9 - 37.5
Airlines
All other 42.4 48.8 36.4 27.0 5.9 21.8 0.1 -
segments
Total 1,012.4 1,504.4 155.5 455.5 894.1 1,049.1 - 232.7 - 193.3
Key figures by region
External revenue Non-current assets
by customer locations
EUR million 2021 2020 2021 2020
Germany 1,741.5 2,504.4 307.4 434.5
United Kingdom 768.5 2,282.8 3,656.2 3,933.3
Spain 87.4 75.8 589.9 738.7
Other Europe 1,926.3 2,817.2 533.9 597.2
North and South America 144.6 140.1 553.0 510.3
Rest of the world 63.3 123.4 1,197.4 1,258.9
Total 4,731.6 7,943.7 6,837.8 7,472.9
Notes to the Consolidated Income Statement
The development of TUI Group's revenue and earnings in the
financial year 2021 was still materially impacted by the suspension
of most of our tour operation, aviation, hotel and cruise
operations as a result of the global travel restrictions in order
to contain the spread of COVID-19. TUI Group's results generally
also reflect the significant seasonal swing in tourism between the
winter and summer travel months, however this period the impact is
less evident due to the COVID-19 pandemic.
(1) Revenue
Group revenue is mainly generated from tourism services. The
other revenues present income from sub-lease. In the financial year
2021, consolidated revenue decreased by 40.4 % year-on-year from
EUR 7.9 bn to EUR 4.7 bn. The decline was driven by the travel
restrictions due to COVID-19.
External revenue allocated by destinations for the period from 1 Oct 2020 to 30 Sep 2021
Spain Other Caribbean, North Rest of Africa, 2021
EUR million (incl. European Mexico, Africa & Ind. Ocean, Other Revenues from Other 2021
Canary destinations USA & Turkey Asia countries contracts with Total
Islands) Canada customers
Hotels & 186.4 65.4 108.6 52.1 27.4 0.6 440.5 - 440.5
Resorts
Cruises 0.3 26.3 0.3 - - 0.1 27.0 - 27.0
TUI Musement 21.4 53.9 23.3 9.0 7.1 1.9 116.6 - 116.7
Holiday 208.1 145.6 132.2 61.1 34.5 2.6 584.1 - 584.1
experiences
Northern 235.9 468.0 82.6 10.0 8.6 1.5 806.6 1.0 807.7
Region
Central 602.7 1,161.9 79.9 337.8 139.7 0.5 2,322.5 0.3 2,322.9
Region
Western 282.7 503.4 106.1 78.6 4.5 0.4 975.7 0.5 976.1
Region
Markets & 1,121.3 2,133.3 268.6 426.4 152.8 2.4 4,104.8 1.8 4,106.7
Airlines
All other 1.7 11.0 1.3 0.8 22.0 4.0 40.8 - 40.8
segments
Total 1,331.1 2,289.9 402.1 488.3 209.3 9.0 4,729.7 1.8 4,731.6
External revenue allocated by destinations for the period from 1 Oct 2019 to 30 Sep 2020
Spain Other Caribbean, North Rest of Africa, 2020
EUR million (incl. European Mexico, Africa & Ind. Ocean, Other Revenues from Other 2020
Canary destinations USA & Turkey Asia countries contracts with Total
Islands) Canada customers
Hotels & 190.6 56.7 27.3 32.8 81.1 13.9 402.4 - 402.4
Resorts
Cruises 93.3 63.1 141.7 0.2 77.0 97.3 472.6 - 472.6
TUI Musement 40.0 85.2 54.4 15.2 77.5 34.0 306.3 0.0 306.3
Holiday 323.9 205.0 223.4 48.2 235.6 145.2 1,181.3 0.0 1,181.3
experiences
Northern 830.9 464.5 486.9 250.8 372.7 45.8 2,451.6 10.4 2,462.0
Region
Central 728.9 1,021.9 197.7 416.4 479.1 10.2 2,854.2 5.4 2,859.6
Region
Western 332.2 290.8 294.2 180.7 206.4 24.3 1,328.6 17.3 1,345.9
Region
Markets & 1,892.0 1,777.2 978.8 847.9 1,058.2 80.3 6,634.4 33.2 6,667.5
Airlines
All other 4.1 37.8 5.0 2.2 32.6 13.2 94.9 - 94.9
segments
Total 2,220.0 2,020.0 1,207.2 898.3 1,326.4 238.7 7,910.6 33.2 7,943.7
Future revenue from performance obligations not yet delivered as
at 30 September 2021 totals EUR 2,192.4 m (previous year EUR
1,993.7 m), including an amount of EUR 2,006.6 m (previous year EUR
1,854.8 m) to be recognised within the next twelve months. The
remaining revenue will mostly be recognised in the following twelve
months. TUI uses the practical expedient offered under IFRS
15.121(a) and only discloses long-term performance obligations from
contracts with a term of more than twelve months, i. e. at least
twelve months lie between the start of the contract (in principle
the booking date) and the end of the contract (in principle the end
of the service).
The touristic advance payments received (contract liabilities)
are presented in Note 34.
(2) Cost of sales and administrative expenses
Cost of sales relates to the expenses incurred in the provision
of tourism services. In addition to the expenses for personnel,
depreciation, amortisation, rental and leasing, it includes all
costs incurred by the Group in connection with the procurement and
delivery of airline services, hotel accommodation, cruises and
distribution costs.
Due to the suspension of business operations as a result of
COVID-19, the cost of sales declined by 40.0 % from EUR 9.9 bn to
EUR 6.0 bn in financial year 2021.
In the prior year, income from the compensation agreed with
Boeing to offset the effects of the 737 Max flight ban, which
represents pure damages, was recognised in cost of sales.
The cost of sales in financial year 2021 and in the prior year
include effects from the termination of hedging relationships that
were previously designated in hedge accounting relationships. For
more details, please refer to Note 41 'Financial instruments'.
Government grants
EUR million 2021 2020
Cost of Sales 158.8 95.1
Administrative expenses 62.7 47.1
Total 221.5 142.2
Since April 2020 government programmes and measures to secure
jobs had been introduced by european governments similar to the
short-time work benefit scheme in Germany. The especially
subsidiaries of the segments northern, western and central region
used these programmes following the introduction of travel
restrictions in the 2020 financial year and in winter and spring
2021. In the wake of the gradual lifting of restrictions in summer
2021 in the framework of the COVID-19 pandemic, some of these
measures have already been terminated, while other will
successively end. In addition, a number of Group companies have
applied for government grants, or received such grants,
respectively, from the relevant national awarding authorities, e.
g. in the form of grants for fixed costs. The government grants
reported under cost of sales and administrative expenses include in
particular grants for wages and salaries, social security
contributions as well as other contributions directly reimbursed to
the relevant company. Due to the termination of these programmes in
part or in full and the resumption of business operations,
government grants will decline substantially in financial year
2022.
In addition TUI AG received government assistance in the form of
financing measures to cover the liquidity requirements due to the
COVID-19 pandemic from the KfW and the WSF. For further details we
refer to the section 'Going concern reporting according to the UK
Corporate Governance Code'.
Administrative expenses comprise all expenses incurred in
connection with activities by the administrative functions and
break down as follows:
Administrative expenses
EUR million 2021 2020
Staff cost 542.1 649.0
Rental and leasing expenses 14.3 23.6
Depreciation, amortisation and impairment 131.9 126.7
Others 152.2 218.1
Total 840.5 1,017.3
The cost of sales and administrative expenses include the
following expenses for personnel and depreciation /
amortisation:
Staff costs
EUR million 2021 2020
Wages and salaries 1,393.1 1,871.6
Social security contributions 193.7 247.1
Pension costs 119.3 142.3
Total 1,706.1 2,261.0
Pension costs include service cost for defined benefit
obligations and contributions to defined contribution pension
schemes.
In the period under review, the TUI Group's personnel costs
decreased from 2.3 bn to EUR 1.7 bn. The year-on-year decline in
wages and salaries and social security contributions in financial
year 2021 resulted in particular from a reduction in the average
number of employees across the Group due to the COVID-19 crisis and
initial reorganisation effects, among others, from the Global
Realignment Programme. In addition, considerable savings were
generated, among other things, through the use of short-time work
and other government programmes as the Job Retention Scheme in
Great Britain, to preserve jobs. Some of these programmes have
already been terminated or will successively end in the wake of the
gradual lifting of restrictions to contain the COVID-19 pandemic.
In addition, the restructuring measures in the 2021 financial year
were lower than in the previous year.
The average annual headcount (excluding trainees) evolved as
follows:
Average annual headcount in the financial year (excl. trainees)
2021 2020
Hotels & Resorts 14,546 15,471
Cruises 58 271
TUI Musement 4,277 5,558
Holiday Experiences 18,881 21,300
Northern Region 8,952 11,172
Central Region 7,537 9,021
Western Region 4,572 5,819
Markets & Airlines 21,061 26,012
All other segments 2,274 2,293
Total 42,216 49,605
Depreciation / amortisation / impairment
EUR million 2021 2020
Depreciation and amortisation of other intangible assets, property, plant and 894.1 1,049.1
equipment and right-of-use assets
Impairment of other intangible assets, property, plant and equipment and 155.5 455.4
right-of-use assets
Total 1,049.6 1,504.5
The decrease in depreciation and amortisation is attributable to
revaluations and modifications of right-of-use assets as well as
impairments in the previous year and changed exchange rates.
Impairment on other intangible assets, property, plant and equipment and right-of-use assets
EUR million 2021 2020
Hotels & Resorts 56.5 135.8
Cruises - 150.4
TUI Musement 0.2 5.2
Holiday Experiences 56.7 291.4
Northern Region 37.6 61.8
Central Region 6.4 17.7
Western Region 18.4 57.5
Markets & Airlines 62.4 137.0
All other segments 36.4 27.0
Total 155.5 455.4
Of the impairments losses EUR 50.7 m (previous year EUR 280.0 m)
relate to property, plant and equipment. Additionally EUR 72.4 m
(previous year EUR 97.4 m) correspond to right-of-use assets and
EUR 32.4 m (previous year EUR 78.0 m) to other intangible assets.
Of the impairment losses EUR 111.3 m (previous year EUR 422.5 m)
are presented within cost of sales and EUR 44.2 m (previous year
EUR 32.9 m) in administrative expenses.
For details of the impairments effected in financial year 2021,
please refer to the respective sections in the Notes on the
consolidated statement of financial position.
(3) Other income and other expenses
Other income in financial year 2021 mainly results from the
disposal of Group companies. For more information, please refer to
the section 'Divestments'. In the prior year, too, this item
primarily included gains from the sale of subsidiaries.
In both the current and previous financial years, Other expenses
comprise losses from the sale of TUI Group companies and the
disposal of aircraft assets.
(4) Financial income
Financial income
EUR million 2021 2020
Bank interest income 0.8 9.4
Other interest and similar income 10.8 10.4
Income from the measurement of hedges 1.1 9.9
Interest income 12.7 29.7
Income from investments - 0.6
Foreign exchange gains on financial instruments 14.6 5.0
Total 27.3 35.3
The decrease in financial income of EUR 8.0 m in financial year
2021 mainly results from lower interest income and lower income
from the valuation of hedging instruments. This decrease was partly
compensated by increased income from exchange rate changes on lease
liabilities in accordance with IFRS 16.
(5) Financial expenses
Financial expenses
EUR million 2021 2020
Bank interest payable on loans and overdrafts 14.8 14.8
Interest expenses on lease liabilities 153.3 148.1
Net interest expenses from defined benefit pension plans 0.9 2.5
Unwinding of discount on provisions - 0.7 7.5
Other interest and similar expenses 282.5 128.7
Expenses relating to the measurement of hedges 10.9 4.0
Interest expenses 461.7 305.6
Expenses relating to the measurement of other financial instruments - 0.3
Foreign exchange losses on financial instruments 2.4 15.8
Total 464.1 321.7
In the period under review financial expenses rose by EUR 142.4
m. This was mainly attributable to higher interest expenses, in
particular due to the utilisation of credit facilities to cover
payments to be made and expenses in connection with the early
repayment of the TUI bond on 23 February 2021. This was offset by
lower expenses from exchange rate changes in lease liabilities in
accordance with IFRS 16.
(6) Share of result of joint ventures and associates
The share of result of joint ventures and associates of EUR -
232.7 m (previous year EUR - 193.3 m) comprises the net loss for
the year attributable to the associated companies and joint
ventures.
Due to the pandemic, joint ventures and associates were tested
for impairment as at 30 September 2021. This resulted in an
impairment loss of EUR 5.0 m in the Hotels & Resorts
segment.
For the development of the results of the material joint
ventures and associates, please refer to Note 16 'Investments in
joint ventures and associates'.
(7) Income taxes
As in the previous year, TUI Group's German companies have to
pay trade tax of 15.7 % and corporation tax of 15.0 % plus a 5.5 %
solidarity surcharge on corporation tax.
Foreign income taxes are calculated on the basis of the laws and
provisions applicable in the individual countries. The income tax
rates applied to foreign companies vary from 0 % to 35.0 %.
Breakdown of income taxes
EUR million 2021 2020
Current tax expense
in Germany - 6.5 6.0
abroad 3.4 15.5
Deferred tax expense 22.3 - 85.7
Total 19.2 - 64.2
In financial year 2021, the actual tax income in Germany
included income attributable to prior periods. Due to the required
reassessment of tax risks, income tax liabilities of EUR 2.0 m
(previous year EUR 0.0 m) were reversed. In financial year 2021,
the tax liabilities from actual taxes attributable to prior periods
totalled EUR 18.2 m (previous year EUR 0.2 m).
In the financial year deferred tax expenses include deferred tax
income from the reassessment of tax loss carryforwards in Germany
of EUR 39.7 m (previous year tax expense EUR 43.8).
In financial year 2021, tax expense totalled EUR 19.2 m
(previous year income EUR - 64.2 m) and are derived as follows from
an 'expected' income tax expense that would have arisen if the
statutory income tax rate of parent company TUI AG (aggregate
income tax rate) had been applied to earnings before taxes.
Reconciliation of expected to actual income taxes
EUR million 2021 2020
Earnings before income taxes - 2,461.7 - 3,203.4
Expected income tax (current year 31.5 %, previous year 31.5 %) - 775.4 - 1,009.1
Effect from the difference of the actual tax rates to the expected tax rates 196.0 259.0
Changes in tax rates and tax law 75.1 40.0
Income not taxable - 82.9 - 204.6
Expenses not deductible 177.1 226.4
Effects from loss carryforwards 483.2 590.5
Temporary differences for which no deferred taxes were recognised - 25.5 35.3
Deferred and current income tax relating to other periods (net) - 34.5 - 2.3
Other differences 6.1 0.6
Income taxes 19.2 - 64.2
(8) Group loss attributable to shareholders of TUI AG
In financial year 2021, the share in Group loss attributable to
TUI AG shareholders decreased from EUR - 3,148.4 m in the prior
year to EUR - 2,467.2 m.
(9) Group loss attributable to non-controlling interest
In the Hotels & Resorts segment, the Group loss attributable
to non-controlling interest primarily relates to the RIUSA II Group
with EUR - 10.6 m (previous year EUR 14.2 m).
(10) Earnings per share
In accordance with IAS 33, basic earnings per share are
calculated by dividing the Group result for the year attributable
to TUI AG shareholders by the weighted average number of registered
shares outstanding during the financial year. The average number of
shares is derived from the total number of shares at the beginning
of the financial year (590,415,100 shares) and the share capital
increase of 508,978,534 new shares issued on a pro rata basis
(363,954,513 new shares).
Earnings per share
2021 2020
Group loss / profit for the year attributable to shareholders of TUI AGEUR million - 2,467.2 - 3,148.4
Weighted average number of shares 954,369,613 589,104,641
Basic earnings per shareEUR - 2.58 - 5.34
Diluted Earnings per share
2021 2020
Group loss / profit for the year attributable to shareholders of TUI AGEUR million - 2,467.2 - 3,148.4
Weighted average number of shares 954,369,613 589,104,641
Weighted average number of shares (diluted) 954,369,613 589,104,641
Diluted earnings per shareEUR - 2.58 - 5.34
As a rule, a dilution of earnings per share occurs when the
average number of shares increases due to the addition of the issue
of potential shares from conversion options. In the event of a
loss, this is not applicable. The matters described below therefore
have no dilutive effect as of the reporting date.
On 1 October 2020 TUI AG issued a warrant bond to the Economic
Stabilisation Fund (ESF) of EUR 150 m. As the conversion price per
share was set at an amount of EUR 2.56, the potential shares amount
to 58.7 m.
In January 2021 a conditional capital of EUR 420.0 m was
resolved to grant ESF the right to exchange all or part of ESF's
asset contribution in the form of a silent partnership interest of
EUR 420 m at any time for up to 420 m new registered shares
representing a proportionate amount of the capital stock of EUR
1.00 per share.
In April and July 2021, a convertible bond was issued for a
total of EUR 589.6 m. At an initial conversion price of EUR 5.36
per share, the number of potential shares is 110 m.
With effect from 2 November 2021, 523.5 m new shares were issued
in a rights offering. More detailed information is provided in Note
47 'Significant events after balance sheet date'.
In total the potential shares amount to 1,112.2 m.
(11) Taxes attributable to other comprehensive income
Tax effects relating to other comprehensive income
2021 2020
EUR million Gross Tax Net Gross Tax Net
effect effect
Foreign exchange differences 119.9 - 119.9 - 185.9 - - 185.9
Cash flow hedges 144.0 - 32.1 111.9 - 316.1 73.3 - 242.8
Remeasurements of benefit
obligations and related fund - 257.5 139.3 - 118.2 25.5 - 15.2 10.3
assets
Changes in the measurement
of companies measured at 17.9 - 17.9 - 38.6 - - 38.6
equity outside profit or loss
Fair value gain / loss on investments in equity instruments - 0.1 - - 0.1 - 27.7 - - 27.7
designated as at FVTOCI
Other comprehensive income 24.3 107.2 131.5 - 542.8 58.1 - 484.7 Corporate income taxes worth EUR - 1.3 m (previous year EUR - 1.9 m) were generated in the reporting period and recognised directly in equity. As in the previous year, deferred income taxes recognised directly in equity were not generated.
Notes to the Consolidated Statement of Financial Position
(12) Goodwill
Goodwill
EUR million 2021 2020
Historical cost
Balance as at 1 Oct 3,404.7 3,438.3
Exchange differences 86.8 - 48.0
Additions - 40.1
Disposals - 25.7
Reclassification as assets held for sale - 22.0 -
Balance as at 30 Sep 3,469.5 3,404.7
Impairment
Balance as at 1 Oct - 490.2 - 429.1
Exchange differences - 8.2 7.0
Impairments for the current year - - 68.1
Reclassification as assets held for sale 22.0 -
Balance as at 30 Sep - 476.4 - 490.2
Carrying amounts as at 30 Sep 2,993.1 2,914.5
In the previous year, Goodwill increased by EUR 36.6 m due to
acquisitions and by EUR 3.5 m due to the first time consolidation
of a formerly immaterial and thus not consolidated subsidiary.
Disposals from the group of consolidated companies resulted in a
previous year's reduction of goodwill of EUR 25.7 m. Furthermore,
impairments carried out in the previous year led to a decrease in
Goodwill of EUR 68.1 m. Detailed information on acquisitions and
divestments is presented under 'Acquisitions - Divestments'.
In accordance with the provisions of IAS 21, goodwill allocated
to the individual segments and sectors was recognised in the
functional currency of the subsidiaries and subsequently translated
when preparing the consolidated financial statements. Similar to
the treatment of other differences from the translation of annual
financial statements of foreign subsidiaries, differences due to
exchange rate fluctuations between the exchange rate at the date of
acquisition of the subsidiary and the exchange rate at the balance
sheet date are taken directly to equity outside profit and loss and
disclosed as a separate item. In financial year 2021, an increase
in the carrying amount of goodwill of EUR 78.6 m (previous year
decrease of EUR 41.0 m) resulted from foreign exchange
differences.
The following table presents a breakdown of goodwill by cash
generating unit (CGU) at carrying amounts. Other exclusively
consists of the two cash-generating units Robinson and Blue
Diamond, which belong to the Hotels & Resorts segment.
Goodwill per cash generating unit
EUR million 30 Sep 2021 30 Sep 2020
Northern Region 1,224.6 1,162.2
Central Region 501.7 501.7
Western Region 412.3 412.3
Riu 343.1 343.1
Marella Cruises 295.2 279.3
TUI Musement 170.3 170.1
Other 45.9 45.8
Total 2,993.1 2,914.5
As at 30 September 2021, an impairment test of capitalised
goodwill was performed at the level of cash generating units based
on an updated planning scenario. No further impairment requirements
of capitalised goodwill were identified.
For all CGUs, the recoverable amount, was determined on the
basis of fair value less costs of disposal, being the higher value
compared to the value in use. The fair value was calculated by
discounting the expected cashflows. This was based on the
medium-term plan for the respective entity as at 30 September 2021.
Budgeted revenues and EBIT margins are based on expectations with
regard to the future business performance, assuming gradual
recovery in 2022 and a business normalisation by 2023. We refer to
the section 'Assumptions and estimates'.
The discount rates are calculated as the weighted average cost
of capital, taking account of country-specific risks of the CGU and
based on external capital market information. The unchanged high
weighted average cost of capital reflects the current market
situation and in particular the increase in beta factors and debt
capital since the beginning of and due to the COVID-19
pandemic.
The table below provides an overview of the parameters versus
the previous financial year, underlying the determination of the
fair values per CGU. Given the impact of the COVID-19 pandemic and
the expected recovery in the upcoming planning periods with a
normalisation of the booking situation in financial year 2023, the
growth rate for revenues and the EBIT margin are comparable only to
a limited extent. The table lists the CGUs to which goodwill has
been allocated:
Parameters for calculation of the recoverable amount at 30 September 2021
Planning Growth EBIT- Sustainable Reco-
period in rate Margin 3 Growth 4 WACC Level Carrying amount verable amount
years revenues 2 in % p. a. in % in % in EUR million in EUR million
in % p. a.
Northern 3.00 8.3 4.4 0.5 11.75 3 1,205.4 3,563.3
Region
Central 3.00 3.3 3.4 0.5 11.75 3 7.2 1,363.1
Region
Western 3.00 6.1 3.4 0.5 11.75 3 449.9 902.7
Region
Riu 1 3.00 7.2 30.1 1.0 7.77 3 2,099.3 3,304.1
Marella 3.00 18.1 14.2 1.0 9.18 3 838.0 1,202.1
Cruises 1
TUI Musement 3.00 23.4 4.8 1.0 8.36 3 327.5 727.7
Other 3.00 2.2 to 4.9 14.9 to 18.8 1.0 7.77 to 8.51 3 548.6 to 672.6 760.4 to 799.0
1 Those are groups of CGUs.
2 Planned growth rate in revenues in % in relation financial
year 2023 to financial year 2024
3 EBIT-Margin for financial year 2024 4 Growth rate of expected
net cash inflows
Parameters for calculation of the recoverable amount at 30 September 2020
Planning Growth rate EBIT- Sustainable WACC Level Carrying amount Reco-
period in revenues 2 Margin 2 Growth 3 in % in EUR million verable amount
years in % p. a. in % p. a. in % in EUR million
Northern 3.00 44.1 1.0 0.5 11.75 3 1,973.2 2,516.8
Region
Central 3.00 28.3 - 0.5 11.75 3 167.7 808.7
Region
Western 3.00 34.8 2.1 0.5 11.75 3 321.5 872.6
Region
Riu 1 3.00 27.9 26.9 1.0 7.74 3 2,010.3 2,778.4
Marella 3.00 32.5 1.0 1.0 9.74 3 573.6 696.4
Cruises 1
TUI Musement 3.00 40.3 - 1.8 1.0 8.39 3 352.5 453.9
Other 3.00 40.3 to 42.3 11.3 to 12.4 1.0 7.74 to 8.80 3 568.9 to 666.5 662.8 to 778.1
1 Those are groups of CGUs.
2 Growth rate of expected net cash inflows
3 Average planned growth rate in detailed planning period
In view of the existing uncertainties regarding future business
development, an extended analysis of sensitivities for the main
planning parameters was carried out. To reflect the uncertainties
in the cost of capital, potential risk discounts and risk premiums
were considered in the Markets and Airlines sector. The following
table shows the effects of potential deviations in fair value in
the financial year 2021:
Sensitivities presenting potential changes of the recoverable amount
Sustainable Sustainable Discounted Discounted Normalisation
Sensitivity analysis Markets WACC WACC growth rate 2 growth rate 2 Cash Flow Cash Flow of
& Airlines + 225 BPS - 225 BPS + 50 BPS - 50 BPS + 15 % - 15 % business
EUR million EUR million EUR million EUR million EUR million EUR million 2024
EUR million
Northern Region - 429.6 627.6 88.3 - 80.8 534.5 - 534.5 - 374.7
Central Region - 208.1 309.2 45.4 - 41.6 206.8 - 206.8 - 143.3
Western Region - 122.2 179.0 25.3 - 23.2 136.1 - 136.1 - 94.9
Sustainable Sustainable Discounted Discounted Normalisation
WACC WACC growth rate 2 growth rate 2 Cash Flow Cash Flow of
Sensitivity analysis Cruises + 100 BPS - 100 BPS + 50 BPS - 50 BPS + 10 % - 10 % business
EUR million EUR million EUR million EUR million EUR million EUR million 2024
EUR million
Marella Cruises 1 - 133.4 170.4 67.8 - 60.0 120.3 - 120.3 - 101.1
Sustainable Sustainable Discounted Discounted Normalisation
Sensitivity analysis Hotels WACC WACC growth rate 2 growth rate 2 Cash Flow Cash Flow of
& Resorts and TUI Musement + 100 BPS - 100 BPS + 50 BPS - 50 BPS + 10 % - 10 % business
EUR million EUR million EUR million EUR million EUR million EUR million 2024
EUR million
Riu 1 - 414.5 557.3 224.1 - 193.3 330.4 - 330.4 - 238.2
TUI Musement - 90.1 118.3 47.5 - 41.5 73.4 - 73.4 - 56.1
Other - 94.0 to 124.7 to 126.4 50.2 to 50.9 - 43.8 to - 76.0 to 79.9 - 76.0 to - 54.8 to -
- 95.4 43.9 - 79.9 62.7
1 Those are groups of CGUs.
2 Sustainable growth rate of expected net cash inflows
The fair values determined in the sensitivity analysis would
only have led to an additional impairment requirement of EUR 6.2 m
in the Hotels & Resorts segment if the WACC had increased by
100 basis points. With the exception of the impairment requirement
presented in the Hotels & Resorts segment, the sensitivity
analysis did not reveal any further indications of an additional
need for impairment losses.
Based on the development of the COVID-19 pandemic, uncertainties
persist in terms of recovery of the tourism business. To take
account of the existing uncertainties, a risk analysis was also
performed for assets of cash-generating units without goodwill. In
the analysis an increased risk for potential impairments was
identified in the cash-generating units TUI Blue and Northern
Hotels in the Hotels & Resorts segment. Consequently, the
individual cash generating units were subject to an event-driven
impairment test (triggering event) and a sensitivity analysis. For
details on impairment losses recognised in the financial year under
review, please refer to the sections 'Property, plant and
equipment' and 'Right-of-use assets'.
The key parameters for the triggering event-driven impairment
tests of the above mentioned cash-generating units are the
development of discounted future cash flows (discounted free cash
flow) and the discount rate (WACC). In the cash-generating units
TUI Blue and Northern Hotels, a 10 % reduction in the discounted
free cash flow would have increased the impairment by EUR 42.3 m.
An increase in the WACC by 100 basis points would have increased
impairments by EUR 36.2 m. In return, an increase in the discounted
free cash flow by 10 % or a decrease in the WACC by 100 basis
points would have resulted in a potential reversal of impairments
of EUR 33.0 m and EUR 32.5 m, respectively.
(13) Other intangible assets
The development of the line items of Other intangible assets in
financial year 2021 is shown in the following table.
Other intangible assets
Brands, Computer software Intangible assets
licenses Transport in
and and Customer the course of Total
other internally leasing base construction
EUR million rights generated acquired contracts and Payments on
account
Historical cost
Balance as at 30 Sep 2019 337.3 458.4 281.0 90.9 94.4 134.3 1,396.3
First-time adoption of IFRS 16 - - - - 24.9 - - - 24.9
Balance as at 1 Oct 2019 (restated) 337.3 458.4 281.0 66.0 94.4 134.3 1,371.4
Exchange differences - 9.6 - 10.5 - 3.1 - 6.9 - 0.9 - 2.3 - 33.3
Additions due to changes in the group of 1.1 - - - 0.3 - 1.4
consolidated companies
Additions 4.5 16.7 26.7 - - 64.0 111.9
Disposals - 5.0 - 11.6 - 61.2 - - 15.0 - 14.6 - 107.4
Reclassification as assets held for sale - - - 4.4 - - - 0.7 - 5.1
Transfer 0.4 64.2 30.8 - - - 96.6 - 1.2
Balance as at 30 Sep 2020 328.7 517.2 269.8 59.1 78.8 84.1 1,337.7
Exchange differences 9.1 22.8 - 2.1 3.3 0.9 4.0 38.0
Additions - 10.3 8.5 - - 89.3 108.1
Disposals - 5.4 - 79.1 - 46.2 - - 0.1 - 3.6 - 134.4
Reclassification as assets held for sale - - - 1.1 - - - - 1.1
Transfer - 2.7 37.6 20.4 - - - 55.3 -
Balance as at 30 Sep 2021 329.7 508.8 249.3 62.4 79.6 118.5 1,348.3
Amortisation and impairment
Balance as at 30 Sep 2019 - 166.4 - 226.3 - 189.0 - 55.3 - 48.6 - - 685.6
First-time adoption of IFRS 16 - - - 11.3 - - 11.3
Balance as at 1 Oct 2019 (restated) - 166.4 - 226.3 - 189.0 - 44.0 - 48.6 - - 674.3
Exchange differences 1.5 5.4 2.3 1.6 0.8 - 11.6
Amortisation for the current year - 22.6 - 75.1 - 40.1 - 2.4 - 9.8 - - 150.0
Impairment for the current year - 7.0 - 28.6 - 25.3 - - 1.8 - 15.3 - 78.0
Disposals 3.6 11.6 58.2 - 15.0 14.4 102.8
Reclassification as assets held for sale - - 3.8 - - - 3.8
Transfer 2.0 - 0.3 - 1.7 - - 0.1 - - 0.1
Balance as at 30 Sep 2020 - 188.9 - 313.3 - 191.8 - 44.8 - 44.5 - 0.9 - 784.2
Exchange differences - 6.3 - 14.0 2.7 - 2.5 - 0.7 - 0.1 - 20.9
Amortisation for the current year - 15.9 - 81.9 - 35.1 - 2.4 - 9.2 - - 144.5
Impairment for the current year - 1.0 - 9.4 - 4.8 - - - 17.2 - 32.4
Disposals 5.4 79.2 45.8 - 0.1 0.9 131.4
Reclassification as assets held for sale - - 1.0 - - - 1.0
Transfer 3.7 - 3.3 - 0.5 - - - - 0.1
Balance as at 30 Sep 2021 - 203.0 - 342.7 - 182.7 - 49.7 - 54.3 - 17.3 - 849.7
Carrying amounts as at 30 Sep 2020 139.8 203.9 78.0 14.3 34.3 83.2 553.5
Carrying amounts as at 30 Sep 2021 126.7 166.1 66.6 12.7 25.3 101.2 498.6
Internally generated computer software consists of computer
programs for tourism applications exclusively used internally by
the Group.
Transport contracts relate to landing rights at airports in the
UK purchased and measured during the acquisition of First Choice
Holidays Plc in 2007.
The intangible assets in the course of construction amounted to
EUR 101.3 m as at 30 September 2021 (previous year EUR 82.9 m).
Additions due to changes in the group of consolidated companies
in the previous year mainly related to the acquisition of Kybele
Turizm Yatirim San. Ve Tic. A.S as well as acquisitions of travel
agencies.
The impairments recognised for the financial year under review
totalled EUR 32.3 m (previous year EUR 78.0 m). The COVID-19
pandemic gave impetus to focus on accelerate the digital
transformation of TUI. Accordingly, local software systems which
will be replaced by group wide software were impaired. This
includes EUR 9.4 m (previous year EUR 28.6 m) impairment of
internally generated software and EUR 4.8 m (previous year EUR 25.3
m) of acquired computer software. In addition, software projects
presented as intangible assets in the course of construction have
been impaired by EUR 17.1 m (previous year EUR 15.3 m). Likewise it
was decided to discontinue the use of smaller brands and licences
with a total book value of EUR 1.0 m (previous year EUR 7.0 m).
Accordingly these assets were impaired.
As in the previous year, the useful life of individual software
systems has been revised based on the acceleration of the digital
transformation. Due to this revision the useful life of the
affected software systems were shortened which increased the
amortization by EUR 8.1 m in the financial year under review. For
the financial year 2022 we expect an increase of amortization by
EUR 8.1 m compared with the amount that would have been charged
before the change in useful life, whereas the increase of
amortisation is expected to be EUR 5.5 m for financial year
2023.
(14) Property, plant and equipment
The table below presents the development of the individual items
of property, plant and equipment in financial year 2021.
Property, plant and equipment
Hotels Other Cruise Other plant, operating Assets under Payments
EUR million incl. buildings Aircraft ships and office equipment construction on Total
land and land account
Historical cost
Balance as at 30 Sep 2,215.4 286.6 2,177.7 1,644.9 1,301.5 172.9 481.3 8,280.3
2019
First-time adoption of - 0.4 - 7.2 - 1,629.9 - 246.2 - 51.1 - 0.1 - - 1,934.9
IFRS 16
Balance as at 1 Oct 2,215.0 279.4 547.8 1,398.7 1,250.4 172.8 481.3 6,345.4
2019 (restated)
Exchange differences - 107.6 - 27.4 - 7.0 - 20.5 - 29.6 - 10.1 - 21.5 - 223.7
Acquisitions through 37.7 - - - 8.7 - - 46.4
business combinations
Additions 65.7 1.2 17.5 125.4 68.8 181.3 117.6 577.5
Disposals - 12.9 - 3.6 - 71.7 - 6.0 - 51.1 - 0.1 - 98.9 - 244.3
Transfer to assets - - 0.4 - 93.4 - 1,013.4 - 5.3 - - 24.4 - 1,136.9
held for sale
Transfer 82.5 1.5 - 0.9 163.0 63.3 - 123.5 - 82.1 103.8
Balance as at 30 Sep 2,280.4 250.7 392.3 647.2 1,305.2 220.4 372.0 5,468.2
2020
Exchange differences 21.5 14.3 2.2 36.9 8.0 2.3 3.3 88.5
Additions 55.1 0.2 26.4 - 61.2 63.8 27.4 234.1
Disposals - 18.4 - 30.2 - 180.7 - 16.5 - 101.4 - 4.6 - 115.8 - 467.6
Transfer to assets - 123.7 - 51.5 0.2 - - 123.3 0.2 - - 298.1
held for sale
Transfer 135.5 - 44.9 24.5 22.8 - 147.5 - 27.7 52.5
Balance as at 30 Sep 2,350.4 183.5 285.3 692.1 1,172.5 134.6 259.2 5,077.6
2021
Depreciation and
impairment
Balance as at 30 Sep - 568.8 - 61.6 - 585.1 - 386.6 - 867.7 0.2 - - 2,469.6
2019
First-time adoption of 0.5 1.9 372.4 83.1 25.4 - - 483.3
IFRS 16
Balance as at 1 Oct - 568.3 - 59.7 - 212.7 - 303.5 - 842.3 0.2 - - 1,986.3
2019 (restated)
Exchange differences 19.5 - 0.4 0.9 7.9 10.5 - - 38.4
Depreciation for the - 60.4 - 2.7 - 32.2 - 73.5 - 99.2 - - 0.6 - 268.6
current year
Impairment for the - 70.7 - 5.0 - 46.5 - 138.3 - 15.4 - - 4.1 - 280.0
current year
Disposals 12.7 2.2 67.6 6.0 45.1 - 4.1 137.7
Transfer to assets - 0.1 68.9 350.4 4.3 - - 423.7
held for sale
Transfer 0.6 - 0.1 1.1 - 57.9 - 14.3 - - - 70.6
Balance as at 30 Sep - 666.6 - 65.6 - 152.9 - 208.9 - 911.3 0.2 - 0.6 - 2,005.7
2020
Exchange differences - 6.0 - 0.7 - 3.5 - 11.8 - 4.3 - 0.1 - 26.2
Depreciation for the - 57.2 - 3.0 - 22.3 - 53.0 - 96.9 - - 0.4 - 232.8
current year
Impairment for the - 37.9 - 1.4 - 7.2 - - 4.2 - - - 50.7
current year
Reversals of 7.5 0.1 1.5 - - - - 9.1
impairment losses
Disposals 18.4 3.0 50.3 16.5 98.1 - - 186.3
Transfer to assets 68.7 49.6 - - 97.9 - 0.2 - 216.0
held for sale
Transfer - 1.5 - - 24.1 11.4 - 0.1 - - - 14.3
Balance as at 30 Sep - 674.6 - 18.0 - 158.2 - 245.8 - 820.8 - - 0.9 - 1,918.3
2021
Carrying amounts as at 1,613.8 185.1 239.4 438.3 393.9 220.6 371.4 3,462.5
30 Sep 2020
Carrying amounts as at 1,675.8 165.5 127.1 446.3 351.7 134.6 258.3 3,159.3
30 Sep 2021
The acquisition of Karisma group resulted in additions of
property, plant and equipment of EUR 44.0 m in the financial year
under review, including EUR 40.3 m for the acquisition of hotels
incl. land.
In the financial year under review, Riu Group invested EUR 86.1
m in the construction of two new hotels and the renovation of
hotels in Spain, Jamaica and Zanzibar. These investments include an
amount of EUR 44.7 m for operating and office equipment and EUR 35
m for assets under construction.
Further additions to assets under construction include EUR 11.7
m for investments in cruise ships and EUR 11.0 m for investments in
aircraft.
In the financial year under review, pre-delivery payments of EUR
15.0 m (previous year EUR 52.1 m) were made for the acquisition of
aircraft and EUR 10.6 m (previous year EUR 38.9 m) for cruise
ships.
The additions to aircraft assets primarily include EUR 12.3 m
for engines and EUR 7.9 m for spare parts.
In the prior year, Hapag-Lloyd Kreuzfahrten GmbH invested an
amount of EUR 117.1 m in the acquisition of the cruise ship
HANSEATIC inspiration.
The acquisitions through business combinations made in the prior
year mainly related to the acquisition of a hotel company, for
which the purchase price allocation was finalised in the previous
year. For details, please refer to the section 'Acquisitions of the
prior financial year'.
The main disposals in the financial year under review include
EUR 130.4 m for the sale of aircraft and aircraft spare parts and
EUR 101.0 m for the disposal of pre-delivery payments on aircraft.
The sale of aircraft resulted in additions to right-of-use assets
due to sale-and-leaseback transactions. Moreover, a
sale-and-leaseback transaction relating to other buildings and land
resulted in a disposal of EUR 26.7 m. In this context, please refer
to the section 'Right-of-use assets and leases'.
The review of the carrying amounts of property, plant and
equipment resulted in impairment losses of EUR 50.7 m in the
financial year under review (previous year EUR 280.0 m).
Impairments of EUR 37.9 m related to hotels including land in the
Hotels & Resorts segment and were attributable notably to
impairments of hotels in the destinations Turkey and Croatia.
In the prior year, one aircraft was written down to the agreed
sale price (Level 2), and impaired by EUR 46.5 m.
The impairments made in the Cruises segment in the prior year
were entirely related to Marella Cruises. The impairment test was
performed by discounting future cash inflows derived from the prior
year business plan with a discount rate of 9.74 %. Please refer to
the section 'Goodwill' for details on how parameters are set. Each
cruise ship represents a separate cash-generating unit. The
recoverable amount was derived from value in use. The impairment
test carried out in the prior year had resulted in impairments on
four cruise ships totalling EUR 69.1 m (recoverable amount EUR
430.8 m). A further cruise ship was marked down by EUR 52.1 m to
the planned selling price less costs to sell of EUR 1.4 m in the
prior year. In addition, a cruise ship was decommissioned in the
previous financial year due to the COVID-19 pandemic, generating an
impairment loss of EUR 17.1 m. The advance payments of EUR 4.1 m
for planned conversions were written off in full.
For detailed information on impairment tests, please refer to
Note 12 'Goodwill'.
In July 2021, TUI AG concluded an agreement to sell Nordotel to
the Grupotel joint venture. Accordingly, the associated assets were
reclassified to the balance sheet item 'Assets held for sale'
before the disposal was completed in October 2021. Further
reclassifications relate to the disposal of hotel assets in the
segment 'Hotels & Resorts', completed in financial year 2021.
For the disposal, please refer to the section 'Divestments'.
The transfer to property, plant and equipment by
reclassifications relate amongst other to carrying amounts of
previously leased assets carried as right-of-use assets for which
purchase options were exercised.
In the financial year 2021, borrowing costs of EUR 0.6 m
(previous year EUR 2.5 m) were capitalised as part of historical
costs. The capitalisation rate of capitalised borrowing costs is
3.0 % p. a. for financial year 2021 and 3.0 % p. a. for the prior
year. For information on the calculation of the capitalisation
rate, please refer to the Property, plant and equipment part in the
section 'Accounting and measurement methods'.
The carrying amount of property, plant and equipment subject to
ownership restrictions or pledged as security totals EUR 490.7 m as
at the balance sheet date (previous year EUR 333.6 m). The increase
is attributable to a new collateralisation of financial liabilities
for aircraft.
(15) Right-of-use assets and leases
As a lessee, TUI recognises right-of-use assets and lease
liabilities according to IFRS 16. For more detailed information on
the use of practical expedients, please refer to the accounting and
measurement methods in the section 'Leases'.
TUI as a lessee
As a lessee, TUI leases moveable assets such as aircraft,
vehicles and cruise ships, as well as property such as hotel
buildings, land, office buildings and travel agencies. The terms
and conditions of the lease agreements are individually negotiated.
Some of TUI's aircraft leases comprise purchase or extension
options. Many of TUI's property leases, in particular for travel
agencies and office buildings, contain extension options and price
adjustment clauses. No residual value guarantees were provided for
the leased items.
The development of the right-of-use assets in financial year
2021 is presented in the table below:
Right-of-use assets
EUR million Aircraft and Hotels Travel Buildings Cruise Other Total
engines agencies ships
Historical cost
Balance as at 1 Oct 2019 2,834.7 751.6 206.2 212.3 247.0 74.0 4,325.8
Exchanges differences - 157.8 - 3.6 - 0.7 - 2.3 - 5.2 - 0.6 - 170.2
Additions 294.8 49.0 17.6 11.6 78.6 14.5 466.1
Revaluations and modifications 60.6 - 178.8 7.3 - 24.7 - 20.3 - 0.3 - 156.2
Disposals - 2.0 - 6.3 - 0.7 - 11.7 - - 0.8 - 21.5
Reclassifications as assets held for sale - 36.5 - - - - - - 36.5
Transfer 5.1 0.1 - 0.5 - 1.1 - 88.4 - 20.7 - 105.5
Balance as at 30 Sep 2020 2,998.9 612.0 229.2 184.1 211.7 66.1 4,302.0
Exchanges differences 39.9 5.1 4.6 1.7 12.0 0.2 63.5
Additions 343.0 20.6 10.8 27.6 0.3 21.5 423.8
Revaluations and modifications 44.2 - 71.0 3.3 - 23.6 8.7 0.5 - 37.9
Disposals - 72.6 - 33.6 - 14.8 - 7.1 - 0.1 - 2.9 - 131.1
Reclassifications as assets held for sale - - 24.7 - - 0.4 - - 0.6 - 25.7
Transfer - 30.0 - 10.9 - 2.0 0.3 - 0.2 - 38.8
Balance as at 30 Sep 2021 3,323.4 497.5 233.1 184.3 232.9 84.6 4,555.8
Depreciation and impairment
Balance as at 1 Oct 2019 - 383.6 - - - 1.9 - 83.2 - 25.5 - 494.2
Exchange differences 42.5 2.3 0.8 0.3 1.6 0.2 47.7
Depreciation for the current year - 409.3 - 107.9 - 54.9 - 24.7 - 18.0 - 15.5 - 630.3
Impairment for the current year - 6.2 - 54.8 - 24.6 - 1.1 - 7.9 - 2.8 - 97.4
Disposals 2.0 6.1 0.3 3.9 - 0.1 12.4
Reclassifications as assets held for sale 18.7 - - - - - 18.7
Transfer - 1.1 - 1.2 - - 58.0 13.3 69.0
Balance as at 30 Sep 2020 - 737.0 - 155.5 - 78.4 - 23.5 - 49.5 - 30.2 - 1,074.1
Exchange differences - 16.3 - 0.6 - 1.9 - 0.2 - 2.9 - 0.1 - 22.0
Depreciation for the current year - 355.3 - 67.7 - 42.0 - 23.7 - 16.5 - 11.4 - 516.6
Impairment for the current year - 2.1 - 22.4 - 13.1 - 27.9 - 6.9 - - 72.4
Reversals of impairments losses - 21.2 4.5 - - 2.3 28.0
Disposals 36.0 30.5 14.7 6.7 0.1 2.8 90.8
Reclassifications as assets held for sale - 11.6 - 0.4 - 0.6 12.6
Transfer 19.2 1.7 - 0.1 - 2.3 - 11.7 0.3 7.1
Balance as at 30 Sep 2021 - 1,055.5 - 181.2 - 116.3 - 70.5 - 87.4 - 35.7 - 1,546.6
Carrying amounts as at 30 Sep 2020 2,261.9 456.5 150.8 160.6 162.2 35.9 3,227.9
Carrying amounts as at 30 Sep 2021 2,267.9 316.3 116.8 113.8 145.5 48.9 3,009.2
Right-of-use assets declined by EUR 218.7 m year-on-year. While
depreciation amounted to EUR 516.6 m, additions included notably an
amount of EUR 343.0 m (previous year EUR 294.8 m) for aircraft and
engines. In the financial year under review a number of aircraft
and aircraft engines were purchased and then sold and leased back.
A further sale-and-leaseback transaction resulted in an addition of
right-of-use assets for an office building in Hanover (EUR 22.1 m),
allocated to ' All other segments'. A new lease for a hotel in
Germany added right-of-use assets of EUR 19.0 m for the TUI Blue
brand in Hotels & Resorts. Other additions include EUR 10.8 m
for travel agencies in Markets & Airlines.
In addition, disposals decreased right-of-use assets by EUR 40.3
m. The disposals primarily include an amount of EUR 36.6 m for the
termination of aircraft leases. Changes and remeasurements of
existing leases resulted in a reduction in right-of-use assets of
EUR 37.9 m. The decline is primarily driven by contractual changes
relating to committed hotel capacity due to the COVID-19 pandemic.
An opposite effect was driven by extensions of aircraft leases.
In July 2021, TUI AG concluded an agreement to sell Nordotel to
the Grupotel joint venture. Accordingly, the associated
right-of-use assets were reclassified to the balance sheet item
'Assets held for sale' before the disposal was completed in October
2021. For details on the disposal, please refer to Note 23 'Assets
held for sale'.
Information on the associated lease liabilities is provided in
Note 32, 'Financial liabilities and lease liabilities'. Details
regarding the maturities of the lease payments not yet made at the
balance sheet date are shown in the section 'Liquidity risk' in
Note 41 'Financial instruments'.
The table below presents the expenses and income carried in the
consolidated income statement of financial position in financial
year 2021 in connection with leases in which TUI is the lessee:
Expenses and income from leases with TUI as the lessee
EUR million 2021 2020
Expenses from short-term leases - 17.0 - 56.0
Expenses from low-value leases - 4.3 - 12.8
Variable lease income and expenses 22.6 36.4
Depreciation of right-of-use assets - 516.6 - 630.3
Impairment of right-of-use assets - 72.4 - 97.4
Reversal of impairments 28.0 -
Interest expenses from lease liabilities - 153.3 - 148.1
Gains or losses arising from sale and leaseback transactions 7.8 0.7
In the financial year under review, the impairment tests carried
out in connection with the COVID-19 pandemic resulted in
impairments of EUR 72.4 m (previous year EUR 97.4 m) for
right-of-use assets. As use of a leased office building in Hanover
in 'All other segments' will be reduced in future, it was impaired
by EUR 22.4 m. Further impairments notably relate to right-of-use
assets for hotels totalling EUR 22.4 m (previous year EUR 54.8 m),
including primarily EUR 13.2 m for hotels in Turkey and EUR 5.5 m
for hotel capacity contracts in Northern Region.
Gains from sale and leaseback transactions of EUR 7.2 m are
attributable to aircraft financing. In the 2021 financial year,
nine newly delivered Boeing B737 Max aircraft and two acquired
engines were refinanced by means of sale and leaseback. In
addition, sale and leaseback was used for a follow-up financing of
another aircraft as well as the disposal and release of one
aircraft and eight engines. Lease liabilities arising from these
transaction totalled EUR 334.6 m. In the period under review, TUI
AG entered into a lease agreement expiring on 30 September 2036
through the sale of a plot of land with buildings. The transaction
resulted in a profit of EUR 0.6 m. As at 30 September 2021, lease
liabilities for this sale-and-leaseback transaction totalled EUR
24.8 m.There were no significant sale and leaseback transactions in
the previous financial year.
The cash outflows for leases totalled EUR 751.4 m (previous year
EUR 816.5 m) in financial year 2021.
At the balance sheet date, unrecognised financial commitments
for short-term leases amounted to EUR 3.7 m (previous year EUR 6.6
m). In addition, potential future lease payments from extension and
termination options of EUR 259.5 m (previous year EUR 265.8 m) were
not included in the measurement of the right-of-use assets and
lease liabilities as it was not reasonably certain that the lease
contracts were going to be extended or not to be terminated.
TUI as lessor
As a lessor, TUI leases or subleases aircraft and, less
significantly, space in office buildings and travel agencies. In
financial year 2021, proceeds from operating leases worth EUR 2.0 m
(previous year EUR 35.2 m) were carried in revenue. This amount
included EUR 0.3 m (previous year EUR 25.4 m) for the sublease of
right-of-use assets. In addition, income from finance leases of EUR
1.0 m (previous year EUR 2.1 m) was carried in the interest
result.
At the balance sheet date, there were receivables from two
subleases classified as finance leases upon transition to IFRS 16.
The following table shows the reconciliation from the undiscounted
lease payments to the net investment:
Net investments - finance leases
EUR million 30 Sep 2021 30 Sep 2020
Undiscounted lease payments (lease components) 12.7 44.7
Unguaranteed residual values - -
Gross investment 12.7 44.7
Unearned finance income 1.3 4.1
Impairment 0.3 27.1
Net investment 11.1 13.5
The table below comprises a maturity analysis of the
undiscounted annual payments from leases in which TUI is the
lessor:
Expected minimum lease payments
30 Sep 2021
Remaining term
EUR million up to 1 year 1- 2 years 2- 3 years 3- 4 years 4- 5 years more than 5 years Total
Operating lease contracts 7.5 5.2 0.2 0.2 0.1 0.1 13.3
Finance lease contracts 4.1 4.1 3.4 1.1 - - 12.7
30 Sep 2020
Remaining term
EUR million up to 1 year 1- 2 years 2- 3 years 3- 4 years 4- 5 years more than 5 years Total
Operating lease contracts 22.7 23.2 21.3 16.2 2.6 0.1 86.1
Finance lease contracts 13.8 9.7 9.7 9.0 2.5 - 44.7
(16) Investments in joint ventures and associates
The table below presents all joint arrangements and associates
of relevance to TUI Group. All joint arrangements and associates
are listed as TUI Group shareholdings in Note 53. All joint
arrangements are joint ventures. There are no joint operations
within the meaning of IFRS 11.
Significant associates and joint ventures
Capital share in % Voting rights share in %
Name and headquarter of company Nature of business 30 Sep 2021 30 Sep 2020 30 Sep 2021 30 Sep 2020
Associates
Sunwing Travel Group Inc., Tour operator & Hotel operator 49.0 49.0 25.0 25.0
Toronto, Canada
Togebi Holdings Limited, Tour operator - 10.0 - 10.0
Nicosia, Cyprus
Joint ventures
Riu Hotels S. A., Hotel operator - 49.0 - 49.0
Palma de Mallorca, Spain
TUI Cruises GmbH, Hamburg, Cruise ship operator 50.0 50.0 50.0 50.0
Germany
All companies presented above are measured at equity.
The financial year of Sunwing Travel Group Inc., Toronto /
Canada (Sunwing), corresponds to TUI Group's financial year. The
financial years of the joint ventures listed above and of Togebi
Holdings Limited, Nicosia, Cyprus deviate from TUI Group's
financial year, ending on 31 December of any one year. In order to
update the at equity measurement as at TUI Group's balance sheet
date, interim financial statements for the period ending 30
September are prepared for these companies.
Significant associates
In 2009, TUI Group entered into a partnership with Sunwing.
Sunwing is a vertically integrated travel company comprising tour
operation, an airline and retail shops. Since the transfer of the
hotel operation and development company Blue Diamond Hotels &
Resorts Inc., St Michael / Barbados, to Sunwing in September 2016,
Sunwing has also included the hotel operation business with a chain
of luxury beach resorts and hotels in the Caribbean and Mexico.
Sunwing's hotel operation business is carried in the Hotels &
Resorts segment, while the tour operation business is carried in
the Northern Region segment. The company has different classes of
shares. TUI Group holds 25 % of the voting shares.
Togebi Holdings Limited (TUI Russia) was established in 2009 as
a joint venture. The business purpose of this associate is to
develop the tour operation business, in particular in Russia and
Ukraine. The company owns tour operation subsidiaries and retail
chains in these countries. At the beginning of October 2018 TUI
Group's share in TUI Russia decreased from 25 % to 10 % due to a
capital increase in which TUI Group did not participate. Since then
Togebi Holdings Limited is classified as an associate. TUI Group
sold its stake in Togebi Holdings Limited at the end of March
2021.
Significant joint ventures
Riu Hotels S. A. is a hotel company owning and operating hotels
in the 4- to 5-star segments. The hotels of the company established
in 1976 are mainly located in Spain and Central America. TUI Group
sold its stake in Riu Hotels S. A. at the end of July 2021.
TUI Cruises GmbH is a joint venture with the US shipping line
Royal Caribbean Cruises Ltd established in 2008. The Hamburg-based
company offers German-speaking cruises for the premium market. TUI
Cruises GmbH currently operates eleven cruise ships.
Financial information on associates and joint ventures
The tables below present summarised financial information for
the significant associates and joint ventures of the TUI Group. The
amounts shown reflect the full amounts presented in the
consolidated financial statements of the relevant associates and
joint ventures (100 %); they do not represent TUI Group's share of
those amounts.
Summarised financial information of material associates
Sunwing Travel Togebi Holdings Limited, Nicosia, Cyprus
Group Inc., Toronto, Canada
EUR million 30 Sep 2021 / 30 Sep 2020 / 30 Sep 2021 / 2021* 30 Sep 2020 /
2021 2020 2020
Non-current assets 1,559.4 1,525.6 n. a. 15.7
Current assets 623.4 601.0 n. a. 225.2
Non-current provisions and liabilities 1,015.3 811.7 n. a. 65.2
Current provisions and liabilities 1,019.5 1,021.0 n. a. 313.7
Revenue 506.7 1,349.9 167.9 456.6
Profit / loss - 144.9 - 143.9 6.1 - 97.4
Other comprehensive income - 1.0 - 28.0 2.1 16.6
Total comprehensive income - 145.9 - 171.9 8.2 - 80.8
* Financial year 2021 only takes into account the values for the
period until the disposal of the company.
Summarised financial information of material joint ventures
Riu Hotels S. A., TUI Cruises GmbH,
Palma de Mallorca, Spain Hamburg, Germany
30 Sep 2021 / 30 Sep 2020 30 Sep 2021 30 Sep 2020
EUR million 2021* / / /
2020 2021 2020
Non-current assets n. a. 813.6 4,312.8 4,180.6
Current assets n. a. 70.2 615.6 373.6
thereof cash and cash equivalents n. a. 14.3 440.8 96.0
Non-current provisions and liabilities n. a. 123.0 3,585.9 2,902.6
thereof financial liabilities n. a. 106.3 3,546.7 2,893.0
Current provisions and liabilities n. a. 47.0 777.4 868.4
thereof financial liabilities n. a. 11.8 599.2 332.1
Revenue 97.4 225.8 319.2 646.3
Depreciation / amortisation of intangible assets and property, 16.1 25.3 177.3 115.4
plant and equipment
Interest income - 0.2 0.9 -
Interest expenses 0.4 0.2 106.4 59.6
Income taxes - 5.7 17.4 - 0.3
Profit / loss - 32.5 10.2 - 293.5 - 148.4
Other comprehensive income 102.1 - 165.6 - 43.6 29.1
Total comprehensive income 69.6 - 155.4 - 337.1 - 119.3
* Financial year 2021 only takes into account the values for the
period until the disposal of the company.
In the financial year 2021, TUI Group received dividends of EUR
3.8 m (previous year EUR 4.9 m) from all joint ventures and
dividends of EUR 2.7 m (previous year EUR 0.8 m) from its
associates.
In addition to TUI Group's significant associates and joint
ventures, TUI AG has interests in other associates and joint
ventures accounted for under the equity-method, which individually
are not considered to be of material significance. The tables below
provide information on TUI Group's share of the earnings figures
shown for the major associates and joint ventures as well as the
aggregated amount of the share of profit / loss, other
comprehensive income and total comprehensive income for the
immaterial associates and joint ventures.
Share of financial information of material and other associates
Sunwing Travel Group Inc., Toronto, Togebi Holdings Other Associates
Canada Limited, Nicosia, immaterial Total
Cyprus associates
EUR million 2021 2020 2021 2020 2021 2020 2021 2020
TUI's share of
Profit / loss - 71.0 - 70.5 - - - 1.0 - 0.2 - 72.0 - 70.7
Other comprehensive 2.2 - 17.8 - - - 2.1 - 10.6 0.1 - 28.4
income
Total comprehensive - 68.8 - 88.3 - - - 3.1 - 10.8 - 71.9 - 99.1
income
Share of financial information of material and other joint ventures
Other
Riu Hotels S. A., Palma de TUI Cruises GmbH, Hamburg, immaterial Joint ventures
Mallorca, Spain Germany joint Total
ventures
EUR million 2021 * 2020 2021 2020 2021 2020 2021 2020
TUI's share of
Profit / loss* - 15.9 5.0 - 146.7 - 74.2 4.0 - 53.4 - 158.6 - 122.6
Other comprehensive 49.3 - 81.1 - 21.8 14.6 - 15.2 - 11.1 12.3 - 77.6
income
Total comprehensive 33.4 - 76.1 - 168.5 - 59.6 - 11.2 - 64.5 - 146.3 - 200.2
income
* Financial year 2021 only takes into account the values for the
period until the disposal of the company.
Net assets of the material associates
Togebi Holdings
EUR million Sunwing Travel Group Inc., Toronto, Canada Limited, Nicosia,
Cyprus *
Net assets as at 1 Oct 2019 465.8 - 151.6
Foreign exchange effects - 28.0 16.6
Capital increase - 94.4
Profit / loss - 143.9 - 97.4
Net assets as at 30 Sep 2020 293.9 - 138.0
Other comprehensive income - -
Foreign exchange effects - 1.0 2.1
Profit / loss - 144.9 6.1
Consolidation effects - 129.8
Net assets as at 30 Sep 2021 148.0 -
* Financial year 2021 only takes into account the values for the
period until the disposal of the company.
Reconciliation to the carrying amount of the associates in the Group balance sheet
Togebi
Sunwing Travel Group Inc., Toronto, Holdings Other Associates
EUR million Canada Limited, immaterial total
Nicosia, associates
Cyprus
Share of TUI in % as at 49.0 10.0 n. a. n. a.
30 Sep 2020
TUI's share of the net assets as at 30 144.0 - 13.8 2.0 132.2
Sep 2020
Goodwill as at 30 Sep 2020 48.5 8.3 7.0 63.8
Unrecognised share of losses - 5.5 31.8 37.3
Impairment of carrying amounts - - - 0.1 - 0.1
Carrying amount as at 192.5 - 40.7 233.2
30 Sep 2020
Share of TUI in % as at 49.0 - n. a. n. a.
30 Sep 2021
TUI's share of the net assets as at 30 72.5 - 29.2 101.7
Sep 2021
Goodwill as at 30 Sep 2021 51.2 - 5.0 56.2
Unrecognised share of losses - - - -
Impairment of carrying amounts - - - 0.2 - 0.2
Carrying amount as at 123.7 - 34.0 157.7
30 Sep 2021
Net assets of the material joint ventures
EUR million Riu Hotels S. A., TUI Cruises GmbH, Hamburg, Germany
Palma de Mallorca, Spain*
Net assets as at 1 Oct 2019 869.3 752.5
Profit / loss 10.2 - 148.4
Other comprehensive income - 105.1 29.1
Capital increase - 150.0
Foreign exchange effects - 60.2 -
Net assets as at 30 Sep 2020 714.2 783.2
Profit / loss - 32.5 - 293.5
Other comprehensive income 82.6 - 43.6
Capital increase - 119.0
Foreign exchange effects 19.5 -
Consolidation effects - 783.8 -
Net assets as at 30 Sep 2021 0.0 565.1 * Financial year 2021 only takes into account the values for the period until the disposal of the company.
Reconciliation to the carrying amount of the joint ventures in the consolidated balance sheet
Riu Hotels S. A., Palma de TUI Cruises GmbH, Other Joint
EUR million Mallorca, Spain Hamburg, immaterial ventures
Germany joint ventures total
Share of TUI AG in % as at 30 Sep 2020 49.0 50.0 n. a. n. a.
TUI AG's share of the net assets as at 350.0 391.6 221.0 962.6
30 Sep 2020
Goodwill as at 30 Sep 2020 1.7 - 20.7 22.4
Unrecognised share of losses - - 2.9 2.9
Impairment of carrying amounts - - - 34.4 - 34.4
Carrying amount as at 30 Sep 2020 351.7 391.6 210.2 953.5
Share of TUI AG in % as at 30 Sep 2021 - 50.0 n. a. n. a.
TUI AG's share of the net assets as at - 282.6 207.3 489.9
30 Sep 2021
Goodwill as at 30 Sep 2021 - - 18.3 18.3
Unrecognised share of losses - - 8.2 8.2
Impairment of carrying amounts - - - 33.6 - 33.6
Carrying amount as at 30 Sep 2021 - 282.6 200.2 482.8
Impairment of the carrying amounts of associates and joint
ventures
Due to the development of the COVID-19 pandemic, uncertainties
remain regarding the recovery of the tourism business. Accordingly,
a risk assessment was performed on existing indications. The
carrying amounts of the associates and joint ventures concerned
were subsequently tested for impairment. All impairment tests used
the business plan of the respective joint venture or associate.
Based on this business plans the recoverable amount was calculated
by discounting future net cash flows. In all cases the fair value
less cost to sell was higher than the value in use. Level 3 inputs
of fair value hierarchy were used in the calculations. In the
financial year under review impairments of EUR 5.0 m were
recognised under Impairment of net investments in associates and
joint ventures.
The impairments related to the Vitya Holding Co. Ltd joint
venture in Thailand, which operates the Robinson Club Khao Lak. The
country-specific discount rate of 7.77 % for Thailand was applied.
Apart from that, the same parameters were applied as for the
goodwill impairment test in the Hotel & Resorts segment (see
Note 12).
Unrecognised losses by associates and joint ventures
Unrecognised accumulated losses amounted EUR 8.2 m (previous
year EUR 40.2 m). The losses carried in the prior year included EUR
2.9 m for TUI's share in the earnings of Bartu Turizm Yatirimlari
AS. These losses increased by a further EUR 1.7 m in the financial
year under review. A further loss of EUR 3.6 m was carried for WOT
Hotels Vietnam. The recognition of additional losses would have
resulted in the carrying amounts falling below nil. Further
unrecognised accumulated losses related to the stakes in Togebi
Holdings Limited and Corsair S. A., which have meanwhile been
sold.
Risks associated with the stakes in associates and joint
ventures
Contingent liabilities of EUR 12.2 m (previous year EUR 20.0 m)
existed in respect of associates as at 30 September 2021.
Contingent liabilities in respect of joint ventures totalled EUR
28.1 m (previous year EUR 89.4 m).
(17) Trade and other receivables
Trade and other receivables
30 Sep 2021 30 Sep 2020
Remaining Remaining
EUR million term more Total term more Total
than 1 year than 1 year
Trade receivables - 259.9 - 151.2
Advances and loans 182.0 202.0 198.7 288.7
Lease receivables 7.2 11.1 9.6 13.5
Other receivables and assets 119.4 307.4 194.1 435.3
Total 308.7 780.3 402.4 888.7
As at 30 September 2021, TUI had capitalised sales commissions
to travel agencies and other distribution channels worth EUR 34.1 m
(previous year EUR 38.4 m) in respect of costs of obtaining a
contract. In the financial year under review, sales commissions
worth EUR 208.0 m (previous year EUR 340.7 m) were recognised in
profit and loss.
During the first quarter of financial year 2021 TUI sold other
receivables to a third party and thus derecognised it as all
criteria for derecognition were met. The sale resulted in a loss,
which is presented as a financial expense in the income
statement.
(18) Touristic payments on account
Touristic payments on account mainly relate to customary advance
payments in respect of future tourism services, in particular
advance payments made by tour operators for future hotel
services.
The impairments recognised through profit or loss for advance
payments made by tour operators for future hotel services in the
financial year under review totalled EUR 8.4 m (previous year EUR
53.4 m).
(19) Other non-financial assets
The other non-financial assets of EUR 290.1 m (previous year EUR
536.6 m) resulted mainly from the overfunded pension plans worth
EUR 137.1 m (previous year EUR 363.3 m) and assets from other taxes
worth EUR 63.4 m (previous year EUR 81.3 m).
(20) Deferred tax assets
Individual items of deferred tax assets and liabilities recognised in the statement of financial position
30 Sep 2021 30 Sep 2020
EUR million Asset Liability Asset Liability
Lease transactions 11.8 61.9 46.4 131.4
Recognition and measurement differences for property, plant and equipment and 125.6 232.0 78.2 274.4
other non-current assets
Recognition differences for receivables and other assets 15.7 35.9 120.2 52.3
Measurement of financial instruments 1.1 37.6 76.5 20.5
Measurement of pension provisions 175.7 38.8 156.6 69.9
Recognition and measurement differences for other provisions 72.1 6.5 53.0 5.8
Other transactions 87.0 55.8 52.1 46.0
Capitalised tax savings from recoverable losses carried forward 147.3 - 124.2 -
Netting of deferred tax assets and liabilities - 345.2 - 345.2 - 407.6 - 407.6
Balance sheet amount 291.1 123.3 299.6 192.7
Deferred tax assets include an amount of EUR 169.2 m (previous
year EUR 147.5 m) expected to be realised after more than twelve
months. Deferred tax liabilities include an amount of EUR 118.9 m
(previous year EUR 183.6 m) expected to be realised after more than
twelve months.
No deferred tax assets are recognised for deductible temporary
differences of EUR 179.7 m (previous year EUR 436.5 m).
No deferred tax liabilities are carried for temporary
differences of EUR 75.2 m (previous year EUR 76.3 m) between the
net assets of subsidiaries and the respective taxable carrying
amounts of subsidiaries since these temporary differences are not
expected to be reversed in the near future.
Recognised losses carried forward and time limits for non-recognised losses carried forward
EUR million 30 Sep 2021 30 Sep 2020
Recognised losses carried forward 771.4 617.5
Non-recognised losses carried forward 11,562.5 9,260.5
of which losses carried forward forfeitable within one year 6.7 9.9
of which losses carried forward forfeitable within 2 to 5 years 70.2 144.8
of which losses carried forward forfeitable within more than 5 years - 38.5
(excluding non-forfeitable loss carryforwards)
of which non-forfeitable losses carried forward 11,485.6 9,067.3
Total unused losses carried forward 12,333.9 9,878.0
Losses carried forward for German companies comprise the
cumulative amount of trade tax and corporation tax as well as
interest carried forward in relation to the German interest barrier
rule. Potential tax savings totalling EUR 2,341.2 m (previous year
EUR 1,740.1 m) were not recognised as the underlying losses carried
forward were not expected to be utilised in the planning
horizon.
In financial year 2021, tax savings of EUR 0.3 m (previous year
EUR 0.0 m) resulted from the use of tax losses carriedforward
previously not assessed as recoverable for which, therefore, no
deferred tax assets had been carried as at 30 September 2020 for
the potential tax savings resulting from these assets. Tax
reductions from loss carry- backs (previous year EUR 0.3 m) were
not realised.
Development of deferred tax assets from losses carried forward
EUR million 2021 2020
Capitalised tax savings at the beginning of the year 124.2 116.4
Use of losses carried forward - 2.0 - 0.6
Capitalisation of tax savings from tax losses carried forward 75.0 78.3
Impairment of capitalised tax savings from tax losses carried forward - 50.0 - 69.9
Exchange adjustments and other items 0.1 -
Capitalised tax savings at financial year-end 147.3 124.2
Capitalised deferred tax assets from temporary differences and
losses carried forward that are assessed as recoverable of EUR
237.2 m (previous year EUR 213.0 m) are covered by expected future
taxable income even for companies that generated losses in the
reporting period or the prior year. This is based on the future
business development planned by TUI's management. The key points of
this planning are presented in the section 'Assumptions and
estimates'. TUI uses a five-year planning horizon to derive the
recoverability of tax loss carryforwards and deductible
differences.
(21) Inventories
Inventories
EUR million 30 Sep 2021 30 Sep 2020
Airline spares and operating equipment 10.9 29.2
Real estate for sale 0.2 14.6
Consumables used in hotels 15.5 16.4
Other inventories 16.2 13.0
Total 42.8 73.2
In financial year 2021, inventories of EUR 248.5 m (previous
year EUR 411.7 m) were recognised as expense. In previous year a
write-down of real estate for sale to net realizable value resulted
in expenses of EUR 17.2 m in the financial year. In this financial
year there were no write-downs.
(22) Cash and cash equivalents
Cash and cash equivalents
EUR million 30 Sep 2021 30 Sep 2020
Bank deposits 1,575.0 1,225.0
Cash in hand and cheques 8.9 8.1
Total 1,583.9 1,233.1
At 30 September 2021, cash and cash equivalents of EUR 509.0 m
were subject to restrictions (previous year EUR 324.0 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 EUR 46.4 m is deposited as security within a bank
account. TUI Group can only use that cash and cash equivalents if
it provides alternative collateral.
Furthermore, an amount of EUR 116.3 m (previous year EUR 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 is restricted. The remaining EUR 346.3 m (previous year
EUR 155.4 m) subject to restrictions relate to cash and cash
equivalents to be deposited due to statutory or regulatory
requirements mainly in order to secure customer deposit and credit
card payables.
(23) Assets held for sale
Assets held for sale
EUR million 30 Sep 2021 30 Sep 2020
Disposal Group Nordotel 96.5 -
Aircraft - 42.4
Investments accounted for using the equity method - 13.1
Other assets - 1.7
Total 96.5 57.2
On 16 July 2021, a contract was signed with Grupotel S. A., a
joint venture of TUI Group, to sell Nordotel S. A., fully
consolidated in Hotels & Resorts. The transaction was subject
to approval by TUI AG's Supervisory Board, which was granted on 9
September 2021. The assets and liabilities of the disposal group
were correspondingly classified as held for sale. The disposal
transaction was completed on 5 October 2021. The first purchase
price payment of EUR 50.0 m was made on 21 September 2021. Further
deferred purchase price payments of EUR 10.0 m and EUR 20.0 m are
due one or two years, respectively, after the closing of the
transaction, taking account of final purchase price adjustments. In
this context, we refer to the note 36 'Liabilities related to
assets held for sale'.
Disposal group 'Nordotel'
EUR million 30 Sep 2021
Other intangible assets and property, plant and equipment 65.7
Right-of-use assets 13.2
Deferred tax assets 7.2
Touristic payments on account 6.0
Cash and cash equivalents 2.2
Other assets 2.2
Total 96.5
In the course of the financial year under review, there were
further reclassifications to assets held for sale and disposal
groups as well as the associated liabilities, resulting in
disposals through sale in the financial year under review. All
assets and disposal groups carried as held for sale as at 30
September 2020 and the associated liabilities were sold in the
financial year under review. Please refer in particular to the
section 'Divestments'.
(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 EUR 1.00. 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 under
review, the Company's capital stock of EUR 1,509,372,235.83,
consisting of 590,415,100 no-par value registered shares with a
proportionate share in the capital stock of around EUR 2.56 per
no-par value share, was reduced by EUR 918,957,135.83 to EUR
590,415,100.00 in accordance with the provisions on ordinary
capital reduction set out in sections 222 ff. of the German Stock
Corporation Act in combination with section 7 (6) of the German
Economic Stabilisation Acceleration Act (WStBG) with a view to
transferring a part of the capital stock to the Company's capital
reserve. The capital reduction took the form of a corresponding
reduction in share capital so that the proportionate share in the
capital stock per share was reduced to EUR 1.00 per existing no-par
value share, without a merging of shares.
The reduced capital stock of the Company of EUR 590,415,100.00
was subsequently increased by EUR 508,978,534.00 to EUR
1,099,393,634.00 by issuing 508,978,534 new no-par value registered
shares with a proportionate share in the capital stock of EUR 1.00
per no-par value share against cash contribution in accordance with
section 7 of the German WStBG. At the end of the financial year
under review, the subscribed capital therefore consisted of
1,099,393,634 shares. This corresponds to EUR 1,099,393,634.00.
In accordance with section 71 (1) no. 2 of the German Stock
Corporation Act, TUI AG acquired 317,171 own shares to issue to
employees in the framework of the employee share programme. The
317,171 shares were purchased on the stock exchange at EUR 3.8513
and transferred to the employees on 30 September 2021. The shares
represent a capital stock of EUR 317,171, i. e. <0.03 % of the
capital stock, and an acquisition volume of EUR 1.2 million. As at
30 September 2021, TUI AG did not hold any own shares.
Conditional capital
The Annual General Meeting on 9 February 2016 had created
conditional capital of EUR 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) was limited to a nominal amount of EUR
2.0 bn and expires on 8 February 2021.
The Extraordinary General Meeting on 5 January 2021 resolved to
create conditional capital of EUR 420.0 m in order to grant the ESF
the right to convert ESF's asset contribution in the form of a
silent participation of EUR 420.0 m ( 'silent participation I') at
any time (in a single or several transactions) in full or in part
into up to 420 m new registered no-par value shares with a
proportionate share in the capital stock of EUR 1.00 per no-par
value share. The new shares will be issued at the minimum issuance
amount of EUR 1.00. The conversion right outlined above is limited
in that the ESF is only entitled to convert silent participation I
into new no-par value shares in an amount that ensures that the
total interest of the ESF (including all other shares held by the
ESF) does not at any point in time amount to more than 25 % plus
one share in the Company's capital stock increased after the
conversion.
The Annual General Meeting on 25 March 2021 resolved to create
conditional capital for the issuance of bonds totalling EUR 109.9
m. The authorisation to issue bonds with conversion or option
rights and profit participation (with or without a fixed maturity)
is limited to a nominal amount of EUR 2.0 bn and expires on 24
March 2026.
Overall, TUI AG had conditional capital of EUR 679.9 m as at 30
September 2021.
Authorised capital
The Annual General Meeting on 13 February 2018 resolved to
create additional authorised capital of EUR 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. No new employee shares were issued in the completed financial
year so that authorised capital at the balance sheet date totals
still around EUR 22.3 m.
The Ordinary Annual General Meeting on 25 March 2021 resolved to
authorise the Executive Board to issue new registered shares
against cash contribution by up to EUR 109.9 m (authorised capital
2021 / I). This authorisation will expire on 24 March 2026.
The Annual General Meeting on 25 March 2021 also resolved to
create authorised capital for the issuance of new shares against
cash or non-cash contribution of EUR 417.0 m (authorised capital
2021 / II). The issuance of new shares against non-cash
contribution is limited to EUR 109.9 m. This authorisation will
expire on 24 March 2026.
At the balance sheet date, the capital authorisations not yet
been taken up amounted to around EUR 549.2 m (previous year around
EUR 742.3 m).
The latter two authorisations for authorised capital resolved in
2021 as mentioned above were used after the balance sheet date. The
authorised capital 2021 / I was fully used, while the authorised
capital 2021 / II was used almost completely (except for around EUR
3.4 m) for a rights issue in October 2021.
(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.
In the completed financial year, capital reserves rose by EUR
1,038.5 m from EUR 4,211.0 m to EUR 5,249.5 m, in particular due to
the capital increase in January and the issuance of the bond with
warrants in October 2020 as well as the convertible bonds in April
and July 2021.
The reduction in subscribed capital outlined in Note 24
'Subscribed capital' resulted in an increase in the capital
reserves of EUR 917.8 m. The premium from the capital increase
boosted the capital reserves by a further EUR 58.8 m. The ancillary
costs of the capital increase and the issuance of the silent
participations described in detail in Note 27 were offset in an
amount of EUR 31.8 m.
Due to the issuance of the warrant bond in October 2020 and the
convertible bonds worth EUR 400.0 m in April and EUR 190.0 m in
July capital reserves rose by EUR 34.5 m and EUR 60.9 m,
respectively. The ancillary costs of the convertible bond were
offset in an amount of EUR 1.6 m.
(26) Revenue reserves
In the completed financial year, TUI AG did not pay a dividend
to its shareholders (previous year EUR 318.1 m).
The ongoing recording of existing equity-settled stock option
plans resulted in an increase in equity of EUR 0.3 m (previous year
EUR 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.
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 EUR+
144.0 m (previous year EUR - 316.1 m) (pre-tax). A reversal of this
amount 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 increase in financial year 2021
is, besides changes in exchange rates and fuel prices, attributable
to hedges no longer classified as effective within the meaning of
IAS 39 due to the COVID-19 pandemic. The cumulative gains or losses
from these instruments continue to be carried in equity at their
relevant fair values until the date from which they were no longer
effective. Upon occurrence of the expected transaction, they are
reclassified to profit or loss.
The revaluation of pension obligations (in particular actuarial
gains or losses) is also carried directly in Other income 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) Silent participations
In financial year 2021, two silent participations were issued to
the ESF. They are both carried in equity in accordance with IAS
32.
The first silent participation was fully paid in at EUR 420.0 m.
It is convertible at any time in whole or in part into shares in
TUI AG at a conversion price of EUR 1.00 per share as long as the
ESF does not obtain a participation in TUI's equity capital of more
than 25 % plus one share.
The second silent participation is not convertible into shares.
It amounts to EUR 671.0 m and has been fully paid in.
(28) 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 EUR 491.5 m
(previous year loss of EUR 2,272.6 m). Taking account of profit
carried forward of EUR 190.9 m (previous year EUR 1,176.0 m) TUI
AG's balance sheet loss totals EUR 300.6 m.
(29) 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*
EUR million 30 Sep 2021 / 2021 30 Sep 2020 / 2020
Current assets 91.6 153.6
Non-current assets 1,824.1 1,755.5
Current liabilities 101.0 115.8
Non-current liabilities 141.9 127.1
Revenues 344.1 449.3
Profit / loss - 21.2 28.4
Other comprehensive income 27.8 - 104.6
Cash inflow / outflow from operating activities 71.5 149.4
Cash inflow / outflow from investing activities - 73.0 - 143.5
Cash inflow / outflow from financing activities - 27.1 - 6.6
Accumulated non-controlling interest 664.9 661.5
Profit / loss attributable to non-controlling interest - 10.6 14.2
Dividends attributable to non-controlling interest - -
* Consolidated subgroup
(30) 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 EUR 77.1 m
(previous year EUR 86.7 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 EUR 5.9 m (previous year EUR 6.1 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 72.6 % (previous year 70.6 %) of TUI Group's total
obligations at the balance sheet date. German plans account for a
further 23.0 % (previous year 24.8 %).
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 2019.
Since 31 October 2018, the main sections of TUI Group's UK
Pension Trust have been closed to future accrual of benefits. 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 deferred members. 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 Services GmbH closed
In the period under review, defined benefit pension obligations
created total expenses of EUR 15.7 m for TUI Group, principally
comprising current service cost. This was partly offset by gains
from plan curtailments resulting from the restructuring of the
activities of the Group's German airline in the financial year. The
administrative expenses shown relate to professional advisor costs
for the pension plans in the United Kingdom, which were for the
current year only, settled from the plan assets.
Pension costs for defined benefit obligations
EUR million 2021 2020
Current service cost for employee service in the period 36.3 49.5
Curtailment gains 29.7 4.0
Net interest on the net defined benefit liability 0.9 2.5
Past service cost 1.5 -
Administration cost 6.7 -
Total 15.7 48.0
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
EUR million 30 Sep 2021 30 Sep 2020
Total Total
Present value of funded obligations 3,101.5 3,071.3
Fair value of external plan assets 3,172.1 3,373.7
Surplus (-) / Deficit (+) of funded plans - 70.6 - 302.4
Present value of unfunded pension obligations 868.6 954.1
Defined benefit obligation recognised on the balance sheet 798.0 651.7
of which
Overfunded plans in other non-financial assets 137.1 363.3
Provisions for pensions and similar obligations 935.1 1,015.0
of which current 33.2 31.4
of which non-current 901.9 983.6
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 2021,
other non-financial assets include excesses of EUR 137.1 m
(previous year EUR 363.3 m).
Development of defined benefit obligations
EUR million Present value of obligation Fair value of plan assets Total
Balance as at 1 Oct 2020 4,025.4 - 3,373.7 651.7
Current service cost 36.3 - 36.3
Past service cost 1.5 - 1.5
Curtailments and settlements - 29.7 - - 29.7
Interest expense (+) / interest income (-) 54.8 - 53.9 0.9
Administration cost - 6.7 6.7
Pensions paid - 178.1 146.2 - 31.9
Contributions paid by employer - - 78.3 - 78.3
Contributions paid by employees 1.4 - 1.4 -
Remeasurements - 101.5 359.0 257.5
due to changes in financial assumptions - 180.2 - - 180.2
due to changes in demographic assumptions 84.7 - 84.7
due to experience adjustments - 6.0 - - 6.0
due to return on plan assets not included in - 359.0 359.0
Group profit for the year
Exchange differences 160.9 - 176.7 - 15.8
Other changes - 0.9 - - 0.9
Balance as at 30 Sep 2021 3,970.1 - 3,172.1 798.0
Development of defined benefit obligations
EUR million Present value of obligation Fair value of plan assets Total
Balance as at 1 Oct 2019 4,155.9 - 3,397.9 758.0
Current service cost 49.5 - 49.5
Past service cost - - -
Curtailments and settlements - 4.5 0.5 - 4.0
Interest expense (+) / interest income (-) 58.3 - 55.8 2.5
Administration cost - - -
Pensions paid - 179.8 148.6 - 31.2
Contributions paid by employer - - 81.5 - 81.5
Contributions paid by employees 1.6 - 1.6 -
Remeasurements 28.2 - 53.7 - 25.5
due to changes in financial assumptions 8.2 - 8.2
due to changes in demographic assumptions 59.8 - 59.8
due to experience adjustments - 39.8 - - 39.8
due to return on plan assets not included in - - 53.7 - 53.7
Group profit for the year
Exchange differences - 62.8 67.7 4.9
Other changes - 21.0 - - 21.0
Balance as at 30 Sep 2020 4,025.4 - 3,373.7 651.7
The net defined benefit obligation increased by EUR 146.3
million to EUR 798.0 million in the financial year. The present
value of the obligation decreased by a total of EUR 55.3 million
compared with the previous year, mainly due to an increase in
discount rates in the Eurozone and the United Kingdom.The fair
value of the plan assets decreased by EUR 201.6 million, in
particular due to a change in the pension fund's asset allocation
in the United Kingdom, thus exceeding the decrease in the
obligation.
In order to limit the risk arising from the obligation, the
trustees of the UK pension plans acquired insurance policies in the
third quarter of the fiscal year securitising full reimbursement by
insurers of the payments to be made for parts of the existing
obligations. The obligation to fulfill the pension commitment has
not been assumed by the insurer in this transaction. Accordingly,
the insured portions of the pension plan continue to be recognised
in the financial statements.
In order to settle the insurance premium, existing plan assets
were sold. The different valuation of an insurance policy compared
to the assets sold resulted in a decrease in plan assets of EUR
174.2 million, which was recognised directly in equity as a
remeasurement effect.
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 2021 30 Sep 2020
Quoted market price Quoted market price
in an active market in an active market
EUR million yes no yes no
Fair value of fund assets at end of period 1,797.4 1,374.7 2,902.5 471.2
of which equity instruments 23.7 - 36.3 -
of which government bonds 38.4 - 36.2 -
of which corporate bonds 584.2 140.6 929.1 -
of which liability driven investments 843.8 - 1,449.4 -
of absolute return bonds - - 184.9 -
of which property 302.0 - 262.7 -
of which insurance policies - 894.1 - 111.2
of which insurance linked securities - 15.6 - 130.9
of which loans - 209.3 - 204.0
of which cash - 115.1 - 25.1
of which other 5.3 - 3.9 -
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 2021
Percentage p. a. Germany Great Britain Other countries
Discount rate 1.0 2.0 0.8
Projected future salary increases 2.0 - 1.0
Projected future pension increases 1.8 3.3 0.7
30 Sep 2020
Percentage p. a. Germany Great Britain Other countries
Discount rate 0.7 1.6 0.7
Projected future salary increases 2.5 - 0.9
Projected future pension increases 1.8 2.8 1.3
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 EUR Corporates AA 10+ and iBoxx EUR
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) 2020. 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 2021 30 Sep 2020
EUR million + 50 Basis points - 50 Basis points + 50 Basis points - 50 Basis points
Discount rate - 342.4 + 393.6 - 342.5 + 393.5
Salary increase + 13.2 - 11.6 + 17.1 - 16.0
Pension increase + 103.4 - 105.6 + 119.1 - 119.7
+ 1 year + 1 year
Life expectancy + 174.7 - + 177.2 -
The weighted average duration of the defined benefit obligations
totalled 19.4 years (previous year 19.6 years) for the overall
Group. In the UK, the weighted duration was 19.8 years (previous
year 19.9 years), while it stood at 19.4 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 2021. 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 EUR 137.2 m (previous year EUR
112.7 m) to pension funds and pay pensions worth EUR 33.2 m
(previous year EUR 31.4 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. The purchase of
insurance policies within the UK schemes serves to eliminate these
risks in respect of the liabilities due to pension scheme members
covered by this insurance, and hence reduce the overall level of
risk in respect of all the categories detailed below.
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.
(31) Other provisions
Development of provisions in the financial year 2021
Balance as at 30 Changes with no effect on profit Usage Reversal Additions Balance
EUR million Sep 2020 and loss * as at
30 Sep 2021
Maintenance provisions 734.9 39.9 63.7 17.2 100.4 794.3
Restructuring 274.7 4.2 150.3 42.8 71.6 157.4
provisions
Provisions for
environmental 52.4 - 0.8 2.9 3.3 52.0
protection
Provisions for 46.4 0.5 2.1 0.7 7.1 51.2
other taxes
Risks from onerous contracts 13.6 - 7.6 7.6 5.5 53.6 46.5
Provisions for other 36.0 - 0.8 1.7 2.9 6.5 37.1
personnel costs
Provisions for litigation 18.8 0.6 1.8 0.9 11.1 27.8
Miscellaneous 125.6 - 10.4 32.4 21.0 75.0 136.8
provisions
Other provisions 1,302.4 26.4 260.4 93.9 328.6 1,303.1
* 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 Programme for which detailed, formal
restructuring plans were drawn up and communicated to the parties
concerned. At the balance sheet date, restructuring provisions
totalled EUR 157.4 m (previous year EUR 274.7 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 from onerous contracts include EUR 17.9 m for the
premature abandonment of a leased administrative building as the
largest single item.
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 40
'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 38.
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 EUR - 0.7 m (previous year EUR 7.5 m), recognised as an
interest expense.
Terms to maturity of other provisions
30 Sep 2021 30 Sep 2020
EUR million Remaining term more than 1 year Total Remaining term more than 1 year Total
Maintenance provisions 569.7 794.3 615.3 734.9
Restructuring provisions 48.3 157.4 146.6 274.7
Provisions for environmental protection 44.8 52.0 49.1 52.4
Provisions for other taxes 21.9 51.2 26.4 46.4
Risks from onerous contracts 18.4 46.5 2.1 13.6
Provisions for other personnel costs 28.7 37.1 28.4 36.0
Provisions for litigation 5.1 27.8 5.4 18.8
Miscellaneous provisions 26.7 136.8 38.8 125.6
Other provisions 763.6 1,303.1 912.1 1,302.4
(32) Financial and lease liabilities
Financial and lease liabilities
30 Sep 2021 30 Sep 2020
Remaining term Remaining term
EUR million up to 1 1- 5 years more than 5 Total up to 1 1- 5 years more than 5 Total
year years year years
Convertible bonds 13.5 - 508.7 522.2 - - - -
Bonds - 119.3 - 119.3 - 298.9 - 298.9
Liabilities to banks 247.6 2,264.3 100.7 2,612.6 560.9 3,298.6 94.2 3,953.7
Other financial 23.5 43.1 - 66.6 16.4 - - 16.4
liabilities
Financial liabilities 284.6 2,426.7 609.4 3,320.7 577.3 3,597.5 94.2 4,269.0
Lease liabilities 623.3 1,738.1 868.0 3,229.4 687.3 1,693.5 1,019.1 3,399.9
Non-current financial liabilities decreased by EUR 655.6 m to
EUR 3,036.1 m as against 30 September 2020. The decline was
primarily driven by a decrease in liabilities to banks of EUR
1,027.8 m and the early redemption on 23 February 2021 of bonds
issued by TUI on 26 October 2016 with a nominal volume of EUR 300.0
m. This decline was recorded alongside an increase in liabilities
from issuing a convertible bond of EUR 400.0 m in April 2021, which
was upsized by EUR 189.6 m in July 2021. The carrying amount of the
liability component of this convertible bond amounts to EUR 522.2
m. Furthermore, has TUI AG issued a bond with warrants worth EUR
150.0 m on 1 October 2020 as part of the funding package by the
Federal Republic of Germany, for which the Economic Stabilisation
Fund (ESF) was the sole subscriber. The bond component of this bond
with warrants is carried under Financial liabilities in the table
above in the line Bonds, the separately tradable warrants are
recognised in equity.
The early termination rights by TUI AG and the put options held
by the holders of the convertible bond and the bond with warrant
represent embedded derivatives which were not separated in
accordance with IFRS 9 as they are classified as closely related to
the host contract.
The core financing instrument is a syndicated revolving credit
facility (RCF) totalling EUR 4.6 bn between TUI AG and the former
banking syndicate and KfW Bank when it joined the syndicate.
In July 2021, an agreement was made with the private banks and
KfW to extend the maturity of the credit facility by two years to
summer 2024. This extension does not entail a substantial
modification to the terms and conditions of the contract.
In addition, there is a separate revolving credit facility
granted by a banking syndicate totalling EUR 170.0 m.
As at 30 September 2021, the amounts drawn under the non-current
revolving credit facilities totalled EUR 1,775.4 m.
Current financial liabilities declined from EUR 577.3 m as at 30
September 2020 by EUR 292.7 m year-on-year to EUR 284.6 m. The
decrease results from a reduction in current liabilities to
banks.
As at 30 September 2021, an amount of EUR 77.6 m had been drawn
from the current revolving credit facilities.
For more details on the terms and conditions of the credit
facilities provided by KfW and the issuance of the convertible bond
in April 2021, please refer to the section 'Going concern reporting
according to the UK Corporate Governance Code'.
Movements financial and lease liabilities
Convertible Short-term liabilities Long-term Other Total Lease
EUR million bonds Bonds to banks liabilities to financial financial liabilities
banks liabilities liabilities
Balance as at - 298.8 560.9 3,392.9 16.4 4,269.0 3,399.9
1 Oct 2020
Payment in 506.9 - 184.5 - 9.1 - 1,347.1 50.2 - 983.6 - 587.2
the period
Changes in scope of - - - 0.2 - 2.7 - - 2.9 - 17.2
consolidation
Foreign exchange - - 3.8 - 16.1 - - 12.3 47.6
movements
Other non-cash movement 15.3 5.0 - 307.9 338.1 - 50.5 386.3
Balance as at 522.2 119.3 247.5 2,365.1 66.6 3,320.7 3,229.4
30 Sep 2021
Movements financial and lease liabilities
Convertible Short-term liabilities Long-term Other Total Lease
EUR million bonds Bonds to banks liabilities to financial financial liabilities
banks liabilities liabilities
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 scope of - - - 34.6 - 277.1 - - 311.7 - 7.2
consolidation
Foreign exchange - - - 0.3 11.0 - 10.7 - 145.4
movements
Other non-cash movement - 1.0 40.4 51.2 - 0.6 92.0 303.4
Balance as at - 298.8 560.9 3,392.9 16.4 4,269.0 3,399.9
30 Sep 2020
Fair values and carrying amounts of the bonds at 30 Sep 2021
30 Sep 2021 30 Sep 2020
Issuer Nominal Nominal value Interes Stock market Carrying Stock market Carrying
EUR million value outstanding rate value amount value amount
initial % p. a.
2021 / 28
convertible TUI AG 589.6 589.6 5.000 583.7 522.2 - -
bond
2016 / 21 TUI AG 300.0 - 2.125 - - 269.5 298.9
bond
Total 583.7 522.2 269.5 298.9
(33) Other financial liabilities
Other financial liabilities include touristic advance payments
received for tours canceled because of COVID-19 restrictions of EUR
204.6 m (previous year EUR 351.0 m), for which immediate cash
refund options exist and which have to be repaid immediately if the
customer chooses to receive a refund. Fore more details, please
refer to the section below.
(34) Touristic advance payments received
Touristic advance payments received
EUR million
Touristic advance payments received as at 1 Oct 2019 2,911.2
Revenue recognised that was included in the balance at the beginning of the period - 1,811.0
Increases due to cash received, excluding amounts recognised as revenue during the period 3,023.3
Reclassification to other financial liabilities - 351.0
Customer refund repayments - 1,897.7
Changes in the consolidation status - 76.4
Other - 28.3
Touristic advance payments received as at 30 Sep 2020 1,770.1
Revenue recognised that was included in the balance at the beginning of the period - 444.4
Increases due to cash received, excluding amounts recognised as revenue during the period 1,691.9
Reclassification to other financial liabilities - 61.3
Customer refund repayments - 609.9
Changes in the consolidation status - 6.0
Other 39.0
Touristic advance payments received as at 30 Sep 2021 2,379.4
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. The entitlement to a refund of the voucher value
represents a financial liability. Due to the high level of
uncertainty regarding the further development of the COVID-19
crisis and customer behavior, it is not possible for TUI Group to
reliably estimate the extent of utilisation of the voucher / refund
credits for future bookings. As at 30 September 2021 the touristic
advance payments received include EUR 2.4 m (previous year EUR
184.8 m) of advance payments for cancelled trips for which
customers have received voucher / refund credits which may have to
be refunded after a certain period of time.
(35) Other non-financial liabilities
Other non-financial liabilities
30 Sep 2021 30 Sep 2020
Remaining term Remaining term
EUR million up to 1 year 1- 5 years Total up to 1 year 1- 5 years Total
Other liabilities relating to employees 201.5 33.7 235.2 184.9 24.3 209.2
Other liabilities relating to 50.2 - 50.2 44.3 - 44.3
social security
Other liabilities relating to other taxes 20.8 - 20.8 19.7 - 19.7
Other miscellaneous liabilities 195.5 5.7 201.2 149.2 5.6 154.8
Deferred income 50.0 166.9 216.9 49.7 168.5 218.2
Other non-financial liabilities 518.0 206.3 724.3 447.8 198.4 646.2
(36) Liabilities related to assets held for sale
As at 30 September 2021, liabilities related to assets held for
sale amounted to EUR 50.6 m. These liabilities exclusively relate
to the 'Nordotel' disposal group. In this context, we refer to the
note 23 'Assets held for sale'.
Disposal group 'Nordotel'
EUR million 30 Sep 2021
Lease liabilities 23.9
Trade payables 19.5
Other non-financial liabilities 5.0
Other provisions and liabilities 2.2
Total 50.6
As at 30 September 2020, liabilities related to assets held for
sale totalled EUR 24.5 m. These liabilities resulted from the
expected transfer of an aircraft to a TUI Group associate, which
was implemented at the beginning of the financial year under
review. For further details, please refer to the section
'Divestments'.
(37) Contingent liabilities
As at 30 September 2021, contingent liabilities amounted to EUR
102.8 m (previous year EUR 165.6 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.
(38) 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
2021 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.
(39) Other financial commitments
Other financial commitments
30 Sep 2021 30 Sep 2020
Remaining term Remaining term
EUR million up to 1- 5 more than 5 years Total up to 1 - 5 more than 5 years Total
1 year years 1 year years
Order commitments in respect 456.5 1,769.5 160.1 2,386.1 465.9 2,028.9 54.2 2,549.0
of capital expenditure
Other financial commitments 51.8 37.0 2.9 91.7 99.0 110.8 2.9 212.7
Total 508.3 1,806.5 163.0 2,477.8 564.9 2,139.7 57.1 2,761.7 Order commitments in respect of capital expenditure relate almost exclusively to tourism and decreased by EUR 162.9 m year-on-year as at 30 September 2021. A new obligation for a cruise ship was more than off-set by delivery of aircraft and reduction in hotel commitments.
(40) Share-based payments in accordance with IFRS 2
As at 30 September 2021, all existing awards except the employee
share programme 'oneShare' are recognised as cash-settled
share-based payment schemes.
The following share-based payment schemes are in effect within
TUI Group as at 30 September 2021.
1. PHANTOM SHARES IN THE FRAMEWORK OF THE Long Term Incentive
Plan (LTIP)
1.1 LTIP with share allocation from financial year 2020 (LTIP
EPS20- 21)
Since the 2020 financial year, the Long Term Incentive Plan
(LTIP) consists of a programme based on phantom shares and is
measured over a period of four years (performance reference
period). The phantom shares are allocated 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 theperformance period
corresponds to target achievement of 0 %.
-- An average absolute EPS of 50 % of the absolute EPS value
determined at the beginning of the performanceperiod corresponds to
target achievement of 25 %.
-- An average absolute EPS of 50 % or more of the absolute EPS
value determined at the beginning of theperformance 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 EUR 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
allocation 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 unusually 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 allocation in financial years 2018 and 2019
(LTIP EPS18- 19)
Since the 2018 financial year, 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 allocated 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 EUR 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 allocation 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 allocation up to and including financial
year 2018 (LTIP)
As Mr Baier stepped down from the Executive Board as scheduled,
the remuneration system which was replaced in financial year 2018
continues to apply for him in relation to the LTIP. It affects the
tranches allocated to Mr Baier up until and including financial
year 2018, which, however, had not yet been paid out and were
therefore not yet taken into account as granted and owed
remuneration within the meaning of section 162 (1) sentence 1 of
the German Stock Corporation Act due to the four-year performance
period. The performance period for the last tranche agreed under
his contract ended with the close of financial year 2021.
The LTIP consists of a programme based on phantom shares and is
measured over a term of four years (performance period). The
phantom shares are allocated 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 totarget achievement of 0
%.
-- A TSR value of TUI AG equivalent to the third to bottom rank
of the index corresponds to targetachievement 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 correspondsto 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 allocation of the LTIP, the
entitlement to payment of the LTIP is determined on a pro rata
basis.
There is an annual LTIP cap individually defined for each
Executive Board member.
1.4 Remuneration restrictions due to Framework Agreement II with
the Economic Stabilisation Fund
On 4 January 2021, TUI AG concluded a framework agreement with
the Economic Stabilisation Fund on the granting of stabilisation
measures, fixing a number of provisions for the remuneration of the
Executive Board members during the use of these measures.
Accordingly, each Executive Board member already appointed on 31
December 2019 must not receive compensation beyond the basic
remuneration of the respective Board member as at 31 December 2019
unless at least 75 % of the stabilisation measure has been repaid
(taking account of potential Group remuneration in the event of
dual employment by another Group company). The framework agreement
also sets out that TUI AG does not grant and therefore does not
entitle Executive Board members to 'any other remuneration
components or services in the free discretion of the Company or any
legally unjustified severance payments, taking account of potential
Group remuneration bonuses, other variable or comparable
compensation components or special payments in the form of share
packages, bonuses or other separate remuneration'.
Performance Share Plan (PSP)
The PSP details the share-based payments for entitled Group
executives who are not part of the Board. The current scheme
principles of the ongoing PSPs have been in effect since 2019 and
have been additionally adjusted accordingly with retroactive effect
for all outstanding tranches. The scheme conditions are harmonized
with the LTIP EPS20- 21 of the Board members with the notable
exceptions of a three year performance period instead of four
years. Target amounts and allocation frequency are subject to
individual contractual agreements.
Since LTIP EPS20- 21 and PSP follow common scheme principles,
the following development of allocated phantom shares under the
programmes are shown on an aggregated basis.
Development of phantom shares allocated (LTIP EPS20, LTIP EPS18- 19, LTIP & PSP)
LTIP EPS20- 21 & PSP* LTIP EPS18 - 19 LTIP*
Number Present Number Present Number Present
of shares value of shares value of shares value
EUR million EUR million EUR million
Balance as at 30 Sep 2019 855,102 9.1 763,460 8.1 363,950 3.9
Phantom shares allocated 1,559,378 15.4 - - - -
Phantom shares exercised - 127,855 - 1.3 - - - 13,653 -
Phantom shares forfeited - 429,034 - 4.2 - - - 293,790 - 1.0
Measurement results - - 12.6 - - 5.5 - - 2.7
Balance as at 30 Sep 2020 1,857,591 6.4 763,460 2.6 56,507 0.2
Phantom shares allocated 3,775,181 13.0 - - - -
New virtual shares allocated from subscription 1,552,117 - 448,272 - - -
rights
Phantom shares exercised - 342 - - - - 14,127 -
Phantom shares forfeited - 469,346 - 1.6 - 567,103 - 2.1 - 42,380 - 0.2
Measurement results - 6.5 - 1.8 - -
Balance as at 30 Sep 2021 6,715,201 24.3 644,629 2.3 - - * In the prior year, the PSP was shown in the LTIP column.
Employee share Programme 'oneShare'
Eligible employees can acquire TUI AG shares under preferential
conditions when participating in the oneShare programme. 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 2021, no new tranche of oneShare was launched. The matching
date occurred for Tranche 2 on 30 September 2020 and the matching
shares of Tranche 2 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 (2017 / Tranche 2 (2017 / Tranche 3 (2018 / Tranche 4 (2019 /
3) 7) 7) 7)
Investment period 1.4.2017 - 1.8.2017 - 1.8.2018 - 1.8.2019 -
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 investment shares 349,941 524,619 1,152,598 1,394,512
thereof forfeited investment shares 1,228 10,216 32,859 31,724
Distributed / Estimated matching shares 116,647 174,873 384,199 464,837
thereof forfeited matching shares 15,256 23,953 67,181 38,297
Share price at grant datein EUR 12.99 13.27 18.30 8.99
Fair value: Discount per investment share 2.60 2.02 2.94 1.26
in EUR
recognised estimated dividendin EUR - 0.63 0.72 0.54
Fair value: matching share in EUR 11.65 11.15 15.93 7.17
recognised discounted estimated dividendin 1.34 2.11 2.37 1.82
EUR
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.
Eligible Group executives were granted bonus payments at the
time, 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. 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 EUR
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 2021, 36,059 share options (valued at EUR 0.1
m) were vested and outstanding. The plan is closed. However, in the
completed financial year, additional phantom shares were allocated,
in analogy to subscription rights resulting from capital measures
such as the capital increase resolved on 5 January 2021 at TUI AG's
Extraordinary General Meeting. No share options were exercised
(total value of EUR 0.0 m), and no options were forfeited.
Accounting for share-based payment schemes
As at 30 September 2021, all existing awards except oneShare are
recognised as cash-settled share-based payment schemes and are
allocated with an exercise price of EUR 0.00. The personnel expense
is recognised 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 allocated.
Accordingly, phantom shares allocated in the past are charged on a
pro rata basis upon actual delivery of service.
In financial year 2021, personnel expenses due to share-based
payment schemes with cash compensation of EUR 1.9 m (previous year
income of EUR 6.5 m) were recognised through profit and loss.
Overall, personnel expenses due to equity-settled share-based
payment schemes of EUR 1.6 m (previous year EUR 5.1 m) were
recognised through profit or loss in financial year 2021.
As at 30 September 2021, provisions relating to entitlements
under these long-term incentive programmes totalled EUR 12.2 m
(previous year EUR 9.7 m).
(41) 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. Due to the COVID-19 pandemic,
entering into new financial derivatives to hedge the planned
foreign exchange requirements was temporarily paused, resulting in
the current hedging ratios for the upcoming winter season being
lower than the target hedging ratios. Hedging has now resumed with
the aim of matching hedge ratios with the respective target hedging
ratios for future seasons.
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
EUR million 30 Sep 2021 30 Sep 2020
Variable: Foreign exchange rate + 10 % - 10 % + 10 % - 10 %
Exchange rates of key currencies
EUR / US dollar
Revaluation reserve - - - 27.6 + 25.5
Earnings after income taxes - 30.1 + 36.9 - 62.0 + 75.2
Pound sterling / EUR
Revaluation reserve + 1.2 - 1.2 - 13.4 + 14.9
Earnings after income taxes - 76.2 + 91.9 - 54.2 + 63.1
Pound sterling / US dollar
Revaluation reserve + 0.9 - 0.9 - 26.1 + 26.3
Earnings after income taxes - 18.4 + 28.3 + 287.4 - 355.8
EUR / Swedish krona
Revaluation reserve - - + 4.0 - 5.4
Earnings after income taxes - + 0.1 + 6.3 - 8.4
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 table below 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
EUR million 30 Sep 2021 30 Sep 2020
Variable: Interest rate level for + 50 basis points - 50 basis points + 50 basis points - 50 basis points
floating interest-bearing debt
Revaluation reserve - - - + 0.9
Earnings after income taxes + 2.9 - 2.9 - 9.2* + 8.6* * The change by EUR 296.2 m compared to the published TUI Group's consolidated financial statements for financial year 2020 results from a correction in the determination of the sensitivities of the floating-rate primary financial instruments.
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. Due to the COVID-19 pandemic,
entering into new financial derivatives to hedge the planned fuel
requirements was temporarily paused, resulting in the current
hedging ratios for the upcoming winter season being lower than the
target hedging ratios. Hedging has now resumed with the aim of
matching hedge ratios with the respective target hedging ratios for
future seasons.
If the commodity prices, which underlie the fuel price hedges,
increase or decrease by 10 % (previous year + 15 % /
- 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 sensitivity of market prices from plus 10 %
to plus 15 % in the previous year was based on the assumption that
an above-average increase in fuel prices could be expected in the
context of a recovery in demand for flight capacity. After the
significant increase in fuel prices in the past twelve months, the
expectation is that the volatility of fuel prices will return to
the level of before the COVID-19 pandemic, so that the sensitivity
of market prices is adjusted to plus 10 %.
Sensitivity analysis - fuel price risk
EUR million 30 Sep 2021 30 Sep 2020
Variable: Fuel prices for aircraft and ships + 10 % - 10 % + 15 % - 10 %
Revaluation reserve + 2.1 - 2.0 + 5.5 - 5.2
Earnings after income taxes + 10.1 - 10.1 + 56.9 - 35.9
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 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 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 EUR 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 cash and cash equivalents.
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 recognised, 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 recognised 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 between
45 and 360 days past due. For corporate customers, the TUI 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. TUI 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 advances and loans, other receivables and assets as well as
other financial assets, the expected credit losses are determined
on a portfolio basis. In significant individual cases, this
portfolio approach is deviated from, as the relevant information
for determining the expected loss is available at the stage of the
individual instrument. TUI Group ensures that solely financial
assets with similar credit risk characteristics are combined, 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, because of the past due status of the instruments,
is determined in TUI Group on an individual basis by region, change
in default risk-related market data or change in contractual
conditions, among other factors. 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 TUI 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.
CDS rates are used as forward-looking information in the general
impairment model too.
TUI 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 2021, trade receivables were impaired in the
amount of EUR 71.6 m (previous year EUR 86.2 m). The following
overview shows a maturity analysis of the impairments:
Ageing structure of impairment of financial instruments classified as trade receivables
30 Sep 2021
EUR million Gross value Impairment Net value Impairment ratio
Trade receivables
Not overdue 184.5 17.9 166.6 5 - 25 %
Overdue less than 30 days 76.2 19.4 56.8 10 - 30 %
Overdue 30 - 90 days 20.8 9.6 11.2 15 - 35 %
Overdue 91 - 180 days 16.3 2.7 13.6 20 - 45 %
Overdue more than 180 days 33.6 22.0 11.6 50 - 75 %
Total 331.4 71.6 259.8
Ageing structure of impairment of financial instruments classified as trade receivables
30 Sep 2020
EUR million Gross value Impairment Net value Impairment
ratio
Trade receivables
Not overdue 101.5 26.0 75.5 5 - 25 %
Overdue less than 30 days 32.3 5.8 26.5 10 - 30 %
Overdue 30 - 90 days 32.6 14.4 18.2 15 - 35 %
Overdue 91 - 180 days 15.7 3.7 12.0 20 - 45 %
Overdue more than 180 days 55.3 36.3 19.0 50 - 75 %
Total 237.4 86.2 151.2
Impairments of lease receivables have developed as follows:
Ageing structure of impairment of financial instruments classified as lease receivables
30 Sep 2021
EUR million Gross value Impairment Net value Impairment ratio
Lease receivables
Not overdue 11.4 0.3 11.1 5 - 25 %
Overdue less than 30 days - - - 10 - 30 %
Overdue 30 - 90 days - - - 15 - 35 %
Overdue 91 - 180 days - - - 20 - 45 %
Overdue more than 180 days - - - 50 - 75 %
Total 11.4 0.3 11.1
Ageing structure of impairment of financial instruments classified as lease receivables
30 Sep 2020
EUR million Gross value Impairment Net value Impairment
ratio
Lease receivables
Not overdue 37.6 24.1 13.5 5 - 25 %
Overdue less than 30 days 1.5 1.5 - 10 - 30 %
Overdue 30 - 90 days 1.5 1.5 - 15 - 35 %
Overdue 91 - 180 days - - - 20 - 45 %
Overdue more than 180 days - - - 50 - 75 %
Total 40.6 27.1 13.5
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 2021
EUR million Gross value Impairment Net value Impairment ratio
Other receivables and assets
Not overdue 223.8 9.1 214.7 5 - 25 %
Overdue less than 30 days 0.2 - 0.2 10 - 30 %
Overdue 30 - 90 days 0.2 - 0.2 15 - 35 %
Overdue 91 - 180 days 0.9 - 0.9 20 - 45 %
Overdue more than 180 days 2.0 0.1 1.9 50 - 75 %
Total 227.1 9.2 217.9
Ageing structure of impairment of financial instruments classified as other receivables and assets
30 Sep 2020
EUR million Gross value Impairment Net value Impairment
ratio
Other receivables and assets
Not overdue 221.9 4.2 217.7 5 - 25 %
Overdue less than 30 days 0.9 - 0.9 10 - 30 %
Overdue 30 - 90 days 1.7 - 1.7 15 - 35 %
Overdue 91 - 180 days 0.8 - 0.8 20 - 45 %
Overdue more than 180 days 3.0 1.2 1.8 50 - 75 %
Total 228.3 5.4 222.9
Impairments of advances and loans have developed as follows:
Ageing structure of impairment of financial instruments classified as advances and loans
30 Sep 2021
EUR million Gross value Impairment Net value
Advances and loans
Not overdue 40.4 28.4 12.0
Overdue less than 30 days - - -
Overdue 30 - 90 days 0.1 - 0.1
Overdue 91 - 180 days - - -
Overdue more than 180 days 1.6 1.2 0.4
Total 42.1 29.6 12.5
Ageing structure of impairment of financial instruments classified as advances and loans
30 Sep 2020
EUR million Gross value Impairment Net value
Advances and loans
Not overdue 132.4 57.1 75.3
Overdue less than 30 days - - -
Overdue 30 - 90 days - - -
Overdue 91 - 180 days - - -
Overdue more than 180 days 1.9 1.2 0.7
Total 134.3 58.3 76.0
The material single items in the following table, 'Default risk
on financial instruments classified as advances and loans and as
other receivables' are disclosed based on an internal rating. There
were two transfers in financial year 2021 of EUR 9.7 m in total
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
the initial recognition due to the COVID-19 pandemic.
Default risk on financial instruments classified as advances and loans and as other receivables
30 Sep 2021 30 Sep 2020
Impairment Internal Gross Net Gross Net
EUR million Stage rating value Impairment value value Impairment value
class
Loans to related
parties
Advances and loans 1 2 25.0 - 0.2 24.8 12.0 - 0.1 11.9
Advances and loans 2 2 - - - 28.1 - 28.1
Other receivables 1 2 0.5 - 0.5 65.3 - 2.4 62.9
Loans to hotels
Advances and loans 1 5 7.8 - 0.5 7.3 - - -
Advances and loans 2 5 29.0 - 1.5 27.5 29.1 - 1.8 27.3
Loans to other
companies
Advances and loans 1 2 130.0 - 0.1 129.9 145.7 - 0.3 145.4
Other receivables 1 2 89.2 - 0.2 89.0 - - -
Other receivables 1 3 - - - 151.6 - 2.2 149.4
Other financial assets carried at amortised cost at an amount of
EUR 12.1 m (previous year EUR 14.9 m) relate to short-term deposits
with banks. The full amount of these investments with a gross
amount of EUR 12.7 m (previous year EUR 15.4 m) is not overdue.
Impairments of EUR 0.7 m (previous year EUR 0.5 m) were carried in
the framework of risk provisioning.
During financial year 2021, 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 classes advances
and loans, other receivables and assets and other financial assets
Stage 1 Stage 2
EUR million 12-month-ECL lifetime-ECL Total
(not impaired)
Risk provisioning as at 1 Oct 2019 19.5 1.8 21.3
Changes in the group of consolidated companies 0.7 - 0.7
Addition of impairment on newly issued / acquired financial assets 50.5 - 50.5
Transfer to - - -
Stage 2 lifetime ECL (not impaired) - 3.1 3.1 -
Unrequired impairments on financial assets derecognised 1.4 0.1 1.5
during the period
Risk provisioning as at 30 Sep 2020 66.2 4.8 71.0
Risk provisioning as at 1 Oct 2020 66.2 4.8 71.0
Exchange differences 0.1 - 0.1
Changes in the group of consolidated companies - - -
Addition of impairment on newly issued / acquired financial assets 18.7 - 18.7
Other change within a Stage (other changes) - - -
Transfer to - - -
Stage 2 lifetime ECL (not impaired) - 9.7 9.7 -
Unrequired impairments on financial assets derecognised 47.7 0.2 47.9
during the period
Risk provisioning as at 30 Sep 2021 27.6 14.3 41.9
As at 30 September 2021, risk provisioning totals EUR 9.4 m
(previous year EUR 10.0 m) for the other receivables and assets
class and EUR 0.7 m (previous year EUR 0.5 m) for the other
financial assets class as well as EUR 31.8 m (previous year EUR
60.4 m) for the advances and loans class.
As at 30 September 2021, no stage 3 instruments were recognised.
There were currency differences amounting to EUR 0.1 m (previous
year EUR 0.0 m). There were no changes in the scope of
consolidation (previous year EUR 0.7 m). Transfers of EUR 9.7 m
from stage 1 to stage 2 were made in class advances and loans
(previous year transfer from stages 1 to stage 2: EUR 3.1 m).
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 a lower risk provision of EUR 21.2
m.
Change in risk provisions for financial assets measured at amortised cost classified
as trade receivables
EUR million Lifetime ECL
simplified approach
Risk provisioning as at 1 Oct 2019 55.5
Exchange differences - 0.1
Changes in the group of consolidated companies 0.7
Addition of impairment on newly issued / acquired financial assets 51.7
Unrequired impairments on financial assets derecognised during the period 21.6
Risk provisioning as at 30 Sep 2020 86.2
Risk provisioning as at 1 Oct 2020 86.2
Exchange differences 0.7
Changes in the group of consolidated companies 0.1
Addition of impairment on newly issued / acquired financial assets 30.1
Unrequired impairments on financial assets derecognised during the period 45.5
Risk provisioning as at 30 Sep 2021 71.6
Change in risk provisions for financial assets measured at amortised cost classified
as lease receivables
EUR million Lifetime ECL
simplified approach
Risk provisioning as at 1 Oct 2019 -
Addition of impairment on newly issued / acquired financial assets 27.1
Risk provisioning as at 30 Sep 2020 27.1
Risk provisioning as at 1 Oct 2020 27.1
Exchange differences 0.3
Unrequired impairments on financial assets derecognised during the period 27.1
Risk provisioning as at 30 Sep 2021 0.3
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*
Stage 1 Stage 2
EUR million 12-month-ECL lifetime-ECL Total
(not impaired)
Gross carrying amounts as at 1 Oct 2019 87.3 29.1 116.4
Addition of assets 268.7 28.1 296.8
Reduction of assets - 64.0 - - 64.0
Transfer to lifetime ECL (Stage 2) - 6.2 6.2 -
Gross carrying amounts as at 30 Sep 2020 285.8 63.4 349.2
Gross carrying amounts as at 1 Oct 2020 285.8 63.4 349.2
Addition of assets 37.7 - 37.7
Reduction of assets - 124.9 - 28.1 - 153.0
Transfer to lifetime ECL (Stage 2) - 9.7 9.7 -
Gross carrying amounts as at 30 Sep 2021 188.9 45.0 233.9 * The presentation of the table was adjusted to improve the informative value. As of 30 September 2021, no instruments in the class advances and loans have been reported in stage 3. There were no substantial changes or modifications. There have been transfers from stage 1 to stage 2 in the amount of EUR 9.7 m (previous year transfers from stage 1 to 2: EUR 6.2 m).
Change in gross carrying amounts classified as other receivables and assets
and other financial assets*
EUR million Stage 1 Stage 2 Total
12-month-ECL lifetime-ECL (not impaired)
Gross carrying amounts as at 1 Oct 2019 289.5 - 289.5
Addition of assets 454.0 - 454.0
Reduction of assets - 282.9 - - 282.9
Gross carrying amounts as at 30 Sep 2020 460.6 - 460.6
Gross carrying amounts as at 1 Oct 2020 460.6 - 460.6
Addition of assets 318.6 - 318.6
Reduction of assets - 449.6 - - 449.6
Gross carrying amounts as at 30 Sep 2021 329.6 - 329.6 * The presentation of the table was adjusted to improve the informative value.
As of 30 September 3021, no instruments in the classes other
receivables and assets and other financial assets have been
reported in stage 3. There were no substantial 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*
EUR million Lifetime ECL simplified
approach
Gross carrying amounts as at 1 Oct 2019 640.0
Addition of assets 237.4
Reduction of assets - 640.0
Gross carrying amounts as at 30 Sep 2020 237.4
Gross carrying amounts as at 1 Oct 2020 237.4
Addition of assets 331.4
Reduction of assets - 237.4
Gross carrying amounts as at 30 Sep 2021 331.4 * The presentation of the table was adjusted to improve the informative value.
Change in gross carrying amounts of assets classified as lease receivables*
Lifetime ECL
EUR million simplified
approach
Gross carrying amounts as at 1 Oct 2019 -
Addition of assets 40.5
Gross carrying amounts as at 30 Sep 2020 40.5
Gross carrying amounts as at 1 Oct 2020 40.5
Addition of assets 10.1
Reduction of assets - 39.2
Gross carrying amounts as at 30 Sep 2021 11.4 * The presentation of the table was adjusted to improve the informative value.
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
totalling EUR 4.6 bn agreed with the previous syndicate banks and
KfW Bank, which has been included due to the COVID-19 pandemic.
Details of the financing transactions are presented in
connection with the going-concern reporting in accordance with the
UK Corporate Governance Code and under 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 2021)
Cash outflow until 30 Sep
up to 1 year 1 - 2 years 2 - 5 years more than 5 years
EUR million repayment interest repayment interest repayment interest repayment interest
Financial liabilities
Convertible bonds - - 29.5 - - 29.5 - - 88.4 - 589.6 - 59.0
Bonds - - 14.3 - - 14.3 - 150.0 - 42.8 - -
Liabilities to banks - 247.6 - 107.7 - 223.1 - 105.6 - 2,040.1 - 85.2 - 101.8 - 6.2
Other financial debt - 23.5 - 21.7 - 42.9 - - 0.2 - 0.2 - -
Trade payables - 2,052.4 - - - - - - -
Other financial liabilities - 313.2 - 1.1 - 1.0 - - 2.2 - - -
Lease liabilities - 623.3 - 66.2 - 727.1 - 70.6 - 1,011.0 - 176.8 - 868.0 - 362.5
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
EUR million repayment interest repayment interest repayment interest repayment interest
(adjusted) (adjusted)
Financial liabilities
Bonds - - 7.9 - 300.0 - 28.5 - - - -
Liabilities to banks - 560.9 - 118.4 - 2,833.4 - 44.4 - 465.3 - 25.1 - 94.2 - 9.3
Other financial debt - 16.3 - - - - - - -
Trade payables - 1,611.5 - - - - - - -
Other financial liabilities - 422.1 - - 0.6 - - 4.0 - - -
Lease liabilities - 687.3 - 88.4 - 652.8 - 91.0 - 1,040.7 - 111.5 - 1,019.1 - 134.2
Cash flow of derivative financial instruments (30 Sep 2021)
Cash in- / outflow until 30 Sep
EUR million up to 1 year 1 - 2 years 2 - 5 years more than
5 years
Derivative financial instruments
Hedging transactions - inflows + 57.6 - - -
Hedging transactions - outflows - 57.8 - - -
Other derivative financial instruments - inflows + 513.8 + 52.1 - -
Other derivative financial instruments - outflows - 531.5 - 65.5 - 2.4 -
Cash flow of derivative financial instruments (30 Sep 2020)
Cash in- / outflow until 30 Sep
EUR million up to 1 year 1 - 2 years 2 - 5 years more than
5 years
Derivative financial instruments
Hedging transactions - inflows + 627.0 + 59.8 - -
Hedging transactions - outflows - 691.1 - 60.7 - -
Other derivative financial instruments - inflows + 2,152.8 + 175.7 + 83.6 -
Other derivative financial instruments - outflows - 2,390.7 - 210.7 - 100.8 - 0.8
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. Due to numerous travel restrictions and limitations the
occurrence of numerous hedged underlying transactions could 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,
so that the 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 EUR - 28.3 m (thereof EUR - 28.3 m from hedges
that were already recognised as hedging instruments in the previous
year) from fuel price hedges and EUR - 9.1 m (thereof EUR - 9.4 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. At 30 September 2021, the fair value of these
reclassified fuel price hedges totalled EUR 1.8 m at a nominal
volume of EUR 8.3 m, while the fair value of the reclassified
currency hedges totalled EUR 0.0 m at a nominal volume of EUR 29.6
m.
Furthermore, the strong increase in TUI's credit risk had a
direct impact on the retrospective hedge effectiveness test. As a
result, fuel price, interest rate and currency hedges had to be
terminated as they no longer met the effectiveness requirements of
IAS 39.
All future changes in the value of these de-designated hedges
are also taken to the cost of sales respectively in the financial
result in the case of interest rate hedges in the income statement
through profit and loss and recognised as other derivative
financial instruments from the date of the termination of the cash
flow hedge accounting. At 30 September 2021, the fair value of
these reclassified fuel price hedges totalled EUR 34.0 m at a
nominal value of EUR 150.9 m, while the fair value of the interest
rate hedges amounted to EUR - 9.2 m at a nominal volume of EUR
366.3 m and the fair value of currency hedges totalled EUR - 0.1 m
at a nominal volume of EUR 160.0 m.
Cash Flow Hedges
At 30 September 2021, hedges existed to manage cash flows in
foreign currencies with maturities of up to two years (previous
year up to two years). The fuel price hedges had terms of up to one
year (previous year up to one year). Hedges to protect variable
interest payment obligations are currently not in the portfolio
(previous year up to one year). 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 2021
Remaining term
EUR million up to more than Total Average hedged rate / price Average hedging
1 year 1 year interest rate
Interest rate hedges
Caps / Floors - - - -
Swaps - - -
Payer EUR - - - -
Payer USD - - - -
Currency hedges -
Forwards 131.2 0.4 131.6
Forwards EUR / GBP 17.0 - 17.0 1.1712
Forwards EUR / USD 76.4 - 76.4 0.8602
Forwards GBP / USD 12.9 - 12.9 0.7223
Forwards EUR / SEK 19.5 - 19.5 0.0982
Other currencies 5.4 0.4 5.8
Commodity hedges -
Swaps 26.9 - 26.9
Jet fuel 26.9 - 26.9 538.06
Marine fuel - - - -
Other fuels - - - -
Other derivative financial instruments 1,950.3 505.3 2,455.6
Nominal amounts of derivative financial instruments used
30 Sep 2020
Remaining term
EUR million up to more than Total Average hedged rate / price Average hedging
1 year 1 year interest rate
Interest rate hedges
Caps / Floors - - - 0.00
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 / GBP 251.8 - 251.8 1.1395
Forwards EUR / USD 436.8 71.3 508.1 0.8589
Forwards GBP / USD 456.6 - 456.6 0.7692
Forwards EUR / SEK 92.8 - 92.8 0.0939
Other currencies 143.2 4.0 147.2
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 derivative financial instruments 4,816.2 956.4 5,772.6
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 2021
Fair Value changes to Balance of hedging Hedging
EUR million determine reserve of reserve
inefficient active cash flow hedges completed (ended) cash flow hedges
portions
Interest rate risk hedges - - - 31.0
Currency risk hedges - 0.9 0.9 3.9
Fuel price risk hedges - 3.7 3.2 - 33.7
Hedging - 4.6 4.1 - 60.8
Total - 4.6 4.1 - 60.8
Disclosures on underlying transactions of cash flow hedges
30 Sep 2020
Fair Value Balance of Hedging
changes to hedging reserve
EUR million determine reserve of completed
inefficient active cash (ended) cash
portions flow hedges flow hedges
Interest rate risk hedges 0.2 - 0.1 - 33.5
Currency risk hedges - 2.8 4.6 5.9
Fuel price risk hedges 46.5 - 43.5 - 129.7
Hedging 43.9 - 39.0 - 157.3
Total 43.9 - 39.0 - 157.3
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 2021.
Development of OCI
30 Sep 2021
EUR million Interest Currency Fuel price Total
rate risk risk risk
Gain or loss from fair value changes of hedges within hedge - 31.0 4.8 - 30.5 - 56.7
accounting
recognised in equity - 31.0 4.8 - 30.5 - 56.7
Reclassification from cash flow hedge - 3.0 - 45.7 - 116.3 - 165.0
reserve to income statement
Due to early termination of the hedge - - 11.4 - 10.8 - 22.2
Due to recognition of the - 3.0 - 34.3 - 105.5 - 142.8
underlying transaction
Development of OCI
30 Sep 2020
EUR million Interest Currency risk Fuel price risk Total
rate risk
Gain or loss from fair value changes of hedges within hedge accounting - 33.6 10.5 - 173.2 - 196.3
recognised in equity - 33.6 10.5 - 173.2 - 196.3
Reclassification from cash flow hedge - 7.5 130.2 - 373.8 - 251.1
reserve to income statement
Due to early termination of the hedge - 4.0 38.2 - 234.4 - 200.2
Due to recognition of the - 3.5 92.0 - 139.4 - 50.9
underlying transaction
In the reporting period, expenses of EUR 139.8 m (previous year:
expenses of EUR 47.4 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 EUR 3.0 m (previous year: expenses of
EUR 3.5 m), carried in net interest income. Income of EUR 0.2 m
(previous year: income of EUR 0.6 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 2021
EUR million Receivables Liabilities FV changes to determine Nominal
ineffective portions volume
Cash flow hedges for
currency risks 1.3 0.4 0.9 131.6
fuel price risks 3.2 - 3.2 26.9
interest rate risks - - - -
Hedging 4.5 0.4 4.1 158.5
Other derivative financial instruments 57.8 23.4 - 2,455.6
Total 62.3 23.8 4.1 2,614.1
Positive and negative fair values of derivative financial instruments shown as receivables or liabilities
30 Sep 2020
EUR million Receivables Liabilities FV changes to determine Nominal
ineffective portions volume
Cash flow hedges for
currency risks 22.3 17.7 4.6 1,456.5
fuel price risks - 43.5 - 43.5 114.1
interest rate risks - 0.1 - 0.1 7.8
Hedging 22.3 61.3 - 39.0 1,578.4
Other derivative financial instruments 74.0 257.5 - 5,772.5
Total 96.3 318.8 - 39.0 7,350.9
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, debt components of bonds with warrants
and convertible 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 2021, the fair values of other current
receivables and current liabilities to banks were determined in
line with 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 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, current trade payables and other financial
liabilities 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 2021
Category according to IFRS 9
Fair value Fair
At Fair value with no with no value Fair value
EUR million Carrying amortised effect on profit and loss effect on through of
amount cost without recycling profit and profit financial
loss with and loss instruments
recycling
Assets
Trade receivables and other
receivables
thereof instruments within the 769.2 661.1 - - 108.1 783.2
scope of IFRS 9
thereof instruments within the 11.1 - - - - 11.7
scope of IFRS 16
Derivative financial
instruments
Hedging transactions 4.5 - - 4.5 - 4.5
Other derivative financial 57.8 - - - 57.8 57.8
instruments
Other financial assets 24.4 12.1 10.3 - 2.0 24.4
Cash and cash equivalents 1,583.9 1,586.1 - - - 1,586.1
Liabilities
Financial liabilities 3,320.7 3,320.8 - - - 3,359.7
Trade payables 2,052.4 2,071.9 - - - 2,071.9
Derivative financial
instruments
Hedging transactions 0.4 - - 0.4 - 0.4
Other derivative financial 23.4 - - - 23.4 23.4
instruments
Other financial liabilities 318.9 318.9 - - - 318.9
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
Fair value Fair
At Fair value with no with no value Fair value
EUR million Carrying amortised effect on profit and loss effect on through of
amount cost without recycling profit and profit financial
loss with and loss instruments
recycling
Assets
Trade receivables and other
receivables
thereof instruments within the 875.2 875.2 - - - 853.1
scope of IFRS 9
thereof instruments within the 13.5 - - - - 39.2
scope of IFRS 16
Derivative financial
instruments
Hedging transactions 22.3 - - 22.3 - 22.3
Other derivative financial 74.0 - - - 74.0 74.0
instruments
Other financial assets 25.5 14.9 8.5 - 2.1 25.5
Cash and cash equivalents 1,233.1 1,233.1 - - - 1,233.1
Liabilities
Financial liabilities 4,269.0 4,291.4 - - - 4,028.5
Trade payables 1,611.5 1,611.5 - - - 1,611.5
Derivative financial
instruments
Hedging transactions 61.3 - - 61.3 - 61.3
Other derivative financial 257.5 - - - 257.5 257.5
instruments
Other financial liabilities 429.2 431.3 - - - 430.8
The amounts shown in the column 'carrying amount' (as shown in
the balance sheet) in the tables above can differ from those in the
other columns of a particular row since the latter include all
financial instruments. That is the latter columns include financial
instruments which are part of disposal groups according to IFRS 5.
In the balance sheet, financial instruments, which are part of a
disposal group, are shown 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.
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 2021
amounts to EUR 10.3 m (previous year EUR 8.5 m). There were
disposals of stakes in partnerships or corporations amounting to
EUR 0.1 m (previous year EUR 3.5 m) which were measured at fair
value, as part of their first consolidation. None of these
strategic financial investments were sold in the completed
financial year. In financial year 2021 no dividends have been
received from these financial investments (previous year EUR 0.6
m).
Aggregation according to measurement categories under IFRS 9 as at 30 Sep 2021
Carrying amount of Fair Value
EUR million financial
instruments Total
Financial assets
at amortised cost 2,259.3 2,381.4
at fair value - recognised directly in equity without recycling 10.3 10.3
at fair value - through profit and loss 167.9 167.9
Financial liabilities
at amortised cost 5,711.6 5,750.5
at fair value - through profit and loss 23.4 23.4
Aggregation according to measurement categories under IFRS 9 as at 30 Sep 2020
Carrying amount of Fair Value
EUR million financial
instruments
Total
Financial assets
at amortised cost 2,123.2 2,101.1
at fair value - recognised directly in equity without recycling 8.5 8.5
at fair value - through profit and loss 76.1 76.1
Financial liabilities
at amortised cost 6,334.1 6,070.7
at fair value - through profit and loss 257.5 257.5
Fair value measurement
The table below presents the fair values of recurring,
non-recurring and other financial instruments measured at fair
value in line with the underlying measurement level. The individual
measurement levels have been defined as follows in line with the
inputs:
-- Level 1: (unadjusted) quoted prices in active markets for
identical assets or liabilities.
-- Level 2: inputs for the measurement other than quoted market
prices included within Level 1 that areobservable in the market for
the asset or liability, either directly (as quoted prices) or
indirectly (derivablefrom quoted prices).
-- Level 3: inputs for the measurement of the asset or liability
not based on observable market data.
Hierarchy of financial instruments measured at fair value as at 30 Sep
2021
Fair value hierarchy
EUR million Total Level 1 Level 2 Level 3
Assets
Other receivables 108.1 - - 108.1
Other financial assets 12.3 - - 12.3
Derivative financial instruments
Hedging transactions 4.5 - 4.5 -
Other derivative financial instruments 57.8 - 57.8 -
Liabilities
Derivative financial instruments
Hedging transactions 0.4 - 0.4 -
Other derivative financial instruments 23.4 - 23.4 -
Hierarchy of financial instruments measured at fair value as at 30 Sep
2020
Fair value hierarchy
EUR 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 financial instruments 74.0 - 74.0 -
Liabilities
Derivative financial instruments
Hedging transactions 61.3 - 61.3 -
Other derivative financial instruments 257.5 - 257.5 -
At the end of every reporting period, TUI Group checks whether
there are any reasons for reclassification to or from one of the
measurement levels. Financial assets and financial liabilities are
generally transferred out of Level 1 into Level 2 if the liquidity
and trading activity no longer indicate an active market. The
opposite situation applies to potential transfers out of Level 2
into Level 1. In the reporting period, there were no transfers
between Level 1 and Level 2.
Reclassifications from Level 3 to Level 2 or Level 1 are made if
observable market price quotations become available for the asset
or liability concerned. In the reporting period there were no other
transfers from or to Level 3. 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, debt components of warrant and
convertible bonds, liabilities to banks,promissory notes and other
non-current financial liabilities as well as for current other
receivables, currentfinancial liabilities and non-current trade and
other receivables, the fair value is determined as the presentvalue
of future cash flows, taking account of observable yield curves and
the respective credit spread, whichdepends 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 thespot or cash prices, taking account of
forward premiums and discounts. The fair values of optional hedges
arecalculated on the basis of option pricing models. The fair
values determined on the basis of the Group's ownsystems 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 ofother financial
instruments.
Level 3 Financial instruments
The table below presents the fair values of the financial
instruments measured at fair value on a recurring basis, classified
as Level 3:
Financial assets measured at fair value in Level 3
EUR million Other receivables Other financial
IFRS 9 assets IFRS 9
Balance as at 1 Oct 2019 - 42.9
Disposals - - 3.5
consolidation - - 3.5
Total gains or losses for the period - - 27.7
recognised through profit and loss - -
recognised in other comprehensive income - - 27.7
Foreign currency effects - - 1.1
Balance as at 30 Sep 2020 - 10.6
Balance as at 1 Oct 2020 - 10.6
Additions 108.1 -
sale 108.1 -
Disposals - - 0.1
sale - - 0.1
Total gains or losses for the period - - 0.1
recognised through profit and loss - -
recognised in other comprehensive income - - 0.1
Foreign currency effects - 1.9
Balance as at 30 Sep 2021 108.1 12.3
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 - 4.2 % and 22.5 % (previous year - 13 % and 22 %). The
constant growth rate is 1 % (previous year 1 %). The weighted
average cost of capital (WACC) is in a range between 8.8 %- 9.9 %
(previous year 8.6- 9.9 %). Due to materiality, no detailed figures
have been provided. With the exception of the WACC, there is a
positive correlation between the input factors and the fair
value.
The increase in the fair values of the Other financial in Level
3 mainly results from foreign exchange rate effects in the amount
of EUR 1.9 m.
The Other receivables according to IFRS 9 in Level 3 relate to a
variable purchase price receivable from the sale of Riu Hotels S.
A. at a carrying amount of EUR 108.1 m, carried as a financial
instrument in the measurement category at fair value through profit
and loss. The fair value is determined using a probability
calculation for the future gross operating profit, taking account
of contractual entitlements to an additional purchase price demand
and an appropriate risk-adjusted discount rate (- 0.33 % until -
0.22 %). Gross operating profit is defined as total revenue minus
operating expenses. The cash flows from the contractual claims set
out in the underlying Memorandum of Understanding depend solely on
a number of contractually determined Riu hotels delivering the
gross operating profit for calendar years 2022 and 2023.
The variable purchase price payment varies as a function of
delivering the contractually fixed gross operating profit. Its'
maximum amount is limited. At least 90 % of the target gross
operating profit contractually agreed for 2022 or 2023,
respectively, has to be achieved in order to generate a variable
purchase price payment. If the 90 % target is not met, no further
purchase price payment will be made. The maximum purchase price
payment totals EUR 127.4 m. Due to different expectations regarding
target achievement, potential purchase price payments vary between
EUR 0 and EUR 127.4 m.
TUI expects the hotels concerned to deliver around 95 % to 100 %
of cumulative gross operating profit in calendar year 2022 and
around 100 % to 105 % in calendar year 2023. The current planning
for the relevant hotels (input parameters) is regularly reviewed by
the responsible accounting staff. In the period under review,
following subsequent valuation, no profits or losses were carried
in the profit and loss statement in connection with the variable
purchase price payment from the sale of Riu Hotels S. A.
A sensitivity analysis shows that an increase in the hotels'
gross operating profit of 10 % would result in a change in the
present value of the additional purchase price receivable of around
EUR 20 m, while a reduction in gross operating profit of 10 % would
result in a change in the present value of around EUR - 95.9 m. An
interest rate shift of + / - 100 basis points would alter the
present value of the purchase price receivable by around EUR 2.0
m.
Effects on results
The effects of remeasuring the 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
2021
EUR million from interest other from interest
net results
Financial assets 1.3 140.3 141.6
At amortised cost 0.2 140.5 140.7
At fair value through profit or loss 1.1 - 0.2 0.9
Financial liabilities - 255.7 - 114.2 - 369.9
At amortised cost - 255.7 - 12.7 - 268.4
At fair value through profit or loss - - 101.5 - 101.5
Total - 254.4 26.1 - 228.3
Net results of financial instruments
2020
EUR million from interest other from interest
net results
Financial assets 24.7 - 193.4 - 168.7
At amortised cost 15.0 - 193.2 - 178.2
At fair value through profit or loss 9.7 - 0.2 9.5
Financial liabilities - 17.4 - 402.6 - 420.0
At amortised cost - 17.4 - 24.2 - 41.6
At fair value through profit or loss - - 378.4 - 378.4
Total 7.3 - 596.0 - 588.7
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
Gross amounts of Gross amounts of Net amounts of Financial Collateral Net
EUR million financial financial financial assets set off, liabilities received amount
assets liabilities set presented in the
off balance sheet
Financial assets as
at 30 Sep 2021
Derivative financial 62.3 - 62.3 11.1 - 51.2
assets
Cash and cash 1,740.7 156.8 1,583.9 - - 1,583.9
equivalents
Financial assets as
at 30 Sep 2020
Derivative financial 96.3 - 96.3 80.8 - 15.5
assets
Cash and cash 1,571.5 338.4 1,233.1 - - 1,233.1
equivalents
Offsetting of financial liabilities
Financial assets and
liabilities not set off
in the balance sheet
Gross amounts Gross amounts Net amounts of Financial Collateral Net
EUR million of financial of financial financial liabilities set off, assets granted amount
assets assets set presented in the balance sheet
off
Financial liabilities
as at 30 Sep 2021
Derivative financial 23.8 - 23.8 11.1 - 12.7
liabilities
Financial liabilities 3,477.5 156.8 3,320.7 - - 3,320.7
Financial liabilities
as at 30 Sep 2020
Derivative financial 318.8 - 318.8 80.8 - 238.0
liabilities
Financial liabilities 4,607.4 338.4 4,269.0 - - 4,269.0
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.
(42) 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 2021, the travel restrictions triggered by the
COVID-19 pandemic continued to have a strong negative impact on the
Group's earnings and liquidity development.
The financing measures carried out in the year under review are
described in detail in the section on Going concern reporting in
accordance with the UK Corporate Governance Code (page 155),
additional information can be found in the section 'Financial
instruments', on page 214 in the Notes.
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.
From a Group perspective, invested capital is derived from
liabilities, comprising equity (including non- controlling
interests) and the balance of interest-bearing liabilities and
interest-bearing assets with an adjustment for the seasonality of
the Group's net financial position. The cumulative amortisations of
purchase price allocations are then added to the invested
capital.
The TUI Group calculates the leverage ratio as the ratio of
gross financial debt + lease liabilities + recognised obligations
from defined benefit pension plans to reported EBITDA. Due to the
negative EBITDA, the negative leverage ratio calculated for
financial year 2021 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
EUR million 2021 2020
Ø Invested Capital 6,913.1 7,134.8
Underlying EBIT - 2,075.5 - 2,997.0
ROIC - 30.0 % - 42.0 %
Gross financial liabilities 3,320.8 4,269.0
Lease liabilities (IFRS 16) 3,229.4 3,399.9
Defined benefit obligation recognised on the balance sheet 798.0 651.7
EBITDA (IFRS 16) - 1,000.4 - 1,355.0
Leverage Ratio - 7.3 - 6.1
Notes to 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.
In the period under review, cash and cash equivalents rose by
EUR 353.0 m to EUR 1,586.1 m. Cash and cash equivalents include an
amount of EUR 2.2 m carried in the balance sheet item 'Assets held
for sale' (previous year EUR 0.0 m)
(43) Cash inflow / cash outflow 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 EUR 151.3 m (previous year EUR - 2,771.9 m).
The cash outflow includes interest payments received of EUR 6.4 m
(previous year EUR 25.1 m) and dividends of EUR 14.2 m (previous
year EUR 7.7 m). Income tax payments resulted in a cash outflow of
EUR 9.0 m (previous year inflow of EUR 56.1 m).
(44) Cash inflow / cash outflow from investing activities
In financial year 2021, the cash inflow from investing
activities totalled EUR 704.7 m (previous year inflow of EUR 161.8
m). This amount includes a cash outflow for capital expenditure
related to property, plant and equipment and intangible assets of
EUR 299.7 m (previous year EUR 587.0 m). The Group also recorded a
cash inflow of EUR 357.9 m, (previous year EUR 109.9 m) from the
sale of property, plant and equipment and intangible assets. In
addition, investing activities include a cash inflow of EUR 105.5 m
in connection with the sale of interests in consolidated companies,
including EUR 32.9 m for the divestment of Hapag-Lloyd Kreuzfahrten
concluded in the prior year and EUR 50.0 m for the sale of Nordotel
S.A, completed after the end of the financial year under review. A
cash inflow of EUR 543.8 m was recorded from the sale of interests
in Riu Hotels S. A. and Karisma Hotels Caribbean S. A. Further cash
inflows of EUR 19.6 m relate to the repayment of loans in
connection with the sale of the stakes in Togebi Holdings Limited
(TUI Russia). A cash outflow of EUR 21.0 m related to a capital
increase in TUI Cruises GmbH.
(45) Cash inflow / cash outflow from financing activities
The cash outflow from financing activities totalled EUR 233.5 m
(previous year inflow of EUR 2,112.5 m). TUI AG recorded a cash
inflow of EUR 1,743.8 m from various equity measures after
deduction of capital procurement costs. Of this, EUR 1,084.4 m was
attributable to the silent participations and EUR 542.5 m to the
issue of shares completed on January 28, 2021. A further EUR 82.4 m
relate to the equity component of the convertible bond issued and
EUR 34.5 m to the equity component of the bond with warrants. A
cash outflow of EUR 1.7 m related to the purchase of shares,
transferred to TUI Group employees in the framework of the oneShare
employee share programme. TUI AG recorded a cash inflow of EUR
598.6 m from taking out loans and bonds after deduction of capital
procurement costs. Other TUI Group companies took out loans worth
EUR 257.0 m. In the period under review, TUI AG reduced its
syndicated credit facility by EUR 1,445.1 m and paid EUR 300.0 m
for the early redemption of a bond. Other Group companies recorded
a cash outflow of EUR 94.1 m to repay financial liabilities. A
further cash outflow of EUR 587.2 m was used to redeem lease
liabilities. A cash outflow of EUR 404.8 m related to interest
payments.
(46) 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 increased by EUR 33.2 m (previous year
EUR - 17.0 m) due to foreign exchange effects.
Other Notes
(47) Significant events after balance sheet date
On 5 October 2021 TUI AG sold its investment in the subsidiary
Nordotel S. A. to the joint venture Grupotel S. A., both in Spain.
For further details especially on the financial effects please
refer to Note 23 'Assets held for sale'.
With effect from 2 November 2021 TUI AG finalized its second
capital increase in the calendar year 2021. The net proceeds
amounted to EUR 1.1 bn. The subscribed capital and number of shares
increased by EUR 523.5 m to EUR 1,622.9 m. The remaining amount of
EUR 0.6 bn increased the capital reserves. TUI AG intends to use
the net proceeds to reduce financial liabilities and interest
expenses.
(48) 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 2021 break down
as follows:
Services of the auditors of the consolidated financial statements
EUR million 2021 2020
Audit fees for TUI AG and subsidiaries in Germany 3.1 3.3
Audit fees 3.1 3.3
Review of interim financial statements 0.3 0.8
Other certification services (mainly in connection with comfort letters) 0.8 0.5
Other certification services 1.1 1.3
Total 4.2 4.6
(49) Remuneration of Executive and Supervisory Board members
according to § 314 HGB
In the completed financial year, the remuneration paid to
Executive Bord members totalled EUR 4.9 m (previous year EUR 4.3
m), and that of the Supervisory Board members totalled EUR 3.6 m
(previous year EUR 3.4 m).
Pension payments for former Executive Board members or their
surviving dependants totalled EUR 6.1 m (previous year EUR 6.1) in
the completed financial year. Pension obligations according to IAS
19 for former Executive Board members and their surviving
dependants amounted to EUR 71.8 m (previous year EUR 73.5 m) at the
balance sheet date.
(50) 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 provision
DEFAG Beteiligungsverwaltungs GmbH I, Hanover TUI Aviation GmbH, Hanover
DEFAG Beteiligungsverwaltungs GmbH III, Hanover TUI Aviation Holding GmbH, Hanover
FIRST Travel GmbH, Hanover TUI Beteiligungs GmbH, Hanover
Flyloco GmbH, Rastatt TUI Blue DE GmbH, Hanover
Last-Minute-Restplatzreisen GmbH, Rastatt TUI Business Services GmbH, Hanover
Leibniz-Service GmbH, Hanover TUI Customer Operations GmbH, Hanover
l'tur GmbH, Rastatt TUI Deutschland GmbH, Hanover
MEDICO Flugreisen GmbH, Rastatt TUI Group Services GmbH, Hanover
Preussag Beteiligungsverwaltungs GmbH IX, Hanover TUI Hotel Betriebsgesellschaft mbH, Hanover
Robinson Club GmbH, Hanover TUI Immobilien Services GmbH, Hanover
TICS GmbH Touristische Internet und Call Center Services, Rastatt TUI InfoTec GmbH, Hanover
TLT Urlaubsreisen GmbH, Hanover TUI Insurance & Financial GmbH, Hanover
TUI 4 U GmbH, Bremen TUI Leisure Travel Service GmbH, Neuss
TUI aqtiv GmbH, Hanover TUIfly GmbH, Langenhagen
TUI Asset Management and Advisory GmbH, Hanover TUIfly Vermarktungs GmbH, Hanover
(51) 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 (Note 53) 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.
Through the Economic Stabilisation Fund (ESF), the federal
German government has indirectly acquired two silent participations
and a warrant bond, which combined form the stabilisation package
for TUI AG. With the payments of EUR 420 m made in connection with
the first silent participation on 25 January 2021, a number of
terms and conditions relating to the package have entered into
force, which TUI AG has to comply with. Amongst others the ESF
nominated two members of the supervisory board of TUI AG. Due to
the scope of those terms and conditions, ESF can exercise material
control over TUI AG and hence is a related party. The stabilisation
measures received are significant business transactions with the
ESF. Please refer to Note 27 'Silent participations' and Note 10
'Earnings per share' for details regarding the warrant bond.
Financial obligations from order commitments vis-à-vis related
parties primarily relate to the purchasing of hotel services.
Transactions with related parties
EUR million 2021 2020
Services provided by the Group
Management and consultancy services 16.1 76.5
Sales of tourism services 36.9 58.3
Other services - 3.7
Total 53.0 138.5
Services received by the Group
Rental and leasing agreements 9.5 16.8
Purchase of hotel services 110.1 197.5
Distribution services 0.8 6.3
Other services 2.9 6.1
Total 123.3 226.7
Transactions with related parties
EUR million 2021 2020
Services provided by the Group to
non-consolidated Group companies 0.3 0.4
joint ventures 29.0 49.0
associates 1.7 48.2
other related parties 22.0 40.9
Total 53.0 138.5
Services received by the Group from
non-consolidated Group companies 0.4 0.3
joint ventures 106.1 169.2
associates 16.8 49.8
other related parties - 7.4
Total 123.3 226.7
Transactions with joint ventures and associates are primarily
effected in the tourism business. 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 July 2021, TUI Group sold its shares in the Riu Hotels S. A.
joint venture. For details of the transaction, please refer to the
section 'Divestments'.
Receivables against related parties
EUR million 30 Sep 2021 30 Sep 2020
Trade receivables from
non-consolidated Group companies - -
joint ventures 4.2 6.2
associates 3.9 5.6
other related parties 5.5 3.2
Total 13.6 15.0
Advances and loans to
non-consolidated Group companies - 0.1
joint ventures 3.1 39.6
associates 27.3 60.0
other related parties 2.5 -
Total 32.9 99.7
Payments on account to
joint ventures 24.4 28.6
Total 24.4 28.6
Other receivables from
non-consolidated Group companies 1.3 1.7
joint ventures 1.4 87.9
associates 1.8 1.7
other related parties - 34.3
Total 4.5 125.6
Payables due to related parties
EUR million 30 Sep 2021 30 Sep 2020
Trade payables due to
non-consolidated Group companies 0.3 0.1
joint ventures 19.6 23.2
associates 3.0 7.5
other related parties - -
Total 22.9 30.8
Financial liabilities due to
non-consolidated Group companies 0.5 0.5
joint ventures 111.9 134.6
Total 112.4 135.1
Other liabilities due to
non-consolidated Group companies 4.9 5.3
joint ventures 6.3 6.9
associates 2.3 3.8
key management personnel 3.3 3.2
Total 16.8 19.2 Financial liabilities to joint ventures included liabilities from leases of EUR 111.9 m (previous year EUR 134.6 m).
The share of result of associates and joint ventures is shown
separately in segment reporting.
Unifirm Limited, Cyprus, held 32.0 % of the shares in TUI AG as
at 30 September 2021 (30 September 2020 24.9 %). Unifirm Limited is
controlled by the family of Russian entrepreneur Alexej 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, reduced its equity stake to less than 3.0 % in the
period under review.
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
EUR million 2021 2020
Short-term benefits 8.5 7.7
Post-employment benefits 1.5 2.9
Share-based payment 0.5 - 3.8
Total 10.5 6.8
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 EUR
16.0 m (previous year EUR 16.6 m) as at the balance sheet date. In
addition, provisions of EUR 2.6 m (previous year EUR 2.1 m) are
recognised relating to the long-term incentive programme.
(52) International Financial Reporting Standards (IFRS) not yet
applied
New standards endorsed by the EU, but applicable after 30 Sep 2021
Applicable Expected impact on
Standard from Amendments financial position and
performance
Amendments to IFRS 9, IAS The amendments address issues that affect financial
39, IFRS 7, reporting when an existing interest rate benchmark is
IFRS 4 and IFRS 16 1 Jan 2021 actually replaced by an alternative No major impacts
Interest Rate Benchmark interest rate benchmark as a result of the interest rate
Reform (Phase 2) benchmark reform.
The amendments specify which costs to include in assessing TUI will review the
whether a contract is onerous. The amendments clarify that impacts
Amendments to IAS 37 1 Jan 2022 the cost of fulfilling of these amendments in
Onerous Contracts a contract consists of the direct cost of the contract due course. We
representing either the incremental costs of fulfilling currently do not
the contract or an allocation of other expect to see any
costs that relate directly to fulfilling the contract. major impacts.
The amendments prohibit deducting from the cost of an item
of property, plant and equipment any proceeds from selling
items
Amendments to IAS 16 produced while bringing that asset to the location and
Proceeds before Intended 1 Jan 2022 condition necessary for it to be capable of operating in No major impacts
Use 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.
Amendments to IFRS 3 The amendments update a reference to the Conceptual
Reference to the 1 Jan 2022 Framework in IFRS 3 without changing the accounting No impacts
Conceptual Framework requirements for business
combinations.
Various The amendments resulting from the Annual Improvements
amendments to IFRS (2018- 1 Jan 2022 2018- 2020 Cycle include small amendments to IFRS 1, IFRS No major impacts
2020 Cycle) 9, IAS 41, and the
Illustrative Examples accompanying IFRS 16.
IFRS 17 establishes the principles for the accounting for
insurance contracts and replaces IFRS 4. On 25 June 2020,
the IASB published
IFRS 17 1 Jan 2023 Amendments to IFRS 17 and deferred the effective date of Not relevant
Insurance Contracts 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.
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 2021
Applicable Expected impact on
Standard from Amendments financial
position and performance
The amendments to IAS 1 are intended to clarify the criteria
used to classify a liability as current or non-current. In
future, the classification
of liabilities as current or non-current will exclusively be TUI will review the impacts
Amendments to IAS 1 based on 'rights' that are in existence at the end of the of this amendment in due
Classification of 1 Jan 2023 reporting period. The course. We
Liabilities as amendments additionally include guidance on the currently do not expect to
Current interpretation of the criterion 'right to defer settlement see any
or Non-Current by at least twelve months' and major impacts.
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.
The amendments to IAS 1 and IFRS Practice Statement 2 are to
help preparers in deciding which accounting and measurement TUI will review the impacts
Amendments to IAS 1 methods of this amendment on the
Disclosure of 1 Jan 2023 to disclose in their financial statements. The amendments disclosures
Accounting Policies require entities to disclose their material accounting and of accounting policies in
measurement policy due course.
information instead of their significant accounting and
measurement policies.
The amendments to IAS 8 are to help entities to distinguish
between accounting policies and accounting estimates. The
Amendments to IAS 8 definition of
Definition of 1 Jan 2023 a change in accounting estimates is replaced with a new No major impacts
Accounting definition of accounting estimates. It is clarified that a
Estimates change in an accounting
estimate that results from new information or new
developments is not the correction of an error.
Amendments to IAS The amendments clarify that deferred tax assets and
12 liabilities have to be formed when a transaction gives rise
Deferred tax to equal amounts
related to Assets of deductible and taxable temporary differences at the same
and 1 Jan 2023 time. The initial recognition exemption, according to which No major impacts
Liabilities arising deferred tax
from a Single assets or liabilities are not recognised on initial
Transaction recognition of an asset or a liability, does not apply to
transactions of this type.
(53) TUI Group Shareholdings
Company Country Capital share in %
Consolidated companies
Tourism
Absolut Holding Limited, Qormi Malta 99.9
Adriasense d. o. o., Zagreb Croatia 100
Advent Insurance PCC Limited (Absolut Cell), Qormi Malta 100
Africa Focus Tours Namibia (Proprietary) Limited, Windhuk Namibia 100
Antwun S. A., Clémency Luxembourg 100
ATC African Travel Concept Proprietary Limited, Kapstadt South Africa 50.1
ATC-Meetings and Conferences Proprietary Limited, Kapstadt South Africa 100
B. D.S Destination Services Tours, Kairo Egypt 100
B2B d. o. o., Dubrovnik Croatia 100
BU RIUSA II EOOD, Sofia Bulgaria 100
Cabotel-Hoteleria e Turismo Lda., Santiago Cape Verde 100
Cel Obert SL, Sant Joan de Caselles Andorra 100
Chaves Hotel & Investimentos S. A., Sal-Rei, Boa Vista Island Cape Verde 100
Citirama Ltd., Quatre Bornes Mauritius 100
Club Hotel CV SA, Santa Maria Cape Verde 100
Club Hôtel Management Tunisia SARL, Djerba Tunisia 100
Clubhotel Cala Serena S. A., Madrid Spain 100
Clubhotel IP S. A., Athen Greece 100
Clubhotel JD, S. A., Las Palmas Spain 100
Cruisetour AG, Zürich Switzerland 100
Daidalos Hotel- und Touristikunternehmen A. E., Athen Greece 89.8
Darecko S. A., Luxemburg Luxembourg 100
Destination Services Singapore Pte Limited, Singapur Singapore 100
Egyptian Germany Co. for Hotels Limited, Kairo Egypt 66.6
Elena SL, Palma de Mallorca Spain 100
ETA Turizm Yatirim ve Isletmeleri A. S., Ankara Turkey 100
Evre Grup Turizm Yatirim A. S., Ankara Turkey 100
Explorers Travel Club Limited, Luton United Kingdom 100
Faberest S. r. l., Verona Italy 100
First Choice (Turkey) Limited, Luton United Kingdom 100
First Choice Holiday Hypermarkets Limited, Luton United Kingdom 100
First Choice Holidays & Flights Limited, Luton United Kingdom 100
First Choice Land (Ireland) Limited, Dublin Ireland 100
First Choice Travel Shops Limited, Luton United Kingdom 100
FIRST Reisebüro Güttler GmbH & Co. KG, Dormagen Germany 75.1
FIRST Travel GmbH, Hannover Germany 100
flyloco GmbH, Rastatt Germany 100
Follow Coordinate Hotels Portugal Unipessoal Lda, Albufeira Portugal 100
Fritidsresor Tours & Travels India Pvt Ltd, Bardez, Goa India 100
GBH Turizm Sanayi Isletmecilik ve Ticaret A. S., Istanbul Turkey 100
GEAFOND Número Dos Fuerteventura S. A., Las Palmas, Gran Canaria Spain 100
GEAFOND Número Uno Lanzarote S. A., Las Palmas, Gran Canaria Spain 100
Gemma Limited, Unguja Tanzania 100
German Tur Turizm Ticaret A. S., Izmir Turkey 100
Groupement Touristique International SAS, Lille France 100
Gulliver Travel d. o. o., Dubrovnik Croatia 100
Hannibal Tourisme et Culture SA, Tunis Tunisia 100
Hapag-Lloyd Reisebüro Hagen GmbH & Co. KG, Hannover Germany 70
Hellenic EFS Hotel Management E. P. E., Athen Greece 100
Holiday Center S. A., Cala Serena / Cala d'Or Spain 100
Holidays Services S. A., Agadir Morocco 100
Hoteli Kolocep d. d., Kolocep Croatia 100
Hoteli Zivogosce d. d., Zivogosce Croatia 100
Iberotel International A. S., Antalya Turkey 100
Iberotel Otelcilik A. S., Istanbul Turkey 100
Imperial Cruising Company SARL, Heliopolis-Kairo Egypt 90
Incorun SAS, Saint Denis Reunion Island 51
Inter Hotel SARL, Tunis Tunisia 100
Intercruises Shoreside & Port Services Canada, Inc., Quebec Canada 100
Intercruises Shoreside & Port Services Pty Limited, Sydney Australia 100
Intercruises Shoreside & Port Services Sam, Monaco Monaco 100
Intercruises Shoreside & Port Services SARL, Paris France 100
Intercruises Shoreside & Port Services, Inc., State of Delaware United States 100
Itaria Limited, Nikosia Cyprus 100
Jandia Playa S. A., Morro Jable / Fuerteventura Spain 100
KHA pet d. o. o., Zagreb Croatia 100
KHA tri d. o. o., Zagreb Croatia 100
Kurt Safari Proprietary Limitied, White River - Mpumalanga South Africa 51
Kybele Turizm Yatirim San. Ve Tic. A. S., Istanbul Turkey 100
Label Tour EURL, Levallois-Perret France 100
Last-Minute-Restplatzreisen GmbH, Rastatt Germany 100
Le Passage to India Tours and Travels Pvt Ltd, New Delhi India 91
Lima Tours S. A. C., Lima Peru 100
Lodges & Mountain Hotels SARL, Notre Dame de Bellecombe, Savoie France 100
l'tur GmbH, Rastatt Germany 100
L'TUR Suisse AG, Dübendorf / ZH Switzerland 99.5
Lunn Poly Limited, Luton United Kingdom 100
Magic Hotels SA, Tunis Tunisia 100
MAGIC LIFE Assets GmbH, Wien Austria 100
Magic Life Egypt for Hotels LLC, Sharm el Sheikh Egypt 100
Magic Tourism International S. A., Tunis Tunisia 100
Manahe Ltd., Quatre Bornes Mauritius 51
Marella Cruises Limited, Luton United Kingdom 100
Medico Flugreisen GmbH, Rastatt Germany 100
Meetings & Events International Limited, Luton United Kingdom 100
Meetings & Events Spain S. L. U., Palma de Mallorca Spain 100
Meetings & Events UK Limited, Luton United Kingdom 100
Morvik EURL, Bourg Saint Maurice France 100
Musement S. p. A., Mailand Italy 100
MX RIUSA II S. A. de C. V., Cabo San Lucas Mexico 100
Nazar Nordic AB, Malmö Sweden 100
Nordotel S. A., San Bartolomé de Tirajana Spain 100
Nouvelles Frontières Senegal S. R. L., Dakar Senegal 100
Nungwi Limited, Sansibar Tanzania 100
Ocean College LLC, Sharm el Sheikh Egypt 100
Ocean Ventures for Hotels and Tourism Services SAE, Sharm el Sheikh Egypt 98
Pacific World (Beijing) Travel Agency Co., Ltd., Peking China 100
Pacific World (Shanghai) Travel Agency Co. Limited, Shanghai China 100
Pacific World Destination East Sdn. Bhd., Penang Malaysia 65
Pacific World Meetings & Events Hong Kong, Limited, Hongkong Hong Kong SAR 100
Pacific World Meetings & Events SAM, Monaco Monaco 100
Pacific World Meetings & Events Singapore Pte. Ltd, Singapur Singapore 100
Pacific World Meetings and Events France SARL, Nizza France 100
Pacific World Travel Services Company Limited, Ho Chi Minh City Vietnam 90
Papirüs Otelcilik Yatirim Turizm Seyahat Insaat Ticaret A. S., Antalya Turkey 100
Paradise Hotel Management Company LLC, Kairo Egypt 100
PATS N. V., Oostende Belgium 100
Professor Kohts Vei 108 AS, Stabekk Norway 100
Promociones y Edificaciones Chiclana S. A., Palma de Mallorca Spain 100
PT Pacific World Nusantara, Bali Indonesia 100
RC Clubhotel Cyprus Limited, Limassol Cyprus 100
RCHM S. A. S., Agadir Morocco 100
Rideway Investments Limited, London United Kingdom 100
Riu Jamaicotel Ltd., Negril Jamaica 100
Riu Le Morne Ltd, Port Louis Mauritius 100
RIUSA II S. A., Palma de Mallorca*
Spain 50
* entrepreneurial management
Riusa Lanka (PVT) Ltd., Ahungalla Sri Lanka 100
RIUSA NED B. V., Amsterdam Netherlands 100
Robinson Austria Clubhotel GmbH, Villach-Landskron Austria 100
Robinson Club GmbH, Hannover Germany 100
Robinson Club Italia S. p. A., Marina di Ugento Italy 100
Robinson Club Maldives Private Limited, Malé Maldives 100
Robinson Clubhotel Turizm Ltd. Sti., Istanbul Turkey 100
Robinson Hoteles España S. A., Cala d'Or Spain 100
Robinson Hotels Portugal S. A., Vila Nova de Cacela Portugal 67
Robinson Otelcilik A. S., Istanbul Turkey 100
Santa Maria Hotels SA, Santa Maria Cape Verde 100
SERAC Travel GmbH, Zermatt Switzerland 100
Skymead Leasing Limited, Luton United Kingdom 100
Société d'Exploitation du Paladien Marrakech SA, Marrakesch Morocco 100
Société d'Investissement Aérien S. A., Casablanca Morocco 100
Société d'Investissement et d'Exploration du Paladien de France 100
Calcatoggio (SIEPAC), Montreuil
Société d'investissement hotelier Almoravides S. A., Marrakesch Morocco 100
Société Marocaine pour le Developpement des Transports Morocco 100
Touristiques S. A., Agadir
Sons of South Sinai for Tourism Services and Supplies SAE, Sharm el Egypt 84.1
Sheikh
Stella Polaris Creta A. E., Heraklion Greece 100
STIVA RII Ltd., Dublin Ireland 100
Summer Times International Ltd., Quatre Bornes Mauritius 100
Summer Times Ltd., Quatre Bornes Mauritius 100
Sunshine Cruises Limited, Luton United Kingdom 100
Tantur Turizm Seyahat A. S., Istanbul Turkey 100
Tec4Jets NV, Zaventem Belgium 100
Thomson Reisen GmbH, St. Johann Austria 100
Thomson Travel Group (Holdings) Limited, Luton United Kingdom 100
TICS GmbH Touristische Internet und Call Center Services, Rastatt Germany 100
TLT Reisebüro GmbH, Hannover Germany 100
TLT Urlaubsreisen GmbH, Hannover Germany 100
Travel Choice Limited, Luton United Kingdom 100
Travel Guide With Offline Maps B. V., Amsterdam Netherlands 100
TT Hotels Croatia d. o. o., Zagreb Croatia 100
TT Hotels Italia S. R. L., Rom Italy 100
TT Hotels Turkey Otel Hizmetleri Turizm ve ticaret A. S., Antalya Turkey 100
TUI (Suisse) AG, Zürich Switzerland 100
TUI 4 U GmbH, Bremen Germany 100
TUI Airlines Belgium N. V., Oostende Belgium 100
TUI Airlines Nederland B. V., Rijswijk Netherlands 100
TUI Airways Limited, Luton United Kingdom 100
TUI aqtiv GmbH, Hannover Germany 100
TUI Asset Management and Advisory GmbH, Hannover Germany 100
TUI Austria Holding GmbH, Wien Austria 100
TUI Belgium NV, Oostende Belgium 100
TUI Belgium Real Estate N. V., Brüssel Belgium 100
TUI Belgium Retail N. V., Zaventem Belgium 100
TUI Blue AT GmbH, Schladming Austria 100
TUI Blue DE GmbH, Hannover Germany 100
TUI Bulgaria EOOD, Varna Bulgaria 100
TUI Curaçao N. V., Curaçao Country of Curaçao 100
TUI Customer Operations GmbH, Hannover Germany 100
TUI Cyprus Limited, Nikosia Cyprus 100
TUI Danmark A / S, Kopenhagen Denmark 100
TUI Destination Experiences (Thailand) Limited, Bangkok*
Thailand 49
* entrepreneurial management
TUI Destination Experiences Costa Rica SA, San José Costa Rica 100
TUI Destination Services Cyprus, Nikosia Cyprus 100
TUI Deutschland GmbH, Hannover Germany 100
TUI Dominicana SAS, Higuey Dominican Republic 100
TUI España Turismo SL, Palma de Mallorca Spain 100
TUI Finland Oy Ab, Helsinki Finland 100
TUI France SA, Nanterre France 100
TUI Hellas Travel Tourism and Airlines A. E., Athen Greece 100
TUI Holding Spain S. L., Palma de Mallorca Spain 100
TUI Holidays Ireland Limited, Dublin Ireland 100
TUI Hotel Betriebsgesellschaft mbH, Hannover Germany 100
TUI Ireland Limited, Luton United Kingdom 100
TUI Italia S. r. l., Sorrent Italy 100
TUI Italia S. r. l. 'in liquidazione', Fidenza Italy 100
TUI Jamaica Limited, Montego Bay Jamaica 100
TUI Malta Limited, Pieta Malta 100
TUI Mexicana SA de CV, Mexico Mexico 100
TUI Nederland Holding N. V., Rijswijk Netherlands 100
TUI Nederland N. V., Rijswijk Netherlands 100
TUI Nordic Holding AB, Stockholm Sweden 100
TUI Norge AS, Stabekk Norway 100
TUI Northern Europe Limited, Luton United Kingdom 100
TUI Norway Holding AS, Stabekk Norway 100
TUI Österreich GmbH, Wien Austria 100
TUI Pension Scheme (UK) Limited, Luton United Kingdom 100
TUI Poland Dystrybucja Sp. z o. o., Warschau Poland 100
TUI Poland Sp. z o. o., Warschau Poland 100
TUI PORTUGAL - Agencia de Viagens e Turismo S. A., Faro Portugal 100
TUI Reisecenter Austria Business Travel GmbH, Wien Austria 74.9
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., Oostende Belgium 100
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, Hannover Germany 100
Tunisie Investment Services Holding S. A., Tunis Tunisia 100
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., Ankara Turkey 100
Ultramar Express Transport S. A., Palma de Mallorca Spain 100
Umbhaba Eco Lodge Proprietary Limited, Kapstadt South Africa 85
WOT Hotels Adriatic Management d. o. o., Zagreb Croatia 51
Zanzibar Beach Village Limited, Sansibar Tanzania 100
All other segments
Absolut Insurance Limited, St. Peter Port Guernsey 100
Canadian Pacific (UK) Limited, Luton United Kingdom 100
Cast Agencies Europe Limited, Luton United Kingdom 100
CP Ships (Bermuda) Ltd., Hamilton Bermuda 100
CP Ships (UK) Limited, Luton United Kingdom 100
DEFAG Beteiligungsverwaltungs GmbH I, Hannover Germany 100
DEFAG Beteiligungsverwaltungs GmbH III, Hannover Germany 100
Europa 2 Ltd, Valletta Malta 100
First Choice Holidays Finance Limited, Luton United Kingdom 100
First Choice Holidays Limited, Luton United Kingdom 100
First Choice Olympic Limited, Luton United Kingdom 100
Jetset Group Holding (Brazil) Limited, Luton United Kingdom 100
Jetset Group Holding Limited, Luton United Kingdom 100
Leibniz-Service GmbH, Hannover Germany 100
Mala Pronta Viagens e Turismo Ltda., Curitiba Brazil 100
Manufacturer's Serial Number 852 Limited, Dublin Ireland 100
PM Peiner Maschinen GmbH, Hannover Germany 100
Preussag Beteiligungsverwaltungs GmbH IX, Hannover Germany 100
Sovereign Tour Operations Limited, Luton United Kingdom 100
Thomson Airways Trustee Limited, Luton United Kingdom 100
travel-Ba.Sys GmbH & Co KG, Mülheim an der Ruhr Germany 83.5
TUI Ambassador Tours Unipessoal Lda, Lissabon Portugal 100
TUI Aviation GmbH, Hannover Germany 100
TUI Aviation Holding GmbH, Hannover Germany 100
TUI Aviation Services Limited, Luton United Kingdom 100
TUI Beteiligungs GmbH, Hannover Germany 100
TUI Brasil Operadora e Agencia de Viagens LTDA, Curitiba Brazil 100
TUI Business Services GmbH, Hannover Germany 100
TUI Canada Holdings, Inc, Toronto Canada 100
TUI Chile Operador y Agencia de Viajes SpA, Santiago Chile 100
TUI China Travel CO. Ltd., Peking China 75
TUI Group Fleet Finance Limited, Luton United Kingdom 100
TUI Group Services GmbH, Hannover Germany 100
TUI Group UK Healthcare Limited, Luton United Kingdom 100
TUI Group UK Trustee Limited, Luton United Kingdom 100
TUI Immobilien Services GmbH, Hannover Germany 100
TUI India Private Limited, New Delhi India 100
TUI InfoTec GmbH, Hannover Germany 100
TUI Insurance & Financial GmbH, Hannover Germany 100
TUI International Holiday (Malaysia) Sdn. Bhd., Kuala Lumpur Malaysia 100
TUI Leisure Travel Service GmbH, Neuss Germany 100
TUI LTE Viajes S.A de C.V, Mexico City Mexico 100
TUI Spain, SLU, Madrid Spain 100
TUI Travel Amber E&W LLP, Luton United Kingdom 100
TUI Travel Aviation Finance Limited, Luton United Kingdom 100
TUI Travel Common Investment Fund Trustee Limited, Luton United Kingdom 100
TUI Travel Group Management Services Limited, Luton United Kingdom 100
TUI Travel Group Solutions Limited, Luton United Kingdom 100
TUI Travel Holdings Limited, Luton United Kingdom 100
TUI Travel Limited, Luton United Kingdom 100
TUI Travel Overseas Holdings Limited, Luton United Kingdom 100
Non-consolidated Group companies
Tourism
'Schwerin Plus' Touristik-Service GmbH, Schwerin Germany 80
Airline Consultancy Services S. A. R. L., Casablanca Morocco 100
Ambassador Tours S. A., Barcelona Spain 100
Centro de Servicios Destination Management SA de CV, Cancun Mexico 100
FIRST Reisebüro Güttler Verwaltungs GmbH, Hannover Germany 75
Hapag-Lloyd Reisebüro Hagen Verwaltungs GmbH, Hannover Germany 70
HV Finance SAS, Levallois-Perret France 100
Ikaros Travel A. E.(i. L.), Heraklion Greece 100
L'TUR Polska Sp.z o. o., Stettin Poland 100
L'TUR SARL, Schiltigheim France 100
Lunn Poly (Jersey) Limited, St. Helier Jersey 100
N. S. E. Travel and Tourism A. E. (i. L.), Athen Greece 100
NEA Synora Hotels Limited (Hinitsa Beach), Porto Heli Argolide Greece 100
New Eden S. A., Marrakesch Morocco 100
Nouvelles Frontières Burkina Faso EURL, Ouagadougou Burkina Faso 100
Nouvelles Frontières Tereso EURL, Grand Bassam Ivory Coast 100
Nouvelles Frontières Togo S. R. L.(i.L), Lome Togo 99
PCO Asia Pacific SDN BHD, George Town (Penang) Malaysia 100
Résidence Hôtelière Les Pins SARL (i. L.), Levallois-Perret France 100
Società Consortile a r. l. Tutela dei Viaggiatori TUI Italia Italy 100
'in liquidazione', Fidenza (Pr)
Société de Gestion du resort Al Baraka, Marrakesch Morocco 100
T-Développement SAS, Levallois-Perret France 100
Trendturc Turizm Otelcilik ve Ticaret A. S., Istanbul Turkey 100
Triposo GmbH i. L., Berlin Germany 100
TUI 4 U Poland sp.zo. o., Warschau Poland 100
TUI d. o. o., Maribor Slovenia 100
TUI Magyarország Utazasi Iroda Kft., Budapest Hungary 100
TUI Reisecenter GmbH, Salzburg Austria 100
TUI ReiseCenter Slovensko s. r. o., Bratislava Slovakia (Slovak Republic) 100
TUI Travel Cyprus Limited, Nikosia Cyprus 100
TUIFly Academy Brussels, Zaventem Belgium 100
VPM Antilles S. R. L., Levallois-Perret France 100
VPM SA, Levallois-Perret France 100
All other segments
Bergbau Goslar GmbH, Goslar Germany 100
travel-Ba.Sys Beteiligungs GmbH, Mülheim an der Ruhr Germany 83.5
Joint ventures and associates
Tourism
Abou Soma for Hotels S. A. E., Giza Egypt 16.7
Ahungalla Resorts Limited, Colombo Sri Lanka 40
Aitken Spence Travels (Private) Limited, Colombo Sri Lanka 50
Alpha Tourism and Marketing Services Ltd., Port Louis Mauritius 25
ARP Africa Travel Limited, Harrow United Kingdom 25
Atlantica Hellas A. E., Rhodos Greece 50
Atlantica Hotels and Resorts Limited, Lemesos Cyprus 49.9
Bartu Turizm Yatirimlari Anonim Sirketi, Istanbul Turkey 50
Clubhotel Kleinarl GmbH & Co KG, Flachau Austria 24
Daktari Travel & Tours Ltd., Limassol Cyprus 33.3
DER Reisecenter TUI GmbH, Dresden Germany 50
Diamondale Limited, Dublin Ireland 27
ENC for touristic Projects Company S. A. E., Sharm el Sheikh Egypt 50
Etapex, S. A., Agadir Morocco 35
Fanara Residence for Hotels S. A. E., Sharm el Sheikh Egypt 50
Gebeco Gesellschaft für internationale Begegnung und Germany 50
Cooperation mbH & Co. KG, Kiel
GRUPOTEL DOS S. A., Can Picafort Spain 50
Ha Minh Ngan Company Limited, Hanoi Vietnam 50
Holiday Travel (Israel) Limited, Airport City Israel 50
Hydrant Refuelling System NV, Brüssel Belgium 25
InteRes Gesellschaft für Informationstechnologie mbH, Darmstadt Germany 25.2
Interyachting Limited, Limassol Cyprus 45
Jaz Hospitality Services DMCC, Dubai United Arab Emirates 50
Jaz Hotel Group S. A. E., Kairo Egypt 51
Kamarayat Nabq Company for Hotels S. A. E., Sharm el Sheikh Egypt 50
Pollman's Tours and Safaris Limited, Mombasa Kenya 25
Raiffeisen-Tours RT-Reisen GmbH, Burghausen Germany 25.1
Ranger Safaris Ltd., Arusha Tanzania 25
Sharm El Maya Touristic Hotels Co. S. A. E., Kairo Egypt 50
Südwest Presse + Hapag-Lloyd Reisebüro GmbH & Co.KG, Ulm Germany 50
Sun Oasis for Hotels Company S. A. E., Hurghada Egypt 50
Sunwing Travel Group, Inc, Toronto Canada 49
Teckcenter Reisebüro GmbH, Kirchheim unter Teck Germany 50
Tikida Bay S. A., Agadir Morocco 34
TIKIDA DUNES S. A., Agadir Morocco 30
Tikida Palmeraie S. A., Marrakesch Morocco 33.3
Travco Group Holding S. A. E., Kairo Egypt 50
TRAVELStar GmbH, Hannover Germany 50
TRAVELStar Touristik GmbH & Co. OHG, Wien Austria 50
TUI Cruises GmbH, Hamburg Germany 50
UK Hotel Holdings FZC L. L. C., Fujairah United Arab Emirates 50
Vitya Holding Co. Ltd., Takua, Phang Nga Province Thailand 47.5
WOT Hotels Adriatic Asset Company d. o. o., Tucepi Croatia 50
All other segments
.BOSYS SOFTWARE GMBH, Hamburg Germany 25.2
MSN 1359 GmbH, Hannover Germany 25
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, 6 December 2021
The Executive Board
Friedrich Joussen David Burling Sebastian Ebel
Peter Krueger Frank Rosenberger Sybille Reiss
Independent 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 2021, 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 2020 to 30 September 2021, 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 2020 to 30 September 2021. 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 asadopted by the EU and the
additional requirements of German commercial law pursuant to
Section 315e (1) HGB and, incompliance with these requirements,
give a true and fair view of the assets, liabilities and financial
position ofthe Group as at 30 September 2021 and of its financial
performance for the financial year from 1 October 2020 to
30September 2021, and
-- the accompanying combined management report as a whole
provides an appropriate view of the Group'sposition. In all
material respects, this combined management report is consistent
with the consolidated financialstatements, complies with German
legal requirements and appropriately presents the opportunities and
risks offuture development. Our audit opinion on the combined
management report does not cover the content of those partsof 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.
Key Audit Matters in the Audit of the Consolidated Financial
Statements
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
consolidated financial statements for the financial year from 1
October 2020 to 30 September 2021. 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 the following we present the key audit matters we have
determined in the course of our audit:
Impact of the COVID-19 pandemic on the going-concern assumption
and presentation of associated risks
Recoverability of goodwill,
Recoverability of touristic payments on account for hotel
services,
Recoverability of deferred tax assets
Specific provisions
Our presentation of these key audit matters has been structured
as follows:
Description (including reference to corresponding information in
the consolidated financial statements)
Auditor's response
Impact of the COVID-19 pandemic on the going-concern assumption
and presentation of associated risks
The global travel restrictions to contain COVID-19 have had a
significant negative impact on the Group's earnings and liquidity
performance from the end of March 2020 and throughout the 2020 / 21
financial year. In the notes to the consolidated financial
statements, the management board states that TUI Group is currently
still affected by the negative impact of the COVID-19 pandemic and
that it is currently not foreseeable when the travel programme can
be fully resumed. The management board also explains that numerous
financing measures had been successfully implemented in the
reporting year and up to the date of preparation of the
consolidated financial statements, including stabilisation measures
by the Federal Republic of Germany in the form of a KfW credit line
and silent participations by the Economic Stabilisation Fund (WSF)
as well as capital increases. Based on the funds raised from the
financing measures and the expected operating cash flow, the
management board assumes that the preparation of the consolidated
financial statements using the going concern assumption is
appropriate and that there is no material uncertainty at the time
of preparation of the consolidated financial statements that could
cast significant doubt on the Group's ability to continue as a
going concern.
The remaining risk with regard to a further pandemic-related
change of the booking behaviour is no longer considered by the
management board to be a risk threatening the Group's ability to
continue as a going concern. In this assessment, the management
board expects that the booking figures for the financial year 2021
/ 22 will successively recover and that the booking behaviour in
the financial year 2022 / 23 will largely correspond to the
pre-pandemic level. Here, the management board expects that no
further long-term closures and lockdowns will be on hand, which
could affect the travel behaviour. Nevertheless, the customer
bookings could be lower than expected on account of new travel
restrictions, an insufficient vaccination rate against the COVID-19
virus in the single countries as well as on account of virus
variants, such as the new Omicron virus variant, for which there
may not be sufficient vaccination protection and could thus affect
the development of TUI Group. In our view, this is a key audit
matter because it strongly depends on discretionary assumptions and
estimations made by the management board and is subject to
uncertainties.
The disclosures on the aforementioned risks and their assessment
are included in the 'Going Concern Reporting under the UK Corporate
Governance Code' section of the notes to the consolidated financial
statements. Furthermore, we refer to the section 'Viability
Statement' of the combined management report.
As part of our audit, we considered whether the preparation of
the consolidated financial statements in accordance with the going
concern assumption is appropriate and whether a material
uncertainty that may cast significant doubt on the Group's ability
to continue as a going concern should be disclosed in the notes to
the consolidated financial statements. In addition, we have audited
the notes to the consolidated financial statements in this context
for completeness and accuracy. In particular, we checked the
plausibility of the forecasts of the management board with regards
to the liquidity development of the group and compliance with the
covenants, especially against the background of the developing
COVID-19-Pandemic. First of all, we checked the plausibility of the
management board's planning approved by the supervisory board and
the assumptions contained therein by comparing them with general
and industry-specific market expectations as well as with
historical data. In addition, we tested the extent to which the
actual development of revenues, earnings and liquidity may deviate
from the management board's expectations by sensitising the
planning submitted by the management board until a potential threat
to TUI Group's continued existence as a going concern would
arise.
In this process, we were supported by our internal valuation and
restructuring specialists. During the entire audit process, we
regularly discussed the individual financing measures as well as
the main planning assumptions with representatives of TUI Group. As
of the financing measures already carried out during the financial
statements preparation period, we have inspected the relevant
documents, contracts and agreements and critically reviewed them
with regard to their impacts on the consolidated financial
statements. In particular, we critically reviewed the current
short-term liquidity forecast prepared by the Company until the
completion of the audit. In addition, we - involving our
specialists - assessed the updated assumptions underlying the
short-term liquidity forecast for plausibility.
Recoverability of goodwill
In TUI AG's consolidated financial statements as at 30 September
2021, goodwill totalling mEUR 2,993.1 is reported under the item
'goodwill' within 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, there is an increased degree of
forecasting uncertainty given the uncertain further impacts of the
COVID-19 pandemic. 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 realisable
amount).
Recoverability of touristic payments on account for hotel
services,
Payments on account for hotel services amounting to mEUR 225.5
are recognised under the item 'touristic payments on account'
reported in the statement of financial position in TUI AG's
consolidated financial statements as at 30 September 2021.
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 payments on account' are
provided in Note (18) of the notes to the consolidated financial
statements.
We evaluated the valuation process for touristic payments on
account 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 payments on account 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
2021 report deferred tax assets totalling mEUR 291.1 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 under Note (20)
'Accounting policies'.
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
2021 report provisions for maintenances of mEUR 794.3 under the
statement of financial position item 'other provisions'.
Furthermore, provisions for pensions and similar obligations of
mEUR 935.1 were recognised as of 30 September 2021. 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 (30) and (31) as well as under the disclosures on recognition
and measurement methods set out in the notes to the consolidated
financial statements.lten.
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 ofgroup-wide maintenance
contracts, price increases expected on the basis of external market
forecasts and thediscount rates applied, supported by our own
analyses;
-- assessed the appropriateness of the valuation parameters used
to calculate the pension provisions. Amongother things, we did so
by comparing them against market data and taking into account the
expertise of our internalpension valuation experts.
Other information
The management board and the supervisory board are responsible
for the other information. The other information comprises:
-- Report of the supervisory board
-- Report of the audit committee
-- the unaudited content of those parts of the combined
management report specified in the appendix to theauditor's
report,
-- the executive directors' confirmation regarding the
consolidated financial statements and the combinedmanagement report
pursuant to Section 297 (2) sentence 4 HGB and Section 315 (1)
sentence 5 HGB, respectively, and
-- all sundry parts of the business report,
-- but not the consolidated financial statements, the audited
content of the combined management report andour audit opinion
thereon.
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 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, the audited content in thecombined 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
executive 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 ofthe combined management
report, whether due to fraud or error, design and perform audit
procedures responsive tothose risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our
auditopinions. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resultingfrom error, as
fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override ofinternal controls.
-- obtain an understanding of internal control relevant to the
audit of the consolidated financialstatements and of arrangements
and measures relevant to the audit of the combined management
report in order todesign audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an
auditopinion on the effectiveness of these systems.
-- evaluate the appropriateness of accounting policies used by
the executive board and the reasonableness ofestimates made by the
executive board and related disclosures.
-- conclude on the appropriateness of the management board's use
of the going concern basis of accountingand, based on the audit
evidence obtained, whether a material uncertainty exists related to
events or conditionsthat may cast significant doubt on the Group's
ability to continue as a going concern. If we conclude that
amaterial uncertainty exists, we are required to draw attention in
the auditor's report to the related disclosuresin the consolidated
financial statements and in the combined management report or, if
such disclosures areinadequate, to modify our respective audit
opinions. Our conclusions are based on the audit evidence obtained
up tothe date of our auditor's report. However, future events or
conditions may cause the Group to cease to be able tocontinue 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 transactionsand 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 EUand 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 orbusiness activities within
the Group to express audit opinions on the consolidated financial
statements and on thecombined 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 combinedmanagement report.
On the basis of sufficient appropriate audit evidence we evaluate,
in particular, thesignificant assumptions used by the management
board as a basis for the prospective information, and evaluate
theproper derivation of the prospective information from these
assumptions. We do not express a separate audit opinionon the
prospective information and on the assumptions used as a basis.
There is a substantial unavoidable risk thatfuture 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 the auditor's report unless law or
regulation precludes public disclosure about the matter.
Other legal and regulatory requirements
Report on the Audit of the Electronic Files of the Consolidated
Financial Statements and of the Combined Management Report prepared
for Publication pursuant to Section 317 (3a) HGB
Audit opinion
In accordance with Section 317 (3a) HGB, we have assessed with
reasonable assurance whether the electronic files of the
consolidated financial statements and of the combined management
report (hereafter referred to as 'ESEF files') prepared for
publication, contained in the accompanying file, which has the
SHA256:
C75413208140981CEFEF72B470AB1D0EE2A7973DD61556DC244310550832DF54,
meet, in all material respects, the requirements concerning the
electronic reporting format ('ESEF format') pursuant to Section 328
(1) HGB. In accordance with the German legal requirements, this
audit only covers the transfer of the consolidated financial
statements' and the combined management report's information into
the ESEF format, and therefore covers neither the information
contained in these electronic files nor any other information
contained in the file stated above.
In our opinion, the electronic files of the consolidated
financial statements and of the combined management report prepared
for publication contained in the accompanying file stated above
meet, in all material respects, the requirements concerning the
electronic reporting format pursuant to Section 328 (1) HGB. Beyond
this audit opinion and our audit opinions on the accompanying
consolidated financial statements and on the accompanying combined
management report for the financial year from 1 October 2020 to 30
September 2021 contained in the above 'Report on the Audit of the
Consolidated Financial Statements and of the Combined Management
Report', we do not express any audit opinion on the information
contained in these electronic files and on any other information
contained in the file stated above.
Basis for the Audit Opinion
We conducted our audit of the electronic files of the
consolidated financial statements and of the combined management
report contained in the accompanying file stated above in
accordance with Section 317 (3a) HGB and on the basis of the IDW
Draft Auditing Standard: Audit of the Electronic Files of the
Annual Financial Statements and of the Management Report prepared
for Publication pursuant to Section 317 (3a) HGB (IDW Draft AuS
410). Our responsibilities in this context are further described in
the section 'Auditor's Responsibilities for the Audit of the ESEF
Files'. Our audit firm has applied the Quality Assurance Standard:
Quality Assurance Requirements in Audit Practices (IDW QS 1)
promulgated by the Institut der Wirtschaftsprüfer (IDW).
Responsibilities of the Management Board and the Supervisory
Board for the ESEF Files
The executive directors of the parent are responsible for the
preparation of the ESEF files based on the electronic files of the
consolidated financial statements and of the combined management
report according to Section 328 (1) sentence 4 no. 1 HGB and for
the tagging of the consolidated financial statements according to
Section 328 (1) sentence 4 no. 2 HGB.
In addition, the management board of the Company is responsible
for such internal control as it has determined necessary to enable
the preparation of ESEF files that are free from material
violations against the requirements concerning the electronic
reporting format pursuant to Section 328 (1) HGB, whether due to
fraud or error.
The supervisory board is responsible for overseeing the
preparation of the ESEF files as part of the financial reporting
process.
Auditor's Responsibilities for the Audit of the ESEF Files
Our objectives are to obtain reasonable assurance about whether
the ESEF files are free from material violations, whether due to
fraud or error, against the requirements pursuant to Section 328
(1) HGB. We exercise professional judgement and maintain
professional scepticism throughout the audit.
We also
-- identify and assess the risks of material violations against
the requirements pursuant to Section 328 (1)HGB, whether due to
fraud or error, design and perform audit procedures responsive to
those risks, and obtainaudit evidence that is sufficient and
appropriate to provide a basis for our audit opinion.
-- obtain an understanding of internal control relevant to the
audit of the ESEF files in order to designaudit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an audit opinionon the effectiveness of these
controls.
-- assess the technical validity of the ESEF files, i.e. whether
the file containing the ESEF files meetsthe requirements of the
Delegated Regulation (EU) 2019 / 815 in the version applicable as
of the balance sheet dateas to the technical specification of this
file.
-- evaluate whether the ESEF files enable a XHTML copy of the
audited consolidated financial statements andof the audited
combined management report whose content is identical with these
documents.
-- evaluate whether the ESEF files have been tagged using inline
XBRL technology (iXBRL) in accordance withArticles 4 and 6 of
Delegated Regulation (EU) 2019 / 815 as applicable at the reporting
date in a way that enablesan appropriate and complete
machine-readable XBRL copy of the XHTML copy.
Further Information Pursuant to Art. 10 of the EU Audit
Regulation
We were elected as group auditor by the general meeting on 25
March 2021. We were engaged by the Supervisory Board on 25 March /
1 April 2021. 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 2020 /
2021. We have nothing to report in this regard.
OTHER MATTER - USE OF INDEPENT AUDITOR'S REPORT
Our audit opinion should always be read in conjunction with the
audited consolidated financial statements and the audited combined
management report as well as the audited ESEF documents. The
consolidated financial statements and combined management report
converted to the ESEF format - including the versions to be
published in the Federal Gazette
- are merely electronic reproductions of the audited annual
financial statements and the audited combined management report and
do not replace them. In particular, the ESEF opinion and our audit
opinion contained therein can only be used in conjunction with the
audited ESEF documents provided in electronic form.
GERMAN PUBLIC AUDITOR RESPONSIBLE FOR THE ENGAGEMENT
The German Public Auditor responsible for the engagement is Dr
Hendrik Nardmann.
Appendix to the Independent Auditor's Report: Parts of the
Combined Management Report Whose Contents are Unaudited
We have not audited the content of the following parts of the
combined management report:
-- the non-financial statement pursuant to Sections 315b and
315c German Commercial Code (HGB) included inthe section 'Combined
non-financial group statement' of the combined management
report
-- the statement on corporate governance pursuant to Section
289f and Section 315d HGB included in section'Corporate Governance
Report' of the combined management report, and
-- the other parts of the combined management report marked as
unaudited.
Hanover / Germany, 7 December 2021
Deloitte GmbH
Wirtschaftsprüfungsgesellschaft
Signed: Signed:
Christoph B. Schenk Dr Hendrik Nardmann
Wirtschaftsprüfer Wirtschaftsprüfer
(German Public Auditor) (German Public Auditor)
Forward-Looking Statements
The annual report, in particular the report on expected
developments included in the management report, includes various
forecasts and expectations as well as statements relating to the
future development of the TUI Group and TUI AG. These statements
are based on assumptions and estimates and may entail known and
unknown risks and uncertainties. Actual development and results as
well as the financial and asset situation may therefore differ
substantially from the expectations and assumptions made. This may
be due to market fluctuations, the development of world market
prices for commodities, of financial markets and exchange rates,
amendments to national and international legislation and provision
or fundamental changes in the economic and political environment.
TUI does not intend to and does not undertake an obligation to
update or revise any forward-looking statements to adapt them to
events or developments after the publication of this annual
report.
Glossary
A
All other segments - 'All other segments' includes our business
activities for the new markets, the corporate centre functions of
TUI AG and the interim holdings, the Group's real estate companies
and the Group's key tourism functions.
Average daily rates - The average rate for hotels refers to the
rate per day and guest. The average rate for cruise ships is
calculated as revenue excluding transportation, onboard and other
revenue divided by actual passenger days.
Average revenue per bed - Arrangement revenue divided by
occupied beds
C
Central Region segment - The tour operators and airlines in
Germany and the tour operator activities in Austria, Poland, and
Switzerland.
Compliance - Compliance is generally defined as a company's
commitment to abide by the rules set by the legislator, the
shareholders or the supervisory body. These rules often contain
ethical aspects of the corporate philosophy. The aim is to avoid
both a negative image and the exclusion of liability cases and
claims for damages.
Corporate Governance - Corporate governance refers to the
long-term, responsible and transparent management and control of a
company. In Germany, the German Corporate Governance Code (DCGK)
contains the main principles for the management and supervision of
listed companies, in Great Britain the UK CGC applies.
Cruises segment - The Cruises segment consists of the joint
venture TUI Cruises, which also operates Hapag-Lloyd Cruises since
the prior year, and Marella Cruises.
CSR - Corporate Social Responsibility
COSO - Committee of Sponsoring Organizations of the Treadway
Commission, a standard that enhances internal control, risk
management, governance and fraud deterrence
D
DCGK - German Corporate Governance Code
Direct distribution mix - Share of Markets & Airlines sales
via own channels (retail and online)
DTR - Disclosure and Transparency Rules of the UK Listing
Authorities
E
EBIT - Earnings before interest, income taxes and result of the
measurement of the Group's interest hedges. EBIT by definition
includes goodwill impairments.
EBITDA - EBITDA is defined as earnings before interest, income
taxes, goodwill impairment and amortisation and write-downs of
other intangible assets, depreciation and write-downs of property,
plant and equipment, investments and current assets.
EBT - Earnings before taxes
Economic Value Added - Economic Value Added is calculated as the
product of ROIC less associated pre-tax capital costs (WACC)
multiplied by interest-bearing invested capital.
EPS - Earnings per share are calculated by dividing the Group
profit for the year attributable to TUI AG shareholders by the
weighted average number of registered shares outstanding during the
financial year.
ESF - Economic Stabilisation Fund, German WSF
Wirtschaftsstabilisierungsfonds
G
GEC - Group Executive Committee of TUI Group. The GEC is set up
to enhance informed, effective decision-making and to create a flat
hierarchy and strong execution environment. It reflects a culture
of openness and information sharing.
GSTC - Global Sustainable Tourism Council
H
Holiday Experiences - Holiday Experiences comprises our hotel,
cruise and destination activities.
Hotels & Resorts segment - The Hotels & Resorts segment
comprises TUI Group's diversified portfolio of Group hotel brands
and hotel companies. The segment includes ownership in hotels,
joint ventures with local partners, stakes in companies giving TUI
a significant influence, and hotels operated under management
contracts.
I
IFRS - International Financial Reporting Standards
IMF - International Monetary Fund
Invested Capital - Invested capital is derived from liabilities,
comprising equity (including non-controlling interests) and the
balance of interest-bearing liabilities and interest-bearing
assets with an adjustment for the seasonality of the Group's net
financial position. The cumulative amortisations of purchase price
allocations are then added to the invested capital.
J
JEV - JEV is designed to motivate members of the Executive Board
to achieve demanding and challenging financial, operational and
strategic goals during a financial year. Group earnings before
interest and taxes (EBIT) on a constant currency basis, weighted at
75 %, are used to determine annual variable remuneration (JEV) for
the Executive Board. EBIT is quantified on a constant currency
basis in order to avoid any distortion caused by currency-driven
translation effects when measuring actual management
performance.
L
Leverage Ratio - Leverage ratio = (gross financial liabilities +
lease liabilities + obligations from defined-benefit pension
plans) / reported EBITDA
LTIP - The LTIP (Long Term Incentive Plan) is a performance
share plan based on virtual shares and is assessed over a period of
four years (Performance Reference Period). Virtual shares are
granted in annual tranches.
M
Markets & Airlines - With our three regions - Northern,
Central and Western - we have well-positioned sales and marketing
structures offering our customers attractive holiday experiences.
Our sales activities are based on online and offline channels. Our
own flying capacity continues to play a key role in our business
model.
N
Northern Region segment - The Northern Region segment comprises
tour operator activities and airlines in the UK, Ireland and the
Nordics. This segment also includes the Canadian strategic venture
Sunwing.
O
Occupancy rate - The occupancy rate for hotels is calculated as
the quotient of occupied beds and capacity. The occupancy rate for
cruises is calculated as the quotient of the actual passenger days
and the potential passenger days.
Online mix - Share of Markets & Airlines online sales.
P
Passenger days - In the Cruises segment we differentiate between
available and achieved passenger days. The number of available
passenger days is calculated as the number of beds on the ship at
full capacity multiplied by the operating days of the ship. The
achieved passenger days show the number at achieved operating days
and achieved occupancy.
R
RCF - revolving credit facilities
ROIC - ROIC is calculated as the ratio of underlying earnings
before interest and taxes (underlying EBIT) to average invested
interest-bearing capital (invested capital).
ROC - Risk Oversight Committee of TUI Group
T
TSR - Total Shareholder Return
TUI Musement segment - The TUI Musement segment delivers local
services at our holiday destinations around the world. TUI Musement
is one of the largest digital providers in the online intermediary
market for tours, activities and experiences.
U
UK CGC - UK Corporate Governance Code
UN Global Compact - In September 2014, TUI signed up to the UN
Global Compact, a world-wide United Nations initiative to encourage
businesses worldwide to adopt sustainable and socially responsible
policies. The TUI Group is comitted to 10 universally accepted
principles in the areas of human rights, labour, environment and
anticorruption.
Underlying EBIT - Underlying EBIT is adjusted by income and
expense items impacting or distorting the assessment of the
operating profitability of the segments and the Group due to their
level and frequency. These items include gains on disposal from
investments, major gains and losses from the sale of assets and
major restructuring and integration expenses. In addition,
adjustments are carried for all effects from purchase price
allocations, ancillary acquisition costs and conditional purchase
price payments. Adjustments made in the reconciliation to
underlying EBIT include goodwill impairments.
UNWTO - World Tourism Organisation of the United Nations
W
WACC - Weighted Average Cost of Capital. The cost of capital is
calculated as the weighted average cost of equity and debt capital
(WACC).
Western Region segment - The segment comprises the tour
operators and airlines in Belgium and the Netherlands and the tour
operator activities in France.
Financial calendar
8 February 2022
Annual General Meeting 2022
8 February 2022
Quarterly Statement Q1 2022
may 2022
Half-Year Financial Report H1 2022
august 2022
Quarterly Statement Q3 2022
-----------------------------------------------------------------------------------------------------------------------
ISIN: DE000TUAG000
Category Code: ACS
TIDM: TUI
LEI Code: 529900SL2WSPV293B552
OAM Categories: 1.1. Annual financial and audit reports
Sequence No.: 128509
EQS News ID: 1254970
End of Announcement EQS News Service
=------------------------------------------------------------------------------------
Image link:
https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=show_t_gif&application_id=1254970&application_name=news
(END) Dow Jones Newswires
December 08, 2021 02:05 ET (07:05 GMT)
Tui (LSE:TUI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Tui (LSE:TUI)
Historical Stock Chart
From Jul 2023 to Jul 2024
