TUI AG (TUI) TUI AG: Annual Financial Report - Part 2
14-Dec-2022 / 08:00 CET/CEST Dissemination of a Regulatory
Announcement, transmitted by EQS Group. The issuer is solely
responsible for the content of this announcement.
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Financial Highlights
TUI Group - financial highlights
Var. %
EUR million 2022 2021 Var. % at constant
currency
Revenue 16,544.9 4,731.6 + 249.7 + 247.4
Underlying EBIT 1
Hotels & Resorts 480.6 - 152.7 n. a. n. a.
Cruises 0.8 - 277.5 n. a. n. a.
TUI Musement 23.2 - 105.3 n. a. n. a.
Holiday Experiences 504.6 - 535.4 n. a. n. a.
Northern Region - 101.6 - 965.8 + 89.5 + 90.6
Central Region 87.8 - 328.6 n. a. n. a.
Western Region - 31.5 - 176.6 + 82.1 + 79.8
Markets & Airlines - 45.3 - 1,470.9 + 96.9 + 97.1
All other segments - 50.5 - 69.1 + 26.9 + 28.2
TUI Group 408.7 - 2,075.5 n. a. n. a.
EBIT 1 320.0 - 2,012.8 n. a.
Underlying EBITDA 1,224.6 - 1,145.2 n. a.
EBITDA 2 1,203.3 - 1,000.4 n. a.
Group loss - 212.6 - 2,480.9 + 91.4
Earnings per shareEUR - 0.17 - 2.58 + 93.4
Net capex and investment 315.9 - 699.1 n. a.
Equity ratio (30 Sept) 3 % 4.2 - 3.0 + 7.2
Net financial position (30 Sept) - 3,436.2 - 4,954.2 + 30.6
Employees (30 Sept) 61,091 50,584 + 20.8
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. All change figures refer to the previous year,
unless otherwise stated.
This Annual Report 2022 of the TUI Group was prepared for the
reporting period from 1 October 2021 to 30 September 2022.
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 62.
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 Sebastian Ebel
"We are entering a new phase for TUI."
In 2022 TUI put the Covid crisis of recent years behind it. Last
year's positive development brings momentum for the future - even
in times of geopolitical and macroeconomic challenges. Today the
Group is leaner and more efficient than ever. Sebastian Ebel, Chief
Executive Officer since October 2022, tells us where the company is
now placing the focus and what he expects for the future.
In the completed financial year 2022, TUI put the Covid crisis
of the last few years behind it. You were heavily involved in that
crucial period as CFO and since the start of October you have been
Group CEO. How should we rate this financial year for TUI?
Basically we didn't really kick off operationally until the
summer began. The first six months were still very much under the
influence of the Covid restrictions. There is also Russia's war of
aggression against Ukraine. But in summer we got off to a great
start. It was a strong Summer season for us, especially in the
fourth quarter. In Q4 our adjusted earnings hit the billion euro
mark. Taking the year as a whole, our figures are significantly in
the black, with EUR 409 million in adjusted EBIT. We announced that
we would do that and we delivered. Apart from that, our finances
are solid and we had a strong cash flow, so in summer we didn't
have to draw on the KfW credit facility either. That positive
development gives us strong momentum for the future, even in times
that are going to stay challenging for geopolitical and
macroeconomic reasons. We are entering a new phase for TUI. The
strategy is in place - and now we are going to implement it. We
want to grow profitably again.
But the German government is still engaged with TUI via
financial assistance in various forms, with a Silent Participation,
a warrant bond and credit lines amounting to about two billion
euros. How much crisis does TUI still need to work off?
We have surmounted the existential crisis, it's behind us. Of
course, we still have homework to do as a consequence of the
pandemic, further cutting our debt, refinancing, strengthening the
balance sheet. But our operational focus is set clearly on
returning to profitable growth. We are gradually pruning back the
state engagement - the agreement with the ESF and the planned
capital increase to follow the AGM are the next logical steps back
to normality and complete financial independence. The pandemic
confronted the whole sector with the crisis of a century and
without those government bail-out packages TUI would hardly have
survived. We are grateful for that support. However, if you look at
how much we actually drew down from those packages, you can see
that we have come through the crisis in robust shape. The credit
lines are like a bank overdraft - you can make use of it but you
don't have to. Whatever happens, it gives you extra security in a
difficult situation. TUI didn't receive any gifts from the state.
We pay interest on any drawdowns. In the end, the engagement paid
off well for the public budget and the taxpayer. By the end of our
financial year alone, the German government has received around EUR
300 million in interest from us.
Let's take another look back. Summer turned out much better than
originally expected. But not every player in tourism was ready for
that .
All of us - TUI, hotels, cruise lines, airlines and many other
partners - have a fantastic mission: our customers trust us with
the best time of their year. We get to design their holiday and to
accompany them. I've been in tourism for many years now, and to me
that still feels like a particular privilege. It motivates me
afresh each day. But naturally it also brings responsibility. This
summer, unfortunately, not all our partners were equally well
prepared for the travel period. The overwhelming majority of TUI
holidays ran smoothly for our guests but there were a few
dissatisfied customers. In the UK, for example, at the start of the
Summer season there was disruption to almost 4 % of our flight
schedule. Bottlenecks were the ground handling services and
security checks at airports. The latter task is run by the state,
but it needs to invest in more people and new technology and put
them to good use. Quite rightly, our customers have great
expectations of their holiday experience with TUI. And our ambition
is not just to meet those great expectations but to surpass them. I
am sorry that this summer we didn't always manage to do that. Our
teams made up for a lot. Our staff demonstrated the true TUI spirit
so as to keep the impact to a minimum for customers. That's why I
want to extend a warm thank you at this point to our colleagues who
gave their all for our customers over the summer, often in adverse
circumstances - whether in the travel agencies, in the call
centres, at the airports, on board our planes and ships, locally in
our hotels and destinations, or in other fields.
Let's talk about your new role. What were the first things you
did as the new CEO of TUI? What will stay the same and what will be
different under Sebastian Ebel?
TUI was a very successful company before Covid. We had built up
a highly successful commercial hotel and cruise business and
expanded hugely. The number of hotels we run under our own TUI
hotel brands has risen in the last nine years from nearly 200 to
about 400. TUI invested capital and paid handsome dividends. We
were an attractive investment and we will be again. No company can
make provision for its business being put completely on hold for
two years. Really, we should have been able to see the success of
our truly massive transformation reflected in our business data for
2019 and 2020. But then we had first of all the temporary
suspension of the Boeing 737 Max in 2019 and then in 2020 the
pandemic. We used the pandemic to set ourselves up as solidly as
possible for the time to come. Today TUI is leaner and more
efficient than ever. The aim now is to implement the measures we
agreed on properly and very swiftly. That's where my focus lies,
that's where our focus lies as a team.
Where is the growth to come from - existing business areas or
new ones?
Both. In the Markets & Airline segment we plan to gain
market share. Our product portfolio will expand significantly. The
classic package tour is becoming more diverse and more flexible. We
do "dynamic" packaging by combining cheap flights with available
hotels, even at short notice. That way we can create new products
that people didn't tend to come to TUI for in the past, like city
breaks. In addition, we will be offering certain travel products as
stand-alones, such as hotel stays, flights, car hire, but also, of
course, the activities and experiences provided by TUI Musement.
That includes excursions in a holiday destination, but also, for
example, tickets for a local museum. The formula is: new products,
additional customers, increasing market share. For customers that
means more choice, more personalised options and greater
flexibility. TUI will be their partner for holidays, leisure and
experiences - not only when they are travelling, but in their home
countries too.
Reading the strategy section in this Annual Report, the concept
"holiday experiences" crops up a lot. What does it mean and what
are your plans for that segment?
I was personally in charge of those activities until I took over
as TUI's CFO in 2020, so I was able to forge them into a growth
segment for TUI together with the teams from Hotels, Cruises and
Musement. What we do there is pool all the holiday experiences
"made by TUI" - our Hotels & Resorts, our cruise liners and the
tours, excursions and activities that we create and curate in the
destinations. So this is where we design the unique TUI holiday
experience for our guests. The aim is to expand this differentiated
product portfolio with our strong brands. In the last ten years the
segment has come on extremely well and now it is one of the growth
drivers in the Group. We intend to build on that. Unique holiday
products combined with the distribution power in our source
markets - online and in the travel agencies: in future that will be
the basis for our profitable growth.
How does that work with TUI hotels?
In the Hotels & Resorts segment we want to carry on growing
- both with the successful hotel brands we already have and by
launching new brands to broaden our portfolio further. We are
looking at destinations where we already operate - but also of
course at places where there are no TUI hotels yet. This growth is
based on what we call our asset-right approach, which means that we
don't have to actually own the real estate in order to manage a TUI
hotel successfully. We are building on our portfolio by means of
our joint ventures, the recently created TUI Global Hotel Fund and
the expansion we are pursuing along with management and franchise
partners. TUI should develop as other big hotel chains are doing.
Hilton, Marriott and Hyatt, for example, don't usually own the
hotel buildings. They design and manage hotel brands, hotel
experiences. That is the skill that we and our partners bring.
And in cruises?
We are growing there too, especially with the new vessels that
have been announced by our very successful joint venture TUI
Cruises. Those investments, by the way, were agreed before the
pandemic. At the same time we want to rejuvenate the British
Marella fleet and to cap it all we will use a multi-channel
distribution strategy to boost the earnings and occupancy rate of
all our liners.
A portfolio of hotels and ships can be expanded by acquiring new
assets, but what about TUI Musement? Where does the growth come
from there?
Experiences are a global trend - people want to experience
things rather than own things. We can offer our customers an
infinite number of experiences and activities - while they are
travelling of course, but at home too. From an evening at a musical
or a visit to a museum to a family outing at a theme park or an
e-bike tour in their own town. With its digital platform TUI
Musement will be building hugely on its range of products so that
it can cater for the growing customer demand for experiences. TUI
Musement will be a partner at the holiday destination, just like at
home. Take leisure activities: TUI Musement will have attractive
products to offer on 365 days of the year, not just during the
fortnight spent on holiday.
You also want to take more care of customers in future, to place
them more centre stage?
They already are centre stage. After all, we sell them unique
experiences, their "best time of the year". That is the core of our
brand. But we can personalise things more and make them more
user-friendly by simplifying the customer experience in the digital
sphere - for example, by giving people a single customer account,
harmonising the payment procedure and pitching all our TUI products
together, including flights and hotels. The linchpin of all this is
our TUI App. This one-stop customer management system enables us to
link our strengths across all segments and generate additional
growth. That enhances the customer experience - and with it the
business. It is a win-win situation. That is a focus. In future our
work will be app-centred: one app, one click, but with the full
diversity of our product and brand universe.
TUI is a people business. You sell experiences, special moments.
And there are always real people behind that to make it happen, TUI
people. What role do they play in implementing the Group
strategy?
The team makes the difference - our people are key to TUI's
success. Customers don't deal with "TUI" or with management.
Customers experience TUI through our employees in distribution, on
the plane, on the ship, at the hotel or during the excursion, or
through the local reps in our destinations. They are the hosts who
define our customers' holidays. And they do that with passion and
tremendous commitment. That's why it matters to me that we make it
clear who we want to be as a company and what it means to work for
TUI. It's about culture, diversity, opportunities, and even the way
we work. That includes mobile and flexible working, the right
technical equipment. But also "TUI Workwide": people in roles that
allow for it can spend up to 30 days a year working from another
country. It's been a success story for us: more than 1,000 TUI
employees have already spent 14,500 days working from abroad. It
creates better understanding for other cultures and countries and
often makes it easier to reconcile family and career. The modern
world of work relies more than anything on a culture of trust. That
is also the basis for "TUI Workwide".
Another important aspect is diversity ...
. and that means a lot to me! Our employees can "come as they
are" at TUI. They are confirming that to us in the surveys.
Contributing different perspectives and accepting them might
perhaps be harder work, but it broadens our horizons and results in
novel solutions, often much better ones. We must make good use of
that potential.
You yourself raise the issue of sustainability at almost every
meeting. Do you think TUI is lagging behind?
For years now TUI has been a pioneer on sustainability. But it
isn't enough to rest on your laurels because the challenges are
getting bigger too. We have to break out of the vicious circle
whereby growth means more emissions. We have set ourselves
ambitious targets for every segment, we have committed to the
Science-Based Target Initiative and we will provide regular,
transparent progress reports. In some areas, such as our hotels and
office buildings, we will achieve our goal of cutting carbon
emissions quickly. Technology is advancing fast here. At our new
TUI Campus in Hanover, for example, we will generate most of our
power from photovoltaics. That investment will pay off within very
few years. The sustainability goals that we have defined for
ourselves will require effort, but we will achieve them. The
important thing is to tackle the challenge with determination and
take a holistic view of sustainability in all its dimensions -
environmental, social and economic. For us sustainable
transformation is not a threat but an opportunity.
How are you going about this sustainable change? Can you give us
an example?
On Rhodes we are currently working on the blueprint for a
sustainable destination together with the South Aegean
administration and the TUI Care Foundation. We are already getting
enquiries from other destinations. They often refer to the formal
or legislative framework, Green Deal, Paris Agreement, rules,
requirements. But is that the only reason we are doing it? No, it's
a matter of conviction, attitude. We have to recognise that more
sustainability and the path to climate neutrality present genuine
opportunities. We are working on that in the company. That's also
why I want us to fulfil our targets ahead of the required date.
2050 is definitively too late.
Every CEO fosters a personal style of leadership. How do you go
about winning people for the journey? And what do you expect from
your crew?
I think it's important to give people space and the right
resources for their project. Naturally, that comes together with a
duty to meet targets as effectively as possible or to speak up if
something can't be achieved as planned. A red light on a project
dashboard is only a problem if people don't talk about it and put
their heads together to set it right. I value a culture of open
exchange. But I believe it is equally important to also deliver. We
must deliver on what we promise. Strategies are fine but
implementation is the key to success.
How optimistic are you looking ahead?
Summer 2022 was very encouraging. Even though the restrictions
were lifted late, our bookings were at a good 90 per cent of the
2019 level, so almost the volume we had before the pandemic, while
our average earnings were significantly higher. We can see the same
trend for Winter. Travelling means a lot to people. The figures
show that our model is intact. We have defined the growth areas. We
have a clear strategy and we are putting it into practice. For many
years I held an office in professional football and in a recent
interview with a daily newspaper I put it like this: It is far
cooler to win than to draw or lose. Or to quote the claim coined by
our HR Director: Let's TUI it!
"We are entering a new phase for TUI. The strategy is in place -
and now we are going to implement it. We want to grow profitably
again."
"TUI will be their partner for holidays, leisure and experiences
- not only when they are travelling, but in their home countries
too."
"I value a culture of open exchange. But I believe it is equally
important to also deliver. We must deliver on what we promise."
Report of the Supervisory Board
Dear Ladies and Gentlemen,
Dear Shareholders,
After two and a half very challenging years in the wake of the
global COVID-19 pandemic, the past financial year was marked by a
recovery of our business. As a result, we were finally able to
report a positive operating result again.
Right at the beginning of the year, we completed another capital
increase and thus took a step towards strengthening our balance
sheet structure. Together with continued strict cost discipline and
targeted working capital management, our liquidity profile improved
significantly. This was also rewarded by the rating agencies with
an upgrade in each case. However, this alone was not enough, and we
were able to take another important step towards the refinancing of
the Group with the placement of a second capital increase in May
2022. Overall, we have not only significantly reduced debt but also
repaid part of the government stabilisation funding.
The pandemic repeatedly posed operational challenges for us with
new virus variants and rising incidence rates. Although the general
conditions for tourism have increasingly improved, positive booking
developments were repeatedly affected by the pandemic at short
notice. Vaccination campaigns in source markets and destinations
continued to progress and customers showed a high interest in and a
significant pent-up demand for travel. The booking momentum, in
particular for the Summer 2022 programme, reflected the trust of
our customers in the quality and reliability of our service and the
TUI brand. We consistently aligned our products and services with
the needs of our customers, who continued to book their holidays at
shorter notice and wanted a high degree of flexibility. As a
result, we were able to complete a Summer 2022 programme that
almost matched the pre-pandemic level of 2019.
The clear pent-up demand for holidays was very pleasing. But the
tight situation in the labour markets also repeatedly posed
challenges for the tourism industry to cover these in the completed
financial year. In spring and summer 2022, disruptions in flight
operations dominated the headlines, especially at numerous airports
in the source markets. Staff shortages in ground handling and
security personnel or breakdowns at third-party providers were
among the reasons why departures were delayed or had to be
cancelled. TUI was affected, too, and took immediate action to
minimise the impact on customers. In particular, the focus was on
avoiding cancellations.
The booking development was largely unaffected by the war in
Ukraine. Nevertheless, the situation had an impact on our Group:
Our long-standing major shareholder Mr Alexey Mordashov was added
to the list of natural and legal persons affected by the EU
sanctions on 28 February 2022. As a consequence, Mr Alexey
Mordashov resigned from the Supervisory Board of TUI AG on 2 March
2022. He had been elected to the Supervisory Board in 2016 and was
also a member of the Presiding Committee, the Nomination Committee
and the Strategy Committee. In addition, Mr Vladimir Lukin resigned
from the Supervisory Board of TUI AG with immediate effect on 3
March 2022. Mr Vladimir Lukin had been a member of our Supervisory
Board since 2019 and was a member of the Audit Committee and the
Strategy Committee. The Supervisory Board immediately dealt with
filling the vacancies that had arisen and was able to recruit
excellent candidates for the Group in Ms Helena Murano and Mr
Christian Baier, who have enriched the work of TUI's Supervisory
Board with their expertise and experience since their appointment
by court order on 31 May 2022. Both will be proposed for election
to the Supervisory Board at the next Annual General Meeting. In
addition, Ms Carola Schwirn had resigned from her mandate as ver.di
trade union representative with effect from the end of 28 February
2022. Ms Sonja Austermühle was nominated as her successor and
appointed by court order on 1 April 2022.
In June, our CEO Mr Friedrich Joussen decided to exercise his
right of resignation. This had been granted to him in connection
with the implementation of the conditions of the COVID-19
stabilisation measures in September 2020. The Presiding Committee
and also the Supervisory Board had dealt with the succession in
time, so that Mr Friedrich Joussen was able to hand over the
chairmanship of the Executive Board to the current Chief Financial
Officer Mr Sebastian Ebel as of 1 October 2022 after around ten
years at the helm of the Group. We are extremely grateful to Mr
Friedrich Joussen for his commitment and the trusting cooperation
over the past years. The merger with TUI Travel, the transformation
of the Company into an integrated tourism group and the very good
crisis management in the pandemic years will be associated with the
name of Mr Friedrich Joussen. We wish the new CEO Mr Sebastian Ebel
all the very best for his task. We are convinced that his
entrepreneurial and strategic approach makes him an excellent
choice for the new start after the COVID-19 pandemic. The same
applies to our new CFO Mr Mathias Kiep, who played a central role
in the crisis team during the pandemic and made an important
contribution to reducing debt and refinancing the Group.
Before I move on to the Report of the Supervisory Board, I would
like to thank you, dear shareholders, most sincerely on behalf of
the entire Supervisory Board. In the completed financial year, you
again expressed your support and confidence in TUI. In particular,
by approving the renewal of the capital resolutions at the Annual
General Meeting in February 2022, you have provided management with
the necessary flexibility to be able to act at any time in a
challenging environment.
2022 was a very important financial year for overcoming the
COVID-19 crisis and it was the first year since the outbreak of the
pandemic with a clearly positive operating result. It is now
important to consistently continue on the path we have chosen and
to react flexibly to the challenges ahead as an integrated tourism
group and digital platform company. We have made good use of the
pandemic years and are well positioned to return to the growth path
with a further strengthening of the balance sheet and clear
ambitions in terms of product, service and profitable growth of the
business segments.
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 107).
In doing so, the Supervisory Board has primarily monitored the
lawfulness, regularity, expediency and efficiency of the management
and the Executive Board, with a significant focus on managing the
impact of the COVID-19 pandemic. Further details can be found in
the report below.
The Executive Board kept us regularly, promptly and
comprehensively informed by means of written and oral reports at
and between meetings. The reports included 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 2022, the focus was on
the ongoing management of the challenges related to the COVID-19
pandemic and the associated structural and financial consequences.
The impact of the sanctioning of a strategic investor and the
implications of the significant increase in inflation in the source
markets and destinations were also the subject of discussion. The
Supervisory Board was involved in all decisions of fundamental
importance to the Company in a timely manner. 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 in
place in the past financial year: the Presiding Committee, the
Audit Committee, the Strategy Committee and the Nomination
Committee. At its meeting in September 2022, the Supervisory Board
decided to deal with strategy issues only in the plenary in future
and to dissolve the Strategy Committee at the end of financial year
2022 accordingly. The Mediation Committee to be formed in
accordance with Section 27 (3) of the German Co-determination Act
did not have to meet. The chairpersons of the committees report
regularly and in detail on their work at the ordinary meetings of
the Supervisory Board. A Transaction Committee set up by the
Supervisory Board and consisting of Dr Zetsche, Mr Jakobi and Prof.
Dr Ernst met in connection with the use of financing instruments.
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 Committee meetings were always accessible to all
members of the Supervisory Board. In addition, the meetings were
reported on at the respective subsequent Supervisory Board
meetings. No additional remuneration or attendance fees were paid
for the meetings of the Transaction Committee.
Despite the numerous meetings, we were able to record a
consistently high attendance rate at our deliberations in financial
year 2022, as in previous years. Attendance at the plenary meetings
averaged 96.3 % (previous year 95.0 %) and at the committee
meetings 98.7 % (previous year 98.6 %). The vast majority of the
members of the Supervisory Board participated in all meetings of
the Supervisory Board in financial year 2022 and in the committee
meetings in accordance with their respective membership. Members
who were unable to attend the meetings generally participated in
the resolutions by sending proxy votes. The timely distribution of
documents by the Executive Board in advance of the meetings and the
almost universal avoidance of handouts made the preparation of the
meetings much easier for the members of the Supervisory Board.
Against the background of the COVID-19 pandemic, some Supervisory
Board and committee meetings were also held as video conferences.
The video format was also used to ensure the availability of
Supervisory Board members for meetings scheduled at short notice.
The exact distribution of in-person and video conference meetings
can be seen in the table below.
In addition to the members of the Supervisory Board, the ESF
also exercised its right to participate as a guest at the meetings
of the Supervisory Board and its committees after the second
framework agreement was concluded in January 2021, insofar as there
was a relevant interest in accordance with the framework agreement.
After the election of Dr Dönges as a member of the Supervisory
Board, this guest right was exercised by individual representatives
of the Finance Agency of the Federal Republic of Germany.
Attendance at meetings of Supervisory Board in financial year
2022
Attendance at meetings of Supervisory Board in financial year 2022
Supervisory Board Transaction Presiding Audit Nomination Strategy
meetings committees committee committee committee committee
Meetings total 7 3 6 7 1 4
thereof virtual 5 3 4 4 0 3
Name
Dr Dieter Zetsche 7 (7) 3 (3) 6 (6)1 7 (7) 1 (1)1 3 (4)1
(Chairman)
Frank Jakobi (Deputy 7 (7) 3 (3) 6 (6) 7 (7) 4 (4)
Chairman)
Ingrid-Helen Arnold 7 (7)
Sonja Austermühle (since 1 2 (3)
April 2022)
Christian Baier (since 31 2 (2) 3 (3)
May 2022)
Andreas Barczewski 7 (7)
Peter Bremme 7 (7) 6 (6)
Dr Jutta Dönges2 7 (7) 2 (2) 7 (7) 0 (0) 4 (4)
Prof. Dr Edgar Ernst 6 (7) 3 (3) 6 (6) 7 (7)1 1 (1) 4 (4)
Wolfgang Flintermann 7 (7)
Maria Garaña Corces 7 (7)
Stefan Heinemann 7 (7) 7 (7)
Janina Kugel 7 (7)
Vladimir Lukin (until 3 3 (3) 3 (3) 3 (3)
March 2022)
Coline Lucille McConville 4 (7) 4 (4)
Alexey A. Mordashov 3 (3) 2 (3) 0 (0) 3 (3)
(until 2 March 2022)
Helena Murano (since 31 May 2 (2)
2022)
Mark Muratovic 7 (7) 7 (7)
Carola Schwirn 3 (3)
(until 28 February 2022)
Anette Strempel 7 (7) 6 (6)
Joan Trían Riu 7 (7)
Tanja Viehl 7 (7)
Stefan Weinhofer 7 (7) 7 (7)
Attendance at meetings in % 96.3 100.0 97.1 100.0 100.0 96.2
Attendance at Committee 98.7
meetings in %
(In brackets: number of meetings held)
1 Chairperson of Committee.
2 Member of the Presiding and Nomination Committee since 10 May
2022.
Main topics of the Supervisory Board's work
The Supervisory Board held seven meetings. Of these, two were
held as in-person meetings, while five were held as video
conferences. Furthermore, the respectively established Transaction
Committees of the Supervisory Board met three times, and two
additional resolutions were passed by circular resolution. The
following main points were the subject of the individual
meetings:
1. At its meeting on 6 October 2021, the Transaction Committee,
established by the Supervisory Board, approved the implementation
of a capital increase.
2. At its meeting on 6 October 2021, the Supervisory Board first
reviewed the past financial year. In addition, the Supervisory
Board was informed about the implementation of a capital increase
with subscription rights and received a report from the Transaction
Committee. Furthermore, the Supervisory Board received an update
on the current situation in the Group-owned airlines. Against the
background of the remuneration restrictions, the Supervisory Board
also decided to waive the determination of the individual
performance factor of the members of the Executive Board for the
annual performance-related remuneration of financial year 2021.
The Supervisory Board also received a report on the initiation of a
Hotel Fund.
3. The meeting on 7 December 2021 initially included a
discussion of the financial statements of the Group and TUI AG,
each of which had obtained an unqualified audit certificate by the
auditors, and the combined Management Report for the Group. The
Executive Board and the auditors were also present. The Audit
Committee had already dealt with these reports in detail on the
previous day and also had the opportunity to consult with the
auditor without the Executive Board. 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 2021 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 Annual General Meeting to
engage Deloitte GmbH Wirtschaftsprüfungsgesellschaft for the 2022
half-year and annual financial statements were adopted. The
Supervisory Board also approved the agenda for the Annual General
Meeting on 8 February 2022 and, due to the pandemic, decided to
hold it virtually. Furthermore, the Personnel and Social Report was
the subject of this meeting and we received an update regarding the
D&O insurance. In addition, the Supervisory Board again dealt
with the Hotel Fund.
4. By circular resolution on 20 January 2022, the Supervisory
Board approved the sale of a joint venture.
5. The meeting of 7 February 2022 included explanations on the
quarterly report and quarterly financial report. In this context,
the Executive Board gave an overview of the current accounting
situation. Other topics included the liquidity development and
various long-term financing options for the Group. In addition to
preparing for the Annual General Meeting on 8 February 2022, the
Supervisory Board was also informed about the progress made in
connection with the internal efficiency and cost savings
programme.
6. By circular resolution on 4 March 2022, the Supervisory Board
approved an editorial amendment to the Articles of Association as a
result of the implementation of the Annual General Meeting
resolutions.
7. The extraordinary meeting on 8 March 2022 dealt with the
direct impact of the Russia-Ukraine conflict on TUI AG. The changes
in the Supervisory Board due to the resignations of Mr Mordashov
and Mr Lukin were discussed. The meeting also dealt with the
consequences for TUI under sanctions law resulting from the asset
freeze and the prohibition to make funds or economic resources
available. In addition, the Executive Board provided an overview of
the current booking situation and an update on key earnings figures
for the current financial year.
8. At the meeting on 10 May 2022, the Executive Board explained
the report on the current financial year, on the quarterly
financial statements and on the first half of 2022, which the Audit
Committee had already dealt with on the previous day. In addition,
the Executive Board gave an overview of the current liquidity
development and financial recovery. Other key topics of the meeting
were an update on the sustainability strategy and the HR strategy
as well as the process, timetable and potential volume of a
potential capital increase excluding subscription rights with the
aim of repaying further state support. The Supervisory Board
approved the latter in principle and set up a Transaction
Committee. In addition, the Supervisory Board dealt with the
specifications for determining the performance criteria of the
individual performance factor of the annual performance
remuneration for financial year 2023 subject to the application of
the remuneration restrictions, after the Presiding Committee had
already discussed the topic. In addition, the Supervisory Board
dealt with succession planning in the context of Executive Board
matters. In addition, two new members constituting shareholder
representatives on the Supervisory Board, Mr Baier and Ms Murano,
were proposed for election to the Supervisory Board as successors
to Mr Mordashov and Mr Lukin, with the Executive Board being asked
to submit the application for court appointment to the competent
local court by the end of the 2023 Annual General Meeting. In
addition, the vacancies on the Presiding, Nomination, Audit and
Mediation Committees of the Supervisory Board as a result of the
resignations of Mr Mordashov, Mr Lukin and Ms Schwirn were
filled.
9. At its meetings on 16 and 17 May 2022, the Transaction
Committee approved the measures required for the placement of the
capital increase and the implementation within the scope of its
authority assigned by the Supervisory Board.
10. At its meeting on 27 June 2022, the Supervisory Board,
following the execution of Mr Joussen right to resign, decided on
the appointment of Mr Ebel as Chief Executive Officer and Mr Kiep
as Chief Financial Officer, both with effect from 1 October 2022.
The Supervisory Board also approved the early extension of Mr
Burling's contract as CEO Markets & Airlines. Furthermore, the
Supervisory Board was informed about the operational challenges at
British and European airports and the associated effects on the
Group as well as possible mitigation measures.
11. At its strategy meeting on 14 September 2022, the
Supervisory Board received an update on the strategic orientation
and developments in the individual company segments. There was also
a discussion on the People Strategy and an ESG update.
On the second day of its regular meeting on 15 September 2022,
the Supervisory Board received an update on the liquidity and
financial profile of the Group. In addition, the Board approved the
budget for the coming financial year and the three-year plan and
took note of the report on security, health and safety. In
addition, the Supervisory Board discussed, among other things, the
amended business allocation plan and resolved on the target values
for the annual performance-related remuneration for the following
financial year subject to the application of the remuneration
restrictions. The Supervisory Board discussed the determination of
the performance criteria for individual performance, the
performance of the entire Executive Board and the achievement of
stakeholder goals and their weighting in relation to each other for
the following financial year. Other topics included the review of
the appropriateness of Executive Board remuneration and pensions as
well as Supervisory Board remuneration, an update on the new
version of the German Corporate Governance Code, especially with
regard to the competence profile and qualification matrix, and the
dissolution of the Strategy Committee as per 30 September 2022.
Presiding Committee
The Presiding Committee is responsible for Executive Board
matters (including succession planning, appointments, terms of
employment contracts, remuneration, proposals on the remuneration
system), which in this function corresponds to a remuneration
committee. In addition, the Presiding Committee prepares the
meetings of the Supervisory Board. In the reporting period, six
meetings were held. Of these, two were held as in-person meetings,
while four were held as video conferences.
The Presiding Committee, which has equal representation of
shareholder and employee representatives, consists of:
-- Dr Dieter Zetsche (Chairman)
-- Frank Jakobi
-- Peter Bremme -- -- Alexey Mordashov (until 2 March
-- Dr Jutta Dönges (from 10 May 2022)
2022) -- Anette Strempel
-- Prof. Dr Edgar Ernst
1. At the meeting on 6 October 2021, the Presiding Committee
primarily dealt with Executive Board matters. The Presiding
Committee recommended that the individual performance factors for
the Executive Board be waived for financial year 2021 against the
background of the remuneration restrictions.
2. On 7 December 2021, the preparation of the Annual General
Meeting 2022 was the subject of the meeting. The Presiding
Committee dealt in particular with the various capital reserve
resolutions on the agenda. Furthermore, the review of the completed
financial year was the subject of the discussions as well as an
update on the negotiations regarding the D&O insurance.
3. The Annual General Meeting of TUI AG was again the subject of
the meeting on 4 February 2022. In addition, the current
consultation procedure of the Government Commission with regard to
the revision of the German Corporate Governance Code was
discussed.
4. On 10 May 2022, the Presiding Committee informed itself about
the current developments regarding the HR strategy. In addition,
the Presiding Committee discussed the specifications for
determining the performance criteria of the individual performance
factor of the annual performance-related remuneration for financial
year 2023. Furthermore, the succession in the context of Executive
Board matters was discussed. Furthermore, the Presiding Committee
passed resolutions recommending to the Supervisory Board to fill
the vacant seats on the Supervisory Board and its committees due to
the resignations of Mr Mordashov and Mr Lukin.
5. At the meeting on the evening of 23 June 2022,
recommendations were made for resolutions in the event of Mr
Joussen's resignation in the context of the succession planning.
Furthermore, a resolution recommendation was made for the possible
early extension of Mr Burling's appointment in the event that he
did not exercise his right to resign.
6. On 13 September 2022, the Presiding Committee discussed the
determination of the target total remuneration of the members of
the Executive Board as well as the target values of the annual
performance-related remuneration for financial year 2023. 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 the Supervisory Board meeting. In
addition, the appropriateness of both Executive Board remuneration
and pensions as well as Supervisory Board remuneration was
discussed and an update on the new version of the German Corporate
Governance Code was discussed, especially with regard to the
competence profile and qualification matrix and the dissolution of
the Strategy Committee at the end of the financial year 2022.
Audit Committee
The Audit Committee met for seven ordinary meetings in financial
year 2022. Of these, three were held as in-person meetings, while
four were held as video conferences. Please refer to the detailed
report of the Audit Committee on page 18 for information on the
composition, tasks, deliberations and resolutions of the Audit
Committee.
Nomination Committee
The Nomination Committee, composed exclusively of shareholder
representatives, nominates suitable shareholder candidates to the
Supervisory Board for its election proposals to the Annual General
Meeting or for appointment by the district court.
The members of the Nomination Committee, which met once at an
in-person meeting, were:
-- Dr Dieter Zetsche (Chairman)
-- Dr Jutta Dönges (from 10 May 2022)
-- Prof. Dr Edgar Ernst
-- Alexey Mordashov (until 2 March 2022)
At its meeting on 10 May 2022, the Nomination Committee dealt
with the proposed resolution for the nomination of Mr Baier and Ms
Murano (shareholder representatives) for court appointment to the
Supervisory Board following the resignations of Mr Mordashov and Mr
Lukin.
Strategy Committee
The task of the Strategy Committee in the financial year was to
advise the Executive Board on the development and implementation of
the corporate strategy. The committee held a total of four meetings
during the completed financial year. Of these, one was held as an
in-person meeting, while three were held as video conferences. The
Committee was dissolved at the end of the financial year under
review.
The members of the Strategy Committee were:
-- Dr Dieter Zetsche (Chairman) -- Vladimir Lukin (until 3 March 2022)
--
-- Dr Jutta Dönges -- Coline McConville
-- Prof. Dr Edgar Ernst -- Alexey Mordashov (until 2 March 2022)
-- Frank Jakobi
1. At its meeting on 5 October 2021, the Strategy Committee
discussed TUI's current market and competitive situation as well as
strategic developments in the Hotels & Resorts, Cruises and TUI
Musement Sectors. The Committee also addressed the progress of the
internal efficiency and cost savings programme.
2. On 6 December 2021, the Strategy Committee again received an
update on the internal efficiency and cost savings programme. Key
performance indicators for hotels, tour operators and the Group's
own airlines were also discussed. The Strategy Committee also
received an update on current IT projects and specific marketing
indicators.
3. On 21 February 2022, the Committee addressed the current
status of ongoing IT projects and the digital transformation. In
addition, the members of the Committee discussed in detail the
strategy of the TUI Blue hotel brand.
4. At its meeting on 9 May 2022, the Strategy Committee dealt
with the development of the liquidity situation and financial
recovery. In this context, the Strategy Committee also informed
itself about the process, timetable and potential volume of a
possible capital increase with the exclusion of subscription rights
with the aim of repaying further state support. Furthermore, the
Strategy Committee discussed a possible dissolution of the
Committee at the end of the financial year 2022.
Corporate Governance
The TUI AG share has its primary 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 British
corporate governance. Apart from mandatory compliance with the
provisions of the German Stock Corporation Act (AktG), the
Co-Determination Act (MitbestG), the Listing Rules and the
Disclosure and Transparency Rules, TUI AG had declared in the
framework of the merger that it would comply with both the German
Corporate Governance Code (GCGC) and - to the extent practicable -
the UK Corporate Governance Code (UK CGC).
For the GCGC, which is based on the German Stock Corporation Act
(AktG) in its basic conception, we were able to submit the
Declaration of Conformity 2022 with the Executive Board in
accordance with Section 161 AktG. The GCGC 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 UK (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 GCGC issued by the Executive Board and the Supervisory Board
was incorrect.
Further information on corporate governance, the Declaration of
Conformity 2022 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
(page 107) and on TUI AG's website.
Conflicts of interest that have arisen
The Supervisory Board has continuously monitored the existence
of conflicts of interest in the current financial year and
determined that no conflict of interest arose in financial year
2022.
Audit of the annual financial statements and consolidated
financial statements of TUI AG and 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 (HGB), the combined Management Report of TUI AG and
the TUI Group and the consolidated financial statements for
financial year 2022 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 12 December 2022
and at our balance sheet meeting on 13 December 2022, 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. Following 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 TUI Group.
On the recommendation of the Audit Committee, we approve the
financial statements for financial year 2022; 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 2022 is shown in the overviews on page 108 for
the Supervisory Board and on page 110 for the Executive Board.
Supervisory Board
In the following, I will give you an overview of the personnel
changes on the Supervisory Board.
Ms Carola Schwirn left the Supervisory Board at the end of 28
February 2022. Ms Schwirn, departmental coordinator in the Berlin
transport department of the ver.di trade union, had been a member
of the Supervisory Board since 2014 and was also a member of the
Mediation Committee. By court appointment on 1 April 2022, Ms Sonja
Austermühle, trade union secretary and lawyer at ver.di Berlin, was
appointed as a member of the Supervisory Board as an employee
representative.
As a result of the Russia-Ukraine war, the European Union
imposed sanctions against Mr Alexey Mordashov on 28 February 2022.
Mr Mordashov informed us on 2 March 2022 that he resigned from his
mandate as a member of the Supervisory Board of TUI AG with
immediate effect. He had been elected to TUI's Supervisory Board in
2016 and was also a member of the Presiding Committee, the
Nomination Committee and the Strategy Committee.
On 3 March 2022, Mr Vladimir Lukin also informed us that he was
resigning from his mandate as shareholder representative on the
Supervisory Board of TUI AG with immediate effect. Mr Lukin had
been a member of our Board since 2019 and was also a member of the
Audit Committee and the Strategy Committee. A court appointment was
applied for in each case for the vacancies that arose. On 31 May
2022, Ms Helena Murano, Senior Advisor at Arcano Partners, and Mr
Christian Baier, Member of the Executive Board (CFO) of METRO AG,
were accordingly appointed as members of the Supervisory Board of
TUI AG.
Presiding Committee
Following the resignation of his mandate as a member of the
Supervisory Board of TUI AG on 2 March 2022, Mr Alexey Mordashov
also resigned from the Presiding Committee. He was succeeded by Dr
Jutta Dönges, elected by the shareholder representatives on 10 May
2022.
Audit Committee
Due to the resignation of his office as a member of the
Supervisory Board, Mr Vladimir Lukin also resigned from the Audit
Committee with effect from 3 March 2022. By court appointment, Mr
Christian Baier became a member of the Supervisory Board with
effect from 31 May 2022 and, with effect from the same date, also a
member of the Audit Committee by resolution of the Supervisory
Board.
Nomination Committee
Following the resignation of Mr Alexey Mordashov from the
Supervisory Board with effect from 2 March 2022 and thus also from
TUI AG's Nomination Committee, the vacancy was filled by Dr Jutta
Dönges with effect from 10 May 2022.
Strategy Committee
Both Mr Alexey Mordashov and Mr Vladimir Lukin resigned from TUI
AG's Supervisory Board and its Strategy Committee on 2 March 2022
and 3 March 2022 respectively. At its meeting on 15 September 2022,
the Supervisory Board decided to discuss strategy issues in the
plenary in future and dissolved the Strategy Committee at the end
of the financial year 2022.
Executive Board
On 24 June 2022, Mr Joussen exercised his right to resign from
his office as member of the Executive Board of TUI AG ahead of
schedule as per 30 September 2022. The Supervisory Board decided on
27 June 2022 to appoint the current Chief Financial Officer, Mr
Ebel, as the new CEO of the Executive Board for a period of three
years as of 1 October 2022. At the same time, the Supervisory Board
decided on the same day that Mr Kiep, previously Group Director
Controlling, Corporate Finance & Investor Relations, should
succeed Mr Ebel as Chief Financial Officer as of 1 October 2022 and
appointed him accordingly as a member of the Executive Board with
effect from 1 October 2022 for a period of three years.
The Supervisory Board decided on 27 June 2022 to extend the
appointment of Mr Burling, CEO Markets & Airlines, ahead of
schedule for a further two years until 31 May 2026. Mr Burling will
continue to be responsible for the Group's tour operators and
airlines.
Thanks to
The Supervisory Board is aware of the enormous challenges TUI
Group employees have faced since the beginning of the pandemic. We
would like to express our gratitude to them for their tireless
efforts, their great commitment and for representing TUI's values
to our stakeholders.
Hanover, 13 December 2022
On behalf of the Supervisory Board
Dr Dieter Zetsche Chairman of the Supervisory Board
Report of the Audit Committee
Dear Shareholders,
As the Audit Committee, we have the task of supporting the
Supervisory Board in the performance of its supervisory function.
In doing so, we deal with the audit of the 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 individual financial statements according
to the German Commercial Code (HGB). In the completed financial
year, we dealt in particular with issues relating to TUI Group's
accounting and financial reporting, as required by law, the German
Corporate Governance Code (GCGC), 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, including a review of 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-year financial report as
well as any additional interim financial information that meets the
requirements for the half-year financial report. The Audit
Committee has agreed with the auditor that the auditor will inform
the Committee without delay of all findings and events of
significance for the Committee's tasks that come to the auditor's
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 discovers facts that show
a misstatement in the declaration on the GCGC issued by the
Executive Board and the Supervisory Board. In addition, the Audit
Committee regularly assesses the quality of the audit.
The current Audit Committee was elected from the members of the
Supervisory Board immediately after the Annual General Meeting in
February 2022. The election of the Committee members is valid for
the respective term of their Supervisory Board mandate. Due to the
resignation of his office as a member of the Supervisory Board, Mr
Vladimir Lukin also resigned from the Audit Committee with effect
from 3 March 2022. By court appointment, Mr Christian Baier became
a member of the Supervisory Board with effect from 31 May 2022 and,
by corresponding resolution of the Supervisory Board, also a member
of the Audit Committee with effect from the same date.
The Audit Committee, which has equal representation, thus
currently consists of the following eight members of the
Supervisory Board:
-- Prof. Dr Edgar Ernst (Chairman) -- Frank Jakobi
-- Christian Baier -- -- Mark Muratovic
-- Dr Jutta Dönges -- Stefan Weinhofer
-- Stefan Heinemann -- Dr Dieter Zetsche
Through the appointment of financial experts, the Audit
Committee has expertise in the areas of accounting and auditing.
The expertise in the field of accounting consists of special
knowledge and experience in the application of accounting
principles and internal control and risk management systems. The
expertise in the field of auditing consists of special knowledge
and experience in the auditing of financial statements. Accounting
and auditing also include sustainability reporting and the auditing
of such reporting. The Chairman of the Audit Committee, Prof. Dr
Edgar Ernst, is an expert in both areas. In addition, Christian
Baier and Dr Jutta Dönges fulfil the requirements of a financial
expert within the meaning of the GCGC. The relevant members of the
Audit Committee are also named in the Corporate Governance Report
starting on page 107, where more detailed information on their
expertise in the aforementioned areas is also provided. In summary,
it should be noted here that the members of the Audit Committee all
have competences relevant to the sector in which the Company
operates.
With regard to the Chairman of the Audit Committee, Prof. Dr
Edgar Ernst, the Supervisory Board is of the opinion that he is
independent of the Company and the Executive Board (for the
independence of the other members of the Audit Committee, see page
114).
The Audit Committee regularly meets 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 in which the Executive
Board explains to the Audit Committee the main contents of the
Pre-Close Trading Update, which is published shortly before the
balance sheet date for the annual financial statements.
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, Corporate
Finance & Investor Relations.
The auditors were invited to attend the meetings to discuss
relevant issues. Other members of TUI Group's senior management as
well as TUI Group executives 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, division heads 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 as well as on the content of
individual discussions in the respective subsequent Supervisory
Board meeting.
The members attended the meetings of the Audit Committee as
shown in the table on page 13.
Information 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
CGC, according to which the annual financial statements and annual
report must be accurate, balanced and understandable. 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 before the publication of
the respective financial statements. The corresponding reports were
discussed. At these meetings, the auditors also reported in detail
on important aspects of the financial statements and on the results
of the audit or the auditor's review. In principle, discussions can
always take place in the absence of the Executive Board. This
applies in particular to the audit of the financial statements. In
the completed financial year, the Audit Committee also discussed
with the auditor the assessment of the audit risk, the audit
strategy and audit planning as well as the audit results. In
addition, the Chairman of the Audit Committee regularly discussed
the progress of the audit with the auditor and each time reported
back to the Audit Committee.
In order to monitor accounting, we intensively dealt with
individual aspects. As in previous years, TUI's economic
development due to the COVID-19 pandemic was a central topic at our
meetings. In particular, we received detailed reports from TUI AG's
Executive Board on the measures taken to safeguard 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, property, plant and
equipment, advance payments to hoteliers for tourism and other
provisions. In consultation with the auditor, we satisfied
ourselves that the assumptions and estimates underlying the
accounting were appropriate. Furthermore, material aspects arising
from the operational business, in particular the impairment testing
of the Group's assets against the background of the COVID-19
pandemic, were assessed by the Audit Committee.
In the reporting period, we dealt in particular with the
following individual aspects:
Even before the outbreak of the COVID-19 pandemic, 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 further development of a central Finance
structure. Structured working capital management was also extended
to the subsidiaries. We were regularly informed about these
projects at our meetings. Due to the outbreak of the COVID-19
pandemic, these processes were greatly expanded and accompanied by
measures for strict cost control. As in previous years, we received
detailed reports on the corresponding measures.
In addition, the consistency of the reconciliation to the key
parameter "underlying EBIT" and the significant items (adjustments)
eliminated here were discussed for each quarterly report and for
the annual financial statements. In this context, the going concern
report prepared by the Company was also discussed 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 regulations of the UK
CGC was also the subject of discussion.
The report of the Chairman of the Audit Committee on the
monitoring of transactions with related parties within the
financial year was also discussed. Since none of the transactions -
neither on an individual basis nor in combination - exceeded the
corresponding threshold value in the reporting year, the monitored
individual matters were monitored on their own.
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 auditor, Deloitte, in reviewing the disclosures.
Accordingly, we were informed of the results of the review by the
auditor in the financial year under review and are of the opinion
that the disclosures published in the CSR Report are appropriate
and adequate.
Our assessment of all aspects of accounting and financial
reporting discussed is consistent with that of the Executive Board
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 economic success
in the long term. To fulfil its monitoring task, the Audit
Committee regularly obtains information on the maturity of the
implemented controls and also about 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 carried out by local management and monitored by the
Executive Board. In the largest source markets, the UK and Germany,
other 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 an essential
role in identifying further control needs and permanent improving
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 shown in the Risk
Report starting on page 34. The Risk Oversight Committee that has
been set up is of crucial importance within the Group. We are
convinced that an adequate risk management system is in place.
The Internal Audit department ensures the independent monitoring
of the implemented processes and systems as well as the significant
projects and reports directly to the Audit Committee at each
regular meeting. During 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 discussions take place between the
Chairman of the Audit Committee and the Director of Internal Audit
for closer coordination. The annual audit planning is carried out
in an agile manner. The Audit Committee has received detailed
reports on the methodology and has taken note of 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 the internal
audit.
At our meetings during the financial year under review, we were
again informed about the implementation and guarantee of the
regulations of the EU General Data Protection Regulation (EU GDPR)
in the individual business units. Based on this report, we are
convinced that 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 within 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 in
the completed financial year.
Review of the independence and objectivity of the auditor
For financial year 2022, the Audit Committee recommended to the
Supervisory Board that Deloitte GmbH
Wirtschaftsprüfungsgesellschaft (Deloitte) be proposed to the
Annual General Meeting as auditors. Following the appointment of
Deloitte as auditors by the Annual General Meeting in February
2022, the Supervisory Board commissioned Deloitte to audit the 2022
financial statements.
The Audit Committee had Deloitte explain to it in advance the
audit plan for the annual financial statements as at 30 September
2022. 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.
Based on 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
financial year 2023. Deloitte was selected by us as auditor in a
public tender process in financial year 2016 and has been appointed
as auditor without interruption since it was first elected 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
the size of the engagement. The Chairperson of the Audit Committee
is only involved in the decision if a specified cost limit is
exceeded. If the auditor provided services to the Group outside 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 regulations of the Audit
Reform Act (AReG) on prohibited non-audit services and on
limitations on the amount of non-audit services. Worldwide,
non-audit services amounted to EUR 2.3 m. The audit fee received by
the auditor, excluding voluntary audits, amounted to EUR 8.2 m. The
corresponding non-audit services accounted for approximately 28 %
of Deloitte's audit fees.
I would like to thank the members of the Audit Committee, the
auditors, the Executive Board and all employees involved for their
trusting and committed cooperation in the past financial year.
Hanover, 12 December 2022
Prof. Dr Edgar Ernst Chairman of the Audit Committee
TUI Group Strategy
Tourism remains a growing sector - fundamentals intact
The travel and tourism market is a significant contributor to
the global economy1, growing above global GDP levels pre-pandemic.2
Demand for tourism is driven by strong fundamental trends - people
living longer, healthier lives; the growth of middle classes across
the globe, which increases disposable income; and the desire for
experiences, of which travel plays a significant part. Therefore,
we expect leisure tourism to continue to be an attractive growth
market over the long-term.
In the shorter term, the industry has withstood unprecedented
disruption as a result of COVID-19. Despite this, the underlying
strong desire of people to travel is clear, as demonstrated the
resurgence of bookings as restrictions were relaxed.3 At TUI, we
experienced a strong uplift in bookings for our destinations on the
easing of government travel restrictions, and in Summer 2022,
Markets & Airlines customer numbers rebounded to around 90 % of
pre-pandemic levels, coupled with a strong 18 % increase in average
selling price.
As the pandemic subsides, the global geopolitical and economic
environment remains challenging for the industry, in particular the
impact this has on cost inflation, foreign exchange rates and
consumer sentiment. In this context customers value brands which
they can depend on, and which deliver choice and flexibility in
configuring the right product for them. Building on this
development, TUI will focus on delivering quality services to our
customers while increasing choice and flexibility, both in terms of
our product offer, and in the right-sizing of the proportion of
risk capacity for flights and hotels. This will be supported by our
strategy of growing our dynamic packaging and components business,
through increasingly flexible supply of flights and hotels.
TUI's business model - foundation for success
TUI is a global tourism group covering the entire holiday
journey, serving millions of customers, operating 134 aircraft, 418
hotels and 16 cruise ships4, as well as a digital platform for
tours and activities with a strong portfolio. The group is
structured into two divisions - Holiday Experiences and Markets
& Airlines.
1 Based on WTTC Economic Impact Research - Travel & Tourism
sector contributed 10.3 % to global GDP in 2019; this decreased to
5.3 % in 2020 and 6.1 % in 2021, due to government restrictions on
mobility.
2 Based on UNWTO international travel arrivals CAGR versus
global GDP CAGR for 2015 to 2019.
3 E. g. UNWTO World Tourism Barometer July 2022 - nearly 250
milion international trips were recorded worldwide between January
and May 2022, compared with 77 million in the comparative period in
2021.
4 As at 30 September 2022, including concept hotels in third
party properties.
Holiday Experiences delivers differentiated content in hotels,
cruises and tours and activities:
1. Our hotel portfolio consists of own and differentiated
leisure brands such as Robinson, TUI Magic Life, TUI Blue and TUI
Suneo, complemented by JV hotel brands such as Riu, Atlantica, Blue
Diamond and Grupotel. The portfolio is well-diversified in terms of
product offer, destination mix and ownership models, and benefits
from multi-channel and multi-source market distribution via Markets
& Airlines, direct to customer, and via third parties such as
Online Travel Agents (OTAs) and tour operators.
2. Our three cruise brands (Mein Schiff, Hapag-Lloyd Cruises,
Marella) cover the cruises sector from premium all-inclusive to
luxury to expeditions, with leading positions in the
German-speaking and UK markets, benefitting from multi-channel
distribution via Markets & Airlines, direct to customer and via
third parties.
3. TUI Musement is one of the largest digital providers in the
online intermediary market for tours, activities and experiences5,
connecting our own and third party product portfolio in
destinations with Markets & Airlines customers, open market
(B2C) customers, and B2B partner customers (such as OTAs,
metasearch sites and tour operators), as well as providing
transfers and support to our customers at the destination.
Markets & Airlines distributes and fulfills holidays to a
large customer base in 13 source markets6. TUI is (according to
consumer surveys for unaided brand awareness and consideration) a
leading tourism brand.7 We differentiate ourselves from the
competition (such as tour operators, OTAs, hotels and airlines)
based on exclusive and high-quality product, service and trust. By
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. This enables TUI to
follow a customer centric approach, aiming to create long-term
relationships with its customers. Growth will be driven by a wider
product range, reflecting consumer demand for more choice and
flexibility, and increasing the appeal across different customer
segments.
5 According to Bernstein analysis, TUI Musement ranked 2nd for
market share in the tours, activities and experiences market.
6 Germany, Austria, Switzerland, Poland, UK, Ireland, Sweden,
Denmark, Norway, Finland, Belgium, Netherlands, France.
7 As measured by brand consideration in TUI brand performance
tracking, completed by Metrixlab.
TUI's strategy for growth
TUI's strategy focuses on delivering growth in both Holiday
Experiences and Markets & Airlines, embedded onto one central
customer ecosystem, underpinned by our Sustainability Agenda and by
our people. The framework for implementation can be visualized with
our "strategy diamond", based on five key elements - Holiday
Experiences, Markets & Airlines, Central Customer Ecosystem,
Sustainability and People.
HOLIDAY EXPERIENCEs: GROW DIFFERENTIATED CONTENT, GROW CUSTOMER
BASE
Our Holiday Experiences business strategy focusses on
asset-right growth in differentiated content and expanding the
customer base with multi-channel distribution.
In Hotels & Resorts, content growth will be delivered both
with our hotel brands in existing and new destinations, as well as
introducing new brands to complement our portfolio. Growth in
hotels will be based on an asset-right approach - through our joint
ventures, the Global Hotel Fund, recently launched by TUI and
partners, and expansion with management and franchise partners. Our
hotel distribution strategy is focused on optimisation of rate and
occupancy of hotels, based on sales via Markets & Airlines, as
well as growing the volume and proportion of sales via direct and
third-party channels.
Growth in Cruises will be driven by investment into new-build
ships by our TUI Cruises JV, as well as a continuation of Marella's
fleet upgrading strategy, by replacing older ships with newer and
larger vessels, enabling it to increase product pricing. Our
distribution strategy for Cruises covers all channels, with sales
via Markets & Airlines complemented by sales via direct and
third-party channels, in order to drive yield and occupancy. We
will focus on enhancing our digital cruise marketing and
distribution, particularly for Marella.
TUI Musement's strategy is to focus on growing customer demand,
product offer, and digitalisation. Customer growth is targeted from
all three segments - TUI customers (based on Markets & Airlines
volume growth plus increased uptake of tours, activities and
experiences), B2C customers (by promoting the Musement platform for
direct bookings, and proving an entry point into TUI customer
ecosystem) and B2B (by digitalizing our partner product portfolio).
Product growth will be delivered both with new tours, activities
and excursions, as well as other products such as mobility,
multi-day tours, and destination passes. The inclusion of these
products is enabled by the continued digitalisation of the
business, which is also transforming the way TUI Musement delivers
service directly to its customers, as well as its interactions with
B2B customers.
MARKETS & AIRLINES: GROW PRODUCT OFFERING, GROW CUSTOMER
BASE
Having accelerated the strategic transformation of our Markets
& Airlines during the pandemic and expecting the full
realisation of our Global Realignment Programme goals in 2023, our
business strategy is now focused on recovery and growth. Taking
into account the current macro environment, we will drive the
recovery by leveraging our core capabilities as well as increasing
the flexibility of accommodation and flight supply, with a
corresponding reduction in the proportion of risk capacity. In
addition, TUI Airline will continue to build resilience and improve
quality, following the above normal levels of disruption
experienced by the industry this year, as well as further enhance
our multi-layered approach to seat supply (in-house fleet plus
third party carriers) by building a central Capacity Demand
Management function.
We will invest into growth by offering more product choice,
growing our customer ecosystem into untapped segments, and
increasing customer value. This includes increasing the volume and
proportion of dynamically sourced packages, as well as
significantly increasing our component offer in accommodation only
and flight only. In addition, we will grow our multi-day tours
business, which operates in an attractive but fragmented market,
with the launch of a new digital platform; and we will expand our
car rental offer for both TUI and open-market customers. Finally,
we will maximise the value of each customer by enhancing our
ancillaries merchandising and offer across the entire TUI
ecosystem. All of these initiatives aim to enlarge TUI's customer
ecosystem and grow volumes, based on dynamic sourcing, which will
balance our risk capacity exposure.
CENTRAL TUI CUSTOMER ECOSYSTEM: TAP GROUP SYNERGIES, MAXIMISE
CUSTOMER VALUE
As well as growing customer volumes, our marketing and
distribution strategy focuses on maximizing customer value,
utilizing synergies between both of our business divisions. As the
basis for this, we will continue to strengthen and leverage the TUI
brand in existing and untapped customer segments. We are
streamlining the digital customer experience via the operation of a
single customer account, implementing a common payment process, and
deploying marketing and recommendations which cover all TUI
products (including in-flight and hotel). We also focus on
enhancing our app to enable customers to access all TUI products
and services more easily, as well as targeting further growth in
the proportion of digital sales made in-app. All of this will
facilitate a full product suite offering and cross-selling, and
increase the number of holiday and experience touchpoints we have
with the customer.
Sustainability agenda 'people, planet and progress'
We want to set the standard for sustainability in the market and
live up to our commitment. We believe that the sustainable
transformation should not be viewed as a cost factor, but that
sustainability pays off - for society, for the environment and for
business. Our strategy is therefore underpinned by clear,
evidence-based goals and targets on sustainability. Our new
Sustainability Agenda consists of three building blocks - People,
Planet and Progress.
Details see page 79.
People
1. We will ensure that local people and communities benefit from
tourism and the local supply chain.
2. We will empower a generation of sustainability changemakers.
TUI Care Foundation will drive positive social and environmental
impact in tourism communities around the world.
Planet
1. In 2022, TUI joined the Science Based Targets initiative
(SBTi), committing to implement emission reductions in line with
the latest climate science.
2. We will achieve net-zero emissions across our operations and
supply chain by 2050 at the latest. We will change the way we use
natural resources and become a circular business.
Progress
1. Together with our partners we will co-create the next
generation sustainable business model for the tourism industry,
through the Destination Co-Lab Rhodes.
2. We will enable our customers to make sustainable holiday
choices in every stage of the customer journey.
We already operate one of Europe's most carbon-efficient
airlines and we aim to continuously improve our environmental
performance. We will build on the progress we have already made and
reduce emissions further through our commitment to science-based
targets and our emission reduction roadmap. In 2022, relative
carbon emissions across our airlines decreased by 18.5 %. This
improvement was largely a result of significantly improved load
factors compared to 2021, as well as TUI's on-going re-fleeting
with older aircraft being replaced by new, more carbon-efficient
aircraft. In 2022, we operated with 19 Boeing 787 aircraft and the
Boeing 737 Max fleet grew from 25 to 35 aircraft during the
financial year.
People strategy - digital, engaging, inclusive
With their competence and commitment, our employees make a key
contribution to TUI Group's success. The challenging interplay
between our transformation to a digital platform company, the
impact of the COVID-19 pandemic and a volatile labour market have
substantially altered expectations about the way we work and how we
interact with present and future employees.
Against this overall backdrop, we have developed a new People
Strategy with Sybille Reiss, Chief People Officer and Labour
Director. The strategy adopts a holistic approach towards both our
HR function as such and our employees. It puts people first. Our
vision is to be "Digital, Engaging and Inclusive".
Our People Strategy focuses on strengthening our business and
enhancing the experience of existing and future employees. In order
to implement our strategy, we have adopted a mission defining our
relevant areas of action:
-- Simplification, harmonisation and focus
-- Digital transformation
-- Supporting growth
-- Positive employee experience
-- Diversity, equity and inclusion
-- Facilitating top performance
We are thus seeking to create a framework that empowers our
employees to deliver their best performance and succeed as a
team.
Further information is provided on pages 87 to 95.
TUI is set for recovery and growth
TUI has emerged from the pandemic as a more digital, more lean
and stronger company, which we believe positions us well to capture
further market growth potential. TUI will continue to grow its
differentiated Holiday Experience and Markets & Airlines
product offerings, grow the volume and value of its customer
ecosystem, increase flexibility for our customers and operations,
and maximise synergies within the business.
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 268 direct and indirect
subsidiaries at the balance sheet date. A further 17 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
pages 164 and 254.
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
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 110.
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 2022 consisted of eleven members,
including six Executive Board members, and is chaired by the
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 the changes implemented in the Executive Board and the GEC
with the start of the new financial year 2023 and with effect from
1 October 2022 and 1 November 2022, see page 10 and from page
11.
For further details, also 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
Region. TUI Group also comprises All other segments. The Group's
reporting structure thus remained 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 2022, Hotels & Resorts comprised a total
of 353 hotels with 275,144 beds. 322 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 2 47 49 98 106,059 Spain, Mexico, Caribbean, Cape Verde, Portugal, Morocco
Robinson 1 17 8 26 16,016 Spain, Greece, Turkey, Austria, Maledives
Blue Diamond 3 12 19 34 32,270 Cuba, Dom. Rep., Jamaica, Mexico, Saint Lucia
Others 25 119 51 195 120,799 Spain, Greece,
Turkey, Egypt
Total 31 195 127 353 275,144
As at 30 September 2022
Riu is the largest hotel group 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 Classic
Hotels, Riu Plaza Hotels (city hotels) and Riu Palace Hotels
(premium segment) target different customer groups.
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 brands include in particular the TUI signature
hotels TUI Blue, TUI Magic Life and TUI Suneo. TUI Blue, present in
about 20 countries, is TUI Group's youngest hotel brand and
targeting an international audience. TUI Magic Life is an
all-inclusive brand, targeting an international audience seeking
club holidays with different profiles in beachfront locations. TUI
Suneo offers value for money hotels.
Our hotels operated by third-party hoteliers include a total of
65 hotels belonging to our international concept brands. This
brings the total number of TUI Group portfolio hotels to 418.
Cruises
The Cruises segment comprises the joint venture TUI Cruises,
which operates cruise ships under the brands Mein Schiff and
Hapag-Lloyd Cruises, 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
Mein Schiff 7 0 7
Hapag-Lloyd Cruises 5 0 5
Marella Cruises 3 1 4
Total 15 1 16
As at 30 September 2022
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, an international reference guide for cruise ship
ratings, repeatedly ranked the ships operated by TUI Cruises among
the Top 5 liners in the 'Large ships' category. In Q3 2022, TUI
Cruises started the construction of two of three newbuildings that
will complement the Mein Schiff fleet until 2026 and bring it to
nine ships. After two pandemic years, TUI Cruises is thus
continuing its growth as planned. The Mein Schiff Herz is to be
transferred to the Marella Cruises fleet from 2023.
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. The
flagships Europa and Europa 2 have repeatedly received the highest
rating category of 5-star-plus in the Berlitz Cruise Guide and are
the only ships worldwide with this ranking.
With a fleet of four ships, Marella Cruises offers voyages in
different segments, including family and city cruises, in the
British market. The Mein Schiff Herz is to join the fleet as
Marella Voyager from June 2023.
TUI Musement
The TUI Musement segment delivers local services at our holiday
destinations around the world. To do this TUI is present in
numerous holiday destinations with its own staff. TUI Musement's
business model for the distribution of experiences, activities,
tours and tickets is based on an online platform open to customers
and suppliers. In addition, transfers are provided in the
destinations.
TUI Musement serves three customer groups:
-- TUI customers: Providing services to our guests in the
destination via tour guides as well as via the TUIDigital Assistant
App and the TUI Experience Center.
-- Strategic B2B customers: Digital and on-site services for
partners from various sectors of the travel industry, such as
airlines, cruise lines, ground transport, OTAs and tour
operators.
-- B2C open Market clients: Global tour and activity
distribution for travellers.
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.
Central Region
The Central Region segment comprises the tour operators and
airlines in Germany and the tour operator activities in Austria,
Poland, and Switzerland.
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 2022,
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 / rpk) 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 64) and in the Report
on Expected Developments (page 52).
Cost of capital
The cost of capital is calculated as the weighted average cost
of equity and debt (WACC). While the cost of equity reflects the
return expected by investors from TUI shares, the cost of debt 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 financial year 2022, we apply a cost of capital of TUI
Group of 12.63 %.
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.
In the year under review, TUI Group's ROIC amounted to 7.49 %
(previous year - 30.02 %). Taking into account the Group's weighted
average cost of capital of 12.63 %, this resulted in a negative
Economic Value Added of EUR 280.7 m (previous year negative
Economic Value Added of EUR 2.8 bn).
Invested Capital
EUR million Notes 2022 2021
Equity 645.7 - 418.4
Subscribed capital (24) 1,785.2 1,099.4
Capital reserves (25) 6,085.9 5,249.6
Revenue reserves (26) - 8,432.7 - 8,525.7
Non-controlling interest (29) 787.3 667.3
Silent Participations (27) 420.0 1,091.0
plus interest bearing financial liability items 5,921.0 7,509.0
Pension provisions and similar obligations (30) 601.4 935.1
Non-current financial liabilities (32) 1,731.4 3,036.1
Current financial liabilities (32) 319.9 284.6
Derivative financial instruments (41) 60.7 23.7
Lease liabilities (IFRS 16) (32) 3,207.5 3,229.4
less financial assets 1,669.6 1,383.7
Derivative financial instruments (41) 259.1 62.3
Cash and cash equivalents (22) 1,736.9 1,583.9
Other financial assets 173.5 237.6
Seasonal adjustment1 - 500.0 - 500.0
less overfunded pension plans 163.4 137.1
Invested Capital before addition of effects from 4,733.7 5,569.7
purchase price allocation
Invested Capital excluding purchase price allocation prior year 5,569.7 7,699.9
Ø Invested Capital before addition of effects from 5,151.7 6,634.8
purchase price allocation2
Invested Capital before addition of effects from 4,733.7 5,569.7
purchase price allocation
plus effects from purchase price allocation 315.4 296.9
Invested Capital 5,049.1 5,866.6
Invested Capital prior year 5,866.6 7,959.7
Ø Invested Capital2 5,457.8 6,913.1
1 Adjustment to net debt to reflect a seasonal average cash
balance.
2 Average value based at beginning and year-end.
ROIC
EUR million 2022 2021
Underlying EBIT 408.7 - 2,075.5
Ø Invested Capital* 5,457.8 6,913.1
ROIC % 7.49 - 30.02
Weighted average cost of capital (WACC)% 12.63 10.27
Value added - 280.7 - 2,785.6
* Average value based on balance at beginning and year-end.
Group performance indicators used in the Executive Board
remuneration system
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 2022
EBIT 320.0
FX effects from translation to budget rates - 25.1
EBIT at budget rates 294.9
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 2022
EBIT 320.0
FX effects from translation to budget rates - 25.1
EBIT at budget rates 294.9
plus amortisation / minus write-backs of other intangible assets and plus depreciation / 883.5
minus write-backs of property, plant and equipment
plus Delta Working Capital 1,073.4
minus other non-cash result items 201.6
minus share of result of joint ventures and associates - 100.7
plus dividends received by TUI AG from joint ventures and associates 0.2
minus paid net interest - 373.1
minus paid income taxes - 131.4
minus pension contributions - 181.1
minus net capex and investments - 315.9
Cash Flow before dividend 1,351.3
Reconciliation cash flow before dividend to Cash Flow Statement
EUR million 2022
Cash inflow from operating activities 2,077.8
plus cash inflow from investing activities - 308.2
less interest paid - 385.6
less payments made for the purchase of own shares - 0.6
less payments received from the sale of money markets fund shares - 7.1
Cash Flow before dividend at actual rates 1,376.3
Effect from translation to budget rates - 25.1
Cash Flow before dividend 1,351.2
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 normalised Group tax rate for the year under review
was reduced in the last two financial years 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 2022 2021
Underlying EBIT 408.7 - 2,075.5
less net interest expense - 465.9 - 448.9
Underlying profit before tax - 57.1 - 2,524.4
Income taxes (0 % assumed tax rate) 0.0 0.0
Underlying Group profit - 57.1 - 2,524.4
Minority interest 64.6 - 13.8
Underlying Group profit attributable to TUI shareholders of TUI AG - 121.7 - 2,510.6
Numbers of shares at FY end (in million) 1,785.2 1,099.4
Underlying earnings per share (EUR) - 0.07 - 2.28
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.
Following the introduction of the FISG
("Finanzmarktintegritätsstärkungsgesetz"), we have taken the
opportunity to review the Group's existing Risk Management System.
At TUI, managing risk has always been a vital part of how we
conduct our business. Our fully developed risk management system
has not been limited to identifying only those developments that
could jeopardise the companies continued existence, it has also
included the active management of all other material risks.
Management is limited to risks only, chances or opportunities are
managed in the controlling process; legal chances are reported in a
separate legal risk report.
The TUI Group Audit Committee has always been reviewing the
adequacy and effectiveness of the risk management system and will
continue to do so, but as the law now explicitly requires this, we
have included the Committee in the risk governance overview
below.
Risk Governance
Audit Committee
The Audit Committee, as a subcommittee of the Supervisory Board,
is overseeing the effectiveness of the risk management system. The
Group Risk Department Head reports twice a year on the system
itself, on topics which have been discussed in the Risk Oversight
Committee, the principal risks and their changes. The Committee
considers the adequacy and the effectiveness of the risk management
system and reviews and acknowledges the risk appetite formulated by
the Executive Board.
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.
Ultimate 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
organisation whereby employees are expected to be risk aware,
control minded and to '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 Board 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.
Chaired by the Chief Financial Officer, senior operational and
finance management as well as those central functions which are
fulfilling the role as a second line are represented on the
committee.
Leaders of central functions as well as senior executives from
the Group's major businesses are invited on a rotational basis to
present on their risk and control framework. This allows members of
the ROC to ask questions on the processes in place, the risks
present in each business or function, as well as any new or
evolving risks which may be on their horizon. It also provides
opportunity to seek confirmation that an appropriate risk culture
continues to be in place in each of the major businesses and that
there are no gaps between risk management at business level and at
function level.
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 team - Support & report
The Executive Board has also established a Group Risk team to
ensure that an adequate risk management system is set up and
functions effectively and that the risk management policy is
implemented appropriately across the Group. The team 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.
Business & 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 risks - moderate risk tolerance with regard to all
operational risks. With the market environment returning to normal
and the Group's business volume rising substantially, capacity
bottlenecks in parts of the infrastructure led to business
interruptions in the completed financial year, which the TUI Group
was only able to influence to a limited extent. These external
events thus temporarily led to an overall increase in the
operational risk portfolio. The Executive Board has taken measures
to increase the operational resilience of the business and aims to
manage operational risks appropriately in order to continue to
offer our customers consistent unique holiday experiences.
Compliance risks - a lower risk tolerance with regard to
compliance-related risks, including compliance with regulatory
requirements, the security of information in any form and the
prevention of harm to customers, employees and all other
stakeholders.
Financial risks - a continued low, but temporarily slightly
increased risk tolerance with regard to financial risks due to
volatile prices of important tourism expenses. In the current
financial year, the Group has taken various measures to reduce the
debts incurred in the context of the COVID-19 pandemic. The
Executive Board's goal is to further reduce the German government's
exposure and improve balance sheet ratios. With a fundamentally
unchanged hedging policy, the hedging ratios for all input costs in
foreign currency and fuel risks are currently still below the
target values. We assume that the hedging ratios will approach the
historical ratios again in the medium term.
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
materialising 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 % 10 - < 30 % 30 - < 60 % 60 - < 80 % ? 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 materialising 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.
During the pandemic, there was a significant reduction in the
companies' operation which allowed for a lower level of operational
risk management. Instead, financial risks in terms of liquidity
management were the primary focus during that time and these were
being closely monitored and managed by the Executive Board.
With the ramp up of the business towards the summer season, risk
management activities throughout the operational businesses and
central functions resumed and formal requirements for risk
reporting were re-introduced taking into account changes to the
business as a result of the ongoing transformation. This however
came at the same time as the increased volumes began putting
pressure on the external infrastructure when some operational risks
increased over which we had only limited control.
The conclusion from all of the above assurance work is that
despite the temporary operational weaknesses as businesss activity
resumed, the risk management system has functioned effectively
throughout the year and there have been no significant failings
identified. Of course there is always room for improvement,
especially considering the necessary adaptions to the changes in
the Group during the pandemic and the Risk Champions and the Group
Risk department continue to work together to enhance the risk
management and reporting processes.
Finally, in accordance with Section 317 (4) HGB (German
Commercial Code), the auditor of TUI AG has reviewed the 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. Following the auditing standard, the auditor
has focused on the determination of the risk bearing capacity of
TUI and the comparison of this performance indicator with the
aggregation of the Group's Risk portfolio. To determine the risk
bearing capacity, we leveradge our considerations given and
calculations made for the Viability Statement. This procedure has
been approved by the Group Executive Committee.
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. 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 minimise 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 2022 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 do not consider the COVID-19 pandemic as a
risk in its own right, but as an event that has led to far-reaching
consequences for our offer in source markets as well as
destinations. 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.
From the Executive Board's perspective, despite the existing
risks, the TUI Group currently has and will continue to have
sufficient funds, resulting from both borrowings and operating cash
flows, to meet its payment obligations and to ensure the going
concern of the company accordingly in the foreseeable future. In
this context, the Executive Board assumes that the credit lines
expiring in summer 2024 will be refinanced. Therefore, as at 30
September 2022, the Executive Board does not identify any material
uncertainty that may cast significant doubt on the Group's ability
to continue as a going concern.
In its assessment, the Executive Board assumes that booking
behaviour in the 2023 financial year will largely correspond to the
pre-pandemic level. The Executive Board assumes that travel
behaviour will not be affected by further long-term closures and
lockdowns or by the impact of Russia's war of aggression on
Ukraine.
The Executive Board does not consider the remaining risk with
regard to a further pandemic / war-related change in booking
behaviour to be a threat to the company's existence. Nevertheless,
the intensified general price increase of recent months could
continue, in particular due to rising energy costs, and lead to a
significant reduction in the private budget available for travel
services, thus lowering purchasing power and resulting in declining
customer demand. In addition, a permanent increase in fuel costs as
well as other services, especially those we purchase in US dollars,
could lead to an increase in our input costs. In view of the
disruptions in our flight operations in H2 2022, we have initiated
measures to increase the resilience of our flight operations, for
example by deploying more stand-by aircraft. In the medium term, we
expect the situation at international airports to ease.
For further information please refer to the Viability Statement
on page 48.
See chapter Going Concern Reporting in accordance with UK
Corporate Governance Code, page 162.
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
The Group's strategy ensures that we are more vertically
integrated, which reduces the impact of disruption by pure digital
players.
The overall strategy is to drive profitable topline growth
whilst reducing our cost base. This involves the integration of our
businesses and the development of core platform capabilities and
technical infrastructure providing flexibility of IT services.
Our focus is on enhancing our operations and customer experience
by providing engaging, intuitive and seamless customer service
through the delivery of these projects.
The lack of integration and flexibility within our systems and
operations, particularly in the Markets & Airline businesses
can impact our competitiveness and our ability to provide a
superior customer experience as well as to deliver on quality and
operational efficiency.
Mitigating Factors
-- We develop our own software solutions and combine them in an
ecosystem for use in all markets of ourMarkets & Airlines
division.
-- 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 Group 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. 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.
Customer demand has returned after the significant impact of the
COVID-19 pandemic. Nevertheless, the Russian war of aggression
against Ukraine and energy prices are significantly worsening the
economic outlook in our key markets.
Adverse climate conditions (heat-waves, droughts, heavy rain)
bear the risk that customer demand for popular holiday
destinations, where TUI is active, decline. This could impact our
mid-term growth and the valuation of our hotel assets in these
countries.
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.
-- Experience shows that many consumers give high priority to
their travel spending.
-- Leveraging our scale to keep costs down and prices
competitive.
-- The multitude of source markets, which react to external
shocks to varying degrees, can lead to abalancing effect.
-- Promoting the benefits of travelling with a globally
operating tour operator to increase customerconfidence and peace of
mind. This became particularly prominent during the pandemic where
customers are seeking ahigher level of security from reputable
companies.
-- With our asset right strategy in our hotels business, we aim
a mix of owned, leased or other partnershiparrangements to manage
the investment into the holiday destinations. This secures capacity
and thus limiting thefinancial investment.
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 continues to be high as a result of the cost saving
measures related to our employees as well due to the tourism
industry being a less attractive sector.
Mitigating Factors
-- Support retention by refreshing our Performance Management
processes, aligning our development opportunities to the business
needs and communicating all internal vacancies to our
employees.
-- 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.
-- Build and develop internal talent pools of our high potential
employees ensuring that they are diverseand inclusive.
-- A strategically aligned leadership programme for high
performing management at all levels and the creation of strong
management development programme for all people managers.
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. After two years heavily impacted by the
COVID-19 pandemic, operational activity has recovered during H2
2022, leading to a more normalised cashflow profile again.
Nevertheless, we are still 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.
The price increases observed in the year under review had no
relevant impact on customer demand.
Mitigating Factors
-- The Executive Board has continued to place significant focus
on the review of the Group's cash flowposition during and after the
COVID-19 crisis period.
-- The resumption of holidays, and ramp-up of operations during
2022 have contributed towards improving thecash positon.
-- With the customer deposits received for the coming seasons ,
the positive cash flow in 2022 and, the netfunds from the financing
measures implemented in the year under review (capital increases in
October 2021 and May2022 net of government hand-backs), the
Executive Board believes that, despite the existing risks, the TUI
Groupcurrently has and will continue to have sufficient funds
resulting both from the borrowing and from operating cashflows to
meet its payment obligations and to continue as a going concern.
The Executive Board no longer considersthe remaining risk with
regard to a further pandemic-related change in booking behaviour as
a threat to the companyas a going concern. For the 2023 financial
year, it is expected that booking behaviour will largely correspond
tothe pre-pandemic level. The Executive Board assumes that travel
behaviour will not be affected by further long-termclosures and
lockdowns or by the impact of Russia's war of aggression on
Ukraine.
-- The Executive Board does not consider the remaining risk with
regard to a further pandemic / war-relatedchange in booking
behaviour to be a threat to the company's existence. In view of the
disruptions in our flightoperations in H2 2022, we have initiated
measures to increase the resilience of our flight operations, for
exampleby deploying more stand-by aircraft. In the medium term, we
expect the situation at international airports to ease.
-- 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 impact from the COVID-19 pandemic, the
review was suspended untilMarch 2022 and resumed in September 2022.
Higher limits will be applied at the first two cut-off dates
beforenormalised limits have to be complied with from September
2023. As of September 2022, TUI successfully compliedwith the
financial covenants.
-- Regularly reviewing ways in which 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 Statement on page 48 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 only
limited lines available to put in place hedges to manage the
volatility of future seasons.
Furthermore, changes in macroeconomic conditions, such as those
that were experienced as a result of the pandemic and other
geo-political events, like the war on Ukraine, can have an impact
on fuel rates and 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. The recent
increase in inflationary pressures has led to central banks
increasing interest rates. The aggressive raising of US interest
rates by the US Federal Reserve vs. a slower pace of monetary
tightening by other central banks, most notably the ECB, has
increased interest rate differentials and caused the US dollar to
strengthen against other currencies such as the Euro and British
Pound. Where the Group has unhedged exposures, this will have an
adverse impact on input costs denominated in US dollars.
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
hedging cover is taken out ahead of the markets'customer booking
profiles, where hedging lines allow. This provides a degree of
certainty over input costs whenplanning pricing and capacity,
whilst also allowing some flexibility in prices so as to be able to
respond tocompetitive pressures if necessary.
-- 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 all of the Group's hedging needs. We regard this
as a temporary situation which has already significantly improved
in the recent months.
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. Access to EU airspace post-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
-- Dedicated workstreams to coordinate suitable mitigation
strategies where the UK exit from the EuropeanUnion has impacted on
our operations, particularly the airlines.
-- Regular engagement and lobbying towards relevant UK and EU
decision makers to stress the continuedimportance of a liberalised
and less regulated aviation market across Europe to allow access to
investment capitaland 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 digitalisation,
embracing emerging technologies, growing global cyber-crime
activity, Russia-Ukraine conflict and more regulation (e. g. EU
GDPR). Our consolidation under the TUI brand and increasing
dependence on online sales and customer care increases our exposure
and the potential worst-case impact of a successful
cyber-attack.
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, andcolleagues are made aware of information security
risks through appropriate training - Security first in everythingwe
do.
-- Increasing the maturity and coverage of our Security
Operations Centre and monitoring tools toanticipate, detect and
respond to criminal attacks and resolve information security
incidents.
-- Scaling out our Security Engineering capability 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 driving the
sustainable transformation of the tourism industry.
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 maximise our positive impact on destinations and
minimise 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
-- The TUI Sustainability Agenda purpose is to set and drive
industry standards, ambitious goals and developtransformation
roadmaps for all parts of the business.
-- This means to actively engage colleagues, partners and
customers, bringing sustainability to life in a tangible and
emotional way.
-- The Group Sustainability department sets clear goals,
priorities, and the framework to deliver the Sustainability
Agenda.
-- Operating one of the most carbon efficient airlines in Europe
with continued investment in new, moreefficient aircraft and cruise
ships.
-- Our ambition is to achieve net-zero emissions across our
operations and supply chain by 2050 at thelatest.
-- Science-based targets have been set for our airline, hotel
and cruise operations by 2030, validated bythe Science Based
Targets initiative (SBTi).
-- Development and implementation of emission reduction roadmaps
for airlines, cruises and hotels to significantly reduce
emissions.
-- Adhering to increasingly supply chain focused regulations (e.
g. German Supply Chain Act, EU Supply chaindue diligence regulation
2025) rolling out new processes and structure with a strong focus
on procurement.
-- Implemented an environmental management system with all TUI
airlines having achieved ISO 14001certification.
-- Driving up social and environmental standards through
accommodation suppliers achieving certifications recognised by the
Global Sustainable Tourism Council (GSTC) and applying the GSTC
Criteria to TUI experiences.
-- Enabling customers to make more sustainable holiday choices
by launching our Green & Fair label.
-- Working with partners in the Destination Co-Lab to develop
Rhodes into a beacon for sustainabledevelopment of holiday
destinations, with the ambition to share the learnings.
-- We are working on improving our alignment to climate-related
financial disclosures in line with the TCFD,by publishing TUI
Groups first TCFD statement in this Annual Report.
See page 123.
Nature of Risk
9. 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.
This risk has crystalised during the summer season when capacity
bottlenecks in third party infrastructure caused some temporarily
business interruption.
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 inherent risk in this
area.
-- A robust prepayment authorisation process is established and
embedded to both limit the level of prepayments 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.
-- Developing adequate controls around key suppliers operative
ability. In service meetings, for example, wediscuss current
challenges with suppliers even more closely, so that we are also in
a position to react operationally ourselves.
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 disasters such as hurricanes or tsunamis; outbreaks
of disease such as the 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
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.
Mitigating Factors
-- Within our Group SHS centre of excellence we have a
centralised Crisis Management Planning and Co-ordination function,
providing centralised frameworks, personnel reporting structures,
incident management systemsand crisis communications plans for use
in the local delivery of any response.
-- Our well-established crisis management procedures and
emergency response plans are activated when anevent of this nature
occurs and focus on the welfare of our customers.
-- Due to our presence in key holiday destinations, in the event
of a local event occurring, we can offeralternative options to our
customers and remix our destination portfolio away from the
affected area in futureseasons if necessary.
Nature of Risk
B. Security Health & Safety failure
The safety and security of customers and colleagues is of
paramount importance to any holiday and travel service
provider.
There is the risk of accidents, incidents or events occurring
causing illness, injury or death to customers or colleagues whilst
on a TUI holiday or provided activity or service.
In addition to the harm caused the affected individual(s), this
could result in disruption to operational activities, reputational
damage to the business and / or financial liabilities through loss
of earnings, lack of demand and / or legal claims being brought by
the affected parties.
Mitigating Factors
-- The established Group Security, Health & Safety (Group
SHS) centre of excellence oversees safety and security risk
management activities are appropriately conducted across the
organisation, delivering alignment andconsistency across the TUI
Group.
-- Group SHS' operational responsibilities include TUI Tour
Operations, TUI Hotels & Resorts and TUI Musement (including
Intercruises). Operational safety and security risk management
activities for Airline andCruise operations are managed from within
the respective business units.
-- Data-led, risk-based Safety and Security Risk Management
systems are in place.
-- Safety and Security Risk Management clauses are included in
supplier contracts.
-- Appropriate insurance policies are in place to mitigate any
financial losses.
Nature of Risk
C. 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 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.
-- Risk based compliance management systems managing the most
relevant legal areas for the Group.
-- Regular reporting of Integrity and Compliance Director in
different bodies (Group Executive Committee,Audit Committee, Group
Works Council) in order to guarantee appropriate monitoring,
supervision and implementationof action plans and to strengthen the
Integrity & Compliance culture across the Group.
-- Embedded legal expertise in all major businesses responsible
for maintaining high quality relationshipswith 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
D. 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). There are three significant
joint ventures within the Group - Riu, TUI Cruises and Sunwing.
For details on our strategy refer to page 23.
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 October 2022 and
covers the period until 30 September 2025. A three-year horizon is
considered appropriate for a fast moving competitive environment
such as tourism.
The global travel restrictions to contain COVID-19 have had a
continuous negative impact on the Group's earnings and liquidity
development since the end of March 2020. To cover the resulting
liquidity needs, the Group has carried out various financing
measures in the financial years 2020 and 2021, which, in addition
to a capital increase, the use of the banking and capital markets
and cash inflows from the sale of assets, also include financing
measures from the Federal Republic of Germany in the form of a KfW
credit line totalling EUR 2.85 bn, an option bond from the Economic
Stabilisation Fund (WSF) totalling EUR 150 m and two silent
participations from the WSF totalling EUR 1.091 bn. The financing
measures are described in detail in the annual reports for the past
two financial years.
With the entry of the new shares in the commercial register on
28 October 2021 and final settlement with the participating banks
on 2 November 2021, TUI AG successfully completed another capital
increase. The gross issue proceeds totalled around EUR 1.1 bn. The
Group's share capital increased nominally by EUR 523.5 m to EUR
1.623 bn.
On 17 May 2022, TUI AG placed around 162.3 m new shares with
institutional investors in the framework of a capital increase
against cash contributions without subscription rights for
shareholders by way of an accelerated placement, corresponding to
around 10 % of TUI AG's share capital. The gross proceeds of around
EUR 425.2 m from the capital increase and available cash were used
to fully repay the German government's silent participation II
(Economic Stabilisation Fund, 'WSF') of EUR 671.0 m in full ahead
of schedule on 30 June 2022. Including the coupons to be shown as
dividends, TUI repaid EUR 725.4 m to the WSF. Following full
repayment and termination of the KfW credit line, TUI has to pay
remuneration to the German state for the coupons saved by the early
repayment of Silent Participation II.
As at 30 September 2022, TUI Group's revolving credit facilities
totalled EUR 3.74 bn, they have a term until summer 2024. The
financing commitments available until 30 September 2021 were
utilised in the amount of EUR 0.6 bn as at the balance sheet
date.
With regard to 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 not exceeding EUR 700 m, for example from capital
measures or disposals of assets or companies, to reduce the
financing granted to TUI AG to bridge the effects of COVID-19. In
accordance with this agreement, TUI AG returned the unused credit
facility of EUR 170 m on 1 April 2022. In addition, the volume of
unused credit commitments under the KfW credit line as at 31 March
2022 was reduced by EUR 413.7 m. Finally, 913 of the 1,500 warrant
bonds issued to WSF were redeemed. A purchase price of EUR 91.3 m
plus accrued interest and early repayment penalties of EUR 7.2 m
was paid for these. On June 30, 2022, the existing and at that date
undrawn KfW credit lines were reduced by a further EUR 336 m to EUR
2.1 bn.
For regulatory reasons due to Brexit, the credit line of a
British bank (around EUR 80 m liquid funds and EUR 25 m guarantee
line) could not be extended beyond summer 2022. It was therefore
repaid or terminated as of July 20, 2022.
After 20 July 2022, 50 % of individual specific cash inflows
exceeding EUR 50 m must be used to reduce the financing granted to
TUI AG to bridge the effects of COVID-19; there is no maximum
limit.
TUI AG's EUR 1.64 bn credit line from private banks and KfW
credit line are subject to compliance with certain financial target
values (covenants) for debt coverage and interest coverage, the
review of which is carried out on the basis of the last four
reported quarters at the end of the financial year or the half-year
of a financial year. Against the backdrop of the ongoing pressures
from the COVID-19 pandemic, the review has only been resumed in
September 2022 and TUI was in full compliance. In addition, higher
limits are to be applied on the first two cut-off dates before
normalised limits have to be complied with from September 2023.
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 162.
Currently, TUI Group is only marginally affected by the negative
financial impact of the COVID-19 pandemic.
Although the number of COVID-19 cases remained high, in
particular due to the rapid spread of the Omicron variant, contact
restriction measures and travel restrictions were gradually eased
in most countries in the first months of the calendar year and
business was fully resumed in all segments. As of April 2022, the
entire fleet of the Cruises Segment was in operation, and as of
summer 2022, the Hotels & Resorts Segment was able to offer the
entire product portfolio. Demand recovered very robustly, albeit
later than assumed in the previous year's planning due to the
travel restrictions in place at the beginning of the financial
year. In the Cruises segment, the recovery in demand started later
than in the other segments. As a result of the pandemic, a more
short-term booking behaviour continues to be observed. The
unprecedented restart of business led to flight disruptions,
particularly in the UK and the Netherlands, but also in other
source markets, which impacted the Group's result. The price
increase in the course of the financial year, especially for fuel,
and changes in exchange rates could not be fully offset by higher
travel prices and additionally burdened the result in the past
financial year.
From the Executive Board's perspective, despite the existing
risks, the TUI Group currently has and will continue to have
sufficient funds, resulting from both borrowings and operating cash
flows, to meet its payment obligations and to ensure the going
concern of the company accordingly in the foreseeable future. In
this context, the Executive Board assumes that the credit lines
expiring in summer 2024 will be refinanced. Therefore, as at 30
September 2022, the Executive Board does not identify any material
uncertainty that may cast significant doubt on the Group's ability
to continue as a going concern.
In its assessment, the Executive Board assumes that booking
behaviour in the 2023 financial year will largely correspond to the
pre-pandemic level. The Executive Board assumes that travel
behaviour will not be affected by further long-term closures and
lockdowns or by the impact of Russia's war of aggression on
Ukraine.
The Executive Board does not consider the remaining risk with
regard to a further pandemic / war-related change in booking
behaviour to be a threat to the company's existence. Nevertheless,
the TUI Group's performance might be impaired by the following
factors. The intensified general price increase of recent months
could continue, in particular due to rising energy costs, and lead
to a significant reduction in the private budget available for
travel services, thus lowering purchasing power and resulting in
declining customer demand. In addition, a permanent increase in
fuel costs as well as other services, especially those we purchase
in US dollars, could lead to an increase in our input costs.
Further burdens could result from continued or increased flight
disruptions. If these risks were to materialise, compliance with
the financial covenants as at 31 March 2023 and 30 September 2023
could be jeopardised. The Executive Board considers the
simultaneous occurrence of these risks to be very unlikely and
therefore assumes that the financial targets (covenants) will be
met.
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)
1. Conceptual framework and governance
The internationally recognised framework created by COSO
(Committee of Sponsoring Organizations of the Treadway Commission)
forms the conceptual basis for TUI Group's accounting-related
internal control system.
On the basis of section 107 (3) of the German Stock Corporation
Act, the Audit Committee of the Supervisory Board of TUI AG reviews
the auditing of the annual financial statements, monitoring the
accounting process and the effectiveness of the internal control
and risk management systems. The reliability of financial reporting
and the monitoring of the financial accounting process as well as
the effectiveness of the internal control and risk management
systems are described in the Audit Committee Report. This also
takes account of the effectiveness of the accounting-related
internal control and risk management system.
Report of the Audit Committee, see page 18.
The Group's auditors gain insight into TUI Group's established
control environment and control measures. The accounting-related
audits by the auditor are complemented by an assessment of selected
control definitions and their implementation. 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 in relation
to Group accounting.
In Group accounting, the risk management system, implemented as
a component of the internal control system in the form of an
Enterprise Risk Management (ERM) System, also addresses the risk of
misstatements in Group bookkeeping and external reporting. A more
detailed explanation of the risk management system is provided in
the section on Risk Governance 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, above all supplied by SAP. When
preparing TUI AG's consolidated financial statements, the
subsidiaries complement their individual financial statements by
setting up standardised reporting packages in the Oracle Hyperion
Financial Management (HFM) reporting system. HFM is used as the
uniform reporting and consolidation system throughout the Group and
hence no additional interfaces are involved in preparing the
consolidated financial statements.
All consolidation processes used to prepare the consolidated
financial statements of TUI AG, e. g. capital consolidation, the
consolidation of assets and liabilities and the elimination of
expenses and income and 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 present complementary information to explain TUI AG's
consolidated financial statements.
The HFM reporting and consolidation system has an in-built
workflow process whereby, when the reporting companies capture
their data packages within the system, they are then locked out
from making any further changes to that data. This ensures data
integrity within the system. This workflow process 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.
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.
To safeguard financial processes, there is a Group-wide
framework under which all major companies included in the
consolidated financial statements as fully consolidated companies
are required to report the nature of their controls and their
implementation for financial reporting, fraud prevention and
detection and effectiveness of working capital management in
relation to defined risks from financial processes to the Group
Risk & Controls function with system support and to assess
their effectiveness on a quarterly basis. The Group Risk &
Controls function reviews these reports on a sample basis and
provides advice on how to improve efficiency and effectiveness.
Where financial processes are carried out in the Group's own Shared
Service Center, this function provides support for the further
development of the process and control framework. Based on the
feedback received, Internal Audit selects companies for an in-depth
review of the control measures in accordance with its own risk
assessment.
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 minimise 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 2022 compared with our guidance
Compared with our original expectations, the TUI Group's
business performance was impacted by the travel restrictions caused
by the spread of the Omicron variant in the course of the first
half of the year and the associated booking restraint after the
turn of the year. Following the successive lifting of the travel
restrictions, business was fully resumed in all segments. As of
April 2022, the entire fleet of the Cruises Segment was in
operation, and as of summer 2022, the Hotels & Resorts Segment
was able to offer the entire product portfolio. Demand recovered
very robustly, albeit later than assumed in the previous year's
planning due to the travel restrictions in place at the beginning
of the financial year. In the Cruises segment, the recovery in
demand started later than in the other segments. A more short-term
booking behaviour continues to be observed. The restart of business
led to flight disruptions, particularly in the UK and the
Netherlands, but also in other source markets, which impacted the
Group's result. The price increase in the course of the financial
year, especially for fuel, and changes in exchange rates could not
be fully offset by higher travel prices and additionally burdened
the result in the past financial year.
Overall, the operating and financial indicators showed a
positive year-on-year development, as expected in our forecast.
In the year under review, turnover by the TUI Group rose from
EUR 4.7 bn to EUR 16.5 bn. The year-on-year growth of 247.4 % at
constant exchange rates thus matched the significant increase
assumed in our forecast.
Also in line with expectations, TUI Group's underlying EBIT
recovered by EUR 2,484.2 m to an operating profit of EUR 408.7 m in
financial year 2022. This means that the significant improvement in
underlying EBIT that we had expected was achieved. In our Half-year
Financial Report 2022, we had specified this expectation of a
significantly positive underlying EBIT.
As expected, net charges of EUR 58.7 m were adjusted in the
earnings statement in the reporting year.
As a result of the significant recovery in underlying EBIT, ROIC
and value added also improved significantly in financial year 2022,
as expected. In the year under review, TUI Group's ROIC amounted to
7.49 % (previous year - 30.02 %). Taking into account the Group's
weighted average cost of capital of 12.63 %, this resulted in a
negative Economic Value Added of EUR 280.7 m (previous year
negative Economic Value Added of EUR 2.8 bn).
In accordance with our forecast, in which we had expected a
significant increase in net tangible and financial investments, the
Group had cash outflows from net tangible and financial investments
of EUR 315.9 m in the reporting year (previous year cash inflows of
EUR 699.1 m).
As expected, the net debt of EUR 3.4 bn reported at the end of
the financial year 2022 was significantly below the previous year's
figure of EUR 5.0 bn. The significant decrease was influenced in
particular by the cash inflow from operating activities of EUR
2,077.8 m as well as the cash inflow from the capital increases
carried out in the reporting year in the amount of EUR 1,522.7 m
less the funds used for the repayment of Silent Participation II to
the Economic Stabilisation Fund of EUR 671.0 m.
For financial year 2022, we had expected a significant reduction
in specific CO2 emissions compared to financial year 2021. In the
year under review, the relative CO2 emissions of our airlines
reduced by 18.5 % from 78.0 g CO2 / rpk to 63.6 g CO2 / rpk. This
improvement was somewhat weaker than expected, as business was slow
to recover over the course of the year. It is mainly due to higher
load factors compared to 2021 as well as our fleet renewal, which
involves replacing older aircraft with new, more CO2-efficient
aircraft.
Projected development of global situation
Projected development of World Output
Var. % 2023 2022
World + 2.7 + 3.2
Eurozone + 0.5 + 3.1
Germany - 0.3 + 1.5
France + 0.7 + 2.5
UK + 0.3 + 3.6
US + 1.0 + 1.6
Russia - 2.3 - 3.4
Japan + 1.6 + 1.7
China + 4.4 + 3.2
India + 6.1 + 6.8
Source: Projections of International Monetary Fund (IMF), World
Economic Outlook, October 2022
Macroeconomic situation and market development in tourism
Global economic growth is impacted by high inflation, the war in
Ukraine with the associated tightening of gas supplies from Russia
to Europe and the lingering effects of the COVID-19 pandemic. The
International Monetary Fund (IMF) revised its global growth
forecast for calendar year 2023 down to 2.7 % (IMF, World Economic
Outlook, October 2022).
International tourism has so far shown signs of a strong and
steady recovery from the effects of the pandemic, despite a
substantial increase in economic and geopolitical challenges. The
recovery of tourism has picked up steam in many parts of the world,
with international tourist arrivals in some regions already having
returned to or even exceeding pre-pandemic levels. The robust
recovery of tourism is reflected not only in the tourism data for
many destinations across the globe, but also in various industry
indicators such as air passenger traffic and hotel metrics. In
fact, the stronger-than-expected rise in demand has also created
substantial operational and workforce challenges in tourism
companies and infrastructure, in particular airports (UNWTO, World
Tourism Barometer, September 2022).
The lifting of the remaining travel restrictions and growing
consumer confidence will be key stimuli for the further recovery of
the sector in an environment of increasing economic headwinds and
geopolitical challenges. The combination of higher interest rates
in all major economies, rising energy and food prices and the weak
development of the global economy, with the growing prospect of
recession in some regions, are of major relevance for the further
recovery of international tourism in 2023. The potential slowdown
can be seen in the latest UNWTO Confidence Index, which reflects a
more cautious outlook, as well as in booking trends, which are
showing signs of slower growth (UNWTO, World Tourism Barometer,
September 2022).
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 view of the environment characterised by the pandemic,
Russia's ongoing war of aggression on Ukraine and the intensified
general price increase in recent months, the Executive Board
believes it would not be appropriate to issue a specific
quantitative forecast for revenue and underlying EBIT for the new
financial year 2023 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 2023 are revenue and underlying
EBIT.
Definition of underlying EBIT in Value-oriented Group management
on page 30.
Key performance indicators used for regular value analysis are
Return On Invested Capital (ROIC) and Economic Value Added. ROIC
for a given segment is compared with the segment-specific cost of
capital.
For financial year 2023, it is expected that travel restrictions
will no longer have a material impact on TUI's business and that
TUI's business will return to 2019 levels. However, in financial
year 2023, fuel costs are expected to remain high as well as energy
and food prices. The cost-saving initiatives already implemented,
especially in Markets & Airlines and the segment TUI Musement,
will have a positive effect.
In the planning of the Hotels & Resorts segment, results are
expected to improve compared to 2022, in particular as travel
restrictions are no longer expected. This is supported by TUI's
ability to steer customer volumes to its own hotels via its direct
distribution.
In the Cruises segment, Marella and TUI Cruises are expected to
operate the full fleet in financial year 2023, with load factors
approaching those of financial year 2019. However, cost base
inflation will impact earnings in the 2023 financial year.
The development of TUI Musement is, on the one hand, dependent
on the development of customer numbers in the Markets &
Airlines segment. On the other hand, TUI Musement will generate
growth through the sale of tours, activities and tickets, which
will be achieved by expanding own / direct sales via the internet
and app.
In Markets & Airlines the cost-saving measures implemented
are expected to cushion the impact of cost base inflation on
earnings. It is expected that the disruptions to flight operations
in the 2022 financial year will not recur in 2023, partly through
the airports' own measures and partly because they are adjusting
their capacities to a higher load factor.
Below, we present TUI Group's expected development in financial
year 2023 based on the constant currency rates for financial year
2022.
Revenue
TUI Group revenue totalled EUR 16.5 bn in the year under review.
For financial year 2023, we expect a further strong increase in TUI
Group's revenue year-on-year.
Underlying EBIT
TUI Group's underlying EBIT in financial year 2022 amounted to
EUR 408.7 m. For financial year 2023, we expect TUI Group's
underlying EBIT to improve significantly year-on-year.
Adjustments
For financial year 2023, we expect a net negative effect from
adjustments in a range of EUR 60 m to EUR 80 m.
For details on objectives and strategies, see page 23 onwards;
for details on risks, see Risk Report from page 34 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
2023, we have defined the Group's net capital expenditure and
investments and its net financial position as key performance
indicators.
Net capex and investments
For financial year 2023, we expect net capex and investments in
a range of EUR 450 m to EUR 500 m.
Net financial position
For financial year 2023, we expect the Group's net debt to be
broadly stable.
Sustainable development
Climate protection and emissions
We have identified specific carbon emissions (in g CO2 / rpk)
from our aircraft fleet as the key non-financial performance
indicator. For financial year 2023, we expect specific CO2
emissions to slightly fall in comparison with financial year
2022.
Overall Executive Board assessment of TUI Group's current
situation and expected development
At the date of preparation of the Management Report (12 December
2022), the Executive Board assumes that booking behaviour in the
2023 financial year will largely correspond to the pre-pandemic
level. The Executive Board assumes that travel behaviour will not
be affected by further long-term closures and lockdowns or by the
impact of Russia's war of aggression on Ukraine. Nevertheless, the
intensified general price increase of recent months could continue,
in particular due to rising energy costs, and lead to a significant
reduction in the private budget available for travel services, thus
lowering purchasing power and resulting in declining customer
demand. In addition, a permanent increase in fuel costs as well as
services, especially those we purchase in US dollars, could lead to
an increase in our input costs. In view of the disruptions in our
flight operations in H2 2022, we have initiated measures to
increase the resilience of our flight operations, for example by
deploying more stand-by aircraft. In the medium term, we expect the
situation at international airports to ease.
For financial year 2023, 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
In particular, a faster decline in fuel costs as well as a lower
general price increase would have a positive impact on the TUI
Group and its segments.
Corporate strategy opportunities
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 TUI Musement 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. % 2022 * 2021
World + 3.2 + 6.0
Eurozone + 3.1 + 5.2
Germany + 1.5 + 2.6
France + 2.5 + 6.8
UK + 3.6 + 7.4
US + 1.6 + 5.7
Russia - 3.4 + 4.7
Japan + 1.7 + 1.7
China + 3.2 + 8.1
India + 6.8 + 8.7
* Projection.
Source: International Monetary Fund (IMF), World Economic
Outlook, October 2022
In calendar year 2022, the economy in the Eurozone initially
continued to recover from the adverse economic effects of the
COVID-19 pandemic as the driving forces resulting from the easing
of the pandemic-related restrictions remained strong until the
middle of the year. As a result, GDP initially continued to grow
despite the distortions caused by the war in Ukraine. In the second
half of the year, however, global economic activity showed a marked
slowdown due to the sustained energy price shock and high inflation
so that growth rates in most economies are projected to decline
overall versus the prior year (IMF, World Economic Outlook, October
2022).
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 from page 71, Risk report from page 34 and
Financial instruments in the Notes from page 224.
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 used 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 an average of
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.
With the outbreak and the global spread of the COVID-19 pandemic
in the first quarter of calendar year 2020, all activities in the
sector came to a standstill. Versus the 2019 reference period,
international tourist arrivals declined by 72.1 % in calendar year
2020 and by 69.6 % in calendar year 2021.
The lifting of restrictions on travel and the progress delivered
in COVID-19 vaccinations contributed to boost consumer confidence
and gradually restore safe mobility in Europe and other parts of
the world. From January to July 2022, international tourism
rebounded with international tourist arrivals down 42.9 % globally
versus the 2019 reference period. In Europe, this indicator was
25.6 % below 2019 levels (UNWTO, World Tourism Barometer, September
2022).
Change of international tourist arrivals vs. prior years
Var. % 2022* 2021
vs. 2019 vs. 2019
World - 42.9 - 69.6
Europe - 25.6 - 59.4
Asia and the Pacific - 86.1 - 94.3
Americas - 35.3 - 62.5
Africa - 40.4 - 72.2
Middle East - 23.9 - 70.7
Source: UNWTO World Tourism Barometer, September 2022 * 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. Their
advantage compared with direct suppliers is generally related to
their distribution and (in the case of tour operators) fulfilment
capabilities. Travel intermediaries include tour operators and
online travel agencies (OTAs), whose business models vary
substantially. 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. Booking preference has shifted to online over time, a
trend which was further accelerated during the pandemic. In order
to secure flight and hotel capacity in advance, a tour operator may
enter into a wholesale contract with the supplier, often involving
some form of commitment to a certain amount of capacity at a
specified price. Where the tour operator commits to capacity, they
take on the risk of filling it; in return, they can expect the
supplier to offer them a favourable rate and the opportunity to
secure accommodation on an exclusive basis, as well as the ability
to yield the capacity. Alternatively, tour operators can
dynamically access flight and hotel supply, either direct with the
supplier, or via a bedbank, or via a global distribution system.
This does not involve taking risk, and provides additional choice
and flexibility for the customer (for example, relating to choice
of departure airport, time of flights and duration of holiday).
OTAs, by contrast, typically do not commit to taking capacity, nor
are they involved in the fulfilment of the holiday. Their offering
to suppliers is a digital distribution platform with broad customer
reach, generally without any exclusivity of offer.
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.
With the lifting of government restrictions, air traffic
increased significantly during the period under review. Based on
past experience of downturn, leisure air travel is expected to
recover significantly ahead of business travel (e. g. McKinsey,
April 2021), and this has been evident in quarterly airline results
communications over the past year.
The European industry faced significant disruption in 2022, in
particular due to shortage of staff in critical areas of operations
(e. g. ground handling and airports). This was due to delayed
ramping up of staff after COVID-19 ramping down and due to
shortages in the labour market.
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, as well as the focus
on direct distribution and customer loyalty.
Cruise market
From the end of July 2022, nearly the entire global ocean-going
cruise fleet was back in operation after the pandemic-induced
suspension of operation. Since the first cruise activities
restarted from the end of July 2020, with the strictest health
protection measures in place, more than 5 million passengers took
to the seas globally within that period. Sector forecasts regarding
the pandemic impact and recovery project passenger volume to
recover to the levels recorded in baseline year 2019 by the end of
2023 and recover in excess of 12 % above 2019 levels by the end of
2026 (CLIA, State of the Cruise Industry 2022).
In calendar year 2021, the largest source markets were North
America, Western Europe, Asia and South America. Based on passenger
volume, the most popular destinations within that period were the
Caribbean, Central and Western Mediterranean, Asia and China as
well as Northern Europe (CLIA, Global Market Report 2021).
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 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 (TUI Consumer Survey 2022). Seeking to emerge
stronger from the COVID-19 crisis, we launched a freshly designed
marketing campaign at the beginning of the financial year 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. This expansion of our brand
core is designed to support our growth ambitions, not only to
retain existing customer segments, but also to attract new ones.
Market research shows that the campaigns not only have high
awareness levels, but also provide above-average brand
identification scores. TUI retains leadership positions in brand
awareness whilst improving customer consideration amongst future
segments.
Group Earnings
Comments on the consolidated income statement
In the course of financial year 2022, TUI's tour operator,
aviation, hotel and cruises businesses expanded following the
lifting of global travel restrictions. Following the successive
lifting of the travel restrictions, business was fully resumed in
all segments. As of April 2022, the entire fleet of the Cruises
Segment was in operation, and as of summer 2022, the Hotels &
Resorts Segment was able to offer the entire product portfolio. In
the Cruises segment, the recovery in demand started later than in
the other segments. The restart of business led to flight
disruptions, particularly in the UK and the Netherlands, but also
in other source markets, which impacted the Group's result. The
price increase in the course of the financial year, especially for
fuel, and changes in exchange rates could not be fully offset by
higher travel prices and additionally burdened the result in the
past financial year. TUI Group's underlying EBIT improved
significantly by EUR 2,484.2 m to EUR 408.7 m year-on-year, an
improvement of EUR 2,474.4 m on a constant currency basis.
Consolidated Income Statement of TUI AG for the period from 1 Oct 2021 to 30 Sep 2022
EUR million 2022 2021 Var. %
Revenue 16,544.9 4,731.6 + 249.7
Cost of sales 15,613.3 5,955.4 + 162.2
Gross profit / loss 931.7 - 1,223.8 n. a.
Administrative expenses 746.3 840.5 - 11.2
Other income 52.2 250.6 - 79.2
Other expenses 1.7 11.5 - 85.2
Impairment (+) / Reversals of impairment (-) of financial assets 7.3 - 38.0 n. a.
Financial income 35.9 27.3 + 31.5
Financial expenses 509.5 464.1 + 9.8
Share of result of investments accounted for using the equity method 100.7 - 232.7 n. a.
Impairment (+) / Reversals of impairment (-) of net investments in joint ventures and 1.6 5.0 - 68.0
associates
Earnings before income taxes - 145.9 - 2,461.7 + 94.1
Income taxes (expense [+], income [-]) 66.7 19.2 + 247.3
Group loss - 212.6 - 2,480.9 + 91.4
Group loss attributable to shareholders of TUI AG - 277.3 - 2,467.2 + 88.8
Group loss / profit attributable to non-controlling interest 64.6 - 13.8 n. a.
Revenue and cost of sales
Revenue
EUR million 2022 2021 Var. %
Hotels & Resorts 806.2 440.5 + 83.0
Cruises 331.5 27.0 n. a.
TUI Musement 517.2 116.7 + 343.4
Holiday Experiences 1,654.9 584.1 + 183.3
Northern Region 6,320.2 807.7 + 682.5
Central Region 5,773.5 2,322.9 + 148.5
Western Region 2,712.6 976.1 + 177.9
Markets & Airlines 14,806.3 4,106.7 + 260.5
All other segments 83.8 40.8 + 105.5
TUI Group 16,544.9 4,731.6 + 249.7
TUI Group (at constant currency) 16,414.0 4,724.6 + 247.4
In financial year 2022, TUI Group's revenue increased by 249.7 %
to EUR 16.5 bn. On a constant currency basis, revenue increased by
247.4 %. Customer numbers were 212.1 % up year-on- year. Revenue is
presented alongside the cost of sales in the income statement,
which increased by 162.2 % in the period under review.
Gross profit / loss
The difference between revenue and the cost of sales increased
as a result of the normalisation of the business by EUR 2,155.5 m
year-on-year to a gross profit of EUR 931.7 m.
Administrative expenses
Administrative expenses decreased by EUR 94.3 m year-on-year to
EUR 746.3 m (previous year EUR 840.5 m).
Other income and other expenses
In financial year 2022, other income mainly resulted from the
sale of Nordotel S. A. in October 2022 and from subsequent income
from the sale of Riu Hotels S. A. in financial year 2021. In the
previous year, this mainly included the profit from the sale of our
49 per cent share in the Riu Hotels S. A. joint venture (real
estate portfolio) to a Riu Group company.
Other expenses resulted in particular from the losses from the
sale of aircraft assets. In the previous year, other expenses also
included losses from the sale of aircraft assets and expenses
incurred in connection with the disposal of TUI Group
companies.
Financial result
The financial result in the 2022 financial year amounted to EUR
- 473.7 m after EUR - 436.8 m in the previous year. The increase in
financial income mainly resulted from higher interest income of EUR
26.3 m, up 107.1 % (previous year EUR 12.7 m). The increase in
financial expenses resulted from 6.6 % higher interest expenses of
EUR 492.1 m (previous year EUR 461.7 m), in particular due to lease
liabilities and defined benefit pension plans as well as the
unwinding of discount on provisions. Expenses from exchange rate
changes in lease liabilities in accordance with IFRS 16 increased
as well.
Share of result of joint ventures and associates
The share of result from joint ventures and associates of EUR
100.7 m comprises the proportionate net profit for the year of
these companies. The increase by EUR 333.5 m was driven by the
normalization of the business following the containment of the
COVID-19 pandemic.
Earnings before income taxes
In the period under review, earnings before income taxes
totalled EUR - 145.9 m. The loss therefore declined significantly
by EUR 2,315.8 m year-on-year.
Group loss
The Group loss for financial year 2022 declined year-on-year by
EUR 2,268.3 m to EUR - 212.6 m.
Share in Group loss attributable to TUI AG shareholders
The share in Group loss attributable to TUI AG shareholders
amounted to EUR - 277.3 m in financial year 2022 (previous year EUR
- 2,467.2 m).
Non-controlling interests
In the completed financial year, non-controlling interests in
the Group result totalled EUR 64.6 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 - 0.17
(previous year EUR - 2.58) in financial year 2022. 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 increases implemented in financial year 2022.
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 income 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.
Reconciliation to underlying EBIT of TUI Group
EUR million 2022 2021 Var. %
Earnings before income taxes - 145.9 - 2,461.7 94.1
plus: Net interest expense (excluding expense / income from measurement of interest hedges) 478.9 439.1 9.1
less / plus: Expense (income) from measurement of interest hedges - 13.0 9.8 n. a.
EBIT 320.0 - 2,012.8 n. a.
Adjustments:
less / plus: Separately disclosed items 58.7 - 95.9
plus: Expense from purchase price allocation 30.1 33.2
Underlying EBIT 408.7 - 2,075.5 n. a.
TUI Group's EBIT increased by EUR 2,332.8 m to EUR 320.0 m in
financial year 2022.
EBIT
EUR million 2022 2021 Var. %
Hotels & Resorts 478.8 39.4 n. a.
Cruises 0.8 - 277.5 n. a.
TUI Musement 5.9 - 127.3 n. a.
Holiday Experiences 485.4 - 365.4 n. a.
Northern Region - 137.6 - 995.1 + 86.2
Central Region 65.8 - 297.3 n. a.
Western Region - 29.3 - 236.6 + 87.6
Markets & Airlines - 101.1 - 1,528.9 + 93.4
All other segments - 64.4 - 118.5 + 45.7
TUI Group 320.0 - 2,012.8 n. a.
TUI Group's operating EBIT adjusted for one-off effects
(underlying EBIT) improved by EUR 2,484.2 m to EUR 408.7 m in
financial year 2022.
Underlying EBIT
EUR million 2022 2021 Var. %
Hotels & Resorts 480.6 - 152.7 n. a.
Cruises 0.8 - 277.5 n. a.
TUI Musement 23.2 - 105.3 n. a.
Holiday Experiences 504.6 - 535.4 n. a.
Northern Region - 101.6 - 965.8 + 89.5
Central Region 87.8 - 328.6 n. a.
Western Region - 31.5 - 176.6 + 82.1
Markets & Airlines - 45.3 - 1,470.9 + 96.9
All other segments - 50.5 - 69.1 + 26.9
TUI Group 408.7 - 2,075.5 n. a.
In financial year 2022, net expenses were adjusted by EUR 58.7 m
for one-off effects. For details, please refer to the Notes to the
segment data.
For one-off effects, please see page 180.
Other segment indicators
Reconciliation to EBITDA
EUR million 2022 2021 Var. %
EBIT 320.0 - 2,012.8 n. a.
Amortisation (+) / write-backs (-) of other intangible assets and depreciation (+) / 883.4 1,012.4 - 12.7
write-backs (-) of property, plant and equipment
Impairment of goodwill - 0.0 n. a.
EBITDA 1,203.3 - 1,000.4 n. a.
EBITDA
EUR million 2022 2021 Var. %
Hotels & Resorts 685.6 257.2 + 166.6
Cruises 55.4 - 214.1 n. a.
TUI Musement 38.4 - 94.3 n. a.
Holiday Experiences 779.4 - 51.2 n. a.
Northern Region 190.5 - 631.5 n. a.
Central Region 170.7 - 163.9 n. a.
Western Region 115.3 - 77.7 n. a.
Markets & Airlines 476.5 - 873.1 n. a.
All other segments - 52.6 - 76.1 + 30.9
TUI Group 1,203.3 - 1,000.4 n. a.
Underlying EBITDA
EUR million 2022 2021 Var. %
Hotels & Resorts 651.3 63.1 + 932.2
Cruises 55.4 - 214.1 n. a.
TUI Musement 48.6 - 79.9 n. a.
Holiday Experiences 755.2 - 230.9 n. a.
Northern Region 213.2 - 618.1 n. a.
Central Region 192.0 - 202.1 n. a.
Western Region 109.7 - 38.1 n. a.
Markets & Airlines 515.0 - 858.4 n. a.
All other segments - 45.6 - 55.9 + 18.4
TUI Group 1,224.6 - 1,145.2 n. a.
Segmental Performance
Holiday Experiences
Holiday Experiences
EUR million 2022 2021 Var. %
Revenue 1,654.9 584.1 + 183.3
Underlying EBIT 504.6 - 535.4 n. a.
Underlying EBIT (at constant currency) 491.0 - 535.4 n. a.
Hotels & Resorts
EUR million 2022 2021 Var. %
Total revenue1 1,499.6 666.7 + 124.9
Revenue 806.2 440.5 + 83.0
Underlying EBIT 480.6 - 152.7 n. a.
Underlying EBIT (at constant currency) 464.4 - 152.7 n. a.
Capacity hotels, total2 (in '000) 37,761 27,070 + 39.5
Riu 13,490 10,604 + 27.2
Robinson 3,582 2,289 + 56.5
Blue Diamond 5,432 4,671 + 16.3
Occupancy rate hotels, total3 (in %, variance in % points) 76 53 + 23
Riu 82 55 + 27
Robinson 66 58 + 8
Blue Diamond 79 51 + 28
Average revenue per bed - hotels, total4 (in EUR) 77 70 + 10.7
Riu 69 59 + 16.8
Robinson 103 103 + 0.2
Blue Diamond 137 104 + 32.3
Turnover measures include fully consolidated companies, all
other KPIs incl. companies measured at equity.
1 Including intragroup revenue.
2 Group owned or leased hotel beds multiplied by opening
days.
3 Occupied beds divided by capacity.
4 Average revenue divided by occupied beds.
-- Our Hotels & Resorts segment made an underlying EBIT of
EUR 480.6 m, a EUR 633.3 m improvement on the prioryear (previous
year EUR - 152.7 m loss) and above pre-pandemic levels. The segment
has seen a strong operationalrecovery in particular in the second
half of the financial year on easing of COVID-19 restrictions.
-- Our multi-destination portfolio of hotels enabled us to
reopen as soon as destination specific travelrestrictions were
progressively lifted around the world, whilst our high level of
direct distribution allowed us tooptimise customer volumes into our
own assets, as well as flexing our distribution to third party
channels.
-- As at 30 September 2022, 344 hotels were in operation (97 %
of 353 Group hotels) increasing from the 331 hotels at previous
year end (previous year 92 % of 359 Group hotels), reflecting the
more normalised post-pandemictravel environment across both markets
and destinations and allowing us to offer our guests our entire
portfolio inthe Summer. Important destinations in Summer 2022 were
Spain, Greece, and Turkey with strong demand also for ouryear-round
destinations such as the Canaries and the Caribbean.
-- Capacity increased by 39.5 % year-on-year reflecting the
drivers above. The average occupancy rate (basedon open hotels) was
76 % (previous year 53 %). Average rate per bed increased by 10.7 %
to EUR 77 (previous year EUR 70) and thus above pre-pandemic
levels.
-- Riu occupancy increased by 27 % pts to 82 % versus prior year
(previous year 55 %) and average rate improved 16.8 % to EUR 69
(previous year EUR 59), with the Group delivering a strong
operational performance in theircore Caribbean and Spanish
markets.
-- Robinson occupancy increased 8 % pts to 66 % versus prior
year (previous year 58 %) with average rate inline with prior year
at EUR 103.
-- Blue Diamond occupancy increased by 28 % pts to 79 % versus
prior year (previous year 51 %) and averagerates were 32.3 % higher
including foreign exchange effects to EUR 137 (previous year EUR
104), supported by strongerdemand to our Dominican Republic and
Mexican properties.
-- Our Other hotel brands benefitted from a stronger performance
across our Turkish and Spanish hotels asdestinations reopened and
demand returned following the pandemic.
Cruises
EUR million 2022 2021 Var. %
Revenue1 331.5 27.0 n. a.
Underlying EBIT 0.8 - 277.5 n. a.
Underlying EBIT (at constant currency) 4.9 - 277.5 n. a.
Occupancy (in %, variance in % points)
TUI Cruises 69 41 + 28
Hapag-Lloyd Cruises 58 45 + 13
Marella Cruises 70 39 + 31
Passenger days (in '000)
TUI Cruises 3,874 1,227 + 215.7
Hapag-Lloyd Cruises 307 114 + 170.4
Marella Cruises 1,452 153 + 849.0
Average daily rates2 (in EUR)
TUI Cruises 178 132 + 34.8
Hapag-Lloyd Cruises 653 231 + 182.7
Marella Cruises3 (in GBP) 164 124 + 32.1
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.
-- The Cruises segment returned to full operation at the
beginning of April 2022, following the COVID-19 restrictions during
the Winter months, with a total fleet of 16 ships across our three
brands. Mein Schiff andHapag-Lloyd Cruises, our two cruise brands
in Germany which make up our joint venture TUI Cruises,
offereditineraries in the Mediterranean, Northern Europe and around
the world. Marella, with its fleet of four ships,operated
itineraries across the Mediterranean.
-- The segment continued to recover throughout the financial
year as COVID-19 restrictions were lifted.Cruises reported a full
year underlying EBIT of EUR 0.8 m (previous year EUR - 277.5 m
loss) which incorporated aprofitable second half of the financial
year for the first time since the pandemic began. Occupancy rates
were upagainst last year and ranged between 58 % and 70 % across
our Cruises brands (previous year between 39 % and 45 %),with rates
back to 2019 levels, reflecting the more normalised trading
environment.
-- Mein Schiff average daily rate of EUR 178 rose by 34.8 %
versus prior year (previous year EUR 132). Occupancyrate was 69 %,
28 %pts higher versus prior year (previous year 41 %) reflecting
the recovery of demand with ashort-term booking trend very evident.
The brand was able to operate its full fleet of seven ships from
April 2022 following the lifting of the COVID-19 restrictions.
-- Hapag-Lloyd Cruises, our luxury and expeditions brand,
average daily rate of EUR 653 increased 27.0 %versus prior year
(previous year EUR 514). Occupancy of 58 % rose by 13 % pts versus
prior year (previous year 45 %)reflecting the same factors as Mein
Schiff. Following a reduced Winter season itinerary due to the
COVID-19-restrictions the full fleet of five ships were in
operation from March.
-- Marella Cruises, our UK cruise brand, was also only able to
offer a reduced Winter programme with allfour ships sailing again
as from Q3 2022. The average daily rate was GBP164, up 32.1 % on
prior year (previous year GBP124). Occupancy was 70 %, up 31 % pts
versus prior year (previous year 39 %), with operations in the
previous yearfully suspended in the first nine months in line with
UK government travel advice.
TUI Musement
EUR million 2022 2021 Var. %
Total revenue* 805.7 178.3 + 351.9
Revenue 517.2 116.7 + 343.4
Underlying EBIT 23.2 - 105.3 n. a.
Underlying EBIT (at constant currency) 21.7 - 105.3 n. a.
* Including intragroup revenue.
-- TUI Musement, our tours and activity business, made an
underlying EBIT of EUR 23.2 m, a EUR 128.5 mimprovement on prior
year (previous year EUR - 105.3 m loss), in line with the recovery
to a more normalisedpre-pandemic environment across our global
destinations. The increase reflects the advantage of our
integratedmodel and growth of third-party sales through the TUI
Musement platform.
-- With the lifting of COVID-19 restrictions, TUI Musement
benefited from increased guest transfers due to the higher number
of tour operator guests. In addition, 7.0 m experiences, activities
and tickets were sold in theyear, up 5.5 m against the previous
year of 1.5 m, highlighting the significant expansion of our
business in thissegment to date.
-- Our growth opportunities will be driven by the expansion of
our TUI Musement segment, which will benefit from both our
integration as well as growth through third party sales,
accelerated digitalisation and execution ofour Global Realignment
Programme. The combination of these drivers will enable us to
emerge stronger, leaner, moredigitalised and more agile, and ready
to exploit growth opportunities.
Markets & Airlines
Markets & Airlines
EUR million 2022 2021 Var. %
Revenue 14,806.3 4,106.7 + 260.5
Underlying EBIT - 45.3 - 1,470.9 + 96.9
Underlying EBIT (at constant currency) - 42.5 - 1,470.9 + 97.1
Direct distribution mix1 (in %, variance in % points) 77 73 + 4
Online mix2 (in %, variance in % points) 54 50 + 4
Customers (in '000) 16,730 5,361 + 212.1
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 - 45.3 m, a EUR 1,425.6 m improvement onprior year
(previous year EUR - 1,470.9 m loss), reflecting the more
normalised pre-pandemic travel environment, butalso emphasizing the
clear pent-up demand for holiday travel. Short-term bookings
represented a large share ofoverall bookings. The result includes
the impact of operational flight disruption encountered during the
Summerseason 2022 and savings delivered through our Global
Realignment Programme across all markets.
-- A total of 16,730 k customers departed for their holidays
during the period under review, up 212.1 %year-on-year (previous
year 5,361 k) reflecting the easing of COVID-19 restriction by
governments in our key sourcemarkets especially during the second
half of the year.
-- As COVID-19 restrictions were lifted the segment experienced
significant operational flight disruptionmost notably in the UK.
The combination of unparalleled industry ramp-up after the COVID-19
pandemic compounded bya tight labour market, has seen the aviation
industry confronted with significant operational issues
anddisruptions, resulting in the increase of delayed departures and
flight cancellations. This has been mainly causedby third party
suppliers and airports due to a shortage in ground handling and
airports security staff, reliabilityissues with lease-in partners
and supplier maintenance delays. As a result, incremental
disruption costs totalled EUR133 m in the financial year, primarily
due to significantly increased FDC (flight disruption cost for
delays > 3 hours) events in the UK, and costs introduced
relating to mitigations. In response, we have swiftly
introducedseveral mitigations to improve resilience and customer
experience, including the doubling of our standby aircraft,active
management of third parties and increased TUI staff at key customer
touch points. Flight disruptions were atelevated levels during the
Summer season but continued to normalise as the financial year came
to a close. Weremain committed to operate our programme with as
minimum impact to customers as possible. Even at the height ofthe
disruptions in May and June, TUI Airline carried 4.8 m passengers
(outbound and return sector) with 96 % ofcustomers arriving without
any major impact (<3 hours delay from arrival), despite
operational issues at airports.
-- Short-haul destinations such as Greece, Turkey, the Balearics
and the Canaries were popular Summer destinations for our
customers, with regular long-haul destinations such as Mexico and
Dominican Republic seeinghigher demand compared to pre-pandemic
levels.
Northern Region
EUR million 2022 2021 Var. %
Revenue 6,320.2 807.7 + 682.5
Underlying EBIT - 101.6 - 965.8 + 89.5
Underlying EBIT (at constant currency) - 90.8 - 965.8 + 90.6
Direct distribution mix1 (in %, variance in % points) 94 94 -
Online mix2 (in %, variance in % points) 71 74 - 3
Customers (in '000) 6,475 826 + 683.5
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.
-- Northern Region reported a significantly reduced underlying
EBIT loss of EUR - 101.6 m (previous year EUR - 965.8 m loss)
driven by the ability to operate a more normalised programme. The
result was impacted by operationaldisruptions encountered at
airports throughout the summer season. The resilience measures
introduced as aconsequence, included in particular the cancellation
of flying from Manchester during June to help protect theprogramme
and reduce the impact on our customers.
-- Customer volume increased significantly by 683.5 % to 6,475 k
versus prior year (previous year 826 k)supported by the easing of
COVID-19 restrictions, with demand recovering in particular in the
UK to nearpre-pandemic levels. Online distribution for the Region
continued to be strong at 71 %, down 3 %pts againstprevious year of
74 %, but up 4 %pts versus pre-pandemic levels (FY 2019 67 %), with
direct distribution at 94 % inline with previous year and
pre-pandemic levels.
-- Our Global Realignment Programme delivered additional
savings, mainly through cost efficiencies acrossthe business
including the reduction of our distribution cost base and airline
rightsizing.
Central Region
EUR million 2022 2021 Var. %
Revenue 5,773.5 2,322.9 + 148.5
Underlying EBIT 87.8 - 328.6 n. a.
Underlying EBIT (at constant currency) 84.0 - 328.6 n. a.
Direct distribution mix1 (in %, variance in % points) 57 61 - 4
Online mix2 (in %, variance in % points) 30 34 - 4
Customers (in '000) 5,873 2,673 + 119.7
1 Share of sales via own channels (retail and online).
2 Share of online sales.
Central Region comprises Germany and Austria, Switzerland and
Poland.
-- Central Region underlying EBIT profit of EUR 87.8 m, is an
improvement of EUR 416.4 m versus prior year(previous year EUR -
328.6 m loss) reflecting the more open travel environment permitted
by the EU, enabled many ofour customers from Germany in particular,
to resume their international holidays this summer. Results
weresupported by the benefit of a EUR 50 m state compensation for
loss of business in the course of the pandemic, inaddition to
savings delivered by our Global Realignment Programme. The Central
Region was also impacted byoperational flight disruption but to a
significantly lower extent than in the UK market.
-- Customer volume increased by 119.7 % to 5,873 k versus prior
year (previous year 2,673 k) in line withthe easing of travel
restrictions due to COVID-19. Online distribution for Central
Region reached 30 %, down 4 %ptsagainst prior year of 34 % but up 8
%pts versus pre-pandemic levels (FY 2019 22 %). Direct distribution
was down 4 %pts to 57 % against previous year whereby the
comparison is limited by lower volumes and longer retail
shopclosures due to the COVID-19 restrictions. Against pre-pandemic
levels of 50 % direct distribution was up 7 %pts.
-- The benefits delivered through our Global Realignment
Programme, included the reduction of retail estate to 528 stores
(previous year 560) along with airline rightsizing.
Western Region
EUR million 2022 2021 Var. %
Revenue 2,712.6 976.1 + 177.9
Underlying EBIT - 31.5 - 176.6 + 82.1
Underlying EBIT (at constant currency) - 35.7 - 176.6 + 79.8
Direct distribution mix1 (in %, variance in % points) 80 81 - 1
Online mix2 (in %, variance in % points) 60 63 - 3
Customers (in '000) 4,383 1,861 + 135.5
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 - 31.5 m, was an
improvement of EUR 145.0 m versus prior year(previous year EUR -
176.6 m loss). Results were supported by a more normalised
pre-pandemic travel environment inall businesses with the
Netherlands benefiting from higher volumes and operations in France
supported byrestructuring. Results were however impacted by the
costs for flight delays and cancellations due to
operationaldisruptions in particular at Schipol Airport.
-- Customer volume increased by 135.5 % to 4,383 k year-on-year
(previous year 1,861 k) reflecting the reduction of COVID-19
related travel restrictions which enabled many of our customers
from Belgium and theNetherlands in particular, to resume their
international holidays this summer. Online distribution for the
regionstood at 60 %, down 3 %pts (previous year 63 %), but up 3
%pts versus pre-pandemic levels (FY 2019: 57 %). Directdistribution
of 80 % was slightly down on previous year whereby the comparison
is limited by lower volumes andlonger retail shop closures due to
the COVID-19 restrictions. Against pre-pandemic levels direct
distribution wasup 5 %pts (FY 2019 75 %).
-- The result included savings delivered by our Global
Realignment Programme, generated by cost efficienciesacross the
business.
All other segments
EUR million 2022 2021 Var. %
Revenue 83.8 40.8 + 105.5
Underlying EBIT - 50.5 - 69.1 + 26.9
Underlying EBIT (at constant currency) - 49.6 - 69.1 + 28.2
The underlying EBIT for All other segments improved by EUR 18.6
m versus prior year, (previous year EUR - 69.1 m loss), reflecting
positive valuation effects relating in particular to the reversal
of provisions in the financial year against prior year, strong cost
discipline, as well as the benefit of our ongoing cost savings
measures, as part of our Global Realignment Programme.
Net Assets
Development of the Group's asset structure
EUR million 30 Sep 2022 30 Sep 2021 Var. %
Fixed assets 10,636.0 10,300.8 3.3
Non-current receivables 715.7 921.6 - 22.3
Non-current assets 11,351.7 11,222.3 1.2
Inventories 56.1 42.8 30.9
Current receivables 2,108.1 1,210.2 74.2
Cash and cash equivalents 1,736.9 1,583.9 9.7
Assets held for sale 2.7 96.5 - 97.2
Current assets 3,903.8 2,933.3 33.1
Assets 15,255.5 14,155.7 7.8
Equity 645.7 - 418.4 n. a.
Liabilities 14,609.7 14,574.1 0.2
Equity and liabilities 15,255.5 14,155.7 7.8
The Group's balance sheet total increased by 7.8 % year-on-year
to EUR 15.3 bn.
Vertical structural indicators
Non-current financial assets accounted for 74.4 % of total
assets, compared with 79.3 % in the previous year. The
capitalisation ratio (ratio of fixed assets to total assets)
decreased from 72.8 % to 69.7 %.
Current assets accounted for 25.6 % of total assets, compared
with 20.7 % in the previous year. The Group's cash and cash
equivalents increased by EUR 153.1 m to EUR 1,736.9 m. They thus
accounted for 11.4 % of total assets, as against 11.2 % in the
previous year.
Horizontal structural indicators
At the balance sheet date, the ratio of equity to non-current
assets has been 5.7 %. Due to the suspension of our business
operations driven by COVID-19 and the resulting losses, Group
equity was negative in the prior year. The ratio of equity plus
non-current financial liabilities to fixed assets was 22.3 %,
compared with 25.4 % in the previous year.
Development of the Group's non-current assets
Structure of the Group's non-current assets
EUR million 30 Sep 2022 30 Sep 2021 Var. %
Goodwill 2,970.6 2,993.1 - 0.8
Other intangible assets 507.6 498.6 + 1.8
Property, plant and equipment 3,400.9 3,159.3 + 7.6
Right-of-use assets 2,971.5 3,009.2 - 1.3
Investments in joint ventures and associates 785.4 640.5 + 22.6
Fixed assets 10,636.0 10,300.8 + 3.3
Receivables and assets 493.7 630.5 - 21.7
Deferred tax claims 222.0 291.1 - 23.7
Non-current receivables 715.7 921.6 - 22.3
Non-current assets 11,351.7 11,222.3 1.2
Goodwill
Goodwill broadly remained at previous year's level of EUR
2,970.6 m.
For details, please refer to the section Goodwill in the Notes
from page 190.
Property, plant and equipment
Property, plant and equipment totalled EUR 3,400.9 m at the
balance sheet date, up by EUR 241.6 m year-on-year. Major additions
to property, plant and equipment related to acquisitions in the
Hotels & Resorts segment and the purchase of new aircraft. The
majority of the disposals related to the disposal of advance
payments for the delivery of aircraft. In addition, tests of the
carrying amounts led to impairments primarily on hotels including
real estate.
Development of property, plant and equipment
EUR million 30 Sep 2022 30 Sep 2021 Var. %
Real estate with hotels 1,800.9 1,675.8 + 7.5
Other land 186.1 165.5 + 12.4
Aircraft 342.3 127.1 + 169.3
Ships 428.4 446.3 - 4.0
Machinery and fixtures 360.8 351.7 + 2.6
Assets under construction 170.7 134.6 + 26.8
Payments on accounts 111.7 258.3 - 56.8
Total 3,400.9 3,159.3 + 7.6
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
Seventeen associated companies and 27 joint ventures were
measured at equity. At EUR 785.4 m, their value decreased by 22.6 %
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 2022 30 Sep 2021 Var. %
Inventories 56.1 42.8 + 30.9
Trade accounts receivable and other financial assets1 1,330.1 537.1 + 147.6
Other non-financial assets2 755.0 615.3 + 22.7
Current tax assets 23.1 57.7 - 60.1
Cash and cash equivalents 1,736.9 1,583.9 + 9.7
Assets held for sale 2.7 96.5 - 97.2
Current assets 3,903.8 2,933.3 33.1
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 implementing a cross-border organisation approach,
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 foreign exchange rates, 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 Group
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 weekly rolling liquidity planning
system is thebasis for arrangements with banks.
Limiting financial risks
The Group companies operate on a worldwide scale. TUI Group is
therefore exposed to financial risks 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. With the market environment
returning to normal and the Group's business volume rising
substantially, hedging restrictions in many areas have largely been
eased, although some restrictions remain, particularly in relation
to fuel hedging. Hedging cover is taken out ahead of the markets'
customer booking profiles, where hedging lines allow. This provides
a degree of certainty over input costs when planning pricing and
capacity.
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 34 ff. and 224 ff.
Capital structure
Capital structure of the Group
EUR million 30 Sep 2022 30 Sep 2021 Var. %
Non-current assets 11,351.7 11,222.3 + 1.2
Current assets 3,903.8 2,933.3 + 33.1
Assets 15,255.5 14,155.7 + 7.8
Subscribed capital 1,785.2 1,099.4 + 62.4
Capital reserves 6,085.9 5,249.6 + 15.9
Revenue reserves - 8,432.7 - 8,525.7 + 1.1
Silent participation 420.0 1,091.0 - 61.5
Non-controlling interest 787.3 667.3 + 18.0
Equity 645.7 - 418.4 n. a.
Non-current provisions 1,323.2 1,665.5 - 20.5
Current provisions 574.2 572.7 + 0.3
Provisions 1,897.4 2,238.2 - 15.2
Non-current financial liabilities 1,731.4 3,036.1 - 43.0
Current financial liabilities 319.9 284.6 + 12.4
Financial liabilities 2,051.3 3,320.8 - 38.2
Non-current lease liabilities 2,508.7 2,606.1 - 3.7
Current lease liabilities 698.8 623.3 + 12.1
Lease liabilities (IFRS 16) 3,207.5 3,229.4 - 0.7
Other non-current liabilities 303.6 402.8 - 24.6
Other current liabilities 7,149.8 5,332.3 + 34.1
Other liabilities 7,453.4 5,735.1 + 30.0
Debt related to assets held for sale - 50.6 n. a.
Liabilities 15,255.5 14,155.7 + 7.8
Capital ratios
EUR million 30 Sep 2022 30 Sep 2021 Var. %
Non-current capital 6,512.8 7,292.1 - 10.7
Non-current capital in relation to balance sheet total% 42.7 51.5 - 8.8*
Equity ratio% 4.2 - 3.0 n. a.*
Equity and non-current financial liabilities 2,377.2 2,617.7 - 9.2
Equity and non-current financial liabilities in relation to 15.6 18.5 - 2.9*
balance sheet total%
* Percentage points.
Overall, non-current capital decreased by 10.7 % to EUR 6,512.8
m. It accounted for 42.7 % (previous year 51.5 %) of the balance
sheet total.
The equity ratio was 4.2 % (previous year - 3.0 %). Equity and
non-current financial liabilities accounted for 15.6 % (previous
year 18.5 %) of the balance sheet total.
Equity
Subscribed capital was initially increased by EUR 523,520,778.00
in October 2021 in the framework of a fully subscribed capital
increase with subscription rights by issuing 523,520,778 new no-par
value shares against cash contribution. At a subscription price of
EUR 2.15 per share, the gross proceeds totalled around EUR 1.1 bn.
In May 2022, subscribed capital was increased by a further EUR
162,291,441.00 in the framework of another cash capital increase
excluding shareholders' subscription rights. By way of an
accelerated bookbuilding, 162,291,441 new shares were sold to
institutional investors. At an issue price of EUR 2.62 per share,
gross proceeds totalled around EUR 425 m. At the end of the
financial year under review, subscribed capital therefore consisted
of 1,785,205,853 shares with a proportionate share in the capital
stock of EUR 1.00 per no-par value share. Revenue reserves rose by
EUR 0.1 bn to EUR - 8.4 bn in the completed financial year.
Non-controlling interests accounted for EUR 787.3 m of equity.
Silent ESF participations
In financial year 2021, TUI obtained two silent participations
from the ESF. Both participations are carried in equity in
accordance with IAS 32. Silent Participation I of EUR 420.0 m was
fully paid. It can be converted into shares in TUI AG at any time
in full or in part at a conversion price of EUR 1.00 per share, as
long as the ESF does not obtain a participation in TUI of more than
25 % plus one share by converting the Silent Participation.
In June 2022, TUI AG carried out a capital increase and fully
repaid Silent Participation II at EUR 671.0 m.
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 1,897.4 m, down by EUR 340.8 m year-on-year.
Financial and lease liabilities
Composition of financial liabilities and lease liabilities
EUR million 30 Sep 2022 30 Sep 2021 Var. %
Bonds 580.5 641.5 - 9.5
Liabilites to banks 1,382.6 2,612.6 - 47.1
Other financial liabilities 88.2 66.6 + 32.4
Financial liabilities 2,051.3 3,320.7 - 38.2
Lease liabilities 3,207.5 3,229.4 - 0.7
Our non-current financial liabilities declined by EUR 1,304.7 m
to EUR 1,731.4 m versus 30 September 2021. The decrease was
primarily attributable to a reduction in liabilities to banks of
EUR 1,262.4 m and the contractually agreed early repurchase of 913
partial option bonds on 1 April 2022.
For more detailed information, please refer to the Notes to the
consolidated financial statements.
See chapter Financial and lease liabilities, page 217.
Overview of TUI's listed bond
The table below lists the maturities, nominal volumes and annual
interest coupon of the listed convertible bond issued in 2021 with
a nominal value of EUR 589.6 m and a seven-year term.
Listed bond
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. 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 %. The
convertible bonds totalling EUR 589.6 m constitute a single series.
In October 2021, the conversion price was reduced to EUR 4.5827 per
share in the wake of the capital increase with subscription
rights.
See Other information from page 248.
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.
In April 2022, TUI AG effected an early redemption of bonds with
a nominal value of EUR 91.3 m so that the residual nominal amount
totals EUR 58.7 m.
Syndicated credit facilities of TUI AG
In April and May 2022, TUI AG's syndicated credit facilities
were reduced by around EUR 920 m from an original amount of around
EUR 4.8 bn on the basis of a contractual agreement and due to
proceeds from refinancing and divestment transactions. First, the
reduced credit line of EUR 170 m from KfW and a private banking
consortium, which had originally amounted to EUR 200 m, was repaid
in full. Moreover, around EUR 750 m of the undrawn KfW tranche of
EUR 2.85 bn was cancelled, reducing this amount to EUR 2.1 bn. In
addition, for regulatory reasons due to Brexit, the credit line of
a British bank forming part of the syndicated credit facility
(around EUR 80 m cash and EUR 25.0 m guarantee line) could not be
extended beyond July 2022.
At the end of the financial year under review, the syndicated
credit facility therefore totalled around EUR 3.7 bn, including a
KfW cash tranche of around EUR 2.1 bn and a bank guarantee line of
EUR 190.0 m.
The interest rate for cash drawdowns is variable and depends on
the short-term interest rate level (EURIBOR or SONIA) and TUI's
credit rating plus a margin.
At the balance sheet date, cash drawdowns from the syndicated
credit facility amounted to EUR 562.0 m.
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 funding 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 217.
Other liabilities
The combined figure for other liabilities mainly includes trade
payables and customer deposits. At EUR 7,453.4 m, it was EUR
1,718.3 m up year-on-year.
Key credit facilities
Syndicated credit facilities of TUI AG
TUI AG's syndicated credit facility of around EUR 3.7 bn
includes a tranche of EUR 190.0 m for bank guarantees. At the
balance sheet date, cash drawdowns from this credit facility
amounted to around EUR 562.0 m. In addition, an amount of EUR 143.8
m was drawn from this credit facility through the use of bank
guarantees.
Bilateral guarantee facilities of TUI AG with banks
In October 2021, TUI AG concluded a multi-year guarantee
facility of EUR 152.0 m with a bank in order to meet a regulatory
obligation. At the balance sheet date, this guarantee facility was
fully used. In October 2022, this guarantee facility was replaced
by a new guarantee line of EUR 345.6 m. The issued guarantee was
replaced by a new guarantee of EUR 268.8 m.
In addition, TUI AG concluded further bilateral guarantee
facilities with banks with a total volume of EUR 19.1 m for the
provision of bank guarantees in the framework of ordinary business
activities. 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 maxi-mum guaranteed amount. At the balance
sheet date, an amount of EUR 8.1 m from these facilities had been
used.
Obligations from financing agreements
TUI AG's Schuldschein worth EUR 425.0 m issued in 2018, the bond
with warrants worth EUR 58.7 m issued in October 2020, the
convertible bond worth EUR 589.6 m issued in 2021 and the credit
and guarantee facilities for TUI AG contain a number of
obligations.
Under its syndicated credit facility worth EUR 3.7 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 initially agreed to a waiver for this financial
covenant obligation up until and including 31 March 2022, and then
set higher ratio limits for testing during the period up until and
including 31 March 2023. 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 58.7 m, the convertible bond worth EUR 589.6 m and the
credit and guarantee facilities for TUI AG 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
2018 2019 2020 2021 2022 Outlook
Standard & Poor's BB BB CCC+ CCC+ B- stable
Moody's Ba2 Ba2 Caa1 Caa1 B3 stable
In the wake of the COVID-19 pandemic, both Standard & Poor's
and Moody's successively lowered TUI's rating to CCC+ and Caa1,
respectively, in 2020.
Due to a significant improvement in the business environment and
the stronger balance sheet structure, both rating agencies upgraded
their ratings 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
particular due to effects of the COVID-19 pandemic, these ratings
were then lowered to CCC+ and Caa1, respectively, in 2020. In the
completed financial year, both rating agencies upgraded TUI's
rating to the B range again. This is essential, in our view, not
only to secure favourable financing terms, but also to retain
access to the debt capital markets even in difficult macroeconomic
situations. We aim to achieve a further improvement in our current
ratings (B- and B3, respectively). As an indicator of financial
stability, we have defined a leverage ratio along the following
basic lines:
Leverage ratio = (gross financial liabilities + lease
liabilities + net obligations from defined-benefit pension plans) /
reported EBITDA. This basic definition is subject to specific
amendments in order to reflect current circumstances. Due to the
lower gross financial liabilities and the return to positive
EBITDA, the leverage ratio improved to a value of 4.7x in the 2022
financial year. We are aiming for a leverage ratio of below 3.0x
again as a medium-term target.
See section Capital management, page 246.
Interest and financing environment
In the period under review, short-term interest rates remained
at a low level compared with historical rates. In some currency
areas, the interest rate initially remained negative but rose again
in the low positive range in all key currencies from mid-2022
onwards. Due to high inflation, interest rates are expected to
continue rising in the next few months. The interest rise cycle is
currently expected to culminate in the medium single-digit
percentage range. Corresponding impacts were recorded on yields
from 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 on sub-investment grades rose to a
level well above the long-standing average. Credit margins for TUI
AG were elevated in H1 2022 and climbed appreciably thereafter. Due
to the difficult market environment in 2022, refinancing was not
possible at acceptable terms and conditions.
Liquidity analysis
At the balance sheet date, TUI AG, the parent company of TUI
Group, held cash and cash equivalents worth EUR 473.0 bn.
Restrictions on the transfer of liquid funds
At the balance sheet date, there were restrictions worth around
EUR 0.5 bn (previous year EUR 0.5 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
100.
Cash flow statement
Summary cash flow statement
EUR million 2022 2021
Net cash in- / outflow from operating activities + 2,077.8 - 151.3
Net cash out- / inflow from investing activities - 308.2 + 704.7
Net cash outflow from financing activities - 1,630.9 - 233.5
Change in cash and cash equivalents with cash effects + 138.6 + 319.8
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 previous
year, the cash flow statement included the disposal group Nordotel
S. A.
In the period under review, cash and cash equivalents increased
by EUR 150.8 m to EUR 1,736.9 m.
Cash inflow / outflow from operating activities
In the period under review, the cash inflow from operating
activities totalled EUR 2,077.8 m (previous year outflow of EUR
151.3 m), including interest payments received of EUR 12.4 m
(previous year EUR 6.4 m) and dividends of EUR 0.5 m (previous year
EUR 14.2 m). The significant improvement compared to the previous
year is due to the normalisation of business operations. Income tax
payments resulted in a cash outflow of EUR 131.4 m (previous year
EUR 9.0 m).
Cash inflow / outflow from investing activities
In financial year 2022, the total cash outflow from investing
activities amounted to EUR 308.2 m (previous year inflow of EUR
704.7 m). This includes a cash outflow for capital expenditure on
property, plant and equipment and intangibles of EUR 515.7 m
(previous year EUR 299.7 m). The Group recorded a cash inflow of
EUR 180.7 m from the divestment of property, plant and equipment
and intangible assets (previous year EUR 357.9 m). A cash outflow
of EUR 8.9 m was recorded from purchase price payments for the sale
of the stakes in Riu Hotels S. A., effected in the prior year. The
divestment of a stake in Karisma Hotels Caribbean S. A. resulted in
a cash inflow of EUR 3.5 m for TUI Group. The Group recorded an
inflow of EUR 25.7 m net of cash disposed for the sale of Nordotel
S. A. A part of the purchase price had already been paid in the
prior year.
Cash inflow / outflow from financing activities
The cash outflow from financing activities amounted to EUR
1,630.9 m (previous year outflow of EUR 233.5 m). TUI AG recorded a
cash inflow of EUR 1,522.7 m from equity increases after deduction
of capital procurement costs in October 2021 and in May 2022. At
the end of June, TUI AG fully repaid the Silent Participation II of
EUR 671.0 m plus a coupon of EUR 51.0 m, carried as a dividend, to
the Economic Stabilisation Fund. In the period under review, TUI AG
reduced its syndicated credit facility by EUR 1,301.4 m. TUI Group
companies took out loans worth EUR 109.7 m. A cash outflow of EUR
853.5 m was recorded for the redemption of other financial
liabilities, including an amount of EUR 583.6 m for lease
liabilities. A cash outflow of EUR 385.6 m related to interest
payments. A further cash outflow of EUR 0.6 m was used to purchase
shares transferred to TUI Group employees in the framework of the
oneShare employee stock option programme.
Change in cash and cash equivalents
EUR million 2022 2021
Cash and cash equivalents at the beginning of period + 1,586.1 + 1,233.1
Changes due to changes in exchange rates + 12.2 + 33.2
Cash changes + 138.6 + 319.8
Cash and cash equivalents at the end of period + 1,736.9 + 1,586.1
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 pages 160 and 247.
Analysis of investments
The development of fixed assets, including property, plant and
equipment, intangible assets, 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 2022 2021 Var. %
Cash gross capex
Hotels & Resorts 197.2 113.9 + 73.1
Cruises 45.5 22.5 + 102.2
TUI Musement 18.8 13.8 + 36.2
Holiday Experiences 261.5 150.2 + 74.1
Northern Region 26.2 10.2 + 156.9
Central Region 9.3 5.1 + 82.4
Western Region 7.5 8.2 - 8.5
Markets & Airlines* 111.2 52.4 + 112.2
All other segments 113.3 82.1 + 38.0
TUI Group 486.0 284.8 + 70.6
Net pre delivery payments on aircraft - 126.5 - 86.0 - 47.0
Financial investments 0.9 28.0 - 96.9
Divestments - 44.4 - 925.9 + 95.2
Net capex and investments 315.9 - 699.1 n. a.
* Including gross capex of EUR 68.2 m for financial year 2022
(previous year EUR 28.9 m) for the aircraft leasing companies which
- unlike income statement items - are allocated to Markets &
Airlines as a whole, but not to the individual segments Northern
Region, Central Region and Western Region.
In the financial year under review, TUI Group's gross capex
totalled EUR 486.0 m. The increase of 70.6 % reflects the expansion
of our business activities as the pandemic subsided.
The year-on-year increase was mainly attributable to higher
investments in aviation, increased investments in hotels as well as
time in dock at Marella Cruises. Net capital expenditure and
investments of EUR 315.9 m rose by EUR 1,015.0 m year-on-year in
the period under review. Divestments related in particular to the
sale of the stake in Nordotel S. A., fully consolidated in the
Hotels & Resorts segment, to Grupotel S. A., a joint venture of
TUI Group. They also comprised a subsequent reduction in the
selling price for the divestment of Riu Hotels S. A. In the prior
year, divestments had included the sale of our 49 % stake in the
Riu Hotels S. A. joint venture to a Riu Group company, the
sale-and-leaseback of aircraft and a part of the total proceeds
from the divestment of Hapag-Lloyd Kreuzfahrten to our joint
venture TUI Cruises.
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 2022 2021
Cash gross capex 486.0 284.8
Additions right-of-use assets 12.3 27.4
Advance payments 29.7 15.0
Other non-cash changes 66.9 15.2
Additions to other intangible assets and property, plant and equipment 594.9 342.3
Investment obligations
Order commitments
Due to agreements concluded in financial year 2022 or in prior
years, order commitments for investments totalled EUR 2,291.4 m as
at the balance sheet date, this total included an amount of EUR
400.7 m for scheduled investments in financial year 2023.
More detailed information is provided in the section Other
financial commitments in the Notes to the consolidated financial
statements.
Net debt
The net debt as of 30 September 2022 declined by EUR 1,518.0 m
year-on-year to EUR 3,436.2 m.
Net debt
EUR million 30 Sep 2022 30 Sep 2021 Var. %
Financial debt 2,051.3 3,320.8 - 38.2
Lease liabilities (IFRS 16) 3,207.5 3,229.4 - 0.7
Cash and cash equivalents 1,736.9 1,583.9 + 9.7
Short-term interest-bearing investments 85.8 12.1 + 609.5
Net debt - 3,436.2 - 4,954.2 + 30.6
Non-financial Declaration of TUI Group*
Page 78 About this non-financial declaration of TUI Group
Page 78 Sustainability governance
Page 78 People - Empower to drive development
Page 78 Planet - Reduce our footprint
Page 78 Progress - Accelerate the transformation
Page 78 Our people
Page 78 Customer experience, Security, Health & Safety and
crisis management
Page 78 Anti-corruption and anti-bribery
Page 78 Disclosure pursuant to EU Taxonomy Regulation (EU)
2020/852 * Unaudited.
About this non-financial declaration of TUI Group
For TUI Group, sustainability covering all three areas of
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 industry.
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. TUI AG publishes a non-financial TUI Group
declaration. It combines aspects and reporting on the following key
issues: environmental matters, employee matters, social matters,
respecting human rights and information on anti-corruption and
anti-bribery integration & compliance. 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 assessment 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 34 onwards, where the principal risks relating to
sustainability are listed and explained.
Applied standards and sustainability indices
Our reporting covers the United Nations Global Compact
principles, which TUI signed up to in 2014, as a framework.
Furthermore, we reviewed our sustainability activities against the
United Nations Sustainable Development Goals (SDGs).
TUI AG is represented on the sustainability index FTSE4Good. In
2022, 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.
SPECIFIC CO2 EMISSIONS FROM OUR AIRLINES AS A KEY NON-FINANCIAL
PERFORMANCE INDICATOR
We regard specific carbon emissions (in g CO2 / rpk) from our
aircraft fleet as a key non-financial performance indicator.
Please see page 31.
Disclosures pursuant to EU Taxonomy Regulation (2020/852)
For the first time, this statement additionally contains
disclosures on whether and to what extent the activities of TUI
Group are aligned with the objectives of the EU Taxonomy
Regulation.
Limited assurance engagement attestation
The present non-financial statement was not part of the audit,
but was subject to a limited assurance engagement in accordance
with ISAE 3000 (revised).
Please see page 267.
Task Force on Climate-related Financial Disclosures (TCFD)
As a company listed in the Premium Segment of the Main Market of
the London Stock Exchange, we are required pursuant to Listing Rule
LR 9.8.6 to make disclosures in relation to the recommendations of
the Financial Stability Board's Task Force on Climate-related
Financial Disclosures (TCFD). The section from page 123 summarises
the disclosures relating to TUI Group's compliance with the TCFD
recommendations and is not part of this non-financial declaration.
These disclosures were therefore also not subject to the limited
assurance engagement in accordance with ISAE 3000 (revised).
Sustainability governance
For TUI Group, sustainability covering all three areas of
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 industry.
Disclosures on the TUI Group's business model
TUI Group is a global integrated tourism group. TUI Group's
business model is outlined in detailed on pages 23 ff. and 27 ff.
in accordance with section 315c paragraph 1 in conjunction with
section 289c, paragraph 1 HGB.
TUI Group has a governance structure in place that ensures that
sustainability issues, along with risks and opportunities resulting
from climate change, are assessed and actioned at all levels. The
Executive Board manages TUI's business strategically, it sets the
Group's strategic direction and long-term objectives for
sustainable development and signed off the Group's Sustainability
Agenda. The Sustainability Business Council, which will convene
from financial year 2023 onwards, will drive the integration of
sustainability into all business processes and decisions.
A team of experienced sustainability professionals are working
in close collaboration with senior management to ensure that TUI's
business and sustainability focus areas are well aligned. The Group
Sustainability Director heads up the Group Sustainability team, and
reports to the Chief Sustainability Officer (CSO) who sits on the
Group Executive Committee.
The role of our sustainability team is to drive implementation
of the Sustainability Agenda across TUI Group and along its supply
chain. The Group Executive Committee is regularly updated on our
performance in delivering the Sustainability Agenda and tackling
other key sustainability issues. Regular meetings are also held
with the Risk Oversight Committee (ROC) to review sustainability
risks.
TUI Sustainability Agenda
Over the past two years, TUI Group's international
sustainability team has 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. Thanks to direct exchange with our stakeholders and sector
industry, we were able to gather expectations and challenges
related to sustainability issues, which have been reflected into
our sustainability activities. The Supervisory Board, Executive
Board, Group Executive Board and employee representatives were
regularly involved in the process of developing the agenda in the
form of individual and group presentations. We also discussed
specific topics with organisations and interested stakeholders. We
will continue to encourage this two-way dialog to ensure we
maintain our focus on the most important and relevant topics at
hand.
Our Sustainability Agenda builds on tourism as a force for good.
Together with our partners we strive to continue to positively
contribute to local communities, reduce our environmental footprint
and create more sustainable holiday choices.
Our mission
"We are mindful of the importance of travel and tourism for many
countries in the world and for the people living there. We partner
with these countries and other stakeholders to actively shape a
more sustainable future for tourism".
TUI's Sustainability Agenda is the next chapter in TUI's
sustainability journey in the right direction. Our ambition is to
continue to lead the industry and actively shape a more sustainable
future for tourism in all three dimensions of sustainability -
social, environmental and economic. We will use our scale and
influence for the sustainable transformation of the tourism
industry.
Our Agenda consists of three building blocks to drive the
sustainable business transformation, to empower 'People' to drive
development, reduce TUI's environmental footprint on the 'Planet'
and partner with others to 'Progress' the transformation of our
industry. Our three P's of People, Planet and Progress are
supported by 15 focus areas with key goals, objectives and
initiatives. The Agenda is our roadmap to address the key industry
and global challenges we will face in the coming decades, such as
climate change. Please see the table for more details on these
three building blocks.
Commitments include achieving net-zero emissions across our
operations and supply chain by 2050 at the latest, setting
near-term science-based emission reduction targets, becoming a
circular business, enabling 20 million customers a year to make
sustainable holiday choices by 2030 and co-creating the sustainable
destination of the future.
The Sustainability Agenda supports and takes action to
contribute to the achievement of the United Nations Sustainable
Development Goals (SDGs) - 17 global goals to fight inequality, end
poverty and respect our planet by 2030. These goals provide a
useful framework with which to view the material impact of our
business operations and a benchmark 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, with a special focus on 13 of them.
People - Empower to drive development
Tourism is the main force for development and prosperity in many
parts of the world. It creates employment, provides education and
drives up social and environmental standards. We will ensure that
local people and communities benefit from tourism and the local
supply chain. We will empower a generation of changemakers by
helping them acquire the new skills and knowledge they need to
transform the tourism industry.
TUI Sustainability Academy
We want to give our colleagues the knowledge and skills to
become sustainability changemakers. One way we are doing this is
through the digital 'TUI Sustainability Academy' learning platform.
The first phase was developed in financial year 2022, which offers
knowledge into a wide range of sustainability topics, from energy
and fuels to social impacts and the circular economy. In the future
the platform will also be made available to our partners so that we
can support upskilling to drive the sustainable transformation of
the industry. Through the TUI Sustainability Academy and other
tools, we aim to deliver to colleagues 25 k training hours on
sustainability annually by 2025.
Sustainability Hackathon
Our first Sustainability Hackathon took place in March 2022,
twelve teams of colleagues from across the Group worked together to
solve a common challenge: How can we change our products to reduce
waste and emissions, to help TUI move towards a circular business
model? Over two days, several hundred ideas came together - both in
the virtual hacking teams and from colleagues who posted their
ideas on a collaboration platform. A panel of judges evaluated the
ideas presented by the twelve teams and selected the winners. The
winning ideas are now being worked on for further development and
implementation.
German Supply Chain Act
Protecting human rights and environmental standards across
supply chains is the premise of the new German Supply Chain Act
(GSCA) coming into force on the 1 January 2023. For TUI, it applies
to our own business, TUI suppliers and the wider supply chain, both
in Germany as well as across the globe. An internal GSCA Steering
Group has been established to prepare the business to comply with
the law. The focus is on the development and implementation of risk
analysis, training, preventative and corrective measures and
policies. This builds on the work TUI already does to protect human
rights and the environment and helps prepare for the upcoming EU
Due Diligence Directive.
Respecting human rights
TUI Group is committed to all internationally proclaimed human
rights as specified in the International Bill of Human Rights and
expects the same of our suppliers and business partners, in
accordance with applicable laws, conventions and regulations.
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 we will take remedial action where necessary.
-- TUI is a signatory to the UN Global Compact, covering human
rights, labour, environment andanticorruption.
-- TUI is a signatory to the UN World Tourism Organisation's
(UNWTO) Global Code of Ethics.
-- Our Global Employment Statement focusses on fair and
respectful treatment of employees at all levels andcompliance with
applicable law and industry standards.
-- Our Employee Code of Conduct, the 'Integrity Passport',
commits us to respect and observe human rights.Colleagues are
encouraged to report any wrongdoing to the 'Speak Up' Line.
-- Our Supplier Code of Conduct sets out the minimum standards
we expect from suppliers, covering humanrights and labour laws,
bribery and corruption, environmental impacts and support for local
communities.
-- 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 certifications recognised by theGlobal Sustainable
Tourism Council (GSTC) which include standards on human rights,
child protection and social welfare in the tourism industry. We are
now also applying the GSTC Criteria to our TUI Collection
experiences.
-- Our internal Child Protection Guidelines includes information
for our colleagues on issues surrounding'voluntourism'.
-- TUI Group publishes an annual Modern Slavery Statement
outlining the steps taken to prevent modernslavery and human
trafficking from occurring in its business and supply chain.
-- Our Human rights and child protection e-learning modules
continue to be rolled out across the different businesses. Airline
crews in the UK, Nordics and Germany receive Vulnerable Children
& Trafficking Training duringtheir inductions, where they learn
about how to spot trafficking and what to do. The Human Rights and
ChildProtection modules are mandatory to be completed bi-annually
by all colleagues in TUI Musement. We are working onrolling these
out also across the remaining business areas.
Charity and good causes
Investments into projects and good causes
EUR million 2022 2021 Var. %
Amount raised for charities / good causes 6.8 2.3 + 195.7
Our business, colleagues and customers raised EUR 6.8 m in
financial year 2022, an increase of 196 % due to the recovery of
the business from the impact of the COVID-19 pandemic.
Supporting the TUI Care Foundation
One of the ways we make a positive difference in destinations is
through our corporate foundation, the TUI Care Foundation, which
uses the positive power of tourism to improve the lives of young
people, care for the natural world and help local communities
thrive. Founded in 2016 as an independent foundation, the TUI Care
Foundation builds projects like education and training that use
tourism as a force for good and open up new perspectives in
particular for young people in the holiday destinations.
With over 30 projects in 25 countries, the TUI Care Foundation
focuses on the unique needs of a destination. Examples of projects
include marine conservation in Bali and Mallorca, vocational
training for disadvantaged young people at the TUI Academies in the
Dominican Republic and Sri Lanka, and tackling plastic waste in
Cyprus and Zanzibar.
During 2022, the TUI Care Foundation won six global awards for
its work around the world:
-- The TUI Care Foundation's COVID-19 Relief Initiatives were
awarded:? Gold Award by WTM Africa, in the category 'Destinations
Building Back Better Post-COVID' ? Gold Award by WTM Latin America
in the category 'Increased local economic benefit' ? Silver by WTM
Africa, in the category 'Virtual Volunteering'
-- Global Responsible Tourism Silver Award by WTM London in the
category of 'Sustaining Employees andCommunities through the
Pandemic'
-- The TUI Junior Academy in Curaçao was awarded a National
Energy Globe Award for sustainable teachingpractices
-- A Barcelona Sustainable Tourism Award was presented by the
consortium Turisme de Barcelona recognisingthe TUI Care
Foundation's best sustainability practices
More on TUI Care Foundation: www.tuicarefoundation.com
Planet - Reduce our footprint
We are working to reduce the environmental footprint of holidays
and drive-up environmental standards in our industry. We will
achieve net-zero emissions across our operations and supply chain
by 2050 at the latest and significantly reduce our environmental
footprint in the areas of water, energy and waste. To protect our
planet, we will change the way we use natural resources and become
a circular business.
Climate commitments
Climate change is a pressing global challenge. There is an
urgency to act and for everyone to play a role in the transition to
a low carbon economy. We have been working for 30 years to reduce
our environmental impacts. In this next phase of our sustainability
journey, we wanted to be led by science.
In 2022, TUI joined the Science Based Targets initiative (SBTi),
committing to implement emission reductions in line with the latest
climate science. Emissions from TUI's airline, cruises and hotel
segments represent 99 % of the Group's own emissions. Detailed
emission reduction roadmaps have been developed for each of these
three segments to realise significant reductions in emissions.
Our 2030 emission reduction targets for airlines, cruises and
hotels are with SBTi for final approval.
SBTi is a global body enabling businesses to set ambitious
emissions reductions targets in line with the Paris Agreement goals
in order to limit the worst effects of climate change. The
initiative is a collaboration between the Carbon Disclosure Project
(CDP), the United Nations Global Compact, World Resources Institute
(WRI) and the World Wide Fund for Nature (WWF).
Our footprint today
In financial year 2022, TUI Group's total emissions increased by
168.6 % year-on-year in absolute terms as a result of the recovery
of the business from the impact of the COVID-19 pandemic, in
particular the increase from aviation operations.
Carbon dioxide emissions (CO2)
tons 2022 2021 Var. %
Airlines & Aviation 1 4,331,628 1,317,865 + 228.7
Cruises 762,942 391,475 + 94.9
Hotels 542,994 362,474 + 49.8
Major premises / shops 14,251 15,949 - 10.6
Ground transport 13,144 5,440 + 141.6
Scope 3 (indirect emissions from TUI's value chain) 2 33,199 27,911 + 18.9
Total 5,698,158 2,121,114 + 168.6
1 Emissions from airlines and aviation include those from TUI
airlines as well as other airlines that TUI Group currently holds a
share in.
2 With reference to the Greenhouse Gas Protocol, TUI Group
currently includes Scope 3 emissions occurring from the production
of office paper and printed brochures, the supply and treatment of
fresh water used in our hotels, employee business travel by air on
3rd party airlines, and the transmission and distribution of
electricity across our hotels, offices and retail estate. TUI Group
acknowledges this is not a full and complete Scope 3 assessment and
will work in future to expand Scope 3 data collection and
reporting.
Energy usage by business area
MWh 2022 2021 Var. %
Airlines & Aviation* 17,655,179 5,371,454 + 228.7
Cruises 2,962,423 1,518,886 + 95.0
Hotels 1,599,057 1,021,997 + 56.5
Major premises / shops 60,036 60,766 - 1.2
Ground transport 55,311 23,314 + 137.2
Total 22,332,006 7,996,417 + 179.3
* Emissions from airlines and aviation include those from TUI
airlines as well as other airlines that TUI Group currently holds a
share in.
More efficient flying
We already operate one of Europe's most carbon-efficient
airlines and we aim to continuously improve our environmental
performance. Our 2030 airline emission reduction targets have been
submitted to SBTi for validation. Within our emission reduction
roadmap for aviation, the following levers are key; continued
investment in modern carbon-efficient aircraft, efficiency through
operational measures as well as investment in sustainable aviation
fuel (SAF).
TUI Group has invested in cutting edge aviation technology to
reduce emissions, such as the Boeing 787 and Boeing 737 Max
aircraft. On average the planes are 20 % and 16 % more
fuel-efficient (787 and 737 Max) than the aircraft they replace in
the TUI Airline fleet. The Boeing 737 Max also has a 40 % smaller
noise footprint than previous generation aircraft. In 2022, we
operated with 19 Boeing 787 aircraft and the Boeing 737 Max fleet
grew from 25 to 35 aircraft during the financial year.
After the end of the reporting period a new aviation investment
was announced in October 2022, with the Embraer E195-E2, the
quietest and most efficient aircraft under 150 seats, to join the
TUI fly Belgium fleet. The aircraft will operate on short and
medium haul routes and is 50 % quieter and emits up to a third less
carbon dioxide.
Environmental management systems and operational measures are
key to implementing sustainability and further enhancing carbon
efficiency. All TUI airlines held the internationally recognised
ISO 14001:2015 standard in financial year 2022. Here are some
examples of operational measures we implement to improve
efficiency:
-- Flight operations, e. g. single-engine taxing in and out,
wind uplinks and optimised climb speeds andprofiles
-- Weight reduction, e. g. carbon brakes and Fly Away Kit (spare
parts and kit)
-- Flight planning optimisation, e. g. alternate distance and
minimum fuel programme
-- Fuel management system to improve fuel analysis, identify
further opportunities and track savings
Sustainable aviation fuels (SAF) play a crucial role in reducing
emissions in aviation. SAF is a key part of our 2030 emissions
reduction roadmap to further improve airline carbon efficiency. TUI
is involved with a number of partners to secure the supply of SAF.
At the beginning of current financial year in October 2022, a
Memorandum of Understanding was signed with Spanish energy company
CEPSA and more will follow. The CEPSA partnership will focus on SAF
fuels made from materials such as used cooking oils, non-food
animal waste or biodegradable waste from various industries, and
will make it possible to reduce aircraft emissions by up to 80 %
compared to conventional kerosene.
In 2022, relative carbon emissions across our airlines decreased
by 18.5 %. This improvement was largely a result of significantly
improved load factors compared to 2021, as well as TUI's on-going
re-fleeting with older aircraft being replaced by new, more
carbon-efficient aircraft.
TUI Airlines - Fuel consumption and CO2 emissions
2022 2021 Var. %
Specific fuel consumption l / 100 rpk* 2.52 3.10 - 18.7
Carbon dioxide (CO2) - total t 4,053,745 1,300,942 + 211.6
Carbon dioxide (CO2) - specific kg / 100 rpk* 6.36 7.80 - 18.5
* rpk = revenue passenger kilometer.
The emissions in the following table are also shown in the form
of CO2 equivalents (CO2e). Apart from carbon dioxide (COS2), 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).
TUI Airlines - Carbon intensity
g CO2 / rpk* 2022 2021 Var. % g CO2e / rpk*
TUI Airline fleet 63.6 78.0 - 18.5 64.3
TUI Airways 62.2 83.3 - 25.2 62.9
TUI fly Belgium 70.7 82.8 - 14.5 71.5
TUI fly Germany 64.4 75.8 - 15.0 65.0
TUI fly Netherlands 59.8 70.3 - 15.0 60.4
TUI fly Nordic 66.4 69.7 - 4.8 67.1
* rpk = revenue passenger kilometer.
We commissioned Verifavia to provide assurance on the carbon
intensity metrics for 2022 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/responsibility/sustainability/reporting-downloads
More sustainable cruising
We continue to focus on lowering emissions across our cruise
operations, making progress through investing in the latest
technology to reduce air emissions, as well as operational
efficiencies. Comprehensive emission reduction roadmaps have been
developed along with our 2030 targets submitted to SBTi for
validation, covering TUI Cruises, Hapag-Lloyd Cruises and Marella
Cruises. Key levers include continued investment in fleet
modernisation and efficiency measures, with a focus on shore power,
route optimisation, energy efficiency boost and propulsion /
alternative fuel switch.
TUI Cruises with its brands Mein Schiff and Hapag-Lloyd Cruises
continues to operate a modern and technologically advanced fleet.
The newbuild ships in the fleet include the latest technologies to
minimise fuel consumption. 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. Furthermore, six of twelve
TUI Cruises ships are already equipped with a shore power
connection that enables the vessels to use green onshore power
where available for a nearly emission-free port stay. The whole
fleet will be shore power ready within the next few years.
On the newbuild Mein Schiff vessels, sulphur emissions and
nitrogen emissions are reduced significantly thanks to
comprehensive exhaust gas treatment systems installed on all new
ships. These advanced emission purification systems are operated
beyond regulatory requirements - for example 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 Mein Schiff travels to, such as the Mediterranean,
Orient, Caribbean and Central America.
The Mein Schiff fleet is also setting another milestone for
sustainable growth. The production of Mein Schiff 7 is underway in
the Meyer Turku shipyard in Finland. The focus is on setting high
environmental standards by optimising the design regarding energy
efficiency and technologies to improve sustainability. The ship
will be built so it is prepared to be fuelled with green methanol
in the future. It will enter service in 2024. This is an important
milestone in TUI Cruises efforts to provide the first
climate-neutral cruise by 2030.
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 TBT-free underwater
coatings, seawater desalination systems for freshwater production
as well as a biological sewage treatment system for wastewater.
Waste is separated on board in an environmental manner prior to
disposal on land by specialised companies in accordance with
international regulations (MARPOL).
Hapag-Lloyd Cruises' Hanseatic Nature, Hanseatic Inspiration and
Hanseatic 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.
TUI Marella continues to focus on sustainability and several
measures have been taken to improve efficiency. For example,
refurbishing the main dining rooms to remove halogen lights and
replace them with LED fixtures, upgrading to more modern and
efficient galley equipment and air conditioning systems, and
applying the latest generation hull coatings to Marella Discovery
and Marella Explorer to decrease drag in the water resulting in
reduced fuel consumption.
In financial year 2022, relative carbon emissions in Cruises
decreased by 44.9 % due to significantly higher occupancy levels
following the impact of the pandemic in 2021. Per cruise passenger
night 10.6 litres of waste were measured - a 55.3 % decrease - and
37 litres of fresh water consumed, a decrease of 58.7 % due to both
the improved occupancy and less bunkering of fresh water.
Cruises - carbon intensity, fresh water and waste
2022 2021 Var. %
Carbon dioxide (CO2) - relative, kg / Cruise passenger night 132 240 - 44.9
Fresh water - relative, l / Cruise passenger night 37 89 - 58.7
Total water - l / Cruise passenger night 321 673 - 52.4
Waste - relative, l / Cruise passenger night 10.6 23.7 - 55.3
Environmental efficiency across hotels
Our hotels and hotel partners continue to focus on and drive the
sustainability transformation across their operations. Each hotel
plays a key role in managing impacts on the local community,
economy and the environment. In support of our priority to reduce
emissions, we have developed comprehensive emission reduction
roadmaps and 2030 targets for the hotel segment of our business.
These targets are science-based and currently with SBTi for
validation.
Our hotel portfolio continues to grow and many of our hotels are
using the latest green technology to improve their sustainability
performance. The production of renewable energy from solar and wind
is a key lever in our emission reduction roadmaps for hotels, as is
efficiency measures achieved through hotel refurbishments and
newbuild standards.
Sustainability is embedded in contract clauses with our
accommodation suppliers outlining minimum expectations and the
requirement to work towards credible sustainability certification
recognised by the Global Sustainable Tourism Council. TUI supports
its hotel partners by providing guidance and tips on preparing for
certification. A community platform has also been set up to inform
and share about relevant sustainability topics and developments.
See the Progress section for more information on both of these
initiatives.
To celebrate innovative sustainability practices, our TUI Global
Hotel Awards includes a sustainability category. The 2022 winners
were Hotel Riu Festival and Hotel Riu San Francisco in Majorca for
their role in supporting a pioneering sustainable food and
recycling project. The hotels are part of an alliance of hotels in
Majorca working with the municipal waste company and a local
producer. Sensors are installed at the hotels to monitor organic
waste, which is then converted into valuable compost. The local
producer then uses the compost for growing fruit and vegetables,
which are then sold to the hotels and enjoyed by their guests.
Our hotels have seen significant improvements in performance
regarding emissions, water consumption and waste production. This
is a result of continued efforts to improve environmental
performance, along with higher customer numbers and occupancy
levels returning since the pandemic.
Hotels - carbon intensity, water* and waste
2022 2021 Var. %
Carbon dioxide (CO2) - relative, kg CO2 / guest night 10.1 13.4 - 24.6
Fresh water - l / guest night 494 644 - 23.2
Total water - relative, l / guest night 652 854 - 23.7
Waste - relative, kg / guest night 1.9 2.2 - 16.8
* Includes water for domestic, pool and irrigation purposes.
Circularity: Reduce, reuse and recycle
One of our core 'Planet' goals is to work towards a circular
business model. The Circular Economy is a way to think about how we
reduce, reuse, recycle and redesign products and services. The aim
is to keep resources and materials in the life cycle for as long as
possible and stop waste from being produced in the first place.
TUI has a set of Circular Economy Commitments focussed on
changing the way we operate and use resources. This will involve
all areas of our business model, but we are initially focussing on
food waste, plastic waste and our procurement processes. TUI will
work with suppliers to have all relevant information about their
sustainability performance so we can track and measure progress. To
support our circular business work, we are members of the
Sustainable Transformation Group on Circular Economy, coordinated
by the Antwerp Management School and part of the Ellen MacArthur
Foundation community.
At TUI we have been working hard for many years to reduce
plastic use across the business and find alternatives. TUI Group is
part of the Global Tourism Plastic Initiative 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 initiative, we commit to eliminating
problematic and unnecessary plastic packaging and items where
possible by 2025.
Protection of biodiversity
We support the WTTC's 'Nature positive vision for travel and
tourism' and we will take a nature positive approach to halt and
reverse biodiversity loss by 2030. We will invest in the protection
and restoration of nature in destinations. In addition to our
existing focus on animal welfare in our supply chain, we also want
to place further emphasis on biodiversity in the future.
We have improved, updated and resumed TUI's animal welfare audit
process, having adapted them to the latest version of the ABTA
guidelines (Global Animal Welfare Guidance for Animals in Tourism)
and to the digital transformation of the company. Since 2016 more
than 237 independent audits of animal attractions featured by TUI
were conducted, as well as 140 online self-assessments. 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.
TUI has partnered with SPANA, a leading global charity in animal
welfare for working animals and community development. The charity
improves the welfare of working animals in three ways: free
veterinary treatment, education and training, and emergency and
outreach projects. The focus of the partnership is working animals
(horses, camels, donkeys) in Morocco.
Progress - Accelerate the transformation
We aim to use our scale to increase the positive social and
environmental impact of every holiday experience we offer. We
strive to become sustainability leaders in all that we do. Together
with our partners we will co-create the next generation sustainable
business model for the tourism industry. We will enable our
customers to make sustainable holiday choices in every stage of the
customer journey. By 2030 we will significantly increase more
sustainable holiday choices through "Green & Fair" products and
services with the aim of havingto have 20 million customers per
year choosing a "Green & Fair" hotel or excursion, which meet
the strict criteria of the Global Sustainable Tourism Council.
Destination Co-Lab
In early 2022, TUI Group, TUI Care Foundation and the government
of the Region of the Southern Aegean launched a five-year project
called 'Destination Co-Lab Rhodes'. Together with our partners we
aim to co-create the next generation sustainable business model for
the tourism industry on Rhodes.
The three strategic pillars are 'Regenerate the natural
environment', 'Strengthen social development and cultural
heritage', and 'Foster inclusive economic development in the
tourism business model'. As part of the Co-Lab, the local tourism
industry and international partners want to work together to find
and develop concrete solutions and implement them on Rhodes.
Driving certification
TUI is driving up social and environmental standards through
certification. Our hotels and hotel partners are expected to
achieve a sustainability certification from an independent
organisation. This process involves a third-party assessment to
certify that the hotel complies with the Global Sustainable Tourism
Council (GSTC) Criteria, demonstrating social and environmental
good practice. The GSTC Criteria is the established global standard
for sustainable tourism and is organised around four main themes:
effective sustainability planning, maximising social and economic
benefits for the local community, enhancing cultural heritage, and
reducing negative impacts to the environment.
In financial year 2022 we had 7.9 m customers staying in a hotel
1 certified to a GSTC-recognised labelstandard, compared to 2.8 m
in 2021. The number of contracted certified hotels 2 has increased
year-on-year by 78.7 % to 1,126 hotels. This increase was due to
many of our key hotel partners finally being able to act on their
longstanding commitment to sustainability certification. Many
certifications lapsed during the previous financial year due to the
disruption caused by the COVID-19 pandemic. This was either due to
hotels being closed, the operational pressures of reopening, or
auditors being unable to visit destinations due to travel
restrictions. The impact of this disruption has significantly
reduced this year, meaning our hotel partners were able to renew
their certification and we are able to report a growth in
numbers.
Sustainability has also been embedded into our experiences
portfolio. In financial year 2022 we applied the GSTC Criteria of
the Global Sustainable Tourism Council to individual tours and
activities in order to assess their sustainability performance, the
first tourism company in the world to do so. 180 TUI Collection
experiences have gone through this comprehensive process to meet
global sustainability standards in destinations such as mainland
Spain, Mallorca, the Canaries, Turkey and the Dominican Republic.
By 2023, TUI aims for all TUI Collection experiences to meet global
sustainability standards. TUI Collection is our own-branded
portfolio of experiences available in over 100 destinations.
1 These hotels include both TUI Hotels & Resorts (in FY
2022, there were 353 TUI Hotels & Resorts) and hotels TUI Group
has a contract with that are certified to a Global Sustainable
Tourism Council (GSTC) recognised standard.
2 These hotels include hotels TUI Group has a contract with,
that are certified to a GSTC-recognized standard and had a minimum
of 100 TUI customers in FY 2022. TUI Hotels & Resorts that do
not have a contract with TUI Group are excluded from this
figure.
Progress performance
2022 2021 Var. %
Number of customers (millions) staying at hotels 7.9 2.8 + 180.2
with certifications1
Number of contracted hotels with certifications2 1,126 630 + 78.7
% of TUI hotels with certifications (variance in % points) 61 51 3 + 10
Number of certified TUI Collection excursions4 180 - n. a.
1 These hotels include both TUI Hotels & Resorts (in FY
2022, there were 353 TUI Hotels & Resorts) and hotels TUI Group
has a contract with that are certified to a Global Sustainable
Tourism Council (GSTC) recognised standard.
2 These hotels include hotels TUI Group has a contract with,
that are certified to a GSTC-recognized standard and had a minimum
of 100 TUI customers in FY 2022. TUI Hotels & Resorts that do
not have a contract with TUI Group are excluded from this
figure.
3 Previous year's number adjusted due to different calculation
method.
4 Certified to a GSTC-recognised standard, certification process
only began in January 2022.
Co-creating with partners
TUIPartners.com has been developed to provide one easily
accessible place for our numerous partners (accommodation, tours,
activities and transport providers) to find the latest news,
information and guidance on sustainability, health & safety,
security and more. We use the Sustainability section as a platform
for sharing knowledge, experiences and upskilling on different
sustainability topics such as how to achieve sustainability
certifications.
Empowering consumers
We want to enable consumers to make more sustainable holiday
choices. As well as embedding sustainability into our brand and
creating a sustainability marketing toolkit for our businesses, we
have developed a label to make it easier for customers to find and
book more sustainable products and services. The 'Green & Fair'
label has been launched in financial year 2022 on our experiences
selling website, to help consumers identify those tours and
activities that meet the GSTC Criteria. In financial year 2023 this
label will be rolled out to hotels.
Our people
People Strategy
With their competence and commitment, our employees made a key
contribution to TUI's successful restart. The challenging interplay
between our transformation to a digital platform company, the
impact of the COVID-19 pandemic and a volatile labour market have
substantially altered expectations about the way we work and how we
interact with present and future employees. The world of work is
undergoing structural change and is characterised by digitalisation
and an ever-faster pace. The introduction of new models of work are
facilitating hybrid work in regards to working place and time with
the help of digital solutions and policies. This changes the way we
work together and leads to new requirements in the communication
between managers and their teams. In the wake of our transformation
the required skill-set and know-how of our employees is shifted
towards the digital field. At the same time, the expectations of
our employees and future talents are continually changing. People
expect greater flexibility and additional benefits from their
employers. Simultaneously, diversity, the experience of belonging
and the increased wellbeing become ever-more relevant factors for
our employees. TUI has to respond to these expectations in order to
secure talent acquisition in a challenging environment, especially
in the IT sector. Against the backdrop of this overall framework,
we have developed a new People Strategy with Sybille Reiss, Chief
People Officer and Labour Director. The strategy adopts a holistic
approach aimed at both our people function, which includes our HR
teams, as well as our employees. It puts people first.
The goal of our People Strategy is reflected in our vision to be
Digital, Engaging and Inclusive.
-- Digital: We use digital tools in order to enable our people
to work smarter, unlock innovation and driveefficiency. Access to
data helps our People Teams to better understand our customers -
our employees - and toenable productive changes.
-- Engaging: We invest in developing teams and confident
leaders. By empowering performance, we enrich thelives of our team
and succeed as a business. We recognise achievements and encourage
continuous learning, allowingpeople to shine, individually and
together. We are proud to be TUI.
-- Inclusive: Every voice matters at TUI. That is why we aim to
break down barriers, listen to eachindividual, and care for their
wellbeing. This means we personalise our approach to be
all-inclusive, embracingdiversity and bringing global and local
teams together.
Our People Strategy focuses on strengthening our business and
the experience of existing and future employees. In order to
implement our strategy, we have adopted a mission defining our
relevant areas of action. With this approach we want to create a
framework to empower our employees to deliver their best
performance and be successful as one team.
Simplification, harmonisation, focus
A crucial factor in implementing our global People Strategy is
that it centres on our core topics and processes. All the
activities we deliver must be aligned to the principles of
simplification, harmonisation and focus. Processes are being
harmonised and standardised globally to create synergies and avoid
duplication. Local adjustments are only effected if and as required
or where this creates additional value. Examples effective from
financial year 2022 include the far-reaching harmonisation of our
recruitment processes across markets and platforms, reducing them
to two master processes. These were ultimately be transferred to
our HR system, enabling us to enhance our recruitment
efficiency.
We have also realigned our HR structure to match that principle.
An organisation with Group-related and local Centres of Expertise
(CoE) is being transformed into a global CoE structure with local
representatives. In addition to the existing global HR Business
Partner and HR Services structures, global CoEs are now being
established in the fields of Reward, HR Systems & People
Analytics, Talent Acquisition and Talent Management &
Development. Implementation was launched in financial year 2022 and
the project is scheduled for completion in the first half of
financial year 2023.
Progressive simplification, harmonisation and focus are
supported by the ongoing development of our HR systems landscape in
the wake of our digital transformation.
Digital transformation
Our goal is to increase the efficiency of our work and to
promote the acceptance of digital systems. The priorities here are
a data-centric alignment and the incorporation of high-quality data
into our decision-making processes.
A key project was the further implementation of our single HR
Core System in TUI People. The functions of the system include HR
master data administration and the mapping of HR processes.
Following the COVID-19 pandemic, the roll-out of the system
continued in the TUI Musement segment in financial year 2022.
Germany saw the launch in financial year 2022.
Another key area was the use of existing and the introduction of
new functions in our HR IT platform TUI People. This is
demonstrated, inter alia, by the launch of the processes for TUI
WORKWIDE and the continued roll-out of a compensation module within
our HR IT platform in the UK, the Nordics, Belgium and the
Netherlands.
Within TUI People, our desktop assistant offers our employees
real-time step-by-step instructions for handling system functions.
This helps to speed up the implementation of new processes, as our
employees can set them up directly with the support of the
assistant. The application also provides 1st level support in the
event of any questions. The desktop assistant was further expanded
in financial year 2022 and supports a large number of digital
processes. The expansion included content in the fields of
recruiting, learning as well as our HR Core System.
Developments in financial year 2022 also featured the launch of
TUI eSafe in several companies in Germany. This is an electronic
safe for employees to which we digitally send documents such as
their payroll slip. The eSafe will be a sustainable, time-saving
application offering employees safe and permanent access to their
documents. In future, employees will receive all documents in their
TUI eSafe, where legally permitted. Roll-out of the application
will continue in Germany next year. It will subsequently be rolled
out on a global level.
Our priorities for the new financial year are the continued
implementation of our single HR Core System and the expansion of
our reporting, analytics and dashboard functionalities, based on
the introduction of a central HR Business Warehouse. The project
was designed in financial year 2022 and its implementation has now
been initiated.
Enable growth
In order to retain our employees and recruit new people in a
challenging labour market, we are pursuing a multi-layered
recruitment approach including internal training programmes as well
as external recruiting. Talent acquisition is implemented by a
global team positioning TUI as an employer of choice in the
relevant markets and among key target groups. Our career sites
achieved almost 1.5 million visits in the period under review, and
we received more than 295,000 applications.
In financial year 2023, we will roll out a new employer branding
strategy for TUI. In the period under review the foundation was
created with the identification of TUI's core strengths and USPs as
an employer thanks to in-house and external surveys as well as
labour market analyses. The new employer branding strategy is
designed to have a positive impact on perceptions of TUI in the
labour market, on the experiences of our talents in the application
process and on employee satisfaction. The core of the strategy is
our Employer Value Proposition. It describes the unique benefits of
TUI as an employer. The communication campaign launched in support
of the strategy aims to generate positive general interest in
working at TUI. In addition, it targets specific groups relevant to
the success of our company in order to recruit and retain them. The
campaign, scheduled to be rolled out from January 2023, is founded
on authentic insights into working at TUI from our employees'
perspective.
A new platform has been incorporated into our career website in
order to enhance job applicants' perception of the company. It
creates touchpoints between external talents and TUI employees. It
offers applicants the opportunity to address questions directly to
selected employees so as to liaise with the company. In a pilot
project launched in March 2022 in IT and parts of TUI Musement, 97
% of the talents assessed the new platform as useful. It is
scheduled for further roll-out from November 2022.
Moreover, a special pre-boarding platform was developed and made
available from the end of financial year 2022 as part of TUI
People. It enables new employees to obtain insights into TUI and
its ways of working before they officially start their job. The
platform offers a welter of useful information about working at TUI
and also serves as a central touchpoint for new employees. It helps
helps us to create an open, welcoming culture and a sense of
belonging to TUI right from the start.
Positive employee experience
We want to create an environment in which people like to work.
With the launch of the TUI Way of Working in the prior financial
year, we created the key conditions to achieve that goal. The TUI
Way of Working is our joint vision for the future of work at TUI
and how to organise it globally and adjust it to local needs. We
are seeking to create a culture of trust that inspires a sense of
belonging in employees regardless of where they work, offering
flexibility and promoting efficient work. The core statement of
that vision is: work is what we do, not where we go.
TUI WORKWIDE was created in that spirit in August 2021. It is an
innovative programme enabling people to work from virtually
anywhere in the world for up to 30 days per year. Flexibility in
terms of place and time is important for TUI as we firmly believe
it promotes productivity and innovation. Since the launch of TUI
WORKWIDE, our employees have applied for more than 10,000 days
working from a different country. Of this total, almost 9,000 days
had been taken up by the end of the financial year. In total, 847
employees had requested an average of 8.5 days within the framework
of TUI WORKWIDE by the end of financial year 2022.
In order to further identify and understand the needs of our
employees, we carried out the TUIgether light survey in summer 2022
after the survey had been suspended for three years. The goal of
the survey was to capture sentiment across the entire organisation.
It achieved a return rate of 48 % (15,820 out of 32,720 potential
respondents). The result reports were prepared at the level of
businesses and functions. The statement "I would recommend TUI as a
great place to work" received a positive rating from 54 % of
participants and will be a key element in the future measurement of
people's engagement. The other questions related to Strategy &
Vision, Personal Development and TUI as an Employer. Unlike in past
surveys, a first step was taken towards measuring diversity, equity
and inclusion. The statement "I feel comfortable being myself at
work" had one of the most positive scores in all TUI Group
businesses, with a total of 76 % agreement from participants. The
follow-up process, once the survey has been implemented and the
results evaluated, has added two new actions since 2019. Firstly, a
new level of transparency was achieved by publishing multiple
survey result reports from different levels of the business on the
Smile intranet. Secondly, a hackathon on "TUI as a great place to
work - Improving the Employee Experience" was planned for the end
of October 2022. Voluntary participants from the entire group were
invited to register for the two-day virtual event and work together
in small groups to develop ideas for improvements based on the
results of the survey and their employee experience.
In parallel, we continued updating the new Employee Listening
strategy in financial year 2022. Our goal is to listen to our
employees more regularly, measuring their engagement and growing it
in a sustained manner. The new TUIgether+ survey approach launched
in cooperation with a new service provider will facilitate a
holistic approach to measuring and enhancing the employee
experience. We will focus on three different survey types, each
tailored to the specific needs of different groups of participants.
Apart from global surveys relating to engagement and other
strategic topics, we will also measure key moments in each
employee's life cycle and use business insight surveys to obtain
their feedback on certain topics such as transformation. Executives
receive feedback on a regular basis to help them plan measures at
all levels. Real-time surveys and more regular feedback will enable
us to respond swiftly to emerging trends. In the next few years,
the new survey landscape will be developed and defined further,
resulting in a structured routine with regular findings.
Diversity, equity & inclusion
Our goal is to be "all-inclusive" in terms of our employees and
our culture at work. We aim to support and promote the wellbeing
and resilience of our employees. We want them to feel accepted and
appreciated to be healthy and motivated in delivering their best
performance. This includes accepting and leveraging diversity.
A number of measures were carried out again in the period under
review. We implemented several training programmes on "Unconscious
bias" and other diversity-related topics. Diversity-related content
was shared on the intranet, in the TUI Learning Lounge and in the
leadership programmes. TUI took part in in-house and external
events on diversity, e. g. as a sponsor at the Maspalomas Pride
event in Gran Canaria. We once again organised Wellbeing Days,
where our employees were able to obtain a range of information on
the theme with, for example, talks on healthy eating and tips for
working from home. Throughout the year, we also took part in
various key events and special dates, e. g. International Women's
Day and Pride Month.
We have also entered into external partnerships, e. g. with
Women in Data (WID), in order to increase the attractiveness of
Data Science for women and diverse professionals. TUI is also part
of the Black Representation in Marketing (BRiM) initiative with
several other companies. In addition, we support the diversity of
internal employee networks with different interests, e. g. LGBTQI+,
Religion or Diversity, Equity & Inclusion. Our internal and
external partnerships help us set the right priorities in this
area.
With TUI's 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 nationality 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.
In financial year 2022, various diversity-related indicators
were monitored. The proportion of women in the overall headcount
rose year-on-year to 55.7 %. The share of women in leadership
positions was increased compared to prior years. Especially the
female proportion in senior leadership teams was raised by two
percentage points.
Proportion of women in managerial positions
in % 30 Sep 2022 30 Sep 2021 Target 2023
TUI AG
Supervisory Board 45 40 30
Executive Board 1 woman 1 woman at least 1 woman
First management level below Executive Board 21 24 25
Second management level below Executive Board 24 24 30
TUI Deutschland
Supervisory Board 33 33 30
Executive Board 33 25 25
First management level below Executive Board 35 22 30
Second management level below Executive Board 43 44 40
TUI fly
Supervisory Board 25 25 30
Executive Board 0 0 20
First management level below Executive Board 0 20 30
Second management level below Executive Board 41 47 40
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. In the
period under review, the first of these targets for 2023 were
already achieved.
See declaration in the Corporate Governance Report on page
121.
In future, the focus of our activities in Diversity, Equity
& Inclusion will be on the development of a holistic, global
strategy covering all dimensions of diversity. It will comprise,
for example, the publication of a binding global Diversity, Equity
& Inclusion (DEI) Statement, the establishment of a global DEI
Committee and the launch of further global DEI activities aimed at
supporting our employees' wellbeing. We are planning to introduce a
diversity index to measure diversity.
Enable best performance
In order to be successful together at TUI, we are seeking to
empower our employees to deliver their top performance. We are
supporting our executives and promoting dialogue between managers
and employees.
As in previous years, we continued the feedback and target
agreement process Great Place to Grow in the period under review.
It offers our executives a clear framework for supporting the
development of our employees and providing them with feedback
through dialogue. We are also aiming to ensure that our employees
have clear goals and know their contribution to the growth of our
Company.
We are supporting our employees in preparing for tomorrow's
challenges with new learning content. We foster our talents in
various areas including digitalisation in order to take TUI a step
further as a digital platform company. Depending on their growth
and career targets, our employees have a broad range of development
formats available to choose from. Overall, the active users of our
HR IT platform TUI People completed an average of more than two
hours of training per month in financial year 2022. We also offered
a wide range of programmes such as the TUI Learning Lounge and the
Sustainability Academy and continued the Language Mentoring
project.
In IT, the for:ward programme was successfully continued in
financial year 2022. It focuses in particular on changing IT roles
and the skills required. for:ward offers our employees two options:
As part of the first option, participants can undergo a role
transition with the support of an external partner. To that end,
learning paths have been established, either guiding employees into
a new role or deepening their expertise in their current role. In
the period under review, the second cohort started role transition
with 21 participants. Sixteen participants completed the training
programme, while five participants extended. This programme will be
continued in financial year 2023 with a third cohort of around 30
participants.
The second option offered by for:ward enables employees to apply
for an on-demand learning licence that includes access to the
highest-ranking business and technology programmes of our partners.
This option was opened up to all TUI employees in the period under
review, and they completed nearly 10,600 hours of training.
Our executives had the opportunity to take part in the
development programmes How2 and Global VIBE. How2 aims to convey
key leadership fundamentals to new executives to ensure that they
can fully live up to their role. The programme comprises six
modules with a wide range of online learning content, eLearning
modules, teamcasts and Share the VIBE sessions. In financial year
2022, 194 executives successfully completed the programme.
Global VIBE expands the approach underlying How2, building
leadership skills in our executives, including the ability to lead
a global team. This programme, too, benefits from a virtual
learning environment with a broad range of additional digital
resources. In addition, we offer formats enabling our executives to
network so that they can exchange views and information and learn
from one another. Examples include twelve master classes held with
a total of 829 participants. The advanced leadership programmes
Perspectives, Digital STEP and Horizons were suspended during the
COVID-19 pandemic. Perspectives and Horizons will be resumed in
March 2023.
Outlook
Our People Strategy defines our priorities for the upcoming
financial years. In a continually changing business environment, we
are investing in the continuous development of our executives and
employees. New Employer Branding and Employee Listening strategies
will support us on the path to being an employer of choice and in
developing an industry-leading employee experience. In our pursuit
of talent management we focus on the retention and acquisition of
talents with relevant skills in key positions. We aim to promote
the engagement of our employees and support their wellbeing and
resilience. Overall, our goal is to simplify and standardise our
processes and our global way of working. This brings us closer to
our vision of being Digital, Engaging and Inclusive.
Employee representatives
TUI Group historically features a strong co-determination
landscape. It embraces the Supervisory Board at corporate level,
the Group Works Council at Group level and many works councils at
company level. Cooperation with these committees was very
constructive. In the financial year under review, negotiations
about an agreement on safeguarding the future continued and were
brought to a successful conclusion. This job security agreement
creates confidence and provides assurance for our employees in
Germany. Other topics discussed with the Group Works Council
included the further development of the HR IT platform TUI People
and various reorganisation issues in the framework of the ongoing
transformation.
At the international level, the TUI Europe Forum as an
information and consultation body represents the interests of
employees working in companies outside Germany and thus plays an
important role as a facilitator and integrator in the European
framework. This enables discussions about relevant themes, such as
transformation, to be held both inside and outside Germany on a
local and regional level and in the international platform
organisations.
Occupational health
TUI Group promotes the physical and mental health of all its
employees. In order to ensure that employee health is given
appropriate attention, a Group-wide body of health officers has
been set up to regularly consider best practices, ongoing projects
and plans for activities conducive to good health. Against the
backdrop of global challenges in connection with mental disorders,
in particular, an even stronger focus will be placed on aligning
activities to shared goals and establishing stringent
processes.
In the course of the year, health-promoting activities and
presentations were offered across the Group. Some of the offerings
of the "TUI fit" programme had to be paused or replaced by digital
alternatives due to the COVID-19 pandemic. The offerings have been
resumed in line with statutory requirements.
Employee indicators
As at the balance sheet date 30.09.2022, staff numbers rose by
20.8 % to 61,091. The ramp-up of business operations and the
reopening of hotels and destinations following the COVID-19
pandemic resulted in a significant increase in overall staff
numbers in Hotels & Resorts and TUI Musement.
Personnel by segment
30 Sep 2022 30 Sep 2021 Var. %
Hotels & Resorts 27,234 21,508 + 26.6
Cruises* 72 57 + 26.3
TUI Musement 8,768 5,381 + 62.9
Holiday Experiences 36,074 26,946 + 33.9
Northern Region 10,423 9,011 + 15.7
Central Region 7,039 7,492 - 6.0
Western Region 5,141 4,833 + 6.4
Markets & Airlines 22,603 21,336 + 5.9
All other segments 2,414 2,302 + 4.9
TUI Group 61,091 50,584 + 20.8
* Excludes TUI Cruises (JV) employees. Cruises employees are
primarily hired by external crew management agencies.
Hotels & Resorts
In Hotels & Resorts, the headcount increased by a total of
26.6 % to 27,234. Staff numbers of Robinson grew from 4,763 to
5,141. TUI Blue reported an increase in its headcount, primarily
resulting from the reopening of hotels in Zanzibar. Riu recorded
growth in staff numbers of 52.0 % to 12,691, driven by the restart
of business operations, in particular hotels in Cape Verde,
Zanzibar and Spain. Northern Hotels also saw a slight increase in
the headcount.
Cruises
The headcount in the Cruises segment increased by 26.3 %
year-on-year to 72.
TUI Musement
In financial year 2022, the headcount in TUI Musement rose by
62.9 % to 8,768. The increase was driven by the reopening of
destinations, in particular in Spain.
Northern Region
Northern Region recorded a year-on-year headcount increase of
15.7 % to 10,423. In the UK, staff numbers rose by 15.7 % in the
Retail, Tour Operator and Airline sectors from 8,353 in the prior
year to 9,666. This is primarily attributable to the filling of
vacancies and a stronger Summer business. In the Nordics, staff
numbers in Tour Operator and Airline grew by a total of 15.0 % to
757.
Central Region
In Central Region, the headcount declined by 6.0 % year-on-year
to 7,039. In Germany, staff numbers fell by 9.4 % from 6,061 to
5,489, in particular due to restructuring measures in the Airline,
Tour Operator and Retail sectors. In Austria, staff numbers rose
slightly by 7.7 % from 431 to 464, as vacancies open after the
pandemic were filled again. In Switzerland, the headcount increased
slightly by 2.5 % from 357 to 366. In Poland, the headcount grew by
12.0 % from 643 to 720.
Western Region
The headcount in Western Region increased by 6.4 % year-on-year
to 5,141. This was driven by higher staff numbers in the Retail and
Tour Operator businesses in Belgium and the Netherlands. The number
of employees in the Airline business in Morocco and the Netherlands
also rose year-on-year. In France, staff numbers grew by 18.9 % to
636.
All other segments
Staff numbers rose by 4.9 % overall to 2,414 year-on-year. The
number of employees working for Head Office functions in Germany
decreased by 2.9 % to 639, including 269 employees working for TUI
AG. The number of employees working for Head Office functions in
the UK grew by 7.8 % to 440. The headcount in IT rose by 9.3 %
year-on-year to 961. The Future Markets segment recorded an
increase in its headcount of 4.8 % to 374.
Personnel costs
EUR million 2022 2021 Var. %
Wages and salaries 1,732.3 1,393.1 + 24.3
Social security contributions 300.4 193.7 + 55.1
Pension costs 109.2 119.3 - 8.5
Total 2,141.9 1,706.1 + 25.5
In the period under review, TUI Group's personnel costs
increased from EUR 1.7 bn in the prior year to EUR 2.1 bn. The
year-on-year increase in wages and salaries and social security
contributions in financial year 2022 mainly results from an annual
average increase in staff numbers of 24.0 %. In addition, the use
of short-time work benefit schemes and other government-sponsored
programmes to save jobs was significantly lower than in 2021.
For more details please refer to page 185.
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 the sustained
participation of employees in the Company's long-term targets. In
addition, the Senior Leadership Team can participate in a long-term
share-based compensation programme based on the allocation of
virtual shares.
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 some cases beyond the
statutory minimum required. In Germany, collective contracts have
been concluded with an insurance undertaking in order to meet the
legal entitlement to deferred compensation.
Customer experience, Security, Health & Safety and crisis
management*
We place our guests and their individual wishes and needs at the
centre of our organisation in order to offer them differentiated
and consistent experiences. In this way, we aim to increase
customer loyalty and tap into new customer segments, as satisfied
guests are a decisive factor for the TUI Group's long-term growth.
Our goal is to continuously adapt the customer experience to
individual needs and to further personalise it. The more flexible
and personalised design of our products and services is supported
by the expansion of our product portfolio and our digital
platform.
Our integrated business model allows us to accompany our guests
through the entire travel experience from booking, arrival, hotel
stay and cruise to local activities and excursions - digitally and
personally. The digital travel experience is complemented by the
personal appreciation of our employees, which our guests experience
in our travel agencies, aircraft and hotels, on our ships and in
the destination.
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
within 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 and other involved business
areas.
Safety
Throughout the 2022 financial year, we have further embedded and
established the Safety & Risk team within the Group. With the
busiest operational summer since 2019, our revised processes have
successfully supported the management of safety risk within our
operation as the industry continued to open up again following the
pro-longed shut down.
* Part of social matters.
The Safety & Risk team's remit continues to focus on the
principal safety risks associated with accommodation, transfers,
excursions, activities, tours and all other in-destination
activities supporting our Tour Operators in the Source Markets and
TUI Musement. The function's remit expanded in 2022 to include TUI
Hotels & Resorts and TUI branded units including TUI Blue -
further strengthening their role in this area as a Centre of
excellence within the Group and driving group wide consistency and
visibility.
In financial year 2022 and in line with local requirements, the
measures for managing the spread of COVID-19 and the associated
reporting processes have been amended and integrated into our
normal operating procedures for reducing the spread of all
infectious diseases. The situation continues to be monitored and
measures can be flexed locally as circumstances require.
In addition to the continuous monitoring approach of key risk
areas taken in TUI Hotels & Resorts, TUI have conducted 4,155
safety assessments across our third party hotel portfolio using a
multi-layered assessment approach. A brand standard has also been
developed for TUI Blue and other concept branded franchised
units.
Building on the data sharing portal established for our Riu
hotels in 2021, significant progress has been made to further
expand our data-led, risk-based approach to Safety Management with
third party hoteliers. The expansion of the data sharing portals,
in partnership with several technical specialist providers who
conduct safety monitoring / management programs with hoteliers
globally, will increase our operational efficiency and enable an
improved approach to safety risk management.
Group S&R, as a Centre of excellence, continues to support
the strategic direction of the business and ensuring that TUI
remains a brand that can be trusted.
Security
Following a review of Group security activities the two
functions of Corporate and Destination security were merged in
early 2022 under one new Head of Security and Intelligence lead.
The department now works collaboratively to manage the security
environment across the business.
This review followed the finalization of the Tunisia inquest and
also the responsibility for Hotels and Resorts properties security
moving to the Group team, as such, two new roles have been added to
the Group Security team to drive the TUI standard for Security to
the next level supporting intelligence management and our important
own branded hotels. This will ensure we move to an industry leading
position with ensures the very highest level of security risk
management across the Group.
Crisis Management and Business Continuity
TUI operates Group wide crisis and business continuity protocols
and governance modules. Regular update calls between Group function
and business areas are established to share strategic and
operational topics incl. best practice. Data is aggregated and
analyzed, the frame works ascertain when guests and / or employees
are affected and what support / actions at what moment is need.
Reporting lines and operational work flows had been adjusted to
ensure operational Group wide efficiency. 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.
The Group wide crisis management system software for monitoring,
escalation and managing of day-to-day incidents gives the ability
to work individually within each business or together as a group
when needed. In addition there is, for the first time ever, a
business continuity system to be implemented in all markets, at the
airlines, the cruise division, Hotels & Resorts, and TUI
Musement to provide a Group overview on business continuity
management and activities. The project includes representation from
all business areas but also with an enhanced governance process
supported by Group SHS.
Anti-corruption and anti-bribery
Details of TUI Group's anti-corruption and anti-bribery measures
are presented in the Corporate Governance section on Integrity
& Compliance from page 129 in this Report.
Disclosure pursuant to EU Taxonomy Regulation (EU) 2020/852
Pursuant to Article 8 of the Regulation (EU) 2020/852 of 18 June
2020 on the Establishment of a Framework to Facilitate Sustainable
Investment, TUI AG is publishing its first report in accordance
with the Taxonomy Regulation. A simplified reporting obligation
applies for financial year 2022. Undertakings have to disclose
information on the extent to which turnover, capital expenditure
and operating expenses as defined in the Regulation are aligned to
the economic activities described in EU Regulations and Delegated
Acts and hence eligible for the taxonomy. This does not in itself
indicate whether they qualify as environmentally sustainable under
Articles 3 and 9 of the Taxonomy Regulation.
As a first step, TUI has analysed its economic activities,
taking into account both activities generating external turn-over
and activities serving the Company's own needs. TUI's main
activities, flight operation and the delivery of accommodation
services in hotels, are not currently listed in the EU regulations.
Therefore, only a small portion of the indicators mentioned above
currently relate to taxonomy-eligible activities. The EU has
announced that it will expand its list of taxonomy-eligible
activities, so that the taxonomy-eligible portion of the key
figures is likely to change substantially in the future. Currently
taxonomy-eligible activities include transporting passengers in
vessels and buses where this is associated with external turnover
and the corresponding capital expenditure and operating expenses.
Activities associated with our buildings, in particular hotels and
administrative buildings are also to be classified as
taxonomy-eligible.
The second step was to determine the indicators relating to
these activities. The total turnover means the turnover determined
under international accounting standards and shown in the Notes. Of
this total the portion relating to taxonomy-eligible activities is
determined. Turnover from package tours is related to different
activities, as they typically include a flight, transport in the
destination and an accommodation service on a ship or in a hotel.
For the purposes of the EU Taxonomy, this turnover is broken down
according to the required costs incurred and attributed attributed
to passenger transport by ship or bus.
Capital expenditure summarises the additions to the relevant
assets mentioned in the Notes to the consolidated financial
statements in the sections "Good-will", "Other intangible assets",
"Property, plant and equipment" and "Rights of use Assets". The
proportions of capital expenditure allocable to taxonomy-eligible
activities were identified with the support of our internal project
controlling.
Operating expenses at TUI include in particular non-capitalised
renovation and maintenance expenses and expenses from short-term
leases determined on the basis of our internal reporting. Capital
expenditure and operating expenses related in particular to TUI's
buildings and to the cruise ships.
Taxonomy-eligible share of economic activities, 2022
Total Share
(EUR million) (%)
Taxonomy-eligible revenue 352.6 2
Taxonomy non-eligible revenue 16,192.3 98
Revenue 16,544.9
Taxonomy-eligible operating expenditure (OpEx) 114.4 25
Taxonomy non-eligible operating expenditure 341.2 75
Operating expenditure according to EU Taxonomy Regulation 455.6
Taxonomy-eligible capital expenditure (CapEx) 229.2 31
Taxonomy non-eligible capital expenditure 521.9 69
Capital expenditure according to EU Taxonomy Regulation 751.1
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
https://www.tuigroup.com/en-en
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 2022 2021 Var. %
Revenue 89.8 33.9 + 164.9
Other operating income 491.7 1,750.3 - 71.9
Cost of materials 16.4 11.3 + 45.1
Personnel costs 57.5 39.6 + 45.2
Depreciation 1.6 4.5 - 64.4
Other operating expenses 332.6 471.8 - 29.5
Net income from investments - 205.2 - 381.1 + 46.2
Write-downs of investments 380.0 1,180.3 - 67.8
Net interest - 121.1 - 191.1 + 36.6
Income taxes (income (-), expense (+)) - 3.8 - 2.8 - 35.7
Profit after taxes - 529.1 - 492.7 - 7.4
Expense / income from other taxes 1.8 - 1.3 n. a.
Net profit for the year - 530.9 - 491.5 - 8.0
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, and the measurement of financial
investments.
Revenue and other operating income
The increase in revenue in financial year 2022 mainly resulted
from higher income from licence fees with subsidiaries. Other
operating income in the previous year was characterised in
particular by the gain on disposal of EUR 1.5 bn from the sale of
the stake in TUI Cruises to Preussag Beteiligungsverwaltungs GmbH
IX. In the completed financial year, gains on disposal from the
sale of two subsidiaries to TUI Holding Spain S. L. were
significantly lower at EUR 23.0 m. The decline in Other operating
income was also driven by lower income from exchange gains. This
income was offset by expenses from exchange losses, carried in
Other operating expenses. Other operating income also included, in
particular, income from intercompany charging of service costs,
carried alongside expenses passed on to TUI AG from other Group
companies, carried in Other operating expenses. The year-on-year
decline in Other operating income was partly offset by a
significant increase in reversals of write-downs of investments and
income from the reversal of provisions no longer required.
Expenses
The year-on-year increase in personnel costs resulted from a
considerable increase in pension expenses due to higher transfers
to pension provisions and from the formation of personnel
provisions for former Executive Board members.
Other operating expenses comprised in particular expenses for
exchange losses, the cost of financial and monetary transactions,
fees, charges, services, transfers to impairments, other
administrative costs as well as expenses for the intercompany
elimination of services. While there was a fall in expenses for
exchange losses, capital procurement costs in connection with
financing schemes and impairments of receivables as well as in
charges for intercompany services from prior years, expenses for
the elimination of intercompany services rose only slightly.
Overall, this resulted in a decline in Other operating
expenses.
Net income from investments
The year-on-year increase in net income from investments is
mainly driven by the significant decline in expenses for loss
transfers, relating predominantly to Leibniz-Service GmbH and other
companies allocated to Central Operations. The income from profit
transfers generated in financial year 2022 resulted from an
earn-out agreement in connection with the sale of the stake in Riu
Hotels S. A. by a subsidiary and profit transfers from a company in
Hotels & Resorts.
Write-downs of investments
In the period under review, write-downs of investments mainly
related to Tour Operator subsidiaries. Due to the recovery of the
market environment, write-downs were significantly lower than in
2021.
Interest result
The development of the interest result mainly resulted from
changes in financing schemes such as the redemption of the bonds in
financial year 2021, the redemption of a part of the credit line
from the Revolving Credit Facility (RCF) in the completed financial
year, the repayment of a part of the warrant bond issued to the
Economic Stabilisation Fund (ESF) and the early redemption of
Silent Participation II in the period under review.
Taxes
Income taxes and expenses for other taxes mainly resulted from
the regular reassessment of tax provisions. They did not include
any deferred taxes.
Net result for the year
For financial year 2022, TUI AG posted a net loss of EUR 530.9
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 decreased
slightly year-on-year to EUR 10,022.1 m.
Abbreviated balance sheet of TUI AG (financial statement according to German Commercial Code)
EUR million 30 Sep 2022 30 Sep 2021 Var. %
Intangible assets /property, plant and equipment 4.6 6.2 - 25.8
Investments 7,753.6 8,022.8 - 3.4
Fixed assets 7,758.2 8,029.0 - 3.4
Receivables 1,781.1 1,385.4 + 28.6
Cash and cash equivalents 473.0 592.5 - 20.2
Current assets 2,254.1 1,977.8 + 14.0
Prepaid expenses 9.8 29.1 - 66.3
Assets 10,022.1 10,036.0 - 0.1
Equity 4,044.3 3,034.8 + 33.3
Special non-taxed items - 0.1 n. a.
Provisions 323.3 327.5 - 1.3
Bonds 648.3 739.6 - 12.3
Other liabilities 5,006.2 5,934.0 - 15.6
Liabilities 5,654.5 6,673.6 - 15.3
Liabilities 10,022.1 10,036.0 - 0.1
Fixed assets
At the balance sheet date, fixed assets almost exclusively
consisted of investments. The development of investments was
affected by the intra-Group sale of two subsidiaries to TUI Holding
Spain S. L. and in particular by write-downs of investments. The
write-downs mainly related to shares in Group companies allocated
to tour operation. The decline was partly offset by write-backs of
shares in Group companies, both in tour operation and Hotels &
Resorts and central segments. Due to redemptions in particular,
loans to Group companies declined slightly in the financial year
under review.
Current assets
The increase in current assets by 14.0 % to EUR 2,254.1 m
resulted from a considerable build-up of receivables, which more
than offset the decline in cash and cash equivalents. The increase
in receivables was primarily attributable to the development of
rights and obligations from profit and loss transfer agreements and
a receivable from the sale of stakes in subsidiaries to TUI Holding
Spain S. L. as well as the short- and medium-term financing of
Group companies. Current assets also rose due to the cash deposit
for the regulatory safeguarding of customer advance payments
received on package holidays, carried in Other assets.
TUI AG's capital structure
Equity
TUI AG's equity increased by 33.3 % to EUR 4,044.3 m. This
increase was primarily driven by the capital increases in October
and May during the completed financial year.
The loss for the year totalled EUR - 530.9 m. When adding a loss
carried forward of EUR - 300.6 m, net loss totalled EUR - 831.5 m.
The equity ratio rose to 40.4 % (previous year 30.2 %) in financial
year 2022.
Provisions
Provisions decreased by EUR 4.2 m to EUR 323.3 m. They consisted
of pension provisions worth EUR 164.0 m (previous year EUR 153.7
m), tax provisions worth EUR 30.1 m (previous year EUR 32.3 m) and
other provisions worth EUR 129.2 m (previous year EUR 141.5 m).
The increase in pension provisions in the completed financial
year was primarily attributable to changes in parameters. The
decline in Other provisions mainly resulted from the reversal of
provisions for assumption of risks in connection with the sale of
Group companies. In addition, provisions for risks from mining were
reversed in the completed financial year due to the reduced scope
of liability. An opposite effect was caused by a slight increase in
personnel provisions.
Liabilities
TUI AG's liabilities totalled EUR 5,654.5 m as at 30 September
2022, down by EUR 1,019.1 or 15.3 %.
On the basis of a contractual agreement and due to proceeds from
the capital increases, TUI AG's syndicated credit facilities
originally amounting to approximately EUR 4.8 bn were reduced by
approximately EUR 920 m in total in April and May 2022. First, the
credit facility originally amounting to EUR 200 m from KfW and a
private banking consortium, already reduced to EUR 170 m, was
repaid in full. Moreover, around EUR 750 m of the undrawn KfW
tranche of EUR 2.85 bn was cancelled, reducing it to EUR 2.1 bn. In
addition, for regulatory reasons due to Brexit, the credit line of
a British bank (around EUR 80 m cash and EUR 25 m guarantee line)
could not be extended beyond July 2022.
At the end of the financial year, the syndicated credit facility
therefore amounted to around EUR 3.7 bn, including a cash tranche
from KfW of around EUR 2.1 bn and a bank guarantee line of EUR
190.0 m. The term of the credit line will end in July 2024.
As at 30 September 2022, the amount of cash drawn from the
credit line totalled EUR 562.0 m, carried as a liability to banks.
A further amount of EUR 143.8 m from this credit facility was drawn
through the use of guarantee lines.
Due to TUI AG's early redemption, in April 2022, of a partial
nominal amount of EUR 91.3 m of the warrant bond issued to the
Economic Stabilisation Fund (ESF) in October 2022, the remaining
nominal amount totalled EUR 58.7 m. The ESF continues to hold 58.7
m warrants, entitling the Fund to purchase 58.7 m shares in TUI AG
at a price of EUR 1.00 per share.
In the framework of the third financing package, the Economic
Stabilisation Fund (ESF) and TUI AG agreed on two silent
participations totalling EUR 1,091 bn in 2020 / 21. The ESF
measures comprise Silent Participation I of EUR 420.0 m,
convertible into TUI shares at a price of EUR 1.00 per share, and
Silent Participation II totalling EUR 671.0 m. In May 2022, the
Company's capital was increased, utilising a part of Authorised
Capital III, and the proceeds were used for the early redemption of
Silent Participation II on 30 June 2022. In the financial
statements in accordance with the German Commercial Code, Silent
Participation I is carried under Other liabilities with a term of
five years.
The considerable decrease in liabilities to banks and other
liabilities was partly offset by the increase in liabilities to
Group companies. Due to an increase in operating activities, Tour
Operator companies, in particular, transferred monies to TUI
AG.
The net financial position (cash and cash equivalents less
liabilities to banks, bonds and Schuldschein) totalled EUR -
1,170.9 m (previous year EUR - 2,430.1 m) in the completed
financial year.
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 1,785,205,853 shares at the end of financial
year 2022 (previous year 1,099,393,634 shares) and correspondingly
totalled EUR 1,785,205,853.00. Each share confers one vote at the
Annual General Meeting.
Restrictions on voting rights or share transfers
The Executive Board assumes that it is currently impossible to
transfer the shares it considers attributable to Alexey Mordashov
or to exercise the voting rights from these 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 amounting to 10 % or more of
the voting rights: *Despite voting right notifications to the
contrary, the 27.16?% stake in TUI AG directly held by Unifirm
Limited, Limassol, Cyprus, remained attributable by law to Alexey
Mordashov, Moscow, Russian Federation, as Alexey Mordashov's
controlling majority in Unifirm Limited has so far not been
transferred to Ondero Limited?/?Marina Mordashova, British Virgin
Isles, with legal effect. Based on the information available to
us, Alexey Mordashov indirectly holds a 30.91?% stake in TUI,
including the 3.75?% stake in TUI AG held by Severgroup LLC,
Moscow, Russian Federation, which is likewise attributable to him.
The transfer transaction remained legally ineffective because in
mid-March 2022 the German Ministry for Economic Affairs and Climate
Protection (BMWK) initiated a review procedure under the Foreign
Trade and Payments Act against Ondero Limited in relation to the
transfer of the shares in Unifirm Limited to Ondero Limited ("the
transaction"). Due to that review procedure, the legal effect of
the transaction remains pending until the BMWK either approves the
transaction or refrains from a decision within the statutory review
period. This period commences when Ondero Limited?/ ?Marina
Mordashova submit the information still required by the BMWK in
order to undertake its review.
At the end of financial year 2022, around 73 % of TUI shares
were in free float. Around 41 % of all TUI shares were held by
private shareholders, around 26 % by institutional investors and
financial institutes, and around 33 % 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 und
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 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
exercise the control rights to which employee shares entitle them
directly, in just the same way as other shareholders, in line with
statutory requirements and 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.
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 (ESF) in October 2020, this authorisation was fully used. As
at the reporting date, the ESF had not used its warrant rights.
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 still totalled
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. As at the balance sheet date, the
ESF had not yet used its conversion rights.
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.
In the completed financial year, the latter two authorisations
were used to increase the capital stock by EUR 523.5 m.
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 options or
warrants as well as profit-sharing rights and income bonds (with or
without fixed terms) 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. As at the balance sheet date, no shares had
yet been issued to service the convertible bond.
The Annual General Meeting on 8 February 2022 resolved to create
an authorisation to use new registered shares against cash
contribution for up to a maximum of EUR 162.3 m (Authorised Capital
2022/I). This authorisation will expire on 7 February 2027.
The Annual General Meeting on 8 February 2022 also resolved to
create authorised capital for the issuance of new shares against
cash or non-cash contribution of EUR 626.9 m (Authorised Capital
2022/II). The issuance of new shares against non-cash contribution
is limited to EUR 162.3 m. This authorisation will expire on 7
February 2027.
The Annual General Meeting on 8 February 2022 furthermore
resolved to create authorised capital for the issuance of new
shares against cash or non-cash contribution of EUR 671.0 m. The
net proceeds must primarily be used to redeem the capital of EUR
671 m provided to TUI AG by the ESF in the framework of Silent
Participation II (Authorised Capital 2022/ III). This authorisation
will expire on 7 February 2027. In May of the financial year under
review, the Company's capital stock was increased by EUR 162.3 m,
drawing in part on Authorised Capital III, and the proceeds were
used to fully repay Silent Participation II.
The Annual General Meeting on 8 February 2022 resolved to create
two additional amounts of capital for the issue of bonds worth EUR
162.3 m and EUR 81.1 m. The authorisations to issue bonds with
conversion options or warrants as well as profit-sharing rights and
income bonds (with or without fixed terms) are limited to a nominal
amount of EUR 2.0 bn and will expire on 7 February 2027.
See the section on Subscribed capital in the Notes to the
consolidated financial statements on page 209 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 3.7 bn
(including bank guarantees), of which EUR 562.0 m (via cash) and
EUR 143.8 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 AGM attendees
or if one third of the shareholder representatives on the
Supervisory Board are attributable to a group of shareholders. 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 have been met for Unifirm to
represent a majority of AGM attendees, so that the entitlement has
arisen for the Riu family to acquire shares within certain time
windows in 2021, 2022 and 2023. In 2022, the Riu family dispensed
with exercising its acquisition right.
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. As the stake in
TUI AG held by Unifirm increased following the capital increase of
2 November 2021, here, too, a change of control was triggered due
to 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
Impact of COVID-19, war in Ukraine and resulting energy crisis,
as well as growing inflation affect TUI share price performance
significantly
During financial year 2022, the TUI share price was, at times,
highly volatile Apart from the development of the COVID-19
pandemic, the war in the Ukraine resulted in major uncertainty in
the capital markets. The share price fell, in particular, in
response to the resulting energy crisis, rising inflation and its
potential economic impact, including on the tourism sector. The
share began the financial year at a price of EUR 3.19 2,3, and
declined by around 61 % in the course of the year to close at EUR
1.24 2,3 on 30 September 2022.
In October 2021, TUI's financial year started with a successful
capital increase with subscription rights with an issue of around
1.1 bn new shares to further strengthen the balance sheet. The net
proceeds were used to repay state aid and, hence, to reduce net
debt and interest expenses.
The winter months were again characterised by rising COVID-19
infection rates as well as measures to control the spread of the
virus. Especially the new, even more contagious Omicron variant
caused an increase in infection numbers in Q1 in TUI's source
markets and destinations. With the start of the booster vaccination
campaign in Germany from mid-December and the assessment that the
new variant is contagious for a shorter period and is associated
with weaker symptoms, TUI's share price recovered substantially
towards the end of December 2021. Despite a partial lockdown in the
winter months, the TUI share recorded an annual high of EUR 3.51
2,3 on 16 February 2022.
The more optimistic sentiment in the capital markets ended with
the Russian attack on Ukraine on 24 February 2022, resulting in
broad economic sanctions against Russia in Europe. As both, Russia
and Ukraine are leading global suppliers of numerous commodities,
global supply shortages arose for key commodities. The war in
Ukraine also temporarily affected customers' booking behaviour as
well as the share price. However, the strong pent-up demand for
travel following two years dictated by the pandemic led to a
considerable recovery in bookings for the Summer season shortly
thereafter. This positive development was also reflected by the
share price: after declining substantially until mid-March, it
recovered significantly by mid-May.
In May, TUI delivered further progress in returning to a solid
and healthy financing structure. Within the context of a cash
capital increase excluding shareholders' subscription rights,
162,291,441 new shares were exclusively issued to institutional
investors. The proceeds from the capital increase and available
cash were used among other things to fully repay the Silent
Participation II of EUR 671 m of the German government (Economic
Stabilisation Fund, ESF) plus interest. With this transaction, TUI
took a further step towards its goal of swiftly reducing the
company's debt, further reducing interest expenses, and repaying
state aid from the COVID-19 programmes.
In light of the increased resumption of business operations
following the COVID-19 pandemic as well as a tight labour market,
the aviation sector, in particular in the UK, faced major
operational disruption in the summer months. This disruption was
primarily caused by third-party suppliers and airports due to a
shortage of ground handling and security staff. As a result,
airlines saw an increase in the number of delays and flight
cancellations. For TUI, this resulted in quite substantial
compensation payments for delays to customers.
Greater media coverage of flight disruptions, the uncertainty
regarding potential energy supply shortages, the increase in
inflation rates and its potential impact on booking behaviour
resulted in additional uncertainty in the capital markets. These
factors particularly affected shares of companies operating in the
tourism sector. On 30 September, the TUI share closed at EUR 1.24
2,3, its lowest share price in the financial year.
1 The contents presented in this chapter are unaudited and
voluntary.
2 Historical prices adjusted for the effect of the capital
increases with subscription rights and cash capital increase.
3 Source: Reuters
TUI share data
30 September 2022
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 1,785,205,853.00
Number of shares 1,785,205,853
Market capitalisationbn EUR 2.2
Market capitalisationbn GBP 1.9
Long-term development of the TUI share (Xetra) 1
EUR 2018 2019 2020 2021 2 20222
High 20.66 16.56 12.67 4.45 3.51
Low 14.34 7.87 2.89 1.60 1.24
Year-end share price 16.56 10.67 3.24 3.19 1.24
1 Source: Reuters
2 Historical prices adjusted for the effect of the capital
increases with subscription rights and cash capital increase.
Quotations, indices, and trading
The TUI share 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. In addition, it has a secondary listing in
the electronic trading system Xetra and at the Hanover Stock
Exchange.
As TUI shares are, apart from their listing at the London Stock
Exchange, also admitted to trading in a regulated market in
Germany, 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.
In addition, TUI is listed in the sustainability index
FTSE4Good. In financial year 2022, the average daily trading volume
at the London Stock Exchange was around 5.1 m shares, while about
8.6 m shares were traded on Xetra per day. Across all trading
platforms, the daily trading volume in the UK amounted to around
9.6 m shares and around 21.0 m shares traded in the euro line. Both
the sterling and the euro line thus delivered strong liquidity for
trading by institutional and retail investors.
Analyst recommendations
Analyses and recommendations by financial analysts serve as a
decision-making basis for institutional and private investors. In
the financial year under review, around 20 analysts regularly
published studies on TUI Group. In September 2022, 12 % of analysts
recommended to "buy" the TUI share, 35 % recommended to "hold" and
53 % recommended to "sell".
Shareholder structure
At the end of financial year 2022, around 73 % of TUI shares
were in free float. Around 41 % of all TUI shares were held by
private shareholders, around 26 % by institutional investors and
financial institutes, and around 33 % 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 2018 2019 2020 2021 2022
Earnings per share + 1.25 + 0.71 - 5.34 - 2.58 - 0.17
Dividend 0.72 0.54 - - -
As a result of the COVID-19 crisis, TUI agreed on three
stabilisation packages with the federal German government.
Conditions attached to the support include a de facto a dividend
holiday, which will remain in force during the term of the loans
and the duration of the investment made by the Economic
Stabilisation Fund.
Investor Relations
An open and 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 conversations were held focusing on the
Group strategy, business performance in the individual segments,
the strong operative Summer business following COVID-19, the
financing structure, the implications of the war in Ukraine as well
as the energy crisis. The objective of these conversations is to
ensure transparent communication so as to enable stakeholders to
make a realistic assessment of the future performance of the TUI
share.
In financial year 2022, dialogue with investors primarily
focused on the following topics:
-- Demand for travel, capacity development and booking numbers
for the Winter and Summer seasons
-- Flight disruptions and mitigation measures taken in the
Summer season
-- Effects of the war in Ukraine and cost inflation on prices
and margins and customers' booking behaviour
-- Implementation of the Global Realignment Programme with
planned annual savings of EUR 400 m
-- Further repayment of state aid: reducing net debt and
progress in returning to a solid and healthyfinancing structure
-- Probability of conversion of Silent Participation I and
warrant bond of the German government
-- Strategic priorities: expansion of our TUI Musement segment
for tours and activities and ofour dynamicpackaging offering, and
further growth through asset-right financing structures
-- New sustainability goals: TUI has submitted the emissions
reduction targets for its own airlines, cruiseships and hotels to
the non-governmental organisation Science Based Targets initiative
(SBTi). TUI aims to be anet-zero company by 2050 at the latest.
After foregoing in-person meetings due to the COVID-19 situation
in recent financial years TUI returned to holding many meetings
in-person in financial year 2022. TUI's management team sought
dialogue with investors at physical and virtual roadshows and
conferences in London, Frankfurt, Munich, Warsaw, Zurich and Paris.
The management also met investors from other financial hubs in
Europe, North America, Asia and Australia.
Furthermore, TUI's Investor Relations team places importance on
the direct engagement with private investors, which is why
intensive exchanges took form of numerous one-on-one conversations.
TUI also offers a broad range of information for analysts,
investors and private shareholders on its website. All conference
calls dealing with financial results were transmitted live.
Corporate Governance
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 b) Veta Health LLC
Zetsche Board of TUI AG Stuttgart 13.2.2018 2023 Kensington Capital 288,600
Acquisition Corp. IV
Deputy Chairman of the
Supervisory Board of TUI
Frank Jakobi1 AG, Hamburg 15.8.2007 2026 3,544
Chairman of Group Works
Council of TUI AG
Ingrid-Helen Member of the Executive Dreieich 11.2.2020 2024 b) Heineken N. V. 0
Arnold Board, Südzucker AG
Trade union secretary and
Sonja lawyer Berlin 1.4.2022 2026 a) TUI Deutschland GmbH 0
Austermühle 1 of ver.di - Vereinte
Dienstleistungsgewerkschaft
b) METRO Cash & Carry
Christian Member of the Management International Holding
Baier Board (CFO), Dusseldorf 31.5.2022 2023 a) METRO Re AG GmbH, Austria 0
METRO AG METRO Holding France
S. A.
Andreas Aircraft Captain, TUIfly Grethem 10.5.2006 2026 a) TUIfly GmbH 4 0
Barczewski 1 GmbH (OT Buechten)
Regional Head of the
Peter Bremme Special Service Division Hamburg 2.7.2014 2026 a) TÜV Nord AG 0
1 of ver.di - Vereinte
Dienstleistungsgewerkschaft
Member of the Executive b) FMS Wertmanagement
Dr Jutta A. Board, Bundesrepublik Frankfurt am 25.3.2021 2025 a) Commerzbank AG AöR 0
Dönges Deutschland - Finanzagentur Main Rock Tech Lithium
GmbH (until October 2022) Inc.
Prof. Dr Member of supervisory a) Metro AG
Edgar Ernst bodies in different Bonn 9.2.2011 2025 Vonovia SE 4 0
companies
Wolfgang Group Director Financial
Flintermann 1 Accounting & Reporting, TUI Großburgwedel 13.6.2016 2026 a) Deutscher Reisepreis-Sicherungsverein VVaG 8,702
AG
Vice President Professional b) Alantra Partners
María Garaña Services, Europe, Madrid 11.2.2020 2024 S. A. 0
Corces Middle East and Africa, Unicaja S. A.
Adobe Inc.
Technology Team Lead
Stefan Airline Platform Services, Nordstemmen 21.7.2020 2026 15,929
Heinemann 1 Airline IT, TUI InfoTec
GmbH
b) Konecranes Plc.
Janina Kugel Supervisory Board Member & Munich 25.3.2021 2025 a) Pensions-Sicherungs-Verein Kyndryl Inc. 0
Senior Advisor Versicherungsverein auf Gegenseitigkeit thinkproject
Deutschland GmbH
Vladimir San Giljan, 12.2.2014
Lukin Lawyer Republic of 5.6.2019 5 3.3.2022 0
Malta
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
b) 3i Group PLC
Coline Member of supervisory Fevertree Drinks
McConville bodies in different London 11.12.2014 2024 PLC 0
companies Travis Perkins
PLC
b) JSC
'Severstal
Alexey Chairman Board of Directors Moscow 6 9.2.2016 2.3.2022 Management' 3, 6 7
Mordashov 6 of PAO Severstal 6 JSC 'Power
Machines' ³
Nord Gold PLC
Lenta IPJSC 3
Helena Murano Senior Advisor, Arcano Palma de 31.5.2022 2023 0
Partners Mallorca
a) TUI Deutschland
Mark Chairman of Works Council, GmbH
Muratovic 1 Tour Operator, Langenhagen 25.3.2021 2026 MER - 7,524
TUI Deutschland GmbH Pensionskasse V.
V. a. G.
Former Department
Coordinator in the a) Eurogate
Carola Transportation Berlin 1.8.2014 28.2.2022 Geschäftsführungs- 0
Schwirn 1 Division of ver.di - GmbH & Co. KGaA
Vereinte
Dienstleistungsgewerkschaft
Anette Chairman of Works Council,
Strempel 1 TUI Customer Operations Hemmingen 2.1.2009 2026 12,918
GmbH
b) Ahungalla
Joan Trían Executive Board Member of Palma de 12.2.2019 2024 Resorts Ltd. 0
Riu Riu Hotels & Resorts Mallorca RIUSA II S. A.
Riu Hotels S. A.
Tanja Viehl 1 Lawyer (in-house lawyer), Wölfersheim 25.3.2021 2026 0
Vereinigung Cockpit e. V.
Stefan International Employee b) TUI Austria
Weinhofer 1 Relations Coordinator at Vienna 9.2.2016 2026 Holding GmbH 0
TUI AG
1 Representative of the employees.
2 Information refers to 30 September 2022 or date of resignation
from the Supervisory Board of TUI AG in financial year 2022.
3 Chairman.
4 Deputy Chairman.
5 New Appointment.
6 Due to sanctioning, all information on Mr Mordashov has been
taken from the October 2021 questionnaire.
7 Information on shareholdings can be found on page 105 of the
Annual Report.
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 Chairman until
(Age: 59) September 2022 a) b) RIUSA II S. A. 2 1,263,306
Member of the Executive Board
since October 2012
CEO since February 2013
Joint-CEO since December 2014
CEO from February 2016 until September
2022 Appointment until September 2022
Sebastian Ebel CFO until a) BRW Beteiligungs
(Age: 59) September 2022 AG b) RIUSA II S. A. 55,255
Member of the Executive Board CEO since Compass Group Sunwing Travel Group
since December 2014 October 2022 Deutschland GmbH Inc.
CEO since October 2022 Eves Information TUI China
Current appointment until September 2025 Technology AG 2
b) First Choice
Holidays Ltd.
First Choice Holidays
& Flights Ltd.
First Choice Olympic
Ltd.
David Burling CEO Markets & a) TUI Deutschland Sunwing Travel Group 44,803
(Age: 54) Airlines GmbH Inc.
Member of the Executive Board since June TUIfly GmbH TUI Canada Holdings
2015 Current appointment until May 2026 Inc.
TUI Northern Europe
Ltd.
TUI Nordic Holdings
Sweden AB
TUI Travel Group
Management Services
Ltd.
TUI Travel Holdings
Ltd.
TUI Travel Ltd.
TUI Travel Overseas
Holdings Ltd.
Peter Krueger b) Old Court
(Age: 46) CSO Management Limited 120,167
Member of the Executive Board RIUSA II S. A.
since January 2021 Sunwing Travel Group
Current appointment until December 2023 Inc.
Sybille Reiss CPO / Labour a) TUI Deutschland
(Age: 46) Director GmbH 8,647
Member of the Executive Board since July TUIfly GmbH
2021 Current appointment until June 2024
Frank Rosenberger
(Age: 54) CIO a) Peakwork AG 13,743
Member of the Executive Board
since January 2017
Appointment October 2022
Mathias Kiep - Member of the Executive Board from October 2022,
CFO.
1 Information refers to 30 September 2022 or date of resignation
from the Excecutive Board in financial year 2022.
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).
Statement on Corporate Governance*
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 2022. In this
chapter, the Executive Board provides - also for the Supervisory
Board - the report on Corporate Governance in the Company pursuant
to Principle 23 of the German Corporate Governance Code in the
version dated 28 April 2022 (GCGC) 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 GCGC pursuant to section 161 of
the German Stock Corporation Act.
https://www.dcgk.de/en/code//foreword.html
Wording of the Declaration of Compliance for 2022
'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
December 2021, the recommendations of the German Corporate
Governance Code in its 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.'
* As part of the combined Management Report.
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 GCGC and the UK CGC
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 116). The two-tier board structure is different to the UK
unitary board structure on which the UK CGC 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, the function of a Company Secretary does not exist in the
GCGC). For this reason, the Executive Board and the Supervisory
Board have set out below in which areas the UK CGC 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 CGC 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 CGC for ease of
reference for investors.
Wording of the UK Corporate Governance Statement 2022
'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 Corporate Governance Code in the version of
July 2018, including its main principles, except as set out and
explained below. Further information on compliance with the UK
Corporate Governance Code can be found in various parts of the
Annual Report.'
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
FY 2021 Results Presentaton (virtual) FJ, SE
December 2021
virtual Roadshow UK FJ, SE
ODDO BHF Forum (virtual) FJ, SE
January 2022 Commerzbank German Investment Seminar (virtual) SE
HCBS Leisure Virtual Speedmeet SE
virtual UniCredit / Kepler Cheuvreux 21st German Corporate Conference SE
Q1 2022 Results Presentation (virtual) FJ, SE
February 2022
Annual General Meeting (virtual) FJ, SE
UBS Best of Business Services, Industrials & Green Mobility, SE
Leisure & Transport Event (virtual)
SE
Erste Bank E-Roadshow (virtual)
SE
Barclays Leisure & Transport Conference (virtual)
H1 2022 Results Presentation FJ, SE
virtual Roadshow London FJ, SE
March 2022
virtual dbAccess Berlin Conference SE
May 2022 virtual Roadshow Frankfurt FJ, SE
June 2022 virtual Roadshow Paris SE
August 2022 virtual Roadshow Zurich SE
September 2022 Erste Consumer Conference, Warsaw (virtual) SE
European Goldman Sachs Business Services, Leisure & Transport Conference (London) SE
Q3 2022 Results Presentation (virtual) FJ, SE, MK
Stifel 6th Transportation Conference (Frankfurt) MK
Berenberg & Goldman Sachs German Corporate Conference (Munich) MK
Bernstein Strategic Decision Conference (London) SE, MK
Key: Friedrich Joussen (FJ), Sebastian Ebel (SE), Mathias Kiep
(MK)
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 CGC, 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 CGC. Under the UK CGC, 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 seven of its nine
shareholder representatives (the Chairman is not taken into account
according to the UK CGC) are independent for the purposes of the UK
CGC. The shareholder representatives considered to be independent
are: Ms Ingrid-Helen Arnold, Mr Christian Baier, Prof. Dr Edgar
Ernst, Ms María Garaña Corces, Ms Janina Kugel, Ms Coline
McConville and Ms Helena Murano. 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 CGC, 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 GCGC,
it is an indication of a lack of independence from the Executive
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 eleven 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 Supervisory Board members currently qualified as
non-independent under the UK CGC are Dr Jutta Dönges, and Mr Joan
Trían Riu. Mr Vladimir Lukin and Mr Alexey Mordashov were also
qualified as non-independent. Mr Mordashov was a member of the
Supervisory Board until 2 March 2022 and Mr Lukin until 3 March
2022. Ms Murano and Mr Baier, who were appointed to the Supervisory
Board by the court to fill the vacancies, are qualified as
independent.
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 as independent under the UK CGC because of their link to
a significant shareholder.
At TUI AG, Mr Joan Trían Riu (Riu Hotels S. A., approx. 2.2 % of
the voting rights as of 30 September 2022) is linked to a major
shareholder. Dr Jutta Dönges is Managing Director of the Finance
Agency GmbH of the Federal Republic of Germany until 31 October
2022. 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. Therefore, neither Dr Dönges, nor Mr
Trían Riu are considered independent for the purposes of the UK
CGC.
Mr Alexey Mordashov controlled Unifirm Ltd., which held approx.
34 % of shares in TUI AG until shortly before he left the
Supervisory Board at the beginning of March 2022. Mr Vladimir Lukin
acted as advisor to the CEO of OOO Severgroup until his resignation
at the beginning of March 2022. As a result, he was associated with
Mr Mordashov. Mr Mordashov and Mr Lukin were thereby qualified as
non-independent.
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 CGC, 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 CGC,
TUI AG's Supervisory Board comprises seven (excluding the Chairman
of the Supervisory Board) independent shareholder
representatives.
Identification of Senior Independent Director (Provision 12)
Under German law and the GCGC, 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 of the Supervisory Board 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 CGC.
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 CGC.
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 CGC to the extent practicable.
The Nomination Committee consists of Prof. Dr Ernst, Dr Zetsche
as Committee Chairman and Dr Dönges, who is considered as a
dependent.
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 CGC 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 108.
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.
The efficiency of the Supervisory Board is reviewed regularly,
but not annually. 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.
The last self-assessment was conducted internally at the end of
September 2020. For this purpose, a questionnaire was distributed
to all members, in which they could give their assessment of the
effectiveness of the working methods of the Supervisory Board and
its committees. The Presiding Committee and the Supervisory Board
have subsequently dealt with the results and derived measures from
them. These primarily concerned the work of the Supervisory Board,
the organisation of the meetings and the main topics that the
Supervisory Board dealt with in more detail. The next
self-assessment is planned for 2023.
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 121. The policy on
diversity and inclusion can be found on page 90. 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 and Dr Dönges,
who is not considered to be independent. (Until 3 March 2022, a
member of the Audit Committee was Mr Lukin, who was also considered
to be a dependent). 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 132 for full
details on Executive and Supervisory Board member´s
remuneration.
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. 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 132.
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 2022. 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 108 et seq.
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 2022. As the oversight body, the Supervisory Board
provided on-going advice and supervision for the Executive Board in
managing the Company in financial year 2022, 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.
Competence Profile and the Qualification Matrix 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 representatives. 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. In financial year 2022, the Supervisory Board
updated its competence profile for the composition of the entire
body. The competence profile of the Supervisory Board is published
at https:/
/www.tuigroup.com/en-en/investors/corporate-governance/management.
Members of TUI AG's Audit Committee with expertise in accounting
and auditing (Recommendation D.3 of the GCGC)
Prof. Dr Edgar Ernst has, among other things, expertise in the
field of accounting and in the field of auditing due to his
activities as Chief Financial Officer of Deutsche Post AG, as
President of the German Financial Reporting Enforcement Panel and
due to his memberships in domestic supervisory boards. Further
information, in particular on his activities in these areas, can be
found in his curriculum vitae on the Company's website.
https://www.tuigroup.com/damfiles/default/tuigroup-15/en/about-us/management/lebenslaufe-en-neu/aufsichtsrat-en-neu/
Ernst_SB_Curriculum-Vitae_01.11.2022.pdf-65dfaa50eba2f947f3e116dd2b789ad7.pdf
His expertise in the field of accounting also includes, in
particular, knowledge and experience in the application of
accounting principles and internal control and risk management
systems.
His expertise in the field of auditing also includes, in
particular, knowledge and experience in auditing of financial
statements. Accounting and auditing also include sustainability
reporting and its auditing.
With regard to the Chairman of the Audit Committee, Prof. Dr
Edgar Ernst, the Supervisory Board is of the opinion that he is
independent from the Company and the Executive Board (for the
independence of the other members of the Audit Committee, see page
114).
Mr Christian Baier has expertise in the field of accounting and
in the field of auditing due to his professional career and in
particular due to his function as Chief Financial Officer of Metro
AG. Further information, in particular on his activities in these
areas, can be found in his curriculum vitae on the Company's
website.
https://www.tuigroup.com/damfiles/default/tuigroup-15/en/about-us/management/lebenslaufe-en-neu/aufsichtsrat-en-neu/
Baier_SB_Curriculum-Vitae_01.11.2022.pdf-bb2ef35e7ef0d79a7fb752c983c9d846.pdf
His expertise in the field of accounting also includes, in
particular, knowledge and experience in the application of
accounting principles and internal control and risk management
systems. His expertise in the field of auditing also includes, in
particular, knowledge and experience in the auditing of financial
statements.
Since Metro AG has also been publishing a non-financial
statement for several years, which is prepared taking into account
the Global Reporting Initiative (GRI) standards on sustainability
reporting and the UN Global Compact, his expertise in the field of
auditing also includes sustainability reporting and its audit.
Dr Jutta Dönges has expertise in the field of accounting and in
the field of auditing due to her professional career and in
particular because of her function as managing director of the
Federal Republic of Germany - Finance Agency GmbH (until 31 October
2022) as well as due to her several years of membership in domestic
supervisory boards. Further information, in particular on her
activities in these areas, can be found in her curriculum vitae on
the Company's website.
https://www.tuigroup.com/damfiles/default/tuigroup-15/en/about-us/management/lebenslaufe-en-neu/aufsichtsrat-en-neu/
Doenges_SB_Curriculum-Vitae_01.11.2022.pdf-cc7134463ced21fb559b0dbd362958be.pdf
Her expertise in the field of accounting also includes, in
particular, knowledge and experience in the application of
accounting principles and internal control and risk management
systems. Her expertise in the field of auditing includes, in
particular, knowledge and experience in the auditing of financial
statements. This includes sustainability reporting and its audit,
whereby this is oriented, among other things, to the standards of
the Global Reporting Initiative (GRI).
Training and professional development measures
The members of the Supervisory Board take responsibility for
undertaking any training or professional development measures
necessary to fulfil their duties, for example on issues of
corporate governance or changes in the legal framework 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. 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
2022, 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 (3a) and (4), 111 (5) of
the German Stock Corporation Act
45 % of the Supervisory Board members were women and 55 % 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.
By resolution of 15 September 2020, the Supervisory Board
extended the target of one woman on the Executive Board until 30
September 2023 in accordance with section 111 para. 5 AktG. In
August 2021, the Second Management Positions Act - FüPoG II - came
into force. According to this law, at least one woman and at least
one man must be a member of the Executive Board of a listed company
with equal co-determination and with more than three members on
the Executive Board. The company has already complied with this
requirement in the reporting period with the membership of Ms
Sybille Reiss.
The Executive Board resolved, in line 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 second level below the Executive Board. Both targets
should be reached by 30 September 2023. For this reason, TUI AG has
implemented various measures aimed at increasing the proportion of
women on a long-term and sustainable basis over the past years.
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 female should 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 21 %
at the first management level below the Executive Board, we are
approaching our target of 25 %. At the second management level
below the Executive Board, the proportion of women has remained
stable at 24 %.
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 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 or by
postal vote 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 8 February 2022, no
resolution received 20 % or more against votes.
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. The Company
subsequently issued a statement, the original version of which can
be accessed via the following link.
https://www.tuigroup.com/en-en/investors/agm/agm-2021-post-AGM/other-documents
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.
The chairman of the Audit Committee reports to the Supervisory
Board on the work of the committee at the next Supervisory Board
meeting at the latest.
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 34.
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
https://www.tuigroup.com/en-en 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,
Mr Stefan Heinemann, Mr Friedrich Joussen, Mr Peter Krueger, Mr
Alexey Mordashov (via Unifirm Limited and Severgroup LLC), Ms
Sybille Reiss, Mr Frank Rosenberger, Ms Anette Strempel und 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 2022.
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 2022 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 260.
The condensed consolidated interim financial statement and
management report as of 31 March 2022 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 GCGC 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
2022.
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 95
-- Employees - see page 87
-- Shareholders and other financial stakeholders - see pages 103
and 162
-- Suppliers - see pages 30 and 81
-- Non-governmental organisations - see page 86
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 corporate governance;
-- 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.
Long-term succession planning for 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 in line with
recommendation B.2 of the GCGC. 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 (short-term, medium-term and long-term
scenarios). The contract terms and renewal options for current
Executive Board members are discussed, as well as possible
successors. 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. Long-term succession planning is primarily oriented towards
the corporate strategy and takes into account the diversity concept
defined by 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 2022
With effect from 1 October 2022, Mr Sebastian Ebel was appointed
to succeed Mr Friedrich Joussen as Chairman of the Executive Board
of TUI AG. In this connection, Mr Mathias Kiep was appointed as a
member of the Executive Board as successor to Mr Ebel with effect
from 1 October 2022. Mr Kiep will take over the Finance Ressort. In
addition, the appointment of Mr David Burling was extended until 30
May 2026 by a corresponding resolution of the Supervisory Board. In
the opinion of the Supervisory Board, Mr Ebel, Mr Kiep and Mr
Burling contribute to the diversity of the Executive Board through
their professional careers, their wide-ranging international
experience and respective professional backgrounds.
The current composition of the Executive Board meets all the
requirements of the diversity concept. The Executive Board members
cover a comprehensive range of knowledge and experience as well as
educational and professional backgrounds and have international
experience. In addition, with Ms Sybille Reiss as a 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 was met
in the reporting period. Different age groups are represented on
the Executive Board. More information on all members of the
Executive Board can be found in the CVs on the Company's website
and in the communication on the occasion of the appointment
decisions of the Supervisory Board.
The reappointments of Mr Ebel and Mr Burling with simultaneous
cancellation of their current appointments took place before the
end of one year prior to the end of the respective appointment
terms. According to recommendation B.4 of the GCGC, this is
permitted if special circumstances apply. This requirement was met
because, in view of the challenging economic times, TUI AG had a
particular interest in securing the services of Mr Ebel and Mr
Burling as members of the Executive Board in the long term.
Diversity concept for the composition of the Supervisory
Board
The Supervisory Board revised and updated objectives for its
composition in addition to the competence profile in the 2022
financial year. In accordance with the applicable legal
requirements, the Supervisory Board of TUI AG shall be composed in
such a way that its members as a whole have the knowledge and
professional experience required to properly perform their duties.
In this context, sufficient diversity shall be ensured. This
includes in particular cultural and ethnic origin, gender,
nationality and professional and life experience as well as age. A
gender quota of 30 % is to be guaranteed. The standard age limit
for election to the Supervisory Board is 68 years.
Goals of the diversity concept for the composition of the
Supervisory Board
The goals set with regard to the composition of the Supervisory
Board reflect the demands placed on the advisory and supervisory
body to perform its task in a globally operating company with a
challenging competitive environment. For example, multicultural and
international experience is just as important as knowledge of the
value and success drivers of the sector. In all of this, the impact
and cultural features of the so-called stakeholder approach of a
social market economy must be taken into account, which is ensured
by the codetermination of employee representatives on the
Supervisory Board as well. For the shareholder side on the
Supervisory Board, the Nomination Committee also ensures that
mandatory and voluntary targets are met with regard to the
composition of the Supervisory Board. As part of the regularly
conducted efficiency reviews, the Supervisory Board also undergoes
a self-assessment, which includes aspects of its composition.
Results achieved in financial year 2022
The Supervisory Board is of the opinion that it meets the
composition targets and fills out the competence profile and the
diversity concept. The status of implementation of the competence
profile and composition targets has been published in the form of a
qualification matrix. The competence profile of TUI AG's
Supervisory Board is published at
https://www.tuigroup.com/en-en/investors/corporate-governance/management.
The qualification matrix can be found at page 117.
In place of Mr Mordashov and Mr Lukin and at the proposal of TUI
AG's Supervisory Board, Mr Christian Baier and Ms Helena Murano
were appointed to the Supervisory Board by court in May 2022 until
the end of the Annual General Meeting in 2023. As already stated
above, both members are qualified as independent from the Company
and its Executive Board. The Supervisory Board has gained another
experienced financial expert in the person of Mr Baier. Ms Murano
enriches the board with her extensive and international experience
in the field of tourism.
In addition, Ms Sonja Austermühle has been appointed by the
court in April 2022 as the new trade union representative on the
Supervisory Board in place of Ms Carola Schwirn. Ms Austermühle
complements the Supervisory Board with her many years of
professional experience as a lawyer and trade unionist in the
ver.di - United Services Trade Union.
The diversity of professional and educational backgrounds of the
individual members of the board is also evident from the CVs of
Supervisory Board members published on the corporate website.
Description of the main features of the internal control system
*
* Unaudited.
The TUI Group's internal control system comprises all
systematically designed rules within the Group that serve to
methodically manage operational, financial and compliance-related
risks. These rules can result from published statements or be
designed as guidelines, work instructions, process descriptions or
risk control matrices. A Group-wide framework is in place for the
creation, approval, revision and communication of these rules. With
its Integrity Passport, the TUI Group has also adopted a Group-wide
Code of Conduct that sets minimum standards and provides guidance
on how to deal with ethical and legal challenges in day-to-day
work, as well as providing orientation in conflict situations.
Where necessary for the criticality of the process in question,
the business units define an appropriate framework of processes and
rules on this basis. These rules may vary from business unit to
business unit due to different systems, process flows or volumes of
transactions processed in the respective process. For certain
risks, which TUI addresses with a uniform Group framework, central
functions have been set up to create appropriate Group-wide
standards for their area in the sense of a 'second line' and to
support or monitor their implementation.
A Group function has also been established for the area of
sustainability. For years, the TUI Group has been collecting
certain sustainability-related indicators for management and
reporting in the context of separate sustainability reports or the
non-financial statement. The methodologies for these indicators
have been published. These ensure uniform understanding and
collection throughout the Group.
To ensure that our businesses are scalable, almost all business
processes are supported by IT solutions. Where possible and
appropriate, we use the controls integrated in these applications
or services. This offers greater security and efficiency in
implementation compared with manual controls. The IT solutions
themselves are protected by a Group-wide framework of general IT
controls. A set of manual process controls to prevent or detect
errors rounds off the internal control system.
The company has a clear approach for identifying and mitigating
information security risks. TUI is externally audited, has an
information security risk insurance policy and a training and
compliance program. Additionally, the Audit Committee is updated on
TUI's risk position on a regular basis.
In the case of business processes, the respective process owners
are responsible for the effectiveness of the controls put in place;
in the case of Group-wide control frameworks, the respective 2nd
line is responsible. Depending on the risk assessment, they use a
different degree of monitoring intensity.
As an independent 3rd line, Internal Audit reviews business
processes, including IT solutions, according to its own risk
assessment and makes recommendations to improve the effectiveness
and efficiency of processes and controls.
The Supervisory Board of TUI AG, in particular the Audit
Committee, is involved in the TUI Group's internal monitoring
system with process-independent auditing activities.
The internal control system and the risk management system are
dynamic systems that are continuously adapted in response to
changes in the business model, the nature and scope of business
transactions or responsibilities. As a result, there is potential
for improvement in terms of both the appropriateness (lack of
suitable controls) and the effectiveness (inadequate execution) of
controls, both from the reviews carried out by the second line,
from internal audit engagements, and from the audit activities of
the external auditor. In addition, potential for improvement may
also arise from compliance incidents. In our overall assessment of
these management systems, we find that none of the improvements
potentials identified in the reporting year speak against the
appropriateness and effectiveness of the two management
systems.
Disclosure pursuant to UK Listing Rule LR 9.8.6
Task Force on Climate-related Financial Disclosures (TCFD)
For TUI Group, sustainability covering all three areas of
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 industry.
As a company listed in the Premium Segment of the Main Market of
the London Stock Exchange, TUI is required pursuant to Listing Rule
LR 9.8.6 to make disclosures in relation to the recommendations of
the Financial Stability Board's Task Force on Climate-related
Financial Disclosures (TCFD), based on the guidelines 2017. The
TCFD provides a framework to improve the disclosure of consistent,
comparable, reliable, and clear climate-related financial
information so that investors can make better capital allocation
decisions in support of the transition to a low-carbon economy.
While TUI has put an emphasis on the topic of climate in general,
we are early in this journey with regard to the specific
recommendations of TCFD due to the considerable challenges caused
by the COVID-19 pandemic that our organisation had to handle, and
therefore not yet fully compliant with all requirements. TUI has
included in its annual financial report climate-related financial
disclosures consistent with the TCFD Recommendations and
Recommended Disclosures apart from the following where we do not
yet perceive full compliance with the recommendations.
-- TUI has not conducted a climate-related scenario analysis for
all risks to describe the resilience of thestrategy; TUI plans to
conduct a detailed scenario analysis in the following year (TCFD
Recommendation: Strategyc.)
-- TUI identifies, assesses and manages climate-related risks as
a component of our principal risks whereapplicable, but has not yet
established a comprehensive group-wide approach on an individual
risk basis andtherefore not identified, assessed and managed
climate-related risks for each individual case. In a
group-wideapproach, TUI plans to embed identification, assessment
and management of material individual climate-related risksmore
strongly into existing risk management processes in the following
year (TCFD Recommendations: Strategy a. andb.; Risk Management a.,
b. and c.)
-- TUI has not yet published any detailled climate-related
targets for short-term periods apart from thetarget to achieve net
zero emissions in its own operations and in the supply chain by
2050 at the latest, as thesehave not been signed-off on by SBTi;
the targets will be published following SBTi's sign-off in 2023 and
includedin TUI's TCFD report for the next financial year (TCFD
Recommendation: Metrics and Targets c.)
The following statement follows the structure of the TCFD
recommendation, covering Governance, Strategy, Risk Management and
Metrics and Targets. Our disclosures on these four building blocks
will continue to evolve and mature over time alongside our strategy
on how to mitigate climate risks and the evolvement of these risks
and opportunities itself.
Our new Sustainability Agenda builds on tourism as a force for
good. Together with our partners we strive to continue to
positively contribute to local communities, reduce our
environmental footprint and create more sustainable holidays. The
Agenda is our sustainability strategy and our roadmap to address
the key industry and global challenges we will face in the coming
decades, such as climate change. Commitments include achieving
net-zero emissions across our operations and supply chain by 2050
at the latest, setting near-term science-based emission reduction
targets, becoming a circular business, enabling 20 million
customers a year to make sustainable holiday choices by 2030 and
co-creating the sustainable destination of the future.
GOVERNANCE
TUI Group has a governance structure in place that ensures that
sustainability issues, along with riks and opportunities resulting
from climate change, are assessed and actioned at all levels.
See page 79 for the governance structure in the Non-financial
declaration.
a) Board's oversight of climate-related risks and
opportunities
The Group Executive Committee (GEC) has ultimate oversight of
climate-related issues and is responsible for reviewing the climate
related risks and opportunities, strategy, measures and target
setting. At the GEC level, the Group Chief Sustainability Officer
(CSO) is responsible for reporting on sustainability and climate
related issues for TUI Group. The CSO informs the GEC on
sustainability issues on a monthly basis. The Group Sustainability
Director reports into the CSO, so organisationally it is the most
appropriate and direct line of reporting to raise climate related
issues to the highest level within the business. Moreover, the
Executive Board has also the final oversight of the non-financial
declaration that includes the climate / environmental strategy,
organization, management, measures and targets. The highest
monitoring body in the area of sustainable management is the
Supervisory Board.
b) Management's role in assessing and managing climate-related
risks and opportunities
The Group Executive Committee (GEC) manages TUI's business
strategically, it sets the Group's strategic direction and
long-term objectives for sustainable development and signed off the
Group's Sustainability Agenda. A team of experienced sustainability
professionals are working in close collaboration with senior
management to ensure that TUI's business and sustainability focus
areas are well aligned. The Group Sustainability Director heads up
the Group Sustainability team. For the coming financial year, it is
planned that the CSO together with the Group Director of
Sustainability will host the Sustainability Business Council due to
meet annually. Addressing climate-related issues will be one of the
agenda points.
The role of our sustainability team is to drive implementation
of the Sustainability Agenda across TUI Group and along its supply
chain. The GEC is regularly updated on our performance in
delivering the Sustainability Agenda and tackling other key
sustainability issues. Regular meetings are also held with the Risk
Oversight Committee (ROC) to review climate related and
sustainability risks and discuss any changes, either internal or to
the external environment which affect the business exposure.
To incentivise management to achieve climate-related targets,
KPIs are linked to monetary rewards. TUI operates a discretionary
bonus scheme for senior and middle management. It is designed to
reward employees in line with both financial performance and
personal contribution to delivering successfully against our
strategy.
STRATEGY
Climate change is a pressing global challenge that cancause a
business risk, whether physical, political, market or reputational.
On the other hand the transition to a low-carbon-emission future
could also create business opportunities for our group.
a) Climate-related risks and opportunities we have identified
over the short, medium, and long term
As a global tourism group TUI operates 134 aircraft, 418 hotels
and 16 cruise ships *. Our business model inherently leads to a
significant emission of greenhouse gases. Within our asset
portfolio our airline emissions represent roughly 75 per cent of
the Group's total Carbon dioxide (CO2) emissions. Therefore, the
risks and opportunities that we have identified over the short,
medium and long term are mainly transition risks and to a lesser
extent of a physical nature. Based on this analysis our climate
change risk profile strongly depends on the successful
implementation of our carbon reduction initiatives within our
airline.
We define short term as within the next three years in line with
our financial planning horizon, mid term until 2030 where our first
carbon reduction milestone is defined, and long term until 2050,
the date we are striving to achieve net-zero emissions across our
operations and supply chain. The following risks and opportunities
over the short, medium and long term have been identified:
Physical risks
Extreme weather events such as hurricanes, typhoons or flash
floods have become more likely in recent years due to climate
change. Their consequences can affect TUI Group's ability to do
business in regions around the world. The unpredictability of these
events also increases the challenge to cope with them. The effects
of such extreme weather events could lead to changes in TUI's mid
term operations. The infrastructure of affected regions might be
impaired more heavily within the coming years. This can result in
damage to or reduction in quality and / or reputation of some of
our key destination and hotels. As a consequence, this might have
an impact on the attractiveness of the region and consequently on
our ability to send guests to these regions. TUI has operational
contingency / crisis management plans in preparation for such
events.
* As at 30 Sep 2022, including concept hotels in third party
properties.
Chronic physical risks
Chronic physical risks are considered by the business in the
long term at company level. Information used to assess this risk is
taken from scientific and industry publications. Quality holiday
experiences rely on beautiful, biodiverse destinations, thriving
communities, stable weather systems and customer comfort, all of
which are at risk from the long-term effects of climate change. A
specific example is that TUI owns hotels in the Maldives which has
been identified as destination at risk from sea level rise. Also,
due to changing precipitation patterns and the change of
temperature extremes certain destinations might become less
attractive for our customers.
We regard the financial impact of the physical risks as low.
Physical opportunities
Due to changing precipitation patterns and the change of
temperature extremes certain destinations might become more
attractive because the summer seasons extends to the shoulder
months as well as destinations that are popular in the winter. In
addition, due to the changes of customer behaviour and preferences,
TUI might have the opportunity to identify new destinations. TUI is
therefore presented with the mid-term opportunity to extend its
selling period for destinations effected by changes in weather
conditions. In addition, customers might be attracted by new
destinations during these extended periods.
Transition risks
Our business model and the assets we operate inherently lead to
the emission of greenhouse gases. Therefore, we believe that
transition risks have the greater impact on our business. Hence,
the transition to a climate-neutral economy forms a major part of
the principal risk 'lack of sustainability improvements'.
Climate-related transition risks to TUI could be technology risks,
regulatory and legal risks as well as market and reputation related
risks.
Technology
A main transition risk for TUI and the entire airline and cruise
industry is that the technology for a fully carbon-neutral air and
sea transport is yet to be developed. Sustainable Aviation Fuels
(SAF) play a crucial role in reducing emissions in aviation. SAF is
also a key part of our 2030 emissions reduction roadmap to further
improve airline carbon efficiency. TUI is involved with a number of
partners to secure the supply of SAF. We have considered the impact
of SAF in our short-term planning, however its financial impact
within this time frame is still considered low.
Further information on our activities on SAF can be found on
page 83.
Regulatory and legal risks
A regulatory risk the airline and cruising industry might come
from increased carbon pricing, fuel taxes and energy efficiency
standards. Therefore, regulation is a relevant risk to TUI as
failure to comply could lead to both a financial and negative
reputational impact. Moreover, a failure to comply with new
regulation could lead to a loss of our license to operate our
assets.
Market and reputation risk
A specific climate change market risk to TUI is for the business
not to adapt and meet the changing demand for more sustainable and
lower carbon holiday products. There is strong evidence to suggest
that consumers might boycott brands with poor reputations in this
area, and favour brands with a good reputation. Inadequate carbon
management could lead to a reduction of perceived and actual brand
value and possible exclusion from sustainability indices in the
future, thereby lowering TUI Group's attractiveness for investors,
customers and other stakeholders.
Transition opportunities
We already operate one of Europe's most carbon-efficient
airlines and a modern cruise fleet. As we aim to continuously
improve our environmental performance, we will build on the
progress we have already made to reduce emissions.
Further information on our activities on lowering emissions
across our segments can be found on page 82.
TUI is working with destinations to reduce their climate
footprint. With the Rhodes Co-Lab we have piloted a collaboration
and exchange with a holiday destination to work towards a net-zero
carbon emission. Low-carbon intensive flying and destinations
provide the opportunity to retain and win further customer groups
focusing on environmentally friendly holidays.
b) Impact of climate related risks and opportunities on our
businesses, strategy, and financial planning
As part of our strategic and financial planning process, we have
analysed various industry and macro trends to model our expected
development of TUI Group and the tourism industry as a whole. We
clearly see sustainability as a major trend, largely driven by
climate-related market and policy risks (e. g. changing customer
behavior, emissions-based taxes / fees). In the past two years, 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 regulatory developments such as the EU Green Deal.
While these priorities were built into our midterm strategic and
financial plan, we have not yet developed specific climate
scenarios for all risks in order to assess the quantitative effects
selected risks and opportunities might have on our financial
performance. In order to better assess these effects on our
business, we will start developing quantitative and qualitative
climate scenario analysis to further identify and analyse potential
impacts from climate related risks and opportunities on our
business model in financial year 2023. This will also allow us to
better understand the potential impact on our business, strategy
and financial planning; as well as our resilience going
forward.
c) Resilience of TUI's strategy, taking into consideration
different climate-related scenarios, including a 2°C or lower
scenario
We will test our strategy against the different climate related
scenarios when having completed our qualitative climate scenario
analysis in 2023.
RISK MANAGEMENT
a) TUI's processes for identifying and assessing climate-related
risks
TUI has a systematic process in place to identify, assess and
manage risks across the business; managed through processes and
structures described in more detail in the Risk section on page 34.
The processes described in the risk section apply to all types of
risks assessed throughout the whole company, including
climate-related risks. Decisions are made to mitigate, transfer,
accept or control risks based on a likelihood and impact scoring
against an established risk appetite. The Principal Risks
identified are overseen by the ROC and regularly reported to the
GEC. Sustainability and Climate Change related risks are included
in a number of these, mainly in the one titled 'Lack of
Sustainability Improvements', but also in 'Reduction in customer
demand' and 'Disruption within our destinations'.
b) TUI's processes for managing climate-related risks
Acute phsysical risks are assessed and managed at both an asset
level, e. g. a TUI owned hotel, and a company level, if for
instance a destination is affected that is featured by all of TUI's
key source markets. Chronic physical risks stemming from long-term
effects of climate change form part of TUI's principle
'sustainability' risk which is the responsibility of the Group
Sustainability department and is reported to the ROC. Financial and
reputational risks from failure to adapt to customer demand are
assessed at a company level.
c) How processes for identifying, assessing, and managing
climate-related risks are integrated into TUI's overall risk
management
Our systematic risk management process as described above has
identified sustainability risks including climate-related risks.
This risk management system is focusing on a short- to mid-term
risk horizon. We anticipate that the planned climate scenario
analysis to be carried out during the following financial year will
heavily influence the way we manage climate related risks and
opportunities going forward and allows for a longer time
horizon.
More information on risk management from page 34.
METRICS AND TARGETS
a) Metrics used by TUI to assess climate related risks and
opportunities in line with its strategy and risk management
process
Climate change is a pressing global challenge. There is an
urgency to act and for everyone to play a role in the transition to
a low carbon economy. As a global tourism group, our business model
inherently leads to a significant emission of greenhouse gases.
Emissions from TUI's airline, cruises and hotel segments represent
99 % of the Group's emissions. Within our asset portfolio our
airline emissions represent roughly 75 per cent of the Group's
total Carbon dioxide (CO2) emissions. We are working to reduce the
environmental footprint of holidays and drive-up environmental
standards in our industry. In order to measure and manage
climate-related risks and in line with our strategic target to
achieve net-zero emissions across our operations and supply chain
by 2050 at the latest, we monitor our absolute CO2 emissions,
(specific) fuel consumption and specific carbon emissions.
Following the larger scale use of SAF, we will further develop our
metrics to reflect the impact on CO2 emissions.
b) Targets used by TUI to manage climate-related risks and
opportunities and its performance against targets
We have been working for 30 years to reduce our environmental
impacts. In this next phase of our sustainability journey, we
wanted to be led by science.
In 2022, TUI joined the Science Based Targets initiative (SBTi),
committing to implement emission reductions in line with the latest
climate science. SBTi is a global body enabling businesses to set
ambitious emissions reductions targets in line with the Paris
Agreement goals in order to limit the worst effects of climate
change. The initiative is a collaboration between the Carbon
Disclosure Project (CDP), the United Nations Global Compact, World
Resources Institute (WRI) and the World Wide Fund for Nature (WWF).
Detailed emission reduction roadmaps have been developed for each
of these three segments to realise significant reductions in
emissions.
Our 2030 emission reduction targets for airlines, cruises and
hotels are with SBTi for final approval. The SBTi accreditation
will confirm that the targets for 2030 set by TUI are in line with
the goals of the Paris Climate Agreement. We will publish our 2030
emission targets following SBTi's sign-off in 2023. These will be
our principle metrics and targets that our emission reduction
initiatives will be based on. Additional targets are included in
the Sustainability Agenda.
c) Scope 1, Scope 2, and, Scope 3 greenhouse gas emissions, and
the related risks
In financial year 2022, TUI Group's total emissions increased by
168.6 % year-on-year in absolute terms as a result of the recovery
of the business from the impact of the COVID-19 pandemic, in
particular the increase from aviation operations.
Carbon dioxide emissions (CO2)
tons 2022 2021 Var. %
Airlines & Aviation 4,331,628 1,317,865 + 228.7
Cruises 762,942 391,475 + 94.9
Hotels 542,994 362,474 + 49.8
Major premises / shops 14,251 15,949 - 10.6
Ground transport 13,144 5,440 + 141.6
Scope 3 (indirect emissions from TUI's value chain)* 33,199 27,911 + 18.9
Group 5,698,158 2,121,114 + 168.6
* With reference to the Greenhouse Gas Protocol, TUI Group
currently includes Scope 3 emissions occurring from the production
of office paper and printed brochures, the supply and treatment of
fresh water used in our hotels, employee business travel by air on
3rd party airlines, and the transmission and distribution of
electricity across our hotels, offices and retail estate. TUI Group
acknowledges this is not a full and complete Scope 3 assessment and
will work in future to expand Scope 3 data collection and
reporting.
Carbon dioxide emissions (CO2)
tons 2022 2021 Var. %
Scope 1 5,214,576 1,770,337 + 194.6
Scope 2 450,384 322,865 + 39.5
Scope 3 33,199 27,911 + 18.9
Energy usage by business area
MWh 2022 2021 Var. %
Airlines & Aviation 17,655,179 5,371,454 + 228.7
Cruises 2,962,423 1,518,886 + 95.0
Hotels 1,599,057 1,021,997 + 56.5
Major premises / shops 60,036 60,766 - 1.2
Ground transport 55,311 23,314 + 137.2
Total 22,332,006 7,996,417 + 179.3
More efficient flying
We already operate one of Europe's most carbon-efficient
airlines and we aim to continuously improve our environmental
performance. We will build on the progress we have already made to
reduce emissions. Our 2030 airline emission reduction targets have
been submitted to SBTi for validation. Within our emission
reduction roadmap for aviation, the following levers are key:
continued investment in modern carbon-efficient aircraft,
efficiency through operational measures as well as investment in
sustainable aviation fuel (SAF).
Further information on our activities on lowering emissions of
our airlines can be found on page 82.
In 2022, relative carbon emissions across our airlines decreased
by 18.5 %. This improvement was largely a result of significantly
improved load factors compared to 2021, as well as TUI's on-going
re-fleeting with older aircraft being replaced by new, more
carbon-efficient aircraft.
Specific carbon 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).
TUI Airlines - Fuel consumption and CO2 emissions
2022 2021 Var. %
Specific fuel consumption l / 100 rpk* 2.52 3.10 - 18.7
Carbon dioxide (CO2) - total tons 4,053,745 1,300,942 + 211.6
Carbon dioxide (CO2) - specific kg / 100 rpk* 6.36 7.80 - 18.5
* rpk=revenue passenger kilometer.
TUI Airlines - Carbon intensity
g CO2 / rpk* 2022 2021 Var. % g CO2e / rpk*
TUI Airline fleet 63.6 78.0 - 18.5 64.3
TUI Airways 62.2 83.3 - 25.2 62.9
TUI fly Belgium 70.7 82.8 - 14.5 71.5
TUI fly Germany 64.4 75.8 - 15.0 65
TUI fly Netherlands 59.8 70.3 - 15.0 60.4
TUI fly Nordic 66.4 69.7 - 4.8 67.1
* rpk=revenue passenger kilometer.
More sustainable cruising
We continue to focus on lowering emissions across our cruise
operations, making progress through investing in the latest
technology to reduce air emissions, as well as operational
efficiencies. Comprehensive emission reduction roadmaps have been
developed along with our 2030 targets submitted to SBTi for
validation, covering TUI Cruises, Hapag-Lloyd Cruises and Marella
Cruises. Key levers include continued investment in fleet
modernisation and efficiency measures, with a focus on shore power,
route optimisation, energy efficiency boost and propulsion /
alternative fuel switch.
Further information on our activities on lowering emissions of
our cruise operations can be found on page 84.
In financial year 2022, relative carbon emissions in Cruises
decreased by 44.9 % due to significantly higher occupan-cy levels
following the impact of the pandemic in 2021.
Cruises - carbon intensity
2022 2021 Var. %
Carbon dioxide (CO2) - relative kg / Cruise passenger night 132 240 - 44.9
Environmental efficiency across hotels
Our hotels and hotel partners continue to focus on and drive the
sustainability transformation across their operations. Each hotel
plays a key role in managing impacts on the local community,
economy and the environment. In support of our priority to reduce
emissions, we have developed comprehensive emission reduction
roadmaps and 2030 targets for the hotel segment of our business.
These targets are science-based and currently with SBTi for
validation.
Further information on our activities on lowering emissions of
our own hotels can be found on page 85.
Our hotels have seen significant improvements in performance
regarding emissions. This is a result of continued efforts to
improve environmental performance, along with higher customer
numbers and occupancy levels returning since the pandemic.
Hotels - carbon intensity
2022 2021 Var. %
Carbon dioxide (CO2) - relative kg / guest night 10.1 13.4 - 24.6
Integrity & Compliance
Anti-corruption and bribery
In implementing our business activities, compliance with many
national and international laws and rules as well as internal
policies is essential. 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 TUI's reputation. TUI's Compliance
Management System aims to promote integrity and prevent potential
misconduct, to make liability risks manageable for TUI and its
employees and in this way to protect the Company's reputation. It
is a fundamental component in our commitment to corporate,
environmental and social responsibility in our actions.
In the completed financial year, Integrity & Compliance
resumed standard operation, focusing on the core areas of
communications, training programmes and sanctions.
To mark the third anniversary of the Integrity Passport - TUI's
Code of Conduct - a communication campaign was rolled out across
the Group. The goal of this campaign was to kindle interest and
focus employees' attention on compliance. Apart from articles on
the intranet and screen savers, the campaign included a quiz to
raise our employees' awareness of compliance topics in a playful
manner. For Policy Management, an interview was recorded and
published on the intranet in order to familiarise our employees
with the key principles. Online Integrity Passport training
sessions and the Fair Competition training (for selected employees)
were carried out and in-person training programmes for the
induction of new employees were resumed.
Due to the conflict between Russia and Ukraine, our work focused
on business partner screening and advice about trade sanctions. To
that end, a Trade Sanctions Task Force was set up in order to
evaluate potentially relevant facts and circumstances, develop and
implement appropriate risk-minimising measures, and discuss the
general way forward. In order to raise employees' awareness of the
topic, communication measures were rolled out across the Group and
statements were formulated to be passed forward to external third
parties setting out TUI AG's situation under sanction law.
Moreover, the individual business areas were called upon to report
business partners related to Russia / Belarus to Integrity &
Compliance according to a decision-making matrix communicated
across the Group. These business partners were subsequently
subjected to sanction law-related checks. After evaluation of the
findings, any business relationships and contracts affected by
sanctions were suspended or terminated. In order to ensure a
reliable assessment of the situation, an external service provider
was additionally commissioned with preparing more in-depth reports
in individual cases. The Compliance Officers of the relevant
segments / regions advised the management and employees on
questions relating to the sanctions.
In risk analysis, the focus in the completed financial year was
likewise on Russian sanctions. The business partner screenings
helped to derive, analyse and assess the risk situation for
individual regions / segments. Information sources also included
regular exchange in the Risk Oversight Committee (ROC) and the
results of the risk analyses that had been performed locally in
cooperation with Risk Champions and the Compliance Officers in
charge and discussed with local management. The risk assessment was
additionally based on the findings obtained from processing reports
received and from the survey implemented to identify conflicts of
interest and the associated self-assessment on compliance
issues.
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 pilot and standard operation
and 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 our centralized Integrity & Compliance department,
forming part of Legal. All Compliance Officers are in close contact
with local management, who remains generally responsible of
observing all the Compliance rules, and together they are
responsible for implementing our Compliance requirements and
Integrity values, above all:
-- Raising awareness of Integrity & Compliance and the
associated core issues through communication campaigns
-- Performing risk analysis relating to the core Compliance
issues and self-assessments or Pulse Checks
-- Implementing measures to ensure that we comply with our
commitment to integrity in line with theIntegrity Passport
-- Providing training on the Integrity Passport and Fair
Competition
-- Advising employees, primarily with regard to trade sanctions,
anti-corruption & anti-bribery and fair competition
-- Securing the necessary exchange of information between local
management and the Integrity & Complianceteam
-- Monitoring new national and international legislation
-- Providing regular reports to the Group Executive Committee
and to the Audit Committee of the SupervisoryBoard
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 up
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 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 hospitality, 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. The
Suppliers' Code of Conduct has been revised to reflect the Supply
Chain Due Diligence Act which will enter into force next year. The
Suppliers' Code of Conduct already comprises comprehensive
obligations for business partners to avoid violations in the fields
of human rights and environmental protection. Additional legal
obligations that must be observed both in our own business
operations and in the supply chain have been incorporated or set
out in more detail. This places our business relationships with our
business partners on a solid basis.
Management of Integrity & Compliance policies
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 how to react to gifts and
hospitalities, fair competition and compliance with trade
sanctions. In order to re-sensitive employees for this topic, the
Communications team conducted an interview this year with the
Policy Management officer outlining the principles of policy
management which was published on the intranet.
Integrity & Compliance - Risk Analysis
Performing a risk analysis is a core element of our Compliance
Management System. 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. The responsible compliance officers have compared
the available information from past surveys with information from
current data sources as well as from individual communication with
the business owners and then qualified the information. Findings
from the exchange in the Risk Oversight Committee, mandated by the
Executive Board with ensuring that businesses risks within the
Group are identified, managed and monitored across the businesses
and functions, were taken into account. The Integrity &
Compliance Director is a standing member of that Committee and
reports on Compliance-related issues. Within the regions /
segments, Compliance risks were regularly discussed and analysed
between the responsible Compliance Officer, the local business and
the Risk Champions to identify and assess business-specific
challenges. Reported infringements of Compliance requirements were
included in the risk analysis. The Compliance Officers have
recorded the findings obtained during the processing and minimised
the risk by means of measures to be implemented, if necessary.
Risk analysis and prevention also includes the annual survey
among legal representatives, executives and selected employees of
TUI Group to identify potential conflicts of interest, including a
self-assessment on Compliance-related facts and circumstances. A
conflict of interests exists if the business judgment of an
employee conflicts with his or her own interests.
As part of the digitalisation strategy, the interface between
the personnel management system TUI People and the Compliance
platform was developed further so that the data exchanged between
the systems could be processed faster and more efficiently. The
survey started in the completed financial year.
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 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
incident resulting from the use of the whistleblower system is
reviewed and followed up by the Integrity & Compliance team, in
some cases in conjunction with Group Audit Fraud.
The whistleblower system is being adjusted to ensure that it
meets the requirements of the Supply Chain Due Diligence Act and
the EU Whistleblowing Directive. This includes, in particular,
opening up the system for third parties outside TUI Group.
In the completed financial year, a total of 43 reports (in 2021
29 reports) were received through the SpeakUp Line. Apart from the
SpeakUp Line, employees also used the opportunity to report
infringements directly to their line managers, the Compliance
contact in charge or the Compliance Mailbox, which is also
available externally. A further 26 reports (in 2021 21 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 69
reports (in 2021 50 reports) submitted in total, 30 cases (in 2021
16 cases) initially presented prima facie indications of a
Compliance infringement, leading to further investigations, which
in 8 cases (in 2021 one case) resulted in further measures.
Business partner screening (due diligence processes)
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
similar listings cannot be ruled out.
In the completed financial year, business partner screening
focused on business partners linked to Russia / Belarus due to the
conflict between Russia and Ukraine. Business partners were checked
against international sanctions, terrorist and wanted persons lists
via the Internet data base provider. In the event of a red flag,
further measures were launched, in the severest cases terminating
the business relationship.
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 (2022: 99.8 %.; 2020: 99.8 %).
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 (GCGC), the requirements of 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 (AktG) as
amended by the Act implementing the Second Shareholders' Rights
Directive (SRD 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 revision of the remuneration system included
different performance targets for the short-term variable
remuneration (STI). Furthermore, the Total Shareholder Return (TSR)
performance target was removed from the calculation of the
long-term variable remuneration (LTIP). In addition, the revised
remuneration system now includes compliance malus and clawback
rules, thus taking into account the requirements of UK-based
stakeholders and the recommendations of the GCGC in particular. 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 GCGC as amended on 7 February 2017 and the draft of the new
version of the GCGC 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).
According to the German Stock Corporation Act 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 the context of the
resolution adopted on 25 March 2021, the Annual General Meeting
approved and thus adopted the remuneration system for the members
of the Executive Board by 95.8 %. Pursuant to the German Stock
Corporation Act in the version of SRD II, the Executive Board and
Supervisory Board must also prepare an annual Remuneration Report,
which must comply with certain requirements (Section 162 AktG). The
auditor has to check whether the Remuneration Report pursuant to
Section 162 AktG contains all legally required information and, in
addition, to issue an audit opinion. Pursuant to Section 120a (4)
AktG, the audited Remuneration Report must be submitted to the
Annual General Meeting for a decision on its approval. Under the
applicable transitional law, the new provisions of the AktG on the
Remuneration Report had to be applied for the first time for the
first financial year beginning after 31 December 2020. Accordingly,
the Remuneration Report for financial year 2022 would in principle
have had to be submitted to the Annual General Meeting of TUI AG
for approval for the first time in 2023. However, the Executive
Board and Supervisory Board of TUI AG have made use of the option
to voluntarily apply the new provisions of the German Stock
Corporation Act on the Remuneration Report earlier. They thus also
comply with a contractual obligation TUI AG has assumed vis-à-vis
the Economic Stabilisation Fund in the framework of the granting of
stabilisation measures in accordance with the Economic
Stabilisation Fund Act. The Remuneration Report prepared and
audited within the meaning of Section 162 AktG for financial year
ended 30 September 2021 was approved by the shareholders of TUI AG
on 08 February 2022 with 98.72 %. The decision of the Annual
General Meeting on the approval of the Remuneration Report is of
recommendatory nature.
COMPOSITION OF THE EXECUTIVE BOARD
In the financial year 2022, the Executive Board consisted of a
total of six members.
-- Friedrich Joussen: CEO
-- David Burling: CEO Markets & Airlines
-- Sebastian Ebel: CFO
-- Peter Krueger: CSO
-- Sybille Reiss: CPO / Labour Director
-- Frank Rosenberger: CIO
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 corresponding performance 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-term performance targets
-- Appropriate relationship between the amount of the fixed
remuneration and the performance-relatedremuneration
-- Adequacy in horizontal and vertical comparison
The remuneration system and the service contracts 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 the granting of variableremuneration components,
-- what the relationship is between the achievement of the
previously agreed performance criteria and thevariable
remuneration,
-- in which form and when the member of the Executive Board can
dispose of the variable remunerationamounts.
The remuneration system adopted by the Supervisory Board at the
end of 2019 and approved by the 2020 and 2021 Annual General
Meetings also contains a compliance 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 FINANCIAL YEAR
2022
In financial year 2022, 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 effect 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 outlined under
'Remuneration Restrictions based on the Framework Agreement with
the Economic Stabilisation Fund'.
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.
Composition of the target total remuneration of all members of
the Executive Board
EUR '000 Fixed STI LTIP
remuneration*
Friedrich Joussen 1,100.0 1,270.0 1,830.0
David Burling 680.0 500.0 920.0
Sebastian Ebel 680.0 500.0 920.0
Peter Krueger 600.0 465.0 765.0
Sybille Reiss 600.0 465.0 765.0
Frank Rosenberger 600.0 465.0 765.0
* Fixed amount, no cap applied. (1) Fixed remuneration
Target
Fixed remuneration paid in twelve equal monthly instalments in
arrears at the end of a 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 / offset 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 (reported), 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, as well as 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
(shareholder value) are to be increased in the long term by setting
ambitious targets that are closely linked to the Company's
earnings, the share price development and the dividend. By linking
earnings per share and share price performance, congruence is
established between the interests and expectations of 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
-- Compliance Malus and Clawback
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 for the twenty trading
days prior to the firstday of financial year.
-- 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 of the last twenty trading days
in the respective 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
-- Twice per financial year reimbursement of costs of a trip or
individual travel components from programmesof tour operators in
which TUI holds a majority stake (incl. discount for family
members); only applies to theservice agreements of Mr Joussen, Mr
Burling, Mr Ebel and Mr Rosenberger; does notapply to the service
agreements of Mr Krueger and Ms Reiss
-- Discount of 75 % on flights with a TUI airline. Applies only
to the service agreements of Mr Joussen,Mr Burling, Mr Ebel and Mr
Rosenberger; does not apply to the service agreements of Mr Krueger
and Ms Reiss
-- 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 (bAV)
and fringe benefits). If the contractually defined upper limit of
the total remuneration isexceeded, the LTIP is reduced
proportionately in the inflow. The contractually defined upper
limit of the totalremuneration corresponds to the respective
maximum total remuneration for the members of the Executive
Boarddetermined by the Supervisory Board.
Maximum Remuneration
EUR '000 Fixed remuneration* STI 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
Sebastian Ebel 680.0 1,080.0 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
* Fixed amount, no cap applied.
(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
(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.
-- 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
-- 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 13,235.3 k as at 30 September
2022 (previous year EUR 15,984.5 k). Of this amount, EUR 4,210.9 k
(previous year EUR 5,762.4 k) related to entitlements earned by Mr
Ebel in the framework of his work for 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 2022 2021 30 Sep 2022 30 Sep 2021
Friedrich Joussen - 694.7 497.2 4,751.1 5,445.8
Sebastian Ebel - 140.2 235.4 2,279.0 2,419.2
Frank Rosenberger - 362.7 342.8 1,994.3 2,357.0
Total - 1,197.6 1,075.4 9,024.4 10,222.0
For the pension obligations of Mr Ebel 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 them in case of a
security event.
No changes to these commitments were made in financial year
2022.
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 employment contract
without good cause are limited in principle in Mr Joussen's service
agreement to the value of two years' remuneration (severance
payment cap).
In the service agreements of Mr Burling, Mr Ebel, Mr Krueger, Ms
Reiss and Mr Rosenberger, 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
contract is terminated for cause, the 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 was agreed with Mr
Joussen.
In the event of premature termination of the service contract,
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 the Executive 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 agreement
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 yet disbursed 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 was agreed with Mr Joussen and Mr Burling that they may
unilaterally resign from their positions as members of the
Executive Board from 1 June 2022 with three months' notice to 30
September 2022, whereby the STI and LTIP would be paid out in
accordance with the service agreement and would not lapse. In the
event of Mr Joussen or Mr Burling exercising this right of
resignation, an expiry period of 24 and 9 months respectively was
agreed for the respective service agreement. On 24 June 2022, Mr
Joussen exercised his right of resignation from his office as
member of the Executive Board of TUI AG ahead of schedule as per 30
September 2022. During the expiry period of 24 months, TUI AG has
agreed to process the service agreement in accordance with the
service agreement until the termination date. Mr Burling did not
exercise his right of resignation.
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 declaring which such termination, 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 agreements 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 2022
In financial year 2022, no members resigned from TUI AG's
Executive Board.
II REMUNERATION RESTRICTIONS BASED ON THE FRAMEWORK AGREEMENT
WITH THE ECONOMIC STABILISATION FUND
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 members
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 2022 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
2022.
III OVERVIEW: INDIVIDUAL REMUNERATION OF THE MEMBERS OF THE
EXECUTIVE BOARD
III.1 ACHIEVEMENT OF TARGETS
The following describes how the performance criteria were
applied and the targets for the variable remuneration components
were achieved in financial year 2022.
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.
With regard to STI's individual performance factor for financial
year 2022, the Supervisory Board decided before the start of
financial year 2022 to defer the individual targets in favour of
the overall Executive Board targets against the background of the
Company-wide transformation process. Thus, the further
implementation of the transformation through the simplification of
the system landscape was a key target. Operationally, the focus was
on expanding the range and variety of products, but also on the
automation and analysis of processes.
In addition, the members of the Executive Board have been given
ESG targets. These include the development of a pilot project to
create a sustainable destination and the implementation of
strategic targets of a new sustainability agenda. Due to
remuneration restrictions, the Supervisory Board has refrained from
determining target achievement for EBIT (reported) and cash flow.
The effects of the COVID-19 pandemic, which in the meantime has led
to significant restrictions in business operations and to
far-reaching disruptions in air traffic, as well as the impact of
the sustained increase in inflation, have led to the achievement of
the two performance targets in financial year 2022 being impaired,
despite a significant recovery in booking numbers compared to the
previous year and restrictive cost management. In principle, around
74 % of the EBIT (reported) target for the financial year 2022 and
66 % of the cash flow target would have been achieved. As a result
of the remuneration restrictions, there is no granted and owed
remuneration within the meaning of Section 162 para. 1 sentence 1,
sentence 2 no. 1 AktG from the STI for financial year 2022.*
In applying the remuneration restrictions, the Supervisory Board
accordingly waived the determination of the individual performance
factor. With the immense amount of work of the Executive Board
members once again had to deliver due to the extraordinary
challenges of financial year 2022, they demonstrated above-average
commitment and dedication, while remaining focused on the agreed
targets. In its discussions, the Supervisory Board agreed that the
entire Executive Board did an excellent job in financial year 2022
in a persistently challenging environment. The balance sheet was
further stabilised through very stringent cash management, massive
cost reductions and the development of extensive sources of
financing. The Supervisory Board expressly acknowledges this
extraordinary performance.
III.1.2 LTIP
The payment of the LTIP tranche 2019 - 2022 is governed by the
provisions of the remuneration system, which came into effect
retroactively as of 1 October 2017.
The LTIP tranche was based on an average TUI AG share price of
EUR 9.87 at the time of allocation. At the end of the performance
period, TUI AG's average stock price was EUR 1.509. 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 payout. Although the EPS
was below the EUR 0.50 mark for financial years 2020, 2021 and
2022, at which point 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 Framework Agreement II would not allow
a payout. The Supervisory Board has therefore decided not to set
any new absolute target values for the EPS and no minimum and
maximum values for determining the percentage target achievement
for the LTIP tranche 2019 - 2022. For the LTIP tranche 2019 - 2022,
there is no remuneration granted and owed in December 2022 within
the meaning of Section 162 para. 1 sentence 1, sentence 2 no. 1
AktG.*
III.2 LOANS OR ADVANCES
No loans or advances were granted to the members of the
Executive Board in financial year 2022, as in the previous year and
the previous years.
III.3 APPLICATIONS
III.3.1 'REMUNERATION GRANTED AND OWED' WITHIN THE MEANING OF
SECTION 162 (1) SENTENCE 1 AKTG IN FINANCIAL YEAR 2022
Pursuant to Section 162 para. 1 sentence 1, sentence 2 no. 1
AktG, all fixed and variable remuneration components 'granted and
owed' to the individual members of the Executive Board in financial
year 2022 must be disclosed. The values stated for both the STI and
the LTIP for financial year 2022 refer to the remuneration
components 'granted and owed' in the respective financial year
pursuant to Section 162 (1) sentence 1 AktG. They thus include all
benefits earned in the respective financial year. The value of the
STI therefore corresponds to the amount for the STI for financial
year 2022, which would not be paid out until financial year 2023 in
accordance with the service agreement. The value of the LTIP
tranche 2019 - 2022 therefore corresponds in value to the amount
for the LTIP whose four-year term ended on 30 September 2022, but
which would not be paid out until the 2023 financial year in
accordance with the service agreement.
In the previous year, the term 'remuneration granted and owed'
within the meaning of Section 162 para. 1 sentence 1, sentence 2
no. 1 AktG was defined differently. According to this definition,
the remuneration granted and owed included the benefits actually
received in the respective financial year, regardless of financial
year for which they would have been received by the members of the
Executive Board. The value of the STI therefore corresponded to the
amount for the STI from the 2020 financial year, which would not
have been paid out until the 2021 financial year in accordance with
the service agreements. The value of the 2017 - 2020 LTIP tranche
therefore corresponded in terms of 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 the 2021 financial year in accordance
with the service agreements. The change in definition is based on
the use of an option resulting from a clarification by the
Institute of Public Auditors (Institut der Wirtschaftsprüfer). The
change in definition had no effect on the disclosure of the amount
of Executive Board remuneration, as no variable remuneration
components were paid out due to the remuneration restrictions.
* The definition of the remuneration granted and owed within the
meaning of Section 162 para. 1 sentence 1, sentence 2 no. 1 AktG
can be found in Section III. 3.1.
Remuneration 'granted and owed remuneration' pursuant to section 162 (1) sentence 1 AktG
Friedrich Joussen David Burling Sebastian Ebel
CEO, Member of the Executive Member of the Executive
since 14 February 2013 1 Board, Board,
since 1 June 2015 since 12 December 2014
EUR in EUR in EUR in EUR in EUR in EUR in
'000 % 2 '000 % 2 '000 % 2 '000 % 2 '000 % 2 '000 % 2
2021 2022 2021 2022 2021 2022
Fixed remuneration
1,100.0 63.0 1,100.0 63.6 680.0 73.4 680.0 73.6 680.0 70.2 680.0
70.7
Fringe benefits 3 52.1 3.0 57.6 3.3 2.3 2.1 1.9 1.9
21.1 19.2 18.0 18.0
Total
1,152.1 66.0 1,157.6 66.9 701.1 75.7 699.2 75.7 698.0 72.0 698.0
72.6
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 (2018 - 0.0 0.0 0.0 0.0 0.0 0.0 2021)
LTIP Tranche (2019 - 0.0 0.0 0.0 0.0 0.0 0.0 2022)
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 AktG4
Total
1,152.1 66.0 1,157.6 66.9 701.1 75.7 699.2 75.7 698.0 72.0 698.0
72.6
Pension / service costs 5
592.7 34.0 571.6 33.1 225.0 24.3 225.0 24.3 271.1 28.0 263.5
27.4
Total remuneration
1,744.8 100.0 1,729.2 100.0 926.1 100.0 924.2 100.0 969.1 100.0
961.5 100.0
1 Member of the Executive Board since 15 October 2012 until 30
September 2022; Co-Chairman of the Executive Board from 9 December
2014 to 9 February 2016.
2 The relative shares stated here refer to the remuneration
components 'granted and owed' in the respective financial year in
accordance with section 162 (1) sentence 1 AktG. They thus include
all benefits actually granted in the respective financial year,
irrespective of the financial year for which they were paid to the
Executive Board members. The relative shares are therefore not
comparable with the relative shares in the description of the
remuneration system pursuant to section 87a (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.
3 Without insurance from group contracts.
4 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 compliance malus and
clawback provision. In financial year 2022 TUI AG did not use this
provision.
5 For Mr Joussen, Mr Ebel and Mr Rosenbeger service costs
according to IAS 19, therefore not constituting 'awarded and owed'
remuneration' within the meaning of section 162 (1) sentence 1
AktG. For Mr Burling, Mr Krueger and Mrs Reiss payments for pension
contribution and therefor part of 'awarded and owed' remuneration
within the meaning of Section 162 (1) sentence 1 AktG.
6 Member of the Executive Board until 31 October 2022.
Remuneration 'granted and owed remuneration' pursuant to section 162 (1) sentence 1 AktG
Peter Krueger Sybille Reiss Frank Rosenberger
Member of the Executive Member of the Executive Member of the Executive
Board, Board, Board,
since 1 January 2021 since 1 July 2021 since 1 January 2017 6
EUR '000 in % 2 EUR '000 in % 2 EUR '000 in % 2 EUR '000 in % 2 EUR '000 in % 2 EUR '000 in % 2
2021 2022 2021 2022 2021 2022
Fixed remuneration 450.0 70.8 600.0 70.8 150.0 70.8 600.0 70.8 600.0 59.2 600.0 60.8
Fringe benefits 3 13.5 2.1 18.0 2.1 4.5 2.1 18.0 2.1 30.5 3.0 25.2 2.6
Total 463.5 72.9 618.0 72.9 154.5 72.9 618.0 72.9 630.5 62.3 625.2 63.3
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 (2018 - 2021) 0.0 0.0
LTIP Tranche (2019 - 2022) 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 AktG4
Total 463.5 72.9 618.0 72.9 154.5 72.9 618.0 72.9 630.5 62.3 625.2 63.3
Pension / service costs 5 172.5 27.1 230.0 27.1 57.5 27.1 230.0 27.1 382.2 37.7 362.3 36.7
Total remuneration 636.0 100.0 848.0 100.0 212.0 100.0 848.0 100.0 1,012.7 100.0 987.5 100.0
1 Member of the Executive Board since 15 October 2012 until 30
September 2022; Co-Chairman of the Executive Board from 9 December
2014 to 9 February 2016.
2 The relative shares stated here refer to the remuneration
components 'granted and owed' in the respective financial year in
accordance with section 162 (1) sentence 1 AktG. They thus include
all benefits actually granted in the respective financial year,
irrespective of the financial year for which they were paid to the
Executive Board members. The relative shares are therefore not
comparable with the relative shares in the description of the
remuneration system pursuant to section 87a (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.
3 Without insurance from group contracts.
4 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 compliance malus and
clawback provision. In financial year 2022 TUI AG did not use this
provision.
5 For Mr Joussen, Mr Ebel and Mr Rosenbeger service costs
according to IAS 19, therefore not constituting 'awarded and owed'
remuneration' within the meaning of section 162 (1) sentence 1
AktG. For Mr Burling, Mr Krueger and Mrs Reiss payments for pension
contribution and therefor part of 'awarded and owed' remuneration
within the meaning of Section 162 (1) sentence 1 AktG.
6 Member of the Executive Board until 31 October 2022.
III.3.2 COMPLIANCE WITH THE MAXIMUM REMUNERATION AS REMUNERATION
CAPS
For financial year 2022, in addition to the maximum amounts for
the one-year and multi-year variable remuneration, a maximum amount
for the remuneration for financial year as a whole (including
fringe benefits and pension commitment) is provided for in
accordance with Section 87a para. 1 sentence 2 no. 1 AktG. This
maximum remuneration is EUR 7.5 m for the Chairman of the Executive
Board and EUR 3.5 m for an ordinary member of the Executive Board
and relates to the remuneration granted for a financial year. If
the remuneration for financial year 2022 exceeds the aforementioned
maximum limit, the LTIP will be reduced accordingly. As the
multi-year variable remuneration component is not available until
the third year after the end of the reporting year due to the
four-year performance period, compliance with the maximum
remuneration for financial year 2022 can only be reported
conclusively as part of the Remuneration Report for financial year
2025.
III.3.3 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 as against the
previous financial year.* The remuneration of the Executive Board
members included in the table reflects the benefits earned in the
respective financial year. For active members of the Executive
Board, these values for financial year 2022 correspond to the
values stated in the table 'Remuneration granted and owed within
the meaning of Section 162 (1) sentence 1 AktG'.
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 (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, TUI Group's earnings trend also
includes the development of TUI Group's underlying EBIT shown in
the consolidated financial statements for financial years 2020,
2021 and 2022 and TUI Group's underlying EBITA shown in the
consolidated financial statements for financial years 2017 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 (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, (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, (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 %) 2022 vs. 20216 2021 vs. 2020 2020 vs. 2019 2019 vs. 2018 2018 vs. 2017
Executive Board remuneration 1
Friedrich Joussen 0 5 - 1 - 74 31
David Burling 0 7 - 8 - 55 14
Sebastian Ebel 0 4 - 2 - 58 30
Peter Krueger 7 33
Sybille Reiss 7 300
Frank Rosenberger - 1 5 - 1 - 45 36
Horst Baier 0 5 10 - 73 8
(CFO until 30 September 2018) 2
Birgit Conix - 100 - 32 - 4 144
(CFO until 31 December 2020)
Dr Elke Eller - 97 - 1 0 - 48 9
(CHRO until 30 June 2021)
Earnings performance
TUI AG 3 - 177 30 - 1,994 - 88 33
TUI Group 4 120 69 - 435 - 22 4
Average employee remuneration
on FTE basis
Company employees 5 10 6 - 2
1 Remuneration granted and owed within the meaning of section
162 (1) sentence 1 AktG (fixed remuneration, STI, LTIP, fringe
benefits and fixed annual pension payment for Mr Burling, Mr
Krueger and Ms Reiss). In addition to the active members of the
Executive Board, those former Executive Board members were taken
into account who still received remuneration from their active
activities within the comparison period.
2 Mr Baier received a payout from his pension plan in financial
years 2019 to 2022. In financial year 2021, he received a final
payout from the remuneration granted and owed from the 2017 - 2020
LTIP tranche.
3 Annual result within the meaning of section 275 para 2 no. 17
HGB.
4 Underlying EBIT of TUI Group for financial years 2022, 2021
and 2020. For financial years 2017 to 2019, underlying EBITA of TUI
Group.
5 Due to the achievement of the company's targets, a higher
bonus is paid out this year than last year.
6 The comparison for financial years 2021 and 2022 was based on
the amended definition of remuneration granted and owed pursuant to
section 162 (1) no. 2 AktG.
7 Pro rata remuneration in financial year 2021.
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 2022.
It came to the conclusion that the amount of the Executive Board
remuneration and the pensions are appropriate from a legal point of
view pursuant to Section 87 (1) of the German Stock Corporation
Act (AktG).
For the assessment of the appropriateness of the Executive Board
remuneration and pensions, the Supervisory Board also regularly
calls on 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 being of a
similar 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
(as at 30 September 2022)
Company Stock market segment Company Stock market segment
Adidas AG DAX Infineon Technologies AG DAX
Aixtron SE MDAX K+S AG MDAX
Aurubis AG MDAX KION GROUP AG MDAX
BASF SE DAX LANXESS AG MDAX
Bayer AG DAX LEG Immobilien AG MDAX
Bechtle AG MDAX Mercedes-Benz AG DAX
Beiersdorf AG DAX Merck KGaA DAX
Brenntag AG DAX MTU Aero Engines AG DAX
Carl Zeiss Meditec AG MDAX Nemetschek SE MDAX
Continental AG DAX ProSiebenSat.1 Media SE MDAX
Covestro AG DAX PUMA SE DAX
CTS Eventim AG & Co. KGaA MDAX QIAGEN N.V. DAX
Delivery Hero AG MDAX Rheinmetall AG MDAX
Deutsche Lufthansa AG MDAX RTL Group SA MDAX
Deutsche Post AG DAX RWE AG DAX
Deutsche Telekom AG DAX SAP SE DAX
Deutsche Wohnen AG MDAX Scout24 AG MDAX
Dürr AG MDAX Siemens AG DAX
ENCAVIS AG MDAX Siemens Healthineers AG DAX
E.ON SE DAX Siltronic AG MDAX
Evonik Industries AG MDAX Software AG MDAX
Evotec AG MDAX Stabilus SE MDAX
Fraport AG MDAX Ströer SE & Co. KGaA MDAX
freenet AG MDAX Symrise AG DAX
Fresenius Medical Care AG & Co KGaA DAX TAG Immobilien AG MDAX
Fresenius SE & Co KGaA DAX TeamViewer AG MDAX
Fuchs Petrolub SE MDAX Telefónica Deutschland Holding AG MDAX
GEA Group AG MDAX ThyssenKrupp AG MDAX
Gerresheimer AG MDAX United Internet AG MDAX
HeidelbergCement AG DAX Volkswagen AG DAX
HelloFresh SE MDAX Vonovia SE DAX
Henkel AG & Co KGaA DAX Wacker Chemie AG MDAX
Hugo Boss AG MDAX Zalando SE DAX
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 2022. As in financial years 2019, 2020 and 2021, the
remuneration was significantly below that of financial year 2018,
the appropriateness of which was again assessed and confirmed. The
amount of the remuneration granted and owed, which for financial
year 2022 consists only of fringe benefits and pension
contributions in addition to the fixed remuneration, was largely
known to the Annual General Meeting whichh approved the
remuneration system in financial year 2021 and the 2021
Remuneration Report in financial year 2022.
III.3.4 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 2022 amounted
to EUR 6,248.9 k (previous year EUR 6,074.2 k). Of this amount, EUR
917.5 k was attributable to Michael Frenzel, who left the Executive
Board on 31 March 2014, and EUR 1,003.6 k to Horst Baier, who left
the Executive Board on 30 September 2018, in financial year 2022.
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
62,985.5 k (previous year EUR 71,766.5 k) measured in accordance
with IAS 19 - excluding Mr Ebel's entitlements of EUR 4,210.9 k
(previous year EUR 5,762.4 k) earned in the framework of his
service for TUI Group before 31 August 2006.
TUI AG and Dr Eller agreed on the premature termination of the
Executive Board mandate and the Labour Director mandate as per 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 employment
contract until the end of the regular termination date, i. e. until
14 October 2021. TUI AG has agreed to Dr Eller that it would
continue to pay 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 that date. In financial year 2022, Dr Eller was thus
entitled to a pro rata fixed remuneration of around EUR 26.4 k.
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. In addition, the
Remuneration Report prepared and audited in accordance with Section
162 of the German Stock Corporation Act (AktG) for financial year
ended 30 September 2021 was approved by the shareholders of TUI AG
on 08 February 2022 with 98.72 %.
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 8 February 2022, there were no new or renewed
mandates to be filled by shareholder representatives.
Ms Carola Schwirn resigned from the Supervisory Board at the end
of 28 February 2022. By court appointment on 1 April 2022, Ms Sonja
Austermühle was appointed as a member of the Supervisory Board as
an employee representative.
On 2 March 2022, Mr Mordashov notified the Company that he was
resigning from his mandate as a member of TUI AG's Supervisory
Board with immediate effect. On 3 March 2022, Mr Vladimir Lukin
also notified us that he was resigning from his mandate as
shareholder representative on TUI AG's Supervisory Board with
immediate effect. Ms Helena Murano and Mr Christian Baier were
appointed as members of TUI AG's Supervisory Board by court order
on 31 May 2022 to fill the vacancies. The applications for court
appointment were each submitted until the next ordinary 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
Ingrid-Helen Arnold Member since 11 February 2020
Sonja Austermühle* Member since 1 April 2022
Christian Baier Member since 31 May 2022
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
Stefan Heinemann* Member since 21 July 2020
Janina Kugel Member since 25 March 2021
Helena Murano Member since 31 May 2022
Mark Muratovic* Member since 25 March 2021
Vladimir Lukin Member from 12 February 2014 to 28 October 2014 and
from 5 June 2019 to 3 March 2022
Coline McConville Member since 11 December 2014
Alexey Mordashov Member since 9 February 2016 to 2 March 2022
Carola Schwirn* Member since 1 August 2014 to 28 February 2022
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
* Employee representatives.
I REMUNERATION OF THE SUPERVISORY BOARD IN FINANCIAL YEAR
2022
The rules and remuneration of the members of the Supervisory
Board are set out in Section 18 of TUI AG's Articles of
Association, permanently accessible to the public on the internet.
Supervisory Board remuneration is reviewed at appropriate
intervals. It takes account of the expected time commitment for the
mandate and the practice in companies of a 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 remuneration
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 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
Presiding Committee
-- 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
* The Strategy Committee was dissolved at the end of financial
year 2022. Accordingly, the committee remuneration for the Strategy
Committee will not be received for the following years.
Nominating Committee
-- None
Transaction committees
-- None
(3) Attendance fees
-- Supervisory Board: EUR 1.0 k per meeting
-- Presiding Committee: 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
Objective
In addition, the members of the Supervisory Board are included
in a pecuniary damage liability insurance policy (so-called D&O
insurance) taken out 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 'GRANTED AND OWED' WITHIN THE MEANING OF
SECTION 162 PARA. 1 SENTENCE 1 OF THE GERMAN STOCK CORPORATION ACT
(AKTG) IN FINANCIAL YEAR 2022
Pursuant to Section 162 (1) sentence 1, sentence 2 no. 1 AktG,
all fixed and variable remuneration components 'granted and owed'
to the individual members of the Supervisory Board in financial
year 2022 must be disclosed. The values stated refer to the
remuneration components 'granted and owed' in the respective
financial year pursuant to Section 162 (1) sentence 1 AktG. They
thus include all benefits earned in the respective financial year,
regardless of whether they were received by the members of the
Supervisory Board in the respective financial year. In terms of
value, the amounts for financial year 2022 are therefore also taken
into account, which, according to the Articles of Association, will
only be paid out in financial year 2023. The remuneration granted
and owed to the Supervisory Board includes the fixed remuneration
earned for financial year 2022, but which, according to the
Articles of Association, will only be paid in financial year 2023.
The attendance fees, on the other hand, are usually paid
immediately after the respective meetings, so that the attendance
fees for the Supervisory Board meetings in 2022 were also paid in
the financial year 2022.
In the previous year, the term of remuneration granted and owed
within the meaning of Section 162 para. 1 sentence 1, sentence 2
no. 1 AktG was defined differently. According to this definition,
the remuneration granted and owed included the benefits actually
received in the respective financial year, regardless of financial
year for which they would have been received by the members of the
Supervisory Board. In terms of value, the amounts for the 2020
financial year were taken into account, which would not have been
paid out until the 2021 financial year in accordance with the
Articles of Association. The change in definition is based on the
use of an option resulting from a clarification by the Institute of
Public Auditors (Institut der Wirtschaftsprüfer).
Total remuneration granted and owed to the Supervisory Board
EUR '000 2022 2021
adjusted*
Fixed remuneration 1,980.9 1,896.0
Remuneration for committee memberships 906.3 865.9
Attendance fees 245.0 372.0
Total remuneration for TUI AG Supervisory Board mandate 3,132.2 3,133.9
Remuneration for Supervisory Board mandates in the Group 50.7 26.5
Total 3,182.9 3,160.4
* Financial year 2021 adjusted due to a change in the definition
of the term 'granted and owed'.
In addition, travel costs and expenses amounting to EUR 72.5 k
(previous year EUR 0 k) were reimbursed. The remuneration of the
Supervisory Board in financial year 2022, together with the
reimbursement of travel costs and expenses, amounted to EUR 3,255.4
k (previous year EUR 3,160.4 k).
I.2. REMUNERATION 'GRANTED AND OWED' WITHIN THE MEANING OF
SECTION 162 PARA. 1 SENTENCE 1 OF THE GERMAN STOCK CORPORATION ACT
(AKTG) IN FINANCIAL YEAR 2022
Pursuant to Section 162 (1) sentence 1, sentence 2 no. 1 of the
German Stock Corporation Act (AktG), all fixed and variable
remuneration components 'granted and owed' to the individual
members of the Supervisory Board in financial year 2022 must be
disclosed. The values stated refer to the remuneration components
'granted and owed' in the respective financial year pursuant to
Section 162 (1) sentence 1 AktG. They thus include all benefits
earned in the respective financial year, regardless of whether they
were received by the members of the Supervisory Board in the
respective financial year. In terms of value, the amounts for
financial year 2022 are therefore also taken into account, which,
according to the Articles of Association, will only be paid out in
financial year 2023.
Granted 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 58.4 168.0 36.4 24.0 5.2 462.0
(Chairman)
Frank Jakobi (Vice 180.0 54.5 126.0 38.2 24.0 7.3 330.0
Chairman)
Ingrid-Helen Arnold 90.0 92.8 0.0 7.0 7.2 97.0
Sonja Austermühle 1 45.0 74.1 0.0 2.0 3.3 13.7 22.6 60.7
Christian Baier 2 30.3 61.3 14.1 28.5 5.0 10.1 49.4
Andreas Barczewski 90.0 75.9 0.0 7.0 5.9 21.5 18.1 118.5
Peter Bremme 90.0 62.1 42.0 29.0 13.0 9.0 145.0
Dr Jutta Dönges 3 90.0 42.8 100.5 47.7 20.0 9.5 210.5
Prof. Dr Edgar Ernst 90.0 27.8 210.0 64.8 24.0 7.4 324.0
Wolfgang Flintermann 90.0 92.8 0.0 7.0 7.2 97.0
María Garaña Corces 90.0 92.8 0.0 7.0 7.2 97.0
Stefan Heinemann 90.0 61.6 42.0 28.8 14.0 9.6 146.0
Janina Kugel 90.0 92.8 0.0 7.0 7.2 97.0
Vladimir Lukin 4 38.3 46.1 35.7 43.0 9.0 10.8 83.0
Coline McConville 90.0 64.3 42.0 30.0 8.0 5.7 140.0
Alexey Mordashov 5 0.0 0.0 0.0 0.0 7.0 100.0 7.0
Helena Murano 2 30.3 93.8 0.0 2.0 6.2 32.3
Mark Muratovic 90.0 55.7 42.0 26.0 14.0 8.7 15.5 9.6 161.5
Carola Schwirn 6 37.0 92.5 0.0 3.0 7.5 40.0
Anette Strempel 90.0 62.1 42.0 29.0 13.0 9.0 145.0
Joan Trían Riu 90.0 92.8 0.0 7.0 7.2 97.0
Tanja Viehl 90.0 92.8 0.0 7.0 7.2 97.0
Stefan Weinhofer 90.0 61.6 42.0 28.8 14.0 9.6 146.0
Total 1,980.9 62.2 906.3 28.5 245.0 7.7 50.7 1.6 3,182.9
1 Pro rata temporis view of all remuneration components as of 1
April 2022.
2 Pro rata temporis view of all remuneration components as of 31
May 2022.
3 Pro rata temporis view of committee remuneration from 10 May
2022.
4 Pro rata temporis view of all remuneration components until 3
March 2022.
5 Pro rata temporis view of all remuneration components until 2
March 2022. No pay-outs 28 February 2022 onwards, as Mr Mordashov
is subject to EU sanctions since that date. Actual pay-outs in
conjunction with the meeting of the Presiding Committee (4 February
2022) and the Supervisory Board (7 February 2022) have been made
prior to listing on sanctions list on 16 February 2022. A pay-out
in conjunction with the meeting of the Strategy Committee (21
February 2022) has not been paid out because of EU sanctions.
6 Pro rata temporis view of all remuneration components until 28
February 2022.
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 as
against the previous financial year*. The remuneration of the
members of the Supervisory Board included in the table reflects the
amounts earned in the respective financial year. For financial year
2022, these values correspond to the values stated in the table
'Remuneration granted and owed within the meaning of Section 162
(1) sentence 1 AktG'. Where members of the Supervisory Board had
previously been members of TUI AG's Executive Board and had
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 on the basis
of the development of TUI AG's profit for the year in accordance
with Section 275 (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 (3) of the German Works 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, 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 Stock
Corporation Act (AktG) is not yet to be included in the
Remuneration Report.
Comparison of annual change to Supervisory Board remuneration according to
section 162 para 1 no. 2 AktG
Annual change (in %) 2022 vs. 20216 2021 vs. 2020 2020 vs. 2019 2019 vs. 2018 2018 vs. 2017
Supervisory Board remuneration 1
Dr Dieter Zetsche 2 17 71 268
Frank Jakobi - 3 18 0 - 6 - 3
Ingrid-Helen Arnold - 5 91
Sonja Austermühle
Christian Baier
Andreas Barczewski - 22 - 6 - 13 5 - 5
Peter Bremme - 5 9 - 14 1 2
Dr Jutta Dönges 111
Prof. Dr Edgar Ernst 4 15 - 6 17 - 5
Wolfgang Flintermann - 8 16 - 10 1 1
María Garaña Corces - 6 96
Angelika Gifford - 47 12 14
Stefan Heinemann 12 914
Dr Dierk Hirschel - 46 - 15 3 9
Janina Kugel 81
Peter Long - 46 - 8 21 47
Vladimir Lukin - 54 47 279
Coline McConville - 8 10 - 16 3 3
Alexey Mordashov 2 - 96 8 - 8 5 - 4
Helena Murano
Marc Muratovic 92
Michael Pönipp - 34 - 8 2 - 2
Carola Schwirn - 62 16 - 21 3 2
Anette Strempel - 5 8 - 14 0 0
Joan Trían Riu - 8 16 41
Tanja Viehl 78
Stefan Weinhofer 12 44 - 10 1 2
Earnings performance
TUI AG 3 - 177 30 - 1,994 - 88 33
TUI Group 4 120 69 - 435 - 22 4
Average employee remuneration
on FTE basis
Company employees 5 10 6 - 2
1 Changes result in particular from the date of entry into the
Supervisory Board, committee membership and the respective date of
resignation.
2 No pay-outs from 28 February 2022 onwards, as Mr Mordashov has
been subject to EU sanctions since that date. Actual pay-outs in
conjunction with the meeting of the Presiding Committee (4 February
2022) and the Supervisory Board (7 February 2022) have been made
prior to listing on sanctions list on 16 February 2022. A pay-out
in conjunction with the meeting of the Strategy Committee (21
February 2022) has not been paid out because of EU sanctions.
3 Annual result within the meaning of section 275 (2) no. 17
HGB.
4 Underlying EBIT of the TUI Group for financial years 2022,
2021 and 2020. For financial years 2017 to 2019, underlying EBITA
of the TUI Group.
5 Due to the achievement of the company's targets, a higher
bonus is paid out this year than last year.
6 The comparison for 2021 and 2022 was based on the amended
definition of remuneration granted and owed pursuant to Section 162
(1) no. 2 AktG.
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 2022 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 2021 to 30 Sep 2022
EUR million Notes 2022 2021
Revenue (1) 16,544.9 4,731.6
Cost of sales (2) 15,613.3 5,955.4
Gross profit / loss 931.7 - 1,223.8
Administrative expenses (2) 746.3 840.5
Other income (3) 52.2 250.6
Other expenses (3) 1.7 11.5
Impairment (+) / Reversals of impairment (-) of financial assets (41) 7.3 - 38.0
Financial income (4) 35.9 27.3
Financial expenses (5) 509.5 464.1
Share of result of investments accounted for using the equity method (6) 100.7 - 232.7
Impairment (+) / Reversals of impairment (-) of net investments in joint ventures and (6) 1.6 5.0
associates
Earnings before income taxes - 145.9 - 2,461.7
Income taxes (expense [+], income [-]) (7) 66.7 19.2
Group loss - 212.6 - 2,480.9
Group loss attributable to shareholders of TUI AG (8) - 277.3 - 2,467.2
Group profit / loss attributable to non-controlling interest (9) 64.6 - 13.8
Earnings per share
EUR Notes 2022 2021
Basic and diluted loss / earnings per share (10) - 0.17 - 2.58
Consolidated Statement of Comprehensive Income of TUI AG
for the period from 1 Oct 2021 to 30 Sep 2022
EUR million Notes 2022 2021
Group loss - 212.6 - 2,480.9
Remeasurements of defined benefit obligations and related fund assets 245.5 - 257.5
Other comprehensive income of investments accounted - 40.3
for using the equity method that will not be reclassified
Fair value loss on investments in equity instruments - 1.2 - 0.1
designated as at FVTOCI
Income tax related to items that will not be reclassified (11) - 71.8 139.3
(expense [-], income [+])
Items that will not be reclassified to profit or loss 172.5 - 78.0
Foreign exchange differences 206.1 119.9
Foreign exchange differences outside profit or loss 206.2 71.7
Reclassification - 0.1 48.2
Cash flow hedges 110.7 144.0
Changes in the fair value 130.2 309.1
Reclassification - 19.5 - 165.1
Other comprehensive income of investments accounted for 17.0 - 22.4
using the equity method that may be reclassified
Changes in the measurement outside profit or loss 17.0 - 22.4
Income tax related to items that may be reclassified (11) - 28.5 - 32.1
(expense [-], income [+])
Items that may be reclassified to profit or loss 305.3 209.5
Other comprehensive income 477.8 131.5
Total comprehensive income 265.1 - 2,349.4
attributable to shareholders of TUI AG 144.1 - 2,350.3
attributable to non-controlling interest 121.1 0.9
Consolidated Statement of Financial Position of TUI AG as at 30 Sep 2022
EUR million Notes 30 Sep 2022 30 Sep 2021
Assets
Goodwill (12) 2,970.6 2,993.1
Other intangible assets (13) 507.6 498.6
Property, plant and equipment (14) 3,400.9 3,159.3
Right-of-use assets (15) 2,971.5 3,009.2
Investments in joint ventures and associates (16) 785.4 640.5
Trade and other receivables (17), (41) 131.6 308.7
Derivative financial instruments (41) 26.6 8.9
Other financial assets (41) 10.6 12.3
Touristic payments on account (18) 138.0 107.6
Other non-financial assets (19) 169.7 183.4
Income tax assets 17.2 9.6
Deferred tax assets (20) 222.0 291.1
Non-current assets 11,351.7 11,222.3
Inventories (21) 56.1 42.8
Trade and other receivables (17), (41) 1,011.8 471.6
Derivative financial instruments (41) 232.5 53.4
Other financial assets (41) 85.8 12.1
Touristic payments on account (18) 619.6 508.6
Other non-financial assets (19) 135.4 106.7
Income tax assets 23.1 57.7
Cash and cash equivalents (22), (41) 1,736.9 1,583.9
Assets held for sale (23) 2.7 96.5
Current assets 3,903.8 2,933.3
Total assets 15,255.5 14,155.7
Consolidated Statement of Financial Position of TUI AG as at 30 Sep 2022
EUR million Notes 30 Sep 2022 30 Sep 2021
Equity and liabilities
Subscribed capital (24) 1,785.2 1,099.4
Capital reserves (25) 6,085.9 5,249.6
Revenue reserves (26) - 8,432.7 - 8,525.7
Silent participation (27) 420.0 1,091.0
Equity before non-controlling interest - 141.6 - 1,085.8
Non-controlling interest (29) 787.3 667.3
Equity 645.7 - 418.4
568.2
Pension provisions and similar obligations (30) 901.9
Other provisions (31) 755.0 763.6
Non-current provisions 1,323.2 1,665.5
Financial liabilities (32), (41) 1,731.4 3,036.1
Lease liabilities (32), (41) 2,508.7 2,606.1
Derivative financial instruments (41) 3.2 10.9
Other financial liabilities (33), (41) 2.8 5.9
Other non-financial liabilities (35) 165.2 206.3
Income tax liabilities 11.1 56.4
Deferred tax liabilities (20) 121.2 123.3
Non-current liabilities 4,543.8 6,045.1
Non-current provisions and liabilities 5,867.0 7,710.5
Pension provisions and similar obligations (30) 33.1 33.2
Other provisions (31) 541.0 539.5
Current provisions 574.2 572.7
Financial liabilities (32), (41) 319.9 284.6
Lease liabilities (32), (41) 698.8 623.3
Trade payables (41) 3,316.5 2,052.4
Derivative financial instruments (41) 57.5 12.9
Other financial liabilities (33), (41) 174.6 313.0
Touristic advance payments received (34) 2,998.9 2,379.4
Other non-financial liabilities (35) 519.9 518.0
Income tax liabilities 82.3 56.7
Current liabilities 8,168.6 6,240.3
Liabilities related to assets held for sale (36) - 50.6
Current provisions and liabilities 8,742.7 6,863.6
Total equity, liabilities and provisions 15,255.5 14,155.7
Consolidated Statement of Changes in Equity of TUI AG for the period from 1 Oct 2021 to 30 Sep 2022
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 1,509.4 4,211.0 - 4,683.4 - 1,326.0 - 23.9 - 148.3 12.8 - 6,168.8 - - 448.4 666.5 218.1
1 Oct 2020
Dividends - - - - - - - - - - - 0.1 - 0.1
Share-based
payment - - 0.3 - - - - 0.3 - 0.3 - 0.3
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 loss for - - - 2,467.2 - - - - - 2,467.2 - - 2,467.2 - 13.7 - 2,480.9
the 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 - 0.0 107.3
comprehensive
income
Other
comprehensive - - - 144.8 153.8 - 0.1 107.9 - 116.9 - 116.9 14.6 131.5
income
Total
comprehensive - - - 2,612.0 153.8 - 0.1 107.9 - - 2,350.4 - - 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
Dividends - - - - - - - - - - - 0.9 - 0.9
Coupon on
silent - - - 51.0 - - - - - 51.0 - - 51.0 - - 51.0
participation
Share-based
payment - - - 0.2 - - - - - 0.2 - - 0.2 - - 0.2
schemes
Acquisition of - - 0.6 - - - - - - - - 0.6 - - 0.6
own shares
Capital 685.8 836.9 - - - - - - - 1,522.7 - 1,522.7
increase
Repayment of
silent - - - - - - - - - 671.0 - 671.0 - - 671.0
participation
Group loss for - - - 277.3 - - - - - 277.3 - - 277.3 64.6 - 212.6
the year
Foreign
exchange - - 28.7 121.6 0.1 - 1.5 - 148.9 - 148.9 57.3 206.2
differences
Financial
assets at - - - - - 1.2 - - - 1.2 - - 1.2 - - 1.2
FVTOCI
Cash flow - - - - - 110.7 - 110.7 - 110.7 - 110.7
hedges
Remeasurements
of defined
benefit - - 245.5 - - - - 245.5 - 245.5 - 245.5
obligations
and related
fund assets
Other
comprehensive
income of
investments - - 17.8 - - - - 17.8 - 17.8 - 0.8 17.0
accounted for
using the
equity method
Taxes
attributable
to other - - - 71.8 - - - 28.5 - - 100.3 - - 100.3 - - 100.3
comprehensive
income
Other
comprehensive - - 220.1 121.6 - 1.1 80.7 - 421.3 - 421.3 56.5 477.8
income
Total
comprehensive - - - 57.2 121.6 - 1.1 80.7 - 144.1 - 144.1 121.1 265.1
income
Balance as at 1,785.2 6,085.9 - 7,410.3 - 1,050.4 - 25.2 40.4 12.8 - 8,432.8 420.0 - 141.7 787.3 645.7
30 Sep 2022
Consolidated Cash Flow Statement of TUI AG for the period from 1 Oct 2021 to 30 Sep 2022
EUR million Notes 2022 2021
Group loss - 212.6 - 2,480.9
Depreciation, amortisation and impairment (+) / write-backs (-) 883.5 1,012.4
Other non-cash expenses (+) / income (-) - 110.9 163.0
Interest expenses 492.1 461.6
Dividends from joint ventures and associates 0.2 14.2
Profit (-) / loss (+) from disposals of non-current assets - 37.2 - 204.4
Increase (-) / decrease (+) in inventories - 16.4 16.2
Increase (-) / decrease (+) in receivables and other assets - 692.1 390.8
Increase (+) / decrease (-) in provisions - 117.8 - 137.4
Increase (+) / decrease (-) in liabilities (excl. financial liabilities) 1,889.0 613.2
Cash inflow / cash outflow from operating activities (43) 2,077.8 - 151.3
Payments received from disposals of property, plant and equipment and intangible assets 180.7 357.9
Payments received / made from disposals of consolidated companies (less disposals of cash and 25.2 105.5
cash equivalents due to divestments)
Payments received / made from disposals of other non-current assets 4.3 567.2
Payments made for investments in property, plant and equipment and intangible assets - 515.7 - 299.7
Payments made for investments in consolidated companies (less cash and cash equivalents - - 5.3
received due to acquisitions)
Payments made for investments in other non-current assets - 2.7 - 21.0
Cash inflow / cash outflow from investing activities (44) - 308.2 704.7
Payments received from capital increase by issuing new shares 1,522.7 542.5
Payments received from capital increase through issuance of silent participations - 1,084.4
Payments made for repayment of the silent participation - 671.0 -
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 - 0.6 - 1.7
Coupons of the silent participation (dividends) - 51.0 -
Payments received from the raising of financial liabilities 109.4 855.5
Payments made for redemption of loans and financial liabilities - 1,571.3 - 1,839.2
Payments made for principal of lease liabilities - 583.6 - 587.2
Interest paid - 385.6 - 404.8
Cash inflow / cash outflow from financing activities (45) - 1,630.9 - 233.5
Net change in cash and cash equivalents 138.6 319.8
Development of cash and cash equivalents (46)
Cash and cash equivalents at beginning of period 1,586.1 1,233.1
Change in cash and cash equivalents due to exchange rate fluctuations 12.2 33.2
Net change in cash and cash equivalents 138.6 319.8
Cash and cash equivalents at end of period 1,736.9 1,586.1
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
TUI Group and its major subsidiaries and shareholdings operate
in tourism.
TUI AG, based in Karl-Wiechert-Allee 4, 30625 Hanover, Germany,
is 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 financial year 2022 comprising the period from 1 October 2021
to 30 September 2022. 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 (https://www.tuigroup.com/en-en).
The consolidated financial statements are prepared in euros.
Unless stated otherwise, all amounts are indicated in million euros
(EUR m). 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 12 December 2022.
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 2022 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 2022 are generally consistent with those followed in
preparing the previous consolidated financial statements for
financial year 2021, with the exception of the initial application
of new or amended standards, as outlined below.
Newly applied standards
Since the beginning of financial year 2022, 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 2022
Applicable Impact on
Standard from Amendments financial
statements
The amendments relate to the provision of relief
from potential consequences arising from the reform
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 of interbank offered rates (IBORs) such as LIBOR on
and IFRS 16 1 Jan 2021 companies' financial reporting. They address issues Not
Interest Rate Benchmark Reform (Phase 2) that affect financial reporting when an existing material.
interest rate benchmark is actually replaced by an
alternative interest rate benchmark as a result of
the interest rate benchmark reform.
For more information on the impact of the reform of global
interest rate benchmarks, please refer to the section 'Interest
rate risk' in Note 41.
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 2022, TUI
Group's net debt (financial debt plus lease liabilities less cash
and cash equivalents and less short-term interest-bearing
investments) totalled EUR 3,436.2 m (as at 30 September 2021 EUR
4,954.2 m).
Net debt
EUR million 30 Sep 2022 30 Sep 2021 Var. %
Financial debt 2,051.3 3,320.8 - 38.2
Lease liabilities (IFRS 16) 3,207.5 3,229.4 - 0.7
Cash and cash equivalents 1,736.9 1,583.9 + 9.7
Short-term interest-bearing investments 85.8 12.1 + 609.5
Net debt - 3,436.2 - 4,954.2 + 30.6
The global travel restrictions to contain COVID-19 have had a
continuous negative impact on the Group's earnings and liquidity
development since the end of March 2020. To cover the resulting
liquidity needs, the Group has carried out various financing
measures already in financial years 2020 and 2021, which, in
addition to a capital increase in January 2021, the use of the
banking and capital markets and cash inflows from the sale of
assets, also include financing measures from the Federal Republic
of Germany in the form of a KfW credit line totalling EUR 2.85 bn,
an option bond from the Economic Stabilisation Fund (WSF) totalling
EUR 150 m and two silent participations from the WSF totalling EUR
1.091 bn. In the IFRS consolidated financial statements, the silent
participations are - with the exception of EUR 11.6 m accumulated
interest - reported as equity due to their nature and are therefore
not included in the Group's net debt. The financing measures are
described in detail in the financial statements for the past two
financial years.
With the entry of the new shares in the commercial register on
28 October 2021 and final settlement with the participating banks
on 2 November 2021, TUI AG successfully completed another capital
increase. The gross issue proceeds totalled around EUR 1.1 bn. The
Group's share capital increased nominally by EUR 523.5 m to EUR
1.623 bn.
On 17 May 2022, TUI AG placed 162.3 m new shares with
institutional investors in the framework of a capital increase
against cash contributions without subscription rights for
shareholders by way of an accelerated placement, corresponding to
around 10 % of TUI AG's share capital. The gross proceeds of EUR
425.2 m from the capital increase and available cash were used to
fully repay the German government's silent participation II
(Economic Stabilisation Fund, 'WSF') of EUR 671.0 m in full ahead
of schedule on 30 June 2022. Including the coupons to be shown as
dividends, TUI repaid EUR 725.4 m to the WSF. As soon as the KfW
credit line has been fully repaid and terminated, TUI has to pay
remuneration to the German state for the coupons saved by the early
repayment of silent participation II.
As at 30 September 2022, TUI Group's credit facilities comprised
the following
-- EUR 1.64 bn credit line from 20 private banks (incl. EUR 190
m guarantee line)
-- EUR 2.1 bn KfW credit line
As at 30 September 2022, TUI Group's revolving credit facilities
totalled EUR 3.74 bn, they have a term until summer 2024.
With regard to 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 not exceeding EUR 700 m, for example from capital
measures or disposals of assets or companies, to reduce the
financing granted to TUI AG to bridge the effects of COVID-19. In
accordance with this agreement, TUI AG returned the unused credit
facility of EUR 170 m on 1 April 2022. In addition, the volume of
unused credit commitments under the KfW credit line as at 31 March
2022 was reduced by EUR 413.7 m. Finally, 913 of the 1,500 warrant
bonds issued to WSF were redeemed. A purchase price of EUR 91.3 m
plus accrued interest and early repayment penalties of EUR 7.2 m
was paid for these. By 30 June 2022, the existing and at that date
undrawn KfW credit lines were reduced by a further EUR 336 m to EUR
2.1 bn.
For regulatory reasons due to Brexit, the credit line of a
British bank (around EUR 80 m liquid funds and EUR 25 m guarantee
line) could not be extended beyond summer 2022. It was therefore
repaid or terminated as of 20 July 2022.
After 20 July 2022, 50 % of individual specific cash inflows
exceeding EUR 50 m must be used to reduce the financing granted to
TUI AG to bridge the effects of COVID-19; there is no maximum
limit.
TUI AG's EUR 1.64 bn credit line from private banks and KfW
credit line are subject to compliance with certain financial target
values (covenants) for debt coverage and interest coverage, the
review of which is carried out on the basis of the last four
reported quarters at the end of the financial year or the half-year
of a financial year. Against the backdrop of the ongoing pressures
from the COVID-19 pandemic, the review has only been resumed in
September 2022 and TUI was in full compliance. In addition, higher
limits are to be applied on the first two cut-off dates before
normalised limits have to be complied with from September 2023.
Currently, TUI Group is only marginally effected by the negative
financial impact of the COVID-19 pandemic.
Although the number of COVID-19 cases remained high, contact
restriction measures and travel restrictions were gradually eased
in most countries in the first months of the calendar year and
business was fully resumed in all segments. As of April 2022, the
entire fleet of the Cruises Segment was in operation, and as of
summer 2022, the Hotels & Resorts Segment was able to offer the
entire product portfolio. Demand recovered very robustly, albeit
later than assumed in the previous year's planning due to the
travel restrictions in place at the beginning of the financial
year. In the Cruises segment, the recovery in demand started later
than in the other segments. A more short-term booking behaviour
continues to be observed. The unprecedented restart of business led
to flight disruptions, particularly in the UK and the Netherlands,
but also in other source markets, which impacted the Group's
result. The price increase in the course of the financial year,
especially for fuel, and changes in exchange rates could not be
fully offset by higher travel prices and additionally burdened the
result in the past financial year.
From the Executive Board's perspective, despite the existing
risks, TUI Group currently has and will continue to have sufficient
funds, resulting from both borrowings and operating cash flows, to
meet its payment obligations and to ensure the going concern of the
company accordingly in the foreseeable future. In this context, the
Executive Board assumes that the credit lines expiring in summer
2024 will be refinanced. Therefore, as at 30 September 2022, the
Executive Board does not identify any material uncertainty that may
cast significant doubt on the Group's ability to continue as a
going concern.
In its assessment, the Executive Board assumes that booking
behaviour in the 2023 financial year will largely correspond to the
pre-pandemic level. The Executive Board assumes that travel
behaviour will not be affected by further long-term closures and
lockdowns or by the impact of Russia's war of aggression against
Ukraine.
The Executive Board does not consider the remaining risk with
regard to a further pandemic / war-related change in booking
behaviour to be a threat to the company's existence. Nevertheless,
the TUI Group's performance might be impaired by the following
factors. The intensified general price increase of recent months
could continue, in particular due to rising energy costs, and lead
to a significant reduction in the private budget available for
travel services, thus lowering purchasing power and resulting in
declining customer demand. In addition, a permanent increase in
fuel costs as well as other services, especially those we purchase
in US dollars, could lead to an increase in our input costs.
Further burdens could result from continued or increased flight
disruptions. If these risks were to materialise, compliance with
the financial covenants as at 31 March 2023 and 30 September 2023
could be jeopardised. The Executive Board considers the
simultaneous occurrence of these risks to be very unlikely and
therefore assumes that the financial targets (covenants) will be
met.
In accordance with Regulation 30 of the UK Corporate Governance
Code, the Executive Board confirms that, in its opinion, it is
appropriate to prepare the consolidated 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 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 fair
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 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 %.
Stakes in joint ventures are also measured using the equity
method. A joint venture is a company managed jointly by 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 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, three 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 2022, the consolidated financial statements
included a total of 268 subsidiaries. The table below presents
changes in the number of companies since 1 October 2021.
Development of the group of consolidated companies*
and the Group companies measured at equity
EUR million Consolidated subsidiaries Associates Joint ventures
Number at 30 Sep 2021 270 18 27
Additions 4 - -
Incorporation 4 - -
Disposals 6 1 -
Liquidation 2 1 -
Sale 1 - -
Merger 3 - -
Change in ownership stake - - -
Number at 30 Sep 2022 268 17 27
* Excl. TUI AG.
TUI AG's direct and indirect subsidiaries, associates and joint
ventures are listed under Other Notes - TUI Group
Shareholdings.
31 subsidiaries were not included in the consolidated financial
statements. Even when taken together, these companies are of minor
significance to the presentation of a true and fair view of the
financial position and performance of the Group.
Acquisitions - Divestments
Acquisitions of the current financial year
In financial year 2022, no companies were acquired. No
acquisitions were made after the balance sheet date.
Acquisitions of the prior financial year
In financial year 2021, no companies were acquired under IFRS
3.
Divestments
On 16 July 2021, a contract was signed with Grupotel dos S. A.,
a joint venture of TUI Group, to sell Nordotel S. A., a fully
consolidated entity within the Hotels & Resorts segment.
Accordingly, the assets and liabilities of the disposal group were
classified as 'held for sale' in August 2021. 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.
Additional deferred purchase price payments of EUR 10.2 m and EUR
20.4 m were originally due one and two years, respectively, after
the closing of the transaction, taking account of final purchase
price adjustments. The final purchase price adjustment was already
performed in September 2022. It resulted in an effect of EUR - 0.7
m. TUI Group also granted a discount of EUR - 2.0 m for the
provisional payment of the two outstanding purchase price payments.
The payment totalling EUR 27.9 m was made on 28 September 2022.
Including foreign exchange effects, the sale of the stake results
in a gain of EUR 19.3 m, carried in Other income.
Condensed balance sheet of Nordotel S. A. divestment as at 5 Oct 2021
EUR million
Assets
Property, plant and equipment and intangible assets 65.7
Other non-current assets 26.8
Trade receivables 21.2
Other current assets 0.7
Cash and cash equivalents 2.2
116.6
Provisions and liabilities
Trade payables 21.2
Touristic advance payments received 4.9
Other current liabilities 31.4
57.5
No divestments took place after the balance sheet date.
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.
Some TUI Group subsidiaries operate their business in a country
that developed into a hyperinflationary economy in the period under
review (previous year no Group companies in hyperinflationary
economies). As the Euro is the functional currency for these
companies, accounting in accordance with IAS 29, Financial
Reporting in Hyperinflationary Economies, is not required.
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 2022, 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 2022 30 Sep 2021 2022 2021
Sterling 0.88 0.86 0.85 0.87
US dollar 0.98 1.16 1.09 1.20
Swiss franc 0.96 1.08 1.02 1.09
Swedish krona 10.95 10.22 10.43 10.18
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. 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 are 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, 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).
TUI has to pay compensation to customers for flight delays or
cancellations (so-called denied boarding compensation). These
payments are directly related to the obligation of the flight
service. Therefore these payments represent variable considerations
under IFRS 15. Hence, 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 changes in our strategy and delays in the digital
transformation, the useful lives of certain software solutions were
extended by two to three years. For further information, please
refer 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. 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
TUI recognises right-of-use assets and corresponding lease
liabilities for the lease arrangements, in which it is the lessee,
in the statement of financial position. As an exception, 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.
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.
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 and not by reference to the underlying
lease asset.
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 own equity instruments for one of the two contracting parties
and correspondingly to an inflow or outflow of financial assets for
the other contracting party. They also comprise (derivative) rights
or obligations derived in particular, from non-derivative financial
assets.
Non-derivative financial assets and financial liabilities
The classification and measurement of financial assets are
determined on the basis of the business model assigned 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)'.
Non-derivative financial assets are initially recognized with
their values at the trading date on which TUI Group under-takes to
buy the assets. When recognised for the first time, they are either
classified at amortised costs or at fair value, depending on their
objective. Non-derivative 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
contractually agreed cash flows, and when the cash flows
exclusively constitute interest and principal payments on the
nominal amount outstanding.
For 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 or if
the financial instruments are trade receivables, lease liabilities
or contract assets. 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 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 fluctuations in the fair value
in the income statement would not be in line with the Group's
strategy. They are allocated to 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 subsequent measurement of
the equity instruments recognised in other comprehensive income
will continue to be recognised in equity even after the equity
instrument has been derecognised and 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 and loss.
Financial assets are derecognised at the date on which the
rights for payments from the assets expire or are transferred and
therefore 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 the derecognition requirements
of IFRS 9.
Non-derivative 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. A non-derivative financial liability is
initially recognized at its fair value. For loans taken out, the
nominal amount is reduced by discounts retained and transaction
costs paid and discounted over the expected remaining term of the
liability. The subsequent measurement of non-derivative financial
liabilities is effected at amortised cost using the effective
interest method. TUI does not use the fair value option.
Financial liabilities are derecognised when the obligations
specified in the contract are discharged, cancelled or expire.
All foreign exchange differences resulting from the translation
of trade accounts payable are reported as a correction to the cost
of sales. Foreign exchange differences from the translation of
liabilities not resulting from normal operating processes are
reported under Other income / expenses, Financial expenses / income
or administrative expenses, depending on the nature of the
underlying receivables or payables.
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 hedge accounting
At initial measurement, derivative financial instruments are
measured at the fair value attributable to them on the date the
contract is entered into and recognised in the balance sheet.
Subsequent remeasurement is also recognised at the fair value
calculated at the respective balance sheet date. Where derivative
financial instruments are not part of a designated hedging
relationship 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. The unrealised gains and
losses from the fair value valuation of derivative financial
instruments that are designated as hedging instruments within hedge
accounting are initially recognised in equity without affecting
profit or loss. In the case of derivative financial instruments
that are not part of a hedging relationship, the effect on profit
or loss is immediate, i. e. the changes from the fair valuation are
recognised through profit and loss.
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 due to foreign currency and fuel price
fluctuations in cash flows from highly probable forecast
transactions (cash flow hedges). Hedges of balance sheet items
(fair value hedges), i. e. hedges of the fair value of an asset or
a liability, which would be accounted for at amortised cost, are
currently not designated.
Upon entering into a transaction, TUI 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 by the using Critical Terms Match method and on
a continual qualitative 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
without affecting profit and loss. 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 or the
hedge has an effect on results or it is no longer highly expected
that the hedged item or a corresponding part thereof will
occur.
If a hedge expires, 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
attributable 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 recognised 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 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 costs 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, assumptions and
estimates. 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 control over an investee and
therefore consolidates this investment
-- 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 TUI Group are mainly
related to the following balance sheet-related facts and
circumstances:
-- Determination of assumptions for use in impairment tests, in
particular for goodwill and property, plantand equipment
-- Effect of climate-related risks on the measurement of
assets
-- 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 significant integration
service
-- Determination of period-related revenue recognition on a
straight-line basis over the duration of thetrip
-- Determination of the ECL of financial instruments
Determining assumptions for use in impairment tests, in
particular for goodwill and property, plant and equipment
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 heavily influenced by
assumptions and estimates and are associated with uncertainties, in
particular due to the strong general increase in prices and
interest rates, which could lead to a decline in demand for tourism
products, due to long-lasting price increases for fuel and other
input factors and as a result of climate related risks.
While TUI's Winter 2021 / 22 business was still adversely
affected by travel restrictions in response to the COVID-19
pandemic, all segments fully resumed their operations after these
restrictions were gradually lifted. From April 2022, the Cruises
segment again operated its entire fleet. From Summer 2022, Hotels
& Resorts offered their entire product portfolio. Demand showed
a very robust recovery, which, however started later than assumed
in the prior year's planning due to the travel restrictions in
place at the beginning of the financial year. In the Cruises
segment, demand recovered later than in other segments. A
shorter-term booking pattern continues to be observed. The
unprecedented restart of business operations resulted in business
disruptions in aviation, in particular in the UK and the
Netherlands, but also in other source markets, causing an adverse
impact on Group earnings. The price increases recorded in the
course of the financial year under review, in particular for fuels,
and the fluctuations in exchange rates were not fully offset by
higher travel prices and placed an additional burden on earnings in
the completed financial year. For financial year 2023, it is
expected that travel restrictions will no longer have a material
impact on TUI's business and that TUI's business will return to
2019 levels. However, in financial year 2023, fuel costs are
expected to remain high as well as energy and food prices. The
cost-saving initiatives already implemented, especially in Markets
& Airlines and the segment Musement, will have a positive
effect. For the subsequent financial years 2024 and 2025, the
cost-saving initiatives already implemented, the further
digitalisation of our business and the expansion of existing and
new business areas are expected to take largely effect. These
factors together will lead to customer volumes which will
expectedly exceed 2019 levels. Fuel prices are expected to decline
in those years though remain at higher levels. Below we describe
the key assumptions underlying medium-term business planning in the
segments.
In its business plan, Hotels & Resorts expects to improve
performance versus 2022, in particular as travel restrictions are
no longer expected. This development is expected to benefit from
TUI's high level of direct distribution, enabling the segment to
steer customers to its own hotels. In the medium term, the segment
is expected to deliver further earnings growth due to capacity
expansion, demand growth and increases in average selling
prices.
In the Cruises segment, Marella and TUI Cruises are expected to
operate their entire fleets and achieve occupancy rates close to
2019 levels in financial year 2023. However, earnings will be
adversely impacted by increased prices for bunker oil in 2023.
Post-2023, prices for bunker oil are expected to decline, initially
to levels 23 % and then to 16.5 % above the assumed price levels
for fuel of prior year's planning. In Summer 2023, Marella will
already be expanding its fleet by an additional cruise ship. TUI
Cruises will transfer that vessel in Summer 2023 and expand its
fleet to eight ships (excluding the Hapag Lloyd Kreuzfahrten brand)
in the following years to 2025. The fleet expansion and the
associated assumptions about occupancy rates are subject to
elevated uncertainty.
The future development of TUI Musement depends in part on the
development of customer numbers in Markets & Airlines. TUI
Musement will also generate growth through the sale of tours,
activities and tickets due to the expansion of its own / direct
distribution via the internet and the app.
In Markets & Airlines, financial year 2023 is expected to
see a return of customer numbers to 2019 levels, partly driven by
market consolidation. The implemented cost-savings initiatives will
cushion the adverse earnings impact from higher fuel prices and
other higher costs. The operational flight disruption encountered
in financial year 2022 is not expected to recur in 2023 to that
extent, partly due to measures initiated by TUI itself, partly
because airports will adjust their capacity to higher load factors.
Wider use of online distribution, the provision of dynamic
production capacities for flights and accommodation and the
investments in digitalisation are expected to take effect in
financial years 2024 and 2025. Moreover, kerosene prices are
expected to decline initially to 49.6 % and then 41.0 % above the
assumed price niveau of prior year's planning. These planning
assumptions are subject to elevated uncertainty.
Other key factors are the weighted average cost of capital after
income taxes (WACC), on which discounting is based, the sustainable
growth rate 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. The increase in the general
interest rate level in financial year 2022 also resulted in an
increase in WACC as at 30 September 2022.
The weighted average cost of capital after income taxes (WACC),
on which discounting is based, was derived from external capital
market information about comparable companies. The cost of capital
to Markets & Airlines was increased by an additional risk
premium of 1.9 % (previous year 3.4 %). This additional risk
premium was based on an analysis of internal and external market
expectations and reflects the elevated uncertainty with regard to
medium- and long-term market developments as well as existing risks
regarding a general price inflation which could lead to a decline
in demand for tourism products and increased prices for fuel and
other input factors. Additional country-specific risk premiums are
included, in particular, in the measurement of individual hotels.
On the determination of WACC we refer to the section Goodwill.
The increased discount factor and the general price inflation,
in particular, triggered the implementation of a risk assessment
for the Group's assets in the light of indications suggesting
impairments as at 30 September 2022. Where an increased risk was
identified for a cash-generating unit, its assets were tested for
impairment. Moreover, where additional indications such as planned
closures, divestments or restructurings were observed, the assets
were also tested for impairment. All previously impaired assets
were tested for reversals of impairments and all goodwills were
tested for impairments.
Finally we have implemented sensitivity analyses to estimate the
uncertainty associated with the assumptions on which the impairment
tests are based. The sensitivities and their impact on the fair
value result exclusively from the adjustment of individual
parameters. Possible compensatory measures were not taken into
account. Sensitivities have been calculated for changes of the WACC
and the sustainable growth in perpetuity. In addition, sensitivity
analyses have been carried out for a general increase or decrease
of future cash flows, a long-lasting increase or decrease of prices
for fuel, risks or chances related to demand and fuel prices in the
financial year 2023 and for material climate related risks. For
further details we refer to the section 'Goodwill'.
Effect of climate-related risks on the measurement of assets
Climate-related risks can 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. TUI
addresses risks from natural disasters, e. g. hurricanes, by taking
out insurance policies. In addition TUI has well-established crisis
management procedures in place which are focused on the welfare of
the customers in such situations. The related expenses are included
in the business plans. In total the aforementioned physical risks
do not have a material financial impact. Accordingly these risks
are not comprised in the sensitivity analysis described in the
section 'Goodwill'.
Climate-related risks with an impact on the recoverability of
assets can additionally occur if the demand for the services of TUI
declines because they do not meet the standards in relation to
emissions and adaptation to climate change. TUI counteracts these
risks with its strategy to reduce climate-damaging emissions and
increasing the sustainability of our services. These so called
transitional risks are subsumed under SBTi risks.
Moreover, the future cash inflows used in impairment tests for
individual assets may also be affected by higher future expenses
due to regulatory or voluntary measures to reduce climate-damaging
emissions. In 2022, TUI joined the Science Based Target intitiative
(SBTi), committing to implement emission reductions until 2030.
Detailed emission reduction roadmaps have been developed for TUI's
airlines, cruises and hotels which represent 99 % of the Groups's
own emissions. The estimates of the impact on future cash inflows
from these roadmaps are subject to substantial uncertainty. This
uncertainty is especially related to changes in the regulatory
framework, the development of new technologies and changes in
customer behaviour. The impact is different between the segments.
The following SBTi risks are taken into account in the sensitivity
analysis in the section 'Goodwill'.
In Markets & Airlines, these risks primarily concern the
airlines. They will be impacted by higher aircraft fuel taxes,
emissions trading and the consumption of low-carbon aviation fuel.
These expenses will partially be offset by cost savings from
reduced aviation fuel consumption and lower costs of emissions
trading in the wake of an increasing use of low-carbon aviation
fuels. Overall we expect an increase of the flight expenses. Given
the comparable young and efficient fleet of TUI we expect that we
will occur less additional costs than other airlines. Therefore it
is our assumption that these increases are in a range that made it
possible to cover them by corresponding price increases. However,
at the current point in time, the future regulatory framework for
aircraft fuel tax and emissions trading is not yet known and there
is as yet insufficient production capacity for low-carbon aviation
fuel. In addition the willingness to pay of our customers might not
be sufficient to cover the cost increases. The estimates are
therefore subject to elevated uncertainty.
TUI assumes that expenses from measures to reduce
climate-damaging emissions in the Hotels & Resorts segment will
relate in particular to efforts to reduce energy consumption, to
establish own energy generation units, e. g. through the use of
solar installations, and to purchase energy which has been produced
without climate-damaging emissions. Estimates show that
energy-saving measures as well as the Group's own generation of
energy may lead to savings that exceed the initial expenses.
In the Cruises segment, the measures to reduce climate-damaging
emissions include investments, leading, for instance, to a more
efficient use of the ships and the installation of shore power
connections. These investments are already included in planned
capital expenditure. However, in the Cruises segment, too, a big
proportion of future expenses will relate to the use of low-carbon
fuels, bunker oil taxes and emissions trading. As in Markets &
Airlines, the estimates of these expenses and the willingness to
pay of our customers are subject to substantial uncertainty.
Overall, TUI does not consider climate-related risks as a
triggering event to test assets for impairment as at 30 September
2022. However, we have implemented sensitivity analyses for all
relevant cash generating units to estimate the uncertainty
associated with the assumptions, presented in the section
'Goodwill.' The sensitivity analyses for these SBTi risks are
calculated for an increase or decrease of the expenses related to
the reduction of climate-damaging emissions until 2030 without
taking into account a compensation by changes of the travel
prices.
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
and estimates are the determination of useful lives and residual
carrying amounts of property, plant and equipment. The carrying
amount of property, plant and equipment as at 30 September 2022
totals EUR 3,400.9 m (previous year EUR 3,159.3 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 2022, the carrying amount of provisions for
pensions and similar obligations totals EUR 601.3 m (previous year
EUR 935.1 m). For those pension plans where the plan assets exceed
the obligation, other non-financial assets amounting to EUR 163.4 m
are shown as at 30 September 2022 (previous year EUR 137.1 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 2,076.4 m (previous year EUR 3,172.1 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 in
Note 30.
Other provisions
As at 30 September 2022, other provisions amount to EUR 1,296.0
m (previous year EUR 1,303.1 m). When recognising and measuring
provisions, assumptions to a considerable content 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 provisions
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 2022, lease liabilities worth EUR 3,207.5 m
(previous year EUR 3,229.4 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 2022, deferred tax assets totalling EUR 222.0
m (previous year EUR 291.1 m) were recognised. Prior to offsetting
against deferred tax liabilities, deferred tax assets total EUR
608.5 m, including an amount of EUR 194.4 m (previous year EUR
147.3 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 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
As at 30 September 2022, the carrying amount of touristic
prepayments totals EUR 757.6 m (previous year EUR 616.2 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.
Segment Reporting
Notes to 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 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 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.
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, underlying EBIT is the segment performance indicator
within the meaning of IFRS 8.
We define the EBIT in underlying EBIT as earnings before
interest, income taxes and result of the measurement of the Group's
interest hedges. 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 financial year 2022, net expenses totalling EUR 58.7 m were
adjusted as separately disclosed items.
The adjusted separately disclosed items for financial year 2022
include restructuring expenses of EUR 94 m in the Hotels &
Resorts (EUR 37 m), Central Region (EUR 21 m), Northern Region (EUR
19 m), TUI Musement (EUR 9 m), All Other Segments (EUR 14 m) and
Western Region (EUR 3 m) segments. Restructuring expenses also
include income of EUR 9 m from the reversal of restructuring
provisions no longer required in Western Region. In addition,
income of EUR 19 m from the sale of the shares in Nordotel S.A,
fully consolidated in the Hotels & Resorts segment, to Grupotel
dos S. A., a joint venture of the TUI Group, income of EUR 16 m
from the subsequent purchase price adjustment of the disposal of
our 49 % stake in the Riu Hotels S. A. joint venture to a company
of the Riu Group in the previous year was adjusted.
In financial year 2021, net income totalling EUR 95.9 m was
adjusted as separately disclosed items.
Separately disclosed items in the 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 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.
The adjusted expenses of EUR 30.1 m (previous year EUR 33.2 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 determining 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 and write-backs relate to non-current assets by
region.
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
2022 2021
EUR million External Group Total External Group Total
Hotels & Resorts 806.2 693.4 1,499.6 440.5 226.2 666.7
Cruises 331.5 - 331.5 27.0 - 27.0
TUI Musement 517.2 288.5 805.7 116.7 61.6 178.3
Consolidation - - 3.5 - 3.5 - - 4.1 - 4.1
Holiday Experiences 1,654.9 978.4 2,633.3 584.1 283.8 867.9
Northern Region 6,320.2 327.8 6,648.0 807.7 273.8 1,081.5
Central Region 5,773.5 83.7 5,857.2 2,322.9 84.0 2,406.9
Western Region 2,712.6 146.2 2,858.8 976.1 130.7 1,106.8
Consolidation - - 538.1 - 538.1 - - 484.9 - 484.9
Markets & Airlines 14,806.3 19.6 14,825.9 4,106.7 3.6 4,110.3
All other segments 83.8 5.6 89.4 40.8 4.4 45.2
Consolidation - - 1,003.7 - 1,003.7 - - 291.8 - 291.8
Total 16,544.9 - 16,544.9 4,731.6 - 4,731.6
Underlying EBIT by segment
EUR million 2022 2021
Hotels & Resorts 480.6 - 152.7
Cruises 0.8 - 277.5
TUI Musement 23.2 - 105.3
Holiday Experiences 504.6 - 535.4
Northern Region - 101.6 - 965.8
Central Region 87.8 - 328.6
Western Region - 31.5 - 176.6
Markets & Airlines - 45.3 - 1,470.9
All other segments - 50.5 - 69.1
Total 408.7 - 2,075.5
Reconciliation to underlying EBIT of TUI Group
EUR million 2022 2021
Earnings before income taxes - 145.9 - 2,461.7
plus: Net interest expense (excluding expense / income from measurement 478.9 439.1
of interest hedges)
less / plus: Expense (income) from measurement of interest hedges - 13.0 9.8
EBIT 320.0 - 2,012.8
Adjustments:
less / plus: Separately disclosed items 58.7 - 95.9
plus: Expense from purchase price allocation 30.1 33.2
Underlying EBIT 408.7 - 2,075.5
Other segmental information
Thereof
Thereof amortisation
impairment of Thereof reversal of /
Amortisation (+), depreciation (+), intangible impairment losses on depreciation Share of
impairment (+) and write-backs (-) assets and intangible assets and of intangible result of
of other intangible assets, property, property, plant, assets and joint ventures
property, plant and equipment, plant, equipment and property, and associates
right-of-use assets and investments equipment and right-of-use assets plant,
right-of-use equipment and
assets right-of-use
assets
EUR million 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Hotels & 206.8 217.8 60.8 56.6 30.7 30.9 176.7 192.3 94.0 - 44.6
Resorts
Cruises 54.6 63.4 - - 15.2 - 69.8 63.4 41.4 - 146.7
TUI Musement 32.6 32.9 1.2 0.2 - 0.1 31.3 32.9 7.5 - 5.6
Holiday 294.0 314.1 62.0 56.7 45.9 31.0 277.8 288.5 142.9 - 196.9
Experiences
Northern 328.1 363.6 4.1 37.5 3.6 2.5 327.6 328.5 - 46.2 - 38.2
Region
Central 104.9 133.4 0.8 6.4 0.8 - 104.8 127.2 3.8 2.3
Region
Western 144.6 158.9 - 18.4 - 3.5 144.6 143.9 - -
Region
Markets & 577.6 655.9 4.9 62.3 4.4 6.0 577.1 599.6 - 42.3 - 35.9
Airlines
All other 11.8 42.4 6.9 36.4 0.1 - 5.0 5.9 0.2 0.1
segments
Total 883.4 1,012.4 73.9 155.5 50.4 37.0 859.8 894.1 100.7 - 232.7
Key figures by region
External revenue Non-current assets
by customer locations
EUR million 2022 2021 2022 2021
Germany 4,555.2 1,741.5 257.8 307.4
United Kingdom 6,103.1 768.5 3,829.3 3,656.2
Spain 145.5 87.4 551.4 589.9
Other Europe 5,357.9 1,926.3 483.7 533.9
North and South America 293.7 144.6 728.4 553.0
Rest of the world 89.6 63.3 1,196.1 1,197.4
Total 16,545.0 4,731.6 7,046.7 6,837.8
Notes to the Consolidated Income Statement
As a result of the easing of global travel restrictions, TUI
Group was able to increase its business volume compared with
financial year 2021. Nevertheless, the development of revenue and
earnings in particular in the first half of financial year 2022
continued to be significantly impacted by the measures to contain
the spread of COVID-19. TUI Group's results generally also reflect
the significant seasonal swing in tourism between the winter and
summer travel months, however the impact is less evident especially
in the previous year period 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 financial year
2022, consolidated revenue increased by 249.7 % year-on-year from
EUR 4.7 bn to EUR 16.5 bn. This reflects a normalisation of the
business environment in tourism to an approximate pre-pandemic
level in the course of the financial year.
External revenue allocated by destinations for the period from 1 Oct 2021 to 30 Sep 2022
Spain Other Caribbean, North Rest of Africa, 2022
EUR million (incl. European Mexico, Africa & Ind. Ocean, Other Revenues from Other 2022
Canary destinations USA & Turkey Asia countries contracts with Total
Islands) Canada customers
Hotels & 292.0 85.8 216.1 74.7 137.6 - 806.2 - 806.2
Resorts
Cruises 158.2 124.8 48.3 - - 0.1 331.4 - 331.5
TUI Musement 97.7 191.4 123.8 32.1 34.1 38.2 517.3 - 517.2
Holiday 547.9 402.0 388.2 106.8 171.7 38.3 1,654.9 - 1,654.9
experiences
Northern 1,955.3 1,986.4 1,202.6 816.7 333.1 20.8 6,314.9 5.3 6,320.2
Region
Central 1,646.4 1,987.2 300.2 1,271.1 565.6 2.5 5,773.0 0.5 5,773.5
Region
Western 868.7 832.5 474.5 390.8 138.8 6.0 2,711.3 1.3 2,712.6
Region
Markets & 4,470.4 4,806.1 1,977.3 2,478.6 1,037.5 29.3 14,799.2 7.1 14,806.3
Airlines
All other 2.1 21.4 10.3 5.0 34.5 10.4 83.7 - 83.7
segments
Total 5,020.4 5,229.5 2,375.8 2,590.4 1,243.7 78.0 16,537.8 7.1 16,544.9
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
Future revenue from performance obligations not yet delivered as
at 30 September 2022 totals EUR 1,502.1 m (previous year EUR
2,192.4 m), including an amount of EUR 1,340.6 m (previous year EUR
2,006.6 m) to be recognised within the next twelve months. The
remaining revenue will mostly be recognised in the following twelve
months.
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 increased business volume, the cost of sales
increased by 162.2 % from EUR 6.0 bn to EUR 15.6 bn in financial
year 2022.
The cost of sales in financial year 2022 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 2022 2021
Cost of Sales 58.0 158.8
Administrative expenses 35.5 62.7
Total 93.5 221.5
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. 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 as part of the meaures to curtail
COVID-19. Especially subsidiaries of the Northern, Western and
Central Region segments used these programmes following the
introduction of travel restrictions in financial years 2020 and
2021 and in Winter 2022. 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. In the wake of the
lifting of travel restrictions and the resumption of business
operations, these measures have been decreasingly used or they have
been terminated. Accordingly, the government grants declined
year-on-year.
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 ESF. 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 2022 2021
Staff cost 544.7 542.1
Rental and leasing expenses 11.0 14.3
Depreciation, amortisation and impairment 73.6 131.9
Others 116.9 152.2
Total 746.3 840.5
The cost of sales and administrative expenses include the
following expenses for personnel and depreciation / amortisation /
impairment:
Staff costs
EUR million 2022 2021
Wages and salaries 1,732.3 1,393.1
Social security contributions 300.4 193.7
Pension costs 109.2 119.3
Total 2,141.9 1,706.1
Pension costs include service cost for defined benefit
obligations and contributions to defined contribution pension
schemes.
In the period under review, TUI Group's personnel expenses rose
from EUR 1.7 bn in the prior year to EUR 2.1 bn. The year-on-year
increase in wages and salaries and social security contributions in
financial year 2022 resulted in particular from a 24.0 % increase
in the average number of employees across the Group. In addition,
the use of short-time working and other government programmes to
secure jobs was significantly lower than in the previous year.
The average annual headcount (excluding trainees) evolved as
follows:
Average annual headcount in the financial year (excl. trainees)
2022 2021
Hotels & Resorts 21,766 14,546
Cruises 63 58
TUI Musement 6,695 4,277
Holiday Experiences 28,524 18,881
Northern Region 9,722 8,952
Central Region 6,919 7,537
Western Region 4,867 4,572
Markets & Airlines 21,508 21,061
All other segments 2,332 2,274
Total 52,364 42,216
Depreciation / amortisation / impairment
EUR million 2022 2021
Depreciation and amortisation of other intangible assets, property, plant and 859.8 894.1
equipment and right-of-use assets
Impairment of other intangible assets, property, plant and equipment and 73.9 155.5
right-of-use assets
Total 933.7 1,049.6
Impairment losses of EUR 73.6 m (previous year EUR 111.3 m) are
presented within cost of sales and EUR 0.3 m (previous year EUR
44.2 m) in administrative expenses.
Impairments losses of EUR 57.2 m (previous year EUR 50.7 m)
relate to property, plant and equipment. Additionally EUR 8.8 m
(previous year EUR 72.4 m) correspond to right-of-use assets and
EUR 7.9 m (previous year EUR 32.4 m) to other intangible
assets.
In financial year 2022, reversals of impairment losses of EUR
50.4 m (previous year EUR 37.0 m) were recognized, of which EUR
49.6 m (previous year EUR 37.0 m) were recorded in cost of sales
and EUR 0.8 m (previous year EUR 0.0 m) in administrative
expenses.
For details of the impairment losses and reversals of impairment
losses effected in financial year 2022, please refer to the
respective sections in the Notes to the consolidated statement of
financial position. A breakdown of impairments and reversals of
impairments is presented in Segment Reporting.
(3) Other income and other expenses
In financial year 2022 other income reflects mainly EUR 19.3 m
from the disposal of Nordotel S. A. in October 2022 and subsequent
income of EUR 13.4 m relating to the disposal of RUI Hotels S. A.
in the prior financial year. In the prior year, this item had
primarily included the gain on disposal of Riu Hotels S. A. of EUR
196.8 m.
In financial year 2022, other expenses result in particular from
the disposal of aircraft assets. In the previous year, losses from
the disposal of aircraft assets and the result from the sale of TUI
Group companies were presented in other expenses.
(4) Financial income
Financial income
EUR million 2022 2021
Bank interest income 4.7 0.8
Other interest and similar income 20.2 10.8
Income from the measurement of hedges 1.4 1.1
Interest income 26.3 12.7
Income from investments 0.3 -
Foreign exchange gains 9.3 14.6
Total 35.9 27.3
The increase in financial income of EUR 8.6 m in financial year
2022 mainly results from higher interest income of EUR 13.6 m. This
increase in this income was partly compensated by decreased income
from exchange rate changes on lease liabilities in accordance with
IFRS 16.
(5) Financial expenses
Financial expenses
EUR million 2022 2021
Bank interest payable on loans and overdrafts 15.2 14.8
Interest expenses on lease liabilities 159.3 153.3
Net interest expenses from defined benefit pension plans 6.6 0.9
Unwinding of discount on provisions 10.1 - 0.7
Other interest and similar expenses 293.1 282.5
Expenses relating to the measurement of hedges 7.8 10.9
Interest expenses 492.1 461.7
Expenses relating to the measurement of other financial instruments 0.1 -
Foreign exchange losses 17.3 2.4
Total 509.5 464.1
In the period under review financial expenses increased by EUR
45.4 m. This increase mainly results from higher interest expenses,
in particular, due to lease liabilities and defined benefit pension
plans as well as the unwinding of discount on provisions. Expenses
from exchange rate changes in lease liabilities in accordance with
IFRS 16 increased as well.
(6) Share of result of joint ventures and associates
The share of result of joint ventures and associates of EUR
100.7 m (previous year EUR - 232.7 m) comprises the net result for
the year attributable to the associated companies and joint
ventures.
Joint ventures and associates were tested for impairment as at
30 September 2022. This resulted in impairments of EUR 4.8 m
(previous year EUR 5.0 m) and reversals of EUR 3.4 m (previous year
EUR 0.0 m) in the Hotels & Resorts segment and EUR 0.4 m
impairments (previous year EUR 0.1 m) and EUR 0.2 m reversals
(previous year EUR 0.1 m) in the Central Region 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 2022 2021
Current tax (expense [+] / income [-])
in Germany - 15.7 - 6.5
abroad 127.5 3.4
Deferred tax (expense [+] / income [-]) - 45.1 22.3
Total 66.7 19.2
In financial year 2022, 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 4.8 m
(previous year EUR 2.0 m) were reversed. In financial year 2022,
the tax expense from actual taxes attributable to prior periods
totalled EUR 42.4 m (previous year EUR 18.2 m).
In the financial year deferred tax expenses include deferred tax
income from the reassessment of tax loss carryforwards in Germany
of EUR 61.4 m (previous year tax expense EUR 39.7 m).
In financial year 2022, tax expense totalled EUR 66.7 m
(previous year EUR 19.2 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 2022 2021
Earnings before income taxes - 145.9 - 2,461.7
Expected income tax (current year 31.5 %, previous year 31.5 %) - 46.0 - 775.4
Effect from the difference of the actual tax rates to the expected tax rates 35.4 196.0
Changes in tax rates and tax law 23.0 75.1
Income not taxable - 61.8 - 82.9
Expenses not deductible 30.5 177.1
Effects from loss carryforwards 89.5 483.2
Temporary differences for which no deferred taxes were recognised - 15.0 - 25.5
Deferred and current income tax relating to other periods (net) 31.8 - 34.5
Other differences (expense [+] / income [-]) - 20.7 6.1
Income taxes 66.7 19.2
(8) Group loss attributable to shareholders of TUI AG
In financial year 2022, the share in Group loss attributable to
TUI AG shareholders decreased from EUR - 2,467.2 m in the prior
year to EUR - 277.3 m.
(9) Group profit / loss attributable to non-controlling
interest
In the Hotels & Resorts segment, the Group profit
attributable to non-controlling interest primarily relates to the
RIUSA II Group with EUR 64.2 m (previous year Group loss EUR 10.6
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 (1,099,393,634 shares) and the share capital
increases in October and May in total of 685,812,219 new shares
issued on a pro rata basis (535,425,497 new shares).
Earnings per share
2022 2021
Group loss / profit for the year attributable to shareholders of TUI AGEUR million - 277.3 - 2,467.2
Weighted average number of shares 1,634,819,131 954,369,613
Basic earnings per shareEUR - 0.17 - 2.58
Diluted Earnings per share
2022 2021
Group loss / profit for the year attributable to shareholders of TUI AGEUR million - 277.3 - 2,467.2
Weighted average number of shares 1,634,819,131 954,369,613
Weighted average number of shares (diluted) 1,634,819,131 954,369,613
Diluted earnings per shareEUR - 0.17 - 2.58
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 150.0 m primary. Following the
capital reduction in financial year 2021, the option price
decreased accordingly from EUR 2.56 to EUR 1.00 per share. The
number of potential shares continues to amount to 58.7 m.
In January 2021 a conditional capital of EUR 420.0 m was
approved to grant ESF the right to exchange all or part of ESF's
asset contribution in the form of a silent partnership of EUR 420.0
m at any time for up to 420.0 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 a present conversion price of EUR 4.58 per
share, the number of potential shares is 128.7 m.
In total the potential shares amount to 607.4 m.
(11) Taxes attributable to other comprehensive income
Tax effects relating to other comprehensive income
2022 2021
EUR million Gross Tax Net Gross Tax Net
effect effect
Foreign exchange differences 206.1 - 206.1 119.9 - 119.9
Cash flow hedges 110.7 - 28.5 82.2 144.0 - 32.1 111.9
Remeasurements of benefit
obligations and related fund 245.5 - 71.8 173.7 - 257.5 139.3 - 118.2
assets
Changes in the measurement
of companies measured at 17.0 - 17.0 17.9 - 17.9
equity outside profit or loss
Fair value gain / loss on investments in equity instruments - 1.2 - - 1.2 - 0.1 - - 0.1
designated as at FVTOCI
Other comprehensive income 578.1 - 100.3 477.8 24.3 107.2 131.5
In the period under review corporate income taxes in the amount
of EUR - 1.0 m were recognised directly in equity (previous year
EUR - 1.3 m). Deferred income taxes recognised directly in equity
were not generated, as in the prior year.
Notes to the Consolidated Statement of Financial Position
(12) Goodwill
Goodwill
EUR million 2022 2021
Historical cost
Balance as at 1 Oct 3,469.5 3,404.7
Exchange differences - 24.6 86.8
Reclassification as assets held for sale - - 22.0
Balance as at 30 Sep 3,444.9 3,469.5
Impairment
Balance as at 1 Oct - 476.4 - 490.2
Exchange differences 2.1 - 8.2
Reclassification as assets held for sale - 22.0
Balance as at 30 Sep - 474.3 - 476.4
Carrying amounts as at 30 Sep 2,970.6 2,993.1
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 2022, a reduction
in the carrying amount of goodwill of EUR 22.5 m (previous year
increase of EUR 78.6 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 2022 30 Sep 2021
Northern Region 1,204.7 1,224.6
Central Region 502.5 501.7
Western Region 412.3 412.3
Riu 343.1 343.1
Marella Cruises 288.8 295.2
TUI Musement 171.4 170.3
Other 47.8 45.9
Total 2,970.6 2,993.1
As at 30 September 2022, an impairment test of capitalised
goodwill was performed at the level of cash-generating units. No
impairments 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 2022.
Budgeted revenues and EBIT margins are based on expectations with
regard to the future business performance. We refer to the section
'Key judgements, 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.
The table below provides an overview of the parameters versus
the previous financial year, underlying the determination of the
fair values per CGU. Due to a growth phase in the first three
planning years, the planning period for TUI Musement was extended
to five years in order to represent a normalised business. At
Marella Cruises, the higher growth rate in revenues in the previous
financial year is mainly due to an expected addition of a new ship
in the planning year 2024. As in the previous year, the EBIT margin
has been adjusted for deductions of centrally incurred costs The
table lists the CGUs to which goodwill has been allocated:
Parameters for calculation of the recoverable amount at 30 September 2022
Planning Growth EBIT Sustainable Carrying Recoverable
period in rate margin 3 growth rate 4 in WACC Level amount in EUR amount in EUR
years revenues 2 in % p. a. % in % million million
in % p. a.
Northern 3.00 8.7 2.8 0.5 11.75 3 1,099.5 2,787.8
Region
Central 3.00 4.1 2.5 0.5 11.75 3 - 134.2 1,133.5
Region
Western 3.00 4.1 2.1 0.5 11.75 3 471.1 786.2
Region
Riu 1 3.00 8.8 30.5 1.0 8.55 3 2,279.8 3,107.2
Marella 3.00 0.7 11.0 1.0 10.57 3 722.6 1,081.5
Cruises 1
TUI Musement 5.00 25.0 2.9 1.0 9.84 3 453.0 805.3
Other 3.00 2.3 to 4.3 15.5 to 21.3 1.0 8.55 to 9.21 3 669.4 to 812.3 711.8 to 956.0
1 Those are groups of CGUs.
2 Planned growth rate in revenues in % in relation financial
year 2024 to financial year 2025.
3 EBIT-Margin for financial year 2025.
4 Growth rate of expected net cash inflows.
Parameters for calculation of the recoverable amount at 30 September 2021
Planning Growth EBIT Sustainable Carrying Recoverable
period in rate margin 3 growth rate 4 in WACC Level amount in EUR amount in EUR
years revenues 2 in % p. a. % in % million 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.
In view of the existing uncertainties regarding future business
development, an analysis of sensitivities for the main planning
parameters was carried out. In the sector Markets & Airlines a
risk premium of 1.9 % (previous year 3.4 %) was added to the cost
of capital. For further information we refer to 'Key judgements,
assumptions and estimates'. The following table shows the effects
of potential deviations in fair value in financial year 2022:
Sensitivities presenting potential changes of the recoverable amount
WACC WACC Sustainable Sustainable Cash inflow Cash
Sensitivity analysis Markets & + 150 BPS - 150 BPS growth rate 2 growth rate 2 + 15 % inflow
Airlines EUR million EUR million + 50 BPS - 50 BPS EUR million - 15 %
EUR million EUR million EUR million
Northern Region - 221.3 281.1 60.6 - 55.4 418.2 - 418.2
Central Region - 130.7 169.8 40.3 - 36.9 173.6 - 173.6
Western Region - 61.0 77.5 16.7 - 15.3 118.0 - 117.9
WACC WACC Sustainable Sustainable Cash inflow Cash
Sensitivity analysis Cruises + 100 BPS - 100 BPS growth rate 2 growth rate 2 + 10 % inflow
EUR million EUR million + 50 BPS - 50 BPS EUR million - 10 %
EUR million EUR million EUR million
Marella Cruises 1 - 86.4 105.9 40.5 - 36.5 108.1 - 108.1
WACC WACC Sustainable Sustainable Cash inflow Cash
Sensitivity analysis Hotels & + 100 BPS - 100 BPS growth rate 2 growth rate 2 + 10 % inflow
Resorts and TUI Musement EUR million EUR million + 50 BPS - 50 BPS EUR million - 10 %
EUR million EUR million EUR million
Riu 1 - 402.1 526.6 214.4 - 187.7 310.7 - 310.7
TUI Musement - 90.7 114.3 46.1 - 41.2 80.5 - 80.5
Other - 78.5 to - 102.1 to 131.4 40.7 to 52.4 - 35.7 to - 46.4 71.2 to 95.6 - 71.2 to
103.0 - 95.6
1 Those are groups of CGUs.
2 Sustainable growth rate of expected net cash inflows.
The fair values determined in the sensitivity analysis would
have led to an impairment requirement of EUR 36.0 m in the Hotels
& Resorts segment (CGU Robinson) if the WACC had increased by
100 basis points. The reduction in the Cash inflow by 10 % would
result in an impairment requirement of EUR 28.8 m in the Hotels
& Resorts segment (CGU Robinson). With the exception of the
impairments presented in the Hotels & Resorts segment, the
sensitivity analysis did not reveal any further indications of an
additional need for impairment losses.
Due to existing uncertainties regarding the general increase in
prices and interest rated, which could lead to a decline in demand
for travel services, in connection with possible significantly
higher costs for fuel and other input factors in the short term, as
well as the SBTi risks, which have been described above, and the
associated effects on the tourism business, an extended analysis of
sensitivities was carried out for cash-generating units with
goodwill. For information on these uncertainties, please refer to
the section 'Key judgements, assumptions and estimates'. The
sensitivity of the effects of the Science Based Target initiative
(SBTi) is based on the assumption of additional negative effects on
earnings or lower costs as expected from the planned measures
necessary to reach the climate targets. Existing uncertainties for
financial year 2023 as a result of the general increase in prices
and the associated fall in demand, the USD development and in
relation to fuel costs are reflected in the sensitivity of demand
and price risks. In addition a corresponding positive development
in 2023 has been considered. The sensitivities relating to fuel
costs are based on the assumptions of cost increases or cost
reductions for aircraft and cruise ships, considered equally for
all plan periods. The shown sensitivities and their impact on the
fair value result exclusively from the adjustment of the individual
parameters. Possible compensatory measures such as using derivative
financial instruments to limit price risks or cost saving measures
were not taken into account in the determination.
Only the increase in fuel prices by 10 % would have led to an
impairment of EUR 9.5 m in the segment Region West. The following
table provides the effects of the sensitivities on the fair value
in the financial year 2022.
Sensitivities presenting potential changes of the recoverable amount
Negative impact on earnings Positive impact on earnings Demand and Demand and Fuel Fuel
Sensitivity analysis Science Based Target Science Based Target price price cost cost
Markets & Airlines initiative (SBTi) + 10 % initiative (SBTi) risks 2023 chances 2023 + 10 % - 10 %
- 10 %
Northern Region - 140.0 142.0 - 123.8 123.8 - 715.9 715.9
Central Region - 36.0 37.0 - 96.9 96.9 - 142.1 142.1
Western Region - 83.0 84.0 - 52.2 52.2 - 324.7 324.7
Negative impact on earnings Positive impact on earnings Demand and Demand and Fuel Fuel
Sensitivity analysis Science Based Target Science Based Target price price cost cost
Cruises initiative (SBTi) + 10 % initiative (SBTi) risks 2023 chances 2023 + 10 % - 10 %
- 10 %
Marella Cruises* - 27.6 9.7 - 11.4 11.4 - 79.2 79.2
Sensitivity analysis Negative impact on earnings Positive impact on earnings Demand and Demand and Fuel Fuel
Hotels & Resorts and Science Based Target Science Based Target price price cost cost
TUI Musement initiative (SBTi) + 10 % initiative (SBTi) risks 2023 chances 2023 + 10 % - 10 %
- 10 %
Riu* - 7.5 7.5 - 12.3 12.3 n. a. n. a.
TUI Musement n. a. n. a. - 9.8 9.8 n. a. n. a.
Other - 2.1 to - 2.7 2.1 to 2.7 - 3.6 to - 3.6 to 8.9 n. a. n. a.
8.9
* Those are groups of CGUs.
(13) Other intangible assets
The development of the line items of Other intangible assets in
financial year 2022 is shown in the following table.
Other intangible assets
Brands, Computer software
licenses Transport Intangible assets 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 1 Oct 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 - - - 1.1 - - - - 1.1
sale
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
Exchange differences 4.7 - 11.1 2.6 - 1.4 0.7 - 3.6 - 8.1
Additions 0.1 10.0 12.5 - - 112.6 135.2
Disposals - 0.2 - 74.2 - 17.5 - - 0.3 - 0.7 - 92.9
Transfer - 0.3 26.6 12.7 - - - 40.4 - 1.4
Balance as at 30 Sep 2022 334.0 460.1 259.6 61.0 80.0 186.4 1,381.1
Amortisation and impairment
Balance as at 1 Oct 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
Impairments - 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 - - 1.0 - - - 1.0
sale
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
Exchange differences 1.9 9.3 - 2.6 1.2 0.1 0.1 10.0
Amortisation for the current year - 15.9 - 64.5 - 30.3 - 2.5 - 5.4 - - 118.6
Impairments - - - 7.3 - - - 0.6 - 7.9
Reversal of impairments - - - - - 0.1 0.1
Disposals 0.2 74.1 17.4 - 0.3 0.6 92.6
Transfer 0.2 - 1.8 - 1.1 - - 2.7 -
Balance as at 30 Sep 2022 - 216.6 - 325.6 - 206.6 - 51.0 - 59.3 - 14.4 - 873.5
Carrying amounts as at 30 Sep 2021 126.7 166.1 66.6 12.7 25.3 101.2 498.6
Carrying amounts as at 30 Sep 2022 117.4 134.5 53.0 10.0 20.7 172.0 507.6
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 172.0 m as at 30 September 2022 (previous year EUR 101.3
m).
The impairments recognised for the financial year under review
totalled EUR 7.9 m (previous year EUR 32.4 m). Impairment charges
of EUR 6.7 m relate primarily to purchased computer software and
are due to restructuring in 'All other segments'. In the previous
year, the COVID-19 pandemic gave impetus on accelerate the digital
transformation of TUI. Accordingly, local software systems which
will be replaced by group wide software were impaired in the
previous year. This included EUR 9.4 m impairment of internally
generated software and EUR 4.8 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 in the
previous year.
Due to changes in our strategy and delays in the digital
transformation, a realignment for Markets & Airlines was
applied in the current financial year. With the focus on strategic
key elements, the timeframe for implementing the digitization has
been adjusted, prompting a review of the useful lives of a number
of software solutions. Due to the revision the useful life of the
affected software systems were extended which reduced the
amortization by EUR 8.6 m in the financial year under review. For
the financial year 2023 we expect a decrease of amortization by EUR
0.1 m compared with the amount that would have been charged before
the change in useful life. The extension of the useful life beyond
the previous end of useful life will lead to an increase in
amortisation by EUR 1.8 m for financial year 2024 and by EUR 6.9 m
for financial year 2025.
In the previous year, the useful life of individual software
systems had been revised based on the acceleration of the digital
transformation. Due to this revision, the useful life of the
affected software systems was shortened, which increased the
amortisation by EUR 8.1 m in the previous year.
(14) Property, plant and equipment
The table below presents the development of the individual items
of property, plant and equipment in financial year 2022.
Property, plant and equipment
Hotels Other Cruise Other plant, operating Assets under Payments
EUR million incl. buildings and Aircraft ships and office equipment construction on Total
land land account
Balance as at 1 Oct 2,280.4 250.7 392.3 647.2 1,305.2 220.4 372.0 5,468.2
2020
Exchange 21.5 14.3 2.2 36.9 8.0 2.3 3.3 88.5
differences
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 2,350.4 183.5 285.3 692.1 1,172.5 134.6 259.2 5,077.6
Sep 2021
Exchange 118.5 26.2 39.3 - 15.9 37.9 25.2 20.8 252.0
differences
Additions 34.7 0.2 150.7 - 32.9 184.2 57.1 459.8
Disposals - 8.0 - 4.5 - 51.9 - 16.5 - 23.4 - 0.3 - 157.9 - 262.5
Transfer to assets - - 4.9 - - - 0.6 - - - 5.5
held for sale
Transfer 98.9 - 98.7 35.2 46.6 - 173.0 - 66.5 39.9
Balance as at 30 2,594.5 200.5 522.1 694.9 1,265.9 170.7 112.7 5,561.3
Sep 2022
Depreciation and
impairment
Balance as at 1 Oct - 666.6 - 65.6 - 152.9 - 208.9 - 911.3 0.2 - 0.6 - 2,005.7
2020
Exchange - 6.0 - 0.7 - 3.5 - 11.8 - 4.3 - 0.1 - 26.2
differences
Depreciation for - 57.2 - 3.0 - 22.3 - 53.0 - 96.9 - - 0.4 - 232.8
the current year
Impairments - 37.9 - 1.4 - 7.2 - - 4.2 - - - 50.7
Reversal 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 - 674.6 - 18.0 - 158.2 - 245.8 - 820.8 - - 0.9 - 1,918.3
Sep 2021
Exchange - 34.1 0.9 - 8.9 7.3 - 22.2 - - 0.1 - 57.1
differences
Depreciation for - 59.1 - 1.4 - 27.9 - 59.7 - 82.5 - - - 230.6
the current year
Impairments - 53.0 - - - - 4.2 - - - 57.2
Reversal of 19.4 - - 15.2 - - - 34.6
impairment losses
Disposals 7.7 1.9 38.0 16.5 23.1 - - 87.2
Transfer to assets - 2.2 - - 0.5 - - 2.7
held for sale
Transfer 0.1 - - 22.8 - 1.0 - - - 21.7
Balance as at 30 - 793.6 - 14.4 - 179.8 - 266.5 - 905.1 - - 1.0 - 2,160.4
Sep 2022
Carrying amounts as 1,675.8 165.5 127.1 446.3 351.7 134.6 258.3 3,159.3
at 30 Sep 2021
Carrying amounts as 1,800.9 186.1 342.3 428.4 360.8 170.7 111.7 3,400.9
at 30 Sep 2022
In the financial year under review, the construction of a new
hotel in Mexico, the refurbishment and expansion of a hotel in
Zanzibar and the renovation of hotels in Mexico and Cape Verde led
to additions to the Riu Group totalling EUR 165.4 m. These
investments include an amount of EUR 112.9 m for assets under
construction, EUR 24.9 m for hotels including land and EUR 16.8 m
for payments in advance.
Furthermore, additions of EUR 120.6 m are due to the purchase of
five new aircraft. In the financial year under review, sale and
leaseback agreements were concluded for four of these aircraft, for
which the requirements for a sale under IFRS 15 were not met. These
aircraft are still recognised under property, plant and equipment.
Further additions to aircraft assets include EUR 16.8 m for spare
parts and EUR 13.2 m for engines.
Further additions to assets under construction include EUR 35.2
m for investments in cruise ships and EUR 17.3 m for investments in
aircraft.
In the financial year under review, advance payments of EUR 29.7
m (previous year EUR 15.0 m) were made for the future delivery of
aircraft. Additional payments in advance of EUR 10.1 m (previous
year EUR 10.6 m) related to cruise ships.
The main disposals in the financial year under review include
EUR 157.9 m for the disposal of advance payments for the delivery
of aircraft and EUR 13.5 m for the sale of aircraft engines and
spare parts. The disposal of pre-delivery payments led to additions
of property, plant and equipment. Besides that, the disposal of
aircraft led to additions of right-of-use assets, which were due to
sale and leaseback transactions. 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 57.2 m in the
financial year under review (previous year EUR 50.7 m). Impairments
of EUR 53.0 m (previous year EUR 37.9 m) related to hotels
including land in the Hotels & Resorts segment. This notably
included EUR 36.2 m relating to the demolition of a hotel in
Mauritius. Further impairments in the Hotels & Resorts segment
related to groups of cash-generating units of Robinson, TUI Blue
and Magic life.
The review of the carrying amounts also led to the reversal of
impairment losses of EUR 34.6 m (previous year EUR 9.1 m). Reversal
of impairments of EUR 19.4 m were attributable to hotels of
Robinson and TUI Blue in the Hotels & Resorts segment. In
addition, reversal of impairments of EUR 15.2 m were made for two
Marella cruise ships in the Cruises segment.
In the previous year, the reclassification of property, plant
and equipment to the balance sheet item 'Assets held for sale'
mainly related to the sale of Nordotel to the Grupotel joint
venture. In this context, we refer to the section 'Divestments'.
Further reclassifications related to the disposal of hotel assets
in the Hotels & Resorts segment.
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 financial year 2022, no borrowing costs (previous year EUR
0.6 m) were capitalised as part of acquisition costs. In the
previous year, the capitalisation rate of capitalised borrowing
costs was 3.0 % p. a. For information on the calculation of the
capitalisation rate, please refer to 'Property, plant and
equipment' 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 611.3 m as
at the balance sheet date (previous year EUR 490.7 m). The increase
is mainly attributable to collaterals of financial liabilities for
aircraft and buildings.
(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
2022 is presented in the table below:
Right-of-use assets
EUR million Aircraft and Hotels Travel agencies Buildings Cruise ships Other Total
engines
Historical cost
Balance as at 1 Oct 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
Exchanges differences 454.2 - 2.4 - 0.3 3.0 - 5.0 - 0.1 449.4
Additions 142.0 - 6.3 4.8 0.5 2.6 156.2
Revaluations and modifications 57.1 - 12.9 15.2 - 5.7 - 1.5 - 0.8 51.4
Disposals - 63.2 - 15.0 - 10.5 - 4.2 - 0.5 - 4.0 - 97.4
Transfer - 33.4 - 0.3 0.9 - 0.3 - 0.1 - 32.6
Balance as at 30 Sep 2022 3,880.1 467.2 244.1 183.1 226.1 82.2 5,082.8
Depreciation and impairment
Balance as at 1 Oct 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
Impairments - 2.1 - 22.4 - 13.1 - 27.9 - 6.9 - - 72.4
Reversal 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
Exchange differences - 184.2 1.6 0.9 - 0.1 2.6 - - 179.2
Depreciation for the current year - 365.0 - 59.8 - 37.7 - 21.4 - 16.0 - 10.7 - 510.6
Impairments - - 4.4 - 3.4 - - 1.0 - - 8.8
Reversal of impairments losses 0.6 13.2 2.0 - - - 15.8
Disposals 63.2 15.1 10.5 3.5 0.5 4.0 96.8
Transfer 22.4 - - 0.1 - - 1.2 21.3
Balance as at 30 Sep 2022 - 1,518.5 - 215.5 - 144.0 - 88.4 - 101.3 - 43.6 - 2,111.3
Carrying amounts as at 30 Sep 2021 2,267.9 316.3 116.8 113.8 145.5 48.9 3,009.2
Carrying amounts as at 30 Sep 2022 2,361.6 251.7 100.1 94.7 124.8 38.6 2,971.5
Right-of-use assets declined by EUR 37.7 m year-on-year.
Depreciation of EUR 510.6 m led to a decrease in right-of-use
assets. The reclassification to property, plant and equipment led
to a further reduction in right-of-use assets of EUR 11.3 m. In
this context, we refer to the section 'Property, plant and
equipment'.
An opposite effect was caused by additions of EUR 156.2 m,
including an amount of EUR 142.0 m for the delivery of six aircraft
(previous year EUR 343.0 m for the delivery of aircraft and
engines) acquired in the framework of sale and leaseback
transactions. In addition, foreign exchange translation resulted in
an increase of right-of-use assets of EUR 270.2 m. Changes and
remeasurements of existing leases increase right-of-use assets by a
further EUR 51.4 m. The increase is primarily driven by a large
number of lease extensions for leased aircraft (EUR 57.1 m) and
leased travel agencies (EUR 15.2 m). This was partly offset by
contract remeasurements relating to hotel contracts (EUR - 12.9
m).
The reclassification of right-of-use assets to the balance sheet
item 'Assets held for sale' in the previous year related to the
sale of Nordotel to the Grupotel joint venture. In this context, we
refer to section 'Divestments'.
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 2022 in connection with leases in which TUI is the lessee:
Expenses and income from leases with TUI as the lessee
EUR million 2022 2021
Expenses from short-term leases - 131.1 - 17.0
Expenses from low-value leases - 3.0 - 4.3
Variable lease income and expenses 0.5 22.6
Depreciation of right-of-use assets - 510.6 - 516.6
Impairment of right-of-use assets - 8.8 - 72.4
Reversal of impairments 15.8 28.0
Interest expenses from lease liabilities - 159.3 - 153.3
Gains or losses arising from sale and leaseback transactions 2.4 7.8
The expenses from short-term leases in the financial year under
review relate in particular to the temporary rental of aircraft.
The impairment losses of the previous year related primarily to the
leased office buildings (EUR 27.9 m) and to leased hotels (EUR 22.4
m).
Gains from sale and leaseback transactions of EUR 2.4 m are
mainly attributable to aircraft financing. In the financial year
under review, six newly delivered Boeing B737 Max aircraft were
refinanced by means of sale and leaseback contracts. As at 30
September 2022, lease liabilities resulting from these transactions
totalled EUR 165.6 m (previous year EUR 334.6 m). Gains obtained in
the previous year of EUR 7.2 m related to sale and leaseback
transactions for nine newly delivered Boeing B737 Max aircraft and
two acquired engines. Moreover, sale and leaseback transactions
were used for follow-up financing for another aircraft as well as
the sale and leaseback of one aircraft and eight engines. In
addition, the sale and leaseback of a plot of land with buildings
resulted in a gain from sale and leaseback transactions of EUR 0.6
m. As at 30 September 2021, lease liabilities resulting from that
transaction totalled EUR 24.8 m.
The cash outflows for leases totalled EUR 867.4 m (previous year
EUR 751.4 m) in financial year 2022. The increase is mainly due to
short-term leases of aircraft.
At the balance sheet date, unrecognised financial commitments
for short-term leases amounted to EUR 4.3 m (previous year EUR 3.7
m). In addition, potential future lease payments from extension and
termination options of EUR 270.3 m (previous year EUR 259.5 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 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 2022, proceeds from operating leases worth EUR 7.8 m
(previous year EUR 2.0 m) were carried in revenue. In addition,
income from finance leases of EUR 0.7 m (previous year EUR 1.0 m)
was carried in the interest result.
The following table shows the reconciliation from the
undiscounted lease payments to the net investment for the two
subleases classified as finance leases:
Net investments - finance leases
EUR million 30 Sep 2022 30 Sep 2021
Undiscounted lease payments (lease components) 10.5 12.7
Unguaranteed residual values - -
Gross investment 10.5 12.7
Unearned finance income 0.7 1.3
Impairment 0.2 0.3
Net investment 9.6 11.1
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 2022
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 15.6 0.6 - - - - 16.2
Finance lease contracts 4.6 3.9 2.0 - - - 10.5
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
(16) Investments in joint ventures and associates
The table below presents all joint arrangements and associates
of relevance to TUI Group. All joint arrangements and associates
are listed as TUI Group shareholdings in Note 52. All joint
arrangements are joint ventures. There are no joint operations
within the meaning of IFRS 11.
Significant associate and joint ventures
Capital share in % Voting rights share in %
Name and headquarter of company Nature of business 30 Sep 2022 30 Sep 2021 30 Sep 2022 30 Sep 2021
Associate
Sunwing Travel Group Inc., Tour operator & 49.0 49.0 25.0 25.0
Toronto, Canada Hotel operator
Joint venture
Grupotel dos S. A., Hotel operator 50.0 50.0 50.0 50.0
Can Picafort, Spain
TUI Cruises GmbH, Cruise ship operator 50.0 50.0 50.0 50.0
Hamburg, 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 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), which was reported in the
previous year, was sold at the end of March 2021. Accordingly, this
company is no longer reported. Where figures were still reported in
financial year 2021, they are presented as previous year figures in
the following tables.
Significant joint ventures
Grupotel dos S. A., founded in 1998, owns and operates hotels in
the Balearic and the Canary Islands.
The TUI Group's shares in Riu Hotels S. A., reported in the
previous year, were sold at the end of July 2021. As explained
above for Togebi Holdings Ltd., only previous-year figures are
reported for Riu Hotels S. A. as well.
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 twelve cruise ships.
Financial information on associates and joint ventures
The tables below present summarised financial information for
the significant associates and joint ventures of 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 2022 / 30 Sep 2021 / 30 Sep 2022 / 30 Sep 2021 /
2022 2021 2022 2021*
Non-current assets 2,115.8 1,559.4 n. a. n. a.
Current assets 862.8 623.4 n. a. n. a.
Non-current provisions and liabilities 1,500.1 1,015.3 n. a. n. a.
Current provisions and liabilities 1,278.4 1,019.5 n. a. n. a.
Revenue 1,907.3 506.7 n. a. 167.9
Profit / loss 7.0 - 144.9 n. a. 6.1
Other comprehensive income / loss 45.0 - 1.0 n. a. 2.1
Total comprehensive income / loss 52.0 - 145.9 n. a. 8.2
* 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
Grupotel dos S. A., Riu Hotels S. A., TUI Cruises GmbH,
Can Picafort, Spain Palma de Mallorca, Spain Hamburg, Germany
EUR million 30 Sep 2022 30 Sep 2021 30 Sep 2022 30 Sep 2021 30 Sep 2022 30 Sep 2021
/ 2022 / 2021 / 2022 / 2021* / 2022 / 2021
Non-current assets 260.6 229.8 n. a. n. a. 4,153.0 4,312.8
Current assets 37.8 24.8 n. a. n. a. 591.4 615.6
thereof cash and cash 16.9 12.9 n. a. n. a. 255.9 440.8
equivalents
Non-current provisions 146.3 131.6 n. a. n. a. 3,195.7 3,585.9
and liabilities
thereof financial liabilities 134.1 124.7 n. a. n. a. 3,165.3 3,546.7
Current provisions and liabilities 36.9 26.8 n. a. n. a. 863.5 777.4
thereof financial liabilities 14.7 18.6 n. a. n. a. 282.9 599.2
Revenue 131.0 30.0 n. a. 97.4 1,238.2 319.2
Depreciation / amortisation of intangible 12.0 6.4 n. a. 16.1 129.9 177.3
assets and property, plant and equipment
Interest income 0.2 0.1 n. a. - 17.2 0.9
Interest expenses 2.4 1.9 n. a. 0.4 135.8 106.4
Income taxes 5.1 3.7 n. a. - 5.7 - 8.6 -
Profit / loss 18.8 2.1 n. a. - 32.5 82.8 - 293.5
Other comprehensive 0.2 - 13.9 n. a. 102.1 37.3 - 43.6
income / loss
Total comprehensive 19.0 - 11.8 n. a. 69.6 120.1 - 337.1
income / loss
* Financial year 2021 only takes into account the values for the
period until the disposal of the company.
In financial year 2022, TUI Group received dividends of EUR 0.9
m (previous year EUR 3.8 m) from its joint ventures and dividends
of EUR 0.2 m (previous year EUR 2.7 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, Canada Other immaterial Associates total
associates
EUR million 2022 2021 2022 2021 2022 2021
TUI's share of
Profit / loss 3.4 - 71.0 4.2 - 1.0 7.6 - 72.0
Other comprehensive 27.8 2.2 - 3.3 - 2.1 24.5 0.1
income / loss
Total comprehensive 31.2 - 68.8 0.9 - 3.1 32.1 - 71.9
income / loss
Share of financial information of material and other joint ventures
Riu Hotels S. Joint
Grupotel dos S. A., Can A., TUI Cruises GmbH, Other immaterial ventures
Picafort, Spain Palma de Hamburg, Germany joint ventures total
Mallorca, Spain
EUR million 2022 2021 2022 2021* 2022 2021 2022 2021 2022 2021
TUI's share of
Profit / loss 9.4 1.1 n. a. - 15.9 41.4 - 146.7 42.3 2.9 93.1 - 158.6
Other comprehensive 0.1 - 6.9 n. a. 49.3 18.6 - 21.8 - 2.0 - 8.3 16.7 12.3
income / loss
Total comprehensive 9.5 - 5.8 n. a. 33.4 60.0 - 168.5 40.3 - 5.4 109.8 - 146.3
income / loss
* 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 2020 293.9 - 138.0
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 -
Other comprehensive income - -
Foreign exchange effects 45.0 -
Profit / loss 7.0 -
Net assets as at 30 Sep 2022 200.0 -
* 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
Sunwing Other Associates
EUR million Travel Group Inc., Toronto, Canada immaterial total
associates
Share of TUI in % as at 30 Sep 2021 49.0 n. a. n. a.
TUI's share of the net assets as at 30 Sep 2021 72.5 29.2 101.7
Goodwill as at 30 Sep 2021 51.2 5.0 56.2
Impairment of net assets - - 0.2 - 0.2
Carrying amount as at 30 Sep 2021 123.7 34.0 157.7
Share of TUI in % as at 30 Sep 2022 49.0 n. a. n. a.
TUI's share of the net assets as at 30 Sep 2022 98.0 29.6 127.6
Goodwill as at 30 Sep 2022 56.9 5.0 61.9
Carrying amount as at 30 Sep 2022 154.9 34.6 189.5
Net assets of the material joint ventures
EUR million Grupotel dos S. A., Riu Hotels S. A., TUI Cruises GmbH, Hamburg, Germany
Can Picafort, Spain Palma de Mallorca, Spain*
Net assets as at 1 Oct 2020 108.0 714.2 783.2
Profit / loss 2.1 - 32.5 - 293.5
Other comprehensive income - 13.9 82.6 - 43.6
Capital increase - - 119.0
Foreign exchange effects - 19.5 -
Consolidation effects - - 783.8 -
Net assets as at 30 Sep 2021 96.2 - 565.1
Profit / loss 18.8 - 82.8
Other comprehensive income 0.2 - 37.3
Net assets as at 30 Sep 2022 115.2 - 685.2 * 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
Grupotel dos S. A., TUI Cruises Other
EUR million Can GmbH, immaterial joint Joint ventures
Picafort, Spain Hamburg, ventures total
Germany
Share of TUI in % as at 30 Sep 2021 50.0 50.0 n. a. n. a.
TUI's share of the net assets as at 30 48.1 282.6 159.2 489.9
Sep 2021
Goodwill as at 30 Sep 2021 - - 18.3 18.3
Unrecognised share of losses - - 8.2 8.2
Impairment of net assets - - - 33.6 - 33.6
Carrying amount as at 30 Sep 2021 48.1 282.6 152.1 482.8
Share of TUI in % as at 30 Sep 2022 50.0 50.0 n. a. n. a.
TUI's share of the net assets as at 30 57.6 342.6 207.3 607.5
Sep 2022
Goodwill as at 30 Sep 2022 - - 15.5 15.5
Unrecognised share of losses - - 8.4 8.4
Impairment of carrying amounts - - - 35.5 - 35.5
Carrying amount as at 30 Sep 2022 57.6 342.6 195.7 595.9
Impairment of the carrying amounts of associates and joint
ventures
Due to the increase in the interest rates, the effects of
Russia's war of aggression against Ukraine and general price
inflation a risk assessment was performed if indicators for
impairments exist. If this was the case the carrying amounts of the
respective associates and joint ventures concerned were
subsequently tested for impairment. In addition all carrying
amounts of associates and joint ventures which have been impaired
in before were tested for reversals of impairment. All impairment
tests used the business plan of the respective joint venture or
associate. Based on these 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.
The impairments included an amount of EUR 4.8 m related to the
Vitya Holding Co. Ltd. joint venture in Thailand, which operates
the Robinson Club Khao Lak. An impairment loss of EUR 3.4 million
recognised in 2020 for WOT Hotels Adriatic Asset Company d. o. o.
was partially reversed. The country-specific discount rates of 8.88
% for Thailand and Croatia were applied. Other impairments related
to joint ventures in Central Region. 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 to EUR 8.4 m (previous
year EUR 8.2 m). The losses of EUR 4.6 m carried in prior years for
TUI's share in the earnings of Bartu Turizm Yatirimlari AS. were
offset by a positive result in the period under review. Additional
unrecognised losses in the prior year relating to WOT Hotels
Vietnam increased by EUR 3.4 m to EUR 6.9 m in the period under
review. Further unrecognised losses of EUR 1.1 m related to
Ahungalla Resorts Limited and EUR 0.4 m to Abou Soma for Hotels S.
A. E. The recognition of additional losses would have resulted in
the carrying amounts falling below nil.
Risks associated with the stakes in associates and joint
ventures
Contingent liabilities of EUR 6.5 m (previous year EUR 12.2 m)
existed in respect of associates as at 30 September 2022.
Contingent liabilities in respect of joint ventures totalled EUR
3.1 m (previous year EUR 28.1 m).
(17) Trade and other receivables
Trade and other receivables
30 Sep 2022 30 Sep 2021
Remaining Remaining
EUR million term more Total term more Total
than 1 year than 1 year
Trade receivables - 399.2 - 259.9
Security deposits - 312.5 - 92.7
Advances and loans 43.4 66.7 182.0 202.0
Lease receivables 5.2 9.6 7.2 11.1
Other receivables and assets 83.0 355.4 119.4 214.7
Total 131.6 1,143.4 308.7 780.3
As at 30 September 2022, TUI has recognised deferred sales
commissions to travel agencies and other distribution channels
worth EUR 63.3 m (previous year EUR 34.1 m) in respect of costs of
obtaining a contract until the associated revenue was earned. In
the financial year under review, sales commissions worth EUR 622.5
m (previous year EUR 208.0 m) were recognised in profit and
loss.
Security deposits include securities for credit card acquirers
as well as securities for touristic advance payments received.
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.
In the financial year under review the reversals of impairments
recognised through profit or loss for advance payments made by tour
operators for future hotel services totalled EUR 33.6 m (previous
year expenses from impairments EUR 8.4 m).
(19) Other non-financial assets
The other non-financial assets of EUR 305.1 m (previous year EUR
290.1 m) resulted mainly from the overfunded pension plans worth
EUR 163.4 m (previous year EUR 137.1 m) and assets from other taxes
worth EUR 70.3 m (previous year EUR 63.4 m).
(20) Deferred tax assets
Individual items of deferred tax assets and liabilities recognised in the statement of financial position
30 Sep 2022 30 Sep 2021
EUR million Asset Liability Asset Liability
Lease transactions 14.1 71.3 11.8 61.9
Recognition and measurement differences for property, plant and equipment and 153.4 230.4 125.6 232.0
other non-current assets
Recognition differences for receivables and other assets 21.9 55.5 15.7 35.9
Measurement of financial instruments 0.2 61.4 1.1 37.6
Measurement of pension provisions 78.6 43.3 175.7 38.8
Recognition and measurement differences for other provisions 50.4 5.3 72.1 6.5
Other transactions 95.5 40.5 87.0 55.8
Capitalised tax savings from recoverable losses carried forward 194.4 - 147.3 -
Netting of deferred tax assets and liabilities - 386.5 - 386.5 - 345.2 - 345.2
Balance sheet amount 222.0 121.2 291.1 123.3
Deferred tax assets include an amount of EUR 138.0 m (previous
year EUR 169.2 m) expected to be realised after more than twelve
months. Deferred tax liabilities include an amount of EUR 119.5 m
(previous year EUR 118.9 m) expected to be realised after more than
twelve months.
No deferred tax assets are recognised for deductible temporary
differences of EUR 22.7 m (previous year EUR 179.7 m).
No deferred tax liabilities are carried for temporary
differences of EUR 87.2 m (previous year EUR 75.2 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 2022 30 Sep 2021
Recognised losses carried forward 1,091.0 771.4
Non-recognised losses carried forward 11,880.6 11,562.5
of which losses carried forward forfeitable within one year - 6.7
of which losses carried forward forfeitable within 2 to 5 years 8.7 70.2
of which losses carried forward forfeitable within more than 5 years 6.2 -
(excluding non-forfeitable loss carryforwards)
of which non-forfeitable losses carried forward 11,865.7 11,485.6
Total unused losses carried forward 12,971.6 12,333.9
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 2,444.6 m (previous year
EUR 2,341.2 m) were not recognised as the underlying losses carried
forward were not expected to be utilised in the planning
horizon.
In financial year 2022, tax savings of EUR 0.0 m (previous year
EUR 0.3 m) resulted from the use of tax losses carried forward
previously not assessed as recoverable for which, therefore, no
deferred tax assets had been carried as at 30 September 2021 for
the potential tax savings resulting from these assets. Tax
reductions from loss carry-backs (previous year EUR 0.0 m) were not
realised.
Development of deferred tax assets from losses carried forward
EUR million 2022 2021
Capitalised tax savings at the beginning of the year 147.3 124.2
Use of losses carried forward - 23.7 - 2.0
Capitalisation of tax savings from tax losses carried forward 84.7 75.0
Impairment of capitalised tax savings from tax losses carried forward - 14.2 - 50.0
Exchange adjustments and other items 0.3 0.1
Capitalised tax savings at financial year-end 194.4 147.3
Capitalised deferred tax assets from temporary differences and
losses carried forward that are assessed as recoverable of EUR
321.3 m (previous year EUR 237.2 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 'Key judgements,
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 2022 30 Sep 2021
Airline spares and operating equipment 13.3 10.9
Real estate for sale 0.2 0.2
Consumables used in hotels 20.9 15.5
Other inventories 21.7 16.2
Total 56.1 42.8
In financial year 2022, inventories of EUR 584.2 m (previous
year EUR 248.5 m) were recognised as expense.
(22) Cash and cash equivalents
Cash and cash equivalents
EUR million 30 Sep 2022 30 Sep 2021
Bank deposits 1,718.6 1,575.0
Cash in hand and cheques 18.3 8.9
Total 1,736.9 1,583.9
At 30 September 2022, cash and cash equivalents of EUR 526.1 m
(previous year EUR 509.0 m) were subject to disposition
restrictions listed below:
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 66.1 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 116.1 m (previous year EUR 116.3
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 343.9 m (previous year
EUR 346.3 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 payment
service provider.
(23) Assets held for sale
Assets held for sale
EUR million 30 Sep 2022 30 Sep 2021
Disposal group Nordotel - 96.5
Other assets 2.7 -
Total 2.7 96.5
On 26 August 2022, a contract was signed between TUI Airways
Limited and A E Chapman & Son Limited to sell the building at
Jet Set House (Crawley). Correspondingly, the asset was classified
as held for sale. The disposal transaction was completed on 3
October 2022. The purchase price payment of GBP 6.5 m was made on 3
October 2022.
No reclassifications to assets held for sale were effected in
the course of the year under review.
In the previous year, assets from the sale of the Nordotel
disposal group were carried 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 10.2 m and EUR 20.4 m were
originally due one or two years, respectively, after the closing
of the transaction, taking account of final purchase price
adjustments. The final purchase price adjustment was already
effected in September 2022. In this context, we refer to the note
36 'Liabilities related to assets held for sale' and to the section
'Divestments'.
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
(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 October of the financial year
under review, the Company's capital stock of EUR 1,099,393,634.00,
consisting of 1,099,393,634 no-par value registered shares, was
increased by the issuance of 523,520,778 new no-par value
registered shares with a proportionate share in the capital stock
of around EUR 1.00 per no-par value share. This increase in capital
stock totalling EUR 523.5 m was carried out using the
authorizations granted by the Annual General Meeting on 25 March
2021 to issue new registered shares against cash contributions by a
maximum of EUR 109.9 m (Authorized Capital 2021 / I) and to issue
new shares against cash or non-cash contributions totalling EUR
413.6 m (Authorized Capital 2021 / II) in full from the authorized
capital.
In May of the financial year under review, the Company's capital
stock of EUR 1,622,914,412.00, consisting of 1,622,914,412 no-par
value registered shares, was again increased through the issuance
of 162,291,441 new no-par value registered shares with a
proportionate share in the capital stock of around EUR 1.00. At the
end of the financial year under review, the subscribed capital
therefore consisted of 1,785,205,853 shares, corresponding to EUR
1,785,205,853.00.
This increase in capital stock in the amount of EUR 162.3 m was
carried out by making partial use of the authorization granted by
the Annual General Meeting on 8 February 2022 to create authorized
capital for the issue of new shares against cash or non-cash
contributions in the total amount of EUR 671.0 m (Authorized
Capital 2022 / III).
In accordance with section 71 (1) no. 2 of the German Stock
Corporation Act, TUI AG acquired 398,901 own shares to issue to
employees in the framework of the employee share programme. The
398,901 shares were purchased at the stock exchange at EUR 1.4306
per share and transferred free of charge to the employees
participating in the program on 30 September 2022. The shares
represent a capital stock of EUR 398,901.00, i. e. <0.025 % of
the capital stock, and an acquisition volume of EUR 0.6 m. As at 30
September 2022, 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 for the issuance of bonds. The
authorisation to acquire bonds with conversion or option rights or
obligations or profit participation rights (with or without a
fixed term) was limited to a nominal amount of EUR 2.0 bn and
expired on 8 February 2021. This authorisation was fully utilised
with the issuance of a bond with warrants totalling EUR 150.0 m to
the Economic Stabilisation Fund (ESF) in October 2020. As at the
reporting date, the ESF had not yet exercised its warrants.
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 no-par value registered 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. At the balance sheet date, the ESF had not yet
exercised its conversion right.
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 acquire bonds with conversion or option
rights or obligations or profit participation rights (with or
without a fixed term) was limited to a nominal amount of EUR 2.0 bn
and expires on 24 March 2026. This authorisation was fully utilised
with the issuance of a convertible bond totalling EUR 589.6 m in
April and June 2021. As at the reporting date, no shares had been
issued to serve the convertible bond.
The Annual General Meeting on 8 February 2022 resolved to create
two further amounts of conditional capital for the issuance of
bonds worth EUR 162.3 m and EUR 81.1 m. The authorisation to
acquire bonds with conversion or option rights or obligations or
profit participation rights (with or without a fixed term) was
limited to a nominal amount of EUR 2.0 bn and expires on 7 February
2027.
As of 30 September 2022, unused option and conversion rights of
issued bonds with warrants and convertible bonds will result in
conditional capital of EUR 588.6 m. As of 30 September 2022 TUI AG
also has unused conditional capital of EUR 243.4 m, resulting in
total unused conditional capital of EUR 832.0 m.
Authorised capital
The Annual General Meeting on 13 February 2018 resolved to
create authorised capital of EUR 30.0 m for the issuance of
employee shares. The Executive Board of TUI AG has been authorised
to use this 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 remains at around
EUR 22.3 m.
The 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.
In the completed financial year, the two last-mentioned
authorisations were utilised to increase the capital stock by EUR
523.5 m. In addition, the authorisation for the remaining part of
Authorised Capital 2021 / II in the amount of EUR 3.4 m was
subsequently cancelled.
The Annual General Meeting on 8 February 2022 resolved to
authorise the Executive Board to issue new registered shares
against cash contributions for up to a maximum of EUR 162.3 m
(Authorised Capital 2022 / I). This authorisation will expire on 7
February 2027.
The Annual General Meeting on 8 February 2022 also resolved to
create authorised capital for the issuance of new shares against
cash and non-cash contribution of EUR 626.9 m (Authorised Capital
2022 / II). The issuance of new shares against non-cash
contributions is limited to EUR 162.3 m. The authorisation for this
capital will expire on 7 February 2027.
The Annual General Meeting on 8 February 2022 furthermore
resolved to create authorised capital for the issuance of new
shares against cash or non-cash contribution of EUR 671.0 m. The
net issuance proceeds are exclusively to be used to repay the
capital made available to TUI AG by the ESF in the framework of
Silent Particpation II of EUR 671.0 m (Authorised Capital 2022 /
III). The authorisation for this authorised capital will expire on
7 February 2027. In May of the completed financial year, the
Company's capital stock was increased by EUR 162.3 m, utilising a
part of Authorised Capital III, and the proceeds were used to fully
repay Silent Participation II.
At the balance sheet date, the total authorisations for unused
authorised capital amounted to around EUR 1,320.2 m (previous year
around EUR 549.2 m), of which EUR 508.7 m can no longer be used due
to the repayment of Silent Participation II.
(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
836.3 m from EUR 5,249.6 m to EUR 6,085.9 m, in particular due to
the premium from the capital increases in October 2021 (EUR 609.3
m) and in May 2022 (EUR 262.9 m).
The ancillary costs of the capital increase in October 2021 (EUR
27.3 m), the capital increase in May 2022 (EUR 5.9 m) and in
connection with the silent participation issued in financial year
2021 (EUR 2.1 m) were offset against the capital reserve.
The capital reserve also decreased by EUR 0.6 m as a result of
the repurchase of own shares for issue to employees under the
employee share program.
(26) Revenue reserves
In the completed financial year, TUI AG did not pay a dividend
to its shareholders (previous year no dividend).
The ongoing recording of existing equity-settled stock option
plans resulted in an decrease in equity of EUR 0.2 m (previous year
increase EUR 0.3 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+
110.7 m (previous year EUR+ 144.0 m). The increase in financial
year 2022 is mainly attributable to changes in exchange rates and
fuel prices.
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 the consolidated
financial statements as of 30 September 2021 in accordance with IAS
32.
The Silent participation II in the amount of EUR 671.0 m was
fully repaid in May 2022.
As in the previous year, the remaining Silent participation I is
carried in equity in the consolidated financial statements as of 30
September 2022.
(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 530.9 m
(previous year loss of EUR 491.5 m). Taking account of loss carried
forward of EUR 300.6 m (previous year profit carried forward EUR
190.9 m) TUI AG's balance sheet loss totals EUR 831.5 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 2022 / 2022 30 Sep 2021 / 2021
Current assets 206.0 91.6
Non-current assets 2,016.0 1,824.1
Current liabilities 199.3 101.0
Non-current liabilities 108.6 141.9
Revenues 916.2 344.1
Profit / loss 128.4 - 21.2
Other comprehensive income 112.9 27.8
Cash outflow / inflow from operating activities 275.4 71.5
Cash outflow / inflow from investing activities - 169.6 - 73.0
Cash outflow / inflow from financing activities - 31.9 - 27.1
Accumulated non-controlling interest 785.5 664.9
Profit / loss attributable to non-controlling interest 64.2 - 10.6
* 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 80.5 m
(previous year EUR 77.1 m).
Apart from these defined contribution pension plans, 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 5.6 m (previous year EUR 5.9 m). For the next
financial year, contributions are expected to remain at that
level.
TUI Group's major pension plans recognised as defined benefit
plans exist in Germany and the UK. By far the largest pension plans
are operated by the Group's tour operators in the UK. They
accounted for 68.2 % (previous year 72.6 %) of TUI Group's total
obligations at the balance sheet date. German plans account for a
further 25.6 % (previous year 23.0 %).
Material defined benefit plans in the United Kingdom
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 65.3 m for TUI Group, principally
comprising current service cost. The restructuring of the
activities of the Group's German airline resulted in a past service
cost and a curtailment expense in the current year. In the previous
year, this measure resulted in income from curtailments. The
administrative costs shown are costs for consulting services for
pension plans, which were paid from the plan assets. The
administrative expenses shown relate to professional advisor costs
for the pension plans settled from the plan assets.
Pension costs for defined benefit obligations
EUR million 2022 2021
Current service cost for employee service in the period 23.1 36.3
Curtailment (losses) / gains - 13.6 29.7
Net interest on the net defined benefit liability 6.6 0.9
Past service cost 19.8 1.5
Administration cost 2.2 6.7
Total 65.3 15.7
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 2022 30 Sep 2021
Total Total
Present value of funded obligations 1,918.0 3,101.5
Fair value of external plan assets 2,076.4 3,172.1
Surplus (-) / Deficit (+) of funded plans - 158.4 - 70.6
Present value of unfunded pension obligations 596.3 868.6
Defined benefit obligation recognised on the balance sheet 437.9 798.0
of which
Overfunded plans in other non-financial assets 163.4 137.1
Provisions for pensions and similar obligations 601.3 935.1
of which current 33.1 33.2
of which non-current 568.2 901.9
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 2022,
other non-financial assets include excesses of EUR 163.4 m
(previous year EUR 137.1 m).
Development of defined benefit obligations
EUR million Present value of obligation Fair value of plan assets Total
Balance as at 1 Oct 2021 3,970.1 - 3,172.1 798.0
Current service cost 23.1 - 23.1
Past service cost 19.8 - 19.8
Curtailments and settlements 13.6 - 13.6
Interest expense (+) / interest income (-) 68.4 - 61.8 6.6
Administration cost - 2.2 2.2
Pensions paid - 163.8 123.8 - 40.0
Contributions paid by employer - - 141.1 - 141.1
Contributions paid by employees 1.4 - 1.4 -
Remeasurements - 1,413.2 1,167.7 - 245.5
due to changes in financial assumptions - 1,433.7 - - 1,433.7
due to changes in demographic assumptions 10.1 - 10.1
due to experience adjustments 10.4 - 10.4
due to return on plan assets not included in - 1,167.7 1,167.7
Group profit for the year
Exchange differences - 4.5 6.3 1.8
Other changes - 0.6 - - 0.6
Balance as at 30 Sep 2022 2,514.3 - 2,076.4 437.9
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
The net defined benefit obligation decreased by EUR 360.1 m to
EUR 437.9 m in the financial year under review. The present value
of the obligation decreased by a total of EUR 1,455.8 m compared to
the previous year, mainly due to an increase in discount rates in
the euro area and the United Kingdom. The fair value of the plan
assets decreased as well by EUR 1,095.7 m. As the pension fund's
assets in the United Kingdom also include instruments that are
intended to hedge changes in interest rates, the assets decrease in
line with the decreased obligation when interest rates rise.
In order to limit the risk arising from the obligation, the
trustees of the UK pension plans acquired insurance policies in the
previous 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.
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 2022 30 Sep 2021
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 1,127.5 948.9 1,797.4 1,374.7
of which equity instruments 528.2 - 843.8 -
of which government bonds 229.0 116.2 584.2 140.6
of which corporate bonds 260.8 - 302.0 -
of which liability driven investments 41.7 - 38.4 -
of absolute return bonds 39.1 - - -
of which property 22.1 - 23.7 -
of which insurance policies - 642.3 - 894.1
of which insurance linked securities - 155.0 - 209.3
of which loans - 10.4 - 15.6
of which cash - 25.0 - 115.1
of which other 6.6 - 5.3 -
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. In
order to take account of the currently high inflation,
significantly higher pension trends have been applied for the next
scheduled pension adjustment for the German pension plans in
deviation from the projected future pension increases indicated
below for Germany.
Actuarial assumptions
30 Sep 2022
Percentage p. a. Germany United Kingdom Other countries
Discount rate 3.7 5.1 3.1
Projected future salary increases 2.0 - 1.5
Projected future pension increases 2.5 3.6 0.9
30 Sep 2021
Percentage p. a. Germany United Other countries
Kingdom
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
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) 2021. 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 2022 30 Sep 2021
EUR million + 50 Basis points - 50 Basis points + 50 Basis points - 50 Basis points
Discount rate - 171.0 + 193.4 - 342.4 + 393.6
Salary increase + 12.2 - 11.1 + 13.2 - 11.6
Pension increase + 54.4 - 45.7 + 103.4 - 105.6
+ 1 year + 1 year
Life expectancy + 79.1 - + 174.7 -
The weighted average duration of the defined benefit obligations
totalled 15.8 years (previous year 19.4 years) for the overall
Group. In the UK, the weighted duration was 16.2 years (previous
year 19.8 years), while it stood at 15.4 years (previous year 19.4
years) in Germany.
Fund assets are determined on the basis of the fair values of
the funds invested as at 30 September 2022. 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 104.4 m (previous year EUR
137.2 m) to pension funds and pay pensions worth EUR 33.1 m
(previous year EUR 33.2 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 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 2022
Balance as at 30 Changes with no effect on profit Usage Reversal Additions Balance
EUR million Sep 2021 and loss * as at
30 Sep 2022
Maintenance provisions 794.3 - 28.8 160.9 31.6 254.7 827.7
Restructuring 157.4 - 4.1 66.8 42.5 44.3 88.3
provisions
Provisions for litigation 27.8 - 1.2 3.3 4.2 52.2 71.3
Provisions for other 37.1 9.7 3.0 8.5 7.2 42.5
personnel costs
Provisions for other taxes 51.2 0.5 2.9 10.3 3.4 41.9
Provisions for environmental 52.0 - 1.1 17.2 1.2 34.9
protection
Risks from onerous contracts 46.5 - 7.9 8.5 14.4 12.4 28.1
Miscellaneous 136.8 - 17.1 31.2 19.6 92.4 161.3
provisions
Other provisions 1,303.1 - 48.9 277.7 148.3 467.8 1,296.0
* 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. With the termination of
an aircraft lease, the associated guarantee agreement in the amount
of EUR 13.1 m was reversed. Lower maintenance expenses than
expected led also to a reversal of EUR 18.5 m.
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. The reversal of the provision in the amount of EUR 42.5
m is mainly due to the lower than expected reduction in the fleet
size of the Group's German airline. At the balance sheet date,
restructuring provisions totalled EUR 88.3 m (previous year EUR
157.4 m), for the most part relating to benefits for employees in
connection with the termination of employment contracts.
Provisions for litigation are formed for existing lawsuits. For
further details on lawsuits, please refer to Note 38.
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 environmental protection primarily relate to
statutory obligations to remediate sites contaminated with legacy
waste from former mining and metallurgical activities. Due to the
absence of risks existing in previous years, the provision of EUR
17.2 m was reversed.
Provisions from onerous contracts include EUR 15.3 m for the
premature abandonment of a leased administrative building as the
largest single item.
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 10.1 m (previous year EUR - 0.7 m), recognised as an
interest expense.
Terms to maturity of other provisions
30 Sep 2022 30 Sep 2021
EUR million Remaining term more than 1 year Total Remaining term more than 1 year Total
Maintenance provisions 561.1 827.7 569.7 794.3
Restructuring provisions 28.6 88.3 48.3 157.4
Provisions for litigation 38.6 71.3 5.1 27.8
Provisions for other personnel costs 34.9 42.5 28.7 37.1
Provisions for other taxes 21.9 41.9 21.9 51.2
Provisions for environmental protection 32.9 34.9 44.8 52.0
Risks from onerous contracts 15.1 28.1 18.4 46.5
Miscellaneous provisions 21.9 161.3 26.7 136.8
Other provisions 755.0 1,296.0 763.6 1,303.1
(32) Financial and lease liabilities
Financial and lease liabilities
30 Sep 2022 30 Sep 2021
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 - 518.6 532.1 13.5 - 508.7 522.2
Bonds - 48.4 - 48.4 - 119.3 - 119.3
Liabilities to banks 280.0 913.8 188.8 1,382.6 247.6 2,264.3 100.7 2,612.6
Other financial 26.4 61.8 - 88.2 23.5 43.1 - 66.6
liabilities
Financial liabilities 319.9 1,024.0 707.4 2,051.3 284.6 2,426.7 609.4 3,320.7
Lease liabilities 698.8 1,668.0 840.7 3,207.5 623.3 1,738.1 868.0 3,229.4
Non-current financial liabilities decreased by EUR 1,304.7 m to
EUR 1,731.4 m versus 30 September 2021. This decrease was primarily
attributable to a decrease in liabilities to banks of EUR 1,262.4 m
as well as to a contractually agreed early redemption of 913
partial option bonds on 1 April 2022. Of this amount, EUR 91.3 m is
accounted for by the nominal value of the partial option bonds and
EUR 7.2 m by interest and early repayment penalties. The remaining
587 partial bonds shown under non-current financial liabilities are
not affected by the early redemption, nor are the approx. 58.7 m
call options on TUI shares, which are legally and financially
separated from the warrant bond. 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 main financing instrument is a syndicated revolving credit
facility (RCF) between TUI AG and the existing banking syndicate
which, from 2020, included the KfW. The amount of this revolving
credit facility totals EUR 3.555 bn at 30 September 2022. The
unused loan commitments under the separate KfW credit line within
this syndicated revolving credit facility were reduced by EUR 413.7
m in April 2022 as well as by EUR 336.0 m in May. In June 2022, a
British bank left the group of syndicated banks for regulatory
reasons which led to a reduction in the volume of the syndicated
revolving credit facility of EUR 80.6 m.
In addition, there was a separate syndicated revolving credit
facility of EUR 170.0 m. This credit facility was fully cancelled
in April 2022.
At 30 September 2022, the amounts drawn under the revolving
credit facilities totalled EUR 562.0 m (30 September 2021 EUR
1,852.9 m).
Current financial liabilities increased by EUR 35.3 m to EUR
319.9 m at 30 September 2022 compared to EUR 284.6 m at 30
September 2021. The increase results primarily from an increase in
liabilities to banks.
For more details on the terms, conditions and the reductions of
the credit lines as well as the redemption of the bond with
warrants, please refer to the section 'Going Concern Reporting
under the UK Corporate Governance Code'.
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 522.2 119.3 247.5 2,365.1 66.6 3,320.7 3,229.4
1 Oct 2021
Raisings /
redemptions - - 91.3 - 95.0 - 1,270.6 - 16.0 - 1,472.9 - 572.6
of the period
Foreign exchange - - 5.0 24.8 0.1 29.9 328.8
movements
Other non-cash 9.9 20.4 122.5 - 16.7 37.5 173.6 221.9
movements
Balance as at 532.1 48.4 280.0 1,102.6 88.2 2,051.3 3,207.5
30 Sep 2022
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
Raisings /
redemptions of the 506.9 - 184.5 - 9.1 - 1,347.1 50.2 - 983.6 - 587.2
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 movements 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
The payments made in the period include the raisings of
financial debt, the repayment of bonds and financial debt as well
as the repayment of lease liabilities.
Fair values and carrying amounts of the bonds at 30 Sep 2022
30 Sep 2022 30 Sep 2021
Issuer Nominal Nominal value Interest 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 5.000 423.0 532.1 583.7 522.2
bond
Total 423.0 532.1 583.7 522.2
(33) Other financial liabilities
Other financial liabilities include touristic advance payments
received for tours cancelled because of COVID-19 restrictions of
EUR 16.7 m (previous year EUR 204.6 m), for which immediate cash
refund options exist and which have to be repaid immediately if the
customer chooses to receive a refund. For 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 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
Revenue recognised that was included in the balance at the beginning of the period - 2,253.1
Increases due to cash received, excluding amounts recognised as revenue during the period 3,237.7
Reclassification to other financial liabilities - 12.0
Customer refund repayments - 325.0
Other - 28.1
Touristic advance payments received as at 30 Sep 2022 2,998.9
Apart from the immediate cash refund option in certain
jurisdictions, TUI Group offers its customers voucher / refund
credits for trips cancelled 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. As at 30 September 2022 the
touristic advance payments received do not include any advance
payments (previous year EUR 2.4 m) 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 2022 30 Sep 2021
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 224.8 27.4 252.2 201.5 33.7 235.2
Other liabilities relating to 39.7 - 39.7 50.2 - 50.2
social security
Other liabilities relating to other taxes 50.6 - 50.6 20.8 - 20.8
Other miscellaneous liabilities 144.2 0.9 145.1 195.5 5.7 201.2
Deferred income 60.6 136.9 197.5 50.0 166.9 216.9
Other non-financial liabilities 519.9 165.2 685.1 518.0 206.3 724.3
(36) Liabilities related to assets held for sale
As at 30 September 2022, there were no liabilities related to
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 2021, liabilities related to assets held for
sale amounted to EUR 50.6 m. These liabilities exclusively related
to the Nordotel disposal group. In this context, we refer to Note
23 'Assets held for sale' and the section 'Divestments'.
(37) Contingent liabilities
As at 30 September 2022, contingent liabilities amounted to EUR
93.5 m (previous year EUR 128.7 m, adjusted). They are mainly
attributable to the granting of guarantees for the benefit of hotel
activities and the granting of guarantees for contingent
liabilities from aircraft leasing agreements. The contingent
liabilities are reported at an amount representing the best
estimate of the expenditure required to meet the potential
obligation at the balance sheet date.
(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
2022 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 2022 30 Sep 2021
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 400.7 1,730.6 160.1 2,291.4 456.5 1,769.5 160.1 2,386.1
of capital expenditure
Other financial commitments 71.9 28.5 28.8 129.2 51.8 37.0 2.9 91.7
Total 472.6 1,759.1 188.9 2,420.6 508.3 1,806.5 163.0 2,477.8
As at 30 September 2022 order commitments in respect of capital
expenditure decreased by EUR 94.7 m as against 30 September 2021.
The decrease in order commitments is attributed to delivery of
aircraft. The reduction is to a greater extent partially off set by
the effects of foreign exchange for order commitments denominated
in non-functional currencies. The commitments for maintenance and
repairs reported within other financial commitments increased in
particular in the Hotels & Resorts segment after the business
returned to normality.
(40) Share-based payments in accordance with IFRS 2
As at 30 September 2022, 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 2022.
1. PHANTOM SHARES IN THE FRAMEWORK OF THE Long Term Incentive
Plan (LTIP) FOR THE EXECUTIVE BOARD OF TUI AG
1.1 LTIP with share allocation from financial year 2020 (LTIP
EPS20 - 22)
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 subject to the application of the remuneration
restrictions (see below 1.3) 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 subject to the application of
the remuneration restrictions 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 ratio 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 ratio 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 year 2019 (LTIP
EPS19)
The LTIP with allocation in the 2019 financial year consists 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 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 governs the share-based remuneration for eligible
executives who are not members of the Executive Board. The PSP is
in principle harmonized with the LTIP EPS 20 - 22 of the Board
members. The performance period of the PSP is three years. The
current PSP has been in effect in its current form since 2019. The
plan conditions for the outstanding tranches of financial years
2021 and 2022 were adjusted again retroactively in financial year
2022 and the vesting of the virtual shares was made dependent on
the achievement of absolute EPS values instead of relative EPS
growth.
Since LTIP EPS20 - 22 and PSP follow common scheme principles,
the following development of allocated phantom shares under the
programs are shown on an aggregated basis.
Development of phantom shares allocated (LTIP EPS20 - 22, LTIP EPS19, PSP)
LTIP EPS20 - 22 & PSP LTIP EPS19
Number Present value Number Present value
of shares EUR million of shares EUR million
Balance as at 30 Sep 2020 1,526,114 5.2 763,460 2.6
Phantom shares allocated 3,775,181 13.0 - -
New virtual shares allocated from subscription rights 1,552,117 - 448,272 -
Phantom shares exercised - 342 - - -
Phantom shares forfeited - 477,470 - 1.7 - 567,103 - 2.1
Measurement results - 6.6 - 1.8
Balance as at 30 Sep 2021 6,375,600 23.1 644,629 2.3
Phantom shares allocated 2,986,295 10.8 - -
New virtual shares allocated from subscription rights 2,349,794 - 85,844 -
Phantom shares forfeited - 1,358,549 - 3.1 - 730,473 - 1.1
Measurement results - - 15.2 - - 1.2
Balance as at 30 Sep 2022 10,353,140 15.6 - -
Employee share program '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 investment shares held, 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 2022, no new tranche of oneShare was launched. The matching
date for Tranche 4 was 30 September 2022 and the matching shares of
Tranche 4 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 -31.7.2017 1.8.2017 -31.7.2018 1.8.2018 -31.7.2019 1.8.2019 -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 65,925
Share price at grant datein EUR 12.99 13.27 18.30 8.99
Fair value: discount per investment 2.60 2.02 2.94 1.26
share 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 1.34 2.11 2.37 1.82
dividendin EUR
Accounting for share-based payment schemes
As at 30 September 2022, 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.
Overall, income from the reversal of provisions for cash-settled
share-based payments of EUR 4.5 m was recognised through profit or
loss in financial year 2022 (previous year personnel expenses of
EUR 1.9 m).
Overall, personnel expenses due to equity-settled share-based
payment schemes of EUR 0.8 m (previous year EUR 1.6 m) were
recognised through profit or loss in financial year 2022.
As at 30 September 2022, provisions relating to entitlements
under these long-term incentive programmes totalled EUR 7.6 m
(previous year EUR 12.2 m).
(41) Financial instruments
Risks and risk management
Risk management principles
Due to the nature of its business operations, 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 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 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, TUI Group uses
over-the-counter derivative financial instruments. These are
primarily fixed-price transactions. In addition, TUI 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, 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 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 TUI 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 TUI's group 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), TUI Group enters into appropriate hedges with
external counterparties in order to protect its profit margin from
exchange rate-related fluctuations.
Within 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 take out cover
ahead of the markets' customer booking profiles in the planned
currency requirements in the run-up to the tourism season. In this
regard, account is taken of the different risk profiles of TUI's
group companies. The hedged currency volumes are adjusted in line
with changes in planned requirements based on reporting by business
units. Target hedge ratios are regularly reviewed 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 2022 30 Sep 2021
Variable: Foreign exchange rate + 10 % - 10 % + 10 % - 10 %
Exchange rates of key currencies
EUR / US dollar
Revaluation reserve + 1.4 - 1.5 - -
Earnings after income taxes - 53.7 + 66.0 - 30.1 + 36.9
Pound sterling / EUR
Revaluation reserve + 67.5 - 66.3 + 1.2 - 1.2
Earnings after income taxes + 49.8 - 47.1 - 76.2 + 91.9
Pound sterling / US dollar
Revaluation reserve + 58.9 - 58.3 + 0.9 - 0.9
Earnings after income taxes + 406.7 - 481.4 - 18.4 + 28.3
EUR / Swedish krona
Revaluation reserve + 0.1 - 0.1 - -
Earnings after income taxes + 0.1 - 0.1 - + 0.1
Interest rate risk
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
non-derivative 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 100 basis points (previous year 50 basis points)
as at the balance sheet date. The adjustment in the sensitivity of
market prices from 50 basis points in the previous year to 100
basis points was based on the assumption that central banks are
expected to continue with an aggressive rate hike cycle in the
coming months.
Sensitivity analysis - interest rate risk
EUR million 30 Sep 2022 30 Sep 2021
Variable: Interest rate level for + 100 basis points - 100 basis points + 50 basis points - 50 basis points
floating interest-bearing debt
Earnings after income taxes - 0.3 + 0.4 + 2.9 - 2.9
Impact of the reform of global reference interest rate
(IBORs)
The global reform of reference interest rates (IBORs) gives rise
to uncertainties for TUI insofar as variable reference interest
rates that are available today, on which some transactions
concluded in foreign currencies are based, will no longer be
available in the future or will be determined differently. At TUI,
only non-derivative risk positions are affected by these
uncertainties. As in the previous year, there are no derivative
risk positions.
With regard to the EURIBOR, there are no effects from the switch
to accounting for non-derivative assets and liabilities. The method
of calculating the EURIBOR had already been adjusted by the
European Money Market Institute in 2019 in order to ensure that the
EURIBOR conforms to the EU benchmark regulation.
According to the latest announcements, the USD LIBOR quotations
will not be published after June 30, 2023. With reference to the
USD LIBOR, there are non-derivative liabilities at 30 September
2022 with carrying amounts totalling EUR 492.7 m (previous year EUR
334.9 m) with a term beyond 30 June 2023. Of this amount, EUR 15.7
m (previous year EUR 0.1 m) relating to a bank facility with a
contractual fallback clause. The other risk positions relate to the
leases or financing of aircraft. There is some residual risk with
regard to the timeliness and the content of the contract amendment
needed. TUI's fleet management will enter into talks with the
counterparties in the coming months to agree on fallback clauses or
to convert the existing agreements to an alternative reference
interest rate. No significant effects are expected from the
USD-LIBOR conversion, which is still pending.
Fuel price risk
Due to the nature of its business operations, 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.
They aim to take out cover ahead of the markets' customer booking
profiles in the planned commodity requirements in the run-up to the
tourism season. 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. Target hedge ratios are
regularly reviewed 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 15 % (previous year + 10 % / - 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 price to +/- 15 % was based on the
assumption that an above-average price volatility in fuel prices
could be expected to continue over the coming months in the context
of the current geo-political environment.
Sensitivity analysis - fuel price risk
EUR million 30 Sep 2022 30 Sep 2021
Variable: Fuel prices for aircraft and ships + 15 % - 15 % + 10 % - 10 %
Revaluation reserve + 13.5 - 26.0 + 2.1 - 2.0
Earnings after income taxes + 15.0 - 3.0 + 10.1 - 10.1
Other price risks
Apart from the financial risks that may result from changes in
exchange rates, commodity prices and interest rates, 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 in particular 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 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. In principle 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. In the event of insolvencies or other objective
indications of impairment before this date, a transfer to stage 3
is made earlier. If a receivable is more than 180 days overdue, it
is assumed to be impaired and, in the event of uncollectibility,
generally written down in full. 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 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 all classes 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 by the Group companies based on past experience of recoveries
of such assets in the country specific business environment if the
financial asset is no longer expected to be collected due to days
overdue. For corporate customers, 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 does not expect significant recovery of amounts written off.
However, written-off financial assets may still be subject to
enforcement actions to collect overdue receivables.
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. Depending on the portfolio, a
reclassification to stage 2 is regularly made if the overdue amount
is more than 30 days past due. 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 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 on all financial
assets with a corresponding adjustment of the carrying amount
through a provision for impairment.
As at 30 September 2022, trade receivables were impaired in the
amount of EUR 59.5 m (previous year EUR 71.6 m). The following
overview shows a maturity analysis of the impairments.
Ageing structure of impairment of financial instruments classified as trade receivables
30 Sep 2022
EUR million Gross value Impairment Net value Impairment ratio
Trade receivables
Not overdue 271.9 6.8 265.1 5 - 25 %
Overdue less than 30 days 95.9 11.6 84.3 10 - 30 %
Overdue 30 - 90 days 35.4 12.3 23.1 15 - 35 %
Overdue 91 - 180 days 17.5 8.5 9.0 20 - 45 %
Overdue more than 180 days 38.0 20.3 17.7 50 - 75 %
Total 458.7 59.5 399.2
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
Impairments of lease receivables have developed as follows:
Ageing structure of impairment of financial instruments classified as lease receivables
30 Sep 2022
EUR million Gross value Impairment Net value Impairment ratio
Lease receivables
Not overdue 9.8 0.2 9.6 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 9.8 0.2 9.6
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
The following tables show the development of impairment losses
on financial instruments in the category Other receivables and
assets and in the category advances and loans, in each case less
the amounts shown for the corresponding category in the table of
the default risk below.
Ageing structure of impairment of financial instruments classified as other receivables and assets
30 Sep 2022
EUR million Gross value Impairment Net value Impairment ratio
Other receivables and assets
Not overdue 642.1 2.3 639.8 5 - 25 %
Overdue less than 30 days - - - 10 - 30 %
Overdue 30 - 90 days 3.4 3.4 - 15 - 35 %
Overdue 91 - 180 days 0.2 - 0.2 20 - 45 %
Overdue more than 180 days 1.1 0.3 0.8 50 - 75 %
Total 646.8 6.0 640.8
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
Impairments of advances and loans developed as follows:
Ageing structure of impairment of financial instruments classified as advances and loans
30 Sep 2022
EUR million Gross value Impairment Net value
Advances and loans
Not overdue 23.0 15.6 7.4
Overdue less than 30 days - - -
Overdue 30 - 90 days 0.1 0.1 -
Overdue 91 - 180 days - - -
Overdue more than 180 days 5.6 5.6 -
Total 28.7 21.3 7.4
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
The material single items in the following table, 'Default risk
on financial instruments classified as advances and loans, as other
receivables or as other financial assets' are disclosed based on an
internal rating. In the past financial year, there was a stage
transfer in the individual items listed there in the category of
advances and loans to related companies from stage 2 to stage 3 in
the amount of EUR 6.2 m (previous year two transfers from stage 1
to stage 2 totaling EUR 9.7 m).
Default risk on financial instruments classified as advances and loans, as other receivables or as other financial
assets
30 Sep 2022 30 Sep 2021
EUR million Impairment Rating Gross Impairment Net Gross Impairment Net
Stage value value value value
Loans to related
parties
Advances and loans 1 internal: 21.9 - 0.6 21.3 25.0 - 0.2 24.8
class 2
Advances and loans 3 internal: 6.2 - 3.6 2.6 - - -
class 5
Other receivables 1 internal: - - - 0.5 - 0.5
class 2
Loans to hotels
Advances and loans 1 internal: 10.4 - 1.8 8.6 7.8 - 0.5 7.3
class 5
Advances and loans 2 internal: 30.0 - 3.3 26.7 29.0 - 1.5 27.5
class 5
Other receivables 3 internal: 41.0 - 13.8 27.2
class 3
Loans to other
companies
Advances and loans 1 internal: - - - 130.0 - 0.1 129.9
class 2
Other financial 1 internal: 34.6 - 0.2 34.4 - - -
assets class 1
Other receivables 1 internal: - - - 89.2 - 0.2 89.0
class 2
Other financial 1 external 45.1 - 0.1 45.0 - - -
assets
Other financial assets carried at amortised cost at an amount of
EUR 85.8 m (previous year EUR 12.1 m) relate to short-term deposits
with banks. The full amount of these investments with a gross
amount of EUR 86.2 m (previous year EUR 12.7 m) is not overdue.
Impairments of EUR 0.5 m (previous year EUR 0.7 m) were carried in
the framework of risk provisioning.
In the financial year 2022, there were cash inflows of EUR 4.8 m
from impaired interest-bearing trade receivables and other
receivables (previous year no significant cash inflows).
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 2 Stage 3
EUR million Stage 1 lifetime-ECL lifetime-ECL Total
12-month-ECL (not (impaired)
impaired)
Risk provisioning as at 1 Oct 2020 66.2 4.8 - 71.0
Exchange differences 0.1 - - 0.1
Addition of impairments on newly issued / 18.7 - - 18.7
acquired financial assets
Transfer to stage 2 lifetime ECL (not impaired) - 9.7 9.7 - -
Unrequired impairments on financial assets derecognised during the 47.7 0.2 - 47.9
period and use of impairments
Risk provisioning as at 30 Sep 2021 27.6 14.3 - 41.9
Risk provisioning as at 1 Oct 2021 27.6 14.3 - 41.9
Addition of impairments on newly issued / 2.3 1.8 20.8 24.9
acquired financial assets
Transfer to stage 3 lifetime ECL (impaired) - 7.4 - 12.8 20.2 -
Unrequired impairments on financial assets derecognised during the 15.9 - - 15.9
period and use of impairments
Risk provisioning as at 30 Sep 2022 6.6 3.3 41.0 50.9
As at 30 September 2022, risk provisioning totals EUR 19.8 m
(previous year EUR 9.4 m) for the other receivables and assets
class and EUR 0.5 m (previous year EUR 0.7 m) for the other
financial assets class as well as EUR 30.6 m (previous year EUR
31.8 m) for the advances and loans class.
As at 30 September, 2022, three instruments in class other
receivables and assets and eight instruments in class advances and
loans were reported in stage 3 (previous year no instruments in
stage 3). There were no currency differences (previous year EUR 0.1
m). There was no change in the scope of consolidation (previous
year no changes). Transfers were made between the stages of the
impairment model in the advances and loans class. In the amount of
EUR 6.6 m from stage 1 to stage 3 and in the amount of EUR 12.8 m
from stage 2 to stage 3 (previous year transfer from stage 1 to
stage 2: EUR 9.7 m). A transfer of EUR 0.8 m from stage 1 to stage
3 was made in the other receivables and assets class (previous year
no transfer).
The largest single item in the use of impairments in class
advances and loans amounts to EUR 9.5 m. The models were adjusted
with regard to the risk parameters used in terms of the loss rate
in line with the macroeconomic market environment. This resulted in
a lower risk provision of EUR 6.2 m (previous year 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 2020 86.2
Exchange differences 0.7
Changes in the group of consolidated companies 0.1
Addition of impairments on newly issued / acquired financial assets 30.1
Unrequired impairments on financial assets derecognised during the period and use of impairments 45.5
Risk provisioning as at 30 Sep 2021 71.6
Risk provisioning as at 1 Oct 2021 71.6
Exchange differences 0.7
Addition of impairments on newly issued / acquired financial assets 23.6
Other changes 1.3
Unrequired impairments on financial assets derecognised during the period and use of impairments 37.7
Risk provisioning as at 30 Sep 2022 59.5
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 2020 27.1
Exchange differences 0.3
Unrequired impairments on financial assets derecognised during the period and use of impairments 27.1
Risk provisioning as at 30 Sep 2021 0.3
Risk provisioning as at 1 Oct 2021 0.3
Exchange differences - 0.3
Unrequired impairments on financial assets derecognised during the period and use of impairments - 0.2
Risk provisioning as at 30 Sep 2022 0.2
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
EUR million Stage 1 Stage 2 lifetime-ECL Stage 3 lifetime-ECL Total
12-month-ECL (not impaired) (impaired)
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
Gross carrying amounts as at 1 Oct 2021 188.9 45.0 - 233.9
Addition of assets 13.2 1.0 2.3 16.5
Reduction of assets - 153.1 - - - 153.1
Transfer to impaired financial assets (Stage 3) - 9.1 - 16.0 25.1 -
Gross carrying amounts as at 30 Sep 2022 39.9 30.0 27.4 97.3
As of 30 September 2022, instruments of the classes loans and
advances amounting to EUR 27.4 m are reported in stage 3. There
were no significant changes or modifications. There were transfers
of EUR 9.1 m from stage 1 to stage 3 and of EUR 16.0 m from stage 2
to stage 3 (previous year transfers between stage 1 and 2: EUR 9.7
m).
Change in gross carrying amounts classified as other receivables and assets
and other financial assets
EUR million Stage 1 Stage 3 lifetime-ECL Total
12-month-ECL (impaired)
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
Gross carrying amounts as at 1 Oct 2021 329.6 - 329.6
Addition of assets 685.4 44.4 729.8
Reduction of assets - 285.3 - - 285.3
Transfer to impaired financial assets (Stage 3) - 7.7 7.7 -
Gross carrying amounts as at 30 Sep 2022 722.0 52.1 774.1
As at 30 September 2022, instruments in the classes of other
receivables and assets and other financial assets amounting to EUR
52.1 m were reported in stage 3. There were no significant changes
or modifications. There were transfers from stage 1 to stage 3
amounting to EUR 7.7 m. (Previous year no transfers between stages
1 - 3). No newly issued or acquired instruments were impaired at
the date of addition.
Change in gross carrying amounts of assets classified as trade receivables
EUR million Lifetime ECL simplified
approach
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
Gross carrying amounts as at 1 Oct 2021 331.4
Addition of assets 458.7
Reduction of assets - 331.4
Gross carrying amounts as at 30 Sep 2022 458.7
Change in gross carrying amounts of assets classified as lease receivables
Lifetime ECL
EUR million simplified
approach
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
Gross carrying amounts as at 1 Oct 2021 11.4
Addition of assets 9.8
Reduction of assets - 11.4
Gross carrying amounts as at 30 Sep 2022 9.8
Liquidity risk
Liquidity risks arise from TUI Group being unable to meet its
short-term financial obligations and the resulting increases in
funding costs. 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 3.6 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 the
section 'Going-concern reporting in accordance with the UK
Corporate Governance Code'.
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 by
maturity 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 contractually agreed (undiscounted) cash
flows by maturity from all financial receivables and liabilities at
the balance sheet date.
Cash flow of financial instruments - financial and lease liabilities (30 Sep 2022)
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 - 29.5
Bonds - - 5.6 - - 5.6 - 58.7 - 11.2 - -
Liabilities to banks - 280.0 - 65.3 - 600.9 - 44.0 - 312.8 - 36.5 - 188.9 - 16.7
Other financial debt - 26.4 - 1.6 - 44.9 - 2.0 - 16.9 - 0.5 - -
Trade payables - 3,316.5 - - - - - - -
Other financial liabilities - 174.7 - 0.3 - 0.3 - - 2.5 - - -
Lease liabilities - 698.8 - 60.8 - 655.7 - 69.8 - 1,012.4 - 182.5 - 840.7 - 393.4
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 derivative financial instruments (30 Sep 2022)
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 + 156.2 - - -
Hedging transactions - outflows - 185.1 - - -
Other derivative financial instruments - inflows + 630.3 - - -
Other derivative financial instruments - outflows - 665.7 - - -
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 -
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 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 in the
past three financial years, 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 so 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. Despite the
significant increase in bookings, EUR+ 0.4 m were reclassified from
foreign currency hedges in the reporting period. During financial
year 2022 only foreign currency hedges have been de-designated as
the highly expected forecasted transactions did not occur.
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 2022, the fair
value of these reclassified fuel price hedges totalled EUR 21.6 m
at a nominal value of EUR 153.5 m, while the fair value of the
interest rate hedges amounted to EUR 5.7 m at a nominal volume of
EUR 358.1 m and the fair value of currency hedges totalled EUR 10.4
m at a nominal volume of EUR 68.7 m.
Cash flow hedges
At 30 September 2022, 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 none). The impact on profit or loss for the period
is at the time the expected cash inflow occurs.
Nominal amounts of derivative financial instruments used
30 Sep 2022
Remaining term
EUR million up to more than Total Average hedged rate / price
1 year 1 year
Currency hedges
Forwards 2,535.6 2.4 2,538.0
Forwards EUR / GBP 1,013.5 - 1,013.5 1.1582
Forwards EUR / USD 464.7 2.4 467.1 0.9627
Forwards GBP / USD 878.6 - 878.6 0.8368
Forwards EUR / SEK 63.5 - 63.5 0.0942
Other currencies 115.3 - 115.3
Commodity hedges
Swaps 165.2 - 165.2
Jet fuel 154.8 - 154.8 1,088.90
Marine fuel 10.4 - 10.4 674.27
Other fuels - - - -
Other derivative financial instruments 3,743.2 53.6 3,796.8
Nominal amounts of derivative financial instruments used
30 Sep 2021
Remaining term
EUR million up to more than Total Average hedged rate / price
1 year 1 year
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
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 2022
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 - - - 30.6
Currency risk hedges - 121.7 121.6 1.4
Fuel price risk hedges 23.8 - 22.9 - 19.3
Hedging - 97.9 98.7 - 48.5
Total - 97.9 98.7 - 48.5
Disclosures on underlying transactions of cash flow hedges
30 Sep 2021
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 - - - 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
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
cost of sales. The table below presents the development of OCI in
financial year 2022.
Development of OCI
30 Sep 2022
EUR million Interest Currency Fuel price Total
rate risk risk risk
Gain or loss from fair value changes of hedges within hedge - 30.6 123.0 - 42.2 50.2
accounting
recognised in equity - 30.6 123.0 - 42.2 50.2
Reclassification from cash flow hedge - 1.4 4.1 - 22.0 - 19.3
reserve to income statement
due to early termination of the hedge - 0.5 - 0.5
due to recognition of the - 1.4 3.6 - 22.0 - 19.8
underlying transaction
Development of OCI
30 Sep 2021
EUR million Interest Currency risk Fuel price risk Total
rate risk
Gain or loss from fair value changes of hedges within hedge accounting - 31.0 4.8 - 30.5 - 56.7
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
In the reporting period, expenses of EUR 18.4 m (previous year
expenses of EUR 139.8 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 1.4 m (previous year expenses of
EUR 3.0 m), carried in net interest income. Expense of EUR 1.3 m
(previous year income of EUR 0.2 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 2022
EUR million Receivables Liabilities FV changes to determine Nominal
ineffective portions volume
Cash flow hedges for
currency risks 124.4 2.8 121.6 2,537.9
fuel price risks - 24.2 - 24.2 165.2
interest rate risks - - - -
Hedging 124.4 27.0 97.4 2,703.1
Other derivative financial instruments 134.7 33.7 - 3,796.7
Total 259.1 60.7 97.4 6,499.8
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
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 2022, 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 2022
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 1,133.8 1,027.3 - - 106.5 1,124.5
scope of IFRS 9
thereof instruments within the 9.6 - - - - 9.9
scope of IFRS 16
Derivative financial
instruments
Hedging transactions 124.4 - - 124.4 - 124.4
Other derivative financial 134.7 - - - 134.7 134.7
instruments
Other financial assets 96.4 85.9 9.6 - 0.9 90.5
Cash and cash equivalents 1,736.9 1,736.9 - - - 1,736.9
Liabilities
Financial liabilities 2,051.3 2,051.3 - - - 1,656.7
Trade payables 3,316.5 3,316.5 - - - 3,316.5
Derivative financial
instruments
Hedging transactions 27.0 - - 27.0 - 27.0
Other derivative financial 33.7 - - - 33.7 33.7
instruments
Other financial liabilities 177.4 177.4 - - - 177.4
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 57.8 4.5
Other derivative financial 57.8 - - - 2.0 57.8
instruments
Other financial assets 24.4 12.1 10.3 - - 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
The amounts shown in the column 'carrying amount' (as shown in
the balance sheet) in the tables above can differ from those in the
other columns of a particular row since the latter include all
financial instruments. That is the latter columns include financial
instruments which are part of disposal groups according to IFRS 5.
In the balance sheet, financial instruments, which are part of a
disposal group, are shown as separate items. If such financial
instruments are included, further details on these financial
instruments are explained in the sections 'Assets held for sale'
and 'Liabilities related to assets held'.
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
fair value through OCI.
Aggregation according to measurement categories under IFRS 9 as at 30 Sep 2022
Carrying amount of Fair Value
EUR million financial
instruments Total
Financial assets
at amortised cost 2,850.1 2,834.9
at fair value - recognised directly in equity without recycling 9.6 9.6
at fair value - through profit and loss 242.1 242.1
Financial liabilities
at amortised cost 5,545.2 5,150.6
at fair value - through profit and loss 33.7 33.7
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
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
2022
Fair value hierarchy
EUR million Total Level 1 Level 2 Level 3
Assets
Other receivables 106.5 - - 106.5
Other financial assets 10.5 - - 10.5
Derivative financial instruments
Hedging transactions 124.4 - 124.4 -
Other derivative financial instruments 134.7 - 134.7 -
Liabilities
Derivative financial instruments
Hedging transactions 27.0 - 27.0 -
Other derivative financial instruments 33.7 - 33.7 -
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 -
At the end of every reporting period, TUI Group checks whether
there are any reasons for reclassification to or from one of the
measurement levels. Financial assets and financial liabilities are
generally transferred out of Level 1 into Level 2 if the liquidity
and trading activity no longer indicate an active market. The
opposite situation applies to potential transfers out of Level 2
into Level 1. In the reporting period, there were no transfers
between Level 1 and Level 2.
Reclassifications from Level 3 to Level 2 or Level 1 are made if
observable market price quotations become available for the asset
or liability concerned. In the reporting period there were no other
transfers from or to Level 3. TUI Group records transfers from or
to Level 3 at the date of the obligating event or occasion
triggering the transfer.
Level 1 Financial instruments
The fair value of financial instruments for which an active
market exists is based on quoted prices at the reporting date. An
active market exists if quoted prices are readily and regularly
available from an exchange, dealer, broker, pricing service or
regulatory agency and these prices represent actual and regularly
occurring market transactions on an arm's length basis. These
financial instruments are classified as Level 1. The fair values
correspond to the nominal amounts multiplied by the quoted prices
at the reporting date. Level 1 financial instruments primarily
comprise shares in listed companies classified as at fair value
through OCI and bonds issued classified as financial liabilities at
amortised cost.
Level 2 Financial instruments:
The fair values of financial instruments not traded in an active
market, e. g., over-the-counter (OTC) derivatives, are determined
by means of valuation techniques. These valuation techniques make
maximum use of observable market data and minimise the use of
group-specific assumptions. If all essential inputs for the
determination of the fair value of an instrument are observable,
the instrument is classified as Level 2.
If one or several key inputs are not based on observable market
data, the instrument is classified as Level 3.
The following specific valuation techniques are used to measure
financial instruments:
-- For 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, current financial 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 valuesof other financial
instruments.
Level 3 Financial instruments:
The table below presents the fair values of the financial
instruments measured at fair value on a recurring basis, classified
as Level 3.
Financial assets measured at fair value in Level 3
EUR million Other receivables Other financial
IFRS 9 assets IFRS 9
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 in other comprehensive income - - 0.1
Foreign currency effects - 1.9
Balance as at 30 Sep 2021 108.1 12.3
Balance as at 1 Oct 2021 108.1 12.3
Disposals - 15.0 -
Total gains or losses for the period 13.4 - 1.4
recognised through profit and loss 13.4 - 0.1
recognised in other comprehensive income - - 1.3
Foreign currency effects - - 0.4
Balance as at 30 Sep 2022 106.5 10.5
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 8.3 % and 24.0 % (previous year - 4.2 % and 22.5 %). The
constant growth rate is 1 % (previous year 1 %). The weighted
average cost of capital (WACC) is in a range between 9.5 %-11.3 %
(previous year 8.8 - 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 decrease in the fair values of Other financial assets in
Level 3 results from a measurement effect totalling EUR - 1.4 m and
from foreign exchange effects totalling EUR - 0.4 m.
Financial instruments classified as Other financial assets
include shares in corporations. The total fair value of these
financial investments at 30 September 2022 is EUR 9.6 m (previous
year EUR 10.3 m). In the year under review, there were no disposals
(previous year EUR 0.1 m) of shares in corporations as part of the
initial consolidation 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. Dividend
payments of EUR 0.3 m (previous year EUR 0.0 m) resulted from these
financial investments.
At 30 September 2022, other receivables in accordance with IFRS
9 in Level 3 include a carrying amount of EUR 106.5 m (previous
year EUR 108.1 m) for a variable purchase price receivable from the
sale of Riu Hotels S. A. in the prior year, measured as a financial
instrument in the category FVTPL. 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 (1.99 % until 2.87 % previous year - 0.33 % until - 0.22 %).
Gross operating profit is defined as total revenue minus operating
expenses. The cash flows from the contractual claims 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 112.4 m. Due to different expectations regarding
target achievement, potential purchase price payments vary between
EUR 0 and EUR 112.4 m. At 30 September 2022, the contractually
fixed target for 2022 had already been reached, thus the variable
purchase price receivable related to 2022 was recognised at its
maximum amount (EUR 87.7 m, previously EUR 69.9 m). After granting
a discount, income of EUR 13.4 m was recognised in the income
statement.
TUI expects the hotels concerned to deliver 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.
A sensitivity analysis shows that an increase in the hotels'
gross operating profit of 10 % (regarding calendar year 2023) would
result in a change in the present value of the additional purchase
price receivable of around EUR 2 m, while a reduction in gross
operating profit of 10 % would result in a change in the present
value of around EUR - 24.4 m. An interest rate shift of + / - 100
basis points would alter the present value of the purchase price
receivable by around EUR 0.5 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
2022
EUR million from interest other net result
net results
Financial assets 1.4 202.9 204.3
at amortised cost 1.4 40.1 41.5
at fair value through profit or loss - 162.8 162.8
Financial liabilities - 256.7 - 1.7 - 258.4
at amortised cost - 256.7 - 1.6 - 258.3
at fair value through profit or loss - - 0.1 - 0.1
Total - 255.3 201.2 - 54.1
Net results of financial instruments
2021
EUR million from interest other net result
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
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 2022
Derivative financial 259.1 - 259.1 32.9 - 226.2
assets
Cash and cash 1,859.7 122.8 1,736.9 - - 1,736.9
equivalents
Financial assets as
at 30 Sep 2021
Derivative financial 62.3 - 62.3 11.1 - 51.2
assets
Cash and cash 1,691.2 * 107.3 * 1,583.9 - - 1,583.9
equivalents
* Restated by EUR 49.5 m from a correction when determining the
netted amount.
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 2022
Derivative financial 60.7 - 60.7 32.9 - 27.8
liabilities
Financial liabilities 2,174.1 122.8 2,051.3 - - 2,051.3
Financial liabilities
as at 30 Sep 2021
Derivative financial 23.8 - 23.8 11.1 - 12.7
liabilities
Financial liabilities 3,428.0 * 107.3 * 3,320.7 - - 3,320.7
* Restated by EUR 49.5 m from a correction when determining the
netted amount.
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
are 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 TUI 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 and also in the first half of financial
year 2022, the travel restrictions triggered by the COVID-19
pandemic had 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, addititional
information can be found on page 162 and in the section on
Financial instruments, page 224 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.
TUI Group calculates the leverage ratio as the ratio of gross
financial debt + lease liabilities + recognised obligations from
defined benefit pension plans to EBITDA. Due to the lower gross
financial debt and the return to a positive EBITDA, the leverage
ratio improved in the 2022 financial year to a value of 4.7x. 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 2022 2021
Ø Invested Capital 5,457.8 6,913.1
Underlying EBIT 408.7 - 2,075.5
ROIC 7.5 % - 30.0 %
Gross financial liabilities 2,051.3 3,320.8
Lease liabilities 3,207.5 3,229.4
Defined benefit obligation recognised on the balance sheet 438.0 798.0
EBITDA 1,203.3 - 1,000.4
Leverage Ratio 4.7 - 7.3
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 150.8 m to EUR 1,736.9 m. The balance sheet item 'Assets held
for sale' did not include any cash or cash equivalents (previous
year EUR 2.2 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 inflow from operating activities
totalled EUR 2,077.8 m (previous year cash outflow of EUR 151.3 m).
This amount includes interest payments received of EUR 12.4 m
(previous year EUR 6.4 m) and dividends of EUR 0.3 m from
non-consolidated companies (previous year EUR 0.0 m) and of EUR 0.2
m from companies measured at equity (previous year EUR 14.2 m).
Income tax payments resulted in a cash outflow of EUR 131.4 m
(previous year EUR 9.0 m).
(44) Cash inflow / cash outflow from investing activities
In financial year 2022, the cash outflow from investing
activities totalled EUR 308.2 m (previous year inflow of EUR 704.7
m). This amount includes a cash outflow for capital expenditure
related to property, plant and equipment and intangible assets of
EUR 515.7 m. The Group recorded a cash inflow of EUR 180.7 m from
the sale of property, plant and equipment and intangible assets.
Purchase price adjustments for the divestment of interests in Riu
Hotels S. A., effected in the previous year, resulted in a cash
outflow of EUR 8.9 m. The divestment Karisma Hotels Caribbean S.
A., also effected in the previous year, resulted in a cash inflow
of EUR 3.5 m for TUI Group. TUI Group received an inflow of EUR
25.7 m net of cash and cash equivalents from the disposal of
Nordotel S. A. A part of the purchase price had already been paid
in the previous year.
(45) Cash inflow / cash outflow from financing activities
The cash outflow from financing activities totalled EUR 1,630.9
m (previous year outflow of EUR 233.5 m). TUI AG recorded a cash
inflow of EUR 1,522.7 m from equity increases after deduction of
capital procurement costs in October 2021 and in May 2022. At the
end of June, TUI AG fully repaid the Silent Participation II of EUR
671.0 m plus a coupon of EUR 51.0 m, carried as a dividend, to the
Economic Stabilisation Fund.
In the period under review, TUI AG reduced its syndicated credit
facility by EUR 1,301.4 m. TUI Group companies took out loans worth
EUR 109.7 m. A cash outflow of EUR 853.5 m was recorded for the
redemption of other financial liabilities, including an amount of
EUR 583.6 m for lease liabilities. A cash outflow of EUR 385.6 m
related to interest payments. A further cash outflow of EUR 0.6 m
was used to purchase shares transferred to TUI Group employees in
the framework of the oneShare employee stock option programme.
(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 12.2 m (previous year
EUR 33.2 m) due to foreign exchange effects.
Other Notes
(47) Services of the auditors of the consolidated financial
statements
TUI AG's consolidated financial statements have been audited by
Deloitte GmbH Wirtschaftsprüfungsgesellschaft. Since financial year
2022, Annika Deutsch has been the auditor in charge. Total expenses
for the services provided by the auditors of the consolidated
financial statements in financial year 2022 break down as
follows:
Services of the auditors of the consolidated financial statements
EUR million 2022 2021
Audit fees for TUI AG and subsidiaries in Germany 3.4 3.1
Audit fees 3.4 3.1
Review of interim financial statements 0.4 0.3
Other certification services (mainly in connection with comfort letters) 0.6 0.8
Other certification services 1.0 1.1
Total 4.4 4.2
(48) 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 6.4 m (previous year EUR 4.9
m), and that of the Supervisory Board members totalled EUR 3.2 m
(previous year EUR 3.2 m, adjusted). The aforementioned
remuneration of the Executive Board members includes a tranche of
the long term incentive plan of EUR 2.0 m (previous year EUR 0.0
m), which represents the fair value at the time of granting in
relation to a number of 1,878,828 phantom shares (previous year
3,573,057) granted in the 2022 financial year.
Pension payments for former Executive Board members or their
surviving dependants totalled EUR 6.2 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 63.0 m (previous year EUR 71.8 m) at the
balance sheet date.
(49) Use of exemption provision
The following German subsidiaries fully included in
consolidation made use of the exemption provision in accordance
with section 264 (3) of the German Commercial Code (HGB):
Use of exemption 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 Airline Service GmbH, Hanover TUIfly GmbH, Langenhagen
TUI Asset Management and Advisory GmbH, Hanover TUI fly Vermarktungs GmbH, Hanover
(50) Related parties
Apart from the subsidiaries included in the consolidated
financial statements, TUI AG, in carrying out its ordinary business
activities, maintains indirect or direct relationships with related
parties. Related parties controlled by TUI Group or over which TUI
Group is able to exercise a significant influence are shown in the
list of shareholdings (Note 52) 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 2022 2021
Services provided by the Group
Management and consultancy services 3.9 16.1
Sales of tourism services 49.2 36.9
Other services 0.8 -
Total 53.9 53.0
Services received by the Group
Rental and leasing agreements 18.3 9.5
Purchase of hotel services 309.3 110.1
Distribution services 6.5 0.8
Other services 14.7 2.9
Total 348.8 123.3
Transactions with related parties
EUR million 2022 2021
Services provided by the Group to
non-consolidated Group companies 0.4 0.3
joint ventures 38.1 29.0
associates 15.4 1.7
other related parties - 22.0
Total 53.9 53.0
Services received by the Group from
non-consolidated Group companies 1.0 0.4
joint ventures 226.4 106.1
associates 121.4 16.8
Total 348.8 123.3
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 October 2021, TUI Group sold Nordotel S. A. to the joint
venture Grupotel dos S. A. For details of the transaction, we refer
to the section 'Divestments'.
Receivables against related parties
EUR million 30 Sep 2022 30 Sep 2021
Trade receivables from
non-consolidated Group companies 0.1 -
joint ventures 9.6 4.2
associates 0.5 3.9
other related parties - 5.5
Total 10.2 13.6
Advances and loans to
non-consolidated Group companies - -
joint ventures 3.3 3.1
associates 26.9 27.3
other related parties - 2.5
Total 30.2 32.9
Payments on account to
joint ventures 15.1 24.4
Total 15.1 24.4
Other receivables from
non-consolidated Group companies 1.3 1.3
joint ventures 2.4 1.4
associates 1.6 1.8
other related parties - -
Total 5.3 4.5
Payables due to related parties
EUR million 30 Sep 2022 30 Sep 2021
Trade payables due to
non-consolidated Group companies 0.1 0.3
joint ventures 40.5 19.6
associates 19.7 3.0
other related parties - -
Total 60.3 22.9
Financial liabilities due to
non-consolidated Group companies 0.4 0.5
joint ventures 91.6 111.9
Total 92.0 112.4
Other liabilities due to
non-consolidated Group companies 4.5 4.9
joint ventures 15.8 6.3
associates 7.2 2.3
key management personnel 3.0 3.3
Total 30.5 16.8
Financial liabilities to joint ventures included liabilities
from leases of EUR 91.2 m (previous year EUR 111.9 m).
The share of result of associates and joint ventures is shown
separately in segment reporting.
As at 31 December 2021, Unifirm Ltd., Cyprus, held 34.0 % of the
shares in TUI AG (as at 30 September 2021 32.0 %). Unifirm Ltd. was
indirectly controlled by Alexey Mordashov. TUI received voting
rights notifications informing the company that a 4.1 % stake in
TUI AG had been transferred to Severgroup LLC, Russia, a company
controlled by Alexey Mordashov, on 28 February 2022 via a number of
share transfers, and that Alexey Mordashov had ceded control over
Unifirm Ltd. The majority shareholder of Unifirm Ltd., which held
29.9 % of the shares in TUI AG at the time of the notification of
voting rights, was, according to the notification, Ondero Ltd.,
British Virgin Islands. In a further regulatory notification TUI
was informed on 18 March 2022 that Marina Mordashova was the
controlling shareholder of Ondero Ltd.
Moreover, the Federal Ministry for Economic Affairs and Climate
Action has informed TUI on 17 March 2021 that it has initiated an
assessment procedure under the Foreign Trade and Payments Act to
ascertain whether the reported transactions are effective. Until
the conclusion of these proceedings the transactions are
provisionally invalid and the voting rights of Unifirm Ltd. may not
be exercised.
Alexey Mordashov was specified on a EU sanctions list on 28
February 2022, Marina Mordashova on 3 June 2022. Thus they do not
have access to the shares in TUI AG controlled by them, the
associated voting rights and economic benefits. This applies
irrespectively of the outcome of the review by the Federal Ministry
for Economic Affairs and Climate Protection. Mr Mordashov stepped
down from TUI AG's Supervisory Board on 2 March 2022.
Mr Mordashov and Ms Mordashova and the companies controlled by
them therefore do not constitute related parties to TUI AG since
the sabctions entered into force.
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 2022 2021
Short-term benefits 7.6 8.1*
Post-employment benefits - 1.2 1.5
Share-based payment 1.1 0.5
Termination benefits - Share-based payment 1.4 -
Termination benefits - Other 3.0 -
Total 11.9 10.1
* Adjusted.
Post-employment benefits are transfers to or reversals of
pension provisions for Executive Board members active in the
reporting period. The expenses mentioned do not meet the definition
of remuneration for Executive and Supervisory Board members under
German accounting rules. The share-based payments are an offset
amount of expenses due to the addition to the provision and income
resulted from the reversal of the provision due to the valuation.
Termination benefits relate to provisions in connection with the
resignation of Fritz Joussen, whose service agreement including all
related compensation components will continue until the end of the
2024 financial year.
Pension provisions for active Executive Board members total EUR
13.2 m (previous year EUR 16.0 m) as at the balance sheet date. In
addition, provisions of EUR 5.1 m (previous year EUR 2.6 m) are
recognised relating to the long-term incentive programme.
(51) International Financial Reporting Standards (IFRS) not yet
applied
New standards endorsed by the EU, but applicable after 30 Sep 2022
Expected impact
Standard Applicable Amendments on financial
from position and
performance
The amendments specify which costs to include in assessing whether a
Amendments to IAS contract is onerous. The amendments clarify that the cost of fulfilling a No major
37 1 Jan 2022 contract consists of the direct cost of the contract representing either impacts.
Onerous Contracts the incremental costs of fulfilling the contract or an allocation of other
costs that relate directly to fulfilling the contract.
The amendments prohibit deducting from the cost of an item of property,
Amendments to IAS plant and equipment any proceeds from selling items produced while
16 1 Jan 2022 bringing that asset to the location and condition necessary for it to be No impacts.
Proceeds before capable of operating in the manner intended by management. Instead, an
Intended Use 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 Framework in IFRS 3
Reference to the 1 Jan 2022 without changing the accounting requirements for business combinations. No impacts.
Conceptual
Framework
Various The amendments resulting from the Annual Improvements 2018-2020 Cycle
amendments to 1 Jan 2022 include small amendments to IFRS 1, IFRS 9, IAS 41, and the Illustrative No major
IFRS Examples accompanying IFRS 16. impacts.
(2018-2020 Cycle)
IFRS 17 establishes the principles for the accounting for insurance
IFRS 17 contracts and replaces IFRS 4. On 25 June 2020, the IASB published
Insurance 1 Jan 2023 Amendments to IFRS 17 and deferred the effective date of the Standard to 1 Not relevant.
Contracts January 2023. Amendments were also issued to address
challenges arising from the implementation of IFRS 17 that were identified
after it was published.
TUI will review
the impacts
Amendments to IAS The amendments to IAS 1 and IFRS Practice Statement 2 are to help of this
1 preparers in deciding which accounting and measurement methods to amendment on
Disclosure of 1 Jan 2023 disclose in their financial statements. The amendments require entities to the
Accounting disclose their material accounting and measurement policy information disclosures of
Policies instead of their significant accounting and measurement policies. accounting
policies in
financial year
2023.
Amendments to IAS The amendments to IAS 8 are to help entities to distinguish between
8 accounting policies and accounting estimates. The definition of a change
Definition of 1 Jan 2023 in accounting estimates is replaced with a new definition of accounting No major
Accounting estimates. It is clarified that a change in an accounting estimate that impacts.
Estimates results from new information or new developments is not the correction of
an error.
Amendments to
IFRS 17
Initial The amendment addresses implementation challenges in the presentation of
Application of 1 Jan 2023 comparative information that were identified after IFRS 17 No impact.
IFRS 17 and was published.
IFRS 9 -
Comparative
Information
Amendments to IAS
12 The amendments clarify that deferred tax assets and liabilities have to be
Deferred tax formed when a transaction gives rise to equal amounts of deductible
related to Assets and taxable temporary differences at the same time. The initial No major
and 1 Jan 2023 recognition exemption, according to which deferred tax assets or impacts.
Liabilities liabilities are not recognised on initial recognition of an asset or a
arising from a liability, does not apply to transactions of this type.
Single
Transaction
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 2022
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
Amendments to of liabilities as current or non-current will exclusively be based
IAS 1 on 'rights' that are in existence at the end of the reporting TUI will review the
Classification 1 Jan 2024 period. The impacts of this
of Liabilities amendments additionally include guidance on the interpretation of amendment in due course.
as the criterion 'right to defer settlement by at least twelve months' We
Current or and currently do not expect
Non-Current clarify what 'settlement' refers to. On 15 July 2020, the IASB had to see any
issued an amendment resulting in the deferral of the effective date major impacts.
to
1 January 2023. By the amendments to IAS 1 (Non-current Liabilities
with Covenants) issued on 31 October 2022, the effective date of
these amendments is deferred again to 1 January 2024.
Amendments to
IFRS 16 The amendments clarify how a seller-lessee subsequently measures
Lease Liability 1 Jan 2024 sale and leaseback transactions that satisfy the requirements in No major impacts.
in a Sale and IFRS 15 to be accounted for as a sale.
Leaseback
The amendments to IAS 1 clarify that only covenants an entity must TUI will review the
Amendments to comply with on or before the reporting period should affect the impacts of this
IAS 1 classification of the corresponding liability as current or amendment in due course.
Non-Current 1 Jan 2024 non-current. However, an entity is required to disclose information We
Liabilities in the notes currently do not expect
with Covenants that enables users of financial statements to understand the risk to see any
that non-current liabilities with covenants could become repayable major impacts.
within twelve months.
(53) TUI Group Shareholdings
Company Country Capital share in
%
Consolidated companies
Tourism
Absolut Holding Limited, Qormi Malta 99.9
Advent Insurance PCC Limited (Absolut Cell), Qormi Malta 100
Africa Focus Tours Namibia (Proprietary) Limited, Windhoek Namibia 100
Antwun S.A., Clémency Luxembourg 100
ATC African Travel Concept Proprietary Limited, Cape Town South Africa 50.1
ATC-Meetings and Conferences Proprietary Limited, Cape Town South Africa 100
B.D.S Destination Services Tours, Cairo 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., Athens Greece 100
Clubhotel JD, S.A., Las Palmas Spain 100
Cruisetour AG, Zurich Switzerland 100
Daidalos Hotel- und Touristikunternehmen A.E., Athens Greece 89.8
Darecko S.A., Luxembourg Luxembourg 100
Destination Services Singapore Pte Limited, Singapore Singapore 100
Egyptian Germany Co. for Hotels Limited, Cairo Egypt 66.6
Elena SL, Palma de Mallorca Spain 100
ETA Turizm Yatirim ve Isletmeleri A.S., Ankara Turkiye 100
Evre Grup Turizm Yatirim A.S., Ankara Turkiye 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, Hanover 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 Turkiye 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 Turkiye 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, Hanover Germany 70
Hellenic EFS Hotel Management E.P.E., Athens 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 Turkiye 100
Iberotel Otelcilik A.S., Istanbul Turkiye 100
Imperial Cruising Company SARL, Heliopolis-Cairo Egypt 90
Inter Hotel SARL, Tunis Tunisia 100
Intercruises Port Operations USA Inc, Wilmington DE United States 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, Nicosia Cyprus 100
Jandia Playa S.A., Morro Jable, Fuerteventura Spain 100
Kurt Safari Proprietary Limited, White River - Mpumalanga South Africa 51
Kybele Turizm Yatirim San. Ve Tic. A.S., Istanbul Turkiye 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 99,6
Lima Tours S.A.C., Lima Peru 100
Lodges & Mountain Hotels SARL, Courchevel France 100
l'tur GmbH, Rastatt Germany 100
L'TUR Suisse AG, Basel Switzerland 99.5
Lunn Poly Limited, Luton United Kingdom 100
Magic Hotels SA, Tunis Tunisia 100
MAGIC LIFE Assets GmbH, Vienna 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
Musement S.p.A., Milan Italy 100
MX RIUSA II S.A. de C.V., Cabo San Lucas Mexico 100
Nazar Nordic AB, Malmö Sweden 100
Nouvelles Frontières Senegal S.R.L., Dakar Senegal 100
Nungwi Limited, Zanzibar 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., Beijing 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, Hong Kong Hong Kong SAR 100
Pacific World Meetings & Events SAM, Monaco Monaco 100
Pacific World Meetings & Events Singapore Pte. Ltd, Singapore Singapore 100
Pacific World Meetings and Events France SARL, Nice France 100
Pacific World Travel Services Company Limited, Ho Chi Minh City Vietnam 90
Papirüs Otelcilik Yatirim Turizm Seyahat Insaat Ticaret A.S., Antalya Turkiye 100
Paradise Hotel Management Company LLC, Cairo Egypt 100
PATS N.V., Ostend Belgium 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
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, Hanover 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 Turkiye 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 Turkiye 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, Marrakesh Morocco 100
Société d'Investissement Aérien S.A., Casablanca Morocco 100
Société d'Investissement et d'Exploration du Paladien de Calcatoggio (SIEPAC), France 100
Calcatoggio
Société d'investissement hotelier Almoravides S.A., Marrakesh Morocco 100
Société Marocaine pour le Developpement des Transports Touristiques S.A., Morocco 100
Agadir
Sons of South Sinai for Tourism Services and Supplies SAE, Sharm el Sheikh Egypt 84.1
Stella Polaris Creta A.E., Heraklion Greece 100
STIVA RII Ltd., Dublin Ireland 100
Summer Times Ltd., Quatre Bornes Mauritius 100
Summertime International Ltd., Quatre Bornes Mauritius 100
Sunshine Cruises Limited, Luton United Kingdom 100
Tantur Turizm Seyahat A.S., Istanbul Turkiye 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, Hanover Germany 100
TLT Urlaubsreisen GmbH, Hanover 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., Rome Italy 100
TT Hotels Turkey Otel Hizmetleri Turizm ve ticaret A.S., Antalya Turkiye 100
TUI (Suisse) AG, Zurich Switzerland 100
TUI 4 U GmbH, Bremen Germany 100
TUI Airlines Belgium N.V., Ostend Belgium 100
TUI Airlines Nederland B.V., Rijswijk Netherlands 100
TUI Airways Limited, Luton United Kingdom 100
TUI Asset Management and Advisory GmbH, Hanover Germany 100
TUI Austria Holding GmbH, Vienna Austria 100
TUI Belgium NV, Ostend Belgium 100
TUI Belgium Real Estate N.V., Brussels Belgium 100
TUI Belgium Retail N.V., Zaventem Belgium 100
TUI BLUE AT GmbH, Schladming Austria 100
TUI BLUE DE GmbH, Hanover Germany 100
TUI Blue Hotels L.L.C., Dubai United Arab Emirates 100
TUI Bulgaria EOOD, Varna Bulgaria 100
TUI Curaçao N.V., Curaçao Country of Curaçao 100
TUI Customer Operations GmbH, Hanover Germany 100
TUI Cyprus Limited, Nicosia Cyprus 100
TUI Danmark A/S, Copenhagen Denmark 100
TUI Destination Experiences (Thailand) Limited, Bangkok* Thailand 49
TUI Destination Experiences Costa Rica SA, San José Costa Rica 100
TUI Destination Services Cyprus, Nicosia Cyprus 100
TUI Deutschland GmbH, Hanover 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., Athens Greece 100
TUI Holding Spain S.L., Palma de Mallorca Spain 100
TUI Holidays Ireland Limited, Dublin Ireland 100
TUI Hotel Betriebsgesellschaft mbH, Hanover 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, Vienna Austria 100
TUI Pension Scheme (UK) Limited, Luton United Kingdom 100
TUI Poland Dystrybucja Sp. z o.o., Warsaw Poland 100
TUI Poland Sp. z o.o., Warsaw Poland 100
TUI PORTUGAL - Agencia de Viagens e Turismo S.A., Faro Portugal 100
TUI Reisecenter Austria Business Travel GmbH, Vienna Austria 74.9
TUI Service AG, Altendorf Switzerland 100
TUI Suisse Retail AG, Zurich Switzerland 100
TUI Sverige AB, Stockholm Sweden 100
TUI Technology NV, Zaventem Belgium 100
TUI Travel Distribution N.V., Ostend 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, Hanover 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 Turkiye 100
Turkuaz Insaat Turizm A.S., Ankara Turkiye 100
Ultramar Express Transport S.A., Palma de Mallorca Spain 100
Umbhaba Eco Lodge Proprietary Limited, Cape Town South Africa 85
WOT Hotels Adriatic Management d.o.o., Zagreb Croatia 51
Zanzibar Beach Village Limited, Zanzibar 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, Hanover Germany 100
DEFAG Beteiligungsverwaltungs GmbH III, Hanover 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, Hanover Germany 100
Mala Pronta Viagens e Turismo Ltda., Curitiba Brazil 100
Manufacturer's Serial Number 852 Limited, Dublin Ireland 100
PM Peiner Maschinen GmbH, Hanover Germany 100
Preussag Beteiligungsverwaltungs GmbH IX, Hanover 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 Airline Service GmbH, Hanover Germany 100
TUI Ambassador Tours Unipessoal Lda, Lisbon Portugal 100
TUI Aviation Asset Company Limited, Luton United Kingdom 100
TUI Aviation GmbH, Hanover Germany 100
TUI Aviation Holding GmbH, Hanover Germany 100
TUI Aviation Services Limited, Luton United Kingdom 100
TUI Beteiligungs GmbH, Hanover Germany 100
TUI Brasil Operadora e Agencia de Viagens LTDA, Curitiba Brazil 100
TUI Business Services GmbH, Hanover 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., Beijing China 75
TUI Group Fleet Finance Limited, Luton United Kingdom 100
TUI Group Services GmbH, Hanover Germany 100
TUI Group UK Healthcare Limited, Luton United Kingdom 100
TUI Group UK Trustee Limited, Luton United Kingdom 100
TUI Immobilien Services GmbH, Hanover Germany 100
TUI India Private Limited, New Delhi India 100
TUI InfoTec GmbH, Hanover Germany 100
TUI Insurance & Financial GmbH, Hanover 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, Hanover Germany 75
Hapag-Lloyd Reisebüro Hagen Verwaltungs GmbH, Hanover Germany 70
HV Finance SAS, Levallois-Perret France 100
Ikaros Travel A.E. (i.L.), Heraklion Greece 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.), Athens Greece 100
NEA Synora Hotels Limited (Hinitsa Beach), Porto Heli Argolide Greece 100
New Eden S.A., Marrakesh 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
Société de Gestion du resort Al Baraka, Marrakesh Morocco 100
T-Développement SAS, Levallois-Perret France 100
Trendturc Turizm Otelcilik ve Ticaret A.S., Istanbul Turkiye 100
Triposo GmbH i.L., Berlin Germany 100
TUI 4 U Poland sp.zo.o., Warsaw 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 100
Republic)
TUI Travel Cyprus Limited, Nicosia 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
ARP Africa Travel Limited, Harrow United Kingdom 25
Atlantica Hellas A.E., Rhodes Greece 50
Atlantica Hotels and Resorts Limited, Limassol Cyprus 49.9
Bartu Turizm Yatirimlari Anonim Sirketi, Istanbul Turkiye 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 Cooperation mbH & Co. KG, Germany 50
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, Brussels 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., Cairo 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., Cairo 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., Marrakesh Morocco 33.3
Travco Group Holding S.A.E., Cairo Egypt 50
TRAVELStar GmbH, Hanover Germany 50
TRAVELStar Touristik GmbH & Co. OHG, Vienna 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, Hanover Germany 25
* Entrepreneurial management.
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, 12 December 2022
The Executive Board
Sebastian Ebel David Burling Mathias Kiep
Peter Krueger 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 2022, the consolidated statement of profit and 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 2021 to 30 September 2022, 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 2021 to 30 September 2022. In accordance with the
German legal requirements, we have not audited 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) GermanCommercial Code (HGB) and, in compliance
with these requirements, give a true and fair view of the
assets,liabilities and financial position of the Group as at 30
September 2022 and of its financial performance for thefinancial
year from 1 October 2021 to 30 September 2022, 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 2021 to 30 September 2022. 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, the Ukraine war and the general
price increases on the going concern assumption and presentation of
related 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, the Ukraine war and the general
price increases on the going concern assumption and presentation of
related risks
The global travel restrictions to contain COVID-19 have had a
negative impact on the Group's earnings and liquidity performance
from the end of March 2020 and throughout the financial year 2021 /
2022. Further uncertainties arise from the changed booking
behaviour as a result of the war in Ukraine and the general price
increases. In the notes to the consolidated financial statements,
the Executive Board explains that numerous financing measures were
successfully implemented in the prior year and in the reporting
year, including stabilisation measures by the Federal Republic of
Germany in the form of a credit facility provided by KfW and silent
participations by the Economic Stabilisation Fund (ESF) as well as
capital increases. Based on the funds raised from the financing
measures, a positive operating cash flow in the reporting year as
well as expected operating cash flow, the Executive 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 Executive Board
does not consider the remaining risk with regard to a change in
booking behaviour as jeopardising the Group's ability to continue
as a going concern. In its assessment, the Executive Board assumes
that the booking behaviour in the financial year 2022 / 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. Furthermore, the
Executive Board does not expect the war in Ukraine to have any
impact on travel behaviour. Nevertheless, the Executive Board says
in the notes to the consolidated financial statements that the
aggravated general price increase may lead to a clear reduction of
the budget available for travel services and hence to a decline in
customer demand. Another impairment to the development of TUI Group
could result from a permanent rise of fuel costs and bought-in
services. In addition, the Executive Board assumes that the
financial covenants for credit facilities with banks and KfW, which
have again been subject to monitoring since September 2022, will be
adhered to in the future and, on top of that, it will be possible
to refinance the credit facilities expiring in the summer of 2024.
In our view, this is a key audit matter because it strongly depends
on the Executive Board's judgements and estimates and is subject to
uncertainties.
The disclosures on the risks stated above and their assessment
are contained 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 for accuracy and
completeness concerning this matter. A focus was on assessing the
plausibility of the Executive Board's forecasts regarding the
Group's liquidity development and compliance with covenants,
especially against a backdrop of the developing COVID-19 pandemic
and general price increases. First of all, we checked the
plausibility of the Executive Board's planning, which was approved
by the Supervisory Board, and the assumptions contained therein by
comparing them with general and industry-specific market
expectations as well as historical data. In addition, we sensitised
the planning presented by the Executive Board to find out how much
the actual development of revenue, earnings and liquidity can
deviate from the Executive Board's expectations 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 specific financing measures and material
plan assumptions with representatives of TUI Group. Regarding the
financing measures carried out, we inspected the corresponding
documents, contracts and agreements, reviewing them critically with
regard to their impact on the consolidated financial statements. In
particular, at the end of our audit, we critically reviewed the
current short-term liquidity forecast prepared by the Company. In
addition, we evaluated the up-to-date assumptions underlying the
short-term liquidity forecast for plausibility by calling in our
specialists.
Recoverability of goodwill
In TUI AG's consolidated financial statements as at 30 September
2022, goodwill totalling mEUR 2,970.6 is reported under the item
'goodwill' in the statement of financial position. Goodwill is
subject to an impairment test at least once a year. Valuation is
made by means of a valuation model based on the discounted cash
flow method. Since the outcome of this valuation strongly depends
on the estimate of future cash inflows by the Executive Board and
on the discount rate used, in the light of the uncertainty of
further impacts of the COVID-19 pandemic, the Ukraine war and the
general price development there is an increased degree of
forecasting uncertainty. Thus, the valuation is subject to
significant uncertainty. Against this background, we believe that
this is a key audit matter.
The Company's disclosures on goodwill are provided in Note (12)
of the notes to the consolidated financial statements.
We evaluated the process for performing the impairment test on
goodwill, and carried out an assessment of the accounting-relevant
controls contained therein. Specifically, we satisfied ourselves of
the appropriateness of the future cash inflows used in the
calculation. For this purpose, among other things, we compared
these figures with the current budgets contained in the three-year
plan adopted by the Executive 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 156.1
are recognised under the item 'touristic payments on account' of
the statement of financial position in TUI AG's consolidated
financial statements as at 30 September 2022.
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 Executive 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. Keeping in mind that there is an
increased risk of misstatement in financial reporting when using
estimated values, and that the valuation decisions of the Executive
Board have a direct and significant effect on the group result, 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 assessed the recoverability
of touristic payments on account particularly in the light of
persisting partial underutilisation of some hotel capacities
despite a positive booking trend as well as potential effects of
the general price increase on customer demand. 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
2022 report deferred tax assets totalling mEUR 222.0 under the
statement of financial position item 'deferred income 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 Executive 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 and measurement policies'.
We involved our own tax experts in our audit of tax matters.
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 Executive 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
2022 report provisions for maintenances of mEUR 827.7 under the
statement of financial position item 'other provisions'.
Furthermore, provisions for pensions and similar obligations of
mEUR 601.3 were recognised as of 30 September 2022. 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 Executive Board.
The Company's disclosures on provisions are provided under the
Notes (30) and (31) as well as under the disclosures on accounting
and measurement methods set out in the notes to the consolidated
financial statements.
We evaluated the process of recognition and measurement
applicable to specific provisions, and carried out an assessment of
the accounting-relevant controls contained therein. In the
knowledge that there is an increased risk of misstatements in
financial reporting with estimated values, and that the valuation
decisions of the Executive 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 Executive Board and / or the Supervisory Board are
responsible for the other information. The other information
comprises
-- the report of the Supervisory Board,
-- the report of the audit committee,
-- the remuneration report,
-- the unaudited content of the combined management report
specified in the appendix to the auditor'sreport,
-- the executive directors' confirmation regarding the
consolidated financial statements and the combinedmanagement report
pursuant to Section 297 (2) sentence 4 and Section 315 (1) sentence
5 HGB, and
-- all other parts of the annual report,
-- but not the consolidated financial statements, not the
audited content of the combined management reportand not our
auditor's report thereon.
The Supervisory Board is responsible for the report of the
Supervisory Board and for the report of the audit committee. The
Executive Board and the Supervisory Board are responsible for the
statement pursuant to Section 161 German Stock Corporation Act
(AktG) on the German Corporate Governance Code, which forms part of
the corporate governance statement included in the section
'Corporate Governance Report' set out in the combined management
report. Otherwise the Executive 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 identified above and, in doing so, to consider
whether the other information
-- is materially inconsistent with the consolidated financial
statements, with the audited content of the combined management
report or our knowledge obtained in the audit, or
-- otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this
regard.
Responsibilities of the Executive Board and the Supervisory
Board for the Consolidated Financial Statements and the Combined
Management Report
The Executive 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 Executive 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 Executive 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 Executive 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 Executive 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 Executive Board in the combinedmanagement report.
On the basis of sufficient appropriate audit evidence we evaluate,
in particular, thesignificant assumptions used by the Executive
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 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
for 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 Reproductions of the
Consolidated Financial Statements and of the Combined Management
Report Prepared for Publication Pursuant to Section 317 (3a)
HGB
Audit Opinion
We have performed an audit in accordance with Section 317 (3a)
HGB to obtain reasonable assurance whether the electronic
reproductions of the consolidated financial statements and of the
combined management report (hereinafter referred to as 'ESEF
documents') prepared for publication, contained in the provided
file, which has the SHA-256 value
48e4ce192578a229edb505d83cefc8441a214ad29f0ef4c51ddb41bdde3b87b4,
meet, in all material respects, the requirements for the electronic
reporting format pursuant to Section 328 (1) HGB ('ESEF format').
In accordance with the German legal requirements, this audit only
covers the conversion of the information contained in the
consolidated financial statements and the combined management
report into the ESEF format, and therefore covers neither the
information contained in these electronic reproductions nor any
other information contained in the file identified above.
In our opinion, the electronic reproductions of the consolidated
financial statements and of the combined management report prepared
for publication contained in the provided file identified above
meet, in all material respects, the requirements for 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 2021 to 30 September
2022 contained in the 'Report on the Audit of the Consolidated
Financial Statements and of the Combined Management Report' above,
we do not express any assurance opinion on the information
contained within these electronic reproductions or on any other
information contained in the file identified above.
Basis for the Audit Opinion
We conducted our audit of the electronic reproductions of the
consolidated financial statements and of the combined management
report contained in the provided file identified above in
accordance with Section 317 (3a) HGB and on the basis of the IDW
Auditing Standard: Audit of the Electronic Reproductions of
Financial Statements and Management Reports Prepared for
Publication Purposes Pursuant to Section 317 (3a) HGB (IDW AuS 410
(10.2021)). Our responsibilities in this context are further
described in the 'Group Auditor's Responsibilities for the Audit of
the ESEF Documents' section. Our audit firm has applied the IDW
Standard on Quality Management: Requirements for Quality Management
in the Audit Firm (IDW QS 1).
Responsibilities of the Executive Board and the Supervisory
Board for the ESEF Documents
The Executive Board of the parent is responsible for the
preparation of the ESEF documents 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 Executive Board of the parent is responsible
for such internal controls that it has considered necessary to
enable the preparation of ESEF documents that are free from
material intentional or unintentional non-compliance with the
requirements for the electronic reporting format pursuant to
Section 328 (1) HGB.
The Supervisory Board is responsible for overseeing the process
for preparing the ESEF documents as part of the financial reporting
process.
Group Auditor's Responsibilities for the Audit of the ESEF
Documents
Our objective is to obtain reasonable assurance about whether
the ESEF documents are free from material intentional or
unintentional non-compliance with the requirements of Section 328
(1) HGB. We exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
-- identify and assess the risks of material intentional or
unintentional non-compliance with therequirements of Section 328
(1) HGB, 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 on the ESEF documents in order todesign audit procedures that
are appropriate in the circumstances, but not for the purpose of
expressing anassurance opinion on the effectiveness of these
controls.
-- evaluate the technical validity of the ESEF documents, i. e.
whether the provided file containing the ESEF documents meets the
requirements of the Delegated Regulation (EU) 2019 / 815, in the
version in force at thereporting date, on the technical
specification for this electronic file.
-- evaluate whether the ESEF documents enable a XHTML
reproduction with content equivalent to the auditedconsolidated
financial statements and to the audited combined management
report.
-- evaluate whether the tagging of the ESEF documents with
Inline XBRL technology (iXBRL) in accordance withthe requirements
of Articles 4 and 6 of the Delegated Regulation (EU) 2019 / 815, in
the version in force at thereporting date, enables an appropriate
and complete machine-readable XBRL copy of the XHTML
reproduction.
Further Information pursuant to Article 10 of the EU Audit
Regulation
We were elected as Group auditor by the general meeting on 8
February 2022. We were engaged by the Supervisory Board on 28 March
2022. We have been the group auditor of TUI AG, Berlin and Hanover
/ Germany, without interruption since the financial year 2016 /
2017.
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 Executive 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 Executive 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 Executive 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 2021 /
2022. We have nothing to report in this regard.
OTHER MATTER - USE OF THE AUDITOR'S REPORT
Our auditor's report must always be read together with the
audited consolidated financial statements and the audited combined
management report as well as with the audited ESEF documents. The
consolidated financial statements and the combined management
report converted into the ESEF format - including the versions to
be published in the Federal Gazette - are merely electronic
reproductions of the audited consolidated financial statements and
the audited combined management report and do not take their place.
In particular, the ESEF report and our audit opinion contained
therein are to be used solely together with the audited ESEF
documents made available in electronic form.
GERMAN PUBLIC AUDITOR RESPONSIBLE FOR THE ENGAGEMENT
The German Public Auditor responsible for the engagement is
Annika Deutsch.
Hanover / Germany, 12 December 2022
Deloitte GmbH
Wirtschaftsprüfungsgesellschaft
Signed: Signed:
Christoph B. Schenk Annika Deutsch
Wirtschaftsprüfer Wirtschaftsprüferin
(German Public Auditor) (German Public Auditor)
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 HGB included in the section 'Non-financialDeclaration of TUI
Group' of the combined management report
-- the corporate governance report / the corporate governance
statement including the corporate governance statement pursuant to
Section 289f and Section 315d HGB and
-- the other parts of the combined management report marked as
unaudited.
Report of the Independent Auditor Regarding the consolidated
non-financial statement
To TUI AG, Hannover
Our Engagement
We have performed a limited assurance engagement on the
consolidated non-financial statement of TUI AG, Hannover,
(hereinafter referred to as "the Company") included in the Group
Management Report, which is combined with the Management Report,
for the fiscal year from October 1, 2021 to September 30, 2022
(hereinafter referred to as "non-financial reporting"). Not in
scope of this engagement were the TCFD-Statement and other
websites that were in the group non-financial statement.
Responsibilities of the Executive Directors
The executive directors of the Company are responsible for the
preparation of the non-financial reporting in accordance with §§
315c in conjunction with 289c to 289e German Commercial Code (HGB)
and Article 8 of Regulation (EU) 2020 / 852 of the European
Parliament and of the Council of 18 June 2020 on the establishment
of a framework to facilitate sustainable investment, and amending
Regulation (EU) 2019 / 2088 (hereafter referred to as "EU Taxonomy
Regulation") and the delegated acts adopted thereon, as well as
with their own interpretation of the wording and terminology
contained in the EU Taxonomy Regulation and the delegated acts
adopted thereon, as is presented in section "Disclosure according
to line EU Taxonomy Regulation (EU) 2020 / 852" in the
non-financial reporting.
These responsibilities of the executive directors include the
selection and application of appropriate methods regarding
non-financial reporting and the use of assumptions and estimates
for individual non-financial disclosures which are reasonable under
the given circumstances. In addition, the executive directors are
responsible for internal controls they have determined necessary to
enable the preparation of the non-financial reporting that is free
from - intentional or unintentional - material misstatement due to
fraudulent behavior (accounting manipulation or misappropriation of
assets) or error.
Some of the wording and terminology contained in the EU Taxonomy
Regulation and the delegated acts adopted thereon are still subject
to considerable interpretation uncertainty and have not yet been
officially clarified. Therefore, the executive directors have laid
down their own interpretation of the EU Taxonomy Regulation and of
the delegated acts adopted thereon in section "Disclosure according
to line EU Taxonomy Regulation (2020 / 852)" of the non-financial
reporting. They are responsible for the selection and
reasonableness of this interpretation. As there is the inherent
risk that indefinite legal concepts may allow for various
interpretations, evaluating the legal conformity is prone to
uncertainty.
The accuracy and completeness of environmental data in the
non-financial reporting is thus subject to inherent limitations
resulting from the way how the data was collected and calculated
and from assumptions made.
Independence and Quality Assurance of the Firm
We have complied with the German professional regulations on
independence and other professional rules of conduct.
Our auditing firm applies the national statutory rules and
professional announcements - particularly of the "Professional
Charter for German Public Auditors and German Sworn Auditors" and
of the IDW Quality Assurance Standard "Quality Assurance
Requirements in Audit Practices" (IDW QS 1) promulgated by the
Institut der Wirtschaftsprüfer (IDW) and does therefore maintain a
comprehensive quality assurance system comprising documented
regulations and measures in respect of compliance with professional
rules of conduct, professional standards, as well as relevant
statutory and other legal requirements.
Responsibilities of the Auditor
Our responsibility is to express a conclusion opinion on the
non-financial reporting based on our work performed within our
limited assurance engagement.
We conducted our work in accordance with the International
Standard on Assurance Engagements 3000 (Revised) "Assurance
Engagements Other than Audits or Reviews of Historical Financial
Information" (ISAE 3000 (Revised)), adopted by the IAASB. This
Standard requires that we plan and perform the assurance engagement
so that we can conclude with limited assurance whether matters have
come to our attention to cause us to believe that the non-financial
reporting of the Company, except the included link to the
TCFD-statement and Websites) has not been prepared, in all
material respects, in accordance with §§ 315c in conjunction with
289c to 289e HGB and the EU Taxonomy Regulation and the delegated
acts adopted thereon, as well as with the interpretation by the
executive directors presented in section "Disclosure according to
line EU Taxonomy Regulation (EU) 2020 / 852" of the non-financial
reporting.
The procedures performed in a limited assurance engagement are
less in extent than in a reasonable assurance engagement;
consequently, the level of assurance obtained in a limited
assurance engagement is substantially lower than the assurance that
would have been obtained had a reasonable assurance engagement been
performed. The choice of assurance work is subject to the auditor's
professional judgment.
Within the scope of our limited assurance engagement, which we
performed during the months from October to December 2022, we
performed, among others, the following procedures and other
work:
-- Gaining an understanding of the structure of the
sustainability organization, and of the involvement
ofstakeholders
-- Inquiries of the executive directors and relevant personnel
who have been involved in the preparation ofthe non-financial
reporting, about the preparation process, about the internal
control systems relating to thisprocess, as well as about
disclosures in the non-financial reporting
-- Identification of probable risks of material misstatements in
the non-financial reporting
-- Analytical evaluation of selected disclosures in the
non-financial reporting
-- Cross validation of the selected disclosures and the
corresponding data in the consolidated financialstatements as well
as in the group management report
-- Assessment of the presentation of the disclosures
-- Evaluation of the process to identify taxonomy-eligible
economic activities and the correspondingdisclosures in the
non-financial reporting
As the EU Taxonomy Regulation and the delegated acts adopted
thereon contain indefinite legal concepts, it is necessary that the
executive directors make an interpretation. The executive
directors' assessment of their interpretation's legal conformity is
subject to uncertainties, which, in this respect, is also true for
our assurance engagement.
Auditor's Conclusion
Based on the work performed and the evidence obtained, nothing
has come to our attention that causes us to believe that the
non-financial reporting of the company for the period from October
1, 2021 to September 30, 2022 has not been prepared, in material
respects, in accordance with Secs. 315c in conjunction with 289c to
289e HGB and the EU Taxonomy Regulation and the delegated acts
adopted thereon, as well as with the interpretation by the
executive directors presented in section "Disclosure according to
line EU Taxonomy Regulation (EU) 2020 / 852" of the non-financial
reporting. Our conclusion does not encompass the TCFD-Statement
and websites mentioned in the non-financial reporting.
Restriction of Use and Liability
We issue this report as stipulated in the engagement letter
agreed with TUI AG (including the "General Engagement Terms for
Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften (German
Public Auditors and Public Audit Firms)" of January 1, 2017 of the
Institut der Wirtschaftsprüfer in Deutschland e.V.). We draw
attention to the fact that the assurance engagement was performed
for the purposes of TUI AG and the report is only intended to
inform TUI AG about the findings of the assurance engagement.
Therefore, it may not be suitable for any purpose other than the
above.
We are liable solely to the Company. However, we do not accept
or assume liability to third parties. Our conclusion was not
modified in this respect.
Hannover, December 12, 2022
Deloitte GmbH
Wirtschaftsprüfungsgesellschaft
Signed: Sebastian Dingel Signed: Daniel Oehlmann
Wirtschaftsprüfer
(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.
Financial calendar
14 February 2023
Annual General Meeting 2023
14 February 2023
Quarterly Statement Q1 2023
may 2023
Half-Year Financial Report H1 2023
august 2023
Quarterly Statement Q3 2023 ANALYST & INVESTOR ENQUIRIES
Nicola Gehrt, Group Director Investor Relations + 49 (0)511 566
1435 Adrian Bell, Senior Investor Relations Manager +49 (0)511 566
2332 James Trimble, Investor Relations Manager + 44 (0)1582 315 293
Stefan Keese, Investor Relations Manager (Retail Investors) + 49
(0)511 566 1387 Anika Heske, Junior Investor Relations Manager
(Retail Investors) + 49 (0)511 566 1425 Media Kuzey Alexander
Esener, Head of Media Relations + 49 (0)511 566 6024
-----------------------------------------------------------------------------------------------------------------------
ISIN: DE000TUAG000
Category Code: ACS
TIDM: TUI
LEI Code: 529900SL2WSPV293B552
OAM Categories: 1.1. Annual financial and audit reports
Sequence No.: 208383
EQS News ID: 1512277
End of Announcement EQS News Service
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