TUI Group Factbook December 07
TUI GROUP REASONS TO INVEST & BUSINESS MODEL TUI GROUP FY7 Factbook December 07
Strong TUI investment case 3 reasons to be invested / to invest STRONG STRATEGIC POSITION Global leading tourism group Covering entire customer journey: Sales & Marketing, Hotels, Cruises, Destination Services Integration and control of attractive hotel & cruise experiences drives customer satisfaction & retention drives end-to-end customer profitability provides strategic entry barriers STRONG EARNINGS GROWTH At least +0% Global leisure travel market growing above GDP Strong track record driven by merger synergies: Underlying EBITA CAGR of % since merger Underlying EPS CAGR of % since merger driven by lower interest and tax rate Future growth supported by digitalisation benefits and by reinvesting disposal proceeds EBITA growth target extended until 00 3 STRONG CASH GENERATION 3.6% group ROIC FY7, significantly above cost of capital Strong operating cash conversion, enabling to fund maintenance investments high cash returns to shareholders in form of dividends balance sheet stability Underlying EBITA CAGR of % since merger / average CAGR of 3% since merger at constant currency 3 TUI GROUP FY7 Factbook December 07
3 years after the merger: TUI one brand, superior strategic positioning, diversified SALES & MARKETING 44% EBITA HOLIDAY EXPERIENCES 56% EBITA INTEGRATION BENEFITS/ STRATEGY 0m customers Portfolio approach Own customer end-to-end Northern Central ~50 TUI Aircraft, 3rd party flying Own, 3rd party committed & non-committed 380 Owned / managed / JV ROIC FY7: 3% 3rd party distribution 0m customers to optimise own hotels/ cruises demand Unique TUI holiday experiences differentiating TUI from competition in Sales & Marketing and driving high NPS Western Destination Services Owned / JV ROIC FY7: 0% 6 3rd party distribution Diversified across Sales & Marketing as well as Holiday Experiences ROIC FY7: 7% GROUP PLATFORMS Strategy: Market demand, digitalisation, diversification Strategy: growth, diversification This number includes concept hotels and 3 rd party concept hotels This number relates to Sales & Marketing/ all other 4 TUI GROUP FY7 Factbook December 07
Merger synergies delivered, strong earnings growth story continues STRONG GROWTH TRACK RECORD: MERGER SYNERGIES FUTURE GROWTH: MARKET DEMAND, DIGITALISATION, INVESTMENTS MERGER SETS BASIS FOR FUTURE GROWTH +% >+0% CAGR Target extended to 00: at least 0% underlying EBITA CAGR Earnings growth from investments Mix of earnings growth changes Earnings growth from market demand & digitalisation benefits Market demand & digitalisation benefits Growth from investments Less seasonality in earnings FY4 FY5 FY6 FY7 FY8e FY9e FY0e Underlying EBITA CAGR of % since merger / average CAGR of 3% since merger at constant currency 5 TUI GROUP FY7 Factbook December 07
3 Strong cash generation allowing to invest, pay dividends and strengthen balance sheet ILLUSTRATIVE CASH FLOW PROFILE FY7 - FY9 CAPITAL ALLOCATION FRAMEWORK Underlying EBITDA Normalised Growth Investments /3 of bn disposal proceeds ~65% Pre-funding Covering Dividends Taxes Pensions Cash conversion Deleveraging etc. Attractive dividend In line with earnings growth FY7: 0.65 per share Balance sheet stability Target leverage ratio further reduced to 3.0x-.5x Strong cash generation allows all boxes to be ticked Growth investments Re-investing disposal proceeds 5% ROIC hurdle rate Opportunistic M&A, if synergistic JV growth ~ 50% JV cash flow pay-out to TUI ~ 50% retained to finance JV growth Disposal proceeds reinvested from FY6-FY9 6 TUI GROUP FY7 Factbook December 07
3 Update on re-investment programme FY6-FY9 doubling EBITA under way GROWTH INVESTMENTS FY6 & FY7 GROWTH INVESTMENTS FY8 & FY9 REINVESTMENTS ~ 0.4bn ~ 0.4bn ~.bn Disposal proceeds 30 Marella Discovery 00 8 Hotels since merger 55 Transat (EV) 50 PDPs 75 UK Pensions 06,090 Remaining pre-funding 60 Expedition ships Hapag- Lloyd 4 400 Mein Schiff & 400 ~30 hotels until 09 75 PDPs 55 UK Pensions 08 00 Other contingency Reinvestment of disposal proceeds by FY9 Own content growth Basis for end-toend profitability Investments on track Doubling returns Capital discipline continues after FY9 ROIC as KPI Normalized capex levels Investments if attractive - 8m 5 6 6 6 5m 30m 30m m 6 6 30m 50m 60m 6 + 36m Deconsolidated EBITA Targeted EBITA 3 Including working capital/cash effect; Assumes MS+ purchase as cash transaction/final decision on transaction structure/financing not yet taken; 3 Based on targeted EBITA run-rate; 4 Equity-contribution, delivery in spring & autumn 09; 5 Number includes 93m EBITA of HBG & Travelopia as well as EAT of MS+ within TUI Cruises of 5m due transferring the ships to UK market, delivery in summer 08 & 09; 6 run-rate 7 TUI GROUP FY7 Factbook December 07
xx 3 Transformational Growth Investments funded by Disposal Proceeds NORMALISED NET INVESTMENTS ( BN) DISPOSALS ( BN) 0.6... Additional net investments for transformation FY6-9 =.9bn ~.0bn 0.4 Hapag-Lloyd 0.4 Travelopia FY 6 FY7 FY8E FY9E Normalised net investments ~3.5% of Revenue Hotels ~30% Cruises ~0% Source Markets ~5% IT ~0% Other 5%. Hotelbeds Additional net investments (Transformation) including PDPs Normalised net investments Assumed MS and MS purchase as cash transaction / final decision on transaction structure/financing not yet taken Net of costs & including WC/cash effect 8 TUI GROUP FY7 Factbook December 07
3 Business model strength continues to drive ROIC TUI GROUP 4% % % FY5 FY6 FY7 CRUISES 0% 7% 7% HOTELS % FY5 SALES & MARKETING, ALL OTHERS 7% 4% % FY6 50% 3% FY7 Delivering strong ROIC for TUI shareholders Hotels: pre-dominantly low capital intensity, JVs Cruises: partially off balance sheet financing Sales & Marketing: low capital intensity Strong earnings performance FY5 FY6 FY7 FY5 FY6 FY7 Pre IFRS 6 Based on former segmentation - Marella Cruises within Source Markets 9 TUI GROUP FY7 Factbook December 07
GROUP FINANCIALS 0 TUI GROUP FY7 Factbook December 07
Income Statement Key Figures FY7 and FY6 In m FY7 FY6 Turnover 8,535.0 7,53.9 Underlying EBITDA,54.7,379.6 Underlying EBITA,0.,000.5 Adjustments -75.6-0.4 EBITA,06.5 898. Interest result -9. -79.5 Hapag-Lloyd AG 7.4-00.3 EBT,079.7 68.3 Income Taxes -68.8-53.4 Group result continuing operations 90.9 464.9 Discontinued operations -49.5 687.3 Minority Interest -6.6-4.8 Group result after minorities 644.8,037.4 Variances due to rounding effects reflects turnover restatement as of FY7 Q3 TUI TUI GROUP GROUP FY7 FY7 Factbook Factbook December December 07 07
Earnings per share (continuing operations) In m Reported FY7 Reported FY6 Pro forma FY7 Pro forma* FY6 EBITA,07 898,0,00 Net interest expense -9-80 -9-80 HLAG book value adjustment and equity result 7-00 - - EBT,080 68 983 8 Tax rate 6% 5% 0% 5% Tax Charge -69-53 -97-05 Minority Interest -7 - -7 - Net Income 794 354 670 504 Basic number of shares (m) 584 584 587 587 Basic Earnings Per Share ( ).36 0.6.4 0.86 Underlying effective tax rate calculated based on underlying EBT Pro forma NOSH based on issued share capital as at 30.9.7 * Pro forma number of shares excludes 6.5m shares relating to employee stock options and Employee Benefit Trust; figures are rounded TUI GROUP FY7 Factbook December 07
Cash Flow & Movement in Net Debt In m FY7 FY6 EBITA reported,06.5 898. Depreciation 464.4 407.0 Working capital 406. 7.8 Other cash effects 89.9 63.7 At equity income -5.3-87. Dividends received from JVs and associates 8. 8. Tax paid -46. -86.4 Interest (cash) -57. -7. Pension contribution -4.3-335.6 Operating Cashflow,508.4 94.4 Net capex -766.9-533.4 Net investments -0.5-5.7 Net pre-delivery payments -0.5-48.7 Disposal proceeds 388.0 8.6 Free Cashflow 84.5,9. Dividends -456.8-34. Movement in Cash Net of Debt 367.7 778. Continuing ops basis non-continuing adjustment in Other cash effects In m FY7 FY6 Opening cash (debt) 350-4 Movement in cash net of debt 368 778 Employees Benefit Trust - - Asset Finance -49-350 Other 36 36 Closing net cash including Discontinued Ops 583 350 Travelopia - -38 Closing net cash as per Balance Sheet 583 3 3 3 TUI GROUP FY7 Factbook December 07
Balance Sheet In m 30 Sep 07 30 Sep 06 Non-current assets 9,867.6 9,3.8 Current assets 4,37.9 5,36. Assets 4,85.5 4,457.9 Subscribed capital,50.6,500.7 Reserves including net profit available for distribution,438.,74.4 Non-controlling interest 594.0 573. Equity 3,533.7 3,48. Non-current financial liabilities,896.,3.3 Current provisions 38.6 45.4 Provisions,78.7,68.7 Non-current liabilities,76.,503.4 Current financial liabilties 7.9 537.7 Financial liabilities,933.,04. Other non-current financial liabilties 459.8 7.7 Other current financial liabilities 5,980. 5,794.9 Other financial liabilties 6,440.0 6,067.6 Debt related to asset held for sale - 47.3 Liabilities 4,85.5 4,457.9 4 4 TUI GROUP FY7 Factbook December 07
Financial Ratios FY7 and Targets for FY8 LEVERAGE RATIO FY7 DEVELOPMENT AND OUTLOOK m FY7 Gross debt,933 to Bonds 96 to Liabilities to banks 38 to Finance lease,7 to Other financial liabilites 9 Pension,7 Discounted value of operating leases,69 Debt 5,680 3.50x.75x 3.3 3.5x.50x.5 3.00x.5x FY8 Leverage Target range 3.00x.5x Reported EBITDAR,4 Leverage Ratio.5x FY 6 FY 7 INTEREST COVER RATIO FY7 m FY7 Reported EBITDAR,4 Rentals interest component 50 Net interest expense 9 Interest Charges 369 Interest cover Ratio 6.x At simplified discounted rate of.75% Simplified approach - one third of long-term rental expense 5.50x 4.50x FY8 Interest cover Target range 5.75x 6.75x Current corporate credit ratings BB from S&P and Ba from Moody s. Upgraded by S&P from BB- in February 07 and upgraded by Moody s from Ba3 in April 06 4.8 FY6 5.75x 4.75x 6. FY7 6.75x 5.75x 5 5 TUI GROUP FY7 Factbook December 07
Key Sources of Funding 30 September 07 Instrument Issue Maturity Amount m Interest % p.a. Revolving Credit Facility Sep 4 Jul,750 E/L +.40 3 Senior Notes Oct 6 Oct 300.5 Finance leases Various Various,7 Various Extended from December 00 to July 0 Including a tranche of 5m for the issue of bank guarantees 3 Upgrade of our rating by S&P has reduced our RCF interest margin from.55% to.40% p.a as of 4/0/07 6 6 TUI GROUP FY7 Factbook December 07
ROIC and Value added methodology In m Notes to ARA FY7 FY6 Equity 3,533.7 3,48. Subscribed capital (4),50.6,500.7 Capital reserves (5) 4,95.0 4,9. Revenue reserves (6) -,756.9-3,07.8 Non-controlling interest (8) 594.0 573. Plus interest bearing financial liability items 3,38. 3,769. Pension provisions and similar obligations (9),7.4,450.9 Non-current financial liabilities (3,38),76.,503.4 Current financial liabilities (3,38) *Upgrade of our rating by S&P has reduced our RCF interest margin from.55% to.40% p.a 7.9 as of 4/0/07 537.7 **Including Derivative a tranche financial of instruments 5.9m for the issue of bank guarantees (38) 67.6 77. Less financial assets 3,04.7 3,37. Financial assets available for sale (7,38) 69.5 36. Derivative finanical instruments (38) 95.3 67.4 Cash and cash equivalents (,38),56.,07.9 Other financial assets 43.8 76.7 Plus purchase price allocation 37.5 300.5 Invested Capital 4,54.7 4,80.6 Invested Capital Prior Year 4,80.6 3,968. Seasonal adjustment 500.0 500.0 Ø Invested capital 4,667.7 4,574.4 Underlying EBITA,0.,000.5 ROIC % 3.6.87 Weighted average cost of capital (WACC) % 6.75 7.50 Value added 787.0 657.4 Adjustment to net debt to reflect a seasonal average cash balance Average value based on balance at beginning and year-end, including seasonal adjustment 7 7 TUI GROUP FY7 Factbook December 07
HOTELS & RESORTS 8 TUI GROUP FY7 Factbook December 07
Hotels & Resorts Summary FY7 HOTEL BEDS BY REGION (%) Key Facts o/w 53 are third party concept hotels (37 Group hotels reflect the Hotel & Resorts segment) Based on 37 Group hotels 3 Group owned or leased hotel beds multiplied by opening days per annum 4 Arrangement revenue divided by occupied beds 5 Occupied beds divided by capacity 6 Low capital intensity is defined as Management, Franchise and 50% of owned hotels due to joint venture structures FY7 Total Turnover ( m),366 o/w Turnover 3 rd party ( m) 679 Underlying EBITDA ( m) 485 Underlying EBITA ( m) 357 o/w Equity result ( m) 9 Number of hotels 380 Number of beds 38,775 3 Capacity ( 000) 39,63 4 Revenue/bed ( ) 63 Occupancy (%) 5 79 > 60% OF INVESTMENTS WITH LOW CAPITAL INTENSITY 6 8% 3% 45% OWNERSHIP IN 365 DAYS DESTINATIONS/SCARCITY OF ASSETS 8% Total 38,775 9% % FINANCING STRUCTURE (%) 39% Caribbean Western Med. Eastern Med. North Africa Other 3% 3% Owership 37 hotels Management Leased Franchise DE-RISKING THROUGH JV OFF- BALANCE FINANCINGS 9 TUI TUI GROUP FY7 FY7 Factbook December 07 07
Hotels & Resorts Summary by brand Key figures FY7 Total Turnover ( m) 493. 8.6-679.0 Underlying EBITA ( m) 355.9 38.5 0. 356.5 Capacity ( 000) 7,94 3,5,859 39,63 Number of hotels 94 3 4 37 Number of beds 86,834 4,770 4,648 38,775 AVERAGE OCCUPANCY 3 % 78 85 86 90 79 78 79 90 75 8 85 7 73 67 83 66 AVERAGE REVENUE PER BED 4 89 9 90 9 9 77 7 63 53 5 56 57 60 64 60 SEGMENTAL ROIC %.3 0.5 9.3 3. FY4 FY5 FY6 FY7 Hotels & Resorts Robinson RIU Blue Diamond Group owned or leased hotel beds multiplied by opening days in the period Count as at 30 September 07 (includes RIU Calypso which operates as a Sensimar hotel) 3 Occupied beds divided by capacity 4 Arrangement revenue divided by occupied beds FY4 FY5 FY6 FY7 Hotels & Resorts RIU Robinson Blue Diamond FY4 FY5 FY6 FY7 0 TUI GROUP FY7 Factbook December 07
Hotels & Resorts RIU Key figures FY7 RIU 00% view In m Total o/w RIUSA II (fully consolidated) o/w Riu Hotels (consolidated at equity) Riu in TUI accounts Turnover,90 85 338 85 Underlying EBITA 446 304 4 356 EBITA Margin 37% 36% EAT 34 3 0 o/w EAT to TUI (50%) 67 6 5 67 ROIC (incl. Goodwill) % ROIC (excl. Goodwill) 7% Unaudited figures HOTEL BEDS BY REGION (%) FINANCING STRUCTURE (%) 3% 5% 49% Total 86,834 8% 5% Western Med. North Africa Caribbean Eastern Med. Other 7% 5% Management 35% 94 Ownership Hotels Lease 53% Franchise * unaudited figures TUI TUI GROUP FY7 FY7 Factbook December 07 07
Hotels & Resorts Robinson Key figures FY7 ( M) Robinson FY7 FY6 In TUI accounts Turnover 04 94 Underlying EBITA 39 39 EBITA margin 9% 0% EAT (00% TUI) 3 5 ROIC % 3% Unaudited figures HOTEL BEDS BY REGION (%) FINANCING STRUCTURE (%) Robinson Club Maldives 9% 40% Total 4,770 6% 5% Western Med. North Africa Eastern Med. Other 3% 6% 3 Clubs 6% Management Ownership Lease * unaudited figures TUI TUI GROUP GROUP FY7 FY7 Factbook December 07 07
Hotels & Resorts Blue Diamond Key figures FY7 ( M) Blue Diamond FY7 FY6 00% view Turnover 360 3 EBITA 6 5 EBITA margin 7% 6% EAT 40 34 o/w EAT to TUI (49%) 0 7 Unaudited figures Blue Diamond Royalton Punta Cana, Dominican Republic NUMBER OF HOTELS BY LOCATION FINANCING STRUCTURE (%) Cuba 3 4 Hotels Jamaica St Lucia Dom Rep 50% 4 Hotels 50% Management Ownership 5 Mexico 3 TUI GROUP FY7 Factbook December 07
CRUISE 4 TUI GROUP FY7 Factbook December 07
Cruises Summary by brand Key figures FY7 MARELLA CRUISES Turnover - 50.4 3.6 Memo: TUI Cruises Turnover,05.5 - - Underlying EBITA 35.9 86.5 33. Passengers (k) 467 308 6 Fleet Size (Group Total 6) 6 6 4 Total Berths 3,96 9,73,54 TUI CRUISES 4.5 3.5.7.77 69 7 73 0.3 0.7 0.6 0.9 MARELLA CRUISES.0...7 5 6 3 99.9 99.0 00.6 0.7 HAPAG-LLOYD CRUISES 579 594 536 450 40 348 355 349 68. 76. 76.8 76.7 SEGMENTAL ROIC % 4 9.9 7.3 7. FY4 FY5 FY6 FY7 Pax Days (m's) Av Daily Rate Occupancy % FY4 FY5 FY6 FY7 Pax Days (m's) Av Daily Rate Occupancy % Equity result Static count as at 30 September 07 3 Inclusive of transfers, flights and hotel due to the integrated nature of Marella Cruises (FY7 sterling equivalent 3) 4 FY4 & FY5 ROIC excludes Marella Cruises 3 FY4 FY5 FY6 FY7 Pax Days(k's) Av Daily Rate Occupancy % 3.3 FY4 FY5 FY6 FY7 5 TUI GROUP FY7 Factbook December 07
Cruises TUI Cruises - Key figures FY7 00% View TUI Cruises 00% FY7 FY6 % Turnover,053 807 30 % Underlying EBITA 304 7 34 % EBITA-Margin 9% 8% EAT (00% TUI) 7 00 36 % o/w TUI EAT (50%) 36 00 36 % ROIC 6% 4% ROE 43% 36% unaudited figures restated 6 TUI GROUP FY7 Factbook December 07
Cruises TUI Cruises Fleet Mein Schiff Mein Schiff Mein Schiff 3 Mein Schiff 4 Mein Schiff 5 Mein Schiff 6 New Mein Schiff New Mein Schiff,94,9,506,506,534,534,894,894 Wholly owned Wholly owned Wholly owned Wholly owned Wholly owned Wholly owned Wholly owned Wholly owned 996 997 04 June 05 July 06 June 07 New build 08 New build 09 MS and MS to replace ships in UK fleet following delivery of new MS and new MS Fleet and pipeline as at December 07 7 TUI GROUP FY7 Factbook December 07
Cruises Marella Cruises fleet Marella Celebration Marella Dream Marella Spirit Marella Discovery Marella Discovery Marella Explorer (Currently MS) Name TBC (Currently MS),6,533,54,830,83,94,9 Finance Lease exp. 0 984 Finance Lease exp. 0 986 Operating Lease exp. Summer 08 983 Finance Lease exp. 06 995 Wholly owned 994 TBC 996 May 08 LAUNCH TBC 997 Spring 09 LAUNCH MS and MS from TUI Cruises to join UK fleet following delivery of new MSand MS Fleet and pipeline as at December 07 8 TUI GROUP FY7 Factbook December 07
Cruises Hapag-Lloyd Cruises Fleet Europa Europa Bremen Hanseatic Hanseatic Nature Hanseatic Inspiration 408 Wholly owned 999 56 Wholly owned 03 55 Wholly owned 990 75 Bareboatcharter exp. 08 993 30 Wholly owned New build 09 30 Wholly owned New build 09 Additional sofa-bed in most of the suites (usable for persons up to the age of 6, 0, or 5 years) Fleet and pipeline as at December 07 9 TUI GROUP FY7 Factbook December 07
SALES & MARKETING SOURCE MARKETS 30 TUI GROUP FY7 Factbook December 07
Sales & Marketing Key figures by Source Markets Key figures FY7 Northern Region Central Region Western Region Total Source Markets Customers (000) 7,39 7,5 5,64 0,84 External Turnover ( m) 6,60 6,039 3,50 6,43 Underlying EBITA ( m) 346 7 09 56 EBITA margin (%) 5.%.% 3.% 3.3% Direct Distribution mix (%) 9 49 7 73 Online Mix (%) 63 9 54 46 TOTAL SOURCE MARKET CUSTOMERS (m) 8.8 9. 9.0 0. TOTAL SOURCE MARKETS DIRECT & ONLINE DISTRIBUTION % 68 70 7 73 38 4 43 46 FY4 FY5 FY6 FY7 FY4 FY5 FY6 FY7 Direct Online Figures shown as a percentage of revenue unless otherwise stated and reflects restatement of Turnover as of FY7 Q3 Excludes strategic ventures in Canada and Russia/CIS Includes one-off TUI fly sickness impact of 4m and Air Berlin insolvency of 5m in the year 3 3 TUI GROUP FY7 Factbook December 07
Aircraft Commitments by Financing Type Operating Lease Finance Lease Owned Held for Sale Total As at 30 September 06 5 6 8-49 Order book financing - - - External Lessor deliveries 3 - - - 3 External Lessor Returns () - - - () Purchase of Leased Aircraft () - - - Other movements - - () - * Includes aircraft leased from and operated on behalf of 3rd party airlines As at 30 September 07 6 7 8 5 Includes aircraft leased from and operated on behalf of 3 rd party airlines Fleet split : UK - TUI Airways (6), Germany - TUI fly (4), Nordic - TUI fly Nordic (7), Netherlands - TUI fly Netherlands (9), Belgium - TUI fly Belgium (7) and France - Corsair (7) 3 3 TUI GROUP FY7 Factbook December 07
Aircraft order book deliveries FY7 to FY FY8 FY9 FY0 FY FY B737-MAX 5 8 5 3 B787-9 - - - Firm order book deliveries 07-0 7 8 7 3 Financial Years (FY) ending 30 September; figures correct as at 30 September 07 In addition to the above firm orders, TUI Group has further aircraft options : FY8 FY9 FY0 FY FY B737-MAX - - - 7 3 B787-9 - - - - Option order book deliveries 07-0 - - - 8 3 Financial Years (FY) ending 30 September; figures correct as at 30 September 07 33 33 TUI GROUP FY7 Factbook December 07
DESTINATION SERVICES 34 TUI GROUP FY7 Factbook December 07
Destination Services Key figures FY7 > million guests More than 6,500 colleagues >4 million transfers operated 4.6 million excursions sold Handled 7.8m 4/7 contacts Operating in 5 destinations Number of vehicles >,000 35 35 TUI GROUP FY7 Factbook December 07