DGAP-Regulatory: TUI AG: Annual Financial Report - Part 1

Dow Jones received a payment from EQS/DGAP to publish this press release.

 
 
 TUI AG / Annual Financial Report 
TUI AG: Annual Financial Report - Part 1 
 
08-Dec-2016 / 08:00 CET/CEST 
Dissemination of a Regulatory Announcement, transmitted by EQS Group AG. 
The issuer is solely responsible for the content of this announcement. 
 
8 December 2016 
 
*TUI GROUP* 
 
*Full year results to 30 September 2016* 
 
- We have delivered a second year of strong performance post-merger with 
12.5% increase in underlying EBITA including Travelopia or 14.5% for 
continuing operations1. 
 
- Our sustained strong performance is a clear demonstration of the success 
of our growth strategy and the strength of our competitive position. 
 
- We believe our strategy creates value for our customers, our people and 
our shareholders alike, and we remain committed to paying an attractive 
dividend, proposed at 63 cents per share in respect of 2015/16. 
 
- Having completed the disposal of Hotelbeds Group in September, and with 
the disposal process for Travelopia underway, we are focussed on delivering 
transformational growth in our own hotel and cruise brands, supported and 
enabled by a strong and flexible balance sheet. 
 
- Current trading for Winter 2016/17 and Summer 2017 remains in line with 
our expectations. 
 
- Based on our roadmap for growth and current trading, we expect to deliver 
at least 10% growth in underlying EBITA in 2016/171, and extend our previous 
guidance of at least 10% underlying EBITA CAGR to 2018/191. 
 
- This balanced guidance is a clear demonstration of the confidence we have 
in our growth strategy, against what continues to be an uncertain 
geopolitical and macroeconomic backdrop. 
 
*KEY FINANCIALS* 
 
*Year ended 
30 
September* 
             *2016*     2015       *Change%*         *Constant 
EURm                    Restated2                    currency 
                                                     change%1* 
Turnover -                                           *+1.4%* 
continuing   *17,185*   17,515     -1.9% 
operations 
Underlying                                           *+14.5%* 
EBITA -      *1,001*    953        +5.0% 
continuing 
operations 
Underlying                                           *+12.5%* 
EBITA -      *1,030*    1,001      +2.9% 
including 
Travelopia 
Reported                                             *+24.4%* 
EBITA -      *898*      795        +13.0% 
continuing 
operations 
Pro forma                                            *+15.5%* 
earnings per *0.86*     0.84       +2.4% 
share3 
Normalised                                           n/a 
operating    *944*      794        +18.9% 
cash flow4 
Return on                                            n/a 
invested     *21.9%*    22.4%      -0.5ppts 
capital 
(ROIC)5 
Dividend per *63 cents* 56 cents   +12.5%            n/a 
share 
 
Note: In order to explain and evaluate the operating performance by the 
segments, EBITA adjusted for one-off effects (underlying EBITA) is 
presented. Underlying EBITA has been adjusted for gains/losses on disposal 
of investments, restructuring costs according to IAS 37, ancillary 
acquisition costs and conditional purchase price payments under purchase 
price allocations and other expenses for and income from one-off items. 
Reported EBITA comprises earnings before net interest result, income tax and 
impairment of goodwill excluding the losses on container shipping measured 
at equity and excluding the result from the measurement of interest hedges. 
_1 Assuming constant foreign exchange rates are applied to the result in the 
current and prior period._ 
_2 Prior year figures restated, including the treatment of Hotelbeds Group 
and Travelopia as discontinued operations. Further explanation is included 
on page 6._ 
_3 Please refer to Earnings Per Share section on page 7._ 
_4 Operating cash flow pre net capex and investments and dividend payments, 
assuming normalised working capital inflow and excluding additional UK 
pension top-up of EUR174m in 2015/16._ 
_5 ROIC (return on invested capital) is calculated as the ratio of 
underlying EBITA to the average for invested interest bearing capital for 
the Group or relevant segment._ 
 
*Annual Report 2015/16 and Investor & Analyst Presentation and Webcast* 
 
A full copy of our Annual Report 2015/16 can be found on our corporate 
website: http://www.tuigroup.com/en-en/investors [1]. A presentation and 
webcast for investors and analysts will take place today at 09:30 GMT / 
10:30 CET. The presentation will be made available via our website shortly 
beforehand. Details of the webcast, which will be available for replay, will 
also be available there. 
 
*SECOND YEAR OF STRONG PERFORMANCE POST-MERGER* 
 
*In EURm* 
*Underlying EBITA 2014/15*                               *1,069* 
Prior year restatement (including Hotelbeds & Travelopia -116 
treated as discontinued)2 
*Underlying EBITA restated 2014/15*                      *953* 
Underlying trading                                       +114 
Turkey / North Africa                                    -50 
Merger synergies                                         +60 
Aircraft & Europa 2 financing                            +15 
*Underlying EBITA 2015/16 excluding FX*                  *1,092* 
Foreign exchange translation                             -91 
*Underlying EBITA 2015/16 *                              *1,001* 
 
_Results in the current and prior year have been restated to include 
Destination Services within Other Tourism, to reclassify Crystal Ski and 
Thomson Lakes & Mountains from Travelopia to Northern Region, and to include 
both Hotelbeds Group and Travelopia as discontinued operations. For further 
explanation of restatements please see page 6._ 
 
- Within the *Source Markets*, underlying EBITA was EUR635m (2014/15: 
EUR711m) or EUR731m excluding EUR96m negative foreign exchange translation. 
The Source Markets continue to build on their strength in direct 
distribution and direct relationship with the customer. In 2015/16 direct 
distribution mix increased by two percentage points to 72% and online mix 
increased by two percentage points to 43%. 
 
- *Northern Region* underlying EBITA was EUR461m (2014/15: EUR538m) or 
EUR556m excluding EUR95m negative foreign exchange translation: 
 
- The *UK* delivered a strong operating performance, with customer volumes 
up over 4% and an increase in load factor. This was driven by the strength 
of customer demand for our unique holidays, with growth across short, medium 
and long haul, and the launch of our new ship TUI Discovery. We have also 
made further significant progress in increasing online distribution, with 
58% of UK holidays booked online this year, up four percentage points. 
 
- The *Nordics* result this year was adversely impacted by lower demand for 
Turkey, having more than halved in size as a destination. A significant 
proportion of the programme was remixed to alternative destinations, 
however, this did not fully mitigate the impact and customer volumes overall 
fell as a result. Further progress has been delivered in respect of online, 
which accounted for 75% of all bookings in the year. The result also 
includes some upfront costs in respect of the TUI brand migration, which 
commenced at the start of November 2016 and is progressing well. 
 
- In *Canada*, Winter margins came under pressure as a result of the 
unfavourable movement in the Canadian dollar exchange rate. However, the 
Summer result improved on prior year due to continued growth in unique 
content. 
 
- *Central Region* underlying EBITA was EUR88m (2014/15: EUR103m) or EUR89m 
excluding negative foreign exchange translation: 
 
- In *Germany*, market conditions remained challenging and margins were 
adversely impacted by subdued demand for Turkey. Despite this, we continued 
to grow market share in the year, building on the strength of the TUI brand. 
We have also delivered an improvement in direct distribution mix to 45% (up 
two percentage points) and in online mix to 14% (up one percentage point), 
and continue to deliver further savings as a result of restructuring 
programmes, including the alignment of our operations in Germany and 
Austria. 
 
- The result includes the impact of a court ruling in November regarding 
airport services and marketing agreements with an Austrian airport, and the 
partial impact on holidays commenced in September of unexpectedly high 
levels of sickness among TUIfly flight crew. 
 
- Our priorities in Germany are to build scale through growth in market 
share with a broader product offering, increase direct and online 
distribution and improve operational efficiency. On the latter, TUI AG's 
Supervisory Board has approved the plan to contribute its German leisure 
airline subsidiary TUI fly GmbH to a joint venture with Etihad, together 
with the leisure operations of Air Berlin and including Air Berlin's 
participation in NIKI. It is intended that this will create a new airline 
joint venture with around 60 aircraft and a seat capacity of 15 million 
seats per year, operating from key departure airports in Germany, Austria 
and Switzerland. It is expected that TUI AG will hold a stake of 24.8% in 
the joint venture, with Etihad holding 25% of the interests and the 
remaining 50.2% held by the existing private foundation NIKI Privatstiftung. 
Details regarding the joint venture will be jointly presented by Etihad and 
TUI after successful completion of the negotiations. 
 
- *Western Region* underlying EBITA improved to EUR86m (2014/15: EUR69m): 
 
- The result in *France* improved significantly following delivery of 
restructuring and remix of the programme away from North Africa. In 
addition, *Netherlands* delivered a good performance following the TUI brand 
migration in Autumn 2015, with a 3% increase in customers and further 
increases in direct and online distribution mix to 71% and 50% respectively. 
 
- These were partly offset by the difficult trading environment in *Belgium* 
following the Brussels attack, particularly for package holiday sales. 

Trading for subsequent seasons has improved and is also being helped by the 
TUI brand migration which commenced in October 2016. 
 
- The acquisition of Transat's French tour operating business completed at 
the end of October 2016 and is expected to further improve the profitability 
of this source market. 
 
- In *Hotels & Resorts*, underlying EBITA increased to EUR287m (2014/15: 
EUR235m) or EUR291m excluding EUR4m negative foreign exchange translation: 
 
- In line with our plans to grow our own hotel brands, we have opened a 
further seven hotels this year, and a further two were repositioned from 
other brands into TUI Blue. In total 18 additional hotels have been opened 
since the end of 2013/14 in our core brands, and we intend to open circa 40 
to 45 additional hotels by the end of 2018/19. 
 
- *Riu* delivered a strong performance in the year, with underlying EBITA up 
EUR68m (excluding EUR11m negative foreign exchange translation), a 4% point 
improvement in occupancy, 1% increase in capacity and 6% increase in average 
revenue per bed. Spain, Cape Verde and Caribbean have performed particularly 
well. 
 
- We have delivered an additional EUR20m benefit from occupancy improvement 
in the year, hitting our merger target in full. This clearly demonstrates 
the benefits of our vertically integrated model. 
 
- However, as expected, earnings for hotels in Turkey and North Africa have 
been adversely impacted by reduced demand following geopolitical events. 
This is estimated to have impacted the result by around EUR50m in the year, 
compared with 2014/15. 
 
- ROIC for Hotels & Resorts increased from 10.5% to 12.3% in the year. 
 
- In *Cruises*, underlying EBITA increased to EUR130m (2014/15: EUR81m): 
 
- *TUI Cruises* delivered EUR32m growth in earnings with the full year 
impact of Mein Schiff 4 and the launch of Mein Schiff 5 in July 2016. 
Average daily rate and occupancy across the fleet also remain very strong. 
We will launch Mein Schiff 6 in Summer 2017, with a further two deliveries 
to come in 2018 and 2019, at which point we intend to move Mein Schiff 1 and 
2 into the UK market. 
 
- *Hapag-Lloyd Cruises* delivered EUR17m growth in earnings, following 
completion of their turnaround last year. Fleet performance continues to 
improve, including an 8% increase in average daily rate. The result also 
includes the benefit of refinancing Europa 2. 
 
- ROIC for Cruises increased from 17.3% to 21.3% in the year. 
 
- In *Other Tourism*, underlying EBITA was EUR5m (2014/15: EUR8m), or EUR1m 
excluding the positive impact of foreign exchange translation. A 
significantly improved performance in Corsair was offset by the impact of 
lower demand to Turkey and North Africa in Destination Services and 
additional IT costs in relation to strategic projects. 
 
- *All other segments* underlying EBITA loss reduced to EUR56m (2014/15: 
EUR81m loss), or EUR62m loss excluding the positive impact of foreign 
exchange translation. 
 
- *Synergy delivery *- We have delivered EUR60m additional merger synergies 
in 2015/16. This includes EUR30m corporate streamlining, EUR20m occupancy 
improvement in our target hotels and EUR10m as a result of the restructuring 
of Destination Services into Other Tourism. We expect the remaining EUR20m 
of synergies to be delivered in 2016/17. 
 
- *Strong operating cash generation - *We are focussed on delivering a 
strong operating cash flow performance and generated over EUR0.9bn in 
2015/16 on a normalised basis (2014/15: EUR0.8bn). 
 
- *Financial targets delivered - *We have delivered against our financial 
targets for 2015/16 with a leverage ratio of 3.3 times (target 3.5 to 2.75 
times), and an interest coverage ratio of 4.8 times (target 4.5 to 5.5 times 
interest). We have tightened our targets for 2016/17 to 3.25 to 2.5 times 
for leverage ratio and 4.75 to 5.75 times for interest coverage. 
 
- *Committed to paying an attractive dividend - *proposed at 63 cents per 
share in respect of 2015/16, which reflects 14.5% growth in underlying EBITA 
at constant currency on the 2014/15 base, plus the additional 10% outlined 
at the time of the merger. 
 
*CURRENT TRADING & OUTLOOK* 
 
- *Winter 2016/17 trading is in line with our expectations:* 
 
- Source Markets revenues up 9% with bookings up 5% and 60% of the programme 
sold. Strong growth in UK long haul and cruise is partly offset by continued 
pressure in Nordics and Germany as a result of lower demand for Turkey and 
North Africa. 
 
- Further openings in our hotel brands, with a new Riu in Jamaica, a new TUI 
Blue in Tenerife and further expansion of our unique tour operator concepts 
in third party hotels including Lanzarote, Thailand, Mauritius and Cape 
Verde. 
 
- First Winter of operations for Mein Schiff 5 and TUI Discovery going well. 
 
- *Summer 2017 is progressing in line with our expectations:* 
 
- Most Source Markets still at very early stage - UK over 20% sold with 
revenues up 16% and bookings up 9%, showing the continued resilience in 
demand for our holidays; 
 
- Openings in our hotel brands include a new Sensatori in Rhodes, a new 
Robinson club in South East Asia and new TUI Blue hotels in Croatia and 
Italy, as well as the continued expansion of our unique tour operator 
concepts in third party hotels including Sardinia, Croatia, Spain, Greece 
and Bulgaria. 
 
- Mein Schiff 6 and TUI Discovery 2 launch next Summer, with bookings 
progressing well. 
 
- Having completed the disposal of Hotelbeds Group in September, and with 
the disposal process for Travelopia underway, we are focussed on delivering 
transformational growth in our own hotel and cruise brands, supported and 
enabled by a strong and flexible balance sheet. 
 
- Medium term cash flow will therefore reflect reinvestment of proceeds from 
the Hotelbeds Group disposal. 
 
- Based on our roadmap for growth and current trading, we expect to deliver 
at least 10% growth in underlying EBITA in 2016/171, and extend our previous 
guidance of at least 10% underlying EBITA CAGR to 2018/191. 
 
- This balanced guidance is a clear demonstration of the confidence we have 
in our growth strategy, against what continues to be an uncertain 
geopolitical and macroeconomic backdrop. 
 
*CURRENT TRADING IS IN LINE WITH OUR EXPECTATIONS* 
 
Winter 2016/17 
 
Current trading for Winter, which is the low season for most of our 
businesses, is in line with our expectations. In Hotels & Resorts, where 
performance is reflective of bookings made via our Source Markets, we have a 
new opening for Riu in Jamaica, one new hotel for TUI Blue in Tenerife and 
two repositioned hotels for TUI Blue in Austria and Germany. We also 
continue to expand our unique tour operator concepts in third party hotels, 
with several additions to our Sensimar and Family Life portfolio this 
Winter, including Lanzarote, Thailand, Mauritius and Cape Verde. 
 
In Cruise we continue to see strong demand for our most recent addition, 
Mein Schiff 5, with a good performance across the TUI Cruises fleet. Thomson 
Cruises (which is currently reported within UK trading data) continues to 
benefit from the addition of TUI Discovery to the fleet, based in the 
Caribbean this Winter. 
 
With 60% of the programme sold to date, Source Market revenue is 9% ahead of 
prior year, with bookings up 5%. This reflects long haul growth (bookings up 
13%), in particular in the UK with an additional 787 flying this Winter. 
 
*Current   *Winter 2016/17* 
Trading1* 
*YoY variation%*     *Total*    *Total*      *Total* *Programme 
                     *Revenue2* *Customers2* *ASP2*  sold (%)* 
 
*Northern Region*    *+14%*     *+11%*       *+3%*   *61%* 
UK                   +26%       +19%         +6%     57% 
Nordics              -5%        -2%          -3%     72% 
 
*Central Region*     *+5%*      *-2%*        *+6%*   *55%* 
Germany              +3%        -4%          +6%     54% 
 
*Western Region*     *+8%*      *+5%*        *+3%*   *64%* 
Benelux              +5%        +2%          +3%     63% 
 
*Total Source        *+9%*      *+5%*        *+4%*   *60%* 
Markets* 
 
_1 These statistics are up to 27 November 2016 and are shown on a constant 
currency basis_ 
_2 These statistics relate to all customers whether risk or non-risk_ 
 
In the UK, revenue is currently up 26% with bookings up 19% and 57% of the 
programme sold to date, ahead of prior year. This is driven by growth across 
package holidays and cruise. Sales to the Canaries and long haul have been 
particularly strong, with bookings up 16% and 21% respectively. Long haul 
expansion has been facilitated by the new Boeing 787-900, delivered in 
Summer 2016, with Mexico, Dominican Republic and Jamaica proving popular and 
new destinations added such as Cuba and Sri Lanka. Cape Verde and Cyprus 
continue to grow as alternative destinations to North Africa. This Winter 
season also sees the first winter operations of the TUI Discovery and we are 
pleased with performance to date for the new ship. 
 
In the Nordics, revenues are down 5% with bookings down 2% and 72% of the 
programme sold to date, in line with prior year. This reflects the impact of 
lower demand for Turkey in October (October is reported within Winter for 
Nordics, but within Summer for other Source Markets), reduced volumes to 
Egypt where demand remains subdued, and lower long haul volumes. These have 
been partly offset by higher demand for the Canaries. Winter trading is also 
impacted by the timing of key holidays, with Christmas falling on a weekend 
(therefore less popular for departures) and the Easter holidays falling in 
April (April is reported within Summer for Nordics, but within Winter for 
other Source Markets). The TUI rebrand was launched in the Nordics at the 
start of November 2016 and is progressing well. 
 
In Germany, revenues are up 3% with bookings down 4% and 54% of the 
programme sold to date. We are continuing to increase our market share, 
despite challenging conditions. Trading reflects lower demand for Turkey, 
which is a Winter destination for Germany, and for Egypt, partly offset by 

growth in the Canaries (albeit with continued high levels of competition) 
and long haul. 
 
In Benelux, revenues are up 5% with bookings up 2% and 63% of the programme 
sold to date, also ahead of prior year. Revenues in Belgium are up 5%, with 
subdued demand for Egypt offset by increased volumes for the Canaries, 
Mainland Spain and Morocco. The TUI rebrand launched in Belgium during 
October 2016 and is progressing well. Netherlands revenues are also up 5%, 
against strong comparatives as a result of the One Brand implementation last 
year. 
 
Summer 2017 
 
Trading for the Source Markets is at an early stage. In line with the usual 
Summer season launch dates for each Source Market, only the UK is over 20% 
sold. UK revenue is up 16% and bookings are up 9%, with growth again driven 
by long haul and cruise, including the launch of TUI Discovery 2. Sales for 
our additional TUI Cruises ship, Mein Schiff 6, are also progressing well. 
In Hotels & Resorts we are opening a new Sensatori in Rhodes, a new Robinson 
club in South East Asia and new TUI Blue hotels in Croatia and Italy, as 
well as continuing to expand our unique tour operator concepts in third 
party hotels including Sardinia, Croatia, Spain, Greece and Bulgaria. 
 
*FUEL/FOREIGN EXCHANGE* 
 
Our strategy of hedging the majority of our jet fuel and currency 
requirements for future seasons, as detailed below, remains unchanged. This 
gives us certainty of costs when planning capacity and pricing. The 
following table shows the percentage of our forecast requirement that is 
currently hedged for Euros, US Dollars and jet fuel for our Source Markets, 
which account for over 90% of our Group currency and fuel exposure. 
 
                 *Winter 2016/17* *Summer 2017* *Winter 2017/18* 
Euro             95%              82%           40% 
US Dollars       90%              75%           45% 
Jet Fuel         92%              88%           66% 
_As at 2 
December 2016_ 
 
*PRIOR YEAR RESTATEMENT* 
 
We have revised our segmental reporting for the current and prior year. The 
most significant restatement relates to Hotelbeds Group. The Destination 
Services result has been carved out from Hotelbeds Group and is now reported 
within Other Tourism and, following the carve out, the Hotelbeds Group 
result has been reclassified to discontinued operations. In addition, the 
Crystal Ski and Thomson Lakes & Mountains result has been reclassified from 
Specialist Group to Northern Region, in preparation for the disposal of 
Travelopia. The result of Travelopia has been reclassified to discontinued 
operations. Also, costs relating to IT services have been reclassified from 
All Other Segments to Other Tourism, as they relate to the Tourism 
businesses. Minor reclassifications have also been made from Western and 
Central Region to All Other Segments 
 
*ADJUSTMENTS* 
 
Adjustments (including separately disclosed items and purchase price 
allocation, for continuing operations) of EUR102m were incurred during 
2015/16, a reduction of EUR57m on prior year. The following table provides a 
breakdown of these items: 
 
*In EURm*                         *2015/16* *2014/15* 
Restructuring expense             12        59 
Gains on disposals                1         -3 
Other one-off items               47        61 
Purchase price allocation (PPA)   42        42 
*Total Adjustments *              *102*     *159* 
Of which are merger related costs 11        39 
 
*NET INTEREST EXPENSE* 
 
Net interest expense (including expense from the measurement of interest 
hedges) for the year improved by EUR3m to EUR180m net expense (2014/15: net 
expense EUR183m). The improvement was driven by lower interest in relation 
to convertible bonds (which converted in the prior year), offset partly by 
the inclusion of EUR12m charge in the current year in respect of interest on 
the October 2019 high yield bond, which we have chosen to recognise up 
front. The bond was called on 19 October 2016 and redeemed in full on 18 
November 2016. New senior notes with the same nominal amount were 
successfully issued on 26 October 2016 with a more favourable interest 
coupon. The notes will mature on 26 October 2021. 
 
*INCOME TAXES* 
 
Tax charge for the year was EUR153m (2014/15: EUR58m). Following the merger 
of TUI AG and TUI Travel PLC a reassessment of deferred tax assets on tax 
loss carry forwards was performed during the second quarter of 2014/15. This 
led to a tax credit of EUR114m in the prior year, primarily driven by the 
planned reorganisation of the German tax group. The underlying effective tax 
rate (which is calculated based on underlying earnings before tax, excluding 
separately disclosed items, acquisition related expenses and impairment 
charges) for TUI Group therefore reduced to 25% in 2014/15 and remained at 
this level in 2015/16. 
 
*PRO FORMA EARNINGS PER SHARE* 
 
The following table shows underlying earnings per share for continuing 
operations on a pro forma basis. This provides like-for-like figures on a 
year on year basis, adjusted for bond conversions and the merger with TUI 
Travel PLC in the prior year. Earnings per share performance reflects growth 
in underlying EBITA (offset partly by EUR91m adverse foreign exchange 
translation). Pro forma earnings per share increased by 2.4% on the prior 
year, or 15.5% excluding the negative impact of foreign exchange 
translation. 
 
*Pro forma figures in EURm*                  *2015/16* *2014/15* 
Underlying EBITA (including prior year       1,001     953 
restatements) 
Net interest expense (excluding convertible  -180      -163 
bond interest in prior year) 
*Underlying earnings before tax*             *821*     *790* 
_Underlying effective tax rate_              _25%_     _25%_ 
Tax charge                                   -205      -197 
Minority interest (excluding TUI Travel PLC  -111      -90 
in prior year) 
Hybrid dividend                              -         -11 
*Net income*                                 *504*     *491* 
Number of shares in issue as at 30.9.2016    587       587 
*Pro forma earnings per share in EUR*        *0.86*    *0.84* 
 
*ACQUISITIONS AND DIVESTMENTS* 
 
No major acquisitions were made during 2015/16. On 31 October 2016 TUI AG 
acquired Transat's French tour operating business for an enterprise value of 
EUR55m, with the aim of increasing our market presence in France. A payment 
of EUR65m was made, including an assumption for working capital, subject to 
receipt of final completion accounts. 
 
The Hotelbeds Group disposal was completed in September 2016 for a total 
cash consideration of EUR1.2bn. Proceeds from the disposal will be 
reinvested in our growth strategy for hotels and cruises, and to strengthen 
the core of our business. 
 
Travelopia (formerly part of Specialist Group) is treated as discontinued 
operations, with marketing having commenced in September 2016. The disposal 
process is progressing to plan. 
 
Our 12.3% shareholding in Hapag-Lloyd AG, which will be diluted to 8.9% 
following the merger of Hapag-Lloyd AG and United Arab Shipping Company, is 
accounted for as an available for sale financial asset, with a viable route 
to exit following the IPO at the end of 2015. As at 30 September 2016 the 
fair value of our shareholding (based on the Hapag-Lloyd AG closing share 
price that day) was EUR266m. 
 
*DIVID* 
 
The Executive Board and the Supervisory Board are recommending a dividend of 
63 cents per share (2014/15: 56 cents per share) in respect of the financial 
year 2015/16. Subject to approval at the Annual General Meeting on 14 
February 2017, the dividend will be paid to shareholders on 17 February 2017 
to holders of relevant shares at close of business on 14 February 2017. 
 
*NET DEBT, RATING AND FINANCIAL TARGETS* 
 
The net cash position (cash and cash equivalents less capital market 
financing, loans, overdrafts and finance leases) at 30 September 2016 was 
EUR32m for continuing operations, or EUR350m including Travelopia (30 
September 2015: net debt EUR214m including Travelopia and Hotelbeds Group). 
The development of net cash reflects our strong operating cash flow 
performance, receipt of Hotelbeds proceeds and the benefit of foreign 
exchange translation, offset as anticipated by capital expenditure, pension 
contributions and dividend outflows. We also added EUR350m additional asset 
backed finance during the year, primarily for a new 787 aircraft and an 
additional cruise ship in the UK. The net cash position of EUR32m at 30 
September 2016 consisted of EUR2,073m of cash and cash equivalents (EUR129m 
of which was subject to disposal restrictions), EUR1,232m of finance lease 
liabilities, EUR306m high yield bond and EUR503m bank and other financial 
liabilities (including owned cruise ship and aircraft finance). 
 
Our focus on rating will allow us to obtain advantageous financing 
conditions and continue to ensure access to debt capital markets. This has 
already delivered benefits. Moody's upgraded TUI to Ba2 in April 2016, and 
Standard & Poor's revised its outlook on TUI from Stable to Positive in 
February 2016. We have delivered against our financial targets for 2015/16 
with a leverage ratio of 3.3 times (target 3.5 to 2.75 times) and an 
interest coverage ratio of 4.8 times (4.5 to 5.5 times interest). For 
2016/17, our financial targets have been tightened - leverage ratio target 
is 3.25 to 2.5 times, and interest cover target is 4.75 to 5.75 times. 
 
In October 2016, we completed the issue of a Euro denominated senior bond, 
maturing October 2021, with a coupon of 2.125%. The proceeds are used for 
general corporate purposes including the refinancing of the former EUR300m 
4.5% high yield bond, which was redeemed in November 2016. 
 
*OUTLOOK* 
 
Our sustained strong performance is a clear demonstration of the success of 
our growth strategy and the strength of our competitive position against 
what continues to be a turbulent geopolitical and macroeconomic backdrop. We 
believe our strategy creates value for our customers, our people and our 
shareholders alike. 
 

Having completed the disposal of Hotelbeds Group in September, and with the 
disposal process for Travelopia underway, we are focussed on delivering 
transformational growth in our own hotel and cruise brands, supported and 
enabled by a strong and flexible balance sheet. Our medium term cash flow 
will therefore reflect the reinvestment of proceeds from the Hotelbeds Group 
disposal. Based on our roadmap for growth and current trading, we expect to 
deliver at least 10% growth in underlying EBITA in 2016/171, and extend our 
previous guidance of at least 10% underlying EBITA CAGR to 2018/191. This 
balanced guidance is a clear demonstration of the confidence we have in our 
growth strategy, against what continues to be an uncertain geopolitical and 
macroeconomic backdrop. 
 
The following detailed guidance is given in respect of 2016/171: 
 
- Turnover - around 3% growth 
 
- Underlying EBITA - balanced guidance of at least 10% growth 
 
- Adjustments - around EUR80m 
 
- Net interest - around EUR160m 
 
- Net capex and investments - around EUR1bn, including the acquisition of 
Transat's French tour operating business and purchase of Legend of the Seas 
for Thomson Cruises. This figure excludes aircraft order book finance. 
 
- Year end net debt - around EUR0.8bn, reflecting investment in 
transformational growth and aircraft order book finance. 
 
- Financial targets - leverage ratio 3.25 to 2.5 times, interest coverage 
4.75 to 5.75 times 
 
_1 __Assuming constant foreign exchange rates are applied to the result in 
the current and prior period and based on the current group structure; 
guidance relates to continuing operations and excludes any disposal proceeds 
for Travelopia and Hapag-Lloyd AG_ 
 
*ANNUAL GENERAL MEETING AND Q1 2016/17* 
 
TUI Group will hold its Annual General Meeting and issue its Q1 2016/17 
Report on 14 February 2017. 
 
*ANALYST & INVESTOR ENQUIRIES* 
 
Andy Long, Director of Investor  Tel: [phone] 
Relations 
 
*Contacts for Analysts and Investors in UK, Ireland and 
Americas* 
Sarah Coomes, Head of Investor   Tel: [phone] 
Relations                        Tel: [phone] 
Hazel Newell, Investor Relations 
Manager 
Jacqui Smith, PA to Andy Long    Tel: [phone] 
 
*Contacts for Analysts and Investors in Continental Europe, 
Middle East and Asia* 
Nicola Gehrt, Head of Investor   Tel: [phone] 
Relations 
Ina Klose, Investor Relations    Tel: [phone] 
Manager 
Jessica Blinne, Team Assistant   Tel: [phone] 
 
The EQS Distribution Services include Regulatory Announcements, 
Financial/Corporate News and Press Releases. 
Archive at www.dgap.de/ukreg 
Language:        English 
Company:         TUI AG 
                 Karl-Wiechert-Allee 4 
                 30625 Hannover 
                 Germany 
Phone:           [phone] 
Fax:             [phone] 
E-mail:          [e-mail] 
Internet:        www.tuigroup.com 
ISIN:            DE000TUAG000, DE000TUAG273, DE000TUAG281 
WKN:             TUAG00 , TUA G27, TUA G28 
Listed:          Regulated Market in Hanover; Regulated Unofficial 
                 Market in Berlin, Dusseldorf, Hamburg, Munich, 
                 Stuttgart, Tradegate Exchange; Open Market in 
                 Frankfurt ; London 
Category Code:   ACS 
TIDM:            TUI 
Sequence Number: 3662 
Time of Receipt: 08-Dec-2016 / 07:19 CET/CEST 
 
End of Announcement EQS News Service 
527883 08-Dec-2016 
 
 
1: http://public-cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=8e080343e3e3e5bb48431aa13ff7cbdd&application_id=527883&site_id=vwd&application_name=news 
 

(END) Dow Jones Newswires

December 08, 2016 02:01 ET (07:01 GMT)