TIDMTT.
RNS Number : 2981X
TUI Travel PLC
09 January 2014
9 January 2014
TUI TRAVEL PLC
ANNUAL REPORT & ACCOUNTS
AND NOTICE OF 2014 ANNUAL GENERAL MEETING
TUI Travel PLC ("the Company") announces that its Annual General
Meeting will be held on Thursday 6 February 2014 at 10.30am at the
offices of Herbert Smith Freehills LLP, Exchange House, Primrose
Street, London EC2A 2EG. In connection with this, the following
documents have been posted or made available to shareholders
today:
-- Notice of 2014 Annual General Meeting ("AGM Notice");
-- Annual Report & Accounts for the year ended 30 September
2013 ("Annual Report & Accounts"); and
-- Proxy Form for the 2014 Annual General Meeting.
In accordance with Listing Rule 9.6.1, copies of the AGM Notice
and Annual Report & Accounts have also been submitted to the
National Storage Mechanism website and will shortly be available
for inspection at: www.hemscott.com/nsm.do.
The AGM notice and the Annual Report & Accounts are
available on the Company's website:
http://www.tuitravelplc.com/investors-media/shareholder-centre/annual-general-meeting
The appendices to this announcement contain additional
information which has been extracted from the Annual Report &
Accounts for the purposes of compliance with the Disclosure and
Transparency Rules ("DTR") and should be read together with the
Final Results Announcement, which can be downloaded from the
Company's website:
http://www.tuitravelplc.com/content/full-year-preliminary-results-statement
This announcement should be read in conjunction with, and is not
a substitute for, reading the full Annual Report & Accounts.
Together these constitute the information required by DTR 6.3.5
which is required to be communicated to the media in full unedited
text through a Regulatory Information Service.
APPENDICES
Appendix A: Directors' responsibilities statement
The following responsibilities statement is repeated here solely
for the purpose of complying with DTR 6.3.5. This statement relates
to, and is extracted from, page 102 of the Annual Report &
Accounts. Responsibility is for the full Annual Report &
Accounts not the extracted information presented in this
announcement or the Preliminary Results Announcement:
Each of the Directors, whose names and functions are listed on
page 66 and 67, confirm that to the best of their knowledge:
-- the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and profit of
the Group; and
-- the Directors' 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 risks and
uncertainties that it faces.
The Directors also confirm that:
-- so far as they are aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- they have taken all the steps that they ought to have taken
as a Director in order to make themselves aware of any relevant
audit information and to establish that the Company's auditors are
aware of that information.
The Directors' responsibilities statement was approved by a duly
authorised Committee of the Board of Directors on 9 December 2013
and signed on its behalf by William Waggott, Chief Financial
Officer.
Appendix B: Principal Risks
A description of the principal risks that the Company faces is
extracted from pages 23-27 of the Annual Report & Accounts:
Risk category Nature and extent of Current mitigation
risk
---------------------------- ------------------------- -------------------------------------------------------------
STRATEGIC
---------------------------- ------------------------- -------------------------------------------------------------
Consumer Preferences & Context Group-wide
Desires Price, product and Ongoing
digital solutions play a * Monitoring closely changes in consumer preferences
Strategic drivers key part in the and sentiment within the wider context of our
* Content consumer's industry and the different sources of influence on
decision-making process. our customers' spending.
Consumers are
* Brands & Distribution increasingly turning
online to research and * Developing new concepts and services which are unique,
book holidays and are diverse and value adding.
* Technology moving towards
booking nearer the time
of travel. * Maintaining our focus on being an 'online driven'
* Growth & Scale Risk business, and tracking the gap (both upside and
We do not identify or downside) between our offer and the competition's to
respond quickly enough inform effective decision-making.
* People to changes in consumer
preferences and do not
keep up with latest Progress
technological * Established a dedicated Group Digital Solutions PMO
developments. to lead IT innovation across the Group, identify
Potential impact participation in emerging technologies and drive
Our market positions market intelligence.
come under pressure
resulting in lower short
to medium-term growth * Agreed funding to test and develop important new
rates technologies to ensure our ongoing relevance to
and reduced margins. consumers.
Appetite
We are eager to be
innovative and consider Planned
all investment options * Exploring how 'Big Data' (customer, social and
to ensure we remain performance data combined) might inform our strategy
relevant and enable us to personalise our interactions with
to our consumer our customers.
preferences & desires.
Net risk movement ê
"Following our results Tour Operator
it is obvious that our Ongoing
strategy of unique * Leveraging our Mainstream structure to enhance the
holidays sold directly portfolio of unique and exclusive products designed
to to increase our competitive advantage.
our customers is the
right one. As the
business continues its * Monitoring closely our concept portfolio and
move towards a more developing new hotel concepts and adapting these,
online future, where appropriate, for our different source markets.
and while we efficiently
manage our costs, we
continue to build upon * Developing the strong brand portfolio of tailor-made
the foundations of a products and services within our Specialist
business set for businesses and reviewing opportunities to extend it
sustainable growth. Our into new markets.
colleagues within the
business care deeply
about * Investing in online platforms and enhancing booking
the customer experience and search functionality in order to provide our
and everything we do is customers with easy to access inspirational content
built around enhancing whilst consolidating finance and reservation systems
it at every level, to leverage scale across multiple source markets.
through every stage of
the customer journey,
from dreaming of a * Focusing on being an online-driven business including
holiday to sharing it our participation in social media according to the
with preferences of our customers, encompassing the entire
family and friends once customer journey from dreaming and planning through
they have returned to experiencing and sharing.
home."
Progress
* Increased the volume of unique holidays and selling
to our customers through multiple channels in a
number of our key source markets thereby enhancing
our customer booking experience.
* Developed and launched a pan-Mainstream all-inclusive
3* concept 'SuneoClub' featuring a series of bright,
modern and friendly three star all-inclusive hotels
offering new standards of quality and affordability
for our customers.
* Launched new services and tailor-made offerings
within our Specialist businesses providing a seamless
service which in turn is driving considerable growth.
* Created a Mainstream Distribution & Online team
providing a clear focus, drive and support to all
Mainstream Source Markets through sharing of best
practice on all digital matters, retail operations,
CRM and ancillaries, providing an immediate
improvement to the customer experience.
* Launched the My Thomson Digital Assistant in our UK
source market with plans to extend it out to our
other source markets to help our customers plan their
holidays and explore the destination before they
arrive.
* Started the transformation of the traditional travel
agency into the next-generation retail concept store,
combining the knowledge and expertise of our people
with the latest technology as we move into a fully
multi-channel world.
Online Accommodation
Ongoing
* Reviewing closely our offer to ensure that we have a
wide variety of product, in terms of quality,
destination and budget, that our content is rich and
inspiring and that it translates well digitally in
order to attract and retain our diversified customer
base.
* Continuing to update and upgrade IT platforms to
ensure our Wholesaler and OTA businesses are
supported by effective and efficient systems
improving the service delivery to our global
customers that underpins our growth strategy.
Progress
* Delivered mobile optimised websites for LateRooms,
AsiaRooms and MalaPronta and have developed mobile
apps for AsiaRooms and LateRooms.
---------------------------- ------------------------- -------------------------------------------------------------
Business Improvement Context Group-wide
Opportunities The Group is heavily Ongoing
reliant on legacy * Driving stronger and more cost-effective
Strategic drivers systems, processes and relationships with key service providers through
* Content structures which, in better co-ordination of key procurement activities.
some cases,
are outdated, complex
* Brands & Distribution and inefficient. * Strengthening our internal control environment
Risk through the rollout of the COSO control framework
We do not address across Financial Reporting, Compliance and
* Technology successfully the legacy Operational categories of control through the
inefficiencies and establishment of Group Finance, Legal & Regulatory
complexities of our and IT Compliance.
* Growth & Scale existing
infrastructure.
Potential impact * Implementing business continuity management in our
* People We incur higher costs various businesses in order to build resilience into
due to inefficiencies, our operations.
impacting our ability to
optimise business
performance Progress
and provide a * Restructured the Group CIO function to provide the
value-added service to governance framework required to deliver technology
our consumers. innovation.
Appetite
We are eager to be
innovative and consider * Instigated a review of project management
all options that might competence/capability and the adequacy/effectiveness
strengthen our of central oversight/control in order to ensure that
infrastructure the governance in place adequately reflects the
and drive out cost and current and future transformation needs of the
complexity. organisation.
Net risk movement ê
"We have been successful
in implementing our * Established Compliance Steering Group to ensure
Group-wide business better understanding and management of
improvement programmes interrelationship of risks and controls between COSO
this categories.
year. The total savings
made this year equates
to GBP46m, an Tour Operator
acceleration of the Ongoing
target outlined * Reviewing areas where the efficiency of our
at the start of year. operations can be further improved and costs reduced
These cost savings were without compromising on customer experience.
primarily driven by back
office restructuring
and IT platform * Increasing controlled distribution thereby reducing
replacement across a third party costs and enabling a direct relationship
number of markets." with our customers.
"We are an online
business but we continue
to drive further * Upgrading our web front-end reservation and finance
enhancements through systems across all source markets with plans
technologies progressing well in our key source markets such as
that amplify the Germany and the UK.
customer experience at
the front-end and drive
further efficiencies in Progress
the * Focused on exploiting our Mainstream structure to
back-end processes." leverage scale in order to grow and consolidate our
"We are pleased to say leading position within Europe and to ensure we are
that we were the first well placed to offset any adverse movement in some of
business in the UK to our other Principal Risks.
take delivery of the
Boeing
787 Dreamliner that has * Established the Mainstream Purchasing Team to act
exceeded customer and globally and focus on purchasing the right product at
our own expectations in the right price to provide best value for money.
its first few months
of operation. In May we
committed to purchasing * Established a Modern Destination Services Board with
60 new Boeing 737 MAX senior executives from both our Mainstream and
aircraft and secured Specialist Destination Services division (providing
the option and right to excursions, transfers and other tailored products)
purchase another 90 on creating a strong and mutually beneficial
the same terms. The deal relationship and added value to the consumer.
will enhance our unique
offering, replace older
aircraft and help secure * Commenced flying the Boeing 787 Dreamliner on
the future of our six long-haul routes vastly improving our customers'
airlines." flying experience whilst driving down costs and
improving airline and environmental efficiencies.
* Committed to the purchase of 60 Boeing 737 MAX
aircraft to replace the 757 fleet and older 737s
across our airlines to operate our short and
medium-haul flights, improving cost efficiency
through simplifying operational training and
maintenance.
* Restructured our Specialist and Activity Sector
resulting in a simplified management structure,
increased sharing of expertise and knowledge across
divisions, improved operational efficiency and a
platform for future growth.
* Committed to combining the UK Finance Shared Service
Centre with the existing German Finance Shared
Service Centre in order to create one transactional
back office Finance team working from one common
platform enabling us to be more operationally
efficient and effective.
Online Accommodation
Ongoing
* Continuing our IT transformation programme in our
Wholesaler and OTA businesses to improve overall
competitiveness and facilitate the rapid integration
of new brands whether acquired or organically
developed.
* Progressing our strategy of consolidating our
market-leading position by further expanding in
existing destinations whilst focusing on our
development in both new source markets as well as new
destinations.
Planned
* Planning to drive superior growth by developing new
distribution channels and new customer segments in
this market.
---------------------------- ------------------------- -------------------------------------------------------------
New Markets, Acquisitions & Context Group-wide
Investments The Group continues to Progress
look into new markets as * Established a dedicated Group-wide Mergers &
Strategic drivers the traditional Acquisitions team to help identify and optimise the
* Content Mainstream markets best growth opportunities available across the Group
mature. through M&A activity.
Specialist businesses,
* Brands & Distribution online accommodation and
new markets represent a * Created a New Markets division focusing specifically
significant opportunity on merger, acquisition and joint venture
* Technology to participate in opportunities in emerging economies in order to
longer-term travel optimise our investments and to evaluate where
growth trends and have existing Group assets can be best leveraged into new
* Growth & Scale higher growth potential. markets.
Risk
We do not maximise
* People potential growth Tour Operator
opportunities to deliver Ongoing
results in New Markets * Developing and delivering the participation strategy
due to for both outbound and domestic tour operations in new
lack of investment markets, to create long-term growth and improved
appetite, short termism shareholder value.
and difficulty in
leveraging Group assets
and integrating Progress
operations and systems. * Established a presence for TUI Travel in the BRIC
Potential impact economies of Brazil, Russia, India and China with
Our potential long-term focus now switched to assessing the next set of new
growth rates and margins frontier markets.
are impacted, with cash
flows lower than
anticipated and Planned
significant absorption * Planning to expand further our long established tour
of resource. operator, TUI India (now the preferred agent for the
Appetite promotion and sales of Emirates Holidays in India) to
We are willing to cater for the domestic and outbound consumer through
consider all markets, a combination of own retail travel agencies, an
acquisitions and extensive B2B network and online.
investments to drive
long-term sustainable
growth value. Online Accommodation
Net risk movement è Progress
"Acquisitions were made * Developed a clear strategy for targeting emerging
in the year for a total markets, in particular in Africa, Asia and Latin
investment value of America.
GBP30m in order to
expand
business operations in * AsiaRooms recognised as the best OTA in Asia Pacific
line with the Group's due to our excellence in online experience and
growth strategy. customer service.
Businesses acquired
during the
year primarily related * Increased our Brazilian Accommodation OTA MalaPronta
to the 50.1% of TUI hotel portfolio in the past year across the main
Infotec GmbH that the domestic destinations of Sao Paulo, Rio de Janeiro
Group did not already and Curitiba.
own
and 100% of the share
capital of JBS Group,
Isango! and TT Visa
Services."
---------------------------- ------------------------- -------------------------------------------------------------
OPERATIONAL
---------------------------- ------------------------- -------------------------------------------------------------
Global Financial Factors Context Group-wide
The cross-border nature Ongoing
Strategic drivers of trading exposes our * Ensuring that hedging cover for fuel and foreign
* Growth & Scale business to fluctuations currency is taken out ahead of source market customer
in exchange rates booking profiles to provide certainty of input costs
and complex tax laws. In when planning pricing and capacity.
addition a significant
proportion of operating
expenses are in relation * Tracking the foreign exchange and fuel markets to
to aircraft fuel which ensure the most up-to-date market intelligence and
is also subject to the ongoing appropriateness of our hedging policies.
fluctuation.
Geo-political events
continue to highlight * Maintaining high-quality relationships with tax
the inherent risks authorities through regular communication keeping
within travel and them informed of the commercial reality of our
tourism, whilst the business operations.
ongoing banking sector
recovery and
the introduction of * Monitoring our funding and liquidity position to
Basel III have the ensure key facilities are refinanced well ahead of
potential to impact maturity. We recognise the impact that different
long--term financing aspects of our operations can have on our access to
availability. financial facilities and seek to ensure that these
Risk are appropriately understood and controlled.
We do not manage
adequately the
volatility of exchange * Maintaining high-quality relationships with the
rates and fuel prices or Group's key financiers and monitoring compliance with
other rising the covenants contained within our financing
input costs; we face an facilities.
increase in tax
authorities taking a
more strident tax Progress
approach in * Secured a GBP300m medium-term bank credit facility
order to fund local available until April 2016 giving greater flexibility
fiscal deficits; and in our financing and access to further funds as
difficulties in securing required. This reflects the banks' ongoing confidence
additional facilities, in our strategy, business model and operational
if competence.
needed, and at a
reasonable cost.
Potential impact * Raised over GBP400m of long-term financing for nine
We suffer increased aircraft scheduled for delivery during FY14. This
costs which reduce financing was raised on competitive terms through a
demand resulting in combination of finance leasing and sale and
lower revenue and/or leaseback.
margins. We
face a negative impact
on cash flow, lengthy
tax litigation processes
and possible reduction
in Group's after-tax
earnings.
Appetite
We are eager to ensure
as stable and as
predictable an
environment as possible
in relation
to FX & fuel, tax,
funding and liquidity.
Net risk movement è
"We remain satisfied
with our funding and
liquidity position. We
have three main sources
of
long-term debt funding
as at 9 December 2013 -
these include the
external bank revolving
credit
facilities totalling
GBP1,120m which mature
in June 2015, a GBP350m
convertible bond (due
October 2014) and a
GBP400m convertible bond
(due April 2017). The
external bank revolving
facilities are used to
manage the seasonality
of the Group's cash
flows and liquidity."
"We have hedged the
majority of our fuel and
currency requirements
for the seasons
currently
on sale, which gives us
certainty of costs when
planning capacity and
pricing."
---------------------------- ------------------------- -------------------------------------------------------------
Consumer Demand Context Group-wide
Spending on travel and Ongoing
Strategic drivers tourism is discretionary * Maintaining our focus on creating lifetime
* Content and price sensitive. The relationships with our customers through great
economic outlook service and fantastic lifetime experiences.
remains uncertain with
* Brands & Distribution different source markets
at different points in Tour Operator
the recovery cycle. Ongoing
* Technology Consumers are also * Assessing our product offering in the context of the
waiting longer to book confidence levels and cost of living pressures being
their trips in order to experienced by our customers.
* Growth & Scale assess their financial
situation.
Risk * Exploiting the flexibility and resilience of our
* People We do not respond business model and the functionality of our
successfully to changes sophisticated capacity and yield management systems
in consumer demand in order to drive margins and profits growth by
and/or the consumer ensuring that capacity is aligned very closely to
preference forecasts.
for late booking.
Potential impact
Our short-term growth Progress
rates and margins are * Developed and launched a pan-Mainstream all-inclusive
lower than anticipated. 3* concept 'SuneoClub' featuring a series of bright,
Appetite modern and friendly all-inclusive hotels offering new
We are willing to standards of quality and affordability.
consider all options to
secure and improve the
flexibility, resilience * Established the Mainstream Purchasing Team to act
and globally and focus on purchasing the right product at
attractiveness of our the right price to provide direct value to our
business model. customers and benefit hoteliers.
Net risk movement è
"The travel market
continues to be driven Online Accommodation
by high growth in online Online
bookings and, while the * Continuing to exploit our model which involves
uncertain economic minimum commitment risk and operates extremely well
environment has had an in relation to the online lates market.
effect on consumer
travel spending habits,
demand
for leisure travel
remains strong."
"Overall, we are pleased
with trading at the
start of our new
financial year. Winter
2013/14
performance is in line
with expectations with
60% of the programme
sold. For Summer 2014,
we are encouraged by
early trading despite
strong comparatives. In
particular, we continue
to see strong demand for
our unique holidays."
---------------------------- ------------------------- -------------------------------------------------------------
Talent Management Context Group-wide
The Group's success Ongoing
Strategic drivers depends on its ability * Assessing our organisational competence and
* Technology to retain key management capability against that required to maximise current
and it relies on having and future shareholder value.
good relations with its
* People colleagues.
Risk * Ensuring succession plans are in place for all
We are unable to attract identified business critical roles, in particular
and retain talent, build emergency successors for all Source Market and Sector
future leadership Board roles, and that these plans are reviewed every
capability and maintain six months.
the commitment and trust
of our employees.
Potential impact * Using our Group-wide leadership framework (including
We do not maximise on our Your Voice survey) to engage and empower people
our operating results whilst delivering results and managing performance.
and financial
performance.
Appetite * Building our pipeline of leadership talent through
We are willing to invest our International Graduate Leadership Programme which
in the appropriate level attracts, develops and retains high quality graduates
of competence and to become our future senior Commercial Leaders.
capability to drive the
future success of our
business. * Driving high performance and engagement through our
Net risk movement è performance review, development plans and career
"Our colleagues are the planning process.
true driver of the
business. Their
commitment, endeavour * Extending our 'risk & control & doing the right
and passion thing' objectives down through the organisation as
to deliver incredible part of developing a strong culture of effective risk
travel experiences for governance.
our customers is proven
in the exceptional
results * Extending competency testing of our key finance
we have announced this management in order to assess the adequacy of the
financial year." skill-set of individual finance managers as well as
the competency of the finance community within key
businesses and across the Group as a whole.
* Focusing on digitally enabling our people in support
of our commitment to be an online driven company.
Progress
* Invested in a number of online tools to support the
creation of a Digital Workplace so our people can
build on their knowledge and move towards a
transformation in learning and career development.
* Introduced a suite of Global High Potential Learning
& Development programmes designed for our talent in
the early stages of their careers or who have been
identified as successors to commercial senior
leadership roles in the future.
* Built on the successful launch of our Finance Academy
with a number of modules designed to drive up levels
of financial maturity within our various businesses
for both financial and non-financial employees.
---------------------------- ------------------------- -------------------------------------------------------------
Political Volatility, Context Group-wide
Natural Catastrophes and Providers of holiday and Ongoing
Outbreaks travel services are * Maintaining a balanced destination mix to minimise
exposed to the inherent concentration and having flexible supplier agreements
Strategic drivers risk of domestic and/or in order to enable capacity to be switched as
* Content international incidents required.
affecting some
countries/destinations
* Growth & Scale within their operations. * Leveraging our unique products and our strong brand
During to drive earlier booking, giving us more time to
the summer months we react to external events.
faced disruption in both
Turkey and Egypt.
Risk * Reviewing trading outlooks destination by destination
We are not able to with the management team of each business area during
respond efficiently and our regular business review meetings and developing
effectively to large operational contingency as appropriate.
scale events.
Potential impact
We suffer significant * Maintaining strong relationships with local tourism
operational disruption bodies, travel and aviation industry associations,
in our Source Markets actively monitoring the political situation in
and destinations leading volatile destinations and acting upon security
to significant losses intelligence advice as it is received.
(holiday cancellations,
repatriation of
customers) and a general * Minimising the impact of negative events in our
decline source markets and destinations by ensuring the
in consumer demand and effective execution of our established incident
increase in our management and emergency response plans and the
insurance premiums. deployment of our experienced leadership teams to
Appetite support and repatriate stranded customers.
We are willing to
consider all options to
secure and improve the * Tracking hotel commitments and prepayments on a
flexibility and timely and sufficiently granular basis to manage our
resilience financial exposure to justifiable levels.
of our business model in
order to withstand
ad-hoc shocks to our * Promoting the benefits of travelling with a
operations. recognised and leading tour operator to increase
Net risk movement è consumer confidence and peace of mind.
"We operate in a market
segment that, as a
matter of course, has to Progress
weather geo-political * Developed a standard set of terms and conditions for
events. As a result, it our Mainstream accommodation contracts from Summer
is vital that we have a 2014 with clauses that contain termination rights
strong and resilient following force majeure or Euro break-up.
business model that
enables
us to deliver on our
strategy, which in turn
drives long-term
sustainable growth and
increased
shareholder returns."
---------------------------- ------------------------- -------------------------------------------------------------
COMPLIANCE
---------------------------- ------------------------- -------------------------------------------------------------
Regulatory Environment Context Group-wide
Industries in which the Ongoing
Strategic drivers Group operates are * Addressing issues affecting the industry and our
* Content highly regulated, customers through our political and regulatory
particularly in relation affairs team, who engage with regulators and
to consumer governments to help ensure legislation that is fit
* Growth & Scale protection, aviation and for purpose, properly balances the interests of
the environment. industry and consumers and treats all industry
Risk players fairly.
We do not establish an
effective system of
internal control to * Lobbying for greater clarity and simplification of
ensure we operate in the Package Travel Directive to ensure a level
compliance playing field across the industry for all those
with all legal and involved in putting together more than one element of
regulatory requirements. a holiday (flight, transportation, accommodation,
Potential impact excursions etc.).
We suffer negative
impact which damages our
reputation, results in * Maintaining a comprehensive Anti-Bribery & Corruption
reduced revenue and/or (ABC) training programme across the Group in order to
higher input costs. raise awareness of the provisions of the Bribery Act
Appetite 2010 in order to prevent bribery and corruption in
We are committed fully the countries in which we operate.
to being a good
corporate citizen in all
of the countries in * Monitoring the adequacy and effectiveness of the ABC
which procedures and measures established, including
we operate. self-certification twice a year by all of our
Net risk movement è businesses across the Group.
"The last 12 months have
seen significant
developments at the Progress
European level with the * Worked with other industry stakeholders to develop a
Commission counter proposal to the recent ruling by the European
proposing new Court in relation to Air Passenger Rights which we
legislation in the area believe will both reduce our exposure and also
of Air Passenger Rights safeguard the longer-term interests of our customers.
and bringing forward
proposals
for reform of the * Reviewed the effectiveness of our flight planning and
Package Travel established appropriate monitoring controls for
Directive. We have on-time performance as a way of both improving
engaged consistently customer service and minimising the impact of the
with the Commission recent ruling by the European Court.
as they have developed
these proposals and will
engage over the coming * Commenced lobbying to simplify the Package Travel
12 months with the Directive in order to make it easier to understand
European Parliament and for both the customer and the industry.
the Council of Ministers
as they come to consider
the suggested reforms * Committed to developing more sustainable holidays and
in detail." to reducing the environmental impact at each stage of
"TUI Travel is a truly our customer's journey. Established a dedicated
worldwide organisation sustainable development team to support the Group and
and we are committed to work closely with business management (see our
operating our business Sustainable Development section on page 26).
in a sustainable manner.
We have a three-year
Sustainable Holidays * Achieved our airline carbon reduction target of 9%
Plan, launched in 2012, (2008-2014) one year ahead of schedule through a
which sets out four mixture of operational efficiencies, fuel
overarching goals with conservation activities, capacity amendments and
20 measurable and airline enhancements.
challenging commitments
to responsible
tourism." * Invested significantly in cutting edge aviation
technology including the Boeing 787 Dreamliner
aircraft, which are forecast to emit 20% less CO(2)
per passenger than comparable aircraft today, the new
innovative Split Scimitar Winglets, reducing fuel
burn by an additional 2%, and committed to purchasing
60 Boeing 737 MAX aircraft, with improved
fuel-efficiency (2018 delivery).
* Recognised in the top tier of the FTSE 350 for carbon
reporting following the introduction of UK
legislation on carbon reporting for the largest UK
companies. We are a third more fuel and carbon
efficient than the average scheduled carrier in
Europe and are now calling for greater transparency
and reporting of consistent metrics across all
airlines so that the government can consider
adjusting its taxes fairly and proportionately.
* Implemented a web-based sustainability data software
solution to further improve data accuracy, increase
data collection frequency and provide reporting that
supports advanced monitoring and targeting of further
efficiency opportunities.
* Established a Group Health & Safety Compliance
function to oversee and ensure that the Health &
Safety Management Systems employed by our businesses
are compliant with Group Policy and that there is
appropriate protection in place for both our
customers and our colleagues.
* Established Group Legal & Regulatory Compliance
function to improve our central oversight,
understanding and control of local practices in
relation to ABC, Anti-Money Laundering, Know Your
Supplier, Know Your Customer and Competition Law.
* Used the newly established Group IT Compliance
function to support the Group Legal & Regulatory
Compliance function by improving central oversight,
understanding and control relating to PCI DSS and
data protection.
* Launched our Supplier Code of Conduct (available in
11 languages) which is the first time a set of social
and ethical values has been given to our suppliers.
This plays an important role in our vision,
reflecting our value of responsible leadership in the
travel industry.
---------------------------- ------------------------- -------------------------------------------------------------
Appendix C: Related party transactions
The following description of related party transactions of the
Company is extracted from pages 169 to 170 of the Annual Report
& Accounts:
Apart from with its own subsidiaries which are included in the
consolidated financial statements, the Group, in carrying out its
ordinary business activities, maintained direct and indirect
relationships with related parties including consolidated or
related companies of its ultimate parent company, TUI AG. These
companies either purchased or delivered services to companies in
the Group.
Convertible bond
In April 2010, the Company issued a GBP400m fixed rate 4.9%
convertible bond, of which Antium Finance Ltd, an independent
special purpose company, subscribed for 50%. TUI AG entered into a
forward purchase agreement with Antium Finance Ltd for these
GBP200m convertible bonds, in order to prevent dilution of its
majority shareholding. TUI AG is entitled to receive the interest
coupon on these bonds and to repurchase these bonds by July 2014 at
the latest.
Trademark Licence Agreement
The Trademark Licence Agreement incorporates trademark licences
granted from TUI AG to members of the TUI Tourism Group in relation
to TUI Tourism's use of the TUI name and logo and other trademarks
from within TUI AG's portfolio of trademarks used in the former TUI
Tourism's business. Licence fees payable under each licence are an
annual fee equal to 0.02% of the average annual gross turnover of
the relevant licensee under the relevant trademarks measured over a
three year period. Total licence fees charged for the year ended 30
September 2013 were GBP3m (2012: GBP3m). Each licence's standard
terms are for five years with an option for the relevant licensee
to extend for a further five years on the same terms.
Hotel Framework Agreement
TUI Deutschland has signed an exclusivity agreement with TUI
AG's Robinson hotel portfolio. Under the terms of the agreement,
TUI Deutschland paid EUR8m in the financial year ended 30 September
2012, EUR10m in the financial year ending 30 September 2013 and
must pay EUR12m per year thereafter. The contract also contains
performance related elements linked to occupancy rates under which
either more can be paid or refunds received.
Details of transactions with related parties during the year and
balances outstanding at the balance sheet date are set out in the
tables below:
Expenses (including
Income interest)
------------------------------ ------------------------------
Year ended Year ended Year ended Year ended
30 September 30 September 30 September 30 September
2013 2012 2013 2012
GBPm GBPm GBPm GBPm
------------------------------- -------------- -------------- -------------- --------------
Related party
Ultimate parent TUI AG 8 7 4 6
Hotel and resort subsidiaries
of TUI AG 1 8 289 332
Other subsidiaries of TUI AG 13 4 9 2
Joint ventures and associates
of TUI AG 10 13 85 73
Joint ventures of the Group 41 47 132 75
Associates of the Group 15 17 14 24
------------------------------- -------------- -------------- -------------- --------------
Total 88 96 533 512
------------------------------- -------------- -------------- -------------- --------------
Income earned from TUI AG includes airline revenue of GBP4m
(2012: GBP3m) and recharges of administrative costs of GBP4m (2012:
GBP3m).
Income earned from hotels and resort subsidiaries of TUI AG,
joint ventures and associates of TUI AG and joint ventures of the
Group includes accommodation and destination services provided by
the Group to the related entities. The income relating to the
Group's joint ventures includes GBP32m (2012: GBP35m) from Togebi
Holdings Limited, the Group's joint venture in Russia, and its
subsidiaries.
Income received from associates of the Group principally
represents aircraft sublease income from Sunwing, as detailed in
Note 7.
Expenses paid to TUI AG includes interest expense of GBP1m
(2012: GBP2m). The remaining expenses paid to TUI AG of GBP3m
(2012: GBP4m) relates to aircraft lease costs and licence fees.
In addition to the amounts disclosed above, GBP10m (2012:
GBP10m) of the interest payable in the year in respect of the
Group's convertible bonds has been paid to Antium Finance Ltd, a
special purpose company which purchased GBP200m of the Group's 4.9%
convertible bond. TUI AG remains entitled to receive the interest
on these bonds from Antium Finance Ltd.
Expenses relating to hotels and resort subsidiaries of TUI AG,
joint ventures and associates of TUI AG and joint ventures and
associates of the Group relate to travel related services,
primarily made up of accommodation and destination services
costs.
Related party receivables
30 September 2013 30 September 2012
-------------------------------- ---------------------------------
Current Non-current Total Current Non- current Total
assets assets assets assets assets assets
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- -------- ------------ -------- -------- ------------- --------
Related party
Ultimate parent TUI
AG 2 - 2 - - -
Subsidiaries of TUI
AG 1 - 1 11 - 11
Joint ventures and associates
of TUI AG 6 1 7 5 - 5
Joint ventures of the
Group 43 35 78 30 34 64
Associates of the Group 3 - 3 6 - 6
Total 55 36 91 52 34 86
------------------------------- -------- ------------ -------- -------- ------------- --------
Receivables due from related parties are reported in Note 16.
Amounts owed from TUI AG and its subsidiaries of GBP3m (2012:
GBP11m) are in respect of current trade and other receivables.
Amounts owed by joint ventures of the Group that are due after
more than one year of GBP35m (2012: GBP34m) include a loan of
US$12m, equating to GBP8m (2012: GBP7m) including interest from TUI
Travel Holdings Limited, a direct subsidiary of the Company, to
Togebi Holdings Limited. This loan is unsecured, bears interest at
a rate of 7% and is repayable by February 2017. The remaining
balance due after more than one year principally comprises hotel
prepayments made to the Atlantica Leisure Group of companies.
Amounts owed by joint ventures that are due within one year of
GBP43m (2012: GBP30m) include accommodation costs due from Togebi
Holdings Limited and its subsidiaries of GBP15m (2012: GBP16m),
which were non interest bearing balances. The remaining balance due
within one year includes current hotel prepayments made to the
Atlantica Leisure Group of companies.
Related party payables
30 September 2013 30 September 2012
------------------------------------------- -------------------------------------------
Current Non-current Total Current Non-current Total
liabilities liabilities liabilities liabilities liabilities liabilities
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ------------- ------------- ------------- ------------- ------------- -------------
Related party
Ultimate parent TUI
AG 7 - 7 8 - 8
Hotel and resort
subsidiaries
of TUI AG 48 - 48 45 - 45
Joint ventures and
associates of TUI AG 11 - 11 19 - 19
Joint ventures of the
Group 26 1 27 10 11 21
Associates of the Group 5 - 5 12 - 12
Total 97 1 98 94 11 105
---------------------------- ------------- ------------- ------------- ------------- ------------- -------------
Payables outstanding with related parties are reported in Notes
20, 21 and 23.
The above balances exclude GBP200m (nominal value) of the
Group's convertible bonds 4.9% April 2017 which have been sold to
Antium Finance Ltd. TUI AG is entitled to receive the interest
coupon on these bonds and to repurchase these bonds by July 2014 at
the latest. Further details of the convertible bonds are given in
Note 20.
Amounts payable to hotels and resorts of TUI AG and joint
ventures and associates of TUI AG are in respect of current trade
payables primarily associated with accommodation and destination
services costs.
Details on interest rate and liquidity risks in respect of
balances with related parties are included in Notes 26(E) and 26(F)
respectively.
Key management compensation
Details of Directors' remuneration are given in the Remuneration
Report. In accordance with IAS 24, key management functions within
the Group (the GMB and the Directors of the Company) were related
parties whose remuneration has to be listed separately. The
compensation paid in respect of key management personnel (including
Directors) was as follows:
Year ended Year ended
30 September 30 September
2013 2012
GBPm GBPm
------------------------------ -------------- --------------
Short term employee benefits 9 9
Termination benefits - 1
Post-employment benefits 1 1
Share-based payments 10 9
Total 20 20
------------------------------ -------------- --------------
Spanish tax case
In connection with the settlement of the tax dispute in Spain
described in Note 8, on 5 August 2013 arrangements were entered
into between the Company, one of its subsidiaries, TUI Travel
Accommodation and Destinations S.L.U., and a former director of
that subsidiary. That individual, a related party of the Company by
virtue of their position as a key member of management, intends to
plead guilty to a number of tax offences as part of the conclusion
of the overall settlement. At that time, the subsidiary will have
settled the outstanding balance of claimed tax, interest and
penalties. The arrangements include agreement to indemnify the
individual against, and not to seek future recovery of, the amounts
payable, agreement to pay the individual's legal costs, and certain
variations to the individual's terms of service. The indemnity and
agreement regarding recovery from the individual in relation to the
penalties was given as the Board considered these to be matters for
the companies involved. In reaching the settlement in Spain and
concluding these arrangements, the Board took account of the fact
that when the transactions were executed, the law in Spain
permitted the tax authorities to take action only against
individuals and not companies. The Board considered this to be a
corporate liability and not an individual liability, and therefore
because the individual could have been any director of the relevant
subsidiaries, the identity of the individual is not considered to
be relevant. This legislation was changed in 2010.
For the purposes of related party transaction disclosure, the
aggregate value ascribed to the arrangements with the individual,
including the indemnity and waiver, is GBP16.7m, of which GBP13.1m
is ascribed to the waiver (i.e. the EUR15m penalty referred to in
Note 8), GBP0.1m represents legal costs paid and the balance is
remuneration under the revised service contract payable in the
ordinary course of their service over its anticipated life. Cash
payments to the individual directly related to the settlement
totalled approximately GBP0.1m for their legal costs.
This information is provided by RNS
The company news service from the London Stock Exchange
END
NOAGMGGMZLZGDZM
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