Peter Long Chief Executive	Paul Bowtell Chief Financial Officer

The Group has had an excellent first year as a merged company with underlying operating profit up 53% and significantly improved profitability across the business.  The integration is progressing well and we are now targeting £175m of synergies, which is £25m higher than our previous target. 

Our customers continue to regard their main holiday as an essential, not a luxury, which they are reluctant to forgo. More than ever they want to book their holidays with trustworthy, financially secure brands that provide excellent value for money.

TUI Travel has a highly experienced management team, a flexible business model and a diverse portfolio of brands. The actions we are taking to manage supply and accelerate the synergy benefits puts the Group in a strong position to manage the current economic environment and continue to meet the Board’s expectations for 2009.

The KPIs used by the Group and the Sectors are linked to our strategic objectives. These are featured on pages 4 to 8 and throughout the Business & Financial Review.

The Group delivered a £137m improvement in underlying operating profits to £398m in 2008, our first year as a fully merged business (2007: £261m). This has primarily been achieved as a result of a strong performance in the UK driven by improved trading and the delivery of synergies, a significant turnaround in France, further improvement in Nordics from strong winter trading and improved summer trading in Germany and Austria. The Specialist Sectors also contributed to the result through a combination of organic and acquisition led growth.

Group revenue for the year increased by 9% to £13,932m (2007: £12,840m) with currency movements accounting for 4% of the growth. As a result of the stronger performance in the Mainstream Sector, the Group increased its underlying operating margin by 90 basis points to 2.9% (2007: 2.0%).

Year ended 30 September

¹ Comparative information is presented on an unaudited pro forma basis for 12 months to 30 September 2007. As set out in Note 1 to the consolidated financial statements, the statutory comparative period included in the financial statements is nine months to 30 September 2007 and includes the results of First Choice from 3 September 2007 only.

² The Group believes that underlying operating profit, underlying profit before tax and underlying earnings per share provide additional guidance to the statutory measures on the underlying performance of the business during the financial year. Please refer to the definitions of these additional measures in Note 1 to the consolidated financial statements.

A reconciliation of underlying profit before tax to profit/(loss) before tax is as follows:

The separately disclosed items of £380.7m (2007: £147.3m) include:

• Restructuring expenses of £65.3m, which relate to restructuring programmes already in progress prior to the merger, the integration of acquired businesses and further restructuring activities to increase business efficiency.
• Merger-related integration costs of £164.3m, incurred as part of the integration programmes across the UK Mainstream and Group and Global businesses affected by the merger.
• Aircraft-related costs of £151.1m, which are primarily attributable to the loss on disposal of 19 aircraft included in the June sale and leaseback transaction.

Further information on the separately disclosed items is included in Note 3 of the consolidated financial statements. As a result of its reclassification as a disposal group held for sale earlier in the year, a goodwill impairment of £111.7m was recognised in respect of TUIfly, our airline in the German source market. TUIfly has since been declassified as a disposal group held for sale. Amortisation of business combination intangibles arising on the merger amounted to £80.0m and is included within the 2008 total charge of £86.9m.