This result incorporates our share in Island Cruises managed by the Portfolio Incoming division within ODS, and in hotels managed by the UK and Nordics source markets. Underlying operating profits for the Group’s joint ventures and associates were £14.8m in 2008, an improvement of £2.0m (2007: £12.8m). This was primarily driven by the incoming agencies, where customer volumes increased by 13% in 2008 due to strong demand in destinations within the Asia region from the UK, Nordics and US source markets.

Island Cruises reported underlying operating profits in 2008 which were £0.4m behind last year, as softer demand in the UK cruise market resulted in the business being unable to pass on higher input costs to the customer. Post the year end, TUI UK & Ireland agreed to buy the remaining 50% of its Joint Venture in Island Cruises from Royal Caribbean Cruises Ltd. (RCL) and take ownership of the Island Cruises operation. The transaction is subject to regulatory clearance in Ireland. Under this transaction the Island Star ship will be returned to RCL in April 2009 while the Island Escape will be retained by our business. TUI UK & Ireland also operates Thomson Cruises, which currently operates a fleet of five ships. It is our intention to integrate the Island Escape into this established fleet.

Corporate Overheads include the costs relating to the Group head office function, including headcount for departments such as Group Finance, Group Legal and Group Human Resources, premises costs and professional fees. Corporate Overheads were £27.2m in 2008, an increase of £11.2m over the pro forma 2007 overhead of £16.0m. We anticipate that ongoing Corporate Overheads will remain around the 2008 level. The higher overhead is primarily due to the inclusion of overhead functions which supported the TUI Tourism businesses and which transferred across to TUI Travel PLC as part of the merger (these costs were not included in Corporate Overheads in the 2007 pro forma results). In addition, a number of central functions have expanded to meet ongoing statutory, compliance and regulatory requirements of the new enlarged group since the merger of the former TUI Tourism and First Choice businesses and, as a result, we have incurred additional costs in 2008.