Dr Michael Frenzel
Non-Executive Chairman
I am delighted to report an excellent performance for the Group’s first full year since the merger of First Choice Holidays PLC and the Tourism Division of TUI AG. We have made outstanding progress in the execution of our strategy and have delivered a strong set of results despite record high oil prices and the economic slowdown experienced in many of our source markets.
The strong performance in this financial year highlights the strength of the business model and our resulting ability to mitigate the effects of uncontrollable macroeconomic factors. Our success has been driven by disciplined capacity management, the breadth of our offering of differentiated products across our market-leading positions, and strong consumer brands. I believe that this strategy will continue to create value for our shareholders.
The Group has achieved a 53% increase in underlying1 operating profit to £398.0m, (20072: £260.5m) on revenues up 9% to £13,931.8m, (20072: £12,839.9m). Underlying1 profit before tax is up 43% to £319.7m, (20072: £222.8m). Underlying1 basic earnings per share increased by 42%2 to 20.4p.
As a result of significant restructuring costs the Group incurred a statutory operating loss of £184.1m (20072: profit £56.1m) and loss before taxation of £266.6m (20072: profit £18.4m). The basic loss per share was 24.4p (20072: basic earning per share 0.6p).
Dividends
The Board is recommending a final dividend of 6.9p per share (2007: 5.9p). On 18 March 2008, the Board recommended an interim dividend of 2.8p per share, thereby resulting in a 16% increase in the full year dividend of 9.7p per share (2007: 8.4p). The Group has a progressive dividend policy and will continue to maintain underlying dividend cover in excess of two times.
Peter Rothwell resigned as Deputy CEO in December 2007 and subsequently left the Board. He was replaced on the Board by Johan Lundgren, Managing Director, Northern Region. Three new independent Non-Executive Directors, Dr Erhard Schipporeit, Dr Albert Schunk and Harold Sher, also joined the Board in the year. The majority of the Board is, therefore, composed of independent Non-Executive Directors.
I am delighted that TUI Travel remains a part of the FTSE4Good index. As a FTSE100 company, we recognise that we have a responsibility to monitor and manage our impact on the environment and people.
Sustainable development is central to the way we run and manage our business. We have sustainable development representatives across all levels of our business from the Board to representatives in each of our Sectors. During the year, our businesses continued their work on many sustainable development projects ranging from a leadership programme with a local eco-tourism project in Costa Rica to developing the world’s leading yacht charter facility using environmentally friendly technologies in the British Virgin Islands.
There has been considerable change for all our colleagues following the merger last year and I have been extremely impressed by the professionalism and enthusiasm that has been displayed as colleagues embraced the new culture within TUI Travel. It is they who delivered the Group’s many successes in 2008 and I thank them all on behalf of the Board.
Dr Michael Frenzel
Non-Executive Chairman
1 Underlying operating profit excludes separately disclosed items, amortisation of IFRS 3 intangibles, goodwill impairment and taxation of results of the Group’s joint ventures and associates. Underlying profit before tax also excludes an acquisition related put option interest charge. Underlying earnings per share excludes the same items as excluded from underlying profit before tax, net of related taxation.
2 This 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.
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