TUI : FY21 H1 Financial Statement

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TUI GROUP

HALF-YEAR FINANCIAL REPORT

1 OCTOBER 2020 - 31 MARCH 2021

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Contents
Interim Management Report ......................................................................................................................................................................................	3
H1 2021 Summary.....................................................................................................................................................................................................	4
Report on changes in expected development ..............................................................................................................................................	6
Structure and strategy of TUI Group................................................................................................................................................................	6
Consolidated earnings ..............................................................................................................................................................................................	7
Segmental performance..........................................................................................................................................................................................	8
Financial position and net assets .....................................................................................................................................................................	12
Comments on the consolidated income statement................................................................................................................................	13
Alternative performance measures.................................................................................................................................................................	14
Other segment indicators....................................................................................................................................................................................	15
Corporate Governance..........................................................................................................................................................................................	16
Risk and Opportunity Report.............................................................................................................................................................................	17
Unaudited condensed Consolidated Interim Financial Statements......................................................................................................	18
Notes...................................................................................................................................................................................................................................	24
General .........................................................................................................................................................................................................................	24
Accounting principles .............................................................................................................................................................................................	24
Group of consolidated companies...................................................................................................................................................................	29
Acquisitions - Divestments.................................................................................................................................................................................	29
Notes to the unaudited condensed consolidated income statement of TUI Group...............................................................	31
Notes to the unaudited condensed consolidated statement of financial position of TUI Group.....................................	33
Responsibility statement ...........................................................................................................................................................................................	46
Review Report ................................................................................................................................................................................................................	47
Cautionary statement regarding forward-looking statements ................................................................................................................	49
Financial calendar..........................................................................................................................................................................................................	49
Contacts.............................................................................................................................................................................................................................	49

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INTERIM MANAGEMENT REPORT

TUI Group - financial highlights

			H1 2021	H1 2020	Var. %	Var. % at
					adjusted			constant cur-
€ million									rency
Revenue			716.3		6,638.7	- 89.2	- 89.0
Underlying EBIT1
Hotels & Resorts			- 198.3		56.1	n. a.	n. a.
Cruises			- 153.3		26.9	n. a.	n. a.
TUI Musement			- 62.0		- 28.9	- 114.5	- 117.6
Holiday Experiences			- 413.6		54.2	n. a.	n. a.
Northern Region			- 418.3		- 415.2	- 0.7	- 2.4
Central Region			- 272.0		- 179.5	- 51.5	- 51.5
Western Region			- 159.8		- 189.6	+ 15.7	+ 16.6
Markets & Airlines			- 850.1		- 784.3	- 8.4	- 9.1
All other segments			- 45.1		- 64.6	+ 30.2	+ 29.9
Underlying EBIT			- 1,308.8		-794.8	- 64.7	- 66.5
EBIT1			- 1,298.5		-746.0	- 74.1
Underlying EBITDA			- 856.1		-266.0	- 221.9
EBITDA2			- 831.5		- 196.9	- 322.4
Group loss			- 1,498.1		- 815.0	- 83.8
Earnings per share	€		- 1.83		- 1.46	- 25.3
Net capex and investment			- 108.4		287.2	n. a.
Equity ratio (31 March)3	%		1.3		15.6	- 14.3
Net financial position (31 March)			- 6,813.1		- 4,902.5	- 39.0
Employees (31 March)			36,029		53,525	- 32.7

Differences may occur due to rounding.

This Quarterly Statement of the TUI Group was prepared for the reporting period H1 FY2021 from 1 October 2020 to 31 March 2021.

• We define the EBIT in underlying EBIT as earnings before interest, income taxes and result of the measurement of the Group's interest hedges. For further details please see page 14.

• EBITDA is defined as earnings before interest, income taxes, goodwill impairment and amortisation and write-downs of other intangible assets, depreciation and write-downs of property, plant and equipment, investments and current assets.

• Equity divided by balance sheet total in %, variance is given in percentage points.

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H1 2021 Summary

• Group revenue of €716m, down 89% as a result of extended travel restrictions imposed across our key Euro- pean markets for the majority of the first half.
• Within Hotels & Resorts, 122 hotels were open at end of the quarter reflecting both the usual winter seasonal- ity and limited operations from travel restrictions.
• TUI Cruises and Hapag-Lloyd Cruises operated five ships during the first half, offering itineraries to the Baltic and North Sea, and Greek Islands in the first quarter and to the Canary Islands in the second.
• Markets & Airlines, took away 684k customers on holiday during the period, demonstrating the continued de- sire to travel when restrictions allow.
• Group underlying EBIT loss of €1,309m reflecting our continued cost discipline, contribution from operational opportunities, helping to reduce average monthly underlying EBIT loss to ~€218m per month.
• During the second quarter, we concluded all elements of our third support package of €1.8bn, including >€500m fully subscribed rights issue.
• Additionally, we successfully placed €400m convertible bonds post balance sheet date.
• Our available liquidity1 as at 7 May 2021 amounts to €1.7bn.
• Global Realignment Programme on track to achieve our cost savings target of €400m p.a by FY2023. Reflecting our accelerated plans to transform into a more agile and leaner business, we expect to deliver ~50% of our tar- geted savings by end of FY2021.
• Pipeline of 2.6m customers booked for Summer 2021 season. Planned capacity of 75% (of Summer 2019) for our upcoming peak Summer months (Q4), with our re-opening portfolio focused on destinations such as Greece, Balearics and Canaries with anticipated good vaccinations rates and low infection rates.
• The continued vaccination progress across our key customer markets and destinations, combined with more testing, and comprehensive hygiene measures throughout our eco-system, should enable the safe return to holidays this Summer.
• Insight survey2 results tell us our customers value a strong brand, flexibility, comprehensive health and safety protocols with a good customer experience during these unprecedented times. TUI, with its integrated model, strong brand, and in-destination service and online 24/7 support, is the model of choice for many holiday mak-

ers.

• Available liquidity defined as unrestricted cash plus committed lines including third support package (contains KFW credit facility provided by KfW of €200m as of end of May) and convertible bonds
  2 TUI Consumer Travel Behaviour Survey, August 2020

Completion of Third Support Package

Our third support package as announced on 2 December 2020 amounting to €1.8bn, agreed with our shareholders, a syndicate of underwriting banks, KfW and the German government (WSF) was successfully concluded in the pe- riod, comprising the following components:

• a capital increase with subscription rights of >€500m
• a silent participation, convertible into shares by the WSF of €420m (IFRS equity accounted)
• a non-convertible silent participation by the WSF of €671m (IFRS equity accounted)
• an additional credit facility provided by KfW of €200m

€400m placement of convertible bonds

Post balance sheet date on 16 April 2021, we successfully completed the placement of senior unsecured convertible bonds for €400m. These bonds have been offered at a coupon rate of 5% and were ~2 times oversubscribed. They utilise 68% of authorised capital resolved at our recent AGM, representing around 75m underlying shares.

Unless previously converted, redeemed or repurchased and cancelled, the convertible bonds will be redeemed at their principal amount on 16 April 2028. Investors also have the possibility to convert the bonds into new and/or existing no-par value ordinary registered shares of TUI. The initial conversion price was set at 5.3631 €, representing a conversion premium of 25% above the reference share price of 4.2905 €.

With the successful offering, we plan to start the refinancing of loans from the COVID-19 support packages, in addition to strengthening our liquidity in the short-term.

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Liquidity Position/Cash Outflow

Available liquidity1 as at 7 May 2021 amounts to €1.7bn. Bearing in mind the typical seasonal swings, and combined with clear signs of pent-up demand as evidenced by the immediate spike in bookings when a destination is re- opened, we are fully confident that the typical seasonal inflow usually seen in Q2, will materialise as we head towards the peak Summer season.

Our assumption for Q3 FY2021, is for departure volumes being muted in the light of travel restrictions. We however anticipate significant working capital inflow once reopening of markets are confirmed and destinations are an- nounced, in line with our planned capacity for Q4.

Our assumption for Q4 FY2021, is for significant positive contributions from strong volumes and normalised level of operations.

• Available liquidity defined as unrestricted cash plus committed lines including third support package (contains KFW credit facility provided by KfW of €200m as of end of May) and convertible bonds

Net debt

Net financial position improved to €6,813m versus our net debt position of €7,177 as at 31 December 2020 (Q1). The €364m decrease in net debt in the second quarter predominantly reflects net cash proceeds from our capital raise and the silent participations of the WSF.

The WSF measures comprise a silent participation convertible into shares in TUI of €420m (Silent Participation I) and a second silent participation of €671m. At 31 March 2021, Silent Participation I was fully paid in and Silent Participation II in the amount of €500m. In the IFRS consolidated financial statements, the silent participations are shown as equity due to their nature and are therefore not included in the Group's net debt.

With the successful placement of €400m convertible bonds post balance sheet date, we have taken the first step towards refinancing our government facilities. As international leisure travel resumes and global markets begin to recover, it is our priority to rebuild a robust financial profile and return to a gross leverage ratio target of less than 3x. The Group continues to explore measures to accelerate de-leveraging and ensure the appropriate capitalisation to support growth over the longer term.

Trading Update

• Summer 2021 bookings1 including amendments and voucher re-bookings, down 69% versus Summer 2019 (undistorted by COVID-19).
• ~2.6m customers booked for our Summer 2021 programme, which is a small reduction since our Q1 update, reflecting customers choosing to defer their booking to future seasons due to the lack of clarity provided by governments on lifting of travel restrictions.
• Our capacity plans of 75% (for Q4 peak summer, compared to 2019 programmes) remains in line with our AGM update on 25 March 2021. We will be focussed on a reopening portfolio of destinations with expected well vaccination and low incidence rates. Destinations will include the Greek islands, the Balearics, the Canaries and Portugal. More than 60% of our planned capacity for Summer 2021 are to destinations with anticipated low incidence rates.
• Summer 2021 ASP1 is up 22%, and continues to be driven by both pricing and mix, with higher level of pack- aged holidays booked versus prior year.
• We anticipate TUI Cruises to operate a phased restart with summer itineraries from May, with its full Mein Schiff fleet of seven ships to be in operation by Q4. Hapag-Lloyd Cruises is currently sailing with Europa 2, with Europa to resume in Q4. Expedition Class Hanseatic nature and Hanseatic inspiration to resume end of May with short cruises, with their newest ship Hanseatic spirit scheduled to join from August.
• Marella is offering UK cruise itineraries with Explorer and Explorer 2 from end of June. From August, Discovery and Discovery 2 are scheduled to operate cruises to the Mediterranean.
• Continued customer appetite and intention to travel for future seasons: o Winter 2021/22 - UK bookings1 up 17%,

• Summer 2022 bookings - UK bookings1 up 293%

• Bookings up to 2 May 2021 compared to respective bookings for 2019 programmes (undistorted by COVID-19) and relate to all customers whether risk or non-risk