TUI AG
Central 210.8 288.0 40.9 73.6 87.8 6.3 707.4 0.3 707.7
Region
Western 73.3 96.8 38.6 11.5 1.8 0.1 222.1 0.5 222.6
Region
Markets & 302.0 509.5 135.3 87.9 102.0 6.9 1,143.6 1.8 1,145.5
Airlines
All other 0.6 5.3 0.7 0.1 13.9 1.9 22.5 - 22.3
segments
Total 369.7 551.6 198.6 98.2 136.3 9.8 1,364.2 1.8 1,365.9
External revenue allocated by destinations for the period from 1 Oct 2019 to 30 Jun 2020
Rest of 9M 2020
Spain Other Caribbean, North Africa, Revenues
? million (incl. European Mexico, Africa Ind. Other from Other 9M 2020
Canary destinations USA & & Ocean, countries contracts Total
Islands) Canada Turkey Asia with
customers
Hotels & 117.2 24.3 64.3 17.9 68.3 12.7 304.7 - 304.7
Resorts
Cruises 101.1 129.0 96.6 0.2 60.7 96.0 483.6 - 483.6
TUI Musement 55.9 78.0 47.3 9.7 71.5 31.7 294.1 - 294.2
Holiday 274.2 231.3 208.2 27.8 200.5 140.4 1,082.4 - 1,082.5
experiences
Northern 851.6 278.0 519.9 118.1 381.8 43.4 2,192.8 9.4 2,202.2
Region
Central 697.7 470.9 179.2 392.3 485.5 7.2 2,232.8 11.2 2,244.0
Region
Western 274.5 112.4 282.2 175.8 210.0 24.0 1,078.9 16.7 1,095.5
Region
Markets & 1,823.8 861.3 981.3 686.2 1,077.3 74.6 5,504.5 37.3 5,541.7
Airlines
All other 2.6 23.0 4.9 2.2 40.6 12.9 86.2 - 86.2
segments
Total 2,100.6 1,115.6 1,194.4 716.2 1,318.4 227.9 6,673.1 37.3 6,710.4 2. Cost of sales and administrative expenses Cost of sales relates to the expenses incurred in the provision of tourism services. In addition to the expenses for staff costs, depreciation, amortisation, rental and leasing, it includes all costs incurred by TUI Group in connection with the procurement and delivery of airline services, hotel accommodation and cruises and distribution costs.
Due to the suspension of business operations as a result of COVID-19, the cost of sales declined by 66.8% to ?2.6bn in 9M 2021.
Government Grants ? million 9M 2021 9M 2020 Cost of Sales 125.2 57.9 Administrative expenses 53.5 28.9 Total 178.7 86.8
The government grants reported under cost of sales and administrative expenses include in particular grants for wages and salaries as well as social security contributions directly reimbursed to the relevant company.
Administrative expenses comprise all expenses incurred in connection with the performance of administrative functions and break down as follows:
Administrative expenses ? million 9M 2021 9M 2020 Staff costs 398.6 500.2 Rental and leasing expenses 11.8 18.2 Depreciation, amortisation and impairment 88.8 75.1 Others 105.1 137.6 Total 604.2 731.1
The cost of sales and administrative expenses include the following expenses for staff and depreciation/ amortisation:
Staff costs
? million 9M 2021 9M 2020
Wages and salaries 952.9 1,425.2
Social security contributions, pension costs and benefits 222.7 294.3
Total 1,175.6 1,719.5
Depreciation/amortisation/impairment
? million 9M 9M 2020
2021
Depreciation and amortisation of other intangible assets, property, plant and equipment and 659.0 803.6
right-of-use assets
Impairment of other intangible assets, property, plant and equipment and right-of-use assets 77.4 339.8
Total 736.4 1,143.4 The decrease in depreciation and amortisation is attributable to revaluations and modifications of right of use assets and impairments in the prior year. In addition changes in the exchange rates caused a decline in depreciations and amortisations. ?45.9m of the impairments losses (9M 2020 ?75.0m) correspond to right-of-use assets, ?31.3m (9M 2020 ?255.5m) relate to property, plant and equipment, and ?0.3m (9M 2020 ?9.3m) to other intangible assets. ?50.0m (9M 2020 ?336.3m) of the impairments charges were presented within cost of sales. In addition reversals of impairment losses of ?12.6m were recognized in cost of sales in 9M 2021. 3. Other income
In 9M 2021 Other income mainly results from the sale of aircraft assets and the disposal of TUI Group companies. In the prior year, this item had primarily included income from the sale of TUI Group companies. 4. Other expenses
In both the current and prior financial years, Other expenses comprise losses from the sale of TUI Group companies and the disposal of aircraft assets. 5. Financial income and financial expenses
The net financial result declined from ?-177.4m in 9M 2020 to ?-331.6m in the 9M of the current financial year. This was largely driven by an increase in interest expenses resulting from the utilisation of credit facilities to cover payment obligations and by expenses incurred in connection with the early redemption of TUI Senior Notes bond on 23 February 2021 as well as lower income from bank balances. Financial income primarily resulted from foreign exchange gains on lease liabilities in accordance with IFRS 16. 6. Share of result of investments accounted for using the equity method
Share of result of investments accounted for using the equity method ? million 9M 2021 9M 2020 Hotels & Resorts - 60.5 - 34.8 Cruises - 141.5 - 7.8 TUI Musement - 2.8 2.6 Holiday Experiences - 204.8 - 40.0 Northern Region - 22.5 - 25.7 Central Region 0.8 2.0 Western Region - - Markets & Airlines - 21.7 - 23.7 All other segments - - Total - 226.5 - 63.7
The result is determined by holiday cancellations, customer repatriation costs and hotel closures due to the COVID-19 pandemic. The previous year's result for cruises included a contribution to earnings from the 2019/20 winter season. 7. Income taxes
The tax expense generated in the first nine months of the financial year 2021 is mainly attributable to a future tax rate increase, from 19% to 25%, in the United Kingdom which affects the valuation of deferred tax balances, however has no effect on cash taxes. 8. Group loss / profit attributable to non-controlling interest
TUI Group's result attributable to non-controlling interests is substantially a loss, primarily relating to RIUSA II Group at an amount of ?25.4m (9M 2020 ?19.9m profit).
Notes to the unaudited condensed consolidated statement of financial position of TUI Group 9. Goodwill
Goodwill increased by ?84.5m due to foreign exchange translation. The breakdown of goodwill by main individual cash generating unit (CGU) at carrying amounts is as follows:
Goodwill per cash generating unit ? million 30 Jun 2021 30 Sep 2020 Northern Region 1,230.4 1,162.2 Central Region 501.6 501.7 Western Region 412.2 412.3 Riu 343.1 343.1 Marella Cruises 296.6 279.3 TUI Musement 169.8 170.1 Other 45.3 45.8 Total 2,999.0 2,914.5
The ongoing travel restrictions and the associated effect of the COVID-19 pandemic on the recovery of the tourism business in the financial year ending 2021 constitute a triggering event for impairment testing as at 30 June 2021. Goodwill was therefore tested for impairment at the level of cash generating units (CGUs).
The discount rates are calculated as the weighted average cost of capital, taking account of country-specific risks and based on external capital market information and considering the characteristics of the CGUs. The comparatively high weighted average cost of capital reflects the current market situation and the increased amount of debt capital due to the COVID-19 pandemic.
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