TUI AG

Friedrich Joussen - Chairman and CEO Horst Baier - CFO

James Ainley - Citi Tim Ramskill - Credit Suisse Patrick Coffey - Barclays Tobias Sittig - Main First Bank Angus Tweedie - Bank of America Mark Fortescue - Panmure Richard Clarke - Bernstein Jeffrey Harwood - Stifel

Good morning, and very sorry for actually my delay. I'm running a little bit late but I will be having enough time, and hopefully you'll allow me the time as well.

So turning directly into my presentation I would like before I start showing you the results on Q1, prefaced for one change in reporting and explain a little bit why we are doing it. And on Page #4, you see Destination Services, a separate line of reporting, which we will be opening effective now from Q1.

What is Destination Services? Destination Services actually our activities in destination.

So as you know, we are vertically integrated. We have actually sales and marketing.

We have the flights. We have Destination Services, as well as hotels.

And when you look at the numbers, the numbers are impressive. We serve more than 12 million guests on transfers.

We serve more than 4.5 million guests on tours and activities, so people who buy something with us. And we believe this is actually a very strategic initiative because of several reasons.

The first reason is it is a market which is growing and it is a market which is actually still very diverse. So you have a lot of players with small market share and we are already a giant in that market.

We are market leading and we believe we can be growing faster and that is actually the second reason because we have talked about our new customer data and CRM platforms. And one of the results of customer data and CRM, that we are early of is customers and anybody else in destination management, meaning we will be in the position to offer excursions and in destination activities already when customers have actually not arrived in destination and we will be paying that.

That is a huge differentiator. And therefore we will be growing faster.

We assume that if we do it right, it will be one of the strongest drivers also in the future. So you should expect some activities.

You should expect some investment. You should expect an extension of our destination portfolio.

You should expect an extension of our activity portfolio in the future, and some investments as well. And therefore we have actually decided to separate this actually activity out and actually together and this actually is now Page #6.

Historically it was in Other Tourism, and now we have actually separate Destination Services out. The remaining part of Other Tourism goes to All Other Segments.

The Destination Services part together with Hotels and Cruises and Destination Services will make Holiday Experiences. We also have said that we believe that that kind of or that this activity this year where it is still actually very early days will grow with 15% in profitability.

So it is already growing faster than the average, and we are just in the initial phase so we believe it is right thing to do. It is more clarity.

It's one of the strategic pillars. And we call it a hidden champion.

We have to prove it will be a hidden champion but we are very confident. So that said, let me turn now to Q1.

The Q1 was a strong one, up turnover 9.1%, underlying EBITDA up 58%, reported EBITDA 35% and we of course confirm our guidance with 10%. When you look at the turnover, a little bit less than 4.5% of the 9.1% are related to more customers are related to higher prices.

But you see also more customers that says that something about winning market shares and being strong in the market. That said, when you look at the bridge for the first quarter, you will we come financial year '15 first quarter was minus €89 million.

Last year was minus €60 million. This year is minus €25 million.

And then you see the bridge between minus €60 million, minus €25 million, you see Holiday Experiences up €11 million mainly a driven cruises; Sales & Marketing up €17 million. This is very good.

I think '16 by trading of our central markets mainly very strong driver. Then you have minus €11 million all other segments, that is actually Corsair mainly driving that results.

And then we have actually two non-recurring effects, plus €38 million from sales of two hotels of Riu and minus €24 million for loss time effect of the Air Berlin Niki insolvency, which we booked. Now on Holiday Experiences: Hotels & Resorts, strong development of course the aperiodic 38% sell-off of Riu was important.

But I think what is good is our general occupancy is up 73% to 75%. This is related to mainly that North Africa is now coming, particularly Egypt.

In the bookings, we also see Turkey coming back strong, but of course in the winter revenues we don't see it because Turkey is not a winter destination. Also the openings of new hotels are in line and you see 35 openings since merger, so we are progressing very well.

But the 60% of which are low capital intensity and I think that also stating that we invest where actually the returns are higher and where the returns are not so higher because the seasons are short or whatever. We don't invest.

Now on Cruises, TUI Cruises and Marella Cruises, strong increases of the passenger days, both around about 30%, and at the same time increases of average daily rates. So that shows how elastic the market is.

Of course occupancy in the yields environment is always 100%. So the yields go up and the capacity goes up, and the capacity 30% up is not little.

It's quite some number. And Hapag-Lloyd, you see more or less a flat development because we didn't add capacity and we had more dry-docks.

So that is something that the new capacity on the expedition will kick in next year and not this year. But I can reassure you it is a very positive market as well.

So Holiday Experiences: Destination Services. Turnover up 23% and EBITDA underlying at constant currency, I would say flat.

There is also change, as we now treat it separately, some of our Destination Services were treated as cost center. In the past, some of them were treated as profit centers.

Now everything is digital. Everything is the same and so on.

Therefore we have a little bit of phasing differences here. I want to reassure you this year will be up 15% in EBITDA, so it is a strong.

Now when you look at the markets, you see very strong development. Customer numbers, every market, every region increased respective customer numbers.

So we have taken market share. Unaided awareness after the rebrand very strong, particularly in the UK, you can see now 44% four months after rebrand, very strong.

Online traffic intact, online distribution intact, direct distribution intact when you look to the lower boxes. So I would say that into the boxes and quite good.

And you see here in the lower box, right box, central region up 16. I always say if we are looking for turnaround in that area and it is, I already said, three to five years, now we don't have the five years yet, we have behind the third year, but you see some initial good indications and I think that's promising.

Now before I hand over to Horst on the trading. I think the trading is all good.

We have new openings for hotels and resorts, seven of which in summer '18. We have new ships for cruises, also for - not only for next season but for the season thereafter.

Destination Services, we will be opening that's one of the first investments Jamaican DMC in April. And then Sales & Marketing, winter has been revenue up 6%, bookings up 3%.

In summer, we are - revenue up 8% and bookings up 6%. It looks all very promising, just coming back and some of our markets more than 50%.

So first the volume right now, of course then the yield systems kick in. So we are very confident that we will be able to deliver on guidance.

And I would like to hand over to Horst for the finance.

Thank you very much. Good morning, ladies and gentlemen.

I would like to go quickly through the P&L. Fritz alluded to the positive development as far as underlying EBITDA is concerned, adjustments are roughly double the size as in the first quarter last year.

However that is a little bit phasing. We have included here some restructuring expenses for France and for Germany.

Ultimately we stick to our guidance of €80 million, and as you know, adjustments include the purchase price effects as well. Net interest down €27 million, by €6 million, and the decrease is especially to our improved net debt position and somewhat higher interest income.

That brings me to the income taxes, 20% underlying effective tax rate. You are always already familiar with that one.

Finally minority interest sitting at minus €40.9 million. This represents the positive development of the RIUSA II, which is the Riu company, which we fully consolidating and therefore group result after minority sits at million €99.6 million, which is an improvement over the first quarter in fiscal year '17.

And you can see that from the development of the basic EPS as well which improved by €0.02. That brings me to the cash flow statement and the movement in net debt.

As far as working capital is concerned, it's slightly worse compared to the first quarter in fiscal year '17. To a certain extent, we see the reversal of some positive impact, which I have already guided on as we announced our full-year financials in December '17.

So no special impact here except from this reversal of some positive impact as of 30 September. Other cash effects are minus €56 million.

Last year we had a positive development. Within this minus €56 million, you have the settlement effects from derivatives and you have some cash outflows, which are due to the fact that we have to pay out some stuff which we provided for.

At equity income, normal development, €45 million, correction here, not too much dividends received from joint ventures and associates. Tax paid somewhat higher compared to last year, however normal development.

And as far as the interest cash is concerned, we see some phasing as well. Pension contribution reduced because we needed to fund less money to the German pension fund, which gives us some operating cash flow of minus €1.3 billion roughly.

Net CapEx in line with that what we expect for the full-year. As far as net investments are concerned, positive.

This includes the disposal proceeds of the three Riu hotels, which Fritz alluded to already, and our net pre-delivery payments are as scheduled. You know that we are re-fleeting our airline Boeing 737 MAX.

Free cash flow ultimately at minus €1.49 billion, same amount compared to the first quarter in fiscal year '17. When you then move to the right-hand side of the chart, you see the development of the closing net debt as per balance sheet.

We have a net financial debt position of €874 million, which is an improvement over 31, December 2016, of roughly €600 million, so a very positive development from my point of view. However I have to mention at that point that we see some impact here from our disposals from our pre-funding as well as our transformation is concerned.

Moving onto an update on our cruise fleet investment program. You have seen that we have decided based on a very strong market development and on a strong demand to make use of the opportunity to order another ship within TUI Cruises, which is supposed to get delivered in 2023.

This is a ship which will carry 2,900 passengers. Roughly acquisition cost will be around €650 million, and you are quite familiar with the contribution of such a ship which sits between €25 million and €30 million.

We are absolutely positive based on the development of demand in the German-speaking markets that this ship will be a success as we have seen it with all the other ships and occupancy and development of average daily rates proves that we are here on a pretty stable track. So ship #7 is on the way.

As far as Marella Cruises is concerned, we stay on track with our re-fleeting, so the UK cruise fleet is carrying modernized and that pays out when it comes to ADR and occupancy is fantastic, as Fritz has explained. As far as the financial units are concerned, this additional CapEx within TUI Cruises does not mean additional funding from 2018.

So we are here in this ring-fence model, which is working perfectly fine. That brings me to an update as far as our reinvestment program, our transformation is concerned.

You are already familiar with this chart because I believe we are showing it now every quarter. Since 30 September, we have spent some additional money, that is due to the effect that we have headed seven additional hotels, so you can see that we have increased the cash out for hotels.

And now we still have a pre-funding sitting within our cash position, which is at €840 million. We are pretty much on track as far as our transformation is concerned, so there is kind of the pipeline for additional hotels, which will come into our portfolio and we are fine as far as our plans and respect of Mein Schiff 1 and 2 are concerned.

So ultimately there is remaining contingency of roughly €100 million available to us. That brings me to the next slide, which gives an update on TUI Airlines.

I already touched based on the fact that we are re-fleeting our TUI Airlines. We are moving from the 737 NG generation to the 737 MAX generation.

We got the first 737 MAX delivered couple of days ago to our bagging fleet. In total, there will be 70 aircraft, which will ultimately replace all of the former 757s and the 737 NGs, which is quite good because these aircraft are very fuel-efficient and they are efficient as far as the emissions of CO2 is concerned.

And on top of that, they have an increase flying range, which is good when it comes to destinations like Cape Verde [ph] which are pretty important to us. As far aircraft financing is concerned, we will decide upon that on a case-by-case basis.

So as far as our balance sheet strength is concerned, we can go for operating leases, finance leases, or we can even go for ownership because the financing cost even for ownership are pretty attractive to us due to the good development of the company over time. That will not have an impact on our leverage ratio target range, which will stay between 3x to 2.25x as indicated in our guidance.

And that brings me ultimately to the last part of my presentation, the fiscal year '18 guidance. You are familiar with the 3% growth as far as sales are concerned.

That does not include cost inflation, so it's kind of a volume growth indication. Underlying EBITDA, I know that you have all different elements within your models.

And on that basis, you probably understand that we will deliver at least 10% growth as far as fiscal year '18 is concerned based on all these elements which are in the pipeline from our transformation, and to a certain extent, based on the non-recurring effects of fiscal year '17, adjustments as already alluded to €80 million. Net interest expense €120 million.

Underlying effective tax rate, 20%. We stick to our guidance as far as net CapEx and investments are concerned.

Net debt cash, slightly negative. Leverage ratio, I just made a couple of remarks to and interest cover stays within the same range as we have indicated to you in December 2017.

As far as our dividend per share is concerned, we will continue with the policy which we have applied over the last years. We grow our dividend in line with the growth of underlying EBITDA.

So far from my end, and now I would like to pass back to Fritz. Thank you very much.

Horst, thank you. So turning the page, I think, and doing some closing and summary remarks.

When you look at our business, I think next page shows quite nicely how we look at it. Holiday Experiences now 60%.

This includes - or 59%, almost 60%. This includes now also Destination Services.

So it is actually hotels, cruises and destinations services. We talk about the double diversification.

We are active in more markets as we are active in more destination and that adds resilience and adds actually natural risk hedge, if you like, in our business. And you see despite fact that things come up and we have ROIC [ph] and so on.

We deliver the underlying at least 10% and that picture I think shows it quite nicely. On the next page, you see last year we had average profitability increases of average 12% and we promised for the next two years, 10%, at least the 10% and it's driven by investments and increasingly by digitalization benefits.

And when I talk digitization, I don't talk so much about digital sense. I don't talk about that we have a good presence to sell to customers.

In Sweden, are more than 90 percentage, in UK let's say 65% and in Germany 20%. We need to be where the customer is.

But that's not the point. The point is we have two big digital platforms.

One is 20 million customers, cloud-based customers, CRM selling services throughout the value chain, and that's of course we think on our destinations services as one important ingredient in that equation. And also our full offer digitized on the block chain basis and 100 million bed nights and 5 billion purchasing volume available globally in the kind of, let's say, touristic block chain environment.

These are the two mega platforms which actually will drive the profitability as well. And let's assume for a moment, we do at least 10% for the next three years.

Then you will have seen over six years a company which doubled profitability without any additional capital raise. So quite contrary we paid a significant dividend.

So how many companies added, and therefore we believe we investment story into our share is a very good and very solid and sustainable one. And the last thing I want to say before we open for question is that we will have some additional information for you and I hope you have penciled this into your calendars.

On 9 May, we do a Capital Markets Day, at this time focused on cruises and guess what, it's part of one of our cruise ships, so it is a good location that you also see one of our products and hopefully you are as excited about the product as I am. And then of course I want to highlight already from 13 December, the update of our annual performance including an update of IFRS 16.

So I think that actually gives you some additional information and hopefully illustrates more about the business. And you know afterwards more about the business than you know already today.

So thank you very much for listening in, and now we are available for your questions.

Good morning, everybody. So I've got three questions please.

Firstly I'm interested to hear about how hotel rates are evolving in the summer, especially in Spain as the demand for [indiscernible] improves? Secondly, if you could give us some maybe some more color about the UK demand?

Do you see consumer confidence, if you refer any changing faster than around maybe duration or destination mix as perhaps you may get more squeezed. And then thirdly if you can comment on German market with respect to the Air Berlin bankruptcy, how you are seeing that market evolve, especially if there is some improved demand there?

Thank you.

Okay, James. Yes, hotel rates.

Demand is coming back in Turkey and surprisingly rates are still up in Spain. So it seems to be that - it's so elastic.

We see now more and more good source market mix in Spain. So I would say generally I would assume that the Spanish rates and Spanish margin, particularly in our hotels, seem to be very stable.

UK, demand, we were - in December, you saw a little bit of weakening margins and that was the reason. The reason was of course because the pound was 20% dilutive and the cost on euro and dollar, it was difficult to recuperate all margin pressure.

Now that said, in the winter and also next summer, you could have two hypothesis and it's interesting to see which one is the right one. The first one could say - the first hypothesis is there is a little bit of weakening demand, let's say, still many customers go.

We are talking about weakening demand. We are talking weekending margins.

So there is a little bit of weakening margins to be precise. And because customers see the higher price level and therefore the higher price level changes patterns.

The other hypothesis could be it's not the price level itself. It is the increase of the price level which drives the change.

And the first time we can really judge about that is December, or let's say the say winter sales for '18 and '19 because then there is lot of change from '17 '18 to '18 '19. Then this is the absolute level.

And guess what, we have now opened the season - it's very, very early days but it seems to be that winter will be very strong and so next winter will be very strong. So it seems to be that it was more change in the price level than the price level itself.

Now that said, it's very early days. But I would assume that the demand is very resilient and we are planning for that.

German market last, in winter we have been a beneficiary of shortening of the supply. We also built actually additional capacity as you know.

We took the wet lease of Air Berlin deck, seven of which we put into Eurowings as wet leases. We took another four in airplanes but of course we retired two, so the net up figure was two, and we also are acquired some slot constraints to upwards, so we believe there will be some more beneficiary.

And at least for the winter, you have seen the up 16%. Also summer trading is very good.

So I think we will be fine. But the proof is in the pudding we will see.

But we are confident.

Very good. That's helpful.

Thank you.

Thanks, good morning. I've got three questions as well please.

Maybe Horst, you could just spend a little bit more time running us through the thought process around the airline fleets and the potential of owning more aircraft on balance sheet, just maybe some sense as to the cost, overall cost benefit and perhaps accretion you could expect to earnings from a shift in that direction? And the second question was just around your cruise growth plans.

Obviously you've had a period of very rapid additions to the fleet up to 2019, and then there is going to be quite a meaningful gap until this new ship in 2023. Just want to understand why that situation has arisen and how you might plan to sort of shift ships between the German and the UK business, and if you think there is going to be a period of much better pricing if you have a period where you're adding less capacity?

And then my final question was just around the central region. Fritz you observed that you felt you can see some early signs of improvement in the region.

My interpretation if Q1 was that it was very much driven by the non-repeat of the one-off to fly costs last year and therefore there wasn't really much obvious sign of improvements to me. So can you just help us understand the things we should be looking for in terms of profit and margin improvement in Central Europe, please?

Thanks.

Sure. Horst, why don't you take the first question?

As far as the re-fleeting is concerned, we have improved as a company. As far as our rating is concerned, we are BB flat, however in discussions with banks and then with investors, that comes the message to us, we perceive already stronger - rather perceive as a BB-plus something.

Two weeks ago I was in Japan, which we are doing every year to have a road show in Tokyo for our financing houses as well as [indiscernible]. These finance leases are concerned and appetite for aircraft from TUI is very strong.

People are saying to us you have improved as far as your results are concerned, you're disciplined. So we rather would like in the special purpose vehicles two aircraft than one aircraft.

And this situation combined with the development of interest rates, this kind of unique opportunity from my point of view to adjust the philosophy which we have had over a couple of years as far as aircraft ownership was concerned, we typically operate least aircraft in the past. Now we are in a different place obviously.

And combined with this very favorable market environment, we are looking into how to finance aircraft on a case-by-case basis, and we will certainly update you whatever new deliveries will come through. We are already fine as far as our complete 18 deliveries are concerned, 16 delivery is more to come and 19 under the term being.

This is the task which our finance guys have to deliver the best financing model for each of these aircraft, which will join the fleet in fiscal year '19.

Yes, that is the part. As far as the aircraft financing is concerned, second question was…

Cruise shipments, yes.

Fritz, would you like to?

Yes, I mean, it's an open sea cut that if you could buy more ships, then we could put in service more ships. We would do so.

Last year and also last quarter, we increased capacity dramatically and still can increase yields. That is a very beautiful environment.

The capital returns by the day of closing today is 20% and if you think about that you still have an increase in capacity, meaning you have an investment in related cost without the related revenues and results, it's very clear that according to plan the ROIC will even increase in the next years, Now that said, we still have some goals to come and the Mein Schiff 1 and the new Mein Schiff 2 and we talked about Mein Schiff 7 now will come and we potentially will redeploy the old Mein Schiff 1 and the old Mein Schiff 2 into the UK because also Marella Cruise is very strong. If there was more capacity available and we are constantly looking on stuff.

Maybe we can even do more because there is a lot of cruise capacity not new but older cruise capacity and we have all the experience of about how to run older cruise capacity once it's refurbished very profitably but that's not that easy. If it was so easy by the way, I think we would see other returns.

The returns would be lower. So therefore it is a little bit - the course is a little bit restricted.

It's a bad message, at the same time it's a very good message and that's how I see it. On the center, I mean you can - of course TUI fly didn't reoccur, but I can also tell you the bankruptcy of an airline like Niki or Air Berlin has a lot of collateral damage also in the last quarter.

Think about the regrouping, rebooking, just we had to do because of the new insolvency. What we actually only have put in right now, the €20 million, that's the one-off effect, is actually the flying we did for Air Berlin which it didn't pay - last year they didn't pay us right now and therefore we had actually to eliminate or actually show the losses right now.

Operational damage is actually not part of the €20 million, which we have shown. And I can tell you more customers, higher margin in Germany in Q1.

And therefore I'm bullish that we are on right track. And also the first time I see that more online and we are talking about, let's say, an increase of course only small bases, it's only 20% but we are talking about now 20%, 30% higher online share in Q1, which is - I don't say the turnaround is there is all great and so on.

I only say contrary to last year, I see now a new spirit and I see now the first things happening. And therefore I am more bullish on Germany than I have been half a year ago.

Excellent. Can I just follow-up with one very quick one on the cruise side of things in terms of the pricing outlook longer term.

Would you see an environment where you have less capacity growth as beneficial for pricing or is it the case that new ships where you tend to get a premium price are part of the reason why you've enjoyed an increase in yield. How do those two things play out, please?

Both are true. New assets create a premium, at the same time when you extend your fleet, you have another effect and that is actually you also extend your routing.

And to usually extent you're routing into routes, which are not as attractive than the routes you have before because with the respective capacity you do the most profitable routes first and then you go at lower profitable routes but the diversity of routes is very important to customers as well. So you have two effects, newer ship higher, more goods, lower yields.

In general, I would say the fundamentals of economy, if you have more demand than supply actually creates a very healthy environment and all kind of marketing [indiscernible] older ships and newer ships and better routes and lower route. At the end of the day, it's all fundamentals and we know that the supply will be restricted for the next five to seven years.

Okay. Thank you very much.

Hi Patrick.

Hi, just two questions from me. Firstly on the UK, I'm talking about margin normalization.

Can you just clarify how much extra investment is required in UK marketing this year in total? Clearly you've previously flagged that you're going to see normalization of UK margins.

So looking back to your TUI travel models, you saw margins with 5% to 7% between 2012 to 2014. But at the time this included Thomson Cruises.

So can you help us understand what a normalized UK margin actually is? And then the second question, hopefully a quick one.

Should we be expecting any further restatements or changes to the reporting structure? Thanks.

Okay, answer to the first one, 5%. And answer to the second one, restatement, no.

Perfect. Thanks very much.

Yes, good morning. Congrats to the results.

Three questions for me please. Firstly the restructuring and finance, could you elaborate a little bit on what you're doing, how much that could reduce costs and basically your level of confidence that France will finally breakeven or deliver decent margin this year or next year?

Second one, your relative cost efficient both for TUI Fly and Corsair. What are the things you've been doing, how do you look at that?

Do you think they now have a sustainable cost structure that allows you to compete profitably in the market longer term or what do you need to do get there? And thirdly, the rebranding in the UK.

Could you give us a number on how much you spent maybe in relative to normal marketing budget this year on marketing in the UK to give us a feel on how much has been spent on rebranding still? Thank you.

Okay. France, the restructuring is going well.

The integration of Transat and TUI France is going well. Now that said, we had some influencers of hurricanes and Caribbean and so on and so on but the sustainable processes of France is intact.

Second point was - and by the way, we are targeting, as we said, for this year breakeven. So that takes us in another season as long.

But as I said it's in fact there is no reason to assume that we will not achieve it. Now the other one on Corsair is of course now the question of we are definitely a small player and we always said that we are looking at all alternatives.

Now that said, we have used the low oil price to hedge quite some bit for the future. As you know, we are running older aircraft and that is not playing positive.

But it's also clear that we are - it's not part of our true operating model. It is separate company.

Of course we will not do stupid things but we are potentially not the best owner for that asset. But that said, you also need to find a buyer and then the portion must be there and also our people need to accept it.

We don't want to do something about our people cannot accept the solutions, so we are also clear about it. But strategically it's not part of our offering.

And the last one?

Rebranding.

On the rebranding. Rebranding in UK, we don't separate out the cost.

Or do we separate out the cost?

No.

No, we don't. I just was looking to my financial colleagues.

It's an all-inclusive. But I can reassure you that we, in all the rebrandings in all the countries, we earned back the rebranding cost in the year.

And I can reassure you - but I know right now from the UK, we will earn back the rebranding of the UK within a year. I mean, we are up now on unaided awareness of 44%.

Our online traffic is up versus as year-on-year. That is the main point, right.

So the main point is not physical rebranding. The main point is actually how much online bookings do you lose, and that is actually unaided awareness, that's the first.

Second you need to find to our webpage search, you need to convert webpage traffic into orders, and the final is fully intact in all instances we are better than last year. And you could argue it's the rebranding, you could argue it's actually the commercial pressure we put, because we have more money in that.

You could argue more like insolvency plays a certain role. But at the end of the day, I don't care as long as the numbers are what they are.

Okay. Thank you very much.

Good morning, guys. Two questions from me.

Firstly on hotel occupancy. You just talked about the Transat because you're down at sort of three major brands but up overall.

Is there signs of Turkey coming back? Could you talk about that?

And then secondly on Destination Services. I think I got it on the call you were talking about 15% growth this year in terms of profits.

Could you just help us understand perhaps the operational leverage there and how we should think about that business? Thanks.

Occupancy, yes, it's true. It's mainly driven by actually in North Africa and South Africa coming back [ph].

So that's a little bit Tunisia which is in the Egypt. It is not yet Turkey because Turkey only start in April but it is all running pretty positively.

And on Destination Services, I think what we show is we show revenues on the external revenues. Of course external revenues will generate margins, so you can actually not divide that margin by revenues.

I think when you look at the gearing of the business we are talking 10% or so, right. I look to my colleagues here.

What is it? I cannot [indiscernible].

It's more around a little bit above 8% and 10%. At the end of that day, we are very early days.

We separated out the business. We have actually de-layout the business.

We have actually not fully digitized the business, so it's all in the cloud. Now actually we are converging it.

There are still part of the restructure still takes place. We have now also the employment model.

For example, for our employees, we exchange to all the Swiss model now so on and so on. So there is so many changes right now.

The fundamental belief is there a sustainable differentiation versus all other players and that is we can say to customers before customers are in destination. And that is, we believe, such a great advantage because can you imagine when you put a segue tour and you are in front of the blackboard of a hotel or if you book the segue to when you are sitting - before your travel you are sitting over your couch at home.

This is such a difference. So don't read the small numbers right now.

Think about the bigger picture a year from now.

Lovely. Thank you.

Hello, good morning. Just two from me please.

One on Hotels & Resorts, one on Sales & Marketing. Slide 10 for Hotels & Resorts was just touching on the profit bridge.

If you are taking out the disposal profits there, it looks like the profit progress is pretty flat. You've got seven new openings in there.

Is that mostly just the timing issue as to when those came into the business in the quarter? Just maybe a bit of context around what's coming in and what's leaving, given what looks like a relatively flat like-for-like profit performance?

And the second question?

Is on Sales & Marketing, actually coming back to the point around the UK. So you talked about margins and the rebrand, just to sort of square those two points, the summer bookings are down 1% year-on-year.

Is that broadly where you thought you'd be given the efforts around the TUI rebrand. Just a touch on that, please.

Yes, Horst maybe take the second question because I'm not 100% sure I understand.

Maybe I'll start with the hotels, where you flexed out the disposal gain and then said this is only €3 million up or €4 million compared to the fiscal year one - first quarter '17. We are in the very low season.

We have October to December not too much activity and November and December is Christmas. So you cannot expect a big uplift.

Even though we have added seven hotels in that quarter, you cannot expect that these hotels are delivering from day one 80% occupancy and are fully on stream. It's always kind of a built which you need.

We will see this increase as far as hotels are concerned result-wise over the next quarters which are ahead of us.

And also more capacity drives usually higher losses in winter. Out of these hotels you have some seasonality, therefore I think look at the strong growth for the whole year.

That's very clear. When you look at the bookings for the full year, we have the visibility that will be quite nice.

The bookings for summer, we have higher margins but we also should have higher bookings. That was the reason I'm 100% sure for the UK.

I think we haven't got the question exactly which you raised in respect of sales and marketing.

Just given the campaign around the TUI rebrand in the UK, you might have thought that summer bookings would be a bit stronger but you're saying they are down 1% compared to where they were last year?

Okay, I think when you look at that, the selling prices are up 3%. I think my view on this is we are playing for the time being the price margin equation that doesn't say anything but our capacity is up.

Therefore it will be more customers in summer and we will be taking market share because we also have our competitor list [ph]. That's also clear.

Monarch actually exited. By end of season, we will be fine.

Now of course for the time being, it is more the price margin equation we're playing but we shouldn't be worried too much.

Okay, thanks.

Good morning. Three questions for me, if I may, all actually on the hotels.

First one just on the Riu disposals. Can you maybe just tell us what you sold, why you sold it, and if there is any sort of signaling there that this is part of a wider strategy of asset rotation?

And then you haven't included the €85 million proceeds in your CapEx bridge on Slide 19. Any reason why and what that money might be used for?

And then the third question is on the other hotels. Last year you made, I think, about €60 million loss in the other hotels.

Most of those are in I think Turkey and Egypt and Tunisia, you've seen the occupancy come up as Angus correctly pointed out, but the loss seems to have widened a little bit in Q1. What are your expectations for the full-year in those other hotels profitability?

Okay. I think that the hotels we are talking about are the Riu Romantica, Bachata and Merengue, all of them are actually should have been refurbished.

They have not been very profitable. Therefore we said these are not the hotels we want to own long-term and on the other hotels.

It will be little bit Turkey which actually will turn around the whole thing or not. I mean, that's also clear.

Turkey is much bigger as a destination than all the other destinations but the bookings are up in Turkey 50%, so we have decided that we talked about that we have decided to extend leases in Turkey last - just six months ago for the next season, of course at better rates and better conditions. But we believe Turkey will be a good value contributor.

On the OpEx, which I'm not sure.

This chart 19 which you refer to is illustrating our transformational process. So what we have done, we sold these three so-called non-core assets and then when you go down to right-hand side, you see all the different elements where we spent the money.

As far as the disposal proceeds from the Riu hotels are concerned, these are part of our overall CapEx guidance. So it is sitting within the €1.2 billion, which I have alluded to as far as our overall CapEx forecast for fiscal year '18 is concerned.

Okay, and then maybe just on the - whether these disposals are - are these a signal that you are looking to do more asset recycling going forward, or were these three one-off hotels that you wanted to dispose of?

We are reviewing our portfolio of hotels on a regular basis and we regard it as very operational exercise when you have such a portfolio of hotels that you're looking to the ones who may result in a very high disposal price compared to that what you can get as an operational result from this hotel. So it is again kind of a very rational approach as far as the portfolio of hotels is concerned.

Okay, very clear. Thank you.

Yes, good morning. Just one question left.

The line All Other Segments, the loss there has moved from 11% to 23%. I wondered if you could say what's happening there, please.

That is actually cost of de-checks €8 million.

I'm sorry. It's €8 million from...

Cost at de-checks, so we are.

Okay, cool.

Each go into de-checks. This is more or less explain the effect.

Sure. Okay.

That's great. Thank you.

Okay, thank you very much. All the best from Hannover.

See you latest on our ship.

In May.

In May. Thank you very much.

Have a great day.