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TUI TRAVEL PLC. Merger of First Choice Holidays PLC and the tourism businesses of TUI AG successfully completed on 3 September 2007

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13 December 2007 TUITRAVEL PLC

RELEASE OF UNAUDITED PRO FORMA FINANCIAL INFORMATION Highlights

• Merger of First Choice Holidays PLC and the tourism businesses of TUI AG successfully completed on 3 September 2007

• 100 day strategic review is progressing well and the integration of the two leading UK franchises remains on track

• Current trading remains strong with the outlook encouraging for both Winter 2007/08 and Summer 2008 programmes; UK Mainstream revenues up 5% for Winter and up 11% for Summer

• Pro forma underlying operating profit up 5% at £287m (2006: £274m) which compares to a market consensus for September 2007 of £277m

• The Specialist sectors delivered 36% growth in underlying operating profit to £129m (2006: £95m) while Mainstream profitability as anticipated is down 12% to £162m (2006: £183m) due to cost and yield pressures in the UK and Germany

• Acquisition of seventeen niche high growth specialist businesses for a maximum total consideration of £227m (2006: sixteen acquisitions for maximum consideration of £160m); the acquisition pipeline remains strong

• Based on the current outlook, the Board remains confident that it will meet its expectations for the year ended 30 September 2008

• Interim dividend of 5.9p per share recommended for 2007 • Investor day scheduled for 29 January 2008

Peter Long, Chief Executive Officer of TUI Travel PLC, commented

"As we approach the key booking period for both Winter and Summer 2008, we are encouraged by our performance to date and the ongoing level of demand for our portfolio of package and specialist holidays. The integration programme continues to advance as planned, with excellent progress made in the UK and across other businesses. We are confident that the combination of organic and acquisition led growth, coupled with the synergy benefits arising from integration, will deliver superior returns for our shareholders. Furthermore, by delivering both underlying growth and synergies, we are building a platform from which we can deliver sustainable long-term earnings and margin growth.”

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Change of Year End

Following the creation, on 3 September 2007, of TUI Travel PLC via the merger of First Choice Holidays PLC and the tourism businesses of TUI AG (“TUI Tourism”), we now provide pro forma financial information for the new Group. This information is provided in order to reflect the change in financial year-end of all TUI Travel PLC’s businesses. First Choice Holidays PLC and its subsidiaries (“First Choice”) have moved from a 31 October to a 30 September year-end and TUI Tourism has changed its year-end from 31 December to 30 September.

As previously highlighted, pro forma financial information provided when the merger was announced on 19 March, and financial information provided in the prospectus, published on 29 June, was based on a simple aggregation of these businesses’ previous October and December year-ends. Accordingly, by combining existing forecasts for First Choice to October 2007 and TUI Tourism to December 2007 the market arrived at a consensus of £317m.

The effect of changing the year-end for TUI Travel PLC to September reduces 2007 underlying operating profit by an estimated £30m to a pro forma underlying operating profit of £287m for the year ended 2007 (2006: £274m).

The year-end harmonisation adjustment is primarily as a result of excluding the relevant months from the final calendar year quarter for 2007 for both businesses and replacing them with months from the final calendar year quarter for 2006 as follows:

Impact of change of year-end on 2007

First Choice TUI

Tourism

EBITA

Previous Year-end 31 Oct 07 31 Dec 07 £317m Market consensus

Harmonisation adjustment

Deduct month(s) in Q4 2007 (Oct 07) (Oct 07) (Nov 07)

(Dec 07) (£30m) Net impact Add month(s) in Q4 2006 Oct 06 Oct 06

Nov 06 Dec 06

New Year-end 30 Sept 07 30 Sept 07 £287m Pro forma

This £30m reduction has principally arisen because the TUI Tourism Q4 2006 result is significantly weaker than the consensus forecast Q4 2007 performance, with the improvement primarily driven by the benefits from the TUI AG restructuring programme announced in December 2006, which are being realised in Q4 2007.

Financial Highlights

• Pro forma underlying operating profit up 5% at £287m (2006: £274m) • Pro forma underlying operating margin flat year-on-year at 2.2%

• Pro forma underlying operating profit includes profit on the sale and leaseback of aircraft of £15m in 2007 and £20m in 2006. Excluding these gains results in underlying operating profit of £272m (2006: £254m). To the extent that profits of this nature arise from the asset management of aircraft in future periods, they will not be included in underlying operating profit.

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Underlying Pro forma1 results Pro forma results

£m FY07 FY06 Change FY07 FY06

Revenue 12,840 12,180 +5% 12,840 12,180

Operating profit/(loss) 287 274 +5% 56 (243)

Profit/(loss) before tax 249 248 = 18 (269)

Basic EPS 16.0p 15.7p +2% 0.6p (34.3)p

1

The Group believes that underlying operating profit, underlying profit before tax and underlying earnings per share provide additional guidance to the pro forma measures on the underlying performance of the business during the financial year. Underlying profit before tax and underlying operating profit exclude separately disclosed items, amortisation of business combination intangibles, impairment of goodwill and taxation of profits of the Group’s joint venture and associate. Underlying earnings exclude the same items net of tax and minority interests

Detailed commentary on these results is included in the Business and Financial Review of this release but the highlights are as follows:

• As anticipated, Mainstream underlying operating profit was down 12% to £162m (2006: £183m) primarily as a result of significant cost pressures in the UK (Air Passenger Duty (“APD”) and fuel) that were not fully recovered from the customer and yield pressures in early Summer trading in the German market. The Nordics business delivered an excellent performance while Western Europe delivered an £18m turnaround in pro forma underlying earnings.

• The Specialist sectors’ pro forma underlying operating profit increased by £34m (up 36%) to £129m (2006: £95m).

• Acquisitions of niche specialist businesses with a maximum consideration of £227m were made during the year (£151m cash paid during the year) with the acquisition pipeline remaining strong.

• Separately disclosed items of £173.8m (2006: £33.7m), further details of which are given in Note 4 of the pro forma financial information.

Current Trading

Since the trading update announced on 8 November, the Winter 2007/08 season has continued to trade well with customer demand for both package and specialist holidays encouraging. For Summer 2008, early indications are also positive, even though in a number of our source markets, brochures have only just gone on sale.

Winter 2007/08

Trading for the Winter programmes has continued to track in line with our expectations, with all businesses now in the peak selling period for the season. As anticipated there has been a slight slowdown in the rate of sale over the last few weeks as a result of the exceptionally strong start to the season. However, most importantly, load factors are still ahead of the prior year in all key source markets.

Current Trading 1

Winter 2007/08

y-o-y variation% Sales Customers Capacity

MAINSTREAM Northern Europe First Choice UK Short-haul -3 -7 -22 Medium-haul +19 +9 -10 Long-haul +20 +14 +2 First Choice UK +17 +8 -10 TUI UK Short-haul -15 -28 -30 Medium-haul +19 +9 +3 Long-haul -7 -17 -17 TUI UK +1 -9 -11 UK Mainstream – Total +5 -5 -11

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TUI – Nordic +16 +12 +12

Northern Europe – Total +9 -1 -7

Central Europe

TUI – Germany +7 +9 -

TUI – Austria -7 -4 -

TUI – Switzerland +22 +21 -

TUI Central Europe - Total +8 +10 +2

Western Europe

TUI – France +2 -7 -

TUI – Belgium +11 +14 +10

TUI – Netherlands +17 +8 -3

TUI Western Europe +8 +2 +3

SPECIALIST +2 +2

ACTIVITY +7 n/a

ODS +55 +36

1 These statistics are up to 2 December 2007

UK Mainstream trading remains strong with total sales up 5% on 5% lower volumes. As we previously announced, we have significantly reduced capacity within the short-haul segment within both brands, down by 30% in Thomson and down by 22% in First Choice, as we continue to reduce our participation in the short-haul segment, and primarily in the loss-making scheduled “city pair” routes operated by Thomsonfly. Sales in TUI UK are 15% lower in short haul on lower volumes of 28%. Within First Choice, both medium haul and long haul continue to trade well with sales up 19% and 20% on higher volumes of 9% and 14% respectively, as consumer demand for Egypt, Cuba and Mexico remains strong. For the total UK programme, the load factor is four percentage points further sold than last year, with margins tracking ahead.

The Nordic region has continued to benefit from the expansion of the higher margin long haul programme, where capacity is up 12%. Consumer demand for long haul destinations, such as Thailand, has driven sales growth of 16% on 12% higher volumes, with margins also ahead of last year.

In both Central Europe and Western Europe, demand is encouraging with sales up 8% in each region on capacity that is marginally up.

In the specialist sectors, Canada has continued to trade satisfactorily in a very difficult competitive environment, while demand for Activity Holidays and Online Destination Services has driven excellent growth with sales up 7% and 55% respectively.

Summer 2008

Current Trading 1

Summer 2008

y-o-y variation% Sales Customers Capacity MAINSTREAM Northern Europe First Choice UK Short-haul +12 +6 -9 Medium-haul +34 +22 - Long-haul +12 +12 - First Choice UK +21 +15 -3 TUI UK Short-haul -4 -13 -30 Medium-haul +20 +13 -6 Long-haul - - +8 TUI UK +4 -3 -19 UK Mainstream – Total +11 +4 -14

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TUI – Nordic +14 +9 +4

Northern Europe – Total +11 +4 -11

Central Europe

TUI - Germany +9 +9 -

TUI - Austria -22 -20 -

TUI - Switzerland +61 +61 -

TUI Central Europe - Total +8 +9 -14

Western Europe

TUI - France +23 +25 -

TUI - Belgium +22 +33 -

TUI – Netherlands 2 n/a n/a -

TUI Western Europe +23 +29 +5

SPECIALIST +13 +21

ACTIVITY +11 n/a

ODS +63 +53

1 These statistics are up to 2 December 2007

2

TheTUI Netherlands Summer 2008 programme has just gone on sale and bookings are still in early stages

Even though it remains very early in the booking cycle for Summer 2008, we are pleased with trading to date.

Since the last trading update in early November, trading in the UK has continued to track in line with our expectations. As a result, load factors are four percentage points ahead of last year with the First Choice programme up four percentage points and the Thomson programme three percentage points ahead. As previously announced, we have scaled back significantly our short haul flying programme with total capacity down 25%, including a reduction of 30% in Thomson’s short haul capacity. As a consequence, sales are down 4% on 13% lower volumes.

The Nordic region summer programme continues to perform strongly with sales growth of 14% on higher volumes of 9%. The programme is now one percentage point further sold than last year, and despite ongoing cost pressures (primarily fuel), margins are ahead of last year.

In Central Europe and Western Europe, bookings for Summer 2008 have only recently gone on sale, but in early trading we are pleased with the promising start. Sales are up 8% and 23% respectively.

Outlook

As we enter the key booking period for both Winter and Summer 2008, we are encouraged by our performance to date and the ongoing level of demand for our portfolio of package and specialist holidays.

The integration programme continues to progress as planned, with excellent progress being made in the UK and across a number of other business lines. Based on the current outlook, the Board remains confident that it will meet its expectations for the current TUI Travel PLC financial period ending 30 September 2008.

We firmly believe that the combination of organic and acquisition led growth, coupled with the synergy benefits arising from integration, will deliver superior returns for our shareholders. Furthermore, by achieving both growth and synergies, we are building a platform from which we can deliver sustainable long-term earnings and margin growth.

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Conference Call

A conference call for analysts will take place today at 9-00am (GMT). The dial-in arrangements for the call are as follows:

Telephone: +44 (0) 1452 555 566

Participant Code: 27813713

A presentation to accompany the conference call will be made available via our corporate website at 8-00 am (GMT). Please use the link below to access the slides:

http://www.tuitravelplc.com/tuitravel/investors/presentations/

Please contact Kerry Gleeson (TUI Travel PLC Corporate Communications) on +44 (0)1293 645773 if you have any difficulty accessing either the conference call or supporting presentation.

A recording of the conference call will be available until 3 January 2008 on:

Telephone: +44 (0) 1452 550 000

Participant Code: 27813713#

Enquiries: TUI Travel PLC

Paul Bowtell, Chief Financial Officer Tel: 01293 645 713

Andy Jones, Director of Group Finance Tel: 01293 645 795

David Paterson, Head of Strategy & Investor Relations Tel: 01293 645 795 Lesley Allan, Corporate Communications Director Tel: 01293 645 773

Hudson Sandler

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BUSINESS AND FINANCIAL REVIEW Group Performance

The Group has achieved pro forma underlying profit before tax of £249.3m (2006: £248.4m), with underlying operating profit up 5% at £287.0m (2006: £274.2m). As previously highlighted the effect of moving all businesses in the Group to a September year-end results in a reduction of underlying profit from the combination of the previous year-ends of October for First Choice and December for TUI Tourism. This is as a result of excluding the results from the three months of October, November and December 2007 and including the results from the three months of October, November and December 2006 in the case of TUI Tourism and excluding the results of October 2007 and including the results of October 2006 in the case of First Choice. This change has no impact on expectations for the 12 months to 30 September 2008.

Group pro forma revenue rose 5% to £12,840m with the underlying operating margin remaining constant at 2.2%.

Year ended 30 September 2007 2006

Revenue £12,840m £12,180m

Underlying operating profit £287.0m £274.2m

Underlying profit before tax £249.3m £248.4m

Operating profit/(loss) £56.1m £(242.8)m

Profit/(loss) before tax £18.4m £(268.6)m

Underlying basic earnings per share 16.0p 15.7p

Basic earnings per share 0.6p (34.3)p

A reconciliation of underlying profit before tax to profit/(loss) before tax is as follows:

2007 £m

2006 £m

Underlying profit before tax 249.3 248.4

Separately disclosed items (173.8) (33.7)

Impairment of goodwill and amortisation of business combination intangible assets

(54.8) (480.1)

Taxation on profits of joint ventures and associates (2.3) (3.2)

Profit/(loss) before tax 18.4 (268.6)

Acquisitions remain an integral part of our strategy and we continue to see value-enhancing acquisitions as a driver of earnings growth going forward. This year we have made seventeen acquisitions for a maximum total consideration of £227m of which £151m has been paid during the year (2006: sixteen acquisitions for a maximum consideration of £160m of which £137m had been paid).

The acquisition pipeline remains strong as we continue to identify opportunities which demonstrate excellent growth characteristics within niche segments of leisure travel, such as premium escorted tours, student travel, adventure holidays and online travel.

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Segmental Performance

The following financial information is presented on a pro forma basis.

Mainstream Holidays Sector

The Mainstream Holidays Sector consists of three divisions;

• The Northern Europe division comprises the distribution and tour operation businesses in the UK, Ireland and the Nordic countries as well as the following airlines: TUIfly Nordic, Thomsonfly and First Choice Airways.

• The Central Europe division comprises the distribution and tour operator businesses in Germany, Switzerland, Austria and the Eastern European markets as well as the operation of the TUIfly airline in Germany.

• The Western Europe division comprises the distribution and tour operation businesses in France, the Netherlands and Belgium as well as the following airlines: Corsairfly, Arkefly and Jetairfly, and a 40% share in Jet4you.com (Morocco).

Mainstream Holidays Sector reported on underlying operating profit of £161.6m (2006: £182.8m), down 11.6% year-on-year, primarily due to cost pressures arising from the year on year increase in fuel and the doubling of APD in the UK. In addition, following the rebranding of the German airlines to TUIfly.com, a number of third party operators cancelled commitments with TUIfly.com for the peak summer season which adversely impacted margins. As a result, the operating margin for the sector is down thirty basis points to 1.5% (2006: 1.8%).

Mainstream Holidays 2006/07 2005/06 Change %

Passengers (‘000) Northern Europe 9,399 9,295 +1% Central Europe 11,394 10,693 +7% Western Europe 4,589 4,358 +5% Total 25,382 24,346 +4% y-o-y variation

Revenue per passenger Total

Northern Europe +1%

Central Europe -1%

Western Europe +2%

Total =

Underlying operating profit (£m)

Northern Europe 113.2 139.7 -19%

Central Europe 47.8 60.5 -21%

Western Europe 0.6 (17.4) +103%

Total 161.6 182.8 -12%

Underlying operating margin %

Northern Europe 2.4% 3.1% -70bps Central Europe 1.1% 1.5% -40bps Western Europe 0.0% (0.9%) +90bps Total 1.5% 1.8% -30bps Controlled distribution % Northern Europe 77% 71% +6ppts Central Europe 48% 49% -1ppts Western Europe 51% 50% +1ppts Total 62% 60% +2ppts

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Northern Europe

The Northern Europe division generated underlying operating profit of £113.2m (2006: £139.7m), which was 19.0% lower than prior year, due to margin pressures in the UK from APD rises and losses incurred in the scheduled flying operation of Thomsonfly. Revenue was 2.7% up on the prior year due to a change in mix in travel products sold, with UK sales impacted by the growth of the lower price seat only and accommodation only businesses.

UK

UK profitability was down 31% to £78.2m (2006: £113.8m) as a result of significant cost pressures from the year on year increase in fuel prices and the UK government’s decision to double APD, announced in December 2006. We were unable to fully recover the £33m increase in APD and the incremental year-on-year fuel costs of £33m from customers, and consequently, margins were adversely impacted for both the Winter and Summer programmes.

Thomson, in line with its previous stated strategy, cut charter capacity back by 10% in 2006/07 as it sought to expand its participation in the component led independent travel segment by seeking to offer greater frequency within the flying timetable and a greater range of destinations. Despite broadly flat volumes, margins were down on the previous year as a result of yield pressures and the competitive environment in the first half of the year. As a result, the Thomsonfly scheduled flying operation contributed £27m of losses to the UK result. We have recently stated that we intend, where possible and within certain time constraints, to exit unprofitable lines of business and therefore expect these losses to be eliminated over a period of time.

The UK business has continued to expand its differentiated content. We opened a new Holiday Village property in the Dominican Republic in Winter 2006/07 and in Egypt during Summer 2007. We are currently planning to open Holiday Villages in Cyprus, Portugal and Cozumel (Mexico) in Summer 2008 and a Thomson Sensatori product in Crete in May 2008. Following a capacity increase of 25% the First Choice long haul programme performed extremely well. An additional six re-configured Boeing 767s (2006: four) were added with Costa Rica, Mexico and the Dominican Republic proving popular with our customers. In total, the UK long-haul programme consisted of ten Boeing 767s and going forward, we are confident we can leverage our Boeing 787 order book (23 in total) to deliver sustainable earnings and margin growth. Controlled distribution across the business now stands at 78% (2006: 71%) as both Thomson and First Choice continue to benefit from investment in controlled distribution channels, most notably the web proposition and retail estate.

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Northern Europe 2006/07 2005/06 Change % Passengers (‘000) UK 7,895 7,827 +1% Ireland 309 325 -5% Nordic 1,195 1,143 +5% Total 9,399 9,295 +1% y-o-y variation

Revenue per passenger Total

UK -1%

Ireland +7%

Nordic +14%

Total +1%

Revenue growth Total

UK = Ireland +1% Nordic +19% Sub Total +2% Other Revenues +12% Total +3%

Underlying operating profit/(loss) (£m) UK 78.2 113.8 -31% Ireland 1.2 (1.3) 192% Nordic 33.8 27.2 24% Total 113.2 139.7 -19%

Underlying operating margin %

UK 2.0% 2.9% -90bps Ireland 1.1% -1.2% +230bps Nordic 5.2% 5.0% +20bps Total 2.4% 3.1% -70bps Controlled distribution % UK 78% 71% +6ppts Nordic 75% 70% +5ppts Total 77% 71% +6ppts Nordic

Revenue in the Nordic region increased 19% year-on-year due to strong trading in Winter 2006/07, primarily as a result of an increase in higher margin long haul where capacity was up 25% for the season, particularly for Thailand which proved very popular with customers. This capacity increase was facilitated by the redeployment of a Boeing 747-400 from Corsair that enabled the operation to commence operating direct flights to Thailand from November 2006.

Despite higher fuel costs, the Nordic business grew underlying operating profit to £33.8m (2006: £27.2m) with operating margins up 20 basis points to 5.2%, as it continued to benefit from the growth in the long haul programme, controlled distribution and differentiated content. For the Summer 2007 programme, controlled distribution was up five percentage points to 77% with web sales accounting for 45% of all sales (up seven percentage points), while the differentiated Blue concept including hotels and holiday villages accounted for 32% of all product (up one percentage point).

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Ireland

Despite the challenging competitive environment within Ireland, the business delivered a turnaround in profitability to £1.2m versus a £1.3m operating loss in 2006. However, due to the EC competition ruling, this business was divested on 14 October 2007.

Central Europe

The Central Europe division generated underlying operating profit of £47.8m (2006: £60.5m), which was 21% lower than prior year, on revenue growth of 6% to £4,203m (2006: £3,979m). Profitability was primarily impacted by the competitive environment within the German flying sector, as both TUIfly.com load factors and margins were adversely impacted due to excess capacity in the market, and the impact of the TUIfly rebranding on a number of the airlines’ customers.

Central Europe 2006/07 2005/06 Change %

Passengers (‘000) Germany 10,388 9,692 +7% Switzerland 319 282 +13% Austria 687 719 -4% Total 11,394 10,693 +7% y-o-y variation

Revenue per passenger Total

Germany -2%

Switzerland +29%

Austria +5%

Total -1%

Revenue growth Total

Germany +5%

Switzerland +46%

Austria =

Total +6%

Underlying operating profit/(loss) (£m) Germany 48.7 58.4 -17% Switzerland 3.3 2.5 +32% Austria (4.2) (0.4) n/a Total 47.8 60.5 -21%

Underlying operating margin %

Germany 1.3% 1.7% -40bps Switzerland 1.5% 1.7% -20bps Austria (1.3%) (0.1%) -120bps Total 1.1% 1.5% -40bps Controlled distribution% 48% 49% -1ppts Germany

Underlying operating profit in Germany was down 17.0% to £48.7m (2006: £58.4m) on revenue growth of 4% to £3,663m (2006: £3,506m). Despite volume growth of 7%, which was largely driven by the expansion of the scheduled flying operation, the business was unable to match the seat load factors achieved in 2006 following the decision to increase

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capacity by four aircraft for Summer 2007. With this level of capacity in the market, pressures on yields resulted in a dilution of margin, particularly within April and May 2007.

In addition, following the decision in early 2007 to rebrand the airlines under the single brand TUIfly.com, a number of third party tour operators who had airline seat commitments with TUIfly.com, handed back a significant number of seats which placed increased pressure on yields during the peak summer selling season. It is estimated that this return of seats cost the operation £14m. We have already announced that for the forthcoming Summer season, we will reduce capacity by seven aircraft.

Switzerland & Austria

Switzerland experienced a 13% year-on-year increase in passengers, following the introduction of the TUI Germany pricing and product model to the Swiss mainstream market. This led to strong consumer demand for TUI holidays. A number of competitors could not compete on price or content, and as a result margins were up with overall underlying profitability up 32% to £3.3m (2006: £2.5m).

Austria experienced a decline in passengers and revenue in 2006/07 compared to the previous year. Demand was good for Egypt and Turkey but bookings for Spain declined year-on-year. The tour operator market in Austria as a whole was weak in 2006/07.

Western Europe

The Western Europe division generated underlying operating profits of £0.6m (2006: £17.4m loss), which represented an £18m turnaround in divisional profitability over the prior year. This was driven by an increase in underlying profitability in the Netherlands and Belgium.

Western Europe 2006/07 2005/06 Change %

Passengers (‘000) France 1,577 1,577 = Netherlands 1,281 1,215 +5% Belgium 1,731 1,566 +11% Total 4,589 4,358 +5% y-o-y variation

Revenue per passenger Total

France +6%

Netherlands -4%

Belgium +6%

Total +2%

Revenue growth Total

France +6%

Netherlands +1%

Belgium +17%

Total +8%

Underlying operating profit/(loss) (£m) France (26.6) (26.7) = Netherlands 4.8 (2.8) +271% Belgium 22.4 12.1 +85% Total 0.6 (17.4) +103%

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Western Europe 2006/07 2005/06 Change %

Underlying operating margin %

France (3.2%) (3.4%) +20bps Netherlands 0.8% (0.5%) +130bps Belgium 3.5% 2.2% +130bps Total 0.0% (0.9%) +90bps Controlled distribution % France 62% 67% -5ppts Netherlands 49% 45% +4ppts Belgium 43% 38% +5ppts Total 51% 50% +1ppts France

After a difficult 2006, Nouvelles Frontieres and Corsair have started to benefit from action taken in December 2006 to restructure the business and a recovery from the effects of the Chikungunya outbreak in La Reunion, which significantly impacted the trading result last year.

• La Reunion, one of the most important destinations for Corsair (which accounts for 20% of all airline volumes), has gradually recovered from the Chikungunya effect that heavily impacted the 2006 results.

• The restructuring programme, announced in December 2006 by TUI AG, is progressing in line with expectations. Rationalisation of the product offering and improvements in yield management and pricing policies have supported improved gross margin versus the prior year. Capacity has been reduced with the phasing out of one B747-300, thereby reducing fleet capacity by 11% and reducing the cost base of the airline. Despite this lower seat capacity, through a more efficient flying programme, the business has kept volumes in line with 2006.

As the benefits from the restructuring programme and the La Reunion recovery will be realised in October to December 2007, the 2006/07 result is broadly in line with the previous year leading to a £26.6m underlying operating loss (2006: £26.7m loss). In addition, £4.8m of “one-off” costs (2006: £nil) relating to the settlement of a social security tax audit has been included within the £26.6m operating loss.

Within the tour operator, growth in controlled distribution and differentiated content has also benefited margins. Online sales have grown significantly to 14% in 2006/07 (up from 9% in 2005/06), and the Paladien resort product has proved very popular. Two additional Paladien resorts were opened in 2007 and, these products now account for 46% of all tour operator content in Nouvelles Frontieres.

As such, it is expected that the restructuring programme, coupled with the growth in controlled distribution and differentiated content, will continue to drive earnings improvement and accordingly we expect the business to break-even in the 2007/08 financial year.

Netherlands

Underlying operating profit was significantly higher at £4.8m (2006: £2.8m loss), on revenue growth of 1% to £588m (2006: £581m). Margins have benefited from the growth in controlled distribution and the growth in the long haul programme.

Total volume growth of 5% was boosted by the expansion of the long haul programme with the business increasing its market share of this segment to 25% (2006: 21%). Web bookings rose in Summer 2007 to 9% (Summer 2006: 2%), while total controlled distribution rose to 49% for the year (2006: 45%).

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Belgium

Belgium has also benefited from the continued drive to increase share of controlled distribution and by remixing capacity from short haul to medium and long haul destinations. As a consequence, the business delivered underlying operating profit of £22.4m, up 85% from the previous year, on 17% revenue growth to £632m (2006: £541m).

With two additional aircraft utilised in Summer 2007 (total fleet up to 12 aircraft), capacity was increased by 13%. This increase in capacity, which benefited margins, sought to expand the medium haul programme as a result of consumer demand for destinations such as Egypt and Turkey.

Controlled distribution now stands at 43% (2006: 38%), with web sales now accounting for 22% of all holiday sales. The resulting savings in third party commissions and marketing costs have also driven higher margins.

Specialist Holidays Sector

The Specialist Holidays Sector operates a business model characterised by destination and lifestyle specialism, flexible accommodation and flying arrangements, and niche brands in each source market. The sector consists of three key segments:

• The Destination segment comprises a number of specialist brands across 11 source markets that have become market leaders to certain destinations out of the source markets in which they operate. This has been achieved by focusing on a relatively small number of destinations whilst establishing a breadth of product that is often exclusive and provides the customer with a range of experiences in the particular destination. Brands within this segment include Marmara, Turchese and Signature Vacations.

• The Premium segment consists of a portfolio of five brands, including Hayes & Jarvis, Sovereign, Citalia and Meon, and these specialise in premium leisure travel experiences, across a range of destinations in Europe, Asia and the Caribbean.

• The Lifestages segment consists of a portfolio of businesses, which focus on a particular customer demographic, such as the student travel and “grey” market, segments of the leisure travel market.

Specialist Holidays 2006/07 2005/06 Change %

Passengers (‘000) Destination 1,785 1,697 +5% Premium 149 149 = Lifestages 139 145 -4% Total 2,073 1,991 +4% y-o-y variation %

Revenue per passenger Total

Destination -5%

Premium -8%

Lifestages +30%

Total -3%

Revenue growth Total

Destination =

Premium -8%

Lifestages +26%

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Specialist Holidays 2006/07 2005/06 Change %

Underlying operating profit (£m)

Destination 24.7 16.6 +49%

Premium 10.4 9.1 +14%

Lifestages 12.1 10.1 +20%

Total 47.2 35.8 +32%

Underlying operating margin %

Total 4.5% 3.5% +100bps

The Sector delivered 31.8% growth in underlying operating profit to £47.2m (2006: £35.8m), with operating margin up 100 basis points to 4.5%.

This was primarily driven by a strong performance in a number of key brands within the Destination segment, primarily Marmara, Turchese and Nazar (within the Nordic region) as the businesses continued to benefit from strong consumer demand for the portfolio of differentiated and destination-led travel experiences. Demand for eastern Mediterranean and North Africa destinations continued to grow with Marmara and Turchese particularly benefiting from differentiated content within these destinations. In addition, the segment benefited from the closure of Marmara Belgium and Marmara Portugal, following poor performance in previous years, which contributed £1.2m benefit to the operating result. We have undertaken a strategic review of the position of the Nazar Switzerland business and as a result, from April 2008, Nazar will no longer operate in Switzerland and the specialist Pegasos product will from Summer 2008 be available through our leading TUI Switzerland brand.

Canada, also operating within this segment, performed strongly across all the regions of the country despite a very competitive environment. This performance was achieved as, we were able to successfully to manage capacity despite weakened demand during the early part of the season with minimal impact upon profitability.

The Premium segment, primarily operating in the UK source market, delivered a good performance despite tough trading conditions, primarily within the premium short-haul segment. Direct distribution now stands at 47% (up eight percentage points) as the group evolves into a direct sell model, while retaining the support of in-house retail agents.

Lifestages, consisting of North American student travel and our Independent Vacations business (Your Man Tours and Europe Express) has performed well. Results have been driven by strong organic growth in the educational travel segment and the annualisation of a number of acquisitions within the student travel segment.

Activity Holidays Sector

This Sector operates in three market segments, Marine, Adventure and Experiential.

• The Marine division includes First Choice Marine, which operates the market leading yacht-chartering brands of Sunsail and The Moorings, in addition to Sunsail Clubs and Inland Waterways (Crown Blue Line and Connoisseur).

• The Adventure division consists of a portfolio of 17 adventure travel businesses, including Quark Expedition Cruising, Exodus, and Peregrine.

• The Experiential segment consists of six brands, including Travcoa and TCS, that operate specialist escorted tours offering cultural and luxury escorted travel experiences for the US source market.

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Activity Holidays 2006/07 2005/06 Change %

y-o-y variation

Total revenue growth Total

Marine +20%

Adventure +23%

Experiential =

Total +18%

Underlying operating profit (£m)

Marine 17.2 8.8 +96%

Adventure 16.6 13.7 +21%

Experiential (1.5) (0.1) n/a

Total 32.3 22.4 +44%

Underlying operating margin %

Total 7.7% 6.3% +140bps

The Sector delivered 44.2% growth in underlying operating profit to £32.3m (2006: £22.4m), with operating margin up 140 basis points to 7.7%. The sector benefited from a combination of strong organic and acquisition-led growth within the portfolio.

Within the Marine division, the integration of The Moorings and Sunsail Yachts delivered a £5m synergy benefit in line with expectations. Sunsail Clubs performed satisfactorily in a challenging trading environment. Le Boat (previously reported as Inland Waterways) delivered a strong performance, boosted by growth in occupancy levels to 61% (2006: 56%) and controlled distribution, to 48% (2006: 44%).

The Adventure division performed well with profits up 21% to £16.6m (2006: £13.7m). This results from a combination of strong organic and acquisition led growth, with operating margins at 8%. Consumer demand remains high within this segment, with many of our businesses very much focused on driving improved trip fill to drive incremental margin.

In North America, our Experiential businesses have performed satisfactorily. The 2006/07 result is impacted by the annualisation of a number of acquisitions made in Winter 2005, and the subsequent inclusion of losses within the 2007 result.

Online Destination Services

The Online Destination Services Sector consists of market-leading incoming agencies that provide services such as guest assistance, transfers, excursions and roundtrips to the group and third party tour operators and their clients. This Sector also sells accommodation online to both consumers and businesses through a number of B2C and B2B brands (e.g. Hotelbeds, Bedsonline, Hotelopia, LateRooms.com) and provides specialised services to cruise lines and the management of meetings and incentives activities for corporate clients.

Online Destination Services 2006/07 2005/06 Change %

Bednights (‘000) Hotelbeds 9,212 7,173 +28% Bedsonline 5,654 4,190 +35% Hotelopia 2,318 2,108 +10% LateRooms 1,445 - n/a Total 18,629 13,471 +38%

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Online Destination Services 2006/07 2005/06 Change %

y-o-y variation

TTV per bednight Total

Hotelbeds +11% Bedsonline +3% Hotelopia +3% LateRooms - Total +6%

Underlying operating profit (£m)

Total 49.1 36.3 +35%

Underlying operating margin %

Total 10.8% 10.2% +60bps

The Sector delivered underlying operating profit growth of 35% to £49.1m (2006: £36.3m). The online businesses delivered strong organic growth with recent acquisitions in the online segment contributing £5.9m earnings growth.

Operating margins for the sector now stand at 10.8%, up 60 basis points. This has been achieved as the online business is now starting to leverage its fixed cost and infrastructure base to drive incremental margin.

We have continued to experience significant growth in all our online routes to market with total online transaction value growing to £405.5m, up 36% on the prior year. Hotelbeds, the brand that provides accommodation content online to independent tour operators, achieved growth of 42.2% in total transaction value (“TTV”) and has benefited from the successful integration of the Pacific World group of companies (acquired in August 2006). This business, based in the Asia Pacific, has a significant bed bank throughout China and South East Asia.

Bedsonline, which services independent travel agents, delivered total transaction value of £149.1m (2006: £107.4m). It also benefited from strong demand from travel agents for content primarily within short-haul destinations.

Our B2C routes to market performed well with Hotelopia growing total transaction value by 13% to £62.6m. It has continued to benefit from strategic alliances with a number of companies, such as easyJet, Spanair and BBVA. For example, in summer 2007, Hotelopia launched a dynamic packaging offering with easyJet through their portal.

We have been delighted with the performance of LateRooms.com since we acquired the business in December 2006. LateRooms.com is a leading online price comparator and seller of late availability hotel rooms (with particular focus on less than 24 hours), which sold 1.4 million room nights on total transaction value of £106.4m in 2007. Operating within a niche, specialist segment of the online market (i.e. late availability), it primarily provides independent hotels the opportunity to distribute late availability hotel stock. Based on a low overhead business model with no inventory risk, it has the ability to create high margins, strong growth and cash generation. It primarily operates in the UK but is expanding into Europe and North America with the planned launch of laterooms.es and laterooms.ca.

Acquisitions

In line with its acquisition strategy, TUI Travel PLC has made a number of acquisitions in the year ended 30 September 2007 within high growth niche segments of the leisure travel market. For the year ended 30 September 2007, the group acquired seventeen businesses for a maximum total consideration of £226.8m. By way of comparison, in the year ended 30 September 2006, we made sixteen acquisitions with a maximum aggregate consideration of £160m of which £137m was paid in 2006.

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We have acquired businesses within the online, activity, premium escorted tours and student travel segments of the market:

• Within Online Destination Services, we have strengthened our position further in the B2C route to market with the acquisition of two leading branded accommodation retailers. In December 2006, we acquired LateRooms.com, a leading online price comparator and seller of late availability hotel rooms (with particular focus on less than 24 hours) operating primarily in the UK market, but seeking organic expansion into new European and North American markets. In September 2007, we acquired asiarooms.com, a leading online B2C provider of Asian hotel accommodation. Asiarooms.com has established itself as a significant online retailer of accommodation by applying leading edge technology and web capabilities in one of the fastest growing travel markets. These acquisitions add to our growing position in the Asia Pacific region and online accommodation market and build upon the group’s bedbank distribution capability where we continue to see excellent growth and margin opportunities for the Group going forward.

• In the Activity Holidays Sector, we have acquired eight companies. Within the premium North American escorted tours segment, we acquired Starquest, an operator of themed luxury travel adventures by private jet, and we are now the clear market leader within this high-growth segment of the US travel market. Within adventure travel, we acquired seven other companies operating within niche segments, particularly expedition polar cruising and soft adventure travel, all of which operate at double-digit margins within a fast growing area of the marketplace. Going forward, we are looking to further develop our participation within these segments.

• Within North American Student Travel, we made four acquisitions in the educational travel segment. These acquisitions will maintain our position at the forefront of the fragmented and high growth group performance segment of the student travel marketplace in the US.

• Within the Mainstream Sector, we acquired an online car broker and an online independent package holiday review site. These businesses will further enable us to meet the needs of the travel consumer for flexibility and choice in their holiday decision-making.

The acquisition pipeline remains strong as we continue to target travel companies, notably within the Asia Pacific region, online, activity and North American student travel segments that exhibit excellent growth characteristics and the ability to generate premium margins, high earnings growth and strong cash flow.

Company Description Date Country Maximum consideration

Cash paid

Mainstream Holidays Sector

Holidays Uncovered Package holiday review

website

September 2007 UK £2.5m £2.5m

MicronNexus Online car broker September 2007 Germany £0.7m £0.7m

Specialist Holidays Sector

Young Explorers Educational tours

operator

January 2007 Canada £0.8m £0.8m

KSA Events High school group

sports tours

April 2007 USA £3.0m £1.7m

Splashline Leisure holidays to

Austrian student market

May 2007 Austria £2.6m -

New Horizons Tour & Travel

Student travel in Group performance market

September 2007 USA £2.5m £1.5m

World Class Vacations Student travel in Group

performance market

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Company Description Date Country Maximum consideration

Cash paid

Activity Holidays Sector

Western Xposure Adventure travel

operator

February 2007 Australia £2.4m £0.9m

i-to-i Provider of meaningful

travel experiences

February 2007 UK £20.6m £3.0m

iExplore Premium adventure

travel internet portal

February 2007 USA £4.6m £2.0m

Quark Expeditions Expedition cruising

specialist

April 2007 USA £9.8m £7.6m

Hannibal Marco Polo Danish adventure

business

May 2007 Denmark £10.0m £10.0m

Australian Sports Tours Group sports tours for

the Australian market

July 2007 Australia £10.5m £3.3m

Ski Alpine Schools skiing business August 2007 UK £1.3m £1.0m

Starquest Expeditions Round the world

experiential business

September 2007 USA £24.5m £16.9m

Online Destination Services

LateRooms.com Seller of late availability

hotel accommodation

December 2006 UK £103.2m £83.7m

Asiarooms.com Online retailer of

accommodation

September 2007 Singapore £23.3m £12.3m

TOTAL £226.8m £150.9m

Acquisitions in the year are shown in the table above. Of the maximum consideration, £150.9m was paid during the year. A further £75.9m will be paid as deferred and contingent consideration. In addition, £2.5m of acquisition expenses was incurred bringing the total expected consideration to £229.3m.

The cash flow effect of these acquisitions includes the cash consideration paid in the year of £150.9m, deferred and contingent consideration of £10.1m relating to prior year acquisitions that was paid in the year, acquisition expenses of £2.5m and the cash acquired of £25.8m, net of proceeds of £2.5m from the disposal of the Group’s interest in Hays Travel, resulting in a total net cash outflow for the year of £135.2m (2006: £115.8m).

The net assets of all the subsidiaries acquired during the year have been consolidated in the Group’s balance sheet at 30 September 2007.

2007 2006

Max Paid Max Paid

Acquisitions in the year £m £m £m £m

Amounts paid in the year 150.9 150.9 137.0 137.0

Deferred & contingent consideration arising 75.9 - 23.2 - 226.8 150.9 160.2 137.0 Acquisition expenses paid in the year 2.5 2.5 4.5 4.5

Total consideration 229.3 153.4 164.7 141.5

Cash acquired with acquisitions (25.8) (40.0)

Cash paid relating to prior year acquisitions 10.1 14.3

Proceeds from disposal of Hays Travel 2.5 -

Net cash outflow in the year relating to acquisitions 135.2 115.8

Since the start of the new year we have acquired two further businesses. In the Activity Sector we have acquired CHS Tour Services GMbH. Based in Austria and operating principally as HTS Total Ski (formerly Hourmont Total Ski) it is the leading operator of UK school ski holidays to Austria. In the year ended 31 October 2006 CHS had gross assets of

€4.1m. In our Online Destination Services Sector we have acquired Cruiselink II Ltd a shore side cruise handling business based on the East coast of the USA which handles services for a number of the large cruise companies in the ports of Manhattan, Brooklyn and Bayonne. In the year ended 31 December 2006 Cruiselink had gross assets of $1.1m.

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Taxation

The Group profit before tax is £18.4m (2006: £268.6m loss). The Group tax charge on this profit was £11.5m (2006: £112.2m), representing an effective tax rate of 62.5% (2006: -41.8%). The effective tax rates in 2007 and 2006 are high as tax relief is not available on goodwill impairment and certain separately disclosed items.

The Group underlying effective tax rate, being tax on underlying profit before tax, is 28.3%.

Based on the current structure of the business following merger completion, existing local taxation rates and legislation (and known future changes), it is expected that the underlying effective tax rate on ongoing activities (before intangible amortisation) will be approximately 28% going forward.

Earnings per share

Underlying basic earnings per ordinary share was 16.0p (2006: 15.7p using underlying effective tax rate of 28.3%), an improvement of 2%. This was primarily due to the higher level of tax paid in 2006.

Dividends

The Board recommends an interim dividend per ordinary share of 5.9p.

The Group will look to maintain underlying dividend cover at just over two times. The Company intends to continue to operate a dividend re-investment plan as an alternative to the full cash dividend.

Cash and liquidity

The net debt position (cash and cash equivalents less loans, overdrafts and finance leases) at the year-end was £532.3m (2006: £629.4m). This consisted of £1,958.7m of cash and £2,260.0 of current bearing loans and liabilities and £231.0 on non-current interest-bearing loans and liabilities. The pensions liability at the year-end was £313.7m (2006: £534.9m).

The Board is fully satisfied that the Group has access to sufficient facilities to fund both the working capital and the investment requirements (maintenance, development and acquisition) of the Group going forward.

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Pro FormaGroup income statement (unaudited) for the years ended 30 September

Note 2007 £m 2006 £m Revenue 2 12,839.9 12,180.3 Cost of sales (11,800.4) (11,142.9) Gross profit 1,039.5 1,037.4 Administrative expenses (993.9) (1,289.7)

Share of profits of joint ventures and associates 10.5 9.5

Operating profit/(loss) 2 56.1 (242.8)

Analysed as:

Underlying operating profit 2 287.0 274.2

Separately disclosed items 4 (173.8) (33.7)

Impairment and amortisation of goodwill and business

combination intangible assets (54.8) (480.1)

Taxation on profits of joint venture and associate (2.3) (3.2) 56.1 (242.8)

Financial income 147.4 120.1

Financial expenses (185.1) (145.9)

Net financing expenses (37.7) (25.8)

Profit/(loss) before tax 18.4 (268.6)

Taxation (11.5) (112.2)

Profit/(loss) for the year 3 6.9 (380.8)

Attributable to:

Ordinary shareholders 6.6 (383.5)

Minority interests 0.3 2.7

Profit/(loss) for the year 6.9 (380.8)

Non GAAP measures – Reconciliation of underlying operating profit to underlying earnings

Underlying operating profit 287.0 274.2

Net financing expenses (37.7) (25.8)

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Pro Forma Groupbalance sheet (unaudited) at 30 September Note 2007 2006 £m £m Non-current assets 7 2,655.7 2,463.4 Intangible assets

Property, plant and equipment 8 1,405.8 1,522.7

Investments in joint venture and associate 102.7 92.9

Other investments available for sale 53.0 48.4

Trade and other receivables 9 252.6 272.0

Derivative financial instruments 4.4 –

Deferred tax assets 197.3 321.5

4,671.5 4,720.9

Current assets

Inventories 19.5 28.1

Other investments available for sale 12.4 3.7

Trade and other receivables 10 2,420.6 2,084.1

Derivative financial instruments 39.5 8.7

Cash and cash equivalents 12 1,958.7 1,160.0

Assets classified as held for sale 11 88.0 43.3

4,538.7 3,327.9

Total assets 9,210.2 8,048.8

Current liabilities

Interest-bearing loans and borrowings 12 (2,260.0) (1,218.5)

Employee benefits 15 (2.9) (3.6)

Derivative financial instruments (142.7) (62.5)

13 (3,753.6) (3,246.0) (138.6) (109.7) Trade and other payables

Provisions

Income tax payable (38.1) (73.0)

Liabilities classified as held for sale (18.8) (25.9)

(6,354.7) (4,739.2)

Non-current liabilities

Interest-bearing loans and borrowings 12 (231.0) (570.9)

Employee benefits 15 (310.8) (531.3)

Trade and other payables 14 (110.3) (90.2)

Derivative financial instruments (19.9) –

(136.4) (154.7) Provisions

Deferred tax liabilities (120.7) (141.8)

(929.1) (1,488.9) Total liabilities (7,283.8) (6,228.1) Net assets 1,926.4 1,820.7 Total equity 1,926.4 1,820.7

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Pro Forma Group statement of cash flows (unaudited) for the years ended 30 September

2007 2006

£m £m

Profit/(loss) for the year 6.9 (380.8)

Adjustment for:

Financial income (147.4) (120.1)

Financial costs 185.1 145.9

Income tax expense 11.5 112.2

Non-cash items (including goodwill impairment) 296.8 686.9

Cash flows from working capital movements 8.2 4.6

Other operating cash flows (81.2) (133.8)

Cash flows from operating activities 279.9 314.9

Cash flows from purchase of property, plant and equipment (90.8) (204.7)

Other investing cash flows (129.1) (107.4)

Cash flows from investing activities (219.9) (312.1)

Receipt of shareholder loan 1,400.0 -

Cash flows from financing activities (670.6) 184.1

Net increase in cash and cash equivalents 789.4 186.9

Cash and cash equivalents at the start of the year 1,160.0 975.2

Effect of foreign exchange on cash held 35.8 (2.1)

Effect of changes in consolidation 5.8 -

Cash and cash equivalents for the cash flow statement 1,991.0 1,160.0

Less: cash included in assets held for sale (32.3) -

Cash and cash equivalents included in the balance sheet 1,958.7 1,160.0

Notes to the pro forma Group financial statements (unaudited) 1. Basis of preparation

The financial information in this pro forma financial information relating to 30 September 2007 and 30 September 2006 and the two years then ended is unaudited. This unaudited pro forma financial information does not constitute the statutory accounts of TUI Travel PLC within the meaning of section 240 of the Companies Act 1985. The first set of consolidated statutory accounts of TUI Travel PLC will be prepared in compliance with International Financial Reporting Standards as adopted by the European Union (‘Adopted IFRSs’) for the year ending 30 September 2008. Nor does this unaudited pro forma financial information comprise the interim management statement which would be required under the Disclosure and Transparency Rules of the Financial Services Authority.

On 3 September 2007, the TUI Travel PLC group was formed through a business combination of the tourism businesses of TUI AG (‘TUI Tourism’) with First Choice Holidays PLC (‘First Choice’). The business combination was effected on 3 September 2007 through the acquisition of First Choice and TUI Tourism by TUI Travel PLC (‘the Company’).

The unaudited pro forma financial information has been prepared by the Directors of the Company to illustrate the effect of the business combination as if it had taken place prior to 1 October 2005 (the first day of the comparative accounting period presented). This is to provide information which the Directors consider is relevant to an understanding of the combined group.

(24)

Note that producing the unaudited pro forma financial information in this report has required changing the financial end for all the businesses. In the case of First Choice and its subsidiaries the year-end has changed from 31 October to 30 September and in the case of TUI Tourism the year-year-end has changed from 31 December to 30 September.

The unaudited pro forma financial information has been prepared for illustrative purposes only, through the aggregation of financial information of TUI Tourism, First Choice and the holding company, TUI Travel PLC. It has not been designed to and does not give a presentation of the profit and loss and financial position of the Company that would have been reported in accordance with Adopted IFRSs had the business combination actually occurred on 1 October 2005. In particular, in order to do so, this would have required the assets of the First Choice group to be fair valued as at that date.

The unaudited pro forma financial information has been prepared on the basis of the Company’s Adopted IFRSs accounting policies, which are disclosed in Part VII of the TUI Travel PLC Prospectus dated 29 June 2007, with the following exceptions:

• No adjustments have been made for the impact of acquisition accounting in accordance with IFRS 3 Business Combinations. In particular, the assets and liabilities of First Choice have not been restated to their fair value as at or after 1 October 2005 and no goodwill relating to the First Choice business combination has been recognized.

• Intra-group trading between TUI Tourism and First Choice has not been eliminated, as required by IAS 27: Consolidated and separate financial statements.

• The value of First Choice derivative financial instruments reported at 30 September 2006 reflects the fair value of derivative financial instruments held by First Choice at 31 October 2006 rather than as at 30 September 2006.

• The transaction costs of the business combination have been recorded within other debtors. • Due to the aggregated nature of the pro forma financial information, an analysis of equity has not

been presented.

In the consolidated financial statements for TUI Travel PLC for the year ended 30 September 2008, the assets and liabilities of TUI Tourism will be accounted for on a merger accounting basis as if TUI Travel PLC had been the parent company throughout all periods reported on. On this basis, in this pro forma financial information the assets and liabilities of TUI Tourism have not been restated to their fair value as at or after 1 October 2005 and certain transactions relating to the transfer of TUI Tourism to the Company have been presented as if they had occurred prior to 1 October 2005.

No adjustments have been made to take account of anticipated post merger restructuring costs or synergy benefits and cost savings which will result from the merger.

TUI Travel PLC, the new parent company, did not trade during the period prior to 3 September 2007.

2. Segmental information

The Sector analysis is based on the Group’s management and reporting structure.

Year ended 30 September 2007

Mainstream Holidays £m Central Europe Northern Europe Western Europe Mainstream Holidays Specialist Holidays Activity Holidays Online Destination Services Corporate Joint ventures and associates Total Group

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External revenue 4,203.1 4,668.3 2,058.0 10,929.4 1,037.4 417.9 455.2 - - 12,839.9 Operating profit/(loss) 20.2 (0.9) (21.1) (1.8) 32.5 (3.2) 36.4 (18.3) 10.5 56.1 Amortisation/ impairment * - 24.0 - 24.0 3.4 18.1 9.3 - - 54.8 Other separately disclosed items 27.6 90.1 21.7 139.4 11.3 17.4 3.4 2.3 2.3 176.1 Underlying operating profit/(loss) 47.8 113.2 0.6 161.6 47.2 32.3 49.1 (16.0) 12.8 287.0 Net financial income (37.7) Profit before tax 249.3

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Year ended 30 September 2006 Mainstream Holidays £m Central Europe Northern Europe Western Europe Mainstream Holidays Specialist Holidays Activity Holidays Online Destination Services Corporate Joint ventures and associates Total Group External revenue 3,978.5 4,546.4 1,914.7 10,439.6 1,030.0 353.1 357.6 - - 12,180.3 Operating profit/(loss) 54.9 (198.2) (172.4) (315.7) 26.3 17.1 35.8 (15.8) 9.5 (242.8) Amortisation/ impairment * - 325.4 142.7 468.1 6.2 5.3 0.5 - - 480.1 Other separately disclosed items 5.6 12.5 12.3 30.4 3.3 - - - 3.2 36.9 Underlying operating profit/(loss) 60.5 139.7 (17.4) 182.8 35.8 22.4 36.3 (15.8) 12.7 274.2 Net financial income (25.8) Profit before tax 248.4

*of goodwill and acquisition related intangible assets

3. Income and expenses

2007 £m

2006 £m Included in the profit/(loss) for the year are the following:

Profits from sale and leaseback transactions 14.7 20.4

Operating lease rentals 386.7 353.8

Depreciation of property, plant and equipment 215.1 194.9

Amortisation of intangible assets including software 46.6 56.7

Impairment of goodwill 37.3 469.5

4. Separately disclosed items

2007 £m

2006 £m

TUI Q4 2006 restructuring 68.4 -

Merger transaction related 18.8 -

Other items 86.6 33.7

173.8 33.7

TUI Q4 2006 restructuring

These costs relate to the restructuring programme which TUI AG announced in their Q4 2006 results, which fall into the first quarter of TUI Travel’s year ending 30th September 2007.

(27)

Merger transaction related

These are costs incurred as a result of the merger going ahead, comprising of professional fees, bonus payments, accelerated LTIP costs and other merger-related costs.

Other items

These costs represent £13.9m of maintenance provision costs booked in TUI UK to bring their policy into line with that of TUI Travel plc; £9.1m of rebranding costs in Germany in relation to the rebranding of TUIfly.com; £40.1m of restructuring costs across the Group; £11.0m of retrospective APD costs; £5.1m of costs related to aborted transactions and £7.4m of other separately disclosed costs.

5. Earnings per share

The basic earnings per ordinary share is calculated by dividing the profit attributable to ordinary shareholders by the applicable weighted average number of ordinary shares in issue during the year, excluding those held in the employee share ownership trusts. The underlying earnings per share measure has been given to provide the reader of the accounts with a better understanding of the results. Earnings 2007 £m Weighted average number of shares 2007 millions Earnings per share 2007 pence Earnings 2006 £m Weighted average number of shares 2006 millions Earnings per share 2006 pence Basic earnings per share 6.6 1,118.0 0.6 (383.5) 1,118.0 (34.3) Basic underlying earnings per

share 178.4 1,118.0 16.0 175.3 1,118.0 15.7

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6. Acquisitions

Acquisitions in the year ended 30 September 2007 were:

Sector & entity Country of operation Date of acquisition Consideration recognised £m Mainstream

Holidays Uncovered UK September 2007 2.5

MicronNexus Germany September 2007 0.7

Specialist

Young Explorers Canada January 2007 0.8

KSA Events USA April 2007 3.0

Splashline Austria May 2007 2.6

New Horizons Tour & Travel USA September 2007 2.5

World Class Vacations USA September 2007 4.5

Activity

WesternXposure Australia February 2007 2.4

i-to-i UK February 2007 20.6

iExplore USA February 2007 4.6

Quark Expeditions USA April 2007 9.8

Australian Sports Tours Australia July 2007 7.2

Hannibal Marco Polo Denmark May 2007 10.0

Ski Alpine UK August 2007 1.3

Starquest Expeditions USA September 2007 24.5

ODS

LateRooms.com UK December 2006 97.2

Asiarooms.com Singapore September 2007 23.3

217.5

Acquisition expenses 2.5

Total investment cost 220.0

7. Intangible assets

2007 £m

2006 £m Included within intangible assets is goodwill allocated to the following segments:

Central Europe 445.6 438.8 Northern Europe 999.7 1,029.5 Western Europe 189.1 184.0 Destinations 144.4 134.3 First Choice 761.5 554.6 2,540.3 2,341.2 In this balance sheet is £761.5m (2006: £554.6m) of goodwill allocated to First Choice, being the goodwill arising on pre-merger acquisitions. Note that this goodwill balance will be materially affected when acquisition accounting in relation to the acquisition of First Choice by TUI Travel PLC is applied and the goodwill relating to the business combination has been recognised.

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