Thomas Cook Regulatory News (TCG)

9 May 2011

Thomas Cook Group plc

Unaudited results for the six months ended 31 March 2011

·; Revenue increased 4% to £3,431m driven by pricing and mix;

·; As anticipated, the impact of the Middle East and North Africa (MENA) situation and the shift of Easter into the second half resulted in an increased seasonal operating loss, of £166m, up £36m;

·; As a result of our continued focus on cash, the seasonal free cash outflow was flat year on year, despite the difficult trading conditions and Öger acquisition;

·; Summer trading is strong across Continental and Northern Europe, with the UK facing a tougher trading environment;

·; Good progress has been made on strategic initiatives; sales through our European Online Travel Agent (OTA) are up 10%; cost initiatives are delivering and we are selling more differentiated and exclusive product;

·; Interim dividend maintained at 3.75p per share.

Manny Fontenla-Novoa, Chief Executive, Thomas Cook Group plc said:

"I am constantly impressed at how resilient our business and people are to ever changing business conditions. We have responded to the challenges of political unrest in MENA and the weak UK consumer environment by redirecting our flying programme, cutting costs and continue to focus on our strategic priorities.

"As expected, first half trading was impacted by the timing of Easter and the unrest in the MENA region but despite the difficult UK trading environment in the first half, we have contained the seasonal loss and kept our focus on cash flow. Our Continental and Northern European businesses have performed well, supported by an improving economic backdrop.

"Whilst results in our UK business are likely to be below last year's levels and the MENA situation remains uncertain, our Continental and Northern European businesses are performing well and summer booking levels are encouraging. Therefore we remain well positioned to make progress for the year."

1 Underlying loss from operations is considered by management to give a fairer view of the year on year comparison of trading performance and is defined as earnings before interest and tax, excluding all separately disclosed items. It also excludes our share of the results of associates and joint venture and net investment income.

2 Free cash flow includes cash from operating activities, purchase and proceeds of disposal of tangible and intangible fixed assets and interest paid.

Enquiries

Presentation to analysts

A presentation will be held for analysts and investors today at 9am (BST) at Nomura, One Angel Lane, London EC4R 3AB.

Dial-in details: +44 (0) 20 3003 2666

Password: Thomas Cook

Replay number: +44 (0) 20 8196 1998

Access number: 6168359#

A live web-cast and a copy of the slides will be available on our website at www.thomascookgroup.com.

CHIEF EXECUTIVE'S REVIEW

Overview of results and financial position

In light of the challenges faced, the Group has delivered a reasonable operating result and a good cash flow performance.

Group revenue for the six months to 31 March 2011 was £3,431m (2010: £3,309m), up 4% (similar on a constant currency basis), despite the effect of cancellations to Egypt and Tunisia, driven by pricing and the further shift in mix towards all-inclusive and differentiated product.

The first half seasonal underlying loss from operations of £166m has increased by £36m on the prior year (2010: £130m loss). This resulted mainly from the disruption in programmes to Egypt and Tunisia and the later timing of Easter which fell in the second half this year. We estimate that the MENA situation has cost the Group £22m in the first half, whilst the shift of Easter had an impact of around £15m.

Segmental operating performance varied, with particularly good performances from Northern Europe (up £4m) and Airlines Germany (up £21m). This was driven by improving economic conditions, better product mix and lower depreciation charges following last year's review of aircraft lives. The UK performance (£42m lower), remains weak as we keep prices competitive to stimulate demand resulting in tighter margins. Cost savings of £16.5m achieved in the UK were not enough to compensate for weak trading. We continue to review the UK business and are progressing with our plans to improve performance.

Operating exceptional items have been reduced in the first half from £60m to £13m, including a £25m credit relating to pensions.

Cash flow continues to be a key focus, with a seasonal free cash outflow of £255m, flat year on year despite increased losses, a significant MENA financial impact and the Öger acquisition. Net debt at 31 March 2011 was £1,094m (up £142m), a robust result given the £128m higher opening position at 1 October 2010. In the first half our banking headroom was £590m and we have secured inaugural credit ratings, which are testament to our continued focus on prudent financial management.

The Group will pay an unchanged interim dividend of 3.75p per share.

Update on the MENA political unrest

As previously reported, travel restrictions to Egypt and Tunisia early this year resulted in approximately 160,000 cancellations, of which 120,000 were for travel to Egypt and 40,000 to Tunisia. The cost of the disruption in the second quarter was £22m, of which £5m were repatriation costs and £17m lost margin.

The ongoing unrest in Libya and other countries in the region is weighing on consumer demand and recovery is slower than expected, despite the significant bed rate reductions we have achieved. At this stage, we estimate that our programme to Egypt, Tunisia and Morocco for summer will operate at approximately 60% of the level originally planned, but this could change if the political situation does not improve. As a result we currently expect a further financial impact of around £35m in the second half of the year. We continue to work on mitigating the financial impact through redirecting our flying programme and securing additional accommodation in alternative destinations.

Current trading

Bookings across all markets for mass market winter season holidays are now in-line or ahead of what we previously reported. UK capacity and bookings reflect the additional flying added over the Easter and royal wedding period, in response to demand.

Excluding the impact of Tunisia and Egypt, trading in most of our European markets has progressed well, supported by an improving economic backdrop, development of our product offering and the anniversary effect of the cancellations caused by the Icelandic volcano eruption.

Note: Figures as at 30 April/1 May 2011. In Central Europe and West & East Europe, bookings represent all bookings including cars/overland, however capacity represents airline seat capacity only. Northern Europe winter season is October-March. Central Europe bookings and ASPs include Öger Tours (comparator restated).

Summer 11

Summer bookings and average selling prices continue to hold up well as consumers in most markets respond positively to the rebalancing of the programme and the wide choice of holiday destinations and formats on offer. Cumulative bookings remain in-line or ahead in all markets, with a significant improvement in the last four weeks in West & East Europe and Northern Europe, up 12% and 19% respectively. Booked load factors are flat or ahead of last year in most markets, including the UK, and in most markets we have less left to sell than in the comparable period.

Note: Figures as at 30 April/1 May 2011. In Central Europe and West & East Europe, bookings represent all bookings including cars/overland, however capacity represents airline seat capacity only. Northern Europe summer season is April-September. Central Europe bookings and ASPs include Öger Tours (comparator restated).

UK: Trading in the UK continues to be tough and bookings are flat year on year. However, margins are lower as we keep prices competitive to stimulate demand. As a result, the programme is now 63% booked, 1% ahead of last year. Average selling prices are up 4%, reflecting changes in mix towards more all-inclusive product.

Central Europe (Germany, Austria and Switzerland): Central Europe has continued to trade well with bookings 4% ahead of last year and pricing up 3%. 55% of flight capacity has been sold, up 3% on prior year. Contracted flight capacity reflects the growth in dynamic packages which reduces the need to contract ahead for flight capacity. Bookings for the Öger Tours business have been particularly strong.

West & East Europe (France, Belgium, the Netherlands, Eastern Europe): Bookings are now up 1% year on year, and have started to recover, following a slower intake period in the wake of the unrest in the important North Africa destinations which represent 25% of the mainstream programme. However, we don't expect to fully make up the lost volume and in response have reduced capacity. Contracted flight capacity is 59% booked, up 3% compared with last year.

Northern Europe: Trading remains strong with bookings up 13%. The segment is benefitting from lower accommodation costs, as a result of strong local currencies, which it has passed on to customers. The programme is 57% booked, up 1% compared with last year, despite taking on additional capacity in response to increased demand.

Airlines Germany: Bookings have remained strong and are now 8% ahead of prior year and well ahead of capacity increases of 6%, resulting in a booked load factor of 50%, up 1% on last year. Yields are up 3%, with continental yields flat and intercontinental yields up 4%.

UK restructuring

As previously announced, we have undertaken a comprehensive review of the cost base and the structure of our UK business and have implemented measures, which will deliver annualised savings of £40-50m from FY12, at an estimated one-off cost of £20m. To date, we have achieved c.£12m of savings and remain on track to deliver £30m of savings in the current financial year which will help offset weak trading. We have also made management changes to our UK business with the external appointments of new heads to our Mainstream and Independent businesses.

In light of the continued difficult trading conditions in the UK, we are continuing to adjust the business, increase flexibility and take costs out where possible. As part of this process we are reviewing the size of our UK airline fleet in order to reduce our winter flying losses, whilst broadly maintaining capacity in the summer. We have also reached agreement to close our UK defined benefit pension plans to all active members and pension provision will now be through a defined contribution scheme.

Strategic initiatives update

Our strategy is to optimise the value of our mainstream package holiday and financial services businesses and invest in areas of future growth, primarily independent travel and new markets. We remain committed to our margin roadmap and continue to work on a series of strategic initiatives that have the potential to raise Group operating profit margins over the medium term.

Group-wide cost-saving initiatives, including airline synergies, group destination management and IT centralisation as well as actions taken by various segments (UK, North America, West & East Europe) to take out cost, will improve the efficiency of the model. Cost savings of £43m were achieved in the first half. At the same time we are increasing the proportion of differentiated and exclusive product across all markets, which we expect to account for 45% of the UK market for Summer 11.

The build-up of our European Online Travel Agent (OTA), a key growth driver, is progressing well. Re-platforming our online offering is gaining momentum, with changes to the user interface, improved functionality and content gradually being rolled out. This year to date we have invested £7m net in the OTA initiative and the organisational set up is now almost complete. Total gross bookings for the first half are up 10%. Growth is particularly strong in Continental Europe, whilst trading in the UK is weak.

Following the announcement on 25 November 2010 that we had reached an agreement to form a joint venture with VAO Intourist in Russia, anti-trust clearance has now been received and we expect the transaction to complete in June 2011. We continue to cooperate with the Competition Commission regarding obtaining clearance for our merger with the Co-operative Travel. We currently expect a decision in August, in line with the Competition Commission timetable.

Board appointment

We also announce today the appointment of Martine Verluyten as an independent non-executive director.

Outlook

Whilst results in our UK business are likely to be below last year's levels and the MENA situation remains uncertain, our Continental and Northern European businesses are performing well and summer booking levels are encouraging. Therefore we remain well positioned to make progress for the year.

FINANCIAL REVIEW

Financial results and performance review

3 Underlying loss from operations is considered by management to give a fairer view of the year on year comparison of trading performance and is defined as earnings before interest and tax, excluding all separately disclosed items. It also excludes our share of the results of associates and joint venture and net investment income.

4 Free cash flow includes cash from operating activities, purchase and proceeds of disposal of tangible and intangible fixed assets and interest paid.

Revenue and underlying loss from operations

Group revenue for the period was £3,431.2m, an increase of 3.7% on the prior year period. Excluding the impact of translation, Group revenue was up 4%, reflecting higher average selling prices across most markets, and a move to more differentiated and exclusive holidays.

The seasonal underlying loss from operations was £165.8m, an increase of £35.6m on the prior year. As announced previously, the political unrest in the MENA region and the consequent travel restrictions have had a financial impact on our Interim results. Repatriation and cancellations followed by below normal demand have resulted in a financial impact of £22.4m, comprising £4.8m repatriation costs and an estimated £17.6m of lost margin.

The timing of Easter was later this year, such that whilst the majority of 2010 Easter holiday customers departed in the comparative prior year period, the 2011 Easter departures took place in the second half of the current financial year. The movement in the date of Easter is broadly estimated to have adversely affected the Interim operating result by around £15.0m.

More details of the movements in revenue and underlying loss from operations are given later in this report in the segmental performance review section.

Separately disclosed items

Separately disclosed items consist of exceptional operating and finance items, IAS 39 fair value re-measurement and the amortisation of business combination intangibles. These are costs or profits that have arisen in the year which management believes are not the result of normal operating performance. They are therefore disclosed separately to give a fairer view of the year on year comparison of underlying trading performance.

The table below summarises the separately disclosed items that have been included in the Interim accounts:

Exceptional operating items

Reducing exceptional operating costs continues to be a key area of focus for the Group. In the six months to 31 March 2011, exceptional operating items (including a gain on pension curtailment) were reduced by £46.7m, to £13.4m.

As we announced last year, we are restructuring our UK business to reduce complexity and improve accountability and visibility of operations. For a total cost of around £20m, we expect to generate annualised overhead savings of £40-50m and are on track to deliver at least £30m of savings in the current year. The exceptional operating costs incurred in the period as a result of these actions were £16.5m. The majority of these were redundancy costs from the reduction in managerial and support roles announced in December.

In West & East Europe we are outsourcing and centralising finance and other back office functions to improve efficiency and reduce overheads. The project is expected to deliver annualised savings in the region of £10-15m and the associated exceptional operating costs incurred in the period were £6.8m, with an expectation of further costs in the second half of around £10m.

In North America we face very difficult market conditions with overcapacity and strong price competition. To mitigate the effect of these market conditions on our results we have restructured to reduce overheads, incurring costs of £2.9m during the period. The anticipated benefits of these actions are annualised savings of around £4.0m.

Other one-off costs included in this category were £6.0m relating to the impairment of an aircraft, which will be disposed of as part of an ongoing programme to further improve the flexibility and profitability of the UK fleet and £4.4m of acquisition and integration costs relating to the ongoing plans to merge our UK high street travel business with the Co-operative Group and Midlands Co-operative, our proposed joint venture with VAO Intourist in Russia and the acquisition of Öger Tours, in Germany.

Following the decision to close our UK defined benefit pension schemes, an actuarial reassessment of pension liabilities has resulted in the recognition of a net gain of £24.5m.

Further detail can be found in note 5 of the financial information in Appendix 1 to this document.

IAS 39 fair value re-measurement

IAS 39 (as amended) requires the time value element of options used for hedging the Group's fuel and foreign currency exposure be written off to the income statement as incurred. This is purely a timing issue but can give rise to significant, unpredictable gains and losses in the income statement so we separately disclose the impact in the income statement to assist users to better understand the underlying business development. For consistency, we also separately disclose the timing effect within net finance charges of marking to market the forward points on our foreign currency hedging. We have therefore separately disclosed a loss of £2.2m in the operating result (2010: gain of £3.2m) and a loss of £4.4m in net finance costs (2010: gain of £4.3m).

Amortisation of business combination intangibles

During the period we incurred non-cash costs of £16.5m (2010: £15.5m) in relation to the amortisation of business combination intangibles. £11.5m of the amortisation relates to the merger of Thomas Cook and MyTravel and represents the amortisation of brand names, customer relationships and computer software. The remaining £5.0m relates to other acquisitions made post-merger.

Income from associates and joint venture

Our share of the results of associates and joint venture was a loss of £1.4m (2010: profit of £0.7m). This mainly reflects weaker winter trading and lower occupancy on the results of an associate hotel management company.

Net investment loss

The net investment loss in the period was £1.2m (2010: £nil) arising on the sale of legacy investments held within our German business.

Net finance costs

Net finance costs (excluding the separately disclosed impact of IAS 39 re-measurement) for the six month period were £64.5m (2010: £54.6m). The £9.9m increase mainly reflects the higher cost of the bond element of the new funding secured in April and May 2010 and higher borrowings. Net finance costs are typically higher in our first half, reflecting the impact on net debt of the Group's seasonal cash flow profile.

Tax

The tax credit for the period was £68.0m (2010: £40.9m). Excluding the effect of adjustments to tax provisions made in respect of previous years and separately disclosed items, this represents an effective tax rate of 28% on the underlying loss for the period.

The underlying cash tax rate is expected to remain low as a result of being able to utilise the losses available in the UK and Germany. Total losses available to carry forward in the Group at 30 September 2010 were £1.8bn. As at 30 September 2010, deferred tax assets were recognised in respect of £0.9bn of this amount.

Loss per share and dividends

The loss per share was 23.5 pence (2010: 24.8 pence).

The Board is recommending an unchanged interim dividend of 3.75p per share, for payment on 7 October 2011 to holders of relevant shares registered on 9 September 2011.

The Group's operating cash flows are seasonal, with the first half outflow driven by the operating loss and working capital movements as cash paid to hoteliers lags the end of the peak summer season. Following significant improvement in the comparable prior year period, the focus on working capital management has continued and we have achieved a further year on year improvement of £56.5m, generating a working capital inflow for the period of £35.5m (2010: outflow of £21.0m)

The seasonal net cash outflow (net of debt movements) was £282.6m (2010: £255.0m). This outcome was achieved despite the higher loss in the period and an estimated £44.0m working capital outflow arising from the settlement of liabilities of Öger Tours, taken on as part of that acquisition. The year on year comparison is affected by the inclusion in the current period of an outflow of £32.0m for the 2010 interim dividend, which was paid in October 2010 whereas the 2009 interim dividend of £31.6m was paid in September 2009.

Net debt (being cash less borrowings, overdrafts and finance leases) at 31 March 2011 was £1,094.2m (31 March 2010: £951.9m). This comprised £304.5m of cash, £1,327.3m of borrowings and overdrafts, and £71.4m of finance lease liabilities. Headroom under the Group's committed bank facilities at 31 March 2011 was £590m.

Hedging

We continue to hedge for future seasons in line with our previously stated hedging policy.

We are almost fully hedged for the current financial year and are already well hedged for each of our principal exposures for next winter, in line with our position at this stage in previous years.

As at 5 May 2011

The increase in fuel costs is of concern and will, if sustained, see costs of holidays increase by 2-3% on average.

Risks and uncertainties

The principal risks and uncertainties affecting the business activities of the Group and mitigating actions being taken by management were set out on pages 24 and 25, and more fully described throughout the Directors' Report, of the Annual Report & Accounts for the year ended 30 September 2010, a copy of which is available on the Group's corporate website, www.thomascookgroup.com. The key Group risks were summarised under the headings of:

Operational and strategic risks

·; downturn in the economies of our source markets leading to a reduction in demand for our products and services;

·; fall in demand for traditional package tours and competition from internet distributors and low-cost airlines;

·; environmental concerns;

·; a major health and safety incident;

·; loss of, or difficulty in replacing, senior talent;

·; business interruption;

·; performance failure by outsourced partners;

·; natural catastrophe including closure of airspace.

Financial risks

·; commodity risk: fuel, foreign currency, and interest rate risks;

·; liquidity and counterparty credit risks;

·; tax risk;

·; pension liabilities;

·; breakdown in internal controls.

Other risks

·; political, military, terrorist, security and health risks in source markets and key tourist destinations;

·; competition law and anti-trust;

·; legal and regulatory risks, especially in respect of airline operating licences, insurance and financial services sectors, and legislative impacts.

In the view of the Board, the key risks and uncertainties for the remaining six months of the financial year continue to be those set out in the above section of the Annual Report & Accounts 2010.

Segmental performance presented here is based on underlying financial performance before separately disclosed items and the segmental narrative is provided on this underlying basis.

See Appendix 2 for key.

Our UK segment continued to face tough market conditions in a difficult economic environment, with negative news on inflation, unemployment and expectations of interest rate rises all hurting consumer sentiment. Whilst the UK results were impacted by the movement in the timing of Easter, the biggest factor was the need to cut margins to stimulate demand, so that whilst customers migrated to all-inclusive and differentiated product, this was often achieved at discounted rates. As previously announced, we took early action to reduce costs and have now appointed new management to key positions in our Mainstream and Independent businesses.

UK revenue increased slightly compared to the prior year period, with capacity reductions and a small decrease in load factors but this was broadly offset by movements towards higher value products. In addition, a poor 'snow season' in the Alps adversely impacted demand for ski holidays, particularly in the lates market, leading to lower average selling prices and margins.

The political unrest in the MENA region and the later Easter had an adverse financial impact on the underlying loss from operations of around £4.1m and £5.4m, respectively. Marketing investment in developing the online travel agent initiative incurred costs of £4.2m and there were £4.0m of additional costs associated with our role as Official Provider of short breaks to the London 2012 Olympic Games. Partially offsetting these items were the first benefits of the restructuring of the UK business, announced in December, with around £12.0m of cost savings seen in the first half and other cost savings of around £4.5m.

See Appendix 2 for key.

Our Central Europe segment benefited from an improving economic environment and strengthening consumer confidence, particularly in Germany. Currency-adjusted revenue growth of 11.7% was also helped by the acquisition of Öger Tours, although the main impact of the acquisition will be seen in the second half of the year. We also continue to see strong growth in sales through dynamic packaging as a result of ongoing improvements in the booking platform and the supporting delivery process.

The acquisition of Öger Tours added approximately 9% to passenger numbers compared to the prior year period. Integration of the business is progressing well and is expected to deliver annualised synergies of around £7.0m. This acquisition together with an increase in average selling prices, as flying and accommodation cost increases are passed on to customers, has driven the revenue growth and will further benefit the second half result.

The underlying loss from operations increased by £7.7m, with most of this attributable to the political situation in the MENA region (c.£3.6m) and the later Easter (c.£3.2m).

See Appendix 2 for key.

Our West & East Europe segment started the period strongly and we saw increased bookings and selling prices helped by increased sales through e-commerce and demand for our differentiated products. However, the impact of the political unrest in the MENA region was most significant as it is a particularly important destination for these source markets, making up around a quarter of the Mainstream programme. Our flexible business model has enabled us to mitigate some of the impact by moving our flying away from affected destinations.

Currency-adjusted revenue in West & East Europe increased by 8.0% year on year, with increases in most markets. This revenue growth was driven by increased passenger numbers, particularly in France and the Netherlands and higher average selling prices across all markets, with the strongest growth in selling prices seen in Eastern Europe. The underlying loss from operations rose by £9.9m with this segment seeing the largest impact from the political situation in the MENA region (c.£7.0m) and increased marketing investment.

In West & East Europe we are outsourcing finance and other back office functions to improve efficiency and reduce overheads. The expected benefits are annualised savings in the region of £10-15m and the total costs are expected to be around £17m, of which £6.8m was incurred in the first half.

See Appendix 2 for key.

Our Northern Europe segment delivered another strong and consistent performance, maintaining market leading positions in its major markets and focusing on cost control and efficiency to maintain margins.

Currency-adjusted revenue was down 4.5% on the prior year period, as a result of a small reduction in Mainstream passenger numbers, in line with capacity, and a reduction in charter revenue in the segment's airline. However, the underlying profit from operations increased by £3.8m despite the negative impacts of the MENA situation (c.£3.8m) and the later Easter (c.£2.7m). In part this improvement was helped by a favourable foreign exchange translation impact of £2.0m and better margins driven by savings on fuel and accommodation.

Northern Europe continues to lead the Group in controlled and internet distribution and has, yet again, experienced strong growth in this key area. Controlled distribution accounted for 84.0% of departed passengers and the proportion of internet sales grew to 58.0%, in the period.

See Appendix 2 for key.

Note: Internet distribution % includes independent travel bookings.

Our North American segment faced particularly difficult market conditions for its Mainstream business with significant overcapacity and consequent price and margin pressure. In response we implemented our lower cost flying programme with our new provider, Jazz, and focused on growing our Independent product. We are also strengthening our distribution capability.

Revenue in North America fell, on a currency-adjusted basis, by 3.9% and the underlying profit from operations decreased by £1.8m as we continued to see difficult trading conditions in the Mainstream market, partially offset by cost savings. We focused on maximising our sales of available seats and saw a consequent increase in load factors. The start of our licensing agreement to manage Sears Travel in January partially offset the decline and will add to revenue and margin in the full year. We have also recently signed an agreement to convert up to 180 travel agencies to the Thomas Cook brand. 2011 is the first year we have been able to use the brand in Canada and we are confident that its strength will benefit our products in this competitive market.

See Appendix 2 for key.

In common with our other Continental European segments, Airlines Germany has benefited from a better economic backdrop during the period. This has seen a rise in passengers flying, particularly on higher value intercontinental routes.

Currency-adjusted revenue in Airlines Germany was up by 7.0% and the underlying result from operations improved by £20.8m, despite the estimated combined impact of around £7.0m from the political unrest in the MENA region and the later Easter. Revenue rose as a result of higher sales to third party tour operators and more seat only sales. The underlying operating result benefited from lower depreciation charges of around £10m, following the review and alignment of aircraft depreciation estimates last year (the full year impact is expected to be broadly neutral), improved fuel yields and positive volume growth.

Capacity has been increased in anticipation of a strong summer and seat load factors are being maintained with rising average yields, driven by a movement towards long haul destinations.

See Appendix 2 for key.

Costs have reduced mainly as a result of non-recurrence of certain people costs in the prior year period. These reductions have been partly offset by a build up of costs within the online travel agent organisation, whose central costs are accounted for within the Corporate segment.

Appendix 1 - Condensed Consolidated Interim Financial Information

Group Income Statement

All revenue and results arose from continuing operations.

The notes on pages 25 to 37 form an integral part of the condensed consolidated interim financial information.

* Separately disclosed items consist of exceptional operating items, IAS 39 fair value re-measurement and amortisation of business combination intangibles.

Group Statement of Comprehensive Income

The notes on pages 25 to 37 form an integral part of the condensed consolidated interim financial

information.

Group Cash Flow Statement

The notes on pages 25 to 37 form an integral part of the condensed consolidated interim financial information.

Group Balance Sheet

The notes on pages 25 to 37 form an integral part of the condensed consolidated interim financial information.

Group Statement of Changes in Equity

The movements in equity for the six months ended 31 March 2011 were as follows:

 The movements in equity for the six months ended 31 March 2010 were as follows:

Notes to the Condensed Consolidated Interim Financial Information

1. General information

Thomas Cook Group plc is a limited liability company incorporated and domiciled in England and Wales under the Companies Act 2006 and listed on the London Stock Exchange. The address of the registered office is 6th Floor South, Brettenham House, Lancaster Place, London, WC2E 7EN. The principal activities of the Group are discussed in the interim management report on pages 1 to 18.

This condensed consolidated interim financial information was approved for issue on 9 May 2011.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 September 2010 were approved by the Board of Directors on 30 November 2010 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

This condensed consolidated interim financial information has been reviewed, not audited.

2. Basis of preparation

This condensed consolidated financial information for the six months ended 31 March 2011 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 "Interim financial reporting" as adopted by the European Union. The half-yearly condensed consolidated financial information should be read in conjunction with the annual financial statements for the year ended 30 September 2010, which have been prepared in accordance with IFRSs as adopted by the European Union.

3. Accounting policies

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 30 September 2010, as described in those annual financial statements, except for the policy with respect to tax, the new or amended standards and interpretations adopted in the current period and other changes noted below.

Tax on income in interim periods is accrued using the tax rate that would be applicable to the expected total annual earnings.

Adoption of new or amended standards and interpretations in the current period

In the current period, the following new or amended standards and interpretations have been adopted. Their adoption has not had a significant impact on the amounts reported or the disclosure and presentation in these interim financial statements, but may impact the accounting or the disclosure and presentation for future transactions and arrangements.

New or amended standards and interpretations in issue but not yet effective

The following new standards, amendments to standards and interpretations that are expected to apply to the Group, which have not been applied in these financial statements, were in issue, but are not yet effective:

Management does not anticipate that the adoption of these new or amended standards and interpretations will have a material impact on the Group.

4. Segmental information

For management purposes, the Group is currently organised into six geographic operating divisions: UK, Central Europe, West & East Europe, Northern Europe, North America and Airlines Germany. These divisions are the basis on which the Group reports its primary segment information. Certain residual businesses and corporate functions are not allocated to these divisions and are shown separately as Corporate. The primary business of all of these operating divisions is the provision of leisure travel services and, accordingly, no separate secondary segmental information is provided.

Segmental information for these divisions is presented below: