24 Jun 2008 07:00
24 June 2008
Thomas Cook Group plc
Unaudited results for the 6 months ended 30 April 2008
Highlights
Financial
Group pro forma loss from operations** reduced by 15% to £177.5m.
Group unaudited reported loss from operations** was £163.7m (2007: £148.6m which excluded £69.6m of seasonal winter losses of the former MyTravel businesses).
Interim dividend of 3.25p per share (2007: nil).
Current trading and Outlook
Trading for summer 08 remains strong in all major markets.
Group fuel requirements for the remainder of this financial year are hedged to 100% for crude and 93% for jet fuel. Group foreign currency requirements for the remainder of this financial year are hedged to 100%.
2008/09 fuel and foreign currency requirements are hedged in line with policy - crude - 89%; Dollar - 75%; Euro - 67%.
Ludger Heuberg to step down as Group CFO for personal and family reasons; Juergen Bueser to become new Group CFO with effect from 1 July.
The Board remains confident that the business will meet its expectations for the current financial year.
Note: Throughout this document reference is made to adjusted and pro forma revenue* and profit/loss from operations**. These terms are defined in Appendix 2.
Manny Fontenla-Novoa, Chief Executive, Thomas Cook Group plc said:
"I'm delighted with our performance over the winter and we are in a very good position for the summer season. I remain confident that we will achieve our goals for this year. For the longer term, our strategy is on track, our merger synergies are coming through, and we continue to target £480m (equivalent to €620m) of operating profit in 2009/10."
Enquiries
| Thomas Cook Group plc | Today | +44 (0) 20 7404 5959 | |
| Thereafter | +44 (0) 1706 746298 | ||
| Manny Fontenla-Novoa | Chief Executive | ||
| Ludger Heuberg | Chief Financial Officer | ||
| Steven Olivant | IR & Financial Communications Director | ||
| Brunswick | +44 (0) 20 7404 5959 | ||
| Fiona Antcliffe | |||
| Laura Cummings | |||
A conference call with analysts will take place today at 9.30am (BST).
Dial-in details for the call are as follows:
Participants' dial-in: +44 (0) 1452 561 263
Password: Thomas Cook
A recording of the call will be available for seven days on:
+44 (0) 1452 550 000 (Pin: 52239769#).
OPERATING REVIEW
Overview of results for the 6 months to April 2008
As noted in our announcement of 15 May, the Board has decided to change the reporting currency for the Group to Sterling as we now expect to generate the majority of our profits in non-Euro countries, with the UK being by far the largest. As a result, all the financial information included within this report has been presented in Sterling including the prior year comparatives.
The financial information also reflects both unaudited pro forma and unaudited statutory information for Thomas Cook Group plc for the 6 months to April 2008 and the comparative prior year period. The pro forma information has been prepared by the Directors to illustrate the effect of the merger of Thomas Cook AG and MyTravel Group plc as if the transaction had taken place prior to 1 November 2006 (the first day of the comparative accounting period presented) and has been included to assist readers in understanding the performance of the Group for the interim period. The pro forma financial information has been prepared on an adjusted basis which means before exceptional items, amortisation of intangible assets that arose from the business combination, interest and tax (unless otherwise indicated), and excludes our share of results of associates and joint ventures.
The statutory results for Thomas Cook Group plc for the 6 months to April 2008 contain a full set of results for the former Thomas Cook AG, MyTravel Group plc and Thomas Cook Group plc, whereas the comparative period only contains the results of the former Thomas Cook AG.
Also included in Appendix 1 to this report is supplementary pro forma income statement, net assets and cash flow information for the 6 months to March 2008, the 6 months to March 2007 and the 12 months to September 2007. This shows what the pro forma results would have been in Sterling had Thomas Cook Group plc always had a September year end.
Pro forma highlights - 6 months to April 2008
The Group pro forma revenue* for the 6 months to April 2008 was £2,964.9m, an increase of 7% on the prior year period. The Group pro forma loss from operations** decreased by 15%, to £177.5m in the 6 months to April 2008. Improvements were seen in all segments except for Airlines Germany which was worst hit by the increased fuel prices.
Statutory highlights - 6 months to April 2008
Revenue* in the period amounted to £2,964.9m (2007: £1,719.8m). The loss from operations** was £163.7m (2007: £148.6m). The prior year figure excludes £69.6m of seasonal winter losses of the former MyTravel businesses which masks the significant underlying trading improvement year on year.
Interim dividend
The Board continues to believe that it is desirable to provide shareholders with dividend payments increasing progressively over time and expects to recommend dividends per share in respect of each full year in the range of 40-50 per cent of earnings per share and to pay approximately one-third of an annual dividend as an interim dividend and the balance as a final dividend.
Although the statutory financial period ending on 30 September 2008 is an 11 month period, the Board is recommending that the total dividend for the period is calculated on the basis of the pro forma 12 months to 30 September 2008. As a result, the Board is proposing an interim dividend of 3.25p per share, payable to holders of relevant shares on the register at 1 August 2008. This dividend will be paid on 5 September 2008.
Strategy
The Group's strategy is to improve its performance in mainstream tour operating; develop its independent travel businesses and travel-related financial services; invest in emerging markets; and grow overall revenue and profit. Following the successful integration of MyTravel Group plc and Thomas Cook AG, we are on track to achieve merger synergies in excess of £155m by 2008/09. Our principal target remains to achieve Group operating profit of more than £480m (equivalent to €620m) of operating profit in 2009/10. This implies EBITDA of more than £620m (equivalent to €800m).
Further information on progress towards delivering the Group's strategy was included in the announcement of the pro forma results to March made on 15 May.
Board change - new Group Chief Financial Officer
As also announced today, Juergen Bueser will join the Board of the Company as its new Group Chief Financial Officer with effect from 1 July 2008. Dr Bueser will replace Ludger Heuberg who, for personal and family reasons, will return to Germany and take up the role of CFO for our Continental Europe business.
Current trading
Summer 08
Trading for summer 2008 continues to be strong in our main markets despite the current economic conditions.
| Year on year pro forma variation % | Average selling price | Bookings | Capacity |
| UK | +5 | -6 | -9 |
| Northern Europe | +10 | +4 | +2 |
| Continental Europe | +4 | +2 | n/a |
| North America | -6 | +1 | -2 |
Note: Figures above are as at 14/15 June 2008. The figures above for UK, Northern Europe and North America represent Risk bookings only. In Continental Europe, all bookings are included.
The UK continues to perform strongly with 19% fewer holidays to sell than at this time last year, which continues to stand us in good stead in the lates market. We are particularly encouraged by our much lower level of stock left to sell in short haul and long haul. Average selling prices are cumulatively 5% ahead and over the last 6 weeks have been 14% ahead of the corresponding prior year period. Margins are also ahead of the prior year.
| UK haul mix: Year on year pro forma variation % | Left to sell | Capacity |
| Short haul | -34 | -22 |
| Medium haul | -9 | -2 |
| Long haul | -37 | -13 |
| UK total | -19 | -9 |
In Northern Europe, summer 2008 trading remains positive. Bookings are currently 4% ahead year on year on capacity up only 2%. Average selling prices are 10% ahead and margins are good.
In Continental Europe, bookings are currently 2% up on the prior year with average selling prices 4% higher.
In Germany, through improvements in capacity management, we have significantly fewer holidays on risk to sell than in the prior year.
Trading in Belgium, our next largest market in the Continental Europe segment, has also continued well. Bookings are slightly behind the prior year but selling prices are well ahead. In the Netherlands, bookings and selling prices are ahead of the prior year. Trading in France, where volumes are much lower, is very strong with both bookings and average selling prices well ahead year on year.
In the Eastern markets (Poland, Hungary and the Czech Republic), we continue to grow the businesses and trading is in line with our expectations.
In North America, where the summer season is the low season for the charter market and capacity is therefore limited, trading remains satisfactory.
Airlines Germany capacity overall is 9% lower, with the largest reduction the result of eliminating unprofitable city routes. The booked load factor is up 1%.
Winter 08/09
For winter 08/09, the UK and Northern Europe are the only markets currently on sale and early trading remains encouraging.
| Year on year pro forma variation % | Average selling price | Bookings | Capacity |
| UK | -1 | +4 | -8 |
| Northern Europe | +4 | +4 | flat |
Note: Figures above are as at 14/15 June 2008.
In the UK, bookings are currently 4% ahead of the prior year on 8% less capacity. In Northern Europe, we have sold 22% of our winter capacity to date and average selling prices are 4% ahead year on year.
Acquisitions
During the 6 months ended 30 April 2008, the Group announced the following:
The acquisition of up to 74.9% of the issued share capital of Thomas Cook India Limited, 100% of the Thomas Cook branded business in Egypt and licences for the Thomas Cook brand in 15 Middle East countries;
The acquisition of Hotels4U.com - the UK's largest independent bed bank, selling exclusively over the internet;
The acquisition of Elegant Resorts Ltd - the number one UK-based luxury travel company.
The acquisition of Thomas Cook India represents a major entry into an emerging market. India is one of the fastest-growing travel markets, expanding by 15% per annum. Thomas Cook India is already the largest foreign exchange business and the second largest travel company in India. The acquisition of 54.9% of Thomas Cook India shares for Rs. 9,362,500,000 (£115.3m) was completed in March 2008. The acquisition of up to an additional 20% of the shares in the Company from the public shareholders of Thomas Cook India, tendered in the mandatory tender offer, is currently pending approval from the Reserve Bank of India.
Further details of all of the above acquisitions can be found in our announcement of 15 May and in the notes to the financial information included at the back of this report.
On 9 June 2008, the Group announced the acquisition, subject to regulatory approval, of TriWest Travel Holdings (TTH) in Canada, together with a binding bid for Jet Tours in France.
TTH is a leading independent travel wholesaler headquartered in Montreal, Canada and operating under two principal brands: Fun Sun, an independent travel wholesaler, and Intair, a leading airline consolidator. By acquiring this business, we will create a nation-wide leading independent travel business with significantly enhanced customer reach and product offering, as well as a more balanced business mix. The business comes with C$17m of net cash on the balance sheet. In addition, we expect to realise in excess of £5m of annualised synergies from the integration of the two businesses. The maximum cash consideration, including management incentives is C$114m (£57m).
Paris-based Jet Tours is a premium tour operator which serves approximately 270,000 guests per year. Its principal brands include Jet Tours, Club Eldorador and Austral Lagons. The combination of Jet Tours and Thomas Cook France, already the largest travel retailer, would form the country's third largest tour operator with a combined market share of around 10%. Jet Tours' product portfolio would complement Thomas Cook's existing offering and we would expect to realise in excess of £7m of annualised synergies from the integration of the two businesses. As at 31 October 2007, Jet Tours had net cash of €19.8m on its balance sheet. The consideration would be €70m (£55m).
All of the acquisitions made to date are expected to meet the Group's acquisition criteria in respect of earnings accretion by year two and exceeding the cost of capital by year three.
Share buy-back programme
At the Extraordinary General Meeting on 12 March 2008, shareholders approved a €375m (equivalent to £290m) share buy-back programme. At the close of business on 23 June 2008, the Group had purchased a total of 48,962,222 shares for cancellation, at a total cost of £131.2m, excluding commission (of which £61.4m was spent in the 6 months to April 2008). Of these shares, 17,876,222 were purchased from Arcandor AG, as a result of which, Arcandor now owns 52.8% of the Group.
Condor
It was announced on 21 May 2008 that the Bundeskartellamt (Federal Cartel Office) had extended the deadline for completion of its primary evaluation of the merger of Condor Flugdienst GmbH, the Group's German airline, and Air Berlin plc, until 11 August 2008.
Following the extension of the deadline to 11 August 2008, Air Berlin, Thomas Cook and the Bundeskartellamt case team have continued their discussions regarding the acquisition and the deadline has been further extended to 9 October 2008.
Given the significant delays in the regulatory review process and the changing economic environment, we are reviewing, jointly with Air Berlin, the feasibility of the Condor transaction. In addition, we are actively considering a number of alternative options. The Group continues to view Condor as a strong business with significant potential.
Fuel and foreign exchange
Fuel costs represent approximately 8% of the Group's revenue and volatility in prices can have a material impact on the Group's variable cost base. We actively manage the volatility by hedging our fuel trading requirements over an 18-24 month period.
The Group fuel requirements for the remainder of this financial year are hedged to 100% for crude and 93% for jet fuel. Going forward, we are hedging in line with our policy which is aimed at ensuring price certainty and flexibility in a changing market place. For 2008/09, we have hedged 89% of the Group's expected fuel requirement using a mixture of swaps and options. Due to the lack of a liquid long term jet fuel forward market, the 2008/09 hedges are in crude oil. However, we will keep prices and market conditions under review and decide whether to roll these hedges into jet fuel hedges as we get closer to the date of consumption.
As with fuel, the Group manages foreign currency exchange rate volatility by hedging its foreign currency trading requirements over an 18-24 month period. For the remainder of the current financial year, we have hedged 100% of the Group's foreign currency requirements, which are mainly in Euros and Dollars. For 2008/09, we have now hedged 75% of the Group's Dollar requirements and 67% of the Group's Euro requirements.
Credit facility
On 23 May 2008, the Group announced that it had agreed terms for a new £1.4 billion (€1.8 billion) credit facility, of which £155m is a bonding facility. The credit facility, which replaces the Group's existing facilities, incorporates three year revolving credit and term facilities, each at a margin of 175 bps above EURIBOR/LIBOR, and a bonding facility. Up to £250m of the facility will be available only if a disposal of Condor occurs. The remainder of the facility is available for the Group's general corporate purposes, including acquisitions and the £290m existing share buyback programme. The Group anticipates that the average draw down of the facility for the remainder of 07/08 will be around £300m. For financial year 08/09, we expect the facility to be around 50% drawn on average. The highest draw down of facilities will be during the winter months when the Group traditionally has a seasonal working capital outflow. Set-up costs will be amortised over the three years of the facility.
Principal risks and uncertainties
In the Annual Report 2007 (pages 43-46), the Directors set out the risks and uncertainties which they believe may affect the Group's operating results, financial condition and/or the trading price of the Company's shares. The risk factors contained therein continue to be those that the Directors believe are potentially significant and have not changed as a result of any of the acquisitions made in the period, but this should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties related to an investment in the Company.
Outlook
As was the case at the time of the Group's interim management statement on 15 May 2008, the Board remains confident that the business will meet its expectations for the current financial year.
FINANCIAL REVIEW
PRO FORMA (UNAUDITED) FINANCIAL RESULTS AND PERFORMANCE REVIEW - 6 MONTHS TO APRIL
To assist investors in understanding the performance of the Group for the interim period, pro forma financial information has been prepared for the 6 months to April 2008 and the comparative period to show the results of the Group as if the two former groups had always been combined. The pro forma financial information has been prepared on an adjusted basis which means before exceptional items, amortisation of intangible assets that arose from the business combination, interest and tax (unless otherwise indicated), and excludes our share of results of associates and joint ventures.
Group
The Group pro forma revenue* for the 6 months to April 2008 was £2,964.9m, an increase of 7% on the prior year period. Revenue increased in Continental Europe by £108.7m, in Northern Europe by £84.5m, in Airlines Germany by £68.6m and in North America by £9.5m. Revenue decreased in the UK by £64.5m as a result of the planned capacity cuts.
The Group pro forma loss from operations** decreased by 15%, to £177.5m in the 6 months to April. Improvements were seen in all segments except for Airlines Germany.
More details of the movements in pro forma revenue* and loss from operations** are given in the pro forma segmental review below.
The Group pro forma basic and diluted loss per share (pre-exceptional items and amortisation of business combination intangibles) in the period was 12.9p compared with a loss per share of 15.9p in the prior period.
Pro forma unaudited segmental performance review
The pro forma segmental revenue* and loss/profit from operations** figures are presented below.
| | 6 months ended 30 April 2008 £m | 6 months ended 30 April 2007 £m | Change % |
| Revenue* | | | |
| UK | 882.3 | 946.8 | -6.8 |
| Northern Europe | 463.4 | 378.9 | +22.3 |
| Continental Europe | 1,084.2 | 975.5 | +11.1 |
| North America | 263.9 | 254.4 | +3.7 |
| Airlines Germany | 271.1 | 202.5 | +33.9 |
| Corporate | - | 0.3 | n/a |
| | | | |
| Group | 2,964.9 | 2,758.4 | +7.5 |
| | | | |
| Loss/profit from operations** | | | |
| UK | (150.7) | (176.7) | +14.7 |
| Northern Europe | 24.9 | 22.7 | +9.7 |
| Continental Europe | (26.0) | (34.1) | +23.8 |
| North America | 11.7 | 9.8 | +19.4 |
| Airlines Germany | (29.6) | (21.4) | -38.3 |
| Corporate | (7.8) | (9.7) | +19.6 |
| | | | |
| Group | (177.5) | (209.4) | +15.2 |
| | | | |
Revenue in Airlines Germany above is stated net of inter company sales to the Continental Europe division of £113.2m (2007: £138.5m).
See Appendix 2 for key.
UK
| 6 months ended 30 April 2008 | 6 months ended 30 April 2007 | Change % | ||
| Revenue (£m) * | 882.3 | 946.8 | -6.8 | |
| Loss from operations (£m) ** | (150.7) | (176.7) | +14.7 | |
| Passengers † | ||||
| Risk | -5.7 | |||
| Non-Risk | -16.2 | |||
| Capacity †† | -6.6 | |||
| Average selling price # | +1.5 | |||
| Load factor % ††† | +1.0 | |||
| Brochure mix % ## | +1.0 | |||
| Controlled distribution % ‡ | 64.9% | 61.8% | +5.0 | |
| Internet distribution % ‡ | 20.0% | 17.9% | +11.7 | |
See Appendix 2 for key.
The pro forma revenue* for the period decreased by 7% on the prior year. This decrease largely reflects fewer passengers as a result of the planned capacity cuts, partly offset by an increase in average selling prices achieved. Despite significant increases in the cost of fuel, gross margins were improved year on year. In addition, overhead costs were also reduced year on year as a result of the successful release of merger synergy benefits. Consequently, the pro forma loss from operations** for the 6 months to April 2008 decreased by £26.0m, or 15% year on year to £150.7m.
Northern Europe
| 6 months ended 30 April 2008 | 6 months ended 30 April 2007 | Change % | ||
| Revenue (£m) * | 463.4 | 378.9 | +22.3 | |
| Profit from operations (£m) ** | 24.9 | 22.7 | +9.7 | |
| Passengers † | ||||
| Risk | +6.8 | |||
| Non-Risk | +13.4 | |||
| Capacity †† | +6.9 | |||
| Average selling price # | +7.6 | |||
| Load factor % ††† | -0.1 | |||
| Brochure mix % ## | +2.8 | |||
| Controlled distribution % ‡ | 75.8% | 72.8% | +4.1 | |
| Internet distribution % ‡ | 36.1% | 29.0% | +24.5 | |
See Appendix 2 for key.
The pro forma revenue* in Northern Europe for the 6 months to April 2008 increased year on year by 22%, to £463.4m, reflecting an increase in both passenger numbers and average selling prices. This improvement was achieved as a result of our successful capacity management, which continues to take advantage of the growth in long haul products in the winter, and the strength of our "Sunwing" branded hotel concept. As a result of the strong trading performance, the pro forma profit from operations** increased by 10% year on year, to £24.9m, despite the rising fuel prices.
Continental Europe
| 6 months ended 30 April 2008 | 6 months ended 30 April 2007 | Change % | ||
| Revenue (£m) * | 1,084.2 | 975.5 | +11.1 | |
| Loss from operations (£m) ** | (26.0) | (34.1) | +23.8 | |
| Passengers † | ||||
| Flight-inclusive | -2.2 | |||
| Non-flight inclusive | -1.0 | |||
| Average selling price # | +2.5 | |||
| Controlled distribution % ‡ | 34.7% | 33.6% | +3.3 | |
| Internet distribution % ‡ | 5.6% | 4.9% | +14.3 | |
See Appendix 2 for key.
The pro forma revenue* in the 6 months to April 2008 in Continental Europe increased by 11% year on year to £1,084.2m, but excluding the impact of translation, the underlying revenue was broadly flat year on year. The pro forma loss from operations** was, however, reduced by £8.1m, or 24%, to £26.0m.
In Germany, passenger volumes were lower year on year with average selling prices slightly improved. However, underlying gross margin was improved, largely as a result of improved capacity management. There were also savings in overhead costs which further improved the performance.
In the Western markets, in particular Belgium and Holland, we were successful in increasing both average selling prices and margins. In the Eastern markets, increases in passenger volumes were offset by a reduction in average selling prices, lower flight capacity utilisation and higher overhead costs.
North America
| 6 months ended 30 April 2008 | 6 months ended 30 April 2007 | Change % | ||
| Revenue (£m) * | 263.9 | 254.4 | +3.7 | |
| Profit from operations (£m) ** | 11.7 | 9.8 | +19.4 | |
| Passengers † | ||||
| Risk | -1.5 | |||
| Non-Risk | -7.8 | |||
| Capacity †† | -1.1 | |||
| Average selling price # | -4.5 | |||
| Load factor % ††† | -0.4 | |||
| Brochure mix % ## | +7.9 | |||
| Controlled distribution % ‡ | 19.3% | 14.2% | +35.9 | |
| Internet distribution % ‡ | 6.9% | 5.1% | +35.3 | |
See Appendix 2 for key.
The pro forma revenue* in the 6 months to April 2008 increased by 4%. Excluding the impact of translation, underlying revenue actually reduced by 9% as a result of lower passenger numbers and reduced selling prices. Difficult trading conditions, as a result of over-capacity in the market place, have continued to prevail in the Canadian risk business and, whilst the acquisition of TriWest will help to mitigate the overall volatility in our Canadian segment, we continue to look for longer-term opportunities to improve the risk business. In the meantime, management reduced the capacity on sale for winter 2007/08. This capacity management, together with careful cost control, has resulted in an improvement in pro forma profit from operations** year on year of £1.9m, or 19%, to £11.7m.
Airlines Germany
| | 6 months ended 30 April 2008 | 6 months ended 30 April 2007 | Change % | |
| | | | | |
| Revenue - external (£m) | 271.1 | 202.5 | +33.9 | |
| Revenue - internal (£m) | 113.2 | 138.5 | -18.3 | |
| Total revenue (£m) | 384.3 | 341.0 | +12.7 | |
| | | | | |
| Loss from operations (£m) ** | (29.6) | (21.4) | -38.3 | |
| | | | | |
| Sold seats ‡‡ | | | | |
| | TC tour operators | | | -27.8 |
| | 3rd party tour operators | | | +21.8 |
| | External seat only | | | +1.5 |
| Total sold seats | | | -7.5 | |
| | | | | |
| Sold seats ‡‡ | | | | |
| | Europe (excl. Cities) | | | -11.8 |
| | Long haul | | | +7.4 |
| | Cities | | | -11.7 |
| Total sold seats | | | -7.5 | |
| | | | | |
| Capacity †† | | | -4.1 | |
| Yield ### | | | +9.1 | |
| Seat load factor % ††† | | | +4.3 | |
| | | | | |
See Appendix 2 for key.
Total pro forma revenue* in the 6 months to April 2008 increased by 13% year on year. Underlying revenue, excluding the impact of translation, was broadly flat as a reduction in European flying was offset by increased volumes and yields in long haul.
Underlying gross margin also fell year on year as a result of the significant increase in the price of fuel which the airline was not able to fully pass onto customers. Tight control of overheads and other operating costs were only able to partly mitigate the increased fuel costs and as a result, the pro forma loss from operations** increased by £8.2m, or 38%, to £29.6m.
Corporate
| 6 months ended 30 April 2008 | 6 months ended 30 April 2007 | Change % | |
| Revenue (£m) * | - | 0.3 | n/a |
| Loss from operations (£m) ** | (7.8) | (9.7) | +19.6 |
See Appendix 2 for key.
The pro forma loss from operations** in the 6 months to April 2008 was reduced by £1.9m, or 20%, to £7.8m. This reduction largely reflects cost savings as a result of the realisation of synergy benefits within the corporate functions.
RECONCILIATION OF PRO FORMA AND STATUTORY PROFIT FROM OPERATIONS **
The table below sets out the key reconciling differences in loss from operations** on a pro forma basis compared with a statutory basis for the 6 months to April 2008 and the comparative prior year period.
| 6 months ended 30 April 2008 | 6 months ended 30 April 2007 | |
| £m | £m | |
| Pro forma Group loss from operations ** | (177.5) | (209.4) |
| Adjustments: | ||
| Pre-merger operating loss/(profit) of MyTravel | - | 69.6 |
| Pre-merger impact of fair value adjustments | - | (8.8) |
| IAS 39 business combination adjustment | 13.8 | - |
| Statutory Group loss from operations ** | (163.7) | (148.6) |
See Appendix 2 for key.
The statutory Group loss from operations** reflects 100% of the results of Thomas Cook AG, MyTravel Group plc and Thomas Cook Group plc for the whole of the current year period and 100% of Thomas Cook AG only for the comparative period. Consequently, the first adjustment in the table above removes the prior year results of MyTravel Group plc. As MyTravel Group plc made losses in the winter period 2007, this adjustment improves statutory profitability in 2007.
In preparing the pro forma loss from operations**, account was taken of the impact of acquisition accounting. As part of the fair value adjustments, a provision was made in respect of above market rate hotel lease rentals. In addition, the value of aircraft held on the balance sheet was reduced. In the pro forma figures, we have assumed that both of these adjustments were made prior to 1 November 2006 and, as a result, the impact of a full year of lower rental costs and reduced depreciation has been reflected in the pro forma loss from operations** in both years. The second adjustment above removes the impact of this adjustment from the pre-acquisition period.
The IAS 39 business combination adjustment represents unrecognised losses on hedging instruments taken to reserves within the MyTravel business prior to the date of the business combination. On consolidation these amounts are included within goodwill and are therefore not recognised in the pro forma figures but increase statutory profit from operations.
UNAUDITED STATUTORY FINANCIAL RESULTS - 6 MONTHS TO APRIL 2008
As noted above, the statutory results for Thomas Cook Group plc for the 6 months to April 2008 contain a full set of results for the former Thomas Cook AG, MyTravel Group plc and Thomas Cook Group plc, whereas the comparative period only contains the results of the former Thomas Cook AG.
Income statement highlights
Revenue* and loss from operations**
Revenue in the period amounted to £2,964.9m (2007: £1,719.8m). The loss from operations** was £163.7m (2007: £148.6m). The increase in losses reflects a significant underlying trading improvement which has been more than offset by the exclusion of £69.6m of seasonal winter losses of the former MyTravel businesses in the prior year.
Exceptional operating items
Total net exceptional operating costs in the period were £30.5m (2007: £0.5m). Exceptional items are defined as costs or profits that have arisen in the period which management do not believe are a result of normal operating performance and which, if not separately disclosed, would distort the year on year comparison of trading performance.
The majority of the £30.5m of exceptional items relate to the costs associated with the ongoing integration of the former MyTravel and Thomas Cook businesses.
Amortisation of business combination intangibles
Amortisation of business combination intangibles in the period amounted to £30.4m and relates to the amortisation of brand names, customer relationships and computer software, and the order backlog that existed at the time of the combination.
Associates and joint ventures
The Group's interests in associates and joint ventures largely comprise a joint venture credit card arrangement with Barclaycard and an investment in an inbound agency in Spain. Our share of results of associates and joint ventures in the period was a loss of £2.9m (2007: £1.5m).
Net investment income, which reflects dividends and interest received from other investments, was £0.3m (2007: £0.6m).
Net finance costs
Net finance costs (excluding exceptional finance costs) in the period were £19.2m (2007: £1.8m). The increase year on year is attributable to a lower cash balance and lower interest rates. The reduced cash balance is due in part to expenditure on acquisitions and on integration costs.
Exceptional finance charges in the period of £13.9m relate to revaluation losses on trading securities.
The Group loss before tax for the 6 months ended 30 April 2008 was £260.3m (2007: £115.9m).
Tax
The tax credit in the period was £69.0m (2007: £85.8m). The current year credit reflects an expected effective tax rate of approximately 27% on the profit for the 11 month period.
The cash tax rate will continue to be considerably lower than 27% 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 31 October 2007 were €1.8 billion.
The Group loss after tax for the 6 months ended 30 April 2008 was £191.3m (2007: £30.1m).
Earnings per share and dividends
The basic and diluted loss per share for the period was 19.6p (2007: 6.0p).
As noted in the pro forma financial results and performance review section of this report, the Board is proposing an interim dividend of 3.25p per share.
Balance sheet
Net assets at 30 April 2008 were £2,108.4m (31 October 2007: £2,120.7m). Since the year end, intangible assets have increased due to acquisitions and movements in exchange rates. However, this has been offset by reduced cash balances and movements in working capital balances largely as a result of the seasonal trading.
Cash flow and net funds
The net cash outflow from operating activities during the period was £58.9m (2007: inflow of £112.3m). The outflow in the period includes the seasonal operating losses and working capital outflows. The prior year inflow excludes all the seasonal cash flows of the former MyTravel business and is therefore not directly comparable.
The net cash outflow on investing activities amounted to £181.0m (2007: £138.1m) and includes expenditure on business acquisitions (net of cash acquired) in the period of £159.7m and expenditure on assets of £62.8m. These outflows were partly offset by a net inflow on the disposal of securities and other assets of £38.1m and £3.4m respectively.
The net cash outflow from financing activities was £41.1m. Included within this outflow is £61.4m of expenditure in relation to the share buyback programme and £48.9m in relation to the final dividend for 2007, offset by a net £135.4m drawdown of borrowings. Other outflows include interest and repayment of finance leases.
Net debt at 30 April 2008 was £265.2m (31 October 2007: net funds of £248.7m).
Supplementary pro forma information
Included in the financial information in Appendix 1 to this report is supplementary pro forma income statement, net assets and cash flow information for the 6 months to March 2008, the 6 months to March 2007 and the 12 months to September 2007. This shows what the pro forma results would have been in Sterling had Thomas Cook Group plc always had a September year end.
Thomas Cook Group plc Interim Financial Information
Thomas Cook Group plc Consolidated Income Statement
| Unaudited | Unaudited | ||
| 6 months to | 6 months to | ||
| 30/04/08 | 30/04/07 | ||
| Notes | £m | £m | |
| Revenue | 4 | 2,964.9 | 1,719.8 |
| Cost of providing tourism services | (2,330.2) | (1,354.4) | |
| Gross profit | 634.7 | 365.4 | |
| Other operating income | 17.4 | 19.7 | |
| Personnel expenses | (438.0) | (265.7) | |
| Depreciation and amortisation | (64.2) | (46.8) | |
| Amortisation of business combination intangibles | (30.4) | - | |
| Other operating expenses | (344.3) | (231.5) | |
| Profit on disposal of businesses and property, plant & equipment | 0.2 | 9.8 | |
| Loss from operations | 4 | (224.6) | (149.1) |
| Analysed between: | |||
| Loss from operations before exceptional items | 4 | (163.7) | (148.6) |
| Amortisation of business combinations intangibles | (30.4) | - | |
| Exceptional items | 5 | (30.5) | (0.5) |
| (224.6) | (149.1) | ||
| Share of results of associates and joint ventures | (2.9) | (1.5) | |
| Profit on disposal of associates | 5 | - | 35.9 |
| Net investment income | 0.3 | 0.6 | |
| Finance income | 39.9 | 31.2 | |
| Finance expense | (59.1) | (33.0) | |
| Exceptional finance costs | 5 | (13.9) | - |
| Loss before tax | (260.3) | (115.9) | |
| Tax | 11 | 69.0 | 85.8 |
| Loss for the period | (191.3) | (30.1) | |
| Attributable to: | |||
| Equity holders of the parent | (191.0) | (30.6) | |
| Minority interests | (0.3) | 0.5 | |
| Loss per share in p | |||
| Basic | (19.6) | (6.0) | |
| Diluted | (19.6) | (6.0) | |
All revenue and results arose from continuing operations.
The notes on pages 28 to 42 form an integral part of the condensed consolidated half-yearly financial information.
Thomas Cook Group plc Consolidated Statement of Recognised Income and Expense
| Unaudited | Unaudited | ||
| 6 months to | 6 months to | ||
| 30/04/08 | 30/04/07 | ||
| Notes | £m | £m | |
| Gains/ (losses) on cash flow hedges | 185.6 | (35.4) | |
| Losses on available-for-sale investments | - | (0.4) | |
| Exchange differences on translation of foreign operations | 134.7 | 7.5 | |
| Actuarial gains on defined benefit | 9 | 7.5 | 85.8 |
| pension schemes | |||
| Tax on items taken directly to equity | (39.6) | (14.1) | |
| Net income recognised directly in equity | 288.2 | 43.4 | |
| Transfers | |||
| Transferred to profit or loss on cash flow hedges | (9.4) | 22.4 | |
| Tax on items transferred from equity | 2.8 | (8.1) | |
| (6.6) | 14.3 | ||
| Loss for the period | (191.3) | (30.1) | |
| Total recognised income & expense for the period | 90.3 | 27.6 | |
| Attributable to: | |||
| Equity holders of the parent | 89.6 | 26.8 | |
| Minority interests | 0.7 | 0.8 | |
| 90.3 | 27.6 | ||
The notes on pages 28 to 42 form an integral part of the condensed consolidated half-yearly financial information.
Thomas Cook Group plc Consolidated Balance Sheet
| Unaudited | Audited | |||
| as at | as at | |||
| 30/04/08 | 31/10/07 | |||
| Restated | ||||
| Notes | £m | £m | ||
| Non-current assets | ||||
| Intangible assets | 6 | 3,285.6 | 2,884.9 | |
| Property, plant & equipment | ||||
| Aircraft and aircraft spares | 6 | 586.3 | 567.1 | |
| Other | 6 | 323.0 | 268.2 | |
| Investment in associates and joint ventures | 40.2 | 35.7 | ||
| Other investments | 28.7 | 26.6 | ||
| Deferred tax assets | 412.8 | 291.7 | ||
| Tax assets | 4.1 | 3.7 | ||
| Trade and other receivables | 119.1 | 98.8 | ||
| Pension asset | 9 | 0.3 | 0.3 | |
| Derivative financial instruments | 56.1 | 20.8 | ||
| 4,856.2 | 4,197.8 | |||
| Current assets | ||||
| Inventories | 20.5 | 19.1 | ||
| Tax assets | 34.5 | 20.4 | ||
| Trade and other receivables | 1,246.0 | 864.4 | ||
| Derivative financial instruments | 367.7 | 79.3 | ||
| Cash and cash equivalents | 400.5 | 622.3 | ||
| 2,069.2 | 1,605.5 | |||
| Non-current assets held for sale | 13 | - | 12.7 | |
| Total assets | 6,925.4 | 5,816.0 | ||
| Current liabilities | ||||
| Retirement benefit obligations | 9 | (6.8) | (3.3) | |
| Trade and other payables | (1,295.3) | (1,426.2) | ||
| Borrowings | 8 | (313.4) | (52.1) | |
| Obligations under finance leases | (95.2) | (81.0) | ||
| Tax liabilities | (75.6) | (76.2) | ||
| Revenue received in advance | (1,420.9) | (664.7) | ||
| Short-term provisions | 10 | (208.1) | (193.1) | |
| Derivative financial instruments | (222.4) | (117.2) | ||
| (3,637.7) | (2,613.8) | |||
| Liabilities related to assets held for sale | 13 | - | (6.8) | |
| Non-current liabilities | ||||
| Retirement benefit obligations | 9 | (176.3) | (172.2) | |
| Trade and other payables | (110.7) | (124.0) | ||
| Long-term borrowings | 8 | (120.4) | (130.4) | |
| Obligations under finance leases | (371.4) | (359.2) | ||
| Tax liabilities | (2.4) | (2.1) | ||
| Revenue received in advance | (0.6) | (0.5) | ||
| Deferred tax liabilities | (160.1) | (83.8) | ||
| Long-term provisions | 10 | (219.5) | (179.8) | |
| Derivative financial instruments | (17.9) | (22.7) | ||
| (1,179.3) | (1,074.7) | |||
| Total liabilities | (4,817.0) | (3,695.3) | ||
| Net assets | 2,108.4 | 2,120.7 | ||
| Unaudited | Audited | ||
| as at | as at | ||
| 30/04/08 | 31/10/07 | ||
| Restated | |||
| Notes | £m | £m | |
| Equity | |||
| Called-up share capital | 7 | 64.5 | 66.1 |
| Share premium account | 7 | 8.9 | 6.8 |
| Merger reserve | 7 | 1,984.2 | 1,984.2 |
| Translation and hedging reserves | 7 | 291.4 | 15.9 |
| Capital redemption reserve | 7 | 1.7 | - |
| Retained (deficit)/earnings | 7 | (252.6) | 44.3 |
| Investment in own shares | 7 | (4.7) | (4.9) |
| Equity attributable to equity holders of the parent | 2,093.4 | 2,112.4 | |
| Minority interests | 7 | 15.0 | 8.3 |
| Total equity | 2,108.4 | 2,120.7 | |
The assets and liabilities for the year ending 31 October 2007 have been restated (see note 2).
The notes on pages 28 to 42 form an integral part of the condensed consolidated half-yearly financial information.
Thomas Cook Group plc Consolidated Cash Flow Statement
| Unaudited | Unaudited | ||
| 6 months to | 6 months to | ||
| 30/04/08 | 30/04/07 | ||
| £m | £m | ||
| Cash flows from operating activities | |||
| Cash generated by operations | (10.2) | 114.5 | |
| Income taxes paid | (48.7) | (2.2) | |
| Net cash from operating activities | (58.9) | 112.3 | |
| Investing activities | |||
| Proceeds on disposal of subsidiary undertaking (net of cash sold) | - | 13.5 | |
| Proceeds on disposal of associated undertakings | - | 1.2 | |
| Proceeds on disposal of property, plant and equipment | 3.4 | 24.9 | |
| Purchase of subsidiaries (net of cash acquired) | 14 | (159.7) | - |
| Purchase of tangible and financial assets | (30.6) | (12.2) | |
| Purchase of intangible assets | (32.2) | (12.5) | |
| Movements in short-term securities | 38.1 | (153.0) | |
| Net cash (used in)/from investing activities | (181.0) | (138.1) | |
| Financing activities | |||
| Interest paid | (32.8) | (14.4) | |
| Dividends paid | 12 | (48.9) | - |
| Drawdown of borrowings | 158.0 | - | |
| Repayment of borrowings | (22.6) | (8.4) | |
| Repayment of finance lease obligations | (35.5) | (12.7) | |
| Purchase of own shares | (61.4) | - | |
| Proceeds from issue of ordinary shares | 2.1 | 0.4 | |
| Net cash used in financing activities | (41.1) | (35.1) | |
| Net decrease in cash & cash equivalents | (281.0) | (60.9) | |
| Cash and cash equivalents at beginning of period | 596.0 | 491.0 | |
| Effect of foreign exchange rate changes | 19.3 | (8.1) | |
| Cash & cash equivalents at end of period | 334.3 | 422.0 | |
| Liquid assets | 400.5 | 431.5 | |
| Bank overdrafts | (66.2) | (9.5) | |
| Cash & cash equivalents at end of period | 334.3 | 422.0 |
The notes on pages 28 to 42 form an integral part of the condensed consolidated half-yearly financial information.
Notes to the Thomas Cook Group plc 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 1985 and listed on the London Stock Exchange. The address of the registered office is The Thomas Cook Business Park, Coningsby Road, Peterborough, Cambridgeshire, PE3 8SB. The principal activities of the Group are discussed in the interim management report on pages 1 to 22.
This condensed consolidated half-yearly financial information was approved for issue on 24 June 2008.
These interim financial results do not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 October 2007 were approved by the Board of Directors on 30 January 2008 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 237 of the Companies Act 1985.
Following the merger between Thomas Cook AG and MyTravel Group plc on 19 June 2007, 52% of the fully diluted share capital of the Company is controlled by Arcandor AG. As part of this transaction, all parties entered into a relationship agreement that enshrined the principle agreed between the parties that the Thomas Cook Group will operate independently from Arcandor AG and in accordance with the highest standards of corporate governance best practice. It also sets out the agreement of the parties regarding the composition of the Board of the Company.
The Directors consider that Arcandor AG is the Company's ultimate controlling party. The largest and smallest group undertakings for which consolidated financial statements are prepared and which include the financial statements of the Thomas Cook Group is that headed by Arcandor AG. Arcandor AG is incorporated in Germany and copies of its financial statements, which are publicly available, may be obtained from Arcandor AG, Theodor-Althoff-Str. 2, 45133 Essen, Germany.
2. Basis of preparation
This condensed consolidated half-yearly financial information for the half-year ended 30 April 2008 has been prepared in accordance with 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 report should be read in conjunction with the annual financial statements for the year ended 31 October 2007, which have been prepared in accordance with IFRSs as adopted by the European Union.
During the period the Group reporting currency was changed from Euro to Sterling. Accordingly the prior period comparatives are re-presented in Sterling. The prior period comparatives for assets and liabilities were translated at the Sterling to Euro period end exchange rate (1.4346). The prior period comparatives for equity and income statement items were translated at the Sterling to Euro exchange rate on the date of the transaction or the average period exchange rate (2007: 1.4755) as an approximation.
The fair values of the MyTravel Group net assets acquired on 19 June 2007 have been revised for an additional amount of provision for off-market contracts. In accordance with IFRS 3, 'Business Combinations' the year ended 31 October 2007 has been restated. Refer to note 14 for further details.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 October 2007, as described in those annual financial statements.
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial period ending 30 September 2008:
| IFRS 7 | Financial instruments: Disclosures, effective for annual periods beginning on or after 1 January 2007. IAS 1, 'Amendments to capital disclosures', effective for annual periods beginning on or after 1 January 2007. IFRS 4, 'Insurance contracts', revised implementation guidance, effective when an entity adopts IFRS 7. As this interim report contains only condensed financial statements the full IFRS 7 disclosures are not required at this stage. The full IFRS 7 disclosures, including the sensitivity analysis to market risk and capital disclosures required by the amendment of IAS 1, will be given in the annual financial statements. |
| IFRIC 11 | Group and treasury share transactions, issued in November 2006, effective for annual periods beginning on or after 1 March 2007. This interpretation is not relevant for the Group. |
| IAS 1 Amendment | Capital disclosures, is effective for periods commencing on or after 1 January 2007. |
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial period ending 30 September 2008 and have not been early adopted:
| IFRS 8 | Operating segments, issued in November 2006, effective for periods beginning on or after 1 January 2009, subject to EU endorsement. |
| IFRS 3 Amendment | IFRS 3 (amendment), 'Business combinations' and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates' and IAS 31, 'Interests in joint ventures', effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. Management is assessing the impact of the new requirements regarding acquisition accounting, consolidation, associates and joint ventures on the Group. |
| IFRS 2 Amendment | Share-based payment, effective for annual periods beginning on or after 1 January 2009. Management is assessing the impact of the changes to vesting conditions and cancellations of the Group's SAYE schemes. |
| IFRIC 12 | Service concession arrangements, effective for annual periods beginning on or after 1 January 2008. Management do not expect this interpretation to be relevant for the Group. |
| IFRIC 13 | Customer loyalty programmes, issued in June 2007, effective for annual periods beginning on or after 1 July 2008. |
| IFRIC 14 | IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction, issued in July 2007, effective for annual periods beginning on or after 1 January 2008. |
| IAS 23 | Borrowing costs, revised version issued in March 2007, effective for annual periods beginning on or after 1 January 2009. |
| IAS 1 | Presentation of financial statements, revised version issued in September 2007, effective for annual periods beginning on or after 1 January 2009. |
The Directors anticipate that the Group will adopt these standards and interpretations on their effective dates.
4. Segmental information
For management purposes, the Group is currently organised into five geographic operating divisions - UK and Ireland, Continental 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 in Corporate.
The primary business of all 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:
| Six months to 30 April 2008 | |||||||
| UK and | Continental | Northern | North | Airlines | |||
| Ireland | Europe | Europe | America | Germany | Corporate | Total | |
| £m | £m | £m | £m | £m | £m | £m | |
| Revenue | |||||||
| Segment sales | 883.2 | 1,084.8 | 465.0 | 263.9 | 384.3 | - | 3,081.2 |
| Inter-segment sales | (0.9) | (0.6) | (1.6) | - | (113.2) | - | (116.3) |
| Total revenue | 882.3 | 1,084.2 | 463.4 | 263.9 | 271.1 | - | 2,964.9 |
| Result | |||||||
| Profit/(loss) from operations | |||||||
| before exceptional items and | |||||||
| amortisation of business | |||||||
| combination intangibles | (141.8) | (26.0) | 25.7 | 15.8 | (29.6) | (7.8) | (163.7) |
| Exceptional items | (22.3) | (0.5) | - | - | 0.1 | (7.8) | (30.5) |
| Amortisation of business combination intangibles | (7.1) | - | (19.8) | (3.5) | - | - | (30.4) |
| Segment result | (171.2) | (26.5) | 5.9 | 12.3 | (29.5) | (15.6) | (224.6) |
| Share of results of associates | |||||||
| and joint ventures | (2.9) | ||||||
| Net investment income | 0.3 | ||||||
| Finance income | 39.9 | ||||||
| Finance costs | (59.1) | ||||||
| Exceptional finance costs | (13.9) | ||||||
| Loss before tax | (260.3) | ||||||
| Tax | 69.0 | ||||||
| Loss for the six months | (191.3) | ||||||
4. Segmental information (continued)
| Six months to 30 April 2007 | |||||||
| UK and | Continental | Northern | North | Airlines | |||
| Ireland | Europe | Europe | America | Germany | Corporate | Total | |
| £m | £m | £m | £m | £m | £m | £m | |
| Revenue | |||||||
| Segment sales | 542.5 | 976.8 | - | - | 341.0 | 0.3 | 1,860.6 |
| Inter-segment sales | (1.0) | (1.3) | - | - | (138.5) | - | (140.8) |
| Total revenue | 541.5 | 975.5 | - | - | 202.5 | 0.3 | 1,719.8 |
| Result | |||||||
| Loss from operations before | |||||||
| exceptional items and | |||||||
| amortisation of business | |||||||
| combination intangibles | (85.7) | (34.1) | - | - | (21.4) | (7.4) | (148.6) |
| Exceptional items | (3.8) | 9.6 | - | - | 0.3 | (6.6) | (0.5) |
| Segment result | (89.5) | (24.5) | - | - | (21.1) | (14.0) | (149.1) |
| Share of results of associates | |||||||
| and joint ventures | (1.5) | ||||||
| Profit on disposal of | |||||||
| associates | 35.9 | ||||||
| Net investment income | 0.6 | ||||||
| Finance income | 31.2 | ||||||
| Finance costs | (33.0) | ||||||
| Loss before tax | (115.9) | ||||||
| Tax | 85.8 | ||||||
| Loss for the six months | (30.1) | ||||||
Inter-segment sales are charged at prevailing market prices.
5. Exceptional items
| Unaudited | Unaudited | |
| 6 months to | 6 months to | |
| 30/04/08 | 30/04/07 | |
| £m | £m | |
| Property costs, redundancy and other costs incurred in | ||
| integrating the Thomas Cook and MyTravel businesses | (27.0) | - |
| Disposal of items of property, plant and equipment | 0.2 | 0.1 |
| Disposal of non-current assets held for sale | - | 9.7 |
| Property costs, redundancy and other costs included in other | ||
| reorganisations | - | (5.1) |
| Cost of irrecoverable air passenger duty | - | (1.5) |
| Abortive transaction fees | (1.2) | (3.7) |
| Change in bonding regulations | (2.5) | - |
| Exceptional items included within operating profit | (30.5) | (0.5) |
| Exceptional items have been included in the income | ||
| statement as follows: | ||
| Cost of providing tourism services | (2.6) | (1.5) |
| Personnel expenses | (8.2) | (4.3) |
| Other operating expenses | (19.9) | (4.5) |
| Profit on disposal of property, plant and equipment | 0.2 | 0.1 |
| Profit on disposal of non-current assets held for sale | - | 9.7 |
| (30.5) | (0.5) | |
| Share of associates' exceptional items | ||
| Profit on disposal of associates | - | 35.9 |
| - | 35.9 | |
| Exceptional finance costs | ||
| Loss on revaluation of trading securities | (13.9) | - |
| (13.9) | - | |
| Total exceptional items | (44.4) | 35.4 |
The profit on disposal of associates in the six month ended 30 April 2007 principally relates to the disposal of the Group's 50% interest in SunExpress, an airline based in Turkey, to Arcandor on an arm's length basis.
6. Capital expenditure
| Unaudited | ||
| Tangible and | ||
| intangible | ||
| assets | ||
| Six months to 30 April 2008 | £m | |
| Opening net book amount 1 November 2007 (Restated) | 3,720.2 | |
| Additions | 61.2 | |
| Acquisition of subsidiaries | 224.0 | |
| Disposals | (3.2) | |
| Assets reclassified from held for sale | 11.2 | |
| Depreciation, amortisation, impairment and other movements | (94.6) | |
| Exchange differences | 276.1 | |
| Closing net book amount 30 April 2008 | 4,194.9 | |
| Six months to 30 April 2007 | ||
| Opening net book amount 1 November 2006 | 1,398.4 | |
| Additions | 55.4 | |
| Disposals | (0.5) | |
| Assets classified as held for sale | (7.4) | |
| Depreciation, amortisation, impairment and other movements | (46.8) | |
| Exchange differences | 23.8 | |
| Closing net book amount 30 April 2007 | 1,422.9 | |
| Unaudited | Audited | |
| as at | as at | |
| 30/04/08 | 31/10/07 | |
| Capital commitments | £m | £m |
| Capital expenditure contracted but not provided for in the accounts | 6.0 | 8.8 |
7. Consolidated statement of changes in equity
The movements in equity attributable to equity holders of the parent during the period were as follows:
| Number | Ordinary | Share | Own | Retained | Other | Attributable | Minority | Total | |
| of shares | shares | premium | shares | earnings | Reserves | to equity holder of the parent | interest | ||
| (thousands) | £m | £m | £m | £m | £m | £m | £m | £m | |
| Capital | |||||||||
| Opening | |||||||||
| balance 1 | |||||||||
| November 2007 | 976,841 | 66.1 | 6.8 | (4.9) | 44.3 | 2,000.1 | 2,112.4 | 8.3 | 2,120.7 |
| Total | |||||||||
| recognised | |||||||||
| income and | |||||||||
| expense for the | |||||||||
| period | - | - | - | - | (185.9) | 275.5 | 89.6 | 0.7 | 90.3 |
| Equity credit in | |||||||||
| respect of share- | |||||||||
| based payments | - | - | - | - | 0.4 | - | 0.4 | - | 0.4 |
| Issue of equity | |||||||||
| shares net of | |||||||||
| expenses | 1,511 | 0.1 | 2.1 | - | - | - | 2.2 | - | 2.2 |
| Acquisition of | |||||||||
| India | - | - | - | - | - | - | - | 6.1 | 6.1 |
| Acquisition of | |||||||||
| minority interest | - | - | - | - | - | - | - | (0.1) | (0.1) |
| Purchase of | |||||||||
| own shares - | |||||||||
| share buy back | |||||||||
| scheme | (21,311) | (1.7) | - | - | (62.5) | 1.7 | (62.5) | - | (62.5) |
| Purchase of | |||||||||
| own shares - | |||||||||
| performance | |||||||||
| share plan | - | - | - | 0.2 | - | - | 0.2 | - | 0.2 |
| Dividends paid | - | - | - | - | (48.9) | - | (48.9) | - | (48.9) |
| At 30 April | |||||||||
| 2008 | 957,041 | 64.5 | 8.9 | (4.7) | (252.6) | 2,277.3 | 2,093.4 | 15.0 | 2,108.4 |
The Group acquired 21,311,466 of its own shares through purchases on the London Stock Exchange since 18 March 2008. The amount paid to acquire the shares, including related expenses was £62.5m and has been deducted from shareholders' equity. The shares have been cancelled or are in the process of being cancelled.
MyTravel Group plc share options exercised during the first half to 30 April 2008 resulted in 1,510,911 shares being issued in exchange for additional shares issued by MyTravel Group plc, with exercise proceeds of £2.2m. The related weighted average price at the time of exercise was £2.74 per share.
8. Borrowings and loans
| Unaudited | Audited | |
| as at | as at | |
| 30/04/08 | 31/10/07 | |
| £m | £m | |
| Current | 313.4 | 52.1 |
| Non-current | 120.4 | 130.4 |
| 433.8 | 182.5 | |
| Movements in borrowings is analysed as follows: | ||
| Six months ended 30 April 2008 | £m | |
| Opening amount as at 1 November 2007 | 182.5 | |
| Acquisition of subsidiary | 55.7 | |
| Borrowings classified as held for sale | 6.5 | |
| Draw down of borrowings | 186.3 | |
| Repayments of borrowings | (22.6) | |
| Exchange difference | 25.4 | |
| Closing amount as at 30 April 2008 | 433.8 | |
| Six months ended 30 April 2007 | £m | |
| Opening amount as at 1 November 2006 | 137.0 | |
| Borrowings classified as held for sale | (6.4) | |
| Draw down of borrowings | 7.7 | |
| Repayments of borrowings | (8.4) | |
| Exchange difference | 0.8 | |
| Closing amount as at 30 April 2007 | 130.7 | |
9. Defined benefit plans
| Unaudited | Audited | |
| as at | as at | |
| 30/04/08 | 31/10/07 | |
| £m | £m | |
| Non-current pension asset | (0.3) | (0.3) |
| Current retirement benefit obligation | 6.8 | 3.3 |
| Non-current retirement benefit obligation | 176.3 | 172.2 |
| 182.8 | 175.2 |
| Unaudited | Unaudited | |
| 6 months to | 6 months to | |
| 30/04/08 | 30/04/07 | |
| Amounts recognised in the income statement were as follows: | £m | £m |
| Current service cost | 10.9 | 14.0 |
| Past service cost | - | 0.1 |
| Expected return on scheme assets | (21.1) | (19.1) |
| Interest cost on scheme liabilities | 21.1 | 18.7 |
| Total included in income statement | 10.9 | 13.7 |
9. Defined benefit plans (continued)
| Unaudited | Unaudited | |
| 6 months to | 6 months to | |
| 30/04/08 | 30/04/07 | |
| Amounts recognised directly in equity were as follows: | £m | £m |
| Actuarial gains on defined benefit pension schemes | 7.5 | 85.8 |
| Unaudited | Audited | |
| as at | as at | |
| 30/04/08 | 31/10/07 | |
| The amounts recognised in the balance sheet were as follows: | £m | £m |
| Present value of funded defined benefit obligations | 619.9 | 648.1 |
| Fair value of scheme assets | (615.1) | (635.2) |
| Deficit on funded retirement benefit obligations | 4.8 | 12.9 |
| Present value of unfunded defined benefit obligations | 178.0 | 162.3 |
| Scheme deficits recognised in the balance sheet | 182.8 | 175.2 |
10. Provisions
| Unaudited | Audited | ||
| as at | as at | ||
| 30/04/08 | 31/10/07 | ||
| Restated | |||
| £m | £m | ||
| Current | 208.1 | 193.1 | |
| Non-current | 219.5 | 179.8 | |
| 427.6 | 372.9 | ||
| Aircraft | |||
| maintenance | Other | ||
| provisions | provisions | Total | |
| £m | £m | £m | |
| At 1 November 2007 (Restated) | 131.1 | 241.8 | 372.9 |
| Additional provisions in year | 16.8 | 34.5 | 51.3 |
| Unused amounts released in year | (6.9) | - | (6.9) |
| Unwinding of discount | - | 4.3 | 4.3 |
| Utilisation of provisions | (6.3) | (18.5) | (24.8) |
| Acquisitions | - | 7.2 | 7.2 |
| Exchange differences | 11.0 | 12.6 | 23.6 |
| At 30 April 2008 | 145.7 | 281.9 | 427.6 |
| At 1 November 2006 | 75.9 | 72.0 | 147.9 |
| Additional provisions in year | 17.8 | 6.7 | 24.5 |
| Unused amounts released in year | - | (3.9) | (3.9) |
| Utilisation of provisions | (27.2) | (11.6) | (38.8) |
| Exchange differences | 0.1 | 1.0 | 1.1 |
| At 30 April 2007 | 66.6 | 64.2 | 130.8 |
10. Provisions (continued)
The aircraft maintenance provisions relate to maintenance on leased aircraft and spares used by the Group's airlines in respect of leases which include contractual return conditions. This expenditure arises at different times over the life of the aircraft with major overhauls typically occurring between two and ten years.
Other provisions relate to provisions for onerous contracts and future obligations, including those arising as a result of reorganisation and restructuring plans that are irrevocably committed including severance payments and provisions for social security compensation plans.
Provisions included in non-current liabilities are principally in respect of onerous contracts and are expected to be utilised over the term of those contracts which extend up to ten years from the balance sheet date.
11. Income taxes
Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial period. The estimated average tax rate used for the 11 months to 30 September 2008 is approximately 27% (the estimated tax rate for the first-half to 30 April 2007 was 74%). The effective rate in the prior period is higher due to the non-taxable profit on disposal of Sun Express and other movements in deferred tax.
12. Dividends
A dividend of £48.9m that relates to the period to 31 October 2007 was paid in April 2008 (2007: £nil).
In addition, the directors propose an interim dividend of 3.25 pence per share (2007: nil pence per share) payable on 5 September 2008 to shareholders who are on the register as at 1 August 2008. This interim dividend has not been recognised as a liability in these interim financial statements.
13. Non-current assets classified as held for sale
| Unaudited | Audited | ||
| as at | as at | ||
| 30/04/08 | 31/10/07 | ||
| £m | £m | ||
| Assets | |||
| Property, plant and equipment | |||
| Buildings | - | 11.2 | |
| Other current assets | - | 1.5 | |
| - | 12.7 | ||
| Liabilities | |||
| Deferred tax liabilities | - | (0.3) | |
| Borrowings of companies held for sale | - | (6.5) | |
| - | (6.8) | ||
The non-current assets and liabilities held for sale in 2007 relate to land and buildings owned by Thomas Cook Netherland BV, this has now been withdrawn from sale and reclassified as continuing assets and liabilities.
14. Business combinations
My Travel Group plc
On 19 June 2007, the Group acquired 100% of the share capital of MyTravel Group plc. The details of the net assets acquired are set out in note 17 of annual financial statements for the year ended 31 October 2007. The fair value of net assets acquired has been adjusted for an £8.2m provision for off-market contracts. The year ended 31 October 2007 has been restated for the additional provision, in accordance with the requirements of IFRS 3 'Business Combinations'. The fair value adjustments are provisional as the fair value review has not been wholly completed. Any further adjustments to the fair value of net assets acquired will be incorporated in the Group's annual financial statement for the period ended 30 September 2008.
Hotels4U.com
On 14 February 2008, the Group acquired the business of Hotels4U.com Limited, an online retailer of hotel accommodation and resort transfers. Hotels4U.com Limited owns the subsidiaries Transfers4U.com Limited (100%) and Trust Accommodation.com Limited (100%). The purchase price was £39.0m of which £21.8m has been paid in cash and the balance of £17.2m is subject to earn out based on profitability up to 2013.
Details of the net assets acquired are set out in the table below:
| £m | |||
| Net assets acquired | |||
| Property, plant and equipment | 0.2 | ||
| Trade and other receivables | 4.2 | ||
| Cash and cash equivalents | 0.7 | ||
| Trade and other payables | (5.0) | ||
| Short-term borrowings | (1.4) | ||
| Deferred tax asset | 0.5 | ||
| (0.8) | |||
| Goodwill | 40.4 | ||
| Total consideration | 39.6 | ||
| Satisfied by: | |||
| Cash (including attributable costs) | 22.4 | ||
| Contingent consideration | 17.2 | ||
| 39.6 | |||
The purchase price of each net asset component listed above represents its book value. We are in the process of determining the fair values to be assigned to the Hotels4U.com's identifiable assets, liabilities and contingent liabilities.
The acquired business contributed revenue of £12.8m and net loss of £0.3m to the Group for the period from acquisition 30 April 2008.
14. Business combinations (continued)
Thomas Cook India
On 27 March 2008, the Group acquired 54.9% of Thomas Cook (India) Limited, a foreign exchange and travel company in India. Thomas Cook (India) Limited owns a number of subsidiaries incorporated in India, Mauritius and Sri Lanka. The purchase price was Rs. 9,362,500,000 (£115.3m) which has all been paid in cash.
Details of the net assets acquired are set out in the table below:
| £m | |||
| Net assets acquired | |||
| Intangible assets | 19.7 | ||
| Property, plant and equipment | 7.5 | ||
| Trade and other receivables | 38.2 | ||
| Cash and cash equivalents | 21.6 | ||
| Trade and other payables | (19.5) | ||
| Short-term borrowings* | (53.5) | ||
| Provisions | (0.5) | ||
| Deferred tax liability | (0.3) | ||
| 13.2 | |||
| Less minority interest | (6.1) | ||
| 7.1 | |||
| Goodwill | 110.4 | ||
| Total consideration | 117.5 | ||
| Satisfied by: | |||
| Cash (including attributable costs) | 117.5 | ||
| 117.5 | |||
* Short term borrowings include £36.8m commercial paper and bank loans, £12.9m preference share capital and £3.8m bank overdraft.
The purchase price of each net asset component listed above represents its book value. We are in the process of determining the fair values to be assigned to the Thomas Cook India's identifiable assets, liabilities and contingent liabilities.
The acquired business contributed revenue of £3.4m and net profit after minority interest of £0.2m to the Group for the period from acquisition 30 April 2008.
14. Business combinations (continued)
Other
On 1 November 2007 the Group acquired 100% of urlaub.de GmbH, on 3 April 2008 the Group acquired 100% of Elegant Resorts and on 4 April 2008 the Group acquired 100% of Thomas Cook Egypt and Lebanon.
Details of the net assets acquired are set out in the table below:
| £m | |||
| Net assets acquired | |||
| Intangible assets | 5.9 | ||
| Property, plant and equipment | 1.1 | ||
| Inventory | 0.1 | ||
| Trade and other receivables | 12.6 | ||
| Cash and cash equivalents | 17.2 | ||
| Trade and other payables | (10.7) | ||
| Bank overdrafts | (0.8) | ||
| Provisions | (6.7) | ||
| Deferred tax asset | 0.1 | ||
| 18.8 | |||
| Goodwill | 38.7 | ||
| Total consideration | 57.5 | ||
| Satisfied by: | |||
| Cash (including attributable costs) | 56.5 | ||
| Contingent consideration | 1.0 | ||
| 57.5 | |||
With the exception of urlaub.de GmbH, the purchase price of each net asset component listed above represents its book value. We are in the process of determining the fair values to be assigned to identifiable assets, liabilities and contingent liabilities.
The acquired businesses contributed revenue of £4.6m and net loss of £0.5m to the Group for the period from acquisition to 30 April 2008.
Pro forma revenue and net profit
If all the acquisitions that have been completed in the half year ended 30 April 2008 had occurred on 1 November 2007, the consolidated revenue and consolidated profit generated by these acquired businesses for the half year ended 30 April 2008 would have been £73.6m and £2.0m respectively.
14. Business combinations (continued)
| Thomas | ||||||
| Cook | ||||||
| Hotels4U | India | Other | Total | |||
| £m | £m | £m | £m | |||
| Net cash outflow from | ||||||
| acquisitions: | ||||||
| Cash consideration for | ||||||
| shares | (21.8) | (115.3) | (56.1) | (193.2) | ||
| Cash and cash equivalents | ||||||
| (net of overdraft) acquired | (0.7) | 17.8 | 16.4 | 33.5 | ||
| (22.5) | (97.5) | (39.7) | (159.7) |
15. Contingent liabilities
Contingent liabilities primarily comprise counter-guarantees for bank funding, letters of credit, uncommitted facilities and other contingent liabilities relating to aircraft leases all of which arise in the ordinary course of business. With the exception of the details below, there are no material changes to contingent liabilities to those disclosed in the Annual Report and Accounts for the year ended 31 October 2007.
In the United Kingdom, under the former process the Group was required to arrange for guarantees to be provided to the regulatory body. The regulatory body has now introduced a fund mechanism whereby travel companies are required to collect and remit a small charge for each protected customer upon booking. With the exception of the United Kingdom, there has been no material change to consumer protection arrangements to those disclosed in the Annual Report and Accounts for the year ended 31 October 2007.
16. Related party transactions
During the period, the Group acquired a right to use part of a German retail web-site (neckermann.de) together with a number of web-sites from the Arcandor Group for a consideration of €15.0m, this transaction was at arms length.
Until 2 April 2007, Thomas Cook AG was jointly owned by Arcandor and Lufthansa and both were regarded as related parties. On 2 April 2007, Arcandor acquired Lufthansa's interest in Thomas Cook AG and on 19 June 2007 contributed Thomas Cook AG to the Thomas Cook Group plc in exchange for shares in the Company. As a result, Arcandor controls a majority of the ordinary share capital of the Company and is therefore regarded as a related party. Transactions with Arcandor for the prior and current period and with Lufthansa up to 2 April 2007 are regarded as related party transactions. During the period the Group bought back 2,836,466 shares for £8.3m from Arcandor. This transaction is part of the share buy-back programme and was at arms length. As a result Arcandor now owns 52.8% of the ordinary share capital of the Company.
Other than the items described above, there were no other material changes in the nature and size of related party transactions for the period to those described in the Annual Report and Accounts for the year ended 31 October 2007.
17. Events occurring after the balance sheet date
Details of the interim dividend proposed are given in note 12.
Acquisition of TriWest Travel Holdings and binding bid for Jet Tours
On 9 June 2008, the Group announced the acquisition, subject to regulatory approval, of TriWest Travel Holdings (TTH) in Canada together with a binding bid for Jet Tours in France.
TTH is a leading independent travel wholesaler headquartered in Montreal, Canada operating under two principal brands: Fun Sun, an independent travel wholesaler, and Intair, a leading airline consolidator. The maximum cash consideration, including management incentives is C$114m (£57m).
Paris-based Jet Tours is a premium tour operator which serves approximately 270,000 guests per year. Its principal brands include Jet Tours, Club Eldorador and Austral Lagons. The consideration would be €70m (£55m).
Credit facility
On 23 May 2008, the Group announced that it had agreed terms for a new €1.8 billion credit facility, of which €200m is a bonding facility. The credit facility, which replaces the Group's existing facilities, incorporates three year revolving credit and term facilities, each at a margin of 175 bps above EURIBOR/LIBOR, and a bonding facility. Up to €320m of the facility will be available only if the disposal of Condor occurs. The remainder of the facility is available for the Group's general corporate purposes, including acquisitions and the €375m existing share buyback programme. The facility is secured by guarantees and share pledges from subsidiaries.
18. Seasonality
Revenue is subject to significant seasonal fluctuations between Winter and Summer seasons, with peak demand in the Summer season. The Group mitigates this seasonal impact as far as possible through operating in different global holiday markets which have different annual cycles and by offering a broad range of holiday products in both the Winter and Summer seasons.
Statement of directors' responsibilities
The directors' confirm that this condensed consolidated set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8.
The directors of Thomas Cook Group plc are listed in the Thomas Cook Group plc Annual Report for 31 October 2007, with the exception of the following changes in the period: Dr Angus Porter resigned from the board on 25 April 2008. A list of current directors is maintained on the Thomas Cook Group plc Group website: www.thomascookgroup.com.
By order of the Board
Manny Fontenla-Novoa
Group Chief Executive Officer
24 June 2008
Ludger Heuberg
Group Chief Financial Officer
24 June 2008
Independent review report to Thomas Cook Group plc
Introduction
We have been engaged by the company to review the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 April 2008, which comprises the consolidated income statement, consolidated balance sheet, consolidated statement of recognised income and expense, consolidated cash flow statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed consolidated set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed consolidated set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 April 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP Chartered Accountants24 June 2008London
Notes (a) The maintenance and integrity of the Thomas Cook Group plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.
Appendix 1
Pro forma Group Income Statement
| Unaudited | Unaudited | Unaudited | ||
| 6 months to | 6 months to | 12 months to | ||
| 31/03/08 | 31/03/07 | 30/09/07 | ||
| £m | £m | £m | ||
| Revenue | 3,094.8 | 2,805.7 | 7,878.5 | |
| Cost of providing tourism services | (2,420.0) | (2,189.8) | (6,115.4) | |
| Gross profit | 674.8 | 615.9 | 1,763.1 | |
| Other operating income | 20.3 | 8.9 | 32.7 | |
| Personnel expenses | (459.9) | (460.7) | (938.3) | |
| Depreciation and amortisation | (64.7) | (63.4) | (126.6) | |
| Impairment of goodwill | - | (9.1) | (9.1) | |
| Other operating expenses | (349.4) | (329.8) | (663.9) | |
| Profit on disposal of businesses and | ||||
| property, plant & equipment | 0.6 | 13.4 | 15.1 | |
| (Loss)/profit from operations | (178.3) | (224.8) | 73.0 | |
| Analysed between: | ||||
| (Loss)/profit from operations before | ||||
| exceptional items | (131.4) | (179.8) | 244.2 | |
| Exceptional items | (46.9) | (45.0) | (171.2) | |
| (178.3) | (224.8) | 73.0 | ||
| Share of results of associates and joint ventures | (1.8) | (3.0) | (2.6) | |
| Profit on disposal of associates | (0.1) | 3.6 | 37.0 | |
| Net investment income | 1.2 | 0.5 | 0.7 | |
| Net finance costs | (10.7) | (5.9) | (7.9) | |
| Exceptional finance costs | (13.9) | - | - | |
| (Loss)/profit before tax | (203.6) | (229.6) | 100.2 | |
| Tax | 57.0 | 64.3 | (28.0) | |
| (Loss)/profit for the period | (146.6) | (165.3) | 72.2 | |
| Attributable to: | ||||
| Equity holders of the parent | (145.4) | (164.8) | 70.3 | |
| Minority interests | (1.2) | (0.5) | 1.9 | |
| Pre-exceptional (Loss)/earnings per share in p | ||||
| Basic | (10.7) | (13.9) | 17.1 | |
| Diluted | (10.7) | (13.9) | 17.1 | |
| All sales and results arose from continuing operations. | ||||
Pro forma Group Statement of Net Assets
| Unaudited | Unaudited | Unaudited | |||
| as at | as at | as at | |||
| 31/03/08 | 31/03/07 | 30/09/07 | |||
| £m | £m | £m | |||
| Non-current assets | |||||
| Intangible assets | 3,254.9 | 2,782.2 | 2,905.7 | ||
| Property, plant & equipment | |||||
| Aircraft and spare engines | 609.3 | 528.8 | 580.6 | ||
| Other | 325.9 | 266.4 | 218.1 | ||
| Investment in associates and joint ventures | 40.0 | 25.0 | 33.5 | ||
| Other investments | 28.8 | 33.2 | 26.7 | ||
| Deferred tax assets | 404.2 | 388.7 | 332.6 | ||
| Tax assets | 4.2 | - | 0.1 | ||
| Trade and other receivables | 115.9 | 114.1 | 105.7 | ||
| Pension asset | 0.5 | 0.3 | 0.3 | ||
| Derivative financial instruments | 17.1 | 15.1 | 13.2 | ||
| 4,800.8 | 4,153.8 | 4,216.5 | |||
| Current assets | |||||
| Inventories | 20.2 | 15.5 | 18.6 | ||
| Tax assets | 34.1 | 18.9 | 18.0 | ||
| Trade and other receivables | 1,257.3 | 930.9 | 892.7 | ||
| Investments | 0.1 | - | - | ||
| Derivative financial instruments | 240.1 | 26.9 | 48.2 | ||
| Cash and cash equivalents | 342.9 | 633.3 | 856.0 | ||
| 1,894.7 | 1,625.5 | 1,833.5 | |||
| Non-current assets held for sale | - | 31.4 | 75.0 | ||
| Total assets | 6,695.5 | 5,810.7 | 6,125.0 | ||
| Current liabilities | |||||
| Retirement benefit obligations | (4.1) | (3.0) | (2.3) | ||
| Trade and other payables | (1,420.8) | (1,437.0) | (1,657.7) | ||
| Borrowings | (159.0) | (63.8) | (71.0) | ||
| Obligations under finance leases | (90.4) | (38.3) | (78.4) | ||
| Tax liabilities | (72.1) | (85.3) | (86.3) | ||
| Revenue received in advance | (1,180.9) | (1,036.4) | (730.3) | ||
| Short-term provisions | (233.2) | (126.3) | (183.3) | ||
| Derivative financial instruments | (156.3) | (79.3) | (86.8) | ||
| (3,316.8) | (2,869.4) | (2,896.1) | |||
| Liabilities related to assets held for sale | - | (28.1) | (41.3) | ||
| Non-current liabilities | |||||
| Retirement benefit obligations | (176.2) | (191.7) | (189.0) | ||
| Trade and other payables | (98.8) | (73.3) | (127.5) | ||
| Long-term borrowings | (139.3) | (144.7) | (116.0) | ||
| Obligations under finance leases | (377.9) | (373.3) | (364.1) | ||
| Tax liabilities | (2.6) | (2.8) | - | ||
| Revenue received in advance | (0.3) | (0.5) | (0.3) | ||
| Deferred tax liabilities | (132.7) | (87.9) | (93.5) | ||
| Long-term provisions | (216.6) | (170.3) | (193.4) | ||
| Derivative financial instruments | (27.6) | (14.4) | (16.6) | ||
| (1,172.0) | (1,058.9) | (1,100.4) | |||
| Total liabilities | (4,488.8) | (3,956.4) | (4,037.8) | ||
| Net assets | 2,206.7 | 1,854.3 | 2,087.2 | ||
Pro forma Group Cash Flow Statement
| Unaudited | Unaudited | Unaudited | ||
| 6 months to | 6 months to | 12 months to | ||
| 31/03/08 | 31/03/07 | 30/09/07 | ||
| £m | £m | £m | ||
| Cash flows from operating activities | ||||
| Cash generated by operations | (212.1) | (76.9) | 273.8 | |
| Income taxes paid | (54.0) | (18.1) | (58.5) | |
| Net cash from operating activities | (266.1) | (95.0) | 215.3 | |
| Investing activities | ||||
| Dividends received from associates | - | 4.0 | 4.1 | |
| Proceeds on disposal of subsidiary undertaking (net | - | (5.4) | 25.8 | |
| of cash balances disposed) | ||||
| Proceeds on disposal of associated undertakings | - | 14.8 | 51.4 | |
| Proceeds on disposal of property, plant & | 6.4 | 26.9 | 55.2 | |
| equipment | ||||
| Disbursements for short term securities | (27.2) | (147.9) | (142.8) | |
| Purchase of property, plant & equipment | (30.8) | (25.5) | (44.5) | |
| Purchase of intangible assets | (35.0) | (19.3) | (44.2) | |
| Acquisition of subsidiary (net of cash acquired) | (117.1) | 0.4 | (27.2) | |
| Net cash used in investing activities | (203.7) | (152.0) | (122.2) | |
| Financing activities | ||||
| Interest paid | (30.1) | (13.8) | (30.4) | |
| Dividends paid to minority shareholders | - | (0.5) | (0.5) | |
| Draw down of borrowings | - | 30.0 | 29.9 | |
| Repayment of borrowings | (16.8) | (42.3) | (51.8) | |
| New bank loans raised | - | - | - | |
| Repayment of obligations under finance leases | (36.5) | (17.4) | (58.9) | |
| Purchase of own shares | (35.8) | - | - | |
| Proceeds from issue of ordinary shares | 1.9 | 0.4 | 8.2 | |
| Net cash used in financing activities | (117.3) | (43.6) | (103.5) | |
| Net (decrease)/increase in cash & cash | (587.1) | (290.6) | (10.4) | |
| equivalents | ||||
| Cash and cash equivalents at beginning of period | 813.2 | 813.0 | 813.0 | |
| Effect of foreign exchange rate changes | 35.9 | 75.8 | 10.6 | |
| Cash & cash equivalents at end of period | 262.0 | 598.2 | 813.2 | |
| Liquid assets | 342.9 | 633.3 | 856.0 | |
| Bank overdrafts | (80.9) | (35.1) | (42.8) | |
| Cash & cash equivalents at end of period | 262.0 | 598.2 | 813.2 | |
Pro forma Segmental Analysis
| Six months to 31 March 2008 | |||||||
| UK and | Continental | Northern | North | Airlines | |||
| Ireland | Europe | Europe | America | Germany | Corporate | Total | |
| £m | £m | £m | £m | £m | £m | £m | |
| Revenue | |||||||
| Segment sales | 991.3 | 1,104.0 | 483.2 | 249.9 | 399.7 | 0.1 | 3,228.2 |
| Inter-segment sales | (0.9) | (1.5) | (2.1) | - | (128.9) | - | (133.4) |
| Total revenue | 990.4 | 1,102.5 | 481.1 | 249.9 | 270.8 | 0.1 | 3,094.8 |
| Profit/(loss) from | |||||||
| operations before | |||||||
| exceptional items | (122.2) | (31.7) | 35.2 | 8.2 | (11.6) | (9.3) | (131.4) |
| Six months to 31 March 2007 | |||||||
| UK and | Continental | Northern | North | Airlines | |||
| Ireland | Europe | Europe | America | Germany | Corporate | Total | |
| £m | £m | £m | £m | £m | £m | £m | |
| Revenue | |||||||
| Segment sales | 957.1 | 1,006.1 | 403.3 | 243.3 | 360.1 | 0.1 | 2,970.0 |
| Inter-segment sales | (6.7) | (2.1) | (2.1) | - | (153.4) | - | (164.3) |
| Total revenue | 950.4 | 1,004.0 | 401.2 | 243.3 | 206.7 | 0.1 | 2,805.7 |
| Profit/(loss) from | |||||||
| operations before | |||||||
| exceptional items | (154.5) | (32.6) | 27.2 | 5.4 | (14.7) | (10.6) | (179.8) |
| Twelve months to 30 September 2007 | |||||||
| UK and | Continental | Northern | North | Airlines | |||
| Ireland | Europe | Europe | America | Germany | Corporate | Total | |
| £m | £m | £m | £m | £m | £m | £m | |
| Revenue | |||||||
| Segment sales | 3,138.7 | 3,052.9 | 811.9 | 379.1 | 855.8 | 0.3 | 8,238.7 |
| Inter-segment sales | (6.9) | (3.9) | (5.3) | - | (344.1) | - | (360.2) |
| Total revenue | 3,131.8 | 3,049.0 | 806.6 | 379.1 | 511.7 | 0.3 | 7,878.5 |
| Profit/(loss) from | |||||||
| operations before | |||||||
| exceptional items | 73.6 | 67.5 | 73.5 | 4.9 | 46.2 | (21.5) | 244.2 |
Inter-segment sales are charged at prevailing market prices.
Notes to the Pro forma Interim Financial Information
Basis of preparation
The pro forma information has been prepared using the accounting policies stated in the Company's report and accounts for the year ended 31 October 2007. For comparison purposes, the amortisation of business combination intangibles has been excluded from the pro forma information.
The information in this report relating to the six months ended 31 March 2008, the six months ended 31 March 2007 and the year ended 30 September 2007 is pro forma and unaudited and does not constitute full statutory accounts within the meaning of section 240 of the Companies Act 1985.
A copy of the statutory accounts for the year ended 31 October 2007 has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.
Appendix 2
Key Performance Indicators Definitions
* Revenue for the Group and segmental analysis represents external revenue only, except in the case of the Airlines Germany pro forma segmental performance review where revenue of £113.2m (2007: £138.5m) largely to the Continental Europe division has been included.
** Profit/loss from operations is defined as earnings before interest and tax, and has been adjusted to exclude exceptional items and amortisation of business combination intangibles. It also excludes our share of the results of associates and joint ventures.
In the case of pro forma profit/loss from operations, the figures reflect the underlying results for the period (and the comparative period) for each of MyTravel Group plc, Thomas Cook AG and Thomas Cook Group plc and have been prepared by the Directors to illustrate the effect of the merger of Thomas Cook AG and MyTravel Group plc as if the transaction had taken place prior to the first day of the comparative period presented.
† Passengers in the case of UK, Northern Europe and North America represents the total number of passengers (in thousands) that departed on a Thomas Cook Group plc holiday in the period. It excludes customers who booked third party tour operator products through Thomas Cook retail channels. For Continental Europe passengers represents all tour operator passengers departed in the period, excluding those on which only commission is earned.
Risk passengers in UK, Northern Europe and North America represent those holidays sold where the business has financial commitment to the product (flights and accommodation) before the customer books. The analysis excludes accommodation only passengers.
Non-Risk passengers in UK, Northern Europe and North America represents those holidays sold where the business has no financial commitment to the product (flights and accommodation) before the customer books.
†† Capacity for UK, Northern Europe and North America represents the total number of holidays available to sell. This is calculated by reference to committed airline seats (both in-house and third party).
In the case of Airlines Germany, capacity represents the total number of available seat kilometres (ASK). ASK is a measure of an airline's passenger carrying capacity and is calculated as available seats multiplied by distance flown.
# Average selling price for UK, Northern Europe and North America represents the average selling price (after discounts) achieved per mainstream passenger departed in the period (excluding accommodation only passengers). For Continental Europe, average selling price represents the average selling price (after discounts) achieved per passenger departed in the period.
††† For UK, Northern Europe and North America, load factor is a measure of how successful the mainstream businesses were at selling the available capacity. This is calculated by dividing the departed mainstream passengers in the period (excluding accommodation only) by the capacity in the period.
For Airlines Germany, seat load factor is a measure of how successful the airline was at selling the available capacity. This is calculated by dividing the revenue passenger kilometres (RPK) by the available seat kilometres (ASK - see capacity definition above) and is the recognised IATA definition of load factor used for airlines. RPK is a measure of the volume of passengers carried by an airline. One RPK is flown when a passenger is carried one kilometre.
## Brochure mix is defined as the number of mainstream holidays (excluding accommodation only) sold at brochure prices divided by the total number of holidays sold and is a measure of how successful a business was at selling holidays early. Holidays are generally discounted closer to departure.
‡ Controlled distribution is defined as the proportion of sales generated through our in-house retail shops, call centres and websites. Internet distribution is a sub-set of controlled distribution and is defined as the proportion of sales generated through in-house websites. Both performance indicators are calculated on sales value of departed passengers in the period.
‡‡ Sold seats in Airlines Germany represents the total number of one-way seats sold on aircraft (in thousands) that departed in the period.
### Yield in Airlines Germany represents the average price achieved per seat departed in the period.