Thomas Cook Regulatory News (TCG)

11 Dec 2007 07:04

Thomas Cook Group PLC11 December 2007 11 December 2007 Thomas Cook Group plc Provisional results, share buy-back programme and trading update Thomas Cook Group plc has brought forward to today its announcement of unauditedprovisional pro forma results for the year ended 31 October 2007, as it nowexpects to report pro forma Group operating profit before exceptional itemswhich is significantly higher than market expectations. Today we are alsoproviding a trading update and announcing plans for a share buy-back programme. Highlights • Group pro forma operating profit before exceptional items expected to be €375.3m (up 26%). • Dividend of 5 pence per share to be recommended. • The Board intends to seek shareholder approval at the AGM for a share buy-back programme of around €375m. • The integration of the businesses is proceeding well and synergies are expected to be at least €200m. The Group today announces that it expects to report pro forma Group operatingprofit (earnings before interest, tax and exceptional items and excluding shareof results of associates and joint ventures) of €375.3m (2006 pro forma:€297.7m), an increase of 26%, on pro forma sales of €11,714.5m (2006 pro forma:€11,870.6m). Manny Fontenla-Novoa, Joint Chief Executive, said: "Both our current trading andour first operating result as Thomas Cook Group plc are very encouraging. Withour merger synergies of at least €200m, we have a sound platform to achieve ourtarget of at least €620m operating profit in 2009/10, implying EBITDA of morethan €800m. We are also announcing our intention to proceed with a €375m sharebuy-back programme." Unaudited provisional pro forma figures The figures shown below reflect unaudited provisional pro forma financialinformation for Thomas Cook Group plc and not statutory financial information.The basis of preparation of the pro forma financial information is explained inthe notes at the end of this announcement. Segmental analysis of pro forma unaudited sales* 12 months to 31 October 12 months to 31 October 2007 2006 •m •m UK 4,714.3 4,736.6Northern Europe 1,194.8 1,151.9Continental Europe 4,477.4 4,567.8North America 559.8 684.6Airlines Germany 767.8 694.4Corporate 0.4 35.3 Group 11,714.5 11,870.6 * Represents external sales only. Airlines Germany excludes sales of €494.6m(2006: €547.9m) largely to the Continental Europe division. Segmental analysis of pro forma unaudited operating 12 months to 31 October 12 months to 31 Octoberprofit* 2007 2006 ^ •m •m UK 121.5 89.2Northern Europe 109.7 92.6Continental Europe 99.5 99.2North America 7.9 15.7Airlines Germany 68.1 38.1Corporate (31.4) (37.1) Group 375.3 297.7 * The pro forma unaudited operating profit is defined as earnings beforeinterest, tax and exceptional items and excluding share of results of associatesand joint ventures. ^ Restated for the impact of fair value adjustments. In the UK, the pro forma operating profit before exceptional items has increasedby €32.3m year on year. While trading for much of the year did not fully meetour expectations, this was more than offset by reductions in overhead costs andthere was a strong end to the season. We have taken the necessary measures tosecure improved performance in the current year. As explained in the notes on basis of preparation below, operating profitsbefore exceptional items have been restated for both 2005/06 and 2006/07 for theimpact of fair value adjustments. The effect in the UK has been to increase theoperating profit before exceptional items in both years by €27.1m. Northern Europe pro forma operating profit before exceptional items increased by€17.1m, reflecting a strong performance in both winter and summer in a maturemarket, with a focus on ensuring that supply and demand remain in balance andthat our products meet the needs of the customer. In Continental Europe, the pro forma operating profit before exceptional itemswas €0.3m higher than the previous year. We are especially pleased with theperformance in Belgium and France. As expected, trading conditions in Germanywere challenging throughout the year, but management actions to reduce capacity,where possible, and successful cost management throughout the year led to aresult in line with expectations. North America pro forma operating profit before exceptional items was reducedyear on year by €7.8m and reflects a difficult trading environment withsignificant overcapacity in the market, particularly in the peak winter season. In Airlines Germany, the pro forma operating profit before exceptional itemsincreased by €30.0m despite difficult trading conditions in Germany, reflectinga strong performance in long haul and management's focus on profitable routesand successful cost control. In the Corporate segment, which largely represents unallocated head office costsand the results of businesses held for resale, the pro forma operating lossbefore exceptional items was reduced by €5.7m. Dividend As announced on 21 November 2007, the Board expects to recommend dividends pershare in respect of each full year in the range of 40-50% of earnings per shareand to pay one third of an annual dividend as an interim and two thirds as afinal dividend. The Board believes it is desirable to provide shareholders withdividend payments increasing progressively over time. Applying this policy, andbased on the Board's expectations of earnings, the Board expects to recommend afinal dividend of 5 pence per share for the year ended 31 October 2007, forpayment after, and subject to shareholder approval at, the annual generalmeeting expected to be held on 10 April 2008. Share buy-back programme/Capital structure As stated at the Group's strategy presentation on 21 November, the Boardrecognises fully the benefits of an efficient capital structure in helping todeliver value to shareholders. We indicated then that a return of capital toshareholders in the short term could expose the Group to unacceptable tax costs. We have now identified an approach that would give the Company sufficientreserves to allow it to undertake a return of capital that avoids these taxcosts and we are now announcing that, the Board intends to proceed with aprogramme of repurchasing around €375m worth of the Group's shares, to beimplemented following the annual general meeting on 10 April 2008, subject toobtaining the necessary shareholder approvals. This level of share buy-backprogramme is consistent with the Group's financial strategy for developing thebusiness through acquisitions and organic growth. Current trading In the UK, bookings for the current winter season have improved since our lasttrading update on 1 November and are now 2% lower than the prior year. Capacityon sale is still expected to be approximately 5% below the prior year and as aresult we have fewer holidays left to sell than a year ago. Average sellingprices are now slightly ahead. Early indications for the UK summer season 2008 are good, with bookings andaverage selling prices ahead even though capacity is expected to be lower thanfor summer 2007. As with winter 07/08, we are adjusting the combined flyingprogramme to exit unprofitable business and optimise yield management. Wecurrently expect to have considerably fewer holidays left to sell in the latesmarket, which we expect to improve profitability. Over the past 12 weeks, margin per passenger has shown a marked improvement yearon year for both the winter and summer seasons in the UK. In Northern Europe, bookings for winter 07/08 are up 10% on the prior year with7% more capacity. Average selling prices are 7% ahead year on year. Bookings forsummer 2008 have started strongly. In Continental Europe, bookings for winter 07/08 are encouraging, with bothbookings and average selling prices slightly ahead of the prior year. In North America winter bookings are 6% lower than last year and average sellingprices are slightly lower than last year, reflecting continued difficult marketconditions. The booked seat load factor in Airlines Germany for winter is currently 5% aheadof the prior year. Ends Enquiries Thomas Cook Group plc Today +44 (0) 20 7404 5959 Thereafter +44 (0) 1706 746464Manny Fontenla- Novoa Joint Chief ExecutiveLudger Heuberg Chief Financial OfficerSteven Olivant IR & Financial Communications Director Brunswick +44 (0) 20 7404 5959Fiona AntcliffeSophie Brand A conference call for analysts will take place today at 8 am (GMT). The dial-inarrangements for the call are as follows:Telephone: + 44 (0) 1452 541 077Participant Code: 27787637# A recording of the conference call will be available until 18 December 2007 on:Telephone: +44 (0) 1452 55 00 00Access Code: 27787637# Notes Basis of preparation The financial information contained in this announcement reflects unauditedprovisional pro forma information and not statutory information for Thomas CookGroup plc. This pro forma financial information reflects the underlying resultsfor the 12 months to 31 October 2007 and the 12 months to 31 October 2006 foreach of MyTravel Group plc, Thomas Cook AG and Thomas Cook Group plc and hasbeen prepared by the directors to illustrate the effect of the merger of ThomasCook AG and MyTravel Group plc as if the transaction had taken place prior to 1November 2005 (the first day of the comparative accounting period presented).This is to provide information that the directors believe is relevant to anunderstanding of the operations of the merged Group. The unaudited pro formaprovisional financial information has been prepared for illustrative purposesonly. The unaudited pro forma combined financial information has been prepared on thebasis of the accounting policies, formats and reporting currency (euro) thatwere set out in the interim report published on 27 June 2007. In preparing the pro forma financial information, account has been taken of theimpact of acquisition accounting on the operating profit before exceptionalitems. As part of the fair value adjustments, an onerous lease provision wascreated against hotel rentals. In addition, the value of aircraft held on thebalance sheet was reduced. The pro forma financial information assumes that bothof these adjustments were made prior to 1 November 2005 and, as a result, theimpact of a full year of lower rental costs and reduced depreciation has beenreflected in the operating profit before exceptional items in both 2006/07 andthe comparative 2005/06 period. The net effect of these fair value adjustmentshas been to increase the operating profit before exceptional items for bothyears by €26.1m. However, we have not adjusted for potential cost savings orother synergies that may result from the combination, and the impact ofintra-group trading between Thomas Cook AG and MyTravel Group plc has not beeneliminated. The statutory financial information for Thomas Cook Group plc, which we willpublish on 30 January 2008, will reflect 100% of the results of Thomas Cook AGfor the full financial year (and the full comparative period) and 100% ofMyTravel Group plc and Thomas Cook Group plc from 19 June 2007, being the dateof the merger. This information is provided by RNS The company news service from the London Stock Exchange