13 Jan 2015 07:00
Thomas Cook Group plc
(the "Company")
Annual General Meeting and Annual Report & Accounts 2014
In compliance with LR 9.6.1, the following documents are being submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/nsm:
1. Notice of Annual General Meeting ("AGM") 2015
2. Form of Proxy
3. Annual Report & Accounts 2014
The AGM is scheduled to be held at 10.30am on Monday 23 February at 1st Floor, North Building, 200 Aldersgate, London, EC1A 4HD.
The Annual Report & Accounts 2014 and the Notice of AGM 2015 can also be viewed at or downloaded from the Company's corporate website at www.thomascookgroup.com.
A condensed set of Company financial statements and information on important events that have occurred during the year and their impact on the financial statements were included in the Company's preliminary announcement on26 November 2014. The preliminary announcement can be viewed or downloaded from the Company's corporate website www.thomascookgroup.com.
For further information please contact:
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Mathias Brandes, Thomas Cook Group | +44 (0) 207 294 7199 |
Jenny Davey, Finsbury | +44 (0) 207 251 3801 |
Appendix A
Statement of Directors' responsibilities
The Annual Report & Accounts 2014 contains the following statements regarding responsibility for the Annual Report, the Directors' remuneration report and the financial statements:
Statement of Directors' responsibilities in respect of the Annual Report, the Directors' remuneration report and the financial statements
The Directors are responsible for preparing the Annual Report, the Directors' remuneration report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the Group and the Company financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union. The financial statements are required by law to give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing those financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent; and
· state that the financial statements comply with IFRSs as adopted by the European Union.
The Directors confirm that they have complied with the above requirements in preparing the financial statements.
The Directors are responsible for keeping proper accounting records that show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group, and for ensuring that the financial statements and the Directors' remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Company's website, and legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Each of the Directors, who were in office at the date of this report, whose names and responsibilities are listed on pages 76 and 77, confirm that, to the best of their knowledge:
· the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
· the Strategic and Directors' report contained on pages 14 to 73 includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
Appendix B
Principal risks and uncertainties
The Annual Report & Accounts 2014 contains the following disclosures relating to principal risks and uncertainties:
Risk management
Embedding a culture of risk management
Our risk management strategy
The Board is responsible for maintaining the Group's risk management and internal control systems, with a mandate that includes defining risk appetite and monitoring risk exposures to ensure that the nature and extent of risks taken by the Group are aligned with its strategic objectives.
Risk appetite
The Board has undertaken a detailed exercise to consider the risk appetite in a number of key areas for the business. The results of this review indicate the relative appetite of the Board across the risk factors and behaviours. It is evident that this represents a view at a point in time and changes in the economic environment, strategy and performance of the business will impact this evaluation.
The Board is aligned on the relative risks and has agreed the appetite for risk taking for Transformation initiatives and operational delivery is entrepreneurial. This position aligns with the strategic aims of the Transformation programme and targets set for the business.
The Board seeks to minimise all Health and Safety and Reputational risks. In all other aspects, the Board takes a balanced view on risk taking.
It is the intent of the Board to use the risk appetite to support its ongoing decision making and to review annually in the light of the changes to the economic environment, strategic progress and performance of the business.
Our approach to risk management
Operating in a dynamic and rapidly evolving environment requires a flexible and responsive risk management process that can match the pace of change and provide management with a concise view of the Group's risk profile at any point in time. We continue to focus on further embedding a culture of risk management that will contribute towards effective strategy execution, ensuring both risk and opportunities are identified and managed to deliver long-term value creation. During 2014, we have formalised our dual track approach to risk management consisting of top down oversight form the Board and senior management and bottom up detailed risk assessments.
Top down oversight
The Risk Matters Group ("RMG") and the broader risk management framework has been designed to ensure the scope of coverage includes transformational/strategic, operational, financial and legal risks within a single framework. The purpose of the RMG is to provide leadership, direction and oversight with regard to the Group's overall risk framework, appetite, and relevant risk policies, processes and controls. The RMG meets on a bi-monthly basis, attended by senior executives from across the Group and our external advisers, in order to provide a further dimension of insight and validation. The chair of the Audit Committee also regularly attends the meetings of the RMG. The RMG reports to the Audit Committee and Risks and Disclosures Committee and the CEO of the Group.
The Risks and Disclosures Committee receives inputs from the RMG and maintains executive oversight of the Group's key risks and mitigation strategies.
The Audit Committee considers risk exposure against risk appetite by profiling key risks in respect of their potential impact and likelihood of occurrence, after consideration of mitigating and controlling actions that are in place. During the year, the Audit Committee has reviewed both top down and bottom up risk analyses and the Board has undertaken a detailed exercise to consider its risk appetite, both in relation to the Transformation activity and the business-as-usual environment. The aim of these activities has resulted in a Combined Assurance Plan, which will enable a risk-based approach to the ongoing internal audit and assurance programme. On an annual basis, the Board reviews risk appetite to ensure it is calibrated to the Group's strategic objectives.
The Risk Matters Group
Top down Oversight and assessmentof risk exposures at thecorporate level | Overall responsibilities for the risk management system | The Board Sets strategic objectives and defines risk appetite | Receives and reviews Audit Committee reports on risk governance |
CEO and CFO | |||
Set tone at the top | Drive a culture of governance, controls and risk management | Ensure capability and capacity of the Risk and Audit Team | |
Audit Committee | Executive Committee | Risk & DisclosureCommittee | |
Supports the Board in monitoring risk exposure against risk appetite | Maintains executive oversight of the Group's key risks and mitigation | Monitors the risk management process | |
Bottom up Identification and assessmentof risk exposures at segmentand function level | Sets the risk management process | Considers emerging risks | Provides oversight and challenge for risk management plans |
Operational level | |||
Group-wide risk identification, assessment and monitoring Maintenance of risk registers | Risk awareness and culture embedded across the Group | Implementation of risk mitigation plans and controls | |
Bottom up assessments
Risk registers are continually updated through an ongoing programme of risk workshops, with operational and financial management. Risk is formally assessed as a standing agenda item at all monthly segment level board meetings. Additionally, each segment now has a quarterly Segment Risk Committee attended by the risk owners of all strategic initiatives as well as the Group Enterprise Risk and Audit Team, with key risks being escalated and discussed within the Risk Matters Group ("RMG"). The Segment Risk Committees analyse key segment risks and ensure implementation of risk mitigation plans.
Our priorities for 2015
The Thomas Cook Business System (see page 34) outlines our commitment to defining excellence in governance and adopting principles of risk management across the organisation and our processes. Our vision for the Thomas Cook Business System extends beyond the parameters of conventional risk management; we are now implementing our plans to ensure principles of risk management influence our approach to leadership, organisational structure, business policies, performance monitoring, decision making and day-to-day processes are aligned to our Profitable Growth Strategy. We do not see this is as a one-time transformational activity, but an opportunity for governance and risk management to influence the culture and ethos of our operations and people.
We will continue to develop our existing risk management framework, enhancing risk governance and improving the risk culture of our organisation. Our priorities for next year consist of improving our reporting capabilities and the underlying risk data by utilising our risk software. Our ongoing work with key risk indicators enables effective and efficient risk monitoring and control.
Principal risks and uncertainties
The table below lists the principal risks and uncertainties that may affect the Group and highlights the mitigating actions that are being taken. The content of the table, however, is not intended to be an exhaustive list of all the risks and uncertainties that may arise.
Principal risks | Mitigation | |
1 | Failure to turnaround our UK business will have a significant impact on the success of the overall Thomas Cook Transformation and may be viewed negatively by our Shareholders, impacting our share price. | UK profitability has improved significantly in FY14 reflecting the effectiveness of the Wave 1 cost-out and profit improvement measures. Significant progress has been achieved in the profitable growth strategy through new product development and by strengthening web performance. |
2 | Failure to transform Thomas Cook into a digital business may have an impact on our market share, as more and more customers use the web to research and purchase their holidays. | Our strategy of digital growth is supported by the design and delivery of the new One Web platform. Additionally, our plans to roll-out Concept stores will enable the digitisation of the in-store experience and closer integration between on and off-line. Best practice and innovation support for our digital growth strategy is also provided by the Digital Advisory Board, led by the CEO and top external experts. |
3 | Our Transformation initiatives fail to deliver our strategic and operational targets. | The CEO reviews all aspects of strategy every two weeks with the Executive Team and with the Board of Directors at every Board meeting. The CEO's Transformation Office (CTmO) holds monthly strategy review meetings during which progress and issues are discussed and addressed. Furthermore, our project management framework enables project governance, transparency and reporting. As part of this framework, regular updates are provided to project sponsors and any other key decision makers on the progress of projects against the agreed baseline in terms of cost, time and quality/specifications. |
4 | Failure to expand our products and services may have an adverse impact on customer demand. | Our current strategy of profitable growth is underpinned by the continued expansion of concept and partnership hotel programmes. Our centralised Group Hotel Procurement Team, which has recently been strengthened by several quality hires, enables process efficiency gains and synergies and will seek to minimise the lead time to the market to ensure the expansion of our hotel programmes is on track. |
4 | Failure to recruit or to retain the right people at the right time will lead to a lack of capability or capacity to enable the implementation of our business strategy. | We continue to make significant investment in our people attracting "world-class" talent to strengthen our leadership across the Group. Our career site now reflects the Company's high tech, high touch strategy and is designed to engage applicants. Our new performance management system was implemented in 2014 to track the performance and potential of all our employees. Our high potential talent is identified and nurtured through an Executive development programme and our Emerging Talent programme is currently being developed. Finally, our reward schemes are constantly evaluated to drive and reward performance and to ensure retention of key talent. |
6 | Our IT operating model fails to support the business through the Transformation and our business as usual activities. | Our IT transformation is proceeding as planned, but some aspects require more work to be done. This project will ensure delivery of IT services and technology will be fit to meet the needs of rapidly changing technologies, whilst maintaining integrity and performance of existing systems and operations. |
7 | Failure to build an accurate understanding of the customer means that we are unable to adequately tailor and target customer demand leading to reduced sales. | Our customer-centric vision aims at improving the customer experience along the customer journey and developing a trusted product that can be seen as a key differentiator in the medium and long-term strategy of Thomas Cook. |
8 | A decision or a course of action is perceived negatively by the media, investors and/or general public, which in turn impacts the corporate reputation of the Group and its share price. | We have a clear plan in place to respond to the potential reputational consequences of an event which includes close cooperation between investor relations, public relations, HR and legal teams to identify and prepare responses to incidents and potential issues. We also monitor stakeholder and political reactions to ensure we react to emerging political and regulatory developments. |
9 | Cash generation does not enable debt repayment using the most commercially-favourable terms. | We proactively monitor our short, medium and long-term cash requirements and liquidity headroom. Our cost-out and profit improvement initiatives are successfully contributing to cash availability. We continue to monitor all opportunities to manage liquidity requirements and maintain an adequate level of contingency as well as lowering the average cost of debt over the medium term. |
10 | A major health and safety incident impacting our customers or colleagues. | The assessment of health and safety risks is inbuilt into daily management routines and is monitored by a comprehensive structure of health and safety committees that are in turn overseen by a corporate Health, Safety & Environmental Committee with Board level oversight. Our Health and Safety programme measures standards, audits hotels and includes a clear escalation and decision process. |
11 | Socio/political uncertainties in particular the increasing incidents of political and terrorist activity in the Middle East region impacting our key markets, as well as macro-economic conditions and environmental factors reduce the demand for travel related products. | Our flexible business model allows us to align our committed capacity to fluctuating demand. We continue to add new destinations to our portfolio thereby mitigating the effect of factors which may negatively impact demand for travel to certain regions. Our active coordination of Group-wide risk activity ensures teams have early indication of emerging risk and by working with risk specialists deliver robust and effective mitigations. |
12 | Management information required for the Company to deliver its strategic targets and objectives is not clearly defined and readily available. | The Group Finance Transformation has standardised structures, processes and systems and provide data driven support for decision makers. |
13 | Failure to comply with legislative requirements in the legal jurisdictions where Thomas Cook operates. | We have a dedicated Legal Team to ensure full compliance with formal regulatory requirements which monitors all current and emerging regulatory developments. The team receives regular training to provide awareness of critical changes in relevant legislation or case law. |