Thomas Cook Regulatory News (TCG)

21 Nov 2007 07:02

Thomas Cook Group PLC21 November 2007 21 November 2007 Thomas Cook Group plc investor strategy day The Group plans to double operating profit to €620 million in three years Thomas Cook Group plc today announces plans to improve performance in mainstreamtour operating, make significant advances in independent travel, travel-relatedfinancial services and emerging markets, and grow overall revenue and profit. The plan sets four key targets(1): • Group operating profit to exceed €620 million in 2009/10 (earnings before interest, tax and exceptional items), which implies EBITDA of more than €800 million. • Group revenue to grow to approximately €13 billion in 2009/10. • Revenue from financial services to grow from €215 million in 2005/06 to around €370 million in 2009/10. • Revenue from independent travel to grow from €2.2 billion in 2005/06 to €3.3 billion in 2009/10. Manny Fontenla-Novoa, Joint Chief Executive, said: "Through the merger of ThomasCook and MyTravel we have transformed both our business and the industry ingeneral. In the last five months we have almost completed the integration,announced the merger of our German airline, Condor, with Air Berlin, and takensteps to align capacity with demand. In addition, we are announcing today thatwe expect to achieve not less than €200 million merger synergies - an increaseof €60 million on our earlier prediction. "Building on this strong foundation we are now entering a further new andexciting phase of our development which will focus on leveraging the strength ofour mainstream business, developing a market leading independent travelbusiness, driving further growth through our unique travel-related financialservices capability and taking advantage of the significant opportunities thatemerging markets represent for us." The plans are being set out as part of a presentation to analysts and investorsin London setting out the Group's strategy. Full copies of the presentationmaterial will be available during the day on the Group's website(www.thomascookgroup.com). As the Group's revenue increases and with its focus on harnessing the strongergrowth potential in independent travel and financial services, it is expectedthat the revenue from mainstream (excluding financial services) will decline asa proportion of the total from 80% in 2005/06 to 72% in 2009/10. Revenue fromindependent travel is expected to increase as a proportion of the total from 18%in 2005/06 to 25% in 2009/10, while revenue from financial services is expectedto increase as a proportion of the total from 2% in 2005/06 to 3% in 2009/10. In 2005/06, financial services generated €215 million of revenue and €52 millionof EBIT. Within that, the proportion of revenue from foreign exchange isexpected to fall from 69% in 2005/06 to 56% in 2009/10, while the proportionfrom insurance remains 31% and the proportion from cards rises from zero to 13%. As part of the Group's strategy of increasing its controlled distribution, oneof its objectives will be to increase its targeted online sales to 35% in 2009/10. The Group will explore investment opportunities, including acquisitions, inmainstream, independent travel, travel-related financial services and emergingmarkets, while maintaining an asset-light business model. Investmentopportunities will be reviewed against a series of criteria including: return oninvested capital exceeding weighted average cost of capital by the third year,earnings accretion by the second year, strategic fit and integration risk. Dividend policy The Board expects to recommend dividends per share in respect of each full yearin the range of 40-50% of earnings per share and to pay one third of an annualdividend as an interim and two thirds as a final dividend. The Board believes itis desirable to provide shareholders with dividend payments increasingprogressively over time. It is expected that the Board will propose a finaldividend in respect of the year ending 31 October 2007, for payment after, andsubject to shareholder approval at, the annual general meeting expected to beheld on 10 April 2008. This first dividend will be in respect of the second halfof the year ended 31 October 2007 and will therefore represent two thirds of thedividend that would have been paid in respect of a full year, equal to 40% ofearnings for that year. Current trading and outlook As announced on 1 November, the Board believes that the Group's financialperformance for the year will be in line with its expectations. Record profitsare expected in Northern Europe, Airlines Germany and Continental Europe.Trading in all divisions has continued broadly in line with the 1 Novemberannouncement and we continue to be encouraged by bookings for 2007/08. Timetable The Group will announce provisional figures for the year to 31 October 2007 on18 December and full results for the year on 30 January 2008. It will issue aninterim management statement on 14 February 2008 and hold its first annualgeneral meeting on 10 April 2008. Enquiries Thomas Cook Group plc Today +44 (0) 20 7404 5959 Thereafter +44 (0) 1706 746464 Manny Fontenla Novoa Joint Chief ExecutiveLudger Heuberg Chief Financial OfficerSteven Olivant Investor Relations & Financial Communications Director Brunswick +44 (0) 20 7404 5959Fiona AntcliffeAnita Kidgell Notes In the context of the merger, the Group announced synergies of at least €140million in 24-30 months from the date of completion of the merger (19 June2007). The Group now expects to achieve not less than €200 million of synergiesover the same time frame. The target of achieving Group operating profit exceeding €620 million in 2009/10is made on the basis of the following assumptions: 1. Stable economic conditions. 2. No sustained period of significant war, hostilities or terrorist activities affecting a number of our markets. 3. No major legal, regulatory or tax change. Ends -------------------------- (1) Includes 75% interest in Condor This information is provided by RNS The company news service from the London Stock Exchange