Performance review
The new Group’s first full year since the merger can best be characterised as one in which we delivered strong financial performance and laid very firm foundations for the future. We have completed the merger and significantly outperformed against synergy expectations; developed a credible strategy against which we have made real progress; and actively managed our business to generate industry-leading margins and create real shareholder value.
All of this has been achieved despite the worsening economic conditions that have emerged since the beginning of the year. Our experienced management team, under the leadership of Manny Fontenla-Novoa, anticipated the potential impact on our businesses and has taken swift and effective action to ensure we sustain our operational and financial strength in the current financial year and beyond.
We will continue to maximise the advantages we have created and developed. These include a strong financial position, a trusted brand portfolio and the proven ability, within our flexible model, to manage our businesses so that we meet the needs of our customers in an ever changing environment.
Dividend
The Board’s dividend recommendation reflects Thomas Cook’s financial achievement, the strength of our business model and our commitment to delivering value to shareholders.
Although the statutory financial period ended 30 September 2008 is an eleven month period, the Board has assessed the total dividend on the basis of the pro forma twelve month period ended 30 September 2008. As a result, the Board is recommending a final dividend of 6.5 pence per share which, when combined with the interim dividend of 3.25 pence per share paid on 5 September 2008, makes a total dividend for the year of 9.75 pence per share. This represents a pay-out of 41% of profit after tax before exceptional items. This is in line with our policy, which remains to increase dividends progressively, paying between 40% and 50% of adjusted earnings by way of dividend.
Board changes
Changes to the Board during the period included the appointment of Jürgen Büser as Chief Financial Officer from 1 July 2008. This followed the decision of Ludger Heuberg to step down from the Board for personal reasons and family commitments. We are pleased that he has remained with the Group in the role of Chief Financial Officer for Continental Europe.
Angus Porter resigned from the Board as a Non-Executive Director on 25 April 2008 following his appointment as Group Strategy Director, a position he took up on 2 June 2008.
Nigel Northridge joined the Board as an Independent Non-Executive Director with effect from 1 August 2008. He is a member of both the Management Development & Remuneration Committee and the Nominations Committee.
With effect from 22 December 2008, Peter Diesch will be stepping down from the Board and will be replaced as an Arcandor AG nominated Non-Executive Director by Dr Karl-Gerhard Eick. I would like to thank Peter for his contribution to the deliberations of the Board since the merger.
Executive team
I, and my fellow Board members, would once again like to express confidence in the Group’s executive team, led by Manny Fontenla-Novoa. He has engaged some of the most talented people in the industry and, together, they have continuously demonstrated their ability to lead the organisation in a challenging marketplace. They have exceeded expectations across a range of metrics, delivering industry-leading margins, making huge progress against our strategic agenda, and further strengthening the Thomas Cook brand.
Employees
We are also very proud of our people at all levels within the Group. They live our Company values and continually strive to understand the requirements of our customers and deliver their travel and holiday dreams. We believe their skills, diversity and experience are key to our flexible approach and to our continued success.
Outlook
The success Manny and the executive team have had in delivering a highly demanding programme during the past year gives my fellow Board members and me every confidence that they will rise again to the challenges of the year ahead.
Dr Thomas Middelhoff
Chairman
19 December 2008
