26 November 2014 Audited results for the year ended 30 September 2014 Thomas Cook delivers further strong profit growth Highlights

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1 26 November 2014 Audited results for the year ended 30 September 2014 Thomas Cook delivers further strong profit growth Highlights 12 months ended 30 September 2014 compared with 12 months ended 30 September 2013: Underlying EBIT on a like-for-like basis was 323 million, an increase of 98 million, or 44% (FY13 LFL: 225 million) All businesses delivered improved profitability. In particular, underlying UK EBIT margin improved by 130 basis points to 3.5% (FY13: 2.2%), achieving our FY14 target New Product revenue grew by 186 million in FY14, bringing cumulative growth since FY12 to 280 million and contributing towards our FY15 target of 700 million. Customer demand for Concept Hotels has been encouraging with Summer 14 bookings up 43% year-on-year Web penetration increased to 38% (FY13: 36%). In particular, web performance improved on main websites in the UK, Germany and Northern Europe where our focused digital investment has led to double-digit increases in bookings. We developed and implemented our omnichannel strategy in the UK, with other markets to follow Further Wave 1 cost out and profit improvements of 206 million delivered in FY14 brought cumulative benefits to 400 million. Reflecting the continuing success of the programme, we are increasing our Wave 1 FY15 target from 460 million to more than 500 million Our Wave 2 FY18 target currently remains at 400 million. We are increasing our identified riskweighted benefits by 30 million to 180 million, reflecting greater certainty of delivery We have de-risked our business by reducing low profit and high risk operations, through business disposals, strategic reductions in risk capacity in France and Russia, and the removal from sale of low quality product Net debt reduced by 95 million to 326 million (FY13: 421 million), alongside significant investment in the business in the form of capital expenditure and transformation costs m (unless otherwise stated) Year ended 30 Sep Year ended 30 Sep 13 Change m Like-for-like change m Revenue 8,588 9,315 (727) (180) Underlying Gross Margin 22.3% 22.1% 0.2% 0.6% Underlying Profit from Operations (EBIT) Underlying EBIT % 3.8% 2.8% 1.0% 1.2% EBIT Separately Disclosed Items (269) (250) (19) EBIT Loss After Tax * (115) (213) 98 Basic EPS * (8.2p) (17.1p) 8.9p Underlying EPS 11.3p 5.0p 6.3p Free Cashflow Net Debt (326) (421) 95 *FY13 separately disclosed interest income restated by 5 million as a result of new pension standard (1) Like-for-like change is quoted to improve the comparability of prior year data, by adjusting the prior year comparative for the impact of disposals, foreign exchange translation and any other factor that distorts the true performance of the business. The detailed like-for-like adjustments are shown on page 12 (2) The term Underlying refers to trading results that are adjusted for separately disclosed items that are significant in understanding the ongoing results of the Group. Separately disclosed items are included on the face of the income statement and are detailed on page 39.

2 Key Financial Points Revenue of 8,588 million was 727 million lower than last year, mainly as a result of business disposals ( 207 million), foreign exchange translation ( 300 million), reduction of strategic risk capacity and removal of low quality product ( 189 million), and continuing lower demand for Egypt ( 177 million), offset by an increase in revenue from new products of 186 million. This has resulted in an improved quality of business, reflecting our focus on higher margin products as part of our strategy for sustainable profitable growth Gross margin improved by 20 basis points to 22.3% (FY13: 22.1%), despite competitive pressures, due to the benefits from the Wave 1 of our profit improvement programme and improved gross margins in our UK business in the second half of the year. On a like-for-like basis, gross margin improved by 60 basis points, resulting in a cumulative improvement of 150 basis points since FY12, an achievement of our FY15 target one year early Overhead costs reduced by 107 million (6.3%) on a like-for-like basis, reflecting strong progress in delivering Wave 1 of our cost out and profit improvement programme Underlying EBIT improved by 60 million to 323 million (FY13: 263 million). After adjusting for disposals ( 15 million) and foreign exchange translation ( 23 million), underlying EBIT was 98 million (44%) higher than last year, mainly due to improved profitability in our UK and Continental European businesses Northern Europe maintained its strong EBIT position, while all other parts of the business recorded increased profits, with the UK and Continental Europe seeing particularly significant like for like improvements of 38 million and 35 million respectively. Condor also performed positively despite difficult market conditions Separately disclosed items impacting EBIT totalled 269 million (FY13: 250 million). This was mainly due to restructuring costs of 124 million (FY13: 127 million) incurred as part of the transformation, pre-disposal impairments ( 41 million) and provision for potential customer claims for flight delays under European directive EU261 ( 41 million) EBIT after separately disclosed items for FY14 was 54 million, an improvement of 41 million compared to last year (FY13: 14 million). After deducting net interest and tax charges, the loss for the year amounted to 115 million, an improvement of 98 million (FY13: loss of 213 million) Free cashflow of 116 million (FY13: 53 million) was generated in FY14. Improved underlying EBIT and disposal proceeds were partially reinvested in the business through higher capital expenditure and exceptional costs related to the transformation. The remainder was used to reduce net debt by 95 million to 326 million (FY13: 421 million) New Group Chief Executive Officer We have also announced separately that Harriet Green will hand over the role of Group Chief Executive Officer of Thomas Cook to Peter Fankhauser with immediate effect. 2.

3 Outlook In the two years since the start of the transformation, we have delivered like-for-like EBIT growth of 102 million (82%) in FY13 and 98 million (43%) in FY14. Reflecting the tougher trading environment our outlook for growth in FY15, while still positive, is more measured. Accordingly, we now expect to deliver further growth this year at a more moderate pace. From a cash perspective, we expect to further improve our net debt position, to between 100 million and 150 million by the end of the financial year. Our work to transform Thomas Cook continues. We are just two years into our major change programmes and, whilst the transformation has already delivered substantial benefits to the business and its stakeholders, there is more to do. We are confident that our robust product strategy, our focus on digital and our continuing profit improvement initiatives will enable us to deliver further significant value this year and beyond. Forthcoming announcement dates The Group intends to publish its first quarter 2015 interim management statement on 11 February 2015, and to release its half year results on 20 May Presentation to equity analysts A presentation will be held for equity analysts by invitation today at 8.15 a.m. (GMT), at FTI Consulting, 9th floor, North Building, 200 Aldersgate, London EC1A 4HD A live webcast of the presentation will available via the following link and dial in: United Kingdom All other locations Enquiries Analysts & Investors James Sandford, Thomas Cook Group +44 (0) Media Jenny Peters, Thomas Cook Group +44 (0) Andrew Lorenz, FTI Consulting +44 (0)

4 Delivering on targets and KPIs The following table sets out the milestones on the journey toward the achievement of our FY15 targets and KPIs, which were initially established in March Actual FY 12 FY 13 FY 14 FY14 Target FY 15 Target Targets New Product Revenue N/A 94m 280m > 300m > 700m Web Penetration (i) 34% 36% 38% >40% > 50% Wave 1 cost out/ profit improvement (run-rate) 60m 194m 400m > 360m > 500m KPIs Sales CAGR (ii) N/A N/A (2.1%) >2.5% > 3.5% Underlying Gross Margin Improvement (iii) N/A 0.8% 1.5% >1.2% > 1.5% UK EBIT Margin 0.1% 2.2% 3.5% >3.5% > 5% Cash Conversion (iv) 11% 48% 62% >55% > 70% (i) Measured on a last 12 months departed basis ("LTM") (ii) Compound annual growth rate from FY13 to FY15 including new product revenue (iii) Underlying gross margin, adjusted for disposals and shop closures on a like-for-like basis (iv) Cash conversion defined as set out on page 20 Against a backdrop of the tougher trading environment and challenges of transforming a complex organisation, we are making good progress towards reaching these targets and KPIs. The Group achieved its underlying gross margin improvement target for FY15 one year early, supported by our Wave 1 cost out and profit improvement programme which has consistently exceeded targets. Turning around our UK business is key to the future success of the Group, and here we are making good headway, achieving an EBIT margin of 3.5%, in line with our FY14 target. Our focus on margin, combined with initiatives to improve cash management, has resulted in good progress towards our FY15 cash conversion target. Our New Product strategy is already delivering incremental revenues, although given the tougher trading environment and the revenue impact of removing low quality product, achieving our Group sales growth target in FY15 will undoubtedly be challenging. However, we now have a higher quality revenue platform from which to build, and we are committed to achieving our FY15 and FY17 new product revenue growth targets of 700 million and 1.2 billion respectively. The significant progress we have already made in digitising our businesses is not yet fully reflected in our web penetration. However as we continue to invest region by region and become a more efficient digital business, we expect that the growth of our web penetration will accelerate, and that we will meet our stretching targets over time. 4.

5 New Product revenue Incremental New Product revenue rose by a further 186 million during FY14, to 280 million on a cumulative basis since FY12, contributing towards our targets of 700 million in FY15, and 1.2 billion by the end of FY17. Our New Product strategy involves reshaping our product portfolio to deliver profitable growth through a combination of increased revenue and improved margin. We are expanding our range of higher margin differentiated holidays by rolling out more of our exclusive products and trusted brands, such as Sunwing and Sunprime, and our major partnership hotels. At the same time, we will continue to deliver the same quality assured customer experience for our other, non-differentiated, products. We will do so more flexibly and at a lower cost, thereby improving gross margin. We are confident that we will achieve our previously announced roll out plan for our exclusive concept and partnership hotels. We aim to have 640 and 800 by FY15 and FY17 respectively compared to 475 currently, as we focus on maximising occupancy levels at our concept hotels through enhanced inventory management. In addition, our product strategy includes the development of our range of flexible products such as City Breaks and Long Tail. As a New Product area accounting for a small proportion of sales, City Breaks is still in an early phase of development. However we are rapidly expanding our range of City Break products and expect this area to deliver significant New Product revenue growth by the end of FY15. Our Long Tail products are those hotels which are quality assured by but not exclusive to Thomas Cook. We can minimise input costs through our ability to source them without commitments and to package them flexibly. By using our significant scale and digital capability we can optimise the inventory to offer competitively priced, low cost product more profitably. In support of this, we have invested significantly during the year in our airline customer experience, including capital expenditure of 37 million pounds on aircraft cabin refurbishments. By Summer 14, we had replaced 9% of our fleet with brand new aircraft, and refurbished a further 30% of the fleet, leading to increased customer satisfaction and greater operational efficiency. By Summer 15 we expect to have replaced or refurbished almost 90% of our fleet, including 25 brand new Airbus A321 aircraft. Web and Omnichannel Enabling customers to access our services through multiple channels in an integrated and seamless manner, including making greater use of online channels, will enable us to provide a better service to customers at lower cost. We have made substantial progress in this area in FY14. We have built and launched our new international web platform, OneWeb, invested in digital stores, and further consolidated our systems landscape. Through these steps we have built the foundations for further digital growth. OneWeb, launched in the UK market in May, provides a significantly improved customer experience on desktop, tablet and mobile devices, including a fully responsive design which adapts automatically and instantly to any screen size. OneWeb consolidates several different legacy systems into a single state-ofthe-art platform, thereby simplifying our technical architecture, and improving resilience and agility. We will roll OneWeb out into other Continental European markets during the coming year, with migration of our Dutch websites already underway. 5.

6 We have also continued to improve our digital proposition in other markets, especially in mobile, including launching fully responsive sites in Germany, The Netherlands, Belgium and Northern Europe during the year. Also in Northern Europe, we launched our Companion App in September, a digital companion to guide customers throughout their Thomas Cook holiday experience; it complements our Travelguide App which is already available in Germany, and we plan to roll out this powerful proposition to other markets over the coming year. Where we have focused our digital investment, we have achieved double digit online growth. For example, in the three months after OneWeb was launched in May 2014, customers booking on thomascook.com increased by 14% compared to the same period last year, with particularly strong performances on mobile and tablet, which increased by 74% combined. Similarly in Central Europe, bookings on our main websites (thomascook.de and neckermann-reisen.de) rose by 17% in FY14 as we focused on improving customer experience. Summer 14 bookings of our new short haul sun and beach flexible product in Northern Europe made through our dynamic booking engine grew by 55% year-onyear. The proportion of our customers who travelled on Thomas Cook holidays booked through our online channels has risen from 34% when the transformation began in 2012 to 38% in FY14. While this does not yet fully reflect the progress we have made in digitising our business, we believe that the actions we have taken to develop our web proposition over the last two years serve as a firm foundation for further digital growth. As we roll out OneWeb across the Group, market by market and become a more efficient digital business, we expect that the growth of our web penetration will accelerate, and that our stretching web target of >50% will be achieved over time. Cost out and profit improvement The table below shows the performance of our Wave 1 cost out and profit improvement programme against targets in FY14, and our new, increased targets for FY15. m FY 12 FY 13 FY 14 FY14 Target FY 15 Target UK turnaround Group-wide cost out Integrated air travel strategy Organisational structure Product, infrastructure, technology, and other Total targeted benefits (i) Expected costs to achieve (ii) Income statement (iii) Cash flow Notes Operating expenditure Capital expenditure (i) Run-rate (ii) One-off costs (iii) One off costs in the income statement are included in separately disclosed items, please refer to note 4 of appendix 1 for further detail 6.

7 Our Wave 1 cost out and profit improvement programme has continued to exceed expectations. In FY14 we delivered further benefits of 206 million, of which 65 million benefited gross margin and 141 million reduced overhead costs. This takes the cumulative total of cost out and profit improvement to 400 million at the end of FY14, exceeding our target for the year by 40 million. For FY15, we are now more confident of exceeding our previous target of 460 million, and accordingly we are increasing this target by 40 million to deliver more than 500 million by the end of the year. Of the cumulative benefits of 400 million at 30 September 2014, 153 million has improved gross margin and 247 million has reduced the Group s overhead cost base. Our Wave 2 cost out and profit improvement programme is progressing well as we continue to develop and refine opportunities. Our current estimate of the total potential benefits from Wave 2 is 400 million. Risk weighted benefits currently total 180 million, an increase of 30 million compared to the last announcement, and should continue to increase towards the gross figure as initiatives continue to mature with an increasing certainty of delivery. The table below shows the expected benefits and costs of our Wave 2 programme. m Risk weighted benefits and costs Target end state Improvement FY15 FY16 FY17 FY18 FY18 - Hotel and airline yield management Channels and digitisation Enablers (IT and share services) Total identified benefits (i) Expected costs to achieve (ii) Notes (i) Cumulative run-rate. There are no benefits prior to FY16. (ii) One off cash costs of delivery. Wave 2 will improve the profitability of the sales of our hotels and flights through reduced input costs, enhanced margin on sales and greater margin per customer on ancillary products. The reduced input costs on hotels are expected to be achieved through improved contracting practices that are adapted from the working methodologies of other successful industries. For example, we are establishing market price monitors in our largest destinations that are validated with local price checks, and we are targeting many of our contracting staff to outperform the local index so that more margin is captured. We are also pooling our flight purchasing to optimise airline seat negotiations. As we focus on distribution efficiencies, our product range will be loaded onto a single inventory management system for use across all markets. We are also focusing on improving price and yield management though improved web analytics, distribution of risk capacity across multiple source markets and the optimisation of real time online pricing. In terms of increasing margin per customer on ancillaries, our Northern European business is already generating significant value in this area by pursuing a proactive contact strategy from the time of initial 7.

8 booking through to after our customer returns from holiday. We are sharing these practices across the Group to maximise returns. Finally, as we continue to roll out our successful omnichannel strategy and our customers continue to migrate to digital channels, we expect our cost of sales and service per holiday to reduce significantly, enabled by further contact centre consolidation. Sales growth Having substantially de-risked our business since the transformation began in FY12, including disposing of or removing low profit and high risk business and product lines, we now have a higher quality revenue platform from which to build and sustain profitable growth. Specifically in the year, Group sales declined by 2.1% excluding disposals and foreign exchange impact. This was mainly due to lost revenues as a result of market disruption in Egypt, the removal of low quality product, and the strategic reduction of risk capacity in France and Russia. Due to these factors, and the tougher trading environment, it is clear that achieving our sales growth target of a 3.5% CAGR by FY15 is challenging. However, we remain confident that our investment in product will enable us to deliver an improved revenue performance in FY15. Underlying gross margin improvement Underlying gross margin for FY14 of 22.3% has improved by 150 basis points since FY12, representing the achievement of our FY15 target one year early. This reflects the benefits of our Wave 1 cost out and profit improvement programme, increasing contributions from our higher margin new products and improved yield management. All of our businesses have improved underlying gross margins over the last two years, and FY14 Group margin improved by 60 basis points compared to last year on a like-forlike basis. This has been achieved despite market pressures from competitive pricing conditions and overcapacity in the short haul airline sector. UK EBIT margin improvement UK EBIT margin in FY14 improved to 3.5%. This reflects operational improvements made to the business, the successful and sustained delivery of our Wave 1 cost out and profit improvement measures, and changes in UK airline maintenance provisions as part of the Group-wide airline integration. This is in line with our target EBIT margin of 3.5% for the UK business in FY14. Our target is for UK EBIT margin to improve further as our product strategy begins to deliver more substantial margin benefits to supplement the operational improvements and cost reduction measures made to date, enhancing the capacity for profitable growth. Cash conversion Cash conversion for FY14 was 62%, ahead of our 55% target, as 78 million of net proceeds from noncore business disposals has been reinvested in accelerating the transformation. The cash conversion ratio has improved during the final quarter of the year as the working capital cycle for the peak Summer months has largely been completed. As a result, the effect of our planned reduction in capacity and consequent reduction in customer receipts and hotel creditors has now unwound through the cash flow statement. 8.

9 We remain committed to achieving our cash conversion target of more than 70% in FY15 and, as we continue to benefit from our profitable growth strategy and improved cash culture, we expect net debt to reduce to between 100 million and 150 million by the end of September Current trading Summer 14 Our Summer programme finished on 31 October with cumulative bookings in line with capacity changes for all markets. There have been no significant changes since we made our Pre-Close announcement on 16 September. Overall, Tour Operator bookings were in line with last year and average selling prices were 1% lower, while Airlines Germany was impacted by overcapacity in the short haul flight market which resulted in average prices being 4% lower year-on-year, offset by a 3% increase in volumes. Summer 14 Year on Year Variation % Risk Business Average Selling Price Committed Capacity Cumulative bookings UK -3% +1% +0% Central Europe +0% +6% +2% France -5% -12% -14% East/West +3% -1% -1% Continental Europe +0% +1% +0% Northern Europe -1% +3% +3% Total Tour Operator -1% +1% +0% Airlines Germany -4% +4% +3% Winter 14/15 The Winter 14/15 season is 55% sold for the Group as a whole, 1% lower than this time last year. Overall, bookings for the Tour Operator are 2% lower than this time last year, and while prices remain in line with last year, competitive market conditions have led to a continuation of the margin pressures that were evident later in the Summer season. UK bookings have increased significantly with volumes 5% higher than at this time last year, against an increase in risk capacity of 10% as we expand our Winter Sun offering to new destinations. Average selling prices have increased by 1%. As several of our Winter Sun destinations have recently been introduced, pricing and margins also reflect a degree of promotional pricing until those routes are better established in the market. 9.

10 While average selling prices in Central Europe are flat year on year, bookings are 5% lower than last year, against a reduction on committed capacity of 9%, reflecting a switch to more flexible dynamically packaged products. This has reduced risk in the business in the climate of weaker consumer sentiment in Germany that we communicated in our Pre-Close statement on 16 September, consistent with the market in general. Bookings in France are 15% lower and prices are 3% higher, consistent with our strategy of reducing the scale of the risk business in that source market to focus on more profitable business lines. East/West bookings are 4% lower than last year compared with capacity reductions of 15% and prices are 1% lower than last year. Northern Europe bookings are 2% below last year, broadly in line with capacity commitments, while prices are 2% higher. Despite a more competitive market environment, we expect our Northern European business to maintain industry-leading margins in FY15, supported by an increased contribution from our dynamically packaged products. Airlines Germany has increased bookings by 10%. Our long haul business is performing well, while certain short and medium haul routes continue to experience over capacity, which has resulted in average selling prices remaining stable. Winter 14/15 Year on Year Variation % Risk Business Average Selling Price Committed Capacity Cumulative bookings UK +1% +10% +5% Central Europe +0% -9% -5% France +3% -17% -15% East/West -1% -15% -4% Continental Europe -1% -13% (1) -6% Northern Europe +2% -1% -2% Total Tour Operator -1% +0% -2% Airlines Germany +0% +9% +10% (1) The reductions in committed capacity are consistent with the strategy of switching to flexible products, de-risking the business Summer 15 While it is early in the booking cycle, we continue to be encouraged by booking and pricing trends for the Summer 15 season. The UK is currently 23% sold, our UK business is showing an encouraging profile with bookings up 8% and prices 1% higher, reflecting our improved product offering for the Summer season. 10.

11 FINANCIAL REVIEW Financial results and performance review Group m (unless otherwise stated) Year ended Year ended 30 Sep Sep 13 Change 'm Like for Like Change 'm Revenue 8,588 9,315 (727) (180) Underlying Gross Margin 22.3% 22.1% 0.2% 0.6% Underlying Profit from Operations (EBIT) Underlying EBIT % 3.8% 2.8% 1.0% 1.2% EBIT Separately Disclosed Items (269) (250) (19) EBIT Loss After Tax * (115) (213) 98 Basic EPS * (8.2p) (17.1p) 8.9p Underlying EPS 11.3p 5.0p 6.3p Free Cashflow Net Debt (326) (421) 95 *FY13 separately disclosed interest income restated by 5 million as a result of new pension standard (1) Like-for-like change is quoted to improve the comparability of prior year data, by adjusting the prior year comparative for the impact of disposals, foreign exchange translation and any other factor that distorts the true performance of the business. The detailed like-for-like adjustments are shown on page 12 (2) The term Underlying refers to trading results that are adjusted for separately disclosed items that are significant in understanding the ongoing results of the Group. Separately disclosed items are included on the face of the income statement and are detailed on page 39. Overview The past financial year has seen a continuation in the Group s progress, building upon the foundations laid in 2013 and creating strong momentum for future profitable growth, underpinned by enhanced financial reporting and controls. In FY13 we set out our medium-term strategy for the three years ending 30 September 2015 and concluded a 1.6 billion recapitalisation exercise to raise additional equity, extend debt maturities and strengthen the Group s capital base. During FY14 we completed the first phase of delivering against the detailed measures of our plan to position the Group for long-term profitable growth. At the same time, the Group has increased like-for-like EBIT by 98 million to 323 million, which has been achieved, while like for like Group revenue has reduced to 8.6 billion. The reduction in revenue is due to the disposal of non-core businesses in the UK and the discontinuation of less profitable activities. At the same time, we have increased our portfolio of more profitable higher quality products. This has de-risked the Group s operations. The main drivers of improved profitability in FY14 are the benefits from the expansion of our new product offering together with the continued delivery of Wave 1 of our cost out and profit improvement programme. 11.

12 Our asset divestiture programme has now been concluded, having generated gross proceeds of 138 million from 15 disposals in 15 months, meeting our target of 100 million to 150 million more than 15 months ahead of schedule. Free cash flow of 116 million (FY13: 53 million) was generated in FY14 as our improved underlying EBIT performance was partially reinvested in the business through higher capital expenditure and exceptional costs related to the transformation. The remaining improvement in underlying EBIT, together with the net proceeds from asset disposals, has been used to reduce net debt. As a consequence of our progress over the past year, Group net debt has been reduced from 421 million at the end of FY13 to 326 million, strengthening the balance sheet and better positioning the Group for profitable growth. We expect to continue to improve the Group s finances, through further deleveraging and through pursuit of refinancing opportunities in order to improve the efficiency of our capital structure. Like-for-like Analysis In implementing the transformation, the Group has undertaken activities which, combined with the normal translational effect of foreign exchange movements, impact upon the comparability of underlying performance for FY13 and FY14. To assist in understanding the impact of those factors and to better present year-on-year trading progression, we consider Like-for-like growth during FY14 in our analysis below. The Like-for-like adjustments and resultant year-on-year movements are as follows: Revenue Gross Operating Margin Expenses EBIT m % m m FY13 Reported (Continuing) 9, % (1,796) 263 Disposals/Store Closures (207) (0.3)% 33 (15) Accounting Changes* (40) (0.1)% 23 (0) Impact of Currency Movements (300) 0.0% 40 (23) Year Ended September 2013 'Like for Like' 8, % (1,700) 225 Year Ended September 2014 Reported 8, % (1,593) 323 Like for Like Growth ( 'm) (180) (9) Like for Like Growth (%) (2.1)% 0.6% 6.3% 43.6% *Accounting changes adjust prior year comparative to ensure consistent presentation with FY14 Revenue Revenue of 8,588 million was 727 million lower than last year, mainly as a result of business disposals in the UK (impact of c. 207 million), and foreign exchange translation (impact of c. 300 million), excluding those factors, revenue decreased by 180 million (2.1%) on a like-for-like basis, reflecting lower demand to Egypt which impacted FY14 revenues by c. 177m, and strategic reductions in risk 12.

13 capacity in certain markets. The latter is consistent with our focus on higher margin business as part of our strategy for sustainable profitable growth. Throughout FY14, the Group has continued to closely manage committed capacity in order to optimise pricing and yield. In FY14 the Group reduced overall committed capacity by approximately 179 million mainly in the UK, France and Russia. The negative impacts on revenue due to discontinued business and the downturn in demand to Egypt were offset by the benefit of our new product expansion strategy, which contributed 186 million of additional revenue in FY14. The main components of like-for-like revenue movement are: m FY13 like for like Revenue 8,768 New Product Growth 186 Egypt (177) Capacity reductions (179) Core Portfolio (10) FY14 Revenue 8,588 Gross Margin Gross margin of 22.3% represents an increase of 20 basis points on FY13. On a like-for-like basis, FY14 gross margin has increased by 60 basis points, resulting in a cumulative improvement of 150 basis points since FY12, achieving our target for FY15 one year early. Like-for-like gross margin improved in all of our geographical segments compared to last year. A major factor in this improvement has been the continued delivery of our cost out and profit improvement programme which has had a positive impact of 70 basis points on gross margin. Key initiatives include the continuing benefits of our Group Airline strategy, with further investment in the fleet, together with Lean and standardised processes, reducing maintenance costs. Pricing and Yield improvements have contributed a further 50 basis point increase in gross margin as we increase our range of new products, which carry a higher average selling price, and sell more high margin ancillary products. Cost inflation of 60 basis points has partially offset the underlying growth in gross margin. The impact of the redirection of demand from Egypt during the Winter season led to a short-term increase in hotel costs in the Canary Islands. In addition, trading conditions became increasingly competitive in the second half of the year with overcapacity in the short / medium haul airline sector creating downward pressure on prices and margins. 13.

14 The major drivers of this like-for-like movement in gross margin of 60 basis points are outlined below: % FY13 like for like Gross Margin 21.7% Yield / Product Mix 0.5% Gross Margin Cost Out 0.7% Cost Inflation (0.6%) FY14 Gross Margin 22.3% Operating Expenses / Overheads Operating expenses for FY14 of 1,593m represent a year-on-year reduction of 203m (11.3%), broken down as follows: m Year Ended Sep 2014 Year Ended Sep 2013 Change LFL Change Personnel Costs (913) (1,036) Net Operating Expenses (507) (598) Subtotal (1,420) (1,634) Depreciation (173) (162) (11) (17) Total (1,593) (1,796) Like-for-like operating expenses reduced by 107 million (6%), driven by Wave 1 of the Group s cost out initiatives, which delivered a further 141 million of savings, partially offset by the 34m million impact of strategic operating investments and an increase in depreciation. The largest contribution to cost reduction came from our UK business, including the full year benefit of our store closure programme and further measures to streamline the tour operator business which were implemented in FY13, alongside new measures initiated in FY14. There were also savings elsewhere in the Group, most significantly from restructuring activities in France and Russia and through further operational efficiency initiatives in the Group Airline. These benefits were partially offset by further investment in strategic operating expenditure investments as set out below. 14.

15 m FY13 like for like operating expenses (1,700) Cost Out and Profit Improvement 141 Strategic Opex investment (28) Other (6) FY14 operating expenses (1,593) Strategic operating investments We continued to make investment in strategic operating costs to support the transformation and our cost out and profit improvement initiatives. These totalled 28 million in FY14, primarily for senior management appointments, investment in IT and strategic marketing expenditure focused on web transition to support our omnichannel strategy. The structural cost out that has been delivered over the first two years of the transformation has directly benefited Group EBIT. This has been partly offset by strategic operating investment of 53 million over the same period. Strategic operating investment totalled 28 million in FY14, below our previous guidance of 40 million, and we expect to incur further costs of 40 million in FY15. Underlying EBIT In FY14 the Group generated underlying EBIT of 323 million, an increase of 60 million (23%) on FY13 EBIT of 263 million. On a like-for-like basis Group EBIT increased by 98 million (44%), with every geographical source market reporting EBIT growth. The improvement in EBIT during the year is primarily due to the continuing delivery of Wave 1 of our cost out and profit improvement measures of 206 million; including a positive impact of 65 million on our Gross Margin. However, 61 million of this improvement has been offset by underlying trading pressures, which impacted profitability particularly in the first half of the year in our UK business. Included in underlying trading are the initial benefits amounting to 21m of from the expansion of our New Products and 10 million of additional costs for customer compensation payments relating to EC Regulation 261/2004. In addition, unrest in Egypt impacted EBIT by 20 million. We have also reduced our overhead cost base through our ongoing Cost Out measures by a further 141 million (of the 206 million total Cost Out and Profit Improvement). Some of those savings have been re-invested in the business either through strategic operating investments and increased depreciation from our airline fleet, an impact of 46 million. We have also benefited this year from lower Corporate overhead costs primarily as result of the incidence of foreign exchange differences, together with revised provisions for employee incentive plans and other remuneration schemes, which have an impact of 19 million. 15.

16 m FY13 like for like EBIT 225 Gross Margin Profit Improvement 65 Egypt (20) Underlying Trading (61) Overhead Cost Out 141 Strategic Opex / Depreciation (46) Corporate 19 FY14 EBIT 323 Separately Disclosed Items The table below summarises separately disclosed items charged to the income statement for FY14 of 296 million, which are 15 million higher than the prior year (FY13: 281 million). They have a cash impact of 119m, broadly in line with last year (FY13: 120 million) FY14 FY13 m Cash Non-cash Total Cash Non-cash Total Restructuring costs (114) (10) (124) (107) (20) (127) EU261 related costs (5) (36) (41) Provisions & Impairments - (104) (104) (13) (110) (123) EBIT related items (119) (150) (269) (120) (130) (250) Finance costs - (27) (27) - (31) (31) Total (119) (177) (296) (120) (161) (281) 1 Non-cash items encompasses both non-cash entries and cash effects, which haven t been realised before the end of the period A full description of these items is disclosed on page 39. Net finance costs Net interest charges before aircraft financing for FY14 totalled 113 million (FY13: 114 million). Aircraft financing charges and fee amortisation totalled 21 million and 9 million respectively, bringing the total net interest cost for FY14 to 143 million (FY13: 146 million). 16.

17 Underlying Net interest and finance costs FY14 m FY13 m Total bank and bond interest (82) (83) Commitment fees (6) (7) Letters of credit and bonding (17) (16) Other interest costs (8) (8) Underlying Net interest and finance costs before aircraft financing (113) (114) Aircraft financing (21) (25) Fee amortisation (9) (7) Underlying Net Interest Expense (143) (146) Operating lease charges FY14 m FY13 m Included within EBIT: Aircraft operating lease charges Retail operating lease charges Hotel operating lease charges Total Retail operating lease charges have reduced by 17% primarily due to the full year impact of the reduction in the UK retail footprint following the closure of stores in FY13. Taxation FY14 m FY13 m Current Tax: UK 0 (5) Overseas (17) (39) Total Current Tax (17) (44) Deferred Tax 16 (6) Total Tax Charge (1) (50) Cash Tax: UK 0 5 Overseas (32) (36) Total Cash Tax (32) (31) 17.

18 The overall tax charge in the year reduced from 50 million to 1 million. A major contributor to the reduction in charge is the increase in deferred tax assets recognised in the year, mainly in respect of our UK business tax losses. The Group continues to pay corporation tax in its profitable markets, in particular in Northern Europe and Belgium. Excluding deferred tax movements and other specific adjustments, the Group s annual tax charge should be broadly consistent with the cash tax cost, which is expected to remain in the range of million per year. Basic Loss per share The basic loss per share for the year was 8.2 pence, delivering a year-on-year improvement of 8.9 pence (FY13: loss 17.1 pence). FY14 FY13* Loss After Tax ( m) (115) (213) Attributable to Minority Interest ( m) (3) 8 Adjusted Loss After Tax ( m) (118) (205) Weighted Ave. # of shares (m) 1,440 1,196 Loss per Share (Pence) (8.2) (17.1) *FY13 separately disclosed interest income restated by 5 million as a result of new pension standard Underlying Earnings Per Share The underlying earnings per share, after taking into account separately disclosed items, was 11.3 pence, delivering a year-on-year improvement of 6.3 pence (FY13: 5.0 pence). FY14 FY13 Loss After Tax ( m) (115) (213) Exceptionals Attributable to Minority Interest ( m) (3) 8 Exceptional Tax (15) (16) Adjusted Loss After Tax ( m) Weighted Ave. # of shares (m) 1,440 1,196 Earnings per Share (Pence)

19 Summary Cash Flow Statement 1 FY14 FY13 m m Underlying EBIT Depreciation EBITDA Working Capital Tax (32) (31) Pensions & Other (22) (18) Operating Cash flow Exceptional Items 2 (43) (120) Capital Expenditure (156) (150) Aircraft Related Costs 3 (35) 0 Net Interest Paid (130) (130) Free Cash flow New Equity Other 4 (9) (65) Net Cash flow Opening Net Debt (421) (788) Net Cash Flow Other Movements in Net Debt 5 (12) (52) Closing Net Debt (326) (421) 1 The Group uses three non-statutory cash flow measures to manage the business. Operating Cashflow is net cash from operating activities excluding interest income, aircraft related costs and the cash effect of separately disclosed items impacting EBIT. Free Cash flow is cash from operating activities less capital expenditure and interest paid. In FY14 Free Cash flow also includes the net cash received on disposals. Net Cashflow is the net (decrease)/increase in cash and cash equivalents excluding the net movement in borrowings, finance lease repayments and facility set-up fees. 2 Exceptional items include net cash from disposals of 78 million in FY14 3 Aircraft related costs reflect maintenance cashflow relating to aircraft financed under operating leases which would otherwise be treated as capital expenditure if financed under finance leases 4 This figure includes a 38 million cash outflow relating to restricted cash within the Thomas Cook North America business, which was disclosed as a Discontinued Operation in the FY13 statements 5 Represents retranslation of foreign currency debt items and amortisation of capitalised fees Net Cash flow of 107 million (FY13: 419 million) was generated in FY14. Improved underlying EBIT was reinvested in the business through higher capital expenditure and exceptional costs related to the transformation. The remaining improvement in underlying EBIT in addition to disposal proceeds has been used to reduce net debt to 326 million (FY13: 421 million). Cash Conversion The group uses a measure of cash conversion reflecting the amount of cash flow retained by the business which can be used for investment in capital expenditure, debt repayment or payment of dividends. Cash conversion has improved from 48% to 62% in the year reflecting improved trading and the benefit of disposal proceeds. 19.

20 FY14 FY13 Operating Cash flow* Net Interest (130) (130) Cash Exceptionals (43) (120) Converted Cash EBITDA Cash conversion 62% 48% *Operating Cash flow defined as net cash from operating activities excluding interest income, aircraft related costs and cash exceptionals. Balance Sheet The summarised Group Balance sheet is as follows: m 30 Sept Sept 2013 Total Intangible Assets 2,873 3,155 Total Tangible Fixed Assets Other Non Current Assets 3,965 4,282 Current Trade And Other Receivables Cash And Cash Equivalents 1 1,019 1,089 Other Current Assets 1,829 2,003 Current Trade And Other Payables (2,083) (1,995) Current Borrowings 1 (449) (177) Short Term Obligations Under Finance Leases 1 (34) (43) Revenue Received In Advance (999) (1,120) Other (329) (370) Current Liabilities (3,894) (3,705) Long Term Borrowings 1 (715) (1,114) Long Term Obligations Under Finance Leases 1 (147) (182) Other (753) (736) Non Current Liabilities (1,615) (2,032) Net Assets Net Debt (326) (421)* *At 30 September 2013 cash of 5 million was included in assets held for resale on the Group s balance sheet. The Group s Net Asset value fell by 263 million, from 548 million to 285 million during FY14. This was mainly due a reduction in Intangible Assets, as a result of the write off of goodwill associated with the disposal of businesses in the UK (c 41 million), together with the impact of foreign exchange translation due to an 8% fall in the value of the Euro against GBP. 20.

21 Net Debt The Group sources debt and finance facilities from a combination of the international capital markets and its relationship banking group. During the year, the Group reduced net debt from 421 million to 326 million. The principal components of this reduction are as follows: 30 Sep 13, closing net debt (421) Gross Proceeds on disposals 134 Client cash disposed with divestments (56) Exchange Rate Movements 10 Equity and Pension Payments (22) Additional capex and airline investment (41) Underlying change Sep 14, closing net debt (326) The composition and maturity of the Group s debt is summarised below: m 30 Sept Sept Movement Maturity 2015 Euro Bond (310) (335) 25 Jun GBP Bond (297) (300) 3 Jun Euro Bond (408) (440) 32 Jun-20 Commercial Paper (82) (134) 52 Oct-14 Revolving Credit Facility n/a Term Loan n/a Finance Leases (181) (224) 43 Various Other external debt (92) (122) 30 Various Arrangement fees (15) n/a Total Debt (1,345) (1,515) 170 Cash 1,019 1,094 (75) Net Debt (326) (421) 95 At 30 September 2013 cash of 5 million was included in assets held for resale on the Group s balance sheet The Group s 500 million Committed Facility comprises a Revolving Credit Facility of 300 million which was undrawn at 30 September 2014 and a 200 million bonding and guarantee facility of which 126 million was drawn at 30 September This Facility matures partly in May 2015 ( 30 million) and

22 partly in May 2017 ( 470 million). The Group also has access to an Additional Facility of 164 million (originally 224 million) which is available from 2015 to partially repay the 2015 Bonds. The Additional Facility must be further reduced by 57 million May 2016 with the remainder maturing in May Treasury Management The Group s funding, liquidity and exposure to foreign currency, interest rates, commodity prices and financial credit risk are managed by the centralised Treasury function and are conducted within a framework of Board-approved policies and guidelines. The principal aim of Treasury activities is to reduce volatility by hedging, providing a degree of certainty to operating segments and ensure a sufficient level of liquidity headroom at all times. The successful execution of policy is intended to support a sustainable low risk growth strategy, enable the Group to meet its financial commitments as they fall due and will enhance the Group s credit rating over the medium term. Credit Rating In April 2014, Standard & Poor s upgraded the outlook on the Group to Positive from Stable. Also in July 2014, Fitch Ratings affirmed their Positive outlook for the Group. Both ratings agencies referenced the significant progress made in the transformation of the Group under the new management team and the outlook reflects expected future debt reduction, leading to a more efficient capital structure. Corporate Ratings Rating Outlook Rating Outlook Standard and Poor s B Positive B Stable Fitch B Positive B Positive Cash management Due to the seasonality of the Group s business cycle and cash flows, a substantial amount of surplus cash accumulates during the summer months. Efficient use and tight control of cash throughout the Group is facilitated by the use of cash pooling arrangements and the net surplus cash is invested by Treasury in high quality, short-term liquid instruments consistent with Board-approved policy, which is designed to mitigate counterparty credit risk. Yield is maximised within the constraints of the policy but returns in general remain low given the low interest rate environment in the UK, the US and Europe. Cash culture has been further strengthened within the Group with clear tone from the top, re-enforcing the importance of the 26-week rolling cash forecasting process, driven and embedded by Treasury and supported by business segments, providing confidence in the Group s ability to manage cash effectively and predict accurately the liquidity headroom requirements during the seasonal low point. 22.

23 A small portion of the Group s cash is restricted in overseas jurisdictions primarily due to legal or regulatory requirements. Such cash does not form part of the liquidity headroom calculation. Hedging of Fuel and Foreign Exchange The Group operates a rolling programme of hedging to smooth fluctuations in the price of fuel and currency. Hedging allows the business to plan with certainty for the forthcoming holiday seasons in the knowledge that input costs for fuel will be c million lower in FY15 than FY14. The net gain to profit will be influenced by competitive pressures at the time of booking but we expect to retain at least 20% of the total fuel cost reduction through improved margins. In addition to being substantially hedged for FY15, as the table below shows, hedging for FY16 has already commenced and will progress in line with the policy. Winter 14/15 Summer 15 Euro 91% 75% US Dollar 94% 71% Jet Fuel 93% 72% As at 31 October 2014 Exchange Rates The average and year end exchange rates relevant to the Group were: Average Rate Year End Rate FY14 FY13 FY14 FY13 GBP/Euro GBP/UD dollar GBP/SEK Currency movements impact the Group s cost base for purchasing product and fuel, and also impact the translation into Sterling of profits made outside the UK. The Group does not hedge against the translation into sterling of overseas profits and so consolidated group profits remain subject to fluctuations in foreign exchange rates. Business disposals As part of the Group s divestiture programme, we concluded the disposal of certain non-core UK businesses during the year. We made disposals to focus on our core businesses and have applied net disposal proceeds of 78 million to reduce our indebtedness. This divestment strategy has improved our business mix and enabled us to focus more on our core assets that we believe will deliver sustained profitable growth. Our formal divestiture programme has now come to an end, having generated gross proceeds of 138 million from 15 disposals in 15 months, thus meeting the Board s target of 100 million to 150 million. 23.