- Michael Beckett
- Chairman
Our management team has again delivered a strong set of results, despite an adverse economic climate.
Performance and strategic review
Our management team has again delivered a strong set of results, despite an adverse economic climate. We grew profit from operations and expanded our operating profit margin, driven by merger synergies and further cost savings. We are delivering an increased dividend and at the same time, we have ensured that we have firm foundations for the future.
Our strategy, which we have further developed during the year, will serve us well in our drive to maximise shareholder value.
Over a year ago, under the leadership of Manny Fontenla-Novoa, the management team took a number of steps in anticipation of the then worsening economic environment. They continued to take swift and effective actions during the year to maintain our operational and financial strength throughout that period and into the future.
We will continue to build on the strengths we have created; including a strong financial position, a trusted brand portfolio and the proven ability, within our flexible model, to manage our business so we continue to meet the needs of our customers in the future.
Dividend
The Board is recommending a final dividend of 7.0 pence per share, which when combined with the interim dividend of 3.75 pence per share paid on 4 September 2009, makes a total dividend for the year of 10.75 pence per share. This recommendation reflects the Group’s financial achievement, the strength of our financial model and our commitment to delivering value to shareholders. The total dividend for the year represents a payout of 41% of adjusted diluted earnings per share and is in line with our policy, which remains to increase dividends progressively, paying between 40% and 50% of adjusted earnings by way of dividend.
Once approved, the final dividend will be payable on 8 April 2010 to holders of relevant shares registered on 19 March 2010.
Shareholder base
During the year, the uncertainty regarding the continued ownership of the shares in Thomas Cook Group held by Arcandor was resolved. Arcandor went into insolvency on 1 September 2009. On 10 September 2009, Arcandor’s lendor banks successfully placed 43% of our issued shares with a number of institutional shareholders at a 2% discount to the closing market price on 9 September 2009. Following this, 100% of our shares are freely floating on the London market, which means Thomas Cook is fully independent for the first time since its foundation in 1841.
The Board
The Board is committed to high standards of corporate governance and, following the termination of the Relationship Agreement with Arcandor on 10 September 2009, we made a number of changes to our governance arrangements in line with the Combined Code. During the year, we also carried out a thorough Board evaluation process, the output of which will help drive further improvements in the area of Board and Committee effectiveness.
We have strengthened our Board with a number of key appointments.
Paul Hollingworth will join the Board on 1 January 2010 as Group Chief Financial Officer. He will replace Jürgen Büser, who is stepping down from the Board following a period of ill health. Ludger Heuberg, a member of the Group Executive Board, who has been Acting Group Chief Financial Officer, will ensure a smooth handover to Paul Hollingworth.
On 6 November 2009, Sam Weihagen, Chief Executive Officer, Northern Europe, took on the additional role of Deputy to the Group Chief Executive Officer and joined the Board as an Executive Director.
Recently, the Nominations Committee commenced a process to identify and recruit two additional Independent Non-Executive Directors. I am pleased to announce that Peter Middleton, who has experience as a Chief Executive Officer in the global travel industry and financial world, has agreed to join our Board with effect from 30 November 2009.
During the year, there were a number of changes to the Board, which were brought about as a result of the Arcandor situation. Peter Diesch left the Board on 22 December 2008, and was replaced by Karl-Gerhard Eick on the same date, and Thomas Middelhoff left the Board on 17 March 2009, and was replaced as Chairman by Karl-Gerhard Eick. Upon the termination of the Relationship Agreement between Arcandor and Thomas Cook, Karl-Gerhard Eick left the Board.
Separately, Hemjö Klein, one of our Independent Non-Executive Directors, resigned from the Board on 18 September 2009, for personal reasons.
On behalf of the Board, I would like to thank each of our former Directors and Ludger Heuberg for their contribution to the Group.
Executive team
Once again, Manny Fontenla-Novoa and his executive team have together demonstrated their ability to lead the Group and deliver strong operating performance in a challenging marketplace. In doing so, they have improved our industry leading margins and have made progress against our strategic agenda. The Board would like to thank them for the success they have delivered and express our confidence in their ability to address the challenges that lie ahead.
Employees
Our employees remain central to the future success of the Group. They live our values and go further to understand the requirements of our customers as they deliver their travel and holiday dreams. With their range of skills and experience, we believe they are our key differentiator in the global competitive environment of our industry. On behalf of the Board and shareholders, I would like to thank them for their dedication and high standards, which they continue to maintain.
The future
Based on our solid foundations and a wide range of initiatives that we continue to undertake, the Board remains confident that the Group will perform in line with its expectations for the current year.
Michael Beckett
Chairman
29 November 2009
