ANNUAL REPORT & ACCOUNTS 2015

CUSTOMER AT OUR HEART CONTINUING THE TRANSFORMATION

u eore 5 5 10 4 Chairman’s statement Financial highlights Our resources architecture brand Our Overview of our transformation, and our business model and strategy With sales of £7.8 year, each billion customers million 20 and Thomas Cookis theoldest and bestloved name in travel. booking on page 8 page on booking Read more about about more Read Our customers’ experience must beplaced at theheart the very essence ofthe very our business is to deliver inspiring personal journeys that make our customers ikmngmn 56 36 25 62 & sustainability 28 Corporate social responsibility 19 People 60 Risk management 16 Financial review objectives strategic Our Market overview model business Our review Executive’s Chief Strategic report TRANSFORMATION CONTINUING THE are focused on doing just that… departure on page 34 Read more about about more Read return year-on-year. return eueainCmite 88 70 73 Committee Remuneration of Chair by statement Annual Corporate governance report 68 Directors of Board Chairman’s statement governance Governance te icoue 105 disclosures Other 90 96 Directors’ remuneration Annual report on policy Directors’ remuneration in-destination on pagein-destination 46 Read more about about more Read GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS returning home on page 54 page on home returning Read more about about more Read ieya eod 180 182 information Shareholder Five year record 117 116 comprehensive income other of statement Group statement income Group iaca ttmns 172 171 statements financial 169 Company the to Notes 170 121 equity in changes of Company statement 119 statement flow cash Company 122 sheet balance Company statements financial the to Notes 118 equity in changes of Group statement sheet balance Group statement flow cash Group 110 Independent auditors’ report Financial statements

FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT OVERVIEW 1

overview CUSTOMER AT OUR HEART AT OUR CUSTOMER PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS

FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT OVERVIEW 3 4 OVERVIEW

OUR BRAND ARCHITECTURE

CORPORATE BRAND

ALIGNED REGIONAL HEROES

ENDORSED BRANDS

INDIVIDUAL BRANDS

City Escapes

OUR HOTEL BRANDS

More details on our hotel brands can be found on page 47

Read more about brand strength on page 23 91 91 Aircraft 3,110 Retail outlets on the face of the income statement and are detailed in Note 7 to the Group financial statements. financial Group the 7to Note in unders in detailed are and significant are that statement items income the of disclosed face the on separately for adjusted are that results trading to refers “underlying” term The revenue. internal of million £386 * Includes bySegment* Revenue £m

£3,449m £2,457m £1,057m £1,257m Read more about our financials on page 36 page on financials our about more Read Continental FINANCIAL HIGHLIGHTS Airlines Northern Europe Northern UK and Ireland OUR RESOURCES ** Includes corporate costs of £32 million. £32 of costs corporate Includes ** 21,813 21,813 Employees Underlying EBIT by Segment** EBIT bySegment** Underlying 20.0m Departed customers THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS tanding the ongoing results of the Group. Separately disclosed items are included included are items disclosed Separately Group. the of results ongoing the tanding £m Continental Europe £119m £96m £56m Airlines Germany Airlines Northern Europe Northern £71m UK and Ireland

FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT OVERVIEW 5 6 OVERVIEW

OUR BUSINESS BY REGION WHERE WE OPERATE

Thomas Cook Group plc is one of the ’s leading leisure travel groups with sales of £7.8 billion in the year ended 30 September 2015. Thomas Cook is supported by 21,813 employees and operates from 15 source markets; it is number one or two (by revenue) in all its core markets. Thomas Cook Group plc’s shares are listed on the Stock Exchange (TCG).

Employees by Segment

KEY FACTS:

9,262 Customers: 6,109k UK and Ireland Retail outlets: 830 6,473 Aircraft: 32 Employees Continental Europe † 3,089 9,262 Northern Europe 2,989 Airlines Germany

UK AND IRELAND CONTINENTAL EUROPE Further expansion of new products together with successful Competitive market conditions in Germany resulted in a reduction implementation of operational actions and continued cost-out, of underlying EBIT to £71 million, £19 million lower than last year on a delivered an underlying EBIT margin of 4.8% in FY15. like-for-like basis.

2015 2014 2014 Like-for-like 2015 2014 2014 Like-for-like Revenue £2,457m £2,585m £2,458m Revenue £3,449m £3,958m £3,554m Gross margin % 26.7% 26.1% 26.6% Gross margin % 13.5% 14.2% 14.2% Underlying EBIT £119m £89m £84m Underlying EBIT £71m £102m £90m Underlying EBIT % 4.8% 3.5% 3.4% Underlying EBIT % 2.1% 2.6% 2.5%

† Includes 277 corporate employees. * Includes 2,593 million in-house customers. in-house million 2,593 * Includes EBITUnderlying % EBIT Underlying % margin Gross Revenue customer choice. toincrease decision ofstrategic asaresult programme flying haul long toincreased due Germany Airlines in performance profit Strong 6,473 Retail outlets: 2,274 outlets: Retail UK AND IRELAND Customers: 7,061k KEY FACTS:KEY Employees Aircraft: 6 Aircraft: AIRLINES GERMANY £1,257m 28.4% £56m 4.5% 2015 129 £1,145m £1,299m 5m£47m £50m 78 28.7% 27.8% CONTINENTAL EUROPE CONTINENTAL .%4.1% 3.8% 042014 Like-for-like 2014 AIRLINES GERMANY NORTHERN EUROPE Underlying EBITUnderlying % EBIT Underlying % margin Gross Revenue markets. source its in offering product ofits differentiation £18 million on year last on a like-for-like strong basis, demonstrating of improvement an million, of£96 EBIT result underlying an reported Europe Northern environment, operating achallenging Despite THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS NORTHERN EUROPE £1,057m £96m 27.9% 2015 9.1% 2,989 3,089 Customers: 7,713k* Customers: 1,698k Retail outlets: 6 outlets: Retail KEY FACTS:KEY FACTS:KEY Aircraft: 42 Aircraft: Employees Employees Aircraft: 11 Aircraft: 113 £998m £1,153m 11 £78m £101m 74 27.0% 27.4% .%7.8% 8.7% 042014 Like-for-like 2014

FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT OVERVIEW 7 8 Booking Departure In-destination Returning home

BOOKING WITH THOMAS COOK booking is fast, easy and in a way that best suits our customers.

Across our source markets, customers can book in a way that best suits them, as our Customer Relationship Management (“CRM”) platform empowers us with accurate and relevant information every time.

BOOKING IN UK AND GERMANY

% of all bookings in 60 to 80 the UK and Germany are made through travel agencies, where frequent retail training helps to welcome constantly improve our customers’ booking experience.

Read more about how we are transforming booking on page 22 every stage oftheir journey. ideas and feedback at and respond to customers’ enables usto CRM react website. “myaccount” our customer mobile app andour and additional services through their destination andbookexcursions their booking details, more about learn departure, customers can manage of bookings are madeonline –before 76 % CUSTOMER RELATIONSHIP MANAGEMENT (CRM) BOOKING IN NORTHERN EUROPE BOOK HERE

FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT OVERVIEW 9 10 OVERVIEW

CHAIRMAN’S STATEMENT

FRANK MEYSMAN CHAIRMAN »A customer-centric, dynamic organisation will be the backbone of our future success.«

SHAREHOLDER VALUE

Underlying EPS Profit after tax FY15 Profit after tax of £19 million, an increase of £134 million (FY14: loss after tax £115 million) 8.9p £19m Thomas Cook holidaymakers. This should enable us to better utilise utilise ustobetter enable should This holidaymakers. Cook Thomas for key in destinations properties resort and hotel toacquire vehicle investment ahotel toestablish Fosun with agreed We also have Zone. Trade Free Pilot (Shanghai) China the in based be will venture joint The brands. Cook Thomas under market Chinese the for activities outbound and inbound domestic, todevelop China in venture joint a established wehave announcement, our Since partner. business asakey importantly more but shareholder, supportive a new as only not Fosun We welcomed equity. tonew a subscription through Company ofthe of4.8% acquisition their and Fosun group investment Chinese the with partnership our weannounced In March, 2015 bond. the to replace Eurobond million €400 asix-and-a-half-year, for January in wereceived support strong bythe demonstrated was This improve Thomas Cook’s and liquidity to opportunities the that meant has turn in which Group, the across performance financial toimproved led has years three last the over taken actions ofthe May2017. in success The expired have would maturing in May 2019. This replaced our £470 million facility, which facility, guarantee and abonding and facility, credit a revolving signed a new £800 in facility million May, financing provided which we efficient, more structure capital our tomake plan ofour part As of delivering. capable weare that expect or ourselves weset for standards the achieve yet not do but Company, ofour journey transformation the on step apositive represent toyou presenting weare results the that tosay isfair it Ithink circumstances, these Taking account into asawhole. industry travel European the and holidaymakers for destinations of important anumber affected which events, byexternal shaped was year the time same However, atthe footing. financial our and partnerships business our ofboth strengthening the and model, operating new ofour launch Fankhauser, the toPeter Group ofthe of leadership transition successful the including strategy, ofour execution the in achievements positive ofvery anumber wedrove 12months, the Over Cook. Thomas for progress of real one uswas behind year The Shareholder Dear capital structure have increased. increased. have structure capital for our customers who were still to travel. totravel. still were who customers our for holidays rebooked and home, tocome wanted who customers of our ofthose care wetook that toensure tirelessly worked stores, retail and centres contact our in those with together airlines, the across and ground the on teams Our ofdays. amatter within countries home Tunisia totheir from customers ofour 15,000 repatriated successfully we and quickly very situation tothe toreact able We were heart. atour customers our ofkeeping value core our demonstrating event, horrific ofthis wake the in customers our after welooked way of the proud extremely Iam asawhole. industry the usand for challenge different avery Tunisia in created attack terrorist shocking The ofcharge. free luggage of additional an amount tocarry destinations impacted ofthe tosome travelling customers enabled Airlines Group our refugees, tothe aid providing effort relief tothe tocontribute looking are who customers our To support customers. toour tolisten wecontinue that ensured also wehave so, doing whilst events; ofsuch impact the tomitigate work and manage wecan that aposition in now We are business. our therefore, and, market the influence that factors external be always will there that weappreciate Company, the on impact afinancial have as these such events Though Germany. in particularly trading, impacted and destination ofholiday choice customers’ our affected have countries, European Western entering ofrefugees number Turkey, sheer the and and islands Greek ofthe ofsome beaches the on arriving families of worldwide broadcast scenes tragic all-too-often The action. and consideration close required also has crisis refugee ofthe scale unexpected The customers. European Continental many amongst uncertainty temporary caused unrest, ofcivil alevel and fluctuations currency with together debates, political asendless activity, unusual ofsuch example –isone Eurozone the from ofGreece exit possible –the “Grexit” potential The market. the in activity unexpected or ofunusual impact the toabsorb able more and a company as resilient usmore made have achievements strategic These pipeline of potential acquisition opportunities. ofasolid development and team management ofafund recruitment vehicle, investment ofthe establishment the on made being already is progress Good offering. hotel differentiated ofour development further and improvement the supporting hotels, own-brand our THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS

FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT OVERVIEW 11 12 OVERVIEW

CHAIRMAN’S STATEMENT CONTINUED

The hard work of our Group Airlines’ teams has been recognised » We are currently across the industry and we are proud to have received five awards in the last year, including “Most Popular ”, awarded to by undertaking a the German Institute for Service and Quality resulting from a German customer survey, and “Europe’s Leading Charter Airline Winner 2015”, awarded to our UK Airline by the World Travel Awards and voted for by programme of work UK charter airline customers. I would like to thank Christoph Debus, our Chief Airlines and Hotels Officer, and his team for their significant to ensure that our efforts and achievements this year. We are currently undertaking a programme of work to ensure that entire organisation... our entire organisation, whether in a customer-facing role or one of our corporate offices, operates with a focus on our customer; our operates with a focus decision making at all levels will always take account of the customer perspective. As part of this programme of work, we appointed former on our customer« Sainsbury’s CEO Justin King to lead a review of all of our business practices relating to our customers. His findings form part of our strategy to further transform Thomas Cook into a truly customer- focused and customer-centric business. Furthermore, to demonstrate our ongoing commitment to the health, safety and welfare of our customers when travelling on holiday, we have established a charity promoting safer tourism, the Safer Tourism Foundation. Our vision is to be the best-loved holiday company, delighting our customers, our people and our shareholders. To achieve our vision we need each and every one of our people to perform their role to the best of their ability, putting our customers at the heart of everything they do. We are realistic in our expectations that we cannot control external factors, and, given the number of customers who holiday with us every year, there will always be challenges to contend with. However, by putting our customers at our heart, we are acknowledging the duty of care we owe to each customer who has chosen to travel on holiday with us, and we are demonstrating the amount we value the trust placed in us, to provide our customers with the best weeks of their year. statement on page 68. governance mycorporate in out set are year last the over Board the to made changes ofthe detail More challenges. future any overcome and tohandle help and journey, transformation its on Company the support asthey ofDirectors, team high-calibre toour toadd Director Non-Executive anew ofrecruiting process the in We are Director. Independent asSenior Board tothe made he contributions valuable the and Company tothe service his for him wethank and year ofthis end atthe down stepped Symon Carl skills. and experience motivation, right the with personalities, high-profile of different mixture agood with place in Board diverse and We astrong have ofit. appreciative extremely weare and ofeffort level this recognise I and members Board The work. oftheir extent the reflecting not results year-end ofour frustration the and setbacks with faced when even basis, a daily on Company toour commitment their demonstrate and hard extremely towork continue people ofour All achievements. year’s this enabling in played have they role critical the and work excellent their for team his and Healy Michael tothank like also Iwould KPIs. same the against tracking goals, same the delivers business the Group the across that toensure structures leadership horizontal isevolving and Team place in Management committed experienced ahighly has Peter Shareholders. our and people our customers, ofour benefit the for further, Cook Thomas to transform going weare how describe plan, business three-year anew with together (“NUMO”), Model Operating New ofour introduction The journey. transformation the on year, aswecontinue next the over him with toworking forward welook and year this achieved has Peter that all with pleased extremely Iare and members Board The growth. profitable for strategy our execute and toimplement isnow focus our leadership, strong Peter’s Under transformation. ofour phase next the entering be CEO wewould Group new asour Fankhauser ofPeter appointment the with that Iexplained ago year One as a profit-making company. company. as a profit-making so year, wedo 175th and our entering now weare that pleased extremely Iam asChairman, year myfourth in and, hand in hand go profitability long-term and focus customer that We believe base. customer loyal increased an with together growth profitable generate and successfully, strategy Cook’s ofThomas stage next critical this complete will leadership, Fankhauser’s Peter Team, under Management the that isconfident Board The progress. positive our support Company ofour views external and internal These friends. and family totheir company asaholiday Cook Thomas recommend would they usthat told have customers ofour percentage increased year, an fiscal ofthe end atthe Indeed increased. has Cook of Thomas appreciation asinternal aswell external that pleased particularly I am Group. Cook of the Thomas apart tobe proud are who workforce, engaged byan delivered Voice”, be “Every will survey engagement employee group-wide ofour results bythe asdemonstrated and, success of our future backbone the be will organisation dynamic A customer-centric, product. resorts and hotel own ofour development the on focus a with further, even customers ofour experiences the improve usto allow will NUMO ofour implementation The of stakeholders. expectations the toexceeding and targets our against delivering to committed We are toexecute. continue Team will Management the which future, the for strategy aclear wehave that and before ever than resilient ismore Group the that shown has year This 24 November 2015 November 24 CHAIRMAN MEYSMANFRANK THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 13 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT OVERVIEW

strategic report TRANSFORMING FOR GROWTH THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 15 FINANCIALFINANCIAL SSTATEMENTSTATEMENTS GOVERNANCEGOVERNANCE STRATEGIC REPORT 16 STRATEGIC REPORT

CHIEF EXECUTIVE’S REVIEW

PETER FANKHAUSER CHIEF EXECUTIVE OFFICER »Our transformation has entered its next stage as we develop Thomas Cook into an organisation that places customers

at its heart.«

FINANCIAL HIGHLIGHTS

Delivering improved financial results Delivering a stronger balance sheet Delivering more operational cash flow Underlying EBIT Net debt Cash conversion £310m £139m 75%

Delivering more cost-out and Delivering stronger margins profit improvement benefits Underlying gross margin Cumulative cost out 22.6% £510m this amount. towards Green CEO Harriet offormer donation substantial the weacknowledge and Foundation Tourism Safer the for raised to be £1 first the million monoxide.carbon Thomas will Cook underwrite of dangers the on focus aparticular with abroad, travelling makers ofholiday safety the toimprove aims which acharity Foundation, Tourism Safer the established wehave journey, this on Continuing service. and quality world-class todelivering committed Iam and toimprove we need where areas the into insights helpful very gaveussome review His King. CEO Justin Sainsbury’s byformer conducted welfare, and service customer ofour review independent an with webegan which future, the in thing right the do will Cook Thomas that commitment Igavemypersonal heart. atour customer the putting initiatives new implement and ustodevelop with working engagement, continued their for grateful very am and family the with arelationship build to worked Ihave months, few last Inthe done. have should as it family children’s the totreat failed had Company the that clear became it 2006, in Cook Thomas through booked atahotel staying whilst Shepherd Christi and ofBobby deaths tragic the into inquest the Following customers. toour support and ofcare degree a higher provided have weshould which in events for UK, the in particularly criticism, recent some we’ve faced that aware doubt You no are heart. at its customers places that organisation an into Cook Thomas we develop as stage next its entered has transformation Our reality. becomes growth profitable for strategy our that time isthe Now business. our in process transformation the implement fully and growth profitable for strategy our istoexecute now myfocus strategy, our for foundation the laying and turnaround our finalising successfully business, the securing on focused were years few last the While opportunities. and challenges ofboth full ayear been has it and Cook CEO ofThomas asthe role mynew in year financial first the been year. has It past the about remarks personal some with begin me Let Shareholder Dear in an integrated and harmonised way. harmonised and integrated an in costs, less with operating structures efficient more and customers, grow improved through quality, for and services better products We will efficiencies. operating generating and proposition channel omni- the enhancing offering, holiday the developing capacity, and assets ofour use best the making about isall It business. wedo way the toimprove designed ofinitiatives aset Model, Operating New isour industry the in changes radical tothe answer Cook’s Thomas key properties. these in rates occupancy up driving and quality, possible best tothe it elevating experience, customer the torefine isnow priority our years, two over just in hotels own-brand 200 than more launched Having aircraft. ofour one board they when begins experience holiday their that weknow customers, our For fleet. toour aircraft A321 Airbus new 21brand added wehave FY13 since Inaddition, board. on time their on areclass long already during our haul delighting guests flights business aluxurious and entertainment in-flight State-of-the-art ofaircraft. fleet entire ofour cabins the torefurbish million £100 than more invested wehave Therefore, experience. customer to the key are they and holiday ofevery pillars the are flights and Hotels journey. customer ofthe parts all over control tighter even maintain wemust means customers our for quality world-class Delivering aware. acutely weare ofwhich responsibility year. is atremendous This every people million of20 well-being the for year. responsible We are oftheir weeks important most the about passionate being and them exciting expectations, their exceeding customers, toour experience holiday possible best the to provide is aspiration our company, aholiday As business. ofour element every underpins heart atour customer the ofplacing mantra Our THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 17 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 18 STRATEGIC REPORT

CHIEF EXECUTIVE’S REVIEW CONTINUED

»The past year has also seen a significant strategic development for Thomas Cook on our journey to becoming a global travel group.«

The transformation of Thomas Cook will see the Company become a Fosun. A team of our employees has already moved to Shanghai, China global travel group steered by horizontal functions with strong local to lead the launch of our joint venture developing domestic, inbound market organisations that are close to the customer. We have already and outbound tourism activities for the Chinese market under begun to establish three horizontal platforms across all markets that Thomas Cook brands. will provide businesses with the right product categories: In closing, I would like to focus on our employees. I am extremely differentiated, complementary and specialist holidays. proud of our team and would like to thank each one of our employees The business will now focus more on our core, own-brand and for their continued hard work and commitment to our Company. partner hotels, which we refer to as differentiated holidays. This year we conducted our third full employee engagement survey We will concentrate on circa 2,500 hotels as our core product. We are across the Group and I am very happy to report that our overall Core working towards this at a Group level to ensure alignment within all Index score for employee engagement has increased by 4% from last local markets. Each local market will be able to put all its power into year’s score (which also showed an increase of 4% on the previous selling quality holidays at the right price to delight our customers. year). Our Senior Management Team recognise the importance of employee engagement and we are each committed to continuing this In addition to this core differentiated product, we will build a totally positive trend. We will move forwards together, with the customer at flexible complementary offer of hotels, sourced automatically and our heart, and an awareness throughout the Group that each one of distributed primarily via our IT systems. To compete with new us must support and personally demonstrate this core value in all we technology-driven competitors, we need the breadth and variety do at Thomas Cook. of a wide range of products that are quality assured, but offered for the lowest possible total cost. Though we appreciate there is more to do, to deliver the value to our Shareholders that they are expecting of us and that we have In between these two platforms – differentiated and complementary the potential to achieve, the past year marks a significant positive – sits our specialist business for premium holidays and long haul. milestone on our journey, as it is the first year since 2010 that we Long haul is one of our real success stories, with constant growth are able to report our results as a profit-making company after over recent years. Our airline has increased its long haul offering tax. In 2016, we celebrate the 175th anniversary of Thomas Cook’s significantly and added new routes to the network. first package trip, the birth of the modern travel business and We have made tremendous progress especially in the UK where our Company. We have a great heritage and with the customer our business performance has improved significantly, despite at our heart, we will create a great future; a stronger Thomas external events. Last winter at the beginning of our financial year, Cook, that delights our customers, our employees and of course we re-launched our premium brand Signature, creating a single our Shareholders. brand that offers the best product range across all product types and destinations. We’ve developed an offering that “goes the extra mile” through choice, flexibility, depth of product expertise and magic PETER FANKHAUSER CHIEF EXECUTIVE OFFICER moments throughout the customer journey. This initiative is already paying off, with increased booking figures and higher margins. 24 November 2015 The past year has also seen a significant strategic development for Thomas Cook on our journey to becoming a global travel group, through our new partnership with the Chinese investment group A: A: A: A: Q: industry-leading consumer brands. consumer industry-leading strong customer relationships and underpinned by holidays and ahigh level of personal built service, on We create value by providing our customers with great HOW VALUE CREATED IS OUR BUSINESS MODEL financial assurance financial and quality We offer customer journey the throughout support and ofservice levels high from competitors by offering We differentiate ourselves availableproducts to customers overwhelming choice of travel ofthe sense make We help Thomas Cook brands ofthe by the strength experience, underpinned travel end-to-end integrated, an customers our We offer business model? business its through value create Cook Thomas How does A: A: Our distributionA: strength Q: field support field agents and dedicated service Our deep supplier relationships, market intelligence and expertise industry Our Cook? Thomas with work to want suppliers other and partners hotel makes What Supply of hotel beds Shareholder value and seats airline Third-party In-house 5 1

SERVICE AND ASSURANCE AND SERVICE SERVICE AND ASSURANCE AND SERVICE A: A: A: Q: in our industry in our innovators proud We are infrastructure technology and processes our in and brands, core our in We invest trends and industry customer needs, preferences to response in services and concepts holiday new We develop competitive advantage? Cook sustain its Thomas does How THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS product/package portfolio components and ancillaries components Production andProduction marketing Brands, services and and Brands, services of travel packages, Innovation 2 A: Brand strength assurance and Service A: money for Value A: choice and range Product A: Q: advantage come from? come advantage Cook’sThomas competitive does Where so? to do continue they do why and Cook Thomas from buy customers do Why Omni-channel distribution Customer value Third-party In-house 4 3 19 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 20 STRATEGIC REPORT

OUR BUSINESS MODEL CONTINUED

1 SUPPLY OF HOTEL BEDS AND AIRLINE SEATS

Sourcing good quality hotels and flights efficiently and economically agreements. In order to further develop customer awareness of our is key to our business. This includes investing in hotel and flight own-hotel brands, our Hotels & Resorts unit intends selectively to sell capacity and utilising it well, balancing risk and non-risk capacity, capacity directly to customers, as well as through our tour operators. and flexing allocations of this capacity within the Group to maximise profits. We source our hotels and flights both from our in-house operations and third-parties. Our in-house operations, through which Our in-house airlines enable our tour operators to benefit from we can better control product quality and typically make higher guaranteed capacity and seat rates, as well as operating profitable margins, are at the core of our holiday offering. Given our strong seat-only businesses on numerous routes in their own right. position in the market, we are able to leverage our Group buying Our airlines operate under the Thomas Cook brand in the UK, power to take measured risks in inventory and balance these risks and Scandinavia, and the Condor brand in Germany. By balancing against customer demand. their use of in-house flight capacity with flights provided by third-parties, our tour operators are able to flex their risk business THOMAS COOK HOTELS & RESORTS according to demand, while at the same time taking advantage of Our Hotels & Resorts unit is dedicated to sourcing and managing flexible seat sourcing at competitive spot prices from third-party our own-brand hotel portfolio, through which we deliver consistent carriers. Our airlines provide just over half of the Group’s total flight quality-controlled holiday experiences to our customers. It is volume, with the remainder being supplied by third-parties. We have responsible for approximately 200 own-brand hotels, located across 18 significantly upgraded our fleet over recent years, purchasing a total destination countries, ensuring that they operate smoothly and to our of 25 brand new aircraft (21 of which we have already brand standards, and overseeing investments and upgrades. As well taken delivery of, with the remaining four entering service in summer as strategic planning and pioneering new hotel formats, the Hotels 2016), and investing over £100 million to refurbish cabins in the rest & Resorts unit is also responsible for the strong positioning of our of the fleet such that by spring next year 95% of our fleet will either existing in-house brands Sunwing, Sunprime, Sentido, Sunconnect, be refurbished or new. Smartline, and the recently launched Casa Cook, within the Group and among customers. The Group favours an asset-light approach to hotel management, with most own-brand hotels operated under franchise

Investment in own-brand hotels for summer 2015 Investment in airlines with a customer focus

1 2 209 3 25 4 Own-brand hotels New aircraft purchased 5

1. No change 70 2. Major refurbishments 58 3. Minor refurbishments 55 4. Brand implementations 21 5. New builds 5 60 New cabin interiors so far PACKAGE HOLIDAYS PACKAGE single supplier. a from holiday their for need they everything purchasing holiday, their topersonalise customers our allow hire, car and selection seat airline insurance, astravel such products Ancillary preferences. their with line in components, travel individual or holidays, packaged fully either toselect customers allows model business flexible Our flexibility. and choice range, customers tooffer flights and hotels ofother range byabroad complemented ofservice, standards high and ofquality basis the on chosen hotels partner selected and hotels ofown-brand portfolio managed toaclosely holidays exclusive and differentiated core includes offering product Our segments. ofcustomer array ofawide needs the tomeet order in products travel and experiences ofholiday range abroad We offer Making ancillaries tangible agent travel athird-party via or directly consumer end tothe them resell and services, other with them package providers, of third-party arange from components holiday these We source customisable. all – destinat requirements individual their with line in holidays their totailor customers allow which packages, dynamic offer wealso packages, toclassic In addition holiday experience. the throughout staff ofour support and care the with together value, and convenience customers our offer holidays Package Europe. Western in segments holiday popular most and largest ofthe isone and holidays, beach and sun core for economical and popular remains package classic The pricing. and availability over certainty operator tour the giving risk), (charter inventory hotel and flight charter pre-allocated from sourced are components these Usually consumer. end tothe product asasingle sold are and ataminimum) ahotel and aflight (typically ofaholiday components more or two combine holidays package classic or Pre-packaged PRODUCTION AND MARKETING OF TRAVEL PACKAGES, COMPONENTS AND ANCILLARIES ion, duration, quality and are price 2 shoulder and low seasons. low and shoulder the in especially occupancy, and yields manage tobetter airlines and unit &Resorts Hotels our allows also This requirements. their meet to order in customers toour offering aflexible providing business, ofour part important isan ofcomponents marketing and sale The COMPONENTS focus. akey strategic remain will this and years, few last the in sold holidays packaged ofdynamically amount the in growth asignificant been has There commission. or amark-up with being expanded into other markets. markets. other into expanded being isnow and Scandinavia in developed successfully been has which Airshoppen is our catalogue-bas hotels. differentiated of our some in rooms hotel specific pre-book to ability the and airport, atthe than rather hotel atthe journey return their for luggage their in tocheck Airlines Cook Thomas with flying customers Scandinavian ofour some for asthe ability such ancillaries, innovative other, more developed We also have in resort. luggage, and room excursions upgrades private transfers, whilst extra selection, seat and meals airline insurance, or booking travel include products Ancillary requirements. oftheir all tomeet order in ancillaries ofmodular addition the through holiday perfect their totailor-make customers allow and flight), and transfer a hotel, markets some (in flight and ahotel ofonly consists that package abasic tooffer We aim margin. and revenue ofincremental source avaluable uswith providing whilst buying, travel totheir approach proposition and allowing customers to take a “one-stop shop” customer the tocompleting key both are buy, ancillaries customers our product travel or experience of holiday type ofthe Regardless ANCILLARIES THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS ed pre-flight shopping business, shoppinged business, pre-flight 21 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 22 STRATEGIC REPORT

OUR BUSINESS MODEL CONTINUED

3 OMNI-CHANNEL DISTRIBUTION

We believe in being accessible to our customers – both physically and Our contact centres also sell directly to customers, as well as online. Our omni-channel approach means that our customers can providing sales and customer support at any customer touchpoint now access our products and services either via any web-connected on the customer journey. A holiday is one of the most cherished device, phone or in person at one of our stores. We also place purchases of the year for our customers, and we recognise this significant importance on direct or controlled distribution, through importance by ensuring that our support is tailored to each which we distribute product directly to customers, enabling us to individual caller and delivered through personal contact rather build direct relationships with them, as well as reducing our cost to than an automated computer system. Our contact centre service is serve. Recognising the value of the travel distribution trade, we also available out of hours and complements our web and retail offering. sell via third-party distributors in order to broaden our reach. This supports the growth of our digital organisation and our omni- channel strategy. OMNI-CHANNEL APPROACH Developing our websites to offer a better online experience is critical DIRECT DISTRIBUTION to our omni-channel philosophy. We have developed OneWeb, our Direct, or controlled, distribution is a key strategic advantage, international web platform, which has now fully replaced all legacy allowing us to form direct relationships with our customers, as well front-end systems for thomascook.com in the UK, and is in the as reducing distribution costs. Our model has some local adaptations process of being introduced into the Netherlands on thomascook.nl. within each of our markets in this respect. In the UK, Northern OneWeb has led to a significant uplift in conversion in the UK across Europe and Belgium, we enjoy a high level of controlled distribution each device type, through a greatly improved user experience. through our own websites, call centres and, in the case of the UK and Using a common codebase deployed across multiple markets, Belgium, our stores. In Germany, however, the majority of our travel OneWeb will enable us to deliver new website functionality and products and services are sold through third-party travel agents. innovations rapidly across the Group. In mobile, we have made Online is a key means to increase our controlled distribution, and significant progress creating responsive websites and mobile we are placing considerable emphasis on further developing this applications, and usage trends are very encouraging. channel across our markets. We are very aware that a large portion In stores, as well as developing new concept and next generation of our market continues to value the face-to-face service offered stores to test new features and technologies, we have also by our Travel Advisers – for these market segments our focus is on introduced new ways of working for our Travel Advisors to allow them continuously improving the in-store experience whilst introducing to spend more time with our customers, focusing on performance new technology to support the sales process. briefs at the start of each shift and management observation and coaching. Tablets and Wi-Fi have also now been rolled out to many of our stores.

Controlled distribution

49% 33% UK and Ireland

Continental 16% 13% Europe

Northern 76% 15% Europe

Our Web Our Retail source markets. ofour each in use will be tailored for These promises operator business. UKtour our in used be will that promises customer four our This table shows differentiator for Thomas Cook. isakey this We believe guests. for services entertainment and leisure providing and quality, managing hotel, attheir to customers summer. Their role includesand support providing customer service the in staff customer-oriented and efficient 2,500 around employs organisation, we which operate services in-destination a significant operators, tour other many and agents travel offline and online Unlike below. are shown promises customer four 24 hours*. Our within problem or issue an resolve wecannot if ofredress means hotels of our atmany customers offers which guarantee, satisfaction hotel 24-hour innovative our include They service. customer our and we provide, information ofthe transparency the holidays, ofour quality the trust, customer These promises relationships. focus on our and reliability overall proposition, we have introduc Recognising the of importance customer and trust service to our home. return the upon and itself, holiday tothe through booking, from time the of adviceprovide and support seamless high-quality to weaim and in-destination, and aircraft our on airport, at the touchpoints during the holiday expe different atmany ispresent service customer Our business. ofour heart atthe customers byputting value tocreate We aim CUSTOMER SERVICE AND EXPERIENCE * Terms and conditions apply. apply. conditions and * Terms Customer promises rience, includingrience, in-store, online, ed four promises to underpin our our tounderpin promises four ed CUSTOMER VALUECUSTOMER 4 our entire product range. our entire product across place in isalso process assurance safety and health active An ismaintained. standard ahigh that toensure checks professional out auditor, tocarry third-party aspecialist SGS, engaged we have destinations, high-volume our For reviews. third-party and customer account into taking assured, isquality inventory product Our customers. our with oftrust level ahigh We developed have QUALITY AND ASSURANCE differentiated from competition. the truly –is in-resort or athome face-to-face, or internet the –via receive customers our ofservice level the that ensure helps expertise sector deep and destinations platforms, across flexibility experience, Our strive to ensure that these values are deeply embedded in our brands. brands. our in embedded deeply are values these that toensure strive we so and markets source our across ofconversion drivers important most ofthe two are consistency and trust that We recognise logo. Heart Sunny the through Group Cook Thomas the with integrated are which Tjäreborg and Spies, JetTours, Ving, Neckermann, including markets, source our across brands local strong very of bya number issupported brand master Cook Thomas The heritage. 174-year our given industry, the in brands travel leisure leading ofthe isone Cook Thomas STRENGTHBRAND THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 23 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 24 STRATEGIC REPORT

OUR BUSINESS MODEL CONTINUED

5 SHAREHOLDER VALUE

SUSTAINABLE AND PROFITABLE GROWTH HOW WE DISTRIBUTE THOSE RETURNS We believe that our strong business model, combined with our As we embark on the second phase of our transformation, our focus strategy to further develop and strengthen our business through remains on ensuring a sustainable, profitable outlook for the Group, our New Operating Model (see page 29), will enable us to deliver our employees and many stakeholders. sustainable and profitable growth in the future. In particular, our In particular, our strategy of profitable growth and cash generation twin focus of: improving our customer proposition by creating and positions the business to deliver value to Shareholders in three marketing more differentiated products underpinned by an improved main areas: customer service; and generating increased operating efficiencies by changing the way we work, will lead to continuing improvements > share price appreciation; in our financial position. > debt reduction; and > dividend payments. CASH GENERATION AND STRENGTHENING OF In view of the progress we have made and the projected benefits BALANCE SHEET we believe are deliverable as part of our profitable growth strategy, Following the successful recapitalisation of the business in FY13, we expect to pay a dividend from FY16 profits in early FY17. a key element of our corporate strategy has been and remains cash flow generation and the retention of a greater proportion of Our policy will be to target a payout ratio of between 20% and 30% our earnings for reinvestment in the business, debt reduction or of net profit each year. We believe this represents an appropriate distribution to Shareholders. We have made significant progress in balance between debt reduction and providing a return to this area, with the Group consistently achieving significantly higher shareholders. A final dividend will be declared with the full year levels of cash conversion than in FY12 (see page 50). results announcement each year, starting with the announcement of our FY16 results, in a year’s time. In view of the seasonality of the In January 2015, we strengthened the balance sheet with a Group’s profit profile, it is not our intention to pay interim dividends €400 million bond due in 2021, refinancing the €400 million bond for the foreseeable future. The Board will review the policy annually which matured in June 2015. In March 2015, we raised a further as we reduce debt, to determine the scope to increase the payout £92 million through an issue of new equity to Fosun, in order to ratio in the future. underpin our strategic partnership. In May 2015, we refinanced our bank facilities, increasing the total facilities amount to £800 million Alongside making dividend payments, the reduction of fixed-term and extending the maturity to May 2019. debt remains a priority for the Group, and we intend to continue to move towards a more efficient capital structure, with reduced interest costs. ECONOMIC ENVIRONMENT arrivals between 2010 and 2020. forecasting average growth rate of 3.8% per year in international tourism accompanied by accelerated growth in travel and tourism. is TheUNWTO the world economy following the financial crisis of 2008/09 has been of the pattern seen over recent years, where the strengthening of & tourism GDP growth is forecast at 3.7%. This represents acontinuation year. Global growth is expected to be2.8% in 2015, while direct travel economy in 2015, and register positive growth for the sixth successive The Travel &Tourism industry is again expected to outperform the wider WHERE OUR MARKET IS TODAY MARKET OVERVIEW International tourist arrivals arrivals tourist International is it 2015, 1.5% although for estimated atan UK, the than is weaker Eurozone the in Growth travel. international for demand increased to isleading Pound strong the with coupled which spending, consumer tobolster continue wages rising and creation job robust prices, oil 2015. in Lower by2.6% torise expected GDP with growth, economic strongest the UKisshowing the markets, source our Within prices. commodity lower and conditions financial oftighter a result toslow, as isexpected markets developing in Growth momentum. togather expected based, are markets source our which in those including countries, high-income in recovery the with 2015in overall, of2.8% growth moderate toachieve isexpected economy global The 200 400 600 800 1,000 1,200 9419 9820 0220 0620 002012 2010 2008 2006 2004 2002 2000 1998 1996 1994 +3.8% 9519 9920 0320 0720 0121 2014 2013 2011 2009 2007 2005 2003 2001 1999 1997 1995 +6.5% +4.2% +3.0% (m) +3.7% +7.3% +0.0% +2.9% –1.7% +10.1% 5.8% June 2015. asat year-to-date, of4% the for arrivals tourist international in rise overall an seen has market Europe’s tourism Nevertheless, toSharm-el-Sheikh. oftravel near-cessation tothe leading in Egypt events recently more and July, in aperiod for toGreece demand Euro impacting the from exit ofaGreek threat the particular, in destination that affecting Tunisia in June in attack terrorist the with events, bygeopolitical affected been also have markets Our to7.1% 2015. in modestly todecline is expected growth continue, vulnerabilities financial toaddress efforts policy and bank adjustments credit In supply conditions. China, while structural in improvement an and rates interest low record prices, oil declining Euro, byaweakening supported levels, recent from accelerating +5.7% THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS +6.5% +1.9% –4.0% +6.5% +5.1% +4.1% +4.7% in first 8 months of 2015 of 8months first in +4.2% + 4 2015 % 25 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 26 STRATEGIC REPORT

MARKET OVERVIEW CONTINUED

REGULATORY AND POLITICAL ENVIRONMENT at notice in order to continue to meet our customers’ Consumer protection is a constant and increasing area of focus expectations. Most notably, the tragic events in Tunisia in June 2015 at the EU level. Within the framework of regulations and standards have led to the UK Government warning against non-essential travel in each of our source markets, we offer our package customers to that country, resulting in the withdrawal of our programme from the assurance of financial protection including the reimbursement the UK. of travel costs in the event of insolvency or bankruptcy of a tour KEY INDUSTRY TRENDS operator. The European Package Travel Directive (“PTD”) places various disclosure and liability obligations upon us as marketers of travel A number of mega-trends continue to influence and steer the leisure packages. The reconsideration of this directive started at the EU travel market. level in July 2013 and concluded in Autumn 2015. The proposed revision is intended to enhance consumer protection rights and to create HOTELS AND RESORTS a more level playing field among travel businesses. The changes In order to protect their business model, all major tour operators created by the reforms will take effect in 2017/18. The UK Government (selling package holidays) have developed their product offering to has announced that it will, once the PTD is finalised, reconsider the include a more well defined hotel portfolio. This hotel offering includes industry’s ATOL consumer protection regime. exclusive hotels that are only sold by a single , and differentiated hotels that have been specifically designed to appeal to The airline industry is heavily regulated principally for safety reasons. a target market. Tour operators have been developing their own-brand It also faces increasing levels of taxation and the enhanced protection hotels to follow, and benefit from the momentum behind, this trend. of consumer rights. European airlines, including our own, are subject to air passenger rights legislation whereby airlines may be required to Thomas Cook identified this trend early on and we have worked to pay compensation to passengers whose flights are delayed by more develop our own hotel brands, since first creating the SunWing brand than three hours. This legislation is also in the process of revision more than 40 years ago. Today the Thomas Cook Group offers more within the EU, but progress has been interrupted by a sovereignty than 200 hotels across our five hotels brands (SENTIDO, SmartLine, dispute between and the UK regarding the applicability of SunConnect, SunPrime and SunWing) with a total of 41,000 rooms this legislation to Gibraltar. During this period, the original EU law available each day. Our new brand, Casa Cook, is due to open in (Regulation 261) has continued to be modified by the courts in various summer 2016. Our own hotel brands and assets form a core part of EU countries such that its original scope and application has been our strategy and operating model, and by maximising utilisation we much increased. will be able to grow our portfolio profitably. Through the creation of our hotel investment fund and with the support of our investors, In this respect, two examples are of note. One is where the courts in we will strengthen our hotel portfolio and be in control of our assets, the UK have established that claims for compensation are permissible which will in turn allow us to more easily manage the quality of in instances of technical fault, even though the original drafting of the our products and maximise returns. EU legislation recognised that technical faults were an area for which compensation would normally not be payable. The Court of Justice of THE EVER-GROWING COMPLEXITY OF the have confirmed this principle, which means that DIGITAL CHANNELS compensation will now generally be payable for all delays caused For Thomas Cook, the trends we see in digital offer many exciting by technical faults to aircraft, irrespective of the cause throughout opportunities, some of which we are actively responding to already Europe. In another UK case it was established that compensation and others which are still in development. As has been the case for claims for delayed flights are valid even if the flight took place up a number of years, the growth of mobility continues to be an exciting to six years ago, and again, this finding is inconsistent with the and critical trend in the travel industry which can be seen in a application elsewhere in the EU. number of customer behaviours. Customers are using mobile devices Since its introduction, this legislation has impacted the airline (smartphones, tablets, etc.) to not only research and share travel industry significantly. We continue to engage in lobbying governments ideas, but also to make bookings. Thomas Cook does not only look in the interests both of our industry and our customers, and to at mobile, but at the wider concept of mobility. We continue to invest remind them of the importance of travel and tourism as a source in our Group platform to optimise our booking experience across of employment and driver of growth. all devices and also in our Companion App to broaden the services we offer customers post-booking and whilst they are on holiday. Our holiday programmes are also influenced by national and political This trend will continue to grow as customers become increasingly events, and the responses of governments to them. We follow such confident with such devices, bandwidth continues to expand governmental travel advice closely and are generally able to change (allowing richer content) and usability insight grows. our flying programme and hotel capacity to alternative destinations our 175th year of business. ofbusiness. year our 175th ways asweenter new in relationship our toembrace continue customers our advances, technological numerous despite that isexciting it here, fully tocover many too content), rich ancillaries, wearables, media, social (including trends other many are there Whilst brochures. toour extended now wehave which experience Holiday Virtual Cook Thomas as the such innovations digital through customers for experiences in-store enhanced tocreate hard wework Additionally, DreamCapture). and MyAccount example, (for customer our for aspossible as simple channels between transitions the tomake development in and place in initiatives ofdigital We anumber have experience. customer our toenhance teams retail in colleagues with hand-in-hand working teams digital with trend this embraced has Cook Thomas face-to-face. or isdigital this –whether choose they channel whatever through Cook Thomas with engagement their complete and continue begin, to customers toallow ability isthe tosuccess Critical brings. this opportunities and challenges the toall close very weare retailer, omni-channel an As decisions. travel their make and consider asthey channels between tomove bycustomers desire is the Cook, toThomas relevant isextremely which trend, A related at an all-time high. at an all-time remains prices competitive todrive power consumer disruptors, ofonline threat growing the with Combined asawhole. industry the on pressure increasing tofurther led capacity travel air excess In2015, substantially. toconsumers offering their increasing thereby operators, tour integrated becoming and chain value the up moving also are airlines These years. coming the over significantly to grow expected are carriers low-cost leading ofthe sizes Fleet Europe. across dramatically togrow continuing are airlines Low-cost TRAVEL AIR LOW-COST 25 23 52 Desktop Mobile Tablet % % % % OF TRAFFIC BY DEVICE, 2014-2015 BY DEVICE, TRAFFIC % OF assurance guarantee. assurance quality byour backed travel, oftheir components individual tocustomise customers allows engine packaging dynamic Our further. services our ustodifferentiate enables position market strong Cook’s Thomas interface, operator tour At the 2014-15. during of82.2% performance on-time acompetitive achieved airlines Our customers. our for destinations topopular flights new ustointroduce enabled sales our on perspective integrated An negotiations. contract joint in volumes our bybundling position cost competitive our tooptimise managed now are airlines Our years. two past the over refurbished completely been have or new either are fleet ofour 90% Nearly renewal. fleet our customers a competitive product, driven by a comprehensive We offer markets. ofour many in websites improved and new our on rates conversion better and ratios share web higher through sales ofseat-only growth bysubstantial driven channels, sales third-party into weexpand Inparallel, operator. tour own byour is generated revenue airlines’ ofthe 46% where flights our on factors load strong ensures operator tour own our with coordination close The position. market strong its tosustain isable third-parties, from capacity air ofits 50% approximately purchases also but Airlines Group own its operates which Cook, Thomas developments, market these Within THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 27 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 28 STRATEGIC REPORT

OUR STRATEGIC OBJECTIVES

OUR FOUR KEY STRATEGIC PILLARS

Our strategy is to grow profitably, by providing our customers proposition, complemented by a wide range of third-party with a broad range of high-quality differentiated and flexible products. In order to realise our strategy, we have outlined four holiday experiences, supported by world-class customer main strategic objectives as seen below. We believe that these service. Recognising that the hotel and flight is key to any strategic pillars will enable us to generate resilient revenue holiday experience, we are putting our own portfolio of growth, improve profitability, increase cash flows and deliver own-brand hotels and flights at the centre of our customer further shareholder value.

1 OWN-BRAND HOTELS AND FLIGHTS Maximise value from our own-brand hotels and aircraft

2 OUR HOLIDAY OFFERING Focus on differentiated holidays, complemented by a broad range of flexible hotels and flights 3 OMNI-CHANNEL AND CUSTOMER Enhance our omni-channel proposition and web efficiency 4 EFFICIENCIES Simplify operations and remove duplication

CUSTOMER AT OUR HEART

We firmly believe that providing consistently excellent This programme includes key initiatives such as reviewing customer experiences is the key to the long-term growth and and improving customer service levels across the Group, success of our business. With more satisfied customers, we introducing a customer charter and satisfaction guarantee, can increase customer retention rates and loyalty, driving top further empowering front line staff to delight our customers, line growth through an increased customer lifetime value, and embedding Net Promoter Score (NPS) improvement targets and margin growth through lower customer acquisition costs. into our reward framework. We have therefore launched a major programme to ensure we put the customer back at the heart of our business. > > FY18: and FY15 between following, the achieve to Cook Thomas enable will Model Operating New the We believe efficiencies. cost and yielding better through improvements margin more cust proposition that attracts quality abetter through growth revenue including growth, profit long-term sustainable, significant, togenerate aim initiatives These in a clear and structured way over the next three years. years. three next way the over structured and in aclear strategy our usto implement enable will that initiatives ofkey isaprogramme (“NUMO”) Model NewOperating Our

£100 million, of £25 which million in was FY15 incurred approximately totalling costs implementation one-off with by FY18, Annual EBIT benefits year per and 3% 2% atbetween togrow, average, on isestimated which market, growth Revenue NEW OPERATINGNEW MODEL TO DRIVE OWN-BRAND HOTELS ANDOWN-BRAND FLIGHTS OMNI-CHANNEL AND CUSTOMEROMNI-CHANNEL OUR HOLIDAY OFFERING OUR at least in line with the European leisure travel travel leisure European the with line in atleast TAEI ILR E UOIIITVS BENEFITS NUMO KEY INITIATIVES STRATEGIC PILLARS of between £100 of between million and £120 million EFFICIENCIES See more on page 30 page on more See See more on page 33 page on more See See more on page 32 page on more See See more on page 31 page on more See 4 3 2 1 omers at higher and points, price

TRANSFORMATION of which is available atwww.thomascookgroup.com isavailable of which 2015, acopy 25 November on presentation analyst atour provided were details Further pages. following the on asdescribed strategy our in embedded are below areas the on focus which initiatives improvement bybusiness generated tobe benefits these We expect > >

customers truly at the heart of our business. ofour heart atthe truly customers our ofwith to proud be create afuture NUMO, wecan Through three years Fixed-term debt reduction profit before tax that is converted into free cash flow cash free into isconverted that tax before profit ofunderlying percentage the being conversion, ofcash definition conversion Cash THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Complementary products Complementary Differentiated holidays Cost-out continuation Hotels & Resorts unit &Resorts Hotels “One Tour Operator” “One CRM and ancillaries Online and retail In-house airline In-house in excess of 70% per year, based on a revised arevised on year, per based of70% excess in of at least £300 million over the next next the over million £300 ofatleast Optimise mix (package vs seat only) only) seat vs (package mix Optimise Grow sales to fewer, higher margin, margin, higher fewer, to sales Grow Grow own-brand hotel occupancy occupancy hotel own-brand Grow Generate further efficiencies efficiencies further Generate effectiveness and efficiency and effectiveness tour operator processes Develop low-cost model Increase ancillary sales sales ancillary Increase through improvedthrough CRM Improve omni-channel omni-channel Improve Align and integrate integrate and Align and improve yield improve and through cost-out quality hotels and yielding 29 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 30 STRATEGIC REPORT

OUR STRATEGIC OBJECTIVES CONTINUED

1 OWN-BRAND HOTELS AND FLIGHTS

OUR AIM WHAT NEXT? As a customer-centric business, we aim to provide an industry- Having launched approximately 200 own-brand hotels in just over leading consumer experience with our own-brand hotels and flights two years, our priority is now to refine the customer experience and firmly placed at the forefront. We are developing our Hotels & Resorts drive occupancy rates in these key properties. Our Hotel & Resorts division into a hotel management company that controls and develops division will manage this initiative as we expand this area of the our core hotel offering and managing our Group Airlines business to business, assuming responsibility for further key hotel relationships ensure that our aircraft offer the very latest in customer comfort and and development projects across the Group. reliability, while delivering maximum occupancy for both. Our airlines will take delivery of a further four brand new Airbus A321 OUR PROGRESS IN 2015 aircraft next summer, completing our single aisle fleet replacement programme. At the same time we will continue to look for Through our Hotels & Resorts division we added 72 own-brand hotels opportunities to further profitably grow our seat-only business, refine in FY15, taking the total to 209 for the summer 15 season. We worked the customer experience and generate further benefits from the with the owners of these hotels over the winter to completely recent integration of our four airlines into a single airline platform. refurbish or rebuild around a quarter of them, implementing quality measures across the portfolio which are consistently monitored and managed. As a result, bookings of our own-brand hotel brands (Sunwing, Sunprime, Sentido, SunConnect and Smartline) rose by 41% last year. This reflects growing customer demand for our differentiated holiday products and we continue to drive occupancy growth among these hotels. Since FY13 we have taken delivery of 21 brand new Airbus A321 aircraft and fully refurbished cabins in 60 existing aircraft as part of a £100 million investment programme. We have now either replaced or fully refurbished around 90% of our fleet, resulting in a significantly upgraded flying experience, increased customer satisfaction and greater operational efficiency. double-digit capacity and like-for-like capacity double-digit revenue growth. with significantly, market haul long the in presence our we grew holidays, Inspecialist so. todo wefail if customer the compensate to promise and notified, ofbeing 24 hours within issue a customer rectify wewill whereby guarantee, customer 24-hour innovative our and service ofin-resort level ahigher include hotels these distinguish that Factors holidays. differentiated ofour basis the form which hotels 2,500 ofapproximately portfolio a core We identified have 2015 IN PROGRESS OUR next destination. their choosing when choice and flexibility greater customers give that products ofcomplementary range byawide is supplemented offering holiday This retention. and loyalty customer higher ultimately, and, margin prices, selling average higher drive products These specialist holidays that focus on more niche and tailored product. includes and hotels, quality-controlled and ofown-brand portfolio ofa consists product holiday differentiated Our experience. customer quality abetter offer which holidays, differentiated on proposition customer the istofocus strategy product Our OUR AIM OUR HOLIDAY OFFERING OUR 2 onto this platform. sourced traditionally are that hotels low-volume 10,000 approximately tomigrate We plan hub. production digital alow-cost, from sourced be will product ofcomplementary range wide Our Group. the across holiday and product optimise our yield management processes of sourcing efficient more from ustobenefit enable will which categories, product ofour each for platforms common building We are WHAT NEXT? world. the around destinations 2,000 over in hotels 31,000 covering destinations ofcity choice widest our on pricing competitive offers UKwhich the in Escapes City Cook ofThomas launch the including products, complementary our topromote year-on-year. of10% We continued bookings in –resulting holidays tailor-made premium, for brand asour Signature Cook Thomas launched We also THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS an uplift in UKan premium uplift holiday 31 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 32 STRATEGIC REPORT

OUR STRATEGIC OBJECTIVES CONTINUED

3 OMNI-CHANNEL AND CUSTOMER

OUR AIM WHAT NEXT? As a full service tour operator, we have close personal contact We are continuing to optimise our websites, and in particular to with many of our customers throughout their holiday experience. develop features that enable us to offer increasingly personalised Our objective is to further develop these customer relationships to services to customers via our online platforms. We are also in the make customer interactions with us as seamless as possible through process of rolling out OneWeb to the Netherlands and intend over better technology, an omni-channel proposition and to improve time to introduce it to our other Continental European markets. customer service, relations and loyalty. We plan to review our call centre procedures and technologies, with the aim of bringing them onto a single platform based on improved, OUR PROGRESS IN 2015 harmonised business processes. We will also aim to grow our share Our online customer experience has seen significant improvements of controlled distribution, particularly in Germany, in order to develop over the year, as a result of the investment we have made to develop closer and more direct customer relationships. We also intend to our international web platform OneWeb, with conversion uplifts of sharpen our focus on ancillary sales to complement the holiday 10% for desktop, 16% for tablet and 67% for mobile devices. Our focus experience, in particular through improved CRM services. on mobile has been enabled by our dedicated Mobile Development Team based in Stockholm. Amongst other things, the team launched a successful digital companion app into the Scandinavian and UK markets, following on from the success of our TravelGuide app in Germany over the last three years. These apps allow customers to search for holidays, manage their bookings, make balance payments, help to know their destinations better and book excursions and ancillaries. In the UK, the new web journey has been fully integrated into our retail stores, enabling us to recognise and serve customers seamlessly across all channels. close to the customer. tothe close are that organisations market local strong with business, the to steer this, creating to organisational horizontal support structure functions anew 2015, weimplemented 1October On effective. and efficient usmore making and structure our simplifying processes, our consolidating Group, the across operations tour our tointegrate seeks that initiative Tour a“One Operator” pursuing weare Model, Operating New ofour aspart and airlines, our with initiative the Mirroring benefits. significant generated has system” to“one airline airlines four was previously what transition to initiatives our where airline, our in UKand the in particularly but Group, the across efficiencies created which ofmeasures variety a from generated were savings These years. three previous the in achieved savings ofcumulative million £400 tothe addition in savings, cost offurther £110 million 2015, achieving in benefits significant todeliver continued programme Improvement Profit and Cost-out Our 2015 IN PROGRESS OUR functions. and processes integrating better and by This will be achieved markets, by between reducing duplication improving and while still customer welfare. satisfaction efficiencies, date, further for significant we believe remains there opportunity to costs reducing in progress excellent made wehave Although development. and transformation ongoing Cook’s key toThomas is business effective and efficient amore tobuild Continuing OUR AIM EFFICIENCIES » 4 we will continue to and business processes harmonising IT platforms Operator initiative, embed our One Tour our business. to minimi opportunity pursue every to continue wewill time same Atthe markets. source our between aspossible duplication asmuch removing and processes, business and platforms IT harmonising initiative, Tour One Operator our embed to continue wewill changes, organisational required the made Having WHAT NEXT? THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS se cost and complexity throughout throughout complexity and cost se «

33 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 34 Booking Departure In-destination Returning home

DEPARTURE WITH really do begin on board.

Altogether our Group airlines carry 17 million passengers signature in-flight meals along with complimentary drinks every year. Across our fleet of 91 aircraft, customers can fly and state-of-the-art, on-demand entertainment systems. with us to over 100 destinations worldwide. We’ve recently Our Economy Cabins have brand new, ergonomically designed upgraded and refurbished our fleet and purchased 25 new seats, ensuring comfort is our priority for all customers. aircraft. Our new Premium Cabins guarantee more legroom,

PASSENGERS PER YEAR AIRSHOPPEN

Customers can buy boutique products 17million on our website, we deliver their order direct to their seats.

Read more about how we are transforming our fleet on page 30 entertainment systems. complimentary drinks, signature in-flight meals, legroom, More 100 DESTINATIONS destinations worldwide NEW PREMIUM CABINS PREMIUM NEW 25 91 of a fleet

aircraft

new AIRCRAFTS 35 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 36 STRATEGIC REPORT

FINANCIAL REVIEW STRONGER, LEANER AND POISED FOR GROWTH

MICHAEL HEALY CHIEF FINANCIAL OFFICER »We are financially stronger, reporting a bottom line profit with a strengthened balance sheet from our successful financing activities.« Free cash flow cash Free rft(os eoetx5 14 6 207 164 (31) (114) 19 50 EPS Underlying Basic EPS tax after Profit/(loss) Tax beforeProfit/(loss) tax Separately disclosed finance charges finance disclosed Separately Associated Undertakings Net debt Net finance charges (underlying) Net finance (iv) ‘Like-for-like’ net debt adjusts the prior year comparative for foreign exchange translation, the impact of changing finan changing of impact the translation, exchange foreign for comparative year prior the adjusts debt net paid. ‘Like-for-like’ interest and (iv) expenditure capital less activities operating li from cash is detailed The flow other. cash and Free fuel (iii) translation, exchange foreign disposals, of impact the for adjusts change ‘Like-for-like’ (ii) (i) Notes: Gross profit Gross Revenue stated) otherwise (unless £m rftfo prtos(BT 1 219202 159 52 211 operations (EBIT) Profit/from Operating expenses (%) Margin Gross neligi rftfo prtos(neligEI)3033(3 30 (13) 323 310 EBIT Separately Disclosed Items Underlying(i) from profit operations (Underlying EBIT) ‘Underlying’ refers to trading results that are adjusted for separately disclosed items that are significant in understanding t understanding in significant are that items disclosed separately for adjusted are that results trading to refers ‘Underlying’

(iii) FINANCIAL RESULTS AND PERFORMANCE GROUP REVIEW 30 September Year ended Year ended 22.6% (1,464) 7,834 1,774 8.9p 1.6p (139) 2015 (99) (141) (28) 161 8 THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS ke-for-like adjustments are shown on page 38. page on shown are adjustments ke-for-like ce lease arrangements, new equity investment and disposal proceeds. disposal and investment equity new arrangements, lease ce he ongoing results of the Group. Separately disclosed items are detailed in Note 7. Note in detailed are items disclosed Separately Group. the of results ongoing he 30 September Year ended Year ended 153 2 10 129 (1,593) 23 .%0.0% 0.3% 22.3% ,8 74 86 (754) 8,588 82p9.8p (8.2)p ,1 12 20 (142) 1,916 13 (2.4)p 11.3p 36 8 156 187 (326) 13 2 2 (143) 21 7 172 172 (271) 2014 15 3 177 134 (115) 2)()(3) (3) (25) 1 45 116 266 1 3)(30) (30) (1) Change £m Like-for-like change £m (iv) (ii) 37 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 38 STRATEGIC REPORT

FINANCIAL REVIEW CONTINUED

OVERVIEW LIKE-FOR-LIKE ANALYSIS The comments below are based on like-for-like comparisons unless Certain items, such as the normal translational effect of foreign otherwise stated, as Management believes this provides a clearer exchange movements, affect the comparability of the underlying view of ongoing business performance. performance between financial years. Accordingly, to assist in understanding the impact of those factors, and to better present Our FY15 financial performance delivered continued growth in like- year-on-year trading progression, ‘Like-for-like’ comparisons with for-like underlying Group EBIT which, combined with a significant FY14 are presented in addition to the change in reported numbers. reduction in Separately Disclosed Items, led to a reported profit after tax of £19 million, a like-for-like improvement of £177 million compared The ‘Like-for-like’ adjustments to the Group’s FY14 results and the to the prior year. This is the first time in five years that the Group has resulting year-on-year movements are as follows: reported a bottom-line profit. Gross Operating Revenue margin expenses EBIT Group revenue grew by £86 million (1%) on a like-for-like basis, whilst £m % £m £m underlying EBIT increased by £30 million on a like-for-like basis to £310 million. We achieved higher profitability through an improved FY14 Reported (Continuing) 8,588 22.3% (1,593) 323 product mix and efficiencies and through delivery of our Cost Out Impact of Currency Movements (641) 0.1% 97 (38) and Profit Improvement programme. Disposals/store closures (98) (0.1)% 22 (5) Free cash flow for the year was £161 million (FY14: £116 million), which Reduced fuel cost (101) 0.3% – – benefited from an improved working capital position. In addition, Year Ended September 2014 ‘Like-for-like’ 7,748 22.6% (1,474) 280 we issued 73.1 million new shares to Fosun, representing 4.8% of the enlarged issued ordinary share capital of the Company, for £91.8 million as part of a strategic partnership announced in March Year Ended September 2015 Reported 7,834 22.6% (1,464) 310 2015). This resulted in net cash inflow for the year of £247 million Like-for-like Change (£’m) 86 n/a 10 30 (FY14: £107 million). Like-for-like Change (%) 1.1% FLAT 0.6% 10.7% As a consequence of the Group’s improved cash flow, and after reflecting non-cash changes such as foreign currency translation, Group net debt reduced to £139 million at September 2015 from £326 million at the end of FY14. During FY15 we continued to strengthen the Group’s financial position through further improvements to our capital structure and by increasing access to liquidity. See page 49 for further details. The main components of the like-for-like revenue movement are: movement like-for-like revenue ofthe components main The sales. ancillary better and retention customer improved margins, higher yield which holidays differentiated on focus continued the reflects revenue of £47 in own-brand products million. The growth strong inof Tunisia disruption of £130 million and in a other net reduction effect bythe offset partially products, new other and hotels brand toown- ofholidays sales in increase million a£263 reflects This Group revenue by increased £86 million (1%) on a like-for-like basis. REVENUE Revenue by segment bysegment Revenue Revenue Revenue FY14 like-for-likeFY14 revenue 7,748 £m and other new products new other and Own brandOwn hotels 263 £m

£2,457m £(386)m £1,057m Tunisia (130) Northern Europe Northern UK and Ireland Corporate* te FY15 Other (47) £3,449m £7,834m £1,257m Continental Europe Airlines Germany Airlines revenue

7,834 Group outlined below: are margin gross in like-for-like movement ofthe components These points. basis by30 margin gross impacted which costs flying non-fuel in increases and points, basis by100 margin gross lowered which inflation cost bed byhotel offset were improvements These airlines. our within toefficiencies due mainly improvement, point basis a60 contributed which initiatives, Improvement Profit and Out Cost our from tobenefit continued also margin Gross points. basis of70 improvement margin agross contributed improvedAn mix and product products higher margin ancillary improvement of FY12. 160 since a basismaintaining cumulative points year, last with line isin margin gross FY15 alike-for-like basis, On GROSS MARGIN Gross margin FY14 like-for-likeFY14 gross margin 22.6% THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS £m yield mix mix yield Product/ 0.7% Bed cost inflation (1.0)% improvement Profit 0.6% flying costs Non-fuel (0.3)% FY15 gross margin 22.6% 39 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 40 STRATEGIC REPORT

FINANCIAL REVIEW CONTINUED

OPERATING EXPENSES/OVERHEADS UNDERLYING EBIT Operating expenses for FY15 of £1,464 million represent a year-on-year Group underlying EBIT increased by £30 million on a like-for-like basis like-for-like decrease of £10 million (1%), mainly due to the Group’s Cost to £310 million in FY15. The growth in underlying EBIT is primarily due Out initiatives. In total, cash operating costs were £23 million (2%) to improved margins through the expansion of our own-brand and lower than last year on a like-for-like basis, offset by a £13 million differentiated holidays, the addition of profitable long haul routes increase in depreciation which reflects the higher level of investment in our airlines and the continuing delivery of our Cost Out and Profit in IT and our airlines in recent years. Improvement measures.

Year ended Overall, gross profit improved by £20 million, as an underlying margin Year ended Year ended 30 Sep 2014 Like-for-like £m 30 Sep 2015 30 Sep 2014 Change like-for-like change benefit of £42 million was partially offset by market disruption in Tunisia, which cost approximately £22 million. Personnel Costs (859) (913) 54 (845) (14) Overheads were £10 million lower than last year, mainly due to further Net Operating Cost Out benefits of £61 million in FY15, offset by the re-investment Expenses (431) (507) 76 (468) 37 of £19 million through further Strategic Operating investments and SubTotal (1,290) (1,420) 130 (1,313) 23 a higher depreciation charge (£13 million), mainly associated with Depreciation (174) (173) (1) (161) (13) the recent investment in our airline fleet. Total (1,464) (1,593) 129 (1,474) 10 Underlying EBIT £m

61

323 42 (19) 310 (5) (32) 280 (22) (38)

FY14 Disposals Impact of FY14 like- Gross Disruption Overhead Strategic Depreciation FY15 * Asheadline a result of/store inter-companycurrency eliminations.for-like profit in Tunisia cost-out Opex and other EBIT EBIT closures movements EBIT excluding investment Tunisia

Underlying EBIT £m £119m £71m UK and Ireland Continental Europe

£96m £56m Northern Europe Airlines Germany £(32)m £310m Corporate Group

6_Segmental_Review_p40_p53_v60.indd 40 06/01/2016 13:12 agn4(9 72 1 20 (1) 10 29 (12) 27 30 (20) (39) (13) (9) 280 (19) 4 9 20 47 18 31 78 (19) Overhead which of 90 35 Margin Gross of which 84 Like-for-like change Like-for-like FY14 neligEI 1 19 6(2 310 (32) 56 96 71 119 EBIT Underlying reconciliation (£m) EBIT Underlying as: summarised are basis segmental on a like-for-like in EBIT growth year-on-year toreflect adjustments The Europe. ofContinental exception the with results, improved of £30 million on a like-for-like reporting basis all segments with EBIT underlying in improvement an reported Group the In FY15 EBIT UNDERLYING IN GROWTH OF SOURCES

eeu ,5 ,4 ,5 ,5 (386) 1,257 1,057 3,449 pages: following the in isconsidered segment ofeach performance financial The 2,457 eliminations. intercompany of aresult * As 310 – (38) (32) Revenue – 56 – £m 96 (5) 2 isasfollows: FY15 for bysegment performance 323 Reported 71 (23) – (19) (10) 119 (2) 50 – 101 – FY15 Reported 102 Accounting changes 89 Movements Impact of Currency Reported FY14 rs agn%2.%1.%2.%2.%na22.6% n/a 28.4% 27.9% 13.5% 26.7% % Margin Gross ClosuresDisposals/Store (5)––––(5) Kingdom Kingdom United United United United Continental Continental Europe Europe Northern Northern Northern Northern Europe Europe emn oprt Group Corporate Germany emn oprt Group Corporate Germany Airlines Airlines * 7,834 Gross margin Like- Airlines Germany UK and Ireland Kingdom f United 26.7% or-like EBIT growth THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS £(19)m % Continental Europe Corporate Continental £(13)m Europe 13.5% £m Group Northern Europe Northern Northern Europe 27.9% £9m Germany Airlines 28.4% £18m 22.6% Group £30m £35m 41 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 42 STRATEGIC REPORT

FINANCIAL REVIEW CONTINUED

UNITED KINGDOM AND IRELAND

Revenue Gross margin EBIT EBIT margin (%) Departed customers (000’s) 2,457 26.7% 119 4.8% 6,109

FY14 Like-for-like Gross margin increased by 10 basis points on a like-for-like basis FY15 FY14 Change like-for-like change to 26.7%. This reflects the continuing benefits of improvements in product quality, with a higher proportion of customers staying Revenue 2,457 2,585 (128) 2,458 (1) in our own-brand hotels and increasing operating efficiencies Gross margin 26.7% 26.1% 0.6% 26.6% 0.1% in our UK airline. Underlying EBIT 119 89 30 84 35 Our OneWeb platform, which was launched in FY14, has increased the Underlying EBIT margin (%) 4.8% 3.5% 1.3% 3.4% 1.4% booking conversion rates across all device types. With a 16% increase in conversion on tablets, and 67% increase on mobile devices, Departed customers (000’s) 6,109 6,170 (61) 6,153 (44) OneWeb is proving particularly effective at converting customer interest on these rapidly growing platforms. Our UK business delivered a strong performance during FY15, Our UK business has been significantly transformed over the past with underlying EBIT growing by £35 million on a like-for-like basis three years by removing unprofitable sales, improving product quality to £119 million, representing a 140 basis point increase in EBIT and by implementing cost efficiencies. As a result, the business is margin to 4.8%. This was delivered through increased sales of now better positioned for profitable growth. our own-brand hotels, further long haul expansion in the airline, successful implementation of operational actions and continued Cost Out initiatives. FY15 underlying EBIT was adversely impacted by £11 million due to disruption in Tunisia and benefited from the release of maintenance provisions in the UK airline of £10 million (flat year-on-year). Revenue of £2,457 million was £1 million lower than prior year on a like-for-like basis (£128 million lower on a headline basis). The business » Our UK business has significantly expanded its Winter programme, with an increase in both new and existing long haul destinations, with a corresponding increase in both Seat Only revenue and increased package holiday been significantly sales. However, this growth was offset by the disruption to the Summer programme with the cancellations of holidays to Tunisia. transformed over the past three years by removing unprofitable sales, improving product quality and by implementing cost efficiencies.« (000’s) customers Departed oa 112(1 0(19) 90 (31) 102 71 Total markets Other continental France Russia margin (%) EBIT Underlying Russia 3,449 Revenue neligEI £)F1 Y4Change FY14 FY15 Germany Underlying EBIT (£m) EBIT by market Change FY14 FY15 France (19) Germany 90 Revenue (£m) (31) EBIT and Revenue by market below: out isset Europe Continental 102 within bykey market EBIT performance underlying and Revenue 71 EBIT Underlying Change margin Gross FY14 Revenue FY15 oa ,4 ,5 59 ,5 (105) 3,554 (509) 3,958 3,449 Total markets Other continental 2,059 3,449 13.5% 7,061 2.1% 265 981 144 52 32 (14) 1 13.5 margin Gross ,5 59 ,5 (105) 3,554 (509) 3,958 ,4 30 ,6 (7) 2,066 (390) 2,449 42 07%1.%(0.7)% 14.2% (0.7)% 14.2% ,5 37 ,9 (329) 7,399 (397) 7,458 .%(.) .%(0.4)% 2.5% (0.5)% 2.6% 9 1)107(46) 1,027 (18) 999 2 6)28(33) 298 (64) 329 8 3)13(19) 163 (37) 181 7()3 1 31 (5) 37 7(5 0(18) 70 (25) 77 9 5 8 (6) (8) (5) (9) 3 3 4 (3) 4 (3) % like-for-like like-for-like like-for-like CONTINENTAL EUROPE CONTINENTAL FY14 FY14 FY14 71 EBIT Like-for-like Like-for-like Like-for-like change change change recorded year-on-yearrecorded totalling £1 growth million. Republic Czech the and Hungary Poland, in businesses European Eastern our whilst alike-for-like basis, on year last with line in was which EBIT an result reported region Benelux The conditions. market competitive despite well, performed markets Continental other Our acquired. was it since profitable been has business the time isfirst This result. FY14 the on of£4 million improvement an FY15, in of£1 million aprofit report business the saw savings, cost further with together which, business profitable on to focus inThrough a risk capacity, reduction our Russian continued business in particular. destinations African toNorth demand customer lower and generally demand consumer French weaker ofacontinued back the on million to £14 by£6million widen loss operating its saw business French Our conditions. market local toreflect Russia and for-like in France to reductions basis, due planned capacity primarily alike- on year last than lower (3%) £105 million was revenue Overall environment. trading acompetitive tooffset help will pricing, toheadline priority in value customer on focus acontinued with along measures, these H12016. We believe during tolaunch platform web anew with approach omni-channel our tostrengthen weplan and hotels, own-brand and product differentiated on focus our increased further relationships, agency third-party improved team, management German our strengthened wehave Inresponse, Germany. in basis like alike-for- on of£18 million EBIT toan decline led has This confidence. consumer weakening with together business German our affecting ofovercapacity asaresult pressure tomargin related EBIT isprimarily £19 million lower year than last on a like-for-like in basis. The reduction EuropeContinental delivered an unde THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 2.1 EBIT (%) margin % rlying EBITrlying million, result of £71 7,061 Departed customers (000’s) 43 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 44 STRATEGIC REPORT

FINANCIAL REVIEW CONTINUED

» Despite a competitive NORTHERN EUROPE Revenue Gross margin EBIT environment in the % Nordics, our business 1,057 27.9 96

remains the market EBIT margin (%) Departed customers (000’s) leader in terms of % number of passengers 9.1 1,698 and profitability.«

FY14 Like-for-like FY15 FY14 Change like-for-like change

Revenue 1,057 1,153 (96) 998 59 Gross margin 27.9% 27.4% 0.5% 27.0% 0.9% Underlying EBIT 96 101 (5) 78 18 Underlying EBIT margin (%) 9.1% 8.7% 0.4% 7.8% 1.3% Departed customers (000’s) 1,698 1,511 187 1,702 (4)

Our Northern Europe business reported an EBIT result of £96 million for FY15, £18 million better than last year on a like-for-like basis, as it further increased its industry leading EBIT margin to over 9%. Despite a competitive environment in the Nordics, our business remains the market leader in terms of number of passengers and profitability. Through an improved yield management performance, the business was well positioned to take advantage of poor weather in the early part of the Summer, to deliver an exceptionally strong trading performance in the “lates” market in the fourth quarter. FY15 EBIT also benefited from a revision to aircraft maintenance provisions of circa £4 million during the year. Revenue of £1,057 million was £59 million higher on a like-for-like basis, demonstrating the strong differentiation of its product offering, which retains unrivalled popularity with customers in its source markets, together with strong ancillary sales. Gross Margin of 27.9% was 90 basis points higher than FY14 on a like-for-like basis. Load factors in excess of 99% and strong average selling prices led to high margins for classic packages, complemented with further sales of dynamic packages and higher ancillary sales reflecting effective online distribution, powerful brands and a focus on customer relationship management. (000’s) customers Departed margin (%) EBIT Underlying 4.5 EBIT (%) margin 1,257 Revenue increased by 5%. increased customer per revenue ancillary aconsequence, As Germany. in concept Airshoppen of our introduction successful the with sales ancillary on focused also Programme Improvement Profit Our costs. landing and overflight aircraft, increased and US Dollar, the Euro against ofthe decline the from effects currency pressures, market haul short/medium for compensated than more Programme Improvement Profit ofour continuation the and like-for-like basis, as a reductions long price strong haul fuel business, a on year last than higher points basis 40 of4.5% was EBIT margin market. this in pressures competitive intense and prices market fuel in reduction ofthe by4% asaconsequence declined yields but 91.6%, to points by1.1 percentage increased factors Load refurbishments. cabin the following aircraft ofour capacity earning increased by the by7.1%, driven increased capacity market, haul short/medium In the 9 cabin. class business refurbished fully our for sales bystrong driven 3.6%, up were Yields FY14. in 88.4% 89.6% from to further improved factors load capacity, in increase an Despite 47 year. tolast compared 9% up Capacity Seat with by14.5%, increased revenues haul Long business. haul long ofour growth by profitable 6 Revenues by increased £112 million on a like-for-like basis, driven year on a like-for-like basis. last than higher million £9 FY15, in EBIT of£56 million toreport market 50 acompetitive in strongly performed again airline, German our Condor, 56 EBIT Underlying Change FY14 Revenue FY15 Gross margin Gross % AIRLINES GERMANY 28.4% 1,257 4.5% 7,713 7,713 Departed customers (000’s) 28.4 margin Gross 78 .%2.%(0.3)% 28.7% 0.6% 27.8% ,9 4)115112 1,145 (42) 1,299 ,9 1 ,6 450 7,263 517 7,196 .%07 .%0.4% 4.1% 0.7% 3.8% % like-for-like 56 EBIT FY14 Like-for-like change BT(2 1)(3 1)(13) (19) (13) (19) (32) FY15. in repeated not were which schemes remuneration other and plans incentive share employee for provisions revised from £12 million by benefited FY14 in result Corporate the announcement, FY14 our in on a like-for-like basis at £32 million £19 (FY14: million). we As reported year last than higher £13 were million expenses operating Corporate EBIT Change exchange Foreign FY14 Operating expenses FY15 THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS CORPORATE (32) 0 2)(2 2)(12) (20) (12) (20) 1 (1) 1 (1) 1 like-for-like FY14 Like-for-like change 45 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 46 Booking Departure In-destination Returning home

IN-DESTINATION WITH THOMAS COOK hassle-free holiday.

Concept hotel customers can enjoy an experience catered of Thomas Cook in-destination. Their local knowledge and exactly for their needs. Our in-destination teams work endless enthusiasm inspires customers of all ages, delivering tirelessly to put the customer at the heart of everything they a holiday never to be forgotten. To support our Reps, our newly do. Connected Consultants are available 24/7, by phone, online, introduced case handling system allows them to manage text and social media. Responding to queries and questions, customer demands consistently, encouraging any requests they make sure customers get the information and support or issues to be handled on the spot. they need for a hassle-free holiday. Our Reps are the face

IN-DESTINATION TEAMS QUALITY MANAGERS

In-destination teams put the customer at the heart of everything 43 they do – they are quality managers available through our across our Connected service. destinations – listening to our customers and identifying ideas 24 for improvement. 7

Read more about how we are transforming our hotels on page 30 SHOULD BE. PREMIUM KNOW WHAT WHO FAMILIES ON: FOCUS both children andadults! holiday memories for hotels). Creating amazing Cook Group family Thomas more than 100 (in they will 2016 visit family hotels this year 81 Thomas Cook Group Lollo &Bernie visited

ON ADULTS. SERVICE OUR FOCUS WE BUT WELCOME ARE KIDS LOCATIONS. IN PREMIUM 4/5*WANT HOTELS WHO COUPLES ON: FOCUS

THOMASTH COOK HOTELS & RESORTS p z s 4/5* HOTEL. 4/5* A OF PRIVACY THE IN OF CARE TAKEN TO BE WANT FRIENDS WHO AND COUPLES ON: FOCUS

lts ing

OM ! AS

C

OO K HO ACCOMMODATION. FUNCTIONAL FOR ARE LOOKING BUT PLANS HAVE FRIENDS WHO GROUPS OF AND COUPLES WORKING SINGLES, ON: FOCUS TE LS & R ES

OR TS EXPERIENCE. CLUB FOR-MONEY GREAT VALUE- BUT ASIMPLE FOR TEENS LOOKING AND KIDS YOUNG INDEPENDENT WITH FAMILIES ON: FOCUS

LIFE BALANCE. LIFE WORK- A HEALTHY SEARCHING FOR DESIGN AND ARE AND FASHION LOVE WHO TRAVELLERS MODERN YOUNG ON: FOCUS

47 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 48 STRATEGIC REPORT

FINANCIAL REVIEW CONTINUED

NET FINANCE COSTS TAXATION Group net finance costs for the year decreased by £2 million to The overall tax charge in the year increased to £31 million from £151 million (FY14: £153 million). This consisted of net interest charges a £1 million charge in FY14 as summarised below. Current tax of before aircraft financing of £134 million (FY14: £132 million) and aircraft £27 million is £10 million higher than last year due to increased financing charges totalling £17 million (FY14: £21 million). charges for our profitable businesses in Northern Europe and Continental Europe, while the change in deferred tax reflects the SEPARATELY DISCLOSED ITEMS recognition of deferred tax assets in FY14 in respect of carried Net Separately Disclosed Items (SDIs) for FY15 were a £120 million forward tax losses in our UK business. charge, a reduction of £176 million compared to the prior year FY15 FY14 (FY14: £296 million). This breaks down into a cash SDI impact of £m £m £69 million (FY14: £119 million) and non-cash impact of £51 million (FY14: £177 million). Current tax (27) (17) FY15 FY14 Deferred tax (4) 16 Non- Non- Total tax charge (31) (1) Cash(i) cash Total Cash(i) cash Total £m £m £m £m £m £m Total cash tax (18) (32) Restructuring (51) (1) (52) (109) (1) (110) Reassessment of Further information is included within Note 9. contingent consideration –1818 ––– Asset valuations –––– (57) (57) OPERATING LEASE CHARGES Onerous contracts Operating lease charges of £205 million have increased by £20m since and legal disputes (5) (30) (35) (5) (74) (79) FY14, as analysed below: Other (13) (17) (30) (5) (20) (25) FY15 FY14 EBIT related items (69) (30) (99) (119) (152) (271) £m £m Profit on disposal of associated undertaking –77–––Included within EBIT: Finance related charges – (28) (28) – (25) (25) Aircraft operating lease charges 135 106 Total (69) (51) (120) (119) (177) (296) Retail operating lease charges 44 49 (i) Cash items encompasses both current year cash flows, and cash effects which have not been Hotel operating lease charges 26 30 realised before the end of the period. Total 205 185 Further information is included within Note 7. 8.9 pence, a year-on-year reduction of 2.4 pence (FY14: 11.3 pence). pence). 11.3 (FY14: pence of2.4 reduction ayear-on-year pence, 8.9 was items, disclosed separately before share, per earnings Underlying SHARE PER EARNINGS further over the medium term. term. medium the over further toimprove weexpect 2015, which asatSeptember outlook’ ‘stable a with to‘B’ 2012 July in outlook’ a‘negative ‘B-‘ with from standing credit our in trend improving an reflects This payments. of dividend previous and resumption documentation, the facility now permits our from terms restrictive certain removed also facilities new The time. over structure capital efficient amore tocreate help will and swing capital working seasonal toour aligned isbetter RCF larger The toMay2019. facilities ofthose maturity the extended available to Group the £470 from million to £800 million and further facilities committed ofthe size the increased agreement This facility. guarantee and bonding committed million a£300 and (RCF), facility facility,financing includes which a £500 million revolving credit million £800 anew InMay2015 wesigned business. ofthe profile debt the extended further 2015, which June in matured which size million Eurobond€400 to a refinance Eurobond bond of same the 7-year, anew for support strong 2015 wegained In January facilities. financing bank larger through toliquidity access our byincreasing and structure capital toour improvements further through position Group’s financial the tostrengthen wecontinued FY15 During STRUCTURE CAPITAL AND LIQUIDITY 11. Note within isincluded information Further pence). 8.2 loss (FY14: pence of9.8 improvement a year-on-year delivering 1.6pence, was year the for share per profit basic The Exceptionals (£m) tax after Profit/(loss) Earnings per share (pence) share per Earnings (m) shares of number average Weighted (£m) tax after profit/(loss) Adjusted Exceptional tax (£m) interest to minority Attributable 1,487 120 Y5FY14 FY15 8.9 132 19 (11) 4 1,440 296 163 11.3 (115) (15) (3) Other movements in net debt net in movements Other flow cash Net prtn ahfo 8 445 496 585 484 paid interest Net Capital expenditure Exceptional items flow cash Operating other and Pensions Tax Working capital EBITDA Depreciation EBIT Underlying FLOW STATEMENT CASH SUMMARY £247 million £107 (FY14: million). of year the for flow cash net in resulted 2015, which March in announced partnership ofastrategic aspart toFosun issued was equity new Inaddition, costs. restructuring and expenditure capital in investment bygreater offset capital, working byimproved helped £116 million) (FY14: £161 was million year the for flow cash Free fees. capitalised of amortisation and items debt currency foreign of retranslation paid. (iv) Represents interest and expenditure capital less activities operating from cash is FY14. in flow (iii) cash million Free £78 and FY15 in million £20 of disposals from cash net include items Exceptional (ii) (i) lsn e et(3)(326) (139) Closing net debt pnn e et(2)(421) 107 (326) 247 debt net Opening flow cash Net Other New Equity Free cash flow cash Free equivalents excluding the net movement in borrowings, finance lease repayments and facility facility and repayments set-up lease fees. finance borrowings, in movement net the excluding cash and cash in equivalents (decrease)/increase net the is flow cash Net the disposals. on includes also received flow cash Cash net Free FY14 In paid. interest and expenditure capital less operating from cash activities is flow Cash Free EBIT. impacting items the disclosed and costs separately of related effect aircraft cash income, interest excluding activities cash operating from Operating cash net is flow business. the manage to measures flow cash non-statutory three uses Group The THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS (iii ) (ii) (iv) (i) (201) (125) 247 310 139 FY15 (60) (20) (98) 174 6 116 161 92 (18) £m (6) (156) (130) 323 FY14 (22) 173 107 (43) (32) £m (12) (9) 3 – 49 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 50 STRATEGIC REPORT

FINANCIAL REVIEW CONTINUED

FY15 FY14 NET DEBT Separately disclosed items £m £m The Group sources debt and finance facilities from a combination of the international capital markets and its relationship banking group. Prior year (paid in FY15) (40) (34) During the year, the Group reduced net debt from £326 million to Prior year EU261 (paid in FY15) (16) – £139 million. Current year(i) (42) (9) Total Exceptional items (98) (43) The composition and maturity of the Group’s net debt is summarised below: (i) Exceptional items include net cash from disposals of £20 million in FY15 and £78 million in FY14. 30 Sept. 30 Sept. The Group uses a measure of cash conversion which reflects the 2015 2014 Movement amount of cash flow retained by the business, which can be used £m £m £m Maturity for investment in capital expenditure, debt repayment or payment of dividends. On this basis, cash conversion has improved to 75% in FY15 2015 Euro Bond – (310) 310 Jun-15 (FY14: 55%). As part of the New Operating Model, the Group intends to 2017 GBP Bond (299) (297) (2) Jun-17 use a revised measure of cash conversion from FY16 onwards. 2020 Euro Bond (388) (408) 20 Jun-20 2021 Euro Bond (295) –(295)Jun-21 FY15 FY14 Commercial Paper (155) (82) (73) Various Revolving Credit Facility – ––May-19 Operating Cash flow(i) 585 445 Finance Leases (183) (181) (2) Various Net Interest (125) (130) Aircraft related borrowings (99) (79) (20) Various Cash Exceptionals (98) (43) Other external debt (47) (13) (34) Various Converted Cash 362 272 Arrangement fees 26 25 1 n/a EBITDA 484 496 Total debt (1,440) (1,345) (95) Cash conversion 75% 55%(ii) Cash (net of overdraft) 1,301 1,019 282 (i) Operating Cash flow defined as net cash from operating activities before net interest payments exceptional cash costs. Net debt (139) (326) 187 (ii) Cash conversion for FY14 has been restated to be consistent with the FY15 presentation; FY14 reported cash conversion was 62% The Group’s £800 million Committed Facilities comprises a Revolving Credit Facility of £500 million, of which £46.6 million was drawn NET ASSETS at 30 September 2015, and a £300 million bonding and guarantee The Group’s balance sheet at 30 September 2015 is set out facility of which £247.2 million was drawn at 30 September 2015 on page 119. During the year the Group’s net asset value (2014 £126.0 million). The Revolving Credit Facility is shown as nil in increased by £83 million to £368 million at 30 September 2015 the above table as the drawn element (£46.6 million) relates to a (September 2014: £285 million), analysed as follows: drawdown of the ancillary facilities of the RCF, which has been used solely for bonding and is thus net debt neutral. These facilities mature Net assets £m in May 2019.

170

(31) 89 368 (8) 285 (120) (17)

Opening PBT Taxes Non- Balance Issue of Other Closing net assets pre- recurring sheet shares (net net assets exceptional items revaluations of costs) reduction programme. reduction cost toour relation in particularly Group, ofthe transformation the in made progress significant the on commented who Fitch, and &Poor’s Standard both from ratings ‘B’ its maintained has Group The CREDIT RATING term. medium the over rating credit Group’s the enhance and due, fall asthey commitments financial its tomeet Group the enable strategy, growth risk low sustainable a tosupport isintended ofpolicy execution successful . at all headroom ofliquidity level asufficient toensure and segments, operating tothe ofcertainty adegree provides which hedging, by volatility istoreduce activities ofTreasury aim principal The guidelines. and policies ofBoard-approved framework within a conducted are and function Treasury acentralised managed by are risk credit financial and prices commodity rates, interest currencies, toforeign exposure and liquidity Group’s funding, The TREASURY MANAGEMENT Such cash does not form part of the liquidity headroom calculation. headroom liquidity ofthe part form not does cash Such due to requirements. primarily legal or regulatory jurisdictions overseas in isrestricted Group’s cash ofthe portion A small Europe. USand the UK, the in environment rate interest low the given low remain general in returns but policy ofthe terms the within ismaximised Yield risk. credit counterparty tomitigate is designed Board-approved consistent with policy, liquidterm instruments which short- quality, high in byTreasury isinvested cash surplus net the and arrangements pooling ofcash use bythe isfacilitated Group the throughout ofcash control tight and use Efficient months. Summer the during accumulates cash ofsurplus amount asubstantial flows, cash and cycle Group’s business ofthe seasonality tothe Due CASH MANAGEMENT Fitch andStandard Poor’s Corporate ratings aigOtokRtn Outlook Rating Outlook Rating BStableBStable 052014 2015 BPositiveBPositive e ul9%9%82% 50% 90% 84% 91% 95% Jet Fuel US Dollar

GBP/SEK 34% 75% 95% 2015. October 28 at As Euro below. table the in shown are hedged been have that exposures ofour proportion The purposes. planning for certainty greater toprovide order in currencies, foreign and Fuel ofJet price the in fluctuations istosmooth policy Group’s hedging ofthe objective The HEDGING OF FUEL AND FOREIGN EXCHANGE GBP/US Dollar GBP/Euro were as follows: Group tothe relevant rates exchange end period and average The million. by£38 lower were FY15 in profits reported year, the during movements ofcurrency asaresult and Sterling, into profits ofoverseas translation the hedge not does Group The benefits. these toretain expect not wedo isthat assumption prudent our although million, £100 byafurther fall will costs fuel net our that estimate wecurrently FY16, For prices. lower through customers toour on passed partly and costs, flying non-fuel denominated dollar- byhigher absorbed partly were benefits year,to last these compared FY15 in million £100 byaround reduced costs fuel net While currencies. our base against USDollar the in movements the and price fuel the by both influenced are costs fuel net our USDollars, in ispriced Fuel Jet As THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS vrg aePeriod end rate Average rate 12.60 1.55 1.35 itr1/6Sme 6Winter 16/17 Summer 16 Winter 15/16 Y5F1 Y5FY14 FY15 FY14 FY15 10.98 1.66 1.22 12.66 1.35 1.51 11.72 1.29 1.62 51 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 52 STRATEGIC REPORT

FINANCIAL REVIEW CONTINUED

FY16 Hedging of fuel and foreign exchange TARGETS AND KEY PERFORMANCE INDICATORS – FY13 TO FY15 95% Since March 2013, we have reported our progress against a set of US Dollar 84% targets and KPIs that were intended to measure our progress in 50% implementing our strategy between FY13 and FY15. The table below

95% shows our achievements over this period: Euro 75% Actual Target 34% Financial year ended 30 September FY12 FY13 FY14 FY15 FY15

91% Jet fuel 90% Targets 82% New product revenue N/A £94m £280m £543m >£700m Web penetration(i) 34% 36% 38% 40% >50% Winter 15/16 Summer 16 Winter 16/17 Wave 1 cost-out/profit As at 31 October 2015. improvement (run-rate) £60m £194m £400m £510m >£500m KPIs (ii) GBP vs EURO, US Dollar and SEK Sales growth N/A N/A (2.1%) (1.2)% >3.5% Underlying gross margin improvement(iii) N/A 0.8% 1.5% 1.6% >1.5% 12.66 UK underlying EBIT margin 0.1% 2.2% 3.5% 4.8% >5% Cash conversion(iv) 11% 48% 55%(v) 75% >70% 11.72 Notes: (i) Measured on a last 12 months (LTM) departed basis. (ii) Compound annual growth rate from FY13 to FY15 including new product revenue. 1.62 1.35 (iii) Underlying gross margin, adjusted for disposals and shop closures to make all periods from FY12 – 1.29 FY15 like-for-like. 1.51 (iv) Cash conversion ratio is defined as free cash flow after exceptional items and before capital expenditure as a percentage of EBITDA. (v) Cash conversion for FY14 has been restated to be consistent with the FY15 presentation; FY14 reported cash conversion was 62%. Oct-14 Jan-15 Apr-15 Jul-15 Sep-15

GBP/USD GBP/SEK GBP/EURO to reduce business risk. business to reduce and profits on tofocus order in lines business profit nil or low certain toremove aswechose targets, penetration web and growth sales year full our meet not wedid disclosure, previous our with Consistent profits. on tofocus order in hotels commodity and City margin lower fewer tosell decision ofastrategic asaresult overall ofimpact Tunisia). However, we did not our £700 meet million target sales the (despite FY15 and FY12 between million of£543 revenue incremental generating hotels, partner and own-brand margin higher our from revenues Product New growing in progress good We made of70%. target ofour ahead FY15, 75% in weachieved conversion, Incash FY12. in tozero compared FY15, for 5% target toour close coming UKEBIT margin, our growing in progress good made We also have targets. exceeded consistently has which programme, Out Cost byour supported early, year one FY15 for target improvement margin gross underlying its achieved Group The met. been not have improvement toprofit linked directly not targets those but targets, improvement profit our on progress good made wehave Accordingly, profits. growing bysustainably foundation stable amore on Group the toput been has years three last the over aim overarching Our Total targeted benefits ru-iecs-u 0260 100 70 27 – – strategy travel air – Integrated Group-wide cost-out – Ktraon 014140 124 60 UK turnaround targets. toour compared performance, Profit and Out Cost our shows below table The (iii) One-off costs in the income statement are included in separately disclosed items. disclosed separately in included are statement income the in costs (iii) One-off costs. One-off (ii) rate. Run (i) Notes: – Income statement raiainlsrcue–3 91 30 – – Organisational structure Expected costs toachieve costs Expected – flow: – Cash – ehooy n te 369 13 – other and technology, infrastructure, Product, prtn xedtr 02 33 29 30 Operating expenditure aia xedtr 21 8 – Capital expenditure THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS (iii) (i) (ii) FY 12 014400 194 60 64 30 47 36 £m FY 13 £m FY 14 £m 7 360 370 FY 15 1 500 510 0 115 104 4 140 140 4 134 148 1 111 118 431 34 411 24 724 37 £m Target FY 15 £m 53 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 54 Booking Departure In-destination Returning home

RETURNING HOME WITH THOMAS COOK holidays don’t have to end at home.

We inspire new holiday choices by providing tailored information on destinations customers might want to travel to next.

HOLIDAY SURVEY

A welcome home email, including a short Holiday Survey, gives customers WELCOME HOME the opportunity to tell us what they loved plus anything we could do to make their next trip with us even better.

Read more about how we are transforming our CRM on page 32 put the customer at ourheart. to andwork our products always helping usto continuously improve Survey is usedacross the Group, Customer the feedbackfrom Holiday queries. any post-holiday hand to respond to Services team is on CustomerOur SURVEY HOLIDAY INSPIRATION CUSTOMER SERVICES CUSTOMER Y M IN ER SP S ERVI IR AT C IO E S N 55 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 56 STRATEGIC REPORT

RISK MANAGEMENT EMBEDDING A CULTURE OF RISK MANAGEMENT

OUR RISK MANAGEMENT STRATEGY TOP DOWN OVERSIGHT The Board is responsible for maintaining the Group’s risk management The Risk Matters Group (“RMG”) and the broader risk management and internal control systems, with a mandate that includes defining framework have been designed to ensure the scope of coverage risk appetite and monitoring risk exposures and mitigations to ensure includes transformational/strategic, operational, financial and legal that the nature and extent of risks taken by the Group are aligned risks within a single framework. Chaired by the Chief Risk Officer, with its strategic objectives. the purpose of the RMG is to provide leadership, direction and oversight with regard to the Group’s overall risk framework, appetite, RISK APPETITE and relevant risk policies, processes and controls. The RMG meets The Board has undertaken a detailed exercise to consider the risk on a quarterly basis, and reviews the Group Risk Dashboard, key appetite in a number of key areas for the business. The results of risk indicators and the Group’s principal risks, All business areas this review indicate the relative appetite of the Board across the risk are represented through attendance by senior executives ensuring factors and behaviours. It is evident that this represents a view at an appropriate level of insight and validation. The chair of the Audit a point in time and changes in light of the economic environment, Committee regularly attends the meetings of the RMG. The RMG strategy and performance of the business will impact this evaluation. reports to the Audit Committee and the CEO of the Group. The Board are aligned on the relative risks and have agreed the BOTTOM UP ASSESSMENTS appetite for risk taking for digital delivery and product risk categories Our investment in risk management software ensures that risk is entrepreneurial. This position aligns with the strategic aims of the registers are regularly updated and reviewed through a Group-wide transformation programme and targets set for the business. programme of risk workshops. Each major business unit has a The Board seeks to minimise all health, safety and reputational risks. quarterly risk committee attended by the risk owners representing In all other aspects, the Board takes a balanced view on risk taking. all areas of the business, as well as the Group Enterprise Risk and Audit Team. The risk committees analyse key business unit risks and It is the intent of the Board to use the results of this review to ensure implementation of risk mitigation plans. Where appropriate, support its ongoing decision making and as the basis for a review significant risks identified at business unit level are escalated and annually in the light of the changes to the economic environment, discussed within the RMG. strategic progress and performance of the business. THE AUDIT COMMITTEE OUR APPROACH TO RISK MANAGEMENT The Audit Committee considers risk exposure against risk appetite by Operating in a dynamic and continually volatile environment requires profiling key risks in respect of their potential impact and likelihood a flexible and responsive risk management process that can match of occurrence, after consideration of mitigating and controlling the pace of change and provide management with a concise view actions that are in place. During the year, the Audit Committee has of the Group’s risk profile at any point in time. We continue to reviewed both top down and bottom up risk analyses and the Board focus on further embedding a culture of risk management that will has undertaken a detailed exercise to consider its risk appetite. contribute towards effective strategy execution, ensuring both risk The aim of these activities has resulted in an Annual Audit Plan, which and opportunities are identified and managed to deliver long-term will enable a risk-based approach to the ongoing internal audit and value creation. assurance programme. The report of the Audit Committee can be During 2015, we focused on enhancing our dual track approach to risk found on page 79. management consisting of top down oversight from the Board and senior management, and bottom up risk management embedded in the day-to-day activities of the Group. Operating Model. New the from arising benefits the forecast accurately can they believe Directors the which over timeframe the and hotels with contracts Group the duration longest the istypically as this viability isThe period believe Directors a appropriate three-year to consider assessments. these tosupport ofdetail level a sufficient provides and information management up-to-date most the contains Plan year. Business The financial the during made estimates other and reviews impairment goodwill assessment, concern going the for basis asthe used been has Plan Business This Plan”). (the “Business 2018 September to30 period the covers which plan, business three-year Group Cook Thomas the approved Board The Code. Governance UK Corporate 2014 ofthe C2.2 provision with accordance in Company ofthe prospects the assessed have Directors The VIABILITY STATEMENT risks. principal Group’s the for strategies mitigation on focus further with data, risk up ofbottom sophistication greater and development ongoing We anticipate organisation. our across culture risk the improving and governance risk toenhance owners risk with working Group, the facilitation through business ofthe risk workshops for all areas of tosupport continue Team will Audit and Risk Enterprise Group The 2016 FOR PRIORITIES OUR Identification and assessment of risk exposures at Segment Segment at exposures risk of Oversight and assessment assessment and Oversight of risk exposures at the the at exposures risk of and function level function and BOTTOM UP TOP DOWN TOP corporate level Maintenance of risk registers > process management risk the Monitors > > Group-wide risk identification, Group-wide risk identification, > risk the management Sets > exposure risk monitoring in Board the Supports > risk system management the for responsibility Overall

assessment and monitoring and assessment process against risk appetite THE MANAGEMENT RISK FRAMEWORK AUDIT COMMITTEE GROUP EXECUTIVE COUNCIL COUNCIL EXECUTIVE GROUP COMMITTEE AUDIT solvency orsolvency liquidity. could threaten Thomas Cook’s business model, future performance, that risks principal relevant all includes This quarterly. Board the with discussed are these and year the throughout reviewed are risks principal The Group. the facing risks principal ofthe Directors by the assessment arobust supported has and appetite Group’s risk the assessing in effectively works system management Group’s risk The ASSESSMENT OF THE PRINCIPAL RISKS fall due over the three-year period of their assessment. oftheir period three-year the over fall due asthey liabilities its meet and operation in tocontinue able be will Group the that expectation areasonable have Directors the analysis, ofthis results the on Based overleaf. table the in indicated been have statement viability tothe link adirect with risks principal The destinations. to certain demand customer ofreduced effect the and, markets; source our in pricing competitive UK; the in strategy ofour aspects online the delivering: ofnot impact the assessing included testing Sensitivity arise. did risks such if timeframe relevant the over Group to the available actions mitigating the and unison in and both individually occurring, actually risks principal Group’s ofthe impact potential the evaluating and Plan Business the underlying assumptions main ofthe anumber flexing involves which testing tosensitivity issubject analysis this appropriate, Where outlook. covenants debt and KPIs flows, cash sheet, balance statement, Group’s income ofthe analysis includes Plan Business The > Risk awareness and culture culture and awareness Risk > osdr mrigrss Considers emerging risks > defines risk appetite risk defines and objectives strategic Sets

embedded across the Group the across embedded RISK MATTERS GROUP MATTERS RISK OPERATIONAL LEVEL THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS THE BOARD THE > Maintains executive oversight of the Group’s key key Group’s the of oversight executive Maintains >

risks and mitigation risks and (including CEO &CFO) (including Implementation of risk mitigation > > Provides oversight and challenge oversight and challenge Provides > governance risk on reports Committee Audit reviews and Receives

plans and controls for risk mitigation plans plans mitigation risk for 57 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 58 STRATEGIC REPORT

RISK MANAGEMENT CONTINUED OUR PRINCIPAL RISKS AND UNCERTAINTIES The table below lists the principal risks and uncertainties as determined by the Board 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 Opportunities Our New Operating Model > Bi-weekly status reports on each project submitted to the Senior To deliver a best in class 1 (NUMO), the next phase of our Management Team. operating model which will transformation, fails to deliver > Monthly Group Transformation Review meetings attended by senior provide a competitive advantage our strategic and operational management including CEO and CFO, during which progress and issues in our market. targets. are discussed and addressed. > Financial benefits and KPIs are incorporated in the FY16 – FY18 business plan and delivery is tracked as part of the business review process. Failure to align our products > Ongoing monitoring of our hotel portfolio has allowed us to focus Diverse product portfolio enabling 2 and services to customer on the continuous improvement of our product offering, taking into us to match product offerings to preferences may have account feedback from our customers. change in customer preferences an adverse impact on > Our “One Tour Operator” initiative will harmonise processes, remove and demand. our ability to improve our duplication and adopt same ways of working behind the scenes with customers’ experience suppliers and in the back-office. This will ensure that we have the right of Thomas Cook holidays*. products and services in place to grow and improve our customers’ experience across all markets. > Our strategy includes a focus on developing best in class ancillaries which will improve our customers’ holiday experience. > There has been significant investment into the refurbishment of our hotel brands. > The Hotel Investment Fund will accelerate our focus on improving our product portfolio. > We have made major investments within our Group airlines through cabin refurbishment, purchase of new aircraft and addition of new routes. Failure to achieve growth in our > We have made significant investment in our One Web platform, which Flexible distribution model 3 digital distribution channel may has led to improvements in functionality and resulted in higher that fully meets the needs have an adverse impact on our conversion rates and online bookings. of our customers. market share, profitability and > As part of our new operating model, the “Omni-channel” initiative will Aligned to customer future growth*. ensure a seamless digital experience for our customers both in stores technology innovation. and online. > Our Group Ecommerce Team has regular dialogues with management within our source markets to maintain oversight and provide digital support. > Our new Companion App allows our customers to obtain information about their holiday, manage payments, and book excursions while in-destination. Failure to recruit or to retain > Our performance management system was implemented in 2014 Employing the best people to 4 the right people at the right and tracks the performance and potential of all our employees. continuously develop and evolve time will lead to a lack of > Our high potential talent is identified and nurtured through an strategy and ensure ongoing capability or capacity to enable Executive Development programme and our Emerging Talent efficiency and operation of the implementation of our programme is currently being developed. the business. business strategy. > Reward schemes are regularly evaluated to drive and reward performance and to ensure retention of key talent. > As part of succession planning, the top 130 positions have been assessed and 42 critical positions have been identified. > Our annual engagement survey allows us to assess employee motivation and commitment and identify actions we need to implement to enable talent retention. IT architecture is unable > The first phase of our IT transformation has been successfully To develop a modern, future proof 5 to support the needs of completed and the second phase is proceeding as planned. IT Operating Model. the business. > Our simplified and automated service delivery process ensures requests from the business are addressed in a timely manner. > Weekly reviews between business unit IT Heads to prevent any IT issues across the business. > IT works closely with the business to ensure NUMO initiatives have the appropriate level of support.

* Principal risk with a direct link to the viability statement. * Principal risk with a direct link to the viability statement. statement. viability tothe link a direct with risk Principal * 11 10 9 8 7 6 rnia ik Mitigation risks Principal damage. associated reputational or colleagues together with customers our impact may that incident safety and health of a toarisk exposed be always will Group the business, its of nature tothe Due payment*. debt repayment and/or dividend manage tostrategically ability the limits generation Cash price*. share its and Group the of reputation corporate the impacts turn in which public, media, investors and/or general is perceived negatively by the action of acourse or A decision risk. principal new a as this added has and area this in exposure risk high have we that recognises Group The item. agenda a key Government and remain allacross industries apriority currently are threats cyber and security Information Cook operates. Thomas where jurisdictions legal in the requirements responsibility legislative and corporate social Failure to comply regulatory, with products*. related travel for demand the reduce and keymarkets our uncertainties negatively impacting and general socio/political Increasing threats security > The assessment of Health and Safety risks is inbuilt into daily daily into inbuilt is risks Safety and Health of assessment The > > All of our senior management regularly participate in crisis crisis in participate regularly management senior our of All > > Our Health and Safety Audit programme, which is delivered by by delivered is which programme, Audit Safety and Health Our > > We have a dedicated Crisis Management Team who have the requisite requisite the have Team who Management Crisis adedicated We have > > The Group regularly reviews and updates its safety and security security and safety its updates and reviews regularly Group The > We continue to monitor to all opportunities manage liquidity > we toensure reactions governmental and stakeholder We monitor > > Our Legal Risk Database enables communication and timely analysis analysis timely and communication enables Database Risk Legal Our > have we toensure landscape socio/political the monitor We actively > > The Group Health, Safety, and Security team implement the SMS, SMS, the implement team Security and Safety, Health, Group The > successfully are initiatives improvement profit and cost-out Our > reputational potential tothe torespond place in plan aclear We have > toprovide and aims underway is programme Improvement Security Our > > Our Code of Conduct is backed by a comprehensive training programme programme training acomprehensive by backed is Conduct of Code Our > destinations new toadd continue we strategy, destination our of part As > > We operate a robust safety management system (SMS) to ensure the the toensure (SMS) system management safety arobust We operate > cash long-term and medium short, our monitor We proactively > that events all identify we process, management risk our of part As > to established been has Group Steering Security Information Our > > We have a dedicated Legal Team to ensure full compliance with formal formal with compliance full Team toensure Legal adedicated We have > capacity committed our toalign us allows model business flexible Our >

be found on page 83. page on be found can Committee &Environmental Safety Health, of the The report oversight. level Board with Committee &Environmental Safety Health, acorporate by overseen turn in are that committees safety and health of astructure by monitored is and routines management management scenarios. management scenarios. a robust follow-up process. a robust follow-up also The programme includes and decisionescalation process. aclear includes and standards measures external specialists, provided to ensure the welfare of our customers. our of welfare the toensure provided is response emergency adequate that toensure skills and resource training programmes to ensure they continue to reflect best practice. totraining programmes practice. ensure best to reflect continue they term. over the medium debt of cost average the tolower as seeking well as contingency of level an adequate maintain and requirements developments. regulatory and political toemerging respond responsibility requirements. responsibility social corporate and legislative toregulatory, related all risks of manner. timely and an appropriate in torespond available are and risk emerging of indication early an which is further supported by a reputable external specialist (SGS). (SGS). specialist external reputable by a supported further which is tocash availability. contributing Inquest.Corfu the during learnt lessons the on based year this been strengthened has plan The issues. potential and toincidents responses prepare and toidentify teams legal and HR relations, public relations, investor between cooperation close includes which event an of consequences data websites, for Service Monitoring Respond and Detect — Training Awareness Security — Policies Group Security — mitigations: following the — Vulnerability Management service to test website and and website totest service Management Vulnerability — to ensure that it is fully embedded across the Group. the across embedded fully is it that to ensure regions. tocertain travel for demand impact negatively may which factors of effect the mitigating thereby portfolio, to our implementation of our Health an andrequirements liquidity headroom. risks. these tomanage place in are controls that ensure and Group tothe impact reputational apotential have may are in place. mitigations appropriate ensure and framework risk cyber the of oversight provide legislation or case law. case or legislation relevant in changes critical of awareness toprovide training regular receives team The markets. source our in developments regulatory emerging and current all monitors which requirements regulatory demand. to fluctuating

centres and critical systems critical centres and system security d Safety Policies and procedures. THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS of our customers and employees. and customers of our benefit the for programmes safety and health leading class To provide geopolitical uncertainties. geopolitical pre-emptively manage emerging to capability proactive To deliver optimal financing strategies. optimal financing cash to implement Sufficient through positive media attention. enhancement of brand value and business the of Promotion stakeholders. key our of all influencing Instilling values and positively emerging cyber threats. tocombat astrategy developing in leaders thought To become Opportunities 59 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 60 STRATEGIC REPORT

PEOPLE INSPIRING AND DEVELOPING OUR TALENT

Having the right people, in the right roles, focused on the right ENGAGEMENT SURVEY priorities is key to the execution of our profitable growth strategy; Change within Thomas Cook continues at pace. During these times, both in terms of supporting our New Operating Model and to ensure feedback is more important than ever so each year we ask employees that we keep our customers at the heart of all we do. Embedding a to tell us how we are performing as a company and an employer. high performing and customer centric culture is pivotal to drive the In September 2015, we ran our third annual Group-wide employee change we need to see and remains a key focus as we aspire to be engagement survey – Every Voice. the world’s best-loved holiday company. More than three-quarters of our people completed the survey VALUES AND WAYS OF WORKING (76%) this year, a one percentage point increase on last year, Our Code of Conduct expresses our core values and beliefs – what with almost 7,500 comments shared with us and read by Peter we do and who we are. These principles provide a solid and unified Fankhauser. This volume of responses tells us that our people want framework across the Group, guiding our behaviours and how to contribute to the development of the Company and be part of our we conduct ourselves at work. Awareness is raised through the positive change. induction process and as part of annual performance reviews, when The Group’s overall Core Index score, which is a measure of employee employees are asked to remind themselves of the Code and confirm engagement with the Company, improved by four percentage points they have read and understood how it applies to their role and what to 72% with a positive shift in most geographical segments and we can expect of each other. business functions. This follows a four percentage point increase in 2014, so a clear pattern of year-on-year improvement. COMMUNICATING AND ENGAGING WITH OUR EMPLOYEES One of our biggest improvements this year was the understanding Regular, effective, two-way communication and collaboration is and engagement with the Company’s Strategy and Objectives, which important at any time, but never more so than during transformation improved by six percentage points to 72%. This is excellent progress and change. Employee engagement is driven through understanding and a clear indicator that we are taking our people with us in our and we target different employee groups through a number of journey and that they have a better understanding of where we’re communication forums and channels: going and what we need to achieve together. > Our Thomas Cook Leadership Council (“TCLC”) comprises our top Results are cascaded throughout the organisation and action 150 senior leaders and is used as a forum for informing, engaging plans are developed collaboratively at a segment and departmental and involving our leaders in our transformation. The TCLC meets level to ensure that we act upon the findings and that our people two to three times a year and the sessions, which are increasingly feel involved and engaged in making a positive difference. participative and collaborative, are designed around strategy execution, planning and calls to action as we move forward with RECOGNISING PERFORMANCE our New Operating Model. Feedback tells us that these sessions Improving our business performance and driving profitable growth inspire and engage members, providing a forum for alignment requires focus, commitment and engagement from our people. of strategic goals and sharing best practice. Strategic objectives are cascaded down through the organisation > Regular digital communications and face-to-face all employee to drive successful execution and provide focus through effective “town halls” take place across all parts of the Group, hosted by use of personal objectives. the local leadership, where plans and progress are discussed. Embedding a high performance culture is enabled by our Participation and feedback is encouraged to ensure communication Group-wide online performance and development system, MyPAD is two-way. (My Performance, Aspirations, Development). During 2015, we have > Our collaborative intranet, “HeartBeat”, launched in 2014 and has enhanced MyPAD from a user perspective and have continued to been revamped during 2015 to support our changing organisation, develop our leaders and managers to ensure effective review and to increase and improve collaboration across the Group. meetings take place at least twice a year. The new attractive and vibrant site encourages our people to work together, collaborate and share. It provides a channel for socialising We have continued throughout 2015 to place great emphasis on pay as well as sharing important news and information consistently for performance through our employee incentive plans. These plans through a variety of digital methods including news articles, blogs, provide our employees with awareness on how their performance and videos. impacts on the success of the Company. Group values. Group Heart”, our online scheme,which is by recognition underpinned our The “From through successes employee celebrate and We reward Shareholders. of our those with interests their aligning results, influence and impact can who Group, the across leaders senior and executives for our plan share aperformance tooperating committed We remain and we will deliver two aspects of this programme in 2016. in programme ofthis aspects two deliver will and we roles, senior for pipeline aleadership tocreate talent identified newly tracking fast on focuses Talent programme Emerging Our during 2015. leaders senior 50 afurther for programme Development Executive second our We delivered have pipeline. leadership our strengthen and organisation the in deeper pools talent ofour understanding a better ustogain enabled has process This PLC Board. and (“GMC”) Committee Management Group our with sessions separate holding approach, and methodology aconsistent using Review Succession Talent and Group-wide first our In2015, weconducted capability. internal our bydeveloping and appointments external via talent high-quality byattracting capability leadership our tostrengthen We continue SUCCESSION PLANNING AND TALENT DEVELOPMENT in Maths and English. English. and in Maths Qualification Skills Functional and Travel in Geography Certificate aTechnical Travel in Services; Diploma NVQ toan leads which programme atwo-year tocomplete business the into introduced are leavers school new 200 than year, Each more leavers. school for work-based le successful incredibly an for recognised ofUKbusinesses forefront atthe Company the puts apprenticeships travel in result unprecedented This programme. Apprenticeship Retail ofour inspection Ofsted recent the in areas all across rating “Outstanding” an toachieve proud weare UK, In the APPRENTICESHIPS l or M CCTC Group TCLC GMC Board Plc 63 38

Female Male % % arning Apprenticeship programme programme Apprenticeship arning GENDER DIVERSITY 92

Female 8 Male % %

are a valuable investment in Thomas Cook’s future. Cook’s Thomas in investment avaluable are programmes Both Cook. toThomas committed and motivated highly educated, well are ofthem All business. our into 70% nearly recruit completing Forafter studies. their dual the programme, we education Cook Thomas with remaining ofthem many universities, different from 200 toover ofinternships number total our brings This board. on wehave apprentices 80 ofthe proud really We are degree. aBachelor’s or certificate ofCommerce aChamber with years three after apprenticeship their finish will They Office, Head German our from our dual into programme education our travel agencies and moving us, joined people 2015, 26 Circle”. “Talent During programme university our through industry travel the in ofworking experiences first their year, interns wegave120 the During apprenticeships. and internships in toinvest wecontinue Germany Cook Thomas Within so choose. they if career entire their tofill variation enough with industry exciting toahugely doors byopening leavers toschool available makes programme Apprenticeship Our opportunities brilliant career organisation as at 30 September 2015: September asat 30 organisation the within levels atdifferent split the show below graphs The of regardless promotion personal characteristics. development and training, career fair through contribution their maximise and potential their tofulfil isable employee each which in environment working inclusive an tocreating 2015. committed We are in Principles Diversity Group-wide welaunched further this To support discrimination. any from free and fairly people wetreat ensure recr and Behaviours Leadership Values, ofConduct, Code Our diversity. our tostrengthen level atasenior appointments strategic making on tofocus We continue growth. profitable drive will and customers ofour to all closer tobe out usreach help will waysofthinking, new open up can diversity We believe leaders. mobile and diverse with culture international centric, customer byastrong issupported service customer class world delivering on focus our organisation aglobal As INCLUSION AND DIVERSITY THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 77 23 Female Male % % uitment and selection practices practices uitment and selection 69

Female 31 Male % % 61 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 62 STRATEGIC REPORT

CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITY

COMMITTED TO MAKING TOURISM MORE SUSTAINABLE

Thomas Cook provides boundless opportunities for people to enjoy OUR SUSTAINABILITY STRATEGY new experiences, discover new cultures and create fantastic We recognise that the sustainability landscape has changed memories. We believe that responsible tourism is capable of dramatically since our last sustainability strategy was launched generating positive economic and social development whilst in 2010. This, along with the changing role of the travel and tourism minimising environmental impact. At Thomas Cook, we are committed industry and social and geopolitical changes since 2010 have to making all holidays more sustainable. prompted us to review how we manage sustainability and our Our vision for sustainability is simple. For us it is how we meet long-term ambitions. our needs today and contribute to the future of our business, the In 2015, Thomas Cook undertook a materiality review, to reassess environment and the people and communities with whom we work. both what is important to the business and stakeholders, as In this way we aim to create a strong and robust business that will well as what the main impacts and risk areas were in respect operate responsibly, generating benefit for the communities with of sustainability. This review gave a new perspective to what the which we work over the longer term. material impacts are for Thomas Cook as an organisation and now drives our efforts to deliver the most benefit to the communities HOW WE MANAGE SUSTAINABILITY with which we work and to reduce our environmental impact. We see sustainability as the responsibility of every employee and an activity that requires strong leadership, beginning with the Group Sustainability at Thomas Cook is now split into three focus areas: CEO Peter Fankhauser. The Board retains responsibility for the long- People, Planet and Responsible Business. Each of these areas term success of the Group and the Health, Safety & Environmental is explored over the following pages and further detail can be Committee has oversight of the consistent policy for managing health, found in our 2015 Sustainability Report, which is available at safety and environmental matters. The Committee met four times thomascookgroup.com/sustainability. during the year and information on activities of the Committee during the year can be found on page 83.

FULL SUSTAINABILITY REPORT

RESPONSIBLE BUSINESS

PLANET

PEOPLE

OVERVIEW

AT OUR HEART SUSTAINABILITY CONTINUING THE TRANSFORMATION

View and download the full Sustainability report here: thomascookgroup.com/sustainability-report part ofpart that initial £1,000,000 fundraising. as Foundation Tourism Safer the tosupport Company the in Shares Ordinary of580,375 Green, CEO, Harriet former ofits donation kind the and acknowledges Foundation Tourism Safer the for raised be to £1,000,000 first the tounderwrite agreed Company The monoxide. ofcarbon dangers the on focus aparticular with abroad travelling makers ofholiday safety the to improve aims which Foundation, Tourism Safer the established also Company year, the the During forbenefits their local communities. tocreate big, or small how matter no activities, all covers and levels atall staff engages It initiatives. fundraising staff and giving payroll over £5 million years customer in five donations, through last the raised has Charity Children’s Cook Thomas The facilities. healthcare and well-being education, water, improving drinking clean of safe provision tothe emphasis particular gives remit Its organisations. partner with byworking lives children’s toimprove aims Charity Children’s Cook Thomas The ofconduct). code international driven (an industry- Code” to“The committed are and welfare children’s safeguard and topromote responsibility isour it We believe Child. the of Rights the on UNConvention tothe committed fully weremain and business our for issue important isan protection and safety Child way. aresponsible in customers toour holidays wedeliver tohow fundamental and behaviours ofour aspect every within isembedded that aphilosophy and make weeach commitment a represents ofConduct Code The in. weoperate destinations the in live and us, with travel who children the toprotecting through travel, customers our towhich and wework which in communities the with byengaging sustainably weoperate how including business, toour material values all covers ofConduct Code Our alike. visitors and residents for service ahigh-quality ensuring weare communities, in investing and destinations supporting partners, industry with collaborating By travel. customers our aswhere aswell work, and live employees our where communities thriving tocreate We work activity. charitable and commitment ofsocial tradition along has Cook Thomas chain in line with the Modern Slavery Act 2015. 2015. Act Slavery Modern the with line in chain supply our in transparency toensure measures appropriate place in putting and chains supply existing ofour areview undertaking be will we To end, chain. this supply or business its in trafficking human or slavery isno there that toensuring iscommitted Group Cook Thomas communities. and individuals upon impacts our mitigate and understand tobetter industry tourism the within partners other and NGOs with working weare and operations all across policy Rights aHuman operates Cook Thomas world. the around communities and individuals impacts business Cook’s Thomas We understand MANAGING HUMAN RIGHTS IMPACTS PEOPLE » and work. where we live and the communities support our employees We will engage and > Get 90% of our suppliers (including central purchasing, purchasing, central (including suppliers ofour 90% Get > Supply chain strategy Protection Child Group the Implement > Child Protection key around projects community local three atleast Conduct > Home Communities Home each in project community sustainable one atleast Support > Destination Communities to: We aim

THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS and comply with our Supplier Code ofConduct Code Supplier our with and comply to up tosign contracting) agency and contracting hotel Head Office locations Head Office of the main regions we operate in weoperate regions main of the

PEOPLE 2020 TARGETS

«

63 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT 64 STRATEGIC REPORT

CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITY CONTINUED

PLANET

The environmental impact of the travel industry is considerable, with around 5% of all global carbon emissions coming from the travel and PLANET 2020 TARGETS tourism sector. At Thomas Cook, we run one of the most efficient airlines in the »We will protect and industry, with only 71.5g CO2 per passenger kilometre, compared with an average for the five largest European airlines of 93.11g CO2 conserve the planet’s per passenger kilometre. We are working to make our airline more efficient, and collaborating with the rest of the airline industry to share best practice. We are also investing in the next generation natural resources.« of aircraft to provide better performance and customer experience. We work with and support the International Civil Aviation We aim to: Organisation, whose aim is to produce a successor to the EU Offices/Retail Emissions Trading Scheme by 2020. > Reduce electricity consumption by 60% > Obtain 50% of our electricity from renewable sources In 2015, we have continued to invest in our airline fleet, with a full > Reduce paper usage by 60% refresh of the interiors of the vast majority of our existing planes as > Purchase all of our paper from sustainable sources well as the purchase of new aircraft. Each of our upgraded aircraft Hotels delivers greater comfort and a superior experience for passengers, > Implement a local sourcing policy for food and beverages whilst reducing weight to achieve greater fuel efficiency. at all own-brand hotels Our efforts to reduce our environmental impact go beyond reducing Airlines fuel usage and carbon emissions. We also work hard to reduce the > Reduce on-board waste use of water in our facilities around the world, to use sustainable > Achieve a 12% increase in fuel efficiency, as compared products and materials wherever possible, to reduce our production to 2008 of waste and to produce our own renewable energy, such as our extensive solar PV panel installation at Copenhagen airport. We work with colleagues across the tourism and airline industry to make the most of technological developments to decrease energy use and to share best practice.

2015 2014 Tonnes of CO2 Tonnes of CO2 Greenhouse gas emissions equivalent equivalent

Total Scope 1 – Direct emissions 4,013,671 3,969,957 Total Scope 2 – Indirect emissions 22,172 32,539 Total emissions 4,035,843 4,002,496 Total emissions/£million turnover 0.00054 0.00043 We have reported on all the emission sources required under the Companies Act 2006 (Strategic report and Directors’ reports) Regulations 2013. These sources fall within our consolidated financial statements. We only have responsibility for the emission sources that are included in our consolidated financial statements. We have used the GHG Protocol Corporate Accounting and Reporting Standard (revised edition), data from EU Emission Trading Scheme and emission factors from the UK Government GHG Conversion Factors Guidance 2015. is experienced by local communities. bylocal is experienced oftourism benefit the that ensuring and in-destination development economic and employment local uspromote helping in key tool a are excursions Label Local habitats. natural or sites of ancient protection to the contributing and people, local with stories personal sharing drink, and food authentic celebrating tolife: traditions their and people its aplace, tobring designed are excursions Label Local These holiday. oftheir memories lasting create and destination ofa culture the in themselves immerse could customers that so ofexcursions range exciting an welaunched Two ago years LOCAL ECONOMIC IMPACT progress. environmental and social financial, to deliver operations, ofour part every toexamine weneed means This business. athriving sustain and tocreate place in processes and products people, best the having means usthis For strategy. long-term customer-centric ofour heart isatthe and culture new our shaping and isdriving Sustainability animal welfare and local development. development. local and animal welfare on impact a positive ashaving aswell customers for enjoyable ismore product each toensure oversight greater have we can attractions, ofanimal number aselect on focusing By destination. each in offered activities animal-related the toreducing a view with chain supply our in welfare animal toaddress We continue animals. on impact negative the reduce to worldwide NGOs welfare animal and partners other industry ABTA, association, industry UK’s travel the with closely We work cruelty. and neglect from animals toprotecting and by tourism, impacted are lives whose animals for ofwelfare standards minimum ustoupholding commits Policy Welfare Animal Group Our tourism. by impacted ofanimals welfare ofthe aware acutely also We are initiatives. education and biodiversity topromote help can and benefit socio-economic apositive have can activities these that We recognise on holiday. whilst opportunities and wildlife-viewing attractions toanimal visits for demand strong demonstrate customers Our ANIMAL WELFARE RESPONSIBLE BUSINESS » long-term value. in order to create reductions resource savings through We will bring cost > To measure and improve our hotel & accommodation and and &accommodation hotel our improve and To measure > > Be recognised as green and responsible business by by business responsible and asgreen recognised Be > Customers per consumption measured customer Reduce electricity > > Reduce water volumes to an average of 350 litres per guest guest per litres of350 average toan volumes water Reduce > > Have at least 20% of our customers stay in accommodation accommodation in stay customers ofour 20% atleast Have > Hotels every in excursion Label Local one atleast Have > Destinations to: We aim

THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS health & safety independent audit performance scores performance audit independent &safety health our customers accommodation hotel Concept at all per night at all Concept hotel accommodation hotel Concept atall night per certified with a GSTC recognised sustainability certification sustainability recognised a GSTC with certified staffed destination RESPONSIBLE BUSINESS 2020 TARGETS « 65 FINANCIAL STATEMENTS GOVERNANCE STRATEGIC REPORT

governance CREATING STRONG FOUNDATIONS THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS

67 FINANCIAL STATEMENTS GOVERNANCE 68 GOVERNANCE

CHAIRMAN’S GOVERNANCE STATEMENT

FRANK MEYSMAN CHAIRMAN »We intend to achieve market best practice standards for compliance across all areas of our business.« personalities, with the right motivation, right the experience with andpersonalities, skills to ofhigh-profile mixture agood with place in Board diverse and astrong wehave that confident Iam Director. Non-Executive a new recruiting in toassist consultant search external an engaged have we and Director Independent ofSenior position the on totake agreed has Airey Dawn that year. delighted Iam of the end atthe down Symon, our Senior Independent Non-Executive Director, stepped asCarl level, Board atthe change additional seen has year This Group. Cook Thomas the for Board and management senior calibre ofhigh- continuation the ustoensure enable will which addressed, tobe need that planning succession our in gaps any and developed tobe individuals talented both identified review The Company. the in roles 130 critical most the covering review, succession and talent aGroup-wide oversaw Board the July in therefore and process ongoing isan planning succession that We recognise bythird-parties. supplied of products range byabroad complemented proposition, customer ofour centre atthe flights and hotels ofcontrolled portfolio own our putting weare experience, holiday any iskey to flight and hotel the that Recognising service. customer class byworld- up backed experiences, holiday flexible and differentiated ofhigh-quality range abroad with customers our by providing growth, profitable on focuses which strategy, ofour execution and transformation the leading isnow CEO. Peter ofGroup role the into transition asmooth for him toprepare served COO asGroup role his The responsibilities increased that Petertransformation. took on in ofthe stage next the into Company the totake choice right the him made industry, travel ofthe experience and knowledge extensive his with together UKbusiness, Cook Thomas the in record track proven Peter’s that felt and Green toHarriet successor capable extremely asan process planning succession the during Peter We identified delivers together. and develops Group entire the that toensure and to succeed experience and skills motivation, right the with equipped a Board wehave that isessential it execution, strategy and transformation ofour stage next the on weembark Fankhauser. As CEO Peter Group new toour transition successful the oversaw Board The year. last ofthe course the over undertaken we have activities key governance the out sets report following the and operate can Company our which from foundation astrong creating in iscrucial governance corporate Good Shareholder Dear every one of our employees. ofour one every and ofeach behaviours the through culture this todemonstrate and business ofour areas all across compliance for standards practice best market toachieve We intend ofus. expected making decision and ofbehaviours standard the reflecting Group, Cook Thomas the across isembedded culture acompliance and area important this in made are improvements continuous toensure Secretary Company Group and Board the with towork continue Iwill complacent. be wecannot that recognise time same year, atthe this but governance of respect in made wehave progress the with pleased I am next year. ofthe course the over activities similar tohold weintend success, this Given us. for experience tothe contributed who people of our many also and Board the on mycolleagues from feedback positive extremely Ireceived people. our and products our toknow getting year previous any in than time more spent and journey customer the of stages various experienced Board The experience. customer the to exposure ofand understanding their toenhance year the during ofactivities anumber undertook Board the wedo, everything in heart atour customers our ofkeeping value core ofour In recognition on page 78. provided are changes ofthese details Team. Further his Management and byPeter introduced being Model Operating New the supports fully Board The strategy. ofour execution the through change and evolve asthey ways ofworking, and structure organisational our in improvements the reflects best making decision that to ensure procedures and policies governance internal our toadapt We continue review. close under Board ofthe the composition tokeep continue and year this performance Board’s ofour review internal an We held challenges. future any overcome and handle to help and journey, transformation its on Company the support 24 November 2015 November 24 CHAIRMAN MEYSMANFRANK THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 69 FINANCIAL STATEMENTS GOVERNANCE 70 GOVERNANCE

BOARD OF DIRECTORS EXPERIENCE AND DIVERSITY

The Board is chaired by Non-Executive Chairman, BOARD COMPOSITION Frank Meysman. In addition to the Chairman, the Board currently includes two Executive 1 Chairman Directors and five Non-Executive Directors. Each of the committees of the Board is chaired 5 by a Non-Executive Director. Independent Non-Executive Directors 2 Executive Directors

BOARD TENURE

1 2 3 4 0–3 years 4 >3 years

4 5 6

GENDER DIVERSITY 5 Male

7 8 9 3 Female

NATIONALITY MIX OF BOARD MEMBERS 3 2 British Belgian

1 1 Swiss Dutch 1 Turkish 9_Governance_p66_p87_v68.indd 71 Awards and the UK Stock Market Awards. Awards. Market Stock UK the and Awards Finance Business the both at Year” the of Director “Finance of accolade the won Michael 2014, March In . of Accountants Chartered of Institute the of amember is He plc. ebookers of Officer Financial Chief subsequently and Limited Company Pacific First Kong-listed Hong the of Director Finance and Officer Operating Chief previously was and industries of range abroad across experience international considerable has Michael business. levered ahighly in risk toreduce plan development abusiness implementing in akey role played he where Group, Fit Kwik of Director Finance Group was he tothis, Prior 2012. 1July on Officer Financial Chief became and May2012 14 on Company the joined Healy Michael Skills & experience Appointment: July 2012 CHIEF FINANCIAL OFFICER 3. MICHAEL HEALY Germany. in time, the at Tour Operator largest third LTU, the around turned successfully and Kuoni of business overseas and division European the growing and managing for responsible was he Cook Thomas joining Before market. travel the in experience of years twenty-five over has Peter 2013. November in Officer Operating toChief promoted was he Europe, & Continental UK CEO for as business UK the around turning in success his of recognition In 13years. last the over Group Cook Thomas the in roles senior of anumber held has Fankhauser Peter Skills & experience Committee and Nominations Committee MemberCommittee memberships: of & Safety Health, Environmental NovemberAppointment: 2014 OFFICER EXECUTIVE CHIEF FANKHAUSER PETER DR 2. S.A. Spadel and (WDP) Pauw De N.V., Warehouses of Picanol Director Representative N.V. Independent an JBC of also is He Chairman appointmentsOther 2014. Awards Director Non-Executive the at category List” Official – Company “Quoted the in Chairman, as won, he 2014 April In companies. international private and public of anumber of Chairman, including Director, aNon-Executive been has Frank Lee, Sara leaving Since Directors. of Board the of amember and President Vice Executive 1997, was he from where, 2003 and 1990 between Corporation Lee Sara the and 1990, and 1986 between Egberts Douwe 1986, and 1977 between &Gamble Procter including companies, brand global dynamic in career executive successful a enjoyed He 2011. 1December on Chairman became 2011 and 1 October on Company the of Designate Chairman appointed was Meysman Frank Skills & experience of Chairman memberships: Committee Nominations Committee 2011 October Appointment: NON-EXECUTIVE CHAIRMAN MEYSMAN 1. FRANK Youth Theatre. National the of Chair and Images Getty of Officer Executive Chief appointmentsOther plc. easyJet of Director aNon-Executive also was she 2008, and 2004 Between plc. ITV at Content Global Director, Managing as role her from company the joining after TV, Five of Officer Executive Chief and Chair was she tothis, Prior Group. RTL the within CLT-UFA Limited Television UK of President and EMEA, Yahoo! of President Vice Senior of roles the held previously She companies. media leading UK’s the of some at positions senior held has and industry media the in experience of years 29 over has She 2015. 1October on Director Independent Senior and 2010 12 April on Director Non-Executive Independent an as appointed was Airey Dawn Skills & experience Committee, Remuneration Co MemberCommittee memberships: of & Safety Health, Environmental Appointment: April 2010 AND SENIOR INDEPENDENT DIRECTOR DIRECTOR NON-EXECUTIVE INDEPENDENT 4. DAWN AIREY Committee and the Remuneration Committee of ASML N.V. ASML of Committee Remuneration the and Committee Strategy and Technology the of member Board and AG; ProSiebenSat1 of Committees Compensation and Audit the of member and member Board AG; Jungheinrich of N.V.; member Board Netherlands ASR of Committees Remuneration and Nomination the of Chair and member Board including: , and Netherlands the Germany, in roles non-executive Various appointmentsOther practice. Media later, its and Transportation, Travel and its of leaders the of one was she where Germany in &Company McKinsey of partner a was she that Before companies. and industries of transformation digital the on is focus her where 2003, since held has she a position France, in INSEAD at Strategy of Professor Adjunct is She 2014. 1July on Director Non-Executive Independent an as appointed was Aris Annet Skills & experience Committee and Remu MemberCommittee memberships: of & Safety Health, Environmental Appointment: July 2014 DIRECTOR NON-EXECUTIVE INDEPENDENT 5. ANNET ARIS THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS neration Committee mmittee and Audit Committee 06/01/2016 13:09 71 FINANCIAL STATEMENTS GOVERNANCE 72 GOVERNANCE

BOARD OF DIRECTORS CONTINUED

6. EMRE BERKIN 8. MARTINE VERLUYTEN INDEPENDENT NON-EXECUTIVE DIRECTOR INDEPENDENT NON-EXECUTIVE DIRECTOR

Appointment: November 2012 Appointment: May 2011 Committee memberships: Chairman of Health, Safety & Environmental Committee memberships: Chairman of Audit Committee and member Committee, and member of Nominations Committee and of Nominations Committee Remuneration Committee Skills & experience Skills & experience Martine Verluyten was appointed as an Independent Non-Executive Emre Berkin was appointed as an Independent Non-Executive Director Director on 9 May 2011. She has significant international financial and on 1 November 2012 and was appointed as Chairman of the Health, Safety IT expertise and has held a number of senior finance positions across & Environmental Committee on 20 February 2014. He has considerable the telecommunications, electronics and materials sectors. Between experience across the technology sector and international markets 2006 and 2011, she was Chief Financial Officer of Umicore, a Brussels- and, being based in Turkey, he has vital knowledge of one of the key based materials technology group, and from 2000 to 2006 she was destinations for millions of our customers. Between 1993 and 2006, Group Controller and subsequently Chief Financial Officer of the mobile he held a number of senior positions at Microsoft, latterly as Chairman, telephone operator, Mobistar. She also held the position of Chair to the Middle East & Africa and Vice-President, Europe, Middle East & Africa, Audit Committee of the Flemish Region in Belgium. where he led all aspects of Microsoft’s business in 79 countries. Other appointments Other appointments Non-Executive Director of 3i Group plc, Supervisory Board member and Non-Executive Director to a number of companies, including Pegasus chair of the Audit Committee of STMicroelectronics N.V. and Independent Airlines, Turkey’s leading low-cost carrier, listed on the Istanbul Stock Director of Group Bruxelles Lambert. Exchange, and a broad range of technology companies.

9. ALICE MARSDEN 7. WARREN TUCKER GROUP COMPANY SECRETARY INDEPENDENT NON-EXECUTIVE DIRECTOR Appointment: September 2015 Appointment: October 2013 Skills & experience Committee memberships: Chairman of Remuneration Committee, Alice Marsden joined the Company in January 2014 as Group Senior Legal and member of Audit Committee and Nominations Committee Counsel and has since taken on the roles of Group Company Secretary Skills & experience (from September 2015) and Head of Legal for the UK&I and Group. Prior to Warren Tucker was appointed as an Independent Non-Executive Director joining the Company, Alice was a senior associate at Latham & Watkins, on 3 October 2013 and became Chairman of the Remuneration Committee a top tier global law firm. During her time at Latham & Watkins, Alice on 20 February 2014. He has significant experience in the travel industry, provided external legal support to the Thomas Cook Group and gained international business and strategic transformations. He was, from 2003 valuable business experience during a client secondment to a leading until May 2013, Chief Financial Officer of Cobham plc. He is a chartered investment company in the UAE. accountant and has previously held senior finance positions at British Airways plc and Cable & Wireless plc and as Non-Executive Chairman of PayPoint plc. Other appointments Non-Executive Director of Reckitt Benckiser Group plc. Independent Non-Executive Director, Chair of the Audit Committee and member of the Compliance Committee of Survitec Limited. Independent Non-Executive Director and Chair of the Audit & Risk Committee of the UK Foreign & Commonwealth Office.

9_Governance_p66_p87_v68.indd 72 06/01/2016 13:09 the Company is now compliant in respect of this provision. ofthis respect in compliant isnow the Company 2014, December 31 on Board the from departure Harriet’s Following Company. the and Harriet toboth benefit ofmutual was Director aNon-Executive being that and Company tothe energy and time sufficient devote would she that satisfied being boards, both on to serve continue should she that agreed Board the appointment, her asCEO. On appointment toHarriet’s prior held were roles Both Co. Electric Emerson and plc Systems ofBAE Director as aNon-Executive served also Green Harriet Officer, Executive asChief serving Whist www.frc.org.uk). at full in read be can Code (the company 100 aFTSE in directorship non-executive one than more on taking Directors toExecutive relation in B.3.3, ofProvision respect in 2014, December 31 and 2014 1 October between aperiod for except Code, ofthe provisions the with complied fully Company the year the 2015. Throughout September to30 year the in Code ofthe provisions the with complied Company the which to extent the and Code”) (“the Code Governance UKCorporate the of principles the applied Company the how out sets report This GOVERNANCE CODE COMPLIANCE WITH THE UK CORPORATE CORPORATE GOVERNANCE REPORT assessments of the Group’s succession plans. Group’s succession ofthe assessments make Directors the helps and ofexecutives group toabroader access Board the gives This ofresponsibility. areas their on presentations tomake order in meetings Committee and ofBoard parts relevant attend level Board below executives Senior level. segment and atGroup both performance, financial ofthe analysis a detailed presents CFO the and Group the across issues business and strategy transformation, the on update acomprehensive CEO presents the meeting, Board Ateach managed. and assessed tobe risk enables which controls, ofeffective isaframework there that ensuring for and Group ofthe success long-term the for isresponsible Board The DIRECTORS OF BOARD THE report. Strategic ofthe 19 to33 pages on summarised are strategy and model Group’s business The STRATEGY AND MODEL BUSINESS GROUP’S THE > reviewing standards of ethics and policy in relation to health, tohealth, relation in policy and ofethics standards reviewing > and planning; succession and performance executive monitoring > > establishing and maintaining the Group’s risk appetite, system system appetite, Group’s risk the maintaining and establishing > > changes to the Group’s capital structure and the issue of of issue the and structure Group’s capital tothe changes > > approval of the Group’s dividend policy and the payment of interim of interim payment the and policy Group’s dividend ofthe approval > > approval of annual, half-year, and quarterly results results half-year, quarterly and ofannual, approval > expenditure; capital and investments ofsignificant approval > > guiding the Group’s strategic aims, leading to its approval of of approval toits leading aims, Group’s strategic the guiding > for: responsible isspecifically Board The

safety, environment, social and community responsibilities. community and social environment, safety, of internal control, governance and approval authorities; authorities; approval and governance control, of internal any securities; any securities; and the recommendation of final dividends; dividends; offinal recommendation the and of the external auditors; auditors; of the external remuneration and appointment the approval, Shareholder announcements, accounting policies and, subject to the Group’s strategy and its budgetary and business plans; plans; business and budgetary its and strategy the Group’s THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS RESPONSIBILITIES OF THE BOARD 73 FINANCIAL STATEMENTS GOVERNANCE 74 GOVERNANCE

CORPORATE GOVERNANCE REPORT CONTINUED

BOARD ACTIVITY DURING THE YEAR

The Board, its Committees and Management continued to focus on delivering Shepherd whilst staying at a hotel booked through Thomas Cook in 2006. the Company’s strategy for the next stage of transformation, which included In response to the issues raised, the Board oversaw the appointment of the development of the New Operating Model. In pursuit of the Company’s Justin King to conduct an independent review of the Group’s customer health, strategic goals, the Board considered and approved entering into the strategic safety, welfare and crisis management practices. The Board also received partnership with Fosun and the re-financing of the Company’s banking facilities a number of reports and reviews on the topics of in-resort Health and Safety to create a more efficient capital structure. The Board also spent time looking and customer complaints. at the Company’s IT function. As detailed on page 76, the Board held one of its meetings in Stockholm, The Board held a number of unscheduled meetings where it considered matters the main offices of the Northern Europe business and another in Majorca, in respect of the inquest and reaction to the tragic deaths of Bobby and Christi which is a key destination for our customers.

In addition to the matters described above, the Board also reviewed the following matters:

The composition of the Board Progress and developments in respect The Group’s financial plan, financial and succession planning of the transformation and strategy performance and reporting

Risk and mitigation matters, including a review The revised organisational structure and delegation Key corporate governance developments of the Board’s risk appetite of authority

The effectiveness of the Board and Results of our employee engagement survey Feedback from institutional investors its Committees

BOARD MEETINGS AND ATTENDANCE CEO decided should be considered by the Board or relevant Committee The table below shows the attendance record of the individual prior to the next scheduled meeting. Directors at scheduled Board meetings and relevant Committee The Chairman and each Non-Executive Director have provided meetings. In addition to the scheduled meetings set out below, the assurance to the Board that they remain fully committed to their Directors also attended several unscheduled Board and Committee respective roles and can dedicate sufficient time to meet what meetings, in respect of business matters that the Chairman and is expected of them.

Health, Safety & Nominations Audit Remuneration Environmental Name Board Committee Committee Committee Committee

Current Directors Frank Meysman 6/6 2/2 – – – Peter Fankhauser 5/5 1/1 – – 3/3 Michael Healy 6/6 – – – – Dawn Airey 6/6 – – 4/4 4/4 Annet Aris 6/6 – – 4/4 3/4 Emre Berkin 6/6 2/2 – 4/4 4/4 Warren Tucker 6/6 2/2 5/5 4/4 – Martine Verluyten 6/6 2/2 5/5 – – Former Directors * 1/1 1/1 – – 1/1 Carl Symon* 6/6 1/2 3/5 3/4 – Notes: * Harriet Green and Carl Symon resigned from the Board on 31 December 2014 and 30 September 2015 respectively. Directors or Chairman. the Directors Executive the involving channels normal the through resolved be cannot that concerns have they should toShareholders available is Director Independent Senior 2015. The 1October on Symon Carl from Director Independent ofSenior role the over took Airey Dawn THE SENIOR INDEPENDENT DIRECTOR atwww.thomascookgroup.com. website corporate Company’s the on found be can document This responsibilities. respective their approved Division of Responsibilities isaBoard- There distinct. and separate CEO are and Chairman the of year. roles The the throughout Chairman the was Meysman Frank THE CHAIRMAN at www.thomascookgroup.com. website corporate Company’s the on and 72 and 71 on pages found be can Directors ofall details Biographical Directors. Non-Executive Independent five and Directors Executive two Chairman, the comprised Board 2015, the at25November As BOARD COMPOSITION business areas and relevant docu relevant and areas business key other on ofpresentations receipt the Team; and, Management the with meet and business the on briefing athorough receive Directors the where segments business Company’s tothe visits senior management; include: with meetings Such typically inductions arrangements. governance its and operations its Group’s business, tothe Directors new is tointroduce programme Induction the of aim the Overall, Director. new each for isprovided Directors tailored programme toAn Induction BOARD INDUCTION AND TRAINING 83. 82and 79, pages on sections Committee relevant the in detailed are year. These the during Committees the of membership tothe changes also were there above, detailed as Board ofthe membership tothe changes ofthe In view CHANGES TO THE COMMITTEES effect with resigned Director) (Non-Executive Symon Carl > position the from resigned Officer) Executive (Chief Green Harriet > on appointed was Officer) Executive (Chief Fankhauser Peter > year: the during occurred Board tothe changes following The CHANGES TO THE BOARD

from 30 September 2015. September from 30 and 2014; December 31 from effect with as a Director resigned and 2014 November 26 the from effect of CEO with 26 November 2014; mentation. Individual induction Individualmentation. induction meet the needs of individual ofindividual needs the meet , which clearly sets out in writing writing in out sets clearly , which Corporate Governance developments. > and market; Airline The > Europe The Northern business; > The IT function; > experience; customer the and Safety and Health In-resort > topics: following the included year the during given updates business major and presentations, support strategy training, Board Group. the across presence Board the gives and Board tothe talent ofsenior exposure the increase also programmes these given, training ofthe benefit tothe Inaddition environments. regulatory and legislative tothe and business, tothe changes and developments on presentations and updates receive Directors the meetings, Committee appropriate, where and, meetings At Board tailored to reflect this. was activity induction his Therefore, Board. the and Management with relationships working and business ofthe knowledge in-depth with role tothe came he that meant which COO, including years many for Group Cook Thomas the in roles senior held previously had asCEO. Peter appointed was Fankhauser year, Peter the During Group. ofthe understanding and knowledge their enhance further would feel they that aspect any in participate and accompany to opportunity the them bygiving Directors, longer-serving of our benefit the for experience that using now We are Director. new each ofinducting experience the on aswebuild significantly evolved has process and content induction The experience. customer of the aspect every through taken are and staff in-destination with meet they time which during visit adestination on go also Directors New aspossible. asswiftly deliberations Board’s tothe to contribute them toenable Group the about knowledge sufficient gain Directors appointed recently and new that toensure Secretary, Company Group ofthe support the with Chairman, bythe monitored are requirements the Sunprime Waterfront Hotel Waterfront the Sunprime in Majorca. at inspection &Safety aHealth on Berkin Emre

THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 75 FINANCIAL STATEMENTS GOVERNANCE 76 GOVERNANCE

CORPORATE GOVERNANCE REPORT CONTINUED

The Board has a programme for holding some of its meetings at the RE-APPOINTMENT OF DIRECTORS business Segments, where, in addition to its normal business, the In accordance with the Code and the Company’s Articles of Board will focus on the strategy and operations of that Segment and Association, all Directors are subject to election by Shareholders. meet with local management and staff. In March 2015, the Board held At the AGM held in February 2015, each of the Directors was submitted its meeting in Stockholm, the main offices of the Northern Europe for election/re-election. The Board has agreed that the Directors Business, where it received presentations on, and met management will continue to be subject to annual election in the future. Non- and staff of, that business. Executive Directors are initially appointed for a three-year term, In September 2015, the Board held its meeting in one of the Group’s subject to annual re-election by Shareholders, and rigorous review by key destinations – Majorca. The Board visited a number of the Group’s the Nominations Committee; each Non-Executive Director can serve Concept and partner hotels and received tours of the facilities. up to a maximum of three such terms. The Board met the local destination management team, hotel owners, hotel management and key individuals from the local community. OPERATION OF THE BOARD The Chairman of the Health, Safety & Environmental Committee Throughout the year, a fully encrypted electronic portal system was also attended a demonstration of a Health and Safety audit of one operated, which enabled Board and Committee papers to be delivered of the Group’s hotels conducted by our third-party expert provider, securely to the Directors. This enabled fast and secure distribution SGS. The visit enabled the Board to gain a deeper understanding of of information that was accessed using electronic tablets. the Thomas Cook customer experience which is a key focus of the The CEO kept the Board updated on matters affecting the business Company’s strategy. between meetings.

DIRECTOR INDEPENDENCE In accordance with its Articles, the Company has granted third-party indemnities, to the extent permitted by law, to each Director and the At its September 2015 Board meeting, the Board considered the Group Company Secretary, which were in force during the financial independence of the Non-Executive Directors against the criteria year and up to the date of signing this report. The Company also specified in the Code and determined that each was independent. maintains Directors’ and Officers’ liability insurance.

DIRECTORS’ CONFLICTS OF INTEREST GROUP COMPANY SECRETARY From 1 October 2008, the Companies Act codified the Directors’ duty The Group Company Secretary, who is appointed by the Board, is to avoid a situation in which they have, or can have, an interest that responsible for advising and supporting the Chairman and the Board conflicts, or possibly may conflict, with the interests of the Company. on corporate governance matters as well as ensuring that there is A Director will not be in breach of that duty if the relevant matter has a smooth flow of information to enable effective decision making. been authorised in accordance with the Articles of Association by the All Directors have access to the advice and services of the Group other Directors. Company Secretary and the Group General Counsel, and through The Board has established a set of guiding principles on managing them, have access to independent professional advice in respect conflicts and has agreed a process to identify and authorise conflicts. of their duties, at the Company’s expense. The Group Company As part of that process, it has also agreed that the Nominations Secretary acts as secretary to the Board and its Committees. Committee should review the authorised conflicts every six months, During the year, Derek Woodward stepped down as Group Company or more frequently if a new potential conflict arises for an existing Secretary with effect from 5 February 2015. Carolyn Gibson was Director. The Nominations Committee reviews the interests of appointed to the position on 5 February 2015 and served until candidates prior to making recommendations for the appointment 10 September 2015 when Alice Marsden was appointed to the position. of new Directors. The Nominations Committee and Board applied the Biographical details of the Group Company Secretary can be found above principles and process throughout the year to 30 September on page 72. 2015 and confirm that these have operated effectively. the previousthe year, making recommendations whilst for further over operation Board’s ofthe areas all in improvement an indicated and analysed and collated were evaluation ofthe results The desired. where verbally Chairman tothe feedback give to invited also was Board The comments. provide and performance Board’s ofthe aspects certain toscore Directors required which ofaquestionnaire form the took and Secretary Company Group bythe conducted was evaluation 2015. The for effectiveness Board’s the assessing in sufficient and appropriate be would evaluation internal an that felt Chairman the 2014, in out carried evaluation Board external independent comprehensive the Following effectiveness. its toimprove toaction leading process, evaluation Committee and Board ofathorough benefit the recognises Board The BOARD EVALUATION Outputs from 2014 evaluation Agreed action in 2014 and delivered in 2014/15 in delivered and 2014 in action Agreed Company. for the future toasustainable leading element, each of execution successful the of importance the and transformation ongoing the understand fully members Board all that toensure be should aim The Company. the of strategy and vision long-term the clarifying and work transformation the for support and challenge between balance right the develop should Board The group of executives. toabroad access has and tothe operations visible is businesses, the of knowledge agood maintains and develops Board the toensure segments business tothe visits ongoing its with continue should Board The indicators. key performance and assets challenges, Company’s the of understanding of platform acommon create to Directors appointed newly for programme Induction the develop Further evaluation 2014 from Outputs Outputs from 2015 evaluation Agreed action in Agreed 2015 role. their tofulfil need they that knowledge necessary the tohave continue Directors Non-Executive all toensure reviewed be should Directors Non-Executive of training ongoing the process, induction Director Non-Executive the of development the Following and talent review. planning succession on time further spend should Board The Outputs from 2015 evaluation carried out. were discussions and presentations strategy of A number 2015. for programme Board the into built was which balance, the agreed Board The 76. page on found be can visit on the information More 2015. in Majorca of destination key the and Stockholm in Business Europe Northern the of offices head the visited Board The developed. was programme Induction existing The Director requirements and address any training needs. training any address and requirements Director Non-Executive review will Secretary Company Group and Chairman The agenda. the on item aregular form will topic The 61. page on given is the review on information More meeting. Board July the at results presented the and out carried was review Succession and talent A Group-wide by the Chairman and the Remuneration Committee. Remuneration the and by the Chairman separately isreviewed Directors Executive ofthe performance individual The Group. the across levels atall to management applies system management performance Company’s Director. Senior bythe tohim given was feedback and Chairman of the absence the in Board bythe debated were evaluation that from outputs The Chairman. ofthe evaluation an conducted Directors, Executive the from input with and Director Independent Senior the of leadership the under Directors, Non-Executive the Separately, report. 2016 Governance the in disclosed be will Progress Board. tothe regularly reported progress and Secretary, Company Group ofthe support the with Chairman, bythe monitored isbeing which plan, action an agreed has Board The improvement. THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 77 FINANCIAL STATEMENTS GOVERNANCE 78 GOVERNANCE

CORPORATE GOVERNANCE REPORT CONTINUED

THE BOARD AND ITS PRIMARY COMMITTEES

BOARD Chairman, CEO, CFO and five Non-Executive Directors.

The Board has a schedule of matters reserved for its approval and has a formal structure of delegated authority, whereby specified aspects of management and control of the Group have been delegated to the CEO, and the Board’s Committees. In addition, the Board has agreed the terms of reference for the Audit, Remuneration, Nominations, Disclosure, and Health, Safety & Environmental Committees and the Division of Responsibilities between the Chairman and the CEO.

AUDIT COMMITTEE NOMINATIONS COMMITTEE HEALTH, SAFETY REMUNERATION COMMITTEE & ENVIRONMENTAL Three Independent Chairman, CEO, and three Four Independent Non-Executive Directors. Independent Non-Executive COMMITTEE Non-Executive Directors. Directors who are the Chairs CEO and three Independent of the Audit, Remuneration Non-Executive Directors. and HSE Committees.

Committee report on page 79 Committee report on page 82 Committee report on page 83 Committee report on page 88

FINANCE & ADMINISTRATION COMMITTEE DISCLOSURE COMMITTEE CEO, CFO and Group General Counsel CEO, appointed as Chairman, CFO, Group General Counsel and Group Company Secretary. Other attendees include senior managers To facilitate swift and efficient operational Management decisions, from Group Finance and Investor Relations. the Committee has delegated authority within clearly identified parameters in relation to day-to-day financing and administrative matters. A schedule The Committee meets regularly during the year to consider the Group’s of decisions taken by the Committee is reported to the next Board Meeting. disclosure obligations and to review all results announcements prior to release.

GROUP MANAGEMENT COMMITTEE Functional and Segment leaders Meets on a monthly basis to consider and approve key business matters, including matters exceeding the delegated authority of the CEO and his direct reports. The GMC is also responsible for cascading information to the Thomas Cook Leadership Council (“TCLC”) and engages in Risk and Audit monitoring of the business. Further information of the role of TCLC can be found on page 60.

During the year, the governance structure of the organisation AGM to allot shares equal to approximately one-third of the Company’s was revised and streamlined with the introduction of the Group issued share capital as at 8 January 2015 or two-thirds in respect Management Committee. The new structure is designed to enable of a rights issue. The Directors were also given the power to allot swift and efficient decision making under NUMO. Ordinary Shares for cash (up to a limit representing approximately 5% of the Company’s issued share capital at 8 January 2015) without The schedule of matters reserved, the terms of reference of each of first offering them to existing shareholders in proportion to their the Board’s Committees and the Division of Responsibilities between existing holdings. the Chairman and the CEO, are available on the Company’s website at www.thomascookgroup.com. The powers of the Directors are set out The papers in respect of the Audit, Remuneration, Nominations and in the Company’s Articles of Association (which are available on the Health, Safety & Environmental Committees are circulated to all the Company’s website). The Directors were authorised at the 2015 Non-Executive Directors, regardless of Committee membership. * > The Group’s Viability Statement Viability Group’s The > > The Company’s The controls financial internal > The Group’s compliance programmes> > The effectiveness of the external audit process audit external the of effectiveness The > > The effectiveness of the Group Enterprise Risk and Audit function and Risk Group Enterprise the of effectiveness The > > The Committee’s own work plan for the year and a review of historic historic of areview and year the for plan work own Committee’s The > Governance: auditors external and internal the each of for plan work annual The > > Information in support of the statements in relation to going concern, concern, togoing relation in statements the of support in Information > > The full and half-year results (including accounting issues and and issues accounting (including results half-year and full The > Financial: reviewed: Committee The activities Committee 2015. 1October from effect with Committee tothe appointed was Airey Dawn 2015. September 30 on Committee the from resigned Symon Carl Committee the of Composition (Group Bill and PwC. Scott Financial Controller) Secretary), Company (Group Marsden Alice Officer), Risk Lee Bradley (Chief M&A), of Head and Counsel General (Group Stoehr Craig (CFO), Healy Michael (CEO), Fankhauser Peter Directors, Non-Executive other the and Chairman The by: attended regularly also Meetings to72 70 pages On biographies Directors’ Airey Dawn Warren Tucker* Other members Five Scheduled Meetings Verluyten* Martine Chairman financial experience, as required by the Code. Code. the by required as experience, relevant financial and recent have to Board the by considered are Tucker Warren and Verluyten Martine

activity against the Committee’s terms of reference terms Committee’s the against activity of information tothe auditors information of viability, fair, and disclosure presentation, and understandable balanced documents those of preparation the underpinning processes the year; and the during issued statements results quarterly and the judgements) AUDIT COMMITTEE Secretary at the registered office. office. registered atthe Secretary Company Group the from or atwww.thomascookgroup.com available are Committee ofthe ofreference terms The business. the across management from support and information receives Committee the effectively, responsibilities and duties its out tocarry it To enable Company’s tothe pursuant raised matters monitor > > establish and oversee the Company’s relationship with its external external its with relationship Company’s the oversee and establish > > monitor and review the effectiveness of the Company’s internal internal Company’s ofthe effectiveness the review and monitor > > review the Company’s internal financial controls and internal control control internal and controls financial internal Company’s the review > > monitor the integrity of the annual and half-year results and and results half-year and annual ofthe integrity the monitor > to: is authorised Board, tothe findings its reports which Committee, The auditors. external and internal Company’s ofthe appointment tothe relation in Board tothe recommendations making for and functions control and management risk internal reporting, financial the overseeing for responsibility Committee tothe delegated has Board The COMMITTEE THE OF ROLE

whistleblowing arrangements. auditors, including the monitoring of their independence; and independence; oftheir monitoring the including auditors, audit function; audit function; and risk management systems; systems; management risk and financial reporting judgements contained in them; them; in contained judgements reporting financial significant ofthe areview including statements, results quarterly THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 79 FINANCIAL STATEMENTS GOVERNANCE 80 GOVERNANCE

CORPORATE GOVERNANCE REPORT CONTINUED

PRINCIPAL ACTIVITIES DURING THE YEAR EXTERNAL AUDITOR The main focus of the Audit Committee during the year has been to Non-Audit fees support and oversee the continuing improvement, led by executive The current policy requires all material non-audit work carried out management, of the Group’s risk management and internal control by the external auditors to be pre-authorised by the Committee arrangements. In that regard, the Committee has reviewed and in order to ensure that the provision of non-audit services does commented on regular risk and audit reports prepared by the not impair the external auditors’ independence or objectivity. Chief Risk Officer (see below), which summarised matters for the The policy, which is appended as a schedule to the Audit Committee’s Committee’s attention. In addition, the Committee received formal terms of reference, is published on the Company’s website at reports from Group Finance which set out the principal accounting www.thomascookgroup.com. An analysis of the fees earned by and disclosure matters for the Committee’s consideration before the Group’s auditors for audit and non-audit services is disclosed approving the Group half-year and full year results announcements. in Note 6 to the financial statements. These activities, together with regular reports from the external auditors, have supported the Audit Committee in providing its advice Effectiveness and Independence to the Board in respect of the effectiveness of internal control (see PwC were appointed as the sole auditors to the Group in 2008 and section headed “Risk management and internal control” on page 84. since that date have complied with the partner rotation requirement The Committee has noted enhancements in risk management set out in the Ethical Standards for auditors; Paul Cragg, a Partner capability supported by a greater risk awareness and culture of PwC, was appointed Senior Statutory Auditor in February 2013. embedded throughout the Group. PwC were re-appointed as the Company’s auditors by Shareholders The Committee is supported in its work by the Risk Matters Group, at the AGM held on 23 February 2015. PwC have confirmed their which is comprised of relevant representatives of the Senior independence as auditors of the Company in a letter addressed Management Team and the Chairman of the Audit Committee. At the to the Directors. end of two of its meetings during the year, the Committee (and also In November each year, the Audit Committee reviews the those Non-Executive Directors who are not on the Committee) met effectiveness of the external audit process. This includes reviewing with the Chief Risk Officer and the external auditors in the absence comprehensive papers from both Management and the external of management. auditors, which set out the planning and execution of the conduct of the audit. The Audit Committee holds a meeting with the external auditors in the absence of Management to discuss further. Upon the recommendation of the Audit Committee, PwC will be proposed for re-election by Shareholders at the AGM to be held on 23 February 2016. In reaching its decision to propose PwC for re-election, the Audit Committee took into account the effectiveness of the external audit process, the length of tenure of PwC as auditors and the objectivity and independence of the external auditor. The Company intends to carry out a formal tender process for the audit of the financial year ending 30 September 2017.

LEE BRADLEY CHIEF RISK OFFICER

Responsibilities: Managing the Risk Management, Health and Safety, Security and Internal Audit functions, Lee reports to the Chair of the Audit Committee and the Chair of the Health and Safety Committee. Skills and experience: Lee joined Thomas Cook in 2012 and brought with him a deep knowledge and extensive experience of embedding the culture and practices of sound risk management, gained from working in numerous listed companies operating in multiple sectors. Lee has previously worked for Manchester Airport PLC, Kwik Fit Group and Thames Water PLC.

9_Governance_p66_p87_v68.indd 80 06/01/2016 13:09 > the impact of new accounting developments. developments. accounting ofnew impact the > and accounts; Group ofthe preparation the in arising matters > like-for-like analysis; and items disclosed separately > the and concern going including considerations, key disclosure > areas: following the considers Committee the context In this ofpreparation. basis and policies Group’s accounting the out which set Controller, Financial Group bythe prepared paper a comprehensive reviews Committee year, the each November InMayand them. in contained judgements reporting financial significant ofthe review a including statements, results quarterly and results half-year annual, ofthe integrity the tomonitor isauthorised Committee The ACTIVITIES COMMITTEE

regulatory requirements in respect of Auditor rotation. Auditor of respect in requirements regulatory rotation: Auditor environment and processes. control and reporting financial Group’s the of aspects several of evolution requires transformation The activities. its of aspects most encompassing Control environment: Accounting treatment in this area can be subjective. obligations. maintenance related and leases aircraft of respect in liabilities provisions: maintenance and leases Aircraft model. new the toimplement required costs with significant, are NUMO by businesses Tour Operator Group’s (NUMO): Model Operating New Group. the of performance underlying the of understanding the reader’s from detract or exceptional either are that items disclosing separately Separately disclosed items: tax assets. deferred of recognition Group’s the of reasonableness the and goodwill including values, asset certain toimpair aneed was there whether considered Committee the years, tax: deferred and Impairment liquidity. of solvency ongoing of assessment through Viability: and Concern Going Committee bythe considered statements financial tothe inrelation issues Significant viability statement; The Group is required to comply with developing developing with tocomply required is Group The The Group is currently engaged in transformation transformation in engaged currently is Group The The Group has an established policy of of policy established an has Group The Consideration of longer-term viability The structural changes envisaged to The structural the In view of the Group’s losses in recent recent in losses Group’s the of view In The Group has significant significant has Group The by the Audit Committee are shown in the table below: below: table the in shown are by the Audit Committee considered issues significant The statements. Group’s financial of the complexity, judgement or in estimation in application their preparation of level the or management, ofsenior remuneration and results Group the on impact oftheir byvirtue important tobe considers it that tomatters attention particular pays Committee The Committee. Audit bythe discussed and reviewed were papers Both matters. accounting and reporting significant included which auditors, external bythe prepared apaper reviewed also Committee Audit The proposed a formal audit tender process commencing in December 2015. December in commencing process tender audit aformal proposed which Management by prepared apaper considered Committee The year. the throughout controls and non-financial financial of the operation by on Management and a report finance and plans within requirements development the highlighted that Management by prepared papers considered Committee The period. transformation the during environment control Group’s the of operation the on focusing as well as transformation this with associated risks broader the considered Committee The appropriate. is treatment the that toensure provisions maintenance and leases aircraft for accounting Group’s the considered Committee The changes. structural the of part as incurred costs for treatment accounting the related and NUMO by impacted areas principal the reviewed Committee The proposed presentation. Management’s toadopt agreed Committee the matter, considered the Having allocations. finance non-cash and certain transformation Group’s tothe relating items particular in and items disclosed separately of presentation Management’s considered Committee The Management’s proposals. with agreed auditors, the from input taken having and approach intended Management’s presenting apaper considered Committee The appropriate. was basis concern on a going accounts toprepare recommendation Management’s that concluded and Management by prepared papers considered Committee The Committee bythe addressed was issue the How THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 81 FINANCIAL STATEMENTS GOVERNANCE 82 GOVERNANCE

CORPORATE GOVERNANCE REPORT CONTINUED

NOMINATIONS COMMITTEE ROLE OF THE COMMITTEE The Board has delegated to the Committee responsibility for reviewing and proposing appointments to the Board and for recommending any other changes to the composition of the Board or its Committees. The principal responsibility of the Committee is to make recommendations to the Board on all new appointments to the Board, as well as Board balance and composition. The Committee ensures that there is clarity in respect of the role description and capabilities required for such appointments. The Committee is also responsible for reviewing, at least every six months, or more frequently if required, the Directors’ potential conflicts of interest and for making recommendations to the Board in respect of authorising such matters. Chairman The full terms of reference of the Committee are available at Frank Meysman www.thomascookgroup.com or from the Group Company Secretary Scheduled Meetings at the registered office. Two PRINCIPAL ACTIVITIES DURING THE YEAR Other members The main issue considered by the Committee was the transition to Emre Berkin, Peter Fankhauser, Warren Tucker and Martine Verluyten a new Chief Executive Officer in November 2014. Peter Fankhauser Directors’ biographies had previously been identified in the succession planning process on pages 70 to 72 as a suitable successor to Harriet Green. The Committee concluded Meetings also regularly attended by: that Peter Fankhauser had the right knowledge, skills and experience The other Non-Executive Directors, Alice Marsden (Group Company to take the Company through the next stage of the transformation, Secretary) and Craig Stoehr (Group General Counsel and Head of M&A). and recommended his appointment to the Board.

Composition of the Committee BOARD APPOINTMENTS POLICY A majority of the members of the Committee are Independent Non- Executive Directors. Peter Fankhauser was appointed to the Committee The Board appointments policy reinforces the Board’s principle that on 26 November 2015. Harriet Green and Carl Symon stepped down from appointments are made on merit, in line with its current and future the Committee on 31 December 2014 and 30 September 2015 respectively. requirements, and reflect the UK listing and international activity Committee activities of the Group. The policy also recognises the benefits of diversity, > Considered succession planning of Executive and Non-Executive including gender diversity. The appointment during the course of Directors; the year was in line with that policy and has reinforced the diverse > Considered and recommended the appointment of Peter Fankhauser composition of the Board. A table illustrating the diversity of the as CEO; Board is shown on page 70. The Board endorses the aims of the > Considered and recommended the appointment of Alice Marsden as Group Company Secretary; Davies’ report entitled “Women on Boards”. The Board’s gender > Considered the re-appointment of the Directors before making a diversity at 38% female is in excess of Lord Davies’ new target of recommendation to the Board regarding their re-election at the 33%. The Chairman is a member of the 30% Club, which has the aim 2015 AGM; of promoting the achievement of 30% women on FTSE 100 Boards > Considered and recommended the re-appointment of Emre Berkin by the end of 2015. A copy of the Group’s Board appointments policy following completion of his initial three-year term; can be found on our website at www.thomascookgroup.com. > Considered the overall composition and balance of the Board and engaged external search consultants to identify an individual to replace Carl Symon; and > Considered Directors’ potential conflicts of interests and independence. > Approval of the Group’s sustainability report sustainability Group’s the of Approval > > Sustainability updates Sustainability > > Government Affairs updates Affairs Government > > Group Airline safety and reports from the Group Aviation Safety Safety Aviation Group the from reports and safety Airline Group > > Continued development of the Group’s health and safety safety and health Group’s the of development Continued > > Reviewed customer and employee accident reports at each meeting each at reports accident employee and customer Reviewed > > Reviewed and monitored outcomes of Third-Party Audit Supplier reports Supplier Audit Third-Party of outcomes monitored and Reviewed > activities Committee 2014. November 26 on appointed was Fankhauser Peter and 2014 December 31 on Committee the from down stepped Green Harriet Committee the of Composition of M&A). Head and Counsel General (Group Stoehr and Craig Secretary) Company (Group Marsden Alice and Security), Compliance Safety, Aviation Group (Director, Solomon Steve &Security), Safety Health, of Head (Group Welsh Peter Officer), Risk (Chief Bradley Lee Directors, Non-Executive other The by: attended regularly also Meetings to72 70 pages on biographies Directors’ Fankhauser Peter and Aris Annet Airey, Dawn Other members Four Scheduled Meetings Emre Berkin Chairman

Management Board Management improvement plan improvement plan SAFETY & ENVIRONMENTAL COMMITTEE & ENVIRONMENTAL SAFETY HEALTH, HEALTH, > The introduction of a new electronic reporting programme programme of reporting a The new introduction electronic > The increased monitoring of transportation, accommodation and > > The continued alignment of the Group with the technical standards standards technical the with Group ofthe alignment continued The > > The re-organisation and continued development of the Group Health, Health, Group ofthe development continued and re-organisation The > YEAR THE DURING ACTIVITIES PRINCIPAL office. registered at the Secretary Company Group the from or www.thomascookgroup.com at available are Committee ofthe ofreference terms full The Group. the across environment the and safety tohealth, relating regulation and legislation relevant with compliance of oversight and review the for responsible isalso It business. Group’s tothe risks environmental and safety health, managing for procedures and standards policy, consistent oversee and develop toreview, responsibility Committee tothe delegated has Board The COMMITTEE THE OF ROLE > The evaluation of the performance of the Third-Party Audit Supplier Supplier Audit Third-Party ofthe performance ofthe evaluation The > in area including: this activities and ofimprovements anumber oversaw and monitored reviewed, Committee year, the the During topic. the on presentation detailed a received Board the and Group’s hotels ofthe ofone inspection Safety and aHealth on (“SGS”) provider audit third-party external specialist Company’s the joined Committee ofthe Chairman the InSeptember, area. this in understanding and knowledge Committee’s the todeepen undertaken were ofactivities anumber and Committee the for focus aparticular was safety year, customer the During to improve the monitoring of employee workplace safety. workplace ofemployee monitoring the to improve system IT based cloud ofanew implementation the including area this in ofdevelopments anumber oversaw and safety employee of respect in ofmatters anumber considered also Committee The European tothe responding in FTO the with engagement active The > > Improving the training of the Group’s employees through the the through Group’s employees ofthe training the Improving >

legislation proposed tolegislation proposed improve standards Europe. across safety individu an making and Services ofTourism Accommodation Safety on Paper Green Commission’s provision of new e-learning content; and content; e-learning ofnew provision where necessary; investigation andtimely implementation of remedial actions enabling accidents and incidents report to effectively designed with a view to increasing the standards customers experience; experience; customers standards the to increasing aview with excursion suppliers to drive impr promulgated by the Federation of Tour Operators (“FTO”); ofTour Operators Federation bythe promulgated for its effective implementation; for its effective support requisite the provide and Group the across procedures and ofpolicy development the Team toensure &Security Safety (SGS) following completion of its first full year of service provision; ofservice year full first ofits completion following (SGS) THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS al submission in support of al submission in support ovements in their performance ovements in their performance 83 FINANCIAL STATEMENTS GOVERNANCE 84 GOVERNANCE

CORPORATE GOVERNANCE REPORT CONTINUED

SHAREHOLDER COMMUNICATION Additionally, the Board responds to ad-hoc requests for information AND ENGAGEMENT and all shareholders are entitled to attend the Annual General The Board promotes open communication with shareholders. This is Meeting. Shareholders are given the opportunity to lodge their votes formalised within the framework of an ongoing investor relations by way of proxy and/or to attend such meetings in person where programme conducted by the CEO, the CFO and the Investor Relations they have the opportunity to ask questions of the Board including Team. The programme includes the presentation of preliminary and the chairs of the Board Committees, vote by way of a poll and meet half-year results (which can be accessed on the Thomas Cook Group informally with the Directors to discuss any issues they may wish website) and a large number of meetings with existing shareholders to raise. and potential investors throughout the year. The Company makes In line with the authority given at its 2008 AGM, the Company uses every effort to ascertain investor perceptions of the Company and its website and email as the primary means of communication with regular reports of investor and analyst feedback are provided to its shareholders. This arrangement provides significant benefits for the Board. shareholders and the Company in terms of timeliness of information, During the year, both the Chairman of the Board and the Chairman of reduced environmental impact and cost. Shareholders may still opt the Remuneration Committee had ongoing dialogue with shareholders to receive their communications in a paper format. The Company’s in respect of Executive remuneration matters. In December 2014, corporate website contains information for shareholders, including they conducted a wide-scale engagement with a large number share price information and news releases. It can be found at of the Company’s major institutional shareholders (representing www.thomascookgroup.com. approximately 64% of the Company’s share capital) and governance RISK MANAGEMENT AND INTERNAL CONTROL bodies to: update them in respect of matters concerning the change in CEO, executive remuneration and governance matters; and, to seek During the year, there has been continued progress made in the views on the Group’s proposed award to the Executive Directors area of risk management and internal control. This has been led under the Performance Share Plan in 2015. The engagement was with a distinct “tone from the top” set by the Board and the Group supportive and constructive and the Board and the Remuneration Management Committee. A highly experienced and dedicated Committee were briefed on the feedback from the above discussions. team of risk and audit professionals under the leadership of Lee The views expressed by shareholders were taken into account Bradley, Chief Risk Officer, has driven a significant improvement when finalising executive remuneration arrangements. The Board agenda to support Management in this important area. High-calibre were pleased with the overwhelming shareholder support given in professionals were recruited into key positions in the Group and favour of the resolutions at the 2015 AGM in respect of the Group’s Segment Finance Teams, which has enabled the Group to further remuneration policy and practice. enhance its risk management capability across the business, thereby enhancing the risk management and internal control environments. Dawn Airey was appointed Senior Independent Director with effect from 1 October 2015, and will provide an additional channel through The Board recognises its ultimate accountability for maintaining which shareholders can engage with the Board if they so wish. an effective system of internal control and risk management that is appropriate in relation to both the scope and the nature In respect of its debt investors, the Company maintains regular of the Group’s activities, and complies with the UK Corporate dialogue with key relationship banks which includes bi-annual Governance Code. The Board has approved the framework and meetings with presentations, from the Executive Management the standards implemented. Team. During the year, it also held update and review meetings with Standard & Poor’s and Fitch, the Company’s two credit The Board has carried out a robust assessment of the principal rating agencies. The Company hosts a dedicated conference call risks facing the Company – including those that would threaten its for bondholders on a bi-annual basis and during the year the Group business model, future performance, solvency or liquidity. This is Treasurer also engaged with Bondholders both as a group, and, on a fully described in the Risk management section on pages 56 to 59. one-to-one basis, at several Investment-bank sponsored conferences. The Group’s internal control and risk management systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide only reasonable, but not absolute, assurance against material misstatement or loss. significant failings or weaknesses identified from that from failings review. or identified significant weaknesses any toremedy taken tobe continue actions necessary that confirm can control, ofinternal system ofthe effectiveness the reviewing in Board, year. The this during processes control internal the in focus active and progress ongoing noted has and improvement continued seen has Board The PwC. auditors, external bythe independently out carried work assurance controls bythe challenged and supported complemented, isalso work This byManagement. implemented fully are recommendations audit toensure place in process a follow-up is there and Committee Audit the with discussed toand presented are issues control on reports Regular function. Audit and Risk Enterprise Group ofthe auspices the under controls, compliance and operational financial, including basis, ongoing an on processes control internal the ismonitoring Board The control. of internal Group’s system ofthe effectiveness ofthe areview conducted has Committee, Audit ofthe work the through Board, year, the the During OFREVIEW SYSTEM OF INTERNAL CONTROL preparing the financial statements. statements. financial the preparing in ofaccounting basis concern going the toadopt appropriate it considered Directors the statement, viability the with connection in discussed matters other the and risks principal the assessed Having GOING CONCERN the Company’s performance, business model and strategy. strategy. and model business performance, the Company’s toassess shareholders for necessary information the provides and understandable and isfair, balanced asawhole, taken & Accounts, Report Annual the that Board tothe comfort provides & Accounts, Report Annual the for process approval and verification internal preparation, ofthe details the out sets that note comprehensive ofa Committee Audit bythe review the and process, above The > oversight by the Group’s Audit Committee, involving (amongst (amongst involving Committee, Group’s Audit bythe oversight > > a transparent process to ensure full disclosure of information ofinformation disclosure full toensure process a transparent > comprehensive review and, wh > > formal sign-offs from appropriate business segment managing managing segment business appropriate from sign-offs formal > > the involvement of qualified, professional employees with an an with employees professional ofqualified, involvement the > This process includes: and approval preparation, reports. the of financial verification periodic of respect in place in process assurance athorough has Group The PROCESS REPORTING FINANCIAL TO THE RELATION IN MANAGEMENT RISK AND CONTROL INTERNAL

— review and, where appropriate, challenge on matters including: matters on challenge appropriate, where and, review — which judgements reporting ofkey financial review a detailed — duties): other experienced firm of external auditors; ofexternal firm experienced and of aprofessional Engagement auditors. to the external key internal Group functions; Group key internal directors and finance directors; finance and directors throughout the business); and Finance Group in (both ofexperience level appropriate

have been discussed by Management; — the consistency of, and any changes to, significant accounting accounting to,significant changes any of, and consistency the — — the Company’s statement on internal control systems, prior prior systems, control internal on statement Company’s the — audit; external an from resulting adjustments significant — — the going concern assumption. concern going the —

THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS policies and during the year; practices to endorsement by the Board; and Board; bythe to endorsement ere appropriate, challenge from 85 FINANCIAL STATEMENTS GOVERNANCE 86 GOVERNANCE

CORPORATE GOVERNANCE REPORT CONTINUED

CODE OF CONDUCT STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN The Group’s Code of Conduct, sets out the Group’s Values, RESPECT OF THE ANNUAL REPORT, THE DIRECTORS’ Leadership Behaviours and Ways of Working – how we expect our REMUNERATION REPORT AND THE FINANCIAL employees to conduct themselves in their everyday working life. STATEMENTS It covers areas such as: behaviour towards our customers and our The Directors are responsible for preparing the Annual Report, people; health and safety; reputation management; sustainable the Directors’ remuneration report and the financial statements operation; supplier relationships; anti-bribery; conflicts of interest; in accordance with applicable law and regulations. Company law competition law; risk management and controls; fraud, theft and requires the Directors to prepare financial statements for each false accounting; IT security; share dealing and our prohibition of financial year. Under that law, the Directors have prepared the political donations. The Code also includes guidance to employees Group and the Company financial statements in accordance with about their responsibility to report problems and issues that come International Financial Reporting Standards (“IFRSs”) as adopted by to their attention and the alternative ways of raising such issues the European Union. The financial statements are required by law in escalating order – line management, HR, and the Trustline – to give a true and fair view of the state of affairs of the Company see below. and the Group and of the profit or loss of the Group for that period. The Code of Conduct is issued to all employees in paper copy and is In preparing those financial statements, the Directors are required to: also available on the Group’s intranet and website. In addition, the > select suitable accounting policies and then apply Group Company Secretary is available for advice on any matter which them consistently; may give rise to cause for concern. > make judgements and accounting estimates that are reasonable To ensure the progress made is fully sustainable and the Code and prudent; and remains embedded across the organisation, there is a process to > state that the financial statements comply with IFRSs as adopted ensure that all new employees receive training as part of their by the European Union. Induction programme. In view of its importance to the Group, training The Directors confirm that they have complied with the above is measured through local HR Departments and every employee has requirements in preparing the financial statements. to confirm they have received their training and understand the Code on an annual basis. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s WHISTLEBLOWING transactions and disclose with reasonable accuracy at any time the As mentioned above, the Code includes guidance to employees financial position of the Company and the Group, and enable them to about their responsibility to report problems and issues that come ensure that the financial statements and the Directors’ remuneration to their attention by way of an independently run whistleblowing report comply with the Companies Act 2006 and, as regards the helpline called Trustline. Details of the Trustline are published in Group financial statements, Article 4 of the IAS Regulation. They are the Code of Conduct booklet and also on the Group’s intranet site. also responsible for safeguarding the assets of the Company and the Significant issues brought to Management’s attention through the Group and hence for taking reasonable steps for the prevention and Trustline are reported to the Audit Committee. detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the Company’s website, and legislation in the 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 functions are listed on pages 70 to 72, 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 16 to 65 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. approving the document. the approving before toManagement comments their in tofeed and Accounts & Report Annual the toreview Directors the for time sufficient included which &Accounts, Report Annual ofthe respect in process tookthen into preparation account thorough the and verification Directors The meetings. between business the about of information flow asaregular aswell meetings Committee and atBoard given 75) page on detailed presentations support strategy and training the (including presentations and updates verbal reports, of written byavariety supplemented and meeting, Board ateach discussed toand prior circulated reviews business and updates reports, regular with iskept up-to-date which business, ofthe knowledge their account into took Directors the confirmation, this In making strategy. and model business performance, and position Company’s the toassess Shareholders for necessary information the provides Accounts, taken as a whole, is fair, balanced and understandable and & Report Annual the consider they that confirm Directors The UNDERSTANDABLE AND BALANCED FAIR, section on pages 105to107. pages on section disclosures” “Other the in given are Shareholders major Company’s the including Company, ofthe capital share tothe relation in Disclosures DISCLOSURES RELATED AND CAPITAL SHARE information. of that aware are auditors Company’s the that toestablish and information audit relevant ofany aware him/her tomake asaDirector taken have to ought he/she that steps all taken has he/she that and unaware; are auditors Company’s the ofwhich information audit relevant no is there isaware, ashe/she far so that: confirms report Directors’ ofthis dateofapproval atthe office held who Directors ofthe Each TO AUDITORS INFORMATION OF DISCLOSURE THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 87 FINANCIAL STATEMENTS GOVERNANCE 88 GOVERNANCE

DIRECTORS’ REMUNERATION REPORT ANNUAL STATEMENT BY CHAIR OF REMUNERATION COMMITTEE

REMUNERATION COMMITTEE Dear Shareholder On behalf of the Board, I am pleased to present our Directors’ Remuneration Report for the year ended 30 September 2015.

EXECUTIVE DIRECTOR CHANGES This year we saw the transition to our new Group CEO Peter Fankhauser, who was appointed on 26 November 2014. The Committee worked to formulate appropriate remuneration arrangements for Peter, in line with the Company’s approved Remuneration Policy, which it considers provides alignment of Peter’s reward with his delivery of the execution of the long-term strategy of the Company. Prior to his appointment as Group CEO, Peter was part of the Thomas Cook Senior Management Team (and from November 2013 served as Group Chief Operating Officer) and as such, has already built Chairman Warren Tucker up a significant holding of 1,286,776 shares in the Company, which he continues to build upon. A summary of Peter’s remuneration Scheduled Meetings arrangements is set out below and further details can be found in Four the Directors’ Remuneration Report. Although Peter was appointed Other members during FY15, we have included the outcome of long-term incentive Dawn Airey, Annet Aris and Emre Berkin awards vesting during the year that were granted to him prior to his appointment as Group CEO. Directors’ biographies on pages 70 to 72 During the year, the Committee also considered departure Composition of the Committee arrangements for former Group CEO Harriet Green. During her All members of the Committee are Independent Non-Executive Directors. two years and four months serving as Group CEO at Thomas Cook, Carl Symon stepped down from the Committee on 30 September 2015. our share price rose from 16.25p (30 July 2012) to 136p (25 November The Committee’s terms of reference are available on the Governance 2014) and therefore, as previously disclosed, a proportion of her 2012 page of the Company’s website at www.thomascookgroup.com. share award vested (pro-rated for time and performance). Meetings also regularly attended by: Frank Meysman (Chairman), Peter Fankhauser (CEO), Martine Verluyten OUR PERFORMANCE IN FY15 (Independent Non-Executive Director), Alice Marsden (Group Company The travel industry continues to face challenging external pressures Secretary), Mitul Shah (Deloitte LLP), and members of the HR Leadership and therefore our Remuneration Policy and performance targets Team as required. reflect both the environment in which we operate and the Company’s Committee activities: strategic goals. As set out in the Strategic report, we have made > Approved remuneration arrangements on the change of Group CEO progress despite the headwinds of currency exchange rates and > Considered Corporate Governance updates in determining executive regional instability. remuneration > Made recommendations to the Board on executive remuneration for the financial year REMUNERATION OUTCOMES IN FY15 > Approved outcomes for short-term and long-term incentives in line As a result of achievements made during the year in respect of with the remuneration policy and incentive plans progress against underlying EBIT and cash conversion targets, payout > Approved the granting of awards under the Company’s long-term has been made under the Group Bonus Plan in respect of these incentive plans elements. There is still further progress to be made in respect of some of our other strategic KPIs, and therefore given the stretching targets set, the proportion of the bonus relating to web penetration and new product revenue targets did not payout. The Committee was focused on ensuring that the outcomes under the FY15 Group Bonus Plan provided an appropriate balance between the financial performance of the business and the performance of the Management and in order to achieve this the Committee made certain adjustments to the calculation of financial performance. Executive Directors: for forward going arrangements remuneration the and year the for outcomes ofthe summary level ahigh provides below table The shareholders. for created value significant and award dateofthe the on price share adjusted 14.3p the on 800% ofalmost increase an representing 127.44p was 2014 4September and 2014 12June daysbetween trading 60 the over price share average Company’s 2015. The July in vested shares awarded ofthe 100% and full in met was price, share absolute on based was which awards, (“COIP”) Plan Co-Investment and (“PSP”) Plan Share Performance 2012 June tothe applying condition performance The of FY16 have been sharing our intended approach for FY16 incentives. incentives. FY16 for approach intended our sharing been have of FY16 start the during and plans, toour attaching conditions performance about toshareholders talked have year the during and matters remuneration on key shareholders our with toconsult We continue with shareholders. engagement ongoing positive, our and performance on progress Company’s ofthe acknowledgement encouraging isan This support. 99.76% with Report, Annual 2014 our in out asset Report, At 2015 the AGM, shareholders approved our Directors’ Remuneration SHAREHOLDERS OUR OF VIEWS THE REFLECTING AGM. 2017 atour again toshareholders presented tobe isdue Policy Remuneration year. Our the during Committee bythe made todecisions context to95give 90 pages on Policy appropriate. We have approved the Remuneration re-published remains Policy our that comfortable are and developments regulatory approved Remuneration but continue to Policy monitor market and shareholder toour changes any year, made not wehave the During REMUNERATION POLICY COIP) 12 June and PSP 12 September and (June year in the LTIP vesting awards as Executive Director period for bonus FY15 FY16 PSP award (subject toperformance) (subject award PSP FY16 deferred into shares for two years) into shares deferred third (one opportunity max bonus FY16 Annual salary Role Chief Executive Officer Chief Financial Officer Financial Chief Officer Executive Chief Name Role shares (total) Number of vested award vesting maximum % of ££604,582 earned opportunity bonus maximum % of £533,129 9 69% salary of 150% CEO) as toappointment prior (granted 2,381,198 award: 66.74%September June award: 100% 69% salary of 150% 150% of salary 150% of salary of 150% salary of 150% (as at appointment in November 2014) in appointment at (as £690,000 Peter Fankhauser Michael Healy Michael Fankhauser Peter 24 November 2015 November 24 CHAIRMAN OF THE REMUNERATION COMMITTEE WARREN TUCKER guidance year. during past the and support their usfor assisted have who all and Committee of the members myfellow tothank like again Iwould Finally, ahead. year the throughout 2016 AGMand atthe support your to receiving forward We look process. ofthis aspart shareholders our with toengage continue wewill and 2016 review ofthe aspart matters these consider will Committee The plans. incentive for place in are provisions clawback that toensure need asthe aswell cetera) et guidelines shareholding deferral, periods, ofholding use the through example (for shareholders with alignment asfurther such matters on expectations investor and trends market ofexternal is mindful Committee The 2017). in toexpire isdue plan current (as the plan incentive long-term anew for asapproval aswell Policy anew for 2017 in approval shareholder seeking be will 2016 and in arrangements remuneration executive the reviewing be will Committee the forward, Looking in the Group Bonus Plan. Plan. Bonus Group the in participants other and Directors toExecutive Plan Bonus Group FY14 the under payout no was There 98. page on disclosed are Plan Bonus Group FY14 Targets the for report. remuneration FY16 our in disclosed be will and time atthis sensitive commercially remain FY15 for Plan Bonus Group our under targets the that Board bythe isconsidered It 70%. was FY12 during Directors Executive tocurrent made awards the for ofvesting level overall The achieved. performance with accordance in vested shares the 2015 and September 30 on ended awards 2012 PSP September ofthe respect in period performance The THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 2,018,730 September award: 62.50% June award: 100% (increased from £510,000, +2% effective 1 April 2015) +2% effective from £510,000, (increased £520,200 the 89 FINANCIAL STATEMENTS GOVERNANCE 90 GOVERNANCE

DIRECTORS’ REMUNERATION POLICY

FUTURE POLICY TABLE

Element Purpose and link to strategic objectives Operation Base salary > Provides fixed remuneration for the role, which > Salaries are paid monthly and are normally reviewed annually. reflects the size and scope of the Executive > Consideration is typically given to a range of factors including: Director’s responsibilities. — size and scope of the Executive Director’s responsibilities; > Attracts and retains the high-calibre talent — performance and experience; and necessary to deliver the business strategy. — typical pay levels for comparable roles in companies of a similar size and complexity in the relevant market.

Retirement > To provide competitive post-retirement > Payment may be made either into a pension scheme (for example, a defined contribution plan) or benefits benefits or cash allowance equivalent. delivered as a cash allowance with Company contributions set as a percentage of basic salary. > Attracts and retains the high-calibre talent > Level of benefit is dependent upon seniority. necessary to deliver the business strategy.

Benefits > Ensures the overall package is competitive. > Provision of a range of benefits by the Company. Such benefits may include those currently provided > Attracts and retains the high-calibre talent to Executive Directors, as disclosed on page 96. These are reviewed annually by the Committee to necessary to deliver the business strategy. ensure that they provide a competitive package and facilitate the delivery of the business strategy. > The Company reserves the right to deliver benefits to Executive Directors depending on their individual circumstances, which may include housing, travel, education, healthcare and other allowances. > In the case of non-UK Executives, the Committee may consider additional allowances in line with standard practice.

Annual bonus > Energises and focuses management on > Measures and targets are set annually and payout levels are determined by the Committee after rigorous execution of Thomas Cook’s strategy the year end based on performance against those targets. on an annual basis. > The Committee has full discretion to amend the bonus payout (upwards or downwards), if in its > Rewards annual performance against judgement any formulaic output does not produce a fair result for either the individual Executive challenging annual targets and key Director or the Company, taking account of the overall business performance or situation of the performance indicators which are critical Company. to the realisation of our business strategy. > Executive Directors must defer one-third of their annual bonus into Company shares which then > Compulsory deferral into the Company’s vest two years after the cash bonus payment date, subject to continued employment and claw-back shares provides a link to the creation of provisions but no additional performance conditions. Regarding the claw-back provisions, unvested long-term sustainable value, and also a share awards lapse in certain scenarios, as described on page 92. retention element. > Good leaver terms are described in more detail on page 93. > The claw-back provision enables the Company > At the Committee’s discretion, Executive Directors may receive the value of dividend equivalents to mitigate risk. during the holding period on the vested shares.

Long-term > Energises and focuses management on > The current Performance Share Plan was approved by shareholders in 2007, and is governed by the share-based rigorous execution of Thomas Cook’s strategy rules of the plan. A summary of the key features is set out below: incentive plan over the longer term. — awards may be made in the form of conditional shares or options with vesting dependent upon the > Rewards sustained performance against achievement of performance conditions set by the Committee. Vesting of awards will be subject challenging long-term targets and key to a three-year performance period; performance indicators which are critical — the Committee has full discretion to amend the number of shares that vest (upwards or downwards), to the realisation of our business strategy. if in its judgement any formulaic output does not produce a fair result for either the individual > Long-term performance targets and Executive Director or the Company, taking account of the overall business performance or situation share-based remuneration support the of the Company; creation of long-term Shareholder value. — the award will lapse if the participant leaves employment before vesting unless in specific “good leaver” circumstances. Good leaver terms are described in more detail on page 93; — the Committee may in the event of a variation of the Company’s share capital adjust or amend the terms of the awards in accordance with the rules of the plan; and — if the Company pays any dividends in respect of record dates falling in the period from the award date to the vesting date, the Committee may consider that the Executive should receive a payment following delivery of the shares in satisfaction of his award, the value of which is equivalent to the cash value of the dividends in respect of any shares that vest.

Chairman and > To reward individuals for fulfilling the > The Committee is responsible for determining the fees for the Chairman of the Company. Non-Executive relevant role. > The fees for the other Non-Executive Directors are set by the Board. Director fees > Attracts and retains individuals with the skills, > The fee structure may include: experience and knowledge to contribute to an — a basic fee; effective Board. — additional fees for chairmanship of Board committees; — additional fees for further responsibilities (for example, Senior Independent Directorship); and — travel and hotel costs that are deemed to be an employment benefit by the relevant tax authority may also be paid.

The Committee reserves the right to make any remuneration or loss of office payments (including the satisfaction of any outstanding awards of variable remuneration made to Executive Directors), where the terms of that payment were agreed: (i) prior to the approval of this policy under their original terms – for these purposes, the terms of a share award are “agreed” at the time it is granted; or (ii) at a time where the individual was not a Director of the Company, and in the opinion of the Committee, the payment was not in consideration for the individual becoming a Director of the Company. scheduled to be held on 23 February 2016. 23February on held to be scheduled Meeting General Annual tothe it tosubmit proposed year, isnot it the during Policy tothe made been have changes no As date. that from Company the on effect abinding it had Accordingly, 2014. February 20 on held Meeting General Annual Company’s atthe shareholders by approved to95was 90 pages on Policy Remuneration The > Ordinarily, salary increases will not exceed the average increase increase average the exceed not will increases salary Ordinarily, > For maximum performance: > Directors, Executive to provided currently those include may Benefits > appropriately is considers Committee the which alevel at Set > page 97. on disclosed are rates contribution Company Current > circumstances certain in levels salary to made be may Increases > 97. page on disclosed are salaries Current > > The normal maximum face value of awards is 150% of salary. salary. of 150% is awards of value face maximum normal The > within made awards all of value aggregate the rules, plan the Under > > Set at a level which the Committee (or the Board, as appropriate) appropriate) as Board, the (or Committee the which alevel at Set > Maximum opportunity Performance metrics Performance Maximum opportunity

awarded to other employees in the Group. the in employees other to awarded — 150% of salary. of 150% — the ongoing strategy of the Company. of the strategy ongoing the provide such level as of it benefits considers appropriate to support to right the reserves Committee the however 96, page on disclosed as market. relevant the in complexity and size asimilar of companies in roles comparable against positioned time. over positioning market to moved being Director Executive an — in role; and performance — responsibility; or role of scope in increase — reflect: to example, for as required, level of award. level of ahigher warrants situation the believes it when maximum, rules plan the to up award to adiscretion has Committee However, the circumstances). exceptional in determine may Committee the as period other such (or salary base of 200% exceed not must period 12-month any — appropriately positioned against comparable roles in companies in roles against companies comparable appropriately positioned — — reflects the time commitment and contribution that is expected expected is that contribution and commitment time the reflects — considers:

of a similar size and complexity in the relevant market. relevant the in complexity and size similar of a from the Chairman and Non-Executive Directors; and Directors; Non-Executive and Chairman the from > Performance, through our performance management processes, is one of the key considerations considerations key the of one is processes, management performance our through Performance, > > The Committee will determine more specific performance measures for future awards as the the as awards future for measures performance specific more determine will Committee The > > The performance measures may be adjusted, following grant, by the Committee to ensure a a ensure to Committee the by grant, following adjusted, be may measures performance The > > For achievement of a “threshold” performance level (which is the minimum level of performance performance of level minimum the is (which level performance a“threshold” of achievement For > > For achievement of a “maximum” performance level (which is the highest level of performance performance of level highest the is (which level performance a“maximum” of achievement For > > Normally, there will be straight-line vesting for any performance level between “threshold” “threshold” between level performance any for vesting straight-line be will there Normally, > > The Committee may substitute, vary or waive the performance targets if an event occurs which which occurs event an if targets performance the waive or vary substitute, may Committee The > > The Committee will have regard to various performance metrics (which will be determined determined be will (which metrics performance various to regard have will Committee The > > No less than 70% of the award is based on financial measures and up to 30% of the award may may award the of 30% to up and measures financial on based is award the of 70% than less No > > For achievement of a “threshold” performance level (the minimum level of performance that that performance of level minimum (the level performance a“threshold” of achievement For > >None. >None. > For achievement of a “mid” performance level, no more than 60% of the maximum for each each for maximum the of 60% than more no level, performance a“mid” of achievement For > > The performance measures for the Performance Share Plan will be a combination of financial financial of acombination be will Plan Share Performance the for measures performance The > out. pays maximum the of level 100% performance a“maximum” of achievement For > >None.

in setting and reviewing salary. and reviewing in setting Shareholders ahead of the next award. next the of ahead Shareholders major with consult will and 2014 during transformation its with progress makes Company consistent basis of calculation and to provide a fair reflection of the Company’s performance. Company’s the of reflection afair provide to and calculation of basis consistent of the award will vest. will of the award element respective each of 30% than more no vesting), award an of part any in results that that results in any additional vesting), 100% of each respective element of the award will vest. will award the of element respective each of 100% vesting), additional any in that results and “maximum”. causes the Committee to consider that the target is no longer appropriate. longer no is target the that consider to Committee the causes by the Committee) measured over the relevant financial year, when determining bonuses. determining when year, financial relevant the over measured by the Committee) be based on the achievement of role-specific objectives, which may be financial or non-financial. or financial be may which objectives, role-specific of achievement the on be based pays out. bonus the of each element for maximum the of 20% than more no payment), any in results performance metric in relation to the bonus pays out. bonus the to relation in metric performance — the remaining 20% may be based either on financial or share price based measures based price share or financial on either based be may 20% remaining the — and measures; based price on share based be will 30% least at — measures; on financial based be will 50% least at — follows: as be will weightings the Normally, period. performance athree-year least at over measured measures, based price share and measures

2013 Annual Report and Accounts available on our website. website. our on available Accounts and Report 2013 Annual our in seen be can byShareholders approved was that policy full The 95) (page Scenarios Performance Illustrative > 94) (page Views ofShareholder ofconsideration Statement > position: recent most the toreflect updated been have sections following The reference. for below policy unchanged the We re-published have

THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 91 FINANCIAL STATEMENTS GOVERNANCE 92 GOVERNANCE

DIRECTORS’ REMUNERATION POLICY CONTINUED

EXPLANATORY DETAIL FOR FUTURE POLICY TABLE APPROACH TO RECRUITMENT REMUNERATION Changes made in the year When agreeing a remuneration package for the appointment of new No changes have been made to the policy during the year. Directors, the Committee will apply the following principles: > The package will be sufficient to attract and retain the high-calibre Explanation of chosen performance measures and the target talent necessary to develop and deliver the business strategy. setting process > The Committee will seek to ensure that no more is paid than Performance measures have been selected to reflect the targets and is necessary. key performance indicators that are critical to the realisation of our > In the next Annual remuneration report, the Committee will explain business strategy. to shareholders the rationale for the relevant arrangements and if Challenging performance targets are set by the Committee each year and when the transition to the policy described on pages 90 and 91 for the annual bonus plan and the PSP. When setting these targets, will occur. the Committee will take into account a number of different reference The following elements may be considered by the Committee for points, including the Company’s business plan and consensus analyst inclusion in a recruitment package for an Executive Director, in addition forecasts of the Company’s performance. Full vesting will only occur to the policy elements set out in the table on pages 90 and 91: for what the Committee considers to be stretching performance. Claw-back Element Approach As highlighted in the policy table, a claw-back arrangement is in Initial An initial long-term incentive award may be made, which long-term may be higher than the maximum PSP opportunity, as set place. Under this arrangement, the unvested deferred annual bonus incentive out on pages 90 and 91. shares may lapse in whole or in part if a claw-back event occurs, award The Committee will ensure: which includes: > The award is linked to the achievement of appropriate > a material adverse misstatement of the Company’s and challenging performance targets. financial statements; > The award will be forfeited if the performance and > the participant or their team having engaged in gross misconduct continued employment conditions are not achieved. or in conduct which resulted in significant losses, as determined Initial The initial annual bonus opportunity may be set higher by the Committee; and/or annual than the approved policy. bonus > the Company having suffered serious reputational damage, as The Committee will ensure the award is linked to the opportunity determined by the Committee, as a result of any action taken by the achievement of appropriate and challenging performance participant or his team. targets. In addition, under the PSP, the Committee has discretion to amend Compensation The terms of any compensation will be determined by the final vesting level should any formulaic output not reflect the for forfeited taking into account the terms of any forfeited awards, overall business performance. This discretion allows the Committee awards including: > Performance achieved or likely to be achieved. to decrease or increase the pay-out in the range of 0%–100% of the > The proportion of performance/vesting period remaining. number of shares awarded. > The form and timing of the original award. Salary, pension and benefits are not subject to claw-back. Sign on In certain limited circumstances, for example in order to awards compensate for a loss at a previous employer other than Policy for the remuneration of employees generally for forfeited awards, the Committee may make a one-off Remuneration arrangements are determined throughout the Group sign-on award as part of the initial package. based on the same principle that reward should be achieved for The Committee retains the discretion to determine, based delivery of our business strategy and should be sufficient to attract on the circumstances at the time, whether this would be and retain high-calibre talent, without paying more than is necessary. in cash or shares, whether or not performance conditions or an additional holding period would apply. Thomas Cook has operations based in a number of different countries and at different levels of seniority, and though based on Notice period The initial notice period may be longer than the Company’s the overarching principle above, reward policies vary depending upon six-month policy (up to a maximum of 24 months). However, this will reduce by one month for every month these factors. served, until the Company’s policy position is reached. Relocation Where necessary, the Company will pay appropriate costs relocation costs, in line with standard practice. The Committee will seek to ensure that no more is paid than is necessary. table on pages 90 and 91. and 90 pages on table policy future the in out set policy the with accordance in determined be will Directors Non-Executive new or Chairman anew for levels Fee appropriate. determines Committee the if shares) Cook Thomas into asaroll-over (such basis arevised under or terms, original the under tocontinue allowed be may Board the joining to prior made were which arrangements other under awards any acquisition, ofan asaresult or Cook Thomas within from promotion internal ofan asaresult Directors Executive becoming individuals For periods. performance incentive) long-term (for three-year atleast and bonus) annual the (for year one both over met, tobe need would targets stretching pay, ofvariable alevel such toachieve order in and circumstances, exceptional in available be only would pay ofvariable level This awards. incentive long-term ofany value face maximum the and bonus annual maximum the covers This salary. ofbase as500% figure this set has Committee the scenario, in a recruitment flexibility sufficient Company with the toprovide Inorder recruitment. oftheir respect in Director new toa paid be could which pay ofvariable amount maximum the out toset isrequired Cook Thomas regulations, reporting the Under be made available in exceptional circumstances. only would opportunities award incentive long-term or bonus annual initial increased or awards sign-on period, notice initial enhanced An these may vest. scenarios However, leaver” date. “good in vesting or payment the before Company the leaves executive an if lapse normally will package ofthe elements performance-linked the under awards Outstanding benefits. and pension salary, base include may This made. be may ofnotice lieu in apayment effect, immediate with Director Executive ofthe employment the terminates Company the If Executive Director. the and Company the both from period, notice asix-month for provide contracts service the Healy, Michael and Fankhauser Peter For contracts. service Company have Directors Executive Executive Directors OF OFFICE PAYMENTS LOSS AND CONTRACTS SERVICE an acquiring Company. an acquiring of shares new into over” “rolled be also may awards The targets. performance relevant any against achieved performance the and grant since elapsed period the account into taking Committee, bythe determined extent tothe vest also may awards PSP Group), Cook Thomas ofthe reorganisation internal ofan aspart than (other Company ofthe winding-up or ofatakeover event In the connection with the award. in disadvantage atax suffer would they or restricted be would shares in deal or award the tohold capacity their where country toa ismoved participant the if early vest also may Awards apply. should period other any determines Committee the unless vesting from ofdeath) case the in 12months (or months ofsix aperiod for exercisable be shall asoptions structured Awards exercised. be may they when relevant, if and, vest awards when todetermine discretion the has Committee the when leaver”, isa“good individual an that todeem discretion its used has Committee the unless employment of ofcessation time atthe lapse shall PSP the under granted Awards made. was award the when on depending date, payment or vesting original the with line in or termination upon immediately out paid be or vest may awards leaver” “good Any elements. be made under performance-linked will payouts no described, scenarios leaver” “good the in than Other appropriate. determines Committee the that reason other any or Group, ofthe out sold being business or company employing holder’s award the retirement, redundancy, ill-health, injury, disability, death, include scenarios leaver” “good reference, For extent tothe vest PSP the under awards unvested Outstanding > > If the participant leaves before the end of the holding period, any any period, holding ofthe end the before leaves participant the If > > If the participant leaves during the annual bonus performance performance bonus annual the during leaves participant the If > include: may This

any relevant performance targets. targets. performance relevant any against achieved performance and award the held has individual the oftime period the account into taking Committee bythe determined unvested deferred bonus shares may vest. may shares bonus deferred unvested performance achieved. achieved. performance to reference with and elapsed, year performance of the portion the toreflect pro-rated made, be may year of the respect in payment abonus date, payment the before and year THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 93 FINANCIAL STATEMENTS GOVERNANCE 94 GOVERNANCE

DIRECTORS’ REMUNERATION POLICY CONTINUED

Non-Executive Directors STATEMENT OF CONSIDERATION OF CONDITIONS Non-Executive Directors, including the Chairman, are appointed ELSEWHERE IN THE COMPANY pursuant to a letter of appointment. The notice period for the When setting the policy for Directors’ remuneration, the Committee Chairman is three months, and one month for the other Non-Executive has regard to the pay and employment conditions elsewhere within Directors. All Non-Executive Directors are subject to annual re-election the Group. This includes consideration of: by Shareholders at the AGM. The Non-Executive Directors’ letters > Salary increases for the general employee population of appointment continue until the date stated in their appointment > Overall spend on annual bonus letter unless they are terminated for cause, or on the notice period > Participation levels in the annual bonus and any long- stated, or if they are not re-elected at the AGM. The Directors’ service term incentives contracts and letters of appointment are kept for inspection by > Company-wide benefit (including pension) offerings Shareholders at the Company’s registered office. > Any other relevant factors as determined by the Committee OUTSIDE APPOINTMENTS In order to take into account the views of the general employee The Company recognises the benefits to the individual, and to the population when formulating Director pay policy, the Committee may Group, of Executive Directors taking on external appointments as review information provided by the HR function and feedback from Non-Executive Directors. Subject to the approval of the Committee an employee engagement surveys. Executive Director may accept such appointments at other companies or other similar advisory or consultative roles. The Committee has set STATEMENT OF CONSIDERATION a limit of one external appointment for each Executive Director, to one OF SHAREHOLDER VIEWS FTSE 100 or 250 Company, or an international Company of a similar The Company is committed to ongoing engagement and seeks major size, unless there is justification for a further appointment. The Board shareholder views in advance of proposing significant changes to its will review the time commitment of all outside appointments and remuneration policies. ensure that it is satisfied that this will not negatively impact upon In December 2014 our key shareholders were communicated to on the Executive’s time commitment to the performance of Thomas various Executive remuneration matters. Key shareholders were Cook duties. invited to comment on the FY15 Performance Share Plan including The Committee may allow Executive Directors to retain any the level of awards to be made to our Executive Directors, the fees payable. performance measures and specific share price and cash conversion targets for the award. The charts show three scenarios: (a) base salary, benefits and pension, (b) mid and (c) maximum: and (b)mid pension, and benefits salary, (a) base scenarios: three charts show The AGM. 2014 February atthe approved was which Policy Remuneration Directors’ the with accordance in isset remuneration Their Directors. Executive current bythe received be may that ofremuneration levels the toillustrate updated been has section This ILLUSTRATIVE PERFORMANCE SCENARIOS In developing the scenarios, the following assumptions have been made: been have assumptions following the scenarios, the In developing As required by the regulations, Performance Share Plan awards (and amounts included within the bonus which have been deferred i deferred been have which bonus the within included assumptions. growth amounts (and awards Plan Share Performance regulations, the by required As Note: Maximum Mid 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Fankhauser CEO –Peter pension and benefits Base salary, oa ie nulbnsPSP bonus Annual fixed Total benefits, pension benefits, Base salary, £927 0%5%28% 50% 100% >A P >A P > Full pay-out of annual bonus, for example, 150% of salary. of 150% example, for bonus, annual of pay-out Full > scenario: following the with line in was performance if receive would Director Executive an what on Based >A in scenario: following result which would expectations, Company’s the line in was performance if receive would Director Executive an what on Based > Pension measured by applying cash in lieu rate against base salary as at the date of this report. this of date the at as salary base against rate lieu in cash applying by measured Pension > F 5020£449£3,5 £674,679 £130,050 £24,429 £520,200 CFO > Benefits are based on the amount shown in the single figure table in this year’s Annual Report on remuneration. on Report Annual in this year’s table figure single the in shown amount the on based are Benefits > E 6000£994£0,0 £926,934 £207,000 £29,934 £690,000 CEO > Base salary as at 23 November 2015. 2015. November 23 at as salary Base > follows: as calculated is This and pension. benefits salary, base example, for received, is pay fixed total Only scenario: following the with line in was performance if receive would Director Executive an what on Based

nnual bonus pays out at 60% of maximum for mid performance. mid for maximum of 60% at out pays bonus nnual SP award with a face value of 200% (in line with the “maximum” possible award under the plan rules) pays out at 100% of maximum of 100% at out pays rules) plan the under award possible “maximum” the with line (in 200% of value aface with award SP SP award with a face value of 150% (in line with the “normal” grant policy) pays out 30% of maximum, being threshold level of v of level threshold being maximum, of 30% out pays policy) grant “normal” the with line (in 150% of value aface with award SP Total remuneration £’000 £1,858 i Maximum Mid 33% 17% aeBnft eso Total fixed Pension Benefits Base £3,342 31% 41% 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Healy CFO –Michael oa ie nulbnsPSP bonus Annual fixed Total benefits, pension benefits, THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Base salary, £675 100% nto shares) are set out at face value, with no share price price share no with value, face at out set are shares) nto Total remuneration £’000 £1,377 i Maximum Mid 9 27% 49% 34% 17%

£2,495 42% 31% the esting. . 95 FINANCIAL STATEMENTS GOVERNANCE 96 GOVERNANCE

ANNUAL REPORT ON DIRECTORS’ REMUNERATION

The Remuneration Committee presents its Annual Report on Directors’ independent advice on executive remuneration matters. Deloitte is one remuneration which is set out below. Decisions taken on remuneration of the founding members of the Remuneration Consultants Group and during the year are in line with our remuneration policy which was adhere to their Code of Conduct in its dealings with the Committee. approved at our 2014 AGM with 98.9% of all votes cast in favour. The Committee is satisfied that the advice provided by Deloitte is CONSIDERATION BY THE DIRECTORS OF MATTERS objective and independent. The Committee is also comfortable that RELATING TO DIRECTORS’ REMUNERATION the Deloitte engagement partner and team, that provide remuneration advice to the Committee, do not have connections with Thomas Cook The Committee invites individuals to attend meetings, as it deems that may impair their independence. Total fees paid to Deloitte in beneficial, to assist it in reviewing matters for consideration. relation to advice to the Committee amounted to £179,650 (charged Other individuals who have provided advice to the Committee during on a time plus expenses basis). Other practices of Deloitte, separate the year include the Chairman of the Board, Group General Counsel, from the executive remuneration practice, have provided consulting Group Head of Reward and Performance, the Group Company services in relation to systems and organisational design projects and Secretary and a representative from Deloitte LLP, the Committee’s general tax and internal audit advice to the Company during the year. external Remuneration Committee Advisor. Warren Tucker is also a member of the Audit Committee and, as such, ensures there is During the year, Alithos provided assistance to the Committee coordination in respect of risk and accounting issues. No Director regarding the calculation of the level of vesting in relation to the share or senior executive is present at the meeting when their own price condition for the June 2012 PSP and COIP awards, and September remuneration arrangements are discussed. 2012 PSP award for which the total fees were £1,100 (based on the number of awards for which calculations were performed and the EXTERNAL ADVISERS reports produced). Alithos was selected by the Company as a service Deloitte LLP (“Deloitte”) have continued this year as advisers to the provider, and the Committee is satisfied that the advice is independent Remuneration Committee providing the Committee with objective and and objective. Alithos provided no other services to the Company.

SINGLE FIGURE OF TOTAL REMUNERATION (AUDITED) The following table sets out the single figure of total remuneration for Directors for the financial years ending 30 September 2014 and 2015:

Salary/fees Benefits4 Group Bonus Plan5 PSP/COIP6 Pension7 Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14

Executive Directors Peter Fankhauser1 585 – 30 – 605 – 2,8678 – 175 – 4,262 – Michael Healy 515 505 24 24 533 – 2,433 – 129 126 3,635 655 Non-Executive Directors Frank Meysman 275 275 58 41 – – – – – – 333 316 Dawn Airey 60 60 3 3 – – – – – – 63 63 Annet Aris 60 15 5 3 – – – – – – 65 18 Emre Berkin 70 66 6 8 – – – – – – 76 74 Warren Tucker 80 72 5 7 – – – – – – 85 79 Martine Verluyten 80 80 4 5 – – – – – – 84 85 Former Executive Directors Harriet Green2 174 687 22 153 – – – – 52 206 248 1,046 Former Non-Executive Directors Carl Symon3 70 66 3 – – – – – – – 73 66 Notes: 6 Reflects the value of: the June 2012 PSP and COIP awards which vested in July 2015; and, the September 1 Peter Fankhauser was appointed to the Board with effect from 26 November 2014. His base salary, 2012 PSP awards which vested in November 2015. In line with regulations, the market value of the benefits, and pension are shown for the period he served as an Executive Director. His FY15 annual September PSP awards is estimated using the three month average closing share price ending bonus shown relates to the period he served as an Executive Director. 30 September 2015 being 1.181p. The valuation of the September 2012 PSP awards will be restated in 2 Harriet Green ceased to be Group CEO on 26 November 2014 and stepped down as Director on next year’s Annual Report on Remuneration when the actual value will be available. No dividends were 31 December 2014. Her base salary, benefits, and pension are shown for the period she served as paid during the period and therefore no dividends or dividend equivalents were added. an Executive Director. Details of payments made to Harriet after leaving are shown on page 99. 7 Peter receives a pension allowance of 30% of salary as shown in the table above. Under the As previously disclosed, a proportion of Harriet Green’s 2012 PSP award vested following her grandfathering provisions of our remuneration and appointment policies, Peter’s German pension departure. 4,115,721 shares vested under this award. provision has been frozen at the level accrued to 26 November 2014 circa €175k per annum. Under the 3 Carl Symon stepped down as a Non-Executive Director on 30 September 2015. terms of the pension, this is payable from age 60 or, if terminated without good cause between the age of 55 to 60, from termination. 4 Executive benefits includes car allowance, private medical insurance, life assurance, income protection (Harriet Green only) and expenses which are chargeable to UK income tax. Non-executive 8 The value of the share award shown for Peter Fankhauser reflects the full award which was granted benefits relates only to travel and accommodation expenses which are chargeable to UK income tax to Peter prior to his appointment as Group CEO. (or would be if the individual were resident in the UK). 5 One-third of the bonus will be deferred as shares under the Deferred Bonus Plan. ee akasr£690,000 Peter Fankhauser during FY15. salaries Healy’s Michael and Fankhauser Peter shows below table The Salary below: are given table previous the in included amounts PSP and bonus annual pension, benefits, salary, ofthe respect in information Further TABLE (AUDITED) FIGURE TO THE SINGLE ADDITIONAL DISCLOSURES RELATING EBIT and cash conversion, which were both satisfied. satisfied. both were which conversion, cash EBIT and underlying Group were FY15 for hurdles financial The measure. any under made be could pay-out before full in met tobe required both were which hurdles financial two set also Committee the targets, those within Included opportunity. bonus maximum ofthe 69% be will plan the against ofpayout level the Directors Executive for targets, these against achievement year, toreflect and financial the during targets strategic our against made been has progress described, As 92. page on date), asdescribed vesting the before (claw-back tomalus subject years, two for as shares deferred be would ofwhich one-third ofsalary, 150% was CFO CEO and the both for opportunity award Plan Bonus Group maximum year, the the For Plan Bonus Group FY15 (audited) Plan Bonus Group respectively. salary base 25% and ofannual to 30% equivalent amount of an allowance asacash contributions pension receive their Healy Michael and Fankhauser Peter both Currently, (audited) Pensions review. pay 2015 annual atthe Group the across awarded amount the with line in was Healy toMichael awarded increase pay The 2015. 1April from effective * Increase ihe el £510,000 Michael Healy 30 September 2014 September 30 26 November 2014 appointment appointment Salary on Salary at 30 September 2015 September 30 60000.0% £690,000 50202.0% £520,200 Salary at Percentage increase* Role-specific Total level of award as a % of maximum opportunity: opportunity: maximum a%of as award of Total level esrsWeighting Measures rates. exchange actual at £510m to Adjusted 3 2 1 Notes: Core and achievement against these for Executive Directors. Directors. Executive for these against and achievement The tablereport. below sets out details of measures performance year’s next in retrospectively targets these disclose will years, prior in taken approach the with line in and sensitive commercially to be Plan Bonus Group the under targets FY15 the considers Board The bonus purposes is different from the achievement stated earlier in the report. report. the in earlier stated achievement the from for used different is achievement purposes the bonus therefore period, performance the of beginning the at afixed basis on set are EBIT currency underlying Group to relation in targets bonus years, prior in disclosed As performance. financial of calculation the to certain made adjustments Committee the balance this achieve to order in and the Management and of business the of performance performance financial the between balance Plan appropriate an Bonus Group provided FY15 the under outcomes the that ensuring on focused was Committee The THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS ru otot1%>£500m 10% Group cost out eerto 0 0 0% 40% 10% penetration web Group n taey1%Ahee 10% Achieved 10% and strategy Organisation, people eeu gos 0 61 0% £681m 10% (gross) revenue New product (constant currency) (constant EBIT underlying Group mrvmn 0 26 4% 22.6% 10% improvement margin gross Group ovrin2%8%25% 85% 25% conversion Group cash 2 5 30 20% £380m 25% Performance achieved 3 Resulting level Resulting opportunity) of award (of (of award of max % 69% 10% 1 97 FINANCIAL STATEMENTS GOVERNANCE 98 GOVERNANCE

ANNUAL REPORT ON DIRECTORS’ REMUNERATION CONTINUED

FY14 Group Bonus Plan As disclosed in the FY14 remuneration report, the two Group hurdles of Group underlying EBIT and Group cash conversion were not met for the FY14 plan therefore no payments were made to participants including Executive Directors. Retrospective disclosure of performance against targets, in line with our commitments to shareholders are set out below, as the Board considers these are no longer commercially sensitive:

Threshold (20% of maximum award) Stretch (100% of maximum award) FY14 Outcome

Group underlying EBIT £326.2m £367.5m £322.9m Group cash conversion 45% 55% 40% Group web penetration 40% 42% 38% Group new products £675m £750m £373m

Performance Share Plan (“PSP”) and Co-Investment Plan (“COIP”) 2012 awards The June 2012 PSP and COIP awards vested in full in July 2015. A subsequent award which was made in September 2012 vested in accordance with performance achieved as set out below. The performance conditions under the PSP awards are spread over both PSP awards made in 2012, taking into consideration that the June 2012 PSP award had a share price condition only. The overall weightings are detailed in the below table:

Group CEO Group CFO weightings weightings Threshold level of Maximum level of Level of Performance condition (% of 2012 awards) (% of 2012 awards) vesting (30%) vesting (100%) Outcome vesting

Share price (highest 60 day average June 2012 in final year of performance period: PSP award 12/06/14 – 12/06/15 10% 20% 26.01p 86.69p 127.44p 100% Share price (highest 60 day average 35% 25% 26.01p 86.69p 121.39p 100% in final year of performance period: September 2012 28/09/14 – 28/09/15 PSP award FY15 Group underlying EBIT 30% 30% £381m £476m £310m 0% FY15 Group cash conversion 25% 25% 55% 65% 71% 100% 100% 100% 70%

Group CEO Group CFO weightings weightings Threshold level of Maximum level of Level of Performance condition (% of 2012 awards) (% of 2012 awards) vesting (30%) vesting (100%) Outcome vesting

Share price (highest 60 day average June 2012 in final year of performance period: COIP award 12/06/14 – 12/06/15 100% n/a 26.01p 86.69p 127.44p 100% 100% This resulted in the number of shares vesting for each Director as set out below:

Director Date of Grant Vesting Date Number of Shares Under Award Number of Shares Vested

Peter Fankhauser PSP Award 12/06/2012 09/07/2015 283,049 283,049 COIP Award 12/06/2012 09/07/2015 362,469 362,469 PSP Award 28/09/2012 07/12/2015 2,600,850 1,735,680 Michael Healy PSP Award 12/06/2012 09/07/2015 576,780 576,780 PSP Award 28/09/2012 07/12/2015 2,307,120 1,441,950

Notes on Group underlying EBIT and Group Cash Conversion Outcomes: The outcomes for Group underlying EBIT and Group cash conversion differ from those stated above in relation to the FY15 Group Bonus Plan, as no adjustments for currency, or other circumstances have been made for the purposes of PSP. Harriet’s September 2013 PSP award lapsed in full. full. in lapsed award 2013PSP September Harriet’s £5,630,306. was ofvesting time atthe shares ofthe value the and 2015 June (62.4%)) 30 on performance (91.7%) and time for prorating of account taking after grant original 57.2% ofthe (representing 4,115,721 shares received She Plan. ofthe provisions leaver the with line in treated was and performance and time for pro-rated was award 2012 PSP Green’s September Harriet disclosed, previously As £451,282. were allowance pension cash and tosalary relation in period this during byHarriet received 2015. Payments June 30 award of Date dateof termination her including toand up contributions) pension of employer lieu in allowance cash the (including benefits contractual and salary full her paid tobe continued and 2014 December 31 on Plan Board the from down stepped Green Harriet disclosed, previously As Directors to past Payments Award of Type Director aclose in being Company tothe due 2014, December from delayed was awards dateofthe The 104. page on found be can conditions ofthe Details shareholders. ofour those with Directors Executive ofour performance the toalign aims and Policy Remuneration our iswithin award The ofsalary. of150% value toaface equating Healy Michael and Fankhauser toPeter made was award A PSP (audited) year financial the during awarded interests Scheme fees for chairmanship of Board Committees. Committees. ofBoard chairmanship fees for additional plus fee, abasic paid are Directors Non-Executive The of£275,000. fee consolidated asingle, ispaid Chairman The NON-EXECUTIVE DIRECTORS office. registered Company’s atthe inspection for available are contracts service The respectively. 8May2012 2015 and 23February are Healy Michael and Fankhauser Peter for contracts service ofthe dates The contracts service Executive Director Current the year. during Directors topast made payments ofoffice loss no were There payments ofoffice Loss 3 Minimum performance is equal to 30% of maximum award. maximum of 30% to equal is grant to prior days performance three the Minimum of price share 3 closing average the being 143.6p was award the calculate to used price share The 2 award. of time the at salary a%of as Expressed 1 Notes: Michael Healy Peter Fankhauser odtoa hr wr S 20/05527910 4.p159,819 216,226 143.6p 143.6p 150% 150% 532,729 720,752 12/03/2015 12/03/2015 PSP Conditional Share Award PSP Conditional Share Award Number of shares and $33,833 respectively which she retained. she which respectively and $33,833 of£18,750 fees received she 2014, December 31 until 2014 1 October from period the For Co. Electric Emerson and plc Systems of BAE Director asaNon-Executive served she Company, ofthe a Director as Green’s time Harriet During approval. toCommittee and report Policy the in out set limitations tothe subject Directors, Executive 3 months asNon- appointments external on taking Directors of Executive benefits the recognises Company the report, Policy the in out set As APPOINTMENTS EXTERNAL N/A 2013 March 27 Meysman Frank Director below: stated ofnotice period the on or cause for terminated unless below out set dates expiry the until continue letters these under appointments The office. registered Company’s atthe inspection for isavailable which ofappointment, to aletter pursuant appointed been has Directors Non-Executive ofthe Each Committee Safety & Environmental Health, the of Chairman the for fee Additional Director Independent Senior the for fee Additional Committee Remuneration the of Chairman the for fee Additional Committee Audit the of Chairman the for fee Additional Non-Executive Director Position table below: the in shown are fees Director ofNon-Executive rates annual The ne rs3 pi 043 ue21 1month 1 month 2017 June 30 2016 11 April 2014 April 30 2013 March 27 Aris Annet Airey Dawn atn elye a 047My21 1month 1month 1month 2017 7May 2014 8 May 2016 2October 2018 October 30 2013 3October 2013 March 27 Verluyten Martine Tucker Warren Berkin Emre awarded THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS . Face value value Face of award 1 Date of latest of latest Date ponmn xiydt Notice period date Expiry appointment Share price used to to used price Share letter of calculate award calculate 2 minimum performance achieved minimum performance Number of shares received if if received shares of Number performance performance approved period. period. Annual fees £’000 60 20 20 10 10 3 99 FINANCIAL STATEMENTS GOVERNANCE 100 GOVERNANCE

ANNUAL REPORT ON DIRECTORS’ REMUNERATION CONTINUED

Statutory graph to the travel sector. The calculation of TSR is in accordance with The graph below shows the total shareholder return (“TSR”) for the relevant remuneration regulations and is broadly the change holders of Thomas Cook Group plc €0.10 Ordinary Shares (€0.01 in market price together with reinvestment of dividend income. Ordinary Shares from 3 June 2013) for the seven-year period since This graph shows the value of £100 invested in Thomas Cook Group 30 September 2008, measured against the FTSE 250 Index and the plc on 30 September 2008 compared with the value of £100 invested FTSE All Share Travel & Leisure Index. These indices were chosen as in the FTSE 250 Index and the FTSE All Share Travel & Leisure Index. relevant comparators, as the Company is a member of both indices, The intermediate points are the values at the Company’s financial with one reflecting a broad equity index and the other being specific year ends. Total Shareholder return £

250 Thomas Cook FTSE 250 FTSE All Share Travel & Leisure Index

200

150

100

50

0 30 Sept 08 30 Sept 09 30 Sept 10 30 Sept 11 30 Sept 1230 Sept 13 30 Sept 14 30 Sept 15

The graph above shows the TSR for Thomas Cook Group plc since 30 September 2008. The TSR for the Company from 30 September 2012 to 30 September 2013 was 966%; to 30 September 2014 was 789% and to 30 September 2015 was 741%. The Group underlying EBIT (see page 180) for the financial year to 30 September 2012 was £126m, for 30 September 2013 was £172m, for 30 September 2014 was £280m, for 30 September 2015 was £310m. The table below shows the pattern of remuneration of the Chief Executive Officer during this period. Note that the single figures for FY15 include the full PSP and COIP awards that Peter Fankhauser received upon vesting.

CEO FY09 FY10 FY11 FY 12 FY13 FY14 FY15

Peter Fankhauser1 ––––––£4.262m CEO Single figure Harriet Green2 –––£717k£2.855m£1.046m£248k of remuneration Sam Weihagen3 ––£153k£1.171m–– – Manny Fontenla-Novoa4 £2.996m £2.322m £1.008m5 ––– – Peter Fankhauser ––––––69% Group Bonus Plan payout Harriet Green ––––100%0%0% (as % maximum opportunity) Sam Weihagen ––0%23%–– – Manny Fontenla-Novoa 96%80%0%––– – Peter Fankhauser ––––––70%6 PSP vesting (as % of Harriet Green ––– – maximum opportunity) Sam Weihagen ––0%0%–– – Manny Fontenla-Novoa 68%0%0%––– – The table above shows the prescribed remuneration data (as shown in the left-hand side column) for the Director(s) undertaking the role of Chief Executive Officer during each of the last five financial years. Notes: 1 Peter Fankhauser was appointed CEO on 26 November 2014. 5 The single figure for FY11 for Manny Fontenla-Novoa excludes his termination payment, 2 Harriet Green stepped down as CEO on 26 November 2014 and remained a Director until which was a total of £1,166,639 (in respect of contractual entitlements to base salary, 31 December 2014. pension allowance and benefits, in lieu of notice). 3 Sam Weihagen was appointed CEO on 3 August 2011, and remained in post until the appointment 6 Relates to the June 2012 PSP and COIP awards and the September 2012 PSP award representing of Harriet Green on 30 July 2012. the full value received. 4 Manny Fontenla-Novoa stepped down as CEO on 2 August 2011.

UK-based employees CEO hires, leavers or promotions. new any excluded wehave alike-for-like basis, ison comparison the that toensure Inorder reason. same for the agreements collective tolong-term subject employees We excluded have pressures. external tosimilar issubject group peer this in movement pay therefore and isUK-based Officer Executive Chief asthe group peer this selected We have agreements). collective tolong-term issubject pay whose employees any (excluding selected been has employees UK-based of group Apeer Group. the in employees ofother remuneration the in change percentage the out sets CEO. also It of the remuneration the in change percentage the out sets below table The OFFICER OF CHIEF EXECUTIVE PERCENTAGE CHANGE IN REMUNERATION 3 2 1 Notes: in the Group Bonus Plan the average pay-out level was also 69% of maximum bonus opportunity. opportunity. bonus maximum of 69% also was level pay-out average the Plan Bonus in the Group and based UK are who those For opportunity. bonus maximum of 69% was CEO Group the for achievement FY15 In FY14. for zero were Plan Bonus Group the in those and CEO levels Group the Bonus CEO. both for the for place in targets performance the to similar focus a“Group” have performance the as targets appropriate, is Plan Bonus Group the in all on participating afocus employees considers UK-based Committee the possible, comparison direct most the provide to order In level Policy of benefits the provided. in change no been has There seniority. upon dependent insurance allowance, car and medical private are employees UK-based to provided benefits taxable main The respectively. 2015 and 2014 at as September 30 Fankhauser Peter and Green Harriet of salary the uses comparison the that meaning basis, ayear-on-year as shown is pay CEO’s Group the of role the purposes comparative For % change in base salary % change in remuneration from FY14 to FY15 to FY14 from remuneration in % change 06%−58%See Note 3 −65.81% −0.62% 2.64% 0% See Note See 3 0% 2.64% 1 % change in benefits 2 annual bonus % change in 3 hrhlesdsrbtos0 323 security payments. 890 social employer include pay Directors’ and employees’ Group for amounts The statements. Group’s financial the from extracted are table the in shown figures The measure. a key performance tobe continues asthis above EBIT isshown underlying Group Shareholders distributions EBIT Group underlying group employee pay Overall on Expenditure Regulations. by the asrequired distributions shareholder and pay employees’ all on Company ofthe expenditure relative the displays below table The RELATIVE IMPORTANCE OF SPEND ON PAY THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 2014 £m 848 310 2015 £m 0 Year on year % change −5% −4% 101 FINANCIAL STATEMENTS GOVERNANCE 102 GOVERNANCE

ANNUAL REPORT ON DIRECTORS’ REMUNERATION CONTINUED

STATEMENT OF IMPLEMENTATION OF Awards will vest on a straight-line basis between these points. REMUNERATION POLICY IN THE FOLLOWING For performance below that of the Index, there will be no vesting. FINANCIAL YEAR EPS performance will be assessed against stretching absolute Group Bonus Plan measures and weightings – FY16 targets for FY18. The targets are set for basic EPS and will be Maximum opportunity for Executive Directors bonus payout will be measured on a constant currency basis. Given that the targets are 150% of salary in line with our approved Remuneration Policy. For FY16, set as actual monetary amounts for a single year (and not growth the measures will be as follows: percentages) they are considered commercially sensitive. We will disclose these targets at such point that the Committee considers Weighting they are no longer commercially sensitive. Measures % overall opportunity DIRECTORS’ AND FORMER DIRECTORS’ Group underlying EBIT 40% SHARE INTERESTS (AUDITED) Core measures Group cash 30% The following table shows the beneficial interests of the Directors Improvement in in the shares of the Company: net promoter score 20% Beneficial holdings Leadership 5% (Number of shares as at Role-specific objectives 30 September 2015)* Strategic progress 5% The performance measures above were selected to align with the Current Directors strategic objectives of the Group. Our bonus targets will be set on Peter Fankhauser 1,286,776 a fixed currency basis at the beginning of the performance period. Michael Healy 402,182 The Committee considers that the targets are commercially sensitive, Frank Meysman 470,000 so these have not been disclosed. We will disclose these targets Dawn Airey 42,000 at such point that the Committee considers they are no longer Annet Aris – commercially sensitive. Emre Berkin – In determining the bonus outcome, the Committee considers that Warren Tucker 30,800 there are circumstances in which it would not be appropriate to Martine Verluyten 165,000 pay a bonus due to the poor financial performance of the business Former Executive Director and therefore the Committee has discretion to adjust any payments Harriet Green* 732,700 as it considers appropriate. Former Non-Executive Director The FY16 bonus will be subject to financial hurdles for the underlying Carl Symon 45,000 EBIT and cash measures. * Interest in shares for Harriet Green shown as at 31 December 2014 that is the date she stepped down from the Board. Performance Share Plan The Committee will grant the next award under the PSP to Executive Shareholding guidelines (audited) Directors during the start of FY16. It is anticipated that the level of Executive Directors are required to hold the Company’s shares to the award will be 150% of salary for both the Group CEO and Group CFO. value of 100% of base salary, under the Thomas Cook Shareholding Guidelines (the “Guidelines”). Executive Directors are allowed a In line with the Remuneration Policy, the Committee has determined build-up period which ends after sufficient awards under the PSP that these will vest to the extent stretching EPS and relative have vested to provide shares to the value of 100% of base salary TSR targets (weighted equally) are achieved over a three-year (after tax has been paid on the shares). Until the shareholding performance period. guideline is met, after-tax proceeds of vested PSP shares cannot be TSR performance will be assessed relative to the constituents of sold. At 30 September 2015, Peter Fankhauser met the shareholding the FTSE 250, excluding companies in the financial services and guidelines with a holding of 271% of salary. Michael Healy has met the commodity sectors. requirement with a holding of 100%.

TSR performance Vesting (% of this portion) In line with the Guidelines, the value of the Directors’ holding is calculated by taking the greater of: a) the initial financial commitment; Index +12% per annum 100% and b) the market value at 30 September 2015. Index + 8% per annum 60% Index + 0% per annum 30% S 80/02£.7 7,195,316 101,351 £0.175 £1.776 28/09/2012 251,266 31/03/2014 £1.776 DBP 31/03/2014 PSP Green Harriet Former Director DBP S 20/02£.6 576,780 150,282 £0.165 £1.776 12/06/2012 31/03/2014 PSP Michael Healy DBP S 20/02£.6 283,049 £0.165 12/06/2012 PSP OP(lsd 20/02£.6 362,469 £0.165 12/06/2012 COIP (closed) Fankhauser Peter Director Directors’ and former directors’ interests in shares under the COIP, the under inshares interests directors’ (audited) DBP PSP and former and Directors’ had purchased. had purchased. they Shares ofLodged number tothe in proportion Shares” “Matching awarded then was participant The years. three for held tobe had which Shares”), (“Lodged behalf their on shares topurchase used were funds own participants the COIP closed) (now the Under Co-Investment Plan (COIP) website. Company’s the on isavailable which report, annual 2013 the in disclosed was ofwhich value 2015, the March 31 on released were shares the and 2014 March in made was award DBP The bonus. FY13 ofthe aquarter represent above shown awards DBP The deferred. being payments 25% ofbonus with year one was period deferral the toFY14, Prior basis. acompulsory on years two of aperiod for shares into isdeferred Plan Bonus Group the under made payment bonus of any athird Plan, Bonus Deferred the Under (DBP) Plan Bonus Deferred DETAILS OF PLANS 00/03£.3 922,033 £1.534 30/09/2013 00/03£.3 610,169 £1.534 30/09/2013 00/03£.3 610,169 £1.534 30/09/2013 80/02£.7 2,600,850 £0.175 28/09/2012 80/02£.7 2,307,120 £0.175 28/09/2012 Date of grant 20/05£.8 – £1.486 12/03/2015 20/05£.8 – £1.486 12/03/2015 Share price at at price Share date of grant 30 September September 30 04GatdRlae Lapsed Released Granted 2014 At price, Group underlying EBIT and Group cash conversion. cash Group EBIT and underlying Group price, share absolute on based were conditions performance made, awards subsequent For award. 2012 the 2015 for June 2014–12 12June price share average 60-day highest on based performance, price share on 100% based are conditions Performance period. performance of the end atthe target performance ofthe satisfaction tothe subject vest will awards the under Shares plc. Group Cook Thomas in shares over award share acontingent awarded are PSP, the participants Under (PSP) SharePlan Performance outstanding awards under this scheme. this under awards outstanding no are There 98. page on given are ofthese details Full full. in vested which award 2012PSP June the for asthose same the were Shares ofMatching 2012award ofthe respect in conditions performance The executives. senior ofother number small avery and grant, 2012 ofthe time atthe Fankhauser Peter included which members, (GEB) Board Executive Group former tothe limited was Plan The 3,2 3,2 12/03/2018 532,729 – – 532,729 2,5 2,5 12/03/2018 720,752 – – 720,752 THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 1,6 30/09/2016 610,169 – – – 2,3 0 922,033 – –215,266– –4,115,7213,079,595–101,351 0 – 0 – 0 1,6 30/09/2016 610,169 – –––2,307,12028/09/2015 – – –––2,600,85028/09/2015 –283,049 0 – –576,780–150,282 0 – 0 – –362,469 0 – 30 September September 30 2015 At Earliest vesting outstanding awards date of 103 FINANCIAL STATEMENTS GOVERNANCE 104 GOVERNANCE

ANNUAL REPORT ON DIRECTORS’ REMUNERATION CONTINUED

Performance Share Plan (PSP) Performance Conditions (audited) The performance conditions under the FY12 PSP and COIP awards which were met in part during the year are set out on page 98. The FY13 PSP awards made to Executive Directors are subject to performance measures set out in the table below:

Share price Group underlying EBIT Cash conversion (45% of the overall award) (30% of the overall award) (25% of the overall award) Vesting (% of Vesting (% of Vesting (% of Performance level Share price this portion) Performance level Group underlying EBIT this portion) Performance level Cash conversion this portion)

To be disclosed Maximum £3.00 100% Maximum retrospectively 100% Maximum 90% 100% Threshold £2.25 30% Threshold 30% Threshold 70% 30% Share price performance is measured as the Group underlying EBIT performance in respect Cash conversion performance measured in average share price performance over the fixed of FY16, which is the final year of the three-year respect of FY16 cash conversion, which is the period of 30 trading days from the release of performance period. final year of the three-year performance period. the preliminary FY16 results, with the intention Group underlying EBIT excludes exceptional Cash conversion is defined as free cash of capturing the market’s reaction to the items. flow post exceptional items, before capital financial results. expenditure/EBITDA. The FY15 PSP awards made to Executive Directors are subject to performance measures set out in the table below:

Share price Group underlying EBIT Cash conversion (45% of the overall award) (30% of the overall award) (25% of the overall award) Vesting (% of Vesting (% of Vesting (% of Performance level Share price this portion) Performance level Group underlying EBIT this portion) Performance level Cash conversion this portion)

To be disclosed Maximum £3.00 100% Maximum retrospectively 100% Maximum 80% 100%

Threshold £2.25 30% Threshold 30% Threshold 70% 30% Share price performance is measured as Group underlying EBIT performance in respect Cash conversion performance measured in the average share price performance over of FY17, which is the final year of the three-year respect of FY17 cash conversion, which is the the fixed period of 30 trading days from the performance period. final year of the three-year performance period. release of the preliminary FY17 results, with the Group underlying EBIT excludes exceptional Cash conversion is defined as free cash intention of capturing the market’s reaction to items. flow post-exceptional items, before capital the financial results. expenditure/EBITDA.

STATEMENT OF SHAREHOLDER VOTING The table below sets out the results of the vote on the Directors’ Remuneration report at the 2015 AGM:

Votes for Votes against Number % Number % Votes cast Votes withheld

Annual remuneration report 1,150,915,753 99.76 2,742,362 0.240.44 1,153,658,115 532,949

This Annual Report on remuneration has been approved by the Board of Directors and signed on its behalf by:

WARREN TUCKER CHAIRMAN, REMUNERATION COMMITTEE

24 November 2015 Deferred Shares of £1 each each €0.09 of Shares Deferred each €0.01 of Shares Ordinary Name issue: in ofshares classes three following the has Company The SHARE CAPITAL OTHER DISCLOSURES giving holders the right, at any time until 22 May 2015, to subscribe May2015, tosubscribe 22 until time atany right, the holders giving lenders, ofits tocertain 5May2012 on announced amendment facility bank ofthe aspart Warrants issued Company the 10May2012, On pence. of19.875 share per price at asubscription ofissue) the date at Company ofthe capital share issued ofthe 4.9% approximately (representing Shares of42,914,639 Ordinary aggregate toan up for May2015, tosubscribe 22 until time atany right, the holders giving lenders, ofits tocertain Warrants issued Company 2011, the 25November on announced facility bank million £200 ofthe part As Warrants Company. of the meetings atgeneral apoll) on or ofhands ashow on (whether or vote speak attend, notice, toreceive entitled not are Shares of Deferred classes ofboth holders The thereon. up paid amounts the aggregate, in received, have Shares Deferred Sterling-denominated and Shares Ordinary ofthe holders the after only Share Deferred denominated Euro- each on up paid capital tothe equal amount an to receive entitled be would Shares Deferred Euro-denominated ofthe holders the and Share Deferred Sterling-denominated each on up paid capital tothe equal amount an toreceive entitled be would Shares Deferred Sterling-denominated ofthe holders the up, awinding On Company. ofthe profits tothe right no carry Shares ofDeferred classes Both Shares Deferred general meetings. at voted not are plans share executive Company’s the under shares Unvested behalf. their tovoteon trustee the instruct may they that so Company, ofthe meetings general ofany respect in trustee relevant bythe ofInstruction aForm sent are 103), page on (as detailed plans share executive Company’s ofthe any under shares vested BAYE or Cook Thomas the under shares hold who Employees Exchange’s main market. Stock London the on totrading and List Official ofthe segment premium tothe admitted are Shares Ordinary The vote. toone right the holds share each Company; ofthe meetings atgeneral speak and toattend right the carry Shares Ordinary The Company. of the up awinding on ofcapital return tothe and distribution for available Company ofthe profits tothe right the carry Shares Ordinary The Shares Ordinary Number of shares 1,535,851,316 934,981,938 30 September September 30 in issue at at issue in 50,000 2015 can be found on page 159. page on found be can £91.8 details in million. Further relation to Company’s the share capital of price aggregate an for Limited International toFosun of €731,357.77 value nominal aggregate, an with Shares Ordinary 73,135,777 issued Company 2015, the 6March On of€166,237.78. price aggregate an for toaWarrantholder of€19,391.26 value nominal aggregate, an with Shares 1,939,126 Ordinary issued Company the 2014, 15 December On year the during shares of Allotments Warrants. outstanding no were 2015, there November asat20 Therefore, basis). aone-for-one on Shares Ordinary into (exercised of1,939,126 Warrants respect in Rights Subscription its exercised Warrantholder remaining final year, the the During price. exercise same tothe 2011 re-priced were November in announced facility bank ofthe aspart issued Warrants the Inaddition, 2013). June in Placing and Issue Rights Company’s the toreflect €0.0857282 to adjusted (subsequently of€0.10 share per price a subscription at 2013) June in Placing and Issue Rights Company’s the to reflect Shares Ordinary by4,440,376 increased (subsequently date ofissue atthe Company ofthe capital share issued ofthe 5.0% approximately representing Shares, of43,749,517 Ordinary aggregate toan up for issued shares. shares. issued of number total ofthe 40% than less be not shall Maximum Permitted the that provided Rights, Operating the with compliance isin believe asthey level atsuch nationals bynon-EEA owned be may which shares Company’s ofthe number the on Maximum” a“Permitted toset totime, time from Directors, the allow Articles The nationals. byEEA controlled effectively and majority-owned be must carrier air an requires that carriers ofair licensing the on 1008/2008 Regulation EC Council Inparticular, Right”). “Operating an (each operated tobe service air an enables which and enjoys or holds subsidiaries, ofits any or it, which privilege or licence permission, authority, ofany benefit the enjoy or tohold tocontinue entitlement Company’s the jeopardise could which alevel reach not does nationals bynon-EEA held shares Company’s ofthe number the that toensure designed are Articles The RESTRICTIONSSHARE TRANSFER shares. its own topurchase authority have not does currently Company The SHARES TO PURCHASE AUTHORITY at www.thomascookgroup.com. website Company’s the on available are Articles The shareholders. of meeting atageneral resolution byaspecial amended be only may “Articles”) (the ofAssociation Articles Company’s The ARTICLES OF ASSOCIATION THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 105 FINANCIAL STATEMENTS GOVERNANCE 106 GOVERNANCE

OTHER DISCLOSURES CONTINUED

The Company maintains a separate register (the “Separate Register”) In deciding which shares are to be dealt with as Affected Shares, of shares in which non-EEA nationals, whether individuals, bodies the Directors, in their sole opinion, will determine which Relevant corporate or other entities have an interest (such shares are referred Shares may give rise to the fact of risk of an Intervening Act occurring to as “Relevant Shares” in the Articles). An interest in this context and, subject to any such determination, will have regard to the is widely defined (see below). The Directors may require relevant chronological order in which particulars of Relevant Shares have been, members or other persons to provide them with information to or are to be, entered in the Separate Register unless to do so would, enable them to determine whether shares are, or are to be treated in the sole opinion of the Directors, be inequitable. If there is a change as, Relevant Shares. If such information is not provided, then the in any applicable law or the Company or any subsidiary receives any Directors will be able, at their discretion, to determine that shares direction, notice or requirement from any state or regulatory authority, to which their enquiries relate be treated as Relevant Shares. which, in either case, necessitates such action to overcome, prevent Registered shareholders will also be obliged to notify the Company or avoid an Intervening Act, then the Directors may either: if they are aware either (a) that any share they hold ought to be > lower the Permitted Maximum to the minimum extent that they treated as a Relevant Share for this purpose or (b) that any share consider necessary to overcome, prevent or avoid an Intervening they hold which is treated as a Relevant Share should no longer be Act; or so treated. In this case, the Directors shall request such information > resolve that any Relevant Shares shall be treated as Affected and evidence as they require to satisfy themselves that the share Shares. The rights of the Directors referred to above apply until should not be treated as a Relevant Share and, on receipt of such such time as the Directors resolve that grounds for the making evidence, shall remove particulars of the share from the Separate of a determination have ceased to exist, whereupon the Directors Register. If the Directors determine that such action is necessary must withdraw such determination. The Permitted Maximum is set to protect any Operating Right due to the fact that an Intervening at 40%. This Permitted Maximum may be varied by the Directors. Act (an “Intervening Act” being the refusal, withholding, suspension If the Directors resolve to vary the Permitted Maximum to deal or revocation of any Operating Right or the imposition of materially with shares as Affected Shares or relax the ownership limitations, inhibiting conditions or limitations on any Operating Right in either they shall publish in at least one national newspaper in the UK (and case, by any state or regulatory authority) has taken place or is in any other country in which the shares are listed) notice of the contemplated, threatened or intended, or the aggregate number of determination and of any Permitted Maximum. Relevant Shares is such that an Intervening Act may occur or the ownership or control of the Company is such that an Intervening Act The Directors shall publish, from time to time: may occur, the Directors may, among other things: > information as to the number of shares particulars of which have > identify those shares that give rise to the need to take action and been entered on the Separate Register; and treat such shares as affected shares (“Affected Shares”) (see below); > any Permitted Maximum that has been specified. or The Directors may not register any person as a holder of shares > set a Permitted Maximum on the number of Relevant Shares that unless such person has furnished to the Directors a declaration, may subsist at any time (which may not, save in the circumstances together with such evidence as the Directors may require, stating referred to below, be lower than 40% of the total number of issued (a) the name and nationality of any person who has an interest in any shares) and treat any Relevant Shares in excess of this Permitted such share and, if the Directors require, the nature and extent of such Maximum as Affected Shares (see below). The Directors may serve interest or (b) such other information as the Directors may from time a notice (an “Affected Share Notice”) in respect of any Affected to time determine. Share. An Affected Share Notice can, if it so specifies, have the effect of depriving the registered holder of the right to attend, vote The Directors may decline to register any person as a shareholder and speak at general meetings which they would otherwise have if satisfactory evidence of information is not forthcoming. had as a consequence of holding such shares. Such an Affected Existing holders of shares will be recorded on the Special Register Share Notice can, if it so specifies, also require the recipient to unless and until they have certified, to the satisfaction of the dispose of the Affected Shares (so that the Relevant Shares will Company, that they are EEA nationals. then cease to be Affected Shares) within 21 days or such longer period as the Directors may determine. The Directors are also given the power to sell such Affected Shares themselves where there is non-compliance with an Affected Share Notice at the best price reasonably obtainable at the relevant time on behalf of the shareholder. by Limited of a 5% stake in the Company. the in ofa5% stake Limited International by Fosun acquisition ofthe light in to45% 40% from Maximum Permitted the increased Board the year the During Register. Separate the on held were (31.71%) Shares Ordinary 2015, 486,987,357 September at30 As ofthe 22 Part toin asisreferred interest such any have they > below) asprovided (subject would that interest an has person such > if: shares plc Group Cook A p year (2014: nil). nil). (2014: year financial the during donations political any make not did Company The DONATIONS POLITICAL interest. unpaid and accrued plus amount principal 101% ofthe to equal cash in price atapurchase notes holder’s of the part any or all torepurchase notes) ofthese issuer (the plc Finance Cook Thomas torequire option the has holder each Company, tothe relating events ofcontrol change ofcertain occurrence the On 2021. due notes senior 6.75% million €400 and 2020 due notes 7.75% senior million €525 The Company’s subsidiary, Thomas Cook Finance plc, has outstanding interest. accrued plus value atpar holder ofsuch notes the topurchase Company) ofthe option (at the or toredeem Company the torequire option the has holder each met), are notes relevant of the respect in conditions rating certain if only then (and Company the to relating events ofcontrol change ofcertain occurrence the (upon 2017 due notes 7.75% guaranteed million £300 has also Company The support. credit immediate demand conditions certain (iii) under and/or Agreement; the under commitments ofits all cancel (ii) lender; tosuch owing ofamounts arepayment (i)receive to: is entitled lender such any reached, be cannot terms new on agreement where but, facilities the continuing for days)terms 30 exceeding not period afurther for byagreement extended unless days, 30 exceeding not aperiod (for tonegotiate obligated are Agreement the under lenders the Company, ofthe ofcontrol change any on that, provides £300 million bilateral bonding and guarantee The facilities. Agreement place of consists which £500 million and credit revolving facility in “Agreement”) (the agreement afacilities has Company The PROVISIONS OF CHANGE OF CONTROL

of Scotland, and interest shall be construed accordingly. accordingly. construed be shall interest and of Scotland, laws the under trustee asasimple or ofEngland, laws the under trustee custodian or asabare hold they which or relationship that of byvirtue isinterested oftheirs minor) or pupil (or, Scotland, in stepchild or child infant, any or spouse their which in shares any in interest an tohave deemed be not shall but 2006, Act Companies or interest; anotifiable has aperson whether 2006 Act Companies ofthe 22 ofPart purposes the for determining in ashaving, taken be would they which or account, into taken be erson shall be deemed to have an interest in relation to Thomas toThomas relation in interest an tohave deemed be shall erson Orbis Holdings Limited Management LLP Asset Marathon Inc. Rock Black (Fosun) Limited UK FPI Group Capital The Standard Life Investments Ltd Investments Life Standard Ltd Name Authority: UKListing ofthe Rules Transparency and Rules Disclosure 5ofthe rule with accordance in Company by the received shareholdings ofmajor notifications shows below table The MAJOR SHAREHOLDINGS 6091951 Re EC1ALondon 4HD Aldersgate 200 Building Floor, South 3rd office Registered 2015 November 24 SECRETARY COMPANY GROUP ALICE MARSDEN by: Board ofthe byorder signed are and approved been have 16to65 pages comprising Report Directors’ and Report Strategic The Meeting. General 2016 Annual tothe proposed be will remuneration their todetermine Directors the authorise to and Auditor Company’s asthe them to re-appoint resolutions Committee, Audit ofthe recommendation the Upon Company. of the asAuditor re-appointed tobe willingness their expressed have PwC INDEPENDENT AUDITORS Strategic Report. 61 ofthe and 60 pages on found be can evolvement employee and people ofdisabled employment ofthe respect in Disclosures EMPLOYEE INFORMATION page 64. on report Strategic ofthe section Sustainability the in included been have gasemissions ofgreenhouse respect in Information GREENHOUSE GAS EMISSIONS 9.8.4. Rule Listing under required disclosure only isthe This page 105. on given are securities ofequity ofallotments respect in Details RULE 9.8.4 LISTING UNDER INFORMATION OF DISCLOSURE 20 November 2015. 2015 to September 30 from period the in shareholdings above tothe changes ofany notification receive not did Company The gistered number THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS as at 30 September 2015 2015 September 30 at as Number of shares held 3,4,0 9.05 138,942,805 7,2,8 18.07 277,529,587 0,9,7 6.97 107,099,975 395203.01 43,905,280 255254.97 72,555,285 289265.02 72,899,276 979015.20 79,789,001 as at 30 September 2015 2015 September 30 at as issued capital (%) (%) capital issued Percentage of 107 FINANCIAL STATEMENTS GOVERNANCE

11_Group_Statements_p108_p121_v64.indd 109 statements financial financial DELIVERING IMPROVED FINANCIAL RESULTS THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 06/01/2016 13:08 109

FINANCIAL STATEMENTS 110 FINANCIAL STATEMENTS

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF THOMAS COOK GROUP PLC

REPORT ON THE GROUP FINANCIAL STATEMENTS OUR AUDIT APPROACH Our opinion Context In our opinion: Thomas Cook Group plc is a British global travel company listed on > Thomas Cook Group plc’s Group financial statements and Company the . The Group operates from approximately financial statements (the “financial statements”) give a true and fair 15 source locations across Europe. The context for our audit has view of the state of the Group’s and of the Company’s affairs as at been set against the continued execution of the Group’s strategy 30 September 2015 and of the Group’s profit and the Group’s and the to become more resilient and focused on profitable growth, through Company’s cash flows for the year then ended; the Wave 1 programme and the launch of the New Operating Model > the Group financial statements have been properly prepared in project, given the effect of external factors and events which impact accordance with International Financial Reporting Standards the travel industry as a whole. This was particularly relevant for the (“IFRSs”) as adopted by the European Union; and work performed on the carrying value of goodwill and deferred tax > the financial statements have been prepared in accordance with assets, the recoverability of hotel prepayments and presentation of the requirements of the Companies Act 2006 and, as regards separately disclosed items. the group financial statements, Article 4 of the IAS Regulation. The areas of audit focus where work performed by component teams What we have audited was most relevant were the recoverability of hotel prepayments The financial statements, included within the Annual Report and and the accounting for aircraft leases and associated maintenance Accounts (the “Annual Report”), comprise: provisions. The judgements in respect of the recoverability of goodwill > the Group and Company balance sheet as at 30 September 2015; and deferred tax assets, treasury derivatives, the Group’s defined > the Group income statement and statement of other comprehensive benefit pension schemes and the presentation of items as separately income for the year then ended; disclosed are primarily taken at a Group level. > the Group and Company cash flow statements for the year Overview then ended; > the Group and Company statement of changes in equity for the year > Overall Group materiality: £15.5m which is then ended; and based on 5% of the underlying profit from operations, being profit from operations > the notes to the financial statements, which include a summary of Materiality significant accounting policies and other explanatory information. adjusted for the impact of ‘separately disclosed’ items. Certain required disclosures have been presented elsewhere in the > Full scope audits performed on 35 of 120 Annual Report, rather than in the notes to the financial statements. units from across the four geographic These are cross-referenced from the financial statements and are Audit scope operating divisions. identified as audited. > The reporting units where we performed The financial reporting framework that has been applied in the audit work accounted for 70% of the preparation of the financial statements is applicable law and IFRSs as Areas of Group’s underlying profit from operations adopted by the European Union and, as regards the Company financial focus and 81% of the Group’s revenue. statements, as applied in accordance with the provisions of the > The Group team visited all three of Companies Act 2006. the ‘Sub-Consolidation component’ teams (being UK, Northern Europe and Continental Europe) and the Airlines Germany component team to attend the clearance meetings and to discuss the audit findings. > Carrying value of goodwill and deferred tax assets. > Aircraft leases and associated maintenance provisions. > Separately disclosed items. > Recoverability of hotel prepayments. > Treasury operations and use of derivative instruments. > Defined benefit pension valuation. addressed the risk of management override of internal controls, controls, ofinternal override ofmanagement risk the addressed wealso audits ofour all in As uncertain. inherently are that events future considering and assumptions making involved that estimates accounting ofsignificant respect in example for judgements, subjective made Directors the atwhere welooked In particular, statements. financial the in misstatement ofmaterial risks the assessing and materiality bydetermining audit our We designed (UK &Ireland)”). (“ISAs Ireland) (UK and Auditing on Standards International with accordance in audit our We conducted offocus areas our and audit ofour scope The the recognition of the deferred tax assets may not be appropriate. be not may assets tax deferred the of the recognition and goodwill the of valuation the achievable, not are results forecast If Operating Model. New the of part form that initiatives restructuring and development business and transformation UK ongoing the of implementation successful the including business the of prospects and results future the of views Directors’ the upon dependent highly is assets these of value The £141m. of asset tax deferred anet holds which UK the on focused we tax deferred for Similarly, balance. goodwill total the of 67% for accounts which (“CGU”) Unit Generating Cash UK the of use in value the on focused we goodwill of respect in particular, In business. the of results future the about Directors the by judgements subjective and complex on dependent is assets these of value carrying the Determining respectively. £197m and £2,388m of sheet balance the on assets tax deferred and goodwill significant holds Group The (notes). 157 and 141 pages and policies) (Accounting 124 page to Refer ASSETS TAX AND DEFERRED GOODWILL OF VALUE CARRYING Area of focus extension of lease terms. terms. lease of extension the including amended, been have terms contractual where aircraft of in respect arises complexity in nature. orare Further financing operating leases whether todetermine needed judgement is there Furthermore, and maintenance costs. usage aircraft forecast upon based are which provisions maintenance the of calculation the in included estimation of level inherent the and balances these of size to the due audit our for focus of area an was This sheet. the balance on held are obligations lease of end contractual and for maintenance £241m of provisions and £605m of aircraft for assets fixed Significant (notes). 158 page and policies) (accounting 131 and 125 pages to Refer LEASES ANDAIRCRAFT ASSOCIATED MAINTENANCE PROVISIONS to recognise a deferred tax asset for the UK. the for asset tax adeferred to recognise appropriate was it that and required were charges impairment goodwill no that conclusion Directors’ the with concurred we work, our of aresult As assets. tax of deferred de-recognition the or goodwill of impairment the require aggregate, in or individually either would, changes adverse reasonable towhich extent the toascertain calculations Directors’ to the analysis sensitivity We applied initiatives. improvement profit and development business the with associated plans against progress and industry travel wider the for rates growth forecast independent as such factors considered Wealso companies. comparable by used rates against calculation rate discount the in used data external certain benchmarked we assumptions Directors’ the of appropriateness the assessing In rates. growth resulting the drive which initiatives improvement profit and development business the of implementation successful continuing the are forecasts UK the within assumptions key The process. forecasting the of accuracy and quality the todetermine us enabled procedures These budgets. approved board the against year current the in business the of performance actual the comparing by, example, for forecasts and budgets of accuracy historical the of review acritical Weperformed plans. three-year approved Board latest the reflected they that confirmed and forecasts flow cash their prepared Directors the which by process the We evaluated aircraft provision. aircraft provision. associated the within misstatements material any or classified incorrectly been had that aircraft any identify not did procedures Our any significant provision releases. and understanding department by engineering maintained the books log aircraft tothe hours flying confirming contracts, expenditure to maintenance of timing and quantum the as such assumptions key verifying obligations, new of assessment an by performing management by prepared calculations provision lease of end contractual We of and maintenance other the appropriateness examined the leases. finance or operating as for accounted appropriately were they that tocheck contracts lease aircraft extended or new within included terms the We examined How our audit addressed the area of focus of area the addressed audit our How our audit. by identified risks ofall list acomplete isnot This context. this in read be should procedures ofour results the on wemake comments any and asawhole, statements financial the on opinion an provide to order in areas specific these toaddress audit our wetailored how out set We also have below. table the in as“areas offocus” identified are effort, and resources ofour allocation the including audit, our on effect greatest the had that misstatement ofmaterial risks The to fraud. due misstatement ofmaterial arisk represented that Directors bythe ofbias evidence was there whether evaluating including THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 111 FINANCIAL STATEMENTS 112 FINANCIAL STATEMENTS

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF THOMAS COOK GROUP PLC CONTINUED

Area of focus How our audit addressed the area of focus SEPARATELY DISCLOSED ITEMS Refer to page 129 (accounting policies) and page 137 (notes). We challenged the Directors’ rationale for the presentation of separately The value of separately disclosed items which are presented within a disclosed items, assessing this against the Group’s accounting policy, separate column on the face of the income statement has reduced this plans for the New Operating Model and consistency of treatment with prior year but remains high. These items are excluded from the Directors’ periods. reporting of the underlying results of the business. We also considered items that were recorded within underlying profit that The nature and use of separately disclosed items is explained in the we considered to be ‘exceptional’ in nature and challenged management Group’s accounting policy and includes costs associated with the Group as to whether they should be presented within separately disclosed items. Transformation Programme (Wave 1) and the newly initiated New Operating We assessed the appropriateness, consistency and balance of the Model programme (including redundancy, consultancy, personnel and Directors’ presentation of these items within the financial statements. other related costs). Other items within separately disclosed items include significant legal and onerous lease provisions, the write off fees associated with the Group’s refinancing and the impact of certain asset disposals. We focused on this area because separately disclosed items are not defined by IFRSs as adopted by the European Union and therefore judgement is required by the Directors to identify such items. Consistency in identifying and disclosing items as separately disclosed is important to maintain comparability of the reporting year on year.

RECOVERABILITY OF HOTEL PREPAYMENTS Refer to page 131 (key sources of estimation uncertainty) for further information. We assessed the Directors’ ability to utilise the hotel deposits and Significant prepayments to hoteliers are held on the year end balance prepayments based on actual and forecast bookings at the hotels. sheet. We examined contracts to ensure that contractual agreements were in place to roll forward prepayments to future seasons. The recoverability of these balances requires the Directors’ judgement including consideration of current booking levels, historical trend data, We evaluated the Directors’ contingency plans regarding certain aged future forecast bookings, the credit-worthiness of the hoteliers and the prepayments, with particular focus on those deemed to be at higher risk impact of external factors. due to geographic location or the credit risk associated with the hotel owner together with any security held by the Group. We challenged the recoverability of certain deposits and whether appropriate provisions had been recorded. Our work did not identify any hotel prepayments that we did not consider to be recoverable.

TREASURY OPERATIONS AND USE OF DERIVATIVE INSTRUMENTS Refer to pages 125 and 126 (accounting policies) and 151 notes for related disclosures. We used our specialist treasury knowledge to test the valuation for fuel The Group uses a number of hedging structures including options to and foreign currency derivatives by recalculating their fair value using manage its exposure to adverse movements in fuel prices and foreign observable market data. exchange rates. We evaluated the values held in the hedging reserve and tested the manual The accounting for options and related derivatives is complex and we adjustments made to correct for timing differences between the maturity therefore focused on this area to assess whether hedge accounting of the hedging instrument and the underlying exposure. had been properly applied and the impact of hedging had been properly We examined the hedge documentation and the hedging structures in presented. place to check whether they had been accounted for in accordance with the Group’s accounting policies and presented appropriately in the Annual Report and Accounts. Our work performed did not identify any material misstatements. Company financial statements asawhole. statements financial Company and Group the on opinion our for weneeded evidence gaveusthe level, atGroup performed procedures additional the with together meetings, clearance attheir attendance and team Germany Airlines the and teams Group engagement team to ‘Sub-consolidation’ component three the bythe visits included which units, reporting atthese work audit Our derivatives held by these companies). and cash bonds, material ofthe (because companies financing Group two and size) ofits (because operation Russia the assets), intangible generated ofinternally (because company development IT Groups the including units 19 reporting afurther in balances certain on performed were items line statement offinancial audits and procedures Specified Group’s revenue. and 81% ofthe operations from profit Group’s underlying ofthe 70% for accounted units reporting These team. engagement Group the and teams component country byeleven audited were units reporting 35 These size. individual totheir due information financial complete oftheir audit oper geographic four the across from units, reporting 35 we identified and size in vary units reporting The functions. centralised the and divisions based geographic- these within businesses Group’s operating the representing units reporting of120 aconsolidation ultimately are statements financial Group The level. ataGroup ultimately then and level division operating atageographic sub-consolidate which entities management numerous exception of Germany, Airlines each operating division comprises the With UK. the and Europe Northern Europe, Continental Germany, Airlines divisions: operating geographic four into isorganised Group The operates. Group accounting processes and controls, and the in industry which the the Group, ofthe structure geographic the account into taking whole, asa statements financial the on opinion an togive able tobe work enough weperformed that toensure audit ofour scope the We tailored scope audit the How wetailored of pension assets due to the nature of financial investments. financial of nature tothe due assets of pension value fair of measurement the in judgement of element an also is There unfunded. are which schemes calculation of the liability, for Germany the Airlines pension particularly the on impact amaterial have can mortality) and rates discount inflation, increases, salary (including key assumptions the of anumber in Changes in choosing appropriatejudgement and technicalexpertise assumptions. of levels significant requires liabilities pension the of valuation The Group. the of sheet balance overall the of context the in significant is which £279m of liabilities post-retirement net with plans pension benefit defined has Group The defined Group the of benefit schemes. details for (notes) 163 page and policies) (accounting 131 and 127 pages to Refer VALUATION PENSION BENEFIT DEFINED Area of focus ating divisions, which required an an ating required which divisions, within our independent expected ranges. expected independent our within materially were Directors’ the by used assumptions The plan. tothe leavers as such data pension over processes and controls management’s tested and evaluated Wealso actuary. scheme the by used valuation liability tothe scheme, the in employees as such inputs, underlying We tested Directors’ calculation. the into incorporated been have should that redundancies and to schemes changes as such events, specific of impact no was there that We checked valuation and ownership the on confirmations third-party We obtained > > We assessed salary increase and mortality rate assumptions against against assumptions rate mortality and increase salary We assessed > > We agreed the discount and inflation rates used in the valuation of the the of valuation the in used rates inflation and discount the We agreed > as follows: assets pension the and liabilities plan pension of valuations the on focused We also plans pension Group’s the in assets and liabilities the of valuation tothe relation in made assumptions the of assessment Directors’ the toevaluate specialists pension our We used reporting for qualitative reasons. qualitative for reporting view, warranted our in that, amount that below asmisstatements well £1m) as £1m (2014: above audit our during identified misstatements tothem report wewould that Committee Audit the with We agreed asfollows: asawhole statements for the financial materiality wedetermined judgement, professional our on Based asawhole. statements the financial on and individually both ofmisstatements, effect the in evaluating and disclosures and items line statement financial individual the on procedures audit ofour extent and timing nature, the and audit our of scope the ustodetermine helped considerations, qualitative with together These, materiality. for thresholds quantitative certain We set ofmateriality. application byour influenced was audit ofour scope The Materiality How our audit addressed the area of focus of area the addressed audit our How

materiality Component applied benchmark Rationale for it determined How we materiality Overall Group of pension assets of pension national and industry averages. national and industry pension liability to our internally developed benchmarks developed internally toour liability pension THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS components was between £1m and £11m. £11m. £1mand between was components materiality. The range of materiality allocated across Group overall our than less was that a materiality allocated we scope, audit our in component each For measured. commonly most is Group the of performance the which against key metric the is and materiality determining for basis year-on-year aconsistent with us provides operations from profit underlying the that We believe disclosed items. separately of impact the for adjusted operations from profit being operations, from profit 5% underlying of £15m). (2014: £15.5m 113 FINANCIAL STATEMENTS 114 FINANCIAL STATEMENTS

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF THOMAS COOK GROUP PLC CONTINUED

Going concern The directors’ assessment of the prospects of the group Under the Listing Rules we are required to review the Directors’ and of the principal risks that would threaten the solvency statement, set out on page 85, in relation to going concern. We have or liquidity of the group nothing to report having performed our review. Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to: Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to the > the Directors’ confirmation on page 57 of the Annual We have Directors’ statement about whether they considered it appropriate to Report, in accordance with provision C.2.1 of the Code, nothing adopt the going concern basis in preparing the financial statements. that they have carried out a robust assessment of the material to principal risks facing the Group, including those that add or to draw We have nothing material to add or to draw attention to. would threaten its business model, future performance, attention to. As noted in the Directors’ statement, the Directors have concluded solvency or liquidity. that it is appropriate to adopt the going concern basis in preparing > the disclosures in the Annual Report that describe We have the financial statements. The going concern basis presumes that the those risks and explain how they are being managed nothing Group and Company has adequate resources to remain in operation, or mitigated. material to add or to draw and that the Directors intend them to do so, for at least one year from attention to. the date the financial statements were signed. As part of our audit we have concluded that the Directors’ use of the going concern basis > the Directors’ explanation on page 57 of the Annual We have is appropriate. However, because not all future events or conditions Report, in accordance with provision C.2.2 of the Code, nothing as to how they have assessed the prospects of the material to can be predicted, these statements are not a guarantee as to Group, over what period they have done so and why add or to draw the Group’s and Company’s ability to continue as a going concern. they consider that period to be appropriate, and their attention to. statement as to whether they have a reasonable OTHER REQUIRED REPORTING expectation that the Group will be able to continue in operation and meet its liabilities as they fall due Consistency of other information over the period of their assessment, including any Companies Act 2006 opinion related disclosures drawing attention to any necessary In our opinion the information given in the Strategic Report and qualifications or assumptions. the Directors’ Report for the financial year for which the financial Under the Listing Rules we are required to review the Directors’ statement statements are prepared is consistent with the financial statements. that they have carried out a robust assessment of the principal risks facing the Group and the Directors’ statement in relation to the longer-term ISAs (UK & Ireland) reporting viability of the Group. Our review was substantially less in scope than an Under ISAs (UK & Ireland) we are required to report to you if, audit and only consisted of making inquiries and considering the Directors’ in our opinion: process supporting their statements; checking that the statements are in alignment with the relevant provisions of the Code; and considering > information in the Annual Report is: We have no whether the statements are consistent with the knowledge acquired by – materially inconsistent with the information in the exceptions us in the course of performing our audit. We have nothing to report having audited financial statements; or to report. performed our review. – apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group and Adequacy of accounting records and information and Company acquired in the course of performing our audit; or explanations received – is otherwise misleading. Under the Companies Act 2006 we are required to report to you if, > the statement given by the Directors on page 87, in We have no in our opinion: accordance with provision C.1.1 of the UK Corporate exceptions > we have not received all the information and explanations we Governance Code (“the Code”), that they consider the to report. require for our audit; or Annual Report taken as a whole to be fair, balanced and > adequate accounting records have not been kept by the company, understandable and provides the information necessary for members to assess the Group’s and Company’s or returns adequate for our audit have not been received from performance, business model and strategy is materially branches not visited by us; or inconsistent with our knowledge of the Group and > the company financial statements and the part of the Directors’ Company acquired in the course of performing our audit. Remuneration Report to be audited are not in agreement with the > the section of the Annual Report on pages 79–81, as We have no accounting records and returns. required by provision C.3.8 of the Code, describing the work exceptions We have no exceptions to report arising from this responsibility. of the Audit Committee does not appropriately address to report. matters communicated by us to the Audit Committee. STATEMENTS AND THE AUDIT THE AND STATEMENTS FINANCIAL THE FOR RESPONSIBILITIES review. our performed having toreport We nothing have Code. of the provisions further toten relating Statement Governance Corporate ofthe part the toreview required weare Rules Listing the Under Corporate Governance Statement this responsibility. from arising toreport exceptions We no have made. not by laware disclosures of directors’our opinion, certain remuneration specified if, in toyou toreport required weare 2006 Act Companies the Under reporting 2006 Act Companies Other 2006. Act Companies the with accordance in prepared properly been has audited be to Report Remuneration Directors’ ofthe part the opinion, In our Directors’ – 2006 Act opinion Companies remuneration report Directors’ remuneration by our prior consent in writing. in consent by our prior agreed expressly where save come may it hands whose into or isshown report this towhom person other toany or purpose other any for responsibility assume or accept opinions, these giving in not, We do purpose. other no for and 2006 Act Companies 16ofthe Part 3of Chapter with accordance in asabody members company’s the for only and for prepared been has opinions, the including report, This Auditors. for Standards Ethical Board’s Practices Auditing the with ustocomply require standards Those (UK &Ireland). ISAs lawand applicable with accordance in statements financial the on opinion an express and istoaudit responsibility Our and fair view.true a give they that satisfied being for and statements financial of the preparation the for responsible are Directors the 86, page on out set Responsibilities ofDirectors’ Statement the in fully more explained As Directors ofthe those and responsibilities Our or inconsistencies we consider for implications the our report. misstatements material apparent ofany aware webecome If audit. the ofperforming course the byusin acquired knowledge the with, inconsistent materially or on, based incorrect materially apparently is that information any toidentify and statements financial audited the with inconsistencies material toidentify Report Annual the in information non-financial and financial the all weread In addition, ofboth. acombination or procedures substantive ofcontrols, effectiveness the testing through evidence audit Weobtain conclusions. todraw us for basis reasonable a toprovide necessary weconsider extent tothe techniques, auditing other and sampling using information, examine and We test financial statements. the in disclosures the evaluating and judgements, own our forming evidence, available against judgements Directors’ the byassessing areas these in work our focus We primarily statements. financial ofthe presentation overall the > > the reasonableness of significant accounting estimates made made estimates accounting ofsignificant reasonableness the > whether the accounting policie > of: assessment an includes This error. or byfraud caused whether misstatement, material from free are statements financial the that assurance reasonable togive sufficient statements financial the in disclosures and amounts the about evidence obtaining involves audit An involves statements offinancial anaudit What 24 November 2015 November 24 London Auditors Statutory and Accountants Chartered LLP ofPricewaterhouseCoopers behalf on and for SENIOR STATUTORY AUDITOR CRAGG PAUL

by the Directors; and and Directors; by the and adequately disclosed; applied consistently been have and circumstances and Company’s THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS

s are appropriate to Group’s the 115 FINANCIAL STATEMENTS 116 FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2015 GROUP INCOME STATEMENT

Re-presented* Year ended 30 September 2015 Year ended 30 September 2014 Separately Separately Underlying disclosed items Underlying disclosed items results (Note 7) Total results (Note 7) Total Notes £m £m £m £m £m £m

Revenue 4 7,834 – 7,834 8,588 – 8,588 Cost of providing tourism services (6,060) (2) (6,062) (6,672) (50) (6,722) Gross profit 1,774 (2) 1,772 1,916 (50) 1,866 Personnel expenses 5 (859) (27) (886) (913) (26) (939) Depreciation and amortisation 12/13 (174) (1) (175) (173) – (173) Net operating expenses 6 (431) (47) (478) (507) (126) (633) Loss on disposal of assets – (13) (13) – (19) (19) Impairment of goodwill and amortisation of business combination intangibles 7 – (9) (9) – (50) (50) Profit from operations 310 (99) 211 323 (271) 52 Share of results of associates 14 1 – 1 2–2 Profit on sale of associated undertaking 14 –7 7 ––– Finance income 8 10 – 10 10 – 10 Finance costs 8 (151) (28) (179) (153) (25) (178) Profit/(loss) before tax 170 (120) 50 182 (296) (114) Tax 9 (31) (1) Profit/(loss) for the year from operations 19 (115)

Attributable to: Owners of the parent 23 (118) Non-controlling interests (4) 3 19 (115)

Basic and diluted earnings/(loss) per share (pence) 11 1.6 (8.2) * £2m of forward points on foreign exchange cash flow hedging contracts has been re-presented from finance costs to cost of providing tourism services within separately disclosed items. Total comprehensive expense for the year the for expense Total comprehensive interests Non-controlling parent the of Owners to: Attributable oa e te opeesv xes o h er (20) 24/9 year the for expense Total comprehensive year the for expense comprehensive other Total net statement income tothe transferred Tax losses on osstaserdt h noesaeet21 statement income tothe transferred Losses cura an/lse)o eie eei eso cee 30 schemes pension benefit defined on gains/(losses) Actuarial loss: or toprofit reclassified be not will that Items expense and income comprehensive Other year the for Profit/(loss) COMPREHENSIVE INCOME STATEMENTGROUP OFOTHER FOR THE YEAR ENDED 30SEPTEMBER 2015 Tax on losses deferred for the year the for deferred Tax losses on Foreign exchange translation losses translation exchange Foreign loss: or toprofit subsequently reclassified be may that Items gains/(losses) Tax actuarial on Losses deferred for the year the for deferred Losses Fair gains value and losses THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Notes 24/9 30 September September 30 Year ended Year ended (223) 143 143 2015 (34) (24) 88 48 (18) £m 19 19 (4) 3 (1) (1) 30 September September 30 Year ended Year ended (258) (255) (255) (103) (140) 2014 (115) £m (10) 45 (91) 19 19 – – 3 117 FINANCIAL STATEMENTS 118 FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2015 GROUP CASH FLOW STATEMENT

Re-presented Year ended Year ended 30 September 30 September 2015 2014 Notes £m £m

Profit/(loss) before tax 50 (114) Adjustments for: Net finance costs 169 168 Net investment income and share of results of associates (1) (2) Depreciation, amortisation and impairment 184 233 Loss on disposal of assets 13 19 Share-based payments 1 4 Profit on sale of associated undertakings (7) – Decrease in provisions (55) (51) Additional pension contributions (28) (26) Interest received 10 9 Movement in working capital: Inventories – (8) Receivables 139 86 Payables 17 49 Cash generated from operations 492 367 Income taxes paid (18) (32) Net cash from operating activities 474 335

Dividends received from associates – 2 Proceeds on disposal of subsidiaries (net of cash disposed) – 78 Proceeds on disposal of property, plant and equipment 3 2 Purchase of subsidiaries (net of cash acquired) – (4) Purchase of tangible assets (130) (118) Purchase of intangible assets (70) (38) Proceeds from sale of associated undertakings 17 – Net cash used in investing activities (180) (78)

Dividends paid to non-controlling interests (6) (4) Interest paid (134) (139) Draw down of borrowings 561 125 Repayment of borrowings (450) (208) Payment of facility set-up fees (18) – Shares purchased by Employee Benefit Trust – (9) Net proceeds on the issue of ordinary shares 26 92 1 Repayment of finance lease obligations (35) (44) Net cash from/(used in) financing activities 10 (278)

Net increase/(decrease) in cash and cash equivalents 304 (21) Cash and cash equivalents at beginning of year 1,017 1,090 Effect of foreign exchange rate changes (35) (52) Cash, cash equivalents and overdrafts at end of year 1,286 1,017 Derivative financial instruments financial Derivative Short-term provisions Borrowings payables other Trade and Retirement obligations benefit liabilities Current assets Total Revenue received in advance Tax liabilities Obligations under leases finance Cash and cash equivalents instruments financial Derivative Trade and other receivables other Trade and assets Tax Inventories Current assets instruments financial Derivative Trade and other receivables other Trade and Pension asset Tax assets Tax Deferred tax assets Other investments associates in Investments spares aircraft and –aircraft – other equipment and plant Property, assets Intangible assets Non-current SHEET BALANCE GROUP AT 30SEPTEMBER 2015 THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Notes 20 30 30 25 24 16 16 19 18 21 15 21 21 12 13 13 14 17 30 September 5,958 5,958 (3,702) 2,035 3,923 2,794 2,794 (1,979) 1,301 (1,117) 585 605 202 (219) (176) (147) 2015 197 197 (22) (35) 50 55 114 114 32 32 £m 15 15 – (7) 3 4 1 30 September (2,083) (3,894) 3,965 2,873 2,873 5,794 5,794 1,829 1,829 (999) 1,019 1,019 (449) (247) 2014 705 578 578 106 106 195 195 (66) (34) 177 177 68 £m (15) 34 19 19 14 (1) 2 3 – 1 119 FINANCIAL STATEMENTS 120 FINANCIAL STATEMENTS

GROUP BALANCE SHEET CONTINUED

30 September 30 September 2015 2014 Notes £m £m

Non-current liabilities Retirement benefit obligations 30 (322) (447) Trade and other payables 18 (79) (90) Long-term borrowings 19 (1,038) (715) Obligations under finance leases 20 (148) (147) Non-current tax liabilities (22) (21) Deferred tax liabilities 24 (46) (49) Long-term provisions 25 (210) (143) Derivative financial instruments 21 (23) (3) (1,888) (1,615) Total liabilities (5,590) (5,509) Net assets 368 285 Equity Called-up share capital 26 69 69 Share premium account 524 435 Merger reserve 1,547 1,547 Hedging and translation reserves (12) 133 Capital redemption reserve 8 8 Accumulated losses (1,778) (1,907) Investment in own shares (18) (38) Equity attributable to equity owners of the parent 340 247 Non-controlling interests 28 38 Total equity 368 285 The financial statements on pages 116 to 168 were approved by the Board of Directors on 24 November 2015. Signed on behalf of the Board

MICHAEL HEALY GROUP CHIEF FINANCIAL OFFICER t3 etme 0553157 12 0(,7)302 368 28 340 (1,778) 90 (102) 1,537 593 2015 September At 30 Dividends paid to non-controlling interest tonon-controlling paid Dividends At 30 September 2014 September At 30 Issue of shares –Fosun shares of Issue iied adt o-otoln neet ()(4) (4) – – – – – – interest tonon-controlling paid Dividends Equity credit in respect of share-based payments su fsae xrieo arns1 – – – – 1 (9) – – 1 (9) – – – – – – – (9) 1 – ofIssue shares – exercise of warrants Trust in Benefit Employee Investment Exercise of shares – Employee Benefit Trust Trust Benefit –Employee shares of Exercise er––(1)(4 4 4 (1) (4) 3 148 (34) (111) – – year the for income/(expense) Total comprehensive (net of tax) – – 35 – – 35 – 35 35 – 35 – – 35 – – year the for expense Total comprehensive (net of tax) statement income tothe transferred Gains qiycei nrseto hr-ae amns 4 4 – 4 4 – – – – Equity credit in respect of share-based payments Losses deferred for the year (net of tax) – – – – – – – – – – – – – – tax) of (net year the for deferred Losses (net of tax) statement income tothe transferred Gains tax) of (net year the for deferred Losses cee nto a) (2 7) (72) – (72) (103) (72) – – (103) – – – (103) – – – – (net of tax) schemes pension benefit defined on losses Actuarial Foreign exchange losses translation Other comprehensive expense: schemes (net of tax) of (net schemes pension benefit defined on gains Actuarial losses translation exchange Foreign Other comprehensive expense: Loss for the year the for Loss CHANGES INEQUITY STATEMENTGROUP OF FOR THE YEAR ENDED 30SEPTEMBER 2015 At 30 September 2013 September At 30 Profit for the year ––––2323(4)19 the difference between the fair value and the nominal value of the share capital issued by Thomas Cook Group plc. plc. Group Cook byThomas issued capital share of the value nominal the and value fair the between difference the reserve merger the ofMyTravel plc, case Group the in and exchange, in issued plc Group Cook ofThomas capital share the AG and ofTho premium share and capital share existing the between difference the represents reserve merger the plc, Group Cook Thomas c AG.Inthe Cook MyTravel byThomas and plc plc Group Group Cook ofThomas acquisition reverse the on arose reserve merger The 2009. September 30 ended year the during programme buyback share ofthe as aconsequence created reserv redemption capital The held. shares own and reserve redemption capital the reserve, merger ofthe consist reserves Other Share capital capital Share and share premium 504 1,517 9 124 (1,907) 247 38 285 285 38 247 124 9 (1,907) 1,517 504 503 1,526 (26) 227 (1,721) 509 39 548 548 39 509 (1,721) 227 (26) 503 1,526 89––––89–89 £m – – 5 13 10 28 (255) 3 (258) (190) (103) 35 – – – – – – 18 18 (115) 3 (118) (118) – – – – –––––– (6) (6) ––1 1 ––––11– 2 (20)–20 – – – (7)––(7)–(175) – (175) – – (175) – ––64––64–64– 3)–(4 (34) – (34) – (34) – – ––––125125–125– reserves reserves Other Other £m Hedging Hedging reserve reserve THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS £m Translation reserve reserve £m Accumulated Accumulated losses £m Attributable to equity owners of the parent parent the of £m

controlling interests interests Non- £m represents represents e was e was ase of of ase mas Cook mas Cook Total equity equity Total £m 121 FINANCIAL STATEMENTS 122 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

1 GENERAL INFORMATION Thomas Cook Group plc is a limited liability company incorporated and domiciled in and under the Companies Act 2006 and listed on the London Stock Exchange. The address of the registered office is 3rd Floor, South Building, 200 Aldersgate, London EC1A 4HD. The principal activities of the Group are discussed in the Strategic Report on pages 15 to 33. These consolidated financial statements were approved for issue by the Board of Directors on 24 November 2015.

2 BASIS OF PREPARATION These financial statements have been prepared in accordance with EU endorsed International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) and Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have also been prepared in accordance with IFRS adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation. After making enquiries and taking into account the matters set out in the Risk Management section on pages 56 to 59, the Directors confirm that they consider it appropriate to use the going concern basis in preparing the Annual Report & Accounts. The financial statements have been prepared on a historical cost basis, except for revaluation of certain financial assets and liabilities (including derivative financial instruments) at fair value through the profit or loss, share-based payments and defined benefit pension obligations. The financial statements have been rounded to the nearest million in Great British Pounds, or in certain cases, to the nearest thousand pounds. Amounts in pence have been rounded to the nearest tenth of a pence. The principal accounting policies applied in the preparation of the financial information presented in this document are set out below. These policies have been applied consistently to the periods presented unless otherwise stated.

3 SIGNIFICANT ACCOUNTING POLICIES 3A CHANGES IN ACCOUNTING POLICY AND DISCLOSURE Adoption of new or amended standards and interpretations in the current year In the current year, the following new or amended standards have been adopted. IFRS 10 “Consolidated financial statements” standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within consolidated financial statements. The amendment did not have an effect on the Group financial statements. IFRS 11 “Joint arrangements” provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form. The amendment did not have an effect on the Group financial statements. IFRS 12 “Disclosure of interests in other entities” standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The amendment did not have an effect on the Group financial statements. IAS 27 (Revised) “Separate financial statements” is effective for annual periods beginning on or after 1 January 2014. This standard includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10. The amendment did not have an effect on the Group financial statements. IAS 28 (Revised) “Investments in associates and joint ventures” standard includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of IFRS 11. The amendment did not have an effect on the Group financial statements. IAS 32 “Offsetting financial assets and liabilities” provides clarification on the application of offsetting rules relating to financial assets and financial liabilities. The amendment did not have a significant effect on the Group financial statements. IAS 36 “Impairment of assets” removes certain disclosures of the recoverable amounts of CGUs. The application of these amendments has no material impact on the disclosures in the Group financial statements. revenue recognition and related disclosures. disclosures. related and recognition revenue i IFRS15 an have may and instruments offinancial disclosures and measurement the impact IFRS9will that expect Directors The impact amaterial tohave expected be would that effective yet not are that interpretations IFRIC or IFRSs further no are There 1 IAS IFRS 15 IFRS 9 EU or endorsed: effective yet not are but issued that IFRSs revised and new following the applied not has Group the statements, financial ofthese dateofauthorisation At the orEU endorsed yet effective not but inissue interpretations and standard New oramended 21 IFRIC IAS 39 3A CHANGES IN ACCOUNTING POLICY AND DISCLOSURE CONTINUED 3 SIGNIFICANT ACCOUNTING POLICIES CONTINUED The excess of the cost of acquisition over the fair value of the Group’s share of identifiable net assets acquired is recorded isrecorded acquired assets net ofidentifiable Group’s share ofthe value fair the over ofacquisition cost the excess of The atdateofacqu company acquired ofthe value fair atthe or interest non-controlling tothe attributable assets net recognised proportion the ateither ismeasured interest non-controlling the 100%, than isless company acquired ofan ownership the When dateofacquisition. ofthe 12months within finalised are values These date. acquisition atthe values initiall measured are combination abusiness in assumed liabilities contingent and liabilities and acquired assets Identifiable expensed are costs transaction attributable Directly dateofexchange. atthe assumed or incurred liabilities and into, entered a consideration contingent issued, instruments equity given, assets ofthe value atfair ismeasured acquisition ofan cost The Group. bythe ofsubsidiaries acquisition the for toaccount isused ofaccounting method acquisition The Business combination leases. operating on Group bythe operated aircraft five) (2014: five own that SPEs six) (2014: six consolidated has the Group a As entities. those in interest equity indirect or direct no has Group the though even toconsolidation, subject therefore and controlled asbeing interpreted be should Group, the with arrangements leasing aircraft in involved are (SPEs), which entities Interpretation guidance SIC included within Interpretation 12 “Consolidation – entities”, special purpose indicates that certai eliminated. are companies Group between transactions on gains unrealised and balances transactions, Inter-company contr datethat the from deconsolidated are They Group. tothe istransferred control which dateon the from consolidated fully Sub entity. the over power its through returns those toaffect ability the has and entity the with involvement its from returns rights has to,or isexposed Group the when entity an controls Group The control. has Group the which over entities) structured entitie all are Subsidiaries undertakings. subsidiary its and Company ofthe those consolidate statements Group’s financial The ofconsolidation Basis 3B SIGNIFICANT ACCOUNTING POLICIES is not expected to have a significant impact and will only have an impact on the disclosures of the financial statements. statements. financial ofthe disclosures the on impact an have only will and impact asignificant tohave expected is not sta 2016. This 1January after or on beginning periods reporting annual for iseffective statements” offinancial “Presentation ofIFRS15. impact the isasse Group The 2018. 1January after or on beginning periods annual for iseffective customers” with contracts from “Revenue of IFRS 9. impact the assessing is Group The assets. offinancial measurement and recognition for requirements the details only currently 39but IAS replace even will standard The 2018. 1January after or on commencing periods reporting annual for iseffective Instruments” “Financial statements. financial Group the on impact material any had not has amendments ofthese application The material. Group is not th on impact the so levies tosignificant subject currently isnot Group The alevy. topay rise gives isthat event obligating the what addresses interpretation The tax. income isnot that levy topay obligation an for accounting the out “Levies”, sets statements. financial Group the on impact material any had not has amendments ofthese application The accounting. ofhedge continuation the and ofderivatives novation the on measurement” and Recognition instruments: “Financial THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS n special purpose purpose n special as goodwill. y at their fair fair y attheir consequence, by the Group, Group, by the as incurred. asincurred. sidiaries are sidiaries isition. isition. on the Group. Group. the on rrangements s (including ol ceases. have been to, variable to,variable mpact on mpact of the of the e ndard tually tually ssing 123 FINANCIAL STATEMENTS 124 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

3 SIGNIFICANT ACCOUNTING POLICIES CONTINUED 3B SIGNIFICANT ACCOUNTING POLICIES CONTINUED Associates Entities, other than subsidiaries, over which the Group exerts significant influence, but not control or joint control, are associates. Entities which the Group jointly controls with one or more other party under a contractual arrangement are joint ventures. The Group’s investments in its associates and joint ventures are accounted for using the equity method. Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Foreign currency The presentation currency of the Group is Sterling. Average exchange rates are used to translate the results of all subsidiaries, associates and joint ventures that have a functional currency other than sterling. The balance sheets of such entities are translated at period end exchange rates. The resulting exchange differences are recorded through a separate component of equity. Transactions in currencies other than the functional currency of an entity are translated at the exchange rate at the date of the transaction. Foreign currency monetary assets and liabilities held at the year end are translated at period end exchange rates. The resulting exchange gain or loss is recorded in the income statement. When a foreign entity is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale. Intangible assets – goodwill Goodwill is recognised as an asset and is reviewed for impairment at least annually. Any impairment is recognised immediately in the Group’s income statement and is not subsequently reversed. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. On disposal of a subsidiary, joint venture or associate, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Intangible assets – other Intangible assets, other than goodwill, are carried on the Group’s balance sheet at cost less accumulated amortisation. Other than capitalised development costs, internally generated intangible assets are not capitalised and expenditure is reflected in the income statement in the year in which the expenditure is incurred. Amortisation is charged on a straight-line basis over the intangible asset’s useful life, when finite, as follows: Brands 9 years to indefinite life Customer relationships 1 to 15 years Computer software 3 to 10 years Indefinite-lived intangible assets principally comprise those trademarks for which there is no foreseeable limit to the period over which they are expected to generate net cash inflows. These are considered to have an indefinite life, given the strength and durability of our brands and the level of marketing support. The nature of the industry we operate in is such that brand obsolescence is not common, if appropriately supported by advertising and marketing spend. Intangible assets with indefinite useful lives are tested for impairment at least annually at the CGU level by comparing their carrying amount to their recoverable amount. All other intangible assets are assessed at each reporting date for indications of impairment. If such indications exist, the recoverable amount is estimated and compared to the carrying amount. If the recoverable amount is less than the carrying amount, the carrying amount is reduced to the recoverable amount and the impairment loss is recognised immediately in the income statement. Aircraft 23 years (or remaining lease period if shorter) shorter) if period lease (or remaining 23years 3to15 years shorter) if period lease remaining (or 5to15 years years 40 and period lease ofremaining Shorter years to50 40 annually. reviewed are lives useful and values residual Estimated assets fixed Other spares Aircraft Aircraft properties Leasehold buildings Freehold asfollows: lives useful expected their over value residual estimated totheir cost their down towrite aims and basis iscalculated isprovided, depreciation no which upon land, freehold than other equipment, and plant property, on Depreciation asincurred. statement income tothe charged are bymanagement intended manner in the ca tobe it for necessary condition and location tothe asset an tobringing attributable directly not are that Costs the item. c the within included are costs such then period, commissioning or astart-up such without bymanagement intended manner the in inc but use for isavailable item that and equipment, or plant ofproperty, item ofan commissioning or start-up ofthe as part cost Where impairment. for provision any and depreciation ofstraight-line net atcost, isstated equipment and plant Property, equipment and plant Property, 3B SIGNIFICANT ACCOUNTING POLICIES CONTINUED 3 SIGNIFICANT ACCOUNTING POLICIES CONTINUED within 12 months. within 12 realise tobe expected isnot it and 12months than ismore instrument ofthe maturity remaining the if liability a non-current asanon-curr ispresented Aderivative liability. asafinancial isrecognised value fair anegative with aderivative whereas asafin isrecognised value fair apositive with Aderivative basis. agross on sheet balance the on presented are Derivatives income statement. immediatel isrecognised instrument asahedging designated not derivatives on value, tofair remeasurement on loss or gain The hedged. being item ofthe nature the so if and instrument isdesignated derivative the whether on depends loss or gain resulting the ofrecognising method The value. atfair remeasured a and into isentered contract dateaderivative the on value atfair recognised initially are instruments financial Derivative in astrading for accounted are accounting hedge for qualify not do that However, derivatives purposes. trading for instruments deri issue or hold not does Group the policy, treasury its with Inaccordance activities. investment and financing operational, a risks price fuel and exchange foreign rate, tointerest exposure its tohedge instruments financial derivative uses Group The instruments financial Derivative distribution. and selling marketing, in incurred tobe costs all less price selling estimated repr value realisable Net price. purchase represents Cost value. realisable net and ofcost lower atthe stated are Inventories Inventories leases. operating ofcertain terms the under Group the upon placed of obligations asaconse period, lease expired the and/or flown tohours byreference calculated statement, income tothe charges appropriate bym airframes and units power auxiliary engines, leased ofoperating overhauls ofmajor costs future the for ismade Provision respectively. asincurred or consumption on statement income tothe charged are contracts) “pay-as-you-go” under provided mainte (including assets offleet tomaintenance relating costs other and spares replacement other All overhauls. major between expect average the over amortised and iscapitalised costs, labour and spares replacement including expenditure, overhaul Major costs maintenance and overhaul Aircraft THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS ent asset or or asset ent re subsequently re subsequently pable of operating ofoperating pable ancial asset ancial asset d or settled settled d or apable of operating ofapable operating vative financial financial vative esents the rising from s are incurred incurred s are on a straight-line astraight-line on aking struments. as a hedging as ahedging nance nance quence ed life y in the the y in ost of of ost 125 FINANCIAL STATEMENTS 126 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

3 SIGNIFICANT ACCOUNTING POLICIES CONTINUED 3B SIGNIFICANT ACCOUNTING POLICIES CONTINUED Hedge accounting For fair value hedges, changes in the fair value of derivative financial instruments that are designated as fair value hedges are recognised in the income statement as part of finance income or cost line, where they offset the changes in fair value on the hedged item. Where the hedged item is designated in a fair value hedge relationship of a financial liability held at amortised cost, the change in fair value in respect to the hedged risk is recorded as a fair value adjustment within finance income or cost. Fair value hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. At that point in time the changes in fair value on the hedging instrument will continue to be recognised immediately into the income statement, while the hedged item will no longer be adjusted for fair value changes. The gain or loss on remeasurement to fair value on derivative financial instruments that are designated and effective as cash flow hedges of future cash flows is recognised directly in other comprehensive income and the ineffective portion is recognised immediately in the income statement within net operating expenses. Forward points on foreign exchange forward contracts and time value of options are not designated as part of the hedging relationship and therefore, are recorded in the income statement within costs of providing tourism. Changes in fair value deferred through the hedge reserve, are recognised in the income statement in the same period, or periods, in which the hedged highly probable forecast transactions are recognised in the income statement. Cash flow hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. At that point in time, any cumulative gains or losses on the hedging instrument recognised in other comprehensive income are retained until the forecast transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in other comprehensive income is transferred to the income statement for the period. Non-derivative financial instruments Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the Group transfers substantially all the risks (and rewards) relating to the financial asset or when the contractual rights to the cash flows associated with the financial asset expire. Financial liabilities are derecognised when the obligation is discharged, cancelled or expires. The measurement of particular financial assets and liabilities is set out below. Cash and cash equivalents Cash and cash equivalents comprise cash balances and term deposits which are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value and have an original maturity of three months or less. Where the Group operates centrally pooled accounts and has the intention and ability to pool account balances, the net cash or overdraft position is disclosed. Where the intention or ability to pool balances together is absent, the cash and overdraft are disclosed on a gross basis in the consolidated balance sheet and the overdraft is excluded from cash and cash equivalents for the purpose of the consolidated statement of cash flows. Trade and other receivables Trade and other receivables are recognised at their fair value and subsequently recorded at amortised cost using the effective interest method as reduced by allowances for estimated irrecoverable amounts. An allowance for irrecoverable amounts is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows. Available-for-sale financial assets Available-for-sale financial assets are recognised and subsequently recorded at their fair value. Gains or losses (except for impairment losses and foreign exchange gains and losses) are recognised directly in equity until the financial asset is derecognised. At this point, the cumulative gain or loss previously recognised in equity is recognised in the income statement. Any impairment losses, foreign exchange gains or losses or dividends receivable are recognised in the income statement. in its fair value attributable to the hedged risk. hedged tothe attributable value fair its in fo adjusted tobe ceases item hedged the when time atthe statement income tothe amortised be will adjustment The risk. hedged value fair their in changes for adjusted are relationship hedge value afair in items ashedged designated are that Borrowings method. interest effective the using cost atamortised recorded Th costs. transaction attributable directly ofany net value fair attheir recognised initially are borrowings bearing Interest Borrowings method. interest eff the using cost atamortised recorded subsequently and value fair attheir recognised initially are payables Trade other and payables Trade other and statement. income the in recognised are losses impairment Any method. interest effective the atamorti measured subsequently are and costs transaction attributable directly any plus value atfair recognised are initially and Loans atcost. ismeasured investment the measured, reliably be cannot value afair Where technique. valuation appropriate usi measured are market active an in price market aquoted have not do that instruments equity in ofinvestments value fair The investments asset non-current Other income statement. recogn are losses or Gains value. fair attheir measured subsequently and recognised are and trading for asheld classified are shee ofabalance hedges asnatural such relationship ahedge in designated not are that derivatives and investments Short-term investments trading for Held 3B SIGNIFICANT ACCOUNTING POLICIES CONTINUED 3 SIGNIFICANT ACCOUNTING POLICIES CONTINUED Ordinary Shares including share premium are classified as equity. asequity. classified are premium share including Shares Ordinary Share capital period. accounting ofthe respect in schemes tothe payable contri ofthe amount the represent schemes contribution Group’s defined ofthe respect in profits against charged costs Pension expenses. personnel in statement in immediately recognised are costs service Past respectively. income finance and costs asfinance presented are assets scheme retu expected the and liabilities scheme the on rate discount ofthe unwinding The expense. as a personnel statement income the year, isinclu the over accruing benefits representing cost, service current The expense. and income ofcomprehensive statement arise they which in period the in recognised are losses or gains Actuarial assets. schemes’ ofthose value fair the and method) projected the using (calculated schemes the under Group’s obligations ofthe value present the between difference the represent oft respect in sheet balance the on recognised liabilities pension The schemes. benefit ofdefined anumber operates Group The Pensions value. present toits isdiscounted provision the ismaterial, ofmoney value time ofthe effect the Where s balance atthe obligation the tosettle required expenditure ofthe estimate best Director’s atthe recognised are Provisions made. be can obligation ofthe amount ofthe estimate areliable and obligation, the tosettle required will be outflow an that isprobable it event, ofapast asa result obligation isapresent there when aprovision recognises Group The Provisions THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS ey are subsequently subsequently ey are heet date. date. heet of resources ofresources sed cost using using cost sed ective in respect of the ofthe respect in within the ised in the inthe ised hese schemes receivables receivables ng an ded in butions unit credit t exposure t exposure rn on the income r changes r changes 127 FINANCIAL STATEMENTS 128 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

3 SIGNIFICANT ACCOUNTING POLICIES CONTINUED 3B SIGNIFICANT ACCOUNTING POLICIES CONTINUED Leases Leases under which substantially all of the risk and rewards of ownership are transferred to the Group are finance leases. All other leases are operating leases. Assets held under finance leases are recognised at the lower of the fair value of the asset and the present value of the minimum lease payments within property, plant and equipment on the balance sheet and depreciated over the shorter of the lease term or their expected useful lives. The interest element of finance lease payments represents a constant proportion of the capital balance outstanding and is charged to the income statement over the period of the lease. Operating lease rentals are charged to the income statement on a straight-line basis over the lease term. Income arising from operating leases where the Group acts as lessor is recognised on a straight-line basis over the lease term and included in operating income due to its operating nature. Share-based payments The Group issues equity-settled share options to certain employees as part of their total remuneration. The fair values of the share options are calculated at the date of grant, using an appropriate option pricing model. These fair values are charged to the income statement on a straight-line basis over the expected vesting period of the options, with a corresponding increase in equity. The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity. The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Insurance contracts and reinsurance contracts Premiums written relate to business incepted during the year, together with any differences between the booked premiums for prior years and those previously accrued, less cancellations. Premiums are recognised as revenue (earned premiums) proportionally over the period of coverage. The portion of premium received on in-force contracts that relates to unexpired risks at the balance sheet date is reported as a provision for unearned premium. Premiums are shown after the deduction of commission and premium taxes where relevant. Claims and loss adjustment expenses are charged to the income statement as incurred based on the estimated liability for compensation owed to policyholders or third-parties damaged by policyholders. They include best estimate direct and indirect claims settlement costs arising from events that have occurred up to the balance sheet date even if they have not yet been reported to the Company. Where applicable, deductions are made for salvage and other recoveries. The Company does not discount its liabilities for unpaid claims. Liabilities for unpaid claims are estimated using the input of assessments for individual cases reported to the Company and statistical analysis for the claims incurred but not reported (IBNR). It is assumed that the development pattern of the current claims will be informed by previous experience. The expected claims are calculated having regard to events that have occurred prior to the balance sheet date. Contracts entered into by the Group with reinsurers, under which the Group is compensated for losses on one or more contracts issued by the Group, and that meet the classification requirements for insurance contracts, are classified as reinsurance contracts held. The benefits to which the Group is entitled under its reinsurance contracts held are recognised as receivables from reinsurers. The Group assesses its reinsurance assets for impairment on an annual basis. Receivables and payables are recognised when due. These include amounts due to and from insurance policyholders. Separately disclosed items Group. bythe received are services and goods to which over statement income the in recognised are expenses Indirect asappropriate. relate they towhich period the over or departure statement income tothe taken are providers travel Group’s leisure bythe arranged tours toinclusive relating expenses Direct Expenses advance. in received asrevenue liabilities current within included are end period the after departing flights and commencing daterelati sheet balance bythe received Monies goods. ofthe delivery on usually customer, tothe istransferred of ownership a risks significant the all when isrecognised ofgoods sale the from Revenue asearned. statement income tothe istaken Group pro services toother relating Revenue departure. flight and dateofholiday the on statement income tothe taken are services, commi agency travel including providers, travel airline and Group’s leisure bythe arranged services totravel relating Revenue tocu granted vouchers compensation and tax added value rebates, volume discounts, trade deducting after basis anet on revenue Grou The ofbusiness. course ordinary the in tocustomers supplied services travel other and commission agency travel services, servic travel airline tours, inclusive from receivable revenue ofgross amount aggregate asthe ismeasured Group’s revenue The Revenue recognition 3B SIGNIFICANT ACCOUNTING POLICIES CONTINUED 3 SIGNIFICANT ACCOUNTING POLICIES CONTINUED The Group’s management consider that these items should be disclosed separately to enable a full understanding of the Group’s r ofthe understanding afull to enable separately disclosed be should items these that consider Group’s management The performance. Group’s underlying ofthe part tobe considered not are consideration co and provisions exceptional on ofdiscount unwind the on arising charges interest and schemes pension benefit Group’s defined o arising charges and income Interest performance. Group’s underlying ofthe part tobe considered not are therefore and mature forwar or options the when unwind and fluctuations tomarket subject are items Both relationships. hedging flow cash in options val time and contracts forward exchange toforeign related points forward in movements includes remeasurement value 39fair IAS Group’s results. ofthe understanding afull toenable separately disclosed be should it that consider management th and issignificant assets intangible ofthese amortisation The years. subsequent in made combinations business other and plc MyTravel AGand Cook Gro Thomas between merger ofthe asaresult acquired were assets intangible combination business Material incidence. or nature size, oftheir because unusual are that items material individually other > and trading ofcurrent light in evaluation cautious amore reflecting ofaccruals, ofassets/reassessment write-down material > impairments; asset other or goodwill significant > programmes; restructuring major other and acquisitions ofsignificant ofintegration costs > ofacquisitions; costs and businesses or ofassets disposal on profits/(losses) > include: category disclosed separately the within included are which Items performance. Group’s underlying ofthe understanding afull provide report separate The disclosure. separate through highlighted but category, statement income relevant their within are presented non-recu are which and nature, their or size oftheir because either material are that items namely items, disclosed Separately remeasurement. value 39fair IAS and intangibles; combination ofbusines amortisation and ofgoodwill impairment items, non-recurring statement: income the in discloses separately Group The

conditions (excluding or errors year prior items); and THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS ssion and other other and ssion ng to holidays on holiday rring, vided by the bythe vided economic economic es, hotel hotel es, the period period the nd rewards p records p records ing helps ing helps e Group’s n the n the esults. d contracts d contracts ntingent ntingent s ue of stomers. up 129 FINANCIAL STATEMENTS 130 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

3 SIGNIFICANT ACCOUNTING POLICIES CONTINUED 3B SIGNIFICANT ACCOUNTING POLICIES CONTINUED Finance income and costs Finance income comprises interest income on funds invested, expected return on pension plan assets, changes in the fair value of held for trading interest-related derivatives, and fair value adjustments to hedged items in a designated fair value hedge. Finance costs comprise interest costs on borrowings and finance leases, unwind of the discount on non-current liabilities, interest cost on pension plan liabilities, changes in the fair value of held for trading interest-related derivatives, movement in forward points on outstanding foreign exchange forward contracts in cash flow hedging relationships and changes in fair value of derivatives designated in a fair value hedge relationship. The changes in fair value on derivatives designated in a fair value hedge relationship and the fair value adjustment on hedged items in a fair value hedge relationship are separately disclosed in Note 7 under the description “IAS 39 fair value remeasurement”. Tax Current tax Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a period. Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are substantively enacted at the balance sheet date. Deferred tax Deferred tax is recognised on all temporary differences arising from differences between the carrying amount of an asset or liability and its tax base, with the following exceptions: > Where the temporary difference arises from the initial recognition of goodwill, or the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither the accounting or taxable profit or loss; > In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and > Deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, tax losses or credits carried forward can be utilised. Deferred tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws substantively enacted at the balance sheet date. Allocation of tax charge or credit between income statement, other comprehensive income and equity Tax is recognised in the income statement unless it relates to an item recognised directly in equity, in which case the associated tax is recognised directly in other comprehensive income or equity respectively. Earnings per share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. EPS measures for continuing operations have been presented in accordance with IAS 33. The Group also presents a basic and diluted underlying EPS measure based on underlying profit before tax as defined in separately disclosed items section above. Further details of the EPS calculation are presented in Note 11. with an indefinite life in relation to those businesses. businesses. tothose relation in life indefinite with an intangibl or goodwill for sheet balance the in included amounts ofthe impairment any been has there whether toassess in order Group’s bu ofthe bycertain generated tobe flows cash operating offuture amounts ofthe respect in made been have Judgements ofgoodwill Impairment statement. income the in charged ofdepreciation amount the determine judgements Those 13). Note (see a plant property, in included ofaircraft lives economic useful and values residual ofthe respect in made been have Judgements assets fixed oftangible values Residual arrangement. tothe principal be will Group the case which in risk, toi isexposed and discretion pricing has arrangements, revenue the all in obligor prime isthe it if byconsidering agency or toa judgement exercises Group The Recognition. 18Revenue IAS with line in respectively, net or gross aseither accounting the agent or ofprincipal capacity the in act Group’s businesses the where istodistinguish revenue recognising in A key judgement Revenue recognition below. discussed are year financial next the within liabilities and of assets carrying tothe adjustment amaterial ofcausing risk asignificant have which assumptions and estimates Those outcomes. actual from differ may which future, the concerning assumptions and estimates made has Group the policies, accounting its In applying 3C CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS 3 SIGNIFICANT ACCOUNTING POLICIES CONTINUED estimates, are disclosed in Note 30. 30. Note in disclosed are estimates, of effect the and estimates, The estimates. ofcritical values the toselect advice actuarial impartial and experience previous liabilities. ofthe value present the tocalculate used rate discount the and generate assets plan that returns the employees, progre salary the members, ofthe expectancy aslife factors such on depend liabilities and assets pension related ofany value cost The obligations. benefit for, retirement provision to,and relation in costs include statements financial consolidated The benefits Retirement profitability. future t and authorities relevant the with losses ofthe agreement the on isdependent assets ofthese recoverability The as aresult. have assets tax deferred and losses, oftax utilisation future probable ofthe respect in made been have estimates In addition, profitability. offuture estimates on dependent be may and future the in payabl be will that oftax estimates management’s represent liabilities and Tax assets authorities. relevant the with be agreed ta for years several take can It complex. are operations ofits implications tax the and regimes tax many in operates Group The Tax fleet. aircraft ofthe renewal and rollover planned and costs offutu estimates utilisation, aircraft forecast on based are spares and aircraft leased ofmaintaining cost the for Provisions provisions maintenance Aircraft hoteliers. tothose made prepayments and ofdeposits amounts recoverable the to assess hotelier ofthose credit-worthiness the and hoteliers with trading offuture volumes ofthe respect in made been have Estimates prepayments and ofdeposits amounts Recoverable those entities. inte equity indirect or direct no has Group the though even consolidated, therefore and Group, bythe ascontrolled interpreted they that shows Group tothe aircraft leasing in involved entities purpose special certain with relationship ofthe nature The entities purpose Special THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS nventory and credit credit and nventory s and the present present the s and re maintenance re maintenance variances in key in variances The Group uses uses Group The should be rest in in rest been recognised e or recoverable recoverable e or he estimates of of estimates he x liabilities to ssess principal ssion of current ofcurrent ssion so to determine todetermine so nd equipment s in order order s in e assets e assets the related related the amounts amounts sinesses sinesses 131 FINANCIAL STATEMENTS 132 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

4 SEGMENTAL INFORMATION For management purposes, the Group is organised into four geographic based operating divisions: UK, Continental Europe, Northern Europe, and Airlines Germany. These divisions are the basis on which the Group reports its primary segment information. Certain residual businesses and corporate functions are not allocated to these divisions and are shown separately as Corporate. These reportable segments are consistent with how information is presented to the Group Chief Executive (chief operating decision maker) for the purpose of resource allocation and assessment of performance. The primary business of all these operating divisions is the provision of leisure travel services and, accordingly, no separate secondary segmental information is provided. Segmental information for these activities is presented below:

Continental Northern Airlines UK Europe Europe Germany Corporate Total Year ended 30 September 2015 £m £m £m £m £m £m

Continuing Operations Revenue Segment sales 2,457 3,449 1,057 1,257 – 8,220 Inter-segment sales (54) (31) (16) (285) – (386) Total revenue 2,403 3,418 1,041 972 – 7,834

Revenue by product Tour Operations 5,789 Airlines 2,806 Other 577 Inter-segment sales (1,338) Total revenue 7,834

Result Underlying profit/(loss) from operations 119 71 96 56 (32) 310 Separately disclosed items (41) (30) (1) (2) (16) (90) Impairment of goodwill and amortisation of business combination intangibles (7) (2) – – – (9) Segment result 71 39 95 54 (48) 211 Share of results of associates 1 Profit on sale of associated undertaking 7 Finance income 10 Finance costs (179) Profit before tax 50 Tax (31) Profit for the year 19 Segment liabilities Segment Liabilities assets Total assets tax deferred Tax and ventures joint and associates in Investments Inter-segment eliminations Total liabilities leases and obligations under finance Borrowings liabilities tax deferred Tax and Inter-segment eliminations Segment assets Assets Balance sheet Impairment of property, plant and equipment and plant property, of Impairment Amortisation of business combination intangibles combination of business Amortisation Depreciation Capital additions Other information CONTINUED INFORMATION 4 SEGMENTAL Amortisation of intangible assets Amortisation under insurance contracts), located in the UK was £1,944m (2014: £1,720m). (2014: £1,944m UKwas the in located contracts), insurance under rig or assets benefits employment no are (there tax deferred and instruments financial than other assets, non-current total The £3,747m). (2014: £2,918m was Germany in customers external from Revenue UKsegment. the in be otherwise would which companies, Spain-domiciled and Ireland in revenue external excluding but above shown revenue segmental from isderived which £2,539m) (2014: £2,355m UKwas the in customers external from Revenue UK. the in isdomiciled entity The 13). (note equipment and plant property, and 12) (note assets intangible toother additions comprise additions Capital provisions. and advance in received revenue payables, other and trade comprise liabilities Segment equivalents. cash and cash and receivables other and trade equipment, and plant ass intangible other ofgoodwill, primarily consist assets Segment prices. market atprevailing charged are sales Inter-segment 333 229 84 96 810 (15,572) (8,160) (916) (864) (2,299) (3,333) ,3 ,7 ,8 ,2 815 17,731 8,115 1,226 1,486 3,770 3,134 86 26 84 68 37 37 86 26 84 68 301 49 6 18 72 – 145 £m 01 1 10 11 8 – 30 UK – 1 – – – 1 – 2 – – – 9 – – – 2 7 THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Continental Europe £m Northern Northern Europe £m Germany Germany Airlines £m Corporate ets, property, property, ets, £m hts arising arising hts the ‘UK’ included included (5,590) (4,060) (11,977) 5,958 5,958 (1,440) 5,754 5,754 11,512 11,512 200 200 Total Total (90) £m 4 133 FINANCIAL STATEMENTS 134 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

4 SEGMENTAL INFORMATION CONTINUED

Continental Northern Airlines UK Europe Europe Germany Corporate Total Year ended 30 September 2014 £m £m £m £m £m £m

Continuing Operations Revenue Segment sales 2,585 3,958 1,153 1,299 – 8,995 Inter-segment sales (56) (26) (8) (317) – (407) Total revenue 2,529 3,932 1,145 982 – 8,588

Revenue by product Tour Operations 7,096 Airlines 2,912 Other 589 Intercompany sales (2,009) Total revenue 8,588

Result Underlying profit/(loss) from operations 89 102 101 50 (19) 323 Separately disclosed items (95) (41) – (16) (69) (221) Impairment of goodwill and amortisation of business combination intangibles (48) (2) – – – (50) Segment result (54) 59 101 34 (88) 52 Share of results of associates 2 Finance income 10 Finance costs (178) Loss before tax (114) Tax (1) Loss for the year (115)

Other information Capital additions 54 20 15 82 13 184 Depreciation 43 7 17 78 1 146 Amortisation of intangible assets 11 11 1 – 4 27 Amortisation of business combination intangibles 6 3 – – – 9 Impairment of other intangible assets 1 1 – – – 2 Impairment of goodwill 41 – – – – 41

emn iblte 283 232 99 76 747 (14,337) (7,487) (776) (919) (2,322) (2,833) Total liabilities leases and obligations under finance Borrowings liabilities tax deferred Tax and Inter-segment eliminations liabilities Segment Liabilities assets Total assets tax deferred Tax and ventures joint and associates in Investments emn ses268 ,6 153 ,4 729 16,220 7,249 1,145 1,523 3,665 2,638 Inter-segment eliminations Segment assets Assets Balance sheet CONTINUED INFORMATION 4 SEGMENTAL

Disclosures in respect of remuneration of key management personnel are included in note 31. 31. note in included are personnel of key management ofremuneration respect in Disclosures statements. financial audited ofthese part form and report Re the within to104 96 pages on are Authority Conduct Financial bythe audit for specified those and 2006 Act Companies by the Disclosures of Directors’ remuneration, sh Corporate Airlines Germany Europe Northern Continental Europe UK was: year the during Group ofthe ofemployees number average monthly The 30) note (see costs pension contribution Defined 30) note (see costs pension benefit Defined 29) note (see settled –equity payments Share-based Social security costs salaries and Wages EXPENSES 5 PERSONNEL are options, long-term incentive schemes, schemes, incentive long-term options, are £m UK THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Continental pension contributions andpension pension contributions entitleme Europe £m Northern Northern Europe £m Germany Germany Airlines £m Number 8,985 2,989 3,089 21,813 21,813 6,473 6,473 886 740 Corporate 277 277 2015 2015 £m 91 13 13 41 41 1 £m muneration nts required required nts (10,640) Number 22,672 10,258 10,258 (5,509) (4,079) 6,568 6,568 5,580 5,580 (1,345) 2,997 9,720 9,720 5,794 5,794 3,120 Total Total 200 200 939 2014 2014 792 267 (85) 98 £m £m 42 42 14 3 4 135 FINANCIAL STATEMENTS 136 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

6 OPERATING EXPENSES

2015 2014 £m £m

Advertising expenses 121 144 Rents and expenses for building maintenance 101 110 Information technology and telecommunication costs 138 161 Travel expenses and ancillary personnel expenses 49 54 Legal and consultancy fees 35 81 Impairment of current and non-current assets, excluding goodwill 19 32 Insurance 11 12 Auditor’s remuneration 4 5 Other operating expenses – 34 478 633 A more detailed analysis of auditors’ remuneration on a worldwide basis is provided below:

Auditors’ remuneration

2015 2014 £m £m

Fees payable to Company’s auditor and its associates for the audit of parent company and consolidated financial statements 1 1 Fees payable to Company’s auditor and its associates for other services: Audit of subsidiaries 2 3 Total audit fees 3 4 Other non-audit services 1 1 Total non-audit services 1 1 Total fees 4 5 Included within ‘Audit of subsidiaries’, £0.1m (2014: £0.1m) has been incurred in respect of the audits of the Group pension schemes. Total non-audit services is inclusive of £0.2m in relation to tax services. Fees paid to the Company’s auditors and their associates for services other than the statutory audit of the Company are not disclosed in subsidiaries’ accounts since the consolidated accounts of the subsidiaries’ parent, Thomas Cook Group plc, are required to disclose non-audit fees on a consolidated basis. A description of the work of the Audit Committee is set out in the Corporate Governance report on page 79 and includes an explanation of how auditor objectivity and independence is safeguarded when non-audit services are provided by the auditors. Total separately disclosed items Unwind of discount on liabilities non-current Net interest obligation cost on benefit defined Write off of unamortised bank facility set-up and related costs related and set-up facility bank unamortised of off Write costs and income finance Affecting of associates on disposal Profit associates from income Affecting Other resolution dispute tax for Provision In FY14 there was a release of £2m to a provision held on a sales tax judgement. judgement. tax asales on held toaprovision of£2m arelease was there In FY14 resolution dispute tax for Provision Group’s results. ofthe understanding afull to enable separately disclosed be should it that consider management Gr the and issignificant assets intangible ofthese amortisation The years. subsequent in made combinations business other and MyTravel AGand Cook Gro Thomas between merger ofthe asaresult acquired were assets intangible combination business Material intangibles combination ofbusiness Amortisation 2015. June in concluded that contract outsourcing res in charge non-cash £24 million afinal recognised has Group the years, prior in identified contracts toonerous In relation o lease onerous an comprises primarily charge The contracts. these under losses future for provision made and sheet balance the to adjustments appropriate made and contracts onerous of certain respect in position its assessed has Group the year the During disputes legal and contracts Onerous of£41m. impairment goodwill topre-disposal relates principally balance year prior The reviews valuation asset and impairment Goodwill of£18m tot areduction in resulted reassessment The venture. joint UKretail the in shares their Co-operative Central England an Group Co-operative the from toacquire obligation ofacontingent value carrying the reassessed Group the IFRS, with In line consideration ofcontingent Reassessment of£27m. costs restructuring Group-wide been have there (NUMO). Inaddition, Operatin New the delivering with associated costs toimplementation relation in £25m include of£52 million costs Restructuring costs Restructuring * Amortisation of business combination intangibles combination of business Amortisation disputes legal and contracts Onerous reviews valuation asset and goodwill of Impairment consideration of contingent Reassessment Reorganisation costs and restructuring from operations profit Affecting ITEMS 7 SEPARATELY DISCLOSED reclassified from restructuring costs to other. provi other. of to cost to costs costs finance restructuring from from re-presented been reclassified has contracts hedging flow cash exchange foreign on points forward of £2m THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS ding tourism services and £14m of loss on disposal of assets has been been has assets of disposal on loss of £14m and services tourism ding (120) 2015 (99) (28) (35) (52) pect of a UK ofaUK pect (21) (12) £m 18 (9) (9) – (7) 7 7 – he liability. d g Model g Model oup’s f £9 million. million. f £9 assets on on assets up plc up plc Re-presented* (296) (271) 2014 (110) £m (25) (79) (57) (10) (18) (15) (9) – 2 – – – 137 FINANCIAL STATEMENTS 138 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

7 SEPARATELY DISCLOSED ITEMS CONTINUED Other This amount includes loss on the disposal of assets as well as £6m gain from the movement in forward points related to foreign exchange forward contracts and time value of options in cash flow hedging relationships. Both items are subject to market fluctuations and unwind when the options or forward contracts mature and therefore are not considered to be part of the Group’s underlying performance. Finance related charges The Group has provisions for future liabilities arising from separately disclosed circumstances, primarily deferred acquisition consideration. A notional interest charge of £9m on the discounted value of such liabilities is recognised within separately disclosed finance related charges. During the year £7m of facility fees have been written off. Interest income and charges arising on the Group’s defined benefit pension schemes is £12m.

8 FINANCE INCOME AND COSTS

Re-presented 2015 2014 £m £m

Underlying finance income Income from loans included in financial assets 1 1 Other interest and similar income 9 9 10 10 Underlying finance costs Bank and Bond interest (95) (89) Fee amortisation (8) (9) Letters of Credit (15) (17) Other interest payable (16) (17) (134) (132) Underlying aircraft related finance costs Interest payable (3) (4) Finance costs in respect of finance leases (14) (17) (17) (21)

Underlying finance cost (151) (153) Net underlying Interest (141) (143)

Separately disclosed finance costs Write off of unamortised bank facility set-up and related costs (7) – Net interest cost on defined benefit obligation (note 30) (12) (15) Unwind of discount on non-current liabilities (9) (10) (28) (25) Total net interest (169) (168) Other interest payable includes fair value gain of £1m (2014: £14m gain) on hedging instruments and fair value loss of £1m (2014: £12m loss) on hedged items in fair value hedges. Losses and other timing differences for which tax relief is not available not is relief tax which for differences timing other and Losses due is relief tax no which for Impairment Income not liable for tax for liable not Income 22%) (2014: 20.5% of rate tax corporation UK the at charge tax Expected against future profits. against future Spai and France UK, the in predominantly available are £2,340m) (2014: of£1,935m tax deferred in recognised not losses Surplus jurisdictions. respective rates atthe iscalculated jurisdictions year. other Taxation the for for profit/(loss) assessable estimated ofthe 22%) (2014: isca tax UKcorporation of£9m). credit (2014: toequity directly credited been of£6mhas instruments financial of derivative the and schemes pension on losses toactuarial relating tax deferred statement, income tothe charged amount tothe In addition Overseas corporation tax charge for the year the for charge tax corporation Overseas Current tax charge tax of Analysis 9 TAX Expenses not deductible for tax purposes tax for deductible not Expenses Profit/ (loss) before tax before (loss) Profit/ Tax reconciliation asfollows: company ofthe toprofits applicable corp UKstandard the using arise would that amount theoretical the from differs tax before Group’s profit/(loss) the on tax The Difference in rates of tax suffered on overseas earnings overseas on suffered tax of rates in Difference recognised previously tax deferred of Derecognition Income tax charge in respect of prior periods prior of respect in charge tax Income Other rates tax in changes of Impact recognised previously not losses of Recognition adjustments in respect of prior periods prior of respect in adjustments Utilisation of tax losses not previously recognised previously not losses tax of Utilisation Total tax charge tax charge/ tax (credit) Total deferred tax Deferred tax tax current Total Tax charge

THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS prevailing in the lculated at 20.5% 2015 2015 50 29 (15) 27 (41) £m £m 10 10 31 31 21 21 13 13 (2) – – 9 2 4 4 1 oration tax rate rate tax oration n for offset offset n for fair value 2014 2014 (114) (56) (25) £m £m (16) (16) 30 23 18 18 31 (6) (9) (6) (4) 17 9 5 7 1 1 1 139 FINANCIAL STATEMENTS 140 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

10 DIVIDENDS No dividends were declared during the year ended 30 September 2015 (2014: nil).

11 EARNINGS PER SHARE The calculations for earnings per share, based on the weighted average number of shares, are shown in the table below. The weighted average number of shares shown excludes 9 million shares held by the employee share ownership trusts (2014: 21m).

2015 2014 Basic and diluted loss earnings/(loss) share £m £m

Net profit attributable to the owners of the parent 23 (118)

2015 2014 millions millions

Weighted average number of shares for basic earnings/(loss) per share 1,487 1,440 Weighted average number of shares for diluted earnings/(loss) per share* 1,487 1,464

2015 2014 pence pence

Basic and diluted earnings/(loss) per share 1.6 (8.2)

2015 2014 Underlying basic and diluted earnings per share £m £m

Underlying net profit attributable to equity holders of the parent** 132 163

2015 2014 pence pence

Underlying basic earnings per share 8.9 11.3 Underlying diluted earnings per share 8.9 11.1 * Awards of shares under the Thomas Cook Performance Share Plan, Buy As You Earn Scheme, Restricted Share Scheme and Co-Investment Plan will be satisfied by shares held in trust and therefore are potentially dilutive. The remainder of the share schemes will be satisfied by the purchase of existing shares in the market and will therefore not result in any dilution of earnings per share. ** Underlying net profit attributable to owners of the parent is derived from the continuing pre-exceptional profit before tax for the year ended 30 September 2015 of £170m (2014: 182m) and then deducting a notional tax charge of £42m (2014: £16m), and taking into account non-controlling interests. 12_Notes_1_16_p122_p146_v60.indd 141 t3 etme 042492 0 6 2,873 6 – 268 108 22 2,469 2014 September At 30 ipsl 1)()()(3 2 1)(62) 765 36 (27) (14) – (1) – 249 (2) 41 (1) 125 – (23) 28 142 – 9 (8) 158 2,388 (3) 22 (3) 105 (9) 5 (12) 319 (13) – 2015 September At 30 Carrying amount 2014 September At 30 Exchange differences Disposals year the for Charge t3 etme 05379 7 3 41 134 179 93 307 2015 September At 30 Exchange differences Disposals year the for Charge t1Otbr21 4 1 4 5 41 816 15 44 155 147 111 344 Impairment 2013 At 1October losses and impairment amortisation Accumulated loss –1–1––2 t3 etme 052651135334 3,548 3 41 383 305 121 2,695 2015 September At 30 Exchange differences Reclassification to plant, property and equipment and property toplant, Reclassification t3 etme 042781726404 3,638 (203) 6 (2) 41 (1) 410 (19) 266 (13) 127 (10) 2,788 (158) Disposals Additions At 30 September 2014 Exchange differences ipsl 8)()()(2 2 1)(170) (14) (2) (52) (9) (4) (89) Disposals t1Otbr21 ,3 3 5 8 42 3,971 21 44 481 254 136 3,035 Additions 2013 At 1October Cost 12 INTANGIBLE ASSETS –534–– 140 Goodwill 9)()()(5 (132) – – (25) (5) (6) (96) 1)()()(6 (37) – – (16) (4) (5) (12) £m 3960–––72 –(11)(1)(1)–4269––39 –(13) – ––(3)–––(3) –(9)(13)(2) –(3)(27) Purchased Computer software and £m THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS concessions generated generated Internally Internally £m relationships Brands and customer £m backlog Order Order £m – Purchased Other Other £m 32,794 – Total Total 754 £m 06/01/2016 13:07 141 FINANCIAL STATEMENTS 142 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

12 INTANGIBLE ASSETS CONTINUED The carrying value of goodwill is analysed by business segment as follows:

2015 2014 £m £m

UK 1,602 1,631 Continental Europe 155 159 Northern Europe 613 659 Airlines Germany 18 20 2,388 2,469

Goodwill Impairment Testing In accordance with accounting standards, the Group tests the carrying value of goodwill for impairment annually and whenever events or circumstances change. Impairment testing is performed by comparing the carrying value of each cash-generating unit (CGU) to the recoverable amount, determined on the basis of the CGU’s value in use. The value in use is based on the net present value of future cash flow projections discounted at pre-tax rates appropriate for each CGU. The Group’s CGUs are determined by geographical market and consist of: UK, Continental Europe, Northern Europe and Airlines Germany. The future cash flow projections used to determine the value in use are based on the most recent annual budgets and three-year plans for each of the CGUs. The key assumptions used to determine the business’ budget and three-year plans relate to capacity and the pricing of accommodation and fuel inputs. Capacity is based on management’s view of market demand and the constraints to managing capacity such as aircraft lease commitments. The accommodation pricing is primarily driven by the underlying bed rate and the foreign exchange hedges in place. The former is based on the businesses’ ongoing dialogue with bed suppliers and local cost inflation. The fuel pricing assumption is primarily driven by the fuel hedges in place and the forward fuel curve at the time that the budget is set. The key assumptions used to determine the Independent business’ budget and three-year plans relate to passenger volumes and commission rates, and are based on the individual businesses’ view of the market conditions. Cash flow forecasts for years beyond the three-year plan are extrapolated at an estimated average long-term nominal growth rate of 2%. A pre-tax discount rate of between 10.4% – 10.9% reflecting the specific risks of each CGU is used to calculate the value in use for each of the CGUs. Sensitivity analysis has not been disclosed as management believe that any reasonable change in assumptions would not cause the carrying value of the CGUs to exceed their recoverable amount. 12_Notes_1_16_p122_p146_v60.indd 143 ipsl 5)–(3 3)(55) 6 258 23 (32) 297 116 3 11 (23) 138 89 454 3 8 – 104 53 177 435 – 4 (58) 55 550 125 163 (13) 123 624 152 131 1,175 141 1,128 forProvision impairment 2014 September At 30 Disposals Reclassifications year the for Charge 2013 At 1October and depreciation impairment Accumulated 2015 September At 30 Exchange differences Disposals Reclassification Additions 2014 September At 30 xhnedfeecs(2)()()()(13) (4) (3) 27 (6) (21) 19 495 (126) (6) 7 197 (4) 1 145 (11) 153 Reclassifications 117 (154) year the for Charge 1,227 Exchange differences Exchange differences Additions 2013 At 1October Cost 13 PROPERTY, AND PLANT EQUIPMENT t3 etme 04588 24 177 202 47 252 51 42 126 46 79 88 105 578 47 605 570 (72) 6 (40) (7) (32) 15 2014 September At 30 2015 September At 30 – Carrying amount (2) 2015 September At 30 Exchange differences (60) Disposals (2) Disposals Reclassification aircraft spares spares aircraft Aircraft and and Aircraft 9 871 39 14 7 18 193 2 120 11 7 2 125 5)()()()(18) (9) (3) (6) (55) 3)()()()(12) (7) (2) (3) (33) 8)()()2(9) 2 (6) (5) (87) 8)()()4(6) 4 (5) (5) (81) £m 4 4 7 7 (4) 4 (4) 9–(11)2(9) ––1 ––1– THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Freehold land and buildings buildings and £m leaseholds Short Short £m Other property, plant and equipment and plant property, Other fixed assets Other Other £m Other Other Total Total £m 06/01/2016 13:07 143 FINANCIAL STATEMENTS 144 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

13 PROPERTY, PLANT AND EQUIPMENT CONTINUED Freehold land with a cost of £30m (2014: £24m) has not been depreciated. The net book value of aircraft and aircraft spares includes £300m (2014: £270m) in respect of assets held under finance leases. The net book value of other property, plant and equipment includes £23m (2014: £10m) in respect of assets held under finance leases. The depreciation of the owned assets during the year was £74m (2014: £85m). Depreciation for property, plant and equipment held under finance lease was £70m (2014: £61m).

2015 2014 Capital commitments £m £m

Capital expenditure contracted but not provided for in the accounts 15 28 The Group is contractually committed to the acquisition of four new Airbus A321 aircraft as at 30 September 2015, which had a list price of $96m each at the time of commitment, before escalations and discounts. All are intended to be financed by sale and leaseback at the point of delivery in 2016. Leases for all of the aircraft were signed as at 30 September 2015, subject to the purchase taking place, and the operating lease commitment included in Note 27.

14 INVESTMENT IN ASSOCIATES

2015 2014 £m £m

Cost At 1 October 2014 36 38 Disposals (10) – Group’s share of associates’ profit for the year 1 2 Dividend received from associate – (2) Exchange differences (2) (2) At 30 September 2014 25 36

Amounts written off or provided At 1 October 2014 22 24 Exchange differences (1) (2) At 30 September 2015 21 22

Carrying amount 4 14 Associated undertakings Investments in associates at 30 September 2015 included a 40% interest in Activos Turisticos S.A, an incoming agency and hotel company based in Palma de Mallorca, Spain. Hotelera Adeje S.L., a hotel company based in Santa Cruz, Tenerife was disposed of during the year generating a profit on sale of £7m.

12_Notes_1_16_p122_p146_v60.indd 144 06/01/2016 13:07 Total liabilities assets Total isasfollows: undertakings associated ofthe respect in information financial Summarised 14 INVESTMENT IN ASSOCIATES CONTINUED The cost of inventories recognised as an expense was £130m (2014: £185m). (2014: £130m was expense asan recognised ofinventories cost The inventories operating spares and other Airline resale for held Goods 15 INVENTORIES associate. ofeach performance and position financial the draw up used are accounts management the and undertakings ofthese statements financial recent most the ofaccounting method the equity o purposes the For Group. ofthe tothat times atdifferent up made are undertakings associated ofthe statements financial The Group’s share of net assets net of share Group’s Net assets Profit for the year the for Profit Revenue Group’s share of associates’ profit for the year the for profit associates’ of share Group’s THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Associates 2015 2015 58 39 23 32 (18) 76 £m £m 9 4 4 1 f applying f applying to to Associates (22) 2014 2014 £m £m 80 58 34 43 24 16 10 2 4 145 FINANCIAL STATEMENTS 146 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

16 TRADE AND OTHER RECEIVABLES

2015 2014 £m £m

Non-current assets Trade receivables 1 – Other receivables 6 13 Deposits and prepayments 46 91 Loans 2 2 55 106

Current assets Trade receivables 201 252 Other receivables 47 44 Deposits and prepayments 317 390 Loans 4 4 Other taxes 16 14 Amounts owed by associates and participations – 1 585 705 The average credit period taken on invoicing of leisure travel services is 10 days (2014: 11 days). No interest is charged on the receivables. The credit risk in respect of direct receivables from customers is limited as payment is required in full before the services are provided. In the case of travel services sold by third-party agents, the credit risk depends on the creditworthiness of those third-parties, but this risk is also limited because of the relatively short period of credit. Deposits and prepayments include amounts paid in advance to suppliers of hotel and other services in order to guarantee the provision of those supplies. The Group’s current policy is that deposits and prepayments will normally be made for periods of up to two years in advance. There is a credit risk in respect of the continued operation of those suppliers during those periods. Deposits and prepayments also include £36m (2014: £53m) of deposits on aircraft lease arrangements. The amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. Allowances for doubtful debts in respect of trade receivable balances are managed in the business units where the debts arise and are based on local management experience. Factors that are considered include the age of the debt, previous experience with the counterparty and local trading conditions. Trade receivables arise from individual customers as well as businesses in the travel sector. The Directors do not consider there to be significant concentration of credit risk relating to trade and other receivables. At end of year of At end Receivables written off Between one and three months overdue months three and one Between Term deposits with a maturity of less than three months three than less of amaturity with deposits Term overdue 12months than More overdue 12months and three Between Unused amounts released The Directors consider that the carrying amounts of these assets approximate to their fair value. fair totheir approximate assets ofthese amounts carrying the that consider Directors The force. in are restrictions control exchange where countries in held £1m) ofcash £1m (2014: > Group’s ca the Services Insurance Android Voyager and Limited, Ireland Insurance Horse byWhite held ofcash £18m) (2014: £18m > requirements; regulatory oflocal respect in accounts escrow within held £38m) (2014: £7m > restricted: tobe considered amounts following the are balance above the within Included agencies. Group’s travel ofthe behalf on collection agency from arising asbalances aswell liabilities current of purpose the for currencies other Euro and Sterling, in denominated balances bank comprise largely equivalents cash and Cash EQUIVALENTS CASH AND CASH 17 values. fair totheir approximate receivables other and oftrade amounts carrying the that consider Directors The assecurity. isheld collateral no and title on torestrictions subject not are receivables Trade other and receivables other and trade ofoverdue analysis Ageing below: out isset assets financial ofthese age ofthe analysis The impaired. not but due past were £69m) (2014: of£88m receivables other and trade end, year At the Exchange differences Additional provisions year of At beginning receivables fordoubtful inallowances Movement CONTINUED RECEIVABLES OTHER AND TRADE 16 Cash at bank and in hand in and bank at Cash overdue month one than Less

insurance companies; and companies; insurance THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 1,301 573 573 728 2015 2015 2015 88 29 38 £m £m £m 42 10 15 21 (9) (8) (1) 9 ptive ptive settling 1,019 403 2014 2014 2014 616 69 £m £m £m 38 (12) 44 42 10 15 14 (8) 2 – 147 FINANCIAL STATEMENTS 148 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

18 TRADE AND OTHER PAYABLES

2015 2014 £m £m

Current liabilities Trade payables 1,401 1,268 Amounts owed to associates and participations 1 2 Social security and other taxes 46 56 Accruals and deferred income 400 613 Other payables 131 144 1,979 2,083

Non-current liabilities Accruals and deferred income 1 2 Other payables 78 88 79 90 The average credit period taken for trade purchases is 83 days (2014: 72 days). Included within the other payables (non-current liabilities) of £78m is £73m (2014: £82m) that represents the carrying value of the contingent obligation to acquire from The Co-operative Group and Midlands Co-operative (now Central England Co-operative) their shares (representing a 33.5% ownership interest), formed by the merger of the three companies’ high street retail stores in 2012. The discounted obligation was recognised at the time of the merger and its fair value is subsequently reassessed at each period end as the minority shareholders have the right, after 30 September 2016, to require the Company to acquire their shares, (see note 21). The Directors consider that the carrying amounts of trade and other payables approximate to their fair value.

19 BORROWINGS

2015 2014 £m £m

Short-term borrowings Unsecured bank loans and other borrowings 171 82 Unsecured bank overdrafts 14 2 185 84 Current portion of long-term borrowings 34 365 219 449 Long-term borrowings Bank loans and bonds – repayable within one year 34 365 – repayable between one and five years 734 308 – repayable after five years 304 407 1,072 1,080 Less: amount due for settlement within one year shown under current liabilities (34) (365) Amount due for settlement after one year 1,038 715 hurdles vary depending on the period that they relate to and range between 1.21x to 3.46x and 1.78x to2.16x 1.78x respectively. and to3.46x 1.21x between range toand relate they that period the on depending vary hurdles co charge fixed and leverage The charges. lease operating and interest tonet compared charges lease operating and amortisation de tax, interest, before earnings ofpre-exceptional isameasure covenant charge fixed The debt. tonet compared rentals lease op aircraft and amortisation depreciation, tax, interest, before earnings ofpre-exceptional isameasure covenant leverage The co charge afixed and covenant ofaleverage consist and basis 12month rolling aquarterly on tested are measures covenant The measures Covenant thr covenants financial its with complied has Group The required. if facilities ofthe utilisation full toprevent expected not financi certain have facilities these £1,168m). Whilst (2014: of£1,682m facility credit revolving torepay available plus cash faci debt committed undrawn and £297m) (2014: of£453m facilities debt committed undrawn had Group 2015, the September at30 As facilities Borrowing facilities. prior toreplace May2019 in May2015 in maturing facility banking year four £800m a new > bal the (with ahead purchased were 29% ofwhich 2015 notes, 6.75% June €400m ofour 2015 respect in February in offer a tender > 2021; June in matures of6.75% which acoupon 2015 with January in Eurobond ofa€400m issue the > year, including: the during transactions financing major three completed has Group The items. disclosed separately within isincluded fees facility ofold off write tothe relating £7m and statement income in the within recognised been have facilities tobanking relating costs transaction capitalised ofthe £9m) (2014: £8m year the During (2014:£14m). toproperty asasecurity £21m and £63m) (2014: toaircraft £101m has assecurity the Group amou carrying tothe isapproximate £150m) (2014: of£275m value fair the that consider Directors the borrowings, other all For m quoted using calculated been has bonds toissued relates which value fair ofthe £1,077m) £1,032m (2014: £1,227m). fair value carryin (2014: is£1,307m of£1,257m value acarrying with Group’s borrowings ofthe value fair the that consider Directors The Group committed credit facility (including transaction costs) transaction (including facility credit committed Group by class Borrowings 19 BORROWINGS CONTINUED Aircraft-related bank loans (including transaction costs) transaction (including loans bank Aircraft-related Issued bonds (including transaction costs) transaction (including bonds Issued Other bank borrowings bank Other Commercial paper

redeemed in full at the maturity date); and date); maturity atthe full in redeemed THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Current Current 5 49 50 5 – 155 1 1,038 219 1 21 14 £m – 976 – –(8) Non-current Non-current 052014 2015 £m al covenants they are are they covenants al Current Current oughout the year. the oughout 4 715 449 1 704 310 311 53 2– 82 g value £1,164m; £1,164m; g value £m arket prices. 412 –(12) nt. In 2015, In2015, nt. finance costs costs finance erating preciation, venant. venant. venant venant ance ance lities lities Non-current Non-current £m 149 FINANCIAL STATEMENTS 150 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

20 OBLIGATIONS UNDER FINANCE LEASES

Present value of Minimum lease payments minimum lease payments 2015 2014 2015 2014 £m £m £m £m

Amounts payable under finance leases: Within one year 48 47 35 34 Between one and five years 145 148 121 119 After five years 32 35 27 28 225 230 183 181 Less: future finance charges (42) (49) – – Present value of lease obligations 183 181 183 181

Less: amount due for settlement within 12 months (shown under current liabilities) (35) (34) Amount due for settlement after 12 months 148 147 The currency analysis of amounts payable under finance leases is:

2015 2014 £m £m

Euro 11 13 US dollar 172 168 183 181 Finance leases principally relate to aircraft and aircraft spares. No arrangements have been entered into for contingent rental payments. The Directors consider that the fair value of the Group’s finance lease obligations with a carrying value of £183m was £191m at 30 September 2015 (2014: carrying value £181m; fair value £181m). The fair values quoted were determined on the basis of the interest rates for the corresponding terms to repayment as at the year end. The Group’s obligations under finance leases are secured by the lessors’ rights over the leased assets. Trade and other payables other Trade and Movement in fair value during the year 16 80 (36) 60 60 (36) 80 16 year the during value fair in Movement Borrowings Cash and cash equivalents At 30 September 2015 September 30 At Trade and other receivables other Trade and ou asset are 2014 September 30 2015 and September asat30 liabilities and assets Group’s financial ofthe values carrying The liabilities and assets offinancial values Carrying 21 FINANCIAL INSTRUMENTS At 1 October 2014 At 1October 2013 At 1October Obligations under leases finance Current liabilities Current assets assets Non-current were: instruments financial ofderivative values fair The instruments financial Derivative oeeti arvledrn h er–4 (3)(88) (130) 42 – year the during value fair in Movement Provisions arising from contractual obligations Non-current liabilities Non-current t3 etme 051 8 (6)(70) (165) 84 11 2015 September At 30 instruments financial Derivative through profit Fair value or loss (8 (5 ,2 (3,631) 1,624 (75) (68) 7) – – (1,846) – – (73) £m – – – (1,257) – – – 1,301 – – – – – 33 – 323 – – – – – (183) – – – – – – (345) – – – (5 – – – (75) 5 in designated relationships instruments instruments Derivative hedging hedging £m receivables receivables THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Loans & Loans £m Interest rate rate Interest liabilities at swaps swaps amortised amortised Financial £m (5) (38) 1 (42) 1 (38) (5) 11 42 (35) 18 18 42 11 (35) cost 2015 £m through profit Fair value contracts contracts Currency or loss (7 3146(3,532) 1,416 23 (87) 8) – – (1,816) – – (82) ()2 – – – 23 (5) £m – – 9 – 397 – – – – – (1,164) – – – – – – (181) – – – – ,1 – 1,019 – – – (371) – – – £m in designated relationships instruments instruments Derivative hedging hedging £m contracts contracts receivables receivables (176) 2015 Fuel Fuel (23) (70) 114 114 £m £m 15 15 Loans & Loans t below: £m liabilities at amortised amortised Financial Total Total cost 2014 2014 (66) 68 £m £m £m 19 19 18 18 (3) 151 FINANCIAL STATEMENTS 152 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

21 FINANCIAL INSTRUMENTS CONTINUED Fair value hierarchy The fair value of the Group’s financial instruments are disclosed in hierarchy levels depending on the valuation method applied. The different methods are defined as follows: Level 1: valued using unadjusted quoted prices in active markets for identical financial instruments Level 2: valued using techniques based on information that can be obtained from observable market data Level 3: valued using techniques incorporating information other than observable market data as at least one input to the valuation cannot be based on observable market data. The fair value of the Group’s financial assets and liabilities are set out below:

2015 2014 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total £m £m £m £m £m £m £m £m

Financial assets Currency contracts –106–106 –72–72 Fuel contracts –12–12 –4–4 Interest rate swaps –11–11–11–11

Financial liabilities Currency contracts –(22)–(22) –(30)–(30) Fuel contracts –(176)–(176) –(39)–(39) Contingent consideration – (73) (73) – – (82) (82) At 30 September – (70) (73) (143) – 18 (82) (64)

The fair values of financial instruments have been calculated using discounted cash flow analysis. The contingent consideration represents the carrying value of the contingent obligation to acquire from The Co-operative Group and Midlands Co-operative (now Central England Co-operative) their shares and is included in Other payables (refer to Note 18 – Trade and Other payables). The carrying value reported is the fair value of the consideration calculated at each year end using the Financial Dividend model. The fair value is the net present value of the Group’s forecasted cash outflows arising from final dividend and exit payment of 4 x EBITDA, discounted at the Group’s weighted average cost of capital. The cash outflows are dependent on EBITDA for financial year 2015-16 and a 5% change in EBITDA will result in a £0.3m change in fair value (decrease in fair value liability and corresponding gain in profit before tax arising from increase in EBITDA) of this level 3 financial instrument. Similarly a 1% change in discount rate will result in £1.1m change in fair value (decrease in fair value liability and corresponding gain in profit before tax arising from increase in discount rate). The Group uses derivative financial instruments to hedge material future transactions and cash flows denominated in foreign currencies. The Group enters into foreign currency forward contracts, swaps and options in the management of its exchange rate exposures. The fair value of currency contracts designated in a cash flow hedge as at 30 September 2015 was an asset of £78m (2014: £47m asset). Currency hedges are entered into up to a maximum of 18 months in advance of the forecasted requirement. As at 30 September 2015, the Group had in place currency hedging derivative financial instruments with a maximum maturity of February 2017 (2014: February 2016) The Group also uses derivative financial instruments to mitigate the risk of adverse changes in the price of fuel. The Group enters into fixed price contracts (swaps) and net purchased options in the management of its fuel price exposures. All fuel hedges are designated as cash flow hedges. in respect of the movement in the time value of options in cash flow hedging relationships (2014: £2m loss). £2m (2014: relationships hedging flow cash in ofoptions value time the in movement ofthe respect in a and loss) £2m (2014: contracts hedging flow cash exchange foreign on points forward ofthe respect in statement income the in of£1m w again Inaddition, below. isshown statement income the in item line each in included amount The transactions. hedged reco following statement income tothe reserve hedge the from transferred was loss) £45m (2014: of£88m year, aloss the During 2015. September 30 o available prices market underlying using calculated been have instruments financial Group’s derivative ofthe values fair The 2020). June (2014: 2020 June was derivatives rate ofinterest maturity maximum 2015, the September at30 As £11m of£11m asset). (2014: 2015 asset an was September at30 relationships value hedge designa in contracts currency cross and swaps rate ofinterest value fair The borrowings. external currency foreign on exposure the and rate interest the tohedge swaps rate interest currency cross into enters also Group The debt. rate fixed on exposures int against tohedge and assets other and ofaircraft financing the with connection in movements rate interest against to hedge inter into enters Group The exposures. rate interest its tomanage instruments financial derivative uses Group the In addition, 2016). April (2014: 2017 ofMarch maturity amaximum with instruments financial derivative fu place in had Group 2015, the September at30 As policy. treasury with line in approval additional need 18months than longer matur Trades with offuel. consumption offorecasted advance in of18months toamaximum up into entered are hedges price Fuel CONTINUED INSTRUMENTS FINANCIAL 21 – fair value movements on derivatives in designated fair value hedge hedge value fair designated in derivatives on movements value –fair income/(costs): Finance contracts hedging flow cash exchange foreign on points –forward options on value –time reserve hedge from –release services: tourism providing of Cost a loss of £19m (2014: £6m gain) between one and five years. five and one between £6mgain) £19m (2014: a loss of yea one within gain) £7m (2014: of£103m aloss are statement income the toimpact expected are they when and tooccur expected cash the which in periods The £13m gain). (2014: of£122m aloss was oftax, impact the excluding reserve, hedging closing The exposure. sheet balance Group tohedge used deri trading for ofheld respect in statement income tothe directly taken was loss) £27m (2014: of£nil again year the During THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS (88) 2015 vatives that are are that vatives £m 5 est rate swaps swaps rate est n flows are 1 1 el price hedging hedging price el currency currency ted fair fair ted erest rate rate erest as recognised as recognised gnition of the ofthe gnition gain of£5m gain ities r and r and Re-presented 2014 (45) £m (2) (2) 11 153 FINANCIAL STATEMENTS 154 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

21 FINANCIAL INSTRUMENTS CONTINUED Offsetting financial assets and financial liabilities The following financial assets and liabilities are subject to offsetting, enforceable master netting arrangements and similar agreements:

Related amounts not set off in the balance sheet Gross amounts of Net amounts of Gross amounts of recognised financial recognised financial recognised financial liabilities set off in assets presented in Financial Cash collateral assets the balance sheet the balance sheet Instruments received Net Amount As at 30 September 2015 £m £m £m £m £m £m

Derivatives financial assets 129 – 129 (85) – 44 Derivatives financial liabilities (199) – (199) 85 – (114) Cash and cash equivalents 1,305 (4) 1,301 – – 1,301 Bank overdrafts (18) 4 (14) – – (14) Total 1,217 – 1,217 – – 1,217

Related amounts not set off in the balance sheet Gross amounts of Net amounts of Gross amounts of recognised financial recognised financial recognised financial liabilities set off in assets presented in Financial Cash collateral assets the balance sheet the balance sheet Instruments received Net Amount As at 30 September 2014 £m £m £m £m £m £m

Derivatives financial assets 87 – 87 (47) – 40 Derivatives financial liabilities (69) – (69) 47 – (22) Cash and cash equivalents 1,665 (646) 1,019 – – 1,019 Bank overdrafts (648) 646 (2) – – (2) Total 1,035 – 1,035 – – 1,035 For the financial assets and liabilities subject to enforceable master netting arrangements or similar arrangements above, each agreement between the Group and the counterparty allows for net settlement of the relevant financial assets and liabilities when both elect to settle on a net basis. In the absence of such an election, financial assets and liabilities will be settled on a gross basis, however, each party to the master netting agreement or similar agreement will have the option to settle all such amounts on a net basis in the event of default of the other party.

22 FINANCIAL RISK The Group is subject to risks related to changes in interest rates, exchange rates, fuel prices, liquidity and counterparty credit within the framework of its business operations. Interest rate risk The Group is subject to risks arising from interest rate movements in connection with the issue of Eurobonds, bank debt, aircraft financing and cash investments. Interest rate swaps are used to manage these risks and are designated as both cash flow and fair value hedges. Foreign exchange rate risk The Group has activities in a large number of countries and is therefore subject to the risk of exchange rate fluctuations. These risks arise in connection with the procurement of services in destinations outside the source market. For example, US Dollar exposure arises on the procurement of fuel and operating supplies for aircraft, as well as investments in aircraft. The Group requires segments to identify and appropriately hedge all exposures in line with approved treasury policies designed to reflect the commercial risk of each underlying business. Each segmental hedging policy includes the hedging build up and permitted instruments. The maximum hedge tenor is 18 months and each segment should achieve at least an 80% hedge ratio prior to the start of the season. The Group uses currency forwards, currency swaps and currency options to manage transactional currency risks and these are usually designated as cash flow hedges. The Group does not hedge translation exposures arising from profits generated outside the UK. 5% (2014: 5%) strengthening of US Dollar US of 5%) strengthening 5% (2014: Euro of 5%) weakening 5% (2014: 5% (2014: 5%) weakening of US Dollar US of 5%) weakening 5% (2014: Interest rate risk rate Interest below: out set are changes scenario defined tothe risks ofthese sensitivity 2015, the September at 30 As cons remain variables other all that assumed been has it case Ineach below. tables the in out set are and calculated been have i offinancial holdings end period the on based Group, the on variables risk these in changes possible ofreasonably impact The p fuel and risk rate exchange foreign risk, rate asinterest identified been tohave issubject Group the that risks market The hedges. flow ascash designated usually are these risk and fuel tomanage options purchased net and (swaps) contracts price fixed including contracts, derivative commodity uses Group The the season. start tothe prior ratio hedge 80% an atleast achieve should segment each general in and is18months tenor hedge maximum The inst permitted and up build hedging the includes policy hedging segmental Each business. underlying ofeach risk commercial the designed policies treasury approved with line in exposures all hedge appropriately and toidentify segments requires Group The Group’s aircraft. bythe incurred costs toflying due arises risk price tofuel Exposure risk Fuel price 22 FINANCIAL RISK CONTINUED Given recent historical movements in fuel prices management believe a 10% shift is a reasonable possibility. isareasonable shift a10% believe management prices fuel in movements historical recent Given price fuel in decrease 10%) (2014: 10% price fuel in increase 10%) (2014: 10% Euro of 5%) strengthening 5% (2014: rates interest in 1%)increase 1% (2014: Fuel price risk Fuel price exchangeForeign rate risk 0.25% (2014: 0.25%) decrease in interest rates interest in decrease 0.25%) (2014: 0.25% THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS before tax tax before tax before tax before on profit on profit on profit Impact Impact Impact Impact ()– (2) £m £m £m (6) 28 (6) (7) 77 (7) – (56) – 6(27) 6(74) 8– – 56 on equity on equity on equity Impact Impact Impact Impact 052014 2015 2014 2014 2015 2015 £m £m £m before tax tax before tax before before tax tax before on profit on profit on profit Impact Impact Impact Impact Impact rice risk. £m £m £m 3 (52) (3) (5) 70 70 (5) – (16) – 6– 1 17 (1) 1 – (1) 352 4(65) nstruments nstruments tant. to reflect to reflect ruments. price price of of on equity on equity on equity Impact Impact Impact Impact Impact £m £m £m 155 FINANCIAL STATEMENTS 156 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

22 FINANCIAL RISK CONTINUED Liquidity risk The liquidity position of the Group is significantly influenced by the booking and payment pattern of customers. As a result, liquidity is at its lowest in the winter months and at its highest in the summer months. The Group manages the seasonal nature of its liquidity by making use of its bank facility, the terms of which, including the covenant measures, are detailed in the borrowings Note (refer to note 19). The Group also uses liquidity swaps to manage short-term currency positions. These liquidity swaps are presented as held-for-trading financial instruments The undrawn committed debt facility plus the cash available ranged between £200m and £1,682m during the current financial year (2014: £169m – £1,168m). Surplus short-term liquidity is invested in accordance with approved treasury policy. Financial liabilities are analysed below based on the time between the period end and their contractual maturity. The amounts shown are estimates of the undiscounted future cash flows and will differ from both carrying value and fair value.

Amount due – 2015 Amount due – 2014 between between in less than 3 and 12 between in more than in less than 3 and 12 between in more than 3 months months 1 and 5 years 5 years Total 3 months months 1 and 5 years 5 years Total At 30 September 2015 £m £m £m £m £m £m £m £m £m £m

Trade and other payables 1,549 287 81 2 1,919 1,576 230 88 4 1,898 Borrowings 194 29 931 428 1,582 95 380 365 587 1,427 Obligations under finance leases 12 36 145 32 225 12 34 148 35 229 Derivative financial instruments: – payable 699 1,724 541 – 2,964 681 1,311 388 – 2,380 – receivable (703) (1,646) (532) – (2,881) (686) (1,311) (401) – (2,398) Provisions arising from contractual obligations 59 63 121 102 345 72 157 77 65 371 1,810 493 1,287 564 4,154 1,750 801 665 691 3,907 For all gross settled derivative financial instruments, such as foreign currency forward contracts and swaps, the pay and receive leg has been disclosed in the table above. For net settled derivative financial instruments, such as fuel swaps and options, the fair value as at the year end of those instruments in a liability position has been disclosed in the table above. Trade and other payables include non-financial liabilities of £142m (2014: £277m) which have not been analysed above. Counterparty credit risk The Group is exposed to credit risk in relation to deposits, outstanding derivatives and trade and other receivables. The maximum exposure in respect of each of these items at the balance sheet date is the carrying value. The Group assesses its counterparty credit risk exposure in relation to the investment of surplus cash, fuel contracts, foreign exchange and interest rate hedging contracts and undrawn credit facilities. The Group primarily uses published credit ratings to assess counterparty strength and to define the credit limit for each counterparty in accordance with approved treasury policies. The Group’s approach to credit risk in respect of trade and other receivables is explained in note 16. Reclassifications Credit to equity At 30 September 2015 September At 30 Exchange differences receivables. insurance ofits risk credit tothe exposure diminishing in satisfactory asbeing ratings credit these assessed has Group The ofA(S&P). rating stability afinancial have that ensures which ofDirectors LtdBoard Ireland Insurance Horse White bythe approved policy areinsurance operates Group The statements. financial Group the on effect amaterial to have expected not are variables tothese changes Any adequ are values carrying the that toensure liabilities its toreview actuary independent an uses also Group The developments. market and expenses handling claims average costs, claims ofhistoric respect in assumptions includes This pattern. development Group’ isthe estimates the underlying assumption principal the end, year atthe outstanding ofclaims cost the estimating When E Continental and Ireland UK, the including operates Group the where countries European several across isspread risk Insurance end. year comm fully been have policies Commercial limits. retention ofthese excess in claims any for contracts reinsurance byusing and insu the within limits byspecific iscapped Exposure contract. individual each for annually reviewed pricing and basis ongoing ismon performance Underwriting volume. high and value low ofshort-term, isone risks insurance oftravel nature principal The customers. non-Group and Group both for insurance travel and Group the for risks commercial standard includes written Business polic the affects adversely event future uncertain aspecified if policyholder the tocompensate ofhaving possibility risk the assignifi defines Group the guideline, ageneral As contracts. asinsurance classified are that and risk insurance significant that contracts issues Limited, Ireland Insurance Horse White subsidiary its through Group, the business, main toits Incidental risk ofinsurance Management 23 INSURANCE Credit/ (charge) toincome (charge) Credit/ 2014 At 1October repo current the during thereon movements and Group bythe recognised assets and liabilities tax deferred the are following The 24 DEFERRED TAX Deferred taxDeferred liabilities Deferred tax assets purposes:reporting fi for balances tax deferred ofthe analysis isthe following The offset. been have liabilities and assets tax deferred Certain Aircraft finance finance leases (62) (55) £m (1) 4 4 – Retirement Retirement obligations benefit benefit (20) 56 35 £m (2) (2) 3 THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS instruments instruments of financial Fair value 24 £m (6) (4) 2 16 – differences differences temporary temporary Other Other (39) (23) (57) £m 2 3 – Tax losses nancial nancial 2015 the Group’s cant insurance 179 (46) 212 197 yholder. 34 151 £m £m (3) 2 – rance policy rance policy transfer itored on an ate. ate. uted at the s past s past urope. rting year: reinsurers reinsurers

Total Total 2014 195 146 146 (49) £m £m 151 (4) 6 2 1 157 FINANCIAL STATEMENTS 158 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

24 DEFERRED TAX CONTINUED At the balance sheet date, the Group had unused tax losses of £2,844m (2014: £3,150m) available for offset against future profits. Deferred tax assets have only been recognised to the extent that business plans evidence future taxable profits against which the assets may be recovered. No deferred tax asset has been recognised in respect of tax losses of £1,935m (2014: £2,340m) due to the unpredictability of future profit streams. Other temporary differences on which deferred tax has been provided primarily relate to the difference in book to tax value on qualifying tax assets, provisions for which tax relief was not originally available, and fair value accounting on assets acquired. In addition, the Group had unused other temporary differences amounting to £339m (2014: £295m) for which no deferred tax asset has been recognised due to the unpredictability of future profit streams. Deferred tax liabilities were offset against the corresponding deferred tax assets as appropriate within territories. Reductions in the UK corporation tax rate from 20% (effective from 1 April 2015) to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015. This will reduce the group’s UK deferred tax asset at 30 September 2015 (which has been calculated based on the rate of 20% substantively enacted at the balance sheet date) by £5m.

25 PROVISIONS

Aircraft Reorganisation maintenance Off-market Insurance and and restructuring Other provisions leases litigation plans provisions Total £m £m £m £m £m £m

At 1 October 2014 234 15 90 23 28 390 Additional provisions in the year 125 6 62 8 10 211 Unused amounts released in the year (30) 2 (3) (7) (2) (40) Unwinding of discount 4 1–––5 Utilisation of provisions (87) (13) (73) (17) (12) (202) Exchange differences (5) – (1) (1) – (7) At 30 September 2015 241 11 75 6 24 357

Included in current liabilities 147 Included in non-current liabilities 210 At 30 September 2015 357

Included in current liabilities 247 Included in non-current liabilities 143 At 30 September 2014 390 The aircraft maintenance provisions relate to maintenance on leased aircraft and spares used by the Group’s airlines in respect of leases which include contractual return conditions. This expenditure arises at different times over the life of the aircraft with major overhauls typically occurring between two and ten years. The aircraft maintenance provisions are re-assessed at least annually in the normal course of business with a corresponding adjustment made to either non-current assets (aircraft and aircraft spares) or aircraft costs. Off-market leases relate to leases acquired through the Resorts Mallorca Hotels International S.L.U (Hi!Hotels) acquisition and certain office locations which have commitments in excess of the market rate at the time of the transaction. Insurance and litigation represents costs related to legal disputes, customer compensation claims (including EU261) and estimated costs arising through insurance contracts in the Group’s subsidiary, White Horse Insurance Ireland Limited. Reorganisation and restructuring plans predominantly represent committed restructuring costs in the UK and Continental segments. “Other” represents liabilities where there is uncertainty of the timing or amount of the future expenditure required in settlement and includes such items as onerous contracts, dilapidations and emissions trading liabilities. This grouping contains no single amount larger than £6m. annual report on pages 105to107. pages on report annual disclosu –other “Governance tothe refer please facilities financing the on information year. further For the during exercised financing old the under issue in Warrants remaining All Shares. of1,939,126 Ordinary aggregate toan May2015, tosubscribe 22 at right, the holders giving lenders tocertain issue in Warrants unexercised remained there agreement financing old the Under 19May2015. on Issue of shares of Issue Exercise of Warrants At 30 September 2014 September At 30 Exercise of Warrants 2013 At 1October CAPITAL SHARE CALLED-UP 26 At 30 September 2015 September At 30 (as shown in the Group balance sheet). At the balance sheet date the Group had total capital of £479m (2014: £573m). (2014: of£479m capital total had Group datethe sheet balance Atthe sheet). balance Group the in (as shown ofthe holders toequity attributable equity and equivalents cash and cash ofdebt, consists Group ofthe structure capital The ofcapital cost the toreduce structure capital optimal an tomaintain and stakeholders other for benefits and for shareholders topr order in concern asagoing to continue Group’s ability the tosafeguard are capital managing when Group’s objectives The management Capital share. per ofearnings calculation the in used of shares average weighted the from excluded been have trust bythe held Shares £25m). 2015 £11m was (2014: September at30 value market (2014: £14m was shares ofthese ofacquisition cost cumulative The 381,015) (2014: respectively. 350,328 and 20,865,104) (2014: w Limited Trustees Plan Share Equiniti and Limited 2015 International byEES Trustees September at30 held ofshares number The balance sheet. rese “other in included are and Shares asTreasury treated are these IFRS, with Inaccordance Scheme. You Earn As Buy plc Group T the with connection in shares hold Limited Trustees Plan Share Equiniti Plan. Share Restricted Cook Thomas the and Plan Share P 2007 plc Group Cook Thomas ofthe respect in Limited International byEES Trustees trust under held are Company ofthe Shares intrust held shares Own A consisting of facility new £500 financing million cr revolving guidelines, toinstitutional or, subject shares ofexisting market the in purchases byeither satisfied be will plan the under awards the exercise, On 29. toNote refer details further For Plan. Share Restricted Cook Thomas the and Plan Share Performance 20 plc Group Cook Thomas tothe respect with outstanding were shares ordinary for tosubscribe 2015, options September at30 As ofshares allotment to the rights Contingent Company. ofthe meetings atgeneral apoll) on or hands o vote(whether or speak attend, notice, toreceive entitled not are Shares ofDeferred classes ofboth holders The up thereon. a the aggregate, in received, have Shares Deferred sterling-denominated and Shares Ordinary ofthe holders the after only Share euro-denominat each on up paid capital tothe equal amount an toreceive entitled be would Shares Deferred euro-denominated the the and Share Deferred sterling-denominated each on up paid capital tothe equal amount an toreceive entitled be would Shares sterling-deno ofthe holders the up, awinding On Company. ofthe profits tothe right no carry Shares ofDeferred classes Both main Exchange’s Stock London the on totrading and List Official ofthe segment premium tothe admitted are Shares Ordinary The right the holds share each Company; ofthe meetings atgeneral speak and toattend right the carry Shares Ordinary The Company. a on ofcapital return tothe and distribution for available Company ofthe profits tothe right the carry Shares Ordinary The edit facility andedit facility £300 million bilateral bonding and guarantee 1,453,403,227 934,981,938 934,981,938 1,453,403,227 1,535,851,316 934,981,938 934,981,938 1,535,851,316 1,460,776,413 934,981,938 934,981,938 1,460,776,413 Ordinary Shares Ordinary 73,135,777 73,135,777 of €0.01 each €0.01 of 7,373,186 1,939,126 THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Deferred Shares Deferred of €0.09 each €0.09 of – – – – Ordinary Shares Ordinary of €0.01 each €0.01 of £m 11 11 11 11 11 11 – – – – Deferred Shares Deferred of €0.09 each €0.09 of issuing new shares. new issuing facility was agreed wasfacility agreed £30m) and the the and £30m) winding up of the ofthe up winding 58 50,000 50,000 58 58 50,000 50,000 58 58 50,000 50,000 58 res section” of the ofthe section” res £m – – – – agreement were n a show of of n ashow parent . minated Deferred Deferred minated ovide returns returns ovide any time until mounts paid of £1 each, 25p paid 25p each, £1 of homas Cook rves” in the the in rves” of shares ofshares holders of as 9,103,314 as 9,103,314 erformance erformance market. market. to one vote. vote. toone 07 07 Deferred Shares Deferred number ed Deferred £m – – – – 159 FINANCIAL STATEMENTS 160 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

27 OPERATING LEASE ARRANGEMENTS The Group as lessee At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Property Aircraft and Property Aircraft and and other aircraft spares Total and other aircraft spares Total 2015 2015 2015 2014 2014 2014 £m £m £m £m £m £m

Within one year 58 125 183 72 96 168 Later than one and less than five years 143 563 706 178 357 535 After five years 140 467 607 146 473 619 341 1,155 1,496 396 926 1,322 Operating lease rentals payable charged to the income statement for hire of aircraft and aircraft spares was £135m (2014: £106m) and other £90m (2014: £102m). Operating lease payments principally relate to rentals payable for the Group’s retail shop and hotel properties and for aircraft and spares used by the Group’s airlines. Shop leases are typically negotiated for an average term of 5 years. Leases for new aircraft are typically negotiated for an average term of 12 years, leases for second hand aircraft and extensions are typically considerably shorter.

28 CONTINGENT LIABILITIES

2015 2014 £m £m

Contingent liabilities 114 102 Contingent liabilities primarily comprise guarantees, letters of credit and other contingent liabilities, including contingent liabilities related to structured aircraft leases, all of which arise in the ordinary course of business. The amounts disclosed above represent the Group’s contractual exposure. The Group complies with all the standards relevant to consumer protection and formal requirements in respect of contracts and has all the necessary licences for the various sales markets. The customers’ right to reimbursement of the return travel costs and amounts paid in case of insolvency or bankruptcy on the part of the tour operator or is guaranteed in all Thomas Cook sales markets in line with local legislation and within the various guarantee systems applied. In the United Kingdom, there is a fund mechanism whereby travel companies are required to collect and remit a small charge for each protected customer upon booking. Customer rights in relation to Thomas Cook Group in Germany, Belgium and Austria are guaranteed via an insolvency insurance system, in Ireland, Scandinavia and France via guarantees provided by banks and insurance companies, and in the Netherlands via a guaranteed fund. In the ordinary course of its business, the Group is subject to commercial disputes and litigation including customer claims, employee disputes, taxes and other kinds of lawsuits. These matters are inherently difficult to quantify. In appropriate cases, a provision is recognised based on best estimates and management judgement but there can be no guarantee that these provisions will result in an accurate prediction of the actual costs and liabilities that may be incurred. There are also contingent liabilities in respect of litigation for which no provisions are made. Exercise price (£) price Exercise year of end at Exercisable 2015 September 30 at Outstanding h oeet notosadaad uigteya nrlto otePPadteohraad ee were: awards other the and PSP tothe relation in year the during awards and options in movements The isheld. award the that period the during aclawback if toforfeiture subject are Awards bonus. annual oftheir toaproportion relating Company, ofthe shares ordinary aw share contingent granted are subsidiaries its and Company ofthe Executives of senior number asmall and Directors Executive (DBP) Plan Bonus Deferred 2014 Cook Thomas The dateofvesting. the and target toaperformance subject be will award the dateofaw atthe determine will RSP. the Company The under awards receiving from excluded are Directors Executive Company. the ordina of, awards the share contingent or toacquire, options granted are subsidiaries its and Company ofthe management Senior (RSP) Plan Share Restricted 2011 plc Group Cook Thomas The behalf. their on share matching one purchase will Company the buys, employee an 10shares every For monthly their from bydeduction Company the in shares topurchase opportunity the offered are employees UKtax-paying Eligible (BAYE) Scheme You Earn As Buy Approved &Customs HMRevenue 2008 plc Group Cook Thomas The date ofgrant. the following th the during met are targets performance if Shares Matching receive may participants purchased, Share Lodged each For Shares). bonu net oftheir aproportion using shares Company’s the topurchase required be may executives senior and Directors Executive (COIP) Plan Co-Investment 2008 plc Group Cook Thomas The da the following years three the during met are targets performance if vest will awards The Company. ofthe shares ordinary the sha contingent or toacquire, options granted are subsidiaries its and Company ofthe executives senior and Directors Executive (PSP) Plan Share Performance 2007 plc Group Cook Thomas The £4m charge). £1m (2014: was transactions payment share-based of equity-settled year the during recognised charge total The below. asoutlined schemes, payment share-based equity-settled operates Company The 29 SHARE-BASED PAYMENTS Average remaining contractual life (years) life contractual remaining Average Lapsed 2014 At 1October Exercised Granted THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 3,8,6 4,307,753 30,487,662 545861,711,492 25,465,856 1,6,4 679,417 11,163,840 89120 (2,945,360) (8,961,220) 72446 (330,318) (7,224,426) 5,018,980 23,240 23,240 5,018,980 PSP i nil nil 1.4 1.5 event occurs occurs event re awards of, te of grant. te ofgrant. ry shares of gross pay.gross s (Lodged ards of the ards of the ree years years ree ard whether ard whether in respect in respect Other 2015 161 FINANCIAL STATEMENTS 162 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

29 SHARE-BASED PAYMENTS CONTINUED The weighted average share price at the date of exercise for the options exercised during the year ended 30 September 2015 was £1.33.

2014 PSP Other

At 1 October 2013 31,899,162 5,440,212 Granted 3,451,942 2,267,869 Exercised (807,281) (688,342) Lapsed (2,851,735) (1,929,368) Cancelled –(244,642) Forfeited (1,204,426) (537,976) Outstanding at 30 September 2014 30,487,662 4,307,753 Exercisable at end of year 95,653 58,260

Exercise price (£) nil 1.77 Average remaining contractual life (years) 1.3 2.2 The weighted average share price at the date of exercise for the options exercised during the year ended 30 September 2014 was £1.64 The fair value of options and awards subject to Group EBIT and cash conversion targets was determined by the use of Black-Scholes models and the fair value of options subject to TSR performance targets was determined by the use of Monte Carlo simulations. For options and awards granted during the year the key inputs to the models were:

2015 2014 PSP PSP

Weighted average share price at measurement date £1.49 £1.45 Weighted average exercise price nil nil Expected volatility 43% 40% Weighted average option life (years) 3 3 Weighted average risk-free rate 0.9% 1.30% Expected dividend yield nil 0 Weighted average fair value at date of grant £1.04 £1.02 Expected volatility has been based on the historic volatility of the Company’s shares and the shares of other companies in the same or related sectors. (Surplus)/deficit of funded plans plans (Surplus)/deficit of funded assets plan of value Fair obligations funded of value Present providers. insurance state-run and private toboth payments by contribution satisfied are plans defined from arising obligations The unfunded. and funded both being plans benefit defined wit plans, benefit defined and plans contribution ofdefined consist Group Cook Thomas ofthe employees the for schemes Pension 30 RETIREMENT BENEFIT OBLIGATIONS Discount rate for scheme liabilities scheme for rate Discount members currently aged 65 of 19 years for men and 23 years for women. women. for 23years and men for of19years 65 aged currently members expectan alife assume 2015. These September at30 obligations pension ofthe value present atthe arriving in used assumptions the for basis asthe schemes, pension German the for used, were Dr. Heubeck byProf. up Klaus Gdrawn 2005 tables mortality The obli benefit defined unfunded the ofdetermining purpose the for made were assumptions actuarial average weighted following The sheet. balance the in obligations benefit retirement for ofliabilities aspart for accounted are schemes pension unfunded The segments. Europe Continental and Europe Northern the in employees for service ofpast respect in obligations G Cook atThomas staff toexecutive commitments individual comprising obligations benefit defined unfunded additional are There 2004. since ofpilots) exception the (with entrants tonew closed been have plans benefit defined Group Condor The statements. financial these in assuch classified and obligations benefit defined classifie are commitments these 19, all IAS with Inaccordance provisions. transitional and commitments individual from arising o retirement has also Group Condor The plan). salary (average employees ofthose salaries average the on based are entitlements pension the which under scheme pension acompany in participate onwards 1995 from company Group aCondor joined who Employees plan). salary (final employment in-flight oftheir termination tothe prior concerned employees s final the on depended commitment benefit the cases, Inboth pension. company or astate-run for eligible became they time the in-flig oftheir termination the between period the for provision toatransitional entitled additionally were crews flight The scheme. pension ofacompany form i maintained and adjusted was states regional and government federal German ofthe authority pensions ofthe commitment pension to1995, prior company Group aCondor joined who employees For GmbH). CF and GmbH Berlin Condor GmbH, Flugdienst (Condor Group oft commitments pension tothe attributable were £277m) (2014: £270m totalling obligations similar and pensions for Provisions employees. respective ofremunerat level and ofemployment period the on and countries individual ofthe circumstances economic and tax legal, the on pensi transitional and old-age for employees tothose made ofcommitments basis the on established are Provisions Group. Condor Cook ofThomas businesses German the in Group’s employees tothe relate primarily obligations pension benefit defined Unfunded obligations pension benefit defined Unfunded Present value of unfunded obligations obligations unfunded of value Present Future pension increases increases salary of rate Expected Total deficit of defined benefit pension plans plans pension benefit defined of deficit Total THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 2.56% 2.68% 1.52% (1,104) 1,063 ht employment and and employment ht 320 320 279 2015 2015 (41) £m % contribution d as unfunded d asunfunded he Condor cy for ion of the ofthe ion bligations alaries of the ofthe alaries roup and roup and mortality mortality AG and the the AG and ons based h the h the gations: n the n the the total 2.54% 1.53% 2.71% (1,001) 1,119 329 329 2014 2014 447 118 118 £m % 163 FINANCIAL STATEMENTS 164 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

30 RETIREMENT BENEFIT OBLIGATIONS CONTINUED Changes in the present value of unfunded pension obligations were as follows:

2015 2014 £m £m

At beginning of year 329 296 Current service cost* 11 10 Past service cost* – (6) Interest expense* 8 10 Benefits paid (7) (7) Settlements* (1) (5) Effect of experience adjustments and demographic assumptions (5) (2) Effect of financial assumptions 2 62 Business combinations – (5) Exchange difference (17) (24) At end of year 320 329

* These amounts have been recognised in the income statement. Service costs, gains on settlement and curtailment gains have been included in personnel expenses in the income statement and the unwinding of the discount rate of the expected retirement benefit obligations has been included in finance costs. Actuarial gains and losses have been reported in the statement of comprehensive income. Funded defined benefit pension obligation The pension entitlements of employees of Thomas Cook UK and employees in and the Netherlands are provided through funded defined benefit schemes, where pension contributions are paid over to the schemes and the assets of the schemes are held separately from those of the Group in funds under the control of trustees. These schemes are closed to new entrants and continue to accrue future benefits for existing active members. The plans are final salary pension plans, which provide benefits to members in the form of a guaranteed level of pension payable for life. The level of benefits provided depends on a member’s length of service and their salary in the final years of active membership. In the UK plans, pensions in payment are generally updated in line with retail price index, pensions in deferment are generally updated in line with consumer price index. Pension costs are assessed in accordance with the advice of qualified actuaries in each country. The fair value of the pension assets in each scheme at the year end is compared with the present value of the retirement benefit obligations and the net difference reported as a pension asset or retirement benefit obligation as appropriate. Pension assets are only recognised to the extent that they will result in reimbursements being made or future payments being reduced. The funded defined benefit obligation primarily relates to the Thomas Cook UK Pension Plan. The assumptions used in arriving at the present value of the obligations at 30 September 2015 have been updated following the 2014 triennial actuarial funding valuation. The mortality assumptions used in arriving at the present value of those obligations at 30 September 2015 are based on the S1PA pensioner tables with 2012 CMI projection model with a long term trend rate of 1.5% for males and 1.25% for females. The mortality assumptions adopted for the plan liabilities indicate a further life expectancy for members currently aged 65 of 23.6 years for men and 25.6 years for women. The Company and Board of trustees are responsible for governance of the plans and ensuring it is sufficiently funded to meet current and future benefits. The trustees appoint advisers to carry out the administration, actuarial work and investment advice. Following the 2014 actuarial valuation of the Thomas Cook UK pension plan, the Recovery Plan agreed with the pension trustees to fund the actuarial deficit was extended. In line with that agreement, during the year ended 30 September 2015 Thomas Cook UK paid instalments totalling £26m in line with the recovery plan. The valuation of the Thomas Cook UK pension plan at 30 September 2015 resulted in a surplus of £50m, this is included within the net Group pension deficit of £279m. The £50m has been disclosed as a pension asset in the statement of financial position. (Surplus)/deficit of funded plan plan (Surplus)/deficit of funded payments –Benefit year of At end payments – Settlement plans: from Payments – Contributions: Employers Current service cost service Current Past service cost – Settlement payments payments – Settlement plans: from Payments Exchange differences Expenses paid* – Experience (gains)/losses –Experience – (Gain)/loss assumptions change from in financial – Loss from change in demographic assumptions demographic in change from –Loss Remeasurements: At beginning of year of At beginning ofobligation value Present isasfollows: year the over obligation benefit defined the in movement The CONTINUED OBLIGATIONS BENEFIT RETIREMENT 30 * These amounts have been recognised in the income statement. income the in recognised been have amounts * These At of year beginning Fair value of plan assets Interest income Interest Interest expense Interest – Benefit payments payments –Benefit year of At end Exchange differences income interest in included amounts excluding assets, plan on –Return Remeasurements: * * * * THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS (1,001) (1,104) 1,063 1,119 1,119 2015 2015 (63) (40) (40) (65) (65) (28) (28) (28) (75) (41) 28 28 44 44 £m £m 16 (1) 3 3 – – – – (1,001) (889) 998 1,119 2014 2014 106 106 118 118 104 104 (29) (40) (40) (75) (75) £m £m (21) 45 44 21 (2) (2) (6) 6 2 2 3 – 1 165 FINANCIAL STATEMENTS 166 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

30 RETIREMENT BENEFIT OBLIGATIONS CONTINUED The weighted average actuarial assumptions were as follows:

2015 2014 % %

Discount rate for scheme liabilities 3.86% 3.89% Inflation rate (RPI) 2.96% 3.15% The average mortality assumptions adopted for the plan liabilities indicate a further life expectancy for members currently aged 65 of 22.2 years for men and 24.7 years for women.

2015 2014 Quoted Non-quoted Total Quoted Non-quoted Total £m £m £m % £m £m £m %

Plan assets are comprised as follows: Cash and cash equivalents 9 – 9 1 12 – 12 1 Equity instruments 83 – 83 8 280 – 280 28 Debt instruments 330 – 330 30 249 – 249 25 Real estate 57 – 57 5 86 – 86 9 Derivatives 451 – 451 41 117 – 117 12 Investment funds 146 – 146 13 230 – 230 23 Assets held by insurance company 325 28 2 324272 Total 1,079 25 1,104 100 977 24 1,001 100

The scheme assets do not include any of the Group’s own financial instruments, nor any property occupied by, or other assets used by the Group. The Scheme currently has part of its assets invested in a liability driven investment portfolio. These assets, in combination with the other protection assets in the portfolio, provide interest rate and inflation rate protection. Sensitivities of the defined benefit obligation The group is exposed to a number of risks, the most significant of which are detailed below: Asset volatility The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets underperform this yield, this will create a deficit. However, the group believes that due to the long-term nature of the plan liabilities and the strength of the supporting group, a level of continuing equity investment is an appropriate element of the Group’s long-term strategy to manage the plans efficiently. Changes in bond yields A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings. Inflation risk Some of the group pension obligations are linked to inflation, and higher inflation will lead to higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to protect the plan against extreme inflation). The majority of the plan’s assets are either unaffected by (fixed interest bonds) or loosely correlated with (equities) inflation, meaning that an increase in inflation will also increase the deficit. Amounts owed to related parties to related owed Amounts Amounts owed by related parties related by owed Amounts Other income Purchases of goods and services and goods of Purchases All transactions are considered to have been made at market prices. Outstanding amounts will normally be settled by cash paymen by cash settled be normally will amounts Outstanding prices. atmarket made been tohave considered are transactions All to considered not are which but participation equity asignificant has Group the where investments equity are * Participations 2015 September 30 At below; detailed are payments benefit future expected The position. offinancial statement the within recognised liability pension cal aswhen applied been has method same the assumptions actuarial tosignificant obligation benefit defined ofthe sensitivity calcul When constant. assumptions other all holding while assumption an in achange on based are analyses sensitivity above The icutrt o ceelaiiis02%-%5% -5% 0.25% Mortality rate Inflation liabilities scheme for rate Discount Impact on defined benefit obligation: is: assumptions principal weighted the in tochanges obligation benefit defined ofthe sensitivity The in plans’ the liabilities. will expectancy life in increases so member, ofthe life the for benefits toprovide are obligations plans’ ofthe majority The Life expectancy CONTINUED OBLIGATIONS BENEFIT RETIREMENT 30 Sale of goods and services and goods of Sale Group: ofthe members not are who parties related with transactions following the into entered year, companies Group the During Trading transactions statements. financial separate 19in Note in out set are subsidiaries in Interest statements. financial separate Company’s the in disclosed are associates and s its and Company the between Transactions below. disclosed are associates its and Group the between Transactions note. this in are and consolidation on eliminated been have parties, related are which subsidiaries, its and Company the between Transactions TRANSACTIONS PARTY RELATED 31 oftrustees. control the under funds in Group ofthe those from separately held are schemes ofthese assets The £42m). (2014: to£23m amounted arrangements, compensation toworkers’ relating benefits of insured liabil including schemes, contribution defined other and ofthis respect in year the for charge total The incurred. are as they statement income asan for accounted are schemes benefit defined the into paid contributions Cash UKemployees. toall is open Schem Pension UKDC Cook Thomas the being scheme principal the Group, the in schemes contribution ofdefined anumber are There Defined contribution schemes payments benefit Pension THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Less than a year ayear than Less be associates. 91 365 33 10 29 £m Between 1–2 years assumption Change in er3% 1 year .5 %-3% 3% 0.25% £m Between 2–5 years years 2–5 Between assumption Increase inIncrease Associates and participations* result in an increase increase an in result ities in respect respect in ities 2015 £m (7) £m (1) 6 the Company’s Company’s the 1 1 culating the expense expense not disclosed ating the the ating ubsidiaries ubsidiaries t. e, which e, which Over 5years Over assumption Decrease in 2014 £m £m (11) (2) 8 3 1 167 FINANCIAL STATEMENTS 168 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

31 RELATED PARTY TRANSACTIONS CONTINUED Remuneration of key management personnel Further information about the remuneration of individual Directors is provided in the audited part of the Directors’ Remuneration report on pages 88 to 104.

2015 2014 £m £m

Short-term employee benefits 5 5 Share-based payments 11 – 16 5 14_Company_Statements_p169_p179_v46.indd 169 Total liabilities Borrowings liabilities Non-current assets Total Total equity equity Total shares own in Investment earnings Retained reserve redemption Capital reserves and translation Hedging Merger reserve account premium Share Share capital Equity Net assets Short-term provisions Borrowings payables other Trade and liabilities Current Cash and cash equivalents receivables other Trade and Current assets receivables other Trade and in subsidiaries Investments equipment and plant Property, Notes 1 to 19 form part of these financial statements. statements. financial ofthese part 1to19form Notes GROUP CHIEF FINANCIAL OFFICER MICHAEL HEALY Board ofthe behalf on Signed 2015. 24 on November ofDirectors Board by the approved were 169to179 pages on statements financial The Intangible assets Intangible assets Non-current COMPANY SHEET BALANCE AT 30SEPTEMBER 2015 THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS Notes 12 12 10 13 13 13 14

9 6 8 8 7 30 September September 30 2,696 2,696 2,454 1,060 3,515 1,429 1,873 1,061 (298) 554 302 382 524 (819) (518) (521) 2015 £m 69 25 (18) (3) 8 2 – 1 30 September September 30 2,580 3,526 2,762 2,762 1,990 1,429 (297) (467) (764) 946 583 436 (310) 529 329 (154) 2014 (38) 911 69 £m 35 (3) 8 5 2 06/01/2016 13:16 169 FINANCIAL STATEMENTS 170 FINANCIAL STATEMENTS

YEAR ENDED 30 SEPTEMBER 2015 COMPANY CASH FLOW STATEMENT

Year ended Year ended 30 September 30 September 2015 2014 £m £m

Cash flows from operating activities Loss before tax (8) (88) Adjustments for: Interest expense 44 48 Amortisation 1 – Share-based payments 1 2 Increase in provisions – 2 (Increase)/decrease in receivables (155) 104 Increase/(decrease) in payables 346 (17) Net cash from operating activities 229 51 Investing activities Purchase of tangible and intangible assets (23) (5) Net cash used in investing activities (23) (5) Financing activities Net outflow from borrowings (281) – Interest paid (46) (48) Share issue – 1 Net proceeds on the issue of ordinary shares 92 1 Investment in own shares – (8) Net cash used in financing activities (235) (54) Net decrease in cash and cash equivalents (29) (8) Cash and cash equivalents at beginning of year 35 46 Effect of foreign exchange rate changes (5) (3) Cash and cash equivalents at end of year 1 35 CHANGES INEQUITY COMPANY STATEMENT OF YEAR ENDED 30SEPTEMBER 2015 t1Otbr21 84414997945(0 3,094 (30) 415 769 9 1,429 434 68 Loss 2013 At 1October for the –––––(88)–(88) year Details of the own shares held are set out in Note 26 to the Group financial statements. statements. financial Group tothe 26 Note in out set are held shares own ofthe Details £329m). (2014: of£302m reserves distributable had Company 2015, the September At 30 15. March toFosu ofshares issuance the following Company ofthe Shares ofOrdinary issue the with connection in arose premium share The sha ofthe value fair the and value nominal the between difference the represents and 2007 19June MyTravel on AG and plc Group o capital share entire ofthe acquisition the with connection in Company ofthe ofshares issue the on arose reserve merger The sheet. balance ofthe totranslation relates expense and income comprehensive Other te opeesv noe–––()(4)()–(243) – (2) (240) (1) – – – Other comprehensive income oa opeesv xes o h er 1 20 9)–(331) – (90) (240) (1) – – – year the for expense Total comprehensive Equity debit in respect of share-based payments –––––4–4 Issue of shares-exercise of warrants 1 1–––––– Share premium –2–––––2 Purchase of own shares ––––––(8)(8) t3 etme 04 94614985939(8 2,762 (38) 329 529 8 1,429 436 69 year the for Loss 2014 September At 30 Other comprehensive expense Total comprehensive expense for the year ––––(147)(8)–(155) Equity credit in respect of share-based payments Issue of shares – Fosun –Fosun shares of Issue Exercise of own shares own of Exercise t3 etme 05 95414983232(8 2,696 (18) 302 382 8 1,429 524 69 2015 September At 30 capital Share £m –––––(8)–(8) ––––(147)––(147) ––1 1 –––––1– –88–––––88 –––––(20)20– premium Share £m THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS reserve reserve Merger £m redemption reserve reserve Capital £m Translation reserve reserve £m Retained Retained earnings £m shares f Thomas Cook Cook f Thomas Own Own £m res acquired. acquired. res n in n in Total Total £m 171 FINANCIAL STATEMENTS 172 FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS

1 ACCOUNTING POLICIES The accounting policies applied in the preparation of these Company financial statements are the same as those set out in Note 2 and 3 to the Group financial statements with the addition of the following: Investments Investments in subsidiaries are stated at cost less provision for impairment. These policies have been applied consistently to the periods presented. The functional currency of the Company is Euro, however, the Directors have decided to adopt Sterling as the presentation currency to be in line with the consolidated accounts.

2 LOSS FOR THE YEAR As permitted by section 408(3) of the Companies Act 2006, the Company has elected not to present its own income statement and statement of comprehensive income for the year. The loss after tax of the Company amounted to £8m (2014: £88m). The auditors’ remuneration for audit services to the Company was £0.1m (2014: £0.2m).

3 PERSONNEL EXPENSES

2015 2014 £m £m

Wages and salaries 23 17 Social security costs – 2 Share-based payments – – 23 19

2015 2014 Number Number

Average number of employees of the Company during the year 165 137 Employees are based in the United Kingdom and Germany. Disclosures of individual Directors’ remuneration, share options, long-term incentive schemes, pension contributions and pension entitlements required by the Companies Act 2006 and specified for audit by the Financial Conduct Authority are on pages 96 to 104 within the Remuneration report and form part of these audited accounts. The employees of the Company are members of the Group pension schemes as detailed in Note 30 of the Group financial statements.

4 TAX At the balance sheet date, the Company had unused tax losses of £209m (2014: £281m) and other deductible short-term temporary differences of £5m (2014: £4m) available for offset against future profits. No deferred tax asset has been recognised in respect of unused tax losses and other deductible short-term timing differences.

5 DIVIDENDS The details of the Company’s dividend are disclosed in Note 10 to the Group financial statements. At 30 September 2015 September At 30 Exchange difference Carrying amount at 30 September 2014 September 30 at amount Carrying Additions Additions payments share-based of respect in Adjustment 2014 September At 30 A list of the Company’s related undertakings is shown in Note 19 to the financial statements. statements. financial 19tothe Note in isshown undertakings related Company’s ofthe A list 2013 At 1October value book net and Cost 7 INVESTMENT IN SUBSIDIARIES Carrying amount at 30 September 2015 2015 September 30 at amount Carrying 2015 September At 30 Charge for year the 2014 September At 30 Charge for year the 2013 At 1October and depreciation impairment Accumulated 2015 September At 30 Additions 2014 September At 30 assets of Transfer Additions 2013 At 1October Cost assets intangible Other ASSETS 6 INTANGIBLE Exchange difference Additions payments share-based of respect in Adjustment THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS 1,990 1,873 2,167 (179) (119) 26 25 £m £m 21 5 5 2 2 4 – – – – – – 1 1 1 173 FINANCIAL STATEMENTS 174 FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

8 TRADE AND OTHER RECEIVABLES

2015 2014 £m £m

Current Amounts owed by subsidiary undertakings 1,057 879 Other receivables 1 3 Deposits and prepayments 2 29 1,060 911 Non-current Amounts owed by subsidiary undertakings 554 583 554 583 Amounts owed by subsidiary undertakings are repayable on demand. The average interest on overdue amounts owed by subsidiary undertakings is 4% (2014: 0.5%). The Directors consider the fair value to be equal to the book value.

9 CASH AND CASH EQUIVALENTS

2015 2014 £m £m

Cash at bank and in hand 1 35 1 35 Cash and cash equivalents includes balances which are considered to be restricted. £0.1m (2014: £35m) is held within escrow accounts in and Norway in respect of local regulatory requirements. The Directors consider that the carrying amounts of these assets approximate their fair value.

10 TRADE AND OTHER PAYABLES

2015 2014 £m £m

Amounts owed to subsidiary undertakings 485 106 Social security and other taxes 1 2 Other payables 11 19 Accruals 21 27 518 154 The average interest on overdue amounts owed to subsidiary undertakings is 1.8% (2014: 0.8%). Amounts owing to subsidiary undertakings are repayable on demand, with the exception of £43m due in 2023. The Directors consider the fair value to be equal to the book value. Provisions arising from contractual obligations Borrowings Trade and other payables payables other Trade and At 30 September 2015 September 30 At out set are 2014, September 30 2015 and September asat30 liabilities and assets Group’s financial ofthe values carrying The liabilities and assets offinancial value Carrying be loss decrease rates interest in decrease 0.25% (2014: bynil tax before loss decrease would rates interest in 0.25% decrease tax before loss increase rates interest in 1% increase (2014: bynil tax before loss increase would rates interest in increase that estimates Company The rates. interest in tomovements isexposed instruments financial Company’s ofthe value carrying The by£5m). tax before loss decrease (2014: by£7m tax before loss decrease would Sterling in 5% weakening while a tax before loss increase (2014: by£7m tax before loss increase would Sterling in a5% strengthening that estimates Company The (primarily rates exchange currency foreign in tomovements isexposed instruments financial Company’s ofthe value carrying The recoverable. fully tobe assets financial ofits value the believes Company to156. The on pages 154 isd risks offinancial management tothe approach Company’s The receivables. and payables other and equivalents, cash and cash undertakings subsidiary to/from due amounts undertakings, subsidiary in investment comprise instruments financial Company’s The 11 FINANCIAL INSTRUMENTS Trade and other receivables other Trade and 2014 September 30 At Cash and cash equivalents receivables other Trade and rvsosaiigfo otata biain 3 (3) (3) – Provisions arising from contractual obligations Borrowings payables other Trade and Cash and cash equivalents THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS receivables receivables Loans & Loans & ,2 74 765 (764) 1,529 ,9 1,494 – 1,494 ,1 89 794 (819) 1,613 ,1 1,612 – 1,612 £m £m 5–35 – 35 –(607)(607)–(154)(154) –(3)(3)–(298)(298) 58 (518) (518) – –1 1– amortised cost amortised amortised cost amortised liabilities at liabilities at by £1m), while a a by £1m), while Financial Financial below: fore tax by £nil). tax fore £m £m by£5m), Sterling). iscussed iscussed a 1% a1% , Total Total Total Total £m £m 175 FINANCIAL STATEMENTS 176 FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

11 FINANCIAL INSTRUMENTS CONTINUED Financial liabilities are analysed below based on the time between the year end and their contractual maturity. The amounts shown are estimates of the undiscounted future cash flows and will differ from both carrying value and fair value. Any cash flows based on a floating rate are calculated using interest rates as set at the date of the last rate reset.

Amount due In less than Between 3 and Between 1 and 3 months 12 months 5 years At 30 September 2015 £m £m £m £m

Trade and other payables (505) (26) – (531) Borrowings ––(327)(327) Provisions arising from contractual obligations – (3) – (3) (505) (29) (327) (861)

Amount due In less than Between 3 and Between 1 and 3 months 12 months 5 years At 30 September 2014 £m £m £m £m

Trade and other payables (29) (121) – (150) Borrowings –(348)(341)(689) Provisions arising from contractual obligations – (3) – (3) (29) (472) (341) (842) The Company is exposed to credit risk in relation to cash and cash equivalents, trade and other receivables, and amounts due from subsidiary undertakings. The maximum exposure in respect of each of these items at the balance sheet date is their carrying value. The Company assesses its counterparty exposure in relation to surplus cash using credit limits based on counterparty credit ratings. For amounts due from subsidiary undertakings and receivables, future operating cash flows are assessed for any indication of impairment. In the opinion of the Directors, the fair value of the Company’s investments is not less than the carrying value as stated in the balance sheet. As of 30 September 2015, Company receivables from Group undertakings were not past due and were expected to be recovered in full. The Company’s approach to credit risk in respect of trade and other receivables is explained in Note 8.

12 PROVISIONS

2015 2014 £m £m

At 1 October (3) (1) Additional provision in the year – (3) Release of provision – 1 At 30 September (3) (3)

13 BORROWINGS Borrowings comprise a £300m bond with an annual coupon of 7.75% maturing in June 2017.

14 CALLED-UP SHARE CAPITAL The details of the Company’s share capital are the same as those of the Group, and are disclosed in Note 26 to the Group financial statements in this report. Details of share options granted by the Company are set out in Note 29 to the Group financial statements. Loans payable Other payables Other receivables financial statements. financial statements. Group ofthe 31 Note in out isset Company, ofthe personnel key management the are who Directors, ofthe remuneration The Remuneration ofkey personnel management After five years years five After years five than less and year one than Later one year Within asfollows: due fall which leases, operating non-cancellable under toproperty, related payments lease minimum future for commitments outstanding had Company the date, sheet balance At the 15 OPERATING LEASE ARRANGEMENTS Loans receivable Loans receivable Year-end subsidiaries with on arising transactions balances Dividend income received expenses other and fees Management payable Interest receivable Interest Transactions with subsidiaries year. the during subsidiaries its from income dividend received also Company The on income interest earns and expense interest incurs Company the Hence, basis. acommercial on ofinterest, rates floating and subsidiaries, its with loans into enters Company The subsidiaries. its with balances outstanding has and transacts Company The Subsidiaries TRANSACTIONS PARTY RELATED 17 booking. upon customer protected each for charge asmall remit and tocollect required are companies travel whereby UKvia the in legislation with line in isguaranteed agency travel or operator tour ofthe part the on bankruptcy or insolvency paid amounts and costs travel return ofthe toreimbursement right customer’s UKthe Inthe licences. necessary the all has and tour ofpackage respect in requirements formal and protection toconsumer relevant standards the all with complies Company The liabilities of £183m (2014: £180m). fi ofthe value book current the on based estimated commitments, lease finance toaircraft related guarantees are included Also statements). financial Group 19tothe Note in (detailed facility banking Group ofthe portion d the on toaguarantee relates predominately This £710m). (2014: to£727m amounting bysubsidiaries owed ofamounts guarantees ofcred letters funding, bank for ofcounter-guarantees respect in liabilities contingent had Company 2015, the September At 30 16 CONTINGENT LIABILITIES THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS (428) 697 914 2015 2015 (57) a fund mechanism, mechanism, afund 45 £m £m 31 (4) 6 3 2 – 1 it and nance lease lease nance in case of of case in these loans. at both fixed fixed at both rawndown rawndown contracts contracts

2014 2014 (59) (43) 731 147 £m £m 28 45 (1) 3 3 7 1 1 177 FINANCIAL STATEMENTS 178 FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

18 SHARE-BASED PAYMENTS The employees of the Company, including the Directors, collectively participate in all of the Group’s equity-settled share-based payment schemes. The details relating to these schemes in respect of the Company are identical to those disclosed in Note 29 to the Group financial statements and have therefore not been re-presented here. The share-based payment charge of £1m (2014: £2m) is stated net of amounts recharged to subsidiary undertakings.

19 SUBSIDIARIES

Country of Proportion Country of Proportion Name Incorporation held % Class of shares Name Incorporation held % Class of shares

List of all subsidiaries Eurocenter Beteiligungs-und Reisevermittlung Germany 100 ordinary AB 9807 Beteiligungsverwaltungs GmbH Germany 40 ordinary GmbH Activos Turisticos, S.A. Spain 99.964 ordinary Future Travel Limited United Kingdom 100 ordinary and preference Airtours Channel Islands Limited Jersey 99.815 ordinary Gesellschaft für Reisevertriebssysteme mbH Germany 100 ordinary Airtours Finance Limited Guernsey 100 ordinary Gigatour Scrl Belgium 28 ordinary Airtours Holidays Transport Limited United Kingdom 100 ordinary Happy Camp S.P.A. Italy 40 ordinary Airtours Insurance Services Limited United Kingdom 100 ordinary Helios Palace SA Greece 100 ordinary Airtours Resort Ownership Espana S.L. Spain 100 ordinary Hix Express, S.L. Spain 100 ordinary Airtrack Services Limited United Kingdom 100 ordinary Hotel Investments Sarigerme Turizm Ticaret L.S. Turkey 100 ordinary Algarve Tours – Agencia de Viagens E Portugal 50 ordinary Hoteles Sunwing SA Spain 100 ordinary Turismo LDA Hotels4u.com Limited United Kingdom 100 ordinary Alpha Reiseburo Partner GmbH Germany 100 ordinary Inspirations Group Pension Trustees Limited United Kingdom 100 ordinary Anfinpan S.L. Spain 100 ordinary A & B Inspirations Limited United Kingdom 100 ordinary Astral (Cyprus) Holdings Limited Cyprus 100 ordinary Intourist Russia 100 ordinary Astral Hellas SA Greece 100 ordinary Intourist Overseas Company Limited Russia 100 ordinary Astral Spain Incoming S.A. Spain 100 ordinary ITC Enterprises Limited United Kingdom 100 ordinary Astral Tours (Cyprus) Limited Cyprus 50 ordinary ITC Travel Investments S.L. Spain 75 ordinary Belgian Travel Network CVBA Belgium 100 ordinary Jeropatur-Viagens e Turismo Limitada Portugal 100 ordinary Blue Sea Overseas Investments Limited United Kingdom 100 ordinary Jet Eldo Maroc Morocco 100 ordinary Bucher Reisen GmbH Germany 100 ordinary Jet Eldo Tunisie Tunisia 100 ordinary Buzzard Leisure Limited United Kingdom 100 ordinary Jet Marques S.A. France 100 ordinary Capitol Holdings Limited Ireland 100 ordinary JMCH Services Limited United Kingdom 100 ordinary Carousel Holidays Limited United Kingdom 100 ordinary Kuyi International Travel Agency (Shanghai) China 49 ordinary Carousel Resorts International Limited United Kingdom 100 ordinary Co., Ltd Close Number 1 Limited United Kingdom 100 ordinary Kelly Holdings Limited Gibraltar 100 ordinary Close Number 16 Limited United Kingdom 100 ordinary Kestrel Leisure Limited United Kingdom 100 ordinary Close Number 19 Limited United Kingdom 100 ordinary & 5% Leon y Castillo Management, S.L. Spain 100 ordinary redeemable preference LLG Nord GmbH & Co. Delta OHG Germany 100 ordinary Close Number 25 Limited United Kingdom 100 ordinary Maretours NV Belgium 48.57 ordinary Close Number 29 Limited United Kingdom 100 ordinary MTG (UK) Limited United Kingdom 100 ordinary Close Number 3 Limited United Kingdom 100 ordinary MyTravel 330 Leasing Ltd Cayman Islands 100 cumulative A, B, C, D Close Number 30 Limited United Kingdom 100 ordinary preference and ordinary Close Number 31 Limited United Kingdom 100 ordinary MyTravel Deutschland GmbH Germany 100 ordinary Close Number 32 Limited United Kingdom 100 ordinary MyTravel Group Limited United Kingdom 100 ordinary Close Number 33 Limited United Kingdom 100 ordinary Mytravel IPR Ireland Limited Ireland 100 ordinary Close Number 34 Limited United Kingdom 100 ordinary MyTravel Licensing S.a.r.l. Luxembourg 100 ordinary Close Number 35 Limited United Kingdom 100 ordinary MyTravel Luxembourg S.a.r.l Luxembourg 100 ordinary Close Number 36 Limited United Kingdom 100 ordinary MyTravel Luxembourg UK Unlimited* United Kingdom 100 ordinary Close Number 37 Limited Jersey 88.889 ordinary MyTravel Limited United Kingdom 100 ordinary Close Number 38 Limited Jersey 100 ordinary MyTravel Pioneer Limited United Kingdom 100 ordinary Close Number 6 Limited United Kingdom 100 ordinary NALG Holdings Ireland 100 ordinary Close Number 7 Limited United Kingdom 100 ordinary NALG Ireland Ireland 100 ordinary Close Number 8 Limited United Kingdom 100 ordinary & C fixed preference Neckermann Polska BP SP. z.o.o. Poland 100 ordinary Close Number 9 plc United Kingdom 100 ordinary & C fixed preference Neckermann Slovakia s.r.o. Slovakia 60 ordinary Compass Travel Limited United Kingdom 100 ordinary & 6% preference Neckermann Urlaubswelt GmbH Germany 100 ordinary Condor Berlin GmbH Germany 50.0023 ordinary NTC Intourist Russia 100 ordinary Condor Flugdienst GmbH Germany 50.0023 ordinary N-U-R Neckermann-utazás Szolgáltató Kft. Hungary 100 ordinary Condor Technik GmbH Germany 100 ordinary Öger Tours GmbH Germany 100 ordinary Co-op Group Travel 2 Holdings Limited United Kingdom 100 ordinary Orlando (ABC) Limited Jersey 100 ordinary Cooperatieve Parkway U.A. Netherlands 100 class A, initial preferred OY Tjaereborg AB Finland 100 ordinary class B and preferred class B Park Hotel SNC France 50 ordinary Delight Information Systems CVBA Belgium 79.997 ordinary Parkway Australia Holdings Pty Limited Australia 100 ordinary hmsCo iln evcsLmtdGene 99ordinary ordinary 99.9 100 Guernsey Denmark Limited Services Thomas Cook Airline A/S Scandinavia Thomas Airlines Cook hmsCo ilnsLmtdUie igo 0 ordinary ordinary 100 100 United Kingdom Belgium Limited Thomas CookAirlines Belgium NV Thomas Cook Airlines Services Limited Thomas Cook Aircraft Engineering hmsCo icatEgneigLmtdUie igo 0 ordinary 100 United Kingdom Engineering Limited Thomas Cook Aircraft hmsCo GGray10bearer shares ordinary ordinary ordinary 100 100 Germany 100 100 Germany United States Inc. Engineering Thomas Aircraft Cook Thomas CookAG Thomas (CIS) Cook AB THG Touristik GmbH hmsCo i eekdlié zlátt f.Hnay10ordinary ordinary 100 100 Hungary deS.A. C.V. United Kingdom Thomas Cook Engineering Aircraft () Thomas Cook Air Kereskedelmi és Szolgáltató Kft. The Travelworld Group Limited h reo rvlGopLmtdUie igo 1ordinary 91 United Kingdom The Freedom Travel Group Limited egl iie irla 0 ordinary ordinary ordinary 100 Gibraltar 100 100 Sweden United Kingdom The Group Airline Limited Tedgold Limited TCNE Leasing AB Aircraft CMLmtdUie igo 0 ordinary 100 United Kingdom TCIM Limited CHHlig iie ntdKndm10ordinary 100 United Kingdom TCGH Holdings Limited CTRti iie ntdKndm10ordinary 100 United Kingdom TCCT Retail Limited CDlaGb emn 0 ordinary ordinary A ordinary ordinary 100 100 Germany 66.5 Jersey 100 United Kingdom Greece TCCT Holdings UK Limited TCCT Holdings Limited TC GmbH Delta Sunwing Hotels Hellas SA uwn elsA wdn10ordinary ordinary ordinary and deferred ordinary 100 99.987 100 Sweden Belgium 100 Cyprus Spain Sunwing Hotels Limited (Cyprus) Sunwing Hellas AB Sunscan Hotel Sociedad Limitada Sunair N.V. pe / emr 0 ordinary ordinary ordinary 100 A ordinary, B ordinary Denmark 100 100 100 United Kingdom Africa South United Kingdom Sun International (UK) Limited Limited Sumango (Proprietary) HolidaysStyle Limited Spies A/S SOTHOU_SE S.A. Societe Touristique et Hoteliere du Senegal hpigadAito nutisLmtdUie igo 0 ordinary 100 United Kingdom Shipping and Limited Aviation Industries AE mHGray10ordinary ordinary ordinary 100 100 Germany 100 Rica Costa Germany C.V. de S.A Hoteles de AdministracionServicios y Operacion de Bluepar,Servicios S.B., S.A. HotelsSentido GmbH & Resorts SATEE GmbH adro KIvsmnsLmtdUie igo 0 ordinary 100 United Kingdom Limited UKSandbrook Investments ltnTae ..Gec 5ordinary ordinary 45 Greece 100 United Kingdom Limited Investments Overseas Sandbrook KG Hammergarten am Objekt ROSATA mbH & Grundstücksvermietungs Co. TravelPlotin S.A. ealTae iie ntdKndm10ordinary ordinary ordinary ordinary ordinary ordinary 100 ordinary 15 United Kingdom 100 100 100 100 Portugal Spain Guernsey 100 United Kingdom Netherlands Retail Travel Denmark Limited Mallorca Hotels S.L. International Resorts Bay S.A. Porto Hotels e-Resorts, Leisure Limited Peregrine Europe Holding A/S Northern Parkway BV Nederland Parkway Limited Parkway aka P iie ntdKndm10ordinary 100 United Kingdom Parkway IPR Limited aka P Cpu)LmtdCpu 0 ordinary ordinary ordinary ordinary 100 100 100 100 Cyprus Netherlands Luxembourg Germany IPRParkway Limited (Cyprus) S.a.r.l. International Parkway UK Holdings Parkway BV Holdings GmbH Parkway Name aka PSr uebug10ordinary ordinary 100 Luxembourg 100 United Kingdom HellasParkway Holdings Limited GPParkway Sarl Vermögensverwaltungs GmbH Parkway Auto Realisations (Germany) Incorporation Country of Country ursy9. ordinary 99.9 Guernsey emn 5ordinary 15 Germany emn 0 ordinary 100 Germany eea 0 ordinary 100 Senegal eio10ordinary 100 Mexico eio10ordinary 100 Mexico Proportion Proportion ed%Class of shares held % and preference EGAito V egu 99 ordinary ordinary ordinary ordinary ordinary ordinary 99.99 ordinary 100 100 100 Belgium 100 Spain Sweden Netherlands 100 Ireland 15 plc. Ireland Group Cook Thomas by directly held Shares ** * Morocco HorseWhite Insurance Ireland Limited Limited Services HorseWhite Administration WELG Aviation NV Wavell BV Holdings EspanaVingresor SA Ving Sverige AB Univers Holidays S.A. igNreASNra 0 ordinary ordinary 100 ordinary Norway 65.00 ordinary 100 Spain Isle of Man 100 Ving Norge A/S United Kingdom Espana,Viajes S.L. Iberoservice VA Limited Insurance Services Travel Technology Initiative Limited rvlAlac ..CehRpbi 0ordinary ordinary 40 Czech Republic 100 United Kingdom Travel Limited and Financial Services Travel a.s. Alliance orao iie ntdKndm10ordinary ordinary 100 100 United Kingdom Germany Tourmajor Limited Tour Touristik Vital GmbH hmsCo etIvsmnsLmtdUie igo 0 ordinary 100 United Kingdom Limited Thomas West Cook Investments hmsCo etib mHGray10ordinary ordinary 100 100 Germany United Kingdom Thomas West Cook Holdings Limited GmbH Thomas Vertriebs Cook hmsCo KTae iie ntdKndm10ordinary 100 United Kingdom Thomas Cook UK Travel Limited hmsCo KLmtdUie igo 0 ordinary 100 United Kingdom Thomas Cook UK Limited hmsCo rauyLmtdUie igo 0 ordinary 100 United Kingdom Thomas Cook Treasury Limited hmsCo rvlPninTute iie ntdKndm10ordinary 100 United Kingdom Thomas Cook Travel Pension Trustees Limited hmsCo orsi mHGray4.9ordinary 49.99 Germany Thomas Touristik Cook GmbH hmsCo orOeain iie ntdKndm10ordinary 100 United Kingdom Thomas Cook Tour Operations Limited hmsCo A rne10ordinary ordinary ordinary ordinary ordinary 100 100 France 100 100 100 Switzerland Czech Republic United Kingdom Belgium Limited Thomas Cook Services AG Thomas Service Cook Thomas SAS Cook s.r.o. Thomas Cook Thomas Cook Retail NV hmsCo ealLmtdUie igo 0 ordinary ordinary 100 100 United Kingdom Belgium Thomas Cook Retail Limited Thomas Retail Cook Belgium NV. hmsCo nieLmtdGene 0 ordinary ordinary ordinary ordinary ordinary ordinary 100 100 100 Guernsey 100 100 100 Sweden United Kingdom Denmark Sweden Netherlands Thomas Cook Pension Trust Limited Thomas Online Limited Cook Europe AB Thomas Northern Cook Europe A/S Thomas Northern Cook Thomas Nordic Cook Holdings AB BV Thomas Nederland Cook hmsCo nentoa GSizrad10ordinary ordinary 100 100 Switzerland United Kingdom (2) Limited** Thomas Investments Cook AG Thomas International Cook hmsCo ninI iie ntdKndm10ordinary 100 United Kingdom Thomas Indian Cook IP Limited hmsCo ru KLmtdUie igo 0 ordinary 100 United Kingdom Thomas Group Cook UK Limited hmsCo ru rauyLmtdUie igo 0 ordinary 100 United Kingdom Thomas Cook Group Treasury Limited Services Limited** Services Management Group Cook Thomas hmsCo rneSAS rne10ordinary ordinary 100 ordinary ordinary ordinary France 100 100 100 United Kingdom 100 Belgium France Germany Thomas Cook Group Hedging Limited Thomas France Cook S.A.S. Thomas France Cook Hotellerie Holding S.A.R.L. Belgium Thomas Financial Cook Services GmbH Thomas Financial Cook Activities hmsCo iac l* ntdKndm10ordinary ordinary 100 100 United Kingdom Jersey Thomas Cook Finance plc** Thomas Cook Finance (Jersey) Limited** hmsCo etntosGb emn 0 ordinary ordinary 100 100 Germany United Kingdom Thomas Cook Finance (2) Limited** GmbH Thomas Destinations Cook hmsCo etnto evcsIcUie tts10ordinary 100 United States Inc Services Destination Thomas Cook hmsCo egu VBlim10ordinary ordinary ordinary ordinary 100 100 100 Belgium France Germany 100 United Kingdom Holdings Limited Thomas Continental Cook Thomas Cabin Cook Crews GmbH Thomas Brok Cook Air Services Thomas Cook Belgium NV Name hmsCo uti GAsra10ordinary ordinary 100 Austria 100 Germany AG Thomas Austria Cook GmbH Service Thomas Cook Airport Registered office: The Thomas Cook Business Park, Coningsby Road, , Cambs, PE3 8SB, England. 8SB, PE3 Cambs, Peterborough, Road, Coningsby Park, Business Cook Thomas The office: Registered THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 &ACCOUNTS REPORT PLC ANNUAL GROUP COOK THOMAS ntdKndm10ordinary 100 United Kingdom Incorporation Country of Country Proportion Proportion ed%Class of shares held % 179 FINANCIAL STATEMENTS 180 FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS CONTINUED FIVE YEAR RECORD

2015 2014 2013 2012 2011

Income Statement Statutory (£m) Revenue (£m) 7,834 8,588 9,315 9,195 9,809 Gross profit (£m) 1,772 1,866 2,020 2,031 2,098 Gross profit margin (%) 22.6% 21.7% 21.7% 22.1% 21.4% Profit/(loss) from operations (£m) 211 52 13 (170) (267) Interest (£m) (169) (168) (177) (168) (135) Profit/(loss) before tax (£m) 50 (114) (163) (337) (398) Profit/(loss) for the financial year (£m) 19 (115) (213) (441) (518)

Weighted average number of shares (millions) 1,487 1,440 1,196 872 858 Basic and diluted earnings/(loss) per ordinary share 1.6 (8.2) (17.1) (67.2) (60.7)

Underlying Revenue (£m) 7,834 8,588 9,315 9,195 9,809 Gross Profit (£m) 1,774 1916 2,059 2,026 2,160 Gross profit margin (%) 22.6% 22.3% 22.1% 22.0% 22.0% Profit from operations (£m) 310 323 263 177 304 EBIT margin (%) 4.0% 3.8% 2.8% 1.9% 3.1% Separately disclosed items (£m) (120) (296) (281) (393) (573) Profit before tax (£m) 170 182 118 56 175

Weighted average number of shares (millions) 1,487 1,440 1,196 872 858 Underlying basic earnings per share 8.9 11.3 5.0 0.6 10.2

Like-for-like Revenue (£m) 7,834 7,748 8,030 8,062 7,920 Gross profit (£m) 1,774 1,754 1,759 1,728 1,725 Gross profit margin (%) 22.6% 22.6% 21.9% 21.0% 21.8% Underlying profit from operations (£m) 310 280 172 126 208 EBIT margin (%) 4.0% 3.6% 2.1% 1.6% 2.6% Interest (£m) (141) (143) (146) (142) (130) Separately disclosed items (£m) (120) (296) (263) (272) (489) Profit before tax (£m) 50 (157) (236) (286) (417) Profit/(loss) for the financial year (£m) 19 (158) (283) (379) (531) *FY12 Gross margin includes notional adjustments in relation to UK store closures totalling 0.4% THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 181

2015 2014 2013 2012 2011

Statement of financial position (£m) Total assets 5,958 5,794 6,285 5,907 6,690 Current assets 2,035 1,829 1,933 1,524 1,646 Current liabilities (3,702) (3,894) (3,688) (3,540) (3,749) Net pension deficit (279) (448) (404) (331) (331) Net Assets 368 285 548 458 1,183 Net debt (139) (326) (421) (788) (891)

Statement of cash flows (£m) Operating cash flow 474 335 339 152 289 Investing activities (180) (78) (182) 53 (178) Financing activities 10 (278) 476 (74) (82) Exchange (losses)/ gains (35) (52) 2 (19) (3) Net (decrease)/increase in cash and cash equivalents 304 (21) 633 131 28 Capex 200 156 151 138 187

Average number of employees 21,813 22,672 26,448 32,250 31,097

FINANCIAL STATEMENTS FINANCIAL 182 SHAREHOLDER INFORMATION

SHAREHOLDER INFORMATION

ANNUAL GENERAL MEETING (“AGM”) WEBSITE The AGM will be held at 1st Floor, North Building, 200 Aldersgate, The Company’s corporate website, www.thomascookgroup.com, London EC1A 4HD on Tuesday 23 February 2016 at 10.30am. The last provides information including: date for AGM proxy votes to be received by the Registrar is 10.30am > news, updates, press releases and regulatory announcements; Sunday 21 February 2016. > investor information, including the Annual Report, financial results, All Shareholders can submit their proxy vote for the AGM electronically financial calendar and share price information; at www.sharevote.co.uk. To register their vote, Shareholders will need > details of Shareholder meetings and poll results; the numbers detailed on their form of proxy. > biographies of the Board of Directors; > the Company’s Articles of Association, the terms of reference for the Alternatively, Shareholders who have already registered Committees of the Board and the Board Appointments Policy; and with Shareview can submit their proxy vote by logging on to > sustainability reporting. www.shareview.co.uk and clicking on the link to vote underneath their Thomas Cook Group plc holding. MULTIPLE ACCOUNTS ON THE SHARE REGISTER If a Shareholder receives two or more sets of the documents SHARE REGISTER AND SHAREHOLDER ENQUIRIES concerning the AGM, this means that there is more than one account The Company’s share register is maintained by Equiniti. in their name on the Shareholder register, perhaps because either the Queries relating to Thomas Cook Group plc shares should name or the address appears on each account in a slightly different be addressed to: way. For security reasons, Equiniti will not amalgamate the accounts The Registrar without the Shareholder’s written consent. Therefore, if a Shareholder Equiniti would like their multiple accounts to be combined, they should write Aspect House to Equiniti, detailing the different Shareholder reference numbers, Spencer Road and request that they be combined into one account. Lancing West Sussex BN99 6DA ELECTRONIC COMMUNICATIONS Tel: 0371 384 2154* At the AGM on 10 April 2008, the Company passed a resolution (International telephone number: +44 (0)121 415 0182) allowing the Company’s corporate website to be used as the primary means of communication with its Shareholders. A consultation card * Lines are open 8.30am to 5.30pm (London time), Monday to Friday (excluding UK public holidays). was sent to Shareholders enabling them to choose either to: Shareholders should quote the Company reference number 3174 and > receive notification by email when Shareholder documentation their Shareholder reference number (which can be found on their is available on the website; or share certificates), when contacting the Registrar. > continue to receive Shareholder documentation in hard copy. SHAREVIEW Shareholders who did not respond were deemed, in accordance To be able to access information about their shares and other with the Companies Act 2006, to have agreed to receive investments online, Shareholders can register with Shareview Shareholder documentation via the Company’s corporate website. (www.shareview.co.uk). Registration is free; Shareholders will These arrangements for electronic Shareholder communications need their Shareholder reference number which is shown on their provide Shareholders with the opportunity to access information form of proxy and share certificate. By registering for this service, in a timely manner and help the Company to reduce both its costs Shareholders will: and its environmental impact. > help reduce paper, print and postage costs; DIVIDENDS > help the environment; > be able to submit their queries by email; and No dividends have been paid or declared since the interim dividend > be able to manage their shareholding easily and securely online. for the financial year ended 30 September 2011, paid on 7 October 2011. Once registered, whenever Shareholder documents are available, Shareholders will be sent a link to the appropriate website, where the documents will be available to view or download. Receiving documents online does not affect Shareholders’ rights in any way. THOMAS COOK GROUP PLC ANNUAL REPORT & ACCOUNTS 2015 183

THOMAS COOK AG/MYTRAVEL GROUP PLC MERGER REPORT A SCAM Thomas Cook Group plc was formed in June 2007 upon the merger If you are approached about a share scam you should tell the FCA of Thomas Cook AG and MyTravel Group plc. using the share fraud reporting form at www.fca.gov.uk/scams, where you can find out about the latest investment scams. You can MyTravel Group plc Shareholders received one Thomas Cook Group plc also call the FCA Consumer Helpline on 0800 111 6768. If you have Ordinary Share for every one MyTravel Group plc share previously held. already paid money to share fraudsters you should contact Action MyTravel Group plc share certificates are no longer valid and can be Fraud on 0300 123 2040. destroyed. Replacement Thomas Cook Group plc share certificates were sent to Shareholders, who held shares in certificated form, on or around 19 June 2007. If you have any queries relating to this, SHAREGIFT please contact the Registrar. Shareholders with a small number of shares, the value of which make it uneconomical to sell, may wish to consider donating them WARNING TO SHAREHOLDERS ABOUT SHARE FRAUD to the charity ShareGift (Registered Charity Number 1052686), which specialises in using such holdings for charitable benefit. Find out Fraudsters use persuasive and high-pressure tactics to lure investors more about ShareGift at www.sharegift.org or by telephoning into scams. +44 (0)20 7930 3737. They may offer to sell shares that turn out to be worthless or non-existent, or to buy shares at an inflated price in return for an SHAREVIEW DEALING upfront payment. A telephone and internet dealing service has been arranged through While high profits are promised, if you buy or sell shares in this way the Registrar to provide a simple way of buying and selling Thomas you will probably lose your money. Cook Group plc shares for existing and prospective UK-based Shareholders. For telephone dealing call 08456 037 037 (international 5,000 people contact the Financial Conduct Authority about share telephone number: +44 (0)121 415 7560) between 8.00am and 4.30pm fraud each year, with victims losing an average of £20,000. (London time), Monday to Friday (excluding UK public holidays), or visit How to avoid share fraud the website: www.shareview.co.uk/dealing. Shareholders will need the Shareholder reference number shown on their share certificate(s). If you are offered unsolicited investment advice, discounted shares, a premium price for shares you own, or free company or research reports, you should take these steps before handing over any money: 1. Keep in mind that firms authorised by the FCA are unlikely to contact you out of the blue with an offer to buy or sell shares. 2. Do not get into a conversation, note the name of the person and firm contacting you and then end the call. 3. Check the Financial Services Register from www.fca.org.uk to see if the person and firm contacting you is authorised by the FCA. 4. Beware of fraudsters claiming to be from an authorised firm, copying its website or giving you false contact details. 5. Use the firm’s contact details listed on the Register if you want to call it back. 6. Call the FCA on 0800 111 6768 if the firm does not have contact details on the Register or you are told they are out of date. 7. Search the list of unauthorised firms to avoid at www.fca.org.uk/scams. 8. Consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial Ombudsman Service or Financial Services Compensation Scheme. 9. Think about getting independent financial and professional advice before you hand over any money. 10. Remember: if it sounds too good to be true, it probably is! SHAREHOLDER INFORMATION SHAREHOLDER 184 SHAREHOLDER INFORMATION

SHAREHOLDER INFORMATION CONTINUED

ANALYSIS OF SHAREHOLDERS AS AT 30 SEPTEMBER 2015

Distribution of shares by Number of Number of the type of Shareholder holdings shares

Nominees and institutional investors 15,169 15,868,808 Individuals 1,098 1,519,982,508 Total 16,267 1,535,851,316

Number of Number of Size of Shareholding holdings shares

1–100 9,291 292,660 101–500 3,137 737,916 501–1,000 963 725,754 1,001–10,000 2,040 7,267,475 10,001–100,000 516 15,772,206 100,001–500,000 141 32,959,517 500,001–1,000,000 48 35,236,698 1,000,001 and above 131 1,442,859,090 Total 16,267 1,535,851,316 Registered office 3rd Floor, South Building, 200 Aldersgate, London EC1A 4HD Registered Number: 6091951

SHAREHOLDER CONTACTS Shareholder Helpline: 0871 384 2154* (International telephone number: +44 (0)121 415 0182) Website: www.thomascookgroup.com Registrar’s website: www.shareview.co.uk * Calls to this number cost 8p per minute plus network extras. Lines are open 8.30am to 5.30pm (London time), Monday to Friday (excluding UK public holidays).

FINANCIAL CALENDAR

Date Event

11 February 2016 Q1 2016 Quarterly Results 23 February 2016 Annual General Meeting 19 May 2016 Interim results for six months ended 31 March 2016 28 July 2016 Q3 2016 Quarterly Results www.thomascookgroup.com The Thomas Cook Group website provides news and details of the Group’s activities, plus links to our customer sites and up-to-date information, including: > corporate news > presentations > share price data > historic Annual and Sustainability Reports > half-year results and interim management statements >news alerts > career opportunities

This report is printed on Edixion Offset, produced at a mill certified to the ISO14001 and EMAS environmental management standards. Manufactured using responsible sources and is FSC® certified. This report is fully recyclable and biodegradable. Designed and produced by Radley Yeldar. Printed by Park Communications. WWW.THOMASCOOKGROUP.COM