Thomas Cook Group TCG Half Yearly Report

  Thomas Cook Group (TCG) - Half Yearly Report

RNS Number : 4725E
Thomas Cook Group PLC
31 May 2012




31 May 2012



                            Thomas Cook Group plc

           Unaudited results for the six months ended 31 March 2012



                           Six months ended 31 March Six months ended 31 March
                                     2012                      2011
£m    (unless    otherwise    Underlying   Statutory    Underlying   Statutory
stated)
Revenue                          3,516.7     3,516.7       3,431.2     3,431.2
Loss from operations[1]          (262.7)     (643.1)       (165.8)     (197.9)
Loss before tax                  (328.3)     (712.9)       (232.9)     (269.4)
Loss per share (p)                (18.1)      (68.2)        (19.6)      (23.5)
Dividend per share (p)                 -           -          3.75        3.75
Net debt                         1,389.9     1,389.9       1,094.2     1,094.2





[1] Underlying loss  from operations  is considered  by management  to give  a 
fairer view  of the  year on  year comparison  of trading  performance and  is 
defined  as  earnings  before  interest  and  tax,  excluding  all  separately 
disclosed items. It also excludes our share of the results of associates  and 
joint venture and net investment income.



· The first half has been difficult, but decisive action has been taken to
improve the Group's position;


o Secured £1.4bn of longer term flexible funding with no fixed repayments
until 31 May 2015;

o Disposal of HCV hotels and aircraft sale and leaseback, approved by
shareholders on 29 May 2012, will add circa £239m of liquidity;

o Agreed disposal of Thomas Cook India, on 21 May 2012, for gross proceeds of
INR 8,174m (circa £94m) which will reduce debt;



· A sound platform has been created from which to restore confidence and
rebuild profitability;

o UK turnaround programme making good progress and underperforming businesses
being addressed;



o An improvement in bookings achieved since the earlier part of the year;



· Statutory losses of £643m include £300m of non-cash goodwill impairments
as announced on 12 May 2012;

· New management team appointed to lead the Group forward and rebuild
shareholder value. Harriet Green appointed as Group CEO, with effect from 30
July 2012, and Michael Healy appointed as Group CFO, with effect from 1 July
2012.



Sam Weihagen, Group Chief Executive, Thomas Cook Group plc said:



"This has been a period of significant change for the Group. At the beginning
of this month  we were delighted  to announce the  agreement with our  banking 
group of longer term and more flexible funding. This, combined with the  sale 
of Thomas Cook India, the sale and  leaseback of some of our aircraft and  the 
disposal of other  non-core assets, provides  the Group with  a much  stronger 
financial platform. From this  platform, we can  re-energise our business  and 
begin to  rebuild  profitability,  reduce  debt  and  continue  to  provide  a 
fantastic holiday experience for our customers."

Enquiries



Thomas Cook Group plc
Louise Bryant         +44 (0) 20 7557 6413
Kathryn Rhinds        +44 (0) 20 7557 6414


Finsbury
Faeth Birch           +44 (0) 20 7251 3801



Presentation to analysts



A presentation will be held for equity analysts and shareholders by invitation
today at 9am (BST), at Allen & Overy, One Bishops Square, London E1 6AD.



Dial-in details:  +44 (0) 20 3003 2666 

Password:  Thomas Cook



Replay number:  +44 (0) 20 8196 1998

Access number:  1435167





A live web-cast and a copy of the slides will be available on our website from
8.45am at www.thomascookgroup.com.





OPERATING REVIEW



The Group has  faced a challenging  six months. Since  December last year,  we 
have put in place a  number of measures to  improve the Group's stability.  At 
the beginning of this month, we were delighted to announce that we had reached
agreement on longer term and more flexible funding with our banking group. The
disposals of India and HCV, and the sale and leaseback of aircraft will reduce
debt and provide additional  liquidity and headroom.  These actions place  the 
Group on a much firmer footing and provide a stronger financial platform  from 
which our  new  management team  can  rebuild profitability,  re-energise  our 
business and  continue  to provide  a  fantastic holiday  experience  for  our 
customers.



The  results  reflect  the   continued  difficult  trading  conditions   being 
experienced in most of the Group's markets and particularly the impact of MENA
on France and the  poor trading in the  Canadian mainstream business partly  a 
result of  overcapacity in  that market.  The acquisitions  of the  Co-op  and 
Russia have  also added  to seasonal  losses in  the first  half. Following  a 
reorganisation, Central Europe  now includes  our Russian  and Eastern  Europe 
businesses.





Revenue and underlying results



Group revenue for the six months to 31 March 2012 was £3,517m (2011:  £3,431m) 
up 3% (3% on a constant currency basis). Revenue benefited from the  inclusion 
of acquisitions, specifically the Russian and Co-op joint ventures which added
£111m, and additional capacity in Airlines Germany and in Northern Europe, but
was offset by  capacity reductions  in other  segments and  weaker trading  in 
North America and France.



The Group seasonal underlying loss from  operations was £263m, an increase  of 
£97m on  the  prior year.  This  reflects the  inclusion  of losses  from  our 
acquired businesses in  Russia (£10m seasonal  loss) and the  Co-op in the  UK 
(£15m seasonal loss). The difficult  trading environment increased losses,  in 
particular the impact of MENA on  the French result (£17m increased loss)  and 
the poor trading in the North American business (£25m worse than prior  year). 
Seasonal losses  in  the UK  business  are flat  year  on year  excluding  the 
acquired Co-op  seasonal  losses, whilst  within  Central Europe,  our  German 
business performed well with a 58% reduction in the seasonal operating loss at
constant currency.



The Group's  underlying  net interest  charge  for  the period  was  £67m,  an 
increase of £2m as a result  of higher average debt and increased  arrangement 
fees.





Separately disclosed items



Included within separately  disclosed items of  £385m is a  £300m charge as  a 
result of a review  of the carrying  value of goodwill  in our North  America, 
West Europe and  India businesses. Further  details are outlined  on page  12. 
Whilst clearly  a substantial  sum, the  exceptional items  are largely  of  a 
non-cash nature. Cash  exceptional costs  were £39m (2011:  £48m) and  largely 
relate to the reorganisation  and restructuring of our  UK, North America  and 
West Europe businesses and costs in relation to the Group's financing.





Earnings and dividends



As a  result of  the  greater underlying  operating  loss and  the  separately 
disclosed items, the  Group delivered  a statutory  loss before  tax of  £713m 
compared with £269m for the same period last year. The reported loss after tax
was £605m (2011: £201m).





The underlying basic loss per share was 18.1p (2011: 19.6p loss per share) and
the basic loss per share was 68.2p (2011: 23.5p).



As previously, announced  the Group  will not  pay any  further dividend  this 
year.





Cash flow and balance sheet



The free cash outflow for  the period was £522m, an  increase of £267m on  the 
comparable period  last year.  This was  driven by  the £97m  higher  seasonal 
operating loss and a  £215m increase in working  capital outflow. The  Group's 
working capital profile has changed this year, largely as a result of capacity
reductions and we would expect much of the first half working capital variance
to reverse by  the year  end. The  resulting net debt  at 31  March 2012  was 
£1,390m (2011: £1,094m) which also reflects  the £87m higher opening net  debt 
position.



Reducing debt and increasing liquidity remains  a key objective for the  Group 
and the agreement of longer term,  more flexible banking arrangements and  the 
recently announced asset disposals are a major step forward in achieving  this 
objective.

Strategic Review



As previously announced on 5 May  2012, the Board has completed its  strategic 
review of the  Group, the  primary purpose  of which  is to  provide a  stable 
platform for recovery and consider further actions to reduce debt. The outcome
of the strategic review is a stabilisation plan which brings together a  range 
of existing actions and new initiatives:



· Continuing to drive the turnaround of our UK business;



· Build  on  the solid  performance  in  our Northern  Europe  and  German 
businesses;



· Address our under-performing businesses, particularly in North  America, 
France and Russia;



· Reducing debt and improving the resilience of our financing and  capital 
structure through  asset disposals,  the sale  and leaseback  of aircraft  and 
minimising our financial commitments;



· Stabilising our capital structure through the agreement of longer  dated 
more flexible facilities.



Significant progress has  been made  since the beginning  of the  year and  an 
update on the key highlights is outlined below:





Turnaround of our UK business



Implementation of  the UK  turnaround  plan is  well underway.  Good  progress 
across the initiatives has  resulted in increased confidence  in the scale  of 
the benefits. We  now expect over  three years to  deliver a fully  annualised 
improvement in profitability of £140m (up from £110m as previously announced),
for a total estimated cost of circa £70m (up from £60m previously).



Although in the current financial year we expect to deliver benefits of  £60m, 
these will help to mitigate the  difficult trading environment and the  weaker 
consumer sentiment towards the Group which we experienced earlier in the year.
As a result of the adverse publicity the Group received in the UK, we suffered
a weakening in brand  sentiment. However, looking forward,  we believe we  are 
taking the  right  actions  to  stabilise the  business  and  provide  a  more 
competitive cost base, which with a steady improvement in brand sentiment will
better position the business for future growth.



The  annual  improvement  in  profitability  and  the  outlay  in  costs   are 
anticipated to be phased as follows:



£m                      FY 12 FY 13 FY 14 Annualised run rate
Cumulative improvements    60   120   130                 140
Costs to achieve           40    20    10





The initial focus  of the  UK turnaround plan  has been  on optimising  yield, 
reducing  retail  and  tour  operator  discounts,  improving  the  operational 
efficiency of the organisation and facilitating faster, more focused  decision 
making. The following are the key actions taken to date:



1. Optimise the UK airline (£10m improvement)



We reduced  the UK  fleet  by six  aircraft during  Winter  11/12 as  part  of 
right-sizing the UK  tour operator  programme, particularly  in long-haul,  to 
reduce the risk to the business. As previously announced, around 300 employees
will have left the business by the end of the financial year.





2.  Refocus  the  product  strategy  in  mainstream  package  holidays   (£15m 
improvement)



Over 500  under-performing  hotels  have  been  removed  from  the  Summer  12 
programme (around 22% of properties), whilst we have introduced around 150 new
properties,  focused  on  differentiation  and  exclusivity.  For  Summer  12, 
customers choosing differentiated product are up 9%, making up 31% of  overall 
passengers for the season to date. Further new properties are being added  for 
Summer 13 as we continue to evaluate our product offering.





3. Improve yield management (£40m improvement, up £5m)



A single commercial trading approach  across the mainstream business has  been 
implemented  with   a  coordinated   discounting  approach   to  ensure   that 
distribution channels are not competing against each other. The improved yield
tools are  allowing us  to better  manage fast  selling stock  and  delivering 
better management  information.  Our revised  discount  policy has  led  to  a 
substantial reduction  in  discount levels  with  retail shops  now  averaging 
around 3% compared to 5% previously.  There remain opportunities to align  our 
product portfolio so  that they  complement rather than  compete against  each 
other.





4. Rationalise Distribution (£30m improvement in the JV, up £5m)



The integration within the retail JV  continues to make good progress.  Nearly 
100 stores have closed since  October 2011 with a further  15 to be closed  or 
sold during  the remainder  of  the current  financial  year, resulting  in  a 
headcount reduction as previously announced, of around 850 employees.



Leverage of  Thomas  Cook's foreign  exchange  expertise across  the  combined 
retail estate, alongside improved contractual and commercial terms are driving
substantial commercial benefits which largely account for the £5m increase  in 
expected benefits.





5. Operational excellence (£45m improvement, up £20m)



We are currently implementing the  majority of projects identified within  the 
"operational excellence" category.  This process  has allowed  us to  identify 
further opportunities, resulting in an  increase in the expected benefits.  As 
we  outlined  previously,  operational   excellence  is  about  reducing   and 
eliminating operational  inefficiencies  driven  by  a  siloed  structure  and 
overlapping, manual processes.



Since we  announced the  programme, we  have implemented  a new  IT system  to 
better manage  yield  on  seat-only  sales  whilst  automating  processes  and 
focusing on  ancillary sales.  Paperless ticketing  has been  launched  during 
Summer 12 and we have reduced brochures by 20% for the current financial  year 
with further efficiencies expected in FY13. We have also announced that we are
working with software provider Anite  to implement a new reservation  platform 
in the UK to drive improved  processes and increase the functionality for  our 
on-line customers. The first  phase of this is  expected to be implemented  in 
the first half of FY13 for departures in FY14.





Building  on  the  solid  performances  in  our  Northern  Europe  and  German 
businesses



Our businesses in  Northern Europe and  Germany have performed  well over  the 
last few years, despite difficult market conditions, and provide a stable base
for the Group. We believe that there is scope for further improvement  through 
strong  leadership  and  building  on  market  positions,  increasing   online 
distribution and differentiated hotel products  whilst continuing to focus  on 
cost control.





Improving under-performing businesses



As we  have previously  stated, the  performance of  our businesses  in  North 
America, Russia and  France are  disappointing and  we believe  that there  is 
substantial scope to improve the results of these businesses.



The North American mainstream business had a poor year in 2011 and a very weak
Winter 11/12 season. We have taken action to reduce our flying commitments and
manage  our  fixed  costs  and  over-capacity.  We  have  exited  our   flying 
arrangements with a third party supplier for the Winter 12/13 season  onwards. 
Going forward we have  an agreement with  WestJet to provide  our flying on  a 
flexible basis,  which not  only  reduces our  costs,  but also  provides  our 
customers with a greater choice  of departure airports. Further  restructuring 
is ongoing as the new management reposition the business for the future.



Our Russian business, which was acquired on 12 July 2011, has been impacted by
MENA as  Egypt is  an important  destination. We  have implemented  management 
change and  put the  business  under the  Central  Europe management  team.  A 
comprehensive restructuring  programme focused  on costs  and better  capacity 
management is underway and benefits are already being seen.



In 2011  we changed  the management  team in  our French  business, which  has 
suffered  considerably  from  the  impact  of  MENA  and  the  weak   consumer 
environment. We  are working  on  plans to  improve  the performance  and  are 
continuing to evaluate our options.





Disposals



On 11 May the Group announced that it has agreed the sale and leaseback of  17 
aircraft with agreements in principle for a further two aircraft. In total we
will receive proceeds of USD 294m (circa £183m) for the 19 aircraft. On 29 May
2012 we  received  shareholder approval  for  the  sale and  leaseback  of  19 
aircraft. The proceeds are to be retained by the Group to provide  significant 
additional liquidity.



Following shareholder approval for  the sale of HCV  hotels, we will  complete 
the disposal of  non-core assets expected  to reduce net  debt by €94m  (circa 
£75m). On 21  May we announced  the disposal  of Thomas Cook  India for  gross 
proceeds of INR 8,174m (circa £94m), the net proceeds of which will be used to
reduce net debt.





Stabilise our capital structure



On the 5 May 2012 we announced a new financing package extending the  maturity 
of the Group's financing until 31 May 2015 with no fixed repayments. Under the
agreement the Group retains  the proceeds of  the sale of  HCV hotels and  the 
aircraft sale  and leaseback  which  has increased  liquidity and  along  with 
revised financial covenants ensure greater financial flexibility.





Current trading



Summer 12



We have been pleased with the recent booking patterns, particularly given the
uncertain economic environment.



                                       Year on year variation %
                           Average selling         Cumulative Planned capacity
                                     price           bookings
UK                                                                         

- Total                              -                 -1                -

-    Specialist    &                 -                +10                -
Independent
                                        +4                 -8              -12
- Mainstream
Central Europe                          +1                 +1             Flat
West Europe                             +4                -10              -13
Northern Europe                         +4                 -6               -3
Airlines Germany                        +5                 +4               +7



Note: Figures  as at  26/27 May  2012.  In Central  Europe and  West  Europe, 
bookings represent  all  bookings including  cars/overland,  however  capacity 
represents airline seat capacity only. Northern Europe summer season is April
- September. The statistics reflect the transfer of the East Europe businesses
into Central Europe.



Overall, UK  bookings are  only  slightly lower  than prior  year.  Mainstream 
bookings are down 8%, well ahead of capacity reductions of 12% and we have 22%
less left to sell compared to prior year. Mainstream average selling price is
stable at  +4%  but would  need  to strengthen  further  to fully  cover  cost 
inflation. Our independent and specialist businesses continue to perform well,
with bookings up  10%, but whilst  consumer demand for  the Olympics  packages 
remains strong, corporate demand has been much weaker than expected which  has 
impacted margins.



In Central Europe,  our German  business is performing  strongly and  bookings 
(+2%) are ahead of planned capacity (flat), with sustained improvement in  the 
last four weeks (+4%). Pricing is up 1% and margins remain stable despite  the 
competition in the market.



Trading in West Europe remains  challenging, particularly in France.  Bookings 
are ahead of capacity reductions, resulting in less left to sell and in recent
weeks have begun to  improve as we  have seen uplift  in bookings to  Tunisia. 
Pricing remains stable at +4%.



In Northern Europe, bookings are down 6%  after a slow start to the year,  but 
have continued to improve with bookings in  the last four weeks up 5% and  are 
trending towards capacity. Pricing is  showing an improvement from the  Winter 
season, and is up 4%.



Bookings are up 4% in Airlines Germany and continue to improve. Yields are up
5%, partly  driven  by a  higher  share  of intercontinental  routes  and  the 
introduction of a fuel surcharge which  partly mitigates the increase in  fuel 
prices.





Board and management changes



Following the successful completion of longer term financing, Paul
Hollingworth has decided to step down from the Board and his role as Group CFO
at the end of June 2012. Paul will be replaced by Michael Healy, who will
become Group CFO and join the Board on 1 July 2012. Michael joined the Group
on 14 May 2012 and has been working closely with Paul to ensure an orderly
handover.



As announced on 24 May 2012, Harriet Green will succeed Sam Weihagen as Group
CEO. Harriet will join the Group and the Board on 30 July 2012 at which time
Sam Weihagen will step down from the Board. Sam will remain with the Group
until 30 September 2012 to ensure an orderly handover.





Outlook



We continue to expect this year to be challenging given the economic backdrop,
difficult trading environment with particularly poor performances in our North
American and French  businesses. Whilst  our booking position  for the  second 
half has improved  trading will be  dependent on how  well the Group  performs 
during the important lates market.

FINANCIAL REVIEW



Financial results and performance review



Group



                                                                            
                                Six months ended Six months ended
                                  31 March 2012    31 March 2011 Year on year
                                                                        change
£m (unless otherwise stated)
Revenue                                  3,516.7          3,431.2        +85.5
Underlying      loss       from          (262.7)          (165.8)        -96.9
operations[3]
Share of results
                                             1.0            (1.4)         +2.4
of associates & joint venture
Net investment income/(loss)                 0.3            (1.2)         +1.5
Finance charges                           (66.9)           (64.5)         -2.4
Underlying loss before tax               (328.3)          (232.9)        -95.4
Separately disclosed items               (384.6)           (36.5)       -348.1
Loss before tax                          (712.9)          (269.4)       -443.5
Underlying loss per share (p)             (18.1)           (19.6)         +1.5
Basic loss per share (p)                  (68.2)           (23.5)        -44.7
Dividend per share (p)                         -             3.75        -3.75
Free cash flow[4]                        (522.1)          (255.2)       -266.9
Net debt                                 1,389.9          1,094.2       -295.7



[3]Underlying loss from operations is defined as earnings before interest and
tax, and has been adjusted to exclude all separately disclosed items. It also
excludes our share of the results of associates and joint venture and net
investment income.

[4]Free cash  flow  includes cash  from  operating activities,  purchase  and 
proceeds of  disposal of  tangible and  intangible fixed  assets and  interest 
paid.



        Income statement



Revenue and underlying profit from operations

Group revenue for the period increased by 2.5% to £3,516.7m, (3.1% at constant
currency). The  increase reflects  the impact  of acquisitions,  particularly 
Intourist, our Russian business and the Co-op in the UK, in addition to volume
growth in the Northern Europe and Airlines Germany segments, partially  offset 
by the impact of capacity reductions in the other segments.



The seasonal  underlying loss  from  operations was  £262.7m, an  increase  of 
£96.9m on the prior year. This result includes £29.4m of first time  seasonal 
losses from operations  of the  acquired businesses,  mainly the  Co-operative 
businesses in the UK and Intourist.  In addition, we have seen  deteriorating 
trading in some of  our businesses, particularly in  France and North  America 
where results are worse by £41.7m.



Following the previously announced changes in management structure to transfer
our East Europe businesses  into the Central Europe  segment, we have  revised 
our segmental presentation  and restated prior  year segmental information  to 
reflect the  new  structure. The  Central  Europe segment  now  includes  the 
businesses in Poland, Hungary, the Czech Republic and Russia.

The main  drivers  of  the year  on  year  increase in  underlying  loss  from 
operations were:



£m
H1 2011 Group underlying loss from operations           (165.8)
Trading                                                  (11.2)
Increased fuel and accommodation costs                   (71.3)
Net impact of acquisitions and disposals                 (26.9)
Cost savings                                               21.7
Inflation, depreciation, exchange translation and other   (9.2)
H1 2012 Group underlying loss from operations           (262.7)





Separately disclosed items

Separately disclosed items consist of exceptional operating and finance items,
IAS 39 fair value re-measurement, impairment of goodwill and the  amortisation 
of business combination  intangibles. These  are costs or  profits that  have 
arisen in the period  which management believes are  not the result of  normal 
operating performance. They are therefore disclosed separately to give a more
comparable view of the year-on-year underlying trading performance.



The table below  summarises the  separately disclosed items,  which have  been 
included in the interim accounts. Further  details are provided in note 5  to 
the financial information in Appendix 1.



                                  Six months ended     Six months Year on year
                                     31 March 2012 ended 31 March  reduction /
£m                                                           2011   (increase)
                                  
Affecting profit from operations
Exceptional operating items                 (67.3)         (37.9)       (29.4)
Gain on pension curtailment                      -           24.5       (24.5)
IAS 39 fair value re-measurement               1.4          (2.2)          3.6
Amortisation     of      business           (14.9)         (16.5)          1.6
combination intangibles
                                            (80.8)         (32.1)       (48.7)
Impairment of goodwill                     (299.6)              -      (299.6)
                                           (380.4)         (32.1)      (348.3)
Affecting net finance costs
Exceptional finance charges                  (1.0)              -        (1.0)
IAS 39 fair value re-measurement             (3.2)          (4.4)          1.2
                                             (4.2)          (4.4)          0.2
Total                                      (384.6)         (36.5)      (348.1)





Exceptional operating items

Exceptional operating  items  were  £67.3m (2011:  £37.9m  excluding  gain  on 
pension  curtailment).   The  principal   elements   of  this   charge   were 
reorganisation and restructuring  costs of  £37.6m relating to  our UK,  North 
American and West Europe businesses (£27.3m, £5.5m and £4.8m, respectively), a
revised forecast of the  cost to settle  a dispute with  HM Revenue &  Customs 
over place of  business, £11.8m,  and professional  and other  fees of  £14.0m 
incurred in relation to the Group's financing.



IAS 39 fair value re-measurement

IAS 39  (as amended)  requires the  time  value element  of options  used  for 
hedging the Group's fuel and foreign  currency exposure be written off to  the 
income statement as incurred. As this is  purely a timing issue but can  give 
rise to significant, unpredictable gains  and losses in the income  statement, 
management has  decided  to  separately  disclose the  impact  in  the  income 
statement to  assist  readers of  the  accounts in  better  understanding  the 
underlying business development. For consistency, we also separately disclose
the timing effect within net finance charges of marking to market the  forward 
points  on  our  foreign  currency  hedging.  We  have  therefore  separately 
disclosed a gain of £1.4m in the operating result (2011: loss of £2.2m) and  a 
loss of £3.2m in net finance costs (2011: loss of £4.4m).



Impairment of goodwill and amortisation of business combination intangibles

As announced on 21  May 2012, we  have reached agreement  to sell Thomas  Cook 
India. There was a formal process  for disposal of this business underway  at 
31 March 2012  so it  has been disclosed  as held  for sale at  that date  and 
recorded at a  carrying value no  greater than  its fair value  less costs  to 
sell. This resulted  in an  impairment of goodwill  previously recognised  in 
respect of the business of £96.0m.



Poor trading and subsequent reviews undertaken by new management in Canada and
France have indicated that the goodwill carried in the North America and  West 
Europe segments  may  be impaired.  As  a  consequence, we  have  tested  the 
goodwill in  these segments  for  impairment and  have recognised  charges  of 
£109.2m in respect of North America and £94.4m in respect of West Europe.



During the  period we  incurred non-cash  costs of  £14.9m (2011:  £16.5m)  in 
relation to the  amortisation of business  combination intangibles. £9.5m  of 
the amortisation  relates  to the  merger  of  Thomas Cook  and  MyTravel  and 
represents  the  amortisation  of  brand  names,  customer  relationships  and 
computer software. The  remaining £5.4m  relates to  other acquisitions  made 
post-merger.



Income from associates and joint ventures

Our share of  the results of  associates and  joint ventures was  a profit  of 
£1.0m (2011: loss  of £1.4m).  This mainly reflects  the disposal  of a  loss 
making business.



Net investment income

The net investment income in the period was £0.3m (2010: loss of £1.2m).  The 
prior year  result reflected  the sale  of legacy  investments in  our  German 
business.



Net finance costs

Net finance costs  (excluding separately  disclosed items) for  the six  month 
period were  £66.9m (2011:  £64.5m) up  £2.4m  mainly as  a result  of  higher 
average borrowing levels and increased arrangement fees.



Tax

The tax  credit for  the period  was £107.9m  (2011: £68.0m).  Excluding  the 
effect  of  separately  disclosed  items,   changes  in  tax  rates  and   the 
derecognition of a deferred tax asset,  this represents an effective tax  rate 
of 49% (2011: 28%) on the underlying loss for the period. Deferred tax assets
of £33.3m  relating to  the  UK have  been  derecognised following  a  revised 
assessment of the entities in which the forecast taxable profits are  expected 
to arise  and deferred  tax assets  of  £11.7m relating  to France  have  been 
derecognised following  the  deterioration in  trading  in that  business  and 
review by new management. In each case the derecognition reflects the reduced
likelihood of utilising the related  taxable losses within an acceptable  time 
period.



Loss per share and dividends

The underlying basic loss  per share was 18.1  pence (2011: 19.6 pence).  The 
basic loss per share was 68.2 pence (2011: 23.5 pence).



As previously announced,  the Group  has decided  not to  declare any  further 
dividend payments this year.



        Borrowings and liquidity



                                Six months ended Six months ended Year on year
                                31 March 2012       31 March 2011  reduction /
£m                                                                  (increase)
Net cash outflow from operating          (449.1)          (142.2)      (306.9)
activities
Capital  expenditure  (net   of           (42.3)           (86.8)         44.5
disposals)
Interest paid                             (30.7)           (26.2)        (4.5)
Free cash flow                           (522.1)          (255.2)      (266.9)
Acquisition of businesses                   32.8              2.8         30.0
Disposal of businesses                       6.9                -          6.9
Dividends paid                            (33.0)           (32.0)        (1.0)
Other items (net)                            0.7              1.8        (1.1)
Net cash outflow                         (514.7)          (282.6)      (232.1)



The seasonal  net cash  outflow  from operating  activities has  increased  by 
£306.9m to  £449.1m. This  reflects the  increased operating  losses for  the 
first six months together with an increased working capital outflow  resulting 
from reduced  revenue in  advance following  capacity reductions  and a  later 
booking pattern. The lower  capacity will also result  in lower payments  for 
accommodation and flying costs and  as a result, we  would expect to see  some 
claw back in the working capital position by the year end.



Net capital  expenditure  for  the  period was  £42.3m  (2011:  £86.8m).  The 
reduction of £44.5m reflects reduced  expenditure and the benefit of  proceeds 
from the disposal of  non-core assets including a  surplus office building  in 
the Netherlands and Moranda, a vacant hotel in Mexico.



The cash  inflow  from  acquisition  of  businesses  reflects  cash  acquired, 
principally with the Co-operative transaction.



The interim  dividend  for  2011  was  paid on  7  October  2011.  The  Group 
subsequently announced the suspension of  dividend payments until the  balance 
sheet has been rebuilt.



Net debt at  31 March  2012 was  £1,389.9m (2011:  £1,094.2m) which  comprised 
£517.7m of  cash,  £1,835.6m  of  borrowings  and  overdrafts  and  £72.0m  of 
obligations under  finance  leases. Available  cash  and headroom  under  the 
Group's committed borrowing facilities at 31 March 2012 was £323m.





Hedging



          Summer 12 Winter 12/13
Euro            95%          73%
US Dollar       87%          64%
Jet Fuel        86%          37%

As at 25 May 2012



PRINCIPAL RISKS & UNCERTAINTIES

The principal risks and uncertainties affecting the business activities of the
Group and mitigating actions being taken by management were set out on pages
28 to 30, and more fully described throughout the Directors' Report, of the
Annual Report & Accounts for the year ended 30 September 2011, a copy of which
is available on the Group's corporate website, www.thomascookgroup.com. The
key Group risks were summarised under the headings of:



Operational and strategic risks



· downturn in the global economy and in the economies of our source
markets leading to a reduction in demand for our products and services;

· fall in demand for traditional package tours and competition from
internet distributors and low-cost airlines;

· failure to implement the UK turnaround plan;

· significant damage to the Group's reputation or brands;

· environmental concerns;

· a major health and safety incident;

· loss of, or difficulty in replacing, senior talent;

· natural catastrophe including closure of airspace;

· disruption to information technology systems or infrastructure, premises
or business processes;

· performance failure by outsourced partners.



        Financial risks



· liquidity and counterparty credit risks;

· extent of borrowings;

· commodity risk: fuel, foreign currency, and interest rate risks;

· breakdown in internal controls;

· tax risk;

· pension liabilities.



        Other risks



· security, political or terrorist risks in key tourist destination
markets;

· legal and regulatory risks, (in particular relating to licences and
regulations for airlines, package holidays and consumer protection);

· competition law and anti-trust.



In the context of the risks arising from a downturn in the global economy,
foreign currency risk and political risks in key tourist destination markets,
the Group continues to monitor the recent sovereign debt crises in Greece,
Spain and other European countries. In the view of the Board, the key risks
and uncertainties for the remaining six months of the financial year continue
to be those set out in the above section of the Annual Report & Accounts 2011.



SEGMENTAL PERFORMANCE REVIEW

Segmental  performance  presented  here  is  based  on  underlying   financial 
performance before separately disclosed items  and the segmental narrative  is 
provided on this underlying basis.



UK



                                Six months ended 31 Six months ended 31 Change
                                         March 2012          March 2011
Financial (£m unless  otherwise 
stated)
Revenue *                                     993.1             1,022.5  -2.9%
Underlying loss from operations             (173.6)             (158.7)  -9.4%
**
Underlying operating  margin  %             (17.5)%             (15.5)% -12.9%
***
Non-financial
Mass market risk
Passengers †                                                             -7.9%
Capacity ††                                                              -8.0%
Average selling price #                                                  +0.6%
Load factor †††                                                              -
Brochure mix ##                                                          -5.4%
Controlled distribution ‡‡                    82.6%               71.5% +15.5%
Internet distribution ‡‡                      35.3%               35.6%  -0.8%

See Appendix 2 for key.



Revenue in our UK segment was down £29.4m at £993.1m, reflecting reduced
capacity in our UK mainstream tour operators and airline, partially offset by
growth in dynamic packages, particularly through our Flexible Trips business.
The Co-op contributed £38.8m of revenue in the first half.



The seasonal underlying loss from operations grew by £14.9m to £173.6m due to
the additional seasonal losses from the Co-op of £14.9m. Although we achieved
benefits from cost savings and efficiencies, these were offset by the impact
of lower revenues, fuel price rises and higher accommodation costs.



Controlled distribution increased to 82.6% following the merger with the high
street travel agency businesses of The Co-operative Group and the Midlands
Co-operative. The transaction completed on 4 October 2011 and the additional
stores are being integrated with our existing retail network. As previously
announced, a rationalisation programme is underway to maximise the efficiency
of the combined store portfolio with the main benefit of the merger expected
to be seen in the second half of the year





        Central Europe



                                                             Restated
                                                                        Change
                               Six months ended 31 six months ended 31
                                         March 2012          March 2011
Financial (£m unless  otherwise 
stated)
Revenue *                                     881.9               774.5 +13.9%
Underlying loss from operations              (20.8)              (17.5) -18.9%
**
Underlying   operating   profit              (2.4)%              (2.3)%  -4.3%
margin % ***
Non-financial
Mass market
Passengers †                                                             +7.8%
       Flight inclusive                                                  +7.7%
       Non-flight inclusive                                              +7.9%
Average selling price #                                                  +3.2%
Controlled distribution ‡‡                    23.6%               24.0%  -1.7%
Internet distribution ‡‡                       7.2%                7.6%  -5.3%

See Appendix 2 for key.

Results for the six months ended 31  March 2011 have been restated to  reflect 
the transfer of the East Europe businesses from the former West & East  Europe 
segment to the Central Europe segment.



Our Central Europe segment now includes the East Europe businesses in  Poland, 
Hungary, and the  Czech Republic as  well as the  Russian business, which  was 
acquired in July  2011. Revenue has  increased by £16.2m  on a  like-for-like 
basis (2.9%  at  constant  currency),  driven  by  increased  average  selling 
prices. The  impact of  the Russian  acquisition added  a further  £72.0m  to 
revenue and  the  specialist German  tour  operator, Tour  Vital  acquired  in 
October 2011 added £19.2m to revenues.



The underlying loss from operations increased  by £3.3m but this included  the 
initial recognition of seasonal  operating losses of  £10.4m from the  Russian 
business, partly offset by £0.6m profit from operations within Tour Vital. On
a like-for-like basis, the seasonal underlying loss from operations reduced by
£6.5m (35.4% at constant currency),  reflecting a strong performance from  our 
German operations which also benefitted from improved margins.



The Central  Europe business,  as historically  reported (Germany,  Austria  & 
Switzerland), including the  acquisition of  Tour Vital,  reported revenue  of 
£786.2m, an increase  of 6.1%  at constant currency.  The seasonal  underlying 
loss from  operations was  £5.8m, a  reduction of  £8.9m (58.0%  reduction  at 
constant currency) on the prior year.



Controlled and internet distribution have remained broadly stable despite  the 
growth  in  passengers  through  acquisition.  This  reflects  the   increased 
conversion of customers through our in-house distribution channels.







        West Europe



                                                            Restated
                                                                        Change
                                 Six months ended six months ended 31
                                     31 March 2012          March 2011
Financial (£m unless  otherwise 
stated)
Revenue *                                    458.0               517.7  -11.5%
Underlying loss from operations             (65.6)              (34.1)  -92.4%
**
Underlying operating  margin  %            (14.3)%              (6.6%) -116.7%
***
Non-financial
Mass market
Passengers †                                                            -12.6%
       Flight inclusive                                                 -12.2%
       Non-flight inclusive                                             -13.2%
Average selling price #                                                  +2.0%
Controlled distribution ‡‡                   55.7%               58.0%   -4.0%
Internet distribution ‡‡                     25.0%               22.7%  +10.1%

See Appendix 2 for key.

Results for the six months ended 31  March 2011 have been restated to  reflect 
the transfer of the East Europe businesses from the former West & East  Europe 
segment to the Central Europe segment.



Revenue in our West Europe segment,  which includes our businesses in  France, 
Belgium and The  Netherlands, fell  by £59.7m (10.6%  at constant  currency). 
This  reduction  reflects  the   capacity  changes  implemented  as   consumer 
confidence remains weak and the impact of unrest in the MENA region  persists, 
particularly in  the French  market for  which North  Africa is  an  important 
winter destination.  Losses  in  our  French  operation  increased  by  £16.9m 
compared to prior year.



Cost reduction programmes have been initiated in all these markets and  whilst 
they are  showing  benefits  in  the period,  further  cost  improvements  are 
targeted for the second half of the year.



The reduction in controlled distribution of  mass market products is a  result 
of the disposal of the retail operation in The Netherlands during the  period, 
which reported  an  operating loss  of  £2.5m  in the  comparable  prior  year 
period. This disposal reduces overhead  costs by approximately £7.0m for  the 
period.

Northern Europe



                               Six months ended 31 Six months ended 31
                                         March 2012          March 2011 Change

Financial (£m unless  otherwise 
stated)
Revenue *                                     586.5               539.9  +8.6%
Underlying     profit      from                25.0                34.0 -26.5%
operations **
Underlying operating  margin  %                4.3%                6.3% -31.7%
***
Non-financial
Mass market risk
Passengers †                                                             +9.5%
Capacity ††                                                              +9.9%
Average selling price #                                                  -4.7%
Load factor †††                                                          -0.2%
Brochure mix ##                                                          -8.3%
Controlled distribution ‡‡                    85.9%               84.0%  +2.3%
Internet distribution ‡‡                      63.1%               58.0%  +8.8%

See Appendix 2 for key.



Revenue in Northern Europe grew to £586.5m reflecting constant currency growth
of 9.2%  as the  business increased  capacity to  maintain market  share in  a 
competitive marketplace.  Consumer confidence  has declined  in these  source 
markets but load  factors were maintained  albeit at a  lower average  selling 
price as we saw a reduction in the proportion of full price brochure sales and
a consequent increase in lower margin, late sales. Results were also  affected 
by weaker demand for Thailand following flooding during the winter.



Personnel costs rose as a result  of increased staff in the airline  following 
the capacity  increase and  although  other costs  were well  controlled,  the 
underlying profit from operations  reduced by £9.0m to  £25.0m (down 26.2%  at 
constant currency).



Controlled distribution and  internet distribution continue  to increase,  the 
latter reflecting actions  taken to  make online booking  for our  Independent 
businesses more customer friendly.







        North America



                                Six months ended 31 Six months ended 31 Change
                                         March 2012          March 2011


Financial (£m unless  otherwise 
stated)
Revenue *                                     206.6               241.4 -14.4%
Underlying  (loss)/profit  from              (15.5)                 9.3    n/a
operations **
Underlying operating  margin  %              (7.5)%                3.9%    n/a
***
Non-financial
Mass market risk
Passengers †                                                            -16.6%
Capacity ††                                                             -14.7%
Average selling price #                                                  -3.0%
Load factor †††                                                          -2.2%
Brochure mix ##                                                         +24.1%
Controlled distribution ‡‡                    16.5%               12.9% +27.9%
Internet distribution ‡‡                      31.6%               31.5%  +0.3%

See Appendix 2 for key.

Note: Internet distribution % includes independent travel bookings.



Our North America business has underperformed during the period in the face of
difficult market  and  economic  conditions. Revenue  reduced  by  £34.8m  to 
£206.6m (down 14.2%  in constant  currency), reflecting  reduced capacity  and 
lower average selling prices in a very competitive market place.



The underlying result from operations reduced by £24.8m. The deterioration in
the like-for-like result was principally  margin driven through a  combination 
of fuel cost increases and higher accommodation costs.



During the  period we  changed the  management  of the  business and  the  new 
management team  has reviewed  the operational  approach and  taken action  to 
reduce costs and restructure the operations. The decision was taken in  April 
to change  our flying  partner  in this  market in  order  to achieve  a  more 
flexible and less risky flying programme. The business will take smaller  seat 
allocations across  a  wider number  of  departure airports  rather  than  the 
previous operation of dedicated aircraft from a few airports and will increase
the frequency of flights on certain key routes and departure days offering the
customer greater choice and flexibility.



The impact of  operating Sears Travel  for the full  period has increased  the 
proportion of controlled distribution to 16.5%.





        

        

        Airlines Germany

        

                                     Six months ended Six months ended
                                         31 March 2012    31 March 2011 Change

Financial   (£m   unless    otherwise 
stated)
Revenue - external *                             390.6            335.2 +16.5%
Revenue - internal *                             115.8            119.8  -3.3%
Total revenue *                                  506.4            455.0 +11.3%
Underlying     (loss)/profit     from            (3.0)             12.3    n/a
operations **
Underlying operating margin % ***               (0.6)%             2.7%    n/a
Non-financial
Sold seats ‡‡‡
       Thomas Cook tour operators                                        +1.3%
       3rd party tour operators                                         +10.1%
       External seat only                                               +35.2%
Total sold seats                                                        +15.3%
Sold seats ‡‡‡
       Europe (excl. Cities)                                            +17.4%
       Long haul                                                        +10.2%
Total sold seats                                                        +15.3%
Capacity ††                                                             +14.2%
Yield ###                                                                -2.9%
Seat load factor †††                                                     +0.6%

See Appendix 2 for key.



Revenue has increased  £55.4m to  £390.6m for  the period  (17.7% at  constant 
currency) following the addition of two long-haul aircraft to the fleet.



The underlying seasonal operating result was reduced by £15.3m to a loss  from 
operations of £3.0m. This reflects the reduced margins arising from increased
fuel costs which have not been fully  passed on to customers. For the  summer 
season we have to  been more successful in  raising yields to partly  mitigate 
much of the increase in fuel prices.



Personnel costs and depreciation have increased  as a result of the  increased 
fleet size but this has been largely offset by operating cost efficiencies.



        Corporate



                               Six months ended 31 Six months ended 31
                                         March 2012          March 2011 Change
Financial (£m)
Underlying loss from operations               (9.2)              (11.1) +17.1%
**

See Appendix 2 for key.



Costs in the  Corporate segment have  reduced in the  period principally as  a 
result of lower IT related and other expenses.

Appendix 1 - Condensed consolidated interim financial information

        

        Group Income Statement

                                 Unaudited                       Unaudited
                       Six months ended 31 March 2012  Six months ended 31 March 2011
                      Underlying Separately     Total Underlying Separately  Totaltal
                         results  disclosed              results  disclosed
                                     items*                         items *
                                   (note 5)                        (note 5)
                notes         £m         £m        £m         £m         £m        £m
Revenue           4      3,516.7          -   3,516.7    3,431.2          -   3,431.2
Cost of                                                                        
providing
tourism                (2,807.8)        0.7 (2,807.1)  (2,714.2)      (3.2) (2,717.4)
services
Gross profit               708.9        0.7     709.6      717.0      (3.2)     713.8
Personnel
expenses                 (542.1)     (24.6)   (566.7)    (491.2)        5.5   (485.7)
Depreciation                                                                   
and
amortisation              (86.2)      (0.1)    (86.3)     (80.3)          -    (80.3)
Net operating
expenses                 (343.3)     (37.1)   (380.4)    (311.3)     (19.3)   (330.6)
(Loss)/profit                                                                 
on disposal of
assets            5            -      (4.8)     (4.8)          -        1.4       1.4
Impairment of                                                                 
goodwill and
amortisation of                                                               
business
combination                                                                   
intangibles
                  5            -    (314.5)   (314.5)          -     (16.5)    (16.5)
Loss from         4      (262.7)    (380.4)   (643.1)    (165.8)     (32.1)   (197.9)
operations
Share of                                                                       
results of
associates and                                                                 
joint venture
                             1.0          -       1.0      (1.4)          -     (1.4)
Net investment
income/(loss)                0.3          -       0.3      (1.2)          -     (1.2)
Finance income    6         24.2          -      24.2       22.8          -      22.8
Finance costs     6       (91.1)      (4.2)    (95.3)     (87.3)      (4.4)    (91.7)
Loss before tax          (328.3)    (384.6)   (712.9)    (232.9)     (36.5)   (269.4)
Tax               7                             107.9                            68.0
Loss for the
period                                        (605.0)                         (201.4)
Attributable
to:
Equity holders                                (594.3)                         (200.8)
of the parent
Non-controlling                                (10.7)                           (0.6)
interests
                                              (605.0)                         (201.4)
Loss per share
(pence)
Basic and
diluted           8                            (68.2)                          (23.5)



All revenue and results arose from continuing operations



The notes on pages 27 to 43 form an integral part of the condensed
consolidated interim financial information.



* Separately disclosed items consist of exceptional operating items, IAS 39
fair value re-measurement, impairment of goodwill and amortisation of business
combination intangibles.





        Group Statement of Comprehensive Income

                                                          Unaudited  Unaudited
                                                   Six months ended Six months
                                                                         ended
                                                           31/03/12   31/03/11
                                             notes               £m         £m
Loss for the period                                         (605.0)    (201.4)
Other comprehensive income and expense
Foreign exchange translation (losses)/gains                  (24.0)       42.0
Actuarial (loss)/gain on defined benefit
pension schemes                               18             (46.7)      118.7
Tax recognised on actuarial movements                           9.4     (32.9)
Fair value gains and losses
(Losses)/gains deferred for the period                       (57.8)       74.7
Tax on (losses)/gains deferred for the
period                                                         17.0     (20.3)
Losses transferred to the income statement                     50.2       44.9
Tax on losses transferred to the income
statement                                                    (14.0)     (12.6)
Total comprehensive (expense)/income for the
period                                                      (670.9)       13.1
Attributable to:
Equity holders of the parent                                (660.2)       13.7
Non-controlling interests                                    (10.7)      (0.6)
Total comprehensive (expense)/income for the
period                                                      (670.9)       13.1



The notes on pages 27 to 43 form an integral part of the condensed
consolidated interim financial information.



        Group Cash Flow Statement

                                                          Unaudited  Unaudited
                                                   Six months ended Six months
                                                                         ended
                                                           31/03/12   31/03/11
                                             notes               £m         £m
Cash flows from operating activities
Cash generated by operations                                (428.1)    (123.2)
Income taxes paid                                            (21.0)     (19.0)
Net cash outflow from operating activities    15            (449.1)    (142.2)
Investing activities
Proceeds on disposal of subsidiaries                            6.9          -
Proceeds on disposal of property, plant and
equipment                                                      27.1       10.3
Purchase of subsidiaries (net of cash
acquired)                                     12               32.8        2.8
Purchase of tangible and financial assets                    (50.1)     (62.5)
Purchase of intangible assets                                (19.3)     (34.6)
Sale of non-current financial assets                            0.4        2.3
Additional loan investment                                        -      (0.6)
Proceeds on disposal of short-term
securities                                                      0.3        0.1
Net cash used in investing activities                         (1.9)     (82.2)
Financing activities
Interest paid                                                (30.7)     (26.2)
Dividends paid                                 9             (32.7)     (32.0)
Dividends paid to non-controlling interests                   (0.3)          -
Draw down of borrowings                                       817.4      251.3
Repayment of borrowings                                     (122.8)     (22.2)
Payment of facility set-up fees                              (14.9)          -
Repayment of finance lease obligations                        (6.3)      (8.1)
Net cash from financing activities                            609.7      162.8
Net increase/(decrease) in cash and cash
equivalents                                                   158.7     (61.6)
Cash and cash equivalents at beginning of
the period                                                    341.7      316.8
Effect of foreign exchange rate changes                       (5.4)        5.0
Cash and cash equivalents at end of the
period                                                        495.0      260.2
Liquid assets                                 16              517.7      304.5
Bank overdrafts                               16             (22.7)     (44.3)
Cash and cash equivalents at end of the
period                                                        495.0      260.2
Cash and cash equivalents are presented in
the balance sheet as follows:
Cash and cash equivalents                                     476.8      304.5
Assets held for sale                                           40.9          -
Short term borrowings                                        (16.7)     (44.3)
Liabilities related to assets held for sale                   (6.0)          -
                                                              495.0      260.2



The notes on pages 27 to 43 form an integral part of the condensed
consolidated interim financial information.





        Group Balance Sheet



                                                 Unaudited Unaudited   Audited
                                                     as at     as at     as at
                                                  31/03/12  31/03/11  30/09/11
                                           notes        £m        £m        £m
Non-current assets
Intangible assets                           10     3,233.6   3,963.0   3,550.0
Property, plant & equipment
        Aircraft and aircraft spares        10       614.2     654.5     638.6
        Investment property                 10           -      17.4      18.0
        Other                               10       251.2     340.4     280.3
Investment in associates and joint venture            22.3      37.8      22.1
Other investments                                     13.3      19.3      13.4
Deferred tax assets                                  404.0     441.1     281.3
Tax assets                                             4.9       4.8       4.2
Trade and other receivables                          129.6     119.8     153.0
Derivative financial instruments                         -       3.4      12.6
                                                   4,673.1   5,601.5   4,973.5
Current assets
Inventories                                           36.7      38.7      38.7
Tax assets                                            69.4      44.4      40.2
Trade and other receivables                        1,414.4   1,301.1   1,090.5
Derivative financial instruments                      79.2     191.1     117.2
Cash and cash equivalents                   16       476.8     304.5     359.3
                                                   2,076.5   1,879.8   1,645.9
Assets held for sale                        11       233.6      10.9      70.4
Total assets                                       6,983.2   7,492.2   6,689.8
Current liabilities
Retirement benefit obligations              18       (6.4)     (6.9)     (6.8)
Trade and other payables                         (1,653.1) (1,611.5) (2,008.2)
Borrowings                                 13/16    (95.6)   (422.0)   (179.5)
Obligations under finance leases            16      (17.9)    (14.5)    (18.6)
Tax liabilities                                    (103.6)    (89.9)    (92.7)
Revenue received in advance                      (1,751.6) (1,773.6) (1,167.2)
Short-term provisions                       14     (163.1)   (155.8)   (187.6)
Derivative financial instruments                    (54.9)   (116.9)    (88.2)
                                                 (3,846.2) (4,191.1) (3,748.8)
Liabilities related  to  assets  held  for  11
sale                                               (107.8)         -    (35.0)
Non-current liabilities
Retirement benefit obligations              18     (359.9)   (266.7)   (324.2)
Trade and other payables                           (104.5)    (18.9)    (42.4)
Long-term borrowings                       13/16 (1,695.7)   (905.3)   (967.8)
Obligations under finance leases            16      (53.7)    (56.9)    (62.1)
Non-current tax liabilities                          (0.6)         -     (0.6)
Revenue received in advance                          (2.3)     (1.0)     (1.9)
Deferred tax liabilities                           (119.1)   (141.9)   (120.9)
Long-term provisions                        14     (197.2)   (204.5)   (193.5)
Derivative financial instruments                     (3.6)     (9.4)     (9.4)
                                                 (2,536.6) (1,604.6) (1,722.8)
Total liabilities                                (6,490.6) (5,795.7) (5,506.6)
Net assets                                           492.6   1,696.5   1,183.2
Equity
Called-up share capital                               59.2      57.7      59.2
Share premium account                                 29.2       8.9      29.2
Merger reserve                                     1,617.8   1,984.2   1,617.8
Hedging and translation reserves                     288.3     428.2     316.9
Capital redemption reserve                             8.5       8.5       8.5
Retained earnings deficit                        (1,558.8)   (800.0)   (871.4)
Investment in own shares                            (13.4)    (13.3)    (13.3)
Equity attributable to equity holders of
the parent                                           430.8   1,674.2   1,146.9
Non-controlling interests                             61.8      22.3      36.3
Total equity                                         492.6   1,696.5   1,183.2

The notes on pages 27 to 43 form an integral part of the condensed
consolidated interim financial information.

        Group Statement of Changes in Equity

The unaudited movements in equity for the six months ended 31 March 2012 were
as follows:



                    Share                                 Attributable
                  capital             Hedging &  Retained    to equity        Non-
                  & share    Other translation earnings/   holders of controlling
                  premium reserves      reserve (deficit)   the parent   interests   Total
                       £m       £m           £m        £m           £m          £m      £m
Opening balance
at
1 October 2011       88.4  1,613.0        316.9   (871.4)      1,146.9        36.3 1,183.2
Loss for the
period                  -        -            -   (594.3)      (594.3)      (10.7) (605.0)
Other
comprehensive
income/(expense):
Foreign exchange
translation
losses                  -        -       (24.0)         -       (24.0)           -  (24.0)
Actuarial loss on
defined benefit
pension schemes
(net of tax)            -        -            -    (37.3)       (37.3)           -  (37.3)
Fair value gains
and losses:
Losses deferred
for the period

(net of tax)            -        -       (40.8)         -       (40.8)           -  (40.8)
Losses
transferred to
the income
statement (net of
tax)                    -        -         36.2         -         36.2           -    36.2
Total
comprehensive
expense

for the period          -        -       (28.6)   (631.6)      (660.2)      (10.7) (670.9)
Equity credit in
respect of share-
based payments          -        -            -       1.1          1.1           -     1.1
Purchase of own
shares (BAYE)           -    (0.1)            -         -        (0.1)           -   (0.1)
Acquisition of
Co-op                   -        -            -    (56.9)       (56.9)        36.8  (20.1)
Exchange
difference on

non-controlling
interests               -        -            -         -            -       (0.6)   (0.6)
At 31 March 2012     88.4  1,612.9        288.3 (1,558.8)        430.8        61.8   492.6



The unaudited movements in equity for the six months ended 31 March 2011 were
as follows:



                    Share                                Attributable
                  capital            Hedging &  Retained    to equity        Non-
                  & share    Other translation earnings/   holders of controlling
                  premium reserves     reserve (deficit)   the parent   interests   Total
                       £m       £m          £m        £m           £m          £m      £m
Opening balance
at
1 October 2010       66.6  1,979.4       299.5   (626.9)      1,718.6        24.1 1,742.7
Loss for the
period                  -        -           -   (200.8)      (200.8)       (0.6) (201.4)
Other
comprehensive
income/(expense):
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