transforming thomas cook

Thomas Cook Group plc Thomas Cook Group plc

Results for the six months ended 31 March

Transforming Thomas Cook

May 16, 2013 1

Thomas Cook Group plc

Delivering against our clear targets and KPIs

Strengthening our capital base

Improving financial and business performance

Transforming Thomas Cook through profitable growth

Thomas Cook Group plc 2

1

2

3

4

Key messages and agenda for today

Thomas Cook Group plc Thomas Cook Group plc 3

Strengthening our capital base 2

Improving financial and business performance 3

Transforming Thomas Cook through profitable growth 4


Delivering against our clear targets and KPIs Harriet Green | Group CEO

1


Underlying EBIT1 on a like for like basis is £58.7 million better

Our H1 20131 performance already demonstrates progress

4

1 2 3 4

Net debt is reduced by £175.4 million

Encouraging current trading: strong bookings and gross margins

Underlying gross margin on a like for like basis

is 110 basis points better

Note: Results are compared with the six months ended 31 March 2012. Net debt is as at 31 March 2013. In this presentation ‘underlying’ refers to trading results after

adjusting for separately disclosed items that are significant in understanding the on-going results of the Group. The term ‘like for like’ reflects the comparison in the

underlying results after removing identifiable non- recurring items in the prior year. A reconciliation of these items is included in the Appendix.

1 In this presentation EBIT means profit / (loss) from operations adjusted to exclude all separately disclosed items (and excluding the Group’s share of associates and joint

ventures and net investment income) as per the Group’s consolidated financial statements for the six months ended 31 March 2013.

Improving

financial and

business

performance

DELIVERING AGAINST OUR CLEAR TARGETS AND KPIS


We continue to strengthen our leadership team

Eliminating silos and spreading best

practices across the Group

We are attracting some very talented

individuals, who bring with them a level

of expertise that comes from operating

at the highest level in some of the largest

and most respected firms in the world

5

DELIVERING AGAINST OUR CLEAR TARGETS AND KPIS 1 2 3 4

Recent appointments include:

John Straw

Global Head of Web

Tomasz Smaczny

Chief Technology Officer

Craig Stoehr

Group General Counsel


We’re well underway against our targets and KPIs

6

1 Measured on a last 12 months basis (“LTM”)

2 Compound annual growth rate from FY13 to FY15 including new product revenue

3 Delivery measured against an underlying gross margin of 21.3%, being the underlying gross margin in FY12, adjusted for the Thomas

Cook India disposal

4 Cash conversion defined as net cash from operating activities less interest paid as a percentage of underlying EBITDA

5 Gross margin improvement of 1.1% for H1 13 compared with H1 12 on a like for like basis. KPI is based on a full year measure

6 Underlying profit from operations of the Group’s UK operating segment (excluding Thomas Cook India) as a percentage of its revenue

FY15 FY12 H1 13

Targets

KPIs Underlying Gross Margin Improvement3 N/A > 1.5%

1.1%5

Sales CAGR2 > 3.5% N/A N/A

UK underlying EBIT Margin6 0.1% > 5% 1.1%1

Cost out / Profit Improvement (run-rate) > £390m £60m £107m

Web Penetration > 50% 34% 35%1

> £500m New Product Revenue N/A

Good progress

(e.g. concept hotels

from 66 to 93)

Cash Conversion4 11% > 60% 47%1



EBIT improvement target £m FY15 run rate

1 2 3 4

More

expected

to come

We are announcing a further £40m of targeted benefits to take the target

for our cost-out and profit improvement programme to £390m

60

Total

390

107

283

Announced

Mar-13

Announced

Feb-13

Announced

Nov-12

100 140

60

80

2011 UK

Turnaround

Group wide cost out and

profit improvement programme

Already

identified

for H2 13 - FY15

Delivered by

end H1 13

50

40

Announced

May-13

DELIVERING AGAINST OUR CLEAR TARGETS AND KPIS


We are also delivering benefits faster than anticipated


8

In our plan we target total annual benefits

of £390m by end of FY15; expected

cumulative costs to achieve such benefits

of c. £178m.

The UK Turnaround delivered £30m of

benefits in H1 13 on top of the £60m

achieved in FY12, taking the total to £90m

Group-wide cost-out delivered a further

£17m in H1 13, taking the total achieved

by the end of March 2013, including the

UK Turnaround, to £107m

We are therefore bringing forward the

timetable of targeted benefits and now

expect to achieve £50m of Group-wide

cost-out by end FY13 revising our earlier

estimate of £25m for this year.

1 Run-rate.

2 One-off costs.

FY13 FY14 FY15 H1 13

13

60 80 - Organisational structure

50 175 250 - Group-wide cost out1

Integrated air travel strategy 19 55 70 -

UK Turnaround1 120 140 140 60

Product, infrastructure,

technology, and other

18 60 100 -

Expected costs to achieve2

Total targeted benefits1 170 315 390 60

Cash flow (Opex) 41 30 10 30

FY12

90

6

107

3

9

5

17

Income statement 68 15 7 36 38

Cash flow (Capex) 18 38 11 - 2


From turnaround to transformation

9

2 3 4

Turnaround Transformation

Strategy building Strategy implementation

Ideas Delivery

15 big decisions 7 drivers of profitable growth

Centrally driven Locally owned with strong co-ordinated leadership

1 DELIVERING AGAINST OUR CLEAR TARGETS AND KPIS


EBIT

improve-

ment

Seven drivers of profitable growth – driving success through major

initiatives

10

2 3 4

Strategic

Targets

Transformation Office

Harriet Green – Group CEO

Michael Healy – Group CFO

Peter Fankhauser – CEO UK & Continental Europe

Product

Deliver sales

growth and

gross margin

targets

Segments

Capture cost

out and profit

improvement

Cost Out

Deliver results

to EBIT level

IT

Support

strategy and

web target

Customer

Innovation Deliver sales

growth and

web targets

Finance &

Risk Deliver cash

conversion

target

Identified Unspecified

target Validated Approved Implemented P&L realised

Cost out and profit improvement process

People &

Culture Drive talent,

performance

and

recognition

1 DELIVERING AGAINST OUR CLEAR TARGETS AND KPIS



Represents a major step towards achieving our optimal capital structure

Significant progress on the transformation enables the capital refinancing

The capital refinancing enables continuing delivery of the transformation

allowing us to fulfil the potential of the Thomas Cook brand

Objectives and benefits

Delevers and extends maturity profile thereby substantially strengthening the

Group’s balance sheet

Amends financing arrangements to provide more operational flexibility

Facilitates on-going execution of the Business Transformation

Improves the credit perception of the Group

Provides a platform to enable the Group to resume dividend payments in the future





Delivering against our clear targets and KPIs 1

Strengthening our capital base Michael Healy | Group CFO

2


Transaction overview

13

STRENGTHENING OUR CAPITAL BASE 1 2 3 4

1 At GBP/EUR exchange rate of 1.19 (31-Mar-13).

Underwritten equity raising Fully underwritten firm equity issue to raise proceeds of £425m

Committed new bank facilities New £691m syndicated bank facility due 2017

– Tranche A RCF and bonding lines of £500m

– Tranche B additional facility of £191m

(available to partially address €400m 2015 bond)

Underwritten bridge to

bond facility

To be replaced by €525m (c. £441m equiv.)1 Senior Notes due 2020

A comprehensive recapitalisation with inter-conditional new financings


£m

Our need to delever and to extend maturities influenced

the approach to recapitalisation

14

STRENGTHENING OUR CAPITAL BASE 2 3 4

New equity

New bond

New bank facility Tranche A

2015 facility

(pre-cash sweep)

1 Excludes transaction costs.

2 At GBP/EUR exchange rate of 1.19 (31-Mar-13),

3 Reduced to £1,211m post-cash sweep in March 2013, with savings of £26m.

4 Representing c. 49% of total commitments, pre-cash sweep.

– Smaller bank deal supported

by the core bank group

– Pro forma for the transaction,

net leverage reduces by c. 1x

LTM EBITDA

– Funding mix leaves net

interest expense broadly

unchanged

– Intention to use operating

cash flows to repay the

€400m 2015 bond with

funding comfort provided by

the new £191m Tranche B

facility

1

New bank facility Tranche B

Cash flows from operations

and other funding sources

2015 notes

2017 notes 300 390

1,9471

425

4412

500

191

1,947

3362

Core4 bank

group

c. £651m

1,3113

Pre-transaction Post-transaction


Significantly improved maturity profile1

15

STRENGTHENING OUR CAPITAL BASE 2 4

1 Excludes finance leases and aircraft related bank loans.

2 Adjusted for £100m facility cancellation in H1 13.

3 At GBP/EUR exchange rate of 1.19 (31-Mar-13), GBP equivalent of c. £336m.

4 Assumes £191m of bank loan (incremental RCF) is available to partially repay the €400m 2015 senior notes.

Maturity profile pre-transaction £m

Maturity profile pro-forma £m

3 1

200

150

2021 2020 2019 2018 2017

300

2016 2015

1,5472

861

3363

2014 2013

Term loan

Bonding facility

€400m senior notes

RCF

£300m senior notes

100

91

2019 2018 2017

861

470

300

2016 2015

185

1554

30

2014 2013 2021 2020

441

€400m

senior

notes

New bank

facility

Tranche B

£300m

senior

notes

New

senior

notes

New bank

facility

Tranche A


Summary timetable

16

STRENGTHENING OUR CAPITAL BASE 2 3 4 1

Bank

Equity

New Bond

16 May 2013 3 June 2013 26 June 2013

Available for

utilisation

Signed bank

facility letter

19 June 2013 20 June 2013

Shareholder

Circular posted

and equity

prospectus

published

General

meeting

Available for

utilisation

End of rights

issue subscription

period

Announcement

of results of rights

issue;

Dealings commence

Announce

bond issue

Available for

utilisation






Improving financial and business performance 3 Michael Healy | Group CFO


Overview of Results

£m HY13 HY12 Change

Revenue 3,224 3,310 -3%

Underlying EBIT (198) (248) 20%

Separately disclosed items (115) (266) 56%

Loss for half year (391) (584) 33%

Net debt 1,215 1,390 13%

Liquidity headroom2 512 323 58%

1 Note: EBIT, profit before tax and earnings per share excluding exceptional operating items, IAS 39 fair value re-measurement, goodwill

impairment and BCI amortisation

2 Note: Liquidity headroom represents headroom under available credit facilities at each date 18

Revenue 3% lower than last year as capacity

is managed more closely to demand

Seasonal underlying EBIT loss of £197.5m,

improved by £50.6m on last year on an

underlying basis and £58.7m on a ‘like for

like’ basis

EBIT progress driven by cost out and the

benefits of yield management and capacity

management

Seasonal loss for the half year reduced

by £193m

Net debt reduction of £175m

Cash management improvements drive

58% increase in liquidity headroom

Transformation gains momentum through benefits of capacity management, cost out and cash management

IMPROVING FINANCIAL AND BUSINESS PERFORMANCE 3 4 1 2


Group EBIT Bridge

* Net of related exchange impact 19

£m

Fuel price

increases

42 -256

Exchange

rate

3

Easter

10

Disposals

5

2011/12

provision

releases

26 -248 47

-198

Other

5

Trading

48

Cost out

& profit

improvement

Benefits of capacity / yield management and cost savings more than offset fuel and other price increases

H1

2011/12

Actual

H1

2011/12

Like for Like

H1

2012/13

Actual



Revenue and margin by business

20

Reduction in risk capacity lowers

revenue but contributes to margin

improvement

Group underlying gross margin

has improved by 1.1% on a like for

like basis with improvements

across all businesses

GM% improved in all businesses

after £42m fuel price increase

HY13 £’m

Growth %

HY13 %

HY12 %

UK & Ireland 909.6 (8.9) 23.0 21.9

Continental Europe 1,154.2 (2.9) 12.8 12.4

France 151.3 (6.0) 21.0 19.4

Airlines Germany 571.6 12.9 26.4 26.3

Northern Europe 602.3 2.2 22.3 20.5

Corporate - - - -

Group 3,224 (2.0) 20.7 20.1

India - (100.0) - 100.0

Group (continuing) 3,224 (2.6) 20.7 19.6

Underlying gross margin improvement across all businesses

Revenue

Like for Like

underlying

Gross Margin



HY13 £m

Improve-

ment £m

LTM £m

EBIT

Margin %

UK & Ireland (147.0) 29.5 31.4 1.1%

Continental Europe* (44.8) 19.5 92.3 2.3%

France (17.5) 4.5 (16.2) (3.8)%

Airlines Germany* (3.2) (0.2) 35.5 3.9%

Northern Europe 26.3 1.3 102.2 8.7%

Corporate (11.3) (1.1) (25.5) -

Group (continuing) (197.5) 53.5 219.7 2.4%

India - (2.9) 7.9 100

Group (197.5) 50.6 227.6 2.5%

Underlying EBIT by business Strong first half improvement with Last Twelve Months underlying EBIT of £220m

UK turnaround plan delivers £29.5m

improvement in first half

Continental Europe performs

strongly with all markets improved

from last year

Over last twelve months underlying

UK EBIT1 margin of 1.1% with

continuing group at 2.4%

Margin for combined German business of 19.8%; EBIT margin 3.0%

1. Underlying profit from operations of the UK’s operating segment as a percentage of its revenues



Separately Disclosed Items

22

Business restructuring costs

delivering the UK and Group Wide

cost and EBIT improvements

Restructuring costs recognised

ahead of benefit delivery

Improving business performance

removes requirement for

additional impairments

Provision for TOMS VAT ruling

£m Cash Non cash HY13 HY12

Business restructuring costs (68.8) (10.9) (79.7) (32.1)

– UK turnaround (39.4) (39.4) (27.3)

– UK airline (5.1) (5.1) -

– Group wide restructuring costs (19.0) (19.0) -

– Outsource contract termination (10.9) (10.9) -

– Others (5.3) (5.3) (4.8)

Refinancing (2.0) (2.0) (14.0)

Operating Intangibles (3.5) (3.5) -

Impairment of goodwill - (190.4)

Adverse 3rd Party tax case (13.4) (13.4) -

IAS 39 & intangible amortisation (14.4) (14.4) (13.5)

Other (2.3) (2.3) (20.2)

Group (70.8) (44.5) (115.3) (270.2)

Costs of delivery of the transformation



Group Cash Flow

23

Embedded initiatives to improve

working capital management on

a sustainable basis

Interest charges increased due to

aircraft sale and leasebacks in

FY12 and fees

Proceeds from disposal of

businesses in prior year (mainly

India and HCV hotels) and sale &

leaseback of aircraft

Net debt reduced by £175.4m

£m HY13 HY12 Change

EBIT (197.5) (248.1) 50.6

Depreciation 78.7 83.7 (5.0)

EBITDA (118.8) (164.4) 45.6

Working capital (77.2) (238.3) 161.1

Tax (19.6) (20.1) 0.5

Other 3.8 1.5 2.3

Operating cashflow (211.8) (421.3) 209.5

Capex (64.2) (66.8) 2.6

Net interest (40.2) (26.2) (14.0)

Free cashflow (316.2) (514.3) 198.1

Dividends - (32.7) 32.7

Disposals (3.4) 56.6 (60.0)

Exceptional / Discontinued Ops (93.9) (24.3) (69.6)

Net cashflow (413.5) (510.7) 101.2

Opening net debt (788.3) (890.9) 102.6

Net cashflow (413.5) (514.7) 101.2

Other (12.7) 15.7 (28.4)

Closing Net Debt (1,214.5) (1,389.9) 175.4

Enhanced cash management builds on EBIT improvement



We are already delivering better performance

24

Winter trading

H1 EBIT improved

by £50.6m

Summer trading

60% of planned capacity

sold – 2% up on last year

10% less left to sell

Gross margins up in all

businesses

Full year outlook

encouraging

underpinned by the

delivery of our

transformation plans

Key highlights of recent trading







Transforming Thomas Cook through profitable

growth

4

Harriet Green | Group CEO


Expanding our concept hotel presence as planned

TRANSFORMING THOMAS COOK THROUGH PROFITABLE GROWTH 1 2 3 4

Indicative concept hotel expansion plan millions of passengers

smartline (adult)

Sunprime/

SENTIDO

Family concept

(tbd)

smartline (family)

Sunwing

16/17

2.0

0.6

0.2

0.6

0.4

15/16 14/15

1.5

0.5

0.5

0.3

13/14 12/13 11/12

0.5

220 250 66 # of hotels

in operation 932

Concept hotels increase from 66 to 93

since FY11/12 as we have rolled out

Smartline concept

Smartline offers budget, quality hotels

with great design for the smart traveler

Already tested well in Germany

www.neckermann-reisen.de/smartline

Performance relative to other products1

Higher gross margins through

volume commitments

Higher loyalty through consistent

experiences

Higher rate of early bookings

1 Average for the existing concept portfolio

2 Total number of hotels, including those opened/opening during April/May, for summer 2013 season 26


Delivering on our high touch and high tech strategy

27


Provides customers with personalised

recommendations for their holiday destinations

based on their individual travel profile

Committed to grow business being transacted online from the current 35%1 to over 50% in FY15

Significant industry recognition of our innovation

in digital

Launching innovative partnership with online travel

site Triporati

Growing team of entrepreneurial digital talent

New Global Head of Web and new

Chief Technology Officer

Shortlisted for Best Online Advertisement/

Campaign in UK (Travel Marketing Awards)

Best in Travel

in Netherlands

Silver Egg Award

in Sweden

1 Calculated on an LTM basis.


Significant progress on the transformation enables the capital refinancing

28


Capital Markets Day 13 March 2013

H1 Results Announcement 16 May 2013

Take total cost-out of £145m1 by end FY13 £107m already delivered by end of H1 13

Improve underlying gross margins by at least 1.5%

by end FY15

1.1% underlying gross margin improvement

on a like for like basis in H1 13

Improve working capital management £175.4m less net debt at end H1 13 compared with end H1 12

Simplify and de-risk our business Sale of North America completed (FY12: operating loss of

£41.1m) and rationalisation of brands in France

Continue to strengthen our management Appointed new Global Head of Web, new

Chief Technology Officer and new General Counsel

Increase business transacted on the web Announcing innovative partnership with Triporati

to provide more focused choice for customers

Expand concept hotels– 66 concept hotels FY11/12 Concept hotels increased to 93

9 Weeks

The capital refinancing enables continuing delivery of the transformation

1 Increased to £170m in May 2013

Thomas Cook Group plc Thomas Cook Group plc

Appendix

30


Biographies 1/2

31

Dr. Peter Fankhauser Christoph Debus Michael Healy Harriet Green

joined the Group in May 2001 and

became CEO UK & Continental

Europe on 1 November 2012.

Prior to this he was CEO

Continental Europe, a role he took

up in June 2007. Peter has over

twenty years of experience in the

travel market and, before joining

Thomas Cook, was responsible for

managing and growing the

European division and overseas

businesses of Kuoni.

joined the Group in September 2012

as Global Head of Air Travel. Christoph

worked with the Group previously as MD

and CFO for Condor, before he joined Air

Berlin as COO in 2009. At Air Berlin, he was

responsible for Operations, IT, Procure-

ment, HR and IT/Processes.

Prior to joining Condor in 2005, he was a

partner with Roland Berger Strategy

Consultants in Munich, where he specia-

lised in Aviation/ Tourism, Automotive and

Restructuring/ Corporate Strategy.

joined the Group on 14 May 2012

and became Group CFO on 1 July

2012. Prior to this, he was Group

Finance Director of Kwik-Fit

Group. Michael has considerable

international experience across a

broad range of industries and was

previously Chief Operating Officer

and Finance Director of the Hong

Kong listed First Pacific Company

Limited and subsequently Chief

Financial Officer of ebookers plc.

joined the Group as Group CEO on

30 July 2012. Prior to this, she was

CEO of leading high service techno-

logy distributor Premier Farnell plc.

Harriet is a global executive with

extensive, multi-channel business

leadership experience of the

worldwide technology and industrial

markets. She has driven innovation

and strategic transformation through

profitable global growth strategies

and delivered industry leading results.

APPENDIX


Biographies 2/2

32

Joe O’Neill Joined in early May, previously with

Cathay Pacific – he has been a CIO

for 15 years, completed 7 IT

transformations, and been awarded

the CIO of the Year awards in 2011,

and 2012. Has delivered many major

transformational change

programmes, will drive the strategic

IT roadmap, focused on the needs of

the business.

He inherits an experienced team

including a Chief Information and

Process Officer with a thorough

knowledge of our legacy systems.

Joined as Group General Counsel, leading our

Group-wide legal function Craig also has respon-

sibility for our strategic divestitures programme

and the Company Secretariat. He joined from

Eastgate Capital Group Limited, a leading Dubai-

based private equity firm and the private equity

arm of The National Commercial Bank of Saudi

Arabia, where he served as General Counsel and

a member of the firm’s Executive Management

Committee. Craig was also an Advisory Board

member of TLG Capital, a London-based private

equity firm and a former corporate Partner of

Latham & Watkins, a top tier global law firm,

where his practice focused on advising clients

with respect to debt and equity capital markets,

merger and acquisition.

Joined the Group in September 2012

as Group Treasurer. Prior to this he

was Group Treasurer of Kwik-Fit

Group. Having originally qualified as

a Chartered Banker, Joe has vast

experience in the field of

international treasury management

and corporate finance from a range

of global organisations including

Diageo plc, Cable & Wireless plc and

Amec plc. He also has a successful

track record of implementing

strategic change in the areas of cash

and working capital management.

John is an award winning digital entre-

preneur who specialises in digital

marketing and search. Over the last 16

years he has started a number of

significant digital marketing compa-

nies, one of which he sold to Microsoft

and one ultimately to Google. John will

lead our eCommerce Centre of

Excellence as we drive web innovation

and progress and also chair Thomas

Cook’s exciting new Digital Advisory

Board, which brings together internal

and external experts with specific

digital knowledge and expertise to

guide our journey in this area.

John Straw Craig Stoehr Tomasz Schmazny

APPENDIX


Group profit and loss account

33

APPENDIX

£m 2013 2012

Continuing

Operations

Revenue 3,224.3 3,310.1

Cost of providing tourism services (2,555.8) (2,620.6)

Gross profit 668.5 689.5

Operating expenses (866.0) (937.6)

Loss from operations (197.5) (248.1)

Separately disclosed items (115.5) (265.6)

Share of results of associates and joint venture and other 0.8 (3.3)

Net finance costs (78.7) (67.1)

Loss before tax (390.9) (584.1)

Tax 123.6 107.9

Loss for the period from continuing operations (267.3) (476.2)

Discontinued

Operations

Loss for the period from discontinued operations (41.4) (128.8)

Loss for the period (308.7) (605.0)

Unaudited six months ended 31 March


Group balance sheet as at 31 March 2013

34

APPENDIX

£m Unaudited as at 31.03.2013 Unaudited as at 31.03.2012 Audited as at 31.09.2012

Non-current assets Intangible assets 3,231.6 3,233.6 3,158.9

Property, plant & equipment 824.0 865.4 840.8

Other non-current assets 521.2 574.1 382.9

4,576.8 4,673.1 4,382.6

Current assets Other current assets 1,188.3 1,599.7 1,063.9

Cash and cash equivalents 295.5 476.8 460.3

1,483.8 2,076.5 1,524.2

Assets classified as held for sale 126.5 233.6 -

Total assets 6,187.1 6,983.2 5,906.8

Current liabilities Trade and other payables (1,509.7) (1,653.1) (2,008.5)

Borrowings and obligations under finance leases (95.1) (113.5) (70.4)

Revenue received in advance (1,721.9) (1,751.6) (1,094.1)

Short-term provisions (240.5) (163.1) (201.5)

Other current liabilities (82.3) (164.9) (165.6)

(3,649.5) (3,846.2) (3,540.1)

Liabilities classified as held for sale (123.1) (107.8) -

Non-current liabilities Retirement benefit obligations (311.4) (359.9) (324.0)

Borrowings and obligations under finance leases (1,467.9) (1,749.4) (1,178.2)

Long-term provisions (180.9) (197.2) (214.3)

Other non-current liabilities (178.4) (230.1) (192.3)

(2,138.6) (2,536.6) (1,908.8)

Total liabilities (5,911.2) (6,490.6) (5,448.9)

Net assets 275.9 492.6 457.9


1 Items that are disclosed separately in order to reflect the underlying operating performance of the business in the relevant period.

2 Impact of provision releases in Northern Europe and Airlines Germany where the underlying liability for aircraft related and other costs no longer exists.

3 Reflects the impact of the disposal of Thomas Cook India in the six months ended 31 March 2013.

4 Net impact of the disposal/closure of individual businesses comprising Explorers Hotel, HCV, FX Bureaux and FY12 store closures.

5 Estimated adjustment for the timing of the Easter holidays. In FY13 part of the Easter holiday season fell in the first half of that financial year.

In FY12 easter predominantly fell in the second half of that financial year.

Reconciliation table for underlying and like for like

EBIT (£m) Gross margin (%)

H1 13 H1 12 Change H1 13 H1 12 Change

Reported (313.0) (513.7) 200.7 20.0 20.8 (0.8)

Separately disclosed items1 115.5 265.6 (150.1) 0.7 - -

Underlying (197.5) (248.1) 50.6 20.7 20.8 (0.1)

FY12 provision releases2 - (26.0) - - (0.3) -

India FY12 disposal3 - (2.9) - - (0.5) -

Other discontinued

operations4 - 7.8 - - (0.7) -

Other5 - 10.0 - - 0.3 -

Currency impact - 3.0 - - - -

Like for like (197.5) (256.2) 58.7 20.7 19.6 1.1

35

A reconciliation of underlying EBIT on a like for like basis and underlying gross margin on a like for like basis

with reported numbers is as follows:

APPENDIX


Calculation of TERP and rights issue bonus factor

The rights issue is treated as a bonus issue of shares + an

issue of fully paid up shares

The bonus factor is used to reflect the bonus element of

the issue, i.e. the discounted (below market price) bonus

issue of shares via the rights issue

For illustration, assuming last closing price prior to the

ex-rights date is equivalent to the reference share price:

Calculating the Theoretical ex-rights price (“TERP”) with reference to the firm placing price

Calculating the bonus factor

* TERP used for bonus factor calculation is based on the last closing price pre the ex-rights date.

APPENDIX

Discount to TERP: 36.4%

It is used to adjust share price and other per share metrics

to ensure comparability pre and post rights issue

Post rights issue completion, historic EPS and DPS are

rebased (divided by) the bonus factor

Reference share price (firm placing price): 137p

Reference # of shares (post firm placing): 1,004m

Rights issue price: 76p

# of rights issue shares: 402m

The TERP is the share volume weighted average price,

calculated as follows:

TERP = 120p = Ref. price

137p ref. # shares issue price # RI shares

1,004m × ( ) 76p 402m × ( ) +

ref. # shares

1,004m RI shares

402m + ( )

Bonus factor =

137

120 1.15x =

TERP*

pre-ex-rights price

36

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