TIDMAVE
RNS Number : 0767Y
Avis Europe PLC
27 August 2009
?
Embargoed for 07.00 - 27 August 2009
AVIS EUROPE PLC
Interim results for six months ended 30 June 2009
Avis Europe plc, a leading car rental company in Europe, Africa, the Middle East
and Asia, announces interim results for the six months ended 30 June 2009.
Operating Performance
* Like-for-like1 reduction in volumes limited to 9.4%, supported by brand
leadership, service differentiation and geographic diversification
* Selected pricing gains achieved, mitigating impact of mix and increased rental
length
* Very strong fleet discipline led to a 4.7% point step-change improvement in
utilisation
* Rigorous cost reduction of EUR82 million (gross margin improved by 2% points;
staff numbers down by 10%) mitigated impact of EUR87 million lower revenues
* Substantial fleet reduction and cash management focus drove significant cash
inflow reducing net debt by EUR392 million versus H1 2008
* Management full year expectations remain overall unchanged
Financial Performance
* Revenues 14.1% lower at EUR533.2 million, 12.5% lower on a constant currency2
basis
* Loss before tax on continuing operations of EUR34.6 million (2008: loss of EUR6.8
million) included a net exceptional charge of EUR15.4 million (2008: EUR1.7
million), and loss on re-measurement items of EUR5.3 million (2008: gain of EUR3.9
million)
* Underlying3 loss before tax on continuing operations4 of EUR13.9 million (2008:
loss of EUR9.0 million)
* Loss per share of 2.8 euro cents (2008: loss of 0.3 euro cents).
Underlying3 loss per share on continuing operations of 0.8 euro cents (2008:
loss of 0.7 euro cents)
* Loss after taxation on continuing operations of EUR25.8 million (2008: loss of
EUR4.0 million)
* Closing net debt of EUR912.3 million (2008: EUR1,304.2 million)
* Return on capital employed ahead by 0.5% points to 8.7%
Pascal Bazin, Chief Executive, said:
"We have delivered a resilient first
half performance as our strategic positioning and the rigorous execution of our
plan for recession mitigated weaker market conditions. Brand leadership, service
differentiation and geographic diversification supported volumes and proactive
actions improved rental revenue per day by 1.0%, excluding the impact of mix and
increased rental length. Very strong fleet discipline led to a 4.7% point
step-change in utilisation. We fully flexed variable costs in line with lower
revenues, and together with a structural reduction in fixed costs, these actions
led to a limited increase in the underlying seasonal first-half loss. At the
same time the substantial fleet reduction and strong cash management drove a
significant reduction in net debt.
Recent trading during July and August to date has shown some improvement in
overall revenue trends, with an improvement in rental revenue per day and a
lower level of volume decline. However, visibility remains limited and we
anticipate continued pressure on consumer sentiment and travel demand in the
second half. In this uncertain trading environment, we will maintain our
rigorous operational discipline to further improve our cost position and
business model flexibility, in addition to continuing our strong commercial
focus to protect profitable revenue, invest in future profitable growth and in
our customers to position the Group well to take full advantage when markets
stabilise.
Our full year expectations remain overall unchanged, including positive free
cash flow."
1. Like-for-like measures comprise only those corporately-owned and agency rental
stations that were in operation throughout all of the current and comparative
period.
2. Constant currency revenue data is calculated whereby both current and prior
period non-euro denominated revenue is translated into euro at the exchange rate
prevailing in the equivalent month in the prior period.
3. Underlying excludes exceptional charges, certain net re-measurement and economic
hedging items (see Basis of Preparation). Underlying is not a defined term under
IFRS, and is not intended to be a substitute for, or superior to, IFRS measures.
4. These profit measures exclude exceptional charges of EUR15.4 million (2008: EUR1.7
million) and certain net re-measurement and economic hedging items totalling
EUR5.3 million (2008: EUR(3.9) million).
+--------------------------------------------+--------------------------------------+
| Enquiries: | |
+--------------------------------------------+--------------------------------------+
| Avis Europe plc | |
+--------------------------------------------+--------------------------------------+
| Pascal Bazin, Chief Executive | 01344 426644 |
+--------------------------------------------+--------------------------------------+
| Martyn Smith, Finance Director | 01344 426644 |
+--------------------------------------------+--------------------------------------+
| Hilary White, Investor Relations | 01344 426644 |
+--------------------------------------------+--------------------------------------+
+--------------------------------------------+--------------------------------------+
| Hogarth Partnership | |
+--------------------------------------------+--------------------------------------+
| Andrew Jaques, Barnaby Fry, Simon | 020 7357 9477 |
| Hockridge | |
+--------------------------------------------+--------------------------------------+
RESULTS OVERVIEW
We have delivered a resilient first half performance as our strategic
positioning and the rigorous execution of our plan for recession mitigated
weaker market conditions.
Corporately-owned operations
Our geographic diversification, brand leadership and service differentiation
supported volumes, with the like-for-like reduction being only 9.4%. Whilst
demand softened in France, Germany and Italy during the first half of the year,
we delivered a comparatively resilient performance in the UK, despite market
conditions, winning several major new contracts during the period. The
environment in Spain remained particularly tough, although with some early signs
of stabilisation.
Avis Licensee and Budget Licensee
Our licensees also benefitted from this diversification, helping to mitigate the
weaker global economic conditions.
Total Group
Our strong customer balance was reinforced with the relatively stronger
performances in the Corporate and Insurance/Replacement customer groups, in
particular with the latter being off-airport and less seasonal. In addition, we
launched "Avis Flex" as a versatile monthly rental product to satisfy increasing
demand for greater flexibility from our Corporate customers. We also
strengthened a number of key partnerships, further protecting our profitable
revenue, and are now the fully exclusive partner for British Airways. In order
to improve our utilisation further, we have introduced a "non-cancellation" fee,
which applies to customers who do not give advance notification of their intent
to cancel a reservation. Despite the global recession, we have continued to
invest in longer-term growth markets, with the opening of a new licensee
operation in Vietnam, a further increase in the number of locations in China and
expansion of our car-sharing operation OKIGO in Paris.
We have kept a very tight control over fleet capacity, continuing to increase
prices where practicable and improving yields through revenue management
actions. We have achieved selected gains in our Individual direct customer group
and successfully implemented price increases to our Insurance/Replacement
customers, as well as many Corporate customers. Rental revenue per day, 1.4%
lower at constant currency2 and 3.4% lower on a reported basis, was impacted by
the mix effect from the relatively stronger volume performance of the
Insurance/Replacement customer group and longer rental length, particularly by
Corporate customers. Excluding the impact of mix and longer rental length,
rental revenue per day on a constant currency basis was ahead by 1.0%.
Vehicle purchases have been managed on a conservative basis, allowing us to flex
proactively the size of our fleet relative to actual demand conditions. Together
with operational efficiencies and the extension of some holding periods, this
resulted in a step-change improvement in utilisation of 4.7% points. These
actions also combined to deliver a strong positive cash flow, reducing closing
debt by EUR221 million from the previous year end. Closing debt of EUR912 million
was 30% lower than June 2008.
We took swift and substantial cost actions to mitigate the impact of
recessionary conditions on our profitability. Total underlying costs were EUR82.3
million lower, also benefitting in part from the positive translation effect due
to weaker sterling. Variable costs were flexed to mitigate lower volumes, which
together with improvements in utilisation and more stable fleet market
conditions, led to a 2% point improvement in the gross margin. Staff costs were
substantially lower, as staff numbers were reduced by 662 to 5,490 and salaries
were frozen for 2009. Fixed overheads were held flat year-on-year despite cost
pressures, leaving the operating margin at 3.7% (2008: 4.0%).
The combination of the above cost reductions, together with fleet and
utilisation actions reducing average capital employed, increased underlying
return on capital employed for the 12 months to June 2009 by 0.5% points to
8.7%.
OUTLOOK
Recent trading during July and August to date has shown some improvement in
overall revenue trends, with an improvement in pricing and a lower level of
volume decline. However, visibility remains limited and we anticipate continued
pressure on consumer sentiment and travel demand in the second half.
Our geographic spread and diversified customer portfolio are helping to mitigate
the impact of this challenging trading environment. We continue to respond by
adapting our business model and maximising opportunities for price increases,
while continuing to focus on the customer experience. We will maintain a very
strong operational focus to preserve cost efficiencies going forward, as well as
retaining our tight control of capital.
As a result, our full year expectations remain overall unchanged, including
positive free cash flow.
KEY PERFORMANCE INDICATORS
The key measures that the Board monitors to
measure the Group's performance are set out in the table below:
Performance indicators
+-------------------------------------------------+----------+------------+------------+
| | Six | Year | Six |
| | months | | months |
+-------------------------------------------------+----------+------------+------------+
| | to 30 | to 31 | to 30 |
| | June | December | June |
| | 2009 | 2008 | 2008 |
| | | (restated) | (restated) |
+-------------------------------------------------+----------+------------+------------+
| Corporately-owned business | | | |
+-------------------------------------------------+----------+------------+------------+
| Rental revenue per day1 - reported currency (% | (3.4) | (1.3) | 0.1 |
| change) | | | |
+-------------------------------------------------+----------+------------+------------+
| Rental revenue per day1 - constant currency2 (% | (1.4) | 0.7 | 2.1 |
| change) | | | |
+-------------------------------------------------+----------+------------+------------+
| Billed days3 (% change) | (10.5) | 0.1 | 2.5 |
+-------------------------------------------------+----------+------------+------------+
| Utilisation - average4 (%pts. change) | 4.7 | 0.2 | (0.5) |
+-------------------------------------------------+----------+------------+------------+
| | | | |
+-------------------------------------------------+----------+------------+------------+
| Total Group: | | | |
+-------------------------------------------------+----------+------------+------------+
| Underlying operating margin (%) | 3.7 | 8.6 | 4.0 |
+-------------------------------------------------+----------+------------+------------+
| Underlying return on capital employed5 (%) | 8.7 | 8.5 | 8.2 |
| | | | |
+-------------------------------------------------+----------+------------+------------+
Footnotes and detailed definitions are described at the end of the Financial
Review.
Comparative data has been restated following both the integration of the Avis
and Budget corporately-owned operations and the application of IFRS 8, Operating
segments.
FINANCIAL REVIEW
Total revenue from continuing operations was 14.1% lower at EUR533.2 million with
an underlying loss before tax of EUR13.9 million (2008: EUR9.0 million). Overall
loss before tax was EUR34.6 million (2008: EUR6.8 million).
Lower volumes and the marginal fall in reported rental revenue per day were
largely mitigated by early and substantial cost actions, the substantial
improvement in utilisation, together with a positive cost effect from
translation due to weaker sterling. We incurred exceptional charges primarily
relating to restructuring the cost base, in addition to fair value losses on the
re-measurement of derivatives.
The underlying loss per share on continuing operations was 0.8 euro cents (2008:
loss of 0.7 euro cents) and the total loss per share on continuing operations
was 2.8 euro cents (2008: loss of 0.4 euro cents).
Currency effects
Exchange rate movements, in particular the sterling/euro exchange rate, affected
results for the first six months of 2009 compared with the prior year period.
The average sterling/euro rate for operating profit for the first six months of
2009 was 1.151 compared to 1.229 in the comparative period. The strength of the
euro adversely impacted customers travelling into mainland Europe, particularly
business from the US and UK, whilst having a beneficial effect on the
translation of the net cost of our UK activities, including the cost of the
Group Headquarters.
Change in basis of segmental reporting
At the end of the period, we took the decision to combine the corporately-owned
operations of Budget with the respective Avis businesses. Consequently, the
corporately-owned operations of both the Avis and Budget branded businesses are
now disclosed as a single segment. Comparative data has been restated
accordingly.
Revenue overview
+-------------------------------------------+---------+------------+-----------+
| EUR million | 2009 | 2008 | % change |
| | | (restated) | |
+-------------------------------------------+---------+------------+-----------+
| Corporately-owned operations: | | | |
+-------------------------------------------+---------+------------+-----------+
| Rental revenue* | 463.0 | 530.3 | (12.7) |
+-------------------------------------------+---------+------------+-----------+
| Other non-rental revenue | 49.5 | 67.1 | (26.2) |
+-------------------------------------------+---------+------------+-----------+
| | 512.5 | 597.4 | (14.2) |
+-------------------------------------------+---------+------------+-----------+
| Licensees: | | | |
+-------------------------------------------+---------+------------+-----------+
| Avis | 15.7 | 17.4 | (9.8) |
+-------------------------------------------+---------+------------+-----------+
| Budget | 5.0 | 5.9 | (15.3) |
+-------------------------------------------+---------+------------+-----------+
| | 20.7 | 23.3 | (11.2) |
+-------------------------------------------+---------+------------+-----------+
| | | | |
+-------------------------------------------+---------+------------+-----------+
| Group Revenue | 533.2 | 620.7 | (14.1) |
+-------------------------------------------+---------+------------+-----------+
*Excluding inter-segment sales
Corporately-owned operations
Revenue from the corporately-owned business segment was 14.2% below the
comparative period at EUR512.5 million at reported currency and 12.5% lower on a
constant currency basis.
Overall billed days were 10.5% lower and 9.4% lower on a like-for-like6
basis excluding the impact of closing 46 very low contribution stations and the
licensing of 21 locations, primarily in Germany, Holland and Austria. A
reduction in billed days primarily reflected a lower number of rentals and was
partially offset by an improvement in rental length, which we actively managed
through revenue management initiatives.
Pricing improvements from proactive actions and revenue management were
offset by the mix effect from the relatively stronger volume performance of the
Insurance/Replacement customer group, car mix and longer rental length. Reported
rental revenue per day was 1.4% lower at constant currency and 3.4% lower on a
reported basis. With a very tight control over fleet capacity, we continue to
increase prices where practicable, achieving selected gains to our Individual
direct customers and implementing successfully price increases to our
Insurance/Replacement customers, as well as many Corporate customers.
The analysis of rental revenue by customer type follows:
Individual
These customers are individual travellers booking directly or
through intermediary travel companies or tour operators, partnership
arrangements and brokers.
The weaker economic conditions particularly affected rental revenue from this
customer group. With regard to direct business, the strength of the euro
adversely impacted business from the UK into mainland Europe but European
domestic business was relatively more resilient. We continue to control tightly
the volume of business through the broker intermediary channel. Overall rental
revenue per day was broadly flat.
Corporate
Corporate customers book via negotiated arrangements with their
employers and through replacement companies.
Volumes from this customer
group were below the comparative period but more resilient than Individual
customers. Price increases were successfully implemented to many Corporate
customers, although pricing remained competitive as many companies seek to
control travel expenditure. Reflecting this pressure and an increase in rental
length, reported rental revenue per day was below the prior year period.
Insurance/Replacement
These customers come through insurance and
replacement companies, dealerships and repair shops with which we have a direct
contractual relationship.
Volumes from this customer group proved more resilient, being less
cyclical, and rental revenue per day was improved.
Avis Licensee
Revenue from Avis Licensee countries was 5.7% lower on a
constant currency basis and 9.8% lower on a reported basis with reductions in
most regions reflecting the weaker global economic conditions.
Budget Licensee
Budget Licensee revenue was marginally ahead on a constant currency basis as
continued growth of the diverse network offset difficult trading conditions. On
a reported basis, revenues were 15.3% lower.
Operating profit overview
+-------------------------------------------------+---------+----------+
| EUR million | 2009 | 2008 |
+-------------------------------------------------+---------+----------+
| Underlying operating profit - continuing | 19.9 | 25.1 |
| operations | | |
+-------------------------------------------------+---------+----------+
| Operating profit - discontinued operation | - | 1.3 |
| (excluded from underlying) | | |
+-------------------------------------------------+---------+----------+
| Amounts excluded from underlying: | (15.4) | (1.7) |
| - Net exceptional charges | (2.0) | 1.0 |
| - Certain re-measurement items and economic | | |
| hedges | | |
+-------------------------------------------------+---------+----------+
| Operating profit including discontinued | 2.5 | 25.7 |
| operation and amounts excluded from underlying | | |
+-------------------------------------------------+---------+----------+
The analysis of underlying operating profit from continuing operations
follows:
Corporately-owned operations
+-------------------------------------------------+---------+------------+
| EUR million | 2009 | 2008 |
| | | (restated) |
+-------------------------------------------------+---------+------------+
| Revenue | 512.5 | 597.4 |
+-------------------------------------------------+---------+------------+
| Cost of sales | (303.1) | (367.0) |
+-------------------------------------------------+---------+------------+
| Administrative expenses | (205.8) | (223.4) |
+-------------------------------------------------+---------+------------+
| Underlying operating profit - continuing | 3.6 | 7.0 |
+-------------------------------------------------+---------+------------+
Underlying operating profit of our corporately-owned operations was only EUR3.4
million lower than the comparative period, despite revenue being EUR84.9 million
or 14% lower, reflecting the flexibility of the variable cost base and
structural reductions in fixed costs.
Cost of sales of EUR303.1 million was EUR63.9 million or 17.4% lower than the
comparative period with fleet costs EUR39.8 million or 17.6% lower. This lower
fleet cost reflected the reduction in fleet capacity to match lower demand,
combined with our drive to improve significantly utilisation. In the comparative
period, fleet costs were negatively impacted by residual values on
non-repurchase vehicles in Spain and the UK. In the current period, residual
values have been more stable with second hand markets supported by scrappage
laws in Germany and the UK. The cost of new vehicle purchases has been held
broadly flat. Other cost of sales was EUR24.1 million or 16.9% lower, being fully
flexed in line with the reduction in rental revenues and gas revenues as
appropriate.
Administrative expenses of EUR205.8 million, were EUR17.6 million or 7.9% lower than
the comparative period. Staff costs were EUR15.6 million or 10.7% lower following
substantial 2008 redundancies, a recruitment freeze since 2008, the
implementation of a salary freeze for 2009 and a further 5% reduction in Group
Headquarter staff in the first half of 2009. In the UK business, staff numbers
have marginally increased to support several large corporate contract wins.
Fixed overheads were flat. Benefits from the translation of the sterling-based
overheads into euro and property rental savings from restructuring actions were
offset by increases in local taxation charges and more conservative receivable
provisions given the prevailing economic climate.
Avis Licensee
+-------------------------------------------------+---------+------------+
| EUR million | 2009 | 2008 |
| | | (restated) |
+-------------------------------------------------+---------+------------+
| Revenue | 15.7 | 17.4 |
+-------------------------------------------------+---------+------------+
| Cost of sales and administrative expenses | (1.0) | (0.5) |
+-------------------------------------------------+---------+------------+
| Underlying operating profit | 14.7 | 16.9 |
+-------------------------------------------------+---------+------------+
Avis Licensee underlying operating profit at EUR14.7 million was reduced by EUR2.2
million primarily reflecting lower volumes, the comparative benefitting from a
one-off credit.
Budget Licensee
+-------------------------------------------------+---------+------------+
| EUR million | 2009 | 2008 |
| | | (restated) |
+-------------------------------------------------+---------+------------+
| Revenue | 5.0 | 5.9 |
+-------------------------------------------------+---------+------------+
| Cost of sales and administrative expenses | (3.4) | (4.7) |
+-------------------------------------------------+---------+------------+
| Underlying operating profit | 1.6 | 1.2 |
+-------------------------------------------------+---------+------------+
Budget Licensee underlying operating profit at EUR1.6 million improved by EUR0.4
million due to tight cost control and foreign exchange benefits from the
translation of the sterling cost base.
Operating margin - continuing
Underlying operating margin on continuing operations was 3.7%, being 0.3% points
lower than the comparative period. Whilst operating costs were largely flexed in
line with revenue, the benefit of certain structural actions to reduce the fixed
cost base crystallised only towards the end of the period.
The operating margin on continuing operations after net exceptional items,
certain re-measurement items and economic hedges reduced from 3.9% to 0.5%,
primarily due to higher net exceptional charges in the current period.
Underlying net finance costs
+-------------------------------------------------+---------+-----------+
| EUR million | 2009 | 2008 |
+-------------------------------------------------+---------+-----------+
| Finance costs | | |
+-------------------------------------------------+---------+-----------+
| Net finance costs (excluding payable on | 33.1 | 33.4 |
| deferred consideration) | | |
+-------------------------------------------------+---------+-----------+
| Interest payable on deferred consideration | 0.9 | 1.1 |
+-------------------------------------------------+---------+-----------+
| Underlying net finance costs1 | 34.0 | 34.5 |
+-------------------------------------------------+---------+-----------+
| | | |
+-------------------------------------------------+---------+-----------+
| Average net debt | 967 | 1,060 |
+-------------------------------------------------+---------+-----------+
1Excludes certain re-measurement items and economic hedges, totalling a loss of
EUR3.3 million (2008: gain of EUR2.9 million).
The underlying net finance costs were broadly flat despite lower average net
debt, as higher average gross cash deposits were held throughout most of the
period. The Group also continued to be substantially hedged in the short-term,
therefore limiting the effect of lower market borrowing rates. The resultant
effective underlying finance rate was 7.0% (2008: 6.5%).
The decrease in average net debt from EUR1,060 million to EUR967 million was due to
the reduction in the size of the average owned fleet of 17,339 units to 84,313,
offset by movements in associated fleet working capital.
Net exceptional charges
Net exceptional charges before taxation of EUR15.4
million were incurred in the period, which are analysed as follows:
+-------------------------------------------------+---------+-----------+
| EUR million | 2009 | 2008 |
+-------------------------------------------------+---------+-----------+
| Restructuring costs | 8.4 | 1.9 |
+-------------------------------------------------+---------+-----------+
| Securitisation preparation costs | 7.1 | - |
+-------------------------------------------------+---------+-----------+
| Centrus receivables | (0.1) | (0.2) |
+-------------------------------------------------+---------+-----------+
| Net exceptional charges - continuing operations | 15.4 | 1.7 |
| Discontinued operation | - | (1.3) |
+-------------------------------------------------+---------+-----------+
| Net exceptional charges including discontinued | 15.4 | 0.4 |
| operation | | |
+-------------------------------------------------+---------+-----------+
Restructuring costs of EUR8.4 million were recognised, reflecting the
rationalisation of operations, which commenced in the prior year. This
rationalisation includes headquarter redundancies, the closure of certain low
margin rental locations, and vacant property provisions following the relocation
of the headquarters of the UK business into the Group head office. In the prior
period, restructuring costs of EUR1.9 million were incurred in respect of a
redundancy programme that commenced in December 2007.
During the period, we commenced the preparation of a structure for potential
securitisation of our fleet. Advisory, legal and other costs totalling EUR7.1
million were expensed in developing corporate and operational structures. We
could however benefit from this work, if and when the market re-opens and the
economics are attractive.
The activities associated with the closure of the Centrus credit hire business
continue to be more successful than previously anticipated. We therefore
partially reversed provisions recognised as exceptional items in prior years,
resulting in a further credit of EUR0.1 million (2008: EUR0.2 million).
In 2007, we disposed of our former subsidiary in Greece and in 2008 recognised
an exceptional credit of EUR1.3 million to reflect the final settlement of a
warranty provision.
The net cash cost of exceptional items, including the settlement of costs
recognised in previous periods, was EUR18.6 million (2008: EUR4.4 million).
Certain re-measurement items and economic hedges
The following items have been recognised in the period and are excluded from
underlying loss before tax:
+-----------------------------------------------+-----------+----------+----------+
| EUR million | Operating | Net | Loss |
| | Profit | Finance | Before |
| | | Costs | Tax |
+-----------------------------------------------+-----------+----------+----------+
| Re-measurement losses on derivative financial | 3.2 | 1.5 | 4.7 |
| instruments | | | |
+-----------------------------------------------+-----------+----------+----------+
| Economic hedge adjustments | (1.2) | (2.4) | (3.6) |
+-----------------------------------------------+-----------+----------+----------+
| Foreign exchange loss on borrowings | - | 4.2 | 4.2 |
+-----------------------------------------------+-----------+----------+----------+
| | 2.0 | 3.3 | 5.3 |
+-----------------------------------------------+-----------+----------+----------+
Re-measurement losses on derivative financial instruments arise from the
recognition in the Income Statement of movements in the fair value of foreign
exchange options used to hedge net US dollar income, and interest rate swaps and
caps used to limit the Group's floating interest rate exposures, partially
offset by an increase in the fair value of an embedded derivative. The foreign
exchange on borrowings primarily arises from translation of sterling debt
exposures.
Fleet
The majority of vehicles continue to be subject to manufacturer
repurchase arrangements, which guarantee a disposal value at the end of the
holding period, thereby reducing the Group's residual value exposure. The split
between the closing non-repurchase and repurchase vehicles on the Balance Sheet
is set out below:
+-------------------------------+----------+--------+----------+-----+----------+-------+
| | 30 June2009 | 31 December | 30 June2008 |
| | | 2008 | |
+-------------------------------+-------------------+----------------+------------------+
| | EURmillion | % | EURmillion | % | EURmillion | % |
+-------------------------------+----------+--------+----------+-----+----------+-------+
| Non-repurchase vehicles on | 436.6 | 33 | 441.0 | 34 | 504.0 | 28 |
| fleet | 4.5 | - | 10.3 | 1 | 12.8 | 1 |
| Non-repurchase vehicles held | | | | | | |
| for resale | | | | | | |
+-------------------------------+----------+--------+----------+-----+----------+-------+
| Manufacturer repurchase | 893.8 | 67 | 841.2 | 65 | 1,267.7 | 71 |
| vehicles | | | | | | |
+-------------------------------+----------+--------+----------+-----+----------+-------+
| | 1,334.9 | 100 | 1,292.5 | 100 | 1,784.5 | 100 |
+-------------------------------+----------+--------+----------+-----+----------+-------+
The average number of fleet units operated under short-term hire operating
leases during the period was 24.4% lower at 9,865, with an Income Statement
charge of EUR26.8 million (2008: EUR31.8 million).
The average number of fleet units, including operating lease vehicles,
operated during the period decreased by 15.8% to 94,178 vehicles reflecting
lower rental volumes and the step-change improvement in utilisation.
Return on capital employed
Underlying return on capital employed increased
from 8.2% for the 12 months to June 2008 to 8.7% for the 12 months to June 2009,
largely as a result of a reduction in average capital employed from the fleet
and utilisation actions taken during the first half of 2009.
Cash flow/net debt movement
+----------------------------------------------------------+--+-----------+-----------+
| EUR million | | 2009 | 2008 |
+----------------------------------------------------------+--+-----------+-----------+
| Net cash generated from/(used in) operating activities | | 412.2 | (59.2) |
| Net cash used in investing activities | | (44.6) | (91.5) |
+----------------------------------------------------------+--+-----------+-----------+
| Net cash (used in)/generated from financing activities | | (356.5) | 146.9 |
+----------------------------------------------------------+--+-----------+-----------+
| Net movement in cash and cash equivalents before | | 11.1 | (3.8) |
| exchange rate changes | | 319.4 | (187.5) |
| Other movements in net debt resulting from cash flows | | (104.8) | (144.3) |
| New finance leases | | (4.8) | 12.3 |
| Other non-cash movements, including the effects of | | | |
| exchange rate changes | | | |
+----------------------------------------------------------+--+-----------+-----------+
| Movement in net debt | | 220.9 | (323.3) |
+----------------------------------------------------------+--+-----------+-----------+
| Net debt brought forward | | (1,133.2) | (980.9) |
+----------------------------------------------------------+--+-----------+-----------+
| Net debt carried forward | | (912.3) | (1,304.2) |
+----------------------------------------------------------+--+-----------+-----------+
During the period, the Group was free cash flow positive resulting in a
reduction in net debt of EUR220.9 million (2008: increase of EUR323.3 million).
The substantial increase in cash generated from operating activities was mainly
attributable to lower vehicle purchases and improvements in non-fleet working
capital cash flows. The seasonal net cash outflow on investing activities was
substantially lower than the comparative period also due to lower vehicle
purchases and limited non-fleet capital expenditure. Net cash used in financing
activities reflected the resultant repayment of borrowings, as opposed to net
new borrowings in the comparative period.
Net debt
+-----------------------------------+----------+-------+-----------+------+
| | 2009 | 2008 |
+-----------------------------------+------------------+------------------+
| Closing net debt | EUR | % | EUR | % |
| | million | | million | |
+-----------------------------------+----------+-------+-----------+------+
| Interest bearing assets | 58.8 | (6) | 66.3 | (5) |
| Debt due within one year | (33.2) | 4 | (57.2) | 4 |
| Debt due after one year | (548.9) | 60 | (868.9) | 67 |
| Finance leases due within one | (312.8) | 34 | (395.9) | 30 |
| year | (76.2) | 8 | (48.5) | 4 |
| Derivative debt instruments | | | | |
+-----------------------------------+----------+-------+-----------+------+
| Net debt | (912.3) | 100 | (1,304.2) | 100 |
+-----------------------------------+----------+-------+-----------+------+
There have been no significant changes in the composition of net debt during the
period. The fair value of derivative debt instruments increased reflecting the
lower market interest rates.
Pensions
The deficit on pension schemes increased by EUR31.7 million in the period,
primarily in the main UK defined benefit scheme, reflecting an actuarial loss of
EUR24.4 million, following a decrease in the real discount rate assumption (as
corporate bond market margins reduced and long-run inflation expectations
increased), and the impact of translation into euro.
Principal risks and uncertainties
Risk mitigation is a key element of the management of Avis and the Group has a
well-developed process to identify, manage and limit exposure to areas, which
may have a negative impact on the business.
There have been no major changes to the principal risks and uncertainties
identified and disclosed in the Business Review included in the Group's 2008
Annual Report. These are summarised as:
- International operations
- Demand
- Pricing and competitive pressures
- Fleet
- Relationship with Avis Budget Group, Inc.
- Insurance
- Funding
- Interest and foreign currency
- Pensions
However, as would be expected, the relative importance of certain risks has
changed since the year end. As a result, management have taken actions to
respond, particularly by addressing further the Group's cost base and reducing
capital employed substantially. Management will continue to monitor and respond
to the changing climate, particularly the effect of economic uncertainty on
demand and residual values in used car markets, and including the potential
impact of swine flu.
Going concern
The Group is subject to a number of key business risks as summarised above. The
nature of the car rental business model means that the Group has an ability to
readily flex its fleet size and hence largely its funding requirements if
required. As an example, due to relatively short holding periods, we are able to
flex vehicle fleet levels relatively quickly to meet both fluctuations in demand
or funding constraints. Also a relatively large number of temporary staff are
employed for the seasonal peak: again, this helps provide flexibility in
managing costs. Furthermore, we can choose whether to franchise or corporately
own operations. We also benefit from significant diversification, in terms of
customers and suppliers, geographic spread and sources of funding. Consequently,
the Directors believe that the Group is well placed to manage its business risks
successfully despite the continuing highly uncertain economic outlook.
As part of our normal business practice, we regularly prepare both annual and
longer-term plans. These plans include an estimate of the financing required
over the respective period. Current forecasts indicate that we expect the Group
to operate within its committed facilities over the next 12 months together with
sufficient operating lease lines. Furthermore, these forecasts also indicate
that the Group is expected to be able to operate within its lenders' financial
covenants over the same period.
Specifically regarding sources of liquidity, the Group has EUR33.2 million of
borrowings due within one year, which primarily consist of uncommitted overdraft
facilities and commercial paper. Whilst we will seek the ongoing renewal of
these facilities, we currently maintain sufficient headroom within our committed
facilities should any of the uncommitted facilities not be renewed.
Included in net debt at 30 June 2009 are finance leases of EUR312.8 million of
which EUR81.5 million relates to drawings on facilities maturing in June 2011.
These facilities are provided by local banks and drawings are secured on the
related fleet. At the period end, the Group had committed finance lease
facilities of EUR480.0 million, which have varying maturities extending through to
June 2011.
Regarding term-debt, the first repayment in respect of committed borrowing
facilities is EUR51.6 million of US$ private placement notes (and an associated
derivative contract) due in late August 2010. Thereafter the next borrowing
repayment matures in February 2011, being the Group's EUR580 million revolving
credit facility. The Group therefore has no committed borrowings due for
repayment within one year of the signing of these Interim Financial Statements.
With regard to the longer term, the Group has commenced discussions with various
financial institutions with respect to a variety of potential forms of future
medium-term funding.
Therefore, whilst any consideration of future matters involves making a judgment
at a particular point in time about future events that are inherently uncertain,
the Directors, after making appropriate enquiries, as indicated above, have a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason, the Directors
continue to adopt the going concern basis in preparing the Financial Statements.
Forward-looking statements
Certain statements in this Interim Report are forward-looking. Although the
Group believes that the expectations reflected in these forward-looking
statements are reasonable, the Group can give no assurance that these
expectations will prove to have been correct. As these statements involve risks
and uncertainties, actual results may differ materially from those expressed or
implied by those forward-looking statements.
Footnotes and detailed definitions
1 Rental revenue per day is calculated as rental revenues divided by billed
days.
2 Constant currency revenue data is calculated whereby both current and prior
period non-euro denominated revenue is translated into euro at the exchange rate
prevailing in the equivalent month in the prior period.
3 Billed days include any day or period less than a day for which a vehicle
rental is invoiced to a customer.
4 Utilisation is calculated as the average period of time during which
operational vehicles are on rent as a percentage of their holding period.
5 Return on capital employed is the ratio of underlying operating profit for
the past 12 months, including the operating profit of the joint ventures and
associate, to capital employed. Capital employed is an average of current and
previous two period end closing balances, comprising shareholders' funds plus
net debt and other liabilities.
6 Like-for-like measures comprise only those corporately-owned and agency
rental stations that were in operation throughout all of the current and
comparative period.
Avis Europe plc
Condensed Consolidated Income Statement for the six month period to 30 June
+-----------------------+-------+-------------+------------+---------+--+---------+----+------------+---------+
| | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| | | | 2009 | | | | 2008 | |
+-----------------------+-------+-------------+------------+---------+--+---------+-----------------+---------+
| | | Underlying1 | Amounts | Total | | Underlying1 | Amounts | Total |
| | | | excluded | | | | excluded | |
| | | | from | | | | from | |
| | | | underlying | | | | underlying | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| | Notes | EURm | EURm | EURm | | EURm | EURm | EURm |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Continuing operations | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Revenue | 3,4 | 533.2 | - | 533.2 | | 620.7 | - | 620.7 |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Cost of sales | | (303.8) | - | (303.8) | | (368.4) | - | (368.4) |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Gross profit | | 229.4 | - | 229.4 | | 252.3 | - | 252.3 |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Administrative | | (209.5) | (17.4) | (226.9) | | (227.2) | (0.7) | (227.9) |
| expenses | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Operating | 4,5 | 19.9 | (17.4) | 2.5 | | 25.1 | (0.7) | 24.4 |
| profit/(loss) | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Finance income | 7 | 0.7 | 1.6 | 2.3 | | 1.2 | 4.6 | 5.8 |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Finance costs | 7 | (34.7) | (4.9) | (39.6) | | (35.7) | (1.7) | (37.4) |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Share of profit of | | 0.2 | - | 0.2 | | 0.4 | - | 0.4 |
| joint ventures and | | | | | | | | |
| associate | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| (Loss)/profit before | | (13.9) | (20.7) | (34.6) | | (9.0) | 2.2 | (6.8) |
| taxation | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Taxation | 8 | 6.1 | 2.7 | 8.8 | | 3.0 | (0.2) | 2.8 |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| (Loss)/profit after | | (7.8) | (18.0) | (25.8) | | (6.0) | 2.0 | (4.0) |
| taxation | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Discontinued | | | | | | | | |
| operation - Greece | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Profit after taxation | | - | - | - | | - | 1.3 | 1.3 |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| (Loss)/profit for the | 15 | (7.8) | (18.0) | (25.8) | | (6.0) | 3.3 | (2.7) |
| six month period | | | | | | | | |
| attributable to | | | | | | | | |
| equity holders of the | | | | | | | | |
| Company | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Loss per share | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| (euro cents) | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Basic and diluted | 10 | | | (2.8) | | | | (0.3) |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| Basic and diluted - | 10 | | | (2.8) | | | | (0.4) |
| continuing | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+--------------+------------+---------+
| | | | | | | | | |
+-----------------------+-------+-------------+------------+---------+--+---------+----+------------+---------+
1 Underlying excludes net exceptional items, certain re-measurement items and
economic hedges - see Basis of Preparation.
The accompanying Notes form an integral part of these Interim Financial
Statements.
Condensed Consolidated Statement of Comprehensive Income for the six month
period to 30 June
+---+-----------------+-------+-------------+-------------+--------+---+-------+---+-------------+---------+
| | | | | | | | | |
+---+-----------------+-------+-------------+-------------+--------+---+-------+---------------------------+
| | | | | 2009 | | | 2008 | |
+---+-----------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| | | | Underlying1 | Amounts | Total | Underlying1 | Amounts | Total |
| | | | | excluded | | | excluded | |
| | | | | from | | | from | |
| | | | | underlying | | | underlying | |
+---+-----------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| | | Notes | EURm | EURm | EURm | EURm | EURm | EURm |
+---+-----------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| | | | | | | | | |
+---+-----------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| (Loss)/profit for | | (7.8) | (18.0) | (25.8) | (6.0) | 3.3 | (2.7) |
| the six month | | | | | | | |
| period attributable | | | | | | | |
| to equity holders | | | | | | | |
| of the Company | | | | | | | |
+---------------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| | | | | | | | |
+---------------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| Actuarial | | - | (24.4) | (24.4) | - | 2.7 | 2.7 |
| (losses)/gains on | | | | | | | |
| retirement benefit | | | | | | | |
| obligations | | | | | | | |
+---------------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| Cash flow hedges: | | | | | | | |
+---------------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| - net fair value | | - | (1.7) | (1.7) | - | 1.7 | 1.7 |
| (losses)/gains | | | | | | | |
+---------------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| - transferred to | | - | 1.1 | 1.1 | - | 0.9 | 0.9 |
| Income Statement | | | | | | | |
+---------------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| Exchange | | - | 12.1 | 12.1 | - | (5.0) | (5.0) |
| differences on | | | | | | | |
| translation of | | | | | | | |
| foreign operations | | | | | | | |
+---------------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| Tax on net items | | - | 7.5 | 7.5 | - | 0.9 | 0.9 |
| taken to equity | | | | | | | |
+---------------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| Other comprehensive | 15 | - | (5.4) | (5.4) | - | 1.2 | 1.2 |
| (expense)/income | | | | | | | |
| for the six month | | | | | | | |
| period, net of | | | | | | | |
| taxation | | | | | | | |
+---------------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| |
+----------------------------------------------------------------------------------------------------------+
| Total comprehensive | | (7.8) | (23.4) | (31.2) | (6.0) | 4.5 | (1.5) |
| (expense)/income | | | | | | | |
| for the six month | | | | | | | |
| period attributable | | | | | | | |
| to equity holders | | | | | | | |
| of the Company | | | | | | | |
+---------------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| | | | | | | | | |
+---+-----------------+-------+-------------+-------------+--------+---------------+-------------+---------+
| 1 Underlying excludes net exceptional items, certain re-measurement items and economic hedges |
| - see Basis of Preparation. |
+----------------------------------------------------------------------------------------------------------+
| The accompanying Notes form an integral part of these Interim Financial Statements. |
+---+-----------------+-------+-------------+-------------+--------+---+-------+---+-------------+---------+
+---------------+---------------------------------+--------+---------+---------+-----------+
| Condensed Consolidated Balance Sheet | | | | |
| | | | | |
+-------------------------------------------------+--------+---------+---------+-----------+
| | | | As at | As at | As at 31 |
| | | | 30 | 30 | December |
| | | | June | June | 2008 |
| | | | 2009 | 2008 | |
+---------------+---------------------------------+--------+---------+---------+-----------+
| | | Notes | EURm | EURm | EURm |
+---------------+---------------------------------+--------+---------+---------+-----------+
| Goodwill | | 0.2 | 1.4 | 0.2 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Other intangible assets | 11 | 16.1 | 14.5 | 14.7 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Property, plant and equipment: | | | | |
+-------------------------------------------------+--------+---------+---------+-----------+
| - vehicles | 11,12 | 436.6 | 504.0 | 441.0 |
+-------------------------------------------------+--------+---------+---------+-----------+
| - other property, plant and equipment | 11 | 69.4 | 76.8 | 71.7 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Investments accounted for using the equity | | 12.6 | 11.1 | 12.2 |
| method | | | | |
+-------------------------------------------------+--------+---------+---------+-----------+
| Other financial assets: | | | | |
+-------------------------------------------------+--------+---------+---------+-----------+
| - investments held for sale | | 0.4 | 0.6 | 0.4 |
+-------------------------------------------------+--------+---------+---------+-----------+
| - derivative financial instruments | | 2.2 | 10.9 | 0.7 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Deferred tax assets | | 45.0 | 51.0 | 31.7 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Non-current assets | | 582.5 | 670.3 | 572.6 |
+-------------------------------------------------+--------+---------+---------+-----------+
| | | | | | |
+---------------+---------------------------------+--------+---------+---------+-----------+
| Non-current assets held for sale | 11,12 | 4.5 | 12.8 | 10.3 |
+-------------------------------------------------+--------+---------+---------+-----------+
| | | | | |
+-------------------------------------------------+--------+---------+---------+-----------+
| Inventories | | 6.7 | 10.6 | 6.9 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Trade and other receivables | | 1,250.5 | 1,710.2 | 1,351.7 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Current tax assets | | 2.0 | 1.8 | 2.0 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Other financial assets: | | | | |
+-------------------------------------------------+--------+---------+---------+-----------+
| - held for trading | | 0.7 | - | - |
+-------------------------------------------------+--------+---------+---------+-----------+
| - derivative financial instruments | | 2.3 | 5.9 | 9.2 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Cash and short-term deposits | | 58.1 | 66.3 | 52.1 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Current assets | | 1,320.3 | 1,794.8 | 1,421.9 |
+-------------------------------------------------+--------+---------+---------+-----------+
| | | | | | |
+---------------+---------------------------------+--------+---------+---------+-----------+
| Total assets | | 1,907.3 | 2,477.9 | 2,004.8 |
+-------------------------------------------------+--------+---------+---------+-----------+
| | | | | | |
+---------------+---------------------------------+--------+---------+---------+-----------+
| Trade and other payables | | 665.5 | 754.3 | 539.2 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Current tax liabilities | | 25.1 | 31.9 | 24.4 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Obligations under finance leases | | 312.8 | 395.5 | 232.7 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Other financial liabilities: | | | | |
+-------------------------------------------------+--------+---------+---------+-----------+
| - borrowings | | 33.2 | 57.2 | 45.1 |
+-------------------------------------------------+--------+---------+---------+-----------+
| - deferred consideration | | 0.3 | 0.3 | 0.2 |
+-------------------------------------------------+--------+---------+---------+-----------+
| - derivative financial instruments | | 17.8 | 0.5 | 21.4 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Provisions | | 27.6 | 36.9 | 33.8 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Current liabilities | | 1,082.3 | 1,276.6 | 896.8 |
+-------------------------------------------------+--------+---------+---------+-----------+
| | | | | | |
+---------------+---------------------------------+--------+---------+---------+-----------+
| Deferred tax liabilities | | 19.1 | 28.9 | 26.1 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Provisions | | 29.3 | 28.8 | 25.6 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Retirement benefit obligations | | 102.6 | 88.0 | 70.9 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Obligations under finance leases | | - | 0.4 | - |
+-------------------------------------------------+--------+---------+---------+-----------+
| Other financial liabilities: | | | | |
+-------------------------------------------------+--------+---------+---------+-----------+
| - borrowings | | 548.9 | 868.9 | 841.3 |
+-------------------------------------------------+--------+---------+---------+-----------+
| - deferred consideration | | 25.2 | 27.1 | 22.5 |
+-------------------------------------------------+--------+---------+---------+-----------+
| - derivative financial instruments | | 61.4 | 63.2 | 51.5 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Non-current liabilities | | 786.5 | 1,105.3 | 1,037.9 |
+-------------------------------------------------+--------+---------+---------+-----------+
| | | | | | |
+---------------+---------------------------------+--------+---------+---------+-----------+
| Total liabilities | | 1,868.8 | 2,381.9 | 1,934.7 |
+-------------------------------------------------+--------+---------+---------+-----------+
| | | | | | |
+---------------+---------------------------------+--------+---------+---------+-----------+
| Net assets | | 38.5 | 96.0 | 70.1 |
+-------------------------------------------------+--------+---------+---------+-----------+
| | | | | | |
+---------------+---------------------------------+--------+---------+---------+-----------+
| Equity | | | | |
+-------------------------------------------------+--------+---------+---------+-----------+
| Called-up share capital | 13 | 13.1 | 13.1 | 13.1 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Share premium | | 381.5 | 381.5 | 381.5 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Own shares held | 14 | (1.1) | (0.5) | (0.4) |
+-------------------------------------------------+--------+---------+---------+-----------+
| Retained deficit | | (326.9) | (282.6) | (283.9) |
+-------------------------------------------------+--------+---------+---------+-----------+
| Translation reserve | | (18.1) | (14.6) | (30.8) |
+-------------------------------------------------+--------+---------+---------+-----------+
| Hedging reserve | | (10.7) | (1.7) | (10.2) |
+-------------------------------------------------+--------+---------+---------+-----------+
| Shareholders' | | 15 | 37.8 | 95.2 | 69.3 |
| equity | | | | | |
+---------------+---------------------------------+--------+---------+---------+-----------+
| Minority interest | | 0.7 | 0.8 | 0.8 |
+-------------------------------------------------+--------+---------+---------+-----------+
| Total equity | | 38.5 | 96.0 | 70.1 |
+-------------------------------------------------+--------+---------+---------+-----------+
| | | | | | |
+---------------+---------------------------------+--------+---------+---------+-----------+
| |
+---------------+---------------------------------+--------+---------+---------+-----------+
The accompanying Notes form an integral part of these Interim Financial
Statements.
The Interim Financial Statements, including accompanying Notes, were approved by
the Board on 27 August 2009 and were signed on its behalf by:
+------------------------------------------+-----------------------------------------+
| Pascal Bazin | Martyn Smith |
+------------------------------------------+-----------------------------------------+
| Chief Executive | Finance Director |
+------------------------------------------+-----------------------------------------+
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Condensed Consolidated Statement of Changes in Equity |
+-------------------------------------------------------------------------------------------------------------------------+
| | | Attributable to equity holders of the Company | |
+--------------------+-------+------------------------------------------------------------------------+-------------------+
| | | Share | Share | Own | Retained | Translation | Hedging | Total | Minority | Total |
| | | capital | premium | shares | deficit | reserve | reserve | | interest | equity |
| | | | | held | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| | | (Note | | (Note | | | | | | |
| | | 13) | | 14) | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| | Notes | EURm | EURm | EURm | EURm | EURm | EURm | EURm | EURm | EURm |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| At 1 January 2008 | | 13.1 | 381.5 | (3.3) | (280.2) | (11.5) | (3.4) | 96.2 | 0.8 | 97.0 |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Loss for the | 15 | - | - | - | (2.7) | - | - | (2.7) | - | (2.7) |
| period | | | | | | | | | | |
| attributable to | | | | | | | | | | |
| equity holders of | | | | | | | | | | |
| the Company | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Net actuarial | | - | - | - | 2.7 | - | - | 2.7 | - | 2.7 |
| gains on | | | | | | | | | | |
| retirement benefit | | | | | | | | | | |
| obligations | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Cash flow hedges: | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| - net fair value | | - | - | - | - | - | 1.7 | 1.7 | - | 1.7 |
| gains | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| - transfers to | | - | - | - | - | - | 0.9 | 0.9 | - | 0.9 |
| Income Statement | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Taxation | | - | - | - | (0.1) | 1.9 | (0.9) | 0.9 | - | 0.9 |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Exchange | | - | - | - | - | (5.0) | - | (5.0) | - | (5.0) |
| differences on | | | | | | | | | | |
| translation of | | | | | | | | | | |
| foreign operations | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Total | | - | - | - | (0.1) | (3.1) | 1.7 | (1.5) | - | (1.5) |
| comprehensive | | | | | | | | | | |
| (expense)/income | | | | | | | | | | |
| for the six month | | | | | | | | | | |
| period | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Increase in equity | 15 | - | - | - | 0.1 | - | - | 0.1 | - | 0.1 |
| reserve arising | | | | | | | | | | |
| from charge to | | | | | | | | | | |
| income for share | | | | | | | | | | |
| options in the | | | | | | | | | | |
| period | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Decrease in equity | 15 | - | - | - | (2.4) | - | - | (2.4) | - | (2.4) |
| reserve arising | | | | | | | | | | |
| from exercise of | | | | | | | | | | |
| share options | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Own shares | 15 | - | - | 2.6 | - | - | - | 2.6 | - | 2.6 |
| released on | | | | | | | | | | |
| vesting of share | | | | | | | | | | |
| awards | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Other exchange | 15 | - | - | 0.2 | - | - | - | 0.2 | - | 0.2 |
| movements | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| At 30 June 2008 | | 13.1 | 381.5 | (0.5) | (282.6) | (14.6) | (1.7) | 95.2 | 0.8 | 96.0 |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| At 1 January 2009 | | 13.1 | 381.5 | (0.4) | (283.9) | (30.8) | (10.2) | 69.3 | 0.8 | 70.1 |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Loss for the | 15 | - | - | - | (25.8) | - | - | (25.8) | - | (25.8) |
| period | | | | | | | | | | |
| attributable to | | | | | | | | | | |
| equity holders of | | | | | | | | | | |
| the Company | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Net actuarial | | - | - | - | (24.4) | - | - | (24.4) | - | (24.4) |
| losses on | | | | | | | | | | |
| retirement benefit | | | | | | | | | | |
| obligations | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Cash flow hedges: | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| - net fair value | | - | - | - | - | - | (1.7) | (1.7) | - | (1.7) |
| losses | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| - transfers to | | - | - | - | - | - | 1.1 | 1.1 | - | 1.1 |
| Income Statement | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Taxation | | - | - | - | 6.8 | 0.6 | 0.1 | 7.5 | - | 7.5 |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Exchange | | - | - | - | - | 12.1 | - | 12.1 | - | 12.1 |
| differences on | | | | | | | | | | |
| translation of | | | | | | | | | | |
| foreign operations | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Total | | - | - | - | (43.4) | 12.7 | (0.5) | (31.2) | - | (31.2) |
| comprehensive | | | | | | | | | | |
| (expense)/income | | | | | | | | | | |
| for the six month | | | | | | | | | | |
| period | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Increase in equity | 15 | - | - | - | 0.4 | - | - | 0.4 | - | 0.4 |
| reserve arising | | | | | | | | | | |
| from charge to | | | | | | | | | | |
| income for share | | | | | | | | | | |
| options in the | | | | | | | | | | |
| period | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Purchase of own | 15 | - | - | (0.6) | - | - | - | (0.6) | - | (0.6) |
| shares | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| Other exchange | 15 | - | - | (0.1) | - | - | - | (0.1) | (0.1) | (0.2) |
| movements | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| At 30 June 2009 | | 13.1 | 381.5 | (1.1) | (326.9) | (18.1) | (10.7) | 37.8 | 0.7 | 38.5 |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| | | | | | | | | | | |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
| The accompanying Notes form an integral part of these Interim Financial Statements. |
+--------------------+-------+---------+---------+--------+----------+-------------+---------+--------+----------+--------+
Condensed Consolidated Cash Flow Statement for the six month period to 30 June
+--------------------------------------------------------+--------+---+---------+----------+
| | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| | | | 2009 | 2008 |
+--------------------------------------------------------+--------+---+---------+----------+
| | Notes | | EURm | EURm |
+--------------------------------------------------------+--------+---+---------+----------+
| | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Operating profit - continuing operations | | | 2.5 | 24.4 |
+--------------------------------------------------------+--------+---+---------+----------+
| Discontinued operation - Greece | | | - | 1.3 |
+--------------------------------------------------------+--------+---+---------+----------+
| Operating profit - all operations | | | 2.5 | 25.7 |
+--------------------------------------------------------+--------+---+---------+----------+
| Reverse amortisation of other intangible assets | 5 | | 2.1 | 1.7 |
+--------------------------------------------------------+--------+---+---------+----------+
| Reverse depreciation on property, plant and equipment | 5 | | 59.4 | 64.9 |
+--------------------------------------------------------+--------+---+---------+----------+
| Reverse adjustments arising on differences between | 5 | | 1.2 | 2.1 |
| sales proceeds and depreciated amounts | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Reverse non-cash operating lease charge on | | | 66.2 | 85.5 |
| manufacturer repurchase contracts | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Payments in respect of manufacturer repurchase | | | (400.0) | (865.7) |
| contracts | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Receipts in respect of manufacturer repurchase | | | 580.9 | 600.3 |
| contracts | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Reverse share-based payment charges | | | 0.4 | 0.1 |
+--------------------------------------------------------+--------+---+---------+----------+
| Decrease/(increase) in inventories | | | 0.4 | (2.9) |
+--------------------------------------------------------+--------+---+---------+----------+
| Decrease in receivables | | | 56.5 | 19.7 |
+--------------------------------------------------------+--------+---+---------+----------+
| Increase in payables | | | 43.6 | 17.3 |
+--------------------------------------------------------+--------+---+---------+----------+
| Decrease in provisions | | | (4.2) | (0.8) |
+--------------------------------------------------------+--------+---+---------+----------+
| Increase/(decrease) in retirement benefit obligations | | | 2.1 | (1.1) |
+--------------------------------------------------------+--------+---+---------+----------+
| Reversal of re-measurement items and economic hedging | | | 2.0 | (1.0) |
| adjustments | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Cash inflow on derivative financial instruments - | | | 0.5 | 0.1 |
| non-debt | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Net cash generated from/(used in) operating activities | | | 413.6 | (54.1) |
| before taxation | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Tax paid | | | (1.4) | (5.1) |
+--------------------------------------------------------+--------+---+---------+----------+
| Net cash generated from/(used in) operating activities | | | 412.2 | (59.2) |
+--------------------------------------------------------+--------+---+---------+----------+
| | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Investing activities | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Purchase of other intangible assets | | | (1.8) | (5.4) |
+--------------------------------------------------------+--------+---+---------+----------+
| Purchase of vehicles | | | (149.2) | (257.6) |
+--------------------------------------------------------+--------+---+---------+----------+
| Proceeds on disposal of vehicles | | | 99.8 | 146.9 |
+--------------------------------------------------------+--------+---+---------+----------+
| Purchase of other property, plant and equipment | | | (4.6) | (8.9) |
+--------------------------------------------------------+--------+---+---------+----------+
| Proceeds on disposal of other property, plant and | | | 0.4 | - |
| equipment | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Proceeds on disposal of non-current assets held for | | | 11.5 | 29.3 |
| sale | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| (Purchase)/disposal of financial assets held for | 16a) | | (0.7) | 5.4 |
| trading | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Acquisition of licensee businesses | | | - | (1.2) |
+--------------------------------------------------------+--------+---+---------+----------+
| Net cash used in investing activities | | | (44.6) | (91.5) |
+--------------------------------------------------------+--------+---+---------+----------+
| | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Financing activities | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Finance revenue received | | | 0.7 | 1.2 |
+--------------------------------------------------------+--------+---+---------+----------+
| Finance costs paid | | | (32.0) | (27.5) |
+--------------------------------------------------------+--------+---+---------+----------+
| Finance cost element of finance lease payments | | | (5.9) | (8.9) |
+--------------------------------------------------------+--------+---+---------+----------+
| Net capital element of finance lease payments | 16a) | | (28.6) | (14.3) |
+--------------------------------------------------------+--------+---+---------+----------+
| Purchase of own shares | | | (0.6) | - |
+--------------------------------------------------------+--------+---+---------+----------+
| Cash flow on derivative financial instruments - debt | 16a) | | (2.5) | (1.1) |
+--------------------------------------------------------+--------+---+---------+----------+
| (Repayment of)/proceeds from bank and other loans | 16a) | | (287.6) | 197.5 |
+--------------------------------------------------------+--------+---+---------+----------+
| Net cash (used in)/generated from financing activities | | | (356.5) | 146.9 |
+--------------------------------------------------------+--------+---+---------+----------+
| | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Increase/(decrease) in cash and cash equivalents | | | 11.1 | (3.8) |
| (excluding exchange rate changes) | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Effects of exchange rate changes | 16a) | | 0.6 | 0.4 |
+--------------------------------------------------------+--------+---+---------+----------+
| Net increase/(decrease) in cash and cash equivalents | | | 11.7 | (3.4) |
+--------------------------------------------------------+--------+---+---------+----------+
| Cash and cash equivalents at 1 January | 16a) | | 24.7 | 52.1 |
+--------------------------------------------------------+--------+---+---------+----------+
| | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| Cash and cash equivalents at 30 June | | | 36.4 | 48.7 |
+--------------------------------------------------------+--------+---+---------+----------+
| | | | | |
+--------------------------------------------------------+--------+---+---------+----------+
| The accompanying Notes form an integral part of these Interim Financial Statements. |
+--------------------------------------------------------+--------+---+---------+----------+
Notes to the Condensed Consolidated Financial Statements for the six month
period ended 30 June
1 General information
The Company is a public limited company with a primary listing on the London
Stock Exchange. The address of its registered office is Avis House, Park Road,
Bracknell, Berkshire, RG12 2EW. The Company's ultimate majority shareholder is
s.a. D'Ieteren n.v. which is incorporated in Belgium. The ultimate controlling
party of s.a. D'Ieteren n.v. is the D'Ieteren family.
This set of condensed Consolidated Interim Financial Statements was approved for
issue on 27 August 2009 and has been reviewed, not audited.
2 Basis of preparation and accounting policies
These condensed Consolidated Interim Financial Statements have been prepared
using accounting policies consistent with International Financial Reporting
Standards (IFRS) as adopted by the European Union, and in accordance with IAS
34, Interim Financial Reporting, and with the Disclosure and Transparency Rules
of the Financial Services Authority.
These condensed Consolidated Interim Financial Statements, including the
information for the year ended 31 December 2008, do not constitute statutory
accounts as defined in section 240 of the Companies Act 1985. A copy of the
statutory accounts for that year has been delivered to the Registrar of
Companies. The auditors' report on those accounts was not qualified, did not
draw attention to any matters by way of emphasis and did not contain statements
under section 237(2) or 237(3) of the Companies Act 1985.
Underlying measures
In addition to total performance measures, the Group discloses alternative
performance measures, including underlying profit and underlying earnings per
share. The Group believes that these underlying performance measures provide
additional useful information on underlying trends to shareholders. The term
"underlying" is not defined under IFRS, and may therefore not be comparable with
similarly titled profit measurements reported by other companies. It is not
intended to be a substitute for, or superior to, IFRS measures.
Underlying measures are calculated based on reported profit before net
exceptional items, certain re-measurement items and adjustments to reflect the
realised gains and losses on foreign exchange forward contracts and accrued
interest cash flows on any financial instruments (economic hedge adjustments).
Underlying amounts recognised in the Statement of Comprehensive Income are
calculated based on recognised income and expense before actuarial gains and
losses arising on retirement benefit obligations.
New standards, interpretations and amendments to published standards - effective
in six month period ending 30 June 2009
Except as described below, the accounting policies, presentation and methods of
computation applied are consistent with those adopted in the Group's latest
annual audited Consolidated Financial Statements. The following new standards,
amendments to standards or interpretations are mandatory for the first time for
the financial year beginning 1 January 2009.
New standards, interpretations and amendments having either no impact or no
significant impact on the Consolidated Financial Statements
IFRIC 13, Customer loyalty programmes (effective from 1 July 2008) provides
guidance on the treatment of customer loyalty programmes. An entity shall
account for award credits which are granted as part of customer loyalty
programmes as separately identifiable components of a sales transaction. The
fair value of the consideration received or receivable in respect of the initial
sale shall be allocated between the award credits and other components of the
sale.
IFRIC 15, Agreements for the construction of real estate (effective from 1
January 2009) addresses the accounting for revenue and associated expenses by
entities that undertake the construction of real estate and is deemed not
relevant to the Group's operations.
IFRIC 16, Hedges of a net investment in a foreign operation (effective from 1
October 2008) provides guidance on net investment hedging, including:
- which foreign currency risks qualify for hedge accounting and the amount that
may be designated;
- where within the Group the hedging instrument may be held; and
- the amount which is reclassified to the Income Statement upon disposal of the
hedged foreign operation.
IAS 1 (Revised), Presentation of financial statements (effective from 1 January
2009) is mandatory for accounting periods commencing on or after 1 January 2009.
The Income Statement and Statement of Recognised Income and Expense have been
replaced by a 'Statement of Comprehensive Income'. IAS 1 permits the components
of the income statement to continue to be presented in a separate income
statement, and the Group has taken this option. Additionally, IAS 1 now requires
the presentation of changes in equity within a separate primary statement.
IAS 19 (Amendment), Employee benefits (effective from 1 January 2009) clarifies
that a plan amendment that results in a change in the extent to which benefit
promises are affected by future salary increases is a curtailment, while an
amendment that changes benefits attributable to past service gives rise to a
negative past service cost if it results in a reduction in the present value of
the defined benefit obligation. The definition of return on plan assets has been
amended to state that plan administration costs are deducted in the calculation
of return on plan assets only to the extent that such costs have been excluded
from measurement of the defined benefit obligation. The distinction between
short-term and long-term employee benefits is based on whether benefits are due
to be settled within or after 12 months of employee service being rendered. IAS
19 has also been amended to be consistent with IAS 37, Provisions, contingent
liabilities and contingent assets, which requires contingent liabilities to be
disclosed, but not recognised.
IAS 23 (Revised), Borrowing costs (effective from 1 January 2009) removes the
option of immediately recognising as an expense those borrowing costs which
relate to assets that take a substantial period of time to prepare for their
intended use.
IAS 32 (Amendment), Financial instruments: Presentation, and IAS 1 (Amendment),
Presentation of financial statements - Puttable financial instruments and
obligations arising on liquidation (effective from 1 January 2009) require
certain instruments to be classified as equity puttable financial instruments.
IAS 38 (Amendment), Intangible assets (effective from 1 January 2009), does not
preclude an entity from recognising a prepayment in the event that payment has
been made in advance of obtaining right of access to goods or receipt of
services.
IAS 39 (Amendment), Eligible hedged items (effective from 1 January 2009) has
been amended to be consistent with IFRS 8, Operating segments, which requires
disclosure for segments to be based on information reported to the chief
operating decision-maker.
IFRS 1 (Amendment), First-time adoption of International Financial Reporting
Standards (effective 1 January 2009) and IAS 27 (Revised), Consolidated and
separate financial statements (effective from 1 July 2009) allow first-time
adopters to use a deemed cost of either fair value or the carrying amount under
previous accounting practice to measure the initial cost of investments in
subsidiaries, jointly controlled entities and associates in the separate
financial statements. The amendment also removes the definition of the cost
method from IAS 27 and replaces it with a requirement to present dividends as
income in the separate financial statements of the investor.
The revised standard also specifies the accounting where there is no change in
control or control is lost. Where there is a change in control, the effects of
all transactions with non-controlling interests are recorded in equity and these
transactions will no longer result in goodwill or gains and losses. Any
remaining interest in the entity is re-measured to fair value and a gain or loss
is recognised in profit or loss. The Group will apply this prospectively to any
such transactions with non-controlling interests from 1 January 2010.
IFRS 2, Share-based payment (effective from 1 January 2009) deals with vesting
conditions and cancellations. It clarifies that vesting conditions are either
service or performance conditions only. Other features of a share-based payment
would need to be included in the grant date fair value calculation for
transactions with employees and others providing similar services; they would
not impact the number of awards expected to vest or valuation thereof subsequent
to grant date. All cancellations, whether by the entity or by other parties,
should receive the same accounting treatment.
New standards, interpretations and amendments having an impact on the
Consolidated Financial Statements
IFRS 8, Operating segments (effective from 1 January 2009) requires an entity to
adopt a "management approach" to segment reporting such that segmental
information is in the form which management uses internally for assessing
segment performance and deciding how to allocate resources to operating
segments. This information may be different from that used to prepare the Income
Statement and Balance Sheet. The introduction of IFRS 8, in conjunction with the
reorganisation of the Group's Budget branded operations, has resulted in a
change in the Group's reportable segments. Previously, the Avis
corporately-owned, Budget corporately-owned and Group Headquarter results were
separately disclosed. Consistent with the revised presentation in the management
accounts, these results have now been combined within total corporately-owned
activities. Comparative segmentation data has been restated accordingly.
New standards, interpretations and amendments to published standards - effective
after 30 June 2009
IFRS 3 (revised 2008), Business combinations (effective from 1 July 2009)
requires that all payments to purchase a business are recorded at fair value at
the acquisition date, with contingent payments classified as debt subsequently
re-measured through the Income Statement. There is a choice on an
acquisition-by-acquisition basis to measure the non-controlling interest in the
acquiree either at fair value or at the non-controlling interest's proportionate
share of the acquiree's net assets. All acquisition-related costs should be
expensed. The Group will apply this from 1 January 2010.
IFRS 5 (Amendment), Non-current assets held-for-sale and discontinued
operations, and consequential amendment to IFRS 1, First-time adoption of
International Financial Reporting Standards (effective from 1 July 2009),
clarifies that all of a subsidiary's assets and liabilities are classified as
held for sale if a partial disposal sale plan results in loss of control.
Relevant disclosure should be made for this subsidiary if the definition of a
discontinued operation is met. The Group will apply this prospectively to all
partial disposals of subsidiaries from 1 January 2010.
IFRIC 17, Distributions of non-cash assets to owners (effective from 1 July
2009), applies when non-cash assets are distributed to owners or when the owner
is given a choice of taking cash in lieu of the non-cash assets. In particular,
a dividend payable should be recognised when the dividend is appropriately
authorised and is no longer at the discretion of the entity and should be
measured at the fair value of the net assets to be distributed. It applies to
the entity making the distribution, not to the recipient. The Group will apply
this prospectively from 1 January 2010.
IFRIC 18, Transfers of assets from customers (effective from 1 July 2009)
clarifies the requirements for agreements in which an entity receives from a
customer an item of property, plant, and equipment that the entity must then use
either to connect the customer to a network or to provide the customer with
ongoing access to a supply of goods or services. When the item of property,
plant and equipment transferred from a customer meets the definition of an asset
under the IASB Framework from the perspective of the recipient, the recipient
must recognise the asset in its financial statements. The Group will apply this
prospectively from 1 January 2010.
3 Revenue
The Group provides international vehicle rental services. Revenue, as disclosed
on the face of the condensed Consolidated Income Statement, is derived entirely
from continuing activities. The Group experiences a natural increase in demand
from leisure customers over the European summer holiday months which generally
results in lower revenue generated in the first half of the year as compared to
the second half.
4 Segment information
IFRS 8, Operating segments, has been applied from 1 January 2009 (see Note 2).
Segment information is presented below on the same basis as that which is used
for internal reporting purposes by the chief operating decision maker.
During the period, the Group commenced the reorganisation of the Budget branded
corporately-owned business, combining these operations with the equivalent Avis
operations in the individual countries. Comparative segmentation data has been
restated accordingly.
+---+-----------------+---+--+--+--+--+--+--+--+-------+--+------+--+--+-----+--+----+--+-----+--+--+-------------+--+--+-----------+
| Business segments | | | | | | |
+----------------------------+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| | | | | | 2009 | | | 2008 | |
+---+-----------------+---+--+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| | | | | External | Inter-segment1 | Total | External | Inter-segment1(as | Total |
| | | | | | | | (as | restated) | (as |
| | | | | | | | restated) | | restated) |
+---+-----------------+---+--+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| Revenue | | | EURm | EURm | EURm | EURm | EURm | EURm |
| | | | | | | | | |
+---------------------+---+--+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| Corporately-owned | | | | | | |
+----------------------------+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| Rental revenue | 463.0 | 1.8 | 464.8 | 530.3 | 1.5 | 531.8 |
+----------------------------+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| Other non-rental revenue2 | 49.5 | - | 49.5 | 67.1 | - | 67.1 |
+----------------------------+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| | 512.5 | 1.8 | 514.3 | 597.4 | 1.5 | 598.9 |
+----------------------------+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| | | | | | | |
+----------------------------+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| Licensees: | | | | | | | | |
+---------------------+---+--+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| Avis | 15.7 | - | 15.7 | 17.4 | - | 17.4 |
+----------------------------+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| Budget | 5.0 | - | 5.0 | 5.9 | - | 5.9 |
+----------------------------+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| | 20.7 | - | 20.7 | 23.3 | - | 23.3 |
+----------------------------+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| | | | | | | |
+----------------------------+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| Elimination of | - | (1.8) | (1.8) | - | (1.5) | (1.5) |
| inter-segment | | | | | | |
+----------------------------+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| | | | | | | | | | |
+---+-----------------+---+--+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| Revenue | 533.2 | - | 533.2 | 620.7 | - | 620.7 |
+----------------------------+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| | | | | | | | | | |
+---+-----------------+---+--+-----------------+--------------------+-------------------+-----------+-------------------+-----------+
| 1 Inter-segment revenues are charged at prevailing market prices. |
+-----------------------------------------------------------------------------------------------------------------------------------+
| 2 Other non-rental revenue includes income from the sale of fuel, sub-licensee income, the |
| provision of foreign exchange services to rental customers and other incidental operating income. |
+-----------------------------------------------------------------------------------------------------------------------------------+
| |
+-----------------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | |
+---+-----------------+---+-----+-----------+--------------------+-----------+-------+-----------+----------------+-----------------+
| | | | | | | |
+-------------------------------------------+--------------------+-----------+-------+-----------+----------------+-----------------+
| | | | | | 2009 | 2008 |
+---+-----------------+---+-----+-----------+-----------------------------------+---------------------------------------------------+
| | | | Underlying1 | Amounts | Total | Underlying1 | Amounts | Total |
| | | | | excluded | | (as | excluded | (as |
| | | | | from | | restated) | from | restated) |
| | | | | underlying | | | underlying | |
| | | | | | | | (as | |
| | | | | | | | restated) | |
+---------------------+---+-----+-------------------------+------------+--------+-------------+----------------------+--------------+
| Operating | | | EURm | EURm | EURm | EURm | EURm | EURm |
| profit/(loss) | | | | | | | | |
+---------------------+---+-----+-------------------------+------------+--------+-------------+----------------------+--------------+
| Corporately-owned | 3.6 | (17.7) | (14.1) | 7.0 | (0.7) | 6.3 |
+-------------------------------------+----------------+---------------+--------+-------------+----------------------+--------------+
| | | | | | | |
+-------------------------------------+----------------+---------------+--------+-------------+----------------------+--------------+
| Licensees: |
+-----------------------------------------------------------------------------------------------------------------------------------+
| Avis | 14.7 | - | 14.7 | 16.9 | - | 16.9 |
+----------------------------------------+-------------+---------------+--------+-------------+----------------------+--------------+
| Budget | 1.6 | 0.3 | 1.9 | 1.2 | - | 1.2 |
+----------------------------------------+-------------+---------------+--------+-------------+----------------------+--------------+
| | | | 16.3 | 0.3 | 16.6 | 18.1 | - | 18.1 |
+-------------------------+-----+--------+-------------+---------------+--------+-------------+----------------------+--------------+
| |
+-----------------------------------------------------------------------------------------------------------------------------------+
| Operating profit/(loss) - continuing | 19.9 | (17.4) | 2.5 | 25.1 | (0.7) | 24.4 |
+----------------------------------------+-------------+---------------+--------+-------------+----------------------+--------------+
| | | | | | | |
+----------------------------------------+-------------+---------------+--------+-------------+----------------------+--------------+
| |
+-----------------------------------------------------------------------------------------------------------------------------------+
| Discontinued operation (see Note | - | - | - | - | 1.3 | 1.3 |
| 6) | | | | | | |
+----------------------------------+-------------------+---------------+--------+-------------+----------------------+--------------+
| |
+-----------------------------------------------------------------------------------------------------------------------------------+
| Operating profit/(loss) including | 19.9 | (17.4) | 2.5 | 25.1 | 0.6 | 25.7 |
| discontinued operation | | | | | | |
+----------------------------------------+-------------+---------------+--------+-------------+----------------------+--------------+
| |
+---+-----------------+---+--+--+--+--+--+--+--+-------+--+------+--+--+-----+--+----+--+-----+--+--+-------------+--+--+-----------+
1 See Basis of Preparation
No adjustment is made between segments to recharge the value of Avis/Budget
goodwill, brand, licence rights, or to allocate the value of goodwill written
off to reserves in previous periods. Avis goodwill of EUR1,080.4 million arising
before 1 March 1998 was fully written off to reserves, and Budget goodwill of
EUR33.9 million arising on 12 March 2003 has been fully impaired and charged to
the Income Statement in previous periods. Had the value of goodwill, brand or
licence rights been charged to the segments, the individual segment results
would be materially affected.
+---+--+---+---+-------------+---+--------+--+--------+--+---------+--+--+-----------+--+----------+
| 5 Operating | | | | | | | | | | | |
| profit/(loss) | | | | | | | | | | | |
+----------------------------+---+--------+--+--------+--+---------+--+--+-----------+--+----------+
| | | | | | | | | | | | | | | | |
+---+--+---+---+-------------+---+--------+--+--------+--+---------+--+--+-----------+--+----------+
| | | | | | | | | | | | | | 2009 | | 2008 |
+---+--+---+---+-------------+---+--------+--+--------+--+---------+--+--+-----------+--+----------+
| | | | | | | | | | | | | | EURm | | EURm |
+---+--+---+---+-------------+---+--------+--+--------+--+---------+--+--+-----------+--+----------+
| Operating profit/(loss) is stated after | | | | | | | |
| charging/(crediting): | | | | | | | |
+-----------------------------------------------------+--+---------+--+--+-----------+--+----------+
| | | | | | | | | | | | | | | | |
+---+--+---+---+-------------+---+--------+--+--------+--+---------+--+--+-----------+--+----------+
| Net charge on hire of plant, equipment and motor vehicles | | | 93.6 | | 118.0 |
+------------------------------------------------------------------+--+--+-----------+--+----------+
| Depreciation on property, plant and equipment (see Note 11) | | | 59.4 | | 64.9 |
+------------------------------------------------------------------+--+--+-----------+--+----------+
| Adjustments arising on differences between sales proceeds and | | | 1.2 | | 2.1 |
| depreciated amounts | | | | | |
+------------------------------------------------------------------+--+--+-----------+--+----------+
| Amortisation of other intangible assets (see Note 11) | | | 2.1 | | 1.7 |
+------------------------------------------------------------------+--+--+-----------+--+----------+
| Exchange movements | | | | | (0.2) | | (0.5) |
+-----------------------------------------------------+--+---------+--+--+-----------+--+----------+
| Contingent operating lease | | | | | | | | 23.6 | | 25.5 |
| rentals2 | | | | | | | | | | |
+--------------------------------+--------+--+--------+--+---------+--+--+-----------+--+----------+
| Other operating lease rentals | | | | | | | | 28.2 | | 27.7 |
+--------------------------------+--------+--+--------+--+---------+--+--+-----------+--+----------+
| | | | | | | | | | | | | | | | |
+---+--+---+---+-------------+---+--------+--+--------+--+---------+--+--+-----------+--+----------+
| Net amounts excluded from underlying1 : | | | | | |
+------------------------------------------------------------------+--+--+-----------+--+----------+
| Total net exceptional items - continuing (see Note 6) | | | 15.4 | | 1.7 |
+------------------------------------------------------------------+--+--+-----------+--+----------+
| Re-measurement gains on non-debt related derivative financial | | | (0.8) | | (2.9) |
| instruments3 | | | | | |
+------------------------------------------------------------------+--+--+-----------+--+----------+
| Re-measurement losses on non-debt related derivative financial | | | 4.0 | | 1.7 |
| instruments3 | | | | | |
+------------------------------------------------------------------+--+--+-----------+--+----------+
| | | | 3.2 | | (1.2) |
+------------------------------------------------------------------+--+--+-----------+--+----------+
| Economic hedging adjustment on foreign exchange | | | (1.2) | | 0.2 |
+------------------------------------------------------------------+--+--+-----------+--+----------+
| Total net exceptional items - continuing, certain re-measurement | | | 17.4 | | 0.7 |
| items and economic hedge adjustments | | | | | |
+------------------------------------------------------------------+--+--+-----------+--+----------+
| |
+---+--+---+---+-------------+---+--------+--+--------+--+---------+--+--+-----------+--+----------+
1 See Basis of Preparation.
2 Contingent operating lease rentals primarily arise with respect to airport
rental desk concessions, and are primarily based on the level of revenue
generated by the individual concession.
3 Net re-measurement losses on non-debt related derivative financial instruments
of EUR3.2 million (2008: gains of EUR1.2 million), comprises realised gains of EUR0.6
million (2008: gains of EUR0.3 million) and unrealised losses of EUR3.8 million
(2008: gains of EUR0.9 million).
+-----------------------------------------+--+--+--+--+--+--+--+--+--+--+--+----------+--+---------+
| 6 Net exceptional items | | |
+--------------------------------------------+-----+-----------------------------------------------+
| | | | | | | | |
+--------------------------------------------+-----+-----------+--------+--+----------+--+---------+
| | | | | | 2009 | | 2008 |
+--------------------------------------------+-----+-----------+--------+--+----------+--+---------+
| | | | | | EURm | | EURm |
+--------------------------------------------+-----+-----------+--------+--+----------+--+---------+
| Exceptional administrative expenses: |
+--------------------------------------------------------------------------------------------------+
| a) Restructuring costs | | | | 8.4 | | 1.9 |
+-----------------------------------------+--------------+--+-----+-------------------+--+---------+
| b) Securitisation preparation costs | | | | 7.1 | | - |
+-----------------------------------------+--------------+--+-----+-------------------+--+---------+
| c) Centrus receivables | | | | (0.1) | | (0.2) |
+-----------------------------------------+--------------+--+-----+-------------------+--+---------+
| Net exceptional items before tax - | | | | 15.4 | | 1.7 |
| continuing operations | | | | | | |
+-----------------------------------------+--------------+--+-----+-------------------+--+---------+
| d) Discontinued operation | | | - | | (1.3) |
+-----------------------------------------------+-----------+-----+-------------------+--+---------+
| Net exceptional items before tax including | | 15.4 | | 0.4 |
| discontinued operation | | | | |
+-----------------------------------------------------+--------+----------------------+--+---------+
| Tax on exceptional items | (1.3) | | (0.7) |
+--------------------------------------------------------------------+----------------+--+---------+
| Net exceptional items after tax including discontinued operation | 14.1 | | (0.3) |
+--------------------------------------------------------------------------+----------+--+---------+
| | | | |
+-----------------------------------------+--+--+--+--+--+--+--+--+--+--+--+----------+--+---------+
a)Restructuring costs of EUR8.4 million were recognised, reflecting the
rationalisation of operations which commenced in the prior year. This
rationalisation includes headquarter redundancies, the closure of certain low
margin rental locations, and vacant property provisions following the relocation
of the headquarters of the UK business into the Group head office. In the prior
period, restructuring costs of EUR1.9 million were incurred in respect of a
redundancy programme that commenced in December 2007.
b)During the period, the Group developed and prepared a structure for a
potential securitisation of its fleet. Advisory, legal and other costs were
incurred in the development of corporate and operational structures.
c)The activities associated with the closure of the Centrus credit hire business
continue to be more successful than previously anticipated. The Group therefore
partially reversed provisions recognised as exceptional items in prior years,
resulting in a further credit of EUR0.1 million (2008: EUR0.2 million).
d)In 2007, the Group disposed of its former subsidiary in Greece and in 2008
recognised an exceptional credit of EUR1.3 million to reflect the final settlement
of a warranty provision.
+---+--+---+---+--------+--------+-------------+------------+---------+--------------+------------+---------+
| 7 | Finance income, finance costs and foreign exchange on net debt |
+---+-------------------------------------------------------------------------------------------------------+
| | | | | | | | |
+---+--+---+---+--------+--------+------------------------------------+-------------------------------------+
| | | | | | | 2009 | 2008 |
+---+--+---+---+--------+--------+------------------------------------+-------------------------------------+
| | | | | | | Underlying1 | Amounts | Total | Underlying1 | Amounts | Total |
| | | | | | | | excluded | | | excluded | |
| | | | | | | | from | | | from | |
| | | | | | | | underlying | | | underlying | |
+---+--+---+---+--------+--------+-------------+------------+---------+--------------+------------+---------+
| | | | | | | EURm | EURm | EURm | EURm | EURm | EURm |
+---+--+---+---+--------+--------+-------------+------------+---------+--------------+------------+---------+
| Finance income | | | | | | |
+--------------------------------+-------------+------------+---------+--------------+------------+---------+
| Interest receivable | | 0.7 | - | 0.7 | 1.2 | - | 1.2 |
+-----------------------+--------+-------------+------------+---------+--------------+------------+---------+
| Re-measurement gains on | - | 1.6 | 1.6 | - | 4.6 | 4.6 |
| debt-related derivative | | | | | | |
| financial instruments2 | | | | | | |
+--------------------------------+-------------+------------+---------+--------------+------------+---------+
| | | | | | | 0.7 | 1.6 | 2.3 | 1.2 | 4.6 | 5.8 |
+---+--+---+---+--------+--------+-------------+------------+---------+--------------+------------+---------+
| | | | | | | | | | | | |
+---+--+---+---+--------+--------+-------------+------------+---------+--------------+------------+---------+
| Finance costs | | | | | | |
+--------------------------------+-------------+------------+---------+--------------+------------+---------+
| Interest payable under finance | (5.9) | - | (5.9) | (8.9) | - | (8.9) |
| lease obligations | | | | | | |
+--------------------------------+-------------+------------+---------+--------------+------------+---------+
| Interest payable on bank | (25.5) | - | (25.5) | (25.5) | - | (25.5) |
| loans, overdrafts and loan | | | | | | |
| notes3 | | | | | | |
+--------------------------------+-------------+------------+---------+--------------+------------+---------+
| Interest payable on deferred | (0.9) | - | (0.9) | (1.1) | - | (1.1) |
| consideration | | | | | | |
+--------------------------------+-------------+------------+---------+--------------+------------+---------+
| Re-measurement losses on | - | (3.1) | (3.1) | - | (2.4) | (2.4) |
| debt-related derivative | | | | | | |
| financial instruments2 | | | | | | |
+--------------------------------+-------------+------------+---------+--------------+------------+---------+
| Economic hedge adjustment on | (2.4) | 2.4 | - | (0.2) | 0.2 | - |
| interest payable3 | | | | | | |
+--------------------------------+-------------+------------+---------+--------------+------------+---------+
| Foreign exchange (loss)/gain | - | (4.2) | (4.2) | - | 0.5 | 0.5 |
| on net debt | | | | | | |
+--------------------------------+-------------+------------+---------+--------------+------------+---------+
| | | | | | | (34.7) | (4.9) | (39.6) | (35.7) | (1.7) | (37.4) |
+---+--+---+---+--------+--------+-------------+------------+---------+--------------+------------+---------+
| | | | | | | |
+--------------------------------+-------------+------------+---------+--------------+------------+---------+
| Net finance costs | (34.0) | (3.3) | (37.3) | (34.5) | 2.9 | (31.6) |
+--------------------------------+-------------+------------+---------+--------------+------------+---------+
| | | | | | | | | | | | |
+---+--+---+---+--------+--------+-------------+------------+---------+--------------+------------+---------+
1 See Basis of Preparation.
2 Net re-measurement losses on debt-related derivative financial instruments of
EUR1.5 million (2008: gains of EUR2.2 million) comprise realised losses of EUR2.5
million (2008: gains of EUR0.9 million) and unrealised gains of EUR1.0 million
(2008: gains of EUR1.3 million).
3 Economic hedging arrangements have been entered into for which the Group is
unable to apply hedge accounting under IAS 39. To the extent that IAS 39 does
not permit hedge accounting, interest payable on bank loans and overdrafts
reflects actual interest rates applicable to debt, regardless of any accrued
cash flow paid at contracted rates within hedging derivatives.
8 Taxation
The underlying tax credit for the six month period ending 30 June 2009 has been
calculated on the basis of an estimated annual effective rate of 43% for the
year ended 31 December 2009 (2008: 33%). The change in the rate is as a
consequence of results arising in different jurisdictions. The effective tax
rate on exceptional items, certain re-measurement items and economic hedges,
including discontinued operations, is 13% (2008: (6)%).
9 Dividends
The Directors do not propose the payment of an interim dividend for the six
month period ended 30 June 2009 (2008: nil). There was no final dividend for the
year ended 31 December 2008 (2007: nil). Accordingly, no amounts have been
recognised as distributions to equity holders in both the current and prior
period.
10 Earnings per share
a) Basic and diluted
Basic and diluted loss per share are based on the loss for the six month period
attributable to equity holders of the Company, and the weighted average number
of shares in issue for the six month period attributable to equity holders of
the Company.
+----+------------------+------------+--++++--+--+++++++-------+---+++++---------+----------+----------+
| Basic and diluted loss per share from continuing operations is as follows: |
| |
+------------------------------------------------------------------------------------------------------+
| Continuing operations | | | | | | | |
+-----------------------+------------+--+-+--------------------+-----------------+----------+----------+
| | | | | | 2009 | 2008 | 2009 | 2008 |
+----+------------------+------------+--+-+--------------------+-----------------+----------+----------+
| Loss from continuing operations | | EURm | EURm | GBPm | GBPm |
+---------------------------------------+-+--------------------+-----------------+----------+----------+
| Loss for the six month period from continuing | (25.8) | (4.0) | (23.5) | (3.1) |
| operations attributable to equity holders of the | | | | |
| Company | | | | |
+--------------------------------------------------+-----------+-----------------+----------+----------+
| | | | | | |
+----------------------------------------+---------+-----------+-----------------+----------+----------+
| | | | | | | | 2009 | 2008 | 2009 | 2008 |
+----+------------------+------------+--+--+--+ +-----------------+-------------+----------+----------+
| Loss per share from continuing | | | | Euro | Euro | | Sterling | Sterling |
| operations | | | | cents | cents | | pence | pence |
+------------------------------------+--+--+--+----------------+-------+---------+----------+----------+
| Basic and diluted loss per share from | | (2.8) | (0.4) | (2.6) | (0.3) |
| continuing operations | | | | | |
+-------------------------------------------------+----+-------+-----------------+----------+----------+
| | | | | | |
+-------------------------------------------------+----+-------+-----------------+----------+----------+
| Basic and diluted including discontinued operation |
+------------------------------------------------------------------------------------------------------+
| | | | | | | | | |
+----+------------------+------------+--+--+---------+--------------+------------+---------------------+
| | | | | | | 2009 | 2008 | 2009 | 2008 |
+----+------------------+------------+--+--+---------+--------------+------------+----------+----------+
| Loss | | | | EURm | EURm | GBPm | GBPm |
+------------------------------------+--+--+---------+--------------+------------+----------+----------+
| Loss for the six month period attributable to | (25.8) | (2.7) | (23.5) | (2.1) |
| equity holders of the Company | | | | |
+-----------------------------------------------------+--------------+-----------+----------+----------+
| | | | | | | | | | |
+----+------------------+------------+--+--+--------+-----------------+----------+----------+----------+
| | | | | | | 2009 | 2008 | 2009 | 2008 |
+----+------------------+------------+--+--+--------+-----------------+----------+----------+----------+
| Loss per share | | | | Euro | Euro | Sterling | Sterling |
| | | | | cents | cents | pence | pence |
+------------------------------------+--+--+--------+-----------------+----------+----------+----------+
| Basic and diluted loss per share | (2.8) | (0.3) | (2.6) | (0.2) |
+----+------------------+------------+--++++--+--+++++++-------+---+++++---------+----------+----------+
After adjusting for own shares held, the weighted average number of shares in
issue for the six month period was 919,703,391 (2008: 918,112,828).
Options have been granted to certain Directors and employees over ordinary
shares of the Company and constitute the only category of potentially dilutive
ordinary shares. These options did not increase the weighted average number of
shares in either 2008 or 2009, as either the option exercise prices were in
excess of the prevailing market share price, or exercise of the options is
subject to performance conditions which had not been fully satisfied by the
period end.
b) Underlying
Underlying loss per share is based on the underlying loss for the six month
period and the weighted average number of shares in issue for the six month
period attributable to equity holders of the Company.
Underlying loss per share from continuing operations is as follows:
+----+------------------+------------+--+------+--+---------+----------+----------+----------+
| | | | | | | 2009 | 2008 | 2009 | 2008 |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
+----+------------------+------------+--+------+--+---------+----------+----------+----------+
| Loss from continuing operations | | | EURm | EURm | GBPm | GBPm |
+---------------------------------------+------+--+---------+----------+----------+----------+
| Underlying loss for the six month period from | (7.8) | (6.0) | (7.1) | (4.6) |
| continuing operations attributable to equity | | | | |
| holders of the Company | | | | |
+-------------------------------------------------+---------+----------+----------+----------+
| |
+--------------------------------------------------------------------------------------------+
| | | | | | | 2009 | 2008 | 2009 | 2008 |
+----+------------------+------------+--+------+--+---------+----------+----------+----------+
| Loss per share from continuing operations | | Euro | Euro | Sterling | Sterling |
| | | cents | cents | pence | pence |
+----------------------------------------------+--+---------+----------+----------+----------+
| Basic and diluted underlying loss per share | (0.8) | (0.7) | (0.8) | (0.5) |
| from continuing operations | | | | |
+----+------------------+------------+--+------+--+---------+----------+----------+----------+
11 Fleet and non-fleet fixed assets
+----+--+---+---+-------+-------+-------+--+-------+------------+----------+-----------+-------------+
| | | | | | | | | | Other | Vehicles | Other | Non-current |
| | | | | | | | | | intangible | | property, | assets held |
| | | | | | | | | | assets | | plant and | for sale1 |
| | | | | | | | | | | | equipment | |
+----+--+---+---+-------+-------+-------+--+-------+ + + + +
| | | | | | | | | | | | | |
+----+--+---+---+-------+-------+-------+--+-------+------------+----------+-----------+-------------+
| | | | | | | | | | EURm | EURm | EURm | EURm |
+----+--+---+---+-------+-------+-------+--+-------+------------+----------+-----------+-------------+
| Cost | | | | |
+--------------------------------------------------+------------+----------+-----------+-------------+
| At 1 January 2008 | 24.7 | 525.8 | 143.6 | 8.3 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Additions | 5.4 | 375.1 | 8.9 | - |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Disposals | (0.1) | (288.2) | - | (35.9) |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Transfers | - | (25.6) | - | 41.3 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Acquisitions | - | - | 0.1 | - |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Exchange movements | (2.1) | (5.2) | (5.1) | (0.2) |
+--------------------------------------------------+------------+----------+-----------+-------------+
| At 30 June 2008 | 27.9 | 581.9 | 147.5 | 13.5 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| | | | | |
+--------------------------------------------------+------------+----------+-----------+-------------+
| At 1 January 2009 | 28.1 | 526.5 | 144.9 | 11.5 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Additions | 1.8 | 177.2 | 4.6 | - |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Disposals | - | (173.2) | (4.5) | (12.5) |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Transfers | - | 10.6 | - | 6.0 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Exchange movements | 2.9 | 4.9 | 5.6 | - |
+--------------------------------------------------+------------+----------+-----------+-------------+
| At 30 June 2009 | 32.8 | 546.0 | 150.6 | 5.0 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| | | | | |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Depreciation, amortisation and impairment | | | | |
+--------------------------------------------------+------------+----------+-----------+-------------+
| At 1 January 2008 | 12.8 | 77.1 | 65.6 | 1.2 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Charges for the six month period | 1.7 | 56.3 | 8.6 | - |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Disposals | (0.1) | (46.7) | - | (6.7) |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Transfers | - | (6.8) | - | 6.4 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Exchange movements | (1.0) | (2.0) | (3.5) | (0.2) |
+--------------------------------------------------+------------+----------+-----------+-------------+
| At 30 June 2008 | 13.4 | 77.9 | 70.7 | 0.7 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| | | | | |
+--------------------------------------------------+------------+----------+-----------+-------------+
| At 1 January 2009 | 13.4 | 85.5 | 73.2 | 1.2 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Charges for the six month period | 2.1 | 51.6 | 7.8 | - |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Disposals | - | (35.4) | (4.2) | (1.1) |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Transfers | - | 5.6 | - | 0.4 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Exchange movements | 1.2 | 2.1 | 4.4 | - |
+--------------------------------------------------+------------+----------+-----------+-------------+
| At 30 June 2009 | 16.7 | 109.4 | 81.2 | 0.5 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| | | | | |
+--------------------------------------------------+------------+----------+-----------+-------------+
| Net book amount | | | | |
+--------------------------------------------------+------------+----------+-----------+-------------+
| At 30 June 2009 | 16.1 | 436.6 | 69.4 | 4.5 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| At 30 June 2008 | 14.5 | 504.0 | 76.8 | 12.8 |
+--------------------------------------------------+------------+----------+-----------+-------------+
| | | | | |
+----+--+---+---+-------+-------+-------+--+-------+------------+----------+-----------+-------------+
At 30 June 2009, the Group had capital commitments for fixed assets contracted,
but not provided for, amounting to vehicles EUR40.3 million (2008: EUR96.7 million)
and other property, plant and equipment EUR1.6 million (2008: EUR3.0 million).
1 Non-current assets held for sale comprise ex-rental vehicles formerly used in
the corporately owned segment, where management are committed to the disposal of
the vehicle. Disposals are ordinarily completed within one month of the transfer
of the vehicle from the rental fleet.
+----+--+---+---+--------+--------+--------+--+---+----------+------------+------------+----------+
| 12 Fleet | | | | | | | | | |
+---------------+--------+--------+--------+--+---+----------+------------+------------+----------+
| | | | | | | | | | | | 2009 | 2008 |
+----+--+---+---+--------+--------+--------+--+---+----------+------------+------------+----------+
| Net book amount | | | | | | | EURm | EURm |
+------------------------+--------+--------+--+---+----------+------------+------------+----------+
| Vehicles | | | | | | | | 436.6 | 504.0 |
+---------------+--------+--------+--------+--+---+----------+------------+------------+----------+
| Non-current assets held for sale | | | 4.5 | 12.8 |
+-------------------------------------------------+----------+------------+------------+----------+
| Repurchase agreement receivables (during | | | 837.8 | 1,162.4 |
| vehicle holding period)1 | | | | |
+-------------------------------------------------+----------+------------+------------+----------+
| Prepaid repurchase vehicle operating lease | | | 56.0 | 105.3 |
| charges (during vehicle holding period)1 | | | | |
+-------------------------------------------------+----------+------------+------------+----------+
| | | | | | | | 1,334.9 | |
| | | | | | | | | 1,784.5 |
| | | | | | | | | |
+----+--+---+---+--------+--------+--------+--+---+----------+------------+------------+----------+
1 Repurchase vehicles are recognised within "trade and other receivables" in the
condensed Consolidated Balance Sheet.
+----+-----------+---+---+--+--+--+--+-------------+------------+----+--------------+-+-+--+--+-+------+
| 13 Called-up share capital |
+------------------------------------------------------------------------------------------------------+
| | | | |
+------------------------------------+--------------------------+----+---------------------------------+
| | 2009 | | | 2008 |
+------------------------------------+-------------+------------+----+---------------------------------+
| | | | | | | | | Number | | | Number | | EURm |
| | | | | | | | | | EURm | | | | |
| | | | | | | | | | | | | | |
+----+-----------+---+---+--+--+--+--+-------------+------------+----+--------------+------+-----------+
| Authorised | | | | | | | | | | |
+------------------------+--+--+--+--+-------------+------------+----+--------------+------+-----------+
| Ordinary shares of 1p each | 940,000,000 | | | 940,000,000 | | |
+------------------------------+-------------------+------------+----+----------------+---------+------+
| | | | | | | | | | | | | | | |
+----+-----------+---+---+--+--+--+--+-------------+------------+----+------------------+--+--+--------+
| Issued and fully paid share | | | | | | | |
| capital | | | | | | | |
+------------------------------------+-------------+------------+----+------------------+--+--+--------+
| At 1 January and 30 June | | 920,524,047 | 13.1 | | 920,524,047 | | 13.1 |
+----+-----------+---+---+--+--+--+--+-------------+------------+----+--------------+-+-+--+--+-+------+
14 Own shares held
Own shares are held by the Avis Europe Employee Share Trust, a discretionary
trust, to partially satisfy options and awards granted under a number of the
Group's share schemes. The Company's own shares have a nominal value of 1 pence
per share.
At 30 June 2009, the Trust held 3,287,735 shares (2008: 637,735 shares), which
have been recognised as a reduction in shareholders' funds. The market value of
the shares as at 30 June 2009 was 21.8 pence per share (2008: 21.5 pence per
share). None of the shares held at the period end are under option to employees,
nor have they been conditionally gifted to them. The Avis Europe Employee Share
Trust has not waived its right to any dividends on these shares.
+----+--+--+--+-------+-------+-------+--+-------+--+--------+-----+---------+--------+--+----------+
| 15 | Reconciliation of movements in shareholders' equity |
+----+----------------------------------------------------------------------------------------------+
| | |
+----+----------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | | 2009 | | 2008 |
+----+--+--+--+-------+-------+-------+--+-------+--+--------+-----+---------+--------+--+----------+
| | | | | | | | | | | | | | EURm | | EURm |
+----+--+--+--+-------+-------+-------+--+-------+--+--------+-----+---------+--------+--+----------+
| Loss after taxation attributable to the equity holders of | | | (25.8) | | (2.7) |
| the Company | | | | | |
+------------------------------------------------------------+-----+---------+--------+--+----------+
| Net (expense)/income recognised directly in equity (see Statement of | (5.4) | | 1.2 |
| Comprehensive Income) | | | |
+----------------------------------------------------------------------------+--------+--+----------+
| Total comprehensive expense attributable to equity holders of the Company | (31.2) | | (1.5) |
+----------------------------------------------------------------------------+--------+--+----------+
| Increase in equity reserve arising from charge to income for share options | 0.4 | | 0.1 |
| in the period | | | |
+----------------------------------------------------------------------------+--------+--+----------+
| Decrease in equity reserve arising from exercise of share options | - | | (2.4) |
+----------------------------------------------------------------------------+--------+--+----------+
| Purchase of own shares | | | | | | | (0.6) | | - |
+-------------------------------------+--+-------+--+--------+-----+---------+--------+--+----------+
| Own shares released on vesting of share awards | | | - | | 2.6 |
+------------------------------------------------------------+-----+---------+--------+--+----------+
| Exchange movements on own shares | (0.1) | | 0.2 |
+----------------------------------------------------------------------------+--------+--+----------+
| Net decrease in shareholders' equity | (31.5) | | (1.0) |
+----------------------------------------------------------------------------+--------+--+----------+
| At 1 January | 69.3 | | 96.2 |
+----------------------------------------------------------------------------+--------+--+----------+
| At 30 June | | | | | | | | | | 37.8 | | 95.2 |
+-------------+-------+-------+-------+--+-------+--+--------+-----+---------+--------+--+----------+
| |
+---------------------------------------------------------------------------------------------------+
| Goodwill of EUR1,080.4 million arising before 1 March 1998 is fully written off to reserves. |
+----+--+--+--+-------+-------+-------+--+-------+--+--------+-----+---------+--------+--+----------+
+-----+-------+---------+-----------+--------+-------+----------+--------+-------+----------+
| 16 Notes to the condensed consolidated cash flow statement |
+-------------------------------------------------------------------------------------------+
| | |
+-----+-------------------------------------------------------------------------------------+
| a)Analysis of changes in net debt | | | |
+----------------------------------------------------+----------+--------+------------------+
| | | At 1 | Cash | Non-cash | Exchange | At 30 |
| | | January | flow | movements | movements | June |
| | | 2009 | | | | 2009 |
+-------------+---------+-----------+--------+------------------+----------------+----------+
| | | EURm | EURm | EURm | EURm | EURm |
+-------------+---------+-----------+--------+------------------+----------------+----------+
| Cash and | | 52.1 | 5.4 | - | 0.6 | 58.1 |
| short-term | | | | | | |
| deposits | | | | | | |
+-------------+---------+-----------+--------+------------------+----------------+----------+
| Bank | | (27.4) | 5.7 | - | - | (21.7) |
| overdrafts | | | | | | |
+-------------+---------+-----------+--------+------------------+----------------+----------+
| Cash and | | 24.7 | 11.1 | - | 0.6 | 36.4 |
| cash | | | | | | |
| equivalents | | | | | | |
+-------------+---------+-----------+--------+------------------+----------------+----------+
| Current | | - | 0.7 | - | - | 0.7 |
| assets - | | | | | | |
| held for | | | | | | |
| trading | | | | | | |
+-------------+---------+-----------+--------+------------------+----------------+----------+
| Obligations | | (232.7) | 28.6 | (104.8) | (3.9) | (312.8) |
| under | | | | | | |
| finance | | | | | | |
| leases | | | | | | |
+-------------+---------+-----------+--------+------------------+----------------+----------+
| Borrowings | | (859.0) | 287.6 | 12.8 | (1.8) | (560.4) |
| (excluding | | | | | | |
| overdrafts) | | | | | | |
+-------------+---------+-----------+--------+------------------+----------------+----------+
| Derivative | | (66.2) | 2.5 | (12.5) | - | (76.2) |
| debt | | | | | | |
| instruments | | | | | | |
+-------------+---------+-----------+--------+------------------+----------------+----------+
| Net debt | | (1,133.2) | 330.5 | (104.5) | (5.1) | (912.3) |
+-------------+---------+-----------+--------+------------------+----------------+----------+
| |
+-----+-------+---------+-----------+--------+-------+----------+--------+-------+----------+
Non-cash movements represent the net effect of the inception and cessation of
finance leases during the period and recognition of changes in the fair value of
derivatives and hedged items.
+----+------------------------+--+--+-------+-------+--------+--+-----------+----+--------------+
| b) | Reconciliation of net increase/(decrease) in cash and cash equivalents to movement in |
| | net debt |
+----+------------------------------------------------------------------------------------------+
| | | | | | | | | | | |
+----+------------------------+--+--+-------+-------+--------+--+-----------+----+--------------+
| | | | | | | | | 2009 | | 2008 |
+----+------------------------+--+--+-------+-------+--------+--+-----------+----+--------------+
| | EURm | | EURm |
+---------------------------------------------------------------+-----------+----+--------------+
| Movement in net debt resulting from cash flows | 330.5 | | (191.3) |
+---------------------------------------------------------------+-----------+----+--------------+
| New finance leases | | | | (104.8) | | (144.3) |
+-------------------------------------------+-------+--------+--+-----------+----+--------------+
| Re-measurement adjustments on borrowings and derivative | | 0.3 | | 4.9 |
| debt instruments | | | | |
+------------------------------------------------------------+--+-----------+----+--------------+
| Exchange movements | | | | (5.1) | | 7.4 |
+-------------------------------------------+-------+--------+--+-----------+----+--------------+
| Total movement in net debt | | | 220.9 | | (323.3) |
+---------------------------------------------------+--------+--+-----------+----+--------------+
| Net debt at 1 January | | | | (1,133.2) | | (980.9) |
+-------------------------------------------+-------+--------+--+-----------+----+--------------+
| Net debt at 30 June | | | | (912.3) | | (1,304.2) |
+-------------------------------------------+-------+--------+--+-----------+----+--------------+
| |
+-----------------------------------------------------------------------------------------------+
| Analysed as: | | | | | | |
+-------------------------------------------+-------+--------+--+-----------+----+--------------+
| Current net debt | | | | (304.2) | | (382.6) |
+-------------------------------------------+-------+--------+--+-----------+----+--------------+
| Non-current net debt | | | | (608.1) | | (921.6) |
+-------------------------------------------+-------+--------+--+-----------+----+--------------+
| | | | | (912.3) | | (1,304.2) |
+-------------------------------------------+-------+--------+--+-----------+----+--------------+
| | | | | | | |
+----+------------------------+--+--+-------+-------+--------+--+-----------+----+--------------+
Included in current net debt at 30 June 2009 are drawings of EUR81.5 million under
a new long-term committed EUR120 million revolving facility, which permits the
inception of finance leases at any time up to the end of June 2011.
17 Contingent liabilities
The Company and certain subsidiaries have provided unsecured guarantees to
certain third parties within the normal course of business, the majority of
which were in favour of certain lenders in respect of some of the Group's loan
notes and borrowing facilities, together with guarantees provided to certain
vehicle suppliers and property lessors. As at 30 June 2009, these guarantees
totalled EUR828.9 million (2008: EUR1,110.7 million).
Certain Group companies are defendants in a number of claims and legal
proceedings incidental to their operations. The Directors do not expect that any
of these contingencies will have a material negative impact on the results or
financial position of the Group.
Save as disclosed herein and excluding intra-group indebtedness and guarantees,
no member of the Group had at the close of business on 30 June 2009 any
outstanding loan capital (including loan capital created but unissued), term
loans or any other borrowings or indebtedness in the nature of borrowings,
including bank overdrafts, liabilities under acceptances (other than normal
trade bills) or acceptance credits, hire purchase commitments, obligations under
finance leases, guarantees or other contingent liabilities.
+-----------------------------------------------------------------------+----------+-------+
| 18 Related party transactions | | |
+-----------------------------------------------------------------------+----------+-------+
| | 2009 | 2008 |
+-----------------------------------------------------------------------+----------+-------+
| | EURm | EURm |
+-----------------------------------------------------------------------+----------+-------+
| Sales to joint ventures | 0.7 | 0.2 |
+-----------------------------------------------------------------------+----------+-------+
| Net current amounts owing from joint ventures | 0.1 | 0.1 |
+-----------------------------------------------------------------------+----------+-------+
| Purchases from majority shareholder | 13.3 | 23.9 |
+-----------------------------------------------------------------------+----------+-------+
| Sales to majority shareholder | 43.5 | 33.9 |
+-----------------------------------------------------------------------+----------+-------+
| Purchases from a subsidiary of majority shareholder | 0.9 | 0.8 |
+-----------------------------------------------------------------------+----------+-------+
| Interest payable to a subsidiary of majority shareholder | 0.2 | 0.3 |
+-----------------------------------------------------------------------+----------+-------+
| Current amounts owing to majority shareholder | 8.8 | 13.3 |
+-----------------------------------------------------------------------+----------+-------+
| Current amounts owing from majority shareholder | 8.7 | 15.2 |
+-----------------------------------------------------------------------+----------+-------+
| Current amounts owing to a subsidiary of majority shareholder | 0.2 | 0.2 |
+-----------------------------------------------------------------------+----------+-------+
| Loans owing to a subsidiary of majority shareholder | - | 10.0 |
+-----------------------------------------------------------------------+----------+-------+
The remuneration of the Directors, and other key management personnel of the
Group, is set out below in aggregate for each of the categories specified in IAS
24, Related Party Disclosures. Salaries and short-term employee benefits include
wages, salaries and social security costs.
+----------------------------------+-----------+------------+---------+-----------+------------+-------+
| | | 2009 | | | 2008 | |
+----------------------------------+-----------+------------+---------+-----------+------------+-------+
| | Directors | Key | Total | Directors | Key | Total |
| | | management | | | management | |
+----------------------------------+-----------+------------+---------+-----------+------------+-------+
| | EURm | EURm | EURm | EURm | EURm | EURm |
+----------------------------------+-----------+------------+---------+-----------+------------+-------+
| Salaries and short-term employee | 1.1 | 1.6 | 2.7 | 1.3 | 1.4 | 2.7 |
| benefits | | | | | | |
+----------------------------------+-----------+------------+---------+-----------+------------+-------+
| Post-employment benefits | - | 0.1 | 0.1 | 0.1 | 0.4 | 0.5 |
+----------------------------------+-----------+------------+---------+-----------+------------+-------+
| Termination amounts | - | - | - | - | 2.1 | 2.1 |
+----------------------------------+-----------+------------+---------+-----------+------------+-------+
| Share-based payments | 0.1 | 0.3 | 0.4 | 0.1 | - | 0.1 |
+----------------------------------+-----------+------------+---------+-----------+------------+-------+
| | 1.2 | 2.0 | 3.2 | 1.5 | 3.9 | 5.4 |
+----------------------------------+-----------+------------+---------+-----------+------------+-------+
19 Exchange rates
Monthly income statements and other period statements of overseas operations are
translated at the relevant rate of exchange for that month. Except for the
Balance Sheet which is translated at the closing rate, each line item in these
condensed Consolidated Financial Statements represents a weighted average rate.
+--------------------------+----+------------+----------+--+--------+---+---------+---+----------+
| | Euro to Sterling | | Sterling to Euro |
+--------------------------------------------+----------------------+---+------------------------+
| | Six month period | |Six month period ended |
| | ended | | |
+--------------------------------------------+----------------------+---+------------------------+
| | 30 June | | 30 June |
+--------------------------------------------+----------------------+---+------------------------+
| | 2009 | | 2008 | | 2009 | | 2008 |
+--------------------------------------------+----------+--+--------+---+---------+---+----------+
| Weighted average reported rate for revenue | 1.099 | | 1.297 | | 0.910 | | 0.674 |
+--------------------------------------------+----------+--+--------+---+---------+---+----------+
| Weighted average reported rate for | 1.151 | | 1.229 | | 0.869 | | 0.682 |
| operating profit | | | | | | | |
+--------------------------------------------+----------+--+--------+---+---------+---+----------+
| Period end rate | | | 1.184 | | 1.260 | | 0.845 | | 0.676 |
+--------------------------+----+------------+----------+--+--------+---+---------+---+----------+
Statement of Directors' Responsibilities
The Directors confirm that this condensed consolidated interim financial
information has been prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the European Union and that the Interim Management
Report includes a fair review of the information required by DTR 4.2.7 and DTR
4.2.8, namely:
- an indication of important events that have occurred during the first six
months and their impact on the condensed set of Financial Statements, and a
description of the principal risks and uncertainties for the remaining six
months of the financial year; and
- material related-party transactions in the first six months and any material
changes in the related-party transactions described in the last Annual Report.
By order of the Board
+-----------------------------------------+-----------------------------------------+
| Pascal Bazin | Martyn Smith |
+-----------------------------------------+-----------------------------------------+
| Chief Executive | Finance Director |
+-----------------------------------------+-----------------------------------------+
| 27 August 2009 | 27 August 2009 |
+-----------------------------------------+-----------------------------------------+
Independent Review Report by the Auditors to the Board of Directors of Avis
Europe plc
Introduction
We have been engaged by the Company to review the condensed set of Financial
Statements in the half-yearly financial report for the six months ended 30 June
2009, which comprises the condensed Consolidated Income Statement, condensed
Consolidated Statement of Comprehensive Income, condensed Consolidated Balance
Sheet, condensed Consolidated Statement of Changes in Equity, condensed
Consolidated Cash Flow Statement and related notes. We have read the other
information contained in the half-yearly financial report and considered whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in Note 2, the annual Financial Statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of Financial Statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of Financial Statements in the half-yearly financial report based on our
review. This report, including the conclusion, has been prepared for and only
for the Company for the purpose of the Disclosure and Transparency Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of Financial Statements in the half-yearly financial
report for the six months ended 30 June 2009 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Uxbridge
27 August 2009
Notes:
a) The maintenance and integrity of the Avis Europe plc website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEIFWMSUSEDA
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