RNS Number:0444I
Avis Europe PLC
27 February 2003
EMBARGOED FOR 0700 HOURS 27TH FEBRUARY 2003
AVIS EUROPE PLC
AUDITED RESULTS FOR YEAR ENDED 31 DECEMBER 2002
Avis Europe plc, the leading car rental company in Europe, Africa, the Middle
East and Asia, announces audited results for the year ended 31 December 2002.
Operating Headlines
* Full year results consistent with guidance provided in June 2002
* Leisure actions help counter reduction in business demand
* Continued strong cost management
* New facilities strengthen funding position
* Proposed acquisition of the Budget vehicle rental business in Europe,
Middle East and Africa
Financial Headlines
* Revenue 5.3% lower at Euro1,189.2 million (#747.5 million)
* Profit before tax* 15.2% lower at Euro122.3 million (#77.3 million)
* Exceptional charge before tax of Euro16.4 million (#10.4 million)
* EPS* 15.5% lower at 16.4 euro cents (10.4p); unadjusted EPS 13.8 euro
cents (8.7p)
* Proposed final dividend of 3.8p per share, full year dividend maintained
at 5.8p
*before goodwill amortisation and exceptional items
Commenting on the results, Chairman Sir Bob Reid said:
"During 2002, weakening economies across Europe impacted corporate travel spend
and against this background we focussed our sales and promotional activities in
revenue segments which provided better short-term opportunities for recovery,
notably Leisure. At the same time, we continued to manage actively our
operational cost base and capacity by significantly adjusting fleet and staffing
levels to mitigate the impact of lower customer demand levels.
With no expectation of significant recovery in the European economies in 2003
and the likelihood of continuing geo-political tension, the short-term outlook
for our business is uncertain. In this environment, we shall maintain very tight
control on fleet and staff levels, as well as developing other cost
efficiencies. We continue to update our contingency plans to mitigate the impact
which would inevitably arise from any escalation towards conflict.
In the first few weeks of 2003 Leisure business has continued to grow, partially
offsetting the continuing lower level of corporate travel.
We continue to invest in our business to improve the potential for future growth
and profitability, with the proposed acquisition of the Budget business, the
purchase of a major Avis licensee in France, and the opening of our Avis branded
joint venture in China."
Enquiries:
Mark McCafferty, Chief Executive 01344 426644
Martyn Smith, Group Finance Director 01344 426644
Ben Foster, Financial Dynamics 020 7269 7247
RESULTS OVERVIEW
2002 was a difficult year for the travel industry, which continued to be
affected both by weakening economies and geo-political uncertainties.
We have taken actions to adjust our business and to focus revenue development
activity on markets and customer segments less affected by current events.
Revenue was 5.3% lower at Euro1,189.2 million. Profit before tax, goodwill
amortisation and exceptional items was 15.2% lower at Euro122.3 million, as a
result of the lower revenue and the impact of the fixed element of our cost
base, principally associated with the rental station network. Adjusted earnings
per share on the same basis were 13.3% lower at 10.4 pence.
Exceptional costs of Euro16.4 million, comprises a Euro6.9 million provision for
Centrus credit hire receivables, a Euro6.2 million severance cost from the
restructuring of management and support positions across the Group announced in
September, and a Euro3.3 million provision for re-insurance receivables.
Profit before tax after goodwill amortisation and exceptional items was Euro101.8
million (2001: Euro136.3 million) and earnings per share on the same basis were 8.7
pence (2001: 11.3 pence)
Dividend maintained
With the underlying strength of the Group, the Directors are recommending a
final dividend of 3.8 pence per share, maintaining the full year dividend at 5.8
pence per share. The dividend will be paid on 7 May 2003 to shareholders on the
register at close of business on 7 March 2003.
REVENUE OVERVIEW
Our balanced geographic and segmental portfolio provides some protection in
times such as these, by enabling us to focus revenue development activity in
less affected areas. In 2002 overall Group revenues were 5.3% lower at Euro1,189.2
million.
Although volume declined by 5.6%, primarily due to cutbacks in corporate-related
spend, we continued to create yield gains with revenue per rental up 1.7% versus
prior year.
Leisure recovered steadily
The major segment for the Group in 2002 was Leisure, accounting for 39% of
revenue. Leisure activity continued to recover, returning to growth in the
second half and achieving full year revenue in line with 2001.
Intra-European Leisure revenue, which is 40% of the Leisure segment, was only
marginally lower than 2001. A reduction in tour operator referred business was
offset by targeted investments to increase the number of customers booking
direct through the internet, our call centres and travel agents. This change in
mix contributed to an increase in revenue per rental of 2.8%.
Domestic Leisure revenue, which is 29% of the segment was up 2% versus prior
year, with particularly strong performances in France and the UK from
promotional activities.
International Leisure revenue, which is 31% of the segment, recovered gradually
during the year, supported by new products and sales investment in the US retail
market. Full year revenue was 2% below prior year.
Corporate customers reduce travel expenditure
Corporate business accounted for 22% of revenue in 2002. This segment was
impacted from the second quarter onwards when companies further reduced their
discretionary expenditure. Full year revenue was 14% lower than prior year, with
only marginal improvement in the second half even with the benefit of the weak
comparative of the fourth quarter of 2001.
The market was particularly difficult in Northern Europe although we again
achieved yield gains in this segment. Investment in sales and marketing activity
enabled us to grow elements of the Corporate segment in certain markets, for
example Spain, by increasing sales efforts in the small and medium sized
enterprise market.
Replacement impacted by reduced corporate spend
Replacement represented 20% of revenue in 2002 and includes business originating
from three sources - corporate longer-term, which was 45% of revenue,
leasing-related 26% and insurance-related 29%.
Overall Replacement revenue was 7% lower than 2002 with corporate longer-term
down 14% in line with the overall trend in the Corporate segment.
Premium in line with overall revenue trends
The Premium sector accounted for the remaining 19% of revenue and includes
customers who do not pre-book their car rental and business from some
partnerships. Revenue in this segment was 4.9% lower than 2001, broadly in line
with the overall Group.
Revenue development in major markets
The major markets of France, Germany, Italy, Spain and the UK generated 81% of
Group revenues during 2002. Full year revenue in Germany and the UK was down 14%
and 11% respectively as these markets were significantly impacted from the
second quarter onwards by cut backs in corporate travel spend. This also
impacted Italy and France to a lesser extent where total revenue was 7% and 5%
lower respectively. Targeted revenue activities were developed in each market to
help mitigate this reduction in corporate-related travel and to underpin revenue
development for the future.
Spain, which grew by 7%, was the strongest of the country markets, not only in
its core Leisure business but also in the successful development of more than
fifty new domestic corporate accounts in the small and medium enterprise
segment. Development of corporate activity reduces dependence on peak leisure
periods and eases fleet planning. A number of important agreements were renewed
during 2002, including the three-year partnerships with Iberia and the Sol Melia
hotel group. We also secured our position across all key Spanish airports for
the next five years.
In Germany, where trading conditions remained particularly difficult, we
continued to operate a yield strategy, with revenue per rental increases in
Corporate and transatlantic business. New initiatives were launched at the end
of the year to develop the insurance-related element of Replacement segment. Our
Lufthansa partnership was successfully renewed and extended to include joint
marketing activities to develop both domestic and international business.
In addition to the economic downturn, Corporate revenue in the UK was impacted
by the withdrawal from certain Government contracts. Initiatives focused on
stimulating domestic Leisure activity underpinned a year on year increase in
Leisure revenues. Despite the difficulties of the airline market and reductions
in passenger capacity, we marginally increased the number of rentals from
British Airways customers through marketing and database promotions.
In France, domestic promotional activity generated a 5% growth in Leisure.
During 2002 we launched Caraway, an internet-based prepaid rental product, to
develop future domestic and outbound leisure business.
Italy successfully implemented new loyalty programmes and stimulated
double-digit rental growth in the premium segment. A number of new UK inbound
tour operator contracts were secured in the latter part of 2002 to generate
leisure business in 2003.
Partnership developments
During 2002 we renewed some key partnerships and secured new arrangements with a
number of airlines, travel companies and international rail companies. Renewed
arrangements were completed with Iberia, Lufthansa, Olympic Airways, JAL and All
Nippon and a new 3 year exclusive partnership was secured with FlyBE, Europe's
leading independent regional carrier.
New pan-European arrangements were secured with Thomas Cook and new partnerships
with two of Europe's largest internet-based travel companies, e-bookers and
Expedia, commenced during the year.
Our penetration of the high-speed rail customer base was further enhanced with a
new exclusive partnership with Eurostar and new marketing programmes with SNCF
in France and RENFE in Spain.
Centrus implements new operating guidelines
Centrus is the UK's second largest car replacement service to non-fault accident
insurance claimants providing claim management services and generating rental
volume for the Avis UK business. In 2002 revenues were down 2.3% to Euro34.6
million with completed hires of some 21,000.
Although industry guidelines for reimbursement of claims were previously agreed
with the Association of British Insurers, we have continued to experience
difficulties with the settlement process, resulting in an exceptional charge of
Euro6.9 million.
To ensure more timely settlement of claims we are working with insurers to
introduce new processes for more effective data capture and exchange and we have
significantly strengthened our claims collection team.
As a result of these actions we expect improvements to the speed of settlement
during 2003, which should then provide a base for expansion of the business in
2004.
PROFIT OVERVIEW
Operating profit before exceptional items and goodwill amortisation was Euro186.5
million, down 13.5% on prior year. Operating margin of 15.7% was 1.5% points
lower than prior year largely resulting from the impact of lower revenue on
fixed costs which mainly relate to the short-term inflexibility of support staff
levels across the Group and the rent and depreciation of our rental station
network.
Operating margin analysis 2002 % revenue 2001 % revenue Margin movement
Selling costs 6.8 6.6 (0.2)
Revenue related 8.2 8.2 -
Rental related 2.1 2.1 -
Fleet costs 33.2 33.1 (0.1)
Staff costs 21.1 20.5 (0.6)
Overheads 12.9 12.3 (0.6)
Operating margin 15.7 17.2 (1.5)
Rapid adjustment of fleet and staff to lower demand
The relative flexibility of our operating cost base allows us to minimise the
impact of reduced revenues on margin.
Average fleet was 5% (some 6,000 units) lower than 2001, resulting in our key
fleet efficiency measure of vehicle utilisation being 68.1% (2001: 68.5%). Our
other key operational efficiency measure is staff productivity, which was just
1.7% lower, compared to the reduction in rentals of 7%. Operational and call
centre staffing levels were reduced in line with demand, sales teams were
tactically increased for business development and a process of restructuring to
adjust management and support positions across the Group, resulted in a
reduction of 100 positions in the last quarter of 2002.
Continued success with fleet strategies
Fleet costs as a percentage of revenue were very similar to prior year,
reflecting the success of key initiatives in vehicle sourcing, damage recovery
and our used car re-marketing programmes.
During the second half of the year a new hand-held vehicle check - out and check
- in device was piloted at selected airports in Germany and the UK. In addition
to improving customer service, this initiative is designed to substantially
improve damage management and increase delivery and collection efficiencies.
With positive consumer acceptance and the process efficiency results achieved in
the pilot, we are investing in a two-year Euro16 million roll out programme of the
new device to all major rental locations across the Group.
Overhead expenditure lower
Overhead cost of Euro153.2 million included Euro73.0 million of non-property costs,
which were reduced by 9% through intensive cost management actions. Property
costs of Euro80.2 million increased by Euro5.8 million as we continued to invest in
improving our network facilities. As a result overheads increased by 0.6% points
of revenue.
New facilities strengthen funding position
Interest payable was reduced due to the lower level of average net debt required
to fund lower fleet levels. Average interest rates have increased from 5.2% to
5.3% as the Group increased financing through longer-term facilities and a
greater proportion of fixed rate debt.
A new multi-currency facility was secured with a syndicate of banks comprising a
Euro385 million five-year tranche and a Euro165 million 364-day tranche, with a
one-year term out option. In addition medium term notes totalling Euro171.8 million
and maturing between 2007 and 2012 were issued.
Net debt reduced by Euro50 million
2002 2001
Euro million Euro million
Net cash inflow from operating activities 518.6 528.1
Fleet capital expenditure (323.7) (271.6)
Non fleet capex (25.3) (17.3)
Taxation (2.0) (25.0)
Interest and dividends (119.2) (126.7)
Acquisitions and other 1.7 12.8
Reduction in net debt 50.1 100.3
The level of net debt reduced during the year by Euro50.1 million largely due to
cash generated from operations despite the lower level of rental activity. Fleet
capital expenditure was Euro52.1 million higher due to working capital movements.
In addition, the Group has benefited from reduced tax payments, because of the
changed timing of payments related to current year tax and repayments received
relating to prior years.
Tax rate maintained
The effective tax rate for 2002 pre-exceptional items was 22.0% and
post-exceptional items, 20.5%. The tax rate continues to be less than the rate
of UK corporation tax largely because of the utilisation of UK tax losses
brought forward and adjustments in respect of prior years.
Pensions
The group has a number of pension schemes of a defined benefit and defined
contribution nature. The material defined benefit pension schemes in the Group
are in the UK, which is a funded scheme and Germany, which is unfunded, in line
with local practice.
On an SSAP 24, Accounting for pension costs, basis there was a deficit at 31
December 2002 in respect of the UK scheme of Euro14.5 million. On a FRS 17,
Retirement benefits, basis the deficit between the market value of the assets in
the UK scheme and the actuarial value of its liabilities was Euro37.2 million.
The charge in the profit and loss account for the Group's defined benefit
schemes is
Euro10.9 million, based on the requirements of SSAP 24. The Group has chosen not to
adopt FRS 17 early, but had it done so, the profit and loss account charge for
the same schemes would have been Euro10.0 million.
Following the actuarial valuation of the Avis UK Pension Plan at 30 June 2002 it
was decided to introduce a new defined benefit scheme for UK employees who join
the company from 1 July 2003. This is a contributory scheme, which provides a
defined capital sum at retirement based on an annual accrual plus interest. This
is used to provide a pension based upon open market rates. The company retains
responsibility for the investment but not the annuity risk.
STRATEGIC DEVELOPMENT
We have continued to invest in the medium term development of the Group with the
proposed acquisition of the Budget business in Europe, Middle East and Africa
and the purchase of a major Avis licensee in France, as well as the opening of
the Avis branded joint venture in China.
Budget acquisition will provide further opportunities for growth
In February 2003 we reached a binding acquisition agreement, for certain assets
of the Budget Group, including the royalty-free rights to the Budget brand
throughout Europe, Middle East and Africa. Completion of the acquisition is
subject to certain closing conditions, which we expect to complete during March.
The purchase consideration is approximately Euro30 million, plus Euro8 million of
assumed debt relating to fleet assets. We expect the acquisition to be
marginally earnings dilutive in the first full year following completion.
Budget is at present predominantly a franchised business with a limited number
of corporate owned operations in France, Switzerland and Austria. It currently
operates in over 60 countries through 1,000 locations and generates licence fee
income of some Euro11 million per annum.
This year we will focus on the integration and stabilisation of the business
prior to more significant investment towards the end of 2003. The brand has very
limited presence in some key territories such as Spain, Italy and Scandinavia.
This provides the opportunity to deploy our operational experience and resources
to regenerate the brand. In addition there will be cost efficiencies from
simplifying existing systems infrastructure as well as developing joint service
and support functions.
Avis France extends corporate network
In January 2003 we acquired the rental network of a major Avis licensee in
France for Euro17.8 million including assumed debt relating to fleet assets of
approximately Euro11.6 million. This is the leading car rental company in the South
East and has been part of the Avis licensee network for over 30 years. The
business generated Euro18.5 million of revenue in 2002 and is expected to be
earnings enhancing in 2003.
Avis branded joint venture in China commences trading
In addition to investing in our core European markets we continue to develop our
presence in Asia which we see as a key long-term growth region for the Group.
Our joint venture in China with Shanghai Automotive Industry Corporation
received regulatory approval and started trading in January 2003 with 1,000 cars
operating from nine locations. We plan to extend the network to 70 locations in
26 cities over the next five years, leading up to the Beijing Olympics in 2008.
SUMMARY AND OUTLOOK
During 2002, weakening economies across Europe impacted corporate travel spend
and against this background we focused our sales and promotional activities in
revenue segments which provided better short-term opportunities for recovery,
notably Leisure. At the same time, we continued to manage actively our
operational cost base and capacity by significantly adjusting fleet and staffing
levels to mitigate the impact of lower customer demand levels.
With no expectation of significant recovery in the European economies in 2003
and the likelihood of continuing geo-political tension, the short-term outlook
for our business is uncertain. In this environment, we shall maintain very tight
control on fleet and staff levels, as well as developing other cost
efficiencies. We continue to update our contingency plans to mitigate the
impact, which would inevitably arise from any escalation towards conflict.
In the first few weeks of 2003 Leisure business has continued to grow, partially
offsetting the continuing lower level of corporate travel.
We continue to invest in our business to improve the potential for future growth
and profitability, with the proposed acquisition of the Budget business, the
purchase of a major Avis licensee in France, and the opening of our Avis branded
joint venture in China.
Consolidated Profit and Loss Account
for the year ended 31 December 2002 2001 2002 2001
Notes Euro'000 Euro'000 #'000 #'000
Revenue 1,189,202 1,255,392 747,501 782,513
Cost of sales (598,875) (628,252) (376,510) (391,710)
Gross profit 590,327 627,140 370,991 390,803
Administrative expenses
(2002: including
exceptional items) (424,249) (415,543) (266,266) (259,276)
Operating profit
before goodwill
amortisation and
exceptional items 186,541 215,594 117,686 134,018
Amortisation of goodwill (4,029) (3,997) (2,527) (2,491)
Exceptional items 2 (16,434) - (10,434) -
Operating profit 166,078 211,597 104,725 131,527
Share of operating loss from
joint ventures (2001: (1,132) (4,268) (708) (2,644)
including exceptional item)
Share of operating loss from
associated
undertaking (72) (48) (46) (30)
Net interest payable (63,067) (70,962) (39,618) (44,271)
Profit on ordinary activities
before taxation,
goodwill amortisation and
exceptional items 122,270 144,243 77,314 89,504
Amortisation of goodwill (4,029) (3,997) (2,527) (2,491)
Exceptional items 2 (16,434) (3,927) (10,434) (2,431)
Profit on ordinary activities
before taxation 101,807 136,319 64,353 84,582
Taxation (20,841) (29,990) (13,147) (18,608)
Profit on ordinary
activities after taxation 80,966 106,329 51,206 65,974
Minority interests - equity (129) (233) (81) (144)
Profit for the year before
goodwill
amortisation and
exceptional items 96,105 113,158 60,787 70,217
Amortisation of goodwill (4,029) (3,997) (2,527) (2,491)
Exceptional items (11,239) (3,065) (7,135) (1,896)
Profit for the year 80,837 106,096 51,125 65,830
Dividends 3 (53,547) (54,736) (33,991) (33,928)
Retained profit for the year 27,290 51,360 17,134 31,902
Earnings per share
(euro cents/sterling
pence per
share)
Basic 4 13.8 18.2 8.7 11.3
Diluted 4 13.8 18.1 8.7 11.3
Adjusted 4 16.4 19.4 10.4 12.0
Consolidated Statement of Total Recognised Gains
and Losses
for the year ended 31 December 2002 2001 2002 2001
Euro'000 Euro'000 #'000 #'000
Profit for the year 80,837 106,096 51,125 65,830
Exchange movements (6,688) (2,779) (1,741) (1,444)
Taxation on exchange movements 2,818 423 1,737 174
Total recognised gains and losses 76,967 103,740 51,121 64,560
Consolidated Balance Sheet
at 31 December 2002 2001 2002 2001
Euro'000 Euro'000 #'000 #'000
Intangible fixed assets
Goodwill 64,405 70,646 41,431 43,753
Tangible fixed assets
- vehicles 1,312,421 1,328,503* 844,260 822,775*
- other 79,688 71,280 51,263 44,146
1,392,109 1,399,783 895,523 866,921
Investments 4,253 5,629 2,736 3,486
1,396,362 1,405,412 898,259 870,407
Total fixed assets 1,460,767 1,476,058 939,690 914,160
Current assets
Debtors 528,395 567,560* 339,909 351,504*
Investments 113,138 488 72,780 302
Cash at bank and in hand 41,506 21,528 26,700 13,333
683,039 589,576 439,389 365,139
Creditors amounts falling due
within one year
Bank and other loans (181,675) (264,092) (116,868) (163,559)
Other creditors (993,829) (1,026,987) (639,317) (636,038)
(1,175,504) (1,291,079) (756,185) (799,597)
Net current liabilities (492,465) (701,503) (316,796) (434,458)
Total assets less current
liabilities 968,302 774,555 622,894 479,702
Creditors amounts falling
due after
more than one year
Bank and other loans (742,646) (572,637) (477,733) (354,649)
Other creditors (35,039) (36,608) (22,540) (22,672)
(777,685) (609,245) (500,273) (377,321)
Provisions for liabilities
and charges (80,520) (80,118) (51,797) (49,619)
110,097 85,192 70,824 52,762
Capital and reserves
Called-up share capital 8,083 8,071 5,858 5,850
Share premium 875,984 874,018 634,757 633,541
Profit and loss account (774,556) (797,554) (570,168) (587,036)
Total shareholders'
funds - equity 109,511 84,535 70,447 52,355
Minority interests - equity 586 657 377 407
110,097 85,192 70,824 52,762
*Comparatives restated, see Note 6.
Consolidated Cash Flow Statement
for the year ended 31 December 2002 2001 2002 2001
Notes Euro'000 Euro'000 #'000 #'000
Net cash inflow from
operating activities 5i 518,617 528,116* 328,227 326,435*
Returns on investments
and servicing of finance
Interest received 5,013 2,915 3,167 1,817
Interest paid (57,308) (60,976) (36,080) (37,933)
Interest element of finance
lease rental payments (11,934) (14,134) (7,497) (8,825)
Dividend paid to minority
interests (200) (141) (126) (88)
(64,429) (72,336) (40,536) (45,029)
Taxation (2,006) (25,035) (1,436) (15,344)
Capital expenditure and
financial investment
Purchase of tangible
fixed assets (1,676,345) (1,991,527)* (1,053,267)(1,240,011)*
Sale of tangible fixed assets 2,207,543 2,430,953 * 1,383,133 1,518,695 *
Sale of fixed asset investments - 51 - 31
531,198 439,477 329,866 278,715
Acquisitions and disposals
Purchase of subsidiary
undertakings - (2,253) - (1,421)
Cash balances acquired
with subsidiary - 3 - 2
undertakings
- (2,250) - (1,419)
Equity dividends paid (54,817) (54,341) (33,954) (33,917)
Management of liquid resources
(Purchase)/sale of current
asset investments (112,671) 9,579 (70,666) 5,934
Financing
Issue of ordinary share capital 1,556 527 962 327
Repayment of capital element
of finance leases (882,717) (764,947) (553,740) (476,954)
(Decrease)/increase in
short term loans (216,070) 36,044 (133,215) 21,943
(Increase)/decrease in long
term loans 302,535 (102,041) 187,697 (64,569)
(794,696) (830,417) (498,296) (519,253)
Increase/(decrease) in cash 5ii 21,196 (7,207) 13,205 (3,878)
*Comparatives restated, see Note 6. The accompanying Notes form an integral part
of these Financial Statements.
Notes to the Financial Statements for the year ended 31 December
1. Basis of accounting and preparation
The Financial Statements have been prepared under the historical cost
convention and in accordance with applicable accounting standards. They have
been prepared on the basis of the accounting policies set out in the Group's
2001 Annual Report and Accounts, all of which have been applied consistently
throughout the year and preceding year, except for changes to deferred
taxation and unregistered cars. During the year, the Group adopted FRS 19,
Deferred tax, and there was no material impact on the Financial Statements.
The Group has also changed the classification of unregistered cars from
prepayments to fixed assets to ensure a consistent treatment with cars in
use by the business. The impact of this change on the comparative balances
is set out in note 6.
The financial information included in this statement does not constitute
statutory accounts within the meaning of section 240 of the Companies Act
1985. The statutory accounts of the Company for the year ended 31 December
2002, on which the auditors have given an unqualified opinion, will be filed
with the Registrar of Companies in due course. The statutory accounts of the
Company for the year ended 31 December 2001, on which the auditors have
given an unqualified opinion, have been filed with the Registrar of
Companies.
As a significant proportion of the Group's revenues, costs and funding arise
in euros, the Directors consider that the Group's functional currency is the
euro and accordingly, the Group's Financial Statements present the results
both in euro and sterling currencies. The Company's statutory accounts
continue to be reported in sterling.
2. Exceptional items
Exceptional administrative expenses in the year were as follows:
As a result of business conditions following the unfortunate events of 11
September 2001, action has been taken to reduce a number of management and
support positions across Europe, incurring severance costs of Euro6,240,000;
#3,946,000.
A charge of Euro6,921,000; #4,405,000 has been made to further reduce Centrus
credit hire receivables to their recoverable amount. This reflects
experience in collections to date, particularly due to the transition to an
industry-wide protocol following certain landmark legal cases affecting the
industry. The charge is stated net of amounts recovered from the Group's
previous advisers.
A dispute has arisen as to the recoverability of certain prior year
re-insured amounts from the Group's former principal re-insurer which is now
in run off under the supervision of the Financial Services Authority.
Accordingly, a charge of Euro3,273,000; #2,083,000 has been made based upon
legal advice as to the outcome of the dispute.
The exceptional item in the prior year related to losses incurred as part of
the restructuring of the Group's interest in its former joint venture,
yourautochoice.com.
3. Dividends
2002 2001 2002 2001
Euro'000 Euro'000 #'000 #'000
Dividend per ordinary share
Interim dividend of 2.0p;
3.2c (2001: 2.0p; 3.2c) 18,558 18,890 11,723 11,697
Proposed final dividend of
3.8p; 6.0c (2001: 3.8p; 6.1c) 34,989 35,846 22,268 22,231
53,547 54,736 33,991 33,928
4. Earnings per share
Basic earnings per share is based on the profit for the year which has also
been used to calculate the diluted earnings per share. Adjusted earnings per
share is calculated after adjusting for exceptional items and goodwill
amortisation to highlight the ongoing trading performance of the Group.
2002 2001 2002 2001
Euro'000 Euro'000 #'000 #'000
Profit 80,837 106,096 51,125 65,830
Amortisation of goodwill 4,029 3,997 2,527 2,491
Exceptional items 16,434 3,927 10,434 2,431
Taxation on exceptional items (5,195) (862) (3,299) (535)
Adjusted profit pre goodwill
and exceptional items 96,105 113,158 60,787 70,217
2002 2001 2002 2001
Cents Cents Pence Pence
Basic earnings per share 13.8 18.2 8.7 11.3
Adjustment re potentially
dilutive share options - (0.1) - -
Diluted earnings per share 13.8 18.1 8.7 11.3
Basic earnings per share 13.8 18.2 8.7 11.3
Amortisation of goodwill 0.7 0.7 0.4 0.4
Exceptional items 2.8 0.6 1.9 0.4
Taxation on exceptional items (0.9) (0.1) (0.6) (0.1)
Adjusted earnings per share 16.4 19.4 10.4 12.0
The weighted average number of shares in issue for the year was 584,561,717
(2001: 583,876,743). The Group has granted options to certain Directors and
employees over ordinary shares. Such shares constitute the only category of
potentially dilutive ordinary shares of Avis Europe plc and these would have
increased the weighted average number of shares in issue by 423,069 in 2002
(2001: 769,728). These options had no impact on profit in either year.
5. Notes to the consolidated cash flow statement
Before
(i) Reconciliation except
of operating ional Exceptional
profit to operating items items 2002 2001
cash flow Euro'000 Euro'000 Euro'000 Euro'000
Operating profit 182,512 (16,434) 166,078 211,597
Depreciation on
tangible fixed assets 321,654 - 321,654 332,332
Amortisation of
goodwill 4,029 - 4,029 3,997
Adjustments arising on
differences between
sales proceeds
and depreciated
amounts (20,553) - (20,553) (17,149)
305,130 - 305,130 319,180
Increase in debtors (8,014) 6,711 (1,303) (35,391)*
Increase in creditors 40,902 7,810 48,712 32,730*
Net cash inflow from
operating activities 520,530 (1,913) 518,617 528,116
Before
exceptional Exceptional
items items 2002 2001
#'000 #'000 #'000 #'000
Operating profit 115,159 (10,434) 104,725 131,527
Depreciation on
tangible fixed assets 202,142 - 202,142 207,176
Amortisation of
goodwill 2,527 - 2,527 2,491
Adjustments arising on
differences between
sales proceeds
and depreciated
amounts (12,941) - (12,941) (10,676)
191,728 - 191,728 198,991
Decrease/(increase)
in debtors (3,371) 4,318 947 (22,126)*
Increase in creditors 25,804 5,023 30,827 18,043*
Net cash inflow from
operating activities 329,320 (1,093) 328,227 326,435
* As restated, see Note 6.
(ii) Reconciliation of
net cash flow to
movement in net
debt 2002 2001 2002 2001
Euro'000 Euro'000 #'000 #'000
Increase/(decrease) in
cash in the year 21,196 (7,207) 13,205 (3,878)
Cash flow from decrease
in debt and leasing
finance 796,252 830,944 499,258 519,580
Cash flow from
increase/(decrease)
in liquid resources 112,671 (9,579) 70,666 (5,934)
Movement in net debt
resulting from cash
flows 930,119 814,158 583,129 509,768
Loans and finance
leases on acquisition
of subsidiaries - (428) - (270)
Loan notes cancelled - 12,863 - 8,000
New finance leases (880,170) (728,226) (552,142) (454,752)
Exchange movements 102 1,897 (25,870) (10,596)
Movement in net debt 50,051 100,264 5,117 52,150
Net debt at
beginning of the
year (1,130,279) (1,230,543) (700,011) (752,161)
Net debt at end
of the year (1,080,228) (1,130,279) (694,894) (700,011)
6. Restatement of prior year balances
The comparative other prepayments have been restated so that amounts
included for prepaid but as yet not registered vehicles are now classified
as fixed assets. This adjustment amounted to Euro63,947,000; #39,604,000 with
an equal and opposite amount being reflected in vehicle fixed assets. Note
that for cash flow purposes, the balance at 31 December 2000 has been
reduced by Euro27,995,000; #17,112,000.
Working capital movements in respect of the purchase and sale of tangible
fixed assets were previously included within net operating cash inflow. As a
result of a change in practice, the comparatives have been restated for the
combined effect of this together with the adjustment referred to above.
Reported purchase of tangible fixed assets has consequently decreased by
Euro22,480,000; #17,137,000 and the sale of tangible fixed assets has increased
by Euro11,920,000; #7,673,000. For both of these adjustments, a compensating
entry has been made within net operating cash inflow.
7. Subsequent events
On 28 January 2003, the Group acquired a 50% interest in Anji Car Rental and
Leasing Company Limited ("Anji") for a total consideration of US$11,000,000.
This consideration is payable in instalments, with an initial investment of
US$6,000,000 and four further instalments payable within 30 months bringing the
total investment to US$11,000,000. Anji operates in China providing vehicle
rental and leasing services under the Avis brand. At the date of acquisition,
Anji had estimated net assets of US$17,000,000.
On 29 January 2003, the Group completed the purchase of a 100% interest in S.A.
Holding Garage des Arenes and its wholly owned subsidiary ("the Arenes Group"),
for a total cash consideration of approximately Euro6,170,000. The Arenes Group
operates in France providing vehicle rental services under the Avis brand. At
the date of acquisition, the Arenes Group had estimated net assets of
Euro2,847,000.
This information is provided by RNS
The company news service from the London Stock Exchange
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