(AVE.L) Avis Europe PLC Buy/Sell

Financial Performance

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."

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 Hockridge 020 7357 9477

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 Six
months Year months
to 30 to 31 to 30
June December June

(restated) (restated)

Corporately-owned business
Rental revenue per day1 - (3.4) (1.3) 0.1

reported currency (% change)
Rental revenue per day1 - (1.4) 0.7 2.1

constant currency2 (% change)
Billed days3 (% change) (10.5) 0.1 2.5
Utilisation - average4 (%pts. 4.7 0.2 (0.5)

change)

Total Group:
Underlying operating margin (%) 3.7 8.6 4.0
Underlying return on capital 8.7 8.5 8.2

employed5 (%)

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)

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 operations 19.9 25.1
Operating profit - discontinued operation (excluded from - 1.3

underlying) Amounts excluded from underlying:

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 deferred consideration) 33.1 33.4
Interest payable on deferred consideration 0.9 1.1
Underlying net finance costs1 34.0 34.5
Average net debt 967 1,060

1 Excludes 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 operation 15.4 0.4

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:

Net Loss
Operating Finance Before
Profit Costs Tax

EUR million
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:

31 December 2008
30 June2009 30 June2008
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 412.2 (59.2)
activities (44.6) (91.5)

Net cash used in investing activities
Net cash (used in)/generated from financing (356.5) 146.9

activities
Net movement in cash and cash equivalents before 11.1 (3.8)

exchange rate changes Other movements in net debt resulting from cash
flows 319.4 (187.5)
New finance leases (104.8) (144.3)
Other non-cash movements, including the effects of (4.8) 12.3

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

Closing net debt EUR million % EUR 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:

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

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 expenses (209.5) (17.4) (226.9) (227.2) (0.7) (227.9)
Operating profit/(loss) 4,5 19.9 (17.4) 2.5 25.1 (0.7) 24.4
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 joint 0.2 - 0.2 0.4 - 0.4

ventures and associate
(Loss)/profit before taxation (13.9) (20.7) (34.6) (9.0) 2.2 (6.8)
Taxation 8 6.1 2.7 8.8 3.0 (0.2) 2.8
(Loss)/profit after taxation (7.8) (18.0) (25.8) (6.0) 2.0 (4.0)

Discontinued operation - Greece
Profit after taxation - - - - 1.3 1.3
(Loss)/profit for the six 15 (7.8) (18.0) (25.8) (6.0) 3.3 (2.7)

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 - continuing 10 (2.8) (0.4)

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

Underlying1 Amounts Total Underlying1 Amounts Total
excluded excluded
from from
underlying underlying
Notes EURm EURm EURm EURm EURm EURm
(Loss)/profit for the six month period attributable (7.8) (18.0) (25.8) (6.0) 3.3 (2.7)

to equity holders of the Company

Actuarial (losses)/gains on retirement benefit - (24.4) (24.4) - 2.7 2.7

obligations Cash flow hedges:

operations
Tax on net items taken to equity - 7.5 7.5 - 0.9 0.9
Other comprehensive (expense)/income for the six 15 - (5.4) (5.4) - 1.2 1.2

month period, net of taxation

Total comprehensive (expense)/income for the six (7.8) (23.4) (31.2) (6.0) 4.5 (1.5)

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 30 As at 30 As at 31
June June December

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:

method Other financial assets:

Other financial assets:

Other financial liabilities:

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:

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' equity 15 37.8 95.2 69.3
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 capital Share Own Retained deficit Translation reserve Hedging reserve Total Minority interest Total equity
premium shares
held
(Note 13) (Note 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 period 15 - - - (2.7) - - (2.7) - (2.7)

attributable to equity holders of the Company
Net actuarial gains on - - - 2.7 - - 2.7 - 2.7

retirement benefit obligations Cash flow hedges:

translation of foreign operations
Total comprehensive - - - (0.1) (3.1) 1.7 (1.5) - (1.5)

(expense)/income for the six month period

Increase in equity reserve 15 - - - 0.1 - - 0.1 - 0.1

arising from charge to income for share options in the period
Decrease in equity reserve 15 - - - (2.4) - - (2.4) - (2.4)

arising from exercise of share options
Own shares released on vesting 15 - - 2.6 - - - 2.6 - 2.6

of share awards
Other exchange movements 15 - - 0.2 - - - 0.2 - 0.2
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 period 15 - - - (25.8) - - (25.8) - (25.8)

attributable to equity holders of the Company
Net actuarial losses on - - - (24.4) - - (24.4) - (24.4)

retirement benefit obligations Cash flow hedges:

translation of foreign operations
Total comprehensive - - - (43.4) 12.7 (0.5) (31.2) - (31.2)

(expense)/income for the six month period

Increase in equity reserve 15 - - - 0.4 - - 0.4 - 0.4

arising from charge to income for share options in the period
Purchase of own shares 15 - - (0.6) - - - (0.6) - (0.6)
Other exchange movements 15 - - (0.1) - - - (0.1) (0.1) (0.2)
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

Notes EURm EURm
Operating profit - continuing 2.5 24.4

operations
Discontinued operation - Greece - 1.3
Operating profit - all 2.5 25.7

operations
Reverse amortisation of other 5 2.1 1.7

intangible assets
Reverse depreciation on 5 59.4 64.9

property, plant and equipment
Reverse adjustments arising on 5 1.2 2.1

differences between sales proceeds and depreciated amounts
Reverse non-cash operating lease 66.2 85.5

charge on manufacturer repurchase contracts
Payments in respect of (400.0) (865.7)

manufacturer repurchase contracts
Receipts in respect of 580.9 600.3

manufacturer repurchase contracts
Reverse share-based payment 0.4 0.1

charges
Decrease/(increase) in 0.4 (2.9)

inventories
Decrease in receivables 56.5 19.7
Increase in payables 43.6 17.3
Decrease in provisions (4.2) (0.8)
Increase/(decrease) in 2.1 (1.1)

retirement benefit obligations
Reversal of re-measurement items 2.0 (1.0)

and economic hedging adjustments
Cash inflow on derivative 0.5 0.1

financial instruments - non-debt
Net cash generated from/(used 413.6 (54.1)

in) operating activities before taxation
Tax paid (1.4) (5.1)
Net cash generated from/(used 412.2 (59.2)

in) operating activities

Investing activities
Purchase of other intangible (1.8) (5.4)

assets
Purchase of vehicles (149.2) (257.6)
Proceeds on disposal of vehicles 99.8 146.9
Purchase of other property, (4.6) (8.9)

plant and equipment
Proceeds on disposal of other 0.4 -

property, plant and equipment
Proceeds on disposal of 11.5 29.3

non-current assets held for sale
(Purchase)/disposal of financial 16a) (0.7) 5.4

assets held for trading
Acquisition of licensee - (1.2)

businesses
Net cash used in investing (44.6) (91.5)

activities

Financing activities
Finance revenue received 0.7 1.2
Finance costs paid (32.0) (27.5)
Finance cost element of finance (5.9) (8.9)

lease payments
Net capital element of finance 16a) (28.6) (14.3)

lease payments
Purchase of own shares (0.6) -
Cash flow on derivative 16a) (2.5) (1.1)

financial instruments - debt
(Repayment of)/proceeds from 16a) (287.6) 197.5

bank and other loans
Net cash (used in)/generated (356.5) 146.9

from financing activities

Increase/(decrease) in cash and 11.1 (3.8)

cash equivalents (excluding exchange rate changes)
Effects of exchange rate changes 16a) 0.6 0.4
Net increase/(decrease) in cash 11.7 (3.4)

and cash equivalents
Cash and cash equivalents at 1 16a) 24.7 52.1

January

Cash and cash equivalents at 30 36.4 48.7

June

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:

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

External Inter-segment1 Total External (as restated) Inter-segment1(as restated) Total (as 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 inter-segment - (1.8) (1.8) - (1.5) (1.5)
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.

Underlying1 Amounts Total Underlying1 Amounts Total
excluded (as restated) excluded (as restated)
from from
underlying underlying
(as restated)
Operating profit/(loss) EURm EURm EURm EURm EURm EURm
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 6) - - - - 1.3 1.3
Operating profit/(loss) including discontinued operation 19.9 (17.4) 2.5 25.1 0.6 25.7

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)

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 depreciated amounts 1.2 2.1
Amortisation of other intangible assets (see Note 11) 2.1 1.7
Exchange movements (0.2) (0.5)
Contingent operating lease rentals2 23.6 25.5
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 instruments3 (0.8) (2.9)
Re-measurement losses on non-debt related derivative financial instruments3 4.0 1.7
3.2 (1.2)
Economic hedging adjustment on foreign exchange (1.2) 0.2
Total net exceptional items - continuing, certain re-measurement items and economic hedge adjustments 17.4 0.7

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

EURm EURm

Exceptional administrative expenses:
a) Restructuring costs 8.4 1.9
b) Securitisation preparation 7.1 -

costs
c) Centrus receivables (0.1) (0.2)
Net exceptional items before 15.4 1.7

tax - continuing operations
d) Discontinued operation - (1.3)
Net exceptional items before tax including discontinued 15.4 0.4

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

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 debt-related derivative financial instruments2 - 1.6 1.6 - 4.6 4.6
0.7 1.6 2.3 1.2 4.6 5.8

Finance costs
Interest payable under finance lease obligations (5.9) - (5.9) (8.9) - (8.9)
Interest payable on bank loans, overdrafts and loan notes3 (25.5) - (25.5) (25.5) - (25.5)
Interest payable on deferred consideration (0.9) - (0.9) (1.1) - (1.1)
Re-measurement losses on debt-related derivative financial instruments2 - (3.1) (3.1) - (2.4) (2.4)
Economic hedge adjustment on interest payable3 (2.4) 2.4 - (0.2) 0.2 -
Foreign exchange (loss)/gain on net debt - (4.2) (4.2) - 0.5 0.5
(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

Loss from continuing operations EURm EURm £m £m
Loss for the six month period from continuing operations attributable to equity holders of the Company (25.8) (4.0) (23.5) (3.1)

Loss per share from continuing operations Euro Euro Sterling Sterling
cents cents pence pence
Basic and diluted loss per share from continuing operations (2.8) (0.4) (2.6) (0.3)

Basic and diluted including discontinued operation

Loss EURm EURm £m £m
Loss for the six month period attributable to equity holders of the Company (25.8) (2.7) (23.5) (2.1)

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:

Loss from continuing operations EURm EURm £m £m
Underlying loss for the six month period from continuing operations attributable to equity holders of the Company (7.8) (6.0) (7.1) (4.6)

Loss per share from continuing operations Euro Euro Sterling Sterling
cents cents pence pence
Basic and diluted underlying loss per share from continuing operations (0.8) (0.7) (0.8) (0.5)

11 Fleet and non-fleet fixed assets

Other intangible Vehicles Other property, Non-current assets
assets plant and equipment held for sale1
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

Net book amount EURm EURm
Vehicles 436.6 504.0
Non-current assets held for sale 4.5 12.8
Repurchase agreement receivables (during vehicle holding period)1 837.8 1,162.4
Prepaid repurchase vehicle operating lease charges (during vehicle holding period)1 56.0 105.3
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

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

EURm EURm
Loss after taxation attributable to the equity holders of the Company (25.8) (2.7)
Net (expense)/income recognised directly in equity (see Statement of Comprehensive Income) (5.4) 1.2
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 in the period 0.4 0.1
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 January 2009 Cash Non-cash movements Exchange At 30 June 2009
flow movements
EURm EURm EURm EURm EURm
Cash and short-term deposits 52.1 5.4 - 0.6 58.1
Bank overdrafts (27.4) 5.7 - - (21.7)
Cash and cash equivalents 24.7 11.1 - 0.6 36.4
Current assets - held for trading - 0.7 - - 0.7
Obligations under finance leases (232.7) 28.6 (104.8) (3.9) (312.8)
Borrowings (excluding overdrafts) (859.0) 287.6 12.8 (1.8) (560.4)
Derivative debt instruments (66.2) 2.5 (12.5) - (76.2)
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

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 debt instruments 0.3 4.9
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

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.

Directors Key management Total Directors Key management Total
EURm EURm EURm EURm EURm EURm
Salaries and short-term 1.1 1.6 2.7 1.3 1.4 2.7

employee 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 ended Six month period ended
30 June 30 June

Weighted average reported rate for revenue 1.099 1.297 0.910 0.674
Weighted average reported rate for operating profit 1.151 1.229 0.869 0.682
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:

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

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