D'IETEREN Annual Report 2009 by The Crew Communication

Dâ&#x20AC;&#x2122;Ieteren Changing Mindsets ANNUAL REPORT 2 0 0 9

From wheelwright to car distribution D’Ieteren starts in 1805 as a wheelwright and manufacturer of wheels in Brussels. The Company becomes later active in all the areas of coachwork. At the end of the 19th century, D’Ieteren extends its activities to the production of bodywork for engine-powered vehicles. In 1931, it enters the distribution business, becoming the main distributor for American brands such as Studebaker, Pierce-Arrow and Auburn. In 1948, the Company becomes the importer of Volkswagen in Belgium and of Porsche two years later. The following brands were added in the following years: Audi, Seat, Škoda, Bentley and Lamborghini for the Volkswagen group, as well as Yamaha and MBK in the two-wheeler segment. Today, D’Ieteren sells annually around 100,000 vehicles of those makes on the Belgian market.

Another step towards mobility In 1956, as a sign of its precursory role in mobility matters, the company launches “Dit’Rent-a-Car”, a short-term car rental company. Two years later, “Dit’Rent-a-Car” becomes an Avis licensee. In 1971, Locadif s.a. is formed in a partnership between D’Ieteren and Avis Inc. In 1989, D’Ieteren becomes the main shareholder of Avis Europe, the European subsidiary of Avis Inc. listed on the London Stock Exchange since 1986. Today, D’Ieteren owns 59.6% of Avis Europe, one of the leading car rental companies in Europe, Africa, the Middle-East and Asia through the Avis and Budget brands with a presence in more than 100 countries.

A third activity at the service of the motorist In 1999, D’Ieteren enters the vehicle glass repair and replacement (VGRR) market by acquiring a majority stake in Belron through Dicobel, a subsidiary jointly owned with Cobepa. The origins of Belron go back to Jacobs & Dandor, a company established in South Africa in 1897. First specialised in mirror making before moving to vehicle glass, the company expands its activities throughout the world from the 1960s onwards. It enters Europe through the acquisition of two well-known companies, Autoglass and Carglass. In September 2009, Cobepa exercised the put options it held on its 16.35% stake in Belron. After payment of the shares early 2010, D’Ieteren today holds 93.73% of Belron, the worldwide leader in VGRR in 32 countries across 5 continents.

D’Ieteren. The Facts. s.a. D’Ieteren n.v.

D’Ieteren is an international group, active in three sectors of services to the motorist: > D’IETEREN AUTO which distributes in Belgium vehicles of the makes Volkswagen, Audi, SEAT, Škoda, Bentley, Lamborghini, Bugatti, Porsche and Yamaha; > AVIS EUROPE plc, one of the world leaders in short-term car rental in Europe, Africa, the Middle East and Asia through the Avis and Budget brands; > BELRON S.A., the world leader in vehicle glass repair and replacement in Europe, North and South America, Asia, Australia and New-Zealand through notably its CARGLASS®, AUTOGLASS®, SAFELITE® AUTO GLASS, SPEEDY GLASS®, LEBEAU VITRES D’AUTOS®, SMITH&SMITH® and O’BRIEN® brands. D’Ieteren and its activities are present in some 120 countries on 5 continents serving more than 19 million customers a year.

100%

59.6%*

93.7%**

D’Ieteren Auto

Avis Europe plc

Belron s.a.

40.4%

6.3%

London Stock Exchange

Minority Shareholders

* Indirect interest through D’Ieteren Car Rental s.a. ** Consolidation percentage at year-end.

Key ﬁgures IFRS 2009

2008

2007

20066

20054

2004

6,269.7

6,501.2

5,967.1

5,253.7

4,757.3

4,459.8

384.7

375.1

361.7

291.6

255.7

274.4

- before tax1, 5

214.2

191.7

194.3

149.3

118.6

124.0

- after tax1

182.8

159.0

166.3

134.3

97.6

94.0

158.5

32.2

127.7

97.9

76.2

43.2

Equity of which:

1,154.6

1,030.8

1,140.2

1,019.2

945.5

990.8

- Capital and reserves attributable to equity holders

1,028.5

896.1

917.7

789.1

709.9

687.1

Consolidated results (EUR million) 5, 7

Sales

Current operating result1, 5 Current result, group’s share:

Group’s share in the result for the period Financial structure (EUR million)

- Minority interest Net debt

126.1

134.7

222.5

230.1

235.6

303.7

1,770.2

2,209.7

2,089.6

1,875.8

1,893.1

1,748.1

33.3

28.9

30.2

24.3

17.7

17.0

Data per share (EUR) Current result after tax1, 3, group’s share 2, 3

Group’s share in the result for the period

28.9

5.9

23.2

17.7

13.8

7.8

Gross dividend per ordinary share

3.2500

3.0000

2.6400

2.4000

2.3100

Net dividend per ordinary share

2.4375

2.2500

1.9800

1.8000

1.7325

Net dividend per ordinary share + strip VVPR

2.7625

2.5500

2.2440

2.0400

1.9635

Capital and reserves attributable to equity holders

186.0

162.0

165.9

142.7

130.1

125.8

Highest share price

299.2

248.0

343.8

272.5

239.9

189.1

Lowest share price

75.6

72.2

236.7

218.5

138.5

135.1

Share price as at 31/12

279.1

75.1

246.0

269.7

232.5

136.5

Average share price

174.3

175.3

297.5

250.9

185.3

161.5

Average daily volume (in number of shares)

7,214

8,024

7,713

6,207

4,920

4,723

1,543.5

415.3

1,360.4

1,491.5

1,285.8

754.9

5,530,262

5,530,260

29,283

28,450

26,004

20,578

18,690

17,453

Market capitalisation as at 31/12 (EUR million) Total number of shares issued Average workforce (average full time equivalents) 1. Before unusual items and re-measurements. 2. Result attributable to equity holders of D’Ieteren, as deﬁned by IAS 1. 3. Calculated in accordance with IAS 33. 4. As restated following application of IAS 21 revised.

5. Excluding in 2006 and 2007 the discontinued operation in Greece (application of IFRS 5). 6. As restated in 2006 following the malpractice identiﬁed in Portugal. 7. Following the amendement to IAS 16 (see note 2.1. of the Consolidated Financial Statements in this annual report), sales include from 2008 onwards the disposal proceeds of non-repurchase vehicles.

An international group

External sales by activity CHANGE ● Automobile Distribution

-8.4%

● Car Rental

-16.4%

● Vehicle Glass

12.4%

Total

-3.6%

Total: EUR 6,269.7 million 39% 39%

● Vehicle Glass Repair and Replacement ● Car Rental

22%

● Car Rental and Vehicle Glass Repair and Replacement ● Automobile Distribution, Car Rental and Vehicle Glass Repair and Replacement

Financing structure: 3 separate ﬁnancing pools (net debt as per 31 December 2009)

Current operating result1 by activity €m 800

CHANGE ● Automobile Distribution & Corporate

Net debt by activity

-25.6%

● Car Rental

-8.3%

● Vehicle Glass

23.9%

Total

700 600

2.6% 500

Total: EUR 384.7 million 27%

400 300

17%

200 100

56%

0 Automobile Distribution & Corporate

CHANGE

CHANGE4

-29.2%

-23.6%

● Car Rental

-7.1%

● Vehicle Glass

38.5%

33.2%

11.7%

10.5%

Total

Vehicle Glass

● Bonds under securitisation programme ● Bonds and loan notes ● Bank loans and commercial paper ● Obligations under ﬁnance leases

Current result before tax1, group’s share, by activity ● Automobile Distribution & Corporate

Car Rental

€m 800

Net debt maturity proﬁle by activity

700 600 500

27%3

400

9%3

300

64%3

200 100 0

1. Under IFRS: before unusual items and re-measurements. 2. As restated in 2008 following the amendment to IAS 16 (see note 2.1. of the Consolidated Financial Statements in this annual report). 3. Before allocation of pro forma ﬁnancial charges (EUR 21.3 million) to the Automobile Distribution & Corporate segment, resulting from the net investment in the Car Rental and Vehicle Glass segments (100% = EUR 235.5 million). 4. At constant perimeter, i.e. excluding the net impact of the additional interest acquired in Belron.

Automobile Distribution & Corporate

● Less than 1 year ● Between 1 and 5 years ● More than 5 years

Car Rental

Vehicle Glass

The world has rarely had to face a financial and economic crisis as severe as the one we have just experienced. It spared no one. Particularly hard hit were those who were unable to transform it into an opportunity. To get off to a new start. This is why Belron can be proud of achieving exceptional organic sales growth, why D'Ieteren Auto's result is above expectations, and why Avis Europe succeeds in keeping earnings stable. We assumed the world would not stop turning. But that it would turn differently.

THE GROUP

ANNUAL REPORT 2009 | THE GROUP | 1

ANNUAL REPORT 2009 | MESSAGE TO SHAREHOLDERS

2009. Resilience and agility. 2009 confirmed what 2008 had announced: an economic and financial crisis of unprecedented violence and worldwide proportions. In this very hostile environment, the report we present to you today can only fill us with pride: we exceeded expectations for the year and are able to announce an increased consolidated current result before tax, group’s share, compared to 2008. This result was made possible by the agility demonstrated by the teams in our three activities, who addressed the crisis with a readiness to discard old ways of doing things and strike out on new paths. We congratulate them warmly. The Belron teams posted a remarkable performance, maintaining strong organic sales growth in a stagnant market, while continuing their geographic expansion, culminating in their entry into the Asian continent. In a car rental market that turned out more depressed than expected, the Avis Europe teams resisted admirably, maintaining earnings levels through strategic positioning and strict implementation of the recovery plan initiated in anticipation of the recession. The D'Ieteren Auto teams, too, faced new challenges, including an unprecedented lack of visibility as to the direction of the automobile market and starting the year with a very high stock of vehicles. Thanks to their responsiveness and their adaptability, they nevertheless finished the year with a much better result than expected. D'Ieteren also recently acquired an additional 16.35% stake in Belron, following the exercise by Cobepa of its put options on shares in the company. D'Ieteren’s shareholding in Belron now stands at 93.7%. The Group ended 2009 with a consolidated current result before tax, group’s share, up 11.7% to EUR 214.2 million.

In Automobile Distribution, D'Ieteren Auto began 2009 in a climate of great uncertainty as to volumes. Far from precise, market forecasts were pointing to a 10 to 20 % drop in registrations. Stocks were high and running them down looked a daunting task. And, last by not least, arranging financing for dealer activities had become more difficult. Substantive measures were immediately introduced, including stringent cost controls, promotional activities to slim inventory, and strict management of receivables. These initiatives have borne fruit. Working capital need has been significantly reduced. Market share, in turn, fell only slightly in a market which declined less than forecast. Most makes made gains, with the exception of Volkswagen, whose range suffered in the first half from a lack of cars with more ecological engines and from the priority given by the Volkswagen group to the German market to take advantage of the scrapping bonus. Moreover, despite the liquidity crisis, our teams managed to renew the necessary operational funding, especially the securitization of the D'Ieteren Lease fleet. None of this prevented D'Ieteren Auto from pursuing its many initiatives to better satisfy and retain customers and to reinvigorate the business, including upgrading its customer relationship management system and reshaping its parts and accessories warehouse. The market in 2010 should remain relatively stable compared to 2009. Based on the lessons learned from this crisis year, D'Ieteren Auto will continue to work to increase its market share with new models and with a range of products and services that are constantly reviewed in the light of customer expectations for product quality and environmental performance. In Vehicle Glass, Belron achieved a remarkable feat by maintaining strong organic sales growth in a slack market for vehicle glass repair and replacement. While benefiting from the favourable weather at the beginning and end of the year, Belron also took advantage of lower advertising rates following the crisis to increase its marketing activities.

This strategy has enabled it to increase its overall market share. It also continued its efforts in the area of customer satisfaction. It rolled out globally a new customer satisfaction measuring system and improved its logistics organization in the United States, where it opened a new distribution centre in California. The first prize in the ‘European Supply Chain Excellence Awards’ won by its logistics team reflects its outstanding work in this area. This year, Belron reached another major milestone in its geographic expansion by opening a service point in China – marking its entry into the Asian market – where it plans to seize new growth opportunities. During the first half, the company also signed franchise agreements in Chile, Finland and Lithuania, bringing to thirty-two the number of countries where it is now present. Finally, the acquisition in September of Iowa-based IGD Industries has further expanded its presence in the United States. In 2010, Belron should continue its internal and external sales growth, while pursuing its efforts to improve its service to customers, insurance companies and fleet managers, and increase operational efficiency. In Car Rental, Avis Europe faced a market downturn that proved more severe than expected. The teams reacted quickly with an ambitious cost reduction plan and by rigorous fleet management, to the extent of improving the utilization rate by some four points. With these effective initiatives, they managed to almost completely offset the decline in turnover and reduce debt dramatically. These achievements demonstrate the effectiveness of both the plan put in place in anticipation of the recession and of the earlier investment in revenue management. Avis Europe ended the year by keeping its promise: to deliver a result equivalent to 2008. In this unfavourable context, the Avis Europe teams remained commercially active. In particular, they continued their efforts in the area of customer service, winning several awards during the year.

A new partnership was also concluded with British Airways and development of the OKIGO car-sharing scheme in Paris continued. In 2010, with forecasts still uncertain, Avis Europe expects to continue its crisis management plan. The year just ended also marks the end of a decade. A decade that has brought its share of unexpected events and of developments that loomed up on the horizon with no clear idea of timing: in particular a financial and economic crisis of extraordinary dimensions, a global and increasingly competitive society and the awareness that our Earth is fragile. We have not given way to either fear or resignation. We have traversed this decade of anxiety with confidence and success, holding our ground in 2009, a year that proved very difficult for many of us. If it is certain that things turn out more and more rarely as expected, the new year and new decade will undoubtedly offer further opportunities to demonstrate our agility. All our employees, individually and in teams, are committed on a daily basis, with enthusiasm, energy and expertise, to satisfying our customers and to the sustainability of our business. Our future depends on them and we are very grateful for their commitment, year after year. We would equally thank our customers, our shareholders and our partners for their trust and loyalty which, this year again, have enabled us to brave the storm calmly and with confidence.

Jean-Pierre Bizet Managing Director

Roland D’Ieteren Chairman

MESSAGE TO SHAREHOLDERS

ANNUAL REPORT 2009 | MESSAGE TO SHAREHOLDERS | 3

ANNUAL REPORT 2009 | GROUP ACTIVITIES

One goal: leadership. Automobile Distribution > 9 WELLKNOWN CAR MAKES. > AROUND 100,000 NEW VEHICLE DELIVERED.

Car Rental > OVER 3,800 LOCATIONS IN EUROPE, AFRICA, THE MIDDLE EAST AND ASIA. > SERVING AROUND 8 MILLION CUSTOMERS.

Vehicle Glass > THE WORLD LEADER IN VEHICLE GLASS REPAIR AND REPLACEMENT.

OUR ROLE > Importation and distribution of Volkswagen, Audi, Seat, Škoda, Bentley, Lamborghini, Bugatti and Porsche vehicles in Belgium; > Management of 5 distribution networks with more than 300 independent dealers throughout Belgium; > Management of 16 corporatelyowned D’Ieteren Car Centers, of which 4 Porsche Centers, mainly in the Brussels and Antwerp regions; > Long-term car rental and ﬁnance

leases through D’Ieteren Lease and D’Ieteren Vehicle Trading; > Used car sales through two “My Way” centres in the Brussels region and around 90 dealers aﬃliated to the “My Way Network”; > Distribution of Yamaha products in Belgium and the Grand Duchy of Luxembourg through D'Ieteren Sport; > Importation and distribution of spare parts and accessories to all dealers.

OUR STRENGTHS > A more than 60-year relationship with the Volkswagen group; > In-depth knowledge of the Belgian automobile market, enabling to tailor product and service oﬀerings to customer wishes; > A proven network organization that is both ﬂexible and close to the customer; > Logistics, IT and marketing experience; > A 19.34% share of the new car market in 2009; > Around one million cars of our makes on Belgian roads.

OUR ROLE > A leading mobility provider supplying short-term car rental services through: • two leading global brands: Avis and Budget in close cooperation with Avis Budget Group Inc., which owns the global rights to both brands; • a network of over 3,800 locations, corporately-owned or licensed, in more than 100 countries in Europe, Africa, the Middle East and Asia;

> A leading car rental company adopting the “We Try Harder.” ethos in every business relationship with customers, employees, shareholders, suppliers, licensees, partnerships and society as a whole.

> Strong travel-related partnerships with airlines, rail, credit card and hotel companies; > Award-winning customer service, diﬀerentiating the brands; > Diversiﬁed customer base and sales channels; balanced geographic spread.

OUR ROLE > World n°1 in vehicle glass repair and replacement (VGRR), with 1,800 branches and 8,500 mobile vans, serving more than 10 million customers in 32 countries across 5 continents; > A 24 hour, 7 days a week repair and replacement service, mobile or at its branches, generating high customer satisfaction; > A unique business model delivering our insurance partners signiﬁcant savings in the cost of their glass claims.

OUR STRENGTHS > A clear dedication to, and focus on, vehicle glass repair and replacement; > A network of corporately-owned and franchised businesses across Europe, North and South America, Australasia and China; > A portfolio of business units operating in markets at diﬀerent stages of maturity, enabling both proﬁtability and growth opportunities; > The best known brands in the industry: CARGLASS® across continental Europe, in Brazil and in China, AUTOGLASS® in the UK,

OUR STRENGTHS > Two strong globally recognised brands − Avis and Budget; > Leading market positions; > An extensive worldwide network with representation at key airport and train station locations;

O’BRIEN® in Australia, SMITH & SMITH® in New Zealand, LEBEAU VITRES D’AUTOS®, SPEEDY GLASS®, DURO VITRES D’AUTOS® and APPLE AUTO GLASS® in Canada, and SAFELITE® AUTO GLASS, ELITE AUTO GLASS™, AUTO GLASS SPECIALISTS®, DIAMOND TRIUMPH GLASS™ and AUTO GLASS CENTER™ in the US; > Highly eﬃcient operations achieved by the sharing of best practices across the group; > Numerous long-term partnerships with leading insurers and ﬂeet partners.

D’Ieteren’s activities are – or have the potential to become – market leaders. With very diﬀerent geographic footprints, they oﬀer attractive growth opportunities, either organically or through acquisition.

D’Ieteren Auto

Avis Europe plc

KEY FIGURES (EUR million) 2009

2008

2007

2006

2005

2004

New vehicles delivered (in units)

99,241

119,967

120,774

112,944

103,239

99,587

External sales

2,453.8

2,679.4

2,642.4

2,491.4

2,227.2

2,088.6

Current operating result1, 2

65.8

88.5

98.7

81.9

56.1

64.1

Current result, group’s share before tax1, 2 after tax1, 2

42.9 41.9

60.6 59.3

74.7 65.2

59.5 57.0

36.1 35.2

48.7 39.3

Average workforce (average full time equivalents)

1,565

1,650

1,601

1,571

1,505

1,493

KEY FIGURES (EUR million)

IFRS 2009

2008

2007

20065

2005

2004

1,392.7

1,665.7

1,324.7

1,255.0

1,276.4

1,252.8

103.4

112.7

106.5

89.8

100.4

114.2

Current result, group’s share before tax1, 4 after tax1

20.9 14.8

22.5 13.0

22.0 17.7

17.8 14.6

22.7 16.6

31.1 23.3

Average workforce (average full time equivalents)

5,319

5,967

6,122

6,276

6,253

6,166

External sales4, 6 Current operating result1, 4

Belron s.a.

IFRS

KEY FIGURES (EUR million)

IFRS 2009

2008

2007

2006

2005

2004

10,7

9.4

8.4

6.1

5.3

4.9

2,423.2

2,156.1

2,000.0

1,507.3

1,253.7

1,118.4

Current operating result1, 3

215.5

173.9

156.5

119.9

99.2

96.1

Current result, group’s share before tax1 after tax1

150.4 126.1

108.6 86.7

97.6 83.4

72.0 62.7

59.8 45.8

44.2 31.4

Average workforce (average full time equivalents)

22,399

20,833

18,281

12,731

10,932

9,794

Total jobs (in million units) External sales

1. Before unusual items and re-measurements. 2. The Automobile Distribution segment includes all costs related to the corporate activities, including (concerning current result), ﬁnance costs resulting from the investment in the Car Rental and Vehicle Glass segments. 3. Including, from 2005 on, a charge associated with the long-term incentive plan for management.

4. Excluding in 2006 and 2007 the discontinued operation in Greece (application of IFRS 5). 5. As restated in 2006 following the malpractice identiﬁed in Portugal. 6. Following the amendment to IAS 16 (see note 2.1. of the Consolidated Financial Statements in this annual report), external sales include from 2008 onwards the disposal proceeds of non-repurchase vehicles.

GROUP ACTIVITIES

ANNUAL REPORT 2009 | GROUP ACTIVITIES | 5

ANNUAL REPORT 2009 | Dâ&#x20AC;&#x2122;IETEREN AUTO

D'Ieteren Auto. By questioning ourselves, we beat our targets.

“With 2009 now behind us, the only possible assessment is: mission accomplished ! When the future looked more uncertain than ever, we refused to be victims of the crisis, seeing it on the contrary as a learning opportunity. We now know that we can reduce our inventory without losing sales, that we can reduce our overheads without social consequences, that the crisis can be an opportunity to challenge existing habits and processes, etc. Our agility and our tenacity in the face of the challenges that 2009 imposed on us enabled us to beat our targets and to finish the year on a decidedly upbeat note.” Thierry van Kan, CEO D'Ieteren Auto.

D’IETEREN AUTO

ANNUAL REPORT 2009 | D’IETEREN AUTO | 7

ANNUAL REPORT 2009 | D’IETEREN AUTO

Eﬀective inventory management. At the end of 2008 the economic and ﬁnancial crisis struck the entire world. Very quickly, market forecasts for 2009 were lowered, including the automobile market in Belgium. Given this expected decline in demand, D'Ieteren Auto recognized that it was essential to reduce its vehicles inventories to keep them at a reasonable level. A corresponding operation was launched as early as November 2008 ... PHILIPPE PETIT:

“Around this time we observed an uncertainty of unprecedented magnitude hanging over the automobile market. We preferred to prepare for the worst case scenario, that is a market of 420,000 new car registrations. On this basis we launched a series of actions to significantly reduce our stock. Special initiatives directed at our dealers and our customers included registration bonuses, fuel cards on the purchase of a vehicle or offering attractive financing terms in cooperation with the Volkswagen Bank. These initiatives were supported by increased publicity. All these actions enabled us to weather the crisis without breaking prices, while reducing our inventory by 34% in 5 months, a result beyond our expectations ! ”

Philippe Petit, Makes General Director.

D’IETEREN AUTO

ANNUAL REPORT 2009 | D’IETEREN AUTO | 9

10 |

ANNUAL REPORT 2009 | D’IETEREN AUTO

Key figures. Belgian market decrease by 11.1% to 476,194 new car registrations. | D'Ieteren share of registrations down slightly to 19.34%; significant gain by Audi; Volkswagen’s share decrease due to delayed launch of models with lightly taxed engines, shortage of Polos as a result of the priority given to the German market by the VW group, and the containment of sales to rental companies. | Sales down by 8.4% intensified by the reduction in dealer inventories. | Good resilience of current operating result at EUR 65.8 million, down 25.6%, the impact of the decline in new vehicle sales being partially offset by cost reductions. | Current result before tax, group’s share, down 29.2% to EUR 42.9 million (down 23.6% excluding the financial charge related to the additional interest acquired in Belron).

FINANCIAL HIGHLIGHTS EUR million

2009

2008

CHANGE

New vehicles delivered (in units)

99,241

119,967

-17.3%

External sales

2,453.8

2,679.4

-8.4%

Current operating result

65.8

88.5

-25.6%

Current operating margin

2.7%

3.3%

–

Current net ﬁnance costs

-23.1

-27.9

17.2%

Current result before tax

42.7

60.6

-29.5%

Current result before tax, group’s share

42.9

60.6

-29.2%

0.6

2.4

–

Unusual items and re-measurements, before tax

SALES BREAKDOWN BY ACTIVITY 2% 5%

80%

19.34

19.76

19.97

19.43

19.01

18.11

17.76

18.02

Registrations (in thousands) 550

19.82

MARKET OF NEW CARS AND MARKET SHARE OF D’IETEREN AUTO

6% 5%

19.61

Market share (%) 20

500 450 15

400

● D’Ieteren Lease

2.7%

● D’Ieteren Sport

-14.6%

D’IETEREN AUTO

8.4%

150

100 50 0

476

0.4%

536

● D’Ieteren Car Centers (after-sales)

200

525

5.6%

526

● Spare parts and accessories

250

480

2.6%

485

● Used vehicles

300

459

-10.8%

468

● New vehicles

350

489

CHANGE

515

SALES EVOLUTION BY ACTIVITY

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

● Market share (%)

● Market (in thousands)

ANNUAL REPORT 2009 | D’IETEREN AUTO | 11

JANUARY. | 01 | Participation in the Brussels Utility and Recreational Vehicles and Motorcycles Show, featuring in particular the new Audi Q5 and the e-Solex. | 02 | 03 | Opening of two Contact Centers for Seat and Škoda at Kortenberg. These allow customers to try the entire range, making them an important sales promotion tool. | Introduction of the Seat EXEO, the first saloon of the make. MAY. | 04 | D’Ieteren Auto completes the restructuring of its parts and accessories store (see page 13). JUNE. | D'Ieteren Lease finalizes the renewal of the securitization of its fleet and its lease contracts, giving it the necessary financial resources for further development. JULY. | 05 | D’Ieteren Sport becomes the representative for Dainese brand motorcycle products in Belgium and the Grand Duchy of Luxembourg. | Audi celebrates its centenary. SEPTEMBER. | Porsche makes its entry in the Sport saloon segment with the Panamera. | 06 | Introduction of the fifth generation VW Polo, followed a month later by a first BlueMotion version, with average CO2 emissions of just 96g/km. An even more environmentally friendly version, emitting just 87g of CO2/km, will be released in 2010. OCTOBER. | 07 | Launch of the new Transporter utility vehicle with even more economical and ecological engines. DECEMBER. | The VW New Polo is voted ‘Car of the Year 2010’. | Audi and Škoda market shares reach record levels for the full year. | D'Ieteren Auto starts building a new Audi Contact Center at Kortenberg. | Launch of the Golf VI BlueMotion. | 08 | D’Ieteren Auto installs a cogeneration plant at its Kortenberg site (see page 14). | 09 | The Škoda Yeti, the first SUV of the make, is voted ‘4x4 of the Year 2010’ in the SUV category. JANUARY 2010. | 10 | D'Ieteren takes part in the 88th European Motor Show Brussels, spotlighting the BlueMotion range and the new Audi A8 in a European premier.

D’IETEREN AUTO

Key events 2009.

12 |

ANNUAL REPORT 2009 | D’IETEREN AUTO

Resilience in a hostile environment. Current result before tax, group's share: EUR 42.9 million, down 29.2%*. Impact of declining new car market and lack of availability of smaller models in ﬁrst half of the year mitigated by cost reductions and tight management of capital employed. Activities and results With the improving trend in the second half, D'Ieteren Auto sales reached EUR 2,453.8 million in 2009, down 8.4% compared with 2008. NEW VEHICLES New car registrations in Belgium in 2009 ended up at 476,194 units, down, less than expected, by 11.1% on 2008 (Car Show year). After rising on the back of destocking actions by dealers at the start of the year, the cumulative market share of the makes distributed by D'Ieteren Auto reached 19.34% at the end of December 2009, slightly down from 19.76% for the year 2008. This is explained mainly by the lower Volkswagen market share, partially oﬀset by gains at Audi and Škoda. The containment of sales to rental companies, the delayed launch of models with lightly taxed engines and the supply shortage of Polos as a result of the priority given by the VW group to the German market impacted Volkswagen’s market share, which picked up again with the arrival of these new models in August. Despite much more intense competition in the second half, Audi achieved a record market share, as did Škoda, helped by the success of the new Škoda Superb launched this year. Seat’s market share declined slightly. The light commercial vehicle market amounted to 51,901 new registrations in 2009, down 20.5%. D'Ieteren Auto achieved a market share of 9.17% for the

year 2009 (9.00% for the year 2008) thanks to its successful promotional activities, especially relating to the Caddy. Total new vehicles, including commercial vehicles, delivered by D'Ieteren Auto in 2009, was 99,241 units, down 17.3% due to the falling market and market share and the reduction of dealer inventories at the start of the year. Thanks to the improved sales mix, new vehicle sales declined only 10.8% to EUR 1,929.7 million. OTHER ACTIVITIES Used vehicle sales were up 2.6% at EUR 117.0 million, thanks to the successful destocking actions at the start of the year, in a more active but still difficult market. Sales of spare parts and accessories rose by 5.6% to EUR 149.4 million. After-sales activities by the D'Ieteren Car Centers rose by 0.4% to EUR 51.6 million. Sales by D’Ieteren Lease, active in longterm car rental of D'Ieteren Auto brands, amounted to EUR 143.2 million, up 2.7%. At 31 December 2009, its fleet amounted to over 21,500 units, down 8% compared with 2008 due to the decision to reduce the in-house fleet (replacement and promotional vehicles) given the difficult used car market. Sales by D'Ieteren Sport, mainly Yamaha motorbikes, quads and scooters, declined by 14.6% to EUR 40.2 million in a market that was down 8.6%. Yamaha’s market share finished at 12.92% (13.62% for the year 2008).

* Down 23.6% excluding the ﬁnancial charge related to the additional interest acquired in Belron.

RESULTS Current operating result was EUR 65.8 million (2008: EUR 88.5 million). This decrease reflects mainly the decline in new vehicle sales, partially offset by cost reductions. Total net finance costs amounted to EUR 21.7 million (2008: EUR 25.5 million). Excluding the re-measurement of financial instruments at fair value (primarily interest rate swaps), current net finance costs totalled EUR 23.1 million (2008: EUR 27.9 million), the decrease being due mainly to lower average net debt following the improvement in working capital. Excluding the financial charge related to the acquisition of the Belron shares, current net finance costs amounted to EUR 19.7 million. Current result before tax, group’s share, amounted to EUR 42.9 million (2008: EUR 60.6 million).

Key developments In this year’s climate of uncertainty, D'Ieteren Auto took major steps to come out of the crisis in top ﬁtness. The attention was mainly focused on reducing working capital needs, in particular by promotional activities to run down inventory levels with a minimal impact on prices and by rigorous management of accounts receivable. Marketing costs and overheads were pared down, with no

significant consequences on employment, and the necessary funding arrangements were renewed, especially the securitization of the D'Ieteren Lease fleet. From an operational viewpoint, D'Ieteren Auto maintained its efforts to enhance customer satisfaction and loyalty and to revitalize its activity in anticipation of a recovery in consumer spending. The introduction into the network of the new management system for dealers and of ‘Customer Relationship Management’, which formalizes the sales and customer relations monitoring processes, continued. The ‘My Way Authorized Distributor’ network was further expanded, with 92 dealers now affiliated. D'Ieteren Auto completed the renovation of its parts and accessories warehouse. This project was initiated in 2008 to improve aftersales service by further cutting order preparation times.

Outlook 2010 As announced by Febiac, the Belgian car market should remain stable or improve slightly in 2010. In this context, D'Ieteren Auto is pursuing its objective of continuous market share improvement. Models to be introduced or renewed in 2010 include the Volkswagen Touareg and Sharan, the Cross versions of the Volkswagen Polo and Golf, the Audi A1, the Seat Leon Ecomotive, the Volkswagen Amarok as well as the Porsche Boxster Spyder and Cayenne.

Logistics. This year, D'Ieteren Auto completed the renovation of its parts and accessories store at Kortenberg. The project was initiated in 2008 to improve after-sales service by further cutting order preparation times. > 34,000 m² of warehousing on two sites > 85,000 references permanently in stock > 108 employees > 13,000 order lines a day D'Ieteren is one of the few independent importers of the Volkswagen group makes operating on a national territory. This includes parts and accessories logistics, contrary to the current European trend of centralization of stocks. This allows D'Ieteren to combine proximity, ﬂexibility and speed in its customer service.

Today, every area of the warehouse operates more independently and eﬀectively. The distributing of work across six sorting islands and the scanning of parts enable to handle orders from a greater number of clients simultaneously. The gain in time, eﬃciency and quality of service is considerable.

The Kortenberg parts and accessories warehouse plays an essential logistics role, with D’Ieteren’s entire car after-sales service depending mainly on its good functioning. The smallest missing piece can keep a vehicle oﬀ the road, and there are hundreds of thousands of diﬀerent parts on the vehicles distributed by D'Ieteren.

“Eﬃcient logistics is a major advantage, allowing us to continuously improve customer satisfaction.” | Ronald Van Genechten, Logistics Director.

Organized into three types of orders and with a permanent stock of some 85,000 references, updated on a daily basis, the warehouse is able to serve the entire network in just a few hours. Nevertheless to further improve this performance and be better equipped for the future, D'Ieteren decided to invest in modernizing its logistics unit, with improved customer service always as the primary goal. Launched in October 2008, this major renovation and modernization project was completed in just seven months, with no interruption of business.

“At the last Volkswagen European logistics congress, we received conﬁrmation that our quality of delivery was among the best in Europe. The new organization should enable us to further improve this score.” | Pol Van Wesembeeck, Logistics Manager.

D’IETEREN AUTO

ANNUAL REPORT 2009 | D’IETEREN AUTO | 13

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ANNUAL REPORT 2009 | D’IETEREN AUTO

The environment, a sustainable topic. guaranteed of 100% renewable origin. In the field of alternative energies, photovoltaic panels have been fitted on the roof of the Audi Center site at Zaventem in 2008. These produced 340 MWh in 2009, equal to a quarter of total consumption at the site. At Kortenberg, a cogeneration plant and two new gas boilers were installed this year, saving more than one million kWh per year. An identical plant has been installed at the Mail site in 2008, covering about 20% of its annual electricity consumption. Rational energy use involves new operating techniques and one-off initiatives to reduce energy consumption in the buildings. The latter include installing dawn/dusk switches, time switches and zoned heating and lighting. A more economical and environmentally friendly computer cooling system has also been introduced. In 2009 this energy control policy produced a 11% reduction in electricity consumption (or 1,730 MWh) and a 2% reduction in heating consumption (or 363 MWh taking degree days into account) compared with last year. Since 2006, electricity consumption has decreased by 20% and heating consumption by 15%.

Corporate Social Responsibility.

* Evolution of the average CO2 emissions of the registered vehicles of the main makes distributed by D'Ieteren Auto (representing 99% of the total registrations of these makes for the years under review). The registered vehicles for which the average CO2 emissions are unknown yet have not been taken into account, but their proportion in the total registrations is not material.

OUR PRODUCTS

OUR ENVIRONMENT

D’Ieteren Auto sells increasingly environmentally-friendly vehicles. Fuel consumption and CO2 emissions have been greatly reduced, in particular by optimizing existing diesel (TDI) and petrol (TSI) engines (see chart on opposite).

For the past several years, D’Ieteren Auto has had a three-pronged energy control program focused on: > energy purchase and energy consumption monitoring; > integration of alternative energies; > rational energy use.

In 2007, Volkswagen launched the BlueMotion program across its range to stimulate respect of the environment and reduce fuel consumption. This concept has since become one of the best-known synonyms for sustainable mobility in Europe. Today, three Volkswagen models carry the BlueMotion label: Polo, Golf and Passat, for which fuel consumption and CO2 emissions have been even further reduced (down to 87g/km for the Polo). These models and all the BlueMotion technologies have been gathered under the generic term ‘BlueMotion Technologies’. Seat, in turn, has expanded its Ecomotive family to embrace no less than ﬁve diﬀerent models, of which both the Ibiza and the Leon emit less than 100 grams of CO2 per kilometre. Audi and Škoda have also developed their range of ecological models.

This year D'Ieteren again continued staﬀ mobility initiatives, notably in order to reduce CO2 emissions from vehicles made available to employees, by organizing ecological driving courses and by promoting alternative means of transport. At client level, some D'Ieteren Car Centers

Since 1 March 2008, all the electrical energy the Company consumes is purchased from the Bassin du Rhône hydroelectric generating stations (AlpEnergie project). This energy is

EVOLUTION OF AVERAGE CO2 EMISSIONS* Average CO2 emissions

170

Q Audi Q VW Q Seat Q Škoda

160 150 140 130 120 110 100 0 Source : JATO

2007

2008

2009

ANNUAL REPORT 2009 | D’IETEREN AUTO | 15

Born from the combination of the words Economy and Ecology, this little Eskimo named Ecogymy, who sees his ice pack disappear under the inﬂuence of global warming, now accompanies all environment related communication initiatives.

now oﬀer courtesy bikes and scooters in addition to replacement vehicles whilst a car is under repair. To further combat unnecessary miles and pollution, the Company has also installed business corners in its dealerships, that is fully equipped waiting areas where customers can stay whilst their car is being serviced, without losing their time in traﬃc and while remaining professionally active.

In 2009, D'Ieteren Auto decided to support the ‘nouvelArbre’ association, founded via the King Baudouin Foundation, and more specifically its rural development programme in Burkina Faso, consisting of selective reforestation (this year, 100 hectares have already been protected and restored) and the production of bio-fuels. An application for United Nations certification of this project is being introduced with the help of CO2Logic. D'Ieteren’s longer-term objective here is to neutralize its CO2 footprint through the certificates obtained. OUR COMMUNITIES

At the operational level, D’Ieteren Auto is working actively with Febiac, in the context of Febelauto, to recycle endof-life cars. 89% by weight of materials from recycled cars are reused in this way. At dealer outlets D’Ieteren Auto is also promoting selective waste sorting and collection, the safe storage of hazardous products and the use of water-based paints in car body repair shops. As it does every year, D’Ieteren Auto provided signiﬁcant support to various

In the social field, D'Ieteren has supported Médecins du Monde, the RED non-profit association for promoting road safety (especially among young drivers), and the Dream initiative, which organizes meetings between secondary school leavers and professionals. This year, D'Ieteren hosted five classes from four different schools. Via its Volkswagen division, it supported the CAP48 fundraising campaigns organized by the RTBF for handicapped persons’ associations, along with Child Focus – the European Centre for Missing and Sexually Exploited

Children. The Škoda division supported the Belgian Red Cross and the Rode Kruis-Vlaanderen by donating vehicles

D’IETEREN AUTO

Ecogymy

organizations. In partnership with the Royal Automobile Club of Belgium, it complemented its responsible driving courses for young drivers with economical driving courses for companies wishing to reduce fuel consumption by their car ﬂeets. The Company has also committed to the Climate Education Program – an initiative by its partner CO2Logic – to help sensitize schoolchildren to the environment. Two associations, GREEN and WaterWeerWind, have been mandated to send trainers into Frenchand Dutch-speaking schools respectively. The D’Ieteren Sport division also invested in the ecological cause this year by supporting the Eco Challenge Campus. Five schools from Wallonia, gathered at the Spa-Francorchamps Automobile Campus, were given the task of modifying MBK scooters (lent by D'Ieteren Sport) to run on bioethanol. The aim was then to ride the scooters as long as possible on the same quantity of bio-fuel.

and providing financial support during the Red Cross Fortnight. In addition, collection boxes were placed at all Škoda dealers, with Škoda matching euro for euro the amount collected. The Porsche division, meanwhile, turned to children this year, making five cars available to the Make-A-Wish association, which makes the dreams of seriously ill children come true. The Audi division provided financial support to two associations, ‘La Fontaine’, a reception and healthcare service for the homeless, and ‘Smiles’, a medical care for children infected with the HIV virus. Finally, D'Ieteren Lease continued its partnership with Special Olympics Belgium, that every year organizes sports competitions for mentally handicapped persons, making vehicles available for transporting athletes.

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ANNUAL REPORT 2009 | D’IETEREN AUTO

2009-2010 Key models.

Volkswagen New Polo BlueMotion. With an average consumption of only 3.3 l/100 km the new Polo BlueMotion is the most economical five-seater in the world. Compared to a conventional Polo TDi the CO2 emission is reduced by 20% and fuel consumption by 0.9 l/100 km, thanks to the BlueMotion Technologies and the use of a newly developed high technology TDi engine. So now, once again it is possible to drive to work or go off on holiday at a reasonable price. You could soon forget how to fill up the tank, as the 45 litre tank capacity makes a considerable driving range possible.

Audi A1. Audi is ready to give a new dimension to the category of compact Premium cars in 2010. The Audi A1 stands for dynamism, exceptional quality and innovative individualization which will certainly evoke emotions. This “New Big Audi” concentrates all the assets of the four rings' brand in less than four meters : expressive design, quality without compromise, an infotainment system that sets new criteria within the segment and a level of personalization with no precedent. This precious jewel of “Vorsprung durch Technik” also has a Belgian touch, thanks to its exclusive production at the Audi Brussels factory.

Škoda Superb Combi. Škoda expects the Superb Combi, a mid-range family car with exceptional comfort and space, to become THE reference in its segment. Its unique design, with the characteristic Škoda “face”, an expressive rear and a dynamic silhouette, makes the new Superb Combi stand out from its rivals. This car demands respect thanks not only to its practical qualities but also to its stylish and elegant appearance.

Seat Leon Ecomotive. After the ecological and economical success of the Ecomotive Ibiza with 98g/km CO2, it is now the Ecomotive Leon with 99g/km CO2 which comes to the market. This 5-door car with an extraordinary design perfectly represents the different values of the Barcelona brand. The new 1.6 TDi with Common Rail technology confers an unforgettable driving pleasure while being fuel-efficient. This efficiency is also emphasized by the Start/Stop system and the braking energy recovery.

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ANNUAL REPORT 2009 | D’IETEREN AUTO

Bentley Mulsanne. The new Mulsanne is a thoroughly modern ﬂagship that captures the essence of the Bentley make. It is elegant yet distinctly sporting in character, delivering eﬀortless performance while within its sumptuous cabin, advanced technology sits discreetly with handcrafted luxury.

Lamborghini Gallardo LP 570-4 Superleggera. The Lamborghini Gallardo LP 570-4 Superleggera is the new model in the Gallardo line-up. The car boasts a dry weight of no more than 1,340 kilograms, thus its name “Superleggera”. One of the key factors contributing to this light weight is the use of exterior and interior components made from carbon-ﬁber. The Gallardo LP 570-4 Superleggera dashes from 0 to 100 km/h in 3.4 seconds and reaches a top speed of 325 km/h.

Porsche Boxster Spyder. Making its ﬁrst public appearance at the European Motor Show Brussels, the Boxster Spyder embodies, in one car, all the values conveyed by the Porsche range from the start. Light, powerful, extremely eﬃcient and designed for top-down driving, it declares its direct connection with the make’s most successful sports and racing cars, from the legendary 550 Spyder through to the RS Spyder.

Yamaha X-MAX. Yamaha launches the new X-MAX in 125cc and 250cc versions. The X-MAX is one of the best sold maxi-scooters in Europe, and also in Belgium both versions have a strong market position. The new X-MAX oﬀers a new frame for a more sporty and dynamic ride. Its design is similar to that of the famous TMAX. Next to these changes the suspension oﬀers more comfort, there are bigger luggage compartments and the dashboard has a sporty design. The new X-MAX is ready to seduce riders that seek an ideal vehicle for their mobility.

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ANNUAL REPORT 2009 | D’IETEREN AUTO | 19

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ANNUAL REPORT 2009 | AVIS EUROPE plc

Avis Europe. A fresh look on our business.

“I am pleased to report that Avis Europe delivered a very strong result for 2009 in what was an extremely difficult economic environment, reflecting a resilient volume performance, good increases in rental revenue per day, a stepchange improvement in utilisation and significant cost savings. At the same time the reduction in fleet and strong cash management drove a substantial reduction in net debt of EUR 375 million. Underlying operating margin was ahead by 30 basis points and return on capital employed improved by 140 basis points. These results position Avis Europe strongly for 2010 and beyond.” Pascal Bazin, CEO Avis Europe.

AVIS EUROPE plc

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ANNUAL REPORT 2009 | AVIS EUROPE plc

Fleet management: maximising utilisation. ALEXANDER LOUCOPOULOS:

“One key area of our strategy for 2009 against this very difficult trading environment was to drive a step-change improvement in utilisation*. We needed to optimise the use of our cars to serve our customers in order to maximise our profitability, reduce our capital employed and drive positive cash flow for the group. This is what we achieved in 2009 with a gain of some 4% pts in utilisation. The main drivers behind this significant improvement compared with previous years were structural changes to the way we manage the fleet, supported by its overall size reduction. In particular we improved our forecasting and optimisation of fleet levels using our now fully-developed revenue management system. We reviewed our operational processes to reduce “on-rent” downtime – for example repair, maintenance, preparation and defleeting – and extended holding periods in certain markets, which reduced the amount of time taken to bring cars on and off the fleet.

Alexander Loucopoulos, Fleet Director, France.

Finally the key success factor was the total alignment and commitment across all the corporate countries in the group to reach our target − from senior management down to the stations. ” * The amount of time that a car is “on-rent” and earning rental income.

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ANNUAL REPORT 2009 | AVIS EUROPE plc | 23

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ANNUAL REPORT 2009 | AVIS EUROPE plc

Key figures. Continued volume resilience: like-for-like1 reduction in volumes limited to 8.4%, supported by brand leadership, service differentiation and geographic diversification. | Proactive pricing actions improved reported rental revenue per day by 2.4% in the second half and 0.7% for the full year, despite negative impact of mix. | Rental income2, 3 down 11.6% to EUR 1,159.6 million. | Rigorous cost reduction of EUR 149 million, including step-change improvement in utilisation of 3.9% pts. | Underlying operating margin4 improved from 8.6% to 8.9%. | Current operating result3 down 8.3% to EUR 103.4 million. | Current result before tax, group’s share,3 down 7.1% to EUR 20.9 million. | Strong focus on cash management leading to EUR 375 million reduction in year-end net debt versus 2008.

FINANCIAL HIGHLIGHTS EUR million

2009

2008

CHANGE

1,392.7

1,665.7

-16.4%

103.4

112.7

-8.3%

Current operating margin

8.9%

8.6%

–

Current net ﬁnance costs

-68.3

-75.1

9.1%

Current result before tax

35.1

37.6

-6.6%

Current result before tax, group’s share

20.9

22.5

-7.1%

-44.4

-278.4

–

External sales

Current operating result

Unusual items & re-measurements, before tax

Note: the average shareholding used for consolidation of the result of Avis Europe in 2009 is 59.72% (59.74% in 2008).

GEOGRAPHICAL SALES BREAKDOWN PERFORMANCE INDICATORS

14%

24%

Rentals1

-9.7%

Rental length

16%

Billed days 13%

Rental revenue per day5

16%

CHANGE 1.5% -8.4% 0.7%

17%

GEOGRAPHICAL SALES EVOLUTION

CHANGE1, 5

● France

-7%

● Spain

-17%

● Italy

-9%

● Germany

-4%

● UK

● Other

Insurance/ replacement 11% Corporate 34% Individual 55%

–

1. Like-for-like measures comprise only those corporately-owned and agency rental stations that were in operation throughout all of the current and comparative year. 2. Restated in 2008 following amendment to IAS 16, external sales now include rental income and the disposal proceeds of non-repurchase vehicles (for further details, see note 2.1 of the Consolidated Financial Statements in this annual report). 3. As reported by D’Ieteren. 4. Underlying operating margin is calculated as underlying operating proﬁt divided by rental income. 5. At constant currency.

ANNUAL REPORT 2009 | AVIS EUROPE plc | 25

| 01 | | 02 | LAUNCH OF AVIS FLEX. Avis Flex is a new rental product to satisfy increasing demand for greater flexibility from corporate customers. These customers can now rent a vehicle for more than 30 days. | 03 | ENTRY INTO VIETNAM. Avis became the first leading global car rental company to operate in Vietnam with the opening of a licensee operation in Hanoi. GREATER SYNERGIES BETWEEN THE AVIS AND BUDGET BRANDS. | Optimisation of the synergies between the Avis and Budget corporately-owned operations in Switzerland, Austria, France and the UK, including combining rental facilities and sharing fleet and infrastructure. | 04 | CONCLUSION OF EXCLUSIVE PARTNERSHIP WITH BRITISH AIRWAYS until 2014, under the banner “Be There Sooner”. | 05 | FURTHER EXPANSION IN CHINA. Avis China now operates in 20 cities through 26 rental stations, with plans to increase its presence further in 2010. | 06 | EXPANSION OF OKIGO. During 2009, OKIGO, Avis’ car-sharing initiative undertaken jointly with Vinci Park, extended its offer to new services. It now gathers around 2,500 members. | 07 | FURTHER SUCCESS OF THE “3MINUTE PROMISE”. This year, approximately 75% of all Avis Preferred rentals within Europe took place at one of the 500 3-minute locations in France, Germany, Spain, the UK, Portugal and Switzerland. The service was also extended to the Czech Republic. | 08 | | 09 | AWARDS. Avis Europe won a series of prestigious awards across its network, including ‘Europe’s Leading Business Car Rental Company’ at the World Travel Awards and the Travel Trade Gazette’s ‘Car Hire Company of the Year’. | 10 | INTRODUCTION OF NONCANCELLATION FEE. This fee was introduced in July this year to further improve utilisation. Customers are asked to give advance notification of their intent to cancel a reservation, thereby making the car available for another renter, or pay a fee.

AVIS EUROPE plc

Key events 2009.

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ANNUAL REPORT 2009 | AVIS EUROPE plc

Resisting adversity. Current result before tax, group's share: EUR 20.9 million, down 7.1%. Very strong performance as the strategic positioning and the rigorous execution of the plan for recession mitigated the declining markets. The following extracts are taken from the 2009 Annual report by Avis Europe plc.

Activities and results “Rental income1 was 11.5% lower at EUR 1,162.4 million, reflecting the global recessionary conditions. Revenue from the corporately-owned business segment was 11.5% lower at EUR 1,119.2 million in reported currency and 10.0% lower on a constant currency basis. Overall billed days were 10.3% lower and 8.4% lower on a like-for-like2 basis, excluding the impact of network actions which involved the closing and licensing of over 200 stations. The reduction in billed days primarily reflected a lower number of rentals and was partially offset by an improvement in rental length, which Avis Europe had actively managed through its revenue management function. Reported rental revenue per day was 0.7% higher at constant currency and 1.0% lower on a reported basis. Excluding the effects of car and customer mix and rental length, pricing was ahead by 2.0%, being 1.0% in the first half and 2.8% in the second half. With a very tight control over fleet capacity, Avis Europe continued to increase prices where practicable throughout the year, achieving particularly good gains during the key summer trading period. Revenue from Avis Licensee countries was 7.1% lower on a constant currency basis and 10.1% lower on a reported basis with reductions in most regions reflecting the weaker global economic conditions. Budget Licensee revenue was 3.9% lower excluding foreign exchange effects, reflecting restructuring in the German network during the year. Excluding Germany, underlying revenue was ahead by 1.6% as continued growth of the diverse network offset difficult trading conditions. On a reported basis, revenues were 18.9% lower.

Revenues from the corporately-owned operations were EUR 145.3 million lower at EUR 1,119.2 million, reflecting the challenging economic environment. Underlying operating profit was only EUR 5.5 million lower at EUR 68.1 million, as Avis Europe fully flexed the variable elements of its cost base and made a number of structural reductions in fixed costs. It lowered fleet costs by EUR 67.8 million or 14.5% by strategically reducing fleet capacity in anticipation of lower demand, the closure and licensing of certain rental locations, and by driving significant improvements in utilisation through specific operational initiatives. In addition, overall fleet costs benefited from more stable used car markets in 2009, which were supported by scrappage laws particularly in Germany and the UK. Conversely, in the prior year, fleet costs were impacted by particularly weak used car markets in Spain and the UK. Staff costs were EUR 22.1 million or 7.8% lower reflecting: the full year effect of 2008 redundancies; a 5% reduction in group headquarter staff; further restructuring actions particularly in Germany and Spain; and optimisation of synergies between Avis and Budget corporatelyowned operations. This was further reinforced by an extended recruitment freeze. Underlying operating margin3 on continuing operations was 8.9%, being 0.3% pts higher and reflecting the benefits of the significant cost reductions to mitigate lower revenues outlined above. Underlying net finance costs were 9.1% lower at EUR 68.3 million. As Avis Europe maintains a fixed level of committed liquidity facilities, the benefit of significantly lower average net debt was partially offset by the resulting higher average gross cash deposits being held throughout most of the year. The group 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: 6.2%), and before the effect of gross cash balances was 6.7%. Net exceptional charges before taxation of EUR 29.5 million were incurred in the year. Restructuring costs of EUR 14.0 million were recognised, reflecting the rationalisation of the operations which commenced in the prior year. Actions included 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 year, restructuring costs of EUR 27.6 million included EUR 1.9 million incurred in respect of a redundancy programme that commenced in December 2007. During the year, Avis Europe took the decision to combine the corporately-owned operations of Budget with the respective Avis businesses. Restructuring costs of EUR 7.8 million were recognised including redundancies, the rationalisation of certain rental stations to reflect synergies with Avis, and vacant property provisions. During the year, it developed and prepared a structure for a potential securitisation of the fleet. Advisory, legal and other costs were incurred in the development of corporate and operational structures.

Operational review Avis Europe’s strategic positioning and the rigorous execution of its plan for recession mitigated weaker market conditions, enabling it to deliver a very strong performance in 2009. In response to lower volumes in the year, reflecting the global recessionary conditions, Avis Europe took early and substantial actions to protect its profitability, improving pricing, significantly reducing costs and achieving a step-change improvement in utilisation. Resilient volume performance The geographic and customer diversification, as well as the brand leadership and service differentiation, helped to support volumes in the face of exceptionally weak demand. This resulted in volumes being only 8.4% lower on a like-for-like2 basis. Second consecutive year of improved pricing During the year Avis Europe placed a daily

1. Restated in 2008 following amendment to IAS 16, i.e. external sales now include rental income and the disposal proceeds of non-repurchase vehicles (for further details, see note 2.1 of the Consolidated Financial Statements in this annual report). | 2. Like-for-like measures comprise only those corporately-owned and agency rental stations that were in operation throughout all of the current and comparative year. | 3. Underlying operating margin is calculated as underlying operating proﬁt divided by rental income.

operational focus on achieving further pricing gains to mitigate lower volumes. In particular it kept a very tight control over fleet capacity, reducing its fleet more than the fall in volumes, to enable to increase prices where practicable. For the year as a whole, Avis Europe achieved a 0.7% improvement in rental revenue per day at constant currency. Rigorous cost reduction and stepchange improvement in utilisation Avis Europe took substantial and early actions to reduce costs to mitigate the impact of recessionary conditions on its profitability. Throughout the year, it managed its fleet levels very proactively and on a conservative basis, allowing to reduce capacity beyond the fall in volumes in the very uncertain trading environment. Together with operational efficiencies, the introduction of a non-cancellation fee and the extension of some holding periods, this resulted in a significant improvement in utilisation of 3.9% pts.

Outlook 2010 In summary, these actions and results position Avis Europe very strongly in anticipation of any volume recovery in its traditional core businesses in 2010 and beyond. In the short term, given the continuing uncertain trading environment and consequent limited visibility in the markets, Avis Europe will maintain its present prudent approach for the current year. It anticipates a slightly positive volume performance for the year and is working towards a further improvement in pricing. Avis Europe will still keep fleet capacity tight and continue its ongoing focus on driving greater efficiency to mitigate cost inflation. The interest charge, excluding any additional cost of a refinancing that is likely to be undertaken later in the year, is expected to benefit from lower rates as existing hedging matures. Avis Europe has ensured that it has sufficient liquidity for the next 12 months, will retain its tight control of capital to maintain debt at broadly the level of 2009 and, from the actions outlined above, is well positioned to continue to make good progress in 2010.” End of extracts.

Brand Leadership and Service Differentiation. In 2009, Avis Europe was internationally recognised for outstanding customer service in a series of prestigious awards including ‘Europe’s Leading Business Car Rental Company’ at the World Travel Awards and the Travel Trade Gazette’s ‘Car Hire Company of the Year’. The company was awarded these top accolades thanks to its outstanding global service. Avis Europe always strives to improve the customers’ travel experience. Being recognised by the most prestigious awards across the board is a reflection of the premium car rental service that it offers. Avis services are designed in response to customers’ demands for speed and transparency and include a complimentary priority service – Avis Preferred – which promises to deliver customers their keys in under three minutes. The “3-minute promise” is now available at over 500 locations across the network.

In addition, customers benefit from a “Rapid Return” service that enables the return of a rental car in just 60 seconds. “We are thrilled that Avis has been recognised by the most prestigious awards across the board. They are a reflection of the premium car rental service that we strive to offer all of our customers and we are very proud of the success that the company has achieved both here in Europe and internationally.” | Wolfgang Neumann, Group Commercial Director for Avis Europe.

AVIS EUROPE plc

ANNUAL REPORT 2009 | AVIS EUROPE plc | 27

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ANNUAL REPORT 2009 | AVIS EUROPE plc

Always trying harder... OUR ENVIRONMENT

Avis Europe’s Corporate Social Responsibility (CSR) strategy is an integral part of its “We try harder.” philosophy.

Avis Europe remains committed to reducing its impacts on the environment, of which the largest is greenhouse gas emissions. Since 1997, it has offset greenhouse gas emissions through innovative renewable energy and energy efficiency projects, as well as reforestation. In 2009 an increasing number of its licensees participated in CarbonNeutral® programmes. The European corporatelyowned operations maintained their CarbonNeutral® status and their emissions amounted to 13,517 tCO2e, a reduction of 8%. In order to offset these emissions Avis Europe has worked with The Carbon Neutral Company to purchase offsets from a variety of independently validated and verified clean and renewable energy projects around the world. The corporately-owned operations also focused on developing and completing a series of initiatives to improve environmental performance, including:

With regard to the environment, Avis Europe’s strategy is to measure the effect that its business operations have on the environment and lower the impact progressively. It has developed a comprehensive environmental programme to ensure it gradually reduces the CO2 emissions in its premises, offset non-reducible emissions, continue to introduce less polluting vehicles onto the fleet and encourage its customers and partners to offset their emissions.

On community matters, Avis Europe’s corporately-owned operations focus their eﬀorts on the provision of vehicles for community purposes and local environmental improvements, whilst local management have discretion to support local staﬀ volunteering and fundraising for causes of their choice.

> completing the implementation of recommendations to achieve further internal emissions reductions, following a number of environmental audits of headquarters and major rental locations undertaken in the prior year; > making better use of resources and continuing to make all staff aware of what they can do to reduce energy use, including the use of e-learning to reduce travel; > reducing European travel by around 30%, partly through the development of e-learning tools to replace face-to-face training and greater use of videoconferencing; > introducing car sharing at a number of its head office locations; > developing closer links with customer groups to help reduce their environmental impact, including a carbon offset tool for both Individual and Corporate customers.

ANNUAL REPORT 2009 | AVIS EUROPE plc | 29

OUR FLEET

> During 2009 Avis Europe continued to minimise emissions from the fleet by introducing more environmentally friendly vehicles in more locations, despite the difficulties in the car manufacturing sector and the resulting reduction in model availability. > Towards the end of 2009 Avis Europe launched a new low emission AVIS ECO collection in the UK − guaranteeing customers a fuel efficient, sub-120 CO2 emission diesel model every time they rent a car from the new collection. > A number of countries have implemented or are beginning the roll-out of a car Delivery and Collection optimisation system aimed at improving the efficiency of their downtown network. Through optimising the scheduling of Delivery and Collection tasks, the system helps reduce emissions by minimising the mileage driven by Avis drivers. > In Paris the OKIGO initiative, in a joint venture with Vinci Park, Europe’s leader in complete car parking solutions, allows customers who pay a subscription to have an Avis car available 24/7 in one of the many Vinci car parks. A significant increase in the number of customers included the extension of the

AVIS EUROPE plc

Avis Europe focused its eﬀorts on four main areas:

programme to universities. Studies show that sharing a car in this way eﬀectively replaces up to eight individual cars. Avis Europe has now also signed a partnership with Vinci Park, the Paris metro and SNCF (the leading French railway company) to facilitate the operation of a public car-sharing scheme with 4,000 vehicles in Paris in 2010. OUR COMMUNITIES Avis Europe’s community investment guidelines provide that it focusses on local environmental improvement and provision of free transport for community activities. In 2009, amongst many other initiatives, Avis Europe was able to help the distribution of emergency aid following the earthquake in Abruzzo in central Italy. In addition to this activity across its corporate and licensee network, it supports UNICEF on a variety of projects and also initiatives which are particularly important to local staﬀ.

Some of the 2009 projects have included: > A variety of fundraising activities for a cancer care charity (Macmillan) in the UK; > Fundraising for the Portuguese Association for the blind (ACAPO); > Staging a theatrical performance in Italy to raise funds for the pediatric oncology unit in Rome General Hospital; > Partnership with act!onaid to provide educational and cultural activities to disadvantaged children in Brazil. In addition, Avis Europe supports employee volunteering and fundraising: > where staﬀ commit to voluntary work for a charitable organisation in Barcelona, the Avis contact centre makes a quarterly contribution; and > in the group headquarters, Avis Europe matches sponsorship funding for individual and team eﬀorts.

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ANNUAL REPORT 2009 | BELRON S.A.

Belron. Transforming obstacles into opportunities.

“Like most other businesses, Belron faced many challenges at the start of 2009 due to the global economic environment. The response our business has made to these challenges has been excellent. I am particularly pleased with the success of the repair led advertising campaigns which have enabled us to deliver greater value to our customers in an environmentally responsible way. We continue to invest in a range of initiatives including a customer delight acceleration programme which further enhance the service that we provide to the motorists and the insurance and ﬂeet industries around the world.” Gary Lubner, CEO Belron.

BELRON S.A.

ANNUAL REPORT 2009 | BELRON S.A. | 31

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ANNUAL REPORT 2009 | BELRON S.A.

Measuring customer delight. Belron has always been committed to delighting its customers with the service it provides. In 2009, the company initiated a customer delight acceleration programme in order to drive further progress in this area. As part of this programme, it completed the worldwide implementation of a new customer delight measurement approach based on the Net Promoter Score (NPS). NPS is a measure of customer loyalty and is calculated using the answers to one simple question which is whether customers would recommend Belron to their friends or colleagues.

PETER ROHRS:

“The Belron team completed the global implementation of the new NPS measurement system in less than 12 months and I am incredibly proud not only of the core team but everyone in the business who have helped to make this happen. The implementation has been a major success and is facilitating further improvements in our customer service. Signiﬁcant improvements are already being made and everywhere I go people are talking about the feedback from their customers gained through the NPS approach and how it is not only improving the way we serve our customers but also changing the behaviour of our own people.”

Peter Rohrs, Head of Operations Service Delivery and Belron’s Customer Delight Acceleration Programme.

BELRON S.A.

ANNUAL REPORT 2009 | BELRON S.A. | 33

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ANNUAL REPORT 2009 | BELRON S.A.

Key ﬁgures. External sales up 12%, comprising 9% organic growth, due to favourable winter weather conditions and successful marketing and operational activities, and acquired growth of 3%. | Current operating result up 23.9% to EUR 215.5 million driven by sales growth and strong cost control. | Current result before tax, group's share, up 38.5% to EUR 150.4 million (up 33.2% excluding the additional interest acquired in Belron). | Acquired growth mainly in the US where integration of 2008 acquisitions is complete. | Continued organic sales growth anticipated in 2010.

FINANCIAL HIGHLIGHTS EUR million External sales Current operating result

2009

2008

CHANGE

2,423.2

2,156.1

12.4%

215.5

173.9

23.9%

Current operating margin

8.9%

8.1%

–

Current net ﬁnance costs

-28.5

-33.6

15.2%

Current result before tax

187.0

140.3

33.3%

Current result before tax, group’s share

150.4

108.6

38.5%

-5.8

-27.5

Unusual items and re-measurements, before tax

Note: the average shareholding used for consolidation of the current result before tax of Belron in 2009 is 80.43% (77.38% in 2008).

GEOGRAPHICAL SALES BREAKDOWN1

43% 57%

> A job is completed every 3 seconds > 8,400 windscreens are repaired every day > 109,000 mobile jobs are completed every week GEOGRAPHICAL SALES EVOLUTION1 ● Europe: Austria, Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxemburg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK ● Rest of the world: Australia, Brazil, Canada, New Zealand, United States 1. At actual exchange rate.

CHANGE 12%

INDICATORS

2009

2008

10.7

9.4

> repair jobs

3.1

2.3

> mobile jobs

5.7

4.9

8,565

7,878

22,399

20,833

Total jobs (in million)

Mobile ﬂeet (number of vans) 14%

Employees

ANNUAL REPORT 2009 | BELRON S.A. | 35

APRIL. | 01 | Belron signs agreement with franchise in Chile and opens its first branch in Santiago. JUNE. | 02 | Franchise agreements signed in Finland and Lithuania. | 03 | Autoglass UK wins prestigious award in UK’s top TV advertising awards. The award was in the category of ‘Best use of TV for response’ at the Thinkbox TV Planning Awards. AUGUST. | 04 | Belron US opens a new distribution centre in Ontario, California, which is strongly influenced by environmental design principles. | 05 | Belron employees from 18 business units compete in the London Triathlon and raise EUR 500,000 for MaAfrika Tikkun. The money will help to support vulnerable children in South Africa giving them vital care and the skills needed to succeed in life. SEPTEMBER. | 06 | Belron enters the Chinese market by acquiring a vehicle glass repair and replacement business operating in the city of Qingdao. | 07 | Belron strengthens its presence in the USA by acquiring Auto Glass Center business in mid-west. OCTOBER. | 08 | Carglass Belgium presented with the prestigious Ambiorix Prize by the Prime minister. This annual award recognises a profitable company, excelling in entrepreneurship and employee engagement. | Carglass Spain wins silver at the EFI − or ‘effectiveness’ Awards − competing against twenty-six internationally-known brands in the category of ‘Most Effective Communications Campaign in the Spanish Media’. NOVEMBER. | 09 | Belron completes world-wide implementation of Net Promoter Score, its new measure of customer delight. | Belron wins ‘Team of the Year’ at the European Supply Chain Excellence Awards. | 10 | Customer Relationship Management Association presents Carglass Netherlands with an award for its total focus throughout the organisation on delivering excellent service to its customers.

BELRON S.A.

Key events 2009.

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ANNUAL REPORT 2009 | BELRON S.A.

Taking advantage of the crisis. Current result before tax, group's share: EUR 150.4 million, up 38.5%* driven by exceptional organic sales growth – fuelled by weather conditions and successful marketing activities – and strong cost control. Activities and results Sales grew by 12.4% to EUR 2,423.2 million, consisting of 9% organic and 3% from acquisitions with a minimal currency translation impact. The organic growth was due to favourable winter weather conditions in the major European countries, additional advertising and operational improvements. These factors together offset the impact of the challenging economic environment. There was minimal currency impact with a stronger US dollar offsetting weaker currencies elsewhere, most notably the GB pound and Australian dollar. Total repair and replacement jobs grew by 14% to 10.7 million. In Europe, after both acquisitions and currency translation, sales growth was 12% which consisted of 13% organic growth and 1% acquired growth offset by an adverse currency impact of 2% due to a weaker GB pound. The European businesses benefited from favourable winter weather conditions compared to 2008. The sales growth was also delivered through increased marketing activities, by maintaining close relationships with key accounts and by operational improvements. The acquisition growth is predominantly due to an acquisition in Denmark in late 2008. Outside Europe, after both acquisitions and currency translation, sales growth amounted to 14%. This consisted of 4% organic growth, 7% acquired growth and 3% from currency translation. The organic growth reflects a continued investment in marketing activities and key account relationships which have enabled the * Up 33.2% excluding the additional interest acquired in Belron.

business to grow despite challenging market conditions. The acquired growth is primarily due to the acquisition of Diamond Glass Inc. which was eﬀective from the beginning of July 2008.

Current result before tax, group’s share, rose by 38.5% to EUR 150.4 million (2008: EUR 108.6 million). During the second quarter of 2009, Belron paid dividends relating to 2007 and 2008 profits of EUR 97.5 million to its shareholders, of which D’Ieteren’s share was EUR 75.4 million. The current operating result amounted to EUR 215.5 million (2008: EUR 173.9 million). The increase in operating result is largely attributed to sales increases across the portfolio of businesses together with operational efficiency gains and cost reductions in many areas. Unusual costs before tax were EUR 4.7 million and relate to the restructuring of US acquisitions. Re-measurements include the amortization of intangibles resulting from acquisitions and changes in the fair value of derivatives. Net finance costs were EUR 27.4 million (2008: EUR 38.1 million). Before re-measurements resulting from the changes in the fair value of derivatives, current net finance costs decreased from EUR 33.6 million in 2008 to EUR 28.5 million due to lower borrowings and reducing interest rates.

Key developments Belron continued to pursue its goal of delivering an unrivalled service to its customers, key insurer and fleet partners thereby delivering sales growth. During the year a new centralised measurement process was rolled out worldwide for collecting and evaluating customer feedback which has made the group even more responsive to its customers’ needs. In addition, the group continued to pursue more efficient and effective relationships with its insurer and fleet partners. The business also completed the roll out of its standardised internet presence. The business has further developed and rolled out new tools and processes to ensure that the work it performs is to the highest standard. In the summer Belron opened its largest distribution centre,

located on the west coast of America. This facility enables Belron to provide a better service to its customers whilst signiﬁcantly reducing mileage travelled. In recognition of this, the Belron Supply Chain team won a Supply Chain Excellence Award in the ‘best team’ category. This was the second successive year that the Belron Supply Chain team has won a Supply Chain Excellence Award. Television marketing was increased in many countries following successful trails in the previous year. The adverts followed a standardised approach and were shown in conjunction with existing radio advertising. During the third quarter Belron acquired a single branch business in China and at the end of September the US VGRR business of IGD Industries was acquired. Earlier in the year franchise agreements were signed in Chile, Finland and Lithuania. In January 2010 Belron acquired its former franchisee in Turkey.

Outlook 2010 The outlook for 2010 is for continued organic sales growth. Belron remains committed to delivering outstanding service to its customers, its insurance and ﬂeet partners, and improving its operational eﬃciency.

New distribution center. Belron continued to focus on the transformation of its recently acquired US businesses during 2009. One major component of this transformation programme is the enhancement of the supply chain, notably the logistics function. As part of this programme, Belron US opened a new distribution centre in Ontario, California, in August 2009. This 26,200 square metre facility will support the enhanced distribution of glass to the states west of the Mississippi River and is the largest in the Belron group. It has storage for 120,000 windscreens and 30,000 other vehicle glass parts and will handle over one million windscreens during its ﬁrst year. The new facility will enable Belron US to serve its customers faster than ever before. It was developed using Belron global best practice and learnings from other facilities across the group, including the racking layout which was designed using Belron best practice warehouse modeling. In addition, the opening of this new distribution centre reﬂects the

Belron environmental commitment as it will eliminate one million miles in transport and reduce the primary carbon footprint of the US business by more than 1,500 tons of CO2. It incorporates many other ecologically-friendly innovations like compact fluorescent T5 lighting, which is three to four times more efficient than standard fluorescent bulbs; motion and daylight sensors that illuminate only when needed; skylights that allow for natural sunlight; and an all-electric mobile fleet. With the continued growth of the US business the new centre will ensure unrivalled availability of glass for its customers.

BELRON S.A.

ANNUAL REPORT 2009 | BELRON S.A. | 37

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ANNUAL REPORT 2009 | BELRON S.A.

Let's not wait for the world to change. Let's change it. Belron is highly committed to operating in an environmentally responsible way.

The company also completed a vehicle trial in Germany to assess the viability of using hybrid vans for local deliveries. OUR BUILDINGS During the year, a wide range of initiatives have been implemented to reduce electricity usage in the buildings. In Italy and Belgium Belron is currently replacing fluorescent light signage with LED equivalents which will reduce waste as well as emissions. Carglass Germany has achieved significant cost and CO2 savings by introducing simple measures such as installing time switches for coffee machines, water dispensers and glass shop shelves. Carglass Netherlands eliminated the need for two large air conditioners in their contact centre through applying solar films to windows and substituting individual PCs with dumb terminals. In the supply chain Belron reduced the transport miles associated with distributing glass across the US by opening its second Distribution Centre (DC) in the USA.

The primary method by which this is achieved is through the Belron repair philosophy which is not only lowering costs but also significantly reducing the number of windscreens that need replacing. Belron actively promotes the repair of windscreens through its advertising and joint promotional activities with its key insurance and fleet partners. Repairing a windscreen before it needs replacing generates significantly less waste and has a carbon footprint around 10 times less than fitting a replacement screen. In addition to driving repairs, Belron also focuses on reducing the environmental impact of repairing or replacing vehicle glass in many other ways. By using its call centres or booking on-line the company routinely reduces the number of trips a customer would make. Belron’s effective route planning systems means the routes that are taken are optimised to be the most efficient, thus eliminating unnecessary mileage and tailpipe emissions. The company also manages the emissions from its fleet, the energy used in its buildings and the recycling of

its products at the end of life. It is also working with its supply chain to eliminate packaging waste and distribution emissions. OUR FLEET Over the course of 2009 Belron has made some significant changes to the way it manages its fleet emissions. Scooters have been adopted as a way of lowering tailpipe emissions in cities including Paris and Brussels and at the same time have delivered a more efficient service in traffic heavy locations. In Carglass Belgium the rollout of an e-positive driver training programme to all technicians saw emissions reduce overall by 2%. In the US business the “Idling Gets you Nowhere”, a programme which encourages technicians to switch off their engines when not driving, has realised savings of over 30,000 metric tons of CO2. Additionally, in the US, Belron has begun investigating the use of trains in the supply chain (historically not done due to fear of high breakage) and started using trains for internal shipments within the US.

WASTE AND RECYCLING Belron repaired nearly three million windscreens during the year, a 30% increase on 2008. This meant that over 4,900 tons of waste was not produced and 12,000 tons less CO2 was emitted as a result. In addition, when a vehicle’s glass needs to be replaced, 74% of all the business units now recycle the glass they replace. Belron is aiming to push this rate even higher in the coming year.

ANNUAL REPORT 2009 | BELRON S.A. | 39

Community Initiatives Programme. Employees in New Zealand participated in the Auckland Marathon. The major charities supported were the Child Cancer Foundation and the NZ Heart Foundation.

BELRON S.A.

Accurate accounting of its carbon emissions is a key element of effective emissions reduction strategies. Over the past year Belron has worked to improve the group-wide tracking tool to enable the company to better capture, measure and monitor its global emissions. At the end of 2009 Belron has started the process for conducting supplier audits to monitor the environmental and Corporate Social Responsibility (CSR) policies of its suppliers. During 2009 the company began working with a key supplier to understand product packaging and identified solutions to reduce waste from plastic packaging by 50%. Most of the DC’s now recycle cardboard which is extensively used throughout the supply chain. In addition Belron is currently working on the design of a new reusable, collapsible crate to transport glass. This new design would eliminate the need to use wood in the supply chain. THE WAY WE WORK Belron knows that building a culture of responsibility begins with the way that it works as a business. 2009 has seen the company further embracing what it can do to make a difference. It has set itself a tough challenge to grow the business without growing the CO2 emissions. Just some of the ways it knows it can achieve this will be by improving its buildings, making changes to its fleet and making greater use of renewable energy. It is also about making changes to the way it works. A number of business units have made changes to their company car policies and implemented full scale recycling policies across buildings. Driver awareness programmes have also been introduced in some of the business units to reduce idle time thus reducing CO2 emissions. The implementation of ISO14001 in Laddaw, the UK distribution business is an example of step change thinking in this area with the whole business adopting a more sustainable approach to the way they operate.

OUR COMMUNITIES Belron is convinced that supporting people beyond its business is the right thing to do and so all the business units are encouraged to be involved in community activities either at a local, national or global level. Belron’s global support was again focussed on its corporate entry into the London Triathlon. The company entered a record number of participants − over 600 individuals from 18 business units took part in the event in August raising in excess of EUR 500,000 for MaAfrika Tikkun. These funds have gone directly to support a range of programmes dedicated to improving the life prospects of African children and young people and the families and communities that care for them. In addition to financial support the Netherlands cleaned up and sent on to MaAfrika Tikkun 65 redundant computers. The dominant theme for many of the business units is to provide support to charities involved with children. Some examples include Carglass Greece which supports an organization called Hamogelo tou Paidiou that helps improve the lives of abused children and orphans. Employees at Carglass Germany have further developed their relationship with staff and patients at the Kinderkrankenhaus children’s hospital. Their donations since 2007 have paid for important after care and provided more hospital staff to support children and their parents at home. A team from O’Brien in Australia took part in the Sydney Running Festival recently as part of their ‘Giving Back’

Disaster relief has also played a prominent role in Belron’s giving back approach in 2009. Its Australian business O’Brien has been supporting individuals and communities affected by the Victorian bushfires through the establishment of the Employee Bushfire Appeal. The company has been matching every employee contribution to the Australian Red Cross. Employees at Carglass Italy rose money to help young people affected by the Abruzzo earthquake which hit Italy earlier this year.

40 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

s.a. D’Ieteren n.v.

Consolidated Financial Statements 2009.

FINANCIAL REPORT

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 41

Contents 42 CONSOLIDATED INCOME STATEMENT 43 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 44 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 45 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 46 CONSOLIDATED STATEMENT OF CASH FLOWS 47 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 47 Note 1: General Information 47 Note 2: Accounting Policies 54 Note 3: Segment Information 58 Note 4: Sales 59 Note 5: Operating Result 60 Note 6: Net Finance Costs 60 Note 7: Entities Accounted for Using the Equity Method 61 Note 8: Tax Expense 62 Note 9: Unusual Items and Re-Measurements 65 Note 10: Earnings per Share 66 Note 11: Goodwill 67 Note 12: Business Combinations 69 Note 13: Other Intangible Assets 70 Note 14: Vehicles 72 Note 15: Other Property, Plant and Equipment 73 Note 16: Investment Property 73 Note 17: Available-for-Sale Financial Assets 73 Note 18: Derivative Hedging Instruments 75 Note 19: Derivatives Held for Trading 76 Note 20: Long-Term Employee Benefit Assets and Obligations

79 Note 21: Deferred Taxes 80 Note 22: Other Non-Current Receivables 80 Note 23: Non-Current Assets Classified as Held for Sale 81 Note 24: Inventories 81 Note 25: Other Financial Assets 81 Note 26: Current Tax Assets and Liabilities 81 Note 27: Trade and Other Receivables 82 Note 28: Cash and Cash Equivalents 83 Note 29: Equity 84 Note 30: Provisions 86 Note 31: Borrowings 89 Note 32: Net Debt 90 Note 33: Put Options Granted to Non-Controlling Shareholders 90 Note 34: Other Non-Current Payables 90 Note 35: Trade and Other Current Payables 90 Note 36: Employee Benefit Expense 91 Note 37: Share-Based Payments 92 Note 38: Financial Risk Management 95 Note 39: Contingencies and Commitments 96 Note 40: Related Party Transactions 96 Note 41: Discontinued Operations 97 Note 42: List of Subsidiaries, Associates and Joint Ventures 98 Note 43: Exchange Rates 98 Note 44: Subsequent Events 99 Note 45: Auditorâ&#x20AC;&#x2122;s Report 100 ABRIDGED STATUTORY FINANCIAL STATEMENTS 2009

42 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Income Statement Year ended 31 December

EUR million

Notes

2008 (1)

2009 Current

Unusual

(2)

items and

items

Total

Current

Unusual

(2)

items and

items

re-measurements Sales

Cost of sales Gross margin Commercial and administrative expenses Other operating income Other operating expenses

Total

re-measu-

(2)

rements

(2)

6,269.7

6,501.2

-4,249.0

8.4

-4,240.6

-4,597.7

-7.4

-4,605.1

2,020.7

8.4

2,029.1

1,903.5

-7.4

1,896.1

-1,618.6

-23.8

-1,642.4

-1,518.7

3.7

-1,515.0

0.7

0.1

0.8

3.3

2.5

5.8

-18.1

-39.6

-57.7

-13.0

-282.1

-295.1

Operating result

384.7

-54.9

329.8

375.1

-283.3

91.8

Net finance costs

-119.9

5.3

-114.6

-136.6

-21.5

-158.1

Result before tax

264.8

-49.6

215.2

238.5

-304.8

-66.3

Share of result of entities accounted for using the equity method

0.8

1.1

Tax expense

Result from continuing operations Discontinued operations

RESULT FOR THE PERIOD

-44.0

11.0

-33.0

-46.7

82.4

35.7

221.6

-38.6

183.0

192.9

-222.4

-29.5

1.3

221.6

-38.6

183.0

192.9

-221.1

-28.2

182.8

-24.3

158.5

159.0

-126.8

32.2

38.8

-14.3

24.5

33.9

-94.3

-60.4

Result attributable to: Equity holders of the Parent

Non-controlling interest Earnings per share for result for the period attributable to equity holders of the Parent Basic (EUR)

33.29

-4.41

28.88

28.90

-23.04

5.86

Diluted (EUR)

33.23

-4.40

28.83

28.86

-23.00

5.86

Earnings per share for result from continuing operations attributable to equity holders of the Parent Basic (EUR)

33.29

-4.41

28.88

28.90

-23.18

5.72

Diluted (EUR)

33.23

-4.40

28.83

28.86

-23.15

5.71

(1) As restated (see note 2.1). (2) See summary of significant accounting policies in note 2 and unusual items and re-measurements in note 9.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 43

Consolidated Statement of Comprehensive Income Year ended 31 December EUR million

Notes

Result for the period

2009

2008

183.0

-28.2

Actuarial gains (losses) on employee benefit obligations Translation differences

-32.8

-21.3

11.8

-42.0

Fair value of available-for-sale financial instruments

-0.1

Cash flow hedges: fair value gains (losses) in equity

-4.8

-1.8

Cash flow hedges: transferred to income statement

2.6

2.2

Share-based payments

0.9

-1.5 6.8

Tax relating to actuarial gains (losses) on employee benefit obligations

8.9

Tax relating to translation differences

1.0

3.8

Tax relating to cash flow hedges

0.8

2.6

-11.6

-51.3

Total comprehensive income for the period

Subtotal

171.4

-79.5

being: attributable to equity holders of the Parent

150.1

-3.6

21.3

-75.9

being: attributable to non-controlling interest

FINANCIAL REPORT

Other comprehensive income

44 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statement of Financial Position At 31 December EUR million

Notes

2009

2008 (1)

Goodwill

939.8

852.0

Other intangible assets

776.2

804.2

Vehicles

671.9

781.4

Other property, plant and equipment

419.1

385.6

Investment property

6.3

6.8

15.5

14.8

Equity accounted investments Available-for-sale financial assets

1.0

Derivatives held for trading

1.9

0.7

Long-term employee benefit assets

14.6

0.5

Deferred tax assets

98.1

81.0

Other receivables

Non-current assets

3.5

2.5

2,947.9

2,930.5

Non-current assets classified as held for sale

Inventories

467.6

530.2

Derivative hedging instruments

0.8

7.7

Derivatives held for trading

19.0

20.6 53.3

Other financial assets

25.9

Current tax assets

2.3

7.9

Trade and other receivables

1,295.4

1,717.7

Cash and cash equivalents

348.2

97.9

Current assets

2,159.2

2,435.3

TOTAL ASSETS

5,107.1

5,365.8

Capital and reserves attributable to equity holders

1,028.5

896.1

Non-controlling interest Equity

126.1

134.7

1,154.6

1,030.8

Long-term employee benefit obligations

127.6

106.9

Other provisions

62.8

189.2

Derivative hedging instruments

41.8

51.5

31/32

1,543.8

1,873.2

Borrowings Derivatives held for trading

0.3

0.6

Put options granted to non-controlling shareholders

113.0

312.1

Other payables

6.1

3.7

Deferred tax liabilities

147.5

170.8

2,042.9

2,708.0

Provisions

Non-current liabilities 30

222.1

42.8

Derivative hedging instruments

20.9

1.8

31/32

549.2

443.7

Borrowings Derivatives held for trading

35.7

47.9

Current tax liabilities

87.9

69.6

Trade and other payables

993.8

1,021.2

Current liabilities

1,909.6

1,627.0

TOTAL EQUITY AND LIABILITIES

5,107.1

5,365.8

(1) As restated (see note 2.1).

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 45

Consolidated Statement of Changes in Equity At 31 December Capital and reserves attributable to equity holders Share

Treasury

capital

premium

Share-

Non-

Group's

controlling

gains

lative

interest

and

translation

Hedging

Retained

Actuarial

based

value

reserve

earnings

payment

reserve

At 1 January 2008

Total Cumu-

Fair

Taxes

losses

Equity

differences

160.0

24.4

-17.5

2.4

0.2

-3.4

773.6

-15.3

3.6

-10.3

917.7

222.5

Treasury shares

-1.5

1.2

-0.3

Dividend 2007 paid in 2008

-16.5

-0.2

-16.7

Put options treatment - Movement of the period

-13.9

Other movements

1.0

Total comprehensive income

-0.6

-0.1

2.0

32.2

-18.4

9.6

-28.3

-3.6

-75.9

-79.5 1,030.8

At 31 December 2008

1,140.2

160.0

24.4

-19.0

1.8

0.1

-1.4

789.3

-33.7

13.2

-38.6

896.1

134.7

Treasury shares

-1.2

-0.8

-2.0

Dividend 2008 paid in 2009

-16.5

-22.1

-38.6

-5.6 -1.4

Put options treatment - Movement of the period Other movements Total comprehensive income At 31 December 2009

0.8

-1.7

158.5

-23.3

7.3

8.5

150.1

21.3

171.4

160.0

24.4

-20.2

2.6

0.1

-3.1

931.3

-57.0

20.5

-30.1

1,028.5

126.1

1,154.6

FINANCIAL REPORT

EUR million

46 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statement of Cash Flows Year ended 31 December EUR million

Notes

2009

2008 (1)

329.8

91.8

Cash flows from operating activities Operating profit from continuing operations Operating profit from discontinued operations Depreciation of vehicles for rent-a-car and operating lease activities

1.3

184.8

182.0

Depreciation of other items

83.4

78.0

Amortisation of Avis licence rights

13.7

21.7

Amortisation of other intangible assets Impairment losses on goodwill and other non-current assets Non-cash operating lease charge on buy-back agreements

27.5

22.6

9/13/15

0.6

226.1

135.7

192.3

Other non-cash items Retirement benefit obligations Other cash items Net receipts/(payments) with respect to vehicles purchased under buy-back agreements Purchase of vehicles for rent-a-car and operating lease activities Sale of vehicles for rent-a-car and operating lease activities

(2)

Change in net working capital Cash generated from operations Tax paid Net cash from operating activities

47.0

64.1

-28.6

-13.8

1.8

-5.6

132.8

-289.4

-447.1

-703.0

370.7

477.8

201.1

-119.9

1,053.2

226.0

-36.2

-32.9

1,017.0

193.1

-115.6

-89.8

Cash flows from investing activities Purchase of fixed assets (excl. vehicles) Sale of fixed assets (excl. vehicles) Net capital expenditure Acquisition of non-controlling interest Acquisition of subsidiaries Net investment in other financial assets

3.7

5.6

-111.9

-84.2

-275.1

9/12

-16.7

-46.4

Net cash from investing activities

21.2

-6.7

-382.5

-137.3

Cash flows from financing activities Net acquisition of treasury shares Net capital element of finance lease payments

-3.4

-1.5

-68.0

-70.9

Net change in other borrowings

-157.4

197.9

Net interest paid

-120.7

-137.8

-16.5

Dividends paid by Parent

Dividends received from/(paid by) subsidiaries Net cash from financing activities TOTAL CASH FLOW FOR THE PERIOD

-22.1

-3.0

-388.1

-31.8

246.4

24.0

Reconciliation with statement of financial position Cash at beginning of period

68.8

54.6

Cash equivalents at beginning of period

29.1

25.9

Cash and cash equivalents at beginning of period

97.9

80.5

246.4

24.0

Total cash flow for the period Translation differences Cash and cash equivalents at end of period (1) As restated (see note 2.1). (2) Excluding vehicles held under buy-back agreements.

3.9

-6.6

348.2

97.9

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 47

Notes to the Consolidated Financial Statements NOTE 1: GENERAL INFORMATION

The Company and its subsidiaries (together the Group) form an international group, active in three sectors of services to the motorist: - Automobile distribution in Belgium of Volkswagen, Audi, Seat, Skoda, Bentley, Lamborghini, Bugatti, Porsche, and Yamaha; - Short-term car rental in Europe, Africa, the Middle East and Asia through Avis Europe plc and the Avis and Budget brands; - Vehicle glass repair and replacement in Europe, North and South America, Australia and New Zealand through Belron s.a. and notably its CARGLASS ® , AUTOGLASS® , SAFELITE® AUTO GLASS, SPEEDY GLASS® , LEBEAU VITRES D'AUTO® , SMITH&SMITH® and O’BRIEN brands. The Group is present in some 120 countries on 5 continents. The Company is listed on Euronext Brussels. These consolidated financial statements have been approved for issue by the Board of Directors on 4 March 2010. The owners of the Company have the power to amend the consolidated financial statements after issue at the Annual General Meeting of Shareholders, which will be held on 27 May 2010.

NOTE 2: ACCOUNTING POLICIES Note 2.1: Basis of Preparation These 2009 consolidated financial statements are for the 12 months ended 31 December 2009. They have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) and the related International Financial Reporting Interpretations Committee (“IFRIC”) interpretations issued and effective, or issued and early adopted as at 31 December 2009 which have been adopted by the European Union (“EU”). They correspond to the standards and interpretations issued by the International Accounting Standards Board (“IASB”) and effective as at 31 December 2009. The principal accounting policies applied in the preparation of these consolidated financial statements are set out in note 2.2. These policies have been consistently applied to all the periods presented, unless otherwise stated. These consolidated financial statements have been prepared under the historical cost convention, except for available-for-sale financial assets, money market assets classified within cash and cash equivalents and derivative instruments that have been measured at fair value. These consolidated financial statements are prepared on an accruals basis and on the assumption that the Group is a going concern and will continue in operation for the foreseeable future. The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. If in the future such estimates and assumptions, which are based on management’s best judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in the relevant notes.

FINANCIAL REPORT

s.a. D’Ieteren n.v. (the Company or the Parent) is a public company incorporated and domiciled in Belgium, whose controlling shareholders are listed in note 29. The address of the Company’s registered office is: Rue du Mail 50 B-1050 Brussels

48 |

RAPPORT REPORT ANNUAL ANNUEL2009 2008| |CONSOLIDATED ÉTATS FINANCIERS FINANCIAL CONSOLIDÉS STATEMENTS

NOTE 2: ACCOUNTING POLICIES (continued) The following new standards, amendments to standards and interpretations are mandatory for the first time for the Group’s accounting period beginning 1 January 2009. - IAS 1 (Revised) “Presentation of Financial Statements”. The Income Statement and Statement of Recognised Income and Expense have been replaced by a Statement of Comprehensive Income. As the Group has taken the option to present two separate statements (an Income Statement and a Statement of Comprehensive Income), there is no significant impact upon the presentation of the Group’s consolidated financial statements. Additionally, IAS 1 Revised now requires the presentation of all changes in equity within a separate primary statement; - IFRS 8 “Operating Segments”. IFRS 8 replaces IAS 14 “Segment reporting” and requires a “management approach” under which segment information is presented on the same basis as that used for internal purposes. The Group determined that the operating segments were the same as the business segments previously identified under IAS 14; - IFRS 7 (Amendments) “Financial Instruments – Disclosures”. These amendments require all financial instruments that are measured at fair value in the statement of financial position to be classified into a three-level fair value hierarchy. No comparative information is required; - IAS 23 (Revised) “Borrowing Costs”. This revised version has no significant impact on the Group’s consolidated financial statements; - IAS 32 (Amendment) “Financial Instruments – Presentation” and IAS 1 (Amendment) “Presentation of Financial Statements” on puttable financial instruments and obligations arising on liquidation. These amendments have no significant impact on the Group’s consolidated financial statements; - IFRS 2 (Amendment) “Share-Based Payment – Vesting Conditions and Cancellations”. This amendment has no significant impact on the Group’s consolidated financial statements; - Amendments to IFRIC 9 and IAS 39 “Financial Instruments – Recognition and Measurement” regarding embedded derivatives; - IFRIC 13 “Customer Loyalty Programmes”. This amendment has no significant impact on the Group’s consolidated financial statements; - IFRIC 14 “IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”; - Improvements to IFRSs (issued by the IASB in May 2008). The amendment to IAS 16 “Property, Plant and Equipment” issued in May 2008 (as part of the improvements to IFRSs) requires entities that routinely sell items of property, plant and equipment that have been held for rental to others to: transfer such assets to inventories at their carrying amount when they cease to be rented and become held for sale; recognise the income on disposal of such assets in revenue in accordance with IAS 18 “Revenue Recognition”; classify cash flows upon the purchase, rent and subsequent disposal of such assets within “operating activities” in the Consolidated Statement of Cash Flows. Previously, vehicles not subject to manufacturers buy-back agreements were classified as “non-currents assets held for sale” in the Consolidated Statement of Financial Position in accordance with IFRS 5 “Non-Current Assets Held for Sale and Discontinued Operations” and their carrying amount was recovered through a sale of assets transaction. Proceeds upon disposal of these vehicles were previously classified within “investing activities” in the Consolidated Statement of Cash Flows. This amendment became retrospectively applicable on 1 January 2009; comparative amounts have therefore been restated accordingly. The impact of this restatement on the Consolidated Statement of Financial Position (Car Rental segment) at 1 January 2009 was only a reclassification of EUR 10.3 million of vehicles from “non-current assets held for sale” to “inventories”. This restatement did not affect the capital and reserves attributable to equity holders of the Parent, nor the total assets. In the Consolidated Income Statement (Car Rental segment) for the year ended 31 December 2008, the impact was a gross-up of sales and cost of sales of EUR 354.4 million. There was no impact on the gross margin and on the result for the period attributable to equity holders of the Parent. The Consolidated Statement of Cash Flows for the year ended 31 December 2008 has been restated to classify within operating activities the cash flows related to these vehicles previously classified within investing activities. The standards, amendments and interpretations to existing standards that have been published by the IASB and adopted by the EU and are mandatory for the Group’s accounting periods beginning on or after 1 January 2010 or later periods but which the Group has not early adopted, are: - IFRS 3 (Revised) “Business Combinations”. The new requirements are applicable to business combinations for which the acquisition date is on or after the beginning of the first annual period beginning on or after 1 July 2009. The Group will apply IFRS 3 (Revised) prospectively to all business combinations as from 1 January 2010; - IAS 27 (Revised) “Consolidated and Separate Financial Statements”. The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The Group will apply IAS 27 (Revised) prospectively to transactions with noncontrolling interests as from 1 January 2010; - Amendment to IAS 39 “Financial Instruments – Recognition and Measurement” on eligible hedged items (effective 1 July 2009); - Amendment to IAS 32 “Financial Instruments – Presentation” on classification of rights issues (effective 1 February 2010);

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 49

NOTE 2: ACCOUNTING POLICIES (continued) -

IFRIC 12 “Service Concession Arrangements” (effective 30 March 2009); IFRIC 15 “Agreements for Conclusion of Real Estate” (effective 1 January 2010); IFRIC 16 “Hedges of a Net Investment in a Foreign Operation” (effective 1 July 2009); IFRIC 17 “Distribution of Non-Cash Assets to Owners” (effective 1 July 2009); IFRIC 18 “Transfers of Assets from Customers” (effective 31 October 2010).

Note 2.2: Summary of Significant Accounting Policies The estimates of amounts reported in the interim financial reporting have not been changed significantly during the final interim period of the financial year. Principles of Consolidation Subsidiary undertakings Subsidiary undertakings, which are those entities in which the Group has, directly or indirectly, an interest of more than half of the voting rights or otherwise has the power to exercise control over the operations are consolidated. Subsidiaries are consolidated from the date that control is transferred to the Group, and are no longer consolidated from the date that control ceases. All intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated upon consolidation. Associated undertakings Investments in associated undertakings are accounted for using the equity method. These are undertakings over which the Group generally has between 20% and 50% of the voting rights, or over which the Group has significant influence, but which it does not control. Unrealised gains on transactions between the Group and its associated undertakings are eliminated to the extent of the Group’s interest in the associated undertakings; unrealised losses are also eliminated. The Group’s investment in associated undertakings includes goodwill on acquisition. Equity accounting is discontinued when the carrying amount of the investment in an associated undertaking reaches zero, unless the Group has incurred obligations or guaranteed obligations in respect of the associated undertaking. Interests in joint ventures Interests in jointly controlled entities are recognised using the equity method. The above principles regarding associated undertakings are also applicable to joint ventures. Foreign Currency Translation The Group consolidation is prepared in euro. Income statements of foreign operations are translated into euro at the weighted average exchange rates for the period and statements of financial positions are translated into euro at the exchange rate ruling on the balance sheet date. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as local currency assets and liabilities of the foreign entity and are translated at the closing rate. Foreign currency transactions are accounted for at the exchange rate prevailing at the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Exchange movements arising from the retranslation at closing rates of the Group’s net investment in subsidiaries, joint ventures and associates are taken to the translation reserve. The Group’s net investment includes the Group’s share of net assets of subsidiaries, joint ventures and associates, and certain inter-company loans. The net investment definition includes loans between “sister” companies and certain inter-company items denominated in any currency. Other exchange movements are taken to the income statement. Where the Group hedges net investments in foreign operations, the gains and losses relating to the effective portion of the hedging instrument are recognised in the translation reserve in equity. The gain or loss relating to any ineffective portion is recognised in the income statement. Gains and losses accumulated in equity are included in the income statement when the foreign operation is disposed of. Goodwill Business combinations are accounted for by applying the purchase method. The excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised in accordance with IFRS 3 constitutes goodwill, and is recognised as an asset. In case this excess is negative, it is recognised immediately in the income statement. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

FINANCIAL REPORT

The Group is currently assessing the impact of the new standards, interpretations and amendments listed above.

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ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2: ACCOUNTING POLICIES (continued) Intangible Assets An item of intangible assets is valued at its cost less any accumulated amortisation and any accumulated impairment losses. Generally, costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. However, costs that are directly associated with identifiable and unique software products controlled by the Group which have probable economic benefits exceeding the cost beyond one year, are recognised as intangible assets. Intangible assets with a finite useful life are amortised over their useful life in accordance with the following methods: - Computer software programmes: straight-line method over 2 to 7 years; - Avis licence rights: straight-line method until 2036 (the licenses being held until that year); - Safelite’s customer contracts: straight-line method over 10 years; - Cindy Rowe’s customer contracts: straight-line method over 7 years; - Diamond’s customer contracts: straight-line method over 5 years; - AUTO GLASS SPECIALISTS® and ELITE AUTO GLASS™ brands: straight-line method over 3 years (as from 1 July 2008); - DIAMOND TRIUMPH GLASS™ brand: straight-line method over 24 months (as from 1 July 2008); - CINDY ROWE AUTO GLASS™ brand: straight-line method over 3 years (as from 1 January 2009). For the brands AUTO GLASS SPECIALISTS® and ELITE AUTO GLASS™, acquired in 2005, as well as the brand DIAMOND TRIUMPH GLASS™ and the brand CINDY ROWE AUTO GLASS™ acquired in 2008, there is a limit to the period over which these assets are expected to generate net cash inflows and accordingly are amortised over their remaining useful lives. The brands CARGLASS® and AUTOGLASS®, acquired in 1999, as well as GLASPRO™, SPEEDY GLASS ®, APPLE AUTO GLASS® and WINDSHIELD PROS™ acquired in 2005, as well as SAFELITE® AUTO GLASS acquired in 2007, have indefinite useful lives, since there is no foreseeable limit to the period over which these assets are expected to generate net cash inflows for the Group. They are therefore not amortised but tested for impairment annually. For any intangible asset with a finite or indefinite useful life, where an indication of impairment exists, its carrying amount is assessed and written down immediately to its recoverable amount. Research and Development Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred. An intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following are demonstrated: (a) the technical feasibility of completing the intangible asset so that it will be available for use or sale; (b) the Group has the intention to complete the intangible asset and use or sell it; (c) the Group has ability to use or sell the intangible asset; (d) how the intangible asset will generate probable future economic benefits; (e) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; (f) the Group has the ability to measure reliably the expenditure attributable to the intangible asset during its development. Property, Plant and Equipment An item of property, plant and equipment is initially measured at cost. This cost comprises its purchase price (including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates), plus any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating. If applicable, the initial estimate of the cost of dismantling and removing the item and restoring the site is also included in the cost of the item. After initial recognition, the item is carried at its cost less any accumulated depreciation and any accumulated impairment losses. The depreciable amount of the item is allocated according to the straight-line method over its useful life. The main depreciation periods are the following: - Buildings: 40 to 50 years; - Plant and equipment: 3 to 15 years; - IT equipment: 2 to 7 years; - Leased assets: depending on the length of the lease. Straight-line depreciation on the vehicle fleet is based on the acquisition costs of the vehicles, estimates of their future residual values, and expected holding periods.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 51

NOTE 2: ACCOUNTING POLICIES (continued) Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

Operating leases for which the Group is the lessee Lease payments under operating leases are recognised as expenses in the income statement on a straight-line basis over the lease term. Finance leases for which the Group is the lessee Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and the finance charge so as to achieve a constant rate of return on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance cost is charged to the income statement over the lease period. The leased assets are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. If there is no reasonable certainty that ownership will be acquired by the end of the lease term, the asset is depreciated over the shorter of the lease term and its useful life. Vehicles sold under buy-back agreements Vehicles sold under buy-back agreements are accounted for as operating leases (lessor accounting), and are presented in the statement of financial position under inventories. The difference between the sale price and the repurchase price (buy-back obligation) is considered as deferred income, while buy-back obligations are recognised in trade payables. Vehicles purchased under buy-back agreements Vehicles purchased under buy-back agreements are not recognised as assets since these arrangements are accounted for as operating leases (lessee accounting). The difference between the purchase price and the resale price (buy-back obligation of the supplier) is considered as deferred expense, while a trade receivable is recognised for the resale price. Investment Properties Investment properties are measured at cost less accumulated depreciation and accumulated impairment losses. Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their location and condition at the balance sheet date. Items that are not interchangeable, like new vehicles and second-hand vehicles, are valued using specific identification of their individual costs. Other items are valued using the first in, first out or weighted average cost formula. When inventories are used, the carrying amount of those inventories are recognised as an expense in the period in which the related revenue is recognised. Losses and write-downs of inventories are recognised in the period in which they occur. Reversal of a write-down is recognised as a credit to cost of sales in the period in which the reversal occurs. Cash and Cash Equivalents Cash comprises cash on hand and demand deposits. Cash equivalents are short-term (maximum 3 months), highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Equity Where the Company (or its subsidiaries) reacquires its own equity instruments, those instruments are deducted from equity as treasury shares. Where such equity instruments are subsequently sold, any consideration received is recognised in equity. Dividends to holders of equity instruments proposed or declared after the balance sheet date are not recognised as a liability at the balance sheet date; they are presented in equity.

FINANCIAL REPORT

Leases Operating leases for which the Group is the lessor Assets leased out under operating leases (other than vehicles sold under buy-back agreements) are included in property, plant and equipment in the statement of financial position. They are depreciated over their expected useful lives. Rental income is recognised on a straight-line basis over the lease term.

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ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2: ACCOUNTING POLICIES (continued) Provisions A provision is recognised when: - there is a present obligation (legal or constructive) as a result of a past event; - it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and - a reliable estimate can be made of the amount of the obligation. If these conditions are not met, no provision is recognised. Post-employment Employee Benefits The Group has various defined benefit pension plans and defined contribution pension plans. Most of these plans are funded schemes, i.e. they are financed through a pension fund or an external insurance policy. The minimum funding level of these schemes is defined by national rules. Payments to defined contribution pension plans are charged as an expense as they fall due. The Group’s commitments under defined benefit pension plans, and the related costs, are valued using the “projected unit credit method”, with actuarial valuations being carried out at least on a yearly basis. Actuarial gains and losses are recognised in full in the period in which they occur. They are recognised outside the income statement, and are presented in the statement of comprehensive income. Past service cost is recognised immediately to the extent that the benefits have already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The long-term employee benefit obligation recognised in the statement of financial position represents the present value of the defined benefit obligations as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of any refunds and reductions in future contributions to the plan. Financial Instruments Excluding Derivatives IAS 32 and 39 are applied to measure financial instruments: (a) Available-for-sale financial assets are measured at fair value through equity. Impairment losses are recorded in the income statement. (b) The carrying amount of treasury shares is deducted from equity. (c) Trade and other receivables are measured at their amortised cost using the effective interest method, as reduced by appropriate allowances for irrecoverable amounts. (d) Financial assets held for trading are measured at fair value. (e) Trade and other payables, as well as borrowings, are measured at amortised cost using the effective interest method. Financial Instruments – Derivatives Derivatives are used as hedges in the financing and financial risk management of the Group. IAS 32 and IAS 39 are applied. The Group’s activities expose it to the financial risks of changes in foreign currency exchange rates and interest rates. The Group uses foreign exchange forward contracts, interest rate swaps, cross currency interest rate swaps, and options to hedge these exposures. The Group does not use derivatives for speculative purposes. However, certain financial derivative transactions, while constituting effective economic hedges, do not qualify for hedge accounting under the specific rules in IAS 39. Derivatives are recorded initially at fair value. Unless accounted for as hedges, they are classified as held for trading and are subsequently measured at fair value. Changes in fair value of derivatives that do not qualify for hedge accounting are recognised in the income statement as they arise. Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised directly in equity and any ineffective portion is recognised immediately in the income statement. If the cash flow hedge is a firm commitment or the forecasted transaction results in the recognition of an asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of an asset or a liability, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects net profit or loss. For an effective hedge of an exposure to changes in the fair value, the hedged item is adjusted for changes in fair value attributable to the risk being hedged with a corresponding entry in profit or loss. Gains or losses from re-measuring the derivative, or for nonderivatives the foreign currency component of its carrying amount, are recognised in profit or loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss recognised in equity is transferred to profit or loss in accordance with IAS 39. Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts, and the host contracts are not carried at fair value with unrealised gains or losses reported in income statement.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 53

NOTE 2: ACCOUNTING POLICIES (continued)

Revenue Recognition Revenue from the sale of goods is recognised when all the following conditions have been satisfied: (a) the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; (b) the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (c) the amount of revenue can be measured reliably; (d) it is probable that the economic benefits associated with the transaction will flow to the Group; and (e) the cost incurred or to be incurred in respect of transaction can be measured reliably. When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the balance sheet date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: (a) the amount of revenue can be measured reliably; (b) it is probable that the economic benefits associated with the transaction will flow to the Group; (c) the stage of completion of the transaction at the balance sheet date can be measured reliably; and (d) the cost incurred for the transaction and the costs to complete the transaction can be measured reliably. Interest is recognised on a time proportion basis that takes into account the effective yield on the asset. Royalties are recognised on an accrual basis in accordance with the substance of the relevant agreement. Dividends are recognised when the shareholder’s right to receive payment has been established. In the income statement, sales of goods, rendering of services and royalties are presented under the heading “sales”. Interest income is presented under the heading “net finance costs”. Share-Based Payments Share-based payments are exclusively made in connection with employee stock option plans (“ESOP”). For equity-settled ESOP, IFRS 2 is not applied to shares, share options or other equity instruments that were granted before or on 7 November 2002 and which had not vested at 1 January 2004. Equity-settled ESOP granted after that date are accounted for in accordance with IFRS 2, such that their cost is recognised in the income statement over the related performance period. All cash-settled ESOP (i.e. granted before, on, or after 7 November 2002) are recognised as liabilities, and their cost is recognised in the income statement over the related vesting period. Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. Government Grants Government grants related to assets are presented in liabilities as deferred income, and amortised over the useful life of the related assets. Income Taxes Current taxes relating to current and prior periods are, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset. The benefit relating to a tax loss that can be carried back to recover current tax of a previous period is recognised as an asset. Deferred taxes are provided in full using the balance sheet liability method, on temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred taxes are not calculated on the following temporary differences: (i) the initial recognition of goodwill and (ii) the initial recognition of assets and liabilities that affects neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the unused tax losses and credits can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

FINANCIAL REPORT

Put Options Granted to Non-Controlling Shareholders The Group is committed to acquiring the non-controlling shareholdings owned by third parties in Belron, should these third parties wish to exercise their put options. IAS 32 requires that the exercise price of such options granted to non-controlling interest be reflected as a financial liability in the consolidated statement of financial position. The goodwill is adjusted at period end to reflect the change in the exercise price of the options and the carrying value of non-controlling interest to which they relate. This treatment reflects the economic substance of the transaction.

54 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2: ACCOUNTING POLICIES (continued) Unusual Items and Re-measurements Each line of the income statement, and each subtotal of the segment income statement, is broken down in order to provide information on the current result and on unusual items and re-measurements. Unusual items and re-measurements comprise the following items: (a) Recognised fair value gains and losses on financial instruments, excluding the accrued cash flows that occur under the Group’s hedging arrangements, where hedge accounting is unable to be applied under IAS 39; (b) Exchange gains and losses arising upon the translation of foreign currency borrowings at the closing rate; (c) Impairment of goodwill and other non-current assets; (d) Amortisation of intangible assets with finite useful lives recognised in the framework of the allocation as defined by IFRS 3 of the cost of a business combination; (e) Other unusual items. They are material items that derive from events or transactions that fall within the ordinary activities of the Group, and which individually or, if of a similar type, in aggregate, are separately disclosed by virtue of their size or incidence. All other items are recognised as part of the current result.

NOTE 3: SEGMENT INFORMATION Note 3.1: Basis of Segmentation The Group’s reportable operating segments are Automobile Distribution, Car Rental and Vehicle Glass. The Automobile Distribution segment includes the automobile distribution activities (see note 1) as well as corporate activities. The Car Rental segment comprises Avis Europe plc and its subsidiaries, joint ventures and associates (see note 1). The Vehicle Glass segment comprises Belron s.a. and its subsidiaries (see note 1). These operating segments are the same as the business segments presented in the 2008 annual financial statements and are consistent with the Group’s organisational and internal reporting structure.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 55

NOTE 3: SEGMENT INFORMATION (continued) Note 3.2: Segment Income Statement - Operating Segments (Year ended 31 December) Notes

2009 Automobile

Car Rental

2008

Vehicle Glass

Eliminations

Group

Distribution External sales

Inter-segment sales Segment sales

Automobile

(1)

Car Rental

Vehicle Glass

Eliminations

Group

Distribution

2,453.8

1,392.7

2,423.2

6,269.7

2,679.4

1,665.7

2,156.1

8.4

2.8

3.4

-14.6

6.5

2.5

3.1

-12.1

6,501.2 -

2,462.2

1,395.5

2,426.6

-14.6

6,269.7

2,685.9

1,668.2

2,159.2

-12.1

6,501.2

Operating result (being segment result)

65.0

56.2

208.6

329.8

88.5

-147.6

150.9

91.8

of which: current items

65.8

103.4

215.5

384.7

88.5

112.7

173.9

375.1

of which: unusual items and of which: re-measurements

-0.8

-47.2

-6.9

-54.9

-260.3

-23.0

-283.3

Net finance costs

-21.7

-65.5

-27.4

-114.6

-25.5

-94.5

-38.1

-158.1

Result before taxes

43.3

-9.3

181.2

215.2

63.0

-242.1

112.8

-66.3

of which: current items

42.7

35.1

187.0

264.8

60.6

37.6

140.3

238.5

of which: unusual items and of which: re-measurements

0.6

-44.4

-5.8

-49.6

2.4

-279.7

-27.5

-304.8

Share of result of entities accounted for using the equity method

0.7

0.1

0.8

0.7

0.4

1.1

Tax expense

-2.4

-30.6

-33.0

-5.0

59.4

-18.7

35.7

Result from continuing operations

41.6

-9.2

150.6

183.0

58.7

-182.3

94.1

-29.5

of which: current items

41.7

24.8

155.1

221.6

59.3

21.8

111.8

192.9

of which: unusual items and of which: re-measurements

-0.1

-34.0

-4.5

-38.6

-0.6

-204.1

-17.7

-222.4

Discontinued operations

RESULT FOR THE PERIOD

1.3

41.6

-9.2

150.6

183.0

58.7

-181.0

94.1

-28.2

Attributable to: Equity holders of the Parent

41.8

-5.2

121.9

158.5

58.7

-99.4

72.9

32.2

41.9

14.8

126.1

182.8

59.3

13.0

86.7

159.0

-0.1

-20.0

-4.2

-24.3

-0.6

-112.4

-13.8

-126.8

Non-controlling interest

-0.2

-4.0

28.7

24.5

-81.6

21.2

-60.4

RESULT FOR THE PERIOD

41.6

-9.2

150.6

183.0

58.7

-181.0

94.1

-28.2

of which: current items of which: unusual items and of which: re-measurements

(1) As restated (see note 2.1).

FINANCIAL REPORT

EUR million

56 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3: SEGMENT INFORMATION (continued) Note 3.3: Segment Statement of Financial Position - Operating Segments (At 31 December) EUR million

Goodwill Other intangible assets Vehicles Other property, plant and equipment Investment property Equity accounted investments Available-for-sale financial assets Derivatives held for trading Long-term employee benefit assets Deferred tax assets Other receivables Non-current assets Non-current assets classified as held for sale Inventories Derivative hedging instruments Derivatives held for trading Other financial assets Current tax assets Trade and other receivables Cash and cash equivalents Current assets TOTAL ASSETS Capital and reserves attributable to equity holders Non-controlling interest Equity Long-term employee benefit obligations Other provisions Derivative hedging instruments Borrowings Derivatives held for trading Put options granted to non-controlling shareholders Other payables Deferred tax liabilities Non-current liabilities Provisions Derivative hedging instruments Borrowings Derivatives held for trading Current tax liabilities Trade and other payables Current liabilities TOTAL EQUITY AND LIABILITIES (1) As restated (see note 2.1).

Notes

11 13 14 15 16 7 17 19 20 21 22 23 24 18 19 25 26 27 28

20 30 18 31/32 19 33 34 21 30 18 31/32 19 26 35

2008 (1)

2009 Automobile

Car

Vehicle

Distribution

Rental

Glass

2.6 0.2 1.8 379.6 307.4 364.5 134.8 64.9 6.3 3.3 12.2 0.5 0.4 1.9 1.0 42.5 0.9 458.6 866.2 266.1 8.4 0.4 16.0 2.0 10.0 2.7 0.2 1.7 95.7 989.6 259.5 60.6 647.5 1,065.4 1,106.1 1,931.6

937.0 394.8 219.4 0.1 14.6 54.6 2.6 1,623.1 193.1 0.4 1.0 13.2 0.4 210.1 28.1 446.3 2,069.4

1,028.5 1.4 124.7 1,029.9 124.7 6.9 89.1 29.0 32.7 41.8 550.8 533.3 113.0 16.8 122.3 716.5 819.2 18.6 18.7 289.2 242.2 21.0 13.4 0.1 41.2 164.3 465.3 474.6 799.4 2,221.0 1,743.3

31.6 1.1 459.7 0.3 6.1 8.4 507.2 203.5 2.2 17.8 1.3 46.6 364.2 635.6 1,142.8

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

939.8 776.2 671.9 419.1 6.3 15.5 1.0 1.9 14.6 98.1 3.5 2,947.9 467.6 0.8 19.0 25.9 2.3 1,295.4 348.2 2,159.2 5,107.1

2.6 0.2 2.8 394.8 340.4 441.0 140.5 71.7 6.8 2.6 12.2 0.5 0.4 0.7 3.7 31.7 1.1 501.0 952.7 352.4 17.2 0.7 12.1 8.5 36.3 5.7 2.0 152.2 1,351.7 1.2 52.1 559.9 1,432.2 1,060.9 2,384.9

849.2 406.6 173.4 0.1 0.5 45.6 1.4 1,476.8 160.6 7.0 17.0 0.2 213.8 44.6 443.2 1,920.0

852.0 804.2 781.4 385.6 6.8 14.8 1.0 0.7 0.5 81.0 2.5 2,930.5 530.2 7.7 20.6 53.3 7.9 1,717.7 97.9 2,435.3 5,365.8

1,028.5 126.1 1,154.6 127.6 62.8 41.8 1,543.8 0.3 113.0 6.1 147.5 2,042.9 222.1 20.9 549.2 35.7 87.9 993.8 1,909.6 5,107.1

896.1 1.5 133.2 897.6 133.2 6.3 70.9 30.2 25.6 51.5 489.2 863.8 312.1 17.0 146.5 854.8 1,158.3 33.8 1.8 134.0 278.0 18.5 19.6 3.7 24.4 156.9 539.2 313.1 896.8 2,065.5 2,188.3

29.7 133.4 520.2 0.6 3.7 7.3 694.9 9.0 31.7 9.8 41.5 325.1 417.1 1,112.0

896.1 134.7 1,030.8 106.9 189.2 51.5 1,873.2 0.6 312.1 3.7 170.8 2,708.0 42.8 1.8 443.7 47.9 69.6 1,021.2 1,627.0 5,365.8

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 57

NOTE 3: SEGMENT INFORMATION (continued) Note 3.4: Segment Statement of Cash Flows - Operating Segments (Year ended 31 December) Notes

2008 (1)

2009 Automobile

Car

Vehicle

Distribution

Rental

Glass

Automobile

Car

Vehicle

Distribution

Rental

Glass

65.0 -

56.2 -

208.6 -

329.8 -

88.5 -

-147.6 1.3

150.9 -

91.8 1.3

Depreciation of vehicles for rent-a-car and operating lease activities

70.6

114.2

184.8

66.9

115.1

182.0

Depreciation of other items Amortisation of Avis licence rights Amortisation of other intangible assets

5 9 5

12.8 1.0

14.9 13.7 4.8

55.7 21.7

83.4 13.7 27.5

12.1 0.2

17.1 21.7 3.4

48.8 19.0

78.0 21.7 22.6

9/13/15

0.6

226.1

135.7

192.3

-3.1 -0.1 -

-9.6 -1.5 1.8

59.7 -27.0 -

47.0 -28.6 1.8

1.1 -

5.9 -2.2 -5.6

57.1 -11.6 -

64.1 -13.8 -5.6

132.8

-289.4

-153.7

-293.4

-447.1

-211.5

-491.5

-703.0

Sale of vehicles for rent-a-car and operating (2) lease activities

120.8

249.9

370.7

122.1

355.7

477.8

Change in net working capital Cash generated from operations Tax paid Net cash from operating activities

145.1 258.4 2.1 260.5

40.8 460.9 -12.0 448.9

15.2 333.9 -26.3 307.6

201.1 1,053.2 -36.2 1,017.0

-122.3 -42.9 -4.6 -47.5

4.5 6.8 -10.6 -3.8

-2.1 262.1 -17.7 244.4

-119.9 226.0 -32.9 193.1

-6.8 0.1 -6.7 -275.1 26.7 -255.1

-10.9 0.6 -10.3 -0.4 -2.7 -13.4

-97.9 3.0 -94.9 -16.3 -2.8 -114.0

-115.6 3.7 -111.9 -275.1 -16.7 21.2 -382.5

-13.7 2.5 -11.2 -11.6 -22.8

-26.3 0.6 -25.7 -1.9 5.6 -22.0

-49.8 2.5 -47.3 -44.5 -0.7 -92.5

-89.8 5.6 -84.2 -46.4 -6.7 -137.3

-1.4 216.4 -21.0 -16.5 75.4 252.9

-2.0 -54.3 -299.4 -71.2 -426.9

-13.7 -74.4 -28.5 -97.5 -214.1

-3.4 -68.0 -157.4 -120.7 -16.5 -22.1 -388.1

-1.5 112.6 -24.8 -16.5 -0.2 69.6

-53.5 147.9 -76.6 17.8

-17.4 -62.6 -36.4 -2.8 -119.2

-1.5 -70.9 197.9 -137.8 -16.5 -3.0 -31.8

258.3

8.6

-20.5

246.4

-0.7

-8.0

32.7

24.0

1.2 -

23.0 29.1

44.6 -

68.8 29.1

1.9 -

35.0 25.9

17.7 -

54.6 25.9

1.2

52.1

44.6

97.9

1.9

60.9

17.7

80.5

258.3 259.5

8.6 -0.1 60.6

-20.5 4.0 28.1

246.4 3.9 348.2

-0.7 1.2

-8.0 -0.8 52.1

32.7 -5.8 44.6

24.0 -6.6 97.9

Cash flows from operating activities Operating profit from continuing operations Operating profit from discontinued operations

Impairment losses on goodwill and other non-current assets Non-cash operating lease charge on buy-back agreements Other non-cash items Retirement benefit obligations Other cash items Net receipts/(payments) with respect to vehicles purchased under buy-back agreements Purchase of vehicles for rent-a-car and operating (2) lease activities

9 9/12 25

Cash flows from financing activities Net acquisition of treasury shares Net capital element of finance lease payments Net change in other borrowings Net interest paid Dividends paid by Parent Dividends received from/(paid by) subsidiaries Net cash from financing activities

TOTAL CASH FLOW FOR THE PERIOD Reconciliation with statement of financial position Cash at beginning of period 28 Cash equivalents at beginning of period 28 Cash and cash equivalents at beginning of period Total cash flow for the period Translation differences Cash and cash equivalents at end of period (1) As restated (see note 2.1). (2) Excluding vehicles held under buy-back agreements.

Group

FINANCIAL REPORT

EUR million

58 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3: SEGMENT INFORMATION (continued) Note 3.5: Other Segment Information - Operating Segments (Year ended 31 December) EUR million

Capital additions

2009

(1)

2008

Automobile

Car

Vehicle

Distribution

Rental

Glass

160.5

327.4

130.0

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

225.4

543.8

116.4

617.9

Group 885.6

(1) Capital additions include both additions and acquisitions through business combinations including goodwill.

Besides depreciation and amortisation of segment assets (which are provided in note 5), the operating lease charges on buy-back agreements (also disclosed in note 5) and the charge arising from the long-term management incentive schemes are the other significant non-cash expense deducted in measuring segment result. Note 3.6: Geographical Segment Information (Year ended 31 December) The Group’s three operating segments operate in three main geographical areas, being Belgium (main market for the Automobile Distribution segment), the rest of Europe and the rest of world. EUR million

2009 Belgium

Segment sales from external customers Non-current assets Capital additions

(1)

(2)

(3)

2008

Rest of

Europe

world

Group

2,419.6

2,792.4

1,057.7

6,269.7

477.4

1,854.0

485.4

2,816.8

167.6

369.9

80.4

617.9

Belgium

(4)

Rest of

Europe

world

Group

2,625.7

2,944.4

931.1

6,501.2

577.7

1,786.3

468.5

2,832.5

231.3

577.8

76.5

885.6

(1) Based on the geographical location of the customers. (2) Non-current assets, as defined by IFRS 8, consists of goodwill, other intangible assets, vehicles, other property, plant and equipment, investment property and non-current other receivables. (3) Capital additions include both additions and acquisitions through business combinations including goodwill. (4) As restated (see note 2.1)

NOTE 4: SALES EUR million

2009

2008 (1)

New vehicles

1,929.7

2,162.7

Used cars

117.0

114.0

Spare parts and accessories

149.4

141.5

After-sales activities by D’Ieteren Car Centers

51.6

51.4

D’Ieteren Sport

40.2

47.1

D’Ieteren Lease

143.2

139.4

Rental income under buy-back agreements Other sales

2.2

3.0

20.5

20.3

Subtotal Automobile Distribution

2,453.8

2,679.4

Rental

1,159.6

1,311.3

233.1

354.4

Subtotal Car Rental

Disposal of vehicles not subject to buy-back agreements

1,392.7

1,665.7

Vehicle Glass

2,423.2

2,156.1

SALES (EXTERNAL)

6,269.7

6,501.2

of which: sales of goods

2,626.0

2,985.0

of which: rendering of services

3,599.7

3,465.7

44.0

50.5

of which: royalties (1) As restated (see note 2.1).

Interest income and dividend income (if any) are presented among net finance costs (see note 6).

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 59

NOTE 5: OPERATING RESULT Operating result is stated after charging: EUR million

2008 (1)

2009 Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

Purchases and changes in inventories

-2,057.6

-279.6

-576.3

-2,913.5

-2,252.6

-416.5

-532.4

-3,201.5

Depreciation of vehicles

-70.6

-114.2

-184.8

-66.9

-115.1

-182.0

Depreciation of other items (excl. investment property)

-11.8

-14.9

-55.7

-82.4

-11.6

-17.1

-48.8

-77.5

-1.0

-4.8

-11.1

-16.9

-0.2

-3.4

-11.1

-14.7

-135.7

-192.3

Amortisation (excl. re-measurements - see note 9) Operating lease charge on buy-back agreements Contingent operating lease rentals

(2)

Other operating lease rentals

-51.3

-55.2

-120.9

-106.2

-227.1

-119.7

-93.5

-213.2 -6.7

Write-down on inventories

2.0

-2.1

-0.1

-6.9

0.2

Net gain (loss) on vehicles

5.4

1.1

6.5

5.2

-10.3

-5.1

-124.5

-260.9

-831.6

-1,217.0

-119.8

-283.0

-786.4

-1,189.2

Employee benefit expenses (see note 36) Research and development expenditure Sundry

-1.4

-3.0

-125.4

-299.2

-619.3

-1,043.9

-138.2

-337.9

-499.9

-976.0

-5.2

-8.8

-1.6

-15.6

-2.8

-2.4

-0.4

-5.6 -0.5

Other operating expenses: Bad and doubtful debts Investment property expenses: Depreciation Operating expenses

(3)

Sundry Subtotal other operating expenses

-0.5

-0.1

0.5

-0.1

-2.4

-2.0

0.2

-0.1

-6.9

-6.8

-5.2

-8.9

-4.0

-18.1

-3.2

-2.5

-7.3

-13.0 1.9

Other operating income: Gain on property, plant and equipment Rental income from investment property

(4)

Sundry Subtotal other operating income Subtotal current items Unusual items and re-measurements (see note 9) NET OPERATING EXPENSES

1.9

0.6

0.7

0.1

0.7

3.3

-2,388.0

-1,289.3

-2,207.7

-5,885.0

-2,590.9

-1,553.0

-1,982.2

-6,126.1

-0.8

-47.2

-6.9

-54.9

-260.3

-23.0

-283.3

-2,388.8

-1,336.5

-2,214.6

-5,939.9

-2,590.9

-1,813.3

-2,005.2

-6,409.4

(1) As restated (see note 2.1). (2) Contingent operating lease rentals primarily arise with respect to airport rental desk concessions, and are ordinarily based on the level of revenue generated by the individual concession. (3) The full amount is related to investment property that generated rental income. (4) Does not include any contingent rent.

FINANCIAL REPORT

Current items:

60 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6: NET FINANCE COSTS Net finance costs are broken down as follows: EUR million

2009

2008

Automobile

Car

Vehicle

Distribution

Rental

Glass

-20.2

-61.7

-25.9

-3.5

-7.6

-3.9

-23.7

-69.3

-29.8

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

-107.8

-29.2

-77.6

-37.2

-15.0

-0.2

0.5

0.3

0.6

-122.8

-29.4

-77.1

-36.9

-143.4

Current items: Finance costs: Interest expense Transfer from re-measurements Current interest expense

-144.0

Other financial charges

-0.2

-0.3

Subtotal finance costs

-23.9

-69.3

-29.8

-123.0

-29.7

-77.1

-36.9

-143.7

Finance income Current net finance costs

0.8

1.0

1.3

3.1

1.8

2.0

3.3

7.1

-23.1

-68.3

-28.5

-119.9

-27.9

-75.1

-33.6

-136.6

Unusual items and re-measurements (see note 9): Unusual items Re-measurements of financial instruments: (1)

-2.1

-2.3

-2.8

-7.2

2.2

-18.4

-4.2

-20.4

Transfer to current items

3.5

7.6

3.9

15.0

0.2

-0.5

-0.3

-0.6

Subtotal gains (losses) on “clean” (1) fair value of derivatives

1.4

5.3

1.1

7.8

2.4

-18.9

-4.5

-21.0

Gains (Losses) on “dirty” fair value of derivatives

Foreign exchange gain (loss) on net debt Unusual items and re-measurements NET FINANCE COSTS

-2.5

-0.5

1.4

2.8

1.1

5.3

2.4

-19.4

-4.5

-21.5

-21.7

-65.5

-27.4

-114.6

-25.5

-94.5

-38.1

-158.1

(1) Change in “dirty” fair value of derivatives corresponds to the change of value of the derivatives between the beginning and the end of the period. Change in “clean” fair value of derivatives corresponds to the change of “dirty” fair value excluding the accrued cash flows of the derivatives that occurred during the period.

NOTE 7: ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD Four group entities are accounted for using the equity method. D’Ieteren Vehicle Trading s.a. is a 49%-owned associate which provides finance lease services to customers of the Automobile Distribution segment. At year end, the Automobile Distribution’s interest in this associate comprised: EUR million

2009

Share of gross assets

37.1

32.1

-33.8

-29.5

Share of gross liabilities Share of net assets Share of sales Share of profit (loss)

2008

3.3

2.6

11.3

9.3

0.7

Mercury Car Rentals Ltd is a 33%-owned associate of Avis Europe plc which provides short-term car rental services in India under the Avis brand. During the year, Avis Europe further invested in its Indian associate undertaking for cash consideration of EUR 0.4 million. No goodwill arose upon this investment. The Avis Europe’s share of net assets are unchanged at 33%. At year end, the Car Rental’s interest in this associate comprised: EUR million Share of gross assets (incl. goodwill)

2009

2008

3.4

3.1

-2.6

Share of net assets

0.8

0.5

Share of sales

3.7

3.8

-0.3

0.1

Share of gross liabilities

Share of profit (loss)

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 61

NOTE 7: ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD (continued)

EUR million

2009

2008

Share of non-current assets (incl. goodwill)

27.4

25.0

Share of current assets

4.7

5.8

-0.7

-20.7

-18.4

Share of non-current liabilities Share of current liabilities Share of net assets

11.4

11.7

Share of sales

19.9

13.5

0.4

0.3

Share of profit (loss)

In 2008, Avis Europe plc invested in a French joint venture, OKIGO, for a cash consideration of EUR 0.1 million. The Car Rental’s 50% share of net liabilities acquired was EUR 0.6 million.

NOTE 8: TAX EXPENSE Tax expense is broken down as follows: EUR million

Current year income tax Prior year income tax Movement in deferred taxes

2009

2008

Automobile

Car

Vehicle

Distribution

Rental

Glass

-0.3

-19.9

-35.4

0.6

0.8

-2.7

19.9

4.0

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

-55.6

-1.9

4.2

-17.8

1.4

-0.8

-2.9

-3.7

21.2

-2.3

55.2

2.0

54.9

-15.5

Tax expense

-2.4

-30.6

-33.0

-5.0

59.4

-18.7

35.7

of which: current items

-1.7

-10.4

-31.9

-44.0

-2.0

-16.2

-28.5

-46.7

of which: unusual items and re-measurements of which: (see note 9)

-0.7

10.4

1.3

11.0

-3.0

75.6

9.8

82.4

In 2008, in the Car Rental segment, the movement in deferred taxes included the movement of EUR 66.9 million in relation with the impairment charge on Avis licence rights (see notes 13 and 21). The relationship between tax expense and accounting profit is explained below: EUR million

Result before taxes

2009

2008

Automobile Distribution

Car Rental

Vehicle Glass

Group

Automobile Distribution

Car Rental

Vehicle Glass

Group

43.3

-9.3

181.2

215.2

63.0

-242.1

112.8

-66.3

-14.7

3.2

-61.6

-73.1

-21.4

82.3

-38.3

22.6

Reconciling items (sum of items marked (a) and (b) below)

12.3

-3.2

31.0

40.1

16.4

-22.9

19.6

13.1

Actual tax on result before taxes

-2.4

-30.6

-33.0

-5.0

59.4

-18.7

35.7

Tax at the Belgian corporation tax rate of 33.99%

FINANCIAL REPORT

Anji Car Rental and Leasing Company Ltd and OKIGO are 50%-owned joint ventures of Avis Europe plc which provide, under the Avis brand, short-term car rental services in China and France respectively. At year end, the Car Rental’s interest in these both joint ventures comprised:

62 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8: TAX EXPENSE (continued) The reconciling items are provided below: EUR million

2009

Current PBT Tax at the Belgian corporation tax rate of 33.99%

2008

Automobile

Car

Vehicle

Distribution

Rental

Glass

42.7

35.1

187.0

-14.5

-12.0

-63.6

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

264.8

60.6

37.6

140.3

238.5

-90.1

-20.6

-12.8

-47.7

-81.1

Rate differential

(a)

6.4

-1.8

4.6

7.3

-5.7

1.6

Permanent differences

(a)

29.1

0.1

25.5

54.7

27.3

-2.7

23.7

48.3

Utilisation of tax losses

(a)

1.5

1.4

2.9

0.4

3.7

4.1

Other temporary differences

(a)

0.1

Adjustments in respect of prior years

(a)

0.9

1.8

-5.9

-3.2

0.1

3.4

-1.7

1.8

Deferred tax assets not recognised Recognition of previously unrecognised deferred tax assets Impact of dividends

(a)

-17.0

-9.0

-1.2

-27.2

-6.7

-11.1

-1.1

-18.9

(a)

1.0

13.7

14.7

(a)

-1.0

-1.3

Other

(a)

-0.3

0.8

0.5

-1.3

-0.3

0.3

-1.3

Actual tax on current PBT

-1.7

-10.4

-31.9

-44.0

-2.0

-16.2

-28.5

-46.7

Actual tax rate on current PBT

30%

17%

43%

20%

Unusual items and re-measurements in PBT

0.6

-44.4

-5.8

-49.6

2.4

-279.7

-27.5

-304.8

-0.2

15.1

2.0

16.9

-0.8

95.1

9.3

103.6

Tax at the Belgian corporation tax rate of 33.99% Rate differential

(b)

-1.8

-0.7

-2.5

-11.3

0.5

-10.8

Permanent differences

(b)

-0.3

0.1

Utilisation of tax losses

(b)

-0.2

Adjustments in respect of prior years

(b)

0.1

Deferred tax assets not recognised

(b)

-0.5

-4.9

-5.4

-2.2

-7.7

-9.9

Other

(b)

2.5

-0.7

10.4

1.3

11.0

-3.0

75.6

9.8

82.4

Actual tax on unusual items and re-measurements in PBT

NOTE 9: UNUSUAL ITEMS AND RE-MEASUREMENTS Result for the Period Current result after tax (“current PAT”) consists of the reported result from continuing operations (or the result for the period when no discontinued operation is reported), excluding unusual items and re-measurements as defined in note 2, and excluding their tax impact. Current result before tax (“current PBT”) consists of the reported result before tax excluding unusual items and re-measurements as defined in note 2. Current PAT, Group’s share, and current PBT, Group’s share, exclude the share of non-controlling shareholders in current PAT and current PBT. Current result is a non-GAAP measure, i.e. its definition is not addressed by IFRS. The Group does not represent current result as an alternative to financial measures determined in accordance with IFRS. Current result as reported by the Group may differ from similarly titled measures by other companies. The Group uses the concept of current result to reflect its underlying performance.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 63

NOTE 9: UNUSUAL ITEMS AND RE-MEASUREMENTS (continued) EUR million

2009

2008

Automobile

Car

Vehicle

Distribution

Rental

Glass

43.3

-9.3

181.2

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

215.2

63.0

-242.1

112.8

Group

From reported PBT to current PBT, Group’s share: -66.3

Less: Unusual items and re-measurements in PBT: -1.3

(b)

-9.5

-12.2

-2.4

5.7

(b)

11.9

Foreign exchange

2.5

(c)

2.5

0.5

(c)

Impairment losses on goodwill

(d)

1.5

(d)

1.5

Amortisation of Avis licence rights

13.7

21.7

Re-measurements of financial instruments

-1.4

(a)

(g)

15.2 0.5

Impairment of Avis licence rights

223.0

Amortisation of customer contracts

5.4

(h)

5.4

5.2

(h)

Amortisation of brands with finite useful life

5.2

(i)

5.2

2.7

(i)

2.7

0.8

29.5

4.7

(j)

35.0

27.3

7.7

(j)

35.0

Other unusual items Current PBT Share of non-controlling interest in current PBT Current PBT, Group’s share

(e)

(f)

(a)

(e)

(f)

223.0 5.2

42.7

35.1

187.0

264.8

60.6

37.6

140.3

0.2

-14.2

-36.6

-50.6

-15.1

-31.7

-46.8

42.9

20.9

150.4

214.2

60.6

22.5

108.6

191.7

42.9

20.9

150.4

214.2

60.6

22.5

108.6

191.7

0.7

0.1

0.8

0.7

0.2

0.9

238.5

From current PBT, Group’s share, to current PAT, Group’s share: Current PBT, Group’s share Share of the group in current result of equity accounted entities Tax on current PBT, Group’s share

-1.7

-6.2

-24.3

-32.2

-2.0

-9.7

-21.9

-33.6

Current PAT, Group’s share

41.9

14.8

126.1

182.8

59.3

13.0

86.7

159.0

Current PAT, Group’s share

41.9

14.8

126.1

182.8

59.3

13.0

86.7

159.0

Current result for the period attributable to equity holders of the Parent

41.9

14.8

126.1

182.8

59.3

13.0

86.7

159.0

From current PAT, Group’s share, to current result for the period attributable to equity holders of the Parent:

Automobile Distribution (a) Net finance costs include re-measurements of financial instruments amounting to EUR 1.4 million (2008: EUR 2.4 million) arising from changes in the “clean” fair value of derivatives. Car Rental (b) Net finance costs and commercial and administrative expenses include re-measurements of financial instruments amounting to respectively EUR 5.3 million (2008: EUR -18.9 million) and EUR -4.0 million (2008: EUR 13.2 million) arising from changes in the “clean” fair values of derivatives. (c) Foreign exchange loss on net debt amounts to EUR -2.5 million (2008: EUR -0.5 million) recognised in net finance costs. (d) During the prior year, Avis Europe recognised an impairment charge against the goodwill arising on the acquisition of certain licensees in Holland. This followed a reappraisal of the business in conjunction with the restructuring mentionned below (see f). (e) In the prior year, the Board of Directors of the Parent reviewed the carrying amount of its investment in Avis Europe in accordance with the requirements of IAS 36 “Impairment of Assets”. This review led to the conclusion that the carrying amount of the Avis Europe cash-generating unit had to be reduced to its value in use. The resulting impairment was fully allocated to the value of the Avis licence rights. As a result, a gross impairment charge (presented in other operating expenses) of EUR 223.0 million was recognised. See note 13 of our 2008 Consolidated Financial Statements for other disclosures required by IAS 36.

FINANCIAL REPORT

Reported PBT

64 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9: UNUSUAL ITEMS AND RE-MEASUREMENTS (continued) (f) Other unusual items of the Car Rental segment are set out below: - Restructuring costs of EUR 14.0 million were recognised, reflecting the rationalisation of operations which commenced in the prior year. Actions included 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 Avis Europe head office. In the prior year, restructuring costs of EUR 27.6 million were incurred in respect of a redundancy programme that commenced in December 2007. These restructuring costs are presented in other operating expenses and in commercial and administrative expenses. - During the year, Avis Europe took the decision to combine the corporately-owned operations of Budget with the respective Avis businesses. Restructuring costs of EUR 7.8 million were recognised including redundancies, the rationalisation of certain rental stations to reflect synergies with Avis, and vacant property provisions. These restructuring costs are presented in other operating expenses and in commercial and administrative expenses. - During the year, Avis Europe developed and prepared a structure for a potential securitisation of its fleet. Advisory, legal and other costs (EUR 7.8 million presented in commercial and administrative expenses) were incurred in the development of corporate and operational structures. - The activities associated with the closed Centrus credit hire business continue to recover a residue of receivables, resulting in a further unusual credit of EUR 0.1 million (2008: EUR 0.3 million). These unusual income are recognised in other operating income. In the prior year, Avis Europe had recognised an unusual income of EUR 1.3 million to reflect the final settlement of a warranty provision made in 2007 in relation with the disposal of its subsidiary in Greece. This unusual income was presented in discontinued operations. Vehicle Glass (g) Net finance costs and cost of sales include re-measurements of financial instruments amounting to respectively EUR 1.1 million (2008: EUR -4.5 million) and EUR 8.4 million (2008: EUR -7.4 million) arising from changes in the “clean” fair value of derivatives. (h) In the framework of US acquisitions (Diamond, Safelite and Cindy Rowe), customer contracts were recognised as an intangible asset with a finite useful life. The 2009 amortisation (in commercial and administrative expenses) amounted to EUR 5.4 million (2008: EUR 5.2 million). (i) Commercial and administrative expenses include the amortisation of US brands with finite useful lives (AUTO GLASS SPECIALISTS® and ELITE AUTO GLASS™, acquired in 2005, as well as DIAMOND TRIUMPH GLASS™ and CINDY ROWE AUTO GLASS™ acquired respectively in June and December 2008) amounting to EUR 5.2 million (2008: EUR 2.7 million). (j) Other unusual items of the Vehicle Glass segment are set out below: - Restructuring costs of EUR 4.7 million (in other operating expenses) were incurred in relation to the restructuring of the US business. In 2008, restructuring costs of EUR 9.9 million (in other operating expenses) were incurred. - In 2008, an unusual credit of EUR 2.2 million (in other operating income) was recognised following the partial release of an onerous lease provision set-up in 2007 for a vacant UK property. Cash Flows The line “Acquisition of non-controlling interest” results from the exercise by Cobepa on 1 September 2009 of its put options on the 16.35% of Belron’s equity capital it owned. Subsequently, the Group and Cobepa owned 93.73% and nil respectively of Belron. The line “Acquisition of subsidiaries” for the year ended 31 December 2009 includes, among other transactions, the business combinations disclosed in note 12.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 65

Earnings per share (“EPS”) and earnings per share for continuing operations (“Continuing EPS”) are shown above, on the face of the consolidated income statement. Basic and diluted EPS are based on the result for the period attributable to equity holders of the Parent (based on the result from continuing operations attributable to equity holders of the Parent for the continuing EPS), after adjustment for participating shares (each participating share confers one voting right and gives right to a dividend equal to one eighth of the dividend of an ordinary share). Current EPS and current continuing EPS, which do not include unusual items and re-measurements as defined in note 9, are presented to highlight underlying trading performance. The weighted average number of ordinary shares in issue for the period is shown in the table below. The Group has granted options to employees over ordinary shares of the Parent and of Avis Europe plc. Such shares constitute the only category of potentially dilutive ordinary shares. The options over ordinary shares of Avis Europe plc did not impact earnings per share in either 2008 or 2009 as 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 year end. The options over ordinary shares of the Parent increased the weighted average number of shares of the Parent in 2008 and 2009 as some option exercise prices were below the market share price. These options are dilutive. The computation of basic and diluted EPS is set out below:

Result for the period attributable to equity holders Adjustment for participating shares Numerator for EPS (EUR million)

(a)

Current result for the period attributable to equity holders Adjustment for participating shares Numerator for current EPS (EUR million)

(b)

2009

2008

158.5

32.2

-1.7

-0.3

156.8

31.9

182.8

159.0

-2.1

-1.8

180.7

157.2

Result from continuing operations

183.0

-29.5

Share of non-controlling interest in result from continuing operations

-24.5

60.9

Result from continuing operations attributable to equity holders

158.5

31.4

Adjustment for participating shares Numerator for continuing EPS (EUR million)

(c)

-1.7

-0.3

156.8

31.1

Current result from continuing operations

221.6

192.9

Share of non-controlling interest in current result from continuing operations

-38.8

-33.9

Current result from continuing operations attributable to equity holders (“Current PAT, Group’s share” as defined in note 9)

182.8

159.0

-2.1

-1.8

Numerator for current continuing EPS (EUR million)

Adjustment for participating shares (d)

180.7

157.2

Weighted average number of ordinary shares outstanding during the period

(e)

5,428,841

5,439,276

Adjustment for stock option plans

9,027

7,698

(f)

5,437,868

5,446,974

Basic EPS (EUR)

(a)/(e)

28.88

5.86

Diluted EPS (EUR)

(a)/(f)

28.83

5.86

Basic current EPS (EUR)

(b)/(e)

33.29

28.90

Diluted current EPS (EUR)

(b)/(f)

33.23

28.86

Weighted average number of ordinary shares taken into account for diluted EPS Result for the period attributable to equity holders

Result from continuing operations attributable to equity holders Basic continuing EPS (EUR)

(c)/(e)

28.88

5.72

Diluted continuing EPS (EUR)

(c)/(f)

28.83

5.71

Basic current continuing EPS (EUR)

(d)/(e)

33.29

28.90

Diluted current continuing EPS (EUR)

(d)/(f)

33.23

28.86

FINANCIAL REPORT

NOTE 10: EARNINGS PER SHARE

66 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11: GOODWILL EUR million

2009

2008

Carrying amount at 1 January

852.0

786.6

Additions

15.2

35.3

Increase arising from put options granted to non-controlling shareholders (see note 33)

71.0

37.6

Impairment losses Adjustments Translation differences Carrying amount at 31 December

-1.5

-0.6

3.1

-5.4

939.8

852.0

The additions arising from business combinations that occurred in the period are detailed in note 12. The increase arising from put options comprise the additional goodwill related to the exercise by Cobepa on 1 September 2009 of its put options (16.35% of Belron’s equity capital) and the additional goodwill recognised at year end to reflect the change in the exercise price of the remaining options granted to non-controlling shareholders and the carrying value of non-controlling interest to which they relate (see note 33). The adjustments result from subsequent changes in the fair value of the net assets (mainly recognition of US intangibles with finite useful lives – see note 13) acquired in 2008 by the Vehicle Glass segment. In 2008, the adjustments resulted from subsequent changes in the deferred consideration payable in relation to the acquisition by the Vehicle Glass segment in 2007 of non-controlling interest of its subsidiary in Brazil and in the fair value of the net assets of Safelite acquired in 2007 by the Vehicle Glass segment. In accordance with the requirements of IAS 36 “Impairment of Assets”, the Group completed a review of the carrying value of goodwill and of the other intangible assets with indefinite useful lives (see note 13) as at each year end. The impairment review, undertaken by calculating value in use, was carried out to ensure that the carrying value of the Group’s assets are stated at no more than their recoverable amount, being the higher of fair value less costs to sell and value in use. The impairment losses of 2008 arose in the Car Rental segment (see note 9). In determining the value in use, the Group calculated the present value of the estimated future cash flows expected to arise from the continuing use of the assets using pre-tax discount rates in the range from 7% to 9% (2008: from 7% to 9%). The discount rate applied is based upon the weighted average cost of capital of each segment with appropriate adjustment for the relevant risks associated with the businesses. Estimated future cash flows are based on long-term plans (i.e. over 4 or 5 years) for each cashgenerating unit, with extrapolation thereafter based on long-term average growth rates for the individual cash-generating units. This growth rate is in the range from 2% to 4% (2008: 2% to 4%) for most of the units, including the ones that carry the most significant goodwill and intangible assets with indefinite useful lives. Future cash flows are estimates that are likely to be revised in future periods as underlying assumptions change. Key assumptions in supporting the value of goodwill and intangible assets with indefinite useful lives include long-term interest rates and other market data. Should the assumptions vary adversely in the future, the value in use of goodwill and intangible assets with indefinite useful lives may reduce below their carrying amounts. Based on current valuations, headroom appears to be sufficient to absorb a normal variation in the underlying assumptions.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 67

NOTE 11: GOODWILL (continued) The allocation of goodwill to cash-generating units is set out below (the allocation of other intangible assets with indefinite useful lives is set out in note 13): EUR million

2009

2008

2.6

France

0.2

Subtotal Car Rental

0.2

United Kingdom

96.5

96.4

France

64.8

Italy

54.2

54.2 47.8

Automobile Distribution

Vehicle Glass

Germany

47.8

Canada

37.4

34.2

Holland

29.1

Belgium

27.1

Australia

24.8

117.3

110.6

United States

15.7

Norway

Spain

6.9

New Zealand

6.4

Greece

3.8

Sweden

4.0

3.9

Switzerland

2.0

2.2

Portugal

1.2

Denmark Brazil China

5.2

4.9

21.2

15.7

1.0

370.6

299.5

Subtotal Vehicle Glass

937.0

849.2

GROUP

939.8

852.0

Unallocated

The unallocated amount in the Vehicle Glass segment comes from the acquisition of Belron by the Group in 1999, from the transactions entered into with the non-controlling shareholders of Belron since 1999, and from the recognition of the put options granted to non-controlling shareholders of Belron following the introduction of IAS 32 from 1 January 2005 onwards (see note 33).

NOTE 12: BUSINESS COMBINATIONS During the period, the Group made the following acquisitions (only in the Vehicle Glass segment): -

On 31 March 2009, Belron acquired a 100% interest in 3091-6266 Québec Inc. which operates three branches in Canada. On 4 June 2009, Belron substantially acquired all of the net assets of Jose V Moncho Climent (Autocristal Panoramic) which operates one branch in Spain. On 19 June 2009, Belron acquired a 100% interest in Couture Vitres D’Auto Inc. which operates one branch in Canada. On 1 September 2009, Belron acquired a 100% interest in Qingdao Xinghuo Automotive Glass Company Ltd. which operates one branch in China. On 30 September 2009, Belron substantially acquired all of the net assets of Auto Glass Center Inc. and Alliance Claims Solutions which operate seventy eight branches in the United States. On 19 November 2009, Belron substantially acquired all of the net assets of Parauto Auto Vidros e Acessórios Ltda which operates two branches in Brazil.

FINANCIAL REPORT

Car Rental

68 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12: BUSINESS COMBINATIONS (continued) The sales arising subsequent to these acquisitions amount approximately to EUR 11 million (approximately EUR 39 million if they had occurred on the first day of the period). The results arising subsequent to these acquisitions (even if they had occurred on the first day of the period) are not considered material to the Group and accordingly are not disclosed separately. The acquisitions have been accounted for using the purchase method of accounting. The Group will apply the revised version of IFRS 3 â&#x20AC;&#x153;Business Combinationsâ&#x20AC;? as from 1 January 2010. The details of the net assets acquired, goodwill and consideration of the acquisitions are set out below: EUR million

Book

Adjustment

(1)

value

Provisional fair value

(2)

Other property, plant & equipment

2.1

Inventories

1.8

Trade and other receivables

3.1

Cash and cash equivalents

0.1

-4.9

2.2

Trade and other payables Net assets acquired

2.2

Goodwill (see note 11)

15.2

CONSIDERATION

17.4

Consideration satisfied by: Cash payment

13.0

Deferred consideration

3.5

Associated costs arising on acquisition

0.9 17.4

(1) Fair value and accounting policy adjustments. (2) The fair values are provisional since the integration process of the acquired entities and businesses is still ongoing.

The goodwill on the 2008 acquisitions was decreased by EUR 1.5 million reflecting fair value adjustments made to the initial valuations disclosed in note 12 of the 2008 Consolidated Financial Statements. This decrease reflects changes in the fair value of the net assets acquired. Business combinations occurred in the Vehicle Glass segment after the balance sheet date but before these consolidated financial statements were authorised for issue (see note 44).

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 69

NOTE 13: OTHER INTANGIBLE ASSETS

EUR million

Gross amount at 1 January 2009 Accumulated amortisation and impairment losses at 1 January 2009 Carrying amount at 1 January 2009

Avis licence rights

Other licenses and similar rights

Brands (with finite and indefinite useful lives)

Customer contracts

Computer software

Intangibles under development

Other

Total

711.5

0.4

337.8

51.8

105.0

1.9

0.3

1,208.7

-331.5

-0.4

-2.6

-9.8

-59.9

-0.3

-404.5

380.0

335.2

42.0

45.1

1.9

804.2

Additions: Internal development

0.9

Items separately acquired

13.3

-1.3

-13.7

-5.2

-5.4

-16.9

-41.2

Disposals Amortisation Transfer from (to) another caption

1.1

0.7

2.8

-2.8

1.8

Translation differences

-2.7

-1.2

2.4

-1.5

Carrying amount at 31 December 2009

366.3

328.4

36.1

45.4

776.2

of which: gross amount

711.5

0.4

336.1

50.9

123.3

0.3

1,222.5

-345.2

-0.4

-7.7

-14.8

-77.9

-0.3

-446.3

of which: accumulated amortisation and impairment losses Gross amount at 1 January 2008

711.5

0.4

334.7

48.2

60.9

44.9

0.3

1,200.9

Accumulated amortisation and impairment losses at 1 January 2008

-86.8

-0.4

-4.1

-40.9

-13.1

-0.3

-145.6

Carrying amount at 1 January 2008

624.7

334.7

44.1

20.0

31.8

1,055.3

Additions: Internal development

0.2

8.5

8.7

Items separately acquired

10.1

-21.7

-2.7

-5.2

-14.7

-44.3

-223.0

Amortisation Impairment losses (see note 9) Transfer from (to) another caption

39.6

-38.0

1.6

Items acquired through business combinations

1.0

2.3

0.1

3.4

Translation differences Carrying amount at 31 December 2008 of which: gross amount of which: accumulated amortisation and impairment losses

2.2

0.8

-10.2

-0.4

-7.6

380.0

335.2

42.0

45.1

1.9

804.2

711.5

0.4

337.8

51.8

105.0

1.9

0.3

1,208.7

-331.5

-0.4

-2.6

-9.8

-59.9

-0.3

-404.5

In 2008, the Board of Directors of the Parent reviewed the carrying amount of the Avis Europe cash-generating unit in accordance with the requirements of IAS 36 “Impairment of Assets” and concluded that it had to be reduced to its value in use. The resulting impairment was fully allocated to the value of the Avis licence rights. As a result, a gross impairment charge (presented in other operating expenses) of EUR 223.0 million was recognised in order to reduce the carrying amount of the Avis licence rights. This impairment charge had led to a decrease of EUR 66.9 million in the deferred tax liability arising on the recognition of the Avis licence rights. The net impairment charge, Group’s share amounted to EUR 84.8 million. See note 13 of our 2008 Consolidated Financial Statements for other disclosures related to sensitivity analysis. In 2009, the same review was carried out by the Board of Directors of the Parent with the value in use calculated on the basis of Avis Europe’s latest five-year plan, with extrapolation thereafter. Considering that the resulting valuation is highly sensitive to a number of assumptions, the Board of Directors of the Parent is satisfied that the carrying amount of the Avis Europe cashgenerating unit is stated at no more than its value in use.

FINANCIAL REPORT

Goodwill is analysed in note 11. All the other intangible assets have finite useful lives, unless otherwise specified.

70 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13: OTHER INTANGIBLE ASSETS (continued) The nature of the brands with indefinite useful lives is provided in the summary of significant accounting policies in note 2. The increase in brands and customer contracts reflects the fair value adjustments made to the initial valuations of the business acquired in 2008 by the Vehicle Glass segment. Since 2008, the brands AUTO GLASS SPECIALISTS ®and ELITE AUTO GLASS™, acquired in 2005, as well as the brands DIAMOND TRIUMPH GLASS™ and CINDY ROWE AUTO GLASS™ acquired in 2008, are not considered to be intangibles with indefinite useful lives, since there is a limit to the period over which these assets are expected to generate cash inflows. They are considered as intangibles with finite useful lives and therefore amortised on their remaining useful life on a straight-line basis. The 2009 amortisation amounted to EUR 5.2 million. The carrying value of the brands with a finite useful life at 31 December 2009 amounted to EUR 7.4 million (2008: EUR 11.5 million), whilst the carrying amount of brands with indefinite useful life amounted to EUR 321.0 million (2008: EUR 323.7 million). The allocation of brands (with indefinite useful lives) to cash-generating units in the Vehicle Glass segment is set out below: EUR million

2009

2008

United Kingdom

67.9

France

61.9

Germany

34.8

Holland

24.2

Belgium

18.1

Canada

15.3

United States

86.5

89.2

Spain

9.1

Portugal

2.9

Italy

0.3

321.0

323.7

Carrying amount of brands

The other disclosures required by IAS 36 for intangible assets with indefinite useful lives are provided in note 11. Based on current valuations (see note 11), headroom appears to be sufficient to absorb a normal variation in the underlying assumptions.

NOTE 14: VEHICLES EUR million

2009

Gross amount at 1 January Accumulated depreciation at 1 January

2008 (1)

980.9

931.2

-199.5

-169.9

Carrying amount at 1 January

781.4

761.3

Additions

470.2

727.4

Depreciation charge

-184.8

-182.0

Transfer to inventories

-403.4

-576.7

6.2

58.5

Transfer from (to) current assets Items acquired through business combinations Translation differences

0.2

2.3

-7.3

Carrying amount at 31 December

671.9

781.4

of which: gross amount

910.5

980.9

-238.6

-199.5

of which: accumulated depreciation (1) As restated (see note 2.1).

Vehicles held under finance leases are included in the above (in the Car Rental segment only) at the following amounts: 2009

EUR

million

2008

EUR

million

The Automobile Distribution’s fleet is rented out in Belgium by s.a. D’Ieteren Lease n.v. (“D’Ieteren Lease”), a wholly-owned subsidiary of the Group. All rentals are operating leases. On average, the rentals are 44 months long (2008: 40 months). The average size of the fleet is as follows: 2009

22,404 vehicles

2008

22,806 vehicles

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 71

In April 2006 D’Ieteren Lease undertook a securitisation programme of its fleet and lease contracts to achieve a more autonomous and flexible financing structure, its fleet having doubled in 6 years. In June 2009, the programme initially launched has been successfully renewed up to EUR 310 million for another three year period. The financing of this new programme is guaranteed for EUR 270 million for eighteen months as from June 2009, to be extended thereafter. This securitisation operation, which fits into the Group’s strategy of diversified financing, consists of the issue of bonds to professional investors. That securitisation programme had no impact on the net debt of the Group (this programme being a substitute to other external sources of financing). The carrying amount of the bonds changes as new lease contracts are concluded and as old ones expire. The reimbursement of the bonds and the payment of interest are covered by customers’ lease payments and the resale of the vehicles. The programme enables the carrying amount of the bonds to follow the evolution of the carrying amount of the fleet until the third anniversary of the renewal (or eighteen months after the renewal, absent extension of the financing of the programme). It then starts to amortise, in line with the maturation of the underlying lease contracts. The securitisation programme does not result in the derecognition of any item from the statement of financial position. Other disclosures regarding the securitisation programme are provided in notes 19, 25, 31 and 39. The Car Rental’s fleet is rented out by Avis Europe plc and its subsidiaries in Europe. All rentals are operating leases. On average, the rentals are 6 days long (2008: 5 days). The average size of the fleet (including vehicles held under buy-back agreements and under other operating leases) is as follows: 2009

100,034 vehicles

2008

117,535 vehicles

The vehicles recognised in the statement of financial position as non-current items are those that are not held under buy-back agreements. Their value at end of rental life will depend on the market for those vehicles at the time of disposal. Judgement is therefore required in the estimation of disposal value.

FINANCIAL REPORT

NOTE 14: VEHICLES (continued)

72 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15: OTHER PROPERTY, PLANT AND EQUIPMENT EUR million

Property

Plant and

Assets

equipment

under

Total

construction Gross amount at 1 January 2009 Accumulated depreciation and impairment losses at 1 January 2009 Carrying amount at 1 January 2009 Additions Disposals Depreciation Transfer from (to) another caption Items acquired through business combinations Impairment losses (see note 9) Translation differences Carrying amount at 31 December 2009 of which: gross amount of which: accumulated depreciation and impairment losses Gross amount at 1 January 2008 Accumulated depreciation at 1 January 2008 Carrying amount at 1 January 2008

361.9

432.2

6.5

800.6

-155.3

-259.7

-415.0

206.6

172.5

6.5

385.6

38.3

75.1

2.9

116.3

-0.7

-4.2

-4.9

-22.0

-60.7

-0.2

-82.9

3.3

2.6

-6.1

-0.2

2.1

-0.4

-0.1

-0.5

2.4

1.1

0.1

3.6

227.5

188.4

3.2

419.1

399.9

498.0

3.2

901.1

-172.4

-309.6

-482.0

353.3

382.9

18.6

754.8

-140.6

-226.2

-0.9

-367.7

212.7

156.7

17.7

387.1

Additions

15.0

68.7

8.7

92.4

Disposals

-0.4

-4.6

-5.0

-21.1

-56.4

-77.5

Transfer from (to) another caption

8.4

7.5

-19.5

-3.6

Items acquired through business combinations

0.1

7.7

7.8

-1.4

-0.2

-1.6

-6.7

-6.9

-0.4

-14.0

206.6

172.5

6.5

385.6

361.9

432.2

6.5

800.6

-155.3

-259.7

-415.0

Depreciation

Impairment losses (see note 9) Translation differences Carrying amount at 31 December 2008 of which: gross amount of which: accumulated depreciation and impairment losses

At 31 December 2009, assets under construction include property under construction in the Automobile Distribution segment (EUR 2.9 million) and in the Car Rental segment (EUR 0.3 million). Assets held under finance leases are included in the above at the following amounts: EUR million

Property

Plant and

Assets

equipment

under

Total

construction 31 December 2009

45.1

31 December 2008

44.8

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 73

EUR million

2009

2008

Gross amount at 1 January

12.5

11.3

Accumulated depreciation at 1 January

-5.7

-5.2

6.8

6.1

Carrying amount at 1 January Additions Depreciation Transfer from (to) another caption

0.3

-0.5

0.9

6.3

6.8

of which: gross amount

12.5

of which: accumulated depreciation

-6.2

-5.7

9.1

Carrying amount at 31 December

Fair value

The fair value is supported by market evidence, and is based on a valuation by an independent valuer who holds a recognised and relevant professional qualification, and who has recent experience in the location and category of the investment property held by the Group. The latest valuations were performed in March and December 2005. All items of investment property are located in Belgium and are held by the Automobile Distribution segment. See also notes 5 and 39 for other disclosures on investment property.

NOTE 17: AVAILABLE-FOR-SALE FINANCIAL ASSETS Available-for-sale financial assets are those non-derivative financial assets that are designated as available for sale or are not classified as (i) loans and receivables, (ii) held-to-maturity investments or (iii) financial assets held for trading. EUR million

2009

2008

Carrying

Fair

Carrying

Fair

amount

value

amount

value

Sundry

1.0

Total available-for-sale financial assets

1.0

Available-for-sale financial assets primarily comprise non-controlling interests in listed companies (measured at fair value) and non listed companies (measured at cost less accumulated impairment losses if any, being an approximation of their fair value), held by the three segments. They are considered as non-current assets, and are not expected to be realised within 12 months. However, some or all of them could be disposed of in the near future, depending on opportunities.

NOTE 18: DERIVATIVE HEDGING INSTRUMENTS Derivative hedging instruments are derivatives that meet the strict criteria of IAS 39 for application of hedge accounting. They provide economic hedges against risks faced by the Group (see note 38). Derivative hedging instruments are classified in the statement of financial position as follows: EUR million Current assets

2009

2008

0.8

7.7

Non-current liabilities

-41.8

-51.5

Current liabilities

-20.9

-1.8

Net derivative hedging instruments

-61.9

-45.6

Cross currency interest rate swaps (debt derivatives)

-46.4

-43.2

Interest rate swaps (debt derivatives)

-13.0

-8.3

Forward foreign exchange contracts (non-debt derivatives)

-1.2

0.2

Non-deliverable forward exchange contracts

-1.3

5.7

-61.9

-45.6

Derivative hedging instruments are analysed as follows:

Net derivative hedging instruments

FINANCIAL REPORT

NOTE 16: INVESTMENT PROPERTY

74 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18: DERIVATIVE HEDGING INSTRUMENTS (continued) All derivative hedging instruments are recognised in the Car Rental and in the Vehicle Glass segments. In the Car Rental segment, cross currency interest rate swaps of aggregate notional principal amounts of USD 288 million (2008: USD 288.0 million) were used to hedge the Avis Europeâ&#x20AC;&#x2122;s USD denominated loan notes. Fair value hedge adjustments of EUR -2.9 million (2008: EUR -9.6 million) arise from the hedging of the principal value of the exposures to euro denominated liabilities. The whole of this adjustment in both the current and prior years related to hedged items due for settlement after one year. Cash flow hedges of EUR 3.6 million (2008: EUR 5.4 million) arise from the conversion of the regular semi-annual USD denominated interest payments to euro denominated interest payments. Amounts recognised within equity will be released to the income statement when the underlying fixed interest payments occur at various dates between the year end and 2014. There was no ineffectiveness of these hedges recorded at the balance sheet date. In the Car Rental segment, interest rate swaps of aggregate notional principal amounts of EUR 200.0 million (2008: EUR 200.0 million) with average fixed interest payable of 4.03% (2008: 4.03%) were used to hedge variable quarterly interest payments arising under the Senior Floating Rate Notes due 2013 issued by Avis Europe in 2006. The aim of the hedge relationship is to transform the variable interest borrowing into a fixed interest borrowing and result in cash flow hedges of EUR 11.8 million (2008: EUR 8.5 million). Credit risks do not form part of the hedge. There was no material ineffectiveness of these hedges recorded as at the balance sheet date. In the Car Rental segment, forward foreign exchange contracts were used to hedge expected foreign currency income and expected foreign currency payments. Movements in the fair value of these forward foreign exchange contracts are recognised as cash flow hedges in the hedging reserve within equity. These amounts are then transferred to the income statement when the amounts are received at various dates between one and 12 months after the year end. There was no material ineffectiveness of these hedges recorded as at the balance sheet date. In the Vehicle Glass segment, non-deliverable forward exchange contracts of nominal amount of EUR 22.7 million equivalent (2008: EUR 21.5 million) were used to hedge exchange movements on EUR denominated loans held in Brazil. The net position recognised within equity amounts to EUR -1.3 million (2008: EUR 6.3 million). In the Vehicle Glass segment, forward foreign exchange contracts were used to hedge the cost of future purchases of raw materials and future interest costs. As part of its net investment hedge policy, the Vehicle Glass segment uses currency denominated borrowings to hedge the exposure of a proportion of its non-EUR denominated net assets against changes in value due to changes in foreign exchange rates. There was no ineffectiveness of these hedges recorded at the balance sheet date. The non-current portion of the derivative hedging instruments is expected to be settled after more than 12 months; the current portion within 12 months. The fair values are determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions at the balance sheet date. The fair value of cross currency interest rate swaps and interest rate swaps is calculated as the present value of future estimated cash flows. The fair value of interest rate caps and collars are valued using option valuation techniques. The fair value of forward exchange contracts is determined using forward exchange market rates at the balance sheet date. The notional principal amounts of the outstanding derivative hedging instruments are as follows: EUR million

2009

2008

Cross currency interest rate swaps (debt derivatives)

200.9

206.9

Interest rate swaps (debt derivatives)

200.0

97.7

72.6

Forward foreign exchange contracts (non-debt derivatives)

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 75

NOTE 19: DERIVATIVES HELD FOR TRADING Derivatives held for trading are derivatives that do not meet the strict criteria of IAS 39 for application of hedge accounting. They however provide economic hedges against risks faced by the Group (see note 38). Derivatives held for trading are classified in the statement of financial position as follows: EUR million

2009

2008

1.9

0.7

1.9

0.7

Non-current assets Embedded derivatives Subtotal Current assets Debt derivatives Interest rate swaps excluding securitisation swaps Interest rate securitisation swaps

(1)

9.4

4.1

6.2

7.2

Interest rate caps

0.1

0.3

Interest rate floors

0.3

0.5

0.1

Forward rate agreements Non-debt derivatives Forward foreign exchange contracts Forward foreign exchange options Fuel hedge instruments Subtotal

2.0

8.2

0.2

1.0

19.0

20.6

-0.3

-0.6

-27.4

-26.0

Non-current liabilities Debt derivatives Interest rate swaps excluding securitisation swaps Current liabilities Debt derivatives Interest rate swaps excluding securitisation swaps Interest rate securitisation swaps

(1)

Interest rate caps Forward rate agreements Forward foreign exchange contracts

-6.4

-7.4

-0.5

-3.1

-0.3

Non-debt derivatives Forward foreign exchange contracts

-1.1

-4.2

-6.7

Subtotal

-35.7

-47.9

NET DERIVATIVES HELD FOR TRADING

-15.1

-27.2

Fuel hedge instruments

(1) Other disclosures regarding the securitisation programme are provided in notes 14, 25, 31 and 39.

The EUR 250.0 million Senior Floating Rate Notes due 2013 issued by Avis Europe in 2006 include a call option permitting Avis Europe to repay the notes with effect from 31 July 2008. Under the option, the notes may be redeemed at the following redemption prices (expressed as a percentage of principal amounts) if repaid during the 12 months period beginning on 31 July 2009: 101%; 31 July 2010 and thereafter: 100%. In accordance with IAS 39, this option is separately recognised from the underlying notes as an embedded derivative. This embedded derivative is classified as non-current asset consistent with the maturity of the borrowing in which it is embedded. In the Vehicle Glass segment, a combination of options, collars and swaps (collectively â&#x20AC;&#x153;fuel hedge instrumentsâ&#x20AC;?) was used to hedge the price of fuel purchases. The fair value of fuel hedge instruments is determined using market valuations prepared by the respective banks that executed the initial transactions at the statement of financial position date based on the present value of the monthly futures forward curve for gasoline given the volume hedged and the contract period. The fair values of forward rate agreements are calculated as the present value of future estimated cash flows. The fair values of the embedded derivative, interest rate swaps and interest rate caps are valued using option valuation techniques. See note 18 for details on the other valuation techniques used.

FINANCIAL REPORT

Debt derivatives

76 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19: DERIVATIVES HELD FOR TRADING (continued) The notional principal amounts of the outstanding derivatives held for trading are as follows: EUR million Interest rate swaps excluding securitisation swaps Interest rate securitisation swaps

(1)

Interest rate caps and collars

2009

2008

1,047.1

1,389.8

540.0

660.0

95.0

202.0

Interest rate floors

50.0

40.0

Forward rate agreements

95.0

515.0

Forward foreign exchange contracts and options

19.1

40.6

(1) Other disclosures regarding the securitisation programme are provided in notes 14, 25, 31 and 39.

NOTE 20: LONG-TERM EMPLOYEE BENEFIT ASSETS AND OBLIGATIONS Long-term employee benefits include post-employment employee benefits and other long-term employee benefits. Postemployment employee benefits are analysed below. Other long-term employee benefits are presented among non-current provisions or non-current other payables, and, if material, separately disclosed in the relevant note. Post-employment benefits are limited to retirement benefit schemes. Where applicable, Group entities contribute to the relevant state pension schemes. Certain Group entities operate schemes which provide retirement benefits, including those of the defined benefit type, which are in most cases funded by investments held outside the Group. The disclosures related to defined contribution schemes are provided in note 36. The Group operates defined benefit schemes for qualifying employees in the following countries: Automobile Distribution: Funded and unfunded schemes: Belgium Car Rental: Funded schemes: Austria France Spain United Kingdom Unfunded schemes: Germany Italy Vehicle Glass: Funded schemes: Canada Ireland Holland United Kingdom United States

The valuations used have been based on the most recent actuarial valuations, updated by the scheme actuaries to assess the liabilities of the scheme and the market value of the scheme assets at each of the balance sheet dates.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 77

NOTE 20: LONG-TERM EMPLOYEE BENEFIT ASSETS AND OBLIGATIONS (continued) The main actuarial assumptions are as follows (ranges are provided given the plurality of schemes operated throughout the Group): Funded schemes

Unfunded schemes

2009

2008

2009

2008

Min.

Max.

Min.

Max.

Min.

Max.

Min.

Max.

Inflation rate

2.0%

3.8%

2.0%

3.2%

2.0%

Discount rate

4.8%

5.8%

5.7%

6.5%

0.8%

6.0%

2.0%

6.0%

Equities

6.8%

8.7%

6.8%

8.7%

Bonds

3.8%

5.8%

3.8%

6.6%

2.0%

7.6%

2.0%

6.0%

Rate of salary increases

Other

1.0%

5.5%

1.0%

4.7%

2.1%

3.9%

2.0%

2.4%

Rate of pension increases

2.0%

3.8%

2.0%

3.0%

1.6%

3.2%

1.6%

4.2%

The expected rates of return on scheme assets are based on market expectations at the beginning of each year, for returns over the entire life of the related obligation. The expected return on bonds is based on long-term bond yields. The expected return on equities is based on a wide range of qualitative and quantitative market analysis including consideration of market equity risk premiums. The actual return on scheme assets is analysed as follows: EUR million

2009

Expected return on scheme assets

19.7

2008 27.1

Actual return less expected return on scheme assets

49.1

-104.9

Actual return on scheme assets

68.8

-77.8

2009

2008

The amounts recognised in the statement of financial position are summarised as follows: EUR million

14.6

0.5

Long-term employee benefit obligations

Long-term employee benefit assets

-127.6

-106.9

Recognised net deficit (-) / surplus (+) in the schemes

-113.0

-106.4

of which: amount expected to be settled within 12 months

-2.0

-0.8

-111.0

-105.6

of which: amount expected to be settled in more than 12 months

The amounts recognised in the statement of financial position are analysed as follows: EUR million

Present value of defined benefit obligations

2009

2008

Funded

Unfunded

schemes

Total

Funded

Unfunded

schemes

Total

-466.2

-39.1

-505.3

-347.3

-38.1

Fair value of scheme assets

392.3

279.0

-385.4 279.0

Net deficit (-) / surplus (+) in the schemes

-73.9

-39.1

-113.0

-68.3

-38.1

-106.4

The amounts recognised in the statement of financial position for the years 2007 and 2006 were analysed as follows: EUR million

Present value of defined benefit obligations

2007

2006

Funded

Unfunded

schemes

Total

Funded

Unfunded

schemes

Total

-493.6

-39.0

-532.6

-467.8

-45.9

Fair value of scheme assets

420.4

340.2

-513.7 340.2

Net deficit (-) / surplus (+) in the schemes

-73.2

-39.0

-112.2

-127.6

-45.9

-173.5

FINANCIAL REPORT

Expected return on scheme assets:

78 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20: LONG-TERM EMPLOYEE BENEFIT ASSETS AND OBLIGATIONS (continued) The fair value of scheme assets includes the following items: EUR million

2009

2008

Funded

Unfunded

schemes

Equity instruments

249.4

Debt instruments

110.7

0.1

Property Other assets Fair value of scheme assets

Total

Funded

Unfunded

schemes

Total

249.4

152.1

110.7

100.7

0.1

32.1

26.1

392.3

279.0

The fair value of scheme assets did not comprise any property or other assets used by the Group, nor any financial instruments of the Group. The movements in the recognised net deficit are as follows: EUR million

2009

2008

Funded

Unfunded

schemes

-68.3

-38.1

40.5

Expense recognised in the income statement Actuarial gains (+) / losses (-)

Net deficit (-) / surplus (+) at 1 January Contributions paid by the Group Benefits paid by the Group

Other benefits paid Translation differences Net deficit (-) / surplus (+) at 31 December

Total

Funded

Unfunded

schemes

Total

-106.4

-73.2

-39.0

-112.2

40.5

24.8

2.4

2.5

-10.5

-3.5

-14.0

-11.1

-3.3

-14.4

-33.2

0.4

-32.8

-22.7

1.4

-21.3

0.4

-2.4

-0.3

-2.7

13.5

0.3

13.8

-73.9

-39.1

-113.0

-68.3

-38.1

-106.4

The amounts recognised in the income statement are as follows: EUR million

2009

2008

Funded

Unfunded

schemes

Current service cost

-7.1

-1.4

Past service cost

-0.1

-22.9

-2.1

Interest cost

Total

Funded

Unfunded

schemes

Total

-8.5

-11.7

-1.2

-0.1

-25.0

-25.9

-2.1

-28.0

-12.9

Effect of curtailment or settlement

-0.1

-0.5

Expected return on scheme assets

19.7

27.1

Expense recognised in the income statement

-10.5

-3.5

-14.0

-11.1

-3.3

-14.4

of which: commercial and administrative expenses of which: (current items)

-10.4

-3.5

-13.9

-10.6

-3.3

-13.9

-0.1

-0.5

of which: other operating expenses of which: (unusual items - see note 9)

The amounts recognised through the statement of comprehensive income are as follows: EUR million

2009

Actual return less expected return on scheme assets Experience gain (+) / loss (-) on liabilities Gain (+) / Loss (-) on change of assumptions

(1)

Actuarial gains (+) / losses (-) (1) Financial and/or demographic assumptions.

2008

Funded

Unfunded

schemes

Total

Funded

Unfunded

schemes

Total

49.1

-104.9

2.6

0.4

3.0

0.7

-0.5

-104.9 0.2

-84.9

81.5

1.9

83.4

-33.2

0.4

-32.8

-22.7

1.4

-21.3

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 79

NOTE 20: LONG-TERM EMPLOYEE BENEFIT ASSETS AND OBLIGATIONS (continued) The best estimate of the contributions expected to be paid to the schemes during the 2010 annual period is EUR 26.5 million. The obligation of defined benefit schemes is calculated on the basis of a set of actuarial assumptions (including among others: mortality, discount rate of future payments, salary increases, personnel turnover, etc.). Should these assumptions change in the future, the obligation may increase. The defined benefit scheme assets are invested in a diversified portfolio, with a return that is likely to experience volatility in the future. Should the return of these assets be insufficient, the deficit might increase.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The movement in deferred tax assets and liabilities during the period and the prior period is as follows: EUR million

Revalua-

Depreciation

Tax losses

Financial

tions

amortisation

Provisions

Dividends

available

instru-

write-downs

for offset

ments

Other

Total

-241.3

Deferred tax liabilities (negative amounts) At 1 January 2008 Credited (charged) to income statement Credited (charged) to equity Exchange differences At 31 December 2008 Credited (charged) to income statement

-205.1

-37.6

7.8

6.9

1.8

-15.1

73.1

-0.5

2.3

-1.3

-1.2

-5.0

-0.6

66.8

8.9

0.8

0.7

10.4

1.0

-5.8

-2.1

0.2

-6.7

-131.0

-35.0

10.9

-1.3

3.6

-3.0

-15.0

-170.8 15.8

3.5

9.8

-2.1

0.3

1.6

1.5

1.2

Credited (charged) to equity

1.2

-0.1

1.1

Transfer to current tax

6.4

-127.5

-25.2

10.0

-1.0

5.2

-1.6

-7.4

-147.5

-14.7

39.6

41.5

1.7

10.0

78.1

-3.3

7.4

-1.0

3.3

-18.5

-12.1 15.3

At 31 December 2009 Deferred tax assets (positive amounts) At 1 January 2008 Credited (charged) to income statement Credited (charged) to equity

-1.8

5.8

2.6

8.7

Exchange differences

-0.4

-3.4

0.6

-0.2

3.1

-0.3

-20.2

49.4

41.1

7.4

3.3

81.0 5.4

At 31 December 2008 Credited (charged) to income statement

3.4

6.0

-0.7

-2.5

-0.8

Credited (charged) to equity

7.7

0.9

1.0

9.6

Transfer to current tax

-0.2

2.7

2.5

Exchange differences

0.8

-0.5

0.1

-0.8

-0.4

-16.2

62.6

40.4

5.9

5.4

98.1

At 31 December 2009 Net deferred tax assets (liabilities) after offsetting recognised in the consolidated statement of financial position: 31 December 2008

-131.0

-55.2

60.3

-1.3

44.7

4.4

-11.7

-89.8

31 December 2009

-127.5

-41.4

72.6

-1.0

45.6

4.3

-2.0

-49.4

The revaluation column mainly includes the deferred tax liability (EUR 116.1 million; 2008: EUR 120.4 million) arising on the recognition of the Avis licence rights. The decrease during the year is explained by the deferred tax impact on the amortisation of the Avis licence rights. The decrease of the revaluation column during the prior year was mainly explained by the deferred tax impact on the amortisation and on the impairment charge of the Avis licence rights. The net deferred tax balance includes a liability of EUR 4.3 million (2008: EUR 4.3 million) that will be reversed in the following year, due to the amortisation of the Avis licence rights. It also includes net deferred tax assets amounting to EUR 5.8 million (2008: EUR 13.9 million) that are expected to be reversed in the following year. However, given the low predictability of deferred tax movements, this net amount might not be reversed as originally foreseen.

FINANCIAL REPORT

NOTE 21: DEFERRED TAXES

80 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 21: DEFERRED TAXES (continued) At the balance sheet date, the Group has unused tax losses and credits of EUR 494.5 million (2008: EUR 438.4 million) available for offset against future profits, for which no deferred tax asset has been recognised, due to the unpredictability of future profit streams. This includes unused tax losses of EUR 1.6 million (2008: EUR 8.9 million) that will expire in the period 2010-2027 (2008: 2009-2026) and unused tax credits of EUR 75.5 million (2008: EUR 54.5 million) that will expire in the period 2010-2016 (2008: 2009-2015). Other losses may be carried forward indefinitely. Deferred tax has not been recognised in respect of other deductible temporary differences amounting to EUR 35.5 million (2008: EUR 25.5 million) due to the unpredictability of future profit streams. At the balance sheet date the aggregate amount of temporary differences associated with the investments in subsidiaries, branches, associates and interests in joint ventures (being mainly the accumulated positive consolidated reserves of these entities) for which deferred tax liabilities have not been recognised is EUR 753.6 million (2008: EUR 656.1 million). No deferred tax liability has been recognised in respect of these differences because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future. It should also be noted that the reversal of these temporary differences, for example by way of distribution of dividends by the subsidiaries to the Parent, would generate no (or a marginal) current tax effect. Deferred tax assets include, among other items: - EUR 1.0 million (2008: EUR 3.6 million) of which the utilisation is dependent on future taxable profits in excess of the profit arising from the reversal of existing taxable temporary differences; - EUR 30.1 million (2008: EUR 34.1 million) related to entities that suffered a loss in either the current or preceding period in a tax jurisdiction to which the deferred tax assets relate. The recognition of these deferred tax assets is supported by profit expectations in the foreseeable future. Deferred tax assets are recognised provided that there is a sufficient probability that they will be recovered in the foreseeable future. Recoverability has been conservatively assessed. However, should the conditions for this recovery not be met in the future, the current carrying amount of the deferred tax assets may be reduced.

NOTE 22: OTHER NON-CURRENT RECEIVABLES The other non-current receivables are comprised of guarantee deposits. Their carrying amount approximates their fair value, and they generally generate no interest income. They are expected to be recovered after more than 12 months.

NOTE 23: NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE Previously, in the Car Rental segment, non-current assets held for sale comprised ex-rental vehicles where management were committed to the disposal of the vehicles. As explained in note 2.1, the amendment to IAS 16 “Property, Plant and Equipment” issued in May 2008 requires entities that routinely sell items of property, plant and equipment that have been held for rental to others to transfer such assets to inventories at their carrying amount when they cease to be rented and become held for sale. This amendment became retrospectively applicable on 1 January 2009; comparative amounts have therefore been restated accordingly. The impact of this restatement on the Consolidated Statement of Financial Position (Car Rental segment) at 1 January 2009 was only a reclassification of EUR 10.3 million of vehicles from “non-current assets held for sale” to “inventories”.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 81

NOTE 24: INVENTORIES EUR million

2009

2008 (1)

238.3

323.3

27.4

28.6

Automobile Distribution Vehicles Spare parts and accessories Other

0.4

0.5

266.1

352.4

Vehicles

3.1

10.3

Fuel

4.9

5.7

Spare parts and accessories

0.4

1.2

Subtotal

8.4

17.2

Glass and related product

193.1

160.6

Subtotal

193.1

160.6

GROUP

467.6

530.2

53.5

84.9

Subtotal

Vehicle Glass

of which: items carried at fair value less costs to sell (1) As restated (see note 2.1).

In the Car Rental segment, vehicles comprise ex-rental vehicles where management are commited to the disposal of the vehicles. The disposals are expected to occur in early 2010. The items carried out at fair value less costs to sell are mainly the vehicles sold under buy-back agreements (this kind of agreement being accounted for as operating lease) that are kept on statement of financial position until their subsequent resale. The inventories are expected to be recovered within 12 months.

NOTE 25: OTHER FINANCIAL ASSETS The other financial assets are analysed as follows: EUR million

2009

2008

Automobile Distribution - Securitisation cash reserves

10.0

36.3

Car Rental - Finance lease collateral

2.7

Vehicle Glass - Restricted cash related to Safelite acquisition

13.2

17.0

Other financial assets

25.9

53.3

The securitisation (see note 14) cash reserves are pledged by Dâ&#x20AC;&#x2122;Ieteren Lease and are held on its own bank accounts. Other disclosures regarding the securitisation programme are provided in notes 14, 19, 31 and 39. The other financial assets are expected to be recovered within 12 months. Their carrying amount is equal to their fair value.

NOTE 26: CURRENT TAX ASSETS AND LIABILITIES Current tax assets (liabilities) are largely expected to be recovered (settled) within 12 months.

NOTE 27: TRADE AND OTHER RECEIVABLES Trade and other receivables are analysed as follows: EUR million

Trade receivables - net Vehicle related receivables Receivables from entities accounted for using the equity method

2009

2008

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

83.9

136.4

169.0

389.3

751.7

0.6

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

139.1

162.3

169.6

471.0

1,106.5

0.7

0.1

0.8

Other receivables

11.2

101.5

41.1

153.8

12.4

82.8

44.2

139.4

Trade and other receivables

95.7

989.6

210.1

1,295.4

152.2

1,351.7

213.8

1,717.7

FINANCIAL REPORT

Car Rental

82 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 27: TRADE AND OTHER RECEIVABLES (continued) The trade and other receivables are expected to be recovered within 12 months. Their carrying amount approximates to their fair value, and they generate no interest income. The Group is exposed to credit risk arising from its operating activities. Such risks are mitigated by selecting clients and other business partners on the basis of their credit quality and by avoiding as far as possible concentration on a few large counterparties. Credit quality of large counterparties is assessed systematically and credit limits are put in place prior to taking exposure. Payment terms are on average less than one month except where local practices are otherwise. Receivables from sales involving credit are closely tracked and collected mostly centrally in the Automobile Distribution and Car Rental segments, and at the country level in the Vehicle Glass segment. In the Automobile Distribution segment, concentration on top ten customers is 19% (2008: 17%) and no customer is above 4%. Certain receivables are also credit insured. In the Car Rental segment, vehicle related receivables include receivables related to vehicles purchased under buy-back agreements, prepaid vehicle operating lease charges, amount due from leasing companies and other vehicle receivables. Credit risk is concentrated with the main European vehicles manufacturers. Concentrations of credit risks with respect to non-vehicle related receivables are limited due to the diversity of the Avis Europe’s customers. In the Vehicle Glass segment, concentrations of risk with respect to receivables are limited due to the diversity of the Belron’s customer base. Statement of financial position amounts are stated net of provisions for doubtful debts, and accordingly, the maximum credit risk exposure is the carrying amount of the receivables in the statement of financial position. As at 31 December 2009, the provisions for bad and doubtful debt amounted to EUR 50.9 million (2008: EUR 41.1 million). The ageing analysis of trade and other receivables past due but not impaired is as follows: EUR million

2009

2008

Up to three months past due

170.7

259.8

Three to six months past due

12.9

15.4

Over six months past due Total

6.6

0.1

190.2

275.3

As disclosed in note 5, the increase in 2009 of the provisions for bad and doubtful debts amounts to EUR 15.6 million (2008: EUR 5.6 million).

NOTE 28: CASH AND CASH EQUIVALENTS Cash and cash equivalents are analysed below: EUR million

2009

2008

Automobile

Car

Vehicle

Distribution

Rental

Glass

24.7

38.7

28.1

21.9

Money Market Assets

234.8

Cash and cash equivalents

259.5

60.6

Cash at bank and in hand Short-term deposits

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

91.5

1.2

23.0

44.6

68.8

21.9

29.1

234.8

28.1

348.2

1.2

52.1

44.6

97.9

Cash and cash equivalents are mainly floating rate assets which earn interest at various rates set with reference to the prevailing EONIA, LIBID or equivalent. Their carrying amount is equal to their fair value. In the Automobile Distribution segment, cash and cash equivalents have been building up, notably with the proceeds of EUR 150 million bond issuance on 23 December 2009 (see note 31). These balances have decreased in January 2010 after the payment of the Belron’s shares acquired following the exercise by Cobepa of its put options in September 2009 (16.35% of Belron’s equity capital). In the Vehicle Glass segment, due to legal restrictions, cash balances held in Brazil, amounting to EUR 4.1 million (2008: EUR 5.0 million), are not available for general use by the Parent or other subsidiaries. Short-term deposits (in the Car Rental segment only) mature within 3 months (2008: 3 months).

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 83

NOTE 29: EQUITY EUR million, except number of shares stated in units

At 1 January 2008 Change At 31 December 2008 Change At 31 December 2009

Number of

Ordinary

ordinary shares

share capital

5,530,262

160.0

5,530,262

160.0

5,530,262

160.0

All ordinary shares issued are fully paid. Ordinary shares have no face value. They are either nominative, bearer or dematerialised shares. Each ordinary share confers one voting right. Treasury shares are held by the Parent and by subsidiaries as set out below: EUR million, except number of shares stated in units

Treasury shares held by the Parent Treasury shares held by subsidiaries Treasury shares held

2009

2008

Number

Amount

Number

Amount

104,043

20.4

101,186

19.0

104,043

20.4

101,187

19.0

Treasury shares are held to cover the stock option plans set up by the Parent since 1999 (see note 37). On 28 May 2009, the Extraordinary General Meeting of Shareholders has renewed the authorisation to the Board of Directors to increase the share capital on one or more occasions, during a renewable period of five years, up to a maximum of EUR 60 million by contributions in cash or in kind or by incorporation of available or non-available reserves or share premium account, with or without creation of new shares, either preference or other shares, with or without voting rights, with or without subscription rights, with the possibility of limiting or withdrawing preferential subscription rights including in favour of one or more specified persons. The same Meeting has authorised the Board of Directors to purchase own shares, during a period of five years, up to a maximum of ten percent of the ordinary shares issued. In addition to ordinary shares, there are 500,000 nominative participating shares, which do not represent share capital. The number of participating shares remained unchanged in 2008 and in 2009. Each participating share confers one voting right and gives the right to a dividend equal to one eighth of the dividend of an ordinary share. Nominative shares not fully paid-up may not be transferred except by virtue of a special authorisation from the Board of Directors for each assignment and in favour of an assignee appointed by the Board (art. 7 of the Articles). Participating shares may not be transferred except by the agreement of a majority of members of the Board of Directors, in which case they must be transferred to an assignee appointed by said members (art. 8 of the Articles). The Groupâ&#x20AC;&#x2122;s objectives when managing capital are to safeguard each of its activities ability to continue as a going concern and to maintain an optimal capital structure to reduce the cost of capital. The Group monitors the capital adequacy at the level of each of its activities through a set of ratios relevant to their specific business. In order to maintain or adjust the capital structure, each activity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt, taking into account the existence of non-controlling shareholders.

FINANCIAL REPORT

The change in ordinary share capital is set out below:

84 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 29: EQUITY (continued) Disclosure of company shareholders (according to “declarations of transparency” dated 31 October 2008)

Capital

Participating

Total voting rights

Number

1,032,206

18.66%

1,032,206

17.12%

Reptid Commercial Corporation, Dover, Delaware

202,532

3.66%

202,532

3.36%

Mrs Catheline Périer-D’Ieteren

152,990

2.77%

125,000

25.00%

277,990

4.61%

1,000

0.02%

1,000

0.02%

1,388,728

25.11%

125,000

25.00%

1,513,728

25.10%

s.a. de Participations et de Gestion, Brussels

Mr Olivier Périer The four abovementioned persons (collectively “SPDG Group”) are associated and act in concert with Cobepa s.a. Nayarit Participations s.c.a., Brussels

1,394,151

25.21%

1,394,151

23.12%

Mr Roland D’Ieteren

46,619

0.84%

375,000

75.00%

421,619

6.99%

Mr Nicolas D’Ieteren

1,000

0.02%

1,000

0.02%

1,441,770

26.07%

375,000

75.00%

1,816,770

30.13%

441,455

7.98%

441,455

7.32%

The three abovementioned persons (collectively “Nayarit Group”) are associated and act in concert with Cobepa s.a. The persons referred to as SPDG Group and Nayarit Group act in concert. Cobepa s.a., Brussels Cobepa s.a. acts in concert on the one hand with Nayarit Group and on the other hand with SPDG Group.

The Board of Directors proposed the distribution of a gross dividend amounting to EUR 3.25 per share (2008: EUR 3.00 per share), or EUR 17.8 million in aggregate (2008: EUR 16.5 million).

NOTE 30: PROVISIONS Provisions for post-retirement benefit schemes are analysed in note 20. The other provisions, either current or non-current, are analysed below. The major classes of provisions are the following ones: EUR million

2009

2008

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

Non-current provisions Dealer-related

13.7

16.5

Warranty

5.2

5.3

Insurance and covers

2.4

23.6

26.0

2.5

20.9

23.4

Other non-current items

16.5

7.7

9.1

1.1

17.9

5.9

4.7

133.4

144.0

29.0

32.7

1.1

62.8

30.2

25.6

133.4

189.2

Insurance and covers

12.6

22.1

Other current items

6.0

203.5

209.5

11.7

9.0

20.7

Subtotal

18.6

203.5

222.1

33.8

9.0

42.8

29.0

51.3

204.6

284.9

30.2

59.4

142.4

232.0

Subtotal Current provisions

Total provisions

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 85

NOTE 30: PROVISIONS (continued) The changes in provisions are set out below for the year ended 31 December 2009: Dealer-

Warranty

Insurance

Other

and

non-current

current

Total

covers

items

At 1 January 2009

16.5

5.3

45.5

144.0

20.7

232.0

Charged in the year

3.2

0.3

24.6

8.9

82.5

119.5

Utilised in the year

-4.2

-0.4

-32.0

-1.9

-26.4

-64.9

Reversed in the year

-1.8

-1.1

-2.9

Transferred during the year

-132.0

132.1

0.1

Translation differences

0.5

0.6

1.1

At 31 December 2009

13.7

5.2

38.6

17.9

209.5

284.9

The timing of the outflows being largely uncertain, most of the provisions are considered as non-current items. Current provisions are expected to be settled within 12 months. The dealer-related provisions arise from the ongoing improvement of the distribution networks. In the Automobile Distribution segment, warranty provisions relate to the cost of services offered to new vehicle customers, like mobility. In the Car Rental segment, insurance reserves provide for uninsured losses under third party liabilities or claims. Due to the timescales and uncertainties involved in such claims, provision is made based upon the profile of claims experience, allowing for potential claims for a number of years after policy inception. In the Automobile Distribution segment, provisions are set up for incurred material damage (registered or not) at Dâ&#x20AC;&#x2122;Ieteren Lease. Other current and non-current provisions primarily comprise: - Reorganisation and employee termination provisions that are expected to crystallise within the next few years; - Dilapidation and environmental provisions to cover the costs of the remediation of certain properties held under operating leases; - Provisions for vacant properties; - Provision against the future redemption of benefits under customer loyalty programmes; - Provision against legal claims that arise in the normal course of business, that are expected to crystallise in the next couple of years. After taking appropriate legal advice, the outcome of these legal claims should not give rise to any significant loss beyond amounts provided at 31 December 2009; - The provision for a long-term management incentive scheme set up in 2005 in the Vehicle Glass segment. The settlement of this scheme is expected to occur in the first half of 2010. It is the intention to replace this long-term management incentive scheme with a scheme of similar nature.

FINANCIAL REPORT

EUR million

86 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 31: BORROWINGS Borrowings are analysed as follows: EUR million

2009

2008

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

Non-current borrowings Bonds

349.5

200.0

Bonds under securitisation programme

199.8

199.6

Obligations under finance leases

25.6

1.5

188.1

189.6

89.6

286.0

243.2

618.8

Loan notes

509.5

246.0

755.5

555.3

251.4

806.7

Deferred consideration

23.8

22.5

550.8

533.3

459.7

1,543.8

489.2

863.8

520.2

1,873.2

Bank and other loans

Subtotal non-current borrowings Current borrowings Bonds under securitisation programme

86.4

Obligations under finance leases

167.9

17.0

184.9

232.7

16.4

249.1 50.8

14.1

14.0

0.8

28.9

3.7

31.8

15.3

Loan notes

Bank and other loans

33.3

Commercial paper

26.7

43.9

13.3

57.2

Deferred consideration

275.1

0.3

275.4

0.2

Subtotal current borrowings

289.2

242.2

17.8

549.2

134.0

278.0

31.7

443.7

TOTAL BORROWINGS

840.0

775.5

477.5

2,093.0

623.2

1,141.8

551.9

2,316.9

The Group issues bonds both through the Parent and its wholly-owned subsidiary D’Ieteren Trading b.v. The bonds outstanding at 31 December are as follows (only in the Automobile Distribution segment): 2009 Issued

Principal

2008 Maturing

Fixed rate

Issued

(EUR million)

Total

Principal

Maturing

Fixed rate

(EUR million)

July 2004

100.0

2012

5.25%

July 2004

100.0

2012

5.25%

July 2005

100.0

2015

4.25%

July 2005

100.0

2015

4.25%

December 2009

150.0

2014

5.50%

350.0

200.0

In December 2009, the Parent issued a five-year bond of EUR 150 million (EUR 149.5 million of net proceed), bearing interest at an annual gross rate of 5.5%. This bond issue is in line with the Group’s strategy of diversifying of its financial resources and will be used for its general purposes. The weighted average cost of bonds in 2009 was 4.8% (2008: 4.8%). The Group issues bonds under a securitisation programme, through its wholly-owned subsidiary s.a. D’Ieteren Lease n.v. (“D’Ieteren Lease”). The programme is set out in note 14. The programme initially launched in April 2006 has been successfully renewed for another three-year period. The weighted average cost of this programme, including the amortisation of the initial set-up and renewal costs over a three-year period, was 3.6% (2008: 5.5%). Pledged accounts related to this securitisation programme are recorded under the heading “other financial assets” (see note 25). Other disclosures regarding the securitisation programme are also provided in notes 19 and 39.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 87

NOTE 31: BORROWINGS (continued) Obligations under finance leases are analysed below: 2009

Within one year Between one and five years More than five years Subtotal Less: future finance charges Present value of finance lease obligations

2008

Minimum

Present value

Minimum

lease

of minimum

lease

of minimum

payments

lease payments

payments

lease payments

190.0

184.9

256.7

249.1

26.8

24.6

27.6

24.5

1.2

1.0

1.9

1.1

218.0

210.5

286.2

274.7

-7.5

-11.5

210.5

274.7

Present value

Obligations under finance leases are mainly located in the Car Rental segment, which leases certain of its vehicles (including some vehicles held under buy-back agreements) and some plant and equipment under finance leases. The average lease term is less than one year. For the year ended 31 December 2009 the average effective interest rate was 3.7% (2008: 5.0%) and interest rates are fixed at the contract date. All these finance leases are on a fixed repayment basis and no arrangements have been entered into for contingent rent payments. Finance leases are also occasionally used in the Vehicle Glass segment, and not used in the Automobile Distribution segment. The Group’s obligations under finance leases are secured by the lessors having legal title over the leased assets. In 2009, collateral was held against certain of the leases in the Car Rental segment (see note 25). Bank and other loans mainly represent non syndicated bank loans (in the Automobile Distribution segment) and syndicated arrangements (in the Car Rental and Vehicle Glass segments), as well as overdrafts. Depending on the currency of the bank borrowings and the segment concerned, the weighted average cost ranged from 1.4% to 7.0% in 2009 (2008: 3.5% to 6.8%). In the Car Rental segment, loan notes represent the following outstanding balances, due by Avis Finance Company plc (“AFC”), an indirect wholly-owned subsidiary of Avis Europe plc: 2009 Issued

Currency

Principal

2008 Maturing

(in million)

Principal

Maturing

(in million)

August 2000

USD

48.0

2010

48.0

June 2002

EUR

26.8

2012

26.8

2010 2012

June 2004

USD

240.0

2011,2012,2014

240.0

2011,2012,2014

June 2004

EUR

65.0

2012

65.0

2012

July 2006

EUR

250.0

2013

250.0

2013

The USD loan notes bear interest at an average fixed rate of 6.3% (2008: 6.3%). The euro denominated loan notes issued prior to July 2006 bear interest at an average fixed rate of 5.8% (2008: 5.8%). These loan notes are at fixed rates such that their contractual repricing profile is coterminous with their maturity profile. The EUR 250.0 million Senior Floating Rate Notes bear interest at EURIBOR plus 2.625%. These notes reprice EURIBOR quarterly and include a call option, permitting AFC to repay the notes with effect from 31 July 2008. This option is separately recognised as an embedded derivative at fair value (see note 19). In the Vehicle Glass segment, loan notes represent the following outstanding balances, due by Belron Finance Limited, a whollyowned subsidiary of Belron: 2009 Interest rate

Currency

Principal

2008 Maturing

Principal

Maturing

(in million)

(in million) Series A

5.68%

USD

200.0

2014

200.0

2014

Series B

5.80%

USD

125.0

2017

125.0

2017

Series C

5.94%

GBP

20.0

2017

20.0

2017

FINANCIAL REPORT

EUR million

88 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 31: BORROWINGS (continued) The Group runs two commercial paper programmes in Belgium: - s.a. D’Ieteren Treasury n.v., a wholly-owned subsidiary of the Parent, runs a EUR 300.0 million (2008: EUR 300.0 million) programme guaranteed by the Parent. The weighted average cost over 2009 was 2.4% (2008: 4.6%). Medium term notes can also be drawn from this programme; - AFC runs a programme guaranteed by Avis Europe plc, which provides the Car Rental segment with borrowings of up to EUR 200.0 million (2008: EUR 200.0 million). Amounts drawn under the facility attract interest at a floating rate set by reference to EURIBOR plus a margin which will vary depending upon market conditions at the time of issue. Amounts borrowed under these programmes were repayable in less than one year. In the Automobile Distribution segment, deferred consideration represents amounts due to Cobepa following the exercise by Cobepa of its put options on 16.35% of Belron’s equity capital, payable in January 2010. In the Car Rental segment, deferred consideration represents amounts still due arising on the acquisition of Avis Europe Investment Holdings Limited (a wholly-owned subsidiary of Avis Europe plc) from Avis Inc. in 1997, and payable in annual instalments of GBP 1.9 million including interest. The deferred consideration is denominated in GBP and bears an interest rate of 8.0% fixed for 28 years. Non-current borrowings are due for settlement after more than one year, in accordance with the maturity profile set out below: EUR million Between one and five years

2009

2008

1,306.7

1,420.9

After more than five years

237.1

452.3

Non-current borrowings

1,543.8

1,873.2

The exposure of the Group’s borrowings to interest rate changes and the repricing dates (before the effect of the debt derivatives) at the balance sheet date is as follows: EUR million

2009

2008

Less than one year

939.4

977.0

Between one and five years

920.5

889.0

After more than five years Borrowings

233.1

450.9

2,093.0

2,316.9

The interest rate and currency profiles of borrowings are as follows (including the value of the adjustment for hedged borrowings disclosed in note 32): EUR million Currency

2009 Fixed

Floating

rate

EUR

446.1

948.1

GBP

46.6

72.3

USD

495.4

68.8

2008 Total

Fixed

Floating

rate

Total

1,394.2

297.3

1,358.9

118.9

43.9

38.3

82.2

564.2

496.4

57.8

554.2

1,656.2

Other

2.3

51.5

53.8

2.2

49.1

51.3

Total

990.4

1,140.7

2,131.1

839.8

1,504.1

2,343.9

When the effects of debt derivatives are taken into account, the interest rate and currency profiles of borrowings are as follows: EUR million Currency

2009 Fixed

Floating

rate

EUR

1,310.6

306.9

GBP

86.8

18.0

USD

300.4

25.7

2008 Total

Fixed

Floating

rate

Total

1,617.5

1,121.5

676.9

104.8

64.9

66.9

131.8

326.1

307.8

13.4

321.2

1,798.4

Other

50.8

31.9

82.7

46.5

46.0

92.5

Total

1,748.6

382.5

2,131.1

1,540.7

803.2

2,343.9

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 89

NOTE 31: BORROWINGS (continued) The floating rate borrowings bear interest at various rates set with reference to the prevailing EURIBOR or equivalent. The range of interest rates applicable for fixed rate borrowings outstanding is as follows: 2008

Currency

Min.

Max.

Min.

Max.

EUR

4.3%

6.8%

3.7%

6.8%

GBP

5.7%

5.9%

5.7%

5.9%

USD

2.0%

7.0%

4.9%

6.8%

Other

5.0%

6.5%

3.6%

6.1%

The fair value of current borrowings approximates to their carrying amount. The fair value of non-current borrowings is set out below: EUR million

2009

2008

Fair

Carrying

Fair

Carrying

value

amount

value

amount

Bonds

349.1

349.5

183.4

200.0

Bonds under securitisation programme

199.8

199.6

Obligations under finance leases Bank loans, loan notes and other loans

25.6

25.7

25.6

774.3

945.1

1,089.1

1,425.5

Deferred consideration Non-current borrowings

23.9

23.8

22.1

22.5

1,372.7

1,543.8

1,519.9

1,873.2

The fair value of the bonds is determined based on their market prices. The fair value of the bonds under securitisation programme is equal to their carrying amount. The fair value of the other borrowings is based on either tradable market values, or where such market values are not readily available is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. Certain of the borrowings in the Group have covenants attached. In the Vehicle Glass segment, currency denominated borrowings are designated as hedge of net investment in non-EUR denominated net assets. They are used to hedge the exposure of a proportion of non-EUR denominated net assets against changes in value due to changes in foreign exchange rates. The fair value of these borrowings at 31 December 2009 was EUR 435.8 million (2008: EUR 392.1 million). The ineffectiveness recognised in the income statement that arises from hedge of net investment in foreign operations amounts to nil.

NOTE 32: NET DEBT Net debt is a non-GAAP measure, i.e. its definition is not addressed by IFRS. The Group does not represent net debt as an alternative to financial measures determined in accordance with IFRS. The Group uses the concept of net debt to reflect its indebtedness. Net debt is based on borrowings less cash, cash equivalents and current asset investments. It excludes the fair value of derivative debt instruments. The hedged borrowings (i.e. those that are accounted for in accordance with the hedge accounting rules of IAS 39) are translated at the contractual foreign exchange rates of the related cross currency swaps. The other borrowings are translated at closing foreign exchange rates. EUR million

31 December 2009

31 December 2008

Automobile

Car

Vehicle

Distribution

Rental

Glass

Non-current borrowings

550.8

533.3

459.7

Current borrowings

289.2

242.2

17.8

38.1

840.0

Adjustment for hedged borrowings Gross debt Less: Cash and cash equivalents

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

1,543.8

489.2

863.8

520.2

1,873.2

549.2

134.0

278.0

31.7

443.7

38.1

27.0

813.6

477.5

2,131.1

623.2

1,168.8

551.9

2,343.9 -97.9

-259.5

-60.6

-28.1

-348.2

-1.2

-52.1

-44.6

Less: Current financial assets

-10.0

-2.7

-12.7

-36.3

Net debt

570.5

750.3

449.4

1,770.2

585.7

1,116.7

507.3

2,209.7

FINANCIAL REPORT

2009

90 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 33: PUT OPTIONS GRANTED TO NON-CONTROLLING SHAREHOLDERS The Group is committed to acquiring the non-controlling shareholdings owned by third parties in Belron, should these third parties wish to exercise their put options. IAS 32 requires that the exercise price of such options granted to non-controlling interest (EUR 113.0 million at 31 December 2009, of which EUR 110.2 million of put options with related call options, exercisable until 2014 and EUR 2.8 million of expected price adjustment on put options exercised in September 2009 by Cobepa, to be settled in 2011) be reflected as a financial liability in the consolidated statement of financial position. The difference between the exercise price of the options and the carrying value of the non-controlling interest (EUR 34.8 million at 31 December 2009) is presented as additional goodwill (EUR 75.4 million at 31 December 2009). This goodwill is adjusted at period end to reflect the change in the exercise price of the options and the carrying value of non-controlling interest to which they relate. This treatment reflects the economic substance of the transaction, and has no impact on the result attributable to equity holders of the Parent. The decrease during the year is mainly due to the exercise by Cobepa on 1 September 2009 of its put options it previously owned on 16.35% of Belronâ&#x20AC;&#x2122;s equity capital. The exercise price of the put options takes into account estimates of the future profitability of Belron. Should the underlying estimates change, the value of the put options recognised in the statement of financial position (and of the related goodwill) would be impacted (this would however have no impact on the income statement under the accounting treatment currently applied).

NOTE 34: OTHER NON-CURRENT PAYABLES Other non-current payables are non interest-bearing deferred consideration on acquisitions, payable after more than 12 months. The carrying value of other non-current payables approximates to their fair value.

NOTE 35: TRADE AND OTHER CURRENT PAYABLES Trade and other payables are analysed below: EUR million

2009

2008

Automobile

Car

Vehicle

Distribution

Rental

Glass

Trade payables

60.0

182.7

90.1

Accrued charges and deferred income

50.0

199.6

2.6

3.9

26.5

Non-income taxes Deferred consideration on acquisitions Other creditors Trade and other payables

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

332.8

63.6

282.4

87.6

433.6

252.2

44.8

190.1

2.9

237.8

15.0

45.4

5.1

3.1

12.9

21.1

10.6

12.4

50.4

56.5

245.9

352.8

43.4

63.6

209.3

316.3

164.3

465.3

364.2

993.8

156.9

539.2

325.1

1,021.2

Trade and other current payables are expected to be settled within 12 months. The carrying value of trade and other current payables approximates to their fair value.

NOTE 36: EMPLOYEE BENEFIT EXPENSE The employee benefit expense is analysed below: EUR million

2009

2008

Automobile

Car

Vehicle

Distribution

Rental

Glass

Retirement benefit charges under defined contribution schemes

-5.2

-6.1

-9.8

Retirement benefit charges under defined benefit schemes (see note 20)

-1.3

-8.1

-4.6

Total retirement benefit charge Wages, salaries and social security costs Share-based payments: equity-settled

Group

Automobile

Car

Vehicle

Distribution

Rental

Glass

Group

-21.1

-4.1

-6.9

-12.5

-23.5

-14.0

-1.1

-10.1

-3.2

-14.4

-6.5

-14.2

-14.4

-35.1

-5.2

-17.0

-15.7

-37.9

-117.5

-246.4

-817.2

-1,181.1

-113.9

-266.3

-770.7

-1,150.9

-0.5

-0.4

-0.9

-0.7

-0.2

-0.9

Total employee benefit expense

-124.5

-261.0

-831.6

-1,217.1

-119.8

-283.5

-786.4

-1,189.7

of which: current items

-124.5

-260.9

-831.6

-1,217.0

-119.8

-283.0

-786.4

-1,189.2

-0.1

-0.5

of which: unusual items (defined benefit schemes of which: see notes 9 and 20)

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 91

NOTE 36: EMPLOYEE BENEFIT EXPENSE (continued) The above expense does not include the amounts charged during the period relating to the long-term management incentive scheme mentioned in note 30.

2009

2008

Automobile Distribution

1,565

1,650

Car Rental

5,319

5,967

Vehicle Glass

22,399

20,833

Group

29,283

28,450

NOTE 37: SHARE-BASED PAYMENTS There are in the Group two kinds of equity-settled share-based payment schemes: - Since 1999, share option schemes have been granted to officers and managers of the Automobile Distribution segment, in the framework of the Belgian law of 26 March 1999. The underlying share is the ordinary share of s.a. Dâ&#x20AC;&#x2122;Ieteren n.v. - Since 1998, several share option schemes, a share retention plan and long-term incentive plans have been granted to certain categories of employees in the Car Rental segment. The underlying share is the ordinary share of Avis Europe plc. Automobile Distribution segment Options outstanding are as follows: Date of grant

Number of options

Exercise

(in units)

price

Exercise period

2009

2008

(EUR)

From

2009

10,905

240.0

1/01/2013

27/10/2019 5/11/2018

2008

12,303

121.0

1/01/2012

2007

9,773

264.0

1/01/2011

2/12/2022

2006

8,285

266.0

1/01/2010

27/11/2021

2005

10,755

11,660

209.0

1/01/2009

6/11/2020

2004

6,985

8,945

142.0

1/01/2008

28/11/2019

2003

7,235

8,525

163.4

1/01/2007

16/11/2018

2002

5,565

6,000

116.0

1/01/2006

13/10/2015

2001

5,530

5,965

133.0

1/01/2005

25/10/2014

2000

13,630

13,430

267.0

1/01/2004

25/09/2013

375.0

1/01/2003

17/10/2012

1999

10,985

11,335

Total

101,951

96,221

All outstanding options are covered by treasury shares (see note 29). A reconciliation of the movements in the number of outstanding options during the year is as follows: Number

Weighted average

(in units)

exercise price (EUR)

2009

2008

2009

2008

Outstanding options at the beginning of the period

96,221

84,588

215.0

229.0

Granted during the period

10,905

12,303

240.0

121.0

-785

-480

370.0

-6,760

-190

157.0

Forfeited during the period Exercised during the period Other movements during the period Outstanding options at the end of the period of which: exercisable at the end of the period

2,370

204.0

101,951

96,221

220.2

199.6

60,685

54,200

223.5

221.2

In 2009, the majority of the options were exercised during the second half of the period. The average share price during the period was EUR 174.3 (2008: EUR 175.3).

FINANCIAL REPORT

The staff numbers are set out below (average full time equivalents):

92 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 37: SHARE-BASED PAYMENTS (continued) For share options outstanding at the end of the period, the weighted average remaining contractual life is as follows: Number of years 31 December 2009

8.2

31 December 2008

6.6

IFRS 2 “Share-Based Payment” requires that the fair value of all share options issued after 7 November 2002 is charged to the income statement. The fair value of the options must be assessed on the date of each issue. A simple Cox valuation model was used at each issue date re-assessing the input assumptions on each occasion. The assumptions for the 2009 and 2008 issues were as follows: 2009 Number of employees

2008

158

212

Spot share price (EUR)

296.6

95.0

Option exercise price (EUR)

240.0

121.0

Vesting period (in years)

3.0

Expected life (in years)

6.8

Expected volatility (in %) Risk free rate of return (in %) Expected dividend (EUR) Probability of ceasing employment before vesting (in %) Weighted average fair value per option (EUR)

34%

35%

0.33%

3.45%

2.30

3.10

95.9

21.2

Expected volatility and expected dividends were provided by an independent expert. The risk free rate of return is based upon EUR zero-coupon rates with an equivalent term to the options granted. Car Rental segment The share option schemes of the Car Rental segment might have a dilutive impact on the Group’s shareholding in Avis Europe plc. The total number of share options in issue at 31 December 2009 is 58,062,800 (2008: 34,688,400). This represents 6.3% (2008: 3.8%) of Avis Europe plc share capital. These share options can be exercised until 2013 (2008: 2013). Details on these share option schemes are provided in Avis Europe’s annual report.

NOTE 38: FINANCIAL RISK MANAGEMENT Treasury policies aim to ensure permanent access to sufficient liquidity, and to monitor and limit interest and currency exchange risks. These are summarised below: Liquidity Risk Each business unit of the Group seeks to ensure that it has sufficient committed funding in place to cover its requirements - as estimated on the basis of its long-term financial projections - in full for at least the next 12 months. Long-term funding is managed at the level of each business unit. This funding is complemented by various sources of uncommitted liquidity (short-term banking facilities, commercial paper). The long-term funding mainly consists of: - In the Car Rental and Vehicle Glass segments: syndicated loan facilities, and private and public bonds; - In the Automobile Distribution segment: public retail bonds, securitisation of leasing activities, bi-lateral bank facilities. Repayment dates are spread as evenly as possible and funding sources are diversified in order to mitigate refinancing risk (timing, markets) and its associated costs (credit spread risk). Cash pooling schemes are sought and implemented each time when appropriate (in the Automobile Distribution and the Vehicle Glass segments) in order to minimise gross financing needs and costs of liquidity.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 93

NOTE 38: FINANCIAL RISK MANAGEMENT (continued) The following is an analysis of the contractual undiscounted cash flows payable under financial liabilities together with derivative financial instrument assets and liabilities at balance sheet date: EUR million

Due within

Due between

Due after

one year

one and five years

five years

Total

Capital

Interest

Capital

Interest

Capital

Interest

Capital

Interest

Bonds

17.8

249.5

60.5

100.0

4.3

349.5

82.6

Bonds under securitisation programme

7.8

195.9

16.5

3.9

0.1

199.8

24.4

At 31 December 2009

Obligations under finance leases

184.9

5.1

24.6

2.3

1.0

0.2

210.5

7.6

Other borrowings

109.8

49.6

814.7

116.2

109.6

14.9

1,034.1

180.7

Deferred consideration

275.4

1.2

22.6

299.2

Total

570.1

80.3

1,285.9

195.5

237.1

19.5

2,093.1

295.3

993.8

-188.0

-16.2

-183.6

-35.7

-4.3

-371.6

-56.2

236.3

22.2

226.0

37.5

3.9

462.3

63.6

1,612.2

86.3

1,328.3

197.3

237.1

19.1

3,177.6

302.7

Trade and other payables Derivative financial assets and liabilities Derivative contracts - receipts Derivative contracts - payments Total At 31 December 2008 Borrowings Bonds Bonds under securitisation programme

9.5

100.0

32.8

100.0

8.5

200.0

50.8

86.4

8.6

198.1

9.9

1.5

286.0

18.5

Obligations under finance leases

249.1

8.9

24.5

2.5

1.1

0.1

274.7

11.5

Other borrowings

108.8

71.4

1,095.0

186.0

323.6

26.2

1,527.4

283.6

Deferred consideration Total Trade and other payables

0.2

1.0

21.5

22.7

444.5

98.4

1,418.6

231.2

447.7

34.8

2,310.8

364.4

1,021.2

-195.9

-18.0

-162.9

-43.6

-73.1

-8.5

-431.9

-70.1

213.9

21.9

212.7

47.4

86.1

8.9

512.7

78.2

1,483.7

102.3

1,468.4

235.0

460.7

35.2

3,412.8

372.5

Derivative financial assets and liabilities Derivative contracts - receipts Derivative contracts - payments Total

Interest Rate Risk The Group seeks to cap the impact of adverse interest rates movements on its current financial results, particularly in relation to the next 12 months. To manage its interest rate exposures, the Group primarily uses forward rate agreements, interest rate swaps, caps and floors. Each business unit determines its own minimum hedge percentages, which, for the period up to 12 months, are comprised between 50% and 100%, and thereafter gradually lower over time. The hedge horizon overall is typically 3 years. Hedges, or fixed rate indebtedness, beyond 5 years are unusual. More specifically, the Automobile Distribution segment seeks to protect the margins forthcoming from its long-term (operational) leasing activity (Dâ&#x20AC;&#x2122;Ieteren Lease). Here, hedging is driven by lease contracts duration (estimated length of contracts, amortisation profiles). A change of 100 basis point in interest rate at the reporting date would have increased/decreased equity and result from continuing operations by the amounts shown below. This analysis assumes that all other variables remain constant. EUR million

Result from continuing operations

Cash flow hedge reserve

1% increase

1% decrease

1% increase

1% decrease

31 December 2009

-1.6

1.7

-21.1

21.1

31 December 2008

-5.5

5.8

-6.8

6.8

FINANCIAL REPORT

Borrowings

94 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 38: FINANCIAL RISK MANAGEMENT (continued) Currency Risk The Groupâ&#x20AC;&#x2122;s objective is to protect its cash flows and investments from the potentially high volatility of the foreign exchange markets by hedging any material net foreign currency exposure. Material means in excess of one million euros. Transaction exposures are limited and generally not material. When material, they are reduced or cancelled as soon as they are identified. Investments outside the Eurozone generate translation exposures. These are minimised mainly through the creating of liabilities (debt) denominated in the same currency as the cash flows generated by the corresponding assets. To complement these natural hedges, the Group uses instruments such as forwards, swaps, plain-vanilla foreign exchange options and, when appropriate, cross currency swaps. The hedging levels are reviewed periodically, in light of the market conditions and each time a material asset is added or removed. A 10 percent strenghtening/weakening of the euro against the following currencies at 31 December would have increased/decreased equity and result from continuing operations by the amounts shown below. This analysis assumes that all other variables remain constant: EUR million

Result from continuing operations

Equity

10% strenghtening

10% weakening

10% strenghtening

10% weakening

EUR/GBP

-1.5

1.5

-1.9

2.0

EUR/USD

-0.2

0.1

1.9

-2.0

EUR/CHF

3.6

-3.6

-2.4

2.4

EUR/GBP

5.0

-5.1

-9.5

9.6

EUR/USD

-0.4

0.2

3.1

-3.5

EUR/CHF

4.0

-4.0

-2.2

2.2

31 December 2009

31 December 2008

Counterparty Risk Exposure limits to financial counterparties in respect of both amount and duration are set in respect of derivatives and cash deposits. Such transactions are effected with a limited number of pre-designated banks on the basis of their publicly available credit ratings, which are checked at least once a year. The required minimum rating is A- (Standard and Poorâ&#x20AC;&#x2122;s). Limits on length of exposure per category of transaction are in place to protect liquidity and mitigate counterparty default risks. The instruments and their documentation must be authorized before entering the contemplated transactions. There is no meaningful price risk other than those mentioned above. Within this framework, considerable autonomy is granted to each of the three businesses. Measurement of financial instruments by category As of 1 January 2009 the Group has adopted the IFRS7 amendments, which require disclosure of how the fair value measurements fit within the fair value measurement hierarchy. The following table presents the Group's financial assets and liabilities measured at fair value within the hierarchy: EUR million

Level 1

Level 2

Level 3

Total

Non-current and current assets: Available-for-sale financial assets Derivative hedging instruments

0.1

0.8

Derivatives held for trading

19.0

1.9

20.9

Cash and cash equivalents

234.8

Total assets

234.9

19.8

1.9

256.6

Non-current and current liabilities: Derivative hedging instruments

62.7

Derivatives held for trading

36.0

Total liabilities

98.7

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 95

NOTE 38: FINANCIAL RISK MANAGEMENT (continued)

Level 2 comprises those financial instruments measured at fair value where the valuation is based on inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (this is, as prices) or indirectly (that is, derived from prices). The fair values of all the Group’s derivative hedging instruments and derivatives held for trading are determined using valuation techniques. These valuations techniques maximise the use of observable market data where it is available, and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. The fair value of the Group’s derivative hedging instruments and derivatives held for trading (other than the embedded derivative in the Car Rental segment – see note 19) are calculated as the present value of the estimated future cash flows based on observable yield curves, and are therefore included in level 2. Level 3 comprises those financial instruments measured at fair value where the valuation is based on inputs for the asset or liability that are not based on observable data. The fair value of the embedded derivative contract (in the Car Rental segment - see note 19) is determined using option valuation techniques which are based on both observable market rates, but also assumptions with respect to future Avis Europe share price volatility (which is extrapolated from historic volatility trends). The embedded derivative is therefore included in level 3. Movements in the fair value of the embedded derivative are recognised in the consolidated income statement. The gain reported in the year amounts to EUR 1.2 million.

NOTE 39: CONTINGENCIES AND COMMITMENTS EUR million

2009

2008

Commitments to acquisition of non-current assets

61.8

27.7

39.9

46.1

3.1

4.6

Other important commitments: Commitments given Commitments received

The commitments to acquisition of non-current assets mainly concern the vehicle fleet of the Car Rental segment. The Group is a lessee in a number of operating leases. The related future minimum lease payments under non-cancellable operating leases, per maturity, are as follows: EUR million

2009

2008

Within one year

159.9

163.3

Later than one year and less than five years

313.9

302.5

After five years

124.3

146.1

Total

598.1

611.9

At each year end, the Group also had prepaid various other operating lease commitments in relation to vehicles purchased under buy-back agreements, included in vehicle related receivables in note 27. The Group also acts as a lessor in a number of operating leases, mainly through its wholly-owned subsidiary s.a. D’Ieteren Lease n.v. The related future minimum lease payments under non-cancellable operating leases, per maturity, are as follows: EUR million

2009 Investment

Vehicles

property

2008 Other

Total

property,

Investment

Vehicles

property

Other

Total

property,

plant and

equipment

Within one year

0.8

83.3

84.1

0.1

89.4

89.5

Later than one year and less than five years

2.0

116.8

118.8

0.5

120.1

120.6

After five years

0.4

0.1

0.5

0.1

0.6

Total

3.2

200.2

203.4

1.1

209.6

210.7

FINANCIAL REPORT

Level 1 comprises those financial instruments measured at fair value where the valuation is based on quoted prices (unadjusted) in active markets for identifiable assets or liabilities. As at 31 December 2009, in the Vehicle Glass segment, the available-for-sale financial assets comprise a non-controlling interest in a listed company.

96 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 39: CONTINGENCIES AND COMMITMENTS (continued) At each year end, the Group also had prepaid various other operating lease commitments in relation to vehicles sold under buyback agreements, included in deferred income in note 35. The revenue, expenses, rights and obligations arising from leasing arrangements regarding investment property are not considered material to the Group, and accordingly a general description of these leasing arrangements is not disclosed. Under the securitisation programme (see notes 14, 19, 25, 31), Dâ&#x20AC;&#x2122;Ieteren Lease granted a floating charge on its business to the bondholders to secure its obligations. The floating charge was granted for up to the following amounts: - in respect of principal: EUR 309.0 million; - three years of interest calculated at the rate of 5%, or such other rate as may be agreed between the parties.

NOTE 40: RELATED PARTY TRANSACTIONS EUR million

2009

2008

With entities with joint control or significant influence over the Group: Amount of the transactions entered into during the period Outstanding creditor balance at 31 December

0.9

0.7

14.3

10.0

With associates: Sales

11.7

9.8

Purchases

-0.1

0.6

0.7

Trade receivables outstanding at 31 December With joint ventures in which the Group is a venturer: Sales

1.4

0.6

Trade receivables outstanding at 31 December

2.4

0.1

With key management personnel: Compensation: Short-term employee benefits

4.4

4.0

Post-employment benefits

0.2

Total compensation

4.6

4.2

Amount of the other transactions entered into during the period

n/a

Outstanding creditor balance at 31 December

n/a

Amount of the transactions entered into during the period

0.1

2.7

Outstanding creditor balance at 31 December

0.8

With other related parties:

NOTE 41: DISCONTINUED OPERATIONS In the prior year, Avis Europe had recognised an unusual income of EUR 1.3 million to reflect the final settlement of a warranty provision made in 2007 in relation with the disposal of its subsidiary in Greece. This unusual income was presented in discontinued operations.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 97

NOTE 42: LIST OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES The full list of companies concerned by articles 114 and 165 of the Royal Decree of 30 January 2001 implementing the Company Code will be lodged with the Central Balance Sheet department of the National Bank of Belgium. It is also available on request from the Parent head office (see note 1). The main fully consolidated subsidiaries of the Parent are listed below: Name

Country of incorporation

% of share capital owned

at 31 Dec. 2009

at 31 Dec. 2008 100%

s.a. D’Ieteren Lease n.v.

Belgium

100%

s.a. D’Ieteren Sport n.v.

Belgium

75%

s.a. D’Ieteren Services n.v.

Belgium

100%

100% 100%

s.a. D’Ieteren Treasury n.v. D’Ieteren Trading b.v. D’Ieteren Car Rental s.a. Dicobel s.a.

Belgium

100%

The Netherlands

100%

Luxemburg

100%

Belgium

100%

United Kingdom

59,59%

Luxemburg

77,38%

Car Rental Avis Europe plc Vehicle Glass Belron s.a.

Taking into account the treasury shares held by Avis Europe, the percentages used for the consolidation of Avis Europe are higher than the proportion held in Avis Europe’s share capital shown above: 2009

2008

Average percentage

59.72%

59.74%

Year-end percentage

60.07%

59.64%

Taking into account the impact of the exercise by Cobepa on 1 September 2009 of its put options on the 16.35% of Belron’s equity capital it owned, the average percentage used in 2009 for the consolidation of Belron was different than the year-end percentage: 2009 Average percentage

(1)

Year-end percentage

2008

80.23%

77.38%

93.73%

77.38%

(1) Average percentage used for the profit or loss attributable to equity holders of the Parent (80.43% for the current PBT, Group’s share).

FINANCIAL REPORT

Automobile Distribution

98 |

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS

NOTE 43: EXCHANGE RATES Monthly income statements of foreign operations are translated at the relevant rate of exchange for that month. Except for the statement of financial position which is translated at the closing rate, each line item in these consolidated financial statements represents a weighted average rate. The main exchange rates used for the translations were as follows: Number of euros for one unit of foreign currency

2009

2008

AUD

0.62

0.50

BRL

0.39

0.30

CAD

0.65

0.59

GBP

1.12

1.05

USD

0.69

0.71

Closing rate

Average rate

(1)

AUD

0.57

BRL

0.36

0.37

CAD

0.63

0.64

GBP

1.15

1.37

USD

0.72

0.68

(1) Effective average rate for the profit or loss attributable to equity holders.

NOTE 44: SUBSEQUENT EVENTS On 6 January 2010, the Vehicle Glass segment acquired the following companies in Turkey: OCS Otocam Servis Hizmetleri ve Ticaret Limited Sirketi, Oto Cam Ticaret Anonim Sirketi and DOGUS Oto Cam Sanayii ve Ticaret Anonim Sirketi, and on 1 February 2010 acquired the Spanish business trading as Cristalbus S.L. as well as some of the assets operated by the business Recasur S.L. All of these businesses operate in the glass repair and replacement. The sales and results arising from these acquisitions are not considered material to the Group and accordingly are not disclosed separately.

ANNUAL REPORT 2009 | CONSOLIDATED FINANCIAL STATEMENTS | 99

NOTE 45: AUDITOR’S REPORT Statutory Auditor’s report to the General Meeting of Shareholders of D’Ieteren s.a. on the consolidated financial statements for the year ended December 31, 2009

Unqualified audit opinion on the consolidated financial statements We have audited the consolidated financial statements for the year ended December 31, 2009, established on the basis of the International Financial Information Standards referential as adopted by the European Union, which show a balance sheet total of EUR 5,107.1 million and of which the profit and loss account closes with a profit for the year attributable to equity holders for an amount of EUR 158.5 million. The financial statements of the foreign daughter companies, which are included in the consolidation, were audited by other auditors; our statement is thereby based on their opinion. Management is responsible for the preparation and the fair presentation of these consolidated financial statements. This responsibility includes: designing, implementing and maintening internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the legal requirements and the auditing standards applicable in Belgium, as issued by the Institute of Registered Auditors (Institut des Reviseurs d’Entreprises / Instituut der Bedrijfsrevisoren). Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements are free from material misstatements, as to whether due to fraud or error. In accordance with the above-mentioned auditing standards, we considered the group’s accounting system, as well as its internal control procedures. We have obtained from management and the company’s officials the explanations and information necessary for executing our audit procedures. We have examined, on a test basis, the evidence supporting the amounts included in the consolidated financial statements. We have assessed the appropriateness of the accounting policies and consolidation principles, the reasonableness of the significant accounting estimates made by the company, as well as the overall presentation of the consolidated financial statements. We believe that these procedures provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements for the year ended December 31, 2009 give a true view of the equity, financial situation, financial performance and cash flows of the consolidated group, in accordance with the referential of International Financial Information Standards as these have been adopted by the European Union. Additional statement The preparation of the consolidated Directors’ report and its content are the responsability of management. Our responsibility is to supplement our report with the following additionnal statement which do not modify our audit opinion on the consolidated financial statements: the consolidated Directors’ report includes the information required by law and is consistent with the consolidated financial statements. We are, however, unable to comment on the description of the principal risks and uncertainties which the consolidated group is facing, and on its situation, its foreseeable evolution or the significant influence of certain facts on its future development. We can nevertheless confirm that the matters disclosed do not present any obvious inconsistencies with the information that we became aware of during the performance of our mandate. Brussels, March 8 th, 2010 SC BDO DELVAUX, FRONVILLE, SERVAIS ET ASSOCIES Statutory Auditor Represented by

Jean-Louis SERVAIS Registered Auditor

Gérard DELVAUX Registered Auditor

FINANCIAL REPORT

In accordance with the legal requirements, we report to you on the performance of the mandate of Statutory Auditor which has been entrusted to us. This report contains our opinion on the true and fair view of the consolidated financial statements as well as the required additional statements.

100 |

ANNUAL REPORT 2009 | ABRIDGED STATUTORY FINANCIAL STATEMENTS

s.a. D’Ieteren n.v. Abridged Statutory Financial Statements s.a. D’Ieteren n.v. 2009 Abridged Statutory Financial Statements 2009

CONTENTS 101 ABRIDGED BALANCE SHEET 102 ABRIDGED INCOME STATEMENT 102 ABRIDGED NOTE 103 SUMMARY OF ACCOUNTING POLICIES

The statutory financial statements of s.a. D’Ieteren n.v. are summarised below in accordance with article 105 of the Company Code. The unabridged version of the statutory financial statements of s.a. D’Ieteren n.v., the related management report and Statutory Auditor’s report shall be deposited at the National Bank of Belgium within the legal deadline and may be obtained free of charge from the internet site www.dieteren.com or on request from: s.a. D’Ieteren n.v. Rue du Mail 50 B-1050 Brussels The Statutory Auditor has issued an unqualified opinion on the statutory financial statements of s.a. D’Ieteren n.v.

ANNUAL REPORT 2009 | ABRIDGED STATUTORY FINANCIAL STATEMENTS | 101

Abridged Balance Sheet At 31 December

EUR million

2009

2008

2,032.0

2,045.1

Fixed assets II.

Intangible assets

1.8

2.8

III.

Tangible assets

90.2

96.2

IV.

Financial assets

1,940.0

1,946.1

358.4

442.1

Current assets V.

Non-current receivables

VI.

Stocks

0.1

0.3

250.0

339.2 86.2

VII.

Amounts receivable within one year

76.3

VIII.

Investments

21.7

7.6

IX.

Cash at bank and in hand

0.7

1.1

Deferred charges and accrued income

9.6

7.7

2,390.4

2,487.2

2009

2008

Capital and reserves

755.9

690.4

I.A.

Issued capital

160.0

II.

Share premium account

IV.

Reserves

Accumulated profits

30.0

25.0

Provisions and deferred taxes

29.6

30.9

1,604.9

1,765.9

1,278.8

1,378.7

279.6

336.3

TOTAL ASSETS

EUR million LIABILITIES

Creditors VIII.

Amounts payable after one year

IX.

Amounts payable within one year

Accrued charges and deferred income

TOTAL LIABILITIES

24.4

541.5

481.0

46.5

50.9

2,390.4

2,487.2

FINANCIAL REPORT

ASSETS

102 |

ANNUAL REPORT 2009 | ABRIDGED STATUTORY FINANCIAL STATEMENTS

Abridged Income Statement EUR million

2009

2008

Operating income

2,351.7

2,626.6

II.

Operating charges

2,309.3

2,568.1 58.5

III.

Operating profit

42.4

IV.

Financial income

79.8

2.4

Financial charges

38.7

101.2

83.5

-40.3

VI.

Result on ordinary activities before income taxes

VII.

Extraordinary income

VIII.

Extraordinary charges

IX.

Result for the period before taxes

IXbis.

Deferred taxes

Income taxes

XI.

Result for the period

XII.

Variation of untaxed reserves

XIII.

Result for the period available for appropriation

(1)

1.6

0.8

47.8

82.7

-86.5

-0.6

0.7

83.3

-87.2

83.3

-87.2

(1) Transfers from untaxed reserves (+) / Transfers to untaxed reserves (-).

Abridged Note Abridged Notes

Auditor’s Remuneration The Statutory Auditor is SC BDO DELVAUX, FRONVILLE, SERVAIS ET ASSOCIES, Réviseurs d’entreprises – Bedrijfsrevisoren, (“BDO – DFSA”). Auditor’s remuneration, including the fees charged by entities related to the Statutory Auditor as defined by article 134 of the Company Law, is analysed as follows: EUR

2009

2008

160,000

Audit s.a. D’Ieteren n.v. (charged by BDO – DFSA) Non-audit Other assurance services s.a. D’Ieteren n.v. (charged by BDO – DFSA) Tax advisory services (charged by SC BDO – DFSA, Conseils fiscaux - Belastingsconsulenten– former Socofidex) TOTAL

8,877

3,575

8,749

17,141

177,626

180,716

ANNUAL REPORT 2009 | ABRIDGED STATUTORY FINANCIAL STATEMENTS | 103

The capitalised costs for the development of information technology projects (intangible assets) are amortised on a straightline basis over their useful life. The amortisation period cannot be less than 2 years nor higher than 7 years. Tangible Fixed Assets are recognised at their acquisition value; this value does not include borrowing costs. Assets held by virtue of long-term leases (â&#x20AC;&#x153;emphytĂŠoseâ&#x20AC;?), finance leases or similar rights are entered at their capital reconstitution cost. The rates of depreciation for fixed assets depend on the probable economic lifetime for the assets concerned. As from the 1st of January 2003, tangible fixed assets acquired or constructed after this date shall be depreciated pro rata temporis and the ancillary costs shall be depreciated at the same rate as the tangible fixed assets to which they relate. The main depreciation rates are the following:

Buildings

Rate

Method

L/D

Building improvements

10%

L/D

Warehouse and garage

15%

L/D

Network identification equipment

20%

L/D

Furniture

10%

L/D

Office equipment

20%

L/D

Rolling stock

25%

Heating system

10%

L/D

20%-33%

L/D

EDP hardware L: straight line. D: declining balance (at a rate twice as high as the equivalent straight line rate).

Tangible fixed assets are revalued if they represent a definite, long-term capital gain. Depreciation of any revaluation surplus is calculated linearly over the remaining lifetime in terms of the depreciation period of the asset concerned. Financial Fixed Assets are entered either at their acquisition price, after deduction of the uncalled amounts (in the case of shareholdings), or at their nominal value (amounts receivable). They can be revalued, and are written down if they suffer a capital loss or a justifiable long-term loss in value. The ancillary costs are charged to the income statement during the financial year. Amounts Receivable within one year and those receivable after one year are recorded at their nominal value. Write-downs are applied if repayment by the due date is uncertain or compromised in whole or in part, or if the repayment value at the closing date is less than the book value. Stocks of new vehicles are valued at their individual acquisition price. Other categories of stocks are valued at their acquisition price according to the fifo method, the weighted average price or the individual acquisition price. Write-downs are applied as appropriate, according to the selling price or the market value. Treasury Investments and Cash at Bank and in Hand are recorded at their acquisition value. They are written down if their realisation value on the closing date of the financial year is less than their acquisition value. When these treasury investments consist of own shares held for hedging share options, additional write-downs are applied if the exercise price is less than the book value resulting from the above paragraph. Provisions for Liabilities and Charges are subject to individual valuation, taking into account any foreseeable risks. They are written back by the appropriate amount at the end of the financial year if they exceed the current assessment of the risks which they were set aside to cover. Amounts Payable are recorded at their nominal value. Valuation of assets and liabilities in foreign currencies Financial fixed assets are valued in accordance with recommendation 152/4 by the Accounting Standards Commission. Stocks are valued at their historical cost. However, the market value (as defined by the average rate on the closing date of the balance sheet) is applied if this is less than the historical cost. Monetary items and commitments are valued at the official rate on the closing date, or at the contractual rate in the case of specific hedging operations. Only negative differences for each currency are entered in the income statement.

FINANCIAL REPORT

Summary of Accounting Policies

104 |

ANNUAL REPORT 2009 | MAJOR RISK FACTORS

Major Risk Factors

AUTOMOBILE DISTRIBUTION D’Ieteren Auto’s activity is primarily based on close relations built during the last sixty years with the Volkswagen group and largely depending on the existence of import agreements between both parties. This close relationship also makes the results of D’Ieteren Auto dependent on the success of the models developed by the Volkswagen group. Furthermore, future developments of the European regulation concerning automobile distribution could potentially influence the competitive environment. The development of environmental standards or tax regulation on company cars could have a negative influence on volumes and mix of new vehicles sold. D’Ieteren Lease’s fleet represents an important asset of which the value is largely depending on the used car market development.

CAR RENTAL Given its extensive geographic coverage, Avis Europe’s business is subject to various risks inherent to international operations and also risks associated with the demand for its services, which in itself is highly seasonal, including disruption to air travel. The group and its licensees are subject to competition from a wide range of other operators both directly and via intermediaries and brokers, increasing the prevalence and intensity of price competition. Fleet costs, one of the most important elements in operating costs, largely depend on the buying conditions negotiated with car manufacturers and the selling conditions on the used car market and therefore depend on the car industry conditions in general. It is important for the activity to have access to the necessary funds in order to finance the fleet. Avis Europe has agreements with Avis Budget Group Inc. (ABG) for the use of the licences of the Avis and Budget brands in specified territories and for the provision of computer systems, marketing initiatives and customer referrals. Any adverse changes to the terms of these agreements or any deterioration in ABG or its business or in the relationship with ABG could have an adverse effect on the group’s financial condition and results of its operations. Significant risks would exist to the stability of the group’s business if access to primary insurance and/or reinsurance was constrained, denied or available only at increased costs that could not be passed on in increased prices.

VEHICLE GLASS Belron operates in the vehicle glass repair and replacement (VGRR) market which is dependent on various factors notably weather conditions, changes in the vehicle park and driving speed. Weather extremes create peaks in demand which need to be managed through flexible operations whilst changes in vehicle technology or traffic speed result in changes in breakage rates and thereby overall market size. The activity is also influenced by insurer decisions towards glass coverage and preferred suppliers. Changes in insurance coverage affect motorists’ propensity to act on damage despite the associated safety risk. Belron employs around 22,000 full time equivalents and makes a significant investment in training to insure all its staff are appropriately qualified to fulfil their roles throughout the business. In addition, Belron uses sophisticated information technology and centralised distribution facilities which are key to the business operation and represent key risk points. In addition to its organic operational activities, Belron is also an acquisitive company and accordingly faces the usual risks associated with buying and integrating businesses. Considering its leading position in most markets, Belron also faces the risk with regard to competition law.

Risks related to ﬁnancial instruments are explained in note 38 of the consolidated ﬁnancial statements.

ANNUAL REPORT 2009 | CORPORATE GOVERNANCE | 105

The Company adheres to the corporate governance principles set out in the Belgian Code of corporate governance 2009 published on the website www.corporategovernancecommittee.be. It has published since 1 January 2006 its Corporate Governance Charter on its website. The implementation of these principles takes into consideration the particular structure of the Company’s share capital, with family shareholders owning the majority and having ensured the continuity of the Company since 1805. Exceptions to the principles are set out in point 5 of this Corporate Governance Statement. 1. BOARD OF DIRECTORS Composition The Board of Directors consists of: > six non-executive Directors, appointed on the proposal of the family shareholders; > one non-executive independent Director, appointed on the proposal of Cobepa; > four non-executive Directors, two of whom being independent, chosen on the basis of their experience; > the Managing Director (CEO). The Chairman and the Deputy Chairman of the Board are selected among the

Directors appointed on the proposal of the family shareholders. Roles and activities Without prejudice to its legal and statutory attributions and those of the General Meeting, the roles of the Board are to: > determine the strategy and values of the Company; > approve its plans and budgets; > decide on major ﬁnancial operations, acquisitions and divestments; > ensure that appropriate organisation structures, processes and controls are in place in order to achieve the Company’s objectives and properly manage its risks;

> appoint the Directors proposed by the Company for the boards of its main subsidiaries; > appoint and revoke the CEO and CFO of s.a. D’Ieteren n.v. as well as the CEO and CFO of D’Ieteren Auto and decide on their remuneration; > monitor and review performance of the executive management; > maintain eﬀective communication with the Company’s shareholders and other stakeholders; > set the dividend. In that framework, the Board of Directors intends to maintain its ongoing policy of providing the largest possible self-ﬁnancing for

Board of Directors (as at 31 December 2009) Roland D’Ieteren1, 2 Chairman of the Board; Director Avis Europe plc, Belron s.a. 1, 2 Maurice Périer Deputy Chairman of the Board; Director of companies Director Belron s.a. Jean-Pierre Bizet Managing Director; Executive Deputy Chairman Avis Europe plc; Chairman of the board Belron s.a. Managing Partner Enero s.p.r.l. Nicolas D’Ieteren1, 2 Pascal Minne3 Managing Director Petercam 1, 2 Olivier Périer Architect; Founding Partner Urban Platform s.c.r.l. Alain Philippson5 Director Banque Degroof, C.F.E. Gilbert van Marcke de Lummen4 Director of companies; Director Coﬁnimmo s.a. 3 Christian Varin Managing Director Cobepa; Director Sapec, Carrières du Hainaut, ISOS, J.F. Hillebrand Senior advisor, Centre International Wendel pour L’Entreprise Christine Blondel3 familiale, INSEAD; Director Compagnie du Bois Sauvage s.a. de Participations et de Gestion1, 6 Permanent representative: Patrick Peltzer Nayarit Participations s.c.a.1 Permanent representative: Etienne Heilporn

Age 67 71

End of term May 2010 May 2011

May 2011

34 59 38 70 72 62

May 2011 May 2010 May 2011 May 2013 May 2011 May 2010

May 2013

69 70

May 2010 May 2010

1. Director appointed on the proposal of the family shareholders. 2. Director descendant of, or related to, the founding family. 3. Independent Director. 4. Former Executive. 5. Baron Alain Philippson lost his quality of independent Director in May 2009 in accordance with article 526ter of the Company Code, which provides that a director is no longer independent at the expiry of his third directorship or after 12 years. 6. The permanent representative of this Director is, as from 1 January 2010 on, Michel Allé, Chief Finance Oﬃcer SNCB-Holding.

CORPORATE GOVERNANCE

Corporate Governance

106 |

ANNUAL REPORT 2009 | CORPORATE GOVERNANCE

Corporate Governance the development of the Group, while ensuring regular dividend growth, results permitting. The Board of Directors meets at least six times a year. Additional meetings are held when business needs require. Decisions of the Board of Directors are taken by a majority of votes, the Chairman having a casting vote in case of a tie. In 2009, the Board met 9 times. All Directors participated to the Board meetings, except Messrs N. D’Ieteren, O. Périer, P. Peltzer, A. Philippson and G. van Marcke de Lummen, who have each been excused for one meeting. Tenures of Directors The Ordinary General Meeting held on May 28, 2009 decided to appoint Mrs Christine Blondel as independent Director for a four-year term and to renew the directorship of Baron Alain Philippson for a four-year term.

of reference include mainly: monitoring the Company’s financial statements, reviewing the risk management function and ensuring the effectiveness of external and internal audit. The Committee will review auditors’ reports on half-year and year-end financial statements of the subsidiaries which are consolidated into the Company’s accounts. The Audit Committee meets at least four times a year, of which one per semester in the presence of the Statutory Auditor, and reports on its activities to the Board of Directors. The Audit Committee’s Charter adopted by the Board is set out in Appendix I of the Charter published on the Company’s website.

Operation of the Committees

Nomination and Remuneration Committee The Nomination and Remuneration Committee comprises four non-executive Directors at the most, among whom the Chairman of the Board, who chairs it, and at least one independent Director. The Committee will make proposals to the Board regarding appointments and remuneration of directors and executive management of the Company, and ensure the Company has formal, rigorous and transparent procedures to support these decisions. The Committee meets at least three times a year and reports on its activities to the Board of Directors. The Nominations and Remuneration Committee’s Charter adopted by the Board is set out in Appendix II of the Charter published on the Company’s website.

Audit Committee The Audit Committee comprises four non-executive Directors at the most with proven expertise in accountancy and audit, of which at least one independent; the Chairman, who can be represented by the Deputy Chairman, is invited to the meetings. The Audit Committee’s terms

Consultation Committee The Chairman and the Deputy Chairman meet monthly with the Managing Director, as the Consultation Committee, to keep in close relation with each other, monitor the Company’s performance, review progress on major projects and prepare the Board of Directors’ meetings.

Committees of the Board of Directors At the beginning of 2005, the Board set up two Board Committees: > the Audit Committee met 4 times in 2009, 2 of which in the presence of the Statutory Auditor, and reported on its activities to the Board of Directors; > the Nomination and Remuneration Committee met 2 times in 2009 and reported on its activities to the Board of Directors.

Policy for transactions and other contractual relationships not covered by the legal provisions on conflicts of interest Directors and managers are not authorised to provide paid services and to purchase or sell goods directly or indirectly to the Company or to companies in its group within the framework of transactions not covered by their mandates or duties without the specific consent of the Board of Directors, except for transactions realised in the normal course of business. They are bound to consult the Chairman or Managing Director who shall decide whether an application for derogation may be submitted to the Board of Directors and, in such case, notify the details of the transaction to the Secretary of the board, who will ensure that the related legal measures are applied. Such transactions shall not be authorised in any event save where effected at market conditions. Evaluation of the Board and its Committees During 2009 the Board carried out an evaluation of its own performance and that of its Committees. It took notably into account their composition, organisation and the meetings’ contents, their relationship with the majority shareholder and with the executives, to assess their effectiveness and to take, if necessary, any appropriate action based on the results of the evaluation. 2. GROUP EXECUTIVE MANAGEMENT The Managing Director of s.a. D’Ieteren n.v. is responsible for the Group executive management. He is assisted by the Corporate management team, in charge, at Group level, of finance, financial communication, investor relations, accounts consolidation, legal and tax

Composition of the Committees (as at 31 December 2009)

Nomination and Remuneration Committee

Audit Committee2

Chairman

Roland D’Ieteren

Pascal Minne1

Members

Pascal Minne1

Gilbert van Marcke de Lummen

Alain Philippson

Christian Varin1

1. Independent Director. 2. Considering their training and management experience in companies with ﬁnancial character, the members of the Audit Committee have the expertise in accounting and audit required by the law.

matters and management control. The Group Chief Financial Officer, the Group Chief Legal Officer and the Group Treasurer are also part of the executive management at Group level. 3. EXECUTIVE MANAGEMENT OF THE THREE SECTORS The activities of the D’Ieteren Group are organised in three sectors. The Automobile Distribution sector - D’Ieteren Auto, an operational department of s.a. D’Ieteren n.v. without separate legal status - is managed by the CEO D’Ieteren Auto, reporting to the Group Managing Director. The CEO D’Ieteren Auto chairs the management committee of D’Ieteren Auto, comprising seven other members with responsibilities for D’Ieteren Car Centers, Finance, Group Service, IT, Marketing, Makes and Human Resources. The Car Rental sector comprises Avis Europe plc and its subsidiaries. At 31 December 2009, Avis Europe plc is governed by a board of directors of nine members: three are appointed on the proposal of s.a. D’Ieteren n.v., three are independent directors, and two are full time executive directors. The current non-executive chairman of the board is a former Avis CEO. D’Ieteren’s Managing Director is executive deputy chairman of the board. The board of directors of Avis Europe plc has three board committees: the audit committee, comprising three independent directors, the nomination committee and the remuneration committee, each comprising one of the directors proposed by s.a. D’Ieteren n.v.. Listed on the London Stock Exchange, Avis Europe plc is in compliance with the provisions of the Combined Code, with a few exceptions fully disclosed in its annual report. The rights and obligations of the directors appointed on proposal of s.a. D’Ieteren n.v., and those of s.a. D’Ieteren n.v. as a shareholder, are set out in the Relationship Agreement entered into at flotation in 1997. The Vehicle Glass sector comprises Belron s.a., in which D’Ieteren and Cobepa

own, at 31 December 2009, respectively a 77.38% and 16.35% shareholding, and its subsidiaries1. At 31 December 2009, Belron s.a. is governed by a board of directors consisting of eleven members, four of which are appointed on proposal of D’Ieteren, two of which are appointed on proposal of the Cobepa group, one is appointed on proposal of the founding shareholders, two are executive directors and two are independent directors1. The Managing Director of D’Ieteren is member of the board and chairs it. The board of directors of Belron s.a. has two board committees: the audit committee and the remuneration committee, each chaired by a director appointed on proposal of D’Ieteren. 4. REMUNERATION REPORT Developing a remuneration policy and setting remuneration for the Group’s non-executive directors and executive managers. Remuneration policy for non-executive directors and for the Group’s executive management is set by the Board of Directors based on recommendations put forward by the Nomination and Remuneration Committee. The subsidiaries Avis Europe plc and Belron s.a., comprising minority shareholders, have their own board of directors and remuneration committee, which determine the remuneration policy of their own non-executive directors and executive managers. At the end of each financial year D’Ieteren’s Nomination and Remuneration Committee examines: > any proposals for changing the remuneration of the non-executive directors during the following year; > proposals concerning variable remuneration of executive managers during the past year, any changes to their fixed compensation and defining their variable compensation target for the following year and submits them for approval to the Board.

Remuneration of non-executive directors Company policy is to offer compensation at levels that will attract to the Board and retain directors with wide-ranging expertise in the various areas needed to develop profitably the Company’s activities. Directors receive a fixed annual salary. Some directors also receive additional fixed remuneration for specific services such as Chairman or Vice-Chairman of the Board, or for participation in one or more Board committees. In addition, Avis Europe plc and Belron s.a. remunerate certain directors for the exercise of directorships on their boards. The Company communicates the remuneration of its non-executive directors on a global basis. The Board believes that shareholders and investors are adequately informed if the overall cost of the collegial body of governance (except the Managing Director) formed by the Board is communicated to them, without having to know each director’s individual situation. For the year ended 31 December 2009, an amount of EUR 1,509,595 has been paid to non-executive directors by the Company and by Group subsidiaries. No other benefit or payment, loan or guarantee has been granted to them by D’Ieteren. Remuneration of the Group’s executive management Group policy is to pay compensation at levels that will attract and retain, in the various activities, managers having the appropriate profile, and to motivate them by means of adequate incentives. This policy is based on criteria of external equity, measured in terms of comparable functions outside the Group, and of internal equity among colleagues within the Company.

1. Early September 2009, Cobepa exercised its put options on 16.35% of Belron’s equity capital. The transaction took place on 7 February 2010, bringing D’Ieteren’s interest in Belron from 77.38% to 93.73%. At the same date, the directors formerly appointed on proposal of the Cobepa group have been temporarily replaced by directors appointed on proposal of D’Ieteren subject to ratiﬁcation of these appointments by Belron’s Annual Shareholders’ meeting.

CORPORATE GOVERNANCE

ANNUAL REPORT 2009 | CORPORATE GOVERNANCE | 107

108 |

ANNUAL REPORT 2009 | CORPORATE GOVERNANCE

The remuneration of the executive management comprises: > a fixed remuneration, consisting of a base remuneration, employer’s contributions to pension schemes and other benefits; > a variable remuneration composed of annual premiums and of share options tied to the individual performances of the executive managers concerned related to their quantitative and qualitative objectives. The Managing Director does not receive any remuneration for his participation in the Board of Directors. The pension schemes are of the defined contribution type. A target annual bonus is set at the beginning of the year. Depending on individual performance, the bonus actually paid at the beginning of the following year may vary within a range of 50% to 150% of this target.

and the end of the tenth year after this, except during the two-month periods preceding the announcement of the annual and semi-annual financial results. These options entitle the holders to acquire, with the possibility of immediate resale, existing shares of the Company at a price corresponding either to the average price during the 30 working days working before the offer date or at the closing price of the immediately preceding business day.The number of options offered by management category and the exercise price are determined on the advice of the Nomination and Remuneration Committee. Pursuant to the possibility offered by Article 21 of the Economic Recovery Act of 27 March 2009, the Board of Directors decided on 28 May 2009 to extend for a 5-year period the share option schemes of years 2003 to 2007 inclusive. Further details on the share option schemes are provided in note 37 to the consolidated accounts.

The long-term incentive programme consists of granting a speciﬁc number of D’Ieteren share options (see below) and, where appropriate, options on a basket of third-party shares. These options are valued at, respectively, 10% and 20% of the exercice price, considering a vesting period of respectively 3 and 1 year(s).

In 2009, 3,125 D’Ieteren share options were granted to executive managers (1,400 options to the Managing Director and 1,725 options to the other executive managers) at an exercise price per share of EUR 240.

In 2009, the total remuneration of the executive management, expressed in gross amounts and, if need be, except employers’ contributions for social security, amounted to EUR 1,863,528 for the Managing Director, and EUR 1,214,602 for the other executive managers. The variable part of those remunerations represents respectively 35% and 37.4% of the total amount.

Main contract conditions concerning the departure of members of the executive management The employment contracts of Managing Director and other members of executive management do not provide for severance pay upon termination of contract. Should such a case arise, the parties will negotiate in good faith to determine the terms and conditions applicable to such termination. In case of disagreement, the dispute will be resolved by courts applying Belgian law.

D’Ieteren share options The features of the D’Ieteren share option schemes organized for managers of the Company were approved by the Ordinary General Meeting of 26 May 2005, which authorized the Board to organize annual share option schemes for managers of the Company with at least three years’ service. These options may be exercised between 1 January of the third year following the launch date of the oﬀer

5. DEROGATIONS TO THE BELGIAN CORPORATE GOVERNANCE CODE The Company derogates from the Code on the following principles: > Derogation to principle 2.2. The group of directors appointed on the proposal of the family shareholders are in a position to dominate the

decisions. In companies where family shareholders own a majority in the share capital, these shareholders have not, like others, the opportunity to sell their shares if they do not agree with the orientations defined by the Board. Their par or majority representation in the Board gives them the possibility to influence these orientations and thereby ensure the stability of shareholding necessary to the profitable and sustainable development of the Company. The potential risks for the corporate governance resulting from a tight control by the majority shareholder on the working of the Board can be mitigated, on the one hand, by an appropriate use of this power by the directors concerned in respect of the legitimate interests of the Company and of the minority shareholders and, on the other hand, by the durable presence of non-executive directors not representative of the family shareholding guaranteeing a real dialogue within the Board. > Derogation to principles 5.2./4, 5.3./1 and 5.4./1. The composition of the consultative committees of the Board, including at least one independent director, can derogate from the Belgian Corporate Governance Code which recommends the presence of a majority of independent directors. The Board indeed considers that in-depth knowledge of the Company is at least as important as the statute of independent director. > Derogation to principle 7.8. The Company discloses globally the remunerations paid to Board members. The Board believes that the shareholders are adequately informed if the total cost of the Board, as a collegial governing body, is disclosed without details by individual director. > Derogation to principle 8.8. The provision that “each shareholder holding at least 5% of the capital shares can submit proposals to the General Meeting” is not applied. Except for the family groups, there is currently only one shareholder holding more than 5%

ANNUAL REPORT 2009 | CORPORATE GOVERNANCE | 109

Those exceptions to the principles are also set out under Title 5 of the Corporate Governance Charter available on the Company’s website. 6. EXTERNAL AUDIT The external audit is conducted by SC BDO Delvaux, Fronville, Servais et Associés, Réviseurs d’entreprises - Bedrijfsrevisoren, represented by Gérard Delvaux and Jean-Louis Servais, until the Ordinary General Meeting in 2011. The fees charged by the Statutory Auditor and linked companies for the work carried out in 2009 on behalf of Group Companies in connection with the compulsory control of the statutory and consolidated financial statements amounted to EUR 224,500 (excl. VAT). Further fees of EUR 21,381 (excl. VAT) were charged for non-audit missions of which EUR 12,632 for other specific assignments and EUR 8,749 for fiscal advice. 7. RISK MANAGEMENT AND INTERNAL CONTROL The Directors have continued to review the effectiveness of the Group’s system of controls, including operational and compliance controls, risk management and the Group’s internal control arrangements. Such a system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and can only provide reasonable, and not absolute, assurance against material misstatement or loss. These reviews have included an assessment of both financial and operational internal controls by the internal audit of each activity and reports from the external auditor on matters identified in the course of its statutory audit work. Internal control environment The Directors are responsible for the system of internal control and for regularly reviewing its effectiveness.

The system of internal control includes but is not limited to: > clear definition of the organisation structure and the appropriate delegation of authorities to management; > maintenance of appropriate segregation of duties together with other procedural controls; > strategic planning and the related annual budgeting and regular review process; > monthly reporting and review of financial results and key performance statistics; > adoption of accounting policies to help ensure the consistency, integrity and accuracy of the Group’s financial records; > specific treasury policies and the regular reporting and review of all significant treasury transactions and financing activities; > procedures for the authorisation of capital expenditure; > internal audit reviews. The Group Audit Committee or the audit committees of each activity have reviewed the effectiveness of the system of internal control through the following processes: > review of internal and external audit plans; > review of significant reported unsatisfactory control matters; > review of control issues that arise from internal and external audits together with any additional matters brought to its attention; > review of significant risks identified by the Group’s risk management process; > discussions with management on significant new risk areas identified by management and the internal and external audit processes. The Group Audit Committee receives a regular report on the work carried out by the audit committee of each activity. Assessment of business risk The Group ensures business risks, whether strategic, operational, legal, reputational, financial and environmental risks, are both understood and visible as far as practicable. The Group’s policy is to ensure that risk is taken on an informed rather

than unintentional basis. Each activity conducts an annual risk review and updates its risk register with each risk’s impact, probability and mitigation actions. This approach forms the cornerstone of the risk management activities of the Group, the aim of which is to provide the assurance that the major risks facing the Group have been identified and assessed, and that there are controls either in place or planned to manage these risks. A summary of the principal risks facing the Group has been reviewed and approved by the Audit Committee and is provided on page 104 of this annual report. Internal audit Each activity has its own internal audit and risk management function, which is independent of its external auditors and which may work with an outsourced provider, where specialist skills are required. The audit committee of each activity ensures that these functions are appropriately staffed and that their scope of work is adequate in the light of the key identified risks facing the activity. It also reviews and approves an annual internal audit plan. The audit committee of each activity ratifies the appointment and dismissal of its internal audit manager and assesses his independence and objectivity and helps ensure that he has unfettered access to management and the audit committee. The role of internal audit of each activity is to: > assess the design and operating effectiveness of controls governing key operational processes and business risks; > provide an assessment, independent of management, as to the adequacy of the activity’s internal operating and financial controls, systems and practices; > provide advice to management in order to enhance the control environment and improve business performance.

CORPORATE GOVERNANCE

of the capital and he is linked to each family group with whom he is acting in concert.

110 |

ANNUAL REPORT 2009 | SHARE INFORMATION

Share Information D’Ieteren share

Indices

Financial year from 1 January to 31 December

D’Ieteren share forms part of the Next 150 and BEL MID indices of NYSE Euronext with respective weighting of 1.09% and 5.60% as at 5 March 2010. It also forms part of sector indices published by Dow Jones, Eurostoxx and Bloomberg.

Minimum lot

1 share

ISIN code

BE 0003669802

Sicovam code or security code

941039

Reuters code

IETB.BR

Bloomberg code

DIE.BB

FTSE classiﬁcation

Business Support Services

Evolution of the share price and traded volumes in 2009 Share Price (EUR)

Volumes 40000

300

35000

250

30000 200

25000 20000

150

15000

100

10000 50

If the allocation of results proposed on note 29 of this Annual Report is approved by the Ordinary General Meeting of 27 May 2010, a gross dividend for the year 2009 of EUR 3.2500 per share will be distributed, i.e.: > a net dividend of EUR 2.4375 in return for coupon n°19, after deduction of the withholding tax of 25%; > a net dividend of EUR 2.7625 in return for the coupon and VVPR strip n°19, after deduction of the withholding tax of 15%. Payment of the dividend will take place as from 3 June 2010 at the head oﬃces and branches of Bank Degroof.

12/09

11/09

10/09

09/09

08/09

07/09

06/09

05/09

04/09

03/09

02/09

5000

01/09

Dividend

Evolution of the share price over 5 years (EUR)

Gross dividend per share (EUR)

Share Price (EUR) 350

3.5

300

3.0

250

2.5

2.40

3.00

2007

2008

3.25

2.64

2.0

200

1.5

150

1.0

12/09

01/09

12/08

01/08

12/07

01/07

12/06

01/06

12/05

01/05

0.0

12/04

0.5

01/04

100

Detailed and historic information on the share price and the traded volumes are available on the websites of D’Ieteren (www. dieteren.com) and NYSE Euronext (www. nyseeuronext.com). Avis Europe, a 59.6% subsidiary of D’Ieteren, is listed on the London Stock Exchange in the Transport sector (code AVE.L).

2005

2006

2009

ANNUAL REPORT 2009 | CAPITAL INFORMATION | 111

Capital Information Denominator 31 December 2009

Number

Related voting rights

Ordinary shares1

5,530,262

500,000

Participating shares1 Total

6,030,262

1. Each of the shares and participating shares grants a voting right.

Shareholding structure

35.72%

1.73% 25.10%

31 December 2009 - in voting rights Nayarit Group

30.13%

SPDG Group

25.10%

Cobepa s.a. Own shares Public

According to article 74 § 7of the Law of the 1st of April 2007 on takeover bids, s.a. D’Ieteren n.v. received on 20 February 2008 notiﬁcations from the Nayarit Group (whose members are listed in note 29 of the ﬁnancial report, see page 84), which include all legally required statements and in particular mention that, separately or acting in concert with other people, the Nayarit Group owns on 30 September 2007 more than 30% of the voting securities issued by the Company.

Elements that can have an inﬂuence in case of a takeover bid on the shares of the Company

30.13%

7.32%

Law on takeover bids

7.32% 1.73% 35.72%

Information about the statement of capital can be found in note 29 of this Annual Report.

Disclosure of significant shareholdings (transparency law) Following the entry into effect, on 1 September 2008, of the new Belgian legislation on transparency, s.a D’Ieteren n.v. received, on 31 October 2008, notifications of major shareholdings on the part of its significant shareholders. In compliance with article 14 paragraph 4 of the Law of 2 May 2007 on the disclosure of significant shareholdings, the shareholding structure such as it results from the notifications received by the Company is presented in note 29 of the financial report (see page 84).

The Extraordinary General Meeting of 28 May 2009 has renewed the authorization to the Board to increase the share capital in one or several times by a maximum of EUR 60 million. The capital increases to be decided upon in the framework of the authorized capital can be made either in cash or in kind within the limits set up by the Company Code, or by incorporation of available as well as non-available reserves or a share premium account, with or without creation of new shares, either preference or other shares, with or without voting rights and with or without subscription rights. The Board of Directors may limit or waive, in the Company’s best interest and in accordance with the conditions determined by the law, the preferential subscription right for the capital increases it decides, including in favour of one or more determined persons. The Board of Directors is also entitled to decide, in the framework of the authorized capital, on the issuance of convertible bonds, subscription rights or ﬁnancial instruments which may in term give right to Company shares, under the conditions set up by the Company Code, up to a maximum, such that the amount of the capital increases which could result from the exercise of the above mentioned rights and ﬁnancial instruments does not exceed the limit of the remaining capital authorized as the case may be, without the preferential subscription right of bondholders. Without prejudice to the authorization given to the Board of Directors according to the previous paragraphs,

FINANCIAL REPORT

The Company is not aware of any subsequent notiﬁcation modifying the information presented in note 29.

112 |

ANNUAL REPORT 2009 | CAPITAL INFORMATION

the Extraordinary General Meeting of 29 May 2008 has explicitly authorized the Board of Directors, for a renewable 3-year period, to proceed – in the event of takeover bids on the Company’s shares and provided the required notification has been made by the CBFA within a 3-year period – to capital increases by contribution in kind or in cash, as the case may be, without the preferential subscription right of shareholders. By decision of the same Meeting, the Board of Directors has been authorized to purchase own shares, without prior approval of the Assembly, in order to prevent the Company from suffering a severe and imminent damage, for a renewable 3-year period, starting from the date of publication of the decisions taken to amend the articles of association in the appendixes of the Belgian Official Gazette. The Board is also authorized, in order to prevent the Company from suffering a severe and imminent damage, to sell own shares on the stock exchange or through a sale offer made under the same conditions to all shareholders in accordance with the law. These authorizations also apply, under the same conditions, to the purchase and sale of the Company’s shares by subsidiaries in accordance with clauses 627, 628 and 631 of the Company Code. Finally, the Extraordinary General Meeting of 28 May 2009 granted the Board a 5-year authorization to purchase own shares under the legal conditions, notably to cover stock option plans for managers. The rules governing the appointment and replacement of Board members and the amendment of the articles of association are those provided for by the Company Code. The change of control clauses included in the credit agreements concluded with financial institutions and in the prospectus for the public offering of 23 December 2009 will be submitted to the approval of the General Shareholders’ Meeting of 27 May 2010, in accordance with article 556 of the Company Code.

ANNUAL REPORT 2009 | CONSOLIDATED DIRECTORS’ REPORT | 113

Consolidated Directors’ Report Evolution of the situation, activities and results of the Company

Page(s) of the annual report 2-3, 10-12-13, 24-26-27, 34-36-37

Major risk factors and uncertainties Subsequent events

104 98

Circumstances susceptible of having a signiﬁcant inﬂuence on the development of the consolidated group

N/A

Research and development

N/A

Financial risk management

92-93-94-95

Increase of capital, issue of convertible debentures or subscription rights

N/A

Interim dividend

N/A

Acquisition of own shares Elements that may have an impact in the event of a takeover bid

83-84 111-112

– Structure of the capital – Agreements between shareholders – Any signiﬁcant agreement which takes eﬀect, alter or terminate upon a change of control of the issuer following a takeover bid – Statement(s) according to the Law on takeover bids – Share capital protection Independence and expertise in accounting and audit of at least one member of the Audit Commitee

106

FINANCIAL REPORT

Content of the Consolidated Directors’ Report

114 |

ANNUAL REPORT 2009 | NOTES

Notes

ANNUAL REPORT 2009 | NOTES | 115

FINANCIAL REPORT

Notes

116 |

ANNUAL REPORT 2009 | NOTES

Notes

FINANCIAL CALENDAR 21 May 2010 Last day for the deposit of shares for the Ordinary General Meeting 27 May 2010 Ordinary General Meeting 3 June 2010 Payment of the dividend for the year 2009 27 August 2010 Publication of the results for the ﬁrst half 2010 March 2011 Publication of the annual results 2010

PRESS AND INVESTOR RELATIONS Stéphanie Ceuppens Financial Communication s.a. D’Ieteren n.v. rue du Mail, 50 B-1050 Brussels Belgium Tel.: + 32-2-536.54.39 Fax: + 32-2-536.91.39 E-mail: ﬁnancial.communication@dieteren.be Website: www.dieteren.com VAT BE 0403.448.140 - Brussels RPM Information about the Group (press releases, annual reports, ﬁnancial calendar, share price, statistical information, social documents…) is available, free of charge, mostly in three languages (French, Dutch, English), on the website: www.dieteren.com, or on request. Ce rapport annuel est également disponible en français. Dit jaarverslag is ook beschikbaar in het Nederlands.

Concept and realisation: The Crew www.thecrewcommunication.com Photography: Jean-Michel Byl - Clair Obscur, Nicolas Van Haren, D’Ieteren Gallery archives and picture libraries Audi, Avis, Belron, Bentley, Budget, Carglass, Lamborghini, Seat, Škoda, Porsche, VW, Yamaha, GettyImages, Shutterstock. Printing: Joh. Enschedé - Van Muysewinkel The major trading brands of the Belron® Group : Belron®, the Belron® Device, Autoglass®, Carglass®, Glass Medic®, Lebeau Vitres d’autos®, Duro®, Speedy Glass®, Apple Auto Glass®, Safelite® Auto Glass, Elite Auto Glass™, Auto Glass Specialists®, Diamond Triumph Glass™, Auto Glass Center™, O’Brien® and Smith&Smith® are trademarks or registered trademarks of Belron s.a. and its aﬃliated companies. Forward-looking statements This Annual Report contains forward-looking information that involves risks and uncertainties, including statements about D’Ieteren’s plans, objectives, expectations and intentions. Readers are cautioned that forward-looking statements include known and unknown risks and are subject to signiﬁcant business, economic and competitive uncertainties and contingencies, many of which are beyond D’Ieteren’s control. Should one or more of these risks, uncertainties or contingencies materialize, or should any underlying assumptions prove incorrect, actual results could vary materially from those anticipated, expected, estimated or projected. As a result, D’Ieteren does not assume any responsibility for the accuracy of these forward-looking statements.