ANNUAL REPORT 2009

Transcription

ANNUAL REPORT 2009

D’Ieteren
Changing Mindsets
ANNUAL REPORT 2 0 0 9
Contents
2 Message to Shareholders | 4 Group Activities | 6 Automobile Distribution –
D’Ieteren Auto | 20 Short-Term Car Rental – Avis Europe plc | 30 Vehicle Glass Repair
and Replacement – Belron s.a. | 40 Financial Report | 104 Major Risk Factors | 105
Corporate Governance | 110 Share Information | 111 Capital Information | 113 Content
of the Consolidated Director’s Report
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:
2
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
3.0000
2.6400
2.4000
2.3100
Net dividend per ordinary share
2.4375
2.2500
2.2500
1.9800
1.8000
1.7325
Net dividend per ordinary share + strip VVPR
2.7625
2.5500
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
5,530,262
5,530,262
5,530,262
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
2
-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%
-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.
& 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
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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
4|
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
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
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
5,319
5,967
6,122
6,276
6,253
6,166
External sales4, 6
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
215.5
173.9
156.5
119.9
99.2
96.1
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
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
6|
ANNUAL REPORT 2009 | D’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
8|
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
10 |
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
2%
Market share (%)
20
500
450
15
400
● D’Ieteren Lease
2.7%
● D’Ieteren Sport
-14.6%
D’IETEREN AUTO
8.4%
150
5
100
50
0
476
0.4%
536
● D’Ieteren Car Centers (after-sales)
200
525
5.6%
526
● Spare parts and accessories
10
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)
0
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.
01
02
03
04
05
06
07
08
09
10
D’IETEREN AUTO
Key events 2009.
12 |
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
14 |
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
QAudi
QVW
QSeat
QŠkoda
160
150
140
130
120
110
100
0
Source : JATO
2007
2008
2009
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.
16 |
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.
D’IETEREN AUTO
18 |
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.
D’IETEREN AUTO
20 |
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
ANNUAL REPORT 2009 | AVIS EUROPE plc | 21
22 |
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.
AVIS EUROPE plc
24 |
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.
EUR million
2009
2008
CHANGE
1,392.7
1,665.7
-16.4%
103.4
112.7
-8.3%
4
8.9%
8.6%
–
-68.3
-75.1
9.1%
35.1
37.6
-6.6%
Current result before tax,
group’s share
20.9
22.5
-7.1%
-44.4
-278.4
–
2
External sales
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%
1
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
0%
● 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.
| 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.
01
02
03
04
05
06
07
08
09
10
AVIS EUROPE plc
Key events 2009.
26 |
Resisting adversity.
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.
“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
28 |
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.
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.
30 |
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
32 |
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.
34 |
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.
EUR million
External sales
2009
2008
CHANGE
2,423.2
2,156.1
12.4%
215.5
173.9
23.9%
8.9%
8.1%
–
-28.5
-33.6
15.2%
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
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.
01
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BELRON S.A.
Key events 2009.
36 |
Taking advantage
of the crisis.
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.
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.
38 |
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.
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
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: Auditor’s Report
100 ABRIDGED STATUTORY FINANCIAL
STATEMENTS 2009
42 |
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
4
Cost of sales
Gross margin
Commercial and administrative expenses
Other operating income
Other operating expenses
Total
re-measu-
(2)
rements
(2)
6,269.7
-
6,269.7
6,501.2
-
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
5
384.7
-54.9
329.8
375.1
-283.3
91.8
Net finance costs
6
-119.9
5.3
-114.6
-136.6
-21.5
-158.1
Result before tax
9
264.8
-49.6
215.2
238.5
-304.8
-66.3
Share of result of entities accounted
for using the equity method
7
0.8
-
0.8
1.1
-
1.1
Tax expense
8
Result from continuing operations
Discontinued operations
41
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
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
9
Non-controlling interest
Earnings per share for result for the period
attributable to equity holders of the Parent
Basic (EUR)
10
33.29
-4.41
28.88
28.90
-23.04
5.86
Diluted (EUR)
10
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)
10
33.29
-4.41
28.88
28.90
-23.18
5.72
Diluted (EUR)
10
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.
Consolidated Statement of
Comprehensive Income
EUR million
Notes
Result for the period
2009
2008
183.0
-28.2
Actuarial gains (losses) on employee benefit obligations
Translation differences
20
-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 |
Financial Position
At 31 December
EUR million
Notes
2009
2008 (1)
Goodwill
11
939.8
852.0
Other intangible assets
13
776.2
804.2
Vehicles
14
671.9
781.4
Other property, plant and equipment
15
419.1
385.6
Investment property
16
6.3
6.8
7
15.5
14.8
Equity accounted investments
Available-for-sale financial assets
17
1.0
1.0
Derivatives held for trading
19
1.9
0.7
Long-term employee benefit assets
20
14.6
0.5
Deferred tax assets
21
98.1
81.0
Other receivables
22
Non-current assets
3.5
2.5
2,947.9
2,930.5
Non-current assets classified as held for sale
23
-
-
Inventories
24
467.6
530.2
Derivative hedging instruments
18
0.8
7.7
19
19.0
20.6
53.3
Other financial assets
25
25.9
Current tax assets
26
2.3
7.9
Trade and other receivables
27
1,295.4
1,717.7
Cash and cash equivalents
28
348.2
97.9
Current assets
2,159.2
2,435.3
TOTAL ASSETS
5,107.1
5,365.8
1,028.5
896.1
Equity
126.1
134.7
1,154.6
1,030.8
Long-term employee benefit obligations
20
127.6
106.9
Other provisions
30
62.8
189.2
18
41.8
51.5
31/32
1,543.8
1,873.2
Borrowings
19
0.3
0.6
Put options granted to non-controlling shareholders
33
113.0
312.1
Other payables
34
6.1
3.7
Deferred tax liabilities
21
147.5
170.8
2,042.9
2,708.0
Provisions
Non-current liabilities
30
222.1
42.8
18
20.9
1.8
31/32
549.2
443.7
Borrowings
19
35.7
47.9
Current tax liabilities
26
87.9
69.6
Trade and other payables
35
993.8
1,021.2
Current liabilities
1,909.6
1,627.0
TOTAL EQUITY AND LIABILITIES
5,107.1
5,365.8
Changes in Equity
At 31 December
Share
Share
Treasury
capital
premium
shares
Share-
Non-
Group's
controlling
gains
lative
share
interest
and
translation
Hedging
Retained
Actuarial
based
value
reserve
earnings
payment
reserve
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
-
-
-
-
-
-
-
-1.5
1.2
-0.3
Dividend 2007 paid in 2008
-
-
-
-
-
-
-16.5
-
-
-
-16.5
-0.2
-16.7
Put options treatment - Movement
of the period
-
-
-
-
-
-
-
-
-
-
-
-13.9
-13.9
Other movements
-
-
-
-
-
-
-
-
-
-
-
1.0
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
-
-
-
-
-
-
-
-1.2
-0.8
-2.0
Dividend 2008 paid in 2009
-
-
-
-
-
-
-16.5
-
-
-
-16.5
-22.1
-38.6
-
-
-
-
-
-
-
-
-
-
-
-5.6
-1.4
-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 |
Cash Flows
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
41
-
1.3
5
184.8
182.0
Depreciation of other items
5
83.4
78.0
Amortisation of Avis licence rights
9
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
5
27.5
22.6
9/13/15
0.6
226.1
5
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)
(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
9
-275.1
-
9/12
-16.7
-46.4
25
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
-16.5
Dividends paid by Parent
29
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
28
68.8
54.6
Cash equivalents at beginning of period
28
29.1
25.9
Cash and cash equivalents at beginning of period
28
97.9
80.5
246.4
24.0
Total cash flow for the period
Cash and cash equivalents at end of period
(2) Excluding vehicles held under buy-back agreements.
28
3.9
-6.6
348.2
97.9
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);
-
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.
50 |
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.
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.
52 |
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.
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 |
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.
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
4
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)
5
65.0
56.2
208.6
329.8
88.5
-147.6
150.9
91.8
of which: current items
5
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
5
-0.8
-47.2
-6.9
-54.9
-
-260.3
-23.0
-283.3
Net finance costs
6
-21.7
-65.5
-27.4
-114.6
-25.5
-94.5
-38.1
-158.1
Result before taxes
9
43.3
-9.3
181.2
215.2
63.0
-242.1
112.8
-66.3
9
42.7
35.1
187.0
264.8
60.6
37.6
140.3
238.5
9
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
7
0.7
0.1
-
0.8
0.7
0.4
-
1.1
Tax expense
8
-2.4
-
-30.6
-33.0
-5.0
59.4
-18.7
35.7
41.6
-9.2
150.6
183.0
58.7
-182.3
94.1
-29.5
41.7
24.8
155.1
221.6
59.3
21.8
111.8
192.9
-0.1
-34.0
-4.5
-38.6
-0.6
-204.1
-17.7
-222.4
Discontinued operations
41
-
-
-
-
-
1.3
-
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
-0.2
-4.0
28.7
24.5
-
-81.6
21.2
-60.4
41.6
-9.2
150.6
183.0
58.7
-181.0
94.1
-28.2
9
FINANCIAL REPORT
EUR million
56 |
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
Deferred tax assets
Other receivables
Non-current assets
Non-current assets classified as held for sale
Inventories
Current tax assets
Current assets
TOTAL ASSETS
Equity
Other provisions
Borrowings
Put options granted to non-controlling shareholders
Other payables
Deferred tax liabilities
Provisions
Borrowings
Current tax liabilities
Current liabilities
TOTAL EQUITY AND LIABILITIES
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
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
41
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
5
70.6
114.2
-
184.8
66.9
115.1
-
182.0
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
-
0.6
-
226.1
-
226.1
5
-
135.7
-
135.7
-
192.3
-
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
-
132.8
-
-289.4
-
-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
28
1.2
52.1
44.6
97.9
1.9
60.9
17.7
80.5
28
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
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
Net cash from investing 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
29
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
Cash and cash equivalents at end of period
(2) Excluding vehicles held under buy-back agreements.
Group
Group
FINANCIAL REPORT
EUR million
58 |
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
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
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
Interest income and dividend income (if any) are presented among net finance costs (see note 6).
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
(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
-
-135.7
-
-192.3
-
-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
-
-51.3
-
-55.2
-
-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
-1.4
-
-
-3.0
-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
-
-
-0.5
-0.5
-
-
-
-
-
-
-0.1
-
-
-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
-
-
0.6
0.7
-
-
0.7
0.1
-
-
0.1
0.7
-
-
0.7
0.7
-
-
0.7
3.3
-
-
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
(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 |
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
-
-
-0.2
-0.3
-
-
-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
-
-2.5
-
-0.5
-
-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
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
-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
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
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
-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 |
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
-
-
0.1
0.1
-
-
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
-
-
-1.0
-1.3
-
-
-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
4%
30%
17%
17%
3%
43%
20%
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
-
-0.3
-
0.1
-
0.1
Utilisation of tax losses
(b)
-
-0.2
-
-0.2
-
-
-
-
Adjustments in respect of prior years
(b)
-
-
-
-
-
0.1
-
0.1
Deferred tax assets not recognised
(b)
-0.5
-4.9
-
-5.4
-2.2
-7.7
-
-9.9
Other
(b)
-
2.5
-
2.5
-
-0.7
-
-0.7
-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.
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
-
13.7
-
13.7
-
21.7
-
21.7
Re-measurements of financial instruments
-1.4
(a)
(g)
(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:
(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 |
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.
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
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
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
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)
(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 |
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
Carrying amount at 31 December
-
-1.5
-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.
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
2.6
France
0.2
0.2
Subtotal Car Rental
0.2
0.2
United Kingdom
96.5
96.4
France
64.8
64.8
Italy
54.2
54.2
47.8
Vehicle Glass
Germany
47.8
Canada
37.4
34.2
Holland
29.1
29.1
Belgium
27.1
27.1
Australia
24.8
24.8
117.3
110.6
United States
15.7
15.7
Norway
Spain
6.9
6.9
New Zealand
6.4
6.4
Greece
3.8
3.8
Sweden
4.0
3.9
Switzerland
2.0
2.2
Portugal
1.2
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 |
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 “Business Combinations” 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
-
2.1
Inventories
1.8
-
1.8
3.1
-
3.1
0.1
-
0.1
-4.9
-
-4.9
2.2
-
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).
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
-
0.9
Items separately acquired
-
-
-
-
13.3
-
-
13.3
-
-
-
-
-1.3
-
-
-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
-
-
-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
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
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
-
-
10.1
-21.7
-
-2.7
-5.2
-14.7
-
-
-44.3
-223.0
-
-
-
-
-
-
-223.0
Amortisation
Impairment losses (see note 9)
-
-
-
-
39.6
-38.0
-
1.6
Items acquired through business combinations
-
-
1.0
2.3
0.1
-
-
3.4
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 |
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
67.9
France
61.9
61.9
Germany
34.8
34.8
Holland
24.2
24.2
Belgium
18.1
18.1
Canada
15.3
15.3
United States
86.5
89.2
Spain
9.1
9.1
Portugal
2.9
2.9
Italy
0.3
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
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
-
0.2
2.3
-7.3
671.9
781.4
910.5
980.9
-238.6
-199.5
of which: accumulated depreciation
Vehicles held under finance leases are included in the above (in the Car Rental segment only) at the following amounts:
2009
EUR
54
million
2008
EUR
87
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
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 |
NOTE 15: OTHER PROPERTY, PLANT AND EQUIPMENT
EUR million
Property
Plant and
Assets
equipment
under
Total
construction
Accumulated depreciation and impairment losses at 1 January 2009
Additions
Disposals
Depreciation
of which: accumulated depreciation and impairment losses
Accumulated depreciation 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
-
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
8.4
7.5
-19.5
-3.6
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
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
-
45.1
31 December 2008
-
44.8
-
44.8
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
Additions
Depreciation
-
0.3
-0.5
-0.5
-
0.9
6.3
6.8
12.5
12.5
of which: accumulated depreciation
-6.2
-5.7
9.1
9.1
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
1.0
1.0
1.0
Total available-for-sale financial assets
1.0
1.0
1.0
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
-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 |
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 Europe’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
200.0
97.7
72.6
Forward foreign exchange contracts (non-debt derivatives)
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
Debt derivatives
Current liabilities
Debt derivatives
(1)
Interest rate caps
-6.4
-7.4
-0.5
-0.5
-
-3.1
-0.3
-
Non-debt derivatives
-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 “fuel hedge instruments”) 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 |
NOTE 19: DERIVATIVES HELD FOR TRADING (continued)
The notional principal amounts of the outstanding derivatives held for trading are as follows:
EUR million
(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
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.
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%
2.0%
2.0%
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
-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
schemes
Total
Funded
Unfunded
schemes
schemes
Total
-466.2
-39.1
-505.3
-347.3
-38.1
Fair value of scheme assets
392.3
-
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
schemes
Total
Funded
Unfunded
schemes
schemes
Total
-493.6
-39.0
-532.6
-467.8
-45.9
420.4
-
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 |
The fair value of scheme assets includes the following items:
EUR million
2009
2008
Funded
Unfunded
schemes
schemes
Equity instruments
249.4
-
Debt instruments
110.7
-
0.1
Property
Other assets
Total
Funded
Unfunded
schemes
schemes
Total
249.4
152.1
-
152.1
110.7
100.7
-
100.7
-
0.1
0.1
-
0.1
32.1
-
32.1
26.1
-
26.1
392.3
-
392.3
279.0
-
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
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
Net deficit (-) / surplus (+) at 31 December
Total
Funded
Unfunded
schemes
schemes
Total
-106.4
-73.2
-39.0
-112.2
40.5
24.8
-
24.8
2.4
2.4
-
2.5
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
-
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
schemes
Current service cost
-7.1
-1.4
Past service cost
-0.1
-
-22.9
-2.1
Interest cost
Total
Funded
Unfunded
schemes
schemes
Total
-8.5
-11.7
-1.2
-0.1
-0.1
-
-0.1
-25.0
-25.9
-2.1
-28.0
-12.9
Effect of curtailment or settlement
-0.1
-
-0.1
-0.5
-
-0.5
Expected return on scheme assets
19.7
-
19.7
27.1
-
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
-
-0.1
-0.5
-
-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
schemes
Total
Funded
Unfunded
schemes
schemes
Total
49.1
-
49.1
-104.9
-
2.6
0.4
3.0
0.7
-0.5
-104.9
0.2
-84.9
-
-84.9
81.5
1.9
83.4
-33.2
0.4
-32.8
-22.7
1.4
-21.3
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
-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
-
-
1.2
-
-
-0.1
-
1.1
Transfer to current tax
-
-
-
-
-
-
6.4
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
-
-1.8
5.8
-
-
2.6
8.7
-
-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
-
3.4
6.0
-
-0.7
-2.5
-0.8
-
-
7.7
-
-
0.9
1.0
9.6
Transfer to current tax
-
-0.2
-
-
-
-
2.7
2.5
-
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 |
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”.
NOTE 24: INVENTORIES
EUR million
2009
2008 (1)
238.3
323.3
27.4
28.6
Vehicles
Other
0.4
0.5
266.1
352.4
Vehicles
3.1
10.3
Fuel
4.9
5.7
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
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
25.9
53.3
The securitisation (see note 14) cash reserves are pledged by D’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
-
751.7
0.6
-
-
0.6
Automobile
Car
Vehicle
Distribution
Rental
Glass
Group
139.1
162.3
169.6
471.0
-
1,106.5
-
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
95.7
989.6
210.1
1,295.4
152.2
1,351.7
213.8
1,717.7
FINANCIAL REPORT
Car Rental
82 |
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
-
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
-
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).
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
-
-
1
-
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 Group’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 |
NOTE 29: EQUITY (continued)
Disclosure of company shareholders
(according to “declarations of transparency”
dated 31 October 2008)
Capital
Participating
shares
shares
Total voting
rights
Number
%
Number
%
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
-
-
13.7
16.5
-
-
Warranty
5.2
-
-
5.2
5.3
-
-
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
-
12.6
-
22.1
-
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
NOTE 30: PROVISIONS (continued)
The changes in provisions are set out below for the year ended 31 December 2009:
Dealer-
Warranty
related
Insurance
Other
Other
and
non-current
current
Total
covers
items
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
-
-
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 D’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 |
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
-
-
349.5
200.0
-
-
200.0
Bonds under securitisation programme
199.8
-
-
199.8
199.6
-
-
199.6
Obligations under finance leases
-
-
25.6
25.6
-
-
25.6
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
-
23.8
-
23.8
-
22.5
-
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
-
-
-
-
86.4
-
-
86.4
-
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
-
33.3
-
-
-
-
Commercial paper
-
26.7
-
26.7
43.9
13.3
-
57.2
275.1
0.3
-
275.4
-
0.2
-
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.
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 |
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
2009
2008
1,306.7
1,420.9
After more than five years
237.1
452.3
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
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
rate
EUR
446.1
948.1
GBP
46.6
72.3
USD
495.4
68.8
2008
Total
Fixed
Floating
rate
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
rate
EUR
1,310.6
306.9
GBP
86.8
18.0
USD
300.4
25.7
2008
Total
Fixed
Floating
rate
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
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
199.8
199.8
199.6
199.6
Bank loans, loan notes and other loans
25.6
25.6
25.7
25.6
774.3
945.1
1,089.1
1,425.5
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
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
-
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
-
-
-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 |
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 Belron’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
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
10.6
-
-
12.4
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
-124.5
-260.9
-831.6
-1,217.0
-119.8
-283.0
-786.4
-1,189.2
-
-0.1
-
-0.1
-
-0.5
-
-0.5
of which: unusual items (defined benefit schemes of which: see notes 9 and 20)
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
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. D’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
To
2009
10,905
-
240.0
1/01/2013
27/10/2019
5/11/2018
2008
12,303
12,303
121.0
1/01/2012
2007
9,773
9,773
264.0
1/01/2011
2/12/2022
2006
8,285
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 |
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
3.0
Expected life (in years)
6.8
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.
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
-
7.8
195.9
16.5
3.9
0.1
199.8
24.4
At 31 December 2009
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
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
-
-
-
-
-
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
Derivative financial assets and liabilities
Derivative contracts - receipts
Derivative contracts - payments
Total
At 31 December 2008
Borrowings
Bonds
-
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
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
Total
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
-
-
-
-
-
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 (D’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
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 |
Currency Risk
The Group’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
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 Poor’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:
0.1
-
-
0.1
-
0.8
-
0.8
-
19.0
1.9
20.9
234.8
-
-
234.8
Total assets
234.9
19.8
1.9
256.6
Non-current and current liabilities:
-
62.7
-
62.7
-
36.0
-
36.0
Total liabilities
-
98.7
-
98.7
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
plant and
equipment
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
0.5
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 |
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), D’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
-0.1
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
0.2
Total compensation
4.6
4.2
Amount of the other transactions entered into during the period
n/a
n/a
n/a
n/a
Amount of the transactions entered into during the period
0.1
2.7
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.
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
% 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%
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%
100%
Luxemburg
100%
100%
Belgium
100%
100%
United Kingdom
59,59%
59,59%
Luxemburg
77,38%
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
98 |
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
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.
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
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:
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
X.
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
160.0
II.
Share premium account
IV.
Reserves
V.
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
X.
Accrued charges and deferred income
TOTAL LIABILITIES
24.4
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
I.
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
V.
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
X.
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
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 (“emphytéose”), 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
5%
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%
L
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
61
May 2011
34
59
38
70
72
62
May 2011
May 2010
May 2011
May 2013
May 2011
May 2010
51
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.
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.
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.
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%
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.
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
0
Dividend
0
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
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
50
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
5,530,262
500,000
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
rue du Mail, 50
B-1050 Brussels
Belgium
Tel.: + 32-2-536.54.39
Fax: + 32-2-536.91.39
E-mail: fi[email protected]
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.
www.dieteren.com

ANNUAL REPORT 2009

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