03 - Europcar Finance

Transcription

REGISTRATION
DOCUMENT
including the annual financial report
2015
CONTENTS
04
SOCIETAL, SOCIAL AND
ENVIRONMENTAL INFORMATION
249
Key figures
2
4.1 CSR organizational overview
Group history
4
4.2 Europcar, promoting sustainable, shared mobility 251
01
OVERVIEW OF EUROPCAR
AND ITS ACTIVITIES
250
4.3 Europcar, renting cars responsibly
255
4.4 Concordance tables
265
4.5 Methodology note
267
4.6 ILO report
270
11
1.1 History and development
12
1.2 Group profile
14
1.3 Presentation of the Group’s market
and competitive environment
16
1.4 Competitive strengths
20
1.5 Strategy
26
1.6 Description of the Group’s business
29
1.7 Organization chart
58
1.8 Research and development, patents and licenses
62
1.9 Property, plant and equipment
63
05
CORPORATE GOVERNANCE
273
5.1 Management and supervisory bodies
274
5.2 Role and activities of the supervisory board
293
5.3 Compensation and other benefits in kind
received by corporate officers
310
5.4 Summary statement of transactions
in Company securities by corporate officers
319
06
02
RISK FACTORS
2.1 Risks relating to the Group’s industry and markets
2.2 Risks related to the business
65
INFORMATION ON THE COMPANY
AND ITS SHARE CAPITAL
321
66
6.1 Information on the Company
322
69
6.2 Constitution and bylaws
322
6.3 Share capital
334
2.3 Risks relating to the Group’s financial structure
and profile
79
6.4 Main shareholders of the company
340
2.4 Regulatory and legal risks
85
2.5 Regulatory, legal and arbitration proceedings
92
6.5 Profit-sharing agreements and incentive plans
– employee shareholders
344
6.6 Disclosures pursuant to Article L. 225-100-3
of the French Commercial Code
345
6.7 Dividend distribution policy
345
2.6 Financial risks
94
2.7 Insurance and risk management
94
03
07
ACCOUNTING AND FINANCIAL
INFORMATION
99
3.1 Analysis of Group results
100
3.2 Liquidity and capital resources
120
3.3 Investments
145
3.4 Consolidated financial statements
and Statutory Auditors’ report
147
3.5 Analysis of the results of Europcar Groupe S.A.
218
3.6 Company financial statements
and Statutory Auditors’ report
221
3.7 Outlook for financial year 2016
245
3.8 Information on mid-term trends and objectives
247
3.9 Significant change in the financial
or business position
248
3.10 Comments from the Supervisory Board
regarding the Management Board’s report
and the financial statements for the year
ended December 31, 2015
248
ADDITIONAL INFORMATION
349
7.1 Persons responsible
for the Registration Document
350
7.2 Related party transactions
351
7.3 Significant contracts
353
7.4 Statutory Auditors’ Special Report on related
party agreements and regulated commitments
354
7.5 Statutory Auditors’ fees
357
7.6 Publicly available documents
357
7.7 Concordance tables
(European regulation no. 809/2004,
annual financial report, Management Board
report, concordance tables of social,
societal and environmental data)
358
7.8 Glossary
364
2015
REGISTRATION
DOCUMENT
ANNUAL FINANCIAL REPORT
GENERAL COMMENTS
This Registration Document (hereinafter the “Registration
Document”) also includes:
a the annual financial report that must be prepared and
published by all listed companies within four months of the
start of each financial year, in accordance with Article L. 451-1-2
of the French Monetary and Financial Code and Article 222-3 of
the AMF General regulation; and
a the annual management report of the Management Board
of Europcar SA, which must be submitted to the General
Meeting of shareholders called to approve the financial
statements of each financial year, in accordance with Articles
L. 225-100 et seq. of the French Commercial Code.
Two cross-reference tables on pages 358 et 359 identify the
information related to these two reports.
In this Registration Document, the terms the “Company,”
“Europcar” and “Europcar Groupe S.A.” mean the Europcar
Group, the holding company of the Group, and the words,
“Europcar” and “the Group” should be understood as
references to Europcar Groupe S.A. and all companies included
in the consolidation.
Pursuant to Article 28 of EU regulation 809/2004, the following
information is incorporated by reference in this Registration
Document:
a the consolidated financial statements of the Group for the
years ended December 31, 2012, 2013 and 2014, contained
in Section 20.1.1 on page 293, which in turn make reference
to Annex II of the Registration Document filed with the AMF
on May 20, 2015 under number I.15-041 (the “Registration
Document”);
a the report of the Statutory Auditors on the consolidated financial
statements of the Group for the years ended December 31,
2012, 2013 and 2014, contained in Section 20.1.2 of the
Registration Document, on pages 293-294 (inclusive);
a the comparison of results for the years ended December 31,
2014 and 2013, contained in Section 9.2 of the Registration
Document on pages 165-171 (inclusive).
The sections of these documents not included by reference in
this document are either irrelevant to current investors or are
addressed in another part of the Registration Document.
Pursuant to its General regulation, notably Article 212-13, the French Financial Markets Authority (the “AMF”) registered this Registration Document on
April 14, 2016 under number R. 16-021. This document may only be used in support of a financial transaction if supplemented by a securities note approved by
the AMF. It was prepared by the issuer and is the responsibility of its signatories.
It was registered, pursuant to the provisions of Article L. 621-8-1-I of the French Monetary and Financial Code, after the AMF had verified that it is complete
and comprehensible, and that the information it contains is consistent. It does not imply authentication by the AMF of the accounting and financial information
contained therein.
Copies of this Registration Document may be obtained free of charge from Europcar Groupe S.A., 2 rue René Caudron, Bâtiment OP, 78960 Voisins-leBretonneux, as well as on the websites of Europcar Groupe (www.europcar-group.com) and the AMF (www.amf-france.org).
This Registration Document in English is a translation of the French “Document de référence” provided for information purposes. This translation is qualified in
its entirety by reference to the “Document de référence”.
EUROPCAR
REGISTRATION DOCUMENT
2015
1
KEY
FIGURES
A dense network of local stations to serve
clients all over the world
Corporate Countries
International Franchises
Partnerships
3,600
140
points of sales worldwide
1,928
Presence in over
140 countries
2
EUROPCAR
stations operated
as franchises
2015
1,654
stations operated
directly or
by agents
2015 was an outstanding year for the Europcar Group,
marked by the success of its IPO. This achievement was driven
by the successful roll-out of the first phase of the Group’s transformation
plan, Fast Lane. The year also produced excellent financial results,
thanks to the contribution of each of the Group’s subsidiaries and
the many commercial initiatives rolled out.
PHILIPPE GERMOND
Chairman of the Management Board
One of the world’s largest car rental
networks
205,400
65
of experience
A vehicle fleet that is serviced
regularly and environmental friendly
Over
6,000
employees
2 ,142
€
million of revenue in 2015
Breakdown of 2015 revenue
Rental income by region (2015)(1)
(1) Rental income excluding franchises
Rental income by customer (2015)(2)
26%
10%
56%
Germany
Spain
Leisure
22%
5%
UK
Portugal
17%
3%
France
Belgium
10%
7%
Italy
Australia
New Zealand
44%
Business
(2) 2015 figures for the nine Europcar «Corporate Countries» alone
EUROPCAR
2015
3
GROUP
HISTORY
1971
1949
1957
1970
1951
Founding
of Europcar in Paris by
Raoul-Louis Mattei
under the name
«l’Abonnement
Automobile».
Signing of
a cooperation
agreement
with Hertz.
Creation
of the «Europcars»
brand.
Raoul-Louis Mattei
sells Europcars to
Régie Renault.
Europcars
acquires a new
visual identity
with a new logo
and a new color:
orange.
1949
2001
2003
1989
1991
1996
Europcar celebrates
its 40th anniversary.
The Group replaces
the orange color
with green.
4
EUROPCAR
Acquisition of
Compagnie des
Wagons-lits by Accor,
who thus becomes
the shareholder of
Europcar International.
The subsidiaries
in Switzerland
and the Netherlands
are acquired
by franchisees.
2015
Europcar launches
a new online
booking tool.
This is a
fundamental
breakthrough for
Europcar: thanks
to www.europcar.
com (or to local
versions), the
200,000 vehicles
of the fleet can be
accessed in 118
countries.
Europcar becomes
the European
car rental leader
thanks to a
strategy based
2004
on the increase
in the number
of operating
Creation of
franchises and the
Europcar Asia
development of
Pacific, comprising
numerous sales
nine countries.
partnerships with
Europcar also
travel agents,
opens up to
airlines companies,
South America.
etc.
1974
1980
1979
1973
Creation of
subsidiaries in
Germany, Belgium,
the Netherlands
and Switzerland.
The «s» disappears
and the brand
becomes
«Europcar».
Creation of
subsidiaries in
Spain, the UK, Italy
and Portugal.
The Europcar
network now
comprises 212
agencies in France,
743 in Europe, Africa
and the Middle
East, with a fleet of
9,000 vehicles and
more than 1,000
employees serving
an increasingly
international
customer base.
1988
To bolster this
image, Europcar
becomes
involved in sports
sponsoring. The
Group sponsors a
Formula 1 Renault
team and the
Paris-Dakar rally.
Renault is replaced
by Compagnie des
Wagons-lits and
then Volkswagen.
InterRent and
Europcar merge.
2005
2012
2006
Europcar joins the United
Nations Global Compact
launched by Kofi Annan
at the World Economic
Forum in Davos. The Group
has thus adopted the 10
fundamental principles
of the Global Compact
concerning the respect
of Human Rights, Labor
standards, the environment
and the fight against
corruption.
2015
Eurazeo takes
control of Europcar,
becoming the sole
shareholder of
Europe’s number
one car rental
group.
Europcar revamps
its brand with a
new positioning
«Moving your
way», together
with a change
in its logo.
Success of Europcar’s Initial Public
Offering. The story of Europcar has
convinced a very broad panel of
French and international investors,
who have joined the Group in its
new development phase.
EUROPCAR
2015
5
KEY FIGURES AND SIGNIFICANT EVENTS OF THE YEAR
Key figures
The reconciliation between GAAP and non-GAAP aggregates are provided in Sections 3.1 “Analysis of Group results” and 3.2
“Liquidity and capital resources”.
Year ended December 31
(in millions of €)
2015
2014
2013
2012
Total Revenue *
2,142
1,979
1,903
1,936
Rental Revenues *
1,992
1,823
1,756
1,781
Rental Day Volume (in millions)
57.1
52.8
50.7
50.7
Revenue Per Transaction Day (RPD) (in €) (1)
34.9
34.5
34.6
35.1
(2)
205.4
189.3
183.6
186.0
76.1%
76.4%
75.6%
74.4%
(253)
(248)
(260)
(284)
251
213
157
119
11.7%
10.8%
8.3%
6.1%
222
138
174
141
(56)
(112)
(63)
(111)
Corporate Free Cash Flow (6)
86
159
128
60
Cash flow after payment of High Yield interest
21
85
54
(7)
3,057
3,148
2,818
2,949
Average Fleet Size in units (in thousands)
Fleet Financial Utilization Rate (3)
Average Fleet Unit Costs/Month (in €) (4)
Adjusted Corporate EBITDA (5) *
Adjusted Corporate EBITDA margin
Operating income (IFRS) *
Net profit/(loss) *
Total Net Debt (including estimated debt equivalent of fleet
operating leases) (7) *
Net Corporate Debt
(7)
Net Corporate Debt/Adjusted Corporate EBITDA
235
581
525
568
0.9x
2.7x
3.3x
4.8x
* As set forth in the consolidated financial statements and the notes to the financial statements
These figures are presented on a reported basis. Please note that changes to certain aggregates can however be influenced by changes to exchange rates.
Please refer to Chapter 3.
(1) RPD (revenue per transaction day) corresponds to rental revenue for the period divided by the Number of Rental Days for the period. This aggregate, like
revenue, may be impacted by currency effects, notably in relation to pound sterling. Readers should refer to Section 3.1 “Analysis of Group results” for a
discussion of change in RPD.
(2) Average fleet of the period is calculated by considering the number of days of the period when the fleet is available (period during which the Group holds
or finances the vehicles), divided by the number of days of the same period, multiplied by the number of vehicles in the fleet for the period.
(3) The fleet financial utilization rate corresponds to the Number of Rental Days as a percentage of the number of days in the fleet’s financial availability period.
The fleet’s financial availability period corresponds to the period during which the Group holds vehicles.
(4) The average fleet costs per unit per month is the total fleet costs (fleet holding costs and fleet operating cost) excluding Interest expense included in fleet
operating lease rents and insurance costs, divided by the average fleet of the period, divided by the number of months of the period.
(5) Adjusted Corporate EBITDA is defined as recurring operating income before depreciation and amortization not related to the fleet, and after deduction
of the interest expense on rental fleet financing. The Group reports Adjusted Corporate EBITDA, as it believes that this aggregate provides investors with
additional information useful in assessing the Group’s performance. The Group believes these indicators are frequently used by securities analysts, investors
and other interested parties in the evaluation of companies in the Group’s industry. The Group further believes that investors, analysts and rating agencies
will use Adjusted Corporate EBITDA to measure the Group’s ability to meet its future debt repayment obligations. Adjusted Corporate EBITDA is not a
recognized measure under IFRS, and should not be seen as an alternative to operating income or net profit as a measure of operating results, or to cash flow
as an indicator of cash generation. Reconciliation with accounting aggregates is presented in Section 3.1 “Management’s analysis of results of operations
and financial condition”.
(6) Corporate free cash flow is defined as free cash flow before the impacts of the fleet and acquisitions of subsidiaries. The Group believes that Corporate free
cash flow is a useful indicator because it measures the Group’s liquidity based on its ordinary activities, including net financing costs on borrowings dedicated
to fleet financing, without taking into account (i) past disbursements in connection with debt refinancing, (ii) costs that, due to their exceptional nature, are
not representative of the trends in the Group’s results of operations, (iii) financial investments, and (iv) cash flows in relation to the fleet analyzed in a separate
manner as the Group makes acquisitions using asset-backed financing. Reconciliation with accounting aggregates is presented in Section 3.2 “Liquidity
and capital resources”.
(7) Total net debt includes Corporate net debt and net fleet debt. The latter aggregate includes all financing related to the fleet, whether or not it is recorded
on the balance sheet. In particular, the off-balance sheet fleet debt, i.e. the estimated debt equivalent of fleet operating leases corresponds to the net book
value of applicable vehicles, which is calculated on the basis of the purchase price and depreciation rates of corresponding vehicles (based on contracts
with manufacturers). Reconciliation with the debt recognized in the balance sheet prepared in accordance with IFRS is provided in Section 3.2 “Liquidity
and capital resources”.
6
EUROPCAR
2015
Significant events during the year
Europcar Groupe, the European leader in vehicle rental services
and a major player in mobility markets, raised approximately
€475 million through its IPO on June 26, 2015. The proceeds
were used to redeem €324 million in notes bearing interest
at 11.50% callable only in the event of an IPO. Then the
Group redeemed in advance its second subordinated notes
(€400 million bearing interest at 9.375%) through a new bond
of €475 million bearing interest at 5.75%.
These transactions, which left the Group with only one
corporate bond, considerably simplified its capital structure and
significantly reduced its debt and corporate interest expense.
This new headroom will enable it to accelerate the
implementation of the strategy initiated in 2012 through the
Fast Lane transformation plan.
Europcar’s successful IPO
On June 25, 2015, Europcar Groupe announced the
success of its IPO on the regulated market of Euronext Paris
(compartment A; ISIN code: FR0012789949; ticker: EUCAR).
The global offering was well received by French and international
institutional investors and the offering price was set at €12.25
per share.
With this transaction, Europcar Groupe raised approximately
€475 million by way of an offering of new shares and €404 million
through the sale of existing shares by Eurazeo (€349 million)
and ECIP Europcar Sarl. The total amount of the global offering
was €879 million before exercise of the over-allotment option.
The main purpose of the offering of the New Shares was to
enable the Group to reduce its indebtedness, strengthen its
financial structure and increase its financial flexibility in order
to accelerate its development and continue the deployment of
its “Fast Lane” program.
Trading of Europcar Groupe’s shares on Euronext Paris in
the form of promesses d’actions started on June 26, 2015.
Settlement and delivery occurred on June 29, 2015. Trading
of shares started on June 30, 2015.
On July 24, 2015, Goldman Sachs International, the stabilizing
agent, acting in the name and on behalf of the Underwriters,
partially exercised the over-allotment option covering 1,522,829
additional existing shares. These shares were sold on July 28 by
Eurazeo (1,327,795 shares) and ECIP Europcar Sarl (195,034
shares) at the offering price of €12.25 per share, corresponding
to a total amount of approximately €19 million.
As a result, a total number of 73,298,339 Europcar common
shares was offered in connection with the IPO, representing
51.3% of the Company’s share capital and bringing the size of
the offering to approximately €898 million.
On December 18, 2015 (at the close of trading), Europcar
Groupe entered the SBF 120 index combining the 120 biggest
stocks listed on Euronext Paris in terms of liquidity and market
capitalization. The share also joined the MSCI Global Small Cap
Index at the close of trading on November 30, 2015.
Further major funding transactions
On May 27, 2015, Europcar Notes Limited set the conditions
governing the issue of €475 million in bonds due in 2022,
namely an issue price of 99.289% of par and a coupon of
5.75%. Demand for the New Notes came from a large and
diversified base of investors. The net proceeds from the
issuance of the New Notes were available to Europcar once its
IPO was completed. Europcar used such proceeds to redeem
in full the Outstanding Subordinated Notes due 2018 (1).
The issue of new bonds followed the refinancing of the existing
Senior Revolving Credit Facility by the new Senior Revolving
Credit Facility (“RCF”) (see Section 3.2.3.1 “Corporate Debt”
(b) “Senior Revolving Credit Facility”) and the changes to
Europcar’s SARF (see Section 3.2.3.2 “Debt related to fleet
financing”; together, these initiatives significantly reduced the
Company’s financial expense ahead of its IPO.
This new €350 million Senior Revolving Credit Facility
matures on May 28, 2020, and bears interest at a rate of
EURIBOR + 250bp.
The SARF, which is a fleet asset-backed financing, has been
increased from €1.0 billion to €1.1 billion to support operating
growth and its maturity has been extended by 2 years to
2019. From mid-June, the interest rate was reduced from
EURIBOR + 220bp to EURIBOR + 170bp. In addition, swap
instruments covering the SARF structure have been extended
to 2019.
(1) Including the redemption premium and transaction costs, with the remainder to be used for general corporate purposes.
EUROPCAR
2015
7
These transactions are part of the refinancing program launched
by the Group in July 2014, covering debt on its fleet as well as
its corporate debt, in the aim of reducing them, lengthening
the maturity of its various instruments, optimizing its financial
expense and improving its credit profile ahead of its IPO.
Uses of proceeds from the IPO and the new
refinancing
The net proceeds from the issuance of the new shares,
approximately €441 millions, and from the €475 million senior
notes, at nominal value, due 2022 (1) were mainly used to
redeem the €324 million Outstanding Subordinated Notes Due
2017 and to pay a redemption premium of €37 million, and to
redeem the €400 million Outstanding Subordinated Notes Due
2018 and to pay a redemption premium of €19 million.
The remainder of the net proceeds of the New Shares and the
New Notes after the refinancing transactions (i.e. approximately
€112 million) was used for the Group’s general corporate
purposes. Of this amount, up to €80 million is intended for
financial investments in strategic initiatives over the 2015-2017
period, including up to €25 million for Europcar Lab-related
activities. See section 3.3.3 “Future Investments”.
The redemption notices for the €324 million Subordinated
Notes Due 2017 and the €400 million Subordinated Notes
Due 2018 were released on June, 26 and the full redemption
price for each of such issues of notes was deposited with the
trustee (The Bank of New York Mellon) on June 29, 2015.
The completion of these transactions brings important benefits
to the Group, including significant reduction in its overall
corporate leverage and a significant reduction in its interest
expense:
a the Group has significantly reduced its gearing (2) , which
was 0.9x at end December 2015, compared with 2.7x at
the end of 2014;
a the interest expense on its corporate notes will be reduced
from €75 million to €27 million.
As a result of the deleveraging and based on the improved
profitability of the Company over recent years, the rating
agencies, Moody’s and S&P, revised the Group’s ratings in July.
Moody’s has upgraded the corporate rating (stable outlook) by
2 notches to B1 from B3 (positive watch). S&P has assigned
a B+ corporate rating (stable outlook) from B (positive watch).
(1) Issue price of 99.289%.
(2) Corporate Net debt / Adjusted corporate EBITDA.
8
EUROPCAR
2015
Our growth in 2015
During the year, Europcar Groupe continued to implement its
“Fast Lane” transformation plan, which had reached mid-point
by the end of 2014. This plan continues to be deployed and
to produce benefits, in particular in terms of profitable revenue
growth and differentiation of the Group’s offer.
On the business segment, Europcar Groupe has won several
new key accounts and renewed several significant contracts.
A strong focus has also enabled the Group to progress
significantly on the SME segment. In addition, Europcar and
Ubeeqo, a carsharing company acquired in late 2014 signed
their first joint agreement with a key account in Belgium.
On the leisure segment, Europcar Groupe has pursued different
initiatives to sustain the development of its two brands Europcar
and InterRent. In the framework of the Europcar brand, the
Group has launched “Keddy by Europcar®”, a dedicated service
for tour-operators, travel agencies and brokers; rolled-out an
ancillary program in all the Corporate Countries ahead of
summer season, and signed new partnerships. The Group
also continued the rollout of InterRent, its low-cost brand, in
its Corporate Countries (75 operating locations to date) and
through franchises (40 countries affiliated at the end of 2015,
compared with 19 at the end of 2014).
Furthermore, the Group continued to improve its customer
experience and strengthened its presence in the new mobility
solutions market. Key examples include:
a an enriched digital experience with reworked mobile
applications and the Europecar mobile website for simplified
browsing, as well as the development of new features on
the Group’s website, such as 24/7 live chat. The Europcar
mobile application moreover obtained the best grade in the
category of vehicle rental applications;
a the acquisition of E-Car Club by Europcar Lab in July 2015,
that, along with the acquisition of Ubeeqo at the end of 2014,
allow the Group to expand its mobility offering with simple
turnkey solutions and offer its customers a differentiated
offering.
a The creation of the “Customer Experience” position, with the
hiring of Jan Löning as Director. His mission is to improve
and enrich the customer experience in order to strengthen
loyalty and grow Europcar’s customer portfolio.
End of the exploitation of the National & Alamo
trademarks
From 2008 to 2013, the Group also exploited the National and
Alamo trademarks in the Europe, Middle East and Africa (EMEA)
region as part of a commercial alliance with Enterprise. This
license agreement and the commercial alliance agreement were
the subject of an arbitration proceeding which, after a transitional
period agreed by the parties, effectively terminated these
agreements as of March 2015. On April 29, 2015, the Group
and Enterprise Holdings Inc. signed a settlement agreement
which put an end to this arbitration and to the dispute between
the parties. The last of Europcar’s commitments in this respect
is the withdrawal of the logo with a lower case “e”, whose use
must end completely by April 30, 2016.
Proceedings by the French Competition
Authority
The French Competition Authority has opened a procedure on
potential anti-competitive practices by participants in the vehicle
rental sector, including Europcar France, to which it addressed
a notice of complaint on February 17, 2015. Europcar France
lodged its statement of defense brief on May 20, 2015. Although
the Group is contesting the complaints made against it, a
provision based on an estimate of the financial risk relative to
this procedure, if the Competition Authority decides to impose
a fine notwithstanding the arguments put forward by the Group,
was accrued in the first quarter of 2015, and unchanged at
December 31, 2015. For a description of this arbitration and the
settlement agreement see Section 2.5 “Administrative, Legal
and Arbitration Proceedings”.
2015 financial performance and 2016 forecasts
The Europcar Groupe has achieved the financial objectives that
were upgraded in November 2015.
Total revenue showed organic growth of 4.9% (1) over that of
2014, reaching €2,142 million. This significant change was
driven by the growth of rental revenues, up 5.9% at constant
perimeter and exchange rates. This increase reflects the
success of commercial initiatives launched as part of the
Fast Lane transformation plan.
Adjusted Corporate EBITDA had major growth reaching
€251 million (+15.6% at constant exchange rates) compared
to €213 million in 2014. This increase results from excellent
operating leverage, cost management improvement and
positive change in fleet financing costs. In particular, Europcar
continued to improve its fleet costs per unit and its variable
costs through efficiency gains made on certain cost lines,
while continuing to invest in commercial development, IT and
marketing, in order to support sustainable growth.
Given the specificities of the year 2015 mentioned above,
the Europcar Group estimated an adjusted net profit of
approximately €128 million. This adjusted net profit excludes
exceptional items (operating and financial), before profits of
companies consolidated using the equity method, after pro
forma adjustment of financing expense, to account for the fullyear effect of the reworking of Group’s financial structure.
Net corporate debt is noticeably down to €235 million at
December 31, 2015 (compared to €581 million at December 31,
2014), due to the complete reworking of the Group’s financial
structure following the initial public offering.
Debt linked to the fleet reached €2,821 million at December 31,
2015, compared to €2,567 million at December 31, 2014. This
change results from the increase in the volume of the fleet in line
with the growth in business and a change in vehicle families.
Moreover, the Group announced, on February 25, 2016,
objectives for the year 2016 in line with commitments made at
the time of the initial public offering:
a organic growth in total revenue (2) between 3% and 5%;
a Adjusted Corporate EBITDA greater than €275 million;
a payment of a dividend to its shareholders starting in 2017,
representing at least 30% of the annual net profit of the
previous year.
The Group also reaffirmed its strategic ambition through the
deployment of its acquisition plan to increase value creation
for its shareholders.
Against this background, confident in its ability to deliver on
its strategic plan, the Group could consider allocating financial
resources for a share buyback program.
A detailed description of performance for the year 2015 is
shown in Section 3.1 “Analysis of Group Results”. The 2016
outlook is described in Section 3.7 “Outlook for financial year
2016” of this Registration Document (see also Section 3.8.2
“Objectives for the year ending December 31, 2017”).
(1) At constant exchange rates and excluding EuropHall, one of its French franchisees, acquired in the fourth quarter of 2014 and consolidated over two
months. In 2014, EuropHall generated standalone revenues of approximately €23 million.
(2) Taking into account the current price of gas.
EUROPCAR
2015
9
10
EUROPCAR
2015
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1.1
HISTORY AND DEVELOPMENT
1.1.1
1.1.2
1.1.3
1.1.4
1.1.5
Corporate name
Place and number of registration
Date of incorporation and duration
Registered office, legal form and applicable law
History and development of the Group
1.2
OVERVIEW OF
EUROPCAR
AND ITS
ACTIVITIES
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1.5
STRATEGY
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1.5.1
Pursue its “Fast Lane” transformation program
and its systematic implementation in order to:
Develop drivers for the Group’s growth
1.6
DESCRIPTION OF THE GROUP’S
BUSINESS
GROUP PROFILE
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1.3
PRESENTATION OF THE GROUP’S
MARKET AND COMPETITIVE
ENVIRONMENT
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1.3.1
1.3.2
1.3.3
General presentation of the vehicle rental market
Growth drivers and general market trends
Information by Corporate Country
1.6.1
1.6.2
1.6.3
1.6.4
1.6.5
1.6.6
1.6.7
1.6.8
1.6.9
1.6.10
1.6.11
Europcar’s Brands
Europcar Lab/Mobility solutions
Customers (“Business”/“Leisure”)
Distribution Channels
Europcar’s network
Group organization
Fleet
Seasonal nature of the business
Suppliers
IT system
Regulation
1.4
COMPETITIVE STRENGTHS
1.4.1
Market growth supported by structural trends
in vehicle rental and mobility solutions
Established leadership and innovation
conferring competitive advantages
Diversified Business Model
“Fast Lane” Transformation Program
that has set the Foundation for Sustainable
Profitable Growth
Strong improvement in financial performance
in recent years
Dynamic and Experienced Management Team
1.4.2
1.4.3
1.4.4
1.4.5
1.4.6
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1.5.2
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29
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33
36
38
45
46
50
50
51
52
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1.7
ORGANIZATION CHART
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22
1.7.1
1.7.2
Simplified Group organizational chart
Subsidiaries and equity investments
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1.8
RESEARCH AND DEVELOPMENT,
PATENTS AND LICENSES
24
25
1.8.1
1.8.2
Research and development
Intellectual property, licenses, usage rights,
and other intangible assets
1.9
PROPERTY, PLANT AND EQUIPMENT
EUROPCAR
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2015
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OVERVIEW OF EUROPCAR AND ITS ACTIVITIES
1.1 HISTORY AND DEVELOPMENT
1.1.1
Corporate name
The name of the Company is “Europcar Group”.
1.1.2
Place and number of registration
The Company is registered with the Registry of Commerce and Companies of Versailles under number 489 099 903.
1.1.3
Date of incorporation and duration
The Company was created on March 16, 2006 for the purpose
of Eurazeo’s acquisition of the Europcar Group.
1.1.4
Registered office, legal form and applicable law
The Company’s headquarters are at 2 rue René Caudron,
Bâtiment OP, 78960 Voisins-le-Bretonneux (Tel.: 00 33 1 30 44 90 00).
Since March 9, 2015, Europcar Group is a Public Limited
Company (Société Anonyme) with a Management Board
and Supervisory Board, organized under French law and
governed in particular by the provisions of book II of the French
1.1.5
Commercial Code. Before March 9, 2015, the Company was
a Public Limited Company (Société Anonyme) with a Board
of Directors.
The Company’s fiscal year begins on January 1 and ends on
December 31 of each year.
History and development of the Group
The Group’s origins date back to 1949, with the creation in
Paris of the car rental company L’Abonnement Automobile by
Raoul-Louis Mattei and the pooling in 1961 of the networks
of L’Abonnement Automobile and of Système Europcars,
another car rental company based in Paris. In 1965, the two
groups officially merged to form the Compagnie Internationale
Europcars. After its acquisition by the French car manufacturer
Renault in 1970, the Compagnie Internationale Europcars
was developed throughout Europe, in particular through new
subsidiaries and the acquisition of existing business segments.
The Compagnie Internationale Europcars’corporate name
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The Company has a legal life of 99 years as from its registration
with the Registry of Commerce and Companies, subject to early
dissolution or extension.
EUROPCAR
2015
(the holding company acting as franchisor) was changed to
Europcar International in 1981.
In 1988, Wagons-Lits acquired Europcar International from
Renault and then sold 50% of the share capital of Europcar
International to Volkswagen AG. At the same time, Europcar
International merged with the German car rental network
InterRent, whose sole shareholder was Volkswagen AG. Accor
acquired 53 Wagons-Lits in 1991 and became a shareholder
with a 50% stake in Europcar International, while Volkswagen
held the remaining 50%. In December 1999, Volkswagen AG
acquired Accor’s stake, thus becoming the sole shareholder of
Europcar International. Starting in 1999, the Europcar Group
actively expanded beyond Europe, in particular through the
development of franchises.
On May 31, 2006, Eurazeo acquired, through the Company
(created for such purpose) the entirety of the share capital of
Europcar International from Volkswagen AG.
In 2006, the Group continued its expansion through external
growth and acquired Keddy N.V. (Belgium) and Ultramar
Cars S.L. (Spain).
In 2007, the Group acquired the UK headquartered operations
of National Car Rental and Alamo Rent A Car covering Europe,
the Middle East and Africa (EMOA zone) from Vanguard Car
Rental Holdings LLC (“Vanguard”). Vanguard was subsequently
acquired by Enterprise Holdings, Inc. (“Enterprise”). From 2008
to August 2013, the Group had a commercial alliance with
Enterprise relating to the National and Alamo brands operated
by Europcar. This alliance ended in August 2013, although the
Group continued to operate the brands National and Alamo in
EMEA until March 2015.
In addition, in 2007, the Group acquired one of its Spanish
franchisees, Betacar.
In 2008, the Group expanded its direct present in Asia-Pacific
through the acquisition of ECA Car Rental, its main franchisee
in Asia-Pacific, operating in Australia and New Zealand.
In 2013, the Group deployed its low-cost brand in Europe,
InterRent, dedicated to leisure travelers. InterRent offers a
competitive car rental service without compromising the quality
of service. As of December 31, 2014, InterRent was deployed
in six Corporate Countries in Europe (France, Germany, Italy,
Portugal, Spain and the United Kingdom) and forty countries
through the franchise network.
01
At the end of 2014, the Group acquired, through its French
subsidiary Europcar France, 100% of the shares of EuropHall,
an important franchisee of Europcar France for the “East”
region. The Group also acquired a stake of 70.64% in Ubeeqo,
a French start-up created in 2008 that offers car-sharing
solutions. Ubeeqo is currently 75.70%-owned by Europcar
Lab SAS, a French subsidiary of the Group, and operates in
France, Belgium, Germany and the United Kingdom.
On June 26, 2015, Europcar Group was successfully listed on
the regulated market of Euronext Paris.
In July 2015, the Group acquired, via its English subsidiary
Europcar Lab UK, a majority stake of 60.8% in E-Car Club, the
United Kingdom’s first entirely electric pay-per-use car club.
On December 18, 2015, Europcar Group joined the SBF 120
stock market index comprising the 120 top stocks in terms
of liquidity and market capitalization, listed on Euronext Paris.
In 2011, the Group started its development of new mobility
solutions by establishing a strategic joint venture with Daimler
AG to create Car2go Europe GmbH. At the date of this
Registration Document, the Group holds 25% of the share
capital of Car2go Europe GmbH.
EUROPCAR
2015
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GROUP PROFILE
1.2 GROUP PROFILE
Europcar Group is the European leader in rental vehicles and
one of the main players in the mobility sector. With operations
in over 140 countries, Europcar offers its customers one of
the largest vehicle rental network, both directly and through its
franchises and partners. The Group operates through two main
brands, Europcar® and its low-cost brand, InterRent®. Customer
satisfaction is paramount for the Group and its employees:
this commitment drives the continuous development of new
services. Europcar Lab, for instance, was created to gain
a better understanding of the future challenges of mobility
through innovation and strategic investments such as Ubeeqo
and E-Car Club.
and 6% in the Rest of the World, its two operating segments),
additional services revenue generated by its subsidiaries
through directly- or agent-operated rental stations (revenues
of € 97.4 million in 2015), as well as royalties and fees received
from its franchises (€52.7 million in 2015, of which 49% was
generated in Europe and 51% in the Rest of World). For further
information on the composition of the Group’s revenue and the
definition of Adjusted Corporate EBITDA, see the Section “Key
figures and significant events of the year” as an introduction
to this Registration Document and Section 3.1 “Analysis of
Group results”.
The Group provides vehicles for short- and medium-term
business and leisure rentals through its network of approximately
3,600 stations (including stations operated by agents and
franchisees). With an average fleet of 205,353 vehicles and a
volume of 57.1 million rental days in its “Corporate Countries”
(Germany, Australia, Belgium, Spain, France, Italy, New
Zealand, Portugal and the United Kingdom) in 2015, (compared
to 189,269 vehicles and 52.8 million rental days in 2014),
the Group uses its extensive knowledge of the vehicle rental
industry to provide a wide range of mobility solutions.
Europcar’s Brands
For the year ending December 31, 2015, the Group generated
consolidated revenues of €2,141.9 million and Adjusted
Corporate EBITDA of €250.6 million. The Group’s revenues
are composed of rental revenue generated by its subsidiaries
through directly- or agent-operated rental stations (revenues of
€1,991 million in 2015, of which 94% was generated in Europe
a InterRent® has been deployed by the Group since 2013 to
target the low-cost leisure segment in order to expand its
customer portfolio.
Europcar operates its car rental business through two main
brands.
a Europcar® is the Group’s core brand. It is used worldwide
directly and through its franchisee network to service a wide
range of market segments, from top of the range to economy,
as well as a large portfolio of diversified customers, from large
Key Accounts (corporate customers) to individual leisure
customers.
The purpose of this strategy is to offer the Group’s customers
a clearly differentiated and understandable portfolio of brands,
to reinforce Europcar’s position in its key markets.
Europcar®
Europcar Service Offerings
Europcar Customers
Europcar’s goal is to provide the mobility solution that best
meets its customers’ needs in a market where expectations
are constantly changing.
The Group’s products and services are offered to a large range
of business and leisure customers. Business customers include
large corporate Key Accounts and small and medium-sized
businesses, as well as companies renting vehicles to provide
vehicle replacement services to their customers. Leisure
customers primarily include individuals who rent vehicles for
vacation travel and individuals who rent vehicles for other
personal transportation needs, either directly via the Europcar
mobile site, the Europcar websites, the reservation centers, in
a station or indirectly through travel agencies, tour operators
or brokers. Revenue generated by each Corporate Countries
is either weighted to one customer category or the other
or balanced between them, depending in particular on the
geographic location.
Europcar offers mobility solutions ranging from short-term
vehicle rental, via its two brands, Europcar® and InterRent®,
to car-sharing. The acquisitions of Ubeeqo, a car-sharing
specialist, and E-Car Club, an entirely electric pay-per-use
car club, offering a fully electric fleet of vehicles in the United
Kingdom, have bolstered the Group’s mobility offering though
its Europcar Lab subsidiary.
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EUROPCAR
2015
GROUP PROFILE
Europcar’s Network
Europcar’s network consists of 3,582 directly- or agentoperated and franchise stations. In order to strengthen
its international operations, the Group has entered into
partnerships (particularly in the US, Canada and Japan) and
commercial and general sales agency arrangements. Europcar
has 7 Corporate Countries in Europe and two in Australia and in
New Zealand. Rental stations within these Corporate Countries
are mainly directly operated by the Group and by agents.
Franchise stations strengthen the network in certain Corporate
Countries (particularly in France, the Group’s birthplace) and
especially in other countries. This franchisee network provides
increased brand awareness and revenues, and allows the
Group to offer its customers services worldwide.
As of December 31, 2015, the Group had 2,388 stations in
Europe, of which 956 were directly-operated, 605 were agentoperated and 827 were franchises. At the same date the Group
had 1,194 stations in the Rest of the World, of which 78 were
directly-operated, 15 were agent-operated and 1,101 were
franchises.
Europcar Fleet
During the year ending December 31, 2015, the Group took
delivery of approximately 278,500 vehicles and operated an
average rental fleet of 205,353 leisure and utility vehicles in
Corporate Countries (+8.5% over 2014). In 2015, Europcar’s
approximate average vehicle holding period was 8.9 months
(7.8 months for vehicles (cars and trucks) covered by buy-back
commitments). The Group purchases its vehicles from a range
of manufacturers with whom it has longstanding relationships,
including primarily Volkswagen, Fiat Group, General Motors,
Renault-Nissan, PSA, Hyundai, Daimler and Ford.
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The Group views fleet management as a key component of
its expertise. The Group has significantly increased its fleet
financial utilization rate in recent years through focused
actions: it reached 76.1% in 2015. Fleet management and
the improvement of the fleet financial utilization rate are based
on internal Group procedures, on the Revenue and Capacity
Management teams that were established during 2012 at
a centralized level and throughout all operating subsidiaries
and on the centralized “Greenway” system and its various
specialized modules.
Europcar Lab
The Group created Europcar Lab in the second half of 2014
to study mobility market usages and search for new mobility
solutions opportunities worldwide, whether such opportunities
be with customers, partners or technology or transport
consultants. Europcar Lab is intended to be an incubator for
researching new products and services in mobility solutions for
the Group. It aims to support internal projects and the securing
of minority and majority stakes in innovative structures. Europcar
Lab holds the stakes in Ubeeqo (approximately 76% owned at
end-2015) and E-Car Club (approximately 61% owned).
EUROPCAR
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PRESENTATION OF THE GROUP’S MARKET AND COMPETITIVE ENVIRONMENT
1.3 PRESENTATION OF THE GROUP’S MARKET
AND COMPETITIVE ENVIRONMENT
The information about the Group’s market contained in this
Section was obtained from various sources, including a KPMG
report dated February 27, 2015 prepared at the request of
the Company as part of its July 26, 2015 initial public offering
and updated on November 6, 2015 for the purposes of this
Registration Document (hereinafter, the “KPMG Study”). The
work performed by KPMG in order to prepare its report was
limited to obtaining and analyzing information and data about
the Group’s key markets from certain public sources (such
as Eurostat, INSEE, the IMF, the World Bank and the OECD)
and non-public sources. KPMG did not conduct an audit or
valuation and did not make any recommendations relating to
potential market opportunities for the Company or relating
to the Company’s planned initial public offering. Moreover,
certain information contained in this Section consists of publicly
available information that the Company considers reliable but
that has not been verified by an independent expert. The Group
cannot guarantee that a third party using other methods to
collate, analyze or compile the market data would obtain the
same results. In addition, the Group’s competitors may define
their economic and geographic markets differently. Except as
otherwise indicated, the data in this Section is taken from the
KPMG Study.
1.3.1
General presentation of the vehicle rental market
Present in over 140 countries worldwide in 2015, Europcar is
a global operator and the European leader in vehicle rentals.
The Group’s strategic positioning is based on (i) nine “Corporate
Countries” in which it has long been present and has extensive
experience (Germany, Australia, Belgium, Spain, France, Italy,
New Zealand, Portugal and the United Kingdom); and (ii) a
network of franchises, agents, partnerships and general sales
agency agreements that enable the Group to reinforce its
network in certain Corporate Countries (notably in France)
and to extend its presence throughout the world. Accordingly,
this network allows the Group to nearly cover the entire world
market estimated at approximately €48.6 billion in 2014
(source: Euromonitor).
The vehicle rental industry is generally characterized by intense
competition with global, local and regional actors. It is based
primarily upon price and customer service quality, including the
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There may be differences between Europcar’s estimated
market share per country, as presented in the KPMG Study,
and the calculation of market share based on revenues per
country as a function of the estimated market size in each
country, as presented in this Registration Document. The
numbers presented in this Registration Document with respect
to market share and the size of the markets are the mid-point
of the ranges estimated by KPMG. In addition, an essential
source of information used by KPMG to establish the revenues
by company were the published financial statements (or those
submitted by Europcar and its competitors to regulatory
authorities, such as the registry (Greffe) in France or Companies
House in the United Kingdom). There may be differences in the
revenues presented in this Registration Document and in the
published financial statements due to the consideration of other
components of revenues. In order to ensure the highest level
of comparability between Europcar and its competitors, KPMG
did not make any adjustments to the published numbers.
Any adjustment made by Europcar could have resulted in an
under-or over-estimation of the Group’s market share in the
absence of equivalent adjustments being made with respect
to its competitors. As the level of adjustments made by
competitors is unknown, KPMG therefore chose not to make
any adjustments for Europcar.
EUROPCAR
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availability and return of vehicles, ease of vehicle reservation,
reliability, the location of rental stations and product innovation.
In addition, competitive positioning is also influenced by
advertising, marketing and brand reputation.
The use of technology has increased pricing transparency
among vehicle rental companies by enabling customers to
more easily compare on the internet the rental rates available
from various vehicle rental companies for any given vehicle.
The European Vehicle Rental Market
The vehicle rental market in Europe represented approximately
€13.1 billion in 2014 (source: Euromonitor). The European
Corporate Countries represented a total estimated market of
€9.5 billion in value in 2014 (an increase of around 4% over
2013).
In Europe, the main vehicle rental companies generally operate
through a combination of directly operated stations and stations
operated by agents or franchisees. The European market is
distributed fairly evenly between the business and leisure
market segments, with some differences from one country
to the next. The European market is also characterized by
the need for an extensive network of rental agencies in order
to cover the entire targeted customer base. Moreover, even
though they may have regional, continental or global strategies,
each of the players operating on the European market must
(i) ensure that they comply with the laws and regulations of
each country, which may change at any time, and (ii) adapt to
the multiple regional differences in consumer habits. The many
operating complexities mentioned above represent a challenge
for operators wishing to enter or expand their presence in
Europe.
The European market is relatively fragmented compared with
the U.S. market. The five largest operators in the European
market represented approximately 66% of market share in
the Corporate Countries in 2014, whereas the three largest
operators in the U.S. market represented approximately
95% of market share in the United States in 2014 (source:
AutoRentalNews). This difference is due to the presence in
several European countries of strong local players that have
relatively significant market shares. The Group has two main
competitors, Avis Budget Group and Hertz, in each of the
European countries in which it operates. In addition, other
companies and brands have significant market share and
1.3.2
footprints in certain countries and regions, including Sixt in
Germany, Enterprise in the United Kingdom and Goldcar,
mainly in Spain. The market shares of the leading participants
of the vehicle rental market in the Group’s European Corporate
Countries (1) were approximately 19% for Europcar, 13% for
Avis (2), 12% for Hertz, 12% for Sixt and 11% for Enterprise
in 2014 (source: KPMG Study, on the basis of the mid-point
of estimated market shares, based on company revenues
excluding franchisees).
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The market in the rest of the world
In 2014, North America represented an estimated market of
€20.3 billion and Asia-Pacific was estimated at €8.2 billion,
followed by Africa and South America, estimated at €3.1 billion
and €2.7 billion, respectively (source: Euromonitor).
In the North American market, the Group entered into
commercial alliances with various partners in order to promote
the cross-referral of customers and offer services in over 140
countries. The Group is also present in Asia-Pacific (in particular
in two Corporate Countries, Australia and New Zealand, which
together represented a market with an estimated value of
€1.4 billion in 2014, and through a commercial cooperation
agreement in Japan) and in South America. Moreover, the
Group operates in the Middle East and Africa through a welldeveloped franchise network as well as partnerships and
general sales agency arrangements.
Growth drivers and general market trends
Macroeconomic conditions and demand
for vehicle rentals
particularly driven by GDP in key markets, through the general
business climate and expenditures on business travel. In the
leisure segment, including vehicle rentals in airports, demand
is mainly driven by changes in inflows of international travelers,
and is therefore closely correlated with airline activity.
Demand for vehicle rentals is tied to macro-economic conditions
in the countries where the Group does business. In particular,
demand is correlated with changes in gross domestic product
(GDP) and with inflows of international travelers, which in turn
is tied to levels of air and rail traffic.
New mobility solutions
Customer segments’ diversity helps reduce the sensitivity of the
vehicle rental business to the economic environment: demand in
the business segment is generally tied to the macro-economic
environment, with significant differences between countries. It is
The vehicle rental industry has been undergoing structural
changes tied to technological advances and the resulting
changes in customer preferences and behaviors. Technological
improvements have enabled providers of mobility solutions to
(1) Excluding Belgium and Portugal.
(2) Prior to Maggiore acquisition in Italy in 2015.
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develop innovative new products and services to respond to
the constantly evolving needs of their customers. Consumer
demand has migrated towards more flexible and economic
mobility solutions with a smaller impact on the environment,
in particular to solve the problem of increased traffic and to
adapt to government policies limiting the use of vehicles in
urban areas.
Accordingly, the way people use the vehicles has been
changing over the last few years: The acquisition and ownership
of vehicles are increasingly irrelevant to actual usage. This
change has accompanied the supply and expansion of various
services traditionally offered by companies that concentrate
all their activities on the mobility market, such as vehicle rental
companies and companies offering car-sharing and ride-sharing
services, as well as the platforms (like Europcar Group and
Ubeeqo). More generally, this market also includes operators
whose activities or services are related and complementary
(such as insurance companies, vehicle leasing companies,
car park operators, car manufacturers, tour operators, travel
agencies, companies offering micro-mobility, telematics
solutions or data storage that develop new mobile applications).
New mobility solutions are being developed in particular in the
following areas:
a car-sharing, which was initially based on business-toconsumer, or “B2C,” models, as well as peer-to-peer, or
“P2P,” models, but now also includes business-to-business,
or “B2B,” models, and may be based on either a one-way
or round-trip itinerary;
a intermodal solutions providing a digital platform that brings
together different means of transportation (public transport,
rental vehicles, taxis, and other mobility solutions) in order
to be able to offer the best possible itinerary to customers
for any given trip;
a transportation services offering the possibility of travelling in
a vehicle driven by a professional or private driver, as well as
ride-sharing solutions offering subscribers the possibility of
sharing rides in vehicles driven by a private individual;
a services that enable individuals, businesses or operators to
turn their temporarily unused parking spaces into sources of
revenue by making them available to other users.
Accordingly, the new players in the mobility solutions market
and vehicle rental companies are all benefiting from the
decreasing number of vehicle owners in capitals and large
European cities. They are currently targeting different user
needs, notably in terms of rental duration, with vehicle rental
companies mostly providing longer-term rentals than other
companies. Nevertheless, the Group believes that vehicle rental
companies are well positioned to seize growth opportunities
in the new mobility solutions market. Indeed, such companies
can capitalize on key competitive advantages such as brand
recognition, customer diversity, fleet size and fleet-management
expertise, network density and experience in the industry.
The development of the low-cost market
segment
As it has been the case in other industries, the European vehicle
rental market has seen the development of low-cost offers in
recent years to meet increased demand for more affordable
services. The low-cost market segment may be defined as all
low-price rental offers including a reduced number of services
and providing less recent vehicles and a more limited selection
of categories, brands and models. This market segment
represented approximately 10% of the vehicle rental market
(roughly €0.9 billion in value) in the Corporate Countries in
Europe in 2014 (1).
This segment is mainly covered by a certain number of
independent players with a business model and brand strategy
specific to this market segment (less modern vehicles, more
limited service offering, lower costs). However, the low-cost
segment is characterized by the increased presence of the main
players in the vehicle rental sector through strategies based on
the development of differentiated offerings under another brand
that is clearly identified as low-cost.
The Group is present in the low-cost segment through its
InterRent® brand. This brand has been progressively deployed
since 2013 and competes with some of the leading players in
the vehicle rental sector as well as with independent players
with varying market shares in different countries. In the United
Kingdom, the principal players include the low-cost brands of
established companies in the industry, such as Greenmotion
and Easirent. In Germany, the principal players include the
low-cost brands of established companies in the sector, such
as Firefly, as well as independent players such as Buchbinder
and Star Car. In France, the Group principally competes with
independent companies such as Ada, Ucar, France Cars and
Rent a Car. In Spain, Italy and Portugal, the low-cost market
developed rapidly in order to provide targeted offers at lowcost to a significant number of leisure customers. The principal
market players in these countries are independent companies
such as Goldcar, RecordGo and Centauro in Spain, and Sicily
by Car in Italy and Goldcar and Drive on Holidays in Portugal.
(1) On the basis of revenue generated in 2014 by the “low-cost” brands of the principal participants in the vehicle rental market and local independent
companies that disclose their positioning and “low-cost” revenue.
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EUROPCAR
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1.3.3
Information by Corporate Country
The vehicle rental market in the Corporate Countries generated
total revenue of approximately €10.9 billion in 2014, an increase
of more than 3% over 2013. It should continue to grow in
value by about 3.1% annually on average for the 2014-2017
period, with each country bringing a positive contribution to
this increase.
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FRANCE
The French vehicle rental market generated total revenue
of approximately €2.6 billion in 2014, (i.e. a growth of
approximately 1% versus 2013).
Europe
The Group is the co-leader in this market, with market share
of approximately 14% in 2014 compared to 15% in 2013. The
Group’s main competitors are Avis Budget, Hertz, Sixt and
Enterprise with respective market shares of approximately 14%,
11%, 6% and 4% compared to approximately 13%, 11%, 5%
and 5% in 2013. Including the franchisee stations that are
very common in France, the Group’s birthplace, the Europcar
brand’s market share was approximately 19% in 2014.
GERMANY
ITALY
The German vehicle rental market generated total revenue of
approximately €2.2 billion in 2014, (i.e. a growth of 3.0% versus
2013).
The Italian vehicle rental market generated total revenue of
approximately €1.1 billion in 2014 (a near 2% increase over
2013).
The Group is the second largest player in this market, with
market share of approximately 23% (versus 24% in 2013). The
Group’s main competitors are Sixt, Hertz, Avis Budget and
Enterprise, with respective market shares of approximately
29%, 11%, 10% and 5% in 2014, compared to approximately
29%, 11%, 11% and 5% in 2013.
The Group is the third largest company in this market, with
market share of approximately 18% in 2014 (unchanged from
2013). The Group’s main competitors are Hertz, Avis Budget,
Maggiore (acquired by Avis in 2015), Sixt and Enterprise, with
respective market shares of approximately 22%, 21%, 13%,
4% and 5% compared to approximately 20%, 19%, 13%, 5%
and 3% in 2013.
Below, the Group provides an analysis of the markets in its
Corporate Countries in Europe and the Rest of the World.
Market share in each Corporate Country is calculated on the
basis of revenue (excluding royalties received from franchisees).
BELGIUM
The Belgian vehicle rental market generated total revenue of
approximately €0.2 billion in 2014 (stable in relation to 2013).
The Group is the leader in this market, with market share
of approximately 34% in 2014 (unchanged from 2013). The
Group’s main competitors are Avis Budget, Hertz and Sixt with
respective market shares of approximately 19%, 13% and 8%
in 2014, compared to 19%, 14% and 8% in 2013.
SPAIN
The Spanish vehicle rental market generated total revenue of
approximately €1.3 billion in 2014 (a 4.3% increase over 2013).
The Group is the leader in this market, with market share of
approximately 15% in 2014 (unchanged from 2013). The Group’s
main competitors are Goldcar, Avis Budget, Hertz, Enterprise
and Sixt with respective market shares of approximately 13%,
12%, 10%, 10% and 6% in 2014, (unchanged from 2013).
PORTUGAL
The Portuguese vehicle rental market generated total revenue
of approximately €0.3 billion in 2014 (an approximate 2%
increase over 2013).
The Group is the leader in this market, with market share of
approximately 23% in 2014 compared to approximately 22%
in 2013. The Group’s main competitors are Avis Budget,
Enterprise, Hertz, and Sixt, with respective market shares
of approximately 11%, 12%, 11% and 2% compared to
approximately 14%, 12%, 10% and 1% in 2013.
UNITED KINGDOM
The British vehicle rental market generated total revenue of
approximately £1.5 billion in 2014 (a more than 6% increase
over 2013).
The Group is the second largest company in this market,
with market share of approximately 23% in 2014 (stable in
relation to 2013). The Group’s main competitors are Enterprise,
Hertz, Avis Budget and Sixt, with respective market shares of
approximately 31%, 11%, 11% and 8% in 2014, compared to
approximately 30%, 12%, 12% and 8% in 2013.
EUROPCAR
2015
19
01
Rest of World
NEW ZEALAND
AUSTRALIA
The New Zealand vehicle rental market generated total revenue
of approximately 0.5 billion New Zealand dollars (equivalent to
around €0.3 billion), a 5% increase over 2013.
The Australian vehicle rental market generated total revenue of
approximately 1.6 billion Australian dollars (equivalent to around
€1.1 billion), a 4% increase over 2013.
The Group is the third largest company on this market, with
market share of approximately 11%, a growth of nearly 1 point
over 2013. The Group’s main competitors are Avis Budget and
Hertz (1) with respective market shares of approximately 34%
and 29% in 2014, compared to approximately 34% and 28%
in 2013.
The Group is the third largest company in this market, with
market share of approximately 5% in 2014 (unchanged from
2013). The Group’s main competitors are Avis Budget and
Hertz with respective market shares of approximately 31% and
17% in 2014, (unchanged from 2013).
1.4 COMPETITIVE STRENGTHS
1.4.1
Market growth supported by structural trends in vehicle rental
and mobility solutions
Vehicle rental market growth in the Corporate Countries
should continue to rise in the short- and medium-term due to
several positive structural factors: increase in GDP, increase
in the number of leisure trips and in air traffic as well as new
methods of use in terms of mobility. The value of the vehicle
rental industry in the Group’s Corporate Countries in Europe
should continue to increase by approximately 2.5% and 2.4%
in 2016 and 2017 respectively (source: KPMG Study).
Furthermore, the Group believes that changing perceptions of
car ownership should foster increasing growth in the vehicle
rental market. These changing perceptions stem in particular
from the increase in costs related to vehicle ownership and
public policies towards car usage in urban centers: the
(1) Including Dollar Thrifty.
20
EUROPCAR
2015
percentage of people in the Group’s Corporate Countries
indicating that they are prepared to no longer own a car and
use “car-sharing” instead increased significantly between 2010
and 2012, from 9% to 33% (source: Observatoire Cetelem –
2010 and 2012 reports – based on surveys of respectively
3,600 and 6,000 individuals in Germany, France, Italy, Spain
and the United Kingdom). These market dynamics contribute to
a growing population of potential users of vehicle rental services
and to the market trend towards mobility solutions and other
innovative service offerings. This should provide the Group with
new revenue opportunities, in particular given the high levels of
urban density in Europe.
1.4.2
Established leadership and innovation conferring competitive advantages
With over 65 years of experience, Europcar has a worldwide
presence and is one of the key players in the mobility industry.
The Group has a wide and international network serving a
broad range of customer mobility needs based on sophisticated
revenue and fleet capacity management. The Group leverages
these strengths to deploy innovative solutions and services to
better serve changing customer mobility usages.
In 2014, the Group was the leading European vehicle rental
organization. More specifically, it is number one in Belgium, Spain
and Portugal, co-leader in France, number two in Germany
and the United Kingdom and number three in Italy (source:
KPMG Study, on the basis of the mid-point of estimated market
shares, based on company revenues excluding franchisees). In
2014, the Group’s competitive positioning within the franchisee
countries in Europe was also excellent.
The chart below sets out the Group’s market share and that
of its principal competitors in Corporate Countries in Europe
in 2014:
2014 MARKET SHARE IN CORPORATE COUNTRIES IN EUROPE
Europcar
19%
Avis
Sixt
Enterprise
12%
12%
11%
> 1.5x
13%*
*
Hertz
Prior to the impact of Avis’ acquisition of Maggiore in Italy in 2015.
Source: KPMG Study, on the basis of the mid-point of estimated
market shares, based on company revenues excluding
franchisees.
The Group believes that this leading position in Europe is
sustainable due to, among other things, the scale of its
operations (average fleet of 205,353 vehicles in its Corporate
Countries in 2015), and the quality of its network, its dual brand
strategy (Europcar® and InterRent®) and its ability to manage
complex operating systems and financing structures in a flexible
and efficient manner. Over the 2009 to 2014 period, the Group’s
market share in Corporate Countries in Europe remained
stable, at between 19% and 20% (source: KPMG Study, on
the basis of the mid-point of estimated market shares, based
on company revenues excluding franchisees). The European
vehicle rental market is one of the most difficult to penetrate
01
due to the multiplicity and diversity of jurisdictions with different
rules and regulations and with regional differences in consumer
habits. The Group believes that its extensive local presence
and professional expertise allow it to respond effectively to the
complex and highly diverse nature of its markets.
Moreover, the Group’s solid positioning across various countries
in Europe allows it to track and anticipate changing levels of
demand and market trends and therefore to better manage
the size of its fleet.
The Group has a global footprint, with approximately 3,600
stations (including franchises) in over 140 countries in 2015
and numerous general sales agency (GSA) arrangements
and partnerships. Franchises enable the Group to extend its
network and are a source of high-value growth with lower risk,
while its partnerships and alliances provide additional market
penetration in growing markets.
The Group’s GSA strategy, (approximately 30 GSA
arrangements at end-2015 versus 18 at end-2014) and
partnerships with major airlines and travel intermediaries
allow the Group to be present at points of entry for inbound
and outbound traveler traffic. The Group relies on partners in
addition to its franchisees, particularly in the United States,
Canada and Japan, as well as on commercial and general
sales agency arrangements. In the US, the Group concluded
a partnership with Advantage Opco (“Advantage”) through
which the Group can service its customers in the United States
under its Europcar brand and via the Advantage network, and
Advantage can serve its customers under its own AdvantageRent-A-Car brand via the Europcar network in regions in which
the Group operates. This alliance allows the Group to extend its
proprietary network and improve its services for its customers
in the United States. In February 2015, the Group also entered
into a new agreement with a general sales agent in the United
States (“Discover the World”), which improves outbound flows
of United States customers to Corporate Countries. Moreover,
in order to develop its activities in China, the Group recently
entered into a two year general sales agency agreement (which
came into force on April 21, 2014) with an online Chinese travel
agency pursuant to which the agency has been appointed to
act as a non-exclusive representative authorized to promote
and offer Europcar’s rental services. This agreement allows the
Group to promote outbound flows of customers from China
toward its Corporate Countries.
The Group’s network, particularly in its Corporate Countries,
is supported by its proprietary GreenWay® system, a powerful
and effective reservation platform and revenue capacity
and fleet management tool. The Group’s network is also
commercially supported by the use of forecasting models that
EUROPCAR
2015
21
01
help to determine pricing while also optimizing the distribution,
planning, allocation and yield of the fleet according to demand.
The Group has a diversified customer base of approximately
5.5 million drivers in 2015 and reaches them through a wide
variety of distribution channels.
The Group’s efficient fleet management benefits from
central coordination and local initiatives, leveraging strong
and longstanding partnerships with vehicle manufacturers.
In addition, the Group takes a pragmatic approach to fleet
management, optimizing the mix between pan-regional and
local contracts, maintaining short- and long-term flexibility in
volume commitments and vehicle holding periods to meet
fluctuations in demand, particularly seasonal, and adapt to
changing economic conditions. This efficiency also relies
on repurchase commitments the Group has obtained from
manufacturers that give it the flexibility required to react to
changes in demand.
1.4.3
Diversified Business Model
The Group’s business model is based on a well-balanced
and complementary revenue base, which optimizes fleet
utilization as well as its network and its related costs and limits
dependency on specific sectors or industries.
The Group has a broad customer base, well balanced between
business and leisure customers (which generated 44% and
56%, respectively, of total Group rental revenue in 2015). This
mix helps the Group manage seasonality over the year (with
leisure peaks during the summer and business demand more
stable throughout the year) and during the week (weekend for
leisure and weekdays for business). The Group’s contractual
relationships with numerous large corporate customers, as well
as with small and medium-sized businesses across multiple
industries contribute to the stability of the Group’s business
rental revenue, in particular during periods outside of tourist
seasons and during business days. The Group’s leisure activity
involves rentals that are longer in duration and generate more
revenue per transaction day than business rentals. The Group
also addresses the leisure segment through its portfolio of
partnerships with recognized leaders in the travel industry,
including major European airlines, tour operators and hotel
groups, such as easyJet, TUI, Accor and Aeroflot. Within
the leisure segment, the Group benefits from its core brand
22
The Group leverages this extensive experience and know-how
in the vehicle rental industry to focus on innovation, enhance
the customer experience and seize opportunities arising from
new mobility trends. In response to targeted customer mobility
needs, the Group has established a “Lab” that is designed
to draw on these technological innovations proposed by inhouse and external innovators to design new products and
services in the area of mobility solutions. This enables the Group
to stay at the forefront of this rapidly evolving and expanding
market. The Group also took a majority stake in Ubeeqo (2014),
a European start-up specializing in fleet and mobility solutions
for business market, and in E-Car Club (2015), first entirely
electric pay-per-use car club. Europcar is also a stakeholder
in the Car2go Europe joint venture with Daimler, in order to
establish a position in the consumer car-sharing market.
EUROPCAR
2015
Europcar® in the medium and upscale markets and is deploying
its InterRent® brand in the low-cost market.
The Group’s revenue base is also geographically diverse.
The Group’s rental revenue (excluding royalties received from
its franchisees) in Corporate Countries for the year ending
December 31, 2015 was as follows:
BREAKDOWN OF GROUP RENTAL REVENUE IN CORPORATE
COUNTRIES IN 2015
26%
Germany
22%
UK
17%
France
10%
Italy
Source: Company.
10%
Spain
7%
Australia/
New Zealand
5%
Portugal
3%
Belgium
The Group’s revenue base is optimized between airports, where
customer traffic is relatively higher, and non-airport locations.
In 2015, the Group’s network included directly- and agentoperated stations in 264 airports. These stations represented
16% of corporate and agent-operated stations in 2015, and yet
generated 42% of the Group’s rental revenue in the same year.
This diversification, along with the Group’s operating expertise
and effective management and information systems, contributes
to a high fleet financial utilization rate of 76.1% in 2015.
The Group’s diversified customer base and network are
supported by a flexible fleet that has one of the highest
proportions of buy-back commitments in the industry, a
diverse fleet supply and flexible fleet financing. Approximately
92% of Europcar’s 2015 fleet vehicles delivered were covered
by such buy-back commitments. This high level of buyback commitments not only limits risk by providing greater
fleet cost visibility, but it also increases flexibility, with the
commitments generally allowing for a five to eight month
1.4.4
buy-back period deliberately chosen by the Group in order
to manage the seasonality inherent to the business. The
sourcing of the Group’s fleet is diversified in terms of automobile
manufacturers and brands: in 2015, approximately 30% of
its fleet was acquired from Volkswagen, 15% from General
Motors, 13% from Fiat, 11% from Renault, 9% from Peugeot
Citroen, 7% from Daimler, 6% from Hyundai, 3% from Ford
and the remaining 7% from other manufacturers. The Group
can periodically and opportunistically enter into multiyear
framework contracts (generally for a two-year term) with certain
manufacturers to ensure fleet availability. In order to optimize its
financing conditions, the Group uses diversified asset-backed
financing represented by the fleet, including securitization,
capital market financing (bond financing), revolving credit
facilities and operating leases.
01
This wide diversification of sources of revenue, fleet and
financing provide the Group with a business model tailored
towards the limitation of risks and optimization of revenue and
costs.
“Fast Lane” Transformation Program that has set the Foundation
for Sustainable Profitable Growth
Since 2012, the Group has been implementing a transformation
program called “Fast Lane” designed to strengthen its
market footprint and prepare its transition from a pure car
rental company to a mobility services provider benefiting
from sustainable growth and improved profitability. The Fast
Lane program has helped foster a business culture based on
improvement, due to defining key priorities that are monitored
precisely and continuously. Fast Lane has helped transform the
organization, rendering it more efficient and more focused on
the customer and on cash generation.
The five strategic pillars supporting the Fast Lane program
prongs are as follows:
a grow the Group’s top line by prioritizing business volume and
improved profitability;
a differentiate the brands and offerings by providing a better
quality customer experience;
a improve the Group’s cost structure and operating model
flexibility;
a optimize the allocation of capital employed; and
a improving organizational efficiency.
During the 2012-2014 period, management focused on
restoring the fundamentals of the business model and the
Group’s profitability dynamics by re-energizing the commercial
activities of each of the segments in which it operates, and with
increased selectivity of customer contracts, a “variabilization”
of costs and more generally a noticeable reduction in fixed
costs. As such, the main work areas of the first phase of the
transformation plan concerned the creation of a Revenue &
Capacity Management Department at the Group level and in
all of its operating subsidiaries to manage customer demand
and the related pricing terms, and to ensure the alignment of
the fleet with demand (category/price and optimized distribution
within the network), and the progressive implementation of a
commercial strategy per customer segment and distribution
channel. The pan-European Shared Services Center opened
in Portugal in early 2014 to handle transactions, accounting
and cash collection activities, and optimized management of
fleet costs. Initiatives implemented concerning the fleet mainly
included an improvement in the fleet mix by vehicle category,
optimization of the buy-back programs to lower vehicle
acquisition and disposal costs, but also to improve the match
of the fleet mix to customer demand and associated prices.
Implementation of the first phase of the Fast Lane program
has been a success. The initial targets have been significantly
exceeded. Over the 2012-2014 period, the Group estimates
that the Fast Lane program has had a positive impact of
more than €90 million on its Adjusted Corporate EBIDTA (as
EUROPCAR
2015
23
01
compared to an initial objective of €50 million). Similarly, the
actions taken with respect to cash management have led to
improvements in non-fleet working capital requirements of
€90 million (as compared to an initial objective of €60 million).
a the continued development of the Shared Services Center
concept with the broadening of transferred functions and the
implementation of uniform procedures, to further improve the
operational effectiveness of the Group as a whole;
At this stage, the impact of the Fast Lane transformation
plan is only partially reflected in the Group’s results and the
Group estimates that the plan had reached the half-way
point at end 2014. Related to the success of the initial public
offering, the Group thus has solid foundations to accelerate
the implementation of the second phase of its transformation
plan with new projects that will progressively enrich the different
focuses of the transformation plan. The operating and financial
performance recorded by the Group in 2015 is the tangible
result of the continuation of the Fast Lane dynamics.
a the launch of an in-depth review of the network in the country
subsidiaries aiming to optimize coverage but also improve
sales dynamic and operating effectiveness of the stations
(project initiated in Germany);
In 2015, the Group continued, or launched, the following
initiatives in particular:
a an acceleration of the commercial strategy per segment that
showed results due to better analysis of “Business” customer
needs leading to the reworking of the approach to SME and
“Van & Trucks” segments;
a enhancement of the “Leisure” customer segment due to
the healthy dynamics of the Group’s distribution channels,
a major development of the low-cost brand, InterRent, and
the success of the launch of Keddy;
a strengthening of the Group’s presence worldwide with more
than 25 representation agents, allowing the Group to improve
the visibility of its brand and benefit from the tourist flow from
emerging countries;
1.4.5
Europcar plans to continue deployment of the second phase
of its Fast Lane plan, to support profitable organic growth.
Growth should be sustained by strengthening the commercial
strategy by segments of the Group and cost management
including optimization of its network and extension of its shared
services logic. Special attention will be given to enriching and
improving customer experience through the Group’s digital
transformation. The Group plans to be able to offer a dedicated
customer experience entirely on mobile devices within two
years. In addition, the Group plans to allocate investments
of approximately €10 million over the 2016-2018 period to
the reworking of its customer relations management system.
Better knowledge of customers, differentiation of products and
services through innovation, transparent and fluid customer
relations, simplified procedures and custom help are the
keywords of this transformation focus. In this context, the
Group also plans to strengthen its commercial strategy via
its direct channels to offer services adapted to new customer
expectations in terms of mobility and create a stronger link
between its brands and customers and thereby increase the
loyalty rate.
Strong improvement in financial performance in recent years
The Group’s financial performance has seen considerable
improvement since 2012 thanks to the implementation of the
first phase of the Fast Lane transformation program. The Group
has managed to significantly lower its fleet costs (including
fleet depreciation), which declined from €639 million in 2012
to €567 million in 2014 and its fleet operating and related
holding costs per unit, which decreased from €284 per month
in 2012 to €248 per month in 2014. The improvement of the
fleet financial utilization rate, from 74.4% in 2012 to 76.4% in
2014, was a key part of this cost optimization.
24
a the creation of the “Customer Experience” position, to
improve and enrich the customer experience, strengthen
loyalty and develop Europcar’s customer portfolio.
EUROPCAR
2015
In a context of modest growth in volumes, and relatively stable
RPD, this optimization, combined with contained network
and headquarters costs, and optimized fleet financing costs,
drove a 4.6 point increase in the Group’s Adjusted Corporate
EBITDA margin between 2012 and 2014. 2014 was marked
by a strong acceleration in the deployment of the Fast Lane
program, which enabled the Group to return to growth in its
revenues, which increased 2.4%, 4.3% and 7.1% at constant
exchange rates in the second, third and fourth quarters of
2014 respectively, compared to the corresponding quarters of
2013. The following chart presents the changes in the Group’s
consolidated revenue and Adjusted Corporate EBITDA margin
over the 2008 to 2014 period:
(12.8)%
6.6%
(0.2)%
(1.7)% (1.7)%
4.0%
1,973
1,969
1,936
1,979
2,122
1,851
1,903
10.8%
8.2%
5.7%
5.7%
6.5%
6.1%
4.7%
2008
2009
2010
Year-on-year growth (%)
2011
2012
2013
Revenue (€m)
2014
Adj. Corp.
EBITDA margin
Source: Company.
In 2015, the Group continued to deploy its transformation
plan as it entered its second phase, to support profitable
organic growth, which allowed it to obtain a record financial
1.4.6
performance. The Group thus generated total revenue of
€2,142 million for organic growth of 4.9% (1) over that of 2014
and an EBITDA margin of 11.7%, up 0.9 points. See Chapter 3,
Section 3.1 “Analysis of Group results”.
01
The Group’s experience with respect to the management
of its fleet and operating costs, together with its diversified
fleet financing (including operating leases) and its ability to
control non-fleet working capital requirements (in particular
by harmonizing payment terms across the Group) have
contributed to stronger cash generation. This has also
allowed the Group to manage its total net debt recorded
on the balance sheet (consisting both of its fleet financing
debt, which is asset-backed, and its corporate debt), giving
the Group a sound financing foundation as well as financial
flexibility. In particular, the ratio of the Group’s Corporate Net
Debt to Adjusted Corporate EBITDA decreased from 4.8x
as of December 31, 2012 to 2.7x as of December 31, 2014,
due to the improvement in operating performance. The initial
public offering and the associated refinancing transactions
facilitated a clear improvement in this ratio, which was 0.9x as
of December 31, 2015.
The Group believes that this track record positions it well to
benefit from future market growth.
Dynamic and Experienced Management Team
The success of the Group’s strategy and growth depends on
the experience and strength of its management team. The
Group’s senior management team has been renewed over
the last four years and is now composed of complementary
backgrounds at top-tier companies in various industries.
Mr. Philippe Germond, CEO since October 2014 and
now Chairman of the Management Board following the
transformation of the Company’s governance, leads a team
of managers with extensive business and operating expertise,
a deep understanding of the vehicle rental services industry,
and a strong track record of execution in respect of the Fast
Lane program. The Group’s top management is supported by
an organizational structure consisting of highly complementary
international and local teams who have the knowledge, passion
and vision to lead the Group in the execution of its strategy.
(1) At constant exchange rates and excluding EuropHall, one of its French franchisees, acquired in the fourth quarter of 2014 and consolidated over two
months. In 2014, EuropHall generated standalone revenues of approximately €23 million.
EUROPCAR
2015
25
01
STRATEGY
1.5 STRATEGY
Europcar Group is a global player and the European leader
in vehicle rental. It is positioned at the center of new mobility
solutions and aims to become a major player in mobility
services.
a the strengthening of its leading position in Europe and
thought leadership throughout the world:
a
The Group’s initial public offering and the associated
optimization of the balance sheet structure are major steps in
the Company’s growth, providing the resources to accelerate
its strategy through:
a the continued implementation of the Fast Lane transformation
program:
a
a
this program was initiated in 2012 and, during its initial
phase, provided the opportunity to lay the foundations for
sustainable and profitable growth.
The Group will continue to deploy the second phase of its
transformation plan to support profitable organic growth.
This growth will be supported by the strengthening of the
commercial strategy by segments of the Group and cost
management including, for example, the optimization of its
network and the broadening of its shared services center;
1.5.1
a
Pursue its “Fast Lane” transformation program and its systematic
implementation in order to:
Reinforce its position as a leader to allow
sustainable growth
a The Group intends to pursue its targeted brand strategy,
based on the development of its offer of services under its
Europcar® and InterRent® brands, in order to support growth
in the volume of activity and to improve its visibility with
existing and potential customers. This strategic positioning
is intended to present a clearly differentiated portfolio of
brands, to reinforce Europcar’s position in its key markets
and to capture the volume increase in the “leisure” segment.
a The Group plans to strengthen its commercial efforts in the
business segment, with the deployment of new commercial
tools and the implementation of targeted actions. The
Group is currently developing its existing business customer
base, relying on the reorganization and revitalization of its
sales teams and the implementation of new commercial
processes, supported by the recent deployment of
commercial productivity tools as well as the deployment of
training programs adapted to its commercial strategy. The
26
a
development of the network worldwide, particularly through
the use of franchisees, partnerships, and general sales
agent arrangements in order to optimize the capture of
incoming and outgoing traffic and to guarantee significant
competitive advantages to Europcar in an industry with
high entry costs and potential for consolidation,
greater capability to finance the Group’s development
and growth operations and to strengthen its innovation
capabilities in a market undergoing considerable
transformation marked by the acceleration of new trends in
consumption, mobility and sharing, with a dedicated sum
of €80 million reserved for strategic initiatives, acquisitions
and partnerships, including up to €25 million for activities
associated with Lab Europcar for the 2015-2017 financial
years,
financial resources tied to the natural “deleveraging”
expected due to the Group’s results while initiating the
payment of dividends starting in 2017 based on the net
profit/(loss) for 2016.
EUROPCAR
2015
Group plans to adopt a targeted approach specific to each
customer category:
with respect to “large corporates”, by focusing on gaining
significant new contracts as well as on increasing customer
loyalty in order to support sustainable growth;
a with respect to “SMEs”, by seizing new opportunities
through the development of new products specifically
intended for this category of customers and, to that end,
by capitalizing on its reenergized sales teams; and
a with respect to the “vehicle replacement” segment,
by broadening its current customer base through the
conclusion of new agreements.
a The Group intends to strengthen its attractiveness in the
leisure segment, by optimizing its digital and mobile strategy,
its distribution channels and its revenue and capacity
management system. To support this strategy, the Group
continuously adapts its digital distribution channels to ensure
they are responsive to changing customer behavior, which
is trending towards an increasingly simplified process of
a
STRATEGY
reserving and accessing a vehicle. The Group intends to
continue to strengthen its focus on “leisure” customers while
continuously optimizing its distribution network, including via
new distribution channels such as new mobile applications,
smartphones and tablet computers to respond to new
customer consumption patterns (for more information
on the Group’s distribution channels, see Section 1.6.4
“Distribution Channels” of this Registration Document). This
development of distribution channels will be accompanied
by the optimization of the processes for demand and
availability management of the fleet (“Revenue & Capacity
Management”), which allows the Group to adapt its offers
(in terms of price, availability, etc.) to fluctuations in demand
and to the composition of the Group’s fleet.
a The Group intends to continue to improve its service offerings
to best meet customers’ new expectations in terms of mobility.
The Group is planning to continue to develop targeted
products and services, based on its thorough knowledge
of the vehicle rental sector and of uses in its local markets.
The Group will continue to develop and deploy its innovative
products and services to meet these new expectations, such
as the recent innovations ToMyDoor, ToMyCar, FitRent and
Keddy by Europcar®. These developments will be supported
by the progressive implementation of new management and
customer portfolio analysis tools.
a The Group intends to implement new customer relationship
management tools and to improve its customer loyalty
programs. The objectives of implementing these new
tools are to refine its understanding of customer profiles to
improve the targeting of marketing campaigns and real time
transmission of customer data to agents to enable them to
better handle each customer’s needs, and, if applicable, offer
additional services (up-selling). The segmentation and data
mining tools implemented will allow for customer actions,
with priority on digital actions, towards prospects having a
profile similar to that of valued customers in our database
(searching for “peers”). As part of improving its customer
relationship management efforts, the Group also intends to
continue to improve its customer loyalty programs, including
its “Privilege” program, expanded in 2014, and designed to
improve customer loyalty of both individuals and businesses.
Pursue operational excellence
recently recruited a Customer Experience officer. The Group
is also implementing projects targeting people and talent
management, in order to foster a corporate culture based
on accountability and the sharing of ideas.
01
a The Group intends to continue improving the architecture
of its IT system in order to better support the development
of new service offerings. In recent years, the Group has
invested in the development of its IT system to guide and
facilitate the implementation of new products and services.
The Group has already implemented a 2020 plan to renovate
the architecture of its IT system in order to make it more
open and flexible and facilitate the integration of third-party
applications. A number of changes are being analyzed to
capitalize on the Group’s operating excellence, promote
data-based decisions, adapt products and prices in real
time and, more generally, accelerate digital development and
strengthen customer relationship management.
a The Group intends to rationalize its semi-fixed cost base, in
particular by expanding the scope of the Shared Services
Center and optimizing its non-fleet purchases. The Group has
a detailed roadmap to further rationalize its semi-fixed costs
base, in particular via the transfer of additional functions to
its Shared Services Center in Portugal and the optimization
of the activities of its operating subsidiaries’ headquarters.
This optimization is based on the nature of its business and
the use of its exclusive Greenway® system, which offers a
single solution covering all the functional areas of vehicle
rentals. Furthermore, the Group will continue to optimize its
non-fleet purchases and network, which it has already begun
in certain countries, in order to better serve the needs of its
existing and potential customers (for example, by opening
downtown rental stations). The optimization of its network will
also aim to strengthen and improve customers’ experiences,
via innovative tools and processes, in connection with the
Group’s marketing and sales strategy.
a The Group intends to continue rationalizing its fleet costs,
in particular by harmonizing management processes
throughout its rental stations. The Group plans to harmonize
the management processes in its rental stations, such as
the inspection of returned vehicles, in order to improve the
customer experience. Moreover, the scope of the Shared
Services Center in Portugal will include certain activities
related to fleet vehicles, such as processing insurance claims.
a The Group intends to continue improving its organizational
efficiency. The Group continues to optimize the management
of its customer relationships and network. The next step
of the Fast Lane program will emphasize strengthening the
management teams and sales teams, in order to ensure
that they benefit from a full range of tools that allow them
to effectively contribute to the Group’s profitable growth.
The Group created international teams responsible for sales
and marketing to coordinate and ensure that the Group’s
marketing efforts are consistent at the local level, and more
EUROPCAR
2015
27
01
STRATEGY
1.5.2
Develop drivers for the Group’s growth
Develop and strengthen its network of agents,
franchises and sales agents
a Capitalize on its network of agents, franchises and sales
representatives to continue to strengthen and expand
it internationally. The Group will continue to optimize its
network of existing franchises via initiatives such as the
sharing of better practices, inter-country conferences
among franchisees and an improvement of administrative
management via the Shared Services Center. Furthermore,
the Group aims to extend its presence in international
markets, by developing its network of international franchises
in selected regions and countries where opportunities exist.
For example, the Group is currently looking to expand its
presence in Latin America and the Asia-Pacific region,
particularly in China, through various types of partnerships.
Moreover, the Group will continue to explore expansion
opportunities beyond its international network of franchises
and continue its joint marketing efforts with international
partners and client companies, including, for example, joint
advertising campaigns and online promotional offers.
Develop new mobility solutions
a Accelerate the implementation of innovative mobility solutions
with support from the “Lab”. The Group recently created a
“Lab”, designed as an incubator of ideas for research into
new products and services in mobility solutions. The Lab aims
to support internal projects and the securing of minority and
majority stakes in innovative structures. The Lab’s activities
are intended to meet the transportation challenges of the
Group’s customers through:
a multi-modal proposition to provide the customer with
fully integrated transportation solutions that fully connect
the customer and the offer in real time; and
a a local transportation solution focused on a well-defined
ecosystem: this solution already exists for the Group with
its “Excel London” partnership, under which Europcar
offers specific vehicle rentals at this London business
center.
The Group intends to continue investing in the Lab in order to
seize opportunities for new mobility solutions in the market.
The first evidence of this commitment was the acquisition of
a majority stake, alongside the founders, in Ubeeqo, a French
start-up specializing in B2B car-sharing and a pioneer in this
market, and E-Car Club, the United Kingdom’s first entirely
electric pay-per-use car club.
a
28
EUROPCAR
2015
a Expand the Group’s mobility solution offerings and capitalize
on its existing offers to better respond to consumer’s new
mobility needs.
As part of its “Fast Lane” transformation program, the Group
is preparing its transition from a rental vehicle company to
a mobility services provider. It seeks to extend its offerings
of innovative solutions in order to respond to changes in
the mobility market and consumer expectations. The Group
aims to create an ecosystem of mobility services that
complements Europcar’s principal activity of vehicle rentals.
The Group plans to leverage key competitive advantages
such as its brand recognition, customer diversity, fleet size,
fleet management expertise and density of its network to
seize opportunities resulting from new mobility trends. The
Group will focus in particular on intermodal solutions using a
digital platform aggregating different means of transportation
(such as public transportation, rental vehicles, taxis and other
mobility solutions) in order to offer its customers the best
possible itinerary for a given route and alternative solutions
to vehicle ownership, ensuring access to a nearby vehicle
as well as solutions that aim to generate value on unused
third-party vehicles and unused parking spaces. The Group
will rely upon the experience it has already acquired in this
field to propose innovative internal solutions or make targeted
acquisitions of companies whose services complement those
of the Group’s.
Accelerate the Group’s growth via external
development operations
a The financial headroom now enjoyed by the Group allows
it to plan external growth transactions aimed at acquiring
customer bases or accelerating certain go-to-market
initiatives.
a The Group may also acquire companies in regions where it
considers that such acquisitions will be profitable, considering,
in particular, that the European market is relatively more
fragmented than the U.S. market (the five largest market
participants in Europe represented approximately 66% of
the market in the Corporate Countries in 2014 (source:
Euromonitor), whereas the three largest market participants
represented approximately 95% of the U.S. market in 2014
(source: AutoRental news)).
DESCRIPTION OF THE GROUP’S BUSINESS
1.6 DESCRIPTION OF THE GROUP’S BUSINESS
1.6.1
01
Europcar’s Brands
The Group has decided to focus its strategy on its two main
brands, Europcar® and InterRent®, targeting a wide range of
customer segments for vehicle rentals:
a Europcar® is the Group’s core brand. It is used worldwide
directly and through its franchisee network in order to serve
a wide range of market segments, from the high-end to the
cost-conscious, as well as a large portfolio of diversified
customers, from large corporate customers to individual
“leisure” customers. The Group aims to maintain customers’
brand trust by offering high quality innovative services and
simple and transparent offers and services. To promote the
brand, the Group uses highly visible sponsorships, particularly
in sports (such as its sponsorship of Arsenal, the English
soccer team, and Benfica, the Portuguese soccer team), as
well as co-marketing campaigns with car manufacturers. The
Group also has international partnerships with airlines, major
hotel groups, railway companies and credit card companies
that both promote the brand and generate demand.
a InterRent® has been deployed by the Group since 2013 to
target the low-cost leisure (“low-cost”) segment in order
to expand its customer portfolio. The “low-cost” market
represents approximately 10% of the vehicle rental market
(approximately €0.9 billion in value) in the Corporate Countries
in Europe in 2014 (source: KPMG study, on the basis of
revenue generated in 2014 by “low-cost” brands of the
principal market participants in the vehicle rental market and
local independent companies that disclose their positioning
and “low-cost” revenue). As of December 31, 2015, the
brand had been launched in six Corporate Countries in
Europe, with 75 stations located primarily in airports and
train stations, and an average fleet of 7,776 vehicles in 2015.
In addition, the brand is available in 40 franchised countries.
The brand, whose motto is “drive, save, enjoy”, targets
cost-conscious leisure travelers with a customized offer. The
InterRent® brand uses a separate website and reservation
system that are managed independently from the Europcar®
brand platform. Some InterRent® stations are separate from
Europcar® stations while others are a separate counter at
a Europcar® station. The purchase and maintenance of
vehicles as well as administrative functions are managed at
the Group level in order to benefit from economies of scale
and a better cost-efficiency ratio.
The purpose of this strategy is to offer the Group’s customers
a clearly differentiated and understandable portfolio of brands,
to reinforce Europcar’s position on its key markets.
1.6.1.1 The Europcar brand®
Europcar ® is the Group’s core brand and offers mobility
solutions ranging from short-term vehicle rental to car sharing.
Europcar® offers a wide variety of recent models of passenger
cars, vans and trucks for rental on an hourly, daily, weekly or
monthly basis, with rental charges computed on a limited or
unlimited mileage rate. While vehicles are usually returned to
the location from which they are rented, the Europcar network
also allows one-way rentals from and to selected locations.
To increase the visibility of the Europcar® brand, the Europcar
Groupe is developing various initiatives via a variety of channels:
traditional media, such as radio and print advertising; Internet
and email marketing and mobile device applications. Europcar
develops co-marketing initiatives with car manufacturers, such
as through its “Be the first” advertising platform for every major
international model launch and its mobility partnerships with
PSA, Renault Nissan and Smart. Sports sponsorship such as
the English football team Arsenal and the Portuguese football
team Benfica have also contributed to the attractiveness of
the Europcar brand® and its image around the slogan “Moving
your way”. The Group also has international partnerships with
airlines, major hotel groups, railway companies and credit card
companies that both promote the brand and generate demand.
The Group has been recognized with numerous awards
since 2000, including at the World Travel Awards, an event
that recognizes excellence in the global travel and tourism
industry. Europcar has recently received awards for World’s
Leading Car Hire, World’s Leading Green Transport Solution
Company, World’s Leading Leisure Car Rental Company,
Europe’s Leading Car Hire, Europe’s Responsible Tourism
Award, Australasia’s Leading Car Hire, Africa’s Leading Car
Hire, Middle East’s Leading Car Hire and Mexico & Central
America’s Leading Car Hire.
In June 2015, the Group’s French subsidiary received the
TripAdvisor® “2015 Travelers’ Choice of travel essentials” award
for the category “Car Rental Agencies”.
EUROPCAR
2015
29
01
In December 2015, Europcar received the Grand Prix
“Communication & Enterprise” jury award in the “External digital
strategy award” category for the international digital campaign
#MyEuropcarRoadTrip. The campaign also received the
Communication award from the jury in the “Best communication
on social media” category.
EUROPCAR SERVICE OFFERINGS®
The Group uses its knowledge of the market to develop and
progressively roll out new mobility products and services.
Examples of innovative Europcar ® branded products and
services include:
a customized packages:
FitRent: a mid-term (minimum of 30 days) rental product
targeting small and medium-sized enterprises (SMEs).
This product was launched at the beginning of 2014 and
is available in France, Portugal, Belgium, Spain, Italy and
Germany. It offers car and truck rentals, flexible terms, a
simple, all-inclusive offer (in particular mileage, insurance,
additional driver) and convenient monthly reporting and
billing,
a AutoLiberté: a subscription-based car rental product
targeting urban customers in France. This service offers,
on a monthly fixed-price basis, two levels of subscription
according to vehicle category. This product guarantees
fixed rates on rentals. With this product, the Group aims
to increase customer loyalty and benefit from customers’
growing demand for mobility solutions other than individual
car ownership;
a timesaving services:
a
a
Selection: a premium mobility service that offers customers
a unique rental experience by delivering high-end cars
(Luxury & Fun). The proposed service offering is customized
and is structured around 5 pillars: a guaranteed model,
special counters at stations, exclusive phone service for
customers, a network of dedicated “Selection” stations
and a dedicated digital platform (available from the 1st
quarter of 2016),
a Chauffeur services: a service targeting “business” and
“leisure” customers, providing a chauffeur and additional
services along with a vehicle rental. This service was
launched in the United Kingdom in 2014 and is also
available in France and Germany as well as in various
franchises in Switzerland, Russia, Austria, Denmark and
Dubai;
a targeted broker products:
a
TARGETED, DIFFERENTIATED OFFERINGS
a
E-ready: a service that allows the customer to fill out an
online customer profile (including, in particular, his driving
license number). The station can then prepare the rental
contract prior to the customer’s arrival and thus limit time
at the counter. The “E ready” customer has access to a
dedicated sales counter;
a premium services:
a
ToMyDoor: a service for both business and leisure
customers that enables the customer to be delivered
the rental vehicle and/or return it at a chosen location,
eliminating the need for the customer to come to the rental
station. It is available in France, Spain, Portugal and the
United Kingdom,
ToMyCar: a service that allows direct access to the rental
vehicle via smartphone (virtual key), eliminating the need to
go to the counter. This product targets leisure and business
customers. It was launched in the United Kingdom in
March 2015,
a
Keddy by Europcar®: this product, launched in March 2015,
is available in Germany, France, Spain, Portugal, Belgium
and the United Kingdom. It is tailored for tour operators,
travel agencies and online brokers that market to leisure
customers who are price-sensitive but looking for more
services than typically available in the “low-cost” segment.
OTHER ANCILLARY PRODUCTS AND SERVICES
The Group offers its customers a range of additional services
and equipment on a fee basis, including those described below:
a protection: The Group offer its customers a range of optional
insurance products and coverage such as physical damage
insurance, theft protection, headlight and tire protection,
supplemental liability insurance and Personal Accident
Insurance, which provides accidental death, permanent
disability and medical expense protection (which can include
personal effects coverage);
a equipment: The Group also offers navigation systems, child
seats, winter equipment and roof racks as well as other
equipment depending on the agency and availability;
a other services: the Group also invoices its customers for
additional services, such as fueling or specific locations such
as airports (“surcharge”). Fees for certain categories of drivers
such as, for example, young drivers may also be charged.
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EUROPCAR
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LOYALTY PROGRAM
1.6.1.2 InterRent® Brand
The Europcar ® brand has a free loyalty program, called
“Privilege®” (1), that provides customers with a range of rewards
and services. This program, which was revamped in 2014,
is designed to improve customer retention in an industry
characterized by a low retention rate of leisure customers. The
program provides specific benefits such as free upgrades and
weekends with free rentals depending on four levels of loyalty
(Privilege Club, Privilege Executive, Privilege Elite and Privilege
Elite VIP) based on a number of rentals or rental days. There are
specific benefits for each loyalty level. In addition to fostering
loyalty, information generated by the program enables the
Group to develop new offers targeted to customer demand and
improve commercial synergies among Europcar users in the
“business” and “leisure” segments. As of December 31, 2015,
the Privilege program had 1.6 million members.
InterRent ® targets the “low-cost” segment and aims at
enhancing the Group’s customer portfolio. The “low-cost”
market represents approx. 10% of the vehicle rental market
(approx. €0.9 billion in value) in the Corporate Countries in
Europe in 2014 (source: KPMG study, on the basis of revenue
generated in 2014 by “low-cost” brands of the principal market
participants of the vehicle rental market and local independent
companies that disclose their positioning and “low-cost”
revenue).
CUSTOMER SATISFACTION
The Group tracks customer satisfaction levels based on its
“promoter score” program in place since 2011 that gathers
feedback from customers as to whether they would recommend
Europcar to friends and family. The Group’s continued efforts
to improve the customer experience was reflected by a net
increase in the Group’s “promoter score” (determined by
collecting customer opinions after each rental and based on
the percentage of customers who indicated that they were “very
likely” or “extremely likely” to recommend Europcar), from 58%
in 2011 to 66% in 2012, 72% in 2013 and 79% in 2014. Since
2015, Europcar has made changes to customer satisfaction
measurement by monitoring a more structured performance
indicator, driving towards excellence, the “Net Promoter Score”,
i.e. the difference between the “promoters” and “critics” of
the brand. Detailed analyses of the NPS allowed Europcar to
identify ways to improve and monitor the performance of the
actions undertaken. The method of gathering customer option
was harmonized (Email channel), thus in 2015, the Group’s
NPS score was at 44.9.
All Group employees are committed to this Net Promoter Score
via a part of their variable compensation. Station scores are
reviewed weekly and action plans implemented based on such
reviews.
The Group has also launched online reviews and ratings on
its websites to foster transparency, interaction and customer
confidence.
01
The brand, whose motto is “drive, save, enjoy”, targets
cost-conscious leisure travelers with a customized offer. The
InterRent® brand uses a separate website and reservation
system that are managed independently from the Europcar®
brand platform. Some InterRent® stations are separated from
Europcar® stations while others are a separate counter at a
Europcar® station. The purchase and maintenance of vehicles
as well as administrative functions are managed at the Group
level in order to benefit from economies of scale and a better
cost-efficiency ratio.
InterRent® offers a simple and direct customer service that
meets the requirements of cost-sensitive leisure customers.
Cars available are often not as new as those offered under the
Europcar® brand, with a more limited selection of categories
(mini, economy, compact and family), brands and models. In
keeping with the low-cost model, InterRent® offers customers
the lowest prices, although the service offering is more limited
than under the Europcar® brand. For example, one-way rentals
are not available. Rentals must also be prepaid. InterRent®
reservations must be made through the brand’s separate
website and reservation system. Front-office InterRent ®
operations are managed separately from the Europcar® brand,
while fleet sourcing, maintenance and back-office functions
are managed by the Group together with the operations of
the Europcar brand to benefit from economies of scale and a
better cost-efficiency ratio.
The InterRent® Brand was first deployed in Spain and Portugal
end of 2011. The InterRent® brand was deployed beginning
2013 in six Corporate Countries in Europe and was available
at 75 rental stations, primarily at airports and train stations,
as of December 31, 2015 (refer to Section 1.6.5 “Europcar’s
network” for the geographical distribution) with an average fleet
of 7,776 vehicles in 2015 against 4,730 vehicles in 2014.
The Group is also actively developing its InterRent® franchise
network, with franchises in place in 40 countries as of
December 31, 2015 (against 19 at the end of 2014), including
Malta, Cyprus, Turkey, Morocco, Croatia and covering the
Mediterranean basin, but also with the desire to reinforce the
brand’s presence particularly in Europe and the Middle East.
InterRent® is managed from Madrid by a dedicated team in
charge of defining the brand’s strategy worldwide to further
improve its competitiveness. The Group is currently investing
in online marketing projects and campaigns to promote the
brand through its website.
(1) The “Privilege” brand is Europcar’s registered brand in English for all the countries in its worldwide network.
EUROPCAR
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01
1.6.2
Europcar Lab/Mobility solutions
The Group seeks to extend its offerings of mobility solutions
in order to respond to changes in the market and consumer
expectations. The Group focuses in particular on developing
intermodal solutions with digital access to local mobility
solutions from a defined local area, guaranteed proximity of
a vehicle and ability to extract value from unused cars and
parking spaces.
The Group has created a Europcar Lab to study mobility market
usages and search for new mobility solutions opportunities
worldwide, whether such opportunities be with customers,
partners or technology or transportation consultants. Europcar
Lab is intended to be an incubator for new products and
services in mobility solutions for the Group. Europcar Lab aims
to support internal projects and secure minority and majority
stakes in innovative structures. Europcar Lab is structured
around a dedicated team of 6 individuals including a director
responsible for supervising the Group’s team and employees.
Europcar Lab is a Group legal entity with its own premises. It is
managed by Fabrizio Ruggiero, a member of Europcar Groupe’s
Management Board and General Manager of Europcar Italy.
The Lab’s activities are intended to meet the transportation
challenges of the Group’s customers through:
a a multi-modal proposition to provide the customer with fully
integrated transportation solutions that fully connect the
customer and the offer in real time; and
a a local transportation solution focused on a well-defined
ecosystem: this solution already exists for the Group with its
“ExCel London” partnership, under which Europcar offers
specific vehicle rentals at this London business.
Existing Mobility Solutions
The Group’s specific mobility solutions currently include:
a Ubeeqo
In November 2014, the Group acquired a 70.64% interest
in Ubeeqo, a French start-up company established in 2008
and one of the pioneers in mobility and fleet management
services for companies and more recently for individuals.
The acquisition is part of Europcar’s strategy to expand its
mobility solution offering to respond to customer needs by
providing simple, turnkey solutions. This acquisition allowed
the Group to sustain Ubeeqo’s development in new mobility
technologies in Europe. In 2015, Europcar Lab increased
its interest in Ubeeqo to 75.7% via a capital increase not
subscribed by the founders who hold the balance shares.
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EUROPCAR
2015
The founders continue to manage Ubeeqo’s development
with the support of Europcar. The shares are subject to
reciprocal put and call options between the founders and
the Company. The Group’s holding in Ubeeqo is accounted
for using the equity method.
Through its solutions and technologies, Ubeeqo encourages
individuals to travel differently, by making better use of cars
when they are indispensable, or by using an alternative where
possible. In plain terms, Ubeeqo, present in France, Belgium,
as well as in the United Kingdom and Germany since 2015,
offers various services such as a mobility app (location,
reservation and payment for mobility solutions from a single
app), car sharing services (general public or in companies)
or connected fleet management solutions for companies.
Ubeeqo also plans to expand into Southern Europe and
countries in Europe where Europcar benefits from a network
of franchises, to build a global footprint.
Thus, Ubeeqo proposes innovative and complementary
solutions to companies, in particular:
“Bettercar Sharing”: a car-sharing solution that promotes
private fleet sharing within a business and among
businesses;
a “Bettercar Connected”: a fleet management solution based
on onboard telematics enabling the analysis of vehicle fleet
usage and costs, aimed at generating cost savings for
businesses; and
a “Mobilities Benefits”: a multimodal alternative to the
Company car, providing employees with access to a fleet
of shared cars and a mobility stipend to fund personal
travel needs (including train, taxi and car rental, among
others), along with a one-stop application.
Its current customer base includes several blue chip French
companies, such as Danone, L’Oréal, Airbus, Michelin. Its
solutions aim to provide customers with significant savings,
enhanced employee satisfaction and a reduced impact on
the environment.
a
More recently, the Company invested in the private market by
opening its multimodal reservation platform for individuals in
Paris and London. With the Ubeeqo app, users may choose
the means of motorized transport most suited to them: car
sharing via “Matcha”, car rentals at stations via Europcar
or cars with drivers via Allocab (the first national network of
cars with drivers (VTC) and motorcycle taxis) in Paris or a
taxi in London. The platform, which also includes payment
and invoicing, intends to expand its services over the next
few months. This service will be gradually extended to other
urban capitals of Europe.
The car sharing service, Matcha, is a closed-loop courtesy
car offer (at the end of the reservation, the car must be
brought back to its start location). The vehicles are available
in the city, in the business districts and at railway stations.
Using the Ubeeqo app or on the website, the customer
may reserve a vehicle for a few hours or days. The pricing
depends on the services utilized during the period (starting
at €4 an hour, with or without subscription).
a E-car Club
In July 2015, Europcar Lab acquired a majority stake in the
share capital of E-car Club, the UK’s first entirely electric
pay-per-use car club. E-Car Club’s vision is to improve
local mobility, while reducing costs and the environmental
impact of its users’ travel. The Company deployed its original
car-sharing solution in several British agglomerations like
London, Hertfordshire, Northamptonshire, Oxfordshire,
Buckinghamshire, Warwickshire and Fife, around ecosystems
such as universities, local public authorities or even residential
building programs. E-car Club will be able to rely on
Europcar’s support to implement an ambitious deployment
plan.
1.6.3
a Car2go Europe
01
Through Car2go Europe, a joint-venture with Daimler in which
the Group holds a 25% stake, the Group has developed
car-sharing services for individuals. Car2go Europe is a carsharing service aimed at making rental vehicles available to
subscriber customers in European cities. Initially launched in
Hamburg and Vienna in 2011, the service was rolled out in a
number of major European cities including Turin and Madrid
in 2015. Car2go Europe is in particular present in Germany,
Austria, and Italy.
This car-sharing service does not require a reservation,
although a car may be reserved up to 30 minutes prior to
the rental through a smartphone application. Cars are easy
to find through the smartphone application, with rental use
charged by the minute (and a lower per-minute price charged
for a stopover during a rental). The service offers one-way
driving and easy parking (including pre-paid on-street parking
in certain locations).
The Group records its stake in Car2go Europe under the
equity method. The Group invested a total of €12.5 million
in Car2go Europe in 2015.
Customers (“Business”/“Leisure”)
The Group’s products and services are offered to a large range of
business and leisure customers. Business customers primarily
include large corporates, small and medium-sized businesses,
as well as entities renting vehicles to provide temporary vehicle
replacement services. “Leisure” customers primarily include
individuals renting vehicles for their personal needs, in particular
for travel during holidays and weekends, directly or indirectly
via tour operators, brokers and travel agencies.
The “business” and “leisure” segments have different and
complementary characteristics, particularly in terms of
seasonality of demand, which allows for better management
of the Group’s network (both in terms of stations and the
fleet utilization rate). The Group believes that maintaining an
appropriate balance between “business” and “leisure” rentals
is important to maintain and enhance its overall profitability
and the consistency of its operations throughout its network.
Consolidated revenue generated by the “business” and “leisure”
customer segments remained relatively stable during the last
few years. For the year ended December 31, 2015, leisure
rentals accounted for approximately 56% of the Group’s
rental revenue (excluding fees received from franchises), with
business rentals accounting for the remaining 44% (against
55% and 45% respectively in 2014).
Certain of the Corporate Countries in Europe (Germany and
Belgium) are more geared towards business customers, while
others (Spain, Italy and Portugal) are more geared towards
leisure customers and others (France and the United Kingdom)
have a balance between business and leisure customers. The
Corporate Countries in the Rest of the World (Australia and
New Zealand) are more geared towards leisure customers. The
table below shows the breakdown of the Group’s revenues
EUROPCAR
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33
01
from rental activities (excluding fees received from franchisees) by “business” and “leisure” customer segments in the Corporate
Countries for the year ended December 31, 2015:
BREAKDOWN OF THE GROUP’S RENTAL REVENUE BY CUSTOMER SEGMENT IN THE CORPORATE COUNTRIES IN 2015
Year ended
December 31, 2015
Corporate Countries
Business
Leisure
Germany
61%
39%
United Kingdom
50%
50%
France
41%
59%
Italy
35%
65%
Spain
29%
71%
Australia/New Zealand
19%
81%
Belgium
60%
40%
Portugal
23%
77%
TOTAL
44%
56%
With approx. 5.5 million drivers recorded in Europcar’s
reservation system in 2015, the Group believes that its
customer portfolio is one of the strongest and most diverse in
the European vehicle rental industry.
Business customers
Business customers who rent a vehicle from the Europcar
network include large corporations, small and mediumsized companies as well as vehicle-rental companies offering
replacement services. Most business customers rent cars
from the Europcar network on terms that the Group has
negotiated (either directly or, in the case of small and mediumsized enterprises, through travel agencies). The Group also
categorizes rentals to customers of companies offering support
services and vehicle replacement as business rentals.
Revenue from business customers tends to be primarily
concentrated during the period from Tuesday through Thursday
each week. Revenue from business customers is less subject
to seasonal change.
LARGE CORPORATES
Europcar has several contracts with many large corporates
(such as Renault, Airbus, Total, Siemens and Accor, as well
as Engie and Thales signed in 2015), to serve as the exclusive
or preferred provider of rental vehicles to their employees or
members, sometimes at the global level.
These contracts are concluded at pre-negotiated rates and
subject to agreed service-level guarantees. Many of the Group’s
business customers have direct access to Europcar’s IT system
via dedicated micro-sites, providing such customers with
reservation and invoicing interfaces specifically tailored to their
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EUROPCAR
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needs. When the volume of rental transactions with a particular
customer is significant, Europcar may locate an “implant” rental
station directly on the customer’s premises.
Vehicle rental contracts are typically signed by large corporates
based on competitive tenders at the end of which one or more
suppliers are selected. As part of its transformation program
“Fast Lane”, the Group reviewed and rationalized its portfolio
of contracts with large corporates aiming to improve its overall
profitability, particularly in 2012 and 2013.
The Group organizes the structure of its sales teams for large
corporates based on the general requirements of different
industry sectors to ensure that it uses its knowledge of these
sectors to propose appropriately tailored offers. The Group
focuses on satisfying the needs of its large corporate customers
and considers that it has a satisfying track record of retaining its
large corporate accounts. The Group plans to take advantage
of its sales force management system.
SMALL AND MEDIUM-SIZED BUSINESSES
Europcar is the exclusive or preferred provider of rental vehicles
to employees of numerous small and medium-sized businesses
at pre-negotiated rates and conditions. This customer segment
is characterized by a large number of accounts, which limits
exposure to any single customer. The Group is focused on
further penetrating this customer segment, in which it sees
opportunities for profitable growth. An example, in 2014, the
Group launched its FitRent product specifically tailored for
small and medium-sized enterprises (SMEs) (see “Europcar®
Offerings” under Section 1.6.1.1 “The Europcar brand®”). The
Group also plans to lead targeted actions at the local level and
to capitalize on the experience gained by its marketing directors
through the “Europcar Master Sales Certification Program” to
generate additional revenues and contracts.
VEHICLE REPLACEMENTS
The vehicle replacement rental business principally involves the
rental of vehicles to insurance and leasing companies, vehicle
dealers and other entities offering vehicle replacement services
to their own customers. Via insurance companies, the Group
offers its services to individuals, whose vehicles were damaged
in accidents, are being repaired or are temporarily unavailable.
In order to strengthen this business, Europcar has entered into
several agreements with insurers, dealerships, repair shops
and long-term vehicle leasing companies. The Group seeks
to further develop its activities in this customer segment by
expanding its existing customer base (including in franchised
countries) and through the implementation of incentives and
special offers through the Group’s seven principal partners.
PARTNERSHIPS TO REACH “LEISURE” CUSTOMERS
01
Europcar has partnerships with several players in order to
offer mobility services to their customers. These exclusive
or preferential partnerships allow Europcar to expand its
“leisure” customers. Business is generated through Europcar’s
distribution on partners’ channels or through participation in
partners’ loyalty programs.
Europcar currently has international partnerships in different
sectors that represent a significant portion of its rental revenue,
including:
“Leisure” customers
a in the airline sector, partnerships with airline companies
such as easyJet (exclusive partnership in place since 2003
and renewed in April 2014 for a three-year term), Aeroflot,
(exclusive partnership signed in December 2013 for a fiveyear term), Emirates (partnership signed in March 2014,
under which Europcar customers receive miles in Emirates’
frequent flier programs for every car rental), Qatar Airways (in
the context of the Qatar Miles program) and more recently
Air Caraïbes;
Leisure customers primarily include individuals renting vehicles
for their personal needs, in particular for travel during holidays
and weekends, directly or indirectly via tour operators, brokers
and travel agencies. The Group also serves a portion of its
leisure customers through partnerships to expand its customer
base.
a in the hotel sector, partnerships with large groups such as
Accor for business, marketing and communication purposes
(partnership established January 1, 2000 and renewed
most recently in 2015 for three years with tacit renewal for
successive two year periods) and Hilton (in the context of the
Hilton Honors program); and
Leisure rentals are typically longer in duration and generate
more revenue per transaction than business rentals (other than
vehicle replacements). Leisure rental activity is more seasonal
than business rental activity, with heightened activity during the
spring and summer (particularly in France, Southern Europe,
Australia and New Zealand, in December and January for
these two countries). Leisure rental activity also tends to be
higher on weekends than mid-week. For further discussion
of the seasonality of the Group’s business, see Section 1.6.8
“Seasonality of the business”.
a in the railway sector, partnerships with Thalys.
The Group also has marketing partnerships with credit card
companies, credit institutions or organizations offering loyalty
programs such as HSBC and Citibank.
Europcar’s contractual relationships with its principal
commercial partners typically have terms of between two and
four years.
The Group plans to increase its development on this customer
segment through the signature of partnerships in new sectors
(cruise ships, banks, insurance, etc.).
INDIVIDUALS
This segment includes all individual customers contracting
directly with Europcar. Individuals book directly under the
Europcar® brand through the brand’s website or using the
Europcar® app, cell phones or tablets, through call centers and
car rental stations and under the InterRent® brand through the
brand’s dedicated website or the InterRent® app, cell phones
or tablets (see “Europcar’s Direct Distribution Channels” under
Section 1.6.4 “Distribution Channels”). The Group plans to
further develop its activities in this customer segment following
the reorganization of its e-commerce department in order to
build on the trend in reservations on websites and mobile
applications and the signing of new agreements with general
sales agents in order to stimulate international demand, in
particular in China, India, Russia and Brazil.
TOUR-OPERATORS, TRAVEL AGENTS
AND BROKERS
Europcar works in close collaboration with various tourismindustry intermediaries, leveraging their marketing positioning
to improve the Group’s visibility and reputation and to enter
additional distribution channels.
Europcar has agreements at the international and national levels
with several travel agencies (including online travel agencies)
that work directly with Europcar or through tour operators or
brokers to offer car rentals to end customers, either on a standalone basis or as part of packages.
EUROPCAR
2015
35
01
In addition, Europcar has multi-year agreements with certain
major tour operators to serve their customers’ leisuredestination needs. Tour operators are traditional partners,
combining car rental with hotels and flights to offer packages
to end customers.
Brokers are leisure intermediaries who sell vehicle rental
services to end customers on their own behalf or on behalf of
the vehicle rental companies.
1.6.4
Distribution Channels
The Group’s customers have access to various mobility offers
of Europcar through a variety of distribution channels.
They may book rental vehicles under the Europcar® brand in the
worldwide network through local, national or toll-free telephone
calls handled by call centers; directly through stations; or, in the
case of replacement rentals, through a proprietary dedicated
system serving the insurance industry. Additionally, customers
may make reservations for rentals worldwide through the
Group’s websites and using its apps or cell phones and tablets.
These channels are known as “direct” booking channels as they
are controlled by the Group.
Customers may also book vehicles through indirect distribution
channels, such as travel agents, brokers, or other third-party
travel websites. Such third-party actors often utilize a third-party
operated computerized reservation system, known as a global
distribution system or “GDS”, to contact Europcar and make
the reservation on behalf of the customer.
®
Reservations for the InterRent brand are all made and prepaid
over the brand’s specific website. The Group mainly uses
indirect distribution channels for the InterRent® brand through
brokers, travel agents and tour operators and is targeting a
progressive shift to direct distribution channels in order to
optimize profitability.
The following chart sets out the breakdown in reservations by
distribution channel including direct channels “controlled” by
the Group (stations, call centers, Europcar-controlled Internet
sites) and indirect distribution channels (intermediaries’ Internet
sites and GDS) over the period from 2005 to 2015 in the
Corporate Countries.
36
The Group considers that it maintains ongoing, balanced
relationships with these different intermediaries. These relations
based on a multi-brand or multi-product strategy allow the
Group to benefit from additional contributions made to its
activities, in particular during low season, or for certain partners,
from intermediaries’ early payments especially during high
season, a period when the Group guarantees them a certain
level of vehicles.
EUROPCAR
2015
BREAKDOWN OF RESERVATIONS BY DISTRIBUTION
CHANNEL FROM 2005 TO 2015
9%
11% 14%
9%
9%
7%
19% 18%
18%
17% 21%
10%
11%
23% 26% 27% 28% 30% 32%
13%
17%
16% 17%
30% 29%
26%
23%
20%
19%
15% 18% 21%
22% 22%
16%
15%
15% 14%
15%
17% 15%
13% 13%
13%
34% 33% 32%
33% 32%
28% 25% 24%
23% 21% 18%
2005
2008
2010
2006
2007
2009
2011
Internet - Direct
Internet - Indirect
Call centers
Stations
2012
2013
2014
2015
Indirect / GDS
Source: Company.
As shown, the Group uses varied distribution channels to better
service its customers. Online reservations (direct and indirect
Internet as well as GDS reservations) represented 69% of the
Group’s total number of reservations in 2015.
Europcar’s direct distribution channels
INTERNET
The Group has invested in its websites and applications, to
answer to the growing role of e-commerce. In 2014, it has
migrated 15 websites to a new harmonized platform and
revamped its iPhone, iPad and Android applications. The Group
continues to develop mobile applications, thus in 2015, more
than 70 websites operated for the franchisees of Europcar and
its partners were also migrated to the new platform. These
initiatives also include the increasing digitalization of customer
transactions from one-click booking to mobile check-in and
check-out. The Group has also deployed online reviews and
ratings on all sites and rolled out online chat to improve the
customer experience and the conversion rates of websites and
mobile applications. Finally in 2015, Europcar launched a B2B
portal on its websites to serve its customers better and capture
online “Business” customers especially on the SME market.
Over the past several years, customers’ booking habits have
evolved by means of Internet/e-commerce. Europcar uses its
websites to both inform and serve its customers, providing
online reservation systems and information about its services.
Europcar accepts reservations from customers via its countryspecific websites, including Europcar. com and Europcar. biz,
mobile applications, as well as through Internet micro-sites
accessible (i) by customers of the partners with whom it has
an exclusive relationship and (ii) by employees of Europcar’s
large corporate accounts. Such micro-sites dedicated to
business accounts enable Europcar to address the needs of
customers without intermediaries. Europcar also offers direct
reservations through the websites of its partners, such as
EasyJet. Reservations for the InterRent brand ®are all made
and prepaid over the brand’s specific website.
Online reservations facilitate price comparisons, thereby
increasing competitive pressure in the industry. Nevertheless,
sales through these channels carry lower direct distribution
costs than traditional distribution channels and result in a
simplified and enhanced customer experience.
In 2015 the Europcar Groupe received the “Best car rental
website” award from World Travel Awards.
TRADITIONAL DIRECT DISTRIBUTION CHANNELS
Although vehicle reservations are increasingly moving towards
e-commerce, Europcar continues to maintain its traditional
direct distribution channels. Traditional direct distribution
channels include Europcar ® call centers and car rental
stations. These channels remain important indeed and are
complementary to Internet channels since, among other things,
they are more conducive to the sale of ancillary services.
The Europcar® call center network consists of Group call
centers located in Germany, Portugal, Belgium (partially
outsourced), Australia/New Zealand and the United Kingdom.
The call centers in Berlin and Cologne, Germany (covering
Germany), in Madrid, Spain (covering France, Italy, Spain and
the United Kingdom) and in Sofia, Bulgaria (covering Australia,
Belgium, France, Italy, Spain and the United Kingdom) are
outsourced and handle approximately 80% of calls from
Europcar customers who wish to make a reservation or request.
01
As part of the “Fast Lane” program, the Group continues to
rationalize its call centers in order to adapt them to consumer
habits and to improve the profitability and efficiency of such
centers.
Indirect distribution channels (Internet, GDS)
Classic indirect distribution channels are represented by car
rental brokers and intermediaries such as travel agents and
tour operators, who use computerized reservation systems,
also called global distribution systems (GDS), which allow
reservations on the Europcar network. The Group pays third
party distributor fees for each reservation.
Over the last few years, the percentage of reservations made
via GDS has decreased from 17% of the Group’s total number
of reservations in 2010 to 15% in 2015. Inversely, indirect
reservations via the Internet have increased from 13% of the
Group’s total number of reservations in 2010 to 22% in 2015
(unchanged compared to 2014).
Although these indirect distribution channels provide the Group
with access to a broader customer base than through its direct
distribution channels alone, the indirect customer segment
can face stronger competition, as intermediaries and partners
generally distribute rental vehicles from several players in the
sector. Therefore, Europcar seeks to conclude exclusive or
privileged “strategic” partnerships, under which the Company
is the only or the first rental vehicle service provider.
Europcar has signed local agreements with large tour operators
and travel agents, which target “business” customers in
particular. Europcar is not an exclusive supplier for these touroperators and agents, who choose to make reservations for
“business” customers who do not have a direct agreement
with a vehicle rental company, at local level. When a customer
has a relationship with both Europcar and a tour-operator, the
latter acts as the distribution channel and makes reservations in
accordance with the conditions negotiated with the customer.
Tour-operators generally offer vehicle rentals as an independent
service or as part of a global offering including other
services such as air tickets or hotel rooms and are generally
compensated by the difference between its resale price to
customers and Europcar’s selling price to tour operators. Travel
agents and most of the brokers, who act as Europcar agents,
rent vehicles at a price determined by Europcar and receive a
commission on this price.
EUROPCAR
2015
37
01
Third party travel websites have also grown in importance as a
distribution channel for Europcar. Currently, the Group is partner
of several major travel portals on the internet, which offer three
distinct marketing benefits:
a expand the geographical zone addressable by the Group
and thus increase Europcar’s network of potential customers
from the non-European market;
a implement dynamic pricing strategies sensitive to short term
demand and supply trends of vehicles at specific locations
with the global service offering of these travel portals;
a indirectly benefit from the links between these travel portals
and airlines, which are not yet partners in the Europcar
network.
The development of the indirect digital distribution channels has
also benefited from the growing presence of car rental brokers
in the market. Europcar has signed agreements with most of
the major car rental brokers in Europe. Customers have access
to a large range of offers from car rental companies and can
directly reserve via the broker’s website.
The Group enjoys balanced relationships with intermediaries
from the tourism industry. These include the following:
a the car rental industry in Europe consists, as regards the
major players, of companies operating under strong and
recognizable brands, including Europcar. Moreover, these
companies have developed attractive geographical networks
for customers. This direct relationship between customers
1.6.5
a car-rental companies are able to adjust their fleet sizes to
match demand, in particular when their cars are acquired
through buy-back programs, which is the case for the majority
of Europcar’s fleet. The Group believes that it has variable
vehicle capacity, as contrasted with the fixed capacity that
may characterize other sectors, such as the hotel sector,
which enables it to manage its various distribution channels
consistently;
a car-rental companies benefit from volume commitments in
the low season and prepayments in the high season from
intermediaries, which offers them guaranteed availability in
the high season; and
a in their principal markets, agents rent Europcar’s vehicles at
a price determined by Europcar and receive a commission
on this price.
The size of Europcar’s network, the availability of its fleet and
the quality of its service are the principal factors of its success
in this distribution channel. The Group intends to reinforce its
presence in this distribution channel by developing its Keddy
by Europcar ® offer and by signing new partnerships with
tour operators, travel agencies and brokers (including in the
franchised countries).
Europcar’s network
The Group operates directly mainly in Europe through its directlyoperated and agent-operated stations and internationally
through its franchises as well as via partnerships and general
sales agency arrangements. The Group’s directly- and agentoperated stations are located in the countries which the Group
refers to as “Corporate Countries” and where the Group has a
long standing local presence and expertise: Australia, Belgium,
France, Germany, Italy, New Zealand, Portugal, Spain and the
United Kingdom. Franchise stations expand the network both
in Corporate Countries (particularly in France) and around the
world, providing increased brand awareness and revenues.
This broad network gives the Group extensive geographic
coverage of both business and leisure customers, with
individual Corporate Countries either weighted to one customer
category or the other or balanced between them, depending
on the geographic location.
38
and the brand, and the proximity of services offered to
customers to the places where they need mobility favors
the adoption of balanced partnerships between the car rental
company and intermediaries in the tourism sector addressing
a complementary target;
EUROPCAR
2015
The density of the Europcar network in the Corporate Countries
enables to address customer demand for proximity and
convenience in such countries, while the international scope
of the Europcar network provided by franchisees, partnerships
and other commercial and sales agency agreements
significantly enhances the Group’s ability to capture business
from customers traveling outside of their home countries
and provides a basis for the Group’s continued growth and
expansion.
The organizational structure of the Group’s operations in each
country is tailored to local market dynamics, in particular the
nature of the customer base, which may be more business or
leisure based and more local or tourist based, and also reflects
the historical development of the Group (including the corporate
versus agent/franchise mix of the stations in each country).
In addition to airport stations, the Europcar network includes
agencies at other major travel points such as railway terminals,
city and suburban centers, hotels, resorts and office buildings.
The Group is continuing to optimize its network in order to
better serve the needs of its customers and to attract new
ones. In particular, the Group is strengthening its network of
downtown rental stations in order to capture growth related to
the changing user habits for vehicles, which presuppose far less
purchase and possession. Certain of the Corporate Countries
in Europe (Germany and Belgium) are more geared towards
business customers, while others (Spain, Italy and Portugal)
are more geared towards leisure customers and others (France
and the United Kingdom) have a balance between business
and leisure customers. The Corporate Countries in the Rest of
the World operating segment (Australia and New Zealand) are
more active in the leisure market.
01
The Group believes that maintaining a balance between
business and leisure customers is an important part of
preserving and enhancing the profitability of its business and
the consistency of its operations. The locations of stations
(airports or other locations) also reflect the specificities of each
country’s customer base.
The following map presents the Group’s network (defined broadly to include - in addition to directly-operated - agent-operated and
franchise stations, strategic partnerships and general (or global) sales agency arrangements) throughout the world:
Corporate Countries
Partnerships
International Franchise
Global Sales Agents
Through this network of franchises, strategic partnerships and
general sales agents, the Group was the fourth actor worldwide
in the vehicle rental market in 2014 (source: Euromonitor, on
the basis of the companies’ revenues).
EUROPCAR
2015
39
01
The following table sets out the number of rental stations (broken down by type) for the year ending December 31, 2015:
2015
Stations
Group
Agents
Franchises
Total
of which
InterRent
Germany
229
234
0
463
10
United Kingdom
264
8
9
281
32
France
253
74
211
538
19
24
188
0
212
8
Europe
Italy
Spain
142
34
0
176
16
Belgium
15
17
0
32
0
Portugal
29
50
0
79
7
Franchises outside of Corporate Countries
-
-
607
607
-
TOTAL EUROPE
956
605
827
2,388
92
of which stations in airports
199
24
-
-
-
Australia
62
10
59
131
-
New Zealand
16
5
0
21
-
Rest of World
Franchises outside of Corporate Countries
0
0
1,042
1,042
-
TOTAL REST OF THE WORLD
78
15
1,101
1,194
-
of which stations in airports
34
7
1,034
620
1,928
3,582
92
TOTAL GROUP
Promoting cross-border activity and inbound
traffic in Corporate Countries
The density of the Group’s network in the Corporate Countries
enables the Group to address customer demand for proximity,
while the international coverage of its network considerably
enhances its ability to capture business from customers
traveling outside of their home countries.
The Group is maintaining and growing its domestic rental
business (reserved vehicles, checked out and returned in a
single country), and is actively developing its international rental
business (in which vehicles are reserved through its direct and
indirect Europcar distribution channels in one country and
checked out in another country). Internationally sourced rentals
represent an additional source of reservations and revenue for
the Group’s domestic operations.
In order to develop the Group’s international business,
management has defined key regional markets outside the
Corporate Countries in which it is actively promoting the
development of cross-border inbound business to the Corporate
Countries. In addition to the promotion of international business
40
EUROPCAR
2015
through cross-country conferences between franchisees, the
development of international business is supported through
joint marketing efforts with international partners and business
customers, including, for example, coordinated advertising
campaigns and special online promotional offers, as well as
through campaigns with vehicle manufacturers in connection
with the launch of new car models.
The chart set forth below shows the breakdown of 2015
revenue between domestic business and inbound business
from Corporate Countries and the rest of the World (including
franchised countries). For the purposes of this table, domestic
rentals are defined as rentals that are reserved, checked-out
and returned in the same country, while rentals from Corporate
Countries and from the rest of the World (including franchised
countries) are rentals in which vehicles are (i) reserved through
the Group’s direct and indirect distribution channels by
customers resident in a given country and (ii) checked-out in
another country.
2015 RENTAL REVENUE BREAKDOWN IN THE LEISURE
SEGMENT BY SOURCE
46%
Revenue from domestic business
30%
Revenue from other countries
(including franchisees)
24%
Revenue from
Corporate Countries
1.6.5.2 Stations operated directly
by the Group or by its agents
01
(A) STATIONS OPERATED DIRECTLY
BY THE GROUP
As of December 31, 2015, the Group directly operated 1,034
stations, all located in the Corporate Countries. Each of these
stations is managed through one of nine local operating
subsidiaries, which owns (or leases) the rental fleet and station
sites and employ the stations’ staff. The General Manager of
each operating subsidiary is responsible for managing the fleet
in the relevant Corporate Country and for overseeing the local
sales and marketing, Human Resources and legal functions.
Directly-operated stations are primarily located in larger airports
and cities.
Source: Company.
1.6.5.1 Operating models
As indicated above in this Registration Document, the Group’s
network is based on different o perating models: directlyoperated, agent-operated or franchise, as may be further
extended through partnerships, commercial cooperation
agreements and general sales agency arrangements. In
general, directly-operated stations are located in larger airports
and cities, while franchise and agent-operated stations are
located in smaller airports and cities to provide full coverage
for the Group’s customers throughout the Corporate Countries.
The Group’s revenues are composed of vehicle rental revenues
generated by its directly-operated rental stations or by the
agent-operated rental stations of its subsidiaries (€1,992 million
in revenues in 2015, of which 93.4% was generated in Europe
and 6.6% in the Rest of the World, the Group’s two operating
segments), additional services revenue generated by its directlyoperated and agent-operated rental stations (€97 million of
revenues in 2015), as well as royalties and fees received from its
franchisees (€53 million in 2015, of which 62% was generated
in Europe and 38% in the Rest of the World).
The revenue generated by stations directly operated by the
Group is included in the Group’s consolidated revenue. It
represented 83% of the revenue generated by rental activities
in 2015 (stable versus 2014).
(B) AGENT-OPERATED STATIONS
As of December 31, 2015, agents operated 620 stations, all
located in the Corporate Countries. Agent-operated stations use
a Group rental fleet. The sites and employees of agent-operated
stations are the responsibility of the agents. Relationships with
agents are managed by the General Manager of the relevant
operating subsidiary. Agent-operated stations are primarily
located in smaller airports and cities to provide widespread
coverage.
The revenue generated by these stations is included in the
consolidated revenue of the Group and agents are paid a
commission (which is accounted for as an expense in the
consolidated financial statements of the Group) based on the
revenue of the relevant stations. It represented 17% of the
revenue generated by rental activities in 2015 (stable versus
2014).
EUROPCAR
2015
41
01
(C) STATION LOCATIONS
The Europcar network rents vehicles to its customers from
stations located in airports, railway terminals, hotels, resorts,
office buildings, and other urban and suburban locations. The
locations vary depending on local market dynamics as well as
on the density of the Group’s network in the country.
Airport locations are important for the Group, as they enable it
to offer convenience to customers travelling by air and to benefit
from the growth in business in these areas. This is one of the
Group’s main sources of revenues. Airport stations generally
generate higher revenue than other stations.
The following charts provide a breakdown in percentage of the number of directly- and agent-operated stations and of the Group’s
rental revenues in Corporate Countries (excluding fees received from franchises) between stations located at airports and other
locations in 2015:
BREAKDOWN BY REVENUE
BREAKDOWN BY NUMBER OF STATIONS
58%
84%
Off-Airport
Off-Airport
16%
42%
Airports
Airports
Source: Company.
The following table presents a breakdown of the Group’s rental revenue in Corporate Countries (excluding fees received from
franchises) between stations located at airports and other locations in 2015:
BREAKDOWN OF THE GROUP’S RENTAL REVENUE IN CORPORATE COUNTRIES BETWEEN STATIONS LOCATED AT AIRPORTS AND OTHER LOCATIONS IN 2015
Corporate Countries
Airports
Off-Airport
Germany
21%
79%
United-Kingdom
37%
63%
France
41%
59%
Italy
60%
40%
Spain
62%
38%
Australia and New Zealand
76%
24%
Belgium
29%
71%
Portugal
55%
45%
TOTAL
42%
58%
Source: Company.
AIRPORT CONCESSIONS
Through its extensive network of airport stations, Europcar
benefits from its exposure to airports’ high passenger volumes.
The number of rental stations in airports as a percentage of the
Group’s total number of stations remained stable at between
14% and 16% over the period from 2011 and 2014. Airport
business is highly related to the levels of air travel at the relevant
airport, and customers often make car rental reservations at
the same time as their flight reservations. Partnerships with
42
EUROPCAR
2015
airlines support this business (see Section 1.6.3 “Customers”
(“Business”/“Leisure”).
In order to operate airport stations, Europcar (or the relevant
agent or franchisee) has entered into a concession or similar
leasing, licensing or other such agreements or arrangements
granting it the right to conduct a vehicle rental business at the
relevant airports. Europcar’s concessions are granted by the
airport operators, following either negotiation or bidding for
the right to operate a vehicle rental business in such airports.
Access to airports is relatively costly, and the airports’ operators
control the number of locations made available to car rental
companies. The terms of an airport concession agreement
typically require payment to the airport’s operator of concession
fees based upon a specified percentage of revenue generated
by Europcar at the airport, subject to a minimum annual fee.
Under most concession arrangements, Europcar must also pay
fixed rent for terminal counters or other leased properties and
facilities. Some concession arrangements are for a fixed length of
time (generally three to five years), while others create operating
rights and payment obligations that, as a formal matter, may
be terminated at any time. Concession arrangements generally
impose on Europcar specific covenants which include certain
price restrictions and quality of service requirements. Under
most concession agreements, if the revenue generated by the
concessionaire increases or decreases, the airports’ operators
may modify the concession, in particular with respect to the
number of parking lots granted to the concessionaire and the
rate of concession fees.
The terms of concession arrangements typically permit Europcar
to seek complete or partial reimbursement of concession fees
from customers to the extent permitted under local regulations.
OTHER STATIONS
In addition to airport stations, the Europcar network includes
agencies at other major travel points such as railway terminals,
city and suburban centers, hotels, resorts and office buildings.
This market is considerably more fragmented than the airport
market, with numerous smaller vehicle rental businesses,
each with limited market share and geographical distribution,
competing with larger organizations such as Europcar. When
compared to airport stations, other stations typically deal with
a greater range of customers, use smaller rental facilities with
fewer employees and, on average, generate fewer transactions
per period than airport locations. Rental stations located at or
near railway terminals are operated pursuant to concession
agreements similar to those described above for airport
stations. Railway stations, particularly those serving high-speed
trains, generally generate higher traffic volume than other nonairport stations. A dense network in the outskirts of big cities
is also essential as it brings us closer to customers and their
needs, in particular small- and medium-sized businesses.
1.6.5.3 Franchises
01
During the year ending December 31, 2015, franchisees
operated approximately 1,928 stations, including 827 stations
in Europe and 1,101 stations in the Rest of the World. Fees from
franchisees received by the Group stood at €52.7 million for the
year ending December 31, 2015, of which 62% was generated
in Europe and 38% in the Rest of the World. Please refer to the
map presented in Section 1.6.5 “Europcar’s network”.
Franchise arrangements have provided the Group with a
cost-effective route to expand into small and medium-sized
local or regional markets and internationally. The franchise
network changes in accordance with any franchise buyouts,
the performance of franchisees and the market in which they
are situated, as well as the policy for extending the network.
The Group continues to expand the Europcar network (i) by
adding new franchisees in the few countries in which it has
a limited or does not have a presence and (ii) by developing
its service offering under the ®Europcar brand to allow Group
franchisees to better address market needs. The current
focus of the Group’s international network expansion includes
important markets in Latin America and the Asia Pacific region.
The Group is also developing its InterRent® franchise network,
with franchises in place in 40 countries as of December 31,
2015 (compared to 19 at end 2014), including Malta,
Cyprus, Turkey, Morocco, Croatia and Greece, covering the
Mediterranean basin, but also with the desire to reinforce the
brand’s presence particularly in Europe and the Middle East.
MANAGEMENT OF THE FRANCHISES
The Group manages its franchise network based on a regional
approach, with four regional directors and with annual global
and regional franchise conferences.
Compliance with the terms of the Group’s franchise agreements
and the uniformity of service quality across the network are
controlled through informal visits to franchisee locations and
through regularly scheduled audits by the Group’s Internal
Audit Department. Regional franchisee conferences are held
on an annual or semi-annual basis to establish best practice
guidelines and to promote inter- and intra-regional business
within the Europcar network.
The Group supports the promotion of the corporate image by
franchisees through:
a local marketing with advertising assistance and resources;
a branding and signage;
EUROPCAR
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01
a product structuring;
a airline and hotel partnerships; and
a access to card programs to promote customer loyalty.
Franchisees participate in the costs associated with brand
initiatives.
The Group has implemented initiatives aimed at further
integrating franchisees, including information via an intranet
platform and monthly newsletters.
The Group also seeks to encourage cross-border sales
between franchisees and directly-operated stations. It also
aims to build on its franchise network to increase inbound and
outbound flows as part of the development of general sales
agency arrangements worldwide.
CHARACTERISTICS OF FRANCHISE OPERATIONS
Franchisees operate using their own fleet and employees and
have the exclusive right to use the relevant brand of the Group
pursuant to a license. Franchise agreements generally cover a
specific portion of a country (e.g., a region or a city) or the entire
country, in which case each franchisee may operate directly or
through sub-franchise or agency agreements between it and
third parties.
Franchisees initially pay an entrance fee, and, upon renewal
of their contracts, a territory fee, for the exclusive right to use
the franchise rights in the area covered by the agreement.
The franchisees pay royalties representing a percentage of
the revenue generated by the vehicle rental operations, a
reservation fee based on the number of reservations made
through the Group’s reservation system and, if applicable, a fee
to use the Group’s IT systems. Franchisees are required to send
monthly financial reports to the Group, which form the basis
of the calculation of royalties. In return for the payment of fees
and royalties, franchisees benefit from access to the Group’s
reservation system, worldwide network, international brand,
customer base and information technology systems. Royalties
and fees paid by Europcar network franchisees in the Corporate
Countries and Franchised Countries totaled €52.7 million for the
year ending December 31, 2015 (versus €53.3 million for the
year ending December 31, 2014). See Section 3.1.2.2 “Analysis
of Group results”, (A) “Revenue”. The underlying rental revenue
generated by the franchisees is recorded as revenue only by the
franchisees themselves. Franchising arrangements throughout
the Europcar network follow a standard format under which
the Group grants licenses for use of the brand name, knowhow, corporate identity and international operating systems and
procedures within a defined geographical region for a period of
time (usually five and up to ten years).
44
EUROPCAR
2015
Other than in a very limited number of cases, franchisees are
exclusive to the Europcar network, meaning that they agree
not to work with any other vehicle rental group or to operate a
vehicle rental business under their own name for the duration
of the franchise agreement. Most of the franchise agreements
concluded by the Group provide that when a Europcar network
customer makes a reservation relating to the territory of a
franchisee, that customer becomes a customer of the said
franchisee.
Franchisees hold (or rent from third parties) and finance their
fleet independently from the Group. Franchisees may benefit
from agreements with buy-back commitments signed at the
Group level, but are free to conclude their own fleet supply
agreements with automobile manufacturers. Franchise
contracts provide that franchisees are required to respect the
Group’s fleet standards (mileage, maintenance, safety etc.). In
order to ensure that franchisees respect the Group’s standards,
an exhaustive review of their fleet is realized based on operating
data (mileage, holding period) and, through sampling, a physical
verification of the fleet is carried out during visits of rental
stations operated by franchisees.
In general, the Group’s franchise contracts do not permit the
franchisee to terminate the agreement prior to the expiration of
the agreed term. In most cases, local franchisees are entitled
to be indemnified by the Group (either pursuant to applicable
law or under the terms of the franchise agreement) should the
franchise agreement be terminated by the Group before the
expiration of its term. The Group retains the right in most cases
to terminate a franchise agreement in the event the franchisee
fails to meet its contractual obligations, notably payment of
royalties and fees, or takes actions that risk damaging the
Group’s brand and reputation. Franchisees may generally also
terminate the agreements concluded with the Group in the
event of a material breach of the agreement by the Group.
1.6.5.4 Commercial cooperation agreements
The Group has entered into commercial cooperation
agreements with certain entities to provide cross-referrals
and cross-services in various countries. These agreements
allow the Group’s customers to be served in certain locations
while also increasing in-bound flows. Revenue generated by
strategic partnerships represented less than 1% of the revenue
generated by the Group’s rental activities in 2015, unchanged
from 2014.
In parallel with the termination of the alliance with Enterprise
in August 2013, the Group entered into two commercial
cooperation agreements to allow its customers to be served
in the United States, through an agreement entered into with
Franchise Services North America in June 2013 relating to
the Advantage-Rent-A-Car brand (which was subsequently
transferred to The Catalyst Capital Group, Inc.), and in Canada
through an agreement entered into with Discount Car and Truck
Rentals Ltd in October 2013.
Under the agreement regarding the Advantage-Rent-A-Car
brand, Europcar brand customers are served by the AdvantageRent-A-Car brand in the United States, and Advantage-Rent-ACar customers are served by Europcar in the rest of the world.
Pursuant to the agreement with Discount Car and Rental
Trucks Ltd., the partners seek to expand the leisure business
in Canada.
The Group has had an exclusive long-term partnership with
Times Car Rental (previously Mazda Car Rental) since 2006,
through which it seeks to encourage cross-referrals and
offer cross-border services. Times Car Rental is a leading
Japanese car rental company. At end April 2015, it operated
a fleet of approximately 26,139 vehicles and over 465 rental
stations throughout Japan. This partnership is visible through
co-branding at certain of the partner’s Europcar partnered
locations (of which there are 172 as of December 31, 2015).
The partner provides in-bound and out-bound support and also
works closely with the Group’s GSA partner in Japan.
1.6.6
1.6.5.5 Commercial and general sales agency
arrangements
01
A key part of the Group’s sales strategy is the development
of its network of general sales agents. The Group strives to
enter into commercial and general sales agency arrangements
in countries where it has limited or no presence, in order to
ensure significant commercial presence in such countries and
to benefit from the travel flows from the United States and
emerging countries to Europe and Australia. General sales
agents (GSAs) sell the Group’s services, in exchange for a
commission. All costs related to running the GSA’s business
are the responsibility of the GSA including but not limited to
insurance, rent, general office expenses and any travel within
the country or region needed to promote or sell the product.
At the end of 2015, a total of approximately 30 agreements had
been signed worldwide, including in the United States and Asia.
For example, in order to develop its business activities in China,
the Group entered into a two-year GSA with a Chinese online
travel agency which, pursuant to the terms and conditions
of this agreement, was appointed as non-exclusive-agent
authorized to promote and sell Europcar vehicles. It receives
a commission paid by the Group and based on the volume of
vehicle rental services sold to its customers.
Group organization
GENERAL MANAGEMENT OF THE GROUP
AND CORPORATE COUNTRIES
The Group’s commercial and development strategy is
determined and overseen by senior management. Functional
Boards at the Group level (Human Resources, Fleet, Finance,
Operations & Network, Commercial, IT and Legal) also oversee
execution of the Group’s strategy. Operations at the local level
are managed by an operating subsidiary, which implements the
strategy and objectives set by the Group. The management
of the Group’s activities outside of the Corporate Countries
consists of managing franchisees, partnerships and commercial
and general sales agency agreements. The objective is to boost
the Group’s growth and geographical coverage and to promote
its brands.
Some of the managers of the Corporate Countries also hold
roles at the Group level, in order to ensure that the Group
benefits from their practical experience and knowledge in terms
of sales, marketing and international development. Local front-
line teams interact with customers at the Group’s stations and
in the Group’s markets, developing loyalty and relationships
with business customers and a robust understanding of leisure
customers.
This organization is designed to ensure a strong local presence
and offer customers differentiated services targeted to local
needs, while based upon an umbrella international strategy,
as well as centralized back-office functions to ensure costeffectiveness. The Group relies on three key departments. The
Marketing Department is responsible for developing innovative
mobility products and services, developing the customer
portfolio and ensuring consistency of the brand and services
worldwide. The Sales Department is responsible for prospecting
and securing Key (corporate) Accounts and for developing
partnerships to increase the Group’s market share worldwide.
The Group’s Revenue and Capacity Management Department
works closely with the marketing and sales departments to
increase the Group’s revenue and to better match the Group’s
offer with customer demand.
EUROPCAR
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01
IMPACT OF THE FAST LANE TRANSFORMATION
PROGRAM
program called “Fast Lane”, designed to strengthen its
market footprint and prepare its transition from a pure car
rental company to a mobility services provider, benefiting
from sustainable growth and improved profitability. See
Section 1.4.4 “Fast Lane. Transformation Program that has
set the Foundation for Sustainable Profitable Growth” for more
detailed information. With the implementation of this program,
the Group aims to further centralize the back-office functions
while maintaining key local skills close to customers.
The pan-European Shared Services Center was opened
in Portugal in early 2014 to handle transaction, accounting
and cash collection activities. The migration of services and
employees to the Shared Services Center continued throughout
2014. Approximately 280 people were employed at the
Shared Services Center as of December 31, 2015 (versus
approximately 230 at end 2014), with employees transferred
from Portugal, Spain, France, the United Kingdom, Belgium
and Germany, with ongoing transfers from Italy. The Group
decided to use a Shared Services Center given its single line of
business and use of one integrated system, ®Greenway, which
facilitates implementation of shared services and also enables
greater rationalization of its processes.
The processes that are or will be handled by the Shared
Services Center include general and management accounting,
1.6.7
The Group intends to extend the scope of the Shared Services
Center to data entry and updating the price grid, so as to further
optimize its cost position and business model flexibility. These
services were transferred for the United Kingdom in the last
quarter of 2014 and the roll-out continued in 2015 for France,
Spain, Italy and Belgium. Additional initiatives are being studied
for implementation by 2017.
A centralized purchasing department, focusing on process
improvement while accelerating purchasing centralization at
a Group level, was created in early 2014. Tools allowing cost
optimization at Group level are currently being deployed.
A significant portion of the cost savings realized through
the Fast Lane program comes from the optimization of fleet
management (see Section 1.3 “Presentation of the Group’s
market and competitive environment”). Fleet-related initiatives
include streamlining the mix per category of vehicle, the
optimization of the buy-back program and a better management
of maintenance fees. Those fleet improvement measures
were coupled with the creation of the “Revenue and Capacity
Management” department allowing a better match of the
Group’s fleet mix to customer demand and an optimization of
demand management and generation related to management
of the fleet’s capacity and distribution.
Fleet
Unless otherwise indicated, this Section relates solely to the
fleet operated directly by Europcar under the Europcar® and
InterRent® brands, and not to the fleet operated by franchisees,
which is independently owned or leased from third parties (for
more information about the fleet of franchisees, see paragraph
“Characteristics of franchise operations” under Section 1.6.5.3
“Franchises”).
Europcar believes it is to be one of the largest purchasers
of vehicles in Europe. Europcar’s fleet is sourced from
various manufacturers, including Volkswagen (with the
brands Volkswagen, Audi, Seat and Skoda), General Motors,
Fiat, Renault-Nissan, PSA (Peugeot, Citroën, DS), Daimler
(Mercedes, Smart), Ford, BMW and Toyota . Volkswagen
AG is Europcar’s largest supplier of vehicles in 2015. During
the year ending December 31, 2015, approximately 30% of
46
cash management, billing, supplier payments, travel expenses,
credit & risk management, key accounts collection, and
insurance billing and collection. These functions were deployed
in 2014 and 2015 for all of the European Corporate Countries.
EUROPCAR
2015
Europcar’s fleet was acquired from the Volkswagen group, 14%
from General Motors, 13% from Fiat, 11% from Renault, 9%
from Peugeot Citroen, 7% from Daimler, 6% from Hyundai, 3%
from Ford and the remaining 7% from other manufacturers.
The Group currently uses 39 different models provided by 19
car manufacturers.
The diversity of Europcar’s fleet allows the Company to meet
the rental demands of a broad range of customers. The fleet
consists of 11 main vehicle categories, based on general
industry standards - mini, economy, compact, intermediate,
standard, full-size, premium, luxury, mini-vans, trucks and
convertibles. The fleet varies by brand, with the fleet offered
under the Europcar® brand covering the full range of vehicles
(from the mini category to the Selection category, comprising
“prestige” and “fun” vehicles), and the fleet offered under
the InterRent® brand corresponding to the most frequently
requested types of vehicles in the “low-cost” segment.
InterRent’s offer is limited to four categories: mini, economy,
compact and intermediate. Some cars are used only for
the InterRent® brand. These vehicles do not have the same
equipment as those rented under the Europcar® brand and
often have longer holding periods and higher mileage. See
Section 1.3 “Presentation of the market and Competitive
environment” of this Registration Document.
The following chart illustrates the diversity of the Group’s
fleet in terms of deliveries by manufacturer (expressed as a
percentage of total acquisitions by the Group) for the year
ending December 31, 2015.
30%
7%
Volkswagen
Others
14%
7%
Opel
Daimler
13%
6%
Fiat
Hyundai
11%
3%
Renault
Ford
The Group believes that Europcar is one of the largest purchasers
of European vehicles and the largest in the European vehicle
rental industry. During the year ending December 31, 2015,
the Group took delivery of approximately 278,500 vehicles and
operated an average rental fleet of 205,353 passenger and
utility vehicles (up by 8.5% versus 2014). For the year ended
December 31, 2015, Europcar’s approximate average vehicle
holding period was 8.9 months (7.8 months for vehicles - cars
and trucks - covered by buy-back commitments). Some of
the sourcing agreements with manufacturers allow Europcar’s
franchisees to benefit from the terms and conditions of these
agreements, including the buy-back provisions. For more
information on the buy-back programs with manufacturers,
see Section 1.6.7.2 “Fleet sourcing and planning”).
01
9%
PSA
Source: Company.
The following table provides a breakdown of the Group’s average fleet size by Corporate Country between the categories “cars”
and “utility vehicles” for 2015:
Year ending
Dec. 31, 2015
Corporate Countries
Cars
Utility Vehicles
Germany
90%
10%
United Kingdom
87%
13%
France
81%
19%
Italy
95%
5%
Spain
97%
3%
Australia/New Zealand
96%
4%
Belgium
91%
9%
Portugal
92%
8%
Source: Company.
1.6.7.1 Fleet management
Europcar’s central fleet department, supported by the local
fleet departments in each of the Corporate Countries, manages
the overall fleet planning process. In addition to negotiating
the acquisition of fleet vehicles from manufacturers, the fleet
department is involved in the process of planning and the
geographical deployment of vehicles, vehicle in-fleeting and
de-fleeting, and the monitoring of fleet utilization rates.
Europcar’s fleet is managed to optimize costs, including
economic depreciation, acquisition and disposal costs,
maintenance and repair costs, taxes and financing costs,
against a set of pre-defined needs and constraints, including
marketing needs, maximum fleet movements (i.e., the maximum
quantity of vehicles that can be in-fleeted or de-fleeted during a
given period) and maximum exposure to a single manufacturer.
This process relies extensively on data collected and processed
by the Greenway® IT system (see Section 1.6.10.1 “Greenway®
system”).
EUROPCAR
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Europcar is able to respond to seasonal fluctuations in demand
through continuous optimization of fleet management (see
Section 1.6.8 “Seasonal nature of the business”). Through its
daily management, Europcar is able to adjust its fleet size by
modifying acquisition plans and/or holding periods to meet
both expected and unforeseen variations in demand. Through
its flexible contracts with vehicle manufacturers, Europcar can
increase its orders for vehicles in advance of the peak season,
and use the flexibility of the holding periods, ranging generally
from five to eight months to de-fleet the vehicles once demand
is less pronounced. Europcar is also able to react rapidly to
geographical changes in demand by re-directing the delivery
of new vehicles to sites where demand is especially strong.
The Group makes every effort to optimize the fleet financial
utilization rate, which reflects the Number of Rental Days per
available days for the period from the first date of service of a
vehicle to its sale date.
The Group has significantly increased its fleet financial utilization
rate through targeted actions and it stood at 76.1% in 2015 (a
slight decrease versus 2014) in a context of significant increase
of the average fleet to 205,353 vehicles (a 8.5% increase versus
2014). Although the Group believes that its financial utilization
rate is close to the optimum rate achievable in the industry,
it continues to regularly study ways to improve it in each of
the Corporate Countries and for both of its brands. Current
initiatives to this end include focusing on reducing the time
between receipt of the new vehicle and first rental use of the
vehicle, the time between each rental and the time between
last rental and disposal of the vehicle, as well as on improving
the processes for accident and repair management and
optimization of the process for InterRent brand vehicles.
1.6.7.2 Fleet sourcing and planning
The fleet sourcing and planning processes are supervised locally
by the fleet department of each subsidiary/country. Purchase
contracts are negotiated depending on the manufacturers,
either at country or international level. The annual or multi-year
agreements define the acquisition and disposal terms and the
volumes of vehicles and model mix to be acquired over the
contractual period. Over half of the volumes purchased by
the Group are purchased through pan-European agreements.
The Group also relies on its local teams to negotiate local
agreements and maintain sufficient flexibility to benefit from
spot deals.
The Group considers at-risk purchases when appropriate,
based on its systematic analysis of at-risk purchases versus
buy-back mechanisms. It considers the choice of models
and options as well as second hand market dynamics and its
capacity to absorb resale volumes.
Purchase contracts for the coming year are generally concluded
at the end of each calendar year, in order to anticipate market
trends, and are readjusted throughout the year on a monthly
basis to ensure maximum reactivity to market demand. The
Group is therefore able to adapt its fleet capacity to rental
market demand.
The Group records all of its vehicle fleet either on the balance
sheet or, with respect to vehicles acquired through leases that
meet the definition of an operating lease, off balance sheet.
The following table summarizes the Group’s fleet asset and
financing structure:
Fleet asset base
The Group calculates its fleet financial utilization rate as the
percentage of the total actual rental days of the fleet out of the
theoretical total potential Number of Rental Days of its fleet of
vehicles. The theoretical total potential number is equal to the
number of vehicles held over the period, multiplied by the total
number of days over the period. Another methodology used
in the industry is based on the Number of Rental Days per
actual available days of fleet, which excludes the days when
the fleet is held but not available for rental (vehicle preparation
at in-fleeting, maintenance periods and vehicle preparation at
de-fleeting). This would lead to a better fleet financial utilization
rate than the aforementioned rate reported by the Group.
Europcar operates central logistics centers for in-fleeting and
de-fleeting of vehicles, including car parks at various locations,
typically airports, in the Corporate Countries. From these
locations, vehicles are either transported by logistics companies
or driven to the rental station where they are needed.
Rental fleet
On balance
sheet
Fleet working capital
requirements due
to buy-back
commitments
Off-balance
sheet
Fleet finance under
operating leases
Source: Company.
48
EUROPCAR
2015
Net operating debt
On-balance sheet fleet
financing debt (EF Finance
Notes, SARF, UK fleet
financing, Asset financing
in Australia, etc.)
Debt equivalent
of fleet operating leases
The Group finances the acquisition of the vehicles in its
fleet by various means, in particular through asset-backed
financing (see Section 3.2 “Group cash and equity” and
Note I “Accounting policies - Rental fleet related receivables”,
paragraph (i) “Vehicles purchased with manufacturer or dealer
buy-back commitment” in the consolidated financial statements
included in Section 3.4 “Consolidated financial statements
and Statutory Auditors’ report”). The Group benefits from a
flexible asset-backed financing structure with a ratio of loans
to value (i.e. the indebtedness of Securitifleet Holding, the
Securitifleet Companies and EC Finance Plc divided by the total
value of the net assets on the balance sheets of the Securitifleet
companies) of between 86.3% in the 1st quarter and 94.6% in
the 3rd quarter of 2015:
The diversity of financing available to acquire the fleet vehicles
allows the Group to limit the impact of such acquisitions on the
Group’s cash flows. Please refer to Section 3.2 “Liquidity and
capital resources” of Chapter 3.
1.6.7.3 Vehicle buy-back commitments
Europcar acquires, subject to availability, a majority of its vehicles
pursuant to various fleet purchase programs established
with the manufacturers. Under these contractual programs,
Europcar purchases vehicles from the vehicle manufacturers
or dealers. Manufacturers or dealers undertake, subject to
certain terms and conditions, to grant Europcar the right to sell
those vehicles back to them at a pre-determined price during a
specified time window (after which the repurchase transaction
is automatically triggered if it has not already occurred). If
the vehicle is bought from a vehicle dealer, the obligations of
the vehicle dealer under the buy-back commitment must be
guaranteed by a vehicle manufacturer. Vehicles purchased by
vehicle rental companies under a buy-back commitment are
referred to as “buy-back vehicles”. The minimum buy-back
period under these buy-back commitments generally varies
from five to eight months for passenger cars and from six to
twenty-four months for utility vehicles.
Repurchase prices for buy-back vehicles are contractually
based on either (i) a predetermined percentage of original
vehicle price and the month in which the vehicle is repurchased
or (ii) the original capitalized price less a set economic
depreciation amount, in either case subject to adjustments
depending upon the condition of the car, mileage and holding
period requirements.
The proportion of the fleet covered by buy-back commitments
can differ by Corporate Country. In addition, the proportion of
the total fleet covered by buy-back commitments at any given
time may be less than the proportion of vehicles purchased
with buy-back commitments during the year given that “at
risk vehicles” generally have a longer holding period (twelve to
twenty four months). Repurchase programs limit Europcar’s
potential residual risk with respect to vehicles purchased under
the programs, allow Europcar to arrange financing on the basis
of the agreed repurchase price and provide Europcar’s fleet
managers with flexibility to respond to changes in demand.
In addition, the high percentage of buy-back vehicles in
Europcar’s fleet allows the Group to be less dependent on the
used car market. These programs operate to the benefit of
the car manufacturers as well, since the return of the vehicles
to them within a short time period enables them to resell the
vehicles more quickly through their dealership networks as
newer models.
01
Approximately 92% of Europcar’s fleet delivered in units in
2015 (stable compared with 2014) was covered by buy-back
commitments, i.e. one of the highest rates of all vehicle rental
companies (1).
The visibility and flexibility conferred by the Group’s buy-back
strategy are important. The Group has long been committed to
maintaining a high rate of fleet purchases in units acquired under
buy-back commitments. On average, the Group estimates that
over 93% of the vehicles purchased over the past ten years
were covered by buy-back commitments.
1.6.7.4 “At risk” vehicles
A number of vehicles are acquired by Europcar from vehicle
manufacturers or dealers without the benefit of any buy-back
commitment. These vehicles fall under the category of “at risk
vehicles”. See Section 2.2.5 “Risks related to the holding of
vehicles not covered by repurchase programs”.
The Group considers at-risk purchases when appropriate,
based on its systematic analysis of at-risk purchases versus
buy-back mechanisms. It considers the mix of models needed
for its fleet as well as remarketing capabilities and second hand
market dynamics. Europcar disposes of “at risk vehicles”
through a variety of channels, including sales to individuals,
wholesalers, brokered retail sales and auctions. To meet market
demand, Europcar has set up an electronic platform for on-line
sales: 2ndmove. eu
1.6.7.5 Maintenance
Europcar arranges for each vehicle to be inspected and cleaned
at the end of every rental and to be maintained according to
the manufacturer’s recommendations. Europcar must follow the
maintenance specifications of the respective manufacturers in
order to maintain the warranty and repurchase commitment on
the vehicle. Europcar operates vehicle maintenance centers at
certain rental stations in the Corporate Countries. These centers
provide maintenance and light repair facilities and monitoring
and processing of more seriously damaged vehicles for which
repairs are handled by specialized bodywork companies. The
objective is, on the basis of detailed appraisals, to optimize
(1) Source: publications by Avis, Hertz and Sixt.
EUROPCAR
2015
49
01
repair costs and lead times in order to limit the impact on the
use of the vehicle. For the most badly damaged vehicles, the
1.6.8
Seasonal nature of the business
The Group’s revenue fluctuates throughout the year in line with
customer demand. The busiest months of the year for vehicle
rentals are June through September. The leisure business is
characterized by higher demand for vehicle rentals during the
summer period and school holidays, in connection with more
significant activity in the transportation sector. As a result,
the Group’s revenue for these periods is higher compared to
the average for the rest of the year. The leisure market is also
characterized by increased demand on weekends as compared
with the workweek. In a complementary manner, the business
activity is fairly stable throughout the year, with a slight decrease
1.6.9
choice is made between repairing the vehicle or selling it in its
current condition.
in demand during the summer vacation months, although it is
more concentrated in mid-week (Tuesday through Thursday).
Management of seasonality is a key part of Europcar’s business
model. The Group aims to capture business during high season
while also taking into account fleet holding costs in the periods
before and after the high season (known as the “shoulder”),
with the goal of keeping its fleet financial utilization rate under
control.
Please refer to Section 3.1.1.2 : “Key factors affecting the
Group’s results”.
Suppliers
This Section discusses suppliers and the volume of purchases,
excluding expenses related to the acquisition, registration and
insurance of the fleet (“cost of purchases excluding fleet”).
For more information on the fleet and the Group’s insurance
arrangements, see Section 1.6.7 “Fleet” and Section 2.7
“Insurance and risk management” of this Registration
Document.
The Group’s cost of purchases excluding fleet and taxes (1) is,
on average, approximately one quarter of the total consolidated
annual revenues of the Group. These costs are broken down
as follows: 40% related to indirect purchases or overheads
(IT and telecommunications, call centers, real estate and
maintenance of the station network and its installations at
an operating capacity, sales and marketing, communications
and advertisement, office supplies, uniforms, consulting and
services) and 60% related to direct purchases related to
customer service and the maintenance of the Group’s fleet
in operating condition, as well as making the fleet available
(maintenance and repair, intense repair services following
accidents, preparation and cleaning services, transportation
services for the geographic redistribution of the fleet according
to the needs of the Group’s customers). See 1.6.10 “IT system”
for a description of the Group’s IT needs and “Europcar’s
direct distribution channels” under Section 1.6.4 “Distribution
Channels” for a description of the call centers.
of expenses generally proportional to its share in the Group’s
annual consolidated revenue. As a result, the Group currently
has relationships with a multitude of suppliers (currently around
20,000) for a very broad range of categories of products and
types of services. The share of value added services relating
to labor intensive activities is close to 50%.
Since 2014, the Group has attempted to rationalize the
necessary volume for its activities and to optimize its cost of
purchases. In the context of the Group’s new purchase strategy
and the implementation of the Shared Services Center in 2014
(see Section 1.4.4 “Fast Lane” Transformation Program that has
set the Foundation for Sustainable Profitable Growth”) the Group
first created a coordination function at the end of 2014 for the
Group’s purchases in order to enable it to control purchases and
increase cooperation among countries. Following amendments
to the Group’s purchase policy, currently being implemented in
all countries in which the Group operates, the second step of
the strategic purchase plan is the Group’s implementation of a
P2P (“Purchase-to-Pay”) solution for the complete processing
of orders and supplier invoices excluding fleet. This project,
launched in 2014, seeks to bring, for both operating purchases
and those directly linked to customer services, transparency as
to the nature and volume of expenses, in order to facilitate the
engagement process while ensuring the control and flexibility of
Supplier Accounting within the Shared Services Center.
The operating needs of the Group so far have been processed
on a country-by-country basis with an annual average volume
(1) Expenses for goods and services incurred by the Group’s corporate-operated rental stations only, excluding stations operated by agents or
franchisees.
50
EUROPCAR
2015
In accordance with its strategic purchasing plan, in addition to
the P2P project, 2015 saw a certain number of achievements:
1. revision of the Group’s purchasing policy in order to provide
it with a Corporate Social Responsibility (CSR) policy and
common principles for monitoring the Group’s performance
(“Controlling & Reporting”);
2. alignment of the purchasing resources at head office and
the Corporate Countries in order to encourage teamwork
with the operating departments and to control expenses;
3. initialization of a supplier risk evaluation process, as a
first step towards implementation of a detailed supplier
management process, and lastly;
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4. increased use of competitive procedures.
In the near future, the Group also intends to define a common
purchase strategy (“Source-to-Pay”) per purchase category,
supplemented by a program to manage the supplier base,
which may take place through the consolidation, development
and signing of multi-jurisdiction contracts, once the P2P solution
has been consolidated for a majority of Corporate Countries.
1.6.10 IT system
IT systems and telecommunications are vital parts of Europcar’s
management of its network of points of sale and customer
reservations via multiple distribution channels. Part of the IT
solutions are designed, developed, implemented, operated and
maintained by the Group’s IT Department, which is ISO 9001
Quality certified.
Europcar continuously invests in improving its IT system in order
to further enhance its ability to offer innovative and cost-effective
services. All IT projects are centrally and regularly evaluated
against business needs. Technical projects, which are aimed
at establishing and ensuring the continuity of services, are
given special attention. Application projects, which are aimed
at maintaining and enhancing system operating capabilities,
are assessed against the expected added value to the Group,
including growth of revenues, reduction of costs and mitigation
of risks (legal, regulatory, obsolescence or performance related).
To support its efforts to develop and implement innovative
mobility solutions, the Group has implemented a plan to
revamp its IT system’s architecture by 2020, making it more
open and flexible and thereby facilitating the integration of
third-party applications. Several modules and innovations
are being analyzed in order to build on the Group’s operating
excellence (new mobile applications or applications that are
being improved or developed on other platforms), promote
data-based decisions (Big Data), adapt products and prices
in real time (Dynamic Pricing) and, more generally, accelerate
digital development and strengthen the customer relationship
management strategy (Cloud CRM).
1.6.10.1 The Greenway® system
Europcar’s IT systems are built around the centralized GreenWay
application, which offers a common and single solution covering
all functional areas of vehicle rental: customer management,
individuals and companies, management of pricing packages,
fleet management, management of reservations and distribution
systems, management of rental station operations as well as
billing and invoicing. The proprietary system was designed
specifically for Europcar’s vehicle rental business and was first
implemented in 1994.
Greenway, which has been in operation since 2014 on a highly
scalable architecture (Java/Linux), allows for over 10,000
concurrent user connections. Today, the system manages
more than 12 million reservations and 10 million rentals on a
yearly basis. More than 10,000 people are Greenway users and
most of them are located in the 1,600 stations of the Europcar
network. 200,000 vehicles are continuously monitored by the
system in order to optimize fleet utilization. The full functionalities
of the Greenway system are available 24/7 at the head offices
and rental stations of the nine Corporate Countries as well as in
franchises in Switzerland, Austria and Norway. The majority of
the Europcar network’s franchise sites are linked to GreenWay
for reservations.
InterRent ® operates an IT platform that is distinct from
Greenway. It is externalized and based on a system operated
as “Software as a Service”.
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1.6.10.2 Other IT applications and systems
Other major applications and systems used by the Group are
“Oracle Financials” for financial management and accounting,
“Datawarehouse” for in-depth analyses of Company data and
“Ataraxia” for the management of accidents, damages and
maintenance of vehicles.
The Group also uses collaborative cloud computing solutions
such as “Google Apps” for office needs and the “Salesforce”
software to optimize business relationships for the sales teams.
Cloud solutions are also being implemented, as part of the
digital transformation of the business (such as connected cars,
keyless access to cars, mobile applications and social media
leveraging).
The Group’s main suppliers of IT include Cap Gemini (hosting
production centers and maintenance of the Greenway software),
Sopra Steria (production info-management), Unisys (installation
and maintenance of workstations), Dell & Lenovo (servers
and workstations), IBM (servers), Hitachi (storage), CISCO
(network equipment), Colt and Telstra (telecom networks for
data transfer).
1.6.10.3 Continuity of IT system services
Careful attention is paid to security systems and the protection
of proprietary data against destruction, theft, fraud or abuse.
Operating systems ensure 24/7 protection against computer
viruses, spam, phishing and denial of service attacks.
The majority of the Group’s IT systems, including Greenway,
internet sites, Oracle Financials and Datawarehouse, are
operated on proprietary infrastructure, centralized in two
production centers operating in parallel 24/7. Each center
operates infrastructure necessary to the delivery of the entirety
of production application services and ensures in real-time
a complete physical duplication of production data. These
production centers are located near Paris, France, and comply
with the following minimum safety rules: a distance of 30 and
60 km between the two centers, independent and multiple
electric power supplies, redundant cooling systems, and
double electric power supplies for all computer equipment.
The objective is to maintain at least 99.98% up-time for each
of the centers.
The Group periodically verifies its disaster recovery plan by
carrying out annual unit tests for each application group, and
by carrying out a large scale test of one of the two production
centers every 18 months. Each of the simulation tests is
covered by a report entailing, if need be, the implementation
of an improvement plan.
Significant safety measures are in place to ensure the security
of Europcar’s systems, applications and data (and that of its
customers).
1.6.11 Regulation
The Group’s business is subject to numerous regulatory
regimes throughout the world, in particular with respect to
the environment, personal data, consumer protection and
franchise operation. Compliance with these rules, which may
differ considerably from one country to the next, is generally
managed at the local level by each of the Group’s Corporate
Countries, subject to supervision and review by the Group’s
legal department.
CONSUMER PROTECTION REGULATIONS
IN THE EEA
1.6.11.1 Consumer Protection Regulations
The European Commission is particularly vigilant with respect
to compliance with the principle of non-discrimination in the
single market. In a press release dated August 11, 2014, the
European Commission announced that the car rental industry
was not sufficiently compliant with the non-discrimination
The Group offers services to individual consumers and is
therefore subject to Consumer Protection Regulations.
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NON-DISCRIMINATION ON PRICES
Directive 2006/123/EC of the European Parliament and of
the Council of December 12, 2006 on services in the internal
market prohibits unjustified discrimination in the provision of
a service on the basis of a consumer’s nationality or place of
residence in all of the European Union Member States.
principle and sent a letter to industry companies, including
the Group, instructing them to end certain practices that it
considered “discriminatory” and which seemed to it to lack
justification by objective criteria and preventing consumers
in the European Union from obtaining the best price offered
online, wherever their place of residence, and therefore from
fully benefiting from the opportunities of the single market. As of
September 2014, the Group implemented, in accordance with
its commercial strategy, a single pricing policy by sales location,
regardless of the European residence of the customer and the
country within Europe from which the reservation was made.
Moreover, the European Commission invited Member States’
relevant authorities to take the measures necessary to ensure
compliance with European Union and national legislation related
to consumer protection. To date, no legal proceedings have
been initiated against the Group by the European Commission
or any national authorities with respect to this issue.
In parallel, in the context of the global cooperative process
between the national authorities of Member States of the
European Union that are responsible for enforcing legislation
to ensure consumers protection pursuant to regulation EC
No. 2006/2004, a dialogue was opened by the European
Commission with the players in the short-term vehicle rental
industry, seeking to improve consumer experiences (in particular
the transparency and suitability of contractual terms) within the
European Union. In this respect, the Group submitted proposals
of commitments to the European Commission, including the
publication of new general rental conditions by early 2016 and
the clarification of the insurance and contractual guarantee
policy in the event of damage caused to the vehicle. The
dialog ended in early 2015 and on July 13, 2015 the European
Commission published a communication setting forth the result
of these exchanges with the different players in the short-term
vehicle rental industry. In early 2016, Europcar put forward new
rental conditions that comply in full with its commitments.
UNFAIR COMMERCIAL PRACTICES
Directive 2005/29/EC of the European Parliament and of the
Council of May 11, 2005 on unfair commercial practices by
companies towards consumers in the internal market sets the
principle of a general prohibition against unfair commercial
practices towards consumers, in particular misleading
practices.
In order to ensure free and informed consent by the consumer,
the Group is committed to providing consumers with easily
accessible and totally transparent offer documentation. With
the intent of offering its consumers even more transparency, the
Group revised its general rental conditions in order to simplify
and modernize them, and to harmonize them between the
various countries in which it operates. These new general
rental conditions were introduced at the start of January 2016.
This effort to improve transparency is also being applied to
the presentation, content and scope of the offers made to
consumers in respect of damage waiver offers. These new offers
were launched at the end of the first semester of 2015. The
Group is in regular contact with the European Commission on
the implementation of this policy. The discussions between the
European Commission and the major vehicle rental companies,
including the Group, ended in July 2015. The discussions dealt
with the practices of the vehicle rental industry and the various
commitments made by vehicle rental companies, including
Europcar, to clarify their documentation and contractual
conditions in order to improve the customer experience. On
July 13, 2015 the European Commission published a press
release setting forth the result of these exchanges.
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UNFAIR CONTRACT TERMS
Directive 93/13/EC of the Council of April 5, 1993 on unfair
terms in contracts concluded with consumers (modified by
Directive 2011/83/EU of December 12, 2011 on consumer
rights) aims to protect European consumers against unfair
terms in the contracts they conclude with professionals. The
regulations concerning unfair contract terms apply to the
vehicle rental agreements proposed by the Group’s companies
to its individual consumer customers.
In France, the Unfair Terms Commission, placed under the
responsibility of the Minister for Consumer Affairs, examines
the agreements proposed in a business sector and then
issues recommendations for eliminating unfair terms in the
sector’s agreements. In its recommendation no. 96-02 of
June 14, 1996 on vehicle rental, the Unfair Terms Commission
recommended the elimination of 44 clauses concerning the
formation, execution and termination of rental agreements, and
the related pricing, payment and insurance.
The provisions of the Group’s general rental conditions are
regularly reviewed in order to ensure their compliance with the
regulations on unfair contract terms.
CONSUMER PROTECTION REGULATIONS
IN AUSTRALIA AND NEW ZEALAND
Europcar Australia is required to comply with the Competition
and Consumer Act of 2010 (the “CCA”), which applies to
most of its activities in the Australian market, in particular its
commercial dealings with its partners and customers. The
primary purpose of the CCA is to ensure consumer protection
and to improve competition between economic players. In this
regard, it lays down some general rules on anti-competitive
agreements between competitors, anti-competitive restrictions
in the vertical procurement chain, unilateral anti-competitive
conduct, objectionable conduct, untruthful or misleading
conduct, protection of consumers as regards unfair contract
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terms and other unfair commercial practices, and consumer
guarantees. Europcar New Zealand is subject to similar rules
in New Zealand.
1.6.11.2 Protection of personal data
In the course of its business, the Group gathers and processes
information that is subject to laws and regulations on the
protection of personal data, both in Europe and in other regions
where the Group does business. The Group generally limits
the use of the data that it collects from customers, including
the circumstances under which it communicates with them.
Personal data concerning the Group’s customers is principally
processed using Europcar’s information system, “Greenway®,”
and in the Group’s databases used for statistical purposes, for
marketing and for customer relations management.
The collection of personal data from the Group’s customers
is carried out both on behalf of the Group’s companies and
on behalf of its business customers and commercial partners.
In the case of business customers, the Group collects data,
first, for necessary purposes relating to the performance of
its commercial obligations (to perform a rental agreement, for
example) and, second, for reporting purposes, to respond to
the needs of its business customers. In the case of commercial
partners (such as airlines), the Group’s companies collect data
on existing customers of their commercial partners, again for
reporting reasons, such as keeping track of the rights acquired
by customers who are members of loyalty programs. The
Group’s international franchisees also undertake to collect
and process customer data in accordance with the Group’s
privacy policy and more generally with European regulations
on personal data protection. They also ensure the preservation
of the Group’s image and reputation.
PROCESSING PERFORMED WITHIN
THE EUROPEAN ECONOMIC AREA
Directive 95/46/EC of the European Parliament and of the
Council dated October 24, 1995 on the protection of individuals
with regard to the processing of personal data and on the
free movement of such data (the “personal data directive”),
supplemented by Directive 97-66 of the European Parliament
and of the Council dated December 15, 1997 concerning the
processing of personal data and the protection of privacy in the
telecommunications sector, provides the framework for data
protection in all of the countries of the European Economic
Area (the “EEA”). In France, the personal data directive was
transposed through several amendments to Law No. 78-17
dated January 6, 1978 on computers, files and freedom, the
principal one of which was adopted by Law No. 2004-801
dated August 6, 2004.
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The personal data directive applies to both automated and
non-automated processing of personal data where such data
is intended to be contained in a file. The directive defines
“personal data” broadly to include any information regarding
an identified or identifiable natural person, whether identifiable
directly or indirectly, whatever the country or residence or
nationality of that person. It requires controllers of personal
data established in a Member State of the EEA or using means
of processing located on the territory of a Member State to take
certain measures upstream of the data collection, during its
preservation and until its deletion. Pursuant to the personal data
directive, a “controller” (as opposed to a mere data processor
working for a third party) means the person or entity that, alone
or jointly with others, determines the purposes and the means
of processing the personal data.
Where a Group entity acts as a controller of personal data (for
example, with respect to its customers’ personal data, such
as driver’s license information or identification documents), it
is subject to obligations including the following:
a processing is permitted only in accordance with one of the
following criteria set out in the personal data directive: (i) the
data subject must have consented to the processing; or (ii)
the processing must be necessary: (a) to perform a contract
with the data subject; (b) to comply with a legal obligation;
(c) to protect vital interests; (d) to perform a mission in the
public interest; (e) to achieve a legitimate interest;
a to ensure that the personal data is processed in an honest
and legal manner, is collected for specific, explicit and
legitimate purposes and in a manner proportionate to those
purposes, is true and, if necessary, is updated and kept in a
form that enables identification of the individuals concerned
for a period of time that does not exceed the time necessary
to achieve the purpose of its collection and processing;
a to take specific precautions before processing sensitive data
(such as data on health, racial or ethnic origin, or political,
philosophical or religious opinions), which is generally
prohibited by the Member States. Such precautions include
ensuring that the data subjects have explicitly expressed
their consent or that the processing falls within the scope
of an exception under the national laws transposing the
personal data directive (for example, where the processing
is necessary for the protection of the vital interests of the data
subject or of another person or relates to data that manifestly
has been made public by the data subject or is necessary
for the establishment, exercise or defense of a legal claim);
a to implement appropriate technical and organizational
measures to protect the personal data from accidental or
illegal destruction, loss, alteration, disclosure or unauthorized
access;
a except in certain cases listed in the personal data directive,
to inform data subjects of (i) the identity of the data controller;
(ii) the purposes of the processing; (iii) the data recipients;
and (iv) whether it is mandatory or optional to respond to the
questions asked when the data is collected;
a to guarantee the data subjects their rights to access, rectify
and object to data concerning them;
a to retain personal data for a period not exceeding the period
of time necessary to achieve the purpose of the processing;
a not to transfer personal data outside of the EEA unless
the recipient country has been deemed by the European
Commission able to provide an adequate level of protection
or if the transfer is covered by standard contractual clauses
established by the European Commission; and
a to carry out the required formalities with the national
authorities in charge of the protection of personal data in
their respective countries (such as the National Commission
on Computers and Freedom in France) prior to processing
the data. These formalities vary from country to country,
from a simple filing with a governmental authority or the
requirement to keep internal records to a requirement to
obtain authorization or approval prior to conducting certain
types of processing, in particular processing that may present
particular risks to the rights and liberties of the data subjects.
Violation of these obligations by a data controller may result in
administrative, civil or criminal penalties, including fines of up
to €1.5 million for legal entities in France.
The Group may also act as a “data processor” within the
meaning of the personal data directive. In this case, the Group
processes personal data provided to it by its partners and
for which those partners are the only data controllers. In that
situation, the data controller’s obligations described above apply
solely to the partners, but the Group nevertheless warrants
that it will (i) implement technical and organizational measures
intended to protect the personal data communicated to it
against accidental loss, alteration or unauthorized disclosure
or any malicious or illegal access; and (ii) process the data
solely in accordance with the data controller’s instructions and
in accordance with the defined purpose.
Although personal data law has for the most part been
harmonized in the EEA, the transposition of the “personal data”
directive into the national laws of the Member States has led
to regimes that can vary and may be more restrictive than the
regime imposed by the personal data directive.
When data processing is local, it is carried out by the Corporate
Country in question in accordance with local law. Each year, the
executive officers of the Corporate Countries sign compliance
letters in which they (i) expressly attest that, to their knowledge,
their Corporate Countries are in compliance with local personal
data legislation and (ii) list inquiries or requests from competent
authorities with respect to personal data of which they have
become aware during the year and that are being monitored
by the Group’s legal department (see Sections 2.7.2 “Risk
Management” and 5.2.3 “Internal Control”).
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Where data processing affects the Group, the matter is handled
by the Group’s legal department in order to ensure consistency
in the Group’s approach.
Regular training and information on personal data protection
law is provided within the Corporate Countries as well as at
the Group level.
PROCESSING PERFORMED OUTSIDE
OF THE EUROPEAN ECONOMIC AREA
The Group is present in numerous countries outside of the
EEA, where it has occasion to process personal data both on
its own behalf and on behalf of its business customers and
commercial partners.
Although there is no international law harmonizing all of the
principles applicable to the protection of personal data, the
regulatory framework applicable within the EEA serves as a
reference, first, because it is stringent and was a pioneer in
this area of regulation, and, second, because it has influenced
legislation in numerous countries that have used it as a model,
in particular in North Africa, Latin America and Asia.
TRANSFER OF PERSONAL DATA OUTSIDE
OF THE EUROPEAN ECONOMIC AREA
The Group transfers personal data to its franchisees outside of
the EEA solely in connection with the strict execution of rental
agreements concluded between its franchisees and customers.
The franchise agreements to which the Group’s companies are
parties contain a personal data protection provision pursuant to
which 124 the franchisees undertake to comply with the same
obligations as those incumbent upon ECI and Europcar France.
In connection with its collaboration with Advantage OpCo
(“Advantage”) in the United States, ECI agreed to the standard
contractual clauses prepared by the European Commission
in order to be able to transfer personal data. In order to be
authorized to receive data originating from the European Union,
in addition to agreeing to a set of safe-harbor principles for
the protection of personal data negotiated between the U.S.
authorities and the European Commission in 2001, Advantage
also adhered to said standard contractual clauses established
by the European Commission by concluding an international
personal data transfer agreement with ECI integrating said
clauses.
The Group may also transfer data to other countries that do
not ensure a level of protection of personal data equivalent
to that provided by the EEA, in particular in connection with
collaboration agreements involving airline loyalty programs
EUROPCAR
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01
(such as Aeroflot Bonus, Emirates Skywards, and Qatar
Privilege Club) and in connection with agreements with general
sales agents. In that regard, the Group enters into international
data transfer agreements that include the standard contractual
clauses prepared by the European Commission.
1.6.11.3 Environmental regulation
As of December 31, 2015, the Group used approximately 267
fuel storage installations in its Corporate Countries.
Each Corporate Country is responsible for ensuring that its
storage facilities comply with local regulations in that country
in order to ensure that they (i) are properly reported to the
competent authorities of the countries in which they are
located; and (ii) have been replaced or upgraded to comply
with applicable requirements on the detection of leaks and
protection against spills, overflows and corrosion. The Group
has the necessary authorizations and registrations for its
activities. In France, for example, stations with tanks do
not require prior authorization but must be reported to the
competent authorities. Depending on the volumes pumped
and the nature and amount of product storage used, some
are considered “classified installations” for the protection of the
environment.Similarly, each Corporate Country is responsible
for any remediation obligations that it may incur under local
regulations.
ENVIRONMENTAL REGULATION WITHIN THE EEA
The use of tanks to store petroleum products, including
gasoline, diesel and used oil; the use, storage and handling of
various dangerous substances (including fuels and lubricants);
and the production, storage, transport and disposal of waste
(including used oils, mud from washing vehicles and used water)
are regulated by Directives No. 96/82/EC dated December 9,
1996 (the “Seveso II” directive), which was repealed by Directive
2012/18/EU, and Directive 2008/98/EC of the European
Parliament and of the Council dated November 19, 2008 on
waste.
Pursuant to Seveso II, any industrial or agricultural operation
liable to create risks or result in pollution or nuisance, in particular
for the health and safety of local residents, is a classified
installation. Activities that are governed by the legislation on
classified installations are listed following a nomenclature that
classifies them as requiring either authorization, registration
or reporting, depending on the significance of the risks or
problems that may be caused. The legislation on classified
installations gives the State the authority (i) to authorize or
refuse to authorize the operation of an installation; (ii) to regulate
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(in other words, to require compliance with certain technical
provisions); (iii) to monitor; and (iv) to impose penalties.
Regulation of classified installations is expected to change
under Directive 2012/18/EU of the European Parliament and
of the Council dated July 4, 2012 on the control of majoraccident hazards involving dangerous substances, called the
“Seveso III” directive, which entered into effect on August 13,
2012. The purpose of the Seveso III directive is to align the
list of dangerous substances covered by the directive with the
new classification system for dangerous substances contained
in regulation (EC) No. 1272/2008 of the European Parliament
and of the Council dated December 16, 2008 on classification,
labeling and packaging of substances and mixtures, known as
the “CLP regulation”, and to progressively replace the current
system by June 1, 2015. The CLP regulation establishes new
methods for the classification of substances and creates new
categories of hazards that have been incorporated into the
Seveso III directive. Seveso III was transposed into French law
by Law No. 2013-619 dated July 16, 2013, with the articles
entering into force on June 1, 2015, by Decree No. 2014284 dated March 3, 2014 and by Decree No. 2014-285 of
March 3, 2014 modifying the nomenclature of classified
installations for the protection of the environment.
Directive 2008/98/EC dated November 19, 2008 on waste
defines the hierarchy for waste prevention and management
as follows: prevention, reuse, recycling, other recovery (in
particular energy recovery) and disposal. This provision was
transposed into French law by Article L. 541-1 of the French
Environmental Code. It also specifies the obligations of waste
producers and waste holders with regard to the waste hierarchy,
requires producers and holders to classify their waste and to
package and label their hazardous waste, and prohibits mixing
of hazardous waste with other waste or materials outside of a
classified installation for the protection of the environment. In
managing its waste, the Group takes all necessary measures
to ensure that its activities comply with applicable regulations.
Europcar has obtained the ISO 14001 certification (the
environmental management standard of the International
Organization for Standardization) for its environmental
management systems in Germany, the United Kingdom, Italy,
Spain, Portugal, Belgium and France. The certification also
covers rental stations operated directly by the Group.
The Corporate Countries monitor and, if necessary, perform
remediation relating to the disposal of waste and/or substances
originating from installations that they currently rent or hold
or that they have in the past rented or held. The cost of such
remediation as well as costs relating to environmental harm
caused by the activities of a Corporate Country could be
significant. The Group’s estimated probable losses in that
regard are the subject of provisions in its consolidated financial
statements. As of December 31, 2015, the total amount
provisioned to cover the Group’s environmental liabilities was
€275,000, representing the estimated cost to study any onsite environmental problems that may require monitoring and/
or remediation, as well as the estimated costs of carrying out
that remediation. Cost estimates are prepared site by site on
the basis of precedents, and are refined as the environmental
study at the site in question progresses.
In France, the Group maintains an updated table listing the
oil installations and classified installations that it operates in
order to ensure that they are monitored. In that regard, periodic
regulatory inspections of classified installations are performed
every five years by an approved organization (Dekra until 2015
and Bureau Veritas thereafter). In the event of non-compliance,
the Group carries out remediation.
In connection with its activities, the Group is also subject to
European energy efficiency regulations (Directive 2012/27/
EU of the European Parliament and of the Council on energy
efficiency dated October 25, 2012). The directive establishes
a common framework for the promotion of energy efficiency
in the European Union. Pursuant to Article 8 of the directive,
transposed by Article L. 233-1 of the French Energy Code,
all large businesses such as the Group must perform energy
audits covering the entire business every four years (and for the
first time by December 5, 2015 at the latest). Article 13 of the
directive, transposed in Article L. 233-4 of the French Energy
Code, provides for penalties in the event that these audits are
not performed in a timely manner. For the Group, these penalties
could consist of fines of up to 2% of the Group’s revenues
(excluding taxes) in France for the most recently closed fiscal
year. These audits must be performed by external consultants
or by qualified internal auditors. The energy efficiency directive
is in the process of being transposed into French law.
ENVIRONMENTAL REGULATION IN AUSTRALIA
AND NEW ZEALAND
In Australia, the operation of oil tanks, in particular underground
tanks, is regulated at both the state and the federal level.
The regulations consist of a combination of specific rules
and general principles contained in environmental laws.
Environmental regulation is relatively uniform and is tied to the
Australian Standard AS 1940-1993.
The operation of underground oil tanks is a particular focus of
regulation due to the risk of contaminating groundwater and
generating leaks that may be difficult to detect. Generally, the
regulatory framework is intended (i) to implement preventive
measures to reduce the risk presented to human health and
to the environment resulting from the operation of underground
tanks; (ii) to conserve resources and detect leaks quickly in
order to avoid the need for extensive remediation work; (iii) to
remediate sites when the regulated activity has ceased; and
(vi) to ensure that businesses governed by the regulations use
best practices. In order to meet these objectives, obligations
are imposed such as the installation of leak-detection systems,
the performance of groundwater testing and the preparation of
a written, auditable plan for the protection of the environment
by each regulated installation. The reporting and information
system for leaks must also be the subject of a written plan.
The removal of underground oil tanks must be reported to
local authorities and is governed by the Australian Standard
AS 4976-2008.
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Europcar New Zealand is subject to environmental rules in New
Zealand that are similar to those applicable in Australia.
STORAGE TANK COMPLIANCE PROGRAM
Each of the operational subsidiaries in the Corporate Countries
has implemented a storage-tank compliance program intended
to ensure that tanks are properly registered with the competent
authorities of the countries in which such tanks are located and
are either replaced or brought into compliance with applicable
requirements for the detection of leaks, spills and overflows
and protection against corrosion. However, there can be no
assurances that these tank systems will remain at all times free
of undetected leaks or that the use of these tanks will not result
in significant spills. The Corporate Countries regularly work with
third party organizations to verify or certify, where necessary,
the compliance of their classified installations.
Employee training in environmental risk management is
implemented and managed at the level of the Corporate
Countries.
1.6.11.4 Regulation of franchises
The Group has a large network of franchisees and is therefore
required to comply with franchise regulations.
The European Union has not implemented any specific
regulation of businesses operated as franchises.
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ORGANIZATION CHART
Franchising is governed by the laws of the various countries
where the Group operates through franchisees. Certain laws
require franchisers to provide a significant amount of information
to potential franchisees but do not require registration. Other
laws require registration or the provision of information in
connection with the establishment of franchises. In order to
ensure harmonized management of its franchise network, the
large majority of franchise agreements that the Group enters
into internationally are governed by French law. Article L. 330-3
of the French Commercial Code provides that any person
who provides another person with a trade name, trademark
or brand while requiring from that other person a commitment
of exclusivity or quasi-exclusivity in order to carry on business
must provide that other person with information prior to signing
any contract concluded in the common interest of both parties.
This provision applies to franchise agreements, which include
an obligation of exclusivity on the part of the franchisee. The
Group’s franchise agreements that are governed by French law
comply with this obligation.
1.7 ORGANIZATION CHART
Europcar Groupe S.A., the Group’s non-operational holding
company, directly or indirectly holds all of the entities comprising
the Group and as such lays down certain broad policies. For
instance, it determines the Group’s strategy and the resources
necessary for its implementation, as well as its commercial
policy.
Europcar Groupe S.A. assists its subsidiaries through a number
of support functions. On September 28, 2006, it concluded with
Europcar International SASU a services agreement pursuant to
which the Company provides ECI with its know-how regarding
fleet management, sales, marketing, communications, Human
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EUROPCAR
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Resources management, accounting, finance, operations and
legal services. In consideration for these services, the Company
receives monthly payments from Europcar International SASU.
Europcar Groupe S.A. was listed on the regulated market of
Euronext Paris on June 26, 2015 (Compartment A; ISIN code:
FR0012789949; Ticker: EUCAR). Trading in Europcar Group
shares began on June 26, 2015 in the form of “promesses
d’actions” (“Europcar Prom”). Settlement and delivery of the
shares in the global offering took place on June 29, 2015, and
market trading of the share commenced on June 30, 2015.
The offering price was set at €12.25 per share.
ORGANIZATION CHART
1.7.1
Simplified Group organizational chart
01
The following chart presents the legal organization of the Group as well as the percentage that Europcar Groupe S.A. holds directly
or indirectly in the share capital of its subsidiaries as of the date of this Registration Document.
EUROPCAR
GROUPE S.A.
(France)
100%
E-Car Club Ltd
(UK)
E-Car Club
Holding Ltd
(UK)
60.8%
Europcar Lab
UK Ltd
(UK)
Ubeeqo S.A.S.
(UK)
25%
100%
Car2go Europe
GmbH
(Germany)
100%
Europcar
Holding PTY Ltd
(Australia)
Europcar IB.
SA
(Spain)
Europcar Lab
S.A.S.
(France)
99%
99.99%
Europcar
International
S.A.S.U. und Co. OHG
(Germany)
0.01%
Europcar France
S.A.S.
(France)
EUROPCAR
INTERNATIONAL
S.A.S.U.
(France)
74.22%
Europcar S.A.
(Belgium)
100%
100%
Europcar
Internacional
Aluguer de
Automoveis. SA
(Portugal)
100%
Europcar
Autovermietung
GmbH
(Germany)
25.77%
Europcar
Services.
Unipessoal.
Lda
(France)
BVJV Ltd
(Nouvelle-Zélande)
100%
Europcar Italia.
SpA
Italy
100%
Europcar UK.
Ltd
(UK)
PremierFirst
Vehicle Rental
EMEA Holdings Ltd
(UK)
100%
PremierFirst
Vehicle Rental
Holdings Ltd
(UK)
SMJV Ltd
(Nouvelle-Zélande)
100%
EUROPCAR
HOLDING
S.A.S.
(France)
100%
100%
100%
100%
100%
0.01%
1%
Europcar
Australia
PTY Ltd
(Australia)
CLA Holdings
PTY Ltd
(Australia)
100%
75.7%
100%
G1 Holdings
PTY Ltd
(Australia)
100%
100%
100%
Europ-Hall
S.A.S.
(France)
Europcar Group
UK. Ltd
(UK)
100%
CLA Trading
PTY Ltd
(Australia)
Holding company
Operational company
1.7.2
Subsidiaries and equity investments
1.7.2.1 Significant subsidiaries
The Company’s principal direct and indirect subsidiaries are
described below.
a Europcar International SAS (“ECI”) is a French singleshareholder simplified stock company (Société par actions
simplifiée), the registered office of which is located at 2 rue
René Caudron, Bâtiment OP, 78960 Voisins-le-Bretonneux,
France, and registered with the Versailles Trade and
Companies Register under number 542 065 305. The
Company directly holds 100% of the share capital and voting
rights of ECI. ECI’s main role is as an operational holding
company for the Group. It directly or indirectly holds the
Group’s subsidiaries and equity investments. At the date
of this Registration Document, ECI is the holder of some
of the Group’s principal trademarks, including Europcar®.
It negotiates and manages the Group’s international
agreements and partnerships. It manages and operates the
principal information systems.
EUROPCAR
2015
59
01
ORGANIZATION CHART
a Europcar Holding SAS is a French single-shareholder
simplified stock company (Société par actions simplifiée), the
registered office of which is located at 2 rue René Caudron,
Bâtiment OP, 78960 Voisins-le-Bretonneux, France, and
registered with the Versailles Trade and Companies Register
under number 428 713 937. The Company indirectly holds
100% of the share capital and voting rights of Europcar
Holding SAS. Europcar Holding SAS directly or indirectly
holds some of the Group’s subsidiaries and centralizes the
Group’s finances.
a Europcar France SAS is a French single-shareholder
simplified stock company (Société par actions simplifiée), the
registered office of which is located at 2 rue René Caudron,
Parc d’Affaires “Le Val Saint Quentin”, Bâtiment L, 78960
Voisins-le-Bretonneux, France, and registered with the
Versailles Trade and Companies Register under number 303
656 847. The Company indirectly holds 100% of the share
capital and voting rights of Europcar France SAS. Europcar
France SAS’s principal business is short-term vehicle rental
in France.
a Europcar International SASU und Co OHG is a German
partnership, the registered office of which is located at 81
Tangstedter Landstrasse, 22415 Hamburg, Germany, and
registered with the Hamburg Trade Register under number
HRA83202. The Company indirectly holds 100% of the share
capital and voting rights of Europcar International SASU und
Co OHG. Europcar International SASU und Co OHG is the
Group’s holding company in Germany.
a Europcar Autovermietung GmbH is a German limited
liability company, the registered office of which is located at
81 Tangstedter Landstrasse, 22415 Hamburg, Germany, and
registered with the Hamburg Trade Register under number
HRB42081. The Company indirectly holds 100% of the
share capital and voting rights of Europcar Autovermietung
GmbH. Europcar Autovermietung GmbH’s principal business
is short-term vehicle rental in Germany.
a Europcar SA is a Belgian limited liability corporation (Société
anonyme), the registered office of which is located at 281
rue Saint-Denis, 1190 Forest, Belgium, and registered with
the Belgian Trade Register under number 0 413 087 168.
The Company indirectly holds 100% of the share capital
and voting rights of Europcar SA. Europcar SA’s principal
business is short-term, medium-term and long-term vehicle
rental in Belgium.
a Europcar UK Ltd is an English limited liability company,
the registered office of which is located at James House,
55 Welford Road, Leicester LE2 7AR, United Kingdom, and
registered with the Registrar of Companies of England and
Wales under number 875561. The Company indirectly holds
100% of the share capital and voting rights of Europcar UK
Ltd. Europcar UK Ltd is the Group’s holding company in the
United Kingdom.
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EUROPCAR
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a Europcar Group UK Ltd is an English limited liability
company, the registered office of which is located at James
House, 55 Welford Road, Leicester LE2 7AR, United
Kingdom, and registered with the Registrar of Companies of
England and Wales under number 1089053. The Company
indirectly holds 100% of the share capital and voting rights of
Europcar Group UK Ltd. Europcar Group UK Ltd’s principal
business is short-term vehicle rental in the United Kingdom.
a Europcar Italia S.p.A is an Italian single-shareholder stock
company, the registered office of which is located at 32 Corso
Italia, 39100 Bolzane, Italy, and registered with the Bolzane
Trade Register under number 207101. The Company
indirectly holds 100% of the share capital and voting rights
of Europcar Italia S.p.A. Europcar Italia S.p.A’s principal
business is short-term vehicle rental in Italy.
a Europcar Internacional Aluguer de Automoveis SA is a
Portuguese limited liability corporation, the registered office
of which is located at 17 Rua Carlos Alberto Mota Pinto,
Lisbon, 10996095, Portugal and registered with the Lisbon
Trade Register under number 500074135. The Company
indirectly holds 100% of the share capital and voting rights of
Europcar International Aluguer de Automoveis SA. Europcar
Internacional Aluguer de Automoveis SA’s principal business
is short-term vehicle rental in Portugal.
a Europcar IB SA is a Spanish company, the registered
office of which is located at 16-18 Avenida del Partenon,
2a planta, Campos de las Naciones, Madrid, 28042,
Spain, and registered with the Madrid Trade Register under
number 5999. The Company indirectly holds 100% of the
share capital and voting rights of Europcar IB SA. Europcar IB
SA’s principal business is short-term vehicle rental in Spain.
a CLA Trading Pty Ltd is an Australian limited liability
company, the registered office of which is located at 158
Mickleham Road - Tullamarine, Victoria, VIC 3044, Australia,
and registered with the Victoria Trade Register under number
ACN 282 220 399. The Company indirectly holds 100% of
the share capital and voting rights of CLA Trading Pty Ltd.
CLA Trading Pty Ltd’s principal business is short-term vehicle
rental in Australia.
a BVJV Ltd is a New Zealand limited liability company
whose registered office is located at 848 Colombo street,
Christchurch, New Zealand and is registered with the
commercial registry under number AC 117 1885. The
Company indirectly holds 100% of the capital and voting
rights of BVJV Ltd. The main business of BVJV Ltd is short
term car rental in New Zealand.
For a description of the Group’s other consolidated subsidiaries,
see Note 34 “Group Entities” to the 2015 financial statements
included in Section 3.4 “Consolidated financial statements and
Statutory Auditors’ report”.
ORGANIZATION CHART
1.7.2.2 Acquisitions and disposals
of subsidiaries in 2015
In July 2015, the Group acquired, via its UK subsidiary Europcar
Lab UK, a majority stake of 60.8% in E-Car Club, the United
Kingdom’s first electric pay-per-use car-sharing company.
1.7.2.3 Ownership
As of the date of this Registration Document, the Group
holds 25% of the share capital and voting rights of Car2go
Europe (GmbH), consolidated by the equity method in
the Group’s consolidated financial statements included in
Section 3.4 “Consolidated financial statements and Statutory
Auditors’ report”.
1.7.2.4 EC Finance Plc
EC Finance Plc (“ECF”) is a special-purpose, autonomous
financing vehicle formed in connection with the issuance of
the EC Finance Notes, which are used to finance part of the
Group’s fleet. All of EC Finance Plc’s common shares are
held by TMF Trustee Ltd, an English entity, in its capacity as
trustee for a charitable trust established under English law.
EC Finance Plc has no material operations. The Company is
deemed to indirectly control EC Finance Plc, which is included
in the Group’s scope of consolidation. For more information on
the EC Finance Notes, see Section 3.2.3 “Description of the
financing as of December 31, 2015”.
1.7.2.5 Securitifleet Entities
Securitifleet S.A.S.U. and Securitifleet S.p.A are, respectively,
100% and 94% held by Securitifleet Holding SA, which in turn
is controlled by State Street Administration Services Limited,
a special purpose, autonomous vehicle governed by Irish law:
a Securitifleet SASU is a single-shareholder simplified stock
company (Société par actions simplifiée), the registered office
of which is located at 57 avenue de Bretagne, 76100 Rouen,
France, and registered with the Rouen Trade and Companies
Register under number 443 071 816. Securitifleet SASU is a
special purpose, autonomous company set up in connection
with the Group’s securitization structure and has as its sole
purpose the acquisition and ownership of vehicles to be
leased to Europcar France S.A.S.; and
01
a Securitifleet S.p.A is an Italian stock company, the
registered office of which is located at 32 Corso Italia,
39100 Bolzane, Italy, and registered with the Bolzane Trade
Register under number 205586. Securitifleet S.p.A is a
special purpose, autonomous company set up in connection
with the Group’s securitization structure and has as its sole
leased to Europcar Italia S.p.A.
Securitifleet GmbH and Securitifleet S. L are, respectively, 90%
and 95% held by Securitifleet Holding Bis SASU, itself controlled
by Structured Finance Management Corporate Services Ltd,
a special purpose, autonomous vehicle governed by Irish law.
a Securitifleet GmbH is a German limited liability company,
the registered office of which is located at 81 Tangstedter
Landstrasse, 22415 Hamburg, Germany, and registered with
the Hamburg Trade Register under number HRB 91341.
Securitifleet GmbH is a special purpose, autonomous
company set up in connection with the Group’s securitization
structure and has as its sole purpose the acquisition
and ownership of vehicles to be leased to Europcar
Autovermietung GmbH;
a Securitifleet S., L is a Spanish limited liability company,
the registered office of which is located at C/Trespaderne,
19 Madrid, Spain, registered with the Madrid Trade Register,
Sheet M-310,150, Book 17,955, page 92, and holding Tax
Identification Code B-83382549. Securitifleet S. L is a special
purpose, autonomous company set up in connection with
the Group’s securitization structure and having as its sole
leased to Europcar IB SA.
The above-mentioned Securitifleet entities are included in the
Group’s scope of consolidation.
EUROPCAR
2015
61
01
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
The following organizational chart sets forth the legal organization of the Securitifleet Companies at the date of this Registration
Document. For a presentation of the links between the Europcar operating entities and the Securitifleet companies, please see the
graphic shown in Section 3.2.3 “Description of the financing as of December 31, 2015”.
Structured Finance
Management Corporate
Services (Ireland) Ltd
Sanne Capital
Market Ireland Ltd
100%
Europcar Groupe S.A.
(France)
91.70%
Europcar
Autovermietung GmbH
(Germany)
Securitifleet
Holding Bis S.A.S.U
(France)
100%
8.26%
Securitifleet
Holding S.A.
(France)
Europcar
International S.A.S.U.
(France)
5%
90%
Securitifleet GmbH
(Germany)
95%
Securitifleet S.L.
(Spain)
5%
100%
5%
94%
Securitifleet
S.A.S.U.
(France)
100%
SFL S.A.S.U.
(France)
Securitifleet S.p.A.
(Italy)
6%
Europcar Italia S.p.A.
(Italy)
Ad hoc entities
Securitifleet holdings
Securitifleet operational companies
1.8 RESEARCH AND DEVELOPMENT, PATENTS
AND LICENSES
1.8.1
Research and development
The Group does not conduct any research and development
activities. However, it is constantly searching for innovative
solutions. In 2014, it created the “Europcar Lab,” an idea
incubator to support the Group’s strategic projects.
62
EUROPCAR
2015
Please see Section 1.6.2 “Europcar Lab / Mobility solutions”
for a description of Europcar Lab.
1.8.2
Intellectual property, licenses, usage rights, and other intangible assets
The Group holds most of the material intellectual property rights
used in connection with its business, which enables it in the
vast majority of cases to provide services to its customers
without dependence on third parties.
(ii) rights relating to the “GreenWay®” technology, the Group’s
complete commercial software solution, principally in the
areas of fleet management, e-commerce, reservations and
global distribution, as well as rental activities.
(iv) Ostergaard Biller A/S in Denmark, the Faroe Islands and
Greenland) and (v) InterRent AS in Norway, and where the
services provided so require, ECI grants its partners and
franchisees a license to certain of its intellectual property rights
(in particular to its trademarks and Greenway technology)
in a given territory. ECI is also party to a cross-licensing
agreement with Advantage OpCo (“Advantage”) pursuant to
which (i) Advantage grants ECI an exclusive license to certain
“Advantage” trademarks in the countries where the Group is
present or has a franchise, with the exception of the United
States (although the license does cover Puerto Rico) and (ii) ECI
grants Advantage an exclusive license to certain “Europcar,”
“Privilège” and “Moving your way” trademarks in the United
States (but not covering Puerto Rico). The licenses are nonexclusive and non-transferable for a duration equal to the term
of the joint venture or franchise agreements in connection with
which they are granted. These licenses are not the subject of
specific fees, but instead are taken into account in the overall
negotiation of the partnership or franchise agreements to which
they apply.
In connection with several partnerships and franchise
agreements outside of France (in particular with (i) Discount
Car & Truck Rentals Ltd in Canada, (ii) AMAG Services AG
in Switzerland and Lichtenstein, (iii) ARAC GmbH in Austria,
For details of the valuation of the Group’s brands, see
Note 14 “Intangible assets” to the 2015 financial statements”
included in Section 3.4 “Consolidated financial statements and
the Statutory Auditors’ report”.
Most of these rights are held by ECI and ECG, with the
remainder (for distinctive marks used in a particular country)
held by local Group entities.
The Group’s intellectual property rights primarily comprise:
(i) rights to distinctive marks, such as trademarks or domain
names, in particular those including the names “Europcar,”
“InterRent” and “Keddy”. These intellectual property rights
are registered or in the process of being registered in most
of the countries where the Group does business, in order
to protect them appropriately for the related activities; and
01
1.9 PROPERTY, PLANT AND EQUIPMENT
As of December 31, 2015, the Group held property, plant and
equipment with a gross value of €282.1 million. The Group
also leases some of its asset write-offs, in particular certain
buildings and technical equipment. For 2015, rental charges
totaled €67.1 million.
Tangible fixed assets held or leased by the Group consist mainly
of:
a administrative buildings and offices, for the Group’s
administrative and commercial needs, in all of the countries
where the Group does business. The Company’s registered
office is in Voisins le Bretonneux, Saint-Quentin-en-Yvelines,
France, and occupies Bâtiment OP of the “Parc d’Affaires le
Val Saint-Quentin,” which includes 5,900 square meters of
rental office space, as well as parking spaces. The Company
rents this building pursuant to a commercial lease for office
space entered into on May 4, 2011, for a fixed term of nine
years and three months, beginning on October 1, 2012. The
initial nine year three month duration is fixed and irrevocable;
the Company waived its right to terminate the lease for the
first three three-year term there under. Europcar also rents
registered offices, sales offices and service facilities in each
Corporate Country. In addition, the Group owns buildings in
some Corporate Countries, in particular in Germany, Spain
and the United Kingdom, in which the registered offices for
those Corporate Countries are located;
a rental stations, primarily located in or near airports and train
stations, as well as in business and residential neighborhoods.
Europcar rents or operates the majority of the 1,034 stations
that the Group directly manages, pursuant to concessions
awarded by governmental authorities and leases with private
entities. The leases and concession agreements generally
require the payment of rent or minimum concession fees,
EUROPCAR
2015
63
01
and in certain countries also require the relevant Europcar
entity to pay or reimburse operating fees, additional rent,
or concession fees that are greater than the guaranteed
minimum, calculated based on a percentage of revenues or
sales at the locations in question;
a technical infrastructure for servers and data centers; and
64
EUROPCAR
2015
a fueling equipment and car-washing facilities at all of the
Group’s stations.
This tangible fixed property is used as security for the Group’s
corporate financing, as explained in more detail in Note 15 to the
2015 financial statements included in Section 3.4 “Consolidated
financial statements and Statutory Auditors’ report”.
02
RISK FACTORS
2.1
RISKS RELATING TO THE GROUP’S
INDUSTRY AND MARKETS
66
2.2
RISKS RELATED TO THE BUSINESS
69
2.3
RISKS RELATING
TO THE GROUP’S FINANCIAL
STRUCTURE AND PROFILE
79
REGULATORY AND LEGAL RISKS
85
2.4
2.5
REGULATORY, LEGAL
AND ARBITRATION PROCEEDINGS
92
2.6
FINANCIAL RISKS
94
2.7
INSURANCE AND RISK MANAGEMENT 94
EUROPCAR
2015
65
02
RISK FACTORS
RISKS RELATING TO THE GROUP’S INDUSTRY AND MARKETS
Investors should consider all of the information set forth in this Registration Document, including the following risk factors, before
deciding whether to invest in the Company’s shares. Such risks are, as of the date of this Registration Document, the risks that the
Company believes, were they to occur, could have a material adverse effect on the Group, its business, financial results, financial
condition and prospects. The Group believes that, as of the date of filing this Registration Document, there are no significant risks
other than those presented in this Chapter. Additional risks that are not known at the date hereof, or that the Group currently
considers immaterial based on the information available to it, may have a material adverse effect on the Group, its results of
operations, financial condition or prospects.
2.1 RISKS RELATING TO THE GROUP’S INDUSTRY
AND MARKETS
2.1.1
Risks related to the high level of competition in the vehicle rental industry
The vehicle rental industry is a competitive market. The Group
competes at the international level primarily with a number of
global vehicle rental companies such as Hertz, Avis, Enterprise
and Sixt. The Group also competes in specific regions or
countries with a number of smaller regional companies (such
as GoldCar in Europe). Enterprise, which regained control
of its National and Alamo brands in Europe, the Middle
East and Africa in December 2014, could become a more
significant competitor in several of the Group’s main markets.
In particular regions, some of the Group’s competitors and
potential competitors may have greater market share, more
technical staff, larger customer bases, lower cost bases, more
established distribution channels or greater brand recognition
and may adapt more rapidly than the Group does to respond to
expectations and changes in demand in the regions in which they
operate. On a worldwide basis, some of these competitors and
potential competitors may have greater financial or marketing
resources. The market shares of the leading participants of
the vehicle rental market in the Group’s European Corporate
Countries were approximately 19% for Europcar, 13% for Avis,
12% for Hertz, 12% for Sixt 11% for Enterprise in 2014 (source:
KPMG Study, on the basis of the mid-point of estimated market
shares, based on company revenues excluding franchisees,
refer to Section 1.3 “Presentation of the Group’s market and
competitive environment”).
Price is one of the industry’s main competitive factors. Pricing is
significantly affected by the supply of vehicles available for rent
relative to demand, and oversupply of rental vehicles relative
66
EUROPCAR
2015
to demand can result in intense pricing pressure as vehicle
rental companies seek to maintain high fleet utilization rates
by rapidly adapting their fleet capacity to demand. Vehicle
rental companies adjust fleet size based on their demand and
supply forecasts as well as competitive positioning strategies. A
number of variables complicate the accuracy of such forecasts,
including the variability of other vehicle rental companies’ fleet
sizes and the relative dispersion of the European market, which
may lead to mismatches between supply and demand.
The Group’s competitors may also seek to compete aggressively
on the basis of price in order to protect or gain market share.
The Group risks losing rental volume to the extent that its
competitors reduce their prices and the Group does not match
or provide competitive pricing or if price increases the Group
seeks to implement make it less competitive. To the extent
that the Group does not match or remain within a competitive
margin of its competitors’ prices, it could lose rental volume. If
competitive pressures require the Group to match competitors’
prices but the Group is not able to reduce operating costs
correspondingly, then the Group’s results of operations and
financial condition could be materially and adversely affected.
Furthermore, the emergence of new mobility solutions creates
opportunities but also carries risks. The arrival of new potential
competitors such as companies offering car-sharing and carpooling services and their growing presence in the mobility
market may also affect the Group’s competitive position.
RISK FACTORS
2.1.2
Risks related to structural changes in the vehicle rental market
The vehicle rental market has been undergoing structural
changes that have affected its competitive dynamics in recent
years.
The increasing use of the Internet for vehicle rental reservations
is a significant structural change that has increased and will
likely continue to increase competitive transparency and thus
potential price pressure in the vehicle rental industry. The
percentage of vehicle rental reservations made through the
Internet (including through rental brokers) has significantly
increased in recent years, from 27% of the Group’s reservations
in 2008 to 54% in 2015. The Internet’s popularity is due,
among other things, to its ease of use (including for last
minute bookings) and the fact that it enables price and service
comparisons. In addition, the Group seeks to maintain good
relationships with brokers, based on a multi-brand and multiproduct strategy. In particular, the Group benefits from support
during low seasons and certain prepayments and offers brokers
in this respect guaranteed availability during high seasons. The
Internet also enables cost-conscious customers, in particular
business travelers who generally make reservations through
their purchasing departments, to obtain the lowest rates
2.1.3
and best and clearest terms from vehicle rental companies
for any given trip. This increase in transparency is ongoing
and may continue to increase the intensity of competition as
well as the homogenization of offers such that price could
increasingly become the primary, or even sole, differentiating
factor. Trends in regulation with respect to consumer rights
may also push the market towards a homogenization of offers.
See “Consumer Protection Regulations in the EEA” under
Section 1.6.11.1 “Consumer Protection Regulations” of this
Registration Document. These trends could have a material
adverse effect on the Group’s business, results of operations,
financial condition and prospects.
02
In parallel with increased pricing transparency and the recent
economic downturn, individuals and businesses have been
increasingly focused on low-cost travel and many companies
have implemented measures to reduce business travel costs.
As a result, the vehicle rental market has also witnessed
increased demand for smaller economy vehicles, which has
required providers to adjust their fleet. Failure to adapt to these
market changes, together with increased competition, could
have a material adverse effect on the Group’s profitability.
Risks related to the weakening of macro-economic conditions or in travel
demand in Europe or the other areas in which the Group operates
Europcar benefits from an international network and operates
primarily in Europe. Of Europcar’s total revenue (before
intra-group eliminations and holdings) for the year ended
December 31, 2015, 92.7% and 7.3% was generated in
Europe and the Rest of the World, respectively. Demand
for vehicle rentals in a given region, and corporate rentals in
particular, is affected by trends in the gross domestic product
(GDP). Declines in or stagnation of GDP negatively impacts the
level of vehicle rental demand. For example, the vehicle rental
industry in general and the Group in particular were negatively
affected by the global financial and ensuing economic crisis
beginning in 2008/2009 and again in Europe in 2011/2012 by
the sovereign debt crisis. Such crises resulted in a tightening
of the credit markets, a reduction in business and leisure travel,
reduced consumer spending and an increase in volatility of
fuel prices, all of which negatively affected the vehicle rental
industry, particularly corporate rentals. Although macroeconomic conditions improved globally and in the Group’s key
markets in 2014 and 2015, current conditions in and outlook
for the Euro-zone economy remain uncertain, with a persistent
risk of stagnation or deflation, as well as the possibility of
the reemergence of a sovereign debt crisis. In particular, in
January 2015, the International Monetary Fund (IMF) released
its forecasts of growth in the Euro-zone of 1.2% in 2015 and
1.4% in 2016. A deflationary environment in Europe would limit
the Group’s growth prospects and any deterioration in the Eurozone economy could adversely affect the Group’s business,
results of operations, financial condition and prospects.
Vehicle rental demand, particularly in the leisure segment, is
also affected by trends in air travel, which themselves are in
turn affected both by macroeconomic conditions as well as by
specific factors such as flight ticket prices, fuel price trends,
work stoppages, terrorist incidents (or a perceived heightened
risk of incidents), natural disasters, epidemics, military conflicts
or government responses to any of these events. The Group
believes that the impact of terrorist acts, such as the Paris
attacks in November 2015, on its financial performance in
fiscal year 2015 was very limited. Nevertheless, if repeated
attacks were to occur in Europe, it could have a significant
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02
RISK FACTORS
adverse effect on the Group’s activities, results of operations
and financial position. Rentals at its airport rental stations were
responsible for 42% of the Group’s total rental revenue for the
year ended December 31, 2015. Europcar has significant
alliances and partnership arrangements with a number of major
airlines that generate a significant source of demand for its
services. Accordingly, a substantial portion of Group revenue
2.1.4
Vehicle rental demand is also highly sensitive to weather
conditions. The tendency towards last minute reservations
(itself resulting in part from the increasing weight of Internetbased distribution channels) has increased this sensitivity. Bad
weather, particularly in the summer months, could reduce
demand during this critical period of the year. A sharp reduction
in demand due to poor weather may not be anticipated by the
Group’s fleet management planning, and could have a material
adverse effect on the Group’s revenues and profitability.
The Group purchases vehicles for its fleet based on anticipated
fluctuations in demand, in particular seasonal fluctuations. The
necessary variation in fleet levels also results in higher levels of
debt in the summer months compared to other times of year,
as additional capital is required to fund fleet acquisitions. The
Group manages its cost base and investment decisions in line
with forecast activity levels and prior experience. Any difference
between forecasted and actual activity, in particular during peak
periods, could have a material adverse effect on pricing both
during the peak periods and in the “shoulder” periods before
and after them and therefore on the Group’s business, results
of operations and financial condition.
Risks related to the rapid development of the vehicle rental industry,
in particular due to the advent of new mobility solutions
The vehicle rental industry has been evolving and is facing
further and potentially substantial structural changes due
to changing customer preferences and usages combined
with and driven by technological change. The evolution
of the mobility solutions market poses risks in addition to
opportunities, (see Sections 1.3 “Presentation of the Group’s
Market and Competitive Environment” and 1.5 “Strategy” of this
68
Uncertainty and volatility with respect to economic conditions
and air travel frequency levels also complicate demand trend
projections and hence fleet management.
Risks related to the highly seasonal nature and sensitivity
to weather conditions of the vehicle rental business
The third quarter of the year has historically been the Group’s
strongest quarters due to higher levels of leisure travel in
the summer months. As an example, for the year ended
December 31, 2015, the third quarter accounted for 32.3%
of the Group’s revenue for the year and 61.5% of its Adjusted
Corporate EBITDA. Any occurrence that disrupts rental activity
during the second or third quarters could have a significant
material adverse effect on the Group’s revenues and profitability,
given the existence of substantial fixed costs.
2.1.5
is strongly correlated with the level of air traffic. Any event that
disrupts or reduces business or leisure air travel could therefore
have a material adverse effect on the Group’s business, results
of operations, financial condition and prospects.
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Registration Document), to the extent that the Group could fail
to adapt quickly enough to meet customer expectations and
seize opportunities in this evolving market. In addition, there is
a risk of cannibalization of products or services proposed by
new entrants in the vehicle rental market or by other parties in
related markets, which may gain more market acceptance and
could result in the decline of vehicle rental use.
RISK FACTORS
In order to keep pace, the Group must concentrate its resources
on the products, services and technologies that it believes,
according to its estimates, will provide the most value or will
achieve substantial customer acceptance and in which it has or
can acquire or develop the appropriate technical expertise for
their operation (see Section “Europcar Lab / Mobility Solutions”
of this Registration Document). Due to the evolving nature of
the technologies and customer usages, however, the Group’s
efforts and investments may not turn out to be appropriately
focused on products and services that could gain market
acceptance.
As part of the Group’s strategy to expand into new mobility
solutions, it has entered into and may continue to enter
into long-term agreements and joint ventures with strategic
partners, such as the Car2go Europe joint venture with Daimler,
and make acquisitions, such as its recent acquisition of Ubeeqo
and E-Car Club. However, joint ventures and acquisitions are
themselves subject to risks inherent to this type of structure or
transaction (see Section 2.2.11 “Risks related to the deployment
of the Group’s strategy” of this Registration Document).
The Group’s prospects depend in part on its ability to maintain
a product and service portfolio that is attractive to its existing
and prospective customers and to continue to introduce
new products and services successfully on a timely basis.
The Group’s failure to keep pace with change in the vehicle
rental business or to invest in products or technologies that
will become commercially accepted with a view to ensuring
the successful marketing of new services within the desired
timeframe, may lead to a loss of market share and could
adversely affect the Group’s business, results of operations,
financial condition and prospects.
02
2.2 RISKS RELATED TO THE BUSINESS
2.2.1
Risks related to the Group’s ability to develop and maintain favorable
brand recognition
The Group invests in its brands and incurs substantial expense
to promote its brands, including through partnerships and
advertising campaigns. Factors affecting brand recognition are
often outside the Group’s control, however, and such efforts
may not be successful (for examples, see Sections 2.4.3
“Risks related to the protection of intellectual property rights”
and 2.5 “Regulatory, legal and arbitration proceedings” of this
Registration Document). The Group is also in the process of
deploying its InterRent® brand, and no assurances can be
given that the InterRent brand will become as well-established
as the Europcar brand in its targeted segment. The Group is
also rolling out the Keddy brand, launched in March 2015 to
market a targeted broker product specifically aimed at tour
operators, travel agencies and on-line brokers. More generally,
unfavorable publicity concerning the Group’s brands or the
industry, and in particular, as the Group’s leisure rental activity
is increasingly reliant on online sales, any negative publicity on
the Internet or social media, could damage the Group’s brands
and accordingly have a material adverse effect on its business,
results of operations, financial condition and prospects.
The risk of reputational damage to the Group’s brand is magnified
by the existence of its extensive network of franchisees, agents
and independent partners (see Section 1.6.5 “Europcar’s
Network” of this Registration Document). While the Group has
implemented Brand Guidelines that specify the conditions under
which its partners, franchisees and agents may reproduce and/
or represent its brands and it ensures, in particular via Internet
monitoring, that franchisees, agents and partners adhere to its
standards and thereby uphold and promote its brands that they
use under license, any failure by them to do so could adversely
affect the brands’ reputation. This could in turn make it more
difficult for the Group to attract new franchisees, agents or
partners and thus compromise its growth strategy.
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2.2.2
Risks related to the potential inability to continue operations
on acceptable terms at major airports and train stations
For the year ended December 31, 2015, revenue generated
by rentals from airport stations represented 42% of total
Group rental revenue in Corporate Countries. The number
of rental stations in airports as a percentage of the Group’s
total number of stations remained stable at between 16%
over 2015. The Group operates airport and train station rental
locations pursuant to concessionary arrangements that have
terms typically of three to five years. While historically such
arrangements have been renewed, the commercial terms may
2.2.3
Risks related to fleet supply and financing
The Group’s fleet is composed of vehicles purchased from a
number of automobile manufacturers. During the year ended
December 31, 2015, the Group acquired approximately 30% of
its fleet from Volkswagen, 15% from General Motors, 13% from
Fiat, 11% from Renault, 9% from Peugeot Citroen, 7% from
Daimler, 6% from Hyundai, 3% from Ford and the remaining 7%
from other manufacturers, with the fleet mix by manufacturer
varying by country. Any of these automobile manufacturers may
decide to significantly curtail production or sales to the vehicle
rental industry as a result of a number of factors. Generally
speaking, car manufacturers limit the number of vehicles sold
to short-term rental companies to a percentage of their total
sales of new vehicles. The percentage varies between 8 and
15% based on the manufacturer. In addition, depending on
market conditions, sales of vehicles to rental companies may
be less profitable for automobile manufacturers than other
sales channels or may not suit their marketing and branding
strategy at a given time. Indeed, sales to the vehicle rental
industry have historically been relatively less profitable for
automobile manufacturers due to sales incentive and other
discount programs that allow fleet purchasers such as Europcar
to decrease the average holding costs for their vehicles.
Fleet supply and holding costs could increase if automobile
manufacturers implement strategies to limit sales to the vehicle
70
be adjusted and there can be no assurance that they will be
renewed on similar terms (in particular due to an upward trend
in commissions paid to airports reflecting inflation to be passed
on to the end consumer, where applicable). A potential inability
to continue operations on acceptable terms at major airports
and train stations currently within the Europcar network could
have a material adverse effect on the Group’s business, results
of operations and financial condition.
EUROPCAR
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rental industry or improve the profitability of such sales (e.g., by
offering lower discounts or repurchase prices), and there can
be no assurance that the Group will be able to pass on such
increased costs to its rental customers. If the Group is unable
to obtain favorable pricing and other terms when it acquires
vehicles and is unable to pass on increased costs to customers,
the Group’s results of operation and financial condition could
be materially adversely affected. For further information on
the Group’s expenses related to vehicle purchases and costs
related to purchasing and selling vehicles, see Sections 3.3.1
“Historical Investments” and the information under “Cost
Structure and Operational Efficiency” in Section 3.1.1.2 “Key
factors affecting the Group’s results” of this Registration
Document.
The terms of the Group’s fleet financing vary widely, depending
on the supplier and the market in which the vehicles are to
be used. While the Group has benefited from credit terms
that are in line with its activity, there can be no assurance
that the Group’s principal fleet suppliers will continue to offer
credit, through their financing divisions, on the same terms
in the future. Adverse changes to credit terms have in some
instances resulted and may in the future result in an increase
in the Group’s debt funding requirement, which the Group may
not be able to satisfy by other means on more attractive terms.
RISK FACTORS
2.2.4
Risks related to the financial condition of automobile manufacturers
and dealers upon which it relies to supply its fleet
The Group relies to a significant extent on contractual
agreements with a limited number of automobile manufacturers
and dealers; Volkswagen, Fiat, General Motors and Renault
represented approximately 69% of the purchases made by the
Group to supply its fleet in 2015.
The automobile industry has, in the past, been significantly
impacted by the economic recession, which seriously
challenged U.S. automakers in particular, and ultimately led to
filings for Chapter 11 bankruptcy protection by Chrysler and
General Motors in 2009. Although such automakers have since
seen improvements in their financial conditions and benefited
from funds received as part of the U.S. federal government
automobile industry bail out, they and other automakers outside
the U.S. could be vulnerable to uncertain market conditions and
risks associated with renewed economic downturns in the U.S.
and Europe. Furthermore, changes in the automotive sector
could accelerate the concentration of automakers, ultimately
resulting in the disappearance of certain brands or models.
Any economic or financial distress affecting manufacturers,
dealers and their suppliers of vehicle components, could also
cause them to raise the prices the Group pays for vehicles or to
reduce their supply. As a result, there is no guarantee that the
Group will continue to be able to obtain vehicles at competitive
terms and conditions or in the form of the particular vehicle
sales arrangements on which the Group currently relies. In
particular, the Group relies on buy-back arrangements (whereby
the Group’s vehicles are repurchased by the manufacturer or
dealer on pre-established terms after a certain pre-determined
period) to limit potential residual risk with respect to vehicles
purchased under the programs, to enable financing on the
basis of the agreed repurchase price and to provide flexibility for
fleet management. If vehicle acquisition costs increase and the
Group is unable to pass on all or part of increased costs to its
customers, or if the Group is unable to supply itself with vehicles
by benefiting from buy-back arrangements at competitive terms
and conditions, the Group’s results of operations and financial
condition may be materially and adversely affected.
02
Furthermore, although the aforementioned U.S. automobile
manufacturers that benefitted from Chapter 11 bankruptcy
protection under U.S. law in 2009 have always been able
to meet their buy-back arrangements with the Group, the
Group could incur material expenses following a manufacturer
or dealer default under its agreements with the Group as a
result of bankruptcy proceedings or otherwise, or in the event
a manufacturer or dealer is unwilling to repurchase vehicles
whose residual value has decreased. In these circumstances,
the Group may be unable to dispose of its vehicles at the prices
specified under the repurchase program or calculated based
on the guaranteed depreciation, or it may be unable to receive
contractual premiums. Failure by a manufacturer or dealer
to fulfill its aforementioned obligations could leave the Group
with a substantial and uncertain unpaid claim particularly with
respect to vehicles that have been (i) resold for an amount less
than the amount contractually guaranteed and therefore subject
to a payment obligation from the manufacturer or dealer for the
loss incurred by the Group or (ii) returned to the manufacturer
or dealer but for which the Group may risk not receiving any
payment or only partial payment. Such failure to perform could
lead the Group to incur a substantial loss.
In the case of insolvency or default of a vehicle manufacturer or
dealer, it may not be possible to recover all amounts owed to
the Group under buy-back agreements in certain jurisdictions.
If an automobile manufacturer or dealer were to become
insolvent, applicable bankruptcy laws may prohibit the Group
from asserting its rights with respect to the buy-back agreement
under certain circumstances. Where the payment claims are
secured by a retention of title provision, the enforcement of the
security may be significantly delayed due to the time necessary
to regain control of vehicles. Moreover, in some jurisdictions,
the Group may still be subject to certain residual liabilities as
a matter of law. The default probability of a manufacturer is
monitored on a monthly basis through ratings by Standard &
Poor’s and Moody’s. However, a downgrade of one or more
manufacturers would have a material adverse effect on the
eligibility of vehicles for financing and on the advance rate of
the financing, and therefore on the Group’s liquidity.
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2.2.5
Risks related to the vehicles not covered by repurchase programs
Approximately 92% of Europcar’s fleet purchased in 2015
was covered by Buy-Back Commitments. Residual values of
the remaining vehicles not covered by repurchase programs,
referred to as “risk vehicles”, are exposed to adverse pricing
conditions and uncertainties in the used vehicle market. The
Group’s ability to sell its vehicles in the used vehicle market
place could become severely limited as a result of a number
of factors, including the macro-economic environment,
model changes, legislative requirements (e.g., changes to
environmental legislation or vehicle taxes), and oversupply by
manufacturers of new vehicles. A decline in used vehicle prices
or a lack of liquidity in the used vehicle market may severely
hinder the Group’s ability to resell “risk vehicles” without a
loss on investment and could adversely affect the Group’s
profitability.
Although the Group has entered into several multi-year
agreements for the buy-back of vehicles, the current relatively
low percentage of “risk vehicles” in the Group’s rental fleet could
increase as a result of market conditions or if manufacturers
were reluctant to agree to sales with buy-back agreements or
if they offered less attractive buy-back terms. Market trends in
certain jurisdictions tend towards greater demand for low-cost
vehicles, which may result in an increase in the percentage of
“risk vehicles” in the Group’s fleet, since they are less costly to
purchase than vehicles purchased in the context of repurchase
programs. Automobile manufacturers may cease granting
repurchase programs or modify the terms of repurchase
programs from one year to another, rendering the purchase of
vehicles in the context of such programs less attractive. The
Group’s vehicles covered by repurchase programs may also
fail to meet repurchase conditions, in particular condition and
mileage requirements for returned vehicles. Vehicles that fail
to meet repurchase conditions become “risk vehicles”. For the
year ended December 31, 2015, the percentage of vehicles
covered by buy-back programs converted into “risk vehicles”
was 2.08%.
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The Group relies on repurchase programs for a substantial
portion of its fleet financing. If the Group were to fail to purchase
a significant part of its fleet through repurchase agreements at
acceptable conditions, vehicle related debt financing would
become more difficult to obtain on acceptable terms. See
Section 2.3.3 “Risks related to the Group’s potential inability
to continue financing vehicle acquisitions for its fleet via assetbacked financing, or to any unfavorable changes in assetbacked financing terms” of this Registration Document.
Fleet holding costs represent a significant portion of the Group’s
operating expenses and repurchase programs enable the
Group to determine a substantial portion of its fleet holding
cost expense in advance. Any increase in the proportion of
“risk vehicles” in the Group’s fleet would decrease the Group’s
ability to determine its fleet holding cost expense in advance.
In addition, any reduction in the residual values of “risk
vehicles” could cause the Group to sustain a loss during the
ultimate resale of such vehicles and would affect its liquidity by
decreasing the value of the asset base upon which financing is
based. Any increase in the share of “risk vehicles” in the Group’s
fleet would increase its exposure to fluctuations in the residual
value of used vehicles.
Repurchase programs provide increased flexibility to adjust the
size of the Group’s fleet to respond to seasonal fluctuations in
demand or in the event of an economic downturn, because
such programs typically allow vehicles, under certain conditions,
to be returned sooner than originally expected without risk of
loss. This flexibility has enabled the Group to optimize its fleet
holding costs and increase its profitability. There can be no
assurance that the Group will be able to maintain the current
percentage of buy-back vehicles in its rental fleet or that the
same level of fleet-management flexibility will be maintained in
the future, which could have a material adverse effect on the
Group’s results of operations and financial condition.
RISK FACTORS
2.2.6
Risk related to manufacturer recalls
Vehicles in the Group’s fleet may be subject to recalls by their
manufacturers. Under certain circumstances, recalls may cause
the Group to attempt to retrieve rented vehicles from customers
or to decline to rent available vehicles until the steps described
in the recalls can be applied. If a large number of vehicles
are the subject of simultaneous recalls, or if the necessary
replacement parts are not in adequate supply, the Group may
struggle to serve its customers for a period of several months.
2.2.7
02
Risks related to the contractual relationships with certain key partners
and distribution channels
In the leisure segment, the Group relies on a number of key
targeted partnerships and distribution channels, which generate
significant rental revenue and accounted for 37% of its vehicle
rental reservations in 2015 (for more information on the Group’s
partnerships in the leisure segment, see the information under
“Partnerships to Reach “Leisure” “Customers” in Section 1.6.3
“Customers” (“Business”/“Leisure”) of this Registration
Document), including, in particular:
a in the airline sector, partnerships with airline companies
such as easyJet, Aeroflot, Emirates, Qatar Airways and Air
Caraïbes;
a in the hotel sector, partnerships with large groups such as
Accor and Hilton;
a in the railway sector, partnerships with Thalys;
a marketing partners such as credit card companies, credit
institutions or membership organizations such as American
Express, HSBC and Citibank; and
2.2.8
The Group could also potentially face liability claims if recalls
concern vehicles that it has already re-sold. Depending on
their number and severity, recalls could materially adversely
affect the Group’s revenue, reduce the residual value of the
vehicles involved, create customer service problems and harm
the Group’s general reputation and the consumer’s view of the
Group’s brand.
a distribution channels such as traditional and online travel
agencies or global distribution systems that connect travel
agents, travel service providers and corporations to the
Group’s reservation system.
In the business segment, the Group also has numerous
exclusive or non-exclusive contracts with large corporations,
which cumulatively generate a substantial portion of the Group’s
consolidated revenue.
The loss of certain of these partnerships, distribution channels
or contracts, unfavorable changes in their terms, including
commission schedules or financial arrangements, the potential
termination of certain of these contracts (a certain number of
which may be terminated at any time by partners), a reduction
in the volume of sales from certain partners or channels, or
a party’s inability to process and communicate reservations
to the Group could have a material adverse effect on the
Group’s business, results of operations, financial condition
and prospects.
Risks related to contractual relationships with certain key suppliers
in addition to automobile manufacturers
The Group has a number of contractual agreements with
suppliers other than automobile manufacturers, in particular
insurance providers, information technology suppliers and call
center suppliers. The Group relies mainly on AIG and in Spain
depends on Allianz in relation to the mandatory insurance cover
for its business to the extent that few insurance companies in
Spain write such policies. See Section 2.4.2 “Risks Related
to Liability and Insurance” and Section 2.7.1 “Insurance” of
this Registration Document. The Group also has important
relationships with several suppliers of software and services
that it uses to operate its systems, manage reservations and
its fleet and provide certain customer services. The Group has
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RISK FACTORS
outsourced a number of its call centers and is reliant on such
suppliers with respect to a significant portion of its calls from
customers.
The suppliers on which the Group relies may be unwilling to
extend contracts that provide favorable terms to the Group, or
they may seek to renegotiate existing contracts with the Group.
2.2.9
Risks related to key contractual relationships with franchisees and agents
Royalties received from franchisees represented €52.7 million
for the year ended December 31, 2015. In addition to an
entrance fee, and, upon renewal of their contracts, a territory
fee, franchisees pay royalties representing a percentage of
rental revenue generated by their vehicle rental operations, and
a reservation fee based on the number of reservations booked
through the Group’s reservations systems. Approximately 28
Europcar branded franchise contracts are due for renewal in
2016, 21 in 2017, 16 in 2018 and 25 in 2019. The Group cannot
guarantee that franchisees will continue to renew their contracts
or will renew them on identical terms. The Group may lose
franchisees to competitors who may offer more favorable terms
and conditions. If one or more of the Group’s franchisees were
to leave the Group’s network, and if the Group were unable
to secure agreements with replacement franchisees at terms
and conditions that are at least equally favorable, the Group’s
profitability and prospects could be adversely affected. The loss
of certain franchisees could also weaken the Group’s brands.
Moreover, franchises are independent operators and their
employees are not Group employees. Consequently, the
Group’s franchisees may not operate in a manner fully
consistent with the Group’s standards and requirements or may
not hire and train qualified managers and other personnel. If this
were to occur, the Group’s image and reputation could suffer.
The Group also operates certain rental stations through agents
in its Corporate Countries. From time to time the validity or
74
The Group cannot guarantee that the suppliers on which it
relies will properly provide the services and products it needs
for the operation of its business on competitive terms or at all.
The occurrence of any of these risks may create operational
problems, damage the Group’s reputation, result in the loss of
customers and have a material adverse effect on the Group’s
business, results of operation and financial condition.
EUROPCAR
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enforceability of certain terms and provisions of these agency
agreements have been and may in the future be challenged
by the Group’s agents or third parties. To the extent a court
or regulatory authority were to find a term or provision to be
invalid or unenforceable and if such finding were determined
to be applicable to all of the Group’s agency agreements in a
particular jurisdiction, the Group’s results of operations could
be materially adversely affected.
In addition, the Group faces risks with respect to the actions
of, or failures to act by, its franchisees and agents. Although
the Group monitors the activities of these third-party operators,
and under certain circumstances is entitled to terminate
their agreements in case of failure to adhere to contractual
operational standards, the Group may be unable to detect
significant problems as they arise. Moreover, the actions of
third-party operators may not be clearly distinguishable from
the Group’s own, which may expose the Group to liability or
reputational damage. It is the Group’s policy to disassociate
itself, when possible, from such claims involving its franchisees
and agents and to pursue indemnity for any adverse outcomes
that affect the Group. Failure of franchisees and agents to
comply with laws and regulations may expose the Group
to liability, damages and unfavorable publicity that could
adversely impact the Group’s business, results of operations or
financial condition. For further information on the management
and operation of franchisee activities, see Section 1.6.5.3
“Franchises” of this Registration Document.
RISK FACTORS
2.2.10 Risks related to the Group’s potential inability to improve its operating
efficiency
program called “Fast Lane”, seeking in particular to improve
the Group’s operating efficiency via the optimization of its
fleet management and reduction of its vehicle acquisition and
maintenance costs. The initiatives implemented include or may
include headcount reductions, business process re-engineering
02
and internal reorganization of the Group. Certain initiatives entail
costs (particularly reorganization charges, which amounted to
€24 million in 2015). If the Group is unable to implement such
initiatives for cost-related reasons or any other reason, its ability
to improve its operating efficiency and profitability could be
limited.
2.2.11 Risks related to the deployment of the Group’s strategy
The Group’s strategy depends in part on its ability to continue
to expand into geographic areas where the Group has little or
no experience and where competitive pressures, particularly
on prices, may be substantial. It also depends on its ability to
identify and successfully exploit opportunities in the changing
mobility solutions markets and more generally to adapt its
commercial strategy to evolving customer preferences and
customer mix in its existing markets. The Group has a global
presence in over 140 countries (directly and through franchises
and partnerships) and may expand into additional countries
in connection with its development strategy, including into
emerging markets in Asia, Africa, Latin America and Eastern
Europe. For more information on the Group’s development
strategy, see Section 1.5.2 “Develop drivers for the Group’s
growth” of this Registration Document. Operations in emerging
markets are inherently subject to higher economic, political and
legal risks than in developed markets.
The Group’s forays into new markets or market segments may
take the form of franchise arrangements in line with the Group’s
traditional approach, a joint venture or partnership with another
company, or the acquisition of an existing business. However,
the Group may not be successful in identifying appropriate
opportunities, potential franchisees, joint venture partners,
alliances or agents, or in entering into agreements with them.
The Group’s partners may also have economic or business
interests or goals that are inconsistent with the Group’s
or they may be unable or unwilling to fulfill their obligations
under the joint venture or other agreements. Furthermore,
they may benefit from knowledge acquired under these joint
venture agreements. In addition, certain of the Group’s debt
instruments and facilities place certain limitations on the
Group’s ability to make acquisitions, enter into joint ventures
or other partnership arrangements. See Chapter 3.2 “Liquidity
and Capital Resources” of this Registration Document.
In the event that the Group chooses to expand by means
of a franchise agreement, the Group could face additional
risks, including (i) possible conflicts of interests with the
new franchisees, (ii) lack of expertise in local franchise laws,
(iii) unfavorable commercial terms, (iv) the Group’s difficulty
in maintaining uniform standards, control procedures and
policies and (v) the possible failures of a franchisee to fulfill
its contractual obligations. An expansion into new markets
or customer segments through a new franchise agreement
could also involve a significant amount of management time,
potentially disrupting ongoing business.
In the event that the Group chooses to expand by means of
one or more acquisitions, the Group could face additional
risks, including: (i) potential disruption of the Group’s ongoing
business, changing, in particular, the Group’s business profile
in ways that could have unintended negative consequences,
and monopolization of management’s time; (ii) potential failure
to achieve anticipated synergies; (iii) difficulty integrating the
acquired businesses; and (iv) exposure to unknown and/
or contingent or other liabilities, including litigation arising in
connection with the acquisition and/or against any businesses
the Group may acquire.
If the Group makes acquisitions in the future, acquisitionrelated accounting expenses may affect the Group’s financial
condition and results of operations. In addition, the financing
of any significant acquisition may result in changes in the
Group’s capital structure, including the incurrence of additional
indebtedness. The Group may not be successful in addressing
these risks or any other problems encountered in connection
with any acquisitions.
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RISK FACTORS
Any one of these factors could result in delays in implementation
of the Group’s growth strategy, increased costs or decreases
in the amount of expected revenues related to the expansion
and have a material adverse effect on the Group’s results of
operations, financial condition and prospects.
2.2.12 Risks related to personnel cost, a material part of the Group’s operating
expenses
The Group’s financial performance is affected by trends in wage
levels and benefits granted to personnel. The Group has a
substantial number of employees who are paid wage rates
at or slightly above the statutory minimum wage. If statutory
minimum wage rates increase in one or more countries in which
the Group directly operates, the Group would then be required
to increase the wages of its employees in order to meet the
minimum wage requirements, and impacting also wages paid
to employees whose wage rates are slightly above minimum
wage. A shortage of qualified employees also could require
the Group to increase wages and benefit offerings in order
to compete effectively in the hiring and retention of qualified
employees or to retain more expensive temporary employees.
Due to competitive conditions in the Group’s business, any
such increases in labor and benefits costs could be difficult
for the Group to recover through contemporaneous price
increases, and there can be no assurance that the Group
would be able to absorb such cost increases through efforts
to increase efficiencies in other areas of its operations. For the
year ended December 31, 2015, the Group’s personnel costs
totaled €374.4 million, (or 19% of the Group’s total operating
expenses for the year). Accordingly, increased labor and
benefits costs, particularly in Germany, France and the United
Kingdom, where the Group has more employees, could have
a material adverse effect on the Group’s results of operations
and financial condition.
2.2.13 Risks related to the Group’s ability to retain the members
of its senior management team and retain and attract key personnel
and high-quality staff
The Group relies on a number of key employees, both in
the Group’s management and the Group’s operations, with
specialized skills and extensive experience in their respective
fields. The Group believes that the growth and success of its
business will depend on the Group’s ability to attract highly
skilled and qualified personnel with specialized know-how in
the vehicle rental industry. The Group’s senior management
team has extensive industry experience, and the Group’s
success depends to a significant degree upon the continued
contributions of that team. If the Group were to lose any
members of its senior management team, the Group’s ability
to successfully implement its business strategy, financial plans,
marketing and other objectives, could be significantly affected.
While the Group places emphasis on retaining and attracting
talented personnel and invests in extensive training and
development of its employees, there can be no assurance that
the Group will be able to retain or hire personnel with equivalent
expertise. For example, following the initial public offering, the
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Company implemented two free share grant plans subject
to performance for the members of the Group’s Executive
Committee and the Group’s 100 main executives.
Moreover, for several years the Group has made use of its
“Europcar University” program, which offers different training
programs depending on the relevant public as well as its
“Europcar Master Sales Certification Program” intended for
Sales Directors, Leaders and Large Account Representatives.
This program, which lasts nine months and leads to a training
certificate, is designed to develop negotiating skills, competence
in Group procedures and tools, and ability to generate additional
revenue and contracts. The marked seasonality of the rental
vehicle industry requires the Group to adjust staffing levels
throughout the year in line with business needs, particularly
through the use of temporary employees. Should the Group
encounter any difficulty in retaining and attracting sufficient staff
or experience labor disputes or stoppages, its business and
results of operations may be adversely affected.
RISK FACTORS
2.2.14 Risks related to the potential failure or unavailability of the Group’s
centralized information systems, or the Group’s inability to keep pace
with new information technology developments
The Group relies heavily on information systems to record
reservations, process rental and sales transactions, manage
its fleets of vehicles, account for its activities and otherwise
conduct its business. The Group has centralized its information
systems and relies on communications service providers to link
its systems with the business locations these systems serve.
See Section 1.6.10 “IT System” of this Registration Document.
A major failure of IT or other systems, or a major disruption
of communications between the system and the locations it
serves, could cause a loss of reservations, slow rental and sales
processes, interfere with the Group’s ability to manage its fleet
and otherwise materially adversely affect its ability to manage its
business effectively. The Group’s systems design and business
continuity plans may not be sufficient to appropriately respond
to any such failure or disruption.
In addition, to achieve its strategic objectives and remain
competitive, the Group must continue to develop and enhance
02
its information systems in order to meet market needs and
keep pace with new information technology developments.
This may require investment in and development of new
proprietary software or other technology, the acquisition of
equipment and software, or upgrades to the Group’s existing
systems. The Group has invested in its information systems,
including under its “Fast Lane” program (with IT development
expenses excluding software and hardware of €7.4 million in
2015), but no assurance can be given that the Group will be
able to anticipate such developments or have the resources to
acquire, design, develop, implement or utilize, in a cost-effective
manner, information systems that provide the capabilities
necessary for the Group to compete effectively. In addition,
regulatory changes may require the Group to bring its IT system
to applicable standards, which may entail significant costs. Any
failure to adapt to technological developments could have an
adverse effect on the Group’s business, results of operations
and financial condition.
2.2.15 Risks related to the Group’s potential failure to protect customer data
against security breaches and cyber-attacks
The Group’s systems regularly possess, store and handle
customer data, including personal data concerning millions of
individuals and non-public data concerning many businesses.
Failure by the Group to maintain the security of the data it
holds, whether as the result of the Group’s own error or the
malfeasance or errors of others, could harm the Group’s
reputation and give rise to significant liabilities. Third parties
may have the technology or expertise to breach the security
measures put in place by the Group to protect customer
transaction data. The Group’s security measures may not
prevent security breaches that could result in substantial
harm to its business and results of operations and damage
to its reputation. The Group intends to rely on encryption and/
or authentication technology licensed from third parties to
securely transmit sensitive data, including credit card numbers.
However, advances in technology, new discoveries in the field
of cryptography, or other developments may compromise or
affect the effectiveness of the technology the Group uses to
protect customer transaction data. In addition, anyone who
is able to circumvent the Group’s security measures could
misappropriate proprietary information or cause interruptions in
the Group’s operations. See Section 1.6.10 “IT System” of this
Registration Document for further information on the Group’s
IT system.
In addition, the payment card industry (“PCI”) imposes strict
customer credit card data security standards to insure that
the Group’s customers’ credit card information is protected.
Failure to meet the PCI data security standards could result
in substantial increased fees to credit card companies, other
liabilities and/or loss of the right to collect credit card payments.
Any failure to protect customer data could damage the Group’s
reputation and brand or result in administrative investigations
or material civil or criminal liability, which would substantially
harm the Group’s business, results of operations and financial
condition.
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RISK FACTORS
2.2.16 Risks associated with the international nature of its customer base
and operations
The Group has operations (directly or through franchises) in
over 140 countries and may expand into additional countries
in connection with its development strategy. Operating in
many different countries exposes the Group to varying risks,
which include: (i) multiple, and sometimes conflicting, foreign
regulatory requirements and laws that are subject to change in
each of the countries in which the Group operates, including
laws relating to taxes, automobile-related liability, consumption,
marketing, insurance rates, insurance products, consumer
privacy, data security, fight against money laundering and
corruption, employment matters, cost and fee recovery, price
controls and the protection of the Group’s trademarks and
other intellectual property; (ii) the effect of foreign currency
translation risk, as well as limitations on the Group’s ability
to repatriate income; (iii) varying tax regimes, including
consequences from changes in applicable tax laws; (iv) local
ownership or investment requirements, as well as difficulties
in obtaining financing in foreign countries for local operations;
and (v) political and economic instability, labor strikes, natural
calamities, war, and terrorism. The effects of these risks may,
individually or in the aggregate, materially adversely affect the
Group’s business, results of operations or financial condition.
2.2.17 Currency fluctuation risks that could adversely affect its profitability
Although the Group reports its results in euro, the Group
conducts business in countries that use currencies other than
the euro, and the Group is therefore subject to risks associated
with currency fluctuations. Of the Group’s total consolidated
revenue for the year ended December 31, 2015, 28.2% was
generated outside the Euro-zone.
The Group’s results of operations may be affected by both
the transaction effects and the translation effects of foreign
currency exchange rate fluctuations. The Group is exposed to
transaction effects when one of the Group’s subsidiaries incurs
costs or earns revenue in a currency different from its functional
currency. The Group is exposed to currency fluctuation when
the Group converts currencies that the Group may receive from
its operations into currencies required to pay the Group’s debt,
or into currencies which the Group uses to purchase vehicles,
incur fixed costs or pay for services, which could result in a
gain or loss depending on fluctuations in exchange rates. See
Section Note II “Significant Accounting Policies—Management
of Financial Risk—(i) Foreign exchange risk” to the consolidated
financial statements included in Section 3.4 “Consolidated
financial statements and Statutory Auditors’ report” of this
Registration Document.
The Group’s results are also exposed to foreign currency
translation risk as its sales in several countries are invoiced in
currencies other than the euro while its consolidated revenue is
reported in euro. Therefore, the Group’s financial results in any
given period are materially affected by fluctuations in the value
of the euro relative to the British pound, Australian dollar and
other currencies. Currency exchange rates have been especially
volatile in the recent past. Currency fluctuations may make it
difficult for the Group to predict and/or provide guidance on
the Group’s results. If the value of the euro declines against
currencies in which the Group’s obligations are denominated
or increases against currencies in which the Group’s revenue
is denominated, the Group’s results of operations and financial
condition could be materially adversely affected.
2.2.18 Risks related to changes in the assumptions used to determine
the carrying amount of certain assets, especially assumptions resulting
from an unfavorable market environment
As of December 31, 2015, the Group had €457.1 million of
goodwill and €719.1 million of intangible assets, including
€699 million with respect to the Europcar® trademark, recorded
on its balance sheet. Following annual impairment tests for
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goodwill and intangible assets during the fourth quarter of
2015, the Group concluded that there was no impairment
related to its goodwill and intangible assets.
RISK FACTORS
RISKS RELATING TO THE GROUP’S FINANCIAL STRUCTURE AND PROFILE
The Group reviews its goodwill and intangible assets for
impairment whenever events or changes in circumstances
indicate that the carrying amount of these assets may not be
recoverable and at least annually. Goodwill is tested based on
the higher of its fair value less costs to sell and its value-inuse determined using the discounted cash flow method; the
value- in-use calculations depend on certain key assumptions,
including assumptions regarding Adjusted Corporate EBITDA,
non-fleet capital expenditure and capitalized IT expenditure.
Trademarks are tested based on the net royalty method,
determined based on five-year projections of the royalties to
be received inside the Europcar network (Corporate Countries,
domestic and international franchisees).
If management’s projections underlying these calculations
change, the estimate of the recoverable amount of goodwill
or the intangible asset could fall significantly and result in
impairment. While impairment does not affect reported cash
flows, the decrease of the estimated recoverable amount
and the related non-cash charge in the income statement
could have a material adverse effect on the Group’s results of
operations or financial condition.
02
2.2.19 Risks related to natural disasters that could disrupt the Group’s supply
chain
Natural disasters affecting countries that are important suppliers
of electronics or other key components to global automobile
manufacturers could result in disruptions to the supply of
vehicles by manufacturers. For example, the earthquakes and
related disasters in Japan in 2011 resulted in a disruption of
the supply of electronic components for automobiles from
Japanese manufacturers and, as a result, in the supply of
vehicles.
In the event that one or more of the Group’s vehicle suppliers
were unable to satisfy the Group’s purchase requirements,
the Group would have to increase the number of vehicles it
purchases from other manufacturers, or start purchasing
vehicles from one or more manufacturers from which it does
not typically purchase vehicles. There can be no guarantee that,
in such a circumstance, the Group would be able to purchase
a sufficient number of vehicles at purchase prices equal to
those for the vehicles the Group currently purchases, or at
all. If the Group is not able to purchase sufficient quantities of
vehicles on competitive or acceptable terms and conditions, or
if a manufacturer from whom it purchases a significant number
of vehicles or equipment is unable to continue to supply the
Group with vehicles, then the cost of purchased vehicles may
increase. These rising costs could have a material adverse
effect on the Group’s results of operations and financial position.
2.3 RISKS RELATING TO THE GROUP’S FINANCIAL
STRUCTURE AND PROFILE
2.3.1
The Company is a holding company whose ability to generate cash comes
from its subsidiaries
The Company is a holding company and its principal assets
consist of direct and indirect stakes in its different subsidiaries
that generate the Group’s cash flow (see Section 1.7.1
“Simplified Group Organization Chart” of this Registration
Document). The Company’s ability to generate cash to meet
its debt service obligations or to pay dividends on its common
stock is dependent on the earnings and the receipt of funds
from its subsidiaries. If the profits of these operating subsidiaries
decrease, the Group’s profits and cash flow could be affected.
The cash flow of the Group’s parent company is primarily
derived from dividends, interest and repayments on intragroup loans and asset transfers by its subsidiaries. The ability
of the Group’s operating subsidiaries to make these payments
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2015
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02
RISK FACTORS
depends on economic, commercial, contractual, legal and
regulatory considerations. Any potential decrease in profits, or
potential failure by the Group’s subsidiaries to make payments
to other Group subsidiaries or to the Company could have a
2.3.2
Risks related to the Group’s substantial indebtedness
In connection with the Company’s initial public offering, the
Group refinanced and repaid certain of its outstanding debt,
in particular in order to reduce the Group’s interest expense
and to improve its leverage ratio. The Refinancing is described
in Section 3.2.1 “General Presentation” of this Registration
Document.
As of December 31, 2015, the Group’s total consolidated
financial liabilities stood at €2.065 billion. The Group has also
entered into off-balance sheet commitments under operating
lease financing arrangements, whose outstanding amount
80
material adverse effect on the ability of the subsidiaries or the
Company to repay their debt and meet other obligations, which
could have a material adverse effect on the Group’s business,
results of operations and financial condition.
EUROPCAR
2015
is estimated at €1,323.4 million at December 31, 2015.
See Section 3.2 “Liquidity and Capital Resources” of this
Registration Document for more information on the Group’s
debt structure on- and off-balance sheet.
The following chart provides a summarized view of the Group’s
financial debt structure (including the estimated debt equivalent
of operating leases) as of December 31, 2015. Each financing
is described in Section 3.2.3.1 “Corporate Debt” (for corporate
debt) and Section 3.2.3.2 “Debt Related to Fleet Financing” (for
fleet debt) of this Registration Document.
RISK FACTORS
Fleet debt
Eurazeo
and other investors
Corporate debt
100%
EUROPCAR
GROUPE S.A.
(France)
€350 m
Senior Revolving Credit Facility(a)
€350 m - 5.125%
EC Finance Notes 2021
€475 m - 5.77%
2022 debt(c)
02
100%
Europcar
International SASU
(ECI - France)
€1.1 bn - SARF(b)
EC France
EC Germany
Fleet operating leases
€1.3 bn
EC Spain
EC Portugal
EC Belgium
€525 m UK
Asset Financing Facilities
EC United Kingdom
AU$300 m
Australia Asset Financing Facilities
EC Australia
(a) The Existing Senior Revolving Credit Facility was repaid on May 28, 2015 with the Senior Revolving Credit Facility (RCF), which has an amount of
€350 million. Margin of 2.50% if the leverage ratio (as defined in the terms of the RCF) is lower than 2.0; 1.0 or 2.75% if greater than 2.0:1.0.
(b) Amendments to the SARF were signed on May 12, 2015. These amendments include, among other things, an increase in the amount of FCT Senior
Notes that may be issued by the FCT Issuer under the SARF from €1 billion to €1.1 billion, and a decrease in the applicable margin in respect of the
FCT Senior Notes from 2.2% to 1.7% (before the amortization period).
(c) The Notes were issued on June 10, 2015 for a total principal amount of €475 million. The proceeds of this issue were used to redeem the Outstanding
Subordinated Notes Due 2018.
The total amount of the Group’s financial liabilities that relate
to fleet financing at December 31, 2015, is €1.659 million.
These liabilities are mostly backed or secured by assets,
mainly vehicles. They consist of €81 million under the
€350 millions Senior Revolving Credit Facility (the “Senior
Revolving Credit Facility”, or “RCF”), €658.3 million under the
Senior asset Revolving Facility (the “SARF”, of a total amount
that may be refinanced by senior notes backed by assets of
€1,100 million), £262.0 million (€356.8 million) under the UK
fleet finance facilities agreements, €350 million in the form of
secured senior subordinated notes issued by EC Finance plc
(the “EC Finance Notes”), $AUD 113.0 million (€75.8 million)
under the Australia and New Zealand fleet finance facilities
agreements and €26.8 million under the Portugal fleet finance
facilities agreements. The Group also finances its vehicle fleet
by means of operating lease financing agreements recorded
off-balance sheet with an estimated outstanding value of
€1,323.4 million (1) as of December 31, 2015.
(1) The estimated debt equivalent of fleet operating leases corresponds to the net book value of applicable vehicles, which is calculated on the basis of
the purchase price and depreciation rates of corresponding vehicles (based on contracts with manufacturers).
EUROPCAR
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RISK FACTORS
Furthermore, a significant portion of the assets of the Group is
pledged to secure the consolidated debt referred to above. The
SARF and, indirectly, on a second ranking basis, the EC Finance
Notes, are secured by the Securitifleet Collateral, as defined
below under Section 2.3.4 “Risks related to covenants included
in the Group’s debt instruments” of this Registration Document.
The Securitifleet Collateral includes certain of the shares and
assets of the special purpose entities established in the context
of the Group’s asset-backed financing and controlled by trusts
(the “Securitifleet Companies”), to purchase and own vehicles
and lease them to the local Europcar operating companies
in France, Germany, Italy and Spain including the vehicle
fleets in these jurisdictions, subject to certain exceptions. The
Securitifleet Companies benefit from a performance guarantee
(in the form of a joint and several guarantee) from Europcar
International SASU (“ECI”). The EC Finance Notes also benefit
from the ECI guarantee. The Senior Revolving Credit Facility is
secured by shares held in certain subsidiaries (in particular, an
effective first ranking basis for the shares of ECI) and the bank
account balances of certain subsidiaries.
The Group’s substantial debt could have important
consequences, in particular:
a requiring the Group to dedicate a substantial portion of the
Group’s cash flow from operations to payment of the Group’s
debt, thereby reducing the funds available for (i) working
capital, (ii) distributing dividends, (iii) capital expenditures and
(iv) other general corporate purposes such as purchasing
and leasing vehicles;
a limiting the Group’s flexibility in planning for or reacting to
changes in the rental vehicle business;
a increasing the Group’s vulnerability to both general and
industry-specific adverse economic conditions;
a limiting the Group’s ability to borrow additional funds and
increasing the cost of any such borrowing; and
a restricting the Group from making strategic acquisitions or
exploring business opportunities.
Any of these or other consequences or events could have a
material adverse effect on the Group’s results of operations
and/or financial condition.
In addition, the Group may incur substantial additional
indebtedness in the future to the extent that such indebtedness
is incurred in compliance with certain covenants included in
the Group’s debt instruments (see Section 3.2.3 “Description
of the financing as of December 31, 2015” of this Registration
Document for a description of the Group’s debt instruments)
including covenants under its credit facilities or under operating
lease financing arrangements (as the Group calibrates drawings
under its revolving credit facilities and leasing to correspond
to the Group’s fleet needs. See Section 3.2 “Liquidity and
Capital Resources” of this Registration Document. If new
debt is added to the Group’s current debt levels, the risks
that the Group now faces could intensify. Although, following
the initial public offering and the associated refinancing, the
ratio of net debt to the Group’s Adjusted Corporate EBITDA
has decreased significantly, these risks may have. a material
adverse effect on the Group’s business, results of operations
and financial condition. For further information on the Group’s
debt, see Section 3.2 “Liquidity and Capital Resources” of this
a placing the Group at a competitive disadvantage compared to
any of the Group’s competitors that might be less leveraged;
2.3.3
Risks related to the Group’s potential inability to continue financing
vehicle acquisitions for its fleet via asset-backed financing, or to any
unfavorable changes in the Group’s asset-backed financing terms
The Group relies significantly on fleet asset-backed financing
to purchase vehicles for its domestic and international vehicle
rental fleets. Currently, the Group mainly relies on the SARF and
the outstanding EC Finance Notes. See Section 3.2 “Liquidity
and Capital Resources” of this Registration Document.
If the Group’s access to asset-backed financing were reduced
or the cost of such financing were to increase, the Group may
not be able to refinance or replace its existing asset-backed
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financing or continue to finance new vehicle acquisitions
through asset-backed financing on favorable terms, or at
all. The Group’s asset-backed financing capacity could be
decreased, or financing costs could be increased, as a result of
risks and contingencies, many of which are beyond the Group’s
control, including, without limitation:
a requirements by the rating agencies that provide credit
ratings for the Group’s asset-backed indebtedness to change
RISK FACTORS
the terms or structure of the Group’s asset-backed financing,
including increased credit enhancement (i) in connection with
the incurrence of additional or refinancing of existing assetbacked debt, (ii) upon the occurrence of external events,
such as changes in general economic and market conditions
or deterioration in the credit ratings of the Group’s principal
vehicle manufacturers, including Volkswagen, Fiat, General
Motors, Renault or Peugeot Citroën, or (iii) otherwise;
a the insolvency or deterioration of the financial condition of
one or more swap counterparties or financial institutions
acting in certain capacities under the asset-backed financing
of the Group;
a the occurrence of certain events that, under the agreements
governing the Group’s existing asset-backed financings,
could result, among other things, in (i) an amortization event
pursuant to which payments of principal and interest on the
relevant indebtedness may be accelerated, or (ii) a liquidation
event of default pursuant to which the security trustee or
relevant creditors would be permitted to require the sale of
fleet vehicles that collateralize the asset-backed financing; or
2.3.4
a legislative changes that negatively impact the Group’s assetbacked financing structure.
Any disruption to the Group’s ability to continue to finance
new vehicle acquisitions through asset-backed financing, or
any negative development in the terms of the asset-backed
financing available to the Group could cause the Group’s
cost of financing to increase significantly and have a material
adverse effect on the Group’s financial condition and results
of operations. The assets that collateralize the Group’s assetbacked financing may not be available to satisfy the claims of
the Group’s unsecured creditors. The terms of the Group’s
outstanding indebtedness permit the Group to finance or
refinance new vehicle acquisitions through other means,
including secured financing that is not limited to the assets
of special purpose subsidiaries. The Group may seek in the
future to finance or refinance new vehicle acquisitions through
such other means. No assurances can be given, however, as
to whether such financing will be available, or as to whether
the terms of such financing will be comparable to the existing
asset-backed financings.
02
Risks related to covenants included in the Group’s debt instruments
The Group and the Group’s subsidiaries are subject to
restrictive covenants contained in the Group’s debt instruments.
These covenants restrict, in certain circumstances, the ability
of certain of the Group’s subsidiaries to make payments to
the Group which could, in turn, affect the Group’s ability to
make payments under the Group’s debt instruments. These
covenants, however, do not include requirements to maintain
a certain rating or any repayment or interest step-up clauses
based on a downgrade in the Group’s credit rating. For example,
in January 2012, the Standard & Poor’s downgrading of the
Group’s credit rating from B+ to B with negative outlook did
not result in any direct deterioration of the Group’s existing debt
(no event of default). However, this downgrade did occur while
the Group was refinancing its debt, and the Group’s financing
costs with respect to the debt raised during such refinancing
process were affected.
The Senior Revolving Credit Facility and the indentures
governing the outstanding Notes and EC Finance Notes contain
customary default provisions and provide that any payment
event of default or acceleration with respect to aggregate
indebtedness of €35 million or more (in the case of the Senior
Revolving Credit Facility and the Notes) or €30 million or more (in
the case of the outstanding EC Finance Notes) of the Company
or its subsidiaries is also an event of default there under. The
Senior Revolving Credit Facility, the UK fleet finance facilities
agreements and certain of the Group’s other indebtedness
also require the Group or certain of the Group’s subsidiaries
to maintain specified financial ratios and satisfy financial tests.
The Group’s ability or the ability of the Group’s subsidiaries to
satisfy these financial tests can be affected by events beyond
the Group’s control, and there can be no assurances that the
Group or its subsidiaries will satisfy them.
A breach of any of these covenants, ratios, tests or restrictions
could result in an event of default under the Senior Revolving
Credit Facility, the outstanding Notes, EC Finance Notes or
hinder the Group’s ability to borrow under the Senior Revolving
Credit Facility or other indebtedness, which could have a
material adverse effect on the Group’s ability to operate the
Group’s business and to make payments under the Group’s
debt instruments. Upon the occurrence of any event of
default under the Senior Revolving Credit Facility, the lenders
thereunder could cancel the availability of the facilities and elect
to declare all amounts outstanding thereunder, together with
accrued interest, immediately due and payable. If the Group
was unable to repay these amounts, the lenders could, subject
to the terms of the applicable intercreditor agreement, proceed
against the collateral granted to them to secure repayment of
these amounts. If the lenders under the Senior Revolving Credit
Facility demand repayment of these amounts, there can be no
assurances that the assets of the Group’s subsidiaries would
EUROPCAR
2015
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02
RISK FACTORS
be sufficient to repay those amounts in full, or to satisfy all of
the Group’s other liabilities which would be due and payable.
The SARF also includes substantial restrictive covenants
applicable to certain of the special purpose entities established
in the context of the Group’s asset-backed financing, including
Securitifleet Holding SA (“Securitifleet Holding”), the special
purpose entity providing financing for the fleet purchasing
and leasing activities of the Securitifleet Companies in France,
Italy, Spain and Germany. Failure to satisfy these covenants
and conditions could result in a decrease in the advance rate
and an increase in the margin under the SARF, or a default
thereunder. In addition to customary default provisions, the
SARF provides that any acceleration with respect to the Senior
Revolving Credit Facility, the Notes, or the EC Finance Notes
will constitute a “level 2” event of default under the SARF.
See Section 3.2 “Liquidity and Capital Resources” of this
Registration Document. A breach of any of these covenants,
ratios, tests or restrictions could result in an event of default
under the SARF or hinder the ability of Group companies to
borrow under such facilities. Upon the occurrence of any event
of default under the SARF (including as a result of acceleration
of the Senior Revolving Credit Facility or the Notes), the lenders
thereunder could cancel the availability of the facilities and elect
to declare all amounts outstanding under the SARF, together
with accrued interest, immediately due and payable.
The Group’s debt instruments include covenants whose aim
is to, inter alia, limit the ability of the Company and certain of
its subsidiaries to:
a incur additional indebtedness;
a pay dividends or make any other distribution;
a make certain payments or investments;
a sell or transfer assets or shares;
a enter into transactions with affiliated companies; and
a merge or consolidate with other entities.
These limitations are subject to various conditions and
exceptions, including the ability to distribute dividends and
make investments under certain circumstances. However,
these covenants could limit the Group’s ability to finance its
future operations and capital needs and its ability to pursue
business opportunities and activities that may be in its interest.
In addition, the Group’s ability to comply with the covenants
in its debt instruments may be affected by events beyond its
control.
EUROPCAR
a a first priority share pledge over a limited percentage of
shares of Securitifleet Holding held by ECI;
a a first priority security interest over a limited percentage of
shares held by each of the Group’s operating companies in
the relevant Securitifleet entity in its jurisdiction (other than
the limited percentage of shares held by Europcar Italy in
Securitifleet Italy with respect to the EC Finance Notes);
a a first priority security interest over receivables (including bank
accounts and the fleet vehicles) in respect of each of the
Securitifleet Companies (other than in respect of Securitifleet
Italy with respect to the EC Finance Notes) ;
a a first priority pledge over Securitifleet Holding’s bank
accounts;
a a first priority security interest over certain receivables
(including under buy-back agreements from vehicle
manufacturers) of each of the Securitifleet Companies (other
than Securitifleet Italy with respect to the EC Finance Notes),
subject to certain exceptions in Spain; and
a a first priority security interest over certain assets (including
bank accounts and the vehicle fleet) of each Securitifleet
Company from time to time (other than Securitifleet Italy
with respect to the EC Finance Notes), subject to certain
exceptions in Spain.
All assets subject to the liens in the foregoing paragraph are
collectively referred to herein as the “Securitifleet Collateral”.
a issue security interests or guarantees;
84
The obligations of Securitifleet Holding under the SARF together
with its obligations to repay the proceeds borrowed under a
proceeds loan between EC Finance plc and Securitifleet
Holding (the “Securitifleet Proceeds Loan”) (which would
allow EC Finance plc to repay the proceeds of the EC Finance
Notes) are secured directly or indirectly by the following shared
collateral:
2015
The Securitifleet Collateral secures the SARF and the
Securitifleet Proceeds Loan (and, hence, indirectly the EC
Finance Notes) on a shared pari passu basis and enforcement
proceeds from such collateral would be paid first to the senior
lenders under the SARF and then to EC Finance plc under
the Securitifleet Proceeds Loan (and, as a result, indirectly to
the holders of EC Finance Notes) pursuant to the priority of
payments in the Intercreditor Agreement. Such senior lenders,
in addition, benefit from direct security interests over the assets
of Securitifleet Italy. The holders of the EC Finance Notes
indirectly benefit only from a negative pledge in respect of the
assets of Securitifleet Italy.
RISK FACTORS
2.3.5
Risks related to the Group’s ability to generate cash and/or secure
financing to fund its indebtedness or foreseeable liquidity requirements
The Group’s ability to make payments on and to refinance
its indebtedness, to acquire vehicles in its fleet and to fund
planned capital and development expenditures or opportunities
that may arise, such as acquisitions of other businesses, will
depend on its future performance and its ability to generate
cash and/or obtain financing, which to a certain extent, are
subject to macro-economic, financial, competitive, legislative,
legal, regulatory and other factors, as well as other factors
discussed in this Section, many of which are beyond the
Group’s control.
There can be no assurances that the Group will generate
sufficient cash flows from operations or that future borrowing
will be available in an amount sufficient to enable it to pay its
debts, or to fund other liquidity needs. If future cash flows
from operations and other capital resources are insufficient to
pay the Group’s obligations as they mature or to fund liquidity
needs, the Group may be forced to reduce or delay its business
activities and capital expenditures, sell assets, obtain additional
debt or equity capital or restructure or refinance all or a portion
of its debt. There can be no assurances that the Group would
be able to accomplish any of these measures in a timely manner
or on commercially reasonable terms, if at all. In addition, the
terms of the Group’s existing and future indebtedness may limit
its ability to pursue any of these alternatives. For a description
of the Group’s financial liabilities, including hedging derivatives
by relevant maturity based on the remaining contractual periods
at December 31, 2015, see Section II “Significant Accounting
02
Policies—Management of Financial Risk—(i) Liquidity risk”
Section 3.4 “Consolidated financial statements and Statutory
Auditors’ report” of this Registration Document.
The Group believes that it will have sufficient resources to
repay or refinance the current portion of its debt and lease
obligations and to fund its foreseeable liquidity requirements
over a 12-month period from the date of filing this Registration
Document. However, as the Group’s debt matures, the Group
anticipates that it will seek to refinance or otherwise extend its
debt instruments’ maturities. The Group’s ability to invest in
its businesses and refinance maturing debt obligations could
require access to the credit and capital markets and sufficient
bank credit lines to support cash requirements. The Group
may also experience difficulties in obtaining financing in foreign
countries for local operations. If the Group is unable to access
the credit, securitization and capital markets, the Group could
experience a material adverse effect on its liquidity, financial
position or results of operations. In addition, the Group’s
available financing could be decreased, or its financing costs
increased, as a result of factors which are beyond its control,
including the insolvency, deterioration of the financial condition,
a change in law or a change in credit policy of one or more
of the Group’s lenders, certain of which are local or regional
lenders.
2.4 REGULATORY AND LEGAL RISKS
2.4.1
Risks related to Compliance with Current or Future regulations Applicable
to the Group’s Business
As it operates in over 140 countries worldwide, the Group
is subject to a vast array of international, national and local
laws and regulations. See Section 1.6.11 “Regulations” of this
Changes to laws, regulations, case law or any other rules
applicable to the Group’s activities, as well as, more broadly,
any changes in the decision-making process of the competent
authorities could give rise to the Group’s liability or have a
material and unforeseeable impact on its business in France,
within the European Union or in other jurisdictions. Changes to
laws, regulations or other applicable rules, as well as the review
of case law or changes in how it is applied and interpreted
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RISK FACTORS
could have a significant adverse effect on the Group’s operating
costs, competitive position or outlook. While the Group keeps
track of and monitors the regulations it is subject to, its activities
in France or abroad may be in breach of the applicable laws
and regulations and give rise to liability. Non-compliance by the
Group with the laws and regulations to which it is subject, both
in France and abroad, could potentially also lead to different
types of sanctions, including the restriction, suspension or
ban of certain activities and the imposition of fines, payment
of compensation or other penalties. Any of these incidents
could have a material adverse effect on the Group, its financial
condition, results of operations or prospects. Even if the
changes to laws, rules or regulations do not apply directly to
the Group, their effects on its customers or partners may have
an indirect and material impact on how the Group carries out
its business or the associated costs, as well as on the demand
for the services the Group supplies.
2.4.1.1 Risks related to Compliance with
Consumer Protection Regulations
The Group’s business and its business practices are highly
regulated with respect to consumer protection and any changes
in these laws, regulations or their interpretation, in particular in
terms of rules related to price transparency, non-discriminatory
pricing, unfair terms or misleading advertising, could affect the
Group’s reputation as well as its business both in terms of
logistics and costs, which could have a material adverse effect
on the Group’s financial condition and results of operations.
For example, the adoption of regulations affecting or limiting
the sale of supplementary insurance or a new interpretation
of regulations by the competent authorities could entail a
reduction or loss of these revenue sources and have a material
adverse effect on the Group’s profitability.
The European Commission is particularly attentive to price
discrimination by market participants in the rental vehicle sector
at the European level. In a press release dated August 11,
2014, the European Commission requested that participants
in the vehicle rental sector end certain practices considered to
be “discriminatory” and requested that the relevant authorities
of Member States take any necessary measures to ensure
compliance with European Union and national regulations
with respect to consumer protection. As of September 2014,
the Group implemented, in accordance with its commercial
strategy, a single European pricing policy by sales location,
regardless of the residence of the customer and the European
Union country from which the reservation was made. To date, no
legal proceedings have been initiated against the Group by the
European Commission or any national authorities with respect
to this issue (see Section 1.6.11.1 “Consumer Protection
Regulations in the EEA” of the Registration Document).
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Moreover, in the context of the cooperative process between
the national authorities of Member States of the European Union
that are responsible for applying legislation for the protection
of consumers pursuant to regulation EC No. 2006/2004, a
dialogue was opened by the European Commission aimed at
improving consumer experiences (in particular the transparency
and suitability of contractual terms) within the European Union.
In this respect, the Group submitted proposals of commitments
to the European Commission on June 17, 2015, including the
publication of new general rental conditions and the clarification
of the insurance and contractual guarantee policy in the event
of damage caused to the vehicle. On July 13, 2015, the
European Commission published a press release setting forth
the result of these exchanges with the different players in the
short-term vehicle rental industry, and in which the authorities
praised the Group’s commitments. In early 2016 the Group
put in place new rental conditions in full compliance with its
commitments. If they conclude that the Group has made
insufficient changes to its sales policy it could have a material
adverse effect on the Company’s revenue and operating results
(see “Consumer Protection Regulations in the EEA” under
Section 1.6.11.1 “Consumer Protection Regulations” of this
Registration Document).
Finally, in most jurisdictions in which the Group operates, the
Group passes various costs on to its customers, including
airport concession fees, as separate fees in connection with
vehicle rentals. Nevertheless, the sector may in the future be
subject to potential legislative or administrative changes that
may limit, constrain and/or prohibit the possibility to indicate,
bill and collect these separate fees, which would result in such
costs being reallocated back to the Group. If such measures
were adopted at the European level, they could have a material
adverse effect on the Group’s revenue, results of operations
or prospects.
2.4.1.2 Risks related to Compliance with
Personal Data Protection Regulations
Changes in the regulations for protection of personal data could
also have a material adverse effect on the Group’s business.
European directives and regulations as well as national rules
in the various countries where the Group operates restrict the
types of data it can collect on people it deals with or wishes
to deal with, as well as the way it collects, stores and uses the
data that it is allowed to collect. In addition, the centralized
nature of the Group’s IT systems requires a regular cross-border
flows of customers’ and prospects’ data beyond the country
where it was taken. If this data flow becomes illegal or starts to
generate additional infrastructure costs the Group’s capacity to
serve its customers may be materially affected for an indefinite
period.
RISK FACTORS
Other legislative changes on customer data confidentiality and
data security could also have a material adverse effect on the
Group’s business. Confidentiality and security of customer data
is a fast-evolving area of law and new standards, some of
which are likely to be hard for the Group to apply, are frequently
being proposed and in some cases adopted. For instance, on
January 25, 2012, the European Commission proposed a draft
regulation defining a new legal framework for all companies
processing personal data in Europe. On March 12, 2014, the
European Parliament passed the proposed regulation on its
first reading. This regulation still needs to be approved by
the European Council. If it is, it will replace Directive 95/46/
EC dated October 24, 1995 on the protection of individuals
with regard to the processing of personal data and on the
free movement of such data. Adoption of this regulation could
affect the Group’s activities, notably with the transposition of
a number of technical and operational changes. The draft
regulation would, for instance, force the Group to (i) put in place
internal rules and mechanisms to guarantee and demonstrate
its compliance with the regulation to its customers, the people
concerned and personal data protection authorities, (ii) carry
out impact studies on data protection before processing begins
presenting the risks and (iii) notify any breaches of personal
data protection rules particularly any security failings. Any such
changes to the legal and regulatory frameworks in any of the
countries where the Group operates, regarding (i) privacy or
personal data of customers and/or (ii) data security and crossborder data flows, could have a material adverse effect on the
Group’s business, chiefly through the deterioration of its sales
and transaction processing activities. On this point, following
the striking down of the Safe Harbor data exchange agreement
by the European Court of Justice on October 6, 2015 (Case
C362/14), the Group has had to revise its contracts to bring
transfers of personal data with US partners and suppliers into
compliance with the new rules, introducing, where necessary,
standard clauses approved by the European Commission.
Also, although the Group has in place procedures to keep
personal and banking data secure, data theft, piracy of security
systems, identity fraud or theft of customers’ banking data
could have a material adverse effect on the Group’s reputation,
revenues, results of operations or prospects.
2.4.1.3 Risks related to Environmental
and Health & Safety Rules
The Group has its own installations for storing petroleum
products as well as centers for washing and maintaining
vehicles. The Group’s businesses are subject to environmental
laws and regulations, particularly as regards (i) owning and
operating petroleum product storage facilities, e.g. gasoline and
diesel, and (ii) production, storage, transportation and disposal
of waste, including sludge from vehicle washes, waste water
and other hazardous substances.
02
Environmental legislation has progressed significantly in recent
years and continues to develop. Public authorities and courts
can impose fines or civil or criminal penalties, and order repairs
or clean-ups of pollution in the event of non-compliance with
environmental regulations. Also, in some cases, the authorities
can amend or revoke the Group’s operating licenses, which
could force it to close down temporarily or permanently the
installations in question and pay the resulting costs of closure,
maintenance and repair. Bringing the Group into compliance
with environmental law and regulations could have an effect on
its results of operation and financial position.
Each Group Corporate Country is responsible for ensuring
that its storage facilities comply with local regulations in that
country in order to ensure that they (i) are properly reported
to the competent authorities of the countries in which they are
located; and (ii) have been replaced or upgraded to comply with
applicable requirements on the detection of leaks and protection
against spills, overflows and corrosion. However, there can be no
assurance that daily use of these tank systems may not result in
leaks which, while insignificant on a daily level, have a cumulative
material effect as the months and years go by.
Furthermore, international law and regulations have historically
and will likely continue to contemplate numerous measures
related to greenhouse gas emissions and climate change. If
rules designed to cap emissions or tax the companies seen as
responsible should come into force, it could affect demand for
the Group’s services and the vehicle fleet and/or other costs
could rise with adverse implications for its results of operation
and financial position.
2.4.1.4 Risk related to Compliance
with regulation of Franchises
Franchising helps the Group achieve wide territorial coverage
and contributes to its revenue. Changes to law, regulations
or to the application or interpretation of texts governing such
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RISK FACTORS
contractual relationships, particularly changes in precedents
limiting the franchiser’s ability to cancel or renew or transfer
agreements (e.g. by requiring compensation if an agreement is
cancelled) could have a material adverse effect on the Group’s
business, financial position and results of operations.
2.4.2
Risks related to liability and insurance
The Group’s business generates significant risk with respect to
automobile civil liability. Vehicles from the Group’s fleet entrusted
to its customers or employees may be involved in cases of
physical injury and death or property damage caused to third
parties. The Group has purchased an automobile insurance
program covering civil liability for bodily injury (including death)
and property damage to third parties resulting from the use
of its rented vehicles. If the Group were not able to renew
its automobile insurance under acceptable commercial terms,
or to find alternative and equivalent coverage, it would be
unable to rent its vehicles. Historically, automobile insurance
premiums calculated per rental day, have both trended upward
and downward, reflecting trends in the insurance market and
the Group’s own loss ratio. The availability and cost of coverage
should remain the controlling factors in the future. Furthermore,
there are only a limited number of insurers that are prepared to
offer multinational automobile insurance programs. For example,
the Group has implemented an insurance program in Belgium,
France, Germany, Italy, Portugal and the United Kingdom (the
“Europrogramme”) with AIG Europe Ltd. (“AIG”). There can be
no assurance that the Group’s insurance premiums will not
increase in the future, in particular in countries where signed
insurance policies are not profitable for insurance companies.
Historically, a significant share of the Group’s exposure to civil
liability, in particular automobile civil liability, has remained the
Group’s responsibility under its insurance policies. As part of the
2.4.3
Europrogramme, accidents, or the share of accidents related
to automobile civil liability, less than or equal to €500,000 per
accident are “self-insured” by the Group. In this case, AIG
covers third parties, under local insurance policies subscribed
to by the Group’s subsidiaries, and is then reimbursed by the
Group. There can be no assurance that the remaining amount
payable by the Group will not significantly increase in the
future. Furthermore, with respect to insured risks, there can
be no assurance that current or future liability claims will not
exceed the Group insurance policy levels. The occurrence of
such an event could have a material adverse effect on the
Group financial condition. See Section 2.7 “Insurance and Risk
Management” of this Registration Document.
Moreover, the Group bears the risk of damages to vehicles
it owns and to its business beyond its automobile fleet. The
Group has decided not to purchase an insurance policy against
these risks. Over the long run, the Group considers that insuring
property damage to its fleet and theft of vehicles would be
greater than or equal to actual costs of damages and theft.
Nevertheless, there can be no assurance that the Group will not
be exposed to non-insured damages from asset-related risks,
whose levels may be greater than historical levels, and which
could have a material adverse effect on the Group’s financial
condition and results of operations. See Section 2.7 “Insurance
and Risk Management” of this Registration Document.
Risks related to the protection of intellectual property rights
The Group’s business and its future growth depend in particular
on its ability to obtain, maintain and protect its trademarks,
domain names, “Greenway®” technology (see Section 1.6.10.1
“The GreenWay® System” of this Registration Document) and
other intellectual property rights. The Group grants operating
88
Although independent, franchisees must comply with the
knowledge requirements and procedural rules issued by the
Group obliging them to respect the laws and regulations
applicable to the sector. Non-compliance by franchisees with
these guidelines could have a material adverse effect on the
Group’s reputation and business in the countries affected.
EUROPCAR
2015
licenses of its trademarks and other intellectual property
rights (including those it uses under licenses) to its franchises,
agents and service providers (see the Section 1.8.2 “Intellectual
Property, Licenses, Usage Rights, and Other Intangible Assets”
of this Registration Document). Royalties received by the Group
RISK FACTORS
from franchises (including with respect to intellectual property
rights) for the year ended December 31, 2015 totaled €52.7
millions. The Group, its franchises, agents or service providers
may not be able to adequately protect these trademarks and
other intellectual property rights against challenges to their
validity, violations and abusive use by third parties, in particular
in markets in which the Group has not been active in the past.
Furthermore, certain intellectual property rights that the Group
uses were granted to it by Advantage OpCo under a reciprocal
license agreement under which ECI is granted an exclusive
license on certain “Advantage” brands in countries in which
the Group operates or has a franchise, excluding the United
States (see Section 1.8.2 “Intellectual Property, Licenses,
Usage Rights, and Other Intangible Assets” of this Registration
Document). An inability to continue using these intellectual
property rights could have a material adverse effect on the
2.4.4
02
Similarly, any material violation of the Group’s intellectual
property rights could entail disputes, which may also result in
costs and commercial uncertainty for the Group. Any of these
incidents could have a material adverse effect on the Group, its
financial condition, results of operations or prospects.
Risks related to regulatory, legal and arbitration proceedings
In the ordinary course of its business, the Group is involved
or at risk of being involved in a certain number of regulatory,
legal or arbitration proceedings, the more significant of which
are described in Section 2.5 “Regulatory, Legal and Arbitration
Proceedings” of this Registration Document. In certain of these
proceedings, claims of a significant amount have been made
against companies of the Group and sanctions, in particular
administrative ones, could be imposed on companies of the
Group. The imposition of sanctions on companies of the Group
2.4.5
Group’s business. Moreover, the Group relies on this third party
to take adequate measures in order to protect and enforce its
intellectual property rights, which it has granted to the Group
under a license. It is also possible that disputes arise as part of
the Group’s use of trademarks subject to licenses, particularly
when the interests of the licensor and those of the Group diverge
as market conditions change. The Group may be ordered to
pay significant damages and interest, discontinue the sale of
services violating the intellectual property rights in question and
incur additional expenses to sign, where applicable, licenses
allowing it to use the disputed intellectual property rights.
its financial condition, results of operations and prospects. In
addition, any provisions recorded by companies of the Group,
with respect to regulatory, legal and arbitration proceedings in
its financial statements could be insufficient (for a description
of these disputes, see Section 2.5 “Regulatory, Legal and
Arbitration Proceedings” of this Registration Document), which
results, financial condition, liquidity or prospects, independently
of the claim’s underlying validity.
Risks related to competition law
The Group’s activities may be subject to legal action or
investigations with respect to competition, marketing practices
and price setting, which could impact the Group’s business,
results of operations and financial condition. The Group could
be held liable for any failure to comply with competition law,
either directly or indirectly (including because of a failure by one
of the Group’s agents, franchisees or partners), which could
result in significant negative consequences for the Group,
particularly with respect to its reputation, financial condition or
prospects. Certain Group entities are subject to investigations
by different administrative authorities relating to competition law
and/or marketing practices and price setting.
The French Competition Authority has opened a procedure
on potential anti-competitive practices by participants in the
vehicle rental sector, including Europcar France, to which it
addressed a notice of complaint on February 17, 2015. See
Section 2.5 “Regulatory, Legal and Arbitration Proceedings” of
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RISK FACTORS
this Registration Document. The Group recorded a provision in
its financial statements at December 31, 2015, reflecting the
Company’s best estimate of the financial risks at this stage of
the procedure in the event that the ADLC were to impose a
fine, notwithstanding Europcar France’s arguments in defense
of its position. See Note 32 of the financial statements at
December 31, 2015 in Section 3.4 “Consolidated financial
statements and Statutory Auditors’ report” of this Registration
Document. There is no guarantee that the amount of any fine
2.4.6
Tax risk
By operating in many countries, the Group is subject to multiple
and complex tax situations. The Group is located in countries
where the laws and tax regulations in effect as well as the legal
decisions of courts and/or local tax authorities are constantly
evolving.
This environment does not always allow the Group to
establish clear or definitive guidelines with respect to the tax
regulations applicable to its business, transactions or intragroup reorganizations (past or future) which could as a result
be based on an erroneous interpretation of French or foreign
tax laws and regulations.
As such, the Group cannot guarantee that these interpretations
will not be called into question by the relevant tax authorities.
More generally, any failure to comply with tax laws and
regulations in countries in which the Group or Group companies
are located or operate may lead to tax reassessments, the
payment of default interest, fines and penalties. In addition,
tax laws and regulations may change or be modified in their
interpretation and in their application by the relevant courts
and authorities, in particular with respect to initiatives decided
at an international or community level (such as the OECD, G20
or European Union). Any 36 of these elements may lead to an
increase in the Group’s tax burden and have a material adverse
effect on its financial condition and results.
Taxation applicable to the ownership and commercial use of
vehicles in Europe is rapidly evolving over time and varies from
country to country. In the context of its operating activities,
Europcar may be subject, in particular but not exclusively, to
fleet, circulation or registration taxes, also known as “ecological
taxes”. These taxes could have a material adverse effect on the
Group’s results of operations in that this additional tax burden
would not be passed on to its customers.
French and foreign tax rules could limit the Group’s ability to
benefit from tax deductions on interest, which may lead to a
reduction in the Group’s net cash.
90
would not be significantly higher than the amount estimated
and provisioned, which could have a material adverse effect
on the Group’s results, or that damage claims would not be
brought at a later date. The imposition of fines or damages
which could potentially be payable by the Group as a result
of the procedure could have a material adverse effect on the
Group’s liquidity and financial condition, leading it to seek
additional financing or resources.
EUROPCAR
2015
Several European countries in which Europcar operates have
implemented restrictive rules with respect to the tax deductibility
of loan interest and other similar financial expenses. These
changes could have an impact on Group companies that have
relatively high debt levels. As an example, many countries have
recently introduced maximum tax limits on interest deductibility.
In general, these rules limit the deduction of interest under net
financial expenses that exceed a certain threshold such as a
percentage of EBITDA, or which do not respect debt/equity
ratios.
Even when regulations of a particular regime allow for a deferral
of the rejected interest deductions over future fiscal periods,
the Group’s ability to make tax deductions of this interest could
depend on a number of factors, such as its ability to record
future taxable income as well as restrictions related to the
duration of the permitted deferral.
With respect to French tax regulations, Articles 212 bis and 223
B bis of the French General Tax Code, created by Article 23
of Finance Law no. 2012-1509 for 2013, limit the portion of
net financial expenses that can be deducted from corporate
income tax, subject to certain conditions and exceptions, to
85% for tax years ended as from December 31, 2012 and to
75% for tax years starting from January 1, 2014.
In addition, as provided for in French regulations on
undercapitalization, the deduction of interest paid on loans
granted by a related party and, subject to certain exceptions,
on loans granted by third parties but guaranteed by a related
party, is authorized under certain conditions but subject to
limitations, pursuant to the provisions of Article 212 of the
French General Tax Code.
The impact of all such regulations on the Group’s ability to
deduct interest paid on loans could increase the Group’s tax
burden and have a material adverse effect on the Group’s
effective tax rate, financial condition and results. Nevertheless,
given current regulations and the Group’s tax situation, the
RISK FACTORS
Group does not expect these limits to have a significant impact
on its cash.
The Group’s future results, French and foreign tax regulations
and tax audits or disputes could limit the Group’s ability to
use its tax loss carryforwards and, as a result, have a material
adverse effect on the Group’s financial condition.
The Group has significant tax loss carryforwards (whose
tax impacts are described in Notes 12 to the Group’s 2015
consolidated financial statements set forth in Section 3.4
“Consolidated financial statements and Statutory Auditors’
report” of this Registration Document).
The ability to effectively use these losses will depend on various
factors including (i) the ability to record taxable income and
2.4.7
02
These factors could increase the Group’s tax burden and have
a material adverse effect on the Group’s effective tax rate,
financial condition and results.
Risks related to labor law
With an average annual headcount of 6,324 in 2015, the Group
is subject to multiple and complex national labor laws. The
Group also uses a number of temporary workers and outsources
services, mainly for the moving and cleaning of vehicles in high
season and in compliance with the legislation applicable to the
countries in which the Group operates. The Group is located
in countries where laws, applicable regulations as well as their
interpretation by the relevant courts or authorities may rapidly
change. The Group cannot guarantee that its interpretation,
2.4.8
the balance between income and losses, (ii) the general limit
applicable to French tax loss carryforwards, under which the
percentage of losses that can be carried forward to offset
the portion of taxable income exceeding €1 million is limited
to 50% for fiscal years ending as from December 31, 2012,
as well as certain more specific restrictions related to using
certain categories of deficits, (iii) limits to the use of 37 tax
losses that may be imposed by foreign laws and regulations,
(iv) consequences of present or future tax audits or disputes
and (v) potential changes in applicable laws and regulations.
past or present, of the laws and regulations applicable in
France or abroad is correct and will not be contested on
different grounds by its employee-representative bodies, its
employees or former employees before the relevant authorities.
If such claims were heard, the Group could be exposed to the
questioning of its practices and/or sanctions, which could have
a material adverse effect on the Group’s business, results of
operations, financial condition and prospects.
Risks related to retirement pensions
The Group has obligations relating to defined benefit pension
plans, in particular in the United Kingdom. The Group’s financial
obligations depend on the future performance of the assets, the
level of interest rates used to determine future commitments,
actuarial forecasts and experience, changes in the retirement
regimes and applicable regulations. Given the large number of
variables that determine the financial obligations of retirement
regimes, which are difficult to forecast, and given that there
may be regulatory changes, the future obligation to finance
in cash the retirement regimes of the Group and other postemployment benefit plans may be more significant than the
amounts estimated at December 31, 2015 (see “Employee
Benefits” in Section II “Significant Accounting Policies” of the
consolidated financial statements included in Section 3.4
report” of this Registration Document). If this were to occur,
such financial obligations may have an adverse effect on the
Group’s financial condition or results of operations.
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RISK FACTORS
REGULATORY, LEGAL AND ARBITRATION PROCEEDINGS
2.5 REGULATORY, LEGAL AND ARBITRATION
PROCEEDINGS
The Group is involved in a number of legal, regulatory and
arbitration proceedings in the ordinary course of its business.
In accordance with the accounting standards applied to the
Group, a provision is recognized in the statement of financial
position when the Group has an obligation as a result of a past
event, it is probable that an outflow of economic resources will
be required to settle the obligation, and the amount can be
reliably estimated.
At the date of this Registration Document, the Group is not
aware of any legal, regulatory or arbitrage proceedings other
than those mentioned below, that might have or have had in the
last twelve months a material adverse effect on the Company’s
or Group’s financial position or results.
Procedure of the French anti-trust authorities
The French Competition Authority (Autorité de la concurrence
– ADLC) has initiated a procedure in the vehicle rental sector.
As a result, inspection visits were made to Europcar France’s
registered office in January 2008 and documents seized. The
Group launched legal proceedings to challenge aspects of how
these inspections were conducted in 2008 and this led to a
ruling by the First President of the Paris Court of Appeal on
May 6, 2015, annulling the inspections, ordering that all items
seized be returned and forbidding their use in evidence by
any person or authority. The ruling specified that there was
no reason to cancel the investigation and its processes as a
result of the appeal against the conduct of the inspections.
On February 17, 2015, the French anti-trust authorities sent a
notification of grievances to Europcar France and a number of
its current and past parent companies. They charge that, for
several years (dating back to 2003 in the first case and 2005 in
the second), they, first, received periodic information from airport
operators on the activities of their competitors in these airports
and, second, applied a surcharge in railway stations which
the French anti-trust authorities allege was agreed with some
of their competitors. Europcar France lodged its statement
of defense brief on May 20, 2015. Following this filing, the
case-handler for the French anti-trust authorities should submit
a report to the College in the first semester 2016. Europcar
France will then have two months to respond to this report. The
French anti-trust authority’s decision would then be expected
to be issued several months later, following a hearing before its
College. Europcar France may appeal any decision imposing
a fine. This would not in principle suspend the obligation to
pay the penalty, unless there is an exceptional procedure to
suspend the payment pending appeal. An unfavorable decision
could be followed by damages claims brought by third parties.
The Group recorded a provision in its financial statements at
December 31, 2015, reflecting the Company’s best estimate
of the financial risks at this stage of the procedure in the event
that the ADLC were to impose a fine, notwithstanding Europcar
France’s arguments in defense of its position. See Note 32 to
the financial statements at December 31, 2015. There is no
guarantee that the amount of any fine would not be significantly
higher than the provision recognized or that damage claims
would not be brought at a later date.
Proceeding by the Italian competition authority
On July 29, 2015, the Italian competition authority performed a
search at the office of Europcar Italy as part of an investigation
mainly targeting the leasing business, involving ANIASA (the
Italian Association of Car Rental Companies) and its members.
This procedure relates to a potential exchange of commercial
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information and a possible agreement between members of
the association who conduct long-term rental, of a nature that
may be liable to restrict competition. Europcar Italia S.p.A. is
awaiting the notification of grievance.
RISK FACTORS
REGULATORY, LEGAL AND ARBITRATION PROCEEDINGS
Proceedings in the Federal Court of Australia
The Australian Competition and Consumer Commission (ACCC)
brought a case before the Federal Court of Australia against
CLA Trading Pty i (“Europcar Australia”). The ACCC charges
Europcar Australia’s rental agreements contained unfair clauses
regarding contractual guarantee policy and consumer liability
in the event of damage caused to the vehicle. The Authority
also considers that some statements on the Europcar Australia
website were misleading as the information provided to
consumers on the scope of their liability in the event of damage
was insufficiently precise. Europcar Australia has accepted
some of the facts alleged and is cooperating with the ACCC.
Europcar Australia has also proposed new general terms and
conditions which the ACCC has not objected to. Europcar
Australia and the ACCC submitted a shared presentation of
the facts and made a joint filing to the hearing on October 26,
2015. A decision is expected early in 2016 setting the amount
of the fine.
02
Dispute with former franchisee and sub-franchisees in Brazil
Two of the Group’s sub-franchisees in Brazil, Rentax Locação e
Comércio de Veículos Ltda. (“Rentax”) and Horizon Distribuidora
Veículos Ltda. (“Horizon”), have filed a suit against ECI and its
former Brazilian franchisee, Cia Ec Br de Franquias e Locação
de Veículos Ltda. (“EC-BR”), claiming unfair termination of the
franchise agreement between ECI and EC-BR. Rentax and
Horizon are claiming BRR 19,525,151, (around €6 million). ECI
is seeking to have the case dismissed on statute of limitations
grounds and, in particular, arguing that (i) there is no contractual
relationship with these two sub-franchisees, and (ii) there was
nothing improper in the termination of the EC-BR contract.
In the court of first instance, it was found that the suit filed
by Rentax and Horizon was not time-barred and that if ECI
were found liable it would have no recourse against EC-BR.
On appeal, this ruling was partly overturned by the Court of
Appeal, which found that ECI could seek recourse against ECBR, claiming back from EC-BR any payment ECI would make in
compliance with a court ruling against it. ECI, considering that
the Appeal Court had failed to consider all its arguments about
the statute of limitations, appealed to the Saõ Paulo Court of
Justice on September 8, 2014. In a ruling handed down on
March 17, 2015, the Saõ Paulo court upheld the ruling that the
plaintiffs’ suit was not time-barred. No date has yet been set for
the court of first instance hearing on the substance of the case.
Labor Disputes
The Group faces individual disputes related to dismissals on
personal grounds as well as individual disputes in the ordinary
course of business. The Group also faces individual disputes
for dismissals on economic grounds in the context of internal
restructurings carried out in prior years, as well as individual or
collective disputes relating to restructurings.
Litigation with twenty-four former employees
The Group is defending proceedings for interim relief brought
before the Rambouillet ombudsman’s council in which twentyfour employees and their union are challenging the automatic
transfer of their employment contracts following the transfer
of APS Greenway’s business to an IT services provider. On
June 24, 2015, the ombudsman’s council dismissed the
employees’ demands. On July 17, 2015, they appealed. The
appeal hearing took place on February 9, 2016 and the decision
is expected to be handed down on April 12, 2016.
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02
RISK FACTORS
FINANCIAL RISKS
Litigation with Mr. Philippe Guillemot
Following his dismissal as CEO on February 13, 2012, Mr.
Philippe Guillemot sued the Company for payment of around
€2.5 million in termination of employment compensation set out
in his contract. The Company claimed that Mr. Guillemot had
been dismissed for gross misconduct and was therefore not
entitled to any contractual compensation. In the court of first
instance, the Versailles Commercial Court ruled in favor of Mr.
Guillemot. In a ruling dated July 1, 2014, the Versailles Court
of Appeal dismissed this ruling in its entirety and found for the
Company. Mr. Guillemot has appealed in turn seeking to have
the appeal court ruling set aside. The case is currently before
the Court of Cassation.
2.6 FINANCIAL RISKS
The Group’s activities expose it to a variety of financial risks:
market risk (in particular foreign exchange risk and interest
rate risk), credit risk, price risk and liquidity risk. The Group’s
overall risk management program seeks to mitigate the
potential negative impacts of volatility in the financial markets
on the Group’s financial performance. The Group’s overall risk
management program seeks to mitigate the potential negative
impacts of volatility in the financial markets on the Group’s
financial performance. The Group uses derivative financial
instruments to hedge certain risk exposures.
the Management Board has approved the transactions,
Group Treasury is responsible for setting up the hedges. This
procedure is prepared and monitored for the management of all
material financial risks, and in particular interest rate and credit
risk, as well as for the use of derivative and ordinary financial
instruments, and the short-term investment of surplus cash.
The Group does not use derivative financial instruments for
any purpose other than managing its exposure. All hedging
operations are either coordinated or carried out by Group
Treasury.
Risk management is handled by the Group Treasury
Department, which submits proposed financial transactions
to the Management Board for approval. The Group Treasury
Department identifies, evaluates and recommends derivative
instruments to hedge financial risks in close collaboration with
the Group’s operational units. The Management Board, taking
note of the recommendations of the Investment Committee,
then decides whether to authorize such proposals based on
formal documentation describing the context, purpose and
main characteristics of the proposed transactions. Once
The Group continuously assesses the financial risks identified
(including market risk, credit risk and liquidity risk) and
documents its exposure in its consolidated financial statements.
The Group considers that its exposure at December 31, 2015
has not changed significantly during the last 12 months and
therefore continues its policy to mitigate against such exposure
unchanged from prior years. A detailed analysis of these risks
can be found in Section II “Significant accounting policies”
in the Consolidated financial statements for the year ended
December 31, 2015.
2.7 INSURANCE AND RISK MANAGEMENT
2.7.1
Insurance
In the ordinary course of business, the Group is exposed
to three principal categories of risks that may be subject to
insurance policies: (i) motor vehicle liability, (ii) damage to
property (vehicles owned by the Group) and (iii) risks related to
its business (excluding its fleet).
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A dedicated insurance and risk management department
oversees in a centralized manner the insurance strategy of
the Group’s fleet as well as the other business related risks
management processes. This centralized management is
carried out in connection with dedicated personnel located
in each Corporate Country. The Group does not manage
insurance covering its franchises, which remains their own
RISK FACTORS
INSURANCE AND RISK MANAGEMENT
responsibility in accordance with the terms of the standard
franchise contracts implemented by the Group.
In countries in which the Group operates, it is generally required
by liability laws to purchase insurance covering its risks related
to motor liability against bodily injury and accidental death or
property damage caused by its customers to third parties and
resulting from the use of its vehicles, whether they are owned,
rented or loaned. If these vehicles are not insured by the Group,
they cannot be put into circulation. As a result, coverage of
the Group’s motor vehicle liability is critical for the running of
its business.
2.7.1.1 Motor vehicle liability
EUROPROGRAMME (BELGIUM, FRANCE,
GERMANY, ITALY, PORTUGAL AND
THE UNITED KINGDOM)
To address the risk of its motor liability, the Group has
implemented an insurance program in Belgium, France,
Germany, Italy, Portugal and the United Kingdom, the
“Europrogramme”. The Europrogramme is a corporate
insurance program allowing each subsidiary operating in each
country participating in the program to benefit from motor
vehicle liability insurance from its local AIG Europe Ltd. (“AIG”)
branch, established in the country in which the subsidiary
operates.
Under the Europrogramme, third party claims or the share of
third party claims related to motor liability less than or equal
to €500,000 per accident are “self-financed”. In this case, AIG
covers third parties, under local insurance policies purchased
by the Group’s subsidiaries, and then recovers sums up to this
amount, according to the relevant subsidiary, by:
(i) Euroguard Cell 0, acting as deductible fund manager on
behalf of Europcar Belgium, France, Italy and Portugal,
up to a maximum of €500,000 per accident and within an
annual aggregate limit actuarially set each year by country, in
accordance with the Deductible Funding Agreement (DFA);
(ii) Europcar Germany, up to a maximum of €100,000 per claim,
and Europcar UK up to a maximum of €500,000 per claim,
according to Loss Reimbursement Agreements (LRA);
(iii) Euroguard Cell 9, the Group’s reinsurance captive within
the Euroguard Protected Cell Company (PCC), a company
separate from the Group, intervenes in order to cover:
a. a layer of €400,000 in excess of €100,000 for Europcar
Germany claims,
b. part of claims exceeding €500,000 m the annual
aggregate limit for the DFA of Belgium, France, Italy
and Portugal.
The share of claims triggering the Group’s motor vehicle liability
that exceed the threshold of €500,000 per claim is transferred
to AIG. The maximum coverage limit provided for by the
insurance policy, including the amount of €500,000 per claim
that is the Group’s responsibility as described above, stands
at a total of at least €100 million per member country of the
Europrogramme, £85 million in the United Kingdom and, may,
in certain countries, exceed this amount when required by local
legislation.
02
For the year ended December 31, 2015, the estimated total
cost of the Europrogramme was €95.1 million. The insurance
policies comprising the Europrogramme were renewed as from
January 1, 2016 for 3 years ahead of the original expiry date
of December 31, 2016, on more favorable terms than those
struck in 2014. This new long-term agreement, which entered
into force on January 1, 2016, defines the general framework
of the Europrogramme and its annual renewal conditions, in
particular the factors that determine the amount of premiums
and fees payable by the Group for each year of the program.
SPAIN
Europcar Spain’s motor vehicle liability is not covered within
the Europrogramme. Since January 1, 2009, it has been
insured through a standard risk transfer policy purchased from
Allianz Spain. This insurance policy expires on December 31,
2017 and stipulates, in particular, the amount of premiums
and fees payable by Europcar Spain in order to benefit from
this coverage. The limits of this policy stand at €70 million for
bodily injury and €15 million for property damage, which may
be increased under certain conditions with additional coverage
of €50 million (“voluntary” coverage) for bodily injury, accidental
death and property damage. The total cost of the insurance
premium for the year ended December 31, 2015 stood at
€8.5 million.
AUSTRALIA/ NEW ZEALAND
The motor liability risks which the Group is exposed to as
a result of its operations in Australia and New Zealand are
covered by the “Third Party Bodily Injury” mandatory regime
administered by the State and automatically purchased during a
vehicle’s registration, combined with an “Own Damages” policy
covering the vehicle’s market price and a “Third Party Property
Damages” policy with a limit of approximately AUD 30 million
(or approximately €20.5 million), executed on May 1, 2014 with
Allianz for a period of one year and placed with QBE on May 1,
2015 for a period of one year.
For the year ended December 31, 2015, the total cost
(including the share of “self-financed” risks and premiums) of
the Group to cover its risks and mainly its motor liability risk
(Europrogramme, Spain, Australia and New Zealand combined)
EUROPCAR
2015
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02
RISK FACTORS
was €99.9 million, of which €95.1 million for the countries being
part of the Europrogramme that corresponds to the coverage
of accidents “self-financed” by the Group, the insurance
premium of the AIG excess layer, claims management fees,
administrative and brokerage fees as well as related taxes. In
2015, for Spain the insurance cost to cover in particular motor
vehicle liability risk was €8.5 million and for Australia and New
Zealand the cost was €0.2 million. The average claims maturing
time during which the costs of claims are borne by the Group is
approximately three years. Liability insurance is by nature longtail insurance and the most severe claims may remain active
for several years, or even tens of years or more in extreme
cases. Motor liability insurance cost, stated on a comparable
basis (per rental day) have historically trended both upward and
downward, reflecting (i) the cost of the market capacity in terms
of motor liability insurance and (ii) the Group’s own motor liability
claims records, these two factors being significantly influenced
by the availability of insurance capacity on the market and
increases in property damage claims and especially severe
bodily injury claims (cases of death and disability). The Group
estimates that these two factors will continue to influence
insurance costs in the future.
Since 2011, the Group has undertaken a voluntarily plan to
reduce claims frequency and improve claims management
processes efficiency in coordination with its partners. Such
an improvement focused on aspects such as repudiating
fraud, reducing claims notifications delays, accelerating the
closing of claims files or reducing the number of dormant files.
Reducing the claims frequency involves actions focused on
business customers or young drivers, customer categories
with high claims frequency records. These actions by country
are presented to actuaries who partly factor them in their
recommendations. These actions, combined with legal
changes or road accident prevention campaigns in certain
countries in which the Group operates, have resulted in a
decrease in its insurance costs. The development of this cost
line nevertheless depends on changes in the economic, social
and legal environment as well as the motor liability risk that
insurers are prepared to provide cover against.
2.7.1.2 Property damage – vehicles owned
by the Group
In most countries in which the Group operates, the Group does
not insure the property damage to its vehicles and is taking
the charge related to the risk of damage to its fleet. Over the
long run, the Group considers that insuring property damage
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to its fleet and theft of vehicles would be greater than or equal
to actual costs of damages and theft. The Group’s rental
agreements generally stipulate that the customer is, subject to
certain exceptions, responsible for any deterioration or damage
(including damage as a result of theft) to the rented vehicles.
The cost of damages related to collisions for which third parties
are not involved and the cost of stolen or missing vehicles, as
well as damages caused to the Group’s property, are expensed
as they are incurred. For the year ended December 31, 2014,
expenses related to damages caused to the fleet (including
repair work) and to the loss or theft of vehicles, net of recoveries,
was €95 million.
The cost of damages to property or of theft not insured by the
Group is partly offset by (i) proceeds from the sale of damage
or theft waivers and (ii) the recovery of deductibles that remain
applicable (see Section 2.7.1.4 “Optional coverage offered to
customers” below).
2.7.1.3 Risks related to the Group’s business
(excluding its fleet)
In order to manage other risks related to the Group’s business,
or to comply with applicable laws, the Group has purchased
and implemented other insurance programs, including a general
liability insurance program, an environmental liability insurance
program, an employer’s practice liability insurance program
related to employment practices, an insurance program
covering fraud, a directors and officers liability insurance
program and a property damage and loss of earnings program.
These insurance programs have been purchased from nonaffiliated insurance companies for amounts deemed by the
Group as reasonable given its risk profile, and secured terms
and conditions considered by the Group as reasonable.
Furthermore, as part of the IPO of the Company’s shares on
Euronext Paris in June 2015, the Company has purchased a
specific IPO-related directors and officers insurance program
for the Company’s executives and major shareholder in order to
cover certain risks related to this flotation. It covers, in particular,
defense and investigation fees, damages and interest, as well
as insurable fines and penalties related to claims filed by the
Company’s new shareholders and proceedings initiated by the
relevant stock market authorities following noncompliance with
applicable regulations. This insurance policy took effect as of
the date of the admission to trading of the Company’s shares
on Euronext Paris for a six-year term.
RISK FACTORS
2.7.1.4 Optional cover offered to customers
PERSONAL ACCIDENT INSURANCE (“PAI”) AND
SUPER PERSONAL ACCIDENT INSURANCE (“SPAI”)
WAIVERS IN THE EVENT OF DAMAGE OR THEFT
The Group proposes insurance products that allow occupants
of its vehicles or their beneficiaries to receive lump sum
indemnities in the event of accidental death or permanent
disability following an accident occurring during the rental
period. These products also contain a “medical expenses”
component.
The Group generally proposes ancillary products to its
customers, such as damage and theft protection, according to
which the Group waives or limits its right to hold its customers
financially liable for damage to the vehicle or losses to the
Group. The purchasing of this type of product transfers, for an
additional fee or premium, the customer’s total or partial cost
liability to the Group.
PROTECTION AGAINST COSTS RELATED TO FLAT
TIRES, BROKEN WINDSHIELDS AND HEADLIGHTS
The Group proposes a product that covers the customer’s
financial liability in the event of a flat tire, broken windshield and
headlight during the ordinary use of the rented vehicle.
02
Such indemnities will be granted in addition to the compensation
received by passengers considered third parties by the
mandatory motor liability insurance regime and by a not-atfault driver of the vehicle rented from the Group.
In the event where the driver of the vehicle rented from the Group
is at fault, and as a result not covered under the mandatory
motor liability insurance regime, insurance offered by the Group
represents the driver’s sole source of compensation (excluding
a social security regime or insurance purchased elsewhere by
the individual for personal use).
These three broad categories of products are available in
sales agencies and from Europcar’s website. The Group has
purchased PAI/SPAI from a leading market insurer. The program
was standardized for all Corporate Countries in March 2015 to
enhance clarity for customers.
2.7.2
Risk management
Risk management relates to measures implemented by the
Group to identify and analyze the risks to which it is exposed
in the ordinary course of business. Risk management is
considered a priority by the Group’s management and is
closely followed by the Group Internal Audit Department. The
Group’s internal control and risk management procedures are
based on a set of measures, policies, procedures, behaviors
and customized actions aiming to ensure that the necessary
measures are taken to:
a ensure the efficiency of operations and the efficient use of
resources; and
a identify, analyze and control risks that could have a
material effect on the Group’s assets, results, operations or
achievement of its objectives, whether they are operational,
commercial, legal or financial or related to compliance with
laws and regulations.
The Group’s internal control system is based on the Committee
of Sponsoring Organizations of the Treadway Commission
(COSO) principles as well as international standards, as
defined by the Institute of internal auditors (IIA). The Group’s risk
management and internal control process was spearheaded by
the Board of Directors through the Company’s Audit Committee.
Since the changes made to the Company’s governance, the
Supervisory Board (through the Audit Committee) is responsible
for monitoring the effectiveness of the internal control and risk
management systems put in place by the Management Board.
The Audit Committee ensures the relevance, reliability and
implementation of internal control procedures, the identification,
hedging and management of the Group’s risks in relation to its
activities as well as accounting and financial information. The
Company has established and manages, under the supervision
of the Internal Audit Department and the Chairman of the
Management Board, the risk map and the risk management
program.
The Group’s risk management program integrates, in particular,
the unpredictable nature of financial markets, and seeks to
minimize their potentially negative effects on the Group’s
financial performance by using derivative financial instrument
in order to hedge certain exposures, in particular those related
to interest rate fluctuations. On the financial front, the Group’s
Treasury Department is tasked with managing financial risks
under the stewardship of the Group Deputy CEO, Finance. The
Group’s Treasury Department identifies, evaluates and hedges
EUROPCAR
2015
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02
RISK FACTORS
financial risks, in close collaboration with the Group’s operating
units. All of these hedging operations are either coordinated and
validated centrally or directly executed by the Group’s Treasury
Department.
and analyzes the actions and specific monitoring of certain
risks (see Section 5.2.3 “Internal Control” of this Registration
Document).
Controlling risk exposure in each country in which the Group’s
companies operate depends on local management teams, who
are as close as possible to the risks related to the activities they
exercise or supervise.
Fraud prevention and fight against corruption
and money-laundering
The Risk Map
The risk map was established at the Group by the Internal
Audit Department on the basis of global risks as identified by
management. In 2015, 17 highly critical risks and 26 moderately
critical risks, either internal or external to the Group, were
identified. Risks are ranked depending on the estimated impact
of each risk and the likelihood of its occurrence. Risks identified
as having severe impacts and a strong probability of occurring
are mapped as “highly critical”. Conversely, risks identified as
having little impact and a weak probability of occurring are
mapped as “moderately critical”. The resulting map obtained
for a given year provides a comparative tool with the previous
year’s map, and helps in understanding the development of
risks to which the Group is exposed. The map allows the Group
to set up a dashboard with the estimated degree of control of
each of the identified risks and to identify those that must be
dealt with in priority, as well as to ensure that internal control
is adequate to prevent and detect them. The risk map also
helps to update the audit plan, in particular on topics that are
identified as requiring increased supervision.
The Group’s Internal Audit Department regularly updates the
risk map at the level of the Group and its related subsidiaries
on a rolling basis. The risk map is presented to the Group’s
Audit Committee and Management Board, which then studies
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The Group’s Internal Audit Department oversees identification
and fraud prevention processes for all of its activities. This
process was strengthened in 2015 by a Fraud Prevention Plan,
the first part of which, covering station fraud, was implemented
in the first semester.
The Group has implemented a signed reporting policy. Under
this policy, the managers of the Group’s different subsidiaries
sign an annual compliance letter. The purpose of the compliance
letter is in particular to (i) report and analyze the situations and
risks of non-compliance, as well as to present any implemented
corrective measures; (ii) ensure that all employees have received
training related to the Group’s charter of values, conflicts of
interest, personal data protection and competition law over
the course of the fiscal year; and (iii) certify, in particular, the
absence of any conflicts of interest and compliance with anticorruption rules, personal data protection, labor laws and
human rights.
Moreover, in the context of its compliance program (including
anti-corruption, compliance with economic sanctions, antifraud), the Group has recently adopted a data-processing tool
allowing for the identification of at-risk commercial partners.
Risks related to operations of the Group’s international
franchisee network are subcontracted to an external audit firm.
At times, external auditors are called upon to cover certain
business sectors with respect to technical issues that cannot
be covered internally.
03
ACCOUNTING
AND FINANCIAL
INFORMATION
3.1
ANALYSIS OF GROUP RESULTS
100
3.7
OUTLOOK FOR FINANCIAL YEAR 2016 245
3.2
LIQUIDITY AND CAPITAL RESOURCES 120
3.8
INFORMATION ON MID-TERM
TRENDS AND OBJECTIVES
247
3.3
INVESTMENTS
3.4
CONSOLIDATED FINANCIAL
STATEMENTS AND STATUTORY
AUDITORS’ REPORT
SIGNIFICANT CHANGE IN THE
FINANCIAL OR BUSINESS POSITION
248
147
ANALYSIS OF THE RESULTS
OF EUROPCAR GROUPE S.A.
218
COMMENTS FROM THE
SUPERVISORY BOARD REGARDING
THE MANAGEMENT BOARD’S
REPORT AND THE FINANCIAL
STATEMENTS FOR THE YEAR
ENDED DECEMBER 31, 2015
248
145
3.9
3.5
3.6
COMPANY FINANCIAL
STATEMENTS AND STATUTORY
AUDITORS’ REPORT
3.10
221
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03
ACCOUNTING AND FINANCIAL INFORMATION
3.1 ANALYSIS OF GROUP RESULTS
The information presented below on the Group’s results of
operations and financial condition should be read in conjunction
with the consolidated financial statements for the years
ended December 31, 2015 and 2014 included in Section 3.4
report” of this Registration Document.
This Section presents certain financial information and
other data for the periods indicated in order to facilitate the
understanding of the Group’s activity. In particular, it presents
Adjusted Corporate EBITDA, defined as recurring operating
income before depreciation and amortization not associated
with the vehicle fleet after deduction of the interest expenses
on liabilities related to rental fleet financing. Adjusted Corporate
EBITDA is a non-IFRS indicator that does not have a single
3.1.1
General presentation
3.1.1.1 Overview
customer contract and fleet management, and daily operational
management:
With over 65 years of experience, Europcar Groupe is the
European leader in the vehicle rental industry and one of the
key players in the mobility industry. With operations in over
140 countries, Europcar offers its customers one of the largest
vehicle rental networks, both directly and through its franchises
and partners. The Group operates through its Europcar® brand
and its low-cost InterRent® brand. Customer satisfaction is at
the core of the Group’s and its employees’ mission and drives
the continuous development of new services. Europcar Lab,
for instance, was created to gain a better understanding of the
future challenges of mobility through innovation and strategic
investments such as Ubeeqo and E-Car Club.
With an average fleet of 205,353 vehicles (cars and vans &
trucks) and a volume of 57.1 million rental days in its Corporate
Countries (Germany, Australia, Belgium, Spain, France, Italy,
New Zealand, Portugal and the United Kingdom) in 2015,
the Group uses its extensive knowledge of the vehicle rental
industry to provide a wide range of mobility solutions.
The Group is organized around two main operating segments,
Europe and Rest of World, within which the nature of the
services provided, the categories of targeted customers
and the seasonality are identical. The distinctions between
the two segments are mainly based on criteria related to the
characteristics of the economic zone, the organization of
customers, interdependency between countries with respect to
100
generally accepted definition. The Group believes that Adjusted
Corporate EBITDA, which takes into account all costs relating
to the vehicle fleet, including depreciation expenses and
interest costs associated with the fleet, provides investors
with valuable insight into the Group’s performance, especially
given that the Group uses this figure to monitor its performance
(see “Adjusted Corporate EBITDA” under Section 3.1.1.3
“Description of the principal line items in the Group’s income
statement”). Moreover, the Group has identified certain impacts
from exchange rate fluctuations (primarily in the pound sterling,
the Australian dollar and the New Zealand dollar) and presents
certain information for the year ended December 31, 2014 by
applying the exchange rates for the year ended December 31,
2015.
EUROPCAR
2015
a the Europe operating segment includes the European
countries where the Group operates its fleet directly
(Germany, Belgium, Spain, France, Italy, Portugal, and
the United Kingdom), organized around common service,
customer and distribution criteria, as well as the franchised
European countries (Austria, Denmark, Finland, Greece,
Ireland, Luxembourg, the Netherlands, Norway, Sweden,
Switzerland and Turkey), which have similar economic
characteristics and offer synergies in terms of fleet negotiation,
customer management, and seasonality of activity. During
the year ended December 31, 2015, the Group generated
consolidated revenue in Europe of €1,992.2 million (or 92.7%
of the Group’s consolidated revenue before intragroup
eliminations and holdings) and Adjusted Corporate EBITDA
of €191 million (or 76.2% of the total);
a the Rest of World operating segment includes the other
countries in which the Group operates directly (Australia and
New Zealand), as well as all of the franchised countries that
are not included in the Europe operating segment. During
the year ended December 31, 2015, the Group generated
consolidated revenue in Rest of World of €156.1 million (or
7.3% of the Group’s consolidated revenue before intragroup
eliminations and holdings) and Adjusted Corporate EBITDA
of €32.1 million (or 12.8% of the total).
Eliminations and Holdings encompasses the departments
supporting the two operating segments, Europe and Rest of
World, including IT, legal, tax, e-commerce, fleet, financing,
insurance, marketing, sales and transformation. It includes
personnel costs, IT costs, and sales and marketing costs, and,
in return, management commissions paid by the two operating
segments. During the year ended December 31, 2015,
Eliminations and Holdings represented Adjusted Corporate
EBITDA of €27.6 million (or 11% of the total).
3.1.1.2 Key factors affecting the Group’s
results
Certain key factors as well as past events and transactions
have affected and may continue to affect the Group’s operating
results, including (i) the dynamics of the vehicle rental industry
and the attractiveness of the Group’s services; (ii) macroeconomic conditions; (iii) the Number of Rental Days and
amount of revenue per day generated by rental activities; (iv)
the seasonal nature of the vehicle rental business; (v) the effects
of the Fast Lane transformation program; (vi) the Group’s cost
structure and operational efficiency; (vii) financing expenses;
and (viii) changes in the Group’s scope of consolidation. Each
of these factors is discussed in greater detail below.
INDUSTRY DYNAMICS AND ATTRACTIVENESS
OF THE GROUP’S SERVICES
The vehicle rental sector is evolving rapidly, due in particular
to changes in consumer habits and technological advances.
a The growth of e-commerce. Customers’ booking habits have
changed in recent years due to e-commerce. E-commerce
enables the Group to adapt to its customers’ continually
evolving needs. The Group has invested in its websites and
applications, with a view to the growing role of e-commerce.
It has also entered into local arrangements with certain large
tour operators and travel agents specifically targeting leisure
customers and into partnerships with several leading Internet
travel portals (see “Europcar’s direct distribution channels”
under Section 1.6.4 “Distribution Channels”). The percentage
of vehicle rental reservations made via the Internet (including
through brokers) has substantially increased in recent years
and was 54% in 2015 compared with 52% in 2014. Online
reservations facilitate price comparison and may thus
further increase competitive pressure in the industry. These
channels, however, also generate lower costs than the
traditional channels.
a Technological changes and changes in offerings. In order
to remain competitive, vehicle rental companies have to
develop management models integrating information and
telecommunications systems that are both effective and
complementary with those of their partners, both with respect
to the customer’s ability to make reservations through multiple
distribution channels and in order to strengthen their ability to
offer innovative and less costly services. The Group regularly
invests in improving its IT system, which was built around
the centralized Greenway system, and has implemented a
plan for 2020 to continuously modernize the architecture of
its information system.
a Demand trends in the high-end and low-cost segments.
The Group believes that consumers in the transportation
sector tend to group themselves around either high-end
offers or low-cost offers. Growth in demand in the highend market provides new growth opportunities for vehicle
rental companies that are able to capitalize on their brand
recognition to develop new services and enter into key
partnerships with large players in the tourism industry.
The Group believes that it benefits from the established
recognition of its principal brand, Europcar®, to develop new
high-end services such as its Prestige offer and chauffeur
services (see Section “Europcar® service offerings” under
Section 1.6.1.1 “The Europcar brand®”). Moreover, demand
is also increasing for low-cost and small economy vehicles,
which drives the companies in the industry to adapt their fleet
composition and to develop new low-cost offers. Given these
trends, the Group began deploying its InterRent brand on the
low-cost market at the start of 2013. As of December 31,
2015, the brand operated in six Corporate Countries in
Europe, with 75 stations located primarily in airports and train
stations, and in 40 franchised countries (see Section 1.6.1.2
“The InterRent® brand”).
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a New mobility solutions. The vehicle rental sector has
undergone structural changes due to technological
improvements and the resulting changes in consumer
preferences and behavior (see Section 1.3.2 “Growth drivers
and general market trends”). These industry dynamics have
created growth opportunities for vehicle rental companies
which can concentrate their investments on the products,
services and technologies that they believe will have strong
added value or that many consumers will like and for which
they have or are able to develop the necessary technical
expertise to operate. The Group relies on its extensive
experience and know-how in the vehicle rental industry to
innovate and seize opportunities arising out of new mobility
trends. The Group’s innovations include new products
and services under its Europcar® brand such as FitRent,
AutoLiberté, ToMyDoor, ToMyCar and Keddy by Europcar®
(see Section 0 “Europcar® offerings”). Moreover, in response
to its customers’ specific mobility needs, the Group created a
Lab to design innovative mobility solutions and capitalize on
existing ones, in particular through Ubeeqo, E-Car Club and
Car2go (see Section 1.6.2 “Europcar Lab/Mobility solutions”).
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a Pricing dynamics. The vehicle rental market is competitive,
and pricing is one of the principal competitive factors. The
Group seeks to capitalize on the density of its network, its
expertise in the industry, its operating excellence and its
brand recognition to increase its capacity to offer an attractive
price-quality ratio while improving profitability. Supply and
demand affect both the Group’s fleet financial utilization rate
and its price positioning. In periods of high demand or when
demand is greater than supply, the fleet financial utilization
rate increases and competitive pressure on prices decreases.
Conversely, if demand decreases or supply exceeds demand,
downward pressure on prices may occur. The management
capacity of the available fleets (size and regional distribution)
of the various vehicle rental market participants also affects
the Group’s fleet financial utilization rate and price positioning.
For more information on the Group’s fleet financial utilization
rate, see “Cost structure and operating efficiency” under
Section 3.1.1.2 “Key factors affecting the Group’s results”.
a Regulatory changes. The Group is subject to numerous
regulatory regimes throughout the world, in particular with
respect to the environment, personal data, consumer
protection and franchise operation (see Section 1.6.11
“Regulation”). Changes in regulations may affect the Group’s
activities and results of operations, in particular when new
requirements are imposed.
REVENUE GROWTH INDICATORS
Revenue includes (i) income from vehicle rentals net of
discounts and rebates, (ii) commissions on related services,
and (iii) royalties received from Europcar franchisees.
The following indicators are generally used to analyze changes in
the Group’s consolidated revenue: (i) activity volume, measured
by the number of rental days, and (ii) average revenue per day
generated by vehicle rental activities.
NUMBER OF RENTAL DAYS
The “Number of Rental Days” is calculated as the number of
rental days invoiced to customers including each day or period
of less than a day for which a vehicle rental is invoiced to a
customer.
The Number of Rental Days is impacted by a number of
factors including those described in “Industry dynamics and
attractiveness of the Group’s services” under Section 3.1.1.2
“Key factors affecting the Group’s results” and “Macroeconomic
conditions” above, under Section 3.1.1.2 “Key factors affecting
the Group’s results”, the seasonal nature of the business,
changes in the services offered by the Group and its customer
portfolio, and the Group’s efforts to achieve profitable growth
in line with its strategy (see Section 1.5 “Strategy”).
REVENUE GENERATED PER DAY BY RENTAL ACTIVITIES
MACROECONOMIC CONDITIONS
Demand for rental vehicles, particularly in the business
segment, is driven by shifting macroeconomic conditions (such
as changes in GDP) in the countries where the Group operates
and especially in Europe, which in 2015 represented 76% of
consolidated Adjusted Corporate EBITDA. For example, the
global financial crisis and resulting economic slowdown in 2008
and 2009 had a negative effect on the vehicle rental business
as a whole and on the Group.
Demand is also driven by changes in air and rail traffic and the
factors underlying those changes, such as currency fluctuations
or geopolitical events, that can impact passenger flows (see
Section 1.3.2 “Growth drivers and general market trends”).
During the year ended December 31, 2015, airport stations
operated directly by the Group or by agents represented 42%
of rental revenue, whereas non-airport stations represented
58% of such revenue due to the capillarity of its network in the
nine Corporate Countries. The Group has also entered into
significant alliances and partnerships with several large airlines.
As a result, a significant portion of the Group’s revenue is tied
to the level of air traffic.
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Revenue per day is calculated as the consolidated revenue
generated by rental activities divided by the Number of Rental
Days for the period in question (“RPD”). The change in RPD
is calculated by reference to the previous year and may be
presented at constant exchange rates to correct for fluctuations
in exchange rates (primarily for impacts relating to the pound
sterling, the Australian dollar and the New Zealand dollar).
RPD primarily depends on the following factors:
a The Group’s price positioning. The Group’s prices generally
reflect (i) positioning of the Group’s services and related pricing
policy, (ii) sales of additional services and equipment such as
insurance products, optional protection and equipment, (iii)
specific market conditions and the structure of the customer
base in the regions where the Group operates, (iv) revenue
and capacity management to manage customer demand
and related pricing terms and to ensure the alignment of
the fleet (category/price and optimized distribution within the
network), (v) competitive pressure, and (vi) average rental
duration;
a Composition and diversity of the Group’s fleet. The Group’s
fleet includes 11 main categories of vehicles, based on general
industry standards: mini, economy, compact, intermediate,
standard, full-size, premium, luxury, mini-vans, trucks and
convertibles. The fleet varies by brand with the Europcar®
brand covering a full range of vehicles and the InterRent®
brand offering a more limited range of vehicles which are
also perceived as being less expensive by customers. The
diversity of the Group’s fleet enables it to meet rental demand
from a large range of customers. Generally, rentals in the
higher categories have higher RPD than rentals of vehicles in
the lower categories. However, the lower categories generate
lower costs for the Group, generally resulting in comparable
profitability;
a Type of customer: business or leisure (see Section 1.6.3
“Customers (business/leisure)”). Leisure rentals tend to be
of longer duration and have a higher RPD than business
rentals. In addition, longer rentals usually generate lower
RPD than shorter rentals but have a different cost structure
which generally gives them comparable profitability (see
“Cost structure and operating efficiency” below):
a Geographical diversity. The Corporate Countries serve
different types of customers and use different price and fleet
composition strategies. In Europe, Germany and Belgium
generate a larger percentage of their revenue in the business
market, while Spain, Italy and Portugal generate more of their
revenue in the leisure market. Lastly, France and the United
Kingdom have a fairly even balance between business and
leisure customers. The Corporate Countries in the Rest of
World operating segment (Australia and New Zealand) are
more active in the leisure market; and
a Fluctuations in certain exchange rates. Since RPD is
measured in euros, it can be affected by fluctuations in
exchange rates, in particular between the euro and the pound
sterling and between the euro and the Australian dollar. As
a result, the Group generally monitors RPD at constant
exchange rates.
SEASONALITY
The vehicle rental business is very seasonal and sensitive to
weather conditions (see Section 1.6.8 “Seasonality”). Activity
generally peaks in June through September. The leisure
market is characterized by higher demand during the summer
months and school holidays, in line with greater activity in
the transportation industry generally. As a result, the Group’s
revenue and Adjusted Corporate EBITDA are higher during
these periods than during the rest of the year. For example,
the Group generated 61.5% of its Adjusted Corporate EBITDA
during the third quarter of the year ended December 31, 2015
(compared with 65% in 2014). The leisure market is also
characterized by increased demand on weekends as compared
with the workweek. The business market complements the
leisure market as it is relatively stable throughout the year
with a slight dip during the summer months and more activity
midweek (Tuesday through Thursday).
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For the year ended December 31, 2015, leisure rentals
represented 56% of rental revenue compared with 44% for
business rentals.
Good management of seasonality is an important aspect of the
Group’s financial model. The Group seeks to take advantage
of activity during weekly and annual peaks (high activity) while
remaining attentive to the fleet holding costs before and after
these periods (low or normal activity) with the objective of
maintaining a sound fleet financial utilization rate (for example
73-80% for each quarter). The Group meets these fluctuations
in demand through flexible agreements with vehicle suppliers.
These agreements provide for the Group to increase its vehicle
orders in advance of the busier months and include short-term
buy-back clauses (generally varying from five to eight months)
to lower the number of vehicles once strong demand has
decreased (see Section 1.6.7 “Fleet”).
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03
The following graph shows changes in consolidated revenue,
in millions of euros, in the fleet financial utilization rate and in
the average fleet per quarter in 2014 and 2015:
Average
fleet
(in thousands)
156
190
225
185
172
209
243
196
than €90 million on Adjusted Corporate EBITDA (compared with
an initial objective of €50 million) in 2012-2014 and contributed
approximately €90 million to improving non-fleet working capital
requirements (compared with an initial objective of €60 million).
The Group considered its transformation program to have
reached its midpoint at the end of 2014.
693
646
The Fast Lane program is described in detail in Section
1.4.4. “Fast Lane” Transformation Program that has set the
Foundation for Sustainable Profitable Growth.
547
495
489
464
414
374
79.8%
79.7%
77.1%
COST STRUCTURE AND OPERATING EFFICIENCY
76.4%
73.7% 73.6%
73.7%
73.6%
Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15
Quarterly revenues (€m)
Fleet utilization (%)
The following graph shows changes in quarterly Adjusted
Corporate EBITDA in millions of euros for the years 2014 and
2015:
180
160
140
120
100
80
60
40
20
0
-20
Operating costs as presented in the management income
statement accounted for 87% of the Group’s revenue in 2015.
The Group believes that its “operating cost base” is 70%
variable and 30% fixed or semi-fixed, as described below.
154.2
138.6
The following costs are considered variable:
63.8
51.7
36.3
32.7
-3.7
-10.2
Q1
Q2
Q3
2014
Operating costs as presented in the management income
statement essentially comprise fleet holding costs (excluding
estimated interest included in operating lease payments
which the Group analyzes as fleet financing costs included in
Adjusted Corporate EBITDA (1)), fleet operating costs, rental
costs, revenue-related costs, personnel costs, and network and
head office overhead. Accordingly, they do not include other
operating income and expenses (recorded in a separate item
in the income statement), non-recurring income and expenses
(recorded in a separate item in the income statement), or fleet
financing expenses.
Q4
2015
FAST LANE TRANSFORMATION PROGRAM
Beginning in 2012, the Group deployed a transformation
program called “Fast Lane” seeking to reinforce the Group’s
market presence and manage the transition from a vehicle
rental company to a larger role as a mobility services provider,
with sustainable growth and improved profitability. The strategic
initiatives aim to improve the Group’s fixed and variable cost
structure and to re-energize its commercial strategy.
The Fast Lane program has surpassed its original objectives.
The Group believes that Fast Lane had a positive impact of more
Fleet holding costs (which represented 29% of the operating
cost base and 26% of revenues in 2015). These costs include:
a costs related to rental fleet agreements which represented
25% of the operating cost base for 2015 and consist of (i)
depreciation expenses relating both to vehicles purchased
with manufacturer or dealer buy-back commitments and atrisk vehicles (based on monthly depreciation rates negotiated
under the buy-back agreements net of volume rebates for
vehicles purchased with a buy-back commitment, and on the
difference between the acquisition cost of the vehicles and
their estimated residual value for at-risk vehicles, the value
of at-risk vehicles being adjusted monthly on the basis of
the vehicles’ market values) and (ii) charges under operating
leases;
a acquisition and sales-related costs which represented 3%
of the operating cost base for 2015 and mainly include
(i) the cost of vehicle accessories, (ii) costs relating to the
conditioning of new vehicles, and (iii) costs relating to the
(1) In the IFRS income statement, payments under operating leases are recorded in full under fleet holding costs with no distinction between the
amortization expense and the estimated financial expense component.
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EUROPCAR
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disposal of used vehicles and vehicles purchased under buyback programs; and
a taxes on vehicles which represented 2% of the operating
cost base for 2015.
These costs are considered variable because the Group is able
to adapt and adjust its fleet using the flexibility provided for under
its buy-back agreements with car manufacturers. Europcar has
the ability to increase its vehicle orders in anticipation of the
high season and to use the variability in holding periods, which
generally range from five to eight months, to sell back vehicles
once demand decreases. Europcar is also able to react to shortterm peaks in demand by optimizing new-vehicle distribution
(see Section 1.6.7.1 “Fleet management”). The Group monitors
the following principal indicators for these costs: (i) average fleet
size; (ii) average fleet costs per unit per month; and (iii) the fleet
financial utilization rate (as discussed below).
Fleet operating, rental and revenue related costs (which
represented 39% of the operating cost base and 34% of
revenues in 2015). These costs include:
a fleet operating costs which represented 13% of the operating
cost base for the year ended December 31, 2015 and
which include insurance costs (the costs of car insurance
covering civil liability and damage to vehicles as well as
self-insurance costs), repairs and maintenance costs, costs
incurred for damaged and stolen cars, and costs incurred
for reconditioning vehicles for repurchase by the car
manufacturer or dealer. These costs vary with the average
fleet size and to a lesser extent with the Number of Rental
Days;
a revenue-related commissions and fees, which include
commissions paid to agents, covering personnel costs
and station overhead (excluding vehicle fleet), as well
as commissions paid to travel agents, brokers and other
commercial partners and fees and taxes paid for airport and
train station concessions. These costs represented 14% of
the operating cost base for 2015 and vary with the revenue
generated by the underlying rental activity; and
a rental related costs which represented 12% of the operating
cost base for 2015 and include the cost of transferring
vehicles from one site to another, vehicle washing costs and
fuel costs. Rental related costs are generally incurred once
per rental, with the result that a shorter-term rental will have
about the same level of these costs as a longer-term rental.
Costs considered fixed or semi-fixed include personnel costs,
head office and network overhead, and IT costs which together
represented 30% of the operating cost base for 2015. These
charges and costs may vary based on numerous factors,
including changes in the number of employees, the launch of
marketing campaigns, the implementation of the Fast Lane
program and the launch and deployment of the Shared Services
Center. Charges incurred within the network of stations may
also vary depending on activity.
03
COST STRUCTURE AND OPERATING EFFICIENCY
INDICATORS
In connection with the Fast Lane transformation program, the
Group achieved significant savings in fleet unit costs and other
operating expenses expressed as a number of vehicle rentals
or as a percentage of revenue.
The Group uses the following indicators to monitor and optimize
its fleet-related costs:
a Average fleet during the period. The average fleet during the
period is calculated as the number of days during the period
when the fleet was available divided by the number of days
in that period, multiplied by the number of vehicles in the
fleet during the period. The size of the average fleet during
the period, and therefore fleet holding costs, vary based on
predicted demand and the Number of Rental Days and in
particular on the effect of seasonality.
a Average fleet cost per unit per month. The average fleet
cost per unit per month corresponds to total monthly fleet
costs (fleet holding costs and fleet operating costs excluding
interest included in rental payments under operating leases
and insurance fees) divided by the average fleet over the
period. The Group also separately calculates monthly per-unit
fleet holding costs (excluding estimated interest included in
rental payments on operating leases) and monthly per-unit
fleet operating costs (calculated without taking into account
insurance costs). The average fleet cost per unit per month is
affected both by the macro-economic conditions that affect
car manufacturers and by the Group’s negotiating power
in its vehicle supply agreements with manufacturers. The
average per-unit cost for small economy cars tends to be
lower than the average per-unit cost for larger cars.
a Fleet financial utilization rate. The fleet financial utilization rate
means the Number of Rental Days over the number of days
in which the fleet is considered financially available (the period
during which the Group holds the vehicles). The higher the
fleet financial utilization rate, the fewer vehicles are needed to
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generate a given Number of Rental Days (see Section 1.6.7
“Fleet”). The optimized management of fleet size through
the acquisition and disposal of vehicles and a higher rate of
long-term rentals contribute to increasing the fleet financial
utilization rate.
Fleet management and improvements in the fleet financial
utilization rate rely on the Group’s internal procedures, on its
Revenue and Capacity Management teams that were set up
in 2012 in connection with the Fast Lane program, and on
the centralized GreenWay system and its specialized modules.
FINANCING COSTS RELATING TO FLEET
FINANCING AND OTHER LOANS
Financing costs include the following:
a financing costs relating to fleet financing which vary in
accordance with the selected or available financing option,
namely, financing through operating leases, which relies
primarily on the financing capacity of carmakers and dealers
(and, to a lesser extent, of banks and other companies
specialized in vehicle leasing), or financing through debt or
securitization for vehicles recorded on the balance sheet.
The type of financing used affects recognition of financing
costs under IFRS accounting standards. In the IFRS income
statement, payments under operating leases, including the
estimated portion corresponding to interest, are recorded
in operating income under fleet holding costs, whereas
expenses relating to other types of financing relating to the
fleet of vehicles recorded on the balance sheet are recorded
in net financing costs under gross financing costs. To make
it easier for the Group to monitor its performance, these two
types of financial expenses are grouped in a dedicated line
in the Adjusted Corporate EBITDA formula (see “Adjusted
Corporate EBITDA” under Section 3.1.1.3 “Description of
the principal line items in the Group’s income statement”) in
the management income statement;
a financial expenses related to the high yield bond used for
corporate financing;
a other financial income and expense, in particular costs
pertaining to other loans, amortization of transaction costs,
any redemption premiums, and foreign exchange differences.
CHANGES IN THE GROUP’S SCOPE
OF CONSOLIDATION
On July 9, 2015, Europcar Lab, the Europcar Group unit
dedicated to innovation, announced the acquisition of a
majority stake in E-Car Club, the UK’s first entirely electric
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pay-per-use car club. This new acquisition is fully in line with
Europcar Lab’s strategy to develop mobility market usages,
search for new mobility solutions opportunities worldwide and
make investments in strategic initiatives allowing the Group to
strengthen its leadership in the mobility market. E-Car Club has
been fully consolidated since July 1, 2015.
On October 31, 2014, the Group acquired 100% of the shares
of EuropHall SAS through its French subsidiary Europcar France
SAS. With revenue of €23 million in 2014, EuropHall has been
a significant franchisee of Europcar France in Eastern France
since 1978. EuropHall has been fully consolidated since early
November 2014.
In addition, on November 30, 2014, the Group acquired a
majority stake in Ubeeqo, a French startup formed in 2008 that
provides car-sharing solutions. This 75.7% equity stake (as at
December 31, 2015) is consolidated under the equity method.
3.1.1.3 Description of the principal line items
in the Group’s income statement
The description below is based on the Group’s income
statement prepared in accordance with IFRS unless stated
otherwise.
REVENUE
In this document, income generated from ordinary activities is
referred to as revenue or consolidated revenue.
Revenue includes rental revenue (net of discounts and rebates
and excluding intragroup sales, value-added taxes and sales
taxes), fees from the provision of services incidental to vehicle
rental (including fuel), and income received from the Europcar
franchise network:
a rental revenue (or vehicle rental income) includes rental
revenue generated by the stations operated directly by the
Group and by the rental stations operated by agents;
a fees from the provision of services complementary to
vehicle rental include, in particular, revenue from fuel sales
and commissions received for fleet management of large
accounts; and
a income from franchisee rental activity includes annual
royalties, import and territorial duties and other costs (such
as reservation fees) invoiced by Europcar; recovery fees; and
fees for IT services provided to franchisees. Royalties paid
by franchisees to the Group are determined on the basis of
the rental revenue generated by the franchisees within their
territories.
FLEET HOLDING COSTS
Fleet holding costs include depreciation charges on vehicles
acquired under agreements with buy-back clauses and on atrisk vehicles, costs relating to vehicle rental agreements, costs
relating to vehicle acquisitions and disposals, and taxes on
vehicles (see “Cost structure and operating efficiency” under
Section 3.1.1.2 “Key factors affecting the Group’s results”).
AMORTIZATION AND DEPRECIATION EXPENSES
EXCLUDING VEHICLE FLEET
Amortization, depreciation excluding vehicle fleet primarily
includes amortization of intangible assets (software and
operating systems owned by the Group), depreciation of
property, plant and equipment (IT equipment).
OTHER INCOME AND EXPENSES
FLEET OPERATING, RENTAL AND REVENUE
RELATED COSTS
Fleet operating, rental and revenue related costs comprise
the costs of operating the fleet (including insurance costs),
commissions and fees relating to income from ordinary
activities, and costs relating to rental. See “Cost structure
and operating efficiency” under Section 3.1.1.2 “Key factors
affecting the Group’s results”.
PERSONNEL COSTS
Personnel costs include wages and salaries (including
expenses relating to bonuses and profit sharing), social security
contributions, post-employment benefits and other items.
Personnel costs are monitored separately for (i) employees of
the rental stations, (ii) personnel costs relating to employees
working for the network, (iii) employees based at the head
offices of each of the Group’s operating subsidiaries, (iv)
employees at the Group’s head office or (v) employees at the
Shared Services Center in Portugal established in 2014.
NETWORK AND HEAD OFFICE OVERHEAD COSTS
Network and head office overhead includes costs relating to
rental stations (including rental costs and general network
costs) and costs relating to the head offices of the Group and
its Corporate Countries (including rental charges, travel costs,
and audit and advisory fees at the local and parent company
levels), as well as the related sales and marketing costs, costs
relating to IT systems, and telecommunications costs.
The head offices of the Group’s Corporate Countries carry out
a number of marketing and operational activities defined by the
Group and tailored to local needs, such as management of large
customer accounts and sales administration; Revenue and
Capacity Management activities; reservations and customer
service; e-commerce and marketing; and vehicle acquisition,
logistics and maintenance, as well as support functions such
as finance and Human Resources.
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Other income and expense includes net revenue from certain
commercial agreements; reversals of excess provisions; capital
gains and losses on disposals of property, plant and equipment;
and other items (such as rental agreement retrocessions and
tax penalties).
OTHER NON-RECURRING INCOME AND EXPENSES
Other non-recurring operating income and expenses include
expenses relating to the acquisition of businesses, restructuring
costs and other operating costs.
Acquisition-related expenses include charges incurred in
connection with the integration of acquisitions, such as legal
and accounting fees, severance and consultancy costs related
to headcount reductions due to the streamlining of the rental
station network and its support functions, asset write-offs and
transfer costs, lease termination and building refurbishment
costs carried out for the purpose of integrating acquisitions.
Reorganization expenses include charges incurred in
connection with business restructurings carried out in
response to economic downturns or to adapt local or corporate
organizational structures to changing business conditions. They
include headcount reduction expenses, consultancy fees, asset
write-offs and transfer costs and early lease termination costs
incurred as part of restructuring programs.
Unusual, abnormal and infrequent items of significant amounts
are presented separately under other non-recurring income
and expenses in order to provide a clear picture of the Group’s
performance.
NET FINANCING COSTS
Net financing costs include gross financing costs, which in turn
include net financing expense on fleet financing loans and net
financing expense on other loans (excluding estimated interest
included in rental payments under operating leases, which
are recorded in operating results), as well as other financing
expenses and other financing income. Other financing expenses
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03
and income include gains and losses on derivative financial
instruments, amortization of financing transaction costs, foreign
exchange gains and losses, the financial component of pension
charges (discounting and the expected return on plan assets),
dividend income, gains and losses on financial instruments
recognized in the income statement, the ineffective portion of
the gain or loss on cash flow hedging instruments, and other
charges including the refinancing/early repayment of certain
financing facilities.
INCOME TAX BENEFIT/(EXPENSE)
Income tax on profit or loss for the year comprises current and
deferred tax. Income tax is recognized in the income statement
except to the extent that it relates to items recognized directly
in equity, in which case it is recognized in equity.
Current tax is the expected tax payable on the taxable income
for the year, calculated using tax rates enacted or substantially
enacted at the reporting date, and subject to any adjustment
to tax payable in respect of previous years.
The amount of deferred tax recognized is based on the
expected pattern of realization or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or
substantively enacted at the reporting date.
A deferred tax asset is recognized only to the extent that it is
probable that future taxable profits will be available against
which the tax asset can be utilized. This probability is assessed
based on:
a the existence of time-related differences that will give rise to
taxation in the future; and
a forecasts of taxable profits.
SHARE OF PROFIT/(LOSS) IN COMPANIES
ACCOUNTED FOR UNDER THE EQUITY METHOD
Share of profit/loss of associates is the share of the profits of the
entities over which the Group has significant influence without
controlling them, in particular Car2go Europe and Ubeeqo.
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In addition to the IFRS figures detailed above, the Group also
uses non-GAAP measures, in particular Adjusted Corporate
EBITDA, to better reflect the performance of its operations.
ADJUSTED CORPORATE EBITDA
To evaluate its performance, the Group uses an indicator it
calls Adjusted Corporate EBITDA which it defines as recurring
operating income before depreciation and amortization not
related to the fleet and after deduction of interest expenses
related to rental fleet financing. Adjusted Corporate EBITDA
includes all vehicle fleet related costs (including impairment
charges and fleet-related interest).
The Group believes that Adjusted Corporate EBITDA is a
key indicator, because it measures the performance of the
Group’s ordinary activities including all expenses relating to fleet
financing (namely, fleet depreciation expenses included in fleet
holding costs and interest expenses relating to fleet financing,
which are included in net financing costs in the IFRS income
statement), without taking into account charges relating to past
disbursements (depreciation and amortization not related to the
fleet) or that by their unusual nature are not representative of
the trends in the Group’s results of operations.
Adjusted Corporate EBITDA is a non-IFRS indicator that does
not have a single generally accepted definition. It should not
be considered a substitute for operating income or net profit or
loss as a measure of operating results or for net cash generated
from operating activities as a measure of liquidity. Other issuers
may calculate Adjusted Corporate EBITDA differently from
the Group. The reconciliation of this figure with the recurring
operating income stated in the IFRS income statement is
presented in Section 3.1.2.2 below.
3.1.1.4 Significant accounting policies
For a description of the Group’s significant accounting
policies, see Note II “Significant Accounting Policies” to the
Group’s consolidated financial statements for the year ended
December 31, 2015, included in Section 3.4 “Consolidated
financial statements and Statutory Auditors’ reports”.
3.1.2
Comparison of results of operations for the years
ended December 31, 2015 and 2014
3.1.2.1 Key operating indicators
Year ended December 31,
2015
2014
Change
Change
at constant
currency
Revenues (in millions of euros)
2,142
1,979
8.2%
5.8%
Rental Revenues (in millions of euros)
1,992
1,823
9.3%
6.8%
Rental Day Volume
57.1
52.8
8.1%
-
RDP (€) (1)
34.9
34.5
1.1%
(1.2)%
6.0
5.7
4.1%
-
205.4
189.3
8.5%
-
(253)
(248)
1.8%
(0.7)%
76.1%
76.4%
(0.3) pt
-
251
213
17.8%
15.6%
11.7%
10.8%
+0.9 pt
-
Average duration (day)
Average Fleet (thousand)
(2)
Average Fleet Unit Costs/Month (€) (3)
Financial utilization rate (4)
Adjusted Corporate EBITDA (in millions of euros)
Adjusted Corporate EBITDA Margin
03
(1) RPD (revenue per transaction day) corresponds to rental revenue for the period divided by the Number of Rental Days for the period.
(2) Average fleet of the period is calculated by considering the number of days in the period when the fleet is available (period during which the Group holds or
finances the vehicles) divided by the number of days in the same period multiplied by the number of vehicles in the fleet for the period. As of December 31,
2015, the fleet amounted to 181,783 vehicles (+4.8% compared to December 31, 2014).
(3) The average fleet costs per unit per month is the total fleet costs (fleet holding costs and fleet operating cost) excluding interest expense included in fleet
operating lease rents and insurance fees divided by the average fleet of the period divided by the number of months in the period.
(4) The fleet financial utilization rate corresponds to the Number of Rental Days as a percentage of the number of days in the fleet’s financial availability period;
the fleet’s financial availability period corresponds to the period during which the Group holds vehicles.
EUROPCAR
2015
109
03
3.1.2.2 Management’s analysis of results of operations
The analysis in this Section is based on the Group’s income statement prepared in accordance with IFRS as well as on management
figures that are monitored to help inform strategic decisions. Management figures are prepared in order to reflect and to improve
understanding of the Group’s economic performance.
IFRS INCOME STATEMENT
FY 2015
FY 2014
Change
2,141.9
1,978.9
8.2%
Fleet holding costs
(547.2)
(496.3)
10.3%
Fleet operating, rental and revenue related costs
(727.0)
(686.3)
5.9%
Personnel costs
(347.4)
(318.2)
9.2%
Network and head office overhead
(218.5)
(199.3)
9.6%
14.2
6.9
105.8%
All data in millions of euros
Total revenue
Other income
Depreciation – excluding vehicle fleet
(32.8)
(31.8)
3.1%
Recurring operating income
283.3
253.9
11.6%
Other non-recurring expenses
(61.8)
(115.7)
(46.6)%
Operating income
221.5
138.2
60.3%
Net financing costs
(227.6)
(232.7)
(2.2)%
Loss before tax
110
(6.1)
(94.5)
(93.5)%
Income tax
(37.6)
(10.7)
251.4%
Share of loss of associates
(12.1)
(6.5)
86.2%
NET LOSS
(55.8)
(111.7)
(50.0)%
NET LOSS ATTRIBUTABLE TO EUROPCAR OWNERS
(55.6)
(112.3)
(50.5)%
EUROPCAR
2015
MANAGEMENT INCOME STATEMENT
In millions of euros
Revenue
2015
2014
2,141.9
1,978.9
8.2%
-
-
5.8%
(491.9)
(442.7)
11.1%
Change at constant exchange rates
Fleet holding costs, excluding estimated interest included in rental payments under
operating leases
Variation
(727.0)
(686.3)
5.9%
Personnel Costs
(347.4)
(318.2)
9.2%
Network and head office overhead costs
(218.5)
(199.3)
9.6%
14.2
6.9
105.8%
(551.7)
(510.6)
8.0%
Other income
Personnel costs, head office and network costs, IT and other
Fleet-related financing expenses
(65.5)
(72.9)
(10.2)%
Estimated interest included in operating leases
(55.2)
(53.6)
3.0%
(120.7)
(126.5)
(4.6)%
250.6
212.8
17.8%
11.7%
10.8%
+0.9pt
(32.8)
(31.8)
3.1%
Fleet-related financing costs, including estimated interest included in operating leases
Adjusted Corporate EBITDA
Margin
Depreciation, amortization and impairment expense
Other non-recurring expenses
(61.8)
(115.7)
(46.6)%
(162.1)
(159.8)
1.4%
(6.1)
(94.5)
(93.5)%
Income tax expense
(37.6)
(10.7)
251.4%
Share of loss in companies accounted for under the equity method
(12.1)
(6.5)
86.2%
(55.8)
(111.7)
(50.0)%
Net financing costs excluding fleet financing
LOSS BEFORE TAX
NET LOSS
The table below presents a reconciliation of adjusted recurring
operating income, Adjusted Corporate EBITDA and Adjusted
Consolidated EBITDA to recurring operating income. The
Group presents adjusted recurring operating income, Adjusted
Consolidated EBITDA and Adjusted Corporate EBITDA because
the Group believes they provide investors with important
additional information to evaluate the Group’s performance.
The Group believes these indicators are frequently used by
securities analysts, investors and other interested parties in the
evaluation of companies in the Group’s industry. In addition,
03
the Group believes that investors, analysts and rating agencies
will consider adjusted recurring operating income, Adjusted
Consolidated EBITDA and Adjusted Corporate EBITDA useful
in measuring the Group’s ability to meet its debt service
obligations. None of adjusted recurring operating income,
Adjusted Consolidated EBITDA or Adjusted Corporate EBITDA
is a recognized measurement under IFRS and should not be
considered as alternative to operating income or net profit as
a measure of operating results or cash flows as a measure of
liquidity.
EUROPCAR
2015
111
03
FY 2015
Adjusted Consolidated EBITDA
FY 2014
766.0
695.0
Fleet depreciation IFRS
(184.4)
(164.2)
Fleet depreciation included in operating lease rents (1)
(210.3)
(191.4)
Total Fleet depreciation
(394.7)
(355.6)
(55.2)
(53.6)
Interest expense related to fleet operating leases (estimated) (1)
Net fleet financing expenses
(65.5)
(72.9)
(120.7)
(126.5)
250.6
212.8
Amortization, depreciation and impairment expense
(32.8)
(31.8)
Total Fleet financing
Reversal of Net fleet financing expenses
65.5
72.9
Reversal of Interest expense related to fleet operating leases (estimated)
55.2
53.6
Adjusted recurring operating income
338.5
307.4
Interest expense related to fleet operating leases (estimated)
(55.2)
(53.6)
Recurring operating income*
283.3
253.9
* As set forth in the consolidated profit and loss statement.
(1) Fleet operating lease rents consist of a fleet depreciation expense, an interest expense as well as, under several operating lease contracts, a small administration fee. For
those fleet operating lease contracts entered into by the Group that do not provide the precise split of the rents amongst the depreciation expense, the interest expense
and the administrative fee, the Group makes estimates of this split on the basis of information provided by the lessors. Furthermore, because the interest expense
component of the lease rent is in substance a fleet financing cost, Europcar’s management reviews fleet holding costs and the adjusted operating income of the Group
excluding this expense.
(A) REVENUE
The following table shows the Group’s consolidated revenue for 2015 and 2014 as a total and by product type:
2015
2014
Change
Change
at constant
currency
1,991.9
1,822.8
9.3%
6.8%
Other revenue associated with car rental
97.4
102.8
(5.3)%
(8.2)%
Franchising business
52.6
53.3
(1.3)%
(2.0)%
REVENUES
2,141.9
1,978.9
8.2%
5.8%
Revenue was €2,142 million in 2015, an increase of 8.2% from
2014. Based on constant exchange rates for the pound sterling
and the Australian dollar, revenue increased 5.8%. Excluding
the consolidation of EuropHall (1), a French franchisee acquired
in the fourth quarter of 2014, the Group’s consolidated revenue
increased by 4.9% at constant exchange rates. This significant
rise was driven by the growth of vehicle rental income, up 5.9%
at constant scope and exchange rates.
The Group believes that the increase in revenue generated by
rental activities resulted primarily from the initiatives launched
in connection with the Fast Lane program, the most significant
of which were the following:
Rental revenues
a the implementation of new sales tools to better organize
and coordinate with business customers, in particular SMEs;
a the development of the Group’s digital distribution platform
which enables a higher retention rate of business customers
(1) Europcar France acquired EuropHall, one of its French franchisees, in the fourth quarter of 2014 and fully consolidated it over two months. In 2014,
EuropHall generated standalone revenues of approximately €23 million.
112
EUROPCAR
2015
and an expansion of the direct-to-brand offering in the leisure
segment;
a the continued development of strategic and commercial
partnerships to attract international customers to the Group
and its franchisees;
a the implementation of a new strategy for the vans & trucks
segment with a view to increasing the return on investment
for this vehicle type;
Other revenue associated with vehicle rental was impacted by
the fall in oil prices with however no significant consequences
for operating income in light of the savings in oil supplies.
Revenue from the franchising business was slightly down, in
particular due to the reduction in royalties invoiced for revenue
generated by the National and Alamo brands which the Group
continued to operate in the EMEA region until December 2014
pursuant to a brand license agreement with Enterprise.
03
a the accelerated expansion of the InterRent® brand;
(B)
a the launch of new products targeting specific customer
profiles, in particular Keddy by Europcar, a dedicated service
for brokers launched in March 2015, and Autoliberté, a
subscription-based urban mobility solution; and
IFRS fleet holding costs were up 10.3% at reported exchange
rates (up 7.6% at constant exchange rates) to €547.2 million in
2015. These costs include fleet depreciation charges (vehicles
acquired and financed through funding recorded on the balance
sheet) and payments on operating leases for vehicles including
their financial component in accordance with accounting
standards (vehicles financed through leasing).
a the implementation of a program for the sale of additional
services such as supplementary insurance products and
specific equipment (for example navigation systems, winter
equipment and child car seats, etc.).
Rental revenue, up 6.8% at constant exchange rates, benefited
from an 8.1% increase in the Number of Rental Days with
57.1 million rental days in 2015. Both the business and leisure
markets contributed to this growth in each of the Corporate
Countries, representing 44% and 56%, respectively, of
consolidated rental revenue in 2015 compared with 45% and
55%, respectively, in 2014. In particular, the growth of revenue
generated by rental activities was driven by:
a increased volumes for the business segment, in particular for
SMEs and vehicle replacement, in line with the sales efforts
implemented by the Group;
a increased demand in the leisure segment supported by the
Europcar brand on all distribution channels, the accelerated
expansion of the InterRent® brand and the successful launch
of the Keddy product.
At constant exchange rates, Revenue Per Transaction Day (RPD)
was down 1.2% in 2015. The fall in RPD was mainly driven by
the changing mix of customer segments (business and leisure)
and brands (Europcar and InterRent) and by a longer average
rental period (+4.1%) without impacting profitability. The Leisure
segment benefited from a high RPD supported notably by the
deployment of the ancillary program, while the deployment of
InterRent, which provides a lower facial RPD, continues to grow
significantly. The Business segment benefited from the higher
contribution of the Vehicle Replacement business that has a
longer duration than the average for the segment and which
drives a lower RPD, and from the implementation of a new
strategy for the vans & trucks segment with a view to renting
smaller vehicles for longer periods to optimize the utilization
rate.
FLEET HOLDING COSTS
Rental payments under operating leases, by their nature, have
an interest component. As explained below, the accounting
of fleet financing expenses is based on the type of financing
(operating lease or other type of financing). To increase clarity,
the Group groups together all fleet financing expenses in its
management income statement and analyzes them in Adjusted
Corporate EBITDA (see “Adjusted Corporate EBITDA” under
Section 3.1.1.3 “Description of the principal line items in the
Group’s income statement”) and excludes these expenses from
its analysis of fleet holding costs.
Excluding the estimated financing expense included in the
payments on operating leases (€55.2 million and €53.6 million,
respectively, in 2015 and 2014), the change in fleet holding
costs was a result of increased activity, continued optimizing
of the monthly per-vehicle cost, and a slight fall in the utilization
rate:
a fleet holding costs excluding the estimated financing on
operating leases increased by 8.3% at constant exchange
rates in line with the increased level of the fleet which jumped
sharply by 8.5% to accompany growth in revenue;
a fleet holding costs per vehicle improved slightly with
a decrease of 0.1% in the holding cost per unit monthly
average (at constant exchange rates) at €198.5 per vehicle.
This continued improvement was due to the rationalization
of fleet composition by category to better align it with
customers’ needs, better logistics in fleet-in and fleet-out
phases, harmonization of procedures for monitoring the
mileage of vehicles covered by buy-back programs, and
optimization of buy-back programs;
EUROPCAR
2015
113
03
a the rate of fleet financial utilization rate fell slightly by 0.3
points to stand at 76.1%. Given the very sharp increase
in the average fleet level, the Group’s operating excellence
and in particular the expertise of the Revenue and Capacity
Management Department (present in every Corporate
Country) helped to maintain the financial utilization rate in
the best standards of the sector (1) by better matching the
Group’s fleet composition with customer demand, optimizing
management of this demand and optimizing fleet distribution.
Initiatives are continuing in this respect by reducing idle time
between the delivery of new vehicles and their first rental,
between rentals and between the last rental and the sale or
return of vehicles, by improving procedures for managing
accidents and repairs, and more generally by improving the
fleet utilization rate operated via the low-cost InterRent brand.
(C)
FLEET OPERATING, RENTAL AND REVENUE
RELATED COSTS
Fleet operating, rental and revenue related costs increased by
5.9%, (3.5% at constant exchange rates), reaching €727 million
in 2015 in the context of a substantial increase in revenue.
a fleet operating costs increased by 1.6% at reported exchange
rates and fell by 0.9% at constant exchange rates principally
due to better management of vehicle damage and a reduction
in maintenance costs. Insurance costs per day continued to
fall in 2015 primarily due to changes in the franchise buyback policy and better fraud detection on damage caused
by Europcar customers to third-party vehicles;
a rental related costs increased by 6.5% (3.5% at constant
exchange rates) despite an increase of over 8% in the Number
of Rental Days. This performance was made possible by an
optimization of transport costs and vehicle-washing costs in
a context of increase in average rental length. It also reflects
the fall in the price of oil;
a the remainder of the increase was due to expenses relating
to employees working at the head offices of the Group and
its subsidiaries and at the Shared Services Center created in
2014 and includes the cost of performance shares granted
to Executive Committee members and the Group’s top 100
managers. The allocation of these free shares is subject to
the achievement of multi-annual financial targets and the
relative performance of Europcar’s share price. See Note 6
to the consolidated financial statements for the fiscal year
ended December 31, 2015.
(E)
NETWORK AND HEAD OFFICE OVERHEAD
COSTS
Network and head office overhead costs increased by 9.6%
to €218.5 million.
This increase was primarily due to the increase in marketing
expenses intended to support revenue growth, notably with the
expansion of InterRent and the launch of Keddy by Europcar®,
a dedicated service for tour-operators, travel agencies
and brokers. In addition, the Group continued to invest to
strengthen its IT system to better address its customer needs.
This increase also includes expenses related to the opening of
InterRent stations and, to a lesser extent, Europcar stations,
and to the effect of the consolidation of EuropHall, acquired in
late 2014 and integrated in early 2016.
(F)
AMORTIZATION AND DEPRECIATION
EXPENSE, EXCLUDING VEHICLE FLEET
a revenue related fees and commissions increased by 9.5% at
reported exchange rates and by 6.8% at constant exchange
rates, an increase that was in line with that of vehicle rental
revenue.
Amortization and depreciation expense excluding vehicle fleet
increased by €1 million to stand at €32.8 million in 2015. This
change is explained by the slight increase in amortization
relating to the Group’s IT systems linked to the increase in
investments in this field.
(D)
(G)
PERSONNEL COSTS
Personnel costs stood at €347.4 million in 2015, an increase
of 9.2% (7.2% at constant exchange rates). The €23.5 million
increase at constant exchange rates is linked primarily to the
Group’s network of stations due to increased activity and to a
lesser extent the implementation of a gradual increase in the
minimum wage in the United Kingdom.
a almost 70% of that increase was the result of personnel
costs in the network to sustain increased business volumes
(1) Source: publications by Avis, Hertz and Sixt.
114
and sales of additional services. At constant exchange rates,
the increase in personnel costs was only slightly higher than
the Number of Rental Days despite the increase in the
minimum wage in the United Kingdom and the consolidation
of EuropHall, a franchisee acquired in late 2014;
EUROPCAR
2015
OTHER INCOME
Other income and expenses increased by €7.3 million to
stand at €14.2 million for the year ended December 31, 2015.
This line item includes income from commercial agreements,
capital gains or losses from disposals of fixed assets, and other
operating income and expenses including a bonus due to a
lapsed debt.
(H)
OTHER NON-RECURRING INCOME
AND EXPENSES
In 2015, other non-recurring income and expenses amounting
to €(61.8) million included the following:
a restructuring costs of €24 million including severance costs
relating to the implementation of measures to streamline the
German network and some local headquarters;
a fees relating to the initial public offering for €11.5 million.
Other fees were deducted from issuance premiums for
€23.8 million;
a a provision of €45 million based on the best estimate of the
financial risk (at the current stage of the procedure with the
French Competition Authority) in the event that the French
Competition Authority were to impose a fine notwithstanding
the Group’s arguments in defense of its position (see Note 32
to the consolidated financial statements for the fiscal year
ended December 31, 2015); and
a a net reversal of €23.4 million relating to the execution of
a settlement agreement with Enterprise on April 29, 2015
putting an end to all legal proceedings with that company
(see Note 32 to the consolidated financial statements for the
year ended December 31, 2015).
In 2014, other non-recurring income and expenses amounting
to €(115.7) million including the following:
a restructuring costs of €22.8 million resulting in part from
the measures implemented by several of the Group’s
entities or announced before the end of the year to lower
the head offices’ cost structure. Moreover, the Group used
outside service providers for a total of €9.8 million in 2014
in connection with the restructuring of the head offices and
the network;
a a net charge of €59.4 million in 2014 in connection with the
litigation and arbitration with Enterprise including attorneys’
fees, the cost of removing the logo from certain stations, the
one-off impairment of the remaining value of the right to use
the National and Alamo brands, and a provision in an amount
equal to the risk of certain of the damages that the Group
was reasonably able to estimate as of the closing date (see
Note 10 to the Group’s consolidated financial statements for
the year ended December 31, 2015);
(I)
Adjusted Corporate EBITDA is defined as recurring operating
income before depreciation and amortization not related to the
fleet, and after deduction of the interest expense on liabilities
related to rental fleet financing.
Adjusted Corporate EBITDA increased by 17.8% (15.6%
at constant exchange rates) from €212.8 million in 2014 to
€250.6 million in 2015. Adjusted Corporate EBITDA margin
as a percentage of revenue continued to grow, increasing
from 10.8% in 2014 to 11.7% in 2015. This increase reflects
excellent operational leverage, cost management and positive
change in financing costs achieved by the Group even as it
continues to invest in IT, sales and marketing development in
order to support profitable growth.
03
Given the significant growth in revenue, the margin after variable
costs(1) increased by €55.9 million at constant exchange rates.
The margin rate also continued to rise to stand at 43.1% due
specifically to an improvement in the monthly unit cost for
holding and operating fleet (2) which stood at €253, down 0.7%
at constant exchange rates. This performance was also made
possible by optimized management of the vehicle utilization rate
which stood at 76.1% in 2015, down by 0.3 points from 2014
despite a significant increase in the level of the fleet operated.
Fleet financing (estimated interest under operating leases and
financing expenses relating to financing the fleet on the balance
sheet) fell by 4.6% from €126.5 million in 2014 to €120.7 million
in 2015 despite an 8.5% increase in average fleet level in 2015
compared with 2014. The Group refinanced the whole of its
fleet-financing debt between July 2014 and mid-2015, thus
significantly lowering its cost (see Section (J) “Net financing
costs” and Section 3.2 “Liquidity and capital resources” of this
Registration Document).
These positive items were partially offset by the increase
in expenses related to network staff due to the increase in
business, the acquisition of EuropHall and the marketing and
communications investments set out above.
a a charge of €23.9 million relating to a multi-year compensation
program whose objectives were achieved in 2014.
(1) The margin after variable costs corresponds to consolidated total revenues net of fleet holding costs (excluding estimated interest included in
operating lease rents) and costs relating to the operation, rental and proceeds of fleet activities.
(2) Excluding interest expenses included in charges relating to fleet operating leases and excluding insurance costs.
EUROPCAR
2015
115
03
(J)
NET FINANCING COSTS
(L)
IFRS net financing costs amounted to €227.6 million in 2015
compared with €232.7 million in 2014. In 2015, they mainly
included:
a €65.5 million in interest charges relating to the financing of
the vehicle fleet recorded on the balance sheet, compared
with €72.9 million in 2014, down in spite of the substantial
increase in average fleet due to the financing implemented
between mid-2014 and May 2015. Overall, the maturity of
these instruments was extended and their cost significantly
reduced. See Section 3.2.3 “Liquidity and capital resources”;
a €56.3 million in interest charges relating to other borrowings
(subordinated notes in corporate debt) compared to
€78.5 million. This substantial drop is linked to the
restructuring of corporate debt that took place in mid-2015
in connection with the IPO. Since the end of June 2015, the
Company has only one corporate bond issue for €475 million
bearing interest at 5.75% (see Section 3.2.3 “Liquidity and
capital resources”);
a €56 million redemption price linked to the repayment of both
the €324 million of outstanding subordinated notes due 2017
bearing interest at 11.5% and the €400 million of outstanding
subordinated notes due 2018 bearing interest at 9.375%;
a €15.4 million in respect of current amortization of transaction
costs for the notes; and
a €26.9 million in respect of the write-off of transaction costs
relating to the notes redeemed.
In 2014, financing expense also included repayment premiums
paid following the early repayment of the fleet-based
€350 million bond issue and its refinancing which took place
in October 2014 (€17.1 million) and the complete amortization
of transaction costs related to the notes.
(K)
Income tax increased by €27 million from €10.7 million in 2014
to €37.6 million in 2015. The improvement in the performance of
the Group and Corporate Countries led to a rise in tax liabilities
but also allowed the recognition of tax assets in respect of tax
loss carryforwards for certain countries. The 2015 tax expense
also takes account of some provisions related to ongoing tax
audits.
116
EUROPCAR
2015
SHARE OF PROFIT/(LOSS) IN COMPANIES
ACCOUNTED FOR UNDER THE EQUITY
METHOD
The share of profit/loss of companies accounted for under
the equity method represented a loss of €12.1 million in
2015 compared with a loss of €6.5 million in 2014 due to the
increase in losses generated by Car2go Europe which is in the
geographic development phase. In 2015, this item included the
result of Ubeeqo, acquired in November 2014.
(M)
NET PROFIT/(LOSS) FOR THE PERIOD
Net profit/loss presented a loss of €55.8 million in 2015 compared
with a loss of €111.7 million in 2014. This significant improvement
was driven by growth in operating performance and a significant
reduction in financing costs. However, net profit for 2015, which
was a transitional year for the Group, includes non-recurring
items, in particular the costs associated with the IPO and the
reshape of the capital structure (approximately €95 million),
the net negative impact of some proceedings (approximately
€22 million). In 2014, net profit also included non-recurring items
specifically related to proceedings (provisions and impairment of
intangible assets in relation to disputes with Enterprise) and the
cost of refinancing fleet-based debt.
(N)
ADJUSTED NET PROFIT/(LOSS) FOR 2015
Given the specificity of 2015 for the Group in relation to its IPO
and the overhaul of its financial structure, an adjusted net profit
of approximately €128 million was estimated. This adjusted net
profit excludes exceptional operating and financial items before
profits from companies consolidated using the equity method
after pro forma adjustment of financing expense to account for
the full-year effect of the repayment of the €324 million note,
the refinancing of the €400 million note by way of the issuance
of a senior note for €475 million bearing interest at 5.75%, and
the refinancing of RCF and SARF credit facilities on better terms. The table below shows the reconciliation of IFRS net income to
the estimated pro forma net profit/(loss):
FY 2015
IFRS NET LOSS
(56)
Pro forma on Interest on corporate high yield bonds
26
Pro forma transaction cost amortization
7
Reversal of corporate high yield bonds redemption premium
56
Reversal of the write off associated with corporate high yield bonds reimbursement
27
Reversal of other exceptional income / expenses *
56
Reversal of share of profit/(loss) of associates
12
ESTIMATED PRO FORMA NET INCOME
128
03
* Includes notably costs associated with the IPO, the net impact of some proceedings and provisions for ongoing tax audits.
3.1.2.3 Revenue and adjusted Corporate EBITDA by operating segment
In this Section, the revenue of each Corporate Country includes revenue from franchising business on its territory.
(A)
EUROPE
The table below shows (i) the allocation of revenue generated in Europe by Corporate Country and other European countries and
(ii) Adjusted Corporate EBITDA generated in Europe for the years ended December 31, 2015 and 2014:
2015
2014
Change
Change
at constant
exchange rates
Germany
544.5
518.3
5.1%
5.1%
United Kingdom
465.2
410.4
13.4%
2.1%
France
360.8
325.4
10.9%
10.9%
Revenue
Italy
219.5
205.8
6.7%
6.7%
Spain
218.0
200.3
8.8%
8.8%
Portugal
103.8
94.3
10.1%
10.1%
Belgium
62.5
60.3
3.6%
3.6%
Other European countries (franchises)
17.9
21.4
(16.4)%
(17.7)%
1,992.2
1,836.2
8.5%
5.9%
191.0
151.4
26.2%
22.6%
TOTAL EUROPE
ADJUSTED CORPORATE EBITDA (EUROPE)
REVENUE
Revenue of the Europe operating segment increased by 8.5%
(5.9% at constant exchange rates) to €1,992 million. Proceeds
from vehicle rental activities stood at €1,860 million, up 9.6%
(7% at constant exchange rates and 5.9% excluding EuropHall,
the French franchisee acquired in the fourth quarter of 2014).
This increase can be seen in each of the Corporate Countries
and is primarily the result of a significant increase in the Number
of Rental Days. The business and leisure markets had similar
increases in revenue. At constant exchange rates, RPD
decreased slightly due to changes in the regional, segment and
brand mixes. The performance of total revenue was however
affected by falling oil prices which were behind the 5.7% drop
in other proceeds associated with car rentals to €100.1 million
(up 4.9% at constant exchange rates) with no significant impact
on Adjusted Corporate EBITDA.
Germany
The Group’s revenue in Germany increased by 5.1% to
€545 million. This increase was due primarily to the increase
in the Number of Rental Days as well as a favorable trend in
RPD. Performance was supported in particular by development
initiatives in the SME sector and the implementation of sales
EUROPCAR
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117
03
tools for complementary products sold directly in the leisure
segment. This growth in activity was accompanied by a
comprehensive review of the network aimed at optimizing
station geography and deploying business skills to allow gains
in productivity.
United Kingdom
The Group’s revenue in the United Kingdom increased by 2.1% at
constant exchange rates to €466 million for 2015. This increase
was due to a significant increase in the Number of Rental Days
primarily supported by growth in vehicle replacement activity
and the vans & trucks segment, the expansion of InterRent, and
the launch of the product specifically targeting brokers, Keddy
by Europcar, which more than made up for the winding-up of
operations at National and Alamo in the first quarter of 2015.
This change to the business mix had an adverse effect on RPD
which was partially offset by the continuation of the program to
increase sales of additional services.
France
The Group’s revenue in France increased by 10.9% to
€361 million. Excluding Europ Hall (acquired in the fourth
quarter of 2014), growth was 5.1% supported by the increase
in the Number of Rental Days in both the business segment
(notably for SMEs) and leisure segment due in particular to the
expansion of InterRent with a slight increase in RPD supported
by the program to increase sales of additional services. In
addition, new stations were opened in city center locations to
capture the growth related to changes in how vehicles are used
and new products were launched (for example the Autoliberté
subscription package and electric vehicle rentals). Activity in the
fourth quarter of 2015 was slightly impacted by the attacks in
November, but the very balanced nature of operations in terms
of geographies (airport/off-airport) and customer segments
(business vs. leisure) helped to offset the slight slowdown in
activity witnessed by some agencies in the first few weeks
after these events.
Italy
The Group’s revenue in Italy increased by €13.7 million, or 6.7%,
to stand at €220 million for the year ended December 31, 2015.
This growth was driven by an increase in the Number of Rental
Days seen across customer segments thanks in particular to
the expansion of InterRent and initiatives launched to boost
the vans and trucks segment. RPD fell over the period as a
result of the effects of the business mix, which are reflected
favorably in the associated fleet cost, and by the increase in
the average rental length in a context of sustained competition.
In this context, Italy continued to encourage direct sales and
optimize its costs, in particular unit fleet costs which were down
nearly 10% in 2015 compared with 2014.
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Spain
Revenue generated by the Group in Spain increased by
€17.7 million, or 8.8%, to €218 million for the year ended
December 31, 2015. This increase was driven by the significant
increase in the Number of Rental Days in the leisure and
business segments. Buoyed by the growth of tourism, the
InterRent brand continued its expansion. In parallel, Spain
launched many initiatives that helped develop the business
segment, particularly in terms of SMEs and car replacement/
leasing. RPD dipped during the period mainly due to the
success of InterRent and an increase in average rental length.
Portugal
The Group’s revenue in Portugal increased by €9.5 million,
or 10.1%, to stand at €104 million for the year ended
December 31, 2015. This significant increase was driven
firstly by a substantial increase in the Number of Rental Days
and secondly by sustained growth in RPD despite heightened
competition.
Belgium
The Group’s revenue in Belgium increased by 3.6% to stand
at €62.5 million for the year ended December 31, 2015. This
increase was caused primarily by the growth in the Number of
Rental Days, specifically in the business segment, supported
by initiatives to develop the van and trucks segment and SME
customers. RPD fell during the period due to changes in the
business mix and an increase in average rental length of 5.6%.
This increase was achieved despite the impact of the threat of
terrorist attacks that paralyzed the Belgian capital for several
days in the fourth quarter of 2015.
Other European countries (franchises)
Revenues from franchisee business in other European countries
(i.e. excluding Corporate Countries) fell by €3.5 million to stand
at €18 million for the year ended December 31, 2015. Overall,
there was a slight improvement in Europcar franchises in other
European countries due in part to the Group’s initiatives under
the Fast Lane program which also benefited the franchisee
network. However, this improvement was limited by the
reduction in royalties invoiced for revenue generated by the
National and Alamo brands run by the Group in Europe, the
Middle East and Africa until December 2014 pursuant to a
license agreement with Enterprise (see Section 2.5 “Regulatory,
Legal and Arbitration Proceedings”).
For information, revenue from franchising business in
Corporate Countries totaled €14.5 million in 2015 compared
with €14.9 million in 2014 with the acquisition of EuropHall, a
French franchisee, in the fourth quarter of 2014 offsetting the
rise in royalties.
In 2015, Adjusted Corporate EBITDA in Europe increased by
€40 million (up 26.2%, or 22.6% at constant exchange rates).
All Corporate Countries contributed to this improvement. The
European Adjusted Corporate EBITDA margin improved by
1.4 pt to 9.6%. This increase reflects the effect of operational
(B)
leverage, the favorable impact of fleet refinancing operated
between July 2014 and mid-2015, the continued improvement
of per-unit fleet holding costs, and the first benefits of the
implementation of the Shared Services Center in Portugal
in early 2014 despite the increase in personnel costs and
investments in sales and marketing to support activity.
REST OF WORLD
03
The table below shows revenue and Adjusted Corporate EBITDA generated in the Rest of World for the years ended December 31, 2015
and 2014:
2015
2014
Change
Change
at constant
exchange rates
137.3
132.3
3.8%
4.2%
18.8
17.7
6.2%
6.2%
156.1
150.0
4.1%
4.4%
32.1
27.9
15.1%
15.0%
Revenue
Other Rest of World countries (franchises)
TOTAL REST OF WORLD
REVENUE
The Group’s revenue in Australia and New Zealand increased by
3.8% (4.2% at constant exchange rates) to stand at €137 million
for the year ended December 31, 2015. This growth was the
result of an increase in the Number of Rental Days in both
the leisure and business segments and of the very marked
increase in RPD due to the increase in sales of additional
services. Revenue from franchising business in Australia was
€1.4 million for the year ended December 31, 2015.
Other Rest of World countries (franchises)
Revenue from franchising business in the other Rest of World
countries increased by 6.2% to €18.8 million for the year ended
December 31, 2015. This increase was due to organic growth
(C)
in the existing franchise network, the collective benefit of the
initiatives taken in connection with the Fast Lane program over
the entire network, and the integration of new franchisees. As
of the end of 2015, the Group was present in 114 other Rest
of World countries.
The Group’s Adjusted Corporate EBITDA in the Rest of World
increased by 15.1% (15.0% at reported exchange rates), or
€32.1 million, for the year ended December 31, 2015. The
Group’s Adjusted Corporate EBITDA margin increased by
2 points to 20.5%. This improvement in Adjusted Corporate
EBITDA margins was the result of substantial growth in revenue
in Australia and New Zealand and of significant growth in
revenue from franchising business.
ELIMINATION AND HOLDINGS
The table below shows revenue recorded in Elimination and Holdings and the Adjusted Corporate EBITDA of Elimination and
Holdings for the years ended December 31, 2015 and 2014:
2015
2014
Change
REVENUE
(6.3)
(7.3)
(13.7)%
27.6
33.5
(17.6)%
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119
03
LIQUIDITY AND CAPITAL RESOURCES
REVENUE
Between 2014 and 2015, Elimination and Holdings revenue
increased by €1 million to €(6.3) million for the year ended
December 31, 2015. This change was primarily due to changes
in the elimination of intragroup royalties billed with respect to
revenue generated by the National and Alamo brands (see
above).
Adjusted Corporate EBITDA of Elimination and Holdings
decreased by €5.9 million to stand at €27.6 million for the
year ended December 31, 2015. This fall is linked primarily
to the recognition of the cost of performance shares granted
to members of the Executive Committee and the top 100
managers of the Group as part of the Group’s IPO. The
allocation of these free shares is subject to the achievement of
multi-annual financial targets and the relative performance of
Europcar’s share price.
3.2 LIQUIDITY AND CAPITAL RESOURCES
3.2.1
General overview
The IPO on June 29, 2015 made it possible for Europcar to
reshaped its capital structure and enhanced its corporate
credit profile. Thanks to the implementation of its Fast Lane
transformation plan, Europcar strengthened its business model
leading to a strong improvement of its financial performance
and credit profile.
Europcar has thus fully redeemed its 11.5% senior subordinated
notes due 2017 in an aggregate principal amount of €324 million
and its 9.375% senior subordinated notes due 2018 in an
aggregate principal amount of €400 million (including a payment
of redemption premium for a total amount of €56 million) with
a portion of the proceeds of the €475 million capital increase
from the IPO (€441 million net proceeds) and the proceeds of
the 5.75% notes due 2022, issued on June 10, 2015 (1).
During the first half of 2015, Europcar also implemented its
New Senior Revolving Credit Facility (RCF). Signed on May 12,
2015, it entered into effect on May 28, 2015. The proceeds
were used to repay the Existing Senior Revolving Credit Facility
(€300 million as of December 31, 2014). This new €350 million
Senior Revolving Credit Facility matures in 5 years and bears
interest at a rate of Euribor+250bps (2).
Finally the Group amended its Senior asset Revolving Facility
(SARF) (3). The amendments signed on May 12, 2015, entered
into effect on June 17, 2015. The amount of FCT Senior
Notes that may be issued by the FCT Issuer under the SARF,
which is a fleet asset-backed financing, was increased from
€1 billion to €1.1 billion to support operating growth, and the
(1) Issue price of 99.289%.
(2) For a leverage ratio below 2x and Euribor +275 bps for leverage above 2x.
(3) The line, intended for fleet financing, is rated A by the S&P agency.
(4) Corporate Net debt / Adjusted corporate EBITDA.
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EUROPCAR
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SARF’s maturity was extended by two years to 2019. The
interest rate on the FCT Senior Notes (before the amortization
period) decreased from Euribor+220bps to Euribor+170bps. In
addition, swap instruments covering the SARF structure have
been extended to 2019.
The completion of these transactions brings significant benefits
to the Group, including:
a a significant reduction in its overall corporate leverage;
a a significant reduction in its interest expense;
a an extension of the maturities on most of its indebtedness;
a the establishment of a simpler and more flexible long-term
capital structure; and
a the extension and increase of the hedging of the exposure
to interest rate fluctuations.
Consequently, the Group considerably reduced its
corporate debt leverage (4) which stood at 0.9x at the end of
December 2015 compared with 2.7x at the end of 2014.
As a result of the deleveraging and based on the improved
profitability of the Company over recent years, rating agencies
Moody’s and S&P revised the Group’s ratings in July 2015.
Moody’s has upgraded the corporate rating (stable outlook) by
2 notches to B1 from B3 (positive watch). S&P has assigned
a B+ corporate rating (stable outlook) from B (positive watch).
3.2.1.1 Financial Resources
The Group’s principal financing needs include fleet financing,
working capital requirements, capital investment, interest
payments and loan repayment. The Group may also need
financing for acquisitions.
The Group’s principal regular sources of liquidity are its
operating cash flows as well as its financings, a substantial
portion of which is dedicated to and secured by the portion of
the fleet that is recorded on the balance sheet. The Group’s
ability to generate cash flow from its operating activities in the
future will depend on its future operating performance which
depends to a certain extent on external factors including
the risk factors described in Section 2 “Risk factors” of the
Registration Document. The Group also has cash and cash
equivalents to finance its ongoing requirements related to its
activity. Moreover, the Group has cash and cash equivalents
that are considered restricted. Restricted cash is cash that is
(i) used to cover future settlement of insurance claims or (ii) not
immediately available to finance the activity of subsidiaries. This
includes, in particular, cash that is held within certain special
purpose vehicles set up for vehicle rental activities.
In 2015, the Group’s primary sources of financing were as
follows:
a Cash generated from operating activities, which totaled
€10.9 million in 2015 compared with €108.5 million in
2014. Operating profit before changes in working capital
requirement increased by €42.1 million to €266.2 million,
reflecting improved Group performance. However, fleetrelated effects recorded on the balance sheet to support
activity and effects related to changes in working capital
excluding fleet affected by non-recurring items more than
offset this increase;
a Available Cash. Cash and cash equivalents totaled
€146.1 million as of December 31, 2015 (compared with
€144 million as of December 31, 2014). The Group also has
restricted cash (defined as cash used to cover the future
settlement of insurance claims or cash that is not immediately
available to finance the activity of subsidiaries) which totaled
€97.4 million as of December 31, 2015 (compared with
81.8 million as of December 31, 2014);
was €2,065 million (compared with €2,171 million as of
December 31, 2014). The Group considers €1,659 million
of that amount to relate to fleet financing (compared with
€1,396 million at the end of 2014). In that regard, this
indebtedness is generally secured or backed by assets,
primarily vehicles. In addition, in order to finance its fleet, the
Group also uses operating leases, the outstanding amount
of which totaled €1,323 million (1) as of December 31, 2015
(compared with €1,284 million as of December 31, 2014).
In accordance with IFRS, this amount is not recorded on
the balance sheet. See Section 3.2.3 “Description of the
financing as of December 31, 2015” of this Registration
Document for a more detailed description of the Group’s
financing.
03
The Group believes that its financing needs for its daily
operations in 2016 will primarily include working capital
requirements, interest expense and the repayment of loans.
3.2.1.2 Debt
As of December 31, 2015, the total amount of the Group’s
consolidated corporate net debt was €235 million compared
with €581 million as of December 31, 2014.
On the same date, the total Net Fleet Debt, which is assetbacked, amounted to €2,821 million compared with
€2,567 million as of December 31, 2014. Of this amount,
€1,498 million was recorded in the balance sheet with the
remainder of €1,323 million corresponding to operating leases.
The estimated debt equivalent of fleet operating leases, which
is recorded off-balance sheet, corresponds to the net book
value of the applicable vehicles calculated on the basis of their
purchase price and depreciation rates (according to contracts
with carmakers). In accordance with IFRS, this amount is not
recorded on the balance sheet. In addition, the loan-to-value
ratio (LTV) as of December 31, 2015 was 94% (2) (compared
with 88.5% as of December 31, 2014). In 2015, total average
net debt for the fleet stood at €3,127 million.
a Indebtedness. As of December 31, 2015, the total
amount of the Group’s consolidated gross indebtedness
(1) The estimated debt equivalent of fleet operating leases corresponds to the net book value of applicable vehicles, which is calculated on the basis of
the purchase price and depreciation rates of corresponding vehicles (based on contracts with car manufacturers).
(2) Corresponds to the net debt of Securitifleet Holding, Securitifleet companies and EC Finance plc (aggregate amount of €1,019 million at the testing
date) divided by the total value of the net assets on the balance sheets of these companies (€1,084 million as of December 31, 2015).
EUROPCAR
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121
03
The table below presents a breakdown of Net Corporate Debt and Total Net Debt (including the estimated outstanding value of
the fleet financed through operating leases):
As at December 31,
2015
2014
Senior Subordinated Secured 11.50% Notes due in 2017 (1)
-
324
Senior Subordinated Unsecured 9.375% Notes due in 2018 (1)
-
400
Senior Unsecured 5.75% Notes due in 2022
Senior Revolving Credit Facility
FCT Junior Notes (2), accrued interest, capitalized costs of finance agreements and other (3) (4)
GROSS CORPORATE DEBT ON BALANCE SHEET
Cash in operating and holding entities and short-term investments
(A)
(5)
NET CORPORATE DEBT ON BALANCE SHEET
(B)
EC senior secured notes 5.125%, due in 2021
475
-
81
201
(150)
(150)
406
774
(171)
(193)
235
581
350
350
Senior asset Revolving Facility
658
418
FCT Junior Notes (2), capitalized costs of financing contracts and other
142
132
Financing of the fleet in the United Kingdom, Australia and other fleet financing facilities
GROSS FLEET DEBT RECORDED ON THE BALANCE SHEET
509
497
(C)
1,659
1,396
(161)
(113)
(D)
1,498
1,283
Cash in fleet-holding entities and short-term investments in fleet
NET FLEET DEBT RECORDED ON THE BALANCE SHEET
Gross debt on balance sheet
(A)+(C)
2,065
2,171
Net debt on balance sheet
(B)+(D)
1,733
1,864
ESTIMATED DEBT EQUIVALENT OF FLEET OPERATING LEASES OFF BALANCE
SHEET (6)
NET FLEET DEBT INCLUDING FLEET-RELATED OFF BALANCE SHEET COMMITMENTS
TOTAL NET DEBT INCLUDING FLEET-RELATED OFF BALANCE SHEET
COMMITMENTS
(E)
1,323
1,284
(D)+(E)
2,821
2,567
(B)+(D)+(E)
3,057
3,148
(1) Notes redeemed or refinanced over the first half of 2015 in connection with the IPO. See Section 3.1.2.
(2) The subscription proceeds of the FCT Junior Notes subscribed by Europcar International SAS (“ECI”) provide the overall credit enhancement and, when applicable, an
additional liquidity requirement. The FCT Junior Notes are used only to finance the fleet debt requirement. FCT Junior Notes are subscribed for by Europcar International
using available cash or drawings on the Senior Revolving Credit Facility.
(3) For countries where fleet costs are not financed through dedicated entities (i.e. Securitifleet entities), the cash used to finance the fleet, which could have been financed
by fleet debt, is restated from the net fleet debt with a de-risk ratio.
(4) Including non-accrued interest on held-to-maturity investments (Euroguard).
(5) Specifically includes the Group’s insurance program (see Section 2.7 “Insurance and Risk Management”).
(6) The estimated debt equivalent of fleet operating leases corresponds to the net book value of applicable vehicles, which is calculated on the basis of the purchase price
and depreciation rates of corresponding vehicles (based on contracts with car manufacturers). The Company’s financial management verifies the consistency of the
external information that is provided.
3.2.2
Analysis of cash flows
3.2.2.1 Analysis of management cash flows
The Group believes that corporate free cash flow is a useful
indicator because it measures the Group’s liquidity based on its
ordinary activities including net financing costs on borrowings
dedicated to fleet financing without taking into account (i)
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EUROPCAR
2015
past disbursements in connection with debt refinancing, (ii)
financial costs which due to their exceptional nature are not
representative of the trends in the Group’s results of operations,
(iii) financial investments, and (iv) cash flows in relation to the
fleet analyzed in a separate manner as the Group makes
acquisitions through asset-backed financing.
The table below shows the calculation of corporate free cash
flows, as well as the regrouping of certain items deemed
significant in analyzing the Group’s cash flow, including cash
flow relating to changes in the rental fleet, in fleet-related trade
receivables and trade payables, and in fleet-related financing
and other working capital facilities, principally used for fleet-
related needs. This presentation differs from the IFRS statement
of cash flows primarily due to the analytic regrouping carried out
and the items that do not affect cash flow which vary based on
the financial indicator used as the starting point (in this case,
Adjusted Corporate EBITDA compared with pretax profit in the
IFRS statement of cash flows).
MANAGEMENT CASH FLOWS
FY 2015
FY 2014
251
213
Non-recurring expenses
(73)
(28)
Acquisition of intangible assets and property, plant and equipment, net of disposals
(24)
(22)
1
11
Changes in provisions and employee benefits
Changes in non-fleet working capital
(29)
16
Income tax paid
(40)
(31)
86
158
(65)
(74)
Corporate operating free cash flow
Cash interest paid on corporate High Yield bonds
Cash flow before change in fleet asset base, financing and other investing activities
21
84
Change in fleet assets base, net of drawings on fleet financing and working capital facilities
(87)
(56)
(8)
(10)
Aquisition of subsidiaries, net of cash acquired
(24)
(46)
Capital increase
448
-
(308)
(17)
(20)
(19)
Proceeds from disposal of financial asets, net
Change in High Yield
Transaction cost cash out and other
Net change in cash before FX effect
Cash and cash equivalents at beginning of period
Effect of foreign exchange conversions
CASH AND CASH EQUIVALENTS AT END OF PERIOD
CORPORATE FREE CASH FLOW
Corporate free cash flow is defined as free cash flow before
the impacts of the fleet and acquisitions of subsidiaries. Free
cash flow was reflected in the generation of €86 million of cash
in 2015 (compared with €158 million in 2014) also affected by
non-recurring items:
a Adjusted Corporate EBITDA. The increase in Adjusted
Corporate EBITDA amounted to €38 million, rising from
€212.8 million in 2014 to €250.6 million in 2015. This increase
reflects excellent operational leverage, cost management
and positive change in financing costs achieved by the
Group even as it continues to invest in sales and marketing
development in order to support profitable growth;
22
(63)
206
267
1
2
229
206
03
a Other non-recurring operating income and expenses. This
item included the cash out related to the reorganization
programs initiated in the context of Fast Lane. In 2015, it also
included the payment of €12.5 million to Enterprise following
the signing of a settlement agreement putting an end to all
legal proceedings with that company (see Note 10 to the
financial statements for the year ended December 31, 2015),
and bonus payments relating to the multi-year compensation
program arising from the success of the Fast Lane plan over
the period 2012-2014 (approximately €23 million);
a Changes in non-fleet working capital represent a cash
outflow of €29 million, due in particular to the significant
increase in the Group’s activity. This item is also affected
by approximately €8 million due to the settlement of tax
payables relating to previous years;
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123
03
a Acquisition of intangible assets and property, plant and
equipment, net of disposals. This item consists mainly of IT
investments and is slightly up on 2014 in line with the Group’s
desire to strengthen its digitalization program to support the
Group’s transformation;
a Income taxes paid. In 2015, income taxes paid represented
a cash outflow of €40 million compared with a cash outflow
of €31 million in 2014. This increase is due primarily to the
Group’s improved operating and financial performance in the
Group’s various country subsidiaries.
OTHER COMPONENTS OF CASH FLOW
Net interest paid on High Yield borrowings fell sharply due to the
repayment of the €324 million and €400 million notes and the
issuance of a new €475 million bond loan on June 10, 2015.
This bears interest at 5.75%. Interest accrued on this loan are
paid twice a year, in June and December.
The item “Changes in the fleet recorded on the balance sheet,
rental fleet related receivables and payables, and borrowings
dedicated to fleet financing and working capital” covers:
a on the one hand, elements relating to the fleet. Given the
asset-backed financing, the net impact of the various
components (change in the fleet, working capital and fleet
financing) is primarily the result of temporary lags between
(i) the delivery of a vehicle and payment for this delivery, and
(ii) entry into securitization and financing of these vehicles.
Changes from one year to the next may thus be significant;
and
a on the other hand, changes in credit facilities.
In 2015, the net impact of these two subjects represented a
cash outflow of €87 million, compared with a cash outflow of
€55 million in 2014. The change reflects in particular reduced
use of the Senior Revolving Credit Facility (RCF) given the cash
available following the capital increase.
Acquisitions and proceeds from the disposal of financial
assets represented a net cash outflow of €8 million in 2015
compared with €10 million in 2014. This item primarily includes
acquisitions of financial assets by the captive insurance
company Euroguard.
Cash outflow relating to acquisitions of subsidiaries net of cash
acquired totaled €24 million in 2015 compared with €46 million
in 2014. In 2015, these items included the Group’s investments
in new mobility solutions, in particular the subscriptions
to the capital increases of Ubeeqo (€5 million) and Car2go
(€12.5 million) to support their development and the acquisition
of E-Car Club. In 2014, these items included cash outflows
resulting from the acquisitions of Ubeeqo and EuropHall (French
franchisee) and the subscription to Car2go’s capital increase.
In addition to the usual financing transactions primarily related
to the rental fleet, the IPO and the reshaping of the Group’s
capital structure strongly impacted cash flows in 2015. In
particular:
a the IPO gross proceeds amounted to €475 million. As of
December 31, 2015, the net proceeds after related fees
already paid amounted to €448 million. As a reminder, part
of the fees for the IPO (approximately €24 million) were
deducted from issuance premiums;
a the new €475 million senior notes due 2022 were issued at
99.289% resulting in a cash inflow of €471.6 million. They
bear interest at 5.75%;
a the proceeds from both the IPO and these new notes were
mainly used to redeem both the €324 million Outstanding
Subordinated Notes Due 2017 and the €400 million
Outstanding Subordinated Notes Due 2018 and to pay the
associated redemption premiums for an aggregate amount
of €56 million.
Finally, payments of financing transaction and other costs
totaled €20 million in 2015 and €19 million in 2014 as a result of
the refinancing transactions carried out during those two years.
3.2.2.2 Analysis of cash flows according
to IFRS
The Group’s principal cash flow drivers are its operating
performance as reflected in its operating profit before changes
in working capital, cash related to financing transactions,
interest on its corporate debt, cash flow relating to acquisitions
and disposals of the fleet and cash from (used by) investments.
IFRS
Net cash generated from (used by) operations
124
2015
2014
(166.1)
(89.7)
Net cash used by investing activities
(55.2)
(76.6)
Net cash generated from (used by) financing activities
243.3
103.3
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
AFTER EFFECT OF FOREIGN EXCHANGE DIFFERENCES
22.0
(63.0)
EUROPCAR
2015
(A)
NET CASH GENERATED FROM (USED BY) OPERATIONS
The table below summarizes the Group’s net cash generated from operations for the years ended December 31, 2015 and 2014.
IFRS
2015
2014
Operating income before changes in working capital
266.2
224.0
(198.0)
(165.5)
(57.3)
50.0
10.9
108.5
(39.7)
(31.4)
(137.3)
(166.8)
(166.1)
(89.7)
Changes in rental fleet and in fleet working capital
Cash generated from operations
Income taxes received/paid
Net interest paid
NET CASH GENERATED FROM (USED BY) OPERATIONS
CASH GENERATED FROM OPERATIONS
INCOME TAX RECEIVED/(PAID)
Net cash generated from operations represented a cash
inflow of €10.9 million in 2015 compared with a cash inflow of
€108.5 million in 2014. While operating profit before changes in
working capital requirements generated an additional resource
of €42.2 million due to improvements in the Group’s operating
profitability between the two years, this change was largely
offset by non-recurring items affecting changes in working
capital requirements and by an increase in the resources
needed to acquire new fleet so as to sustain the significant
rise in the Group’s operations.
Income taxes paid represented a cash outflow of €39.7 million
in 2015 compared with a cash outflow of €31.4 million in 2014.
This increase is due primarily to the Group’s improved operating
and financial performance.
Cash outflow from changes in rental fleet and in fleet working
capital totaled €198 million in 2015 compared with €165.5 million
in 2014. This change was the result of increased activity at the
end of 2015 compared with the end of 2014, reflected in the
6% increase in the Number of Rental Days in the last quarter of
2015 compared with the last quarter of 2014, and of financing
that increase principally through balance sheet debt. At the end
of December 2015, the total net fleet debt recognized in the
balance sheet was €1,498 million, representing an increase of
16.8% compared with December 31, 2014.
Changes in non-fleet working capital represented a cash
outflow of €57.3 million in 2015. In addition to the impact of
the substantial increase in Group activity, the year was marked
by several non-recurring items including the bonus payment
relating to the multi-year compensation program arising from
the success of the Fast Lane plan for the period 2012-2014
(approximately €23 million recognized in profit for 2014) and
the settlement of tax payables relating to previous years of
approximately €8 million.
03
NET INTEREST PAID
Net interest paid represented a cash outflow of €137.3 million
in 2015 compared with a cash outflow of €166.8 million in
2014. This improvement reflects the benefit of the complete
refinancing of the corporate debt, which took place at the
end of the first half of 2015, and of the refinancing of the fleet
debt, which took place between July 2014 and mid-2015, in
a context of a notable increase in activity. See Section 3.2.1.
In particular:
a with respect to the corporate debt, the Group is carrying no
more than one bond loan of €475 million bearing interest
at 5.75% compared with two bond loans of €324 million
and €400 million which bore interest at 11.5% and 9.375%,
respectively;
a with respect to fleet debt, the refinancing of the senior notes
tied to €350 million during the summer of 2014 made it
possible to reduce the interest rate from 9.75% to 5.125%.
This saving, associated with the reduction of the cost of the
SARF and United Kingdom financings, made it possible to
absorb the impact of the increase of the fleet acquired by
the Group in order to support the development of its activity.
EUROPCAR
2015
125
03
(B)
NET CASH USED BY INVESTING ACTIVITIES
The table below summarizes the Group’s net cash used by investing activities for the years ended December 31, 2015 and 2014.
IFRS
2015
2014
Acquisition of intangible assets and property, plant and equipment
(29.2)
(23.6)
Proceeds from disposal of intangible assets and property, plant and equipment
Proceeds from disposal of financial assets
Other investments and loans
Acquisition of subsidiaries, net of cash acquired
Net cash flow linked to investment activities represented a cash
outflow of €55.2 million in 2015 compared with a cash outflow
of €76.6 million in 2014.
Acquisitions and proceeds from the disposal of financial
assets represented a net cash outflow of €7.6 million in 2015
compared with €9.6 million in 2014. This item primarily includes
acquisitions of financial assets by the captive insurance
company Euroguard.
Cash outflow relating to acquisitions of subsidiaries net of
cash acquired totaled €23.9 million in 2015 compared with
€45.8 million in 2014. In 2015, these items included the
Group’s investments in new mobility solutions, in particular the
(C)
5.4
3.5
(7.6)
(9.6
-
(1.2)
(23.9)
(45.8
(55.2)
(76.6)
subscriptions to the capital increases of Ubeeqo (€5 million)
and Car2go (€12.5 million) to support their development and
the acquisition of E-Car Club. In 2014, these items included
cash outflows resulting from the acquisitions of Ubeeqo and
EuropHall (French franchisee) and the subscription to Car2go’s
capital increase.
Acquisition of intangible assets and property, plant and
equipment net of disposals includes IT investments in particular.
This item increased slightly compared with 2014 in line with
the Group’s wish to reinforce its IT systems. It also included
purchases of furnishings or fixtures for the stations and for the
head offices.
NET CASH GENERATED FROM (USED BY) FINANCING ACTIVITIES
The table below summarizes the Group’s net cash generated from (used by) financing activities for the years ended December 31, 2015
and 2014.
IFRS
2015
2014
Capital increase
448.2
-
Inssuance of bonds
471.6
350.0
(780.0)
(367.1)
Change in other borrowings
123.3
139.7
Payment of transaction costs
(19.8)
(17.3)
-
(2.0)
243.3
103.3
Redemption of bonds
Cash payment Swap
NET CASH GENERATED FROM (USED BY) FINANCING ACTIVITIES
Net cash connected to financing activities represented a cash
inflow of €243.3 million in 2015 compared with a cash inflow of
€103.3 million in 2014. In addition to the customary financing
transactions primarily related to the fleet over these two
126
EUROPCAR
2015
periods, the IPO and the restructuring of the Group’s funding
strongly impacted cash flow generated by the financing activity.
These impacts are analyzed in Section 3.2.2.1 “Analysis of
management cash flows”.
3.2.3
Description of the financing as of December 31, 2015
The Group uses various financing arrangements to fund the
acquisition of its fleet and other non-fleet financing needs. The
Group’s corporate (non-fleet) financing is currently composed
primarily of senior subordinated notes and the Senior Revolving
Credit Facility (RCF). The Group’s fleet financing consists
primarily of the Senior asset Revolving Facility (the “SARF”)
and the related securitization, senior secured notes, operating
lease arrangements and specific UK and Australian/New
Zealand fleet financing facilities. The Group’s main financing
arrangements are described below, with the corporate financing
arrangements described first followed by a description of the
fleet financing arrangements.
Crédit Agricole Corporate and Investment Bank (formerly
known as CALYON), Deutsche Bank AG, London Branch, BNP
Paribas, RBS, Lloyds, HSBC, Crédit Industriel et Commercial
and Société Générale, and certain of their affiliates, among
other lenders, are the main lenders of the Group.
EUROPCAR
2015
03
127
03
The following table presents a summary of the Group’s financial debt (on balance sheet and the estimated debt equivalent of fleet
operating leases off-balance sheet) as of December 31, 2015.
On or off
balance
sheet
Financing
(in millions of euros)
Amount at
December 31,
2015
Corporate
Collateral or Assetor Fleet
backed Financing Current
Noncurrent
Interest Rate
Before the
Refinancing
Maturity
475.0
5.75%
2022
Outstanding Subordinated
Notes Due 2022
On balance Yes (Security interest on ECI
sheet
shares held by Europcar
Groupe S.A.)
(Guaranteed by certain
subsidiaries)
Corporate
-
Senior Revolving Credit
Facility (RCF)
On balance
sheet
Yes
(Security interest
on certain assets)
Corporate
and Fleet
81.0
Euribor plus a margin
that varies based
on a leverage ratio
(2.50% at the date
of this document)
2020
Of which financing of the
FCT Junior Notes (1)
On balance
sheet
-
Fleet
86.2
-
2020
Capitalized financing
agreement transaction costs
-
-
Corporate
and Fleet
(7.9)
(24.0)
-
-
Accrued interest
-
-
Corporate
and Fleet
11.3
-
-
-
SARF/FCT Senior
Notes
On balance
sheet
Yes
(Securitifleet Collateral)
Fleet
658.3
Euribor plus a margin
of 1.70% that varies
based on financing by
FCT Junior or Senior
Notes and certain events
(2.20% in case of certain
breaches)
2019
EC Finance Notes
On balance
sheet
Yes
(Securitifleet Collateral)
Fleet
-
350.0
5.125%
2021
UK fleet financing
On balance
sheet
Yes
Fleet
356.8
-
Asset financing in Australia
and New Zealand
On balance
sheet
Yes
Fleet
75.8
-
Various conditions
depending on the lenders
Renewed
annually
Asset financing
in Portugal
On balance
sheet
Fleet
26.8
-
Various conditions
depending on the lenders
Renewed
annually
Other debt
On balance
sheet
Fleet
47.6
0,2
-
Bank overdrafts
On balance
sheet
Corporate
and Fleet
(14,1)
-
Eonia + 0.75%
1,263.8
801.2
1,323.4
-
TOTAL GROSS
ON-BALANCE SHEET DEBT
Estimated outstanding value
of the fleet financed through
operating leases (3)
Off balance
sheet
-
Fleet
Mainly LIBOR + 2% Various dates (2)
- Mainly renewed
annually
(1) FCT Junior Notes are issued by the FCT and subscribed for by ECI which finances them through cash on-hand at the Group and RCF drawdowns. These notes finance
the amount that is not financed by the SARF and the EC Finance Notes.
(2) See Section 3.2.3.2 «Debt related to fleet financing», paragraph (F) “Significant operating leases – Europcar Group UK fleet financing” of this Registration Document for
further information.
(3) The estimated debt financed through operating leases represents the carrying amount of the vehicles concerned and is calculated based on the purchase prices and
depreciation rates of corresponding vehicles (based on contracts with car manufacturers).
128
EUROPCAR
2015
-
The following chart presents the Group’s financial debt as of December 31, 2015.
EUR 350 m - 5.125%
EC Finance Notes Due 2021
EC Finance Trustee
uaran
ECI G
EUR 1.1 bn - SARF (b)
EURIBOR +170bp
100%
100%
ECI
Subo
The Securitifleet
On-Loan Agreements
FCT (securitization
mutual fund)
rdina
ted L
Gu
92%
(France)
ECI Performance
Guarantee
100%
5%
100%
6HFXULWLÁHHW
Holding
Bis S.A.S.
Master Operating Lease
Ownership
Funds Flow
Contractual relationship
Securitization entities
consolidated in the
Group's consolidated
financial statements
Note: Percentages have been rounded
Europcar France
6HFXULWLÁHHW,WDO\
6%
Europcar Italy
6HFXULWLÁHHW Germany
90%
5%
95%
Europcar Holding
S.A.S. (France)
Securitifleet Advances
6HFXULWLÁHHW+ROGLQJ
Share Trustee II
100%
6HFXULWLÁHHW)UDQFH
94%
03
EUR 20 m overdraft CIC
EONIA +75bp
Europcar International
S.A.S.U.
(ECI – France)
FCT Junior
Notes
6HFXULWLÁHHW
Holding S.A.
EUR 350 m - Senior
Revolving Credit Facility (a)
EURIBOR +250bp
100%
oan
8%
6HFXULWLÁHHW+ROGLQJ
Share Trustee I
tee
n
ara
tee
EC Finance PLC
EUR 475 m - 5.75%
Outstanding Subordinated
Notes Due 2022 (c)
Eurazeo Group
and other Equity
Investors
5%
Europcar Germany
6HFXULWLÁHHW6SDLQ
GBP 525 m UK Asset
Financing Facilities
LIBOR GBP 1M + 200bp
AUD 300 m Australia
Asset Financing Facilities
(Australia)
Europcar Spain
Operating companies
(Portugal, Belgium,
Russia, Australia)
In analyzing its liquidity, the Group uses corporate available cash flow (free cash flow).
Rating
STANDARD & POOR’S
On July 8, 2015, Standard & Poor’s Ratings Services raised
its long-term corporate credit ratings on Europcar Groupe and
wholly owned financing subsidiary Europcar International to
‘B+’ from ‘B’. It removed the ratings from CreditWatch, where
it had placed them with positive implications on May 26, 2015.
The outlook is stable.
The agency upgraded the issue rating on Europcar Groupe’s
€350 million revolving credit facility (RCF) from ‘B+’ to ‘BB’.
This rating was upgraded again on January 29, 2016 to ‘BB-’.
The agency upgraded the issue rating on EC Finance’s
€350 million senior secured notes due 2021, intended for the
financing of the fleet, from ‘B’ to’ B+’.
They raised the issue rating on the €475 million senior notes
due 2022 to ‘B-’ from ‘CCC+’.
The issue ratings on the RCF, the senior secured notes, and
the senior notes have also been removed from CreditWatch
with positive implications.
Moreover, the SARF, intended for the financing of the fleet, is
rated ‘A’.
(a) The Existing Senior Revolving Credit Facility was repaid on May 28, 2015 with the new Senior Revolving Credit Facility (RCF) which has an amount of
€350 million. Margin of 2.50% if the leverage ratio (as defined in the terms of the RCF) is lower than 2: 1 or 2.75% if the leverage ratio greater than 2: 1.
(b) Amendments to the SARF were signed on May 12, 2015. These amendments include, among other things, an increase in the amount of FCT Senior
Notes that may be issued by the FCT Issuer under the SARF from €1 billion to €1.1 billion, and a decrease in the applicable margin in respect of the
FCT Senior Notes from 2.2% to 1.7% (before the amortization period).
(c) The Notes were issued on June 10, 2015 for a total principal amount of €475 million. The proceeds of this issue were used to redeem the Outstanding
Subordinated Notes due 2018.
EUROPCAR
2015
129
03
MOODY’S
On July 7, Moody’s Investors Service upgraded Europcar
Groupe’s corporate family rating (CFR) to “B1” from “B3”.
Concurrently, Moody’s changed the instrument rating on the
€475 million Senior Notes due 2022, the obligations of which
have been transferred to the Company from Europcar Notes
Limited after the completion of the IPO, to definitive “B3” from
provisional (P)“B3” and upgraded EC Finance Plc’s instrument
rating on the €350 million Senior Secured Notes due 2021 to
“B2” from “B3”.
The outlook on the ratings is stable.
SENIOR NOTES
Within the framework of the Refinancing, on June 10, 2015,
Europcar Notes Limited, a limited liability special-purpose
vehicle under Irish law (the “Note Issuer”), issued senior notes
for an amount of €475 million bearing interest at an annual rate
of 5.75% repayable in June 2022 (the “Notes”) under the terms
of a bond issue agreement (indenture) dated June 10, 2015
between the Note Issuer, as issuer, and The Bank of New York
Mellon, as trustee. These Notes were listed for trading on the
Euro MTF Market of the Luxembourg stock exchange.
The proceeds from the issue of these Notes were allocated to
redeem in full the Outstanding Subordinated Notes due 2018
and to pay an early redemption premium of €19 million and
approximately €10 million of issuance costs with the remainder
to be used for general corporate purposes.
SECURITY AND GUARANTEES OF THE NOTES
The Notes are secured by a second-priority security interest
on ECI shares held by the Company subordinated to the firstpriority security interest on ECI shares held by the Company
from which lenders under the RCF benefit.
RANKING OF THE NOTES
The Notes are:
a equal in right of payment to all existing and future
indebtedness that is not subordinated in right of payment to
the Notes (including indebtedness under the Senior Revolving
Credit Facility);
a secured by a second-priority security interest on ECI shares
ranking junior to the first-priority security interest on such
shares in favor of the lenders under the RCF;
130
EUROPCAR
a effectively subordinated to all existing and future indebtedness
and other liabilities (including trade payables) of each
Company subsidiary that is not a guarantor of the Notes
(including indebtedness under the RCF and the SARF); and
a rank senior in right of payment to all existing and future
indebtedness of the Company that is expressly subordinated
in right of payment to the Notes.
OPTIONAL REDEMPTION OF THE NOTES
3.2.3.1 Corporate Debt
(A)
a effectively subordinated to all existing and future indebtedness
of the Company that is secured by property and assets that
do not secure the Notes (including indebtedness under the
RCF and the SARF) to the extent of the value of the assets
securing such indebtedness;
2015
Before June 15, 2018, the Company may redeem early all
or part of the Notes, upon not less than 10 nor more than
60 days’ notice before the redemption date, at a redemption
price of 100% (expressed as a percentage of par) increased by
interest accrued and not paid and by additional amounts due,
if applicable, on the redemption date through the payment of
a make-whole premium.
Moreover, the Company may, prior to June 15, 2018, redeem
early, with the net cash proceeds from an equity issue (other
than an IPO), up to 40% of the principal amount of the Notes
issued, upon not less than 10 nor more than 60 days’ notice
before the redemption date, at a redemption price of 105.75%
of the principal amount increased by interest accrued and not
paid without paying a make-whole premium, if applicable, on
the redemption date, provided that:
(i) at least 60% of the principal amount of the Notes originally
issued (excluding Notes held by the Company and its
affiliates) remains outstanding immediately after any such
redemption; and
(ii) the Company makes such redemption not more than 90
days after the consummation of any such equity offering.
At any time after June 15, 2018, the Company may redeem all
or part of the New Notes upon not less than 10 nor more than
60 days’ notice before the redemption date, at the following
redemption prices (expressed as percentages of the principal
amount thereof), plus accrued and unpaid interest at the
redemption date (subject to the right of holders of record on
the relevant record date to receive interest due on the relevant
interest payment date), if redeemed during the 12-month period
commencing on June 15 of the years set out below:
Year
Redemption Price
2018
102.875%
2019
101.438%
As from 2020
100.000%
Moreover, in the event of certain changes to tax regulations, the
Company may redeem in full the New Notes at a price of 100%
(expressed as percentages of the principal amount thereof) plus
accrued and unpaid interest and any additional amounts due,
if applicable, to the redemption date.
CHANGE IN CONTROL AND SALE OF ASSETS
Upon the occurrence of certain cases of change in control,
Noteholders may require the Company to redeem all or part of
their Notes at a purchase price equal to 101% (expressed as
a percentage of par) plus accrued interest on the redemption
date. The Company will be required to inform holders of the
change of control and the terms of this optional repurchase
within 30 days of the occurrence of a change of control event.
After the listing of the Company’s shares, a “change of control”
means any person or group of persons acting in concert (within
the meaning of Article L. 233-10 of the French Commercial
Code) (other than Eurazeo or a member of the Eurazeo Group)
obtaining the direct or indirect control within the meaning of
Article L. 233-3 of the French Commercial Code of the share
capital or voting rights of Europcar Groupe.
COVENANTS
The indenture pertaining to the Notes contains commitments
(covenants) that will limit the ability of the Company its
subsidiaries to:
a make restricted payments;
a sell assets and use the cash proceeds thereof;
a merge, make acquisitions or consolidate;
a engage in transactions with affiliates;
a create security guarantees; and
a restrict the payment of dividends by subsidiaries.
These covenants are subject to important exceptions and
qualifications. As of the date of this Registration Document,
all the Company’s subsidiaries are restricted subsidiaries (as
defined in the indenture pertaining to the Notes).
EVENTS OF DEFAULT
The indenture pertaining to the Notes contains the customary
events of default, including nonpayment of the principal or
interest of the Notes, certain failures with respect to other
notes under the indenture pertaining to the Notes or contracts
pertaining to the collateral, failure to pay certain debts or to
execute certain orders, and the bankruptcy of the Company or
of a significant subsidiary or of any collateral ceasing to exist (as
such terms are defined in the indenture pertaining to the Notes).
The occurrence of an event of default will permit or require the
accelerated repayment of all of the Notes.
(B)
03
SENIOR REVOLVING CREDIT FACILITY
The Senior Revolving Credit Facility was agreed on May 12,
2015 with BNP Paribas, Crédit Agricole Corporate and
Investment Bank, Crédit du Nord, Crédit Industriel et
Commercial, Deutsche Bank AG, London Branch, Goldman
Sachs International, HSBC France and Société Générale (the
“RCF Lenders”) and became effective on May 28, 2015 (RCF).
The RCF consists of a revolving credit facility, covered by a firstpriority guarantee of an amount of €350 million, providing for
credit advances (“Advances under the Senior Revolving Credit
Facility” or “RCF Advances”) or letters of credit (“RCF Letters of
Credit”) denominated, in both cases, in euros, pounds sterling,
US dollars or in any other currency agreed with the RCF lenders,
for a maximum outstanding amount of €350 million at any time
and made available, as applicable, under certain conditions, to
Europcar Groupe, ECI and certain Group operating subsidiaries.
The Senior Revolving Credit Facility is divided into two subfacilities: a €250 million sub-facility, which may be drawn down
solely through RCF Advances (the “Revolving Sub-Facility”),
and a €100 million sub-facility, which may be utilized through
RCF Advances or RCF Letters of Credit (the “L/C Sub-Facility”).
The maximum aggregate amount of the RCF Letters of Credit
shall not exceed €100 million. The available amount of the
Facility is equal to the total available commitments of the RCF
Lenders, less any “Excess Securitization Amount”. Unless
stated otherwise, capitalized terms set forth and used in the this
Section entitled “Senior Revolving Credit Facility” have the same
meaning as set forth in the Senior Revolving Credit Facility.
The Group will be entitled to request from time to time
additional credit commitments (“Incremental Commitments”)
in an aggregate principal amount not exceeding €100 million
provided that certain conditions are satisfied, namely: (i) that
no case of default has arisen or continues to exist under the
Facility; (ii) that the Additional Commitment is authorized under
the indenture pertaining to the Notes, the EC Finance Notes
and the SARF; and (iii) that if the Additional Commitments are
EUROPCAR
2015
131
03
incurred for a separate tranche, the opening commission fees
and the margin (and any applicable ratchet) on such tranche do
not exceed the initial margin of the facility (and any applicable
ratchet) by more than 1%, and the maturity date of such a
tranche does not precede that of the facility (such date may
be extended, if applicable).
The Incremental Commitment may be provided (i) either by
way of increase of the Revolving Sub-Facility commitments or
the L/C Sub-Facility commitments or (ii) by way of a separate
tranche (“Incremental Facility Tranche”). It may be only by way
of RCF Advances.
RCF ADVANCES
A “Qualifying Listing” refers to any Listing of all or part of the
share capital of Europcar Groupe on any public exchange or
public market provided that:
The RCF Advances are made available to the Company, ECI,
Europcar Holding S.A.S., Europcar Autovermietung GmbH,
Europcar International S.A.S.U. und Co. OHG, Europcar France
S.A.S., and Europcar IB S.A.U., as the initial borrowers, and
under certain conditions, to other subsidiaries of Europcar
Groupe (each a “Borrower under the RCF” or “RCF Borrower”).
(i) following such listing, the Leverage Ratio (x) on the previous
Quarter Date (pro forma for the repayment of financial
indebtedness occurring on or about the date of such listing)
or Leverage Ratio (y) within six months following such listing
is less than 2.00: 1; and
RCF Advances may be granted in euros, pounds sterling or US
dollars or any other currency requested by the RCF Borrowers
and agreed by the Agent provided that such currency is
available and freely convertible into euros on the wholesale
market on the relevant dates of quotation and utilization.
(ii) the proceeds of such listing are used to, inter alia, redeem
in full the Outstanding Subordinated Notes Due 2017.
RCF LETTERS OF CREDIT
“Quarter Date” means any of March 31, June 30, September 30
and December 31 of each year.
“Leverage Ratio” on each Quarter Date means the ratio of Total
Net Debt (as defined in the RCF) to Corporate EBITDA (as
defined in the RCF) on such Quarter Date for the 12-month
period ending on such Quarter Date.
“Total Net Debt” is equal, without accumulation, to the total
amount in circulation of (i) the Notes less the capitalized
financing costs connected to such bonds, (ii) the amounts of
the RCF Advances made available less the Junior FCT Notes,
(iii) bank overdrafts drawn by Europcar Holding, (iv) for the fleets
of the United Kingdom, Australia and New Zealand, gross total
debt less the net book value of the fleet and (v) any debt not
intended for the financing of the fleet less cash deposited into
a Group account opened at a bank ranked at least “P-2” by
Moody’s or “A-2” by S&P (with the exception of the cash of
the Securitifleet companies) and cash equivalents from which
each of the Group’s entities benefits.
“Excess Securitization Amount” means the portion of any
Securitization proceeds received by any member of the Group
exceeding an aggregate amount of €50,000,000.
“Securitization” means any factoring programs, receivables
securitization or other receivables financing of the Group
on a recourse basis not exceeding an aggregate amount of
€150,000,000.
132
The purpose of the RCF is to finance (i) the Group’s working
capital requirements and general corporate needs, (ii) interest
payments due by the Company or any other borrower,
(iii) repayment of inter-company loans, and (iv) permitted
acquisitions, it being specified that the RCF may not be used
to finance the prepayment, repayment, purchase, defeasance
or redemption of the Notes.
EUROPCAR
2015
RCF Letters of Credit may be issued under the RCF at the
request of an RCF Borrower.
RCF Letters of Credit may be issued in euros, pounds sterling
or US dollars or any other currency requested by the Borrowers
and agreed by the Agent provided that such currency is
available and freely convertible into euros on the wholesale
market on the relevant dates of quotation and utilization.
The aggregate amount of the RCF Letters of Credit issued shall
not exceed €100 million.
The expiry date of the RCF Letters of Credit falls on or before
thirty (30) calendar days before the maturity date of the facility
(as extended, as the case may be).
The term of RCF Letters of Credit is 12 months or less or, for
RCF Letters of Credit whose aggregate amounts do not exceed
€30,000,000, 18 months or less.
GUARANTEES
Guarantees have been granted by Europcar Groupe, ECI,
Europcar Holding S.A.S., Europcar Autovermietung GmbH,
Europcar France S.A.S., Europcar International S.A.S.U.
und Co. OHG, Europcar IB S.A.U., Europcar Italia SpA and
Europcar UK Limited.
In addition, other subsidiaries of Europcar Groupe may accede,
under certain conditions, to the new Senior Revolving Credit
Facility as guarantors in the future.
INTEREST
CANCELLATION
The interest rates per annum applicable to NSRCF Advances
under the New Senior Revolving Credit Facility are based on
EURIBOR (or LIBOR for drawings in currencies other than euros)
plus a borrowing margin, it being specified that EURIBOR or
LIBOR will be deemed equal to zero in the event of a negative
interest rate.
Undrawn amounts under the RCF may be cancelled by the
Company at any time in whole or in part on five business days’
notice on condition that the cancelled amount must be for a
minimum amount of €10 million.
The applicable margin is 2.75% for an RCF Advance to any
RCF Borrower if the Leverage Ratio is equal to or greater
than 2: 1, and 2.50% if no event of default has occurred or
is occurring under the RCF and the Leverage Ratio for the 12
months preceding the most recent Quarter Date is less than
2: 1.
The RCF is secured, subject to certain applicable limitations,
by (a) a first-priority security interest on (i) the shares of ECI
and of certain direct or indirect subsidiaries of ECI (Europcar
Holding SAS, Europcar France, Europcar UK Limited, Europcar
Autovermietung GmbH, Europcar Italia S.p.A., Europcar IB
S.A.U. and Europcar International S.A.S.U. und Co. OHG)
and (ii) the bank accounts of Europcar Groupe, ECI, Europcar
Holding SAS, Europcar France, Europcar International S.A.S.U.
& Co. OHG, Europcar IB S.A.U., Europcar Italia SpA, and by (b)
a first-priority security interest on intra-group receivables under
certain cash management agreements (cash pooling) entered
into between Europcar Holding SAS, as cash pool manager,
and other subsidiaries of Europcar Groupe.
MATURITY AND REPAYMENTS OF RCF ADVANCES
The Senior Revolving Credit Facility will mature 5 years from its
effective date (the “RCF Maturity Date”).
Each RCF Advance must be repaid on the last day of the
interest period relating thereto but may be repaid by way of
a new Advance. Each RCF Advance repaid (except pursuant
to a mandatory prepayment), will thereafter be available for
redrawing until one month prior to RCF Maturity. All RCF
Advances must be repaid at the RCF Maturity.
MANDATORY PREPAYMENT
Subject to certain exceptions, the RCF will be automatically
subject to mandatory prepayment and cancellation in full upon
the occurrence of one of the following events:
a a change in control; or
a the listing of the shares of any of the Group’s members on a
regulated market or other trading market; or
a on a disposal of all or substantially all of the assets of the
Group.
SECURITY
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On the occurrence of a Qualifying Listing, all the security
interests mentioned (other than those granted on the shares
in significant subsidiaries or the receivables under the cash
pooling arrangements) may be released at the request of
Europcar Groupe.
FEES AND COMMISSIONS
The Company must pay the following fees: (i) fees on the
unused revolving loan commitments of the lenders, (ii) letters
of credit participation fees on the outstanding amount of each
Letter of Credit, (iii) the fronting fees due to the issuing bank
for each Letter of Credit, and (iv) other customary fees of the
RCF (including arrangement fees, coordination fees and agents’
fees).
RANKING
Furthermore, if, at any time, as a result of any Securitization,
the outstanding amounts of the RCF Advances and RCF
Letters of Credit exceed the available amount of the Facility,
the Borrowers must repay (without cancellation) within three
business days the outstanding RCF Advances up to such
excess amount or reduce the amount of the Securitization
proceeds. The Borrowers shall be entitled to redraw any RCF
Advances which has been so repaid.
A “change in control” is deemed to have taken place if any
person or group of persons acting in concert (under article
L. 233-10 of the French Commercial Code), other than Eurazeo
or a member of Groupe Eurazeo, obtains direct or indirect
control of the capital or the voting rights of the Company under
article L. 233-3 of the French Commercial Code.
The RCF ranks senior to all other subordinated debt of each
RCF Borrower.
The RCF ranks pari passu with hedging transactions in right of
payment and in connection to its security (except the abovementioned first-priority security interest on ECI shares which
does not secure hedging transactions).
RCF lenders rank at least pari passu with all amounts owed to
unsecured creditors except for those amounts benefiting from
a higher rank under law or an intercreditor agreement.
FINANCIAL COVENANT
The RCF specifies that the Group must maintain a ratio of cash
flow to total debt service of no less than 1.10: 1.
Total debt service will be defined as the aggregate of the interest
and associated fees during any given 12 month period plus
repayment of financial liabilities, the latter being subject to
certain limitations.
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COVENANTS
Subject to certain exceptions related to materiality tests,
grace periods and carve-outs, the Senior Revolving Credit
Facility specifies certain undertakings (covenants), namely:
(i) a negative security interest in respect of Group assets, (ii)
a limitation on financial indebtedness, (iii) a restriction on the
payment of dividends, issuing stock, payments to shareholders
and investor debt, (iv) restrictions on asset disposals, and (v)
limitations on mergers, acquisitions and permitted investments.
EVENTS OF DEFAULT
The Senior Revolving Credit Facility contains, subject to
exceptions related to materiality tests, grace periods and
carve-outs, a certain number of customary events of default
including the following: (i) failure to pay the principal amount,
interest, fees and other amounts, (ii) noncompliance with certain
commitments and other obligations, (iii) substantial inaccuracy
in representations and warranties, (iv) cross defaults or defaults
which are accelerated with another significant debt, (v) certain
cases of insolvency, (vi) the actual or presumed invalidity of
any collateral or subordination clause under the terms of the
Intercreditor Agreement, (vii) a significant audit qualification, and
(viii) the occurrence of a significant unfavorable event.
GOVERNING LAW
The Senior Revolving Credit Facility is governed by French law.
3.2.3.2 Debt related to fleet financing
(A)
SENIOR ASSET REVOLVING FACILITY
OR SARF
The SARF was entered into between Crédit Agricole Corporate
and Investment Bank, as “Lending Bank” and Securitifleet
Holding as borrower.
The SARF was initially entered into on July 30, 2010
and amended on August 26, 2010, November 4, 2010,
January 11, 2011 and April 5, 2012. The SARF was further
amended on March 4, 2014 in certain respects, principally to
(i) add two additional banks to the facility, (ii) reduce the margin
of senior notes issued by the FCT Issuer under the facility from
2.70% to 2.20% (before the amortization period) and from
3.75% to 2.75% (after the amortization period), (iii) reduce the
maximum amount of senior notes that may be issued by the
FCT Issuer from €1.1 billion to €1 billion, (iv) provide the borrower
with flexibility to request weekly advance and repayment dates
rather than monthly settlement dates only, and (v) extend the
maturity of the SARF from July 2014 to January 2017. The
Senior asset Revolving Facility provides a committed facility
of €1.0 billion to Securitifleet Holding. Drawings are made
available to Securitifleet Holding (the “SARF Borrower”) for the
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sole purpose of financing fleet acquisition and maintenance
in France, Italy, Germany and Spain through the Securitifleet
companies.
Certain additional amendments to the SARF were signed on
May 12, 2015 and became effective on June 17, 2015 (the
“2015 Amendments”). The 2015 Amendments (i) reduced the
applicable margin with respect to the FCT Senior Notes from
2.2% to 1.7% (before the amortization period) and from 2.75%
to 2.25% (after the amortization period), (ii) reduced the rate
of non-use from 1% to 0.75% in the potential event where the
rate of use would be less than or equal to 50% and from 0.75%
to 0.5% in the potential event where the rate of use would
be greater than 50%, (iii) extended the maturity of the SARF
to the settlement date following January 2019, (iv) increased
the amount of the Senior Notes which could be used by the
FCT Issuer under the SARF of €1 billion to €1.1 billion, and
(v) enabled the participation of two new banks, Lloyds Bank
and HSBC France (or, if applicable, Regency Assets Limited,
its sponsored conduit supplying asset-backed commercial
paper), the latter replacing Barclays Bank plc. ECI and the
banks also agreed to (i) allow the sub-leasing of vehicles by
a local subsidiary (namely Europcar France SAS, Europcar
Autovermietung GmbH, Europcar Italia SpA or Europcar IB
SA) to another local subsidiary, except for Europcar Italia SpA,
under intragroup master operating sub-lease agreements, and
(ii) treat such sub-leased vehicles as eligible vehicles for the
amended SARF.
The Senior Facility Lending Bank assigned its claims arising
under the SARF, together with all security and ancillary rights
related thereto, to the FCT Issuer which in return issued (i)
“FCT senior notes” to be subscribed for from time to time by
Crédit Agricole Corporate and Investment Bank (or, as the
case may be, LMA, its sponsored multi-seller asset-backed
commercial paper conduit), The Royal Bank of Scotland plc,
Société Générale, Deutsche Bank AG, London Branch, Natixis,
(or, as the case may be, Magenta, its sponsored multi-seller
asset-backed commercial paper conduit), BNP Paribas (or,
as the case may be, Matchpoint, its sponsored multi-seller
asset-backed commercial paper conduit), HSBC France (or,
if applicable, Regency Assets Limited, its sponsored assetbacked commercial paper conduit), and any other entity
which may subscribe for or acquire FCT Senior Notes as
senior subscriber(s) in an aggregate amount of €1.1 billion
(after the 2015 Amendments), and (ii) “FCT Junior Notes” to
be subscribed for from time to time by ECI.
FINAL MATURITY DATE
The SARF will be terminated on the earlier of the following
dates: (i) the settlement date in January 2017 (or January 2019
after the signature of the 2015 Amendments), (ii) the start of
a Non-Enforcement Amortization Period (namely, the date on
which a Level 1 Event of Default is declared (as defined below)),
(iii) the start of an Enforcement Amortization Period (namely, the
date on which a Level 2 Event of Default is declared (as defined
below)), and (iv) the date on which an RCF is repaid (unless all or
part of such facility is refinanced in amounts equal to or greater
than the existing amount of such facility), the first of such dates
being the “SARF Termination Date”. The final maturity date of
the Senior asset Revolving Facility will be the date occurring
six months after the Senior asset Revolving Facility Termination
Date (the “SARF Final Maturity Date”).
SARF ADVANCES, REVOLVING PERIOD AND AMORTIZATION
PERIOD
During the period between March 4, 2014 and the SARF
Termination Date (the “SARF Revolving Period”), advances
(“SARF Advances”) are made to Securitifleet Holding subject
to the terms and conditions set out in the SARF as amended
on March 4, 2014. Following the occurrence of the Senior asset
Revolving Facility Termination Date and until the SARF Final
Maturity Date (the “SARF Amortization Period”), Securitifleet
Holding is required to apply all available amounts towards
the amortization of the outstanding Advances in accordance
with the priority of payments set out in the SF Intercreditor
Agreement (as defined below), as described below. All SARF
Advances will be fully due and payable on the SARF Final
Maturity Date.
SARF ADVANCE RATE
The rate of SARF Advances (the “SARF Advance Rate”) is
determined in light of the aggregate “Borrower Asset Value”
(as defined below) of all Securitifleet companies, the credit
enhancement mechanics confirmed with Standard & Poor’s,
and the concentration limits applicable to carmakers and
vehicles as defined in the SARF, the master operating lease
agreements and the terms and conditions of the FCT Junior
Notes.
In particular, the SARF Advance Rate is calculated by reference
to the “Senior Asset Funding Limit” which is sized principally
on the basis of (A) the aggregate Borrower Asset Value of all
Securitifleet Companies (subject to certain limitations) as the
same is reduced by (B) the applicable “Credit Enhancement
Amount”. The Credit Enhancement Amount is determined by
aggregating (i) the amount determined by the application of the
rate determined using Standard & Poor’s Credit Enhancement
Matrix applicable to the corresponding Credit Enhancement
Asset, and (ii) the amount exceeding the concentration limits
applicable to carmakers and vehicles defined in the SARF.
BORROWER ASSET VALUE
Drawing under the Senior asset Revolving Facility by Securitifleet
Holding will depend on the aggregate of all Borrower Asset
Values of the Securitifleet Companies.
In relation to any Securitifleet Company acting as borrower
under the Securitifleet On-Loan Agreements (as defined
below), the Borrower Asset Value is calculated monthly as the
aggregate of the following items:
a the vehicle fleet residual value—which comprises the
aggregate residual value of the vehicle fleet plus capitalized
costs for any purchased vehicles for which registration is
pending, less any aggregate provisions for badly damaged,
stolen or converted vehicles—of the vehicle fleet owned by
the relevant Securitifleet Company;
a the amount of the vehicle provider receivables—which
comprise the receivables owed to such Securitifleet Company
by any car dealer or manufacturer pursuant to the relevant
Securitifleet Company’s disposal of any vehicle under any
buy-back agreement—payable to the relevant Securitifleet
Company;
03
a the amount of VAT receivables, which comprise any VAT
repayment receivables owed or to be owed by a taxation
authority to the relevant Securitifleet Company that are
payable to such Securitifleet Company;
Minus
a the aggregate amount of any debt outstanding and due
by the relevant Securitifleet Company to vehicle providers
(excluding any amount in respect of VAT related thereto)
to the extent the maturity date of such payables falls after
the second succeeding SARF settlement date (as defined
below); and
a the aggregate amount of the capitalized costs related to
each vehicle fleet (excluding the vehicle fleet of Securitifleet
GmbH) delivered and accounted for by a Securitifleet
Company (excluding Securitifleet GmbH) but for which the
corresponding invoice has not yet been received or booked;
and
a the aggregate amount of all VAT payments owed by the
relevant Securitifleet Company to a taxation authority
in its relevant jurisdiction at such time (excluding for the
avoidance of doubt such VAT payments due by Europcar
Autovermietung GmbH in relation to the resale by Securitifleet
GmbH of its vehicles).
MARGIN
The interest rate applicable to the FCT Senior Notes is equal to
the sum of the EURIBOR rate applicable to the relevant interest
period plus 1.70% (in each case before the SARF Amortization
Period) or 2.25% (in each case during the SARF Amortization
Period). In the case of breach of certain obligations (subject to
reservations pertaining to their importance, the grace period
and other exceptions) with respect to a vehicle fleet availability
service agreement or a fee agreement concerning the provision
of legal services in Germany (a “DSP Material Breach”), the
margin applicable to the FCT Senior Notes (for the interest
periods terminating before the SARF Amortization Period)
will be automatically and immediately 2.25% from the date
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of the DSP Material Breach until the DSP Material Breach is
remedied or waived.
The interest rate applicable to the FCT Junior Notes is equal to
the sum of the EURIBOR rate applicable to the relevant interest
period plus 2.25%.
FEES
FLEET SERVICING
All Europcar operating companies in France, Germany, Spain
and Italy (each an “Operating Company”), pursuant to servicing
agreement (each a “Servicing Agreement”), acts as a services
provider (each, in such capacity, a “Services Provider”) in
respect of the vehicle fleet (and other assets) owned by the
related Securitifleet Company.
Upon implementation pursuant to the terms of a vehicle fleet
disposal services agreement, and of an engagement letter
and fee agreement regarding the provision of legal services
in Germany, a disposition services provider provides certain
disposition services in relation to the recovery of the fleet under
certain conditions.
ECI PERFORMANCE GUARANTEE
ECI granted in favor of each Securitifleet company certain
performance guarantees (together the “ECI Performance
Guarantee”) pursuant to which it guarantees as co-surety
the full payment when due of all amounts (including, without
limitation, rental payments under the master operating leases,
expenses, fees, costs, indemnity and other amounts due as a
result of the non-performance or incomplete performance by
the relevant Operating Company of any of its obligations) due to
each Securitifleet company by the relevant Operating Company
with respect to certain of their respective payment obligations,
in particular under the master operating lease agreements
and the management services agreements, up to an amount
equal to the available cash. The benefit of the ECI Performance
Guarantee was assigned in favor of the Senior Facility Lending
Bank acting as the fronting bank under the SARF but not in
favor of the trustee for the Outstanding Subordinated Notes
or the holders of the EC Finance Notes, directly or indirectly.
In case of the occurrence of any event of default under the
Senior asset Revolving Facility, the SARF b orrower can
be directed by the facility instructing party to call the ECI
Performance Guarantee and exercise any right it is entitled to
exercise in accordance with the terms of the ECI Performance
Guarantee.
SECURITY
Securitifleet Holding’s obligations under the SARF are
secured by the Securitifleet collateral described below under
“Securitifleet Collateral” which also indirectly benefit holders
of EC Finance Notes. In addition, however, the obligations of
Securitifleet Holding under the Senior asset Revolving Facility
are also secured by the vehicle fleet and receivables held against
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vehicle providers under manufacturer buy-back agreements in
Italy and Catalonia, as well as the bank accounts of Securitifleet
Italy and the shares held by Europcar Italy in Securitifleet Italy.
The Noteholders do not benefit, either directly or indirectly, from
this additional Securitifleet collateral.
2015
The SARF Borrower pays fees on the unused underwriting
commitments of holders of FCT Senior Notes, documentary
credit fees, and other customary fees in respect of the SARF
(including arrangement fees, ticking fees and agency fees).
RANKING
The Senior asset Revolving Facility ranks senior to the
Securitifleet Proceeds Loan both in interest and principal and
any other subordinated indebtedness of each SARF Borrower.
See “SF Intercreditor Agreement”.
COVENANTS
The covenants applied to Securitifleet Holding are divided
into Level 1 Undertakings and Level 2 Undertakings. Any
breach of a Level 1 Undertaking, which is not cured within its
applicable grace period (if relevant), shall result in a Level 1
Event of Default, and correspondingly any breach of a Level 2
Undertaking, which is not cured within its applicable grace
period (if relevant), shall result in a Level 2 Event of Default.
The Level 1 Undertakings relate to delivery of financial
statements, compliance with accounting policies, notification
of Level 1 defaults and maintaining bank accounts with
suitably rated banks. The Level 2 Undertakings include in
particular (i) information obligations (including notification of a
Level 2 Event of Default), (ii) the maintenance of the necessary
authorizations, licenses and consents, (iii) compliance with laws
and regulations, in particular tax laws, (iv) a negative pledge
regarding the assets or business of Securitifleet Holding, (v)
restrictions on the granting of loans by Securitifleet Holding, (vi)
a limitation on the financial indebtedness of Securitifleet Holding,
(vii) a limitation on the granting of guarantees by Securitifleet
Holding, (viii) restrictions on the rights of Securitifleet Holding
as shareholder of certain Securitifleet companies, and (ix) the
maintenance of bankruptcy-remoteness criteria including
restrictions on mergers.
The agreement also provides for two levels of representations
and warranties. The Borrower Level 1 Representations
and Warranties relate to the accuracy of historical financial
statements, ranking, no conflicts, and no events of default
and no withholding. The Borrower Level 2 Representations
and Warranties relate to other representations and warranties.
EVENTS OF DEFAULT
There are two levels of event of default under the Senior asset
Revolving Facility Agreement:
(i) a “Level 1 Event of Default” which, subject to any agreed
exceptions, materiality tests, grace periods and carve-outs,
consists of (i) misrepresentations made under borrower
Level 1 Representations and Warranties, (ii) breach of
any Level 1 Undertaking, and (iii) the replacement of the
Lending Bank without a replacement assignee bank being
appointed; and
(ii) a “Level 2 Event of Default” which, subject to any agreed
exceptions, materiality tests, grace periods and carve-outs,
consists of (i) non-payment of amounts due under the
SARF, (ii) misrepresentations made under borrower Level 2
Representations and Warranties, (iii) the violation of any
Level 2 Undertaking, (iv) the occurrence of an insolvency
event of Securitifleet Holding, (v) enforcement of security
or security ceasing to be valid, binding and enforceable or
losing the benefit of a priority ranking, (vi) the occurrence of a
material adverse change affecting Securitifleet Holding, (vii)
any audit qualification by the Statutory Auditors concerning
Securitifleet Holding’s financial statements to the extent it
materially adversely changes the current or future value
of Securitifleet Holding’s assets, (viii) breaches relating
to Securitifleet Holding’s obligations under Securitifleet
shareholder arrangements and to compliance with the
recommendations made by the Senior Facility Lending Bank
or the FCT Issuer as part of its consultation procedure, (ix)
misrepresentations and/or breaches by Securitifleet Holding
in relation to any security or encumbrance, (x) acceleration
under the Senior Revolving Credit Facility of the outstanding
EC Finance Notes or of Notes, and (xi) termination or breach
of any material operating license.
extending the duration of any base operating lease or sublease in force on the amortization commencement date,
and
a entering into any new base operating lease or sub-lease
with the relevant Securitifleet Company or Operating
Company.
The occurrence of a Level 2 Event of Default will trigger an
“Enforcement Amortization Period” during which (i) the relevant
instructing party will be entitled to accelerate all advances
granted to Securitifleet Holding in accordance with the
provisions of the SF Intercreditor Agreement, and (ii) all securities
granted to the FCT Issuer will be enforceable in accordance
with the provisions of the SF Intercreditor Agreement.
a
GOVERNING LAW
The Senior asset Revolving Facility Agreement is governed by
French law.
(B)
THE SECURITIFLEET COLLATERAL
The undertakings of Securitifleet Holding under the SARF
together with its obligations to repay the proceeds of the EC
Finance Notes to EC Finance Plc (as defined below) under a
loan agreement (the “Securitifleet Loan”) are secured directly
and indirectly by:
a a first priority security interest on the shares of Securitifleet
Holding held by ECI;
a a first priority security interest on the shares in each of the
Securitifleet Companies (other than shares held by Europcar
Italy in Securitifleet Italy);
a a first priority security interest on receivables held by
Securitifleet Holding in respect of each of the Securitifleet
companies (other than in respect of Securitifleet Italy);
The occurrence of a Level 1 Event of Default will commence
a “Non-Enforcement Amortization Period” during which, in
particular:
a a first priority security interest on the balances in Securitifleet
Holding’s bank accounts;
(i) any outstanding advance will become a term advance
repayable on a monthly basis during the amortization period
via all cash collections received;
a a first priority security interest on certain receivables (including
under buy-back agreements from carmakers) of each of the
Securitifleet Companies (other than Securitifleet Italy), with
certain exceptions in Spain; and
(ii) each Securitifleet company will be prohibited from ordering
new vehicles from vehicle providers and granting new
advances under the SARF; and
(iii) each Operating Company, acting as lessee under the
relevant master operating lease agreement and an
intragroup sub-lease agreement, will be prohibited from, due
to the prohibition that applies to Securitifleet Companies:
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a a first priority security interest on certain assets (including bank
account balances and the vehicle fleet) of each Securitifleet
Company from time to time (other than Securitifleet Italy),
with certain exceptions in Spain.
All above-mentioned assets subject to security interests are
collectively referred to herein as the “Securitifleet Collateral”. The
Securitifleet Collateral secure the Senior asset Revolving Facility
and the Securitifleet Proceeds Loan on a shared pari passu
basis and enforcement proceeds from such collateral will be
paid first to the senior lenders under the Senior asset Revolving
Facility pursuant to the amortization priority of payments in the
SF Intercreditor Agreement. Such senior lenders, in addition,
benefit from direct security over the assets of Securitifleet Italy.
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The holders of the EC Finance Notes indirectly benefit only from
a negative pledge in respect of the assets of Securitifleet Italy.
The security agent for the EC Finance Notes acts as agent
for the trustee for the EC Finance Notes and the holders of
such EC Finance Notes in respect of the EC Finance Notes
Collateral (as defined below). A common security agent acts
as the agent for the SARF creditors and the EC Finance Notes
trustee and as the security agent for the EC Finance Notes
and the holders of EC Finance Notes in respect of the shared
Securitifleet Collateral and in accordance with the provisions
of the SF Intercreditor Agreement.
(C)
THE SECURITIFLEET ON-LOAN
AGREEMENTS
Securitifleet Holding acts as the financing entity for the vehicle
fleet purchasing and leasing activities of the Securitifleet
Companies. Securitifleet Holding has used the proceeds from
funding under the Securitifleet Proceeds Loan related to the
EC Finance Notes, together with drawings under the SARF, to
on-lend, directly or indirectly, as required by certain jurisdictional
limitations, said amounts to the Securitifleet companies
(each such transaction a “Securitifleet Advance”) under the
“Securitifleet On-Loan Agreements”.
Securitifleet Holding has entered into revolving facilities with
Securitifleet Spain, Securitifleet Italy, Securitifleet France and
Securitifleet Germany pursuant to which Securitifleet Holding
has advanced funds to Securitifleet Spain, Securitifleet Italy,
Securitifleet France and Securitifleet Germany from time to time.
Except as otherwise required by law, all payments under
the Securitifleet Advances are made without deductions or
withholding for, or on account of, any applicable tax. In the
event that any Securitifleet company is required to make
any such deduction or withholding, it is further required to
gross-up each payment to Securitifleet Holding to ensure that
Securitifleet Holding receives and retains a net payment equal
to the payment which it would have received had no such
deduction or withholding been made.
Each Securitifleet On-Loan Agreement provides that the
Securitifleet Companies will make all payments pursuant
thereto on a timely basis in order to ensure that Securitifleet
Holding can satisfy its payment obligations under the Senior
asset Revolving Facility and the Securitifleet Proceeds Loan,
taking into account administrative and timing concerns and
limitations, including under the SF Intercreditor Agreement. As
the SF Intercreditor Agreement only permits payments to be
made on a settlement date falling on the 17th of each month,
semi-annual interest payments on the EC Finance Notes are
funded by Securitifleet Holding to ECF on the settlement date
preceding the relevant semi-annual interest payment date on
the EC Finance Notes (which is on the first of the following
month). ECF is permitted to invest such funds in highly-rated
liquid securities held in an account pledged for the benefit
of the EC Finance Noteholders. Any surplus funds in such
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account following an EC Finance Notes interest payment date
may be remitted to Securitifleet Holdings for investment in the
Securitifleet Companies. Pursuant to the ECI Subordinated
Loan, ECI has the option to extend to ECF amounts sufficient
to enable ECF to satisfy its payment obligations under the EC
Finance Notes that are not funded through payments on the
Securitifleet Proceeds Loan.
Each Securitifleet Company has been created with a limited
corporate purpose and is required by the terms of the
Securitifleet On-Loan Agreements to which it is a party, which
incorporate limitations substantially similar to those provided in
the EC Finance Notes Indenture (as defined below), to use the
proceeds of the relevant Securitifleet Advances made available
under its Securitifleet On-Loan Agreement to acquire and lease
vehicles to the Europcar operating company in its jurisdiction.
(D)
FCT JUNIOR NOTES
The subscription proceeds of the FCT Junior Notes subscribed
by ECI set forth the overall credit enhancement and, as
applicable, the remuneration of the FCT accounts (in the event
of a negative interest rate being applicable to these accounts)
as well as an additional liquidity requirement, which is an
amount determined by application of a fixed percentage of
the vehicle fleet residual value (which, for each Securitifleet
Company, is comprised of the aggregate residual value of a
given Securitifleet Company’s vehicle fleet plus capitalized
costs for any purchased vehicles for which registration is
pending, less any aggregate provisions for badly damaged or
stolen vehicles or vehicles the value of which has decreased
significantly, with the amount equal to the product of the
percentage of the loss adjustments and the residual value of
the fleet being deducted),to the amount of the securitization
financing (as defined below) at the level of the FCT Issuer, on a
cross-collateralized basis among all the Securitifleet Companies
(including any residual risk, such as interest rate risk). The
amount and rate of the credit enhancement and liquidity
required amount is calculated monthly (such amount being
adjusted on the date on which each advance is made under
the Senior asset Revolving Facility) and is applied towards the
determination of the amount of the FCT Junior Notes to be
issued in connection with each advance drawdown from time
to time under the Senior asset Revolving Facility on the basis
of the advance rate and the liquidity required amount.
The FCT Junior Notes are issued for a nominal amount of
€1,000. They accrue interest on the basis of the principal
amount issued for each interest period which ends on
each settlement date. The amount of interest due on each
settlement date for each FCT Junior Note is calculated on a
date immediately preceding this settlement date as follows:
(A) an amount equal to (i) the sum of all interest amounts due to
be received under the SARF Agreement on such settlement
date; plus (ii) the swap floating amount due to the FCT
Issuer by the swap counterparties on such settlement
date, (iii) the aggregate interest amount accrued on a
liquidity enhancement cash reserve account and an Italian
withholding tax reserve account up to such calculation date;
plus (iv) the FCT “Additional Amount” due to be paid by
Securitifleet Holding to the FCT on such settlement date
(being an amount payable by Securitifleet Holding to the
transaction administrator for the account of the FCT Issuer,
deemed to be €140,000 per month, subject to certain
modifications); less (v) the swap fixed amount due to be
paid by Securitifleet Holding to any swap counterparties
on that settlement date; less (vi) the aggregate of all Senior
Note coupons due to be paid in relation to all Senior Notes
on such settlement date; divided by
The ECI Guarantee is subordinate to any existing or future debt
and any other liabilities of ECI secured by the property and
assets of ECI and its subsidiaries to the extent of the value of
the property and assets securing this debt, including the Senior
Revolving Credit Facility and certain fleet financing contracts.
In the event of bankruptcy or insolvency, the secured lenders
have a priority claim over all collateral of ECI securing the debt
they hold.
The obligations of Securitifleet Holding under the Securitifleet
Proceeds Loan are secured directly or indirectly by the
Securitifleet Collateral. See Section “The Securitifleet Collateral”.
(B) the aggregate outstanding amount of all Junior Notes;
multiplied by
RANKING OF THE EC FINANCE NOTES
(C) the principal outstanding amount of such Junior Notes.
a are general senior obligations of ECF;
(E)
EC FINANCE NOTES
On July 31, 2014, EC Finance plc (“ECF”) issued €350,000,000
5.125% Senior Secured Notes due 2021 (the “EC Finance
Notes”). The EC Finance Notes are admitted to trading on the
Euro MTF market of the Luxembourg Stock Exchange.
The EC Finance Notes were issued pursuant to an indenture,
dated as of July 31, 2014 (the “EC Finance Notes Indenture”)
among ECF as issuer, The Bank of New York Mellon as
trustee, transfer and principal paying agent, and The Bank
of New York Mellon (Luxembourg) S.A. as registrar and as
Luxembourg paying and transfer agent. The EC Finance Notes
are obligations of ECF, and are guaranteed by ECI on a senior
unsecured basis.
Under the Securitifleet Proceeds Loan Agreement between
ECF and Securitifleet Holding the Securitifleet Proceeds Loan
funding was made available to Securitifleet Holding in an
amount equal to the aggregate principal amount of the EC
Finance Notes. Securitifleet Holding then makes Securitifleet
Advances to Securitifleet Companies. ECF and ECI entered into
the “ECI Subordinated Loan” pursuant to which ECI has the
option to extend to ECF amounts sufficient to enable ECF to
satisfy its payment obligations under the EC Finance Notes that
are not funded through payments on the Securitifleet Proceeds
Loan.
GUARANTEES
The EC Finance Notes are the obligations of ECF and are
guaranteed on a senior unsecured basis by ECI (the “ECI
Guarantee”). The ECI Guarantee is a general senior obligation
of ECI, which ranks equally in right of payment with all existing
and future indebtedness of ECI that is not subordinated in
right of payment to the ECI Guarantee and in the event of
an enforcement of the ECI Guarantee, the ECI Performance
Guarantee. Such ECI Guarantee ranks senior in right of
payment to all existing and future indebtedness of ECI that
is subordinated or otherwise junior in right of payment to the
ECI Guarantee.
03
The EC Finance Notes:
a are guaranteed on a senior unsecured basis by ECI;
a rank equally in right of payment with all existing and future
indebtedness of ECF that is not subordinated in right of
payment to the EC Finance Notes; and
a rank senior in right of payment to all existing and future
indebtedness of ECF that is subordinated or otherwise junior
in right of payment to the EC Finance Notes.
EC FINANCE NOTES COLLATERAL
EC Finance Notes benefit directly from the security interests
granted to the notes security agent on behalf of the EC Finance
Notes trustee and of holders of the EC Finance Notes (the “EC
Finance Notes Collateral”) in the following rights, property and
assets:
a the balance in English bank accounts of ECF and ECF’s rights
under the ECI Subordinated Loan; and
a ECI’s rights under the Securitifleet Proceeds Loan.
As lender under the Securitifleet Proceeds Loan, ECF (and
indirectly the EC Finance Noteholders) also benefits, indirectly,
from the Securitifleet Collateral. See Section “The Securitifleet
Collateral”.
OPTIONAL REDEMPTION
Except as described below, the EC Finance Notes are not
redeemable before January 15, 2017. Thereafter, ECF or ECI
may redeem all or, from time to time, a part of the EC Finance
Notes upon not less than 10 nor more than 60 days’ notice
prior to the redemption date, at the following redemption prices
(expressed as percentages of the principal amount thereof),
plus accrued and unpaid interest to the redemption date
(subject to the right of EC Finance Notes’ holders of record on
EUROPCAR
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03
interest payment date), and which vary according to the periods
set out below, commencing on January 15, 2017:
Year
Redemption Price
January 15, 2017 to July 15, 2017
103.844%
July 15, 2017 to July 15, 2018
102.563%
July 15, 2018 to July 15, 2019
101.281%
July 15, 2019 and thereafter
100.00%
At any time prior to January 15, 2017, the EC Finance Notes
may also be redeemed or purchased (by ECF or any other
person) in whole or, from time to time, in part, at ECF’s or
ECI’s option at a price equal to 100% of the principal amount
thereof plus the applicable premium as of, and accrued but
unpaid interest, if any, to the date of redemption or purchase
(subject to the right of EC Finance Notes’ holders of record on
interest payment date). Such redemption or purchase may be
made upon notice mailed by first-class mail to each ECF Notes’
holder’s registered address, not less than 10 nor more than 60
days prior to the date of redemption.
On or prior to January 15, 2017, ECF or ECI may, at their
option, redeem during each 12-month period commencing with
the issue date of the EC Finance Notes (or six-month period in
the case of the period remaining from July 15, 2016 through
January 15, 2017) up to 10% of the aggregate principal amount
of the EC Finance Notes outstanding, upon not less than 10
nor more than 60 days’ prior notice, at a redemption price
equal to 103% of the principal amount of the EC Finance Notes
redeemed, plus accrued and unpaid interest and additional
amounts, if any, to the date of redemption, subject to the rights
of holders of the EC Finance Notes on the relevant record date
to receive interest due on the relevant payment date.
In addition, any time, or from time to time, on or prior to
January 15, 2017, ECF or ECI may, at their option, use the net
cash proceeds of one or more equity offerings to redeem up to
35% of the principal amount of the EC Finance Notes issued
under the EC Finance Notes Indenture at a redemption price
of 105.125% of the principal amount thereof plus accrued and
unpaid interest and additional amounts, if any, to the date of
redemption (subject to the right of the EC Finance Notes’ holder
of record on the relevant record date to receive interest due on
the relevant interest payment date); provided that:
(1) at least 65% of the principal amount of EC Finance Notes
originally issued under the EC Finance Notes Indenture
(excluding EC Finance Notes held by ECF, ECI and their
respective affiliates) remains outstanding immediately after
any such redemption; and
(2) ECI makes such redemption not more than 90 days after
the consummation of any such equity offering.
In addition, in the event that ECI becomes obligated to pay
additional amounts (as defined in the EC Finance Notes
Indenture) to EC Finance Notes’ holders as a result of changes
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affecting withholding taxes applicable to payments on the EC
Finance Notes, ECI may redeem the EC Finance Notes in whole
but not in part at any time at 100% of the principal amount of
the EC Finance Notes plus accrued and unpaid interest at the
redemption date.
Any optional redemption made under this Section shall be
irrevocable.
CHANGE OF CONTROL AND ASSET SALES
Upon the occurrence of certain change of control events,
each holder of the EC Finance Notes may require ECF or ECI
to repurchase all or a portion of its EC Finance Notes at a
purchase price equal to 101% of the principal amount of the
EC Finance Notes, plus accrued and unpaid interest to, but
not including, the date of purchase. ECF or ECI must inform
holders of the change of control and the terms of this optional
repurchase within 30 days of the occurrence of a change of
control event.
If ECI sells assets under certain circumstances, ECI is required
to make an offer to purchase the EC Finance Notes at 100%
of the principal amount of the EC Finance Notes, plus accrued
interest to, but not including, the date of purchase, with the
excess proceeds from the sale of the assets.
COVENANTS
The EC Finance Notes Indenture contains covenants that,
among other things, limit the ability of ECF, ECI, Securitifleet
Holding, Securitifleet Companies and their Restricted
Subsidiaries to:
a respect a maximum loan-to-value ratio of all Securitifleet
companies’ indebtedness over the total value of certain of
the Securitifleet Companies’ assets of 95%, compliance to
be tested on a quarterly basis;
a respect covenants limiting the activities of ECF and the
Securitifleet Companies;
a make restricted payments, including dividends or other
distributions;
a create certain security interests;
a sell assets;
a in the case of restricted subsidiaries, enter into arrangements
that restrict dividends or other payments to the Company;
a in the case of restricted subsidiaries, guarantee or secure
debt;
a engage in transactions with affiliates;
a consolidate, merge or transfer all or substantially all of the
Company’s assets and the assets of its subsidiaries on a
consolidated basis; and
a take any action that would materially impair the security
interest.
These covenants are subject to important exceptions and
qualifications. Currently, all of the subsidiaries of ECF, ECI,
Securitifleet Holding and Securitifleet Companies are Restricted
Subsidiaries (as defined in the EC Finance Notes Indenture).
EVENTS OF DEFAULT
The EC Finance Notes Indenture contains customary events of
default, including, among others, the non-payment of principal
or interest on the EC Finance Notes, certain failures to perform
or observe any other obligation under the EC Finance Notes
Indenture or security documents, the failure to pay certain
indebtedness or comply with judgments and the bankruptcy or
insolvency of ECF, ECI, a Securitifleet Company or a significant
subsidiary. The occurrence of any default event would permit
or require the acceleration of all obligations outstanding under
the EC Finance Notes Indenture.
SF INTERCREDITOR AGREEMENT
In connection with entering into the SARF and the issuance of
the EC Finance Notes, an intercreditor agreement was entered
into with, inter alias, the Senior Facility Lending Bank under the
SARF and the trustee for the EC Finance Notes on July 30,
2010, which agreement was amended on March 4, 2014,
July 31, 2014 and again on May 12, 2015 (the “SF Intercreditor
Agreement”).
The SF Intercreditor Agreement sets out, among other things:
a the relative ranking of certain of Securitifleet Holding’s debt;
a when payments can be made in respect of Securitifleet
Holding’s debt;
a when and under what terms enforcement action in respect
of this debt can be taken;
a the terms on which any part of this debt will be subordinated
upon the occurrence of certain insolvency events;
a turnover provisions;
The Group’s main operating lease agreements with financial
institutions are described below.
CM-CIC AGREEMENTS IN GERMANY AND BELGIUM
The operating lease agreements with CM-CIC are the Group’s
main operating leases with financial institutions. The Group’s
German Operating Company and CM-CIC Leasing GmbH,
Frankfurt/Main entered into a vehicle sale and leaseback master
agreement dated January 30, 2009 (as amended from time to
time), for a term of three years, for the sale and leaseback of
vehicles to be purchased from the manufacturers Volkswagen
AG, Audi AG, Seat Deutschland GmbH, SkodaAuto Deutschland
GmbH, Volkswagen AG Marke Volkswagen Nutzfahrzeuge and
Volkswagen Gebrauchtfahrzeughandels- und Service GmbH
under certain purchase agreements. Over the course of 2011,
the line was extended to Belgium and France with a volume
of up to € 500 million. Local operating lease agreements were
entered into by CM-CIC and Europcar entities in France and
Belgium. The parties agreed to extend the term of the line for
Germany and Belgium until the end of 2014 and to reduce
the line to €410 million; the maturity of the line was further
extended to mid-2015. In August 2015, the parties entered into
a global framework agreement setting out the general terms
and conditions of the leases until mid-2016 which have been
supplemented by local lease contracts. Discussions between
ECI and CM-CIC are ongoing to extend the maturity date of
the global framework agreement and the local lease contracts.
OPERATING LEASES WITH CAR MANUFACTURERS’ FINANCIAL
ENTITIES
Europcar International S.A.S.U. and some of the Group’s main
car suppliers, such as Daimler, Volkswagen, Fiat and Renault
have put in place, at the local level, operating lease agreements
between the Group’s local operating companies and the car
suppliers’ financial entities. These operating leases are entered
into on the basis of a detailed fleet plan per country agreed
between the parties. These agreements roll on a yearly basis.
a security amendment principles setting out when security
and guarantees may be modified by the common security
agent without prior consent from the trustee or holders of
EC Finance Notes; and
In addition, the Group has entered into several base operating
lease agreements for the purpose of purchasing and leasing
activities of the vehicle fleet.
a limitations to any petition action in certain time periods and
to the recourse which may be taken against Securitifleet
Holding and any of the Securitifleet companies.
(G)
(F)
SUBSTANTIAL OPERATING LEASES
The Group finances a portion of its fleet in all of its Corporate
Countries through operating leases. The Group has entered into
large framework operating lease agreements, respectively, with
financial institutions and the financing arms of the Group’s main
car suppliers, which are negotiated at a Group level.
03
INTEREST RATE SWAP AGREEMENTS
As of the date of this Registration Document, the Group has
entered into two interest rate swap agreements.
The first interest rate swap agreement was originally entered
into by the Group in December 2010. Pursuant to this swap
agreement, amended several times over the years, the Group
pays a fixed interest rate ranging from 0.823% to 0.893% on
the outstanding nominal amount of €900 million and receives
interest income equal to the EURIBOR one-month rate. The
maturity date of this swap agreement is July 17, 2017.
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On May 28, 2015, the Company amended this swap agreement
to raise the nominal amount to €1 billion, extend the maturity
date from July 17, 2017 to July 17, 2019 (the “Extension
Period”) and lower the interest rate payable to an average of
0.64%.
(H)
EUROPCAR UK GROUP FLEET FINANCING
The Group currently finances its UK fleet on a stand-alone
basis through its UK subsidiaries including Europcar Group
UK Limited (“ECGUK”), Europcar UK Limited (“ECUK”) and
certain subsidiaries of ECUK (the “Europcar UK Group”) under
an overdraft facility (for an amount of £5 million), a revolving
credit facility (for an amount of £15 million) and seven leasing
facilities (in the total aggregate amount of £540 million).
In July 2011, the Group entered into the second interest rate
swap agreement, with a start date of December 19, 2011.
Pursuant to this swap agreement, amended several times over
the years up to the date of this Registration Document, the
Group pays interest at a fixed rate of 1.099% on the outstanding
nominal amount of €600 million and receives interest income
equal to the EURIBOR six-month rate. The maturity date of this
agreement is July 19, 2020.
The following table presents the Group’s fleet financing arrangements in the United Kingdom, which are described below:
Financing
On- or offbalance
sheet
Collateral
or Asset-backed
Amount drawn at
December 31, 2015
Amount available at
December 31, 2015
Term/Maturity
(in millions of pounds)
(in millions of pounds)
Interest
Rate
Club Facility
On balance
sheet
Yes 2018, one option
(financed fleet
to extend
and other assets)
by one year
246.6
(approx. €335.9 million)
178.4 Libor + 2.00%
(approx. €243 million)
Santander Facility
On balance
sheet
Yes 2018, one option
(title of financed fleet)
to extend
by one year
14.8
15.2 Libor + 2.00%
Lex Autolease Facility
Off balance
sheet
Yes
(title of financed fleet)
2019
41.6
13.4 Libor + 2.00%
Of which
Overdraft Facility
On balance
sheet
Yes
(title of financed fleet
and other assets)
Reviewed
annually
0.5
4.5
Libor +1.75%
Of which
the revolving
credit facility
On balance
sheet
Yes September 2016
(title of financed fleet
and other assets)
15.0
0.0
Libor +1.75%
Lloyds Facility
THE “CLUB” FACILITY
On October 1, 2014, ECGUK entered into a committed vehicle
funding agreement the “Club Vehicle Funding Agreement”
with Lombard, United Dominion Trust, HSBC and GE Capital
(hereafter the “Club Vehicle Funders”) pursuant to which the
Club Vehicle Funders granted to ECGUK, as hirer (the “Club
Hirer”), a £425 million aggregate facility, to finance the purchase
of the Group’s UK fleet vehicles, consisting of four bilateral
agreements with the following facility sizes:
a £150 million for the facility with Lombard North Central PLC;
a £100 million for the facility with HSBC Equipment Finance
Limited;
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a £100 million for the facility with United Dominion Trust
Limited; and
a £75 million for the facility with GE Capital Equipment Finances
Limited.
The Club Vehicle Funding Agreement has a term of three years
with two successive options to extend for a further 12-month
period at each of the first and second anniversaries of the
start date. On October 1, 2015, ECGUK exercised the first
extension option to push the maturity date of the facility to
2018. The obligations of the Club Hirer under the Club Facility
are guaranteed by ECUK, PremierFirst Vehicle Rental EMEA
Holdings Limited, PremierFirst Vehicle Rental Holdings Ltd.,
PremierFirst Vehicle Rental Franchising Ltd. and Provincial
Assessors Ltd. (collectively the “Club Guarantors”).
SECURITY
The Club Hirer’s obligations under the facility are secured by
way of: (i) title in the assets funded, (ii) fixed charges on the bank
account into which such proceeds are paid, (iii) guarantees
from the Club Guarantors, (iv) debentures from each of the
Club Hirer, PremierFirstVehicle Rental Franchising Limited and
Provincial Assessors Limited, and (v) a security assignment of
the manufacturer’s buy-back commitments relating to assets
funded by the Club Vehicle Funders.
COVENANTS
The facility contains affirmative and negative covenants
customary for this type of facility including restrictions on
creation of security interests over the assets of certain
members of ECGUK, the periodic delivery of financial and other
information, and certain financial covenants and fleet tests.
In particular, ECUK must ensure that:
a the net assets of ECGUK are not less than GBP 60 million;
a the ratio of earnings before interest, tax, depreciation and
amortization to fixed charges must not be less than 1.00, and
a the ratio of coverage of the fleet must be no more than 1.00.
ECUK was in compliance with these covenants at
December 31, 2015.
Subject to certain permitted exceptions, the facility also
includes restrictions on making distributions (including by way
of dividend).
EVENTS OF DEFAULT
This facility is on the same commercial terms as the “Club”
facility but does not benefit from the same security package.
SECURITY
The Santander Hirer’s obligations under the facility are secured
by way of title in the assets funded.
COVENANTS
The facility contains affirmative and negative covenants
customary for this type of facility including restrictions on
the creation of security interests over the assets of certain
members of ECGUK, the periodic delivery of financial and
other information, and certain financial covenants and fleet
tests. Subject to certain permitted exceptions, the facility also
includes restrictions on making distributions (including by way
of dividend). The facility includes a change of control clause with
respect to ECGUK, providing that in the event of a change of
control without the prior express consent of Santander Asset
Finance PLC, Santander Asset Finance PLC may withdraw
its commitments under the agreement. As an exception, the
initial public offering is a permitted change of control under the
agreement.
EVENTS OF DEFAULT
The facility contains events of default customary for these types
of agreements, including, (i) breach of any of the Santander
Vehicle Funding Agreement, (ii) breach of the terms of the
financing, subject to cure periods, (iii) breach of certain other
funding or rental agreements, and (iv) insolvency and cross
default provisions.
The facility contains events of default customary for these
types of agreements, including, (i) breach of the terms of the
Club Vehicle Funding Agreement, (ii) breach of certain other
funding or rental agreements, (iii) insolvency and cross default
provisions, (iv) repayment default and (v) non-compliance with
covenants.
THE LEX AUTOLEASE FACILITY
THE SANTANDER FACILITY
The borrowers’ obligations under the new Lex Autolease facility
is secured by way of title in the assets funded. The facility
contains affirmative and negative covenants customary for this
type of facility. The facility also contains customary events of
default for this type of facility.
On October 10, 2014, Europcar Group UK Limited entered into
a committed vehicle funding agreement with Santander Asset
Finance PLC (the “Santander Vehicle Funding Agreement”)
pursuant to which Santander Asset Finance PLC granted to
ECGUK (the “Santander Hirer”) a £30 million facility to finance
the purchase of the Group’s UK fleet vehicles. The Santander
Vehicle Funding Agreement has a term of three years with two
successive options to extend for a further 12-month period at
each of the first and second anniversaries of the start date. On
October 1, 2015, ECGUK exercised the first extension option
to push the maturity date of the facility to 2018.
03
On October 1, 2014 ECGUK entered into a master contract hire
agreement with Lex Autolease Limited to finance the purchase
of the Group’s UK fleet vehicles via an operating lease facility
of £55 million. The master contract hire agreement ends on
December 31, 2019.
THE LLOYDS FACILITIES
On October 1, 2014, ECGUK entered into two working capital
facilities with Lloyds: an overdraft with a limit of £5 million and
a revolving credit facility with a limit of £15 million.
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THE OVERDRAFT FACILITY
On October 1, 2014, ECGUK and PremierFirst Vehicle Rental
Holdings Limited, as borrowers, and Lloyds, as lender, entered
into an overdraft facility agreement pursuant to which Lloyds
provided a £5 million net/£10 million gross overdraft facility to
ECGUK and certain of its subsidiaries for general overdraft
purposes (the “Overdraft Facility”). Lloyds reviews the facility
periodically and at least once a year.
Interest is payable on all advances under the Overdraft Facility
at the annual rate which is the sum of the then applicable
margin, LIBOR and the mandatory costs (if any). In addition to
the interest charges, commitment fees are payable. Interest is
payable on all amounts owing under the Overdraft Facility at
the annual rate which is the sum of the applicable margin and
the then applicable base rate.
The Overdraft Facility may be cancelled by Lloyds at any time
and all outstanding advances, together with accrued interest,
may become immediately due and payable.
On the occurrence of certain events, including a change
of control, the Overdraft Facility may be cancelled and all
outstanding advances, together with accrued interest, may
become immediately due and payable.
Obligations under the Overdraft Facility are secured by English
law debentures granted by certain members of the Europcar
UK Group in favor of Lloyds.
The Overdraft Facility contains affirmative and negative
covenants customary to this type of agreement including
periodic delivery of financial information and maintenance of
certain financial performance targets.
The Overdraft Facility letter sets out events of default customary
for these types of facilities including, subject to certain cure
periods, events of default for non-payment, breaches of
representations and warranties and undertakings, and
insolvency-related events.
THE REVOLVING CREDIT FACILITY
On October 1, 2014, ECGUK, as borrower, and Lloyds, as
lender, entered into a revolving credit facility agreement pursuant
to which Lloyds provided a £15 million revolving credit facility
to ECGUK and certain of its subsidiaries for general corporate
purposes. The revolving credit facility has a termination date
of September 29, 2016.
Interest is payable on all advances under this revolving credit
facility at the annual rate which is the sum of the then applicable
margin, LIBOR and the mandatory costs (if any). In addition to
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the interest charges, commitment fees are payable. Interest is
payable on all amounts owing under this revolving credit facility
at the annual rate which is the sum of the applicable margin
and the then applicable base rate.
Obligations under this revolving credit facility are secured by
English law debentures granted by certain members of ECGUK
in favor of Lloyds.
This revolving credit facility contains affirmative and negative
covenants customary to this type of agreement including
periodic delivery of financial information and maintenance of
certain financial performance targets.
It also contains events of default customary for these types of
facilities, including, events of default for non-payment, breaches
of representations and warranties and undertakings, and
insolvency related events.
(I)
ASSET FINANCING IN AUSTRALIA
AND NEW ZEALAND
On March 31, 2015, National Australia Bank (the NAB), Toyota
Financial Services (TFS), Volkswagen Financial Services,
Alphabet Financial Services, St George Bank, Mercedes Benz
Finance, Nissan Finance and other Australian and New Zealand
financial institutions provided Europcar Australia and Europcar
New Zealand with senior credit facilities (the “Australian and
New Zealand Asset Financing Facilities”) including revolving
and non-revolving fleet operating and finance leases of up to
AUD 300 million. These facilities are renewed annually and
finance the fleet in Australia and New Zealand.
The facilities are secured by fixed and floating charges over
Europcar Australia and Europcar New Zealand assets, including
goodwill and uncalled capital and called but unpaid capital,
together with the relative insurance policy assigned. There are
also performance guarantees for the facilities.
These facilities include covenants. In particular, Europcar
Australia must ensure that:
a its minimum net worth, i.e., total shareholders’ equity, is
always greater than AUD 58 million;
a its fleet utilization rate is above 70% on average over the
year; and
a its minimum cumulative net profit before tax is within 85% of
the Company’s budget.
Europcar Australia was in compliance with these covenants at
December 31, 2015.
INVESTMENTS
3.2.3.3 Equity
Shareholders’ equity attributable to the owners of the Group
totaled €561.4 million as of December 31, 2015 compared with
€157.2 million as of December 31, 2014.
The rise in the Group’s equity is linked primarily with the
€475 million capital increase carried out as part of the IPO
on June 26, 2015. The associated costs of approximately
€24 million were deducted directly from the issuance premiums.
In addition, the Group recorded a net loss of €55.6 million.
These losses included non-recurring items, notably the costs
associated with the IPO and the reshaping of the capital
structure (approximately €95 million), the net negative impact of
some proceedings (approximately €22 million), and provisions
for ongoing tax audits. See Section 3.1.2.2.
3.2.3.4 Contractual obligations
and off-balance sheet commitments
See Section 3.2.3 “Description of the financing as of
December 31, 2015” and Note 32 to the consolidated financial
statements for the year ended December 31, 2015.
03
3.3 INVESTMENTS
3.3.1
Historical Investments
The Group’s capital expenditures relate primarily to the Group’s
information technology infrastructure and equipment as well as
to fixtures and improvements in its office and rental stations.
The Group’s expenses relating to the purchase of vehicles are
not accounted for as capital expenditures but as operating
expenses if the acquisition is recorded on the balance sheet.
3.3.1.1 Rental fleet
The Group records all of its vehicle fleet either on the balance
sheet or, with respect to vehicles acquired through leases that
meet the definition of an operating lease, off balance sheet.
The Group’s gross expenses relating to the acquisition of
vehicles totaled €2.4 billion and €1.9 billion for the years ended
December 31, 2015 and 2014 respectively. These expenses
are primarily financed through specific financing arrangements.
Repayment of these loans is based on the proceeds of the
sales of the vehicles at the end of their period of use. These
net amounts resulted in the use of €76 million of cash in 2015
compared with €55 million in 2014.
The Group’s rental fleet is composed of vehicles that are acquired or financed in different ways, as shown in the following table:
% of total volume
of vehicles purchased
Type of acquisition and related financing
2015
2014
Vehicles purchased with manufacturer or dealer buy-back arrangement financed via the balance sheet
46%
43%
Vehicles purchased with manufacturer or dealer buy-back arrangement
and financed through rental agreements qualifying as operating leases
46%
49%
TOTAL FLEET PURCHASED WITH BUY-BACK ARRANGEMENTS
92%
92%
Vehicles purchased without manufacturer or dealer buy-back arrangement (at-risk vehicles)
7%
7%
Vehicles financed through rental agreements qualifying as finance leases
1%
1%
100%
100%
TOTAL PURCHASES OF RENTAL FLEET
EUROPCAR
2015
145
03
INVESTMENTS
For more information about the Group’s fleet, see Section 1.6.7
“Fleet” and Section 3.2 “Liquidity and capital resources”.
3.3.1.2 Capital expenditures
The Group’s capital expenditure (acquisitions of tangible and
intangible assets net of sales) increased to €23.8 million in
2015 compared with €20.1 million in 2014. Capex included
expenditures for the development of IT, excluding software and
equipment and expenditures on other equipment (IT software
and equipment, furniture, interior layouts and fixtures).
The Group’s IT development expenditures relate in particular
to projects to develop new functionalities in the Group’s
application portfolio. In 2014 and 2015, tools for managing
the sales teams and pricing in real time were put in place in
the Sales & Marketing departments. The fleet department was
equipped with a sales site for at-risk vehicles and a tool for
vehicle fleet optimization. In e-commerce, the Internet sites of
the Europcar brand were renewed and a content manager was
put in place while referencing on Internet sites was improved.
3.3.1.3 Acquisitions/Joint Ventures
On July 9, 2015, Europcar Lab, the Europcar Group unit
dedicated to innovation, announced the acquisition of a
majority stake in E-Car Club, the UK’s first entirely electric
pay-per-use car club. This new acquisition is fully in line with
Europcar Lab’s strategy to develop mobility market usages,
search for new mobility solutions opportunities worldwide and
make investments in strategic initiatives allowing the Group to
strengthen its leadership in the mobility market.
On October 31, 2014, the Group acquired 100% of the shares
of EuropHall SAS through its French subsidiary Europcar France
SAS. With revenue of €23 million in 2014, EuropHall has been
a significant franchisee of Europcar France in eastern France
since 1978. This company has been fully consolidated since
early November 2014.
In addition, on November 30, 2014, the Group acquired a
majority stake in Ubeeqo, a French startup formed in 2008 that
provides car-sharing solutions. Following its capital increase
fully subscribed by the Group in 2015, the Group’s stake stood
at 75.7% as of December 31, 2015.
In addition, in 2015 and 2014, the Group subscribed to capital
increases of Car2go Europe amounting to €12.5 million and
€5.7 million respectively.
3.3.2
Ongoing Investments
See Section 3.3.3. below.
3.3.3
Future Investments
The Group plans to continue its Fast Lane transformation
program aimed at strengthening the Group’s market presence
and preparing the transition from a vehicle rental company
to a mobility services player (see Section 1.4.4 “Fast Lane”
Transformation Program that has set the Foundation for
Sustainable Profitable Growth).
As part of its development strategy, the Group plans in particular
to continue to develop innovative services and products in
response to consumers’ new expectations in terms of mobility
and to seize opportunities for external growth that present an
attractive yield profile in order to widen the Group’s mobility
services offering (see Section 1.5 “Strategy”).
146
EUROPCAR
2015
The Group plans to continue to invest in strategic initiatives.
As announced in May 2015 as part of its planned IPO, the
Group will invest up to €80 million over the 2015-2017 period
including up to €25 million in Europcar Lab. The Group also
plans to increase non-fleet capital expenditure to approximately
€40 million in 2017 compared with approximately €28 million
in 2015.
However, the Outstanding Subordinated Notes and the
Senior Revolving Credit Facility contain provisions limiting
the Group’s ability to make certain investments, in particular
acquisitions (see Section 3.2.3 “Description of the financing
as of December 31, 2015”).
CONSOLIDATED FINANCIAL STATEMENTS AND STATUTORY AUDITORS’ REPORT
In order to support the Group’s efforts to develop and implement
innovative mobility solutions, the Group intends to continue
its investments under its 2020 plan aimed at improving its IT
systems architecture with the goal of making it more open
and flexible in order to facilitate the integration of applications
developed by third parties (see Section 1.6.10 “IT system”).
As of the date of this document, other than commitments related
to the purchase of vehicles financed by specific financing, the
repayment of which will be financed by the sale of such vehicles
at the end of their period of use, the Company does not have
any significant, firm commitments to make investments in the
future (see Note 32 “Off-balance sheet commitments” to the
Group’s 2015 consolidated financial statements).
03
3.4 CONSOLIDATED FINANCIAL STATEMENTS
AND STATUTORY AUDITORS’ REPORT
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated financial statements for the year ended December 31, 2015
and notes to the financial statements
In thousands of euros
Notes
Revenue
As at
Dec. 31, 2015
As at
Dec. 31, 2014
2,141,923
1,978,870
Fleet holding costs
3
(547,186)
(496,264)
4
(726,990)
(686,279)
Personnel Costs
5
(347,388)
(318,153)
Network and head office overhead costs
7
(218,475)
(199,339)
Depreciation, amortization and impairment expense
8
(32,781)
(31,824)
Other income
9
14,216
6,879
283,319
253,890
Current operating income
Goodwill impairment expense
Other non-recurring income
10
-
-
Other non-recurring expense
10
(61,774)
(115,729)
Operating income
221,545
138,161
Gross financing costs
(121,768)
(151,424)
Other financial expenses
(117,780)
(90,650)
11,956
9,393
11
(227,592)
(232,681)
(6,047)
(94,520)
Income tax benefit/(expense)
12
(37,637)
(10,655)
Share of profit/(loss) of associates
16
Other financial income
Net financing costs
Profit/loss before tax
Net profit/(loss) for the period
(12,074)
(6,523)
(55,758)
(111,698)
(55,602)
(112,273)
Attributable to:
Owners of ECG
Non-controlling interests
(156)
575
Basic earnings/(loss) per share attributable to owners of ECG (in euros)
25
(0.449)
(1.082)
Diluted earnings/(loss) per share attributable to owners of ECG (in euros)
25
(0.449)
(1.082)
EUROPCAR
2015
147
03
Consolidated statement of comprehensive income
As at Dec. 31, 2015
As at Dec. 31, 2014
Before tax
Tax
income/
(expense)
After tax
(18,121)
(37,637)
Items that will not be reclassified to profit or loss
4,179
Actuarial gains/(losses) on defined benefit pension schemes
4,179
Items that may be reclassified subsequently
to profit or loss
Before tax
Tax
income/
(expense)
After tax
(55,758)
(101,043)
(10,655)
(111,698)
(1,087)
3,092
(21,802)
5,985
(15,817)
(1,087)
3,092
(21,802)
5,985
(15,817)
3,574
(20)
3,554
(282)
(4,713)
(4,995)
Foreign currency differences
12,271
-
12,271
13,598
-
13,598
Effective portion of changes in fair value
of hedging instruments
(8,697)
(20)
(8,717)
(13,922)
(4,713)
(18,635)
Net change in fair value of available-for-sale financial assets
Other comprehensive income for the period
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD
-
-
-
42
-
42
7,753
(1,107)
6,646
(22,084)
1,272
(20,812)
(10,368)
(38,744)
(49,112)
(123,127)
(9,383)
(132,510)
Attributable to:
a Group
a Non-controlling interests
148
EUROPCAR
2015
(48,934)
(133,085)
(178)
575
Consolidated statement of financial position
Notes
As at
Dec. 31, 2015
As at
Dec. 31, 2014
Goodwill
13
457,072
449,389
Intangible assets
14
713,136
721,732
Property, plant and equipment
15
89,236
88,204
Equity-accounted investments
16
22,035
17,323
Other non-current financial assets
17
57,062
38,934
Deferred tax assets
18
ASSETS
TOTAL NON-CURRENT ASSETS
55,730
47,395
1,394,271
1,362,977
Inventories
19
15,092
16,141
Rental fleet recorded on the balance sheet
20
1,664,930
1,402,660
Rental fleet and related receivables
21
574,652
530,098
Trade and other receivables
22
357,200
325,912
Current financial assets
17
37,523
49,477
Current tax assets
Restricted cash
23
Cash and cash equivalents
23
33,441
33,347
97,366
81,795
146,075
144,037
2,926,280
2,583,467
4,320,551
3,946,444
Share capital
143,155
446,383
Share premium
767,402
452,978
TOTAL CURRENT ASSETS
TOTAL ASSETS
03
Equity
Reserves
(74,341)
(77,926)
(274,821)
(664,250)
561,395
157,185
962
950
24
562,356
158,135
26
801,183
1,043,069
Retained earnings (losses)
Total equity attributable to the owners of ECG
Non-controlling interests
TOTAL EQUITY
LIABILITIES
Financial liabilities
Non-current financial instruments
30
52,090
41,928
Employee benefit liabilities
27
119,295
124,759
Non-current provisions
28
25,168
10,114
Deferred tax liabilities
18
131,132
131,005
Other non-current liabilities
TOTAL NON-CURRENT LIABILITIES
306
365
1,129,174
1,351,240
Current portion of financial liabilities
26
1,263,783
1,127,545
Employee benefits
27
2,944
2,744
24,511
34,560
Current tax liabilities
Rental fleet related payables
21
662,722
581,957
Trade payables and other liabilities
29
424,974
449,866
Current provisions
28
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
EUROPCAR
250,087
240,397
2,629,021
2,437,069
3,758,195
3,788,309
4,320,551
3,946,444
2015
149
03
Consolidated statement of changes in equity
Attributable to owners of ECG
Share
capital
Share
premium
Hedging
reserve
Translation
reserve
BALANCE AT JANUARY 1, 2014
446,383
452,978
(18,136)
(54,753)
(539,278)
Noncontrolling
interests
Total
Total
equity
287,194
3,451
290,645
-
-
-
-
(112,273)
-
(112,273)
575
(111,698)
-
-
-
13,598
-
-
13,598
-
13,598
Effective portion of changes
in fair value of hedging
instruments
-
-
(13,922)
-
-
-
(13,922)
-
(13,922)
Net change in fair value
of available-for-sale
financial assets
-
-
-
-
42
-
42
-
42
Actuarial gains/(losses)
on defined benefit
pension schemes
-
-
-
-
(21,802)
-
(21,802)
-
(21,802)
Income tax relating to
components of other
comprehensive income
-
-
(4,713)
-
5,985
-
1,272
-
1,272
Other comprehensive
income/(loss)
-
-
(18,635)
13,598
(15,775)
-
(20,812)
-
(20,812)
Change in non-controlling
interests
-
-
3,076
-
3,076
(3,076)
-
Transactions with owners
-
-
-
-
-
-
-
-
446,383
452,978
(36,771)
(41,155)
(664,250)
950
158,135
BALANCE AT DECEMBER 31, 2014
150
Retained Treasury
earnings
shares
EUROPCAR
2015
157,185
Attributable to owners of ECG
Share
Share
capital premium
BALANCE AT JANUARY 1, 2015
Hedging Translation
reserve
reserve
Retained
earnings
Treasury
shares
Total
Noncontrolling
interests
Total
equity
446,383
452,978
(36,771)
(41,155)
(664,250)
157,185
950
158,135
Net profit/(loss)
for the period
-
-
-
-
(55,602)
- (55,602)
(156)
(55,758)
-
-
-
12,271
-
-
12,271
(22)
12,249
Effective portion of changes
in fair value of hedging
instruments
-
-
(8,697)
-
-
-
(8,697)
-
(8,697)
Net change in fair value
of available-for-sale financial
assets
-
-
-
-
-
-
-
-
-
Actuarial gains/(losses)
on defined benefit pension
schemes
-
-
-
-
4,179
-
4,179
-
4,179
Income tax relating
to components of other
comprehensive income
-
-
(20)
-
(1,087)
-
(1,107)
-
(1,107)
Other comprehensive
income/(loss)
-
-
(8,717)
12,271
3,092
-
6,646
(22)
6,624
73
1,437
-
-
-
-
1,510
-
1,510
Capital increase preferred
shares
Capital increase by
“incorporation de primes”
Capital decrease
Capital increase IPO
99,406
(99,406)
-
-
-
-
-
-
-
(441,483)
-
-
-
441,483
-
-
-
-
38,776
436,224
-
-
-
- 475,000
-
475,000
(23,832)
-
-
-
- (23,832)
-
(23,832)
IPO fees
Share-based payments
-
-
-
-
2,624
-
2,624
-
2,624
Cancellation of treasury shares
-
-
-
-
-
31
31
-
31
Purchase of shares from
non-controlling interests
-
-
-
-
(1,457)
-
(1,457)
(1,835)
(3,292)
Change in non-controlling
interests
-
-
-
-
(711)
-
(711)
2,025
1,314
(303,228)
314,423
441,939
31 453,165
190
453,355
143,155
767,402
(274,821)
31
962
562,356
Transactions with owners
(45,488)
(28,884)
EUROPCAR
561,395
2015
03
151
03
Consolidated cash flow statement
Notes
Profit/(loss) before tax
As at
Dec. 31, 2015
As at
Dec. 31, 2014
(6,047)
(94,520)
Reversal of the following items
Depreciation and impairment charge on property, plant and equipment
15
15,277
12,834
Amortization and impairment charge on intangible assets
14
17,893
36,183
Impairment charge on goodwill
13
-
-
27, 28
999
46,865
Changes in provisions and employee benefits
Recognition of share-based payments
2,624
-
Costs related to the IPO
8,692
-
Profit/(loss) on disposal of assets
(394)
(1,311)
Total net interest costs
127,303
160,011
Redemption premium
56,010
17,063
Amortization of transaction costs
42,340
29,237
-
1,415
Amortization of bond issue premiums
Other non-cash items
(1)
Financing costs
Operating income before changes in working capital
1,465
16,258
227,118
223,984
266,162
224,035
Changes to the rental fleet recorded on the balance sheet (6)
20
(232,851)
(91,466)
Changes in fleet working capital
21
34,869
(74,025)
Income taxes received/paid
Net interest paid
Net cash generated from (used by) operations
13,14,15
Other investments and loans
Proceeds from disposal of financial assets
( 57,243)
50,018
10,937
108,562
(39,669)
(31,447)
(137,334)
(166,798)
( 166,066)
(89,683)
( 29,172)
(23,578)
5,384
3,491
-
(1,158)
(7,563)
(9,614)
(23,872)
(45,778)
Net cash used by investing activities
( 55,223)
(76,637)
Capital increase (net of related expenses) (3)
448,203
-
Issuance of bonds (5)
471,623
350,000
Acquisition of subsidiaries, net of cash acquired (2)
Redemption of bonds (4)
(780,010)
(367,063)
123,310
139,699
Payment of transaction costs
(19,820)
(17,336)
Swap cash payment
Net cash generated from (used by) financing activities
Cash and cash equivalent at beginning of period
23
Net increase/(decrease) in cash and cash equivalents
after effect of foreign exchange differences
Effect of foreign exchange differences
Cash and cash equivalents at end of period
-
(2,000)
243,306
103,300
206,317
267,038
22,018
(63,020)
1,033
2,299
229,368
206,317
(1) Of which, €1.5 million (€14 million in 2014) of swap fair value adjustments reclassified from other comprehensive income to profit and loss (see Note 30).
(2) Of which, in 2014, the acquisition price net of cash acquired of Ubeeqo (€17.3 millions) and EuropHall (€22.5 million) and the subscription to the capital increase of
Car2Go (€5.7 million), and, in 2015, the subscription to the capital increase of Car2Go (€12.5 million), the payment of the balance of the acquisition price of EuropHall
(€5.4 million), the subscription to the capital increase of Ubeeqo (€5 million) and the payment of the acquisition of E-Car Club
(3) Corresponding to capital increases on May 15 and June 26, 2015, for a total of €476.5 million (see Note 24) net of fees paid (€8.7 million in other non-recurring
expenses and €19.6 million out of the €23.6 million allotted to the share premium).
(4) Early redemption of high-yield bonds of €324 million and €400 million, and payment of their redemption premium of €56 million (see Note 26).
(5) High-yield bond issue of €475 million at 99.289% (see Note 26).
(6) Given the average ownership period for the fleet, the Group reports the vehicles as current assets at the beginning of the contract. Their change from period to period is
therefore similar to operating flows generated by activity.
152
EUROPCAR
2015
Significant accounting policies
Europcar Groupe S.A. (“ECG”) was incorporated on
March 9, 2006 with an initial share capital of €235,000 and
was converted into a French société anonyme (joint-stock
corporation) on April 25, 2006. ECG’s registered offices are
located at 2 rue René Caudron, 78960 Voisins le Bretonneux,
France.
The Europcar Group leverages all of its experience in the car
rental sector to provide vehicles for short- and medium-term
corporate and leisure rentals. Under the Europcar and InterRent
trademarks, the Group covers a wide range of markets and
customers - both private and business. Its offering ranges from
low-cost to luxury rentals.
Between 2008 and 2013, the Group also serviced the National
and Alamo trademarks in the EMEA region under a license from
Enterprise, with National targeting mostly the business segment
and Alamo the leisure broker segment. This partnership was
terminated in August 2013, although the Group continues to
service the National and Alamo brands in the EMEA regions on
the basis of a license agreement with Enterprise. This license
agreement and the commercial alliance agreement were the
subject of an arbitration proceeding which, after a transitional
period agreed by the parties, effectively terminated these
agreements as of March 2015. (See Note 32.4)
The Company was listed on the regulated market of Euronext
Paris on June 26, 2015 (Compartment A; ISIN code:
FR0012789949; ticker: EUCAR). Trading in Europcar Groupe
shares begun on June 26, 2015 in the form of “promesses
d’actions” (“Europcar Prom”). Settlement and delivery of the
shares in the global offering occurred on June 29, 2015 and
market trading commenced on June 30, 2015. The offering
price has been set at €12.25 per share.
The IPO included the issuance of new shares as part of a cash
capital increase in the approximate amount of €475 million,
corresponding to estimated net proceeds of approximately
€441 million, and the sale of existing common shares by the
Selling shareholders in the gross amount of approximately
€404 million.
The main purpose of the Global Offering and the listing of the
Company’s shares on Euronext Paris is to enable the Group
to reduce its indebtedness, strengthen its financial structure
and increase its financial flexibility in order to accelerate its
development and continue the deployment of its “Fast Lane”
program.
The net proceeds from the issuance of the New Shares was
notably used to redeem in full the €324 million in principal due
from the Company in respect of the subordinated notes due
2017 and to pay a redemption premium of €37 million.
On May 27, 2015 €475 million in subordinated notes due 2022
were issued at a price representing 99.289% of par in the
Company Europcar Notes Limited. Following the Company’s
listing on June 29, 2015, the net proceeds of the issue held
in an escrow account until then were released and partially
allocated to the redemption of subordinated 2018 notes in
the principal amount of €400 million, and the payment of a
redemption premium of €19 million.
03
The remainder of the net proceeds of the New Shares and
the New Notes after these refinancing transactions (i.e.,
€112 million) will be used for the Group’s general corporate
purposes. Of this amount, up to €80 million will be allocated
to strategic growth investments, including acquisitions and
partnerships within the framework of strategic initiatives during
the 2015-2017 period.
In 2014, the Group created the “Lab,” the purpose of which is
to promote innovation and improve customer mobility.
In 2015, a dedicated legal entity known as “Europcar Lab” was
established to house these activities.
In July 2015, the acquisition of E-Car Club (sharing of electric
vehicles in the United Kingdom) by Europcar Lab illustrates its
strategy of identifying key opportunities to enhance its mobility
offer for its customers.
I - Basis of preparation
The consolidated financial statements of Europcar Groupe
for the year ended December 31, 2015 were approved by
the Management Board on February 24, 2016, and examined
by the Oversight Committee on February 24, 2016, and are
subject to the approval of the General Shareholders’ Meeting
of May 10, 2016.
II - Significant accounting policies
The consolidated financial statements of Europcar Groupe were
prepared in accordance with the principles defined by the IASB
(International Accounting Standards Board) as adopted by the
European Union. This framework is available on the website
of the European Commission: http://ec.europa.eu/finance/
accounting/ias-evaluation/index_en. htm.
The international framework comprises IFRS (International
Financial Reporting Standards), IAS (International Accounting
Standards) and their SIC (Standing Interpretations Committee)
and IFRIC (International Financial Reporting Interpretations
Committee) interpretations.
EUROPCAR
2015
153
03
The financial statements were prepared under the historical
cost convention, except for the valuation of certain financial
instruments.
The effects of applying IFRS 16 to leasing agreements as from
January 1, 2019 (subject to adoption by the European Union)
will be assessed in 2016
These consolidated financial statements are presented in
euros (€), which is ECG’s functional currency and the Group’s
presentation currency. All financial information presented in
euros (€) has been rounded to the nearest thousand euros
unless otherwise stated.
Furthermore, the presentation of aggregates associated with
the fleet and finance lease debt has been amended in relation to
that used in previous publications. It now distinguishes between
the rental fleet recorded on the balance sheet (Note 20) and
receivables and payables related to the rental fleet (Note 21), as
well as between “other borrowings dedicated to fleet financing”
and “finance lease liabilities” (Note 26) so as to better reflect
the substance of the underlying items.
BASIS OF MEASUREMENT
The accounting policies used to prepare the consolidated
financial statements are consistent with those used for the
year ended December 31, 2014, with the exception of the
following standards which are mandatory for accounting
periods beginning on or after January 1, 2015:
a IFRIC 21 – Levies;
a Annual improvements 2011-2013.
Application of these new standards and amendments did not
have a material impact on Europcar’s consolidated financial
statements.
In 2015, the Group did not elect to apply ahead of time the
amendments approved by the European Union, in particular
as regards:
a amendments to IAS 1 – Disclosure initiative, presentation of
financial statements;
a amendments to IAS 16 and IAS 38 – Clarifications on
acceptable methods of depreciation and amortization;
a amendments to IAS 19 – Employee contributions;
a annual improvements 2010-2012 and 2012-2014;
a amendments to IFRS 11 – Accounting for acquisitions of
interests in joint operations.
Europcar is currently determining the potential impacts of these
standards, amendments and interpretations on the Group’s
consolidated financial statements.
The following standards, amendments and interpretations,
published and mandatory after 2015 but not yet adopted by the
European Union may affect the Group’s financial statements:
a IFRS 9 – Financial instruments;
a IFRS 15 – Revenue from contracts with customers;
a IFRS 16 – Leases.
The effects of applying IFRS 15 to the accounting of revenue
as from January 1, 2018 are currently being assessed. These
should be immaterial given the nature of the Group’s business.
The effects of applying IFRS 9 to financial instruments as from
January 1, 2018 are also being assessed.
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USE OF ESTIMATES AND JUDGMENTS
The preparation of financial statements requires management
to make judgments, estimates and assumptions which impact
the amounts presented for existing assets and liabilities in
the consolidated statement of financial position, income
and expense items in the consolidated income statement,
and disclosures in the notes to the consolidated financial
statements.
Due to the uncertainty inherent to all measurement processes,
these estimates are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the
estimate is revised and in any future periods affected.
The Group formulates assumptions and, on this basis,
regularly prepares estimates relating to its various activities.
These estimates are based on past experience and factor
in the economic conditions prevailing at the period-end and
the information then available. Those economic trends are
specifically reviewed on a country-by-country basis.
Depending on changes in assumptions, or in the eventuality
of conditions differing from those that were initially expected,
amounts recorded in future financial statements may differ from
current estimates. Future results may also differ from these
estimates.
With respect to the vehicle rental business, estimates
specifically cover:
a the residual value of at risk vehicles (see “rental fleet”);
a the fair value of vehicles purchased with a manufacturer or
dealer buy-back commitment when badly damaged or stolen
(see “rental fleet”);
a the evaluation of the ultimate cost of claims made against
the Group for self-funded insured accidents using actuarial
techniques generally accepted and used in the insurance
industry.
In addition, estimates also cover:
a fair value measurement of assets and liabilities during
allocation of the acquisition cost of business combinations;
a the value of non-listed equity investments available for sale
(see Note 17) and derivative financial instruments recorded
at fair value in the Group’s statement of financial position
(see Note 30);
a estimates of future cash flows as part of impairment tests
for goodwill recorded in the statement of financial position
and capitalized assets including trademarks (see Notes 13
and 14);
a amounts of deferred taxes that may be recognized in the
statement of financial position (see Note 18);
a measurement of post-employment benefits and other
employee benefits (see Note 27);
a provisions for disputes and litigation and valuation of
contingent liabilities (see Notes 28 and 32.4).
BASIS OF CONSOLIDATION
(I)
SUBSIDIARIES
Europcar Groupe’s financial statements include the accounts
of the parent company, ECG, and its subsidiaries for the year
ended December 31, 2015.
Subsidiaries are all entities (including special purpose entities),
directly or indirectly controlled by ECG. Control exists when
ECG has the ability to direct an investee’s relevant activities, is
exposed to variable returns and has the ability to affect those
returns through power over an investee. In assessing control,
substantive potential voting rights that are currently exercisable
or convertible are taken into account. The financial statements
of subsidiaries are included in the consolidated financial
statements from the date that control commences until the
date that control ceases.
The acquisition method of accounting is used to account for
the acquisition of subsidiaries by the Group. At the acquisition
date, ECG transfers the consideration, acquires the assets and
assumes the liabilities of the acquiree.
The assets acquired and the liabilities assumed (including
contingent consideration) are valued at fair value at the
acquisition date.
Acquisition-related costs are expensed as incurred.
On an acquisition-by-acquisition basis, the Group recognizes
any non-controlling interests in an acquiree either at fair value
or at the non-controlling interest’s proportionate share of the
acquiree’s net assets. Depending on the nature of the business
combination, the Group may elect to use either of these options.
At the acquisition date, the difference between:
a the fair value of the consideration transferred (including
contingent consideration), plus non-controlling interests in
the acquiree and, where applicable, the acquisition-date fair
value of the acquirer’s previously held equity interest in the
acquiree revalued through profit or loss;
a and the acquisition-date fair value of the identifiable assets
required and liabilities assumed;
is recorded as goodwill.
If the difference arising from the calculation above is negative,
it is recognized directly in the income statement.
03
Accounting policies of subsidiaries are amended where
necessary to ensure consistency with the policies adopted by
the Group.
(II)
TRANSACTIONS AND NON-CONTROLLING INTERESTS
The Group treats transactions with non-controlling interests as
transactions between equity owners of the Group. In the case
of an additional acquisition of shares in a previously-controlled
entity, the difference between the consideration paid and the
corresponding share acquired in the carrying amount of net
assets of the subsidiary is recorded in equity. When the Group
ceases to exercise control, any remaining interest in the entity is
remeasured to its fair value, with the change in carrying amount
recognized in profit or loss.
The minority shareholders of certain fully consolidated
subsidiaries benefit from commitments made by the Group
to purchase their shares. In the absence of specific provisions
under IFRS, the Group recognizes these commitments as
follows: - the value of the commitment at the balance sheet date
is recorded in “Other non-current liabilities”; - the corresponding
non-controlling interests are canceled. For acquisitions where
control was gained after January 1, 2010, and in application of
IFRS 3 revised and IFRS 10, the corresponding entry for this
liability is deducted from equity attributable to non-controlling
interests up to the carrying amount of the relevant noncontrolling interests and deducted from total equity attributable
to the owners of ECG to cover any additional amounts. The
liability is revalued at each balance sheet date at the current
redemption value, i.e. the present value of the exercise price
of the put option. Any change in value is recognized in equity.
This accounting method has no effect on the presentation of
non-controlling interests in the income statement.
(III)
ASSOCIATES
Associates are entities over whose financial and operating
policies the Group has significant influence, but not control
or joint control (generally corresponding to a shareholding of
between 20% and 50% of the voting rights).
The Group’s interests in associates are consolidated using the
equity method. The investment is recorded at cost and adjusted
for changes subsequent to the transaction in accordance with
the investor’s share in the net assets of the associate. When
the Group’s share of losses exceeds its interest in an associate,
the Group’s carrying amount is reduced to nil and recognition
of further losses is discontinued except to the extent that the
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Group has a legal or constructive obligations to make payments
on behalf of an associate.
FOREIGN CURRENCY TRANSLATION
(I)
(IV)
PARTNERSHIPS
Joint ventures are entities over whose activities the Group
has joint control, established by contractual agreement. The
Group’s interests in joint ventures are accounted for under the
equity method, as is the case for related companies.
The Group does not have any joint activities.
(V)
RECLASSIFICATION OF EXCHANGE GAINS/LOSSES IN
PROFIT AND LOSS
Exchange gains/losses recognized in other comprehensive
income are reclassified in profit and loss only in the case of a
total disposal. A partial disposal is defined by the Group as the
disposal of an interest in a subsidiary (and not as a decrease
in the investment).
(IV)
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (“the
functional currency”). The consolidated financial statements
are presented in euros (€),which is ECG’s functional currency
and the Group’s presentation currency.
(II)
SPECIAL PURPOSE ENTITIES
Special purpose entities (SPEs), such as SecuritiFleet
companies, Euroguard, the Protected Cell Insurance &
Reinsurance SPE, FCT Sinople and EC Finance plc are
consolidated when the relationship between the Group and
the SPE indicates that the SPE is in substance controlled by
the Group. SPEs are entities which are created to accomplish
a specifically-defined objective.
(VI)
FUNCTIONAL AND PRESENTATION CURRENCY
FOREIGN CURRENCY TRANSACTIONS AND BALANCES
Transactions in foreign currencies are translated into the
functional currency at the foreign exchange rate at the
transaction date. Monetary assets and liabilities denominated
in foreign currencies at the reporting date are translated
into euros at the foreign exchange rate at that date. Foreign
exchange differences arising on translation of monetary assets
and liabilities are recognized in the income statement. Nonmonetary assets and liabilities measured at historical cost
in a foreign currency are translated using the exchange rate
at the transaction date. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair value
are translated into euros at the foreign exchange rate at the fair
value measurement date.
(III)
FINANCIAL STATEMENTS OF FOREIGN OPERATIONS
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation,
are translated into euros at the foreign exchange rate at the
reporting date, while equity is translated at historical rates. The
revenues and expenses of foreign operations are translated
into euros at weighted average rates. All resulting exchange
differences are recognized as Other comprehensive income
within equity.
EXCHANGE RATES
The following exchange rates were used for the years ended December 31, 2014 and December 31, 2015:
December 31, 2015
December 31, 2014
Average rate
Closing rate
Average rate
Closing rate
Sterling (GBP)
1.377
1.362
1.240
1.284
Australian Dollar (AUD)
0.677
0.671
0.679
0.674
Source : Banque de France.
(I)
GOODWILL
Goodwill recognized in local currency is not amortized and is
subject to an impairment test performed at least annually, or
more frequently if there is evidence that it may be impaired.
For the purpose of impairment testing, goodwill is allocated to
cash-generating units (CGU) or groups of cash-generating units
that are expected to benefit from the business combination in
which the goodwill arose.
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A CGU is defined as the smallest identifiable group of assets
that generates cash inflows that are largely independent of the
cash inflows from other assets or groups of assets. Goodwill
is allocated by operating segment and within the corporatelyowned rental business segment by country.
The recoverable value of a CGU is based on the higher of its
fair value less costs to sell and its value in use determined using
the discounted future cash flow method. When this value is less
than its carrying amount, an impairment loss is recognized in
the income statement. The impairment loss is first recorded
as an adjustment to the carrying amount of goodwill allocated
to the CGU and the remainder of the loss, if any, is allocated
to the other long-term assets of the unit on a pro rata basis.
Goodwill arising from acquisitions of associates is included in
“Investments in associates” and the total amount of goodwill
is tested for impairment.
Any impairment of goodwill is recorded in “Goodwill impairment
expense”.
INTANGIBLE ASSETS OTHER THAN GOODWILL
(I)
TRADEMARKS AND LICENSES
Costs that are directly associated with the development of
identifiable and unique software products controlled by the
Group, and that will probably generate economic benefits
exceeding costs beyond one year, are recognized as intangible
assets. These costs include the costs of the employees
allocated to developing the software and a portion of relevant
overheads directly attributable to developing the software.
Computer software development costs recognized as assets
are amortized over their estimated useful lives (see below).
(III)
03
INTANGIBLE ASSETS
Other intangible assets that are acquired by the Group are
stated at cost less accumulated amortization (see below) and
impairment losses. They include the right to operate trademarks
acquired under a business combination.
Trademarks with an indefinite useful life
The Europcar trademark has been recognized at cost with an
indefinite useful life and is not amortized. It is tested annually for
impairment based on the relief-from-royalty method.
Impairment charges for trademarks are accounted for in “Other
non-recurring income and expenses” in the consolidated
income statement.
Trademarks with a finite useful life
The contractual right to operate the National and Alamo
trademarks as part of a brand license agreement with Enterprise
Holdings Inc. was recorded in “Other intangible assets”.
Following the resolution of the dispute between Enterprise
Holdings Inc and the Company, the residual value of the right
to use the National Alamo brand was written off in full in 2014.
The Group no longer owns any trademarks with finite useful
lives.
Trademarks and licenses that have a finite useful life are
carried at cost less accumulated amortization. Amortization is
calculated using the straight-line method to allocate the cost
of trademarks and licenses over their estimated useful lives,
or over the life of the underlying contract (10 years). They are
tested for impairment if there is evidence that they may be
impaired.
(II)
COMPUTER SOFTWARE AND OPERATING SYSTEMS
Acquired computer software licenses are capitalized on the
basis of the costs incurred to acquire them and bring them into
use. These costs are amortized over their estimated useful lives
(see below). Costs associated with developing or maintaining
computer software programs are recognized as an expense
as incurred.
(IV)
AMORTIZATION
Intangible assets are amortized from the date they are available
for use. Estimated useful lives are as follows:
a trademarks with a finite useful life: 10 years;
a leasehold rights: 10 years;
a computer software: 3 years;
a operating systems: 5 to 10 years.
(I)
DIRECTLY OWNED ASSETS
Items of property, plant and equipment are stated at historical
cost less accumulated depreciation and impairment losses.
Where parts of an item of property, plant and equipment have
different useful lives, these are accounted for as separate items
of property, plant and equipment and depreciated over their
own useful lives. Repairs and maintenance costs are expensed
as incurred.
(II)
LEASED ASSETS
IAS 17 defines a lease as being an agreement whereby the
lessor conveys to the lessee in return for a payment, or series
of payments, the right to use an asset for an agreed period
of time.
Leases under which the Group assumes substantially all the
risks and rewards of ownership are classified as finance leases
(lessee accounting). Owner-occupied property acquired by way
of a finance lease is stated at an amount equal to the lower of its
fair value and the present value of the minimum lease payments
at inception of the lease, less accumulated depreciation and
impairment losses.
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(III)
SUBSEQUENT COSTS
The Group recognizes within the carrying amount of an item
of property, plant and equipment, the cost of replacing part of
such an item when that cost is incurred, if it is probable that
the Group will gain future economic benefit from the item and
the cost of the item can be measured reliably. All other costs
are expensed in the income statement as and when they are
incurred. The cost of repairs and interest on borrowings are
recorded as current expenses.
(IV)
DEPRECIATION
Land is not depreciated. Estimated useful lives are as follows:
a buildings: 25 to 50 years;
a technical equipment and machinery: 6 to 12 years;
a other equipment and office equipment, including specialized
tools: 3 to 15 years.
The useful life is reviewed annually.
RENTAL FLEET
The group operates a large fleet purchased with or without a
buy-back commitment. IFRS treats the accounting of assets
and liabilities differently depending on how these acquisitions
are financed. Accordingly, vehicles purchased via debt recorded
in the balance sheet or via finance leases are reported in the
balance sheet under current assets given the duration of the
group’s operating cycle. Vehicles financed via operating leases
are not reported in the balance sheet. Related commitments
are then recorded as off-balance sheet commitments.
(I)
DIRECTLY OWNED RENTAL FLEET
The fleet operated by the Group is acquired through two types
of agreement:
a with a manufacturer or dealer buy-back commitment (known
as buy-back vehicles):
a without a manufacturer or dealer buy-back commitment (at
risk vehicles):
Vehicles purchased with a manufacturer or dealer buy-back
commitment
One of the characteristics of the automotive industry is the
sale/purchase of vehicles with a buy-back commitment from
the manufacturer or dealer after a predetermined duration,
generally less than 12 months.
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Such agreements are treated for accounting purposes as
operational pre-paid vehicle leases insofar as:
a the Group does not have control of the vehicle because it
cannot sell it;
a the contract only gives it the right to use the asset over a
limited time; and
a the asset retains a significant part of its value at the time of
its repurchase by the manufacturer.
This accounting method is consistent and symmetrical with the
recognition adopted by manufacturers, which consider the risks
and rewards of ownership not to have been transferred since
they retain the residual risk on the asset’s value and since this
risk is significant.
The amount recorded represents the acquisition cost of the
vehicles (net of volume rebates) and is the sum of two amounts
representing distinct current assets:
a the “Vehicle buy-back agreement receivable”, representing
the agreed buy-back price (the obligation of the manufacturer
or dealer); Repurchase prices for buy-back vehicles are
contractually based on either (i) a predetermined percentage
of the original vehicle price and the month in which the vehicle
is repurchased, or (ii) the original capitalized price less a set
economic depreciation amount, in either case subject to
adjustments depending upon the condition of the vehicle,
mileage and holding period.
a the “Deferred depreciation expense on vehicles”, representing
the difference between the acquisition cost of the vehicle
and the agreed buy-back price. This asset is depreciated
through the income statement on a straight-line basis over
the contractual holding period of the vehicle.
In view of the length of time for which these assets are held,
the Group recognizes these vehicles as current assets at the
outset of the contract.
For stolen vehicles, the Group recognizes an impairment charge
against the value of the corresponding “Vehicle buy-back
agreement receivable” over a three-month period following the
event. For badly damaged vehicles, the Group adjusts the value
of the corresponding receivable on the basis of independent
appraisal of the damaged vehicle.
Vehicles purchased without a manufacturer or dealer buy-back
commitment (at risk vehicles):
Vehicles purchased without manufacturer or dealer buy-back
commitment are reported by the Group as “at risk” vehicles.
The value of the vehicles is initially measured at cost, including
any import duties, non-refundable purchase taxes and any
costs directly attributable to bringing the vehicle to the rental
location and preparing it for rental. Upon acquisition, at risk
vehicles are depreciated on a straight-line basis based over
their planned holding period and projected residual value. Over
the holding period, the residual value is regularly reviewed
taking into account the state of the used vehicle market, and
is adjusted if necessary.
In most cases, the holding period for a car does not exceed
12 months. For vans and trucks, the holding period can range
from 12 to 24 months. Accordingly, although “at-risk“ vehicles
are similar to fixed assets, the Group classifies these vehicles
in the balance sheet as current assets under “Fleet included in
the balance sheet” – see Note 19.
(II)
FLEET FINANCED UNDER LEASES
The operated fleet can be financed through leasing contracts
with financial institutions or the finance divisions of car
manufacturers meeting either finance criteria or operating
lease criteria. The accounting principles are in such cases
identical to those mentioned in the Section on property, plant
and equipment – leased assets.
Operating lease
Contracts where lessors do not transfer to Europcar
substantially all the risks and rewards of ownership meet in
substance the lease criteria as defined by IAS 17. Accordingly,
the vehicles concerned are not recorded in the balance sheet.
Rents paid for these vehicles are disclosed in Note 32.1
“Operating leases.”
Finance lease
By contrast, when Europcar is exposed to a significant residual
value risk under leasing arrangements with financial institutions
or the finance divisions of car manufacturers, the arrangement
is considered to be a finance lease.
In this case, such contracts are recognized in the balance sheet
offsetting a liability. These assets are depreciated over their
expected useful lives on the same basis as owned assets or
over the term of the relevant lease, if shorter.
As is the case for “at-risk” vehicles, their average holding period
generally does not exceed 12 months. Therefore, vehicles
financed under finance lease arrangements are recorded as
current assets.
a the full amount of the Group’s VAT receivables, since the
major portion of these are fleet-related.
Rental fleet payables are amounts due to car manufacturers or
dealers. These payables are recorded at fair value and fall due
within one year. Rental fleet related payables include the full
amount of the Group’s VAT payables, since the major portion
of the Group’s VAT payables is fleet related.
In addition, the rental fleet and related payables and receivables
include the effects of a major operating lease signed in 2009
under which the group acquires vehicles from a manufacturer
and sells them immediately to the lessor. The receivable
(from the manufacturer) and payable (to the lessor) amounts
recorded at inception of the lease are settled when the vehicles
are returned to the manufacturer according to the buy-back
arrangement. The asset from the manufacturer and liability to
the lessor are of an equivalent amount that cannot be offset in
the balance sheet in the absence of an enforceable right held
by the group.
TRADE AND OTHER RECEIVABLES
Trade receivables are amounts due from customers for
services performed in the regular course of business, which
are recognized initially at fair value and subsequently measured
at amortized cost using the effective interest method, less any
provisions for impairment. A provision is recognized in respect
of impairment of trade receivables when there is objective
evidence that the Group will not be able to collect all amounts
due according to the original terms of a receivable. Significant
financial difficulties of the debtor, probability that the debtor
will enter bankruptcy or financial reorganization, and default or
delinquency in payments are considered to be indicators that
a trade receivable is impaired.
The impairment loss is recognized in the consolidated income
statement in “Fleet operating, rental and revenue related costs”
(see Note 4).
CASH
Cash includes cash and cash equivalents and restricted cash.
RECEIVABLES AND PAYABLES RELATED
TO THE RENTAL FLEET
(I)
Rental fleet related receivables include:
Cash equivalents include short-term and highly liquid
investments such as marketable securities and obligations with
a maturity of less than three months at the acquisition date,
readily convertible to a known amount of cash and subject to
an insignificant risk of a change in value. Financial instruments
classified as cash and cash equivalents are accounted for at
fair value through profit and loss.
a fleet receivables, due by car manufacturers or dealers
repurchasing the vehicles after the vehicle has been returned
to the car manufacturer at the end of the holding period
(buy-back agreements). The fleet receivables are recorded
at fair value, which corresponds to their nominal value. These
receivables fall due within one year and are impaired if their
carrying amount is greater than the estimated recoverable
amount;
03
CASH AND CASH EQUIVALENTS
Cash comprises cash in hand.
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(II)
RESTRICTED CASH
(III)
Cash and cash equivalents are considered as restricted when
they are (i) used to cover the future settlement of insurance
claims or (ii) not immediately available for financing the activity
of the subsidiaries. Therefore, cash located in the following fleet
and insurance SPEs is considered restricted:
“Available-for-sale financial assets” is essentially a residual
category for those financial assets that do not meet the criteria
of the other categories or that are designated as available-forsale. This category includes investments in non-consolidated
companies (see Note 17).
a Securitifleet Holding and Securitifleet Holding Bis;
Financial instruments classified as “available-for-sale” are
measured at fair value. Gains and losses arising from changes
in fair value are included as Other comprehensive income within
equity except for impairment losses and monetary items such
as foreign exchange gains and losses. When these investments
are derecognized, the cumulative gain or loss inventoried in
equity is transferred to the income statement. Where these
investments are interest bearing, interest determined using the
effective interest method is recognized in the income statement.
a FCT Sinople (securitization mutual fund);
a EC Finance Plc; and
a Euroguard, a captive insurance structure.
Restricted cash and restricted cash equivalents are presented
separately from cash and cash equivalents.
FINANCIAL INSTRUMENTS
Financial instruments are contracts that give rise to a financial
asset in one entity and a financial liability or equity instrument
in another entity.
The Group classifies its financial assets in the following
categories: financial instruments at fair value through profit or
loss, loans and receivables, held-to-maturity investments and
available-for-sale financial assets.
Financial liabilities are classified in the following categories:
financial liabilities at fair value through profit or loss and other
financial liabilities. Management determines the classification of
financial assets and liabilities at initial recognition.
(I)
LOANS AND RECEIVABLES
This category is for non-derivative financial assets with fixed
or determinable payments that are not quoted on an active
market, which arise from the lending of money, or supply of
goods or services. They include loans acquired, receivables
and marketable securities not classified as cash and cash
equivalents. Loans and receivables are initially recognized at
fair value, including transaction costs. These are subsequently
valued at amortized cost, using the effective interest rate
method.
For short-term receivables, amortized cost generally equals
the nominal amount.
(II)
EUROPCAR
Available-for-sale equity investments (e.g., investments in
unconsolidated companies) that do not have a quoted market
price in an active market and whose fair value cannot be
reliably measured are measured at cost, less any accumulated
impairment losses.
Impairment of available-for-sale financial assets
In the case of available-for-sale equity securities, a significant or
prolonged decline in the fair value of the security below its cost
is also considered in determining whether impairment exists.
Where such evidence exists, the cumulative net loss previously
recognized directly in equity is transferred out of equity and
recognized in the income statement.
Impairment losses recognized in the income statement on
equity instruments are not reversed through the income
statement until the sale of the equity instrument. Increases in
the fair value of equity securities after impairment are recognized
directly in equity.
(IV)
FINANCIAL LIABILITIES AT AMORTIZED COST
These financial liabilities include:
a loans and borrowings;
a trade and other payables;
a bank overdrafts.
For short-term trade and other payables, amortized cost
generally equals the nominal amount.
HELD-TO-MATURITY FINANCIAL ASSETS
Held-to-maturity investments are non-derivative financial assets
with fixed or determinable payments and a fixed maturity that
the entity has the positive intention and ability to hold to maturity.
These instruments are measured at amortized cost. Held-tomaturity investments are reported as non-current investments
if the maturity is greater than 12 months. Otherwise they are
reported as current investments (see Note 17).
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2015
Borrowings are initially recognized at fair value, net of transaction
costs. Borrowings are subsequently measured at amortized
cost. The effective interest rate calculation takes into account
interest payments and the amortization of transaction costs.
Transaction costs are amortized on an effective interest rate
basis over the term of the borrowings.
Bank overdrafts that are repayable on demand and form an
integral part of the Group’s cash management are included
as a component of current borrowings for the purposes of the
statement of financial position and statement of cash flows.
Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for
at least 12 months after the reporting date.
(V)
DERIVATIVE FINANCIAL INSTRUMENTS
The Group uses derivative financial instruments to manage
its exposure to interest rate and foreign exchange risks. In
accordance with its treasury management policy, the Group
does not hold or issue derivative financial instruments for
trading purposes.
When derivatives are held for risk management purposes and
when transactions meet the required criteria, the Group applies
fair value hedge accounting, cash flow hedge accounting or
hedging of a net investment in a foreign operation as appropriate
to the risks being hedged.
At the inception of the transaction the Group documents the
relationship between hedging instruments and hedged items,
as well as its risk management objectives for undertaking
the hedging transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing
basis, of whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair
values or cash flows of hedged items. The fair values of various
derivative instruments used for hedging purposes are disclosed
in Note 30.
At December 31, 2015, the Group did not hold any derivative
instruments eligible for fair value or net investment hedge
accounting.
Cash flow hedge accounting
For qualifying cash flow hedges, the fair value gain or loss
associated with the effective portion of the cash flow hedge
is recognized initially in shareholders’ equity (see consolidated
statement of comprehensive income), and recycled to the
income statement in the periods when the hedged item will
affect profit or loss. Any ineffective portion of the gain or loss on
the hedging instrument is recognized in the income statement
immediately in “Net financing costs” (see Note 11).
(VI)
IMPAIRMENT OF FINANCIAL ASSETS
The Group assesses at each reporting date whether there is
objective evidence that loans and receivables are impaired.
Impairment losses are incurred only if there is objective
evidence of impairment as a result of one or more loss events
that occurred after the initial recognition of the asset and prior
to the reporting date (a “loss event”), and said loss event has
an impact on the estimated future cash flows of the financial
asset or the portfolio that can be reliably estimated.
Impairment of trade receivables is described in Note 21 and
impairment of available-for-sale assets is described above.
TREASURY SHARES
Europcar Groupe shares held by the parent company are
recorded at cost and deducted from consolidated equity.
On disposal, the gain or loss and the related tax impacts are
recorded as a change in equity.
03
EMPLOYEE BENEFITS
The Group provides post-employment benefits through defined
contribution plans as well as defined benefit plans.
(I)
DEFINED CONTRIBUTION PLANS
A defined contribution plan is a pension plan under which the
Group pays fixed contributions to an independent entity or a
fund. The Group has no legal or constructive obligation to pay
further contributions after its payment of the fixed contribution
if the fund does not have sufficient assets to pay all employee
benefits relating to employee services in the current and prior
periods. The Group contributes to state pension plans and
insurance schemes for individual employees that are deemed
to be defined contribution plans. Contributions to the plans are
recognized as an expense in the period in which the services
are rendered by the employees.
(II)
DEFINED BENEFIT PLANS
Plans that do not meet the definition of a defined contribution
plan are defined benefit plans. The defined benefit plan
operated by the Group defines the amount of pension benefit
that an employee will receive on retirement by reference to
length of service and final salary.
The legal obligation for any benefits remains with the Group,
even if plan assets for funding the defined benefit plan have
been set aside. Plan assets may include assets specifically
designated to a long-term benefit fund.
The valuation of the Group’s commitments with respect to
defined benefit plans is performed by an external independent
actuary using the projected unit credit method. This method
requires specific actuarial assumptions that are detailed in
Note 27 – Employee Benefits. These actuarial valuations are
performed at the period end for each plan by estimating the
present value of the amount of future benefits that employees
have earned in return for their service in the current and prior
periods and factoring in the effects of future salary increases.
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03
Plan assets are usually held in separate legal entities and
measured at fair value as determined at each period end.
In accordance with IAS 19, the liability recognized in the
statement of financial position for defined benefit plans is the
present value of the defined benefit obligation at the reporting
date less the fair value of plan assets.
From one accounting period to the next, any difference between
the projected liabilities and their re-estimated amounts, and
the expected level of dedicated assets and their actual level
constitute actuarial differences, which are cumulated at the level
of each pension plan. These actuarial differences may result
either from changes in actuarial assumptions used at the period
end or from experience-related adjustments based on changes
in prior-period assumptions.
The Group recognizes actuarial gains/losses in the consolidated
statement of comprehensive income in the period in which
they occur.
Past service costs are recognized immediately as operating
expenses in “Personnel Costs”.
Unwinding of discounts and the expected return on plan assets
are recognized as financial expenses (see Note 10).
(III)
LONG-TERM SERVICE BENEFITS
The Group’s net obligation in respect of long-term service
benefits, other than for pension plans (or post-employment
benefit plans), is the future benefit that employees have earned
in return for their service in the current and prior periods, such
as long-service awards (médailles du travail) in France and
jubilee awards in Germany. The obligation is calculated using
the projected unit credit method and is discounted to its
present value. The provision is recorded net of the fair value
of any related assets (i.e., all actuarial gains/losses and past
service costs are recognized immediately in the consolidated
income statement).
(IV)
PROFIT-SHARING AND BONUS PLANS
The Group recognizes a liability and an expense for bonuses
and profit-sharing, based on a formula that takes into
consideration the profit attributable to ECG’s shareholders after
certain adjustments. The Group recognizes a provision when
required by a contractual obligation.
The related expenses are recognized in Personnel costs (see
Note 5 “Personnel Costs”).
PROVISIONS
A provision is recognized in the statement of financial
position when the Group has a present legal or constructive
obligation as a result of a past event, it is probable that an
outflow of economic benefits will be required to settle the
obligation, and the amount can be reliably estimated. If the
effect is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and,
where appropriate, the risks specific to the liability.
Provision is made for the estimated value of uninsured losses
from both known and incurred but not reported third-party
claims on an actuarially determined basis. Where these claims
are expected to be settled over a longer period of time, the
provision made represents the present value of the expected
expenditure required to settle the obligation. Any excess of
this prepayment over the estimated liabilities is subject to an
assessment of recoverability, and a provision is set aside if
necessary.
In the normal course of its business activities, the Group
is subject to certain claims and investigations relating to
compliance with laws and regulations in various jurisdictions,
including some with fiscal or competition authorities. The Group
generally records a provision whenever a risk represents a the
probability of a cash disbursement towards a third party without
compensation and when the possible loss that may result can
be estimated with sufficient accuracy.
A provision on vehicle buy-back and reconditioning costs is
recognized over the holding period of the vehicles.
The impact of discounting provisions is recognized in other
financial expenses.
REVENUE
Revenue includes vehicle rental incomes, fees from the
provision of services incidental to vehicle rental (including fuel),
and fees receivable from the Europcar franchise network, net
of discounts and excluding inter-company sales, VAT and sales
taxes.
Revenue from services rendered is recognized proportionally
over the period in which the vehicles are rented out based on
the terms of the rental contract. The stage of completion is
assessed on the basis of the actual service provided (number
of days of rental in the accounting period).
When vehicle rental income is generated by intermediaries
(such as travel agencies), the gross revenue is recognized in
the consolidated income statement when Europcar:
a has the ability to determine the price;
a performs part of the service; and
a has discretion in intermediary selection.
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The commission fees are recorded in the Fleet operating, rental
and revenue-related costs line item in the income statement
(see Note 4).
No revenue is recognized if there are significant uncertainties
regarding recovery of the consideration due.
The Group has launched a loyalty program covered by IFRIC 13
— Customer Loyalty Programs.
This program provides a free weekend rental or discount
coupons after a certain number of rentals eligible for the
program have been accumulated. These benefits can be used
as from the next rental and are valid for 12 months.
Given its recent nature, the Group considers that the impacts
of applying this standard, consisting of:
a considering the benefit accruing to the customer – such as
a free weekend of car rental to be used within one year – as
a separate component of a sale transaction;
(II)
FLEET OPERATING, RENTAL AND REVENUE RELATED COSTS
Fleet operating costs relate to costs incurred during the fleet
operating cycle for:
a reconditioning;
a repairs;
a maintenance;
a impairment of badly damaged and wrecked vehicles, thefts;
and
a insurance.
Rental costs include fuel, vehicle transfers, vehicle washing,
etc. Costs related to revenue from ordinary activities include
commissions, and airport and rail station fees, etc.
(III)
PAYMENTS IN RESPECT OF FINANCE LEASE CONTRACTS
a allocating some of the proceeds of the initial sale to the
award, and deferring this portion of the proceeds until the
Group has fulfilled its obligations; are not material.
Minimum lease payments are apportioned between the finance
charge and the reduction of the outstanding liability. The finance
charge is allocated to each period during the lease term so as
to produce a constant periodic rate of interest on the remaining
balance of the liability.
For this reason, no impact was reported as such in
the consolidated financial statements as of the end of
December 2015.
OPTION PLAN AND SIMILAR
EXPENSES
(I)
FLEET HOLDING COSTS
Fleet holding costs include vehicle costs such as costs related
to rental fleet agreements either with car manufacturers
through the recognition of vehicle depreciation charges (see
“rental fleet”) or with providers of funding (via lease rents), taxes
applicable to the rental fleet and the costs incurred for the
purchase or sale of vehicles.
Costs related to rental fleet agreements mainly consist of vehicle
depreciation expense net of rebates and off-balance sheet fleet
operating lease expenses (see Significant Accounting Policies
– “the rental fleet”).
Costs related to the acquisition and disposal of vehicles
include the cost of vehicle accessories and costs relating to
the conditioning of new vehicles and the disposal of used cars.
Payments made under operating leases are recognized in the
consolidated income statement in “Fleet holding costs” on a
straight-line basis over the term of the lease.
03
The Group has established plans granting free shares to
management and certain employees. The fair value of these
plans is equal to the value of the free shares as of the grant
date, taking into account the valuation of the restriction during
the potential lock-up period (see Note 6). These plans result in
the recognition of a personnel expense spread over the vesting
period. The estimated cost to be recognized takes into account
the employee turnover rate over the vesting period.
(I)
ACQUISITION-RELATED CHARGES
Acquisition-related expenses include charges incurred in
connection with the integration of acquisitions, such as legal
and accounting fees, severance and consultancy costs related
to headcount reductions due to the streamlining of the rental
station network and its support functions, asset write-offs and
transfer costs, lease termination and building refurbishment
costs carried out for the purpose of integrating acquisitions.
EUROPCAR
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163
03
(II)
REORGANIZATION EXPENSES AND OTHER NON-RECURRING
COSTS
Reorganization expenses include charges incurred in
connection with business restructuring carried out to adapt
local or corporate organizational structures to changing
business conditions. They include headcount reduction
expenses, consultancy fees, asset write-offs and transfer
costs and early lease termination costs incurred as part of
restructuring programs.
Unusual, non-recurring items in material amounts are presented
separately in Other non-recurring income and expenses to
provide a clearer picture of the Group’s performance.
enacted at the reporting date, and subject to any adjustment
to tax payable in respect of previous years.
The amount of deferred tax is based on the expected pattern
of realization or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted
at the reporting date.
A deferred tax asset is recognized only to the extent that it is
probable that future taxable profits will be available against
which the tax asset can be utilized. This probability is assessed
based on:
a the existence of temporary differences that will give rise to
taxation in the future;
a forecasts of taxable profits.
NET FINANCING COSTS
Net financing costs comprise interest payable on borrowings
calculated using the effective interest rate method, dividend
income, foreign exchange gains and losses, financing
arrangement costs, gains and losses on financial instruments
that are recognized in the consolidated income statement, any
ineffective portion of the gain or loss on cash flow hedging
instruments, and the financial component of pension charges
(unwinding of discounts and the expected return on plan
assets).
Interest income is recognized in the income statement as
it accrues, using the effective interest method. The interest
expense component of finance lease payments is recognized in
the income statement using the effective interest rate method.
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net income
(attributable to shareholders of the parent company) by the
average number of shares outstanding during the year. Treasury
shares are not taken into account in the calculation of basic
or diluted earnings per share. Diluted earnings per share is
calculated by dividing net income attributable to shareholders
of the parent company by the average number of common
shares outstanding during the period, plus the average number
of shares that would have been issued had all outstanding
dilutive instruments been converted.
INDICATORS NOT DEFINED BY IFRS
Income tax on profit or loss for the year comprises current and
deferred tax. Income tax is recognized in the income statement
except to the extent that it relates to items recognized directly
in equity, in which case it is recognized in equity.
Adjusted corporate EBITDA, defined as recurring operating
income before non-fleet depreciation and amortization, after
deduction of the interest expense on certain liabilities related
to rental fleet financing. See Note 2, “Segment reporting” for
a reconciliation of Adjusted corporate EBITDA to the amounts
reported in the consolidated income statement.
Current tax is the expected tax payable on the taxable income
for the year, calculated using tax rates enacted or substantially
Financial risk management
The Group’s activities expose it to a variety of financial risks:
market risk (including currency risk, fair value interest rate risk,
cash flow interest rate risk and equity price risk), credit risk and
liquidity risk. The Group’s overall risk management program
seeks to mitigate the potential negative impacts of volatility in
the financial markets on the Group’s financial performance. The
Group uses derivative financial instruments to hedge certain risk
exposures.
The Group Treasury Department is responsible for risk
management, and submits its proposals for financial transactions
for approval by the Management Board. The Group Treasury
Department identifies, evaluates and recommends derivative
instruments to hedge financial risks in close collaboration with
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EUROPCAR
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the Group’s operational units. The Management Board decides
whether to authorize these recommendations based on formal
documentation describing the context, purpose and main
characteristics of the transactions. Once the Management Board
has approved the transactions, Group Treasury is responsible
for implementing the hedges. This procedure is prepared and
monitored for the management of all material financial risks, and
in particular interest rate and credit risk, as well as for the use of
derivative and ordinary financial instruments, and the short-term
investment of surplus cash. The Group does not use derivative
financial instruments for any purpose other than managing its
exposure. All hedging operations are either centrally coordinated
or carried out by Group Treasury.
The Group continuously assesses the financial risks identified
(including market risk, credit risk and liquidity risk) and
documents its exposure in its consolidated financial statements.
The Group considers that its exposure at December 31, 2015
has not changed significantly during the last 12 months and
therefore the policy implemented to mitigate such exposure
remains consistent with prior years.
MARKET RISK
(I)
FOREIGN EXCHANGE RISK
The Group operates in several countries internationally and is
exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the GBP. Foreign exchange
risk arises from translation into euros of the results and net
assets of the subsidiaries having a functional currency other
than the euro.
03
The foreign exchange risk related to intragroup financial
transactions and, to a lesser extent, transactions with
franchisees is somewhat limited with each subsidiary operating
in its own market and functional currency.
As at December 31, 2015, the Group did not have any
investments in foreign operations whose net assets are
exposed to foreign currency translation risk other than in the
United Kingdom, Australia and New Zealand.
GROUP SUMMARY OF QUANTITATIVE EXPOSURE TO FOREIGN EXCHANGE RISK ARISING FROM TRANSLATION OF BALANCES INTO THE FUNCTIONAL CURRENCY
Trade and other receivables (including fleet)
GBP
AUD
Total 2015
122,670
10,607
133,277
338
54
392
-
-
-
Other financial assets:
Non-current investments
Derivative financial instruments
Other financial assets
TOTAL FINANCIAL ASSETS
2
-
2
6,689
19,101
25,790
129,699
29,762
159,461
Trade and other payables (including fleet)
105,842
16,866
122,708
Loans and borrowings
375,089
75,774
450,863
Impact of hedging derivatives
-
-
-
480,931
92,640
573,571
(351,232)
(62,878)
(414,110)
GBP
AUD
Total 2014
105,988
11,386
117,374
1,657
43
1,700
Derivative financial instruments
-
-
-
2
-
2
17,797
17,695
35,492
TOTAL FINANCIAL LIABILITIES
NET EXPOSURE (TO EXCHANGE RISK) FOR NON-EURO COMPANIES
Trade and other receivables (including fleet)
Other financial assets:
Non-current investments
125,444
29,124
154,568
Trade and other payables (including fleet)
112,889
17,138
130,027
Loans and borrowings
347,635
102,668
450,033
-
-
-
460,254
119,806
580,060
(334,810)
(90,682)
(425,492)
Impact of hedging derivatives
TOTAL FINANCIAL LIABILITIES
NET EXPOSURE (TO EXCHANGE RISK) FOR NON-EURO COMPANIES
At December 31, 2015, if the euro had appreciated or depreciated by 15% against sterling, with all other variables held constant, net
loss for the year would have increased/decreased by €3.9 million (2014: €1.1 million) and equity would have increased/decreased
by €78.3 million (2014: €74.7 million).
EUROPCAR
2015
165
03
(II)
INTEREST RATE RISK
With the exception of investments in bonds in the Euroguard
insurance program (see “Insurance risks”), the Group does
not hold any significant interest-bearing assets. Accordingly,
its revenue is not significantly subject to changes in market
interest rates.
The Group is exposed to risk that rates on its variable rate
financing might rise: on revolving lines of credit. on the one
hand, but also from operating leases for vehicles. Borrowings
issued at variable rates expose the Group to cash flow interest
rate risk. Borrowings issued at fixed rates expose the Group to
fair value interest rate risk.
In accordance with its hedging policy, and in respect of
certain of its debt instruments bearing interest at variable
rates (specifically the SARF, the RCF and most operating
leases), the Group hedges a significant portion of the risk of
fluctuations in the benchmark rate, which is generally based on
EURIBOR. In 2015 and 2014, a significant part of the Group’s
borrowings at variable rates were denominated in euro and
based on EURIBOR. The Group may also hedge its exposure
to fluctuations in LIBOR and/or the Australian benchmark rate
in respect of its financing facilities in the UK and Australia.
The Group analyzes its interest rate exposure on a dynamic
basis. Various scenarios are simulated taking into consideration,
among other things refinancing, renewal of existing positions,
alternative financing and hedging. Based on these scenarios,
the Group calculates the impact on profit and loss of a defined
interest rate shift. For each simulation, the same interest rate
shift is used for all currencies. The scenarios are run only for
liabilities that represent the major interest-bearing positions.
Based on the various scenarios, the Group manages its cash
flow risk on interest rates by using variable-fixed interest rate
swaps. These swaps convert variable rate debt to fixed rate
debt. Generally, the Group raises long-term borrowings for
revolving fleet financing facilities at floating rates and swaps
them into fixed rates that are generally lower than those
available if the Group borrowed at fixed rates directly.
The Group is protected against the risk of rising interest rates
via two interest rate swap contracts:
a an interest rate swap with a nominal principal amount of
€1,000 million maturing on July 17, 2017, extended to
July 17, 2019 subject to the entering into effect of the
SARF’s extension, for which the Group pays a fixed interest
rate of 0.8059% until July 17, 2017 and 0.6418% from
July 17, 2017 to July 17, 2019 and receives a variable interest
rate corresponding to the one-month EURIBOR; and
a an interest rate swap with a nominal principal amount of
€500 million maturing in July 2018, for which the Group pays
a fixed interest rate of 1.489% and receives a variable interest
rate corresponding to the six-month EURIBOR. This swap
was amended, extending its maturity to July 2020, increasing
the nominal to €600 million and reducing the fixed interest
rate to 1.0990%.
An outstanding amount of €700 million in swaps outstanding
is backed by variable-rate lines of credit (see table below) and
an outstanding amount of €900 million is backed by rents from
variable-rate leases.
At closing, the distribution of loans by rate type was as follows:
As at
Dec. 31, 2015
As at
Dec. 31, 2014
Non-current liabilities
Fixed rate borrowings
812,118
1,047,682
Variable rate borrowings
(10,935)
(4,613)
Of which variable rate hedged
(11,087)
(4,916)
152
303
801,183
1,043,069
6,653
7,644
1,257,130
1,119,901
Of which variable rate hedged
735,353
614,700
Of which variable rate not hedged
521,780
505,201
1,263,783
1,127,545
Of which variable rate not hedged
Current liabilities
Fixed rate borrowings
Variable rate borrowings
All interest rate swaps reported by the Group are classified as cash flow hedges.
166
EUROPCAR
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Tests performed in connection with such hedging instruments
showed inefficiency estimated at €1.8 million recorded in the
2015 income statement.
At December 31, 2015, if interest rates had strengthened by 100
basis points, the fair value recognized in other comprehensive
income would have increased by €58.5 million (€38.0 million
at December 31, 2014).
At December 31, 2015, if interest rates had weakened by 100
basis points, the fair value recognized in other comprehensive
income would have decreased by €61.6 million (€39.2 million
at December 31).
In the year ended December 31, 2015, if interest rates had
varied by +/- 1%, interest expense on the unhedged portion of
borrowings, all other constants being equal, would have varied
by +/- €5.1 million.
CREDIT RISK
Credit risk is managed on a Group-wide basis. Credit risk arises
on:
a cash and cash equivalents;
a derivative financial instruments;
a deposits with banks and financial institutions;
a arrangements with car manufacturers and dealers;
03
a customer receivables, particularly outstanding receivables
and pending commitments.
For banks and financial institutions, only counterparties that
are independently rated are accepted. The utilization of credit
limits is regularly monitored.
LOANS AND RECEIVABLES CREDIT RISK ANALYSIS
Neither past due nor impaired (1)
Past due but not impaired
Impaired
TOTAL
As at
Dec. 31, 2015
As at
Dec. 31, 2014
1,699,488
1,459,322
125,417
139,290
39,310
36,899
1,864,215
1,635,511
(1) Net of provisions for stolen and badly damaged cars (see Note 21).
The maximum exposure to credit risk at the reporting date is
the carrying amount of loans and receivables. The Group does
not hold any collateral as security.
Loans and receivables neither past due nor impaired relate to
a number of independent counterparties for whom there is no
recent history of default or expected default.
a the risk of having to self-finance the receivables referred to
in the previous point; and
a the risk of bankruptcy of a significant supplier and the
subsequent uncertainty surrounding future supplies.
No single customer accounts for 10% or more of Europcar
Groupe’s revenue in 2015.
The Group’s credit risk exposure to car manufacturers and
dealers primarily arises from:
a the risk of non-recoverability of receivables relating to
buy-back commitments received from car manufacturers;
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2015
167
03
In addition, the Group has implemented procedures to
monitor and reduce credit risk exposure that include customer
credit limits in the information system, monthly tracking of
car manufacturer credit ratings and overdue receivable risk
Not yet due
Vehicle buy-back agreement receivables
Less than
Between 3
3 months and 6 months
past due
past due
More than
6 months
past due
Total
1,024,072
-
-
-
1,024,072
Fleet receivables
444,957
52,969
85
3,511
501,522
Rental receivables
136,290
47,391
13,442
12,092
209,215
Trade receivables
15,719
1,522
412
6,376
24,029
Other receivables
53,715
26
21
13
53,775
1,674,753
101,908
13,960
21,992
1,812,613
Less than
Between 3
3 months and 6 months
past due
past due
More than
6 months
past due
Total
-
832,196
TOTAL AS AT DECEMBER 31, 2015
Not yet due
832,196
-
Fleet receivables
387,896
63,436
6,280
2,426
460,038
Rental receivables
127,582
37,116
12,322
4,467
181,487
Trade receivables
18,937
4,503
301
6,832
30,573
Other receivables
48,900
19
8
1
48,928
1,415,511
105,074
18,911
13,726
1,553,222
TOTAL AS AT DECEMBER 31, 2014
PRICE RISK
The Group is not exposed to equity price risk given the
non-material amounts of its financial investments classified as
either available-for-sale or at fair value through profit or loss.
The Group is not directly exposed to commodity price risk but
is exposed to the risk of increasing holding costs for vehicles.
LIQUIDITY RISK
Europcar Group is currently followed by Moody’s and Standard
& Poor’s, which have respectively awarded it B1 stable outlook
and B+ stable outlook ratings.
Management monitors rolling forecasts of the Group’s liquidity
reserve on the basis of expected cash flows determined on a
consolidated basis. Each operational entity produces liquidity
and cash forecasts for internal reporting purposes. Those
forecasts are consolidated at Group Treasury level and analyzed
by Group management and operational units.
168
monitoring reporting. The aged analysis of loans and receivables
past due but not impaired and excluding financial loans and
receivables is as follows:
EUROPCAR
2015
-
The budget, on which is based the cash forecast for fiscal year
2016, has been built on assumptions taking into account the
impact of the currently uncertain economic environment.
The liquidity risk management strategy is based around
maintaining sufficient available lines of credit and guaranteed
credit facilities for appropriate amounts. Given the dynamic
nature of the underlying businesses—particularly seasonal
fluctuations—flexible financing arrangements are provided by
guaranteed medium- to long-term revolving lines of credit.
The following table presents the Group’s financial liabilities
including hedging derivatives by relevant maturity, based
on the remaining period from the balance sheet date to the
contractual maturity date. The amounts disclosed in the table
are the contractual undiscounted cash flows. Balances due
within 12 months are equal to their carrying values, as the
impact of discounting is not significant.
From 1 year
to 5 years
Up to 1 year
Later than 5 years
Total
Carrying
Value
Principal
Interest
Principal
Interest
Principal
Interest
Principal
Interest
Notes issued
818,771
-
45,250
-
181,000
825,000
51,432
825,000
277,682
Bank borrowings and finance
lease liabilities
529,939
102,810
15,700
437,937 (1)
32,642
-
-
540,747
48,342
(1)
December 31, 2015
Senior asset financing facility
Other borrowings
Derivative liabilities
Trade and fleet payables
Deposits
TOTAL FINANCIAL
LIABILITIES
653,856
-
19,300
49,858
-
-
658,284
69,158
62,400
62,400
-
-
-
-
-
62,400
-
658,284
52,090
-
-
-
52,090
-
-
-
52,090
882,234
882,234
-
-
-
-
-
882,234
-
37,379
37,379
-
-
-
-
-
37,379
-
80,250 1,096,221
315,590
825,000
51,432 3,036,044
447,272
3,036,669 1,084,823
From 1 year
to 5 years
Up to 1 year
Later than 5 years
03
Total
Carrying
Value
Principal
Interest
Principal
Interest
Principal
Interest
Principal
Interest
December 31, 2014
1,055,324
-
112,850
724,000
215,026
350,000
27,654
1,074,000
355,529
Bank borrowings and finance
lease liabilities
Notes issued
671,357
124,706
15,874
552,018 (1)
26,607
-
-
676,724
42,841
Senior asset financing facility
414,153
-
14,040
417,600 (1)
20,298
-
-
417,600
34,338
29,780
29,780
-
-
-
-
-
29,780
-
Other borrowings
Trade and fleet payables
Deposits
TOTAL FINANCIAL
LIABILITIES
41,928
-
-
-
41,928
-
-
-
41,928
794,333
794,333
-
-
-
-
-
794,333
-
42,875
42,875
-
-
-
-
-
42,875
-
3,049,750
991,694
142,764 1,693,618
303,859
350,000
27,654 3,035,312
474,276
(1) Revolving credit facilities are classified on the balance sheet as current liabilities given their nature.
The table below shows the credit limits and balances with the three major counterparties at the reporting date:
As at Dec. 31, 2015
As at Dec. 31, 2014
Credit limit
Utilized
Credit limit
Utilized
350,000
94,400
300,000
214,300
Senior asset financing lines related to fleet financing
1,100,000
658,284
1,000,000
417,600
Financing other than senior asset financing lines
related to fleet financing (2)
1,224,661
877,171
1,235,159
884,201
Revolving credit
(1)
(1) Amounts drawn include €81.0 million on the revolving credit facility at December 31, 2015 (2014: €201 million) and guarantees given in the course of the Group’s
operations.
(2) Primarily relates to fleet operations in the United Kingdom financed through credit lines other than the senior financing asset loan.
EUROPCAR
2015
169
03
CAPITAL RISK MANAGEMENT
The Group’s objectives when managing capital are to safeguard
the Group’s ability to continue as a going concern in order
to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets
to reduce debt.
INSURANCE RISKS
The Group’s operating subsidiaries located in France, the
United Kingdom, Portugal, Belgium, Italy and Germany buy
local motor third party liability insurance policies through AIG
Europe Limited entities, which reinsure part of such risks with
a reinsurance structure hosted by Euroguard, a protected
cell reinsurance company. The Group owns a reinsurance
cell (9) within Euroguard, which has been consolidated since
January 2006. Local Europcar entities fund a significant
portion of the risk through a Deductible Funding mechanism
managed via another cell (0) located within Euroguard, which
acts simply as a fund manager. The funds hosted in this cell
are also consolidated.
The Spanish, Australian and New Zealand subsidiaries buy
insurance cover in their local markets using classic risk transfer
mechanisms.
(I)
FREQUENCY AND SEVERITY OF CLAIMS
The Group uses its auto fleet liability insurance programs to
insure against property damage and bodily injury caused to
third parties by the drivers of Europcar vehicles. Because auto
liability insurance is mandatory, the risk is initially transferred
from ground up to the insurer, but partly funded and reinsured
by Europcar as a group on the back end side through various
risk self-financing techniques.
The cost of Europcar’s auto fleet liability risk is based on a
combination of frequency and severity events. Europcar has
developed a strategy based on self-financing frequent risks and
effectively transferring severity risk to the insurer (applicable
170
EUROPCAR
2015
to the main countries in which the Group operates, with the
exception of Spain, Australia and New Zealand for the reasons
set out above):
a operating a large fleet entails significant risk of the occurrence
of multiple small third party claims. The expense stemming
from these small claims can be predicted with a good level
of certainty by actuaries, factoring into their projections
the variation in activity and trends witnessed in the various
countries. A line of €500,000 per claim is self-insured in this
manner;
a operating a large fleet also entails the risk of the more random
occurrence of costly events, essentially bodily injury claims
from third parties invoking Europcar’s liability. Such events
cannot be anticipated by actuaries with a satisfactory level of
certainty, which is why the portion of risk exceeding €500,000
is borne by the insurer.
The trend in the markets where Europcar operates is towards
an increase in the unit cost of bodily injuries for economic, legal
and social reasons.
(II)
SOURCES OF UNCERTAINTY IN THE ESTIMATION OF FUTURE
CLAIM PAYMENTS
Claims falling within the scope of motor third party liability
insurance policies give rise to compensation payable on a
case-by-case basis. The Group, by virtue of the self-insurance
component of the program, financially bears all claims insured
up to €500,000 per claim over the period. Part of the claims
occurring during a given insurance period materializes after the
expiry of this period due to the late notification of claims and
changes during the period subsequent to the period covered
(usually due to a deterioration in the health status of the victim
or the judicial character of the case). As a result, liability claims
are settled over a long period of time and a larger element of
the claims provision relates to incurred but not reported claims
(IBNR).
(III)
CHANGES IN ASSUMPTIONS AND METHODOLOGY
The Group did not change any of the main assumptions or
methodologies for the insurance contracts disclosed in this
note in 2015, other than updating its cost in light of the time
value of money.
Notes
CONTENTS
03
NOTE 1
CHANGES TO SCOPE OF CONSOLIDATION
172
NOTE 2
SEGMENT REPORTING
172
NOTE 3
FLEET HOLDING COSTS
175
NOTE 4
175
NOTE 5
PERSONNEL COSTS
175
NOTE 6
SHARE-BASED PAYMENTS
176
NOTE 7
177
NOTE 8
AMORTIZATION, DEPRECIATION AND IMPAIRMENT EXPENSE
177
NOTE 9
177
NOTE 10
178
NOTE 11
NET FINANCING COSTS
178
NOTE 12
INCOME TAX
179
NOTE 13
GOODWILL
180
NOTE 14
INTANGIBLE ASSETS
182
NOTE 15
184
NOTE 16
EQUITY-ACCOUNTED INVESTMENTS
185
NOTE 17
FINANCIAL ASSETS
186
NOTE 18
DEFERRED TAX ASSETS AND LIABILITIES
187
NOTE 19
INVENTORIES
188
NOTE 20
RENTAL FLEET RECORDED ON THE BALANCE SHEET
189
NOTE 21
RECEIVABLES AND PAYABLES RELATED TO THE RENTAL FLEET
189
NOTE 22
190
NOTE 23
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
191
NOTE 24
CAPITAL AND RESERVES
192
NOTE 25
LOSS PER SHARE
195
NOTE 26
LOANS AND BORROWINGS
195
NOTE 27
EMPLOYEE BENEFITS
200
NOTE 28
PROVISIONS
204
NOTE 29
TRADE PAYABLES AND OTHER LIABILITIES
206
NOTE 30
206
NOTE 31
OTHER DISCLOSURES RELATING TO FINANCIAL ASSETS AND LIABILITIES
207
NOTE 32
OFF-BALANCE SHEET COMMITMENTS
210
NOTE 33
RELATED PARTIES
211
NOTE 34
GROUP ENTITIES
213
NOTE 35
STATUTORY AUDITORS’ FEES
215
NOTE 36
SUBSEQUENT EVENTS
215
EUROPCAR
2015
171
03
NOTE 1
CHANGES TO SCOPE OF CONSOLIDATION
IN 2015
a Creation of Europcar Lab SASU and Europcar Lab UK in 2015, Europcar Groupe entities devoted to innovation.
This transaction also included the acquisition of a majority stake (60.80%) in the capital of E-Car Club Holding, giving the Group
full ownership of the capital of E-Car Club, the leading car-sharing company, offering a fleet of fully electric vehicles in the United
Kingdom, on a pay-per-use model.
This new acquisition is fully in line with Europcar Lab’s strategy to develop mobility market usages, search for new mobility solutions
opportunities worldwide and make investments in strategic initiatives allowing the Group to strengthen its leadership in the mobility
market.
These companies are all fully consolidated.
a Creation of Europcar Inc, wholly owned and fully consolidated by Europcar Groupe, based in the United States.
The purpose of this company will be to manage outbound traffic to Europe.
a EIS E.E.I.G. was the object of a full transfer of assets (TUP) with retroactive effect to January 1, 2015 by Europcar International.
a The German company Travset Business Travel + Service GmbH was also the object of a TUPE dated July 1, 2015 by Europcar
Autovermietung GmbH.
IN 2014
a On October 31, 2014, the Group acquired 100% of the capital of EuropHall for an amount of €13.5 million (payable in two
installments with the outstanding portion of €5.4 million due in 2015). EuropHall was fully consolidated from the acquisition date.
EuropHall is the second largest company in the franchisee network by revenue and size and is a longstanding partner of Europcar
France.
The acquisition generated goodwill of €10.3 million.
a On November 30, 2014, the Group acquired a 70.6% stake in the French startup Ubeeqo, specialized in corporate car-sharing
solutions, through the acquisition of shares and subscription to a capital increase for a total amount of €17 million. Following a
capital increase at the end of 2015, the proportion of the shareholding rose to 75.7%.
Ubeeqo currently operates in France and Belgium. The Company is accounted for using the equity method in the Europcar Group
consolidated financial statements.
NOTE 2
SEGMENT REPORTING
Europcar operates a car rental activity:
a using its own fleet of vehicles based in nine countries; and
a through a franchisee network present in the countries in
which Europcar operates directly (“domestic franchises”),
but particularly in other countries (“international franchises”).
In total, Europcar is present in 145 countries.
The chief operating decision maker within the meaning of IFRS 8
– Operating Segments, is the Group Executive Committee.
The Group is monitored and managed on a day to day basis
using reporting data provided by the individual countries. The
Group presents two segments: Europe and Rest of World.
The nature of the services provided and the category of
customers are identical for these two segments. The distinction
172
EUROPCAR
2015
between the two segments is mainly based on criteria related
to the dynamics of the economic zones, the organization of
customers, interdependencies between the countries as
regards the management of customer contracts and the fleet,
as well as daily operational management.
a Europe: European countries in which the Group operates
its fleet directly (Belgium, France, Germany, Italy, Portugal,
Spain and the United Kingdom), organized on shared service,
customer and distribution criteria, as well as franchised
European countries (Austria, Denmark, Finland, Greece,
Ireland, Luxembourg, Netherlands, Norway, Sweden,
Switzerland and Turkey) which have similar economic
characteristics and offer synergies in terms of fleet negotiation
and customer management.
a Rest of the world: all countries other than those cited above,
including Australia and New Zealand, where the Group
operates the fleet directly.
a adjusted corporate EBITDA: recurring operating income
before depreciation and amortization, after deduction of the
interest expense on liabilities related to rental fleet financing.
The Executive Committee members regularly review the
operating and financial performance of the segments, which
are measured as follows:
Consequently, and as required by IFRS 8, the Group discloses
a global reconciliation of its segment reporting information to
its IFRS consolidated financial statements.
a revenue: includes vehicle rental income, territorial fees, other
commissions related to the Group’s trademarks and billed to
franchisees, and fuel sales;
03
SEGMENT REPORTING INFORMATION
December 31, 2015
Note
Segment revenue
Reversal of depreciation and impairment charges
11
Europe
Rest of
world
Eliminations
& Holding
companies
Segment
total
1,992,155
156,095
(6,327)
2,141,923
235,975
34,490
12,857
283,322
11,580
1,047
20,154
32,781
(56,550)
(3,463)
(5,441)
(65,454)
191,005
32,074
27,570
250,649
Total assets
1,608,640
108,234
2,605,897
4,322,861
Total liabilities
1,699,585
94,898
1,960,791
3,755,274
Europe
Rest of
world
Eliminations
& Holding
companies
Segment
total
1,836,161
149,996
(7,287)
1,978,870
206,625
31,996
15,270
253,890
10,716
1,089
20,019
31,824
Adjusted corporate EBITDA of the segments
December 31, 2014
Note
Segment revenue
Reversal of depreciation and impairment charges
(65,974)
(5,129)
(1,805)
(72,908)
151,368
27,956
33,484
212,807
Total assets
1,491,165
125,547
2,329,732
3,946,444
Total liabilities
1,568,712
121,550
2,098,047
3,788,309
Adjusted corporate EBITDA of the segments
11
(i) Information about revenue and services
Revenue and services can be analyzed as follows:
December 31, 2015
Vehicle rental income
SEGMENT REVENUE
Europe
Rest of
world
Eliminations
& Holding
companies
Segment
total
1,859,598
132,297
-
1,991,895
100,106
3,595
(6,327)
97,374
32,451
20,203
-
52,654
1,992,155
156,195
(6,327)
2,141,923
EUROPCAR
2015
173
03
December 31, 2014
SEGMENT REVENUE
Europe
Rest of
world
Eliminations
& Holding
companies
Segment
total
1,695,994
126,772
-
1,822,766
106,126
3,935
(7,287)
102,774
34,041
19,289
-
53,330
1,836,161
149,996
(7,287)
1,978,870
(ii) Disclosure by country and customer segment
As at
Dec. 31, 2015
As at
Dec. 31, 2014
1,991,895
1,822,766
Leisure
55.6%
55.3%
Business
44.4%
44.7%
Breakdown of customers by segment
(iii) Segment information by geographical
areas
The Group operates in four main markets: France, Germany,
the United Kingdom, as well as other European countries.
Revenue has been identified based on where the rental service
is provided. Non-current assets are allocated based on their
physical location.
Revenue and non-current assets include items directly
attributable to a geographical area as well as those that
can be allocated on a reasonable basis. Unallocated items
include income and non-current assets related to holding
companies and eliminations. Car rental customers comprise
both individuals and corporate customers.
Germany
Other
European
countries
Rest of
world (2)
Unallocated
items
Total
465,227
544,470
621,677
156,095
(6,327)
2,141,923
98,307
116,148
207,205
128,280
36,329
806,741
1,393,011
88,345
96,270
180,384
38,374
26,899
26,800
457,072
France
United
Kingdom
Germany
Other
European
countries
Rest of
world (2)
Unallocated
items
Total
325,363
410,385
518,259
582,154
149,996
(7,287)
1,978,870
97,886
110,253
208,865
118,397
39,041
788,435
1,362,977
88,024
88,865
180,384
38,374
26,942
26,800
449,389
France
UnitedKingdom
360,781
December 31, 2015
Revenue from external
customers
Non current assets
(1)
Of which Goodwill
December 31, 2014
Revenue from external
customers
Non-current assets
Of which Goodwill
(1)
(1) Non-current assets reported under “Eliminations & Holdings” notably include trademarks.
(2) “Rest of World” mainly corresponds to Australia and New Zealand.
174
EUROPCAR
2015
NOTE 3
FLEET HOLDING COSTS
Costs related to rental fleet agreements (1)
As at
Dec. 31, 2015
As at
Dec. 31, 2014
(460,360)
(421,709)
Purchase and sales related costs (2)
(54,536)
(47,354)
Taxes on vehicles
(32,290)
(27,201)
(547,186)
(496,264)
03
(1) Costs related to rental fleet agreements mainly consist of (i) vehicle depreciation expenses and (ii) off-balance sheet fleet operating lease expenses (see Significant
Accounting Policies, Section f) “Vehicle fleet”.
During the year ended December 31, 2015 the Group recognized depreciation expense net of volume rebates amounting to €189.0 million (€164.2 million in 2014) under
“Costs related to rental fleet agreements”. This depreciation expense relates to vehicles subject to manufacturer or dealer buy-back agreements and “at-risk” vehicles.
“Costs related to rental fleet agreements” also include operating lease payments amounting to €265.5 million (December 2014: €245 million). The related off-balance
sheet rental commitments in respect of rental fleets operated under operating lease arrangements are disclosed in Note 32.1 (i), “Operating leases”.
(2) Fleet acquisition and disposal costs include the costs related to vehicle accessories and conditioning new vehicles and to the disposal of used cars.
NOTE 4
Fleet operating costs (1)
Revenue-related commissions and fees
(2)
Of which, trade receivables allowances and write-offs
Rental related costs
(3)
As at
Dec. 31, 2015
As at
Dec. 31, 2014
(233,279)
(229,577)
(270,968)
(247,547)
(6,954)
(9,899)
(222,743)
(209,155)
(726,990)
(686,279)
(1) Fleet operating costs mainly consist of insurance, repairs and maintenance costs as well as costs incurred for damaged and stolen cars and for the reconditioning of
vehicles before they are repurchased by the car manufacturers or dealers.
(2) Revenue-related costs include agent’s fees, travel agency commissions and airport and railway concession fees.
(3) Rental related costs include vehicle transfer costs incurred during the holding period, vehicle washing costs and fuel costs.
NOTE 5
PERSONNEL COSTS
PERSONNEL COSTS
Wages and salaries (1)
(2)
As at
Dec. 31, 2015
As at
Dec. 31, 2014
(266,480)
(242,757)
(68,452)
(59,875)
Post-employment benefits
(6,847)
(6,833)
Other items
(5,609)
(8,688)
(347,388)
(318,153)
Social security contributions
(1) Includes bonuses and profit-sharing expenses, as well as the IFRS expense related to plans for free shares implemented in the course of 2015 (€2.6 million).
(2) Includes employer contributions (€2.6 million) related to free shares allocated to residents of France.
EUROPCAR
2015
175
03
HEADCOUNT
In average number of equivalent-to-full-time employees (FTE)
As at
Dec. 31, 2015
As at
Dec. 31, 2014
6, 324 (1)
6,284 (1)
TOTAL HEADCOUNT
(1) Excluding EuropHall in 2014. In 2015, Europhall has 128 full-time employees.
Data shown in the table above correspond to average annual
data. The Group also uses a certain number of temporary
workers as well as external service providers, mainly for vehicle
NOTE 6
transit and cleaning during peak periods, and in accordance
with the applicable legislation in each of the countries in which
the Group operates.
SHARE-BASED PAYMENTS
The extraordinary General Meeting of the Company’s
shareholders held on June 8, 2015 authorized the Company’s
Management Board to award free shares in the Company.
The Management Board at its meeting held on June 25, 2015
pursuant to said delegation of authority finalized these Scheme
rules and the principle of two plans to award free shares. The
first plan, “AGA 13 T1” and “AGA13 T2”, benefits members of
the Group’s Executive Committee.
Vesting of these free shares, following vesting periods of two
to three years, and on condition that the person continue to
be with the Company for two years after the periods, would be
conditioned on the achievement of:
a for the year ended December 31, 2017: performance
conditions related to (i) Adjusted Corporate EBITDA and (ii)
movements in the Company’s stock price as compared with
movements in the SBF 120.
The second free share grant plan, “AGA 100”, benefits the
Group’s top 100 executives. The shares would vest following a
two-year vesting period, subject to the beneficiary’s continued
employment with the Company and subject to the achievement
of performance conditions relating to (i) Adjusted Corporate
EBITDA and (ii) movements in the Company’s stock price as
compared with movements in the SBF 120.
a with respect to the years ended December 31, 2015 and
2016: performance conditions related to Adjusted Corporate
EBITDA; and
Movements relating to the acquisition of free shares in 2015, to which IFRS 2 standard “Share-based payments” applies, are as
follows:
Number of free shares
Currently vesting as at January 1, 2015
Allocated
1,991,844
Vested
Canceled
(128,511)
Currently vesting as at December 31, 2015
1,863,333
The weighted average fair value of the allocated shares was
determined on the allocation date by applying a Monte Carlotype simulation model.
Since the dividend rate was 2.20% (only for 2017) and the
borrowing rate was equal to a risk-free rate +1%, the fair values
on the allocation date less the dividends discounted during the
vesting period and the discounted cost of non-transferability
during the lock-up period are equal to
a €11.73 for the AGA 13 T1 plan;
176
EUROPCAR
2015
a €5.91 for the AGA 100 plan.
The employer’s contribution of 30% was calculated on a base
corresponding to the fair unit value of shares estimated on the
awarding date.
The total expense for these two plans was €10.2 million with
€2.6 million recorded as personnel costs for 2015 (see Note 5).
NOTE 7
As at
Dec. 31, 2015
As at
Dec. 31, 2014
Network costs (1)
(81,878)
(77,948)
IT costs
(33,983)
(30,482)
Telecom costs
(7,761)
(6,348)
Head office costs (2)
(57,424)
(50,185)
Sales and marketing costs
(37,429)
(34,376)
(218,475)
(199,339)
03
(1) Network costs consist of rental expenses for premises and network overheads.
(2) Head office costs consist of rental and traveling expenses and auditing and consulting fees incurred at Group level.
NOTE 8
AMORTIZATION, DEPRECIATION AND IMPAIRMENT EXPENSE
As at
Dec. 31, 2015
As at
Dec. 31, 2014
Amortization of intangible assets
(17,450)
(18,243)
Depreciation of property, plant and equipment
(14,888)
(13,550)
(443)
(31)
(32,781)
(31,824)
Impairment expense
NOTE 9
This category includes net income related to certain commercial agreements, the release of provisions and other items.
As at
Dec. 31, 2015
Contractual income
As at
Dec. 31, 2014
2,204
2,514
Release of surplus provisions
188
1,410
Foreign exchange gains/(losses) on operating activities
705
307
Gains (losses) on the disposal of property, plant and equipment
394
1,312
10,725
1,336
14,216
6,879
Other items, net (1)
(1) Of which:
a €1.3 million in 2014 for gains on the disposal of plants in Manchester, Birmingham and Plymouth owned by P1 UK Ops;
a in 2015, income from the previous fiscal year was reported for a debt established in 2009 that lapsed during 2015.
EUROPCAR
2015
177
03
NOTE 10
As at
Dec. 31, 2015
Amortization of rights to operate National and Alamo trademarks
Addition to/release of provisions for impairment of real estate assets in Spain
Reorganization charges
(2)
O/w: Reorganization – redundancy expenses
Reorganization - professional fees
(1)
IPO fees Compensation benefit
Legal fees (3)
As at
Dec. 31, 2014
(5,235)
(613)
502
(24,033)
(22,771)
(18,897)
(12,960)
(5,136)
(9,811)
(8,692)
-
1,025
(23,865)
23,001
(59,440)
Other (4)
( 52,462)
(4,920)
TOTAL OTHER NON-RECURRING INCOME AND EXPENSES
(61,774)
(115,729)
(1) For the part recognized on the income statement. The total amount of fees incurred is €32.5 million.
(2) Reorganization charges, which totaled €24.0 million as at December 31, 2015 compared with €22.8 million as at December 31, 2014 resulted from the measures
implemented by several of the Group’s entities or announced before the end of the year to streamline the network and back-office activities.
(3) In 2014, this amount included ongoing litigation with Enterprise Holdings Inc both for use of the logo in the UK and for the arbitration proceedings: legal fees, damage
assessment and the cost of dismantling the logo in certain rental stations as well as a one-off write-down taken on the residual value of the right to use the National
Alamo trademark (see Note 32.4). In 2015, taking into account the outcome of the dispute (see Note 32), a portion of the provision was reversed.
(4) Of which €45 million provisioned in 2015 for the financial risk measured by the Group as part of the ongoing proceedings with the French anti-trust authorities (see
Note 32.4) and €2.7 million of exceptional bonuses paid out to the employees of the Group.
NOTE 11
NET FINANCING COSTS
Net other financing expenses
Gross financing costs
Amortization of charges arising on the trading of derivatives
(2)
Foreign exchange losses
Cost of discounting social commitments
Early redemption premiums (1)
Other
As at
Dec. 31, 2015
As at
Dec. 31, 2014
(65,454)
(72,908)
(56,314)
(78,516)
(121,768)
(151,424)
(1,465)
(16,258)
(42,340)
(30,652)
(8,164)
(5,963)
(2,125)
(2,977)
(56,010)
(17,100)
( 7,676)
( 17,700)
(117,780)
(90,650)
Foreign exchange gains
11,956
9,393
Other financial income
11,956
9,393
(227,592)
(232,681)
Other financial expenses
NET FINANCING COSTS
(1) Of which €56 million redemption price paid to bond holders of €324 and €400 million high yield notes in 2015, and €17.1 million redemption price paid to bond holders
€350 million in 2014.
(2) Of which €26.9 million transaction costs written-off following the repayment of the corporate bonds €400 and €324 million for the period ended December 31, 2015 and
€4 million transaction costs written-off following the repayment of the fleet bond €350 million for the period ended December 31, 2014.
For the year ended December 31, 2015, the total interest expense on financial liabilities at amortized cost amounted to €123.3 million
(vs. €152.5 million in December 2014) and total interest income on financial assets at amortized cost amounted to €1.5 million (vs.
€1.0 million in December 2014).
178
EUROPCAR
2015
NOTE 12
INCOME TAX
Current tax
Deferred tax
TOTAL INCOME TAX EXPENSE
As at
Dec. 31, 2015
As at
Dec. 31, 2014
( 46,794)
(29,196)
9,157
18,541
(37,637)
(10,655)
03
The theoretical tax expense based on ECG’s statutory tax rate (i.e., the standard corporate income tax rate in France of 33.33%
to which is added the corporate income tax social security contribution of 3.3% on the amount of corporate income tax above
€763,000) can be reconciled to the tax expense reported in the income statement as follows:
Profit/loss before tax
Statutory tax rate
Theoretical tax
Impact of differences in tax rates
Permanent differences
(1)
Capitalization of losses and temporary differences that were formerly not recognized
As at
Dec. 31, 2015
As at
Dec. 31, 2014
(6,047)
(94,520)
34.43%
34.43%
2,081
32,543
12,814
(2,229)
( 24,649)
(8,397)
31,541
Unrecognized deferred tax assets
( 31,000)
(28,201)
Impact of tax losses (2)
( 18,725)
(19,037)
Other temporary differences
( 12,275)
(9,164)
Impact of French business contribution on added value (CVAE)
and Italy’s regional tax on productive activities (IRAP)
(5,997)
(3,625)
Other (3)
( 22,427)
(747)
Income tax benefit/(expense)
(37,637)
(10,655)
Effective tax rate
(11.27)%
(1) The amount was mainly due to the non-deduction of interest for tax purposes in France in 2014 (-€11 million) and 2015 (€16 million).
(2) In 2014 and 2015, virtually all unrecognized tax losses were attributable to France (€26 million).
(3) The 2014 total included a provision for tax risks in Germany for a negative amount of €3.7 million, offset by €2.7 million in prior-period adjustments (including €1.0 million
in Germany and €0.8 million in the United Kingdom) and an €18 million provision for tax risks in France, and €5.7 million of adjustments for previous years.
EUROPCAR
2015
179
03
NOTE 13
GOODWILL
Gross value Impairment loss
Balance at January 1, 2014
Carrying
Value
621,530
(187,178)
434,352
10,287
-
10,287
Impairment
-
(31)
(31)
Disposals
-
-
-
7,095
(2,314)
4,781
Acquisitions
Effect of movements in foreign exchange rates
Acquisitions
Impairment
Disposals
638,912
(189,523)
449,389
638,912
(189,523)
449,389
4,805
-
4,805
-
(443)
(443)
-
-
-
4,864
(1,543)
3,321
648,581
(191,509)
457,072
Goodwill arises from past acquisitions of franchisees in the normal course of the Group’s business and from acquisitions of
subsidiaries.
13.1
Annual impairment test
In accordance with IAS 36 – Impairment of Assets, the Group
performs impairment testing of the carrying value of goodwill.
The Group prepares and internally approves formal three-year
business plans for each of its geographical segments. For
impairment testing purposes, the three-year plan is extended
to five years The 2016 budget and the 2017 & 2018 plans
were drawn up in consideration of (i) the economic growth
forecasts in the countries where the Group operates, (ii) the
current macroeconomic data for each country, (iii) the expected
growth of air traffic, (iv) changes in the car rental market and
competitive pressure, and (v) projects and new products under
development. Beyond 2018, the revenue growth assumption
180
EUROPCAR
2015
adopted is conservative with a stable profitability rate. The
Group considers that each country corresponds to a cashgenerating unit (CGU). When performing impairment tests, the
Group calculates cash flows from Adjusted corporate EBITDA
and uses the following assumptions:
a adjusted corporate EBITDA according to the three-year plan.
a the terminal value of each CGU is based on a perpetuity
growth rate of 2%.
a the weighted average cost of capital (WACC) is applied to
the cash flows of each CGU based on the average risk-free
rate (average over a five-year period) corresponding to the
German risk-free rate for ten year bonds adjusted for a risk
premium for each country:
13.2
Goodwill allocated to corporate segments by underlying geographical
cash-generating unit
Germany
UnitedKingdom
France
Italy
Spain
Other
countries
Total
180,384
85,121
77,768
-
-
91,079
434,352
Acquisition
-
-
10,287
-
-
-
10,287
Disposal/price adjustment
-
-
-
-
-
-
-
Impairment expense
-
-
(31)
-
-
-
(31)
Effect of movements in foreign
exchange rates
-
3,744
-
-
-
1,037
4,781
180,384
88,865
88,024
-
-
92,116
449,389
92,116
449,389
180,384
88,865
88,024
-
-
Acquisition
-
3,960
764
-
-
Disposal/price adjustment
-
-
-
Impairment expense
-
-
(443)
-
-
4,724
81
81
-
(443)
Effect of movements in foreign
exchange rates
-
3,445
-
-
-
(124)
3,321
180,384
96,270
88,345
-
-
92,073
457,072
Recently recognized impairment losses include the following:
for the year ended December 31, 2010, €53.8 million of
goodwill allocated to an Italian cash-generating unit (full writedown); for the year ended December 31, 2011, €23.7 million
13.3
03
of goodwill allocated to a United Kingdom cash-generating unit
and €16.7 million of goodwill allocated to an Australian cashgenerating unit (partial write-downs).
WACC calculation
France
Germany
Italy
Spain
UnitedKingdom
Belgium
Portugal
Australia
7.46%
7.25%
8.95%
9.10%
7.95%
7.29%
10.49%
9.12%
The terminal value is based on normalized cash flows
discounted over an indefinite period, with a perpetuity growth
rate of 2%. The risk-free rate is based on the German risk-free
rate for bonds with a 10-year maturity (average over a five-year
period), adjusted by a risk premium for each country in line with
a credit risk premium based on a BB- credit rating.
13.4
WACC calculation
The Group considers that the weighted average cost of
capital should be determined based on an historical equity risk
premium of 5%, in order to reflect the long-term assumptions
factored into the impairment tests.
The gearing used when determining the WACC is based on
the annual average debt to equity ratio issued by comparable
companies on a quarterly basis.
Sensitivity analysis
Goodwill was subject to an impairment test performed by the
Company as described in the “Goodwill” Section of Significant
Accounting Policies and in Section (a) above.
Europcar did not identify any probable scenarios in any
countries whereby the CGU’s recoverable amount would fall
below its carrying amount. The sensitivity analysis performed
on the assumptions used indicate that no impairment losses
would be recognized in the following scenarios:
a a 1 percentage point increase in the discount rate;
a a 1 percentage point decrease in the growth rate;
a a 5% decrease in adjusted corporate EBITDA.
EUROPCAR
2015
181
03
NOTE 14
INTANGIBLE ASSETS
Trademarks (1)
Software,
operating
systems
Intangible
assets in
progress
Leasehold
rights
Total
Gross values
731,709
232,751
7,113
1,040
972,613
Changes in scope of consolidation
-
12
-
263
275
Other acquisitions
-
622
10,747
-
11,369
Disposals
-
(8)
-
(33)
(41)
Transfers
-
727
(723)
-
4
3,849
815
-
33
4,697
735,558
234,919
17,137
1,303
988,917
735,558
234,919
17,137
1,303
988,917
-
113
-
-
113
7,976
Other acquisitions
-
478
Disposals
-
( 3,702)
Transfers
-
10,970
(10,960)
75
8,529
(36)
( 3,738)
-
10
3,586
691
-
12
4,289
739,144
243,469
14,153
1,354
998,120
(39,942)
(186,345)
-
(699)
(226,986)
-
-
-
(239)
(239)
(18,224)
-
(19)
(36,152)
Depreciation and impairment losses
Increases/decreases related to changes
in scope of consolidation
Provision for depreciation
(17,909)
(1)
Provision for amortization
-
Disposals
-
7
-
-
7
Transfers
-
242
-
-
242
(3,258)
(799)
-
-
(4,057)
(61,109)
(205,119)
-
(957)
(267,185)
(61,109)
(205,119)
-
(957)
(267,185)
Increases/decreases related to changes in scope
of consolidation
-
5
-
-
5
Provision for amortization
-
(17,438)
-
(12)
(17,450)
Disposals
-
3,485
-
(24)
3,461
Transfers
-
462
-
-
462
(3,582)
(689)
-
(6)
(4,277)
(64,691)
(219,294)
-
(999)
(284,984)
As at Dec. 31, 2014
674,449
29,800
17,137
346
721,732
As at Dec. 31, 2015
674,453
24,175
14,153
355
713,136
Net carrying amounts
(1) Including the right to use trademarks with a finite life (Alamo, Guy Salmon and National), amortized since March 1, 2007: gross value of €54.7 million, cumulative
amortization of €37.4 million as at December 31, 2013 and Europcar trademark. In 2014, these trademark usage rights were written down in full following the settlement
of the related litigation (see “Significant events of the year”).
182
EUROPCAR
2015
14.1
(i)
Trademarks
Annual impairment test
In accordance with IAS 36 – Impairment of Assets, the Group
has performed an annual impairment test of the carrying
amount of the Europcar trademark that has an indefinite useful
life (€699 million as at December 31, 2015) based on the relieffrom-royalty method. This test is performed on a consolidated
basis with no country or segment-based allocation.
The value in use of the trademark has been determined based
on projections of royalties received within the Europcar network
(corporate entities, domestic and international franchisees).
The discount rate used in the weighted average cost of capital
is applied to the net royalty cash flows of each CGU based on
a risk-free rate for 10-year German bonds.
In 2015, it was estimated at 9.14% (9.05% in 2014).
(iii) Sensitivity analysis
A reasonably possible change in the key assumptions on which
management has based its determination of the recoverable
amount would not cause significant difference between the
carrying amount and the recoverable amount. The following
table shows the results of the impairment tests and the resulting
difference between the recoverable amount and the carrying
amount of brands according to different assumptions of the
long-term growth rate and weighted average cost of capital.
03
(ii) Key assumptions
The terminal value is based on a perpetuity growth rate of 2%.
Perpetuity growth rate
1.0%
2.0%
3.0%
8.14%
314
440
616
9.14%
189
280
403
10.14%
91
160
249
WACC
The tests performed on the Europcar trademark did not result in the recognition of any impairment losses in 2014 or 2015.
14.2
Software and operating systems
Computer software (the Europcar Greenway and PremierFirst
Speedlink systems) has been recognized at fair value in
accordance with IFRS 3 – Business Combinations, based on
an analysis of functional aspects. This methodology is based
on the calculation of function points for each segment/software
of the Europcar and PremierFirst rental reservation and fleet
management systems. A function point reflects the functionality
of the application which has been used as a basis to calculate
its replacement value.
14.3
Security
The total amount of intangible assets (except for the Europcar
brand) is held as security against the senior asset financing
loan, as described in Note 26.
The net book value of this internally-developed computer
software amounts to €3.1 million as at December 31, 2015
(the equivalent figure in 2014 was €19.9 million).
Costs amounting to € 7.4 million were capitalized in 2015.
EUROPCAR
2015
183
03
NOTE 15
The Group leases buildings and other equipment under different
types of finance lease agreements. At December 31, 2015,
the carrying amount of leased buildings and other equipment
was €0.1 million and €5.7 million, respectively (in 2014, the
respective figures were €0.3 million and €4.9 million).
Property, plant and equipment assets are held as security
against Group corporate financing, as described in Note 26.
Land and
buildings
Technical
equipment
Other
equipment
Fixed assets in
progress
Total
89,649
8,227
158,973
2,616
259,465
-
69
3,209
-
3,278
548
171
8,132
3,252
12,103
(2,449)
(6)
(959)
(285)
(3,699)
Gross values
Other acquisitions
Disposals
Transfers
Other acquisitions
Disposals
Transfers
11
-
1,873
(1,888)
(4)
1,058
13
1,895
-
2,966
88,817
8,474
173,123
3,695
274,109
88,817
8,474
173,123
3,695
274,109
-
-
(53)
17
(36)
366
971
15,923
3, 302
20,562
(4,506)
(477)
( 8,404)
( 1,551)
( 14,938)
-
-
1,885
(1,895)
(10)
747
(2)
1,693
-
2,438
85,424
8,966
184,167
3,568
282,125
(36,469)
(6,247)
(127,347)
-
(170,063)
Depreciation and impairment losses
Depreciation and impairment charge for the year
Disposals
Transfers
Depreciation and impairment charge for the year
-
(60)
(2,560)
-
(2,620)
(1,358)
(364)
(11,112)
-
(12,834)
714
6
801
-
1,521
-
-
(242)
-
(242)
(232)
(6)
(1,429)
-
(1,667)
(37,345)
(6,671)
(141,889)
-
(185,905)
(37,345)
(6,671)
(141,889)
-
(185,905)
-
-
36
-
36
(2,429)
(352)
( 12,493)
-
( 15,277)
Disposals
1,792
413
7,984
-
10,189
Transfers
-
-
(462)
-
(462)
(151)
2
(1,321)
-
(1,470)
(38,133)
(6,608)
(148,148)
-
(192,889)
As at Dec. 31, 2014
51,472
1,803
31,234
3,695
88,204
As at Dec. 31, 2015
47,291
2,358
36,019
3,568
89,236
Carrying amounts
184
EUROPCAR
2015
NOTE 16
EQUITY-ACCOUNTED INVESTMENTS
AS AT DEC. 31, 2015
Company name
Car2Go Europe GmbH (A)
Ubeeqo (B)
Net profit/
loss
attributable
to Europcar
Equityaccounted
shares
Provisions
taken
on equityaccounted
shares
% control (in thousands of €)
(in €k)
(in €k)
Principal place
of business
% interest
Germany
25.00%
25.00%
(10,010)
1,776
-
France
75.71%
75.71%
(2,064)
20,259
-
(12,074)
22,035
-
Net profit/
loss
attributable
to Europcar
Equityaccounted
shares
Provisions
taken
on equityaccounted
shares
% control (in thousands of €)
(in €k)
(in €k)
TOTAL
03
AS AT DEC. 31, 2014
Company name
Car2Go Europe GmbH (A)
Ubeeqo (B)
Principal place
of business
% interest
Germany
25.00%
25.00%
(6,523)
-
(717)
France
70.60%
70.60%
-
17,323
-
(6,523)
17,323
(717)
TOTAL
(A)
CAR2GO EUROPE GMBH – ON A FULL-CONSOLIDATION BASIS
As at
Dec. 31, 2015
As at
Dec. 31, 2014
Non-current assets
36,455
50,266
Current assets
17,392
43,596
(19)
(33)
(42,690)
(71,532)
Current liabilities
NET ASSETS
11,138
22,297
52,324
53,179
(40,040)
(26,091)
As at
Dec. 31, 2015
As at
Dec. 31, 2014
Non-current assets
4,819
2,057
Current assets
5,806
5,310
(85)
(1,548)
(1,884)
(64)
Revenue
Profit or loss
The Europcar Group subscribed to two capital increases in Car2go for an amount of €12.5 million.
(B)
UBEEQO SAS – ON A FULL-CONSOLIDATION BASIS
Current liabilities
Net assets
8,656
5,755
Revenue
2,698
2,613
(2,919)
(843)
Profit or loss
EUROPCAR
2015
185
03
In light of the planned shareholders’ agreement between
Europcar Groupe and the founders of Ubeeqo, no shareholder
controls the Company within the meaning of IFRS 10 - none
of the parties may take a decision without the approval of the
other party (even if one of the parties owns more than 50%
of the share capital), or exercise joint control. Consequently,
Europcar Groupe exercises significant influence over Ubeeqo
and accounts for it using the equity method.
NOTE 17
As at December 16, 2015, Europcar Groupe had injected
€5 million during a capital increase. The proportionate share of
its assets is thus 75.7% as from this date (note however, that the
loss recorded in the accounts closed as at December 31, 2015
takes the former holding rate of 70.76% into account).
The carrying amount of the Ubeeqo securities, a company in
the ramp-up phase, is justified by its value in use.
FINANCIAL ASSETS
As at
Dec. 31, 2015
As at
Dec. 31, 2014
280
670
50,838
31,225
5,928
5,747
15
1,292
57,061
38,934
Other non-current financial assets
Available-for-sale financial assets
Held-to-maturity investments
(1)
Deposits and prepayments
Other long-term investments
TOTAL NON-CURRENT FINANCIAL ASSETS
Current financial assets
Loans
Other current financial assets (1)
TOTAL CURRENT FINANCIAL ASSETS
118
118
37,405
49,359
37,523
49,477
(1) Including €72.0 million to cover liabilities arising from our captive insurance structure (€62.9 million at December 31, 2014), mainly consisting of bonds recognized at
amortized cost. Because they mature in the very near future, management has concluded that the fair value of these held-to-maturity investments approximates their
respective carrying amounts as at December 31, 2015.
No impairment charge was recognized on investments in non-consolidated entities classified as “available-for-sale financial assets”.
186
EUROPCAR
2015
NOTE 18
18.1
DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities and temporary differences recognized
during the period
Intangible assets
Rental fleet
Investments in subsidiaries
Receivables and other assets
Prepaid and deferred charges
Employee benefits
Deferred income
Provisions
Other debt
Tax losses carried forward
DEFERRED TAX ASSETS/(LIABILITIES)
January 1,
2015
Changes
in scope of
consolidation
Recognized
in income
statement
Fair value
adjustment
in OCI
Translation December 31,
reserve
2015
(1,228)
(932)
-
(94)
(2,254)
(245,514)
738
-
(72)
(244,848)
(2,012)
(4,207)
-
8
(6,211)
145
(94)
-
3
54
(302)
(34)
-
-
(336)
(2,962)
(1,566)
-
9
(4,519)
36
(67)
-
-
(31)
18,099
(2,877)
(1,087)
(4)
14,178
6,152
(3,473)
-
-
2,679
17,436
2,724
(554)
(5)
19,601
20
-
(20)
-
-
10,111
3,656
-
1
13,830
116,409
15,288
554
313
132,564
(83,610)
9,157
(1,107)
158
( 75,402)
Deferred tax assets
55,730
Intangible assets
Rental fleet
Investments in subsidiaries
(131,132)
January 1,
2014 Reclassification
Recognized
in income
statement
Fair value
adjustment
in OCI
Translation December 31,
reserve
2014
(1,434)
313
-
(106)
(1,228)
(253,308)
7,988
-
(200)
(245,514)
(3,964)
2,082
-
(130)
(2,012)
149
-
(7)
3
145
-
(302)
Receivables and other assets
(1,199)
(1,782)
20
(2,962)
2,276
(2,239)
(3)
36
Employee benefits
Deferred income
Provisions
Other debt
03
(302)
12,615
(533)
5,985
32
18,099
3,670
2,482
-
-
6,152
11,787
5,686
(11)
(26)
17,436
4,733
-
(4,713)
20
6,218
3,865
-
28
10,111
Tax losses carried forward
115,030
980
-
381
116,409
DEFERRED TAX ASSETS/(LIABILITIES)
(103,427)
18,541
1,628
(81)
(83,610)
Deferred tax assets
47,395
(131,005)
EUROPCAR
2015
187
03
Aside from the French tax group, on which a portion of tax
losses have been recognized as deferred tax assets in the
amount of the deferred tax liabilities related to the Europcar
18.2
trademark, the other deferred tax assets recognized must be
used within five years.
Unrecognized deferred tax assets
Deferred tax assets are recognized up to the amount of available deferred tax liabilities and recoverability projections derived from
business plans.
2015
in millions of euros
Relating to temporary differences
Relating to tax losses carried forward (1)
2014
45,691
33,415
127,942
129,290
173,643
162,705
(1) The amount mainly relates to Spain (€28.9 million), Italy (€6.7 million) and France (€84.9 million). All tax losses, including Spain since 2015, may be carried forward
indefinitely. Certain tax jurisdictions may cap the use of tax losses.
NOTE 19
INVENTORIES
No material restrictions of title or right of use exist in respect of the inventories listed below:
As at
Dec. 31, 2015
Consumables
Oil and fuel
1,632
2,021
11,779
12,363
Vehicles
736
739
Spare parts
291
312
Other items
654
706
15,092
16,141
TOTAL INVENTORIES
Inventories are stated net of provisions, they amounted to €152,000 (end-2014: €140,000).
Vehicles reported in inventory are vehicles not yet in operation at the end of the period.
188
As at
Dec. 31, 2014
EUROPCAR
2015
NOTE 20
RENTAL FLEET RECORDED ON THE BALANCE SHEET
The rental fleet operated by the Group is acquired and financed in different ways. The table below presents the breakdown between
these different methods for the 2014 and 2015 business years:
% of total volume
of vehicles purchased
Type of acquisition and related financing
2015
2014
Vehicles purchased with manufacturer or dealer buy-back commitment financed on-balance sheet
46%
43%
Vehicles purchased with manufacturer or dealer buy-back commitment
and financed through rental agreements qualifying as operating leases
46%
49%
Total fleet purchased with buy-back arrangements
92%
92%
Vehicles purchased without manufacturer or dealer buy-back commitment (“at risk” vehicles)
7%
7%
Vehicles financed through rental agreements qualifying as finance leases
1%
1%
100%
100%
TOTAL PURCHASES OF RENTAL FLEET
03
In accordance with accounting standards, the fleet funded by operating leases is not recorded in the balance sheet and liabilities
for these contracts are listed in off-balance sheet commitments. The rental fleet recorded in the statement of financial position is
broken down as follows:
As at
Dec. 31, 2015
Deferred depreciation expense on vehicles
As at
Dec. 31, 2014
258,441
158,247
1,024,072
897,011
Fleet purchased with buy-back contracts financed on-balance sheet
1,282,513
1,055,258
306,744
289,088
75,043
58,314
1,664,300
1,402,660
Vehicles purchased without manufacturer or dealer buy-back commitment (“at risk” vehicles)
Vehicles acquired through rental agreements qualifying as finance leases without buy-back arrangements
TOTAL RENTAL FLEET RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION
The fleet is presented net of depreciation or impairment expense amounting to €4.7 million (December 2014: €4,5 million) in respect
of damaged or stolen vehicles.
NOTE 21
RECEIVABLES AND PAYABLES RELATED TO THE RENTAL FLEET
As at
Dec. 31, 2015
As at
Dec. 31, 2014
Fleet receivables (1)
501,522
460,038
VAT receivables (2)
73,130
70,060
574,652
530,098
RENTAL FLEET AND RELATED RECEIVABLES
EUROPCAR
2015
189
03
Fleet payables (1)
VAT payables
TOTAL RENTAL FLEET AND RELATED PAYABLES
As at
Dec. 31, 2015
As at
Dec. 31, 2014
567,931
491,664
94,791
90,293
662,722
581,957
(1) Includes €245 million (December 2014: €232.5 million) related to a large fleet operating lease contracted in 2009, whereby the Group acquired vehicles from a
manufacturer and resold them immediately to the lessor. The receivable (from the manufacturer) and payable (to the lessor) amounts recorded at inception of the lease
are settled when the vehicles are returned to the manufacturer according to the buy-back arrangement.
(2) Most of the VAT receivables amount is related to fleet acquisitions and disposals.
As at
Dec. 31, 2015
As at
Dec. 31, 2014
(39,257)
(77,096)
VAT receivables
(1,725)
(22,595)
Payables related to fleet acquisition
74,475
11,947
1,376
13,719
34,869
(74,025)
As at
Dec. 31, 2015
As at
Dec. 31, 2014
209,215
181,487
77,804
79,501
Fleet receivables
VAT payables
CHANGES TO THE NEED FOR CASH FLOW LINKED TO THE VEHICLE FLEET
NOTE 22
All trade receivables fall due within one year.
Rental receivables
Other trade receivables
Other tax receivables
870
543
Insurance claims
21,378
18,515
Prepayments
32,144
31,902
803
739
14,987
13,225
357,200
325,912
As at
Dec. 31, 2015
As at
wDec. 31, 2014
(35,297)
(33,742)
(6,683)
(8,783)
Receivables written off during the year/period
8,694
6,803
Unused amounts reversed
1,874
568
Employee related receivables
Deposits, other receivables and loans
TOTAL TRADE AND OTHER RECEIVABLES
Impairment losses taken on rental and other trade receivables are as follows:
Opening balance
Depreciation for bad debts
Closing balance
(81)
(143)
(31,493)
(35,297)
Additions to/releases of the allowance for bad debts are included in “Fleet operating, rental and revenue related costs” in the
consolidated income statement (Note 4).
190
EUROPCAR
2015
The aged receivables profile is as follows:
As at Dec. 31, 2015
Not past due
Trade and other receivables - gross amount
Overdue by
> 180 days
Total
255,772
62,035
20,581
49,612
388,000
(8,363)
(5,360)
(3,488)
(24,332)
(41,543)
247,409
56,675
17,093
25,280
346,457
Overdue by
> 180 days
Total
18,133
47,067
369,275
Impairment of bad debts
Trade and other receivables - net amount
Overdue by
Overdue by between 90
< 90 days and 180 days
03
As at Dec. 31, 2014
Not past due
Trade and other receivables - gross amount
253,396
Impairment of bad debts
Trade and other receivables - net amount
Overdue by
Overdue by between 90
< 90 days and 180 days
50,679
(9,308)
(2,335)
(2,152)
(29,568)
(43,363)
244,088
48,344
15,981
17,499
325,912
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
NOTE 23
Cash-in-hand and at bank
Accrued interest
Restricted cash
Cash and cash equivalents and restricted cash
Cash-in-hand and at bank includes €77.7 million in cash
(December 2014: €52.5 million) tied up in Securitifleet
companies, excluding the two SFH Holdings dedicated to fleet
financing in France, Germany, Italy and Spain. As such, this
cash is considered as non-restricted.
As at
Dec. 31, 2015
As at
Dec. 31, 2014
145,803
143,721
272
316
146,075
144,037
97,366
81,795
243,441
225,832
Cash and cash equivalents in fleet and captive insurance SPEs
are reported as restricted cash. For the definition of restricted
cash, please refer to Significant Accounting Policies, Section
“Treasury” (ii).
The following table reconciles cash and cash equivalents in the statement of financial position to cash and cash equivalents in the
cash flow statement:
Restricted cash
Bank overdrafts
(1)
Cash and cash equivalents reported in the cash flow statement
As at
Dec. 31, 2015
As at
Dec. 31, 2014
146,075
144,037
97,366
81,795
(14,073)
(19,515)
229,368
206,317
(1) Included in current loans and borrowings (see Note 26).
EUROPCAR
2015
191
03
NOTE 24
24.1
CAPITAL AND RESERVES
Share capital and share premium
As at December 31, 2015, the recorded share capital
of Europcar Groupe was €143,154,016 and comprised
143,154,016 shares with a unit value of one euro each,
Date
Share capital
Share premium
Operation
(in €)
(in €)
446,383,193.50
452,977,636.00
103,810,045
4,300
Capital decrease
(336,844,642.72)
-
103,810,045
1.055
12/31/2014
2/24/2015
Number
of shares
Nominal value
(in €)
5/15/2015
Increase in share capital
8,532.21
1,501,568.74
103,818,131
1.055
6/8/2015
98,909,577.00
(98,909,577.00)
103,818,131
2.008
6/8/2015
Capital decrease
(104,638,529.00)
-
103,818,131
1.000
6/26/2015
495,845.00
(495,845.00)
495,845
1.000
6/26/2015
38,775,510.00
412,392,604.5
38,775,510
1.000
11/04/2015
8,829.00
(8,829.00)
8,829
1.000
11/04/2015
7,444.00
(7,444.00)
7,444
1.000
12/15/2015
12/31/2015
48,257.00
(48,257.00)
48,257
1.000
143,154,016.00
767,401,857.24
143,154,016
1.000
Each Category A common share gives an entitlement to one
vote.
price – or of the exercise date of the conversion right, based
on an average of the Company’s stock market share price.
Category B, C and D shares are preferred shares as defined
by article L. 228-11 of the French Commercial Code and have
no voting rights.
Holders of Class B shares could sell part of their shareholding
on the same terms and conditions as those of Eurazeo during
the IPO. The balance of Class B shares was bound by the
lock-up obligations to the underwriting banks.
Class B preferred shares were issued outside July 2011 for
executive officers and employees of the Group, some of whom
have left the Group, and Eurazeo.
The terms and conditions of Class B shares set out the terms
on which holders can convert them into ordinary shares. These
state that Class B shares can be converted into ordinary
shares exclusively by certain managers and ex-managers
of the Europcar Group (together “the managers”) if certain
events occur before publication of Eurazeo’s 2015 results,
in particular if the Company’s shares are offered for sale in
a regulated market via an Initial Public Offering (IPO). In the
latter case, holders of Class B shares can exercise their right
to convert their shares at any time from notification of the IPO
up to the expiration of the 20-day period following publication
of Eurazeo’s 2015 results, or, if later, the three-month period
following expiration of the lock-up period that may be imposed
by the underwriting banks in relation to the IPO.
The conversion ratio of Class B shares into common stock
is calculated on the basis of the exercise period – taking into
account Eurazeo’s return on its investment up to the IPO
(including net proceeds of any sale of shares by Eurazeo during
the IPO) plus the value of its retained stake based on the IPO
192
142,998,496 common shares, 147,434 category B preference
shares, 4,045 category C preference shares and 4,041
category D preference shares. The various corporate actions
since January 1, 2015 (in particular within the scope of ecg’s
ipo on euronext paris) are as follows:
EUROPCAR
2015
If a Class B shareholder does not exercise their conversion
rights in the course of the conversion period available, their
Class B shares will be automatically converted into the same
number of common shares in the Company at the end of the
period.
Class C and D shares were issued by the Company’s
Management Board on May 15, 2015, upon delegation of
powers granted it at the Shareholders’ Meeting of February 24,
2015.
Class C preferred shares were subscribed for by certain
managers and employees of the Group sitting on the Executive
Committee (together “the Group managers – C”) while Class D
shares were subscribed for by Eurazeo on the understanding
that they would be sold by Eurazeo to the Group managers – C
(and accordingly purchased by the latter from the former) in the
event of the signing of an underwriting agreement for an IPO.
Class D shares were accordingly sold by Eurazeo to the
Group managers – C following the signing of an underwriting
agreement for the IPO.
The total amount paid by all holders of Class C shares was
€1.7 million; of this amount, members of the Management
Board paid €925,000 (of which in turn the Chairman of the
Board paid €550,000) for the subscription for Class C shares
and the purchase of the Class D shares from Eurazeo.
Under the agreement between the Group managers – C and
Eurazeo in respect of the IPO, neither Class C nor Class D
shares can be sold (except to Eurazeo) and common shares
created by the conversion of Class C shares cannot be
transferred during the lock-up period set by the underwriting
banks and in any case before a minimum period of one year. In
addition, members of the Management Board may not transfer
shares to reduce their holding below the mandatory minimum
for their office until the end of their term of office, i.e. the lower of
either 10% of the number of shares held before the transfer or
a number equivalent to three times their annual compensation
based on the share price at the transfer date.
The terms and conditions of Class C and D preferred shares
set out how and when holders of Class C and D shares can
convert them into common stock. Accordingly, in the event of
an IPO, Class C shares can be converted into common shares
at any time until December 31, 2019; Class D shares cannot
be converted in the year following the IPO; up to half of Class
D shares can be converted during the following year with the
remainder eligible for conversion two years from the IPO.
03
The agreement also defines the joint transfer rights and
commitments of the Group managers – C as well as their
commitment to transfer their preferred shares to Eurazeo if
they leave the Group under specified circumstances.
As from the IPO, the conversion ratio of Class C and D shares
into common stock is determined on the basis of the exercise
period taking into account a multiple of the value of the common
shares varying in line with their trading price. For the purposes
of this calculation, the value of the common shares is equal
to a weighted average of the share price over a period of 10
trading days.
If no conversion event occurs before December 31, 2019, the
Class C and D shares will automatically be converted into the
same number of common shares in the Company.
Shareholders are entitled to receive dividends as declared on
a timely basis. There is no preferential dividend. The Group did
not distribute any dividends in 2015.
The following table shows the breakdown of the Company’s shareholders before the Company’s IPO:
Shareholders
Eurazeo
ECIP Europcar Sarl
Executives
and employees
TOTAL
Number
of common
shares and
voting rights
Number
of Class B
preferred
shares (4)
Number
of Class C
preferred
shares (4)
Number
of Class D
preferred
shares (4)
Total
number of
shares
Percentage
of common
shares and
voting rights
Percentage
of share
capital
89,947,696 (1)
150,810 (2)
–
4,041
90,102,547
86.97%
86.79%
13,480,307
–
–
–
13,480,307
13.03%
12.98%
–
231,232 (3)
4,045
–
235,277
-
0.23%
103,428,003
382,042
4,045
4,041
103,818,131
100.00%
100.00%
(1) Including 346,607 shares issued by the Company on October 16, 2007 and later transferred to Eurazeo by Eureka Participations SAS in connection with a complete
transfer of assets and liabilities;
(2) Of these shares, 41,025 Class B Preferred Shares acquired from Mr. Philippe Guillemot were placed in escrow pursuant to an order dated June 14, 2012 in a legal
proceeding relating to the exercise of the promise to purchase and its terms and conditions;
(3) Including 122,783 Class B Preferred Shares still held by former employees.
(4) The Class B, Class C and Class D Preferred Shares do not have voting rights.
EUROPCAR
2015
193
03
The following table sets forth the shareholders of Europcar Groupe following the Company’s IPO:
Shareholders
Eurazeo
ECIP Europcar Sarl
Executives
and employees,
and floating
TOTAL
Number
of common
shares and
voting rights
Number
of Class B
Preferred
Shares
Number
of Class C
Preferred
Shares
Number
of Class D
Preferred
Shares
Total
number of
shares
Percentage
of common
shares and
voting rights
Percentage
of share
capital
61,859,208
-
-
4,041
61,863,249
43.29%
43.23%
9,232,494
-
-
-
9,232,494
6.46%
6.45%
71,814,775
174,923
4,045
-
71,993,743
50.25%
50.32%
142,906,477
174,923
4,045
4,041
143,089,486
100.00%
100.00%
As at December 31, 2015, the breakdown of shareholders in the share capital was as follows:
Shareholders
Eurazeo
ECIP Europcar Sarl
Executives
and employees,
and floating
TOTAL
24.2
Number
of common
shares and
voting rights
Number
of Class B
Preferred
Shares
Number
of Class C
Preferred
Shares
Percentage
of share
capital
-
-
-
60,544,838
42. 38%
42.29%
-
-
-
9,036,469
6.33%
6.31%
73, 417,189
147, 434
4,045
4041
73,572,709
51. 29%
51.39%
142,998,496
147,434
4,045
4,041
143,154,016
100.00%
100.00%
Treasury shares
a €100,000
Europcar did not cancel any shares in 2015.
Translation reserve
The translation reserve comprises all foreign exchange
differences arising from the translation of the financial statements
of foreign operations. At December 31, 2015 it includes a
EUROPCAR
Percentage
of common
shares and
voting rights
9,036,469
a no Europcar Groupe shares;
194
Total
number of
shares
60, 544,838
Under the liquidity contract entrusted to Rothschild relating
to the shares of Europcar Groupe on December 31, 2015 the
following resources were listed on the liquidity account:
24.3
Number
of Class D
Preferred
Shares
2015
foreign exchange loss amounting to €51.5 million (the same
as at December 31, 2014) arising on an intercompany loan
denominated in GBP granted by Europcar Groupe S.A. to its
subsidiary Europcar UK Ltd that qualifies as a quasi-equity loan.
This loan for a nominal amount of €171 million (denominated
in GBP) was repaid in full by Europcar UK Ltd to Europcar
Groupe SA in December 2011. As the parent company
continues to hold the same percentage of the subsidiary and
continues to control the foreign operation, no partial disposal
was recognized under Sections 48d and 49 of IAS 21.
Accordingly, the relevant currency translation adjustment has
not been reclassified to the consolidated income statement.
As at December 31, 2015, Europcar International S.A.S.U.
held a loan receivable with its subsidiary located in Australia
amounting to AUD 14.6 million. The translation reserve includes
a foreign exchange gain amounting to €1.6 million in relation to
this loan (unchanged from December 31, 2014).
NOTE 25
LOSS PER SHARE
Basic and diluted loss per share are based on the loss
attributable to common shareholders of €55,6 million as at
December 31, 2015 (€112.3 million as at December 31, 2014)
and the weighted average number of common shares during
the year (not taking into account the shares that could be issued
as these are likely to have an accretive impact), calculated as
follows:
As of
Dec. 31, 2015
As of
Dec. 31, 2014
(55,602)
(112,273)
123,722,277
103,428,003
Loss per share in €
(0. 449)
(1.085)
Diluted loss per share in €
(0. 449)
(1.085)
Loss attributable to ordinary shareholders
Average number of shares outstanding
03
The number of potential dilutive shares is 2,371,810 (of which 1,863,333 free shares, 500,391 class B preferred shares and 8,086
class C and D preferred shares) as at December 31, 2015 and 1,296,651 as at December 31, 2014.
NOTE 26
Notes issued
Other bank loans
As at
Dec. 31, 2015
As at
Dec. 31, 2014
825,000
1,074,000
152
303
(23,969)
(31,234)
NON-CURRENT LIABILITIES
801,183
1,043,069
81,000
201,000
Senior Asset Facility
658,284
417,600
Other borrowings dedicated to fleet financing
383,706
420,154
Finance lease liabilities
76,041
55,570
Bank overdrafts
14,073
19,515
Current bank loans and other borrowings
47,314
9,361
Transaction costs/Premium/Discount – current portion
(7,906)
(16,916)
Accrued interest
11,271
21,261
1,263,783
1,127,545
Transaction costs/Premiums/Discounts
CURRENT LIABILITIES
Total net debt reconciliation:
Total net debt includes net corporate debt and total fleet net
debt. The latter includes all financing in relation to the fleet
whether or not it is recorded in the balance sheet. In particular,
the estimated outstanding value of the fleet financed through
operating leases corresponds to the net book value of the
vehicles in question. The estimated debt on operating leases
represents the carrying amount of the vehicles concerned and
is calculated based on the purchase prices and depreciation
rates of corresponding vehicles ( based on contracts signed
with the manufacturers).
EUROPCAR
2015
195
03
Notes
As at
Dec. 31, 2015
As at
Dec. 31, 2014
Non-current loans and borrowings
26
801,183
1,043,069
Current loans and borrowings
26
1,263,783
1,127,545
Held-to-maturity investments
17
(50,838)
(31,225)
Other current financial assets
17
(37,405)
(49,359)
Cash and cash equivalents and restricted cash
23
(243,441)
(225,832)
Net debt on the statement of financial position
1,733,282
1,864,198
Estimated outstanding value of the fleet financed through operating leases
1,323,411
1,284,052
3,056,693
3,148,250
TOTAL NET DEBT
26.1
Loans and borrowings by maturity
Notes issued
Other bank loans
Transaction costs/Premiums/Discounts (1)
As at
Dec. 31, 2015
<1 year
From 1 year
to 5 years
>5 years
825,000
-
-
825,000
152
-
152
(23,969)
-
-
(23,969)
801,183
-
152
801,031
81,000
81,000
-
-
Senior Credit Facility
658,284
658,284
-
-
Other borrowings
383,706
383,706
-
-
76,041
76,041
-
-
Bank overdrafts
14,073
14,073
-
-
47,314
47,314
-
-
Transaction costs/premiums/discount - current portion (1)
(7,906)
(7,906)
-
-
Accrued interest
11,271
11,271
-
-
1,263,783
1,263,783
-
-
CURRENT LIABILITIES
(1) Transaction costs and premiums relate to the €475 million bond for €9.5 million, the €350 million bond for €6.1 million, the SARF for €5.5 million, the RCF for €10.8 million.
Notes issued
Other bank loans
<1 year
From 1 year
to 5 years
>5 years
1,074,000
-
724,000
350,000
303
-
303
-
Transaction costs
(31,234)
-
(29,492)
(1,741)
1,043,069
-
694,811
348,259
201,000
201,000
-
-
417,600
417,600
-
-
Other borrowings
420,154
420,154
-
-
55,570
55,570
-
-
Bank overdrafts
19,515
19,515
-
-
9,361
9,361
-
-
(16,916)
(16,916)
-
-
Transaction costs/Premiums/Discounts - current portion
Accrued interest
CURRENT LIABILITIES
196
As at
Dec. 31, 2014
EUROPCAR
2015
21,261
21,261
-
-
1,127,545
1,127,545
-
-
26.2
Loans and borrowings by currency of origination
As at December 31, 2015, loans and borrowings by currency of origination can be analyzed as follows:
As at
Dec. 31, 2015
EURO
GBP
AUD
Notes issued
825,000
825,000
-
-
Transaction costs
(31,875)
( 28,436)
(3,439)
-
Accrued interest
11,271
11,271
-
-
81,000
81,000
-
-
658,284
658,284
-
-
Other borrowings
383,706
26, 824
356, 937
26,769
76,041
27,039
-
49,002
Bank overdrafts
14,073
14,073
-
-
47,314
47,314
-
-
152
152
-
-
2,064,966
1,628,819
360,376
75,771
As at
Dec. 31, 2014
EURO
GBP
AUD
1,074,000
1,074,000
-
-
(48,150)
(44,101)
(4,049)
-
Other bank loans
TOTAL LOANS AND BORROWINGS
Notes issued
Transaction costs
21,261
21,261
-
-
Accrued interest
201,000
201,000
-
-
417,600
417,600
Other borrowings
420,154
-
-
351,018
69,136
55,570
22,041
-
33,529
Bank overdrafts
19,515
19,176
339
-
9,361
9,361
-
-
303
303
-
-
2,170,614
1,720,641
347,308
102,665
Other bank loans
TOTAL LOANS AND BORROWINGS
26.3
Debt covenants
The following covenants must be complied with:
(i)
For United Kingdom fleet financing facilities
Europcar UK shall ensure that:
a the net assets of Europcar UK Group shall be not less than
GBP 60 million;
a the ratio of earnings before interest, tax, depreciation and
amortization to Fixed Charges shall be not less than 1.00;
a fleet cover shall be no more than 1.00.
03
(ii) For the Senior Revolving Credit Facility
The ratio of cash flow (which shall include, for any given period
of 12 months ending on a quarter date, cash on the statement
of financial position at the beginning of such period) to total debt
service shall at no time be less than 1.10.
Total debt service is defined as the aggregate of the interest
and associated fees paid during any given 12 month period
plus repayment of financial liabilities, the latter being subject
to certain limitations.
(iii) Loan to Value Covenant
The Group is subject to a maximum 95% loan-to-value ratio
for all Securitifleet company debt over the total asset market
value of certain Securitifleet entities. Compliance is tested on
a quarterly basis.
EUROPCAR
2015
197
03
(iv) For Australian Asset Financing
a its minimum cumulative net profit before tax is within 85% of
the Company’s budget.
Europcar Australia shall ensure that:
a its minimum net worth, i.e., total shareholders’ equity, is
always greater than AUD 58 million;
a the fleet utilization ratio is above 70% on average over the
year;
26.4
a no dividends or other payments may be made by a member of
Europcar Groupe Australia to another member or shareholder
or related party of Europcar Groupe Australia without prior
written consent of the bank.
The Group complied with all these covenants at December 31,
2015.
Notes issued
Loan notes issued are as follows:
Nominal outstanding amount
As at
Dec. 31 2015
As at
Dec. 31 2014
As at
Dec. 31 2015
As at
Dec. 31 2014
Senior Subordinated Secured 11.50% Notes due in 2017
-
324,000
-
302,807
-
350,000
-
350,122
350,000
-
352,098
-
475,000
-
466,673
-
-
400,000
-
402,397
825,000
1,074,000
818,771
1,055,326
Senior Subordinated Unsecured 9.375% Notes due in 2018
(i)
€350 million senior subordinated notes
In July 2014, the Group refinanced its fleet financing debt in
France, Italy, Germany and Spain by issuing €350 million worth
of senior secured 5.125% notes due in 2021. These notes
were issued by EC Finance plc, an SPE, and guaranteed as
senior debt by ECI, (the “EC Finance Notes”). This issue was
used to redeem the senior secure notes due in 2017 – and
also guaranteed by EC Finance plc – in two installments:
€250 million in summer 2010 and €100 million in May 2011.
This early redemption therefore generated a redemption
premium of €17.1 million.
These call options provided for in the event of early redemption
are considered as embedded derivatives that must be
recognized separately at fair value through profit and loss and
they are not deemed material at December 31, 2015.
198
Carrying Value
EUROPCAR
2015
(ii) €475 million senior subordinated notes
On May 27, 2015, €475 million senior notes due 2022 were
issued at an issue price of 99.289%. and a coupon of 5.75%.
On June 29, 2015 a portion of the HY bond proceed was
directly transferred to an escrow account dedicated to the
redemption of €400 million of Outstanding Subordinated
Notes Due 2018 and bearing interest at 9.375%. The remaining
proceed was transferred to Europcar Groupe.
On June 29, 2015 a portion of the IPO proceeds was directly
transferred to an escrow account dedicated to the redemption
of the €324 million of Outstanding Subordinated Notes Due
2017 and bearing interest at 11.50%. The remaining proceed
was transferred to Europcar Groupe.
26.5
The Senior Revolving Credit Facility consists of a senior secured
revolving credit facility providing for loan advances denominated
in euro, or such other currencies as may be agreed upon with
the lenders. The purpose of the facility is to provide funding
mainly for:
a financing advances to be made by a borrower to an SPE to
contribute to the financing of fleet acquisition;
a working capital needs and general corporate purposes of
the Group;
a payment to an SPE pursuant to any operating lease;
a interest payments due by ECG or any other debtor of the
Group pursuant to, inter alia, the Senior Revolving Credit
Facility and certain other outstanding liabilities of ECG;
a repayment of inter-company loans.
The New Senior Revolving Credit Facility was signed on
May 12, 2015 and entered into effect on May 28, 2015. The
€350 million Senior Revolving Credit Facility matures in 5 years
and bears interest at a rate of Euribor + 250 bps (or 275 bps
if certain thresholds are achieved).
26.6
(i)
Dedicated asset financing
Senior asset Revolving Facility
The SARF 2010 was initially entered into on July 30, 2010, then
amended between Credit Agricole Corporate and Investment
Bank acting as lender, Securitifleet Holding (as borrower) and
ECI (as borrower agent). Drawings are available to Securitifleet
Holding for the sole purpose of financing fleet acquisition and
maintenance in France, Italy, Germany and Spain through
the Securitifleet companies exclusively. These drawn down
amounts are based on the aggregate of all borrowing bases
calculated monthly, in substance representing the aggregate
of the vehicle fleet residual value (including vehicles for which
registration is pending) and the fleet working capital, including
related VAT positions.
The lender assigned its claims arising under SARF 2010,
together with all security and ancillary rights thereto, to FCT
Sinople. With respect to these claims, FCT Sinople will issue:
(i) FCT Senior Notes to be subscribed periodically by Credit
Agricole Corporate and Investment Bank, Royal Bank of
Scotland plc., Société Générale, Deutsche Bank, Natixis, BNP
Paribas and any other entity which may subscribe to or acquire
the FCT Senior Notes as senior subscriber, and (ii) FCT Junior
Notes to be subscribed from time to time by ECI.
In March 2014, the Group signed an amendment allowing it to
extend maturity through July 2017 and to start repayments in
January 2017. Europcar also adapted the facility to its financing
requirements and limited its commitment to €1 billion. Standard
& Poor’s has confirmed its A stable outlook rating.
SARF was amended (signed on May 12, 2015 and effective as
of June 17, 2015) primarily to extend the maturity of the facility
to July 2019 thereof and to lower the overall interest cost fixed
to EURIBOR (+1.70%), increase the amount from €1.0 billion
to €1,1 billion and permit the participation of two new banks,
Lloyds Bank and HSBC France.
03
(ii) United Kingdom fleet financing facilities
The United Kingdom fleet has a stand-alone arrangement
through the Group’s United Kingdom subsidiaries, including
Europcar Group UK Limited, Europcar UK Limited and
certain subsidiaries of Europcar UK Limited, comprising a
working capital facility and two main leasing facilities (one with
Lloyds for GBP 190 million and the other with Lombard for
GBP 160 million). In October 2014, all financing lines were
renegotiated. As well as obtaining better conditions and
expanding the banking pool, the refinancing arrangements
increase the United Kingdom entities’ fleet financing facilities
to GBP 455 million, maturing in three years with a two-year
extension option.
The total guaranteed amount available for leasing facilities is
GBP 525 million (2014: GBP 555 million). Vehicles are acquired
from the manufacturers, then sold to lessors and operated
through lease-back agreements. The amount outstanding for
these contracts as at December 31, 2015 was GBP 262 million
(GBP 273 million at end-2014). Most of the leasing facilities
will mature on September 30, 2018 after the first one-year
extension option has been exercised.
26.7
Australia asset financing
National Australia Bank (the “NAB”), Toyota Financial Services,
Volkswagen Financial Services and Alphabet Financial Services
have provided Europcar Australia and New Zealand with senior
credit facilities (the “Australian Asset Financing Facilities”) that
include revolving and non-revolving fleet operating and finance
leases for up to AUD 60 million. These facilities are renewed
annually in April of each year.
EUROPCAR
2015
199
03
NAB Facilities are secured by fixed and floating charges over
Europcar Australia assets, including goodwill and uncalled
capital and called but unpaid capital, together with assignment
of the related insurance policy. There are also performance
guarantees for the facilities.
26.8
operating leases. In certain countries, the operating companies
have entered into comprehensive framework operating lease
agreements with financial institutions and manufacturers.
The financing of our operating leases is mostly correlated to
the 6-month Euribor rate, in particular due to contractual terms
that match the average length of the holding period of cars.
The note on “Financial risk management” provides more
information about the Group’s exposure to interest and liquidity
risks.
Major operating lease
The Group finances a portion of its fleet in all countries in which it
is present, including Germany, France, Italy and Spain, through
NOTE 27
EMPLOYEE BENEFITS
As at Dec. 31, 2015
In thousands of €
Non-current
As at Dec. 31, 2014
Pensions
Other LT
employee
benefits
Total
Pensions
Other LT
employee
benefits
Total
115,849
3,446
119,295
120,945
3,814
124,759
Current
2,944
-
2,944
2,744
-
2,744
TOTAL
118,793
3,446
122,239
123,689
3,814
127,503
27.1
Net liability recognized in the statement of financial position
The Group has defined benefit pension obligations for some of the Group’s employees in the United Kingdom, France, Germany,
Italy and Belgium.
As at
Dec. 31, 2015
As at
Dec. 31, 2014
Present value of funded or partially funded obligations
(A)
(76,045)
(74,155)
Fair value of plan assets
(B)
71,630
67,425
(4,415)
(6,730)
(114,378)
(116,960)
-
-
(118,793)
(123,689)
118,793
123,689
-
-
Surplus/(Deficit) at period end
(1)
Present value of unfunded obligations
(C)
Unrecognized prior service costs
NET LIABILITY FOR DEFINED BENEFIT OBLIGATIONS AT END OF PERIOD
O/w:
A statement of financial position liability of
A statement of financial position asset of
(1) Mainly in United Kingdom.
200
EUROPCAR
2015
27.2
Movement in net liability recognized in the statement of financial position
Net liability for defined benefit obligations at January 1
As at
Dec. 31, 2015
As at
Dec. 31, 2014
(123,689)
(101,346)
156
(912)
Settlements
(39)
-
Contributions paid into plan
2,901
2,269
Benefits paid
2,662
3,399
(5,475)
(5,861)
(7)
(12)
Defined benefit obligations and fair value of plan assets acquired
as part of business combinations
03
Current service cost, interest expense and expected return on plan assets
Past service cost
Actuarial gains/(losses) recognized in equity
4,179
(21,802)
Curtailments
596
569
(76)
7
(118,793)
(123,689)
As at
Dec. 31, 2015
As at
Dec. 31, 2014
(191,115)
(156,416)
596
569
NET LIABILITY FOR DEFINED BENEFIT OBLIGATIONS AT END OF PERIOD
27.3
Movement in defined benefit obligations
Defined benefit obligations at January 1
Curtailments
Settlements
(39)
(3)
Defined benefit obligations acquired as part of a business combination
156
(912)
Benefits paid
6,603
5,028
Current service cost
(3,349)
(3,048)
Interest on obligations
(4,645)
(5,199)
5,261
(27,327)
(3,891)
(3,807)
(190,423)
(191,115)
DEFINED BENEFIT OBLIGATIONS AT END OF PERIOD
(A)+(C)
EUROPCAR
2015
201
03
27.4
Plan assets
2015
2014
Eurozone United-Kingdom
In % (average)
Equities
0%
Debt
Other assets
17%
Eurozone United-Kingdom
0%
18%
0%
52%
0%
52%
100% (1)
32%
100%
31%
(1) Unit-linked portfolios for various insurance policies, which themselves consist of a mix of stocks, bonds and cash, were classified as “other instruments“.
27.5
Movement in defined benefit plan assets
As at
Dec. 31, 2015
As at
Dec. 31, 2014
67,425
55,080
-
-
Settlements
-
3
Fair value of plan assets acquired as part of a business combination
-
-
2,901
2,269
(3,941)
(1,629)
2,519
2,386
Fair value of plan assets at January 1
Curtailments
Contributions paid into plan
Benefits paid
Expected rate of return on plan assets
FAIR VALUE OF PLAN ASSETS AT END OF PERIOD
27.6
5,527
3,808
3,789
71,630
67,425
Expense recognized in the income statement for defined benefit plans
As at
Dec. 31, 2015
As at
Dec. 31, 2014
Current service costs
3,107
3,046
Interest on obligations
4,647
5,199
(2,318)
(2,386)
Past service cost
Curtailments/settlements
The expense is recognized in “Personnel costs” as disclosed in
Note 5, except for interest costs on benefit plans and expected
return on plan asset (€2.3 million). In the three main countries
202
(B)
(1,082)
EUROPCAR
2015
7
12
(148)
-
5,295
5,872
(France, Germany and United Kingdom), the estimated charge
in the consolidated income statement for 2016, based on the
assumptions at December 31, 2015 amounts to €4.9 million.
27.7
Actuarial assumptions
Group obligations are valued by an external independent actuary, based on assumptions at the reporting date that are periodically
updated. These assumptions are set out in the table below:
2015
Eurozone
excl.
Germany (1)
2014
Germany
UnitedKingdom
Eurozone
excl.
Germany (1)
Germany
UnitedKingdom
2.00%
2.00%
3.85%
1.80%
1.80%
3.65%
Inflation rate
1.00%
to 2.00%
1.00%
3.25%
1.00%
to 2.00%
1.00%
3.15%
Expected rate of salary increase
2.00%
to 3.50%
3.25%
2.00%
to 3.50%
2.00%
2.75%
Expected rate of pension increase
0.00%
to 3.00%
1.00%
3.10%
0.00%
to 3.00%
1.00%
3.05%
1.75%
to 2.00%
na
3.85%
1.80%
na
3.65%
Discount rate
2.00%
03
(1) The eurozone includes plans in Italy, France and Belgium expressed based on a weighted average.
The discount rate is the yield at the reporting date on bonds
with a credit rating of at least AA that have maturities similar to
those of the Group’s obligations.
A 0.25% increase in the discount rate would reduce the benefit
obligation by €7.9 million; a 0.25% decrease in the discount
rate would increase the benefit obligation by €8.2 million.
The estimated return on plan assets has been determined
based on long-term bond yields. All of the plan assets are
allocated to United Kingdom and Belgian employees.
27.8
Assumptions concerning long-term returns on plan assets are
based on the discount rate used to measure defined benefit
obligations. The impact of the revised IAS 19 is not material
for Europcar Groupe.
Assumptions regarding future mortality rates are based on
best practice and published statistics and experience in each
country.
Actuarial gains and losses recognized directly in equity (net of deferred tax)
Cumulative opening balance
Gain/(loss) recognized during the year/period
Cumulative closing balance
EUROPCAR
As at
Dec. 31, 2015
As at
Dec. 31, 2014
(41,724)
(25,907)
3,785
(15,817)
(37,939)
(41,724)
2015
203
03
27.9
Experience adjustments
2015
2014
2013
2012
2011
2010
2009
(63,917)
(61,369)
(50,720)
(47,859)
(42,325)
(38,098)
(35,482)
Fair value of plan assets
65,992
61,669
49,880
47,155
40,668
36,617
31,286
(surplus)/deficit
(2,075)
(300)
(840)
(705)
(1,657)
(1,481)
(4,196)
(247)
1,372
313
-
850
-
(1,071)
36
1,444
3,174
679
2,434
1,469
Present value of defined benefit obligations
Experience adjustments to plan liabilities
Experience adjustments to plan assets
27.10 Contributions to defined contribution plans
In 2015, the Group paid contributions into defined contribution plans amounting to €2.7 million (2014: €2.7 million).
NOTE 28
PROVISIONS
Insurance claim
provisions
Reconditioning
provisions
Other
provisions
Total
129,769
28,070
40,302
198,141
59,816
72,314
65,268 (1)
197,398
(51,489)
(68,738)
(22,575)
(142,802)
(2,252)
(295)
(4,476)
(7,023)
-
-
644
644
Transfers
-
-
976
976
Actuarial (gains)/losses
-
-
-
-
Provisions recognized during the period
Provisions utilized during the period
Provisions reversed during the period
Non-current
Current
Provisions recognized during the period
2,339
423
415
3,177
138,183
31,774
80,554
250,511
-
-
10,114
10,114
138,183
31,774
70,440
240,397
138,183
31,774
80,554
250,511
138,183
31,774
80,554
250,511
(1)
228,936
73,743
78,904
(77,938)
(76,121)
(34,372)
(188,431)
Provisions reversed during the period
-
-
(20,223)
(20,223)
-
-
-
-
Transfers
-
-
1,231
1,231
Provisions utilized during the period
Actuarial (gains)/losses
Non-current
Current
76,289
-
-
-
-
2,242
403
586
3,231
136,230
34,960
104,065
275,255
-
-
25,168
25,168
136,230
34,960
78,897
250,087
136,230
34,960
104,065
275,255
(1) Including in 2014 a provision relating to the dispute between Europcar and Enterprise Holding Inc. and in 2015 a provision for the ongoing dispute with the French
Competition Authority (see Note 32).
204
EUROPCAR
2015
28.1
Insurance claim provisions
Most of these provisions relate to the insurance risks described
in the Section “Financial risk management”. For the portion
of the self-financed automotive liability risk, Europcar annually
establishes a cost schedule for the insurance and brokerage
costs, taxes and cost of the self-financed portion for each
country. The cost is determined by day of rental and is included
in the budget instructions sent to each country at the end of the
year. Based on the cost per day of rental, Europcar entities set
aside funds to cover costs based on the self-financed portion
that will pay claims when benefits are actually due to third
parties.
contract. These contracts usually stipulate that the vehicles
must be returned at the end of a certain period (less than 12
months) and in a certain “condition” (mileage, cleanliness,
etc.). Consequently, the Group has commitments to these
manufacturers under these contracts and recognizes a
provision to cover the cost of restoring the fleet at the balance
sheet date. This cost is determined from statistics compiled
by the Fleet Department over the last 6 to 12 months. There
are no specific key assumptions, but only statistical support.
03
28.3
Other provisions
Other provisions relate mainly to reserves for:
28.2
Reconditioning provisions
The provision for reconditioning relates to costs incurred for
the present fleet at the end of the buy-back agreement period.
Europcar acquires a large proportion of its vehicles from car
manufacturers with buy-back commitments at the end of the
28.4
a risks and liabilities for damages to cars financed through
operating leases;
a restructuring costs (personnel costs and the costs of moving
the Group’s head office);
a litigation costs include litigation with franchisees, employee
disputes and accident claims.
Provisions added or reversed in the income statement
As at
Dec. 31, 2015
As at
Dec. 31, 2014
Included in “Fleet operating, rental and revenue related costs”
( 2,699)
10,152
Included in “Personnel costs”
( 6,418)
(5,841)
Included in “Network and head office overhead costs”
(1,015)
(263)
Included in “Other income”
(2,779)
(86)
Included in “Other non-recurring income and expenses”
13,959
29,677
2,311
3,250
15,687
9,980
19,076
46,867
Included in “Net financing costs”
Included in “Income tax”
TOTAL PROVISIONS ADDED OR REVERSED
EUROPCAR
2015
205
03
NOTE 29
TRADE PAYABLES AND OTHER LIABILITIES
The fair values of trade payables correspond to their nominal value. All trade payables and other liabilities fall due within one year.
As at
Dec. 31, 2015
As at
Dec. 31, 2014
304,911
302,669
Trade payables
Other tax payables
8,989
16,007
Deposits
37,379
42,875
Employee related liabilities (1)
70,403
82,930
Liabilities relating to the acquisition of participating interests
3,292
5,385
TOTAL TRADE PAYABLES AND OTHER LIABILITIES
424,974
449,866
As of
Dec. 31, 2015
As at
Dec. 31, 2014
Trade receivables
(17,148)
(18,346)
Other receivables
(9,206)
(11,492)
(327)
1,249
(1) Includes €23.7 million relating to the multi-year compensation program in 2014 which was paid in 2015.
Tax receivables
Inventories
1,294
1,300
Trade payables
(4,994)
69,514
Other debt
(5,845)
4,304
(13,998)
2,443
(7,020)
1,046
(57,243)
50,018
Employee-related liabilities
Tax debt
CHANGES IN NON-FLEET WORKING CAPITAL
NOTE 30
Total interest rate derivatives eligible for hedge accounting
Interest rate swaps maturing in 2017 (1) - 0.8059%
Nominal
Indexation
Fair value
as at
Dec. 31, 2015
Fair value
adjustments
during period
Impact on
income
statement
Impact
on OCI
1,000,000
1-month
Euribor
(16,753)
3,192
-
3,192
600,000
6-month
Euribor
(22,728)
(803)
900
(1,703)
Asset swaps
1,600,000
Forward interest rate swaps maturing in 2019 (4) 0.6418%
1,000,000
1-month
Euribor
(12,609)
(12,609)
(1,811)
(10,798)
900,000
1-month
Euribor
-
(58)
-
58
1,300,000
1-month
Euribor
-
-
(554)
554
(52,090)
(10,162)
(1,465)
(8,697)
Interest rate swaps maturing in 2015 - 0.143%
(1) From 1/19/2015 to 7/17/2017 - following the amendment of the SARF in 2015, the nominal amount was raised from €900 million to €1,000 million. The interest rate was
dropped to 0.8059%.
(2) Wound up in April 2012 in exchange for a balancing cash payment of €67 million amortized over the initial term of the swap (i.e., through January 2015).
(3) Maturity extended until July 2020, change in interest rate at 1.099% and nominal amount raised to €600m.
(4) From 7/17/2017 to 7/17/2019.
206
EUROPCAR
2015
Nominal
Indexation
Fair value
as at
Dec. 31, 2014
Forward interest rate swaps maturing in 2017 (1)
- 0.865%
900,000
1-month
Euribor
(19,945)
(19,945)
-
(19,945)
500,000
6-month
Euribor
(21,925)
(12,460)
-
(12,460)
900,000
1-month
Euribor
(58)
4,225
(2,000)
4,225
1,300,000
1-month
Euribor
-
-
(14,258)
14,258
(41,928)
(28,180)
(16,258)
(13,922)
Asset swaps
Fair value
adjustments
during period
Impact
on income
statement
Impact
on OCI
1,400,000
Interest rate swaps maturing in 2015 - 0.143%
03
(1) From 1/19/2015 to 7/17/2017.
(2) Wound up in April 2012 in exchange for a balancing cash payment of €67 million amortized over the initial term of the swap (i.e., through January 2015).
(3) Change in rate to 1.65% in exchange for a balancing cash payment of €2 million, then to 1.4890%, and maturity extended through July 2018.
The fair value of a hedging derivative is recorded as a noncurrent asset or liability if the remaining maturity of the hedged
item is more than 12 months, and as a current asset or liability
if the maturity of the hedged item is less than 12 months.
The forward swap agreements qualify for cash flow hedge
accounting and therefore the effective portion ofchanges in
NOTE 31
fair value is recognized in equity. In 2015, a financial expense
of €1.8 million was recorded for the inefficiencies generated by
the Eur 1-month forward swap.
The consideration of credit risk in the valuation of derivatives
had no material impact on fair value as of December 31, 2015.
OTHER DISCLOSURES RELATING TO FINANCIAL ASSETS AND LIABILITIES
This note presents the Group’s financial instrument fair value
measurement methodology. The “Financial risk management”
Section in the Significant Accounting Policies provides more
information about the Group’s financial risk management policy.
The fair value of financial instruments traded in active markets
(such as trading and available-for-sale securities) is based on
quoted market prices at the reporting date. The quoted market
price used for financial assets held by the Group is the current
bid price: Level 1 in the fair value measurement hierarchy.
The fair value of financial instruments that are not traded in
an active market (for example, over-the-counter derivatives)
is determined by using valuation techniques. The Group uses
a variety of methods and makes assumptions that are based
on market conditions existing at each reporting date. Quoted
market prices or dealer quotes for similar instruments are
used for long-term debt. Other techniques, such as estimated
discounted cash flows, are used to determine fair value for the
remaining financial instruments. The fair value of interest rate
swaps is calculated using the discounted cash flow method:
Level 2 in the fair value measurement hierarchy.
The carrying amount less impairment provision for trade
receivables and payables is assumed to approximate their fair
value.
Given the maturity of the financing facilities and other debts
and their respective interest rates, management has concluded
that the fair value of the financial liabilities approximates their
respective carrying amounts, except for Loan Notes maturing
in 2017, 2018 and 2021 whose fair values were determined
using quoted prices on the Euro MTF market at December 31,
2015, December 31, 2014 and December 31, 2013.
The fair values of the other financial assets and liabilities
(investments, other assets, trade receivables and payables) are
close to their carrying amounts in view of their short maturities.
EUROPCAR
2015
207
03
The fair values of financial assets and liabilities, together with their carrying amount in the statement of financial position, are as follows:
Fair value
through
the income
statement
Fair value
through
equity
Financial
instruments
at amortized
cost
Notes
Carrying
Value
Fair value
Trade receivables
22
287,018
287,018
-
-
287,018
Deposits and current loans
17
6,046
6,046
-
-
6,046
20
1,024,072
1, 024,072
-
-
1,024,072
Fleet receivables
21
501,522
501,522
-
-
501,522
22
Fair value as at December 31, 2015
TOTAL OF LOANS AND RECEIVABLES
14,987
-
-
14,987
1,833,645
-
-
1,833,645
-
280
-
Investments in non-consolidated entities
17
280
280
17
88,236
88,236
-
-
88,236
Restricted cash
23
97,366
97,366
97,366
-
-
23
146,075
146,075
146,075
-
-
Derivative assets
30
-
-
-
-
-
2,165,602
2,165,602
243,441
280
1,921,881
TOTAL FINANCIAL ASSETS (1)
Notes and borrowings
26
801,183
839,109
-
-
839,109
Trade payables
29
468,453
468,453
-
-
468,453
Fleet payables
-
567,931
1,263,783
20
567,931
567,931
-
Bank overdrafts and portion of loans due in less than
one year
26
1,263,783
1,263,783
-
-
30
52,090
52,090
-
52,090
3,153,440
3,153,440
-
52,090
TOTAL FINANCIAL LIABILITIES (1)
208
14,987
1,833,645
EUROPCAR
2015
3,101,350
Fair value
through
the income
statement
Fair value
through
equity
Financial
instruments
at amortized
cost
Notes
Carrying
Value
Fair value
Trade receivables
22
260,629
260,629
-
-
260,629
Deposits and current loans
17
7,164
7,164
-
-
7,164
Fair value as at December 31, 2014
20
897,011
897,011
-
-
897,011
Fleet receivables
21
460,038
460,038
-
-
460,038
22
TOTAL OF LOANS AND RECEIVABLES
13,225
13,225
-
-
13,225
1,638,067
1,638,067
-
-
1,638,067
Investments in non-consolidated entities
17
670
670
-
670
-
17
99,179
99,179
-
-
99,179
Restricted cash
23
81,795
81,795
81,795
-
-
23
144,037
144,037
144,037
-
-
Derivative assets
30
-
-
-
TOTAL FINANCIAL ASSETS (1)
1,963,748
1,963,748
225,832
670
1,737,246
Notes and borrowings
26
1,043,069
1,120,820
-
-
1,120,820
Trade payables
29
368,913
368,913
-
-
368,913
Fleet payables
-
491,664
1,127,545
21
491,664
491,664
-
Bank overdrafts and portion of loans due in less than
one year
26
1,127,545
1,127,545
-
-
30
41,928
41,928
-
41,928
3,073,119
3,150,870
-
41,928
TOTAL FINANCIAL LIABILITIES (1)
03
3,108,942
(1) Financial assets and liabilities are not offset as they were not contracted with the same counterparties.
The level in the fair value hierarchy at which fair value measurements are categorized, for assets and liabilities measured in the
statement of financial position, is as follows:
As at
Dec. 31, 2015
Level 1
Level 2
Level 3
280
280
-
-
243,820
243,820
-
-
244,100
244,100
-
-
As at
Dec. 31, 2015
Level 1
Level 2
Level 3
52,090
-
52,090
-
52,090
-
52,090
-
Assets measured at fair value
TOTAL
Liabilities measured at fair value
TOTAL
Time-frame for recycling items from OCI to profit and loss:
As at
Dec. 31, 2015
2016
2017
2018
2019
2020
Recycling of completed operations
1,465
-
-
-
-
-
Recycling of operations in progress
52,090
17,415
16,719
11,953
5,233
768
EUROPCAR
2015
209
03
NOTE 32
32.1
Fleet operating leases
As at December 31, 2014 and 2015, the Group’s minimum future payments for non-cancellable operating lease commitments
are as follows:
As at Dec. 31 2015
As at Dec. 31 2014
Including amounts
related to rental fleet
Including amounts
related to rental fleet
Payable:
Within 1 year
233,581
185,230
314,276
267,735
From 1 to 5 years
115,339
8,002
115,527
23,607
More than 5 years
37,558
-
33,179
-
386,478
193,232
462,982
291,342
The Group leases vehicles in Germany, Belgium, Portugal,
France, Spain, Australia and New Zealand. The Group also
leases facilities and other assets. Facilities and other asset
leases run for a period of three to nine years in most instances,
usually with an option to renew the lease after that date.
During 2015, €265.5 million was recognized as an expense in
the income statement in respect of operating leases related to
the rental fleet (2014: €245.0 million). For assets other than the
rental fleet leased under operating leases (mainly rental station
facilities), expenses recorded in the 2015 consolidated income
statement were €67.1 million (€64.7 million in 2014).
32.3
Asset purchase commitments
During the year ended December 31, 2015, the Group entered
into contracts to purchase tangible and intangible assets. As
of December 31, 2015, purchase agreements amounted to
€700,000 versus €200,000 as of December 31, 2014.
32.4
Contingencies and guarantees
1. The main disputes and proceedings currently in progress or
that have evolved during the period are as follows:
32.2
Capital commitments for vehicle
purchases
During 2015 the Group entered into contracts to purchase
vehicles. As at December 31, 2015, capital commitments to
purchase vehicles amounted to €1,037.5 million (€496.1 million
as at December 2014).
In 2015, the increase in commitments related to the fleet was
due to a larger volume of purchases located mainly in Germany
and the UK.
210
EUROPCAR
2015
Procedure of the French anti-trust authorities
On February 17, 2015, the ADLC addressed a statement
of objections to Europcar France, as well as to other
stakeholders, relating to certain practices that are alleged
not to be compliant with French anti-trust regulations.
Europcar France lodged its statement of defense brief
on May 20, 2015. The Company strongly contests the
complaints and the underlying arguments. Further to which
the case-handler is expected to submit a report to the ADLC
College during the first quarter of 2016. Europcar France will
then have two months to respond to this report. The ADLC’s
decision would then be expected to be issued several
months later, following a closed hearing before its College.
Any decision imposing a fine may be appealed. This would
not in principle suspend the obligation to pay the penalty,
unless there is an exceptional procedure to suspend the
payment pending appeal. An unfavorable decision could be
followed by damages claims brought by third parties.
The Group recorded a provision for €45 million of nonrecurring expenses (see Note 10) in its 2015 consolidated
financial statements, reflecting the Company’s best estimate
of the financial risks at this stage of the procedure in the event
that the ADLC were to impose a fine, notwithstanding the
Group’s arguments in defense of its position.
There is no guarantee that the amount of any fine would not
be significantly higher than the provision recognized or that
damage claims would not be brought at a later date.
2. The Group has provided various guarantees (mostly joint
and several guarantees) to certain third parties (mainly
for fleet leasing transactions) within the normal course of
business, as well as some specific purpose guarantees,
including a €38 million guarantee to Chartis (formerly
AIG) for the performance of certain obligations of its selfinsurance program (Loss Retention Agreement), which could
be exercised in the highly unlikely event that Europcar were
unable to meet its commitments under such Loss Retention
Agreement.
As at December 31, 2015, ECG had given guarantees worth
€26.7 million to suppliers, including Chartis (€43.4 million in
December 2014). At that date, contingent assets amounted
to €5.1 million (€3.6 million at end-2014).
3. ECG received a vendor warranty granted by the Volkswagen
group at the time of the acquisition of Europcar Groupe in
2006. This guarantee has expired and cannot now be called
upon except in relation to certain very specific matters.
However, relating to previous implementations or such
specific implementations, the Company may still receive
compensation subject to the completion of ongoing litigation
NOTE 33
or pre-litigation and in agreement with Volkswagen on the
final amount of such compensations.
4. The Group has granted pledges on some of its assets, in
particular subsidiaries’ shares, receivables, bank accounts
and business assets. The assets of the Securitifleet group
as well as those related to Securitifleet group operations are
pledged in favor of EC Finance Notes holders and the lenders
of the SARF 2010. Other assets have been pledged in favor
of the lenders of the Senior Revolving Credit Facility, except
for certain United Kingdom based assets and Australia/New
Zealand based assets which are pledged in favor of the local
lenders for those respective territories.
03
5. Securitifleet SAS and Securitifleet SL respectively own a
substantial part of the fleet leased by, respectively, Europcar
France S.A.S and Europcar IB S.A. to their respective clients
and have been granted a pledge over their vehicles, with
respect to Securitifleet S.A.S, in favor of Crédit Agricole
Corporate and Investment Bank and its successors and
assignees and, more particularly, in favor of the French
securitization mutual fund, FCT Sinople, in accordance with
the provisions of articles 2333 et seq. of the French Civil
Code (Code civil), and with respect to Securitifleet S.L.,
in favor of its creditors and its successors and assignees
pursuant to a contract known as the “Spanish Securitifleet
Financing Agreement” and in accordance with the
provisions of article 1863 of the Spanish Civil Code. For the
requirements of these pledges, Europcar France SAS and
Europcar IB SA were respectively appointed as third party
holders (tiers convenu and tercero poseedor de conformidad)
in accordance with the provisions of Article 2337 of the
French Civil Code and Article 1863 of the Spanish Civil Code,
respectively. Consequently, any vehicle returns by clients of
Europcar France SAS or Europcar IB S.A. will either have
to be made to Europcar France SAS or Europcar IB SA in
their capacity as third party holder (tiers convenu and tercero
poseedor de conformidad) or to any other entity representing
them in such capacity and in no event to Securitifleet France
SAS or Securitifleet SL.
RELATED PARTIES
Under IAS 24, related parties include parties with the ability to
control or exercise significant influence over the reporting entity.
All business transactions with non-consolidated subsidiaries
are conducted at arm’s length. Several members of the
Group’s management and Supervisory Board are members of
the management bodies of companies with which Europcar
Groupe S.A. has relations in the normal course of its business
activities. All transactions with these parties are conducted at
arm’s length.
33.1
Transactions with related parties
controlled by Eurazeo SA
The Group has negotiated a management services agreement
with Eurazeo. These services are provided by Eurazeo and
billed directly to Europcar Groupe S.A..
The services provided by Eurazeo as at December 31, 2015
are presented in the table below.
Services to Eurazeo
1,695
Services from Eurazeo
1,894
EUROPCAR
2015
211
03
33.2
Transactions with entities over
which Europcar Groupe exercises
significant influence
The Group has subscribed to the capital increase of Car2Go
Europe in line with its 25% stake for the following amounts:
€5.7 million in 2012, €5.0 million in 2013, €5.7 million in 2014
and 12.5 million in 2015.
The Group also subscribed to the capital increase of its
subsidiary Ubeeqo for €4 million during its acquisition in 2014
and for €5 million in 2015.
33.3
Compensation of key management
members
In 2015, on the occasion of the Company’s IPO, a new
governance structure was put in place. Henceforth the
Salaries and short-term employee benefits
Termination indemnities
Management Board has the authority and responsibility to plan,
direct and control the activities of the Group. For this reason,
the compensation of its members is detailed below.
In 2014, in accordance with the governance structure in force
at the time, the compensation of the members of the Group’s
Executive Committee was detailed by category. These figures
are repeated here for the record.
In addition to their salaries, the Group provides non-cash
benefits to executive officers and contributes to a postemployment defined benefit plan on their behalf. There were
no significant transactions with any companies related directly
or indirectly to key management members disclosed in the
management report of the Europcar subsidiaries.
The remuneration of the Group’s executives amounted to
€6.4 million in 2015.
The senior executives of the Group were remunerated as
follows throughout the year. Salaries and short-term employee
benefits include wages, salaries and social security costs.
As at
Dec. 31, 2015
As at
Dec. 31, 2014
6,973
7,421 (1)
41
15
-
313
7,014
7,749
(1) Including the Executive Committee members’ portion of the LTIP, of which €24 million was classified in “Other non-recurring expenses” (Note 10).
212
EUROPCAR
2015
NOTE 34
GROUP ENTITIES
Local HQ
(city)
Country
Consolidation
method (1)
(FC/EM)
Voisins-le- Bretonneux
France
FC
Europcar International S.A.S.U.
France
FC
100.0%
100.0%
EC1
France
FC
100.0%
100.0%
Company name
%
interest
%
control
PARENT COMPANY
03
1. Information on consolidated companies
Europcar Holding S.A.S.
France
FC
100.0%
100.0%
Europcar Lab S.A.S.U.
France
FC
100.0%
100.0%
Europcar Lab UK Ltd
Leicester
United-Kingdom
FC
100.0%
100.0%
E-Car Club Holding Ltd
Leicester
United-Kingdom
FC
60.8%
60.8%
London
United-Kingdom
FC
60.8%
60.8%
France
FC
100.0%
100%
Weisbaden
Germany
FC
100.0%
100%
Ubeeqo S.A.S.
Boulogne-Billancourt
France
EM
75.7%
75.7%
Ubeeqo France S.A.S.
Boulogne-Billancourt
France
EM
75.7%
75.7%
Luxembourg
Luxembourg
EM
75.7%
75.7%
Ixelles
Belgium
EM
75.7%
75.7%
Ubeeqo GmbH
Düsseldorf
Germany
EM
75.7%
75.7%
Ubeeqo Limited
London
United-Kingdom
EM
75.7%
75.7%
Paris
France
FC
100.0%
8.26%
E-Car Club Ltd
EC 2 S.A.S.U.
PremierFirst Vehicle Rental German Holdings GmbH
Ubeeqo Luxembourg Sarl
Ubeeqo SPRL
Securitifleet Holding S. A
Securitifleet Holding Bis S.A.S.U.
EC Finance Plc
FCT Sinople
Europcar France S.A.S.
Securitifleet S.A.S.U.
Paris
France
FC
100.0%
0.0%
London
United-Kingdom
FC
0.0%
0.0%
Paris
France
FC
0.0%
0.0%
France
FC
100.0%
100.0%
Paris
France
FC
100.0%
8.26%
Securitifleet France Location S.A.S.U.
Rouen
France
FC
100.0%
8.26%
Parcoto Services S.A.S
Rouen
France
FC
100.0%
100.0%
Europ-Hall S.A.U.
Monaco Auto Location SAM
Besançon
France
FC
100.0%
100.0%
Monaco
Monaco
FC
100.0%
100.0%
Europcar International S.A.S.U. und Co OHG
Hamburg
Germany
FC
100.0%
100.0%
Europcar Autovermietung GmbH
Hamburg
Germany
FC
100.0%
100.0%
Securitifleet GmbH
Hamburg
Germany
FC
100.0%
5.41%
InterRent Immobilien GmbH
Hamburg
Germany
FC
100.0%
100.0%
Car2Go Europe GmbH
Esslingen
Germany
EM
25.0%
25.0%
Car2Go Deutschland GmbH
Esslingen
Germany
EM
25.0%
25.0%
Vienna
Austria
EM
25.0%
25.0%
Car2Go Österreich GmbH
Car2Go Italia S.r.l.
Car2Go UK Ltd
Ogotrac France S.A.S.
Car2Go Denmark
Car2Go Sweden
Milan
Italy
EM
25.0%
25.0%
Birmingham
United-Kingdom
EM
25.0%
25.0%
Paris
France
EM
25.0%
25.0%
Copenhagen
Denmark
EM
25.0%
25.0%
Stockholm
Sweden
EM
25.0%
25.0%
Car2Go Hamburg GmbH
Hamburg
Germany
EM
75.0%
50.0%
Europcar S.A.
Zaventem
Belgium
FC
100.0%
100.0%
EUROPCAR
2015
213
03
Country
Consolidation
method (1)
(FC/EM)
%
interest
%
control
Madrid
Spain
FC
100.0%
100.0%
Madrid
Spain
FC
100.0%
0.41%
Palma de Mallorca
Spain
FC
100.0%
100.0%
Europcar Italia S.p.A.
Bolzano
Italy
FC
100.0%
100.0%
Securitifleet S.p.A.
Bolzano
Italy
FC
99.32%
13.76%
Europcar Internacional Aluguer de Automoveis S.A.
Lisbon
Portugal
FC
100.00%
100.0%
Europcar Services Unipessoal, LDA.
Lisbon
Portugal
FC
100.0%
100.0%
Local HQ
(city)
Europcar IB S.A.
Securitifleet S.L.
Company name
Ultramar Cars S.L.
Europcar United Kingdom Limited
Watford
United-Kingdom
FC
100.0%
100.0%
PremierFirst Vehicle Rental EMEA Holdings Ltd
Leicester
United-Kingdom
FC
100.0%
100.0%
PremierFirst Vehicle Rental Holdings Ltd
Leicester
United-Kingdom
FC
100.0%
100.0%
Provincial Assessors Ltd
Leicester
United-Kingdom
FC
100.0%
100.0%
PremierFirst Vehicle Rental Pension Scheme Trustees Ltd
Leicester
United-Kingdom
FC
100.0%
100.0%
Europcar Group UK Ltd
Leicester
United-Kingdom
FC
100.0%
100.0%
PremierFirst Vehicle Rental Franchising Ltd
Leicester
United-Kingdom
FC
100.0%
100.0%
Euroguard
Europcar Holding Property Ltd
Gibraltar
Gibraltar
FC
100.0%
100.0%
Melbourne
Australia
FC
100.0%
100.0%
Europcar Australia Pty Ltd
Victoria
Australia
FC
100.0%
100.0%
G1 Holdings Pty Ltd
Victoria
Australia
FC
100.0%
100.0%
CLA Holdings Pty Ltd
Victoria
Australia
FC
100.0%
100.0%
CLA Trading Pty Ltd
Victoria
Australia
FC
100.0%
100.0%
Eurofleet Pty Ltd
Victoria
Australia
FC
100.0%
100.0%
Delta Cars & Trucks Rentals Pty Ltd
Victoria
Australia
FC
100.0%
100.0%
Eurofleet Sales Pty Ltd
Victoria
Australia
FC
100.0%
100.0%
E Rent a car Pty Ltd
Victoria
Australia
FC
100.0%
100.0%
MVS Holdings (Australia) Pty Ltd
Victoria
Australia
FC
100.0%
100.0%
MVS Trading Pty Ltd
Victoria
Australia
FC
100.0%
100.0%
JSV Trading Pty Ltd
Victoria
Australia
FC
100.0%
100.0%
SMJV Ltd
Christchurch
New Zealand
FC
100.0%
100.0%
BVJV Ltd
Christchurch
New Zealand
FC
100.0%
100.0%
Wilmington,
New Castle, Delaware
USA
FC
100.0%
100.0%
Europcar Inc.
2. Information on non-consolidated companies
Vehitel 2000 France S.A.S.
Suresnes
France
NC
20.0%
20.0%
Vehitel 2000 S.N.C.
Suresnes
France
NC
33.33%
33.33%
PremierFirst Marketing Enterprises Middle East Ltd
Dubai United Arab Emirates
NC
25.0%
25.0%
EIR Autonoleggio SRL
Rome
Italy
NC
100.0%
100.0%
Voisins-le-Bretonneux
France
NC
100.0%
100.0%
EC 3 S.A.S.U.
(1) FC: full consolidation; EM: equity method; NC: not consolidated.
Consolidated special purpose entities (SPEs)
As part of the securitization program for part of the fleet
financing for Germany, France, Italy and Spain, SPEs have
been incorporated under the name Securitifleet in each of
214
EUROPCAR
2015
those countries and are either 100% owned or controlled (over
90%-controlled) by one of the following SPEs: “Securitifleet
Holding SA” or “Securitifleet Holding Bis SAS”, both
incorporated in France. The Group consolidates all Securitifleet
entities, i.e., the four local Securitifleet companies as well as
the two Securitifleet holding companies, since they have been
created for specific objectives defined by Europcar Groupe.
PremierFirst Vehicle Rental Holdings Limited owns 100% of
PremierFirst Vehicle Rental Insurances Guernsey Limited, a
captive company based in Guernsey in the Channel Islands.
This captive company has two types of business: roadside
assistance (RAC) and Personal Accident Insurance (PAI).
The profits from the RAC and PAI businesses can mostly be
distributed by the captive company under strict rules. 90% of
the profits must be distributed within 18 months of the year end.
The Group’s operating subsidiaries located in France, Spain, the
United Kingdom, Portugal, Belgium, Italy (from January 1, 2008)
and Germany (from April 1, 2008) buy local automobile liability
insurance policies with Chartis (formerly AIG) entities, which
reinsure part of such risks with a reinsurance structure hosted
by Euroguard, a protected cell reinsurance company. The
Group owns a reinsurance cell (9) within Euroguard, which
has been consolidated since January 2006. However, the local
Europcar entities fund a significant portion of the risk through a
Deductible Funding mechanism which is managed via another
cell (0) located within Euroguard that acts as a fund manager.
The funds hosted in this cell are also consolidated.
NOTE 35
Since January 2008, PremierFirst Vehicle Rental Limited has
participated in the Group insurance scheme described in the
first paragraph above.
03
STATUTORY AUDITORS’ FEES
PricewaterhouseCoopers Audit
2013
2014
2015
Mazars
2013
Total
2014
2015
2013
2014
2015
Audit
Statutory audit, certification, review
of individual and consolidated
accounts
795
767
798
476
682
666
1,271
1,449
1,464
of which Europcar Groupe
111
193
163
104
193
198
215
386
361
of which fully consolidated
subsidiaries
684
574
634
372
489
468
1,056
1,063
1,102
Other diligence and services
directly related to the Statutory
Auditors’ role
34
209
601
34
171
533
68
380
1,134
159
475
112
463
271
938
of which subsidiaries
SUB-TOTAL
34
50
126
34
59
70
68
109
196
829
976
1,398
510
853
1,199
1,339
1,829
2,597
-
-
-
145
124
108
-
-
-
Other services provided by the networks to fully consolidated subsidiaries
Legal, tax, labor
145
124
Other
108
21
SUB-TOTAL
TOTAL
21
145
145
108
-
-
-
145
145
108
974
1,121
1,506
510
853
1,199
1,484
1,974
2,705
111
352
638
104
305
661
215
657
1,299
of which subsidiaries
863
769
868
406
548
538
1,269
1,317
1,406
NOTE 36
SUBSEQUENT EVENTS
To management’s knowledge, no events liable to have a material impact on the earnings, assets, business or overall financial
position of the Group occurred between January 1 and February 25, 2016.
EUROPCAR
2015
215
03
STATUTORY AUDITORS’ REPORT
Statutory Auditors’ report on the consolidated financial statements
This is a free translation into English of the statutory auditors’ report issued in French and is provided solely for the convenience
of English speaking users. The statutory auditors’ report includes information specifically required by French law in such reports,
whether modified or not. This information is presented below the opinion on the consolidated financial statements and includes
an explanatory paragraph discussing the auditors’ assessments of certain significant accounting and auditing matters. These
assessments were considered for the purpose of issuing an audit opinion on the consolidated financial statements taken as a
whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated
financial statements.
This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards
applicable in France.
(For the year ended 31 December 2015)
In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you, for the year ended
31 December 2015, on:
a the audit of the accompanying consolidated financial statements of Europcar Groupe;
a the justification of our assessments;
a the specific verification required by law.
These consolidated financial statements have been approved by the Management Board. Our role is to express an opinion on
these consolidated financial statements based on our audit.
I - Opinion on the consolidated financial statements
We conducted our audit in accordance with professional standards applicable in France; those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain
audit evidence about the amounts and disclosures in the consolidated financial statements. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall
presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position
of the Group as at 31 December 2015 and of the results of its operations for the year then ended in accordance with International
Financial Reporting Standards as adopted by the European Union.
II - Justification of our assessments
In accordance with the requirements of article L.823-9 of the French Commercial Code (Code de commerce) relating to the
justification of our assessments, we bring to your attention the following matters:
Measurement of tangible and intangible assets
The Group tests goodwill and intangible assets with an indefinite useful life for impairment and assesses whether long term assets present
an indication of impairment, in accordance with the methods set out in note 13 - “Goodwill” and note 14 - “Intangible assets” to the
consolidated financial statements. We have reviewed the methods used for the aforementioned test, the methodology applied as well
as the estimated future cash flows and underlying assumptions and verified that the information provided in these notes is appropriate.
216
EUROPCAR
2015
Provisions
As specified in the note “Significant accounting policies – Provisions” to the consolidated financial statements, the Group records
provisions to cover risks. The nature of the provisions recorded in the financial statements under Provisions is described in the note
“Financial risk management – Insurance risks” and in the notes 27, 28 and 32 to the consolidated financial statements. Based on
the information available at the time of our audit, we ensured that the methods and data used to determine provisions, notably
relating to insurance claims, as well as the disclosures regarding the provisions provided in the notes to the consolidated financial
statements, are appropriate.
These assessments were made as part of our audit of the consolidated financial statements taken as a whole, and therefore
contributed to the opinion we formed which is expressed in the first part of this report.
03
III - Specific verification
As required by law, we have also verified in accordance with professional standards applicable in France the information related to
the Group given in the management report.
We have no matters to report regarding the fair presentation and consistency of this information with the consolidated financial
statements.
Neuilly-sur-Seine and Courbevoie, 25 February 2016
The Statutory Auditors
Mazars
François Jaumain
Isabelle Massa
EUROPCAR
2015
217
03
ANALYSIS OF THE RESULTS OF EUROPCAR GROUPE S.A
3.5 ANALYSIS OF THE RESULTS OF EUROPCAR
GROUPE S.A.
Please read the following information on the Company’s profits and losses and financial position in conjunction with the Company’s
financial statements for the year ended on December 31, 2015, as shown in Section 3.6 “Company financial statements and
Statutory Auditors’ report” of this Registration Document.
3.5.1
Revenue of the Company
Europcar Groupe reported revenue of €4,543 thousand in 2015, compared with €4,042 thousand in 2014, an increase of 12.4%,
breaking down as follows:
Revenue
Dec. 31, 2014
Dec. 31, 2015
a Management fees in respect of services to subsidiaries (ECI)
2,960
3,197
a Royalty fees on long-term trademark
1,082
1,346
4,042
4,543
in thousand of euros
TOTAL
3.5.2
Results of operations of the Company
The Company reported an operating loss of €9,772 thousand in
2015, compared with a loss of €4,379 thousand in 2014. The
deterioration in the results of operations was due primarily to a
3.5.3
Financial income/(expense) of the Company
The Company reported net financial expense of €135,172
thousand in 2015, compared with an expense of €79,258
thousand in 2014, a variation of €55,914 thousand attributable
218
URSSAF (social security) charge levied on free shares granted
to management, an increase in wages and salaries, and higher
consulting fees.
EUROPCAR
2015
chiefly to the payment of early redemption premiums on
two convertible bonds and the accelerated amortization of
transaction costs.
3.5.4
Other information relating to the Company’s separate financial statements
for 2015
The profit/(loss) before tax of the Company in the year ended
December 31, 2015 was a loss of €114,944 thousand,
compared with a loss of €83,637 thousand in the previous
year, a deterioration of €31,307 thousand.
On the basis of the above items, the result of the Company for
the year ended December 31, 2015 was a loss of €119,633
thousand, compared with a loss of €104,639 thousand in the
year ended December 31, 2014.
The exceptional income/(expense) of the Company was income
of €9,002 thousand in the year ended December 31 2015,
compared with a loss of €32,411 thousand in the previous year.
At December 31, 2015, the total assets of the Company
amounted to €1, 463,336 thousand, compared with €1,481,643
thousand at December 31 2014.
Income tax was a gain of €16,310 thousand in the year ended
December 31, 2015 (for the most part attributable to income
from tax consolidation), compared with a gain of €11,409
thousand in the year ended December 31, 2014.
The Company had 12 salaried employees at December 31, 2015.
3.5.5
Proposed appropriation of profit
The Combined General Meeting of May 10, 2016 will be asked
to clear the loss for the year ended December 31, 2015, in the
amount of €119,633 thousand, by deducting the full amount
3.5.6
03
from the share, merger and contribution premium, reducing
its balance from €767,402 thousand to €647,769 thousand.
Dividends paid in respect of the last three years
Pursuant to Article 243 bis of the French General Tax Code, you are reminded that no dividend was paid in respect of the last
three years.
EUROPCAR
2015
219
03
3.5.7
Table of results for the last five years
(Article R.225-102 of the French Commercial Code)
Year ended
Year ended
Year ended
Year ended
Year ended
Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2015
In euros
Duration of financial period
12
Capital at year end
12
12
12
-
-
-
-
-
Share capital (at year end)
782,286,490
782,286,490
446,383,194
446,383,194
143,154,016
Number of ordinary shares
78,228,649
78,228,649
103,810,045
103,810,045
143,154,016
Operations and profit/(loss)
-
-
-
-
-
6,020,004
6,446,965
4,975,918
4,041,733
4,542,518
Revenue excluding taxes
Profit/(loss) before tax, investment, depreciation
and amortization, and provisions
Income tax
(103,269)
(67,220,136)
(77,942,907)
(92,990,176)
(127,161,398)
4,595,901
18,455,888
17,533,484
11,409,147
16,310,028
(45,335)
(50,706,748)
(60,018,663)
(104,638,5)
(119,632,847)
Distributed earnings (losses)
0
0
0
0
0
Earnings per share
-
-
-
-
-
Profit/(loss) after tax, investment, depreciation
and amortization, and provisions
(1,26)
(0,62)
(0,58)
(0,79)
(0,77)
(0,58)
(0,65)
(0,58)
(1,01)
(0,84)
0
0
0
0
0
Dividend paid
Personnel
-
-
-
-
-
22
21
12
10
9
Payroll
6,132,410
5,623,262
4,529,371
3,740,470
10,114,172
Amounts paid for employee benefits
(social security, social services, etc.)
2,205,405
2,580,591
1,751,808
1,418,461
3,180,188
Average headcount
220
12
EUROPCAR
2015
COMPANY FINANCIAL STATEMENTS
3.6 COMPANY FINANCIAL STATEMENTS
AND STATUTORY AUDITORS’ REPORT
03
Balance sheet
ASSETS
Year ended
Dec. 31, 2015
Notes
Gross Depreciation
and
carrying
amount amortization
Year ended
Dec. 31, 2014
Net
Net
Trademarks
25,000
-
25,000
25,000
Intangible assets
25,000
-
25,000
25,000
1,241,195
-
1,241,195
1,258,517
-
-
-
-
146,378
-
146,378
146,286
105
-
105
8
1,387,678
-
1,387,678
1,404,811
1,412,678
-
1,412,678
1,429,811
87
-
87
112
Investment securities
Receivables from investments
Loans
Financial assets
NON-CURRENT ASSETS
11
Advance payments on orders
12
18,858
-
18,858
6,463
Other receivables
12
20,533
-
20,533
12,449
Marketable securities
-
-
-
-
Cash-in-hand and at bank
-
-
-
5
15
-
-
-
11
Deferred expenses
15
8,064
-
8,064
32,791
Premiums on early redemption of bonds
3,116
-
3,116
-
CURRENT ASSETS
50,658
-
50,658
51,832
-
-
-
-
1,463,336
-
1,463,336
1,481,643
Foreign exchange differences – assets
TOTAL ASSETS
EUROPCAR
2015
221
03
LIABILITIES AND EQUITY
Year ended
Dec. 31, 2015
Year ended
Dec. 31, 2014
Share capital
143,154
446,383
Share, merger, contribution premiums
767,402
452,978
-
-
Notes
Legal reserve
Retained earnings
Regulated provisions
(336,845)
(104,639)
23,793
23,793
Equity
18
814,716
481,671
Provisions for risks
19
-
25,000
Provisions for expenses
-
-
Provisions
-
25,000
476,138
736,725
4
30
Other non-convertible bonds
13
Borrowings from credit institutions
Financial liabilities
Trade and other payables
476,142
736,755
13
12,042
9,809
12,256
10,436
13
148,148
217,972
32
-
172,478
238,217
648,620
974,972
-
-
1,463,336
1,481,643
Tax and social security liabilities
Other debt
Deferred income
Operating liabilities
LIABILITIES
Foreign exchange differences – liabilities
TOTAL LIABILITIES AND EQUITY
222
(119,633)
EUROPCAR
2015
Income statement
Notes
Year ended
Dec. 31, 2015
Year ended
Dec. 31, 2014
Sales of services
3
4,543
4,042
-
-
Reversals of provisions, amortization and transfers of expenses
Other income
4
12,607
2,334
17,150
6,376
(17,282)
(5,715)
(202)
119
Wages and salaries
(5,321)
(4,169)
Social security contributions
(3,800)
(990)
(317)
(0)
TOTAL OPERATING INCOME
Other purchases and external expenses
5
Taxes, levies and similar payments
Other expenses
TOTAL OPERATING EXPENSES
(26,922)
(10,755)
OPERATING INCOME
(9,772)
(4,379)
Other interest and similar income
16,878
16,804
4
2
Foreign exchange gains
Financial income
7
Interest and similar expense
Depreciation, amortization, impairment and provisions
Foreign exchange losses
Financial expense
7
16,882
16,806
(118,153)
(81,410)
(33,781)
(14,599)
(119)
(54)
(152,054)
(96,063)
NET FINANCIAL INCOME/(EXPENSES)
(135,172)
(79,258)
RECURRING PROFIT/(LOSS) BEFORE TAX
(144,944)
(83,637)
Exceptional income from management transactions
4,400
7,102
17,323
-
25,000
1,943
46,723
9,045
Exceptional expenses on management transactions
(20,398)
(16,456)
Exceptional expenses on capital transactions
(17,323)
-
-
(25,000)
(37,721)
(41,456)
9,002
(32,411)
16,310
11,409
(119,633)
(104,639)
Exceptional income from capital transactions
Reversals of provisions, impairment and transfers of expenses
Exceptional income
8
Depreciation, amortization, impairment and provisions
Exceptional expenses
8
EXCEPTIONAL INCOME/(EXPENSES)
Income taxes
9
NET PROFIT/(LOSS)
EUROPCAR
2015
03
223
03
Consolidated statement of cash flows
Notes
PROFIT/(LOSS) BEFORE TAX
Change in provisions
18
Expenses related to the IPO
Financing costs
Redemption premium
Year ended
Dec. 31, 2015
Year ended
Dec. 31, 2014
(135,943)
(116,056)
(25,000)
25,000
8,692
-
79,046
80,414
56,010
-
OPERATING INCOME BEFORE CHANGES IN WORKING CAPITAL
(17,195)
(10,642)
Change in trade receivables
(12,395)
(2,826)
Change in other receivables
(15,966)
(7,340)
(1,959)
13,414
Change in trade payables
Change in other liabilities
Income taxes received/(paid)
8
14,307
(765)
(16,013)
2,483
5,783
22,168
Net interest paid
(56,971)
(65,712)
NET CASH GENERATED FROM/(USED BY) OPERATIONS
(84,396)
(51,703)
-
-
-
-
17,323
(17,323)
-
-
17,323
(17,323)
448,203
-
Change in other investments and borrowings
(1)
Dividends received from associates
Capital increase (3)
Issuance of bonds
(4)
Redemption of bonds (2)
471,623
-
(780,010)
69,074
(63,888)
Payment of refinancing costs
(8,832)
NET CASH GENERATED FROM/(USED BY) FINANCING ACTIVITIES
67,096
69,074
Cash and cash equivalents at end of period
Cash and cash equivalent at beginning of period
INCREASE/(DECREASE) IN NET CASH
(4)
(27)
(27)
(75)
23
48
(1) Transfer of Ubeeqo securities, acquired by ECG on November 30, 2014 for €17.3 million, to Europcar Lab SASU.
(2) Early redemption of the €324 million and €400 million high-yield notes, and payment of their early redemption premiums (€56 million).
(3) Capital increases dated May 15 and June 26, 2015, in a total amount of €476.5 million (see Note 18) net of fees paid (€8.7 million recognized in other non-recurring
expenses and €19.6 million of the €23.6 million allocated to the issue premium).
(4) €475 million in high-yield notes issued at 99.289% of par.
224
EUROPCAR
2015
Notes to the separate financial statements
CONTENTS
03
NOTE 1
SIGNIFICANT EVENTS
226
NOTE 2
SIGNIFICANT ACCOUNTING POLICIES
227
229
NOTE 3
BREAKDOWN OF REVENUE
NOTE 4
OTHER INCOME
229
NOTE 5
OTHER PURCHASES AND EXTERNAL EXPENSES
229
229
NOTE 6
EXECUTIVE COMPENSATION
NOTE 7
NET FINANCING COSTS
230
NOTE 8
EXCEPTIONAL INCOME/(LOSS)
231
NOTE 9
INCOME TAX: BREAKDOWN AND TAX LIABILITIES
231
NOTE 10
TAX GROUP
232
NOTE 11
STATEMENT OF FIXED ASSETS
233
NOTE 12
AMOUNTS AND MATURITIES OF RECEIVABLES
233
NOTE 13
AMOUNTS AND MATURITIES OF PAYABLES
234
NOTE 14
INFORMATION ON RELATED COMPANIES
235
NOTE 15
DEFERRED EXPENSES AND PREMIUMS ON EARLY REDEMPTION OF BONDS
235
NOTE 16
ACCRUED EXPENSES
236
NOTE 17
ACCRUED INCOME
236
NOTE 18
SHAREHOLDERS’ EQUITY
237
NOTE 19
STATEMENT OF PROVISIONS
240
NOTE 20
241
NOTE 21
WORKFORCE
242
NOTE 22
FREE SHARE GRANTS
242
NOTE 23
SUBSIDIARIES AND AFFILIATES
243
EUROPCAR
2015
225
03
General principles
NOTE 1
1.1.
SIGNIFICANT EVENTS
Overview and description
of the activity performed
by the Company
Europcar Groupe S.A. (“ECG”) was incorporated on March 9,
2006 with an initial share capital of €235,000 and was converted
into a French société anonyme (joint-stock corporation) on
April 25, 2006. ECG’s registered offices are located at 2 rue
René Caudron, 78960 Voisins le Bretonneux, France.
The Europcar Groupe leverages all of its experience in the car
rental sector to offer diverse and varied mobility solutions to its
customers through the provision of leisure and utility vehicles
for short- and medium-term rentals. Under its Europcar and
InterRent trademarks, the Group covers a wide range of
markets and customers, both private and business, with lowcost or luxury rentals.
The net proceeds from the issuance of new shares, in the
amount of approximately €441 million, takes into account
expenses incurred as part of the transaction. These expenses
break down either as:
a expenses related to the issuance of new shares in the amount
of €23.8 million, charged directly against shareholders’ equity;
a IPO fees in the amount of €8.7 million, recorded among
exceptional items.
Europcar Groupe is the European leader in short-term vehicle
rentals.
The net proceeds from the issuance of new shares was
allocated to the full redemption of the €324 million owed by
the Company on subordinated bonds maturing in 2017 and
the payment of an early redemption premium of €37 million.
At December 31, 2015, 42.3% of Europcar Groupe’s share
capital was held by Eurazeo, and 57.7% by private and public
investors following its initial public offering on the regulated
market of Euronext Paris in June 2015.
On May 27, 2015, €475 million of senior notes due 2022 were
issued at an issue price of 99.289% of par through the entity
Europcar Notes Limited. The proceeds were only available after
the listing of the Group’s shares.
1.2.
a)
Significant events during the year
Initial public offering
The Company was listed on the regulated market of Euronext
Paris on June 26, 2015 (Compartment A; ISIN code:
FR0012789949; ticker: EUCAR). Trading in Europcar Groupe
shares on the regulated market of Euronext Paris began on
June 26, 2015 in the form of share promises (“Europcar Prom“).
Settlement and delivery of the shares took place on June 29,
2015 and the first shares were exchanged on the market on
June 30, 2015. The offering price was set at €12.25 per share.
The IPO involved:
a the issuance of new shares as part of a cash capital
increase in the gross amount of approximately €475 million,
corresponding to net proceeds of approximately €441 million;
and
a the sale of approximately €404 million (gross) of existing
common shares by the Selling shareholders.
226
The main purpose of the Global Offering and the listing of the
Company’s shares on Euronext Paris was to enable the Group
to reduce its indebtedness, strengthen its financial structure
and increase its financial flexibility in order to accelerate its
development and continue the deployment of its “Fast Lane”
program.
EUROPCAR
2015
Consequently, on June 29, 2015, the net proceeds, kept in an
escrow account until then, were released and partially used to
redeem subordinated bonds maturing in 2018 with a principal
amount of €400 million and to pay an early redemption premium
of €19 million.
The balance of the net proceeds from the issuance of new
shares and new bonds after these refinancing transactions (i.e.
approximately €112 million) was allocated to general corporate
purposes.
b) Governance
During the first half of 2015, and ahead of the Company’s
IPO, Europcar Groupe strengthened its governance through
the establishment of a Supervisory Board and a Management
Board. The Management Board comprises Philippe Germond,
Chairman, Caroline Parot, Chief Financial Officer of Europcar
Groupe, Ken McCall, Chief Operating Officer, and Fabrizio
Ruggiero, Head of Mobility.
c)
Treasury shares held under the liquidity
contract
As of July 24, 2015, for a period of one year renewable by
tacit agreement, the Company has appointed Rothschild & Cie
Banque to implement a liquidity contract on the Europcar share,
in compliance with the charter of Ethics established by AMAFI
and approved by decision of the AMF on March 21, 2011.
For the implementation of this contract, resources of up to
€4 million may be allocated to the liquidity account.
d) Free share grants
The Management Board, at its meeting of June 25, 2015,
pursuant to the said delegation, accordingly granted free shares
to members of the Executive Committee and to 100 of the
Group’s managers (see Note 23).
e)
SAS for a total of €17,323 thousand, corresponding to the net
carrying amount.
f)
Disputes and litigation proceedings
At December 31, 2014, various entities of the Group,
including ECG, were party to a number of legal disputes
and an arbitration proceeding with Enterprise Holdings Inc.
(“Enterprise”). On April 30, 2015, the Group and Enterprise
signed a settlement agreement putting an end to these
proceedings, in consideration of the payment of €12.5 million
by ECG and the phased discontinuation of use of the e-moving
logo by Europcar (see Note 8).
03
On February 17, 2015, the Competition Authority addressed
a statement of objections to Europcar France, as well as to
other stakeholders, citing certain practices that are allegedly
not compliant with French antitrust regulations (see Note 19).
Transfer of Ubeeqo securities
In order to house its investments in mobility solutions within the
same holding company, Europcar Groupe sold, on June 30,
2015, its 70.6% stake in French start-up Ubeeqo, a company
specializing in shared in-company mobility, to Europcar Lab
NOTE 2
1.3.
Subsequent events
Not applicable
SIGNIFICANT ACCOUNTING POLICIES
The annual accounts of Europcar Groupe are prepared in
accordance with French generally accepted accounting
principles for separate financial statements, pursuant to the
French General Accounting Plan (ANC regulation 2014-03 of
June 5, 2014 relating to the General Accounting Plan).
The accounting policies used in the preparation of the financial
statements for the year ended December 31, 2015 are identical
to those used for the year ended December 31, 2014.
2.2.
Measurement of non-amortized
non-current assets
At each balance sheet date, Europcar Groupe conducts
impairment testing to ensure that the fair value of the trademark
at this date is higher than its carrying amount.
Impairment is recognized when the carrying amount exceeds
the greater of its fair value amount or its value in use.
They were prepared in accordance with the historical cost
convention.
The figures in the Notes are in thousands of euros, unless
otherwise stated.
2.3.
Financial assets
Investment securities and related advances
2.1.
Intangible assets
This item is comprised exclusively of the Europcar trademark
for the “long-term” car rental activity (over one year).
Investment securities are recorded at their purchase price,
including costs directly attributable to their acquisition.
Impairment testing on securities is carried out on the basis
of the value of the securities. Value in use is determined
using discounted future cash flows based on business plans
EUROPCAR
2015
227
03
established by the management of each investment and
approved by Europcar’s management.
2.6.
For impairment testing purposes, the three-year plan is
extended to five years. The 2016 budget and the 2017 and
2018 business plans were prepared taking into account
economic growth forecasts in the countries where the Group
operates, current macroeconomic data for each country, air
traffic growth forecasts, trends in the vehicle rental market and
competitive pressure, as well as new projects and products
in the development phase. Beyond 2018, revenue growth
assumptions are conservative, and the projected profit margin
is stable.
A provision is recognized in the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event, it is probable that an outflow of resources with no
counterparty will be required to settle the obligation, and the
amount can be reliably estimated.
If this value in use is lower than the carrying amount, impairment
is recognized.
Investment securities have an acquisition value of €1,234,724
thousand, and are exclusively comprised of Europcar
International SASU securities, as well as incidental acquisition
costs in the amount of €23,793 thousand. These were the
subject of straight-line amortization over five years, and were
fully amortized as of December 31, 2015.
Provisions
If the effect is material, provisions are discounted using a pretax rate that reflects current market assessments of the time
value of money and the risks specific to the liability.
2.7.
Borrowings and bond issuance
costs
Borrowings are recorded at their nominal repayment amount.
They are not discounted.
For bonds issued above par and redeemable at par, the
difference is an issue premium.
For bonds issued below par and redeemable at a higher
amount, the difference is a redemption premium.
2.4.
Receivables and payables
The redemption premium is recorded in the balance sheet as
“deferred expenses,” and is amortized over the term of the loan.
Receivables and payables are stated at their nominal value.
Impairment is recognized when a risk of non-recovery exists.
Unrealized foreign exchange gains are recognized in translation
gains, whereas unrealized foreign exchange losses are
recognized in translation losses and are subject to a provision
for risks and charges.
2.8.
Foreign exchange gains and losses corresponding to current
accounts are recognized directly in profit or loss, and are not
subject to translation adjustments.
Europcar gives Company employees retirement bonuses and
pensions provided through defined-contribution or definedbenefit plans.
2.5.
Europcar Groupe has opted not to recognize its pension
obligations. The Company’s obligations are valued by
independent actuaries, and are subject to disclosures (see
Note 20).
Marketable securities:
treasury shares
Marketable securities are exclusively comprised of Europcar
Groupe shares purchased under the terms of the liquidity
contract entered into with an investment service provider in
accordance with Article L. 225-209 of the French Commercial
Code, as amended by Article 15 of Law No. 2012-387 of
March 22, 2012 (see Note 14).
These shares are measured at acquisition cost. If their probable
market value at the balance sheet date is below their acquisition
cost, impairment is recognized.
228
EUROPCAR
Retirement and post-employment
benefits
2015
2.9.
Capital increase expenses
Europcar Groupe has opted to charge the expenses related to
the capital increase against the issue premium.
Notes to the income statement
NOTE 3
BREAKDOWN OF REVENUE
Europcar Groupe’s revenue excludes amounts derived from the rebilling of subsidiaries (see Note 4), and breaks down as follows:
Amounts as of
Dec. 31, 2015
France
Excluding
France
Total
Total
Provision of services to subsidiaries
3,197
-
3,197
2,960
Franchise revenue
1,346
-
1,346
1,082
4,543
-
4,543
4,042
Amounts as of
Dec. 31, 2015
Amounts as of
Dec. 31, 2014
12,260
1,987
347
313
-
34
12,607
2,334
TOTAL
NOTE 4
03
Amounts as of
Dec. 31, 2014
OTHER INCOME
Other revenue consists primarily of:
Rebilling of fees (1)
Rebilling of insurance
Miscellaneous
TOTAL
(1) See Note 5.
NOTE 5
OTHER PURCHASES AND EXTERNAL EXPENSES
Other purchases and external expenses increased significantly
(by €11.6 million) in the year ended December 31, 2015.
This is due to the payment of approximately €12 million
to various financial intermediaries in connection with the
NOTE 6
refinancing of senior credit facilities (Senior asset Revolving
Facility or SARF and Revolving Credit Facility or RCF) made in
the context of the Company’s IPO. These costs were billed to
the various countries (see Note 4).
EXECUTIVE COMPENSATION
A new governance structure was established at the time of the
Company’s IPO in 2015. The Management Board is now the
body that has authority and responsibility for planning, directing
and controlling the Group’s activities. It is in this capacity that
the compensation of its members is set out below.
Note that in 2014, and in accordance with the governance
in place during that period, it was the compensation of the
members of the Group’s Executive Committee that was
disclosed by category. The relevant figures are given as a
reminder.
EUROPCAR
2015
229
03
As at
Dec. 31, 2015
As at
Dec. 31, 2014
8,129 (1)
7,667
Salaries and short-term employee benefits
Termination indemnities
TOTAL
41
15
-
313
8,170
7,995
(1) Of which the portion relating to Management Board members in respect of compensation under the multi-year plan paid in 2015.
Europcar Groupe did not make any payments to members of
the Supervisory Board in respect of directors’ fees in the year
ended December 31, 2015 (as opposed to payments totaling
€246,380 in the previous year).
NOTE 7
In addition, exceptional compensation of €30,000 was paid to
a member of the Supervisory Board for a special assignment
involving the provision of assistance in the implementation and
monitoring of the Company’s transformation plan.
NET FINANCING COSTS
Financial income/(loss) was €(135,172) thousand, consisting of:
Other interest and similar income
Other
Amounts as of
Dec. 31, 2014
16,878
16,804
4
2
Financial income
16,882
16,806
Interest on bonds
(53,593)
(60,312)
Interest on the revolving credit facility
(1,765)
(14,735)
Interest on intercompany debt
(6,785)
(6,363)
(6,881)
(14,599)
Accelerated amortization of transaction costs
(1)
Early redemption premiums (1)
Other
Financial expense
NET FINANCING COSTS
(1) Relative to the €324 million and €400 million bonds redeemed early.
230
Amounts as of
Dec. 31, 2015
EUROPCAR
2015
(26,900)
-
(56,010)
-
(119)
(54)
(152,054)
(96,063)
(135,172)
(79,258)
NOTE 8
EXCEPTIONAL INCOME/(LOSS)
Exceptional income/(loss) is primarily composed of:
Amounts as of
Dec. 31, 2015
Amounts as of
Dec. 31, 2014
Transfer of Ubeeqo securities (1)
17,323
-
Reversal of provisions (2)
25,000
1,943
-
7,102
4,400
-
Repayment of VW liability guarantees
Other non-recurring income (3)
Other
Exceptional income
Transfer of Ubeeqo securities (1)
Charges to provisions (2)
Compensation paid following the “Memorandum of Understanding” (2)
IPO fees and related exceptional payments
(4)
Other exceptional expenses (3)
Exceptional expenses
EXCEPTIONAL INCOME/(EXPENSES)
-
-
46,723
9,045
(17,323)
-
-
(25,000)
(12,500)
-
(7,896)
(5,508)
(2)
(10,948)
(37,721)
(41,456)
9,002
(32,411)
03
(1) Europcar Groupe transferred Ubeeqo shares at their acquisition price (€17.3 million) to Europcar Lab SASU, another member of the Europcar consolidated group (see
Note 10).
(2) These amounts correspond to the reversal of a provision of €25.0 million related to the dispute between Europcar Groupe and Enterprise Holdings Inc. over the use
of the e-logo in the United Kingdom and in respect of the ensuing arbitration proceedings. In 2015, given the outcome of the case, part of the provision recorded was
reversed as no longer required (€12.5 million).
(3) Including, in 2014, €7 million accrued in respect of lawyers’ fees, particularly in the context of the dispute with Enterprise, and, in 2015, €4.4 million of fees written off
once the agreement had been reached.
(4) Fees related to the IPO and related exceptional compensation in an amount of €32.5 millions, of which €23.8 million charged to the issue premium and €8.7 million
recorded in exceptional expenses.
In 2014, the exceptional expense corresponded primarily to the multi-year compensation payable to executives.
NOTE 9
INCOME TAX: BREAKDOWN AND TAX LIABILITIES
Breakdown
Recurring profit/(loss)
Exceptional income/(expenses)
TOTAL
Profit before tax
in the year ended
Dec. 31, 2015
Current tax
Net profit for
the year ended
Dec. 31, 2015
Net profit for
the year ended
Dec. 31, 2014
(144,944)
16,310
(128,634)
(72,228)
9,002
-
9,002
(32,411)
(135,943)
16,310
(119,633)
(104,639)
Base
Income tax
effect
Detail
At a rate of 33.33%
Organic
30
(10)
Net reduction of the future tax liability
30
(10)
As ECG had tax losses in the amount of €813 million as of December 31, 2015, there would have been no tax to recognize if the
Company had been taxed separately.
EUROPCAR
2015
231
03
NOTE 10
TAX GROUP
Europcar Groupe is the parent company of the French tax
group, which includes Europcar International, Europcar Lab,
Europcar Holding, Europcar France, Parcoto and EuropHall.
Europcar Groupe is the only entity liable for tax for the entire
tax group.
Each consolidated company is placed in the position it would
have been in as regards tax if it had been taxed separately.
Tax income and expense on consolidated companies are
recognized in the financial statements of Europcar Groupe.
232
EUROPCAR
2015
Europcar Groupe, as parent company, recognizes the gain
resulting from the effects of tax consolidation in its financial
statements. Europcar Groupe accordingly recognized tax
consolidation income of €16,310 thousand in 2015.
Tax loss carryforwards in respect of the scope of the tax group
amounted to €562 million as of December 31, 2015.
Notes to the balance sheet
NOTE 11
STATEMENT OF FIXED ASSETS
Amounts as of
Dec. 31, 2014
Additions
during
the period
Reductions
during
the period
Amounts as of
Dec. 31, 2015
25,000
-
-
25,000
25,000
-
-
25,000
1,258,517
-
17,323
1,241,195
146,293
190
-
146,483
1,404,811
190
17,323
1,387,678
Trademarks (2)
TOTAL INTANGIBLE ASSETS
Investment securities
(1)
Loans and other financial assets
03
(1) Investment securities correspond to the subsidiary Europcar International SASU, wholly-owned by Europcar Groupe and include incidental acquisition expenses
(€23,793 thousand). They were the subject of straight-line amortization over five years, and had been fully amortized as of December 31, 2015.
The securities of Ubeeqo, held in the proportion of 70.6%, were sold for their net carrying amount of €17,323 thousand to Europcar Lab SASU under the terms of a
transfer agreement signed on June 30, 2015.
(2) Intangible assets are comprised exclusively of the Europcar trademark for the “long-term” car rental activity (over one year).
Since these assets have an indefinite life, they are not amortized.
No impairment was recorded on non-current assets.
NOTE 12
AMOUNTS AND MATURITIES OF RECEIVABLES
Receivables
Receivables from investments
Loans
Tax and social security receivables
Amounts
Gross as of
Dec. 31, 2015
≤ 1 year
From 1 to
5 years
> 5 years
146,378
146,378
-
-
105
105
-
-
18,945
18,945
-
-
5,191
5,191
-
-
Associates
16,436
16,436
-
-
Deferred expenses
11,180
1,428
9,752
-
198,235
188,483
9,752
-
Amounts as of
Dec. 31, 2015
Amounts as of
Dec. 31, 2014
13,435
46
-
1,678
TOTAL
Aged analysis of receivables
Not past due
Overdue by < 30 days
Overdue by > 30 days and < 6 months
19
-
Overdue by > 6 months and < 1 year
81
27
-
-
13,535
1,751
Overdue by > 1 year
TOTAL
EUROPCAR
2015
233
03
NOTE 13
AMOUNTS AND MATURITIES OF PAYABLES
OPERATING LIABILITIES
Liabilities
Amounts
Gross as of
Dec. 31, 2015
≤ 1 year
> 1 year
12,042
12,042
-
Tax and social security liabilities
13,382
13,382
Associates
147,595
147,595
Other debt
553
553
-
-
-
-
173,572
173,572
-
Deferred income
TOTAL
Due
Aged analysis of payables
as of Dec. 31, 2015
Not past due
Due
< 45 days
≥ 46 days and
≤ 60 days
> 60 days
Total.
6,464
53
-
6
47
6,517
187
85
-
4
81
272
6,651
138
-
10
128
6,789
Suppliers within the Group
Suppliers outside the Group
TOTAL
Due
Aged analysis of payables
as of Dec. 31, 2014
Not past due
Due
< 45 days
≥ 46 days and
≤ 60 days
> 60 days
Total.
18
84
-
-
84
102
Suppliers outside the Group
226
2,916
1,013
605
1,298
3,142
TOTAL
244
3,000
1,013
605
1,316
3,244
Suppliers within the Group
FINANCIAL LIABILITIES
Gross
amounts as of
Dec. 31, 2015
Aged analysis of financial liabilities
Accrued interest
TOTAL
Aged analysis of financial liabilities
Accrued interest
TOTAL
234
EUROPCAR
2015
≤ 1 year
> 1 year
475,000
-
475,000
1,138
1,138
-
4
4
-
476,142
1,142
475,000
Gross
amounts as of
Dec. 31, 2014
≤ 1 year
> 1 year
724,000
-
724,000
12,725
12,725
-
30
30
-
736,755
12,755
724,000
NOTE 14
INFORMATION ON RELATED COMPANIES
Gross value
Amounts as of
Dec. 31, 2015
Amounts as of
Dec. 31, 2014
1,241,295
1,258,517
146,383
146,286
5,322
6,463
29,979
12,449
6,517
102
11,419
217,972
ASSETS
Ownership
Loans
Other receivables
03
LIABILITIES
Other debt
Income statement
Financial expense
6,785
6,363
Financial income
16,850
16,804
The information on related companies corresponds to transactions with subsidiaries included in the scope of consolidation as of
December 31, 2015, of which Europcar Groupe is the parent company.
Eurazeo SA also subscribed to the €475 million high-yield bond in the amount of €15 million.
NOTE 15
DEFERRED EXPENSES AND PREMIUMS ON EARLY REDEMPTION
OF BONDS
As of December 31, 2015, “Deferred expenses” and “Premiums
on early redemption of bonds”, in a total amount of €11,180
thousand, included:
a refinancing costs incurred on the issuance of high-yield notes
maturing in 2022 in the amount of €475 million conducted in
May 2015 in a net amount of €5.6 million;
a the resulting issue premium in a net amount of €3.1 million,
and;
a costs related to the renegotiation of the €350 million
Revolving Credit Facility maturing in five years commencing
in May 2015 in the amount of €2.5 million.
These expenses are amortized over the term of the loans.
In the year ended December 31, 2014, the balance of bond
redemption fees and redemption premiums related to:
a issuance costs incurred on the issuance on
November 18, 2010 of high-yield notes maturing in 2018
in the amount of €400 million, in a net amount of €5,624
thousand as of 12/31/2014;
a issuance costs incurred on the issuance in June 2012 of highyield notes maturing in 2017 in the amount of €324 million, in
a net amount of €25,850 thousand as of 12/31/2014;
a the renegotiation of the Revolving Credit Facility in May 2012
in the amount of €1,317 thousand as of 12/31/2014.
These items were fully amortized following their repayment in
2015.
EUROPCAR
2015
235
03
NOTE 16
ACCRUED EXPENSES
Amounts as of
Dec. 31, 2015
Amounts as of
Dec. 31, 2014
1,138
12,678
1,138
12,678
Supplier creditors excluding FNP fleet
2,331
6,414
Group – Other liabilities – FNP Corporate
2,922
151
5,253
6,565
6,878
2,289
9
17
1,182
690
(159)
(50)
ASSETS
Interest accrued on bonds and other borrowings
LIABILITIES
TRADE AND OTHER PAYABLES
Provisions for wages
Provisions – Other personnel expenses
Provisions on accrued social security charges
Withholding tax on wages
Other accrued expenses
TAX AND SOCIAL SECURITY LIABILITIES
TOTAL ACCRUED LIABILITIES
NOTE 17
2,946
14,766
22,190
Amounts as of
Dec. 31, 2015
Amounts as of
Dec. 31, 2014
2,256
2,164
ACCRUED INCOME
Accrued interest – Loans
OTHER FINANCIAL ASSETS
Interco – Corporate – FAE
Miscellaneous income receivable
2,256
2,164
4,955
4,072
368
368
1
288
5,324
4,728
TOTAL ACCRUED INCOME
7,580
6,892
Other receivables – FAE
236
465
8,375
EUROPCAR
2015
NOTE 18
18.1
SHAREHOLDERS’ EQUITY
Consolidated statement of changes in equity
Share capital
Share
premium
Retained
earnings
Net profit/
(loss) as at
Dec. 31,
2014
446,383
452,978
(336,845)
(104,639)
-
457,877
Net profit/(loss) for the year ended
12/31/2015
-
-
-
-
(119,633)
(119,633)
Net profit/(loss) for the year ended
12/31/2014
-
-
(104,639)
104,639
-
-
Capital increase preferred shares
Capital increase by incorporation of premium
Capital decrease
Capital increase IPO
IPO fees
BALANCE AS AT DECEMBER 31, 2015
18.2
73
1,437
-
-
-
1,510
(99,405)
-
-
-
-
(441,483)
-
441,483
-
-
-
38,776
436,224
-
-
-
475,000
-
(23,832)
-
-
-
(23,832)
143,154
767,402
-
-
(119,633)
790,922
As at December 31, 2015, the recorded share capital of Europcar
Groupe was €143,154,016 and comprised 143,154,016 shares
Operation
12/31/2014
Equity
99,405
Share capital and share premium
Date
Unappropriated
earnings
with a unit value of one euro each, 142,998,496 common
shares, 147,434 category B preferred shares, 4,045 category
C preferred shares and 4,041 category D preferred shares. The
various corporate actions since January 1, 2015 (in particular
within the scope of ECG’s IPO on euronext Paris) are as follows:
Share capital
Issue premium
(in €)
Number
of shares
Nominal value
(in €)
446,383,193.50
452,977,636.00
103,810,045
4.300
(336,844,642.72)
-
103,810,045
1.055
(in €)
2/24/2015
Capital decrease
5/15/2015
8,532.21
1,501,568.74
103,818,131
1.055
6/8/2015
98,909,577.00
(98,909,577.00)
103,818,131
2.008
6/8/2015
Capital decrease
(104,638,529.00)
-
103,818,131
1.000
6/26/2015
495,845.00
(495,845.00)
495,845
1.000
6/26/2015
38,775,510.00
412,392,604.50
38,775,510
1.000
11/04/2015
8,829.00
(8,829.00)
8,829
1.000
11/04/2015
7,444.00
(7,444.00)
7,444
1.000
12/15/2015
48,257.00
(48,257.00)
48,257
1.000
143,154,016.00
767,401,857.24
143,154,016
1.000
12/31/2015
Each Category A common share gives an entitlement to one
vote.
Class B, C and D shares are preferred shares within the
meaning of Article L. 228-11 of the French Commercial Code,
and are devoid of voting rights.
Class B preferred shares (the “B Shares”) were issued in
July 2011 for executives and employees of the Group, some
of whom have since left it, and for Eurazeo.
03
The terms and conditions of the B Shares lay down the
conditions under which their holders may convert them into
common shares. As such, pursuant to their terms, the B Shares
could be converted into common shares upon the occurrence
of certain events before the date of publication of the 2015
results of Eurazeo, notably in the event of the admission to
trading of the shares of the Company on a regulated market
(an “initial public offering”). In such cases, holders of B Shares
were able to exercise their conversion rights at any time from
EUROPCAR
2015
237
03
the notification of the proposed IPO until the end of a period of
20 trading days following the date of publication of the 2015
results of Eurazeo (or, if later, until the end of a period of three
months following the expiry of lock-up obligations imposed by
the underwriters for the IPO).
The conversion ratio of B Shares into common shares is
determined, depending on the exercise period, by taking into
account the return on investment of Eurazeo until the IPO
(including the net proceeds from the sale of any shares by
Eurazeo as part of the IPO) plus the value of the stake kept by
Eurazeo on the basis of the IPO price or, depending on the date
of exercise of the conversion right, on the basis of an average
market price of the Company’s shares.
Holders of B Shares were able to sell part of their shares under
the same conditions as those of Eurazeo at the time of the
IPO. The balance of the B Shares was subject to lock-up
commitments in respect of the underwriters.
In the absence of the exercise of conversion rights by a
holder of B Shares during the conversion period, the holder’s
B Shares will be converted automatically at the end of the
conversion period into the same number of common shares
of the Company.
The C and D Shares were issued by the Management Board of
the Company on May 15, 2015, on the basis of an authorization
granted by the Shareholders’ Meeting of February 24, 2015.
The Class C preferred shares (the “C Shares”) were subscribed
by certain of the Group’s executives and employees belonging
to the Executive Committee (the “Group C managers”), and the
Class D preferred shares (the “D Shares”) were subscribed by
Eurazeo, it being stipulated that the D Shares were subject to
a promise by Eurazeo to sell them to the Group C managers
and a commitment by the Group C managers to purchase them
from Eurazeo upon the signature of a guarantee agreement
relating to the IPO. The D Shares were transferred by Eurazeo
to the Group C managers following the signing of a guarantee
agreement as part of the IPO.
The total amount of the investment of the Management Board
members for the subscription of the C Shares and the purchase
of the D Shares from Eurazeo was €925,000 (€550,000 for
the Chairman of the Management Board), and approximately
€1.7 million for all C Share holders.
238
EUROPCAR
2015
The terms and conditions of the C and D preferred shares lay
down the conditions under which holders of C and D Shares
may convert them into common shares. Thus, in accordance
with their terms, in the event of an IPO, the C Shares may be
converted into common shares at any time until December 31,
2019; the D Shares may only be converted for a period of one
year following the IPO, then in an amount capped at half the
outstanding D Shares in the following year, and then in full at
the end of a period of two years after the IPO.
As from the IPO, the conversion ratio of the C and D Shares
into common shares is determined, depending on the exercise
period, by taking into account a multiple of the value of the
common shares, which varies in line with changes in the value
of the common shares. For the purposes of this calculation, the
value of the common shares is equal to the weighted average
share price over a period of 10 trading days.
Under the agreement between the Group C managers and
Eurazeo drawn up in conjunction with this transaction, neither
C Shares nor D Shares may be transferred (sale to Eurazeo
excepted), and common shares resulting from the conversion
of the C Shares may not be sold during the term of the lock-up
commitment imposed by the underwriters, and in any case not
within a minimum period of one year. Neither may they be sold
in the amount of the number of shares held by the members
of the Management Board and locked up until the end of their
term (i.e. the lesser of 10% of shares held before transfer and
an amount equal to three times the annual remuneration of the
common shares on the date in question).
The agreement also lays down the joint rights and duties of the
Group C managers and the commitment of such managers to
sell their preferred shares to Eurazeo in certain situations should
they leave the Group.
In the absence of conversion before December 31, 2019, the
C and D Shares shall be converted automatically into the same
number of common shares of the Company.
Shareholders are entitled to receive dividends as declared
periodically. There is no preferential dividend. The Group did
not distribute any dividends in 2015.
The following table shows the breakdown of shareholdings before the Company’s IPO:
Shareholders
Eurazeo
ECIP Europcar Sarl
Number
of common
shares and
voting rights
Number
of Class B
preferred
shares (4)
Number
of Class C
preferred
shares (4)
Number
of Class D
preferred
shares (4)
Total
number
of shares
Percentage
of common
shares and
voting rights
Percentage
of share
capital
89,947,696 (1)
150,810 (2)
-
4,041
90,102,547
86.97%
86.79%
13,480,307
-
-
-
13,480,307
13.03%
12.98%
-
231,232 (3)
4,045
-
235,277
-
0.23%
103,428,003
382,042
4,045
4,041
103,818,131
100.00%
100.00%
Executives
and employees
TOTAL.
03
(1) Including 346,607 shares issued by the Company on October 16, 2007 and later transferred to Eurazeo by Eureka Participations SAS in connection with a complete
transfer of assets and liabilities.
(2) Including 41,025 Class B preferred shares acquired from Philippe Guillemot, held in escrow (order of June 14, 2012 in legal proceedings).
(3) Including 122,783 Class B Preferred Shares still held by former employees.
(4) The Class B, Class C and Class D Preferred Shares do not have voting rights.
The following table shows the breakdown of Europcar Groupe shareholdings following the Company’s IPO:
Number
of common
shares and
voting rights
Number
of Class B
preferred
shares
Number
of Class C
preferred
shares
Number
of Class D
preferred
shares
Total
number
of shares
Percentage
of common
shares and
voting rights
Percentage
of share
capital
61,859,208
-
-
4,041
61,863,249
43.29%
43.23%
ECIP Europcar Sarl
9,232,494
-
-
-
9,232,494
6.46%
6.45%
Executives and
employees, and free
float
71,814,775
174,923
4,045
-
71,993,743
50.25%
50,32%
142,906,477
174,923
4,045
4,041
143,089,486
100.00%
100.00%
Shareholders
Eurazeo
TOTAL.
As at December 31, 2015, the breakdown of shareholders in the share capital was as follows:
Shareholders
Number
of common
shares and voting
rights
Number
of Class B
preferred
shares
Number
of Class C
preferred
shares
Number
of Class D
preferred
shares
Total
number
of shares
Percentage
of common
shares and
voting rights
Percentage
of share
capital
60,544,838
-
–
–
60,544,838
42.38%
42.29%
9,036,469
-
–
–
9,036,469
6.33%
6.31%
73,417,189
147,434
4,045
4,041
73,572,709
51.29%
51.39%
142,998,496
147,434
4,045
4,041 143,154,016
100.00%
100.00%
Eurazeo
ECIP Europcar Sarl
Executives and
employees, and
floating
TOTAL
Europcar did not cancel any shares in 2015.
18.3
Treasury shares
following resources were listed on the liquidity account:
a no Europcar Groupe share
Under the liquidity contract entrusted to Rothschild relating to
the shares of the Europcar Groupe on December 31, 2015 the
In number of shares
a €100,000
6/29/2015
Increase
Reduction
Dec. 31, 2015
Treasury shares
-
437,227
(437,227)
-
TOTAL
-
437,227
(437,227)
-
EUROPCAR
2015
239
03
18.4
Regulated provisions
Amounts as of
Dec. 31, 2014
Accelerated depreciation (see Note 2.3)
23,793
-
-
-
23,793
TOTAL REGULATED PROVISIONS
23,793
-
-
-
23,793
NOTE 19
STATEMENT OF PROVISIONS
Amounts as of
Dec. 31, 2014
Provisions for litigation
PROVISIONS FOR RISKS
19.1
-
(12,500)
(12,500)
-
25,000
-
(12,500)
(12,500)
-
Dispute with Enterprise Holdings
Inc.
Furthermore, in January 2015, the High Court of Justice of
England issued a judgment ordering Europcar Groupe to cease
using the “e-moving” logo (an accessory element to the global
Europcar brand) in the United Kingdom on the grounds that
such logo was confusing and infringed upon prior trademarks
of Enterprise Holdings Inc. Europcar Groupe has sought leave
to appeal this judgment before the English courts.
In its financial statements as of and for the year ended
December 31, 2014, Europcar Groupe recorded a provision of
€25 million in relation to the two aforementioned proceedings,
an amount equal to the risk of certain of the damages that it
was able reasonably to estimate as of the closing date.
During a second phase of the arbitration proceeding, the
arbitrators will determine the compensation for damages
incurred by Enterprise as a result of the facts referred to in the
arbitration decision of December 9, 2014. The amount of other
EUROPCAR
2015
Provisions
Provisions
Additions
reversed reversed during
during the
during the
the period Amounts as of
period period (used)
(unused) Dec. 31, 2015
25,000
In 2007 the Group acquired from Vanguard the operations
of National and Alamo in the EMEA region. Vanguard was
then acquired by Enterprise and the Group and Enterprise
entered into a period of commercial cooperation that lasted
until August 2013 during which Europcar Groupe continued
to operate the National and Alamo brands in EMEA under a
license agreement with Enterprise. Following disputes between
the parties over the interpretation of certain provisions of the
license agreement, such agreement and the commercial
alliance agreement were the subject of an arbitration proceeding
that resulted in a decision on December 9, 2014 which, after
a transitional period agreed by the parties terminated these
agreements as of March 2015.
240
Provisions
Additions
reversed
during
during the
the period period (used)
Provisions
reversed during
the period
reversed during
the period Amounts as of
(unused) Dec. 31, 2015
damages that the Group may be required to pay as a result
of the adverse findings in such decision cannot be reasonably
estimated at this stage of the proceeding (the final award of
which is not expected to be issued before the second quarter
of 2016) and, accordingly, no provision in respect of such
other potential damages was recorded in the Group’s financial
statements for the year ended December 31, 2014.
On April 29, 2015, the Group and Enterprise signed a
settlement agreement which put an end to these proceedings,
in consideration of the payment of €12.5 million by the Group
(paid on May 4, 2015) as well as the phased discontinuation
of use of the e-moving logo by Europcar.
19.2
Procedure of the French anti-trust
authorities
Europcar France lodged its statement of defense brief on
May 20, 2015. The Company strongly contests the complaints
and the underlying arguments, further to which the ADLC’s
case-handler is expected to submit a report to the Competition
Authority College during the first half of 2016. Europcar France
will then have two months to respond to this report. The ADLC’s
decision would then be expected to be issued several months
later, following a closed hearing before its College.
Any decision imposing a fine may be appealed. This would not
in principle suspend the obligation to pay the penalty, unless
there is an exceptional procedure to suspend the payment
pending appeal. An unfavorable decision could be followed by
damages claims brought by third parties.
Off-balance sheet items
NOTE 20
20.1
Guarantees
Pursuant to Article 4 of regulation 2010-02 of September 2, 2010
of the French Accounting Standards Authority, repealed and
subsequently included in ANC regulation 2014-03, relating to
related party transactions and transactions not recorded in the
balance sheet, the financial commitments of the Company,
given and received, as of December 31, 2015 are as follows:
The Group has commitments with respect to defined
benefit retirement plans. This commitment is assessed
by an independent actuary using the projected unit credit
method. This method requires the use of the specific actuarial
assumptions set out below. These actuarial valuations are
performed at the period end for each plan by estimating the
present value of the amount of future benefits that employees
have earned in return for their service in the current and prior
periods and factoring in the effects of future salary increases.
Guarantees and sureties given
The assumptions are:
As surety for the Senior Revolving Facility Agreement dated
May 31, 2006 as amended, and the relevant coverage
documents (ISDA Master Agreement), the Company has made
the following pledges to its banks:
a discount rate: 1.80%;
a secured and irrevocable deposit of borrowers;
a expected rate of wage increases: 3.50%.
a pledge of Europcar International SASU shares held by the
Company;
The 2015 service cost was €15 thousand, and the financial
cost €2 thousand.
03
a anticipated long-term inflation rate: 1.75%;
a expected return on the fund: 2.00%;
a pledge of the bank accounts of consolidated companies.
Guarantees and sureties received
The Company is the beneficiary of a vendor warranty granted
by the Volkswagen group at the time of its disposal of Europcar
Groupe in 2006. This warranty is expired and can no longer be
implemented. However, relating to previous implementations,
the Company may still receive compensation subject to
the completion of ongoing litigation or pre-litigation and
in agreement with Volkswagen on the final amount of such
compensations.
20.3
Other commitments
Individual training rights
As of December 31, 2015, the number of hours of training
accumulated corresponding to rights acquired under the French
Individual Training Rights scheme (replaced by the Professional
Training Account on January 1, 2015) was 594 hours.
Employees used a total of 121 hours in 2015.
20.2
Retirement commitments
Legal and contractual retirement allowances amounted to €167
thousand (€132 thousand in 2014) based on the valuation
method prescribed by ANC recommendation no. 2013-02.
EUROPCAR
2015
241
03
Further information
NOTE 21
WORKFORCE
Items as of Dec. 31, 2015
Salaried
personnel
Personnel seconded
to the Company
Managers and similar
12
-
TOTAL
12
-
NOTE 22
FREE SHARE GRANTS
The Management Board at its meeting held on June 25, 2015
pursuant to said delegation of authority approved the decision
and the principle of two grants of free shares.
The first plan, “AGA 13 T1“ and “AGA 13 T2“ benefits members
of the Group’s Executive Committee.
The granting of these free shares, following vesting periods of
two to three years, and subject to the beneficiary’s continued
employment with the Company at the end of this period, would
be conditioned on the achievement of:
a for the year ended December 31, 2017: performance
conditions related to (i) adjusted corporate EBITDA and (ii)
movements in the Company’s stock price as compared with
movements in the SBF 120 index.
The second free share grant plan, “AGA 100“, benefits the
Group’s top 100 executives. The shares will vest following a
two-year vesting period, subject to the beneficiary’s continued
employment with the Company on the date of allocation and
subject to the achievement of performance conditions relating
to (i) adjusted corporate EBITDA and (ii) movements in the
Company’s stock price as compared with movements in the
SBF 120 index.
a with respect to the years ended December 31, 2015 and
2016: performance conditions related to adjusted corporate
EBITDA; and
Changes in respect of free shares during 2015 are as follows:
Number of free shares
Currently vesting as at January 1, 2015
Allocated
1,991,844
Vested
-
Canceled
(128,511)
Currently vesting as at December 31, 2015
1,863,333
The weighted average fair value of the allocated shares was
determined on the allocation date by applying the Monte Carlo
simulation model.
Since the dividend rate was 2.20% (only for 2017) and the
borrowing rate was equal to a risk-free rate +1%, the fair values
on the allocation date less the dividends discounted during the
vesting period and the discounted cost of non-transferability
during the lock-up period are equal to:
242
EUROPCAR
2015
a €5.91 for the AGA 100 plan.
The employer contribution at the rate of 30% was calculated
on a base corresponding to the unit fair value of the shares as
estimated at the grant date.
The plans are expected to be satisfied by new shares.
NOTE 23
SUBSIDIARIES AND AFFILIATES
Corporate name
Share capital
Percentage
held
Gross value
of securities
Loans,
advances
Revenue
Equity
Dividends
received
Net value
of securities
Guarantees
Net income/
(loss)
110,000
100%
1,217,402
-
98,772
52,638
-
1,217,402
-
78,248
-
-
-
-
-
03
Subsidiaries (over 50%)
Europcar International SASU (FRANCE)
Investments (between 10% and 50%)
-
Statutory Auditor’s report on the financial statements
This is a free translation into English of the statutory auditors’ report on the financial statements issued in French and it is provided
solely for the convenience of English speaking users.
The statutory auditors’ report includes information specifically required by French law in such reports, whether modified or not. This
information is presented below the audit opinion on the financial statements and includes an explanatory paragraph discussing the
auditors’ assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose
of issuing an audit opinion on the financial statements taken as a whole and not to provide separate assurance on individual account
balances, transactions, or disclosures.
This report also includes information relating to the specific verification of information given in the management report and in the
documents addressed to shareholders.
This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards
applicable in France.
For the year ended 31 December 2015
To the Shareholders,
In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you, for the year ended
31 December 2015, on:
a the audit of the accompanying consolidated financial statements of Europcar Groupe S.A.;
a the justification of our assessments;
a the specific verifications required by law.
These financial statements have been approved by the Management Board. Our role is to express an opinion on these financial
statements based on our audit.
I - Opinion on the financial statements
We conducted our audit in accordance with professional standards applicable in France; those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An
audit involves performing procedures, using sample techniques or other methods of selection, to obtain audit evidence about the
amounts and disclosures in the financial statements. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made, as well as the overall presentation of the financial statements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
EUROPCAR
2015
243
03
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group
as at 31 December 2015 and of the results of its operations for the year then ended in accordance with French accounting principles.
II - Justification of our assessments
In accordance with the requirements of article L.823-9 of the French Commercial Code (Code de Commerce) relating to the
justification of our assessments, we bring to your attention the following matters:
a measurement of investments in subsidiaries: the Company assesses annually the recoverable value of its investments in subsidiaries
in accordance with the methods set out in section 2.3 – “Financial assets” note 2 – “Significant accounting policies” to the financial
statements. We have reviewed the methods used for the aforementioned assessment and, based on the information available at
the time of our audit, we ensured the estimates made by the Company at 31 December 2015 are appropriate.
a provisions: as specified in note 2 - “Significant accounting policies” section 2.6 - “Provisions” to the financial statements, the
Group records provisions to cover risks. The nature of the provisions recorded in the financial statements under Provisions is
described in the note 19 - “Statement of provisions” to the financial statements. Based on the information available at the time
of our audit, we ensured that the information given in the notes to the financial statements is appropriate;
These assessments were made as part of our audit of the financial statements, taken as a whole, and therefore contributed to the
opinion we formed which is expressed in the first part of this report.
III - Specific verifications
We have also performed, in accordance with professional standards applicable in France, the specific verifications required by
French law.
We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given
in the management report of the Management Board, and in the documents addressed to the shareholders with respect to the
financial position and the financial statements.
Concerning the information given in accordance with the requirements of article L.225-102-1 of the French Commercial Code (code
de commerce) relating to remunerations and benefits received by the directors and any other commitments made in their favour,
we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial
statements and, where applicable, with the information obtained by your company from companies controlling your company or
controlled by it. Based on this work, we attest the accuracy and fair presentation of this information.
In accordance with French law, we have verified that the required information concerning the identity of shareholders and holders
of the voting rights has been properly disclosed in the management report.
Courbevoie and Neuilly-sur-Seine, on 25 February 2016
244
Mazars
François Jaumain
Isabelle Massa
EUROPCAR
2015
OUTLOOK FOR FINANCIAL YEAR 2016
3.7 OUTLOOK FOR FINANCIAL YEAR 2016
3.7.1
Group forecasts for the year ending December 31, 2016
Forecasts in terms of revenue and Adjusted Corporate EBITDA
as well as distributions presented below are founded on data,
assumptions, and estimates considered as reasonable by
Group Management. They are likely to change or be modified
due to uncertainties linked, for example, to the economic,
financial, competitive and/or regulatory environment, and due
to other factors that are unforeseeable as well as by certain
transactions, if any. In addition, the materialization of certain
risks described in Chapter 2 “Risk factors” of this Registration
Document could have an impact on the Group’s activities and
its ability to achieve these forecasts. No assurance can be given
that the Group’s actual results will be in line with the forecasts
below. Finally, the Group considers that Adjusted Corporate
EBITDA, although a non-GAAP measure, is a relevant indicator
of the Group’s operating and financial performance.
The Group’s forecasts are based on its consolidated financial
statements as of and for the year ended December 31, 2015.
These forecasts are based on the following main assumptions:
a no material changes in the accounting principles or scope
of consolidation as compared to the Group’s consolidated
financial statements as of and for the year ended
December 31, 2015;
In line with its commitments made at the time of the initial
public offering, the Group foresees, for the year ended on
December 31, 2016, that it will continue to generate profitable
growth, due to its Fast Lane transformation plan:
03
a consolidated revenues increasing between 3% and 5% at
constant scope and exchange rates (organic growth) (1),
compared to revenues of €2,141.9 million in 2015;
a adjusted Corporate EBITDA greater than €275 million,
compared to €251 million in 2015.
The Company also has an objective to distribute, subject to
shareholder approval, annual dividends starting in 2017 in an
amount equal to at least 30% of its net profit of the prior fiscal
year.
The Company’s dividend payment policy (see Section 6.7.1
“Dividend Policy”) will take into account, among other factors,
its results of operations, financial position and the achievement
of its objectives as set out in this Chapter, as well as restrictions
on dividend payments applicable under the terms of its debt
instruments.
a an estimated annual average GBP/Euro exchange rate of
1.43 and Australian dollar/Euro exchange rate of 0.68.
(1) Taking into account the current price of gas.
EUROPCAR
2015
245
03
OUTLOOK FOR FINANCIAL YEAR 2016
3.7.2
Statutory auditors’ report on the profit forecast
for the year ending December 31, 2016
63 rue de Villiers
92208 Neuilly sur Seine
MAZARS
61 rue Henri Regnault
92400 Courbevoie – La Défense
To the Chairman of the Management Board
EUROPCAR GROUPE
2 rue René Caudron
Bâtiment Op
78960 Voisins le Bretonneux
France
Sir,
In our capacity as statutory auditors of your company and in accordance with Commission Regulation (EC) no809/2004, we hereby
report to you on the profit forecast (“Adjusted Corporate EBITDA”) of Europcar Groupe S.A. set out in section 3.7 - chapter 3 of
the 2015 Registration Document (Document de référence 2015).
It is your responsibility to compile the profit forecast, together with the material assumptions upon which it is based, in accordance
with the requirements of Commission Regulation (EC) n°809/2004 and ESMA’s recommendations on profit forecasts.
It is our responsibility to express an opinion, based on our work, in accordance with Annex I, item 13.2 of Commission Regulation
(EC) n°809/2004, as to the proper compilation of this forecast.
We performed the work that we deemed necessary according to the professional guidance issued by the French institute of statutory
auditors (Compagnie nationale des commissaires aux comptes –CNCC) for this type of engagements.
Our work included an assessment of the procedures undertaken by management to compile the profit forecast as well as the
implementation of procedures to ensure that the accounting policies used are consistent with the policies applied by Europcar Groupe
S.A. for the preparation of the historical financial information. Our work also included gathering information and explanations that we
deemed necessary in order to obtain reasonable assurance that the profit forecast has been properly compiled on the basis stated.
Since profit forecasts, by nature, are uncertain and may differ significantly from actual results, we do not express an opinion as to
whether the actual results reported will correspond to those shown in the profit forecast.
In our opinion:
a the profit forecast has been properly compiled on the basis stated; and
a the basis of accounting used for the profit forecasts is consistent with the accounting policies of Europcar Groupe S.A. applied
in 2015.
This report has been issued solely for the purpose of registering the Registration Document (Document de référence) with the
French financial markets authority (Autorité des marches financiers – AMF).
Courbevoie and Neuilly-sur-Seine, April 8, 2016
246
EUROPCAR
Mazars
Isabelle Massa
François Jaumain
2015
INFORMATION ON MID-TERM TRENDS AND OBJECTIVES
3.8 INFORMATION ON MID-TERM TRENDS
AND OBJECTIVES
3.8.1
Recent events
03
A detailed description of the Group’s results for the year ended December 31, 2015 is provided in Section 3.1 “Analysis of Group
results” of this Registration Document.
3.8.2
Objectives for the year ending December 31, 2017
The objectives of the Group described below are not forecasts
or estimates of Group profit, but reflect the Group’s strategic
orientations and action plan, as described in Section 1.5
“Strategy”.
The Group’s management believes the data, assumptions
and estimates upon which the Group has based these
objectives to be reasonable. They are based, in particular, on
the Group’s expectations regarding the economic climate,
market developments and the anticipated impact of its current
“Fast Lane” program. They are likely to evolve or change due
to uncertainties related notably to the economic, financial,
competitive, and/or regulatory environment, other factors of
which the Group is not aware, or due to the occurrence of
certain operations. Moreover, the occurrence of certain risks
described in Chapter 2 “Risk Factors” of this Registration
Document could affect the business of the Group and its
ability to implement the objectives described below. The Group
provides no assurance that the objectives described in this
Section will be met and does not undertake to publish updates
to this information. Finally, the Group considers that Adjusted
Corporate EBITDA, and the associated margin, non-GAAP
measures, are relevant indicators of the Group’s operating and
financial performance.
The Group confirms the 2017 objectives as announced at
the time of the Company’s initial public offering. The Group
thus plans to continue implementation of the Fast Lane
transformation program.
The Group targets organic revenue growth (at constant
exchange rates and scope) of between 3% and 5% in 2017.
The Group aims to achieve an Adjusted Corporate EBITDA
margin in excess of 13% by 2017, compared with an Adjusted
Corporate EBITDA margin of 11.7% in 2015 (see the Section
“Key figures and significant events of the year” on page 7 of
this Registration Document.)
Lastly, the Group aims to maintain its corporate leverage ratio
(defined as Corporate Net Debt to Adjusted Corporate EBITDA,
see the Section “Key figures and significant events of the year”
on page 7 of this Registration Document) at a level of less
than 1x by the end of fiscal year 2017 (at constant scope of
consolidation compared to December 31, 2015). This objective
is based on the following assumptions:
a improvement in the below-mentioned profitability;
a objective to distribute, subject to shareholder approval,
annual dividends starting in 2017 in an amount equal to at
least 30% of its net profit of the prior fiscal year;
a increase in annual capital expenditure (excluding fleet
and acquisition of subsidiaries) at a level of approximately
€40 million in 2017, relating mainly to information technology;
a up to €80 million in financial investments (acquisitions,
partnerships) by the end of 2017 for strategic initiatives,
including up to €25 million for Lab-related activities;
a the possible payment of the amount set aside in the 2015
financial statements to cover the proceedings initiated
by the French Competition Authority (see Note 32 to the
consolidated financial statements for the year ended
December 31, 2015 and Section 2.5 “Administrative, Legal
and Arbitration Proceedings”).
The Group believes that reducing its leverage ratio (at current
scope) could also enable it to benefit from organic growth
opportunities that would create value.
EUROPCAR
2015
247
03
SIGNIFICANT CHANGE IN THE FINANCIAL OR BUSINESS POSITION
3.9 SIGNIFICANT CHANGE IN THE FINANCIAL
OR BUSINESS POSITION
To the Company’s knowledge, there has been no significant change in the Group’s or Company’s financial or business position
since December 31, 2015 other than as described in this document.
3.10 COMMENTS FROM THE SUPERVISORY BOARD
REGARDING THE MANAGEMENT BOARD’S REPORT
AND THE FINANCIAL STATEMENTS FOR THE YEAR
ENDED DECEMBER 31, 2015
Europcar Groupe
A public limited company with Management Board and Supervisory Board with share capital of €143,154,016
Registered office: 2 rue René Caudron - Bâtiment OP 78960 Voisins-le-Bretonneux
Versailles Trade and Companies Register no. 489 099 903
Comments of the Supervisory Board presented to the Combined General Meeting of May 10, 2016
Dear Shareholders,
In consideration of Article L. 225-68 of the French Commercial Code, the Supervisory Board has no comment to make concerning
the report of the Management Board or the financial statements for the year ended December 31, 2015 and asks the General
Meeting to approve all of the resolutions that are proposed by the Management Board.
248
EUROPCAR
2015
04
SOCIETAL,
SOCIAL AND
ENVIRONMENTAL
INFORMATION
4.1
CSR ORGANIZATIONAL OVERVIEW
250
4.4
CONCORDANCE TABLES
265
4.1.1
4.1.2
CSR history and current developments
CSR Reporting Organization and Governance
250
251
4.5
METHODOLOGY NOTE
267
4.2
EUROPCAR, PROMOTING
SUSTAINABLE, SHARED MOBILITY
251
4.6
ILO REPORT
270
1.
4.2.1
4.2.2
Mobility for all our customers and employees
Our fleet, driving sustainable, shared mobility
251
253
Attestation regarding the completeness
of CSR Information
Conclusion on the fairness of CSR Information
4.3
EUROPCAR, RENTING CARS
RESPONSIBLY
4.3.1
4.3.2
A business generating local jobs
An environmental footprint distributed
through the value chain
Local suppliers and sub-contractors
4.3.3
2.
270
271
255
255
261
263
EUROPCAR
2015
249
04
SOCIETAL, SOCIAL AND ENVIRONMENTAL INFORMATION
CSR ORGANIZATIONAL OVERVIEW
4.1 CSR ORGANIZATIONAL OVERVIEW
4.1.1
CSR history and current developments
Europcar’s CSR initiative was strengthened in 2005, when the
Group adhered to the principles of the United Nations Global
Compact. From 2005 through 2012, the Group participated
in the Learner Platform, before achieving the Global Compact
Active Level in 2013. This means that the Group is required to
comply with the United Nations Global Compact’s disclosure
and monitoring requirements, including a statement by the
Company’s CEO expressing the renewal of its support for the
Global Compact, a description of the practical steps taken
by the business and a measurement of the results achieved.
The Group also launched measures to increase environmental
awareness at all of its entities and to establish a dedicated
environmental management team. This voluntary internal
initiative led to the drafting of an environmental charter, certified
in June 2008 by Bureau Veritas, an independent external
organization. The charter has been updated several times since
and is audited by Bureau Veritas each year. The environmental
charter sets forth the Group’s objectives in eight areas:
water, energy, air pollution, biodiversity, waste management,
environmental awareness and responsibility, risk prevention
and management, and the principles and rules applicable to
environmental matters.
In compliance with one of the charter’s requirement, in 2009,
all of the Group’s European operating subsidiaries obtained
ISO 14001 (environmental management) certification. The
certification is audited by Bureau Veritas each year and must
be renewed every three years. The Group’s CSR initiative has
been built on the foundations laid in 2009, in particular with the
appointment of persons tasked with managing and monitoring
environmental questions for each of the Group’s operating
subsidiaries and at the Europcar International level.
non-financial information publication obligations of its historical
reference shareholder, Eurazeo.
Following the Company’s IPO, in 2015 this organization was
reviewed with the appointment of a Group CSR Director tasked
with defining and overseeing the Group’s CSR strategy. This
appointment enables the Group to meet its obligation to collect
and publish social and environmental information in accordance
with Article 225 of the Act No. 2010-788, of July 12, 2010, the
so-called “Grenelle 2 Law” (CSR Reporting).
2015 was thus marked by an effort to consolidate the Group’s
CSR governance, the establishment of a new reference
framework for CSR Reporting to ensure both compliance and
operational supervision, and the launch of actions in tune with
the Group’s renewed commitment to CSR.
In 2015, Europcar carried out work to integrate a CSR
dimension into its purchasing policy. The new policy, which
is being deployed in the Corporate Countries in the first half
of 2016, is based on the results of a comprehensive CSR
questionnaire evaluating suppliers on their level of maturity and
their CSR risks, and provides for the addition of CSR clauses
to calls for tender and supplier contracts.
The Group also bolstered its identification and fraud prevention
processes across all its activities. The first stage of the Fraud
Prevention Plan, covering station fraud, was implemented in
the first half of 2015 (1).
In 2016, the Group plans to establish a more detailed CSR
strategy with action plans for the coming years.
In 2012, the Group published its first social and environmental
report based on the ISO 26000 recommendations, and put
into a place an internal organization to ensure it could meet the
(1) See the paragraph “Suppliers and local sub-contractors” at the end of this section.
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EUROPCAR, PROMOTING SUSTAINABLE, SHARED MOBILITY
4.1.2
CSR Reporting Organization and Governance
To meet the requirements of the Grenelle 2 Law and to speed
up the definition of a value-generating CSR strategy, in 2015 the
Group consolidated its CSR governance structure as follows:
a appointment of a Group CSR Director in charge of CSR
Reporting and of defining and implementing the Group’s
CSR strategy;
a appointment of CSR representatives in the Holdings and
Corporate Countries, responsible for forwarding non-financial
information and implementation of the Group CSR strategy;
a identification of around one hundred CSR Reporting
contributors across the Group’s subsidiaries and
departments;
a drafting of a CSR Reporting protocol detailing all the relevant
procedures and methodologies, distributed to all CSR
Reporting contributors;
a implementation of an internal control process to ensure
consistency in CSR Reporting;
a appointment of an Independent Third Party Organization to
verify the existence and accuracy of CSR Reporting data in
accordance with Decree No. 2012-557 of April 24, 2012.
Dedicated software (SI-RSE) was used to collect non-financial
information, with specific settings to incorporate data from
across the Group. The CSR Reporting scope covers the
Holdings (Europcar International, Europcar Groupe and the
Shared Service Center) and Corporate Countries.
04
For more information on the scope and structure of nonfinancial information collection and consolidation, please refer
to the methodology note at the end of this Chapter.
4.2 EUROPCAR, PROMOTING SUSTAINABLE,
SHARED MOBILITY
4.2.1
Mobility for all our customers and employees
Innovation that supports shared, sustainable
mobility
dialog, transparency and security systems concerning its
stakeholders, i.e. its “customers”, placing them at the heart
of its action.
Europcar wishes to contribute to society by playing a role
in developing tomorrow’s mobility for all. With over 65 years
of experience on the vehicle rental market, the Group is
continuously driving innovation to provide its customers with
an increasingly extensive shared mobility offering.
4.2.1.1 Quality and accessible offering
In particular, with Europcar Lab the Group develops new
mobility offers and solutions which (1), focusing on usage rather
than possession, make it possible to reduce the environmental
footprint of society as a whole.
In addition to the mobility offering per se and its availability to
the widest clientele possible, the Group has also established
Promoter Score
With a view to continuously improving the quality of its services,
the Group tracks customer satisfaction levels based on its
Promoter Score program in place since 2011. The program
gathers feedback from customers as to whether they would
recommend Europcar to friends and family. The Group’s
continued efforts to improve the customer experience were
reflected by a net increase in the Group’s Promoter Score from
2011 to 2014:
2011
2012
2013
2014
58%
66%
72%
79%
(1) See Europcar Lab / Mobility solutions and Europcar® Service Offerings in Section 1.6.2 “Europcar Lab/Mobility solutions”.
EUROPCAR
2015
251
04
Since 2015, Europcar has changed its measurement of
customer satisfaction with the adoption of a more potent
performance indicator, the “Net Promoter Score” (NPS), i.e. the
difference between the brand’s “promoters” and “detractors.”
Detailed analysis of the NPS has identified ways to improve the
score and monitor the performance of actions undertaken. The
method used to gather customer reviews has been harmonized,
and the Group’s NPS score was 44.9 in 2015.
Part of station employees’ variable compensation (as well as
that of all Group employees) is linked to their Net Promoter
Score. Station scores are reviewed weekly and action plans
implemented based on such reviews.
Finally, the Group has a process monitoring tool to manage
customer requests and complaints and ensure they are
dealt with in the best possible way. This system centralizes
all requests, classified by type (duplicate invoice, invoice
explanation, payment means and so on), and monitors the
time required to process and solve customer requests.
In addition to offering a wide range of quality services, the
Group also aims to ensure its offers are accessible to the widest
possible customer base, by providing modern mobility solutions
to all users, including those with a specific budget or other
requirements.
Affected customers
Details of offering
Students
In France the Student Box offer gives students discounted rates for both utility and leisure vehicle rentals,
to facilitate their frequent relocations, in spite of the young drivers’ surcharge.
Families
In Italy, the “Family” offering was expanded with the addition of a customized package (insurance, child car seat,
additional driver, GPS, etc.).
Women
In Spain, a dedicated package has been developed for female customers that includes the guaranteed availability
of the reserved model and comprehensive protection, as well as the gift of an accessory.
Bicycle/motorbike riders
The Group now rents motorbikes and bicycles at many of its stations.
People with reduced mobility
In Germany and in the United Kingdom, vehicles fitted with hand controls are available for people with reduced
mobility.
Cost-sensitive customers
Since 2013, the Group offers low-cost rental in most European countries under its attractively priced InterRent
brand. This offer allows customers on a low budget to find suitable mobility solutions.
The Group also pursues sustainable mobility solutions internally,
in particular with the launch of its subsidiary Ubeeqo’s services
at its head office. This initiative, known as Bettercar Sharing,
provides employees without a company vehicle with courtesy
cars they can use for personal and work-related trips at the
Europcar International and Europcar France head offices.
Europcar International and Europcar France has also
implemented a solution in partnership with Wayz-Up, allowing
their employees at the Voisins-le-Bretonneux sites near Paris
to car pool for their commute.
4.2.1.2 Transparent offering
In 2015, the Group committed to a set of 18 measures
promoting the transparency of offers made to customers in
the European Union. The Group wishes to promote these
measures, as it believes they can contribute to improving its
customer relations, from the booking stage to when the vehicle
is returned by the customer to the station and including the sale
of insurance protection.
252
Online assessment and feedback services to improve
transparency, customer interaction and satisfaction levels have
also been available since 2014.
EUROPCAR
2015
In practical terms, one of the key measures implemented
involved amending the general rental terms and conditions
to ensure greater transparency and understanding by the
customers.
The insurance protection offering, a vital part of Europcar’s
customer safety policy, has also been reviewed, and made
clearer and more transparent, as well as more consistent
between countries where the Group is active. It is now based
on three simple packs (basic, medium and premium), offering
increasing protection levels and decreasing damage waiver
amounts.
Lastly, of particular relevance among these transparency
boosting measures is an email sent to customers summarizing
the key elements of their rental, as well as the applicable terms
and conditions after the booking is completed (which are also
available at the stations and on the website) or the inclusion of
the young driver surcharge at the start of the booking process,
where applicable.
4.2.1.3 Customer safety and protection
Customer safety and protection are a Group priority: from
vehicle inspection and maintenance in accordance with written
procedures displayed at the preparation sites, the availability
of customized insurance protection to meet a range of diverse
customer needs, to customer support as part of roadside
assistance.
In addition to the main guarantee of safety, namely the average
age of fleet vehicles (8.9 months across the entire fleet of the
Group), Europcar arranges for each vehicle to be inspected
and cleaned at the end of every rental and to be maintained
according to the manufacturer’s recommendations. Mandatory
checks before each departure include dashboard lights (battery,
temperature, brake pads, etc.), levels (gasoline, tire pressure,
oil, wiper fluid, etc.), rearview mirrors, lights, tires, windshield
and body.
Europcar must follow the maintenance specifications of the
respective manufacturers in order to maintain the warranty and
repurchase commitment on the vehicle. Europcar operates
vehicle maintenance centers at certain rental stations in the
Corporate Countries, providing routine maintenance and light
repair facilities for its fleet. Major repairs, in particular if related
to collision damage, are generally performed by independent
contractors.
4.2.2
The insurance offering, revamped in 2015 to provide greater
clarity, covers all the risks customers may be exposed to and
offers protection up to full liability waivers. All damage types
can be covered: from liability insurance, which is included and
mandatory with every rental, to theft, and from vehicle damage
(including glass breakage or punctured tires) to the loss of
personal effects in the event of an accident.
All vehicles rented by Europcar are covered by MTPL (Motor
Third Party Liability) policies issued by recognized insurance
companies in their markets.
Twenty-four hour roadside assistance is available to all
customers in the event of any issues during the rental period
(accidents, technical faults, lost keys, etc.). The best solution to
ensure the customer’s mobility will be identified based on the
issue. In general, response time, included in the service level
guaranteed by the assistance providers, is around one hour.
04
Lastly, the Group offers its customers the option to access a
complete range of equipment that provides a greater level of
safety: winter tires or chains, driver assistance systems (parking
assist, cruise control, etc.).
Our fleet, driving sustainable, shared mobility
Fleet description and utilization
The functionality economy, which prioritizes the sale of an
integrated product-service solution (usage) rather than an
individual product or service, is at the core of Europcar’s model.
Thanks to the fleet made available by the Group, customers can
focus on using rather than owning a vehicle. This approach is
increasingly in line with the expectations of society. This shared
mobility model is beneficial to the environment, in particular
because it leads to far higher utilization rates compared with
the use of individual cars.
The benefits of the Group’s vehicle purchasing model are even
greater, given the average holding period of 8.9 months across
the Group at December 31, 2015, which translates into a very
young fleet and consequently the Group’s ability to offer its
customers vehicles that meet the most recent standards in
terms of average consumption, greenhouse gas emissions
and safety.
During the year ended December 31, 2015, the Group took
delivery of approximately 278,500 vehicles and operated an
average rental fleet of 205,353 leisure and utility vehicles.
To meet its customers’ needs, the Group has diversified its
sourcing. In 2015, approximately 30% of its fleet was acquired
from Volkswagen, 14% from General Motors, 13% from Fiat,
11% from Renault, 9% from Peugeot Citroen, 7% from Daimler,
6% from Hyundai, 3% from Ford and the remaining 7% from
other manufacturers.
Across all cars resold in 2015, the Group sold approximately
7 billion mobility kilometers to its customers, of which
approximately 60% on Mini, Economy or Compact models.
Fleet delivery
To meet customer demand and ensure there are always
vehicles available at the right time and in the right place, the
Group must manage its fleet across the different rental stations.
Whenever possible, the Group chooses pooled delivery means
(trucks, trains or even ships) and also relies on drivers who
move the cars from one station to the other or to the customer’s
home, where this service is available. The Group optimizes
these trips in both financial and distance traveled terms, thereby
minimizing their environmental footprint. In 2015, the distance
traveled for vehicle delivery was just 2% of the distance traveled
by rented vehicles.
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2015
253
04
Lastly, in certain countries, the Group offers a “€1 return” option
enabling customers to bring back one-way rentals to the point
of origin. This enables vehicle retrieval free of charge and avoids
the CO2 emissions associated with alternative vehicle recovery,
while customers can travel paying only for fuel. In 2015, either
directly or through external partners in charge of distributing
offers, over 1.6 million kilometers were travelled under the “€1
return” option across the Group.
CAR DELIVERY ASSISTED BY BICYCLE
In 2015, in eight locations across the country, Germany pilot-tested delivery or collection of reserved vehicles to the home
by an employee using a bicycle. The concept is very simple: It enables a reserved vehicle to be delivered or picked up using
only one employee, who drives the reserved vehicle on delivery or return, and travels in the opposite direction using a folding
bicycle stored in the vehicle’s trunk. The environmental gain is significant since it saves one round trip by car for each delivery or
collection (i.e. the accompanying car driven by a second driver in order to bring or take back the employee driving the delivered
car). This is an example of value-creating environmental innovation since it also enables the Group to benefit from the related
financial savings.
Overview of greenhouse gas emissions
The table below shows the Group’s greenhouse gas emissions
for scopes 1 and 2, corresponding to direct (scope 1) and
indirect (scope 2) emissions from energy consumption.
The table shows the emissions from internal fuel consumption
across the Group as well as energy consumption of head
offices and stations within the CSR Reporting scope (electricity
and gas). Over and above the internal consumption of fuel,
the Group’s internal energy consumption is thus relatively
low, mostly originating in the remaining part of the value chain
(scope 3): outsourcing of car washing and repairs, upstream
carbon associated with car manufacturing, customers’
combustion of oil and fuel, fleet delivery, etc.
In t CO2 eq.
2015
Coverage rate
Scope 1
20,105 ✔
95 – 99%
Scope 2
Total scope 1 & 2
Thanks to its purchasing policy, based on a short holding
period, the Group can always rely on the best possible fleet,
as it purchases its vehicles new. Consequently, the average
emissions in grams of CO2 per kilometer ✔ (manufacturers’
figures) of the Group’s fleet have been decreasing year after
year:
151
146
140
134
127
124
119
120
95%
95 – 99%
vehicles for their use, all other things being equal, the mobility
services it provides translate into a way to reduce emissions.
Given that the average age of vehicles in France is 8/9 years,
according to the CCFA survey (1), we can estimate that the
average emissions of current vehicles is in line with those of
new cars sold in 2007, i.e. approximately 150g CO2/km.
In view of the number of kilometers traveled on the Group’s
European fleet (excluding commercial vehicles), we estimate
the emissions avoided on this scope at roughly 176,000 tCO2e.
This means that emissions avoided on this scope represent
roughly 20% of the emissions generated by customers on all
7 billion kilometers of mobility provided by the Group.
160
140
6,359 ✔
26,464 ✔
118
In addition to the intrinsic benefits of the Group’s model (young
fleet and high utilization rates), Europcar spares no effort to
reduce its own and its customers’ carbon footprint:
100
Nov-08 Sept-09 Aug-10 Dec-11 Dec-12 Nov-13 Dec-14 Jan-16
This chart shows the emissions of the European scope
excluding commercial vehicles.
Although it is true that Europcar carries a part of the
environmental footprint of its customers by holding a fleet of
a a website (2) dedicated to environmental awareness has
been developed and shows customers the processes put
in place by the Group to reduce its footprint, as well as its
“green” vehicle offering (hybrid or electric), accessible to all
customers, and lastly offers nine “green tips” for reducing
fuel consumption on the road;
(1) Committee of French Automotive Manufacturers: The French Automotive Industry, Analysis and Statistics 2015.
(2) http://microsite.europcar.com/green/
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EUROPCAR
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EUROPCAR, RENTING CARS RESPONSIBLY
a every year the Group increases the proportion of hybrid and
electric vehicles in its fleet, based on customer demand and
market maturity in terms of both offering and infrastructure.
In 2015, Europcar hybrid and electric vehicles traveled over
11 million kilometers;
a to raise awareness and to help customers choose, the CO2
emissions of each vehicle (manufacturers’ figures) are posted
on the Group’s website during the booking process starting
from the first screen and are also included in the customer’s
invoice;
a to help its Corporate customers prepare their carbon
emissions statements, the Group has been providing the
“Carbon Emissions Report” since 2011. At the customer’s
request, Europcar provides information for calculating and
documenting the carbon emissions generated by vehicles
rented by their employees.
WEFOREST
Since 2013, the Group has also taken measures to limit the effects of climate change and increase biodiversity through its
collaboration with WeForest.
04
Through this program, the Group gives its customers the chance to offset a portion of their CO2 emissions when they rent
Europcar vehicles. WeForest is an international non-profit organization working against climate change. The funds collected are
used to finance reforestation and sustainable energy projects. The inclusion of such a carbon-offset program when reserving a
vehicle promotes the involvement and awareness of Europcar’s customers in climate change issues. But Europcar also works
alongside its customers, since on each reservation, the customer is asked to give 50 euro cents, which are then matched by
the Group, enabling 2 trees to be planted in the Burkina Faso desert.
4.3 EUROPCAR, RENTING CARS RESPONSIBLY
4.3.1
A business generating local jobs
4.3.1.1 Group operations
Europcar offers vehicles to its Leisure and Corporate customers
from stations located at airports, railway terminals, hotels,
resorts, office buildings, and other urban and suburban
locations.
Outside airports, the car rental market is very fragmented, with
numerous smaller vehicle rental businesses, each with limited
market share and geographical distribution.
Within the Subsidiaries in other countries, with 1034 rental
stations owned by the Group and approximately 900 stations
operated by agents and franchisees that had revenue in 2015,
the Group has operations in a diverse range of geographical
locations. The Group provides a significant contribution to
local dynamics wherever it is present, be it in tourist areas
and resorts through its Leisure and Vacation customers, or in
business and industrial areas through its Business customers.
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255
04
In particular, with two-thirds of the staff working in the station networks and just one-third in the head offices, the Group is an
important local employer:
HEAD OFFICE/RENTAL STATION WORKFORCE DISTRIBUTION** (1)
Workforce at 12/31
2015
Headcount Head offices
2,466
38%
Headcount Stations
4,094
62%
The staff of the Holdings and the Shared Services Center have
been included in the Head offices headcount.
4.3.1.2 A dynamic approach to workforce
management
The business is, by nature, very seasonal, with strong fluctuations
during the year but also during the week. Consequently, the
Group must manage its workforce dynamically to meet the
needs of its Leisure and Corporate customers.
The geographical breakdown of the workforce is a reflection of the Group’s international operations and its business levels within
each country.
WORKFORCE DISTRIBUTION BY COUNTRY**
Workforce at 12/31
2015
TOTAL
Europcar International and Europcar Group
Shared Services Center
6,560 ✔
100%
316
5%
280
4%
Germany
1,562
24%
France
1,227
19%
United Kingdom
1,156
17%
Spain
642
10%
Australia
473
7%
Italy
438
7%
Portugal
292
4%
Belgium
116
2%
58
1%
New Zealand
WORKFORCE DISTRIBUTION BY AGE*
Workforce at 12/31
2015
Under 25
282
5%
From 25 year to 35 years
1,915
33%
1,931
33%
1,258
21%
497
8%
More than 55 years
Among permanent employees, approximately two-thirds of the workforce are aged between 25 and 45 years, 60% have more
than 5 years’ service and over 40% more than 10 years’ service.
(1) Throughout this section, an asterisk (*) signifies that the data relate to permanent headcount only; two asterisks (**) signify that the data relate to
permanent and fixed-term headcount
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WORKFORCE DISTRIBUTION MANAGERS/NON-MANAGERS*
Workforce at 12/31
2015
Managers
1,512
26%
Non-managers
4,371
74%
Managers, defined as having responsibility for a team, a budget or a function, account for approximately one-quarter of the Group’s
workforce, and are divided between headquarters in Corporate Countries and stations.
HIRINGS AND DEPARTURES OVER THE YEAR**
2015
2,048 ✔
Hirings
Number of voluntary departures
893 ✔
41%
Number of departures initiated by employer
498 ✔
23%
Number of departures for other reasons (contract ended, retirement)
784 ✔
36%
WORKING TIME ORGANIZATION
To meet the mobility needs of its customer base, the Company
requires a dynamic approach to its workforce, with the ability
to adjust its Human Resources to the level of business. Due
to the seasonal nature of the business, with yearly, weekly and
04
even daily peaks, the Group uses different types of contracts
depending on the country and in compliance with local
regulations, from close-ended contracts of a few weeks or
months (for fixed-term staff) to weekly or hourly based contracts
(including seasonal staff).
The Group thus adjusts its staff to the business, as shown by the graphs below:
DIFFERENCE FROM THE ANNUAL AVERAGE OF THE FLEET
DIFFERENCE FROM THE ANNUAL AVERAGE FIXED-TERM
AND SEASONAL HEADCOUNT
60,000
292
37,114
40,000
250
114
20,000
4,546
50
0
-8,995
-20,000
-40,000
-150
-96
-32,666
Q1
Q2
Q3
Q4
-350
-309
Q1
There is a significant correlation between the fluctuation in
temporary and seasonal staff and the changes in the average
fleet over the year. Mostly located in the United Kingdom,
Germany and Spain, seasonal staff accounted for approximately
2,000 full-time equivalent employees over the year.
Q2
Q3
Q4
ORGANIZATION OF WORKING TIME
2015
Proportion of permanent part-time employees*
10.3%
Overtime (all types of contracts) (in hours)
301,218
Hours of atypical work (all types of contracts)
242,446
Absenteeism**
EUROPCAR
4.6%
2015
257
04
To meet its customers’ demands, Europcar stations need to be
open outside normal business hours, principally in the evening,
Sundays, and holidays, depending on the country. In all the
countries, the Group complies with the applicable regulations
under collective bargaining agreements and employees working
outside standard hours are paid a premium.
multiple and complex national labor laws. With the exception of
very few individual proceedings, the Group has not received any
type of sanction for failure to comply with the labor regulations
of the countries in which it operates. As regulations in the
countries where the Group operates are in line with and often
stricter than ILO (International Labor Organization) directives,
the Group is compliant with said directives.
4.3.1.3 Labor policy
The Group promotes a labor policy built on social dialog,
diversity and gender equality, and on training and health/safety
policies leading to low absenteeism and accident rates, as well
as a balanced gender ratio at Group level.
With operations in seven European countries as well as in
Australia and New Zealand, the Group needs to comply with
YOU MAKE THE DIFFERENCE
As part of the “You make the difference” program, whose objective is strengthen the corporate culture within the Group, in
June 2015 the Company launched a first flagship initiative around its values: the Europcar 2015 Trophies, organized in all the
subsidiaries. These trophies reward the attitudes and behaviors the Group wishes to promote. Each quarter, different attitudes
related to Group values are highlighted. For 2015, Europcar chose to concentrate on three of its values: commitment, flexibility
and trust, and to promote the following attitudes: cooperation, open-mindedness and passion, pro-activeness, influence,
simplicity and leadership, etc.,
LABOR RELATIONS, COLLECTIVE BARGAINING
AGREEMENTS, CORPORATE CLIMATE
ORGANIZATION OF LABOR RELATIONS
The Group abides by local regulations in all countries with
regulated labor relations. Accordingly, in France, Germany,
Spain, Italy and Belgium, labor relations are built around works
councils which discuss any topics as required, in relation to
employment, equal opportunities and equality, the Company’s
financial position and so on, depending on the country.
In Australia and New Zealand, the Group has been proactive in
establishing constructive labor relations through team meetings
and monthly telephone conferences, yearly roadshows,
regular bulletins and emails sent to the employees, and a
dedicated email address enabling employees to contact senior
management directly.
OVERVIEW OF THE COLLECTIVE BARGAINING AGREEMENTS
Within the Group, 52 collective bargaining agreements are
active as of December 31, 2015, including 8 signed during
the year. These collective bargaining agreements cover different
subjects such as working time organization, pensions or
compensation.
SOCIAL CLIMATE AND EMPLOYEE SATISFACTION
The Group has implemented and deployed in all of its Corporate Countries and holding companies an internal tool to assess the
social climate. Employees are asked to express their level of satisfaction on a scale from 1 to 10 as part of a quarterly survey. The
results are then consolidated for each country and analyzed by the Human Resources teams, including regional teams, before
being passed on to the General Manager of each subsidiary. Depending on the detailed results and the associated comments that
employees are also free to give, action plans are implemented if needed. The satisfaction rate averages 7 out of 10.
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EUROPCAR
2015
HEALTH/SAFETY
Within the Group, four collective agreements relating to health
or safety were in force at December 31, 2015, one of which
was signed during the year.
In the majority of the countries where the Group is located,
signing health and safety agreements with staff representation
bodies is not mandatory. The Group has, however, implemented
various measures to reduce the frequency and severity of
workplace accidents, which are thus low.
In its French subsidiaries, regulation largely covers these
measures, but in addition to the CHSCT meetings and keeping
records of the Risk Assessment Documents, in 2015 for
example, Europcar France introduced an internal report that
managers must complete after each accident and on which they
can note any preventative measures to be implemented so that
the accident does not occur again. In the stations, employees
are required to wear Individual Protection Equipment.
In certain countries like Germany and Portugal, site safety
management is operated in partnership with independent
certification bodies, enabling the Group to ensure risks are
identified and procedures implemented to minimize them.
In other countries such as Spain and the United Kingdom, the
Group relies on benchmarks and standards such as OHSAS
18001 (1) or COSHH (2) in order to comply with regulations and
define its Health and Safety policy. Italy renewed its OHSAS
18001 certification in 2015.
In Australia and New Zealand, various policies and procedures
are developed to identify station risks. In addition to the
monthly inspection of sites with car washing equipment, and
an inspection every hour months for other sites, all employees
are trained in health and safety practices when they join the
Company and annually thereafter. All job descriptions define
the health and safety responsibilities related to it.
In Belgium, a Hygiene, Health and Safety and Working
Conditions Committee meets every month to review potential
risk areas and identify improvements to be made.
In the Holding Companies, evacuation drills and staff first aid
training are carried out regularly.
Workplace accidents
Number of workplace accidents
Number of days lost time due to workplace accidents
Number of fatal workplace accidents in the year
Workplace accident frequency rate
Workplace accident severity rate
2015
160
3,771
0
12.9
0.3
The activities of Group employees do not cause any
occupational illness in any of the Corporate Countries or Holding
Companies. In particular, employees of Europcar France are
not exposed to levels exceeding the limits set by legislation
for any of the factors deemed by legislation to be particularly
harsh (cold, noise, posture etc.) However, Europcar France has
nonetheless recognized that certain employees, in particular
the vehicle preparation agents or customer service agents,
could be engaged in tasks deemed “harsh” and a collective
bargaining agreement covering this has been agreed with the
social partners (unions and management) to mitigate its effects.
COMPENSATION POLICY AND SOCIAL SECURITY
04
Over 2015, all benefits and salaries together amount to
approximately €266 million.
The compensation policy is, depending on the country, based
on pay scales in accordance with the collective bargaining
agreements, either internal pay scales set by the Company or
on local labor market conditions.
Europcar complies with local regulations which, in certain
countries, regulate compensation for working hours outside
of the traditional work week (evenings, weekends and holidays)
by offering higher pay to those employees affected.
Many employees benefit from a variable component of
compensation linked to monthly or annual performance
objectives depending on the type of position. At the Group
level, more than 20% of the total payroll is variable and based
on performance objectives.
Benefits **
2015
Number of employees covered by optional health
insurance
2,542
Number of employees covered by optional death
and disability insurance
5,064
Number of employees covered by optional retirement
insurance
3,215
A large number of employees receive company benefits
(health, provident or retirement) providing higher benefit levels
than the legal minimums. The granting of this complementary
coverage depends on criteria specific to each country, chief
among which are age, seniority within the Company, the type
of contract (permanent, fixed-term and status as a manager
or member of the Executive Committee). In certain countries,
these corporate employee benefits enable the Company to
build employee loyalty by offering more favorable terms than
those in the local market.
In all other cases, Europcar complies with its obligations from
internal agreements or collective bargaining agreements.
(1) OHSAS is an international standard for managing workplace health and safety.
(2) COSHH is a set of UK regulations requiring employers to control substances that are hazardous to health.
EUROPCAR
2015
259
04
TRAINING AND ANNUAL REVIEWS
Staff training is a key factor in the Group’s success. Whether it
be at the rental agency counter, where the training of teams in
service quality and sales has a direct impact on the brand image
and Group profits, or behind the scenes, where the safety of
employees and the quality and speed of vehicle preparation is
a direct result of training policies, the Group provides training
plans in all countries training tailored to each type of job or
employee.
Employees in head offices also benefit from training plans
tailored to their activities.
In 2015, 86,530 hours of training were provided.
The training objectives are to improve the value of each team,
of each team member and to create an environment that
maximizes opportunities and minimizes inefficiency. Training
plans are defined on the basis of achieving a balance between
the economic and performance requirements of the Group,
individual aspirations and local regulations.
Training plans are also defined based on individual interviews
held with the majority of employees, whether or not they are
managers, and working in agencies or in head offices. The
procedures for annual reviews are formalized and based on
performance criteria and objectives, as well as on the areas of
commitment and personal development.
In the area of youth employment and training, in some countries
the Group takes on apprentices, some of whom are then
recruited permanently. There were approximately 164 full time
equivalent employees taken on as apprentices across the
Group in 2015, representing almost 3% of headcount.
OUR NEIGHBORHOODS HAVE TALENT
Europcar International signed a partnership agreement with the “Nos quartiers ont des talents” (Our neighborhoods have talent)
organization in July 2015. This organization puts together companies and young graduates with four or five years of post-high
school education, who come from disadvantaged backgrounds and cannot find employment. The organization looks for male
and female sponsors within these companies who will be able to help these young people to better understand the working
world by coaching them (reviewing CVs, interview practice, following their progress, etc.). Europcar International signed up to
this community initiative and as of December 31, 2015 had 16 sponsorships with young people in the Ile-de-France region.
ANTI-DISCRIMINATION
By drawing on its geographic presence in very different regions,
the Group is a significant local employer relying on the diversity
of the regions in which it operates in order to recruit.
The Group furthermore complies in a proactive way with
different local regulations designed to fight discrimination. The
Group communicates internally pursuant to legal requirements
and trains employees in compliance with non-discrimination
principles, both in the recruitment process, where the Human
Resources departments are trained in non-discrimination, and
in the corporate environment. The majority of countries have
formal and internally communicated anti-discrimination policies.
In particular, concerning the employment of people with
disabilities, no discrimination is practiced in hiring, and in certain
countries where it is allowed, positive discrimination is even
practiced where possible.
In Italy, regulations require recruitment of a minimum percentage
of people with disabilities. The Group complies with this law,
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EUROPCAR
2015
with one disabled person recruited in 2015 and 21 in the
headcount as of December 31, 2015, which represents
approximately 5% of the permanent and fixed-term headcount.
In France, despite efforts undertaken to adapt jobs and work
with ESAT whenever possible, the Company has not reached
the minimum regulatory requirement of 6% of its headcount
being people with a disability.
MALE/FEMALE EQUALITY**
The anti-discrimination policy extends to parity between the
sexes and the Group is exemplary in this regard. All antidiscrimination policies of Group subsidiaries state that gender
cannot be a selection or remuneration criterion and that is
reflected in the figures showing a balance between male and
female headcount across the Group.
The Group also ensures that both genders are represented
within its management and governance, with a female presence
in its Management Board and Supervisory Board of 25% and
30% respectively at year-end 2015.
2015
Men/Women Breakdown
Headcount at 12/31
%
Men
3,297 ✔
50.3%
Women
3,263 ✔
49.7%
Men on the Management Board
3✔
75%
Women on the Management Board
1✔
25%
Men on the Supervisory Board
7✔
70%
Women on the Supervisory Board
3✔
30%
WOMEN AT EUROPCAR
04
Europcar puts parity and fairness at the heart of its corporate culture. With the development of the “Europcar Women” community
and forums, the Group hopes to support the contribution of women internally at all levels and give them the resources to
succeed: training, career development, succession planning, and personnel development.
In this context, the Group actively supports the PWN (Professional Women’s Network), which is a network of European women
whose mission is to support women in their promotion to strategic positions.
4.3.2
An environmental footprint distributed through the value chain
As a provider of mobility, the Group holds and maintains on
behalf of its customers a substantial fleet of vehicles. The
Group’s model is virtuous from the environmental point of view,
since it enables Group customers to travel with new and wellmaintained vehicles, thus minimizing consumption, emissions
and accident risks.
The environmental footprint of the business is thus shared
between the customer as user (usage of the vehicle and fuel
consumption), the Group (administration and delivery of the
fleet) and its sub-contractors (vehicle washing, preparation and
repair).
As the Group does not carry out any industrial activities, the
risks of environmental pollution are thus limited and essentially
only concern the washing areas and the fuel storage tanks.
Organization of the Group and training related
to the environment
Since 2007, Europcar has had a pro-active environmental
charter, approved by Bureau Veritas, deployed across the
Group and addressing the management of the following issues:
water, energy, air discharges, biodiversity, waste management,
environmental responsibility and risk management.
Furthermore, the European Corporate Countries have all
been ISO 14001 certified since 2009. This environmental
management system has enabled the Group to identify
environmental risk areas and implement tailored procedures
and training.
The amount of provisions and guarantees for environmental
risks as of December 31, 2015 is thus insignificant (around
€50,000) and no environmental penalties were imposed on
the Group in 2015.
The Group’s “green” initiatives resulted in its winning the World
Travel Awards trophy for World’s Leading Green Transport
Solution Company 2015, its sixth consecutive win.
Environmental footprint
Although the Group carries and shares a part of the
environmental footprint of its customers by holding a fleet
of vehicles for their use, it also externalizes a significant part
of its environmental footprint, essentially comprised of the
maintenance, washing and delivery of its vehicle fleet.
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2015
261
04
The footprint shown below thus only shows the Group’s internal consumption:
2015
Consumption
Water (cu.m.)
Coverage rate
326,512
86%
17,227 ✔
95%
Renewable energy (MWh)
5,375 ✔
92%
Natural gas (MWh)
6,384 ✔
95%
28,986 ✔
86-95%
7,462,453 ✔
99%
Electricity (MWh)
Total energy excluding fuel (MWh)
Fuel consumed internally (liters)
The costs related to water and energy consumption are, for a
number of stations, included in the premises’ rental charges,
and it is difficult to obtain more detailed information. This
explains the fact that coverage rate of (1) these figures is not
100%.
Beyond the issues of car washing discussed in the following
paragraph, the Group has implemented best practices as
quickly as possible for reducing water and energy consumption
in its head offices and networks: timed self-closing faucets, low
flush toilets, lighting operated by motion detectors, replacement
of existing lighting by LED lighting, air conditioning automatically
shut off after 8 pm, etc.
The Group’s non-hazardous waste is mainly from office
uses and paper. The Group considers these impacts to be
non-material in relation to its activity and has therefore not
implemented any strategy to collect this information. Various
steps have nevertheless been carried out across the Group
(head offices and networks) to reduce paper and office waste
as much as possible and increase their recycling. In addition
to sorting, collecting and recycling this type of waste, the
Group’s main initiative in this area is to go paperless in the
billing and contract signing procedures. In 2015, more than
1,220,000 invoices were neither printed nor sent by mail to
Group customers, representing a paperless rate of 12.5%
across the whole Group (Leisure and Corporate customers),
and 25% on Leisure customers alone.
The classification of waste as hazardous waste depends on
local regulations. The Group mainly produces the following
hazardous waste: computer waste and toners for the head
offices, and neon lights, batteries and sludge from hydrocarbon
separators in the stations. The Group complies with local
regulations for waste treatment and implements treatment and
recycling procedures guided by its ISO 14001 environmental
management system.
2015
Consolidated Group
data
Coverage rate
Quantity produced
318
87%
Quantity recycled
119
93%
Tons
In terms of its ground footprint, the Group has areas used
permanently for head offices and the network and parking
lots actively managed according to the activity. The orders
of magnitude and the types of area occupied by the Group
(basement or on an upper level) are not such as to make ground
usage a significant issue for the Group in terms of environmental
impact.
The Group has 267 ✔ tanks used mainly to stock oil and
fuel. The Group complies with local regulations covering the
ownership and operation of reservoirs to stock oil and fuel
and also uses procedures implemented in compliance with
ISO 14001 to reduce leakage risks. Accordingly, the tanks
are regularly monitored and a significant number of them are
equipped with leak detectors, alarms and double bottoms. No
leaks were detected in 2015.
Car washing
In addition to the environmental and carbon footprint related
to the typical lifecycle of cars (manufacture, transport, usage,
maintenance, end of life), the Group’s main environmental
impact relates to the cleaning of cars, which is the source of
water, energy and chemical product consumption.
(1) For more information on the coverage rate, please refer to the methodology note.
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In certain countries, such as Germany, the washing of cars
is almost entirely sub-contracted (outside of the station) to
the extent that the Group does not have its own washing
equipment. In other countries, the Group has washing facilities
operated either by Group employees or by sub-contractors.
In 2015, the Group started work to analyze the consumption
related to both internal and sub-contracted car washing.
The purpose of this work is to understand and reduce the
impact of car washing in terms of its consumption of resources
(energy, water and chemical products) and discharges into the
environment.
Nevertheless, many steps are already in use within the Group,
sometimes enabling a very substantial reduction in the impacts
from car washing, in terms of both water and energy resource
consumption, and pollution risks:
in a washing gantry, but cleaned by hand as necessary and
without water, thus saving substantial amounts of water,
energy and chemical products on a Group scale, even if
the number of vehicles prepared this way remains marginal;
a many stations, including the biggest in all countries, are
equipped with a filtration system (hydrocarbon separators,
decanters, active charcoal filters) and used water recycling
system operating in an almost closed circuit. Thanks to these
systems, between 70% and 80% of the water required for
each wash comes from the recycling circuit, depending on
the type of equipment, and only the remaining water required
is taken from the water supply network.
Including hot countries and areas of water stress, there were
no restrictions on water usage in 2015, and the Group did not
incur any penalties in this regard.
04
a when the vehicle (in general a very short-term rental) returns
in an almost immaculate state on the exterior, it is not washed
4.3.3
Local suppliers and sub-contractors
Breakdown between suppliers
and sub-contractors
Corporate social responsibility (CSR) policy
in the value chain
Present in Europe, Australia and New Zealand, the Group
makes 99% of its purchases in these geographic regions and
has contracts with only approximately 30 suppliers in Asia
or South America, representing approximately 0.2% of the
Group’s purchasing volumes.
As well as being a significant provider of local employment,
the Group is also a purchaser, with relationships with a large
number of local suppliers, often small companies.
NUMBER OF DIRECT SUPPLIERS
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
18,075
1,459
32
Europe The Pacific North
America
19
11
Asia
South
America
0
The Group measures and monitors the risk level of its suppliers
depending, on the one hand, on the potential social risks (which
are limited given the geographic areas in which the Group
operates) and on the other hand, on the supplier’s revenue
from Europcar (dependency risk).
To further understand and manage its supply chain, and to
follow an improvement process with its suppliers, in 2015, the
Group undertook major work to formalize the way it takes into
account CSR progress and risk criteria in its purchasing policy.
From the inclusion of CSR clauses in tenders and contracts, to
a complete CSR questionnaire sent to all its existing or potential
suppliers, this new policy will be deployed in all Subsidiaries
in 2016.
Africa
With more than 19,500 suppliers, the Group has essentially
two supplier types: Group suppliers (fleet, insurance, bank, IT,
etc.) and a very large number of local suppliers enabling each
station to operate locally (repairers, transporters, recruitment
agencies, etc.).
EUROPCAR
2015
263
04
Fraud prevention and fight against corruption
and money-laundering
The Group’s Internal Audit Department oversees identification
and fraud prevention processes for all of its activities. This
process was strengthened in 2015 by a Fraud Prevention Plan,
the first part of which, covering station fraud was implemented
in the first half-year.
non-compliance situations and risks, as well as to present
any corrective measures taken; (ii) ensure that all employees
have received training related to the Group’s values charter,
conflicts of interest, personal data protection and competition
law over the course of the fiscal year; and (iii) certify, in particular,
the absence of any conflicts of interest and compliance with
anti-corruption rules, personal data protection, labor laws and
human rights.
The Group has implemented a signed reporting policy.
Under this policy, the managers of the Group’s different
subsidiaries sign an annual compliance letter. The purpose of
the compliance letter is in particular to (i) notice and analyze
Moreover, in the context of its compliance program (including
anti-corruption, compliance with economic sanctions, antifraud), the Group has recently adopted a data-processing tool
allowing for the identification of at-risk commercial partners.
AUSTRALIA/NEW ZEALAND
Group employees are trained in anti-corruption rules every two years as part of training related to the “Competition and
Customers” act. A code of conduct governing the relationship with suppliers and specifying the required standards of integrity
and conduct must be signed by all employees authorized to send purchase orders. Finally, employees must sign an annual
conflict of interests or potential conflict of interests declaration.
264
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CONCORDANCE TABLES
4.4 CONCORDANCE TABLES
Section
SOCIAL INFORMATION
Employment
Total headcount and breakdown of employees
4.3.1.2
4.3.1.3
Hirings and dismissals
4.3.1.2
Compensation and its change
4.3.1.3
04
Working time organization
Working time organization
4.3.1.2
Absenteeism
4.3.1.2
Employee Relations
Organization of labor relations
4.3.1.3
Overview of the collective bargaining agreements
4.3.1.3
Health and safety
Health and safety conditions at work
4.3.1.3
Summary of the agreements signed relating to health and safety at work
4.3.1.3
Workplace accidents and occupational illnesses
4.3.1.3
Training policies
4.3.1.3
Total number of training hours
4.3.1.3
Training
Equal treatment
Measures taken to promote equality between men and women
4.3.1.3
Measures taken to promote employment and inclusion of disabled persons
4.3.1.3
Anti-discrimination policy
4.3.1.3
Promotion and respect for the provisions of the ILO’s fundamental conventions
Respect for the freedom of association and right to collective bargaining
4.3.1.3
Elimination of discrimination in matters of employment and occupation
4.3.1.3
Elimination of forced or compulsory labor
n/a,
see note on methodology
Effective abolition of child labor
n/a,
ENVIRONMENTAL INFORMATION
General Environmental Policy
Company organization to take environmental questions into account
4.1.1
4.1.2
4.3.2
Training and information regarding environmental protection
4.3.2
Resources dedicated to environmental risk and pollution prevention
4.3.2
Amount of environmental risk provisions and guarantees
4.3.2
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265
04
CONCORDANCE TABLES
Section
Pollution and Waste Management
Prevention, reduction or remediation measures for air, water, and soil discharges severely affecting
the environment
4.2.2
4.3.2
Measures to prevent recycle and eliminate waste
4.3.2
Taking noise pollution and any other form of pollution specific to an activity into account
n/a,
Sustainable Use of Resources
Water consumption and water supply depending on local constraints
Consumption of raw materials and measures taken to improve the efficiency of their use
4.3.2
n/a,
Energy consumption, the measures taken to improve energy efficiency and use of renewable energy
4.3.2
Ground use
4.3.2
Climate change
Greenhouse gas emissions
4.2.2
Adapting to the consequences of climate change
n/a,
Protection of Biodiversity
Measures taken to protect and increase biodiversity
n/a,
SOCIAL INFORMATION
Territorial, economic and social impacts of the Company’s activity
Regarding employment and regional development
4.3.1.1
On neighboring or local populations
4.3.1.1
Relationships maintained with persons or organizations interested in the Company’s activity.
Conditions for dialogue with these persons or organizations
4.2.1
Partnership or sponsorship initiatives
4.2.2
Sub-contractors and suppliers
Taking account social and environmental issues in the purchasing policy
4.3.3
Importance of sub-contracting and taking into account suppliers’ and sub-contractors’ social
and environmental responsibility
4.3.3
Fair trade practices
Action taken to prevent corruption;
4.3.3
Measures taken to promote consumer health and safety
Other actions taken to promote human rights
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EUROPCAR
4.2.1.2
4.2.1.3
n/a,
2015
METHODOLOGY NOTE
4.5 METHODOLOGY NOTE
As a listed company and in accordance with Article 225 of Law No. 2010-788, July 12, 2010, the so-called “Grenelle 2” Law,
Europcar is required to publish consolidated non-financial data in its Registration Document.
Period and Scope of CSR Reporting
The CSR Reporting period is the calendar year from January 1,
2015 to December 31, 2015.
The scope of CSR Reporting covers the Holding Companies
(ECI, ECG and the Shared Services Center) and the Corporate
Countries (France, Germany, United Kingdom, Italy, Spain,
Portugal, Belgium, Australia and New Zealand), including
InterRent stations.
04
It does not include data from stations purchased from
EuropHall, or data from agency or franchised stations, except
for fleet information for vehicles used by agents.
The published data are consolidated at Group level, apart from
the data on workforce distribution by country.
CSR Reporting Organization
The organization used for CSR Reporting is set out in a
protocol showing all the procedures and methodologies of
CSR Reporting. This protocol has been circulated to each CSR
Reporting contributor prior to the start of reporting.
Audit and consolidation of the data
INTERNALLY
CSR Reporting is organized and coordinated by the Europcar
CSR Director, Pierre Beguerie, in collaboration with the
CSR coordinators in the Holding Companies and Corporate
Countries. At the level of each subsidiary, data collection is
managed by the responsible teams, and mainly concerns
Human Resources, Operations, Fleet and Management Audit
teams.
Data are audited at the level of each entity by the teams
responsible for reporting the information and by internal audit
teams. Automatic consistency checks are carried out in the
collection software, then by people in the teams in charge
of the analysis and consolidation of the data at Group level:
comparison of the data between countries, comparison to
historic data, the ratio of localized checks (e.g. on the price
of resources.) Finally, a part of the data from the Corporate
Countries comes from the Shared Services Center, which
ensures consistency of data between countries.
Collection tool
VERIFICATION OF THE DATA BY AN INDEPENDENT
THIRD PARTY ORGANIZATION
Data collection
To collect and consolidate the data, and ensure the traceability
of the data and processes, Europcar used the online nonfinancial information collection software, Reporting 21. This
software has been deployed in all the entities covered by CSR
Reporting and has helped around 100 contributors to input the
information from the CSR Reporting.
PricewaterhouseCoopers, Audit (PwC), one of the Company’s
Statutory Auditors, has been appointed by Europcar as the
Independent Third Party Organization to verify the presence
and accuracy of the non-financial information presented in the
Registration Document, pursuant to the Grenelle 2 legislation
(see the report and the opinion on fairness in Section 4.6 “ILO
report”). Europcar also voluntarily asked PwC to review certain
indicators in the context of a reasonable assurance audit. The
data reviewed in this context are flagged by the sign: ✔.
EUROPCAR
2015
267
04
METHODOLOGY NOTE
Choice of indicators
To produce its CSR Reporting, Europcar defined a list of
indicators consistent with the themes identified in Article 225
of Law No. 2010-788 of July 12, 2010, the so-called Grenelle 2
Law.
This list contains quantitative and qualitative indicators,
broken down into five major categories: Environment, Fleet,
Social, Societal and Supply Chain. This enables not only the
Group’s material issues in terms of compliance and dialog with
stakeholders to be covered, but also the baseline information
to be collected in order to define and steer an actionable and
long-term CSR strategy.
Given the Group’s business (non-industrial), its geographic
location (European countries, Australia and New Zealand),
certain themes from the decree applying Article 225 of the
Grenelle Law have been deemed irrelevant in relation to the
Group’s activity and are not covered by the CSR Reporting
indicators:
a the Group’s activities do not generate noise pollution or other
specific forms of pollution other than the issues discussed
in this chapter (mainly the use and maintenance of cars);
a the Group does not, strictly speaking, consume raw materials,
and the issues related to reducing oil and fuel consumption
are discussed in this chapter;
a The Group has not to be impacted to date by the
consequences of climate change in its host countries;
a the Group’s activities do not directly impact biodiversity;
a the Group is not located in countries at risk of human rights
violations and complies with all local human rights legislation
in the countries where it is located (elimination of forced or
compulsory labor and the effective abolition of child labor).
a no framework has been implemented to measure and collect
the amounts of non-hazardous waste (mainly paper and
office items) produced;
Coverage rate
Given the decentralized structure of the Group (more than 9,000
stations in 9 countries), data collection and standardization is
a complex exercise.
The coverage rate is calculated for all the indicators in the
social, environment and supply chain categories, starting from
the reference indicators:
To consolidate the data and communicate unbiased
information, the Group has introduced the concept of coverage
rate in its CSR Reporting. This concept enables data to be
consolidated solely across the scope where they are available,
indicator by indicator, and allows entities (mainly stations) to be
excluded from an indicator where the data is not available or
not homogenous with the rest of the Group.
a permanent and fixed-term headcount as of December 31,
2015 for the social indicator;
a revenue for the environment indicator;
For each indicator in these categories, the contributors provided
the scope actually covered by the indicator’s value, and the
value consolidated at Group level is therefore shown with the
exact consolidated coverage rate for each indicator.
For the chapter as a whole, coverage in respect of social
information is 100%.
268
EUROPCAR
2015
METHODOLOGY NOTE
Notes on methodology and main limiting factors
The entities included in the CSR Reporting scope are spread
across nine countries with substantially different laws and
practices.
a The energy and water indicators do not include consumption
for vehicle washing by external service providers.
The choice of indicators and their definitions are discussed
upstream with the different contributors from the various entities
to achieve indicators that are as closely tailored as possible to
circumstances on the ground.
Notes on the greenhouse gas emissions
footprint
Notes on the definitions of certain indicators
a Unlike the productivity data monitored by the Group, the
workforce under the CSR reporting scope includes longterm leave.
For CO2 emissions, the Group’s internal consumption of energy
was considered (mainly electricity and gas) and fuel (diesel and
gasoline). Carbon emission factors specific to each country for
electricity consumption were then considered, and the same for
the other items. The emission factors used come from the 2014
IEA (International Energy Agency) report on carbon emission
factors.
04
a Absenteeism excludes maternity and paternity leave.
EUROPCAR
2015
269
04
ILO REPORT
4.6 ILO REPORT
Report by one of the Statutory Auditors, appointed as an independent third party, on the consolidated environmental, labour and
social information presented in the management report
For the year ended December 31, 2015
To the Shareholders,
In our capacity as Statutory Auditor of Europcar Groupe, appointed as an independent third party and certified by COFRAC under
number 3-1060 (1), we hereby report to you our report on the consolidated human resources, environmental and social information
for the year ended December 31, 2015, included in the management report (hereinafter named «CSR Information»), pursuant to
article L.225-102-1 of the French Commercial Code (Code de commerce).
COMPANY’S RESPONSIBILITY
The Chairman of the Management Board is responsible for preparing a company’s management report including the CSR Information
required by article R.225-105-1 of the French Commercial Code in accordance with the CSR reporting protocol used by the
Company (hereinafter the «Guidelines»), summarised in the management report under section 4.5 “Methodology Note” and available
on request from the company’s head office.
INDEPENDENCE AND QUALITY CONTROL
Our independence is defined by regulatory texts, the French Code of ethics (Code de déontologie) of our profession and the
requirements of article L.822-11 of the French Commercial Code. In addition, we have implemented a system of quality control
including documented policies and procedures regarding compliance with the ethical requirements, French professional standards
and applicable legal and regulatory requirements.
STATUTORY AUDITOR’S RESPONSIBILITY
On the basis of our work, our responsibility is to:
a attest that the required CSR Information is included in the management report or, in the event of non-disclosure of a part or all of
the CSR Information, that an explanation is provided in accordance with the third paragraph of article R.225-105 of the French
Commercial Code (Attestation regarding the completeness of CSR Information);
a express a limited assurance conclusion that the CSR Information taken as a whole is, in all material respects, fairly presented in
accordance with the Guidelines (Conclusion on the fairness of CSR Information).
Our work involved 5 persons and was conducted between October 2015 and February 2016 during a 4 week period. We were
assisted in our work by our CSR experts.
We performed our work in accordance with the French professional standards and with the order dated 13 May 2013 defining the
conditions under which the independent third party performs its engagement and with ISAE 3000 (2) concerning our conclusion on
the fairness of CSR Information.
1.
Attestation regarding the completeness of CSR Information
Nature and scope of our work
On the basis of interviews with the individuals in charge of the relevant departments, we obtained an understanding of the Company’s
sustainability strategy regarding human resources and environmental impacts of its activities and its social commitments and, where
applicable, any actions or programmes arising from them.
We compared the CSR Information presented in the management report with the list provided in article R.225-105-1 of the French
Commercial Code.
For any consolidated information that is not disclosed, we verified that explanations were provided in accordance with article R.225105, paragraph 3 of the French Commercial Code.
(1) Whose scope is available at www.cofrac.fr.
(2) ISAE 3000 – Assurance engagements other than audits or reviews of historical financial information.
270
EUROPCAR
2015
ILO REPORT
We verified that the CSR Information covers the scope of consolidation, i.e., the Company, its subsidiaries as defined by article
L.233-1 and the controlled entities as defined by article L.233-3 of the French Commercial Code within the limitations set out in
the methodological note, presented in section 4.5 “Methodology Note” of the management report.
Conclusion
Based on the work performed and given the limitations mentioned above, we attest that the required CSR Information has been
disclosed in the management report.
2.
Conclusion on the fairness of CSR Information
Nature and scope of our work
We conducted about 10 interviews with the persons responsible for preparing the CSR Information in the departments in charge
of collecting the information and, where appropriate, responsible for internal control and risk management procedures, in order to:
04
a assess the suitability of the Guidelines in terms of their relevance, completeness, reliability, neutrality and understandability, and
taking into account industry best practices where appropriate;
a verify the implementation of data-collection, compilation, processing and control process to reach completeness and consistency
of the CSR Information and obtain an understanding of the internal control and risk management procedures used to prepare
the CSR Information.
We determined the nature and scope of our tests and procedures based on the nature and importance of the CSR Information with
respect to the characteristics of the Company, the human resources and environmental challenges of its activities, its sustainability
strategy and industry best practices.
Regarding the CSR Information that we considered to be the most important (3):
a at the parent entity level, we referred to documentary sources and conducted interviews to corroborate the qualitative information
(organisation, policies, actions), performed analytical procedures on the quantitative information and verified, using sampling
techniques, the calculations and the consolidation of the data. We also verified that the information was consistent and in
agreement with the other information in the management report;
a at the level of a representative sample of entities selected by us (4) on the basis of their activity, their contribution to the consolidated
indicators, their location and a risk analysis, we conducted interviews to verify that procedures are properly applied and to identify
potential undisclosed data, and we performed tests of details, using sampling techniques, in order to verify the calculations and
reconcile the data with the supporting documents. The selected sample represents on average 60% of headcount and 59% of
quantitative environmental data disclosed.
For the remaining consolidated CSR Information, we assessed its consistency based on our understanding of the company.
We also assessed the relevance of explanations provided for any information that was not disclosed, either in whole or in part.
We believe that the sampling methods and sample sizes we have used, based on our professional judgement, are sufficient to
provide a basis for our limited assurance conclusion; a higher level of assurance would have required us to carry out more extensive
procedures. Due to the use of sampling techniques and other limitations inherent to information and internal control systems, the
risk of not detecting a material misstatement in the CSR information cannot be totally eliminated.
Conclusion
Based on the work performed, no material misstatement has come to our attention that causes us to believe that the CSR
Information, taken as a whole, is not presented fairly in accordance with the Guidelines.
Neuilly-sur-Seine, February 25, 2016
One of the Statutory Auditors, appointed as an independent third party
François Jaumain
Sylvain Lambert
Partner
Partner in charge of the Sustainable Business department
(3) The list of the CSR Information considered to be the most important is available in Appendix to this report
(4) Europcar France, Europcar Group UK Ltd (United Kingdom), Europcar Autovermietung GmbH (Germany)
EUROPCAR
2015
271
04
APPENDIX: LIST OF INFORMATION THAT WE CONSIDERED THE MOST IMPORTANT
APPENDIX: LIST OF INFORMATION
THAT WE CONSIDERED THE MOST IMPORTANT
Quantitative Human Resources Information
a Headcount as of December 31, 2015 per country, age,
employment status and gender.
a Working time organization (Proportion of permanent part-time
employees, overtime hours, hours of atypical work).
a Employment and departures (Number of hirings, number of
total departures and allocation by motive).
a Absenteeism rate.
a Frequency and severity rate of workplace accidents.
a Number of training hours.
Qualitative Human Resources Information
a Compensation policy and social security.
a Training policy.
a Health and safety working conditions.
Quantitative Environmental Information
a Consumption by energy source (electricity, renewable energy,
natural gas).
a Fuel consumption.
a Average CO2 emission of the rental fleet.
a Water consumption.
a Number of oil and fuel tanks.
a Greenhouse gas emissions – Scope 1 and 2.
Qualitative Environmental Information
a Waste management and recycling policies.
a Overview of greenhouse gas emissions.
Qualitative Societal Information
a Customer safety and protection measures.
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EUROPCAR
a Involvement of sub-contractors and consideraton of
the suppliers’ and sub-contractors’ Corporate social
responsability (CSR).
2015
05
CORPORATE
GOVERNANCE
5.1
MANAGEMENT AND SUPERVISORY
BODIES
274
5.1.1
5.1.2
5.1.3
Management Board
Supervisory Board
Declarations relating to corporate governance
274
279
292
5.2
ROLE AND ACTIVITIES
OF THE SUPERVISORY BOARD
5.2.1
5.2.2
5.2.3
5.2.4
5.2.5
Internal rules of the Supervisory Board
Supervisory Board Committees
Internal control
Report by the Chairman of the Supervisory Board
Statutory Auditors’ report, prepared
in accordance with article L.225-235
of the French Commercial Code on the report
prepared by the Chairman of the Supervisory
Board of Europcar Groupe S.A.
5.3
COMPENSATION AND OTHER
BENEFITS IN KIND RECEIVED
BY CORPORATE OFFICERS
5.3.1
5.3.2
Compensation principles of the corporate officers 310
Summary of the compensation and benefits
of corporate officers
312
Other information
318
5.3.3
310
293
293
294
298
300
5.4
SUMMARY STATEMENT OF
TRANSACTIONS IN COMPANY
SECURITIES BY CORPORATE
OFFICERS
319
309
EUROPCAR
2015
273
05
MANAGEMENT AND SUPERVISORY BODIES
5.1 MANAGEMENT AND SUPERVISORY BODIES
The Company is a public limited company (société anonyme)
with a Supervisory Board and a Management Board since
March 9, 2015. This latter is composed of Philippe Germond,
Chairman of the Management Board, Caroline Parot, CEO
Finance, Kenneth McCall, Deputy Chief Operating Officer
and Fabrizio Ruggiero, Head of Mobility. Prior to this date, the
Company was a public limited company (société anonyme) with
a Board of Directors. A description of the main provisions of the
5.1.1
Management Board
The table below shows the composition of the Management
Board as of the date of this Registration Document and the
principal positions and offices held by the members of the
274
Company’s bylaws, in particular those relating to its functioning
and powers, as well as a summary description of the main
provisions of the Internal Regulations of the Supervisory Board
and the special committees of the Supervisory Board, are
included in Section 5.2 “Functioning of the Supervisory Board”
and in Section 6.2 “Memorandum of Association and Bylaws”
of this Registration Document.
EUROPCAR
2015
Management Board outside the Company (whether inside or
outside the Group) during the last five years.
PHILIPPE GERMOND
CHAIRMAN OF THE MANAGEMENT BOARD OF EUROPCAR GROUPE
POSITIONS AND OFFICES HELD
Positions and offices currently held at companies controlled (1) by Europcar Groupe
❚
None
Positions and offices currently held at companies not controlled (1) by Europcar Groupe
❚
❚
❚
Business address:
C/o Europcar Groupe S.A.
2 rue René Caudron,
Bâtiment OP
78960 Voisins-leBretonneux
❚
Age and nationality:
59
French
❚
Date first appointed:
03/09/2015
Date term of office
ends:
03/08/2019
Chairman of the Supervisory Board of Qosmos
Member of the Board of Directors of the École Centrale de Paris
Manager of Philippe Germond Conseil
Member of the Board of Directors of Unisys Corporation (2)
Other positions and offices held over the last five years
❚
Chairman and CEO of PMU
MANAGEMENT EXPERIENCE
❚
❚
❚
Philippe Germond joined the Group in October 2014 as CEO of the Company, a post he held until the change in the
Company’s corporate governance structure to a public limited company with a Management Board and a Supervisory
Board.
Before joining the Group, he had served since 2009 as Chairman and CEO of PMU.
Before 2009, he had been Chairman of Atos Origin (2007-2008), member of the Management Board of Atos Worldline
(2006-2008), Chairman of Alcatel (2003-2005), Chairman and CEO of SFR – Cegetel (1995-2002) and member of the
Management Board of Hewlett-Packard, where he began his career.
Mr. Germond is a graduate of the École Centrale Paris - ECP Paris (1979) and holds an MS in Management from
Stanford University (1980).
05
Number of Company
shares held:
1,292 Class C shares
1,292 Class D shares
(1) Articles L. 225-21 par. 2, L. 225-77 par. 2 and L. 225-94 par. 1 of the French Commercial Code.
(2) Company listed outside France.
EUROPCAR
2015
275
05
CAROLINE PAROT
CEO FINANCE - MEMBER OF THE MANAGEMENT BOARD
OF EUROPCAR GROUPE
❚
❚
❚
❚
❚
❚
Business address:
Bâtiment OP
44
French
03/09/2015
Date term of office
ends:
03/08/2019
Number of Company
shares held:
528 Class C shares
528 Class D shares
❚
❚
❚
❚
❚
Chairwoman of EUROPCAR INTERNATIONAL SAS
Chairwoman of Europcar Holding SAS
Chairwoman of Europcar Services, Unipessoal, Lda
Permanent representative of Europcar International SAS in her capacity as Chairwoman of Europcar France SAS
Member of the Supervisory Board of Europcar Autovermietung GmbH
Member of the Board of Directors of Europcar Australia PTY Ltd
Member of the Board of Directors of car2go Europe GmbH
Member of the Board of Directors of PremierFirst Vehicle Rental EMEA Holdings Limited
Member of the Board of Directors of BVJV Limited
Member of the Board of Directors of CLA Trading Pty Ltd
Member of the Oversight and Development Committee of Ubeeqo SAS
❚
None
❚
Member of the Executive Committee of Technicolor
❚
❚
❚
❚
❚
Caroline Parot joined the Group in 2011 and has been its CFO since March 2012.
Previously, she had occupied the positions of group management controller (2009-2011) and member of the Executive
Committee (2010-2011) with the Technicolor group, and in particular was in charge of restructuring ThomsonTechnicolor’s debt.
She also served as Technicolor’s Chief Financial Officer for the Technology sector (2008-2009) and as controller in the
Department of Intellectual Property and License Management (2005-2008).
Until 2005, she was an auditor with Ernst & Young, where she began her career in 1995.
Ms. Parot holds a DEA in Mathematical Economics from the Panthéon-Sorbonne University and a Masters in Finance
from the École Supérieure de Commerce de Paris. She also holds a DESCF (an accounting and financial diploma).
276
EUROPCAR
2015
KENNETH MCCALL
DEPUTY CEO - MEMBER OF THE MANAGEMENT BOARD
OF EUROPCAR GROUPE
❚
❚
❚
❚
❚
Business address:
C/o Europcar Group UK Ltd
77-85 Aldenhal Road
Bushey, Hertfordshire WD23
2QQ
United Kingdom
58
British
03/09/2015
Date term of office
ends:
03/08/2019
Managing Director of Europcar Group UK Limited
Managing Director of Europcar UK Limited
Managing Director of PremierFirst Vehicle Rental EMEA Holdings Limited
Managing Director of PremierFirst Vehicle Rental Holdings Limited
Managing Director of Provincial Assessors Limited
❚
None
❚
Member of the Executive Committee of Technicolor
❚
❚
❚
❚
❚
Kenneth McCall joined Europcar Groupe in November 2010 as Managing Director of Europcar Group UK.
He is also a non-executive member of the Board of Directors of SuperGroup, a fashion brands distribution company
operating a multichannel network of Internet sites, franchisees and licensees in 54 countries throughout the world.
Previously, he had served as Chief Executive of DHL Express UK & Ireland from 2008 to 2010, after having served as
Managing Director in charge of network and operations at the European level for DHL Express from 2007 to 2008.
Among his earlier positions, he served as Managing Director of The International Consulting Company (March-October
2007) and as Chief Executive Officer of TNT China (2004-2006), after having held the same positions at TNT Asia/
Middle East/Africa/Indian Subcontinent from 1996-2004. He had been with TNT since 1979.
Mr. McCall completed all of his higher education in Scotland.
05
Number of Company
shares held:
3,818 common shares
118 Class C shares
116 Class D shares
EUROPCAR
2015
277
05
FABRIZIO RUGGIERO
MEMBER OF THE MANAGEMENT BOARD
OF EUROPCAR GROUPE
❚
❚
❚
❚
CEO of Europcar Italia SpA
Co-Chairman of the Oversight and Development Committee of Ubeeqo SAS
Sole Director of Europcar Lab Italy Srl
Business address:
Via Cesare Giulio Viola 48
00148 Rome
Italy
46
Italian
03/09/2015
Date term of office
ends:
03/08/2019
Number of Company
shares held:
234 Class C shares
234 Class D shares
❚
❚
❚
General Manager of Leasys
Member of the Executive Committee of Fiat Group Automobiles
❚
❚
❚
❚
Fabrizio Ruggiero joined the Europcar Groupe in May 2011 and has served as Managing Director of Europcar Italy and
as Head of Mobility Solutions for Europcar Groupe.
From 2004 to 2011 he was General Manager of the Italian company Leasys, a company controlled by Fiat Group
Automobiles and Crédit Agricole and a leader in “long-term commercial” rentals in Italy.
Also at Leasys, he served as Director of Sales and Marketing from 2005 to 2007 and as Director of Operations from
2004 to 2005. Mr. Ruggiero had previously been a manager of Bain & Company Italy (Rome office) from 2000 to 2004
and a consultant with Accenture (Rome office) from 1997 to 2000.
He holds a Masters in business management from the MIP Politecnico di Milano (1999) and a management diploma
from the Università degli Studi di Roma (1995).
278
EUROPCAR
2015
5.1.2
Supervisory Board
5.1.2.1 Composition of the Supervisory Board
The table below shows the composition of the Supervisory
Board as of the date of this Registration Document and
JEAN-PAUL BAILLY
the main positions and offices held by the members of the
Supervisory Board outside the Company (both inside and
outside the Group) during the last five years.
CHAIRMAN OF THE SUPERVISORY BOARD OF EUROPCAR GROUPE INDEPENDENT MEMBER
❚
❚
Member of the Board of Directors of Accor SA (2)
Member of the Board of Directors of Edenred (2)
05
❚
❚
Business address:
38 rue Gay-Lussac
75005 Paris
69
French
06/08/2015
Date term of office
ends:
Shareholders’ Meeting
called to approve the
financial statements for
the fiscal year ending
December 31, 2018
Number of Company
shares held:
500 common shares
❚
❚
❚
❚
❚
Chairman and CEO of La Poste SA
Member and Chairman of the Supervisory Board of La Banque Postale
Chairman of the Board of Directors of Post-Immo
Permanent representative of La Poste on the Board of Directors of Sofipost, Geopost and Post Immo
Member of the Boards of Directors of Sopasurre and CNP Assurances (2)
Member of the Supervisory Board of La Banque Postale Asset Management.
Member, representing the French State, of the Board of Directors of GDF Suez (2)
❚
❚
❚
❚
❚
❚
Jean-Paul Bailly has devoted all of his career to public service, by participating in the management and running of
two major public companies, the RATP and then La Poste.
He started his career in 1970 at the Régie Autonome des Transports Parisiens (RATP). In 1978, he ran the Direction
de la Coopération Française in Mexico.
He joined RATP again in 1982, where he was notably Director of Bus Rolling Equipment, Director of the Metro and
RER and Director of Human Resources. In 1990, he was named Deputy CEO and then CEO from 1994 to 2002.
He was CEO of La Poste from 2002 to 2013 and has served as its Honorary Chairman since October 2013.
He is also President of Entreprise et Personnel as well as of IMS-Entreprendre pour la Cité, Vice-President of
Confrontations Europe and a member of the Board of Directors of Accor, Edenred, the Envol, the ANVIE, the
Fondation Jean-Jacques Laffont-TSE, the Fondation de la 2ème chance and of Sciences-Po Aix. He is also a
member of the Conseil Économique, Social et Environnemental since 1995.
Jean-Paul Bailly is a graduate of École polytechnique and MIT. He is an Officer of the French Legion of Honor and a
Commander of the French National Order of Merit.
(2) French listed company.
EUROPCAR
2015
279
05
JEAN-CHARLES PAUZE
VICE-CHAIRMAN OF THE SUPERVISORY BOARD OF EUROPCAR
GROUPE - INDEPENDENT MEMBER
❚
❚
❚
Chairman of the Supervisory Board of CFAO (2)
Independent member of the Board of Directors of Bunzl Plc (3)
Chairman of the Supervisory Board of IMCD NV (3)
❚
Business address:
Bâtiment OP
68
French
02/24/2015
Date term of office
ends:
December 31, 2015
Number of Company
shares held:
1,000 common shares
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
Member of the Board of Directors of Redcats
Chairman of the Management Board of Rexel (2)
Board member of Rexel France
President of Rexel North America, Inc.
Director (Geschäftsführer) of Rexel GmbH
Member of the Board of Directors and Chairman of Rexel Holdings USA Corp.
Board member of Rexel Senate Limited
Chairman of the Supervisory Board of Hagemeyer
Manager of Rexel Deutschland Elektrofach grosshandel GmbH
Manager of Galatea Einhundertvierzigste Vermögensverwaltungs GmbH
Manager of Rexel Central Europe Holding GmbH
Board member of Rexel, Inc.
Board member of General Supply & Services, Inc.
Board member of Rexel Belgium.
President of Rexdir
Chairman and CEO of Rexel Distribution
Board member of Discodis and CFP
❚
❚
❚
Jean-Charles Pauze was Chairman of the Company’s Board of Directors from February 2012 until the change in the
Company’s corporate governance structure to a public limited company with a Management Board and a Supervisory
Board.
He had previously been CEO of Alfa Laval Industrie (1981-1984), Chairman and CEO of Bran & Luebbe, a German
subsidiary of Alfa Laval (1984-1986), Chairman and CEO of Clestra-Hausermann (1986-1991), Chairman and CEO
of Steelcase Strafor (1991-1998), Chairman of the Management Board of Guilbert (1998-2002), and Chairman of the
Management Board of Rexel (2002-2012).
Jean-Charles Pauze holds an engineering degree from the IDN-EC of Lille and an MBA from the INSEAD.
1) Articles L. 225-21 par. 2, L. 225-77 par. 2 and L. 225-94 par. 1 of the French Commercial Code.
280
EUROPCAR
2015
PATRICK SAYER
MEMBER OF THE SUPERVISORY BOARD OF EUROPCAR GROUPE
Positions and offices currently held at companies not controlled(1) by Europcar Groupe
❚
❚
❚
❚
❚
❚
Business address:
C/o Eurazeo
1, rue Georges Berger
75017 Paris
58
French
02/24/2015
Date term of office
ends:
called to approve
the financial statements
for the fiscal year ending
December 31, 2018
Number of Company
shares held
500 common shares
❚
❚
❚
❚
Chairman of the Management Board of Eurazeo(2)
Member of the Supervisory Board of ANF Immobilier(2)
Member of the Board of Directors of Accor(2)
Member of the Board of Directors of I-Pulse (USA)
Managing Director of Legendre Holding 19
Manager of Investco 3d Bingen (non-trading company)
Chairman of Legendre Holding 25, Legendre Holding 26, CarryCo Capital 1, CarryCo Croissance 2
and CarryCo Croissance
Member of the Board of Directors of Tech Data Corporation (USA)(3)
Member of the Advisory Board of Kitara Capital International Limited (Dubai)
Member of the Board of Directors of Colyzeo Investment Advisors (United Kingdom)
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
Vice-Chairman of the Supervisory Board and later member of the Board of Directors of Rexel(2)
Chairman and Vice-Chairman of the Supervisory Board of ANF Immobilier(2)
Manager of Eurazeo Srl
Chairman and member of the Board of Directors of Europcar Groupe
Chairman and member of the Board of Directors of Holdélis
Member of the board of directors of Moncler Srl
Member of the board of directors of Sportswear Industries Srl
Member of the board of directors of Edenred
Member of the board of directors of Gruppo Banca Leonardo
Managing Director of Immobilière Bingen
Managing Director of Legendre Holding 8
President of Eurazeo Capital Investissement
Member of the Supervisory Board of Paris-Saint-Germain Football SASP
Member of the Advisory Board of APCOA Parking Holdings GmbH
05
❚
❚
❚
❚
❚
❚
Patrick Sayer was a director of the Company from 2006 until the change in the Company’s corporate governance
structure to a public limited company with a Management Board and a Supervisory Board.
Since May 2002, he has been Chairman of the Management Board of Eurazeo.
He was previously a managing partner of Lazard Frères et Cie in Paris and a managing director of Lazard Frères & Co.
in New York.
He is a former Chairman of the Association Française des Investisseurs pour la Croissance (French Association of
Investors for Growth) (AFIC), a director of the Musée des Arts Décoratifs de Paris and a member of the Club des Juristes.
He is also a commercial court judge with the Commercial Court of Paris.
Mr. Sayer is a graduate of the Ecole Polytechnique and of the Ecole des Mines de Paris.
EUROPCAR
2015
281
05
PHILIPPE AUDOUIN
❚
❚
❚
❚
❚
Business address:
C/o Eurazeo
75017 Paris
❚
❚
❚
❚
❚
02/24/2015
❚
❚
59
French
❚
Date term of office
ends:
financial statements for the
fiscal year ending
December 31, 2016
Number of Company
shares held:
1,000 common shares
Member of the Management Board and Chief Administrative and Financial Officer of Eurazeo(2)
Member of the Supervisory Board of ANF Immobilier(2)
Member of the Supervisory Board of Elis(2)
Member of the Supervisory Board of Eurazeo PME
Chairman of LH APCOA, Legendre Holding 19, Legendre Holding 21, Legendre Holding 27, Legendre Holding 29,
Legendre Holding 30
Legendre Holding 34, Legendre Holding 35, Legendre Holding 36, Legendre Holding 42, Eurazeo Patrimoine
and Eurazeo Patrimoine Aubervilliers
CEO of Legendre Holding 23, Legendre Holding 25, CarryCo Capital 1 and and CarryCo Croissance
Chairman of the Supervisory Board of Legendre Holding 28
Chief Executive of Eurazeo Services Lux
Permanent representative of Eurazeo on the board of directors of SFGI
Managing Director of Perpetuum MEP Verwaltung GmbH
❚
❚
❚
❚
❚
❚
❚
❚
❚
❚
Vice-Chairman of the Supervisory Board of the B&B Hotels Group
Managing Director of Legendre Holding 33, Eurazeo Capital Investissement and Eureka Participations
Chairman of Legendre Holding 8, Legendre Holding 22, Legendre Holding 28, Legendre Holding 25, Legendre Holding 23
Legendre Holding 26, Legendre Holding 31 and Legendre Holding 32
Chairman of Immobilière Bingen
Chairman of Rue Impériale Immobilier
Manager of Eurazeo Italia
Vice-Chairman of the Supervisory Board of APCOA Parking AG
Member of the advisory board of Apcoa Parking Holdings GmbH
Member of the board of directors of Holdélis
Member of the board of directors of Europcar Groupe
❚
❚
❚
❚
❚
❚
Philippe Audouin was a director of the Company from 2006 until the change in the Company’s corporate governance
structure to a public limited company with a Management Board and a Supervisory Board.
He spent the first 10 years of his career creating and developing his own business. After selling that business, he
served as CFO and legal representative (“Prokurist”) of the first joint venture between France Telecom and Deutsche
Telekom in Germany from 1992 to 1996.
From 1996 to 2000, he served as Financial, Human Resources and Administrative Director of France Telecom’s
Multimedia division. He was also a member of the Supervisory Board of Pages Jaunes. From April 2000 to February
2002, he worked for the Arnault Group as CFO of Europ@Web.
He joined Eurazeo in 2002 as Administrative and Financial Director and was appointed to its Management Board in
March 2006
He is a member of the Supervisory Boards and Audit Committees of ANF Immobilier, Elis and Eurazeo PME and is
Chairman of the Audit Committees of ANF Immobilier and Eurazeo PME. He is also a member of the Consultative
Commission of the Autorité des Normes Comptables (French Accounting Standards Authority), a member of the
AMF’s Issuers Committee and Chairman of the Association Nationale des Dirigeants Finance-Gestion (National
Association of Finance and Management Executives) (DFCG).
Mr. Audouin is a graduate of the Ecole des Hautes Etudes Commerciales.
282
EUROPCAR
2015
ARMANCE BORDES
MEMBER OF THE SUPERVISORY BOARD
OF EUROPCAR GROUPE
❚
Corporate and Securities Law Manager of Eurazeo (2)
❚
❚
❚
Business address:
C/o Eurazeo
75017 Paris
37
French
02/24/2015
Date term of of the
appointment:
❚
Manager of Euraleo
Member of the Board of Directors of Lauro 2007 Srl
Member of the Board of Directors of Broletto 2 Srl
Member of the Board of Directors of Broletto 1 Srl
❚
❚
❚
❚
Armance Bordes joined Eurazeo in 2007. She is Legal Director in charge of corporate law and corporate governance
and is secretary of Eurazeo’s Supervisory Board.
She is in charge of monitoring listed equity investments and has participated in several acquisitions and sales of listed
companies, as well as in initial public offerings.
She began her career in the mergers and acquisitions department at the Paris office of Gibson Dunn & Crutcher LLP.
She then practiced law at Linklaters LLP in Paris.
Ms. Bordes is an attorney with a degree from Oxford University and a DEA in English and North American Business Law
from the Panthéon-Sorbonne University.
05
called to approve
the financial statements
for the fiscal year ending
December 31, 2015
Number of Company
shares held:
500 common shares (3)
(3) Share loan granted by Eurazeo.
EUROPCAR
2015
283
05
ÉRIC SCHAEFER
❚
❚
❚
Director of Eurazeo Capital (2)
Member of the Supervisory Board of Elis (2)
Member of the Supervisory Board of Legendre Holding 33
❚
Business address:
C/o Eurazeo
75017 Paris
Member of the Board of Directors of Holdélis
❚
34
French
❚
❚
❚
02/24/2015
❚
Eric Schaefer represented Eurazeo on the Company’s Board of Directors until the change in the Company’s corporate
governance structure to a public limited company with a Management Board and a Supervisory Board.
He serves as Director of Eurazeo Capital, which he joined in 2004.
He participated in the analysis of several investment opportunities and monitored equity investments in various
industrial and service sectors.
At Eurazeo, he participated actively in the carrying out and monitoring investments in Eutelsat, B&B Hotels, Europcar,
Elis and Asmodée.
Mr. Schaefer is a graduate of the Ecole Polytechnique and of the Ecole des Hautes Etudes Commerciales.
Date term of office ends:
December 31, 2017
Number of Company
shares held:
500 common shares(3)
(3) Share loan granted by Eurazeo.
284
EUROPCAR
2015
ANGÉLIQUE GÉRARD
MEMBER OF THE SUPERVISORY BOARD OF EUROPCAR GROUPE INDEPENDENT MEMBER
❚
❚
❚
Independent member of the Board of Directors of Association Française de la relation Client
Director of Customer Relations at the French Iliad Group
Chairwoman of nine subsidiaries of the Iliad Group
❚
Business address:
C/o Iliad
16, rue de la Ville l’Evêque
75008 Paris
40
French
02/24/2015
None.
❚
❚
❚
Angélique Gérard joined the Iliad Group at the end of 1999 after four years with France Telecom. She is currently
Director of Customer Relations for the Iliad Group (Free & Free Mobile) and a member of Iliad’s Executive Committee.
She was manager of Memdis from 2003 to 2006, and is Chairwoman of nine subsidiaries of the French
telecommunications group Iliad.
Angélique Gérard is a graduate of INSEAD, of the Ecole des Hautes Etudes Commerciales and of the Multimedia
Institute.
05
Date term of office
ends:
December 31, 2017
Number of Company
shares held:
500 common shares
EUROPCAR
2015
285
05
VIRGINIE FAUVEL
❚
❚
❚
❚
Member of the Executive Committee of Allianz France
Member of the Conseil National du Numérique (French Digital Council)
Member of the Board of Directors of Allianz Vie
Member of the Board of Directors of Allianz Iard
Business address:
c/o Allianz
87, rue Richelieu
75113 Paris Cedex 02
41
French
02/24/2015
Date term of office
ends:
❚
Member of the Board of Directors of Cortal Consorts
❚
❚
❚
❚
❚
Virginie Fauvel began her career in 1997 at Cetelem as the head of risk scoring and then as Director of CRM, before
becoming Director of world Internet strategy in 2004 and then Director of the e-business France unit in 2006.
She next joined BNP Paribas’s retail bank in 2009, where she directed and developed the online bank before
becoming Director of European online banks in 2012. In that capacity, in mid-2013 she launched HelloBank!, the first
100% mobile European bank.
She joined Allianz France in July 2013 as a member of the Executive Committee in charge of Digital and Market
Management.
In January 2013 she was named a member of the Conseil National du Numérique (French Digital Council).
Ms. Fauvel is a graduate of the École des Mines de Nancy.
December 31, 2016
Number of Company
shares held:
500 common shares
286
EUROPCAR
2015
SANFORD MILLER
❚
❚
Vice-Chairman of the board and founding director of Gateway Financial Holdings of Florida Inc.
Managing Partner of Basin Street Partners LLC
❚
❚
Business address:
444 Seabreeze Blvd Ste.
1002 Daytona Beach,
FL 32118
United States of America
63
American
06/08/2015
Date term of office
ends:
December 31, 2018
Co-Chairman and co-CEO of Franchise Services of North America, Inc.
Member of the Board of Directors of Stonewood Holdings LLC
❚
❚
❚
❚
❚
❚
❚
Sandy Miller has experience in the transportation and tourism industries and strong knowledge of the vehicle rental
market.
He started his career in 1979 at the vehicle rental company Budget Group, Inc. that he joined as North East Field
Operation Manager, before becoming a franchisee of Budget Rent-a-Car from 1980 to 1987.
Appointed as Chief Executive Officer of Team Rental Group in 1987, he notably supervised the acquisitions of Cruise
America, VPSI, Premier Car Rental and Budget Rent-a-Car; he then served as President, Chief Executive Officer and
Chairman of Budget Group from 1997 to 2003, where he supervised the acquisition of Ryder TRS as well as the
acquisition of Budget Group by Cendant Corporation.
From 2003 to 2012, he served as Co-Chairman and Co-Chief Executive Officer of Franchise Services of North
America, Inc., where he managed the acquisition of Advantage-Rent-a-Car, the merger with Rent a Wreck Capital and
U-Save.
He also served as member of the Board of Directors of the restaurant chain Stoonewood Holdings and of the State
University of New York at Oswego Foundation and as President of the American Car Rental Association.
Sandy Miller is currently Managing Partner of the private investment firm Basin Street Partners that he founded in 2001
and since 2006 has been Vice-Chairman of the Board & Founding Director of the bank Gateway Financial Holdings of
Florida, Inc. He is also a management consultant at Gerson Lehrman Group since 2003.
Sandy Miller holds a Bachelor of Science, Business from the State University of New York, Oswego, NY.
05
Number of Company
shares held:
500 common shares
EUROPCAR
2015
287
05
PASCAL BAZIN
❚
❚
❚
❚
Director of Darty plc
Director of Belron
Director of Camaïeu
Manager of PB Consulting
Business address:
49 Bis route de Montesson
78110 Le Vesinet
❚
59
French
06/08/2015
Date term of office
ends:
December 31, 2017
Number of Company
shares held:
500 common shares
❚
❚
❚
❚
❚
❚
❚
Chairman and Chief Executive Officer of Avis plc
Director of Belvédère (2)
Pascal Bazin was, from June 2014 until the transformation of the Company’s corporate structure to a structure with
a Management Board and a Supervisory Board, a representative of PB Consulting on the Board of Directors of the
Company.
He started his career in 1980 in the management consulting firm Peat Marwick Mitchell. Pascal Bazin was founder
and Chairman of PB Consulting, a consulting firm specialized in professional and strategic coaching and director
(administrateur) of Darty Plc, Belron SA and Camaïeu.
Pascal Bazin was Managing Director (Directeur Général) of Avis Europe Plc from January 2008 to December 2011,
where he successfully managed the company’s recovery and led the development of the group towards new markets
such as China and towards new mobility solutions such as car-sharing. He left his position at the end of 2011,
following the transfer of his activity to Avis Budget Group, Inc.
He had joined Avis Europe in 2005 after leaving Redcats, the third largest direct selling group in the world, where he
was Managing Director (Directeur Général) of the specialized brands division (division des marques spécialisées) and
Vice-President of Development/Strategy.
Among his previous positions, he was Managing Director (Directeur Général) of many divisions of the cosmetic group
Yves Rocher in Southern Europe and North America.
Pascal Bazin graduated from France’s École polytechnique.
288
EUROPCAR
2015
KRISTIN NEUMANN
MEMBER PROPOSED FOR APPOINTMENT AT THE GENERAL MEETING OF
MAY 10, 2016
INDEPENDENT MEMBER
❚
❚
Administrative and Financial Director of LSG Lufthansa Service Holding AG
Member of the Supervisory Board of Germanwings GmbH
❚
Business address:
LSG Lufthansa Service
Holding AG
FRA Z/VF
Dornhofstrasse 38
Allemagne
44 years
German
May 10, 2016
Member of the Board of Directors of Thomas Cook AG
❚
❚
❚
Kristin Neumann began her career in 2000 at Thomas Cook AG as a Specialist and later Head of the IT Department’s
Planning and Coordination Unit, then Head of Sales Control in the German market (2003), Administrative and Financial
Director for continental Europe (2006, and from November 1, Deputy CEO), Administrative and Financial Director for
central Europe (2008), Member of the Thomas Cook AG Board of Directors (2010), Administrative and Financial Director
for the United Kingdom and continental Europe (2012-2014), in particular in charge of restructuring the English market.
In 2014, she joined LSG Lufthansa Service Holding AG as Administrative and Financial Director and Chief Officer Human
Resources.
Kristin Neumann holds a degree in micro-economics and business management from the Georg-August-Universität
Göttingen (Diplom-Kauffrau, 1997) and a doctorate in business administration from the same university (1999), where she
also worked as a graduate-level lecturer and scientific director (1997-2000).
05
Date term of office
ends:
December 31, 2019
Number of Company
shares held:
No shares held
EUROPCAR
2015
289
05
5.1.2.2 Balance in the composition
of the Supervisory Board
All of the criteria recommended by the AFEP/MEDEF Code
were used to evaluate the independence of the members of
the Supervisory Board.
At December 31, 2015, the Supervisory Board of the Europcar
Group had ten members, of which six were independent.
The Nominations and Compensation Committee and the
Supervisory Board, at their meetings of February 4, 2015 and
February 4, 2015 respectively, evaluated the independence of
Jean-Charles Pauze pursuant to the criteria adopted by the
Company (see Section 6.2.2.2 “Supervisory Board” of this
Registration Document). The Supervisory Board noted that,
although he had been Chairman of the Board of Directors
between 2012 and 2015, Jean-Charles Pauze had never been
CEO nor held an executive position at the Group. In particular,
he did not hold the position of interim CEO, a position held
by Mrs. Caroline Parot for a few months in 2014. Therefore,
the Board of Directors considered that his past mandate as
Chairman of the board of the directors of the Company did not
impact his independence, which was also considered in light
of other independence-related criteria which were all satisfied.
The application of all of these criteria led the Supervisory Board
to keep the following as independent members:
a Jean-Paul Bailly;
a Jean-Charles Pauze;
a Virginie Fauvel;
a Angélique Gérard;
a Pascal Bazin;
a Sanford Miller;
a Kristin Neumann.
This is a total of 7 out of 11 members, representing 64% of
the headcount of the Supervisory Board, at the end of the
Shareholders’ Meeting of May 10, 2015.
INDEPENDENCE CRITERIA
Not be an
employee
or
corporate
No cross- No business No family
officer directorships relationships
ties
Not hold
more than
10% of the
stock
Independent
Jean-Paul Bailly
✔
✔
✔
✔
✔
✔
✔
✔
Jean-Charles Pauze
✔
✔
✔
✔
✔
✔
✔
✔
Patrick Sayer
✔
✔
✔
✔
✔
Philippe Audouin
✔
✔
✔
✔
✔
✔
Virginie Fauvel
✔
✔
✔
✔
✔
✔
✔
✔
Angélique Gérard
✔
✔
✔
✔
✔
✔
✔
✔
Pascal Bazin
✔
✔
✔
✔
✔
✔
✔
✔
Sandy Miller
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
Armance Bordes
Eric Schaefer
Kristin Neumann
✔
On the criterion of business relationships, the AFEP-MEDEF
Code in its revised version states that “the appreciation of the
significance or not of the relationship with the Company or
its group should be discussed by the board and the criteria
resulting in the assessment explained in the Registration
Document.” The review by the Nominations and Compensation
Committee of the situation of each member in respect of
this criterion found there to be no business relationships as
regards the independent members. It therefore made no
pronouncement on the materiality assessment.
290
Not be a Not have been
current
a director
or a past for more than
auditor
12 years
EUROPCAR
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✔
Since Europcar’s initial public offering on June 26, 2015 and
the appointments of Virginie Fauvel and Angélique Gérard to
its Supervisory Board, the latter includes three women, or 30%
of its members, thus exceeding the 20% threshold of women
stipulated by Act 2011-103 of January 27, 2011 relating to
the balanced representation of women and men on boards of
directors and Supervisory Boards. Subject to the approval by
the Shareholders’ Meeting of May 10, 2016 of the resolution
on the appointment of Kristin Neumann and the renewed
mandates of Jean-Charles Pauze and Armance Bordes to the
Company’s Supervisory Board, the latter will comprise eleven
members of which four, or about 36%, will be women.
5.1.2.3 Terms of office of the members
The terms in office of the members of the Supervisory Board
expire on a staggered basis in order to allow for the rolling
renewal of the Supervisory Board’s membership, in accordance
with the recommendations of the AFEP-MEDEF Code.
5.1.2.4 Other management bodies
The Group has appointed one Chief Operating Officer and
set up an Executive Committee, as well as two committees
to assist the Management Board at operating level with the
preparation and implementation of decisions and strategies
decided by the Management Board, namely the Fast Lane
Committee and the Investment Committee.
a) Chief Operating Officer
Kenneth McCall is the Chief Operating Officer.
b) Executive Committee
The Group has established an Executive Committee, the
principal mission of which is to coordinate the operating
management of the Group. The Executive Committee
meets monthly to review the Group’s operating and financial
performance, discuss strategic projects and business
operations and to propose action plans to achieve the Group’s
short- and mid-term objectives.
The Executive Committee, chaired by Philippe Germond, is
composed of the heads of each country and the members of
the Management Board, as well as operating managers:
a Mr. Philippe Germond, Chairman of the Management Board;
a Mrs. Caroline Parot, CEO Finance (Directeur Général
Finances), Chief Financial Officer;
a Mr. Kenneth McCall, Deputy CEO, General Manager of
Europcar UK;
a Mr. Fabrizio Ruggiero, Director of Innovation and Mobility and
General Manager of Europcar Italy;
a Mr. Marcus Bernhardt, Group Commercial Director;
a Mr. Jacques Brun, Transformation Director and Director of
Group Human Resources;
a Mr. Didier Fenix, General Manager of Europcar France and
Belgium, Head of Group Fleet;
a Mr. Benoît Garel, Group Controller;
a Mr. Jan Löning, Customer Experience Director;
a Mr. José Maria Gonzalez, General Manager of Europcar
Spain, in charge of InterRent;
Information about the four members of the Executive
Committee who are also members of the Management Board
is provided in Section 5.1.1.1 “Management Board” of this
Registration Document. Information about the other members
of the Executive Committee is set out below:
Marcus Bernhardt has been the Commercial Director since
February 2013. He was previously the head of operations and
responsible for conformity at international hotel groups and
chief of security at Gulf Air Bahrain.
Jacques Brun has been Transformation and Human
Resources Director since December 2012. He previously
held various functions in the Finance, Logistics and Human
Resource Departments of several companies, in particular
within Avis EMENA.
Didier Fenix has been responsible for Fleet and Innovation at
the Group since 2013. He also holds the position of Managing
Director of Europcar France and Europcar Belgium. He joined
the Group in 1992 and held various management positions at
Europcar Belgium.
05
Benoît Garel has been Group Controller since 2012. He joined
the Group in 2008.
Jan Löning has been Group Head of Customer Experience
since 2015. He previously held general management positions
within Fnac.com, Redcats, Yves Rocher and Mobile Planet. He
also has extensive knowledge of our business and the mobility
market, acquired at Avis Budget Group, where he held the post
of Managing Director France.
José-Maria Gonzalez has been General Manager of Spain
at the Group since February 2010. He previously was director
of operations for Spain since June 1995.
Paulo Moura has been General Manager of Portugal at the
Group since 2005. He was previously Manager of Europcar
Fleet Services.
Reinhardt Quante has been General Manager of Germany
at the Group since January 2013. He previously was financial
director of Central Europe and Eastern Europe within Ferrero.
Ron Santiago has been General Manager of Australia and
New Zealand since 2008. He has 22 years of experience in
the automotive industry.
c) Fast Lane Transformation Committee
The Group formed a Fast Lane Transformation Committee,
headed by Jacques Brun, whose main function is to monitor
the operational implementation of the Fast Lane transformation
program throughout the Group’s various business and regional
units.
a Mr. Paulo Moura, General Manager of Europcar Portugal;
This committee will be supported by the PMO (Project
Management Officer) team and representatives from the
principal operating functions of the Group.
a Mr. Reinhard Quante, General Manager of Europcar
Germany; and
Meetings are held based on the advancement of roll-out
projects within each relevant country or unit.
a Mr. Ron Santiago, General Manager of Europcar Australia /
New Zealand.
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d) Investment Committee
The Group also formed an Investment Committee, whose
main task is to analyze, structure and validate the economic
and financial balance of contracts with principal partners and
major Group investment projects (key commercial stakeholders,
5.1.3
including customers and partners) other than those monitored
by the Fast Lane Committee.
The Investment Committee meets whenever necessary.
This Committee, presided by Caroline Parot, relies on the
project management function, the group controlling the
operating functions of the Group.
Declarations relating to corporate governance
The Company complies with all of the recommendations of
the AFEP-MEDEF Code of Corporate Governance for Listed
Companies (1).
As the Company’s shares were publicly traded on a regulated
market as of the filing date of this Registration Document, and
in accordance with article L. 225-68 of the French Commercial
Code, the Chairman of the Supervisory Board is required to draw
up a report on the Board’s composition and gender balance,
the conditions in which the Board prepares and organizes its
work, and the internal control and risk management procedures
the Company has put in place. This report was prepared for
the first time in respect of the fiscal year ended December 31,
2015; the said report appears in Section 5.2.4 “Report by
the Chairman of the Supervisory Board” of this Registration
Document.
5.1.3.1 Biographical information about
the members of the Supervisory
and Management Boards
As of the date of this Registration Document, to the Company’s
knowledge, there were no family ties between any members of
the Company’s Supervisory and Management Boards.
To the Company’s knowledge, in the last five years, (i) no Board
member has been convicted of fraud, (ii) no Board member
has been associated with any bankruptcy, receivership or
liquidation, (iii) no Board member has been the subject of any
accusations or official public sanctions by statutory or regulatory
authorities (including designated professional bodies), and
(iv) no Board member has been disqualified by a court from
acting as a member of the administrative, management or
supervisory body of any company or from being involved in
the management or performance of business of any company.
5.1.3.2 Conflicts of interest
To the Company’s knowledge, and subject to the relationships
described in Section 7.2 “Related Party Transactions”, as of
the date of this Registration Document there were no potential
conflicts of interest between the duties of the members of the
Supervisory and Management Boards to the Company and
their private interests. The Supervisory Board has given a
special assignment to Pascal Bazin to support the Fast Lane
project. This assignment is in the best interests of the Company.
Outside of this mission and to the Company’s knowledge, there
are no service contracts linking members of the Supervisory
Board with the Company or one of its subsidiaries and granting
benefits.
To the Company’s knowledge, as of the date of this Registration
Document, there were no agreements or undertakings of
any kind with shareholders, customers, suppliers or others
pursuant to which any member of the Company’s Supervisory
or Management Boards was appointed to such position.
As of the date of this Registration Document, the members
of the Supervisory and Management Boards have not agreed
to any restrictions on the sale of their shares in the Company
apart from rules on the prevention of insider trading and the
recommendations of the AFEP-MEDEF Code on the retention
of shares.
(1) http://www.afep.com/uploads/medias/documents/Code_de_gouvernement_entreprise_revise_novembre_2015.pdf
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ROLE AND ACTIVITIES OF THE SUPERVISORY BOARD
5.2 ROLE AND ACTIVITIES OF THE SUPERVISORY BOARD
5.2.1
Internal rules of the Supervisory Board
The internal rules set out in Article 19 of the Company’s bylaws
follow best practices to ensure compliance with the basic
principles of corporate governance, in particular those laid
down in the AFEP-MEDEF Code of Corporate Governance
for Listed Companies (henceforth the “AFEP-MEDEF Code”)
revised in November 2015.
or other means of telecommunication is prohibited for votes on
the following decisions:
The internal rules were approved by the Supervisory Board at
its meeting of April 1, 2015 and complement the Company’s
bylaws as well as the laws and regulations in force by specifying
the duties, composition and workings of the Supervisory Board,
the Audit Committee and the Nominations and Compensation
Committee and their interactions. The Audit Committee has had
its own charter since 2010, which is currently being updated.
a closing the annual Company and consolidated financial
statements and reviewing the Company and Group
management reports.
The internal rules of the Supervisory Board can be modified at
any time by a deliberation of the Supervisory Board.
5.2.1.1 Participation in Supervisory Board
meetings by video conference or
other means of communication
Pursuant to applicable laws and regulations, the use of video
conference or other means of telecommunication is authorized
for any Supervisory Board meeting. The means used must
enable real-time and continuous transmission of speech and, if
applicable, video images of the members, who must be visible
to everyone. These means must also permit each member to
be identified and ensure their active participation in meetings.
Directors participating in a meeting by means of video
conference or other means of telecommunication as described
above are deemed present for purposes of calculating quorum
and majority. The attendance sheet includes the names of
members participating in the Supervisory Board meeting in
such manner. The meeting’s minutes must indicate the names
of those Supervisory Board members deemed present in this
manner. The minutes must also mention the occurrence of any
technical difficulties that may have interfered with the meeting.
In accordance with Article L. 225-82 of the French Commercial
Code and Article 19-III of the Company’s bylaws, participation
in Supervisory Board meetings by means of video conference
a appointing or replacing a Chairperson or Vice-Chairperson;
a appointment or removal of members of the Management
Board; and
05
5.2.1.2 Matters reserved for the Supervisory
Board
Article 20.IV of the Company’s bylaws sets limits to the powers
of the Management Board. First, in accordance with applicable
laws and regulations, the following acts are subject to the prior
authorization of the Supervisory Board:
a the sale of real property;
a the total or partial sale of equity investments; and
a the granting of sureties, bonds, endorsements or guarantees.
The bylaws also stipulate that the following transactions relating
to the Company require prior authorization:
a a proposal to the Shareholders’ Meeting to modify the
bylaws;
a any draft resolution to the Shareholders’ Meeting relating
to the issuance of share or other securities giving access,
immediately or in the future, to the Company’s share capital,
and any use of such delegations granted by the general
Shareholders’ Meeting;
a any transaction in the Company’s shares that could lead,
immediately or in the future, to a capital decrease (not
occasioned by losses) through a decrease in the par value
or a cancellation of shares;
a any proposal to the Shareholders’ Meeting to implement a
share buy-back program;
a any proposal to the Shareholders’ Meeting to allocate the
Company’s results and to distribute dividends, as well as
any distribution of an interim dividend;
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a decisions to change the Company’s business or to diversify
the Group’s activities in a manner involving investments of
more than €15 million; and
a adopting the Company’s annual budget and strategic plan.
The amounts referred to above may be revised upward by the
Supervisory Board’s internal rules.
The bylaws also provide that the following transactions relating
to the Company or to the subsidiaries it controls, within the
meaning of Article L. 233-3 of the French Commercial Code,
require prior authorization:
a implementing an option plan or allocating stock subscription
or purchase options;
a implementing a free share grant plan or granting shares;
a any new debt or financing agreement where the transaction
or agreement amount exceeds (i) €100 million in the case of
asset-backed debt without any guarantee, with the exception
of leasing agreements, and (ii) €25 million in all other cases;
a dispute settlement agreements in an amount exceeding
€10 million;
a decisions to expand into new countries, whether directly,
through the formation of a direct or indirect subsidiary, through
equity investments or entry into joint-venture agreements
or significant collaborations that is to say, collaborations in
which the assets contributed by any Group entity (including in
cash) exceed a threshold of €15 million, as well as decisions
to withdraw from any presence in a given country, except in
the event of an emergency;
5.2.2
a the acquisition, expansion or sale of equity investments by
the Company or by one of its subsidiaries in any companies
created or to be created in an amount greater than
€15 million;
a the entry into or substantial modification of agreements
relating to the exclusive use by a third party of any mark
owned by the Company or one of its subsidiaries (other than
in connection with a franchise agreement or in the ordinary
course of business);
a any other planned transaction (except for fleet purchase
investments) not referred to in the list above, the investment
amount of which is greater than €10 million, to the extent
that such investments are not included in the budget; and
a any decision to carry out a merger, spin-off, partial asset
contribution or similar transaction involving the Company,
and any vote within the Company’s subsidiaries relating
to a merger, spin-off, partial asset contribution or similar
transaction, with the exception of intra-Group reorganizations.
The amounts referred to above may be revised upward by the
Supervisory Board’s internal rules.
Any related-party agreement subject to Article L. 225-86 of
the French Commercial Code also requires prior authorization.
Activity of the Supervisory Board in 2015
In 2015, the Supervisory Board met 10 times, with an
attendance rate of 83% (1).
Supervisory Board Committees
Pursuant to Article 20.VI of the Company’s bylaws and Article 10
of the Supervisory Board’s internal rules, the Supervisory Board
may form committees charged with examining questions
submitted to them by the Board or its Chairman. Prior to the
change in the Company’s corporate governance structure, the
Board of Directors had two committees: an Audit Committee
and a nominations-compensation committee.
The Supervisory Board created an Audit Committee and
a Nominations and Compensation Committee whose
composition, duties and workings are described below.
The composition of these committees complies with the
recommendations of the AFEP-MEDEF Code.
After receiving a favorable opinion from the Nominations and
Compensation Committee, the Supervisory Board decided on
the following composition for the Board’s committees:
1) The Audit Committee comprises the following members
for terms that will coincide with their respective terms as
members of the Supervisory Board:
Philippe Audouin (Chairman);
Pascal Bazin (independent member);
a Virginie Fauvel (independent member).
The three members of the Audit Committee have the necessary
financial and accounting skills in view of their experience, as
described in Section 5.1.2.1 “Composition of the Supervisory
Board” of this Registration Document.
a
a
(1) With the change in the Company’s mode of governance, the Board of Directors met three times, with a 93% attendance rate of its members.
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2) The Nominations and Compensation Committee comprises
the following members for terms that will coincide with their
respective terms as members of the Supervisory Board:
a
a
a
Jean-Charles Pauze (Chairman, independent member);
Angélique Gérard (independent member);
Eric Schaefer.
5.2.2.1 Audit Committee
The Statutory Auditors must in particular be heard at the time
of the Committee meetings dealing with the preparation and
control of the financial statements in order to report on the
execution of their mission and the conclusions of their work.
This allows the Committee to be informed of the main areas
of risk or uncertainty regarding the accounts identified by the
Statutory Auditors, their audit approach and any difficulties
encountered during their mission.
(II)
OVERSEEING THE EFFECTIVENESS OF THE INTERNAL
CONTROL, INTERNAL AUDIT AND RISK MANAGEMENT
DUTIES (ARTICLE 1 OF THE RULES
OF PROCEDURE OF THE AUDIT COMMITTEE)
SYSTEMS CONCERNING ACCOUNTING AND FINANCIAL
INFORMATION.
The duties of the Audit Committee are to oversee the preparation
and audit of accounting and financial information and to ensure
the effectiveness of risk monitoring and internal operating
control mechanisms in order to facilitate the Supervisory
Board’s oversight of control and verification mechanisms.
Within this framework, the Audit Committee carries out the
following main duties:
(I)
OVERSEEING THE PREPARATION OF ACCOUNTING
AND FINANCIAL INFORMATION
Prior to their presentation to the Supervisory Board, the
Audit Committee must examine the parent company and
consolidated financial statements, annual or half-yearly, and
ensure the relevance and constancy of the accounting methods
used to establish these statements. The Committee will review,
if needed, all major transactions that may have entailed conflicts
of interest. The Committee must express an opinion on any
significant changes to the accounting principles applied by the
Company when preparing its consolidated financial statements
(annual or half-yearly) with the exception of changes caused
by modified IAS/IFRS.
The Committee must examine the scope of consolidated
companies and, if need be, the reasons why companies are
excluded from the scope.
The Audit Committee must in particular examine provisions
and their adjustments and any situation that may generate a
significant risk for the Group as well as all financial information
and all annual, half-yearly or quarterly reports drawn up in the
regular course of business or for a specific transaction (for
example a contribution, a merger or a market transaction).
This examination must take place insofar as possible two (2)
days prior to the review by the Supervisory Board.
The examination of the financial statements must be
accompanied by a presentation from the Statutory Auditors
indicating the key points of the legal audit and of the accounting
options used as well as a presentation by the Chief Financial
Officer describing the Company’s risk exposure and significant
off-balance sheet commitments.
The Audit Committee must ensure the relevance, reliability
and implementation of internal control procedures and the
identification, hedging and management of the Company’s
risks in relation to its activities and its accounting and financial
information.
05
The Committee must also examine the significant risks and
off-balance sheet commitments of the Company and its
subsidiaries. The Committee must in particular interview the
persons in charge of the internal audit and regularly examine
the business risk map. In addition, the Committee must give
its opinion on the organization of the Audit Department and be
informed of its audit program. It should receive the internal audit
reports or a periodic summary of these reports.
(III)
OVERSEEING THE LEGAL AUDIT OF THE PARENT COMPANY
AND CONSOLIDATED FINANCIAL STATEMENTS BY THE
COMPANY’S STATUTORY AUDITORS
In particular, the Audit Committee must gather and monitor
information from the Company’s Statutory Auditors (also
without the presence of members of the Management Board)
on their general work schedule, on any difficulties encountered
during the exercise of their mission, on changes they consider
necessary to the Company’s accounts or other records, on any
accounting irregularities, anomalies or inaccuracies they may
have identified, on uncertainties or significant risks concerning
the drawing up and processing of accounting and financial
data, on the conclusions drawn from their observations and
corrections concerning the period’s results compared to those
of the previous period, and on any significant internal control
weaknesses they may have discovered.
(IV)
OVERSEEING THE INDEPENDENCE OF THE STATUTORY
AUDITORS
The Committee must steer the procedure for selecting and
renewing the Statutory Auditors and submit the results of
this selection to the Supervisory Board. It must also issue a
recommendation on the Statutory Auditors put forward for
appointment by the Shareholders’ Meeting. Upon expiry of
the Statutory Auditors’ mandate, their selection or renewal may
be preceded, upon a proposal by the Committee and decision
by the Supervisory Board, by a call for tenders supervised by
the Audit Committee.
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In order for the Audit Committee to monitor the Statutory
Auditors’ compliance with the rules pertaining to their
independence and objectivity throughout the duration of their
mandate, the Committee must obtain every year:
a the Statutory Auditors’ declaration of independence;
a the amount of the fees paid to the Statutory Auditor networks
by the entities controlled by the Company and its controlling
entity for services that are not directly related to the Statutory
Auditors’ mission; and
a information on the services supplied in respect of the tasks
directly related to the Statutory Auditors’ mission.
In addition, the Committee must examine with the Statutory
Auditors the risks pertaining to their independence and the
safeguard measures taken to reduce these risks. It must in
particular ensure that the amount of the fees paid by the
Company and the Group, or the share it represents of the
revenue of the Statutory Auditor firms or networks, is not of a
nature to endanger the independence of the Statutory Auditors.
The mission of Statutory Auditor must be exclusive of any
other task not related to this mission in accordance with
the professional code of ethics and professional standards
governing Statutory Auditors. The selected Statutory Auditors
must renounce, for themselves and for the network to which
they belong, all consultancy work (e.g. legal, tax, information
technology) carried out directly or indirectly on behalf of the
Company that has chosen them or of the companies that
it controls. Nevertheless, upon prior approval by the Audit
Committee, work ancillary or directly complementary to the
audit of the financial statements may be carried out, such as
acquisition or post-acquisition audits but excluding evaluation
and consultancy work.
COMPOSITION (ARTICLE 10 OF THE SUPERVISORY
BOARD’S INTERNAL RULES)
In accordance with Article 10 of the Supervisory Board’s
internal rules, the Audit Committee must comprise between
three and five members chosen from among the members of
the Supervisory Board.
As of the date of this Registration Document, the Audit
Committee was made up of three members chosen from
among the members of the Supervisory Board, two of whom
were appointed from among the independent members of the
Supervisory Board. As the proportion of independent members
within the Audit Committee is two thirds, the composition of this
committee complies with the recommendations of the AFEPMEDEF Code.
In accordance with applicable legal rules, the members of the
committee must have specialized knowledge in finance and/
or accounting. Upon their appointment, all members of the
Audit Committee must receive information pertaining to the
Company’s accounting, financial and operating specificities.
The Audit Committee members’ terms expire at the same
time as their terms on the Supervisory Board, except that the
Supervisory Board may at any time change the composition of
the Committee and thus end the term of a Committee member.
The Chairman of the Audit Committee is appointed by the
Supervisory Board from among the Committee’s members for
his entire term as a member of the Committee.
OPERATION (ARTICLE 2 OF THE RULES
OF PROCEDURE OF THE AUDIT COMMITTEE)
The Audit Committee may conduct meetings in person or via
video or telephone conference pursuant to the same rules as
the Supervisory Board, when convened by its Chairman or
secretary, so long as at least half of its members participate.
Committee members may not give proxies to other members
to represent them.
The Audit Committee’s recommendations are adopted by a
simple majority of members present. In the event of a tie, the
vote of the Committee’s Chairman prevails.
The notice of meeting must include an agenda and may be
transmitted orally or by any other means.
The Audit Committee meets as often as necessary and, in
any event, at least twice a year in connection with the Group’s
preparation of the annual and interim financial statements.
The Audit Committee’s meetings are held prior to the meeting
of the Supervisory Board and, to the extent possible, at least
two days prior when the Audit Committee’s agenda includes
examination of interim or annual financial statements prior to
their review by the Supervisory Board.
Minutes are prepared for each meeting, in the absence
of other provisions, by the meeting’s secretary appointed
by the Committee’s Chairman, under the authority of the
Committee’s Chairman. The minutes are sent to all members
of the Committee. The Chairman of the Committee decides
conditions pursuant to which it reports on its work to the
Supervisory Board.
The Committee presents its work at the next Supervisory Board
meeting.
Activity of the Audit Committee in 2015
In 2015, the Audit Committee met five times, with an attendance
rate of 100%.
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5.2.2.2 Nominations and Compensation
Committee
DUTIES (ARTICLE 1 OF THE RULES
OF PROCEDURE OF THE NOMINATIONS
AND COMPENSATION COMMITTEE)
In accordance with Article 10 of the Supervisory Board’s internal
rules, the Nominations and Compensation Committee must
comprise between three and five members chosen from among
the members of the Supervisory Board.
As of the date of this Registration Document, the Nominations
and Compensation Committee had three members chosen from
among the members of the Supervisory Board, two of whom
were appointed from among the independent members of the
Supervisory Board. As the proportion of independent members
within the Nominations and Compensation Committee is a
majority, the composition of this committee complies with the
recommendations of the AFEP-MEDEF Code.
The Nominations and Compensation Committee is a specialized
committee of the Supervisory Board whose main duty is to
assist the Supervisory Board in constituting the Company’s
management bodies and determine and regularly evaluate
the compensation and benefits received by the members of
the Management Board, including deferred benefits and/or
severance pay for voluntary or forced departure from the Group.
In that context, the Nominations and Compensation Committee
carries out the following duties:
a proposing candidates for appointment to the Supervisory
Board, to the Management Board and to Board Committees
and evaluating the candidacies of non-independent members
The Nominations and Compensation Committee makes
proposals for the appointment of members of the Supervisory
Board (either by the Shareholders’ Meeting or by co-option)
and of the Management Board and for the appointment of
members and chairmen of each of the Supervisory Board’s
committees.
With respect to nominating independent members of the
Supervisory Board, the Committee takes the following criteria
into account: (i) the desired balance in the composition of
the Supervisory Board with regard to the composition and
the evolution of the Company’s ownership, (ii) the proportion
of men and women required by the regulations in effect,
(iii) the advisability of renewing terms, and (iv) the integrity,
knowledge, experience and independence of each candidate.
The Nominations and Compensation Committee must also
establish a procedure to select future independent members
and make its own evaluations of potential candidates before
any candidates are approached.
a annual evaluation of all positions held by members of the
Supervisory Board
Each year prior to the publication of the Company’s Annual
Report, the Nominations and Compensation Committee
examines the status of each member of the Supervisory
Board with regard to the rules on the holding of multiple
offices and submits its findings to the Board so that the
Board may examine the status of members as appropriate
under these standards.
a examination and proposal to the Supervisory Board of all
components and terms of compensation of the members
of the Management Board
The Nominations and Compensation Committee makes
proposals that include fixed and variable compensation,
as well as, if applicable, share subscription or purchase
options, performance share allocations, retirement and
pension plans, severance packages, benefits in kind and
individual benefits and all other possible direct or indirect
compensation (including long-term) that may be included in
the compensation of members of the Management Board.
05
The Committee is informed of the compensation policy for
the principal executives who are not corporate officers, as
well as of the hiring and compensation of the members of
the Executive Committee.
a evaluation and proposal to the Supervisory Board concerning
allocation of attendance fees
The Committee submits a proposal to the Supervisory Board
with respect to the allocation of attendance fees and individual
amounts of payments to the members of the Supervisory
Board, taking into account their actual participation on the
Board and on the committees of which they are members,
the responsibilities undertaken and the time which they must
dedicate to their duties.
The Committee also submits a proposal on the compensation
allocated to the Chairman and Vice-Chairman of the
Company’s Supervisory Board.
a exceptional duties
The Committee is consulted by the Supervisory Board to
make recommendations on all exceptional compensation
related to exceptional duties which may be given by the
Supervisory Board to certain of its members.
COMPOSITION (ARTICLE 10 OF THE SUPERVISORY
BOARD’S INTERNAL RULES)
As of the date of this Registration Document, the Nominations
and Compensation Committee had three members chosen
from among the members of the Supervisory Board, two of
whom were appointed from among the independent members
of the Supervisory Board.
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Committee members are appointed by the Supervisory Board
from among its own members, taking into consideration
independence as well as experience in the selection and
compensation of listed company executive officers. The
Nominations and Compensation Committee may not include
any senior executive or corporate officer of the Company.
The Nominations and Compensation Committee members’
terms expire at the same time as their terms on the Supervisory
Board, except that the Supervisory Board may at any time
change the composition of the Committee and thus end the
term of a Committee member.
The composition of the Committee may be modified by the
Supervisory Board, acting at the request of its Chairman, and,
in any event, must be modified in the event of a change in the
general composition of the Supervisory Board.
The Chairman of the Nominations and Compensation
Committee is appointed from among the independent members
by the Supervisory Board, upon the proposal of the Chairman
of the Supervisory Board.
The Committee’s secretary is any person designated by the
Chairman of the committee or with the Chairman’s agreement.
WORKINGS (ARTICLE 2 OF THE RULES
OF PROCEDURE OF THE NOMINATIONS
AND COMPENSATION COMMITTEE)
The Nominations and Compensation Committee may conduct
meetings in person or via video or telephone conference
pursuant to the same rules as the Supervisory Board, when
convened by its Chairman or secretary, so long as at least half
of its members participate. Committee members may not give
proxies to other members to represent them.
The Committee’s recommendations with respect to
compensation and nominations are adopted by a simple
majority of members present. In the event of a tie, the vote of
the Committee’s Chairman prevails.
The notice of meeting must include an agenda and may be
transmitted orally or by any other means.
The Nominations and Compensation Committee meets as
often as necessary and, in any event, prior to any meeting
at which the Supervisory Board votes on the compensation
of members of the Management Board or the allocation of
attendance fees.
The Committee presents its work at the next Supervisory Board
meeting.
Activity of the Nominations and Compensation
Committee in 2015.
In 2015, the Nominations and Compensation Committee met
four times, with an attendance rate of 100%.
5.2.3
Internal control
The Group’s internal control system is intended to ensure:
The internal control system encompasses the following:
a application of the instructions and guidelines set by the
Group’s senior management;
Organization/control environment, including:
a the proper functioning of the Company’s internal processes,
in particular those involved in protecting its assets; and
AN INTERNAL AUDIT DEPARTMENT
a the reliability of financial information.
It relies on the principles of the Committee of Sponsoring
Organizations of the Treadway Commission (COCO) as well
as on international standards, as defined by the Institute of
Internal Auditors (IIA), in particular.
298
EUROPCAR
2015
The Group Internal Audit Department is composed of a Director
of Group Internal Audit, a manager and three internal auditors.
Previously, the Director of Internal Audit has reported to the
CEO, the Chairman of the Company’s Board of Directors and
the Audit Committee, which was appointed by the Board of
Directors. When the Company’s new corporate governance
structure is instituted, the Director of Internal Audit will report
to the Chairman of the Supervisory Board and to the Audit
Committee appointed by the Supervisory Board. This link
between internal audit and the Company’s management is
supplemented by continuous access to and cooperation with
the other members of the Company’s Management Board.
In addition, there will be an operating link between the Group
Internal Audit Department and the local audit units of the
operating subsidiaries, primarily dedicated to point of sale
audits and operating site audits, including of local stations and
franchisees.
This organization arises out a shared audit charter that has
been in place between the Company and the Corporate
Countries since 2010, the update of which is expected to be
completed in early 2016.
The Group Internal Audit Department provides Group
management teams with reasonable assurances as to
transactional oversight, gives them advice on improvements and
contributes to creating added value. It assists the Management
Board and the Corporate Countries in achieving their objectives
by using a systematic and methodical approach to evaluating
management risks, control risks and corporate governance,
and making proposals to strengthen their effectiveness. It also
promotes a strong internal control environment in order to
increase oversight of risks and operations.
The Group Internal Audit Department carries out and regularly
updates risk mapping at the Group and subsidiary levels on a
rotating basis. The risk mapping is presented once a year to
the Group’s Management Board, which reviews it and examines
actions and specific monitoring of certain risks. The main
identified risks are then addressed or monitored specifically.
The Group Internal Audit Department defines and executes,
either on its own initiative or on the initiative of Group
management, an annual audit plan that includes the
international franchise network, internal control audits and any
other advice or assurance assignment. In addition, the Group
Internal Audit Department consolidates the audits performed in
the various Corporate Countries and in particular those relating
to transactions carried out by the different stations making up
the Group’s network. It works in close collaboration with the
local audit teams for that purpose.
For the last two years, the Group Internal Audit Department has
asked Ernst & Young to conduct an annual audit of stations
held by franchisees in order to ensure their compliance with
the Group’s rules.
Finally, in close collaboration with the external auditors, the
Group Internal Audit Department oversees the implementation
of the audit recommendations and of high-priority action plans.
The report prepared by the Chairman of the Supervisory
Board on the composition of the Supervisory Board and the
application of the principle of balanced representation of men
and women on the Board, and setting out the conditions under
which the Supervisory Board prepares and organizes its work
and the internal control and risk management procedures the
Group has been put in place, as provided for in article L. 225-68
of the French Commercial Code, is presented in Section 5.2.4
“Report by the Chairman of the Supervisory Board” of this
AN INTERNAL CONTROL QUESTIONNAIRE
The Group has used an Internal Control Questionnaire (ICQ)
for the past four years. It covers financial reporting procedures,
operating oversight (such as contract management, franchises,
agents and affiliates), functional oversight (such as legal,
purchase, Human Resources, IT) and oversight of Group
governance. The internal control questionnaire will be reworked
in 2016.
05
AN ANNUAL STATEMENT SIGNED BY
THE MANAGEMENT OF THE GROUP ENTITES.
Each year, the executive officers of the Group’s companies sign
a compliance letter that lists and analyzes situations of noncompliance or risk of non-compliance and then explains the
corrective measures implemented during the fiscal year. The
compliance letter also certifies that, to the knowledge of the
signing officer, all staff employed by the entity during the fiscal
year received training on the Group’s ethics charter, conflicts
of interest, the protection of personal data and competition
law (see Section 2.7.2 “Risk Management” of this Registration
Document).
AN INTRANET SITE
The Group also maintains an intranet site that includes all
int

03 - Europcar Finance

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