Avis Europe plc Preliminary Results for the Year Ended December 31, 1998

Business Wire, Feb 24, 1999

BRACKNELL, Berkshire--(BUSINESS WIRE)--Feb. 24, 1999--Avis Europe plc, the leading car rental company in Europe, Africa, the Middle East and Asia, today announced a significant increase in earnings for the period to December 31, 1998. The Group announced in April 1998 a change in accounting year end from February 28 to December 31 in line with other major car rental companies. The results are therefore presented for both the year ended December 31, 1998 and the 10 months ended December 31, 1998. The highlights below are for the year to December 31, 1998.

Highlights

- Revenue up 14.3% to (pound)576.3 million ($958.9 million(a))(up

17.5% in ECU). - Operating profit up 25.6% to (pound)127.6 million ($212.3

million) (up 28.4% in ECU). - Operating margin up from 20.1% to 22.1%. - Pre-tax profits up 44.1% to (pound)98.7 million ($164.1 million)

(up 46.5% in ECU). - Earnings up 46.5% to (pound)73.9 million ($123.0 million) (up

48.7% in ECU). - Earnings per share up 35.1% to 12.7p (21.1(cent)) (up 37.2% in

ECU). - Margin performance driven by revenue per day increases and

continued productivity improvements.

(a) US Dollar equivalents are provided for reader convenience at the December 31, 1998 rate of (pound)1 = $1.6638.

Commenting on the results, Chairman Alun Cathcart said: "Avis Europe has had another excellent year with significant revenue growth in all major markets, reinforcing our leadership position in Europe. We have continued to improve margin performance despite predicted increases in fleet-related costs and have delivered trading results ahead of expectations for a second year. While general economic predictions are for a weaker market environment in 1999, we have had a satisfactory start to the year and are well placed to deliver further growth in the year ahead through continued application of our strategies."

The 1998 Annual Report will be mailed to Shareholders on April 28, 1999.

The financial review and extracts from the audited financial statements are available on www.avis-europe.com from February 24, 1999.

Chairman's Statement

I am pleased to announce Avis Europe's 1998 preliminary results, which continue the excellent performance achieved since our flotation in April 1997. Due to our previously announced change in accounting year end from February 28 to December 31, we are presenting our results for both the year ended December 31, 1998 and the 10 months ended December 31, 1998. To facilitate a more meaningful comparison, the review below focuses on the year ended December 31, 1998, which is also representative of the 10 month trading period to December 31, 1998.

As in previous years, the Group's results are presented in both Sterling and ECU. With the spread of our operations across Europe we believe ECU reporting has provided a more accurate reflection of the underlying performance of our business. ECU reporting has now been replaced by Euro reporting for all future financial periods.

Financial Results for 12 months to December 31, 1998

In 1998 the Group's ECU revenue grew by 17.5% versus prior year (14.9% in like for like businesses, which exclude the acquisition of the Greek licensee and 3 Arrows). Significant revenue growth was achieved in all major markets through a combination of volume and price. Reported revenues were up 14.3% to (pound)576.3 million reflecting the strength of Sterling against the major European currencies during the first half of 1998.

Operating profit for the period of (pound)127.6 million (1997: (pound)101.6 million) was 25.6% ahead of prior year and 28.4% ahead when expressed in ECU. Net interest expense of (pound)29.4 million (1997: (pound)33.5 million) benefited by (pound)3 million as a result of the year on year impact of the flotation proceeds received in April 1997. Interest on increased debt levels, primarily due to acquisitions, was more than off-set by lower interest rates. Pre-tax profits were (pound)98.7 million (1997: (pound)68.4 million), an increase of 44.1%, and earnings were 46.5% higher than last year at (pound)73.9 million (1997: (pound)50.4 million). Earnings per share increased by 35.1% to 12.7 pence (1997: 9.4 pence), reflecting the change in the share structure prior to flotation.

Overview of Trading

1998 was an excellent year for the Group with significant progress in all four areas of our strategic focus, reinforcing our leadership position, pursuing balanced growth in our core market segments, driving strong operating efficiencies and continuing investment in our network development.

In addition to delivering strong financial performance, the Group continued to win several major industry awards.

Leadership Position Reinforced

Avis Europe reinforced its leadership position with a strong revenue increase of 17.5% (ECU), following a 15.5% increase achieved in the year ended February 1998. Revenue performance was driven by a combination of volume and revenue per day increases in existing markets, together with the acquisition of our Greek licensee announced in July 1998.