Half-Year Financial Report 2018 Half-year ending June 30, 2018

Transcription

1 Half-Year Financial Report 2018 Half-year ending June 30, 2018

2 Europcar Mobility Group S.A. A French public limited company (société anonyme) with share capital of 161,030,883 Headquarters: 13 ter boulevard Berthier Paris Paris Trade and Companies Register (R.C.S.) no This document is a free translation of the interim financial report of Europcar Mobility Group for the first half-year ended 30 June This translation has been prepared solely for the information and convenience of English speaking users. In the event of any ambiguity or discrepancy between this translation and the original document, the French version shall prevail. 2

3 CONTENTS HALF-YEAR MANAGEMENT REPORT HIGHLIGHTS OF THE FIRST HALF OF SCOPE CHANGES AND ACQUISITIONS LAUNCH OF A SHARE BUY-BACK PROGRAM FINANCING SUBSEQUENT EVENTS ANALYSIS OF OPERATING RESULTS: KEY PERFORMANCE INDICATORS COMPARISON OF OPERATING RESULTS TOTAL REVENUE FLEET HOLDING COSTS FLEET OPERATING, RENTAL AND REVENUE-RELATED COSTS PERSONNEL COSTS OVERHEAD FOR HEADQUARTERS AND NETWORK OTHER NON-CURRENT INCOME AND EXPENSES ADJUSTED CORPORATE EBITDA NET FINANCING COSTS INCOME TAX SHARE OF PROFIT OR LOSS IN COMPANIES ACCOUNTED FOR UNDER THE EQUITY METHOD NET PROFIT/(LOSS) REVENUE AND ADJUSTED CORPORATE EBITDA BY OPERATING SEGMENT EUROPE REST OF WORLD ELIMINATION AND HOLDINGS LIQUIDITY AND FINANCIAL POSITION OVERVIEW TOTAL NET DEBT ANALYSIS OF CORPORATE FREE CASH FLOW OVERVIEW CORPORATE FREE CASH FLOW OTHER COMPONENTS OF CASH FLOW ANALYSIS OF CASH FLOW (IFRS) NET CASH FROM (USED BY) OPERATIONS NET CASH FLOW FROM INVESTING ACTIVITIES NET CASH FLOW FROM FINANCING ACTIVITIES

4 5 REGULATORY, LEGAL AND ARBITRATION PROCEEDINGS TRANSACTIONS WITH RELATED PARTIES GUIDANCE FOR INFORMATION ON MEDIUM TERM TRENDS AND OBJECTIVES PRINCIPAL RISKS AND UNCERTAINTIES FOR THE SECOND HALF OF FORWARD-LOOKING STATEMENTS INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS STATUTORY AUDITORS REVIEW REPORT ON THE HALF-YEAR FINANCIAL INFORMATION STATEMENT BY THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT

5 HALF-YEAR MANAGEMENT REPORT 1. HIGHLIGHTS OF THE FIRST HALF OF Scope changes and acquisitions On April 4, 2018, Europcar Mobility Group sold its 25% stake in Car2Go Europe GmbH to Daimler Mobility Services GmbH for a total amount of 70 million. On April 25, 2018, Europcar Mobility Group acquired through its subsidiary Ubeeqo, 100 % of Poleis Consulting and their brand Scooty, a Belgian electric scooter sharing start-up founded in Launch of a share buy-back program On May 17, 2018, Europcar Mobility Group signed a mandate in connection with the share buyback program authorized by the Combined General Meeting of Shareholders on May 10, 2017 targeting a maximum amount of shares not to exceed a value of 30 million, representing approximately 2.1% of the Company s share capital. 1.3 Financing On May 14, 2018, the Group signed amendments of the SARF to allow the financing of the Goldcar vehicles and refinance progressively the 450m Asset Back Bridge, put in place in The main amendments were the increase of the line from 1.3 billion euros to 1.7 billion euros and the creation of SPVs dedicated to the financing of the Goldcar fleet, the Goldfleet companies. The Group took this opportunity to renegotiate the margin from 1.50% to 1.30% and extend the maturity of the facility from January 2020 to January In parallel, the interest rate hedging tools have been amended and completed to reflect the amendments of the SARF: The existing swaps amounting to 1 billion euros at an average fix rate of 0.516% have been extended by 2 years, from October 2020 to October 2022 at a fix rate of 0.944%. The existing caps amounting to 200 million euros have been restructured. The 0% strike has been increase to 0.50% and the maturity has been extended to October The Group has also completed the interest rate hedging by implementing additional new caps amounting to 400m at a strike of 0.50% maturing in October On June 15, 2018, Europcar Mobility Group announced the pricing of the offering by EC Finance plc of 150 million 2.375% Senior Secured Notes due The offering price of the notes has been set at 99% with a yield to maturity of %. Those notes are equivalent to the existing 350 million notes and will then increase the existing notes to 500 million. The delivery and settlement and the listing of the notes on the Euro MTF market of the Luxembourg Stock Exchange occurred on June 29, The proceed of the notes amounts to million and will be used to finance the Goldcar fleet integration into the Group's securitization program. 5

6 2. SUBSEQUENT EVENTS To management s knowledge, there are no other subsequent events to the closing that might have a material impact on the earnings, assets, business or overall financial position of the Group. 3. ANALYSIS OF OPERATING RESULTS: 3.1. Key performance indicators In millions, unless stated otherwise 6M M 2017 Change Change at constant exchange rate Revenues 1,297 1, % 27.5% Rental Revenues 1, % 28.4% Rental day volume (thousand) % RPD (1) (in ) % -2.6% Average duration (day) % Average fleet size (thousands) (2) % Average fleet costs per unit per month (in ) (3) (236) (241) -1.8% Financial utilization rate (4) 75.5% 76.3% (0,8)pt. Adjusted corporate EBITDA % -16.6% Adjusted corporate EBITDA margin 3.6% 5.5% (1,9)pt. Corporate Free Cash Flow % LTM adjusted corporate EBITDA % LTM adjusted corporate EBITDA margin 9.5% 11.5% (2,0)pt. Operating income (IFRS) % Net income (IFRS) 20 (27) (1) RPD (revenue per transaction day) corresponds to rental revenue for the period divided by the number of rental day volume for the period. Variation is calculated compared with previous year. (2) Average fleet during the period is calculated as the number of days in the period during which the fleet was available, divided by the number of days of the period, multiplied by the number of vehicles in the fleet during the period. As of June 30, 2018, the fleet comprised

7 thousand vehicles, compared with thousand as of June 30, (3) Average fleet cost per unit per month corresponds to total monthly fleet cost (fleet holding and operating costs), excluding interest expense for fleet operating leases and insurance, divided by the average fleet during the period. The average fleet is then divided by the number of months during the period. (4) The fleet financial utilization rate corresponds to the number of rental days as a percentage of the number of days the fleet is considered financially available. The fleet s financialavailability period represents the period during which the Group holds the vehicles Comparison of operating results Analysis in this section is based on the Group s income statement, prepared in accordance with IFRS, as well as data provided by management intended for strategic guidance. Management data are prepared in order to reflect and clarify the presentation of Group economic performance. IFRS Income Statement In millions 6M M 2017 Change Total revenue 1, , % Fleet holding costs (359.4) (264.0) 36.1% Fleet operating, rental and revenue related costs (456.3) (371.3) 22.9% Personnel costs (257.0) (191.2) 34.4% Network and head office overhead costs (151.4) (120.6) 25.5% Other income % Depreciation, amortization and impairment expense (20.4) (14.2) 43.3% Recurring operating income % Other non-recurring income and expenses 47.9 (38.5) 224.2% Operating income % Net financing costs (77.6) (58.0) 33.7% Profit/(loss) before tax 27.3 (26.2) 204.1% Income tax benefit/(expense) (6.0) % Share of profit of Associates (1.2) (5.8) 79.2% Net profit/(loss) for the period 20.1 (27.0) 174.5% 7

8 Management Performance Indicators In millions 6M M 2017 change Total revenue 1, , % Fleet holding costs, excluding estimated interest included in operating leases (334.3) (242.6) 37.8% Fleet operating, rental and revenue-related costs (456.3) (371.3) 22.9% Personnel costs (257.0) (191.2) 34.4% Network and head office overhead costs (151.4) (120.6) 25.5% Other income % Costs for personnel, network and headquarters overhead, IT and other (403.5) (307.9) 31.1% Net fleet-financing expense (31.0) (28.2) 9.7% Estimated interest included in operating leases (25.1) (21.4) 17.1% Total fleet financing (56.1) (49.7) 12.9% Adjusted corporate EBITDA % Margin 3.6% 5.5% -34.6% Depreciation, amortization and impairment expense (20.4) (14.2) 43.3% Other non-recurring income and expenses 47.9 (38.5) 224.2% Other financing income and expense not related to the fleet (46.7) (29.8) 56.5% Profit/(loss) before tax 27.3 (26.2) 204.1% Income tax benefit/(expense) (6.0) % Share of profit or loss in companies accounted for under the equity method (1.2) (5.8) 79.2% Net profit/(loss) for the period 20.1 (27.0) 174.5% The table below presents a reconciliation of recurring operating income to adjusted recurring operating income, adjusted corporate EBITDA and adjusted consolidated EBITDA. Adjusted recurring operating income, adjusted consolidated EBITDA and adjusted corporate EBITDA are presented because the Group believes that these measures provide readers with important additional information for the evaluation of Group performance. The Group also believes that 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, the Group believes that investors, securities analysts and rating agencies will consider that adjusted recurring operating income, adjusted consolidated EBITDA and adjusted corporate EBITDA are useful indicators for measuring the Group s capacity to meet its debt-service obligations. IFRS does not recognize recurring operating income, adjusted consolidated EBITDA or adjusted corporate EBITDA. Therefore, these indicators should not be viewed as alternatives to operating income or net profit, nor should they be considered indicators of operating results or of cash flows as measures of liquidity. 8

9 In millions 6M M 2017 Adjusted consolidated EBITDA Fleet depreciation (IFRS) (151.6) (92.5) Fleet depreciation included in operating-lease rents (1) (122.5) (100.2) Total fleet depreciation (274.2) (192.7) Interest expense related to fleet operating leases (estimated) (1) (25.1) (21.4) Net fleet-financing expense (31.0) (28.2) Total fleet financing (56.1) (49.7) Adjusted corporate EBITDA Depreciation, amortization and impairment expense (20.4) (14.2) Reversal of net fleet-financing expenses Reversal of interest expense for fleet operating leases (estimated) Adjusted recurring operating income Interest expense related to fleet operating leases (estimated) (25.1) (21.4) Recurring operating income (2) (1) Expenses related to operating leases for fleet vehicles comprise depreciation, interest and, in some cases, a small management fee. For contracts that do not provide a breakdown of rent payments in accordance with these expenses, the Group makes estimates on the basis of data provided by the lessors. Furthermore, because interest expense for operating leases is essentially a financing cost for the fleet, Europcar management reviews fleet holding costs and Group adjusted operating income net of this expense. (2) As set forth in the consolidated income statement. 9

10 3.2.1 Total revenue The following table shows changes in Group consolidated revenue for the half-years ended June 30, 2018, and June 30, 2017, as a total and by product type: In millions 6M M 2017 Change Change at constant exchange rate Rental Revenues 1, % 28.4% Other revenue associated with car rental % 20.2% Franchising business % 4.3% Total revenue 1, , % 27.5% Total revenue stood at 1,296.6 million, compared with 1,027.8 million for the first half of 2017, an increase of 27.5% at constant exchange rates. Restated for the new changes in the scope of consolidation and exchange rates, the Group s total revenue increased by 3.4%. This increase in the Group s total revenue was the result of positive growth in all of its three major Business Units with growth of 13% for the Cars BU, 55% for the Vans BU and more than 251% for the Low-Cost BU. The volume of rental days rose by 31.8% over the first half of 2017, to stand at 39.5 million days. Furthermore, the revenue per transaction day rose by 0.3% at Group level, restated for the revenue linked to the new changes in the scope of consolidation and exchange rate effects Fleet holding costs Fleet holding costs include fleet depreciation expenses (vehicles acquired and financed through funding recorded on the balance sheet) and payments on operating leases for vehicles including their financial component, in compliance with accounting standards (e.g., vehicles financed through leasing). Rental payments under operating leases automatically include a component of financial interest. As explained below, the accounting methods employed for fleetfinancing expenses depend on the type of financing (operating lease or other type of financing). For greater clarity, the Group combines all fleet-financing expenses in its management income statement. For analytical purposes, the expenses are included in adjusted corporate EBITDA but are excluded from fleet holding costs. Adjusted for estimated financial expenses on operating leases, fleet holding costs totaled million, up 37.8% from million in 2017, mainly due to the increase in the volume of rental days. The Group delivered a good performance in terms of fleet financial utilization with a decline on a reported basis in the first half of 2018 but a 10 basis points increase to 76.4% versus 76.3% when excluding for the impact of Buchbinder and Europcar Denmark which are more off airport set ups. Through its cost management strategy and also due to a lower per-unit fleet costs per month reported by Buchbinder and Goldcar, the Group has been able to reduce its average fleet cost per vehicle per month by 0.9%, from 238 for the first half of 2017 to 236 in the first half of 2018 at constant rates Fleet operating, rental and revenue-related costs 10

11 In the first half of 2018, fleet operating costs totaled million, up 23%. This is due to the proportional increase of 31.8% in the volume of rental activity Personnel costs In the first half of 2018, personnel costs totaled million, an increase over At constant exchange rates, these expenses are up 22.7% due primarily to changes in the scope of consolidation, but also to an increase in the headcount assigned to support the Group's organization per Business Units Overhead for headquarters and network In the first half of 2018, overhead for headquarters and the network totaled million, an increase of 26%. This increase stems primarily from the consolidation scope effect with the recent acquisitions of Buchbinder and Goldcar Other non-current income and expenses In the first half of 2018, other non-current income and expenses represented a net profit of 47.9 million, and were mainly related to the gain on disposal of Car2Go Europe GmbH to Daimler Mobility Services GmbH, the acquisition and integrating costs of the companies acquired in 2017 for 3 million, restructuring and Group transformation costs for 8 million and litigations costs for 5 million Adjusted corporate EBITDA Adjusted corporate EBITDA is defined as recurring operating income before depreciation and amortization unrelated to the fleet, and after deduction of interest expense for fleet financing. The level of adjusted corporate EBITDA fluctuates significantly from season to season. In the first half of 2018, adjusted corporate EBITDA totaled 46 million, compared with 56 million in the first half of Excluding the impact of New Mobility, adjusted corporate EBITDA totaled 53 million compared to 60 million if the first half of 2017.This decline reflects the reinforced seasonality of the Group affecting the overall profitability generation following its purchase of Goldcar. The Adjusted Corporate EBITDA margin of the Group is lower by 190 basis points to 3.6% in the first half of 2018 as a result of an increase in both network costs and HQ structure costs following the recent acquisitions made by the Group (Goldcar, Buchbinder and Europcar Denmark) Net financing costs Net financing costs amounted to 78 million in the first half of 2018, compared with 58 million in the first half of 2017, mainly reflecting the effect of the senior bond issue of 600 million due in 2024 carried out on October 16, Income tax In the first half of 2018, the Group had a tax expense of 6.0 million, compared with a tax profit of 5 million in At Group level, the effective tax rate for the six-month period ended June 30, 2018 is 22% compared to 19% for the period ended June 30, Share of profit or loss in companies accounted for under the equity 11

12 method The share of the profit or loss in companies accounted for under the equity method came to a loss of 1.2 million, compared with 5.8 million in the first half of It consists of the share of the loss of Car2Go accounted for under the equity method before the disposal date, and the loss of Wanderio, also accounted for under the equity method Net profit/(loss) Net profit in the first half of 2018 came to 20.1 million, compared with a loss of 27 million for the first half of REVENUE AND ADJUSTED CORPORATE EBITDA BY OPERATING SEGMENT Europe The table below shows (i) the revenue generated in Europe and (ii) adjusted Corporate EBITDA generated in Europe for the half-years ended June 30, 2018, and June 30, 2017: In millions Six months ended June 30 Change Change at constant exchange rates Total revenue Total Europe 1, % 29.0% Adjusted Corporate EBITDA (Europe) % -6.6% Revenue The revenue of the European operating sector increased at constant exchange rates to 1,215.1 million for the first half of Southern Europe countries reported steady growth in the first half of 2018 across all business segments. Acquisitions mainly contributed to the Europe operating sector. Adjusted Corporate EBITDA In the first half of 2018, adjusted corporate EBITDA in Europe fell by 1.1 million, to 15.5 million Rest of world The table below shows revenue and adjusted corporate EBITDA generated in the rest of the world for the half-years ended June 30, 2018, and June 30, 2017: In millions Six months ended June 30 Change Change at constant exchange rates Total revenue Total Rest of world % 9.5% Adjusted corporate EBITDA % -1.4% Revenue generated in the rest of world rose by 9.5% at constant exchange rates. This change was largely driven by corporate countries Australia and New Zealand, under the combined effect of growth in both number of rental days and revenue per day. 12

13 Group adjusted Corporate EBITDA in rest of world dropped 1.4% at constant exchange rates, to 15.1 million in the first half of Elimination and holdings The table below shows revenue and adjusted corporate EBITDA of the elimination and holdings segment for the first halves of 2018 and 2017: In millions Six months ended June 30 Change Total revenue % Adjusted corporate EBITDA % 4 LIQUIDITY AND FINANCIAL POSITION 4.1 OVERVIEW On May 14, 2018, the Group signed amendments of the SARF to allow the financing of the Goldcar vehicles and refinance progressively the 450m Asset Back Bridge, put in place in The main amendments were the increase of the line from 1.3 billion euros to 1.7 billion euros and the creation of SPVs dedicated to the financing of the Goldcar fleet, the Goldfleet companies. The Group took this opportunity to renegotiate the margin from 1.50% to 1.30% and extend the maturity of the facility from January 2020 to January In parallel, the interest rate hedging tools have been amended and completed to reflect the amendments of the SARF: The existing swaps amounting to 1 billion euros at an average fix rate of 0.516% have been extended by 2 years, from October 2020 to October 2022 at a fix rate of 0.944%. The existing caps amounting to 200 million euros have been restructured. The 0% strike has been increase to 0.50% and the maturity has been extended to October The Group has also completed the interest rate hedging by implementing additional new caps amounting to 400m at a strike of 0.50% maturing in October On June 15, 2018, Europcar Mobility Group announced the pricing of the offering by EC Finance plc of 150 million 2.375% Senior Secured Notes due The offering price of the notes has been set at 99% with a yield to maturity of %. Those notes are equivalent to the existing 350 million notes and will then increase the existing notes to 500 million. The delivery and settlement and the listing of the notes on the Euro MTF market of the Luxembourg Stock Exchange occurred on June 29, The proceed of the notes amounts to million and will be used to finance the Goldcar fleet integration into the Group's securitization program. In addition, the Group is heavily focused on cash generation, and corporate free cash flow totaled 65 million for the first half of As a result, Corporate Net Debt stood at 849 million as of June 30, 2018 (compared with

14 million December 31, 2017). The Corporate debt leverage 1 proforma of acquisitions was 2.8x at the end of June For information, in the first half of 2017, the Group signed a new secured 500 million Revolving Credit Facility (RCF) with a diversified pool of international banks. This Facility, which replaced the existing 350 million Senior Revolving Credit Facility, will be due in June The group has optimized the financing cost of this new RCF by a 25-bps reduction of the margin. The Group also signed on July 13, 2017, an unsecured bridge loan facility of 1,040 million for the acquisition of Goldcar, to refinance its existing debt and finance its fleet. This bridge loan facility was canceled on December 19, 2018, the acquisition date of Goldcar. 4.2 TOTAL NET DEBT As of June 30, 2018, Group net Corporate debt amounted to 849 million, compared with 827 million as of December 31, On the same date, secured net fleet debt, including fleet-related off-balance-sheet commitments, totaled 5,224 million, compared with 4,037 million as of June 30, 2017, and 4,061 million as of December 31, Of this amount, 2,669 million is capitalized on the statement of financial position and the remaining 2,555 million corresponds to operating leases. The estimated outstanding value of vehicles financed through operating leases corresponds to the book value of the vehicles. This amount is calculated from the acquisition costs and depreciation rates for the vehicles, on the basis of contracts signed with the manufacturers. In compliance with IFRS, this amount is not recorded on the balance sheet. The loan-to-value ratio (LTV ratio) was 89.1% 2 as of June 30, Defined as the ratio of Corporate net debt to Adjusted Corporate EBITDA for the last 12 months. 2 Corresponds to the debt of Securitifleet Holding, Securitifleet and EC Finance plc (total amount of 1,303 million on the test date) divided by the total net asset value of the companies (i.e., 1,463 million as of June 30, 2018). 14

15 The table below presents net corporate debt and total net debt (including the estimated outstanding value of the fleet financed through operating leases). In millions June 30 Dec High yield senior notes, 4.125%, notes due in 2024 (A) High yield senior notes, 5.75%, notes due in 2022 (A) Senior revolving credit facility FCT junior notes (B), accrued interest not yet due, capitalized costs of financing contracts and other (C) (D) Gross Corporate debt 1,140 1,090 Short-term investments and cash in operating and holding entities (E) Net Corporate debt High yield EC finance notes, 2.375%, notes due in 2022 (F) Senior asset revolving facility FCT junior notes (B), accrued interest, financing capitalized costs and other UK, Australia and other fleet-financing facilities 1,271 1,081 Gross financial fleet debt 2,751 2,430 Cash held in fleet-financing entities and short-term fleet investments Fleet net debt on balance sheet 2,669 2,287 Debt equivalent of fleet operating leases off balance sheet (G) 2,555 1,774 Net fleet debt (incl. op leases) 5,224 4,061 Net fleet debt (incl. op leases) 6,073 4,888 (A) On October 16, 2017, Europcar Mobility Group announced the launch of an offering of 600 million senior notes due 2024 by Europcar Drive D.A.C., a special purpose entity. (B) Proceeds from the FCT junior notes subscribed by Europcar International SAS ( ECI ) provide overall credit enhancement and, when applicable, additional liquidity. FCT junior notes are used only to finance the fleet debt requirement. FCT junior notes are subscribed by ECI during using available cash or drawing on the senior revolving credit facility. (C) For countries where fleet costs are not financed through dedicated entities (e.g., the Securitifleet entities), the cash used to finance the fleet (which could have been financed by fleet debt) is restated from the net fleet debt through a de-risk ratio. (D) Including accrued interest for financial assets (Euroguard). (E) Specifically includes the Group s insurance program. (F) On October 16, 2017, Europcar announced the launch of a 350 million issuance of, senior secured notes due 2022 by EC Finance Plc. On June 15, 2018, Europcar Mobility Group announced the pricing of the offering by EC Finance plc of 150 million 2.375% Senior Secured Notes due (G) The estimated debt equivalent of fleet operating leases corresponds to the book value of the vehicles. This amount is calculated from the acquisition costs and depreciation rates for the vehicles, on the basis of contracts signed with the manufacturers. The Company s financial management verifies the consistency of all external data provided. 15

16 4.3 ANALYSIS OF CORPORATE FREE CASH FLOW Overview The Group uses corporate free cash flow as its liquidity indicator. The Group believes that corporate free cash flow is a useful indicator because it measures the Group s liquidity on the basis of its operating activities, including net financing costs on borrowings dedicated to fleet financing, without taking into account (i) past disbursements for debt refinancing, (ii) exceptional costs that are not representative of trends in Group operating results, and (iii) cash flows in relation to the fleet. These cash flows are analyzed separately because the Group makes vehicle 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 for the analysis of Group cash flow, including cash flow relating to changes in the rental fleet, in fleet-related trade receivables and payables, and in fleet-related financing and other working capital facilities used principally for fleet-related needs. This presentation differs from the IFRS statement of cash flows, mainly because of analytic regrouping and the inclusion of items that do not affect cash flows that vary based on the financial data used as the starting point (in this case, adjusted Corporate EBITDA, as presented below, compared with pretax profit in the IFRS statement of cash flows). Management Cash Flows First half First half In millions Adjusted corporate EBITDA Other non-current income and expenses (21) (39) Non-fleet capital expenditure (net of proceeds from disposals) (33) (21) Changes in non-fleet working capital and provisions Income taxes received (paid) (17) (17) Corporate free cash flow Cash interest paid on corporate high yield bonds (30) (17) Cash flow before change in fleet Other investments 60 (76) Changes in fleet asset base, net of drawings on fleet financing and working capital (45) (64) Capital increase and buy back of treasury shares (27) 192 Special distribution taken from the share premium (24) (59) Change in corporate high yield (9) - Payment of transaction costs (15) 2 Increase/(decrease) in cash and cash equivalents before effect of foreign exchange conversions (25) 67 Cash and cash equivalent at beginning of period Changes in scope of consolidation - 3 Effect of foreign exchange differences (1) (2) Cash and cash equivalents at end of period

17 4.3.2 Corporate free cash flow Corporate free cash flow is defined as free cash flow before impacts from fleet, refinancing and acquisitions of subsidiaries. Free cash flow in the first half of 2018 came to 65 million, compared with 90 million in the first half of 2017 (down - 25 million). Adjusted corporate EBITDA. Adjusted Corporate EBITDA totaled 46 million, compared with 56 million in the first half of This decline reflects the reinforced seasonality of the Group affecting the overall profitability generation following its purchase of Goldcar. Other non-recurring income and expense. This line, which includes an expense of 21 million in the first half of 2018, compared with an expense of 39 million for the first half of 2017, specifically includes reorganization costs, Group transformation costs and costs related to the integration of the companies acquired in 2017, specifically, Goldcar and Buchbinder. Acquisition of intangible assets and property, plant and equipment. This line item primarily includes IT investments for 21 million and hardware renewals for 13 million. Changes in WCR excluding rental fleet and provisions fell from 111 million in 2017 to 89 million in 2018 with a stable change in WCR excluding rental fleet. Tax received/(paid). Tax cash-outs in the first half of 2018 are stable compared with the first half of Other components of cash flow The payment of interest on High Yield borrowings amounted to 30 million for the first half of 2018, compared with 17 million for the previous year, primarily reflecting the effect of the 600 million senior bond issue on October 16, 2017 due in Other investments represent cash inflow of 60 million during the first half year due primarily to the disposal of Car2Go for a total of 70 million. In the first half of 2017, other investments correspond to a cash outflow of 76 million and mainly include the purchase price of a franchise in Denmark for 52 million and the exclusive takeover of Ubeeqo for 7 million. Changes in the rental fleet, in working capital requirements, fleet financing and WCR facilities for 45 million in the first half of 2018 primarily reflect vehicle purchases for the summer, the increase in supplier debts to manufacturers (as a result of these purchases) and fleet debt draws to finance these vehicle purchases. Treasury share buy backs over the period for 27 million follow up on the mandate signed on May 17, 2018 by Europcar Mobility Group and allowing the implementation of the share buyback authorized by the combined Annual General Meeting of shareholders on May 10, In the first half of 2017, the capital increase amounted to 197 million (of which 22 million for a capital increase the Group's employees only and 175 million for a private placement capital increase). The exceptional distribution of 24.2 million taken from the share premium, was approved by the Combined General Meeting of Europcar Mobility Group shareholders on May 17, ANALYSIS OF CASH FLOW (IFRS) The Group s principal cash flow drivers are its operating performance (as reflected in its 17

18 operating profit before changes in working capital), cash flow from financing transactions, interest on Corporate debt, cash flow from acquisitions and disposals of fleet, and cash flow from investing activities. Six months ending June 30 In millions Net cash generated from (used by) operating activities... (374.6) (231.3) Net cash used by investing activities (97.6) Net cash generated from (used by) financing activities Net increase/(decrease) in cash and cash equivalents after effect of foreign exchange differences... (25.4) Net cash from (used by) operations The table below summarizes the Group s net cash flow from operations for the first-halves of 2017 and Six months ending June 30 In millions Net cash from operations before changes in working capital Changes in rental fleet and in fleet working capital (430.0) (321.4) Changes in non-fleet working capital Cash generated from operations (290.9) (164.7) Income taxes received (paid) (16.9) (17.1) Net interest paid (66.8) (49.4) Net cash generated from (used by) operating activities (374.6) (231.3) Cash generated from operations Cash flow from operating activities represented a cash outflow of million in the first half of 2018, compared with a cash outflow of million in the first half of Operating profit before changes in working capital requirements was nearly unchanged over the two periods. Working capital requirement linked to the rental fleet totaled million in the first half of 2018, compared with million in the first half of These outflows were for vehicle purchases (capitalized) in preparation for the summer season. In addition, the change in working capital requirements excluding the rental fleet was positive at 93.4 million at the end of June 2018 due to the seasonality of the activity. Income tax received/ (paid) Tax cash-outs in the first half of 2018 are stable compared with the first half of Net interest paid Net interest paid totalled 66.8 million in the first half of 2018, compared with 49.4 million in the first half of

19 4.4.2 Net cash flow from investing activities The table below summarizes the Group s net cash flow from investing activities for the halfyears ended June 30, 2018, and June 30, Six months ending June 30 In millions Acquisitions of intangible assets and property, plant and equipment (34.2) (22.3) Proceeds from disposal of intangible assets and property, plant and equipment Other investments and loans 60.8 (76.5) Net cash used by investing activities 29.0 (97.6) Net cash flow from investing activities represents a cash inflow of 29.0 million as of June 30, 2018, compared with a cash outflow of 97.6 million as of June 30, In 2018, this can mainly be explained by the disposal of Car2Go Europe GmbH to Daimler Mobility Services GmbH for an amount of 70 million in April Net cash flow from financing activities The table below summarizes the Group s net cash flow from financing activities for the halfyears ended June 30, 2018, and June 30, Six months ending June 30 In millions Increase in share capital Special Distribution (24.2) (59.4) New notes Change in other financings Derivatives (6.1) (0.9) Payment of transaction costs (8.9) (0.6) (Purchases)/sales of treasury shares net (27.1) (0.5) Net cash generated from (used by) financing activities Net cash flow from financing activities represents an inflow of million in the first half of 2018, compared with an inflow of million for the first half of In addition to the usual financing transactions, mainly linked to the fleet during both periods, cash flows in the first half of 2018 were impacted by the issue of new secured senior bonds for a total amount of million, the special distribution of 24.2 million ( 59.4 million in 2017), the launch of a share buyback program for 27.1 million. The cash flows of the first half of 2017 were mainly impacted by the private placement capital increase for million and by the capital increase in connection with the employee share ownership plan for 21.7 million. 19

20 5 REGULATORY, LEGAL AND ARBITRATION PROCEEDINGS The main disputes and proceeding as of June 30, 2018 are described in Note 26 of the interim condensed consolidated financial statements for the first half of TRANSACTIONS WITH RELATED PARTIES See Note 25 of the interim condensed consolidated financial statements for the first half of GUIDANCE FOR 2018 The guidance presented below for revenue, adjusted corporate EBITDA and dividends is based on data, assumptions and estimates that are considered reasonable by Group management. The guidance may change because of uncertainties surrounding the economic, financial, competitive and/or regulatory environment, or because of other unforeseeable factors (e.g., certain transactions). In addition, the materialization of certain risks described in chapter 2, Risk Factors, of the 2017 Registration Document could have an impact on the Group s activities and its ability to achieve these forecasts. There is no guarantee that the Group's results will be in line with the forecasts below. The Group considers that adjusted corporate EBITDA, although a non-gaap measure is a relevant indicator of the Group s operating and financial performance. Europcar Mobility Group confirms its four financial targets for 2018 compared to 2017: - Accelerating organic revenue growth ie above 3% - Increase in adjusted corporate EBITDA margin (excluding New Mobility) ie above 350 million - A corporate operating free cash flow conversion rate above 50% - A dividend payout ratio above 30% The dividend policy (see section of the 2017 Registration Document, Dividend distribution policy ) will take into account the Company s results, financial position, achievement of its objectives as set out in this section, and restrictions on dividend payments applicable under the terms of the Group s various debt instruments. 8 INFORMATION ON MEDIUM TERM TRENDS AND OBJECTIVES The Group has entered an acceleration phase of its strategy with a high ambition for the future: to become a world leader in mobility solutions. By 2020, this ambition is expected to result in revenues in excess of 3 billion, through organic growth as well as acquisitions, and an adjusted Corporate EBITDA margin greater than 14% (excluding the New Mobility Division). 9 PRINCIPAL RISKS AND UNCERTAINTIES FOR THE SECOND HALF OF 2018 Europcar Mobility Group operates in a context of risk and uncertainty, the result of the overall economy and the specific nature of its activities. A detailed description of risk factors and uncertainties that could affect the rest of 2018 may be found in chapter 2, Risk factors, of the 2017 Registration Document. Europcar Mobility Group believes that the principal risks described in this document have not significantly changed. If the risks materialized, they could have a significant negative impact on the Group s activities, financial position, results and outlook. In addition, other risks, either not yet identified or considered insignificant by the Group as of the date of this report, could also have an unfavorable effect. 20

21 10 FORWARD-LOOKING STATEMENTS This interim report contains statements regarding the prospects and growth strategies of the Group. These statements are sometimes identified by the use of the future or conditional tense, or by the use of forward-looking statements such as considers, envisages, believes, aims, expects, intends, should, anticipates, estimates, thinks, wishes and might, or, if applicable, the negative form of such terms and similar expressions or similar terminology. Such information is not historical in nature and should not be interpreted as a guarantee of future performance. Such information is based on data, assumptions, and estimates that the Group considers reasonable. Such information is subject to change or modification based on uncertainties in the economic, financial, competitive or regulatory environments. This information is contained in several sections of this Document and includes statements relating to the Group s intentions, estimates and targets with respect to its markets, strategies, growth, results of operations, financial situation and liquidity. The Group s forward looking statements speak only as of the date of this Document. Absent any applicable legal or regulatory requirements, the Group expressly disclaims any obligation to release any updates to any forward looking statements contained in this Document to reflect any change in its expectations or any change in events, conditions or circumstances, on which any forward looking statement contained in this Document. The Group operates in a competitive and rapidly evolving environment; it may therefore be unable to anticipate all risks, uncertainties or other factors that may affect its business, their potential impact on its business or the extent to which the occurrence of a risk or combination of risks could have significantly different results from those set out in any forward-looking statements, it being noted that such forward-looking statements do not constitute a guarantee of actual results. 21

22 Europcar Mobility Group S.A. Interim condensed consolidated financial statements for the six months ending June 30,

23 INTERIM CONSOLIDATED INCOME STATEMENT INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY INTERIM CONSOLIDATED CASH FLOW STATEMENT NOTE 1 GENERAL OVERVIEW General Information Basis of preparation Main events of the period NOTE 2 SIGNIFICANT ACCOUNTING POLICIES Principle of accounts preparation Seasonality of operations Use of estimates and judgments NOTE 3 CHANGES IN THE SCOPE OF CONSOLIDATION Main acquisitions and disposals of the period Purchase price allocation related to 2017 main acquisitions Restatement of the 2017 comparative information Purchase price allocations NOTE 4 SEGMENT REPORTING NOTE 5 FLEET HOLDING COSTS NOTE 6 FLEET OPERATING, RENTAL AND REVENUE RELATED COSTS NOTE 7 PERSONNEL COSTS NOTE 8 SHARE BASE PAYMENTS NOTE 9 AMORTIZATION, DEPRECIATION AND IMPAIRMENT EXPENSE NOTE 10 OTHER NON-RECURRING INCOME AND EXPENSES NOTE 11 NET FINANCING COSTS NOTE 12 INCOME TAX NOTE 13 GOODWILL AND INTANGIBLE ASSETS NOTE 14 EQUITY-ACCOUNTED INVESTMENTS NOTE 15 FINANCIAL ASSETS NOTE 16 RENTAL FLEET RECORDED ON THE BALANCE SHEET NOTE 17 RECEIVABLES AND PAYABLES RELATED TO THE RENTAL FLEET NOTE 18 TRADE AND OTHER RECEIVABLES, TRADE AND OTHER PAYABLES NOTE 19 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH NOTE 20 CAPITAL AND RESERVES AND EARNINGS PER SHARE NOTE 21 LOANS AND BORROWINGS NOTE 22 PROVISIONS NOTE 23 OTHER DISCLOSURES RELATING TO FINANCIAL ASSETS AND LIABILITIES NOTE 24 OFF-BALANCE SHEET COMMITMENTS NOTE 25 RELATED PARTIES NOTE 26 CONTINGENCIES NOTE 27 SUBSEQUENT EVENTS

24 Interim consolidated income statement In thousands First-half 2018 First-half 2017 Notes Revenue 1,296,621 1,027,776 Fleet holding costs 5 (359,364) (264,036) Fleet operating, rental and revenue related costs 6 (456,290) (371,272) Personnel costs 7 (256,968) (191,217) Network and head office overhead costs (151,403) (120,611) Depreciation, amortization and impairment expense 9 (20,390) (14,225) Other income 4,815 3,934 Current operating income 57,021 70,349 Other non-recurring income and expense 10 47,872 (38,532) Operating income 104,893 31,817 Gross financing costs (62,341) (45,945) Other financial expenses (17,335) (12,725) Other financial income 2, Net financing costs 11 (77,622) (58,039) Profit/(loss) before tax 27,271 (26,222) Income tax benefit/(expense) 12 (5,978) 4,995 Share of profit of Associates (1,199) (5,751) Net profit/(loss) for the period 20,094 (26,978) Attributable to: Owners of ECG 20,125 (26,840) Non-controlling interests (31) (138) Basic Earnings per share attributable to owners of ECG (in ) (0.185) Diluted Earnings per share attributable to owners of ECG (in ) (0.185) 24

25 Interim consolidated statement of comprehensive income First-half 2018 First-half 2017 In thousands Before tax Tax income/ (expense) After tax Before tax Tax income/ (expense) After tax Net profit/(loss) for the period 26,072 (5,978) 20,094 (31,973) 4,995 (26,978) Items that will not be reclassified to profit or loss ,683 (1,252) 2,431 Actuarial gains/(losses) on defined benefit pension schemes ,683 (1,252) 2,431 Items that may be reclassified subsequently to profit or loss (22,720) - (22,720) 7,961-7,961 Foreign currency differences (3,027) - (3,027) (4,880) - (4,880) Effective portion of changes in fair value of hedging instruments (19,693) - (19,693) 12,841-12,841 Other comprehensive income for the period (22,720) - (22,720) 11,644 (1,252) 10,392 Total comprehensive income/(loss) for the period 3,352 (5,978) (2,626) (20,329) 3,743 (16,586) Attributable to: Owners of ECG (2,595) (16,448) Non-controlling interests (31) (138) 25

26 Interim consolidated statement of financial position In thousands As at June 30, 2018 As At Dec. 31, 2017 (*) Assets Notes Goodwill 13 1,122,486 1,122,839 Intangible assets , ,033 Property, plant and equipment 114, ,855 Equity-accounted investments 14 1,390 4,036 Other non-current financial assets 15 70,339 58,602 Financial instruments non-current 4, Deferred tax assets 63,496 58,542 Total non-current assets 2,225,689 2,197,133 Inventory 31,926 24,330 Rental fleet recorded on the balance sheet 16 3,045,279 2,339,313 Rental fleet and related receivables , ,117 Trade and other receivables , ,688 Current financial assets 15 26,637 32,762 Current tax assets 54,384 42,760 Restricted cash 19 84, ,818 Cash and cash equivalents , ,792 Total current assets 4,703,745 3,941,580 Total assets 6,929,434 6,138,713 Equity Share capital 161, ,031 Share premium 692, ,748 Reserves (156,599) (107,407) Retained earnings (losses) 86,413 37,209 Total equity attributable to the owners of ECG 783, ,581 Non-controlling interests Total equity , ,344 Liabilities Financial liabilities 21 1,722,814 1,570,141 Non-current financial instruments 57,390 37,122 Employee benefit liabilities 134, ,951 Non-current provisions 22 5,279 8,680 Deferred tax liabilities 137, ,166 Other non-current liabilities Total non-current liabilities 2,057,359 1,887,336 Current portion of financial liabilities 21 2,170,054 1,950,262 Employee benefits 3,149 3,149 Current provisions , ,155 Current tax liabilities 35,912 31,566 Rental fleet related payables , ,196 Trade payables and other liabilities 712, ,705 Total current liabilities 4,088,246 3,414,033 Total liabilities 6,145,605 5,301,369 Total equity and liabilities 6,929,434 6,138,713 (*) The opening amounts are restated for December 2017, and do not correspond to the figures published in 2017 financial statements since adjustments to the valuation of 2017 acquisitions were made during the first semester of 2018 as detailed in the note

27 Interim consolidated statement of changes in equity In thousands Share capital Share premium Attributable to owners of Europcar Mobility Group Hedging reserve Translation reserve Treasury Shares Retained earnings Total Noncontrolling interests Total equity Balance as at January 1, , ,514 (53,900) (52,935) (4,846) (48,706) 630, ,266 Net profit/(loss) for the period (26,840) (26,840) (138) (26,978) Other comprehensive income/(loss) ,841 (4,880) - 2,431 10,392-10,392 Transactions with owners 17,622 99, (520) 21, , ,573 Balance as at June 30, , ,497 (41,059) (57,815) (5,366) (51,911) 752, ,253 Balance as at January 1, , ,748 (36,731) (63,263) (6,762) 37, , ,995 Catch up amortization of Purchase Price Allocation (651) (651) - (651) in 2017 Balance as at January 1, 2018 restated 161, ,748 (36,731) (63,263) (6,762) 36, , ,344 Net profit/(loss) for the period ,125 20,125 (31) 20,094 Foreign exchange gains (losses) (3,027) - - (3,027) - (3,027) Effective portion of changes in fair value of hedging instruments - - (19,693) (19,693) - (19,693) Other comprehensive income/(loss) - - (19,693) (3,027) - - (22,720) - (22,720) Purchases / Sales of Treasury Shares (27,123) - (27,123) - (27,123) Share base payments IFRS 9 impact (194) (194) - (194) Profit appropriate by share premium - (29,264) , Special distribution deducted from share premium - (24,228) (24,228) - (24,228) Others (90) (90) (4) (94) Transactions with owners - (53,492) - - (27,123) 29,730 (50,885) (4) (50,889) Balance as at June 30, , ,256 (56,424) (66,290) (33,885) 86, , ,829 27