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Avis Finance Company plc

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					                                                                         3JUL200614470623

                                                     A250,000,000


                           Avis Finance Company plc

                         Senior Floating Rate Notes due 2013
Issue Price . . . . . . . . .      100%.

Use of Proceeds . . . . . .        To refinance maturing debt obligations of Avis Finance Company plc (the ‘‘Issuer’’).

Maturity . . . . . . . . . . .     31 July 2013.

Interest Rate . . . . . . . .      EURIBOR plus 2.625% per annum reset quarterly and payable quarterly in arrears on
                                   31 October, 31 January, 30 April and 31 July of each year, beginning on 31 October
                                   2006.

Redemption . . . . . . . .         At any time on or after 31 July 2008, the Issuer may redeem all or part of the Notes
                                   at a price equal to their principal amount plus a specified premium. In addition, the
                                   Issuer may redeem all, but not less than all, of the Notes at a price equal to their
                                   principal amount plus accrued and unpaid interest upon the occurrence of certain
                                   changes in tax law.

Change of Control . . . .          The Issuer must offer to re-purchase all the Notes at 101% of their principal amount
                                   plus accrued and unpaid interest if the Issuer experiences a change of control.

Ranking . . . . . . . . . . .      The Notes will be senior unsecured obligations of the Issuer and will rank equally in
                                   right of payment to all existing and future senior unsecured indebtedness of the
                                   Issuer including the Senior Revolving Credit Facility.

Guarantees . . . . . . . . .       The Notes will be guaranteed by the Issuer’s holding company, Avis Europe Holdings
                                   Limited, and by its indirect parent, Avis Europe plc. Each guarantee of the Notes will
                                   be a senior unsecured obligation of such guarantor and will rank equally in right of
                                   payment to all existing and future senior unsecured indebtedness of such guarantor.

Listing . . . . . . . . . . . .    Application has been made to list the Notes on the Irish Stock Exchange for trading
                                   on the Alternative Securities Market thereof.

You should be aware that investing in the Notes involves risks. Please see ‘‘Risk Factors’’ beginning on
page 16.

The Notes have not been, and will not be, registered under the US Securities Act of 1933, as amended (the ‘‘US
Securities Act’’), or the securities laws of any other jurisdiction. The Notes are being offered outside the United
States in accordance with Regulation S under the US Securities Act, and may not be offered or sold within the
United States.

                                                   Joint Book-Running Managers

Barclays Capital
         Joint Co-ordinator

                                  Dresdner Kleinwort
                                              The Royal Bank of Scotland
                                                                             Joint Co-ordinator

                                                                                            SOCIETE GENERALE
                                                                                            Corporate & Investment Banking

                                                            Co-Manager

                                                          Fortis Bank

                                        Offering Memorandum dated 14 July 2006.
                                            EAMEA network
                                        Countries in red denote Avis Group presence




New hand-held device for rapid vehicle return                 Re-launch of Avis Preferred loyalty programme
                                               GENERAL
Stabilisation
     In connection with the issue of the Notes, Barclays Bank PLC and The Royal Bank of Scotland plc
(the ‘‘Joint Stabilising Managers’’) (or persons acting on behalf of the Joint Stabilising Managers) may
over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a
level higher than that which might otherwise prevail. However, there is no assurance that the Joint
Stabilising Managers (or persons acting on behalf of the Joint Stabilising Managers) will undertake
stabilisation action. Any stabilisation action may begin on or after the date on which adequate public
disclosure of the terms of the offer of the Notes is made and, if begun, may be ended at any time,
but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days
after the date of the allotment of the Notes.

Responsibility statement
     Except as provided below, the Group accepts responsibility for the information contained in this
offering memorandum. To the best of the Group’s knowledge and belief (having taken all reasonable
care to ensure that such is the case), the information contained in this offering memorandum is in
accordance with the facts and does not omit anything likely to affect the import of such information.
However, the information contained under the headings ‘‘Summary’’, ‘‘Currency Presentation and
Exchange Rate Data’’, ‘‘Industry Overview’’ and ‘‘Business’’ includes extracts from information and
data publicly released by official and other sources. Although the Group accepts responsibility for the
accurate extraction and summarisation of such information and data, the Group accepts no further
responsibility in respect of such information. In addition, the information set out in relation to
sections of this offering memorandum describing clearing arrangements, including the section
entitled ‘‘Book-Entry, Delivery and Form’’, is subject to any change in or reinterpretation of the rules,
regulations and procedures of Euroclear Bank S.A./N.V., as operator of the Euroclear System
                                            ee
(‘‘Euroclear’’), or Clearstream Banking Soci´ t´ Anonyme (‘‘Clearstream Banking’’) currently in effect.
While the Group accepts responsibility for accurately summarising the information concerning
Euroclear and Clearstream Banking, the Group accepts no further responsibility in respect of such
information.
     This offering memorandum contains summaries with respect to certain terms of certain
documents, but reference is made to the actual documents, including the indenture governing the
Notes (copies of which will be made available by the Group to prospective purchasers upon request),
for complete information with respect thereto.

Offering
     The Issuer has not registered and will not register the Notes under the US Securities Act or any
securities laws of any state of the United States. Unless so registered, the Notes may not be offered
or sold within the United States except in a transaction that is exempt from, or not subject to, the
registration requirements of the US Securities Act. The Issuer is only offering Notes in offshore
transactions complying with Rule 903 or 904 of Regulation S. See ‘‘Notice to Investors’’.
     The Notes offered hereby have not been approved or disapproved by the US Securities and
Exchange Commission (the ‘‘SEC’’) or any other securities commission or other regulatory authority
in the United States, nor have the foregoing authorities passed upon or endorsed the merits of this
offering nor have they approved this offering memorandum or confirmed the accuracy or determined
the adequacy of the information contained in this offering memorandum. Any representation to the
contrary is unlawful.
     This document and the offering are only addressed to and directed at persons in member states
of the European Economic Area who are ‘‘qualified investors’’ within the meaning of Article 2(1)(e)
of the Prospectus Directive (Directive 2003/71/EC) (‘‘Qualified Investors’’). In addition, in the United
Kingdom, this document is being distributed only to, and is directed only at, Qualified Investors
(i) who have professional experience in matters relating to investments falling within Article 19(5) of
the Financial Services and Markets Act 2000 (‘‘FSMA’’) (Financial Promotion) Order 2005 (the
‘‘Order’’) and Qualified Investors falling within Article 49(2)(a) to (d) of the Order, and (ii) to whom
it may otherwise lawfully be communicated (all such persons together being referred to as ‘‘relevant
persons’’). This document must not be acted on or relied on (i) in the United Kingdom, by persons



                                                    i
who are not relevant persons, and (ii) in any member state of the European Economic Area other
than the United Kingdom, by persons who are not Qualified Investors. Any investment or investment
activity to which this document relates is available only to (i) in the United Kingdom, relevant
persons, and (ii) in any member state of the European Economic Area other than the United
Kingdom, Qualified Investors, and will be engaged in only with such persons. This document and its
contents are confidential and should not be distributed, published or reproduced (in whole or in part)
or disclosed by recipients to any other person.

Prospective purchasers of the Notes must comply with all applicable laws
     The distribution of this offering memorandum and the offer and sale of the Notes in certain
jurisdictions are restricted by law. This offering memorandum does not constitute an offer of, or an
invitation to purchase, any of the Notes in any jurisdiction in which, or to any person to whom, such
offer or invitation would be unlawful in such jurisdiction.
     Persons into whose possession this offering memorandum comes are required by the Initial
Purchasers of the Notes, and the Issuer to inform themselves about and to observe any such
restrictions. For a further description of certain restrictions on the offering and sale of the Notes, see
‘‘Plan of Distribution’’ and ‘‘Notice to Investors’’.

Purchasers of the Notes agree to abide by transfer restrictions
     The Notes are subject to restrictions on transferability and resale and may not be transferred or
resold except as permitted under the US Securities Act and other applicable laws. Prospective
purchasers of the Notes should be aware that they may be required to bear the financial risk of their
investment for an indefinite period of time. See ‘‘Notice to Investors’’.

Offering memorandum accurate only as of its date
     The offering memorandum is accurate only as of its date. The Group undertakes no obligation to
update this offering memorandum or any information contained in it, whether as a result of new
information, future events or otherwise, save as required by applicable law. Neither the delivery of
this offering memorandum nor any sale of the Notes shall, under any circumstances, create any
implication that there has been no change in the information set out in this offering memorandum
or in the Group’s affairs since the date of this offering memorandum.

Reliance only on this offering memorandum
    Prospective purchasers should rely only on the information contained in this offering
memorandum. None of the Issuer, the Guarantors or the Initial Purchasers has authorised anyone to
provide prospective purchasers with information different from that contained in this offering
memorandum. If anyone provides prospective purchasers with different or inconsistent information,
prospective purchasers should not rely on it.
      The Initial Purchasers make no representation or warranty, express or implied, as to the accuracy
or completeness of information set out herein, and nothing contained in this offering memorandum
is, or shall be relied upon as, a promise or representation by the Initial Purchasers whether as to past
or future. The Initial Purchasers do not assume any responsibility for the accuracy or completeness of
such information.

No investment, legal or tax advice
     In making an investment decision, you must rely upon your own examination of the Group, the
terms of the offering and the Group’s financial information. You are not to construe the contents of
this offering memorandum as investment, legal or tax advice. You should consult your own advisors
as to those matters. The Issuer, the Guarantors and the Initial Purchasers are not, making any
representation to you regarding the legality of an investment in the Notes by you under applicable
investment or similar laws.




                                                    ii
                                         NOTICE TO IRISH RESIDENTS
    The Notes may be offered or sold in Ireland only in accordance with the European Communities
(Stock Exchange) Regulations 1984, the European Communities (Transferable Securities and Stock
Exchange) Regulations 1992, the Investment Intermediaries Act, 1995 (as amended) and the
Companies Act 1963 to 2001 and all other applicable Irish laws and regulations.

                                   PRESENTATION OF INFORMATION
Industry and Market Data
     In many cases the Group has made statements in this offering memorandum regarding the
Group’s industry and the Group’s competitive position in the industry based on its experience and its
own investigation of market conditions. The Group cannot assure you that any of these assumptions
are accurate or correctly reflect its competitive position in the industry, and none of the Group’s
internal surveys or information have been verified by independent sources, which may have estimates
or opinions regarding industry-related information that differ from the Group’s.

Definitions
    In this offering memorandum:
    • ‘‘Avis’’ refers to the Group’s operations under the Avis brand name;
    • ‘‘Avis US’’ refers to Avis Inc.;
    • ‘‘Budget’’ refers to the Group’s operations under the Budget brand name;
    • the ‘‘Company’’ and the ‘‘Group’’ refer to Avis Europe plc and its consolidated subsidiaries,
      joint ventures and associates;
    • ‘‘EU’’ refers to the European Union;
    • ‘‘Issuer’’ refers to Avis Finance Company plc, the issuer of the Notes; and
    • ‘‘United States’’ or ‘‘US’’ refers to the United States of America.
     In addition, the Group has included a glossary of selected technical and other terms used in this
offering memorandum, beginning on page 144.

Presentation of Financial Statements and Financial Data
    This offering memorandum includes the following financial statements;
    • Consolidated financial information of the Group as at 31 December 2005 and 2004, and for
      the two years then ended (the ‘‘Consolidated Financial Information 2005’’), prepared in
      accordance with International Financial Reporting Standards, as adopted for use in the EU
      (‘‘IFRS’’);
    • Consolidated financial statements of the Group as at 31 December 2004 and 2003 and for the
      two years then ended (the ‘‘Consolidated Financial Statements 2004’’), prepared in accordance
      with generally accepted standards of accounting in the United Kingdom (‘‘UK GAAP’’)
      (together with the Consolidated Financial Information 2005, the ‘‘Consolidated Financial
      Statements’’); and
    • Selected financial data as at 31 December 2002 and for the year then ended prepared in
      accordance with UK GAAP.
     Through 31 December 2004, the Group prepared its consolidated financial statements in
accordance with the requirements of UK GAAP, after which the Group transitioned to IFRS for fiscal
years beginning on or after 1 January 2005. The comparative financial information as at and for the
year ended 31 December 2004 has also been reconciled and presented within the Group’s financial
information for the two years ended 31 December 2005 in accordance with IFRS, which differs in
significant respects from UK GAAP. Details of the accounting principles applied under IFRS and the
rules and accounting principles governing the conversion from UK GAAP to IFRS are described in the
Group’s Consolidated Financial Information 2005 included elsewhere in this offering memorandum.
Prospective investors should consult their own advisers regarding the differences between UK GAAP



                                                    iii
and IFRS and how those differences might affect the financial information included elsewhere in this
offering memorandum.
     In addition, the Group has included a discussion of the Group’s cash flow/net debt movement for
the years ended 31 December 2005 and 2004 prepared in accordance with IFRS and for the years
ended 31 December 2004 and 2003, prepared in accordance with UK GAAP, respectively, in the
section entitled ‘‘Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources.’’ This discussion is based on tailored management
analysis rather than extractions from the Group’s cash flow statements included in the Consolidated
Financial Statements. Management believes that these management analyses present more
meaningful data to prospective investors as to the drivers of the movement in the Group’s overall net
debt from year to year, particularly since the principal driver behind such movements is the Group’s
overall net fleet expenditure (which includes both vehicles subject to manufacturer re-purchase
agreements and risk vehicles). Net debt and net fleet expenditure move significantly throughout the
year due to the strong seasonal effects on the Group’s business. For more information on such
seasonality, please see ‘‘Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Seasonality’’.
    The Group’s consolidated financial statements are published in euro. In this offering
memorandum, references to (i) ‘‘euro’’, ‘‘A’’ or ‘‘EUR’’ are to the lawful currency of the participating
member states of the EU; (ii) ‘‘sterling’’, ‘‘pound sterling’’ or ‘‘£’’ are to the lawful currency of the
United Kingdom; and (iii) ‘‘US dollar’’ or ‘‘US$’’ are to the lawful currency of the United States of
America.

                                      FORWARD-LOOKING STATEMENTS
      This offering memorandum includes forward-looking statements. These forward-looking
statements can be identified by the use of forward-looking terminology, including the terms
‘‘believes’’, ‘‘estimates’’, ‘‘anticipates’’, ‘‘expects’’, ‘‘forecast’’, ‘‘foresee’’, ‘‘intends’’, ‘‘may’’, ‘‘plan’’,
‘‘project’’, ‘‘seek’’, ‘‘should’’ or ‘‘will’’ or, in each case, their negative, or other variations or
comparable terminology. These forward-looking statements include all matters that are not historical
facts. They appear in a number of places throughout this offering memorandum and include
statements regarding the Group’s intentions, beliefs or current expectations concerning, among other
things, the Group’s results of operations, financial condition, liquidity, prospects, growth, strategies
and the countries and industry in which the Group operates.
     By their nature, forward-looking statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the future. The Group cautions
investors that forward-looking statements are not guarantees of future performance and that the
actual results of the Group’s operations, financial condition and liquidity, and the development of the
countries and the industry in which the Group operates may differ materially from those made in or
suggested by the forward-looking statements contained in this offering memorandum. In addition,
even if the Group’s results of operations, financial condition and liquidity, and the development of
the countries and the industry in which the Group operates are consistent with the forward-looking
statements contained in this offering memorandum, those results or developments may not be
indicative of results or developments in subsequent periods. Important factors that could cause the
differences include, but are not limited to:
     • general economic and market conditions;
     • the successful implementation of the Group’s margin improvement strategy;
     • disruption in rental activity during the Group’s peak season;
     • changes in the air travel industry;
     • competition from other companies in the Group’s industry and pricing pressure;
     • the international nature of the Group’s customer base and operations;
     • the Group’s reliance on certain major vehicle suppliers;
     • changes in the average price of new vehicles and fleet holding costs;
     • the resale value of vehicles not covered by re-purchase programmes;



                                                         iv
     • the Group’s dependence on key personnel and high-quality staff;
     • the Group’s reliance on centralised information systems;
     • the Group’s dependence on Cendant;
     • liabilities and insurance relating to the Group’s business;
     • changes in governmental laws or regulations;
     • the Group’s dependence on concessionary arrangements by airport and rail authorities;
     • the ability of the Group’s vehicle suppliers to re-purchase buy-back vehicles;
     • the Group’s exposure to interest rate and exchange rate fluctuations; and
     • risks associated with the Group’s structure, the Notes, the related guarantees and the Group’s
       other indebtedness.
     The Group urges you to read ‘‘Risk Factors’’, ‘‘Management’s Discussion and Analysis of Financial
Condition and Results of Operations’’ and ‘‘Business’’ for a more complete discussion of the factors
that could affect the Group’s future performance and the countries and industry in which the Group
operates. In light of these risks, uncertainties and assumptions, the events described in the forward-
looking statements contained in this offering memorandum may not occur.
     Except as required by law or applicable stock exchange rules or regulations, the Group
undertakes no obligation to update or revise publicly any forward-looking statement, whether as a
result of new information, future events or otherwise. All subsequent written and oral forward-
looking statements attributable to the Group or to persons acting on the Group’s behalf are expressly
qualified in their entirety by the cautionary statements referred to above and contained elsewhere in
this offering memorandum.

                                           CURRENCY PRESENTATION AND EXCHANGE RATE DATA
    The following table sets forth information concerning exchange rates between the euro and
pound sterling from 2002 through June 2006, expressed in euro per pound sterling as used by the
Group, for each of the periods shown.

                                                                                                                                                                                             (Euro per pound sterling)(1)
                                                                                                                                                                                       Period-end Average
                                                                                                                                                                                          rate         rate     High      Low

Year
2002 . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.55         1.59      1.64    1.55
2003 . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.42         1.45      1.55    1.40
2004 . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.44         1.47      1.51    1.42
2005 . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.48         1.46      1.50    1.43
Month
January 2006 .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.46          n/a      n/a      n/a
February 2006          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.46          n/a      n/a      n/a
March 2006 . .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.45          n/a      n/a      n/a
April 2006 . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.44          n/a      n/a      n/a
May 2006 . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.47          n/a      n/a      n/a
June 2006 . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.46          n/a      n/a      n/a

(1) The Group’s accounting exchange rates.




                                                                                                                                   v
    The following table sets forth information concerning exchange rates between the US dollar and
the euro from 2002 through June 2006, expressed in US dollar per euro as used by the Group, for
each of the periods shown.

                                                                                                                                                                                               (US dollar per euro)(1)
                                                                                                                                                                                       Period-end Average
                                                                                                                                                                                          rate         rate     High     Low

Year
2002 . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.03         0.94      1.03     0.88
2003 . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.23         1.11      1.23     1.03
2004 . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.34         1.24      1.34     1.18
2005 . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.19         1.26      1.34     1.17
Month
January 2006 .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.21          n/a       n/a     n/a
February 2006          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.19          n/a       n/a     n/a
March 2006 . .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.21          n/a       n/a     n/a
April 2006 . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.23          n/a       n/a     n/a
May 2006 . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.29          n/a       n/a     n/a
June 2006 . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1.26          n/a       n/a     n/a

(1) The Group’s accounting exchange rates.




                                                                                                                               vi
                                               SUMMARY
     This summary highlights information about the Group and the offering of the Notes contained in
this offering memorandum. This summary does not contain all of the information you should consider
before investing in the Notes. The following summary should be read in conjunction with, and the
following summary is qualified in its entirety by, the more detailed information included in this offering
memorandum, including the Consolidated Financial Statements and the related notes thereto. You
should read carefully the entire offering memorandum to understand the Group’s business, the nature
and terms of the Notes and the tax and other considerations which are important to your decision to
invest in the Notes, including the risks discussed under the caption ‘‘Risk Factors’’.

The Company
     The Group is the leading international vehicle rental services company in Europe based on
market share of revenue (source: Euromonitor IMIS Travel Database 2005). Under the Avis and
Budget brands, the Group operates more than 3,700 locations in 105 countries throughout Europe,
Africa, the Middle East and Asia. In 2005, the Group employed 6,253 persons (based on average full-
time equivalent headcount), had an average fleet of 120,000 vehicles, and completed over five million
transactions.
    Avis Europe plc has been listed on the London Stock Exchange since 1997. For the year ended
31 December 2005, the Group generated consolidated revenues of A1,276.5 million and Underlying
EBITDA of A433.7 million.
    The Group enjoys close commercial ties with Cendant in the United States, which owns the
US-domiciled Avis US and Budget Inc. and the global rights to the two brands, including sharing
technology and marketing initiatives. Together, the two companies provide their customers with
access to a global network.

Competitive Strengths
Strong global brand
     The ‘‘Avis’’ brand has been established for more than 60 years and is acknowledged as one of
the world’s most recognised brands. Combined with the Group’s distinctive culture, which is
embodied in the ‘‘We try harder’’ ethos, the Avis brand engenders considerable customer and staff
loyalty throughout the world.

Leading market position
     The Group is the leading vehicle rental company in Europe, with an aggregate 16.8% market
share in eleven key Corporate Countries (source: Euromonitor IMIS Travel Database 2005). Through
its network of licensees, the Group also holds a leading position throughout Africa, the Middle East
and Asia. As of 31 December 2005, the Group operated more than 3,700 locations in 105 countries
and is present at 75 principal airport locations in Europe.

Diversified customer base and sales channels
    The Group’s customer base is well balanced between all major market segments and all key
countries throughout EAMEA. This diversification prevents over-dependence on any one customer
group or market. For the year ended 31 December 2005, no single corporate, agent or licensee-run
rental station in the Corporate Countries accounted for more than 2.1% of the Group’s consolidated
revenues, and no single customer account generated more than 4.0% of the Group’s consolidated
revenues. The Group offers multiple booking channels, including a low cost market-leading website, a
substantial rental station network, dedicated call centres and well-established links to the travel
industry.

Worldwide network
    Through Avis and Budget, the Group provides its customers with access to a worldwide network
through two of the three global vehicle rental brands. This worldwide network enables the Group to
provide a global service to multi-national corporate customers.




                                                    1
Leading partnership programmes
     The Group has a leading portfolio of over 70 international partnerships with airlines, including
British Airways, Iberia and Lufthansa, tour operators, major hotel groups, railway companies and
credit card companies. These partnerships provide access to a wide customer base and generate a
significant proportion of the Group’s rentals.

Flexible cost base
     Up to 70% of the Group’s cost base is variable over a 12-month period. Key components of costs
are fleet, staff, commissions and fees.
    The Group is able to flex its fleet level rapidly to meet fluctuations in rental demand. As vehicles
are only held for approximately seven months, this can be achieved by altering purchases of new
vehicles or by varying holding periods. The Group uses a variety of disposal methods and benefits
from flexibility within its manufacturer re-purchase agreements.
    The Group has flexible staffing levels, benefiting from a relatively high proportion of seasonal
and part-time staff and the outsourcing of certain activities (such as car washing and preparation).
A number of other key costs, such as commissions and fees, vary in line with sales volume.

Strong asset backing
     The Group’s borrowings are supported by a fleet of newly purchased vehicles. These vehicles are
relatively liquid assets, and the majority have guaranteed residual values by virtue of manufacturer
re-purchase agreements. The Group’s fleet net book value generally exceeds its level of borrowing.
For instance, fleet net book value as at 31 December 2005 was A1,357.9 million, compared with total
net debt of A945.6 million.

Highly-integrated information systems
     Avis uses Wizard, a highly-integrated and proprietary IT and information system, which provides
reservation and rental information used throughout Avis’ worldwide network. Additionally, the Group
continues to develop its website, and to invest in other technology such as a sophisticated hand-held
system which allows for rapid vehicle return and recovery of fuel and damage charges.

Equity support
    Avis Europe plc’s majority shareholder is D’Ieteren, a Belgian family-controlled company with
widespread automotive interests that is listed on the Brussels Stock Exchange. D’Ieteren has had a
long and supportive relationship with the Group, as evidenced by its further investment of
A104.5 million during the Rights Issue.

Strengthened management team
     In March 2004, Murray Hennessy took over as Chief Executive Officer. Murray has continued to
strengthen the senior management team. Changes include the appointment of a new Commercial
Director, a new IT Director, new country management in the United Kingdom, France and Germany,
and key senior recruitments in the business development and revenue management teams.

Strategy
     The Group’s margin improvement strategy centres on staff, customers and profitability. This
strategy is designed to increase operating margins by three to five percentage points from the level
reported in 2004 over the next two to three years, whilst still maintaining the Group’s market leading
position.




                                                   2
   These initiatives build on the Group’s core strengths, are characterised by low technological
complexity and comprise multiple, small-scale projects, thereby reducing execution risk.
    The four main elements of the strategy are as follows:
    • Cost reduction: Variable costs are being addressed in a number of ways, including ceasing
      commission payments to travel agents on corporate contracted business, and improving both
      post-rental revenue adjustments and collection of fuel and damage charges. To reduce fleet
      holding costs, investments are being made in fleet system enhancements and vehicle
      re-marketing capabilities.
      In addition, the Group has substantially completed a significant organisational restructuring
      and redesign of key processes to address fixed costs. Targeted investments are being made in
      key areas such as revenue management and web development. These changes are designed to
      create a more effective and efficient business. The restructuring and redesign comprises a
      substantial reduction in staff and running costs at the European headquarters; an acceleration
      of the transfer of back-office activities into the shared service centre in Budapest;
      consolidation of all call centre activities into the existing Barcelona facility by October 2006;
      and a number of personnel and overhead cost initiatives in both the European headquarters
      and country head offices. These cost saving initiatives are expected to generate savings of
      approximately A7 million in 2006, A25 million in 2007 and A30 million per annum thereafter.
      Exceptional costs taken in 2005 were A6 million and are expected to amount to some
      A40 million in 2006 and A7 million in 2007.
      Actions to turnaround the loss making Budget business acquired in 2003 are well underway
      with programmes in place to improve both performance in the corporate operations in the
      United Kingdom and France and the development of overall network revenue.
    • Improving yield and utilisation: A new central revenue management function has been
      formed with the goal of improving pricing and vehicle utilisation.
      A number of new data tools and processes are being developed by the team to be used at
      European, country and station level. Several successful pilots have been conducted and the
      experience of these has assisted the design and development of this initiative.
    • Target most profitable customer segments: The Group has developed a comprehensive
      database on the profitability and return on capital characteristics of different customer groups.
      Actions are underway to migrate business towards the more profitable customer groups so
      that capital is progressively deployed to generate a higher return.
      This is being achieved by increasing marketing spend and sales focus on these more profitable
      segments and by upgrading service, particularly to targeted customer groups. Initiatives
      include a new vehicle return service, using hand-held technology and a simplified multi-lingual
      rental agreement. Investments are also being made in on-line marketing activities and
      continued enhancements to the website.
    • Tight capital control: The Group is renewing its focus on maintaining capital discipline,
      including fleet allocation and rotation, and working capital management.
    For each of these strategic priorities, the Group has a series of specific action plans, and
implementation is well underway. Priority has been given to initiatives that deliver the most certain
and immediate benefits, such as the overhead restructuring detailed above.




                                                   3
The Group’s Corporate and Financing Structure
     The following chart sets forth a simplified summary of the Group’s corporate and financing
structure following the offering of the Notes. Shaded entities are the Issuer or the Guarantors under
the indenture governing the Notes (the ‘‘Indenture’’). The indebtedness of the various operating
subsidiaries is as disclosed in the capitalisation table set forth in the section entitled ‘‘Capitalisation’’.


                                              Avis Europe plc
                                                (Guarantor)



                                          Avis Europe Investment
                                             Holdings Limited


                                                Avis Europe
                                            Investments Limited




                                           Cilva Holdings Limited



                                           Avis Europe Holdings
                                            Limited (Guarantor)




                                                                                                    Avis Finance
                                                                                                    Company plc
                                                                                                     (Borrower)
                                                                                       Bank facilities                 —
                                                                                       Commercial paper                —
                                                                                       Loan Notes                 €565.8m
                                                                                       Net derivative financial
                                                                                       instruments                €55.6m
                                                                                       Notes offered hereby       €250.0m
                                                                                                                  €871.4m


     Avis                  Budget
                                          China            Malaysia            India
 Operating Cos           Operating Cos
                                          50%               25%                33%
    100%                    100%
       Bank facilities        —
       Finance leases €278.1m
                         €278.1m                                                                         17JUL200607271708




                                                       4
Recent Developments
Current trading and prospects
    The Group issued the following press release on 5 July 2006:
    ‘‘Avis Europe, the leading car rental company in Europe, Africa, the Middle East and Asia,
confirms that it is planning a senior floating rate note issue.
    In connection with the process, the Group is reiterating its guidance on its first half underlying
performance and providing more detail regarding first half operating profit. This guidance is consistent
with the AGM Trading Statement of 25th May 2006. The Group also confirms that, in the absence of
unforeseen circumstances, the Group’s expectations for the underlying result for the full year remain
unchanged.
    More details regarding the operating performance are set out below:
     As previously reported, positive revenue trends have continued across all countries, with Germany
being the only significant exception. The Group estimates that its underlying operating profit for the
six months ended 30th June 2006 will be in a range of EUR23m-EUR27m (2005: EUR31m). This reflects
the weaker performance in Germany, together with several other countries overlapping a relatively
stronger prior year. Also, the first half of last year benefited from several property disposals. However,
these factors are partially offset by stronger performances in Italy, the smaller corporate markets, the
licensee business and Budget.
     In the second half, the Group does not anticipate any material improvement in Germany, but the
impact should be more than offset by continued positive trends, as outlined above, together with a
considerably stronger performance in certain key countries. The Group also confirms that the
restructuring programme announced in February 2006 is on track. Consequently, the Group’s
expectations for the underlying result for full year outcome remain unchanged.’’

Senior Revolving Credit Facility
     The Issuer entered into a facility agreement dated 20 February 2006 which provides for a
five-year multicurrency revolving loan and letter of credit facility in a maximum aggregate principal
amount of A580 million (the ‘‘Senior Revolving Credit Facility’’).




                                                    5
                                                            THE OFFERING
     The summary below describes the principal terms of the Notes. Certain of the terms and
conditions described below are subject to important limitations and exceptions. This summary does not
contain all of the information that is important to you as a prospective investor in the Notes. The
‘‘Description of the Notes’’ section of this offering memorandum contains a more detailed description
of the terms and conditions of the Notes.

Issuer . . . . . . . . . . . . . . . . . . . . . . . .   Avis Finance Company plc.
Notes Offered . . . . . . . . . . . . . . . . . .        A250,000,000 aggregate principal amount of Senior Floating
                                                         Rate Notes due 2013 (the ‘‘Notes’’).
Maturity Date . . . . . . . . . . . . . . . . . .        31 July 2013.
Interest . . . . . . . . . . . . . . . . . . . . . . .   The Notes will bear interest at a rate per annum, reset
                                                         quarterly, equal to EURIBOR plus 2.625%.
Issue Price . . . . . . . . . . . . . . . . . . . .      100%.
Interest Payment Dates . . . . . . . . . . .             Interest on the Notes will be payable quarterly on
                                                         31 October, 31 January, 30 April and 31 July of each year,
                                                         beginning on 31 October 2006. Interest will accrue from the
                                                         issue date of the Notes.
Ranking . . . . . . . . . . . . . . . . . . . . . .      The Notes:
                                                         • will be senior unsecured obligations of the Issuer;
                                                         • will rank pari passu in right of payment with any existing
                                                              and future indebtedness of the Issuer that is not
                                                              subordinated to the Notes, including additional notes and
                                                              indebtedness under the Senior Revolving Credit Facility;
                                                         • will be effectively subordinated to any existing and future
                                                              indebtedness of Avis Europe plc’s subsidiaries that do not
                                                              guarantee the Notes; and
                                                         • will be unconditionally guaranteed by the Guarantors.
                                                         As of 31 December 2005, on a pro forma basis, after giving
                                                         effect to this offering and the application of the proceeds as
                                                         described in ‘‘Use of Proceeds’’, there would have been:
                                                         • A278.1 million of secured subsidiary indebtedness of the
                                                              Group to which the Notes would have been effectively
                                                              subordinated; and
                                                         • A621.4 million of indebtedness of the Group ranking
                                                              equally with the Notes.
                                                         The Indenture governing the Notes will permit the Group and
                                                         its subsidiaries to incur substantial additional indebtedness,
                                                         subject to certain limitations with respect to indebtedness of
                                                         the Group’s subsidiaries.
                                                         The Issuer is a wholly-owned finance subsidiary of Avis
                                                         Europe plc and has no other material assets or sources of
                                                         revenue other than in connection with the issuance of the
                                                         Notes, outstanding intercompany loans and assets or
                                                         liabilities under certain hedging arrangements, on a first-
                                                         ranking basis. See ‘‘Risk Factors—Risks Relating to the
                                                         Notes’’.
Guarantees . . . . . . . . . . . . . . . . . . . .       The Notes will be jointly and severally guaranteed by Avis
                                                         Europe plc and Avis Europe Holdings Limited (collectively,
                                                         the ‘‘Guarantors’’). Each Guarantee:
                                                         • will be a senior unsecured obligation of each Guarantor;
                                                         • will rank pari passu in right of payment with any existing
                                                              and future indebtedness of that Guarantor that is not




                                                                   6
                                                           subordinated to such Guarantor’s Guarantee, including
                                                           Indebtedness under the Senior Revolving Credit Facility;
                                                      • will be senior in right of payment to any existing and
                                                           future indebtedness of that Guarantor that is
                                                           subordinated to such Guarantor’s Guarantee;
                                                      • be effectively subordinated to any existing and future
                                                           indebtedness of such Guarantor that is secured by
                                                           property or assets that do not secure such Guarantor’s
                                                           Guarantee, to the extent of the value of the assets
                                                           securing such indebtedness; and
                                                      • will be effectively subordinated to any existing and future
                                                           indebtedness of Avis Europe plc’s subsidiaries that do not
                                                           guarantee the Notes. See ‘‘Description of the Notes—
                                                           Brief Description of the Notes and the Note Guarantees’’.
Optional Redemption . . . . . . . . . . . .           The Issuer may redeem all or part of the Notes on or after
                                                      31 July 2008 at the redemption prices listed in the section
                                                      entitled ‘‘Description of the Notes—Optional Redemption’’,
                                                      plus accrued and unpaid interest and additional amounts, if
                                                      any, on the Notes redeemed to the redemption date.
                                                      Tax Redemption. The Issuer may redeem all, but not less
                                                      than all, of the Notes at a redemption price of 100% of the
                                                      principal amount, plus accrued and unpaid interest, if any, to
                                                      the redemption date, if the Issuer or any surviving entity
                                                      would become obligated to pay certain additional amounts
                                                      as a result of certain changes in specified tax laws or certain
                                                      other circumstances. See ‘‘Description of the Notes—
                                                      Redemption for Changes in Withholding Taxes’’.
Additional Amounts . . . . . . . . . . . . .          All payments in respect of the Notes will be made without
                                                      withholding or deduction for any taxes or other
                                                      governmental charges, except to the extent required by law.
                                                      If withholding or deduction is required by law, subject to
                                                      certain exceptions, the Issuer will pay additional amounts so
                                                      that the net amount you receive is no less than you would
                                                      have received in the absence of such withholding or
                                                      deduction. See ‘‘Description of the Notes—Additional
                                                      Amounts’’.
Change of Control . . . . . . . . . . . . . .         Upon the occurrence of a change of control at any time, the
                                                      Issuer will be required to offer to re-purchase the Notes at a
                                                      price equal to 101% of the principal amount thereof together
                                                      with accrued and unpaid interest and certain other amounts,
                                                      if any, to the date of re-purchase. See ‘‘Description of the
                                                      Notes—Change of Control’’.
Covenants . . . . . . . . . . . . . . . . . . . . .   The Indenture governing the Notes will, among other things,
                                                      restrict the Group’s ability to:
                                                      • incur or guarantee additional indebtedness;
                                                      • pay dividends or make other distributions, or redeem or
                                                           re-purchase equity interests;
                                                      • make investments;
                                                      • create liens;
                                                      • enter into agreements that restrict the Group’s restricted
                                                           subsidiaries’ ability to pay dividends or make other
                                                           distributions to the Group;
                                                      • sell assets, including the capital stock of the Group’s
                                                           subsidiaries;
                                                      • enter into transactions with affiliates;


                                                                7
                                                          • transfer all or substantially all of the Group’s assets; and
                                                          • merge or consolidate.
                                                          In addition, under the Indenture, Avis Europe plc will
                                                          undertake to meet at 30 June and 31 December of each year,
                                                          commencing on 31 December 2006, certain maintenance
                                                          covenants governing the ratio of indebtedness of subsidiaries
                                                          to consolidated indebtedness of the Group and the ratio of
                                                          finance leases to consolidated fleet net book value of the
                                                          Group.
                                                          These covenants are subject to important exceptions and
                                                          qualifications. See ‘‘Description of the Notes—Certain
                                                          Covenants’’.
Use of Proceeds . . . . . . . . . . . . . . . .           The Group will use the net proceeds from the offering of the
                                                          Notes to temporarily repay indebtedness under the Senior
                                                          Revolving Credit Facility and the commercial paper
                                                          programme and, in due course, to refinance obligations
                                                          under the Issuer’s A120 million 6.4% Guaranteed Notes due
                                                          2007, the Issuer’s A50 million Euro Notes due 2006 and 2007
                                                          and the Issuer’s US$102 million 8.17% Series A Loan Notes
                                                          due 2007. See ‘‘Use of Proceeds’’.
Transfer Restrictions; Absence of a
  Public Market for the Notes . . . . .                   The Notes have not been registered under the US Securities
                                                          Act and have not been registered under any other country’s
                                                          securities laws and thus are subject to restrictions on
                                                          transferability and resale. The Issuer cannot assure you that a
                                                          market for the Notes will develop or that, if a market
                                                          develops, the market will be a liquid market. The Initial
                                                          Purchasers have advised the Issuer that they currently intend
                                                          to make a market in the Notes. However, the Initial
                                                          Purchasers are not obligated to do so and any market
                                                          making with respect to the Notes may be discontinued
                                                          without notice. See ‘‘Plan of Distribution’’.
Form of Notes . . . . . . . . . . . . . . . . .           The Notes initially will be represented by one or more global
                                                          notes in bearer form without interest coupons attached (the
                                                          ‘‘Global Notes’’). The global Notes will be deposited with The
                                                          Bank of New York, as note depositary (the ‘‘Note
                                                          Depositary’’) under the terms of a note depositary agreement
                                                          (the ‘‘Note Depositary Agreement’’). The Note Depositary will
                                                          in turn issue certificated depositary interests representing
                                                          interests in the Notes (‘‘CDIs’’) which will be registered in the
                                                          name of a nominee for the common depositary for Euroclear
                                                          and Clearstream Banking. These interests in the Notes will be
                                                          shown on, and transfers effected through, records
                                                          maintained in book-entry form (referred to as ‘‘Book-Entry
                                                          Interests’’) by Euroclear and Clearstream Banking as
                                                          described in more detail under ‘‘Description of the Notes’’
                                                          and ‘‘Book-Entry, Delivery and Form’’.
Listing . . . . . . . . . . . . . . . . . . . . . . . .   Application has been made to list the Notes on the Irish
                                                          Stock Exchange for trading on the Alternative Securities
                                                          Market thereof.
Trustee, Registrar, Transfer Agent,
   and Principal Paying Agent . . . . . .                 The Bank of New York.
Irish Listing Agent . . . . . . . . . . . . . .           The Bank of New York.
Irish Paying Agent . . . . . . . . . . . . . .            AIB/BNY Fund Management (Ireland) Limited.
Governing Law of the Notes, the
   Indenture, the Guarantees and the
   Note Depositary Agreement . . . . .                    New York.


                                                                      8
             SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OTHER DATA
     The following summary of historical IFRS financial data as of and for the years ended
31 December 2005 and 2004 have been derived from the consolidated financial information and notes
thereto which have been prepared in accordance with IFRS and are included elsewhere in this offering
memorandum. Also included below is the historical UK GAAP financial data as at and for each of the
years ended 31 December 2004, 2003 and 2002 which have been derived from the consolidated
financial statements for each of the years then ended. Statutory financial statements for the year
ended 31 December 2004, prepared in accordance with UK GAAP, are included elsewhere in this
offering memorandum.
    It should be noted that financial information for the years ended 31 December 2005 and 2004
under IFRS and the financial information under UK GAAP are not directly comparable.
     The tables set forth below for the years ended 31 December 2005 and 2004 include columns for
‘‘underlying’’ financial information. In order to provide what management believes is useful information
on ‘‘underlying’’ trends, the Group segregates ‘‘underlying’’ costs from exceptional items, certain
re-measurement items and economic hedges. Although this ‘‘underlying’’ financial information appears
on the face of the Group’s Consolidated Financial Information 2005 included elsewhere in this offering
memorandum, the term ‘‘underlying’’ is not defined under IFRS or UK GAAP, and therefore may not be
comparable with similarly titled profit measurements reported by other companies.
      Pro forma net debt and cash interest expenses and related ratios have been prepared for
illustrative purposes only to give effect to this offering (and use of proceeds) as if it had occurred at
31 December 2005 for pro forma net debt purposes, and from 1 January 2005 for pro forma net cash
interest expense purposes. The pro forma financial information is based on assumptions and should
not be considered indicative of actual results that would have been achieved had the transaction been
consummated on the date indicated and do not purport to indicate balance sheet data or results of
operations as of any future date or for any future period. The pro forma financial information is also
not intended to be an indicator of the Group’s financial condition or results of operations in the future.
The pro forma financial information should be reviewed together with the Consolidated Financial
Statements.
    Also included below are certain unaudited operational data which have been derived from the
Group’s operating systems and not from its audited financial statements for the periods described
above.
    You should regard the summary financial and business data below only as an introduction and
should base your investment decision on a review of the entire offering memorandum.




                                                    9
Summary consolidated historical and pro forma financial information and operating data prepared
                        in accordance with IFRS or based on IFRS data
The following tables set out summary consolidated financial information and unaudited operating
data for the Group as at and for the years ended 31 December 2005 and 2004 prepared in
accordance with IFRS or based on IFRS data:

                                                                                                                                                Year ended 31 December
                                                                                                                    2005                                                                                       2004
                                                                                                                                                             IFRS
                                                                                                                                                    (in millions of euro)
                                                                                                                     Amounts                                                                                    Amounts
                                                                                                                     excluded                                                                                   excluded
                                                                                                                       from                                                                                       from
                                                                            Underlying(1)                           underlying                              Total                   Underlying(1)              underlying            Total

Summary consolidated income
statement data
Revenue . . . . . . . . . . . . . . . . .       .   .   .   .   .   .           1,276.5                                        — 1,276.5                                                1,252.8                       — 1,252.8
Cost of sales . . . . . . . . . . . . . .       .   .   .   .   .   .            (709.3)                                       —   (709.3)                                               (675.0)                      —   (675.0)
Gross profit . . . . . . . . . . . . . . .      .   .   .   .   .   .             567.2                                        —    567.2                                                 577.8                       —    577.8
Administrative expenses . . . . .               .   .   .   .   .   .            (467.3)                                    (18.5) (485.8)                                               (463.6)                   (74.4) (538.0)
Operating profit . . . . . . . . . . . . . . . .                    .                    99.9                           (18.5)                               81.4                               114.2              (74.4)             39.8
Finance revenue . . . . . . . . . . . . . . . .                     .                     1.9                              —                                  1.9                                 3.7                 —                3.7
Finance costs . . . . . . . . . . . . . . . . . . .                 .                   (64.0)                            0.9                               (63.1)                              (65.7)                —              (65.7)
Foreign exchange on net debt . . . . . .                            .                      —                             (0.1)                               (0.1)                                 —                 2.1               2.1
Share of profit/(loss) of joint venture
  and associate . . . . . . . . . . . . . . . . .                   .                           —                                   —                                   —                           (0.1)              —               (0.1)
Profit/(loss) before tax . . . . . . . . . . . .                                         37.8                           (17.7)                                  20.1                             52.1              (72.3)            (20.2)
Taxation . . . . . . . . . . . . . . . . . . . . . . .                                  (10.2)                            2.2                                   (8.0)                           (13.0)              16.1               3.1
Profit/(loss) for the year . . . . . . . . . .                                              27.6                        (15.5)                                  12.1                                39.1           (56.2)            (17.1)

(1) Underlying excludes exceptional items, certain re-measurement items and economic hedges.

    Underlying IFRS profit and loss for the year is reconciled to total profit and loss for the year as follows:
                                                                                                                                                                                                                 Year ended
                                                                                                                                                                                                                31 December
                                                                                                                                                                                                            2005             2004
                                                                                                                                                                                                                      IFRS
                                                                                                                                                                                                             (in millions of euro)

    Underlying profit for the year . . . . . . .            . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                           27.6              39.1
    Net exceptional charges:
    —Restructuring . . . . . . . . . . . . . . . .          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        (8.4)           (9.6)
    —Project termination costs . . . . . . . .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        (3.6)          (43.4)
    —Centrus receivables provision . . . . . .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .         3.2            16.7
    —Capital restructuring and rights issue .               .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        (4.4)             —
    —Goodwill impairment . . . . . . . . . . .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .          —            (38.1)

    Net exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                     (13.2)          (74.4)
    Certain re-measurement items and economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                     (4.5)            2.1
    Taxation on reconciling items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                         2.2            16.1
    Total profit/(loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                      12.1            (17.1)

     For more information, see ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Critical Accounting Policies and Estimates’’ and the Consolidated Financial Information 2005 included elsewhere in this offering
memorandum.




                                                                                                        10
                                                                                                                                                                                                        As at 31 December
                                                                                                                                                                                                       2005             2004
                                                                                                                                                                                                                IFRS
                                                                                                                                                                                                       (in millions of euro)

Summary consolidated balance sheet data
Non-current assets(1) . . . . . . . . . . . . . . . . .                                           .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     645.2          584.2
  of which Rental fleet(2) . . . . . . . . . . . . . .                                            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     475.1          428.6
Current assets . . . . . . . . . . . . . . . . . . . . . .                                        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   1,459.3        1,453.1
  of which Rental fleet(3) . . . . . . . . . . . . . .                                            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     882.8          874.3
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                        2,104.5       2,037.3
Non-current liabilities .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     933.0          876.6
  of which Borrowings             .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     611.6          664.7
Current liabilities . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   1,084.9        1,218.1
  of which Borrowings             .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     114.1          144.7
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                       2,017.9       2,094.7
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                           86.6         (57.4)
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                              2,104.5       2,037.3

(1) Includes non-current assets held for sale.

(2) Represents portion of fleet which is risk fleet and fleet held for sale. These are presented in the Group’s balance sheet as
    ‘‘vehicles’’ within ‘‘Property, plant and equipment’’ and ‘‘Non-current assets held for sale’’.

(3) Represents portion of fleet which is held under manufacturer re-purchase contracts. These are classified in the Group’s
    balance sheet as ‘‘Re-purchase agreement receivables’’ and ‘‘Prepaid vehicle operating lease charges’’.

                                                                                                                                                                                                            Year ended
                                                                                                                                                                                                           31 December
                                                                                                                                                                                                       2005             2004
                                                                                                                                                                                                                IFRS
                                                                                                                                                                                                       (in millions of euro)
Summary consolidated cash flow data
Operating cash before changes in rental fleet and working capital . . . .                                                                                                             ....             415.6          434.3
  Changes in inventories, and receivables . . . . . . . . . . . . . . . . . . . . . . .                                                                                               ....              44.4           35.9
  Changes in liabilities (excluding Borrowings) and in provisions and
  retirement benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                          ....              (2.8)          (11.5)
  Other net changes from operating activities . . . . . . . . . . . . . . . . . . .                                                                                                   ....              (3.6)          (34.6)
Purchase of vehicles under manufacturer re-purchase contracts, net of
  disposals(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                ....            (278.9)          (64.2)
Net cash generated from operating activities . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                           174.7          359.9
Purchase of vehicles, net of disposal of vehicles(2) . . . . . . . . . . . . . . . . . . . . .                                                                                                        (213.1)        (134.5)
Other net changes from investing activities . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                          126.8           47.2
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                    (86.3)         (87.3)
Net cash used in financing activities including exchange rate changes . . . . .                                                                                                                        (27.5)        (290.1)
Net increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . .                                                                                                                  60.9          (17.5)

(1) Represents portion of fleet which is held under manufacturer re-purchase contracts.

(2) Represents portion of fleet which is risk fleet and fleet held for sale.




                                                                                                                  11
                                                                                                                                                                                                                              Year ended
                                                                                                                                                                                                                             31 December
                                                                                                                                                                                                                         2005             2004
                                                                                                                                                                                                                                  IFRS
                                                                                                                                                                                                                         (in millions of euro,
                                                                                                                                                                                                                          other than ratios)

Other data (unaudited)
Net fleet capital expenditures(1) . . . . . . . . . . . . . . . . .                                      .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                   504.0              197.2
Net non-fleet capital expenditures(2) . . . . . . . . . . . . . .                                        .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                    17.6               46.9
EBITDA before non cash net operating lease charge(3)                                                     .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                   425.8              366.8
Underlying EBITDA(4) . . . . . . . . . . . . . . . . . . . . . . . . .                                   .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                   433.7              437.3
Net debt(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                   945.6              965.7
Pro forma net debt(6) . . . . . . . . . . . . . . . . . . . . . . . . .                                  .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                   945.6
Net cash interest expense(7) . . . . . . . . . . . . . . . . . . . .                                     .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                    60.0                60.5
Pro forma net cash interest expense(8) . . . . . . . . . . . .                                           .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                    70.0
Credit statistics (unaudited)
Ratio of net debt to Underlying EBITDA . . . . . . . . . . . . . . . . . . . . . .                                                                               .   .       .       .       .       .                     2.2x                 2.2x
Ratio of Underlying EBITDA to net cash interest expense . . . . . . . . .                                                                                        .   .       .       .       .       .                     7.2x                 7.2x
Ratio of pro forma net debt to Underlying EBITDA . . . . . . . . . . . . . .                                                                                     .   .       .       .       .       .                     2.2x
Ratio of Underlying EBITDA to pro forma net cash interest expense .                                                                                              .   .       .       .       .       .                     6.2x

(1) Net fleet capital expenditures includes cash flows relating to both vehicles subject to re-purchase agreements and risk
    vehicles and also includes new finance leases of A95.4m (2004; A69.7m).

(2) Net non-fleet capital expenditures is total capital expenditures less net fleet capital expenditures, as defined in
    footnote (1) above.

(3) EBITDA before non cash net operating lease charge is defined as profit for the year before interest, taxes, depreciation,
    amortisation and non cash net operating lease charge on vehicles under manufacturer re-purchase contracts. This is not a
    measurement of the Group’s financial performance or liquidity under IFRS and should not be considered as a substitute
    for profit for the year, operating profit, or any other performance measures derived in accordance with IFRS or UK GAAP
    or as a substitute for cash flow from operating activities as a measure of the Group’s liquidity. Because not all companies
    calculate EBITDA identically, this presentation of EBITDA may not be comparable to other similarly titled measures of
    other companies.

(4) Underlying EBITDA is calculated as EBITDA before non cash net operating lease charge adjusted to remove the impact of
    net exceptional items, economic hedge adjustments, share of profit/(loss) of joint venture and foreign exchange
    (loss)/gain on net debt less gains on disposals of assets. Exceptional items have been defined previously. Underlying
    EBITDA is not a measurement of the Group’s financial performance or liquidity under IFRS and should not be considered
    as a substitute for profit for the year, operating profit, or any other performance measures derived in accordance with
    IFRS or UK GAAP or as a substitute for cash flow from operating activities as a measure of the Group’s liquidity.

     Reconciliation of Underlying EBITDA to net profit/(loss) follows for the years indicated:

                                                                                                                                                                                                                                   Year ended
                                                                                                                                                                                                                                  31 December
                                                                                                                                                                                                                              2005             2004
                                                                                                                                                                                                                                        IFRS
                                                                                                                                                                                                                               (in millions of euro)

     Profit for the year . . . . . . . . . . . . . .   . . . . . . . . . . . . . . . . . . . . . .                                       . . . . . . .               .   .       .       .       .   .   .   .   .   .         12.1             (17.1)
     less: Finance revenue . . . . . . . . . . .       . . . . . . . . . . . . . . . . . . . . . .                                       . . . . . . .               .   .       .       .       .   .   .   .   .   .         (1.9)             (3.7)
     plus: Finance cost . . . . . . . . . . . . . .    . . . . . . . . . . . . . . . . . . . . . .                                       . . . . . . .               .   .       .       .       .   .   .   .   .   .         63.1              65.7
           Taxation . . . . . . . . . . . . . . . .    . . . . . . . . . . . . . . . . . . . . . .                                       . . . . . . .               .   .       .       .       .   .   .   .   .   .          8.0              (3.1)
           Depreciation and amortisation . .           . . . . . . . . . . . . . . . . . . . . . .                                       . . . . . . .               .   .       .       .       .   .   .   .   .   .        153.6             144.8
           Asset impairment charges . . . . .          . . . . . . . . . . . . . . . . . . . . . .                                       . . . . . . .               .   .       .       .       .   .   .   .   .   .          0.5                —
     Net operating lease charge on vehicles            under manufacturer re-purchase                                                    contracts                   .   .       .       .       .   .   .   .   .   .        190.4             180.2
     EBITDA before non cash net operating lease charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                            425.8             366.8
     plus: Net exceptional items . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .       .       .   .   .   .   .   .   .   .   .   .   .       .       .       .   .   .   .   .   .           13.2             74.4
           Economic hedge adjustments . . . . . . . . . .            .   .   .   .   .   .   .   .   .   .   .   .       .       .   .   .   .   .   .   .   .   .   .   .       .       .       .   .   .   .   .   .            5.3               —
           Share of loss of joint venture and associate              .   .   .   .   .   .   .   .   .   .   .   .       .       .   .   .   .   .   .   .   .   .   .   .       .       .       .   .   .   .   .   .             —               0.1
     less: Foreign exchange (loss)/gain on net debt . .              .   .   .   .   .   .   .   .   .   .   .   .       .       .   .   .   .   .   .   .   .   .   .   .       .       .       .   .   .   .   .   .            0.1             (2.1)
     Underlying EBITDA including gains on disposals of assets . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                           444.4             439.2
     less: Gains on disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                (10.7)             (1.9)
     Underlying EBITDA(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                               433.7             437.3

(5) Net debt represents the gross repayable balance (i.e. excluding the impact of any debt issue costs or issue discounts or
    premiums) less the total of cash and short-term deposits.




                                                                                         12
(6) Pro forma net debt represents ‘‘Pro forma total debt’’ less ‘‘Pro forma cash and short-term deposits’’ as shown within the
    section entitled ‘‘Capitalisation’’.

(7) Net cash interest expense represents the amount of net interest paid on cash and outstanding debt balances
    (i.e. excluding the impact of any amortisation of debt issue costs or issue discounts or premiums).

(8) ‘‘Pro forma net cash interest expense’’ represents net cash interest expense paid, adjusted to give effect to this offering as
    if the offering had occurred with effect from 1 January 2005 and was in existence throughout the year ended
    31 December 2005. This does not reflect interest that would have been earned on the excess cash received from this
    offering. Pro forma net cash interest expense is calculated as follows;

                                                                                                                                          Year ended
                                                                                                                                       31 December 2005
                                                                                                                                              IFRS
                                                                                                                                          (in millions
                                                                                                                                            of euro)

    Net cash interest expense as previously reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             60.0
    less: cash interest expense on retired debt(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (4.3)
    plus: cash interest expense on the Notes offered hereby(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               14.3
                                                                                                                                             70.0


    (a) Adjustment reflects elimination of cash interest expense on bank facilities and commercial paper which are intended
        to be repaid from the proceeds of the Notes, as reflected in the ‘‘Capitalisation’’ section, and assumes repayment in
        full.
    (b) Finance costs on the Notes have been calculated using a rate of 5.705% (three month EURIBOR as of 14 July 2006 of
        3.080% plus a margin of 2.625%) per annum.




                                                                          13
 Summary consolidated historical financial information and operating data prepared in accordance
                           with UK GAAP or based on UK GAAP data
    The following tables set out summary financial information and unaudited operating data for the
Group as at and for the years ended 31 December 2004, 2003 and 2002 prepared in accordance with
UK GAAP or based on UK GAAP data:
                                                                                                               Year ended 31 December
                                                                                                             2004         2003        2002
                                                                                                                      UK GAAP
                                                                                                                 (in millions of euro)

Selected consolidated income statement data
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1,176.9 1,169.4 1,189.2
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (613.2) (620.4) (598.9)
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       563.7         549.0        590.3
Administrative expenses (including operating exceptional items) . . . . . .                                 (524.3)       (481.7)      (424.2)
Operating profit before goodwill amortisation and operating
 exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             115.4         122.8        186.5
Amortisation of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              (2.6)         (4.8)        (4.0)
Operating exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                (73.4)        (50.7)       (16.4)
Group operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              39.4          67.3        166.1
Share of operating loss from joint ventures and associate . . . . . . . . . . .                               (0.1)         (0.6)        (1.2)
Total operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            39.3           66.7       164.9
Loss on disposal of business on termination of operation . . . . . . . . . . .                                  —           (54.9)         —
Net interest payable (2003: including exceptional income) . . . . . . . . . .                                (61.1)         (59.2)      (63.1)
Profit on ordinary activities before goodwill amortisation, net
  exceptional items and taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    54.2          59.4        122.2
Amortisation of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              (2.6)         (4.8)        (4.0)
Net exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (73.4)       (102.0)       (16.4)
(Loss)/profit on ordinary activities before taxation . . . . . . . . . . . . . . .                           (21.8)        (47.4)       101.8
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       2.9          (3.8)       (20.8)
(Loss)/profit on ordinary activities after taxation . . . . . . . . . . . . . . . .                          (18.9)        (51.2)        81.0

                                                                                                                    As at 31 December
                                                                                                            2004           2003        2002(1)
                                                                                                                         UK GAAP
                                                                                                                   (in millions of euro)

Summary consolidated balance sheet data
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1,411.6      1,466.0      1,460.8
   of which Rental fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1,302.9      1,313.3      1,312.4
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        612.1         667.2         683.0
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     2,023.7      2,133.2      2,143.8
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         823.3         937.2         858.2
   of which Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            664.7         778.5         742.7
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,218.1      1,180.1      1,175.5
   of which Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            144.7         169.0         181.7
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2,041.4 2,117.3           2,033.7
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (17.7)   15.9             110.1
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           2,023.7      2,133.2      2,143.8

(1) The Group adopted UITF38 ‘‘Accounting for ESOP Trusts’’ as at 1 January 2004, reclassifying certain comparative balances
    in 2003, as explained in the Consolidated Financial Statements 2004. Certain balances for the year ended 31 December
    2002 have not been restated. Had UITF38 been adopted at 31 December 2002, the effect would have been to reduce non-
    current assets to A1,458.4 million and to decrease total equity to A107.7 million.




                                                                        14
                                                                                                                                                                                                                      Year ended 31 December
                                                                                                                                                                                                                     2004        2003      2002
                                                                                                                                                                                                                             UK GAAP
                                                                                                                                                                                                                        (in millions of euro)

Summary consolidated cash flow data
Net cash generated from operating activities . . .                       .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .            454.3   463.9   518.6
Returns on investments and servicing of finance .                        .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .            (60.5) (54.9) (64.4)
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .            (30.2) (25.6)    (2.0)
Capital expenditure and financial investment . . .                       .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .            509.4   473.4   531.2
Acquisitions and disposals . . . . . . . . . . . . . . . . .             .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .             (2.3) (48.1)      —
Equity dividends paid . . . . . . . . . . . . . . . . . . . . .          .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .            (33.7) (43.2) (54.8)
Management of liquid resources . . . . . . . . . . . . .                 .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .             23.4    (4.4) (112.7)
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .           (875.6) (764.4) (794.7)
(Decrease)/increase in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                                  (15.2)         (3.3)    21.2

                                                                                                                                                                                                                                     Year ended
                                                                                                                                                                                                                                    31 December
                                                                                                                                                                                                                                  2005       2004
                                                                                                                                                                                                                                        IFRS

Summary key indicators(1) (unaudited)
Number of rentals (in thousands) . . . . . . . . . . . . . .                         .....               .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .     5,253   5,155
Number of billed days (in thousands)(2) . . . . . . . . . .                          .....               .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .   30,842 30,004
Average revenue per billed day (in A)(3) . . . . . . . . . .                         .....               .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .      39.2    39.8
Average fleet size (rounded to the nearest thousand                                  units)              .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .       120     118
Fleet cost per car month (A per unit/month) . . . . . .                              .....               .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .     284.0   276.4
Average fleet utilisation(4) . . . . . . . . . . . . . . . . . . . .                 .....               .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .      70.5%   69.5%
Fleet book value (A million) . . . . . . . . . . . . . . . . . . .                   .....               .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .   1,357.9 1,302.9

(1) All financial and operating data refer to Avis corporate data, which excludes Avis Licensees, Budget and Centrus.

(2) Includes any day or period less than a day for which a vehicle rental is invoiced to a customer.

(3) Total revenues divided by total billed days.

(4) The average period of time during which vehicles are on rent as a percentage of their holding period.

                                                                                                                                                                                                               Year ended 31 December
                                                                                                                                                                                                             2004       2003      2002
                                                                                                                                                                                                                      UK GAAP

Summary key indicators(1) (unaudited)
Number of rentals (in thousands) . . . . . . . . . . . . . . . . . . . .                                 .       .       .       .       .       .       .       .       .       .                     5,155   5,029   4,971
Number of billed days (in thousands)(2) . . . . . . . . . . . . . . .                                    .       .       .       .       .       .       .       .       .       .                   30,004 29,626 28,654
Average revenue per billed day (in A)(3) . . . . . . . . . . . . . . .                                   .       .       .       .       .       .       .       .       .       .                      37.4    37.6    39.6
Average fleet size (rounded to the nearest thousand units)                                               .       .       .       .       .       .       .       .       .       .                       118     120     115
Fleet cost per car month (A per unit/month) . . . . . . . . . . .                                        .       .       .       .       .       .       .       .       .       .                     276.4   279.1   271.3
Average fleet utilisation(4) . . . . . . . . . . . . . . . . . . . . . . . . . .                         .       .       .       .       .       .       .       .       .       .                      69.5%   68.7%   68.1%
Fleet book value (A million) . . . . . . . . . . . . . . . . . . . . . . . .                             .       .       .       .       .       .       .       .       .       .                   1,302.9 1,313.3 1,312.4

(1) All financial and operating data refer to Avis corporate data, which excludes Avis Licensees, Budget and Centrus.

(2) Includes any day or period less than a day for which a vehicle rental is invoiced to a customer.

(3) Total revenues divided by total billed days.

(4) The average period of time during which vehicles are on rent as a percentage of their holding period.




                                                                         15
                                             RISK FACTORS
      You should carefully consider the following risks, as well as the other information set forth in this
offering memorandum, before making an investment decision. If any of the following risks materialises,
it could materially adversely affect the Group’s business, prospects, general results of operations or
financial condition and its ability to make payment on the Notes. The price of the Notes could decline
due to the materialisation of any of these risks, and you may lose part or all of your investment. The
risks set forth herein are not the only risks that the Group faces. In addition to the risks described
below, the Group may encounter unknown risks, or risks that it currently believes to be immaterial,
which may also materially impair the Group’s business, prospects, general results of operations or
financial condition. The order in which the risks are presented does not necessarily reflect the
likelihood of their occurrence or the magnitude of their potential impact on the Group’s business,
prospects, general results of operations or financial condition.

Risks related to the Avis Europe plc Business
A decline in general economic activity could result in, among other things, a decline in business and
leisure travel and vehicle rental activity, which could adversely affect the Group’s business.
     The Group’s results of operations are affected by various economic factors, including the level of
general economic activity in the markets in which it operates. In the vehicle rental industry, a decline
in general economic activity can result in a decline in both business and leisure travel, and
accordingly a decline in the volume of vehicle rental transactions. In the case of a decline in vehicle
rental activity, as a short-term response the industry may reduce rental rates to try to stimulate
demand, which could adversely affect the Group’s results of operations. A decline in general
economic activity may also have an adverse effect on residual values realised on the sale of the
Group’s inventory of vehicles where not protected by re-purchase agreement guarantees (see ‘‘—The
Group faces risks related to the resale value of vehicles not covered by re-purchase programmes’’). In
order to counteract such adverse effects of general economic conditions and to protect operating
margins in the short-term, the Group has flexibility to reduce its variable costs and lower its asset
base, primarily through the reduction of vehicle fleet. However, a sustained economic downturn could
require the Group to continue to reduce its fixed cost base, which would be very difficult to rescale
without a fundamental change to the Group’s business model. Such a change would incur significant
costs and also entail significant execution risk.

The Group may not be able to meet the targets set out in its margin improvement strategy. If the
Group is unsuccessful in meeting those objectives, the Group’s results of operations and financial
condition could be negatively affected.
     The Group’s management has recently embarked on a margin improvement strategy designed to
significantly improve profitability in the medium-term. See ‘‘Business’’ for a further description of the
margin improvement strategy. The strategy builds on the Group’s core strengths, and is characterised
by low technological complexity and comprises multiple, small-scale projects, thereby reducing
execution risk. However, there can be no assurance of successful implementation or achievability of
the margin improvement strategy in the planned timeframe. In particular, efforts to improve
profitability of the Group could be hampered by aggressive pricing behaviour by competitors or by
costs rising faster than expected. If the Group is unable to successfully implement its margin
improvement strategy, the Group’s business, future prospects, financial condition and results of
operations may be adversely affected.

The Group’s business is highly seasonal and a disruption in rental activity during its peak season, or
a mismatch between actual and anticipated demand, could have a material adverse effect on the
Group’s results of operations and financial condition.
     Industry revenues and operating profits are substantially weighted towards the peak European
holiday periods, and particularly the key summer months of June through September when the Group
increases staff levels and purchases more fleet to accommodate these peaks. A significant proportion
of the Group’s staff costs and overhead costs are fixed and cannot be adjusted according to
short-term fluctuations in business activities. In addition, significant fleet investment is incurred in
anticipation of seasonal demand when there is only limited demand visibility from forward bookings.
This variation in fleet levels is also reflected in a higher requirement for debt to fund the fleet



                                                    16
purchases in the summer months than at other times of the year. The Group manages its cost base
and its investment decisions in line with forecast activity levels and prior experience. However, any
shortfall in revenues during peak trading periods against those anticipated could have a significant
impact on the Group’s profitability and results.

The vehicle rental industry depends on the air travel industry and air passenger traffic and
disruptions in air travel patterns or a general decrease in air travel could result in decreased
revenues or otherwise harm the Group’s business.
     The Group estimates that approximately 50% of its vehicle rental revenues in 2005 were
generated at its airport facilities, which largely exist as concessionary arrangements with airport
authorities. The Group also has significant alliances and partnership arrangements with a number of
major airlines. A substantial proportion of the Group’s revenue is therefore strongly correlated with
the level of air passenger traffic. Any significant event that disrupts or reduces air travel patterns or
affects the Group’s airport locations for a prolonged period could have an adverse effect on the
Group’s results of operations. These events could include loss of airport concessions, fuel surcharges,
work stoppages, airline bankruptcies, loss of airline partnerships, military conflicts or terrorist
incidents (whether actual incidents or a perceived heightened risk thereof). In addition, any decision
by airport authorities to relocate the vehicle rental facilities may result in additional costs to the
Group.

The vehicle rental industry is highly competitive, which may result in downward pressure on the
Group’s pricing, sales, volume and profitability at both the global and local levels.
     The industry in which the Group operates is highly competitive. In any given location, the Group
or its licensees may encounter competition from international, national, regional and local companies.
Large European competitors such as Hertz, Europcar, National/Alamo, Enterprise and Sixt compete
with the Group in most customer categories. Local operators may have lower operating costs,
making it easier for them to charge lower prices for their vehicles than the Group, which can have an
adverse impact on local market share, particularly in the leisure market.
    Management believes that price is one of the primary competitive factors in vehicle rental
markets. For example, the car rental industry faces pricing pressure from increased pricing
transparency as a result of the growing importance of internet travel portals, other forms of
e-commerce (potentially including e-auctions in the corporate customer category) and the increasing
use of rental brokers. These distribution channels for car rental services enable cost-conscious
customers, including business travellers, to more easily obtain the lowest rates available from car
rental companies for any given trip. This transparency has increased, and may continue to increase,
the prevalence and intensity of price competition, which could have a material adverse impact on the
Group’s results of operations and financial condition.
     Although management believes that recent ownership changes in the industry could improve
pricing discipline, certain competitors, some of whom have access to more substantial capital
resources, may seek to compete aggressively on the basis of pricing. To the extent that the Group is
not willing or able to match competitors’ pricing, this could have an adverse impact on the Group’s
results of operations as the Group may lose market share. Conversely, if the Group follows or leads
with an aggressive pricing strategy, it may have a detrimental impact on the Group’s profitability.
The Group has certain significant customer accounts, mainly in the corporate and replacement
categories and airline partnerships, the loss of which to a competitor, or the annual renewal on less
advantageous terms, would impact the Group’s results of operations.

The Group is exposed to risks associated with the international nature of its customer base and
operations.
     Avis and Budget, respectively, have corporate and licensed international operations in 105
countries and in 63 countries. With operations worldwide, the Group’s business is subject to various
risks inherent in international operations. These risks include, among others, regulatory requirements,
differing legal practice and interpretation, difficulties in managing foreign operations, different local
accounting practices, political instability and potentially differing tax law and practice. The Group
takes a low risk and cost-effective approach to its network outside of Western Europe by using
licensees to which it charges a fee for use of the Avis and Budget brands. In return, local operators



                                                   17
are required to abide strictly by the Avis and Budget corporate brand and quality service standards.
There is also a skilled management team experienced in managing such risks and internal audit
financial and operational reviews are undertaken. However, non-adherence to the corporate brand
and quality service standards set by the Group by any or all licensees could adversely affect the
success of the Group’s operations in particular markets.

The Group’s relationship with certain of its major vehicle suppliers is important to its business and
the loss or material change of the terms on which the Group obtains its fleet vehicles could
adversely affect its business.
     The vehicle rental business depends on providing consistently high levels of service to customers
in order to ensure repeat business. One of the key propositions is the provision of a wide range of
brand new or nearly new vehicles to rental customers whilst at the same time minimising overall
vehicle costs and optimising vehicle utilisation. The provision of new vehicles from a variety of
manufacturers in several different geographic locations enables the provision of this customer service.
In the event that the Group could not procure vehicles from its current sources, vehicles would be
obtained from other sources such as dealers, however there could be risks to business volumes and
to financial and operating results as the Group sought alternative supplier arrangements. The Group’s
policy is to acquire vehicles from a broad range of suppliers while retaining purchasing power
vis-a-vis such suppliers. In 2005, the Group had supply arrangements to buy more than 34 individual
manufacturers’ brands, with the top five manufacturer groups by volume supplying between 80% and
90% of the fleet. The majority of manufacturer agreements are renegotiated on an annual basis and
there is no guarantee that these agreements will be renewed or renewed on terms as favourable as
the existing agreements.
     Any loss of a relationship with a major supplier or a material adverse change by a major supplier
in the terms on which the Group obtains fleet vehicles, such as a material increase in price, or a
reduction in the number of vehicles they wish to sell to the Group, which cannot be offset by
sourcing alternatives from other manufacturers or dealers, could have an adverse effect on the
Group’s financial condition and results of operations.

The Group faces risks related to the resale value of vehicles not covered by re-purchase
programmes.
     The Group purchases approximately 30% of its fleet under arrangements which do not
guarantee residual values to the Group. These vehicles are sold by the Group on the open market
after use in the rental business for a period of time. Residual values of these vehicles are therefore
exposed to an adverse movement in second-hand vehicle prices, which can be a result of a number
of factors, including general economic conditions, model changes and legislative requirements (for
example, changes to environmental legislation). Any such movement in used vehicle prices or a lack
of liquidity in the used vehicle market may severely hinder the Group’s ability to sell these vehicles
and could adversely affect the Group’s results. The Group has a number of different sales channels
that help mitigate the risk associated with residual values.
     The Group also purchases vehicles from suppliers with whom it has agreed terms for the
re-purchase of the vehicle by the supplier or third party dealer (i.e. ‘‘buy-back vehicles’’ or
‘‘re-purchase vehicles’’). A reduction in the percentage of the Group’s vehicles subject to re-purchase
programmes would increase its exposure to the vehicle resale markets and could increase its fleet
holding costs. The proportion of vehicles subject to agreed re-purchase terms is not uniform across
its markets.
     The Group strives to limit its exposure to vehicle depreciation and any loss on resales through
re-purchase programmes, but there is no guarantee that this will continue to be achieved.
Management expects vehicle depreciation to continue to be a substantial cost factor in its vehicle
rental operations. If manufacturers reduce the availability of re-purchase programmes or related
incentives, or otherwise reduce the number of vehicles available to vehicle rental companies through
re-purchase programmes, or impose more stringent conditions for the physical state of a vehicle
prior to return, then this could have a detrimental impact on the Group’s results of operations.




                                                  18
The Group faces risks related to the average price of new vehicles and fleet holding costs.
     In recent years, the average price of new vehicles has increased. The effective cost of vehicles is
dependent on the new purchase price, the level of discount, the amount of any marketing
contributions, and the residual value of the vehicle either on the open market for risk vehicles or the
pre-agreed re-purchase price for buy-back vehicles. There is a risk that new vehicle prices will
continue to increase, which combined with the implementation of new EU regulation number
1400/2002 covering automotive block exemption rules in Europe (that should lead to a
harmonisation of prices) will mean there can be no assurance that prices will remain at the same
level, that the Group will be able to effectively control the average cost of its fleet by purchasing a
mix of less expensive vehicles or, that because of competitive pressures, the Group will be able to
pass on the increased cost of vehicles to its rental customers.
     Further, there can be no assurance that the Group will continue to receive marketing
contributions from vehicle manufacturers. These marketing contributions are in respect of the value
that the manufacturers attribute to the presence of their vehicles on the vehicle fleet, combined with
various levels of promotional activity that Avis undertakes on behalf of that manufacturer. There can
be no assurance that these marketing contributions will continue and the absence of these
contributions could have a negative effect on the Group’s performance.

The Group’s operations are dependent to a significant extent on its ability to retain and attract key
personnel and high-quality staff.
      Management believes that a principal driver for the future success of the Group will be the
experience and enterprise of local management and the active involvement of employees at all levels
in initiatives to improve the business. The recruitment and retention of such staff is critical to the
Group’s long-term profitability and commercial success. In addition, the seasonality of the business
(as discussed above) necessitates changes in staffing levels through the year in order to meet
business needs. The Group places emphasis on attracting and retaining talented and flexible
personnel and invests in extensive training and development of its employees, emphasising the
importance of delivering a high quality of service to customers. Should the Group encounter any
difficulty in attracting and retaining sufficient staff of the calibre required, the Group’s current
business, prospects and results of operations might be adversely affected.
      As an international service business, a negative employee relations environment could be
damaging to the Group. In line with the local statutory requirements of each of the Group’s
Corporate Countries, appropriate forums for communication and collective consultation with elected
representatives have been established. In addition, the Group has a European consultation forum that
meets twice annually with the CEO and other senior managers to gain updates on the Group’s
initiatives and results.
    Should the Group encounter any significant employee relations issues, the Group’s current
business, prospects and results of operations might be adversely affected.

The Group’s relationship with Cendant (which owns the global Avis and Budget brands) is important
to its business and any adverse changes to the terms or termination of the master licensing
agreements with Cendant could adversely affect the Group’s financial condition.
      The principal and most material aspect of the Group’s relationship with Cendant (which owns
the global Avis and Budget brands) are the licences granted by Cendant to the Group to use the Avis
and Budget brand names in Europe, Africa, the Middle East and Asia (‘‘EAMEA’’) and Europe, Africa
and the Middle East (‘‘EAME’’), respectively. Cendant licenses the Avis and Budget brands to the
Group through master licensing agreements, which are due to expire in 2036. The licences can be
terminated by Cendant in any of the following events: a vehicle rental competitor acquires more than
35% of the voting share capital of Avis Europe plc; insolvency or liquidation; or in the event of a
material breach of the licence agreements which is not remedied within 90 days. In addition to the
foregoing, the principal material impact of these licensing arrangements is that the Group’s business
is limited in the following ways: (1) the Group is obliged to conduct its vehicle rental and leasing
operations exclusively under the Avis or Budget brands; (2) the existing licences permit the use of
the Avis and Budget brands only for the business of vehicle rental and leasing, together with
products and services reasonably related thereto; (3) the Group may not use the Avis and Budget
brands outside the respective territories granted by the licences, and (4) the Group has to comply


                                                   19
with the operating guidelines of the licensor from time to time. The second material aspect of the
Group’s relationship with Cendant is the Wizard reservation system, the risks relating to which are
described herein.
     The Group does not have any cross shareholdings with Cendant, yet through its contractual and
business relationship with Cendant they are closely related. The Group works with Cendant to provide
a seamless service to customers of the Avis and Budget networks in Europe, Africa, the Middle East,
Asia and the Americas and Australia. The Group relies on Cendant to operate its own business in a
manner that both upholds the value of the global brand and allows the Group to provide a similar
service in the locations in which it operates. The Group has joint marketing initiatives with Cendant
and shares market and customer information. It also provides joint services and cross-refers
customers through a formalised agreement. Although both the master licensing agreement and the
Wizard systems agreement are long-term agreements, and are not scheduled for renewal until 2036,
the Group still relies on its business relationship and its informal working relationship with Cendant.
Although management believes that the relationship with Cendant is good, there can be no
assurance that it will remain so. Any adverse changes to the terms of the agreements or any
deterioration in the Group’s relationship with Cendant or its business is likely to have an adverse
effect on the Group’s financial condition and results of its operations.

The Group relies on centralised information systems, including the Wizard system under a long-term
computer services agreement with Cendant, to conduct its day-to-day operations, and the failure or
unavailability of such systems could have a material adverse effect on the Group’s operations.
     Operational risks are present in all of the Group’s businesses, including the risk of direct or
indirect loss resulting from inadequate or failed internal and external processes, systems and human
error or from external events. The Group’s business is highly dependent on processing a large
number of reservations and customer transactions across numerous and diverse countries, and is
subject to a number of different legal regimes. In addition, the Group manages offshore operations
that include certain transaction processing, a centralised call centre and IT functions. The Group’s
systems and processes are designed to ensure that the operational risks associated with its activities
are appropriately controlled, but any weakness in the systems, processes or business continuity
arrangements could have a negative impact on its results of operations during the affected period.
     The Group uses the Wizard system under a long-term computer services agreement with
Cendant. This agreement is subject to a five-year notice period. Wizard has been operational since
1972, and has been continuously enhanced and expanded since that time. It is a fully integrated
reservation, rental and management information system that is also used by Cendant. Wizard’s basic
functions, together with the Group’s own inter-linked systems, perform and process the full range of
vehicle rental activities, ranging from reservation and rental to billing and accounting, giving
customers the ability to make reservations 24-hours a day across the Avis worldwide network. All of
the Avis computer-based rental transactions are processed through the Wizard system. As the Group
is obliged to contribute to the cost of upgrading and enhancing Wizard, any unanticipated costs
might adversely affect the Group’s results. In addition, should Wizard need to be replaced, process
and execution issues associated with this replacement may present a substantial risk to the Group’s
operations. Although the Group is confident that the five-year notice period would give the Group
adequate time to find a replacement for the Wizard reservation system, the cost of such a system
would almost certainly adversely affect the Group’s results and the process and execution issues
associated with this replacement may present a substantial risk to the Group’s operations.

The Group faces risks related to liabilities and insurance.
     The Group is legally obliged to provide third party motor liability insurance as a basic minimum
to all customers. This insurance provides financial protection against claims (both bodily injury and
property damage) from third parties where the Group’s customers are at fault. In addition, sales of
damage waiver insurance and personal accident insurance are important sources of revenues for the
vehicle rental industry. These waivers relieve customers of their financial obligation to the rental
company resulting from damage or theft of vehicles whilst on rent. Personal accident insurance
provides ‘‘defined benefits’’ to the driver and passengers including theft of personal belongings. The
Group also covers various risks arising in the normal course of its business, including damage to its
property and general liability. All insurance policies are arranged with insurance companies of strong
credit quality. Significant risks would exist to the stability of the Group’s business if access to primary


                                                    20
insurance and/or reinsurance was constrained, denied or available only at increased costs that could
not be passed on in increased prices.
    Adoption of legislation affecting or limiting the sale of waiver and supplemental cover products
could result in a reduction in or loss of these sources of revenue. If such legislation were
implemented, it would be likely to have an adverse impact on Group profitability.

Changes in governmental laws or regulations could adversely affect the Group’s business or subject
it to liability for fines or damages.
     The Group is regulated by environmental laws and regulations in connection with its operations,
including, among other things, with respect to the ownership and operation of tanks for the storage
of petroleum products, such as gasoline, diesel fuel and motor and waste oils and the safe disposal of
chemicals used in the cleaning of vehicles. A significant percentage of the fuel tanks are located
underground. The Group has established a compliance programme for its tanks to ensure that: (i) the
tanks are properly registered; and (ii) the tanks have been either upgraded or replaced to meet
appropriate leak detection and spill, overfill and corrosion protection requirements. However, there
can be no assurance that these tank systems will at all times remain free from leaks or that the use
of these tanks will not result in spills.
     The Group has incurred, and will continue to incur, expenses to comply with environmental laws
and regulations, including, among others, expenses for the clean-up of contamination at its owned
and leased properties. There can be no assurance that compliance with existing or future
environmental legislation and regulations will not require further material expenditure by the Group
or otherwise have an adverse effect on the Group’s operations.

The Group’s ability to operate at airports and train stations is dependent on the granting and
renewal of concessionary arrangements by airport and rail authorities.
     The Group generates material revenues from rental locations at airport and train station
locations pursuant to concessionary arrangements that generally have terms from three to five years.
A certain proportion of these concession arrangements will be due for renewal each year, and there
can be no assurance that they will be renewed, or that that they will be renewed on comparable
terms. In addition, most concession agreements impose certain restrictive covenants on the Group
that may be difficult to comply with in the future. Non compliance with these covenants allows
airport and rail authorities to terminate the arrangements. An inability to continue operations at
certain major airports and train stations currently within the Group’s network could have a material
adverse effect on the Group’s results of operations and financial condition.
    A number of the Group’s airport concession agreements, as well as certain of the Group’s other
agreements with third parties, require the consent of the airports’ operators or other parties in
connection with any change in ownership of the Group. If the Group fails to obtain any required
consent, the applicable third parties could seek to terminate their agreement with the Group. Such
terminations could have a material adverse effect on the Group’s results of operations and financial
condition.

The Group could be harmed by a severe decline in the results of operations or financial condition of
vehicle manufacturers supplying the Group’s fleet, particularly if the vehicle manufacturers or other
counterparties to re-purchase programmes (such as dealers) are unable to re-purchase buy-back
vehicles.
     A severe or persistent decline in the results of operations or financial condition of one of the
manufacturers supplying vehicles for the Group’s fleet could reduce the vehicles’ residual values,
particularly if the manufacturer unexpectedly were to announce the potential elimination of its
models or brands or cease manufacturing them altogether. With respect to ‘‘risk vehicles,’’ any such
reduction in residual values could cause the Group to sustain a loss on the ultimate sale of those
vehicles or require the Group to book a higher holding cost for those vehicles. A decline in the
economic and business prospects of manufacturers, including but not limited to General Motors, or
other re-purchase programme counterparties, including any economic distress affecting the suppliers
of vehicle components to manufacturers, could also cause them to raise the prices the Group pays
for vehicles or to reduce the Group’s supply.



                                                 21
     In addition, if a decline in the results of operations or financial condition of a vehicle
manufacturer (or other re-purchase programme counterparty, such as a dealer) were so severe as to
cause it to default on an obligation to re-purchase vehicles covered by buy-back guarantees, the
Group would have to find an alternative method of disposition of those vehicles, which could
significantly increase the Group’s expenses and decrease the proceeds from such disposals. Any such
default might also leave the Group with a substantial unpaid claim against the manufacturer or
dealer with respect to buy-back vehicles that have been sold and returned but not yet paid for.

Risks relating to the funding of the Group
Fluctuations in interest rates could adversely affect the Group’s financial results.
     The Group has an exposure to movements in interest rates on that element of its debt financed
on a floating rate basis, principally in euro and sterling. To manage this risk, the business is financed
through a combination of fixed and floating rate facilities and various derivatives are entered into to
ensure that the proportion of fixed rate debt to net debt (defined for this purpose to include the net
book value of fleet under operating leases) at the next year-end date will be maintained in the range
of 45-65%, with lower limits for the following two years. Therefore, whilst the Group attempts to
manage the risk associated with interest rate movements through hedging and funding activity,
fluctuations in interest rates could still adversely affect the Group’s financial results.

Fluctuations in exchange rates could adversely affect the Group’s financial condition.
     The majority of the Group’s business is transacted in euro, sterling and US dollars. The principal
commercial currency of the Group is the euro, although dividends, when and if resumed, would be
payable in sterling. The Group seeks to manage material currency exposure wherever it is possible
and cost-effective to do so. In each country of operation, the Group generates revenues and incurs
costs primarily in local currency, providing a natural currency hedge. In addition, intra-Group trading
transactions are netted and settled centrally. Any remaining material foreign currency transaction
exposures are hedged as appropriate. With regard to translation exposures the Group’s policy is to
match the average assets to the equivalent average liabilities in each major currency and thus seek to
lower any impact on the Group. To the extent that this does not naturally occur, both foreign
currency borrowings and forward exchange contracts are used. Long-term US dollar borrowings,
undertaken to benefit from the liquidity of the US dollar denominated capital markets, are swapped
into euro. Thus whilst the Group attempts to manage the risk associated with foreign currency
movements through hedging and funding activity, fluctuations in exchange rates could still adversely
affect the Group’s financial results.

An increase in the Group’s funding needs or changes to obligations in respect of its pension
schemes could have an adverse impact on its business.
    The Group operates funded defined benefit schemes for qualifying employees in the United
Kingdom, France, Spain and Austria. In addition, the Group operates unfunded defined benefit
pension schemes for employees in Germany and Greece, and an unfunded defined benefit statutory
termination scheme for employees in Italy. The principal schemes are in the United Kingdom and
Germany.
    The Group’s IAS 19 net deficit as at 31 December 2005 totalled A129.3 million, of which
A82.1 million related to funded schemes and A47.2 million related to unfunded schemes.
     The valuation of these schemes relies on a number of assumptions concerning the future
performance of the scheme, the profile of employees and future discount and inflation rates. Should
the valuation assumptions not be fulfilled, such as, long-term investment returns or mortality rates
being lower than the rate assumed, or if interest rates reduce further, leading to an increased scheme
deficit, the cash flow of the Group may be adversely affected as there may be a requirement to
increase future contributions to eliminate any increase in the under-funding of the schemes. Since
July 2003, no new employees have participated in the non-contributory Avis Final Salary Plan (a
section within the Avis UK Pension Plan). Instead, new employees have joined a new defined benefit
section within the Avis UK Pension Plan, called the Retirement Capital Plan, to which they have to
make contributions.




                                                   22
     Furthermore, the Group is proposing to introduce further changes and is in a consultation
process to close the Final Salary Plan for future accruals from 1 January 2007 and invite existing Final
Salary Plan members to join the Retirement Capital Plan of the Avis UK Pension Plan. The Avis
Pension Plan in Germany is to be closed to new entrants and the benefits accruing for future service
of existing members have been significantly reduced.

Without adequate access to funding, the Group may not have sufficient liquidity to fund the Group’s
fleet growth or to operate the Group’s business.
     The Group intends to grow its fleet in line with the demand growth experienced in its major
markets and to ensure that demand resulting from the margin improvement strategy is met. The
Board continues to believe that it is appropriate to fund a substantial proportion of the growth in
fleet assets with debt, and, as such, depends on access to the debt markets and other forms of debt
financing to fund its fleet growth requirement. If the Group is unable to access such debt facilities on
commercially acceptable terms, its current business, future prospects, financial condition and results
of operations may be adversely affected as it may not be possible to finance any further growth in
the fleet.

Terms of credit between the Group and its principal suppliers of fleet vary widely and changes to
these terms (i.e. the shortening of credit terms) may result in an increased debt funding
requirement for the Group.
      Terms of credit between the Group and its principal suppliers of fleet vary widely, depending
both on the market in which the vehicles are to be used and on the supplier. Terms of payment on
receipt of fleet are usually mirrored on the disposal of the same vehicle, where re-purchase
agreements are in place. Over previous years, certain markets within the Group and their suppliers
agreed improved credit terms that allowed the Group to benefit from working capital movements in
its favour and the consequent reduction in the requirement for debt. Such manufacturer credit terms
reverted back to more normalised levels in the year ended 31 December 2005. Any future shortening
of credit terms may result in an adverse working capital movement which would result in an
increased debt funding requirement for the Group.
     At 31 December 2005, the Group held 8.9% of its fleet under operating leases, primarily from
manufacturers. As the manufacturer retains title to the vehicles and the associated risks and benefits
of ownership, neither the value of the vehicles nor the associated liabilities are recorded in the
Group’s balance sheet. The manufacturers are not committed to provide vehicles to the Group on an
operating lease basis and are entitled to require that new and replacement fleet be acquired by the
Group. If manufacturers ceased to provide fleet to the Group on an operating lease basis or reduced
the number of vehicles they were willing to make available to the Group under operating leases, the
Group may need to fund the acquisition of that fleet with debt finance. There can be no assurance
that such debt finance will be available to the Group or the terms on which such finance would be
available. Any such debt finance would increase the leverage of the Group.

Risks relating to the Notes
The Group’s leverage and debt-service obligations could have important consequences.
      In order to finance fleet and capital investment, the Group makes use of the bond and banking
markets. As at 31 December 2005, the Group had total debt (including net derivatives, but excluding
deferred consideration) of A1,059.4 million. The seasonal nature of the business necessitates higher
fleet levels in the summer months and hence higher debt requirements. Consequently, the Group
ensures that it has a core level of long-term funding in place, with maturities spread over a wide
range of dates, supplemented by shorter-term facilities including operating and finance leases to
cover higher seasonal requirements within the year. The Group may need to borrow additional
amounts in the future to meet its anticipated long-term financing needs. The level of the Group’s
indebtedness and/or the restrictive covenants and security arrangements contained in its senior debt
facility agreements could: limit the Group’s flexibility in managing its businesses or its reaction to
changes in the industry in which it operates; place the Group at a competitive disadvantage
compared to competitors who may have less debt; increase the Group’s vulnerability to and ability to
withstand general adverse economic and industry conditions; and limit the Group’s ability to access




                                                  23
future financing both on a secured and unsecured basis or otherwise on terms acceptable to the
Group.
     The Issuer’s ability to service the Notes and the Group’s ability to service its other indebtedness
will depend upon future operating performance.
     The Group’s leverage and debt-service obligations could also have important consequences,
including the following:
    • the Group’s ability to obtain additional financing for future working capital needs or for other
      purposes may be limited; and
    • a substantial portion of the Group’s cash flow from operations will be dedicated to the
      payment of principal and interest on its indebtedness, thereby reducing funds available for
      other purposes.
     There can be no assurance that cash flow from operations in conjunction with borrowings from
existing and possible future credit facilities will be sufficient to meet future debt-service
requirements.
    If the Group’s cash flow were not sufficient to meet its debt service and principal payment
requirements, the Group could be required to refinance its obligations or to dispose of assets in order
to meet such requirements. There can be no assurance that the Group would be able to effect any
such transactions or do so on favourable terms.

The Notes are structurally subordinated to the debt and liabilities of Avis Europe plc’s subsidiaries
and enforcement of guarantees by Avis Europe Holdings Limited and Avis Europe plc may be
limited.
      Generally, claims of creditors of a subsidiary, including trade creditors, will have priority with
respect to the assets and earnings of the subsidiary over the claims of creditors of its parent
company. In the event of bankruptcy or insolvency of the Issuer, holders of the Notes may receive
less, rateably, than holders of debt of subsidiaries and other liabilities. However, holders of the Notes
will have direct claims against Avis Europe plc and Avis Europe Holdings Limited under the
guarantees issued by them on a senior unsecured basis.
     Accordingly, the Notes will effectively be subordinated to all creditors, including trade creditors,
of Avis Europe plc’s subsidiaries (other than Avis Europe Holdings Limited and the Issuer). Any right
of Avis Europe plc’s or Avis Europe Holdings Limited to receive assets of any subsidiary upon the
insolvency or liquidation of the subsidiary (and the consequent rights of the holders of the Notes to
participate in those assets) will be effectively subordinated to the claims of the subsidiary’s creditors,
except to the extent Avis Europe plc’s or Avis Europe Holdings Limited’s claims do not result from
their respective shareholdings, in which case their claims would still be subordinated with respect to
any assets of the subsidiary pledged to secure other indebtedness, and any indebtedness of the
subsidiary senior to that held by Avis Europe plc or Avis Europe Holdings Limited. In addition,
holders of secured indebtedness of Avis Europe plc or Avis Europe Holdings Limited would have a
claim on the assets securing such indebtedness that is prior to the holders of the Notes and would
have a claim that is pari passu with the holders of the Notes to the extent the security did not satisfy
such indebtedness.
    At 31 December 2005, the Group had total debt (including net derivatives, but excluding
deferred consideration) on its consolidated balance sheet of A1,059.4 million. Of this indebtedness,
approximately A292.5 million were secured and/or would have been debt of the Group’s
non-Guarantor entities and structurally senior to the Notes.

The Issuer and the Guarantors have no material assets or sources of revenue except for claims
against other Group companies resulting from intercompany loans and, in the case of the Issuer,
assets or liabilities under certain hedging arrangements. The Issuer will rely on the cash flows and
interest payments received from Avis Europe plc’s subsidiaries to service and repay the Notes.
     The Issuer is a wholly-owned finance subsidiary of Avis Europe plc and will on-lend the proceeds
from the sale of the Notes to subsidiaries of Avis Europe plc under intercompany loan agreements.
The Issuer intends to service and repay the Notes out of the payments it receives under these
intercompany loan agreements. The Issuer has no other material assets or sources of revenue except


                                                   24
for its claims under this and other outstanding intercompany loans and assets or liabilities under
certain hedging arrangements. Accordingly the Issuer’s ability to service and repay the Notes depends
on the ability of Avis Europe plc and the other debtors under intercompany loans to service such
indebtedness. Therefore, in meeting its payment obligations under the Notes, the Issuer is wholly
dependent on the profitability and cash flow of Avis Europe plc and such other debtors.
    Avis Europe Holdings Limited, a Guarantor of the Notes, functions as a holding company for the
Group and has no material amount of independent operations. Avis Europe plc is a holding company
and all of its operations are conducted through its subsidiaries. Therefore, Avis Europe plc depends
on the dividends or other payments from its subsidiaries to meet its obligations.

Insolvency and administrative laws could adversely affect the ability of holders of the Notes to
enforce their rights under the Notes.
     Under English law, if the Issuer and the Guarantors were to go into liquidation, or administration
or other insolvency proceeding, the maximum that holders of the Notes will be able to recover is the
principal amount of the Notes and any interest on the Notes accruing up to the date of liquidation,
although this would depend on the extent to which the Issuer or Guarantor had funds available to
pay such amounts, having already paid any prior-ranking creditors. Holders of the Notes would not
be able to recover any interest payable under the Notes after the Issuer and the Guarantors went
into liquidation or administration, unless there were to be a surplus remaining after the payment of
all of the Issuer’s and the Guarantors’ other debt.
    Upon liquidation, the order of priorities is such that debts due to any holders of fixed charges
are paid first to the extent they are secured by such charges. Following payment of such debts,
preferential debts would be paid. Such debts may include:
    • amounts owed in respect of occupational pension obligations; and
    • certain amounts owed to employees.
     Thereafter, any debts owing to any holder of a floating charge would be paid to the extent they
are secured by that charge. A certain proportion of the assets covered by any floating charge would
be ‘‘ring-fenced’’ and made available pro rata to unsecured creditors (including holders of the Notes).
The exact amount will depend on the total value of the Issuer or Guarantor’s property—currently the
total ring-fenced amount cannot exceed £600,000 but this may be increased by subsequent
legislation. Unsecured debts, including the Notes and the related guarantees, which are not
preferential debts, would be paid after those prior liabilities.
     Under English insolvency law, a liquidator or administrator of a company has certain powers to
apply to court to challenge transaction entered into by a company if the company is insolvent (as
defined in the UK Insolvency Act 1986) at the time of the transaction or if the company becomes
insolvent as a result of the transaction and the transaction takes place up to two years prior to the
administration or liquidation. A transaction might be challenged in this way if it involved a gift by
the company or the company received significantly less value than it gave in return. A court will not
intervene, however, if it is satisfied that the company entered into the transaction in good faith for
the purposes of carrying on its business and if, at the time it did so, there were reasonable grounds
for believing the transaction would benefit the company. Avis Europe plc cannot be sure that, in the
event of the Issuer or any Guarantor becoming insolvent within two years of the issuance of the
Notes, the issuance of the Notes and the provision of the related guarantees will not be challenged
by a liquidator or administrator or that a court would uphold the transaction as valid.
     It should be noted that pursuant to the EU Regulation on Insolvency Proceedings, the insolvency
regime applicable for a company whose centre of main interests is in an EU Member State will
depend on where that centre of main interests lies. There is a presumption that the centre of main
interests will be where the company’s registered office is located, but this presumption can be
rebutted by evidence to the contrary. In addition, the centre of main interests of a company may
change over time. There is therefore a risk that if, on the facts at the time the relevant company is
insolvent, the centre of main interests of the Issuer or any Guarantor is not in England but in another
Member State, then the Issuer or Guarantor (as appropriate) will be subject to insolvency
proceedings of a universal scope in, and the insolvency laws of, that other Member State.




                                                  25
You may face foreign exchange risks by investing in the Notes.
     The Notes are denominated and payable in euro. If you measure your investment returns by
reference to another currency, an investment in the Notes entails foreign exchange-related risks due
to, among other factors, possible significant changes in the value of the euro relative to your
reference currency. Such currency fluctuations could result from economic, political and other factors
over which the Group has no control. Depreciation of the euro against your reference currency could
cause a decrease in your effective yield from the Notes below their stated coupon rates and could
result in a loss to you when the return on the Notes is translated into your reference currency. There
may also be tax consequences for you as a result of any foreign exchange gains or losses resulting
from investment in the Notes.

The Group is subject to various restrictive covenants that limit the discretion of its management in
operating its business and could prevent the Group from engaging in some beneficial activities.
     Both the Indenture and the Senior Revolving Credit Facility contain, and certain of the Group’s
future financing agreements are expected to contain, various restrictive covenants that limit
management’s discretion in operating its business. In particular, these agreements will limit the
Group’s ability to, among other things:
    • incur additional debt;
    • make restricted payments (including paying dividends on capital stock or redeeming or
      repurchasing capital stock or subordinated obligations);
    • create liens on assets;
    • sell or otherwise dispose of the Group’s assets;
    • engage in transactions with affiliates; or
    • merge, consolidate or transfer substantially all of the Group’s assets.
    These restrictions could limit the Group’s ability to finance its future operations or capital needs,
make acquisitions that may be in the Group’s interest or make payments of principal or interest on
the Notes and the Senior Revolving Credit Facility.
     If the Group fails to comply with the restrictions of the indenture governing the Notes and the
Senior Revolving Credit Facility or any other financing agreements, a default may allow the creditors,
if the agreements so provide, to accelerate the related debt as well as any other debt to which a
cross-acceleration or cross-default provision applies. In addition, the lenders may be able to
terminate any commitments they had made to supply the Group with further funds. The Group is not
certain whether it would have, or would be able to obtain, sufficient funds to make these accelerated
payments.

Increases in market interest rates will increase the debt service obligations of the Issuer and its
subsidiaries.
     A portion of the Issuer’s debt, including the Notes and indebtedness incurred under the Senior
Revolving Credit Facility, bears interest at variable rates. An increase in market interest rates will
therefore reduce funds available to repay the Notes and other debt and to finance operations and
future business opportunities. As a result, increased market interest rates will intensify the
consequences of the Issuer’s capital structure. As of 31 December 2005, the Group had
A381.0 million of outstanding gross indebtedness (including net derivatives, but excluding deferred
consideration) bearing interest at variable rates.

Transfers of the Notes will be restricted.
     The Notes have not been and will not be registered under the US Securities Act or any state or
foreign securities laws nor has the Issuer entered into any registration rights agreement requiring any
such registration. Consequently, the Notes may not be offered or sold in the United States or to a US
person, as defined in Regulation S of the US Securities Act, except pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the US Securities Act and applicable
state securities laws. See ‘‘Notice to Investors’’.



                                                   26
An active trading market may not develop for the Notes.
     The Notes will be new securities and there currently is no market for them. The Initial
Purchasers have informed the Issuer that they currently intend to make a market in the Notes.
However, they are not obligated to do so and they may discontinue market-making at any time. As a
result, no assurance can be given that a market will develop.
     Although an application has been made to list the Notes on the Irish Stock Exchange for trading
on the Alternative Securities Market thereof, no assurance can be given that the Notes will become
or remain listed. Although no assurance is made as to the liquidity of the Notes as a result of the
admission to trading on the Alternative Securities Market of the Irish Stock Exchange, failure to be
approved for listing or the delisting of the Notes from the Irish Stock Exchange may have a material
effect on a holder’s ability to resell Notes in the secondary market.

The Notes will initially be held in book-entry form.
     So long as the Note Depositary or its nominee is the holder of the Notes in global form, owners
of CDIs and interests in the Global Notes and CDIs (‘‘Book-Entry Interests’’) will not be considered
owners or holders of Notes. Instead, the Note Depositary, or its nominee, will be the sole holder of
the Notes. Unless and until definitive Notes are issued in exchange for Notes in global form,
participants and indirect participants in Euroclear and Clearstream Banking will not be entitled to
receive physical delivery of Notes or CDIs or have Notes or CDIs registered in their names and will
not be considered Holders of such Notes under the Indenture or holders of such CDIs under the Note
Depositary Agreement. Accordingly, each person owning a Book-Entry Interest must rely on the
procedures of the Note Depositary and Euroclear or Clearstream Banking, and each indirect
participant must rely on the procedures of the participants or indirect participants through which it
holds its Book-Entry Interests, to exercise the rights of a Holder under the Indenture.
     Payments of principal, interest and other amounts owing on or in respect of the Notes in global
form will be made to the Principal Paying Agent, which in turn will make such payments to the Note
Depositary as the Holder of the Notes in global form. Upon receipt of such amounts the Note
Depositary will make such payments to the common depositary, which will in turn distribute
payments to Euroclear and Clearstream Banking. Thereafter, payments will be made by Euroclear and
Clearstream Banking to participants in these systems and then by such participants to indirect
participants. After payment to the common depositary, none of the Issuer or the Guarantors or any
of their subsidiaries, the Trustee, any paying agent or the Note Depositary will have any responsibility
or liability for any aspect of the records relating to or payments of interest, principal or other
amounts to Euroclear and/or Clearstream Banking or to owners of Book-Entry Interests.
     Unlike holders of the Notes themselves, owners of Book-Entry Interests will not have the direct
right to act upon any solicitations for consents from the Issuer or the Guarantors or requests for
waivers or other actions from holders of the Notes. Instead, any owners of Book-Entry Interests will
be permitted to act only to the extent they have received appropriate proxies to do so from
Euroclear and/or Clearstream Banking or, if applicable, from a participant. The Issuer and the
Guarantors cannot assure you that procedures implemented for the granting of such proxies will be
sufficient to enable investors to vote on any requested action on a timely basis.




                                                  27
                                         USE OF PROCEEDS
     The net proceeds from this offering of the Notes, after deducting the estimated expenses of the
offering and the applicable underwriting discounts and commissions, will be used to temporarily
repay indebtedness under the Senior Revolving Credit Facility and the commercial paper programme
and, in due course, to refinance obligations under the Issuer’s A120 million 6.4% Guaranteed Notes
due 2007, the Issuer’s A50 million Euro Notes due 2006 and 2007 and the Issuer’s US$102 million
8.17% Series A Loan Notes due 2007.




                                                 28
                                                                    CAPITALISATION
     The following table sets out the actual cash and short-term deposits and capitalisation of the
Group as at 31 December 2005, and as adjusted to give effect to the issuance of the Notes and the
application of the proceeds therefrom, as if these transactions had been completed by that date. This
table does not reflect the Group’s actual capitalisation as of the date of the offering memorandum. In
particular, it should be noted that net debt normally increases between January and May each year as
the Group builds up its fleet, and peaks in the period of June through September, while net debt
decreases between October and December of each year as the Group de-fleets. This seasonality of
debt is largely reflected in the variations between the Group’s net debt balance at the start of each
year and at each half year. For additional information, please see ‘‘Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Seasonality’’.
     This table should be read in conjunction with ‘‘Management’s Discussion and Analysis of
Financial Condition and Results of Operations’’ and the audited financial statements of the Group
including the Notes thereto which are included elsewhere in this offering memorandum.

                                                                                                                                                                                                     As at
                                                                                                                                                                                              31 December 2005
                                                                                                                                                                                             Actual      Pro forma
                                                                                                                                                                                             (in millions of euro)
Cash and short-term deposits(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                    113.8       203.9
Subsidiary debt:
  Bank facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                           14.4          —
  Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                             278.1       278.1
  Total subsidiary debt . . . . . . . . . . .           .................................                                                                                                      292.5       278.1
Pari passu Issuer debt:
  Bank facilities . . . . . . . . . . . . . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       79.5          —
  Commercial paper . . . . . . . . . . . . .            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       66.0          —
  Loan Notes . . . . . . . . . . . . . . . . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      565.8       565.8
  Net derivative financial instruments                  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       55.6        55.6
  Notes offered hereby(2) . . . . . . . . .             .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .         —        250.0
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                       1,059.4     1,149.5
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                  86.6        86.6
Total capitalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                           1,146.0     1,236.1

Other than as disclosed herein there has been no significant change in the Group’s capitalisation
since 31 December 2005.

(1) Actual column includes cash at bank and in hand of A79.0 million, short-term deposits of A19.8 million and current asset
    investments of A15.0 million.

     Pro forma cash and short-term deposits excludes the impact of debt issuance costs and is calculated as follows:

                                                                                                                                                                        As at 31 December 2005
                                                                                                                                                                          (in millions of euro)
          Cash and short-term deposits, as reported . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                            113.8
          Add: proceeds from the Notes offered hereby . . . . . . . . . . . . . . . . . . . . . . .                                                                                250.0
          Less: cash used to retire debt outstanding at 31 December 2005 . . . . . . . . . . .                                                                                    (159.9)
          Pro forma cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                     203.9

(2) Reflects the gross proceeds of the Notes offered hereby.




                                                                                            29
              SELECTED HISTORICAL AND PRO FORMA FINANCIAL AND OTHER DATA
     The following summary of selected historical IFRS financial data as of and for the years ended
31 December 2005 and 2004 have been derived from the consolidated financial information and notes
thereto which have been prepared in accordance with IFRS and are included elsewhere in this offering
memorandum. Also included below is the historical UK GAAP financial data as at and for each of the
years ended 31 December 2004, 2003 and 2002 which have been derived from the consolidated
financial statements for each of the years then ended. Statutory financial statements for the year
ended 31 December 2004, prepared in accordance with UK GAAP, are included elsewhere in this
offering memorandum.
    It should be noted that financial information for the years ended 31 December 2005 and 2004
under IFRS and the financial information under UK GAAP are not directly comparable.
     The tables set forth below for the years ended 31 December 2005 and 2004 include columns for
‘‘underlying’’ financial information. In order to provide what management believes is useful information
on ‘‘underlying’’ trends, the Group segregates ‘‘underlying’’ costs from exceptional items, certain
re-measurement items and economic hedges. Although this ‘‘underlying’’ financial information appears
on the face of the Group’s Consolidated Financial Information 2005 included elsewhere in this offering
memorandum, the term ‘‘underlying’’ is not defined under IFRS or UK GAAP, and therefore may not be
comparable with similarly titled profit measurements reported by other companies.
      Pro forma net debt and cash interest expenses and related ratios have been prepared for
illustrative purposes only to give effect to this offering (and use of proceeds) as if it had occurred at
31 December 2005 for pro forma net debt purposes, and from 1 January 2005 for pro forma net cash
interest expense purposes. The pro forma financial information is based on assumptions and should
not be considered indicative of actual results that would have been achieved had the transaction been
consummated on the date indicated and do not purport to indicate balance sheet data or results of
operations as of any future date or for any future period. The pro forma financial information is also
not intended to be an indicator of the Group’s financial condition or results of operations in the future.
The pro forma financial information should be reviewed together with the Consolidated Financial
Statements.
    Also included below are certain unaudited operational data which have been derived from the
Group’s operating systems and not from its audited financial statements for the periods described
above.
    You should regard the selected financial and business data below only as an introduction and
should base your investment decision on a review of the entire offering memorandum.




                                                   30
 Selected consolidated historical and pro forma financial information and operating data prepared
                           in accordance with IFRS or based on IFRS data
The following tables set out selected consolidated financial information and unaudited operating data
for the Group as at and for the years ended 31 December 2005 and 2004 prepared in accordance
with IFRS or based on IFRS data:

                                                                                                                                                Year ended 31 December
                                                                                                                    2005                                                                                       2004
                                                                                                                                                             IFRS
                                                                                                                                                    (in millions of euro)
                                                                                                                     Amounts                                                                                    Amounts
                                                                                                                     excluded                                                                                   excluded
                                                                                                                       from                                                                                       from
                                                                            Underlying(1)                           underlying                              Total                   Underlying(1)              underlying            Total

Summary consolidated income
statement data
Revenue . . . . . . . . . . . . . . . . .       .   .   .   .   .   .           1,276.5                                        — 1,276.5                                                1,252.8                       — 1,252.8
Cost of sales . . . . . . . . . . . . . .       .   .   .   .   .   .            (709.3)                                       —   (709.3)                                               (675.0)                      —   (675.0)
Gross profit . . . . . . . . . . . . . . .      .   .   .   .   .   .             567.2                                        —    567.2                                                 577.8                       —    577.8
Administrative expenses . . . . .               .   .   .   .   .   .            (467.3)                                    (18.5) (485.8)                                               (463.6)                   (74.4) (538.0)
Operating profit . . . . . . . . . . . . . . . .                    .                    99.9                           (18.5)                               81.4                               114.2              (74.4)             39.8
Finance revenue . . . . . . . . . . . . . . . .                     .                     1.9                              —                                  1.9                                 3.7                 —                3.7
Finance costs . . . . . . . . . . . . . . . . . . .                 .                   (64.0)                            0.9                               (63.1)                              (65.7)                —              (65.7)
Foreign exchange on net debt . . . . . .                            .                      —                             (0.1)                               (0.1)                                 —                 2.1               2.1
Share of profit/(loss) of joint venture
  and associate . . . . . . . . . . . . . . . . .                   .                           —                                   —                                   —                           (0.1)              —               (0.1)
Profit/(loss) before tax . . . . . . . . . . . .                                         37.8                           (17.7)                                  20.1                             52.1              (72.3)            (20.2)
Taxation . . . . . . . . . . . . . . . . . . . . . . .                                  (10.2)                            2.2                                   (8.0)                           (13.0)              16.1               3.1
Profit/(loss) for the year . . . . . . . . . .                                              27.6                        (15.5)                                  12.1                                39.1           (56.2)            (17.1)

(1) Underlying excludes exceptional items, certain re-measurement items and economic hedges.

    Underlying IFRS profit and loss for the year is reconciled to total profit and loss for the year as follows:
                                                                                                                                                                                                                 Year ended
                                                                                                                                                                                                                31 December
                                                                                                                                                                                                            2005             2004
                                                                                                                                                                                                                      IFRS
                                                                                                                                                                                                             (in millions of euro)

    Underlying profit for the year . . . . . . .            . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                           27.6              39.1
    Net exceptional charges:
    —Restructuring . . . . . . . . . . . . . . . .          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        (8.4)           (9.6)
    —Project termination costs . . . . . . . .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        (3.6)          (43.4)
    —Centrus receivables provision . . . . . .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .         3.2            16.7
    —Capital restructuring and rights issue .               .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        (4.4)             —
    —Goodwill impairment . . . . . . . . . . .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .          —            (38.1)

    Net exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                     (13.2)          (74.4)
    Certain re-measurement items and economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                     (4.5)            2.1
    Taxation on reconciling items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                         2.2            16.1
    Total profit/(loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                      12.1            (17.1)

     For more information, see ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Critical Accounting Policies and Estimates’’ and the Consolidated Financial Information 2005 included elsewhere in this offering
memorandum.




                                                                                                        31
                                                                                                                                                                                                        As at 31 December
                                                                                                                                                                                                       2005             2004
                                                                                                                                                                                                                IFRS
                                                                                                                                                                                                       (in millions of euro)

Summary consolidated balance sheet data
Non-current assets(1) . . . . . . . . . . . . . . . . .                                           .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     645.2          584.2
  of which Rental fleet(2) . . . . . . . . . . . . . .                                            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     475.1          428.6
Current assets . . . . . . . . . . . . . . . . . . . . . .                                        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   1,459.3        1,453.1
  of which Rental fleet(3) . . . . . . . . . . . . . .                                            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     882.8          874.3
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                        2,104.5       2,037.3
Non-current liabilities .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     933.0          876.6
  of which Borrowings             .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     611.6          664.7
Current liabilities . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   1,084.9        1,218.1
  of which Borrowings             .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     114.1          144.7
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                       2,017.9       2,094.7
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                           86.6         (57.4)
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                              2,104.5       2,037.3

(1) Includes non-current assets held for sale.

(2) Represents portion of fleet which is risk fleet and fleet held for sale. These are presented in the Group’s balance sheet as
    ‘‘vehicles’’ within ‘‘Property, plant and equipment’’ and ‘‘Non-current assets held for sale’’.

(3) Represents portion of fleet which is held under manufacturer re-purchase contracts. These are classified in the Group’s
    balance sheet as ‘‘Re-purchase agreement receivables’’ and ‘‘Prepaid vehicle operating lease charges’’.

                                                                                                                                                                                                            Year ended
                                                                                                                                                                                                           31 December
                                                                                                                                                                                                       2005             2004
                                                                                                                                                                                                                IFRS
                                                                                                                                                                                                       (in millions of euro)
Summary consolidated cash flow data
Operating cash before changes in rental fleet and working capital . . . .                                                                                                             ....             415.6          434.3
  Changes in inventories, and receivables . . . . . . . . . . . . . . . . . . . . . . .                                                                                               ....              44.4           35.9
  Changes in liabilities (excluding Borrowings) and in provisions and
    retirement benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                            ....              (2.8)          (11.5)
  Other net changes from operating activities . . . . . . . . . . . . . . . . . . .                                                                                                   ....              (3.6)          (34.6)
Purchase of vehicles under manufacturer re-purchase contracts, net of
  disposals(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                ....            (278.9)          (64.2)
Net cash generated from operating activities . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                           174.7          359.9
Purchase of vehicles, net of disposal of vehicles(2) . . . . . . . . . . . . . . . . . . . . .                                                                                                        (213.1)        (134.5)
Other net changes from investing activities . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                          126.8           47.2
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                    (86.3)         (87.3)
Net cash used in financing activities including exchange rate changes . . . . .                                                                                                                        (27.5)        (290.1)
Net increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . .                                                                                                                  60.9          (17.5)

(1) Represents portion of fleet which is held under manufacturer re-purchase contracts.

(2) Represents portion of fleet which is risk fleet and fleet held for sale.




                                                                                                                  32
                                                                                                                                                                                                                              Year ended
                                                                                                                                                                                                                             31 December
                                                                                                                                                                                                                         2005             2004
                                                                                                                                                                                                                                  IFRS
                                                                                                                                                                                                                         (in millions of euro,
                                                                                                                                                                                                                          other than ratios)

Other data (unaudited)
Net fleet capital expenditures(1) . . . . . . . . . . . . . . . . .                                      .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                   504.0              197.2
Net non-fleet capital expenditures(2) . . . . . . . . . . . . . .                                        .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                    17.6               46.9
EBITDA before non cash net operating lease charge(3)                                                     .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                   425.8              366.8
Underlying EBITDA(4) . . . . . . . . . . . . . . . . . . . . . . . . .                                   .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                   433.7              437.3
Net debt(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                   945.6              965.7
Pro forma net debt(6) . . . . . . . . . . . . . . . . . . . . . . . . .                                  .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                   945.6
Net cash interest expense(7) . . . . . . . . . . . . . . . . . . . .                                     .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                    60.0                60.5
Pro forma net cash interest expense(8) . . . . . . . . . . . .                                           .   .       .       .       .   .   .   .   .   .   .   .   .       .       .       .       .                    70.0
Credit Statistics (unaudited)
Ratio of net debt to Underlying EBITDA . . . . . . . . . . . . . . . . . . . . . .                                                                               .   .       .       .       .       .                     2.2x                 2.2x
Ratio of Underlying EBITDA to net cash interest expense . . . . . . . . .                                                                                        .   .       .       .       .       .                     7.2x                 7.2x
Ratio of pro forma net debt to Underlying EBITDA . . . . . . . . . . . . . .                                                                                     .   .       .       .       .       .                     2.2x
Ratio of Underlying EBITDA to pro forma net cash interest expense .                                                                                              .   .       .       .       .       .                     6.2x

(1) Net fleet capital expenditures includes cash flows relating to both vehicles subject to re-purchase agreements and risk
    vehicles and also includes new finance leases of A95.4m (2004; A69.7m).

(2) Net non-fleet capital expenditures is total capital expenditures less net fleet capital expenditures, as defined in
    footnote (1) above.

(3) EBITDA before non cash net operating lease charge is defined as profit for the year before interest, taxes, depreciation,
    amortisation and non cash net operating lease charge on vehicles under manufacturer re-purchase contracts. This is not a
    measurement of the Group’s financial performance or liquidity under IFRS and should not be considered as a substitute
    for profit for the year, operating profit, or any other performance measures derived in accordance with IFRS or UK GAAP
    or as a substitute for cash flow from operating activities as a measure of the Group’s liquidity. Because not all companies
    calculate EBITDA identically, this presentation of EBITDA may not be comparable to other similarly titled measures of
    other companies.

(4) Underlying EBITDA is calculated as EBITDA before non cash net operating lease charge adjusted to remove the impact of
    net exceptional items, economic hedge adjustments, share of profit/(loss) of joint venture and foreign exchange
    (loss)/gain on net debt less gains on disposal of assets. Exceptional items have been defined previously. Underlying
    EBITDA is not a measurement of the Group’s financial performance or liquidity under IFRS and should not be considered
    as a substitute for profit for the year, operating profit, or any other performance measures derived in accordance with
    IFRS or UK GAAP or as a substitute for cash flow from operating activities as a measure of the Group’s liquidity.

     Reconciliation of Underlying EBITDA to net profit/(loss) follows for the years indicated:

                                                                                                                                                                                                                                   Year ended
                                                                                                                                                                                                                                  31 December
                                                                                                                                                                                                                              2005             2004
                                                                                                                                                                                                                                        IFRS
                                                                                                                                                                                                                               (in millions of euro)

     Profit for the year . . . . . . . . . . . . . .   . . . . . . . . . . . . . . . . . . . . . .                                       . . . . . . .               .   .       .       .       .   .   .   .   .   .         12.1             (17.1)
     less: Finance revenue . . . . . . . . . . .       . . . . . . . . . . . . . . . . . . . . . .                                       . . . . . . .               .   .       .       .       .   .   .   .   .   .         (1.9)             (3.7)
     plus: Finance cost . . . . . . . . . . . . . .    . . . . . . . . . . . . . . . . . . . . . .                                       . . . . . . .               .   .       .       .       .   .   .   .   .   .         63.1              65.7
           Taxation . . . . . . . . . . . . . . . .    . . . . . . . . . . . . . . . . . . . . . .                                       . . . . . . .               .   .       .       .       .   .   .   .   .   .          8.0              (3.1)
           Depreciation and amortisation . .           . . . . . . . . . . . . . . . . . . . . . .                                       . . . . . . .               .   .       .       .       .   .   .   .   .   .        153.6             144.8
           Asset impairment charges . . . . .          . . . . . . . . . . . . . . . . . . . . . .                                       . . . . . . .               .   .       .       .       .   .   .   .   .   .          0.5                —
     Net operating lease charge on vehicles            under manufacturer re-purchase                                                    contracts                   .   .       .       .       .   .   .   .   .   .        190.4             180.2
     EBITDA before non cash net operating lease charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                            425.8             366.8
     plus: Net exceptional items . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .       .       .   .   .   .   .   .   .   .   .   .   .       .       .       .   .   .   .   .   .           13.2             74.4
           Economic hedge adjustments . . . . . . . . . .            .   .   .   .   .   .   .   .   .   .   .   .       .       .   .   .   .   .   .   .   .   .   .   .       .       .       .   .   .   .   .   .            5.3               —
           Share of loss of joint venture and associate              .   .   .   .   .   .   .   .   .   .   .   .       .       .   .   .   .   .   .   .   .   .   .   .       .       .       .   .   .   .   .   .             —               0.1
     less: Foreign exchange (loss)/gain on net debt . .              .   .   .   .   .   .   .   .   .   .   .   .       .       .   .   .   .   .   .   .   .   .   .   .       .       .       .   .   .   .   .   .            0.1             (2.1)
     Underlying EBITDA including gains on disposals of assets . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                           444.4             439.2
     less: Gains on disposals of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                 (10.7)             (1.9)
     Underlying EBITDA(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                               433.7             437.3

(5) Net debt represents the gross repayable balance (i.e. excluding the impact of any debt issue costs or issue discounts or
    premiums) less the total of cash and short-term deposits.




                                                                                         33
(6) Pro forma net debt represents ‘‘Pro forma total debt’’ less ‘‘Pro forma cash and short-term deposits’’ as shown within the
    section entitled ‘‘Capitalisation’’.

(7) Net cash interest expense represents the amount of net interest paid on cash and outstanding debt balances
    (i.e. excluding the impact of any amortisation of debt issue costs or issue discounts or premiums).

(8) ‘‘Pro forma net cash interest expense’’ represents net cash interest expense paid, adjusted to give effect to this offering as
    if the offering had occurred with effect from 1 January 2005 and was in existence throughout the year ended
    31 December 2005. This does not reflect interest that would have been earned on the excess cash received from this
    offering. Pro forma net cash interest expense is calculated as follows;

                                                                                                                                          Year ended
                                                                                                                                       31 December 2005
                                                                                                                                              IFRS
                                                                                                                                          (in millions
                                                                                                                                            of euro)

    Net cash interest expense as previously reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             60.0
    less: cash interest expense on retired debt(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (4.3)
    plus: cash interest expense on the Notes offered hereby(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               14.3
                                                                                                                                             70.0


    (a) Adjustment reflects elimination of cash interest expense on bank facilities and commercial paper which are intended
        to be repaid from the proceeds of the Notes, as reflected in the ‘‘Capitalisation’’ section, and assumes repayment in
        full.
    (b) Finance costs on the Notes have been calculated using a rate of 5.705% (three month EURIBOR as of 14 July 2006 of
        3.080% plus a margin of 2.625%) per annum.




                                                                          34
  Selected consolidated historical financial information and operating data prepared in accordance
                              with UK GAAP or based on UK GAAP data
    The following tables set out selected financial information and unaudited operating data for the
Group as at and for the years ended 31 December 2004, 2003 and 2002 prepared in accordance with
UK GAAP or based on UK GAAP data:
                                                                                                               Year ended 31 December
                                                                                                             2004         2003        2002
                                                                                                                      UK GAAP
                                                                                                                 (in millions of euro)

Selected consolidated income statement data
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1,176.9 1,169.4 1,189.2
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (613.2) (620.4) (598.9)
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       563.7         549.0        590.3
Administrative expenses (including operating exceptional items) . . . . . .                                 (524.3)       (481.7)      (424.2)
Operating profit before goodwill amortisation and operating
 exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             115.4         122.8        186.5
Amortisation of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              (2.6)         (4.8)        (4.0)
Operating exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                (73.4)        (50.7)       (16.4)
Group operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              39.4          67.3        166.1
Share of operating loss from joint ventures and associate . . . . . . . . . . .                               (0.1)         (0.6)        (1.2)
Total operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            39.3           66.7       164.9
Loss on disposal of business on termination of operation . . . . . . . . . . .                                  —           (54.9)         —
Net interest payable (2003: including exceptional income) . . . . . . . . . .                                (61.1)         (59.2)      (63.1)
Profit on ordinary activities before goodwill amortisation, net
  exceptional items and taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    54.2          59.4        122.2
Amortisation of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              (2.6)         (4.8)        (4.0)
Net exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (73.4)       (102.0)       (16.4)
(Loss)/profit on ordinary activities before taxation . . . . . . . . . . . . . . .                           (21.8)        (47.4)       101.8
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       2.9          (3.8)       (20.8)
(Loss)/profit on ordinary activities after taxation . . . . . . . . . . . . . . . .                          (18.9)        (51.2)        81.0

                                                                                                                    As at 31 December
                                                                                                            2004           2003        2002(1)
                                                                                                                         UK GAAP
                                                                                                                   (in millions of euro)

Summary consolidated balance sheet data
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1,411.6      1,466.0      1,460.8
   of which Rental fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1,302.9      1,313.3      1,312.4
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        612.1         667.2         683.0
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     2,023.7      2,133.2      2,143.8
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         823.3         937.2         858.2
   of which Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            664.7         778.5         742.7
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,218.1      1,180.1      1,175.5
   of which Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              144.7         169.0         181.7
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2,041.4 2,117.3           2,033.7
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (17.7)   15.9             110.1
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           2,023.7      2,133.2      2,143.8

(1) The Group adopted UITF38 ‘‘Accounting for ESOP Trusts’’ as at 1 January 2004, reclassifying certain comparative balances
    in 2003, as explained in the Consolidated Financial Statements 2004. Certain balances for the year ended 31 December
    2002 have not been restated. Had UITF38 been adopted at 31 December 2002, the effect would have been to reduce non-
    current assets to A1,458.4 million and to decrease total equity to A107.7 million.




                                                                        35
                                                                                                                                                                                                                      Year ended 31 December
                                                                                                                                                                                                                     2004        2003      2002
                                                                                                                                                                                                                             UK GAAP
                                                                                                                                                                                                                        (in millions of euro)

Summary consolidated cash flow data
Net cash generated from operating activities . . .                       .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .            454.3   463.9   518.6
Returns on investments and servicing of finance .                        .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .            (60.5) (54.9) (64.4)
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .            (30.2) (25.6)    (2.0)
Capital expenditure and financial investment . . .                       .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .            509.4   473.4   531.2
Acquisitions and disposals . . . . . . . . . . . . . . . . .             .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .             (2.3) (48.1)      —
Equity dividends paid . . . . . . . . . . . . . . . . . . . . .          .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .            (33.7) (43.2) (54.8)
Management of liquid resources . . . . . . . . . . . . .                 .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .             23.4    (4.4) (112.7)
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    .   .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .           (875.6) (764.4) (794.7)
(Decrease)/increase in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                                  (15.2)         (3.3)    21.2

                                                                                                                                                                                                                                     Year ended
                                                                                                                                                                                                                                    31 December
                                                                                                                                                                                                                                  2005       2004
                                                                                                                                                                                                                                        IFRS

Summary key indicators(1) (unaudited)
Number of rentals (in thousands) . . . . . . . . . . . . . .                         .....               .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .     5,253   5,155
Number of billed days (in thousands)(2) . . . . . . . . . .                          .....               .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .   30,842 30,004
Average revenue per billed day (in A)(3) . . . . . . . . . .                         .....               .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .      39.2    39.8
Average fleet size (rounded to the nearest thousand                                  units)              .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .       120     118
Fleet cost per car month (A per unit/month) . . . . . .                              .....               .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .     284.0   276.4
Average fleet utilisation(4) . . . . . . . . . . . . . . . . . . . .                 .....               .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .      70.5%   69.5%
Fleet book value (A million) . . . . . . . . . . . . . . . . . . .                   .....               .       .       .       .       .       .       .       .       .       .       .       .       .   .   .   .   .   .   1,357.9 1,302.9

(1) All financial and operating data refer to Avis corporate data, which excludes Avis Licensees, Budget and Centrus.

(2) Includes any day or period less than a day for which a vehicle rental is invoiced to a customer.

(3) Total revenues divided by total billed days.

(4) The average period of time during which vehicles are on rent as a percentage of their holding period.

                                                                                                                                                                                                               Year ended 31 December
                                                                                                                                                                                                             2004       2003      2002
                                                                                                                                                                                                                      UK GAAP

Summary key indicators(1) (unaudited)
Number of rentals (in thousands) . . . . . . . . . . . . . . . . . . . .                                 .       .       .       .       .       .       .       .       .       .                     5,155   5,029   4,971
Number of billed days (in thousands)(2) . . . . . . . . . . . . . . .                                    .       .       .       .       .       .       .       .       .       .                   30,004 29,626 28,654
Average revenue per billed day (in A)(3) . . . . . . . . . . . . . . .                                   .       .       .       .       .       .       .       .       .       .                      37.4    37.6    39.6
Average fleet size (rounded to the nearest thousand units)                                               .       .       .       .       .       .       .       .       .       .                       118     120     115
Fleet cost per car month (A per unit/month) . . . . . . . . . . .                                        .       .       .       .       .       .       .       .       .       .                     276.4   279.1   271.3
Average fleet utilisation(4) . . . . . . . . . . . . . . . . . . . . . . . . . .                         .       .       .       .       .       .       .       .       .       .                      69.5%   68.7%   68.1%
Fleet book value (A million) . . . . . . . . . . . . . . . . . . . . . . . .                             .       .       .       .       .       .       .       .       .       .                   1,302.9 1,313.3 1,312.4

(1) All financial and operating data refer to Avis corporate data, which excludes Avis Licensees, Budget and Centrus.

(2) Includes any day or period less than a day for which a vehicle rental is invoiced to a customer.

(3) Total revenues divided by total billed days.

(4) The average period of time during which vehicles are on rent as a percentage of their holding period.




                                                                         36
              MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                                   RESULTS OF OPERATIONS
     The following discussion and analysis provides information that management believes to be
relevant to understanding the Group’s financial condition and results of operations as of and for the
years ended 31 December 2005, 2004 and 2003.
     This discussion includes comparisons of operating results and cash flows determined in accordance
with IFRS for the years ended 31 December 2005 and 2004 as well as comparisons of operating
results and cash flows determined in accordance with UK GAAP for 31 December 2004 and 2003.
    It should be noted that financial information for the years ended 31 December 2005 and 2004
under IFRS and the financial information under UK GAAP are not directly comparable.
     This discussion should be read together with the consolidated financial information and related
notes for the years ended 31 December 2005 and 2004 and the consolidated UK GAAP financial
statements for the year end 31 December 2004 and 2003, included elsewhere in this offering
memorandum and other financial information. The consolidated financial information for the year
ended 31 December 2005 is the first to be prepared under IFRS. This discussion and analysis covers
only the 2005 and 2004 financial years, the only periods prepared in accordance with IFRS and unless
otherwise stated all amounts in this discussion and analysis are presented in accordance with IFRS.
IFRS differs in certain respects from UK GAAP and are therefore not comparable.
      The statements in this discussion and analysis regarding industry outlook, management’s
expectations regarding the future performance of the Group’s business and the other non-historical
statements in this discussion and analysis are forward-looking statements. These forward-looking
statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and
uncertainties described in ‘‘Risk Factors’’. The Group’s actual results may differ materially from those
contained in or implied by any forward-looking statements. Investors should consider the following
discussion and analysis together with the information contained under the headings ‘‘Risk Factors’’ and
‘‘Selected Historical and Pro Forma Financial and Other Data’’ and the Group’s Consolidated Financial
Statements and related notes thereto included elsewhere in this offering memorandum.

Overview
    As detailed in the ‘‘Business’’ section set forth elsewhere in this offering memorandum, the
Group is the leading international vehicle rental services company in Europe based on market
share(1). The Group has an exclusive licence to conduct vehicle rental operations throughout EAMEA,
under the globally recognised ‘‘Avis’’ brand name and throughout EAME under the ‘‘Budget’’ brand
name, in both cases until 2036. Budget, which was acquired in early 2003, represented approximately
3% of the Group’s total revenue in the year ended 31 December 2005.

Main Factors Affecting Revenue
    Revenue includes vehicle rental income, fees from the provision of services incidental to vehicle
rental, and fees receivable from licensees, net of discounts and excluding inter-company sales and
value-added and sales taxes.

Rental revenue
    Avis Corporate rental revenue (whereby the Group operates the ‘‘Avis’’ brand via wholly-owned
subsidiaries) varies according to the evolution of:
     —The volume of business within each Corporate Country, measured by number of billed days;
      and
     —The average price per rental day achieved within each Corporate Country, measured by
      average revenue per billed day (‘‘RPBD’’).

Billed days
    The number of billed days, which includes any day or period less than a day for which a vehicle
rental is invoiced to a customer, is a function of the number of rentals undertaken and average rental


(1) Source: Euromonitor IMIS Travel Database 2005.



                                                     37
length (in days). The number of billed days is influenced by a number of factors, including general
economic conditions, real GDP growth, airline passenger traffic, geographical mix and customer mix.

Average RPBD
     Average RPBD consists of the total rental revenue over a particular period, and incidental fees
divided by the number of billed days in the same period. Average RPBD is influenced by several
factors, including pricing of time and mileage, fuel and insurance fees. Like that of other European
rental operators, the Group’s average RPBD has been declining in recent years due to downward time
and mileage pricing pressures. These pricing pressures are attributable to several factors, including
competition and enhanced price transparency stemming from the increased use by customers of
both the internet and rental brokers to book travel arrangements.

Geographical mix
     The geographical mix of the Group’s revenue varies from period to period reflecting differences
in rental volume growth rates. Average RPBD also varies across countries reflecting local economic
factors and local customer category mix as described below. The Group’s geographical revenue mix
trends are detailed in ‘‘Business—Rental Services and Business Mix—Geographic mix’’.

Customer mix
    The Group defines four primary customer categories: corporate; leisure; replacement and
premium. Leisure customers can be further sub-categorised into domestic (i.e. rentals undertaken in
the country of the customer’s origin); intra-Europe (i.e. rentals by European customers in one of the
Group’s Corporate Countries outside their country of origin); long-haul US (i.e. rentals by US
customers); and long-haul other (i.e. rentals by non-European and non-US citizens).
     Customer mix affects RPBD since different customer categories have different rental profiles.
Corporate rentals are generally of a short-term duration, but are at the corporately negotiated RPBD
rates. Leisure customers are generally of a longer term and at higher RPBD rates. Replacement
rentals are generally long-term, but at discounted rates. Premium rentals vary in length, but tend to
be at higher rates and include certain travel partnership business and customers who have not made
a reservation in advance of rental.

Licensee revenue
     Licensees usually pay an initial entrance fee, and, upon renewal of their contracts, a renewal fee,
for the exclusive right to use the Avis licence rights in the country covered by the licence agreement.
Licensees pay ongoing fees representing a percentage of rental revenues generated by their vehicle
rental operations. Licensees also pay a rental fee based on the number of rentals booked through the
Group’s reservations systems.
    Licensing arrangements are usually for a period of five to ten years, although agreements with
new licensees, or those who operate in emerging markets, typically have an initial period of three
years.
     As licence fees are determined based on the rental revenue generated by the licensees within
their specified territory, the portion of the Group’s revenue represented by ongoing fees is subject to
factors impacting the rental car industry in each of the markets within the Group’s network. Ongoing
fees and entrance and territory fees paid by the Group’s international licensees totalled A25.1 million
for 2005 and A22.2 million for 2004 (which does not include fees for rentals booked through the
Group’s reservation systems).

Main Factors Affecting Underlying Cost
     In order to provide useful information on underlying trends, the Group segregates ‘‘underlying’’
costs from exceptional items and certain re-measurement items. The term ‘‘underlying’’ is not
defined under IFRS or UK GAAP, and may not therefore be comparable with similarly titled profit




                                                  38
measurements reported by other companies. The underlying costs of the Group and their underlying
drivers primarily comprise the following:

Cost of Sales:
Fleet costs
     Fleet costs represent the single largest portion of the Group’s overall expenses and comprise
both fleet holding costs (which comprise the costs associated with the acquisition, delivery and
disposal of fleet vehicles) and fleet running costs (which comprise costs associated with third party
motor liability insurance, repairs and maintenance and road tax). The effective management of fleet
is a key factor for the Group in achieving profitability and return targets. The Group offers customers
a wide range of vehicles, while at the same time seeking to minimise overall vehicle costs and
optimise vehicle utilisation.

Fleet holding costs
    Fleet holding costs are driven by three main factors:
    • Fleet size and mix
    Fleet size and mix varies depending upon the Group’s rental volume demand forecasts, including
    the impacts of seasonality and its marketing strategies. The Group maintains operational
    flexibility as much as possible, and can alter its fleet size by several methods including adjusting
    purchasing plans and holding periods or leasing its vehicles on a short-term basis. The Group
    can also use these methods to adjust fleet size rapidly in order to meet unforeseen variations in
    demand. A ‘‘richer’’ fleet mix (i.e. containing a higher proportion of premium vehicles) generally
    results in higher fleet holding costs, but is generally offset by increased average RPBD.
    • Average holding cost per vehicle
    The average holding cost per vehicle is a function of the Group’s fleet supply agreements with
    the vehicle manufacturers. The resultant cost being dependent upon the relative economic
    environment affecting both parties negotiating position. Factors that vary include:
    —the level of re-purchase guarantees and discounts offered by the vehicle manufacturers;
    —changes in the resale value of risk vehicles, which are not covered by manufacturer
     re-purchase contracts. Risk vehicles represent approximately 30% of the Group’s fleet mix; and
    —vehicle registration taxes which in some countries are wholly or partly refundable and which
     have the effect, in certain cases, of restricting the countries in which a vehicle can be sold.
    • Fleet utilisation
    Fleet utilisation, which measures the period of time during which vehicles are on rent as a
    percentage of their holding period, is important in controlling overall fleet costs. Management
    closely monitors the utilisation and deployment of the Group’s vehicles. While the Group seeks
    continually to increase vehicle utilisation, this needs to be balanced against the availability of
    vehicles to ensure access to rental business that was not pre-booked which can often attract
    premium rates. See ‘‘Business—Fleet Composition, Acquisition and Management’’.

Fleet running costs
    Fleet running costs are driven by three main factors:
    • Third party motor liability insurance
    The Group is legally obliged to provide all customers with sufficient insurance against accidents
    caused to third parties and cover is also offered against theft and personal accident. Cover is
    arranged with a number of major insurance companies of strong credit quality. Through the
    Group’s captive insurance company, the Group self-insures on a cost-effective basis. Insurance
    costs generally vary in line with the overall insurance volume of rentals.
    • Road tax
    Road taxes are incurred over the holding period of the vehicle and accordingly fluctuate
    commensurately with the average fleet size.




                                                  39
    • Repairs and maintenance
    The Group incurs ongoing repair and maintenance costs for minor damage to vehicles. In certain
    cases a portion of these costs are recovered from customers where fault can be identified.

Revenue related costs
     Revenue related costs include commissions to distribution channels and also to third parties
operating stations on an agency basis (whereby the agent, typically a local entrepreneur supplies the
site and the staff at a station but the Group provides the vehicles), together with airport turnover-
based commissions and credit card fees. These costs generally vary as a function of the revenue
generated by the underlying rental activity.

Rental related costs
     Rental related costs include fuel costs, car wash and preparation and vehicle logistics. Rental
related costs are normally incurred only once per rental transaction with the result that shorter
duration and longer duration rentals exhibit a different cost-structure, with short-term rentals being
relatively more affected by these costs.

Selling costs
     Selling costs include certain distribution channels (e.g. commissions to intermediaries), frequent
flyer programme membership, marketing and promotional expenditure. Selling costs are influenced
by the Group’s sales and marketing strategy.

Administrative Expenses:
Staff costs
     Staff costs include primarily wages and salaries, other social security costs, retirement benefit
charges and share-based payment costs. As vehicle rental is a service business, employees are central
to the success of the business and constitute a significant percentage of costs. Therefore, employee
productivity, which is measured by comparing the number of employees to the volume of vehicle
rentals, is a key industry measure of efficiency. Additional temporary staff complement full-time
employees on a daily and seasonal basis to meet fluctuating demand.

Overhead costs
    Overhead costs include costs of the Group’s headquarters in Bracknell, Berkshire in the United
Kingdom together with country head offices, the shared service centre in Budapest, call centres in
Barcelona and Manchester, credit collection costs and the IT and property costs of the network.
    A number of these overhead costs are fixed but certain network property rental costs are based
on a percentage of revenues or sales arising at the relevant locations (see ‘‘Business—Property, Plant
and Equipment’’).
    In late 2005, the Group commenced a restructuring project covering the roles of its European
headquarters, corporate operations and shared service centres. On 15 February 2006, having
completed the planning stage, the Group announced the full extent of the project to create an
organisation that is both more effective and more efficient. The project comprises the following main
elements: a substantial reduction in staff and running costs at the European headquarters; an
acceleration of the transfer of back-office activities into the shared service centre in Budapest;
consolidation of call centre operations into the existing Barcelona facility and closure of the
Manchester call centre; and a number of other staff and overhead cost-cutting initiatives within
corporate operations.

Exceptional items, certain remeasurement items and economic hedge adjustments
     Exceptional items are major non-recurring items that derive from events or transactions that fall
within the ordinary activities of the Group. Exceptional items arise due to one-off major
restructuring, major projects, or significant impairments or provisions against the carrying value of
assets. Certain re-measurement items include movements in the fair value of certain derivatives and
exchange gains and losses upon the translation of foreign currency borrowings.




                                                   40
     Under IAS 39 ‘‘Financial Instruments: Recognition and Measurement’’, the Group applies hedge
accounting to hedge relationships where it is permissible and practicable to do so. Due to the nature
of its economic hedging relationships, in a number of circumstances the Group is unable to apply
hedge accounting to these derivatives. Management believes that these arrangements remain
effective economic and commercial hedges, and therefore economic hedge adjustments are made to
reported profit measures such that underlying profit reflects full application of hedge accounting.

Seasonality
     The Group’s revenue fluctuates throughout the year in line with customer demand. While the
corporate customers display a relatively even pattern of demand throughout the year, leisure
customers are more seasonal with demand peaking over the key holiday periods. The Group’s peak
months of the year for vehicle rental are the summer months of June through September, when
leisure rental experiences a notable increase in demand in line with the broader travel industry.

Illustrative pro forma average net debt versus average fleet net book value versus total billed days
          2,000                                                                                                                  4,000




          1,500                                                                                                                  3,000




                                                                                                                                         Billed Days (’000s)
  EUR m




          1,000                                                                                                                  2,000




           500                                                                                                                   1,000




             0                                                                                                                   0
                  Jan-05   Feb-05   Mar-05   Apr-05 May-05       Jun-05    Jul-05   Aug-05 Sep-05     Oct-05   Nov-05   Dec-05

                                    Pro Forma Average Net Debt            Average Fleet NBV         Total Billed Days
                                                                                                                           4JUL200623174460
     As a result of the strong seasonal effect on the leisure business, the period of June through
September is the most profitable period for the Group. A significant proportion of the Group’s staff
costs and overhead costs are fixed and cannot be adjusted according to short-term fluctuations in
business activities. In addition, significant fleet investment is incurred in anticipation of seasonal
demand as detailed in ‘‘Business—Fleet Composition, Acquisition and Management—Fleet
Management’’. This variation in fleet levels is also reflected in a higher requirement for debt to fund
the fleet purchases in the summer months than at other times of the year.
    The Group’s debt balance generally moves in line with the Group’s overall fleet levels, subject to
a working capital arising from the effects of manufacturer credit terms. Net debt normally increases
between January and May each year as the fleet builds up, and peaks in the period of June through
September, before decreasing between October and December as the Group de-fleets. For example:
          • as at 30 June 2005 the Group’s net debt was A1,193.5 million as compared to net debt of
            A980.6 million as at 1 January 2005, a variation of 21.7%.
          • the average net debt for the year ended 31 December 2005 was A1,095.5 million as compared
            to net debt of A980.6 million as at 1 January 2005, a variation of 11.7%.




                                                                      41
    Consequently, the Group ensures that it has a core level of long-term funding in place, with
maturities spread over a wide range of dates, supplemented by shorter-term facilities to cover
requirements through the year.

Results of Operations
     The following discussion and analysis of the Group’s results of operations and financial condition
is based on the Group’s historical results. It should be noted that financial information for the year
ended 31 December 2005, as well as comparative information for the year ended 31 December 2004,
has been prepared in accordance with IFRS and financial information for the years ended
31 December 2004 and 2003 has been prepared in accordance with UK GAAP and, therefore, the
historical results of operations for the three years ended 31 December 2005, 2004 and 2003 are not
directly comparable amongst all three years. A reconciliation of the 2004 profit and loss account
prepared on a UK GAAP basis and prepared on an IFRS basis is provided at the end of this results
overview.

Year Ended 31 December 2005 compared with Year Ended 31 December 2004 prepared in
accordance with IFRS
     The following table sets forth certain underlying financial information (which excludes
exceptional items, certain re-measurement items and economic hedges) relating to the Group’s
income statement extracted without material adjustment from the underlying consolidated financial
information of the Group for the years ended 31 December 2005 and 2004 prepared in accordance
with IFRS. A reconciliation of this underlying financial information to total IFRS results is provided at
the end of this section:

Underlying Financial Information
                                                                                                                               Year ended
                                                                                                                              31 December
                                                                                                                           2005          2004
                                                                                                                                   IFRS
                                                                                                                          (in millions of euro)

          Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     1,276.5     1,252.8
          Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      (709.3)     (675.0)
          Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       567.2         577.8
          Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             (467.3)       (463.6)
          Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . .      .   .   .   .   .   .   .   .   .      99.9        114.2
          Finance revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .       1.9          3.7
          Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     .   .   .   .   .   .   .   .   .     (64.0)       (65.7)
          Share of profit/(loss) of joint venture and associate                       .   .   .   .   .   .   .   .   .        —          (0.1)
          Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            37.8         52.1
          Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      (10.2)       (13.0)
          Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            27.6         39.1

Revenue
Consolidated revenue
     Consolidated revenue increased by A23.7 million, or 1.9%, from A1,252.8 million for the year
ended 31 December 2004 to A1,276.5 million for the year ended 31 December 2005. This increase
was primarily due to strong volume growth during the summer period and early progress with the
Group’s margin improvement strategy, partially offset by the continued impact of a weaker pricing
environment.

Business segment revenue
     The Group’s business is split into the two main brands: ‘‘Avis’’ and ‘‘Budget’’. Each brand in turn
is split into two business segments: corporate and licensee.




                                                                     42
    The following table sets forth overall Group revenue by business segment for the years ended
31 December 2005 and 2004 in accordance with IFRS:
                                                                                                                                                                                                Year ended
                                                                                                                                                                                               31 December
                                                                                                                                                                                            2005          2004
                                                                                                                                                                                                    IFRS
                                                                                                                                                                                           (in millions of euro)

       Avis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                1,234.7     1,217.6
       Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                     41.8        34.3
       Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                       —          0.9
       Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                 1,276.5     1,252.8

       (1) Represents revenue from the Centrus claims management business of A0.9 million in 2004.

     Avis Corporate revenue (whereby the Group operates the ‘‘Avis’’ brand via wholly-owned
subsidiaries) in 2005 was A1,209.6 million, an increase of 1.2% from the prior year. See ‘‘Selected
Historical and Pro Forma Financial and Other Data’’. Volume in terms of the number of rentals and
billed days were 2.8% higher, with all customer groups other than replacement ahead of prior year
and a particularly strong performance in the leisure category. The shift of emphasis from the
replacement category was in line with the Group’s strategy of focusing on higher margin categories.
Although the pricing environment remained difficult with revenue per day 1.5% lower, there was
some easing in the second half, largely resulting from a reduction in longer rental length replacement
business.
    Avis Licensee revenue in 2005 was A25.1 million, an increase of 13.1% from the prior year, with
above average growth trends across the Middle East and emerging markets in Asia.
     Budget Corporate revenue of A33.6 million increased by 22.2% mainly as a result of the
re-opening of a station at Heathrow Airport, an improved performance in France, and increased
walk-up business in Switzerland. Budget Licensee revenue of A8.2 million increased due to new
licensee openings and improved ongoing fees from the existing licence network.

Geographic mix
    The following table sets forth overall Group revenue by geographical segment for the years
ended 31 December 2005 and 2004 in accordance with IFRS:
                                                                                                                                                                                                Year ended
                                                                                                                                                                                               31 December
                                                                                                                                                                                            2005          2004
                                                                                                                                                                                                    IFRS
                                                                                                                                                                                           (in millions of euro)

       France . . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    261.2         254.2
       Germany . . . . . .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    182.9         180.9
       Italy . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    175.5         176.4
       Spain . . . . . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    207.1         202.2
       United Kingdom .            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    213.8         208.2
       Other Europe . . .          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    233.4         227.3
       Rest of the world           .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      2.6           2.7
       Other(1) . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       —            0.9
       Total Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                     1,276.5     1,252.8

       (1) Represents revenue from the Centrus claims management business of A0.9 million in 2004.

    The Group operates in five principal countries: France, Germany, Italy, Spain and the United
Kingdom. These revenues relate primarily to the Avis Corporate business segment.
     Revenue from the Group’s operations in France increased by A7.0 million, or 2.8%, from
A254.2 million for the year ended 31 December 2004 to A261.2 million for the year ended
31 December 2005. This increase was primarily due to volume growth in the domestic leisure
customer group, offset, in part, by limited growth in corporate revenue in France and a decline in
replacement revenue.



                                                                                                               43
    Revenue from the Group’s operations in Germany increased by A2.0 million, or 1.1%, from
A180.9 million for the year ended 31 December 2004 to A182.9 million for the year ended
31 December 2005. This increase was primarily due to double-digit revenue growth in the leisure
customer category and increases in replacement revenue offset by lower revenues from corporate
customers.
     Revenue from the Group’s operations in Italy decreased by A0.9 million, or 0.5%, from
A176.4 million for the year ended 31 December 2004 to A175.5 million for the year ended
31 December 2005. This decrease was primarily attributable to a decline in corporate and
replacement revenue, as well as a decline in the premium category which was impacted by a
transport strike in Italy in early 2005, offset by double-digit revenue growth in the leisure customer
category.
     Revenue from the Group’s operations in Spain increased by A4.9 million, or 2.4%, from
A202.2 million for the year ended 31 December 2004 to A207.1 million for the year ended
31 December 2005. This increase was primarily attributable to higher rental volume and particularly
strong revenue performance in the corporate category, offset by a decline in replacement revenue.
     Revenue from the Group’s operations in the United Kingdom increased by A5.6 million, or 2.7%,
from A208.2 million for the year ended 31 December 2004 to A213.8 million for the year ended
31 December 2005. This increase was primarily attributable to double-digit revenue growth in the
leisure category, offset by weaker prices, partly on increased rental length in the corporate category,
and a decrease in replacement revenue.

Customer mix
    Overall customer mix in the year showed a shift towards the leisure business, offset by a
reduction in the replacement business as detailed in ‘‘Business—Rental Services and Business Mix—
Customer Type’’. Movements in customer mix by geographical market is as detailed above.

Cost of sales
    Cost of sales, which is presented on a consolidated basis, increased by A34.3 million, or 5.1%,
from A675.0 million for the year ended 31 December 2004 to A709.3 million for the year ended
31 December 2005. This increase was primarily due to increases in fleet holding costs, rental related
costs and selling costs.
    Fleet holding costs included the following:

                                                                                                          Year ended
                                                                                                         31 December
                                                                                                     2005             2004
                                                                                                              IFRS
                                                                                                     (in millions of euro)

         Depreciation on risk vehicles . . . . . . . . . . . . . . . . . . . . . . . .               133.2          129.2
         Non-cash operating lease charge on manufacturer
           re-purchase contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . .             190.4          180.2
         Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   323.6          309.4

     The increase in fleet holding costs was a consequence of higher volumes in 2005 as detailed in
the ‘‘Business—Fleet Composition, Acquisition and Management—Fleet Composition’’ section of this
offering memorandum. Fleet cost per car month was 2.8% higher due to higher costs from the car
manufacturers and richer fleet mix, offset in part by improved utilisation performance. Fleet running
costs increased as a result of higher insurance premiums and costs associated with a general
transportation strike in Italy in the early part of 2005.
    The increase in rental related costs related primarily to increased road taxes in Germany and
higher fuel costs, which impacted both transportation costs and the cost of providing fuel to
customers, although the latter was largely offset by increased fuel revenue.
    Selling costs increased due to margin improvement strategy initiative expenditures, offset by
lower travel agency fees following the successful change of terms on pre-contracted
corporate rentals.



                                                                     44
Administrative expenses
    Administrative expenses increased by A3.7 million, or 0.8%, from A463.6 million for the year
ended 31 December 2004 to A467.3 million for the year ended 31 December 2005. This increase was
primarily due to an increase in staff costs, partially offset by a decrease in overhead costs.
     Staff costs increased from A272.7 million in 2004 to A283.7 million in 2005. This increase is
primarily attributable to inflationary increases, investment in additional staff to implement yield
management and fleet re-marketing initiatives, and the continued parallel running of back-office
activities in preparation for the full transfer of such activities to the shared service centre in
Budapest. Average full-time equivalent staff numbers increased from 6,039 in 2004 to 6,253 in 2005.
      Overhead costs decreased by A10.7 million, primarily due to profits arising on the disposal of
certain properties in Belgium and Spain in the first half of 2005 and cost reductions in Germany,
Italy, France and the United Kingdom. Overall property rental costs increased from A95.7 million in
2004 to A99.5 million in 2005 partly due to revenue increases at concession locations and general
inflation. Margin improvement strategy initiative expenditures during the 2005 year were higher than
the prior year’s project spend, which included certain costs associated with cancelled IT projects.

Underlying operating profit
    Underlying operating profit decreased by A14.3 million, or 12.5%, from A114.2 million for the
year ended 31 December 2004 to A99.9 million for the year ended 31 December 2005 and can be
analysed as follows.

                                                                                                                                                                                 Year ended
                                                                                                                                                                                31 December
                                                                                                                                                                            2005             2004
                                                                                                                                                                                     IFRS
                                                                                                                                                                            (in millions of euro)

         Avis . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   106.8          122.3
           EBIT margin          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     8.7%           9.9%
         Budget . . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (6.9)          (8.1)
           EBIT margin          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   (16.5)%        (23.6)%
         Total underlying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                99.9          114.2

     Avis EBIT margin of 8.7% was 1.2% lower than prior year due to the revenue and cost factors
discussed above, partly offset by improved utilisation performance (see ‘‘Selected Historical and Pro
Forma Financial and Other Data’’). In summary, the weaker pricing environment, together with the
investment in margin improvement strategy initiatives was partially mitigated by volume growth and
improved utilisation performance.
     The Budget underlying operating loss of A6.9 million was A1.2 million lower than the previous
year. The Budget Corporate underlying operating loss of A8.4 million was only marginally improved,
reflecting planned investment in additional sales and marketing activities and after a goodwill
impairment charge of A0.4 million. Budget Licensee underlying operating profits of A1.5 million
contrasted favourably to A0.9 million in the comparative period, in line with the improvement in
revenue trends.

Underlying net finance costs
     Underlying net finance costs increased by A0.1 million, or 0.2%, from A62.0 million for the year
ended 31 December 2004 to A62.1 million for the year ended 31 December 2005, primarily due to
the full year impact from the higher cost of Loan Notes issued in June 2004, offset by slightly lower
average debt, benefiting from the receipt of proceeds from a rights issue in July 2005 (the ‘‘Rights
Issue’’). See ‘‘Description of Other Indebtedness’’.

Underlying taxation
    Underlying taxation decreased by A2.8 million, or 21.5%, from A13.0 million for the year ended
31 December 2004 to A10.2 million for the year ended 31 December 2005. The effective rate of
taxation on underlying profit was 27% in 2005 compared to 25% in 2004. The increase in the



                                                                                                            45
effective rate was primarily the consequence of the mix of profits and losses in different jurisdictions,
and restrictions on the ability to recognise deferred tax assets in loss making subsidiaries.

Underlying profit/(loss) for the year
    As a consequence of the above, underlying profit for the year decreased by A11.5 million, or
29.4%, from A39.1 million for the year ended 31 December 2004 to A27.6 million for the year ended
31 December 2005.

Underlying profit/(loss) reconciliation
     Underlying IFRS profit and loss for the year is reconciled to total profit and loss for the year
as follows:
                                                                                                                                    Year ended
                                                                                                                                   31 December
                                                                                                                               2005             2004
                                                                                                                                        IFRS
                                                                                                                               (in millions of euro)

         Underlying profit for the year . . . . . . . .        ................                                                27.6            39.1
         Net exceptional charges:
         —Restructuring . . . . . . . . . . . . . . . . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (8.4)          (9.6)
         —Project termination costs . . . . . . . . .          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (3.6)         (43.4)
         —Centrus receivables provision . . . . . .            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     3.2           16.7
         —Capital restructuring and rights issue               .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (4.4)            —
         —Goodwill impairment . . . . . . . . . . . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      —           (38.1)
         Net exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                     (13.2)         (74.4)
         Certain re-measurement items and economic hedges . . . . . .                                                           (4.5)           2.1
         Taxation on reconciling items . . . . . . . . . . . . . . . . . . . . . . . .                                           2.2           16.1
         Total profit/(loss) for the year . . . . . . . . . . . . . . . . . . . . . . .                                        12.1           (17.1)

    For further information on the above adjustments, see the Consolidated Financial Information
2005 included elsewhere in this offering memorandum.

Net exceptional items
     Restructuring costs of A2.0 million were incurred in 2005 in connection with the transfer of
back-office functions to the shared service centre in Budapest. A further A6.4 million was incurred in
relation to the restructuring project commenced in late 2005 relating to the Group’s headquarters,
corporate operations, shared service centre and call centres.
     Following the Group’s decision in 2004 to terminate an agreement with the principal contractor
on an IT back-office project, additional termination costs of A3.6 million were recognised in 2005,
primarily arising from a mitigating action being taken against the termination costs, which may lead
to a net credit in future accounting periods.
     During the year, the collection of credit hire receivable balances in the Centrus business was
more successful than previously anticipated. Exceptional income of A3.2 million was recognised
reflecting a partial reversal of the receivable write-off and reorganisation provision made in
previous years.
     Additionally, various professional, legal and consultancy costs have been incurred in the year in
conjunction with the Company’s capital restructuring and the Rights Issue. Where such costs are not
directly attributable to the issue of new shares, or the drawing down of new debt facilities, they have
been recognised as exceptional items.
   Details of the net exceptional items arising in 2004 are detailed in the 2004 to 2003
comparison below.

Certain re-measurement items and economic hedges
     Certain re-measurement items and economic hedges arose from the recognition in the income
statement of movements in the fair value of certain derivatives following the implementation of



                                                               46
IAS 39, ‘‘Financial Instruments: Recognition and Measurement’’ in 2005, and recognition of foreign
exchange on certain intra-group borrowings in both 2005 and 2004. These items are required to be
recognised in the income statement, where the Group is unable to apply hedge accounting even
where the Group is economically hedged.

Cash flows and debt for the years ended 31 December 2005 and 2004 in accordance with IFRS
     The Group has included below a management analysis of the Group’s cash flow/net debt
movement for the years ended 31 December 2005 and 2004 rather than extractions from the
Group’s cash flow statements included in the Consolidated Financial Information 2005. Management
believes that these management analyses present more meaningful data to prospective investors as
to the drivers of the movement in the Group’s overall net debt from year to year, particularly since
the principal driver is the Group’s overall net fleet expenditure (which includes both vehicles subject
to manufacturer re-purchase agreements and risk vehicles). Net debt and net fleet expenditure move
significantly throughout the year due to the strong seasonal effects on the Group’s business. For
more information on seasonality, please see ‘‘—Seasonality’’.
    The following table sets forth a management’s analysis of the Group’s cash flow and reduction in
net debt for the financial years ended 31 December 2005 and 2004 based on IFRS data:
                                                                                                                     Year ended
                                                                                                                    31 December
                                                                                                                2005             2004
                                                                                                                         IFRS
                                                                                                                (in millions of euro)

         Net cash generated from operating activities before
           taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ......                    177.8           390.1
         Manufacturer re-purchase contracts:
           Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      ......                   1,469.5       1,308.7
           Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ......                  (1,190.6)     (1,244.5)
         Other working capital movements . . . . . . . . . . . . . .                   ......                       4.0            —
         Adjusted cash flow from operating activities                      before
            taxation . . . . . . . . . . . . . . . . . . . . . . . . . .   ......      .   .   .   .   .   .     460.7           454.3
         Net fleet capital expenditures(1) . . . . . . . . . .             ......      .   .   .   .   .   .    (504.0)         (197.2)
         Net non-fleet capital expenditures . . . . . . . .                ......      .   .   .   .   .   .     (17.6)          (46.9)
         Interest and dividends . . . . . . . . . . . . . . . . .          ......      .   .   .   .   .   .     (60.0)          (94.2)
         Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . .    ......      .   .   .   .   .   .      (3.1)          (30.2)
         Acquisitions and other . . . . . . . . . . . . . . . .            ......      .   .   .   .   .   .     159.0            (5.9)
         Reduction in net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          35.0            79.9
         Net fleet capital expenditures is analysed as follows:
         Net charge to the income statement . . . . . . . . . . . .                    .   .   .   .   .   .    (319.4)         (308.1)
         Change in closing fleet . . . . . . . . . . . . . . . . . . . . . .           .   .   .   .   .   .     (55.0)           10.4
         Movement in fleet working capital . . . . . . . . . . . . .                   .   .   .   .   .   .    (132.3)           98.2
         Exchange and other acquisitions . . . . . . . . . . . . . . .                 .   .   .   .   .   .       2.7             2.3
         Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              (504.0)         (197.2)

         (1) Net fleet capital expenditures includes cash flows relating to both vehicles subject to re-purchase agreements
             and risk vehicles and includes new finance leases of A95.4 million in 2005 (2004: A69.7 million).

    The reduction in net debt was A35.0 million. Adjusted cash flow from operating activities
marginally increased by A6.4 million, from A454.3 million for the year ended 31 December 2004 to
A460.7 million for the year ended 31 December 2005, despite cash outflows in the year of
A40.0 million relating to exceptional items.
    Total net fleet cash capital expenditures in 2005 was A504.0 million, which was A306.8 million
higher than the previous year. This is largely due to the reduction of the fleet working capital
improvement achieved in 2004, arising from both the tightening of credit terms by vehicle
manufacturers and the timing of purchases and sales at the year end, offset in part by lower
year-on-year average owned fleet levels.




                                                                     47
     Lower non-fleet capital expenditures was mainly a consequence of significant expenditure in the
prior year on the re-engineering of back-office activity and technological improvement to the
hand-held vehicle return device.
     Interest and dividend payments decreased from the previous period mainly as a result of the
inclusion of the final dividend of 2003 in the previous year and with no dividend payments made
since that time. Taxation cash outflows decreased mainly due to the offset or recovery during the
year of overpayments made in previous years.
    Acquisitions and other primarily reflects the receipt of Rights Issue proceeds in July 2005.

Year Ended 31 December 2004 Compared With Year Ended 31 December 2003 in accordance with
UK GAAP
     The following table sets forth certain financial information relating to the Group’s profit and loss
account extracted without material adjustment from the underlying consolidated financial
information of the Group for the years ended 31 December 2004 and 2003 prepared in accordance
with UK GAAP:

                                                                                                             Year ended
                                                                                                            31 December
                                                                                                        2004             2003
                                                                                                              UK GAAP
                                                                                                        (in millions of euro)

          Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,176.9        1,169.4
          Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (613.2)        (620.4)
          Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        563.7           549.0
          Administrative expenses(1) . . . . . . . . . . . . . . . . . . . . . . . . . .               (448.3)         (426.2)
          Operating profit before goodwill amortisation and                        operating
           exceptional items . . . . . . . . . . . . . . . . . . . . . . .         ........             115.4           122.8
          Amortisation of goodwill . . . . . . . . . . . . . . . . . . .           ........              (2.6)           (4.8)
          Operating exceptional items . . . . . . . . . . . . . . . . .            ........             (73.4)          (50.7)
          Group operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                39.4           67.3
          Share of operating loss from joint ventures and associate . .                                   (0.1)          (0.6)
          Total operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ..         39.3           66.7
          Loss on disposal of business and on termination
            of operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     ..           —           (54.9)
          Net interest payable(2) . . . . . . . . . . . . . . . . . . . . . . . . . . .        ..        (61.1)         (62.8)
          Profit on ordinary activities before goodwill amortisation,
            net exceptional items and taxation . . . . . . . . . . . . . . . .                 .   .      54.2           59.4
          Amortisation of goodwill . . . . . . . . . . . . . . . . . . . . . . . . .           .   .      (2.6)          (4.8)
          Net exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . .        .   .     (73.4)        (102.0)
          Loss on ordinary activities before taxation . . . . . . . . . . . .                  .   .     (21.8)         (47.4)
          Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2.9           (3.8)
          Loss on ordinary activities after taxation . . . . . . . . . . . . . . .                       (18.9)         (51.2)

          (1) Excludes operating exceptional items and amortisation of goodwill.

          (2) Does not include exceptional income in 2003.


Revenue
Consolidated Revenue
    Consolidated revenue increased by A7.5 million, or 0.6%, from A1,169.4 million for the year
ended 31 December 2003 to A1,176.9 million for the year ended 31 December 2004.




                                                                     48
Business Segment Revenue
    The following table sets forth overall Group revenue by business segment for the years ended
31 December 2004 and 2003 in accordance with UK GAAP:

                                                                                                                                                                                 Year ended
                                                                                                                                                                                31 December
                                                                                                                                                                            2004             2003
                                                                                                                                                                                  UK GAAP
                                                                                                                                                                            (in millions of euro)

         Avis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                        1,142.3        1,134.7
         Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                             33.7           22.4
         Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                              0.9           12.3
         Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                         1,176.9        1,169.4

         (1) Represents revenue from the Centrus claims management business of A0.9 million in 2004 and
             A12.3 million in 2003.

    Avis Corporate volume and RPBD were broadly flat. See ‘‘Selected Historical and Pro Forma
Financial and Other Data’’. Price was held back by competitive market conditions particularly in
France, offset by the Group’s yielding strategy in Spain.
    Avis Licensee revenue grew overall with broadly similar growth trends across the main regions of
Scandinavia and Central and Eastern Europe, Africa, the Mediterranean and the Middle East and
above average growth in some of the smaller emerging countries in Asia.
    Budget revenue was higher than 2003 due primarily to only nine months of consolidated trading
in 2003.
   Other revenue of A0.9 million in 2004 and A12.3 million in 2003 comprised the Centrus claims
management business which was terminated in December 2003.

Geographic mix
    The following table sets forth overall Group revenue by geographical segment for the years
ended 31 December 2004 and 2003 prepared in accordance with UK GAAP:
                                                                                                                                                                                 Year ended
                                                                                                                                                                                31 December
                                                                                                                                                                            2004             2003
                                                                                                                                                                                  UK GAAP
                                                                                                                                                                            (in millions of euro)

         France . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    228.2           227.6
         Germany . . . . .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    169.3           167.0
         Italy . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    161.6           156.8
         Spain . . . . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    185.4           186.2
         United Kingdom            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    213.0           213.7
         Others . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    219.4           218.1
         Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                         1,176.9        1,169.4

     Revenue from the Group’s operations in France increased by A0.6 million, or 0.3%, from A227.6
for the year ended 31 December 2003 to A228.2 for the year ended 31 December 2004. This
increase was primarily due to significant increases in volume in the intra-European leisure category,
offset by competitive pricing conditions in the domestic leisure and corporate categories and a
decline in replacement revenue as compared to significant new customer gains in the prior
year period.
    Revenue from the Group’s operations in Germany increased by A2.3 million, or 1.4%, from
A167.0 million for the year ended 31 December 2003 to A169.3 million for the year ended
31 December 2004. This increase was primarily attributable to the full year impact of significant
customer account gains in the replacement category during 2003.




                                                                                                           49
     Revenue from the Group’s operations in Italy increased by A4.8 million, or 3.1%, from
A156.8 million for the year ended 31 December 2003 to A161.6 million for the year ended
31 December 2004. This increase was primarily attributable to significant increases in volume in
intra-European leisure revenue and the benefit of additional business via intermediaries and
tour operators.
     Revenue from the Group’s operations in Spain decreased by A0.8 million, or 0.4%, from
A186.2 million for the year ended 31 December 2003 to A185.4 million for the year ended
31 December 2004. This decrease was primarily attributable to lower intra-European leisure revenue
largely driven by lower tour operator business into mainland Spain and decreased premium revenue
due to decreased premium volume.
    Revenue from the Group’s operations in the United Kingdom decreased by A0.7 million, or 0.3%,
from A213.7 million for the year ended 31 December 2003 to A213.0 for the year ended
31 December 2004. This decrease was primarily due to a strong corporate performance in the
second half of 2003 which was not repeated in 2004.

Customer mix
     Volume increases in the corporate and replacement businesses were offset by a reduction in the
leisure business, primarily due to adopting a yielding strategy in certain markets. Overall movements
in customer mix are provided in ‘‘Business—Customer Type’’.

Cost of sales
     Cost of sales, before exceptional items, decreased by A7.2 million, or 1.2%, from A620.4 million
for the year ended 31 December 2003 to A613.2 million for the year ended 31 December 2004. This
decrease was primarily due to the Group’s continued focus on the management of fleet, offset by
cost increases as a result of growth in rentals and general cost inflation.
    Fleet costs were down year-on-year, primarily as a result of slightly lower average owned fleet
volumes in 2004. Fleet costs included depreciation on both risk vehicles and vehicles subject to
manufacturer re-purchase contracts totalling A311.5 million in 2004 and A322.3 million in 2003.
     Revenue related costs were flat year-on-year, whereas rental related costs showed a marginal
increase, partially due to higher transport costs, fuel costs and road taxes.
     Selling costs were also lower year-on-year, reflecting the shift towards direct sales channels, such
as the internet and the Group’s call centres.

Administrative expenses
    Administrative expenses, before exceptional items, increased by A22.1 million, or 5.2%, from
A426.2 million for the year ended 31 December 2003 to A448.3 million for the year ended
31 December 2004.
     Staff costs increased from A269.4 million in 2003 to A278.1 million in 2004. This increase is
primarily attributable to inflationary increases offset by a reduction in average staff numbers from
6,104 in 2003 to 6,039 in 2004. Additional staff costs were incurred due to the overlapping of
personnel required in the start-up phase of the Budapest shared service centre and investment in
training operational staff to support the new hand-held car return device.
     Overhead cost increases included the impact of initial expenditure on strategic initiatives and
certain one-off items, including an accrual release in the prior year.

Operating profit before goodwill amortisation and operating exceptional items
    The Group separately presents operating profit before goodwill amortisation and operating
exceptional items in order to provide what management believes is useful information on underlying
UK GAAP trends.




                                                   50
     Operating profit before goodwill amortisation and operating exceptional items decreased by
A7.4 million, or 6.0%, from A122.8 million for the year ended 31 December 2003 to A115.4 million
for the year ended 31 December 2004, split between the Avis and Budget businesses as below.

                                                                                                                                                                                   Year ended
                                                                                                                                                                                  31 December
                                                                                                                                                                              2004             2003
                                                                                                                                                                                    UK GAAP
                                                                                                                                                                              (in millions of euro)

           Avis . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   123.5          137.8
             EBIT margin          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    10.8%          12.1%
           Budget . . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (8.1)          (5.3)
             EBIT margin          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   (24.0)%        (23.7)%
           Other . . . . . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      —            (9.7)
           Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                          115.4          122.8

      Avis UK GAAP underlying EBIT margin of 10.8% for the year ended 31 December 2004 was 1.3%
lower than prior year due to the revenue and cost factors discussed above, plus improved utilisation
performance (see ‘‘Selected Historical and Pro Forma Financial and Other Data’’). In summary, overall
volumes and RPBD were broadly flat, with improved utilisation performance more than offset by
initial strategic initiative expenditure, and continuing cost inflation.
    Budget UK GAAP underlying EBIT margin of (24.0)% for the year ended 31 December 2004 was
0.3% lower than the prior year due to an increase in sales and marketing activities, offset by the
implementation of certain cost synergy initiatives.

Adjusted net interest payable
     Adjusted net interest payable decreased by A1.7 million, or 2.7%, from A62.8 million for the year
ended 31 December 2003 to A61.1 million for the year ended 31 December 2004. This decrease was
primarily as a result of the reduced level of average net debt required to fund the lower average fleet
levels, offset by a slight increase in the average interest rate from 5.2% to 5.3% due to the impact of
the issuance of Loan Notes in June 2004.

Taxation
     Taxation decreased from a tax charge of A3.8 million for the year ended 31 December 2003 to a
tax credit of A2.9 million for the year ended 31 December 2004. This was primarily due to the
benefits derived from utilisation of UK brought forward tax losses.

Loss on ordinary activities after taxation
    As a consequence of the above, loss on ordinary activities after taxation decreased by
A32.3 million, or 63.1%, from a loss of A51.2 million for the year ended 31 December 2003 to a loss
of A18.9 million for the year ended 31 December 2004.




                                                                                                              51
                                                                                                                                                                                                               Year ended
                                                                                                                                                                                                              31 December
Exceptional items                                                                                                                                                                                         2004            2003
                                                                                                                                                                                                                UK GAAP
                                                                                                                                                                                                          (in millions of euro)

Net exceptional items:
—Restructuring costs . . . .          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (9.6)          (25.9)
—Project termination costs            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   (44.4)              0
—Centrus receivables . . . .          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    16.7           (15.9)
—Goodwill impairment . . .            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   (36.1)          (13.8)
—Other items . . . . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      —              4.9
Operating exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                               (73.4)          (50.7)
Interest on VAT repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                  —              3.6
Loss on disposal of business and on termination of operation . . . . . . . . . . . . . . .                                                                                                                   —            (54.9)
Net exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                           (73.4)        (102.0)

     Restructuring costs of A9.6 million were incurred in 2004 comprising, the costs incurred in
connection with an IT back office project up to the point of termination; and further restructuring
costs in connection with a software development project curtailed in 2003. Restructuring costs
incurred in 2003 of A25.9 million related to the reduction of a number of management and support
positions across Europe, the integration and reorganisation programme following the acquisition of
the Budget business, initial costs of the aforementioned IT back-office project, and a restructuring
following the curtailment of a software development project.
    Following the Group’s decision to terminate the agreement with the principal contractor on an
IT back-office project, termination costs of A44.4 million were recognised in 2004.
     The exceptional charge in 2003 for Centrus amounting to A15.9 million was to reduce the book
values of credit hire receivables to anticipated recoverable amounts. In 2004, the collection of
receivable balances proved to be more successful than previously anticipated, such that an
exceptional income of A16.7 million was recognised reflecting a reversal of the credit receivable
provision recognised in previous periods.
    In 2004, the Group recognised an impairment provision against the goodwill in respect of the
Budget business and certain former French licensee companies. In 2003, an impairment provision of
A7.1 million was recognised against certain businesses in Germany, and an impairment provision of
A6.7 million was recognised against the business in Holland.
     In 2003, a one-off VAT repayment of A4.9 million in respect of earlier years and the net amount
received in resolving a dispute that had been provided as an exceptional item in previous years was
received, plus additional interest of A3.6 million on the aforementioned VAT receipt.

Cash flows and net debt for the years ended 31 December 2004 and 2003 in accordance with
UK GAAP
     The Group has included below a management analysis of the Group’s cash flow/net debt
movement for the years ended 31 December 2004 and 2003 rather than extractions from the
Group’s cash flow statements included in the Consolidated Financial Statements 2004. Management
believes that these management analyses present more meaningful data to prospective investors as
to the drivers of the movement in the Group’s overall net debt from year to year, particularly since
the principal driver is the Group’s overall net fleet expenditure (which includes both vehicles subject
to manufacturer re-purchase agreements and risk vehicles). Net debt and net fleet expenditure move
significantly throughout the year due to the strong seasonal effects on the Group’s business. For
more information on seasonality, please see ‘‘—Seasonality’’.




                                                                                                          52
    The following table sets forth management’s analysis of the Group’s cash flow and reduction in
net debt for the financial years ended 31 December 2004 and 2003 based on UK GAAP data:

                                                                                                                                                  Year ended
                                                                                                                                                 31 December
                                                                                                                                             2004             2003
                                                                                                                                                   UK GAAP
                                                                                                                                             (in millions of euro)

         Net cash inflow from operating activities                          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    454.3          463.9
         Net fleet capital expenditures . . . . . . . . .                   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   (197.2)        (203.2)
         Net non-fleet capital expenditures . . . . .                       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (46.9)         (42.5)
         Taxation . . . . . . . . . . . . . . . . . . . . . . . . .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (30.2)         (25.6)
         Interest and dividends . . . . . . . . . . . . . . .               .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (94.2)         (98.1)
         Acquisitions and other . . . . . . . . . . . . . .                 .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     (5.9)         (59.9)
         Reduction in net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                  79.9            34.6

    Net fleet capital expenditures is analysed as follows:

                                                                                                                                                  Year ended
                                                                                                                                                 31 December
                                                                                                                                             2004             2003
                                                                                                                                                   UK GAAP
                                                                                                                                             (in millions of euro)

         Net charge to income statement . . .               .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   (308.1)        (315.4)
         Change in closing fleet . . . . . . . . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     10.4           (0.9)
         Movement on fleet working capital .                .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     98.2          109.7
         Exchange and other acquisitions . . .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      2.3            3.4
                                                                                                                                            (197.2)        (203.2)

    Net cash inflow from operating activities decreased from A463.9 million in 2003 to
A454.3 million in 2004, largely as a result of the lower operating profits and cash outflow on net
operating exceptional charges, partially offset by an improvement in non-fleet working capital.
    Total fleet capital expenditures in 2003 was A203.2 million while in 2004 total fleet capital
expenditures was A197.2 million, reflecting slightly lower average owned fleet levels. In both 2003
and 2004, the Group benefited from favourable fleet working capital movements.
    The increase in the non-fleet capital expenditures between 2004 and 2003 reflects the Group’s
investment in finance and IT projects, development of a new rental vehicle return device, internet
investment and the opening of a new head office in Madrid.
     Interest and dividend payments in 2004 were similar to 2003, with higher interest being offset
by the effect of a lower 2003 final dividend. The cash outflow in 2003 for acquisitions substantially
reflects the payment for Budget, a sub-licensee business in France and the joint venture in China.
     The Group has therefore managed to reduce overall net debt in each year. A A79.9 million
reduction in net debt occurred in 2004, principally as a result of further reductions in fleet working
capital.

Reconciliation of UK GAAP to IFRS
     For all periods up to and including the year ended 31 December 2004, the Group prepared its
financial statements in accordance with UK GAAP. The financial information for the year ended
31 December 2005 was the first year that the Group was required to prepare in accordance with
IFRS. The financial information for the year ended 31 December 2005 include comparative financial
information for the year ended 31 December 2004, which has been restated from UK GAAP to IFRS.
    The impact of this restatement on the profit and loss account is summarised below, which has
been extracted without material adjustment from Note 46 to the Consolidated Financial Information
2005 included elsewhere in this offering memorandum.




                                                                        53
    The reconciliation with IFRS of the Group’s UK GAAP income statement for the year ended
31 December 2004 is as follows:

                                                                                                                      Accounting       Effect of
                                                                                                         UK GAAP         policy       transition
                                                                                                        as reported     changes         to IFRS     IFRS
                                                                                                                       (in millions of euro)

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      1,176.9         75.9              —       1,252.8
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         (613.2)       (61.8)             —        (675.0)
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         563.7         14.1              —        577.8
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . .                                 (524.3)       (13.1)           (0.6)     (538.0)
Operating profit . . . . . . . . . . . . . . .       .................                                      39.4           1.0           (0.6)       39.8
Analysed as
Operating profit before exceptional                  items . . . . . . . . . . . .                         115.4            —            (1.2)      114.2
Amortisation of goodwill . . . . . . . .             .................                                      (2.6)           —             2.6          —
Net exceptional items . . . . . . . . . .            .................                                     (73.4)          1.0           (2.0)      (74.4)
Operating profit . . . . . . . . . . . . . . .       ........       .   .   .   .   .   .   .   .   .       39.4           1.0           (0.6)        39.8
Finance income . . . . . . . . . . . . . . .         ........       .   .   .   .   .   .   .   .   .        3.7            —              —           3.7
Finance costs . . . . . . . . . . . . . . . . .      ........       .   .   .   .   .   .   .   .   .      (64.8)         (0.9)            —         (65.7)
Foreign exchange on net debt . . . .                 ........       .   .   .   .   .   .   .   .   .         —             —             2.1          2.1
Share of profit of joint venture and                 associate      .   .   .   .   .   .   .   .   .       (0.1)           —              —          (0.1)
Loss before tax . . . . . . . . . . . . . . . . . . . .        ............                                (21.8)          0.1            1.5        (20.2)
Analysed as
Profit before exceptional items before tax                     ............                                 54.2          (0.9)           0.9         54.2
Amortisation of goodwill . . . . . . . . . . . . .             ............                                 (2.6)           —             2.6           —
Net exceptional items . . . . . . . . . . . . . . .            ............                                (73.4)          1.0           (2.0)       (74.4)
Loss before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            (21.8)          0.1            1.5        (20.2)
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        2.9            —             0.2          3.1
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            (18.9)          0.1            1.7        (17.1)
Attributable to: Equity holders of the parent . . . . . . . . . .                                          (18.9)          0.1            1.7        (17.1)
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               —             —              —            —
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            (18.9)          0.1            1.7        (17.1)
Earnings/(loss) per share (euro cents) basic and diluted .                                                   (3.2)          —             0.3         (2.9)
Adjusted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            6.9           —           N/A           N/A

     As shown above, in 2004, the transition to IFRS had little impact on the Group’s underlying
result, nor on the Group’s net loss. Furthermore, the main impact on the Group’s net assets was the
recognition of the deficits within the Group’s main defined benefit post-employment schemes.
However, there are significant presentation, classification and disclosure changes that effect the
Group’s consolidated financial statements, in particular:

Vehicles held under manufacturer re-purchase agreements
     Vehicles used by the Group under certain manufacturer re-purchase agreements which are
accounted for as tangible fixed assets under UK GAAP are treated as operating leases for IFRS
purposes. This difference in accounting treatment has a significant impact on the format of the
Group’s income statement and balance sheet, but has no impact on the Group’s net assets or net
result for a period.
     The depreciation charge recognised in respect of these vehicles under UK GAAP and the gain on
disposal of these vehicles are reclassified as a net operating lease charge under IFRS. The relevant
fixed asset balances under UK GAAP are reclassified as prepaid operating lease balances together
with receivable balances due under the re-purchase agreement.




                                                                                54
Post-employment benefits
     The Group has various defined benefit post-employment plans. Under UK GAAP, independent
qualified actuaries valued these defined benefit schemes on a regular basis, generally every three
years, using the ‘‘projected unit cost method’’. Surpluses and deficits arising from the valuations were
spread over the average remaining service lives of employees, with any difference between the profit
and loss account charge and the contributions paid included as an asset or liability in the balance
sheet where applicable.
     Under IFRS, defined benefit retirement plans are valued using the ‘‘projected unit credit
method’’, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and
losses are recognised in full in the period in which they occur in the Statement of Recognised Income
and Expense. Past service cost is recognised immediately to the extent that the benefits have already
vested, and is otherwise amortised on a straight-line basis over the average period until the benefits
become realised.
    Further information of the above items, and all other UK GAAP to IFRS adjustments are detailed
in Note 46 to the Consolidated Financial Information 2005 included elsewhere in this offering
memorandum.

Liquidity And Capital Resources
Overview
     The Group finances its capital expenditure and working capital requirements through a
combination of cash flows from operating activities and long-term debt financing. The Group’s
long-term borrowings consist of a mixture of debt securities and bank facilities. The Group’s debt
balance moves in line with the Group’s overall fleet levels, subject to a minor delay due to the effects
of manufacturer credit terms. In particular, net debt normally increases between January and May
each year as the fleet builds up, and peaks in the period of June through September, before
decreasing between October and December as the Group de-fleets. This seasonality of debt is largely
reflected in the variation between the Group’s net debt balance at the start of each year and at each
half year. For additional information, please see ‘‘—Seasonality’’. The following discussion of the
Group’s liquidity and capital resources is as of 31 December 2005 and is based on data prepared in
accordance with IFRS.

Liquidity, Commitments and Financing Agreements
    The Group expects that its principal sources of liquidity in the medium-term will be cash
provided by operations and cash from short- and long-term borrowings.
    The Group anticipates that the principal demand on its cash subsequent to 31 December 2005
and in the medium-term thereafter will be to fund:
    • the Group’s operating activities, including its working capital requirements;
    • capital expenditure, in particular on the Group’s fleet;
    • near-term maturities of debt; and
    • ultimately, when conditions allow, the resumption of the payment of dividends to
      shareholders.
    Under the Senior Revolving Credit Facility, Lenders have made available to the Issuer loan
advances (‘‘Advances’’) in a total aggregate principal amount of A580.0 million outstanding at any
time. Advances are made by the Lenders to the Issuer from time to time by way of either cash
advances, or letters of credit up to an aggregate amount of 20% of the total facility size. The
termination date of this facility is 20 February 2011. For more information on the Senior Revolving
Credit Facility, please see ‘‘Description of Other Indebtedness—Senior Revolving Credit Facility’’.
    The Issuer has a commercial paper programme in Belgium for the issuance of up to a maximum
of A200.0 million with a maturity not exceeding 364 days, of which an aggregate principal amount of
A66.0 million was issued and outstanding as of 31 December 2005. For more information on this
commercial paper programme, please see ‘‘Description of Other Indebtedness—Commercial Paper
Programme’’.



                                                   55
    The Issuer also has the following loan notes (the ‘‘Loan Notes’’):

         Issued                                                                           Principal amount        Maturity
                                                                                             (in millions)
         5.25% Euro Notes . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .        A25.0         November 2006
         6.00% Euro Notes . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .        A25.0         March 2007
         6.4% Guaranteed Notes . . .      .   .   .   .   .   .   .   .   .   .   .   .       A120.0         July 2007
         8.17% Series A Loan Notes        .   .   .   .   .   .   .   .   .   .   .   .       $102.0         August 2007
         8.30% Series B Loan Notes .      .   .   .   .   .   .   .   .   .   .   .   .        $48.0         August 2010
         5.66% Series A Loan Notes        .   .   .   .   .   .   .   .   .   .   .   .       $120.0         June 2011
         5.34% Series B Loan Notes .      .   .   .   .   .   .   .   .   .   .   .   .        A65.0         June 2012
         5.87% Series C Loan Notes .      .   .   .   .   .   .   .   .   .   .   .   .        $20.0         June 2012
         6.80% Loan Notes . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .        A26.8         June 2012
         6.19% Series D Loan Notes        .   .   .   .   .   .   .   .   .   .   .   .       $100.0         June 2014
    For more information on these individual series of Loan Notes, please see ‘‘Description of Other
Indebtedness’’.
     It is also the Group’s policy to lease certain of its vehicles (including some vehicles held under
re-purchase arrangements) and certain office and IT equipment under finance leases. The average
lease term is normally less than one year, and is commensurate with the period for which the
underlying secured item is held.
     Excluding the above facilities, Avis Europe plc and its subsidiaries had approximately A3.6 million
of indebtedness under committed bilateral bank facilities, with approximately A127.1 million of
additional borrowing capacity as of 31 December 2005. Avis Europe plc and its subsidiaries had
approximately A19.6 million of indebtedness under uncommitted bilateral bank facilities, with
approximately A178.6 million of additional borrowing capacity as of 31 December 2005. Borrowings
under the bilateral bank facilities are generally used to finance working capital needs and are all
unsecured. For more information on these bilateral facilities, please see ‘‘Description of Other
Indebtedness—Bilateral Facilities’’.
      At 31 December 2005, the Group had committed finance lease facilities of A416.9 million, of
which A267.1 million were utilised at that date. In addition, the Group had other finance lease
facilities of A288.6 million, of which A11.0 million were utilised at the year-end. The Group seeks to
utilise the committed finance lease facilities to the maximum extent the size of the fleet allows. Other
finance lease facilities are utilised more variably throughout the year. For more information on these
finance lease facilities, please see ‘‘Description of Other Indebtedness—Finance Leases’’.

Off-Balance Sheet Arrangements
     Avis Europe plc and certain subsidiaries have provided unsecured guarantees to certain third
parties within the normal course of business, the majority of which were in favour of certain lenders
in respect of some of the Group’s Loan Notes and borrowing facilities, together with guarantees
provided to vehicle suppliers and property lessors. As at 31 December 2005, these guarantees
totalled A911.4 million (2004: A974.6 million).
    The Group also has various off-balance sheet operating lease arrangements for the rental of land
and buildings and certain fleet vehicles. These obligations are detailed under ‘‘—Contractual
Obligations’’ below.




                                                                              56
Contractual Obligations
    The maturity profile of the Group’s gross debt balances at 31 December 2005 is summarised
below, which has been extracted without material adjustment from Note 27 to the Consolidated
Financial Information 2005 included elsewhere in this offering memorandum.

                                                                                                      Payments due by period
                                                                                       Less than       One to        Two to       More than
                                                                                       one year      two years     five years     five years    Total
                                                                                                                       IFRS
                                                                                                              (in millions of euro)

Derivative financial instrument assets . . . . . . .                                       2.8               —          —              —            2.8
Derivative financial instrument liabilities . . . .                                       (5.6)           (23.6)     (12.6)         (16.6)        (58.4)
Derivative financial instruments .             .   .   .   .   .   .   .   .   .   .     (2.8)        (23.6)         (12.6)        (16.6)        (55.6)
Bank overdrafts . . . . . . . . . . . . .      .   .   .   .   .   .   .   .   .   .    (12.4)           —              —             —          (12.4)
Bank loans and other loans . . . .             .   .   .   .   .   .   .   .   .   .    (10.8)        (70.7)            —             —          (81.5)
Commercial paper . . . . . . . . . . .         .   .   .   .   .   .   .   .   .   .    (66.0)           —              —             —          (66.0)
Loan Notes . . . . . . . . . . . . . . . .     .   .   .   .   .   .   .   .   .   .    (24.9)       (228.8)         (39.2)       (272.9)       (565.8)
Obligations under finance leases               .   .   .   .   .   .   .   .   .   .   (276.2)         (1.9)            —             —         (278.1)
Gross debt (including net derivatives but
  excluding deferred consideration) . . . . . . . .                                    (393.1)       (325.0)         (51.8)       (289.5)      (1,059.4)

    In addition to the above, the Group had deferred consideration of A33.0 million due primarily to
Avis US payable over 32 years.
     At 31 December 2005 and 2004, the Group had the following minimum lease payment
commitments under non-cancellable operating leases, which has been extracted without material
adjustment from Note 39 to the Consolidated Financial Information 2005 included elsewhere in this
offering memorandum:
                                                                                                           As at 31 December
                                                                                                   2005                     2004
                                                                                       Land and                 Land and
                                                                                       buildings Vehicles Other buildings Vehicles Other
                                                                                                   IFRS                     IFRS
                                                                                          (in millions of euro)    (in millions of euro)

           Expiring:
           Within one year . . . . . .         ...........                               43.4       13.5      0.1     31.4      11.4     0.1
           Later than one year and             less than five
             years . . . . . . . . . . . . .   ...........                               54.8        1.8      0.1     51.6       1.3     0.1
           After five years . . . . . . .      ...........                               28.8         —        —      29.2        —       —
           Total . . . . . . . . . . . . . . . . . . . . . . . . .                      127.0       15.3      0.2    112.2      12.7     0.2

     At each year end, the Group prepaid various other operating lease commitments in relation to
manufacturer re-purchase agreements, as detailed in Note 19 of the Consolidated Financial
Information 2005 set forth elsewhere in this offering memorandum.

Critical Accounting Policies and Estimates
    This management’s discussion and analysis of financial condition and results of operations is
based upon Consolidated Financial Statements of Avis Europe plc, which have been prepared in
accordance with IFRS and UK GAAP. The preparation of these financial statements requires
management to make estimates and judgments that affect the reported amounts in the Consolidated
Financial Statements.
     Management believes the following critical accounting policies require the more significant
judgments and estimates used in the preparation of the Group’s Consolidated Financial Statements.
Changes in these judgments and estimates may impact the Group’s future results of operations and
financial condition. For additional discussion of the Group’s accounting policies, see ‘‘Selected
Historical and Pro Forma Financial and Other Data.’’




                                                                                        57
IFRS (2005 and 2004)
Goodwill
     As required by IAS 36 ‘‘Impairment of Assets’’, the Group regularly monitors the carrying value
of its assets, including goodwill. Impairment reviews compare the carrying values to the present value
of future cash flows that are derived from the relevant asset or cash-generating unit. These reviews
therefore depend on management estimates and judgements, in particular in relation to the
forecasting of future cash flows and the discount rate applied to the cash flows (see Note 10 to the
Consolidated Financial Information 2005).

Exceptional items
     Exceptional items are those that, by virtue of their size or incidence, should be separately
disclosed in the income statement. The determination of which items should be separately disclosed
as operating exceptional items requires judgement.

Vehicles
     Given the nature of the Group’s business, the main asset on the balance sheet is the vehicle fleet.
The majority of fleet is held under manufacturer re-purchase arrangements, which guarantee a
disposal value at the end of the holding period. However, a proportion of fleet has no such
contractual protection and therefore the value at the end of the rental life will depend on the market
for those vehicles at the time of disposal. Judgment is therefore required in the estimation of disposal
value.

Post-employment benefits
     Application of IAS 19 ‘‘Employee Benefits’’ requires the exercise of judgement in relation to
setting the assumptions used by the actuaries in assessing the financial position of each scheme. The
Group determines the assumptions to be adopted in discussion with its actuaries, and believes these
assumptions to be in line with UK generally accepted practice, but the application of different
assumptions could have a significant effect on the amounts reflected in the income statement and
balance sheet in respect of post-employment benefits. In particular, the defined benefit obligation for
funded schemes is forecast to vary by approximately A4.0 million for each 0.1% movement in either
the applied discount rate or inflation rate. Similarly, the defined benefit obligation for unfunded
schemes is forecast to vary by approximately A0.8 million for each 0.1% movement in either the
discount rate or inflation rate.

Provisions
     The Group continues to carry balance sheet provisions in a number of areas against exposures
that arise in the normal course of trading. These provisions cover areas such as uninsured losses,
termination and reorganisation activities and property dilapidation reserves. Judgement is involved in
assessing the exposures in these areas and hence in setting the level of the required provision.

UK GAAP (2004 and 2003)
Goodwill impairment reviews
    As required by UK accounting standards, the Group regularly monitors the carrying value of its
tangible and intangible fixed assets, including goodwill. The reviews compare the carrying values to
the present value of future cash flows that are derived from the relevant asset. These reviews
therefore depend on management estimates and judgements, in particular in relation to the
forecasting of future cash flows and the discount rate applied to the cash flows. The outcome of
these reviews is set out in the notes to the Consolidated Financial Statements 2004.

Operating exceptional charges
     Operating exceptional charges are those that, by virtue of the size or incidence, should be
separately disclosed if the Consolidated Financial Statements 2004 are to properly reflect the results
for the period. The determination of which items should be separately disclosed as operating
exceptional charges requires a significant degree of judgement.



                                                  58
Vehicles
    Given the nature of the Group’s business, the main asset on the balance sheet is the vehicle fleet.
The majority of fleet is held under manufacturer re-purchase arrangements, which guarantee a
disposal value at the end of the holding period. However, a proportion of fleet has no such
contractual protection and therefore the end of rental life value will depend on the market for these
vehicles at the time of disposal. Judgement is therefore required in the estimation of disposal value.
Depreciation rates are set to write-off the difference between the purchase price and the anticipated
disposal value of a vehicle, or class of vehicle, over the holding period and vary between 12% and
40% per annum, depending on the type of vehicle.

Post-employment benefits
     The Group accounts for post-employment benefits under Accounting Standard SSAP 24, and
provides additional disclosures in accordance with FRS 17. Application of SSAP 24 required the
exercise of judgement in relation to assumptions for future pay rises in excess of inflation, employee
demographics and the future expected returns on assets. The Group determines the assumptions to
be adopted in discussion with its actuaries, and believes these assumptions to be in line with UK
accepted practice generally, but the application of different assumptions could have a significant
effect on the amounts reflected in the profit and loss account and balance sheet in respect of post
employment benefits. The Consolidated Financial Statements 2004 comply with the transitional
disclosure requirements of FRS 17.

Provisions
     The Group continues to carry balance sheet provisions in a variety of areas against exposures
that arise in the normal course of trading. These provisions cover areas such as insurance reserves.
Judgement is involved in assessing the exposures in these areas and hence in setting the level of the
required provisions.

Disclosures About Market Risks
     From a treasury perspective the Group is exposed to market risks, notably in respect of changes
in exchange rates and interest rates. The Group manages its exposure to these market risks through
its regular operating and financing activities and, in respect of interest rate risk, through the use of
derivative financial instruments. Derivative financial instruments are viewed as risk management tools
and are not used for speculative or trading purposes. For more information on these exposures see
Note 26 to the Consolidated Financial Information 2005.

Financial risk management objectives and policies
     The Group’s financial risk management objective is to reduce the financial risks and exposures
facing the business with respect to changes in interest and foreign exchange rates, and to ensure
constant access to sufficient liquidity. To achieve this the Group undertakes an active hedging policy,
including the use of derivatives (interest rate and foreign exchange swaps, options, forward rate
agreements and caps and collars), which are entered into under policies approved and monitored by
a sub-committee of the Board, chaired by the Group Finance Director. These transactions are only
undertaken to reduce exposures arising from underlying commercial transactions and at no time are
transactions undertaken for speculative reasons.

Foreign currency risk
    The majority of the Group’s business is transacted in euro, sterling and the US dollar. The
principal commercial currency of the Group is the euro, although functional currency is sterling. The
Group seeks to manage currency exposure wherever possible.
     In each country where the Group has a corporate operation, revenue generated and costs
incurred are primarily denominated in the relevant local currency, so providing a natural currency
hedge. In addition, intra-group trading transactions are netted and settled centrally. Any remaining
material foreign currency transaction exposures are hedged as appropriate. Revenue recognised from
licensees is primarily earned and received in sterling.




                                                  59
    With regard to translation exposures, the policy is to match the average assets of the Group to
the equivalent average liabilities in each major currency and thus minimise any impact to the Group.
To the extent that this does not occur, both foreign currency borrowings and forward exchange
contracts are used. Long-term US dollar borrowings undertaken to benefit from the liquidity of the
US dollar denominated capital markets are swapped into euro.

Interest rate risk
     The Group’s interest rate risk primarily arises from the Group’s borrowings. 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.
    The Group has an exposure to movements in interest rates, principally in euro and sterling.
     To manage these risks, the Group is both financed through a combination of fixed and floating
rate facilities and enters into various derivatives. The Group has a policy to ensure that the
proportion of fixed rate debt to net debt (defined for this purpose to include the net book value of
fleet under operating leases) for the next three year ends will be maintained in the ranges of 45% to
65%, 35% to 60% and 25% to 55%, respectively.

Liquidity risk
     The seasonal nature of the business necessitates higher fleet levels in the summer months and
hence proportionately higher debt requirements. Consequently the Group ensures that it has a core
level of long-term funding in place, with maturities spread over a wide range of dates, supplemented
by shorter-term facilities to cover requirements through the year.

Credit risk
     The Group controls this risk from a treasury perspective by only entering into transactions
involving financial instruments with authorised counter-parties of strong credit quality, and such
positions are monitored regularly.




                                                  60
                                                       INDUSTRY OVERVIEW
Market size and growth
     Total car rental revenue generated in the Group’s eleven key Corporate Countries(1) in 2005 is
estimated by the Euromonitor IMIS Travel Database (an independent research organisation)(2)
(‘‘Euromonitor’’) to be A8,800 million, of which the largest of these countries by revenue were
Germany (22.1%), the United Kingdom (19.6%), France (16.1%), Spain (15.2%) and Italy (9.9%).
During this period, Euromonitor estimates that 40.1 million rentals were made and that a combined
fleet of approximately 1.2 million vehicles was used.
     Historically, the growth of the car rental market has been closely tied to general economic
activity, and, in the case of airport rentals, to airline passenger volume growth. Economic growth
prospects for the Group’s key markets are favourable, with the Economist Intelligence Unit
forecasting Euro-area GDP to grow at an annual rate of between 1.8% and 2.1% from 2006-2009,
and between 2.1% and 2.4% in the United Kingdom over the same period. The airline sector is
particularly buoyant, driven in part by the rapid growth of low cost airlines. The International Air
Transport Association forecasts growth in passenger arrivals for flights within Europe of 5.1% per
annum from 2005-2009. Management believes that these two trends should help to support
continued growth in the car rental market.
    As a consequence, Euromonitor estimates that the total industry revenue in the key Corporate
Countries grew at a compound rate of 1.4% per annum from 1999-2005, and forecast growth of
3.0% per annum from 2005-2010.

                                            Total Industry Revenue, 1999-2010f, Europe
                     11,000



                     10,000



                      9,000
         € million




                      8,000



                      7,000



                      6,000



                      5,000
                              1999   2000    2001   2002   2003   2004   2005   2006f   2007f   2008f   17JUL200607221500
                                                                                                        2009f     2010f

                                        Source: Euromonitor IMIS Travel Database 2005

Market composition
     The car rental market is generally categorised either by the type of customer (corporate, leisure,
replacement) or by the location of rental (airport, non-airport). Euromonitor estimates that just over
50% of the market is leisure, with approximately 44% being corporate and 6% being replacement
business, while 35% of revenue comes from airport rentals.

Competition
      Euromonitor research shows that the Group has the highest aggregate market revenue share in
its eleven largest Corporate Countries in 2005, with 16.8%, followed by Hertz and Europcar with

(1) I.e. Germany, the United Kingdom, France, Spain, Italy, Portugal, Greece, Switzerland, Austria, Belgium, and
    the Netherlands.
(2) Data supplied as at 30 June 2006.



                                                                  61
16.2% each. In specific markets, the Group faces competition from local regional operators such as
Sixt in Germany and Enterprise in the United Kingdom, in addition to smaller-scale operators.

                                    Market share by country (% of Revenue)
     €1,949m         €1,729m             €1,424m             €1,338m    €877m       €1,504m
                                                                         Others
                                            Others                       12.2%
      Others                                26.3%                       National/    Others
      29.5%                                                                                         Total Market Share
                      Others                                             Alamo       38.1%
                      44.0%                                   Others    14.2%
                                                              47.6%                                 Others          38.1%
                                         ADA 7.4%                       Sixt 4.7%
                                       National/Alamo 4.8%                                          National          4.9%
                                                                                    National 1.8%
       Sixt
                                                                        Europcar    Sixt 5.6%
      24.6%                               Europcar                       22.0%                      Sixt              7.8%
                     Enterprise
                                           17.8%                                    Europcar
                      9.4%
                                                             Europcar                13.9%          Europcar        16.2%
                   National/Alamo                             17.5%
     Europcar          16.1%
                                                                                                    Hertz           16.2%
                                                                         Hertz
      21.5%                                 Hertz                       23.9%         Hertz
                     Sixt 4.9%              23.9%              Hertz                 17.2%          Avis            16.8%
                                                              17.0%
       Hertz       Europcar 6.9%
      11.5%            Hertz
                       9.9%                  Avis              Avis      Avis         Avis
       Avis                                 19.8%             17.9%     23.0%        23.4%
      12.9%             Avis
                       8.8%

     Germany            UK                 France             Spain      Italy       Other                     5JUL200621434860
Source: Euromonitor IMIS Travel Database 2005, 11 Corporate Countries in Europe




                                                               62
                                                            BUSINESS
The Group
     The Group is the leading international vehicle rental services company in Europe based on
market share of revenue(1). Under the Avis and Budget brands, the Group operates more than 3,700
locations in 105 countries throughout Europe, Africa, the Middle East and Asia. In 2005, the Group
employed 6,253 persons (based on average full-time equivalent headcount), had an average fleet of
120,000 vehicles, and completed over five million transactions.
    Avis Europe plc has been listed on the London Stock Exchange since 1997. For the year ended
31 December 2005, the Group generated consolidated revenues of A1,276.5 million and Underlying
EBITDA of A433.7 million.
    The Group enjoys close commercial ties with Cendant in the United States, which owns the
US-domiciled Avis US and Budget Inc. and the global rights to the two brands, including sharing
technology and marketing initiatives. Together, the two companies provide their customers with
access to a global network.

                                                                                   The Group                  Cendant
                                                                              Avis         Budget       Avis US    Budget US
                                                                             Europe
                                                                             Africa        Europe                     Americas
                                                                           Middle East     Africa       Americas     Australasia
Territories                                                                   Asia       Middle East   Australasia      Asia

Corporate Countries . . . . . . . . . . . . . . . . . . . . . . . . . .         14             4             8             5
Corporate Locations . . . . . . . . . . . . . . . . . . . . . . . . . .      1,700           240         1,180           680
Licensee Countries . . . . . . . . . . . . . . . . . . . . . . . . . . .        91            59            48            52
Licensee Locations . . . . . . . . . . . . . . . . . . . . . . . . . . .     1,200           560           850         1,120


    In 2005, Avis represented 96.7% of the Group’s overall revenue, and Corporate Countries
accounted for approximately 95% of the Group’s overall revenue.

Strengths
Strong global brand
     The ‘‘Avis’’ brand has been established for more than 60 years and is acknowledged as one of
the world’s most recognised brands. Combined with the Group’s distinctive culture, which is
embodied in the ‘‘We try harder’’ ethos, the Avis brand engenders considerable customer and staff
loyalty throughout the world.

Leading market position
     The Group is the leading vehicle rental company in Europe, with an aggregate 16.8% market
share in eleven key Corporate Countries. Through its network of licensees, the Group also holds a
leading position throughout Africa, the Middle East and Asia. As of 31 December 2005, the Group
operated more than 3,700 locations in 105 countries and is present at 75 principal airport locations
in Europe.(1)

Diversified customer base and sales channels
    The Group’s customer base is well balanced between all major market segments and all key
countries throughout EAMEA. This diversification prevents over-dependence on any one customer
group or market. For the year ended 31 December 2005, no single corporate, agent or licensee-run
rental station in the Corporate Countries accounted for more than 2.1% of the Group’s consolidated
revenues, and no single customer account generated more than 4.0% of the Group’s consolidated
revenues. The Group offers multiple booking channels, including a low cost market-leading website, a
substantial rental station network, dedicated call centres and well-established links to the travel
industry.


(1) Source: Euromonitor IMIS Travel Database 2005.



                                                                 63
Worldwide network
    Through Avis and Budget, the Group provides its customers with access to a worldwide network
through two of the three global vehicle rental brands. This worldwide network enables the Group to
provide a global service to multi-national corporate customers.

Leading partnership programmes
     The Group has a leading portfolio of over 70 international partnerships with airlines, including
British Airways, Iberia and Lufthansa, tour operators, major hotel groups, railway companies and
credit card companies. These partnerships provide access to a wide customer base and generate a
significant proportion of the Group’s rentals.

Flexible cost base
     Up to 70% of the Group’s cost base is variable over a 12-month period. Key components of costs
are fleet, staff, commissions and fees.
    The Group is able to flex its fleet level rapidly to meet fluctuations in rental demand. As vehicles
are only held for approximately seven months, this can be achieved by altering purchases of new
vehicles or by varying holding periods. The Group uses a variety of disposal methods and benefits
from flexibility within its manufacturer re-purchase agreements.
    The Group has flexible staffing levels, benefiting from a relatively high proportion of seasonal
and part-time staff and the outsourcing of certain activities (such as car washing and preparation). A
number of other key costs, such as commissions and fees, vary in line with sales volume.

Strong asset backing
     The Group’s borrowings are supported by a fleet of newly purchased vehicles. These vehicles are
relatively liquid assets, and the majority have guaranteed residual values by virtue of manufacturer
re-purchase agreements. The Group’s fleet net book value generally exceeds its level of borrowing.
For instance, net fleet book value as at 31 December 2005 was A1,357.9 million, compared with total
net debt of A945.6 million.

Highly-integrated information systems
     Avis uses Wizard, a highly-integrated and proprietary IT and information system, which provides
reservation and rental information used throughout Avis’ worldwide network. Additionally, the Group
continues to develop its website, and to invest in other technology such as a sophisticated hand-held
system which allows for rapid vehicle return and recovery of fuel and damage charges.

Equity support
    Avis Europe plc’s majority shareholder is D’Ieteren, a Belgian family-controlled company with
widespread automotive interests that is listed on the Brussels Stock Exchange. D’Ieteren has had a
long and supportive relationship with the Group, as evidenced by its further investment of
A104.5 million during the Rights Issue.

Strengthened management team
     In March 2004, Murray Hennessy took over as Chief Executive Officer. Murray has continued to
strengthen the senior management team. Changes include the appointment of a new Commercial
Director, a new IT Director, new country management in the United Kingdom, France and Germany,
and key senior recruitments in the business development and revenue management teams.

Strategy
     The Group’s margin improvement strategy centres on staff, customers and profitability. This
strategy is designed to increase operating margins by three to five percentage points from the level
reported in 2004 over the next two to three years, whilst still maintaining the Group’s market leading
position.




                                                   64
   These initiatives build on the Group’s core strengths, are characterised by low technological
complexity and comprise multiple, small-scale projects, thereby reducing execution risk.
    The four main elements of the strategy are as follows:
    • Cost reduction: Variable costs are being addressed in a number of ways, including ceasing
      commission payments to travel agents on corporate contracted business, and improving both
      post-rental revenue adjustments and collection of fuel and damage charges. To reduce fleet
      holding costs, investments are being made in fleet system enhancements and vehicle
      re-marketing capabilities.
      In addition, the Group has substantially completed a significant organisational restructuring
      and redesign of key processes to address fixed costs. Targeted investments are being made in
      key areas such as revenue management and web development. These changes are designed to
      create a more effective and efficient business. The restructuring and redesign comprises a
      substantial reduction in staff and running costs at the European headquarters; an acceleration
      of the transfer of back-office activities into the shared service centre in Budapest;
      consolidation of all call centre activities into the existing Barcelona facility by October 2006;
      and a number of personnel and overhead cost initiatives in both the European headquarters
      and country head offices. These cost saving initiatives are expected to generate savings of
      approximately A7 million in 2006, A25 million in 2007 and A30 million per annum thereafter.
      Exceptional costs taken in 2005 were A6 million and are expected to amount to some
      A40 million in 2006 and A7 million in 2007.
      Actions to turnaround the loss making Budget business acquired in 2003 are well underway
      with programmes in place to improve both performance in the corporate operations in the
      United Kingdom and France and the development of overall network revenue.
    • Improving yield and utilisation: A new central revenue management function has been
      formed with the goal of improving pricing and vehicle utilisation.
      A number of new data tools and processes are being developed by the team to be used at
      European, country and station level. Several successful pilots have been conducted and the
      experience of these has assisted the design and development of this initiative.
    • Target most profitable customer segments: The Group has developed a comprehensive
      database on the profitability and return on capital characteristics of different customer groups.
      Actions are underway to migrate business towards the more profitable customer groups so
      that capital is progressively deployed to generate a higher return.
      This is being achieved by increasing marketing spend and sales focus on these more profitable
      segments and by upgrading service, particularly to targeted customer groups. Initiatives
      include a new vehicle return service, using hand-held technology and a simplified multi-lingual
      rental agreement. Investments are also being made in on-line marketing activities and
      continued enhancements to the website.
    • Tight capital control: The Group is renewing its focus on maintaining capital discipline,
      including fleet allocation and rotation, and working capital management.
    For each of these strategic priorities, the Group has a series of specific action plans, and
implementation is well underway. Priority has been given to initiatives that deliver the most certain
and immediate benefits, such as the overhead restructuring detailed above.

Corporate History
     The Avis vehicle rental business originated in 1946 when Warren Avis opened the first Avis
rental location at Willow Run Airport in Detroit, Michigan, United States. In the 1950s, the Avis
vehicle rental business started to expand internationally and franchise operations were opened in
Europe, Canada and Mexico. The EAME division, which eventually became the Company, was
established in 1965 in order to spearhead international expansion. By the early 1970s, the EAME
division had grown rapidly to become the leading vehicle rental business in Europe.
    In 1986, Avis Europe plc was listed on the London Stock Exchange. At that time, the Group and
Avis US (now a subsidiary of Cendant) established a legal framework for maintaining the mutual
benefits of operating a seamless world-wide Avis vehicle rental system. The co-operative


                                                  65
arrangements then in existence were formalised through various agreements including a trademark
licensing agreement granting the Group exclusive rights to the Avis name and trademarks for vehicle
rental, leasing and related services throughout EAME until 2036 on a no-fee basis, and a computer
services agreement giving the Group access to Avis US’s Wizard computer system.
     In 1989, a consortium of D’Ieteren, General Motors and Avis US took Avis Europe plc private.
However, in 1997, Avis Europe plc was floated for a second time on the London Stock Exchange,
primarily to fund expansion of its core business. Upon flotation, Avis US and General Motors ceased
to be shareholders of the Group and to have an equity interest in Avis Europe plc. Immediately
following the flotation D’Ieteren retained a majority shareholding of 56.9% and has since acquired
further shares. D’Ieteren is currently the beneficial owner of 59.6% of Avis Europe plc. For further
details of the relationship with D’Ieteren, see ‘‘—Significant Relationships’’ and ‘‘Certain Relationships
and Related Party Transactions’’.
     In 1997, the Group also extended its licence to the Avis name and brand to a further 27
territories in Asia (14 of which were operational on flotation) and has continued expanding in this
region. The Group has established a presence in India and China, the latter by acquiring in
January 2003 a 50% interest in Anji China Car Rental and Leasing Company Limited (‘‘Anji’’) from a
wholly-owned subsidiary of SAIC Group, one of China’s largest automobile groups, for a consideration
of A10.4 million, plus acquisition-related costs of A1.0 million. Anji operates in China providing vehicle
rental and leasing services under the Avis brand.
     In March 2003, the Group acquired Budget’s operations and a licence to use the Budget brand
name for EAME from Budget’s Trustee in bankruptcy for A41.8 million, of which A7.1 million was
associated debt. The Group is continuing to strengthen and integrate the Budget network in EAME.
See ‘‘—The Budget Business’’.
    In December 2003, the Group decided to exit from its claims management company, Centrus,
which it acquired in 1998.
    In July 2005, the Group raised approximately A166 million net of expenses, through a successful
four for seven rights issue, with the D’Ieteren’s full support. These proceeds have strengthened the
Group’s capital base.

THE AVIS BUSINESS
The Avis Network
     The Avis network, comprising more than 2,900 stations in over 105 countries, is one of Avis’ key
assets, contributing to its proximity to its customers and satisfying one of their primary demands—
convenience. The Avis network includes a combination of corporate, agency and licensee operations
in the Corporate Countries, and national and regional licensee operations in the rest of the world.
     Management also believes that the extensive scope of the Avis network enhances Avis’ ability to
maximise fleet utilisation, to control fleet costs (through, for example, reduced fleet-relocation costs),
to offer competitive pricing and one-way rentals, and to limit the extent to which Avis’ financial
performance and prospects are dependent on any one location or customer account. For the year
ended 31 December 2005, no single corporate, agent or licensee-run rental station in the Corporate
Countries accounted for more than 2.1% of the Group’s consolidated revenues, and no single
customer account generated more than 4.0% of the Group’s consolidated revenues.

Corporate Countries
     Avis directly manages the majority of the stations in the Corporate Countries through its 14
local operating subsidiaries, which own (or lease) the rental fleet and station sites and employ the
stations’ staff. The general manager of each operating subsidiary is responsible for managing the
fleet and the stations in the relevant Corporate Country and for overseeing the local sales and
marketing, human resources, legal and accounting functions.
    The remaining stations in the Corporate Countries are operated either by agents or by licensees.
The combination of these three operating structures enables Avis to provide cost-effective coverage
throughout the Corporate Countries.




                                                    66
     Relationships with agents and licensees in the Corporate Countries are managed at the operating
subsidiary level. Agents operate in the Corporate Countries using a rental fleet owned (or leased) by
Avis. The sites and employees of agent-operated stations are the responsibility of the agents, who
receive a commission from Avis based on their station’s revenues (which are recorded as Group
revenues). Licensees in the Corporate Countries use their own fleet (which in certain cases is leased
from Avis), locations and employees. Licence agreements generally cover a specific portion of the
Corporate Countries (e.g. a region or a city). Please refer to ‘‘—Operation of Licensing
Arrangements’’ for a description of the mechanics of the licensing arrangements.

Licensee Countries
     In addition to its operations in the Corporate Countries, the Avis network has expanded
elsewhere through international licence operations. As of 31 December 2005, the Avis network’s
international licences covered 91 countries (each, a ‘‘Licensee Country’’ and collectively, the ‘‘Licensee
Countries’’). Avis’ international licence department is responsible for developing and overseeing
licence activities in the Licensee Countries. Operations in each Licensee Country are conducted by a
single licensee, either directly by it, or through sub-licence or agency agreements between it and
third parties. Licences are a major factor contributing to the Avis network’s international reach, and
the licence system plays an essential role in maintaining and growing both market share and profits.
Please refer to ‘‘—Operation of Licensing Arrangements’’ for a description of the mechanics of the
licensing arrangements.
     Avis is represented in more than 73% of Africa, which is more than any other international
vehicle rental company and services all international airports in 37 countries in Africa. Avis is
represented in over 13 countries in the Middle East serving a population of more than 120 million.
Avis has the widest network covering Scandinavia with a fleet in excess of 12,700 vehicles. Avis is
represented in every country in Central and Eastern Europe. Avis operates in 15 countries in Asia
which provides it with access to a vast market representing over 60% of the world population in one
of the most dynamic regions of the global economy, whilst further enhancing its international
presence.

Joint Venture Countries
     Asia is a key long-term growth region and Avis became the first international vehicle rental
company to enter into an equity joint venture in the Chinese market in January 2002, through the
signing of an agreement with a subsidiary of SAIC Group, one of China’s largest automotive groups.
The 50% stake in the joint venture makes Avis the largest international vehicle rental company in
China, since it commenced trading in January 2003.
    Avis also owns a 33% equity stake in a joint venture with a subsidiary of Oberoi Hotels in India,
and Avis Europe plc recognises the strong potential for growth in this market.

Rental Services and Business Mix
Rental Services
     The Avis network offers a wide variety of recent-model passenger cars, vans and trucks for
rental on a daily, weekly, monthly or longer basis (up to one year), with rental charges computed on
a limited or unlimited mileage rate, or on a time rate with or without mileage charges. The Avis
network’s rental fee rates vary at different locations depending on local market conditions and other
competitive and cost factors. While vehicles are usually returned to the location from which they are
rented, the Avis network also allows one-way rentals to and from selected locations.
     The Group’s consolidated revenues are derived from the corporate and agent-operated vehicle
rental operations in the Corporate Countries and through royalties and fees from the Avis network’s
licences. In addition to vehicle rentals and licence fees, Avis generates additional revenue from
ancillary charges and services, such as surcharges for airport concessions, loss or collision damage
waivers, insurance, and charges for fuel and supplemental equipment (e.g. in-car and portable
navigation systems, child seats and ski racks). Rental agreements generally require the customer to
pay for fuel so Avis is not materially vulnerable to changes in fuel prices.




                                                   67
Geographic Mix
     In 2005, over 80% of the Group’s revenue was derived from five major markets as represented in
the following chart:

                       Avis Corporate revenue breakdown by country—2005
                                  Other                         France
                                  19%                            20%




                           UK                                              Germany
                          17%                                                14%




                                                               Italy
                                     Spain                     14%
                                     16%                               4JUL200623513630
     This distribution of revenue across the major markets has not changed significantly within the
last three years, and reduces Avis’ exposure to a downturn in any one market.

Customer Type
     The Group classifies its business into four main customer categories, which are summarised in
the following chart:

                    Avis Corporate revenue breakdown by customer type—2005

                            Replacement                       Corporate
                                22%                             22%




                        Premium
                          19%


                                                             Leisure
                                                              37%4JUL200621572134
Corporate
    Customers who rent from the Avis network for business purposes include employees from large
global companies, small and medium-sized enterprises, governments and other organisations. The
Group also categorises rentals to customers of companies offering vehicle replacement services
through negotiated arrangements with the Avis network as corporate rentals. The corporate
customer category displays a relatively even pattern of demand throughout the year. Avis has
contractual arrangements with a number of major European companies to serve as the preferred
provider of vehicle rental programmes at pre-negotiated rates and subject to agreed service level
guarantees. Corporate contracts can be exclusive or shared with other vehicle rental providers. In
addition, through negotiated arrangements with major travel agency networks, Avis is able to reach


                                                 68
small and medium-sized enterprises whose rental volume is insufficient to support a direct
relationship with Avis.
     Many of Avis’ business customers have direct access to Wizard via dedicated micro-sites,
providing them with reservations and invoicing interfaces specifically tailored to their needs. Where
the volume of rental transactions with a particular customer is significant, Avis may locate an
‘‘implant’’ station directly on the customer’s premises. The key requirements of corporate customers
are competitive prices, speed and quality of service, availability of management information and
geographical coverage.

Leisure
     Customers who rent from the Avis network for ‘‘leisure’’ purposes include both individual
travellers booking directly with Avis and customers whose rentals have been arranged through travel
companies and tour operators. The leisure market includes both customers who pre-book a vehicle
prior to departure and those who decide to rent a vehicle whilst at their destination through
intermediaries that identify them to Avis as leisure customers. To support its leisure business Avis
has an extensive portfolio of over 70 international partnerships with the world’s airlines, railway
networks and leading travel companies. The leisure customer category is more seasonal than the
corporate customer category, with demand peaking over the key holiday periods. Leisure customers
are principally attracted to Avis by its widespread network, excellent advertising and internet site,
and competitive prices.

Replacement
     The vehicle replacement rental business principally involves the rental of vehicles to individuals
who are referred, and whose rental charges are wholly or partially paid or reimbursed, by insurance
companies, vehicle leasing companies and dealerships, repair shops and other entities offering vehicle
replacement and motorist assistance services, with whom Avis has a direct contractual relationship.

Premium
    The premium customer category comprises rentals from customers who cannot be classified by
the Group into any other category. For example, such customers would include those who book
through certain travel partnerships or those customers who do not pre-reserve their rental.

Stations
     Rental locations throughout the network are selected for their convenience to customers, with
particular importance attached to representation at airports, rail locations and other major travel
points. Avis benefits from an even distribution of revenue from airport and non-airport locations.

Airport Stations
     In order to operate at an airport, Avis must obtain a concession or similar permitting agreement
from an airport’s operator. The airport operators control the number of concessions made available
to vehicle rental companies and each concession must be obtained through a negotiation or bidding
process. Access to airports is relatively costly, and consequently representation at airports is higher
amongst the larger vehicle rental companies.

Non-Airport Stations
     In addition to airport stations, Avis operates non-airport stations offering vehicle rental services
to a variety of customers. Non-airport stations include other major travel points such as railway
stations, city and suburban centres, hotels, resorts and office buildings. When compared to airport
rental locations, non-airport rental locations typically deal with a wider variety of customers, use
smaller rental facilities with fewer employees and, on average, generate fewer transactions per period
than airport locations.




                                                   69
Fleet Composition, Acquisition and Management
Fleet Composition
     Avis’ fleet of motor vehicles represents its major asset and the procurement, management and
financing of the fleet is a key factor in achieving profitability. Avis aims to offer customers a wide
range of vehicles, while at the same time seeking to minimise overall vehicle costs and optimise
vehicle utilisation.
    Vehicles are retained, on average, for a period of seven months. Due to the large number of
vehicles required for Avis’ operations, Avis is one of the largest purchasers of vehicles in Europe,
having acquired approximately 180,000 vehicles in calendar year 2005. The size of its fleet fluctuates
on a seasonal basis throughout the year. The fleet acquisition policy is determined by the expected
mix of rental demand, the terms available from vehicle manufacturers, anticipated vehicle
maintenance and running costs, and vehicle resale values.
    During the year ended 31 December 2005, Avis operated an average rental fleet in Europe of
approximately 120,000 vehicles. Some of Avis’ sourcing agreements with manufacturers allow the
Group’s licensees to benefit from the terms and conditions of these agreements, including the
re-purchase provisions and the marketing provisions.

Acquisition and Resale of Fleet
    Avis acquires vehicles from a broad range of suppliers. In 2005, Avis had supply arrangements to
purchase vehicles of 34 different manufacturer brands. The composition of the fleet according to
vehicle manufacturers is summarised in the following chart:

                                       Composition of fleet—2005
                                              PSA Others
                                      Daimler 3%   3%
                                        5%
                                   Fiat
                                                                        GM
                                   6%
                                                                        32%

                            Ford
                             9%




                             VAG
                             16%


                                                           Renault
                                                            26%4JUL200621581928
     The discounts which Avis can obtain from vehicle manufacturers, and the number of vehicles
available for purchase from each manufacturer on acceptable terms, fluctuate from year to year. The
sales value of vehicles on disposal in the second-hand vehicle market can be influenced both by
general economic conditions and by the number of ex-rental vehicles which are sold into that
market. Avis employs a variety of methods in seeking to reduce exposure to these factors, which can
include purchasing from a wide range of manufacturers, and entering into a variety of arrangements
for disposal of vehicles at the end of their rental lives.
     The fleet departments in each of the Corporate Countries are responsible for negotiating
national fleet acquisition contracts (including those implementing the terms of the international
contracts). In most cases, national contracts with vehicle manufacturers cover a single calendar year
of purchases and are re-negotiated annually.
     Group policy is to maintain a balance between the certainty of costs of acquiring its fleet
through re-purchase agreements, and the advantages of purchasing vehicles where the Group takes
the residual value risk. Under the contractual re-purchase programmes, the Group agrees to acquire a


                                                   70
given quantity of specific model vehicles exclusively for short-term rental use (i.e., with a maximum
rental period per customer of between 50 and 90 days), and the manufacturer (or, in certain cases,
one or more of its dealers) agrees to re-purchase the vehicles at a specified price during established
re-purchase periods, subject to specified vehicle condition and mileage requirements. Vehicles
purchased by vehicle rental companies under re-purchase programmes are referred to as ‘‘buy-back’’
vehicles. Re-purchase prices for buy-back vehicles are contractually based on either (i) a
predetermined percentage of original vehicle price and the time period within which the vehicle is
re-purchased or (ii) the original capitalised price less a set daily economic depreciation amount.
      Re-purchase programmes balance the Group’s potential residual value risk and are important in
managing the Group’s exposure to fluctuations in the used vehicle market. Re-purchase programmes
also allow the Group to arrange financing on the basis of the agreed re-purchase price and provide
the Group’s fleet managers with flexibility to respond to changes in demand (see ‘‘—Fleet
Management’’ below). Optional re-purchase programmes afford the Group the choice to require
manufacturers to re-purchase the vehicles at set prices, or to retain the vehicles for further use or to
sell the vehicles in the market.
     Vehicles not acquired through re-purchase agreements, or those which have become ineligible
for re-purchase such as those which have become badly damaged in accidents, are sold on the open
market and are referred to as ‘‘risk’’ vehicles. Avis therefore accepts a residual value risk in respect of
these vehicles, which it seeks to manage by only taking such risk, to the extent practicable, on
vehicles which have an established history of resale values. Vehicles sold on the open market are
distributed through a number of channels: wholesale, export and, to a limited extent, retail and
auction. Avis closely monitors used vehicle markets across Europe, phasing disposals over the course
of the year, and actively working with all parties, including the manufacturers, on sophisticated
remarketing strategies. This has enabled the Group to achieve a high degree of stability in the
average resale prices compared to list prices over recent years.
    In addition to vehicles acquired through re-purchase agreements and risk vehicles, the Group has
the use of vehicles obtained from manufacturers under uncommitted operating leases. These
operating lease vehicles are not accounted for on the balance sheet of the Group.
    As at 31 December 2005, the vehicles held by the Group were classified as follows:
approximately 59% buy-back vehicles, 32% risk vehicles and 9% operating lease vehicles. These
proportions do change during the course of a year.
     Overall, the Group retains a higher proportion of risk vehicles than its major competitors.
Management believes that its current proportion of optional re-purchase vehicles, risk vehicles and
operating lease vehicles allows it a strategic advantage in maintaining flexibility for optimal
day-to-day fleet management, and also affords it greater protection against any sudden and
short-term reductions in vehicle rental demand similar to those experienced in the immediate
aftermath of the September 11 attacks after which fleet utilisation returned to normal levels within
six to eight weeks. The Group also believes that this greater flexibility enables it to maximise returns
on the sale of vehicles at the end of their rental life.
     General Motors has been the Group’s largest single vehicle supplier since 1990, and was the
source of approximately 32% of the Group’s vehicle acquisitions in 2005. In light of concerns over
the financial condition of certain manufacturers, the Group is seeking to rebalance its mix of
suppliers. In 2006, General Motors is expected to supply approximately a quarter of the Group’s fleet.
Approximately 50% of all vehicles purchased from General Motors are subject to re-purchase
arrangements, which represents a lower proportion than for most other suppliers.

Fleet Management
     Fleet sourcing and overall fleet planning processes are overseen by the Group’s fleet department,
which negotiates the Group’s international fleet purchase contracts. Fleet utilisation, which measures
the period of time during which vehicles are rented out as a percentage of their rental lives, is
important in controlling overall fleet costs as a percentage of sales. In 2005, the fleet utilisation rate
was 70.5%. Areas in which Avis seeks to improve utilisation include reducing the time between
vehicle delivery and first rental, cutting the time between each rental, and minimising the time
between the last rental and final disposal of the vehicle, as well as improving the process for accident
and repair management. However, such factors cannot be eliminated entirely, and management
believes that in practice it would be difficult to achieve a utilisation rate better than 75%. In order to



                                                    71
help maximise its vehicle utilisation, each month the Group re-forecasts its expected monthly pattern
of demand and readjusts its acquisition and disposal plans based upon those forecasts.
     The Group is able to respond to seasonal fluctuations in demand through continuously
optimising fleet management. Avis can alter its fleet size by adjusting purchasing plans or holding
periods under some flexibility in its re-purchase agreements, and can also use these methods to
adjust fleet size rapidly in order to meet unforeseen variations in demand. The Group is also able to
react to peaks in demand in separate regions or stations at short notice by re-directing the delivery
of new vehicles and by transferring existing vehicles from one location to another.
     To further maintain operational flexibility, the Group typically contracts to purchase up to 90%
of its expected fleet requirements for any given year in each country. These contracts typically
permit the Group to reduce its fleet purchases in a range of extreme circumstances. The Group
would normally expect to obtain the balance of its requirements during the year through local spot
deals on the open market.
     Additionally, Avis constantly monitors and manages the cost of its fleet through control of costs
relating to maintenance, damage, insurance and pre-delivery inspection.

Maintenance
    The Group arranges for each vehicle to be inspected and cleaned at the end of every rental and
to be serviced according to the manufacturer’s recommendations. As a condition to the re-purchase
programmes under which much of its fleet is acquired, the Group must follow the maintenance
specifications of the respective manufacturers in order to maintain the warranty and re-purchase
covenant on the vehicle. The Group outsources the majority of these maintenance services, which is
more cost-effective.

Sales and Marketing
Avis Brand
    The ‘‘We try harder’’ advertising campaign for the Avis brand established and publicised a
commitment to customer service and continuous improvement in the early 1960’s. Today, ‘‘We try
harder’’ is an integral part of the Avis brand identity and corporate ethos for both customers and
employees and is the core of Avis’ internal and external marketing and communication positioning.
    The Group’s international sales and marketing team is supported by local teams in each of the
Corporate Countries. The international sales and marketing team is responsible for negotiating and
managing agreements with major corporate customers and international partners, and for developing
and maintaining Avis’s brand image.
     The Group advertises its vehicle rental offerings through a variety of traditional media, such as
television and newspapers, direct mail and the internet. In addition to advertising, the Group
conducts a variety of other forms of marketing and promotion, including travel industry business
partnerships and press and public relations activities.
     The Company’s sales and marketing team works closely with Avis US to maintain the Avis brand
and to ensure the consistent use of the corporate image worldwide. Local marketing initiatives
remain subject to corporate guidelines established by the international sales and marketing team, and
the appearance of the Avis network’s stations in EAMEA is governed by corporate standards covering
uniforms, brand positioning, website design and station layout.
    Service-level agreements for customer contracts and internal performance benchmarks
elaborated by the international sales and marketing team reflect the Group’s commitment to high
standards of service quality throughout the network.

Avis Customer Loyalty Programme—Avis Preferred
     Avis Preferred is the Avis customer loyalty programme, which provides a number of benefits to
registered members such as increased speed of service. Avis Preferred is operated extremely
successfully by Avis US with approximately 50% of all Avis US customers registered on the system. In
order to improve customer penetration, and in line with the closer marketing ties with Avis US, the
Group is improving and re-launching the Avis Preferred system within EAMEA.




                                                   72
Cross-marketing within the Avis network
     As part of a major international network the Group is able to generate a material number of
cross-border and international rentals. In 2005, cross-border rental revenue within Europe
represented approximately 25% of total rental revenue, and cross-border travel from long haul
arrivals, such as the United States, represented a further approximately 13% of total rental revenue.
Whilst the Group expects this cross-border business to benefit from the anticipated considerable
growth in airline passenger traffic as forecasted by the International Air Transport Association, the
Group also intends to increase this sector of the business by increasing the amount of cross-
marketing within the network. Developments such as a uniform website will help with this initiative,
as well as the fact that sales and marketing staff within the network are incentivised to promote sales
in all other countries.
     In particular, the Group has looked to strengthen marketing ties with Avis US by signing a
marketing co-operation agreement in May 2005. Under the agreement, both parties will receive
direct benefits for referring or providing business to the other, and are obliged to make significant
promotion of each other. For example, the Avis US website now contains a permanent banner with a
link to promotions and offers for Avis and vice versa. Whilst this new agreement had a marginal
impact on rental volume in its first year, it is expected to be revised and renewed annually and to
provide a considerable source for increased customers flows in the future and improved access to the
US market.

Distribution Channels
     ‘‘Direct’’ customers, whether individuals or companies, reserve their vehicle rental directly with
the Group without the involvement of any third parties. The most common types of direct sales are
made through the Avis website, call centres or are made by the customer in person at rental
stations. ‘‘Indirect’’ customers make their reservations with the Group through third party
intermediaries, such as travel agents, tour operators and travel websites. These third parties charge a
fee or commission for their involvement in the booking process and can also affect pricing by
sourcing rental vehicles from more than one rental vehicle company, and consequently indirect sales
are usually less profitable than direct sales. In recent years, the growing popularity of the internet
and e-commerce has caused a large increase in the volume of reservations made through online
intermediaries.

Direct Sales
Avis Website
     The Group recognises the growing importance of the internet as a customer channel, and
continues to invest in website functionality. The Group has now centralised the operation of the Avis
website, so that customers are presented with a uniform and clear set of rental options regardless of
the country in which they make their reservation. Examples of recent website innovations include the
introduction of a user friendly system for upgrading a vehicle at the point of booking, and an option
for pre-payment which improves the Group’s cash flow and reduces the chances of a customer not
taking a vehicle which they have reserved. The Group has also taken steps to ensure that the Avis
website is well positioned and prominent in internet search engines, such as Google. The Group
continues to monitor the effectiveness of the Avis website, and to upgrade it with the latest features
of modern e-commerce. In 2005, approximately 24% of the Group’s rentals within the Corporate
Countries were reserved through the Avis website or online intermediaries.
Call Centres
     The Group operates pan-European call centres in Manchester and Barcelona serving customers
booking direct with the Group. The Manchester site is due to close in October 2006, with all existing
call centre activities to be consolidated into the existing Barcelona facility. One of the major factors
in the reduction of call centre activity is the recent sharp increase in the number of internet
bookings.

Indirect Sales
     Whilst indirect distribution channels are usually more expensive than direct distribution channels,
they represent an extremely significant proportion of overall rental sales and are an important
distribution channel. It is a feature of the vehicle rental market, especially with increased use of the
internet, that many customers will approach intermediaries or agents rather than Avis directly.


                                                   73
     Many intermediaries and agents can help the Group to access a larger customer base, especially
in cases where they promote to groups which would be too small to merit direct marketing.
Travel websites, travel agents and tour operators
     Travel websites, travel agents and tour operators make reservations with the Avis network on
behalf of customers. Many utilise the major global distribution systems which are used throughout
the travel industry (such as Amadeus, Sabre, Galileo and Worldspan), all of which are directly linked
to the Group’s Wizard reservation system. In order to reduce the impact of third party fees and
increased pricing transparency, the Group seeks to enter into exclusive or preferred ‘‘strategic’’
partnerships with third parties, meaning that the agencies, operators or websites will first seek to
reserve through the Avis network before sending business to one of its competitors.
Partnerships and strategic alliances
     The Group’s market leading portfolio of partnerships generates significant vehicle rental revenue
and expands the Group’s customer base by providing access, in some cases exclusive or preferential,
to the customers of the Group’s partners. Partnerships and strategic alliances generate a significant
proportion of the Group’s rentals and are considered a major strength of the Group’s network.
     Avis has over 70 international partnerships with leading airlines, tour operators, major hotel
groups, railway companies and credit card companies. Well-recognised partners include British
Airways, Iberia, Lufthansa, SAS, Emirates, Thai Airways, Finnair, Cathay Pacific, Turkish Airlines, South
African Airways, Saudi Arabian Airlines, Eurostar, SNCF, Starwood, the Hilton hotel group, American
Express, Raffles Hotels & Resorts and Tesco.
     The precise terms of the partnerships vary, but all share the fundamental characteristic of
promotion of the Avis brand and exposure to a wide customer base. The Group leverages its
extensive network and technological strengths in the development of these partnerships and
participates in many airline and travel industry frequent traveller programmes worldwide, enabling
customers to earn points on its vehicle rentals and to receive other benefits.

Awards
     Avis’ focus on customer service and quality has been recognised by the travel industry and wider
business community. The Group has a strong record of winning the principal awards bestowed upon
participants in the vehicle rental industry in Europe. In 2005, the Group won two prestigious business
traveller awards for the second consecutive year—the Business Traveller Awards for Best Car Rental
Company and Best Car Rental Company Worldwide—together with a further 13 awards across
EAMEA. The majority of these awards are based directly on customers’ views.

Operation of Licensing Arrangements
     Licence arrangements have provided Avis with a cost effective and low risk route to expand into
less mature markets within the diverse territories of EAMEA, and so provide the comprehensive
network that is necessary to attract international customers.
     Licensees pay an initial amount upon the granting of a licence and thereafter an ongoing fee
based on vehicle rental revenues. Terms are usually an initial five years followed by rolling renewals.
In return licensees benefit from access to the Avis reservation system, world-wide network, global
brand, international customer base and technology (the substantial majority of licensees are linked to
Wizard).
     Within Corporate Countries, the network also includes rental locations operated through
licensees, who own and operate their own rental business using their own vehicle fleets and pay a fee
based on rental revenues, and agency locations, which use their employees and premises and receive
commissions for operating the fleet of Avis’ local operating company.
    Total fees paid by licensees from the Licensee Countries totalled A25.1 million for the year ended
31 December 2005 (which does not include fees associated with Wizard).
     Compliance with the terms of the Group’s licence agreements and the uniformity of service
quality across the network are controlled through informal visits to licensee locations and through
regularly scheduled audits by the Group’s internal audit department. Regional licensee 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 Avis network. In addition, there is a central corporate team
responsible for licensees to ensure and promote integration with other parts of the Avis network.



                                                    74
Significant Relationships
The D’Ieteren Group
    Avis Europe plc’s majority shareholder is D’Ieteren, a Belgian family-controlled company with
widespread automotive interests and listed on the Brussels Stock Exchange. D’Ieteren Invest s.a. holds
52.68% of Avis Europe plc’s shares, and s.a. D’Ieteren n.v. holds a further 6.91%. D’Ieteren has a
range of automotive interests, including vehicle distribution (it is the sole importer for Belgium of
vehicles manufactured by Volkswagen, Audi, SEAT, Porsche, Skoda and Yamaha) and the Belron/
Carglass replacement glass business.
    D’Ieteren became an Avis licensee in 1958, established a joint venture with Avis Europe plc (then
the European, African and Middle Eastern division of Avis US) in 1971 and became a shareholder of
Avis Europe plc in 1987 when it sold its joint venture interest in the Belgian licensee for shares in
Avis Europe plc.
     D’Ieteren is viewed by the Group as a long-term shareholder of Avis Europe plc having had an
interest in the business since 1971 and having recently reconfirmed its support of Avis Europe plc by
subscribing for its full allotment in the June 2005 rights issue for a total investment of A104.5 million.
Avis Europe plc and D’Ieteren entered into a relationship agreement at the time of the Group’s listing
in 1997. It includes undertakings by D’Ieteren to exercise its voting rights as a shareholder and to
procure that its directors vote, so as to ensure that there are no variations to the Avis Europe plc
articles which would prejudice Avis Europe plc’s independence, that the independence of the board is
maintained, that the majority of the board is independent of D’Ieteren, that all transactions between
the Group and D’Ieteren will be on an arm’s length basis and that the listing is maintained. The
relationship agreement also contains undertakings on behalf of Avis Europe plc not to issue shares in
a manner that would dilute D’Ieteren’s voting rights unless D’Ieteren is offered the opportunity to
subscribe for shares to maintain its percentage holding. For more information on transactions with
D’Ieteren and its Belgian operators, see ‘‘Certain Relationships and Related Party Transactions’’.

Cendant
     The Group does not have any cross shareholdings with the New York Stock Exchange listed
Cendant, yet through its contractual and business relationship with Cendant the two companies are
closely related. Cendant is a services group specialising in travel, hospitality, vehicle, marketing and
real estate services, and has recently announced that it will soon effect a series of de-mergers to
ultimately become four separate companies. A pure play vehicle rental company will be created,
named Avis Budget Group, Inc. This is not expected to have any material impact on the Group. The
Group co-operates closely with Cendant to provide a seamless service to customers of the Avis and
Budget networks throughout the world. The Group relies on Cendant to operate its business in a
manner that both upholds the value of the global brand and allows the Group to provide a similar
service in the locations in which it operates. The Group has joint marketing initiatives with Cendant
and shares market and customer information and technology (particularly reservation systems). It
also provides joint services and cross-refers customers.
     The principal and most material aspect of the Group’s relationship with Cendant (which owns
the global Avis and Budget brands) is the licences granted by Cendant to the Group to use the Avis
and Budget brand names. Cendant licenses the Avis and Budget brands to the Group through master
licensing agreements, which are due to expire in 2036. The licences can be terminated by Cendant in
any of the following events: a vehicle rental competitor acquires more than 35% of the voting share
capital of Avis Europe plc; insolvency or liquidation; or in the event of a material breach of the
licence agreements which is not remedied within 90 days.
     The second material aspect of the Group’s relationship with Cendant is the Wizard reservation
system which is discussed below.

Technology
Wizard technology
     The core of the Group’s technology is the Wizard computer system, which is owned by Cendant
and used by the Group under a long-term computer services agreement. The Wizard system delivers
a fast and efficient service to customers while providing the Group with valuable management data



                                                   75
to maximise internal efficiencies. Wizard and the Group’s own interlinked systems perform and
process the full range of vehicle rental activities, from reservation and rental to billing and
accounting, providing comprehensive real time data on key aspects of the business. The availability
of this data enhances operational control and efficiency.
    The system has been continuously enhanced and expanded since it was launched in 1972. It is
capable of processing over 300 million instructions per second, 125,000 reservations per day and
over 2.4 million credit authorisations per month. It has live links in all of the Corporate Countries and
a substantial number of licensee countries.
      The Group has actively exploited Wizard’s capabilities and links to a wide range of external
computer systems through alliances with many of its principal business partners in order to enhance
Wizard’s marketing activities and provide additional customer benefits. Linkage with all the major
computer travel reservation systems (including Amadeus, Sabre, Galileo and Worldspan) provide
airlines and travel agencies worldwide with on-line reservation capabilities through direct access to
Wizard. Links to airline frequent traveller programs enable automatic crediting of customer points
and worldwide tracking of programme information.
    The Group has an extensive customer satisfaction measurement system. Using data generated by
Wizard, the Group is able to track customer reaction to the service received. Customer feedback,
together with a comprehensive employee satisfaction tracking system, provides data to help the
Group continuously improve service delivery and its relationships with customers, suppliers and
partners.
     The computer services agreement between Cendant and a subsidiary of Avis Europe plc is
subject to a five-year notice period prior to termination. Cendant cannot unilaterally terminate the
Group’s right to use the system before 2011 in the absence of breach of terms by the Group.
Management believes that, in the unlikely event that this were to occur, the five-year notice period
would allow sufficient time for it to install alternative arrangements. As with other participants in the
travel services industry, the Group is highly dependent on maintaining continuous and timely access
to key technologies. Wizard data from the global network is processed at a single data centre run by
IBM in Denver, Colorado. This data centre is covered by a disaster recovery plan, the objective of
which is to restore key business operations within 24 hours of a disaster. This involves the use of an
alternative data centre run by a third party contractor in Philadelphia, Pennsylvania.
     Along with Cendant, the Group continues to invest in developing Wizard and complementary
technologies. The Group is entitled, but not required, to participate in any Wizard system
developments initiated by Cendant in return for a pro rata contribution to costs and may also initiate
any developments which it requires for its own operations (in which case, similarly, Cendant may
choose to participate and contribute). The Group pays a variable charge, linked to the running costs
of the system, which is calculated by reference to its share of total world-wide rental agreements
processed by the Wizard system.
     Management believes that Wizard gives the Group a strong competitive advantage, particularly
in the areas of customer service, marketing and the provision of global management information.
Wizard databases are continuously updated as reservations and rentals are transacted around the
world, enabling analysis of customer trends and business profiles, which the Group uses to improve
customer service.

Risk Management
    The Group is subject to three main categories of risk: third party motor liability; damage to
property; and general business risks.

Third Party Motor Liability
     In compliance with the relevant local laws and regulations, the Group is required to maintain
insurance against legal liability for bodily injury (including death) and property damage to third
parties arising from the operation of the Group’s vehicles in stipulated amounts. The Group’s
principal insurer for third party motor liability is AIG Europe SA (‘‘AIG’’), although Generali
Assicurazioni S.P.A. and Allianz Compania de Seguros y Reaseguros S.A. are also used at a local level.




                                                   76
     All third party insurance policies will contain an excess or retention per claim, ranging from
A3,000 to A300,000 per claim, which will be payable by the Group’s local subsidiary. This retention
level is set by the insurance company concerned and is generally driven by a combination of the
Group’s claims history and local market practice. The relevant insurance company will then provide
insurance cover beyond that retention level, and will be responsible for claims management and
other administrative functions.
     For third party policies written with AIG, the Group’s Isle of Man based captive insurer, Aegis
Motor Insurance Limited (‘‘Aegis’’), will provide reinsurance to AIG for 50% of AIG’s liability in excess
of the retention, up to a limit of A4.0 million per loss. This sharing of liability ensures that the
interests of AIG are aligned with those of Aegis and the Group when AIG is processing claims. Aegis
will then reinsure around two thirds of its liability with Zurich Insurance Company, who will also
provide a cap for the portion of Aegis’s liability which is not reinsured.

Damage to the Group’s Property
     The Group’s rental contracts typically provide that the customer is responsible, subject to certain
exceptions, for damage to or loss (including loss through theft) of rented vehicles. The Group
generally offers ancillary rental products such as collision waivers and theft waivers, under which the
Group waives or limits its right to make a claim for such damage or loss. To the extent a customer
purchases such a waiver, the Group retains the risk of such damage or loss. In addition, the Group
carries the risk of damage to or loss of vehicles which are not on rent.
     The Group benefits from property and catastrophe policies, which are principally provided by
ACE European Group Limited. These policies cover damage or loss of all property owned or leased by
the Group, and an excess or retention of A6,000 will be payable on each claim. Aegis provides
reinsurance of up to A1.0 million per claim, up to an aggregate total of A2.2 million. The Group will
obtain insurance for acts of terrorism from local government pool arrangements to the extent
available, and otherwise from the London insurance market.

General Business Risks
     The Group has obtained a variety of other insurance policies to cover other general business
risks such as worker’s compensation and employer’s and general liability, commercial crime and
fidelity, and director’s and officer’s liability. This insurance is provided to the Group centrally by ACE
European Group Limited and by AIG. Aegis provides reinsurance for each loss up to A500,000 per
claim, up to an aggregate of A1.0 million.

Litigation and Arbitration
     In the ordinary course of its business, the Group is party to, or may become party to, a number
of legal, administrative or arbitration proceedings.
    Provisions are only made against the charges that might result from these proceedings once
such proceedings are probable and their amount may be either quantified or estimated, on a
case-by-case basis, within a reasonable range. In the latter case, the amount to be provisioned is
determined, on a case-by-case basis, based on the best estimate possible.
     The provisions made are also based, in each case, on an evaluation of the relevant level of risk
and do not primarily depend on the status of the relevant proceedings progress. However, events
that occur during a proceeding may nevertheless lead to a re-evaluation of the risk.
     Other than the proceedings described below, the Group is not party to any legal, administrative
or arbitration proceedings that could reasonably be expected to have a material adverse effect on its
profits, business or consolidated financial situation. To the Group’s knowledge, no legal,
administrative or arbitration proceeding of this nature poses a threat to the Group.
     Following the Group’s decision in 2004 to terminate an agreement with the principal contractor
on an IT back office project, it is taking mitigating action against the contractor to recover its
termination costs and other damages. This action is subject to on-going litigation but there can be
no assurance that any such costs or damages will be recovered or that the Group will not be subject
to successful counterclaims.




                                                    77
     The Group is currently a defendant in various actions, and has received numerous claims on
which actions have not yet been commenced, for bodily injury (including death) and property
damage arising from the operation of motor vehicles and equipment rented from the Group. All such
actions and claims are managed by the Group’s insurers, and management believes that the Group
has adequate levels of insurance to avoid a material exposure to any one claim. For details of
insurance arrangements, refer to ‘‘Business—Risk Management’’ above.
     In addition to the foregoing, various legal actions, claims and governmental enquiries and
proceedings may be instituted or asserted in the future against the Group. Litigation is subject to
many uncertainties, and the outcome of the individual litigated matters is not predictable with
assurance. It is possible that certain of the actions, claims, enquiries or proceedings, including those
discussed above, could be decided unfavourably to the Group. Although the amount of liability with
respect to these matters cannot be ascertained, potential liability in excess of related accruals is not
expected to materially affect the Group’s consolidated financial position, results of operations or cash
flows.

Property, Plant and Equipment
    The Group’s headquarters are in Bracknell, Berkshire in the United Kingdom supporting both the
Avis and Budget businesses through central sales and marketing functions, licensee development, IT
support and finance services.
     The Group’s corporate and agent operated rental stations are primarily located at or near
airports or train stations and in central business districts and suburban areas throughout the
Corporate Countries. The Group leases or operates the majority of these rental stations under
concessions from governmental authorities and leases from private entities. Those leases and
concession agreements typically require the payment of rents or minimum concession fees and, in
certain countries, require the relevant Group entities to pay or reimburse operating expenses, to pay
additional rent, or concession fees above guaranteed minimums, based on a percentage of revenues
or sales arising at the relevant premises. The leases are generally of a short-term nature, but are
renewed on a rolling basis.

Employees
    The average number of persons employed (full time equivalent) by the Group during the years
ended 31 December 2005, 2004 and 2003 was as follows:

                                                                                                                                                                       2005    2004    2003

         United Kingdom            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   1,295   1,238   1,350
         France . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   1,469   1,389   1,377
         Germany . . . . .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     720     719     744
         Italy . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     514     531     502
         Spain . . . . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   1,055   1,031   1,047
         Others . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   1,200   1,131   1,084
         Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                       6,253   6,039   6,104

    As is usual in the vehicle rental industry, the Group uses temporary workers to manage the peak
demands and seasonality. In addition, the Group also employs temporary workers and engages
outside services to assist in the movement of rental fleet between locations.
     As vehicle rental is a service business, employees are central to the Group’s success and
constitute a substantial percentage of costs. Therefore, employee productivity, which is measured by
comparing the number of employees to the volume of vehicle rentals, is a key industry measure of
efficiency. The Group seeks to improve employee productivity by continuously enhancing its use of
technology, streamlining operating processes and by matching its workforce to changes in rental
demand. Additional staff complement full-time employees on a daily and seasonal basis to meet
fluctuating demand.
     The Group aims to ensure an organisational structure and working climate in which both the
business and employees grow and develop. Management believes that the effectiveness and efficiency
of the business is enhanced by employing people with extensive experience of the Group at all levels


                                                                                                               78
of staff. The Group works hard to retain staff, not least by personal development and internal
promotion. Approximately 50% of staff in the Group has more than five years’ service with the
Group. Customer service values and business innovation are reinforced through the ‘‘Spirit of Avis’’
initiative, which forms the basis of internal training, recognition and communication policies
throughout EAMEA. To enhance the association of the brand with consistently high quality levels of
service throughout the network, the Group systematically tracks the satisfaction of both customers
and employees, enabling it to respond rapidly to changing patterns in customer and employee needs.
     Management believes that the successful application of the Group’s management philosophy has
created a high degree of employee loyalty, enthusiasm and expertise at all levels of the organisation.
In 2005, the Group’s vehicle rental operation was recognised by the London Sunday Times as one of
the ‘‘Best 100 Companies to Work For’’.
   In line with local legislation, the Group has a number of staff representation and consultation
committees, including limited union representation in Spain, Portugal, Belgium and Italy.
     Avis has implemented significant change over recent years, with no significant employee
relations issues arising. The Group is currently in the process of accelerating the centralisation of
some finance and administrative processes into the Group’s shared service centre in Budapest, and
consolidating all call centre activities into the existing Barcelona facility. Through the well established
consultation processes this is being implemented without any adverse impact on employee relations.

THE BUDGET BUSINESS
Overview
    In early 2003, the Group acquired the Budget operations in EAME out of bankruptcy. Budget
now operates under licence from Cendant who own the global Budget brand. In 2005, the Budget
business represented approximately 3% of Group revenue.

Budget Network
    The Budget operation in EAME serves customers through over 800 rental locations in
63 countries. There are corporate rental operations in Switzerland, Austria, France and the
United Kingdom.

Budget Strategy
     Budget currently incurs losses, largely driven by a history of under-investment and a lack of
revenue scale. However, Budget is one of only three truly global vehicle rental brands and the
Group’s objective is to ultimately enhance its strategic value by improving financial performance and
developing the business. Actions taken to date include expanding the size of the network in the
United Kingdom and France, including a greater centralisation of fleet purchasing and a significant
investment in sales and marketing. The Budget website has also been overhauled, and greater use of
the relationship with Budget Inc. has been made. Budget has strengthened its international licensee
network by renewing licensee agreements and increasing the rates of royalties.




                                                    79
                                                            MANAGEMENT
Directors of Avis Europe plc
      The directors of Avis Europe plc (the ‘‘Directors’’) and their functions are as follows:

Name                                             Function                     Principal activities outside the Group

Alun Cathcart . . . . . . . . . . . . . . .      Non-executive Chairman       Non-executive Chairman of The
                                                                              Rank Group plc and Chairman of
                                                                              Palletways Group Limited.
                                                                              Chairman of Emap plc (since
                                                                              13 July 2006).
Jean-Pierre Bizet . . . . . . . . . . . . .      Executive Deputy Chairman    Chief Executive Officer of
                                                                              D’Ieteren s.a. and a Director of
                                                                              Belron s.a.
Murray Hennessy . . . . . . . . . . . . .        Chief Executive              None.
Martyn Smith . . . . . . . . . . . . . . .       Group Finance Director       Non-executive Director and
                                                                              Chairman of the Audit
                                                                              Committee of SMG plc.
Simon Palethorpe . . . . . . . . . . . .         Group Commercial Director    Directorship with The National
                                                                              Archives.
Lesley Colyer . . . . . . . . . . . . . . . .    Group Personnel and          None.
                                                 Corporate Affairs Director
Roland D’Ieteren . . . . . . . . . . . . .       Non-executive Director       Chairman of s.a. D’Ieteren n.v.
                                                                              and non-executive Director of
                                                                              Belron s.a.
Gilbert van Marcke de Lummen . .                 Non-executive Director       Director of s.a. D’Ieteren n.v. and
                                                                              non-executive Director of Belron
                                                                              s.a. and of s.a. Cofinimmo n.v.
Benoit Ghiot . . . . . . . . . . . . . . . .     Non-executive Director       Chief Financial Officer of s.a.
                                                                              D’Ieteren n.v. and Director of
                                                                              Belron s.a.
Malcolm Miller . . . . . . . . . . . . . . .     Non-executive Director       Chief Executive of Raymarine plc.
Axel von Ruedorffer . . . . . . . . . . .        Non-executive Director       Non-executive Director of a
                                                                              number of companies, including
                                                                              Audi AG, Stiebel Eltron Group
                                                                              and a number of financial
                                                                              institutions.
Les Cullen . . . . . . . . . . . . . . . . . .   Non-executive Director       Non-executive Director and
                                                                              Chairman of the Audit
                                                                              Committee of DTZ Holdings plc,
                                                                              and a non-executive Director of
                                                                              Interserve plc and Sustrans Ltd.

   The business address of each of the Directors is Avis House, Park Road, Bracknell, Berkshire
RG12 2EW.
Alun Cathcart (62) appointed to the Board 3 February 1997.
Chairman (since May 2004).
Until 1 January 1999, Mr. Cathcart was Chairman and Chief Executive of Avis Europe plc and served
as Interim Chief Executive from November 2003 until March 2004. He spent 14 years in executive
positions in the transportation industry before joining Avis Europe plc in 1980, and became Chief
Executive in 1983. Mr. Cathcart is non-executive Chairman of The Rank Group plc and Chairman of
Palletways Group Limited. He became Chairman of Emap plc on 13 July 2006.
Jean-Pierre Bizet (58) appointed to the Board 29 October 2002.
Executive Deputy Chairman (since May 2004).



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Mr. Bizet was appointed a non-executive Director of the Board in October 2002 and as executive
deputy chairman in May 2004. In May 2005, he was appointed Chief Executive Officer of
D’Ieteren s.a. He is a Director of Belron s.a.
Murray Hennessy (45) appointed to the Board 15 March 2004.
Chief Executive (since March 2004).
Mr. Hennessy joined Avis Europe plc from the John Lewis Partnership, where he was Commercial
Director. His previous appointments include Chief Executive Officer of buy.com, Chief Financial
Officer, Europe and then Vice President and General Manager for Europe with Tricon Global
Restaurants, and Vice President Supply Chain for PepsiCo Restaurants. He began his career in 1984
with the management consulting firm Bain & Co.
Martyn Smith (51) appointed to the Board 11 September 2002.
Group Finance Director (since September 2002).
Mr. Smith joined Avis Europe plc from John Menzies plc, where he served as Group Finance Director
from 1999. Prior to joining John Menzies plc, he was Group Financial Controller for Inchcape plc, and
previously held a number of financial roles with Inchcape plc and Rothmans International. He is also
a non-executive director and chair of the audit committee of SMG plc.
Simon Palethorpe (37) appointed to the Board 6 December 2004.
Group Commercial Director (since December 2004).
Mr. Palethorpe joined Avis Europe plc from the John Lewis Partnership, where he was Finance
Director for John Lewis Department Stores. He was previously Managing Director of John Lewis
Direct. His earlier career includes appointments with Levis Strauss Europe and PepsiCo Restaurants
(latterly called Tricon Global Restaurants).
Lesley Colyer (53) appointed to the Board 18 April 2002.
Group Personnel and Corporate Affairs Director (since April 2002).
Ms. Colyer joined Avis Europe plc in April 1977 and held a variety of positions before being
appointed Director of Personnel in 1990. She assumed her current responsibilities at flotation
in 1997. Prior to joining Avis Europe plc, she worked for the Jaeger Group and Harrods.
Roland D’Ieteren (64) appointed to the Board 3 February 1997.
Since May 2005, Mr. D’Ieteren has been Chairman of s.a. D’Ieteren n.v., having previously been
President and Chief Executive Officer since 1975. He joined s.a. D’Ieteren n.v. in 1971. He is a
non-executive Director of Belron s.a.
Gilbert van Marcke de Lummen (68) appointed to the Board 3 February 1997.
From November 1987 until the sale of the Group’s leasing business, Mr. van Marcke de Lummen was
Group Leasing Director. He has been employed by s.a. D’Ieteren n.v. since 1962, retired in 2002 and
is a member of the board of s.a. D’Ieteren n.v. He is a non-executive Director of Belron s.a. and of
s.a. Cofinimmo n.v.
Benoit Ghiot (37) appointed to the Board 15 December 2004.
Mr. Ghiot is Chief Financial Officer of s.a. D’Ieteren n.v., having joined the company in 2002, and is
also a member of the Board of Directors of Belron s.a. Prior to joining D’Ieteren, he was Group
Controller and Strategic Planning Director with the Belgian retail group GIB.
Malcolm Miller (50) appointed to the Board 21 February 2001.
Chairman of the Remuneration Committee.
Mr. Miller is Chief Executive of Raymarine plc. He was Chief Executive of Pace Micro Technology plc
from 1997 to 2002, and was formerly Chief Executive, Europe for Sega. His earlier career was with
Amstrad PLC, culminating in appointment as Managing Director.
Axel von Ruedorffer (64) appointed to the Board 27 June 2001.
From 1984 to 2002, Mr. von Ruedorffer was a member of the Board of Managing Directors of
Commerzbank AG, having joined the bank in 1967, and was responsible for Accounting and Taxes,
Compliance, Financial Control and Internal Auditing. He is a non-executive Director of a number of
companies, including Audi AG, Stiebel Eltron Group and a number of financial institutions.




                                                   81
Les Cullen (54) appointed to the Board 25 May 2004.
Chairman of the Audit Committee.
Mr. Cullen has held successive appointments as Group Finance Director of STC plc, De La Rue plc,
Goodman Fielder Ltd, Inchcape plc and Prudential plc, having previously held senior financial roles
with Black & Decker and GrandMet. During recent years, he has also been Chairman of a number of
private equity backed companies. He is a non-executive Director and Chairman of the Audit
Committee of DTZ Holdings plc, a non-executive Director of Interserve plc and Sustrans Ltd and has
been appointed as a trustee of the British Telecom Pension Scheme.
    Except as described above, the Directors do not have any potential conflicts of interests between
any duties to Avis Europe plc and their private interests.

Board Committees
    The Board Committees in place are the Nominations Committee, the Remuneration Committee
and the Audit Committee. Each Committee reviews its terms of reference and its effectiveness
annually and recommends to the Board any changes required as a result of such review.

The Nominations Committee
     The Nominations Committee ensures that the Company has a formal, rigorous and transparent
procedure for the appointment of new Directors. The Nominations Committee regularly reviews the
structure and composition of the Board to ensure the required blend of skills and experience
appropriate to the Company’s needs. It sets objective criteria in recommending appointees to the
Board, including being satisfied that appointees have sufficient time available to devote to the role,
especially for chairmanships. The Nominations Committee is also responsible for ensuring that
induction and training requirements are met both for new Directors and for the Board as a whole to
ensure that Directors regularly update their skills and knowledge, including their knowledge of
developments in the Company’s business. The Nominations Committee carries out an annual review
of the succession plans for the Board and for senior executives across the Group to ensure that
continuing management capability is available to match the development needs of the business.
     The members of the Nominations Committee are Alun Cathcart (Chairman), Les Cullen, Roland
D’Ieteren, Malcolm Miller and Axel von Ruedorffer. As recommended by the Combined Code, the
membership of the Nominations Committee comprises a majority of independent non-executive
Directors.

The Remuneration Committee
     The Remuneration Committee determines broad policy on senior executive remuneration and
terms of service and approves specific terms of appointment for the Chairman, executive Directors
and senior management. The Remuneration Committee is also responsible for the structuring and
allocation of the Group’s share incentive schemes, including the setting of appropriate performance
targets.
     The members of the Remuneration Committee are Malcolm Miller (Chairman), Les Cullen, Roland
D’Ieteren and Axel von Ruedorffer. The Remuneration Committee comprises three independent
non-executive Directors together with Roland D’Ieteren. The Company recognises that Roland
D’Ieteren is not regarded as an independent non-executive Director and therefore that the
composition of the committee is not in accordance with the recommendations of the Combined
Code, but considers it essential that s.a. D’Ieteren n.v., as the majority shareholder of the Company, is
represented on the Remuneration Committee. As Chairman of s.a. D’Ieteren n.v., Roland D’Ieteren
abstains from discussion and voting on the remuneration of any Directors appointed by s.a. D’Ieteren
n.v. pursuant to the relationship agreement (referred to under ‘‘Business—Significant Relationships’’).

The Audit Committee
     The Audit Committee assists the Board by ensuring that the Company presents a balanced and
understandable assessment of its position with regard to financial reporting, including interim,
preliminary and other formal announcements relating to the Group’s financial performance.
     Under its terms of reference, the Audit Committee monitors the integrity of the Group’s financial
statements and the effectiveness of the external audit process. It is responsible for ensuring that an


                                                   82
appropriate relationship between the Group and the external auditors is maintained, including
reviewing non-audit services and fees. It also reviews annually the Group’s system of internal control
and the processes for monitoring and evaluating risks facing the Group. The Audit Committee
reviews the effectiveness of the internal audit and risk management function and is responsible for
approving, upon the recommendation of the Group Finance Director, the appointment and
termination of the Director of that function.
    The members of the Audit Committee are Les Cullen (Chairman), Malcolm Miller, and Axel von
Ruedorffer. As recommended by the Combined Code, all the members of the Audit Committee are
independent non-executive Directors.

Directors’ Service Agreements and Letters of Appointment
    The Directors each have a service contract or letter of appointment with a member of the
Group, as follows:

Executive Directors
     Each of the Executive Directors has a service contract with Avis Management Services Limited, a
wholly-owned subsidiary of the Company, which is terminable by 12 months’ written notice by either
party. The service contracts have no fixed term. Each Executive Director has agreed to work such
hours as are reasonably necessary to ensure the proper discharge and performance of his duties and
may be required to work for an associated company of Avis Management Services Limited. Under the
service contracts, each of Murray Hennessy, Martyn Smith, Simon Palethorpe and Lesley Colyer is
entitled to a base salary, an annual incentive bonus, a car or car allowance, private medical insurance,
sick pay, life insurance, permanent health insurance and a mobile telephone and is entitled to
participate in the Company’s pension scheme.
    Jean-Pierre Bizet receives an inclusive annual fee and does not participate in the Group’s benefit
programmes. His contract can be terminated only in accordance with the relationship agreement.
    Save as disclosed above in relation to Jean-Pierre Bizet, there are no service agreements between
any Director and any member of the Group which provide for benefits upon termination of
employment.
    The table below shows the date each Executive Director was appointed as an Executive Director.

                                                                                                                                                                                  Date appointed
                                                                                                                                                                                    to Board as
       Director                                                                                                                                                                  Executive Director

       Jean-Pierre Bizet .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   25 May 2004*
       Lesley Colyer . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   18 April 2002
       Murray Hennessy         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   15 March 2004
       Simon Palethorpe        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   6 December 2004
       Martyn Smith . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   11 September 2002

       *   Jean-Pierre Bizet previously held office as a non-Executive Director, appointed on October 29, 2002.


    The total amount of compensation paid to Executive Directors for the year ended
31 December 2005 was A2,343,859.




                                                                                                       83
Non-executive Directors
    Avis Europe plc currently has seven non-Executive Directors. The details of their letters of
appointment are set out below:

                                                                                                                                                               Date appointed
                                                                                                                                                                 to Board as
       Director                                                                                                                                             non-Executive Director

       Alun Cathcart (Chairman)* . . . .            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   May 2004
       Les Cullen** . . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   25 May 2004
       Roland D’Ieteren . . . . . . . . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   3 February 1997
       Benoit Ghiot . . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   15 December 2004
       Gilbert van Marcke de Lummen                 .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   3 February 1997
       Malcolm Miller*** . . . . . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   21 February 2001
       Axel von Ruedorffer . . . . . . . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   27 June 2001

       *    Alun Cathcart was first appointed to the Board on 3 February 1997 as Chief Executive and Chairman
            and chairs the Nominations Committee.

       **   Les Cullen chairs the Audit Committee.

       *** Malcolm Miller chairs the Remuneration Committee.


     The appointment of Alun Cathcart as Chairman can be terminated by the Company in
accordance with the articles with no prior notice. The appointment of each of Les Cullen, Benoit
Ghiot, Gilbert van Marcke de Lummen and Malcolm Miller are all terminable by either party upon
giving one month’s written notice, although the termination of the appointment of Benoit Ghiot (and
Roland D’Ieteren) must be effected in accordance with the relationship agreement.
    The total compensation paid to Non-executive Directors for the year ended 31 December 2005
was A480,001.

Directors of the Issuer and of Avis Europe Holdings Limited
     Stuart Fillingham, Edwin Peter Gates and Nina Bell serve as directors of the Issuer. The directors
of the Issuer do not have any potential conflicts of interests between any duties to the Issuer and
their private interests.
     Stuart Fillingham, Edwin Peter Gates and Nina Bell serve as directors of Avis Europe Holdings
Limited. The directors of Avis Europe Holdings Limited do not have any potential conflicts of
interests between any duties to Avis Europe Holdings Limited and their private interests.
    The business address of each of the directors named above is Avis House, Park Road, Bracknell,
Berkshire RG12 2EW.




                                                                                    84
                                                   PRINCIPAL SHAREHOLDERS
D’Ieteren
    For a description of the Group’s relationship with D’Ieteren, please refer to ‘‘Business—Significant
Relationships’’ and ‘‘Certain Relationships and Related Party Transactions’’.

Substantial Shareholders
    As at 29 June 2006, the following shareholders had notified Avis Europe plc of having an interest
greater than 3% in Avis Europe plc:

                                                                                                                               % of issued
           Major Shareholders                                                                                                 share capital

           D’Ieteren. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       59.59
           Fidelity International Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                 10.75
           Templeton Worldwide Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                   4.98

     In addition, the Group has information indicating that as of 6 July 2006, the Prudential group of
companies in its capacity as investment manager of a number of unit trusts and other collective
investment schemes, had an interest in 5.86% of the shares in Avis Europe plc. As such, the interest
is not notifiable to the Group under the Companies Act.
      An agreement governing the relationship between s.a. D’Ieteren n.v. and the Company was
entered into in connection with the Group’s flotation in 1997. It includes restrictions on s.a. D’Ieteren
n.v.’s power to appoint Directors and obligations on those Directors to ensure that the majority of
the Board is independent of s.a. D’Ieteren n.v. It also provides that all transactions between the
Company and s.a. D’Ieteren n.v. will be on an arm’s length basis. The agreement also contains certain
anti-dilution rights for the s.a. D’Ieteren n.v. provided that D’Ieteren owns more than 30% of the
issued ordinary share capital of the Company.

                       CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
    An agreement governing the relationship between s.a. D’Ieteren n.v. and the Company was
entered into in connection with the Group’s flotation in 1997. See ‘‘Business—Significant
Relationships’’ and ‘‘Principal Shareholders—Substantial Shareholders’’.
     During the financial years ended 2005 and 2004, the Group engaged in the following
transactions with D’Ieteren on an arm’s-length basis. These transactions involved the purchase and
sale of vehicles in Belgium and the provision of finance to the Group through a short-term
uncommitted loan facility.

                                                                                                                                                  2005   2004
                                                                                                                                                   Em     Em
Purchases of vehicles from D’Ieteren . . . . . . . . . . . . . . . . . . . . .             ..........         .   .   .   .   .   .   .   .   .   49.8   48.3
Sales of vehicles to D’Ieteren . . . . . . . . . . . . . . . . . . . . . . . . . .         ..........         .   .   .   .   .   .   .   .   .   48.9   41.0
Purchases of vehicles from a subsidiary of D’Ieteren . . . . . . . . .                     ..........         .   .   .   .   .   .   .   .   .    0.2     —
Interest payable to a subsidiary of D’Ieteren under a short-term                           loan facility      .   .   .   .   .   .   .   .   .    0.3    1.8
Dividend paid to D’Ieteren . . . . . . . . . . . . . . . . . . . . . . . . . . . .         ..........         .   .   .   .   .   .   .   .   .     —    20.3
Current amounts owing to D’Ieteren . . . . . . . . . . . . . . . . . . . . .               ..........         .   .   .   .   .   .   .   .   .   13.1   24.9
Current amounts owing from D’Ieteren . . . . . . . . . . . . . . . . . . .                 ..........         .   .   .   .   .   .   .   .   .   17.2   23.8
Current amounts owing from a subsidiary of D’Ieteren . . . . . . .                         ..........         .   .   .   .   .   .   .   .   .    0.1     —
Loans owing to a subsidiary of D’Ieteren . . . . . . . . . . . . . . . . . .               ..........         .   .   .   .   .   .   .   .   .     —    34.0

    In addition, the Company carries directors’ and officers’ liability insurance which is arranged
under an umbrella policy effected by s.a. D’Ieteren n.v.




                                                                      85
                                      DESCRIPTION OF OTHER INDEBTEDNESS
     The following is a description of the Group’s material indebtedness other than the Notes. The
descriptions set forth below do not purport to be complete and are subject in their entirety by
reference to the actual provisions of each respective agreement or instrument described.

Senior Revolving Credit Facility
     The Senior Revolving Credit Facility consists of an unsecured, committed, multi-currency
revolving credit facility that was entered into on 20 February 2006 and which terminates on 20
February 2011. This facility was provided by a group of 14 banks led by Barclays Bank PLC, Dresdner
                                        ee e e
Bank AG, Fortis Bank S.A./N.V., Soci´ t´ G´ n´ rale, and The Royal Bank of Scotland plc (together the
‘‘Lenders’’). The facility agent (the ‘‘Agent’’) is Barclays Bank PLC.
      The facility provides for loan advances (‘‘Advances’’) to the Issuer as borrower (‘‘the Borrower’’)
denominated in euro, pound sterling, or such other currencies as may be agreed upon with the
lenders, in a total aggregate principal amount of A580 million outstanding at any one time. The
facility is guaranteed by Avis Europe plc and Avis Europe Holdings Limited, and the Issuer is the sole
borrower under this facility. All amounts borrowed under the facility are (a) applied towards the
refinancing of the Issuer’s existing debt, and (b) for general corporate purposes.

Advances
     Advances under the Senior Revolving Credit Facility are available to the Borrower and are made
in euro, pound sterling, or such other currencies requested by the Borrower that are agreed by the
Agent, provided that such currency is available and freely convertible into euro in the relevant
interbank market on the relevant dates of quotation and utilisation.
    Advances are made available by the Lenders to the Borrower from time to time by way of either
cash advances, or letters of credit up to an aggregate amount of 20% of the total facility size.
Advances may be for periods of one, two, three, or six months, or such other period as may be
agreed between the Borrower and the Agent.

Interest
     The interest rates per annum applicable to Advances under the Senior Revolving Credit Facility
are based on EURIBOR (or LIBOR for drawings in currencies other than euro), plus an applicable
margin. The applicable margin is subject to a pricing grid determined by the ratio of total net
financial debt to adjusted EBITDA as defined in the Senior Revolving Credit Facility as illustrated in
the table below:

                                                                                                                                                                                      Margin per cent.
Ratio of total net financial debt to adjusted EBITDA                                                                                                                                    per annum

Greater than 3.0 and less than or equal to 3.5                .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        1.45
Greater than 2.5 and less than or equal to 3.0                .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        1.30
Greater than 2.0 and less than or equal to 2.5                .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        1.15
Less than or equal to 2.0 . . . . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        1.00

Financial Covenants
    The Senior Revolving Credit Facility contains a number of financial covenant ratios and
undertakings. These are tested semi-annually, in accordance with the definitions set out in the Senior
Revolving Credit Facility. Key financial covenant ratios and undertakings are as follows:
     • the ratio of the Group’s total net financial debt to adjusted EBITDA must not be greater than
       3.50:1 as at 30 June each year, and not be greater than 3.00:1 as at 31 December each year;
     • the ratio of the Group’s adjusted EBITDA to total net interest expense must not be less than
       5.00:1 as at each semi-annual testing date;
     • the aggregate subsidiary indebtedness (excluding finance leases) is no more than 10% of the
       total gross financial debt as at 30 June and 31 December each year;




                                                                      86
    • the aggregate financial indebtedness of the Group constituted by finance leases is no more
      than 25% of fleet net book value as at 30 June and 31 December each year; and
    • the fleet coverage ratio ((fleet net book value plus fleet receivables plus prepaid fleet)/(net
      debt plus fleet payables)) must not be less than 1.10:1 at each semi-annual testing date.
     The Senior Revolving Credit Facility also contains limitations on liens, mergers, consolidations,
sale of assets, investments and acquisitions, and transactions with affiliates.

Mandatory Prepayment
     Any Lender may request the cancellation of its commitment, and all its outstandings, including
accrued interest and all other amounts owing to the Lender under the Senior Revolving Credit
Facility, become due and payable upon a change of control of Avis Europe plc.

Commercial Paper Programme
    The Issuer has a commercial paper programme in Belgium for the issuance of a maximum of
A200 million of commercial paper with a maturity not exceeding 364 days. Paper issued under this
programme may be denominated in euro, or any other freely convertible currency. Avis Europe plc
has provided a senior unsecured guarantee of the outstandings under the commercial paper
programme. The obligations under the commercial paper programme rank pari passu with all other
senior obligations of the Issuer and Avis Europe plc. As of 31 December 2005, the total amount
outstanding under the commercial paper programme was A66.0 million.

Loan Notes
Euro Notes (‘‘Schuldscheindarlehen’’) due 2006 and 2007
    The Issuer issued two A25 million unsecured, five-year, fixed rate Schuldscheindarlehen (‘‘Euro
Notes’’) in 2001 and 2002. These Euro Notes mature on 29 November 2006 and 8 March 2007, and
bear a fixed rate of 5.25% and 6.0% per annum respectively.
    Avis Europe plc and Avis Europe Holdings Limited have provided senior unsecured guarantees of
the Euro Notes. The Euro Notes rank pari passu with all other senior obligations of the Issuer, Avis
Europe plc and Avis Europe Holdings Limited.

B120 million 6.4% Guaranteed Notes due 2007
     On 8 July 2002, the Issuer issued A120 million 6.4% Guaranteed Notes which mature on
8 July 2007. The Issuer, Avis Europe plc, or any of their respective subsidiaries may, at any time,
purchase notes in the open market or otherwise at any price. Any notes so purchased will be
cancelled and may not be re-issued or sold.
     Avis Europe plc and Avis Europe Holdings Limited have provided senior unsecured guarantees of
the notes. The notes are entitled to any security, guarantee, indemnity or other arrangement
provided on any indebtedness with a maturity of one year or more of Avis Europe plc, Issuer or any
of their respective subsidiaries in the form of, or represented by, bonds, notes, debentures, loan
stock, or other securities which are or would be, with the consent of the relevant issuer, capable of
being quoted, listed, or ordinarily dealt on any stock exchange, over-the-counter, or other securities
market.
    Key financial covenant ratios are as follows:
    • the ratio of the Group’s total net financial debt to adjusted EBITDA must not be greater than
      3.50:1 as at 30 June each year, and not be greater than 3.00:1 as at 31 December each year;
      and
    • the ratio of the Group’s adjusted EBITDA to total net interest expense must not be less than
      5.00:1 as at each semi-annual testing date.

US$102 million 8.17% Series A Loan Notes due 2007
    On 30 August 2000, the Issuer issued US$102 million 8.17% Series A Loan Notes which mature
on 30 August 2007. The Issuer may redeem all or a part of the notes at any time upon payment of a



                                                    87
make-whole amount as defined in the note purchase agreement. Avis Europe plc and Avis Europe
Holdings Limited have provided senior unsecured guarantees of the notes. The notes rank pari passu
with all other senior obligations of the Issuer, Company and Avis Europe Holdings Limited.
    The notes have been swapped into an instrument with a principal amount of A108.8 million
bearing a fixed rate of 6.62%.
     Key financial covenant ratios and undertakings for this Loan Note and the Loan Notes below are
as follows:
    • the ratio of the Group’s total net financial debt to adjusted EBITDA must not be greater than
      3.50:1 as at 30 June each year, and not be greater than 3.00:1 as at 31 December each year;
    • the ratio of the Group’s adjusted EBITDA to total net interest expense must not be less than
      5.00:1 as at each semi-annual testing date;
    • the aggregate subsidiary indebtedness (excluding finance leases) is no more than 10% of the
      total gross financial debt as at 30 June and 31 December each year; and
    • the aggregate financial indebtedness of the Group constituted by finance leases is no more
      than 25% of fleet net book value as at 30 June and 31 December each year.
     There are also limitations on the amount of finance leases and subsidiary indebtedness, as well
as limitations on liens, sale of assets, and transactions with affiliates similar to those in the Senior
Revolving Credit Facility.

US$48 million 8.30% Series B Loan Notes due 2010
    On 30 August 2000, the Issuer issued US$48 million 8.30% Series B Loan Notes which mature on
30 August 2010. The Issuer may redeem all or a part of the notes at any time upon payment of a
make-whole amount as defined in the note purchase agreement. Avis Europe plc and Avis Europe
Holdings Limited have provided senior unsecured guarantees of the notes. The notes rank pari passu
with all other senior obligations of the Issuer, Avis Europe plc and Avis Europe Holdings Limited.
    The notes have been swapped into an instrument with a principal amount of A51.2 million
bearing a fixed rate of 6.78%.

US$120 million 5.66% Series A Loan Notes due 2011
    On 9 June 2004, the Issuer issued US$120 million 5.66% Series A Loan Notes which mature on
9 June 2011. The Issuer may redeem all or a part of the notes at any time upon payment of a
make-whole amount as defined in the note purchase agreement. Avis Europe plc and Avis Europe
Holdings Limited have provided senior unsecured guarantees of the notes. The notes rank pari passu
with all other senior obligations of the Issuer, Avis Europe plc and Avis Europe Holdings Limited.
    The notes have been swapped into an instrument with a principal amount of A100.4 million
bearing a fixed rate of 5.41%.

B65 million 5.34% Series B Loan Notes due 2012
    On 9 June 2004, the Issuer issued A65 million 5.34% Series B Loan Notes which mature on 9 June
2012. The Issuer may redeem all or a part of the notes at any time upon payment of a make-whole
amount as defined in the note purchase agreement. Avis Europe plc and Avis Europe Holdings
Limited have provided senior unsecured guarantees of the notes. The notes rank pari passu with all
other senior obligations of the Issuer, Avis Europe plc and Avis Europe Holdings Limited.

US$20 million 5.87% Series C Loan Notes due 2012
    On 9 June 2004, the Issuer issued US$20 million 5.87% Series C Loan Notes which mature on
9 June 2012. The Issuer may redeem all or a part of the notes at any time upon payment of a
make-whole amount as defined in the note purchase agreement. Avis Europe plc and Avis Europe
Holdings Limited have provided senior unsecured guarantees of the notes. The notes rank pari passu
with all other senior obligations of the Issuer, Avis Europe plc and Avis Europe Holdings Limited.
    The notes have been swapped into an instrument with a principal amount of A16.7 million
bearing a fixed rate of 5.56%.


                                                    88
B26,766,595.29 6.80% Loan Notes due 2012
     On 14 June 2002, the Issuer issued A26,766,595.29 6.80% Loan Notes which mature on
14 June 2012. The Issuer may redeem all or a part of the notes at any time upon payment of a
make-whole amount as defined in the note purchase agreement. Avis Europe plc and Avis Europe
Holdings Limited have provided senior unsecured guarantees of the notes. The notes rank pari passu
with all other senior obligations of the Issuer, Avis Europe plc and Avis Europe Holdings Limited.

US$100 million 6.19% Series D Loan Notes due 2014
    On 9 June 2004, the Issuer issued US$100 million 6.19% Series D Loan Notes which mature on
9 June 2014. The Issuer may redeem all or a part of the notes at any time upon payment of a
make-whole amount as defined in the note purchase agreement. Avis Europe plc and Avis Europe
Holdings Limited have provided senior unsecured guarantees of the notes. The notes rank pari passu
with all other senior obligations of the Issuer, Avis Europe plc and Avis Europe Holdings Limited.
    The notes have been swapped into an instrument with a principal amount of A83.7 million
bearing a fixed rate of 5.81%.

Finance Leases
    A number of Avis Europe plc’s operating subsidiaries use finance leases as part of their funding.
The majority of finance leases are in the rent-a-car operations in France and the United Kingdom,
and are used to fund the fleet.
      There are a number of finance facilities in France provided by local financial institutions. These
facilities are all committed facilities, secured on the fleet financed, and are generally renewed on an
annual basis. As there are significant economic advantages to funding the fleet in France using
finance leases, maximum use of these facilities is made throughout the year, subject to the natural
seasonal cycle of the size of the fleet. As at 31 December 2005, there were A267.1 million of finance
leases outstanding in France, with a further A149.8 million of facilities unutilised.
     The remaining finance lease facilities are all uncommitted, though still secured on the assets
financed, with the majority in the United Kingdom. Use of these facilities is more variable than for
those in France. As at 31 December 2005, there were A11.0 million of finance leases outstanding
under these facilities, with a further A277.6 million of facilities unutilised.

Bilateral Facilities
    Excluding the facilities listed above, as at 31 December 2005 Avis Europe plc and its subsidiaries
had approximately A3.6 million of indebtedness under committed bilateral bank facilities and
A19.6 million under uncommitted bilateral bank facilities. As at 31 December 2005, Avis Europe plc
and its subsidiaries had an additional borrowing capacity of approximately A127.1 million of
committed bilateral facilities and A178.6 million of uncommitted bilateral facilities. Borrowings under
the bilateral bank facilities are generally used to finance working capital needs and are all unsecured.




                                                   89
                                     DESCRIPTION OF THE NOTES
     Avis Finance Company plc (the ‘‘Issuer’’) will issue senior floating rate notes (the ‘‘Notes’’) under
an indenture (the ‘‘Indenture’’) among itself, the Guarantors, The Bank of New York, as trustee (the
‘‘Trustee’’), transfer agent, registrar and principal paying agent and AIB/BNY Fund Management
(Ireland) Limited, as Irish paying agent. The terms of the Notes are stated in the Indenture. The
Notes will be guaranteed (the ‘‘Note Guarantees’’) by Avis Europe plc (the ‘‘Parent’’) and by Avis
Europe Holdings Limited (‘‘Avis Holdings’’ and, together with the Parent, the ‘‘Guarantors’’). The
Notes will not be guaranteed by any operating Subsidiaries of the Parent.
    You can find the definitions of certain terms used in this description under the subheading
‘‘—Certain Definitions.’’ In this description, the word ‘‘Issuer’’ refers only to Avis Finance Company plc
and the word ‘‘Parent’’ refers only to Avis Europe plc and not to any of its subsidiaries.
     The following description is a summary of the material provisions of the Indenture. It does not
restate the Indenture in its entirety. Prospective investors are urged to read the Indenture because it,
and not this description, defines the rights of Holders of the Notes. Copies of the Indenture are
available as set forth below under ‘‘—Additional Information.’’ Certain defined terms used in this
description but not defined below under ‘‘—Certain Definitions’’ have the meanings assigned to them
in the Indenture.
     The Issuer will issue the Notes in global bearer form to the Note Depositary which in turn will
issue certificated depositary interests representing interests in the Notes or CDIs in registered form to
a nominee of a common depositary for Euroclear and Clearstream Banking.
    The Holder of the Notes in global bearer form will be treated as the owner of it for all purposes.
Only such Holder will have rights under the Indenture. The rights of holders of Book-Entry Interests
and direct and indirect participants in Euroclear and Clearstream Banking are described under ‘‘Book-
Entry Delivery and Form’’.

Brief Description of the Notes and the Note Guarantees
The Notes
    The Notes:
    • will be senior unsecured obligations of the Issuer;
    • will rank pari passu in right of payment with any existing and future indebtedness of the Issuer
      that is not subordinated to the Notes, including Additional Notes and Indebtedness under the
      Senior Revolving Credit Facility;
    • will be effectively subordinated to any existing and future indebtedness of the Parent’s
      Subsidiaries that do not guarantee the Notes; and
    • will be unconditionally guaranteed by the Guarantors.

The Note Guarantees
    The Notes will be guaranteed by each of the Guarantors.
    Each Guarantee of the Notes:
    • will be a senior unsecured obligation of each Guarantor;
    • will rank pari passu in right of payment with any existing and future indebtedness of that
      Guarantor that is not subordinated to such Guarantor’s Guarantee, including Indebtedness
      under the Senior Revolving Credit Facility;
    • will be senior in right of payment to any existing and future indebtedness of that Guarantor
      that is subordinated to such Guarantor’s Guarantee;
    • will be effectively subordinated to any existing and future indebtedness of such Guarantor that
      is secured by property or assets that do not secure such Guarantor’s Guarantee, to the extent
      of the value of the assets securing such indebtedness; and
    • will be effectively subordinated to any existing and future indebtedness of the Parent’s
      Subsidiaries that do not guarantee the Notes.


                                                    90
     Avis Holdings is the only Subsidiary of the Parent that will guarantee the Notes. In the event of a
bankruptcy, liquidation or reorganisation of any of the other Subsidiaries of the Parent, such
non-guarantor Subsidiaries will pay the holders of their debt and their trade creditors before they will
be able to distribute any of their assets to the Guarantors. The Guarantors are holding companies
that do not generate any revenue (other than interest and dividends) and do not own any assets
(other than investments in subsidiaries and intercompany loans). Substantially all of the consolidated
revenues of the Group were generated by non-guarantor Subsidiaries in the year ended 31 December
2005. In addition, such Subsidiaries held substantially all of the Group’s consolidated assets as of
31 December 2005.
     As of the Issue Date, all of the Subsidiaries of the Parent will be ‘‘Restricted Subsidiaries.’’
However, under the circumstances described below under the caption ‘‘—Certain Covenants—
Designation of Restricted and Unrestricted Subsidiaries,’’ the Parent will be permitted to designate
certain of its Subsidiaries as ‘‘Unrestricted Subsidiaries.’’ The Unrestricted Subsidiaries will not be
subject to many of the restrictive covenants in the Indenture. The Unrestricted Subsidiaries will not
guarantee the Notes.

Principal, Maturity and Interest
      The Issuer will issue A250 million aggregate principal amount of Notes in this offering. The Issuer
may issue additional Notes (‘‘Additional Notes’’) under the Indenture from time to time after this
offering. Any issuance of Additional Notes is subject to all of the covenants in the Indenture,
including the covenant described below under the caption ‘‘—Certain Covenants—Incurrence of
Indebtedness and Issuance of Preferred Stock.’’ The Notes and any Additional Notes subsequently
issued under the Indenture will be treated as a single class for all purposes under the Indenture,
including, without limitation, waivers, amendments, redemptions and offers to purchase. The Issuer
will issue Notes in denominations of A50,000 and integral multiples of A1,000 above A50,000. The
Notes will mature on 31 July 2013.
     Each Note will bear interest at a rate per annum (the ‘‘Applicable Rate’’), reset quarterly, equal
to EURIBOR, in each case, plus 2.625% as determined by the calculation agent (the ‘‘Calculation
Agent’’), which will initially be the Principal Paying Agent. Interest on the Notes will be payable
quarterly in arrears on 31 October, 31 January, 30 April and 31 July, commencing 31 October 2006.
A Holder will be entitled to an interest payment if it is a holder of record of the Notes on the
immediately preceding 15 October, 15 January, 15 April and 15 July. Interest on the Notes will accrue
from the most recent date to which interest has been paid or, if no interest has been paid, from and
including the Issue Date.
     ‘‘Determination Date,’’ with respect to an Interest Period relating to EURIBOR, will be the day
that is two TARGET Settlement Days preceding the first day of such Interest Period.
     ‘‘EURIBOR,’’ with respect to an Interest Period, will be the rate (expressed as a percentage per
annum) for deposits in euro for a three-month period beginning on the day that is two TARGET
Settlement Days after the Determination Date that appears on Telerate Page 248 as of 11:00 a.m.,
Brussels time, on the Determination Date. If Telerate Page 248 does not include such a rate or is
unavailable on a Determination Date, the Calculation Agent will request the principal London office
of each of four major banks in the Euro-zone inter-bank market, as selected by the Calculation
Agent, to provide such bank’s offered quotation (expressed as a percentage per annum) as of
approximately 11:00 a.m., Brussels time, on such Determination Date, to prime banks in the
Euro-zone interbank market for deposits in a Representative Amount in euro for a three-month
period beginning on the day that is two TARGET Settlement Days after the Determination Date. If at
least two such offered quotations are so provided, the rate for the Interest Period will be the
arithmetic mean of such quotations. If fewer than two such quotations are so provided, the
Calculation Agent will request each of three major banks in London, as selected by the Calculation
Agent (‘‘Reference Banks’’), to provide such bank’s rate (expressed as a percentage per annum), as of
approximately 11:00 a.m., Brussels time, on such Determination Date, for loans in a Representative
Amount in euro to leading European banks for a three-month period beginning on the day that is
two TARGET Settlement Days after the Determination Date. If at least two such rates are so
provided, the rate for the Interest Period will be the arithmetic mean of such rates. If fewer than two
such rates are so provided then the rate for the Interest Period will be the rate in effect with respect
to the immediately preceding Interest Period.



                                                   91
     ‘‘Euro-zone’’ means the region comprised of member states of the European Union that at the
relevant time have adopted the euro.
    ‘‘Interest Period’’ means the period commencing on and including an interest payment date and
ending on and including the day immediately preceding the next succeeding interest payment date,
with the exception that the first Interest Period will commence on and include the Issue Date and
end on and include 30 October 2006.
    ‘‘Representative Amount’’ means the greater of (a) A1,000,000 and (b) an amount that is
representative for a single transaction in the relevant market at the relevant time.
    ‘‘TARGET Settlement Day’’ means any day on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer (TARGET) System is open.
     ‘‘Telerate Page 248’’ means, the display page so designated on Bridge’s Telerate Service (or such
other page as may replace that page on that service, or such other service as may be nominated as
the information vendor).
    The Calculation Agent will, as soon as practicable after 11:00 a.m., Brussels time, on each
Determination Date, determine the Applicable Rate, and calculate the aggregate amount of interest
payable on the Notes in respect of the following Interest Period (the ‘‘Interest Amount’’). The Interest
Amount will be calculated by applying the Applicable Rate to the principal amount of each Note
outstanding at the commencement of the Interest Period, multiplying each such amount by the
actual number of days in the Interest Period concerned divided by 360.
     All percentages resulting from any of the above calculations will be rounded, if necessary, to the
nearest one hundred thousandth of a percentage point, with five one-millionths of a percentage
point being rounded upwards (e.g. 4.876545% (or .04876545) being rounded to 4.87655%
(or .0487655)). All euro amounts used in or resulting from such calculations will be rounded to the
nearest euro cent (with one-half euro cent being rounded upwards). The determination of the
Applicable Rate and the Interest Rate Amount by the Calculation Agent shall, in the absence of wilful
default, bad faith or manifest error, be binding on all parties.
     The Calculation Agent will, upon the written request of the Holder of any Note, provide the
interest rate then in effect with respect to the Notes.
     The rights of holders of Book-Entry Interests to receive the payments of interest on the Notes
are subject to applicable procedures of the Note Depositary and Euroclear and Clearstream Banking.

Methods of Receiving Payments on the Notes
    Principal, interest, premium and Additional Amounts (as defined below), if any, on the Global
Notes (as defined below) will be payable in euro at the specified office or agency of one or more
paying agents; provided that all such payments with respect to Book-Entry Interests registered in the
name of or held by a nominee of Clearstream Banking and/or Euroclear will be made by wire
transfer of immediately available funds to the account specified by the Holder or Holders thereof.
     Principal, interest, premium and Additional Amounts, if any, on the Definitive Notes (as defined
below) will be payable at the specified office or agency of one or more paying agents in the
City of London and, for so long as the Notes are listed on a recognised stock exchange (the ‘‘Stock
Exchange’’) and its rules so require, in the location of the Stock Exchange, in each case maintained
for such purposes.

Paying Agent, Registrar and Transfer Agents for the Notes
      The Issuer will maintain a paying agent for the Notes (each, a ‘‘Paying Agent’’) (i) in London (the
‘‘Principal Paying Agent’’) and (ii) for so long as the Notes are listed on the Stock Exchange and its
rules so require, in the location of the Stock Exchange. The initial Principal Paying Agent will be The
Bank of New York.
    In addition, the Issuer will undertake to maintain a Paying Agent in a member state of the
European Union that is not obliged to withhold or deduct tax pursuant to European Council Directive
2003/48/EC or any other Directive implementing the conclusions of the European Council of
Economics and Finance Ministers (‘‘ECOFIN’’) meeting of 26-27 November 2000 or any law
implementing or complying with, or introduced in order to conform to, such Directive.


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     The Note Depositary and, if definitive Notes are issued in registered form (‘‘Definitive Notes’’),
the Issuer, will maintain one or more registrars (each, a ‘‘Registrar’’), and a transfer agent in London
and, for so long as the Notes are listed on the Stock Exchange and its rules so require, the location
of the Stock Exchange. The initial Registrar will be The Bank of New York. The initial transfer agent
in London will be The Bank of New York. The Registrar and each transfer agent will maintain a
register reflecting ownership of CDIs or Definitive Notes, if any are issued, outstanding from time to
time and will make payments on and facilitate transfers of CDIs or Definitive Notes, if any are issued,
on behalf of the Note Depositary.
     Upon notice to the Trustee, the Issuer or Note Depositary may change or add any Paying Agent,
Registrar or transfer agent; provided, however, that in no event may a Principal Paying Agent be
appointed in any member state of the European Union where the Principal Paying Agent would be
obliged to withhold or deduct tax in connection with any payment made by it in relation to the
Notes unless the Principal Paying Agent would be so obliged if it were located in all other member
states of the European Union. For so long as the Notes are listed on the Stock Exchange and its rules
so require, the Issuer will publish a notice of any change of Paying Agent, Registrar or transfer agent
in a newspaper having a general circulation in the location of the Stock Exchange or, to the extent
and in the manner permitted by such rules, posted on the official website of the Stock Exchange.

Transfer and Exchange
    The Notes will be sold outside the United States pursuant to Regulation S under the U.S.
Securities Act and will initially be represented by one or more Global Notes.
    The Global Notes will be deposited with the Note Depositary or a nominee for the Note
Depositary which in turn will issue CDIs registered in the name of a nominee for a common
depositary for Euroclear and Clearstream Banking. The Global Notes may be transferred only to the
Note Depositary or its nominee or a successor thereof. CDIs may be transferred only to Euroclear
and/or Clearstream Banking or a nominee of them, to a successor of Euroclear and/or Clearstream
Banking and/or to a nominee of such successor.
     Ownership of interests in the Global Notes through interests in CDIs held by a nominee for a
common depositary for Euroclear and Clearstream Banking (‘‘Book-Entry Interests’’) will be limited to
persons (‘‘participants’’) that have accounts with Euroclear and Clearstream Banking or persons that
may hold interests through such participants. Ownership of interests in the Book-Entry Interests will
be shown on and transfers thereof will be made only through, records maintained by Euroclear and
Clearstream Banking and their participants, subject to restrictions on transfer and certification
requirements. Such transfers of Book-Entry Interests between participants in Euroclear or participants
in Clearstream Banking will be effected by Euroclear or Clearstream Banking pursuant to customary
procedures and subject to the applicable rules and procedures established by Euroclear or
Clearstream Banking and their respective participants.
     Holders of Book-Entry Interests will be entitled to receive Definitive Notes in exchange for their
holdings of Book-Entry Interests only in the limited circumstances set out under ‘‘Book-Entry,
Delivery and Form’’. If Definitive Notes are issued, they will be issued only in registered form and in
minimum denominations of A50,000 principal amount and integral multiples of A1,000 in excess
thereof, upon receipt by the Registrar of instructions relating thereto and any certificates, opinions
and other documentation required by the Indenture. It is expected that such instructions will be
based upon directions received by Euroclear or Clearstream Banking, as applicable, from the
participant that owns the relevant Book-Entry Interests. Definitive Notes issued in exchange for a
Book-Entry Interest, if any, will, except as set forth in the Indenture or as otherwise determined by
the Issuer in compliance with applicable law, be subject to, and will have a legend with respect to,
the restrictions on transfer summarised below and described more fully under ‘‘Notice to Investors.’’
     Subject to the restrictions on transfer referred to above, Notes issued as Definitive Notes, if any,
may be transferred or exchanged, in whole or in part, in minimum denominations of A50,000 in
principal amount and integral multiples of A1,000 in excess thereof. In connection with any such
transfer or exchange, the Indenture will require the transferring or exchanging Holder to, among
other things, furnish appropriate endorsements and transfer documents, furnish information
regarding the account of the transferee at Euroclear or Clearstream Banking, where appropriate,
furnish certain certificates and opinions, and pay any taxes, duties and governmental charges in
connection with such transfer or exchange. Any such transfer or exchange will be made without


                                                   93
charge to the Holder, other than any taxes, duties and governmental charges payable in connection
with such transfer.
    Notwithstanding the foregoing, the Issuer is not required to register the transfer of any
Definitive Registered Notes:
    • for a period of 15 calendar days prior to any date fixed for the redemption of the Notes;
    • for a period of 15 calendar days immediately prior to the date fixed for selection of Notes to
      be redeemed in part;
    • for a period of 15 calendar days prior to the record date with respect to any interest payment
      date; or
    • that the Holder has tendered (and not withdrawn) for re-purchase in connection with a
      Change of Control Offer or an Asset Sale Offer (as defined below).

Note Guarantees
    The Notes and the Issuer’s obligations under the Notes will be guaranteed by each of the
Guarantors. The Note Guarantees will be joint and several obligations of the Guarantors. The
Guarantors will guarantee, on a senior unsecured basis, and as a primary obligor and not merely as
surety, the Issuer’s obligations under the Notes and the Indenture.

Optional Redemption
    Except as set out below under ‘‘—Redemption for Changes in Withholding Taxes,’’ the Notes will
not be redeemable at the Issuer’s option prior to 31 July 2008.
     On or after 31 July 2008, the Issuer may redeem all or a part of the Notes in amounts of
A50,000 or an integral multiple of A1,000 in excess thereof, upon not less than 30 nor more than
60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set out
below plus accrued and unpaid interest and Additional Amounts, if any, on the Notes redeemed to
the applicable redemption date, if redeemed during the 12-month period beginning on 31 July of the
years indicated below, subject to the rights of Holders of Notes on the relevant record date to receive
interest on the relevant interest payment date:

       Year                                                                                                               Percentage

       2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   102.0%
       2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   101.0%
       2010 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          100.0%
    Unless the Issuer defaults in the payment of the redemption price, interest will cease to accrue
on the Notes or portions thereof called for redemption on the applicable redemption date.

Mandatory Redemption
     The Issuer is not required to make mandatory redemption or sinking fund payments with respect
to the Notes.

Selection and Notice
    If less than all of the Notes are to be redeemed at any time, the Trustee will select Notes for
redemption by lot or by such other method as determined by the Trustee in accordance with
applicable procedures of the clearing systems.
     Notes of A50,000 in principal amount cannot be redeemed in part. Notices of redemption will be
mailed by first class mail at least 30 but not more than 60 days before the redemption date to each
Holder of Notes to be redeemed at its registered address, except that redemption notices may be
mailed more than 60 days prior to a redemption date if the notice is issued in connection with a
defeasance of the Notes or a satisfaction and discharge of the Indenture. Any such redemption or
notice may be subject to the satisfaction of one or more conditions precedent at the Issuer’s
discretion.




                                                                     94
     If any Note is to be redeemed in part only, the notice of redemption that relates to that Note
will state the portion of the principal amount of that Note that is to be redeemed. A new Note in
principal amount equal to the unredeemed portion of the original Note will be issued in the name of
the Holder of Notes upon cancellation of the original Note. Notes called for redemption become due
on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on
Notes or portions of Notes called for redemption.

Redemption for Changes in Withholding Taxes
     The Issuer may redeem the Notes, in whole but not in part, at any time upon giving not less
than 30 nor more than 60 days’ prior notice to the Holders (which notice must be given in
accordance with the procedures described in ‘‘—Selection and Notice’’), at a redemption price equal
to the principal amount thereof, together with accrued and unpaid interest, if any, to the date fixed
by the Issuer for redemption (a ‘‘Tax Redemption Date’’) and all Additional Amounts (if any) then
due and which will become due on the Tax Redemption Date as a result of the redemption or
otherwise (subject to the right of Holders on the relevant record date to receive interest due on the
relevant Interest Payment Date and Additional Amounts (if any) in respect thereof), if on the next
date on which any amount would be payable in respect of the Notes, the Issuer has paid or would be
required to pay Additional Amounts, and the Issuer cannot avoid any such payment obligation taking
reasonable measures available, as a result of:
    (1) any change in, or amendment to, the laws or treaties (or any regulations, or rulings
        promulgated thereunder) of the relevant Tax Jurisdiction (as defined below) affecting
        Taxation which change or amendment has not been publicly announced or formally
        proposed before and which becomes effective on or after the Issue Date (or, if the relevant
        Tax Jurisdiction has changed since the Issue Date, the date on which the then current Tax
        Jurisdiction became the applicable Tax Jurisdiction under the Indenture); or
    (2) any change in, or amendment to, the existing official position or the introduction of an
        official position regarding the application, administration or interpretation of such laws,
        treaties, regulations or rulings (including a holding, judgment or order by a court of
        competent jurisdiction or a change in published practice), which change, amendment,
        application or interpretation has not been publicly announced or formally proposed before
        and becomes effective on or after the Issue Date (or, if the relevant Tax Jurisdiction has
        changed since the Issue Date, the date on which the then current Tax Jurisdiction became
        the applicable Tax Jurisdiction under the Indenture).
     The Issuer will not give any such notice of redemption earlier than 90 days prior to the earliest
date on which the Issuer would be obligated to make such payment or withholding if a payment in
respect of the Notes were then due. Notwithstanding the foregoing, the Issuer may not redeem the
Notes under this provision if the relevant Tax Jurisdiction changes under the Indenture and the Issuer
is obligated to pay any Additional Amounts as a result of a change in, or an amendment to, the laws
or treaties (or any regulations or rulings promulgated thereunder), or any change in or amendment
to, any official position regarding the application, administration or interpretation of such laws,
treaties, regulations or rules, of the then current Tax Jurisdiction which, at the time such Tax
Jurisdiction became the applicable Tax Jurisdiction under the Indenture, was publicly announced or
formally proposed. Prior to the publication or, where relevant, mailing of any notice of redemption of
the Notes pursuant to the foregoing, the Issuer will deliver to the Trustee an opinion of counsel, the
choice of such counsel to be subject to the prior written approval of the Trustee (such approval not
to be unreasonably withheld) to the effect that there has been such change or amendment that
would entitle the Issuer to redeem the Notes hereunder and that the Issuer cannot avoid any
obligation to pay Additional Amounts by taking reasonable measures available to it.
    For the avoidance of doubt, the implementation of European Council Directive 2003/48/EC or
any other directive implementing the conclusions of the ECOFIN meeting of 26–27 November 2000
on the Taxation of savings income or any law implementing or complying with or introduced in
order to conform to, such directive will not be a change or amendment for such purposes.

Additional Amounts
    All payments made by the Issuer under or with respect to the Notes (whether or not in the form
of Definitive Notes) or by any of the Guarantors with respect to any Guarantee will be made free and


                                                 95
clear of and without withholding or deduction for, or on account of, any present or future Taxes
unless the withholding or deduction of such Taxes is then required by law. If any deduction or
withholding for, or on account of, any Taxes imposed or levied by or on behalf of any jurisdiction in
which the Issuer or any Guarantor (including any successor entity), is then incorporated, engaged in
business or resident for tax purposes or any jurisdiction by or through which payment is made or
any political subdivision thereof or therein (each, a ‘‘Tax Jurisdiction’’), will at any time be required to
be made from, or any Taxes are imposed directly on any Holder or beneficial owner of the Notes on,
any payments made by the Issuer under or with respect to the Notes or any of the Guarantors with
respect to any Guarantee, including payments of principal, redemption price, purchase price, interest
or premium, the Issuer or the relevant Guarantor, as applicable, will pay such additional amounts (the
‘‘Additional Amounts’’) as may be necessary in order that the net amounts received and retained in
respect of such payments by each Holder (including Additional Amounts) after such withholding,
deduction or imposition will equal the respective amounts that would have been received and
retained in respect of such payments in the absence of such withholding, deduction or imposition;
provided, however, that no Additional Amounts will be payable with respect to:
    (1) any Taxes that would not have been imposed but for the Holder or the beneficial owner of
        the Notes being a citizen or resident or national of, incorporated in or carrying on a
        business, in the relevant Tax Jurisdiction in which such Taxes are imposed other than by the
        mere acquisition, holding, ownership or disposition of such Note or enforcement or exercise
        of any rights thereunder or the receipt of payments in respect thereof or any other
        connection with respect to the Notes;
    (2) any Taxes that are imposed or withheld as a result of the failure of the Holder of the Notes
        or beneficial owner of the Notes to comply with any written request, made to that Holder or
        beneficial owner in writing at least 90 days before any such withholding or deduction would
        be payable, by the Issuer or any of the Guarantors to provide timely or accurate information
        concerning the nationality, residence or identity of such Holder or beneficial owner or to
        make any valid or timely declaration or similar claim or satisfy any certification, information
        or other reporting requirement, that is required or imposed by a statute, treaty, regulation
        or administrative practice of the relevant Tax Jurisdiction as a precondition to exemption
        from all or part of such Taxes;
    (3) any Note presented for payment (where Notes are in the form of Definitive Registered Notes
        and presentation is required) more than 30 days after the relevant payment is first made
        available for payment to the Holder (except to the extent that the Holder would have been
        entitled to Additional Amounts had the note been presented on the last day of such 30 day
        period);
    (4) any estate, inheritance, gift, sale, transfer, personal property or similar tax or assessment;
    (5) any Taxes withheld, deducted or imposed on a payment to an individual and that are
        required to be made pursuant to European Council Directive 2003/48/EC or any other
        directive implementing the conclusions of the ECOFIN meeting of 26–27 November 2000 on
        the Taxation of savings income or any law implementing or complying with, or introduced
        in order to conform to, such Directive;
    (6) any Note presented for payment by or on behalf of a Holder of Notes who would have been
        able to avoid such withholding or deduction by presenting the relevant Note to another
        Paying Agent in a member state of the European Union; or
    (7) any combination of items (1) through (6) above.
     In addition to the foregoing, the Issuer and the Guarantors will also pay and indemnify the
Holder for any present or future stamp, issue, registration, transfer, court or documentary taxes, or
any other excise or property taxes, charges or similar levies or Taxes (together with any interest or
penalties thereon) that are levied by any jurisdiction on the creation, issuance, performance,
execution, delivery, registration or from the initial resale of the Notes by the initial purchasers or
enforcement of any of the Notes, the Indenture, any Guarantee, or any other document or
instrument referred to therein, or the receipt of any payments with respect to the Notes or the Note
Guarantees.




                                                    96
     If the Issuer or any Guarantor, as the case may be, becomes aware that it will be obligated to
pay Additional Amounts with respect to any payment under or with respect to the Notes or any
Guarantee, the Issuer or the relevant Guarantor, as the case may be, will deliver to the Trustee on a
date that is at least 30 days prior to the date of that payment (unless the obligation to pay
Additional Amounts arises after the 30th day prior to that payment date, in which case the Issuer or
the relevant Guarantor shall notify the Trustee promptly thereafter) an Officers’ Certificate stating
the fact that Additional Amounts will be payable and the amount estimated to be so payable. The
Officers’ Certificate must also set forth any other information reasonably necessary to enable the
Paying Agents to pay Additional Amounts to Holders on the relevant payment date. The Issuer or the
relevant Guarantor will provide the Trustee with documentation reasonably satisfactory to the
Trustee evidencing the payment of Additional Amounts.
     The Issuer or the relevant Guarantor will make all withholdings and deductions required by law
and will remit the full amount deducted or withheld to the relevant Tax Jurisdiction in accordance
with applicable law. The Issuer or the relevant Guarantor will use its reasonable efforts to obtain Tax
receipts from each Tax Jurisdiction evidencing the payment of any Taxes so deducted or withheld.
The Issuer or the relevant Guarantor will furnish to the Holders, within 60 days after the date the
payment of any Taxes so deducted or withheld is made, certified copies of Tax receipts evidencing
payment by the Issuer or a Guarantor, as the case may be, or if, notwithstanding such entity’s efforts
to obtain receipts, receipts are not obtained, other evidence of payments by such entity. Such entity
shall attach to each certified copy or other evidence, as applicable, a certificate stating (x) that the
amount of Tax evidenced by the certified copy was paid in connection with payments under or with
respect to the Notes then outstanding upon which such Taxes were due and (y) the amount of such
withholding tax paid per A1,000 of principal amount of the Notes.
     Whenever in the Indenture or in this ‘‘Description of the Notes’’ there is mentioned, in any
context, the payment of amounts based upon the principal amount of the Notes or of principal,
interest, premium, if any, or of any other amount payable under, or with respect to, any of the
Notes, such mention shall be deemed to include mention of the payment of Additional Amounts to
the extent that, in such context, Additional Amounts are, were or would be payable in respect
thereof.

Certain Covenants
Change of Control
     If a Change of Control occurs, the Issuer must offer to re-purchase all the Notes pursuant to a
Change of Control Offer on the terms set forth in the Indenture. In the Change of Control Offer, the
Issuer will offer a payment (the ‘‘Change of Control Payment’’) in cash equal to 101% of the
aggregate principal amount of Notes re-purchased plus accrued and unpaid interest, if any, on the
Notes re-purchased to the date of purchase, subject to the rights of Holders of Notes on the relevant
record date to receive interest due on the relevant interest payment date. Within 30 days following
any Change of Control, the Issuer will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to re-purchase Notes on such date
(the ‘‘Change of Control Payment Date’’) specified in the notice, which date will be no earlier than
30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures
required by the Indenture and described in such notice. The Issuer will comply with the requirements
of any relevant securities laws and regulations thereunder to the extent those laws and regulations
are applicable in connection with the re-purchase of the Notes as a result of a Change of Control. To
the extent that the provisions of any securities laws or regulations conflict with the Change of
Control provisions of the Indenture, the Issuer will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under the Change of Control
provisions of the Indenture by virtue of such compliance.
    On the Change of Control Payment Date, the Issuer will, to the extent lawful:
    (1) accept for payment all Notes or portions of Notes properly tendered pursuant to the Change
        of Control Offer;
    (2) irrevocably deposit with the Paying Agent in immediately available funds an amount equal
        to the Change of Control Payment in respect of all Notes or portions of Notes properly
        tendered; and



                                                   97
    (3) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an
        Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes
        being purchased by the Issuer.
    Subject to the satisfaction of clauses (1) to (3) above, the Paying Agent will promptly pay (by
wire transfer of immediately available funds, by mail or otherwise) to each Holder of Notes properly
tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate
and mail (or cause to be transferred by book entry) to each Holder a new note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any. The Issuer will publicly
announce the results of the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
    Except as described above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Notes to require that the Issuer re-purchase or redeem the
Notes in the event of a takeover, recapitalisation or similar transaction.
     The Issuer will not be required to make a Change of Control Offer upon a Change of Control if
(1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer
made by the Issuer and purchases all Notes properly tendered and not withdrawn under the Change
of Control Offer, or (2) notice of redemption has been given pursuant to the Indenture as described
above under the caption ‘‘—Optional Redemption,’’ unless and until there is a default in payment of
the applicable redemption price.
     The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease,
transfer, conveyance or other disposition of ‘‘all or substantially all’’ of the properties or assets of the
Parent and its Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase ‘‘substantially all,’’ there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Notes to require the Issuer to
re-purchase its Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than
all of the assets of the Parent and its Restricted Subsidiaries taken as a whole to another Person or
group may be uncertain.

Incurrence of Indebtedness and Issuance of Preferred Stock
     The Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently
or otherwise, with respect to (collectively, ‘‘incur’’) any Indebtedness (including Acquired Debt), and
the Parent will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries
to issue any shares of preferred stock; provided, however, that the Issuer or the Parent may incur
Indebtedness (including Acquired Debt) or issue Disqualified Stock, if the Fixed Charge Coverage
Ratio for the Parent’s most recently ended 12 months for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued, as the case may be, would have been at least 4.0 to 1.0, determined on a
pro forma basis (including a pro forma application of the net proceeds therefrom), as if such
Indebtedness had been incurred or the Disqualified Stock had been issued, as the case may be, at the
beginning of such 12-month period.
    The first paragraph of this covenant will not prohibit the incurrence of any of the following
items of Indebtedness (collectively, ‘‘Permitted Debt’’):
    (1) the incurrence by the Issuer and the Guarantors of additional Indebtedness and letters of
        credit under Credit Facilities (with letters of credit being deemed to have a principal amount
        equal to the maximum potential liability of the Parent and its Restricted Subsidiaries
        thereunder) in an aggregate principal amount at any one time outstanding under this
        clause (1) not to exceed A580.0 million, less the aggregate amount of all Net Proceeds to
        the extent used to permanently repay any Indebtedness under such Credit Facilities and
        effect a corresponding commitment reduction to meet the requirements of the covenant
        described above under the caption ‘‘—Certain Covenants—Asset Sales;’’
    (2) the incurrence by the Parent and its Restricted Subsidiaries of Existing Indebtedness;




                                                    98
(3) the incurrence by the Issuer and the Guarantors of Indebtedness represented by the Notes
    and the related Note Guarantees to be issued on the Issue Date;
(4) the incurrence by the Parent or any Restricted Subsidiary of Indebtedness represented by
    (a) Finance Leases with a maturity of less than 12 months, incurred for the purpose of
    financing all or any part of the purchase price of vehicle rental fleet or other equipment
    used in the business of the Parent or any of its Restricted Subsidiaries (including any
    reasonable related fees or expenses incurred in connection therewith) or (b) mortgage
    financings or purchase money obligations (other than Finance Leases with a maturity of less
    than 12 months) incurred for the purpose of financing all or any part of the purchase price
    or cost of design, construction, installation or improvement of property, plant or equipment
    used in the business of the Parent or any of its Restricted Subsidiaries (including any
    reasonable related fees or expenses incurred in connection therewith); provided, however,
    that, in the case of Indebtedness referred to in this clause 4(b), the Parent would have been
    able to incur A1.00 of additional Indebtedness pursuant to the first paragraph of this
    covenant after giving effect to the incurrence of such Indebtedness;
(5) the incurrence by any Restricted Subsidiary of Subsidiary Indebtedness with a maturity of
    less than 12 months to fund the acquisition of vehicle rental fleet and for working capital
    purposes in the ordinary course of business;
(6) the incurrence by the Parent or any Restricted Subsidiary of Permitted Refinancing
    Indebtedness in exchange for, or the net proceeds of which are used to renew, refund,
    refinance, replace, defease or discharge any Indebtedness (other than intercompany
    Indebtedness between or among the Parent and a Restricted Subsidiary) that was permitted
    by the Indenture to be incurred under the first paragraph of this covenant or clauses (2),
    (3), (6) or (7) of this paragraph;
(7) Indebtedness of a Person incurred and outstanding on or prior to the date on which such
    Person was acquired by the Parent or a Restricted Subsidiary (other than Indebtedness
    incurred in contemplation of, or in connection with, the transaction or series of related
    transactions pursuant to which such Person became a Restricted Subsidiary of or was
    otherwise acquired by the Parent); provided, however, that on the date that such Person is
    acquired by the Parent, (x) such Person becomes a Restricted Subsidiary and (y) the Parent
    or its Restricted Subsidiaries would have been able to incur such Indebtedness pursuant to
    the first paragraph of this covenant if such Person were a Restricted Subsidiary on the date
    of the acquisition;
(8) the incurrence by the Issuer, the Parent or any of its Restricted Subsidiaries of intercompany
    Indebtedness between or among the Issuer, the Parent and any of its Restricted Subsidiaries;
    provided, however, that:
    (a) if the Issuer, the Parent or any Guarantor is the obligor on such Indebtedness and the
        payee is not the Issuer, the Parent or a Guarantor, such Indebtedness is unsecured; and
    (b) (i) any subsequent issuance or transfer of Equity Interests that results in any such
        Indebtedness being held by a Person other than the Parent or a Restricted Subsidiary of
        the Parent and (ii) any sale or other transfer of any such Indebtedness to a Person that
        is not either the Parent or a Restricted Subsidiary of the Parent, will be deemed, in each
        case, to constitute an incurrence of such Indebtedness by the Parent or such Restricted
        Subsidiary, as the case may be, that was not permitted by this clause (8);
(9) the issuance by any of the Parent’s Restricted Subsidiaries to the Parent or to any of its
    Restricted Subsidiaries of shares of preferred stock; provided, however, that:
    (a) any subsequent issuance or transfer of Equity Interests that results in any such
        preferred stock being held by a Person other than the Parent or a Restricted Subsidiary
        of the Parent; and
    (b) any sale or other transfer of any such preferred stock to a Person that is not either the
        Parent or a Restricted Subsidiary of the Parent,
    will be deemed, in each case, to constitute an issuance of such preferred stock by such
    Restricted Subsidiary that was not permitted by this clause (9);



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    (10) the incurrence by the Parent or any of its Restricted Subsidiaries of Hedging Obligations in
         the ordinary course of business and not for speculative purposes;
    (11) any Note Guarantee;
    (12) the incurrence by the Parent or any of its Restricted Subsidiaries of Indebtedness in respect
         of workers’ compensation claims, self-insurance obligations, health, disability or other
         employee benefits or property, casualty or liability insurance claims, bankers’ acceptances,
         performance bonds, surety bonds, completion guarantees, performance guarantees, letters of
         credit and other reimbursement and indemnification obligations, in each case, in the
         ordinary course of business;
    (13) the incurrence by the Parent or any of its Restricted Subsidiaries of Indebtedness arising
         from the honoring by a bank or other financial institution of a check, draft or similar
         instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is
         covered within five Business Days;
    (14) the incurrence by the Parent and its Restricted Subsidiaries of Guarantees of the
         Indebtedness obligations of Anji China Car Rental and Leasing Company Limited not
         exceeding A20 million in the aggregate;
    (15) the incurrence of Indebtedness arising from agreements providing for Guarantees,
         indemnities or obligations in respect of warranties and purchase price adjustments in
         connection with the acquisition or disposition of assets, including without limitation, shares
         of Capital Stock; provided that the maximum aggregate liability in respect of such
         Indebtedness related to a disposition (other than in respect of tax and environmental
         matters) permitted pursuant to this clause at no time exceeds the gross proceeds, including
         non-cash proceeds (the value of which are measured at the time of the transaction)
         received from such disposition;
    (16) Guarantees of Indebtedness, which by their terms must be guaranteed if the Notes are
         guaranteed; Guarantees of other Indebtedness of the Issuer, the Parent or a Guarantor if the
         provisions of the Indenture described under the caption ‘‘—Additional Note Guarantees’’ are
         satisfied; and Guarantees by the Issuer, the Parent or a Guarantor of Indebtedness not
         prohibited by the provisions of the Indenture; and
    (17) the incurrence by the Parent or any of its Restricted Subsidiaries of additional Indebtedness
         not otherwise permitted to have been incurred under the Indenture in an aggregate
         principal amount (or accreted value, as applicable) at any time outstanding not to exceed
         A20 million.
     The Issuer and the Parent will not incur, and will not permit any Guarantor to incur, any
Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to
any other Indebtedness of the Issuer, the Parent or such Guarantor unless such Indebtedness is also
contractually subordinated in right of payment to the Notes or the applicable Guarantee on
substantially identical terms; provided, however, that no Indebtedness will be deemed to be
contractually subordinated in right of payment to any other Indebtedness of the Parent solely by
virtue of being unsecured or by virtue of being secured on a junior Lien basis or by virtue of not
being Guaranteed.
    Notwithstanding the foregoing, the Parent undertakes that, at 30 June and 31 December of each
year, commencing on 31 December 2006:
        (a) Subsidiary Indebtedness shall not exceed 15% of total Consolidated Indebtedness of the
            Parent and its Restricted Subsidiaries; and
        (b) Finance Leases shall not exceed 30% of Consolidated Fleet Net Book Value of the Parent
            and its Restricted Subsidiaries.
     For purposes of determining compliance with this ‘‘Incurrence of Indebtedness and Issuance of
Preferred Stock’’ covenant, in the event that an item of proposed Indebtedness meets the criteria of
more than one of the categories of Permitted Debt described in clauses (1) through (17) of the
second paragraph of this covenant, or is entitled to be incurred pursuant to the first paragraph of
this covenant, the Parent will be permitted to classify such item of Indebtedness on the date of its
incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that



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complies with this covenant, except that (x) any debt Incurred under clauses (1) through (17) of the
second paragraph of this covenant may not be reclassified as incurred pursuant to the first
paragraph of this covenant unless it could have been so incurred on the date of its incurrence and
(y) all Indebtedness outstanding on the Issue Date under any Credit Facilities shall be deemed initially
Incurred under clause (1) of the second paragraph of this covenant. The accrual of interest, the
accretion or amortisation of original issue discount, the payment of interest on any Indebtedness in
the form of additional Indebtedness with the same terms, the reclassification of preferred stock as
Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to
be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant;
provided, in each such case, that the amount of any such accrual, accretion or payment is included in
Fixed Charges of the Parent as accrued, except as otherwise set forth in the definition of Fixed
Charges. Notwithstanding any other provision of this covenant, the maximum amount of
Indebtedness that the Parent or any Restricted Subsidiary may incur pursuant to this covenant shall
not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.
    The amount of any Indebtedness outstanding as of any date will be:
    (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original
        issue discount;
    (2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
    (3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified
        Person, the lesser of:
         (a) the Fair Market Value of such assets at the date of determination; and
         (b) the amount of the Indebtedness of the other Person.

Restricted Payments
     The Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly:
    (1) declare or pay any dividend or make any other payment or distribution on account of the
        Parent’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation,
        any payment in connection with any merger or consolidation involving the Parent or any of
        its Restricted Subsidiaries) or to the direct or indirect holders of the Parent’s or any of its
        Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or
        distributions payable in Equity Interests (other than Disqualified Stock) of the Parent and
        other than dividends or distributions payable to the Parent or a Restricted Subsidiary of the
        Parent);
    (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in
        connection with any merger or consolidation involving the Parent) any Equity Interests in
        the Parent or any direct or indirect parent of the Parent (other than in connection with a
        scheme of arrangement pursuant to which Equity Interests in a parent of the Parent have
        been issued in respect of Equity Interests in the Parent);
    (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire
        or retire for value any Indebtedness of the Parent or any Guarantor that is contractually
        subordinated to the Notes or to any Guarantee (excluding any intercompany Indebtedness
        between or among the Parent and any of its Restricted Subsidiaries), except a payment of
        interest or principal on any such Indebtedness at the Stated Maturity thereof; or
    (4) make any Restricted Investment
(all such payments and other actions set forth in clauses (1) through (4) above being collectively
referred to as ‘‘Restricted Payments’’), unless, at the time of and after giving effect to any such
Restricted Payment:
    (1) no Default or Event of Default has occurred and is continuing or would occur as a
        consequence of such Restricted Payment;




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(2) the Parent would, at the time of such Restricted Payment and after giving pro forma effect
    thereto as if such Restricted Payment had been made at the beginning of the applicable
    12-month period, have been permitted to incur at least A1.00 of additional Indebtedness
    pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the
    covenant described below under the caption ‘‘—Incurrence of Indebtedness and Issuance of
    Preferred Stock;’’ and
(3) such Restricted Payment, together with the aggregate amount of all other Restricted
    Payments made by the Parent and its Restricted Subsidiaries since the Issue Date (excluding
    Restricted Payments permitted by clauses (2), (3),(4), (6) and (7) of the next succeeding
    paragraph), is less than the sum, without duplication, of:
    (a) 50% of the Consolidated Net Income of the Parent for the period (taken as one
        accounting period) from the beginning of the first fiscal quarter commencing
        immediately before the Issue Date to the end of the Parent’s most recently ended fiscal
        quarter for which internal financial statements are available at the time of such
        Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less
        100% of such deficit); plus
    (b) 100% of the aggregate net cash proceeds (other than Excluded Contributions) received
        by the Parent since the Issue Date as a contribution to its common equity capital or
        from the issue or sale of Equity Interests in the Parent (other than Disqualified Stock) or
        from the issue or sale of convertible or exchangeable Disqualified Stock or convertible
        or exchangeable debt securities of the Parent that have been converted into or
        exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock
        or debt securities) sold to a Restricted Subsidiary of the Parent); plus
    (c) to the extent that any Restricted Investment that was made after the Issue Date
        (i) ceases to be a Restricted Investment because it becomes an Investment in a
        Restricted Subsidiary, the initial amount of such Restricted Investment or (ii) is sold for
        cash or otherwise liquidated or repaid for cash, the lesser of (x) the cash return of
        capital, if any, with respect to such Restricted Investment (less the cost of disposition, if
        any) and (y) the initial amount of such Restricted Investment; plus
    (d) to the extent that any Unrestricted Subsidiary of the Parent designated as such after the
        Issue Date is redesignated as a Restricted Subsidiary after the Issue Date, the lesser of
        (i) the Fair Market Value of the Parent’s Investment in such Subsidiary as of the date of
        such redesignation or (ii) such Fair Market Value as of the date on which such
        Subsidiary was originally designated as an Unrestricted Subsidiary after the Issue Date;
        plus
    (e) 100% of any cash dividends received by the Parent or a Restricted Subsidiary of the
        Parent that is a Guarantor after the Issue Date from an Unrestricted Subsidiary of the
        Parent, to the extent that such dividends were not otherwise included in the
        Consolidated Net Income of the Parent for such period.
The preceding provisions will not prohibit:
(1) the payment of any dividend or the consummation of any irrevocable redemption within
    60 days after the date of declaration of the dividend or giving of the redemption notice, as
    the case may be, if at the date of declaration or notice, the dividend or redemption payment
    would have complied with the provisions of the Indenture;
(2) the making of any Restricted Payment in exchange for, or out of the net cash proceeds
    (other than Excluded Contributions) of the substantially concurrent sale (other than to a
    Restricted Subsidiary of the Parent) of, Equity Interests in the Parent (other than Disqualified
    Stock) or from the substantially concurrent contribution (other than Excluded Contributions)
    of common equity capital to the Parent; provided that the amount of any such net cash
    proceeds that are utilised for any such Restricted Payment will be excluded from
    clause (3)(b) of the preceding paragraph;
(3) the re-purchase, redemption, defeasance or other acquisition or retirement for value of
    Indebtedness of the Parent or any Guarantor that is contractually subordinated to the Notes




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         or to any Guarantee with the net cash proceeds from a substantially concurrent incurrence
         of Permitted Refinancing Indebtedness;
    (4) the payment of any dividend (or, in the case of any partnership or limited liability company,
        any similar distribution) by a Restricted Subsidiary of the Parent to the holders of its Equity
        Interests on a pro rata basis;
    (5) so long as no Default has occurred and is continuing or would be caused thereby, the
        re-purchase, redemption or other acquisition or retirement for value of any Equity Interests
        in the Parent or any Restricted Subsidiary of the Parent held by any current or former
        officer, director or employee of the Parent or any of its Subsidiaries pursuant to any equity
        subscription agreement, stock option agreement, shareholders’ agreement or similar
        agreement; provided that the aggregate price paid for all such re-purchased, redeemed,
        acquired or retired Equity Interests may not exceed A2 million in any 12-month period;
    (6) the re-purchase of Equity Interests deemed to occur upon the exercise of stock options or
        warrants to the extent such Equity Interests represent a portion of the exercise price of
        those stock options or warrants;
    (7) so long as no Default has occurred and is continuing or would be caused thereby, the
        declaration and payment of regularly scheduled or accrued dividends to holders of any class
        or series of Disqualified Stock of the Parent or any Restricted Subsidiary of the Parent issued
        on or after the Issue Date in accordance with the Fixed Charge Coverage Ratio test
        described below under the caption ‘‘—Incurrence of Indebtedness and Issuance of Preferred
        Stock;’’ and
    (8) so long as no Default has occurred and is continuing or would be caused thereby, other
        Restricted Payments in an aggregate amount at any time outstanding not to exceed
        A20 million since the Issue Date.
    The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the
date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by
the Parent or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The Fair Market Value of any assets or securities that are required to be valued by this covenant will
be determined by the chief financial officer or chief executive officer to the extent such value is less
than A10 million and by the Board of Directors of the Parent to the extent such value exceeds
A10 million, such determination to be evidenced by an Officer’s Certificate delivered to the Trustee.
The Board of Directors’ determination must be based upon an opinion or appraisal issued by an
Independent Financial Advisor if the Fair Market Value exceeds A30 million.

Liens
     The Parent will not, and will not permit any of its Restricted Subsidiaries to, create, incur,
assume or otherwise cause or suffer to exist or become effective any Lien of any kind (other than
Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all
payments due under the Indenture and the Notes are secured on an equal and ratable basis with the
obligations so secured until such time as such obligations are no longer secured by a Lien.

Asset Sales
    The Parent will not, and will not permit any of its Restricted Subsidiaries to, consummate an
Asset Sale unless:
    (1) the Parent (or the Restricted Subsidiary, as the case may be) receives consideration at the
        time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity
        Interests issued or sold or otherwise disposed of; and
    (2) at least 75% of the consideration received in the Asset Sale by the Parent or such Restricted
        Subsidiary is in the form of cash. For purposes of this provision (but not for purposes of the
        definition of Net Proceeds), each of the following will be deemed to be cash:
         (a) any liabilities, as shown on the Parent’s most recent consolidated balance sheet, of the
             Parent or any Restricted Subsidiary (other than contingent liabilities and liabilities that
             are by their terms subordinated to the Notes or any Guarantee) that are assumed by



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              the transferee of any such assets pursuant to a customary novation agreement that
              releases the Parent or such Restricted Subsidiary from further liability;
         (b) any securities, notes or other obligations received by the Parent or any such Restricted
             Subsidiary from such transferee that are within 30 days, subject to ordinary settlement
             periods, converted by the Parent or such Restricted Subsidiary into cash, to the extent
             of the cash received in that conversion; and
         (c) any shares received in connection with an acquisition referred to in clause (2) of the
             next paragraph of this covenant or any assets received in connection with an
             acquisition referred to in clause (3) of the next paragraph of this covenant.
    Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Parent (or the
applicable Restricted Subsidiary, as the case may be) may apply such Net Proceeds:
    (1) to the extent the Parent or any Restricted Subsidiary, as the case may be, elects (or is
        required by the terms thereof) to prepay, repay or purchase Indebtedness; provided that
        within such 360-day period such Indebtedness is retired and the related commitment (if
        any) is permanently reduced in an amount equal to the principal amount so prepaid, repaid
        or purchased;
    (2) to acquire all or substantially all of the assets of, or any Capital Stock of, another Permitted
        Business, if, after giving effect to any such acquisition of Capital Stock, the Permitted
        Business is or becomes a Restricted Subsidiary of the Parent; or
    (3) to make a capital expenditure or to purchase Replacement Assets.
    Pending the final application of any Net Proceeds, the Parent may temporarily reduce
Indebtedness or otherwise invest the Net Proceeds in any manner that is not prohibited by the
Indenture.
     Any Net Proceeds from Asset Sales that are not applied or invested as provided in the second
paragraph of this covenant will constitute ‘‘Excess Proceeds.’’ When the aggregate amount of Excess
Proceeds exceeds A20 million, within 15 days thereof, the Issuer will make an offer (an ‘‘Asset Sale
Offer’’) to all Holders of Notes and, to the extent the Issuer elects, to all holders of other
Indebtedness that ranks pari passu with the Notes containing provisions similar to those set forth in
the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to
purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may
be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer in respect of the
Notes will be equal to, and in the case of pari passu Indebtedness the offer price will be no more
than, 100% of the principal amount of the Notes or pari passu Indebtedness plus accrued and unpaid
interest, if any, to the date of purchase in accordance with the procedures set out in the Indenture or
the agreements governing the pari passu Indebtedness, as applicable, in each case in minimum
denominations of A50,000 and in integral multiples of A1,000 in excess thereof. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Parent may use those Excess
Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal
amount of Notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the
amount of Excess Proceeds, the Trustee will select the Notes and such other pari passu Indebtedness
to be purchased on a pro rata basis or such other method as determined by the Trustee in
accordance with the provisions of the applicable clearing systems. Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds will be reset at zero.
     The Asset Sale Offer, insofar as it relates to the Notes, will remain open for a period of not less
than 20 Business Days following its commencement (the ‘‘Asset Sale Offer Period’’). No later than five
Business Days after the termination of the Asset Sale Offer period (the ‘‘Asset Sale Purchase Date’’)
the Issuer will purchase the principal amount of Notes and to the extent the Issuer elects, pari passu
Indebtedness required to be purchased by it pursuant to this covenant, or if less than the Asset Sale
Offer Amount has been so validly tendered, all Notes and pari passu Indebtedness validly tendered in
response to the Asset Sale Offer.
    The Issuer will comply with the requirements of any relevant securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection with each
re-purchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the Asset Sale provisions of the Indenture, the Issuer will



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comply with the applicable securities laws and regulations and will not be deemed to have breached
its obligations under the Asset Sale provisions of the Indenture by virtue of such compliance.

Dividend and Other Payment Restrictions Affecting Subsidiaries
     The Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly,
create or permit to exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to:
    (1) pay dividends or make any other distributions on its Capital Stock to the Parent or any of
        its Restricted Subsidiaries, or with respect to any other interest or participation in, or
        measured by, its profits, or pay any indebtedness owed to the Parent or any of its Restricted
        Subsidiaries;
    (2) make loans or advances to the Parent or any of its Restricted Subsidiaries; or
    (3) sell, lease or transfer any of its properties or assets to the Parent or any of its Restricted
        Subsidiaries.
    However, the preceding restrictions will not apply to encumbrances or restrictions existing under
or by reason of:
    (1) agreements in effect on the Issue Date and any amendments, restatements, modifications,
        renewals, supplements, refundings, replacements or refinancings of those agreements with
        the same or different parties; provided that the amendments, restatements, modifications,
        renewals, supplements, refundings, replacements or refinancings are not materially more
        restrictive, taken as a whole, with respect to such dividend, loan, transfer, other payment
        restrictions and maintenance provisions than those contained in the agreements in effect on
        the Issue Date;
    (2) the Indenture, the Notes and the Note Guarantees;
    (3) applicable law, rule, regulation or order;
    (4) any instrument governing Indebtedness or Capital Stock of a Person acquired by, or merged,
        consolidated or otherwise combined into or with the Parent or any of its Restricted
        Subsidiaries as in effect at the time of such acquisition (except to the extent such
        Indebtedness or Capital Stock was incurred in connection with or in contemplation of such
        acquisition), which encumbrance or restriction is not applicable to any Person, or the
        properties or assets of any Person, other than the Person, or the property or assets of the
        Person, so acquired and its Subsidiaries; provided that, in the case of Indebtedness, such
        Indebtedness was permitted by the terms of the Indenture to be incurred;
    (5) customary non-assignment and transfer provisions in contracts (including operating leases)
        and licences and restrictions on sublicensing;
    (6) mortgages and purchase money obligations for property acquired, Finance Leases and
        agreements with manufacturers that contain re-purchase provisions that impose restrictions
        on the property purchased or leased of the nature described in clause (3) of the preceding
        paragraph;
    (7) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts
        distributions by that Restricted Subsidiary pending the sale or other disposition;
    (8) Permitted Refinancing Indebtedness; provided that the restrictions contained in the
        agreements governing such Permitted Refinancing Indebtedness are not materially more
        restrictive, taken as a whole, than those contained in the agreements governing the
        Indebtedness being refinanced;
    (9) Liens permitted to be incurred under the provisions of the covenant described above under
        the caption ‘‘—Liens’’ (including Permitted Liens) that limit the right of the debtor to
        dispose of the assets subject to such Liens;
    (10) provisions limiting the disposition or distribution of assets or property in joint venture
         agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and
         other similar agreements entered into with the approval of the Parent’s Board of Directors,
         which limitation is applicable only to the assets that are the subject of such agreements; and


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    (11) restrictions on cash, cash equivalents or other deposits or on net worth, in each case,
         imposed by customers and suppliers under contracts or in connection with insurance
         arrangements.

Merger, Consolidation or Sale of Assets
    The Parent will not, directly or indirectly: (1) consolidate or merge with or into another Person
(whether or not the Parent is the surviving corporation); or (2) sell, assign, transfer, convey or
otherwise dispose of all or substantially all of the properties or assets of the Parent and its Restricted
Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:
    (1) either: (a) the Parent is the surviving corporation; or (b) the Person formed by or surviving
        any such consolidation or merger (if other than the Parent) or to which such sale,
        assignment, transfer, conveyance or other disposition has been made is a corporation
        organised or existing under the laws of any European Union Member State, the United
        States, any state of the United States or the District of Columbia;
    (2) the Person formed by or surviving any such consolidation or merger (if other than the
        Parent) or the Person to which such sale, assignment, transfer, conveyance or other
        disposition has been made assumes all the obligations of the Parent under the Notes and
        the Indenture pursuant to agreements reasonably satisfactory to the Trustee including but
        not limited to providing an opinion of counsel and an Officers’ Certificate stating that such
        transaction complies with the applicable terms of the Indenture and that all conditions
        precedent have been satisfied;
    (3) immediately after giving pro forma effect to such transaction, no Default or Event of Default
        exists and is continuing; and
    (4) the Parent or the Person formed by or surviving any such consolidation or merger (if other
        than the Parent), or to which such sale, assignment, transfer, conveyance or other
        disposition has been made would, on the date of such transaction after giving pro forma
        effect thereto and any related financing transactions as if the same had occurred at the
        beginning of the applicable 12-month period, be permitted to incur at least A1.00 of
        additional Indebtedness pursuant to first paragraph of the covenant described above under
        the caption ‘‘—Incurrence of Indebtedness and Issuance of Preferred Stock.’’
    In addition, the Parent will not, directly or indirectly, lease all or substantially all of the
properties and assets of it and its Restricted Subsidiaries taken as a whole, in one or more related
transactions, to any other Person.
    This ‘‘Merger, Consolidation or Sale of Assets’’ covenant will not apply to:
    (1) a merger of the Parent with one of its Affiliates solely for the purpose of reincorporating
        the Parent under the laws of any European Union Member State, the United States, any state
        of the United States or the District of Columbia; or
    (2) any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other
        disposition of assets between or among the Parent and its Restricted Subsidiaries.

Transactions with Affiliates
     The Parent will not, and will not permit any of its Restricted Subsidiaries to, make any payment
to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction, contract, agreement,
understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate of the Parent
(each, an ‘‘Affiliate Transaction’’), unless:
    (1) the Affiliate Transaction is on terms that are no less favourable to the Parent or the relevant
        Restricted Subsidiary than those that would have been obtained in a comparable transaction
        by the Parent or such Restricted Subsidiary with an unrelated Person; and
    (2) the Parent delivers to the Trustee:
         (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions
             involving aggregate consideration in excess of A10 million, a resolution of the Board of
             Directors of the Parent set forth in an Officers’ Certificate certifying that such Affiliate


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              Transaction complies with this covenant and that such Affiliate Transaction has been
              approved by a majority of the disinterested members of the Board of Directors of the
              Parent; and
         (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions
             involving aggregate consideration in excess of A30 million, an opinion as to the fairness
             to the Parent or such Subsidiary of such Affiliate Transaction from a financial point of
             view issued by an Independent Financial Advisor.
    The following items will not be deemed to be Affiliate Transactions and, therefore, will not be
subject to the provisions of the prior paragraph:
    (1) any employment agreement, employee benefit plan, officer or director indemnification
        agreement or any similar arrangement entered into by the Parent or any of its Restricted
        Subsidiaries in the ordinary course of business and payments pursuant thereto;
    (2) transactions between or among the Parent and/or its Restricted Subsidiaries;
    (3) transactions with a Person (other than an Unrestricted Subsidiary of the Parent) that is an
        Affiliate of the Parent solely because the Parent owns, directly or through a Restricted
        Subsidiary, an Equity Interest in, or controls, such Person;
    (4) payment of reasonable directors’ fees to Persons who are directors or on the Board of
        Directors of the Parent;
    (5) any issuance of Equity Interests to Affiliates of the Parent;
    (6) any Restricted Payment that does not violate the provisions of the Indenture described
        above under the caption ‘‘—Restricted Payments;’’
    (7) loans or advances to employees in the ordinary course of business not to exceed A1 million
        in the aggregate at any one time outstanding;
    (8) transactions pursuant to any agreement of the Parent or any of its Restricted Subsidiaries as
        in effect on the Issue Date; and
    (9) vehicle rental fleet purchase and sale arrangements with the Principals, loans to and from
        the Principals and insurance arrangements with the Principals, in each case, provided such
        arrangements are on terms no less favourable to the Parent and the relevant Restricted
        Subsidiary that those that would have been obtained in a comparable transaction by the
        Parent or such Restricted Subsidiary with an unrelated Person and are consistent with past
        practice; provided that the annual compliance certificate delivered to the Trustee after the
        end of each fiscal year of the Parent includes a certification that all such transactions
        described in this Clause (9) have been conducted on such basis.

Business Activities
    The Parent will not, and will not permit any of its Restricted Subsidiaries to, engage in any
business other than Permitted Businesses, except to such extent as would not be material to the
Parent and its Restricted Subsidiaries taken as a whole.

Additional Note Guarantees
    The Parent will cause each Restricted Subsidiary that is not a Guarantor that, after the Issue
Date, guarantees any Indebtedness of the Issuer, the Parent or a Guarantor, to execute and deliver a
supplemental indenture or other appropriate agreement providing for such Restricted Subsidiary’s
guarantee of all of the Notes, which Note Guarantee will be senior to or pari passu with such
Restricted Subsidiary’s Guarantee of such other Indebtedness.
    Any such additional Note Guarantees will be automatically released:
    (1) in connection with any sale or other disposition of all or substantially all the assets of that
        Guarantor or all the Capital Stock of that Guarantor, in each case, to a third party, if the
        sale or other disposition does not violate the provisions of the Indenture described under
        the caption ‘‘—Asset Sales’’;




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    (2) upon legal defeasance or satisfaction and discharge of the Notes as provided in the
        provisions of the Indenture described under the captions ‘‘—Legal Defeasance and Covenant
        Defeasance’’ and ‘‘—Satisfaction and Discharge’’; or
    (3) if the Guarantor is released from all its obligations under all its Guarantees of Indebtedness
        of the Issuer, the Parent and the Guarantors.

Designation of Restricted and Unrestricted Subsidiaries
    The Board of Directors of the Parent may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is
designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding
Investments owned by the Parent and its Restricted Subsidiaries in the Subsidiary designated as
Unrestricted will be deemed to be an Investment made as of the time of the designation and will
reduce the amount available for Restricted Payments under the covenant described above under the
caption ‘‘—Restricted Payments’’ or under one or more clauses of the definition of Permitted
Investments, as determined by the Parent. That designation will only be permitted if the Investment
would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors of the Parent may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a Default.
     Any designation of a Subsidiary of the Parent as an Unrestricted Subsidiary will be evidenced to
the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors giving
effect to such designation and an Officers’ Certificate certifying that such designation complied with
the preceding conditions and was permitted by the covenant described above under the caption
‘‘—Restricted Payments.’’ If, at any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary
for purposes of the Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred
by a Restricted Subsidiary of the Parent as of such date and, if such Indebtedness is not permitted to
be incurred as of such date under the covenant described under the caption ‘‘—Incurrence of
Indebtedness and Issuance of Preferred Stock,’’ the Parent will be in default of such covenant. The
Board of Directors of the Parent may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary of the Parent; provided that such designation will be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Parent of any outstanding Indebtedness
of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness
is permitted under the covenant described under the caption ‘‘—Incurrence of Indebtedness and
Issuance of Preferred Stock,’’ calculated on a pro forma basis as if such designation had occurred at
the beginning of the 12-month reference period; and (2) no Default or Event of Default would result
following such designation.

Prescription
     The Issuer shall be discharged from its obligation to pay principal on the Notes to the extent
that a payment which has been duly made remains unclaimed at the end of the period of ten years
from the maturity date in respect of such Notes. The Issuer shall be discharged from its obligation to
make an interest payment on the Notes to the extent that a payment which has been duly made
remains unclaimed at the end of the period of five years from the interest payment date in respect
of such payment.

Listing
    The Parent will use its reasonable best efforts to list and maintain the listing of the Notes on the
Stock Exchange; provided, however, that if the Parent is unable to list the Notes on the Stock
Exchange or if maintenance of such listing becomes unduly onerous, it will maintain a listing of such
Notes on another recognised stock exchange.

Payments for Consent
     The Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly,
pay or cause to be paid any consideration to or for the benefit of any Holder of Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture
or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes



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that consent, waive or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement, other than any Holder who waives the right to receive
all or any part of such consideration.

The Issuer
     The Issuer will not engage in any business activity or undertake any other activity, except any
activity, undertaken directly or through one of its Subsidiaries, relating to the financing and other
intercompany activities of the Parent and its Restricted Subsidiaries and other activities relating or
incidental thereto (including in respect of Hedging Obligations) or relating to the ownership or
management of its Subsidiaries.
     The Issuer will at all times remain a wholly-owned Restricted Subsidiary of the Parent. The Issuer
will not merge, consolidate, amalgamate or otherwise combine with or into another Person, or sell,
transfer, lease or otherwise dispose of any material property or assets to any Person other than a
Restricted Subsidiary.

Reports
    Whether or not required by applicable rules and regulations, so long as any Notes are
outstanding, the Parent will furnish to the Trustee and the Irish Paying Agent and make available to
the Holders of Notes and potential investors:
    (1) within 120 days after the end of each fiscal year of the Parent, commencing with the fiscal
        year ending 31 December 2006: (a) information substantially similar in scope to the annual
        reporting requirements of an UK listed public company, a presentation of Underlying EBITDA
        and the same ratios presented in this offering circular under ‘‘Summary Historical and Pro
        Forma Consolidated Financial Data’’, a discussion and analysis by management of the
        financial condition and results of operations of the Parent and its Restricted Subsidiaries, as
        well as a description of material recent developments; and (b) audited consolidated
        statements of income, statements of cash flow and balance sheets of the Parent (or any
        predecessor company of the Parent) as of and for the most recent two fiscal years, including
        appropriate footnotes to such financial statements and the report of the independent
        auditors on such financial statements;
    (2) within 90 days following the first semi-annual period beginning with the semiannual period
        ending 30 June 2006, information including: (a) an unaudited condensed consolidated
        balance sheet as of the end of such period and unaudited condensed statements of income
        and cash flow for the most recent period ending on the unaudited condensed balance sheet
        date, and the comparable prior year periods, together with condensed footnote disclosure;
        (b) a discussion and analysis by management of such unaudited financial statements;
        (c) material recent developments and (d) a presentation of Underlying EBITDA and the same
        ratios presented in this offering circular under ‘‘Summary Historical and Pro Forma
        Consolidated Financial Data’’; and
    (3) promptly after the occurrence of a material acquisition, disposition, restructuring, senior
        management changes or change in auditors, a report containing a description of such event
        and such other information as the Parent is required to make publicly available under the
        requirements of the applicable UK laws (including pro forma financial statements, if required
        by such laws).
     If the Parent has designated any of its Subsidiaries as Unrestricted Subsidiaries and such
Subsidiaries are Significant Subsidiaries, then the semi-annual and annual financial information
required by the preceding paragraph will include a reasonably detailed presentation, either on the
face of the financial statements or in the footnotes thereto, of the financial condition and results of
operations of the Parent and its Restricted Subsidiaries excluding the financial condition and results
of operations of the Unrestricted Subsidiaries of the Parent.
    So long as the Notes are listed on the Stock Exchange, all reports referred to in this section will
be available at the offices of the Paying Agent in the location of the Stock Exchange.




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Events of Default and Remedies
    Each of the following is an ‘‘Event of Default’’:
    (1) default for 30 days in the payment when due of interest on, or Additional Amounts, if any,
        with respect to, the Notes;
    (2) default in the payment when due (at maturity, upon redemption or otherwise) of the
        principal of, or premium, if any, on, the Notes;
    (3) failure by the Parent or any of its Restricted Subsidiaries to comply with the provisions
        described under the captions ‘‘—Certain Covenants—Change of Control,’’ ‘‘—Certain
        Covenants—Asset Sales,’’ or ‘‘—Certain Covenants—Merger, Consolidation or Sale of Assets;’’
    (4) failure by the Parent or any of its Restricted Subsidiaries for 60 days after notice to the
        Parent by the Trustee or the Holders of at least 25% in aggregate principal amount of the
        Notes then outstanding voting as a single class to comply with any of the other agreements
        in the Indenture;
    (5) default under any mortgage, indenture or instrument under which there may be issued or
        by which there may be secured or evidenced any Indebtedness for money borrowed by the
        Parent or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the
        Parent or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now
        exists, or is created after the Issue Date, if that default:
         (a) is caused by a failure to pay principal of, or interest or premium, if any, on, such
             Indebtedness prior to the expiration of the grace period provided in such Indebtedness
             on the date of such default (a ‘‘Payment Default’’);
         (b) results in the acceleration of such Indebtedness prior to its express maturity,
         and, in each case, the principal amount of any such Indebtedness, together with the
         principal amount of any other such Indebtedness or the maturity of which has been so
         accelerated, aggregates A20 million or more and has not been discharged in full or such
         acceleration has been rescinded or annulled within 30 days of such Payment Default or
         acceleration;
    (6) failure by the Parent or any of its Restricted Subsidiaries to pay final judgments entered by
        a court or courts of competent jurisdiction aggregating in excess of A20 million, which
        judgments are not paid, discharged or stayed for a period of 60 days;
    (7) except as permitted by the Indenture, any Guarantee is held in any judicial proceeding to be
        unenforceable or invalid or ceases for any reason to be in full force and effect, or any
        Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its
        obligations under its Guarantee; and
    (8) certain events of bankruptcy or insolvency described in the Indenture with respect to the
        Parent, a Guarantor or any of its Restricted Subsidiaries that is a Significant Subsidiary or
        any group of Restricted Subsidiaries that, taken together, would constitute a Significant
        Subsidiary.
    In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with
respect to the Parent, a Guarantor, any Restricted Subsidiary of the Parent that is a Significant
Subsidiary or any group of Restricted Subsidiaries of the Parent that, taken together, would
constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately
without further action or notice on the part of the Trustee or any Holder. If any other Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.
    Subject to certain limitations, Holders of a majority in aggregate principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of Default if it
determines that withholding notice is in their interest, except a Default or Event of Default relating to
the payment of principal, interest or premium, if any.




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     Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event
of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the
rights or powers under the Indenture at the request or direction of any Holders of Notes unless such
Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or
expense satisfactory to the Trustee in all respects. Except to enforce the right to receive payment of
principal, premium, if any, or interest, when due, no Holder of a Note may pursue any remedy with
respect to the Indenture or the Notes unless:
    (1) such Holder has previously given the Trustee written notice that an Event of Default is
        continuing;
    (2) Holders of at least 25% in aggregate principal amount of the then outstanding Notes have
        requested the Trustee in writing to pursue the remedy;
    (3) such Holders have offered the Trustee reasonable security or indemnity against any loss,
        liability or expense satisfactory to the Trustee in all respects;
    (4) the Trustee has not complied with such request within 60 days after the receipt of the
        request and the offer of security or indemnity; and
    (5) Holders of a majority in aggregate principal amount of the then outstanding Notes have not
        given the Trustee a direction inconsistent with such request within such 60-day period.
     The Holders of a majority in aggregate principal amount of the then outstanding Notes by notice
to the Trustee may, on behalf of the Holders of all of the Notes, rescind an acceleration or waive any
existing Default or Event of Default and its consequences under the Indenture except a continuing
Default or Event of Default in the payment of interest or premium, if any, on, or the principal of, the
Notes.
     The Parent is required to deliver to the Trustee annually a statement regarding compliance with
the Indenture. Upon becoming aware of any Default or Event of Default, the Parent is required to
deliver to the Trustee within thirty days a statement specifying such Default or Event of Default.

No Personal Liability of Directors, Officers, Employees and Stockholders
    No director, officer, employee, incorporator or stockholder of the Parent or any Guarantor, as
such, will have any personal liability for any obligations of the Parent or the Guarantors under the
Notes, the Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for issuance of the Notes. The
waiver may not be effective to waive liabilities under the U.S. federal securities laws.

Legal Defeasance and Covenant Defeasance
     The Issuer may at any time, at the option of its Board of Directors evidenced by a resolution set
forth in an Officers’ Certificate, elect to have all of its obligations discharged with respect to the
outstanding Notes and all obligations of the Guarantors discharged with respect to their (‘‘Legal
Defeasance’’) except for:
    (1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of,
        or interest or premium, if any, on, such Notes when such payments are due from the trust
        referred to below;
    (2) the Issuer’s obligations with respect to the Notes concerning issuing temporary notes,
        registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an
        office or agency for payment and money for security payments held in trust;
    (3) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s and the
        Guarantors’ obligations in connection therewith; and
    (4) the Legal Defeasance and Covenant Defeasance (as defined below) provisions of the
        Indenture.
     In addition, the Issuer may, at its option and at any time, elect to have the obligations of the
Issuer and the Guarantors released with respect to certain covenants (including its obligation to make



                                                  111
Change of Control Offers and Asset Sale Offers) that are described in the Indenture (‘‘Covenant
Defeasance’’) and thereafter any omission to comply with those covenants will not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under ‘‘—Events of Default and Remedies’’ will no longer constitute an Event of
Default with respect to the Notes.
    In order to exercise either Legal Defeasance or Covenant Defeasance:
    (1) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders
        of the Notes, cash in euro, euro-denominated non-callable government securities, or a
        combination of cash in euro and euro-denominated non-callable government securities, in
        amounts as will be sufficient, in the opinion of a nationally recognised investment bank,
        appraisal firm or firm of independent public accountants, to pay the principal of, or interest
        and premium, if any, on, the outstanding Notes on the stated date for payment thereof or
        on the applicable redemption date, as the case may be, and the Issuer must specify whether
        the Notes are being defeased to such stated date for payment or to a particular redemption
        date;
    (2) in the case of Legal Defeasance, the Issuer must deliver to the Trustee (a) an opinion of
        counsel in the United States reasonably acceptable to the Trustee confirming that (i) the
        Issuer has received from, or there has been published by, the U.S. Internal Revenue Service a
        ruling or (ii) since the Issue Date, there has been a change in the applicable U.S. federal
        income tax law, in either case to the effect that, and based thereon such opinion of counsel
        will confirm that, the Holders of the outstanding Notes will not recognise income, gain or
        loss for federal income tax purposes as a result of such Legal Defeasance and will be subject
        to U.S. federal income tax on the same amounts, in the same manner and at the same times
        as would have been the case if such Legal Defeasance had not occurred; and (b) an opinion
        of counsel in the jurisdiction of incorporation of the Issuer to the effect that the Holders will
        not recognise income, gain or loss for the income tax purposes of such jurisdiction as a
        result of such deposit and defeasance and will be subject to income tax on the same
        amounts, in the same manner and at the same times as would have been the case if such
        Legal Defeasance had not occurred;
    (3) in the case of Covenant Defeasance, the Issuer must deliver to the Trustee (a) an opinion of
        counsel in the United States reasonably acceptable to the Trustee confirming that the
        Holders of the outstanding Notes will not recognise income, gain or loss for U.S. federal
        income tax purposes as a result of such Covenant Defeasance and will be subject to federal
        income tax on the same amounts, in the same manner and at the same times as would have
        been the case if such Covenant Defeasance had not occurred and (b) an opinion of counsel
        in the jurisdiction of incorporation of the Issuer to the effect that the Holders will not
        recognise income, gain or loss for income tax purposes of such jurisdiction as a result of
        such deposit and defeasance and will be subject to income tax in such jurisdiction on the
        same amounts, in the same manner and at the same times as would have been the case if
        such Covenant Defeasance had not occurred;
    (4) no Default or Event of Default shall have occurred and be continuing on the date of such
        deposit (other than a Default or Event of Default resulting from the borrowing of funds to
        be applied to such deposit) and the deposit will not result in a breach or violation of, or
        constitute a default under, any other instrument to which the Issuer or any Guarantor is a
        party or by which the Issuer or any Guarantor is bound;
    (5) the Parent must deliver to the Trustee an Officers’ Certificate stating that such Legal
        Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute
        a default under, any material agreement or instrument (other than the Indenture) to which
        the Parent or any of its Subsidiaries is a party or by which the Parent or any of its
        Subsidiaries is bound;
    (6) the Issuer must deliver to the Trustee an Officers’ Certificate stating that the deposit was
        not made by the Issuer or any Guarantor with the intent of preferring the Holders of Notes
        over the other creditors of the Issuer with the intent of defeating, hindering, delaying or
        defrauding any creditors of the Issuer or others; and


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    (7) the Issuer must deliver to the Trustee an Officers’ Certificate and an opinion of counsel,
        each stating that all conditions precedent relating to the Legal Defeasance or the Covenant
        Defeasance have been complied with.

Amendment, Supplement and Waiver
     Except as provided in the next two succeeding paragraphs, the Indenture, the Notes or the Note
Guarantees may be amended or supplemented with the consent of the Holders of at least a majority
in aggregate principal amount of the Notes then outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any
existing Default or Event of Default or compliance with any provision of the Indenture, the Notes or
the Note Guarantees may be waived with the consent of the Holders of a majority in aggregate
principal amount of the then outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes).
    Without the consent of Holders holding at least 90% of the then outstanding principal amount
of Notes, an amendment, supplement or waiver may not (with respect to any Notes held by a
non-consenting Holder):
    (1) reduce the principal amount of Notes whose Holders must consent to an amendment,
        supplement or waiver;
    (2) reduce the principal of or change the fixed maturity of any Note or alter the provisions with
        respect to the redemption of the Notes (other than provisions relating to the covenants
        described above under the caption ‘‘—Certain Covenants’’);
    (3) reduce the rate of or change the time for payment of interest, including default interest, on
        any note;
    (4) waive a Default or Event of Default in the payment of principal of, or interest or premium,
        or Additional Amounts, if any, on, the Notes (except a rescission of acceleration of the
        Notes and a waiver of the payment default that resulted from such acceleration by the
        Holders of at least a majority in aggregate principal amount of the then outstanding Notes);
    (5) make any Note payable in money other than that stated in the Notes;
    (6) make any change in the provisions of the Indenture relating to waivers of past Defaults or
        the rights of Holders of Notes to receive payments of principal of, or interest or premium or
        Additional Amounts, if any, on, the Notes;
    (7) waive a redemption payment with respect to any note (other than a payment required by
        one of the covenants described above under the caption ‘‘—Certain Covenants’’); or
    (8) make any change in the preceding amendment and waiver provisions.
    Notwithstanding the preceding two paragraphs, without the consent of any Holder of Notes, the
Parent, the Guarantors and the Trustee may amend or supplement the Indenture, the Notes or the
Note Guarantees:
    (1) to cure any ambiguity, defect or inconsistency;
    (2) to provide for uncertificated Notes in addition to or in place of certificated Notes;
    (3) to provide for the assumption of the Parent’s or a Guarantor’s obligations to Holders of
        Notes and Note Guarantees in the case of a merger or consolidation or sale of all or
        substantially all of the Parent’s or such Guarantor’s assets, as applicable;
    (4) to make any change that would provide any additional rights or benefits to the Holders of
        Notes or that does not adversely affect the legal rights under the Indenture of any such
        Holder;
    (5) to conform the text of the Indenture, the Note Guarantees or the Notes to any provision of
        this Description of Notes to the extent that such provision in this ‘‘Description of the Notes’’
        was intended to be a verbatim recitation of a provision of the Indenture, the Note
        Guarantees or the Notes;




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    (6) to provide for the issuance of additional Notes in accordance with the limitations set forth
        in the Indenture as of the Issue Date; or
    (7) to allow any Guarantor to execute a supplemental indenture and/or a Guarantee with
        respect to the Notes or to further secure the Notes.
     In formulating its opinion on such matters, the Trustee will be entitled to request, and rely
absolutely on, such evidence as it deems appropriate, including an opinion of counsel and an
Officers’ Certificate, on which the Trustee may rely without further inquiry.

Acts by Holders
    In determining whether the Holders of the required principal amount of the Notes have
concurred in any direction, waiver or consent, the Notes owned by the Parent, any Guarantor or by
any Person directly or indirectly controlling or controlled by or under direct or indirect common
control with the Parent will be disregarded and deemed not to be outstanding.

Satisfaction and Discharge
    The Indenture will be discharged and will cease to be of further effect as to all Notes issued
thereunder, when:
    (1) either:
         (a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have
             been replaced or paid and Notes for whose payment money has been deposited in trust
             and thereafter repaid to the Parent, have been delivered to the Trustee for cancellation;
             or
         (b) all Notes that have not been delivered to the Trustee for cancellation have become due
             and payable by reason of the mailing of a notice of redemption or otherwise or will
             become due and payable within one year and the Parent or any Guarantor has
             irrevocably deposited or caused to be deposited with the Trustee funds in trust solely
             for the benefit of the Holders, cash in euro, non-callable government securities, or a
             combination of cash in euro and non-callable government securities, in amounts as will
             be sufficient, without consideration of any reinvestment of interest, to pay and
             discharge the entire Indebtedness on the Notes not delivered to the Trustee for
             cancellation for principal, premium and Additional Amounts, if any, and accrued
             interest to the date of maturity or redemption;
    (2) no Default or Event of Default has occurred and is continuing on the date of the deposit
        (other than a Default or Event of Default resulting from the borrowing of funds to be
        applied to such deposit) and the deposit will not result in a breach or violation of, or
        constitute a default under, any other instrument to which the Parent or any Guarantor is a
        party or by which the Parent or any Guarantor is bound;
    (3) the Parent or any Guarantor has paid or caused to be paid all sums payable by it under the
        Indenture; and
    (4) the Parent has delivered irrevocable instructions to the Trustee under the Indenture to apply
        the deposited money toward the payment of the Notes at maturity or on the redemption
        date, as the case may be.
    In addition, the Parent must deliver an Officers’ Certificate and an opinion of counsel to the
Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Judgment Currency
     Any payment on account of an amount that is payable in euro (the ‘‘Required Currency’’) which
is made to or for the account of any Holder or the Trustee in lawful currency of any other
jurisdiction (the ‘‘Judgment Currency’’), whether as a result of any judgment or order or the
enforcement thereof or the liquidation of the Parent or any Guarantors, shall constitute a discharge
of the Parent’s or the Guarantor’s obligation under the Indenture or the Notes, as the case may be,
only to the extent of the amount of the Required Currency which such Holder or the Trustee, as the



                                                  114
case maybe, could purchase in the London foreign exchange markets with the amount of the
Judgment Currency in accordance with normal banking procedures at the rate of exchange prevailing
on the first Business Day following receipt of the payment in the Judgment Currency. If the amount
of the Required Currency that could be so purchased is less than the amount of the Required
Currency originally due to such Holder or the Trustee, as the case may be, the Parent shall indemnify
and hold harmless the Holder or the Trustee, as the case may be, from and against all loss or
damage arising out of, or as a result of, such deficiency. This indemnity shall constitute an obligation
separate and independent from the other obligations contained in the Indenture, the Notes or the
Note Guarantees, shall give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by any Holder or the Trustee from time to time and shall
continue in full force and effect notwithstanding any judgment or order for a liquidated sum in
respect of an amount due hereunder or under any judgment or order.

Consent to Jurisdiction and Service of Process
     The Parent and the Guarantors will irrevocably submit to the jurisdiction of any New York state
or U.S. federal court located in The Borough of Manhattan, City of New York, State of New York in
relation to any legal action or proceeding (i) arising out of, related to or in connection with the
Indenture, the Notes, the Note Guarantees and any related documents and (ii) arising under any U.S.
federal or U.S. state securities laws and (b) agree to accept service of process in any such action or
proceeding.

Concerning the Trustee
     If the Trustee becomes a creditor of the Parent or any Guarantor, the Indenture limits the right
of the Trustee to obtain payment of claims in certain cases, or to realise on certain property received
in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest it must eliminate such conflict
within 90 days, or resign.
     The Holders of a majority in aggregate principal amount of the then outstanding Notes will have
the right to direct the time, method and place of conducting any proceeding for exercising any
remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an
Event of Default occurs and is continuing, the Trustee will be required, in the exercise of its power,
to use the degree of care of a prudent person in the conduct of his/her own affairs. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder of Notes, unless such Holder has offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or expense (including reasonable
attorneys’ fees and expenses and value added tax thereon).

Additional Information
     So long as the Notes are listed on the Stock Exchange and its rules so require, copies, current
and future, of all of the Parent’s annual audited consolidated and unconsolidated financial
statements, the Parent’s unaudited consolidated interim quarterly financial statements and the
offering circular, the Indenture may be obtained, free of charge, during normal business hours at the
offices of the Paying Agent in the location of the Stock Exchange.

Governing law
    The Indenture, the Notes and the Note Guarantees will be governed by and construed in
accordance with the laws of the State of New York.

Certain Definitions
    Set forth below are certain defined terms used in the Indenture. Reference is made to the
Indenture for a full disclosure of all defined terms used therein, as well as any other capitalised terms
used herein for which no definition is provided.




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    ‘‘Acquired Debt’’ means, with respect to any specified Person:
    (1) Indebtedness of any other Person existing at the time such other Person is merged with or
        into or became a Subsidiary of such specified Person, whether or not such Indebtedness is
        incurred in connection with, or in contemplation of, such other Person merging with or into,
        or becoming a Restricted Subsidiary of, such specified Person; and
    (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person
        existing at the time such asset is acquired.
     ‘‘Aegis Agreement’’ means (a) the memorandum of agreement dated 24 May 1993 between
Cornhill Insurance plc, Aegis Motor Insurance Limited and Barclays Private Bank & Trust (Isle of Man)
Limited; and (b) the treaty dated 1 January 1993 between Cornhill Insurance plc and Aegis Motor
Insurance Limited.
     ‘‘Affiliate’’ of any specified Person means any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified Person. For purposes of
this definition, ‘‘control,’’ as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or otherwise; provided
that beneficial ownership of 10% or more of the Voting Stock of such second Person will be deemed
to be control. For purposes of this definition, the terms ‘‘controlling,’’ ‘‘controlled by’’ and ‘‘under
common control with’’ have correlative meanings.
    ‘‘Africa Trademark Licence’’ means the licence to use in Madagascar and the continent of Africa
west of the Suez Canal and the Red Sea, certain trademarks and service marks to be made between
Wizard Co., Inc. and Avis Holdings and the rights and obligations of Avis Holdings under which have
been assigned to Avis Africa Limited.
    ‘‘Asia Trademark Licence’’ means the licence to use, in that part of the world more particularly
described therein which is generally referred to as Asia, certain trademarks and service marks made
between Wizard Co., Inc. and the Parent and the rights and obligations of the Parent under which
have been assigned to Avis Asia Limited.
    ‘‘Asset Sale’’ means:
    (1) the sale, lease, conveyance or other disposition of any assets or rights; provided that the
        sale, lease, conveyance or other disposition of all or substantially all of the assets of the
        Parent and its Restricted Subsidiaries taken as a whole will be governed by the provisions of
        the Indenture described above under the caption ‘‘—Certain Covenants—Change of Control’’
        and/or the provisions described above under the caption ‘‘—Certain Covenants—Merger,
        Consolidation or Sale of Assets’’ and not by the provisions of the Asset Sale covenant; and
    (2) the issuance of Equity Interests in any of the Parent’s Restricted Subsidiaries or the sale of
        Equity Interests in any of its Subsidiaries.
    Notwithstanding the foregoing, none of the following items will be deemed to be an Asset Sale:
    (1) any single transaction or series of related transactions that involves assets having a Fair
        Market Value of less than A15 million;
    (2) a transfer of assets between or among the Parent and its Restricted Subsidiaries;
    (3) an issuance or sale of Equity Interests by a Restricted Subsidiary of the Parent to the Parent
        or to a Restricted Subsidiary of the Parent;
    (4) the sale or lease of vehicle rental fleet products, services or accounts receivable in the
        ordinary course of business and any sale or other disposition of damaged, worn-out or
        obsolete assets in the ordinary course of business;
    (5) the sale or other disposition of cash or Cash Equivalents;
    (6) a Restricted Payment that does not violate the covenant described above under the caption
        ‘‘—Certain Covenants—Restricted Payments’’ or a Permitted Investment;




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    (7) any sale or disposition deemed to occur in connection with creating, granting or enforcing
        any Permitted Lien;
    (8) the licensing, sublicensing or grant of rights to third parties relating to intellectual property
        in the ordinary course of business;
    (9) the surrender or waiver of contract rights or the settlement or release of rights or other
        claims in the ordinary course of business; and
    (10) leases, subleases or assignments to third parties in the ordinary course of business if such
         leases, subleases or assignments do not interfere in any material respect with the business of
         the Parent and its Restricted Subsidiaries.
     ‘‘Beneficial Owner’’ has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under
the U.S. Exchange Act, except that in calculating the beneficial ownership of any particular ‘‘person’’
(as that term is used in Section 13(d)(3) of the U.S. Exchange Act), such ‘‘person’’ will be deemed to
have beneficial ownership of all securities that such ‘‘person’’ has the right to acquire by conversion
or exercise of other securities, whether such right is currently exercisable or is exercisable only after
the passage of time. The terms ‘‘Beneficially Owns’’ and ‘‘Beneficially Owned’’ have a corresponding
meaning.
    ‘‘Board of Directors’’ means:
    (1) with respect to a corporation, the board of directors of the corporation or any committee
        thereof duly authorised to act on behalf of such board;
    (2) with respect to a partnership, the Board of Directors of the general partner of the
        partnership;
    (3) with respect to a limited liability company, the managing member or members or any
        controlling committee of managing members thereof; and
    (4) with respect to any other Person, the board or committee of such Person serving a similar
        function.
     ‘‘Business Day’’ means any day that is not a Saturday or Sunday or other day on which banks
and financial institutions in London, New York or the jurisdiction of the exchange in which the Notes
will be listed are authorised or required by law to close.
    ‘‘Capital Stock’’ means:
    (1) in the case of a corporation, ordinary shares;
    (2) in the case of an association or business entity, any and all shares, interests, participations,
        rights or other equivalents (however designated) of corporate stock;
    (3) in the case of a partnership or limited liability company, partnership interests (whether
        general or limited) or membership interests; and
    (4) any other interest or participation that confers on a Person the right to receive a share of
        the profits and losses of, or distributions of assets of, the issuing Person, but excluding from
        all of the foregoing any debt securities convertible into Capital Stock, whether or not such
        debt securities include any right of participation with Capital Stock.
    ‘‘Cash Equivalents’’ means:
    (1) securities issued or directly and fully guaranteed or insured by the United States or any state
        thereof or any European Union Member State (provided that the full faith and credit of the
        United States or such European Union Member State is pledged in support of those
        securities) in each case denominated in U.S. dollars, pound sterling or euro and having
        maturities of not more than six months from the date of acquisition;
    (2) certificates of deposit and time deposits with maturities of six months or less from the date
        of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight
        bank deposits, in each case, (a) with the banks under the Senior Revolving Credit Facility
        and (b) with any other bank or trust company which is organised under the laws of a
        European Union Member State, of the United States or any other state thereof and has


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         capital, surplus and undivided profits aggregating in excess of A300 million (or the foreign
         currency equivalent thereof) and whose long-term debt is rated ‘‘A-3’’ or higher by Moody’s
         or ‘‘A-’’ or higher by S&P or the equivalent rating category of another internationally
         recognised rating agency;
    (3) re-purchase obligations with a term of not more than seven days for underlying securities of
        the types described in clauses (1) and (2) above entered into with any financial institution
        meeting the qualifications specified in clause (2) above;
    (4) commercial paper having one of the two highest ratings obtainable from Moody’s or S&P
        and, in each case, maturing within six months after the date of acquisition;
    (5) money market funds at least 95% of the assets of which constitute Cash Equivalents of the
        kinds described in clauses (1) through (4) of this definition;
    (6) in the case of any Restricted Subsidiary located outside the United States and the European
        Union, any substantially similar investment of the kind described in clauses (2) through
        (5) of this definition in the ordinary course of business and with the best available ranking
        for a national bank in such jurisdiction; and
    (7) to the extent held by any captive insurance company and not exceeding A25 million, debt
        instruments and unit trusts and similar instruments listed on a recognised stock exchange
        and rated at least ‘‘AA’’ by S&P or the equivalent rating category of another internationally
        recognised rating agency.
    ‘‘Change of Control’’ means the occurrence of any of the following:
    (1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by
        way of merger or consolidation), in one or a series of related transactions, of all or
        substantially all of the properties or assets of the Parent and its Subsidiaries taken as a
        whole to any ‘‘person’’ (as that term is used in Section 13(d) of the U.S. Exchange Act)
        other than a Principal or a Related Party of a Principal;
    (2) the adoption of a plan relating to the liquidation or dissolution of the Parent;
    (3) the consummation of any transaction (including, without limitation, any merger or
        consolidation), the result of which is that any ‘‘person’’ (as defined above) other than a
        Principal or a Related Party of a Principal becomes the Beneficial Owner, directly or
        indirectly, of more than 50% of the Voting Stock of the Parent, measured by voting power
        rather than number of shares;
    (4) the first day on which a majority of the members of the Board of Directors of the Parent
        are not Continuing Directors.
    ‘‘Change of Control Offer’’ has the meaning assigned to that term in the Indenture governing
the Notes.
     ‘‘Consolidated Fleet Net Book Value’’ means, with respect to any specified Person on a specified
date, the aggregate net book value of vehicle rental fleet on the consolidated balance sheet of such
Person and its Restricted Subsidiaries as at such date, plus the net book value of all vehicles subject
to manufacturer re-purchase contracts and all vehicles held for re-sale, but excluding the value, if
any, of vehicle rental fleet financed by operating leases as at such date.
    ‘‘Consolidated Indebtedness’’ means, with respect to any specified Person on a specified date, the
Indebtedness on the consolidated balance sheet of such Person and its Restricted Subsidiaries as at
such date (excluding, with respect to the Parent and its Restricted Subsidiaries, Indebtedness with
respect to future payments to be paid to Cendant Corporation (or any of its subsidiaries) under the
Asia Trademark Licence and Africa Trademark Licence.
    ‘‘Consolidated Net Income’’ means, with respect to any specified Person for any period, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a
consolidated basis, determined in accordance with IFRS; provided that:
    (1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is
        accounted for by the equity method of accounting will be included only to the extent of the
        amount of dividends or similar distributions paid in cash to the specified Person or a
        Restricted Subsidiary of the Person;


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    (2) the Net Income of any Restricted Subsidiary will be excluded to the extent that the
        declaration or payment of dividends or similar distributions by that Restricted Subsidiary of
        that Net Income is not at the date of determination permitted by operation of the terms of
        its charter or any agreement, instrument, judgment, decree or order applicable to that
        Restricted Subsidiary or its stockholders; and
    (3) the cumulative effect of a change in accounting principles will be excluded.
    ‘‘Continuing Directors’’ means, as of any date of determination, any member of the Board of
Directors of the Parent who:
    (1) was a member of such Board of Directors on the Issue Date; or
    (2) was nominated for election or elected to such Board of Directors with the approval of a
        majority of the Continuing Directors who were members of such Board of Directors at the
        time of such nomination or election.
      ‘‘Credit Facilities’’ means, one or more debt facilities, commercial paper facilities, or other
Indebtedness, including the Senior Revolving Credit Facility, in each case, with banks or other
institutional lenders or investors providing for (i) term loans, (ii) revolving credit loans,
(iii) receivables financings (including through the sale of receivables to such lenders or to special
purpose entities formed to borrow from such lenders against such receivables), bank guarantees or
letters of credit, or (iv) other Indebtedness, in the case of (i), (ii), (iii) or (iv), as amended, restated,
modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or
refinanced in whole or in part from time to time with the same or different banks or other
institutional lenders or investors.
    ‘‘Default’’ means any event that is, or with the passage of time or the giving of notice or both
would be, an Event of Default.
     ‘‘Disqualified Stock’’ means any Capital Stock that, by its terms (or by the terms of any security
into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder
of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the
Capital Stock, in whole or in part, on or prior to the date on which the Notes mature.
Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require the Parent to re-purchase
such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Parent may not re-purchase or
redeem any such Capital Stock pursuant to such provisions unless such re-purchase or redemption
complies with the covenant described above under the caption ‘‘—Certain Covenants—Restricted
Payments.’’ The amount of Disqualified Stock deemed to be outstanding at any time for purposes of
the Indenture will be the maximum amount that the Parent and its Restricted Subsidiaries may
become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions
of, such Disqualified Stock, exclusive of accrued dividends.
    ‘‘Equity Interests’’ means Capital Stock and all warrants, options or other rights to acquire Capital
Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).
    ‘‘European Union Member State’’ means any country that at such time is a member of the
Europe Union.
     ‘‘Excluded Contribution’’ means Net Proceeds or property or assets received by the Parent as a
capital contribution to the equity (other than through the issuance of Disqualified Stock) of the
Parent or from the issuance or sale (other than to a Restricted Subsidiary) of Equity Interests in the
Parent (other than Disqualified Stock or securities convertible into or exchangeable for Disqualified
Stock), in each case, to the extent designated as an Excluded Contribution pursuant to an Officer’s
Certificate of the Parent.
    ‘‘Existing Indebtedness’’ means Indebtedness of the Parent and its Restricted Subsidiaries (other
than Indebtedness under any Credit Facilities) in existence on the Issue Date.
     ‘‘Fair Market Value’’ means the value that would be paid by a willing buyer to an unaffiliated
willing seller in a transaction not involving distress or necessity of either party, determined in good
faith by the Board of Directors of the Parent (unless otherwise provided in the Indenture).



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     ‘‘Finance Lease’’ means, at the time any determination is to be made, the amount of the liability
in respect of a capital lease that would at that time be required to be capitalised on a balance sheet
prepared in accordance with IFRS, and the Stated Maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date upon which such
lease may be prepaid by the lessee without payment of a penalty.
     ‘‘Fixed Charge Coverage Ratio’’ means with respect to any specified Person for any period, the
ratio of the Underlying EBITDA of such Person for such period to the Fixed Charges of such Person
for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs,
assumes, guarantees, repays, re-purchases, redeems, defeases or otherwise discharges any
Indebtedness (other than ordinary working capital borrowings and Finance Leases and Subsidiary
Indebtedness with a term of less than 12 months) or issues, re-purchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated and on or prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the ‘‘Calculation Date’’), then the Fixed Charge Coverage Ratio will
be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment,
re-purchase, redemption, defeasance or other discharge of Indebtedness, or such issuance,
re-purchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same
had occurred at the beginning of the applicable 12-month reference period provided that, for the
purposes of the pro forma calculation, any Indebtedness to be given pro forma effect that has a term
of less than 12 months or which is otherwise expected to be outstanding for less than 12 months
shall be assumed to be outstanding for its term and not for the full 12-month period, such term, if
not specifically provided for in the relevant documentation for such Indebtedness, to be as
determined in good faith by a responsible financial or accounting Offer of the Parent.
    In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
    (1) acquisitions that have been made by the specified Person or any of its Restricted
        Subsidiaries, including through mergers or consolidations, or any Person or any of its
        Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries,
        and including any related financing transactions and including increases in ownership of
        Restricted Subsidiaries, during the 12-month reference period or subsequent to such
        reference period and on or prior to the Calculation Date will be given pro forma effect as if
        they had occurred on the first day of the 12-month reference period;
    (2) the Underlying EBITDA attributable to discontinued operations, as determined in accordance
        with IFRS, and operations or businesses (and ownership interests therein) disposed of prior
        to the Calculation Date, will be excluded;
    (3) the Fixed Charges attributable to discontinued operations, as determined in accordance with
        IFRS, and operations or businesses (and ownership interests therein) disposed of prior to the
        Calculation Date, will be excluded, but only to the extent that the obligations giving rise to
        such Fixed Charges will not be obligations of the specified Person or any of its Restricted
        Subsidiaries following the Calculation Date;
    (4) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have
        been a Restricted Subsidiary at all times during such 12-month period;
    (5) any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to
        have been a Restricted Subsidiary at any time during such 12-month period; and
    (6) if any Indebtedness bears a floating rate of interest, the interest expense on such
        Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the
        applicable rate for the entire period (taking into account any Hedging Obligation applicable
        to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation
        Date in excess of 12 months).
     For purposes of this definition, whenever pro forma effect is to be given to an acquisition or
other Investment and the amount of income or earnings relating thereto, the pro forma calculations
will be as determined in good faith by a responsible financial or accounting Officer of the Parent
(including in respect of anticipated expense and cost reductions and synergies), provided that such
adjustments are set forth in an Officer’s Certificate signed by such Officer which states (i) the
amount of such adjustment or adjustments, (ii) that such adjustment or adjustments is based on the




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reasonable good faith beliefs of such Officer at the time of such execution and (iii) that any related
incurrence of Indebtedness is permitted pursuant to the Indenture.
    ‘‘Fixed Charges’’ means, with respect to any specified Person for any period, the sum, without
duplication, of:
    Underlying consolidated interest expense calculated as:
    (1) the consolidated net interest expense of such Person and its Restricted Subsidiaries for such
        period, calculated in accordance with IFRS, whether paid or accrued, including, without
        limitation, amortisation of debt issuance costs and original issue discount, non-cash interest
        payments, the interest component of any deferred payment obligations, the interest
        component of all payments associated with Finance Leases, commissions, discounts and
        other fees and charges incurred in respect of letter of credit or bankers’ acceptance
        financings, plus
         (a) such adjustments necessary to account for any interest rate charges minus any interest
             rate income on economic hedge effect interest rate derivative financial instruments;
             minus
         (b) re-measurement losses plus re-measurement gains on debt-related derivative financial
             instruments; plus
         (c) any gain and minus any loss relating to foreign exchange on net debt; plus
         (d) any exceptional gains and minus any exceptional losses recorded in interest expense;
             minus
         (e) any portion of interest expense which relates to deferred finance charges; plus
    (2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was
        capitalised during such period; plus
    (3) any interest on Indebtedness of another Person that is guaranteed by such Person or one of
        its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its
        Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus
    (4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any
        series of preferred stock of such Person or any of its Restricted Subsidiaries, other than
        dividends on Equity Interests payable solely in Equity Interests in the Parent (other than
        Disqualified Stock) or to the Parent or a Restricted Subsidiary of the Parent, times (b) a
        fraction, the numerator of which is one and the denominator of which is one minus the
        then current combined federal, state and local statutory tax rate of such Person, expressed
        as a decimal, in each case, determined on a consolidated basis in accordance with IFRS. This
        definition includes ‘‘grossed up’’ preferred dividends as Fixed Charges.
     ‘‘Guarantee’’ means a guarantee other than by endorsement of negotiable instruments for
collection in the ordinary course of business, direct or indirect, in any manner including, without
limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in
respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to
take or pay or to maintain financial statement conditions or otherwise).
    ‘‘Guarantors’’ means each of:
    (1) the Parent and Avis Holdings; and
    (2) any other Subsidiary of the Parent that executes a Guarantee in accordance with the
        provisions of the Indenture,
and their respective successors and assigns, in each case, until the Guarantee of such Person has
been released in accordance with the provisions of the Indenture.
    ‘‘Hedging Obligations’’ means, with respect to any specified Person, the obligations of such
Person under:
    (1) interest rate swap agreements (whether from fixed to floating or from floating to fixed),
        interest rate cap agreements and interest rate collar agreements;




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    (2) other agreements or arrangements designed to manage interest rates or interest rate risk;
        and
    (3) other agreements or arrangements designed to protect such Person against fluctuations in
        currency exchange rates or commodity prices.
     ‘‘Holder’’ means, with respect to any Note in bearer form, the physical holder or bearer of such
Note, which initially shall be the Note Depositary, and, with respect to any Note in registered form,
the Person in whose name such Note is registered in the register maintained by the Registrar under
the Indenture.
    ‘‘IFRS’’ means the accounting standards adopted by the International Accounting Standards
Board and its predecessors, which are in effect from time to time.
     ‘‘Indebtedness’’ means, with respect to any specified Person, any indebtedness of such Person
(excluding accrued expenses (including accrued interest), trade payables, customer deposits and
advance payments received, and other current liabilities incurred, in the ordinary course of business
and deferred taxes, whether or not contingent):
    (1) in respect of borrowed money;
    (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or
        reimbursement agreements in respect thereof);
    (3) in respect of banker’s acceptances;
    (4) representing Finance Leases;
    (5) representing the balance deferred and unpaid of the purchase price of any property or
        services due more than six months after such property is acquired or such services are
        completed; or
    (6) representing the net obligations under any Hedging Obligations (the amount of such
        obligations to be equal to the termination value under the relevant agreements)
if and to the extent any of the preceding items (other than letters of credit, Attributable Debt and
Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person
prepared in accordance with IFRS. In addition, the term ‘‘Indebtedness’’ includes all Indebtedness of
others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is
assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the
specified Person of any Indebtedness of any other Person. Indebtedness shall not include any
operating leases which do not appear as a liability on a balance sheet under IFRS.
     ‘‘Independent Financial Advisor’’ means an accounting, appraisal or investment banking firm of
recognised standing that is, in the good faith judgment of the Parent, qualified to perform the task
for which it has been engaged.
     ‘‘Investments’’ means, with respect to any Person, all direct or indirect investments by such
Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other
obligations but not receivables owing to the Parent or any of its Restricted Subsidiaries, including in
respect of prepayments under manufacturer re-purchase agreements and other prepaid expenses, if
created or acquired in the ordinary course of business), advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as investments on a balance sheet
prepared in accordance with IFRS. If the Parent or any Restricted Subsidiary of the Parent sells or
otherwise disposes of any Equity Interests in any direct or indirect Subsidiary of the Parent such that,
after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Parent,
the Parent will be deemed to have made an Investment on the date of any such sale or disposition
equal to the Fair Market Value of the Parent’s Investments in such Subsidiary that were not sold or
disposed of in an amount determined as provided in the final paragraph of the covenant described
above under the caption ‘‘—Certain Covenants—Restricted Payments.’’ The acquisition by the Parent
or any Restricted Subsidiary of the Parent of a Person that holds an Investment in a third Person will
be deemed to be an Investment by the Parent or such Restricted Subsidiary in such third Person in
an amount equal to the Fair Market Value of the Investments held by the acquired Person in such
third Person in an amount determined as provided in the final paragraph of the covenant described



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above under the caption ‘‘—Certain Covenants—Restricted Payments.’’ Except as otherwise provided
in the Indenture, the amount of an Investment will be determined at the time the Investment is made
and without giving effect to subsequent changes in value.
    ‘‘Issue Date’’ means 21 July 2006.
     ‘‘Lien’’ means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to grant a security interest.
    ‘‘Moody’s’’ means Moody’s Investors Service, Inc.
     ‘‘Net Income’’ means, with respect to any specified Person, the net income (loss) of such Person,
determined in accordance with IFRS and before any reduction in respect of preferred stock dividends,
excluding, however:
    (1) any gain (but not loss), together with any related provision for taxes on such gain (but not
        loss), realised in connection with: (a) any Asset Sale by such Person or any of its Restricted
        Subsidiaries; (b) the disposition of any securities by such Person or any of its Restricted
        Subsidiaries or (c) the extinguishment of any Indebtedness of such Person or any of its
        Restricted Subsidiaries; and
    (2) any extraordinary gain (but not loss), together with any related provision for taxes on such
        extraordinary gain (but not loss).
     ‘‘Net Proceeds’’ means the aggregate cash proceeds received by the Parent or any of its
Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received
upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation, transaction costs (including
legal, accounting and investment banking fees, and sales commissions, any relocation, closure,
redundancy or severance expenses or costs incurred as a result of the Asset Sale), liabilities retained
by the seller, taxes paid or payable as a result of the Asset Sale, in each case, after taking into
account any available tax credits or deductions and any tax sharing arrangements, any reserve for
adjustment in respect of the sale price of such asset or assets or retained liabilities established in
accordance with IFRS, distributions and payments to minority interest holders and payments made
on any Indebtedness secured by any assets subject to such Asset Sale or, which must by its terms, or
to obtain consent to such Asset Sale or by applicable law, be repaid out of the proceeds of such
Asset Sale.
    ‘‘Non-Recourse Debt’’ means Indebtedness:
    (1) as to which neither the Parent nor any of its Restricted Subsidiaries (a) provides credit
        support of any kind (including any undertaking, agreement or instrument that would
        constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise or
        (c) constitutes the lender;
    (2) no default with respect to which (including any rights that the holders of the Indebtedness
        may have to take enforcement action against an Unrestricted Subsidiary) would permit upon
        notice, lapse of time or both any holder of any other Indebtedness of the Parent or any of
        its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the
        payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and
    (3) as to which the lenders have been notified in writing that they will not have any recourse to
        the stock or assets of the Parent or any of its Restricted Subsidiaries.
   ‘‘Obligations’’ means any principal, interest, penalties, fees, indemnifications, reimbursements,
damages and other liabilities payable under the documentation governing any Indebtedness.
     ‘‘Officer’’ means the chief executive officer, chief financial officer, any vice president, the
treasurer or secretary or any person in any equivalent position.
    ‘‘Officers’ Certificate’’ means a certificate signed by two Officers, one of whom must be the chief
executive officer or the chief financial officer.
    ‘‘Permitted Business’’ means the vehicle rental business and any business reasonably related
thereto.



                                                    123
‘‘Permitted Investments’’ means:
(1) any Investment in the Parent or in a Restricted Subsidiary of the Parent;
(2) any Investment in Cash Equivalents;
(3) any Investment by the Parent or any Restricted Subsidiary of the Parent in a Person, if as a
    result of such Investment:
    (a) such Person becomes a Restricted Subsidiary of the Parent; or
    (b) such Person is merged, consolidated or amalgamated with or into, or transfers or
        conveys substantially all of its assets to, or is liquidated into, the Parent or a Restricted
        Subsidiary of the Parent;
(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale
    that was made pursuant to and in compliance with the covenant described above under the
    caption ‘‘—Certain Covenants—Asset Sales;’’
(5) any Investment paid for with Excluded Contributions or the proceeds from the sale thereof;
(6) any acquisition of assets or Capital Stock solely in exchange for the issuance of Equity
    Interests (other than Disqualified Stock) of the Parent or acquired with the proceeds (other
    than Excluded Contributions) from the concurrent sale of Equity Interests in the Parent;
(7) any Investments received in compromise or resolution of (a) obligations of trade creditors or
    customers that were incurred in the ordinary course of business of the Parent or any of its
    Subsidiaries, including pursuant to any plan of reorganisation or similar arrangement upon
    the bankruptcy or insolvency of any trade creditor or customer; or (b) litigation, arbitration
    or other disputes with Persons who are not Affiliates;
(8) Investments represented by Hedging Obligations;
(9) loans or advances to employees made in the ordinary course of business of the Parent or
    any Restricted Subsidiary of the Parent in an aggregate principal amount not to exceed
    A1 million at any one time outstanding;
(10) loans or advances to employee benefit trusts to purchase Equity Interests in the Parent or
     purchases of Equity Interests in the Parent on behalf of such trusts, in each case made in
     connection with employee share schemes to the extent such share schemes do not exceed
     the limitations imposed on such schemes recommended by the Association of British
     Insurers and the National Association of Pension Funds as in effect on the Issue Date;
(11) re-purchases of the Notes;
(12) Guarantees and other assurances permitted under the provisions of the Indenture described
     under the caption ‘‘—Incurrence of Indebtedness and Issuance of Preferred Stock.’’
(13) Investments in Anji China Car Rental Leasing Company Limited in an aggregate amount at
     any one time outstanding not exceeding A10 million;
(14) Investments in existence on the Issue Date and replacements of such Investments on
     substantially the same terms;
(15) Cash and other deposits in connection with insurance arrangements in the ordinary course
     of business; and
(16) other Investments in any Person other than an Affiliate of the Parent and not otherwise
     permitted to have been incurred under the Indenture having an aggregate Fair Market Value
     (measured on the date each such Investment was made and without giving effect to
     subsequent changes in value), when taken together with all other Investments made
     pursuant to this clause (16) that are at the time outstanding not to exceed A20 million.
‘‘Permitted Liens’’ means:
(1) Liens to secure Finance Leases and other Indebtedness permitted by clause (4) of the
    second paragraph of the covenant entitled ‘‘—Certain Covenants—Incurrence of
    Indebtedness and Issuance of Preferred Stock’’ covering only the assets acquired with or
    financed by such Indebtedness;
(2) Liens created for the benefit of (or to secure) the Notes (or the Note Guarantees);


                                              124
(3) Liens existing on the Issue Date or arising from contractual commitments in effect on the
    Issue Date;
(4) Liens in favor of the Parent or the Guarantors;
(5) Liens on property of a Person existing at the time such Person is merged with or into or
    consolidated with the Parent or any Subsidiary of the Parent; provided that such Liens were
    in existence prior to the contemplation of such merger or consolidation and do not extend
    to any assets other than those of the Person merged into or consolidated with the Parent or
    the Subsidiary;
(6) Liens on property (including Capital Stock) existing at the time of acquisition of the
    property by the Parent or any Subsidiary of the Parent; provided that such Liens were in
    existence prior to, such acquisition, and not incurred in contemplation of, such acquisition;
(7) Liens to secure the performance of statutory obligations, self-insurance obligations health,
    disability or other employee benefits or property, casualty or liability insurance claims,
    bankers’ acceptances, surety or appeal bonds, performance bonds, completion guarantees,
    performance guarantees, letters of credit or other obligations of a like nature incurred in the
    ordinary course of business;
(8) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent
    or that are being contested in good faith by appropriate proceedings promptly instituted
    and diligently concluded; provided that any reserve or other appropriate provision as is
    required in conformity with IFRS has been made therefor;
(9) Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and mechanics’ Liens, in
    each case, incurred in the ordinary course of business;
(10) survey exceptions, easements or reservations of, or rights of others for, licences,
     rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar
     purposes, or zoning or other restrictions as to the use of real property that were not
     incurred in connection with Indebtedness and that do not in the aggregate materially
     adversely affect the value of said properties or materially impair their use in the operation
     of the business of such Person;
(11) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under the
     Indenture; provided, however, that:
    (a) the new Lien shall be limited to all or part of the same property and assets that secured
        or, under the written agreements pursuant to which the original Lien arose, could
        secure the original Lien (plus improvements and accessions to, such property or
        proceeds or distributions thereof); and
    (b) the Indebtedness secured by the new Lien is not increased to any amount greater than
        the sum of (x) the outstanding principal amount, or, if greater, committed amount, of
        the Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees
        and expenses, including premiums, related to such renewal, refunding, refinancing,
        replacement, defeasance or discharge;
(12) Liens arising by operation of law in the ordinary course of business or contained in any
     contract for the purchase or sale of goods or services or for the licence of intellectual
     property (provided such Lien is limited to the right or asset licensed), in each case, entered
     into in the ordinary course of business;
(13) Liens created pursuant to or in connection with the Aegis Agreement and any other
     analogous agreement or replacements thereof with other insurers and/or banks;
(14) Liens securing Hedging Obligations permitted to be incurred under the Indenture;
(15) bankers’ rights of set-off or netting against amounts credited to accounts of the Parent or
     its Restricted Subsidiaries for outstandings and liabilities in the ordinary course of business
     or as a result of normal banking relationships or which arise by operation of law;
(16) Liens securing leases and subleases of real property which do not interfere with the ordinary
     business of the Parent or any of its Restricted Subsidiaries and Liens securing the obligations




                                              125
         of the Parent or any of its Restricted Subsidiaries under any such leases and subleases of
         real property;
    (17) Liens extending, renewing or replacing, in whole or in part, another Lien permitted by the
         Indenture provided the Lien is limited to the property subject to the existing Lien and any
         improvements and construction on such property and any Indebtedness secured by such
         Lien does not exceed the Indebtedness secured by the original Lien; and
    (18) Liens with respect to obligations that do not exceed A50 million at any one time
         outstanding.
    ‘‘Permitted Refinancing Indebtedness’’ means any Indebtedness of the Parent or any of its
Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to renew,
refund, refinance, replace, defease or discharge other Indebtedness of the Parent or any of its
Restricted Subsidiaries (other than intercompany Indebtedness); provided (except in the case of
Indebtedness incurred to refinance or defease the Notes) that:
    (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing
        Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the
        Indebtedness renewed, refunded, refinanced, replaced, defeased or discharged (plus all
        accrued interest on the Indebtedness and the amount of all fees and expenses, including
        premiums, incurred in connection therewith);
    (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final
        maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the
        Weighted Average Life to Maturity of, the Indebtedness being renewed, refunded,
        refinanced, replaced, defeased or discharged;
    (3) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is
        subordinated in right of payment to the Notes or the Note Guarantees, such Permitted
        Refinancing Indebtedness has a final maturity date later than the final maturity date of, and
        is subordinated in right of payment to, the Notes (or the Note Guarantees) on terms at least
        as favorable to the Holders of Notes (or the Note Guarantees) as those contained in the
        documentation governing the Indebtedness being renewed, refunded, refinanced, replaced,
        defeased or discharged; and
    (4) such Indebtedness is incurred either by the Parent or by the Restricted Subsidiary who is the
        obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or
        discharged.
   ‘‘Person’’ means any individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organisation, limited liability company or government or other entity.
    ‘‘Principals’’ means s.a. D’Ieteren n.v. and its Subsidiaries.
    ‘‘Related Party’’ means:
    (1) any controlling stockholder, Subsidiary or immediate family member (in the case of an
        individual) of any Principal; or
    (2) any trust, corporation, partnership, limited liability company or other entity, the
        beneficiaries, stockholders, partners, members, owners or Persons beneficially holding a
        controlling interest of which consist of any one or more Principals and/or such other
        Persons referred to in the immediately preceding clause (1).
    ‘‘Replacement Assets’’ means properties and assets that will be used in a Permitted Business.
    ‘‘Restricted Investment’’ means an Investment other than a Permitted Investment.
    ‘‘Restricted Subsidiary’’ of a Person means any Subsidiary of the referent Person that is not an
Unrestricted Subsidiary.
     ‘‘Senior Revolving Credit Facility’’ means the Multicurrency Revolving Facilities Agreement, dated
February 20, 2006, among the Parent, the Guarantors and the banks named therein as such may be
amended, supplemented, waived or otherwise modified from time to time or as may be refunded,
refinanced, replaced, renewed or extended in whole or in part from time to time (whether upon or
after termination or otherwise).




                                                    126
    ‘‘S&P’’ means Standard & Poor’s Ratings Group.
    ‘‘Significant Subsidiary’’ means any Subsidiary which meets any of the following conditions:
    (1) the Parent and its Restricted Subsidiaries’ investments in and advances to such Subsidiary
        exceed 10% of the total consolidated assets of the Parent as of the end of the most recently
        completed financial year; or
    (2) the Parent and its Restricted Subsidiaries’ proportionate share of the total assets (after
        intercompany eliminations) of such Subsidiary exceeds 10% of the total consolidated assets
        of the Parent as of the end of the most recently completed financial year; or
    (3) the Parent and its Restricted Subsidiaries’ equity in the consolidated income from continuing
        operations before income taxes, extraordinary items and cumulative effect of a change in
        accounting principle of such Subsidiary exceeds 10% of such consolidated income of the
        Parent for the most recently completed financial year.
    ‘‘Stated Maturity’’ means, with respect to any installment of interest or principal on any series of
Indebtedness, the date on which the payment of interest or principal was scheduled and required to
be paid in the documentation governing such Indebtedness as of the Issue Date, and will not include
any contingent obligations to repay, redeem or re-purchase any such interest or principal prior to
the date originally scheduled for the payment thereof.
    ‘‘Subsidiary’’ means, with respect to any specified Person:
    (1) any corporation, association or other business entity of which more than 50% of the total
        voting power of shares of Capital Stock entitled (without regard to the occurrence of any
        contingency and after giving effect to any voting agreement or stockholders’ agreement
        that effectively transfers voting power) to vote in the election of directors, managers or
        trustees of the corporation, association or other business entity is at the time owned or
        controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of
        that Person (or a combination thereof) on the basis that it is controlled directly or indirectly
        by such Person or otherwise fails to be consolidated as a subsidiary under IFRS; and
    (2) any partnership (a) the sole general partner or the managing general partner of which is
        such Person or a Subsidiary of such Person or (b) the only general partners of which are
        that Person or one or more Subsidiaries of that Person (or any combination thereof).
    ‘‘Subsidiary Indebtedness’’ means Indebtedness (other than Indebtedness under Finance Leases)
incurred by a Restricted Subsidiary of the Parent other than the Issuer or any Guarantor.
    ‘‘Tax’’ means any tax, duty, levy, impost, assessment or other governmental charge (including
penalties and interest related thereto).
    ‘‘Taxes’’ and ‘‘Taxation’’ shall be construed to have corresponding meanings.
    ‘‘Underlying EBITDA’’ means, with respect to any specified Person for any period, the
Consolidated Net Income of such Person for such period plus, without duplication:
    (1) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries
        for such period, to the extent that such provision for taxes was deducted in computing such
        Consolidated Net Income; minus
    (2) finance revenue plus finance costs less foreign exchange gains on net debt plus foreign
        exchange losses on net debt of such Person and its Restricted Subsidiaries for such period,
        to the extent deducted in computing such Consolidated Net Income; plus
    (3) an amount equal to any exceptional or extraordinary losses less any exceptional or
        extraordinary gains; plus
    (4) any loss or less any gain recognised on re-measurement items, which consist of:
         (a) fair value movements in non-debt related derivative financial instruments; and
         (b) economic hedge adjustments on foreign exchange
         in each case, of such Person and its Restricted Subsidiaries for the period to the extent that
         such re-measurement items were deducted in computing such Consolidated Net Income;
         plus



                                                  127
    (5) depreciation, amortisation (including amortisation of intangibles and amortisation of
        prepayments made in respect of vehicles purchased under manufacturer re-purchase
        contracts but excluding amortisation of any other prepaid cash expenses that were paid in a
        prior period), net loss (or less any net gain) realised in connection with any vehicle rental
        fleet asset sales and other non-cash expenses (excluding any such non-cash expense to the
        extent that it represents an accrual of or reserve for cash expenses in any future period or
        amortisation of a prepaid cash expense that was paid in a prior period) of such Person and
        its Restricted Subsidiaries for such period to the extent that such depreciation, amortisation,
        gain or loss on sale and other non-cash expenses were deducted in computing such
        Consolidated Net Income; plus
    (6) the impairment of assets including goodwill; plus
    (7) any net loss or less any net gain realised by such Person or any of its Restricted Subsidiaries
        in connection with any non-fleet asset sale, to the extent such losses were deducted in
        computing such Consolidated Net Income; minus
    (8) non-cash items increasing such Consolidated Net Income for such period, other than the
        accrual of revenue in the ordinary course of business,
    in each case, on a consolidated basis and determined in accordance with IFRS.
     Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and
the depreciation and amortisation and other non-cash expenses of, a Restricted Subsidiary of the
Parent will be added to Consolidated Net Income to compute Underlying EBITDA of the Parent only
to the extent that the net income of such Restricted Subsidiary is included in Consolidated Net
Income.
    ‘‘Unrestricted Subsidiary’’ means any Subsidiary of the Parent that is designated by the Board of
Directors of the Parent as an Unrestricted Subsidiary pursuant to a resolution of the Board of
Directors, but only to the extent that such Subsidiary:
    (1) has no Indebtedness other than Non-Recourse Debt;
    (2) except as permitted by the covenant described above under the caption ‘‘—Certain
        Covenants—Transactions with Affiliates,’’ is not party to any agreement, contract,
        arrangement or understanding with the Parent or any Restricted Subsidiary of the Parent
        unless the terms of any such agreement, contract, arrangement or understanding are no less
        favorable to the Parent or such Restricted Subsidiary than those that might be obtained at
        the time from Persons who are not Affiliates of the Parent;
    (3) is a Person with respect to which neither the Parent nor any of its Restricted Subsidiaries
        has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to
        maintain or preserve such Person’s financial condition or to cause such Person to achieve
        any specified levels of operating results; and
    (4) has not guaranteed or otherwise directly or indirectly provided credit support for any
        Indebtedness of the Parent or any of its Restricted Subsidiaries.
    ‘‘U.S. Exchange Act’’ means the U.S. Securities Exchange Act of 1934, as amended.
    ‘‘U.S. Securities Act’’ means the U.S. Securities Act of 1933, as amended.
     ‘‘Voting Stock’’ of any specified Person as of any date means the Capital Stock of such Person
that is at the time entitled to vote in the election of the Board of Directors of such Person.
   ‘‘Weighted Average Life to Maturity’’ means, when applied to any Indebtedness at any date, the
number of years obtained by dividing:
    (1) the sum of the products obtained by multiplying (a) the amount of each then remaining
        installment, sinking fund, serial maturity or other required payments of principal, including
        payment at final maturity, in respect of the Indebtedness, by (b) the number of years
        (calculated to the nearest one-twelfth) that will elapse between such date and the making of
        such payment; by
    (2) the then outstanding principal amount of such Indebtedness.




                                                  128
                                 BOOK-ENTRY, DELIVERY AND FORM
General
     The Notes initially will be represented by one or more Global Notes in bearer form without
interest coupons attached. The Global Notes will be deposited with the Note Depositary under the
terms of the Note Depositary Agreement. The Note Depositary in turn will issue certificated
depositary interests representing interests in the Global Notes or CDIs in the name of the nominee
for a common depositary for Euroclear and Clearstream Banking.
     Ownership of Book-Entry Interests will be limited to persons that have accounts with Euroclear
and/or Clearstream Banking, or persons that hold interests through such participants. Euroclear and
Clearstream Banking will hold interests in the Global Notes and CDIs on behalf of their participants
through customers’ securities accounts in their respective names on the books of their respective
depositaries. Except under the limited circumstances described below, Notes and CDIs will not be held
in definitive certificated form.
    Book-Entry Interests will be shown on, and transfers thereof will be done only through, records
maintained in the book-entry form by Euroclear and Clearstream Banking and their participants. The
laws of some jurisdictions, including certain states of the United States, may require that certain
purchasers of securities take physical delivery of such securities in definitive certificated form. The
foregoing limitations may impair the ability to own, transfer or pledge Book-Entry Interests. In
addition, while the Notes are in global form, holders of CDIs and holders of Book-Entry Interests will
not be considered the owners or ‘‘holders’’ of Notes for any purpose.
     So long as the Notes are held in global bearer form, the Note Depositary (or its nominee), will
be considered the sole holder of the Global Note for all purposes under the Indenture. In addition,
participants must rely on the procedures of Euroclear and/or Clearstream Banking, and indirect
participants must rely on the procedures of Euroclear, Clearstream Banking and the participants
through which they own Book-Entry Interests, to transfer their interests or to exercise any rights of
holders under the Indenture.
     Except as described under ‘‘—Issuance of Definitive Notes’’, participants or indirect participants
in Euroclear and/or Clearstream Banking are not entitled to have Notes registered in their names.
They will not receive or be entitled to receive physical delivery of Notes in definitive form and will
not be considered the owners or holders of Notes or CDIs under the Indenture or the Note
Depositary Agreement. Accordingly, each person owning Book-Entry Interests must rely on the
procedures of the Note Depositary, Euroclear and/or Clearstream Banking. If such person is not a
participant in Euroclear or Clearstream Banking it must rely on the procedures of the participant in
the clearing system through which such person owns their interest to exercise any rights and
remedies of a holder under the Note Depositary Agreement and, in turn, the Indenture. For more
information, see ‘‘—Actions by Owners of Book-Entry Interests’’ below. If any Definitive Notes are
issued to participants or indirect participants, they will be issued in registered form as described
under ‘‘—Issuance of Definitive Notes.’’ Unless and until Book-Entry Interests are exchanged for
Definitive Notes, the CDIs held by a nominee for a common depositary for Euroclear or Clearstream
Banking may not be transferred except as a whole. Under no circumstances will Definitive Notes be
issued in bearer form to holders of Book-Entry Interests.
     Although Euroclear and Clearstream Banking have agreed to certain procedures to facilitate
transfers of Book-Entry Interests among participants of Euroclear and Clearstream Banking they are
under no obligation to perform or continue to perform these procedures. The procedures may be
discontinued at any time.
     None of the Issuer, the Trustee, or the Note Depositary will have any responsibility, or be liable,
for any aspect of the records relating to the Book-Entry Interests.

Redemption of the Global Notes
    In the event the Global Notes (or any portion thereof) are redeemed, the Note Depositary will
redeem an equal amount of CDIs and Euroclear and/or Clearstream Banking, as applicable, will in
turn redeem an equal amount of the Book-Entry Interests from the amount received in respect of the
redemption of the CDIs. The redemption price payable in connection with the redemption of such
CDIs and Book-Entry Interests will be equal to the amount received by the Note Depositary and



                                                  129
Euroclear and Clearstream Banking, as applicable, in connection with the redemption. The Issuer
understands that, under the existing practices of Euroclear and Clearstream Banking, if fewer than all
of the Notes are to be redeemed at any time, Euroclear and Clearstream Banking will credit their
respective participants’ accounts on a proportionate basis (with adjustments to prevent fractions), by
lot or on such other basis as they deem fair and appropriate; provided, however, that no Book-Entry
Interest of A50,000 principal amount or less may be redeemed in part.

Payments on the Global Notes
     The Issuer will make payments of any amounts owing in respect of the Global Notes (including
principal, premium, if any, and interest) to the Note Depositary or its nominee, which shall pay such
amounts to a nominee for a common depositary for Euroclear and Clearstream Banking. Euroclear
and Clearstream Banking or its nominee will in turn distribute such payments to participants in
accordance with their customary procedures. The Issuer and the Note Depositary will make payments
of all such amounts without deduction or withholding for, or on account of, any present or future
taxes, duties, assessments or governmental charges of whatever nature, except as may be required by
law. If any such deduction or withholding is required to be made by the Issuer, then, to the extent
described under ‘‘Description of the Notes—Additional Amounts’’ above, the Issuer will pay additional
amounts as may be necessary in order that the net amounts received by any holder of the Global
Notes after such deduction or withholding will equal the net amounts that such holder or owner
would have otherwise received in respect of the Global Notes absent such withholding or deduction.
The Note Depositary shall pay such additional amounts with respect to the CDIs to a nominee for a
common depositary for Euroclear and Clearstream Banking. The Issuer expects that standing
customer instructions and customary practices will govern payments by participants to owners of
Book-Entry Interests held through such participants.
     Under the terms of the Indenture, the Issuer and the Trustee will treat the bearer of the Global
Notes which initially will be the Note Depositary or its nominee, as the owner thereof for the purpose
of receiving payment and for all other purposes. Under the terms of the Note Depositary Agreement,
the Note Depositary will treat the registered holder of the CDIs (i.e., a nominee for a common
depositary for Euroclear or Clearstream Banking (or their respective nominees)) as the owner thereof
for the purpose of receiving payments and for all other purposes. Consequently, none of the Issuer,
the Trustee or any of the Issuer’s or the Trustee’s respective agents or the Note Depositary has or
will have any responsibility or liability for:
    • any aspect of the records of Euroclear, Clearstream Banking or any participant or indirect
      participant relating to, or payments made on account of, a Book-Entry Interest or for
      maintaining, supervising or reviewing the records of Euroclear, Clearstream Banking or any
      participant or indirect participant relating to, or payments made on account of, a Book-Entry
      Interest, or
    • Euroclear, Clearstream Banking or any participant or indirect participant.

Currency of Payment for the Global Note
    The principal of, premium, if any, and interest on, and all other amounts payable in respect of,
the Global Note will be paid in euro.

Action by Owners of Book-Entry Interests
     Euroclear and Clearstream Banking have advised the Issuer and the Note Depositary that they
will take any action permitted to be taken by a holder of Notes or CDIs (including the presentation of
Notes for exchange as described above) only at the direction of one or more participants to whose
account the Book-Entry Interests in the Global Notes and CDIs are credited and only in respect of
such portion of the aggregate principal amount of Notes and CDIs as to which such participant or
participants has or have given such direction. The Note Depositary has advised the Issuer that it will
only take such action at the discretion of, and only with respect to such portions of the Global Notes
as to which it has received direction from, Euroclear or Clearstream Banking. Euroclear and
Clearstream Banking will not exercise any discretion in the granting of consents, waivers or the
taking of any other action in respect of interests in the Global Notes or CDIs. The Note Depositary
will not exercise any such discretion in respect of the Global Notes.



                                                 130
Transfers
     Transfers between participants in Euroclear and Clearstream Banking will be effected in
accordance with Euroclear and Clearstream Banking rules and will be settled in immediately available
funds. If a holder requires physical delivery of Definitive Notes for any reason, including to sell Notes
to persons in states which require physical delivery of securities or to pledge such securities, such
holder must transfer its interests in the Global Note and CDIs in accordance with the normal
procedures of Euroclear and Clearstream Banking and in accordance with the procedures set forth in
the Indenture governing the Notes.
     Book-Entry Interests will be subject to the restrictions on transfers and certification requirements
discussed under ‘‘Notice to Investors’’.

Issuance of Definitive Notes
     Under the terms of the Indenture and Note Depositary Agreement, owners of Book-Entry
Interests may exchange their Book-Entry Interests for Definitive Notes:
    • if Euroclear or Clearstream Banking notifies the Issuer that it is unwilling or unable to continue
      to act as depositary and a successor depositary is not appointed by the Issuer within 120 days;
    • if Euroclear or Clearstream Banking so requests following an Event of Default under the
      Indenture;
    • if the owner of a Book-Entry Interest requests such exchange in writing delivered through
      either Euroclear or Clearstream Banking following certain Events of Default under the
      Indenture; or
    • if the Note Depositary is at any time unwilling or unable to continue as Note Depositary and a
      successor depositary is not appointed by the Issuer within 120 days.
    In the event that Definitive Notes become issuable pursuant to the above, other than upon the
request of the owner of a Book-Entry Interest:
    (i)   the Issuer shall deliver to the Principal Paying Agent a request for the issue of Definitive
          Notes in registered form in an aggregate principal amount equal to the principal amount of
          the Global Notes; and
    (ii) the Principal Paying Agent shall: (A) arrange for Definitive Notes to be issued in the amount
         of and in the name of the holders of Book-Entry Interests based on instructions received by
         it from the Note Depositary, in turn based on instructions from Euroclear or Clearstream
         Banking; (B) request the Note Depositary to deliver the Global Notes to the Principal Paying
         Agent within five business days after such request; (C) upon receipt of the Global Notes,
         cancel the Global Notes; and (D) arrange for the entry of the Definitive Notes in the register
         kept by the Issuer and the delivery of certificates evidencing the entry of the Definitive
         Notes in such register in the name of the relevant holders of Book-Entry Interests.
     So long as the Notes are listed on the Stock Exchange, in the event that Definitive Notes are
issued, a notice will be published in a daily leading newspaper with general circulation in Ireland if at
such time the Stock Exchange so requires.
     If Book-Entry Interests will be exchangeable in whole or in part for Definitive Notes at the
request of any holder of such Book-Entry Interests within 60 days following notice given by the Issuer
or the Trustee of certain Events of Default described under ‘‘Description of the Notes—Defaults,’’
with respect to the Notes, such request must include the principal amount of the Definitive Notes to
be issued at the request of such holder, together with such holder’s name and account number in
Euroclear and/or Clearstream Banking, as the case may be. In the event that the Principal Paying
Agent receives a request to issue Definitive Notes in accordance with the preceding sentence, the
Principal Paying Agent shall: (A) notify the Note Depositary of such holder’s request; (B) deliver to
the Note Depositary the amount of the reduction of the principal amount of the Global Note and the
principal amount remaining (after giving effect to the issuance of the Definitive Notes); and
(C) notify the registrar thereof of the amount of and the name in which such Definitive Notes are to
be issued, based on the details provided in such holder’s request, in order that the registrar (i) enter
the Definitive Notes in the register and (ii) cause the delivery of certificates evidencing the entry of
the Definitive Notes in such register in the name of such holder. The Note Depositary will, whenever


                                                  131
the aggregate principal amount at maturity of the Global Notes is reduced, reduce the aggregate
principal amount at maturity of the CDIs by an equal amount.
   UNDER CURRENT UK TAX LAW, IF DEFINITIVE NOTES ARE ISSUED STAMP DUTY OR STAMP
DUTY RESERVE TAX MAY BE CHARGEABLE ON TRANSFER OF SUCH NOTES AT A RATE OF 0.5 PER
CENT. OF THE CONSIDERATION FOR SUCH TRANSFER.
     In the case of the issuance of Definitive Notes, the holder of a Definitive Note may transfer such
note by surrendering it to the Registrar or a Transfer Agent. In the event of a partial transfer or a
partial redemption of a holding of Definitive Notes represented by one Definitive Note, a Definitive
Note will be issued to the transferee in respect of the part transferred and a new Definitive Note in
respect of the balance of the holding not transferred or redeemed will be issued to the transferor or
the holder, as applicable; provided that no Definitive Note in a denomination less than A50,000 will
be issued. The Issuer will bear the cost of preparing, printing, packaging and delivering the Definitive
Notes.
      The Issuer will not be required to register the transfer or exchange of Definitive Notes for a
period of 15 calendar days preceding (i) the record date for any payment of interest on the Notes,
(ii) any date fixed for redemption of the Notes or (iii) the date fixed for selection of the Notes to be
redeemed in part. Also, the Issuer is not required to register the transfer or exchange of any Notes
selected for redemption. In the event of the transfer of any Definitive Note, the Registrar or any
Transfer Agent may require a holder, among other things, to furnish appropriate endorsements and
transfer documents as described in the Indenture. The Issuer may require a holder to pay any taxes
and fees required by law and permitted by the Indenture and the Notes.
     If Definitive Notes are issued and a holder thereof claims that such Definitive Note has been lost,
destroyed or wrongfully taken, or if such Definitive Note is mutilated and is surrendered to the
Registrar or at the office of a Transfer Agent, the Issuer will issue and the Trustee will authenticate a
replacement Definitive Note if the Trustee’s and the Issuer’s requirements are met. The Issuer or the
Trustee may require a holder requesting replacement of a Definitive Note to furnish an indemnity
bond sufficient in the judgment of both to protect the Issuer, the Trustee or any Paying Agent
appointed pursuant to the Indenture from any loss which any of them may suffer if a Definitive Note
is replaced. The Issuer may charge for any expenses incurred by the Issuer in replacing a Definitive
Note.
     In case any such mutilated, destroyed, lost or stolen Definitive Note has become or is about to
become due and payable, or is about to be redeemed or purchased by the Issuer pursuant to the
provisions of the Indenture, the Issuer, in its discretion, may, instead of issuing a new Definitive Note,
pay, redeem or purchase such Definitive Note, as the case may be.
     Definitive Notes may be transferred and exchanged only after the transferor first delivers to the
Trustee a written certification (in the form provided in the Indenture) to the effect that such transfer
will comply with the transfer restrictions applicable to such Notes. See ‘‘Notice to Investors’’.

Charges of Note Depositary
    The Issuer has agreed to pay all charges of the Note Depositary under the Note Depositary
Agreement. The Issuer has also agreed to indemnify the Note Depositary against certain liabilities
incurred by it under the Note Depositary Agreement.

Amendment and Termination of the Note Depositary Agreement
    The Note Depositary Agreement may be amended or supplemented by the Issuer and the Note
Depositary without notice to or consent of the holder of the relevant CDIs or any owner of
Book-Entry Interests therein:
    (1) to cure any ambiguity, defect or inconsistency,
    (2) to add to the covenants and agreements of the Issuer and/or the Note Depositary,
    (3) to effectuate the assignment of the Note Depositary’s rights and duties to a qualified
         successor,
    (4) to comply with UK and/or tax laws or any other applicable rule or regulation, or



                                                   132
    (5) to modify, alter, amend or supplement the Depositary Agreement in any other manner that
         is not adverse to Euroclear or Clearstream Banking or their common depositary or the
         holders of the Book-Entry Interests.
    Except as set forth above, no amendments that adversely affect the common depositary for
Euroclear or Clearstream Banking or the holders of the Book-Entry Interests may be made to the
Note Depositary Agreement without the consent of the common depositary for Euroclear or
Clearstream Banking or such holders, as the case may be.
    Upon issuance of Definitive Notes in exchange for Book-Entry Interests in the CDIs constituting
the entire principal amount at maturity of the Global Notes held pursuant to the Note Depositary
Agreement, the Note Depositary Agreement will terminate. The Note Depositary Agreement may be
terminated upon the resignation of the Note Depositary if no successor has been appointed within
120 days as set forth above. Owners of Book-Entry Interests are deemed to have notice of the Note
Depositary Agreement and shall be bound by all of its terms and conditions by acceptance of such
Book-Entry Interests.

Obligation of the Note Depositary
    The Note Depositary will assume no obligation or liability under the Note Depositary Agreement
other than to use good faith and reasonable care in the performance of its respective duties under
such agreement.

Information Concerning Euroclear and Clearstream Banking
     The Issuer understands as follows with respect to Euroclear and Clearstream Banking. Euroclear
and Clearstream Banking hold securities for participating organisations. They also facilitate the
clearance and settlement of securities transactions between their respective participants through
electronic book-entry changes in accounts of such participants. Euroclear and Clearstream Banking
provide various services to their participants, including the safekeeping, administration, clearance,
settlement, lending and borrowing of internationally traded securities. Euroclear and Clearstream
Banking interface with domestic securities markets. Euroclear and Clearstream Banking participants
are financial institutions such as underwriters, securities brokers and dealers, banks, trust companies
and certain other organisations. Indirect access to Euroclear and Clearstream Banking is also available
to others such as banks, brokers, dealers and trust companies that clear through or maintain a
custodian relationship with a Euroclear or Clearstream Banking participant, either directly or
indirectly.




                                                 133
                                        NOTICE TO INVESTORS
    The Notes are being offered exclusively to persons who trade or invest in securities in the
conduct of their profession or trade (which includes banks, securities intermediaries (including
dealers and brokers), insurance companies, pension funds, other institutional investors and
commercial enterprises which as an ancillary activity regularly invest in securities).

    Australia
     This document does not constitute a disclosure document or a product disclosure statement for
the purposes of the Corporations Act 2001 of the Commonwealth of Australia (the ‘‘Corporations
Act’’) and has not been, and will not be, lodged with the Australian Securities and Investments
Commission. The Notes will be offered to persons who receive offers in Australia only to the extent
that both (a) those persons are ‘‘wholesale clients’’ for the purposes of Chapter 7 of the Corporations
Act; and (b) such offers of Notes do not need disclosure to investors under Part 6D.2 of the
Corporations Act. Any offer of Notes received in Australia is void to the extent that it needs
disclosure to investors under the Corporations Act. In particular, offers for the sale of Notes will only
be made, and this document may only be distributed, in Australia in reliance on various exemptions
from such disclosure to investors provided by section 708 of the Corporations Act (‘‘section 708’’)
and where the investors are also ‘‘wholesale clients’’ as described above.
     This document is intended to provide general information only and has been prepared by the
Issuer without taking into account any particular person’s objectives, financial situation or needs.
Investors should, before acting on this information, consider the appropriateness of this information
having regard to their personal objectives, financial situation or needs. Investors should review and
consider the contents of this document and obtain financial advice specific to their situation before
making any decision to purchase the Notes.
    The Issuer does not hold an Australian financial services licence.

    France
     Neither this offering memorandum nor any other offering material relating to the Notes has
                                                                e            e
been submitted to the clearance procedures of the Autorit´ des march´ s financiers in France. The
Notes have not been offered, sold or otherwise transferred and will not be offered, sold or otherwise
transferred, directly or indirectly, to the public in France. Neither this offering memorandum nor any
other offering material relating to the Notes has been or will be (i) released, issued, distributed or
caused to be released, issued or distributed to the public in France or (ii) used in connection with
any offer for subscription or sale of the Notes to the public in France. Any offers, sales, distributions
or other transfers of the Notes in France will be made only (i) to qualified investors (investisseurs
       e
qualifi´ s) and/or to a restricted circle of investors (cercle restreint d’investisseurs), in each case
investing for their own account, all as defined in and in accordance with Articles L.411-2, D.411-1,
                                                            e
D.411-2, D.411-3 and D.411-4 of the French Code mon´ taire et financier or (ii) to investment
services providers authorised to engage in portfolio management on behalf of third parties, or (iii) in
a transaction that, in accordance with Article L.411-2-II-1 -or-2 -or 3 of the French Code mon´ taire   e
                                                                 e           e e
et financier and article 211-2 of the General Regulations (R` glement G´ n´ ral) of the Autorit´ dese
       e                                                                  ` e
march´ s financiers, does not constitute a public offer (appel public a l’´ pargne), in each case in
                                                                             e
compliance with Articles L.341-1 to L.341-17 of the French Code mon´ taire et financier. Such Notes
may be resold only in compliance with Articles L.411-1, L.411-2, L.412-1, L.621-8 through L.621-8-3
                                                      e
and L.341-1 to L.341-17 of the French Code mon´ taire et financier’’.

    Germany
    The offering of the Notes is not a public offering in the Federal Republic of Germany. The Notes
may be offered and sold in Germany only in compliance with the German Securities Prospectus Act
(Wertpapierprospektgesetz) as amended, the Commission Regulation (EC) No 809/2004 of April 29,
2004 as amended, or any other laws applicable in Germany governing the issue, offering and sale of
securities. The offering memorandum has not been approved under the German Securities Prospectus
Act (Wertpapierprospektgesetz) or the Directive 2003/71/EC.




                                                   134
    Italy
     The offering of the Notes has not been cleared by CONSOB (the Italian Securities Exchange
Commission) pursuant to Italian securities legislation and, accordingly, no Notes may be offered, sold
or delivered, nor may copies of this offering memorandum or of any other document relating to the
Notes be distributed in the Republic of Italy, except (i) to qualified investors (operatori qualificati),
other than natural persons, as defined in Article 31, second paragraph, of CONSOB Regulation
No. 11522 of 1 July 1998, as amended, provided that such professional investors will act in their
capacity and not as depositaries or nominees for other shareholders or (ii) in circumstances which
are exempted from the rules on solicitation of investments pursuant to Article 100 of Legislative
Decree No. 58 of 24 February 1998, as amended (the ‘‘Italian Financial Services Act’’), its
implementing CONSOB regulations including Article 33, first paragraph, of CONSOB Regulation
No. 11971 of 14 May 1999, as amended. Any offer, sale or delivery of the Notes or distribution of
copies of this offering memorandum or any other document relating to the Notes in the Republic of
Italy under (i) or (ii) above must be (a) made by an investment firm, bank or financial intermediary
permitted to conduct such activities in the Republic of Italy in accordance with the Italian Financial
Services Act and Legislative Decree No. 385 of 1 September 1993 (the ‘‘Banking Act’’), as amended,
and the implementing guidelines of the Bank of Italy, and (b) in compliance with Article 129 of the
Banking Act and the implementing guidelines of the Bank of Italy pursuant to which the issue or the
offer of securities in the Republic of Italy may need to be preceded and followed by an appropriate
notice to be filed with the Bank of Italy depending, inter alia, on the aggregate value of the securities
issued or offered in the Republic of Italy and their characteristics, and in accordance with any other
applicable laws and regulations including any relevant regulations which may be imposed by CONSOB
or the Bank of Italy. In any case, the Notes cannot be offered or sold to any individuals in Italy either
in the primary market or the secondary market.

    Luxembourg
     The Notes may not be offered or sold to the public in the Grand Duchy of Luxembourg, directly
or indirectly, and neither this offering memorandum nor any other circular, prospectus, form of
application, advertisement, communication or other material may be distributed, or otherwise made
available in or from, or published in, the Grand Duchy of Luxembourg except in circumstances which
do not constitute a public offer of securities to the public.

    The Netherlands
     The Notes (including rights representing an interest in a Global Note) may not be offered or sold
to individuals or legal entities in The Netherlands other than to professional market parties within the
meaning of article 1a paragraph 3 of the Exemption Regulation to the Dutch Securities Trade
Supervision Act (Wet toezicht effectenverkeer 1995) unless one of the other exemptions from or
exceptions to the prohibition contained in article 3 of the Dutch Securities Trade Supervision Act is
applicable.

    Spain
    Neither the Notes nor this offering memorandum have been approved or registered in the
administrative registries of the Spanish Securities Markets Commission (CNMV). Accordingly, the
Notes may not be offered in Spain except in circumstances that do not constitute a public offer of
securities in Spain within the meaning of the Spanish Securities Market Law of 28 July 1988 (Law
24/1988, of 28 July, on the Securities Act (as amended by Royal Decree Law 5/2005, of 11 March)
and related legislation.

    United Kingdom
     In the United Kingdom, the Notes will only be available for subscription pursuant to the offering
to a person who represents and agrees that:
 (i) it has only communicated or caused to be communicated and will only communicate or cause to
     be communicated any invitation or inducement to engage in investment activity (within the
     meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any
     Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer or the
     Guarantors; and


                                                  135
(ii) it has complied with and will comply with all applicable provisions of the FSMA with respect to
     anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom.

    United States
     The Notes have not been registered under the US Securities Act, or any state securities laws,
and, unless so registered, may not be offered or sold except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the US Securities Act and applicable state
securities laws. The Notes offered hereby are being offered and sold only in offshore transactions in
reliance on Regulation S under the US Securities Act.
     In addition, until 40 days after completion of the offering, an offer or sale of the Notes within
the United States by any dealer (whether or not participating in the offering) may violate the
registration requirements of the US Securities Act.
    Each purchaser of Notes, by its acceptance thereof, will be deemed to have acknowledged,
represented to and agreed with the Group and the Initial Purchasers as follows (terms used in this
paragraph that are defined in Regulations under the US Securities Act are used herein as defined
therein):
(1) The purchaser is not a U.S. person (and is not purchasing the Notes for the account or benefit of
    a U.S. person) and is purchasing the Notes in an offshore transaction pursuant to Regulation S.
(2) The purchaser understands that the Notes are being offered in a transaction not involving any
    public offering in the United States within the meaning of the US Securities Act, that the Notes
    have not been and will not be registered under the US Securities Act and that if in the future it
    decides to offer, resell, pledge or otherwise transfer any of the Notes such Notes may be offered,
    resold, pledged or otherwise transferred only (i) outside the United States in a transaction
    complying with the provisions of Rule 904 under the US Securities Act, (ii) pursuant to an
    exemption from registration under the US Securities Act provided by Rule 144 (if available),
    (iii) pursuant to any other available exemption from the registration requirements of the US
    Securities Act, (iv) pursuant to an effective registration statement under the US Securities Act, or
    (v) to the Group or any subsidiary thereof, in each of cases (i) through (v) in accordance with
    any applicable securities laws of any applicable jurisdiction (including any state of the United
    States).
(3) If you are a purchaser in a sale that occurs outside the United States within the meaning of
    Regulation S, you acknowledge that until the expiration of the ‘‘distribution compliance period’’
    (as defined below), you shall not make any offer or sale of these Notes to a U.S. person or for
    the account or benefit of a U.S. person within the meaning of Rule 902 under the US Securities
    Act and that such Note will bear a legend to this effect. The ‘‘distribution compliance period’’
    means the 40-day period following the later of the commencement of the offering or the issue
    date for the Notes.

General
     No action has been or will be taken in any jurisdiction by the Issuer or the Initial Purchasers that
would, or is intended to, permit a public offering of the Notes, or possession or distribution of this
offering memorandum or any other offering material, in any country or jurisdiction where action for
that purpose is required. Persons into whose hands this offering memorandum comes are required by
the Issuer and the Initial Purchasers to comply with all applicable laws and regulations in each
country or jurisdiction in which they purchase, offer, sell or deliver Notes or have in their possession,
distribute or publish this offering memorandum or any other offering material relating to the Notes,
in all cases at their own expense.




                                                  136
                                    TAXATION CONSIDERATIONS
UK Tax Considerations
     The following is a general description of certain UK tax considerations relating to the Notes
based on current law and practice in the United Kingdom. It does not purport to be a complete
analysis of all UK tax considerations relating to the Notes. It relates to the position of persons who
are the absolute beneficial owners of Notes and some aspects do not apply to certain classes of
taxpayer (such as dealers and/or holders of Notes who are connected or associates with the Issuer or
any Guarantor for relevant tax purposes). Prospective holders of Notes who may be subject to tax in
a jurisdiction other than the United Kingdom or who may be unsure as to their tax position should
seek their own professional advice.

Interest on the Notes
     The Notes will constitute ‘‘quoted Eurobonds’’ within the meaning of section 349 of the Income
and Corporation Taxes Act 1988 (the ‘‘Taxes Act’’) as long as they are and continue to be listed on a
‘‘recognised stock exchange’’ within the meaning of section 841 of the Taxes Act. In the case of
Notes to be traded on the Alternative Securities Market of the Irish Stock Exchange, which is a
recognised stock exchange, this condition will be satisfied if the Notes are admitted to listing and to
trading on the Alternative Securities Market of the Irish Stock Exchange. Accordingly, payments of
interest on the Notes may be made without withholding on account of UK income tax provided the
Notes remain so listed at the time of payment.
     In all other cases an amount must be withheld on account of UK income tax at the lower rate
(currently 20%), subject to any direction to the contrary by H.M. Revenue & Customs under an
applicable double taxation treaty, and except that the withholding obligation is disapplied in respect
of payments to holders of Notes who the Issuer reasonably believes are either a UK resident company
or a non-UK resident company carrying on a trade in the UK through a UK permanent establishment
which is within the charge to UK corporation tax, or fall within various categories enjoying a special
tax status under the relevant UK legislation (including certain charities and pension funds), or are
partnerships consisting of such persons (unless H.M. Revenue & Customs directs otherwise).
     Interest on the Notes constitutes UK source income for tax purposes and, as such, may be
subject to UK income tax by direct assessment even where paid without withholding. However,
interest with a UK source received without deduction or withholding on account of UK tax will not be
chargeable to UK tax in the hands of a holder of Notes who is not resident for tax purposes in the
UK unless that holder of Notes carries on a trade, profession or vocation in the UK through a UK
branch or agency (or for holders of Notes who are companies, through a UK permanent
establishment) in connection with which the interest is received or to which the Notes are
attributable. There are exemptions for interest received by certain categories of agent (such as some
brokers and investment managers). The provisions of any applicable double taxation treaty may also
be relevant for such holders of Notes.
     The provisions in the Notes relating to additional payments referred to under ‘‘Description of the
Notes—Additional Amounts’’ may not apply if H.M. Revenue & Customs sought to assess the person
entitled to the relevant interest or (where applicable) profit on any Note directly to UK income tax.
However, exemption from or reduction of such UK tax liability might be available under an applicable
double taxation treaty.
     Any Paying Agent or other person through whom interest is paid to, or by whom interest is
received on behalf of, broadly, an individual or a partnership where one or more of the partners is an
individual (whether resident in the UK or elsewhere) may be required to provide information in
relation to the payment and the individual concerned to H.M. Revenue & Customs. Interest for this
purpose includes any amount to which a person holding a deeply discounted security is entitled on
redemption of that security. H.M. Revenue & Customs may communicate information to the tax
authorities of other jurisdictions.
     Under EC Council Directive 2003/48/EC on the taxation of savings income, Member States are
required, from 1 July 2005, to provide to the tax authorities of another Member State details of
payments of interest (or other similar income) paid by a person within its jurisdiction to or for an
individual in that other Member State. However, for a transitional period, Belgium, Luxembourg and
Austria are instead required (unless during that period they elect otherwise) to operate a withholding


                                                 137
system in relation to such payments (the ending of such transitional period being dependent upon
the conclusion of certain other agreements relating to information exchange with certain other
countries).
     Also with effect from 1 July 2005, a number of non-EU countries, including Switzerland, and
certain dependent or associated territories of certain Member States have agreed to adopt similar
measures (either provision of information or transitional withholding (a withholding system in the
case of Switzerland)) in relation to payments made by a person within its jurisdiction to or for an
individual in a Member State. In addition, certain Member States have entered into a reciprocal
provision of information or transitional withholding arrangements with certain of those dependent or
associated territories in relation to payments made by a person in a Member State to or for an
individual in one of those territories. The attention of the holders of Notes is drawn to ‘‘Description
of the Notes—Additional Amounts’’.

Guarantor Payments
     If a Guarantor makes any payments in respect of interest on the Notes (or other amounts due
under the Notes other than the repayment of amounts subscribed for the Notes) such payments may
be subject to UK withholding tax which may be either at the lower rate (currently 20%) or at the
basic rate (currently 22%) or may not be subject to any withholding tax at all. The application of any
UK withholding tax may be subject to relief under the provisions of an applicable double taxation
treaty. The attention of the holders of Notes is drawn to ‘‘Description of the Notes—Additional
Amounts’’.

Transfer of the Notes—UK corporation taxpayers
     In general, the holders of Notes which are within the charge to UK corporation tax (other than
venture capital trusts, investment trusts, authorised unit trusts and open-ended investment
companies) will be treated for UK tax purposes as realising profits, gains or losses (including
exchange gains and losses) in respect of the Notes on a basis which is broadly in accordance with
their statutory accounting treatment so long as the accounting treatment is in accordance with
generally accepted accounting practice as that term is defined for UK tax purposes. Such profits,
gains and losses (or, where the functional currency of the holder of the Note is not sterling, the
sterling equivalent of such profits, gains and losses as computed in the functional currency of the
holder of the Note) will be taken into account in computing taxable income for UK corporation tax
purposes. Holders of Notes that are venture capital trusts, investment trusts, authorised unit trusts or
open ended investment companies will be subject to the same UK taxation treatment in respect of
the Notes as other holders of Notes that are within the charge to UK corporation tax, other than (in
each case and in broad terms) with respect to profits, gains and losses of a capital nature in respect
of the Notes.

Transfer of the Notes—Other UK taxpayers
     The UK tax treatment of non-corporate holders of the Notes will depend upon whether or not
the relevant Notes constitute ‘‘Deeply Discounted Securities’’ for UK tax purposes. Generally speaking,
Notes will constitute ‘‘Deeply Discounted Securities’’ if they are issued at a discount to the
redemption amount which exceeds or may exceed 0.5% of the redemption amount for each year of
the Notes’ anticipated life between its date of issue and redemption. Whilst it is not considered that
the redemption which may occur on a Change of Control should be taken into account for this
purpose, the position is not considered to be free from doubt. The UK tax treatment of
non-corporate holders of the Notes is therefore set out in the alternative:

If the Notes are Deeply Discounted Securities
     The Notes will be ‘‘deeply discounted securities’’ for the purposes of Part 4, Chapter 8 of the
Income Tax (Trading and Other Income) Act 2005. Therefore, Noteholders who do not fall within the
charge to UK corporation tax will be charged to UK income tax, if the Notes are transferred in any
way or redeemed, on any profit realised from the transfer or redemption. The tax charge will arise in
the year of assessment in which the transfer or redemption takes place and will be calculated by
reference to the difference between the amount paid for the Notes and the amount realised from the
transfer or redemption (no account being taken of any costs incurred in connection with the transfer



                                                  138
or redemption of the Notes or their acquisition). If a Noteholder sustains a loss from the transfer or
redemption of the Notes, the loss will not be allowable and will not reduce the Noteholder’s UK
income tax liability.
     No chargeable gain (or allowable loss) will be treated as arising for these purposes on a disposal
of the Notes by a Noteholder.

If the Notes are not Deeply Discounted Securities
     The disposal (including redemption) of a Note by a non-corporate holder who is resident or
ordinarily resident for tax purposes in the UK or who carries on a trade, profession or vocation in the
UK through a branch or agency to which the Note is attributable may give rise to a chargeable gain
or allowable loss for the purposes of UK tax on capital gains, depending on individual circumstances
and subject to any taper relief which may be due. In calculating any gain or allowable loss on
disposal of a Note, pound sterling values are compared at acquisition and transfer. Accordingly, a
taxable profit can arise even where the foreign currency amount received on a disposal is less than
or the same as the amount paid for the Note.
     If the Notes are not deeply discounted securities, the provisions of the accrued income scheme
(the ‘‘Scheme’’) may apply to certain holders of Notes who are not subject to UK corporation tax, in
relation to a transfer of the Notes. On a transfer of securities with accrued interest the Scheme
usually applies to deem the transferor to receive an amount of income equal to the accrued interest
and to treat the deemed or actual interest subsequently received by the transferee as reduced by a
corresponding amount. Generally, persons who are neither resident nor ordinarily resident in the UK
for UK tax purposes and who do not carry on a trade in the UK through a branch or agency to which
the Notes are attributable will not be subject to the provisions of the Scheme.

Stamp Duty and SDRT
     No UK stamp duty or stamp duty reserve tax should be payable on the issue or transfer of the
Global Notes or the transfer of interests in the Notes. However, if Notes in definitive form are issued,
stamp duty or stamp duty reserve tax may be chargeable on transfers of such Notes, at 0.5 per cent.
of the consideration for such transfer.




                                                  139
                                        PLAN OF DISTRIBUTION
    Under the terms and subject to the conditions set out in a purchase agreement dated 14 July
2006, the Issuer has agreed to sell to the Initial Purchasers the aggregate principal amount of the
Notes. The purchase agreement provides that the obligations of the Initial Purchasers thereunder are
subject to certain conditions precedent.
    The Issuer and the Guarantors have agreed in the purchase agreement to indemnify, jointly and
severally, under certain circumstances, each Initial Purchaser, its affiliates, officers, directors,
employees, representatives, agents and controlling persons against certain liabilities in connection
with the offer and sale of the Notes, including liabilities under the US Securities Act, and to
contribute to payments (including expenses) that each Initial Purchaser may be required to make in
respect thereof.
    The Initial Purchasers propose to offer the Notes initially at 100% of the principal amount
thereof. After the offering, the issue price and other selling terms may be changed at any time
without notice.
     During the period beginning on the date of the final offering memorandum and until the date
which is the earlier of the end of the stabilisation period, or 90 days after the issuance of the Notes,
none of the Issuer or the Guarantors will offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any debt securities issued by the Issuer or either Guarantor that are
substantially similar to the Notes or securities issued by the Issuer or either Guarantor that are
convertible into, or exchangeable with, the Notes or such other debt securities without the prior
written consent of the Joint Stabilising Managers on behalf of the Initial Purchasers. Neither the
Issuer nor either Guarantor will at any time offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any securities in circumstances where such offer, sale, pledge, contract or
disposition would cause the safe harbour of Regulation S thereunder to cease to be applicable to the
offer and sale of the Notes.
    The Notes have not been and will not be registered under the US Securities Act or any state
securities law. The Initial Purchasers have agreed that they will offer to sell the Notes outside the
United States only to non-US persons in offshore transactions in reliance on Regulation S.
     Until 40 days after the completion of the offering, an offer or sale of the Notes within the United
States by any dealer (whether or not participating in the offering) may violate the registration
requirements of the US Securities Act.
    Each Initial Purchaser has represented and agreed that:
    (a) it has only communicated or caused to be communicated and will only communicate or
        cause to be communicated an invitation or inducement to engage in investment activity
        (within the meaning of Section 21 of the FSMA) received by it in connection with the issue
        or sale of the Notes in circumstances in which Section 21(1) of the FSMA does not apply to
        the Issuer or the Guarantors; and
    (b) it has complied and will comply with all applicable provisions of the FSMA with respect to
        anything done by it in relation to the Notes in, from or otherwise involving the United
        Kingdom.
     The Issuer does not intend to apply for the Notes to be listed on any securities exchange other
than the Irish Stock Exchange for trading on the Alternative Securities Market thereof or for the
Notes to be quoted on any quotation system. The Issuer cannot assure you that the Notes will be
approved for listing or such listing will be maintained. The Initial Purchasers have advised the Group
that the Initial Purchasers currently intend to make a market in the Notes. However, they are not
obligated to do so and any market making may be discontinued by an Initial Purchasers at any time
without notice. Accordingly, no assurance can be given as to the liquidity of, or the trading market
for, the Notes.
     In connection with this offer, the Joint Stabilising Managers (or persons acting on behalf of the
Joint Stabilising Managers) may over-allot Notes or effect transactions with a view to supporting the
market price of the Notes at a level higher than that which might otherwise prevail for a limited
period after the date hereof. However, there is no obligation on either Joint Stabilising Manager or




                                                   140
any agent of it to do this. Such stabilising, if commenced, may be discontinued at any time and must
be brought to an end after a limited period.
      Over-allotment involves sales in excess of the offering size which creates a short position for the
Initial Purchasers. Stabilising transactions involve bids to purchase the Notes in the open market for
the purpose of pegging, fixing or maintaining the price of the Notes. Syndicate covering transactions
involve purchases of the Notes in the open market after the distribution has been completed in order
to cover short positions. Such stabilising transactions and syndicate covering transactions may cause
the price of the Notes to be higher than it would otherwise be in the absence of such transactions.
     Such stabilisation activities will not be carried out by either Joint Stabilising Manager as the
Group’s agents and none of the Initial Purchasers will be accountable to the Group for any resulting
profit or liable to the Group for any loss.
      The Initial Purchasers, directly or through its affiliates, have provided from time to time, and
expect to provide in the future, investment banking and commercial banking services to the Group
and its affiliates for which such Initial Purchasers have received and/or will receive customary fees
including in connection with the Senior Revolving Credit Facility, which was provided in part by
affiliates of each of the Initial Purchasers. For additional information regarding the Senior Revolving
Credit Facility, please see ‘‘Description of Other Indebtedness—Senior Revolving Credit Facility’’.
    Buyers who purchase the Notes from the Initial Purchasers may be required to pay stamp taxes
and other charges in accordance with the laws and practice of the country of purchase in addition to
the offering price set out on the cover page of this offering memorandum.

                                           LEGAL MATTERS
     Certain legal matters in connection with this offering will be passed upon for the Group by
Freshfields Bruckhaus Deringer as to matters of English and United States law. Certain legal matters
in connection with this offering will be passed upon for the Initial Purchasers by Latham & Watkins
as to matters of English and United States law.

                                       INDEPENDENT AUDITORS
    The Group’s consolidated financial information as of 31 December 2005 and 2004, prepared in
accordance with IFRS, is included in this offering memorandum. PricewaterhouseCoopers LLP, the
Groups’ independent auditors, have issued an Accountants’ Report in accordance with Standards for
Investment Reporting, on the consolidated IFRS information as of and for the years ended
31 December 2005 and 2004, as stated in their report appearing herein.
     The Group’s consolidated financial statements as of 31 December 2004, prepared in accordance
with UK GAAP included in this offering memorandum have been audited by PricewaterhouseCoopers
LLP, the Group’s independent auditors, as stated in their report appearing herein.
PricewaterhouseCoopers LLP is a member of the Institute of Chartered Accountants in England and
Wales.

                                LISTING AND GENERAL INFORMATION
Listing
     Application has been made to list the Notes on the Irish Stock Exchange for trading on the
Alternative Securities Market thereof in accordance with the rules of that exchange. Pursuant to the
rules of the Irish Stock Exchange, the Group accepts responsibility for the information contained in
this document. To the best of the knowledge and belief of the Issuers, the information contained in
this document is in accordance with the facts and does not omit anything likely to affect the import
of such information. Information relating to each of the Guarantors was provided by the respective
Guarantor. The estimated expenses associated with the admission to trading of the Notes are
expected to be around A4,533.




                                                  141
     For as long as the Notes are listed on the Irish Stock Exchange for trading on the Alternative
Securities Market thereof and the rules of that exchange require, physical copies and/or electronic
versions of the following documents may be inspected and obtained at the specified office of the
Issuers, the Guarantors and the Irish Paying Agent:
    • the organisational documents of the Issuer and each of the Guarantors;
    • the Issuer’s most recent annual financial statements and any interim financial statements
      published by the Issuer;
    • each Guarantor’s most recent annual financial statements and any interim financial statements
      published by such Guarantor;
    • the Indenture relating to the Notes (which includes the form of the Notes); and
    • the Note Depositary Agreement.
     As long as the Notes are listed on the Irish Stock Exchange and the rules of the Irish Stock
Exchange shall so require, the Issuer will maintain a paying and transfer agent in Ireland. The Issuer
reserves the right to vary such appointment and the Issuer will publish notice of such change of
appointment in a newspaper having a general circulation in Ireland.
      The Group has appointed AIB/BNY Fund Management (Ireland) Limited as paying agent in
Ireland (the ‘‘Irish Paying Agent’’) and The Bank of New York as principal paying agent (the
‘‘Principal Paying Agent’’) and transfer agent to make payments on, and transfers of, the Notes. The
Issuer reserves the right to vary such appointment.
    The Group prepares audited consolidated annual financial information for the Issuers and the
Guarantors according to IFRS. The Group does not prepare non-consolidated financial statements.
     So long as the Notes are listed on the Irish Stock Exchange for trading on the Alternative
Securities Market thereof, the Notes will be freely transferable and negotiable in accordance with the
rules of the Irish Stock Exchange.

Clearing information
    The Notes sold have been accepted for clearance through the facilities of the Clearstream
Banking and Euroclear under common code 26169658. The international securities identification
number for the Notes sold is XS0261696586.

Authorisations
     The creation and issuance of the Notes have been authorised by resolutions of the Issuer’s board
of directors, dated 6 July 2006 and 13 July 2006, and by a resolution of the board of directors of Avis
Europe plc dated 6 July 2006 and a resolution of a committee of the board of directors of Avis
Europe plc dated 13 July 2006. The guarantees have been authorised by resolutions of the board of
directors of Avis Europe Holdings Limited dated 6 July 2006 and 13 July 2006 and a resolution of the
board of directors of Avis Europe plc dated 6 July 2006 and a resolution of a committee of the board
of directors of Avis Europe plc dated 13 July 2006.

Legal information
The Issuer and the Guarantors
Issuer
Description of Avis Finance Company plc
    Avis Finance Company plc was incorporated and registered in England and Wales under the
Companies Act 1985 as a private company limited by shares under the name Pitchultra Limited on
16 April 1987. On 21 July 1987, its name was changed to Avis Finance Company Limited plc and on
2 May 2002 it was re-registered as a public limited company and its name changed to Avis Finance
Company plc. Avis Finance Company plc’s registered number is 2123807. The principal legislation
under which Avis Finance Company plc operates is the Companies Act 1985, as amended (the
‘‘Companies Act’’) and the regulations made under the Companies Act.




                                                  142
   Avis Finance Company plc’s registered office is at Avis House, Park Road, Bracknell, Berkshire,
RG12 2EW, United Kingdom with telephone number +44 (0) 1344 426644.

Guarantor information
Description of Avis Europe Holdings Limited
     Avis Europe Holdings Limited was incorporated and registered in England and Wales under the
Companies Act 1985 as a public limited company under the name Toymon Public Limited Company
on 4 March 1986. On 1 September 1986, its name was changed to Avis Europe plc and on
30 January 1990 it was re-registered as a private company limited by shares and its name changed to
Avis Europe Limited. On 29 February 1996 its name was changed to Avis Europe Holdings Limited.
Avis Europe Holdings Limited’s registered number is 1995619. The principal legislation under which
Avis Europe Holdings Limited operates is the Companies Act and the regulations made under the
Companies Act.
   Avis Europe Holdings Limited’s registered office is at Avis House, Park Road, Bracknell, Berkshire,
RG12 2EW, United Kingdom with telephone number +44 (0) 1344 426644.

Description of Avis Europe plc
     Avis Europe plc was incorporated and registered in England and Wales under the Companies Act
1985 as a private company limited by shares under the name D.I.T. Investments Limited on
28 January 1997. On 7 February 1997 its name was changed to Avis Europe Limited and on
26 February 1997 it was re-registered as a public limited company and its name was changed to Avis
Europe plc. Avis Europe plc’s registered number is 3311438. The principal legislation under which
Avis Europe plc operates is the Companies Act and the regulations made under the Companies Act.
    Avis Europe plc’s registered office is at Avis House, Park Road, Bracknell, Berkshire, RG12 2EW,
United Kingdom with telephone number +44 (0) 1344 426644.
    Except as disclosed in this offering memorandum:
    • there has been no material adverse change in the financial position of Avis Europe plc or any
      of its subsidiaries or Avis Europe plc and its subsidiaries on a consolidated basis since
      December 31, 2005; and
    • none of Avis Europe plc or any of its subsidiaries has been involved in any litigation,
      administrative proceedings or arbitration relating to claims or amounts which are material in
      the context of the issue of the Notes, and, so far as Avis Europe plc and its subsidiaries are
      aware, no such litigation, administrative proceeding or arbitration is pending or threatened.

Where you can find additional information
     Each purchaser of the Notes from the Initial Purchasers of the Notes will be furnished a copy of
this offering memorandum and any related amendments or supplements to this offering
memorandum. Each person receiving this offering memorandum and any related amendments or
supplements to the offering memorandum acknowledges that:
(1) such person has been afforded an opportunity to request from the Group, and to review and has
    received, all additional information considered by it to be necessary to verify the accuracy and
    completeness of the information herein;
(2) such person has not relied on the Initial Purchasers or any person affiliated with the Initial
    Purchasers in connection with its investigation of the accuracy of such information or its
    investment decision; and
(3) except as provided pursuant to paragraph (1) above, no person has been authorised to give any
    information or to make any representation concerning the Notes offered hereby other than
    those contained herein and, if given or made, such other information or representation should
    not be relied upon as having been authorised by the Group or the Initial Purchasers.
     Copies of documents concerning the Issuer and the Guarantors, this offering memorandum and
other information relating to the issuance of the Notes may be obtained from the specified offices of
the Irish Paying Agent.



                                                  143
                                             GLOSSARY
     The following definitions apply throughout this document unless the content requires otherwise.

‘‘Aegis’’                        Aegis Motor Insurance Limited.
‘‘Advances’’                     The loan advances available to the Issuer under the Senior
                                 Revolving Credit Facility.
‘‘Agent’’                        The facility agent for the Senior Revolving Credit Facility.
‘‘AIG’’                          AIG Europe SA.
‘‘Avis Corporate’’               The Group’s operations under the Avis brand name in the
                                 Corporate Countries.
‘‘Avis’’                         The Group’s operations under the Avis brand name.
‘‘Avis Licence’’                 The Group’s operations under the Avis brand name in the Licensee
                                 Countries.
‘‘Avis US’’                      Avis Inc.
‘‘Banking Act’’                  Legislative Decree No. 385 of 1 September 1993.
‘‘Book-Entry Interests’’         Ownership of interests in the Global Note.
‘‘Borrower’’                     The Issuer as borrower under the Senior Revolving Credit Facility.
‘‘Budget’’                       The Group’s operations under the Budget brand name.
‘‘Budget Corporate’’             The Group’s operations under the Budget brand name in the
                                 Corporate Countries.
‘‘Budget Licensee’’              The Group’s operations under the Budget brand name in the
                                 Licensee Countries.
‘‘Cendant’’                      Cendant Corp.
‘‘Centrus’’                      Centrus Limited.
‘‘Clearstream Banking’’                                  ee
                                 Clearstream Banking Soci´ t´ Anonyme.
‘‘Company’’ or ‘‘Group’’         Avis Europe plc and its consolidated subsidiaries, joint ventures and
                                 associates.
‘‘Companies Act’’                The Companies Act 1985, as amended.
‘‘Consolidated Financial         The Group’s consolidated financial information as at 31 December
Information 2005’’               2005 and 2004 and for the two years then ended, prepared in
                                 accordance with IFRS as adopted for use in the EU.
‘‘Consolidated Financial         The Consolidated Financial Information 2005 and the Consolidated
Statements’’                     Financial Statements 2004.
‘‘Consolidated Financial         The Group’s consolidated financial statements as at 31 December
Statements 2004’’                2004 and 2003 and for the two years then ended, prepared in
                                 accordance with UK GAAP.
‘‘Corporate Countries’’          The 14 countries in which the Group has wholly-owned Europe
                                 operations, namely Austria, Belgium, the Czech Republic, France,
                                 Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal,
                                 Singapore, Spain, Switzerland and the United Kingdom. In certain of
                                 these countries, in addition to the Group’s own operations,
                                 independent operators are licensed by the Group to use the Avis or
                                 Budget name and brand.




                                                  144
‘‘D’Ieteren’’                    s.a. D’Ieteren n.v., D’Ieteren Invest s.a. and their current and/or
                                 previous subsidiary undertakings, as the context requires, and their
                                 nominees.
‘‘Definitive Notes’’             Definitive Notes in registered form.
‘‘Directors’’ or ‘‘Board’’       The Directors of Avis Europe plc.
‘‘EAME’’                         Europe, Africa and the Middle East.
‘‘EAMEA’’                        Europe, Africa, the Middle East and Asia.
‘‘EU’’                           European Union.
‘‘Euroclear’’                    Euroclear Bank S.A./N.V., as operator of the Euroclear System.
‘‘Euromonitor’’                  Euromonitor IMIS Travel Database.
‘‘Euro Notes’’                   The Issuer’s two A25 million unsecured, 5 year, fixed rate
                                 Schuldscheindarlehen in 2001 and 2002.
‘‘FSMA’’                         Financial Services and Market Act 2000.
‘‘General Motors’’               General Motors Corporation.
‘‘Global Notes’’                 Global Notes in bearer form without interest coupons attached.
‘‘Guarantors’’                   Avis Europe plc and Avis Europe Holdings Limited.
‘‘IAS’’                          International Accounting Standards.
‘‘IASB’’                         International Accounting Standards Board.
‘‘IFRS’’                         International Financial Reporting Standards, as adopted for use in
                                 the EU.
‘‘Indenture’’                    The indenture governing the Notes.
‘‘Initial Purchasers’’           Barclays Bank PLC, Dresdner Bank AG London Branch, The Royal
                                                           ee e e
                                 Bank of Scotland plc, Soci´ t´ G´ n´ rale, London Branch and Fortis
                                 Bank nv-sa.
‘‘Irish Paying Agent’’           AIB/BNY Fund Management (Ireland) Limited.
‘‘Issuer’’                       Avis Finance Company plc, the issuer of the Notes.
‘‘Italian Financial Services     Article 100 of Legislative Decree No. 58 of 24 February 1998, as
Act’’                            amended.
‘‘Joint Stabilising Managers’’   Barclays Bank PLC and The Royal Bank of Scotland plc.
‘‘Lenders’’                      A group of 14 banks led by Barclays Bank PLC, Dresdner Bank AG,
                                                            ee e e
                                 Fortis Bank S.A./N.V., Soci´ t´ G´ n´ rale, and The Royal Bank of
                                 Scotland plc.
‘‘Licensee Country’’             A country where the Avis network is operated by international
                                 licences.
‘‘Loan Notes’’                   A25.0 million 5.25% Euro Notes due November 2006, A25.0 million
                                 6.00% Euro Notes due March 2007, A120.0 million 6.4% Guaranteed
                                 Notes due July 2007, $102.0 million 8.17% Series A Loan Notes due
                                 August 2007, $48.0 million 8.30% Series B Loan Notes due August
                                 2010, $120.0 million 5.66% Series A Loan Notes due June 2011,
                                 A65.0 million 5.34% Series B Loan Notes due June 2012,
                                 $20.0 million 5.87% Series C Loan Notes due June 2012,
                                 A26.8 million 6.80% Loan Notes due June 2012 and $100.0 million
                                 6.19% Series D Loan Notes due June 2014.
‘‘NBV’’                          Net book value.



                                                   145
‘‘Notes’’                     The senior floating rate notes due 2013 that are hereby being
                              offered.
‘‘Order’’                     The Financial Services and Markets Act 2000 (Financial Promotion)
                              Order 2005.
‘‘Qualified Investors’’       ‘‘qualified investors’’ within the meaning of Article 2(1)(e) of the
                              Prospectus Directive (Directive 2003/71/EC).
‘‘Parent’’                    Avis Europe plc
‘‘Principal Paying Agent’’    The Bank of New York.
‘‘Rights Issue’’              The Issuer’s 4 for 7 rights issue of 334,736,017 new shares at
                              35 pence per share that was completed in July 2005.
‘‘RPBD’’                      Revenue per billed day.
‘‘SEC’’                       The US Securities and Exchange Commission.
‘‘Senior Revolving Credit     The senior revolving credit facility between the Borrower and the
Facility’’                    Lenders that was entered into on 20 February 2006 and which
                              terminates on 20 February 2011.
‘‘Taxes Act’’                 Income and Corporation Taxes Act 1988.
‘‘UK GAAP’’                   The generally acceptable accounting principles in the United
                              Kingdom.
‘‘underlying’’                Excludes exceptional items, certain re-measurement items and
                              economic hedges.
‘‘United States’’ or ‘‘US’’   United States of America.
‘‘UK’’                        United Kingdom.
‘‘US Securities Act’’         US Securities Act of 1933, as amended.




                                                146
                                              INDEX TO FINANCIAL INFORMATION

Consolidated Financial Information 2005
Accountants’ Report on the financial information for the years ended 31 December 2005
and 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    F-2
Consolidated Income Statements for the years ended 31 December 2005 and 2004 . . . . . . . .                                                F-3
Consolidated Statement of Recognised Income and Expense for the years ended
31 December 2005 and 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 F-4
Consolidated Balance Sheets at 31 December 2005 and 2004 . . . . . . . . . . . . . . . . . . . . . . . . .                                  F-5
Consolidated Cash Flow Statements for the years ended 31 December 2005 and 2004 . . . . . .                                                 F-6
Significant Accounting Policies Applicable to the Consolidated Financial Information for the
year ended 31 December 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 F-7
Notes to the Consolidated Financial Information for the years ended 31 December 2005
and 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   F-18

Consolidated Financial Statements 2004
Independent Auditors’ Report to the Members of Avis Europe plc . . . . . . . . . . . . . . . . . . . . . .                                 F-73
Consolidated Profit and Loss Account for the year ended 31 December . . . . . . . . . . . . . . . . .                                      F-75
Consolidated Statement of Total Recognised Gains and Losses for the year ended
31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      F-76
Consolidated Balance Sheet at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      F-77
Consolidated Cash Flow Statement for the year ended 31 December . . . . . . . . . . . . . . . . . . . .                                    F-78
Company Balance Sheet at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       F-79
Statement of Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               F-80
Notes to the Financial Statements for the year ended 31 December . . . . . . . . . . . . . . . . . . . .                                   F-83




                                                                       F-1
                                                                                      2FEB200616484011

The Directors
Avis Europe plc
Park Road
Bracknell
Berkshire RG12 2EW

7 July 2006

Dear Sirs

Avis Europe plc.

Introduction
We report on the financial information of Avis Europe plc (the ‘‘Company’’) set out on pages F-3 to
F-72. This financial information has been prepared for inclusion in the offering memorandum to be
dated 14 July 2006 (the ‘‘Offering Memorandum’’) of Avis Finance Company plc on the basis of the
accounting policies set out on pages F-7 to F-17 to the financial information.

Responsibility
The directors of the Company are responsible for preparing the financial information on the basis of
preparation set out on page F-7 to the financial information and in accordance with International
Financial Reporting Standards as adopted by the European Union (‘‘IFRS’’).
It is our responsibility to form an opinion as to whether the financial information gives a true and fair
view for the purposes of the Offering Memorandum and to report our opinion to you.

Basis of opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the
Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence
relevant to the amounts and disclosures in the financial information. It also included an assessment
of significant estimates and judgements made by those responsible for the preparation of the
financial information and whether the accounting polices are appropriate to the entity’s
circumstances, consistently applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance
that the financial information is free from material misstatement, whether caused by fraud or other
irregularity or error.

Opinion
In our opinion, the financial information gives, for the purposes of the Offering Memorandum, a true
and fair view of the state of affairs of the Company as at the dates stated and of its results and
cash flows for the periods then ended in accordance with the basis of preparation set out on page
F-7 to the financial information and in accordance with IFRS.

Declaration
For the purposes of Paragraph 3(2)(f) of Schedule 1 to the Prospectus (Directive 2003/71/EC)
Regulations 2005 we are responsible for this report as part of the Offering Memorandum and
declare that we have taken all reasonable care to ensure that the information contained in this
report is, to the best of our knowledge, in accordance with the facts and contains no omission likely
to affect its import. This declaration is included in the Offering Memorandum in compliance with
item 1.2 of annex IX of Commission Regulation (EC) No 809/2004.

Yours faithfully




PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place,
London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Services Authority for designated investment business.



                                                                                              F-2
                                                 Consolidated Income Statements
                                       for the years ended 31 December 2005 and 2004

                                                                       2005                                 2004
                                                                         Amounts                              Amounts
                                                                      excluded from                        excluded from
                                                Notes Underlying(1)     underlying   Total   Underlying(1)   underlying   Total
                                                          Em               Em         Em         Em             Em         Em
Revenue . . . . . . . . . . . . . . . . . . .     1,2   1,276.5              —      1,276.5    1,252.8            —      1,252.8
Cost of sales . . . . . . . . . . . . . . . . .          (709.3)             —       (709.3)    (675.0)           —       (675.0)
Gross profit . . . . . . . . . . . . . . . . .           567.2                 —      567.2      577.8            —        577.8
Administrative expenses . . . . . . . . .               (467.3)             (18.5)   (485.8)    (463.6)        (74.4)     (538.0)
Operating profit . . . . . . . . . . . . . . 2,3,5         99.9             (18.5)     81.4      114.2         (74.4)       39.8
Finance revenue . . . . . . . . . . . . . .      6          1.9                —        1.9        3.7            —          3.7
Finance costs . . . . . . . . . . . . . . . .    6        (64.0)              0.9     (63.1)     (65.7)           —        (65.7)
Foreign exchange on net debt . . . . .           6           —               (0.1)     (0.1)        —            2.1         2.1
Share of profit/(loss) of joint venture
  and associate . . . . . . . . . . . . . . .  14            —                —          —         (0.1)         —          (0.1)
Profit/(loss) before taxation . . . . . .                  37.8             (17.7)     20.1       52.1         (72.3)      (20.2)
Taxation . . . . . . . . . . . . . . . . . . .    7       (10.2)              2.2      (8.0)     (13.0)         16.1         3.1
Profit/(loss) for the year . . . . . . . .                 27.6             (15.5)     12.1       39.1         (56.2)      (17.1)

Attributable to:
Equity holders of the Company . . . .            32        27.3             (15.5)     11.8       39.1         (56.2)      (17.1)
Minority interest . . . . . . . . . . . . . .    35         0.3                —        0.3         —             —           —
Profit/(loss) for the year . . . . . . . .                 27.6             (15.5)     12.1       39.1         (56.2)      (17.1)

Earnings/(loss) per share (euro
  cents)
Basic and diluted . . . . . . . . . . . . . .     9                                     1.5                                 (2.4)


(1) Underlying excludes exceptional items, certain re-measurement items and economic hedges—see Significant Accounting
    Policies.




         The accompanying Notes form an integral part of this Consolidated Financial Information.


                                                                      F-3
                                Consolidated Statement of Recognised Income and Expense
                                        for the years ended 31 December 2005 and 2004

                                                                                2005                                   2004
                                                                                   Amounts                                Amounts
                                                                                excluded from                          excluded from
                                                        Notes Underlying(1)       underlying  Total    Underlying(1)     underlying  Total
                                                                  Em                 Em        Em          Em               Em        Em
Actuarial losses on retirement benefit
  obligations . . . . . . . . . . . . . . . . .   . . 23,32          —              (38.1)    (38.1)         —              (6.8)     (6.8)
Cash flow hedges:
—net fair value gains . . . . . . . . . . . .     . .     33         —                6.1       6.1          —               —          —
—transferred to income statement . . .            . .     33         —                4.9       4.9          —               —          —
Exchange differences on translation of
  foreign operations . . . . . . . . . . . .      . .     33         —                0.4       0.4          —              (5.1)     (5.1)
Tax on net items taken to equity . . . .          . .      7         —                2.9       2.9          —               1.0       1.0
Net expense recognised directly in
  equity . . . . . . . . . . . . . . . . . . . . . .      34         —              (23.8)    (23.8)         —             (10.9)    (10.9)
Profit/(loss) for the year . . . . . . . . . . .                   27.6             (15.5)     12.1        39.1            (56.2)    (17.1)
Total recognised income and expense for
  the year                                                         27.6             (39.3)    (11.7)       39.1            (67.1)    (28.0)
Impact of adoption of IAS 32 and IAS 39 .                 47         —              (11.3)    (11.3)         —                —         —
Changes in equity—other than those
  arising from transactions with equity
  holders in their capacity as equity
  holders . . . . . . . . . . . . . . . . . . . . . .              27.6             (50.6)    (23.0)       39.1            (67.1)    (28.0)
Total recognised income and expense for
  the year, is attributable to:
Equity holders of the Company . . . . . . .                        27.3             (39.3)    (12.0)       39.1            (67.1)    (28.0)
Minority interest . . . . . . . . . . . . . . . . .                 0.3                —        0.3          —                —         —
Total recognised income and expense for
  the year . . . . . . . . . . . . . . . . . . . . .               27.6             (39.3)    (11.7)       39.1            (67.1)    (28.0)


(1) Underlying excludes exceptional items, certain re-measurement items, and economic hedges—see Significant Accounting
    Policies.




         The accompanying Notes form an integral part of this Consolidated Financial Information.


                                                                          F-4
                                                                                           Consolidated Balance Sheets
                                                                                   at 31 December 2005 and 2004

                                                                                                                                                                                                   Notes   2005       2004
                                                                                                                                                                                                            Em         Em
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                           . . . . . . . . . . . . . . . . . . . . .                                            10        7.8        7.8
Other intangible assets . . . . . . . . . . . . . . . . . . . .                                                . . . . . . . . . . . . . . . . . . . . .                                            11        5.0        2.6
Property, plant and equipment:
—vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    12      464.0      423.6
—other property, plant and equipment . . . . . . . . .                                                         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    13       85.4       89.2
Investments accounted for using the equity method .                                                            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    14       10.6        9.0
Other financial assets—available for sale investments                                                          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    15        0.6        0.6
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . .                                              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    16       60.7       46.4
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                  634.1      579.2
Non-current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                              17       11.1         5.0
Inventories . . . . . . . . . . . . . . .                  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      18         7.0        6.2
Trade and other receivables . . . .                        . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      19     1,331.6    1,321.5
Current tax assets . . . . . . . . . .                     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                 3.8       11.1
Other financial assets:
—held for trading . . . . . . . . . .                      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      15        15.0       75.0
—derivative financial instruments                          . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      26         3.1         —
Cash and short-term deposits . . .                         . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      20        98.8       39.3
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                               1,459.3    1,453.1
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                               2,104.5    2,037.3
Trade and other payables . . . . .                         . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      21      657.4      773.5
Current tax liabilities . . . . . . . . .                  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                               30.3       29.3
Obligations under finance leases .                         . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      24      276.2      270.6
Other financial liabilities:
—borrowings . . . . . . . . . . . . .                      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      25      114.1      144.7
—deferred consideration . . . . . .                        . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      25        0.3         —
—derivative financial instruments                          . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      26        6.6         —
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                              1,084.9    1,218.1
Deferred tax liabilities . . . . . . . .                   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    16       52.4        49.4
Provisions . . . . . . . . . . . . . . . .                 .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    22       52.3        43.8
Retirement benefit obligations . .                         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    23      129.3        86.6
Obligations under finance leases .                         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    24        1.9          —
Other financial liabilities:
—borrowings . . . . . . . . . . . . .                      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      25      611.6      664.7
—deferred consideration . . . . . .                        . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      25       32.7       32.1
—derivative financial instruments                          . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                      26       52.8         —
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                   933.0      876.6
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                              2,017.9    2,094.7
Net assets/(liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                 86.6       (57.4)
Equity
Called-up share capital        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    29        13.1        8.1
Share premium . . . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    30       381.5      876.0
Own shares held . . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    30        (1.1)      (1.4)
Retained earnings . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    32      (299.0)    (935.5)
Other reserves . . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    33        (8.7)      (5.2)
Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                            34       85.8       (58.0)
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                         35        0.8         0.6
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                 86.6       (57.4)




         The accompanying Notes form an integral part of this Consolidated Financial Information.


                                                                                                                                   F-5
                                                     Consolidated Cash Flow Statements
                                         for the years ended 31 December 2005 and 2004

                                                                                                                                                                             Notes    2005        2004
                                                                                                                                                                                       Em          Em
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                     . .                 81.4        39.8
Reverse depreciation on property, plant and equipment . . . . . . . . . . . . . . . . . . . . . .                                                                    . .         3      152.3       141.6
Reverse amortization of other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                              . .         3        1.3         3.2
Reverse adjustments arising on differences between sales proceeds and depreciated
  amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                    .   .               (10.7)       (1.9)
Reverse operating exceptional other intangible impairment . . . . . . . . . . . . . . . . . . . .                                                                    .   .       5          —         33.2
Reverse operating exceptional goodwill impairment . . . . . . . . . . . . . . . . . . . . . . . . .                                                                  .   .       5          —         38.1
Reverse operating goodwill impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                              .   .       3         0.5          —
Reverse non-cash operating lease charge on manufacturer re-purchase contracts . . . . .                                                                              .   .       3       190.4       180.2
Payments with respect to manufacturer re-purchase contracts . . . . . . . . . . . . . . . . . .                                                                      .   .            (1,469.5)   (1,308.7)
Receipts with respect to manufacturer re-purchase contracts . . . . . . . . . . . . . . . . . .                                                                      .   .             1,190.6     1,244.5
Reverse share-based payment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                              .   .       4         0.4         0.1
Increase in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                      .   .                (0.8)       (0.8)
Decrease in debtors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                      .   .                45.2        36.7
Decrease in creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                      .   .               (14.2)      (10.6)
Increase/(decrease) in provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                          .   .                 8.2       (10.0)
Increase in retirement benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                             .   .                 3.2         9.1
Reverse net re-measurement losses on non-debt related derivative financial instruments                                                                               .   .       3         4.1          —
Cash flow on derivative financial instruments—non-debt . . . . . . . . . . . . . . . . . . . . .                                                                     .   .                (2.9)         —
Cash flow on termination of operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                              .   .                (1.7)       (4.4)
Net cash generated from operating activities before taxation . . . . . . . . . . . . . . . . . . . .                                                                                    177.8       390.1
Tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                   (3.1)      (30.2)
Net cash generated from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                174.7       359.9
Investing activities
Purchase of other intangible assets . . . . . . . . . . . . . . . . . .                      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .               (3.6)      (24.1)
Purchase of vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . .                   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .             (495.6)     (342.5)
Proceeds on disposal of vehicles . . . . . . . . . . . . . . . . . . . .                     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .              282.5       208.0
Purchase of other property, plant and equipment . . . . . . . .                              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .              (19.1)      (22.8)
Proceeds on disposal of other property, plant and equipment                                  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .                5.1          —
Proceeds on disposal of non-current assets held for sale . . . .                             .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .               87.3        71.2
Proceeds on disposal of financial assets held for trading . . . .                            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   37a, b      58.4        25.2
Purchase of other subsidiaries and joint venture . . . . . . . . .                           .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      36       (1.3)       (2.3)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                         (86.3)      (87.3)
Financing activities
Net proceeds from the issue of share capital . . . . .               .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      29      166.2          —
Finance revenue received . . . . . . . . . . . . . . . . . .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .                1.9         3.7
Finance cost paid . . . . . . . . . . . . . . . . . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .              (51.4)      (55.0)
Finance cost element of finance lease payments . . .                 .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .              (10.5)       (9.2)
Net capital element of finance lease payments . . . .                .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   37a, b     (92.7)      (48.6)
Dividends paid—equity . . . . . . . . . . . . . . . . . . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .                 —        (33.7)
Cash flow on derivative financial instruments—debt .                 .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   37a, b      (8.0)         —
Repayment of bank and other loans . . . . . . . . . . .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   37a, b     (34.8)     (147.6)
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                           (29.3)     (290.4)
Effects of exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                               37a, b        1.8         0.3
Net increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . .                                                                       37a, b      60.9       (17.5)
Cash and cash equivalents at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                 37a, b      25.5        43.0
Cash and cash equivalents at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                 86.4        25.5




         The accompanying Notes form an integral part of this Consolidated Financial Information.


                                                                                             F-6
                                    Significant Accounting Policies
    Applicable to the Consolidated Financial Information for the year ended 31 December 2005
Basis of preparation
    From 1 January 2005, the Group is required to prepare Consolidated Financial Statements in
accordance with International Financial Reporting Standards (‘‘IFRSs’’) as adopted by the European
Union. The Group previously prepared Consolidated Financial Statements in accordance with UK
GAAP until 31 December 2004.
     Details with respect to the Group’s transition from UK GAAP to IFRS, including accounting
policies used, reconciliations and descriptions of the effect of the transition on the Group’s net
income, equity and cash flows are provided in Notes 45 and 46.
     The basis of accounting and format of presentation is subject to change following any further
interpretative guidance that may be issued by the International Accounting Standards Board (‘‘IASB’’)
and the International Financial Reporting Interpretations Committee (‘‘IFRIC’’) from time to time. The
European Commission has not yet endorsed all of the recent amendments to the standards or recent
interpretations.
     Additionally, IFRS is being applied in the United Kingdom and in a large number of countries
simultaneously for the first time. Furthermore, due to a number of new and revised standards
included within the body of standards that comprise IFRS, there is not yet a significant body of
established practice on which to draw in forming options regarding interpretation and application.
Accordingly, practice is continuing to evolve.
     The Consolidated Financial Information has been prepared on the historical cost basis, except for
the revaluation of certain financial instruments, and have been prepared in accordance with the
accounting policies set out below.
     These policies have been consistently applied to all the periods presented except for those
relating to the classification and measurement of financial instruments. The Group has made use of
the exemption under IFRS 1, First Time Adoption of International Financial Reporting Standards, to
only apply IAS 32, Financial Instruments: Disclosure and Presentation, and IAS 39, Financial
Instruments: Recognition and Measurement, with effect from 1 January 2005. The policies applied to
the Consolidated Financial Information for 2004 and 2005 are disclosed separately below.
    The impact of the implementation of IAS 32 and IAS 39 on equity as at 1 January 2005 is
provided in Note 47.
    The Group has also elected to early adopt IAS 19 (Amendment), Employee Benefits. This
amendment introduces the option for actuarial gains and losses on retirement benefit obligations to
be recognised in full in the statement of recognised income and expense in the period in which they
occur. The Group has applied this option in the Consolidated Financial Information for both the year
ended 31 December 2005 and the comparative period.

Standards, interpretations and amendments to published standards that are not yet effective
     Certain new standards, amendments and interpretations to existing standards have been
published that are mandatory for the Group’s accounting periods beginning on or after
1 January 2006 or later periods but which the Group has not early adopted, as follows:

IAS 39 (Amendment), Cash Flow Hedge Accounting of Forecast Intra-group Transactions (effective
  from 1 January 2006)
    The amendment allows the foreign currency risk of a highly probable forecast intra-group
transaction to qualify as a hedged item in the Consolidated Financial Statements, provided that:
    a)   the transaction is denominated in a currency other than the functional currency of the
         entity entering into that transaction; and
    b)   the foreign currency risk will affect consolidated profit or loss. This amendment is not
         relevant to the Group’s operations, as the Group does not have any intra-group transactions
         that would qualify as a hedged item in the Consolidated Financial Statements as of
         31 December 2005 and 31 December 2004.


                                                   F-7
IAS 39 (Amendment), The Fair Value Option (effective from 1 January 2006)
     This amendment changes the definition of financial instruments classified at fair value through
profit or loss and restricts the ability to designate financial instruments as part of this category. The
Group believes that this amendment should not have a significant impact on the classification of the
Group’s financial instruments.

IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts (effective from 1 January 2006)
    This amendment requires issued financial guarantees, other than those previously asserted by
the entity to be insurance contracts, to be initially recognised at their fair value and subsequently
measured at the higher of:
    a) the unamortised balance of the related fees received and deferred; and
    b) the expenditure required to settle the commitment at the balance sheet date. Management
         considered this amendment to IAS 39 and concluded that it is not relevant to the Group.

IFRS 7, Financial Instruments: Disclosures, and a complementary amendment to IAS 1, Presentation of
  Financial Statements—Capital Disclosures (effective from 1 January 2007)
     IFRS 7 introduces new disclosures to improve the information about financial instruments. It
requires the disclosure of qualitative and quantitative information about exposure to risks arising
from financial instruments, including specified minimum disclosures about credit risk, liquidity risk
and market risk, including sensitivity analysis to market risk. It replaces IAS 30, Disclosures in the
Financial Statements of Banks and Similar Financial Institutions, and disclosure requirements in
    `
IAS 32, Financial Instruments: Disclosure and Presentation. It is applicable to all entities that report
under IFRS. The amendment to IAS 1 introduces disclosures about the level of an entity’s capital and
how it manages capital. The Group assessed the impact of IFRS 7 and the amendment to IAS 1 and
concluded that the main additional disclosures will be the sensitivity analysis to market risk and the
capital disclosures required by the amendment of IAS 1. The Group will apply IFRS 7 and the
amendment to IAS 1 from annual periods beginning 1 January 2007.

IFRIC 4, Determining whether an Arrangement contains a Lease (effective from 1 January 2006)
    IFRIC 4 requires the determination of whether an arrangement is or contains a lease to be based
on the substance of the arrangement. It requires an assessment of whether:
    a)   fulfilment of the arrangement is dependent on the use of a specific asset or assets (the
         asset); and
    b)   the arrangement conveys a right to use the asset. Management is currently assessing the
         impact of IFRIC 4 on the Group’s operations, but does not expect this to affect how the
         Group currently classifies its leasing arrangements.

IFRIC 8, Scope of IFRS 2 (effective from 1 May 2006)
    IFRIC 8 is not relevant to the Group’s operations as the only sharebased payments issued by the
Group are in relation to employee services which are already accounted for in accordance with
IFRS 2.

Other
     The following standards and interpretations have also been issued, but all are deemed not
relevant to the Group’s operations:
    a)   IFRS 1 (Amendment), First-time Adoption of International Financial Reporting Standards
         (effective from 1 January 2006).
    b)   IFRS 6, Exploration for and Evaluation of Mineral Resources (effective from 1 January 2006).
    c)   IFRIC 5, Rights to Interests arising from Decommissioning, Restoration and Environmental
         Rehabilitation Funds (effective from 1 January 2006).
    d)   IFRIC 6, Liabilities arising from Participating in a Specific Market—Waste Electrical and
         Electronic Equipment (effective from 1 December 2005).
    e)   IFRIC 7, Financial Reporting in Hyperinflationary Countries (effective from 1 March 2006).

                                                   F-8
Functional currency
    As a significant proportion of the Group’s revenues, costs, assets and funding arise in euro, the
Consolidated Financial Information of the Group is presented in euro.

Basis of consolidation
   The Consolidated Financial Information comprises a consolidation of the accounts of the
Company and its subsidiary undertakings.
     The accounting reference dates of certain of the Group’s subsidiary undertakings and its
associated undertaking are governed by local requirements and are not coterminous with the Group’s
31 December year end. For those companies with non-coterminous year ends, management accounts
for the relevant period to 31 December have been consolidated. The main subsidiary undertakings
with such non-coterminous year ends are Avis Location de Voitures sas and Avis Autonoleggio SpA.
In the opinion of the Directors, the expense of providing additional coterminous statutory accounts,
together with consequential delay in producing the Consolidated Financial Information, would
outweigh any benefit to the shareholders.

Subsidiary undertakings
     Subsidiary undertakings are those entities in which the Group has, directly or indirectly, an
interest of more than half of the voting rights or otherwise has the power to exercise control over
the operations, are consolidated. Subsidiaries are consolidated from the date that control is
transferred to the Group and are no longer consolidated from the date that control ceases. All inter-
company transactions, balances and unrealised gains on transactions between Group companies are
eliminated upon consolidation.

Joint ventures
     Interests in jointly controlled entities including joint ventures are recognised using the equity
method. Unrealised gains and losses on transactions between the Group and its joint ventures are
eliminated to the extent of the Group’s interest in the joint ventures. The Group’s investment in joint
ventures includes goodwill on acquisition. The Group’s share of profit from joint ventures represents
the Group’s share of the joint venture’s profit after tax. If the Group’s share of losses in a joint
venture equals or exceeds its investment in the joint venture, the Group does not recognise further
losses unless it has incurred obligations or made payments on behalf of the joint venture.

Associate undertaking
    Investments in the associate undertaking are accounted for using the equity method. This is an
undertaking over which the Group has significant influence but not control, generally accompanied
by a share of between 20% and 50% of the voting rights. The Group’s share of profit from the
associate represents the Group’s share of the associate’s profit after tax.

Underlying measures
      In addition to the reported profit and earnings per share, the Group also discloses underlying
performance measures, including underlying profit and underlying earnings per share. The Group
believes that these underlying performance measures provide additional useful information on
underlying trends to shareholders. The term ‘‘underlying’’ is not defined under IFRS, and may
therefore not be comparable with similarly titled profit measurements reported by other companies.
It is not intended to be a substitute for, or superior to, IFRS measures of profit.
    Underlying measures are calculated based on reported profit before exceptional items, certain
re-measurement items and adjustments to reflect the realised gains and losses on foreign exchange
forward contracts and accrued interest cash flows on any financial instruments (economic hedge
adjustments).

Exceptional items
     Exceptional items are material non-recurring items that derive from events or transactions that
fall within the ordinary activities of the Group, and which individually or, if of a similar type, in
aggregate, are separately disclosed by virtue of their size or incidence.


                                                  F-9
Certain re-measurement items
    Items that represent the certain re-measurement of underlying assets or liabilities (for example
due to interest rate or exchange rate changes) are presented as re-measurement items. Events which
may give rise to the classification of these certain re-measurement items include the following:
    a)    Recognised fair value gains and losses on derivatives in accordance with the financial
          instruments and hedge accounting policy below.
    b)    Exchange gains and losses arising upon the translation of foreign currency borrowings at the
          closing rate.
    c)    Actuarial gains and losses arising on defined benefit retirement benefit schemes.

Economic hedge adjustments
     Under IAS 39, the Group applies hedge accounting to hedge relationships (primarily forward
exchange contracts, cross currency interest rate swaps, interest rate swaps and forward exchange
contracts) where it is permissible and practicable to do so. Due to the nature of its economic
hedging relationships, in a number of circumstances the Group is unable to apply hedge accounting
to these derivatives. The Group continues, however, to enter into these arrangements as they provide
certainty of the exchange rates applying to the foreign currency transactions entered into by the
Group and the interest rate on the Group’s debt. These arrangements result in fixed and determined
cash flows. The Group believes that these arrangements remain effective economic and commercial
hedges, and therefore adjustment is made to reported profit measures such that underlying profit
reflects full application of hedge accounting.

Segment reporting
     The Group’s primary reporting format is business segments and its secondary format is
geographical segments. A business segment is a component of the Group that is engaged in
providing a group of related products and services, and is subject to risks and returns that are
different from those other business segments. A geographical segment is a component of the Group
that operates within a particular economic environment and this is subject to risks and returns that
are different from those of components operating in other economic environments.

Revenue
    Revenue includes vehicle rental income, fees from the provision of services incidental to vehicle
rental, and fees receivable from licensees, net of discounts and excluding inter-company sales, value
added and sales taxes.
      When the outcome of a transaction involving the rendering of services can be estimated reliably,
revenue associated with the transaction is recognised by reference to the stage of completion of the
transaction at the balance sheet date. The outcome of a transaction can be estimated reliably when
all the following conditions are satisfied:
    a)    the amount of revenue can be measured reliably;
    b)    it is probable that the economic benefits associated with the transaction will flow to the
          Group;
    c)    the stage of completion of the transaction at the balance sheet date can be measured
          reliably; and
    d)    the cost incurred for the transaction and the costs to complete the transaction can be
          measured reliably.

Cost of sales
     Cost of sales includes selling, revenue related costs (eg commissions and credit card fees) and
vehicle costs. Contributions to vehicle costs from suppliers are credited over the holding period of
the related vehicles. Any such contributions dependent on performance criteria are recognised in the
income statement only to the extent that it is considered probable that the criteria will be met.




                                                  F-10
Finance costs
    Finance costs are recognised as an expense in the period in which they are incurred.

Share-based payments
     Share-based payments are exclusively made in connection with employee stock option plans
(‘‘ESOPs’’).
     IFRS 2, Share-Based Payments, is not applied to shares, share options or other equity
instruments that were granted before or on 7 November 2002 and which had not vested at 1 January
2005. Equity-settled ESOPs granted after that date are accounted for in accordance with IFRS 2, such
that the fair value of the employee service received in exchange for the grant of the option is
recognised in the income statement over the related performance period. The total amount to be
expensed over the vesting period is determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions (for example profitability growth targets).
Non-market vesting conditions are included in assumptions about the number of options that are
expected to become exercisable. At each balance sheet date, the Group revises its estimates of the
number of options that are expected to become exercisable. It recognises the impact of the revision
of original estimates in the income statement, with a corresponding adjustment to equity.
     The proceeds received net of any directly attributable transaction costs are credited to share
capital and share premium when the options are exercised.

Goodwill
      Business combinations are accounted for by applying the purchase method. The excess of the
cost of the business combination over the acquirer’s interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities, recognised in accordance with IFRS 3, Business
Combinations, constitutes goodwill, and is recognised as an asset. Where this excess is negative, it is
recognised immediately in the income statement. Goodwill on acquisition of subsidiaries is included
in ‘‘Goodwill’’. Goodwill on acquisition of associates and joint ventures is included in ‘‘Investments
accounted for using equity method’’.
     After initial recognition, goodwill is measured at cost less any accumulated impairment losses,
until disposal or termination of the previously acquired business (including planned disposal or
termination where there are indications that the value of the goodwill has been permanently
impaired), when the profit or loss on disposal or termination will be calculated after charging the
book amount, at current exchange rates, of any such goodwill through the income statement.
Goodwill is tested for impairment at least annually, and whenever there are indications that goodwill
may have become impaired. Goodwill is allocated to cash-generating units for the purpose of
impairment testing. The allocation is made to those cash-generating units or Group cash-generating
units that are expected to benefit from the business combination in which the goodwill arose.
     Goodwill arising on acquisitions before 1 January 2004, the date of transition to International
Financial Reporting Standards, has been retained at the previous UK GAAP amounts, subject to being
tested for impairment at that date. The Group’s policy up to and including 28 February 1998 was to
eliminate goodwill arising upon acquisitions to reserves. Under IFRS 1 and IFRS 3, such goodwill will
remain eliminated against reserves and is not included in determining any subsequent profit or loss
on disposal.

Other intangible assets
     Other intangible assets are valued at cost less any accumulated amortisation and any
accumulated impairment losses. Costs that are directly associated with identifiable and unique
software products controlled by the Group and which have probable economic benefits exceeding the
cost beyond one year, are recognised as intangible assets. Computer software programmes are
amortised on a straight-line basis over periods varying between two and five years.

Vehicles
     Vehicles are initially measured at cost. This cost comprises its purchase price (including import
duties and non-refundable purchase taxes, after deducting trade discounts and rebates), plus any
costs directly attributable to bringing the vehicle to the location and condition necessary for it to be


                                                  F-11
capable of operating. After initial recognition, the vehicle is carried at its cost less any accumulated
depreciation and any accumulated impairment losses. Straight-line depreciation is based on initial
cost, after consideration of their expected holding periods and estimates of residual values. Where
the carrying amount of a vehicle is greater than its estimated recoverable amount, it is written-down
immediately to its recoverable amount. Recoverable amount is the higher of fair value less costs to
sell and value in use.

Other property, plant and equipment
     Other property, plant and equipment is initially measured at cost. This cost comprises its
purchase price (including import duties and non-refundable purchase taxes, after deducting trade
discounts and rebates), plus any costs directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating. If applicable, initial estimates of the cost of
dismantling and removing the item and restoring the site are also included in the cost of the item.
     After initial recognition, the fixed assets are carried at cost less any accumulated depreciation
and any accumulated impairment losses. The depreciable amount of the item is allocated according
to the straight-line method over its useful economic life. The main useful lives are as follows:

    a) Buildings: . . . . . . . . . . . . . . . . . . . . . . . . .   40 to 50 years;
    b) Plant and equipment: . . . . . . . . . . . . . . . .           3 to 15 years;
    c) IT equipment: . . . . . . . . . . . . . . . . . . . . . .      2 to 7 years;
    d) Leased assets: . . . . . . . . . . . . . . . . . . . . . .     depending on the length of the lease.
     Where the carrying amount of a fixed asset is greater than its estimated recoverable amount, it
is written-down immediately to its recoverable amount. Recoverable amount is the higher of fair
value less costs to sell and value in use and is determined for an individual asset.

Leases
     Leases in which a significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases.

Operating leases for which the Group is the lessor
    Rental income is recognised on a straight-line basis over the lease term. Unless the vehicles
themselves are held under operating leases for which the Group is the lessee, vehicles leased out
under operating leases are included in vehicles in the balance sheet. They are depreciated over their
expected useful lives.

Operating leases for which the Group is the lessee
     Lease payments under operating leases are recognised as expenses in the income statement on a
straight-line basis over the lease term.

Vehicles subject to manufacturer re-purchase agreements
     Vehicles subject to manufacturer re-purchase agreements are not recognised as non-current
assets since these arrangements are accounted for as operating leases (lessee accounting). The
difference between the initial payment and the final re-purchase price (the obligation of the
manufacturer) is considered as a deferred charge and is classified as prepaid vehicle operating lease
charges within trade and other receivables. At inception of the arrangement, a separate re-purchase
agreement receivable is also recognised within trade and other receivables for the final re-purchase
price.

Finance leases for which the Group is the lessee
     Leases of vehicles (including vehicles subject to manufacturer re-purchase arrangements), other
property, plant and equipment, where the Group has substantially all the risks and rewards of
ownership, are classified as finance leases. Finance leases are capitalised at the inception of the lease
at the lower of the fair value of the leased property or the present value of the minimum lease
payments. Each lease payment is allocated between the liability and the finance charge so as to


                                                                 F-12
achieve a constant rate of return on the finance balance outstanding. The corresponding rental
obligations, net of finance charges, are included in interest-bearing liabilities. The interest element of
the finance cost is charged to the income statement over the lease period. The leased assets are
depreciated over their expected useful lives on a basis consistent with similar owned vehicles or other
property, plant and equipment. If there is no reasonable certainty that ownership will be acquired by
the end of the lease term, the asset is depreciated over the shorter of the lease term and its useful
life.

Non-current assets held for sale
     Non-current assets are classified as held for sale if their carrying amount will be recovered
through a sale transaction rather than through continuing use. This condition is met when the sale is
highly probable, the asset is available for immediate sale in its present condition, management are
committed to the asset disposal, and disposal is expected to be completed within 12 months. Non-
current assets classified as held for sale cease to be depreciated and are measured at the lower of
carrying amount and fair value less selling costs.

Inventories
      Inventories are measured at the lower of cost and net realisable value. The cost of inventories
comprises all costs of purchase, costs of conversion and other costs incurred in bringing the
inventories to their location and condition at the balance sheet date. Items are valued using the first
in, first out method. When inventories are used, the carrying amount of those inventories are
recognised as an expense in the period in which the related revenue is recognised. Provision for
write-downs to net realisable value and losses of inventories are recognised as an expense in the
period in which the write-down or loss occurs. Reversals are recognised as a reduction in the amount
of inventories recognised as an expense in the period in which the reversal occurs.

Trade and other receivables
     Trade and other receivables are measured at amortised cost using the effective interest method
as reduced by appropriate allowances for estimated irrecoverable amounts.

Cash and cash equivalents
    Cash comprises cash in hand, demand deposits and bank overdrafts. Cash equivalents include
short-term, highly liquid investments that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.

Trade and other payables
    Trade and other payables are measured at amortised cost using the effective interest method.

Provisions
     A provision is recognised when there is a present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. If these conditions are not met, no provision is recognised.
      Uninsured losses are recognised when the underlying event occurs. Accruals are made for
uninsured losses notified and provisions are made for claims incurred but not reported at each year
end. Recoveries of amounts claimed from insurers to settle expenses incurred are recognised when it
is virtually certain that reimbursement will be received.
     Provisions are measured at the value of the expenditures expected to be required to settle the
obligation.

Retirement benefit obligations
    The Group operates various defined benefit and defined contribution retirement benefit plans.
Most of these plans are funded schemes, that is they are financed through a pension fund or an
external insurance policy. The minimum funding level of these schemes is defined by national rules.


                                                  F-13
       Payments to defined contribution retirement benefit plans are charged as an expense as they fall
due.
     The Group’s commitments under defined benefit retirement benefit plans, and the related costs,
are valued using the ‘‘projected unit credit method’’, with actuarial valuations being carried out at
each balance sheet date. Actuarial gains and losses are recognised in full in the period in which they
occur. They are recognised in the statement of recognised income and expense. Past service cost is
recognised immediately to the extent that the benefits have already vested, and otherwise is
amortised on a straight-line basis over the average period until the benefits become vested.
     The retirement benefit obligation recognised in the balance sheet represents the present value of
the defined benefit obligation as reduced by the fair value of scheme assets. Any asset resulting from
this calculation is limited to past service cost, plus the present value of any refunds and reductions in
future contributions to the plan. The current service costs and gains and losses on settlements and
curtailments are included in operating expenses in the income statement.

Taxation
     The current tax payable is based on taxable profit for the year. Taxable profit differs from net
profit as reported in the income statement because it excludes items of income or expense that are
taxable or deductible in other years, and it further excludes items that are never taxable or
deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted
or substantially enacted at the balance sheet date.
     Current tax for current and prior periods, to the extent unpaid, are recognised as a liability. If
the amount already paid in respect of current and prior periods exceeds the amount due for those
periods, the excess is recognised as a current asset. The benefit relating to a tax loss that can be
carried back to recover current tax of a previous period is recognised as a current asset.
      Deferred tax is provided in full using the balance sheet liability method, on temporary
differences between the carrying amount of assets and liabilities for financial reporting purposes and
the corresponding tax bases for taxation purposes. Deferred taxes are not calculated on the following
temporary differences: (i) the initial recognition of goodwill and (ii) the initial recognition of assets
and liabilities that affect neither accounting nor taxable profit. The amount of deferred tax provided
is based on the expected basis of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantially enacted at the balance sheet date. A deferred tax
asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the unused tax losses and credits can be utilised. Deferred tax assets previously
recognised are reduced to the extent that it is no longer probable that the related tax benefit will be
realised.
    Deferred tax is charged or credited to the income statement except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Foreign currency translation
      The Group consolidation is prepared in sterling. Income statements of foreign operations are
translated into sterling at the weighted average exchange rates for the period and balance sheets are
translated into sterling at the exchange rate ruling on the balance sheet date. Goodwill and fair value
adjustments arising on the acquisition of a foreign entity are treated as local currency assets and
liabilities of the foreign entity and are translated at the closing rate.
     Foreign currency transactions are accounted for at the exchange rate prevailing at the date of
the transactions. Gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies are recognised in the
income statement, other than gains and losses arising on the translation of intercompany quasi-
equity debt which is recognised in the statement of recognised income and expense. Exchange
movements arising from the re-translation at closing rates of the opening balance sheets and results
of subsidiaries, joint ventures and associates are taken to the translation reserve. Other exchange
movements are taken to the income statement.
    Where the Group hedges net investments in foreign operations, the gains and losses relating to
the effective portion of the hedging instrument is recognised in the translation reserve in equity. The
gain or loss relating to any ineffective portion is recognised in the income statement. Gains and


                                                  F-14
losses accumulated in equity are included in the income statement when the foreign operation is
disposed of.
    The Group’s results are presented in euro. The consolidated assets and liabilities at each balance
sheet date are translated into euro at the closing rate at that balance sheet date. The consolidated
income and expenses are translated into euro at the average monthly exchange rates. All resulting
exchange differences are taken to the translation reserve.

Equity
     Where the Company (or its subsidiaries) re-acquires its own equity instruments, those
instruments are deducted from equity as treasury shares. Where such equity instruments are
subsequently sold, any consideration received is recognised in equity.

Dividend distribution
    Dividend distribution to the Company’s shareholders is recognised as a liability in the
Consolidated Financial Information in the period in which the dividends are approved by the
Company’s shareholders.

Financial instruments and hedge accounting
    From 1 January 2004 to 31 December 2004 financial instruments used as hedges in the financing
and financial risk management of the Group were accounted for as follows:
    a)   Forward foreign exchange contracts which hedged currency assets and liabilities were
         recognised in the financial statements together with the assets and liabilities they hedged.
         The contract rate was used for translation. Foreign exchange contracts which hedged future
         sales and purchases were not recognised in the Consolidated Financial Information until the
         transaction they hedged was itself recognised. If a foreign exchange contract ceased to be a
         hedge, then any gain or loss was taken to the income statement.
    b)   Options on cross currency or interest rate swaps were used either to hedge borrowings or
         as a means of entering into a swap (as a hedge) at a pre-determined target rate: premiums
         paid or received for such options were accounted for over the life of the relevant
         transaction, or, if immaterial and no transaction took place, were recognised in the income
         statement upon exercise or at maturity of the option contract.
    c)   Cross currency swaps were included in the Consolidated Financial Information at the rate of
         exchange ruling on the balance sheet date. Exchange differences arising were dealt with in
         accordance with the accounting policy on foreign currencies. Interest paid or received on
         cross currency swaps was recorded on an accruals basis. Apart from inclusion at the ruling
         rate of exchange, cross currency swaps were not revalued to fair value at the balance sheet
         date.
    d)   Interest arising upon interest rate swaps, caps and collars was taken to the income
         statement on an accruals basis. None of these instruments were revalued to fair value at the
         balance sheet date. Premiums paid on caps and collars were recognised on an accruals basis.
     From 1 January 2005, in accordance with IAS 39, financial instruments are recorded initially at
fair value. Subsequent measurement depends upon the designation of the instrument, as follows:
    a)   Investments (other than interests in joint ventures, associates and fixed deposits) and
         short-term investments (other than fixed deposits) are normally designated as available for
         sale.
    b)   Fixed deposits, comprising principally funds held with banks and other financial institutions,
         and short-term borrowings and overdrafts are classified as loans and receivables and are
         held at amortised cost.
    c)   Derivatives, comprising interest rate swaps, foreign exchange contracts, cross currency
         interest rate swaps, options and embedded derivatives, are classified as derivative financial
         instruments.
    (d) Long-term loans are generally held at amortised cost.



                                                 F-15
     The fair values of derivative financial instruments are determined on the basis of market forward
interest, exchange rates, and option valuation techniques at the balance sheet date. Changes in fair
value of derivative financial instruments that do not qualify for hedge accounting are recognised in
the income statement as they arise.

Cash flow hedges
     Changes in the fair value of derivative financial instruments that are designated and effective as
hedges of future cash flows are recognised directly in equity and any ineffective portion is recognised
immediately in the income statement. If the cash flow hedge is a firm commitment or the forecasted
transaction results in the recognition of an asset or a liability, then, at the time the asset or liability is
recognised, the associated gains or losses on the derivative that had previously been recognised in
equity are included in the initial measurement of the asset or liability. For hedges that do not result
in the recognition of an asset or a liability, amounts deferred in equity are recognised in the income
statement in the same period in which the hedged item affects net profit or loss.
    When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is
recognised when the forecast transaction is ultimately recognised in the income statement. When a
forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in
equity is immediately transferred to the income statement.

Fair value hedges
    For an effective hedge of an exposure to changes in the fair value of a hedged item, the hedged
item is adjusted for changes in fair value attributable to the risk being hedged with a corresponding
entry in the income statement. Gains or losses from re-measuring the derivative, or for
non-derivatives, the foreign currency component of its carrying amount, are also recognised in the
income statement.
     If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying
amount of a hedged item for which the effective interest method is used, is amortised to the income
statement over the period to maturity.

Embedded derivatives
     Derivatives embedded in other financial instruments or other host contracts are treated as
separate derivatives when their risks and characteristics are not closely related to those of the host
contracts, and the host contracts are not carried at fair value with unrealised gains or losses reported
in the income statement.
    The impact of this change in accounting policy is detailed in Note 47.

Critical accounting policies and judgements
      The preparation of the Consolidated Financial Information requires management to make
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and
liabilities, and disclosure of contingencies at the date of the Consolidated Financial Information. If in
the future such estimates and assumptions, which are based on management’s best judgement at the
date of the Consolidated Financial Information, deviate from the actual circumstances, the original
estimates and assumptions will be modified, as appropriate, in the period in which the circumstances
change. The following policies are considered to be of greater complexity and/or particularly subject
to the exercise of judgement:

Goodwill
     As required by IAS 36, Impairment of Assets, the Group regularly monitors the carrying value of
its assets, including goodwill. Impairment reviews compare the carrying values to the present value of
future cash flows that are derived from the relevant asset or cash-generating unit. These reviews
therefore depend on management estimates and judgements, in particular in relation to the
forecasting of future cash flows and the discount rate applied to the cash flows (see Note 10).




                                                    F-16
Exceptional items
     Exceptional items are those that, by virtue of the size or incidence, should be separately
disclosed in the income statement. The determination of which items should be separately disclosed
as operating exceptional items requires judgement.

Fleet
     Given the nature of the Group’s business, the main asset in the balance sheet is the vehicle fleet.
The majority of fleet is held under manufacturer re-purchase arrangements, which guarantee a
disposal value at the end of the holding period. However, a proportion of fleet has no such
contractual protection and therefore the value at the end of the rental life will depend on the market
for those vehicles at the time of disposal. Judgement is therefore required in the estimation of
disposal value.

Post-employment benefits
     Application of IAS 19, Employee Benefits, requires the exercise of judgement in relation to
setting the assumptions used by the actuaries in assessing the financial position of each scheme. The
Group determines the assumptions to be adopted in discussion with its actuaries, and believes these
assumptions to be in line with UK generally accepted practice, but the application of different
assumptions could have a significant effect on the amounts reflected in the income statement and
balance sheet in respect of post-employment benefits. In particular, the defined benefit obligation for
funded schemes is forecast to vary by approximately A4 million for each 0.1% movement in either
the applied discount rate or inflation rate. Similarly, the defined benefit obligation for unfunded
schemes is forecast to vary by approximately A0.8 million for each 0.1% movement in either the
discount rate or inflation rate.

Provisions
     The Group continues to carry balance sheet provisions in a number of areas against exposures
that arise in the normal course of trading. These provisions cover areas such as uninsured losses,
termination and reorganisation activities and property dilapidation reserves. Judgement is involved in
assessing the exposures in these areas and hence in setting the level of the required provision.




                                                 F-17
                                    Notes to the Consolidated Financial Information
                                   for the years ended 31 December 2005 and 2004


1   Revenue
     The activity of the Group is the supply of vehicle rental services and revenue is derived entirely
from continuing activities. The Group experiences a natural increase in demand from leisure
customers over the European summer holiday months. This seasonality generally results in lower
revenue earned in the first half as compared to the second half of each year, together with an
increase in the number of vehicles acquired in the period leading up to the summer months.

2   Business and geographical segments
     The dominant source and nature of the Group’s risks and returns govern whether its primary
segment reporting is by business segment or geographical segment. The Group is subject to
significant variations in risks and rewards between undertaking its operations through corporately
owned businesses, as compared with the licensing of such operations to third parties. Given the
nature of the separate brands, the Group is also subject to significant variations in risks and rewards
between its Avis branded businesses and its Budget branded businesses. These variations contrast
with more limited differentials between the risk and reward profile of operations in different
geographical locations. The Group’s primary reporting format is therefore by business segment, and
secondary reporting format is geographical.
     Segment assets include software, vehicles, other property, plant and equipment, stocks, debtors
and operating cash, goodwill, corporation tax, deferred tax and investments. Segment liabilities
include operating liabilities, taxation and certain corporate borrowings. Capital expenditure comprises
additions to software, vehicles (excluding vehicles under manufacturer re-purchase arrangements),
other property, plant and equipment, including additions arising from business combinations,
excluding goodwill arising on these acquisitions.

a) Business segments

       Revenue                                                                                                   2005      2004
                                                                                                                  Em        Em
       Avis Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           1,209.6   1,195.4
       Avis Licensees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            25.1      22.2
       Avis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1,234.7   1,217.6
       Budget Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               33.6      27.5
       Budget Licensees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              8.2       6.8
       Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         41.8      34.3
       Unallocated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            —         0.9
       Total Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,276.5   1,252.8




                                                                     F-18
                             Notes to the Consolidated Financial Information (Continued)
                                      for the years ended 31 December 2005 and 2004


2    Business and geographical segments (Continued)

    Unallocated revenue comprises revenue earned in the prior year by the Centrus claims
management business (the operations of which were terminated by the Directors in December 2003).
There are immaterial sales between the business segments.

                                                                       2005                                            2004
                                                                       Amounts                                         Amounts
                                                                    excluded from                                   excluded from
Operating profit                                     Underlying       underlying           Total     Underlying       underlying     Total
                                                        Em               Em                 Em          Em               Em           Em
Avis Corporate . . . . . . . . . . . . . .             130.8                (4.1)          126.7       154.6              (6.2)     148.4
Avis Licensees . . . . . . . . . . . . . . .            23.1                  —             23.1        20.2                —        20.2
Avis . . . . . . . . . . . . . . . . . . . . . . .     153.9                (4.1)          149.8       174.8              (6.2)     168.6
Budget Corporate . . . . . . . . . . . .                  (8.4)              —              (8.4)       (9.0)            (32.4)     (41.4)
Budget Licensees . . . . . . . . . . . . .                 1.5               —               1.5         0.9                —         0.9
Budget . . . . . . . . . . . . . . . . . . . .            (6.9)              —              (6.9)       (8.1)            (32.4)     (40.5)
Unallocated . . . . . . . . . . . . . . . . .           (47.1)            (14.4)           (61.5)      (52.5)            (35.8)     (88.3)
Operating profit . . . . . . . . . . . . .               99.9             (18.5)            81.4       114.2             (74.4)      39.8

     Unallocated operating profit primarily comprises head office expenses. Underlying operating
profit of Centrus in both years was A nil.
     No adjustment is made between segments to recharge the value of the overall Avis/Budget
goodwill, brand or licence rights. Avis goodwill of A1,080.4 million arising before 1 March 1998 was
fully written-off to reserves, and Budget goodwill of A33.9 million arising on 12 March 2003 has been
fully impaired and charged to the income statement in previous periods. Had the value of goodwill,
brand or licence rights been charged to the segments, the individual segment results would be
materially affected.

                                                                          Assets                   Liabilities               Net assets
Balance sheet                                                      2005            2004        2005          2004          2005      2004
                                                                    Em              Em          Em             Em           Em        Em
Avis Corporate . . . . . . . . . . . . . . . . . . . . .          1,988.8     1,919.0        (1,708.4) (1,663.4)           280.4    255.6
Avis Licensees . . . . . . . . . . . . . . . . . . . . . .            6.9         5.3              —         —               6.9      5.3
Avis . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1,995.7     1,924.3        (1,708.4) (1,663.4)           287.3    260.9
Budget Corporate . . . . . . . . . . . . . . . . . . .              38.6            22.0           (65.2)       (31.2)     (26.6)     (9.2)
Budget Licensees . . . . . . . . . . . . . . . . . . .               3.4             2.1            (0.6)        (0.8)       2.8       1.3
Budget . . . . . . . . . . . . . . . . . . . . . . . . . . .        42.0            24.1           (65.8)       (32.0)     (23.8)     (7.9)
Share of joint ventures and associate
  (see Note 14) . . . . . . . . . . . . . . . . . . . .             10.6             9.0           —            —     10.6     9.0
Unallocated . . . . . . . . . . . . . . . . . . . . . . . .         56.2            79.9       (243.7)      (399.3) (187.5) (319.4)
Total Group . . . . . . . . . . . . . . . . . . . . . . .         2,104.5     2,037.3        (2,017.9) (2,094.7)            86.6    (57.4)




                                                                     F-19
                                    Notes to the Consolidated Financial Information (Continued)
                                                    for the years ended 31 December 2005 and 2004


2    Business and geographical segments (Continued)

    Unallocated primarily represents head office assets and liabilities. No adjustment is made
between segments to allocate the value of goodwill written-off to reserves in previous periods (see
above).

                                                                                                                                                    Depreciation
                                                                                                                                   Capital              and                 Impairment
                                                                                                                                 expenditure        amortisation              losses
Other information                                                                                                              2005      2004      2005     2004           2005    2004
                                                                                                                                Em         Em       Em        Em            Em      Em
Avis Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                   669.0     540.6     145.2       138.0       0.1      5.7
Avis Licensees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                    —         —         —           —         —        —
Avis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                             669.0     540.6     145.2       138.0       0.1      5.7
Budget Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                       2.1       1.4         1.3         0.7     0.4    32.4
Budget Licensees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                        —         —           —           —       —       —
Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                 2.1       1.4         1.3         0.7     0.4    32.4
Unallocated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                  3.3      27.5         7.1         6.1      —     33.2
Total Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                  674.4     569.5     153.6       144.8       0.5    71.3

     Unallocated primarily represents capital expenditure and depreciation and amortisation of head
office software projects and tangible fixed assets. Impairment losses include goodwill impairments
(see Note 10) and impairment losses on other intangible assets (see Note 11).

b) Geographical segments

                                                                                                                                                                             Capital
                                                                                                                         Revenue                   Assets                  expenditure
                                                                                                                     2005      2004         2005            2004         2005      2004
                                                                                                                      Em         Em          Em              Em           Em         Em
France . . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    261.2      254.2       456.6            433.7       215.5   146.2
Germany . . . . . .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    182.9      180.9       305.2            309.7        57.2    44.6
Italy . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    175.5      176.4       230.0            229.1       155.4   152.5
Spain . . . . . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    207.1      202.2       343.7            314.7       138.6   104.5
United Kingdom .            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    213.8      208.2       240.6            239.3        24.0     4.9
Other Europe . . .          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    233.4      227.3       454.8            415.0        78.9    87.9
Rest of the world           .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      2.6        2.7         6.8              6.9         1.5     1.4
                                                                                                                    1,276.5    1,251.9    2,037.7       1,948.4          671.1   542.0
Share of joint ventures and associate—Rest
  of the world (see Note 14) . . . . . . . . . . . . .                                                                     —        —           10.6           9.0          —       —
Unallocated . . . . . . . . . . . . . . . . . . . . . . . . . .                                                            —       0.9          56.2          79.9         3.3    27.5
Total Group . . . . . . . . . . . . . . . . . . . . . . . . . .                                                     1,276.5    1,252.8    2,104.5       2,037.3          674.4   569.5




                                                                                                                    F-20
                            Notes to the Consolidated Financial Information (Continued)
                                    for the years ended 31 December 2005 and 2004


3    Operating profit
                                                                                                                                                       2005     2004
                                                                                                                                                        Em       Em
Operating profit is stated after charging:
Net amounts excluded from underlying(1):
Re-measurement gains on non-debt related derivative financial instruments(2) . . . . . .                                                                (3.1)     —
Re-measurement losses on non-debt related derivative financial instruments(2) . . . . .                                                                  7.2      —
                                                                                                                                                         4.1       —
Economic hedging adjustment on foreign exchange(2) . . . . . . . . . . . . . . . . . . . . . . . .                                                       1.2       —
Total net exceptional items (see Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                          13.2     74.4
Total net exceptional items, certain re-measurement items and economic hedge
  adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             18.5     74.4
Underlying profit:
Hire of vehicles under re-purchase contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                           217.8 180.2
Unwinding of discount on vehicle re-purchase contracts(2) . . . . . . . . . . . . . . . . . . . . .                                                    (27.4)   —
Net operating lease charge on manufacturer re-purchase contracts . . . . . . . . . . . . . .                                                           190.4    180.2
Hire of plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                      0.8      0.7
Hire of motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                43.7     32.4
Net charge on hire of plant, equipment and motor vehicles . . . . . . . . . . . . . . . . . . . .                                                      234.9    213.3
Depreciation on vehicles—owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                         104.0     98.1
Depreciation on vehicles—under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                               29.2     31.1
Depreciation on other property, plant and equipment (see Note 13) . . . . . . . . . . . . . .                                                           19.1     12.4
Depreciation on property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                152.3    141.6
Amortisation of other intangible assets (see Note 11) . . . . . . . . . . . .                      .   .   .   .   .   .   .   .   .   .   .   .   .     1.3      3.2
Non-exceptional goodwill impairment charge (see Notes 10 and 36)                                   .   .   .   .   .   .   .   .   .   .   .   .   .     0.5       —
Contingent operating lease rentals(3) . . . . . . . . . . . . . . . . . . . . . . . .              .   .   .   .   .   .   .   .   .   .   .   .   .    49.0     48.0
Other operating lease rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          .   .   .   .   .   .   .   .   .   .   .   .   .    50.5     47.7

(1) See Significant Accounting Policies.

(2) Items arise in current year only, due to the application of IAS 32/IAS 39 with effect from 1 January 2005. Net
    re-measurement losses on non-debt related derivative financial instruments of A4.1 million, comprises realised losses of
    A3.7 million and unrealised losses of A0.4 million.

(3) Contingent rentals primarily arise with respect to airport rental desk concessions, and are ordinarily based on the level of
    revenue generated by the individual concession.




                                                                      F-21
                          Notes to the Consolidated Financial Information (Continued)
                                  for the years ended 31 December 2005 and 2004


3   Operating profit (Continued)

                                                                                                                                                                                                                                                    2005   2004
                                                                                                                                                                                                                                                     Em     Em
         Auditors’ remuneration is analysed as follows:
         Audit—UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                                                       0.8     0.6
         Audit—overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                                                         0.7     0.7
                                                                                                                                                                                                                                                    1.5     1.3
         Non-audit—UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                                                         2.1     0.5
         Non-audit—overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                                                             0.6     0.7
                                                                                                                                                                                                                                                    2.7     1.2
         Non-audit services are analysed as follows:
         Taxation advice . . . . . . . . . . . . . . . . . . . . . . . .                                  ....                            .       .       .       .       .       .       .       .       .       .       .       .       .   .     1.1     0.6
         Accounting assistance . . . . . . . . . . . . . . . . . . .                                      ....                            .       .       .       .       .       .       .       .       .       .       .       .       .   .      —      0.3
         Capital restructuring and rights issue (see Note                                                 29) .                           .       .       .       .       .       .       .       .       .       .       .       .       .   .     0.8      —
         Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            ....                            .       .       .       .       .       .       .       .       .       .       .       .       .   .     0.8     0.3
                                                                                                                                                                                                                                                    2.7     1.2

4   Directors and employees
                                                                                                                                                                                                                                                   2005     2004
                                                                                                                                                                                                                                                    Em       Em
       Staff costs
       Retirement benefit charges under defined contribution schemes . . . . . .                                                                                                                                                                     3.9      3.8
       Retirement benefit charges under defined benefit schemes
         (see Note 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                                                        13.2     12.8
       Total retirement benefit charges . . . .               .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .   .         17.1    16.6
       Wages and salaries . . . . . . . . . . . . . .         .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .   .        225.2   217.6
       Social security costs . . . . . . . . . . . . .        .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .   .         41.0    38.4
       Share-based payments (see Note 31)                     .   .   .   .   .   .   .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .   .          0.4     0.1
       Total Directors and employee costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                                                                  283.7   272.7

    Further details of Directors’ remuneration for the year are provided in Note 41.

                                                                                                                                                                                                                                               2005         2004
                                                                                                                                                                                                                                              Number       Number

       Staff numbers (average                full time equivalent)
       United Kingdom . . . . . .            .................                            .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .               1,295    1,238
       France . . . . . . . . . . . . .      .................                            .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .               1,469    1,389
       Germany . . . . . . . . . . .         .................                            .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .                 720      719
       Italy . . . . . . . . . . . . . . .   .................                            .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .                 514      531
       Spain . . . . . . . . . . . . . .     .................                            .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .               1,055    1,031
       Others . . . . . . . . . . . . .      .................                            .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .       .               1,200    1,131
                                                                                                                                                                                                                                                  6,253    6,039




                                                                          F-22
                          Notes to the Consolidated Financial Information (Continued)
                                 for the years ended 31 December 2005 and 2004


5    Net exceptional items
                                                                                                                                                                  2005    2004
                                                                                                                                                                   Em      Em
         Exceptional administrative expenses:
         a) Restructuring costs . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    8.4    9.6
         b) Project termination costs . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    3.6   43.4
         c) Centrus receivables . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   (3.2) (16.7)
         d) Capital restructuring and rights issue            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    4.4     —
         e) Goodwill impairment . . . . . . . . . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     —    38.1
                                                                                                                                                                  13.2    74.4
         Net exceptional items before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                           13.2    74.4
         Current tax credit on net exceptional items (see Note 7) . . . . . . . . . . . . .                                                                       (1.3)   (8.8)
         Deferred tax credit on net exceptional items (see Note 7) . . . . . . . . . . . .                                                                          —     (7.2)
         Net exceptional items after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                          11.9    58.4

a)   Restructuring costs of A2.0 million were incurred in the year in connection with the transfer of back-office functions to
     the Group’s shared service centre in Budapest. A further A6.4 million was incurred in relation to a restructuring project
     the Group commenced in late 2005 covering the roles of its European Headquarters, corporate operations, shared service
     centre and call centres (see Note 44 for further information). Restructuring costs of A9.6 million were incurred in the prior
     year.

b)   Following the Group’s decision in 2004 to terminate the agreement with the principal contractor on the IT back-office
     project, additional termination costs of A3.6 million (2004: A43.4 million) have been recognised in 2005, primarily arising
     from the mitigating action being taken against the termination costs, which may lead to a net credit in future accounting
     periods.

c)   During the year, the collection of credit hire receivable balances in the Centrus business was more successful than
     previously anticipated. Exceptional income of A3.2 million (2004: A16.7 million) has been recognised reflecting a partial
     reversal of the receivable write-offs and reorganisation provisions made in previous years.

d)   Various professional, legal and consultancy costs have been incurred in the year in conjunction with the Company’s capital
     restructuring (see Note 30) and the rights issue (see Note 29). Where such costs are not directly attributable to the issue
     of new shares, or the drawing down of new debt facilities, they have been recognised in the income statement as
     exceptional items.

e)   In the prior year, the Group recognised an exceptional impairment provision against the goodwill in respect of the Budget
     business and goodwill arising on the acquisition of certain French licensee companies (see Note 10).




                                                               F-23
                           Notes to the Consolidated Financial Information (Continued)
                                   for the years ended 31 December 2005 and 2004


6   Finance revenue, finance costs and foreign exchange on net debt
                                                                       2005                                     2004
                                                                         Amounts                                  Amounts
                                                                      excluded from                            excluded from
                                                      Underlying(1)     underlying    Total    Underlying(1)     underlying    Total
                                                          Em               Em          Em          Em               Em          Em
Finance revenue
Interest receivable . . . . . . . . . . . . . .             1.9              —          1.9          3.7              —          3.7
                                                            1.9              —          1.9          3.7              —          3.7
Finance costs
Interest payable under finance lease
   obligations . . . . . . . . . . . . . . . . . .       (10.5)              —        (10.5)        (9.2)             —         (9.2)
Interest payable on bank loans and
   overdrafts . . . . . . . . . . . . . . . . . . .      (48.8)              —        (48.8)      (53.9)              —        (53.9)
Interest payable on deferred
   consideration . . . . . . . . . . . . . . . .           (2.6)             —         (2.6)        (2.6)             —         (2.6)
Re-measurement losses on debt-
   related derivative financial
   instruments(2) . . . . . . . . . . . . . . . .            —             (1.2)       (1.2)          —               —           —
Economic hedge adjustment on
   interest payable(2,3) . . . . . . . . . . . .           (2.1)            2.1          —            —               —           —
                                                         (64.0)             0.9       (63.1)      (65.7)              —        (65.7)
Foreign exchange (loss)/gain on
  net debt . . . . . . . . . . . . . . . . . . . .           —             (0.1)       (0.1)          —              2.1         2.1
Net finance costs . . . . . . . . . . . . . . .          (62.1)            (0.8)      (61.3)      (62.0)             2.1       (59.9)

(1) Underlying excludes exceptional items, certain re-measurement items, and economic hedges—see Significant Accounting
    Policies.

(2) Items arise in current year only due to the application of IAS 32/IAS 39 with effect from 1 January 2005 (see Note 47).
    Re-measurement losses on debt related financial instruments of A1.2 million, comprises realised gains of A1.6 million and
    unrealised losses of A2.8 million.

(3) The Group has entered into economic hedging arrangements for which the Group is unable to apply hedge accounting
    under IAS 39. Interest payable on bank loans and overdrafts, to the extent that IAS 39 does not permit hedge accounting,
    reflects actual interest rates applicable to debt, regardless of any accrued cash flow paid at contracted rates within
    hedging derivatives.




                                                                   F-24
                           Notes to the Consolidated Financial Information (Continued)
                                   for the years ended 31 December 2005 and 2004


7   Taxation
a) Analysis of tax charge

                                                                           2005                            2004
                                                                            Amounts                        Amounts
                                                                         excluded from                  excluded from
                                                              Underlying   underlying  Total Underlying   underlying    Total
                                                                 Em           Em        Em      Em           Em          Em
Current UK tax
UK corporation tax on profits for the year
  before exceptional items . . . . . . . . . . . .                1.0        (0.7)       0.3     10.6        (0.1)      10.5
Tax on exceptional items . . . . . . . . . . . . .                 —         (0.7)      (0.7)      —         (8.6)      (8.6)
Adjustments in respect of prior years . . . .                     4.0          —         4.0     (6.7)         —        (6.7)
                                                                  5.0        (1.4)      3.6       3.9        (8.7)       (4.8)
Current foreign tax
Foreign corporation tax on profits for the
  year before exceptional items . . . . . . . .                   8.1          —         8.1     11.0          —        11.0
Tax on exceptional items . . . . . . . . . . . . .                 —         (0.6)      (0.6)      —         (0.2)      (0.2)
Adjustments in respect of prior years . . . .                    (3.6)         —        (3.6)     2.9          —         2.9
                                                                  4.5        (0.6)      3.9      13.9        (0.2)      13.7
Total current tax . . . . . . . . . . . . . . . . . . .          9.5         (2.0)      7.5      17.8        (8.9)        8.9
Analysed as:
Corporation tax on profits for the year
  before exceptional items . . . . . . . . . . . .                9.1        (0.7)       8.4     21.6        (0.1)      21.5
Tax on exceptional items . . . . . . . . . . . . .                 —         (1.3)      (1.3)      —         (8.8)      (8.8)
Adjustments in respect of prior years . . . .                     0.4          —         0.4     (3.8)         —        (3.8)
                                                                  9.5        (2.0)      7.5      17.8        (8.9)        8.9
Deferred tax
Origination and reversal of temporary
  differences . . . . . . . . . . . . . . . . . . . . . . .      (3.5)       (0.2)      (3.7)    (5.2)         —         (5.2)
Deferred tax on exceptional items . . . . . . .                    —           —          —        —         (7.2)       (7.2)
Adjustments in respect of prior years . . . .                     4.2          —         4.2      0.4          —          0.4
                                                                  0.7        (0.2)      0.5      (4.8)       (7.2)      (12.0)
Total taxation . . . . . . . . . . . . . . . . . . . . . .      10.2         (2.2)      8.0      13.0       (16.1)       (3.1)

b) Tax charge/(credit) taken directly to the Statement of Recognised Income and Expense

                                                                             2005                           2004
                                                                              Amounts                        Amounts
                                                                           excluded from                  excluded from
                                                                Underlying   underlying  Total Underlying   underlying  Total
                                                                   Em           Em        Em      Em           Em        Em
Deferred tax charge on cash flow hedges . . .                       —           3.3       3.3      —            —         —
Current tax charge on exchange movements
  offset in reserves . . . . . . . . . . . . . . . . . . .          —           3.0       3.0      —           0.1        0.1
Deferred tax credit on actuarial losses . . . . .                   —          (9.2)     (9.2)     —          (1.1)      (1.1)
                                                                    —          (2.9)     (2.9)     —          (1.0)      (1.0)




                                                                   F-25
                            Notes to the Consolidated Financial Information (Continued)
                                    for the years ended 31 December 2005 and 2004


7    Taxation (Continued)

c) Reconciliation of tax charge

                                                                             2005                           2004
                                                                              Amounts                        Amounts
                                                                           excluded from                  excluded from
                                                                Underlying   underlying  Total Underlying   underlying  Total
                                                                   Em           Em        Em      Em           Em        Em
Profit/(loss) before taxation . . . . . . . . . . .               37.8           (17.7)         20.1          52.1           (72.3)         (20.2)
Tax at the UK corporation tax rate of 30%                         11.3             (5.3)         6.0          15.6           (21.7)           (6.1)
Differing rates applied to overseas profits .                     (5.0)            (0.1)        (5.1)         (3.9)            0.1            (3.8)
Expenses not deductible for tax purposes .                         2.3              2.6          4.9           0.5             5.1             5.6
Utilisation of tax losses . . . . . . . . . . . . . . .          (13.2)              —         (13.2)         (3.9)             —             (3.9)
Other temporary differences . . . . . . . . . . .                   —                —            —           (0.6)            1.0             0.4
Adjustments in respect of prior years . . . .                      4.6               —           4.6          (3.4)             —             (3.4)
Deferred assets not recognised . . . . . . . . .                  10.0              0.6         10.6           6.9              —              6.9
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . .      0.2               —           0.2           1.8            (0.6)            1.2
Total taxation . . . . . . . . . . . . . . . . . . . . . .        10.2             (2.2)            8.0       13.0           (16.1)           (3.1)

8    Dividends
                                                                                                                2005      2004    2005       2004
                                                                                                                 £m        £m      Em         Em
Amounts recognised as distributions to equity holders in the year
Final dividend for the year ended 31 December 2004 of nil pence; nil
   euro cents (2003: 2.6 pence; 3.7 euro cents) . . . . . . . . . . . . . . . . . . . . .                        —        15.2         —     22.7
Interim dividend for year ended 31 December 2005 of nil pence: nil euro
   cents (2004: 1.3 pence; 1.8 euro cents) . . . . . . . . . . . . . . . . . . . . . . . . .                     —         7.6         —     11.3
                                                                                                                 —        22.8         —     34.0

    The Directors do not propose the payment of a final dividend for the year ended 31 December
2005.

9    Earnings per share
a) Basic and diluted
    Basic and diluted earnings per share are based on the profit for the year attributable to equity
holders of the Company.

                                                                                                      2005        2004       2005           2004
                                                                                                       Em          Em         £m             £m
Earnings
Profit/(loss) for the year attributable to equity holders of the
  Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     11.8       (17.1)          8.1       (13.4)

                                                                                                      2005        2004       2005           2004
                                                                                                      Euro        Euro      Sterling       Sterling
                                                                                                      cents       cents      pence          pence
Earnings/(loss) per share
Basic and diluted earnings/(loss) per share . . . . . . . . . . . . . . . . . . . .                       1.5      (2.4)         1.0         (1.9)

     The weighted average number of shares in issue for the year was 808,293,280 (2004 restated:
698,187,356). The prior year weighted average number of shares has been restated to take account
of the impact of the rights issue as detailed in Note 29.



                                                                    F-26
                           Notes to the Consolidated Financial Information (Continued)
                                   for the years ended 31 December 2005 and 2004


9    Earnings per share (Continued)

    Options have been granted to certain Directors and employees over ordinary shares of the
Company (see Note 31). These options constitute the only category of potentially dilutive ordinary
shares and these did not increase the weighted average number of shares in either 2004 or 2005 as
the option exercise prices were in excess of the prevailing market share price. Since these options
were not dilutive they had no impact upon the income statement in either year.

b) Underlying
     Underlying earnings per share are based on the underlying profit for the year attributable to
equity holders of the Company, and the weighted average number of shares in issue for the year
attributable to equity holders of the Company.

                                                                                                                     2005                2004            2005      2004
                                                                                                                      Em                  Em              £m        £m
Earnings
Underlying profit for the year attributable to equity holders of the
  Company (see page F-3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           27.3                39.1            18.6      25.2

                                                                                                                     2005                2004         2005         2004
                                                                                                                     Euro                Euro        Sterling     Sterling
                                                                                                                     cents               cents        pence        pence
Earnings per share
Basic and diluted underlying earnings per share . . . . . . . . . . . . . . . . .                                        3.4                 5.6          2.3       3.6

10    Goodwill
                                                                                                                                              2005         2004
                                                                                                                                               Em           Em
         Cost
         At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             46.4         45.4
         Additions (see Note 36) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                     0.5           —
         Exchange movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                      0.7          1.0
         At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                 47.6         46.4
         Accumulated impairment provisions
         At 1 January . . . . . . . . . . . . . . . . . . .    ..............            .   .   .   .   .   .   .   .   .   .   .   .   .    38.6           —
         Exceptional impairment losses for the                 year (see Note 5)         .   .   .   .   .   .   .   .   .   .   .   .   .      —          38.1
         Other impairment losses for the year                  ..............            .   .   .   .   .   .   .   .   .   .   .   .   .     0.5           —
         Exchange movements . . . . . . . . . . . .            ..............            .   .   .   .   .   .   .   .   .   .   .   .   .     0.7          0.5
         At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                 39.8         38.6
         Net book amount
         At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                      7.8      7.8

    Goodwill of A1,080.4 million arising before 1 March 1998 is fully written-off to reserves (see
Note 32).
     In accordance with the requirements of IAS 36, Impairment of Assets, the Group completed a
review of the carrying value of goodwill as at each year end. The impairment review was to ensure
that the carrying value of the Group’s assets are stated at no more than their recoverable amount,
being the higher of fair value less costs to sell and value in use.
     Goodwill was allocated to cash-generating units (‘‘CGUs’’) for the purpose of impairment testing,
each of these CGUs representing the Group’s investment in each country where the goodwill
originally arose.



                                                                    F-27
                    Notes to the Consolidated Financial Information (Continued)
                         for the years ended 31 December 2005 and 2004


10   Goodwill (Continued)

     After a reassessment of the long-term business plan for Budget, following the completion of the
integration of the business acquired in March 2003, and in particular a downturn of the profitability
of the Budget operations in France, the Directors concluded at 31 December 2004 that the
recoverable amount (determined by reference to their value in use) of these businesses was less than
the carrying amount of the associated assets. As a consequence, impairment provisions of
A32.4 million against the goodwill relating to the Budget business and A5.7 million against the
goodwill relating to certain acquired French licensee companies, was recognised to write-down the
value of these assets to their recoverable amounts, representing a full provision against goodwill.
There were no cash flow impacts arising from these impairment provisions.
     In the year to 31 December 2005, goodwill arose upon the acquisition of Budget licensee
locations in France, and Avis licensee locations in France and Holland (see Note 36). As the acquired
locations have been integrated into existing operations, where the goodwill arising in these
cash-generating units had already been fully provided in previous accounting periods, impairment
provisions have been recognised against the goodwill arising in the year. Impairment provisions have
therefore been recognised in the year against the Budget licensee acquisition, and the Avis licensee
acquisitions of A0.4 million and A0.1 million respectively (see Note 2).
     The Directors also reviewed at each year end the carrying values of the remaining capitalised
goodwill relating to the business in Greece and the joint venture in China (see Note 14). These
reviews (undertaken by calculating value in use) did not result in the need for any impairment
provision to be recognised as at 31 December 2004 or 31 December 2005.
     In determining the value in use, the Directors calculated the present value of the estimated
future cash flows expected to arise from the continuing use of the assets using pre-tax discount rates
in the range from 7% to 11%. The discount rate applied is based upon the Group’s weighted average
cost of capital with appropriate adjustment for the relevant risks associated with the businesses.
Estimated future cash flows are based on management’s five-year plans for each cash-generating
unit, with extrapolation thereafter based on the long-term average growth rates for the individual
countries in which the individual cash-generating unit primarily operates.




                                                F-28
                            Notes to the Consolidated Financial Information (Continued)
                                        for the years ended 31 December 2005 and 2004


11    Other intangible assets
    Other intangible assets comprise internally generated software development costs and externally
acquired software.

                                                                                                             Software                                   Software
                                                                                                Internally    Externally                   Internally    Externally
                                                                                                generated      acquired    Total           generated      acquired    Total
                                                                                                  2005           2005      2005              2004           2004      2004
                                                                                                   Em             Em        Em                Em             Em        Em
Cost
At 1 January . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      2.6            5.5       8.1               16.5          0.6        17.1
Additions . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      1.7            1.9       3.6               19.2          4.9        24.1
Disposals . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       —            (0.3)     (0.3)             (33.2)          —        (33.2)
Exchange movements              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      0.1            0.1       0.2                0.1           —          0.1
At 31 December . . . . . . . . . . . . . . . . . . . .                                             4.4            7.2      11.6                2.6          5.5         8.1
Amortisation
At 1 January . . . . . . . . . . . . . . . . . . . . . . .                                         2.3            3.2       5.5                2.3          0.1         2.4
Charges for the year (see Note 3) . . . . . . .                                                    0.5            0.8       1.3                0.1          3.1         3.2
Exceptional impairment losses for the year
  (see Note 5) . . . . . . . . . . . . . . . . . . . . . .                                          —              —         —                33.2           —         33.2
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . .                                       —            (0.3)     (0.3)             (33.2)          —        (33.2)
Exchange movements . . . . . . . . . . . . . . . .                                                  —             0.1       0.1               (0.1)          —         (0.1)
At 31 December . . . . . . . . . . . . . . . . . . . .                                             2.8            3.8       6.6                2.3          3.2         5.5
Net book amount
At 31 December . . . . . . . . . . . . . . . . . . . .                                             1.6            3.4       5.0                0.3          2.3         2.6

12    Vehicles
                                                                                                                                              2005         2004
                                                                                                                                               Em           Em
            Cost
            At 1 January . . . . . . . . . . . . . .                                    .......................               .    .   .      511.0        562.0
            Additions . . . . . . . . . . . . . . . . .                                 .......................               .    .   .      651.2        522.6
            Acquisitions (see Note 36) . . . .                                          .......................               .    .   .        0.5           —
            Disposals . . . . . . . . . . . . . . . . .                                 .......................               .    .   .     (535.4)      (490.8)
            Transfers to non-current assets                                             held for resale (see Note 17)         .    .   .     (102.1)       (83.8)
            Transfers from current assets .                                             .......................               .    .   .       41.5           —
            Exchange movements . . . . . . .                                            .......................               .    .   .        0.9          1.0
            At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                          567.6        511.0
            Depreciation and impairment
            At 1 January . . . . . . . . . . . . . .                                    .......................               .    .   .       87.4         97.6
            Charges for the year . . . . . . . .                                        .......................               .    .   .      133.2        129.2
            Disposals . . . . . . . . . . . . . . . . .                                 .......................               .    .   .     (107.7)      (130.8)
            Transfers to non-current assets                                             held for resale (see Note 17)         .    .   .      (10.3)        (8.7)
            Exchange movements . . . . . . .                                            .......................               .    .   .        1.0          0.1
            At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                          103.6         87.4
            Net book amount
            At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                          464.0        423.6




                                                                                                   F-29
                            Notes to the Consolidated Financial Information (Continued)
                                           for the years ended 31 December 2005 and 2004


12    Vehicles (Continued)

   Vehicles held under finance leases are included in the above at 31 December at the following
amounts:

                                                                                                                                          2005        2004
                                                                                                                                           Em          Em
            Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            128.8        78.0
            Depreciation and impairment . . . . . . . . . . . . . . . . . . . . . . . . . . .                                             (15.7)       (6.0)
            Net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                       113.1        72.0

    At 31 December 2005, the Group had capital commitments for vehicles contracted, but not
provided for, amounting to A160.1 million (2004: A175.7 million).

13    Other property, plant and equipment

                                                                                                                         Short                      Assets in
                                                                                                       Freehold land   leasehold    Plant and    the course of
                                                                                                       and buildings    property   equipment      construction   Total
                                                                                                            Em             Em          Em             Em          Em
Cost
At 1 January 2004 . .          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      31.3          42.3          72.2            8.4        154.2
Additions . . . . . . . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       9.0           5.4           8.4             —          22.8
Disposals . . . . . . . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      (1.7)         (2.4)        (13.7)            —         (17.8)
Transfers . . . . . . . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        —             —            8.0           (8.0)          —
Exchange movements             .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        —            0.1          (0.6)          (0.2)        (0.7)
At 31 December 2004 . . . . . . . . . . . . . . . . .                                                     38.6          45.4         74.3             0.2        158.5
At 1 January 2005 . .          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      38.6          45.4          74.3            0.2        158.5
Additions . . . . . . . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       1.3           4.3          10.9            2.6         19.1
Disposals . . . . . . . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      (1.3)         (4.0)        (14.7)          (0.3)       (20.3)
Transfers . . . . . . . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        —           (5.9)           —              —          (5.9)
Exchange movements             .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        —            0.1           0.8             —           0.9
At 31 December 2005 . . . . . . . . . . . . . . . . .                                                     38.6          39.9         71.3             2.5        152.3
Depreciation and impairment
At 1 January 2004 . . . . . . . . .                        .   .   .   .   .   .   .   .   .   .   .        4.0         15.2          53.4             —          72.6
Charges for the year . . . . . . . .                       .   .   .   .   .   .   .   .   .   .   .        1.6          4.1           6.7             —          12.4
Disposals . . . . . . . . . . . . . . . .                  .   .   .   .   .   .   .   .   .   .   .       (1.6)        (2.3)        (13.7)            —         (17.6)
Exchange movements . . . . . . .                           .   .   .   .   .   .   .   .   .   .   .       (0.1)        (0.1)          2.1             —           1.9
At 31 December 2004 . . . . . . . . . . . . . . . . .                                                       3.9         16.9         48.5              —          69.3
At 1 January 2005 . .          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        3.9         16.9          48.5             —          69.3
Charges for the year .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        2.3          5.0          11.8             —          19.1
Disposals . . . . . . . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       (1.2)        (3.9)        (14.6)            —         (19.7)
Transfers . . . . . . . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .         —          (2.6)           —              —          (2.6)
Exchange movements             .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .         —          (0.1)          0.9             —           0.8
At 31 December 2005 . . . . . . . . . . . . . . . . .                                                       5.0         15.3         46.6              —          66.9
Net book amount
At 31 December 2005 . . . . . . . . . . . . . . . . .                                                     33.6          24.6         24.7             2.5         85.4
At 31 December 2004 . . . . . . . . . . . . . . . . .                                                     34.7          28.5         25.8             0.2         89.2




                                                                                                        F-30
                        Notes to the Consolidated Financial Information (Continued)
                                 for the years ended 31 December 2005 and 2004


13   Other property, plant and equipment (Continued)

    Other property, plant and equipment held under finance leases are included in the above at
31 December at the following amounts:

                                                                                                                      2005      2004
                                                                                                                       Em        Em
        Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      4.4   1.1
        Depreciation and impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      (0.7) (0.1)
        Net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                3.7       1.0

    At 31 December 2005, the Group had capital commitments for other property, plant and
equipment contracted, but not provided for, amounting to A4.7 million (2004: A1.1 million).

14   Investments accounted for using the equity method
                                                                                                   Joint
                                                                                                  venture       Associate       Total
                                                                                                    Em             Em            Em
        Cost
        At 1 January 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 9.8            0.3        10.1
        Share of loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (0.1)            —         (0.1)
        Exchange movements . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   (1.0)            —         (1.0)
        At 31 December 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . .                     8.7            0.3         9.0
        At 1 January 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 8.7             0.3        9.0
        Share of loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              —               —          —
        Exchange movements . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    1.7            (0.1)       1.6
        At 31 December 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . .                   10.4             0.2        10.6

    The Group has a 50% share in its sole joint venture Anji Car Rental and Leasing Company, and a
33% share in its associate, Mercury Car Rentals Limited. The Group’s share of results for the year
were as follows:

                                                                            Joint venture         Associate                  Total
                                                                           2005     2004        2005    2004          2005       2004
                                                                            Em       Em          Em      Em            Em          Em
        Share of:
        Revenue . . . . . . . . . . . . . . . . . . . . . . . . . .         9.1   6.3   2.6   1.6   11.7   7.9
        Expenses . . . . . . . . . . . . . . . . . . . . . . . . . .       (8.6) (6.3) (2.5) (1.6) (11.1) (7.9)
        Operating profit . . . . . . . . . . . . . . . . . . . .            0.5    —    0.1                  —          0.6    —
        Net finance costs . . . . . . . . . . . . . . . . . . .            (0.3) (0.1) (0.1)                 —         (0.4) (0.1)
        Profit/(loss) before tax . . . . . . . . . . . . . . .              0.2 (0.1)             —          —          0.2 (0.1)
        Taxation . . . . . . . . . . . . . . . . . . . . . . . . . .       (0.2)  —               —          —         (0.2)  —
        Net loss for the year . . . . . . . . . . . . . . . . .               —       (0.1)       —          —          —        (0.1)




                                                                   F-31
                       Notes to the Consolidated Financial Information (Continued)
                              for the years ended 31 December 2005 and 2004


14   Investments accounted for using the equity method (Continued)

    At the year end, the Group’s interest in Anji Car Rental and Leasing Company Limited, and
Mercury Car Rentals Limited, comprised:

                                                                                                          Joint venture     Associate       Total
                                                                                                          2005     2004   2005 2004     2005    2004
                                                                                                           Em       Em     Em      Em    Em       Em
         Share of:
         Fixed assets . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   16.6 12.2    1.3   1.0 17.9 13.2
         Current assets . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    2.4   1.6   0.8   0.4   3.2   2.0
         Current liabilities . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   (9.5) (6.0) (0.4) (0.3) (9.9) (6.3)
         Long-term liabilities        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     —     — (1.5) (0.8) (1.5) (0.8)
                                                                                                           9.5     7.8    0.2    0.3     9.7    8.1
         Net book amount of goodwill arising upon
           acquisition (see Note 10) . . . . . . . . . . . .                                               0.9     0.9     —      —      0.9    0.9
                                                                                                          10.4     8.7    0.2    0.3    10.6    9.0

   At each year end, the joint venture and associate had no contingent liabilities, no capital
commitments, and no operating lease commitments of greater than A0.1 million per annum.
     As both the joint venture and associate have accumulated losses, transfer of funds from both the
joint venture and associate is restricted.

15   Other financial assets
                                                                                                                                        2005   2004
                                                                                                                                         Em     Em
         Non-current assets—available for sale investments . . . . . . . . . . . . . . .                                                 0.6    0.6
         Current assets—held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                      15.0   75.0

     Non-current financial assets of A0.6 million (2004: A0.6 million) primarily comprise equity
minority interests in overseas companies. The current financial assets comprise finance lease
collateral of A15.0 million (2004: A67.5 million) which attracts interest at 2.3% (2004: 2.1%), and A nil
(2004: A7.5 million) of other held for trading assets which attracted interest at 2.2%.




                                                                                              F-32
                             Notes to the Consolidated Financial Information (Continued)
                                     for the years ended 31 December 2005 and 2004


16     Deferred tax

                                                                                      Temporary differences
                                                                            Accelerated                                   Losses
                                                                                tax                 Employee            available
Deferred tax provided                                                       depreciation Fair value benefits   Other    for offset   Total
                                                                                Em           Em        Em       Em         Em         Em
At 1 January 2004 . . . . . . . . . . . . . . . . . .           .....         (22.0)         —       12.3      (12.4)       5.1      (17.0)
Recognised in Income Statement (see Note                        7) . . .         —           —         —         8.9        3.1       12.0
Recognised in the statement of recognised
  income and expense (see Note 7) . . . . .                     .....             —          —        1.1         —          —         1.1
Exchange movements . . . . . . . . . . . . . . . .              .....            0.5         —        0.4         —          —         0.9
At 31 December 2004 . . . . . . . . . . . . . . . . . . . .                   (21.5)         —       13.8       (3.5)       8.2       (3.0)
At 1 January 2005 . . . . . . . . . . . . . . . . . . . . . . .               (21.5)          —      13.8       (3.5)       8.2       (3.0)
Impact of IAS 32 and IAS 39 (see Note 47) . . . . .                              —           4.9       —          —          —         4.9
At 1 January 2005 (restated) . . . . . . . . . . . .                ...       (21.5)        4.9      13.8       (3.5)       8.2        1.9
Recognised in income statement (see Note 7)                         ...        (0.9)         —        0.6       (4.8)       4.6       (0.5)
Recognised in the statement of recognised
  income and expense (see Note 7) . . . . . . .                     ...           —         (3.3)     9.2         —          —         5.8
Exchange movements . . . . . . . . . . . . . . . . . .              ...           —          0.3      0.5        0.2         —         1.1
At 31 December 2005 . . . . . . . . . . . . . . . . . . . .                   (22.4)        1.9      24.1       (8.1) 12.8             8.3
Analysed as:
At 31 December 2005
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . .               14.9         1.9     23.3       14.7        5.9       60.7
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . .             (37.3)         —       0.8      (22.8)       6.9      (52.4)
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (22.4)        1.9     24.1       (8.1)     12.8         8.3
At 31 December 2004
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . .               12.6         —       13.8       17.7        2.3       46.4
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . .             (34.1)        —         —       (21.2)       5.9      (49.4)
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (21.5)        —       13.8       (3.5)       8.2       (3.0)

     Deferred tax assets have been recognised in respect of tax losses and other temporary
differences giving rise to deferred tax assets where it is probable that these assets will be recovered.
Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset
and there is an intention to settle the balances net.
     At the year end, the Group had unused tax losses of A123.4 million (2004: A134.4 million)
available for offset against future profits. A deferred tax asset has been recognised in respect of
A43.8 million (2004: A25.4 million) of such losses. No deferred tax asset has been recognised in
respect of the remaining A79.6 million (2004: A109.0 million) due to the unpredictability of future
profit streams, but these losses may be carried forward indefinitely.
    Deferred tax has not been recognised in respect of other temporary differences giving rise to
deferred tax assets of A6.5 million (2004: A3.1 million) and deferred tax liabilities of A0.1 million
(2004: A0.1 million) due to the unpredictability of future profit streams.
     At the year end, the aggregate amount of other temporary differences associated with
unremitted earnings of the Group’s overseas subsidiaries for which deferred tax liabilities have not
been recognised was A212.9 million (2004: A192.2 million). No liability has been recognised in respect
of these differences because the Group is in a position to control the timing of the reversal of the
temporary differences and it is probable that such differences will not reverse in the foreseeable
future. Temporary differences arising in connection with interests in the joint venture and associate
are insignificant.



                                                                       F-33
                          Notes to the Consolidated Financial Information (Continued)
                                   for the years ended 31 December 2005 and 2004


17   Non-current assets held for sale
                                                                                                                                                                                                      2005            2004
                                                                                                                                                                                                       Em              Em
          Cost
          At 1 January . . . . . . . . . . .                      ........                        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .             5.4    2.1
          Transfers from vehicles (see                            Note 12)                        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .           102.1   83.8
          Disposals . . . . . . . . . . . . . .                   ........                        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .           (95.2) (80.5)
          Exchange movements . . . . .                            ........                        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .             0.1     —
          At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                    12.4          5.4
          Depreciation and impairment
          At 1 January . . . . . . . . . . . . . . . . . . .                                      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .                0.4           —
          Transfers from vehicles (see Note 12)                                                   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .               10.3          8.7
          Disposals . . . . . . . . . . . . . . . . . . . . . .                                   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .               (9.4)        (8.3)
          Exchange movements . . . . . . . . . . . . .                                            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .                 —            —
          At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                        1.3       0.4
          Net book amount
          At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                    11.1          5.0

    Non-current assets held for sale comprise ex-rental vehicles formerly used in the Avis Corporate
segment, where management are committed to the disposal of the vehicle. Disposals are ordinarily
completed within one month of transfer of the vehicle from the rental fleet. Gains/(losses)
recognised on the disposal of non-current assets held for resale in the year totalled A1.5 million
(2004: A(0.8) million).

18   Inventories
                                                                                                                                                                                                              2005     2004
                                                                                                                                                                                                               Em       Em
          Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                          5.7      5.2
          Vehicle parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                               1.3      1.0
                                                                                                                                                                                                              7.0      6.2

    The cost of inventories recognised as an expense in the income statement in the year totalled
A61.0 million (2004: A54.0 million).

19   Trade and other receivables
                                                                                                                                                                                                                    2005        2004
                                                                                                                                                                                                                     Em          Em
Re-purchase agreement receivables (during vehicle holding period) . . .                                                                                                       .   .   .   .   .   .   .   .          811.2      795.0
Prepaid vehicle operating lease charges (during vehicle holding period)                                                                                                       .   .   .   .   .   .   .   .           71.6       79.3
Other vehicle receivables (at end of vehicle holding period) . . . . . . . . .                                                                                                .   .   .   .   .   .   .   .          153.9      123.3
Amounts due from leasing companies . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                        .   .   .   .   .   .   .   .           42.0       57.4
Vehicle related receivables           .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1,078.7        1,055.0
Other trade debtors . . . . .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       132.2          120.9
Other debtors . . . . . . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        73.2           74.0
Other prepayments . . . . . .         .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        47.5           71.6
                                                                                                                                                                                                                1,331.6        1,321.5

    Other vehicle receivables include amounts due on exercising of manufacturer re-purchase
agreements.




                                                                                                      F-34
                        Notes to the Consolidated Financial Information (Continued)
                                for the years ended 31 December 2005 and 2004


19   Trade and other receivables (Continued)

    Vehicle related receivables include A163.3 million (2004: A197.8 million) held under finance lease
arrangements. The Group’s principal financial assets comprise available for sale and held for trading
investments; derivative financial instrument assets; trade and other receivables; and cash and
short-term deposits, which in aggregate represent the Group’s maximum exposure to credit risk at
each year end.
    The credit risk on cash and short-term deposits and derivative financial instruments is limited
because the counterparties are banks with high credit-ratings assigned by international credit-rating
agencies.
     With respect to vehicle related receivables, credit risk is concentrated with the main European
vehicle manufacturers. Concentrations of credit risk with respect to non-vehicle related receivables
are limited due to the diversity of the Group’s customers. Balance sheet amounts are stated net of
provisions for doubtful debts, and accordingly, the maximum credit risk exposure is the carrying
amount of the receivables in the balance sheet. An allowance of A25.1 million (2004: A25.1 million)
has been made for estimated irrecoverable amounts of trade and other receivables. This allowance
has been determined by reference to past experience. Irrecoverable trade and other receivable
expense of A4.6 million (2004: A6.3 million) has been recognised in the income statement in the year.

20   Cash and short-term deposits
                                                                                                                                                                       2005    2004
                                                                                                                                                                        Em      Em
         Cash at bank and in hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                  79.0    21.3
         Short-term deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                             19.8    18.0
                                                                                                                                                                       98.8    39.3

     Cash and short-term deposit balances are floating rate assets which earn interest at various rates
set with reference to the prevailing EURIBID, LIBOR or equivalent.
    Short-term deposits include A3.3 million (2004: A3.3 million) of deposits required by insurers to
be held by Aegis Motor Insurance Limited (a subsidiary of the Group) to settle claims.

21   Trade and other payables
                                                                                                                                                                     2005     2004
                                                                                                                                                                      Em       Em
         Vehicle payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                              236.5    338.9
         Amounts due to leasing companies . . . . . . . . . . . . . . . . . . . . . . . . .                                                                           44.0     45.0
         Vehicle related payables . . . . .          .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   280.5    383.9
         Other trade payables . . . . . . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    71.9     66.0
         Finance cost creditors . . . . . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    14.3      9.4
         Other creditors . . . . . . . . . . . .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    33.5     55.0
         Accruals and deferred income .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   235.2    230.8
         Other taxes and social security             .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    22.0     28.4
                                                                                                                                                                     657.4    773.5




                                                                             F-35
                            Notes to the Consolidated Financial Information (Continued)
                                    for the years ended 31 December 2005 and 2004


22    Provisions
                                                                                                   2005                            2004
                                                                                       Uninsured     Other             Uninsured     Other
                                                                                         losses     trading   Total      losses     trading   Total
                                                                                           Em         Em       Em          Em         Em       Em
At 1 January . . . . . . . . . . . . . . . . . .      .   .   .   .   .   .   .   .      26.3       17.5       43.8      20.3        33.5      53.8
Charged in the year . . . . . . . . . . . . .         .   .   .   .   .   .   .   .      18.2        5.2       23.4      16.3         2.9      19.2
Transfer to trade and other payables                  .   .   .   .   .   .   .   .        —        (1.0)      (1.0)     (2.3)         —       (2.3)
Utilised in the year . . . . . . . . . . . . . .      .   .   .   .   .   .   .   .      (7.7)      (6.6)     (14.3)     (8.1)      (19.3)    (27.4)
Exchange movements . . . . . . . . . . . .            .   .   .   .   .   .   .   .       0.3        0.1        0.4       0.1         0.4       0.5
At 31 December (included in non-current
  liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . .                     37.1       15.2      52.3       26.3        17.5     43.8

     Uninsured losses represent provisions for losses under third party liabilities or claims. Due to the
timescales and uncertainties involved in such claims, provision is made based upon the profile of
claims experience, allowing for potential claims for a number of years after policy inception.
      Other trading provisions primarily comprise:
      a)    Reorganisation and employee termination provisions of A3.1 million (2004: A7.4 million) that
            are expected to crystallise within the next few years. The reduction in the provision in the
            year is primarily due to the running down of the Centrus business.
      b)    Dilapidation and environmental provisions of A6.6 million (2004: A6.7 million) to cover the
            costs of the remediation of certain properties held under operating leases. The fair value of
            these provisions, which are primarily euro denominated and non-interest bearing, are not
            materially different to the book values, and the ultimate expenditure is expected to be
            coterminous with the underlying remaining lease periods (see Note 39).
      c)    Other short-term provisions of A5.5 million (2004: A3.4 million), which primarily comprise
            provision against future redemption of benefits under customer loyalty programmes and
            provision against legal claims that arise in the normal course of business that are expected
            to crystallise in the next couple of years. In the Directors’ opinion, after taking appropriate
            legal advice, the outcome of these legal claims will not give rise to any significant loss
            beyond the amounts provided at 31 December 2005.

23    Retirement benefit obligations
a)    Retirement benefit schemes operated
    Where applicable, subsidiaries contribute to the relevant state pension scheme. Certain
subsidiaries operate schemes which provide retirement benefits, including those of the defined
benefit type, which are in most cases funded by investments held outside the Group.

b)    Defined benefit schemes
    The Group operates funded defined benefit pension schemes for qualifying employees in the
United Kingdom, France, Spain and Austria. In addition, the Group operates unfunded defined benefit
schemes for employees in Germany and Greece, and an unfunded defined benefit statutory
termination scheme for employees in Italy. The principal schemes are in the United Kingdom and
Germany.




                                                                                      F-36
                        Notes to the Consolidated Financial Information (Continued)
                                for the years ended 31 December 2005 and 2004


23   Retirement benefit obligations (Continued)

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

                                                                                                            Funded        Unfunded
                                                                                                           schemes         schemes
                                                                                                        2005     2004   2005    2004

         Main assumptions
         Discount rate . . . . . . . . . . . . . . . . . . . .      .   .   .   .   .   .   .   .   .   4.7%     5.2%   4.0%    4.8%
         Inflation rate . . . . . . . . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .   .   2.8%     2.7%   1.6%    1.5%
         Expected rate of salary increases . . . . .                .   .   .   .   .   .   .   .   .   4.3%     4.1%   2.9%    2.5%
         Rate of pension increases in payment . .                   .   .   .   .   .   .   .   .   .   2.8%     2.7%   1.6%    1.5%
         Rate of pension increases in deferment .                   .   .   .   .   .   .   .   .   .   2.8%     2.7%   1.6%    1.5%
         Expected return on plan assets:
         —equities . . . . . . . . . . . . . . . . . . . . . . .    .........                           7.4%     7.5%   n/a     n/a
         —bonds . . . . . . . . . . . . . . . . . . . . . . . .     .........                           4.5%     4.9%   n/a     n/a
         —other . . . . . . . . . . . . . . . . . . . . . . . . .   .........                           4.2%     4.3%   n/a     n/a
     The expected rate of returns on plan assets is based on market expectations at the beginning of
each year, for returns over the entire life of the related obligation. The expected return on bonds is
based on long-term bond yields. The expected return on equities is based on a wide range of
qualitative and quantitative market analysis including consideration of market equity risk premiums.
     Mortality assumptions vary by scheme. Assumptions regarding future mortality experience are
set based on advice from published statistics and experience in each territory. The post-retirement
longevity assumption in the principal funded scheme applied a life expectancy for a member aged 65
in 2005 of 18 years (2004: 17 years) for males, and 21 years (2004: 20 years) for females. The
postretirement longevity assumption in the principal unfunded scheme applied a life expectancy for a
member aged 65 in 2005 of 18 years (2004: 17 years) for males and 22 years (2004: 21 years) for
females.




                                                                F-37
                           Notes to the Consolidated Financial Information (Continued)
                                   for the years ended 31 December 2005 and 2004


23    Retirement benefit obligations (Continued)

     The amounts recognised in the balance sheet are summarised as follows:

                                                                                                   2005                                 2004
                                                                                       Funded    Unfunded                   Funded    Unfunded
                                                                                      schemes    schemes      Total        schemes    schemes     Total
                                                                                         Em         Em         Em             Em         Em        Em
Present value of defined benefit obligations                                          (206.2)     (47.2)     (253.4) (153.0)           (36.0)    (189.0)
Fair value of scheme assets . . . . . . . . . . . . .                                  124.1         —        124.1   102.4               —       102.4
Retirement benefit obligations . . . . . . . . . .                                     (82.1)     (47.2)     (129.3)        (50.6)     (36.0)     (86.6)

                                                                                                   2005                                 2004
Analysis of movements in the present value                                             Funded    Unfunded                   Funded    Unfunded
of defined benefit scheme obligations                                                 schemes    schemes      Total        schemes    schemes     Total
                                                                                         Em         Em         Em             Em         Em        Em
At 1 January . . . . . . . . . . . . . . . .      ........                            (153.0)     (36.0)     (189.0) (132.5)           (31.0)    (163.5)
Current service charge . . . . . . . .            ........                              (8.0)      (2.4)      (10.4)   (8.3)            (1.9)     (10.2)
Interest on scheme liabilities . . . .            ........                              (8.0)      (1.7)       (9.7)   (7.6)            (1.7)      (9.3)
Actuarial loss:
—experience loss on liabilities . .               .   .   .   .   .   .   .   .         (5.6)       0.2        (5.4)         (3.3)       0.4       (2.9)
—loss on change of assumptions                    .   .   .   .   .   .   .   .        (37.5)      (8.6)      (46.1)         (3.1)      (3.4)      (6.5)
Contributions by employees . . . .                .   .   .   .   .   .   .   .         (0.4)        —         (0.4)         (0.4)        —        (0.4)
Benefits paid by the Group . . . . .              .   .   .   .   .   .   .   .           —         1.3         1.3            —         0.4        0.4
Benefits paid from the fund . . . .               .   .   .   .   .   .   .   .          5.3         —          5.3           3.7         —         3.7
Settlements paid from the fund .                  .   .   .   .   .   .   .   .          4.3         —          4.3            —          —          —
Exchange loss . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .         (3.3)        —         (3.3)         (1.5)       1.2       (0.3)
At 31 December . . . . . . . . . . . . . . . . . . . .                                (206.2)     (47.2)     (253.4) (153.0)           (36.0)    (189.0)

                                                                                                   2005                                2004
                                                                                        Funded    Unfunded                  Funded    Unfunded
Analysis of movements in the scheme assets                                             schemes    schemes       Total      schemes    schemes     Total
                                                                                          Em         Em          Em           Em         Em        Em
At 1 January . . . . . . . . . . . . . . .    ..........                                102.4          —       102.4         85.9          —       85.9
Expected return on plan assets .              ..........                                  6.9          —         6.9          6.7          —        6.7
Actuarial gain:
—experience gain on assets . . .              .   .   .   .   .   .   .   .   .   .      13.4          —           13.4        2.6         —        2.6
Contributions by the Group . . . .            .   .   .   .   .   .   .   .   .   .       7.9          —            7.9        9.5         —        9.5
Contributions by employees . . .              .   .   .   .   .   .   .   .   .   .       0.4          —            0.4        0.4         —        0.4
Benefits paid from the fund . . . .           .   .   .   .   .   .   .   .   .   .      (5.3)         —           (5.3)      (3.7)        —       (3.7)
Settlements paid from the fund .              .   .   .   .   .   .   .   .   .   .      (4.3)         —           (4.3)        —          —         —
Exchange gain . . . . . . . . . . . . . .     .   .   .   .   .   .   .   .   .   .       2.7          —            2.7        1.0         —        1.0
At 31 December . . . . . . . . . . . . . . . . . . . . . .                              124.1          —       124.1        102.4          —     102.4

                                                                                                                   Funded schemes
                                                                                                              2005                2004
           Defined benefit scheme assets                                                                    Em      %          Em      %

           Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     79.0      64%        63.0      62%
           Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      32.6      26%        25.0      24%
           Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      12.5      10%        14.4      14%
           Fair value of scheme assets . . . . . . . . . . . . . . . . . .                                 124.1     100%       102.4     100%




                                                                                        F-38
                           Notes to the Consolidated Financial Information (Continued)
                                   for the years ended 31 December 2005 and 2004


23    Retirement benefit obligations (Continued)

    The fair value of scheme assets did not comprise any property or other assets used by the
Group, nor any financial instruments of the Group.

Analysis of return on scheme assets                                                                                     2005   2004
                                                                                                                         Em     Em
Expected return on scheme assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       6.9   6.7
Actual return less expected return on pension scheme assets . . . . . . . . . . . . . . . . . . . . .                   13.4   2.6
Actual return on scheme assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    20.3   9.3

      The amounts recognised in the Income Statement are as follows:

                                                                                2005                               2004
                                                                      Funded   Unfunded                Funded     Unfunded
                                                                     schemes   schemes       Total    schemes     schemes      Total
                                                                        Em        Em          Em         Em          Em         Em
Current service cost . . . . . . . . . . . . . . . . . . . . .          8.0       2.4        10.4        8.3           1.9     10.2
Interest on scheme liabilities . . . . . . . . . . . . . . .            8.0       1.7         9.7        7.6           1.7      9.3
Expected return on scheme assets . . . . . . . . . . .                 (6.9)       —         (6.9)      (6.7)           —      (6.7)
Total charge before tax to income statement
  (see Note 4) . . . . . . . . . . . . . . . . . . . . . . . . .        9.1       4.1       13.2         9.2           3.6     12.8

     The scheme settlements in the year had no impact on the amounts recognised in the income
statement, and there were no curtailments in any of the schemes in either year. The charge before
tax is included in administrative expenses in the Income Statement.
      Amounts recognised through the Statement of Recognised Income and Expense are as follows:
                                                                                2005                              2004
                                                                      Funded   Unfunded                Funded     Unfunded
                                                                     schemes   schemes      Total     schemes     schemes      Total
                                                                        Em        Em         Em          Em          Em         Em
Actual return less expected return on pension
  scheme assets . . . . . . . . . . . . . . . . . . . . . . . .       13.4         —         13.4        2.6            —       2.6
Experience loss . . . . . . . . . . . . . . . . . . . . . . . . .     (5.6)       0.2        (5.4)      (3.3)          0.4     (2.9)
Loss on change of assumptions (financial and
  demographic) . . . . . . . . . . . . . . . . . . . . . . . .       (37.5)      (8.6)      (46.1)      (3.1)          (3.4)   (6.5)
                                                                     (29.7)      (8.4)      (38.1)      (3.8)          (3.0)   (6.8)

     The best estimate of the contributions expected to be paid by the Group into funded schemes
during the 2006 annual period is A12.9 million, which includes payments to fund the net actuarial
obligations over time.




                                                                    F-39
                             Notes to the Consolidated Financial Information (Continued)
                                      for the years ended 31 December 2005 and 2004


24     Obligations under finance leases
                                                                                                                                                                    Present value of
                                                                                                                                            Minimum lease           minimum lease
                                                                                                                                              payments                 payments
                                                                                                                                            2005    2004            2005       2004
                                                                                                                                             Em      Em              Em         Em
Amounts payable under finance leases
Within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                             279.4           273.6   276.2    270.6
Between two and five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                      2.0              —      1.9       —
                                                                                                                                            281.4 273.6
Less: future finance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                   (3.3) (3.0)
Present value of finance lease obligations . . . . . . . . . . . . . . . . . . . . .                                                        278.1           270.6   278.1    270.6
Analysed as:
Current liabilities (due for settlement within one year) . . . . . . . . . . .                                                                                      276.2    270.6
Non-current liabilities (due for settlement after more than one year)                                                                                                 1.9       —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                               278.1    270.6

     It is the Group’s policy to lease certain of its vehicles (including some vehicles held under
re-purchase arrangements) and some plant and equipment under finance leases. The average lease
term is less than one year. For the year ended 31 December 2005 the average effective interest rate
was 3.0% (2004: 2.9%) and interest rates are fixed at the contract date. All finance leases are on a
fixed repayment basis and no arrangements have been entered into for contingent rental payments.
    The fair value of the Group’s obligations under finance leases approximates to their carrying
amount and is secured by the lessors either having legal title or charges over the leased assets. In
addition, collateral is held against certain of the leases (see Note 15).

25     Other financial liabilities
a)    Borrowings
                                                                                                                                                            2005    2004
                                                                                                                                                             Em      Em
             Bank overdrafts (see Note 27) . . . . . . . . .                .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    12.4    13.8
             Bank loans and other loans (see Note 27)                       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    81.5    79.3
             Commercial paper (see Note 27) . . . . . . .                   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    66.0    44.4
             Loan notes (see Note 27) . . . . . . . . . . . .               .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   565.8   671.9
                                                                                                                                                            725.7   809.4
             Analysed as:
             Current liabilities (due for settlement within one year) . . . . . . . . . .                                                                   114.1   144.7
             Non-current liabilities (due for settlement after more than one
             year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                          611.6   664.7
                                                                                                                                                            725.7   809.4

    All borrowings were unsecured as at both 31 December 2005 and 31 December 2004. There are
covenants attached to certain of the borrowings.
    As all long-term borrowings are fixed rate, the contractual repricing profile of borrowings is
coterminous with the maturity profile (see Note 27).

Bank overdrafts
    Bank overdrafts are primarily denominated in euro and sterling and attract floating rate interest
by reference to Euribor and LIBOR plus margins ranging from 2% to 6%.




                                                                        F-40
                                  Notes to the Consolidated Financial Information (Continued)
                                                  for the years ended 31 December 2005 and 2004


25   Other financial liabilities (Continued)

Bank loans and other loans
    Bank loans and other loans are primarily floating rate, with a weighted average cost at 31
December of 5.0% (2004: 4.1%).

Commercial paper
    Avis Finance Company plc, an indirect wholly owned subsidiary of the Company, runs a
commercial paper programme in Belgium, guaranteed by the Company, which can provide the Group
with borrowings of up to A200.0 million (2004: A200.0 million). Commercial paper attracts interest at
2.6% (2004: 2.3%).

Loan notes
     At 31 December Avis Finance Company plc has outstanding the following loan notes:

                                                                              2005                                          2004
                                                              Principal m            Maturing             Principal m              Maturing
Issued
June 1998 . . . .     .   .   .   .   .   .   .   .   .   .         —                        —             $ 57.5                        2005
August 2000 . .       .   .   .   .   .   .   .   .   .   .    $ 150.0            2007 and 2010            $ 150.0              2007 and 2010
November 2001         .   .   .   .   .   .   .   .   .   .    A 25.0                      2006            A 25.0                        2006
March 2002 . . .      .   .   .   .   .   .   .   .   .   .    A 25.0                      2007            A 25.0                        2007
June 2002 . . . .     .   .   .   .   .   .   .   .   .   .    A 26.8                      2012            A 26.8                        2012
July 2002 . . . . .   .   .   .   .   .   .   .   .   .   .    A120.0                      2007            A120.0                        2007
June 2004 . . . .     .   .   .   .   .   .   .   .   .   .    $ 240.0      2011, 2012 and 2014            $ 240.0        2011, 2012 and 2014
June 2004 . . . .     .   .   .   .   .   .   .   .   .   .    A 65.0                      2012            A 65.0                        2012
    The US$ loan notes bear interest at an average fixed rate of 6.8% (2004: 6.8%). The euro
denominated loan notes bear interest at an average fixed rate of 6.1% (2004: 6.1%).
      US$150.0 million (2004: US$150.0 million) of proceeds from the loan notes issued in
August 2000 are swapped to a fixed rate euro liability. US$240.0 million (2004: US$240.0 million) of
the proceeds from the loan notes issued in June 2004 are swapped to a euro liability at a floating
rate of interest until June 2005 and a fixed rate thereafter. US$57.5 million of proceeds from the loan
notes issued in June 1998, which matured in the current year, were swapped to a fixed rate euro
liability. A60.0 million (2004: A60.0 million) of the proceeds from the loan notes issued in July 2002
are swapped to a floating rate euro liability. Further details are provided in Notes 26 and 27.

b)   Undrawn borrowings
     The committed borrowing facilities of the Group, drawn and undrawn, are as follows:

                                                                                                 2005                            2004
                                                                                      Drawn     Undrawn     Total       Drawn   Undrawn       Total
                                                                                       Em         Em         Em          Em       Em           Em
Revolving sydicated credit facility . . . . . . . . . . . .                           117.3     267.7       385.0        85.1      436.4      521.5
Bilateral facilities and finance leases . . . . . . . . . .                           270.7     276.9       547.6       248.3      218.2      466.5
                                                                                      388.0     544.6       932.6       333.4      654.6      988.0

     The drawn amount of the revolving syndicated credit facility includes A46.6 million in respect of
letters of credit (2004: A40.3 million).




                                                                                F-41
                        Notes to the Consolidated Financial Information (Continued)
                               for the years ended 31 December 2005 and 2004


25   Other financial liabilities (Continued)

     The maturity profile of the Group’s undrawn committed borrowing facilities at 31 December is
as follows:
                                                                                                      2005     2004
                                                                                                       Em       Em
         Expiring within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   276.9    218.2
         Expiring within one and two years . . . . . . . . . . . . . . . . . . . . . . . . .          267.7    136.5
         Expiring within two and five years . . . . . . . . . . . . . . . . . . . . . . . . .            —     299.9
                                                                                                      544.6    654.6

    At 31 December 2005, there were additional uncommitted facilties available to the Group of
A686.0 million (2004: A1,025.1 million).

c)   Deferred consideration
                                                                                                        2005    2004
                                                                                                         Em      Em
         Current liabilities (due for settlement within one year) . . . . . . . . . . . .                0.3      —
         Non-current liabilities (due for settlement after more than one year) .                        32.7    32.1
                                                                                                        33.0    32.1

     Deferred consideration comprises:
       i) A32.9 million (2004: A32.1 million) arising on the acquisition of shares in Avis Europe
          Investment Holdings Limited from Avis Inc in 1997. The balance is denominated in sterling
          and attracts an interest rate of 8.0% (2004: 8.0%) fixed for 32 years (2004: 33 years). The
          balance is repayable in annual instalments (including interest) of £1.9 million.
      ii) A0.1 million (2004: Anil) arising on the acquisition of Avis licensee locations in the
          Netherlands (see Note 36). The balance is denominated in euro and does not attract
          interest.

26   Derivative financial instruments
Financial risk management objectives and policies
     The Group’s financial risk management objective is to reduce the financial risks and exposures
facing the business with respect to changes in interest and foreign exchange rates, and to ensure
constant access to sufficient liquidity. To achieve this the Group undertakes an active hedging policy,
including the use of derivatives (interest rate and foreign exchange swaps, options, forward rate
agreements and caps and collars), which are entered into under policies approved and monitored by
a sub-committee of the Board, chaired by the Group Finance Director. These transactions are only
undertaken to reduce exposures arising from underlying commercial transactions and at no time are
transactions undertaken for speculative reasons.

Foreign currency risk
    The majority of the Group’s business is transacted in euros, sterling and US dollars. The principal
commercial currency of the Group is the euro, although dividends are payable in sterling. The Group
seeks to manage currency exposure wherever possible.
     In each country where the Group has a corporate operation, revenue generated and costs
incurred are primarily denominated in the relevant local currency, so providing a natural currency
hedge. In addition, intra-group trading transactions are netted and settled centrally. Any remaining
material foreign currency transaction exposures are hedged as appropriate. Revenue recognised from
licensees is primarily earned and received in sterling.
    With regard to translation exposures, the policy is to match the average assets of the Group to
the equivalent average liabilities in each major currency and thus minimise any impact to the Group.



                                                              F-42
                     Notes to the Consolidated Financial Information (Continued)
                          for the years ended 31 December 2005 and 2004


26   Derivative financial instruments (Continued)
To the extent that this does not occur, both foreign currency borrowings and forward exchange
contracts are used. Long-term US dollar borrowings undertaken to benefit from the liquidity of the
US dollar denominated capital markets are swapped into euros.

Interest rate risk
     The Group’s interest rate risk primarily arises from the Group’s borrowings. 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.
     The Group has an exposure to movements in interest rates, principally in euro and sterling.
     To manage these risks, the Group is both financed through a combination of fixed and floating
rate facilities and enters into various derivatives. The Group has a policy to ensure that the
proportion of fixed rate debt to net debt (defined for this purpose to include the net book value of
fleet under operating leases) for the next three year ends will be maintained in the range of 45% to
65%, 35% to 60% and 25% to 55% respectively.

Liquidity risk
     The seasonal nature of the business necessitates higher fleet levels in the summer months and
hence proportionately higher debt requirements. Consequently the Group ensures that it has a core
level of long-term funding in place, with maturities spread over a wide range of dates, supplemented
by shorter-term facilities to cover requirements through the year.

Credit risk
     The Group controls this risk from a treasury perspective by only entering into transactions
involving financial instruments with authorised counter-parties of strong credit quality, and such
positions are monitored regularly (see Note 19).




                                                 F-43
                              Notes to the Consolidated Financial Information (Continued)
                                      for the years ended 31 December 2005 and 2004


26     Derivative financial instruments (Continued)
Recognised fair values of derivative financial instruments
                                                                                                                                2005(1)
                                                                                                                    Assets     Liabilities    Net
                                                                                                                     Em           Em          Em
Hedging instruments:
—forward foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         —             (0.4)      (0.4)
Non-hedging instruments:
—forward foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         0.2           (0.6)      (0.4)
—forward foreign exchange options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       0.1             —         0.1
Non-debt derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             0.3            (1.0)     (0.7)
Hedging instruments:
—cross currency interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       —          (52.8)      (52.8)
Non-hedging instruments:
—interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              2.8           (5.6)      (2.8)
Debt derivatives (see Note 27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   2.8        (58.4)       (55.6)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3.1        (59.4)       (56.3)
Less: Non-current portion:
Hedging instruments:
—cross currency interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       —          (52.8)      (52.8)
Debt derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          —         (52.8)       (52.8)
Analysed as:
Current liabilities (due for settlement within one year) . . . . . . . . . . . . . . . . .                            3.1         (6.6)       (3.5)
Non-current liabilities (due for settlement after more than one year) . . . . . .                                      —         (52.8)      (52.8)
                                                                                                                      3.1        (59.4)      (56.3)

(1) Items arise in current year only due to the application of IAS 32/IAS 39 with effect from 1 January 2005 (see Note 47).
     As none of the derivative financial instruments are traded in an active market their fair values
are determined using a number of methods and assumptions that are based on conditions at the
balance sheet date. The fair value of interest rate swaps and cross currency interest rate swaps is
calculated as the present value of future estimated cash flows. The fair value of interest rate caps and
collars are valued using option valuation techniques. The fair value of forward exchange contracts is
determined using forward exchange market rates at the balance sheet date.
     The book values of derivative financial instruments as recognised in the 2004 comparatives, and
their related fair values, are as follows:
                                                                                                                               2004
                                                                                                                      Book amount Fair value
                                                                                                                          Em          Em
Derivative financial instruments included in debt Interest rate swaps,                                   caps
  and collars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      ......                —              4.6
Cross currency interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . .                 ......              77.8            96.6
Forward foreign currency contracts and foreign exchange options . . .                                    ......               0.8            (2.0)
                                                                                                                             78.6            99.2
Amounts included in accrued interest in respect of derivative financial
  instruments Interest rate swaps, caps and collars . . . . . . . . . . . . . . . . . . . .                                  (0.6)            —
Cross currency interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         (2.3)            —
Forward foreign currency contracts and foreign exchange options . . . . . . . . .                                            (0.3)            —
                                                                                                                             (3.2)            —
                                                                                                                             75.4            99.2



                                                                        F-44
                      Notes to the Consolidated Financial Information (Continued)
                           for the years ended 31 December 2005 and 2004


26   Derivative financial instruments (Continued)
Hedging instruments
Forward foreign exchange contracts
     Forward foreign exchange contracts as at 31 December 2005 with notional values of
US$11.6 million (2004: US$16.8 million) and South African Rand 2.5 million (2004: South African
Rand nil) were used to hedge expected foreign currency income as follows: US$2.2 million (2004:
US$2.5 million) and South African Rand 2.5 million (2004: South African Rand nil) into sterling, and
US$9.4 million (2004: US$14.3 million) into euro. These forward exchange contracts and
corresponding foreign currency receipts will mature within 12 months of the year end. Movements in
the fair value of these forward foreign exchange contracts were recognised as cash flow hedges in
the hedging reserve within equity. These amounts are then transferred to the income statement
when the forecast amounts are received at various dates between one and 12 months after the year
end.

Cross currency interest rate swaps
     Cross currency interest rate swaps of aggregate notional principal amounts of US$390.0 million
(2004: US$447.5 million) were used to hedge the Group’s US$ denominated loan notes (see Note 25).
Fair value hedges of A22.3 million (2004: A nil) arise from the hedging of the principal value of the
exposures to euro denominated liabilities. Cash flow hedges arise from the conversion of the regular
semi-annual US$ denominated interest payments to euro denominated interest payments. Amounts
recognised within equity will be released to the income statement when the underlying fixed interest
payments occur at various dates between the year end and 2014.

Non-hedging instruments
Forward foreign exchange contracts
     Forward foreign exchange contracts as at 31 December 2005 were held to convert the following
foreign currency notional amounts into sterling balances totalling £65.2 million (2004:
£100.7 million): Swiss Francs 57.7 million (2004: Swiss Francs 59.5 million); Singapore dollar
2.3 million (2004: Singapore dollar 3.3 million); US$3.2 million (2004: US$2.6 million); and South
African Rand 6.0 million (2004: South African Rand 5.2 million). In addition, at 31 December 2004,
the Group held forward exchange contracts to convert South African Rand 12.4 million into euro
balances of A1.4 million.

Forward foreign exchange options
     Forward foreign exchange option contracts as at 31 December were held to convert expected
foreign currency income of: US$1.3 million (2004: US$2.5 million) into sterling of £0.7 million (2004:
£1.4 million); US$5.7 million (2004: US$8.5 million) into A4.5 million (2004: A6.9 million). These
option contracts and corresponding foreign currency receipts will mature within 12 months of each
year end.

Interest rate swaps
    The notional principal amount of outstanding interest rate swap contracts as at the year end
was A165.0 million (2004: A260.0 million), with fixed interest rates payable between 4.1% and 5.9%.
The notional principal amount of interest rate caps and collars outstanding as at the period end was
A70.0 million (2004: A70.0 million).
    In addition, forward start interest rate swaps with an aggregate notional principal value of
A50.0 million (2004: A50 million) have been contracted to commence in 2006 and run for four years.
The swaps will convert a prevailing floating interest rate liability to an average fixed rate of 5.2%.




                                                 F-45
                            Notes to the Consolidated Financial Information (Continued)
                                    for the years ended 31 December 2005 and 2004


27    Net debt
     The maturity profile of the Group’s net debt balances (excluding deferred consideration) is as
follows:
                                                                                             At 31 December 2005
                                                                                                               More
                                                                           Less than    One to     Two to      than
                                                                           one year    two years five years five years     Total
                                                                              Em          Em         Em         Em          Em
Derivative financial instrument assets (see
  Note 26) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            2.8         —          —          —           2.8
Derivative financial instrument liabilities (see
  Note 26) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           (5.6)     (23.6)    (12.6)      (16.6)       (58.4)
Derivative financial instruments (see Note 26)                     .   .     (2.8)      (23.6)     (12.6)      (16.6)       (55.6)
Bank overdrafts (see Note 25) . . . . . . . . . . . . .            .   .    (12.4)         —          —           —         (12.4)
Bank loans and other loans (see Note 25) . . . .                   .   .    (10.8)      (70.7)        —           —         (81.5)
Commercial paper (see Note 25) . . . . . . . . . . .               .   .    (66.0)         —          —           —         (66.0)
Loan notes (see Note 25) . . . . . . . . . . . . . . . .           .   .    (24.9)     (228.8)     (39.2)     (272.9)      (565.8)
Obligations under finance leases (see Note 24)                     .   .   (276.2)       (1.9)        —           —        (278.1)
Gross debt (including net derivatives) . . . . . . . .                     (393.1)     (325.0)     (51.8)     (289.5)    (1,059.4)
Current assets — held for trading (see Note 15) .                            15.0          —          —           —          15.0
Cash and short-term deposits (see Note 20) . . . .                           98.8          —          —           —          98.8
Interest bearing assets . . . . . . . . . . . . . . . . . . . .               113.8         —          —          —        113.8
Net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (279.3)     (325.0)     (51.8)     (289.5)     (945.6)

                                                                                             At 31 December 2004
                                                                                                               More
                                                                           Less than    One to      Two to     than
                                                                           one year    two years five years five years     Total
                                                                              Em          Em         Em         Em          Em
Bank overdrafts (see Note 25) . . . . . . . . . . . . .            .   .     (13.8)        —           —          —         (13.8)
Bank loans and other loans (see Note 25) . . . .                   .   .     (34.5)        —        (44.8)        —         (79.3)
Commercial paper (see Note 25) . . . . . . . . . . .               .   .     (44.4)        —           —          —         (44.4)
Loan notes (see Note 25) . . . . . . . . . . . . . . . .           .   .     (52.0)     (24.9)     (253.2)    (341.8)      (671.9)
Obligations under finance leases (see Note 24)                     .   .    (270.6)        —           —          —        (270.6)
Gross debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (415.3)     (24.9)     (298.0)    (341.8)    (1,080.0)
Current assets — held for trading (see Note 15) .                             75.0         —           —          —          75.0
Cash and short-term deposits (see Note 20) . . . .                            39.3         —           —          —          39.3
Interest bearing assets . . . . . . . . . . . . . . . . . . . . .             114.3        —           —           —       114.3
Net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (301.0)     (24.9)     (298.0)    (341.8)      (965.7)




                                                                       F-46
                                               Notes to the Consolidated Financial Information (Continued)
                                                               for the years ended 31 December 2005 and 2004


27    Net debt (Continued)
Interest rate and currency profile
      The interest rate and currency profile of the Group’s net debt balances is as follows:
                                                                                                                             2005                         2004
                                                                                                                Fixed      Floating            Fixed    Floating
                                                                                                                 rate        rate     Total     rate      rate     Total
                                                                                                                  Em          Em       Em        Em        Em       Em
Gross debt (excluding impact of
  derivatives)
Euro . . . . . . . . . . . . . . . . . . . . . .                                       .   .   .   .   .   .   (201.6)      (430.2)   (631.8) (151.6)    (309.0)   (460.6)
Sterling . . . . . . . . . . . . . . . . . . .                                         .   .   .   .   .   .       —         (65.6)    (65.6)     —      (206.0)   (206.0)
US$ . . . . . . . . . . . . . . . . . . . . . .                                        .   .   .   .   .   .   (328.7)          —     (328.7) (335.1)        —     (335.1)
Other . . . . . . . . . . . . . . . . . . . . .                                        .   .   .   .   .   .       —            —         —       —         0.3       0.3
                                                                                                               (530.3)      (495.8) (1,026.1) (486.7)    (514.7) (1,001.4)
Net impact of derivatives
Euro . . . . . . . . . . . . . . . . .                             .   .   .   .   .   .   .   .   .   .   .   (465.8)        83.8    (382.0) (462.0)     (28.2)   (490.2)
Sterling . . . . . . . . . . . . . .                               .   .   .   .   .   .   .   .   .   .   .    (11.0)        65.6      54.6   (57.8)     165.3     107.5
US$ . . . . . . . . . . . . . . . . .                              .   .   .   .   .   .   .   .   .   .   .    328.7           —      328.7   335.1         —      335.1
Other . . . . . . . . . . . . . . . .                              .   .   .   .   .   .   .   .   .   .   .       —         (34.6)    (34.6)     —       (31.0)    (31.0)
                                                                                                               (148.1)       114.8     (33.3) (184.7)     106.1     (78.6)
Gross debt         (net of derivatives)
Euro . . . . .     .......................                                                                     (667.4)      (346.4) (1,013.8) (613.6)    (337.2)   (950.8)
Sterling . .       .......................                                                                      (11.0)          —      (11.0) (57.8)      (40.7)    (98.5)
US$                                                                                                                —            —         —       —          —         —
Other . . . .      .......................                                                                         —         (34.6)    (34.6)     —       (30.7)    (30.7)
                                                                                                               (678.4)      (381.0) (1,059.4) (671.4)    (408.6) (1,080.0)
Interest bearing                   assets
Euro . . . . . . . . .             ......                  .   .   .   .   .   .   .   .   .   .   .   .   .       —         101.8    101.8       —        96.6      96.6
Sterling . . . . . .               ......                  .   .   .   .   .   .   .   .   .   .   .   .   .       —          10.5     10.5       —        16.7      16.7
US$ . . . . . . . . .              ......                  .   .   .   .   .   .   .   .   .   .   .   .   .       —            —        —        —          —         —
Other . . . . . . . .              ......                  .   .   .   .   .   .   .   .   .   .   .   .   .       —           1.5      1.5       —         1.0       1.0
                                                                                                                   —         113.8    113.8       —       114.3    114.3
Net debt
Euro . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   (667.4)      (244.6)   (912.0) (613.6)    (240.6)   (854.2)
Sterling .     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (11.0)        10.5      (0.5) (57.8)      (24.0)    (81.8)
US$ . . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       —            —         —       —          —         —
Other . . .    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       —         (33.1)    (33.1)     —       (29.7)    (29.7)
                                                                                                               (678.4)      (267.2)   (945.6) (671.4)    (294.3)   (965.7)

    The net impact of derivatives in 2005 of A(33.3) million, comprises the recognition of the fair
value of the debt related derivative financial instruments of A(55.6) million, and fair value hedge
adjustment of A22.3 million (see Note 26).
     The net impact of derivatives in 2004 of A(78.6) million, comprises the book amount of
derivatives recognised in debt (see Note 26).




                                                                                                                    F-47
                            Notes to the Consolidated Financial Information (Continued)
                                    for the years ended 31 December 2005 and 2004


27    Net debt (Continued)
    The range of interest rates applicable for fixed rate gross debt (net of derivatives) by principal
currency is as follows:
                                                                                                    2005                       2004
                                                                                          Euro %       Sterling %     Euro %      Sterling %

Fixed interest rate charge . . . . . . . .         ...................                    4.8-6.8      6.7-6.7       4.7-6.8       6.5-6.5
Floating rate interest charge margin               above:
— EURIBOR . . . . . . . . . . . . . . . . . .      ...................                    0.2-1.7         n/a        0.2-1.7         n/a
— LIBOR . . . . . . . . . . . . . . . . . . . .    ...................                       n/a       0.4-1.0          n/a       0.3-1.0

28    Summary of fair values of non-derivative financial assets and liabilities

                                                                                        2005                               2004
                                                                               Book amount Fair value             Book amount Fair value
                                                                                   Em          Em                     Em          Em
Fair value of financial assets and financial liabilities:
Non-current assets — available for sale investments
  (see Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             0.6               0.6             0.6            0.6
Trade and other receivables (see Note 19) . . . . . . . . .                       1,331.6           1,331.6         1,321.5        1,321.5
Current assets — held for trading (see Note 15) . . . .                              15.0              15.0            75.0           75.0
Cash and cash equivalents (see Note 20) . . . . . . . . . .                          98.8              98.8            39.3           39.3
Trade and other payables (see Note 21) . . . . . . . . . . .                       (657.4)           (657.4)         (773.5)        (773.5)
Obligations under finance leases (see Note 24) . . . . .                           (278.1)           (278.1)         (270.6)        (270.6)
Financial liabilities — borrowings:
— current (see Note 25) . . . . . . . . . . . . . . . . . . . . . .                (114.1)           (101.9)        (144.7)         (160.9)
— non-current (see Note 25) . . . . . . . . . . . . . . . . . . .                  (611.6)           (639.5)        (664.7)         (599.0)
Financial liabilities — deferred consideration:
— current (see Note 25) . . . . . . . . . . . . . . . . . . . . . .                     (0.3)          (0.3)             —              —
— non-current (see Note 25) . . . . . . . . . . . . . . . . . . .                      (32.7)         (34.7)          (32.1)         (32.6)
    The Directors consider that the book value of non-current assets—available for sale investments;
trade and other receivables; current assets: held for trading; cash and cash equivalents; and trade and
other payables, approximate to their fair value.
    The fair value of obligations under finance leases approximates to their book value as the
majority of these obligations are due within one year (see Note 24).
     The fair value of borrowings and deferred consideration for disclosure purposes is estimated by
discounting the future contractual cash flows at the current market interest rate that is available to
the Group for similar financial instruments.

29    Called-up share capital

                                                                                               2005                        2004
                                                                                           Number            Em         Number          Em

Authorised
Ordinary shares of 1p each . . . . . . . . . . . . . . . . . . . . . . . . .            940,000,000                  800,000,000
Issued and fully paid share capital
At 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    585,788,030          8.1     585,788,030        8.1
Issued during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . .          334,736,017          5.0              —          —
At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        920,524,047         13.1     585,788,030        8.1

    On 16 June 2005, the Board announced a proposed 4 for 7 rights issue of new shares at 35
pence per share. To enable the rights issue, the shareholders approved, at an Extraordinary General



                                                                    F-48
                             Notes to the Consolidated Financial Information (Continued)
                                     for the years ended 31 December 2005 and 2004


29    Called-up share capital (Continued)
Meeting on 4 July 2005, an increase in the Company’s authorised share capital and authorised the
Directors to allot the new shares. The authorised share capital immediately following the
Extraordinary General Meeting was £9,400,000 divided into 940,000,000 shares.
     A total of 334,736,017 new shares were issued on 4 July 2005 pursuant to the rights issue. The
new shares rank equally in all respects with the existing shares, including the right to receive all
dividends or distributions made, paid or declared.
   The net proceeds of the rights issue were received on 27 July 2005 and 1 August 2005 and
amounted to £111.1 million (A166.2 million), which has been recognised as follows:
                                                                                                                                                                                                                         £m         Em

Rights issue
Share capital (as above) . . . .            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     3.3   5.0
Share premium (see Note 30)                 .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (4.8) (7.4)
Own shares (see Note 30) . . .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (0.1) (0.2)
Merger reserve (see Note 32)                .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   112.7 168.8
Net proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                            111.1     166.2

     The net proceeds above exclude other professional, legal and consultancy costs which have been
incurred in conjunction with the rights issue, but are not directly attributable to the issue of shares,
that have been recognised in the income statement as exceptional items (see Note 5).
    The net proceeds have been used to pay down short-term uncommitted borrowings and to
reduce the amounts drawn on the Group’s revolving lines of credit.

30    Share premium and own shares held

                                                                                                                                                                                                             Share               Own
                                                                                                                                                                                                            premium           shares held
                                                                                                                                                                                                               Em                 Em
At 1 January 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                 876.0            (1.7)
Own shares released on vesting of share awards . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                                   —              0.3
At 31 December 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                     876.0            (1.4)
At 1 January 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                 .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .            876.0           (1.4)
Own shares released on vesting of share awards . . . . .                                                                .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .               —             0.5
Own shares acquired upon rights issue (see Note 29) .                                                                   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .               —            (0.2)
Net expenses incurred on rights issue (see Note 29) . .                                                                 .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .             (7.4)            —
Transfer to retained earnings (see Note 32) . . . . . . . .                                                             .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .           (487.1)            —
At 31 December 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                     381.5            (1.1)

     On 22 June 2005, the High Court of Justice confirmed a reduction in the share premium account
of the Company of £335.2 million (A487.1 million) which became effective on 23 June 2005. The
deficit on the retained earnings account in the unconsolidated balance sheet of the Company, and in
the consolidated balance sheet of the Group, have been reduced accordingly.
    Own shares are held by the Avis Employee Share Trust, a discretionary trust, to partially satisfy
options and awards granted under a number of the Group’s share schemes.
     At 31 December 2005, the Trust held 664,049 shares (2004: 581,095 shares), with a market
value of 71 pence per share (2004: 54 pence per share), which have been recognised as a reduction
in shareholders’ funds. During the year the Trust acquired 241,472 shares as part of the rights issue,
which represented 0.026% of the issued share capital post the rights issue. None of the shares held
at the year end are under option to employees, nor have they been conditionally gifted to them. The
Avis Employee Share Trust has not waived its right to dividends on these shares.




                                                                                                    F-49
                             Notes to the Consolidated Financial Information (Continued)
                                      for the years ended 31 December 2005 and 2004


31     Share and share option schemes
     During the year, pursuant to the rights issue (see Note 29), and in accordance with the
individual share option scheme rules, adjustments have been approved to increase the number of
shares under option and decrease (where relevant) the exercise price per share of any options.
    The purpose of these adjustments was to counter the depreciatory effect which the rights issue
would otherwise have on the latent value of options. At the year end, options outstanding under all
schemes were as follows:

At 31 December 2005
                                                                                                                                     Exercise price range   Exercise period
                                                                                                                     No of options
Date of grant                                                                                                           (’000)        From          To      From         To

Approved and Unapproved                      Share Option
  Schemes
2004 . . . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       753.9        78.2p       78.2p      2007     2014
2003 . . . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       730.1        75.7p       86.8p      2006     2013
2002 . . . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     2,071.0        83.6p      174.2p      2005     2012
2001 . . . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     1,450.1       121.8p      136.4p      2004     2011
2000 . . . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       892.9       166.6p      166.8p      2003     2010
1999 . . . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       718.2       212.3p      234.6p      2002     2009
1998 . . . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       129.7       208.1p      224.7p      2001     2008
1997 . . . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       329.8       103.9p      107.1p      2000     2007
                                                                                                                       7,075.7
Equity Partnership Plan
Partnership shares
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                   —            —           —      2005     2012
Loyalty shares
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                47.7            —           —      2005     2012
                                                                                                                          47.7
Performance         Share    Plan
2004 . . . . . .    .....    ....    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       584.9            —           —      2007     2014
2003 . . . . . .    .....    ....    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .       702.7            —           —      2006     2013
2001 . . . . . .    .....    ....    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .          —             —           —      2005     2012
2000 . . . . . .    .....    ....    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .        78.5            —           —      2004     2011
                                                                                                                       1,366.1
Share Retention Plan
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                               715.8            —           —      2006     2008
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                            9,205.3




                                                                                                             F-50
                             Notes to the Consolidated Financial Information (Continued)
                                       for the years ended 31 December 2005 and 2004


31     Share and share option schemes (Continued)

At 31 December 2004

                                                                                                                                            Exercise price
                                                                                                                                               range(1)          Exercise period
                                                                                                                       No of options(1)
Date of grant                                                                                                              (’000)          From         To       From       To

Approved       and Unapproved Share Option Schemes
2004 . . . .   ................................                                                                              672.0         93.3p     93.3p       2007     2014
2003 . . . .   ................................                                                                              769.0         90.3p    103.5p       2006     2013
2002 . . . .   ................................                                                                            2,214.0         99.7p    207.8p       2005     2012
2001 . . . .   ................................                                                                            1,416.0        145.3p    162.7p       2004     2011
2000 . . . .   ................................                                                                              929.5        198.7p    199.0p       2003     2010
1999 . . . .   ................................                                                                              689.1        253.3p    279.8p       2002     2009
1998 . . . .   ................................                                                                            1,706.9        248.2p    268.0p       2001     2008
1997 . . . .   ................................                                                                              350.6        124.0p    127.8p       2000     2007
                                                                                                                           8,747.1
Equity Partnership Plan
Partnership shares
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                    5.5           —              —   2005     2012
Loyalty shares
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                 217.2            —              —   2005     2012
                                                                                                                             222.7
Performance Share Plan
2004 . . . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .         490.3            —              —   2007     2014
2003 . . . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .         589.0            —              —   2006     2013
2001 . . . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .          93.8            —              —   2005     2012
2000 . . . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .          65.8            —              —   2004     2011
                                                                                                                           1,238.9
Share Retention Plan
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                 600.0            —              —   2006     2008
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                              10,808.7

(1) These comparative balances have not been restated for the effects of the rights issue in July 2005.




                                                                                                           F-51
                            Notes to the Consolidated Financial Information (Continued)
                                   for the years ended 31 December 2005 and 2004


31    Share and share option schemes (Continued)

                                                               Approved and                                  Equity                                                                      Share
                                                                Unapproved                                 Partnership Performance                                                     Retention
                                                               Share Schemes                                  Plan      Share Plan                                                        Plan                   Total
                                                                                                                     Number (’000)
Outstanding options as at 1 January
  2004 . . . . . . . . . . . . . . . . . . . . . . .   .   .       11,434.1                                     492.1                              1,007.9                                    —               12,934.1
Granted in the year . . . . . . . . . . . . . .        .   .           787.5                                       —                                 490.0                                 600.0                1,877.5
Forfeited in the year . . . . . . . . . . . . .        .   .        (3,474.5)                                  (101.5)                              (259.0)                                   —                (3,835.0)
Exercised in the year . . . . . . . . . . . . .        .   .              —                                    (167.9)                                  —                                     —                  (167.9)
Outstanding options as at
 31 December 2004 . . . . . . . . . . . . . .                          8,747.1                                     222.7                           1,238.9                                 600.0              10,808.7
Exercisable options as at 31 December
  2004 . . . . . . . . . . . . . . . . . . . . . . . . .               5,092.1                                             —                                       —                                   —       5,092.1
Outstanding options as at 1 January
  2005 . . . . . . . . . . . . . . . . . . . . . . .   .   .        8,747.1                                     222.7                              1,238.9                                 600.0              10,808.7
Granted in the year — rights issue . .                 .   .        1,370.9                                      11.0                                221.0                                 115.8                1,718.7
Expired in the year . . . . . . . . . . . . . .        .   .             —                                      (26.4)                                  —                                     —                   (26.4)
Forfeited in the year . . . . . . . . . . . . .        .   .       (3,042.3)                                     (1.6)                               (93.8)                                   —                (3,137.7)
Exercised in the year . . . . . . . . . . . . .        .   .             —                                     (158.0)                                  —                                     —                  (158.0)
Outstanding options as at
 31 December 2005 . . . . . . . . . . . . . .                          7,075.7                                         47.7                        1,366.1                                 715.8               9,205.3
Exercisable options as at 31 December
  2005 . . . . . . . . . . . . . . . . . . . . . . . . .               5,591.7                                             —                                       —                                   —       5,591.7

     All movements in the number of outstanding options under the Equity Partnership Plan,
Performance Share Plan, and Share Retention Plan during the year had zero weighted average
exercise prices. Exercisable options comprise outstanding options where the vesting period has
completed, irrespective as to whether the option exercise price is above or below the current share
price.
    Movements in the weighted average exercise prices of the Approved and Unapproved Share
Schemes during the year is as follows:

                                                                                                                                                                                                           Approved and
                                                                                                                                                                                                            Unapproved
                                                                                                                                                                                                           Share Schemes

Weighted average exercise price (pence)
Outstanding options as at 1 January 2004                       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .          170.4
Granted in the year . . . . . . . . . . . . . . . . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .           93.3
Forfeited in the year . . . . . . . . . . . . . . . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .          141.2
Exercised in the year . . . . . . . . . . . . . . . . .        .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .            n/a
Outstanding options as at 31 December 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                      168.0
Exercisable options as at 31 December 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                    209.1
Outstanding options as at 31 December 2004                                 .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .          168.0
Granted in the year — rights issue . . . . . . . . .                       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .          139.6
Expired in the year . . . . . . . . . . . . . . . . . . . . .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .            n/a
Forfeited in the year . . . . . . . . . . . . . . . . . . . .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .          105.0
Exercised in the year . . . . . . . . . . . . . . . . . . . .              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .            n/a
Outstanding options as at 31 December 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                      128.4
Exercisable options as at 31 December 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                    141.1



                                                                               F-52
                           Notes to the Consolidated Financial Information (Continued)
                                  for the years ended 31 December 2005 and 2004


31    Share and share option schemes (Continued)

                                                                            Approved and                  Equity                      Share
                                                                             Unapproved                 Partnership   Performance   Retention
                                                                            Share Schemes                  Plan        Share Plan      Plan

Weighted average remaining contract lives (years)
At 31 December 2005 . . . . . . . . . . . . . . . . . . . . . .                         5.6                3.7           4.5           1.5
At 31 December 2004 . . . . . . . . . . . . . . . . . . . . . . .                       5.9                1.0           5.3           2.0

     IFRS 2, Share-Based Payment, requires that the fair value of all share options issued after
7 November 2002 is charged to the income statement. All of the Equity Partnership Plan options and
some of the options from the other schemes were issued before 7 November 2002 and therefore the
fair values of these granted options are not recognised. For options issued after 7 November 2002,
the fair value of the option must be assessed on the date of each issue. The Group uses a stochastic
valuation model at each issue date re-assessing the input assumptions on each occasion. No options
have been issued in 2005 and accordingly the only movements in the year to impact on the weighted
average relate to the rights issue and the forfeited and expired options. The weighted average of the
assumptions used in each valuation and the resulting weighted average fair value per option were as
follows:

                                                                                                  Approved
                                                                                                    and
                                                                                                 Unapproved                          Share
                                                                                                   Share         Performance       Retention
                                                                                                  Schemes         Share Plan          Plan
                                                                                                2005   2004      2005    2004    2005     2004

Weighted average
Share price (pence) . . . . . . . . . . . . . . . . . . . . . . . . . .     .   .   .   .   .   80.6    95.6     76.8    91.6    42.7    51.0
Option exercise price (pence) . . . . . . . . . . . . . . . . . . .         .   .   .   .   .   80.6    95.6       —       —       —       —
Vesting period (years) . . . . . . . . . . . . . . . . . . . . . . . .      .   .   .   .   .    3.0     3.0      5.5     5.5     2.0     2.0
Option life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . .   .   .   .   .   .   10.0    10.0      7.0     7.0     2.0     2.0
Expected volatility (%) . . . . . . . . . . . . . . . . . . . . . . . .     .   .   .   .   .    49%     49%      49%     49%     49%     49%
Risk free rate of return (%) . . . . . . . . . . . . . . . . . . . .        .   .   .   .   .    4.7%    4.7%     4.8%    4.8%    4.8%    4.8%
Probability of ceasing employment before vesting (%)                        .   .   .   .   .      5%      5%       0%      0%      0%      0%
Expectations of meeting performance criteria (%) . . .                      .   .   .   .   .    43%     43%      55%     55%    100%    100%
Fair value per option (pence) . . . . . . . . . . . . . . . . . . .         .   .   .   .   .   29.1    35.0     44.1    52.7    42.7    51.0
     Weighted average share price (pence); weighted average option exercise price (pence) and
weighted average fair value per option (pence) have been adjusted in 2005 (but not 2004
comparatives) for the changes in the number of options and exercise price arising from the rights
issue in 2005 (see above).
     Expected volatility was determined by reference to the volatility in the share price using rolling
one year periods for the five years immediately preceding the grant date. The risk free rate of return
is based upon UK gilt rates with an equivalent term to the options granted. For options issued prior
to July 2003, an expected dividend yield of 6.4% was applied, based on historic dividend yield
performance.
    For options issued after July 2003, future dividend assumptions were aligned to the dividend
expectations publicly announced by the Group.




                                                                  F-53
                            Notes to the Consolidated Financial Information (Continued)
                                   for the years ended 31 December 2005 and 2004


32    Retained earnings

                                                                                                                                   2005     2004
                                                                                                                                    Em       Em
At 1 January as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                (935.5) (878.8)
Impact of adoption of IAS 32 and IAS 39 (see Note 47) . . . . . . . . . . . . . . . . . . . . .                                     (2.7)     —
At 1 January as restated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           ..   ...   ..      (938.2) (878.8)
Profit/(loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         ..   ...   ..        11.8   (17.1)
Dividends (see Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         ..   ...   ..          —    (34.0)
Increase in equity reserve arising from charge to income for share options                                     in   the
  year (see Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        ..   ...   .   .     0.4        0.1
Net actuarial loss on retirement benefit obligations (see Note 23) . . . . . . .                               ..   ...   .   .   (38.1)      (6.8)
Taxation on actuarial loss (see Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . .                  ..   ...   .   .     9.2        1.1
Transfer from share premium reserve (see Note 30) . . . . . . . . . . . . . . . . .                            ..   ...   .   .   487.1         —
Transfer from merger reserve (see Note 33) . . . . . . . . . . . . . . . . . . . . . . .                       ..   ...   .   .   168.8         —
At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              (299.0) (935.5)

     Goodwill of A1,080.4 million arising on acquisitions arising before 1 March 1998 has been
written-off to reserves.

33    Other reserves

                                                                                                 Translation        Merger        Hedging
                                                                                                   reserve          reserve       reserve    Total
                                                                                                     Em               Em            Em        Em
At 1 January 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 —                   —          —          —
Exchange movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  (5.1)                 —          —        (5.1)
Taxation (see Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 (0.1)                 —          —        (0.1)
At 31 December 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   (5.2)                 —          —        (5.2)
At 1 January 2005 as reported . . . . . . . . . . . . . . . . . . . . . . . .                       (5.2)                 —          —        (5.2)
Impact of adoption of IAS 32 and IAS 39 (see Note 47) . . . . . .                                     —                   —        (8.6)      (8.6)
At 1 January 2005 as restated . . . . . . . . . . . . . . . . . . . . .          ....               (5.2)                 —        (8.6)    (13.8)
Cash flow hedges:
—net fair value gains . . . . . . . . . . . . . . . . . . . . . . . . . . . .    .   .   .   .        —                 —           6.1        6.1
—transfers to income statement . . . . . . . . . . . . . . . . . . .             .   .   .   .        —                 —           4.9        4.9
Premium arising on share issue (see Note 29) . . . . . . . . .                   .   .   .   .        —              168.8           —       168.8
Transfer to retained earnings (see Note 32) . . . . . . . . . . .                .   .   .   .        —             (168.8)          —      (168.8)
Exchange differences on translation of foreign operations                        .   .   .   .       0.4                —            —         0.4
Taxation (see Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . .      .   .   .   .      (3.0)               —          (3.3)      (6.3)
At 31 December 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   (7.8)                 —        (0.9)      (8.7)

     The Group has net euro borrowings of A26.6 million (2004: A44.0 million) which it has
designated as a hedge against its net investment in certain of its euro functional currency
subsidiaries. A foreign exchange gain of A1.0 million (2004: A0.9 million) on translation of the
borrowings into sterling has been recognised as part of the exchange movements in the translation
reserve.
    The merger reserve was recognised as a consequence of the Company taking merger relief under
s131 Companies Act 1985, on shares issued to acquire, as part of the rights issue process, an
investment in the ordinary and redeemable preference shares in Caelum Limited (a company
incorporated in Jersey). Following the subsequent redemption of the preference shares acquired, the




                                                                   F-54
                             Notes to the Consolidated Financial Information (Continued)
                                     for the years ended 31 December 2005 and 2004


33    Other reserves (Continued)

related amount previously standing to the credit of the merger reserve has become realised and has
been transferred to retained earnings.

34    Reconciliation of movements in shareholders’ equity

                                                                                                                               2005      2004
                                                                                                                                Em        Em
Profit/(loss) for the year attributable to the equity holders of the Company . . . . . . . .                                    11.8     (17.1)
Net expense recognised directly in equity (see Statement of Recognised Income and
  Expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (23.8) (10.9)
Total recognised income and expense attributable to equity holders of the Company                                          .   (12.0) (28.0)
Dividends (see Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       .      — (34.0)
Increase in equity reserve arising from charge to income for share options in the
  year (see Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    .     0.4       0.1
Net proceeds of share issue (see Note 29) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  .   166.2        —
Own shares released on vesting of share awards (see Note 30) . . . . . . . . . . . . . . . . .                             .     0.5       0.3
Net increase/(decrease) in shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      155.1     (61.6)
At 1 January as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           (58.0)      3.6
Impact of adoption of IAS 32 and IAS 39 (see Note 47) . . . . . . . . . . . . . . . . . . . . . . .                            (11.3)       —
At 1 January as restated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (69.3)      3.6
At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        85.8     (58.0)

35    Reconciliation of movements in minority interest

                                                                                                                                 2005     2004
                                                                                                                                  Em       Em
Profit on ordinary activities after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           0.3      —
Exchange movements (net of taxation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 (0.1)    0.1
Net increase in minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             0.2     0.1
At 1 January as reported and restated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 0.6     0.5
At 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      0.8     0.6

36    Acquisitions
Acquisition of licensee locations
     During the year, the Group acquired a 100% interest in a number of the rental locations of
former Avis licensees in both the Netherlands and France, and former Budget licensees in France. The
locations, which provide vehicle rental services, were acquired with effect from 1 March 2005,
10 November 2005 and 27 May 2005 respectively.
     The results and cash flows arising subsequent to the acquisitions (even if they had occurred on
the first day of the year) are not considered material to the Group and accordingly are not disclosed
separately. The acquisitions have been accounted for using the purchase method of accounting. The




                                                                      F-55
                             Notes to the Consolidated Financial Information (Continued)
                                     for the years ended 31 December 2005 and 2004


36     Acquisitions (Continued)

aggregated details of the net assets acquired, goodwill and consideration of the acquisitions are set
out below:

                                                                                                                 Fair value and
                                                                                                                  accounting
                                                                                                                      policy      Provisional
                                                                                                   Book value     adjustments      fair value
                                                                                                      Em               Em              Em
Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        0.5              —             0.5
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       0.5              —             0.5
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1.0              —             1.0
Goodwill arising on acquisitions . . . . . . . . . . . . . . . . . . . . . . . . .                                                   0.5
Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                          1.5
Consideration satisfied by:
Cash for acquisition of business . . . . . . . . . . . . . . . . . . . . . . . . .                                                   1.3
Deferred consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                               0.1
Forgiveness of receivable balances . . . . . . . . . . . . . . . . . . . . . . .                                                     0.1
                                                                                                                                     1.5

Rights issue acquisition
    During the year, as part of the rights issue (see Note 29), the Group acquired in two separate
tranches 100% of the ordinary and redeemable preference share capital of Caelum Limited (a
company incorporated in Jersey).
     The acquisition has been accounted for using the acquisition method of accounting, but resulted
in the recognition of a merger reserve (see Note 33). The details of the net assets acquired, goodwill
and consideration for the acquisition are set out below:

                                                                                                                    Fair value
                                                                                                                       and
                                                                                                                   accounting
                                                                                                                      policy      Provisional
                                                                                                    Book value     adjustments     fair value
                                                                                                       Em               Em             Em
Amounts due from original shareholders . . . . . . . . . . . . . . . . . . . .                        173.8              —          173.8
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           173.8              —          173.8
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                       —
Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                       173.8
Consideration satisfied by:
Issue of share capital
—called up share capital (see Note 29) . . . . . . . . . . . . . . . . . . . . .                                                      5.0
—share premium recognised in merger reserve (see Note 33) . . . .                                                                   168.8
                                                                                                                                    173.8




                                                                       F-56
                           Notes to the Consolidated Financial Information (Continued)
                                  for the years ended 31 December 2005 and 2004


37    Notes to the consolidated cash flow statement
a) Analysis of changes in net debt
                                                                                                                             Impact of
                                                                                                         At 31 December     adoption of    At 1 January
                                                                                                             2004 as        IAS 32 and       2005 as
                                                                                                             reported         IAS 39         restated
                                                                                                                Em              Em              Em
Cash and short-term deposits (see Note 20) . . . . . . . . . . . . .                                           39.3                 —          39.3
Bank overdrafts (see Note 25) . . . . . . . . . . . . . . . . . . . . . . . .                                 (13.8)                —         (13.8)
Cash and cash equivalents . . . . . . . . . . . . . . . . . .      .   .   .   .   .   .   .   .   .          25.5               —             25.5
Current assets — held for trading (see Note 15) .                  .   .   .   .   .   .   .   .   .          75.0               —             75.0
Obligations under finance leases (see Note 24) . .                 .   .   .   .   .   .   .   .   .        (270.6)              —           (270.6)
Borrowings (excluding overdrafts) (see Note 25) .                  .   .   .   .   .   .   .   .   .        (795.6)            86.3          (709.3)
Derivative debt instruments (see Note 26) . . . . .                .   .   .   .   .   .   .   .   .            —            (101.2)         (101.2)
Net debt (see Note 47) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            (965.7)           (14.9)         (980.6)

                                                            At 1 January
                                                              2005 as                                        Other        Exchange      At 31 December
                                                              restated                 Cash flow            non-cash      movement           2005
                                                                 Em                       Em                  Em             Em               Em
Cash and short-term deposits (see
  Note 20) . . . . . . . . . . . . . . . . . . . . . . .        39.3                           57.7              —           1.8              98.8
Bank overdrafts (see Note 25) . . . . . . . . .                (13.8)                           1.4              —            —              (12.4)
Cash and cash equivalents . . . . . . . . .            ..       25.5                           59.1              —           1.8             86.4
Current assets — held for trading (see
  Note 15) . . . . . . . . . . . . . . . . . . . . .   ..       75.0                           (58.4)            —          (1.6)             15.0
Obligations under finance leases (see
  Note 24) . . . . . . . . . . . . . . . . . . . . .   ..     (270.6)                          92.7           (95.4)        (4.8)          (278.1)
Borrowings (excluding overdrafts) (see
  Note 25) . . . . . . . . . . . . . . . . . . . . .   ..     (709.3)                          34.8           (32.2)        (6.6)          (713.3)
Derivative debt instruments (see
  Note 26) . . . . . . . . . . . . . . . . . . . . .   ..     (101.2)                              8.0         37.3          0.3             (55.6)
Net debt (see Note 27) . . . . . . . . . . . . .              (980.6)                      136.2             (90.3)        (10.9)          (945.6)

     Other non-cash movements represent the effect of the inception and cessation of certain finance
leases during the year and recognition of changes in the fair value of derivatives and hedged items.




                                                                 F-57
                           Notes to the Consolidated Financial Information (Continued)
                                  for the years ended 31 December 2005 and 2004


37     Notes to the consolidated cash flow statement (Continued)

b) Reconciliation of net increase/(decrease) in cash and cash equivalents to movement in net debt
                                                                                                                                                                        2005     2004
                                                                                                                                                                         Em       Em
Increase/(decrease) in cash and short-term deposits . . . . . . . . . . . . . . . . . . . . . . .                                                                        59.5     (13.2)
Decrease/(increase) in bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                  1.4      (4.3)
Net increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . .                                                                         60.9     (17.5)
Exchange movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                           (1.8)     (0.3)
Cash   and cash equivalents . . . . . . . . . . . . . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     59.1     (17.8)
Cash   flow from obligations under finance leases . .                  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     92.7      48.6
Cash   flow from borrowings (excluding overdrafts)                     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     34.8     147.6
Cash   flow from financial liabilities . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      8.0        —
Cash   flow from current financial assets . . . . . . . . .            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (58.4)    (25.2)
Movement in net debt resulting from cash flows                     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    136.2     153.2
New finance leases . . . . . . . . . . . . . . . . . . . . . . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (95.4)    (69.7)
Re-measurement adjustments . . . . . . . . . . . . . . .           .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      5.1        —
Exchange movements . . . . . . . . . . . . . . . . . . . . .       .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    (10.9)     (3.6)
Total movement in net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                             35.0      79.9
Net debt at 1 January (as restated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                              (980.6) (1,045.6)
Net debt at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                          (945.6)   (965.7)

38     Contingent liabilities
     The Company and certain subsidiaries have provided unsecured guarantees to certain third
parties within the normal course of business, the majority of which were in favour of certain lenders
in respect of some of the Group’s loan notes and borrowing facilities, together with guarantees
provided to vehicle suppliers and property lessors. As at 31 December 2005, these guarantees
totalled A911.4 million (2004: A974.6 million).
     Certain Group companies are defendants in a number of claims and legal proceedings incidental
to their operations. The Directors do not expect that any of these contingencies will have a material
impact on the results or financial position of the Group.
    Save as disclosed herein and excluding intra-group indebtedness and guarantees, no member of
the Group had at close of business on 31 December 2005 any outstanding loan capital (including
loan capital created but unissued), term loans or any other borrowings or indebtedness in the nature
of borrowings, including bank overdrafts, liabilities under acceptances (other than normal trade bills)
or acceptance credits, hire purchase commitments, obligations under finance leases, guarantees or
other contingent liabilities.




                                                                 F-58
                             Notes to the Consolidated Financial Information (Continued)
                                     for the years ended 31 December 2005 and 2004


39     Financial commitments
    At 31 December, the Group had the following minimum lease payment commitments under
non-cancellable operating leases:

                                                                                          2005                                                                       2004
                                                                            Land and                                                     Land and
                                                                            buildings     Vehicles               Other                   buildings                   Vehicles     Other
                                                                               Em           Em                    Em                        Em                         Em          Em
Expiring:
Within one year . . . . . . . . . . . . . . . . . . . . . . . . .                43.4         13.5                   0.1                     31.4                        11.4     0.1
Later than one year and less than five years . . .                               54.8          1.8                   0.1                     51.6                         1.3     0.1
After five years . . . . . . . . . . . . . . . . . . . . . . . . .               28.8           —                     —                      29.2                          —       —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      127.0            15.3                   0.2                  112.2                          12.7     0.2

     At each year end, the Group also had prepaid various other operating lease commitments in
relation to manufacturer re-purchase agreements, as detailed in Note 19.

40     Majority shareholder
     The Company’s ultimate majority shareholder is s.a. D’Ieteren n.v. which is incorporated in
Belgium. The ultimate controlling party of s.a. D’Ieteren n.v. is the D’Ieteren family. Avis Europe plc is
the smallest company that consolidates the results of the Company and its subsidiaries.
    s.a. D’Ieteren n.v. is the largest company that consolidates the results of the Company and its
subsidiaries. Copies of s.a. D’Ieteren n.v.’s financial statements are available from: The Investor
Relations Department, Avis Europe plc, Avis House, Park Road, Bracknell, Berkshire RG12 2EW.

41     Related party transactions

                                                                                                                                                                          2005    2004
                                                                                                                                                                           Em      Em
Sales to joint venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     0.4     0.3
Net current amounts owing from joint venture . . . . . . . . . . . . . . .                           .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     0.2      —
Purchases from majority shareholder . . . . . . . . . . . . . . . . . . . . . .                      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    49.8    48.3
Sales to majority shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . .                .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    48.9    41.0
Purchases from a subsidiary of majority shareholder . . . . . . . . . . .                            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     0.2      —
Interest payable to a subsidiary of majority shareholder . . . . . . . .                             .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     0.3     1.8
Dividends paid to majority shareholder . . . . . . . . . . . . . . . . . . . . .                     .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      —     20.3
Current amounts owing to majority shareholder . . . . . . . . . . . . . .                            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    13.1    24.9
Current amounts owing from majority shareholder . . . . . . . . . . . .                              .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .    17.2    23.8
Current amounts owing from a subsidiary of majority shareholder                                      .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .     0.1      —
Loans owing to a subsidiary of majority shareholder . . . . . . . . . . .                            .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .      —     34.0
    The remuneration of the Directors, and other key management personnel of the Group is set out
below in aggregate for each of the categories specified in IAS 24, Related Party Disclosures.

                                                                                                2005                                                                     2004
                                                                                   Directors     Other                   Total                   Directors                Other   Total
                                                                                      Em          Em                      Em                        Em                     Em      Em
Key management compensation
Salaries and short-term employee benefits . . . . . . . .                               4.0              0.7                 4.7                         3.4               0.7     4.1
Post-employment benefits . . . . . . . . . . . . . . . . . . . . .                      0.7              0.7                 1.4                         0.6               0.6     1.2
Termination benefits . . . . . . . . . . . . . . . . . . . . . . . . .                   —                —                   —                          0.6                —      0.6
                                                                                        4.7              1.4                 6.1                         4.6               1.3     5.9




                                                                          F-59
                            Notes to the Consolidated Financial Information (Continued)
                                    for the years ended 31 December 2005 and 2004


42     Exchange rates
      Monthly income statements and other period statements of overseas operations are translated at
the relevant rate of exchange for that month. Except for the balance sheet which is translated at the
closing rate, each line item in these Consolidated Financial Statements represents a weighted average
rate.
    The rates of exchange between the euro (the presentation currency and the main currency that
principally affects the Group) and sterling (the functional currency) were as follows:

                                                                                                                            Sterling to Euro   Euro to Sterling
                                                                                                                              Year ended         Year ended
                                                                                                                             31 December        31 December
                                                                                                                            2005       2004    2005      2004

Weighted average reported rate for revenue . . . . . . . . . . . . . . . . . . .                                           1.461     1.474     0.685     0.678
Weighted average reported rate for operating profit . . . . . . . . . . . . .                                              1.465     1.504     0.683     0.665
Year end rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        1.480     1.444     0.676     0.693

43     Principal subsidiaries
    A list of the principal subsidiaries including the name, country of incorporation, and proportion
of ownership are detailed below:
                                                                                                                                      2005            2004
                                                                                                                     Country of    % of indirect   % of indirect
Name of company                                                                                                    incorporation    ownership       ownership

Avis   Location de Voitures SAS . . . . . . . . . . . .            .   .   .   .   .   .   .   .   .   .   .   .        France         100             100
Avis   Autovermeitung GMBH & Co KG . . . . . . .                   .   .   .   .   .   .   .   .   .   .   .   .      Germany          100             100
Avis   Autonoleggio SpA . . . . . . . . . . . . . . . . . .        .   .   .   .   .   .   .   .   .   .   .   .           Italy       100             100
Avis   Alquile un Coche SA . . . . . . . . . . . . . . . .         .   .   .   .   .   .   .   .   .   .   .   .          Spain        100             100
Avis   Rent A Car Limited . . . . . . . . . . . . . . . . .        .   .   .   .   .   .   .   .   .   .   .   .             UK        100             100
Avis   Europe International Reinsurance Limited                    .   .   .   .   .   .   .   .   .   .   .   .   Isle of Man         100             100
Avis   Europe Holdings Limited . . . . . . . . . . . . .           .   .   .   .   .   .   .   .   .   .   .   .             UK        100             100
Avis   Finance Company plc . . . . . . . . . . . . . . .           .   .   .   .   .   .   .   .   .   .   .   .             UK        100             100
Avis   Management Services Limited . . . . . . . . .               .   .   .   .   .   .   .   .   .   .   .   .             UK        100             100
    In addition to the principal subsidiaries, the assets and liabilities of Europe Leisure Holdings NV
and its subsidiary are consolidated in these Consolidated Financial Statements in accordance with
SIC 12, Consolidation—Special Purpose Entities.
    A complete list of all Group subsidiaries is available from: The Investor Relations Department,
Avis Europe plc, Avis House, Park Road, Bracknell, Berkshire RG12 2EW.

44     Subsequent events
    In late 2005, the Group commenced a restructuring project covering the roles of its European
Headquarters, corporate operations and Shared Service Centres. On 15 February 2006, having
completed the planning stage, the Group announced the full extent of the project to create an
organisation that is both more effective and more efficient. The project comprises the following main
elements: a substantial reduction in staff and running costs at the European headquarters; an
acceleration of the transfer of back-office activities into the shared service centre in Budapest;
consolidation of all call centre activities into the existing Barcelona facility and closure of the
Manchester call centre; and a number of other people and overhead cost initiatives within corporate
operations.
     In addition to A6.4 million of exceptional costs taken in 2005 (see Note 5), the exceptional costs
of this project are expected to amount to some A40.0 million in 2006 and A7.0 million in 2007. The
project will generate anticipated savings of around A7.0 million in 2006, A25.0 million in 2007 and
A30.0 million per annum thereafter.



                                                                           F-60
                     Notes to the Consolidated Financial Information (Continued)
                           for the years ended 31 December 2005 and 2004


44   Subsequent events (Continued)

    Also subsequent to the year end, the Group has entered into a new five year revolving
syndicated credit facility of A580 million, replacing the revolving syndicated facility of A385 million in
place at 31 December 2005.

45   Explanation of the transition to International Financial Reporting Standards
a) Application of IFRS 1
      The Group’s Consolidated Financial Statements for the year ended 31 December 2005 are the
first annual financial statements that have been prepared under International Financial Reporting
Standards ‘‘IFRS’’.
    The Group’s transition date is 1 January 2004. The Group prepared its opening IFRS balance
sheet as at that date. The reporting date of these Consolidated Financial Statements is 31 December
2005. The Group’s IFRS adoption date is 1 January 2005.
    In preparing these Consolidated Financial Statements, the Group has applied the mandatory
exceptions and certain of the optional exemptions from full retrospective application of IFRS.

b) Transition to IFRS—First time adoption
    IFRS 1, First-time Adoption of International Financial Reporting Standards, provides the basis
upon which companies are to initially convert their financial statements to IFRS. IFRS 1 allows certain
exemptions and options in respect of accounting and disclosure on transition to IFRS. The Group has
taken the following key exemptions:

Business combinations
    The Group has applied the business combinations exemption in IFRS 1. It has not restated
business combinations that took place prior to the 1 January 2004 transition date. Under IFRS 3,
Business Combinations, the net book value of goodwill is ‘‘frozen’’ at 1 January 2004 and is no longer
subject to amortisation. Instead it is subject to an impairment test on an annual basis, or more
frequently when there is an indication that the carrying value is not recoverable.

Cumulative translation differences
    The Group has elected to set all previous cumulative translation differences of its investments in
subsidiaries, joint venture and associates to zero as at 1 January 2004.

Post-employment benefits
     The Group has elected to immediately recognise all cumulative actuarial gains and losses as at
1 January 2004.

Share-based transactions
    IFRS 2, Share-Based Payments, has only been applied to equity based employee compensation
schemes in respect of awards granted after 7 November 2002, and not vested by 1 January 2005.

Financial instruments
     Under IFRS, certain of the Group’s financial instruments are required to be measured at fair
value, in accordance with IAS 32, Financial Instruments: Disclosures and Presentation, and IAS 39,
Financial Instruments: Measurement and Recognition. Derivatives, which are largely held off-balance
sheet under UK GAAP, must be recognised in the balance sheet in full and at fair value. Subject to
satisfying the requirements for hedge accounting, any gains or losses in the period arising from the
movement in the fair values of derivatives are recognised in the income statement. In accordance



                                                   F-61
                              Notes to the Consolidated Financial Information (Continued)
                                       for the years ended 31 December 2005 and 2004


45     Explanation of the transition to International Financial Reporting Standards (Continued)

with IFRS 1, the Group has opted to apply IAS 32 and IAS 39 with effect from 1 January 2005. As
permitted under IFRS 1, the comparative data for 2004 therefore excludes the impact of IAS 32 and
IAS 39, and such derivatives have been accounted for instead on the basis of the Group’s UK GAAP
accounting policies.
    The impact of the adoption of IAS 32 and IAS 39 on the balance sheet as at 1 January 2005 is
separately detailed in Note 47 below.

46     Reconciliations between IFRS and UK GAAP
    The following reconciliations provide a quantification of the effect of the transition to IFRS on
the Group.
i)    Summary of the impact on equity

                                                                                                        At 1 January   At 31 December
                                                                                                Notes      2004             2004
                                                                                                            Em               Em
Total equity shareholders’ funds—in accordance with UK GAAP (as
  reported) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 15.4           (18.3)
Accounting policy changes—Reversal of interest capitalisation . . . .                             a         (0.2)           (0.1)
Total equity shareholders’ funds—in accordance with UK GAAP (as
  restated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               15.2           (18.4)
Vehicles subject to manufacturer re-purchase agreements . . . . . . .                             b           —               —
Restatement of the provision for post-employment benefits . . . . . .                             c        (45.5)          (54.0)
Restatement of goodwill for non-amortisation/impairment with
  effect from 1 January 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . .              d           —              0.7
Deferred tax adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            f         12.2            13.7
Other—Reversal of proposed ordinary dividends payable . . . . . . . .                             g         21.7              —
Total equity shareholders’ funds—in accordance with IFRS . . . . . . .                                       3.6           (58.0)




                                                                          F-62
                              Notes to the Consolidated Financial Information (Continued)
                                      for the years ended 31 December 2005 and 2004


46     Reconciliations between IFRS and UK GAAP (Continued)
ii)   Reconciliation of equity as at 31 December 2003

                                                                                                                                 Accounting    Effect of
                                                                                                                    UK GAAP        policy     transition
                                                                                                           Notes   as reported    changes       to IFRS     IFRS
                                                                                                                       Em           Em            Em         Em
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           ..         d        45.4          —             —          45.4
Other intangible assets . . . . . . . . . . . . . . . . . . . . . .                                ..         g          —           —           14.7         14.7
Property, plant and equipment:
—vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            .   .   b, g     1,313.3           —        (848.9)      464.4
—other property, plant and equipment . . . . . . . . . . .                                         .   .   a, g        96.6         (0.3)       (14.7)       81.6
Investments accounted for under the equity method .                                                .   .               10.1           —            —         10.1
Other financial assets—available for sale investments .                                            .   .                0.6           —            —          0.6
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . .                              .   .      f        18.5           —          12.8        31.3
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .                                            1,484.5         (0.3)      (836.1)      648.1
Non-current assets held for sale . . . . . . . . . . . . . . . . .                                            g           —          —             2.1         2.1
Inventories . . . . . . . . . . . . . . . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .      a          —           5.4           —           5.4
Trade and other receivables . . . . . . . . .              .   .   .   .   .   .   .   .   .   .   .   .   a, b       491.9         (1.3)       846.4      1,337.0
Current tax assets . . . . . . . . . . . . . . . .         .   .   .   .   .   .   .   .   .   .   .   .                4.3           —            —           4.3
Other financial assets—held for trading                    .   .   .   .   .   .   .   .   .   .   .   .      g       116.1           —         (16.0)       100.1
Cash and short-term deposits . . . . . . .                 .   .   .   .   .   .   .   .   .   .   .   .      g        36.4           —          16.0         52.4
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                            648.7         4.1         846.4      1,499.2
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                        2,133.2         3.8          12.4      2,149.4
Trade and other payables . . . . . . . . .             .   .   .   .   .   .   .   .   .   .   .   .   .   c, g       716.9           —         (29.8)      687.1
Current tax liabilities . . . . . . . . . . . . .      .   .   .   .   .   .   .   .   .   .   .   .   .               43.6          4.1           —         47.7
Obligations under finance leases . . . .               .   .   .   .   .   .   .   .   .   .   .   .   .              250.6           —            —        250.6
Other financial liabilities—borrowings .               .   .   .   .   .   .   .   .   .   .   .   .   .              169.0           —            —        169.0
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                         1,180.1         4.1         (29.8)     1,154.4
Net current assets/(liabilities) . . . . . . . . . .