Half-Year Financial Report 2017 - Investor Relations ...

Half-Year Financial Report 2017 Half-year ended June 30, 2017

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Europcar Groupe S.A.

A French public limited company (société anonyme) with share capital of €161,030,883

Headquarters:

2 rue René Caudron, Bâtiment OP 78 960 Voisins-le-Bretonneux

Versailles Trade and Companies Register (R.C.S.) no. 489 099 903

This document is a free translation of the interim financial report of Europcar Groupe for the first half-year ended 30 June 2017. This translation has been prepared solely for the information and convenience of English speaking users. In the event of any ambiguity or discrepancy between this translation and the original document, the French version shall prevail.

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CONTENTS

HALF-YEAR MANAGEMENT REPORT ............................................................................................................. 5

1. HIGHLIGHTS OF THE FIRST HALF OF 2017 ........................................................................................... 5

1.1 SCOPE CHANGES AND ACQUISITIONS .................................................................................................. 5

1.2 CAPITAL INCREASE ................................................................................................................................... 6

2. SUBSEQUENT EVENTS .............................................................................................................................. 7

2.1 FINANCING OPERATIONS ......................................................................................................................... 7

3. ANALYSIS OF OPERATING RESULTS : ................................................................................................... 8

3.1. KEY PERFORMANCE INDICATORS ................................................................................................ 8

3.2. COMPARISON OF OPERATING RESULTS ...................................................................................... 9

3.2.1 TOTAL REVENUE .................................................................................................................... 12

3.2.2 FLEET HOLDING COSTS ........................................................................................................ 12

3.2.3 FLEET OPERATING, RENTAL AND REVENUE-RELATED COSTS .................................. 12

3.2.4 PERSONNEL COSTS ................................................................................................................ 13

3.2.5 OVERHEAD FOR HEADQUARTERS AND NETWORK ....................................................... 13

3.2.6 OTHER NONCURRENT INCOME AND EXPENSES ............................................................. 13

3.2.7 ADJUSTED CORPORATE EBITDA ......................................................................................... 13

3.2.8 NET FINANCING COSTS ......................................................................................................... 13

3.2.9 INCOME TAX ............................................................................................................................ 14

3.2.10 SHARE OF PROFIT OR LOSS IN COMPANIES ACCOUNTED FOR UNDER THE

EQUITY METHOD .................................................................................................................... 14

3.2.11 NET PROFIT/(LOSS) ................................................................................................................. 14

3.3 REVENUE AND ADJUSTED CORPORATE EBITDA BY OPERATING SEGMENT .................. 15

3.3.1 EUROPE ..................................................................................................................................... 15

3.3.2 REST OF WORLD ..................................................................................................................... 16

3.3.3 ELIMINATION AND HOLDINGS ............................................................................................ 16

4 LIQUIDITY AND FINANCIAL POSITION ............................................................................................... 17

4.1 OVERVIEW ........................................................................................................................................ 17

4.2 TOTAL NET DEBT ............................................................................................................................ 17

4.3 ANALYSIS OF CORPORATE FREE CASH FLOW ......................................................................... 19

4.3.1 OVERVIEW ................................................................................................................................ 19

4.3.2 CORPORATE FREE CASH FLOW ........................................................................................... 20

4.3.3 OTHER COMPONENTS OF CASH FLOW ............................................................................. 20

4.4 ANALYSIS OF CASH FLOW (IFRS) ................................................................................................ 21

4.4.1 NET CASH FROM (USED BY) OPERATIONS ....................................................................... 21

4.4.2 NET CASH FLOW FROM INVESTING ACTIVITIES ............................................................ 22

4.4.3 NET CASH FLOW FROM FINANCING ACTIVITIES ........................................................... 22

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5 REGULATORY, LEGAL AND ARBITRATION PROCEEDINGS........................................................... 23

6 TRANSACTIONS WITH RELATED PARTIES......................................................................................... 23

7 GUIDANCE FOR 2017 ................................................................................................................................ 23

8 INFORMATION ON MEDIUM TERM TRENDS AND OBJECTIVES .................................................... 23

9 PRINCIPAL RISKS AND UNCERTAINTIES FOR THE SECOND HALF OF 2017 ............................... 23

10 FORWARD-LOOKING STATEMENTS .................................................................................................... 24

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ..................................................... 25

STATUTORY AUDITORS’ REVIEW REPORT ON THE HALF-YEAR FINANCIAL INFORMATION ...... 56

STATEMENT BY THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT ................... 58

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HALF-YEAR MANAGEMENT REPORT

1. HIGHLIGHTS OF THE FIRST HALF OF 2017

1.1 Scope changes and acquisitions

In December 2016, the Group expanded its network of subsidiaries by acquiring 100% of its Irish franchisee.

In addition to its car rental business, the Group also acquired Europcar Ireland’s car-sharing service,

launched in 2012, which operates under the GoCar brand. Given the date of the acquisition, the Irish entities,

ETL, GoCar and Irish Car Rental Ltd, were not included in the consolidation scope as of December 31, 2016.

They are fully consolidated as from January 1, 2017.

The acquired business’s contribution to the Group’s revenue and operating results for the period from the

acquisition date until June 30, 2017 is €23.4 million and €4.1 million respectively.

On February 17, 2017 the Group announced the exclusive takeover of Ubeeqo, through its subsidiary

Europcar Lab SAS, which until then has been consolidated under the equity method in Europcar scope.

Starting March 1st, 2017 Ubeeqo is fully consolidated.

The 2016 company's revenue amounted approximately to € 5 million, with strong growth budgeted in the

coming years.

March 9, 2017 Europcar Australia acquired assets from its franchisee in the Queensland region of Australia

for an amount of 2.5 million Australian dollars (1.7 million euros).

On April 27, 2017 the Group acquired its Danish franchisee, one of its biggest in terms of revenue. Europcar

Denmark is the market leader with circa 30% market share in Denmark. It operates an average rental fleet of

6,000 vehicles through 40 branches. In 2016, Europcar Denmark generated revenues of €60 million.

On May 23, 2017, pursuant to share purchase agreement, Europcar Lab acquired a minority stake of up to

20% in SnappCar a peer-to-peer car sharing start-up. SnappCar is a Dutch scale-up and social enterprise

created in 2011. It is the second largest international peer-to-peer car sharing player in Europe with more

than 250.000 customers sharing over 30.000 cars available on its platform. Today SnappCar is available in

the Netherlands, Denmark and Sweden with the intention to expand to new markets.

This investment is fully in line with the Group’s ambition to become a global mobility solutions leader, and

providing a good alternative to car ownership thanks to a large portfolio of affordable solutions tailored to

every specific need. It will enable SnappCar to take peer-to-peer car sharing to its next stage of development

in Europe. SnappCar’s ambition is to decrease by 5 million the numbers of owned cars by 2022.

With this investment, Europcar joins the consortium of existing shareholders AutoBinck Group and the Danish

Startup Studio Founders who have extended their commitment to SnappCar. These investors are now joining

forces with a common ambition to help SnappCar expand geographically within Europe and further improve

and innovate its platform usage and services for its members, by for example, introducing ‘keyless

technology’, making it possible to open a car through the SnappCar app.

On May 26, 2017 the Group has signed an agreement to acquire Buchbinder. Founded over 60 years ago,

Buchbinder is a well-established company in Germany, with an extensive network of 152 stations of which 18

airport stations and an average fleet in excess of 20,000 vehicles. It is the 5th largest car rental company in

the market with a solid positioning as a low cost car rental operator, as well as a leading position in the vans

& trucks segment. Buchbinder is also a market leader in Austria and is present in Hungary and Slovakia. In

2016, Buchbinder Group generated revenues of around €200 million.

The company has a well-diversified business model, a large customer base with a strong focus on small- and

medium-sized enterprises (SME) and a renowned brand praised by local customers for the quality of its

service.

The acquisition of Buchbinder will significantly boost Europcar’s nascent low cost business in Germany and

the strength of the Buchbinder brand will bring an opportunity to source further into the large pool of German

and Austrian travellers in order to grow Europcar’s low cost business in southern Europe.

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In addition, the combination of Buchbinder and Europcar Germany’s vans and trucks businesses will not only

create a market leader but more importantly act as a core pillar to drive the vans and trucks expansion

strategy across the Group.

Finally, Buchbinder’s best practical expertise on fleet remarketing will deliver further opportunities across the

Europcar Group.

The acquisition is subject to customary conditions precedent, including the approval of antitrust authorities,

and is expected to close in the second half of the year 2017.

The transaction, which is expected to generate significant synergies in the medium term, is based on a post-

synergy Adjusted Corporate EBITDA multiple slightly above 5x.

On June 17, 2017 the Group has signed an agreement to acquire Goldcar. Goldcar is a major low cost

operator in Europe thanks to its strong positions in Spain and Portugal and its strong know-how in running a

lean and efficient pure low-cost operating model. In 2016, Goldcar generated revenues of around €240 million

and an estimated adjusted Corporate EBITDA of approximately €48 million.

With this strategic acquisition, the Europcar Group will increase its exposure to three major growth engines -

the Mediterranean region, the leisure segment and the low cost segment – and will become a major player in

the fast growing European low cost segment.

The acquisition of Goldcar will create value for the Europcar Group as it will strengthen the Group’s expertise

and know-how in low cost operations and will therefore significantly improve the revenue growth prospects of

Europcar’s low cost business unit.

The acquisition is subject to customary conditions precedent, including its approval by antitrust authorities,

and is expected to close in the second half of the year 2017.

The proposed transaction, which is expected to generate close to €30 million of cost synergies per annum by

2020, is based on a Corporate Enterprise Value of €550 million and a post-synergy Adjusted Corporate

EBITDA around 7x. Europcar Group expects the transaction to be materially accretive to its earnings per

share from the first full year post closing onwards.

1.2 Capital Increase

Capital increase reserved for employees of the group (Employee Share Ownership Plan)

In 2016, the Group launched its first international share offer reserved for employees of the Company and

Group subsidiaries wholly owned either directly or indirectly by the Company, who are members of Europcar's

Group Employee Savings Plan (the "GESP") and the International Group Employee Savings Plan ("IGESP")

and whose registered offices are in Germany, Australia, Belgium, Spain, U.S.A, France, Italy, New Zealand,

Portugal and the UK (the "Offer").

Under the terms of the Offer, in accordance with the authorizations granted by the Company's Combined

General Meeting of May 10, 2016 (resolutions 13 and 14), the Management Board, after obtaining the

approval of the Supervisory Board, decided on August 31, 2016, to increase the Company's capital for the

benefit of (i) GESP and IESP members and (ii) a special purpose entity belonging to a bank whose sole

purpose is to subscribe for, hold and sell shares in the Company in order to implement the Offer, up to a

maximum nominal amount of 2% of the share capital at the date the decision was taken.

The subscription price per share was set on January 20, 2017, at the average opening price on the twenty

trading days immediately preceding the Management Board decision fixing the dates for the

subscription/cancellation of shares, less a 15% discount rounded up to the nearest euro cent. Each

subscriber benefits from an employer contribution of 100% of their initial subscription up to a gross value of

€1,000.

The Offer resulted in a gross capital increase of €21,787,312 on February 24, 2017 through the issuance of

2,723,414 new shares at a price of €8 per share.

2,177 employees in the ten countries involved, representing 33% of the Group’s workforce, subscribed to the

Offer. As a result, the shares held by Group employees represented 1.97% of the Company's share capital as

at June 30, 2017, compared to 0.12% at December 31, 2016.

The new shares issued under the Offer are ordinary shares of the Company. They were listed for trading on

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the Euronext Paris market immediately on issue as part of the same code as existing shares. They are valid

from January 1, 2017, and entitle holders to dividends paid in respect of the year ended December 31, 2016.

Capital increase through a private placement

On June 21, 2017 Europcar Groupe placed 14,612,460 new ordinary shares at a price per share of €12.00,

including share premium, for a total of €175,349,520, representing approximately 10% of Europcar Groupe’s

ordinary shares pre-capital raise. The fees related to the private placement amounting to €4.7 million were

included in the share premium. Settlement for the new ordinary shares and their admission to listing on

Euronext Paris took place on June 23, 2017.

The subscription price of €12.00 per new ordinary share represents a discount of 3.23% compared to the

closing price of the shares on Euronext Paris on June 20, 2017.

Capital increase to deliver free-shares plans

On June 26, 2017, the share capital of Europcar Groupe was increased by 285,711 new shares of €1 each in

order to deliver the free-shares vested under the AGA 13 T1 share based plan. The counterpart of the share

capital increase was a corresponding decrease of the additional share premium by €285,711.

2. SUBSEQUENT EVENTS

2.1 Financing operations

On July 13, 2017, the group signed a new secured €500 million Revolving Credit Facility (RCF) with a diversified

pool of international banks. This Facility, which replaced the existing €350 million Senior Revolving Credit Facility,

will mature on June 2022. The group has optimized the financing cost of this new RCF by a 25 bps reduction of

the margin (from 250 bps to 225 bps for a corporate leverage ratio less than 2x and from 275 bps to 250 bps for a

corporate leverage ratio higher than 2x). This new RCF includes the usual financial and general covenants for

general purpose facilities. The €150 million increase of the nominal amount will allow the group to support its

2020 ambition and the related growing financing needs.

On July 13, 2017, the group also signed an unsecured €1.040 million Bridge Facility with a pool of international

banks. This facility includes two tranches: a €440 million bridge to bond dedicated to the acquisition of Goldcar

equity value and a €600 million bridge to fleet financing dedicated to the refinancing of the existing fleet debt of

Goldcar. Those two facilities, which can be drawn until March 31, 2018 , have a 12 months maturity and can be

extended respectively for an additional 6 months period and for two additional 6 months periods. This Bridge

facility has no financial covenant, and includes a step up margin grid. Europcar will refinance this Bridge Facility

in the future through a mix of bond issue and implementation of specific fleet financings.

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3. ANALYSIS OF OPERATING RESULTS :

3.1. Key performance indicators

H1 2017 H1 2016 Change

Change at constant exchange

rate

Revenues (in € millions) 1,028 948 8.4% 10.1%

Rental revenues (in € millions) 956 883 8.3% 9.9%

Rental day volumes (million) 30.0 26.7 12.2%

Consolidated RPD (1) (in €) 31.9 33.0 (3.5%) (2.0%)

Average duration (day) 5.8 5.7 1.6%

Average fleet (thousands) (2) 217.1 194.7 11.5%

Per-unit fleet costs per month (in €) (3) (241) (250) (3.6%)

Financial utilization rate (4) 76.3% 75.5% +0,9pt

Adjusted corporate EBITDA (in € millions) 56.4 54.7 3.0% 2.7%

Adjusted corporate EBITDA margin 5.5% 5.8% (0,3)pt

Adjusted corporate EBITDA over past 12 months (in € millions)

255 245 4.3%

LTM adjusted corporate EBITDA margin 11.5% 11.5% (0.0)pt

Operating income (IFRS) 32 72 (55.7%)

Net income (IFRS) (27.0) 2.8

(1) RPD (revenue per transaction day) corresponds to rental revenue for the period divided by the number of rental days for the period. Variation is calculated compared with previous year.

(2) Average fleet during the period is calculated as the number of days in the period during which the fleet was available, divided by the number of days of the period, multiplied by the number of vehicles in the fleet during the period. At June 30, 2017, the fleet comprised 284.5 thousand vehicles, compared with 245.8 thousand at June 30, 2016.

(3) Average fleet cost per unit per month corresponds to total monthly fleet cost (costs for holding and operating the fleet), excluding interest expense for fleet operating leases and insurance, divided by the average fleet during the period. The average fleet is then divided by the number of months during the period.

(4) The fleet financial utilization rate corresponds to the number of rental days as a percentage of the number of days the fleet is considered financially available. The fleet’s financial-availability period represents the period during which the Group holds the vehicles.

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3.2. Comparison of operating results

Analysis in this section is based on the Group’s income statement, prepared in accordance with IFRS, as well as data provided by management intended for strategic guidance. Management data are prepared in order to reflect and clarify the presentation of Group economic performance.

IFRS Income Statement

In € millions First half

2017 First half

2016 Change

Total revenue 1,027.8 947.9 8.4%

Fleet holding costs (264.0) (248.5) 6.3% Fleet operating, rental and revenue-related costs (371.3) (336.9) 10.2%

Personnel costs (191.2) (169.6) 12.8%

Network and headquarters overhead (120.6) (111.0) 8.6%

Other income and expenses 3.9 2.5 56.3%

Depreciation (14.2) (15.9) (10.3)%

Recurring operating income 70.4 68.6 2.5%

Other non-recurring income and expenses (38.5) 3.3 (1283.1)%

Operating income 31.8 71.9 (55.7)%

Net financing costs (58.0) (55.1) 5.3%

Profit/(loss) before tax (26.2) 16.8 (256.4)%

Income tax 5.0 (11.0) (145.2)%

Share of profit/(loss) of associates (5.8) (2.9) 98.0%

Net profit/(loss) (27.0) 2.8 (1058.9)%

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Management Performance Indicators


2017 First half

2016 Change

Total revenue 1,027.8 947.9 8.4%

Change at constant exchange rates 10.1%

Fleet holding costs, excluding estimated interest included in operating leases

(242.6) (226.0) 7.3%

Fleet operating, rental and revenue-related costs (371.3) (336.9) 10.2%

Personnel costs (191.2) (169.6) 12.8%

Network and headquarters overhead (120.6) (111.0) 8.6%

Other income and expenses 3.9 2.5 56.3%

Costs for personnel, network and headquarters overhead, IT and other

(307.9) (278.1) 10.7%

Net fleet-financing expense (28.2) (29.8) (5.2%)

Estimated interest included in operating leases (21.4) (22.4) (4.5%)

Fleet financing expenses, including estimated interest for operating leases

(49.7) (52.2) (4.9%)

Adjusted corporate EBITDA 56.4 54.7 3.0%

Margin (%) 5.5% 5.8% (0.3)pt

Depreciation (14.2) (15.9) (10.3)%

Other nonrecurring income and expenses (38.5) 3.3 (1283.1)%

Other financing income and expense not related to the fleet

(29.8) (25.4) 17.6%

Profit/ (loss) before tax (26.2) 16.8 (256.4)%

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The table below presents a reconciliation of recurring operating income to adjusted recurring operating income, adjusted corporate EBITDA and adjusted consolidated EBITDA. Adjusted recurring operating income, adjusted consolidated EBITDA and adjusted corporate EBITDA are presented because the Group believes that these measures provide readers with important additional information for the evaluation of Group performance. The Group also believes that these indicators are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Group’s industry. In addition, the Group believes that investors, securities analysts and rating agencies will consider that adjusted recurring operating income, adjusted consolidated EBITDA and adjusted corporate EBITDA are useful indicators for measuring the Group’s capacity to meet its debt-service obligations. IFRS does not recognize recurring operating income, adjusted consolidated EBITDA or adjusted corporate EBITDA. Therefore these indicators should not be viewed as alternatives to operating income or net profit, nor should they be considered indicators of operating results or of cash flows as measures of liquidity.

In € millions H1 2017 H1 2016

Adjusted consolidated EBITDA 298.7 287.0

Fleet depreciation (IFRS) (92.5) (87.3)

Fleet depreciation included in operating-lease rents (100.2) (92.8)

Total fleet depreciation (192.7) (180.1)

Interest expense related to fleet operating leases (estimated) (A)

(21.4) (22.4)

Net fleet-financing expense (28.2) (29.8)

Total fleet financing (49.7) (52.2)

Adjusted corporate EBITDA 56.4 54.7

Depreciation (14.2) (15.9)

Reversal of net fleet-financing expenses 28.2 29.8

Reversal of interest expense for fleet operating leases (estimated)

21.4 22.4

Adjusted recurring operating income 91.8 91.1

Interest expense related to fleet operating leases (estimated)

(21.4) (22.4)

Recurring operating income* 70.4 68.6

*As set forth in the consolidated income statement.

(A) Expenses related to operating leases for fleet vehicles comprise depreciation, interest and, in

some cases, a small management fee. For contracts that do not provide a breakdown of rent payments in accordance with these expenses, the Group makes estimates on the basis of data provided by the lessors. Furthermore, because interest expense for operating leases is essentially a financing cost for the fleet, Europcar management reviews fleet holding costs and Group adjusted operating income net of this expense.

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3.2.1 Total revenue

The following table shows changes in Group consolidated revenue for the half-years ended June 30, 2017, and June 30, 2016, as a total and by product type:


2017 First half

2016 Change


rate

Rental revenues 956.3 882.9 8.3% 9.9%

Other revenue associated with car rental 48.3 41.6 16.1% 18.9%

Franchising business 23.1 23.4 (1.3)% (1.2)% Total revenue

1,027.8 947.9 8.4% 10.1%

Total revenue stood at €1,027.8 million, compared with €947.9 million for the first half of 2016, an increase of 10.1% at constant exchange rates. Restated for income tied to fuel, at constant scope and exchange rates, the Group’s total revenue increased by 4.6%.

This significant increase in the Group’s total revenue was the result of positive growth in all the Group’s key markets and in all of its three major Business Units with growth of 7.7% for the Cars BU, 9.7% for the Vans BU and more than 80% for the Low Cost BU.

The volume of rental days rose by 12.2% over the first half of 2017, to stand at 30.0 million days. This growth in rental days was shared across all Business Units with an increase of 8.2% for the Cars BU, an increase of 14% for the Vans BU and, finally, growth of over 64% for the Low Cost BU.

In addition, revenue per rental day fell by 2.0% at constant exchange rate at Group level, primarily due to a 4.1% drop in the Vans BU, reflecting a strategic desire to improve both the utilization rate and the rental duration. Revenue per rental day fell slightly by 0.5% for the Cars BU and rose 9.7% for the Low Cost BU.

3.2.2 Fleet holding costs

Fleet holding costs include fleet depreciation expenses (vehicles acquired and financed through funding recorded on the balance sheet) and payments on operating leases for vehicles including their financial component, in compliance with accounting standards (e.g., vehicles financed through leasing). Rental payments under operating leases automatically include a component of financial interest. As explained below, the accounting methods employed for fleet-financing expenses depend on the type of financing (operating lease or other type of financing). For greater clarity, the Group combines all fleet-financing expenses in its management income statement. For analytical purposes, the expenses are included in adjusted corporate EBITDA but are excluded from fleet holding costs.

Adjusted for estimated financial expenses for operating leases (i.e., €21.4 million and €22.4 million in the first halves of 2017 and 2016 respectively), fleet holding costs totaled €242.6 million, up 7.3% from €226 million in 2016. The Group continues to improve its utilization rate, from 75.5% to 76.3% for the first half of 2017, an increase of 89 basis points. Through its cost management strategy, the Group has been able to reduce its average fleet cost per vehicle per month by 1.8%, from €245 for the first half of 2016 to €241 in the first half of 2017 at constant rates.

3.2.3 Fleet operating, rental and revenue-related costs

In the first half of 2017, fleet operating costs totaled €371.3 million, up 10.2%. This is due to the proportional increase of 12.2% in the volume of rental activity.

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3.2.4 Personnel costs

In the first half of 2017, personnel costs totaled €191.2 million, an increase over 2016. At constant exchange rates, they were up 12.8% due primarily to changes in consolidation scope following the takeover of the Irish and Danish franchisees, as well as minority interests in Ubeeqo and the increase in the number of employees in order to support growth and improve the quality of customer service.

3.2.5 Overhead for headquarters and network

In the first half of 2017, overhead for headquarters and the network totaled €120.6 million, an increase of 8.6%.This increase was primarily due to the consolidation effect with the acquisition of the Irish and Danish franchisees and the mobility company Ubeeqo. In addition, the costs of the network for the pre-acquisition group continued to grow with the development of the Low Cost BU and the Vans BU.

3.2.6 Other noncurrent income and expenses

In the first half of 2017, other non-current income and expenses represented a net expense of €39 million, which can be analyzed as follows:

- a provision for risk of €44 million following the launch of an investigation by the Trading

Standards Services in the United Kingdom;

- a provision for restructuring and the costs related to the Group’s transformation for €17

million;

- mergers and acquisitions expenses for €9 million;

- the reversal of the €45 million provision that had been accrued because of a financial risk

relating to proceedings of the French Competition Authority.

For information, in the first half of 2016 other non-current income and expenses stood at €3.3 million in income, distributed as follows:

- Reorganization expenses of €5.2 million;

- Offset by income of €8.9 million related to the resolution of a tax dispute

3.2.7 Adjusted corporate EBITDA

Adjusted corporate EBITDA is defined as recurring operating income before depreciation and amortization unrelated to the fleet, and after deduction of interest expense for fleet financing. The level of adjusted corporate EBITDA fluctuates significantly from season to season.

In the first half of 2017, adjusted corporate EBITDA totaled €56.4 million, compared with €54.7 million in the first half of 2016, an increase of 3.0%.

The Group’s adjusted EBITDA margin fell by 40 basis points to 5.5% in the first half of 2017, due to the increase in the network costs and our variable operating costs.

These two cost lines are influenced by the expansion of consolidation scope following the acquisitions made by the Group (Locaroise, Ireland, Denmark and Ubeeqo) over the past twelve months, as well as increases in airport fees in Spain.

3.2.8 Net financing costs

Net financing costs amounted to €58.0 million in the first half of 2017, compared with €55.1 million in the first half of 2016. The primary reason for this change is the total effect of the increase in the

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Group's Senior Note in June 2016, in the amount of €125 million.

3.2.9 Income tax

In the first half of 2017, the Group had tax profit of €5.0 million, compared with tax expense of €11.1 million in 2016. The Group's effective tax rate was 19%, compared with 65.9% at June 30, 2016, specifically impacted by the non-taxation of the reversal of the provision relating to the proceedings of the French Competition Authority.

3.2.10 Share of profit or loss in companies accounted for under the equity method

The share of profit or loss in companies accounted for under the equity method came to a loss of €5.8 million, compared with €2.9 million in the first half of 2016. It is composed of the development costs for Car2go Europe and the share of profit of equity associate Ubeeqo at the end of February 2017, prior to the exclusive takeover.

3.2.11 Net profit/(loss)

Net loss in the first half of 2017 came to €27.0 million, compared to a profit of €2.8 million for the first half of 2016.

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3.3 REVENUE AND ADJUSTED CORPORATE EBITDA BY OPERATING SEGMENT

3.3.1 Europe

The table below shows (i) the allocation of revenue generated in Europe by corporate countries and other European countries, and (ii) adjusted corporate EBITDA generated in Europe for the half-years ended June 30, 2017, and June 30, 2016:

In € millions First half First half Change


rate 2017 2016

Revenue

Germany 260.7 252.8 3.11%

United Kingdom 187.0 189.4 (1.30)% 9.70%

France 167.7 159.2 5.32%

Other European countries 323.0 266.5 21.21%

Other European countries (franchises)

7.4 8.8 (15.99)%

Europe 945.7 876.7 7.87% 10.13%

Adjusted corporate EBITDA (Europe)

16.6 19.9 (16.81)% (15.66)%

Revenue

Revenue of the European operating sector increased at constant exchange rates to €945.7 million for the first half of 2017. Southern European countries recorded a steady growth over the first half of 2017, led in particular by InterRent, which grew significantly in all corporate countries, and by growth in the Leisure market thanks to higher business volume, despite a drop in the selling price. The Northern European countries, Germany in particular, saw a less buoyant economic and commercial environment, but were still able to increase their volume of business.

Germany

In the first half of 2017, revenue generated by the Group in Germany was up 3.1% to €260.7 million. The Leisure segment and InterRent enjoyed significant growth over the period, driven by the implementation of very proactive development plans. This momentum was not replicated in the Corporate segments, because of a drop in prices in the face of a more challenging environment and stiff competition.

United Kingdom

Revenue generated by the Group in the United Kingdom was up 9.70% at constant exchange rates to stand at €187.0 million for the period ended June 30, 2017. As was the case in Germany, all action plans led to a clear increase in revenue in the Leisure and InterRent segments, without significantly damaging prices. The Corporate segment and primarily the Replacement segment suffered seriously in terms of business because of heavy competition.

France

Revenue generated by the Group in France rose 5.3% over the first half year, with an increase for the InterRent brand and growth in the Corporate segments.

The French market suffered from strong price pressures in the Leisure and Corporate markets.

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Adjusted corporate EBITDA

In the first half of 2017, adjusted corporate EBITDA in Europe fell by €3.3 million, to €16.6 million. This decline in the corporate countries was primarily related to a drop in revenue per day.

3.3.2 Rest of world

The table below shows revenue and adjusted corporate EBITDA generated in the rest of world for the half-years ended June 30, 2017, and June 30, 2016:



rate 2017 2016

Revenue 84.6 73.4 15.21% 9.38%

Adjusted corporate EBITDA 16.1 12.8 25.67% 22.19%

Revenue generated in the rest of world rose by 9.4% at constant exchange rates. This change was largely driven by corporate countries Australia and New Zealand, under the combined effect of growth in both number of rental days and revenue per day.

Group adjusted corporate EBITDA in rest of world rose 22.2% at constant exchange rates, to €16.1 million in the first half of 2017.

3.3.3 Elimination and holdings

The table below shows revenue and adjusted corporate EBITDA of the elimination and holdings segment for the first halves of 2017 and 2016:


2017 2016

Revenue (2.6) (2.2) 15.50%

Adjusted corporate EBITDA 23.6 21.9 7.72%

Adjusted corporate EBITDA for the elimination and holdings segment rose by €1.7 million in the first half of 2017, to €23.6 million. This increase is primarily related to a decline in financial expenses and a reduction in IT costs.

17

4 LIQUIDITY AND FINANCIAL POSITION

4.1 OVERVIEW

On July 13, 2017, the group signed a new secured €500 million Revolving Credit Facility (RCF) with a

diversified pool of international banks. This Facility, which replaced the existing €350 million Senior

Revolving Credit Facility, will mature on June 2022. The group has optimized the financing cost of this

new RCF by a 25 bps reduction of the margin. The €150 million increase of the nominal amount will

allow the group to support its 2020 ambition and the related growing financing needs.

On July 13, 2017, the group also signed an unsecured €1.040 million Bridge Facility with a pool of

international banks dedicated to the acquisition of Goldcar and to the refinancing of the existing fleet

debt of Goldcar. Those two facilities have a 12 months maturity and can be extended respectively for

an additional 6 months period and for two additional 6 months periods. Europcar will refinance this

Bridge Facility in the future through a mix of bond issue and implementation of specific fleet

financings.

In addition, the Group is heavily focused on cash generation, and corporate free cash flow totaled €90

million for the first half of 2017, compared with €82 million in 2016.

As a result, Corporate Net Debt stood at €104 million at June 30, 2017 (compared with €200 million at

June 30, 2016). Corporate debt leverage1 was 0.4x at the end of June 2017.

It should be noted that, during the first half of 2016, the Group took the opportunity to issue new

bonds on favorable terms. On June 2, 2016, the Group thus successfully increased its original 2022

bond (initial nominal amount: €475 million) for a total amount of €125 million. With a yield at maturity

of 4.8790%, this product represents an improvement of 100 basis points on the initial issue. The

proceeds from the issue totaled €131 million, which the Group allocated to financing its program of

acquisitions and general corporate requirements.

4.2 TOTAL NET DEBT

At June 30, 2017, Group net corporate debt amounted to €104 million, compared with €220 million at December 31, 2016.

On the same date, secured net fleet debt, including fleet-related off-balance-sheet commitments, totaled €4,037 million, compared with €3,555 million at June 30, 2016, and €3,045 million at December 31, 2016. Of this amount, €2,009 million is capitalized on the balance sheet and the remaining €2,028 million corresponds to operating leases. The estimated outstanding value of vehicles financed through operating leases corresponds to the book value of the vehicles. This amount is calculated from the acquisition costs and depreciation rates for the vehicles, on the basis of contracts signed with the manufacturers. In compliance with IFRS, this amount is not recorded on the balance sheet. The loan-to-value ratio (LTV ratio) was 88.0%2 at June 30, 2017.

1 Defined as the ratio of Corporate net debt to Adjusted Corporate EBITDA for the last 12 months.

2 Corresponds to the debt of Securitifleet Holding, Securitifleet and EC Finance plc (total amount of

€1,461 million on the test date) divided by the total net asset value of the companies (i.e., €1,286 million at June 30, 2017).

18

The table below presents net corporate debt and total net debt (including the estimated outstanding value of the fleet financed through operating leases).

In € million June 30 Dec. 31

2017 2016

High yield senior notes, 5.75%, notes due in 2022 (A) .......................................................................................................................... 600 600

Senior revolving credit facility ................................................................................................................................................................. 0 0

FCT junior notes (B), accrued interest not yet due, capitalized costs of financing contracts and other (C) (D) ...........................................................................................................................................................................................................

(222) (189)

Gross corporate debt ........................................................................................................................................................................... 378 411

Short-term investments and cash in operating and holding entities (E) (275) (211)

Net corporate debt ................................................................................................................................................................................ 104 200

High yield EC finance notes, 5.125%, notes due in 2021 350 350

Senior asset revolving facility ................................................................................................................................................................. 878 859

FCT junior notes (B), accrued interest, financing capitalized costs and other ....................................................................................... 218 174

UK, Australia and other fleet-financing facilities ..................................................................................................................................... 693 509

Gross financial fleet debt ..................................................................................................................................................................... 2 139 1 892

Cash held in fleet-financing entities and short-term fleet investments (130) (148)

Fleet net debt on balance sheet .......................................................................................................................................................... 2 009 1 744

Debt equivalent of fleet operating leases ‒ off balance sheet (F) 2 028 1 811

Net fleet debt (incl. op leases) 4 037 3 555

Total net debt 4 140 3 755

(A) In June 2016, the Group issued new senior notes for a total of €125 million. These notes are assimilated with existing senior notes paying a fixed rate of 5.750% and maturing in 2022 (issued in June 2015) for a total of €475 million, bringing the total amount of outstanding notes to €600 million.

(B) Proceeds from the FCT junior notes subscribed by Europcar International SAS (“ECI”) provide overall credit enhancement and, when applicable, additional liquidity. FCT junior notes are used only to finance the fleet debt requirement. FCT junior notes are subscribed by ECI using available cash or drawing on the senior revolving credit facility.

(C) For countries where fleet costs are not financed through dedicated entities (e.g., the Securitifleet entities), the cash used to finance the fleet (which could have been financed by fleet debt) is restated from the net fleet debt through a de-risk ratio.

(D) Including accrued interest for financial assets (Euroguard).

(E) Specifically includes the Group’s insurance program.

(F) The estimated debt equivalent of fleet operating leases corresponds to the book value of the vehicles. This amount is calculated from the acquisition costs and depreciation rates for the vehicles, on the basis of contracts signed with the manufacturers. The Company’s financial management verifies the consistency of all external data provided.

19

4.3 ANALYSIS OF CORPORATE FREE CASH FLOW

4.3.1 OVERVIEW

The Group uses corporate free cash flow as its liquidity indicator.

The Group believes that corporate free cash flow is a useful indicator because it measures the Group’s liquidity on the basis of its operating activities, including net financing costs on borrowings dedicated to fleet financing, without taking into account (i) past disbursements for debt refinancing, (ii) exceptional costs that are not representative of trends in Group operating results, and (iii) cash flows in relation to the fleet. These cash flows are analyzed separately because the Group makes vehicle acquisitions through asset-backed financing.

The table below shows the calculation of corporate free cash flows, as well as the regrouping of certain items deemed significant for the analysis of Group cash flow, including cash flow relating to changes in the rental fleet, in fleet-related trade receivables and payables, and in fleet-related financing and other working capital facilities used principally for fleet-related needs. This presentation differs from the IFRS statement of cash flows, mainly because of analytic regrouping and the inclusion of items that do not affect cash flows that vary based on the financial data used as the starting point (in this case, adjusted corporate EBITDA, as presented below, compared with pretax profit in the IFRS statement of cash flows).

Management Cash Flows

First half First half

In € millions 2017 2016

Adjusted corporate EBITDA 56 55

Nonrecurring expenses (39) 3

Non-fleet capital expenditure (net of proceeds from disposals) (21) (13)

Changes in non-fleet working capital and provisions 111 37

Income taxes received (paid) (17) -

Corporate free cash flow 90 82

Cash interest paid on corporate high yield bonds (17) (13)

Cash flow before change in fleet 73 69

Other investments (76) (1)

Changes in fleet asset base, net of drawings on fleet financing and working capital (64) (150)

Capital increase 192 -

Dividend paid (59) -

Change in corporate high yield - 131

Payment of financing transaction costs and redemption premium - (3)

Increase/(decrease) in cash and cash equivalents before effect of foreign exchange conversions 66 46

Cash and cash equivalents at beginning of period 249 229

Effect of foreign exchange conversions (2) (1)

Cash and cash equivalents at end of period 317 274

20

4.3.2 Corporate free cash flow

Corporate free cash flow is defined as free cash flow before impacts from fleet, refinancing and acquisitions of subsidiaries. Free cash flow in the first half of 2017 came to €90 million, compared with €82 million in the first half of 2016 (+€8 million).

Adjusted corporate EBITDA. Adjusted corporate EBITDA reached €56 million, compared with €55 million in the first half of 2016, reflecting the increase in network costs and variable operating costs due to the expansion of the Group's consolidation scope following acquisitions (Locaroise, Ireland, Denmark and Ubeeqo) over the past twelve months, as well as some price increases in airport fees in Spain.

Other non-recurring income and expense. This line, which includes an expense of €39 million in the first half of 2017, compared with income of €3 million for the first half of 2016, specifically includes reorganization costs, Group transformation costs and costs related to acquisitions, in particular franchisees in Ireland and Denmark, Ubeeqo mobility company, Goldcar and BuchBinder

Acquisition of intangible assets and property, plant and equipment. This item primarily represents IT investments which increased by €8 million to stand at €21 million in 2017, compared to €13 million in 2016, reflecting Europcar Group’s desire to improve the digitization of its customer pathway.

Changes in WCR excluding vehicle fleet and provisions. Good performance in WCR excluding the fleet, which increased from €37 million in 2016 to €111 million in 2017, largely due to the seasonality of the business, period of customer receivables recovery decrease and an increase in broker prepayments.

Tax received/(paid). The increase in tax disbursements in the first half of 2017 compared with the first half of 2016 is due mainly to tax refunds recorded in the United Kingdom and Spain in 2016. Current tax disbursements for the first half of 2017 totaled €17 million, mainly in the United Kingdom (€6 million), Germany (€5 million) and France (€3 million).

4.3.3 Other components of cash flow

The payment of interest on High Yield borrowings amounted to €17 million for the first half of 2017, compared with €13 million for the previous year, primarily reflecting the increase in the Group's Senior Bond in June 2016 for the amount of €125 million.

Other investments amounting to €76 million made of the acquisition price of the Danish franchisee for €52 million, the exclusive takeover of Ubeeqo for €7 million, the acquisition of minority interests in the Snappcar start-up, deposits and guarantees and the acquisition of assets in the Australian franchisee.

Changes in the vehicle fleet, in working capital requirements, fleet financing and WCR facilities for €64 million in the first half of 2017 primarily reflect vehicle purchases for the summer, the increase in supplier debts to manufacturers (as a result of these purchases) and fleet debt draws to finance these vehicle purchases. This negative change at June 2017 is primarily tied to the use without securitization of their cash to finance the fleet in order to minimize the cost of financing vehicles.

The capital increases totaled €192 million, €22 million of which was used for a capital increase reserved for Group employees (ESOP plan) and €175 million for a capital increase by private placement on June 21, 2017 representing approximately 10% of the company's capital. Costs for the capital increase by private placement in the amount of €4.7 million were deducted from the issue premium.

The exceptional distribution of a cash dividend of €59.4 million approved by the Shareholders Meeting of Europcar Group on May 10, 2017.

21

4.4 ANALYSIS OF CASH FLOW (IFRS)

The Group’s principal cash flow drivers are its operating performance (as reflected in its operating profit before changes in working capital), cash flow from financing transactions, interest on corporate debt, cash flow from acquisitions and disposals of fleet, and cash flow from investing activities.

Six months ended June 30


Net cash generated from (used by) operating activities (231.3) (240.4)

Net cash used by investing activities (98.5) (10.2)

Net cash generated from (used by) financing activities 395.6 297.0

Net increase (decrease) in cash and cash equivalents after effect of foreign exchange differences 65.8 46.4

4.4.1 Net cash from (used by) operations

The table below summarizes the Group’s net cash flow from operations for the first-halves of 2016 and 2017.



Operating profit before changes in working capital 54.7 52.8 Changes in rental fleet and in fleet working capital (321.4) (319.8) Changes in non-fleet working capital 101.9 73.3 Cash generated from operations (164.8) (193.7) Income taxes received (paid) (17.1) 0.1 Net interest paid (49.4) (46.8) Net cash generated from (used by) operations (231.3) (240.4)

Cash flow from operating activities

Cash flow from operating activities represented a cash outflow of €164.8 million in the first half of 2017, compared with an outflow of €193.7 million in the first half of 2016.

Operating profit before changes in working capital requirements was nearly unchanged over the two periods. Cash outflow from changes in rental fleet and in fleet working capital was nearly unchanged as well, totaled €321 million in the first half of 2017, compared with €320 million in the first half of 2016. These outflows were for vehicle purchases (capitalized) in preparation for the summer season.

In addition, the change in working capital requirements excluding the vehicle fleet was positive at €102 million at the end of June 2017. This change reflects the improvement in procedures to optimize its cash management.

Income tax received/ (paid)

The increase in tax disbursements in the first half of 2017 from the first half of 2016 is primarily due to tax refunds recorded in the United Kingdom and Spain in 2016. Current tax disbursements for the first half of 2017 totaled €17 million, mainly in the United Kingdom (€6 million), Germany (€5 million) and France (€3 million).

Net interest paid

Net interest paid totaled €49.4 million in the first half of 2017, compared with €46.8 million in the first

22

half of 2016.

4.4.2 Net cash flow from investing activities

The table below summarizes the Group’s net cash flow from investing activities for the half-years ended June 30, 2017, and June 30, 2016.



Acquisitions of intangible assets and property, plant and equipment

(22.3) (16.3)

Proceeds from disposal of fixed assets 1.3 3.4 Other investments and loans (77.4) 2.8 Acquisitions and proceeds from disposal of financial assets - - Acquisition of subsidiaries, net of cash acquired - - Disposal of subsidiaries, net of cash sold - - Dividends received from associates - - Net cash used by investing activities (98.5) (10.2)

Net cash flows used by investing activities amounted to €98 million at June 30, 2017 and €10 million at June 30, 2016. This sharp increase was driven by the acceleration of investments in connection with the 2020 ambition plan, and is primarily related to the acquisition of the Danish franchisee (€51.7 million), the exclusive takeover of Ubeeqo (€7 million), the acquisition of minority interests in the Snappcar start-up (€4.9 million), and the acquisition of assets of the Australian franchisee (€1.7 million). In 2016, investments primarily consisted of IT investments in line with the Group's strategy.

4.4.3 Net cash flow from financing activities

The table below summarizes the Group’s net cash flow from financing activities for the half-years ended June 30, 2017, and June 30, 2016.



Increase in share capital 192.4 - Dividend paid/received (59.4) - New notes - 130.6 Redemption of notes - - Change in other financings 263.6 171.6 Payment of transaction costs (0.6) (2.4) (Purchases)/sales of treasury shares net (0.5) (2.8) Net cash generated from (used by) financing activities

395.6 297.0

Net cash flow from financing activities represents an inflow of €395.6 million in the first half of 2017, compared with an inflow of €297.0 million for the first half of 2016. In addition to the usual financing transactions, mainly related to the fleet over both periods, flows for the first half of 2017 were impacted by the capital increase in connection with the employee share ownership plan (€21.7 million), the capital increase by private placement (€170.7 million) and by the payment of dividends (€59 million). Cash flows for the first half of 2016 were impacted by the issuance of new bonds for €131 million, which resulted in the provisional repayment of the Revolving Credit Facility.

23

5 REGULATORY, LEGAL AND ARBITRATION PROCEEDINGS

The main disputes and proceeding as of June 30, 2017 are described in Note 25 of the interim condensed consolidated financial statements for the first half of 2017.

6 TRANSACTIONS WITH RELATED PARTIES

See Note 24 of the interim condensed consolidated financial statements for the first half of 2017.

7 GUIDANCE FOR 2017

The guidance presented below for revenue, adjusted corporate EBITDA and dividends is based on data, assumptions and estimates that are considered reasonable by Group management. The guidance may change because of uncertainties surrounding the economic, financial, competitive and/or regulatory environment, or because of other unforeseeable factors (e.g., certain transactions). In addition, the materialization of certain risks described in chapter 2, “Risk Factors,” of the 2016 Registration Document could have an impact on the Group’s activities and its ability to achieve these forecasts. There is no guarantee that the Group's results will be in line with the forecasts below. The Group considers that adjusted corporate EBITDA, although a non-GAAP measure is a relevant indicator of the Group’s operating and financial performance.

In 2017, the Europcar Group plans to achieve the four following financial targets compared to 2016:

- Accelerating organic revenue growth ie above 3% - Increase in adjusted corporate EBITDA margin (excluding New Mobility) ie above 11.8% - A corporate operating free cash flow conversion rate above 50% - A dividend payout ratio above 30%

The Group reiterates all four of its financial targets for the year 2017 and confirms that 2017 will be a

year of significant progress towards our 2020 Group targets of reaching €3 billion of revenue and 14%

Corporate EBITDA margin (excluding New Mobility).

The dividend policy (see section 6.7.1 of the 2016 Registration Document, “Dividend distribution

policy”) will take into account the Company’s results, financial position, achievement of its objectives

as set out in this section, and restrictions on dividend payments applicable under the terms of the

Group’s various debt instruments.

8 INFORMATION ON MEDIUM TERM TRENDS AND OBJECTIVES

The Group has entered an acceleration phase of its strategy with a high ambition for the future: to become a world leader in mobility solutions. By 2020, this ambition is expected to result in revenues in excess of €3 billion, through organic growth as well as acquisitions, and an adjusted Corporate EBITDA margin greater than 14% (excluding the New Mobility Division).

9 PRINCIPAL RISKS AND UNCERTAINTIES FOR THE SECOND HALF OF 2017

Groupe Europcar operates in a context of risk and uncertainty, the result of the overall economy and

the specific nature of its activities.

A detailed description of risk factors and uncertainties that could affect the rest of 2017 may be found

in chapter 2, “Risk factors,” of the 2016 Registration Document. Groupe Europcar believes that the

principal risks described in this document have not significantly changed. If the risks materialized, they

could have a significant negative impact on the Group’s activities, financial position, results and

outlook. In addition, other risks, either not yet identified or considered insignificant by the Group as of

the date of this report, could also have an unfavorable effect.

24

10 FORWARD-LOOKING STATEMENTS

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

25

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Europcar Groupe S.A.

Interim condensed consolidated financial statements

for the six months ended

June 30, 2017

Interim consolidated income statement

26

INTERIM CONSOLIDATED INCOME STATEMENT ................................................................................................. 27

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ......................................................... 28

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION .................................................................. 29

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................................... 30

INTERIM CONSOLIDATED CASH FLOW STATEMENT .......................................................................................... 31

NOTE 1 – GENERAL OVERVIEW ................................................................................................................................ 32

1.1 General Information ........................................................................................................................................ 32

1.2 Basis of preparation ....................................................................................................................................... 32

1.3 Main events of the period.............................................................................................................................. 32

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES .................................................................................................. 34

2.1 Principle of accounts preparation .............................................................................................................. 34

2.2 Seasonality of operations ............................................................................................................................. 35

2.3 Use of estimates and judgments................................................................................................................. 36

NOTE 3 – SEGMENT REPORTING ............................................................................................................................... 36

NOTE 4 – FLEET HOLDING COSTS ............................................................................................................................. 40

NOTE 5 – FLEET OPERATING, RENTAL AND REVENUE RELATED COSTS ...................................................... 40

NOTE 6 – PERSONNEL COSTS ..................................................................................................................................... 40

NOTE 7 – SHARE BASE PAYMENTS .......................................................................................................................... 41

NOTE 8 – AMORTIZATION, DEPRECIATION AND IMPAIRMENT EXPENSE ...................................................... 42

NOTE 9 – OTHER NON-RECURRING INCOME AND EXPENSES ........................................................................... 42

NOTE 10 – NET FINANCING COSTS ........................................................................................................................... 43

NOTE 11 – INCOME TAX .............................................................................................................................................. 43

NOTE 12 – GOODWILL .................................................................................................................................................. 44

NOTE 13 – EQUITY-ACCOUNTED INVESTMENTS .................................................................................................. 44

NOTE 14 – FINANCIAL ASSETS .................................................................................................................................. 45

NOTE 15 – RENTAL FLEET RECORDED ON THE BALANCE SHEET .................................................................... 45

NOTE 16 – RECEIVABLES AND PAYABLES RELATED TO THE RENTAL FLEET ............................................. 46

NOTE 17 – TRADE AND OTHER RECEIVABLES ...................................................................................................... 47

NOTE 18 – CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ............................................................. 47

NOTE 19 – CAPITAL AND RESERVES AND EARNINGS PER SHARE ................................................................... 49

NOTE 20 – LOANS AND BORROWINGS..................................................................................................................... 51

NOTE 21 – PROVISIONS ................................................................................................................................................ 52

NOTE 22 – OTHER DISCLOSURES RELATING TO FINANCIAL ASSETS AND LIABILITIES ............................ 52

NOTE 23 – OFF-BALANCE SHEET COMMITMENTS ................................................................................................ 53

NOTE 24 – RELATED PARTIES .................................................................................................................................... 54

NOTE 25 – CONTINGENCIES ....................................................................................................................................... 54

NOTE 26 – SUBSEQUENT EVENTS ............................................................................................................................. 55


27


In € thousands First-half

2017

First-half 2016

Notes

Revenue 1,027,776 947,934

Fleet holding costs 4 (264,036) (248,480)

Fleet operating, rental and revenue related costs 5 (371,272) (336,875)

Personnel costs 6 (191,217) (169,588)

Network and head office overhead costs (120,611) (111,035)

Depreciation, amortization and impairment expense 8 (14,225) (15,858)

Other income 3,934 2,517

Current operating income 70,349 68,615

Other non-recurring income 9 45,000 11,444

Other non-recurring expense 9 (83,532) (8,187)

Operating income 31,817 71,872

Gross financing costs (45,945) (44,440)

Other financial expenses (12,725) (11,738)

Other financial income 631 1,062

Net financing costs 10 (58,039) (55,116)

Profit/(loss) before tax (26,222) 16,756

Income tax benefit/(expense) 11 4,995 (11,043)

Share of profit of Associates (5,751) (2,904)

Net profit/(loss) for the period (26,978) 2,809

Attributable to:

Owners of ECG (26,840) 2,927

Non-controlling interests (138) (118)

Basic loss per share attributable to owners of ECG (in €) 19 (0,185)

0,020

Diluted loss per share attributable to owners of ECG (in €) 19 (0,185)

0,020

Interim consolidated statement of comprehensive income

28

Interim consolidated statement of comprehensive income

First-half 2017 First-half 2016

In € thousands Before

tax

Tax income/

(expense) After tax

Before tax

Tax income/

(expense) After tax

Net profit/(loss) for the period (31,973) 4,995 (26,978) 13,852 (11,043) 2,809

Items that will not be reclassified to profit or loss

Actuarial gains/(losses) on defined benefit pension schemes 3,683 (1,252) 2,431 (18,847) 5,222 (13,625)

Items that may be reclassified subsequently to profit or loss

Foreign currency differences (4,880) - (4,880) (19,989) - (19,989)

Effective portion of changes in fair value of hedging instruments

12,841 -

12,841 (14,262) - (14,262)

Net change in fair value of available-for-sale financial assets - - - (148) (148)

Other comprehensive income for the period 11,644 (1,252) 10,392 (53,246) 5,222 (48,024)

Total comprehensive income/(loss) for the period (20,329) 3,743 (16,586) (39,394) (5,821) (45,215)

Attributable to:

Owners of ECG (16,448) (45,065)

Non-controlling interests (138) (150)

Interim consolidated statement of financial position

29

Interim consolidated statement of financial position

In € thousands At

June 30, 2017

At Dec. 31,

2016

Assets Notes

Goodwill 12 557,009 459,496 Intangible assets 726,181 715,209 Property, plant and equipment 104,118 84,102 Equity-accounted investments 13 - 14,083 Other non-current financial assets 14 58,103 67,820 Financial instruments non-current 1,210 - Deferred tax assets 64,377 58,743

Total non-current assets 1,510,998 1,399,453

Inventory 21,324 16,843 Rental fleet recorded on the balance sheet 15 2,384,263 1,640,251 Rental fleet and related receivables 16 746,579 720,623 Trade and other receivables 17 385,377 365,200 Current financial assets 14 47,952 77,003 Current tax assets 52,934 35,585 Restricted cash 18 110,394 105,229 Cash and cash equivalents 18 213,518 154,577

Total current assets 3,962,341 3,115,311

Total assets 5,473,339 4,514,764

Equity

Share capital 161,031 143,409

Share premium 747,497 647,514 Reserves (104,239) (111,681) Retained earnings (losses) (51,911) (48,706)

Total equity attributable to the owners of ECG 752,378 630,536

Non-controlling interests 875 730

Total equity 19 753,253 631,266

Liabilities

Financial liabilities 20 959,892 953,240 Non-current financial instruments 41,060 56,216 Employee benefit liabilities 136,148 139,897 Non-current provisions 21 31,976 18,640 Deferred tax liabilities 123,898 107,848 Other non-current liabilities 221 246

Total non-current liabilities 1,293,195 1,276,087

Current portion of financial liabilities 20 1,557,404 1,224,442 Employee benefits 3,247 3,247 Current tax liabilities 41,184 39,227 Rental fleet related payables 16 1,013,096 679,678 Trade payables and other liabilities 588,117 440,065 Current provisions 21 223,843 220,752

Total current liabilities 3,426,891 2,607,411

Total liabilities 4,720,086 3,883,498

Total equity and liabilities 5,473,339 4,514,764

Interim consolidated statement of changes in equity

30

Interim consolidated statement of changes in equity

Attributable to owners of ECG

Non-

controlling interests

Total equity

In € thousands Share capital

Share premium

Hedging reserve

Translation reserve

Treasury Shares

Retained earnings

Total

Balance as at January 1, 2016 143,155 767,402 (45,488) (28,884) 31 (274,821) 561,395 961 562,356 Net profit/(loss) for the period 2,927 2,927 (118) 2,809 Other comprehensive income/(loss) - - (14,262) (19,957) - (13,773) (47,992) (32) (48,024)

Transactions with owners 254 (254) - - (2,800) 2,691 (109) (127) (236)

Balance as at June 30, 2016 143,409 767,147 (59,750) (48,481) (2,769) (282,976) 516,221 684 516,905

Balance as at January 1, 2017 143,409 647,514 (53,900) (52,935) (4,846) (48,706) 630,536 730 631,266 Net profit/(loss) for the period (26,840) (26,840) (138) (26,978)

Foreign exchange gains (losses) - - - (4,880) - - (4,880) - (4,880) Effective portion of changes in fair value of hedging instruments - - 12,841 - - - 12,841 - 12,841 Actuarial gains/(losses) on defined benefit pension schemes - - - - - 3,683 3,683 - 3,683 Income tax related to components of other comprehensive income - - - - - (1,252) (1,252) - (1,252)

Other comprehensive income/(loss) - - 12,841 (4,880) - 2,431 10,392 - 10,392

Capital increase on private placement 14,613 156,040 - - - - 170,653 - 170,653 Capital increase reserved for employees 2,723 19,064 - - - - 21,787 - 21,787 Capital increase to deliver free-shares plans 286 (286) - - - - - - Share base payment - - - - - 4,264 4,264 - 4,264

Purchases / Sales of Treasury Shares - - - - (520) - (520) - (520)

Profit appropriation by share premium - (15,469) - - - 15,469 - -

Dividends - (59,366) - - - - (59,366) - (59,366)

Others - - - 1,472 1,472 283 1,755

Transactions with owners 17,622 99,983 - - (520) 21,205 138,290 283 138,573

Balance as at June 30, 2017 161,031 747,497 (41,059) (57,815) (5,366) (51,911) 752,378 875 753,253

Interim consolidated cash flow statement

31

Interim consolidated cash flow statement

In € thousands

First-half 2017

First-half 2016

Profit/(loss) before tax (26,222) 16,756

Reversal of the following items Depreciation and impairment expenses on property, plant and equipment 8,580 7,292 Amortization and impairment expenses on intangible assets 5,726 8,566 Changes in provisions and employee benefits (1) 11,783 (33,482)

Recognition of share-based payments 2,764 2,450

Profit/(loss) on disposal of assets (30) (62) Total net interest costs 49,404 47,101 Amortization of transaction costs 3,865 3,734 Other non-cash items (1,139) 440

Net financing costs 52,100 51,213

Net cash from operations before changes in working capital 54,731 52,795

Changes to the rental fleet recorded on the balance sheet (2) (612,182) (478,053)

Changes in fleet working capital 290,806 158,226

Changes in non-fleet working capital 101,874 73,334

Cash generated from operations (164,771) (193,698) Income taxes received/paid (3) (17,148) 63 Net interest paid (49,386) (46,786)

Net cash generated from (used by) operating activities (231,305) (240,421)

Acquisition of intangible assets and property, plant and equipment (4) (22,349) (16,294) Proceeds from disposal of intangible assets and property, plant and equipment

1,287 3,382

Other investments and loans (5) (77,420) 2,756

Net cash used by investing activities (98,482) (10,156)

Capital increase (net of related expenses) (6) 192,440 - Dividends received / paid (59,366) - Issuance of bonds - 130,625 (Purchases) / Sales of treasury shares net (520) (2,800) Change in other borrowings (7) 263,630 171,608 Payment of transaction costs (563) (2,447)

Net cash generated from (used by) financing activities 395,621 296,986

Cash and cash equivalent at beginning of period 248,507 229,368 Net increase/(decrease) in cash and cash equivalents after effect of foreign exchange differences

65,834 46,409

Changes in scope (8) 2,988 - Effect of foreign exchange differences (783) (997) Cash and cash equivalents at end of period 316,546 274,780

(1) In 2017, the reversal of provision for disputes with French Competition Authority for €45 million and the accrual of provision related to the Trading Standard investigation in the UK for (€44) million. (2) Given the average holding period for the fleet, the Group reports vehicles as current assets at the beginning of the contract. Their change from period to period is therefore similar to operating flows generated by the activity. (3) The increase of tax cash-out in H1 2017 versus H1 2016 is mainly due to prior year’s regularizations in H1 2016 in UK and Spain. The cash out in H1 2017 amounts to (€17million) and is due to regular cash out mainly in UK (€6 million), Germany (€5 million) and France (€3 million). (4) Mainly related to IT cost capitalized (€9,9m); other & technical equipment for (€11,5m). (5) Of which Denmark franchisee acquisition price (€51.7 million), Ubeeqo minority’s stake acquisition price (€7 million), minority stake in a start-up SnappCar (€4.9 million), deposits and sureties (€6.7 million) and business acquisition of Australian franchisee (€1.7 million). (6) Of which €21.7 million Capital increase reserved for employees (ESOP) and €170.7 million Capital increase on private placement. (7) Related to drawing variation under Senior Notes (SARF). (8) Due to the change of Ubeeqo consolidation method from equity method to full consolidation starting March 1, 2017.

32

NOTE 1 – GENERAL OVERVIEW

1.1 GENERAL INFORMATION

Europcar Groupe S.A. (“ECG”) was incorporated on March 9, 2006 with initial share capital of €235,000 and was

converted into a French joint stock company (société anonyme) on April 25, 2006. ECG’s registered offices are

located at 2 rue René Caudron, 78960 Voisins le Bretonneux, France.

ECG changed its governance on February 24, 2015 to take the form of a joint stock company with a Management

Board and a Supervisory Board.

ECG is the ultimate parent company of Europcar Groupe (the “Group”) which leverages all of its experience in car

and utility vehicle rental for short and medium terms, offers various mobility solutions to its customers. Under its

Europcar and InterRent brands, the Group covers a wide range of markets and customers, both private and business,

with services ranging from luxury to low-cost.

ECG was first listed on the regulated market of Euronext Paris on June 26, 2015 (Compartment A; ISIN code:

FR0012789949; ticker: EUCAR).

1.2 BASIS OF PREPARATION

The interim condensed consolidated financial statements for the six-month period ended June 30, 2017 were

prepared in accordance with IAS 34 – Interim Financial Reporting, as adopted by the European Union. They do not

contain all of the disclosures required for a complete set of financial statements in accordance with IFRS, and should

therefore be read in conjunction with the consolidated financial statements for the year ended December 31, 2016.

They were reviewed by the Audit Committee on July 21, 2017 and authorized for issue by the Management Board of

Europcar Group and by the Supervisory Board of Europcar Group on July 24, 2017.

The interim condensed consolidated financial statements are presented in thousands of euros, unless otherwise

indicated.

1.3 MAIN EVENTS OF THE PERIOD

(a) Scope changes and acquisitions

In December 2016, the Group expanded its network of subsidiaries by acquiring 100% of its Irish franchisee. In

addition to its car rental business, the Group also acquired Europcar Ireland’s car-sharing service, launched in

2012, which operates under the GoCar brand. Given the date of the acquisition, the Irish entities, ETL, GoCar and

Irish Car Rental Ltd, were not included in the consolidation scope as of December 31, 2016. They are fully

consolidated as from January 1, 2017.

The €23.6 million investment made by the Group’s French subsidiary, Europcar Participations includes an

estimated earn out for €10.5 million and registration fees for €0.2 million. The net assets acquired amounted to

€(0.3) million and a transitional Goodwill of €34.6 million was recognized. The annual revenue is approximately

€50 million.

The acquired business’s contribution to the Group’s revenue and operating results for the period from the

acquisition date until June 30, 2017 is €23.4 million and €4.1 million respectively.

On February 17, 2017 the Group announced the exclusive takeover of Ubeeqo, through its subsidiary Europcar

Lab SAS, which until then has been consolidated under the equity method in Europcar scope. Starting March 1st,

2017 Ubeeqo is fully consolidated.

33

The 2016 company's revenue amounted approximately to € 5 million, with strong growth budgeted in the coming

years.

The change in the consolidation method led to a transitional Goodwill recognition amounting to €18.5 million (of

which €13.6 million issued from the initial transaction in 2014).

As part of the step by step acquisition, the effect of the revaluation of the share prior to the acquisition had no

impact in the income statement.

March 9, 2017 Europcar Australia acquired assets from its franchisee in the Queensland region of Australia for

an amount of 2.5 million Australian dollars (1.7 million euros). Transitional Goodwill of the same amount was

recognized as at June 30, 2017.

On April 27, 2017 the Group acquired its Danish franchisee, one of its biggest in terms of revenue. Europcar

Denmark is the market leader with circa 30% market share in Denmark. It operates an average rental fleet of

6,000 vehicles through 40 branches . In 2016, Europcar Denmark generated revenues of €60 million.

The €51.7 million investment made by the Group’s French subsidiary, Europcar Participations includes an

estimated earn out for €4.9 million. The net assets acquired amounted to €15.2 million and a transitional Goodwill

of €36.5 million was recognized.

On May 23, 2017, pursuant to share purchase agreement, Europcar Lab acquired a minority stake of up to 20% in

SnappCar a peer-to-peer car sharing start-up. SnappCar is a Dutch scale-up and social enterprise created in

2011. It is the second largest international peer-to-peer car sharing player in Europe with more than 250.000

customers sharing over 30.000 cars available on its platform. Today SnappCar is available in the Netherlands,

Denmark and Sweden with the intention to expand to new markets.

The first investment step performed amounts to €4.9 million representing 13.5% of share capital. The second

investment step, subject to the achievement of business objectives, will be performed before the end of the year

and will amount to €3.1 million.

The shareholders’ agreement doesn’t allow Europcar to have a significant influence over its investee.

Consequently, SnappCar is a minority investment not included in consolidation scope.

On May 26, 2017 the Group has signed an agreement to acquire Buchbinder. Founded over 60 years ago,

Buchbinder is a well-established company in Germany, with an extensive network of 152 stations of which 18

airport stations and an average fleet in excess of 20,000 vehicles. It is the 5th largest car rental company in the

market with a solid positioning as a low cost car rental operator, as well as a leading position in the vans & trucks

segment. Buchbinder is also a market leader in Austria and is present in Hungary and Slovakia. In 2016,

Buchbinder Group generated revenues of around €200 million. This transaction is based on a post-synergy

Adjusted Corporate EBITDA slightly above 5x.

The acquisition is subject to customary conditions precedent, including the approval of antitrust authorities, and is

expected to close in the second half of the year 2017. Consequently, Buchbinder isn’t included in consolidation

scope as at June 30, 2017.

On June 17, 2017 the Group has signed an agreement to acquire Goldcar. Goldcar is a major low cost operator

in Europe thanks to its strong positions in Spain and Portugal and its strong know-how in running a lean and

efficient pure low-cost operating model. In 2016, Goldcar generated revenues of around €240 million and an

estimated adjusted Corporate EBITDA of approximately €48 million. This transaction is based on a Corporate

Enterprise Value of €500 million.

The acquisition is subject to customary conditions precedent, including the approval of antitrust authorities, and is

expected to close in the second half of the year 2017. Consequently, Goldcar isn’t included in consolidation scope

as at June 30, 2017.

34

(b) Capital Increase

Capital increase reserved for employees of the group (Employee Share Ownership Plan)

In 2016, the Group launched its first international share offer reserved for employees of the Company and Group

subsidiaries wholly owned either directly or indirectly by the Company, who are members of Europcar's Group

Employee Savings Plan (the "GESP") and the International Group Employee Savings Plan ("IGESP") and whose

registered offices are in Germany, Australia, Belgium, Spain, U.S.A, France, Italy, New Zealand, Portugal and the

UK (the "Offer").

Under the terms of the Offer, in accordance with the authorizations granted by the Company's Combined General

Meeting of May 10, 2016 (resolutions 13 and 14), the Management Board, after obtaining the approval of the

Supervisory Board, decided on August 31, 2016, to increase the Company's capital for the benefit of (i) GESP

and IESP members and (ii) a special purpose entity belonging to a bank whose sole purpose is to subscribe for,

hold and sell shares in the Company in order to implement the Offer, up to a maximum nominal amount of 2% of

the share capital at the date the decision was taken.

The subscription price per share was set on January 20, 2017, at the average opening price on the twenty trading

days immediately preceding the Management Board decision fixing the dates for the subscription/cancellation of

shares, less a 15% discount rounded up to the nearest euro cent. Each subscriber benefits from an employer

contribution of 100% of their initial subscription up to a gross value of €1,000.

The Offer resulted in a gross capital increase of €21,787,312 on February 24, 2017 through the issuance of

2,723,414 new shares at a price of €8 per share.

2,177 employees in the ten countries involved, representing 33% of the Group’s workforce, subscribed to the

Offer. As a result, the shares held by Group employees represented 1.97% of the Company's share capital as at

June 30, 2017, compared to 0.12% at December 31, 2016.

The new shares issued under the Offer are ordinary shares of the Company. They were listed for trading on the

Euronext Paris market immediately on issue as part of the same code as existing shares. They are valid from

January 1, 2017, and entitle holders to dividends paid in respect of the year ended December 31, 2016.

In accordance with IFRS 2, this leveraged employee share ownership plan offers the possibility to employees to

subscribe for shares at a discounted preferential rate. As a consequence, the Group has recognized an expense

amounting to €2.7 million with a counterpart fully credited to equity in the condensed consolidated financial

statement as of June 30, 2017. In addition, the employer contribution amounts to €1 million recognized as an

expense.

Capital increase through a private placement



ordinary shares pre-capital raise. The fees related to the private placement amounting to €4,7 million were

included in the share premium. Settlement for the new ordinary shares and their admission to listing on Euronext

Paris took place on June 23, 2017.

The subscription price of €12.00 per new ordinary share represents a discount of 3.23% compared to the closing

price of the shares on Euronext Paris on June 20, 2017.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

2.1 PRINCIPLE OF ACCOUNTS PREPARATION

The accounting principles used to prepare these interim condensed consolidated financial statements as of and for

35

the six months June 30, 2017 are the same as those used to prepare the 2016 consolidated financial statements,

except for certain interim reporting treatment as described below in the “Use of estimates and judgments” section.

As at June 30, 2017, there are no new standards, amendments to existing standards or published interpretations

that are mandatory in the financial statements as at June 30, 2017.

New standards, amendments to existing standards and interpretations applicable in future years and not early

adopted by the Group for the period ended June 30, 2017:

o Adopted by the European Union:

- IFRS 15 – Revenue from contracts with customers

- IFRS 9 – Financial instruments

o Non adopted by the European Union:

- Amendments to IFRS 2 – Classification and Measurement of Share-based Payment Transactions

- Amendments to IFRS 4 – Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts

- Amendments to IAS 40 – Transfers of Investment Property

- Amendments to IFRS 1 and IAS 28 – Annual improvements 2014 – 2016

- IFRIC 22 – Foreign Currency Transactions and Advance Consideration

- IFRS 16 – Leases

- IFRIC 23 – Uncertainty over Income Tax Treatments

- IFRS 17 – Insurance Contracts

- Amendments to IFRS 15 – Clarification to IFRS 15

- Amendments to IFRS 10 and IAS 28 – Sale or transfer to assets between on investor and an associate or joint

venture

- Amendments to IAS 12 – Recognition of Deferred Tax Assets for Unrealized Losses

- Amendments to IAS 7 – Information Disclosure Initiative

The effects of applying IFRS 15 and its amendments for clarification to the accounting of revenue as from January 1,

2018 have been assessed and have been considered of little significance in light of the nature of the Group’s

business activities.

The Group has begun the analysis of the impacts of IFRS 16 Leases, applicable with effect from January 1, 2019 and

the approximate impact on the balance sheet of the first time adoption will be assessed from this valuation phase.

The package of improvements introduced by IFRS 9 includes a logical model for classification and measurement of

financial assets, an “expected loss” model for loans and receivables and a reformed approach to hedge accounting.

The classification and measurement of Group’s financial assets will be substantially the same as they are currently

under IAS 39; the impairment allowances won’t be materially affected by a focus on the risk that a loan will default

rather than whether a loss has been incurred. Regarding the hedge accounting, the Group doesn’t expect either any

significant impact of applying the reformed approach.

2.2 SEASONALITY OF OPERATIONS

Revenue, recurring operating income and all operating performance indicators are subject to seasonal fluctuations,

due mainly to the summer holiday season when activity for the leisure segment surges. The impact of seasonality

varies depending on the country in which the Group operates. Accordingly, the interim results for the six months

36

ended June 30, 2017 may not reflect the results that are expected for full-year 2017.

2.3 USE OF ESTIMATES AND JUDGMENTS

The preparation of interim financial information requires management to use judgment in making estimates and

applying assumptions that may impact the amounts of certain assets and liabilities and income and expenses

recognized in the interim condensed consolidated financial statements, as well as the information disclosed in certain

explanatory notes. Actual values recognized in future periods may differ from these estimates due to changes in

conditions that affect the underlying assumptions.

For the preparation of these interim condensed consolidated financial statements, the judgments exercised by

management in applying the Group's accounting policies and the main estimates were identical to those used to

prepare the consolidated financial statements for the year ended December 31, 2016, with the following exceptions:

- the estimate used to recognize the interim tax expense: for interim financial information, the current and deferred tax

expense are determined based on the income tax rate expected to apply to full-year taxable income, i.e., by applying

the expected average effective tax rate for 2017 to pre-tax income and share of profit of companies accounted for by

the equity method for the interim period.

- the French business contribution on added value (CVAE), for which a provision has been set aside for 50% of the

estimated annual expense.

-the associates' interim results as of June 30, 2017 have been estimated using historical and forecasted data.

In view of the significant increase in the yield on AA-rated bonds (1.3% December 31, 2016 versus 1.5% at June 30,

2017), the Group's main pension obligations (Germany) were remeasured as part of the preparation of the interim

condensed consolidated financial statements.

The pension expense for the period amounted to 50% of the estimated expense for 2017 based on the data and

assumptions used at December 31, 2016.

With respect to the vehicle rental business, estimates specifically cover:

- the residual value of “at risk” vehicles;

- the value of vehicles purchased with manufacturer or dealer buy-back commitment when badly damaged or

stolen;

- the evaluation of the ultimate cost of claims made against the Group for self-funded insured accidents using

actuarial techniques generally accepted and used in the insurance industry.

Estimates also cover provisions for disputes and litigation and the measurement of contingent liabilities. The Group

sets aside provisions when the related damages can reasonably be estimated at the reporting date. A provision is

recognized in the statement of financial position when the Group has a present legal or constructive obligation as a

result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and

the amount can be reliably estimated. If the effect is material, provisions are determined by discounting the expected

future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where

appropriate, the risks specific to the liability.

NOTE 3 – SEGMENT REPORTING

Europcar operates a car rental activity:

first, with its own rental fleet in eleven countries.

and second, through a franchise network present both in the countries in which Europcar operates directly

(“domestic franchises”), but especially in the other countries (“international franchises”).

In total, the Europcar Group is present in more than 130 countries and territories.

37

The chief operating decision maker within the meaning of IFRS 8 – Operating Segments, is the Group’s Management

Board.

On July 25, 2016, the Group adopted a new organization by segment encouraging better integration of its

“customers" in order to accelerate the development of its "Go To Market" strategy. The five Business Units are : (I)

Cars BU, (ii) Vans & Trucks BU, (iii) Low Cost BU, (iv) New Mobility BU, and (v) International Coverage BU.

At this stage, the new organization is based on commercial strategies and a business model that are defined by the

senior executives of business units then shared with senior executives of the countries who implement it in each

market.

The Group is mainly managed day to day on the basis of reporting data from individual countries. Following the

operations of external growth conducted in the first half 2017 and the implementation of this new organization, the

internal reporting system and management tools already in operation will have to be adapted in view of future

business integrations.

As a result, the Group continues to present the segment reporting required by IFRS 8 according to two geographic

segments. Segment reporting is complemented by information on revenues of business units.

Indeed, the Group presents two geographical segments: Europe and Rest of the World, within which the nature of the

services provided, and the category of customers targeted, are identical. The distinction between the two segments is

mainly based on criteria related to the dynamics of the economic zones, the organization of customers,

interdependencies between the countries regarding the management of customer contracts and the fleet, as well as

daily operational management.

Europe: European countries in which the Group operates its fleet directly (Belgium, France, Germany, Italy,

Portugal, Spain, Ireland, the United Kingdom and Denmark), organized on shared service, customer and

distribution criteria, as well as franchised European countries (Austria, Finland, Greece, Luxembourg,

Netherlands, Norway, Sweden, Switzerland and Turkey) which have similar economic characteristics and

offer synergies in terms of fleet negotiation and customer management.

Rest of the world: all countries other than those cited above, including Australia and New Zealand, where the

Group operates the fleet directly.

The Executive Committee members regularly review the operating and financial performance of the segments, which

are measured as follows:

Revenue from operations: includes vehicle rental income, territorial fees, other commissions related to the

Group’s trademarks and billed to franchisees, and fuel sales;

adjusted corporate EBITDA: recurring operating income before depreciation and amortization, after

deduction of the interest expense on liabilities related to rental fleet financing.

Consequently, and as required by IFRS 8, the Group discloses a global reconciliation of its segment reporting

information to its IFRS consolidated financial statements.

38

Segment reporting information

First-half 2017

In € thousands

Note Europe

Rest of the

World

Eliminations & Holding companies

Segment total

Segment revenue 945,721 84,618 (2,563) 1,027,776

Recurring operating income 37,004 17,251 16,098 70,352

Amortization and depreciation expense 6,758 581 6,886 14,225

Net fleet financing expenses (27,176) (1,695) 653 (28,218)

Adjusted corporate EBITDA 16,586 16,137 23,637 56,359

Total assets 2,279,999 121,331 3,072,009 5,473,339

Total liabilities 2,446,624 90,546 2,182,916 4,720,086

39

First-half 2016

In € thousands

Note Europe

Rest of the

World


Segment total

Segment revenue 876,707 73,446 (2,219) 947,934

Recurring operating income 42,820 13,537 12,257 68,615

Amortization and depreciation expense 5,276 490 10,092 15,858

Net fleet financing expenses (28,165) (1,186) (406) (29,757)

Adjusted corporate EBITDA 19,931 12,841 21,943 54,716

Total assets 1,970,169 76,590 2,866,794 4,913,563

Total liabilities 2,124,018 59,439 2,213,874 4,397,331

a) Information about revenue and services

Revenue and services can be analyzed as follows:

First-half 2017

In € thousands Europe

Rest of the

World


Segment total

Vehicle rental income 882,918 73,410 - 956,328

Other revenue associated with car rental 49,395 1,516 (2,563) 48,348

Franchising business income 13,408 9,692 - 23,100

Segment revenue 945,721 84,618 (2,563) 1,027,776

First-half 2016

In € thousands Europe

Rest of the

World


Segment total

Vehicle rental income 821,106 63,743 214 885,063

Other revenue associated with car rental 40,499 1,394 (2,433) 39,460

Franchising business income 15,102 8,309 - 23,411

Segment revenue 876,707 73,446 (2,219) 947,934

b) Customer segment information

40


2017 First-half

2016

Vehicle rental income 956,328 885,063

Breakdown of customers by segment

Leisure broker 53.2% 53.2%

Business 46.8% 46.8%

c) Revenue of Business Units:

First-half 2017

In € thousands CARS

VANS

LOWC

MOBI

ICOV

TOTAL

Segment revenue 841,657 106,517 45,762 11,169 22,671 1,027,776

NOTE 4 – FLEET HOLDING COSTS

In € thousands First-half 2017 First-half 2016

Costs related to rental fleet agreements (223,208) (210,288)

Purchase and sales related costs (23,132) (22,583)

Taxes on vehicles (17,696) (15,609)

Total fleet holding costs (264,036) (248,480)

NOTE 5 – FLEET OPERATING, RENTAL AND REVENUE RELATED COSTS


2017 First-half

2016

Fleet operating costs (123,409) (105,626)

Revenue-related commissions and fees (136,322) (127,330)

Of which, trade receivables allowances and write-offs (3,666) (4,365)

Rental related costs (111,541) (103,919)

Total fleet operating, rental and revenue related costs (371,272) (336,875)

NOTE 6 – PERSONNEL COSTS


Wages and salaries (142,250) (125,016)

Social security contributions (33,166) (33,466)

Post-employment benefits (3,750) (2,630)

Other items (12,051) (8,476)

Total personnel costs (191,217) (169,588)

41

NOTE 7 – SHARE BASE PAYMENTS

The Europcar Extraordinary Shareholders’ Meeting held on June 8, 2015 authorized the Management Board to

award free shares in the Company. The Management Board, at its meeting held on June 25, 2015, pursuant to

said delegation of authority approved the decision and the principle of two free share plans.

The first “AGA 13 T1” and “AGA 13 T2” plan benefited members of the Group’s Executive Committee.

- Vesting period of “AGA 13 T1” ended on June 25, 2017, following a two-year vesting period and subject

to performance and continuous presence criteria;

- Vesting period of “AGA 13 T2” will end on December 31, 2017, following a two-year and a half vesting

period and subject to performance and continuous presence criteria

The second free share plan, “AGA 100“, benefited the Group’s top 100 senior executives. Vesting period of “AGA

100” ended on June 25, 2017, following a two-year vesting period and subject to performance and continuous

presence criteria.

The number of free shares definitely acquired by the beneficiaries were vested solely under the AGA 13 T1 share

based plan and were delivered on June 26, 2017 ; this led to a capital increase of 285.711 new shares of €1

each.

As of June 20, 2017, 602,445 free shares on AGA 13 T2 are still outstanding.

The Company’s Extraordinary General Meeting dated as of 10 May 2016 , in its 12th resolution, authorized the

implementation free performance shares award scheme, in favor of some employees or managers of the Group.

This authorization has been given for a 26-months period and is valid until July 8, 2018.

The acquisition of these performance shares, following a vesting period of two years (or three years for non-

French residents under option), is subject to the beneficiary’s continued employment with the Group on the

vesting date, and the achievement of the following performance conditions for the fiscal year ended December 31,

2017 and December 31, 2018, performance conditions related to (i) Group EBITDA, (ii) revenue, and (iii) a

relative TSR (Total Shareholder Return).

When the vesting period is equal to 2 years, a one-year retention period is required for fee shares. No retention

period is required when the vesting period is equal to 3 years.

As of June 30, 2017, 521,500 free-shares on AGA 17 are still outstanding.

Number of free

shares

Currently vesting as of January 1, 2016 1,863,333

Cancelled (403,574)

Currently vesting as of December 31, 2016 1,459,759

Granted 521,500

Cancelled (571,603)

Delivered (285,711)

Currently vesting as of June 30, 2017 1,123,945

The cumulative charge for these plans amounts to €7.1 million as at June 30, 2017 (compared to €10.2 million at

June 30, 2016).

In June 30, 2017, the impact on the income statement for services received was a expense of €1.5 million compared

with an expense of €2.5 million as at June 30, 2016. The counterpart has been credited to equity.

42

NOTE 8 – AMORTIZATION, DEPRECIATION AND IMPAIRMENT EXPENSE


Amortization of intangible assets (1) (5,564) (8,566)

Depreciation of property, plant and equipment (8,661) (7,292)

Total amortization, depreciation and impairment expense (14,225) (15,858)

(1) In 2016, Goodwill allocated to Greenway was fully depreciated and consequently the amortization expense has decreased in

2017.

NOTE 9 – OTHER NON-RECURRING INCOME AND EXPENSES


2017 First-half

2016

Other non-recurring income(1) 45,000 11,444

Total other non-recurring income 45,000 11,444

Reorganization expenses (17,051) (5,209)

O/w: Reorganization – redundancy expenses (15,224) (2,634)

Reorganization – fees (1,827) (2,575)

M&A (8,857) -

Other non-recurring expense (2) (57,624) (2,977)

Total other non-recurring expense (83,532) (8,187)

Total other non-recurring income and expenses (38,532) 3,257

(1) In 2017, €45 million reversal of the provision related to the proceedings with the Authority Of The French Competition (note 25).

(2) In 2017, (€44) million due to the accrual of provision related to the Trading Standard investigation in the UK (note 25).

43

NOTE 10 – NET FINANCING COSTS


2017 First-half

2016

Net fleet financing expenses (28,218) (29,757)

Net other financing expenses (17,727) (14,683)

Gross financing costs (45,945) (44,440)

Profit (Loss) on derivative financial instruments 1,211 (700)

Amortization of transaction costs (3,865) (3,734)

Foreign exchange losses (845) (2,064)

Adjustments to the discounting rates applied to provisions and employee benefits

(908) (1,092)

Other (8,318) (4,148)

Other financial expenses (12,725) (11,738)

Foreign exchange gains 631 1,062

Other financial income 631 1,062

Net financing costs (58,039) (55,116)

NOTE 11 – INCOME TAX

The Group recognizes the tax expense for the period based on its best estimate of the expected annual average

weighted tax rate for full-year 2017, determined separately for each country.

The rules applied to recognize the deferred tax assets remain unchanged regarding December 31, 2016.

The Income tax income amounts to €5.0 million as at June 30, 2017 (Income tax expense amounting to €11 million

as at June 30, 2016).

At Group level, the effective tax rate for the six-month period ended June 30, 2017 is 19% compared to 65.9% for the

period ended June 30, 2016.

44

NOTE 12 – GOODWILL

In accordance with IAS 36, for its interim consolidated financial statements, Europcar Group uses internal and

external data to assess whether there is any indication that an asset may be impaired.

External data sources essentially consist in reviewing the weighted average cost of capital (WACC).

Internal data sources are based on performance indicators: a material decrease in revenue and/or profitability, or the

inability to achieve the budget, are indications of impairment

After reviewing the general trend in the performance of the countries comprising the cash-generating units,

management did not identify any indications of impairment and therefore no impairment tests were carried out on

assets at June 30, 2017, including on goodwill and the Europcar trademark.

Following the acquisitions and changes in the consolidated scope in the first half of 2017, the amount of goodwill has

increased by €98 million as follows:

In € thousands Germany

UK France

Other countries

Total

Balance as at January 1, 2017 180,384 94,604 91,878 92,629 459,496

Acquisitions (*) -

-

-

99,296

99,296

Effect of movements in foreign exchange rates

-

(1,682)

-

(529)

(2,211)

Other - - 429 - 429

Balance as at June 30, 2017

180,384

92,922

92,307

191,396

557,009

(*) Of which €34.6 related to the Irish franchisee, €38 million related to the Danish franchisee (including €1,5 million of pre-

acquisition goodwill), €25 million related to the Ubeeqo takeover and its full integration in Group financial statements as at March 1,

2017 (including €6,5 million of pre-acquisition goodwill on Bluemove and Guidami) and €1.7 million related to Australian Franchisee

acquisition of assets.

NOTE 13 – EQUITY-ACCOUNTED INVESTMENTS

Company name Principal place of business

% interest % control

Net profit/loss attributable to

Europcar (in €k)

Equity-accounted shares (in €k)

Provisions taken on equity-

accounted shares (in €k)

Car2Go Europe GmbH

Germany 25.00% 25.00% (4,270) - 5,833

Ubeeqo (1) France 75.71% 75.71% (1,481) - -

Total (5,751) - 5,833

(1) %interest and share of profit/loss of associate accounted for under the equity method before the exclusive takeover of Ubeeqo

ended February 2017.

45

NOTE 14 – FINANCIAL ASSETS

In € thousands At

June 30, 2017

At Dec. 31,

2016

Other non-current financial assets

Available-for-sale financial assets 1,873 1,224 Held-to-maturity investments(1) 33,021 36,415 Deposits and prepayments 14,798 6,183 Other long-term investments (2) 8,411 23,998

Total non-current financial assets 58,103 67,820

Current financial assets Loans (2) 219 34,165 Other current financial assets(1) 47,733 42,838 Total current financial assets 47,952 77,003

(1) Including €33 million to cover liabilities arising from our captive insurance structure (€63.3 million at December 31, 2016), mainly

consisting of bonds recognized at amortized cost.

(2)Of which €8 million related to Snappcar acquisition in June 2017 and €23.6 million of shares and a €22 million loan related to the Irish Franchisee not included in consolidation scope as of December 2016.

NOTE 15 – RENTAL FLEET RECORDED ON THE BALANCE SHEET The rental fleet operated by the Group is acquired and financed in different ways. The table below presents the breakdown between these different methods for the year ended December 31, 2016 and six months period ended June 30, 2017:

Type of acquisition and related financing

% of total volume of vehicles purchased

June 2017

Dec 2016

Vehicles purchased with manufacturer or dealer buy-back commitment financed on-balance sheet

41% 46%

Vehicles purchased with manufacturer or dealer buy-back commitment and financed through rental agreements qualifying as operating leases

49% 46%

Total fleet purchased with buy-back arrangements 90% 92%

Vehicles purchased without manufacturer or dealer buy-back commitment (“at risk” vehicles)

9% 7%

Vehicles financed through rental agreements qualifying as finance leases

1% 1%

Total purchases of rental fleet 100% 100%

In accordance with accounting standards, the fleet funded by operating leases is not recorded in the balance sheet and liabilities for these contracts are listed in off-balance sheet commitments. The rental fleet recorded in the statement of financial position is broken down as follows:

46

In € thousands At

June 30, 2017

At Dec. 31,

2016

Deferred depreciation expense on vehicles 272,734 155,328

Vehicle buy-back agreement receivables 1,572,275 1,059,333

Fleet purchased with buy-back contracts financed on-balance sheet 1,845,009 1,214,661

Vehicles purchased without manufacturer or dealer buy-back commitment (“at risk” vehicles) 462,423 341,594

Vehicles acquired through rental agreements qualifying as finance leases without buy-back arrangements 76,831 83,996

Total rental fleet recognized in the statement of financial position 2,384,263 1,640,251

The fleet is presented net of depreciation or impairment expense amounting to €3.9 million (December 2016: €4.3

million) in respect of damaged or stolen vehicles.

NOTE 16 – RECEIVABLES AND PAYABLES RELATED TO THE RENTAL FLEET

In thousands At June 30,

2017

At Dec. 31,

2016

Fleet-related receivables 570,404 612,739

VAT receivables 176,175 107,884

Total fleet-related receivables 746,579 720,623

In thousands At June 30,

2017

At Dec. 31,

2016

Fleet-related payables (1) 938,997 551,344

VAT payables 74,099 128,334

Total fleet-related payables 1,013,096 679,678

(1) Related to fluctuations in fleet volumes in relation to the seasonality of the activity.

The change in working capital requirements related to the rental fleet is detailed below:

In thousands of euros At June

30, 2017

At June.

30, 2016

Fleet-related receivables 45,041 (60,823)

VAT receivables (65,303) (88,883)

Payables related to fleet acquisition 366,702 321,595

VAT payables (55,634) (13,663)

Changes to the need for cash flow linked to the vehicle fleet 290,806 158,226

47

NOTE 17 – TRADE AND OTHER RECEIVABLES

The fair values of trade and other receivables correspond to their nominal value. All trade receivables fall due within

one year.

In thousands of € At June

30, 2017

At Dec.

31, 2016

Rental receivables 191,971 198,917

Other trade receivables 94,435 86,166

Other tax receivables 1,487 742

Insurance claims 19,541 22,070

Prepayments 58,029 32,891

Employee related receivables 879 556

Deposits, other receivables and loans 19,035 23,858

Total trade and other receivables 385,377 365,200

Impairment losses taken on rental and other trade receivables are as follows:

In € thousands At June 30,

2017

At Dec. 31,

2016

Opening balance (33,018) (31,493)

Allowance for bad debts (2,236) (8,210)

Receivables written off during the year/period 2,491 6,479

Unused amounts reversed - 60

Foreign currency differences 287 146

Closing balance (32,476) (33,018)

Additions to / releases of the allowance for bad debts are included in “Fleet operating, rental and revenue related

costs” in the consolidated income statement (see Note 5).

NOTE 18 – CASH AND CASH EQUIVALENTS AND RESTRICTED CASH


2017 At Dec. 31,

2016

Cash-in-hand and at bank 213,097 154,344

Accrued interest 421 233

Cash and cash equivalents 213,518 154,577

Restricted cash 110,394 105,229

Cash and cash equivalents and restricted cash 323,912 259,806

Cash-in-hand and at bank includes €33.9 million in cash at June 30, 2017 (December 2016: €61.3 million) tied up in

Securitifleet companies, excluding the two SFH Holdings and are dedicated to fleet financing in France, Germany,

Italy and Spain. As such, this cash is considered as non-restricted.

Cash and cash equivalents in fleet and captive insurance SPEs are reported as restricted cash. For the definition of

restricted cash, please refer to Significant Accounting Policies, section Treasury (ii) December 2016 financial

48

statements.

The following table reconciles cash and cash equivalents in the statement of financial position to cash and cash

equivalents in the cash flow statement:


2017 At Dec. 31,

2016

Cash and cash equivalents 213,518 154,577

Restricted cash 110,394 105,229

Bank overdrafts(1) (7,366) (11,299)

Cash and cash equivalents reported in the cash flow statement 316,546 248,507

(1) Included in current loans and borrowings (see Note 20).

49

NOTE 19 – CAPITAL AND RESERVES AND EARNINGS PER SHARE

(a) Share capital and share premium

The various changes in equity since January 1, 2017 are as follows:

Date Operation Share capital

(in €) Share premium

(in €) Number of

shares

Nominal value (in €)

12/31/2016 143,409,298 647,513,729 143,409,298 1,000

Feb 24, 2017 Capital increase reserved for

employees (1) 2,723,414 19,063,898 2,723,414 1,000

May 10, 2017 Profit appropriation by share

premium - (15,468,921) - -

May 31, 2017 Dividend paid - (59,365,633) - -

June 21, 2017 Capital increase on Private

placement 14,612,460 156,040,355 14,612,460 1,000

June 26, 2017 Capital increase to deliver

free-shares plans 285,711 (285,711) 285,711 1,000

06/30/2017 161,030,883 747,497,717 161,030,883 1,000

On February 24, 2017, the capital increase reserved for employees of the group (Employee Share Ownership

Plan) resulted in a gross capital increase of €21,787,312 through the issuance of 2,723,414 new shares at a price

of €8 per share (see Note 1.3 (b)).



ordinary shares pre-capital raise. Settlement for the new ordinary shares and their admission to listing on

Euronext Paris took place on June 23, 2017 (see Note 1.3 (b)). The fees related to the private placement

amounting to €4,7 million were included in the share premium.

On June 26, 2017, the share capital of Europcar Groupe was increased by 285,711 new shares of €1 each in

order to deliver the free-shares vested under the AGA 13 T1 share based plan. The counterpart of the share

capital increase was a corresponding decrease of the additional share premium by €285,711 (see Note 7).

As at June 30, 2017, the breakdown of shareholders in the share capital was as follows:

Shareholders

Number of common

shares and voting rights

Number of Class B

Preferred Shares

Number of Class C

Preferred Shares

Number of Class D

Preferred Shares

Total number of

shares

Percentage of common

shares and voting rights

Percentage of share capital

Eurazeo ................................. 63,044,838 - - 234 63,045,072 39.32% 39.15% ECIP Europcar Sarl ........................................

9,036,469 - - - 9,036,469 5.64% 5.61%

Morgan Stanley 9,047,141 - - - 9,047,141 5.64% 5.62% Public 76,022,457 - - - 76,022,457 47.42% 47.21% Executives and employees, and floating

3,171,892 - 4,045 3,807 3,179,744 1.98% 1.97%

Autocontrol 700,000 - - - 700,000 0% 0.43%

Total ..................................... 161,022,797 - 4,045 4,041 161,030,883 100.00% 100.00%

(b) Treasury shares

Under the liquidity contract, Rothschild & Cie Banque has purchased for the account of Europcar Groupe 774,948

50

shares at an average price of € 10.02, for a total cost of € 8,026,569 and sold 715,288 shares at an average price of €

10.74, for a total of € 7,505,567.

During this period, Europcar Group did not use derivatives to make its purchases.

As of June 30, 2017, the Company held 700,000 treasury shares.

During the period ended June 30, 2017, Europcar canceled €521,000 of treasury shares.

(c) Dividend paid

The General Meeting of Europcar Group held on May 10, 2017, approved the payment of a special distribution

exclusively in cash of a total amount of €59,365,633.

The final number of company’s shares having right to this special distribution being equal to 145 432 712 as at May

24, 2017, the amount of the special distribution is set at €0.4082 per share.

The right to this special distribution was allocated on May 29, 2017 and was paid exclusively in cash on May 31,

2017.

(d) Profit (Loss) per share

First-half

2017

First-half 2016

Loss attributable to ordinary shareholders (in €k) (26,840) 2,927

Average number of shares outstanding 145,337,208 143,227,594

Loss per share in € (0,185) 0,020

Diluted loss per share in € (0,185) 0,020

The number of potential dilutive shares is 1,284,048 as of June 30, 2017 (including 1,123,945, free shares and

ordinary shares issued from the conversion of class C and class D preferred shares) and 2,130,147 as of June 30,

2016.

51

NOTE 20 – LOANS AND BORROWINGS


2017 At Dec. 31,

2016

Notes issued 950,000 950,000

Other bank loans 21,854 20,659

Transaction costs/Premiums/Discounts (11,962) (17,419)

Non-current liabilities 959,892 953,240

Senior Revolving Credit Facility - 13,000

Senior Asset Revolving Facility dedicated to fleet financing 877,995 692,970

Other borrowings dedicated to fleet financing 501,390 361,645

Finance lease liabilities 60,955 96,770

Bank overdrafts 7,366 11,299

Current bank loans and other borrowings 107,695 45,726

Transaction costs/Premium/Discount – current portion (8,406) (7,759)

Accrued interest 10,409 10,791

Current liabilities 1,557,404 1,224,442

Net debt reconciliation:


2017 At Dec. 31,

2016

Non-current loans and borrowings 959,892 953,240

Current loans and borrowings 1,557,404 1,224,442

Held-to-maturity investments (33,021) (36,415)

Other current financial assets (47,952) (77,003)

Cash and cash equivalents and restricted cash (323,912) (259,806)

Net debt on the statement of financial position 2,112,411 1,804,458

Estimated outstanding value of the fleet financed through operating leases(1)

2,027,783 1,460,505

Total net debt 4,140,194 3,264,963

(1) The estimated debt on operating leases represents the carrying amount of the vehicles concerned and is calculated based on the purchase prices

and depreciation rates of corresponding vehicles (statistics provided by the manufacturers).

52

NOTE 21 – PROVISIONS

In € thousands

Insurance claim

provisions

Reconditioning provisions

Other provisions

Total

Non-current - - 18,640 18,640

Current 116,435 36,238 68,079 220,752

Balance as at December 31, 2016 116,435 36,238 86,719 239,392

Balance as at January 1, 2017 116,435 36,238 86,719 239,392

Provisions recognized during the period (2) 32,233 42,550 68,817 143,600

Provisions utilized during the period (26,849) (39,165) (8,512) (74,526)

Provisions reversed during the period (1) (2,868) - (51,564) (54,432)

Changes in scope of consolidation 1,409 287 1,693 3,389

Transfers - - 362 362

Effect of foreign exchange differences (744) (220) (1,002) (1,966)

Balance as at June 30, 2017 119,616 39,690 96,513 255,819

Non-current - - 31,976 31,976

Current 119,616 39,690 64,537 223,843

Balance as at June 30, 2017 119,616 39,690 96,513 255,819

(1) €45 million reversal of the provision related to the proceedings with the Authority Of The French Competition (note 25).

(2) (€44) million due to the accrual of provision related to the Trading Standard investigation in the UK (note 25).

NOTE 22 – OTHER DISCLOSURES RELATING TO FINANCIAL ASSETS AND LIABILITIES

The fair values of financial assets and liabilities, together with their carrying amount in the statement of financial

position, are as follows:

In € thousands Carrying

value Fair value

Fair value through the

income statement

Fair value through equity

Financial instruments at amortized

cost Fair value as at June 30, 2017 Notes

Trade receivables 17 286,406 286,406 - - 286,406 Deposits and current loans 15,017 15,017 - - 15,017 Vehicle buy-back agreement receivables 15 2,384,263 2,384,263 - - 2,384,263 Fleet-related receivables 16 570,404 570,404 - - 570,404 Deposits, other receivables and loans 17 19,035 19,035 - - 19,035

Total of loans and receivables 3,275,125 3,275,125 - - 3,275,125

Investments in non-consolidated entities 14 1,873 1,873 - 1,873 - Other financial assets 14 47,952 47,952 - - 47,952 Restricted cash 18 110,394 110,394 110,394 - - Cash and cash equivalents 18 213,097 213,097 213,097 - - Derivative assets 1,210 1,210 1,210 - -

Total financial assets 3,649,651 3,649,651 324,701 1,873 3,323,077

Notes and borrowings 20 959,892 993,120 - - 993,120 Trade payables 588,117 588,117 - - 588,117

53

Fleet-related payables 16 938,997 938,997 - - 938,997 Bank overdrafts and portion of loans due in less than one year

20 1,557,404 1,557,404 - - 1,557,404

Derivative liabilities 41,060 41,060 - 41,060 -

Total financial liabilities 4,085,470 4,118,698 - 41,060 4,077,638

Over the period, there were no transfers between levels of the fair value hierarchy used in measuring the fair value of

financial instruments.

The fair value of financial instruments traded in active markets (such as cash, cash equivalents and securities held

for trading and securities available for sale) is based on the market price at the closing date . The market price at the

end used to evaluate financial assets held by the Group is the current bid price: level 1 in the fair value hierarchy.

The fair value of financial instruments that are not traded in an active market (such as derivatives traded OTC) is

determined using valuation techniques. The Group uses different methods and assumptions based on market

conditions observed at each reporting date. Market prices or prices provided by operators for similar instruments are

used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to calculate the fair

value of other financial instruments. The fair value of interest rate swaps is determined using the method of

discounted cash flows: Level 2 in the fair value hierarchy .

NOTE 23 – OFF-BALANCE SHEET COMMITMENTS

(a) Operating leases

At June 30, 2017, the Group’s minimum future payments for non-cancelable operating lease commitments were as

follows:

In € thousands At June 30, 2017 At Dec. 31, 2016

TOTAL

Including amounts

related to rental fleet

TOTAL

Including amounts

related to rental fleet

Payable:

Within 1 year 221,252 161,964 253,026 190,439

From 1 to 5 years 143,252 10,772 138,479 3,793

More than 5 years 48,674 - 35,152 -

Total 413,178 172,736 426,657 194,232

(b) Capital commitments

The Group has entered into contracts to purchase vehicles. At June 30, 2017, capital commitments to purchase

vehicles amounted to €673.0 million (versus €1,040.0 million at December 31, 2016).

(c) Guarantees

As at June 30, 2017, ECG had given guarantees worth €49.5 million to suppliers. At that date, contingent assets

amounted to €3.2 million (€3.2 million at end-2016).

(d) Business purchase agreement

54

On May 26, 2017 the Group has signed an agreement to acquire Buchbinder, one of the largest car rental

companies in Germany. This transaction is based on a post-synergy Adjusted Corporate EBITDA slightly above 5x.

On June 17, 2017 the Group has signed an agreement to acquire Goldcar, Europe’s largest low cost car rental

company. This transaction is based on a Corporate Enterprise Value of €500 million.

Both acquisitions are subject to customary conditions precedent, including the approval of antitrust authorities, and is

expected to close in the second half of the year 2017.

NOTE 24 – RELATED PARTIES

During the first semester 2017, the amount of operation with related parties is not significant.

NOTE 25 – CONTINGENCIES

The main disputes and proceedings currently in progress or that have evolved during the period are as follows:

Proceeding of the French competition authorities

The French Competition Authority (Autorité de la concurrence – ADLC) initiated a procedure in the vehicle rental

sector. On February 17, 2015, the ADLC addressed a statement of objections to Europcar France, as well as to other

stakeholders, relating to certain practices that are alleged not to be compliant with French anti-trust regulations.

Europcar France lodged its statement of defense brief on May 20, 2015. The Company strongly contested the

complaints and the underlying arguments, further to which the ADLC’s case-handler was expected to submit a report

to the Competition Authority College during the first half of 2016. Following the filing of those statements in response,

the reporter of the French Competition Authority issued a report to the College on June 2, 2016. Europcar France

replied to this report on September 5, 2016. The hearing before the College of Competition Authority took place on

December 12, 2016.

On February 27, 2017, the French Competition Authority rendered a dismissed case decision upon a proceeding in

the car rental sector, considering that the alleged practices covered by the investigation services were not

established. As this decision could have been subject to an appeal before Paris Court of Appeals, the provision of

€45 million recorded in non-recurring expenses as at December 31, 2015, was maintained as at December 31, 2016.

On April 17, 2017 the Group was informed that the Ministry of Economy and Finance decided not to appeal to the

Paris Court of Appeal. Consequently the provision of € 45 million recorded on December 31, 2015 was reversed as at

June 30, 2017.

Dispute with a former franchisee in Israel

In July 2016, Kalrom Leasing And Financing Ltd and Kalrom Motors & Engineering Equipment Ltd brought an action

against Europcar International, Europcar France, Europcar Group UK Ltd before the Lod District Court in Israel,

claiming for €3 million in damages on the grounds of breach of agreements and unilateral termination of contracts.

However, Kalrom Leasing and Financing Ltd were the debtor of Europcar International and its subsidiaries for

approximately €1 million. Europcar entities challenged the jurisdiction of the Israeli courts as the Franchise

agreement has an arbitration clause which designates the Chamber of Commerce in Paris.

A settlement Agreement was signed as in June, 2017 where each Party waives its respective claims

Italian Competition Authority investigation

July 29, 2015, officers of the Italian Antitrust Authority (“IAA”) carried out an investigation at the Europcar Italian’s

premises in relation to IAA’s decision to open an in-depth investigation against ANIASA (the Italian Associations of

Car rental Companies) and its members (including Europcar Italia S.p.A.), related to the business data exchanges in

55

the field of the Long Term Car Rental (NLT) in order to verify a possible agreement which restricts competition. On

December 7, 2016 IAA has sent to Europcar Italia S.p.A its notification of grievance. This notification of grievance

stated that Europcar is only active on the short term car rental market and is not concerned by the incriminated

behavior. As such, Europcar Italia S.p.A has also not been included in the list of company who may potentially be

sanctioned.

The Hearing was held on March 1, 2017 and the decision was notified the April 13, 2017. Europcar was completely

discharged, the IAA held in fact that Europcar cannot be deemed involved since it is solely active in the short term car

rental market (“NBT”) and not in the long term car rental (“NLT”) or fleet management (“FM”) ones. This decision is

likely to be subject to appeal before the TAR Lazio (Administrative Courts).

The term for filing the possible appeal against the decision expired on June 12, 2017 and the IAA decided not to

appeal.

Leicester City Council Trading Standards Services investigation

On 23 June 2017 Leicester City Council Trading Standards Services opened investigation into Europcar UK in

relation to allegations that Europcar UK levied charges for repairs where damages to a vehicle have been in dispute

and without the consent of the holder; and/or false and / or excessive charges and comprise charges in excess of the

cost of the repairs in breach of Regulation 9 of the Consumer Protection from Unfair Trading Regulations 2008. The

Group recorded a provision for £ 38 million (€44 million) of non-recurring expenses (see note 9) in its 2017 half-year

consolidated financial statements. This amount corresponds to the Company’s best estimate, at very early stage of

the investigation based on a number of assumptions, including an assumption that the charging practices will be

found to be misleading under Regulation 9 of the Consumer Protection from Unfair Trading Regulations 2008 and

potential inappropriate behavior when charging repairs costs to consumers.

NOTE 26 – SUBSEQUENT EVENTS

On July 13, 2017, the group signed a new secured €500 million Revolving Credit Facility (RCF) with a diversified pool

of international banks. This Facility, which replaced the existing €350 million Senior Revolving Credit Facility, will

mature on June 2022. The group has optimized the financing cost of this new RCF by a 25 bps reduction of the

margin (from 250 bps to 225 bps for a corporate leverage ratio less than 2x and from 275 bps to 250 bps for a

corporate leverage ratio higher than 2x). This new RCF includes the usual financial and general covenants for

general purpose facilities. The €150 million increase of the nominal amount will allow the group to support its 2020

ambition and the related growing financing needs.

On July 13, 2017, the group also signed an unsecured €1.040 million Bridge Facility with a pool of international

banks. This facility includes two tranches: a €440 million bridge to bond dedicated to the acquisition of Goldcar equity

value and a €600 million bridge to fleet financing dedicated to the refinancing of the existing fleet debt of Goldcar.

Those two facilities, which can be drawn until March 31, 2018 , have a 12 months maturity and can be extended

respectively for an additional 6 months period and for two additional 6 months periods. This Bridge facility has no

financial covenant, and includes a step up margin grid. Europcar will refinance this Bridge Facility in the future

through a mix of bond issue and implementation of specific fleet financings.

To management’s knowledge, there are no other subsequent events to the closing that might have a material impact

on the earnings, assets, business or overall financial position of the Group.

56

STATUTORY AUDITORS’ REVIEW REPORT ON THE HALF-YEAR FINANCIAL INFORMATION

(HALF-YEAR ENDED JUNE 30th, 2017)

This is a free translation into English of the Statutory Auditors’ review report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.

To the Shareholders, EUROPCAR GROUPE 2 rue René Caudron Bâtiment Op 78960 Voisins le Bretonneux

In compliance with the assignment entrusted to us by your Shareholder meeting and in accordance with the requirements of article L. 451-1-2 III of the French Monetary and Financial Code (Code monétaire et financier) , we hereby report to you on:

the review of the accompanying condensed half-year consolidated financial

statements EUROPCAR GROUPE for the period from January 1, 2017 to June 30, 2017;

the verification of the information contained in the half-year management report. These condensed half-year consolidated financial statements are the responsibility of the Management Board. Our role is to express a conclusion on these financial statements based on our review.

I. Conclusion on the financial statements

We conducted our review in accordance with professional standards applicable in France. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

57

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed half-year consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 - the standard of IFRSs as adopted by the European Union applicable to interim financial information.

II. Specific verification

We have also verified the information given in the half-year management report on the condensed half-year consolidated financial statements subject to our review. We have no matters to report as to its fair presentation and consistency with the condensed half-year

consolidated financial statements.

Neuilly-sur-Seine and Courbevoie, July 25th, 2017

The Statutory Auditors

French original signed by

PricewaterhouseCoopers Audit Mazars François Jaumain Isabelle Massa

58

STATEMENT BY THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT

To the best of my knowledge, I hereby certify that the Interim condensed consolidated financial statements for the 6 months period ended June 30, 2017 have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, financial position and results of Europcar Groupe and all consolidated companies, and that the half-year financial report attached presents a true and fair view of the significant events that occurred during the first six months of the financial year and of their impact on the half year financial statements, the main transactions between related parties and a description of the main risks and uncertainties for the remaining six months of the financial year.

Voisins-le-Bretonneux,

July 25, 2017 French original signed by

Caroline Parot Chairman of the Management Board

Half-Year Financial Report 2017 - Investor Relations ...

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