The dominant source and nature of the Group's risks and returns govern whether its primary segment reporting is by business segment or geographical segment. The Group is subject to significant variations in risks and rewards between undertaking its operations through corporately owned businesses, as compared with the licensing of such operations to third parties. Given the nature of the separate brands, the Group is also subject to significant variations in risks and rewards between its Avis branded businesses and its Budget branded businesses. These variations contrast with more limited differentials between the risk and reward profile of operations in different geographical locations. The Group's primary reporting format is therefore by business segment, and the secondary reporting format is geographical. Discontinued relates entirely to Avis Corporate activities.
a) Business segments
| 2007 | 2006 | |||||
| as restated1 | ||||||
| Revenue | €m | €m | ||||
| Rental revenue | 1,114.2 | 1,056.9 | ||||
| Other non-rental revenue2 | 2 125.8 | 124.5 | ||||
| Avis Corporate | 1,240.0 | 1,181.4 | ||||
| Avis Licensees | 34.1 | 29.0 | ||||
| Avis | 1,274.1 | 1,210.4 | ||||
| Budget Corporate | 42.6 | 36.6 | ||||
| Budget Licensees | 10.1 | 8.8 | ||||
| Budget | 52.7 | 45.4 | ||||
| Revenue – continuing | 1,326.8 | 1,255.8 | ||||
| Discontinued operation – see Note 39 | 48.7 | 81.3 | ||||
| Revenue including discontinued operation | 1,375.5 | 1,337.1 |
- 1 Restated following the prior year adjustment regarding Avis Portugal (see Note 33).
- 2 Other non-rental revenue includes income from the sale of fuel, sub-licensee income, the provision of foreign exchange services to rental customers, in addition to other incidental operating income.
Sales between the business segments are immaterial.
| 2007 | 2006 | ||||||||||
| Operating profit/(loss) | Underlying1 €m | Amounts excluded from underlying €m | Total €m | Underlying1 as restated2 €m |
Amounts excluded from underlying €m | Total as restated2 €m | |||||
| Avis Corporate | 124.7 | (4.4) | 120.3 | 115.8 | (8.4) | 107.4 | |||||
| Avis Licensees | 31.9 | – | 31.9 | 26.3 | – | 26.3 | |||||
| Avis | 156.6 | (4.4) | 152.2 | 142.1 | (8.4) | 133.7 | |||||
| Budget Corporate3 | (4.1) | – | (4.1) | (4.6) | (1.6) | (6.2) | |||||
| Budget Licensees3 | 1.2 | – | 1.2 | (0.2) | – | (0.2) | |||||
| Budget | (2.9) | – | (2.9) | (4.8) | (1.6) | (6.4) | |||||
| Headquarters | (47.2) | (0.8) | (48.0) | (47.8) | (17.7) | (65.5) | |||||
| Operating profit/(loss) – continuing | 106.5 | (5.2) | 101.3 | 89.5 | (27.7) | 61.8 | |||||
| Discontinued operation (see Note 39) | 7.9 | (15.9) | (8.0) | 12.6 | – | 12.6 | |||||
| Operating profit/(loss) including discontinued operation | 114.4 | (21.1) | 93.3 | 102.1 | (27.7) | 74.4 | |||||
- 1 See Basis of Preparation.
- 2 Restated following the prior year adjustment regarding Avis Portugal (see Note 33) and the reclassification of the discontinued operation - Greece (see Note 39).
- 3 The 2006 allocation of operating profit between the Budget Corporate and Licensee segments has been restated by of €2.3 million (decrease in Licensee with a corresponding increase in Corporate) to ensure that the operating profit is presented on a consistent basis with the Avis segments.
No adjustment is made between segments to recharge the value of the overall Avis/Budget goodwill, brand, licence rights, or to allocate the value of goodwill written off to reserves in previous periods. Avis goodwill of €1,080.4 million arising before 1 March 1998 was fully written off to reserves, and Budget goodwill of €33.9 million arising on 12 March 2003 has been fully impaired and charged to the Income Statement in previous periods. Had the value of goodwill, brand or licence rights been charged to the segments, the individual segment results would be materially affected.
| Assets | Liabilities | Net assets | |||||||||
| 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | ||||||
| Balance sheet | €m | as
restated1 €m |
€m | as
restated1 €m |
€m | as restated1 €m |
|||||
| Avis Corporate | 1,923.1 | 1,780.5 | (1,591.7) | (1,493.8) | 331.4 | 286.7 | |||||
| Avis Licensees | 8.5 | 5.2 | – | – | 8.5 | 5.2 | |||||
| Avis | 1,931.6 | 1,785.7 | (1,591.7) | (1,493.8) | 339.9 | 291.9 | |||||
| Budget Corporate | 53.2 | 44.8 | (53.0) | (78.3) | 0.2 | (33.5) | |||||
| Budget Licensees | 2.8 | 2.5 | (1.2) | (0.7) | 1.6 | 1.8 | |||||
| Budget | 56.0 | 47.3 | (54.2) | (79.0) | 1.8 | (31.7) | |||||
| Segment total | 1,987.6 | 1,833.0 | (1,645.9) | (1,572.8) | 341.7 | 260.2 | |||||
| Share of joint venture and associate (see Note 14) | 10.8 | 10.2 | – | – | 10.8 | 10.2 | |||||
| Headquarters | 91.3 | 144.2 | (346.8) | (349.1) | (255.5) | (204.9) | |||||
| Continuing operations | 2,089.7 | 1,987.4 | (1,992.7) | (1,921.9) | 97.0 | 65.5 | |||||
| Discontinued operation (see Note 39) | n/a | 235.4 | n/a | (215.7) | n/a | 19.7 | |||||
| Group including discontinued operation | 2,089.7 | 2,222.8 | (1,992.7) | (2,137.6) | 97.0 | 85.2 | |||||
- 1 Restated following the prior year adjustment regarding Avis Portugal (see Note 33) and the reclassification of the discontinued operation - Greece (see Note 39).
Headquarters primarily represents head office assets and liabilities. Segment assets include software, vehicles, other property, plant and equipment, inventories, receivables (including vehicles under manufacturer repurchase agreements) and operating cash, goodwill and investments. Segment liabilities include operating liabilities and certain corporate borrowings. Capital expenditure comprises additions to software, vehicles (excluding vehicles under manufacturer repurchase arrangements), other property, plant and equipment, including additions arising from business combinations, excluding goodwill arising on these acquisitions.
| Capital expenditure | Depreciation and amortisation | Impairment losses | |||||||||
| 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | ||||||
| Balance sheet | €m | as
restated1 €m |
€m | as
restated1 €m |
€m | as restated1 €m |
|||||
| Avis Corporate | 637.3 | 742.3 | 136.3 | 161.6 | 4.0 | 0.3 | |||||
| Avis Licensees | – | – | – | – | – | – | |||||
| Avis | 637.3 | 742.3 | 136.3 | 161.6 | 4.0 | 0.3 | |||||
| Budget Corporate | 3.1 | 1.5 | 1.4 | 1.0 | – | – | |||||
| Budget Licensees | – | – | – | – | – | – | |||||
| Budget | 3.1 | 1.5 | 1.4 | 1.0 | – | – | |||||
| Segment total | 640.4 | 743.8 | 137.7 | 162.6 | 4.0 | 0.3 | |||||
| Headquarters | 11.5 | 10.8 | 10.3 | 9.6 | – | – | |||||
| Continuing operations | 651.9 | 754.6 | 148.0 | 172.2 | 4.0 | 0.3 | |||||
| Discontinued operation (see Note 39) | 26.8 | 47.0 | 9.7 | 16.4 | 7.1 | – | |||||
| Group including discontinued operation | 678.7 | 801.6 | 157.7 | 188.6 | 11.1 | 0.3 | |||||
- 1 Restated following the prior year adjustment regarding Avis Portugal (see Note 33).
Headquarters primarily represents capital expenditure and depreciation/amortisation of head office software projects and property, plant and equipment. Impairment losses comprise goodwill impairments (see Note 10).
b) Geographical segments
| Revenue | Assets | Capital expenditure | |||||||||
| 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | ||||||
| €m | as
restated1 €m |
€m | as
restated2 €m |
€m | as restated2 €m |
||||||
| France | 295.5 | 275.1 | 437.9 | 430.9 | 160.3 | 282.5 | |||||
| Germany | 196.7 | 181.6 | 420.7 | 295.6 | 59.1 | 53.2 | |||||
| Italy | 201.9 | 190.1 | 246.6 | 225.8 | 156.6 | 154.7 | |||||
| Spain | 208.1 | 210.5 | 327.4 | 322.9 | 179.2 | 175.8 | |||||
| United Kingdom | 243.7 | 226.0 | 321.5 | 285.8 | 48.7 | 27.9 | |||||
| Other Europe | 177.7 | 169.5 | 226.2 | 265.2 | 33.4 | 47.0 | |||||
| Rest of the world | 3.2 | 3.0 | 7.3 | 6.8 | 3.1 | 2.7 | |||||
| 1,326.8 | 1,255.8 | 1,987.6 | 1,833.0 | 640.4 | 743.8 | ||||||
| Share of joint venture and associate – | |||||||||||
| Rest of the world (see Note 14) | – | – | 10.8 | 10.2 | – | – | |||||
| Headquarters | – | – | 91.3 | 144.2 | 11.5 | 10.8 | |||||
| Continuing operations | 1,326.8 | 1,255.8 | 2,089.7 | 1,987.4 | 651.9 | 754.6 | |||||
| Discontinued operation (see Note 39) | 48.7 | 81.3 | n/a | 235.4 | 26.8 | 47.0 | |||||
| Group including discontinued operation | 1,375.5 | 1,337.1 | 2,089.7 | 2,222.8 | 678.7 | 801.6 | |||||
