As a consequence of the review announced on 11 June 2007 regarding the carrying value of the Group’s net assets in Avis Portugal, a prior year adjustment has been recorded in order to restate their carrying amounts to their recoverable amount.
The impact of the restatement on the comparative amounts within the Balance Sheet as at 31 December 2006 is an increase in vehicle fleet fixed assets of €3.7 million, an increase in short-term obligations under finance leases of €6.9 million, and an increase in accrued liabilities of €1.4 million. These adjustments reduce net assets and closing retained earnings by €4.6 million.
The impact of this restatement on the comparative amounts within the Income Statement for the year ended 31 December 2006 is an increase in vehicle fleet depreciation charges of €2.9 million, an increase in adjustments arising on differences between sales proceeds and depreciated amounts of €0.2 million, and an increase in other cost of sales of €0.8 million. Accordingly, total cost of sales increased by €3.5 million.
As a result of the restatement, a reclassification between operating and investing cash flows of €0.3 million has been reflected in the Cash Flow Statement.
The impact of this restatement on the basic and diluted total earnings per share is a decrease of Euro cents 3.0 to Euro cents 2.0.
No tax credit has been recognised on the above, given that it is uncertain when any deferred tax asset would be realised.
