Avis Europe plc Preliminary Results for the Year Ended December 31, 2000.

Business Editors

BRACKNELL, Berkshire, England--(BUSINESS WIRE)--Feb. 22, 2001

Avis Europe plc, the leading car rental company in Europe, Africa, the Middle East and Asia today announced preliminary results for the year ended December 31, 2000.

Financial Highlights

-- Strong revenue growth up 20.9% to (euro)1,222.4 million ($1098.7 million(a))
(up 11.4% to(pound)747.7 million)

-- Like-for-like Euro revenue growth of 17.5% to (euro)1,171.9 million (up 8.2%
to(pound)716.8 million), driven by strong demand and continued price gains

-- Reported sterling numbers affected by 8% decline in euro/sterling exchange
rate

-- Operating profit before exceptional items up 11.2% to (euro)242.3 million
($217.8 million ) (up 3.1% to (pound)148.1 million)

-- Operating margin of 19.8% before exceptional items 1.7% lower, principally
due to higher fleet costs in some markets, investments in e-commerce and call
centers and the impact of the fuel tax protests.

-- Pre-tax profits before exceptional items up 3.6% to (euro)175.0 million
($157.3 million) (down 3.6% to (pound)107.0 million)

-- Earnings per share before exceptional items up 3.5% to (euro)0.225 million
($0.202) (down 3.8% to 13.74p)

-- Exceptional charges of (euro)36.3 million ($32.7 million) ((pound)22.0
million) relating to 3 Arrows subsidiary and yourautochoice.com start-up costs

-- Proposed final dividend of 3.8p (5.7(cent)) per share (1999: 3.6p)

-- Earnings per share (euro)0.178 ($0.160) (10.91p)

Operating Highlights

-- Continued double-digit revenue growth in all customer segments

and key markets

-- Development opportunities from significant new partnerships

during 2000

-- New pan-European call centers starting to deliver benefits

Commenting on the results, Chairman Alun Cathcart said:

"In 2000 we achieved double-digit revenue growth across all key markets. Operating margins remained strong but were lower than last year due to fleet costs, our investment program and the one-off impact of the fuel tax protests. We expect fleet cost pressures to continue in 2001, and for further operating efficiencies to result from our continued investment. Against the background of expected slower GDP growth in the European economies, we anticipate somewhat lower volume growth in the year ahead, but a continuing favorable outlook for pricing. Growth in the first six weeks of 2001 has been in line with our expectations."

The annual report will be posted to shareholders on March 15, 2001. The Chairman's statement, the Operating and Financial Review and extracts from the Audited Financial statements are available on www.avis-europe.com from February 22, 2001.

The financial statements are presented in both euro and sterling. Euro is the main reporting currency for the Group due to the significance of Avis' continental European operations. Reported sterling numbers are affected by the 8% average year-on-year decline in the euro/sterling exchange rate during 2000.

(a) US Dollar equivalents are provided for reader convenience at the

December 31, 2000 rate of $0.8988 =1 euro (December 31, 1999 rate

of $1.0062 = 1 euro)

Continued strong revenue growth

In 2000, the Group continued to deliver very strong revenue growth, with increases of 20.9% and 11.4% in euro and sterling respectively.

Like-for-like revenue growth was 17.5%, which excludes the acquisition of a German sub-licensee in July 1999 and the licensee in Holland in January 2000. Revenue growth was driven by a significant increase in volume, together with a further improvement in revenue per rental. In like-for-like business, volume increased by 14.5% versus prior year and revenue per rental by 7.2% comprising an increase in revenue per day of 2.6% and a rental length increase of 4.5%.

Since flotation in 1997, the Group has achieved an average annual like-for-like volume increase of 10.8% and revenue per rental increase of 4.8%.

Gains in all customer segments and key markets

The Group continues to pursue a balanced growth strategy across all its major markets and customer segments.

Double-digit revenue growth was achieved in each of the five major markets, France, Germany, Spain, Italy and the UK, which together accounted for 84% of total Group revenue in 2000.

In France, revenue grew by 15%, underpinned by strong performances in Premium and Replacement. Good increases were achieved in revenue per rental despite extremely competitive conditions in some customer segments.

In Germany, revenue grew by 24% on a like-for-like basis. The very high levels of growth achieved in the first half of the year moderated somewhat faster than anticipated, principally due to an unexpected slow-down in demand for replacement vehicles associated with accident damage. We have strengthened our market position in Germany and after such strong gains during 2000, the focus in 2001 will be on consolidation.

Revenue was up 16% in Italy, underpinned by a good performance in Leisure and, in particular, very strong transatlantic demand, which was up 40%.

In Spain, revenues grew by 14% with increasing demand created by major new partnerships agreed during 2000 including Thomas Cook, LeasePlan and RENFE, the Spanish high speed rail system. Intra-European Leisure performed particularly well, with a significant increase in inbound business from the UK.

Sterling revenues in the UK increased by 10%, despite lower activity during September and October due to the fuel tax protests. Growth in Leisure was particularly strong as a result of successful promotional activities in the domestic market.

During 2000 we also achieved double-digit growth across all major customer segments. In like-for-like revenue, Leisure was up 18%, Corporate 20%, Replacement 14% and Premium 15%. We continue to develop strategies for both domestic and cross-border business. 58% of revenues originated from domestic customers during 2000, 25% from intra-European travel and the balance from the rest of the world, of which 10% was from the US.

Partnerships extend leadership position

Our market leadership position is underpinned by the quality and tenure of our partner relationships. We are delighted to have secured exclusive new partnerships in the past year, as well as renewing some established relationships. Development of our Replacement segment was reinforced by an agreement to become the preferred supplier to the LeasePlan Group, the largest pan-European leasing company. This partnership covers eight countries and we are now progressing deployment of web-based technology for reservations and on line customer service systems.

We expanded our airline partnership arrangements in 2000 with an exclusive three year partnership agreement with Swissair and Sabena, which becomes fully effective in March 2001. A number of innovations will be introduced and already a customized internet micro-site has been launched for the employees of SAir Group.

In February 2001, we renewed an established 12 year relationship with bmi british midland on a preferred supplier basis for a further three years. As part of the renewed agreement, gold members of the airline's diamond club will automatically receive membership of Avis Preferred, providing significant speed of service benefits for frequent travelers. Avis has agreements with over 70 of the world's airlines.

The exclusive agreement with Thomas Cook for business in our territories became effective during 2000, contributing to the significant increase in intra-European leisure business in the second half of the year. We now have exclusive agreements with two of the UK's top three travel groups.

We also renewed our exclusive marketing agreement with SNCF, the French national rail company, for a further five years and commenced business with RENFE, the Spanish rail company, during 2000. We continue to develop the linkage between high-speed rail and car rental, which is likely to form a significant part of future integrated transport trends across Europe. Rentals originating from railway stations already account for an estimated 8% of our volume.

Continued investment in licensee network development

We continue to invest in the development of our licensee businesses in 98 countries, which together generated revenues of over (euro)600 million under the Avis name, and contributed to total Group network revenues, including sub-licensees in corporate countries, of over (euro)2.0 billion.

Asia continues to be an important long term development opportunity for the Group. During 2000 additional licensee locations opened in India and new partnerships were signed with Japan Airlines and the Japanese Automobile Federation. Although we are the leading international car rental company in Asia with operations across 19 countries, the markets are under-developed and we are continuing to progress opportunities to strengthen our presence throughout the region. In total, the Avis businesses in Asia generated revenues for our licensees of (euro)199 million, an increase of 18% versus 1999.

Strong underlying operating margins

Operating profit before exceptional items rose by 11.2% to (euro)242.3 million (up 3.1% to (pound)148.1 million). Operating margins at 19.8% were 1.7 percentage points lower than prior year, due to higher fleet costs, incremental investments and the impact of fuel tax protests, as described below.

One-off impact of fuel tax protests on operating margins

The fuel tax protests impacted a number of countries in September and October, notably France and the UK. The protests reduced general demand and caused some additional costs, such as the transportation of cars from those rental locations with fuel to those without, as well as extra costs on our defleeting activity. The one-off impact on operating profit was in excess of (euro)3 million.

Fleet costs partially offset by operating efficiencies

As expected, the cost of fleet continued to rise as a percentage of revenue, reflecting the higher costs of cars, increased insurance costs, lower residual values in some markets, and higher damage and rectification costs.

The increase in fleet costs caused a reduction in operating margin, although the effect was partially mitigated by improvements in operating efficiencies and overhead cost control.

In response to rising fleet costs, we continue to source vehicles from a large number of suppliers and have extensive guaranteed buy back arrangements with manufacturers to limit exposure to the used car market. In 2000, we sourced vehicles from over 30 suppliers with some 80% of our fleet covered by buy back arrangements. We have also extended the holding periods on our vehicles and during 2000 held our cars for 6.6 months on average versus 5.8 months two years ago.

The used car markets in the UK and Germany have been somewhat weaker during 2000. We have been able to mitigate the effects by optimizing the timing and mix of vehicle disposals as well as beginning to establish alternative channels for the disposal of fleet.

The launch of yourautochoice.com, an on-line nearly new car sales service is designed to increase yield on sales of Avis vehicles and to play a role in the evolving market for internet based car sales.

In March 2001, yourautochoice.com and RAC will launch an exclusive co-branded site, providing the five million customers of RAC with access to nearly new cars with the reassurance of RAC roadside assistance and warranties. This strategic partnership will provide yourautochoice.com with the opportunity for expanded customer acquisition whilst RAC will benefit from the on-line, logistics and service capabilities of yourautochoice.com.

In addition to yourautochoice.com we are now rolling out an internet based sales channel for dealers in Germany.

Damage costs continued to increase during 2000, partly due to higher rectification charges from manufacturers on the return of buy-back vehicles. We have made tangible progress in damage management through a number of enhanced recovery procedures at major locations, achieving like-for-like savings of (euro)4.0 million. We expect to drive further savings across the Group in 2001.

We continue to increase efficiencies in the use of our vehicle assets with utilization on a like-for-like basis increasing by 0.9%.

The rise in fleet costs was partially offset by a 1.7 percentage point improvement in staff costs, which fell from 21.5% to 19.8% of revenue. Headline employee productivity increased by 1.8%. This is lower than the historical annual growth rate of 5%, in part due to the one-off impact during the year of double staffing during the call center integration process.

Productivity was further impacted by the introduction of new legal requirements in France for all companies to operate a 35 hour working week. Further investment in manpower will be required in 2001 to complete the structural change necessary to meet these new regulations. Underlying productivity, excluding the impact of the 35 hour week and double staffing in the call centers increased by 3.3%.

Both vehicle utilization and productivity were adversely affected in the second half by the fuel tax protests and the unexpected slow-down in replacement business in Germany.

Improvements in employee productivity have been achieved at the same time as maintaining employee satisfaction levels. During 2000 Avis achieved further recognition for service quality and customer satisfaction through a significant number of major industry awards.

Other operating costs marginally higher

Selling, revenue related and rental related costs increased 0.4% as a percentage of revenue, due to higher operating commissions as well as costs relating to the growth in 3 Arrows' credit repair business. Other overheads remained broadly similar to last year as a percentage of revenue, but include incremental investments of around (euro)7.0 million.

Incremental investments to achieve future operating efficiencies

Further operating efficiencies remain an important area of strategic priority for the Group and a significant driver of future profitability. Incremental investments during 2000 supported key initiatives, particularly in distribution.

In December, we successfully completed the transition from nine individual country reservation centers to two new multi-lingual call centers in Barcelona and Manchester, as part of our strategy to reduce unit cost of sale in 2001 and beyond. The total investment in these centers is (euro)22 million over five years with a projected return of over 20%. Benefits are now being seen through a higher percentage of customer calls converted to reservations, together with improved customer service levels. Despite the disruption of consolidating to two centers, we handled 5% more calls during 2000 versus 1999 and created 10% more reservations.

We have increased investment in internet distribution channels to further reduce cost of sale. Internet sales are accelerating, following the launch of enhanced country sites, which provide local language promotions and travel trade links across all five major markets. Customers booking through this channel are set to increase significantly over the next two years and are expected to account for at least 10% of all business by 2002.

We have further strengthened our presence in the on-line business-to-business market with direct links from Avis' on-line booking facility to over 200 key corporate customers and partner sites.

Exceptional charge of (euro)36.3 million

The exceptional charge of (euro)36.3 million relates to 3 Arrows ((euro)33.0 million) and our share of costs relating to the start-up of yourautochoice.com ((euro)3.3 million), our on-line nearly new car sales joint venture, the launch of which is discussed above.

We acquired 3 Arrows in December 1998 to extend our presence in the replacement segment in the UK and to take advantage of a market with high growth potential. Following legal rulings in 2000 over industry pricing and compliance with the Consumer Credit Act, the exceptional charge relates primarily to provisions for potentially irrecoverable debts together with related costs.

In May, the House of Lords endorsed the right of consumers to a replacement car when they are non-fault accident victims, but at lower rates than previously charged. A further ruling on the enforceability of certain contracts which have been replaced but were used by 3 Arrows until June 1999 was issued by the Court of Appeal in December 2000. This ruling concluded that these particular contracts were subject to the provisions of the Consumer Credit Act and, as a consequence, claims under the contracts are not recoverable in full. We are pursuing a number of legal options in response to this ruling.

We have made progress in reaching agreements to establish an acceptable basis for future business. From January 1, 2001, 3 Arrows is participating in the Association of British Insurers third party hire initiative which provides a framework for the services charged, at lower rates but faster settlement.

We have restructured 3 Arrows to operate within this environment and remain positive about the opportunities for the development of this business going forward.

Interest

Net interest expense is up (euro)17.5 million to (euro)67.3 million. This reflects (euro)3.4 million of additional interest from higher rates, (euro)10.1 million relating to investment in fleet to support very strong volume growth and (euro)4 million relating to the year on year impact of funding acquisitions.

Dividend

The Board is proposing a final dividend of 3.8p (5.7(cent)) which will be paid on May 10, 2001 to shareholders on the register at the close of business on March 2, 2001. This brings the total dividend for the year to 5.8p, compared to 5.4p for the previous year.

Summary and Outlook

"In 2000 we achieved double-digit revenue growth across all key markets. Operating margins remained strong but were lower than last year due to fleet costs, our investment program and the one-off impact of the fuel tax protests. We expect fleet cost pressures to continue in 2001 and further operating efficiencies to result from our continued investment. Against the background of expected slower GDP growth in the European economies, we anticipate somewhat lower volume growth in the year ahead, but a favorable outlook for pricing. Growth in the first six weeks of 2001 has been in line with our expectations."

Avis Europe plc rents cars under the Avis brand name to customers in 112 countries. Avis Europe's ordinary shares trade on the London Stock Exchange. Prices may be accessed on Bloomberg under the symbol AVE LN and Reuter Equities 3000 Service under AVE.L. Additional information is available on Avis Europe's internet site: www.avis-europe.com.

AVIS EUROPE PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended December 31, 2000
                                      Notes    2000        1999
                                               $'000      $'000
Revenue                                    1,098,688  1,017,461
Cost of sales                               (541,726)  (466,146)
Gross profit                                 556,962    551,315
Administrative expenses (including
 exceptional item)                          (368,859)  (332,085)

Operating profit before exceptional
 item                                       217,763    219,230
Exceptional item                            (29,660)       -

Operating profit                             188,103    219,230
Share of start-up costs from joint
 venture                                     (2,993)
Share of operating profit from
 associated undertakings                         -         801
Interest receivable                           4,972      2,831
Interest payable                            (65,438)    (52,884)
                                           ------------------------
Profit on ordinary activities
 before taxation
and exceptional items                        157,297    169,978
Exceptional items                            (32,653)       -
Profit on ordinary activities
 before taxation                            124,644    169,978
Taxation                                    (31,171)   (42,442)
Profit on ordinary activities after
 taxation                                   93,473     127,536
Minority interests - equity                   (175)       (121)
Profit for the year before
 exceptional items                          117,788    127,416
Exceptional items                           (24,490)
Profit for the year                          93,298     127,416
Dividends                           3       (50,016)    (49,161)
Retained profit for the year                 43,282      78,255
                                           ------------------------
Earnings per share
Basic                               4         16.0c      21.9c
                                           ------------------------
Diluted                             4         15.9c      21.8c
                                           ------------------------
Pre-exceptional items               4         20.2c      21.8c
for the year ended December 31,
 2000
Profit for the year                          93,298     127,415
Exchange adjustments                         (2,912)      4,992
                                           ------------------------
Total recognised gains and losses            90,386     132,407
                                          -------------------------

(a) US Dollar equivalents are provided for reader convenience at the
    December 31, 2000 rate of $0.8988 = 1 euro (December 31, 1999 rate
    of $1.0062 = 1 euro )


AVIS EUROPE PLC
CONSOLIDATED BALANCE SHEET
at December 31, 2000
                                         2000              1999
                                        $'000             $'000

Intangible assets
Goodwill                                66,329            66,182
                                   -----------------------------------

Fixed assets
Tangible assets - vehicles            1,136,249         1,107,144
Tangible assets - others                 55,242            53,011
Investments                               2,949             1,190
                                   -----------------------------------

                                      1,194,440         1,161,345
                                   -----------------------------------
Current assets
Debtors                                 525,818           466,323
Investments                               3,441             5,529
Cash at bank                             30,878            44,216
                                   -----------------------------------

                                        560,137           516,068
                                   -----------------------------------
Creditors falling due within one
 year
Bank and other loans                   (411,175)         (340,713)
Other creditors                        (847,614)         (947,453)
                                   -----------------------------------

                                     (1,258,789)       (1,288,166)
                                   -----------------------------------

Net current liabilities                (698,652)         (772,098)
                                   -----------------------------------

Total assets less current
 liabilities                            562,117           455,429

Creditors falling due after more
 than one year
Bank and other loans                   (410,432)         (339,084)
Other creditors                         (47,745)          (61,024)
                                   -----------------------------------
                                       (458,177)         (400,108)

Provisions for liabilities and
 charges                                (71,961)          (68,094)
                                   -----------------------------------

                                         31,979           (12,773)
                                   -----------------------------------

Capital and reserves
Called-up share capital                   7,251             8,090
Share premium                           784,993           874,538
Profit and loss account                (760,782)         (895,779)
                                   -----------------------------------

Total shareholders' funds - equity       31,462           (13,151)
Minority interests - equity                 516               378
                                   -----------------------------------

                                         31,978           (12,773)
                                   -----------------------------------

(a) US Dollar equivalents are provided for reader convenience at the
    December 31, 2000 rate of $0.8988 = 1 euro (December 31, 1999 rate
    of $1.0062 = 1 euro )


AVIS EUROPE PLC
CONSOLIDATED CASH FLOW STATEMENT
for the year ended December 31, 2000
                                         2000              1999
                                         $'000             $'000

Net cash inflow from operating
 activities                             333,805           388,348
                                   -----------------------------------

Dividends received from associated
 undertakings                                -                329
                                   -----------------------------------

Returns on investments and
 servicing of finance
Interest received                         4,929             2,831
Interest paid                           (50,529)          (39,947)
Interest element of finance lease
 rental payments                        (16,170)          (14,050)
                                   -----------------------------------

                                        (61,770)          (51,166)
                                   -----------------------------------

Taxation                                (31,659)          (30,647)
                                   -----------------------------------

Capital expenditure
Purchase of tangible fixed assets    (1,623,326)       (1,333,916)
Sale of tangible fixed assets         2,006,966         1,787,366
Acquisition of own shares                (2,239)              -
                                   -----------------------------------

                                        381,401           453,450
                                   -----------------------------------
Acquisitions and disposals
Purchase of subsidiary
 undertakings, joint venture
and associate undertaking               (44,069)          (13,135)
Cash balances acquired with
 subsidiary undertakings                  3,230               282
                                   -----------------------------------

                                        (40,839)          (12,853)
                                   -----------------------------------


Equity dividends paid                   (48,876)          (41,035)
                                   -----------------------------------


Management of liquid resources
Sale/(purchase) of current asset
 investments                              1,607              (734)
Cash (transferred to)/withdrawn
 from short-term deposit                 (5,265)            1,407
                                   -----------------------------------

                                         (3,658)              673
                                   -----------------------------------
Financing
Issue of ordinary share capital           2,839             1,276
Repayment of capital element of
 finance leases                        (757,194)         (717,955)
Increase/(decrease) in short term
 loans                                  104,947           (68,664)
Increase in long term loans             107,304            85,448
                                   -----------------------------------

                                       (542,104)         (699,895)
                                   -----------------------------------

Decrease/(increase) in cash             (13,700)            7,204
                                  ------------------------------------

(a) US Dollar equivalents are provided for reader convenience at the
    December 31, 2000 rate of $0.8988 = 1 euro (December 31, 1999 rate
    of $1.0062 = 1 euro)

AVIS EUROPE PLC

NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2000

NOTE 1   Basis of Accounting

      The Financial Statements have been prepared under the historical
cost convention, and in accordance with applicable accounting
standards. The implementation of new accounting standards, required to
be implemented in 2000, had no material impact on the financial
statements.
      The financial information included in this statement does not
constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985. The statutory accounts of the Company for the
period to December 31, 2000, on which the auditors have given an
unqualified opinion, will be filed with the Registrar of Companies in
due course. The statutory accounts for the year ended December 31,
1999, on which the auditors gave an unqualified opinion, have been
filed with the Registrar of Companies.
      Further financial information is available from our internet site
at http://www.avis-europe.com and a hard copy of this information can
be obtained from the Company Secretary, Avis Europe plc, Avis House,
Park Road, Bracknell, Berkshire RG12 2EW.

NOTE 2   Basis of Preparation

      The Financial Statements present the consolidated results for the
year ended December 31, 2000 in both euro and sterling. As a
significant proportion of the Group's revenues, costs and funding
arise in the euro zone, the Directors consider that the Group's
functional currency is the euro. Accordingly, the Group's statutory
accounts have been prepared in euros. The Company's statutory accounts
continue to be reported in sterling.


NOTE 3   Dividends                     2000              1999
                                       $'000             $'000


Interim dividend per ordinary share    0.029             0.027
Proposed final dividend per
 ordinary share                        0.057             0.056
                                   ---------------- -----------------

                                       0.086             0.083
                                   ---------------- -----------------

Interim dividend                       16,705            16,019
Proposed final dividend                33,311            33,142
                                   ---------------- -----------------

                                       50,016            49,161
                                   ---------------- -----------------

AVIS EUROPE PLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)
for the year ended December 31, 2000

NOTE 4     Earnings per Share
                                         2000             1999
                                         $'000           $'000


Profit for the year
Basic and diluted earnings per share    93,298          127,415
3 Arrows Limited bad debt provision
 and costs                              29,660             -
Share of start-up costs from
 yourautochoice.com                      2,993             -
Taxation on adjusting items             (8,163)            -
                                    ---------------------------------

Adjusted profit pre exceptional
 items                                 117,788          127,415
                                    ---------------------------------


Weighted average number of ordinary
 shares in issue
Basic earnings per share              583,418,950     582,914,958

Diluted earnings per share            586,717,934     585,608,719

Earnings per share
Basic earnings per share                 16.0c           21.9c
                                    ---------------------------------

Diluted earnings per share               15.9c           21.8c
                                    ---------------------------------

Pre-exceptional items                    20.2c           21.9c
                                    ---------------------------------

      The diluted earnings per share is the basic earnings per share
adjusted for dilutive potential ordinary shares. The Group has granted
options to Directors and employees over ordinary shares of Avis Europe
plc and such shares constitute the only category of dilutive potential
ordinary shares of Avis Europe plc.