ALD Trading update and Q1 17 results

ALD Q1 17 HIGHLIGHTS

ü  Total Fleet at 1.41 million vehicles managed worldwide at end of March 2017, up 2.3% vs. end of December 2016 and up 14.3% vs. end of March 2016

ü  Gross Operating Income at EUR 328.4 million (1), up 8.3 % vs. Q1 16

ü  Net Income (Group share) at EUR 143.6 million, up 9.7% vs. Q1 16

Mike Masterson, CEO of ALD commented on the Q1 17 results:

“The Q1 17 results demonstrate continuing strong performance in terms of fleet growth, gross operating income and net income. The Group will continue to invest in the growth of the business, while rigorously managing its costs and risks. ALD is determined to pursue its strategy of delivering sustainable growth, building on its constant customer focus and backed by the service excellence of its teams.”

A GLOBAL LEADER IN MOBILITY SOLUTIONS AND FLEET MANAGEMENT SERVICES

ALD operates across the value chain in mobility solutions and is a leading international provider of full service vehicle leasing and fleet management services to corporate customers. More recently, it has expanded its offer to private individuals.

ALD is ranked #1 in Europe and #3 globally based on its total number of vehicles under management of 1.38 million as at 31 December 2016. Its unique ability to deliver competitive global fleet solutions, thanks to its direct presence in 41 countries (with top 3 positions in 26 countries) and its network of global alliances, provide ALD unparalleled customer visibility.

ALD’s strength in indirect channels through white label partnerships with car manufacturers and banks gives it unrivalled access to SME and private clients across a wide range of countries.

ALD’s strategic objective is to be a global leader in the provision and delivery of mobility solutions and fleet management services.

Solid performance across all REGIONs and CONSOLIDATED income components

ALD’s Gross Operating Income increased significantly during Q1 17 recording an 8.3% growth to EUR 328.4 million (versus EUR 303.3 million in Q1 16).

This performance was driven by an increase in the total fleet across all regions (+16.2% in Western Europe, +3.0% in Nordics, +10.2% in Central Eastern Europe and +7.5% in South America, Africa & Asia), including the full contribution from Parcours (acquired in May 2016, with a managed fleet of c. 63,700 vehicles).

The increase in Gross Operating Income was due to contributions from Leasing Contract Margin and Services Margin, which increased in Q1 17 to EUR 128.8 million and EUR 151.8 million respectively (vs. EUR 121.6 million and EUR 129.6 million in Q1 16). Together, these two margins grew by 11.7% in Q1 17. The contribution from Car Sales Results remained robust at EUR 47.8 million vs. EUR 52.0 million in Q1 16.

In Q1 17, the Total Operating Expenses increased by 11.5% to EUR 144.5 million (versus EUR 129.6 million), driven by an increase in staff expenses of 13.9% to EUR 90.6 million (vs. EUR 79.5 million in Q1 16), due to the full costs of the Parcours staff reflected in Q1 2017.

The cost of risk (2) remained stable at 14 bps during Q1 17 compared to 14 bps for Q1 16 (in % of Net Earning Assets, annualized).

This solid operating performance in Q1 17 resulted in Net Income Group Share of EUR 143.6 million (up 9.7% versus Q1 16).

The Return on Average Earning Assets in Q1 17 (annualised) was 3.9%.

The Group’s Equity / Total Assets ratio stood at 15.7% at the end of March 2017.

ALD: PRIVATE LEASE GROWTH INITIATIVES

ALD continues to strengthen its position in the private lease market. ALD initiated two partnerships in April 2017, with Credit du Nord and BlaBlaCar in France, providing a strong basis for the growth of this key pillar of ALD’s growth strategy.

The partnership with Credit du Nord enables ALD to provide a new long-term vehicle leasing offering to the bank’s clients representing more than 2 million individual customers and 230,000 professional clients. ALD has also entered into a pilot partnership in France with BlaBlaCar, the world’s largest long-distance carpooling community. BlaBlaCar’s French ‘Ambassadors’ – the platform’s most active members – have access to a selection of cars available in simple and attractive “car-as-a-service” packages, including lower-priced leasing, warranty and maintenance services. Both of these initiatives are expected to contribute strongly to ALD’s targeted volumes in the private lease segment.

Full details of our financial results for the quarter ended 31 March 2017 are available on our website at www.ALDAutomotive.com. The limited review procedures of these results by ALD’s statutory auditors are in progress.

GUIDANCE 2017 AND OUTLOOK 2016-2019

ALD’s guidance for 2017 is as follows:

·         Total Fleet is expected to grow around 8% compared to 2016;

·         Gross Operating Income (3) is expected to grow around 8% compared to 2016;

·         Net Income Group Share is expected to grow around 10% compared to 2016;

·         Return on Average Earning Assets is expected to be between 3.5% and 4%, and Return on Equity between 15% and 17%;

·         Leverage and shareholder return targets are consistent with capital generation and total asset growth, with the objective to maintain BBB rating:

−      Maintain Equity / Total Assets ratio stable between 15% and 17%;

−      Target pay-out ratio between 35% and 40%.

ALD’s outlook for 2016-2019 is as follows:

·         Total fleet is expected to grow by 8% – 10% per annum on average;

·         Leasing Contract Margin (4) and Services Margin are expected to grow by 8% – 10% per annum on average throughout the period, with an expected decreasing contribution of Car Sales Result within Gross Operating Income by 2019

·         Net Income Group Share is expected to grow around 7% per annum on average, this evolution being driven by fleet growth, a strong focus on efficiency, resilient margins and a normalization of the Car Sales Results,

·         Return on Average Earning Assets is expected to be above 3.5% throughout the period, consistent with its performance over the last three years;

·         Leverage and shareholder return targets are consistent with capital generation and total asset growth over the period, with the objective to maintain BBB rating:

−      Maintain Equity / Total Assets ratio stable between 15% and 17%;

−      Target pay-out ratio between 35% and 40%.

Annex

Consolidated Income Statement

In the context of the preparation of the documentation relating to its contemplated initial public offering, ALD has changed the presentation format of its consolidated income statement as follows:

·          The Depreciation Revenue and Financial Revenue lines have been merged into one single line called “Leasing Contract Revenue”. This new line and the associated costs of depreciation and financing derived from leasing contracts are reported as the “Leasing Contract Margin”,

·          The Services Margin and the Car Sales Results continue to be presented on separate lines,

·          “Total Income” has been renamed “Gross Operating Income”,

·          A new subtotal, “Operating Result”, has been added representing the sum of the “Gross Operating Income”, “Total Operating Expenses”, “Impairment Charges on Receivables” and “Non-Recurring Income (Expenses)”.

SELECTED FINANCIAL FIGURES

¹ The limited review procedures of Q1 17 results by ALD’s statutory auditors are in progress.

² Annualized ratio (quarterly figure multiplied by 4): using average balance between quarterly figure and end of previous year.