| Thu 16 May 2002, 0:00 | | Avis Fires On All Cylinders To Post Strong Profit |
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AVIS FIRES ON ALL CYLINDERS TO POST STRONG PROFIT GROWTH
Johannesburg, 16 May - Avis Southern Africa increased headline earnings per
share by 27% in the year to March 2002. Shareholders` funds grew to more
than R1 billion over the same period.
Announcing this today, chief executive Grenville Wilson attributed the
group`s strong showing to an intensified focus on its core car rental and
fleet services businesses, and the inherent strength of its global
superbrand, people and systems. Wilson said that both the South African and
Scandinavian operations had shown remarkable resilience in the face of the
recent global turbulence. He noted that travel in general, and the South
African tourism market in particular, were picking up strongly.
From continuing operations, revenue grew by 17% to R1.25 billion and
operating income was up 35% at R227 million. Attributable income increased
by 27% to R148 million and headline earnings per share were up by the same
margin to 86.4 cents. The balance sheet strengthened further and net asset
value per share at the end of the year stood at 591 cents against 476 cents
in 2001. The full-year distribution to shareholders is 21.5 cents (2001: 19
cents).
With another strong performance by its Scandinavian subsidiaries - which
again exceeded their acquisition profit targets in their local currencies -
Avis earned 30% of its profit before tax for the year outside the Rand
Monetary Area, 20% from Scandinavia. Wilson noted that Avis had invested a
further R150 million of equity in Scandinavia for the development of longer-
term vehicle rental products, and that it was likely that Avis would be able
to generate 25% of its earnings from offshore by 2003.
Rent-A-Car Southern Africa increased its rental days - the industry`s prime
performance benchmark - by 8.5% over the year while the Scandinavian
operations improved theirs by 13%. With Sweden now number one in that
country, all three of these businesses are the leaders in their respective
markets. People productivity and vehicle utilisation were again improved
while vehicle costs remained well controlled.
Avis Fleet Services increased its vehicles under management from some 38 000
to over 45 000 and also benefited from the introduction of new value-added
services. The company was recently appointed as the Southern African
partner of PHH, the world`s leading fleet services business.
Wilson said in the year ahead all the Avis businesses would be concentrating
on improving customer service levels at the human interface through
initiatives such as the group`s Brand Ambassador programme. New services
were being developed to enhance customer loyalty and increase market share.
There would also be a strong focus on maintaining a lowest-cost position in
all the businesses, as well as on leveraging economies of scale through
technology to achieve competitive advantages.
"Our objectives for the new year are to maintain a high rate of organic
growth in our existing businesses; to drive costs down further through
technology and by exploiting opportunities to share expenses between all
divisions and regions; to improve the rand hedge value for our shareholders;
and to seek opportunities for appropriate acquisitions in our core business
areas," Wilson said.
"All our businesses are budgeting for increased profit and, provided global
operating conditions meet expectations, Avis should again produce real
earnings growth in the year to March 2003. In fact, management are
targeting a strong growth in the group`s earnings in the forthcoming year."
Issued by du Plessis Associates on behalf of Avis Southern Africa Limited.
dPA contact - Helen McKane on Tel : +27(11) 728 4701, Fax : +27(11) 728
2547/8 or
e-mail : avis@dpapr.com
AVIS SOUTHERN AFRICA LIMITED
(Incorporated in the Republic of South Africa)
Reg. No: 1967/010320/06
ISIN No: ZAE 000013371
Share Code: AVS
AUDITED RESULTS 2002
* Headline EPS increased by 27%
* 30% of PBT earned outside Rand Monetary Area
* Shareholders` funds exceeds R1 billion (+24%)
* Results reflect strength of brand, people and systems
CONSOLIDATED INCOME STATEMENT
Audited Audited
Year ended % Year ended
R000 31/03/2002 Change 31/03/2001
Revenue - continuing
operations 1 236 723 17% 1 061 082
Revenue - disposed of
operations - 176 648
Revenue 1 236 723 1 237 730
Operating income -
continuing operations 227 496 35% 168 752
Operating income - disposed
of operations - 33 423
Operating income
(after charging) 227 496 202 175
Depreciation - fixed assets 129 864 122 634
Depreciation - current
assets 204 075 177 873
Operating lease charges 64 326 68 713
Variable full maintenance
leasing income 69 536 66 339
Net finance costs (92 184) (96 426)
Net income before tax 204 848 19% 172 088
Amortisation of goodwill
and trademarks (39 284) (33 056)
Exceptional item (disposal
of non-core investments) - 240 817
Taxation (56 561) (43 074)
Net income after tax 109 003 336 775
Outside shareholders`
interest (304) (10 782)
Net income attributable to
ordinary shareholders 108 699 325 993
Headline earnings per
share (cents) 86.4 27% 68.1
Earnings per share (cents) 63.5 190.3
Fully diluted earnings
per share (cents) 63.5 183.5
Distribution per share (cents) 21.5 13% 19.0
Interest cover (times) 3.2 2.8
Headline earnings per share
The calculation of earnings
per share is based on
the consolidated net income
attributable to ordinary
shareholders and a weighted
average number of shares (000)
in issue of 171 282 171 282
Earnings per share are
reconciled to headline
earnings per share by
taking into account the
amortisation of goodwill
and trademarks and the
exeptional item
CONSOLIDATED BALANCE SHEET
Audited Audited
At At
R000 31/03/2002 31/03/2001
Employment of capital
Intangible assets 314 706 258 758
Vehicles for lease 488 919 467 856
Property, plant and equipment 98 419 63 012
Investments and loans 18 713 17 940
Vehicles for rent 1 419 084 1 093 498
Other current assets 365 353 292 731
Total assets 2 705 194 2 193 795
Interest bearing liabilities 1 083 012 948 031
- Rand Monetary Area 640 422 524 658
- Foreign 442 590 423 373
Non-interest bearing
liabilities 609 239 421 809
Total liabilities 1 692 251 1 369 840
1 012 943 823 955
Capital employed
Shareholders` interest 1 012 875 814 999
Outside shareholders` interest 68 8 956
1 012 943 823 955
Number of shares in
issue (000) 171 282 171 282
Net asset value per share
(cents) 591 476
Tangible net asset value per
share (cents) 408 325
Gearing ratio 1.1 1.2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
R000 31/03/2002 31/03/2001
Balance at beginning of
period 814 999 490 096
Final dividend 2000 - 20 554
Currency translation
differences 122 577 9 223
Subsidiaries sold - (36)
Net income attributable to
ordinary shareholders 108 699 325 993
Dividend declared (33 400) (30 831)
Balance at end of period 1 012 875 814 999
CONSOLIDATED CASH FLOW STATEMENT
Audited Audited
Year ended Year ended
R000 31/03/2002 31/03/2001
Cash flow from operating
activities 345 149 252 059
Change in working capital (255 069) (341 670)
Taxation paid (38 395) (38 665)
Net cash flow
- from investing activities (191 278) (225 345)
- from financing activities 184 979 372 188
Movement in cash and cash
equivalents 45 386 18 567
Cash and cash equivalents
- at beginning of period 49 205 30 638
- at end of period 94 591 49 205
COMMENTS
The past year was one of consolidation around Avis`s Rent-A-Car and Fleet
Services operations following the sale of the group`s non-core interests in
2001, with the emphasis on the development of people and internal synergies.
In spite of the worldwide tension generated by events in America, and the
disruptive effect this had on international travel, the Avis operations in
Southern Africa and Scandinavia performed excellently. The group`s ability
to deliver sound returns, even in challenging circumstances is driven by:
* Our vision of `exceeding customer expectations at every human
communication and interface`.
* The strength of our Global Super Brand.
* Our people who deliver on our promises of `We Try Harder` and `People are
more important than cars`, and subscribe to our values of `Honesty, Empathy
and Humanity`.
* Our world class systems and service.
* Our balanced portfolio.
* Our concentrated focus on our core business.
* Our unrelenting focus on efficiency and cost management.
* Our rigorous financial controls.
OPERATIONAL REVIEW
Avis Rent-A-Car Southern Africa
Demand from both local and foreign inbound business remained positive in
South Africa and is reflected in an increase of 8.5% in rental days for the
region`s operations. Some of the neighbouring countries were negatively
affected by political developments, but they all still generated sound
profits. Average revenue per rental day was only slightly up on the
previous year but by year end had improved by 12%. Market share was
maintained at around 40% and people productivity as well as fleet
utilisation continued to improve. Vehicle holding costs were well
controlled.
Avis Rent-A-Car Norway and Sweden
Market conditions in Scandinavia were characterised by stable economies and
strong currencies. The Swedish operation increased rental days by 12% and
is now the market leader in that country. Avis Norway increased its rental
days by 14% and remained the market leader. Price increases in line with
inflation were achieved while vehicle costs were well controlled. People
productivity improved and a good increase in fleet utilisation was achieved.
The performance targets set for these businesses at the time of their
acquisition have been exceeded, in Scandinavian currencies, and synergy
benefits continue to be extracted. During November 2001 an additional R150
million of capital was transferred from South Africa and is being used in
the development of longer-term vehicle rental products.
Avis Fleet Services
There has been a strong focus on providing our customers with value-added
fleet management products precisely tailored to their requirements and
consequently vehicles under management increased from some 38 000 to more
than 45 000. The division benefited from a strong used car market, the
introduction of new services, better cost control and significant increases
in people productivity.
FINANCIAL REVIEW
The income statement for the previous financial year includes the activities
of operations disposed of during that year. The balance sheet reflects the
effect of the Rand`s significant depreciation during the past year.
From continuing operations, revenues grew by 17% and operating income by
35%. Despite the growth in the vehicle fleets and the fact that the
Scandinavian acquisition debt was in place for the full current year,
financing costs decreased. This is attributable to the receipt of the
proceeds of last year`s disposals.
Revenue earned outside the Rand Monetary Area was 38% of the total
(2001:32%). Car Rental operations contributed 74% of revenue from
continuing operations (2001:73%) and 77% of the net income before tax
(2001:59%). 30% of the net income before tax was earned outside the Rand
Monetary Area (2001:21%), including 20% earned in Scandinavia (2001:12%).
The change in the average exchange rates has increased headline earnings per
share by 4 cents.
A dividend cover of four times has been maintained.
Other than a change whereby dividend distributions are deducted from
shareholders` interest in the year in which it is paid instead of when
declared, the accounting policies are consistent with those of the previous
period and comply with South African statements of Generally Accepted
Accounting Practice.
DISTRIBUTION TO SHAREHOLDERS
An interim dividend of 6.5 cents per share has been paid and a distribution
of 15 cents per share from the share premium account has been proposed,
subject to approval by shareholders at the next annual general meeting.
Last date to trade cum
the distribution Friday 30 August
Ordinary shares trade
ex the distribution Monday 2 September
Record date Friday 6 September
Date of payment Monday 9 September
Shareholders may not dematerialise or rematerialise their Avis shares
between Monday 26 August and Friday 6 September 2002, both dates inclusive.
PROSPECTS
Provided global operating conditions meet expectations, Avis should again
produce real earnings growth in the year to March 2003. Management is
targeting an increase in headline earnings per share of more than 25% for
the forthcoming year.
For and on behalf of the board
Glenn van Heerden Grenville Wilson
Chairman Chief Executive
Kempton Park
16 May 2002
Avis Southern Africa Limited and its subsidiaries
(Incorporated in the Republic of South Africa)
Reg. No: 1967/010320/06
ISIN No: ZAE 000013371 - Share Code: AVS
Registered Office:
2A Sysie Road, Croydon, Kempton Park PO Box 221, Isando, 1600, South Africa
Tel: +27 (11) 923-3770
* Fax: +27 (11) 923-3772 * www.avis.co.za
Investor and Media Relations:
To obtain additional information about the group or to be placed on the
distribution list for group announcements, please contact: Avis Investor
Relations, PO Box 87386, Houghton, 2041, Tel: +27(11) 728-4701,
Fax: +27(11) 728-2547, avis@dpapr.com
Directors:
G van Heerden** - Chairman, GJ Wilson - Chief Executive, TRT Bohlmann*, GD
Cilliers, HR Cloete**, BP Diamond**,
JW Dreyer*, HM Khoza*, AR Langham, P O`Brien, LM Savage, PJJ van der Walt*.
* independent non-executive
** non-independent non-executive
Date: 16/05/2002 11:45:00 AM Produced by the SENS Department
