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AVIS STATEHOLDER LETTER Avis Southern Africa Limited Reg. No 1967/010320/06 ISIN: ZAE 000013371 Share code: AVS Strong Q1 trading performance Trading in the first quarter has been strong throughout the group and indications at this stage are that we are on track to meet earnings expectations for the year. You may have seen that the European based Avis plc recently published a trading update warning of a 15% decrease in their profitability for the year to end September 2002. The main factor effecting their results is a slow down in the corporate travel market. We too have experienced some softness in the corporate travel market although not to the same extent as has occurred in Avis plc`s markets. We have been growing new markets strongly and as a result have protected ourselves from any weakness in traditional market segments. Currently we are looking forward to a particularly good first half on the back of higher Fleet Services vehicles under management, increased rental days and improved margins in the Southern African Rent-A-Car operations; excellent results from all our used car businesses; a growth in rental day volumes in Norway and Sweden; and the beneficial effects of the Scandinavian currencies` strength relative to the Rand. Review of operations Rent-A-Car Southern Africa has increased rental days by over 5% over the prior year Q1 and revenue per rental day has grown well ahead of inflation. Particularly good growth was achieved in the domestic leisure and long-term rental segments. The division has also achieved further meaningful improvements in people productivity and fleet utilisation. Prospects for the latter half of the financial year are considerably enhanced by the World Summit on Sustainable Growth, the Cricket World Cup and what is expected to be a very good tourism season starting in September. Overall we believe that we are still on track to achieve our target of a 9% growth in rental days for the year. Rent-A-Car Norway and Sweden both posted substantial gains in rental days, with an overall increase of 18% over the prior year Q1. As we announced recently, Avis Norway is taking over the Bertel O. Steen car dealership`s rental network while the Avis Scandinavian operations have together negotiated a major supply contract with the "if." insurance group, two developments which will strengthen these operations` presence in the replacement vehicle market and provide the basis for further rental day growth. Fleet Services has produced a strong growth in profitability for the quarter on the back of excellent profitability from our used car operations improved interest income and tighter cost control. The managed fleet grew by over 6% during the quarter, largely as a result of growth in maintenance contracts. The fleet under finance has stabilised at the last year end size and indications are that it should begin to grow again. New trading system highlights Avis free float As you know, the JSE moved onto the London Stock Exchange`s trading system last month, as part of which it has introduced new free float rules for index tracking. With some 65% of its issued shares held by non-strategic investors, Avis Southern Africa enjoys a relatively high free float, a factor which should further improve its market rating. Latest annual report reflects both GAAP and IAS If you have already seen our 2002 annual report, which was published last month, you may have noted that the group`s audited financial statements are now compliant with International Accounting Standards as well as the South African Generally Accepted Accounting Practice. This is a further illustration of Avis Southern Africa`s commitment to the highest standards of disclosure and corporate governance. We believe this annual report, which also has an eight- year statistical and performance history and a detailed segmental analysis, ranks highly in terms of reporting standards. Shareholder distribution As announced with our results, we propose to make the normal biannual cash distribution to shareholders from the Share Premium account. This is more cost- effective than to pay a dividend from the Retained Income account, but the overall effect on shareholders` funds is the same. The intention is to continue making cash distributions equal to a quarter of annual earnings from the Share Premium account until that account is exhausted, and then to revert to payments from the Retained Income account. Shareholders should note that for technical reasons, distributions from the Share Premium account are not included in the JSE`s dividend yield calculations as reported in the press. At the current share price of around R8.00 the yield from distributions to shareholders is close to 3%. Yours sincerely Grenville Wilson Chief Executive 10 July 2002 Date: 10/07/2002 12:00:00 PM Produced by the JSE SENS Department
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