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Avis Southern Africa Limited
and its subsidiaries
(Incorporated in the Republic of South Africa)
Reg. No: 1967/010320/06
ISIN: ZAE 000013371 * Share Code: AVS
INTERIM REPORT TO 30 SEPTEMBER 2002
Headline EPS increased by 55.8% to 52.2c
Distribution to shareholders up by 38.5%
All businesses grow volumes and profitability
On track to meet, and probably exceed, growth targets
CONSOLIDATED INCOME STATEMENT
(Unaudited) (Unaudited)
Six months Six months (Audited)
to % to Year ended
R000 30/9/2002 Change 30/9/2001 31/3/2002
Revenue 719 905 27.3% 565 544 1 236 723
Operational
income (after
charging) 134 824 84 571 227 496
Depreciation -
fixed assets 63 472 64 022 129 864
Depreciation -
current
assets 114 896 90 127 204 075
Operating lease
charges 16 363 29 235 64 326
Variable full
maintenance
leasing
income 41 585 34 460 69 536
Net finance
costs (54 103) (41 648) (92 184)
Net income
before
taxation 122 306 58.1% 77 383 204 848
Amortisation of
goodwill and
trademarks (16 866) (12 985) (39 284)
Taxation (33 678) (19 886) (56 561)
Net income
after
taxation 71 762 44 512 109 003
Outside
shareholders`
interest 776 (190) (304)
Net income
attributable to
ordinary
shareholders 72 538 44 322 108 699
Headline earnings
per share
(cents) 52.2 55.8% 33.5 86.4
Earnings per share
(cents) 42.3 25.9 63.5
Fully diluted
headline
earnings per
share (cents) 50.4 33.4 84.9
Fully diluted
earnings
per share
(cents) 41.3 26.7 63.5
Distribution per
share (cents) 9.0 38.5% 6.5 21.5
Interest cover
(times) 3.3 2.9 3.2
Effective interest
cover (times) 10.8 11.8 10.0
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 171 282 171 282 171 282
Earnings per share
are reconciled to
headline earnings
per share by taking
into account the
amortisation of
goodwill and
trademarks.
CONSOLIDATED BALANCE SHEET
(Unaudited) (Unaudited) (Audited)
At At At
R000 30/9/2002 30/9/2001 31/3/2002
Employment of
capital
Intangible assets 313 466 248 150 314 706
Vehicles for lease 503 916 477 838 488 919
Property, plant and
equipment 100 259 84 663 98 419
Investments and
loans 24 545 24 229 18 713
Vehicles for rent 1 939 604 1 278 897 1 419 084
Other current
assets 417 022 318 979 365 353
Total assets 3 298 812 2 432 756 2 705 194
Interest bearing
liabilities 1 379 421 1 044 732 1 083 012
- Rand Monetary
Area 770 769 511 506 640 422
- Foreign 608 652 533 226 442 590
Non-interest bearing
liabilities 835 467 544 878 609 239
Total liabilities 2 214 888 1 589 610 1 692 251
1 083 924 843 146 1 012 943
Capital employed
Shareholders`
interest 1 084 624 832 181 1 012 875
Outside shareholders`
interest (700) 10 965 68
1 083 924 843 146 1 012 943
Number of shares
in issue (000) 171 282 171 282 171 282
Net asset value
per share (cents) 633 486 591
Tangible net asset
value per
share (cents) 450 341 408
Gearing ratio 1.3 1.2 1.1
Effective gearing ratio 1.1 1.0 0.9
STATEMENT OF CHANGES IN EQUITY
(Unaudited) (Unaudited) (Audited)
R000 30/9/2002 30/9/2001 31/3/2002
Balance at
beginning of
period 1 012 875 814 999 814 999
Currency
translation
differences 24 903 (4 873) 122 577
Net income
attributable
to ordinary
shareholders 72 538 44 322 108 699
Distribution to
shareholders (25 692) (22 267) (33 400)
Balance at end of
period 1 084 624 832 181 1 012 875
CONSOLIDATED CASH FLOW INFORMATION
(Unaudited) (Unaudited) (Audited)
R000 30/9/2002 30/9/2001 31/3/2002
Cash flow from
operating
activities 197 919 118 469 345 149
Change in
working
capital (387 017) (94 253) (255 069)
Taxation paid (23 872) (21 128) (38 395)
Net cash flow
- from investing
activities (91 678) (101 871) (191 278)
- from financing
activities 292 748 62 229 184 979
Movement in cash
and cash
equivalents (11 900) (36 554) 45 386
Cash and cash
equivalents
- at beginning
of period 94 591 49 205 49 205
- at end of
period 82 691 12 651 94 591
COMMENTS
Focused and committed performances from our people in Southern Africa and
Scandinavia have resulted in the group achieving significant growth in earnings
during the period under review. All operations maintained their emphasis on
consistently improving customer service at the human interface, and also
continued to make progress with their other strategic priorities. These include
attracting, retaining and developing the best people; advancing the black
economic empowerment of its staff and suppliers in Southern Africa; the
development of new products and services designed to increase customer loyalty
and market share; leveraging economies of scale and technology to sustain
competitive advantages; entrenching a lowest-cost position for all its
operations; and becoming the benchmark Avis licensee in all that we do.
It must be noted that the full impact of the depreciating Rand benefited our
earnings in the Scandinavian peak season and that 5 cents of the 52.2 cents
earned can be attributed to exchange gains. However, even if this is excluded,
our growth still exceeded 40%.
OPERATIONAL REVIEW
Avis Rent-A-Car Southern Africa
We were impacted favourably by sound economic activity overall and strong GDE
growth in particular as well as consistently firm demand in the tourism segment
during the period under review. The overall regional rental day increase was 5%
off a steady number of transactions. Rent-A-Car South Africa showed strong
rental day growth (11%) as did Namibia (31%) while Sizwe shifted its focus away
from volume accounts and our regional operations continued to be hampered by the
consequences of difficulties in Zimbabwe. Increased rates, a real improvement
in people productivity of 17%, an overall improvement in total vehicle
utilisation of 2% (including used car sales stock), and well-contained vehicle
holding costs, resulted in much improved margins.
Avis Rent-A-Car Norway and Sweden
Our Scandinavian operations again achieved excellent growth, posting a 17%
increase in rental days off a 10% rise in transactions. Their continued growth
was attributable to their clear focus and to the successful penetration of new
market segments. Real pricing levels were maintained in all sectors but the
overall rate per rental day decreased as a result in the change of mix favouring
longer-term rentals. Both people productivity and vehicle utilisation showed
good improvements on the prior year.
Avis Fleet Services
This division also produced an excellent profit performance. Continued focus on
developing value-added services around its core full-maintenance leasing product
provided a 10% growth in vehicles under management during the period under
review. While the financed fleet was sustained at the year-end level, its
maintenance products showed strong growth during the review period. Fleet
Services also benefited from the ongoing buoyancy of the used car markets. The
division`s new partnership with Wesbank to manage and develop the Barloworld
leasing fleet, as well as the ongoing trend towards outsourcing vehicle
management and the signing up of the Kruger National Park fleet, should provide
further growth opportunities.
FINANCIAL REVIEW
Revenues grew by 27% and operating income by 58%. Revenue earned outside the
Rand Monetary Area was 45% of the total (2002 : 38%). Car rental operations
contributed 76% of revenue (2002 : 72%) and 78% of the net income before tax
(2002 : 77%). The group earned 37% of its net income before tax outside of the
Rand Monetary Area (2002 : 39%), including 30% earned in Scandinavia (2002 :
30%).
The balance sheet remains in a sound position to cater for further organic
growth. In Scandinavia we have increased the fleet size and transferred further
vehicles from lessor financing to our own balance sheet. In addition, the
balance sheet reflects the further strengthening of the Scandinavian currencies
as well as inflationary effects in South Africa resulting from the Rand`s rapid
devaluation during the second half of our last financial year.
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 International Accounting Standards and South African statements of
Generally Accepted Accounting Practice.
DISTRIBUTION TO SHAREHOLDERS
An interim distribution of 9 cents per share is to be paid from the share
premium account in terms of the authority given by shareholders at the last
annual general meeting.
Last date to trade cum the
distribution Friday 29 November 2002
Ordinary shares trade ex
the distribution Monday 02 December 2002
Record date Friday 06 December 2002
Date of payment Monday 09 December 2002
Shareholders may not dematerialise or rematerialise their Avis shares between
Monday 2 December and Friday 6 December 2002, both dates inclusive.
PROSPECTS
Forward reservations for Avis Rent-A-Car in South Africa are, at this early
stage, showing strong growth in all market segments including domestic corporate
and leisure travel while the early October figures for the international inbound
segment are already showing double-digit growth. The Scandinavian operations
anticipate further double-digit volume growth and Fleet Services` strong
performance should continue. Economic conditions in all our major markets
remain positive.
Every indication is that our current performance levels in all markets are
sustainable. The group`s strong balance sheet will enable us to capitalise
fully on increasing demand and our cost structure remains resilient to the
current interest rate increases in Southern Africa. The earnings growth rate in
the second half of the year will also be strong, allowing us to achieve if not
exceed our management targets of 25% growth in headline earnings per share.
Managements` targets have been reviewed for reasonableness by the company`s
auditors - their report is available from the company secretary on request.
For and on behalf of the board
Glenn van Heerden Grenville Wilson
Chairman Chief Executive
Kempton Park
17 October 2002
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
Company Secretary
JL Stiff * e-mail: jstiff@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, e-mail: avis@dpapr.com
Directors
G van Heerden - Chairman, GJ Wilson - CEO, 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: 17/10/2002 12:00:00 PM Produced by the JSE SENS Department
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