| Thu 15 May 2003, 12:40 | | Avis Southern Africa Limited - Reviewed Results 20 |
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Avis Southern Africa Limited - Reviewed Results 2003
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
REVIEWED RESULTS 2003
HIGHLIGHTS
- Headline EPS increased by 45% to 125.1c
- Distribution to shareholders up by +45%
- All businesses produce strong performances
- Rental days exceed 4 million
- Vehicles under management exceed 60 000
CONSOLIDATED INCOME STATEMENT
(Reviewed) (Audited)
Year ended % Year ended
R000 31/3/2003 Change 31/3/2002
Revenue 1 525 255 23% 1 236 723
Operational income
(after charging) 327 743 44% 227 496
Depreciation -
property, plant and
equipment 150 621 129 864
Depreciation -
current assets 289 741 204 075
Operating lease charges 95 389 64 326
Variable full maintenance
leasing income 85 670 69 536
Net finance costs (130 186) (92 184)
Net income before taxation 283 227 204 848
Amortisation of goodwill (28 390) (39 284)
Profit on sale of business 9 820 -
Taxation (68 511) (56 561)
Net income after taxation 196 146 109 003
Outside shareholders" interest (356) (304)
Net income attributable to
ordinary shareholders 195 790 108 699
Headline earnings per share
(cents) 125.1 45% 86.4
Earnings per share (cents) 114.3 63.5
Fully diluted headline earnings
per share (cents) 120.9 84.9
Fully diluted earnings per
share (cents) 111.1 63.5
Distribution per share (cents) 31.5 21.5
Interest cover (times) 3.2 3.2
Effective interest cover (times) 7.4 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
Earnings per share are
reconciled to headline
earnings per share by
taking into account the
amortisation of goodwill
and exceptional items
The calculation of fully
diluted headline earnings
per share is based on 17.9
million (2002: 12.4 million)
unissued share rights out-
standing at year end in
terms of the employee
share incentive scheme
CONSOLIDATED BALANCE SHEET
(Reviewed) (Audited)
At At
R000 31/3/2003 31/3/2002
Employment of capital
Intangible assets 246 503 314 706
Vehicles for lease 565 267 488 919
Property, plant and equipment 98 838 98 419
Investments and loans 25 518 18 713
Vehicles for rent 1 885 877 1 419 084
Other current assets 380 906 365 353
Total assets 3 202 909 2 705 194
Interest bearing liabilities 1 594 461 1 083 012
- Rand Monetary Area 1 115 172 640 422
- Foreign 479 289 442 590
Non-interest bearing liabilities 542 069 609 239
Total liabilities 2 136 530 1 692 251
1 066 379 1 012 943
Capital employed
Shareholders" interest 1 066 171 1 012 875
Outside shareholders" interest 208 68
1 066 379 1 012 943
Number of shares in issue (000) 171 282 171 282
Net asset value per share (cents) 622 591
Tangible net asset value per share
(cents) 479 408
Gearing ratio 1.5 1.1
Effective gearing ratio 1.3 0.9
STATEMENT OF CHANGES IN EQUITY
(Reviewed) (Audited)
R000 31/3/2003 31/3/2002
Balance at beginning of year 1 012 875 814 999
Currency translation differences (101 387) 122 577
Net income attributable to ordinary
shareholders 195 790 108 699
Distribution to shareholders (41 107) (33 400)
Balance at end of year 1 066 171 1 012 875
CONSOLIDATED CASH FLOW INFORMATION
(Reviewed) (Audited)
R000 31/3/2003 31/3/2002
Net income before tax 283 227 204 848
Non-cash flow movement in NDR
other than movements in property,
plant and equipment, taxes and
intangible assets (65 114) 56 063
Other non-cash flow items 132 346 117 552
Change in working capital (545 948) (255 069)
Shareholders" distributions paid (41 144) (33 314)
Taxation paid (53 449) (38 395)
Net cash flow
- from investing activities (227 702) (191 278)
- from financing activities 501 132 184 979
Movement in cash and cash
equivalents (16 652) 45 386
Cash and cash equivalents
- at beginning of year 94 591 49 205
- at end of year 77 939 94 591
COMMENTS
The group"s proven strengths coupled with its sound business model enabled it to
produce another excellent performance in the year under review, with headline
earnings per share increasing by 45%.
In Southern Africa, the continuing growth in inbound tourism coincided with
generally buoyant economic conditions, benefiting our Rent-A-Car and Fleet
Services operations, both of which showed substantial real growth. In the
northern hemisphere, the softening of the European economies was also evident in
Norway and Sweden, but a downward trend in corporate rentals was more than
offset by our Scandinavian operations" increased market shares and penetration
of new market sectors, and both businesses achieved real growth.
The drive to enhance Avis"s competitive edge by continuing to improve customer
service at the human interface through initiatives such as the Brand Ambassador
Programme was sustained throughout the group, and delivered measurable results.
All three of our car rental operations were formally ranked as the best in their
regions by their respective travel industry associations during the year.
OPERATIONAL REVIEW
Avis Rent-A-Car Southern Africa
This division posted 2.99 million rental days (an increase of over 13%) off more
than an 8% increase in rental transactions. It also achieved major efficiency
improvements, increasing people productivity by 16% and overall vehicle
utilisation by more than 4%. A key focus in this division, as elsewhere
throughout the group, was on exceeding our customers" expectations at the human
interface. Another strategic priority was the continuing development of new
products and services designed to enhance the Avis experience. We have also
continued to leverage our technological advantage to extend the scope and
increase the efficiency of our services.
Avis Rent-A-Car Norway and Sweden
The Scandinavian operations increased rental days by 17% to 1.15 million off a
10% growth in transactions. People productivity was improved by 4% and vehicle
utilisation rose marginally to just over 70%. The incorporation of the rental
businesses of two major car dealers and an agreement with one of Scandinavia"s
leading insurers have given these businesses a strong presence in the
replacement car sector, and this was a major growth driver during the review
period. Back office and IT platforms of the two countries were successfully
integrated, and this should deliver further efficiency and cost benefits.
Avis Fleet Services
Avis Fleet Services increased its fleet under management to over 60 000 vehicles
and achieved excellent productivity and cost control gains. The division"s
continued expansion from its full maintenance leasing base into new value-added
products and services had a positive impact on its performance, as did the
buoyant used car market. Capitalising on the continued trend to outsourcing,
the division, in partnership with BEE interests, was awarded a five-year
contract to manage the Kruger National Park"s fleet. The Barloworld motor
finance book has been transferred to Wesbank with effect from April 2003 and
Fleet Services will play a key role in growing this business through selling its
value-added products into the customer base.
FINANCIAL REVIEW
Revenue grew by 23% and operational income by 44%. Revenue earned outside the
Rand Monetary Area was 39% of the total (2002: 38%) and net income before tax
earned outside the Rand Monetary Area amounted to 33% of the total (2002: 30%),
with Scandinavia accounting for 23% (2002: 20%). Car rental operations
contributed 76% of revenue (2002: 74%) and 79% of the net income before tax
(2002: 77%).
The Scandinavian currencies were on average 15% stronger than the rand was
during the previous year. However, by the year-end they were more than 10%
weaker against the rand than at the previous year-end. If our group results
from operations outside the Rand Monetary Area had been translated at the
closing exchange rates and not at the average rates, earnings would have been
approximately 3% lower.
The balance sheet remains in a sound position to cater for further robust
organic growth as well as possible acquisitions. Its strength is reflected in
the continued high effective interest cover and the low effective gearing ratio.
The increase in the fleet value is attributable to the increased cost per
vehicle in Southern Africa, the fleet expansion required to support higher
business volumes, and the transfer in Scandinavia of vehicles from lessor
financing onto our own balance sheet.
The accounting policies applied during the reporting period are consistent with
those of the previous period and comply with South African Statements of
Generally Accepted Acounting Practice and International Financial Reporting
Standards. PricewaterhouseCoopers" unmodified review report on the condensed
financial statements contained in this preliminary report is available for
inspection at the company"s registered office.
DISTRIBUTION TO SHAREHOLDERS
An interim distribution of 9 cents per share has been paid and a final
distribution of 22.5 cents is proposed from the share premium account subject to
the approval by shareholders at the next annual general meeting on 12 August
2003 at 12h00 at the company"s registered office.
Last date to trade cum the
distribution Friday 29 August 2003
Ordinary shares trade ex the
distribution Monday 1 September 2003
Record date Friday 5 September 2003
Date of payment Monday 8 September 2003
Shareholders may not dematerialise or rematerialise their Avis shares between
Monday 1 September and Friday 5 September 2003, both dates inclusive.
PROSPECTS
In the first six weeks of the new financial year, car rental volumes and forward
reservations in our Southern African operations were ahead of the previous
year"s high levels. The aftermath of the war in Iraq and world health concerns
do not seem to have had a negative impact on inbound reservations volumes or
patterns in Southern Africa, but do appear to be contributing to the lower
travel volumes in Europe. The continuing strengthening of the rand has made
Southern Africa somewhat less of a bargain as a holiday destination but we
believe generally positive foreign tourist perceptions will continue to sustain
the growth in long-haul visitors to the region.
While penetration of new market sectors and gains in market share have enabled
us to grow significantly in Scandinavia, travel within Europe has been
reflecting negative growth for some time. This trend will affect the growth of
our businesses in Norway and Sweden but our operations are highly flexible in
terms of overheads and fleet size, and we will be watching leading indicators
closely to ensure we flex them according to demand.
The outsourcing of operating risks and administration functions remains a growth
business in Southern Africa as corporates and parastatals increasingly focus on
their core operations. Avis Fleet Services" ability to offer both a
comprehensive fleet management service as well as value-added modular services
should support its continued expansion.
All in all, we are confident that our businesses are firmly positioned to out
perform the markets in which they operate. The strong emphasis on recognising
the important role our people play in improving customer service at the human
interface will be sustained throughout the group, and we will also continue our
vigorous efforts to improve productivity, increase utilisation, control costs
and develop value-add new products and services for our customers.
With all the divisions budgeting for revenue increases ahead of inflation,
management is targeting an improvement in headline earnings per share of 15% for
the year ahead, provided the operating environment remains in line with current
expectations.
For and on behalf of the board
Glenn van Heerden Grenville Wilson
Chairman Chief Executive
Kempton Park
15 May 2003
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
Website : 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 - 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: 15/05/2003 12:00:20 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
