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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 2003
* Sound operational performance in all markets
* Total operating income increased by 15%
* Headline e.p.s impacted by rand strength and lower margins after finance
charges
CONSOLIDATED INCOME STATEMENT
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
to % to ended
R000 30/9/2003 Change 30/9/2002 31/3/2003
Revenue 757 616 5.2% 719 905 1 525 255
Operational
income (after
charging) 153 020 134 824 327 743
Depreciation -
fixed assets 91 573 63 472 150 621
Depreciation -
current assets 143 163 114 896 289 741
Operating lease
charges 35 937 16 363 95 389
Variable full
maintenance
leasing income 50 087 41 585 85 670
Total operating
income 203 107 15.1% 176 409 413 413
Net finance
Costs (88 999) (54 103) (130 186)
Net income
before
taxation 114 108 (6.7)% 122 306 283 227
Amortisation of
goodwill and
trademarks (17 169) (16 866) (28 390)
Exceptional
item 9 454 - 9 820
Taxation (28 260) (33 678) (68 511)
Net income
after taxation 78 133 7.6% 71 762 196 146
Outside
shareholders"
interest (100) 776 (356)
Net income
attributable
to ordinary
shareholders 78 033 72 538 195 790
Headline
earnings per
share (cents) 50.1 (4.1)% 52.2 125.1
Earnings per
share (cents) 45.6 42.3 114.3
Fully diluted
headline earnings
per share (cents) 49.5 50.4 120.9
Fully diluted
earnings per
share (cents) 45.3 41.3 111.1
Distribution per
share (cents) 10.0 11.1% 9.0 31.5
Interest cover
(times) 2.3 3.3 3.2
Effective interest
cover (times) 3.9 10.8 7.4
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 and exceptional
items.
The calculation of fully diluted headline earnings per share is based on 11.2
million (2002: 14.1 million) unissued share rights outstanding at the end of
the period in terms of the employee share incentive scheme.
CONSOLIDATED BALANCE SHEET
(Unaudited) (Unaudited) (Audited)
At At At
R000 30/9/2003 30/9/2002 31/3/2003
Employment
of capital
Intangible assets 237 998 313 466 246 503
Vehicles for lease 704 841 503 916 565 267
Property, plant
and equipment 92 694 100 529 98 838
Investments and
loans 59 721 24 545 25 518
Vehicles for
rent 2 024 865 1 939 604 1 885 877
Other current
assets 445 295 417 022 380 906
Total assets 3 565 414 3 298 812 3 202 909
Interest bearing
liabilities 1 648 007 1 379 421 1 594 461
- Rand monetary
area 1 067 108 770 769 1 115 172
- Foreign 580 899 608 652 479 289
Non-interest
bearing
liabilities 831 081 835 467 542 069
Total liabilities 2 479 088 2 214 888 2 136 530
1 086 326 1 083 924 1 066 379
Capital employed
Shareholders"
interest 1 086 045 1 084 624 1 066 171
Outside
shareholders"
interest 281 (700) 208
1 086 326 1 083 924 1 066 379
Number of shares
in issue (000) 171 282 171 282 171 282
Net asset value
per share 634 633 622
Tangible net asset
value per share 495 450 479
Gearing ratio 1.5 1.3 1.5
Effective gearing ratio 1.1 1.1 1.3
STATEMENT OF CHANGES IN EQUITY
(Unaudited) (Unaudited) (Audited)
R000 30/9/2003 30/9/2002 31/3/2003
Balance at
beginning of
period 1 066 171 1 012 875 1 012 875
Currency
translation
differences (19 621) 24 903 (101 387)
Net income
attributable to
ordinary
shareholders 78 033 72 538 195 790
Distribution to
shareholders (38 538) (25 692) (41 107)
Balance at end of
period 1 086 045 1 084 624 1 066 171
CONSOLIDATED CASH FLOW INFORMATION
(Unaudited) (Unaudited) (Audited)
R000 30/9/2003 30/9/2002 31/3/2003
Net income
before tax 114 108 122 306 283 227
Non-cash flow
movement in NDR
other than
movements in
property, plant
and equipment,
taxes and
intangible assets (14 590) 15 262 (65 114)
Other non-cash
flow items 84 142 60 351 132 346
Change in working
capital 83 809 (387 017) (545 948)
Shareholders"
distributions
paid (38 465) - (41 144)
Taxation paid (26 415) (23 872) (53 449)
Net cash flow
- from investing
activities (257 492) (91 678) (227 702)
- from financing
activities 58 474 292 748 501 132
Movement in cash and
cash equivalents 3 571 (11 900) (16 652)
Cash and cash
equivalents
- at beginning
of period 77 939 94 591 94 591
- at end of
period 81 510 82 691 77 939
COMMENTS
Avis"s people in Southern Africa and Scandinavia produced another sound
operational performance in the six months under review. A strong rand
combined with lower car rental margins in Southern Africa resulted in a 4%
decrease in headline earnings for the period. However, if these results were
translated at the 2002 comparable period"s exchange rates, headline earnings
would have grown by 7%.
OPERATIONAL REVIEW
Avis Rent-A-Car Southern Africa
Although economic growth slowed down during the review period, demand in all
our market segments remained firm. Market shares were increased and rental
days sold grew by 15% year-on-year. Overall vehicle utilisation was improved
by 2% and an outstanding 12% increase was achieved in people productivity.
This division was nevertheless not able to match last year"s exceptionally
good results, as rate increases lagged the sharp rise in vehicle holding
costs while competition from the new car market and high real interest rates
had a negative effect on used car retail volumes.
Avis Rent-A-Car Norway and Sweden
These operations also grew their market shares and further penetrated new
market segments, increasing rental days by 11%. Vehicle utilisation was
maintained at the previous year"s level but people productivity improved by
3%. The larger component of longer-term rentals in the product mix and some
pricing pressure in the European corporate travel market resulted in a
decrease in the rate per rental day. The profitability of these businesses
improved in their local currencies.
Avis Fleet Services
This division produced an excellent profit performance. The continued drive
to develop value-added services around its core full-maintenance leasing
product generated an 8% growth in vehicles under management during the review
period. The financed fleet increased marginally while the fleet under
maintenance contracts grew strongly. The used cars sold by Fleet Services
are typically three to four years old and demand in this segment of the
market remained strong.
FINANCIAL REVIEW
Revenue grew by 5% and profit before finance charges by 15%. Headline
earnings per share declined by 4%. Operations outside the Rand Monetary Area
accounted for 37% of the total revenue (2002: 45%) and 46% of the Group"s net
income (2002: 37%). Car rental operations contributed 75% of revenue (2002:
76%).
The Group"s balance sheet remains strong and is soundly positioned to cater
for further organic growth.
The accounting policies applied during the reporting period are consistent
with those of the previous period and comply with the South African
Statements of Generally Accepted Accounting Practice as well as International
Financial Reporting Standards. The Group"s auditors have not reviewed this
interim report.
DISTRIBUTION TO SHAREHOLDERS
An interim distribution of 10 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 28 November 2003
Ordinary shares trade ex
the distribution Monday 01 December 2003
Records date Friday 05 December 2003
Date of payment Monday 08 December 2003
Shareholders may not dematerialise or rematerialise their Avis shares between
Monday 1 December 2003 and Friday 5 December 2003, both dates inclusive.
PROSPECTS
Current indications are that Southern Africa will experience a tourism season
similar to last year as the strength of the Rand is inhibiting growth in the
long-haul inbound market. As a consequence the Group is taking a cautious
approach with respect to its planning. Reasonable rate increases are now
being achieved in the Southern African car rental market and with vehicle
holding costs stabilising, margins are improving. The Scandinavian
operations anticipate further volume growth and Fleet Services" strong
performance should continue.
Against this background, all divisions expect to sustain their current
operational performance levels. Unless there is a material deterioration in
market conditions, the Group is now forecasting growth in headline earnings
of 4% for the full financial year.
CAUTIONARY NOTICE
Further to the cautionary announcements dated 1 August 2003 and 12 September
2003, shareholders are advised that discussions have reached an advanced stage
and it is expected that a detailed announcement will be made on or before 7
November 2003. Accordingly, Avis shareholders are advised to continue
exercising caution when dealing in Avis securities until this announcement is
made.
For and on behalf of the board
Glenn van Heerden Grenville Wilson
Chairman Chief Executive
Kempton Park
23 October 2003
AVIS SOUTHERN AFRICA LIMITED
and its subsidiaries
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: G Knight
e-mail: gknight@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 **, JW Dreyer*, HM Khoza*, AR Langham, M
Laubscher **, P O"Brien, LM Savage, PJJ van der Walt*
* independent non-executive
** non-independent non-executive
Date: 23/10/2003 11:00:11 AM Produced by the JSE SENS Department
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