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IMPERIAL HOLDINGS

IMPERIAL HOLDINGS. CAR RENTAL & TOURISM DIVISION. Car Rental And Tourism Division. Welcome Introduce Team Overview : Osman Arbee Imperial / Europcar : Dawn Jones Tempest / Sixt : Leslie Matthews Auto Pedigree : Kobus Davidtz

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IMPERIAL HOLDINGS

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  1. IMPERIAL HOLDINGS CAR RENTAL & TOURISM DIVISION

  2. Car Rental And Tourism Division • Welcome • Introduce Team • Overview : Osman Arbee • Imperial / Europcar : Dawn Jones • Tempest / Sixt : Leslie Matthews • Auto Pedigree : Kobus Davidtz • Tourism: Springbok Atlas : Paddy Vella

  3. Products and Services Offered • Car rental • 4x4 and motor homes rentals • Used car sales • Tourism - Coach operations - Scheduled tours - Incentive groups • Panel shops – 90% internal work • Chauffeur Drive – customers include: - SAA Voyager - BHP Billiton - Anglo American • Executive Carport – Managing valet parking (OR Tambo Airport)

  4. Challenges facing the Car Rental Industry • Over traded market (12 concessionaires by July 2008) • Pricing pressure – Industry realised 7% increase • Car rental cost inflation: - New car prices - Flat used car prices - Exchange rates - Interest rates - Fuel costs - Increase in airport operating costs - High CPI driving up labour costs - Accident costs and vehicle thefts

  5. Industry Market Share

  6. Operational Statistics • Average fleet 15 400 - High 17 600 - Low 13 400 • Average fleet value R1.3 billion • Van & Truck Fleet Average 1 046 • Average utilisation – cars 70% • Motor vehicle price increases 7% (8.6% including mix) • Cars sold to Auto Pedigree 86% • Leases and buybacks 14% • Used cars sold (Auto Pedigree) 4 649 ( 6 months) • Number of coaches and vehicles 150

  7. Company Overview

  8. Experience in Car Rental Imperial Car Rental - 29 years Est.1979 Europcar - 11 years Est.1997 (SA) • Total business experience – > 2100 years • Senior management – > 60 years • Management – > 840 years

  9. Organisational Infrastructure • More than 130 locations • Represented in SA, Botswana, Namibia, Swaziland, Lesotho, Zambia, Mozambique, Zimbabwe • Vehicles are kept for 12 months/ 40 000kms • Trading at all major airports • Ranked #1 or #2 at each airport • More than 1 000 permanent and 400 outsourced staff • IT systems (Impress) – integrated but needs enhancements to improve flexibility.

  10. Merger Pre June 2007 Current Brand Mid 2009

  11. Why the Merger • Optimisation of fleet • Branch integration • Improved productivity • Global brand for domestic customers • Increased product offering • Economies of scale enable IT & operational investments • Access to global best practices • Increased inbound volume • Seasonal synergies

  12. Why Europcar? • No. 1 brand in Europe • 1.5 billion Euros in revenue • 42 million rental days • 220 000 vehicles • Extensive global reach • Vanguard alliance (National /Alamo & Enterprise)

  13. Particulars of the Deal • Long term franchise agreement with Europcar International • Negotiated favourable franchise fees • Inbound supplier agreement with National/Alamo • Access to global corporate customer base • Access to global partnerships (e.g. BA, Lufthansa, Easyjet.com, American Airlines) • Rights to expansion in Africa • Expansion opportunities in van rental • Access to Europcar knowhow, standards and experience

  14. Post Merger – Where to? • Exploit inbound and outbound customer base • Grow replacement and internet business • To be best-in-class by: - Investing in and implementing new IT systems - Re-engineer processes and procedures i.e. internal and customer facing - Attract, train and retain the best people • Increase selling prices and manage costs

  15. Customer Base

  16. New Opportunities • National / Alamo inbound business • Exploit E-commerce and internet opportunities • Replacement market • Inbound business travellers via Europcar global corporate relationships • Grow outbound business • FIFA World Cup 2010 • Growth in tourism – emerging markets • Revenue management – dynamic pricing • Van rental opportunity • Expansion in Africa

  17. Tempest Car Hire

  18. Our Business • Reputable brand • Tempest manage the SIXT brand • Strong Network – 37 branches • Strong internet channel • Not reliant on preferred agreement for volumes • Alliance with low cost airlines • Substantial database – 250 000 names • Good BEE credentials • Lower depreciation costs • Ideally placed to launch a newproduct

  19. Our Opportunities • Dominate as low cost car rental company • Differentiate between the 2 brands in our division • Own the credit card market in S.A. and reduce credit customers • Capture emerging market • Cut costs in business • Growth in domestic leisure travel • Maximize internet channel • Immediate benefit from rate increases coupled with lower holding costs • Reduce Broker business and save commissions

  20. Marketing

  21. The Business in 12 Months Time • 70% of business on credit cards or lodge cards • Internet based reservation channels • Telesales environment as opposed to standard sales practices • Basic service delivery only – not full service offering • 6 motor vehicle groups (from 14) • Entry level vehicles and people carriers only • 9 – 20 month old vehicles (de-fleets from Group) • Initially set fleet at 3 000 vehicles

  22. Profit Drivers in the Business • Economic growth • Rental days • Revenue per day • Volumes of rental agreements • Utilisation of fleet • Yield management

  23. Car Rental Business – Where are we ! PAST • Multi brands • All brands competing in all markets • Duplicating staff, location, fleet and marketing costs • No operational and IT synergies • Overlap in business

  24. Car Rental Business– Where are we going! FUTURE Improve efficiencies by investing in IT and re-engineering processes 24

  25. Profitability enhanced by : • Definitive pricing strategy • Yield management to optimise utilisation • Focus on efficiencies • Continuous cost saving drives • Risk management – internal controls • Improved supplier management • Aggressive growth in volume • Investment in technology

  26. Company Overview 26

  27. Overview • Over 25 years in the business • Extensive knowledge and experience in the motor industry • Over 65 branches • Largest second hand car dealer network in the country • >212 Sales people • Total retail sales - 75% rental vehicles - 25% trade-ins and buy-outs. • Total sales (80% retail and 20% wholesale) • Trusted and reliable • Offer value for money and low mileage vehicles 27

  28. Value Added Services • You Ring - We Bring - “doorstep" test drive and inspection - Online finance application • Value added products - Easy finance - “Top Up” insurance cover - Road side/medical assistance plan - Paint protection - Credit Life - Mechanical motor plan 28

  29. Overview • Purchase vehicle of choice - telephonically - SMS to Auto Pedigree direct - website - up-to-date inventory management 29

  30. Online Finance Application • Tailor made packages - MFC - All major banks 30

  31. Our Strengths • Countrywide coverage > 65 branches • Virtual network - Furniture retail stores eg Ellerines • 1-stop shop – value added services - Advertising - In house retail store magazines • Extensive TV coverage • Low-cost ofering • Brand strength 31

  32. Unit Sales and Prospects 2008 2007 2006 6 mts 12 mts 12 mts Retail Units 4 649 7 223 7 935 Wholesale Units 8532 3401 994 Total Units 5 5029 5639 929 Revenue (R000) 547 383 803 050 817 248 Average selling price (R) 99 48883 975 82 309 LOOKING AHEAD • New car price increases will assist used car market • Volumes should grow by 5% to 8% • Back-end income sustainable into foreseeable future • Cheap imports and an oversupply of used vehicles in the markets will cause pricing pressures • Expense inflation higher than sales inflation putting pressure on margins • Virtual branches country wide

  33. Company Overview

  34. Overview • Coach and Tour operator established in 1946 • 6 Locations in South Africa and Namibia • Representation in 5 overseas countries • Services throughout Southern and Eastern Africa • 150 vehicles • 250 employees • Alliance partners • Botswana • Zambia • Zimbabwe • Mozambique • Tanzania • Kenya 34

  35. Our Business • Touring services • Schedule tours (guaranteed departure tours) • Tailor made tours (Group, FIT’s, Special interest travel) • Special events, incentives, conferences • Transport services - Coach charter - Special contract transport - Airport shuttle services - Game viewing • Clients from across the world • Specialist operating divisions • Comprehensive Insurance and Indemnity 35

  36. Our Industry • Make up of industry • Fragmented industry made up of small operators • Springbok Atlas is one of a handful of major players in tourism and transport sectors • Growth industry - Tourism made up 8.1% of GDP in 2007 - Contribution to economy grew by R22 billion from 2006 to 2007 (SA TOURISM data) • Future - E-commerce Internet - Traditional inbound tourism - Continued growth in core markets: UK/Europe and America - Emerging international market: India, China and Middle East - Emerging domestic market • Major Events (2010 etc) • Business tourism 36

  37. Statistics

  38. Strengths – How we meet challenges • Strong brand and image • Proven capabilities and performance • Leader in SA tourism and coaching industries • Management stability and expertise • National infrastructure • Diversified product range (genuine complete DMC) • Wide client base • Strong established relationships with key clients • Alliances with major suppliers • Purchasing power 38

  39. Future Growth and Profitability TOURISM BUSINESS • Improve margins • Capitalise on opportunities in a growth industry • New alliances to capture new markets - Middle East, India and China - USA market • Internet business CHARTER BUSINESS • 2010 and tourism growth • Contract transportation • Grow with local sports and business events OVERALL • Bolt on acquisitions in related industries

  40. Car RentalDivision Revenue (R 000) 566 771 1 335 888 Revenue Growth 16% 22% Revenue Days Growth 11% Revenue per Day Growth 5% Profit before Interest and Tax (R 000) 138 549 187 187 PBIT Margin 24% 14% PBIT Growth 16% 12% Average Net Assets (R 000) 1 062 257 1 460 626 Average Return on Invested Capital 19% 18% Gearing - Current 84% 74% - Going forward 100% 100% Financial Summary – Half Year Results 2008 40

  41. Car Rental and Tourism Division QUESTIONS?

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