Lewis Group Limited · JSE:LEW
Lewis — H1 2008 Earnings Presentation
25 slides from Lewis's earnings presentation, November 2007
Slide 1: Interim Results Presentation
INTERIM RESULTS PRESENTATION For the six months ended 30 September 2007 1
Slide 2: Agenda
AGENDA 1. Financial Highlights 2. Review of Operations 3. Financial Overview 4. Developments in Furniture Retail 5. Outlook 6. Questions 2
Slide 3: 1. Financial Highlights
1. Financial Highlights 3
Slide 4: Financial Highlights
Financial Highlights R1718m R423m 24.6% 308.5c 144c Up Up Up from Up Up 11.2% 14.6% 23.9% 11.0% 24.1% Revenue Operating Operating Headline Dividends Profit Margin Earnings per share per Share 4
Slide 5: Review of Operations
2. Review of Operations () IS — Bye Ltd 5
Slide 6: Review of Operations
Review of Operations Best Lifestyle Group Lewis Living Electric • Revenue up 11.2% 10% 18% 18% • Merchandise sales % contribution 100% 82% 11% 7% • Merchandise sales up 7.5% 6.6% 11.2% 12.4% • No. of stores – Total 517 414 84 19 • No. of stores - opened this period 11 5 6 - • No. of stores - to open
Slide 7: Merchandise Strategy
Review of Operations Merchandise Strategy 7
Slide 8: Review of Operations
Review of Operations 8
Slide 9: Review of Operations (Cont'd)
Review of Operations (Cont’d) NCA Implementation Store based Promotions – Repeat Business Customer Valuation Model 9
Slide 10: Review of Operations (Cont'd)
Review of Operations (Cont’d) Quality of Debtors Book - Doubtful Debts Provision % - Actual Bad Debts Extended terms to selected customers Capital Management Financial Services – JV pilot test 10
Slide 11: Electronic Catalogue
Review of Operations (Cont’d) ELECTRONIC CATALOGUE 11
Slide 12: Review of Operations (Cont'd)
Review of Operations (Cont’d) 12
Slide 13: 3. Financial Overview
3. Financial Overview 13
Slide 14: Financial Overview – Income Statement
Financial Overview – Income Statement H1/08 % H1/07 FY07 Rm Change Rm Rm Revenue 1 718 11.2% 1 545 3324 Merchandise sales 897 7.5% 834 1 809 Gross Profit Percentage 34.1% 34.3% 34.0% Operating profit 423 14.6% 369 860 Operating margin percentage 24.6% 23.9% 25.9% Attributable earnings 285 9.4% 261 5
Slide 15: Analysis of Revenue Mix & Product Range
Analysis of Revenue Mix & Product Range Revenue Mix H1/08 Ancillary Income 10% (H1/07: 8%) Finance charges earned Merchandise sales 52% 23% (H1/07: 24%) ( H1/07: 54% ) Insurance premiums earned 15% (H1/07: 14%) Product Range H1/08 Appliances 25% (H1/07: 24%) Furniture 53.0% (H1/07: 51%) Audiovisual
Slide 16: Analysis of Costs
Analysis of Costs (Excluding debtor costs) H1/08 Change H1/07 FY07 Rm % Rm Rm Employment costs 265 11% 239 486 Admin and IT 84 5% 80 162 Marketing 62 17% 53 107 Occupancy costs 65 17% 55 117 Transport/Travel 61 11% 55 109 Depreciation 25 9% 23 39 Other operating costs 60 13% 53 102 Total 622 558 112
Slide 17: Analysis of Debtor Costs
Analysis of Debtor Costs H1/08 H1/07 FY07 Rm Rm Rm Debtor costs as a % of net debtors 3.0% 3.0% 5.8% Debtor Costs 83 71 148 - Bad debts written off 42 43 138 - Provision for Doubtful Debts Dr/(Cr) 41 28 10 Credit application decline rate 21.6% 20.7% 20.1% 17
Slide 18: Doubtful Debts Provision – last 4 years trend at the half year
Doubtful Debts Provision – last 4 years trend at the half year Doubtful debts provision as % of net debtors 25.0% 20.0% 19.1% 18.4% 16.9% 15.4% 15.0% 10.0% 5.0% 0.0% H1/05 H1/06 H1/07 H1/08 18
Slide 19: Balance Sheet Overview
Balance Sheet Overview H1/08 H1/07 FY07 Rm Rm Rm Property, plant and equipment 184 174 183 Investments 680 630 660 Tax and Deferred tax 94 99 103 Inventory 311 244 230 Net Debtors after Doubtful Debts 2 328 1 989 2 188 Cash 57 34 36 Total assets 3 654 3 170 3 400 Shareholders’ equity and reserves 2
Slide 20: Capital Structure and Ratios
Capital Structure and Ratios H1/08 H1/07 FY07 Rm Rm Rm Shareholders’ Funds 2 511 2 247 2527 ======= ======= ====== Interest-bearing borrowings (net of cash) 636 383 394 ======= ======= ======= Gearing ratio 25.3% 17.1% 15.6% Dividend cover (x) 2.00 2.25 2.25 Dividend declared this period (cents) 144
Slide 21: Cash Flow
Cash Flow H1/08 H1/07 FY07 Rm Rm Rm Cash generated from operations 299 327 592 Significant cash flow continues which funded the following: • Increase in working capital requirement - mainly investment in debtors 202 100 320 • Share repurchases 162 214 214 • Dividends paid during the period 134 127 2
Slide 22: ABIL Takeover of Ellerines and Changes to Business Models
4. Developments in Furniture Retail ABIL TAKEOVER OF ELLERINES AND CHANGES TO BUSINESS MODELS 22
Slide 23: Outlook
5. Outlook Group Ltd 23
Slide 24: Outlook
Outlook • Trading conditions in the medium term are expected to be challenging with food and transport increases impacting on target market. • Long term outlook remains positive in our target market: - Infrastructure spend - Employment growth - Real wage increases • Expansion opportunities exist in
Slide 25: Questions Thank you
6. Questions Thank you Visit our website on: www.lewisgroup.co.za 25