Lewis Group Limited · JSE:LEW
Lewis — H1 2011 Earnings Presentation
22 slides from Lewis's earnings presentation, November 2010
Slide 1: Results Presentation for the 6 months ended 30 September 2010
RESULTS PRESENTATION For the 6 months ended 30 September 2010 november 2010
Slide 2: Agenda
AGENDA 1. Overview of Results 2. Debtor Analysis 3. Financial Results 4. Outlook 5. Questions 2
Slide 3: 1. Overview of Results
1. OVERVIEW OF RESULTS 3
Slide 4: Overview of Results
Overview of Results R1 058m 22 0% 22.0% R469m 332 5c 332.5c 156c + 11.2% + 20 bps + 10.5% + 14.5% + 8.3% Merchandise Operating p g Operating p g Headline Dividend Sales Margin Profit Earnings per per Share Share 4
Slide 5: Overview of Results (cont'd)
Overview of Results (cont’d) 1 Improving sales trend since year end – up 11.2%. 1. 11 2% Furniture & appliances (80% of business) – up 11.1% Electronic sales (20% of business) – up 11.7%. 11 7% 2. Exclusivity of merchandise a key focus. New ranges launched. 3. Successful launch of the My y Home bran
Slide 6: Overview of Results (cont'd)
Overview of Results (cont’d) 4. Store roll out – on track to open 40 – 45 stores. 5. Improving Credit mix – 71.7% (H1-10: 68.5%). 6. Gross profit margin improved. H1/2011 H1/2010 FY/2010 Gross profit 35.1% 33.5% 34.9% Exchange losses (0.7%) (3.1%) (1.5%) All in gross profit 34.4% 30.4% 33.4% 6
Slide 7: Overview of Results (cont'd)
Overview of Results (cont’d) 7. Stock turn - 5.2. 8. Debtor costs 4.8% of net Debtors (H1-10: 5.0%). 9. Unemployment in our customer base stable at below 3%. 10. Gearing 25.7% (H1-10: 27.4%). 11. Cash from operations R413 mil (+R214 mil). 7
Slide 8: 2. Debtor Analysis
2. DEBTOR ANALYSIS Group Ltd 8
Slide 9: Debtor Costs
Debtor Costs H1/2011 H1/2010 R Rm R Rm Total Debtor costs 206 189 Bad debts written off 48 53 Impairment provision 158 136 Debtor costs as a % of net debtors 4 8% 4.8% 5 0% 5.0% 9
Slide 10: Debtors Impairment Provision
Debtors Impairment Provision H1/2011 H1/2010 Rm Rm Net Debtors before p prov. 4 312 3 738 Impairment provision 793 668 p Impairment p provision % 18.4% % 17.9% % Credit application decline rate 31.1% 27.4% Impairment – Net present value of expected cash flow discounted at interest rate applicable to
Slide 11: Debtor Payment Analysis
Debtor Payment Analysis NCA IMPAIRMENT OVER NUMBER OF CUSTOMERS PROVISION % 24 MONTHS Debtor's Payment Analysis H1/2011 H1/2010 H1/2011 H1/2010 March 2010 H1/2011 Customers fully up to No. 510 722 491 614 257 431 date including those Satisfactory paid who have paid 70% or more of amounts due % 71.6%
Slide 12: 3. Financial Results
3. FINANCIAL RESULTS Group Ltd 12
Slide 13: Income Statement
Income Statement H1/2011 H1/2010 % Rm Rm Revenue 2 136 1 946 9.8% Merchandise sales 1 058 951 11.2% Gross profit margin % 35.1% 33.5% Operating profit 469 424 10.5% Operating margin % 22.0% 21.8% Attributable earnings 296 261 13.1% EPS (cents) 335 297 12.8% Headline EPS (cents) 333 290 14.5% 13
Slide 14: Segmental Analysis
Segmental Analysis Best Home My Home/ H1/2011 Group Lewis Electric Lifestyle * Revenue (Rm) 2 136 1 796 274 66 Revenue growth (%) 9.8% 9.2% 14.7% 5.8% Operating profit (Rm) 469 413 53 3 Operating margin H1:11 22.0% 23.0% 19.3% 4.7% H1:10 21.8% 23.0% 19.3% 1.1% Number of stores 565 444 101 14/6 * Inc
Slide 15: Business Split
Business Split Risk Financial Retail Services Services Group Rm Rm Rm Rm H1/2011 Revenue 1 202 337 597 2 136 Operating profit 159 89 221 469 Operating margin H1:11 13.2% 26.5% 37.0% 22.0% H1 10 H1:10 12 4% 12.4% 26 0% 26.0% 37 5% 37.5% 21 8% 21.8% • Supplied for continuity purposes only only. Our bu
Slide 16: Analysis of Costs (Excluding Debtor costs)
Analysis of Costs (Excluding Debtor costs) H1/2011 H1/2010 Change Rm Rm % Employment costs 328 296 11.0% Admin and IT 101 92 10.0% Marketing 81 71 13 8% 13.8% Occupancy costs 88 78 12.6% Transport/Travel 69 64 7.2% Depreciation 28 27 3.7% Other operating costs 79 72 9.4% Total 774 700 10 5% 10.5% %
Slide 17: Balance Sheet Overview
Balance Sheet Overview H1/2011 H1/2010 Rm Rm Property, plant and equipment Property 269 232 Investments 984 803 Deferred tax 9 - Inventory 265 306 N t Debtors Net D bt 3 611 3 147 Cash 84 67 Total Assets 5 222 4 555 Shareholders’ equity and reserves 3 463 3 049 Retirement benefits 53 55 Tax and Defe
Slide 18: Capital Ratios
Capital Ratios H1/2011 H1/2010 ROE – after tax (%) 17.6% 17.6% ROCE – after tax (%) 15.6% 16.4% ROA – before tax (%) 19.8% 21.0% Interim Dividend declared (cents) 156 144 Gearing ratio (%) 25.7% 27.4% 18
Slide 19: 4. Outlook
4. OUTLOOK 19
Slide 20: Outlook
Outlook • The proven business model a competitive advantage advantage. • Management of Debtors book . ¾ Improving collections environment. ¾ Debtor costs continue to moderate moderate. • Merchandise – a key focus. 20
Slide 21: Outlook (cont'd)
Outlook (cont’d) • Store expansion – on track. ¾ 3 - 4 yr target : 700 stores ¾ 40 - 45 stores per year • Operating margin three year target – 26%. 21
Slide 22: Thank You / Questions
2 a Q. 2 oO c Xo THANK YOU QUESTIONS 5.