Lewis Group Limited · JSE:LEW
Lewis — H1 2016 Earnings Presentation
24 slides from Lewis's earnings presentation, September 2015
Slide 1: Results Presentation for the Six Months Ended 30 September 2015
RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
Slide 2: Agenda
AGENDA Overview of results 3 Debtor analysis 6 Financial results 9 Accounting matters 15 Regulatory update 18 Outlook 21 Questions 24
Slide 3: Overview of results
Overview of results Revenue Gross Operating Earnings Interim profit profit per share dividend margin R2.8 bn Maintained 36.4% 14.7% 335c + 8.3% at 215c LY R2.6 bn LY 36.9% LY 18.4% LY 384c LY 215c 3
Slide 4: Overview of results
Overview of results ß Sales patterns since year end – Furniture & appliances (81% of business – up 8.9%) – Electronics (19% of business – up 8.8%) ß Credit application decline rate 41% (LY:41%) ß Credit sales at 65.9% (LY:69.7) ß Debtor costs as a % of net debtors 7.4% (LY:6.8%) 4
Slide 5: Overview of results
Overview of results ß Beares now trades out of 84 stores ß Small format Lewis stores – 178 ß Exclusivity of merchandise 3 5
Slide 6: Debtor Analysis
DEBTOR ANALYSIS
Slide 7: Debtor costs
Debtor costs H1/2016 H1/2015 Rm Rm Total debtor costs (16.7% up) 468 401 ß Bad debts written off 244 209 ß Impairment provision 224 192 Debtor costs as a % of net debtors 7.4% 6.8% 7
Slide 8: Debtor payment analysis
Debtor payment analysis DISTRIBUTION OF IMPAIRMENT NUMBER OF CUSTOMERS PROVISION March Debtor's Payment Analysis H1/2016 H1/2015 H1/2016 H1/2015 2015 Customers who have paid 70% or No. 471 067 462 625 Rm 29.8 22.6 21.1 Satisfactory more of amounts due over the contract period. The provision in this
Slide 9: Financial Results
FINANCIAL RESULTS : SS ial
Slide 10: Income statement
Income statement H1/2016 H1/2015 Rm Rm % Revenue (Rm) 2 798 2 583 8.3% Merchandise sales (Rm) 1 227 1 128 8.8% Gross profit margin (%) 36.4% 36.9% Operating profit (Rm) 410 475 (13.6%) Operating profit margin (%) 14.7% 18.4% Attributable earnings (Rm) 298 341 (12.6%) EPS (cents) 335 384 (12.7%) Head
Slide 11: Segmental analysis
Segmental analysis Group Lewis Best Beares Revenue (Rm) 2 798 2 226 382 190 Revenue growth (%) 8.3% 3.8% 2.1% 195% Operating profit (Rm) 410 362 71 (23) Operating margin H1:16 14.7% 16.3% 18.5% (12.0%) H1:15 18.4% 18.5% 19.3% 9.1% Number of stores H1:16 724 512 128 84 11
Slide 12: Analysis of costs
Analysis of costs H1/2016 H1/2015 Change Rm Rm % Employment costs 476 421 13.0% Admin and IT 127 111 14.6% Marketing 104 95 9.1% Occupancy costs 160 127 25.6% Transport/Travel 110 103 6.8% Depreciation 45 34 34.0% Other operating costs 117 104 12.8% Total Operating costs 1 139 995 14.5% % of revenue
Slide 13: Balance sheet overview
Balance sheet overview H1/2016 H1/2015 Rm Rm Property, plant and equipment 362 329 Trademark 59 - Investments 1 814 1 714 Inventory 519 425 Tax and Deferred Tax - net 30 (2) Net Debtors 4 901 4 744 Cash 247 268 Total assets 7 932 7 478 Shareholders’equity and reserves 5 421 5 097 Retirement benefits
Slide 14: Capital ratios
Capital ratios H1/2016 H1/2015 ROE – after tax (%) 11.0% 13.6% ROCE – after tax (%) 9.6% 11.4% ROA – before tax (%) 11.8% 14.2% Interim dividend declared (cents) 215 215 Gearing ratio (%) 27.6% 25.7% 14
Slide 15: Accounting Matters
ACCOUNTING MATTERS (age
Slide 16: Accounting Matters - Restatement - Income Statement
Accounting Matters - Restatement - Income Statement H1/2016 H1/2015 FY15 Rm Rm Rm Refund of premiums and interest (2.1) (2.9) (5.4) Insurance and re-insurance accounting 0.5 17.1 0.4 Maintenance contracts 2.2 (12.8) (41.1) Profit before taxation 0.6 1.4 (46.1) Taxation (0.2) (0.4) 12.9 Effect on att
Slide 17: Accounting Matters - Restatement - Balance Sheet
Accounting Matters - Restatement - Balance Sheet H1/2016 H1/2015 FY15 Rm Rm Rm Refund of premiums and interest (56.8) (52.1) (54.6) Insurance accounting (144.3) (162.0) (162.9) Maintenance contracts (166.9) (140.7) (169.1) Effect on total assets (368.0) (354.8) (386.6) Reinsurance accounting 152.7 1
Slide 18: Regulatory Update
REGULATORY UPDATE
Slide 19: Regulatory update
Regulatory update ß Referral to National Consumer Tribunal – NCR referred Lewis and Monarch to the National Consumer Tribunal – Alleged mis-selling of loss of employment insurance to pensioners and self-employed customers – Internal investigation launched – Identified instances of such mis-selling –
Slide 20: Regulatory update
Regulatory update ß Affordability assessment regulations – Early adopted in July 2015 – Three payslips / bank statements requirement – Minimum monthly expense table ß Capping of credit life insurance – Regulator not yet engaged with industry to discuss 20
Slide 21: Outlook
OUTLOOK Group Ltd
Slide 22: Outlook
Outlook Actual Target Financial and operating targets H1/2016 2016 Gross profit margin (%) 36.4% 37 - 38.5 Operating costs as a % of revenue 40.7% 36.5 - 37.5 Debtor costs as a % of net debtors 7.4% 12 - 14 Credit sales as a % of total sales 65.9% 68 - 70 Operating profit margin (%) 14.7% 19 - 21 Sa
Slide 23: Outlook
Outlook ß Trading outlook ß 23
Slide 24: Questions
QUESTIONS